Halifax County, Va. By and Through Bd. of Sup'rs v. Lever

• Decision Date: 02 November 1983
• Docket Number: No. 82-2012,82-2012
• Citation: 718 F.2d 649
• Court: U.S. Court of Appeals — Fourth Circuit
• Parties: COUNTY OF HALIFAX, VIRGINIA, acting By and Through the BOARD OF SUPERVISORS, its governing body, a Political Subdivision of the Commonwealth of Virginia, Halifax, Virginia; Synergics, Inc., a Maryland Corporation having its principal place of business in Annapolis, Maryland, Appellees, v. Kenneth LEVER, c/o Actaeon Corporation; Banister Development, Ltd., c/o Actaeon Corporation, Appellants.

Page 649

718 F.2d 649

COUNTY OF HALIFAX, VIRGINIA, acting By and Through the BOARD

OF SUPERVISORS, its governing body, a Political Subdivision

of the Commonwealth of Virginia, Halifax, Virginia;

Synergics, Inc., a Maryland Corporation having its principal place of business in Annapolis, Maryland, Appellees, v. Kenneth LEVER, c/o Actaeon Corporation; Banister

Development, Ltd., c/o Actaeon Corporation, Appellants.

No. 82-2012.

United States Court of Appeals, Fourth Circuit.

Argued June 6, 1983.

Decided Sept. 29, 1983.

Rehearing and Rehearing En Banc Denied Nov. 2, 1983.

Joseph M. Winston, Jr., Danville, Va. (Luis A. Abreu, Clement & Wheatley, Danville, Va., on brief), for appellants.

Thomas J. Wood, William W. Bennett, Jr., South Boston, Va. (Slayton, Bennett & Rand, South Boston, Va., on brief), for appellees.

Before RUSSELL and WIDENER, Circuit Judges, and BRYAN, Senior Circuit Judge.

DONALD RUSSELL, Circuit Judge:

The plaintiffs/appellees, County of Halifax, Virginia, and Synergics, Inc. filed this action in district court against Kenneth Lever and Banister Development, Ltd., defendants/appellants, asserting diversity jurisdiction and seeking by way of relief only "a mandatory injunction ... against defendants requiring [the defendants] to withdraw and relinquish all their rights obtained under the permit dated July 7, 1981, for the Banister Dam, Halifax County, Virginia, United States of America, Federal Energy Regulatory Commission, Project No. 3610-000, effective immediately; and further, to restrain and enjoin defendants from applying or filing with the Federal Energy Regulatory Commission any other permits, licenses or exemption applications for the Banister Dam, Halifax, Virginia; ...." The defendants moved to dismiss the action for lack of subject matter jurisdiction because the controversy was in effect one to invalidate a permit issued by the Federal Energy Regulatory Commission [FERC] under the Federal Power Act ¹ and to overturn the decision of FERC not to rescind that permit. Such a proceeding, they contend, was within the exclusive jurisdiction of the FERC. Assuming that the proceedings were within the exclusive jurisdiction of the FERC, the defendants argued in their motion that the plaintiffs had not exhausted their administrative remedies before said Commission under the Act by filing a petition for rehearing within thirty (30) days after the issuance of the challenged order of permit nor had they within the required time petitioned for review of the order of the Commission refusing to invalidate the temporary permit to an appropriate United States Court of Appeals which had the exclusive jurisdiction "to affirm, modify, or set aside" the Commission's order of permit. ² The District Court denied the motion to dismiss. Its ground for such denial was that plaintiffs' action was one in tort for fraud and deceit and as such did not arise under the Federal Power Act. It relied on the decision in Montana-Dakota Utilities Co. v. Northwestern Pub. Serv. Co., 341 U.S. 246, 71 S.Ct. 692, 95 L.Ed. 912 (1951), as authority for this ruling. The cause thereafter, with issues joined, proceeded to trial before the District Court and resulted in an order and decree "requiring Defendant to surrender his permit [to produce hydroelectric power at a dam on Banister River in Halifax County, Virginia] to FERC and [to] take no further action on said permit." The defendants have appealed. We reverse.

The threshold question which must first be answered in this appeal is the jurisdiction or power of the District Court. The resolution of that issue depends on the inherent nature and character of plaintiffs' action, an issue which requires some review of the record. The plaintiffs in their complaint have not sued in tort for damages sustained as a result of fraud and deceit; they sue in essence, to hold and set aside, by way of a mandatory injunction in the District Court, a temporary permit issued the defendants, after a properly noticed hearing, by the FERC under the Federal Power Act. That permit, which is the real subject of this action, was issued pursuant to an application filed by the defendants with the FERC for a temporary permit to develop a dam to generate hydroelectric energy at Banister Dam in Halifax County under Section 797(e), 16 U.S.C. of the Federal Power Act. The FERC gave notice of this filing to "any States or municipality likely to be interested in or affected by such application," which included Halifax County. It also published "notice of such application once each week for four weeks in a daily or weekly newspaper published" in Halifax County where the lands affected by the project were located as required in Sec. 797(f), 16 U.S.C. In addition, the notices as given stated specifically that "notices of intent to file competing applications had to be submitted to the Commission by April 6, 1981" and "that parties filing notices of intent had to submit [their] competing applications by June 5, 1981." The notice further stated that any "comments, protests, or petitions to intervene must be received on or before April 6, 1981."

On March 19, 1981, the plaintiff Halifax County filed a notice of intent to file an application for a preliminary permit prior to the April 6 deadline under the provisions of the Commission's regulation 18 CFR, Sec. 4.33(f) and (c), 1980, but it thereafter submitted no competing application by June 5, 1981, or by any later date. On July 2, 1981, however, after time for filing either a competing application or other type of application had expired, Halifax County filed a notice of intent to file an application for exemption from licensing. While such notice of the County was pending, the Director, Office of Electric Power Regulation in the FERC, ("Director") issued the preliminary permit to the defendants on July 7, 1981. Thereafter he "rejected as late the Halifax notice of intent for exemption." On July 16 and 22, 1981, the plaintiffs filed appeals from the orders of the Director. The FERC issued on August 17, 1981, a notice of intent to act on the appeals and suspended the effective date of the preliminary permit pending Commission action on the appeals. After receiving arguments from the parties, on October 8, 1981, the FERC issued its order denying the appeals of the plaintiffs. In its order it gave very definite reasons for such denial. The plaintiffs did not petition the Commission for rehearing but filed this action in the District Court seeking, in effect, the same relief they had sought of the Commission.

In its appeal as filed on July 22, 1981, Halifax County raised a number of claims of defects in the FERC proceedings. The first was directed at the scope and effect of its notice of intent to file a competing application as submitted to the FERC on March 19, 1981. According to plaintiff's argument, as set forth in its statement of grounds of appeal, such notice was "intended to protect fully [the County's] rights and options regarding the Banister Dam" and "was not intended to confine the [County's] options to the filing of an application for a preliminary permit or to preclude the filing of an exemption application." ³ Moreover, on July 2, 1981 (which, incidentally, was almost three months after the final date for filing a notice of intent to file a competing application and a month after the notice of the Commission required that a competing application be filed), the County asserts that it "reaffirm[ed] its intent to file a competing exemption application," but, without replying to such notice of intent the "FERC issued a preliminary permit" to the defendants.

The County, also, in its appeal invoked the authority of the Commission to "cancel a permit for other good cause shown, after notice and opportunity for hearing." 18 C.F.R. Sec. 4.83. It identified particularly as "good cause" for the cancellation that the defendants had "promised" the County that, its "permit application would be withdrawn if [it] was not the successful bidder on the Banister Dam," that it was not the successful bidder but that the defendants had "refused to honor this commitment," thereby "substantially jeopardiz[ing] [the County's] ability to allow the successful bidder to develop the Banister Dam." ⁴ It added that, unless granted a cancellation of defendants' permit, the County "will be unable to work with its developer of preference and will be compelled to work with a developer whose prior dealings with [it] can only be characterized as being in bad faith." The plaintiffs' final ground for cancellation was that it had been misled by members of the Commission's staff, with whom it had consulted, as to the scope and effect of its notice of intent to file a competing application.

From this review of the record, there can be no question about the nature and character of plaintiffs' proceedings in the District Court. It is not an action to recover damages for fraud or deceit; the plaintiffs do not even ask for damages. What they are asking the District Court to do is to grant them by way of relief in this proceeding in the District Court, in a somewhat left-handed way, exactly what it sought and was denied by the Commission in the administrative proceeding before it to which proceeding the County had been a party. After having unsuccessfully invoked the jurisdiction of the Commission to obtain that relief, the County now argues that the power to revoke the temporary permit issued by the Commission did not exist in the Commission and that the District Court has the power to provide it with relief by way of an improvised invalidation of the temporary permit granted the defendants.

We are unable to follow the County's reasoning. The plaintiffs have pursued the wrong road for the relief they seek. The Federal Power Act, "written in words of plain meaning," has committed to the Commission the exclusive right to grant, cancel, or rescind permits for the construction or...