Southeastern Federal Power Customers v. Geren

• Decision Date: 05 February 2008
• Docket Number: No. 06-5081.,No. 06-5080.,06-5080.,06-5081.
• Citation: 514 F.3d 1316
• Parties: SOUTHEASTERN FEDERAL POWER CUSTOMERS, INC., Appellee v. Peter GEREN, Secretary of the United States Department of the Army, et al., Appellees. State of Florida, Appellant.
• Court: U.S. Court of Appeals — District of Columbia Circuit

514 F.3d 1316

SOUTHEASTERN FEDERAL POWER CUSTOMERS, INC., Appellee v. Peter GEREN, Secretary of the United States Department of the Army, et al., Appellees.

State of Florida, Appellant.

No. 06-5080.

No. 06-5081.

United States Court of Appeals, District of Columbia Circuit.

Argued November 16, 2007.

Decided February 5, 2008.

Appeals from the United States District Court for the District of Columbia (No. 00cv02975).

Parker D. Thomson argued the cause for appellant State of Florida. Matthew H. Lembke argued the cause for appellant State of Alabama. With them on the briefs were Bill McCollum, Attorney General, Attorney General's Office of the State of Florida, Jonathan A. Glogau, Chief, Complex Litigation, James T. Banks, William S. Cox, III, W. Larkin Radney, IV, and Scott B. Smith. R. Craig Kneisel, Christopher M. Kise, Donald G. Blankenau, H. Christopher Bartolomucci, and Lauren J. Caster, entered appearances.

Deborah M. Murray was on the brief for amici curiae Alabama Rivers Alliance, et al. in support of appellants. Mary M. Asbill entered, an appearance.

Michael T. Gray, Attorney, U.S. Department of Justice, argued the cause for federal appellee. Bruce P. Brown argued the cause for appellees State of Georgia, et al. Clinton A. Vince argued the cause for appellee Southeastern Federal Power Customers, Inc. With them on the brief were Robert H. Oakley, Attorney, U.S. Department of Justice, Thurbert E. Baker, Attorney General, Attorney General's Office for the State of Georgia, R. Todd Silliman, William M. Droze, J. Cathy Fogel, David A. Fitzgerald, Patricia T. Barmeyer, and Lewis B. Jones. Orlando E. Vidal, Philip D. Bartz, and Charles A. Zdebski, entered appearances.

Susan N. Kelly, Wallace F. Tillman, and Mary Ann Rails were on the brief for amici curiae American Public Power Association and National Rural Electric Cooperative Association in support of appellees.

Before: ROGERS and KAVANAUGH, Circuit Judges, and SILBERMAN, Senior Circuit Judge.

Opinion for the Court by Circuit Judge ROGERS.

Opinion by Senior Circuit Judge SILBERMAN concurring in the judgment.

ROGERS, Circuit Judge.

This case arises out of the requirements of three States for water stored in a federal reservoir. The States of Alabama and Florida appeal the order of the district court approving a Settlement Agreement between Southeastern Federal Power Customers, Inc. ("Southeastern"), a group of Georgia water supply providers ("Water Supply Providers"), the U.S. Army Corps of Engineers (the "Corps"), and the State of Georgia. The Agreement provides for a ten or twenty year "temporary" reallocation of over twenty percent (20%) of the water storage in the Lake Lanier reservoir, which is located in the State of Georgia and operated by the Corps. Alabama and Florida contend that the Agreement violates the Water Supply Act ("WSA"), 43 U.S.C. § 390b(d), the Flood Control Act ("FCA"), 33 U.S.C. § 708, and the National Environmental Protection Act ("NEPA"), 42 U.S.C. § 4321 et. seq. We need address only one of the statutory challenges. Under the WSA, the Corps must obtain prior Congressional approval before undertaking "major . . . operational changes." § 301(d), 43 U.S.C. § 390b(d). Because the Agreement's reallocation of Lake Lanier's storage space constitutes a major operational change on its face and has not been authorized by Congress, we reverse the district court's approval of the Agreement.

I.

The setting for this case is Lake Sidney Lanier, a federally owned reservoir operated by the Corps and located in Georgia. It was created by the construction of the Buford Dam on the Chattahoochee River, approximately fifty miles northeast of the city of Atlanta. To the south of the Buford Dam, the Chattahoochee joins the Flint River and the two become the Apalachicola River, which flows through northern Florida and eventually into the Gulf of Mexico. The three river systems make up the Apalachicola-Chattahoochee-Flint river basin ("ACF Basin"), which includes counties in Alabama.

Congress authorized the Corps to design and build Buford Dam in 1946, and the project was completed in the mid-1950s. Beginning in the 1970s, the Corps entered into a series of five-year renewable contracts that allowed some of Lake Lanier to be used for storage of local water supply. See Se. Fed. Power " Customers, Inc. v. Harvey, 400 F.3d 1, 2 (D.C.Cir.2005). The last of the local water storage contracts expired in 1990, but the Corps has permitted the withdrawal of water, in increasing amounts, under the terms of the expired contracts. Id.

In 1989, before the expiration of the last temporary local water storage contract, the Corps transmitted a report to Congress recommending that 207,000 acre-feet of storage in Lake Lanier be reallocated from hydropower to local consumption, noting that this might require Congressional approval. USACE, POST AUTHORIZATION CHANGE NOTIFICATION REPORT FOR THE REALLOCATION OF STORAGE FROM HYDROPOWER TO WATER SUPPLY AT LAKE LANIER, GEORGIA ("PAC REPORT") 1, 12, 26 (1989). In response, Alabama sued the Corps in the federal district court in the Northern District of Alabama, seeking to enjoin reallocation of Lake Lanier's storage space to water supply. This litigation resulted in a stay order, Alabama v. USAGE, No. CV90-H-1331-B (N.D.Ala. Sept. 19, 1990), and no permanent water storage reallocation was undertaken despite the recommendations of the PAC REPORT. In 1992, Alabama, Florida, Georgia and the Corps entered into a Memorandum of Agreement allowing existing withdrawals to continue or increase in response to reasonable demand; in 1997, the same three States and Congress approved the Apalachicola-Chattahoochee-Flint River Basin Compact ("Compact") to facilitate water storage allocation, planning and dispute resolution in the ACF Basin. Pub.L. No. 105404, 111 Stat. 2219. The Compact, which did not assign rights to any quantity of water, id. at 8, terminated on August 31, 2003, without resulting in an agreement on the allocation of water storage resources.

In 2000, Southeastern sued the Corps in the federal district court in the District of Columbia, challenging the Corps' statutory authority to divert water from Lake Lanier to the detriment of hydropower users and alleging economic injury stemming from increased withdrawals of water from Lake Lanier, which allegedly compromised use of Lake Lanier's water for power generation. Georgia thereafter petitioned the Assistant Secretary of the Army for Civil Works to formally reallocate reservoir storage space for local consumption—effectively requesting a threefold increase in the amount of space devoted to local water supply. In 2001, not having received a response to its request, Georgia sued the Corps in the federal district court in the Northern District of Georgia. In 2002, Georgia's request was denied. By letter of April 15, 2002, the Acting Assistant Secretary of the Army for Civil Works explained that because "[t]his request involves substantial withdrawals from Lake Lanier and accommodating it would affect authorized project purposes ... [the matter had been referred to] the Office of the Army General Counsel, [and t]hat office has ... concluded that it cannot be accommodated without additional Congressional authorization." Letter from R.L. Brownlee, to Hon. Roy E. Barnes, Governor of Georgia (Apr. 15, 2002), citing Memorandum of Earl Stockdale, Deputy Gen. Counsel, Dep't of the Army, regarding Georgia Request for Water Supply from Lake Lanier (Apr. 15, 2002) ("Army Legal Memorandum"). The Georgia lawsuit is currently abated. Georgia v. USAGE, 223 F.R.D. 691, 699 (N.D.Ga.2004).

Meanwhile, in March 2001, the D.C. district court referred the parties to mediation, where they were eventually joined by Georgia and the Water Supply Providers. The parties negotiated the Agreement at issue and signed it in January 2003. The Agreement specifies that Lake Lanier's storage space is 1,049,400 acre-feet. It requires the Corps to allocate between 210,858 and 240,858 acre-feet of Lake Lanier's water storage to local municipal and industrial uses for a once-renewable period of ten years; the exact amount of space allocated depends on whether Gwinnett County chooses to purchase all of the storage space to which it is entitled. If, under the Agreement, all of the storage space that may be officially dedicated to local consumption is, then the reallocation constitutes more than twenty-two percent (22%) of the total storage space in Lake Lanier and approximately nine percent (9%) more of the total storage space than was being allocated for local use in 2002. Compare Agreement at 5, and Army Legal Memorandum at 8, with Agreement at 6. The interim ten-year leases will become permanent if Congress approves the change in use or a final court judgment holds that such approval is not necessary, Agreement at 10, and the Corps commits to recommending that Congress formally "make the storage covered by the Interim Contracts available on a permanent basis," id. at 11. The Agreement also provides hydropower generators with payments in the form of "credit to be reflected in hydropower rates," based on "revenues paid into the United States Treasury [under contracts based on the Agreement]," to compensate for lost opportunities related to its reallocation of water storage rights. Id. at 13.

In October 2003, after the Agreement was signed, the D.C. district court allowed Alabama and Florida to intervene and denied the motions to transfer the case to the Georgia district court; Alabama and Florida also resuscitated the Alabama lawsuit that was filed in 1990. On October 15, 2003, the Alabama district court entered a preliminary injunction, preventing the Agreement from being implemented. The D.C. district court approved the Agreement on February 10, 2004, contingent upon the "dissolution of the [Alabama district court's] injunction." Se. Fed. Power Customers v. Caldera, 301 F.Supp.2d 26, 35 (D.D.C.2004)....