United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued November 16, 2007 Decided February 5, 2008
No. 06-5080
SOUTHEASTERN FEDERAL POWER CUSTOMERS, INC.,
APPELLEE
v.
PETER GEREN, SECRETARY OF THE
UNITED STATES DEPARTMENT OF THE ARMY, ET AL.,
APPELLEES
STATE OF FLORIDA,
APPELLANT
Consolidated with
No. 06-5081
Appeals from the United States District Court
for the District of Columbia
(No. 00cv02975)
Parker D. Thomson argued the cause for appellant State of
Florida. Matthew H. Lembke argued the cause for appellant
State of Alabama. With them on the briefs were Bill McCollum,
Attorney General, Attorney General’s Office of the State of
Florida, Jonathan A. Glogau, Chief, Complex Litigation, James
2
T. Banks, William S. Cox, III, W. Larkin Radney, IV, and Scott
B. Smith. R. Craig Kneisel, Christopher M. Kise, Donald G.
Blankenau, H. Christopher Bartolomucci, and Lauren J. Caster
entered appearances.
Deborah M. Murray was on the brief for amici curiae
Alabama Rivers Alliance, et al. in support of appellants. Mary
M. Asbill entered an appearance.
Michael T. Gray, Attorney, U.S. Department of Justice,
argued the cause for federal appellee. Bruce P. Brown argued
the cause for appellees State of Georgia, et al. Clinton A. Vince
argued the cause for appellee Southeastern Federal Power
Customers, Inc. With them on the brief were Robert H. Oakley,
Attorney, U.S. Department of Justice, Thurbert E. Baker,
Attorney General, Attorney General’s Office for the State of
Georgia, R. Todd Silliman, William M. Droze, J. Cathy Fogel,
David A. Fitzgerald, Patricia T. Barmeyer, and Lewis B. Jones.
Orlando E. Vidal, Philip D. Bartz, and Charles A. Zdebski
entered appearances.
Susan N. Kelly, Wallace F. Tillman, and Mary Ann Ralls
were on the brief for amici curiae American Public Power
Association and National Rural Electric Cooperative
Association in support of appellees.
Before: ROGERS and KAVANAUGH, Circuit Judges, and
SILBERMAN, Senior Circuit Judge.
Opinion for the Court by Circuit Judge ROGERS.
Opinion by Senior Circuit Judge SILBERMAN concurring in
the judgment.
3
ROGERS, Circuit Judge: This case arises out of the
requirements of three States for water stored in a federal
reservoir. The States of Alabama and Florida appeal the order
of the district court approving a Settlement Agreement between
Southeastern Federal Power Customers, Inc. (“Southeastern”),
a group of Georgia water supply providers (“Water Supply
Providers”), the U.S. Army Corps of Engineers (the “Corps”),
and the State of Georgia. The Agreement provides for a ten or
twenty year “temporary” reallocation of over twenty percent
(20%) of the water storage in the Lake Lanier reservoir, which
is located in the State of Georgia and operated by the Corps.
Alabama and Florida contend that the Agreement violates the
Water Supply Act (“WSA”), 43 U.S.C. § 390b(d), the Flood
Control Act (“FCA”), 33 U.S.C. § 708, and the National
Environmental Protection Act (“NEPA”), 42 U.S.C. § 4321 et.
seq. We need address only one of the statutory challenges.
Under the WSA, the Corps must obtain prior Congressional
approval before undertaking “major . . . operational changes.”
§ 301(d), 43 U.S.C. § 390b(d). Because the Agreement’s
reallocation of Lake Lanier’s storage space constitutes a major
operational change on its face and has not been authorized by
Congress, we reverse the district court’s approval of the
Agreement.
I.
The setting for this case is Lake Sidney Lanier, a federally
owned reservoir operated by the Corps and located in Georgia.
It was created by the construction of the Buford Dam on the
Chattahoochee River, approximately fifty miles northeast of the
city of Atlanta. To the south of the Buford Dam, the
Chattahoochee joins the Flint River and the two become the
Apalachicola River, which flows through northern Florida and
eventually into the Gulf of Mexico. The three river systems
4
make up the Apalachicola-Chattahoochee-Flint river basin
(“ACF Basin”), which includes counties in Alabama.
Congress authorized the Corps to design and build Buford
Dam in 1946, and the project was completed in the mid-1950s.
Beginning in the 1970s, the Corps entered into a series of five-
year renewable contracts that allowed some of Lake Lanier to be
used for storage of local water supply. See Se. Fed. Power
Customers, Inc. v. Harvey, 400 F.3d 1, 2 (D.C. Cir. 2005). The
last of the local water storage contracts expired in 1990, but the
Corps has permitted the withdrawal of water, in increasing
amounts, under the terms of the expired contracts. Id.
In 1989, before the expiration of the last temporary local
water storage contract, the Corps transmitted a report to
Congress recommending that 207,000 acre-feet of storage in
Lake Lanier be reallocated from hydropower to local
consumption, noting that this might require Congressional
approval. USACE, POST AUTHORIZATION CHANGE
NOTIFICATION REPORT FOR THE REALLOCATION OF STORAGE
FROM HYDROPOWER TO WATER SUPPLY AT LAKE LANIER,
GEORGIA (“PAC REPORT”) 1, 12, 26 (1989). In response,
Alabama sued the Corps in the federal district court in the
Northern District of Alabama, seeking to enjoin reallocation of
Lake Lanier’s storage space to water supply. This litigation
resulted in a stay order, Alabama v. USACE, No. CV90-H-1331-
B (N.D. Ala. Sept. 19, 1990), and no permanent water storage
reallocation was undertaken despite the recommendations of the
PAC REPORT. In 1992, Alabama, Florida, Georgia and the
Corps entered into a Memorandum of Agreement allowing
existing withdrawals to continue or increase in response to
reasonable demand; in 1997, the same three States and Congress
approved the Apalachicola-Chattahoochee-Flint River Basin
Compact (“Compact”) to facilitate water storage allocation,
planning and dispute resolution in the ACF Basin. Pub. L. No.
5
105-104, 111 Stat. 2219. The Compact, which did not assign
rights to any quantity of water, id. at 8, terminated on August 31,
2003, without resulting in an agreement on the allocation of
water storage resources.
In 2000, Southeastern sued the Corps in the federal district
court in the District of Columbia, challenging the Corps’
statutory authority to divert water from Lake Lanier to the
detriment of hydropower users and alleging economic injury
stemming from increased withdrawals of water from Lake
Lanier, which allegedly compromised use of Lake Lanier’s
water for power generation. Georgia thereafter petitioned the
Assistant Secretary of the Army for Civil Works to formally
reallocate reservoir storage space for local consumption —
effectively requesting a threefold increase in the amount of
space devoted to local water supply. In 2001, not having
received a response to its request, Georgia sued the Corps in the
federal district court in the Northern District of Georgia. In
2002, Georgia’s request was denied. By letter of April 15, 2002,
the Acting Assistant Secretary of the Army for Civil Works
explained that because “[t]his request involves substantial
withdrawals from Lake Lanier and accommodating it would
affect authorized project purposes . . . [the matter had been
referred to] the Office of the Army General Counsel, [and t]hat
office has . . . concluded that it cannot be accommodated
without additional Congressional authorization.” Letter from R.
L. Brownlee, to Hon. Roy E. Barnes, Governor of Georgia (Apr.
15, 2002), citing Memorandum of Earl Stockdale, Deputy Gen.
Counsel, Dep’t of the Army, regarding Georgia Request for
Water Supply from Lake Lanier (Apr. 15, 2002) (“Army Legal
Memorandum”). The Georgia lawsuit is currently abated.
Georgia v. USACE, 223 F.R.D. 691, 699 (N.D. Ga. 2004).
Meanwhile, in March 2001, the D.C. district court referred
the parties to mediation, where they were eventually joined by
6
Georgia and the Water Supply Providers. The parties negotiated
the Agreement at issue and signed it in January 2003. The
Agreement specifies that Lake Lanier’s storage space is
1,049,400 acre-feet. It requires the Corps to allocate between
210,858 and 240,858 acre-feet of Lake Lanier’s water storage to
local municipal and industrial uses for a once-renewable period
of ten years; the exact amount of space allocated depends on
whether Gwinnett County chooses to purchase all of the storage
space to which it is entitled. If, under the Agreement, all of the
storage space that may be officially dedicated to local
consumption is, then the reallocation constitutes more than
twenty-two percent (22%) of the total storage space in Lake
Lanier and approximately nine percent (9%) more of the total
storage space than was being allocated for local use in 2002.
Compare Agreement at 5, and Army Legal Memorandum at 8,
with Agreement at 6. The interim ten-year leases will become
permanent if Congress approves the change in use or a final
court judgment holds that such approval is not necessary,
Agreement at 10, and the Corps commits to recommending that
Congress formally “make the storage covered by the Interim
Contracts available on a permanent basis,” id. at 11. The
Agreement also provides hydropower generators with payments
in the form of “credit to be reflected in hydropower rates,” based
on “revenues paid into the United States Treasury [under
contracts based on the Agreement],” to compensate for lost
opportunities related to its reallocation of water storage rights.
Id. at 13.
In October 2003, after the Agreement was signed, the D.C.
district court allowed Alabama and Florida to intervene and
denied the motions to transfer the case to the Georgia district
court; Alabama and Florida also resuscitated the Alabama
lawsuit that was filed in 1990. On October 15, 2003, the
Alabama district court entered a preliminary injunction,
preventing the Agreement from being implemented. The D.C.
7
district court approved the Agreement on February 10, 2004,
contingent upon the “dissolution of the [Alabama district
court’s] injunction.” S. Fed. Power Customers v. Caldera, 301
F. Supp. 2d 26, 35 (D.D.C. 2004). The district court rejected
Alabama’s and Florida’s argument that the Agreement exceeded
the authority conferred on the Corps by Congress, including
applicable provisions of the WSA, the FCA and NEPA. Id. at
31. It also concluded that while the Agreement would affect
hydropower generation, an original purpose of Lake Lanier, the
assent of the hydropower generators meant that Congressional
approval for the allocation of storage space was not required.
Id. at 31-32. The district court quoted the WSA’s “operational
change” provision, but did not explicitly address this issue. See
id.
This court dismissed the initial appeal filed by Alabama and
Florida for lack of a final order, in view of the conditional nature
of the district court’s approval of the Agreement. Se. Fed.
Power, 400 F.3d at 5. Following the dissolution of the Alabama
district court’s injunction, Alabama v. USACE, 424 F.3d 1117,
1136 (11th Cir. 2005), the D.C. district court, on March 9, 2006,
entered a final judgment that is the basis for this appeal by
Alabama and Florida.
II.
Alabama and Florida contend that the Agreement should be
set aside because it violates the WSA, the FCA, and NEPA.
They maintain that the reallocation in the Agreement requires
Congressional approval under the WSA because it both
constitutes a major operational change and seriously affects
project purposes. They also contend that the Agreement violates
the FCA because it allows only the short-term sale of surplus
water, whereas the Agreement is a long-term transaction
involving water that is not surplus; because the FCA prohibits
8
negatively affecting existing uses of affected water; and because
the Agreement is contrary to the Corps’ internal FCA
contracting guidelines. Finally, they contend that the Agreement
violates NEPA by “irrevocably committ[ing] [the Corps] to
executing the [Agreement] at the completion of its NEPA
analysis,” Appellants’ Br. at 48, effectively bypassing the
statute. 1
The court reviews the fairness of a settlement agreement for
abuse of discretion. Moore v. Nat’l Ass’n of Sec. Dealers, Inc.,
1
Alabama’s and Florida’s contention that the district court
abused its discretion in denying the motion to abate or transfer this
case to the Alabama district court is without merit. They note that the
Georgia district court abated the case before it in favor of the prior-
filed Alabama case, Georgia, 223 F.R.D. at 697-99, and that they
urged the D.C. district court to do likewise on the grounds that the
Alabama and D.C. cases involve substantially the same parties and
subject matter, the Alabama lawsuit was first filed, the Alabama court
is more convenient, and the “equities weigh in favor of abatement.”
Appellants’ Br. at 58. However, the district court adequately justified
its denial of the motion and did not abuse its discretion. See Handy v.
Shaw, Bransford, Veilleux & Roth, 325 F.3d 346, 349 (D.C. Cir.
2003). The district court explained that “more entities purporting to
be affected by the manner in which the Corps makes disposition of the
water storage capacity . . . in Lake Lanier are now subject to the
jurisdiction of this [district c]ourt than are before [the Alabama district
court],” and reasonably concluded that the prospects of “duplicative
litigation and inconsistent adjudicative results” were reduced by its
review of the Agreement. Caldera, 301 F. Supp. 2d at 31. Hence,
because reversal is not justified, the court need not decide whether 28
U.S.C. § 2105, which precludes reversal by “a court of appeals for
error in ruling upon matters in abatement which do not involve
jurisdiction,” prevents review of the abatement motion. Cf. Nascone
v. Spudnuts, Inc., 735 F.2d 763, 771 (3d Cir. 1984); see also 15A
CHARLES ALAN WRIGHT ET AL., FEDERAL PRACTICE AND PROCEDURE
§ 3903 (3d ed. 2007).
9
762 F.2d 1093, 1106 (D.C. Cir. 1985). Although there are few
precedents on review of a settlement agreement for compliance
with statutory requirements, the district court could hardly
approve a settlement agreement that violates a statute, see, e.g.,
Sierra Club, Inc. v. Elec. Controls Design, Inc., 909 F.2d 1350,
1355 (9th Cir. 1990), and this court owes the district court no
deference in its legal interpretations. Our statutory review then
is de novo, although this is largely a matter of semantics: “A
district court by definition abuses its discretion when it makes
an error of law,” Koon v. United States, 518 U.S. 81, 100
(1996); see also Donovan v. Robbins, 752 F.2d 1170, 1178 (7th
Cir. 1984). In considering the Corps’ interpretation of its
statutory authority to enter into the Agreement, the court applies
the familiar two-step analysis under Chevron, U.S.A., Inc. v.
Natural Resources Defense Council, Inc., 467 U.S. 837 (1984).
[Where] Congress has directly spoken to the . . . issue
. . . that is the end of the matter; for the court, as well
as the agency, must give effect to the unambiguously
expressed intent of Congress . . . if the statute is silent
or ambiguous with respect to the specific issue, the
question for the court is whether the agency’s answer
is based on a permissible construction of the statute.
Id. at 842-43.
Section 301 of the WSA, 43 U.S.C. § 390b, addresses the
development of “water supplies for domestic, municipal,
industrial, and other purposes,” specifically acknowledging that
primary responsibility for their development is lodged in States
and localities. Id. § 301(a), § 390b(a). It authorizes storage “in
any reservoir project surveyed, planned, constructed or to be
planned . . . by the Corps of Engineers or the Bureau of
Reclamation” so long as the costs of construction or
10
modification are adequately shared by the beneficiaries. Id. §
301(b), § 390b(b). The WSA provides, however, that:
Modifications of a reservoir project heretofore
authorized, surveyed, planned, or constructed to
include storage as provided in subsection (b) of this
section which would seriously affect the purposes for
which the project was authorized, surveyed, planned,
or constructed, or which would involve major
structural or operational changes shall be made only
upon the approval of Congress as now provided by
law.
Id., § 301(d), § 390b(d) (emphasis added).
Alabama and Florida contend that the Agreement’s
reallocation of up to 240,858 acre-feet of storage space to the
Water Supply Providers constitutes a “major . . . operational
change[]” and thus requires Congressional approval. They point
to previous analyses prepared by the Corps and the Office of the
Army General Counsel indicating that operational changes on a
similar scale would require Congressional approval. See, e.g.,
PAC REPORT at 12; Army Legal Memorandum at 12. Appellees
offer that the Agreement “merely leaves in place . . . [t]he status
quo [of] incremental increases in withdrawal amounts by the
Water Supply Providers as those increases are permitted by
Georgia,” Appellees’ Br. at 37, and thus does not constitute an
operational change. They would distinguish the 2002 Army
Legal Memorandum on the basis that Georgia’s request involved
a larger percentage of Lake Lanier than the storage allocated by
the Agreement and included projections that were thirty as
opposed to ten years in the future. Appellees further offer that
the Agreement provides for compensation payments to
hydropower producers, thus “retaining the hydropower benefit
and adding the water benefit,” id. at 38. Finally, Appellees offer
11
that the reallocation is temporary rather than permanent, and
thus does not require Congressional approval.
1.
As a threshold matter, we hold that Alabama and Florida
have standing to challenge the Agreement insofar at it
constitutes a major operational change to the Lake Lanier
reservoir.2 They credibly claim to fear that the proposed
reallocation of water storage will result in “diminish[ed] [] flow
of water reaching the downstream states.” Appellants’ Br. at 2.
The Agreement does potentially reduce the amount of water
flowing downstream, Agreement at 5; Alabama, 424 F.3d at
1122, and the ACF basin would thereby be affected by changes
to the quantity of water in the Chattahoochee River for as long
as twenty years, see, e.g., Agreement at 10; cf. Georgia v.
USACE, 302 F.3d 1242, 1252 (11th Cir. 2002). As the ACF
basin includes parts of both Alabama and Florida, they would be
directly impacted by the Agreement’s proposed changes to water
storage uses; in its complaint, Florida alleged various negative
environmental impacts from reduced water flow. In addition,
the states’ quasi-sovereign interests” entitles them to “special
solicitude” in standing analysis. See Massachusetts v. EPA, 127
S. Ct. 1438, 1455 (2007). To the extent the Agreement provides
that “entering into the storage contracts described in this
Agreement . . . potentially gives rise to certain obligations under
NEPA,” Agreement at 14, any attendant delay due to the Corps’
compliance with NEPA does not affect the imminence of the
claimed injury. The Agreement commits the Corps to use its
“best efforts to complete any applicable requirements of NEPA
2
The court, therefore, has no occasion to consider whether
Alabama and Florida would have standing to challenge the Agreement
as “seriously affect[ing]” the original Congressionally authorized
purposes of Lake Lanier. Cf. Opinion Concurring in the Judgment
(hereinafter, Concurring Op.) at 3.
12
as expeditiously as practicable.” Id.; cf. Massachusetts, 127
S.Ct. at 1456. In addition, the Agreement states that its NEPA
compliance provision “does not apply to the Supplement to
Relocation Contract” between the Corps and the City of
Gainsville allowing removal of water from Lake Lanier from
the date of settlement, Agreement at 12, 14.
Alabama and Florida thus show both the imminence of
injury-in-fact and its causation, and reversing the approval of the
Agreement would provide redress to their injury. See generally
Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61 (1992).
Alabama’s and Florida’s prudential standing is likewise
established because they come within the zone of interests that
Congress could reasonably have intended to protect. See Clarke
v. Sec. Indus. Ass’n, 479 U.S. 388, 399-401 (1987).
2.
Section 301 of the WSA plainly states that a major
operational change to a project falling within its scope requires
prior Congressional approval.3 Consistent with this plain text,
the Corps has long recognized that its discretion to alter a
project’s operations without Congressional approval is limited
to non-major matters. It acknowledged in the 1989 PAC
REPORT, at 12, that Congressional approval might be required
for reallocation of 207,000 acre-feet, or approximately twenty
percent (20%) of Lake Lanier’s total current storage as specified
in the Agreement. In 2002, on the basis of a legal opinion from
the Office of the Army General Counsel, the Corps rejected
Georgia’s request that 370,930 acre-feet, approximately thirty-
3
The Corps has not suggested that “the approval of
Congress” required by the statute means anything other than a bill or
resolution passed by both Houses that is either signed by the President
or passed by two-thirds of both Houses over the President’s veto. Cf.
U.S. CONST. art. I, § 7.
13
five percent (35%) of Lake Lanier’s total storage, be reallocated
to local use. That legal opinion concluded that Georgia’s
request was of a magnitude that would “involve substantial
effects on project purposes and major operational changes” and
therefore required prior Congressional approval. Army Legal
Memorandum at 1; see also id. at 9, 13. This conclusion was
based on a comprehensive analysis: The Army Legal
Memorandum identified the “specifically authorized purposes
[of Lake Lanier] . . . . [as] navigation, hydropower generation,
and flood control — with water supply as an incidental benefit,”
id. at 6; reviewed relevant congressional authorizations,
beginning with the Rivers and Harbor Acts of 1945, noting that,
according to engineers’ reports, water supply was an “incidental
benefit” of the Dam; and cited statutory limitations on the
Corps’ authority to modify any existing project under the WSA,
id. at 3-9, referencing a House subcommittee report contrasting
the Corps’ authority to make “minor modifications” as distinct
from “major changes in a project” and observing that “[t]he
Corps’ view of its discretionary authority in this area comports
with that of Congress,” id. at 10-11 (quoting U.S. HOUSE COMM.
ON PUBLIC WORKS, SUBCOMM. TO STUDY CIVIL WORKS,
REPORT ON THE CIVIL FUNCTIONS PROGRAM OF THE CORPS OF
ENGINEERS, 82ND CONGRESS at 22 (1952)). The Corps’ legal
defense of then-existing water withdrawals was limited to a
footnote, without citation to authority, which stated that “the
agency does have the discretionary authority to meet the current
water supply needs of the municipalities surrounding the
reservoir,” id. at 8 n.2.
On its face, then, reallocating more than twenty-two percent
(22%, approximately 241,000 acre feet) of Lake Lanier’s storage
capacity to local consumption uses, see Agreement at 5-6,
constitutes the type of major operational change referenced by
the WSA; the reallocation’s limitation to a “temporary” period
of twenty years does not change this fact. Even a nine percent
14
(9%, approximately 95,000 acre feet) increase over 2002 levels
for twenty years is significant. Appellees’ contrary arguments
are unpersuasive.
First, Appellees maintain that the Agreement simply reflects
the status quo of gradual water storage reallocation, and
consequently does not constitute a major operational change.
But the appropriate baseline for measuring the impact of the
Agreement’s reallocation of water storage is zero, which was the
amount allocated to storage space for water supply when the lake
began operation. Otherwise, under Appellees’ logic, even if the
Agreement had simply kept in place a series of interim
agreements that allocated all of Lake Lanier to storage for local
consumption, no major operational change would have occurred
— a chain of logic that would effectively bypass section 301(d)
of the WSA, 43 U.S.C. § 390b(d).4 Even taking the status quo as
the consumption level in 2002, the reallocation of approximately
nine percent (9%, approximately 95,000 acre feet) of storage
space for a twenty-year period is still significant. As the Corps
acknowledged during oral argument, the change from current
local usage storage to the storage levels envisioned by the
Agreement would be the largest acre-foot reallocation ever
undertaken by the Corps without prior Congressional approval.
Oral Arg. Tape (Nov. 16, 2007) at 45:16.5.
4
The court, in responding to the Corps’ defense of its
approval of the Agreement, has no occasion to opine whether the
Corps’ previous storage reallocations were unlawful. See Concurring
Op. at 3-4. The court relies only on initial allocations of water storage
— a more limited issue than would be presented were the court to
address the original Congressional purposes of Lake Lanier alluded to
by our colleague, see id. at 3. In any event, it is hardly “draconian,”
id. at 4, to follow Congress’ explicit instructions for prior approval of
major operational changes.
15
Second, Appellees maintain both that the amount of storage
space reallocated by the Agreement is too limited to qualify as
a major operational change, and that the Agreement’s
compensation of hydropower users prevents the reallocation
from constituting a major operational change. But in defending
the Agreement, Appellees provide no rational reason to explain
why a reallocation of approximately thirty-five percent (35%) of
total storage, taking into account thirty years of future local
needs, constitutes a major operational change, see Army Legal
Memorandum at 9, 12; Agreement at 6, whereas a reallocation
of more than twenty-two (22%) of total storage, taking into
account twenty years of future local needs, does not. See
Agreement at 5-6, 10. In suggesting that the Agreement’s
compensation for the loss of hydropower uses is meaningfully
different from Georgia’s reallocation request in 2000, Appellees
ignore the fact that even if compensation provides hydropower
producers the full financial benefit they would have received
from use of Lake Lanier in the absence of the water storage
reallocation, a major operational change still occurs because
there is less flow through as a result of increased water storage
for local use.
Third, Appellees maintain that the absence of a permanent
reallocation under the Agreement removes the need for prior
congressional approval. But it is unreasonable to believe that
Congress intended to deny the Corps authority to make major
operational changes without its assent, yet meant for the Corps
to be able to use a loophole to allow these changes as long as
they are limited to specific time frames, which could
theoretically span an infinite period. Appellees’ attempt to
respond by suggesting a time period of ninety-nine years “‘might
cause a serious impact,’” Appellees’ Br. at 38 n.6 (quoting
counsel for the Corps during oral argument before the D.C.
district court, Transcript of Oral Argument (Feb. 8, 2005) at 30,
S. Fed. Power Customers v. Caldera, 301 F. Supp. 2d 26 (D.D.C.
16
2004)), fails to explain why a twenty year term would not cause
the same “serious impact.”
In other circumstances it is conceivable that the difference
between a minor and a major operational change might be an
ambiguous matter of degree, where the Court would consider
whether an agency’s authoritative interpretation should be
accorded deference under Chevron step two in defining the term
“major operational change,” cf. Concurring Op. at 4-5. But the
Agreement’s reallocation of over twenty-two percent (22%) of
Lake Lanier’s storage space does not present that situation. It is
large enough to unambiguously constitute the type of major
operational change for which section 301(d) of the WSA, 43
U.S.C. 390b(d), requires prior Congressional approval. This
conclusion is reinforced by the Corps’ prior consideration of
reallocation proposals, see PAC REPORT at 12; Army Legal
Memorandum at 8-12. The same conclusion applies to a
reallocation of approximately nine percent (9%) of Lake Lanier’s
storage space, for it too presents no ambiguity. This is illustrated
by the Corps’ acknowledgment of the reallocation’s
unprecedented scale, Oral Arg. Tape (Nov. 16, 2007) at 45:16.5.
Vaguely committing to request Congressional approval of the
reallocation at some future date, see, e.g., Agreement at 11; Oral
Arg. Tape (Nov. 16, 2007) at 47:00.0, does not accord with the
plain text of the WSA.
The Corps may understandably be of the view that it faces
a “difficult situation,” Oral Arg. Tape (Nov. 16, 2007) at 51:38.8,
and is attempting to balance multiple interests and achieve a
“creative solution,” id. at 52:04.2. However, Congress
envisioned that changed circumstances or “difficult situations”
might arise and specified that any solution involving “major
operational . . . changes” required its prior authorization. WSA
§ 301(d), 43 U.S.C. § 390b(d). We therefore need not reach the
other contentions of Alabama and Florida. The Agreement’s
17
reallocation of Lake Lanier’s storage capacity to local
consumption is a major operational change that under section
301(d) of the WSA, 43 U.S.C. § 390b(d), may not occur without
Congress’ prior authorization. Accordingly, because no
authorization has been obtained, we hold that the district court
erred in approving the Agreement and reverse.
SILBERMAN, Senior Circuit Judge, concurring in the
judgment:
I agree with the majority’s conclusion that,
notwithstanding our limited scope of review of a district court’s
approval of a settlement agreement, we are obliged to reject this
one. I write separately to discuss issues appellants raise which
I think should be disposed of – and should be rejected so as not
to complicate any further possible litigation – and to disagree
with my colleagues on one important point.
Appellants argued that the Agreement violated the Flood
Control Act (“FCA”), as well as the Water Supply Act
(“WSA”). I think that alternative claim is quite weak. The
relevant provision of the FCA states:
Sale of surplus waters for domestic and industrial
uses; disposition of moneys – The Secretary of the
Army is authorized to make contracts with States,
municipalities, private concerns, or individuals, at such
prices and on such terms as he may deem reasonable, for
domestic and industrial uses for surplus water that may
be available at any reservoir under the control of the
Department of the Army: Provided, that no contracts for
such water shall adversely affect then existing lawful
uses of such water. . . .
33 U.S.C. § 708. By its plain terms, this provision sets the
conditions under which the Secretary may sell “surplus water.”
However, the Corps does not contend that the Settlement
Agreement disposes of “surplus” water. The Agreement does
reallocate a certain amount of reservoir capacity to water
storage, but reallocations are governed by the Water Supply Act,
not the Flood Control Act. Section 301(d) of the WSA requires
Congressional approval of “[m]odifications of a reservoir project
2
. . . which would involve major structural or operational changes
. . . .” 43 U.S.C. § 390b(d). It is abundantly clear, then, that the
Water Supply Act, not the Flood Control Act, is the statute that
governs the Corps’ actions in this case, and I would accordingly
explicitly reject the appellants’ FCA claims.
Turning to the WSA, appellants argued – indeed, it was
their main argument – that the Agreement was unlawful under
that statute, not just because it constituted a “major operational
change,” but also because it was inconsistent with the project’s
authorized purposes. 43 U.S.C. § 390b(d). The Buford Dam
was constructed to improve navigation, generate hydroelectric
power, and control flooding. Alabama v. U.S. Army Corps of
Engineers, 424 F.3d 1117, 1122 (11th Cir. 2005). (For many
years, the Corps has maintained that an incidental benefit of the
project was to provide metropolitan Atlanta with water supply.
Id.) One of the project’s primary purposes, thus, was to provide
hydroelectric power to downstream users. The Agreement, it is
contended by Alabama and Florida, will reduce the amount of
water released from the reservoir which will, in turn, reduce the
water available for Alabama’s and Florida’s power
requirements. Appellees responded that the Agreement’s
compensation mechanisms met the hydroelectric purposes of the
project.
Under those mechanisms, the water supply providers will
pay substantially higher rates for water storage, and the resulting
revenue will be credited to hydropower customers to
compensate them for the reduced water flows through the dam.
The Corps, the power customers, and the water supply providers
all agree that this compensation mechanism will ensure that the
Agreement does not have an adverse effect on hydropower
generation.
3
I would not reach the merits of this argument because I
do not think Florida and Alabama have standing to raise it. The
two states have not identified any cognizable injury attributable
to this claim. They do not assert that they or their citizens will
pay any more for electricity as a result of the Agreement.
Indeed, the hydroelectric companies supplying Florida and
Alabama customers – the members of the Southeastern Federal
Power Customers – support the Agreement because the
compensation mechanism does adequately offset the reduction
in water supply. To be sure, Florida and Alabama do have
standing – as the panel concludes – to object to the alleged
“major operational change” because the decreased water supply
will have environmental impacts on Florida and Alabama.
However, standing must be established for each claim, The
Wilderness Society v. Norton, 434 F.3d 584, 591 (D.C. Cir.
2006), and appellants lack standing to assert that the Agreement
will “seriously affect” the project purposes of the reservoir.
***
My fundamental disagreement with my colleagues’
determination that the Agreement works a “major operational
change” is with their conclusion that the appropriate baseline for
measuring the impact of the Agreement’s reallocation of water
storage is zero. That seems to imply that the project was never
intended to provide water to the city of Atlanta, which is in
tension with the 11th Circuit’s observation mentioned infra, and
is an issue which the settling parties agreed was not determined
by the Agreement; it is an open question that has not really been
briefed.
Beginning in the 1970s, the Corps allocated a steadily
increasing volume of storage space to the water supply
providers. Alabama v. U.S.A.C.E., 424 F.3d at 1122. It does not
4
appear that Alabama and Florida challenged this policy until
1990, when the Corps was seeking Congressional approval to
enter into permanent water supply contracts. Id. at 1122-23.
Thus, for over a decade, the appellants acquiesced to a policy of
increasingly large withdrawals. Even after Florida and Alabama
initiated litigation in 1990, the states entered into two
agreements that allowed the Corps to increase water withdrawals
“to satisfy reasonable increases in [] demand” while settlement
negotiations were pending.1
By asserting that the baseline is zero, the majority
implicitly suggests that for many years some amount of water
stored for (and supplied to) the city of Atlanta was illegal. That
is a draconian conclusion I do not think warranted by the record.
I nevertheless agree with the majority’s determination
that the Settlement Agreement is unlawful. To be sure, the
definition of major operational change is by no means clear.
Typically we would defer to an agency’s interpretation of that
ambiguous term, but we cannot do so here because we are not
1
These agreements do contain disclaimers that they “shall
not be construed as granting any permanent, vested or perpetual
rights to the amounts of water used” during settlement
negotiations. (It would appear that the word “used” in the
agreements only refers to the water withdrawn during the
settlement negotiations, and not to reservoir space that had been
allocated to water storage prior to those agreements.) Moreover,
the 1992 agreement states that it shall not be construed as
“changing the status quo as to the Army’s authorization of water
withdrawals.” This implies that – at the very least – Florida and
Alabama did not contest the amount of storage that had been
authorized by the Corps prior to 1992.
5
reviewing an agency rulemaking or adjudication, but only a
settlement agreement (which does not even purport to interpret
the crucial language). See United States v. Mead Corp, 533 U.S.
218, 230 (2001). We have given deference to agency
interpretation of settlement agreements when Congress has
granted the agency “an active role in approving the agreement.”
Nat’l Fuel Gas Supply Corp. v. FERC, 811 F.2d 1563, 1571
(D.C. Cir. 1987). But we have also emphasized that such
deference is inappropriate where – as here – “the agency itself
[was] an interested party to the agreement.” Id. In such cases,
“deference might lead a court to endorse self-serving views that
an agency might offer in a post hoc reinterpretation of its
contract.” Id. The government seems to have implicitly
interpreted the term “major” in its brief – as not including
incremental changes – but we do not defer to mere litigating
positions. Bowen v. Georgetown Univ. Hosp., 488 U.S. 204,
213 (1988).
The Agreement appears to me to constitute a “major
operational change” because it substantially increases the
amount of reservoir space allocated to water supply compared
to the allocation in 2002, which is all we have to conclude. The
total storage capacity of Lake Lanier is 1,049,400 acre-feet. In
a 2002 memorandum regarding Georgia’s request for more
water storage, the General Counsel of the Department of the
Army stated that, “[c]urrently, municipal and industrial interests,
through direct withdrawals and releases from the reservoir,
utilize the equivalent of 145,460 acre-feet of storage in Lake
Lanier for water supply.” Thus, in 2002, approximately 13.9%
of the reservoir’s capacity was being used for water supply.
Under the Settlement Agreement, up to 240,858 acre-feet of the
reservoir would be set aside for water storage (175,000 acre-feet
for Gwinnett County, 20,675 acre-feet for the City of
Gainesville, and 45,183 acre-feet for the Atlanta Regional
6
Commission). This represents an increase of 95,398 acre-feet,
which is a 65.6% increase over the 2002 level. Put another way,
under the Agreement, approximately 9% more of Lake Lanier’s
total capacity will be set aside for water storage – in 2002,
13.9% of the total capacity was allocated to water supply, but
under the Agreement that figure increased to 22.9%. Like the
majority, I also find it noteworthy that the storage levels
permitted by the Agreement “would be the largest acre-foot
reallocation ever undertaken by the Corps without prior
Congressional approval.” Maj. Op. at 14.
At oral argument, counsel for the Corps acknowledged
that the Settlement Agreement would increase the amount of
reservoir space allocated to storage by approximately 100,000
acre-feet (or 10% of total reservoir capacity), compared to the
status quo prior to the Agreement. Tr. of Oral Arg. at 43:20.
Counsel then conceded that a permanent reallocation of 10% of
the reservoir’s capacity would constitute a “major operational
change.” Id. at 49:08. In a letter dated December 13, 2007, the
Corps attempted to retract this concession, noting that it was “in
error.” But the logic of this concession was ineluctable. The
Corps argued, however, that even if a permanent reallocation of
10% of the reservoir would be deemed “major,” the Settlement
Agreement does not require Congressional approval because it
is only an interim measure. That is not persuasive. The
requirements of the Water Supply Act apply to “major structural
or operational changes” – the text of that statute draws no
distinction between interim and permanent changes.
The Corps argues that the burden was on Florida and
Alabama to show that the Settlement Agreement was unlawful,
and that the plaintiffs-appellants failed to offer sufficient
evidence to meet this burden. But as explained above, the
record – including the Corps’ own documents – shows that the
7
Agreement would allocate an additional 95,398 acre-feet of
reservoir capacity to water storage, and would increase the share
of the reservoir allocated to water storage from 13.9% to 22.9%.
I simply do not see how we can conclude that is not a major
change.