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Exelon Generation Company, LLC v. Grumbles

United States District Court, District of Columbia

March 29, 2019

BENJAMIN H. GRUMBLES, et al., Defendants.



         The State of Maryland cherishes the Chesapeake Bay and is determined to save the Bay by removing pollutants. The Susquehanna River delivers about 75% of the freshwater in the Bay; its environmental health is critical. The River is over 400 miles long, originating in New York State, flowing through the Commonwealth of Pennsylvania, and then, for its last 15 miles, traversing part of Maryland before emptying into the Bay at Havre de Grace. This multistate watershed creates a pollutant problem. The River transports great amounts of phosphorus and nitrogen-farm nutrients-turned-pollutants-and other detritus from New York and Pennsylvania to the Bay.

         Exelon Generation Co., LLC operates the Conowingo Project, a Maryland dam and hydroelectric power plant that is ten miles upriver from the Bay. The Conowingo Project has applied to the Federal Energy Regulatory Commission for a new operating license. As the cost of such a federal license, Maryland insists that the Conowingo Project remove the phosphorus and nitrogen that flow downriver from New York, Pennsylvania, and Maryland. In lieu of cleaning the Susquehanna, Maryland would accept $172 million from Exelon each year for the next 50 years.

         The Conowingo Project adds no phosphorus or nitrogen to the Susquehanna River; it only passes the water along. Exelon protests that it should not be made to pay up to $7 billion to clean up pollution sent downriver by others. Exelon has sued Benjamin H. Grumbles and D. Lee Currey in their official capacities as Secretary of the Environment and Director, Water and Sciences Administration of the Maryland Department of the Environment, respectively.

         Right now, the question is whether Exelon's lawsuit is brought in the right court. Maryland argues that it belongs in its State courts. Alternatively, it argues that the case should be brought in the United States District Court for the District of Maryland. The issue is fully briefed[1] and the Court heard oral argument. For the reasons explained below, this Court disagrees on both points and concludes that venue lies in D.C. as well as Maryland. The Court will deny so much of Maryland's motion to dismiss as is based on improper venue.

         I. FACTS

         A. Background

         Exelon Generation Company, LLC (Exelon), owns and operates the Conowingo Dam and hydroelectric facility (the Conowingo Project). Exelon is a Pennsylvania limited liability company and a fully owned subsidiary of Exelon Corporation, a Pennsylvania corporation. The Conowingo Project produces electricity, which it provides directly to the mid-Atlantic power grid and indirectly to a majority of Maryland homes and businesses; it generates more renewable electricity than all other facilities in the State of Maryland combined.

         The Susquehanna River was first dammed at Conowingo ninety-odd years ago to create a reservoir for Baltimore, Maryland, and to produce hydroelectric power. The main branch of the Susquehanna originates in New York State and flows for over 400 miles through New York and Pennsylvania, where it is joined by a junior east-west branch from across Pennsylvania, and then into Maryland. See Defs.' Mem at 3. Only about fifteen miles of the River are in Maryland before it empties into the Chesapeake Bay. The impoundment created by the Dam, i.e., the Baltimore reservoir, fully occupies the first five miles of the Susquehanna in Maryland, from the Pennsylvania/Maryland border to the Conowingo Dam. Compl. ¶ 19. The mouth of the Susquehanna is ten miles downstream from the Conowingo Dam at Havre de Grace. See id. Over its lifespan, the Dam has trapped and retained some of the harmful nutrients-turned-pollutants in the runoff from upstream farms and businesses in New York, Pennsylvania, and Maryland, preventing such pollutants from reaching the Bay. Id. ¶¶ 22-23. Now, however, its trapping capacity is declining, as sediment flowing downstream has been deposited in the reservoir and reduced its depth. Id. ¶ 25.

         Exelon has applied to the Federal Energy Regulatory Commission (FERC) to renew its operating license for the Conowingo Project for 50 years under the Federal Power Act (FPA), 16 U.S.C. §§ 791a-823g; see also Compl. ¶ 30. Under Section 401 of the Clean Water Act (CWA), 33 U.S.C. § 1341(a)(1), the State of Maryland must certify that the Conowingo Project is compliant with State water-quality laws and regulations before FERC can grant the license. Id. ¶¶ 39-41. Presently, however, Maryland and all the states in the Chesapeake Bay watershed are facing the likelihood of increased demands from the Environmental Protection Agency (EPA) to eliminate more nitrogen and phosphorous from their waters that enter the Bay. See id. ¶¶ 117-22. Maryland has welcomed the opportunity of the FERC re-licensing process to require that the Conowingo Project remove such pollutants from the Susquehanna River in the amounts that EPA would normally apportion among the multiple states around the Bay or the three states through which the Susquehanna flows. Id. ¶¶ 110, 119. Alternatively, the Conowingo Project at the tail end of the River can avoid this obligation to clean up 400-plus miles of pollutants from neighboring states by paying Maryland approximately one-half million dollars ($500, 000) each day over the life of its next FERC license, or approximately $7 billion in the next 50 years. The Maryland Department of the Environment (MDE) has submitted its Certification to FERC with such requirements. Id. ¶ 94. FERC is obligated to include these terms in a new license for the Conowingo Project, which is now under consideration.

         Exelon appealed through the state administrative and court processes and filed suit under federal law here.

         B. The Exelon Application to FERC for a New License

         In anticipation of its renewal application, Exelon developed a study plan in or about 2009 and performed more than 45 separate studies regarding various environmental issues, including fish passage, stream flow, the water transport of sediment, and water temperature. Exelon filed its application with FERC on August 31, 2012.

         In 2015, FERC issued an Environmental Impact Statement (EIS) for three hydroelectric projects on the lower Susquehanna, including the Conowingo Project in Maryland. The EIS noted that the Susquehanna River “is the largest source of freshwater to the Chesapeake Bay, contributing about 70% of the total nitrogen and 55% of the total phosphorus, and that the presence of these pollutants is a watershed-wide issue.” Compl. ¶ 36. The EIS warned that if the Conowingo Reservoir could no longer trap sediment and pollutants, “governmental jurisdictions in the watershed might need to increase their . . . nutrient-reduction efforts.” Id.

         The EIS also evaluated whether dredging might be a reasonable way to increase the trapping capacity of the Conowingo Reservoir to continue its ability to reduce pollutants in the Bay. However, citing the Lower Susquehanna River Watershed Assessment-a joint assessment by the Army Corps of Engineers and the MDE-the FERC EIS concluded that “operational changes at Conowingo would not address the sediment transport issue, and that dredging of Conowingo [Reservoir] would be cost prohibitive and ineffective.” Id. ¶ 37 (internal quotation marks omitted).

         Exelon also engaged in detailed negotiations with the Department of the Interior (DOI) Fish & Wildlife Service regarding fish spawning in the Susquehanna River as part of its relicensing process. Those parties reached a settlement whereby Exelon committed to enhancing fish passage over the Dam by trapping and transporting fish upstream to reduce the time it takes them to reach spawning locations. Id. ¶ 38. Exelon agreed to haul fish upstream from the Conowingo Reservoir and past three additional dams to ensure that a high percentage of fish complete their migrations successfully. Id.

         C. The MDE Certification

         On April 29, 2013 FERC issued a formal request to MDE for a state water-quality certification (Certification) for the Conowingo Project.

         On January 31, 2014, Exelon submitted its request to MDE for a Section 401 certification in connection with the FERC relicensing of the Conowingo Project. Along with its request, Exelon submitted copies of the studies that it had already completed. Under the Clean Water Act, Maryland had one year to submit a certification or waive its rights. See 33 U.S.C. § 1341(a)(1); Hoopa Valley Tribe v. FERC, 913 F.3d 1099 (D.C. Cir. 2019).

         MDE asked Exelon to conduct an additional study on the impacts of sediment transport on water quality in the Susquehanna River and the Bay (the Sediment Study). Compl. ¶ 45. As a result, Exelon entered into an agreement with MDE to work with Maryland agencies, the Army Corps of Engineers, the United States Geological Survey, the University of Maryland Center for Environmental Science, and EPA to design and conduct a multi-year Sediment Study, at a cost to Exelon of $3.5 million. Id. ¶¶ 46-47.

         In order to provide time for the Sediment Study requested by Maryland, Exelon withdrew its January 2014 application in December 2014. Id. ¶ 48. Exelon refiled the application for a Section 401 certification on March 3, 2015 and then withdrew it on February 5, 2016 because the Sediment Study was not completed. Id. ¶ 49. Exelon refiled its application on April 25, 2016 and again withdrew it on February 17, 2017. Id. ¶ 50.

         Finally, on March 13, 2017, MDE indicated that it would be ready to receive Exelon's application for the Certification no later than May 18, 2017. Id. ¶ 52. Exelon resubmitted its application on May 17, 2017. Id. ¶ 53.

         Exelon alleges that “[t]he studies that [it] submitted to MDE . . . and the information in the record before MDE demonstrate that the Conowingo Project is not the source of pollution entering the Susquehanna River. They also demonstrate that the Project is meeting all applicable state water-quality standards in waters immediately downstream.” Id. ¶ 54. In addition, “[t]he Sediment Study confirmed that Conowingo Project operations introduce negligible amounts of sediment into the water, ...

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