State of N.C. v. City of Virginia Beach

Citation951 F.2d 596
Decision Date12 February 1992
Docket NumberNo. 91-2314,91-2314
Parties22 Envtl. L. Rep. 20,323 STATE OF NORTH CAROLINA; Roanoke River Basin Association, Plaintiffs-Appellees, v. CITY OF VIRGINIA BEACH, Defendant-Appellant.
CourtUnited States Courts of Appeals. United States Court of Appeals (4th Circuit)

John F. Kay, Jr., Mays & Valentine, Richmond, Va., argued (M. Scott Hart, George A. Somerville, Samuel M. Brock, III, Mays & Valentine, Richmond, Va., Leslie L. Lilley, City Atty., Jeffry A. Sachs, Asst. City Atty., City of Virginia Beach, Virginia Beach, Va., John R. Jordan, Jr., Robert R. Price, Jordan, Price, Wall, Gray & Jones, Raleigh, N.C., on brief), for defendant-appellant.

Alan S. Hirsch, Sp. Deputy Atty. Gen., Raleigh, N.C., Patrick M. McSweeney, McSweeney, Burtch & Crump, P.C., Richmond Before HALL, MURNAGHAN, and NIEMEYER, Circuit Judges.

Va., argued (Lacy H. Thornburg, Atty. Gen. of North Carolina, Timothy D. Nifong, Asst. Atty. Gen., Raleigh, N.C., Michael V. Hernandez, Richmond, Va., on brief), for plaintiffs-appellees.

OPINION

NIEMEYER, Circuit Judge:

Once again we are confronted with the long-running dispute over the use of the waters of Lake Gaston, a man-made lake which lies partly in Virginia and partly in North Carolina, in the basin of the Roanoke River. The City of Virginia Beach, Virginia, which is situated in the James River Basin, seeks to satisfy its potable water needs by building an 85-mile pipeline extending from Lake Gaston to Virginia Beach through which it can withdraw up to 60 million gallons of fresh water per day. The State of North Carolina and the Roanoke River Basin Association (collectively hereafter, North Carolina) 1 oppose the proposed diversion of water from the Roanoke River Basin, because they argue it will create a potential shortage there and stifle future development in the basin.

Although Virginia Beach has obtained a permit for construction of the pipeline from the Army Corps of Engineers, which was affirmed by the district court in North Carolina v. Hudson, 731 F.Supp. 1261 (E.D.N.C.1990), and by us in Roanoke River Basin Ass'n v. Hudson, 940 F.2d 58 (4th Cir.1991), it has not obtained approval from the Federal Energy Regulatory Commission (FERC), which is the licensor of the hydropower facility at Lake Gaston and the immediately surrounding land, known as FERC Project 2009.

On North Carolina's motion, the district court issued an injunction against Virginia Beach on December 10, 1990, that prevents it from commencing construction of any part of the pipeline project until the necessary approvals are obtained from FERC and until FERC has completed its environmental review. Relying on our decision in Maryland Conservation Council v. Gilchrist, 808 F.2d 1039, 1042 (4th Cir.1986), the district court concluded that any construction including even that outside FERC's jurisdiction, would impose public and political pressure on FERC to the point of usurping its ability to make a reasoned and independent environmental evaluation. The court also denied Virginia Beach's motion to alter or amend the injunction to allow Virginia Beach to proceed with two relatively small portions of the project outside of FERC's jurisdiction which are critical to maintaining a schedule and saving expense. From the district court's orders granting the injunction and denying the modification, this appeal is taken.

We are now presented with the questions of 1) whether the interest of FERC in approving changes at the hydropower facility at Lake Gaston (Project 2009) justifies an order prohibiting construction of other portions of the pipeline solely on the ground that FERC's review would improperly be influenced, and 2) whether FERC's intent to conduct an independent environmental review beyond its jurisdiction justifies an injunction prohibiting construction of those portions of the pipeline project not within its jurisdiction. Without reaching the question of whether all construction outside Project 2009 can proceed, we hold here that the commencement of construction of two relatively small portions of the pipeline project outside FERC Project 2009 does not apply such public and political pressure on FERC that it will be unable rationally to discharge its statutorily imposed responsibilities and that this construction will not interfere with FERC's responsibility in conducting an environmental review on other parts of the pipeline. Accordingly, we reverse the court's refusal to modify the injunction, without reaching the question beyond that modification of how much construction is too much.

I

Although the City of Virginia Beach, which is the most populous city in the State of Virginia, borders the lower Chesapeake Bay and the Atlantic Ocean, it has for many years suffered from fresh water shortages. 2 At various times in the past decade, water-use restrictions and water rationing have been imposed, and with the unexpectedly rapid population growth of the Virginia Beach community, the shortage grows more severe. Virginia Beach does not have a water supply of its own, and it has had to purchase its water from the City of Norfolk under a contract that obligates Norfolk only to provide Virginia Beach with "surplus" water. That contract expires in 1993. After exploring various options for alleviating the problem, such as desalination of sea water and wastewater reuse, Virginia Beach concluded that the best solution was to draw water through a pipeline from Lake Gaston.

Lake Gaston was created by construction of a dam on the Roanoke River for use as a hydropower project. The project was constructed in the 1950's by Virginia Power Company (VEPCO (formerly the Virginia Electric & Power Company)) under a license obtained from FERC 3 to construct, operate, and maintain the facility (Project 2009). VEPCO owns the hydropower generation facility and surrounding land that is included in Project 2009. Consequently, to obtain water from Lake Gaston, Virginia Beach must obtain easements from VEPCO to cross its land and VEPCO must obtain approval from FERC. North Carolina contends that VEPCO must also obtain a modification of its license from FERC to permit Virginia Beach to draw water from Lake Gaston.

In July 1983, Virginia Beach applied for a permit for the construction of the pipeline project from the Army Corps of Engineers, pursuant to 33 U.S.C. § 403 (1988). The pipeline project, which would lie wholly in the State of Virginia, would include six overhead river crossings, a pump station near Lake Gaston, and intake structures in and near the lake. The total cost of the project has been estimated at $218.9 million.

In December 1983, the Corps issued an Environmental Assessment (EA) and a Finding of No Significant Impact (FONSI), which concluded that there would be no significant impact on the quality of the human environment as a result of the pipeline project. Thus the Corps concluded that an Environmental Impact Statement (EIS), otherwise mandated by the National Environmental Policy Act (NEPA), 42 U.S.C. § 4332(2)(C) (1988), was not necessary. After a 30-day public comment period, the Corps issued a permit to Virginia Beach for the pipeline project.

Virginia Beach then, in 1984, approached VEPCO to obtain approval from FERC. VEPCO, however, declined to initiate the application to FERC until the permit from the Corps had been affirmed by the district court.

The issuance of the permit spawned two lawsuits. In the first, filed in the Eastern District of Virginia, Virginia Beach sought a declaratory judgment that the Corps' permit was valid. On appeal of an interlocutory order entered in that case, we held that the district court in Virginia had no personal jurisdiction over the Governor of North Carolina, who had been named as a defendant. City of Virginia Beach v. Roanoke River Basin Ass'n, 776 F.2d 484, 488 (4th Cir.1985). That case was thereafter transferred to the Eastern District of North Carolina where the second lawsuit, which was filed by the State of North Carolina and the Roanoke River Basin Association and challenged the issuance of the permit, was pending. The case transferred from Virginia was later dismissed when Virginia Beach was allowed to intervene in the North Carolina case and raise the same arguments it had made in the transferred case.

The district court issued two published opinions, North Carolina v. Hudson, 665 F.Supp. 428 (E.D.N.C.1987) (Hudson I ), and North Carolina v. Hudson, 731 F.Supp. 1261 (E.D.N.C.1990) (Hudson II ), the final effect of which was to reject North Carolina's challenge to the Corps' permit and to refuse to require that an EIS (environmental impact statement) be prepared. We affirmed the district court's ruling in Roanoke River Basin Ass'n v. Hudson, 940 F.2d 58 (4th Cir.1991), concluding that "[t]he Army Corps of Engineers properly considered all factors that it was required to consider before issuing a permit." 940 F.2d at 66.

After the district court decided Hudson II, but prior to our affirmance, Virginia Beach began the process of preparing an application, through VEPCO, to obtain FERC's approval of the grant of easements from VEPCO for use of the property within Project 2009. It also decided to commence construction of the portions of the pipeline project that were not under FERC's jurisdiction and awarded contracts toward that end. North Carolina, having learned that construction would commence on December 10, 1990, filed another suit on November 30, 1990, in the Eastern District of North Carolina for a preliminary and a permanent injunction to prohibit any construction of the pipeline pending approval by FERC. Ten days later the district court issued an injunction and a final decision on the merits prohibiting construction of any part of the pipeline project until FERC has approved "the application by VEPCO for the Non-Project Use of Project Lands and Waters." 4 Virginia Beach thereafter filed a ...

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