The Sierra Club on Sept. 26 asked a federal bankruptcy court to lift an automatic stay against legal action involving Midwest Generation so that it can keep pursuing a complaint against the company at the Illinois Pollution Control Board over coal-fired emissions.
In December 2012, Midwest Generation and related companies, including Edison Mission Energy, sought Chapter 11 protection at the U.S. Bankruptcy Court for the Northern District of Illinois. Immediately after that, the court issued an automatic stay, which bankruptcy courts routinely grant, that freezes any pending litigation against the bankrupt companies. That has the effect of channeling all complaints against the bankrupt companies through the bankruptcy court.
Besides any outside court action against Edison Mission Energy and its affiliates, that automatic stay also froze an action that the Sierra Club had initiated in December 2012, just prior to the bankruptcy filing, against Midwest Generation at the Illinois Pollution Control Board. That complaint is over alleged clean-air violations at four Midwest Gen coal-fired power plants; Waukegan, Joliet, Powerton and Will County.
The complaint alleges that the SO2 emissions from these plants have violated and will continue to violate Illinois law by emitting SO2 at levels that would cause violations of the EPA SO2 Limit and, therefore, to cause or threaten cause “air pollution” as defined and prohibited by Illinois law.
The club said it has a legally protected interest in that it is pursuing the IPCB proceeding against Midwest Gen (also called MWG) in accordance with state law in order to stop violations of Illinois law and to protect the environment and public health. “This interest has plainly been affected by MWG’s bankruptcy proceeding in that, among other things, the proceeding has to this point been stayed as a result of MWG’s filing,” the club added.
Club: new or existing plant owner(s) will have to deal with this anyway
There is adequate legal precedent for the stay to be lifted to allow the IPCB case to proceed, the club argued. It also said this really wouldn’t do any harm to the company’s reorganization/dissolution efforts.
“Because the owner of the Coal Plants is going to have to deal with the emissions problems and [Illinois Environmental Protection Agency] violations at some point in the near future, its ability to reorganize will not be adversely effected by the IPCB Proceeding,” the club reasoned. “In fact, moving forward with the IPCB Proceeding would be beneficial to the Debtors’ estates in that the Debtors and potential acquirers of the Coal Plants will be better able to quantify the required pollution reductions and the anticipated costs of compliance. This is particularly true given that the Debtors are still in the relatively early stages of their bankruptcy cases. Per their own reports, they are still considering a variety of restructuring options ranging from a sale of some or all of their assets to a standalone restructuring.”
In any case, the debtor companies have been on notice of this cause of action since the IPCB complaint was filed in December 2012 (and probably long before), and they plainly have the resources to move forward with the proceeding, the club added. “As noted, the Debtors are multi-national corporations with billions of dollars in assets and liabilities. They have an army of professionals retained to help them navigate the restructuring process, regulatory issues, and other matters, and due to the nature of their businesses they routinely deal with environmental compliance issues. Moving forward with the IPCB Proceeding is not going to have a material impact on their restructuring efforts, and could very well prove beneficial.”
The Sierra Club has asked for an Oct. 16 bankruptcy court hearing on its motion.
Midwest Gen owns and operates four coal-fired power plants in Illinois:
- Joliet #9 and #29. Joliet #9 is a 360-MW coal-fired unit. Joliet #29 includes units 7 and 8, which are rated at 660 MW each.
- Powerton, which includes Units 5 and 6, are rated at 893 MW each.
- Waukegan, which includes Units 7 and 8, which are rated at 326 MW and 355 MW, respectively.
- Will County, which includes Units 3 and 4, which are rated at 299 MW and 598 MW, respectively.