Legislative leaders come to agreement on Peabody incentives

Fletcher coy about other issues on a call for a new special session, however

By RONNIE ELLIS

LOUISVILLE — A meeting between executives of Peabody Energy, legislative leaders and Gov. Ernie Fletcher appears to have resolved the deadlock over the special session and is likely to produce a bill to provide incentives for Peabody to locate a coal-to-synthetic natural gas production facility in western Kentucky.



It also appears effectively to end the 68-item special session Fletcher called – but that may depend on Fletcher’s willingness to issue another call dealing only with the energy legislation.



Senate President David Williams, R-Burkesville, and House Speaker Jody Richards, D-Bowling Green, emerged from a two-hour meeting at the Convention Center in Louisville on Wednesday to announce that Peabody CEO Greg Boyce assured lawmakers that if they pass the incentive measures he will recommend that Peabody “focus our project review exclusively in Kentucky.”



Peabody officials left the meeting by a rear door, but issued a written statement through the governor’s staff.



Peabody Energy and a consortium of companies and financial backers are looking to construct a $3 billion facility to convert coal to synthetic natural gas. One of the areas under consideration is western Kentucky (where Peabody operates mines and owns large coal reserves), along with a site in Illinois. Fletcher called a special session to pass such incentives but included a host of other items including capital construction projects and a controversial ban on domestic partner insurance benefits at universities and public agencies. The Democratic House said the session was unnecessary, called by Fletcher to boost his re-election and they adjourned without taking up the measures on Fletcher’s agenda – all of which were passed in the Republican-controlled Senate with bipartisan support.



Richards called for Wednesday’s meetings to secure a firm commitment from Peabody that it will locate the facility in Kentucky if the legislature provided the incentives.



“This was really a good meeting from the standpoint that it clarified what Peabody would do,” Richards said.



Williams said the Senate and House will convene Monday – the day Fletcher set for reconvening the session he previously called – and immediately adjourn. Fletcher will then call another session. Williams said the target date is Monday, Aug. 13. In the meantime, he said, bi-partisan working groups in both chambers will try to work out details of the energy legislation and incentives.



Other lawmakers in the meeting were Republican Senators Bob Stivers and Dan Kelly, and Democratic Senator Ed Worley; Republican Representatives Jeff Hoover, Stan Lee and Bob DeWeese and Democratic Representatives Rocky Adkins, Larry Clark, Rob Wilkey; Harry Moberly and Charlie Hoffman. Economic Development Cabinet Secretary John Hindman also attended.



Williams, Richards and Fletcher each said separately the meeting focused not only on the specific needs of Peabody’s plans for a synthetic gas facility but on comprehensive energy policy to make Kentucky a leader in alternative fuels.



Richards said House members asked Fletcher not to put any item on the August 13 session agenda other than energy and said Fletcher previously said he would do that – but Fletcher didn’t go that far.



“I told them they need to tell me which parts of these things are political and we’d take that into consideration,” Fletcher said.



Williams, however, said the House has indicated it is not interested in any issues other than the energy bill.



“The House has indicated they are not going to deal with the other issues,” Williams said. “That’s their prerogative and it would be a practice in futility at this juncture and I think it would poison the water in the negotiations with the House.”



He deflected further questions about the scope of the call Fletcher will issue for the Aug. 13 session.



“This is a good day for Kentucky,” Williams said. “It’s a day when Republicans and Democrats, House and Senate leadership and the executive branch have come together to move Kentucky forward in dealing with energy in Kentucky and economic development.”



Richards said it would be “advantageous to pass this now.” Peabody plans to make a decision within the next two months to spend between $30 million and $60 million on a feasibility and site selection study. Richards said if the preliminary work on the legislation is done properly, the new special session can complete its work in five days.



Fletcher said the plant – which would produce more than 50 billion cubic feet of synthetic natural gas from more than 3.5 million tons of coal annually – would create “hundreds of high tech jobs in the operational phase,” but he said it will create thousands of jobs through construction and ancillary support jobs. Democrats and critics of the plant have disputed those numbers.



The proposed facility is criticized by environmental groups and members of Kentuckians for the Commonwealth protested across the street from the convention center Wednesday. At one point, some of then entered the convention center singing “Take Me Back to Muhlenberg County,” written by John Prine which includes the line “Mr. Peabody’s coal train done hauled it all away.” Fletcher, however, said the plant will use the cleanest, coal burning technology in existence.



Worley, the Democratic Senate Minority Leader from Richmond, said the meeting produced “as good a resolution to this issue that could’ve come about. The House and Senate WILL work this out by the 13th.”



Adkins, the House Majority Leader from Sandy Hook who has sponsored similar energy legislation in the House and will be a key player in developing the bill which lawmakers take up in August, called the meeting “very positive. It was very open and honest.”



Williams said leaders of the two chambers are working on resolving the other major impasse – how to deal with legislative pay for the present special session. Democrats in the House say they will not accept pay for the special session and the two chambers disagree on how that can legally be accomplished.



RONNIE ELLIS writes for CNHI News Service and is based in Frankfort. Reach him at rellis@cnhi.com.

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