FERC v. MacDonald

• Decision Date: 30 March 1994
• Docket Number: Civ. No. 90-530-B.
• Parties: FEDERAL ENERGY REGULATORY COMMISSION v. Winslow H. MACDONALD.
• Court: U.S. District Court — District of New Hampshire

862 F. Supp. 667

FEDERAL ENERGY REGULATORY COMMISSION
v.
Winslow H. MACDONALD.

Civ. No. 90-530-B.

United States District Court, D. New Hampshire.

March 30, 1994.

862 F. Supp. 668

COPYRIGHT MATERIAL OMITTED

862 F. Supp. 669

Nancy E. Hart, Patrick M. Walsh, Asst. U.S. Attys., Elaine Marzetta Lacy, U.S. Attorney's Office, Concord, NH, Demetra Economos Anas, F.E.R.C., Washington, DC, for plaintiff

Daniel W. Allegretti, Brown, Olson & Wilson, PC, Concord, NH, for defendant.

ORDER

BARBADORO, District Judge.

This is a civil action brought by the Federal Energy Regulatory Commission ("FERC" or "Commission") seeking declaratory relief and a civil penalty against Winslow H. MacDonald for his alleged failure to comply with certain terms and conditions of a hydroelectric power license issued by FERC.

Presently before the court are defendant's Motion for Summary Judgment or in the Alternative for Partial Summary Judgment (document 32), and the plaintiff's Motion for Summary Judgment (document 37).¹

I. FACTS²

1. Venue and jurisdiction for this case exist in the United States District Court for the District of New Hampshire.

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2. Plaintiff, FERC is an independent agency of the United States with authority to license and regulate hydroelectric generating facilities. The Commission brings this action pursuant to the authority conferred by the Federal Power Act (the Act).

3. Defendant, Winslow H. MacDonald, trustee of the Milford Elm Street Trust, is the licensee of a hydroelectric generating facility located on the Souhegan River in Hillsborough County, New Hampshire that is known as the Pine Valley Project (Project). MacDonald is being sued in his capacity as licensee. The Milford Elm Street Trust has been the owner of the Project since 1979.

4. Mr. David Blackmer is the sole beneficiary of the Milford Elm Street Trust. Mr. Blackmer is also the owner and president of a construction company known as Earthworks, Inc., which performed all of the work at the Project in 1987 and 1988. Mr. Blackmer was acting on behalf of the defendant for all work at the Project described below.

5. The Commission has five regional offices and each one is headed by a Regional Director, who was formerly called a Regional Engineer. The Commission's New York Regional Office ("NYRO") is responsible for overseeing work on hydroelectric projects in 12 states, including New Hampshire. The NYRO's duties include inspecting hydroelectric projects for adequate construction and operation, and monitoring projects for compliance with licensing requirements and safety regulations. The NYRO monitors the Project.

6. Mr. James Wing is a civil engineer with the NYRO. In 1987 and 1988, Mr. Wing was assigned to and was responsible for inspecting hydroelectric projects in New Hampshire, including the Project. Mr. Wing's supervisors at that time were Mr. Martin Inwald, the NYRO Regional Director (also known as the Regional Engineer) and Charles Goggins, a supervisory Civil Engineer in the NYRO. Mr. Wing did not see or inspect the Project until about September 1989, after all work at issue in this proceeding had been completed.

7. The New Hampshire Water Resources (WRB) issued an order to defendant on October 29, 1979 requiring him to make certain designated structural repairs to the dam within two years. This 1979 WRB order is the only order issued by the state of New Hampshire that required construction work at the Pine Valley Project from 1979 until after November 23, 1988.

8. When defendant filed the application with FERC for the Project license in 1985, the Project was not then generating power and had not generated power since 1977. At the time of the license application, the Project consisted primarily of the following elements: a 200-foot long, 23-foot high concrete, stone, and masonry dam; a reservoir with a surface area of about five acres; a 42' × 38' wooden gatehouse; a 2,700-foot long power canal; and a powerhouse located in a former mill building, containing a generating unit with a capacity of 525 kilowatts.

9. The license application contained, inter alia, Exhibit A which identified the existing facilities at the Pine Valley Project and described proposed installations, dam improvement, completion of work to install steel penstock pipe in the existing lower canal, and installation of a "suitable lowhead turbine generator" at the dam site. By 1982, a substantial portion of the 96-inch diameter penstock pipe had been installed in the canal and buried. The license application stated that portions of the penstock near the dam and under a railroad trestle had not been installed. The penstock carries water from the dam to the powerhouse. Exhibit A specifically described past and future penstock work and all work proposed for the Project. The license application also contained Exhibits F-1 through F-6 and Exhibits G and G-2, which included site plans, maps and drawings of the Project. These Exhibits showed the existing facilities at the Pine Valley Project, as well as work defendant proposed to do after the Commission issued a license for the Project.

10. On October 16, 1987, FERC issued a license to defendant for the Pine Valley Project. The license is set forth at 41 FERC ¶ 62,049 (1987). The license is subject to the terms of the Act, which is incorporated by reference as part of the license, as well as

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the Commission's regulations found in 18 C.F.R. Part 12

11. On or about November 24, 1987, Martin Inwald sent, and defendant received, a letter directing defendant's attention to Articles 4, 301, 302 and 303 of his license. This letter repeated some of the defendant's obligations that are also contained in the license and the FERC regulations.

12. Defendant completed the installation of the penstock by placing lengths of pipe in the power canal next to the gatehouse and under the railroad trestle between approximately October 28, 1987 and December 15, 1987. The work involved excavation and grading, placing drain pipes in the canal, banding and bolting the final sections of the pipe together, backfilling around the pipe, covering the pipe with geotextile material, and covering it to grade with fill. Defendant installed the 6-foot diameter penstock under the railroad trestle using two concrete junction boxes that allowed for a transition from a single 96-inch diameter pipe leading up to the railroad track to two parallel six-foot diameter pipes running underneath the tract and back to the 96-inch diameter pipe on the other side. The use of the parallel six-foot diameter pipes was to avoid major excavation and/or the removal of a portion of the railroad track.

13. The sections of the 96-inch diameter penstock pipe installed at the Project in 1987 were 20-feet long and weighed 5,000 pounds each. In order to move sections of penstock into position, defendant used heavy equipment such as a front end loader and an excavator.

14. On or about October 4, 1988, defendant began work along the left bank of the river, immediately downstream of the dam. Defendant excavated an area that was approximately 25 feet by 45 feet and 12 feet deep. The excavated area included land along the river bank and land from the river bed. After defendant finished digging, he placed gravel and then poured a concrete slab in the excavation, leaving a cavity in the slab to accommodate future installation of a draft tube for a low-flow generator.

15. Defendant built a temporary structure to divert water from the excavation area and employed pumps to remove water that accumulated in that work area. The diversion structure was an embankment consisting of rocks and gravel excavated from the river bed, about 20-25 feet wide at its base, approximately 60 feet long, with an average height of 4-6 feet. Mr. Steven Paro, an Earthworks employee, placed the excavation materials in the river, parallel to the direction of flow. Mr. Michael Young, Sr., another Earthworks employee, supervised Mr. Paro's work. Placement of the excavation material was at Mr. Blackmer's direction. This embankment narrowed the channel of the Souhegan River and was intended to help reduce the amount of water in the excavation area in order to provide a dry area for the workers. The embankment connected to the bank downstream of the excavation to prevent back flow of water into the excavation work area.

16. The drawing made by Mr. Blackmer at his deposition in January 9, 1992, accurately depicts an aerial view of the embankment defendant placed at the Pine Valley Project in October and November, 1988.

17. Defendant began generating power at the Pine Valley Project on March 28, 1988. Defendant generated approximately 727,680 kilowatt hours of electric power and received gross revenues of approximately $60,217 from the time he commenced operations in March until November 23, 1988. Defendant sold this power to Public Service Company of New Hampshire.

18. On or about November 21, 1988, David Blackmer received a telephone call from James Wing of the NYRO. When Mr. Blackmer described the status of the work, Mr. Wing ordered him to cease and desist all work. Defendant ceased work at the Project in compliance with this order. This telephone conversation was followed up by a letter from Martin Inwald to defendant, dated November 23, 1988, which also directed defendant to file a report detailing the work performed and to submit a schedule for compliance with license Articles 302 and 303.

19. The Commission issued a notice of Proposed Penalty (Notice), dated February

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14, 1990, proposing a civil penalty to defendant in the amount of $100,000 for his allegedly violating FERC regulations at 18 C.F.R. § 12.23

20. On March 21, 1990, defendant replied to the Notice by filing with the Commission a Notification of Election and Answer (Answer). Defendant's response denied the allegations and elected district court review of any penalty that ultimately might be...