Monday, June 4, 2012

Southeast Side Coal Gasification Cram Down Nears Success

Using a time honored end of session legislative sleight of hand, the south suburban Beemsterboer cousins have nearly completed a legislative mandate that natural gas customers across the state pay for an economically wasteful and environmentally risky coal gasification project to be built on some of the most polluted land in the state. All that stands between gas consumers and the certainty of pointless rate increases to pay for the Beemsterboer boondoggle is Governor Quinn’s signature on Senate Bill 3766, passed in a secretive maneuver late last week.

What Is The Project?
Chicago Clean Energy, LLC an Illinois limited liability company managed by officers of New York’s Leucadia National Corporation, proposes to build a $3 billion high sulfur coal gasification facility on the former LTV Steel coke battery site at 114th and Burley on the east bank of the Calumet River on Chicago’s southeast side. The riverfront land is one of the most polluted brownfield sites in Illinois. Proponents of the project say it will produce 1,000 construction jobs and 200 permanent jobs in the depressed Lake Calumet neighborhood. The proposed facility would mix high sulfur Illinois mined coal with tar sand oil recovery waste to produce synthetic natural gas.

The Sierra Club and other environmental groups opposing construction of the facility point out that both the petroleum coke and a million tons of high sulfur coal annually feeding the facility would be piled in the open air on the north end of the site, contributing volatile organics and coal dust particulates to neighborhood air, and insoluble petroleum fractions and heavy metal pollution to the groundwater and the Calumet River. The proposed plant would draw a net 8 million gallons of water daily from the Calumet River.

The 140 acre site is owned by cousins Alan Beemsterboer of Orland Park, Steven Beemsterboer of Frankfort, and Simon Beemsterboer of South Holland, who operate and manage Calumet Transfer LLC on the property. They bought the property from bankrupt LTV Steel in December, 2002, for $850,000.00. At the time they operated a slag and ballast unloading facility across the river at the 106th street dock through Indiana incorporated Beemsterboer Slag & Ballast.
What Are The Economics?
The type of high sulfur coal strip mined in Illinois can’t be burned directly in electric power plants here because even the best stack gas scrubbers won’t remove enough of the toxic products of combustion to prevent serious air pollution. Besides, today’s clean burning natural gas prices are low enough to compete with coal as a fuel for electric power generation. Sounds like an ideal set of circumstances for converting Illinois coal to synthetic natural gas, right?

Wrong! In order for Leucadia National to recover the $3 billion it says it will be investing in construction of the coal gasification facility through Chicago Clean Energy LLC, Leucadia will have to be able to sell the synthetic gas it produces to local gas utilities at a price guaranteed to be four times higher than current natural gas market prices, for the next 30 years. Ameren, People’s Gas and Nicor have been opposing the imposition of these legislatively inflated prices on them before the Illinois Commerce Commission, and last year the Commission sided with the gas utilities, refusing to impose the 2% per year gas rate increases on consumers, or increases of more than 1/3 at the end of the 30 years.

The only folks who would benefit from such a deal are the Beemsterboers and Leucadia.
How Did The Beemsterboers Sneak This Bill Through?
In the Illinois legislature, every bill is supposed to get three readings on the House floor on three separate days, and three readings on the Senate floor on three separate days, before any floor vote. That process is intended to give each Representative, Senator, affected constituent, and the general public plenty of time to read the legislation, figure out what is in it, and make their views known to legislative leaders before a new law is voted on. Controversy over proposed legislation is meant to be publicly aired and debated before new laws are passed. However, like much that happens in Illinois politics, the process has been corrupted by slick legislative maneuvers designed to keep public debate to a minimum by secretly passing the most controversial bills a night or two before the end of the session, and quietly sending a large package of sneaky bills to the Governor’s desk for his signature after the legislative session ends and all the news reporters have gone home for the summer.

Here’s how it works: Legislative leaders who want to sneak through controversial or unpopular bills will put a “place holder” bill in the hopper early in the legislative session. The “place holder” will be a seemingly innocuous, short measure with no controversial text, and a subject – say, clean energy - arguably related to the “real” bill. The “place holder” passes without debate through committees passes one house and gets two readings on the floor of the other house. Meanwhile, in secret late night meetings in the back rooms of the Capitol, and in Springfield bars and restaurants, lobbyists and legislative leaders hammer out the desired but unpopular, complex and lengthy text of the “real” bill they intend to pass.

At the last minute, usually one or two days before the end of the legislative session, the “place holder” is amended in the house that hasn’t passed it yet, by “deleting everything after the enacting clause” and substituting the secretly crafted and already vote counted mystery text of the “real” proposed law. The bill passes in that house, and a vote of concurrence in the amendment is taken minutes later in the other house, and off the secret text of the legislation goes to the Governor’s desk without a peep from the press or the public. This is stealth legislation at its finest.

Here’s how everything went down in this particular case: On February 10, 2012, SB 3766 the “place holder” was introduced. This version directed the ICC to have its Office of Retail Market Development prepare a study and report to a joint legislative committee and the Governor on municipal aggregation in the natural gas market – sounds innocuous. The first reading in the Senate was the same day. March 27, 2012, was the second reading and addition of a floor amendment permitting gas utilities to include transportation charges on their bills for piping gas bought from other sellers to homes or businesses. Another red herring. The bill as thus amended had its third reading in the Senate on March 29, 2012, and passed the Senate.

Over in the House, the Senate passed bill as amended so far had its first House reading the very same day it passed the Senate. The entire month of April and most of May went by with no publicly apparent action on this seemingly innocuous bill. Then as the final hours and minutes of the legislative session ticked away, the heretofore secret “real” bill forcing Ameren, Peoples Gas and Nicor to accept the 30 year inflated price synthetic gas purchase contracts they successfully resisted last year before the ICC materialized May 30 as House Committee Amendment No.1. May 30 the House second reading took place, and May 31 the “real” bill passed the House on the third reading. The same day the Senate voted to concur in the House amendment gutting the entire text of SB3766 and replacing it with the 30 year inflated price synthetic gas purchase mandate.

The “real” bill, now passed by both houses after seeing the light of day for only a little over 24 hours, is now on Governor Quinn’s desk. Nothing but his veto pen stands between gas utility customers and guaranteed rate increases for the next 30 years. Let him know now how you feel about that.

blog comments powered by Disqus