Bill Text: TX HCR117 | 2017-2018 | 85th Legislature | Introduced
Bill Title: Granting Sumitomo Mitsui Banking Corporation, as collateral agent for certain secured lenders and other entities, some of which are headquartered or incorporated in Texas, permission to sue the Lower Colorado River Authority.
Spectrum: Partisan Bill (Republican 1-0)
Status: (Introduced - Dead) 2017-05-02 - Left pending in committee [HCR117 Detail]
Download: Texas-2017-HCR117-Introduced.html
85R11582 WBL-F | ||
By: Lozano | H.C.R. No. 117 |
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WHEREAS, Sumitomo Mitsui Banking Corporation, as collateral | ||
agent for certain secured lenders and other entities, some of which | ||
are headquartered or incorporated in Texas, alleges that: | ||
(1) Papalote Creek Wind Farm II, LLC, built, owns, and | ||
operates a wind farm that generates electricity in San Patricio | ||
County, Texas, on land leased from many San Patricio County | ||
landowners; | ||
(2) before Papalote Creek Wind Farm II, LLC, | ||
constructed the San Patricio wind farm, Papalote Creek Wind Farm | ||
II, LLC, and the Lower Colorado River Authority, a conservation and | ||
reclamation district created by Chapter 7 (S.B. 2), Acts of the 43rd | ||
Legislature, 4th Called Session, 1934, now codified as Chapter | ||
8503, Special District Local Laws Code, executed a power purchase | ||
agreement, under which Papalote Creek Wind Farm II, LLC, agreed to | ||
sell and the authority agreed to take and pay for all of the San | ||
Patricio wind farm's power generation; | ||
(3) under the power purchase agreement's terms: | ||
(A) the Lower Colorado River Authority promised | ||
to purchase at a set price all of the wind-generated power from the | ||
San Patricio wind farm during an 18 year term in accordance with the | ||
power purchase agreement; and | ||
(B) the Lower Colorado River Authority is | ||
required to pay Papalote Creek Wind Farm II, LLC, damages if the | ||
authority fails to meet the authority's purchasing obligations | ||
under the power purchase agreement; | ||
(4) the Lower Colorado River Authority's promises to | ||
buy electricity or pay damages were crucial to the San Patricio wind | ||
farm's viability, and Papalote Creek Wind Farm II, LLC, built the | ||
San Patricio wind farm in reliance on those promises; | ||
(5) in 2013, Papalote Creek Wind Farm II, LLC, sought | ||
financing from secured lenders and other entities for which | ||
Sumitomo Mitsui Banking Corporation serves as collateral and | ||
administrative agent; | ||
(6) the Lower Colorado River Authority's long-term | ||
power purchase agreement commitments to Papalote Creek Wind Farm | ||
II, LLC, were important to the financing and payment of the | ||
obligations of Papalote Creek Wind Farm II, LLC, to Sumitomo Mitsui | ||
Banking Corporation and the other secured lenders and required | ||
that: | ||
(A) Papalote Creek Wind Farm II, LLC, assign its | ||
rights under the power purchase agreement to Sumitomo Mitsui | ||
Banking Corporation as collateral for the financing; and | ||
(B) the Lower Colorado River Authority make | ||
related agreements to ensure the authority's continued performance | ||
under the power purchase agreement in the event of the occurrence | ||
and continuance of an event of default under the financing; | ||
(7) Papalote Creek Wind Farm II, LLC, Sumitomo Mitsui | ||
Banking Corporation, and the Lower Colorado River Authority | ||
executed the consent to assignment of the rights under the power | ||
purchase agreement, and the authority's obligations under the power | ||
purchase agreement were crucial to Sumitomo Mitsui Banking | ||
Corporation's financing of Papalote Creek Wind Farm II, LLC; | ||
(8) the consent to assignment of power purchase | ||
agreement grants Sumitomo Mitsui Banking Corporation the right to | ||
compel the Lower Colorado River Authority to specifically perform | ||
its obligations under the power purchase agreement and prohibits | ||
the authority from modifying the power purchase agreement without | ||
Sumitomo Mitsui Banking Corporation's prior written consent; | ||
(9) the Lower Colorado River Authority has breached | ||
the consent to assignment of power purchase agreement by: | ||
(A) modifying the power purchase agreement | ||
without Sumitomo Mitsui Banking Corporation's prior written | ||
consent through a separate arbitration to which Sumitomo Mitsui | ||
Banking Corporation was not a party; and | ||
(B) ceasing performance under the power purchase | ||
agreement, in violation of the consent to assignment provision that | ||
the Lower Colorado River Authority must continue to specifically | ||
perform its obligations under the power purchase agreement when | ||
directed to do so by Sumitomo Mitsui Banking Corporation; | ||
(10) the consent to assignment of power purchase | ||
agreement grants Sumitomo Mitsui Banking Corporation the right to | ||
compel the Lower Colorado River Authority to specifically perform | ||
the authority's obligations under the power purchase agreement, and | ||
provides that if the corporation notifies the authority in writing | ||
that an event of default has occurred and is continuing, and | ||
requests that the authority continue performance under the power | ||
purchase agreement, the authority must perform under the power | ||
purchase agreement in accordance with the terms of that agreement; | ||
(11) Sumitomo Mitsui Banking Corporation has: | ||
(A) notified the Lower Colorado River Authority | ||
in writing that an event of default has occurred and is continuing; | ||
and | ||
(B) requested continued performance of the power | ||
purchase agreement by the Lower Colorado River Authority; | ||
(12) Section 20 of the consent to assignment of power | ||
purchase agreement further provides: "This Consent does not confer | ||
any additional rights or obligations from the Consenting Party to | ||
the Assignor or the Assignee other than those contained in this | ||
Consent. THE PARTIES AGREE TO SEEK SPECIFIC PERFORMANCE AS THE SOLE | ||
AND EXCLUSIVE REMEDY FOR ANY AND ALL CLAIMS ARISING FROM THIS | ||
CONSENT AGREEMENT. THE PARTIES' REMEDIES UNDER THIS CONSENT ARE | ||
LIMITED TO SPECIFIC PERFORMANCE ONLY AND THE PARTIES AGREE THAT | ||
THEY WILL NOT SEEK DAMAGES OR ANY OTHER REMEDIES AT EQUITY OR LAW."; | ||
(13) the purpose of the consent to assignment of power | ||
purchase agreement entered into by the Lower Colorado River | ||
Authority was to facilitate the financing arrangements of Papalote | ||
Creek Wind Farm II, LLC, by further guaranteeing that the authority | ||
would continue to buy power throughout the term of the power | ||
purchase agreement; | ||
(14) Sumitomo Mitsui Banking Corporation and the | ||
secured lenders relied on the Lower Colorado River Authority's | ||
agreements and obligations as set forth in the consent to | ||
assignment of power purchase agreement in connection with the | ||
financing, including the authority's consent and agreement to the | ||
bringing of a specific performance action against the authority | ||
with respect to the enforcement of the rights of Sumitomo Mitsui | ||
Banking Corporation and the secured lenders under the consent to | ||
assignment of power purchase agreement; | ||
(15) the Lower Colorado River Authority has asserted | ||
that it is immune from suit for breach of the consent to assignment | ||
of power purchase agreement; | ||
(16) the Lower Colorado River Authority's position is | ||
legally erroneous under Texas law; | ||
(17) Sumitomo Mitsui Banking Corporation seeks to | ||
enforce the rights granted to it under the consent to assignment of | ||
power purchase agreement; | ||
(18) Sumitomo Mitsui Banking Corporation does not seek | ||
authorization or permission to join any other agency or institution | ||
of the State of Texas in any other lawsuit; and | ||
(19) Sumitomo Mitsui Banking Corporation is not | ||
seeking the recovery of monetary damages from the State of Texas, | ||
but only the ability to fully litigate and obtain relief against the | ||
Lower Colorado River Authority; now, therefore, be it | ||
RESOLVED by the Legislature of the State of Texas, That | ||
Sumitomo Mitsui Banking Corporation, as collateral agent for | ||
certain secured lenders, is granted permission to sue the Lower | ||
Colorado River Authority subject to Chapter 107, Civil Practice and | ||
Remedies Code; and, be it further | ||
RESOLVED, That the suit authorized by this resolution may be | ||
brought in San Patricio or Travis County; and, be it further | ||
RESOLVED, That the attorney general, the general manager of | ||
the Lower Colorado River Authority, and the presiding officer of | ||
the board of directors of the Lower Colorado River Authority be | ||
served process as provided by Section 107.002(a)(3), Civil Practice | ||
and Remedies Code. |