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
ADVERTISEMENT
Subscribe to Indiana Lawyer
  1. Im very happy for you, getting ready to go down that dirt road myself, and im praying for the same outcome, because it IS sometimes in the childs best interest to have visitation with grandparents. Thanks for sharing, needed to hear some positive posts for once.

  2. Been there 4 months with 1 paycheck what can i do

  3. our hoa has not communicated any thing that takes place in their "executive meetings" not executive session. They make decisions in these meetings, do not have an agenda, do not notify association memebers and do not keep general meetings minutes. They do not communicate info of any kind to the member, except annual meeting, nobody attends or votes because they think the board is self serving. They keep a deposit fee from club house rental for inspection after someone uses it, there is no inspection I know becausee I rented it, they did not disclose to members that board memebers would be keeping this money, I know it is only 10 dollars but still it is not their money, they hire from within the board for paid positions, no advertising and no request for bids from anyone else, I atteended last annual meeting, went into executive session to elect officers in that session the president brought up the motion to give the secretary a raise of course they all agreed they hired her in, then the minutes stated that a diffeerent board member motioned to give this raise. This board is very clickish and has done things anyway they pleased for over 5 years, what recourse to members have to make changes in the boards conduct

  4. Where may I find an attorney working Pro Bono? Many issues with divorce, my Disability, distribution of IRA's, property, money's and pressured into agreement by my attorney. Leaving me far less than 5% of all after 15 years of marriage. No money to appeal, disabled living on disability income. Attorney's decision brought forward to judge, no evidence ever to finalize divorce. Just 2 weeks ago. Please help.

  5. For the record no one could answer the equal protection / substantive due process challenge I issued in the first post below. The lawless and accountable only to power bureaucrats never did either. All who interface with the Indiana law examiners or JLAP be warned.

ADVERTISEMENT