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Paseo Verde Gibson Apts., LLC v. Valley Electric Association, Inc.

United States District Court, D. Nevada

March 29, 2018

PASEO VERDE GIBSON APTS. LLC, a Nevada Limited Liability Company, Plaintiff,
v.
VALLEY ELECTRIC ASSOCIATION, INC., et al., Defendants.

          ORDER

          The Honorable Kent J. Dawson United States District Judge.

         Presently before the Court is Plaintiff's Motion for Summary Judgment (#17). Defendants filed a response in opposition (#20) to which Plaintiff replied (#21). Also before the Court is Defendants' Motion for Summary Judgment (#18). Plaintiff filed a response in opposition (#20) to which Defendants replied (#22). The parties agree that the Court will determine on cross-motions for summary judgment whether Defendant Valley Electric Association, Inc. (“VEA”), a wholly owned subsidiary of Valley Electric Transmission Association, LLC, is entitled to and did renew its fifty (50) year right-of-way (“ROW”) across Plaintiff's property for an additional fifty-year term. The facts are not in issue and only a question of law regarding renewal of the ROW remains pending.

         I. Facts

         Valley Electric Association, Inc. is a non-profit electric utility incorporated in 1965 and based in Pahrump, Nevada. VEA originated as a consolidation of the Amargosa Valley Cooperative (“Amargosa”), the Amargosa Power Company, the Beatty Utility Company, and the White Mountain Electric Cooperative. Among the assets transferred to VEA from these constituent entities was a 138 kilovolt (“kv”) electric transmission line that was built in 1963 by Amargosa with funds that were made available from the Rural Electrification Association. The line was built to import power needed by the local farmers and the community in the Amargosa Valley to satisfy growing demand and to increase reliability of service. In 2010, Valley Electric Transmission Association, LLC was formed to hold VEA's transmission assets.

         The construction of the transmission line at issue in this case was funded by a loan under the Rural Electrification Act of 1936 (“REA”), 7 U.S.C. § 31, et. seq., which was intended to provide electrical service to rural America and agricultural communities. The statute provided low cost loans to farmers to enable them to form and operate cooperatives to build electrical infrastructure to modernize operations and to obtain low cost power at wholesale and transmit it to rural and agricultural load centers.

         The transmission line originates at Western Area Power Administration's (“WAPA's”) Amargosa Substation in Henderson, Nevada, and extends 142-miles to Beatty, Nevada. It interconnects with Nevada Power Company's transmission system at the Department of Energy's Jackass Flats Substation.

         WAPA is a federal agency and part of the U.S. Department of Energy that sells electricity at wholesale to various utilities in fifteen western states from more than fifty hydroelectric power plants operated by the U.S. Bureau of Reclamation, U.S. Army Corps of Engineers, and the International Boundary and Water Commission. VEA is entitled to approximately thirty (30) megawatts of low-cost hydroelectric power from WAPA in the summer and, twenty-seven (27) megawatts of power in the winter, which is transmitted across the subject transmission lines for the benefit of VEA's members and customers.

         Segments of the transmission line traverse federal land under the jurisdiction and control of the Bureau of Land Management (“BLM”). In 1965, the BLM issued a right-of-way to Amargosa pursuant to a federal statute, 43 U.S.C. § 961, which permits the Department of Interior the right to grant right-of-way across federal land to facilitate the construction of electric transmission, distribution and communication facilities throughout the United States, and in particular the American West, where large sections of property were, and still are, owned by the United States.

         Significantly, in keeping with the public policies favoring the development of electricity and communications to rural and agricultural communities in the West, the BLM regulations enacted to implement 43 U.S.C. § 961 expressly exempted transmission projects funded and financed through REA from any obligation to pay rent for any rights-of-way granted under and pursuant to federal acts. See 43 C.F.R. § 2234.1-6.

         The BLM granted Amargosa rights-of-way across federal lands for its 138 kv transmission line for a period of fifty years, including the ROW at issue. The ROW grant specifically incorporated into its provisions terms and conditions set forth in two regulations, 43 C.F.R. § 2234.1 and 43 C.F.R. § 2234.4-1, both published in Circular Number 2161.

         43 C.F.R. § 2234.4-1(1)(8) provides that “unless sooner canceled, the right of way shall expire 50 years from the date thereof. If, however, within the period of 1 year prior to the expiration date, the grantee shall file, in accordance with section 2234.1-2(a), a written application to renew the right of way, and shall agree to comply with all the laws and regulations existing at such expiration date governing the occupancy and use of lands of the United States for the purpose desired, the right of way may be renewed.”

         43 C.F.R. § 2234.1-2(a) establishes that an applicant may have its right-of-way renewed provided that it meets five specific requirements. Specifically, the regulation provides that a renewal application: (1) shall require no special form other than it must be typewritten or in legible handwriting; (2) must identify the authorizing regulation; (3) state that the right-of-way will continue to be subject to existing law; and (4) cite the original Act under which the right-of-way was authorized; and (5) state the primary purpose for which the right-of-way is used. No. fee is required under the section to file the request for renewal if the right of way is an REA project. 43 C.F.R. § 2234.1-2(a)(2).

         In November 1971, the BLM transferred a small portion of the land over which VEA's ROW is situated to the City of Henderson, under Land Patent 27-72-0017 (“the Land Patent”). The Land Patent expressly provided that the ROW was “[s]ubject to those rights for transmission line purposes which have been granted to [VEA], its successors and assigns under the Act of March 4, 1911, 43 U.S.C. § 961 . . . which are due to expire on July 5, 2015.” The Land Patent was recorded in the offices of the Clark County Recorder on December 19, 1971.

         Plaintiff acquired the property that is the subject of this litigation from successors in interest to H.M. Greenspun in 2014, who had acquired the property from the City of Henderson in 1972. The land acquired by Plaintiff over which the ROW is situated comprises approximately 1.19 acres of 1, 377 acres of land over which the entire right-of-way is situated. Plaintiff admits that ...


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