BEFORE THE DEPARTMENT OF PUBLIC SERVICE REGULATION
PUBLIC SERVICE COMMISSION
OF THE STATE OF MONTANA
IN THE MATTER OF the Petition of
The Boeing Company and Montana Aviation Research Company for Declaratory Order
on Scope of Commission Jurisdiction
DOCKET NO. D2009.6.79
1. On June 3‚ 2009‚ The Boeing Company (Boeing) and Montana Aviation Research Company (MARCO)‚ a wholly owned subsidiary of Boeing (collectively referred to hereafter as MARCO)‚ filed with the Montana Public Service Commission (commission) a Petition for Declaratory Ruling addressing the commission's jurisdiction‚ or lack of jurisdiction over certain obligations‚ terms, and conditions under agreements for the provision of water in and near the old Glasgow Air Force Base in Valley County‚ Montana.
2. MARCO is the holder of certain water rights and the owner of a water treatment plant and water distribution system at what was formerly known as the Glasgow Air Force Base (GAFB), now known as the Glasgow Industrial Airport.
3. Dry Prairie Rural Water Authority of Culbertson‚ Montana (Dry Prairie) is organized and established as a water authority under Montana law for the purpose of constructing and operating a water supply distribution system. Dry Prairie wishes to purchase water from MARCO‚ on a temporary basis‚ for distribution by Dry Prairie to its customers. MARCO is agreeable to selling water in bulk to Dry Prairie on the condition that such an arrangement does not subject MARCO to the jurisdiction of the commission. Dry Prairie is a municipal‚ industrial‚ and rural water system for Valley‚ Daniels‚ Sheridan, and Roosevelt counties outside the boundaries of the Fort Peck Indian Reservation. Dry Prairie is organized pursuant to Title 75‚ chapter 6‚ part 3‚ MCA‚ and is owned and operated by the off-reservation users. The Assiniboine and Sioux Rural Water System is the on-reservation rural water system. Together these two systems comprise one regional project called the Fort Peck Reservation Rural Water System (the project).
4. Glasgow Air Force Base (GAFB)‚ now known as Glasgow Industrial Airport‚ is located in the northeast corner of Montana‚ approximately 15 miles north of the City of Glasgow‚ Montana (the city). The GAFB was inactivated as a U.S. Air Force facility and on or about March 29‚ 1979‚ the United States transferred a portion of the GAFB to Valley County‚ a political subdivision of the state of Montana (county). On or about March 12‚ 1992‚ county transferred a substantial portion of the GAFB‚ including runways‚ taxiways‚ the control tower‚ hangars‚ numerous support facilities‚ water supply facilities‚ and Water Right No. 40S 171767-00 to MARCO‚ which operates the GAFB as an aircraft testing facility.
5. The water supply facilities acquired by MARCO include a 24-mile water pipeline and processing system (transmission system) consisting of an intake on the Missouri River‚ the pipeline itself‚ several pumping stations‚ a treatment plant‚ and various easements and incidental properties. The transmission system is located outside the boundaries of a housing and commercial development area adjacent to the GAFB‚ referred to St. Marie.
6. The residents of St. Marie elected to form the North Valley County Water and Sewer District‚ Inc. (district) pursuant to Title 7‚ chapter 13‚ parts 22 and 23‚ Mont. Code Ann. The district is responsible for providing water and sewer services to St. Marie. The district owns the water distribution system located within St. Marie. MARCO transports water through the transmission system (including the treatment facility) and sells treated water to the district at a single metered gate at the district's boundary. The district resells the water to its government‚ commercial‚ and residential customers located within St. Marie and on the adjacent property.
7. Valley Park, Inc. (Valley Park) owned and was developing the undeveloped portions of St. Marie at the time that MARCO initiated its aircraft testing facility operations.
8. MARCO‚ Boeing‚ city‚ district‚ Valley County, and Valley Park entered into a water system agreement dated December 20‚ 1991 (water system agreement)‚ which generally describes the obligations of the parties. Prior to execution of the water system agreement, Valley County owned the transmission and distribution systems and proposed to transfer the obligations and responsibilities it assumed upon acquiring the GAFB properties from the federal government in 1979. These obligations included water and sewer service to the GAFB and the adjacent housing areas and maintaining and‚ when necessary‚ repairing and refurbishing the systems.
9. The city has an arrangement with MARCO and Boeing to alternate usage of the intake facility and the first stage pumping. The city takes the water pumped from the Missouri River to a "T" on the transmission system located about eight miles north of the intake facility. From the "T" the city transports the water to the city through a city owned pipeline. The city holds its own water right and fully controls its operations‚ taking the entire flow of water when necessary to satisfy its water needs. Neither MARCO nor Boeing share control of expenses of such operations by the city.
10. On January 10‚ 1991‚ prior to acquiring the GAFB and entering into the water system agreement, MARCO and Boeing sought a declaratory ruling from the commission. MARCO sought a determination that its acquisition of the GAFB and its obligations under the water system agreement did not subject it to the jurisdiction of the commission. The specific question presented to the commission was as follows:
"The question of law presented to the Commission is whether MARCO‚ as described in the facts presented by MARCO‚ is a public utility or common carrier subject to the jurisdiction of the Montana Public Service Commission."
The commission‚ through its order of March 6‚ 1992‚ determined that MARCO was not subject to commission jurisdiction.
11. The project (the aforementioned Fort Peck Reservation Rural Water System) is designed to bring Missouri River water‚ treated to meet safe drinking water standards‚ to existing municipal water systems‚ rural households‚ and livestock pasture taps in northeastern Montana. It is anticipated that the two systems (on reservation and off reservation) will share common facilities‚ including the intake facility and the water treatment plant. The tribal system is operated by the Fort Peck Tribes and held in trust by the Department of Interior for the tribes.
12. The major components of the project are an intake facility on the Missouri River‚ southeast of Wolf Point‚ Montana‚ and a 13-million gallon-per-day treatment facility (facility). Once treated‚ the water will be pumped through 3‚200 miles of pipeline by 20 mainline pump stations‚ and will be delivered to a population of about 31‚000 persons for municipal‚ rural‚ industrial‚ and livestock purposes in 7‚000 square mile areas of northeast Montana. A temporary water supply is needed until the facility and pipeline system are completed. Dry Prairie and MARCO have entered into an agreement for MARCO to provide potable water to Dry Prairie on a temporary basis‚ subject to‚ among other things‚ a determination by the commission that the MARCO-Dry Prairie agreement (discussed below) does not subject MARCO to the jurisdiction of the commission.
13. MARCO and Dry Prairie entered into a Water Buy and Sell Agreement dated January 23‚ 2009 (water provider agreement)‚ wherein the parties agreed to‚ among other things‚ the following:
a. MARCO agrees to provide potable water in the approximate amount of 416 equivalent dwelling units (EDUs) to Dry Prairie during the term of the agreement.
b. Dry Prairie‚ at its own expense, will install a pipeline at a point of delivery with a meter and required measuring devices. Parties may ask for testing of the accuracy of the meter.
c. Dry Prairie will‚ at its own expense‚ obtain all necessary permits for construction of a water distribution system that will take water from the point of delivery to customers in Dry Prairie's South Valley County service area‚ including the Town of Nashua.
d. Dry Prairie obtains no ownership or right to possession of the water system pursuant the agreement.
e. Dry Prairie agrees to pay MARCO $1.26 per 1‚000 gallons for the first 200‚000 gallons per calendar day‚ a rate of $2.52 per day per 1‚000 gallons for the next 20‚000 gallons per day and a rate of $4.04 per 1‚000 gallons for any water delivered under the agreement over 220‚000 gallons per day.
14. The question presented to the commission is whether MARCO‚ as described in the facts presented above‚ including a consideration of the water system agreement and the water provider agreement‚ is a public utility or common carrier subject to the jurisdiction of the Montana Public Service Commission.
A. Status as a Public Utility
15. Montana's definition of "public utility" is set forth in § 69-3-101(1)‚ MCA‚ which states as follows:
"(1) The term 'public utility'‚ within the meaning of this chapter‚ shall embrace every corporation‚ both public and private‚ company individual‚ association of individuals‚ their lessees‚ trustees‚ or receivers appointed by any court whatsoever‚ that now or hereafter may own‚ operate‚ or control any plant or equipment‚ or any part or a plant or equipment‚ or any water right within the state for the production‚ delivery‚ or furnishing for or to other persons‚ firms‚ associations‚ or corporations‚ private or municipal:
(b) street - railway service;
(d) power in any form or by any agency;
(e) except as provided in chapter 7‚ water for business‚ manufacturing‚ household use‚ or sewerage service‚ whether within the limits of municipalities‚ towns‚ and villages or elsewhere;
(f) regulated telecommunications service.
The definition of public utility does not include:
(a) privately owned and operated water‚ sewer‚ or combination systems that do not serve the public;
(b) county or consolidated city and county water or sewer districts as defined in Title 7‚ chapter 132‚ parts 22 and 23; or
(c) a person exempted from regulation as a public utility as provided in 69-3-111."
16. Dry Prairie is the new entity proposed to be added to those entities securing water through the transmission system since the commission issued its 1992 declaratory ruling. Dry Prairie is a regional water authority formed pursuant to the Regional Water and Wastewater Authority Act‚ Section 75-6-301 et seq.‚ MCA. A water authority has the powers granted under Section 75-6-313‚ MCA‚ which includes the power to:
"[a]cquire by purchase or lease‚ construct‚ install‚ and operate reservoirs‚ pipelines‚ wells‚ check dams‚ pumping stations‚ water purification plants‚ and other facilities for the production‚ distribution‚ and use of water and transportation facilities‚ pump stations‚ lift stations‚ treatment facilities‚ and other facilities necessary for the transportation and treatment of wastewater and may own and hold real and personal property that may be necessary to carry out the purposes of its organization."
17. A "common carrier" is defined as "[e]veryone who offers to the public to carry persons, property, or messages, excepting only telegraphic or telephonic messages. § 69-11-101(1)‚ MCA.
18. As is the case with the district‚ Dry Prairie has the obligation to provide water to the consumers within its boundaries. The ultimate consumer interests are the responsibility of Dry Prairie and not the commission‚ which is proscribed from regulating regional water authorities that have been formed under the provisions of the Regional Water and Wastewater Authority Act‚ Section 75-6-301 et seq.‚ MCA.
19. The MARCO-city-district-Dry Prairie relationships do not make MARCO a public utility. MARCO owns and operates the GAFB as an aircraft testing facility‚ which is MARCO's primary concern. Incidental to supplying water to itself‚ MARCO has agreed to supply water in bulk pursuant to the water system agreement and the water provider agreement (on a temporary basis). MARCO's participation in these two agreements‚ and its sale of water in bulk to entities exempt from commission regulation does not make MARCO a public utility.
20. Moreover‚ the commission further finds that MARCO is not a common carrier. As was held in the March 6‚ 1992 Declaratory Ruling and as still holds true at this date‚ the commission has not interpreted § 69-11-101, MCA‚ as applying to the transportation of water by pipelines‚ nor has the commission determined there to be a basis in law to do so.
21. This ruling is binding upon MARCO and determines its rights only upon the factual situation presented.
Fully apprised of all premises‚ the Montana Public Service Commission hereby DECLARES that‚ in furnishing and delivering water to the City of Glasgow‚ the Valley County Water District and‚ on a temporary basis‚ the Dry Prairie Rural Water Authority‚ as described above‚ The Boeing Company and Montana Aviation Research Company‚ individually or jointly‚ do not hold public utility or common carrier status under the jurisdiction of the commission under the laws of the state of Montana.
Done and dated this 14th day of April 2010.
BY ORDER OF THE MONTANA PUBLIC SERVICE COMMISSION
/s/ Ken Toole
/s/ Gail Gutsche
/s/ Brad Molnar
/s/ John Vincent
NOTICE: Petitioner has the right to appeal the decision of this agency by filing a petition for judicial review in district court within 30 days after service of this decision. Judicial review is conducted pursuant to § 16-4-411‚ MCA.
CERTIFICATE OF MAILING
The undersigned hereby certifies that on the 14th day of April 2010‚ a true and correct copy of the foregoing has been serviced by placing same in the United States Mail, postage prepaid‚ addressed as follows:
Alan C. Bryan
Crowley Fleck PLLP
500 Transwestern Plaza II
490 North 31st Street
P O Box 2529
Billings MT 59103-3441
/s/ Verna Stewart
PSC Commission Secretary