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SOUTHEASTERN FEDERAL POWER CUSTOMERS, INC. v. CALDERA

February 10, 2004.

SOUTHEASTERN FEDERAL POWER CUSTOMERS, INC., Plaintiff,
v.
LUIS CALDERA, SECRETARY OF THE U.S. DEPARTMENT OF THE ARMY, et al., Defendants



The opinion of the court was delivered by: THOMAS JACKSON, Senior District Judge

MEMORANDUM & ORDER

This case is presently before the Court for the sole purpose of the Court's review of a partial (and conditional) resolution of certain issues relating to the flow of river water through the Apalachicola-Chattahoochee-Flint ("ACF") Basin in the southeastern United States. The settlement, expressed in a 19-page Settlement Agreement with multiple attachments, is the culmination of protracted mediation ordered by the Court in March, 2001, and concluded in January, 2003. It represents no more than an armistice in a decades-long conflict between the constituencies who share the benefits and burdens of proximity to the Chattahoochee River, Buford Dam, and the reservoir created by the dam known as Lake Lanier in the State of Georgia.

If approved by the Court, the settlement will not end the controversy over the waters of the Chattahoochee; it will merely moot for a time the dispute between the original protagonists in this case and the assenting intervenors. Nor will it end related litigation in the U.S. District Page 2 Courts for the Northern District of Georgia ("N.D. Ga.") and the Northern District of Alabama ("N.D. Ala."). The dissenting intervenors (and others), moreover, will surely continue the contest elsewhere. The larger issue (which is not addressed by the settlement), namely, the apportionment of rights of usage of the waters of an interstate river between sovereign states, may yet arise, but it is neither present in the case now, nor would it be within the jurisdiction of this Court if it were. See 28 U.S.C. & 1251(a) (2003). In short, the Settlement Agreement purports to adjust and formalize a tenuous working relationship between the U.S. Army Corps of Engineers ("Corps" or "Army") and some of the constituencies to whom it makes the fresh water it stores in Lake Lanier available for their several purposes.*fn1

  I.

  The Chattahoochee River originates in the mountains of northern Georgia, runs along the Alabama-Georgia border, joins the Flint River at the Florida-Georgia border (becoming the Apalachicola River), and eventually flows into the Gulf of Mexico. In the mid-1940s, with congressional approval, the U.S. Army Corps of Engineers built Buford Dam on the Chattahoochee River north of Atlanta, Georgia, creating Lake Lanier. Congress initially authorized Lake Lanier and Buford Dam expressly for flood control, navigation, and hydropower generation purposes, although the Corps asserts that the possibility of local water supply usage in Page 3 the future was always in contemplation.*fn2 The water in Lake Lanier utilized for flood control, navigation, and hydropower purposes is called flow-through, meaning that the water is not consumed but flows through the Buford Dam into downstream rivers and, eventually, out into the Gulf of Mexico. Beginning in the 1970s, however, the Corps permitted some water stored in Lake Lanier to be reserved for local water supply, a use which consumes the water extracted, ostensibly diminishing the quantity available for flow-through.

  As explained to the Court at oral argument, pursuant to the Water Supply Act of 1958 ("WSA"), supra n.1, the Corps charges the beneficiaries of projects such as the Buford Dam and Lake Lanier for the benefits provided, the charges being proportioned to the ratio of the quantity of water allocated to storage for a particular use to the cost of a project's construction and operation.

  The following history, somewhat oversimplified, emerges from the record before the Court.

  The withdrawals made from water allocated to storage in Lake Lanier for local water supply were initially made under five-year interim withdrawal contracts renewable until July of 1989 at which time the Corps intended to convert to permanent storage space contracts which would necessitate a permanent reallocation of storage capacity to water supply rather than to flow-through uses. By 1988 the Corps had made interim contracts with the Atlanta Regional Commission ("ARC"), the cities of Cummings, Gainesville, Buford, Gwinnett County (all in Page 4 Georgia, and hereinafter collectively referred to as "the Water Supply Providers"), and the State of Georgia itself. These contracts facilitated an aggregate withdrawal from the total storage capacity of Lake Lanier in ever-increasing amounts.

  Although all of these contracts had expired by the end of 1989, the Corps allowed the withdrawals to continue unabated while it sought authority from Congress to negotiate permanent storage space contracts with the Water Supply Providers. In October of 1989, the Corps issued a draft water storage reallocation report for submission to Congress proposing to allocate such a large quantity to storage for water supply as to alarm the downstream states Alabama and Florida.

  Alabama reacted to the Corps' 1989 report by suing the Corps in N.D. Ala. The State of Florida moved to intervene on the side of Alabama, and the State of Georgia moved to intervene on the side of the Corps. Settlement negotiations began between the parties, and they sought a stay of the litigation. In a September 1990 order, N.D. Ala. granted a stay on the condition that the Corps not execute any permanent water supply contracts without prior approval from Alabama and Florida while the stay was pending. The stay order, although terminable unilaterally at the instance of any party, remained in place throughout the 1990s,*fn3 and the parties (and proposed intervenor states) filed periodic status reports updating N.D. Ala. about their progress in resolving the underlying dispute.

  Settlement negotiations ultimately resulted in an interstate compact (the "ACF Compact"), approved by Congress in 1997, intended to provide "an orderly process by which the Page 5 three states would achieve a water allocation formula," or, in other words, an agreement to agree. This left matters as they were when the lawsuit was filed in Alabama in 1990. The ACF Compact expired August 31, 2003, no agreement having been reached.

  In the meantime the Corps continued to allow the Water Supply Providers to withdraw water stored in Lake Lanier for municipal and industrial consumption under ad hoc agreements in successively larger amounts each year, precipitating the instant lawsuit.

  II.

  The plaintiff in this case, filed in December 2000, Southeastern Federal Power Customers, Inc. ("SeFPC"), is a non-profit corporate consortium of rural electric cooperatives and municipal electric systems supplying electric power to their customers in the southeastern United States. All of them derive a portion of the hydropower they distribute from the Buford Dam generating capacity. SeFPC complains, in substance, that cumulative withdrawals by the Water Supply Providers permitted by the Corps for municipal and industrial consumption have diminished the flow-through by which hydropower is generated. SeFPC's members have consequently been obliged to purchase more costly electrical power elsewhere, yet continue to pay for Buford Dam hydropower at prices disproportionate to their residual share of water stored in Lake Lanier devoted to power generation. In other words, they are paying prices that reflect a higher proportion of the Corp's costs for the benefits of Lake Lanier and Buford Dam than they currently receive, whereas the Water Supply Providers' payments are proportionately less. SeFPC prays for a declaratory judgment to the effect that the Corps' practice of ...


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