Ten Taxpayer Citizens Group v. Cape Wind Assocs.

• Decision Date: 28 June 2004
• Docket Number: No. 03-2323.,03-2323.
• Citation: 373 F.3d 183
• Parties: TEN TAXPAYER CITIZENS GROUP; Cape Cod Marine Trades Association, Inc.; Raoul D. Ross; The Massachusetts Boating and Yacht Clubs Association, Inc., Plaintiffs, Appellants, v. CAPE WIND ASSOCIATES, LLC, Defendant, Appellee.
• Court: U.S. Court of Appeals — First Circuit

373 F.3d 183

TEN TAXPAYER CITIZENS GROUP; Cape Cod Marine Trades Association, Inc.; Raoul D. Ross; The Massachusetts Boating and Yacht Clubs Association, Inc., Plaintiffs, Appellants, v. CAPE WIND ASSOCIATES, LLC, Defendant, Appellee.

No. 03-2323.

United States Court of Appeals, First Circuit.

Heard May 3, 2004.

Decided June 28, 2004.

Rehearing and Suggestion for Rehearing En Banc Denied August 19, 2004.

COPYRIGHT MATERIAL OMITTED

John W. Spillane, with whom Spillane & Spillane, LLP was on brief, for appellants.

Timothy J. Dacey, with whom Kurt W. Hague and Goulston & Storrs, P.C. were on brief, for appellee.

Before TORRUELLA, Circuit Judge, COFFIN, Senior Circuit Judge, and LYNCH, Circuit Judge.

LYNCH, Circuit Judge.

This appeal is an early round in the legal battle over whether a commercial wind energy farm may be built in Nantucket Sound.

In October 2002, Ten Taxpayer Citizens Group and several additional plaintiffs (together, Ten Taxpayer) filed a lawsuit in Massachusetts state court to prevent Cape Wind Associates from erecting a 197-foot data collection tower in Nantucket Sound. The complaint alleged that Massachusetts state courts had jurisdiction over the project and that Cape Wind had failed to obtain the necessary permits under state law. Cape Wind removed the action to federal court and Ten Taxpayer moved to remand. After denying the motion to remand, the district court dismissed the complaint on August 19, 2003.

On appeal, Ten Taxpayer argues that the district court was obligated to remand the case to state court for lack of federal subject-matter jurisdiction. Ten Taxpayer also challenges the court's dismissal of the complaint. We affirm.

I.

The facts underlying this case are essentially undisputed. Where the parties disagree, we accept as true the well-pleaded factual allegations in the plaintiffs' complaint, drawing all reasonable inferences in their favor. Soto-Negron v. Taber Partners I, 339 F.3d 35, 38 (1st Cir.2003).

Cape Wind is a limited liability corporation based in South Yarmouth, Massachusetts. Its goal is to construct a commercial windmill farm on Horseshoe Shoals, a shallow area of Nantucket Sound more than three miles offshore. The proposed windmill farm includes at least 130 industrial wind turbines, each 470 feet tall. If it is completed as presently envisioned, the facility will spread across 28 square miles of Nantucket Sound and will be visible from shore. The project is the first of its kind in North America.

To construct the wind farm, Cape Wind needs extensive meteorological and oceanographic data concerning conditions on Horseshoe Shoals. For that purpose, Cape Wind in late 2001 announced plans to build a "scientific measurement device station" (SMDS) on Horseshoe Shoals. Intended as a temporary facility, the SMDS was designed to collect data for five years. It would consist of a data tower rising approximately 200 feet in the air, supported by three steel pilings driven 100 feet into the seabed. Together with its tripodal support structure, the tower would occupy about 900 square feet of ocean surface.

On August 19, 2002, the United States Army Corps of Engineers issued a permit to Cape Wind under § 10 of the Rivers and Harbors Act of 1899, 33 U.S.C. § 401 et seq., for construction of the SMDS.¹ Cape Wind neither sought nor obtained permits for the SMDS project under Massachusetts law. A few weeks later, the Coast Guard issued a public notice that construction of the data tower would commence on or about October 11, 2002. Construction was briefly delayed when Ten Taxpayer obtained a temporary restraining order from a state court in a related lawsuit. Ten Taxpayer voluntarily dismissed that suit, however, and the temporary restraining order lapsed by its own terms. On October 27, 2002, Cape Wind began construction of the SMDS. It is now complete and in operation.²

Ten Taxpayer filed this action in Barnstable Superior Court on October 16, 2002, shortly before construction of the data tower began. In its complaint, Ten Taxpayer acknowledged that the SMDS site is more than three miles from the nearest Massachusetts shoreline and that, accordingly, the location falls under the jurisdiction of the federal government. Nevertheless, Ten Taxpayer contended, Cape Wind could not build the SMDS without regulatory approval from Massachusetts because Congress has ceded to Massachusetts the power to regulate any activity affecting fishing in Nantucket Sound. Under the Massachusetts laws regulating fisheries and fish habitats, administrative approval is required for structures erected on the seabed. Because Cape Wind did not obtain such approval, Ten Taxpayer alleged, the SMDS project was in violation of Massachusetts law. Ten Taxpayer sought an injunction blocking construction of the SMDS or, if the court would not enjoin construction, a $25,000 fine for every day that the SMDS remained on Horseshoe Shoals.

Cape Wind immediately removed the case to federal court, asserting that federal jurisdiction was proper because Ten Taxpayer's complaint, on its face, states a federal question — i.e., whether Congress has in fact delegated to Massachusetts the necessary regulatory authority over Nantucket Sound. In the alternative, Cape Wind argued that regardless of what Ten Taxpayer actually pleaded in its complaint, deciding Ten Taxpayer's state claims would require resolution of a substantial question of federal law, cf. Almond v. Capital Props., Inc., 212 F.3d 20, 23 (1st Cir.2000) (describing so-called Smith jurisdiction), and that federal law completely preempts state law beyond three miles from the coast, cf. Beneficial Nat'l Bank v. Anderson, 539 U.S. 1, 6-7, 123 S.Ct. 2058, 156 L.Ed.2d 1 (2003) (describing the "complete preemption" doctrine). Ten Taxpayer moved to remand.

On November 14, 2002, the district court denied the motion to remand without opinion. Ten Taxpayer appealed that order, but this court dismissed the appeal on the ground that it was not a final judgment.

Meanwhile, on November 6, 2002, Cape Wind filed a motion in federal court to dismiss Ten Taxpayer's complaint. Cape Wind attached to its motion two letters from the Massachusetts Department of Environmental Management indicating that, at least under Mass. Gen. Laws ch. 132A, Massachusetts does not claim regulatory authority over activities on Horseshoe Shoals. Cape Wind also argued that Ten Taxpayer lacks standing to assert the Commonwealth's regulatory interest in offshore lands.

On August 19, 2003, the district court granted Cape Wind's motion to dismiss. Ten Taxpayers Citizen Group v. Cape Wind Assocs., LLC, 278 F.Supp.2d 98, 101 (D.Mass.2003). The court concluded that although Congress did delegate to Massachusetts the power to regulate fishing in Nantucket Sound, that grant did not confer on the Commonwealth a general warrant to "polic[e] the entire Nantucket Sound for environmental disturbances that could impact fishing." Id. Massachusetts had no authority over the construction of the SMDS, and thus no state permits were required. Id.

Ten Taxpayer filed this timely appeal.

II.

This case implicates the complex and rather obscure body of law that divides regulatory authority over Nantucket Sound between the state and federal governments. Because that body of law is essential to our disposition of this appeal, we summarize it briefly.

A. Regulation of the Seabed and Attached Structures

As a general rule, "paramount rights to the offshore seabed inhere in the Federal Government as an incident of national sovereignty." United States v. Maine (Maine I), 420 U.S. 515, 524, 95 S.Ct. 1155, 43 L.Ed.2d 363 (1975). In a series of cases beginning in 1947, the Supreme Court established that the United States enjoys exclusive title in the lands underlying the sea, regardless of a state's historical claims to the waters off its coast. See United States v. Texas, 339 U.S. 707, 719-20, 70 S.Ct. 918, 94 L.Ed. 1221 (1950); United States v. Louisiana, 339 U.S. 699, 705-06, 70 S.Ct. 914, 94 L.Ed. 1216 (1950); United States v. California, 332 U.S. 19, 29-39, 67 S.Ct. 1658, 91 L.Ed. 1889 (1947). Together, those cases established that the "control and disposition" of the seabed is "the business of the Federal Government rather than the States." Maine I, 420 U.S. at 522, 95 S.Ct. 1155.

That background rule, however, has been modified by Congress in several significant respects. Most importantly, Congress in 1953 passed the Submerged Lands Act (SLA), 43 U.S.C. § 1301 et seq., which grants to the states full title to the seabed within three geographical miles of their shores.³ See 43 U.S.C. §§ 1301, 1311. Moreover, Congress expressly recognized that three-mile line as the official seaward boundary of the coastal states. Id. § 1312.

Shortly thereafter, however, Congress enacted the Outer Continental Shelf Lands Act of 1953 (OCSLA), 43 U.S.C. § 1331 et seq. A major purpose of the OCSLA was to specify that federal law governs on the "outer Continental Shelf" — defined as all submerged lands under U.S. sovereign control lying seaward of the three-mile boundary, see 43 U.S.C. § 1331(a) — and on any fixed structures attached to the outer Continental Shelf. Rodrigue v. Aetna Casualty & Surety Co., 395 U.S. 352, 355, 89 S.Ct. 1835, 23 L.Ed.2d 360 (1969); see also 43 U.S.C. § 1332 (declaring it to be "the policy of the United States that ... the subsoil and seabed of the outer Continental Shelf appertain to the United States and are subject to its jurisdiction, control, and power of disposition"). The OCSLA makes the Constitution, laws, and civil and political jurisdiction of the United States fully applicable to the outer Continental Shelf. 43 U.S.C. § 1333(a)(1). It also establishes nationwide rules for the leasing and development of natural resources in the seabed outside of state territory. Id. § 1337. Further, the OCSLA provides a federal cause of action for any person aggrieved by a violation of those rules, id. §...