Shale Daily / NGI All News Access

Indiana Supreme Court Will Hear SNG Case

The Indiana Supreme Court announced Thursday that it will hear a case involving a 30-year contract for the state to purchase coal-to-substitute natural gas (SNG) from a proposed $2.8 billion gasification plant in southwestern Indiana.

Court records show the case -- Indiana Gas Co. et al. v. Indiana Regulatory Commission (No. 93A02-1112-EX-1141) -- was transferred to the high court at the urging of the project's supporters and opponents.

At issue is a contract between Leucadia National Corp. and the Indiana Finance Authority (IFA), under which the latter has agreed to purchase 38 million Dth/year of SNG and resell it on the interstate natural gas market (see Shale Daily, Feb. 16, 2012). State regulators approved the contract in November 2011.

Former Gov. Mitch Daniels, a Republican, supported the proposal, and asserted that the coal-to-SNG plant in Rockport would bring hundreds of jobs to an economically depressed part of the state.

But consumer groups and various utilities, including Vectren Corp., argue that the deal is uneconomic because of the shale gas revolution and low natural gas prices. They also oppose the project because end customers would be responsible for any losses.

Clayton Miller, appellants' attorney with the Indianapolis-based law firm Bamberger, Foreman, Oswald & Hahn LLP, told NGI's Shale Daily that the court on Friday tentatively scheduled oral arguments for Sept. 5.

"I can tell you that my clients were asking for the court to grant transfer, and so we're glad that they did," Miller said Monday. He said he was not authorized to comment further on the case. Court records show he is representing Sycamore Gas Co.

Last October, the Indiana Court of Appeals ruled against the contract, on the grounds that its definition of a "retail end use customer" inappropriately included industrial transportation customers, even though state lawmakers did not intend for them to be included when they enacted the state's SNG Act.

In response to the uproar over the Leucadia contract, legislators in the Indiana General Assembly drafted a bill, SB 494, which made additional SNG findings and required the IFA to submit certain contracts and agreements to the Indiana Utility Regulatory Commission for approval.

SB 494 passed the state Senate by a 43-7 vote on April 26, followed by the state House of Representatives with a 70-28 vote on April 27. Republican Gov. Mike Pence signed the bill into law on May 10.

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