BEAUMONT - The 172nd District Court of Jefferson County has ruled in favor of Port Arthur Steam Energy against Oxbow Calcining when it issued a post-judgment turnover order mandating that Oxbow deliver flue gas energy generated by the operation of its calciner facility to PASE.
The Court’s order was entered to allow PASE to satisfy its multi-million dollar judgment it obtained against Oxbow in 2015, a press release states.
PASE, a green energy facility located in Port Arthur, post-judgment relief requiring Oxbow to deliver flue gas heat through the kilns that connect the two companies. PASE operates a steam generation plant. Oxbow is under contract to supply flue gas energy to PASE. In turn, PASE uses the flue gas to operate boilers that generate steam. PASE sells and delivers the steam to a nearby plant, Valero Port Arthur Refinery.
Over the course of three days, Judge Donald Floyd heard evidence presented by PASE and Oxbow in the post-judgment proceedings. Oxbow’s counsel argued certain environmental concerns involving sulphur dioxide (SO2) emissions present in the flue gas prevented Oxbow from delivering the flue heat they were otherwise contractually obligated to provide to PASE.
In a 12-page order, the Court ruled in favor of PASE finding “clear and convincing evidence” warranting the full post-judgment relief sought. The Court’s order stated, “If Oxbow has or believes that it has an actual or potential pollution problem, Oxbow is required under the Judgment and Arbitration Award to address the problem. That has already been judicially determined. Shutting off the delivery of waste heat to PASE’s boilers and keeping PASE from operating, selling steam, and generating heat payments that may be offset to collect its judgment are not actions consistent with the terms of the Arbitration Award and Judgment, particularly when Oxbow continues to operate all of its kilns.”
The Court’s ruling further stated “… this Court is troubled that Oxbow’s avoidance of satisfaction of the judgment is being justified as necessary for Oxbow to avoid detection of the SO2 pollution levels at the TCEQ monitor while Oxbow simply discharges the same pollution to another location.”
“This is a huge victory for PASE and the citizens of Jefferson County,” Zona Jones, one of the attorneys representing PASE, said. “The Court’s ruling will help pave the way for PASE to begin collecting its judgment against Oxbow and result in Oxbow having to take the appropriate measures to control its SO2 emissions by installing proper pollution control devices at its facility.”
In 2011, PASE won an arbitration ruling against Oxbow wherein the panel determined that Oxbow “fostered a culture that repeatedly interrupted or reduced delivery of maximum flue gas energy to PASE” via the dedicated kilns. The arbitration panel ruled PASE could recover the $3.4 million in damages through heat payments from future operations of the steam plant.
Following an appeal to the Texas Supreme Court, the arbitration award was confirmed in a 2015 judgment. After the judgment was entered, Oxbow reduced and ultimately stopped its delivery of flue gas to PASE from its three dedicated kilns. This kept PASE from collecting on its judgment and forced them out of operation. At the same time, Oxbow continued to operate all of its kilns, bypassing PASE and discharging all flue gas directly into the atmosphere through its own hot stacks.
The Court has appointed Pat Zummo of the Law Offices of Patrick Zummo (Houston & Beaumont) as a receiver to ensure Oxbow complies with the full requirements of the Post-Judgment Order.
According to the Court’s ruling, Oxbow has ten business days from the date of the Order to resume delivery of flue gas to PASE from Oxbow’s operation of the three dedicated kilns. Oxbow has filed a Notice of Appeal and an Emergency Motion for Stay Pending Appeal with the 9th Court of Appeals in Beaumont relating to the Order Granting Post-Judgment Turnover Relief signed by Judge Floyd.
PASE is represented by Loyd Neal & Jim Dunn of Dunn & Neal LLP in Houston along with Jones of Harrison Davis Steakley Morrison Jones (Beaumont and Waco).
Oxbow is represented by Michael S Goldberg & Kevin T Jacobs of Baker Botts LLP (Houston) along with Guy N Goodson & Toby F Nash of Germer PLLC (Beaumont).