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United States v. Pend Oreille County Pub. Util. Dist. No. 1

Citation: 28 ELR 20555
(01/28/1998)

The court affirms a district court's award of trespass damages to the Kalispel Tribe under the Federal Power Act (FPA) for the flooding of tribal lands by an electric utility's construction and operation of the Box Canyon dam in Washington. The court first holds that the district court was bound to use the power site formula to determine the amount of damages. In a prior opinion, the court rejected the district court's use of the grazing value of the land and specifically directed that, on remand, the district court use the value of the tribal lands as part of the power project. While regulation or case law does not compel the use of the formula, it is the most acceptable measure of damages for the utility's trespass. The court next holds that it was not clear error for the district court to choose the cost of buying extra power from the Bonneville Power Administration (BPA) as the measure for the cost of alternative power. Given the flexibility the Federal Energy Regulatory Commission (FERC) has identified in determining power site value and the FPA's requirement that charges be reasonable, it was not clearly erroneous to choose this measure of alternative cost. Further, in a prior case FERC appears to have allowed a similar measure of alternative costs when it accepted the BPA's power rates under an existing contract as a measure of the alternative cost of energy to meet the plant's peaking capacity. Although the charge in the case at hand is much lower than the annual charge for the project at issue in the prior case before FERC, the rationale adopted by the district court, that the tribal land was incremental to the project and to its production of electricity, is a reasonable basis for distinguishing the cases.

The court also holds that the district court did not clearly err in allotting 40 percent rather than 50 percent of the net benefits of the incremental power generation to the flooded land. The court was required to consider all the facts in evidence regarding the unusual nature of this case. The court, therefore, did not err by taking into account that the tribe owned none of the land underlying the dam and power plant and no substantial portion of the land used for storage of water. The court then holds that the district court's finding of total acreage of tribal lands was not clearly erroneous. The district court made its findings after hearing extensive testimony and evaluating the different methods of measurement. In addition, the district court did not abuse its discretion in excluding under Federal Rule of Evidence 403 evidence supporting an alternative calculation. The district court reasonably could have concluded that introducing in rebuttal a third and much higher estimate of the percentage of tribal land would needlessly complicate the issue and unduly delay the proceeding. The court also holds that the district could did not clearly err in its evaluation of evidence that a newsprint plant might leave if utility rates increased and that the impact of that departure would be severe.

The court next holds that the district court's decision to award prejudgment interest, and the amount awarded, were not an abuse of discretion. The court also holds that the district court did not err in granting summary judgment dismissing the utility's counterclaim for condemnation. The utility cannot condemn the tribal allotted lands because the United States retains a proprietary interest in the allotted lands and it strongly opposes the utility's condemnation. The court then holds that the district court did not abuse its discretion in issuing a permanent injunction against further flooding of tribal lands or in issuing a stay of the injunction. The district court concluded that irreparable harm would not follow from dropping the reservoir to end the utility's illegal trespass. And if the utility is not in compliance with the terms of the stay, the United States and the tribe may move to lift the stay. Last, the court holds that the utility's partial easements on tribal land are not an antidote to trespass damages. The utility knew it had no right to flood the reservation land, but flooded it anyway.

[A related decision to this litigation is published at 24 ELR 21275.]

Counsel for Plaintiff
Elizabeth Peterson
Environment and Natural Resources Division
U.S. Department of Justice, Washington DC 20530
(202) 514-2000

Counsel for Defendant
Jerry Boyd
Paine, Hamblen, Coffin, Brooke & Miller
717 W. Sprague Ave., Ste. 1200, Spokane WA 99201
(509) 455-6000

Before Ferguson and Trott, JJ