Pressl et al v. Appalachian Power Company

Filing 25

MEMORANDUM OPINION. Signed by Judge Norman K. Moon on 10/6/15. (sas)

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF VIRGINIA
ROANOKE DIVISION
RICHARD A. PRESSL AND THERESA M. PRESSL,

CASE NO. 7:15-CV-00343

Plaintiffs,
v.

MEMORANDUM OPINION

APPALACHIAN POWER COMPANY
Defendant.

JUDGE NORMAN K. MOON

Richard A. Pressl and Theresa M. Pressl (“Pressls,” or “Plaintiffs”) filed this action in
state court, pursuant to Virginia Code, § 8.01–184. Appalachian Power Company (“APCO,” or
“Defendant”) removed the action to this Court.
This action arises out of the Pressls’ desire to construct a dock on Smith Mountain Lake.
Compl. ¶ 6. The construction, APCO argues, is subject to both a flowage easement that APCO
holds on the Pressls’ property and a license order granted to APCO by the Federal Energy
Regulatory Commission (“FERC”).

Mot. to Dismiss 2. APCO claims these rights because it

operates the Smith Mountain Hydroelectric Project on the Smith Mountain and Leesville Lakes
in Southwest Virginia. Id. At the end of the Complaint, the Pressls asked the state court for the
following forms of declaratory judgment:
C. That the Court . . . find that APCO lacks the authority to demand that
your plaintiffs relinquish without compensation valuable property rights they
and their predecessors in title retained by under the original flowage easement.
D. That the Court further find that APCO lacks the authority to require the
plaintiffs to enter into a revocable license agreement as a condition for
accessing the waters of Smith Mountain Lake for recreational purposes;

E. That the Court find that APCO has no regulatory authority over the
plaintiffs’ property which lies below the 800 foot contour beyond those rights
defined by the flowage easement, the contemporaneous expressions of the
parties, and vested rights to build and own structures to access Smith
Mountain Lake for recreational purposes;
F. That the Court find that APCO cannot regulate the size and type of dock
that the plaintiffs may construct on their property;
G. That the Court find that APCO cannot regulate how the plaintiffs stabilize
the shoreline of their property by requiring them to plant vegetation below the
800 foot contour;
H. That the Court find that APCO cannot regulate whether the plaintiffs
may dredge in front of their property to improve any dock which they may
construct;
I. That the Court find that the Plaintiffs be allowed to use their property in
any manner not inconsistent with the maintenance of a dam and hydroelectric power generation plant operated by APCO.
Compl., pp. 18–19. The matter is now before me upon the Pressls’ motion to remand and
APCO’s motion to dismiss. The Pressls argue that the entire case should be remanded to the
Circuit Court for the County of Franklin, Virginia, under 28 U.S.C. § 1447(c) (“if at any time
before final judgment it appears that the district court lacks subject matter jurisdiction”), because
the Court lacks subject matter jurisdiction.

APCO argues that the complaint should be

dismissed because it fails to state a claim upon which relief can be granted under Fed. R. Civ. P.
12(b)(6). For the reasons that follow, the Pressls’ motion will be DENIED and APCO’s motion
will be GRANTED.
I.

BACKGROUND

APCO operates the Smith Mountain Hydroelectric Project (“the Project”) pursuant to a
license issued to it by the 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
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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 or has obtained rights of occupancy and use via flowage right and easement deeds.
According to APCO, these property rights allow it to enforce the requirements of the FERC
license.
APCO manages the Project in accordance with a Shoreline Management Plan (the “SMP”),
which it developed in 2003. 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 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 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 for purposes of enhancing the stability of a floating structure.
The Pressls own a parcel of land on Smith Mountain Lake. Their property is located in
Lakeland Park, Gills Creek Magisterial District, Franklin County, Virginia.

The Pressls’

property consists of 2.663 acres with ½ acre, more or less, below the Project boundary of 800

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FMSL. APCO had previously obtained easement rights over the Pressls’ property pursuant to a
Flowage Right and Easement Deed dated April 18, 1960, by and between APCO and the Pressls’
predecessors-in-title. The Flowage Right and Easement Deed provide APCO with:
[T]he right to enter upon said premises at any time and from time to time and, at
[APCO’s] discretion, to cut, burn and/or remove therefrom any and all buildings,
structures, improvements, trees, bushes, driftwood and other objects and debris of
any and every kind or description which are or may hereafter be located on the
portion of said premises below the contour the elevation [sic] of which is 800 feet.
[Pressls have] the right to possess and use said premises [subject to the flowage
easement] in any manner not inconsistent with the estate rights and privileges
herein granted to [APCO], including (a) the right to cross said land to reach the
impounded waters for recreational purposes . . . .

Compl. ¶16. Since purchasing the property, the Pressls have sought to construct a dock to access
the waters of Smith Mountain Lake. However, APCO has informed the Pressls that it has the
ability to control how they use the property below the 800 foot contour level of their property.
Specifically, APCO has advised the Pressls that, as a condition for the building of the dock, they
must execute an Occupancy and Use Permit (“Permit”).1

Compl. ¶ 19 (Permit attached as

Compl. Ex. G). Due to this demand and its obligations, the Pressls filed this action seeking
declaratory relief.
II.

LEGAL STANDARD
a. MOTION TO REMAND

Pursuant to 28 U.S.C. § 1447(c), a case must be remanded “if at any time before final
judgment it appears that the district court lacks subject matter jurisdiction.” Federal courts are
courts of limited jurisdiction, possessing “only that power authorized by Constitution and
statute.” Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994). Generally, a case

1

The terms of this Permit state that it is a revocable license which APCO may revoke for any act which violates
a condition imposed by APCO. Compl. ¶ 31-32.

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can be originally filed in a federal district court if there is federal question jurisdiction under 28
U.S.C. § 1331 or diversity of citizenship jurisdiction under 28 U.S.C. § 1332.
“Whether a case ‘arises under’ federal law for purposes of § 1331” is governed by the
“well-pleaded complaint rule.” Holmes Grp., Inc. v. Vornado Air Circulation Sys., 535 U.S. 826,
830 (2002).

More specifically, federal jurisdiction exists only when a federal question is

presented “on the face of the plaintiff’s properly pleaded complaint.”

Caterpillar, Inc. v.

Williams, 482 U.S. 386, 392 (1987). An action “arises under” federal law if “federal law creates
the cause of action” or “the vindication of a right under state law necessarily turned on some
construction of federal law.” Merrell Dow Pharm. Inc. v. Thompson, 478 U.S. 804, 808–09
(1986).
However, the well-pleaded complaint rule is modified when, as in this case, a party is
seeking declaratory relief. For these situations, the court must consider “whether the complaint
alleges a claim arising under federal law that the declaratory judgment defendant could
affirmatively bring against the declaratory judgment plaintiff.” Columbia Gas Transmission
Corp. v. Drain, 237 F.3d 366, 370 (4th Cir. 2001); see also Franchise Tax Bd. v. Constr.
Laborers Vacation Trust, 463 U.S. 1, 19 (1983) (“Federal courts have regularly taken original
jurisdiction over declaratory judgment suits in which, if the declaratory judgment defendant
brought a coercive action to enforce its rights, that suit would necessarily present a federal
question.”); Interstate Petroleum Corp. v. Morgan, 249 F.3d 215, 226–227 (2001) (en banc)
(Wilkins, Williams, Motz, and Traxler, JJ., dissenting) (“[F]ederal right actually litigated when
declaratory relief is sought may belong to the declaratory judgment defendant rather than to the
declaratory judgment plaintiff does not change the fact that the action arises under federal law.”).

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In addition, the Supreme Court has recognized situations where a “substantial federal
question” is presented through four elements. Gunn v. Minton, __ U.S. __, 133 S.Ct. 1059, 1065
(2013) (quoting Grable & Sons Metal Prods., Inc. v. Darue Eng’g & Mfg., 545 U.S. 308, 314
(2005)). In these situations, the federal issue must be: (1) necessarily raised, (2) actually
disputed, (3) substantial, and (4) capable of resolution in federal court without disrupting the
federal-state balance approved by Congress. Id.; see also Washington Consulting Grp., Inc., v.
Raytheon Technical Servs. Co., L.L.C., 760 F. Supp 2d 94, 100 (D.D.C. 2011) (recognizing the
Grable decision as a narrow exception to the well-pleaded complaint); Nielsen v. Archidiocese of
Denver, 413 F. Supp. 2d 1181, 1184 (D. Colo. 2006) (noting that Grable did not abrograte the
well-pleaded complaint rule).
b. MOTION TO DISMISS
A Rule 12(b)(6) motion to dismiss tests the legal sufficiency of a complaint to determine
whether the plaintiff has properly stated a claim: “it does not resolve contests surrounding the
facts, the merits of a claim, or the applicability of defenses.” Republican Party of North
Carolina v. Martin, 980 F.2d 943, 952 (4th Cir. 1992). Although a complaint “does not need
detailed factual allegations, a plaintiff’s obligation to provide the ‘grounds’ of his entitle[ment]
to relief requires more than labels and conclusions, and a formulaic recitation of the elements of
a cause of action will not do.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (internal
citations omitted). A court need not “accept the legal conclusions drawn from the facts” or
“accept as true unwarranted inferences, unreasonable conclusions, or arguments.” Eastern Shore
Markets, Inc. v. J.D. Assocs. Ltd. P’ship, 213 F.3d 175, 180 (4th Cir. 2000). “Factual allegations
must be enough to raise a right to relief above the speculative level,” Twombly, 550 U.S. at
555, with all allegations in the complaint taken as true and all reasonable inferences drawn in the
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plaintiff’s favor. Chao v. Rivendell Woods, Inc., 415 F.3d 342, 346 (4th Cir. 2005).
Rule 12(b)(6) does “not require heightened fact pleading of specifics, but only enough facts to
state a claim to relief that is plausible on its face.” Twombly, 550 U.S. at 570. Consequently,
“only a complaint that states a plausible claim for relief survives a motion to dismiss.” Ashcroft
v. Iqbal, 556 U.S. 662, 679 (2009).
Relevant here, a motion to dismiss may be proper if a party has failed to exhaust its
administrative remedies before bringing its lawsuit. Parties who challenge agency action are
required to exhaust all administrative remedies before bringing a case to court. See Cavalier
Tel., LLC v. Va. Elec. & Power Co., (4th Cir. 2002) (“It is a ‘long-settled rule of judicial
administration that no one is entitled to judicial relief for a supposed or threatened injury until
the prescribed administrative remedy has been exhausted.’”) (quoting Myers v. Bethlehem
Shipbuilding Corp., 303 U.S. 41, 50–51 (1938)). When determining whether exhaustion occurs,
courts look to Congressional intent and the role Congress has assigned to the relevant federal
agency. Id. In this situation, the FPA establishes a series of remedies for those who wish to
challenge a FERC action or decision. Under the FPA, any person may petition FERC with a
complaint about a FERC licensee.

16 U.S.C. § 825e.

FERC may then investigate these

complaints in such a manner and by such a means as it shall find proper. Id. In addition to this
independent investigation, a party may intervene in a FERC proceeding if they file a timely
motion and demonstrate that they have an interest which may be directly affected by the outcome
of the proceeding or that their participation is in the public interest. 18 C.F.R. § 385.214. A
person aggrieved by a final FERC decision or order can file for a rehearing by FERC within
thirty days of the date of issuance of the order. 18 C.F.R. § 385.713; 16 U.S.C. §825l(a). Only
then, after FERC’s final decision and unsuccessful rehearing, can a person seek judicial review

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of a FERC action. This judicial review, however, must be sought in a United States Court of
Appeals. 16 U.S.C. § 825l(b).
III. DISCUSSION
a. MOTION TO REMAND
The Pressls argue that the complaint should be remanded for lack of subject matter
jurisdiction. The Pressls contend that:
There is absolutely nothing on the face of the Pressls’ Complaint that present an issue of
federal question. The face of the Complaint makes no reference to the FPA, Defendant’s
FERC license, or the SMP. Likewise, the aforementioned are not referenced in or
incorporated into the flowage easement. The Complaint, and all of its request for relief,
refer to and are brought under the state-law theory of easement interpretation.
Mot. to Remand p. 8. In essence, the Pressls argue that the complaint, under the well-pleaded
complaint rule, lacks federal question jurisdiction due to the fact that it does not mention or
discuss anything dealing with FERC or the SMP. However, this argument fails.
While the well-pleaded complaint rule determines whether a federal question exists, this
rule is modified in declaratory judgment proceedings. In such proceedings, the Fourth Circuit
has made clear that the court should consider the coercive suit that the declaratory judgment
defendant could bring against the declaratory judgment plaintiff. Columbia Gas Transmission
Corp. v. Drain, 237 F.3d 366, 370 (4th Cir. 2001). In the present case, the “coercive suit” would
occur if the Pressls had decided, rather than bringing suit, to build the dock as they desired
without a permit from APCO. Then, APCO could have brought its “coercive action” seeking an
injunction against the building of the dock.

This “coercive suit” contemplated by APCO

resembles the numerous other disputes between APCO and Smith Mountain Lake landowners
that federal courts have decided with proper jurisdiction under 16 U.S.C. § 825p.2 See, e.g.,

2

At the hearing, the Pressls contend that this court lacks jurisdiction by looking solely at the current declaratory
action. However, this is incorrect. As the case law makes clear, the proper analysis hinges on the mirror image

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Nissen et al. v. Appalachian Power, 6-14-CV-000048 (W.D. Va. Feb 2, 2015) (concerning the
same factual dispute). More specifically, APCO operates it hydroelectric project pursuant to a
license from FERC under the Federal Powers Act (“FPA”), in accordance with 16 U.S.C. § 817.
In providing this license, FERC delegated to APCO its FPA-related duties and responsibilities
with respect to operation of the Project, which incorporated the SMP. Furthermore, the FERC
license, specifically the operation of the Project, provide a limitation on the broad grant of
authority given in the original easement. McCarthy Holding L.L.C. v. Burgher, 716 S.E.2d 461,
464–65 (recognizing that a broad grant in an easement is limited to the original purpose of that
grant).

Consequently, APCO’s “coercive suit” “would seek to enforce the duties and

responsibilities that it has under the FPA, which include a duty to ensure that lands within the
Project boundary comply with the SMP.” Id. at 7. This enforcement would “fall[] within the
exclusive jurisdiction of the District Courts of the United States,” as numerous cases between
APCO and Smith Mountain Lake landowners have held. Id.; see also Appalachian Power Co. v.
Arthur, No. 7:09-CV-360, 2014 WL 3900618, at *1 (W.D. Va. Aug. 11, 2014); VA Timberline,
LLC v. Appalachian Power Co., No. 7:06-CV-40026, 2008 WL 269544, at *1 (W.D. Va. Jan. 29,
2008) aff’d sub nom. VA Timberline, L.L.C. v. Appalachian Power Co., 343 F. App’x 915 (4th
Cir. 2009); Appalachian Power Co. v. Longenecker, No. 7:00-CV-00731 (W.D. Va. 2001); J.W.
Holdings, Inc. v. Appalachian Power Co., No. 6:04-CV-00033, at 2–3 (W.D. Va. 2005).
In addition to jurisdiction under 16 U.S.C. § 825p, this case would also satisfy the Grable
and Gunn requirements for a “substantial federal question.” See, e.g., Va. Timberline, LLC v.
Appalachian Power Co., No. 7:06-CV-40026, 2006 WL 1993557, at *2 (“The meaning of the
FERC license is a substantial and important issue of federal law that sensibly belongs in federal

“coercive suit” that APCO, as the declaratory judgment defendant, could bring against the Pressls, as the declaratory
judgment plaintiffs. This suit would be identical to the Nissen case decided earlier this year.

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court.”) (citing Grable, 545 U.S. at 314). Under this doctrine, federal jurisdiction exists over a
claim arising under state law if such claim “necessarily raise[s] a stated federal issue, actually
disputed and substantial, which a federal forum may entertain without disturbing any
congressionally approved balance of federal and state judicial responsibilities.” Grable & Sons
Metal Prods., Inc. v. Darue Eng’g & Mfg., 545 U.S. 308, 314 (2005). More recently, the
Supreme Court has stated:
That is, federal jurisdiction over a state law claim will lie if a federal issue is: (1)
necessarily raised, (2) actually disputed, (3) substantial, and (4) capable of resolution in
federal court without disrupting the federal-state balance approved by Congress. Where
all four of these requirements are met, we held, jurisdiction is proper because there is a
“serious federal interest in claiming the advantages thought to be inherent in a federal
forum,” which can be vindicated without disrupting Congress's intended division of labor
between state and federal courts
Gunn v. Minton, 133 S. Ct. 1059, 1065 (2013). As for the necessarily raised requirement, the
Pressls would be required to prove that under the Flowage Easement they have the “privilege to
use the land . . . in a particular manner and for a particular purpose[].” Brown v. Haley, 355
S.E.2d 563, 567 (1987). Therefore, the Pressls would be required to prove that it would not be
contrary to APCO’s right under the Flowage Easement for them to conduct the activities that
they seek.3 One of these rights given to APCO is to “affect so much of said premises . . .
continuously or from time to time in any manner whatsoever as the result of . . . operation and/or
maintenance of the aforesaid dam and/or power station.” Compl. ¶9.4 In order to effectuate
whether the Pressls’ activities are inconsistent with APCO’s operation of the dam or power
station, the Court would have to consider what is required of APCO to operate the Project.
Specifically, pursuant to the FPA, APCO must operate its “dam and hydro electric power
3

The Flowage Right and Easement Deed makes clear that the Pressls have the right to possess and use their
property subject to the grant of the easement. Compl. ¶16.
4

In addition, Plaintiffs specifically seek declaratory relief that they “be allowed to use their property in any
manner not inconsistent with the maintenance of a dam and hydro electric power generation plant operated by
APCO at Smith Mountain.” Compl., pp. 18–19.

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generation plant” in accordance with the terms of the FERC license. See e.g., Compl. ¶¶ 6, 14,
15, 16, 17. The Court would also be required to consider the FERC license when determining
whether APCO “lacks authority to require the plaintiffs to enter into a revocable license
agreement [the Permit] as a condition for accessing the waters of Smith Mountain Lake for
recreational purposes,” as the Permit’s authority and limitation comes from the FERC license.
Compl. p. 17. Therefore, in order to rule on the Pressls’ request for declaratory relief, the terms
of the FERC issues license would be necessary to the resolution of the case and these licenses
“are interpreted under federal law.” Timberline, 2006 WL 1993557, at *2 (citing United States
v. So. Cal. Edison Co., 413 F. Supp. 2d 1101, 1124 n.13 (E.D. Cal. 2006).
The second requirement provides that the federal issue in the case be “actually disputed.”
In order for any court to take jurisdiction over a declaratory judgment action, an actual dispute
must exist between the declaratory judgment plaintiff and declaratory judgment defendant. 28
U.S.C. § 2201; see also Evers v. Dwyer, 358 U.S. 202, 203 (1958) (“[F]ederal courts will not
grant declaratory relief in instances where the record does not disclose an actual controversy.”). 5
The Pressls’ complaint recognizes this requirement stating that “there exists a dispute between
the parties regarding . . . the rights which the defendant has to regulate the plaintiffs’ use of their
property.” Compl. ¶ 36. Thus, APCO’s ability to regulate certain activities within the Project
boundary is clearly in dispute in this case and this dispute raises a federal issue, as discussed
above, because the Court must interpret the FERC orders in resolving this dispute and
interpreting the Flowage Right and Easement Deed.
The third requirement requires the federal issue in the case to be substantial. “The
substantiality inquiry under Grable looks [] to the importance of the issue to the federal system
as a whole.” Gunn, 133 S.Ct. at 1066. Defendant’s license from FERC is sanctioned under the
5

This principle also holds true under Virginia law. See Va. Code §8.01–184.

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FPA, “a complete scheme of national regulation, promot[ing] the comprehensive development of
the water resources of the Nation.” Albany Engineering Corp., v. Federal Energy Regulatory
Commission, 548 F.3d 1071, 1075 (D.C. Cir. 2008) (citing First Iowa Hydro-Electric Coop. v.
Federal Power Commission, 328 U.S. 152, 180 (1946)).

Specifically, FERC’s goal is to

administer a uniform oversight of its licensees operating hydroelectric projects. Id. Therefore,
the federal issue in this case is substantial, in order to ensure that FERC’s Congressionally
mandated purpose under the FPA is not diverted and the FERC orders under the project remain
consistent and uniform. See Battle v. Seibels Bruce Ins. Co., 288 F.3d 596, 607–08 (4th Cir.
2002) (concluding that state law claims against an insurer who issued a flood insurance policy
pursuant to National Flood Insurance Program involved a substantial federal question and were
properly removed to district court because policy was governed by FEMA’s flood insurance
regulations); Timberline, 2006 WL 1993557, at *2 (“The meaning of the FERC license is
substantial and important issue of federal law that sensibly belongs in a federal court.”); see also
Grable, 545 U.S. at 314. The Federal Government has an “obvious concern in maintaining
control over [the] engineering, economic, and financial soundness” of water power resource
projects licenses by FERC. First Ia. Hydro-Elec. Co-Op., 328 U.S. at 172. Therefore, “[t]he
Government . . . has a direct interest in the availability of a federal forum to vindicate its own
administrative action” in connection to these FERC license given to the Defendant. Timberline,
2006 WL 1993557, at *2 (citing Grable, 545 U.S. at 314).
The fourth and final requirement states that the federal issue arising from state law claims
must be “capable of resolution in federal court without disrupting the federal state balance
approved by Congress.” Gunn, 133 S.Ct. at 1065. In this case, “[f]ederal jurisdiction to resolve
genuine disagreements over the terms of FERC licenses (like that exercised to resolve

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disagreement over federal tax law in Grable) . . . will portend only a microscopic effect on the
federal-state division of labor.” Timberline, 2006 WL 1993557, at *2 (citing Grable, 545 U.S. at
314). Therefore, I find that this action should not be remanded to the state court, as this court has
proper jurisdiction to decide these claims.
b. MOTION TO DISMISS
1. APCO’s easement rights provide it with the authority to request the Pressls to obtain a
Occupancy and Use Permit
The Pressls’ major contention is that APCO does not possess the legal right to require
them to enter into a revocable Permit6 before they commence the building of their dock.7 This
argument basically asks me to declare that the Flowage Easement does not grant APCO with
sufficient property rights to compel the Pressls to obtain a permit prior to building their dock.8
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, 553 S.E.2d 725, 728 (Va. 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.

6

Compl. Ex. G.

7

To the extent that request for relief “G” is tied to the Permit, it also can be dismissed as illustrated below.
However, if APCO is requesting that the Pressls plant vegetation outside of a requirement for the Permit, that
requirement is not within the scope of the easement. The easement does not allow APCO to require an affirmative
duty on the landowner to act. In that case, APCO could plant the proper vegetation on its own. However, this issue
is not justiciable at this time due to the fact that the Pressls’ allege that they have attempted to comply with APCO’s
request, therefore making it moot.
8

APCO contends that the Pressls are collaterally attacking a prior order issued by FERC concerning the Pressls’
predecessor in title, Richard Frie. Presumably, when Mr. Frie failed to comply with certain conditions, FERC
denied the application for a variance and request to build a dock. Furthermore, the permit issued to Mr. Frie has
since been revoked by APCO, and his appeal to the Fourth Circuit was dismissed as moot when Mr. Frie was
divested of ownership through a foreclosure proceeding. Defs.’ Mem. of Law p.6, n. 16; Pl’s Mem. of Law p. 14;
see also Frie v. Fed. Energy Regulatory Comm’n, Case No. 11-1331, Dkt. No. 31 (4th Cir. 2011).

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Town of Saltville, 691 S.E.2d 491, 494 (Va. 2010). Determining the nature of an interest in land
conveyed by deed is a question of law. Id.
With this background, the Pressls’ position is at odds with the plain language of the
Flowage Easement. The instrument grants APCO:
[T]he right to enter upon said premises at any time and from time to time and, at
[APCO’s] discretion, to cut, burn and/or remove therefrom any and all buildings,
structures, improvements, trees, bushes, driftwood and other objects and debris of any
and every kind or description which are or may hereafter be located on the portion of said
premises below the contour the elevation [sic] of which is 800 feet.

Compl. ¶ 16. This language vests APCO with the ability to remove structures located below 800
FMSL at any time for any reason.9
While this broad grant allows the removal of structures, such as a dock, at APCO’s
discretion, it logically would hold that it also provides APCO with the ability to determine the
necessary steps that a party must take to build a dock to begin with. See, e.g., Posadas de Puerto
Rico Associates v. Tourism Co. of Puerto Rico, 478 U.S. 328, 345-46 (1986) (accepting the
principle that the greater power includes the lesser power); City of Lakewood v. Plain Dealer
Publishing Co., 486 U.S. 750, 763 (1988) (same). For example, without the Permit, APCO
legally has the right to come onto the Pressls’ land and tear down their dock at the exact moment
the first structure10 has been erected. This could continuously occur over and over again until
either the APCO seeks an injunction or the Pressls gives up on the endeavor. In order to prevent
9

Although there is no language in the instrument limiting this grant, Virginia case law makes clear that this
easement is limited by a reasonableness inquiry based on what the original purpose of the grant: in this case, the
original purpose of the Project and FERC license. McCarthy Holding L.L.C. v. Burgher, 716 S.E.2d 461, 464–65
(Va. 2011) (quoting Shooting Point, L.L.C. v, Wescoat, 576 S.E. 2d 497, 502–03 (Va. 2003)). However, APCO’s
ability to control the construction of the dock and vegetation surrounding the Project is the same purpose as the
original easement grant, to run the hydro electric dam, and nothing suggests that APCO is expanding this purpose,
found in the FERC license, to burden Plaintiffs. Id. If the Plaintiffs believe that an expansion has occurred, they can
complain to FERC.
10

This is assuming that the structure violates APCO’s FERC obligation under the Project as discussed in the
previous footnote. In this case, the Pressls’ proposed dock would be contrary to the Project.

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this long and expensive standoff, APCO has provided a mechanism, the Permit, to allow the
Pressls to ensure that it builds the dock in accordance with APCO’s FERC obligations. This
Permit ultimately saves both sides’ time and money to ensure a dock is correctly built with the
necessary conditions and no structure has to be removed at a later date.
Therefore, APCO’s right to require the Pressls to obtain a Permit before the
commencement of their dock is logically tied to the APCO’s ability to remove at the moment
that the first structure has been erected.
2. The Pressls failed to exhaust administrative remedies provided by FERC
Because the Pressls failed to obtain the Permit to build the dock, they did not exhaust
their administrative remedies before bringing this lawsuit. See Cavalier Tel., L.L.C. v. Va. Elec.
& Power Co., 303 F.3d 316, 322 (4th Cir. 2002) (“It is a long-settled rule of judicial
administration that no one is entitled to judicial relief for a supposed or threatened injury until
the prescribed administrative remedy has been exhausted”

(quoting Myers v. Bethlehem

Shipbuilding Corp., 303 U.S. 41, 50–51 (1938))).
In this case, the Pressls were not satisfied with the Permit requirement, so they brought
this action. Instead, the Pressls should have sought the remedies set forth under the FPA. Under
the FPA, the Pressls could petition FERC with a complaint about APCO, the FERC licensee. 16
U.S.C. § 825e. In this complaint to FERC, the Pressls could question any condition under the
Permit and whether APCO can require these conditions. After submitting this complaint, FERC
may then investigate the Pressls’ allegations. 16 U.S.C. § 825e. At that time, the Pressls may
intervene in the FERC proceeding. 18 C.F.R. § 385.214. If at the end of the investigation the
Pressls are still aggravated, they may file for a rehearing by FERC within thirty days. 18 C.F.R.
§ 385.713; 16 U.S.C. § 825l(a). Only after this initial determination and rehearing has been

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completed, the Pressls can seek judicial review. However, this review would come before the
United States Court of Appeals, not this court. 16 U.S.C. § 825l(a).
Accordingly, because the Court finds that the Pressls have failed to exhaust its
administrative remedies as required by the FPA, the Court GRANTS APCO’s Motion to
Dismiss for failure to state a claim upon which relief can be granted.11
IV. CONCLUSION
As set forth above, Plaintiffs’ motion to remand is DENIED and Defendant’s motion to
dismiss is GRANTED.
The Clerk of the Court is hereby directed to send a certified copy of this Memorandum
Opinion and the accompanying Order to all counsel of record.
6th
Entered this _____ day of October, 2015

11

Because the Court finds this ground to be proper for dismissal, it is unnecessary to reach APCO’s other
grounds for dismissal. However, the other grounds are also viable grounds for dismissal. For example, APCO
claims that the Pressls’ request for Declaratory Relief in Paragraph C. and D.(listed above) should be dismissed for
failure to state a justicable controversy. More specifically, APCO suggests that C. and D. are based on a “proposed”
permit rather than one that had been formally entered by the parties. Until this permit is formally agreed upon, the
parties are not in any justiciable controversy.
Finally, APCO claims that the Pressls’ request for Declaratory Relief in Paragraph E., F., H., and I. should be
dismissed because they ask the Court to find that APCO has no authority to keep them, the Pressls, from building,
constructing, or improving a dock or other structures meant for recreational purposes on or in front of their property.
With this issue being resolved in Arthur and Nissen, I could dispose of this argument by properly taking judicial
notice of prior decisions and outcomes. Massey v. Ojanit, 759 F.3d 343, 347 (4th Cir. 2014) (noting that a court
“need not accept allegations that contradict matters properly subject to judicial notice”).

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