NORMAN K. MOON, UNITED STATES DISTRICT JUDGE.
Appalachian Power Company ("APCO," or "Plaintiff") filed this action on October 3, 2014, pursuant to the Declaratory Judgment Act, 28 U.S.C. § 2201 et seq. and the Federal Power Act ("FPA"), 16 U.S.C. § 791a et seq. Plaintiff alleges that William Nissen, II and Lora J. Nissen (collectively "Nissens" or "Defendants") are constructing a dock on Smith Mountain Lake that violates APCO's legal rights. The construction and related changes made to the land, Plaintiff argues, violate both a flowage easement that APCO holds on Defendants' property and a license order granted to APCO by the Federal Energy Regulatory Commission ("FERC"). Compl. ¶ 34. Plaintiff holds these rights because it operates the Smith Mountain Hydroelectric Project on the Smith Mountain and Leesville Lakes in Southwest Virginia. Id. ¶ 7. Plaintiff seeks the following: (1) a declaratory judgment that the Defendants are in violation of its easement; (2) an injunction requiring Defendants to repair some of the alleged damage caused by the dock's construction; and (3) an injunction to remove the dock if Defendants fail to obtain a permit from APCO approving its construction. Compl. ¶¶ 34, 38. Despite Defendants efforts to muddy the waters, this case is a simple one: APCO seeks to determine if Defendants' construction violates the terms of its FERC License and, if so, whether the flowage easement grants it sufficient property rights to halt the construction and undo certain changes made to the land.
The matter is now before me upon Plaintiff's motion for summary judgment. In its motion, APCO asks this Court enter judgment upon its request for declaratory relief. More specifically, APCO asks me to determine that: (1) it has the authority to regulate the use and occupancies of the project lands; (2) the Nissens have constructed a dock in violation of APCO's rights; (3) the Nissens have removed vegetation in violation of APCO's rights; (4) the Nissens have constructed a road in violation of APCO's rights; and (5) the Nissens have engaged in unauthorized fill activity
The Court will also grant a permanent injunction in favor of APCO to prevent future violations as explained further below.
Plaintiff APCO operates the Smith Mountain Hydroelectric Project ("the Project") pursuant to a license issued to it by the Federal Energy Regulatory Commission ("FERC"). The Federal Power Act ("FPA"), 16 U.S.C. § 791a et seq., vests FERC with the authority to license hydroelectric projects for the use and benefit of interstate and foreign commerce. By an order dated April 25, 1960, FERC issued a fifty-year license to APCO for the Project, thus delegating its duties and responsibilities to APCO. FERC extended this license for an additional ten years by an order issued on December 15, 2009. The Project boundary encompasses the reservoir at Smith Mountain Lake and all lands on the shoreline of the lake lying below a specific elevation, 800 feet above mean sea level ("FMSL"). When FERC granted APCO the license, it required APCO to acquire title to or the right to use all property necessary to construct, maintain, and operate the Project. Accordingly, APCO has obtained property rights to all Project lands (those below 800 FMSL), and either owns them in fee simple or has obtained rights of occupancy and use via flowage rights and easement deeds. At dispute in this case is whether the property rights acquired on Defendants' property allow APCO to enforce the requirements of the FERC license.
Plaintiff manages the Project in accordance with a Shoreline Management Plan (the "SMP"), which was developed in 2003. This plan was developed through community input and FERC approved the plan. Since approval, the SMP has been incorporated by and is now a part of APCO's license from FERC. The SMP provides detailed guidelines for managing development within the Project's boundaries. Accordingly, the SMP imposes various restrictions on landowners aimed at promoting shoreline stabilization and the protection of aesthetic and environmental quality. Among other things, the regulations address the location, length, height, and maximum size of docks. The SMP also establishes certain "Vegetative Cover Regulations," which require that vegetation within the Project boundary be preserved, and that none may be removed without a permit from APCO. The SMP further limits what can be constructed between an elevation of 795 and 800 FMSL. Structures located within this zone are limited to those that provide access to a dock, as well as pilings or cables installed
Defendants own a parcel of land on Smith Mountain Lake. Their property is located at 164 Windmere Trail, Moneta, Virginia 24121. Defendants' property consists of approximately 1.441 acres, some of it lying above and some of it lying below the Project boundary of 800 FMSL. The parcel was conveyed to Defendants subject to all easements, restrictions, reservations, and covenants of record by Deed dated April 14, 2014. Plaintiff APCO had previously obtained easement rights over Defendants' Property pursuant to the Flowage Right and Easement Deed ("Flowage Easement") dated September 12, 1960, by and between APCO and Defendants' predecessors-in-title. The Flowage Easement provides APCO with:
Flowage Easement 1. The Flowage Easement also reserves certain rights to the Grantor:
Flowage Easement 2.
Defendants have, without obtaining permission from APCO, commenced construction of a dock, removed vegetation, and constructed a road, all on the portion of their property that falls within the Project boundary. The Defendants' proposed dock, which will be located close to a neighboring lot, will measure roughly 3,520 square feet in size, approximately 110 feet in length, and over 26 feet in height. Plaintiff APCO alleges that the proposed dock does not conform to the requirements of the FERC License Order and integrated SMP, as it is "oversized, too long, too high, and is located too close to the neighboring property." Compl. ¶ 31. Additionally, Defendants' road construction violated the SMP by destroying vegetation and placing additional fill within the Project boundary.
Flowage Easement 1-2 (emphasis added).
Summary judgment is warranted if the Court concludes that no genuine issue of material fact exists for trial and that the moving party is entitled to judgment as a matter of law, based on the totality of the evidence, including pleadings, depositions, answers to interrogatories, and affidavits. Whiteman v. Chesapeake Appalachia, L.L.C., 729 F.3d 381, 385 (4th Cir.2013) (citing Fed. R. Civ. P. 56). A genuine issue of material fact exists "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).
To demonstrate that a genuine issue of material fact exists, a party may not rest upon his own mere allegations or denials. Celotex Corp. v. Catrett, 477 U.S. 317, 324, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Rather, the party must "proffer[ ] sufficient proof, in the form of admissible evidence, that could carry the burden of proof of his claim at trial." Mitchell v. Data Gen. Corp., 12 F.3d 1310, 1316 (4th Cir.1993). To this end, a district court has an "affirmative obligation ... to prevent `factually unsupported claims [or] defenses' from proceeding to trial." Felty v. Graves-Humphreys Co., 818 F.2d 1126, 1128 (4th Cir. 1987) (quoting Celotex, 477 U.S. at 323-24, 106 S.Ct. 2548).
Before discussing APCO's requests for declaratory judgment, the Nissens' contention concerning the FERC Licenses must be examined.
While the Nissens have couched their argument as a dispute of material fact, the determination of an easement and its limitations are questions for the Court. The rules controlling the interpretation of an easement granted by deed are the same as those that govern the construction of other written documents. Pyramid Development, L.L.C. v. D & J Associates, 262 Va. 750, 553 S.E.2d 725, 728 (2001). The terms of the easement "are to be construed by giving the words their natural and ordinary meaning," and "[t]he language in the deed is taken most strongly against the grantor and most favorably to the grantee." Bailey v. Town of Saltville, 279 Va. 627, 691 S.E.2d 491, 494 (2010). Determining the nature of an interest in land conveyed by deed is a question of law. Id. Furthermore, an easement that contains no limitation is limited by a reasonableness inquiry based on the original purpose of the grant: in this case, the original purpose of the Project, to run the hydro electric plant, as determined through the current FERC license. McCarthy Holdings L.L.C. v. Burgher, 282 Va. 267, 716 S.E.2d 461, 464-65 (2011) (quoting Shooting Point, L.L.C. v. Wescoat, 265 Va. 256, 576 S.E.2d 497, 502-03 (2003)).
Although the Nissens' argument concerns a question of law rather than fact, it is worth examining. Presumably, the Nissens suggest that the 1960 FERC license provides a better determination on the original purpose of the grant. See McCarthy Holdings, L.L.C., 716 S.E.2d at 464-65. Specifically, the Nissens point to Article 21 of the April 25, 1960, Order granting APCO its FERC License Order. In that Article, the Order specifically stated that "The Licensee shall, prior to flooding, clear all lands...." (emphasis added). After the introduction, the Order mirrors the language of the Flowage Easement obtained in that same year. Due to this, the Nissens argue that the entire Flowage Easement concerns only the "limited privilege to flood the land subject to the Flowage Easement for the purpose of constructing and operating the Project." Defs. Mem. 9.
While the argument has been cleverly sculpted, it cannot be accepted. Virginia law limits the unfettered rights that APCO is given under the Flowage Easement through the FERC License and SMP.
In the first paragraph of the Flowage Easement, the easement specifically states that it concerns the "construction, existence, operation and/or maintenance of the aforesaid dam and/or power station." This language proves that the original purpose of the Flowage Easement grant concerned an ongoing obligation, on APCO's part, to operate and maintain the dam and power station — obligations that continue to be monitored and determined through updated Licenses and SMPs. These updated obligations were even included in the 1960 License; the same License that the Nissens contend should be interpreted in this case. The 1960 License incorporated the terms and conditions of the Federal Powers Act, and such rules and regulations as the Commission has issued or prescribed. 1960 FERC License, 23 F.P.C. 624 (1960). Specifically, Section 10(c) of the FPA, 16 U.S.C. § 803(c), was incorporated into the license. In Section 10(c), a licensee can be required to conform to rules and regulations that the Commission makes from time to time, thus making the retention of the property rights on APCO's behalf important. 1960 FERC License, 23 F.P.C. 624, at Ordering Paragraph B. Thus, the 1960 FERC License provided the possibility that FERC would issue new licenses in the future providing new rules and regulations.
Therefore, the 2009 License and 2014 SMP must be analyzed in this case to limit the unfettered language of the Flowage Easement. FERC, the original grantor of the Project, has the best ability to determine what actions APCO must take in order to succeed with the original grant of the easement — to run the dam and power station. Therefore, FERC has just ensured that the Project maintains its purpose through the changing times of technology and activity as evidenced through the updated FERC Orders and SMP. These documents concern the current affairs of the Project and provide an updated determination of what is required of APCO to satisfy the original grant of the easement — to maintain and operate the dam and power station — under the reasonableness inquiry. McCarthy Holdings, L.L.C., 716 S.E.2d at 464-65. If, however, FERC, through its updated order, would require more than APCO's easement allows, then APCO would be required to obtain the proper property rights.
Because FERC, the grantor of the Project, would understand what is needed to satisfy the original grant of the easement, to run the dam and power station, the 2009 License and 2014 SMP are the proper documentation to be analyzed in this case in connection with the Flowage Easement.
In this request, APCO asks the Court to declare: "That, under the FPA, the FERC License Order issuing and amending Appalachian's license for the Project, and the SMP, Appalachian has the authority and responsibility to regulate uses and occupancies of the Project lands." Compl., at 12.
Therefore, there is no dispute of material fact that Appalachian has the ability to regulate the use and occupancies of the Project lands under the Flowage Easement as expounded by the Federal Power Act, the FERC License Order for the Project, and the SMP.
In this request, APCO asks the Court to find that "[t]he Nissens have commenced construction of a dock in violation of the SMP, APCO's Obligation under the FERC Orders for the Project, and the Flowage Easement." Pl.'s Mem., at 14.
At the Motion to Dismiss stage, I noted that "Defendants' argument that APCO does not have a property interest such that it can compel the Nissens to cease construction of the dock ... is at odds with the plain language of the Flowage Easement." Mem. Op., Dkt. No. 61, at 7. In addition, this Court in Arthur, interpreting the exact same Flowage Easement language, found that "APCO's easement deed expressly allows APCO to ... effect the removal of nonconforming structures like the ones at issue here." Arthur, 39 F.Supp.3d at 797; see also Pressl v. Appalachian Power Company, No., Oct. 6, 2015, Mem. Op., at 14 (holding that a Flowage Easement with the exact same language "provides APCO with the ability to determine the necessary steps that a party must take to build a dock to begin with"); Appalachian Power Company v. Longenecker, No. 7:00-cv-00731, July 7, 2001 Mem. Op. (W.D. Va.).
In this case, the Nissens' dock is clearly within the Project boundary, making it subject to the Flowage Easement. Pl.'s Mem. Ex. D. Furthermore, the Nissens admit that their planned dock would be 3,520 square feet, which is well above the maximum size of 1,500 square feet allowed at this location. Defs.' Answer to Pl.'s Compl. ¶ 28; SMP, at 39-40.
Therefore, no dispute of material fact exists that Nissens' dock violates APCO's rights under the Flowage Easement, FERC Orders, and SMP.
In the third request for declaratory judgment, APCO requests this Court to determine that "[t]he Nissens have removed vegetation in violation of the SMP and the FERC Orders for the Project." Pl.'s Mem., at 16. Under the Flowage Easement, APCO has the right to "affect so much of said premises ... continuously or from time to time in any manner whatsoever as the result of ... operation
While this language gives APCO a very broad right, Virginia law requires that this easement be limited to the original easement grant, which as discussed above can be determined through the current FERC license which incorporates the SMP. See McCarthy Holdings, L.L.C., 716 S.E.2d at 464-65. Under the SMP's Vegetative Cover Regulation, "[v]egetation within the project boundary must be preserved if present." SMP, at 73-74. Although the SMP allows a permit to modify or remove vegetative cover, the Nissens failed to request a permit and still removed vegetation.
However, APCO's requirement that the Nissens re-vegetate the land is a closer issue.
As the clear language shows, APCO has the right to enter upon the land and remove all buildings, structures, improvements, trees, bushes, driftwood, and other objects and debris. Id. This language does not give APCO the ability to force the Nissens to act. However, APCO could recover damages for the labor and materials used to remedy the Nissens violation of the easement. See Snead v. C & S Properties Holding Co., Ltd., 279 Va. 607, 614, 692 S.E.2d 212 (2010) (awarding easement holder compensatory and nominal damages in addition to the costs of removal). Therefore, it would be proper to give the Nissens the opportunity to remedy such violation on the front-end so that they could have the opportunity to decide where such vegetation should be placed and in a manner most cost-effective while remedying the violation. See e.g., Pizzarelle v. Dempsey, 259 Va. 521, 531-32, 526 S.E.2d 260
By failing to request permission and still removing the vegetation, the Nissens have violated APCO's rights under the Flowage Easement.
In its fourth request for declaratory judgment, APCO asks the Court to decide that the Nissens have constructed a road in violation of the Flowage Easement. Under the Flowage Easement, APCO has the right to enter upon Defendants' Property at any time to "remove therefrom any and all ... improvement ... and other objects and debris of any and every kind or description which are or may be located on the portion of said premises below the contour the elevation of which is 800 feet." Black's Law Dictionary defines "improvement" as "an addition to property, usually real estate, whether permanent or not; especially, one that increases its value or utility or that enhances its appearance." Black's Law Dictionary (10th ed. 2014). An earlier version of Black's Law Dictionary defined "improvement" as "a valuable addition made to property (usually real estate) or an amelioration in its condition, amounting to more than mere repairs or replacement, costing labor or capital, and intended to enhance its value, beauty or utility or to adapt it for new or further purpose." Black's Law Dictionary (6th ed. Abridged 1991); see also Sellers v. Bles, 198 Va. 49, 55, 92 S.E.2d 486 (1956) (defining "improvement" as "a valuable addition, or betterment, as a building, clearing, drain, fence, etc., on land."); 9B Michie's Jurisprudence, Improvements § 1 (2013) ("A valuable addition made to property-usually real estate-or an amelioration in its condition, amounting to more than mere repairs or replacement, costing labor or capital, and intended to enhance its value, beauty or utility or to adapt it for a new or further purpose."). Therefore, each definition accepts the fact that "improvement" is a "comprehensive term, which includes in its meaning any development whereunder work is done and money is expended with reference to the future benefit or enrichment of the premises." Eppes v. Eppes, 181 Va. 970, 988, 27 S.E.2d 164 (1943). Furthermore, the Flowage Easement's use of the term "improvement" is preceded by two other very broad and comprehensive terms: buildings and structures. Sellers, 198 Va. at 54, 92 S.E.2d 486 ("Improvement is not a word of art having a fixed and definite meaning. It takes color and
In this case, the Nissens' road
In this request, APCO requests the Court to find that the Nissens have engaged in unauthorized fill activity in violation of the Flowage Easement. As this Court has previously stated, the "plain language" of the Flowage Easement forbids the Nissens from placing "refuse, waste, or other contaminating matter, such as fill, below 800 FMSL." Dkt. No. 61, at 8. In addition, the SMP specifically prohibits "the depositing or stockpiling of material [] within the project boundary." SMP, at 73.
The Nissens have caused dirt, gravel, and debris to be placed upon, drained, or discharged upon their property that is below the 800-foot elevation contour without APCO's permission. Bryant Dec. ¶ 10.
Therefore, there is no dispute of material fact that the Nissens have violated the SMP and APCO's right under the Flowage Easement.
The Nissens filed a Counterclaim for Declaratory Judgment with their Answer. The Counterclaim for Declaratory Judgment incorporated the Nissens' responses to the allegations in Appalachian's Complaint, and asserted five separate requests for declaratory judgment. In response, Appalachian filed a Motion to Dismiss the Nissens' Counterclaims, and that motion was granted in part and denied in part. Specifically, this Court dismissed the Nissens' first, second, fourth and fifth requests for declaratory judgment. Therefore, only one request, the third request for declaratory judgment remains. This request asks the Court to find:
Because Requests "A", "C", "D", and "E" were all answered in the preceding sections, I will not discuss them again. Therefore, summary judgment will be granted in favor of APCO on "A," "C," and "D." As discussed above, the Flowage Easement does not give APCO the ability to affirmatively require the Nissens to act without Court order. Therefore, Request "E" will be denied to the extent it asks this Court to require the Nissens to re-vegetate or remove the fill.
Summary judgment will also be granted for Request "F" because it is based on a "proposed" permit rather than one that had been formally entered by the parties. Pressl, No., Mem. Op. Oct. 6, 2015 at fn. 11. Until this permit is formally agreed upon, there is no justiciable controversy. Id. Furthermore, the Nissens would be required to exhaust their administrative remedies with FERC before seeking judicial review of any problems that they have with any prospective permit. Id.
The Nissens also fail to exhaust their administrative remedies with FERC concerning their last request, Request "B." Request "B" asks the Court to declare "[t]hat Plaintiff is not authorized to regulate property within the Project boundary if its property interest in the land that is sought to be regulated does not arise to the requirements of Article 5 of the FERC License Order." Under Article 5, APCO is required to "acquire title in fee or the right to use in perpetuity all lands ... necessary or appropriate for the construction, maintenance, and operation of the project." This Court is not the correct forum to raise these contentions. "It is for FERC to decide in the first instance whether the licensee is in compliance with the conditions of the license." DiLaura v. Power Authority, 786 F.Supp. 241, 253 (W.D.N.Y.1991), aff'd, 982 F.2d 73, 80 (2d Cir.1992). FERC has even issued a ruling on this very issue stating "[s]ince the issuance of its original licenses in 1960, Appalachian Power has obtained all the necessary property rights to project lands in fee or by holding flowage rights." See Letter to Cut Unnecessary Regulatory Burden, Inc., re the Property issues at Smith Mountain Pumped Storage Project under P-2210 (July 10, 2015), at 5. Therefore, "[i]t is the FERC, and not this Court, that has the power and the expertise to decide if the license was violated or if the current operating procedures should be changed." DiLaura, 786 F.Supp. at 253; see also Pressl, Mem. Op. Oct. 6, 2015, at 15-16 (holding that Smith Mountain Lake property owners who are dissatisfied with APCO's permit process must exhaust administrative remedies with FERC before seeking judicial review in the Court of Appeals, not the District Court.").
In its complaint, APCO seeks a permanent injunction to:
As previously noted, the plain language of the Flowage Easement does not provide APCO with the ability to necessarily force the Nissens to act affirmatively as the easement is written to give APCO the ability to act when landowners contravene its rights.
Although I decline to enter an injunction requiring the Nissens to affirmatively act, I will enter a permanent injunction for the Nissens to cease constructing the dock and attempt to gain compliance for the dock.
In order to grant a permanent injunction, a court must ensure that four factors are met. These four factors include:
eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388, 391, 126 S.Ct. 1837, 164 L.Ed.2d 641 (2006).
While the Supreme Court originally denoted the permanent injunction inquiry as four factors, the first two factors are often fused. Safeway Inc. v. CESC Plaza Ltd. Partnership, 261 F.Supp.2d 439,
In this case, an injunction will remedy the problem of the continuing trespass of the Nissens on APCO's property rights under the Flowage Easement. Levisa Coal Co. v. Consolidation Coal Co., 276 Va. 44, 62, 662 S.E.2d 44 (2008) ("[I]njury is deemed irreparable and the owner protected in the enjoyment of his property whether such be sentimental or pecuniary."), cert. denied, 556 U.S. 1221, 129 S.Ct. 2158, 173 L.Ed.2d 1156 (2009). Furthermore, the Nissens continued violations would cause irreparable harm to APCO's ability to "operate and maintain" the dam and power station as the Flowage Easement protects. Furthermore, remedies available at law, such as damages, would be inadequate. As discussed above, without an injunction, the Nissens could continue to violate APCO's rights under the Flowage Easement requiring APCO to return to litigation rather than running the Project.
Therefore, a permanent injunction would be proper because APCO has suffered irreparable injury — injury to its property rights — and remedies available at law are inadequate.
The third factor requires the Court to balance the hardships imposed on the defendant if the injunction is granted against the hardships imposed on the plaintiff if the injunction is denied. See Akers v. Mathieson Alkali Works, 151 Va. 1, 9, 144 S.E. 492 (1928) ("[T]he court should weight the injury that may accrue to the one or the other party, and also the public, by granting or refusing the injunction.).
The only hardship that the Nissens face, if the injunction is granted, would be complying with the terms of the Flowage Easement. If the injunction is denied, APCO would have significant hardship losing its property rights and running the Project with non-conforming land.
Therefore, the balance of the hardship favors APCO in losing its property rights under the Flowage Easement versus the Nissens' hardship in the erection and removal of structures that violated APCO's rights in the beginning.
The fourth and final factor under the permanent injunction analysis is whether the public interest would be served by the requested injunction.
Because the entire purpose of the Smith Mountain Lake Project is to serve the public interest through a scenic lake while running a hydroelectric plant, any injunction that would ensure that APCO could continue to maintain and operate the Project would serve the public. See e.g., SMP, at 1 (establishing that the SMP purpose is to "ensure the protection and enhancement of the Project's recreational, environmental,
Therefore, the permanent injunction would ensure that landowners, such as the Nissens, would not violate the future lake users' enjoyment while also ensuring the production of electricity.
As set forth above, Plaintiffs' Motion for Summary Judgment is
In addition, the request for a permanent injunction is
Second, the Nissens claim that APCO's current license creates an impermissible expansion of the scope of the rights under the Flowage Easement. As discussed above, the Flowage Easement itself is a broad grant of authority. Such a broad grant is limited to the original purpose of the easement — to construct and maintain the dam and power station. The current license only ensures that this original purpose is maintained. McCarthy Holdings, L.L.C., 716 S.E.2d at 464-65. Thus, the current license is a limit on the unfettered language in the Flowage Easement as determined by the original Project grantor, FERC, whom has determined what is needed to maintain the dam and power station in the Project.