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News Digest

Fortnightly Magazine - January 15 2000

apply in the case of a final release of liability under a natural gas take-or-pay contract.

Thus, the court ruled that two agreements by natural gas producers to release a gas purchaser from TOP liability were enforceable, though one was deemed "unconscionable" and the other in "bad faith." El Paso Nat. Gas Co. v. Minco Oil & Gas, Inc., No. 98-0478, Nov. 18, 1999 (Tex.).

Groundwater Pumping Rights. The Arizona Supreme Court ruled that the federal doctrine of reserved water rights for Indian Reservations applies not only to surface water, but to groundwater, so that tribal rights take precedence over state law rights enjoyed by adjacent private landowners to pump groundwater on their property for "reasonable use."

It added that such federal rights of Indian Reservations are entitled to greater protection from injury from remote groundwater pumping than landowners whose groundwater rights stem from state law.

Said the court, "Under the 'reasonable use' doctrine, Arizona has consumed far more groundwater than nature can replenish. ¼ Some Indian reservations have been entirely 'dewatered' by off-reservation pumping." In re Gila River System, Nos. WC-90-0001-IR, Nov. 19, 1999 (Ariz.).

Telecom Diversification. In affirming a state PSC order, a Georgia appeals court ruled that a state-created municipal electric utility could not offer telecommunications services to the general public for compensation, despite the 1996 Federal Telecommunications Act.

The utility had sought to resell excess capacity from an internal telecommunications system that it built with funding from municipal revenue bonds. Municipal Elec. Auth. v. Georgia PSC, No. A99A1152, Nov. 16, 1999 (Ga.App.).

Transmission & ISOs

Transmission Line Construction. Wisconsin Public Service Corp. and Minnesota Power Inc. have petitioned the Wisconsin PSC for permission to build a 250-mile, 345-kilovolt electric transmission line from Wausau, Wis., to Duluth, Minn. If approved, the line would be the longest built in Wisconsin in 25 years.

A 1,400-page proposal estimates construction costs from $125 million to $175 million. About one-half of the line would be built on existing rights-of-way, with 20 percent built on public lands. The utilities noted that the line would allow them to wheel power from outside the state and connect to cheap power supplies from Manitoba hydroelectric plants.

But a local opposition group, calling itself "Save Our Unique Lands," has held rallies at the PSC and at the state capitol, and has submitted petitions against the proposed line.

Gas Pipelines

Independence Project. Though it said it was granting "conditional approval," the FERC by a 3-2 vote in effect denied a certificate of need for the Independence Pipeline and the ANR SupplyLink and MarketLink expansion projects. It cited a failure to prove market need, as most commitments for pipeline capacity had come from an affiliate formed at the last minute by project sponsors. Chairman James Hoecker said the pipeline was selling capacity "essentially to itself."

Curt Hébert dissented, calling the order a "crushing blow." Dissenter Vicky Bailey faulted the majority for "looking behind" the contracts. "Affiliates are players in their own right," she said. The project still faces opposition from New Jersey governor Christine Whitman and environmental groups. Docket No.