January 18, 2014
California, Montana

State court to hear suit between wind farm owner and energy company

Wind farm, utility will argue over birds, contract in state court | Written by Karl Puckett, Tribune Staff Writer | Great Falls Tribune | Jan. 17, 2014 | www.greatfallstribune.com

A breach of contract lawsuit brought by NaturEner, the owner of Montana’s largest wind farm, against San Diego Gas and Electric, which is buying the power, will be heard in state court, a federal judge in Great Falls has ruled.

The case centers on whether NaturEner USA is doing enough at the wind farm to protect raptors. The San Franciso-based company says it is. San Diego Gas and Electric, which is buying power from NaturEner, says it isn’t and wants out of the contract.

SDG&E wanted the case heard in federal court because federal laws and rules will come up in arguments over whether bird protection provisions in the contract are being met. NaturEner argued the case involves breach of contract and that state laws apply.

“It’s really a matter of state law,” said NaturEner spokesman Patrick Ferguson, adding the company is pleased the issue will be heard in state court. “The issue is the interpretation of the contract.”

In a ruling filed Wednesday in federal court in Great Falls, U.S. District Judge Brian Morris said potential federal issues that might be raised over bird protections are not sufficient grounds to remove the NaturEner’s lawsuit against SDG&E from state district court, where the lawsuit was originally filed in December.

“Accordingly, this case should be decided in state court, rather than in federal court,” Morris wrote in his order.

“We are confident in the merits of our case,” SDG&E spokeswoman Jennifer Ramp said.

NaturEner, owner of 189-megawatt Rim Rock Wind Farm, filed a lawsuit against SDG&E in December alleging breach of contract after the SDGE notified NaturEner it was breaking a contract to buy power from the wind farm for 20 years.

Besides purchasing electricity, SDG&E agreed to invest $300 million in the wind farm, if provisions of the contract were met.

A day before NaturEner filed its lawsuit in Montana, SDGE filed its own suit against NaturEner in San Diego Superior Court asking that the court uphold its decision to terminate the contract. It says NaturEner did not meet its obligations in regard to avian protections.

SDG&E alleges that NaturEner misrepresented the risks of the wind farm to birds in order to secure financing for the project and did not meet conditions set forth in the contract related to avian protection. For example, SDG&E’s lawsuit alleges, NaturEner assured SDG&E that an eagle take permit would not be required for the project, and that it wasn’t recommended by the U.S. Fish and Wildlife Service. It also accuses NaturEner of insisting that SDG&E officials not participate in meetings NaturEner had with U.S. Fish and Wildlife Service regarding the project.

The wind farm is located in a well-known raptor area. Bald and golden eagles and migratory birds are protected by federal laws. Without a take permit, a take of a protected species is a violation of federal law.

For it’s part, NaturEner is arguing in the Montana lawsuit that it’s meeting bird-related provisions in the contract and that its avian protections are state-of-the-art. It says SDG&E has buyer’s remorse and wants out of the contract to purchase less expensive renewable energy elsewhere because prices have dropped. It’s seeking a temporary restraining order to block SDG&E from breaking the contract.

SGG&E sought to remove the Toole County case to federal court in Great Falls, arguing that federal bird laws such as the Bald and Golden Eagle Protection Act would be discussed when the parties addressed whether NaturEner fulfilled its contractual obligations. Whether NaturEner’s bat and bird protection plan complies with U.S. Fish and Wildlife Service Guidelines also is at issue.

Even if federal law is discussed, however, the federal issues raised by SDG&E are “merely collateral and incidental to a claim that is based primarily in state law” and do not justify removal to federal court, Morris wrote in his decision.

NaturEner spokesman Ferguson said the company is asking the Toole County court for a temporary restraining order to stop SDG&E from ending the contract and an expedited motions schedule.

SDG&E is a regulated public utility that provides energy service to 3.4 million consumers through 1.4 million electric meters and 861,000 natural gas meters in San Diego and southern Orange counties.

Spain-based NaturEner develops wind farms and operates three wind energy projects Montana.

SDG&E has filed a motion in Toole County for a substitute judge for District Judge Robert G. Olson, hears cases in Glacier, Toole, Pondera and Teton counties.