Charles R. Otwell, Sr. v. Alabama Power Company , 747 F.3d 1275 ( 2014 )

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[PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________
No. 13-12584
________________________
D.C. Docket No. 6:11-cv-02139-LSC
CHARLES R. OTWELL, SR.,
JUDY OTWELL,
DAVID BILLINGS,
KHFW, LLC,
Plaintiffs-Appellants,
versus
ALABAMA POWER COMPANY,
Defendant-Appellee.
________________________
Appeal from the United States District Court
for the Northern District of Alabama
________________________
(April 1, 2014)
Before HULL and BLACK, Circuit Judges, and SMITH, * District Judge.
BLACK, Circuit Judge:
*
Honorable C. Lynwood Smith, Jr., United States District Judge for the Northern District
of Alabama, sitting by designation.
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Charles and Judy Otwell, property owners on Smith Lake in north central
Alabama; David Billings, another property owner on Smith Lake; and KHFW,
LLC, a real estate development company that owns property on Smith Lake
(collectively, Appellants), appeal the district court’s grant of summary judgment to
Appellee Alabama Power Company (Alabama Power) on their complaint alleging
Alabama Power unreasonably lowers the water levels of Smith Lake. 1 We
conclude Appellants’ claims are an impermissible collateral attack on the agency
order authorizing Alabama Power to continue operating the lake and therefore
affirm.
I. BACKGROUND
The district court provided a thorough and cogent review of the history and
context of this case in its order granting summary judgment, and the parties do not
dispute the essential facts. Accordingly, we provide only a brief overview of the
pertinent information.
In 1957, the Federal Power Commission (FPC), the predecessor of the
Federal Energy Regulatory Commission (FERC), issued Alabama Power a 50-year
license (the 1957 License) to construct, operate, and maintain the Warrior River
Project (the Project), which included constructing the Lewis Smith Dam on the
Sipsey Fork of the Black Warrior River, creating a 21,200 acre reservoir (i.e.,
1
Appellants also challenge the district court’s denial of their cross-motion for partial
summary judgment.
2
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Smith Lake), and building hydroelectric power houses. In accordance with the
1957 License, Alabama Power purchased or condemned land and property rights
below 510 feet mean sea level (msl) from affected property owners and acquired
the right to inundate the lands between 510 and 522 feet msl under certain
conditions.
The 1957 License obligated Alabama Power to implement flood control
operations pursuant to a manual that Alabama Power would prepare in conjunction
with the Army Corps of Engineers. That manual describes the normal operation of
Smith Lake, provides procedures to be followed during a flood, and establishes
guide curves for the year-round elevation of the lake. The manual explains that
Alabama Power would operate the Project as a “peaking plant” to help meet energy
demands on the company’s system and, in so doing, would normally keep Smith
Lake at or below an elevation of 510 feet msl at all times when there was no
flooding. It is undisputed, however, that so long as Alabama Power operated the
Project to meet the dual requirements of flood control and downstream navigation,
it could conduct its operations “to best suit system requirements to obtain
maximum energy generation from water available and did not have to maintain
specified lake elevations.”
In 1974, Alabama Power began coordinating its operation of Smith Lake
with the Gorgas Steam Plant (Plant Gorgas), which is located approximately 44
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miles downstream from the dam. As part of the coordination procedure, Alabama
Power releases cold water from Smith Dam for Plant Gorgas to use in once-
through cooling—a process that allows the plant to meet regulatory requirements
for the temperature of discharges back into the river. Such coordination ordinarily
requires water to be released from the dam five days per week for five or six hours
per day from May through October.
In 2000, Alabama Power began the process of relicensing the Project and,
after consulting with numerous stakeholders, filed a renewal application with the
FERC in July 2005. The application provided that Alabama Power would continue
to operate the Project as a peaking plant and that no changes in the guide curve or
schedule for flood control operations were needed.
In 2007, while Alabama Power’s application was pending with the FERC,
the Smith Lake Improvement and Stakeholders Association (SLISA) intervened in
the relicensing proceedings. SLISA is “a non-profit organization representing
more than 3,000 property owners and other interested parties in and around Smith
Lake.” Jared Key—a former plaintiff in this case and one of the owners of
KHFW—is the president of SLISA. SLISA, as well as appellant David Billings,
actively participated in the relicensing proceedings and opposed Alabama Power’s
request to continue operating the Project as it had under the 1957 License. SLISA
specifically proposed that the elevation of Smith Lake be kept higher and more
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stable throughout the year and suggested that the FERC require Alabama Power to
construct cooling towers at Plant Gorgas (rather than allow the company to use
once-through cooling) to minimize the releases of water from Smith Dam.
In March 2009, the FERC issued a “Final Environmental Assessment” in
which it discussed SLISA’s proposal for more stable lake levels at length and
concluded that “the costs of [SLISA’s] alternative outweigh the benefits, and it is
not in the overall public interest to adopt this measure.” On March 31, 2010, the
FERC issued Alabama Power a 30-year license to continue operating the Project
(the 2010 License). In the 2010 License, the FERC stated it had considered and
rejected SLISA’s proposal for more stable lake levels and approved Alabama
Power’s plan for operating the Project “because it provide[d] for the
comprehensive use of multiple competing resources within the Warrior River and
downstream river basins.” SLISA filed a petition for rehearing.
On May 11, 2011, while SLISA’s petition for rehearing was pending with
the FERC, Appellants filed a putative class action against Alabama Power in the
Circuit Court of Walker County, Alabama. 2 In their complaint, Appellants alleged
2
Jared Key was also a plaintiff in the initial suit, but he and his claims were later
voluntarily dismissed from the case.
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Alabama Power unreasonably decreased lake levels during certain months of the
year to such an extent that they could not enjoy their property or the lake. 3
After Alabama Power removed the case to federal district court, the FERC
denied SLISA’s request for rehearing, reiterating that SLISA’s proposal for more
stable lake levels was not in the overall public interest. After amending their
complaint several times, Appellants ultimately asserted numerous state tort claims
against Alabama Power related to its allegedly unreasonable actions in lowering
the levels of Smith Lake. In the operative version of their complaint, Appellants
requested, inter alia, monetary damages, a declaratory judgment finding they had
riparian rights in the lake, and an injunction requiring Alabama Power to construct
cooling towers at Plant Gorgas.
Alabama Power filed a motion for summary judgment on all of the
Appellants’ claims, and Appellants filed a cross-motion for partial summary
judgment on their claim seeking a declaratory judgment that they possessed
riparian rights in Smith Lake. In a meticulous and particularly thoughtful order,
Judge Coogler granted Alabama Power’s motion for summary judgment and
denied Appellants’ cross-motion, finding in pertinent part that Appellants’ claims
were an impermissible collateral attack on the FERC’s 2010 relicensing order and,
3
The plaintiffs also alleged that Alabama Power improperly stored water on their
property between 510 and 522 feet msl during certain months of the year. The claims arising
from those allegations were voluntarily dismissed and are not part of this appeal.
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even if they were not, Alabama Power’s operation of the Project was reasonable
under Alabama law. This appeal followed.
II. STANDARD OF REVIEW
We review de novo a district court’s resolution of a motion for summary
judgment as well as “threshold justiciability determinations.” Ouachita Watch
League v. Jacobs, 463 F.3d 1163, 1169 (11th Cir. 2006). In reviewing a grant of
summary judgment, we view the facts and draw all reasonable inferences in the
light most favorable to the nonmoving party. Goodman v. Kimbrough, 718 F.3d
1325, 1331 (11th Cir. 2013). We review the district court’s denial of declaratory
relief for abuse of discretion. Frulla v. CRA Holdings, Inc., 543 F.3d 1247, 1251
(11th Cir. 2008).
III. DISCUSSION
We begin our analysis with a brief discussion of federal jurisdiction and the
constitutional standing requirements of Article III. After concluding Appellants
have alleged a cognizable injury in fact, we address their contention that the
district court abused its discretion by declining to issue a declaratory judgment
finding that they possess riparian rights in Smith Lake. Finding no abuse of
discretion in the district court’s refusal to grant declaratory relief, we address the
district court’s grant of summary judgment to Alabama Power and hold that
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Appellants’ claims are inescapably intertwined with a review of the 2010 License
and constitute an impermissible collateral attack on the FERC’s final order.
A. Standing
Appellants argue the district court abused its discretion by declining to
decide whether they have riparian rights in the waters of Smith Lake. They
contend the district court should have addressed whether they have riparian rights
in order to assure itself of its jurisdiction to resolve this case. According to
Appellants, if they do not possess riparian rights in the lake, then they do not have
standing to assert their claims. Because “we have an obligation to assure ourselves
of a litigant’s standing under Article III,” we consider Appellants standing
arguments before addressing the propriety of the district court’s grant of summary
judgment. Ouachita Watch League, 463 F.3d at 1169.
The doctrine of standing does not support Appellants’ arguments. Article III
of the Constitution limits the power of the federal courts to resolving cases and
controversies. U.S. Const. art. III, § 2. Standing “is an essential and unchanging
part of the case-or-controversy requirement of Article III.” DiMaio v. Democratic
Nat’l Comm., 520 F.3d 1299, 1301 (11th Cir. 2008) (quotation marks omitted). To
satisfy Article III’s standing requirements, a plaintiff must show (1) he has suffered
an injury in fact that is concrete and particularized as well as actual or imminent,
(2) the injury is traceable to the defendant, and (3) it is likely the injury will be
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redressed by a favorable decision. Friends of the Earth, Inc. v. Laidlaw Envtl.
Servs. (TOC), Inc., 528 U.S. 167, 180-81, 120 S. Ct. 693, 704 (2000).
Regardless of whether Appellants have riparian rights in Smith Lake, the
alleged harm to their recreational interests in the lake is a concrete and
particularized injury in fact that gives them Article III standing. See Sierra Club v.
Tenn. Valley Auth., 430 F.3d 1337, 1344 (11th Cir. 2005) (“In an environmental
case, an individual plaintiff may show . . . injury in fact[] by attesting that he uses,
or would use more frequently, an area affected by the alleged violations and that
his aesthetic or recreational interests in the area have been harmed”).4 Appellants
have alleged a concrete and particularized injury in fact to their recreational
interests, see Nat’l Parks Conservation Ass’n v. Norton, 324 F.3d 1229, 1242-43
(11th Cir. 2003), that injury is traceable to Alabama Power, and that injury would
likely be redressed by a favorable decision. Accordingly, Appellants meet the
4
Appellants’ standing is entirely independent of whether they actually have riparian
rights in Smith Lake. It is immaterial that the specific claims Appellants chose to pursue would
fail in the absence of riparian rights because the district court’s jurisdiction to resolve cases and
controversies does not hinge on the ultimate success or failure of a plaintiff’s claims. See Swann
v. Sec’y of Ga., 668 F.3d 1285, 1288 (11th Cir. 2012) (“We have held that standing is a threshold
jurisdictional question which must be addressed prior to and independent of the merits of a
party’s claims.” (quotation marks and brackets omitted)); Bochese v. Town of Ponce Inlet, 405
F.3d 964, 976 (11th Cir. 2005) (“[S]tanding in no way depends on the merits of the plaintiff’s
contention that particular conduct is illegal. . . .”).
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constitutional standing requirements.5 See Friends of the Earth, 528 U.S. at
180-81, 120 S. Ct. at 704.
B. Declaratory Relief
Having assured ourselves that Article III’s standing requirements have been
met, we conclude the district court did not abuse its discretion in declining to issue
a declaratory judgment concerning Appellants’ purported riparian rights. It is well
established that district courts have exceptionally broad discretion in deciding
whether to issue a declaratory judgment, and the remedy is not obligatory. Wilton
v. Seven Falls Co., 515 U.S. 277, 286-88, 115 S. Ct. 2137, 2142-43 (1995). The
Supreme Court has explained that, “[s]ince its inception, the Declaratory Judgment
Act has been understood to confer on federal courts unique and substantial
discretion in deciding whether to declare the rights of litigants,” and that “[t]he
statute’s textual commitment to discretion, and the breadth of leeway [the Court
has] always understood it to suggest, distinguish the declaratory judgment context
from other areas of the law in which concepts of discretion surface.” Id. at 286-87,
115 S. Ct. at 2142.
5
Our conclusion that the standing requirements of Article III were satisfied in this case
does not conflict with our holding that the exclusive review provision of the Federal Power Act
(FPA) prevented Appellants from pursuing their claims in the district court. Although the FPA
directs all challenges to the FERC’s final orders directly from the agency to this Court, the
statute’s judicial review mechanism did not negate the fact that Appellants’ have alleged a
cognizable injury in fact for Article III purposes.
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As the district court recognized, the question of whether Appellants have
riparian rights in Smith Lake is not dispositive of their claims. Even if they have
such rights, Alabama Power might not have violated those rights or might
otherwise avoid liability for any number of reasons. Appellants did not have a
right to a declaratory judgment, and the district court did not abuse its substantial
discretion by assuming Appellants had riparian rights and then resolving their
claims on an alternative basis. See Ameritas Variable Life Ins. Co. v. Roach, 411
F.3d 1328, 1330 (11th Cir. 2005) (“The Declaratory Judgment Act is an enabling
Act, which confers a discretion on courts rather than an absolute right upon the
litigant.” (quotation marks omitted)); see also Wilton, 515 U.S. at 289, 115 S. Ct. at
2144 (“[F]acts bearing on the usefulness of the declaratory judgment remedy, and
the fitness of the case for resolution, are peculiarly within [the district court’s]
grasp.”). Accordingly, we affirm the district court’s denial of Appellants’ motion
for partial summary judgment.
C. Collateral Attack
Appellants contend the district court erred by finding their claims were an
impermissible collateral attack on the FERC’s relicensing order because, rather
than challenging the agency’s decision, Appellants simply sought to enforce their
riparian rights. Appellants also maintain they are distinct parties from SLISA and
that they do not seek to vindicate the same interests SLISA pursued before the
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FERC since they assert different claims and request different relief. In addition,
Appellants argue that 16 U.S.C. § 821 expressly preserves state common law
property rights and allows them to pursue their claims.
1. Section 825l(b)
We agree with the district court that Appellants’ claims are a collateral
attack on the FERC’s final relicensing determination. The Federal Power Act
(FPA) contains a judicial review provision which vests the federal courts of
appeals with exclusive jurisdiction to affirm, modify, or set aside an order of the
FERC. 16 U.S.C. § 825l(b). Section 825l(b) provides:
Any party to a proceeding under this chapter aggrieved by an order
issued by the Commission in such proceeding may obtain a review of
such order in the United States Court of Appeals for any circuit
wherein the licensee or public utility to which the order relates is
located or has its principal place of business, or in the United States
Court of Appeals for the District of Columbia, by filing in such court,
within sixty days after the order of the Commission upon the
application for rehearing, a written petition praying that the order of
the Commission be modified or set aside in whole or in part. . . . Upon
the filing of such petition such court shall have jurisdiction, which
upon the filing of the record with it shall be exclusive, to affirm,
modify, or set aside such order in whole or in part.
Id.
The Supreme Court has explained that, in enacting § 825l(b), Congress
“prescribed the specific, complete and exclusive mode for judicial review of the
Commission’s orders.” City of Tacoma v. Taxpayers of Tacoma, 357 U.S. 320,
336, 78 S. Ct. 1209, 1218 (1958). Thus, § 825l(b) “necessarily preclude[s] de
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novo litigation between the parties of all issues inhering in the controversy, and all
other modes of judicial review,” and requires that “all objections to the order, to
the license it directs to be issued, and to the legal competence of the licensee to
execute its terms, must be made in the Court of Appeals or not at all.” Id. at 336,
78 S. Ct. at 1219.
Appellants cannot escape § 825l(b)’s strict judicial review provision by
arguing that they are pursuing different claims and different relief than the parties
before the FERC. See id. (stating § 825l(b) encompasses “all issues inhering in the
controversy”). Appellants’ suit sought more stable water levels in Smith Lake, and
Appellants explicitly requested an injunction requiring Alabama Power to
construct cooling towers at Plant Gorgas—proposals expressly considered and
rejected by the FERC in its relicensing proceedings, in the order issuing the 2010
License, and in its order denying rehearing. Appellants are attempting to obtain
the same results and to place the same constraints on Alabama Power rejected by
the agency in the exercise of its institutional expertise, and their claims are
inescapably intertwined with a review of the FERC’s final decision. See Doe v.
FAA, 432 F.3d 1259, 1263 (11th Cir. 2005) (considering a challenge to a decision
of the Federal Aviation Administration and concluding the plaintiff’s claims were
an impermissible collateral attack on the agency order because they were
inescapably intertwined with a review of the procedures and actions taken by the
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FAA); see also Merritt v. Shuttle, Inc., 245 F.3d 182, 187 (2d Cir. 2001)
(explaining that “statutes . . . that vest judicial review of administrative orders
exclusively in the courts of appeals also preclude district courts from hearing
claims that are ‘inescapably intertwined’ with review of such orders”). The review
entailed by Appellants’ claims is statutorily dedicated to the court of appeals, and
the district court did not err by concluding it could not resolve the merits of
Appellants’ suit. Cf. Telecomms. Research & Action Ctr. v. FCC, 750 F.2d 70, 78
(D.C. Cir. 1984) (explaining that exclusive judicial review provisions implicate
compelling considerations, including judicial economy, fairness, and the
elimination of duplicative and potentially conflicting review).
Appellants’ argument that they are not subject to the exclusive judicial
review provision of § 825l(b) because they are distinct parties from SLISA and did
not participate in the proceedings before the FERC is unavailing. We do not read
§ 825l(b) as allowing any person or entity that was not a party to the FERC
proceedings to collaterally challenge the final order resulting from those
proceedings. Instead, we read § 825l(b) as limiting the persons who may seek
judicial review of an order of the FERC to those parties who participated in the
FERC proceedings. 16 U.S.C. § 825l(b). Thus, non-parties to the proceedings
before the FERC may not contest the agency’s final decision in an alternative
forum by bringing challenges that are inescapably intertwined with a review of the
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agency’s final determination. Cal. Trout v. FERC, 572 F.3d 1003, 1013 (9th Cir.
2009) (“Because section [825l(b)] enumerates the specific, complete and exclusive
mode for judicial review of the Commission’s orders, a non-party to the
Commission’s proceedings may not challenge the Commission’s final
determination in any court.” (quotation marks and citation omitted)).
Our reading of the statute accords with the Supreme Court’s statements in
City of Tacoma that § 825l(b) precludes all other modes of judicial review and that
all objections to the FERC’s order “must be made in the Court of Appeals or not at
all.” 357 U.S. at 336, 78 S. Ct. at 1219. Our interpretation of § 825l(b) also
prevents the provision from being rendered nugatory. See United States v. Tohono
O’Odham Nation, 131 S. Ct. 1723, 1730 (2011). Under Appellants’ approach, any
person or entity with an interest in the proceedings before the FERC could evade
the FPA’s exclusive judicial review provision by simply choosing not to participate
in the proceedings, or by creating a corporate entity to champion its interests
before the agency. Then, following an adverse order, the non-participants could
obtain a collateral redetermination of the identical issues considered and rejected in
the FERC’s final order because those persons were not parties to the proceedings.
Such a construction of the statute would do violence to Congress’s deliberately
crafted administrative scheme and would eviscerate § 825l(b).
2. Section 821
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Appellants argue § 821 of the FPA “saves” their state common law rights
and allows them to assert their state law claims against Alabama Power. We are
unpersuaded.
Section 821 provides that:
[n]othing contained in this chapter shall be construed as affecting or
intending to affect or in any way to interfere with the laws of the
respective States relating to the control, appropriation, use, or
distribution of water used in irrigation or for municipal or other uses,
or any vested right acquired therein.
16 U.S.C. § 821. The Supreme Court has stated that the FPA:
discloses both a vigorous determination of Congress to make progress
with the development of the long idle water power resources of the
nation and a determination to avoid unconstitutional invasion of the
jurisdiction of the states. The solution reached is to apply the
principle of the division of constitutional powers between the state
and Federal Governments.
First Iowa Hydro-Electric Coop. v. Fed. Power Comm’n, 328 U.S. 152, 171, 66 S.
Ct. 906, 915 (1946). In that context, the Supreme Court explained that § 821
protects state laws from federal preemption but is limited “to laws as to the control,
appropriation, use or distribution of water in irrigation or for municipal or other
uses of the same nature.” Id. at 175-76, 66 S. Ct. at 917. The Court emphasized
that the words “other uses” are “confined to rights of the same nature as those
relating to the use of water in irrigation or for municipal purposes.” Id. at 176, 66
S. Ct. at 917.
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More recently, in California v. FERC, 495 U.S. 490, 499, 110 S. Ct. 2024,
2030 (1990), the Supreme Court adhered to a narrow construction of § 821 and
emphasized that the FPA “establishes a broad and paramount federal regulatory
role.” In California, the state of California and the federal government both sought
to regulate the amount of water a FERC-licensed power plant had to maintain in a
specific section of a stream. Id. at 493-94, 110 S. Ct. at 2027. In concluding that
the power plant was subject to the minimum flow rates established by the FERC
rather than the state, the Supreme Court reaffirmed the validity of First Iowa and
reiterated that § 821 is limited to proprietary rights “of the same nature as those
relating to the use of water in irrigation or for municipal purposes.” Id. at 497-98,
110 S. Ct. at 2029 (quotation omitted). The Court explained that “California’s
minimum stream flow requirements neither reflect nor establish ‘proprietary
rights,’ or ‘rights of the same nature as those relating to the use of water in
irrigation or for municipal purposes.’” Id. at 498, 110 S. Ct. at 2029 (quoting First
Iowa, 328 U.S. at 176, 66 S. Ct. at 917). The Supreme Court also concluded that
First Iowa’s interpretation of § 821 was not dicta. Id. at 500-02, 110 S. Ct. at
2030-31.
Appellants’ purported rights in Smith Lake relate to their recreational use of
the lake. Those alleged rights are not similar in nature to rights relating to
irrigation and municipal uses and therefore do not fall within the scope of § 821, as
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interpreted by the Supreme Court. Appellants attempt to distinguish First Iowa
and California from the present case by asserting this case involves discretionary
conduct while First Iowa and California involved mandatory state regulations.
The discretion granted to Alabama Power under its FERC license, however, is
completely unrelated to the type of rights that fall within the ambit of § 821.
Appellants’ purported rights to the recreational use of Smith Lake would not relate
to irrigation or municipal uses even if the guide curve were mandatory or if
Alabama Power had no discretion regarding the operation of the Project.
Section 821 does not allow Appellants to veto the operation of a project that was
approved and licensed by the FERC, see California, 495 U.S. at 506-07, 110 S. Ct.
at 2034, and the district court’s grant of summary judgment to Alabama Power is
affirmed. 6
IV. CONCLUSION
For the foregoing reasons, we affirm the district court’s judgment denying
Appellants’ motion for partial summary judgment and granting summary judgment
to Alabama Power.
AFFIRMED.
6
Because we conclude Appellants could not pursue their claims directly in the district
court, we need not address the district court’s alternative finding that Alabama Power’s operation
of the Project was reasonable under state law.
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