City of Farmington goes to court seeking to enforce SJGS facility takeover rights
FARMINGTON – Just days after declaring its intent to force the transfer of the San Juan Generating Station away from the facility’s other owners the City of Farmington filed a complaint in the state’s 11th Judicial District Court seeking relief on the grounds that the plant’s closure would “threaten Farmington with imminent irreparable harm.”
“With unanimous support from the Mayor and Council, the City of Farmington today filed a Complaint for Declaratory Judgment and Coercive Relief against Public Service (sic) of New Mexico (PNM) and other co-owners of the San Juan Generating Station (SJGS),” the city stated Sept. 21 in a news release titled “Mayor and Council Go to Mat to Save Local Jobs at SJGS.”
The complaint, in part, seeks an injunction against PNM taking any actions like invalidating environmental permits or selling valuable equipment that could render the facility inoperable. The suit does not seek to stop PNM from shutting the station down on Sept. 30.
The filing also seeks to hold SJGS owners to a 2017 exit agreement the city contends mandates negotiations to transfer assets at no cost while parties exiting the power station agreement remain responsible for “historic liabilities” signers of the exit agreement agreed to cover.
Dispute centers on 2017 exit agreement's terms
While negotiating with Enchant Energy, the city’s partner in a plan to keep the facility running and install carbon capture technology, Farmington argues the defendants tried to change the rules in violation of the 2017 exit agreement known as NEDA.
Farmington’s filing contends that the owners sought financial assurances that were not part of the 2017 exit agreement and sought “a clean break from all liabilities, even though NEDA requires defendants to maintain historic liabilities even after the conveyance to Farmington is completed.”
“PNM has not yet been served with the City of Farmington’s request for relief so we are not able to comment on the filing," Raymond Sandoval, director of corporate communications for the Public Service Company of New Mexico (PNM), said in response to the city's statements. "What we can say, is that It's disappointing that Farmington, days before the closure of the San Juan Generating Station, is now trying to force a transfer without meeting the threshold legal and financial requirements for a valid transfer proposal."
"For more than four years, the current and former owners have devoted time and resources to working in good faith with the city of Farmington and Enchant," Sandoval said via email Sept. 21. "PNM has a legal responsibility to ensure no additional liability is taken on for customers. Neither Farmington nor Enchant has provided adequate assurances to the co-owners that their transfer proposal comes with appropriate protections and financial soundness."
"PNM as the operating partner has cooperated with Farmington over the past several years by responses to numerous data requests, hosting tours for multiple potential developers, plant testing as requested, access and input for engineering studies, and countless time set aside for discussions, as well as reviewing site repurposing potentials," Sandoval continued. "Despite these extensive efforts by the current and former owners, Farmington and Enchant have failed to address the fundamental threshold issues required by ownership agreement for a valid transfer proposal.”
Sandoval said shutdown procedures continue at the coal-fired station, where one unit is operational.
"PNM has about 100 employees remaining at the plant. Approximately half of these employees will be laid off September 29th," Sandoval said. "The remaining employees are anticipated to be laid off later October after the plant has been safely shutdown and immediate actions necessary to secure the site are completed."
He said about 48 employees will stay at the plant through mid-October "for safe shutdown of the last unit and then around 10 employees will remain onsite for activities such as continued running of the switchyard, managing inventory reduction, closing down computer systems, and decommissioning."
After the plant is shuttered, a San Juan County ordinance requires PMN to file a demolition plan "within 3 months of permanent plant closure," he said.
In related news, Westmoreland San Juan Mining LLC announced earlier this month that that its "underground crews have mined the last ton of coal destined for the San Juan Generating Station."
"Beginning as a surface mining operation in 1973 when Unit 1 of the San Juan Generating Station came online, the San Juan and La Plata mines have been the sole supplier of coal to the San Juan Generating Station for nearly five decades," Westmoreland said in a news release Sept. 13.
In the city's filing for a temporary restraining order the city seeks to ensure the plant will be left in working order.
"Immediate injunctive relief is necessary because the decommissioning process is underway, and Defendants intend to make the shutdown of the San Juan Project permanent," the filing stated. "Farmington is now at a point of no return. Absent injunctive relief, it will be impossible or nearly so to start the plant up again because Defendants are likely to take irreversible actions."
The city also filed a motion for an expedited hearing before Judge Bradford J. Dalley. No date had been set as of the morning of Sept. 22, according to online court documents.
Farmington's mayor says carbon capture is the way to go
Farmington’s officials are keeping their focus on saving the plant, and restarting it with technology that will cut down on pollution.
“For a region already facing economic challenges, doing everything in our power to keep SJGS open with carbon capture is a no-brainer,” Farmington Mayor Nate Duckett said in the city’s release. “The prosperity and futures of our children and families are at stake. Our community helped the other owners of SJGS provide low-cost power to their customers and healthy rates of return for their shareholders for decades."
The city's release said keeping the station open with carbon capture technology added "is a WIN for climate. It is also a WIN for the regional community by preserving and expanding jobs, increasing tax revenues for schools, and creating future career paths as New Mexico emerges as a national pioneer in carbon capture technology."
"Our community surely deserves more than PNM and the other owners playing hide-the-ball with these negotiations," Duckett said. " We go to the mat for our community – and, unfortunately, the actions of PNM and the other exiting owners are forcing us to enforce our rights by initiating litigation to do just that.”
Injunction or decree sought
“The facts and circumstances threaten Farmington with imminent irreparable harm that necessitates a declaration of Farmington’s rights and Defendants’ obligations under the 2017 agreement and requires coercive relief in the form of an injunction or decree compelling Defendants to specifically perform their contractual obligations.” the Complaint for Declaratory Judgment and Coercive Relief states in part.
“At a minimum, Farmington claims that the 2017 agreement requires Defendants [PNM and the other exiting owners] to negotiate the conveyance of their interests in a manner that is consistent with the terms of the 2017 agreement and that assures San Juan Generating Station’s continued successful operation, which Defendants have failed and refused to do,” the filing states. “Instead, in August 2022, Defendants terminated any negotiations, and they have since declared their intention to close the San Juan Generating Station beginning in September 2022.”
The defendants are Public Service Company of New Mexico, Tucson Electric Power Company, the County of Los Alamos, New Mexico and Utah Associated Municipal Power Systems.