City drops San Juan Generating Station lawsuit in favor of arbitration

FARMINGTON – The City of Farmington filed a document on Oct. 6 dismissing its lawsuit against the owners of the San Juan Generating Station in favor of using an arbitration process to seek the transfer of the now-closed power plant to the city.

"The city's efforts are ongoing,” Farmington City Attorney Jennifer Breakell said Oct. 7 via email. “The lawsuit has been dismissed and we will be entering into arbitration as allowed under the contract."

On Sept. 21 the City of Farmington filed a lawsuit in state court seeking a temporary restraining order against any decommissioning work at the power plant that could permanently prevent it from being restarted if the city takes it over.

The city also sought to keep the operator from abandoning air quality permits needed to run the plant, and to jumpstart negotiations on a plant takeover.

Defendants file to move Farmington's SJGS lawsuit to federal court

In related court documents, attorneys for the defendants also indicated they asked for arbitration, and seek a finding that the city has no right to take over the plant. The defendants are Public Service Company of New Mexico (PNM), the Incorporated County of Los Alamos, New Mexico, Utah Associated Municipal Power Systems, and Tucson Electric Power Company.

The facility’s former operator is PNM, which is in charge of decommissioning activities that spurred the city’s request for a temporary restraining order.

“Farmington has agreed to voluntarily dismiss their lawsuit and asked for arbitration under the now expired SJGS exit agreement,” said PNM’s Director of Corporate Communications and Brand Management Raymond Sandoval. “The arbitration process has been available to Farmington for the past four years and they only chose to exercise it at a time when the mine has closed, employees have been laid off, and the plant has already ceased operations.”.

Legal maneuvers continue

The case dismissal and a request by the city for emergency arbitration are part of a string of court actions Farmington‘s attorneys have filed aimed at starting an arbitration process.

“Farmington is filing this Notice of Voluntarily Dismissal Without Prejudice because this Court lacks appropriate subject matter jurisdiction and cannot issue an effective Order enjoining Defendants’ actions which are continuing to have an immediate irreparable harm on Farmington, and Farmington intends to seek the relief it needs in the pending arbitration,” its filing in federal court Oct. 6 states in part.

Power struggle: Farmington vows to get ownership of San Juan Generating Station

The city, which last week stated it would oppose the move by the plant owners to move the case to federal court instead of the state court selected by the city, reserved its right to refile.

“In dismissing this action without prejudice pursuant to Rule 41(a)(1), Farmington does not waive and expressly reserves its rights to re-file its claims in a court of competent jurisdiction, including without limitation should relief sought be unavailable in the arbitration forum,” the filing states.

The city also reserved the right to challenge federal jurisdiction over the matter if necessary in the future.

On Oct. 5 the city’s legal team filed a request for emergency relief with the American Arbitration Association requesting the immediate appointment of an emergency arbitrator and emergency relief” under the association’s rules.

“As set forth in the accompanying documents, emergency relief is required to prevent Respondents from engaging in actions that would result in the irreversible shutdown of the San Juan Generating Station in violation of Farmington's contractual rights to have ownership of that station transferred to it, causing Farmington immediate irreparable harm and undermining the Tribunal’s ability to render a meaningful final award” to the city.

Legal bills keep accruing

Critics of the city’s fight to take over the power station with its partner Enchant Energy cite the costs of litigation as well as environmental concerns as reasons they oppose the plan.

Farmington acknowledged last week that the cost of litigation over the course of the city’s efforts to take over the plant has reached the $2 million mark.

City of Farmington goes to court seeking to enforce SJGS facility takeover rights

The website NM Political Report, after going over invoices gathered through an open records act request, put the sum last week at $2.2 million.

“As Four Corners residents, we want to see the negotiated replacement power, solar and energy storage, and we want the ETA implementation money to go to the impacted coal workers and communities,” Mike Eisenfeld of San Juan Citizens Alliance said last week in a joint release about the plant’s closure coordinated by Boulder, Colorado-based Western Resource Advocates.

“Enchant Energy has been disingenuous and unaccountable on the progress of their project, which joins a long list of failed carbon-capture and sequestration projects funded through the Department of Energy,” Eisenfeld continued. “City of Farmington has expended nearly $2 million in legal fees supporting Enchant’s failed project with timelines now extending to 2027. We’re looking at the immediate need for past and current owners to carry out their decommissioning and reclamation responsibilities within 90 days of SJGS and San Juan Mine closure.”