Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caDC-06-05080/USCOURTS-caDC-06-05080-0/pdf.json

Nature of Suit Code: 890
Nature of Suit: Other Statutory Actions
Cause of Action: 

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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

USCA Case #06-5080 Document #1097136 Filed: 02/05/2008 Page 1 of 24
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.

USCA Case #06-5080 Document #1097136 Filed: 02/05/2008 Page 2 of 24
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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

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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 fiveyear 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.

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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

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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.

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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

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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 priorfiled 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). 

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.,

USCA Case #06-5080 Document #1097136 Filed: 02/05/2008 Page 8 of 24
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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

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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.,

PACREPORT 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

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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.

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

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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.

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 thirtyUSCA Case #06-5080 Document #1097136 Filed: 02/05/2008 Page 12 of 24
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

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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.

(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.

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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.

USCA Case #06-5080 Document #1097136 Filed: 02/05/2008 Page 15 of 24
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

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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.

USCA Case #06-5080 Document #1097136 Filed: 02/05/2008 Page 17 of 24
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

USCA Case #06-5080 Document #1097136 Filed: 02/05/2008 Page 18 of 24
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. . . 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.

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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

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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. 

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

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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

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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

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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.

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