7.2.1 Boilerplate Terms

A settlement is a contract between signatories to support FERC’s approval of proposed license articles in the license.  Like any contract, it thus includes boilerplate terms that establish the relationship between the signatories.  Indeed, boilerplate is a misnomer, since it is commonly understood to mean “meaningless.”  Boilerplate here means that the terms describe how the signatories will relate in the implementation of the settlement, including the response to opposition from any stranger.

Parties are the signatories of the settlement.  Recitals are factual statements that provide context, including the status of the licensing proceeding, the negotiation process, and the intent of the signatories for use of the settlement.  Definitions define terms that are not otherwise defined in general law or rule.  Effective date is when the contract takes effect – typically, the date when the final signatory signs.  Term establishes when the settlement expires – typically, when the new license expired, or earlier if the licensee withdraws from the settlement.  Purpose states the signatories’ intent and hope that FERC will approve the proposed license articles as the basis of the license.  Resolved Issues, like its converse Unresolved Issues, define the scope of the settlement and specifically state whether the signatories will dispute any unresolved issues going forward in the proceeding.  Reservation of Rights or No Precedent means that the signatories retain all legal rights except as expressly exercised in the contract.  Thus, while a settlement may resolve the proposed license articles for one project, the same signatories are free to take different positions in other proceedings.  Authority to Sign is a representation that each signatory is authorized to bind the represented party.

OEP will never sign a settlement because it cannot bind the Commissioners in their decision on the offer.  Regulatory agencies may sign, subject to a Reservation of Authority.  This reservation means: (A) the contract does not modify in any way the agency’s duty to protect the public interest as required by its organic statute and implementing rules and (B) the agency has the right to withdraw from the settlement after signature, take a position inconsistent with the settlement, or take such other action as it determines to be necessary for such compliance.  Since a settlement typically is signed before publication of an environmental document or completion of the record, this reservation typically includes the specific right to seek mutually agreeable modifications to the settlement, or withdraw in the absence of such modifications if the subsequent development of the record requires such modifications in its judgment.  An agency which has authority to prescribe conditions under FPA section 4(e) or 18, CWA section 401(a) CZMA, or ESA, may sign a settlement before prescription and thus may use the settlement as the basis for its prescription, provided the reservation expressly acknowledges its duty to make an independent decision (taking into account the entirety of the record, including public comments) when that decision is due.  For example, see Appendix C.

Most importantly, the boilerplate terms establish duties and procedures for implementation of the settlement.  Duty to Support commits the signatories to submit the settlement, when effective, as an Offer of Settlement and support it in the face of any adverse comments.  From the licensee’s perspective, this duty means that its Proposed Action is the license application not as filed, but as modified by the settlement.  Implementation Procedures will be established to address contingencies that affect whether the settlement is approved.  Such contingencies include an agency’s adoption of mandatory conditions inconsistent with the settlement, a non-signatory’s submittal of adverse comments, or even FERC’s disapproval (in whole or part) of the settlement.  The procedures address what actions the signatories will take in these scenarios.  Dispute Resolution Procedures commit the signatories to make best efforts to resolve disputes that arise in the implementation of the settlement and may specify the form of resolution, such as mediation or arbitration.  Amendment Procedures provide how the signatories will affect any mutually agreeable amendment after initial signing of the settlement.  They also address whether the licensee or other signatories may seek, after approval of the settlement, to amend the relevant license.  Withdrawal Procedures permit a signatory to withdraw if a significant dispute regarding the implementation of the settlement is not resolved through the dispute resolution procedures, and they typically provide that the settlement terminates if the licensee withdraws.  Enforcement Procedures define the venue and remedies for enforcement of the settlement.  They preserve the existing venue of a federal or state court and are typically limited to specific performance, excluding damages.  FPA Part I, not the contract, governs enforcement of any proposed articles that FERC incorporates into the license.

Since 1990, more than 200 settlements have been executed and filed with FERC as the basis for licensing decisions.  All include boilerplate terms in some form.  Paradoxically, there is not yet a standard set of boilerplate terms, which therefore tend to be renegotiated in each proceeding.  In these past settlements, the terms covering each topic above range from simple to very complex, depending on project circumstances and drafters’ preferences.  Simpler is better, other things being equal, since complexity inevitably results in greater difficulty in negotiation or later interpretation of the terms, which, after all, are not the substance of the settlement.  You should use the examples included in Appendix C, as well as others not included (simply as a function of space limitations) and extract those terms that appear workable in your circumstances.  The licensee may have preferences if it has recently negotiated a settlement for another project.