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Clinton A. Vince, Emma F. Hand, and Karen A. Sealy on Southeastern Federal Power Customers, Inc. v. Geren

In Southeastern Federal Power Customers, Inc. v. Geren, 2008 U.S. App. LEXIS 2501 (D.C. Cir. 2008), an appellate court has for the first time attempted to put boundaries on the definition of what constitutes a "major operational change" at a federal dam operated by the U.S. Army Corps of Engineers ("Corps"). Clinton A. Vince, Emma F. Hand, and Karen A. Sealy discuss the case’s impact upon the Corps' customary discretion in its operation of federal water projects and the impact upon the Corps' ability to reallocate water storage from one purpose to another. They write:
     The withdrawal of water storage for water supply purposes diminishes the capacity of water in the reservoir available for hydropower generation. The Southeastern Federal Power Customers (“SeFPC”), a not for profit corporation comprised of rural electric cooperatives and municipal electric systems entitled to preferential access to hydropower from federal dams, brought suit in 2000 in the U.S. District Court for the District of Columbia (“D.C. District Court”) against the Corps challenging the Corps’ statutory authority to divert water storage from Lake Lanier to the detriment of hydropower users, and alleging economic injury stemming from increased withdrawals of water from Lake Lanier storage, which compromised use of the lake’s water for power generation.
     Under court-supervised mediation the SeFPC, Corps, and intervenors Georgia and Georgia municipal water supply providers reached a settlement agreement in 2003 that required the Corps to negotiate new interim contracts for the allocation of water storage with the water supply providers. The agreement also required the Corps to conduct the necessary statutory process to ensure that these interim contracts complied with the National Environmental Policy Act (“NEPA”), and to seek Congressional approval to make the interim contracts permanent, assuming the contracts were not invalidated by the NEPA process. The Southeastern Power Administration, which sells the federal hydropower generated by the projects in the Apalachicola-Chattahoochee-Flint (“ACF”) River Basin, including Lake Lanier, would use the revenue from the contracts, paid into the U.S. Treasury, to credit the hydropower customers for benefits foregone (the credits would be reflected in hydropower rates).
     . . . .
     Alabama and Florida argued on appeal that the settlement agreement violated several federal statutes. Most important to this analysis, the States argued that the reallocation of water storage proposed in the settlement agreement required Congressional approval under the WSA [Water Supply Act] because implementing the agreement would both constitute a major operational change and seriously affect the authorized purposes of Lake Lanier.
     The D.C. Circuit found that, on its face, reallocating over 22% of Lake Lanier’s storage capacity to water supply constituted the type of major operational change requiring Congressional approval under the WSA because the Corps was in effect allocating storage space to a purpose for which there was no allocation when Lake Lanier was conceived: “[T]he 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.”
(footnotes omitted)