Midwest Generation, an affiliate of Edison Mission Energy, told its bankruptcy court on Oct. 30 that a new coal ash disposal policy from the Illinois Environmental Protection Agency makes a motion from the Environmental Law and Policy Center (ELPC) a moot point.
ELPC wants the U.S. Bankruptcy Court for the Northern District of Illinois to lift its blanket stay on all outside legal actions against Midwest Generation so that ELPC can pursue a claim against Midwest Gen at the Illinois Pollution Control Board. That claim is over coal ash disposal at the company’s power plants in Illinois.
Notable is that Edison Mission Energy has a pending deal to sell itself, and these power plants, to NRG Energy (NYSE: NRG).
On Oct. 28, the Illinois EPA filed a proposed new coal ash disposal rule with the board, with the agency saying that broad policy was in part fashioned on earlier work it had done with Ameren (NYSE: AEE) related to that company’s coal plants in the state.
Midwest Gen (also known as MWG) told the court on Oct. 30 that the board has already struck down, before the court stay was put in place, parts of the ELPC complaint. “In fact, the only relief remaining to be considered in the Action is all but obviated by the new proposed rule,” it added. “As explained by the Board, the remaining relief seeks to require ‘that MWG permanently remove coal ash and other contaminated materials from the ash ponds, install groundwater pumping and treatment systems, and cease dumping coal ash into the ash ponds.’”
But under the new rule proposed by the state EPA, MWG said it will have a choice (assuming any violations) between closing the ash ponds (which would require removing coal ash and other materials and ceasing dumping the coal ash) and developing a site-specific plan to correct the violations (which plan would be subject to approval by the Illinois EPA, the proper, governmental regulator here).
“Further, there is no active open dumping, mooting ELPC’s request that MWG be prohibited from open dumping,” the power producer added. “Nevertheless, ELPC followed the Board’s Order with the Motion, requesting that the Court completely lift the automatic stay and allow the Action to go forward in high gear. But in addition to the absence of any benefit to be gained from the Action’s unjustifiable attempt to override the Illinois EPA, developments in the six months since the initial hearing on ELPC’s original motion additionally demand denial of the Motion.”
MWG noted that just last week, the bankruptcy court approved the debtors’ entry into a plan sponsor agreement with potential purchaser NRG Energy, pursuant to which NRG proposes to acquire substantially all of the debtors’ businesses for roughly $2.64bn through a chapter 11 plan.
“The Plan Sponsor Agreement contains a ‘go-shop’ provision that allows the Debtors to complete the sale process they started on August 1, 2013, and sets a series of timing milestones that the Debtors must meet in connection with the chapter 11 plan process, ultimately requiring confirmation of a chapter 11 plan by March 31, 2014,” the company said. “In other words, the Debtors have just five months to conclude their sale process for over $2 billion in assets; develop, file, and obtain approval for a disclosure statement; solicit, receive, and tally votes on a chapter 11 plan; analyze and resolve $10 billion in claims against their estates; and obtain confirmation of a chapter 11 plan effectuating the NRG transaction — all subject to a fiduciary out in the event the Debtors receive a higher and better offer in the meantime, and all in close coordination with the Debtors’ key stakeholders. These chapter 11 cases are in their home stretch, and the devotion of energy, time, and focus to consummating this comprehensive restructuring transaction has never been more critical. Granting the Motion now would come at the expense of these scarce resources.”
Midwest Gen added: “ELPC suggests that, because the Debtors were able to negotiate and secure the offer from NRG while the Action was pending, the Debtors should also be able execute the deal while the Action goes forward. In addition to disregarding the new posture of these chapter 11 cases, ELPC is ignoring key changes about its own Action. Most importantly, at the time of the Initial Order, it was possible for the Action to take a step forward with minimal involvement on MWG’s part: its motion to dismiss was already pending, and all that remained to be done to adjudicate that motion to dismiss was for ELPC to respond and the Board to make a ruling. But now, the next step is full-blown litigation, including extensive oral and written discovery, complex data analysis, depositions and testimony of MWG employees, Illinois EPA personnel, and dueling experts, and hundreds or thousands of attorney hours all leading up to a hearing that could take place many months or years from now.”