United States v. Tennessee Water Quality Control Board

Nos. 82-3030, -3031 (M.D. Tenn. April 9, 1982)

The court rules that the diversion of water at a federal flood control and power project is not a discharge of pollutants within the meaning of § 313 of the Federal Water PollutionControl Act (FWPCA) requiring federal compliance with state pollution control requirements. The court rules that § 313 of the FWPCA requires the Tennessee Valley Authority to comply with state water quality requirements if it is engaging in activity resulting in a discharge or runoff of pollutants. However, the diversion of water from the dam, through a flume to the generating station, does not constitute a discharge or runoff of pollutants.

Counsel for Plaintiff
Herbert F. Sanger, General Counsel
Tennessee Valley Authority
400 Commerce Ave., Knoxville TN 37902
(615) 632-2241

Counsel for Defendants
William B. Hubbard
Office of the Attorney General
450 James Robertson Pkway., Nashville TN 37219
(615) 741-7085

Charles H. Warfield
Farris, Warfield & Kanaday
17th Floor, Third Nat'l Bank Bldg., Nashville TN 37219
(615) 244-5200

[12 ELR 20740]

Morton, J.:

Memorandum

This case involves the application of § 313 of the Clean Water Act, 33 U.S.C. § 1323, to one of the Tennessee Valley Authority installations. Jurisdiction is asserted under 28 U.S.C. §§ 1331, 1337 and 1345. The facts are agreed as follows:

Ocoee No. 2 is located on the Ocoee River, a tributary of the Hiwassee, in southeastern Tennessee. It consists of a rock-filled and concrete-covered timber crib diversion dam at river mile 24.2, a powerhouse at river mile 19.7, and a 4.6-mile wooden flume. Water from behind the dam is diverted into the flume, in which it is carried to a point above, and then down to, the powerhouse where it is used to generate electric power.

Ocoee No. 2 was built in 1912-13 by the East Tennessee Power Company, a predecessor of the Tennessee Electric Power Company (Tennessee Electric Power). In 1939, TVA entered into a contract with the Commonwealth and Southern Corporation (a holding company which controlled Tennessee Electric Power) and others, which provided for federal purchase of Tennessee Electric Power's generating and transmission properties including Ocoee No. 2, and the purchase by various municipalities and cooperatives of its distribution properties. Consummation of the contract was dependent on congressional approval. Specific congressional approval was given by the addition to the TVA Act of section 15c, 53 Stat. 1083 (1939), 16 U.S.C. § 831n-3 (1976). Section 15c authorized TVA to use up to $46 million of proceeds from the sale of government-guaranteed bonds "for the purchase of electric utility properties of the Tennessee Electric Power Company and Southern Tennessee Power Comapny, as contemplated in the contract between [TVA] and the Commonwealth and Southern Corporation and others, dated as of May 12, 1939."

As provided by the contract, Ocoee No. 2, like all of the other real property included in the federal portion of the purchase, was thereafter conveyed to the United States of America in conformity with section 4(h) of the TVA Act, 16 U.S.C. § 831c(h) (1976). Section 4(h) provides that "in the purchase of any real estate [for the TVA program] . . . the title to such real estate shall be taken in the name of the United States of America, and thereupon all such real estate shall be entrusted to [TVA] as the agent of the United States to accomplish the purposes of this [Act]."

Following such conveyance, Ocoee No. 2 became and has been operated as an integral part of the TVA unified dam and reservoir system. Ocoee No. 2 dam has no storage capacity;¹ its purpose is simply to divert water from the stream into the flume. The amount of water available at Ocoee No. 2 is regulated by the operation of Blue Ridge Dam and, to a much lesser extent Ocoee No. 3 dam, upstream. Blue Ridge Dam is located at river mile 51.3 in the State of Georgia and has 183,000 acre-feet of storage capacity. It was acquired by the United States under the same 1939 contract and conveyance by which it acquired Ocoee No. 2. Ocoee No. 3 dam is located at river mile 29.2 in Tennessee and has 9,100 acre-feet of storage capacity. It was built by TVA with money appropriated for that purpose by Congress. 55 Stat. 597 (1941); 56 Stat. 418 (1942). As in the case of Ocoee No. 2, the powerhouse at Ocoee No. 3 is located more than 4 river miles below the dam, and the river waters are similarly diverted except that the diversion is through a concrete tunnel rather than a wood flume.

In 1976, operation of Ocoee No. 2 was temporarily suspended because deterioration of the steel trestles supporting the flume caused a safety hazard. While it has been so shut down, water which would ordinarily have been diverted through the flume has flowed past the dam instead. The resulting stretch of water immediately below the dam, which is easily accessible from a nearby highway, has been extensively used during this period for recreational rafting. This in turn has led to the provision of commercial raft rentals and related commercial services.

After the shutdown, TVA made extensive studies, including preparation of an environmental impact statement (EIS), relating to the cost and desirability of repairing Ocoee No. 2 (including rebuilding the flume, which deteriorated during the shutdown, and some work on the dam) and returning it to operation. On the basis of these studies, TVA concluded that Ocoee No. 2 is a valuable power asset which can and should be repaired and returned to operation as a part of TVA's power system.² TVA also concluded that it was precluded from wholly or partially diverting a power asset such as Ocoee No. 2 to a nonpower use such as recreational rafting unless the TVA power system was compensated for the power lost thereby. The basis for such preclusion was section 9a of the TVA Act, 16 U.S.C. § 831h-1 (1976), and a Basic Bond Resolution which TVA adopted in 1960 under express authority contained in the 1959 revenue bond amendment to the TVA Act, 16 U.S.C. § 831n-4 (1976; Supp. IV, 1980), and which constitutes by its own terms a contract between TVA and the holders of its bonds. TVA further concluded that some recreation releases of water from behind Ocoee No. 2 dam [12 ELR 20741] would be desirable if, but only if, the power system were so reimbursed, and that a congressional appropriation of the necessary funds would be a practicable method of providing such reimbursement (if Congress regarded recreational rafting as warranting an appropriation).

Such an appropriation was sought and denied — first by the House Appropriations Committee in connection with TVA's fiscal year 1981 budget, and again by the Office of Management and Budget (OMB) in refusing to include a request for such funds in the overall federal budget submitted by the President for fiscal year 1982.Both the House Appropriations Committee and OMB expressed the view that the funds needed to reimburse the power system for recreation releases should be provided by recreation users themselves through a system of user fees, and OMB indicated its willingness to support legislation providing for such fees if legislation were necessary. See Hearings Before a Subcomm. of Energy and Water Development, 96th Cong., 2d Sess. 974 (1980); H.R. REP. NO. 96-1093, 96th Cong., 2d Sess. 150 (1980).

On March 6, 1981, the Ocoee River Council, an organization formed by various commercial rafting interests and noncommercial rafters, and two other parties, one a commercial rafting company and the other an individual rafter, brought an action in the United States District Court for the Eastern District of Tennessee, Southern Division, No. 1-81-100, seeking an injunction prohibiting such repair and restoration to service. Plaintiffs alleged that such repair and restoration would violate the National Environmental Policy Act (NEPA), 42 U.S.C. §§ 4321 et seq. (1976; Supp. III, 1979); the Federal Water Pollution Control Act, 33 U.S.C. §§ 1251 et seq. (1976; Supp. III, 1979); portions of the Administrative Procedure Act (APA), 5 U.S.C. §§ 701 et seq. (1976); the Fish and Wildlife Coordination Act, 16 U.S.C. §§ 661 et seq. (1976); and a section of the Outdoor Recreation Act, 16 U.S.C. § 460l (1976).

On June 9, 1981 the court (Chief Judge Frank W. Wilson) issued an order, with an accompanying memorandum, holding plaintiffs' contentions as to the Federal Water Pollution Control Act, the Fish and Wildlife Coordination Act, and the Outdoor Recreation Act to be without merit and granting TVA's motion for summary judgment with respect to those contentions. On the NEPA and APA claims, the court held that TVA's EIS for Ocoee No. 2 was adequate, but that TVA had violated NEPA by assuming that recreation releases could not legally be made from Ocoee No. 2 unless the power program were reimbursed for resulting losses in power generation. It accordingly ordered that TVA reconsider its decision in light of NEPA "without excluding recreational releases of water absent separate funding for such releases," and that it report the results of its reconsideration to the court within 90 days. In so doing, the court stayed plaintiffs' request for a preliminary injunction restraining TVA's continued work on Ocoee No. 2, and noted in the memorandum accompanying its order that:

In reviewing the TVA's decision . . . this Court may not substitute its judgment for that of the agency . . . . So long as the Agency complies with its obligation under NEPA to incorporate environmental concerns into its decision-making, the ultimate decision on each project belongs to the agency.

Turning . . . to the issue of the [probability of] the ultimate success of the plaintiffs in obtaining a full retirement of the Ocoee No. 2 project, it should be noted that the alternative of not reconstructing Ocoee No. 2 and of retiring the project was rejected by the final EIS. It would appear, therefore, that when the TVA reconsiders its decision upon Ocoee No. 2 with due regard for its obligations under NEPA, it is unlikely that the TVA would adopt this alternative. The Court concludes, therefore, that the plaintiffs have little prospect of ultimately obtaining a complete cessation of work on the project [memorandum at 15, 18; emphasis the court's].

The TVA Board, following reconsideration on the basis directed by the court, concluded on September 2, 1981, that Ocoee No. 2 should be restored to service; recreation releases without reimbursement to the power system would be undesirable and productive of public detriments which would outweigh any benefits to recreation; and the project should be operated for power, with recreation releases for 82 days per year if, but only if, a method — such as concession, license, or user fees — could be developed to assure reimbursement to the power system. TVA so reported to the court, and also asked that the court reconsider, in the light of section 9a of the TVA Act and TVA's Basic Bond Resolution, the portion of its memorandum which had indicated that total or partial diversion of the project to recreation at the expense of power would have been proper had TVA found — as it did not — that such diversion would be desirable. The issues involved were briefed and, on February 11, 1982, orally argued, after which the court took the matter under advisement.

Two weeks after TVA's September 2, 1981, determination, the Ocoee River Council filed a complaint with the Commissioner, Tennessee Department of Health, alleging that TVA's restoration of Ocoee No. 2 to service for generation of power will violate the Tennessee Water Quality Control Act. The complaint did not state or suggest that TVA's plans involve the discharge of any foreign substance into the waters of the Ocoee River. Rather, it claimed that diversion of such waters through the restored flume would itself constitute a "degradation of these high quality recreation waters"; that TVA's determination to utilize Ocoee No. 2 for power purposes, unless power is reimbursed for generation lost through its partial diversion to recreation use, represents an "assert[ion] that it, not the people of Tennessee, is the owner of the river," in violation of "that portion of the [Tennessee Water Quality Control] Act which provides that 'the waters of Tennessee are the property of the state and are held in public trust for the use of the people of the state'"; and that TVA's plans to use the water for power generation violates "the entire intent of the Act which seeks to make the fullest use of the water resources of Tennessee."

On September 21, 1981, the Commissioner addressed a letter to TVA which stated that "the Commissioner will be investigating this complaint and you will be notified of his determination as soon as it is made," and that "[y]our appeal privileges are to the Water Quality Control Board."

Thereafter, on December 11, 1981, the Commissioner sent TVA a letter with which he enclosed a technical report by his department's Division of Water Quality Control and an opinion by the Tennessee Attorney General. The letter stated that he had "carefully evaluated both of the enclosed documents and find[s] that TVA's proposed activity requires a State water quality permit." The stated reasons for the finding were that "TVA's proposed diversion of the waters of the Ocoee River will constitute an '. . . alteration of the physical, chemical, radiological, biological, or bacteriological properties of . . . waters of the State'"; "TVA's use of the diverted water to generate electricity at Power-house No. 2 constitutes '[t]he development of a natural resource . . .'"; and "T.C.A. 70-330(b) makes either of these activities unlawful unless it is carried out in accordance with the conditions of a valid permit." The letter further advised that TVA could appeal to the Tennessee Water Quality Control Board within 30 days from its receipt of the letter.

During such 30-day period, TVA filed an appeal, removed it to this court, and filed the separate declaratory judgment action with which the appeal has been consolidated.

It is TVA's basic position that (1) the state and its officials have no authority to regulate or control federal action relating to the unified development of the Tennessee River system except to the extent Congress has expressly consented thereto, and (2) Congress has not consented to the regulation or control here involved.

The defendants submit that § 313 of the Clean Water Act requires the TVA to comply with state requirements respecting control and abatement of pollution.In other words, does that section waive the sovereign immunity otherwise possessed by the United States of America through the TVA. The statutory language is that each instrumentality of the executive branch of government engaging in any activity "resulting, or which may result, in the discharge or runoff of pollutants" shall be subject to State requirements, etc. The key words are "discharge or runoff of pollutants." The State cannot under the guise of regulation of discharge [12 ELR 20742] or runoff of pollutants exercise the right of control over a unified federal navigation, flood control and power operation, where federal sovereignty has been retained. Here there is solely a question of diversion. There is no discharge nor runoff of pollutants. Regardless of the desirability of recreational rafting, that issue is not present. The strained construction that somehow this diversion of water for a distance of 4.6 miles, passing through a flume, constitutes a discharge or runoff of pollutants is not impressive.

The motion of TVA for a summary judgment is sustained. The motion of the defendant is denied. An order will be entered.

1. TVA TECHNICAL REPORT NO. 5, THE HIWASSEE VALLEY PROJECTS, vol. 2, at 40 (1948).

2. Section 14 of the TVA Act, 16 U.S.C. § 831m (1976), provides for allocations of the costs of dam projects constructed by or turned over to TVA, and further provides that such allocations, when approved by the President, shall be final. The cost of Ocoee No. 2 was allocated entirely to power, and such allocation was approved by the President. 1945 TVA ANN. REP. 233-35; 1946 TVA ANN. REP. 89. The bonds issued under § 15c of the TVA Act to finance federal purchase of Ocoee No. 2 and the other power properties involved have been repaid from power revenues provided by TVA's ratepayers. See Hearings on H.R. 3460 and H.R. 3461 Before the House Comm. on Pub. Works, 86th Cong., 1st Sess. 11 (1959).