Leucadia Illinois Plant

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Leucadia National Corporation is a holding company that, through its subsidiaries, engages in mining & drilling services, telecommunications, healthcare services, manufacturing, banking and lending, real estate, and winery, among other businesses, including joint ventures with Berkshire Hathaway.[1]

The company is proposing a $3-billion Chicago coal gasification plant at an abandoned steel site along the Calumet River in Cook County, Illinois.

Legal issues

With pollution in Cook County above the limits allowed by federal law, the U.S. Environmental Protection Agency in 2005 issued an edict: before more pollution can be added to the air in the area, a new polluter must first prove that an existing polluter has reduced its emissions. To fulfill that criteria, Leucadia wants to persuade the state to let it purchase the permission to pollute from the owners of the industrial site, a coke facility that has been idle since 2001. The Illinois Environmental Protection Agency has opposed the sale of the pollution offsets, saying the coke plant's pollution was never factored into Cook County's toxic air because it stopped operating years before the edict was issued.[2]

The gas plant site, 11400 South Burley Ave., is where LTV Corp. once manufactured coke used in making steel. The facility closed in December 2001 when LTV filed for bankruptcy. Alan, Steve and Simon Beemsterboer, who acquired the site in bankruptcy court, made plans in 2004 to restart the coke plant near Lake Calumet. But those plans never materialized. Now the Beemsterboers, through an entity called Chicago Coke LLC, are fighting the Illinois Pollution Control Board to allow it to sell its permission to pollute, along with the property, to Leucadia. The move follows years of meetings and letters, outlined in legal documents, between Chicago Coke and the Illinois EPA, which repeatedly denied the company's request to sell its permission to pollute, saying that the intent behind emission reductions is to clean up existing pollution, not to give previous polluters a commodity to sell on the open market.[2]

Chicago Coke filed simultaneous appeals to the Illinois Pollution Control Board and the Chancery Division of Cook County Circuit Court, arguing that the state EPA had given the go-ahead to pollute when it was planning to restart the coke plant and that it should have the right to sell that permission. The Circuit Court dismissed the case this month, leaving it up to the Pollution Control Board to decide. A hearing date has not been set.[2]

The plant is opposed by consumer advocates who note that Illinois utilities would be required to purchase synthetic gas from the Leucadia plant for 30 years and from a plant downstate for 10 years and that the gas will be more expensive than natural gas and help drive up heating bills for northern Illinois customers as much as $191 a year. The plant is supported by the Illinois coal industry, as Illinois coal production fell by half since the 1990s as a result of environmental regulations that deemed that the high levels of sulfur dioxide found in Illinois coal emitted dangerous pollutants when burned.[2]

March 2011: Illinois Governor vetoes proposed Leucadia plant

On March 14, 2011, Illinois Gov. Pat Quinn vetoed two coal gasification plants that would have locked in rates for the facilities, saying he was committed to "clean coal" but that the Power Holdings Company plant and a proposed $3-billion Chicago plant at an abandoned steel site along the Calumet River by Leucadia would result in higher utility bills for Illinoisans. Leucadia reportedly lobbied intensely for the plant.[3]

June 2011: Governor to vote on Leucadia plant

On June 1, 2011, legislation needed for three multibillion-dollar coal gasification projects to move forward in Illinois - FutureGen 2.0, Power Holdings Company plant and a proposed $3-billion Chicago plant at an abandoned steel site along the Calumet River by Leucadia - arrived at Governor Pat Quinn's desk after winning final approval in the General Assembly the night before. Quinn must decide whether to sign or veto S.B. 2062, S.B. 1533 and S.B. 2169, relating to FutureGen 2.0, Leucadia and Power Holdings, respectively.

The Leucadia and Power Holdings bills allow for the companies to construct synthetic gas plants on Chicago's South Side and in southern Illinois, respectively. Leucadia's plant would cost about $3 billion, Power Holdings about $2 billion. Together, the plants would create a market for more than 4 million short tons of high-sulfur coal annually. Quinn, a Democrat, vetoed previous Leucadia and Power Holdings bills in March 2011, citing "inadequate consumer protections" (PCT 4/15). Since then, the companies have worked with the governor's office in an effort to get the plants passed. Phil Gonet, president of the Illinois Coal Association, said: "I would be shocked if Quinn does not approve these. I think they're ready to hit the ground running."

Quinn has until late August 2011 to sign or veto the measures.[4]

July 2011: Governor approves plant

On July 13, 2011, it was announced that IL Gov. Quinn would sign "clean coal" legislation that paves the way for the $3 billion dollar plant and Illinois-mined coal. Quinn vetoed earlier versions of the bill after groups claimed consumers would have price increases of up to $191 per year for three decades. The new legislation contains consumer protections, including rate caps, to ensure residential customers do not see their natural gas bills increase more than 2 percent per year.[5] Leucadia has yet to obtain permission to add pollution to the crowded industrial area in Chicago, and has not located a buyer for its carbon dioxide emissions.[6]

Project Details

Sponsor: Leucadia
Location: Chicago, IL
Size: Type: Coal-to-liquids
Projected in service: 2013
Status: Permitting

Citizen Groups

Resources

References

  1. "2009 Form 10K Edgar Online, Filed Feb. 26, 2010.
  2. 2.0 2.1 2.2 2.3 Julie Wernau, "Seeking permission to pollute" Chicago Tribune, Jan. 21, 2011.
  3. Steve Daniels, "Quinn vetoes kill 2 proposed coal-to-gas plants" Chicago Business, March 14, 2011.
  4. Sayeh Tavangar, "Illinois passes bills for 3 gasification projects" Platts Energy Weekly, June 2, 2011.
  5. Gregory Karp and Julie Wernau, "Quinn set to sign 'clean coal' bill, opening door to Southeast Side plant" Chicago Tribune, July 13, 2011.
  6. "Quinn to sign bill boosting coal-to-gas plant" AP, July 13, 2011.

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