Montana is the proper venue to hear a breach of contract lawsuit involving a California utility and the owner of a wind farm in Montana in which raptor protections are front and center, a Montana district judge has ruled.
The case, being heard in Park County, involves NaturEner, the owner of Rim Rock wind farm in Glacier and Toole counties in Montana, and San Diego Gas & Electric, which is purchasing renewable energy credits from the 189-megawatt, 126-turbine facility.
SDG&E filed a lawsuit Dec. 19 in California Superior Court seeking to terminate the power purchase and investment contracts alleging NaturEner did not meet avian protections called for in the contracts.
Late last month, it filed an amended complaint alleging NaturEner fraudulently concealed that federal wildlife officials recommend an eagle take permit.
On Dec. 20, the day after SDG&E filed its lawsuit in California, NaturEner filed a breach of contract lawsuit in Toole County, Montana against SDG&E. It claimed SDG&E had buyer’s remorse and wanted out of the contract to purchase less expensive renewable energy elsewhere because prices have dropped. It says it has met all of the avian conditions in the contracts and has state-of-the-art bird protections in place.
SDG&E later sought to have the Montana case dismissed on several grounds, including lack of jurisdiction, improper venue and breach of implied covenant of good faith and fair dealing.
On Friday, District Judge Brenda Gilbert denied that motion, meaning the Montana lawsuit will proceed, and rejected SDG&E’s improper venue and lack of jurisdiction claims.
“SDG&E entered into two multimillion contracts related to Rim Rock wind farm in Montana; negotiated contractual provisions related to Montana wildlife living near Rim Rock; and sent representatives to conduct due diligence on Rim Rock,” Gilbert wrote in her order. “If SDG&E were permitted to terminate the relevant contracts, Montana residents, workers and landowners will be among those harmed. Montana therefore has a substantial interest in the outcome of this case – an interest that is, in fact much stronger than California’s.”
Gilbert also granted NaturEner’s application for a preliminary injunction, which requires SDG&E to continue making monthly payments to NaturEner for the renewable energy credits under the power purchase agreement. A temporary restraining order requiring payments was previously granted.
“We’re grateful that Judge Gilbert is requiring San Diego Gas & Electric to continue to honor its contractual commitment until the legal dispute is resolved,” said Derek Denniston, vice president of business development at San Francisco-based NaturEner USA and NaturEner Canada.
“We’re still confident in the merits of the case and we’re reviewing all options at this time,” SDG&E spokeswoman Jennifer Ramp said of the ruling.
NaturEner also filed a motion Tuesday in California Superior Court asking for a stay of SDG&E’s lawsuit pending the resolution of the Montana case, Denniston said.
The parties signed power purchase agreement in January 2012.
Under the agreement, SDG&E agreed to purchase renewable energy credits generated at Rim Rock for 20 years. A second agreement required SDG&E to make an equity investment of $285 million to help finance construction of the wind farm.
The contracts also required NaturEner to undertake measures to protect birds and other avian species.
Rim Rock is located on the Kevin Rim, which has the highest density of Ferruginous hawks in Montana and several other species of raptor including federally protected golden eagles.
SDG&E sought a substitute judge after NaturEner filed its Montana lawsuit in Toole County, where the wind farm is located, and the case is now being heard by Gilbert in Park County.
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