Judge OKs SOBE receiver to kill appeal on gasification permit
But sanctions against CEO Ferro on hold
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YOUNGSTOWN -- A judge permitted SOBE Thermal Energy Systems LLC's receiver "to take any action necessary to dismiss" an appeal by the company's CEO, who abandoned the steam heat utility, to a state agency's decision to revoke a permit for a controversial waste gasification process.
Mahoning County Common Pleas Court Judge Anthony Donofrio on Friday granted a June 30 request by John C. Collins, SOBE's receiver, to stop David Ferro, the company's embattled CEO, from appealing the Ohio Environmental Protection Agency's June 24 decision to revoke a pyrolysis permit to convert rubber tire chips into synthetic gas at the Youngstown facility.
With Collins' Feb. 17 appointment as SOBE's receiver, Donofrio wrote he has "full and exclusive authority over all affairs of SOBE. Consequently, Mr. Ferro was stripped of this authority."
While Donofrio gave Collins the go-ahead to dismiss Ferro's appeal, the judge wrote that a request by the receiver for sanctions against Ferro will wait,
"A hearing on sanctions may be set at a later date," Donofrio wrote.
Collins on June 19 requested the EPA revoke the pyrolysis permit given to SOBE on Feb. 14, 2024, for the Youngstown facility.
In a June 24 decision, Ohio EPA Director John Logue officially revoked the permit.
That same day, Ferro appealed the ruling to the EPA though his ability to do that is highly questionable as he abandoned the financially troubled company.
Based on Logue's decision, the city of Youngstown, which filed an objection to the granting of the permit, submitted a July 21 motion to dismiss its appeal to the Environmental Review Appeals Commission. A day later, the commission dismissed the case.
Michael Moran, SOBE's court-appointed legal counsel, filed a June 30 motion on behalf of Collins with Donofrio stating Collins "made the determination that installation of that system was not feasible and that the rights were not of interest to any known prospective purchasers or operators of SOBE and its assets. Accordingly, the receiver requested that the permit be revoked pending an appeal of the approval of such permit filed by the city of Youngstown. Without any authority whatsoever, David Ferro, purporting to act on behalf of SOBE, filed an appeal of the revocation."
Before the company was put in receivership, Ferro scrapped the company's boilers and later defaulted for months on payments to a company leasing a boiler to provide steam heat. Ferro abandoned the Youngstown facility in late September after the repossession of the rented boiler was granted by a judge.
SOBE's plant was gutted in 2022 when Ferro razed the boiler house and sold the three boilers for scrap. Ferro then had the company lease a boiler, but stopped paying the monthly rental fee. The boiler was repossessed on Sept. 30, shortly after Ferro walked away from the facility. Under Ferro's leadership, SOBE failed to pay $468,000, its monthly fee on the rented boiler for about two years.
It would cost about $13 million to build back SOBE's plant, Collins said.
Ferro's proposal for pyrolysis - the gasification or combustion of tires, chipped tires and/or electronic waste - was met with significant backlash by community activists and Youngstown City Council.
Council on Nov. 19 passed its third one-year moratorium banning the process in Youngstown.
With SOBE on the verge of financial collapse, the Public Utilities Commission of Ohio on June 24 granted the company permission to impose huge emergency rate increases in an effort to keep it in business.
SOBE provides steam heat to 23 buildings, which make up most of downtown Youngstown.
For 13 of the SOBE's customers, the emergency rate increase, which took effect June 30, is 93% with two at 92%, one at 91% and two at 36%. The five other customers will pay between 64% and 80% more.
That is for the nonheating season between May and October.
Between November and April, the rate will increase by another 162% for 14 of SOBE's 23 customers. One will pay 163% more during those six months with two paying 85% more. The six others will pay increases between 123% and 159%.
Moran and Collins said if SOBE's customers pay the increases, the company will have sufficient funds to operate.
Both acknowledged there are concerns about customers paying the new rates and/or leaving the SOBE system.
In an effort to cut costs, SOBE returned two of its three rented boilers until October, which will save it about $30,000 a month.
SOBE recently settled a late gas bill with Enbridge Gas Co., which billed it $1,999,656.95 in unpaid fees, for $750,000 to be paid in $40,000 monthly installments over 18 months, beginning this month.