The Indiana Supreme Court revived a controversial state-backed deal that would facilitate construction of a $2.7 billion coal-using synthetic natural gas plant in Rockport. The decision likely sets up another round of state regulatory review if developers choose to move forward.
Justices on Tuesday unanimously affirmed a contract between the Indiana Finance Authority and Indiana Gasification, LLC that a divided panel of the Court of Appeals invalidated. But the Court of Appeals’ differences over whether the contract was valid were rendered moot when the state agency and the private company amended the deal, the Supreme Court ruled.
In affirming the decision of the Indiana Utility Regulatory Commission to approve the contract, Chief Justice Brent Dickson cited language used in cases dating to 1904: “When the concrete controversy at issue in a case ‘has been ended or settled, or in some manner disposed of, so as to render it unnecessary to decide the question involved,’ the case will be dismissed.
“Appellants requested that this Court vacate the IURC’s Order in part because the Contract’s definition of (retail end use customers) improperly applied to industrial transportation customers; IFA and Indiana Gas have addressed this concern by amending the Contract approved by the IURC and rendering it unnecessary for this Court to decide the issue,” Dickson wrote.
The politically charged deal obligates the state to purchase synthetic natural gas for 30 years at guaranteed prices much higher than current market rates.
An unusual alliance of environmental groups, utilities and business concerns oppose the deal championed by former Gov. Mitch Daniels and cite it as a polluting example of crony capitalism. The project is backed by former Daniels adviser Mark Lubbers, whose connections to Justice Mark Massa resulted in calls for Massa to recuse himself, which he refused to do.
After the ruling, Jodi Perras of the Sierra Club’s Beyond Coal Campaign said the ruling was disappointing and called the project a “boondoggle.”
“The justices ignored serious flaws in the state’s contract to buy expensive coal gas and pass the costs on to Indiana natural gas customers. The contract doesn’t guarantee savings for ratepayers. With each passing day of low natural gas prices, it confirms even more that the contract will cost Hoosier ratepayers billions of dollars,” Perras said in a statement.
The final outcome for the contract and the fate of the proposed plant likely will be decided elsewhere in the Statehouse. Lawmakers this year enacted Senate Enrolled Act 494 that deferred to the Supreme Court and also put new regulatory hurdles before the proposal. Gov. Mike Pence also signaled opposition to the project, backed by hedge fund Leucadia National Corp.
After Pence signed SEA 494, Lubbers issued a statement that cast doubt on the plant’s future.
“We will work hard for a win if the Supreme Court takes the case,” the statement said. “If we win, however, only a clear reversal of position by the governor would enable the project to go forward.”
Justices ducked the change in the law that passed as the case was being argued on appeal.
“We decline the request of (Indiana Gasification) to address the validity and impact of Senate Enrolled Act 494 as part of this appellate proceeding,” Dickson wrote in a footnote.
The case is Indiana Gas Company, Inc. and Southern Indiana Gas and Electric Company, et al v. Indiana Finance Authority and Indiana Gasification, LLC, 93S02-1306-EX-407.