The already polluted air over Spencer County will be more toxic if a new synthetic gas plant is built near the Ohio River town. Indiana taxpayers will bear the financial burden for the plant, whether it is successful or not.

The Leucadia Corporation, a speculative venture corporation headquartered in New York City, has a get-rich-quick-and-stay-rich-scheme targeting Rockport in Spencer County on the Ohio River. The project is called Indiana Gasification LLC and entails building a coal gasification plant, which would manufacture synthetic natural gas (syngas) out of coal and would be built just outside the county seat.

Rockport is in the southwest region of the state, across from Owensboro, Ky., 30 miles east of Evansville.

Evansville is in the center of the largest concentration of coal-fired power plants in the world, according to John Blair, president of Evansville-based Valley Watch, which, along with Citizens Action Coalition (CAC) and the Sierra Club, oppose the plant.

Spencer County is already a "toxic sacrifice zone," Blair says.


Indiana produces 96.2 percent of its electricity from coal, according to Purdue University. That makes the state the foremost emitter of all the states when in comes to carbon dioxide from coal. CO2 is the No.1 global warming gas. Indiana's coal-fired power plants release 134 million tons of carbon dioxide per year, according to Purdue.
"Have you ever seen an economically viable community around a huge coal plant?" - Rex Winchell, Spencer County Citizens for Quality of Life
CAC says it also makes Indiana the No. 1 emitter of carbon dioxide per capita in the country.

In 2000, the Union of Concerned Sciences said the state exported about 24 percent of the electricity it generated, with Hoosiers absorbing the pollution from the export without receiving any benefit from the electricity.

Coal combustion has serious public health consequences, including cancer, asthma, heart attacks, chronic bronchitis, lung cancer, stroke and sudden infant death syndrome.

Of all 50 states, Indiana has the second highest emissions of nitrogen oxides, the third highest emissions of sulfur dioxide (strongly associated with human deaths) and the fourth highest emissions of carbon dioxide and mercury.

"Dirty Air, Dirty Power," a 2004 publication from the Clean Air Task Force, says Indiana is fifth in the nation in mortality and per capita deaths related to power plant emissions. Indianapolis ranks as the 15th metropolitan area in the country for deaths related to such emissions.


Seventeen coal plants surround Spencer County in southwest Indiana, western Kentucky and eastern Illinois. Eight more coal plants have been proposed for that region.

Spencer County is in the heart of Indiana coal country -- mining and burning coal and storing the fly ash, bottom ash and slag. The area contains many coal mines.

A town of 2,596 in a county of 20,000, Rockport already has two heavily polluting industries, AK Steel, a mill, and AEP Rockport, a coal-fired power plant.
"Our county seat, Rockport, for example, is quite near a large coal power plant and is in the process of becoming a ghost town." - Rex Winchell, Spencer County Citizens for Quality of Life
AEP Rockport alone emits three-fourths of a ton of mercury each year, according to Blair. Together, the two plants release tons of antimony, arsenic, barium, lead, hydrochloric acid, sulfuric acid and hydrogen fluoride per year.

According to Blair, the federal government's Toxic Release Inventory says in 2006 AK Steel emitted 27.3 million pounds of toxic chemicals. AEP Rockport released 9.4 million pounds. Combined, the two industries spewed 36.7 million pounds in 2006.


Spencer County has one of the highest cancer rates in the state.

According to Rex Winchell, president of Spencer County Citizens for Quality of Life (SCCQL), the local grassroots group that's been opposing the plant since it was initially announced in 2006, "As Stephen Jay, M.D., Ph.D, head of the Indiana University Department of Public Health testified before the Indiana Assembly in 2006, the costs from fine airborne particulates, chiefly from coal plants, exceed $5 billion each year [in Indiana] (using calculation procedures commonly used by the health industry). That amounts to more than about $800/yr for each resident of the state!"

The coal ash and particulates are so thick in Spencer County's air that residents complain they have to wash their cars once a day and that they often can't see their children waiting outside their homes for the school bus, according to Kerwin Olson, program director of CAC.

Polluting industries like to build plants in regions that are already polluted, usually poor areas and communities of color, where the industries expect to encounter a passive population and little opposition. Spencer County fills the bill: it has a 15 percent unemployment rate. Per capita, the average income is 65 percent of the national average.

The county is not only poor but also is what Winchell calls "a hotbed of apathy." Spencer County residents, he says, "believe anything that goes down."
"Living in coal country, people are always docile. Coal takes away the human spirit." - John Blair, Valley Watch
The elected and economic development officials of Spencer County are eager to see the plant built because Leucadia promises to bring jobs to the area. What Leucadia fails to mention is that the plant will bring only about 200 permanent jobs.

Winchell observes, "Proponents also cite the economic benefits for the local economy, from additional employment and a large tax base. I note though, have you ever seen an economically viable community around a huge coal plant?"

Mainly the plants are dirty and located in depressed places that most people want to stay away from.

"Our county seat, Rockport, for example, is quite near a large coal power plant and is in the process of becoming a ghost town," he said. "The situation is so dire that even few saloons remain. And virtually all the managers and higher level technical people who work at the coal plant live at least 20 miles away."

The elected city and county officials refuse to acknowledge how bad the pollution is in their area.

The gasification plant is advocated by "relatively few people with vested financial interests." Winchell says. The elected officials aren't beyond taking a few hundred dollars in exchange for supporting a project such as this, he continues. The state legislators who are advocating construction, Winchell says, "should consider whether they would like having a hugh syngas plant near their homes."

The Rockport city council passed a resolution in support of the plant, but the county council's vote was a tie, 2 to 2.


The banking industry doesn't want to finance more coal plants, choosing instead to finance renewable sources of energy and energy efficiency. Leucadia's solution is for Indiana ratepayers and taxpayers to foot the bill. This plan is what CAC calls a "multi-billion dollar boondoggle."

Three years ago Leucadia convinced the state legislature and Gov. Mitch Daniels to pass a bill approving the plant, calling it "Indiana Home-Grown Energy" (HB 1722). Sponsors of the bill were District 74 State Rep. Russell Stilwell (D-Boonville) and District 7 State Sen. Brandt Hershman (R-Monticelllo), both of whom receive campaign funds from the coal industry.

The bill locks ratepayers into the project for 30 years and mandates constructing the plant in Indiana and using only Indiana coal.
"Indiana Gasification LLC cannot get funding for the plant unless they can prove that they have taxpayers and ratepayers on the hook for the costs involved." - Grant Smith, Citizens Action Coalition
In 2008 Stilwell and Hershman came up with another bill, SB 223, which also passed and again locked ratepayers into paying for the plant for 30 years. This time the legislation stipulated that "the plant could be built outside of Indiana, does not have to use Indiana coal, and yet if the contracts are signed, Indiana taxpayers and ratepayers could still be saddled with the costs of paying for the plant, even if it never produces any natural gas," says Grant Smith, executive director of CAC.

Last year the legislature passed yet another bill, SB 423, that Stilwell and Hershman cosponsored. "This bill was passed because all of the Indiana natural gas utilities refused to sign contracts with Leucadia to purchase the synthetic natural gas that this plant would produce," Smith says. "So, SB 423 allows the State of Indiana to sign the contracts, forces the Indiana natural gas utilities to deliver the gas, and forces Indiana natural gas customers to foot the bill for the plant."

District 90 State Rep. Mike Murphy (R-Indianapolis) calls the coal-gasification plant the single biggest economic development project in the history of the state, according to CAC's Olson.

Gov. Daniels, Winchell notes, told the National Review he's "totally enamored of goal gasification."

The Boston-based Clean Air Task Force (CATF), a coal industry lobbying group, supports the project, as does the Indiana Wildlife Federation. CATF has lots of funding to support "clean" coal, and both organizations accept money from the Joyce Foundation.

President Obama recently announced that two U.S. coal-gasification plants will receive federal loan guarantees -- that is, taxpayers' money. Opponents of the Rockport facility suspect that it's one of them.


Indiana Gasification LLC cannot get funding for the plant unless it can prove that it has taxpayers and ratepayers on the hook for the costs involved, Smith said. "In other words, they need the signed contracts from the State of Indiana, and federal loan guarantees (meaning that if they default on their loans, the federal government will pay off the loans) before their funding will be approved."

Even though the plant hasn't been engineered and "is no more than a PowerPoint presentation" today, Olson says, Leucadia is asking for funding.

The company acknowledges that the plant could cost as much as $5 billion.
"Ratepayers would be liable for all costs in the future relative to carbon dioxide regulations which everyone agrees will soon be created and will be highly expensive." - Citizen Action Coalition fact sheet
Though Leucadia doesn't know the actual cost of the plant, Smith points out, it wants the State of Indiana to sign a 30-year contract holding all Indiana natural gas ratepayers hostage to pay for the gas produced by the plant.

"Right now, Indiana natural gas utilities have to come before the Indiana Utility Regulatory Commission to review their natural gas purchases and costs every 90 days," he said. "Signing a 30-year contract with no review is a blatant attempt to erode consumer protections currently in Indiana law."


Currently there is little or no use for syngas in the United States. Vast reserves of natural gas have been discovered recently, and new drilling techniques have brought the price down to under $3 per million BTU, whereas syngas costs $7.50 per million BTU, according to Olson.

What to do with the massive amounts of CO2 the plant would release is a problem. Smith notes, "Leucadia claims that it can show a consumer savings by selling waste carbon dioxide from the plant for purposes of recovering oil from old oil fields in Mississippi. But the pipeline isn't built and the carbon market is yet to be created.

"In other words, the gas from the plant will be so expensive that Leucadia has resorted to attempting to sell a waste stream from the plant to make it work."

A CAC fact sheet on the plant says: "According to the legislation, when the plant isn't operating, ratepayers could be double charged. At those times, ratepayers are obligated to pay for the gas that is not being produced as well as the replacement gas that would have to be purchased. If the contracts are signed, this will be the case even if the project is a failure and the plant never produces any natural gas.

"Indiana natural gas utilities would be able to ignore service at the cheapest cost as stipulated by law. Ratepayers would be liable for all costs in the future relative to carbon dioxide regulations which everyone agrees will soon be created and will be highly expensive."
"This is corporate welfare at its worst." - Kerwin Olsen, Citizens Action Coalition
Olson says Leucadia wants to socialize the risks of its business -- making people ill, polluting the environment and forcing state taxpayers to pay for it -- while all the profits go to the company's stockholders and CEOs.

"This is corporate welfare at its worst," he says.

Blair calls Indiana Gasification, LLC "a scam beyond belief."

Winchell comments, "If it's such a doggone good product, why can't they fund it? It's like throwing money down a rat hole."


According to Olson, the gasification plant is now the closest it's been to becoming a reality. The state could sign a contract with Leucadia any day. The plant's advocates are treating information on the specifics and cost of the project as proprietary information, not available to the public.

However, the state and federal governments have to take numerous steps before the project can go forward.

The Indiana Utility Regulatory Commission has to approve the plant. The Indiana Finance Authority is negotiating a sales contract.

The U.S. Department of Energy has yet to approve the project, and the federal loan guarantees (with taxpayers' money) have yet to come through.

The federal government claims it will complete the mandatory environmental impact statement (EIS) by the end of July. However, Leucadia has filed no air permits for approval by the Indiana Environmental Management, so the EIS can't be done yet.


SCCQL opposes the gasification plant on environmental, health and economic grounds. Democracy is another important issue.
"A scam beyond belief." - John Blair, Valley Watch
At a public hearing on June 25, 2008, nearly the entire group of residents present spoke out and signed a petition against the plant. The State, however, observes the city council's ordinance approving the plant and assumes the community supports Indiana Gasification.

SCCQLL is small and quiet, and it's difficult to persuade local citizens to attend public hearings. Yet Spencer County residents see a link between increasing illnesses and the escalating level of pollution.

"Living in coal country, people are always docile," Blair says. "Coal takes away the human spirit."

What SCCQL does is make "countermoves" to the official moves. Since the organization has trouble convincing people to attend hearings, its members set up an ad hoc committee of four people to do so.

CAC, Valley Watch and Sierra Club are considering taking legal action against the project but must wait till further along in the approval process.

Despite the obstacles, Blair says, "We'll fight the plant all the way to the end."

Linda Greene can be reached at .