20101229Notice of Affiliate Transaction.pdf

~~""MOUNTAIN
December 29,2010
F
201 South Main, Suite 2300
Salt Lake City, Utah 84111
VI ELECTRONIC FILING
AND OVERNIGHT DELIVERY
l5\M1EC 29 ll~ 2: 64
Jean D. Jewell
Commission Secretar
Idaho Public Utilities Commission
472 W. Washigton
Boise,ID 83702
Attention:Jea D. Jewell
Commission Secreta
RE:Notice of Affliate Transaction; Case No. PAC-E-05-8
Ths letter will serve as notice pursuat to Commtment I 17(2), incorprated in the Idao Public
Utilties Commission Order No. 29973 issued Febru 13, 2006, as supplemented by Order No.
29998 on March 14, 2006, in the above referenced proceeding, approving the acquisition of
PaeifiCorp by MidAerican Energy Holdings Company ("MEHC"), of an affiliate interest
transaion. Rocky Mountan Power, a division of PacifiCorp, (the "Company") hereby submits
an origial and 7 copies of the Memorandum of Agreement Huntington Creek Wildlife Habitat
Replacement Project ("MOA") to be executed by and between Rocky Mounta Power, the
United States Bureau of Reclamation and Huntigton Cleveland Irgation Compay ("HCIC"), a
copy of which is included as Attachment A.
HCIC is a non-profit company that holds water rights in the Huntington Creek draiage, located
in Utah. The Company curently owns approximately one-thd of the shares of HCIC.
Additionally, HCIC manages access to certin water supplies on behaf of Rocky Mountain
Power. Therefore, Rocky Mountan Power's ownership interest in HCIC creates an affliated
interest. The Company uses the water obtaed though HCIC as par of the supply to its
Huntington Plant and Hunter Plant located in Emery County, Uta.
HCIC, along with Rocky Mountan Power, the Bureau of Reclamation, the Uta Deparent of
Food and Agrculture, and the Natul Resources Conservation Service ar jointly fuding and
constrcting a federally-sponsored salinty control project in the Upper Colorado River basin. As
a condition for approval of the salinity control project, the Bureau of Reclamation is requig
HCIC to replace wildlife habitat value that will be impaird by the constrction of the sainty
control project. Rocky Mountain Power own signficant amounts of land in the area due to
requirements associated with purchasing water rights to supply the Huntington and Hunter
Plants. Rocky Mountain Power typically either leases these lands to farers or allows them to
remain in their natural state.
The MOA will allow HCIC to use approximately 100 acres of Rocky Mounta Power-owned
land near the location of the salinity control project to comply with the requiment to develop
Idaho Public Utilties Commission
December 29, 2010
Page 2
and replace wildlife habitat. Under the terms of the MOA, HCIC will be granted acces to the
land to develop the wildlife haitat, essentially managing the land. The Company will continue
to be able to lease the land for livestock grazg, as is the current practice. Additionally, Rocky
Mountan Power will be a member of the wildlife habitat team maagig the propert. HCIC is
responsible for all costs associated with the wildlife habitat replacement project.
Rocky Mountain Power and its customers will realize benefits from ths arangement through
HCIC's management of the land and instalation of improvements to the land. Furer, the
habitat replacement wil aid in the conservation of wildlife.
Inquiries regarding this matter may be addressed to Ted Weston, manger of Idaho reguatory
affais, at [phone].
Sincerely,
Vice President, Reguation
Enclosures
F(i::CE t\l
Huntington ~':kO~:1i~":::I:~::=~en~DlJll9 PM 2' 65
This Memorandum of Agreement (the "MOA") is entered into this
2010 by and between the Bureau of Reclamation ("Reclamation"), the Huntington Cleveland Irrigation
Company ("HCIC"), a Utah Nonprofit Corporation and Mutual Water Company, and PacifiCorp, an Oregon
Corporation ("PacifiCorp").
Recitals
WHEREAS, Reclamation and HCIC have agreed, by entering into Cooperative Agreements, to
construct two (2) Salinity Control Projects in Northern Emery County, Utah under the Colorado River
Salinity Control Program, Colorado River Basin Salinity Control Act (US Department of the Interior, Bureau
of Reclamation 1974 Colorado River Basin Salinity Control Act, Public Law 93-320). The main salinity control
project is being constructed under Cooperative Agreement No. 04-FC-40-2242 and a supplementary salinity
control project is being constructed under Cooperative Agreement No. R09AC40R03.
WHEREA, As a result of entering into the Cooperative Agreements lists above, HCIC is obligated to
replace a certain amount of wildlife habitat that wil be impaired by the installation of HCIC's Salinity
Control Projects.
WHEREAS, PacifiCorp owns a certain Propert in Emery County that can be used by HCIC to fulfill its
wildlife habitat replacement obligations listed above. This Property is located in Section(s) 5 and 8,
Township 18 South, Range 9 East, S.L.M. with the PacifiCorp Parcelld Numbers of UTEM-0142 (County Tax
Lot U4-0057-QOO9) and UTEM-0295 (County Tax Lot U4-0054-0012)("Propert.")
WHEREAS, HCIC and PacifiCorp have prepared a plan (HCIC Habitat Replacement Plan - Huntington
Creek Wildlife Habitat Replacement Project) that, if implemented on the PacifiCorp Property described
above, the Property will provide the necessary wildlife habitat values. The HCIC Wildlife Habitat
Replacement Plan is attached to this Memorandum of Agreement as Exhibit A.
WHEREAS, Reclamation, HCIC and PacifiCorp would like to enter into a cooperative agreement that
wil allow the use of this Propert to meet the habitat replacement requirements associated with the HCIC
Salinity Control Projects. This agreement wil document the construction, operation and maintenance
responsibilties of each part to implement and comply with the HCIC Wildlife Habitat Replacement Plan.
NOW, THEREFORE, in consideration of the mutual promises contained herein, the parties agree as follows:
1.0 Reclamation Responsibilties
Reclamation has provided funding and oversight to the HCIC Salinity Control Projects. Its role and
responsibilties associated with the HCIC Wildlife Habitat Replacement Project is as follows:
. Reclamation shall participate as a member of the Management Team (as such is constituted
herein) in order to provide oversight and direction for all management prescriptions and issues as
outlined in the HCIC Wildlife Habitat Replacement Plan.
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. A Reclamation representative wil periodically inspect the HCIC Habitat Replacement Site to make
sure the tenant is following all aspect of the habitat replacement plan.
2.0 PacifiCorp Responsibilties
PacifiCorp has provided funding and has participated in the overall implementation of the Main HCIC
Salinity Control Project. Its role and responsibilties associated with the HCIC Wildlife Habitat Replacement
Project is as follows:
. PacifiCorp shall provide the use of the above referenced fee-owned Property in Emery County for
the HCIC Wildlife Habitat Replacement Project as outlined in this agreement and shall allow HCIC
access to and use of such Property for Wildlife Habitat Replacement Project purposes.
. PacifiCorp shall participate as a member of the Management Team in order to provide oversight
and direction for all management prescriptions and issues as outlined in the HCIC Wildlife Habitat
Replacement Plan. The Management Team shall meet at least one (1) time each calendar year to
inspect, evaluate and discuss the on-going implementation of the HCIC Wildlife Habitat
Replacement Project.
. Subject to approval of the tenant and lease by HCIC (which approval shall not be unreasonably
withheld), PacifiCorp shall have the right to lease the subject Propert for livestock grazing, as long
as the livestock grazing is conducted as directed by the Management Team to meet the objectives
of the HCIC Wildlife Habitat Replacement Plan. Any lease wil_communicate all livestock grazing
limitations directly to the tenant as approved and agreed upon by the Management Team.
PacifiCorp shall be the only entity that wil communicate directly to the tenant, unless permission is
given which would allow other members of the Management Team to so communicate. .
. PacifiCorp will periodically inspect the HCIC Habitat Replacement Site to make sure the tenant is
following all aspects of the plan, including the grazing prescriptions.
. PacifiCorp may, at its discretion, require the tenant to perform routine maintenance activities
identifjed in the Wildlife Habitat Replacement Plan or other activities identified by the
Management Team. This may include, but not be limited to, repairs to fencing, ditches, ponds, and
signs.
. PacifiCorp shall instruct its tenant to watch for any unauthorized trespasses and report any activity
immediately to a designated PacifiCorp representative.
. PacifiCorp reserves the right to review and approveJanguage that will be installed on signs-on all
perimeter fences. These signs wil identify that the site is the Huntington Creek Wildlife Habitat Site
and will include general"No Trespassing without permission" language on each sign.
. PacifiCorp shall arrange and conduct a meeting of the Management Team at least one (1) time each
calendar year to inspect, evaluate and discuss the on~going implementation of the HCIC Wildlife
Habitat Replacement Project. Other members of the Management Team may call a meeting of the
Management Team by giving reasonable notice to the other members. All members of the
Management Team must be present for it to act.
3.0 HCIC Responsibilties
The HCIC Wildlife Habitat Replacement Plan identifies several management issues and prescriptions
including livestock grazing, noxious/non-native plant species, Russian-olive tree management, vegetation
health and diversity, remnant oxbow channels, hydrologic support and site control. HClC has the general
responsibility for implementation of the proposed prescriptions detailed in the Plan. HCIC's specific
responsibilties are as follows:
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. HCIC shall have full access to and use of the Property and shall be responsible for the
implementation of the Wildlife Habitat Replacement Plan.
. HCIC shall be responsible for all ongoing operation and maintenance activities associated with the
Wildlife Habitat Replacement Plan.
. HCIC agrees to utilze its best efforts to comply with all aspects of the Wildlife Habitat Replacement
Plan and any reasonable future revisions or modification of the Plan.
. HCIC shall participate as a member of the Management Team in order to provide oversight and
direction for all management prescriptions and issues as outlined in the HCIC Wildlife Habitat
Replacement Plan. The Management Team shall meet at least one (1) time each calendar year to
inspect, evaluate and discuss the on-going implementation of the HCIC Wildlife Habitat
Replacement Project.
. HCIC shall be responsible for any financial resources required to implement and comply withJhe
Wildlife Habitat Replacement Plan.
. HCIC wil provide Reclamation and PacifiCorp with a yearly photo monitoring report for 5
consecutive years, beginning one year after fencing is completed. The report wil include photos
from established photo points to document plantings success. The annual report wil be submitted
to Reclamation's Environmental Group representative no later than December 20th of each
applicable year
4.0 Agreement Modification and Amendment
This Agreement may be modified or amended in writing by the mutual consent of the parties.
4.1 Termination
The HCIC Wildlife Habitat Site will be managed to meet the goals and objectives of the HCIC Wildlife
Habitat Replacement Plan. This MOA shall remain in effect for as long as the HCIC Salinity Project is
in operation or fift (50) years from the execution date of this MOA,whichever is shortest.
In the event the Huntington Creek Habitat Site is not utilzed for the purposes anticipated in this
Agreement for longer than one (1) year, PacifiCorp shall provide written notifcation to the
management team describing the abandoned condition. If no action is taken by a member of the
management team within the ninety (90) day period to remedy and restore the propert use to its
original purpose of fulfillng HCIC's habitat replacement obligations, PacifiCorp shall have the right
to immediately reenter the site and take full possession thereof and exclude Reclamation and HCIC
from any attempted renewed use of the Property.
If the enactment or adoption of any law, ordinance, regulation, order, condition, or other
governmental requirement relating to the operations of the Huntington Creek Habitat Site makes
further performance impractical or frustrates the purpose of this MOA, any party shall have the
right to terminate this agreement by giving each member of the management team ninety (90)
days prior written notice.
Upon the expiration or termination of this MOA, the Management Team shall surrender any control
of the Huntington Creek Habitat Site in similar condition to the condition of the Property at the
execution of this MOA, as approved by PacifiCorp, except for any changes to the Propert as a
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result of executing the Wildlife Habitat Replacement Plan, or that may occur as addressed in
section 4.6 entitled "Improvements".
4.2 Successors and Assigns
This MOA shall be binding upon and inure to the benefit of the parties and their respective heirs,
executors, ~ administrators, successors, legal representatives, and assigns; provided that this
provision shall not be construed as permitting assignment, substitution, delegation, or other
transfer of rights or obligations except strictly in accordance with the provisions of this MOA.
4.3 Hunting
No Hunting shall be allowed within the Huntington Creek Habitat Site boundary during the term of
this Agreement.
4.4 Acceptance of Huntington Creek Habitat Site
Reclamation and HCIC have examined the Huntington Creek Habitat Site and accept it in its present
condition, AS-IS and with all faults. PacifiCorp makes no representation or warranty as to the
present or future condition of the Huntington Creek Habitat Site and shall not be required to
perform, pay for, or be responsible for any work to ready the site for habitat replacement, use or
any other work whatsoever throughout the term of this MOA to repair, maintain or improve the
Huntington Creek Habitat Site.
4.5 Water Rights
HCIC and Reclamation acknowledges that this MOA gives no right to the use of water from any
private water right owned by PacifiCorp and that it is HCIC's responsibilty to provide its own water
for the Huntington Creek Habitat Site's needs. Any tenant and HCIC shall not allow any irrigation
water it calls to be delivered to the Property to run uncontrolled onto or from the Huntington Creek
Habitat Site.
4.6 Improvements
All improvements made by HCIC shall immediately become and shall remain the real propert of
PacifiCorp at the time this MOA terminates or expires unless otherwise specified by PacifiCorp. If
HCIC desires to make any changes or improvements to the Propert not addressed in the Wildlife
Habitat Replacement Plan, HCIC shall provide PacifiCorp with plans for the proposed change or
improvement. PacifiCorp shall have the right to conditionally approve, modify, or deny the
requested change or improvement at its sole discretion.
4.7 Flammable Materials
HCIC shall not place or store any flammable material, including but not limited to chemical solvents,
fuels, rubbish piles, haystacks, or lumber products, on the Huntington Creek Habitat Site without
PacifiCorp's prior written consent, excluding from this prohibition, however, motor vehicles fuels
and lubricants properly contained in vehicles coming onto the Huntington Creek Habitat Site.
4.8 Storage
HCIC shall not cause or permit any structure, building, automobile, or equipment to be placed,
erected, or stored on the Huntington Creek Habitat Site without PacifiCorp's prior written consent
nor shall HClC, under any circumstances place any object or allow any person under its control to
come within twenty (20) feet of any power lines on the Huntington Creek Habitat Site. HCIC
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understands and acknowledges that electricity can arc between lines and persons or objects within
twenty (20) feet of the lines.
4.9 Environmental Regulations
All parties shall strictly comply in all material respects with all federal, state, and local
environmental laws, regulations, and ordinances ("Environmental Laws") and shall not use or store
on the Huntington Creek Habitat Site any hazardous or toxic materials without PacifiCorp's prior
written consent. In the event of any spil or release or any hazardous or toxic materials by any of
the parties, the responsible party shall immediately report, remedy, and shall immediately notify
PacifiCorp thereof. Upon termination of this MOA, HCIC shall deliver the Huntington Creek Habitat
Site to PacifiCorp free of any material contamination by hazardous or toxic materials by HCIC. HCIC
covenants and agrees to protect, indemnify, and hold PacifiCorp (except insofar as PacifiCorp, as a
shareholder of HCIC, may have its own liabilty or responsibilty) harmless from any and all liability,
loss, costs, damage, or expense, including attorneys' fees, resulting from HCIC's failure to comply
with the provisions of this paragraph. The covenants contained within this paragraph shall survive
the expiration termination this MOA.
4.10 Compliance with Laws
All parties shall comply with all federal, state, and local laws, rules, and regulations.
4.11 PacifiCorp's Use of the Huntington Creek Habitat Site
It is understood and agreed upon that PacifiCorp reserves the right to access the Huntington Creek
Habitat Site at any time for the purpose of maintaining or repairing its existing power lines and
associated equipment and facilties and to place additional poles, lines, and equipment upon the
Huntington Creek Habitat Site. It is further understood and agreed upon that, to the extent
consistent with the Habitat Replacement Plan, PacifiCorp shall reserve the right to add to, change,
or enlarge its power lines and associated facilities and structures on the Huntington Creek Habitat
Site, including such equipment and facilties of others, including fiber optic and cable lines. If such
changes require HClC to make changes to any of HCIC's structures or improvements located upon
the Huntington Creek Habitat Site, PacifiCorp shall give HCIC at least ninety (90) days advance
written notice and HCIC agrees to make any such changes within a reasonable period of time as
designated by PacifiCorp.
4.12 Prohibited Activities
No party shall permit any of their employees, designated agents, contractors and subcontractors to
bring any firearm, explosive device, weapon, alcoholic beverage, or ilegal drug on the Huntington'
Creek Habitat Site. HCIC and Reclamation's employees, designated agents, contractors and
subcontractors, shall not allow animals in vehicles or otherwise on to PacifiCorp's lands that are not
used in the livestock industry. HCIC and Reclamation's employees, designated agents, contractors
and subcontractors, shall not place any trash, rubbish, debris or smoking materials on propert of
Owner. No HCIC and/or Reclamation employee shall hunt, prospect for antlers, fossils or
antiquities, consume alcoholic beverages or carry on any ilegal activities on the Huntington Creek
Habitat Site. HCIC shall provide for adequate sanitization or lavatory facilities for its employees
during construction activities which will take longer than two (2) successive days. HCIC and
Reclamation employees shall not enter the Huntington Creek Habitat Site other than during
daylight hours, except in the case of emergencies. No part shall use any hazardous substances on
the Property without first obtaining the appropriate licenses.
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4.13 Inspection
PacifiCorp and Reclamation shall have the right to enter into and upon the Huntington Creek
Habitat Site at any time for the purpose of inspecting the site to ascertain whether HCIC is in
compliance with all federal and state environmental protection laws.
4.14 Indemnification
HCIC shall use the Huntington Creek Habitat Site at its own risk and hereby releases and forever
discharges any claims, demands or causes of action it may have against PacifiCorp, its offcers,
directors, employees, subsidiaries and affliates, arising out of their use of or activities on or around
the Huntington Creek Habitat Site. In addition, HCIC shall protect, indemnify and hold harmless
PacifiCorp, its officers, directors, employees, subsidiaries and affliates (collectively "Indemnitees")
from and against any liability, losses, claims, liens, demands, expenses, interest, fines, penalties,
claims, judgments, suits, and causes of action of every kind, including the amount of any judgment,
penalty, interest, court cost or legal fee incurred by the Indemnities or any of them in the defense
of same, arising in favor of any party, including governmental agencies or bodies, on account of
taxes, claims, liens, debts, personal injuries, death or damages to Property, violations of
Environmental Laws and Regulations, and all other claims or demands of every character arising out
of HClC's use of the Property. This paragraph shall survive the termination of this Agreement. For
purposes of this agreement, "Environmental Laws and Regulations" shall mean all present and
future federal, state and local laws and all rules and regulations promulgated thereunder, relating
to pollution or protection of the environment. For the purposes of this Agreement, this paragraph
will not relieve PacifiCorp from any obligation, responsibilty or liabilty as a shareholder of HClC.
4.15 Insurance
HCIC has obtained liabilty insurance with the coverages, amounts and insurer as set forth in Exhibit
B attached hereto. The insurance coverage as set forth on Exhibit B is acceptable and satisfactory
to the Parties. HCIC shall annually provide to PacifiCorp a certificate of insurance evidencing its
insurance coverage. The policies required herein, except Workers' Compensation and Employers'
liability, shall include provisions or endorsements naming PacifiCorp, its parent, affliates,
subsidiaries, its offcers, directors, agents, employees or servants as additional insured. HCIC's
insurance required under this section shall contain provisions that such policies cannot be cancelled
or their limits of liabilty reduced without 1) ten (10) calendar days' prior written notice to
PacifCorp if cancelled for nonpayment of premium, or 2) thirt (30) calendar days' prior written
notice to PacifiCorp if cancelled for any other reason. In the event HClC changes its insurance
carrier or reduces its insurance coverage, the following requirements shall apply:
Without limiting any liabilties or any other obligations of HClC, HCIC shall procure and continuously
maintain for the duration of this MOA term, with insurers having an A.M. Bests rating of A-VII or
better, insurance against claims for injury to persons or damage to Propert which may arise from
or in connection with HCIC's use or occupancy ofthe Huntington Creek Habitat Site as follows:
a. Workers' Compensation. Coverage as required by law. HCIC shall furnish proof thereof
satisfactory to PacifiCorp within 14 days prior to commencing any work on the Huntington
Creek Habitat Site. All Workers' Compensation policies shall contain provisions that the
insurance companies wil have no right of recovery or subrogation against PacifiCorp, its
parent, divisions, affliates, subsidiary companies, co-venturers, agents, directors, offcers,
Page 60f9
employees, servants, and insurers, it being the intention of the PacifiCorp and HCIC that the
insurance as effected shall protect all parties.
b. Employers' Liabilty. Insurance with a minimum single limit of $1,00,000 each accident,
$1,000,00 disease each employee, and $1,000,000 disease policy limit.
c. Commercial General Liabilty. The most recently approved iSO (Insurance Services Offce)
policy, or its equivalent, written on an occurrence basis, with limits not less than
$1,000,000 per occurrence and $2,000,000 general aggregate (on a per location basis) to
protect against and from any and all loss by reason of bodily injury or propert damage on
or about the Huntington Creek Habitat Site, including the following coverages:
i. Bodily injury, propert damage, and personal injury coverage, including
damage to PacifiCorp's Electric Facilities or Improvements as a result of
HCIC's, its contractors', subcontractors' or agents' negligence.
ii. Contractual liabilty
iii. Huntington Creek Habitat Site and Products/Completed Operations
iv. Independent Contractors
d. Automobile liability. The most recently approved ISO policy, or its equivalent, with a
minimum single limit of $1,000,000 for bodily injury and propert damage including sudden
and accidental pollution liabilty, with respect to HClC's vehicles whether owned, hired or
non-owned, assigned to or used in any way on the Huntington Creek Habitat Site.
e. HClC's Insurance Primary. To the extent of HCIC's negligent acts or omissions, all policies
required under this MOA shall include provisions that such insurance is primary with
respect to the interest of PacifiCorp and that any other insurance maintained by PacifiCorp
is excess and noncontributory insurance with the insurance required hereunder, and
provisions that the policy contain a cross liabilty or severabilty of interest clause or
endorsement.
f. No Right of Recovery or Subrogation. Unless prohibited by applicable law, all required
insurance policies shall contain provisions that the insurer wil have no right of recovery or
subrogation against the PacifiCorp, its parent, divisions, affiliates, subsidiaries companies,
or co-venturers, agents, directors, offcers, employees, servants, and insurers, it being the
intention of the PacifiCorp and HCIC that the insurance as affected shall protect all parties.
g. Notice Prior to Change or Cancellation. HClC's insurance required under this section shall
contain provisions that such policies cannot be cancelled or their limits of liabilty reduced
without 1) ten (10) calendar days' prior written notice to PacifiCorp if cancelled for
nonpayment of premium, or 2) thirty (30) calendar days' prior written notice to PacifiCorp
if cancelled for any other reason.
4.16 Entire Agreement
Each party to this Agreement acknowledges that this Agreement contains the entire agreement
between the parties with regard to the matters set forth herein. There are no other
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understandings, representations, inducements, promises, or agreements, oral or otherwise, in
relation thereto, between the parties except as herein expressly set forth.
4.17 Shareholder Status of PacifiCorp
PacifiCorp is a shareholder of HCIC. Notwithstanding any provision herein, the rights, duties and
obligations of PacifiCorp as a shareholder of HCIC shall not be abrogated, abridged or modified
through this Agreement.
5.0 Designated Representatives
Each part to this agreement has respectively designated the following initial Management Team
member, with the official notification address, to act on behalf of their respective organization
pertaining to the Management Team and timely performance of this MOA:
Bureau of Reclamation
Rafael Lopez
Provo Area Office
302 East 1860 South
Provo, Utah 84606
Phone: [phone]
Huntington Cleveland Irrigation Company
Allen Staker
Huntington Offce
71 North Main Street (P.O. Box 327)
Huntington, Utah 84528
Phone: [phone]
PacifiCorp
Huntington Plant
Cody Allred
P.O. Box 680
Huntington, Utah 84528
Phone: [phone]
Designation of new members of the Management Team to replace the initial members shall be in
writing to the other parties.
Page 80f9
6.0 Signatures
Each individual executing this MOA, represents and warrants that he or she has been duly
authorized by appropriate action of the governing body of the part for which he signs to execute
and deliver this MOA in the capacity and for the entity set forth where he signs and that as a result
of his signature, this MOA shall be binding upon the party for which he or she signs.
Bureau of Reclamation Huntington Cleveland Irrigation Company
Signature Signature
Title Title
Date Date
PacifiCorp
Signature
Title
Date
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