Otwell v. Ala. Power Co.

• Decision Date: 09 May 2013
• Docket Number: No. 6:11–cv–2139–LSC.,6:11–cv–2139–LSC.
• Citation: 944 F.Supp.2d 1134
• Parties: Charles R. OTWELL, Sr., et al., Plaintiffs, v. ALABAMA POWER COMPANY, Defendant.
• Court: U.S. District Court — Northern District of Alabama

944 F.Supp.2d 1134

Charles R. OTWELL, Sr., et al., Plaintiffs,

v.ALABAMA POWER COMPANY, Defendant.

No. 6:11–cv–2139–LSC.

United States District Court,

N.D. Alabama,

Jasper Division.

May 9, 2013.

Audrey Elaine Brown, Brooke G. Malcom, James Gorman Houston, Jr., John M. Johnson, Lightfoot, William S. Cox, II, Franklin & White LLC, Birmingham, AL, James C. King, King Wiley & Williams, Jasper, AL, for Plaintiffs.

Adam Kent Israel, Jason B. Tompkins, S. Allen Baker, Jr., Teresa G. Minor, Balch & Bingham, LLP, Birmingham, AL, James A. Byram, Jr., Balch & Bingham LLP, Montgomery, AL, for Defendant.

MEMORANDUM OF OPINION

L. SCOTT COOGLER, District Judge.

I. Introduction

Before this Court are cross motions for summary judgment: 1) Defendant Alabama Power Company's (“Alabama Power's”) Motion for Summary Judgment as to all of Plaintiffs' claims, filed on December 12, 2012 (Doc. 81), and 2) Plaintiffs' Motion for Partial Summary Judgment as to Count One of their Second Amended Complaint (Action for Declaratory Judgment of Riparian Rights), filed on January 17, 2013. (Doc. 89.) The motions are fully briefed and are now ripe for decision. Upon full consideration of the legal arguments and evidence presented, Alabama Power's Motion for Summary Judgment will be granted, and Plaintiffs' Cross Motion for Partial Summary Judgment will be denied.¹

II. Background Facts²and Procedural History1. Alabama Power's Federal Licensing and Development of Smith Dam

Alabama Power is an electric public utility engaged in the manufacture, supply and sale to the public of electricity in the State of Alabama, including electricity produced by water at hydroelectric power dams. In 1956, Alabama Power filed an application with the Federal Power Commission (“FPC”), the predecessor agency to the Federal Energy Regulatory Commission (the “FERC”), for a license under the Federal Power Act (“FPA”) for the Warrior River Project (“the Project”). The Project includes the Lewis Smith development, located in north central Alabama in the headwaters of the Black Warrior River on the Sipsey Fork in Cullman, Walker, and Winston counties. The Lewis Smith development consists of a 300–foot–high, earth and rock fill dam (“Smith Dam”); a 35–mile–long, 21,200 acre reservoir impounded by construction of the dam (“Smith Lake”), and a hydroelectric power house. The FPC issued a fifty-year license to Alabama Power for the Project effective September 1, 1957 (the “1957 License”). The license required the Project to be operated for flood control and hydroelectric power generation. Specifically, Smith Dam was to provide hydroelectric power storage between elevations of 488 to 510 feet above mean sea level (“msl”), flood control storage between elevations of 510 and 522 msl, and flood control surcharge between elevations of 522 and 540 msl. The 1957 License provided for flood control operations in accordance with certain specified conditions to be implemented by a Reservoir Regulation Manual (“the Manual”) to be prepared by the U.S. Army Corps of Engineers (the “Corps”). In issuing the 1957 License, the FPC found the Project “desirable and justified in the public interest” and stated:

The project is best adapted to a comprehensive plan for improving and developing the Sipsey Fork of the Black Warrior River and the Black Warrior River for the use and benefit of interstate or foreign commerce, for the improvement and utilization of water-power development, and for other beneficial public uses, including recreational purposes.

(Doc. 83–1, ¶ 10.)

2. Alabama Power's Acquisition of the Project Property

Pursuant to the 1957 License, Alabama Power was obligated to acquire the project lands required for the dam site and reservoir, the dam, power houses, and related equipment, and “all riparian or other rights, the use or possession of which is necessary or appropriate in the maintenance and operation of the project.” (Doc. 83–1, at 194–98.) Upon purchase of the dam site, Alabama Power was authorized by Alabama law “[t]o acquire by condemnation the lands and rights necessary for the construction and operation of the dam and works connected therewith or useful thereto, either up or downstream therefrom” and “all lands, waters, interests, rights, or easements in lands or waters likely to be flooded or damaged by impounding or diverting the water of any watercourse in this state....” (Doc. 83–4, at 3–4, ¶¶ 3–5.) Pursuant to this authority, Alabama Power either by negotiated purchase or condemnation acquired the property necessary to own and operate the Project, which was the property of the former owners in and to the portion of the real property lying below elevation 510 msl and by easement the right to inundate from time to time lands lying between 510 and 522 msl.

Plaintiffs Charles and Judy Otwell (“the Otwells”) own a subdivision lot on Smith Lake in Walker County, Alabama, which they purchased in 1986. The Otwells' lot is part of a parcel of land that Alabama Power obtained from John E. Gaddy and his wife by purchase in 1958. The Gaddy deed to Alabama Power provides that the land between elevations of 510 and 522 msl is encumbered by an easement, and the land below the elevation of 510 is owned in fee by Alabama Power.³

Plaintiff David Billings owns a lot on Smith lake described as 0.34 acres in Cullman County, Alabama. Billings' lot was part of a parcel of land that Alabama Power obtained from E.C. Harris and his wife by purchase in 1958. The Harris deed to Alabama Power also provides that the land between elevations of 510 and 522 msl is encumbered by an easement, and the land below the elevation of 510 is owned in fee by Alabama Power.⁴

The conveyances executed by the predecessors in title to the Otwells' and Billings' properties also included an exculpatory covenant for future operation of Smith Dam for the manufacture of electricity. (Doc. 83–4, ¶¶ 11, 13.)

Plaintiff KHFW, LLC is a real estate development company owned by Jared Key, a former plaintiff in this case, and others. In 2006, KHFW, LLC acquired property on Smith Lake consisting of approximately 22.17 acres in Winston County, Alabama. The property now owned by KHFW, LLC was part of a much larger parcel which Alabama Power obtained by condemnation from the Grief Brothers Cooperage Corporation, consisting of 203 acres.⁵ Alabama Power's condemnation proceedings for this parcel provided that the land was being acquired in order to operate a dam for the manufacture of electricity, that the land between elevations 510 and 522 msl would be encumbered by an easement, and the land below elevation 510 would be owned in fee by Alabama Power. The final condemnation order entered on September 6, 1958, granted to Alabama Power “the right to take, use and hold the lands and waters ... for the purpose of covering with water, and flooding ... in connection with the construction and operation of Lewis M. Smith Dam for the manufacture, supply and sale to the public of electric power....” (Doc. 83–4, ¶ 15.)

3. The Corps Reservoir Regulation Manual and Operations

Filling of Smith Lake commenced in 1960, minimum power pool elevations were reached in 1961, and commercial operation of Smith Dam began in September 1961. As specified in the 1957 License, the Corps developed, in cooperation with Alabama Power, a Manual which describes, among other things, Alabama Power's normal operation of Smith Lake and the procedure Alabama Power must use to operate the lake in a flood event. The Manual generally describes the Project as “a storage project constructed for the purpose of providing reservoir capacity for the generation of hydro-electric power and for flood control. It will normally be operated as a peaking plant to help meet load demands on the Alabama Power Company's system in the State of Alabama.” (Doc. 83–1, ¶ 13.) ⁶

The Manual also contains a guide curve or chart for power operation, illustrating the projected elevation of Smith Lake during normal operations by day of the year. The guide curve describes the probable range of drawdown of the lake waters as a band between elevations 488 and 496 msl from December to January, rising to between 506 and 510 msl by April and continuing in May, then gradually falling beginning in June until the reservoir reaches the 488 to 496 msl level by December 1. The “principle objective” in the development of these guide curves by Alabama Power and the Corps was to fill the reservoir during the early spring months to provide maximum hydroelectric energy during the peak season months (June through September), during which time the reservoir was drawn down to achieve minimum winter pool elevations by December 1.

Plaintiffs contend that the evidence submitted by Alabama Power shows that it has not always operated Smith Dam in accordance with the Corps' Manual's guide curves. Alabama Power submitted charts showing the elevation of Smith Lake for each year from 1961 to 2012. These charts show that the high and low elevations vary greatly from year to year based on precipitation, inflow and other factors, but that generally the reservoir level was maintained within the guide curves. In any event, the FERC has recognized that Alabama Power had discretion under the 1957 License to operate the Project “to best suit the system requirements” between the minimum power pool elevations of the lower guide curve and the top of the power pool at elevation 510 msl, as follows:

The chart referred to in the above-quoted text (Chart 8: Guide Curves and Rules of Project Operation) “shows guide curves for power operation which indicate the probable range of drawdown.” Unlike many cases involving guide curves, where the licensee would be required to operate within the band established by the curves, there was no requirement in the [1957 License] to operate within the guide curves. The only operating requirements were for flood control and navigation.... So long as Alabama Power met those two sets of requirements ...