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U.S. court backs tribe in fight over Calpine plant

Mon Nov 6, 2006

SAN FRANCISCO, Nov 6 (Reuters) - A U.S. federal appeals court backed an Indian tribe on Monday in a fight in which the bankrupt power producer Calpine Corp (CPNLQ.PK: Quote, Profile, Research) had sought to build a geothermal plant in an area Native Americans consider sacred.

San Jose, California-based Calpine planned to erect a plant on leased U.S. Forest Service land in the northern Mount Shasta region of California after more than a decade of planning.

The Pit River Tribe sued in federal court over the plan in 2002, saying the 66-square-mile Medicine Lake Highlands is sacred ground even if not part of the tribe's reservation.

The tribe lost its initial legal fight, but on Monday the 9th U.S. Circuit Court of Appeals overturned a lower court and ruled against U.S. government agencies, saying they had improperly extended the leases to Calpine for the land.

"We conclude that the agencies did not take a 'hard look' at the environmental consequences of the 1998 lease extensions and never adequately considered the no-action alternative," Judge Clifford Wallace wrote for a three-judge panel.

"The agencies violated their duties...and their fiduciary duties to the Pit River Tribe by failing to complete an environmental impact statement before extending Calpine's leases in 1998," he continued. "Hence, both the five-year lease extensions and the subsequent forty-year extensions must be undone."

California, Nevada, Oregon and other Western U.S. states are seeking to boost geothermal and other renewable electricity like solar and wind to reduce emissions of heat-trapping gases linked to global warming.

Geothermal developers drill wells into underground reservoirs to tap steam heated by the earth. The steam spins turbine generators, producing electricity.