ILNews

Justices weigh $2.7 billion Rockport deal

Back to TopCommentsE-mailPrintBookmark and Share

A controversial, politically charged power plant proposal voided by an appellate court and later waylaid by the General Assembly and Gov. Mike Pence landed before the Indiana Supreme Court Sept. 5. Attorneys for and against the proposed plant pleaded that terms of the contract were on their side.

At issue is a contract pushed by former Gov. Mitch Daniels and approved under his watch by the Indiana Utility Regulatory Commission that would have guaranteed the sale and purchase of substitute natural gas to fund construction of a $2.7 billion coal gasification plant in Rockport, a town along the Ohio River in southwest Indiana.

Opponents argue the proposal is an unproven, environmentally harmful design and an example of crony capitalism that would saddle utility ratepayers with a 30-year contract to buy gas at rates upward of double the current market price. Supporters say the plant would be a cutting-edge, clean-coal facility, diversifying the state’s energy supply that would drive economic development and that the contract has safeguards for consumers.

A divided panel of the Indiana Court of Appeals reversed the IURC’s green light and voided the entire contract because its definition of “retail end user” differed from the statutory definition. Chief Judge Margret Robb dissented, finding IURC’s approval could be affirmed by simply excluding the offending section of the contract.

After the COA ruling, lawmakers dealt a blow to the proposal, passing Senate Enrolled Act 494 that deferred to the Supreme Court and likely set the stage for a new round of regulatory review if the contract is affirmed by the court. Plant backers responded to Pence’s signing of the bill by suspending work on the plant.

The matter made national headlines last month when Justice Mark Massa refused to recuse himself due to what plant opponents argue is conflict of interest. His 27-year relationship with project manager Mark Lubbers, a former adviser to Daniels who recruited Massa to state government and spoke at Massa’s robing ceremony after Daniels appointed him to the bench, was cited.

An unlikely coalition of utilities and environmental and consumer groups oppose the proposal backed by Indiana Gasification and its parent company, Leucadia National Corp. The case is Indiana Gas Company, Inc. v. Indiana Finance Authority, 93S02-1306-EX-407.

Norman Funk of Krieg DeVault LLP argued on behalf of utilities including Vectren, Ohio Valley Gas Inc. and Sycamore Gas. Funk said the Indiana Court of Appeals ruled correctly, citing a term of the contract that allowed it to be voided entirely if any provision was invalidated.

But parties to the contract amended it to comply with statute after the Court of Appeals ruling, and Chief Justice Brent Dickson pressed Funk on why such an action would not render the case moot.

“Certainly an amended provision cannot trump the Indiana Utility Regulatory Commission’s jurisdiction,” Funk said. “This is a regulated contract.”

Funk also warned that justices should be wary of Robb’s dissent. He said the cases she cited were inapposite because they didn’t concern contracts that required state agency approval or contain clauses like those in this case. He said the court was not at liberty to “blue-line” a contract that required approval from a state regulatory agency.

“We believe it would be a usurpation and a violation of separation of powers,” Funk said, “for this court to tell the (IURC) what it must do.” Allowing an amended contract to stand without required agency approval, he said, would mark the court “wading into new constitutional waters.”

But attorney Karl Mulvaney of Bingham Greenebaum Doll LLP argued that another provision of the contract gives signers ultimate authority over its provisions. “The parties to the contract can enter into an amendment,” said Mulvaney, representing plant backers Indiana Gasification and the Indiana Finance Authority. He likened the contract to that of a real-estate purchase.

“We really believe we have an absolute right to amend this contract,” Mulvaney said. He said the justices should affirm the contract as amended.

When Justice Loretta Rush pressed Mulvaney on whether he was “asking us to do something contrary to the statute,” she asked what his fallback position was. Mulvaney said the court could affirm the 2011 contract as approved by the IURC “and you don’t say anything about the amendment.”

Mulvaney opened his argument by saying he had never seen a case in which a contract was the target of the Legislature as was the case here. “There have been separation of powers problems,” he said.

Funk, too, referred to the Legislature’s action and developments subsequent to the COA opinion as “kind of the gorilla in the courtroom,” but Justice Robert Rucker at times reigned in both attorneys in an effort to narrow the scope to matters briefed. He told Funk, “This is not properly before us.”  

Mulvaney opened his presentation focusing on the act of the Legislature. “Both sides have told you this is a unique case,” Mulvaney said, adding the court could deal sua sponte with legislation that “impairs a contract.”

Rucker asked Mulvaney, “Wouldn’t it be more important for the court to address … either the Court of Appeals got it right or got it wrong?”

Funk opened his argument telling the court there were two issues before it: whether the IURC-approved contract complied with statute, and if it didn’t, what the proper remedy would be.

Massa presented the first question for Funk, the only question he asked during the 40-minute oral argument. “Hasn’t that been effectively mooted by the subsequent action of the parties?” Massa said, referring to the amended contract. Funk said he didn’t believe the amendment mattered.

The section of the contract stipulating that any voided section voids it entirely, he said, was “not an accident, not an oversight, not a misplaced comma. … Either all of it is valid or none of it is valid.”

“This is not a garden-variety, bilateral contract entered into by the private sector,” Funk said, arguing the contract could not be “rewritten judicially.” He also argued there was a likelihood that ratepayers would see no savings until the expiration of the 30-year contract guaranteeing purchase prices.

But Mulvaney said justices should give deference to the IURC ruling and stressed safeguards that were provided in the contract.

“The Indiana Finance Authority negotiated this looking at a lot of different models” of potential commodity costs for substitute natural gas compared with current and projected costs. “The contract price is going to be more favorable over time,” he said.•

ADVERTISEMENT

Post a comment to this story

COMMENTS POLICY
We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
 
You are legally responsible for what you post and your anonymity is not guaranteed.
 
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in Indiana Lawyer editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
 
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
 
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.
 

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by

facebook - twitter on Facebook & Twitter

Indiana State Bar Association

Indianapolis Bar Association

Evansville Bar Association

Allen County Bar Association

Indiana Lawyer on Facebook

facebook
ADVERTISEMENT
Subscribe to Indiana Lawyer
  1. He called our nation a nation of cowards because we didn't want to talk about race. That was a cheap shot coming from the top cop. The man who decides who gets the federal government indicts. Wow. Not a gentleman if that is the measure. More importantly, this insult delivered as we all understand, to white people-- without him or anybody needing to explain that is precisely what he meant-- but this is an insult to timid white persons who fear the government and don't want to say anything about race for fear of being accused a racist. With all the legal heat that can come down on somebody if they say something which can be construed by a prosecutor like Mr Holder as racist, is it any wonder white people-- that's who he meant obviously-- is there any surprise that white people don't want to talk about race? And as lawyers we have even less freedom lest our remarks be considered violations of the rules. Mr Holder also demonstrated his bias by publically visiting with the family of the young man who was killed by a police offering in the line of duty, which was a very strong indicator of bias agains the offer who is under investigation, and was a failure to lead properly by letting his investigators do their job without him predetermining the proper outcome. He also has potentially biased the jury pool. All in all this worsens race relations by feeding into the perception shared by whites as well as blacks that justice will not be impartial. I will say this much, I do not blame Obama for all of HOlder's missteps. Obama has done a lot of things to stay above the fray and try and be a leader for all Americans. Maybe he should have reigned Holder in some but Obama's got his hands full with other problelms. Oh did I mention HOlder is a bank crony who will probably get a job in a silkstocking law firm working for millions of bucks a year defending bankers whom he didn't have the integrity or courage to hold to account for their acts of fraud on the United States, other financial institutions, and the people. His tenure will be regarded by history as a failure of leadership at one of the most important jobs in our nation. Finally and most importantly besides him insulting the public and letting off the big financial cheats, he has been at the forefront of over-prosecuting the secrecy laws to punish whistleblowers and chill free speech. What has Holder done to vindicate the rights of privacy of the American public against the illegal snooping of the NSA? He could have charged NSA personnel with violations of law for their warrantless wiretapping which has been done millions of times and instead he did not persecute a single soul. That is a defalcation of historical proportions and it signals to the public that the government DOJ under him was not willing to do a damn thing to protect the public against the rapid growth of the illegal surveillance state. Who else could have done this? Nobody. And for that omission Obama deserves the blame too. Here were are sliding into a police state and Eric Holder made it go all the faster.

  2. JOE CLAYPOOL candidate for Superior Court in Harrison County - Indiana This candidate is misleading voters to think he is a Judge by putting Elect Judge Joe Claypool on his campaign literature. paragraphs 2 and 9 below clearly indicate this injustice to voting public to gain employment. What can we do? Indiana Code - Section 35-43-5-3: Deception (a) A person who: (1) being an officer, manager, or other person participating in the direction of a credit institution, knowingly or intentionally receives or permits the receipt of a deposit or other investment, knowing that the institution is insolvent; (2) knowingly or intentionally makes a false or misleading written statement with intent to obtain property, employment, or an educational opportunity; (3) misapplies entrusted property, property of a governmental entity, or property of a credit institution in a manner that the person knows is unlawful or that the person knows involves substantial risk of loss or detriment to either the owner of the property or to a person for whose benefit the property was entrusted; (4) knowingly or intentionally, in the regular course of business, either: (A) uses or possesses for use a false weight or measure or other device for falsely determining or recording the quality or quantity of any commodity; or (B) sells, offers, or displays for sale or delivers less than the represented quality or quantity of any commodity; (5) with intent to defraud another person furnishing electricity, gas, water, telecommunication, or any other utility service, avoids a lawful charge for that service by scheme or device or by tampering with facilities or equipment of the person furnishing the service; (6) with intent to defraud, misrepresents the identity of the person or another person or the identity or quality of property; (7) with intent to defraud an owner of a coin machine, deposits a slug in that machine; (8) with intent to enable the person or another person to deposit a slug in a coin machine, makes, possesses, or disposes of a slug; (9) disseminates to the public an advertisement that the person knows is false, misleading, or deceptive, with intent to promote the purchase or sale of property or the acceptance of employment;

  3. The story that you have shared is quite interesting and also the information is very helpful. Thanks for sharing the article. For more info: http://www.treasurecoastbailbonds.com/

  4. I grew up on a farm and live in the county and it's interesting that the big industrial farmers like Jeff Shoaf don't live next to their industrial operations...

  5. So that none are misinformed by my posting wihtout a non de plume here, please allow me to state that I am NOT an Indiana licensed attorney, although I am an Indiana resident approved to practice law and represent clients in Indiana's fed court of Nth Dist and before the 7th circuit. I remain licensed in KS, since 1996, no discipline. This must be clarified since the IN court records will reveal that I did sit for and pass the Indiana bar last February. Yet be not confused by the fact that I was so allowed to be tested .... I am not, to be clear in the service of my duty to be absolutely candid about this, I AM NOT a member of the Indiana bar, and might never be so licensed given my unrepented from errors of thought documented in this opinion, at fn2, which likely supports Mr Smith's initial post in this thread: http://caselaw.findlaw.com/us-7th-circuit/1592921.html

ADVERTISEMENT