“Any disputes regarding property rights are not within the Commission’s jurisdiction; rather, they are matters for state courts to resolve.[1]

Please note that the SMP applies only to those lands in the project boundary where Appalachian Power has property rights. The licensee has no authority to regulate construction on privately owned lands, unless the property owner has given the company those rights.”[2]

The instruments of conveyance define the extent of the licensee’s rights; therefore, neither the Commission nor a licensee/transferee can interfere with the transferor’s retained rights.[3]

The inclusion of lands within a project boundary will not restrict landowners’ uses, since inclusion of lands within a project boundary does not itself create or alter property rights. [3]

The Commission’s inclusion of the standard land use articles, the approval and adoption of the SMP, or the approval of a project boundary in an Exhibit G map will not affect the property interests obtained. [3]

If a landowner believes that a licensee’s easement precludes certain activity, such a dispute must be resolved between the property owner and Appalachian Power in a property law action in a court of appropriate jurisdiction. [3]

If it is determined that a licensee does not have adequate rights to comply with license requirements, the Commission could require the licensee to obtain the additional rights by easement or eminent domain. [3]

Commission staff stated that “[a]ny disputes regarding property rights are not within the Commission’s jurisdiction; rather, they are matters for state courts to resolve.” ... That order was not dictating the court of appropriate jurisdiction, but merely stating that the issue of property rights is a matter of state law. [3]

As we have explained, the issuance of a hydropower license or the approval of an SMP does not give a licensee any new property rights. Rather, these approvals simply direct the licensee’s use of lands in which it holds interests. To the extent that there are disputes as to the nature of a licensee’s rights, those matters must be resolved in a court of competent jurisdiction: the Commission has no authority to resolve property rights issues.” [3]

_______________________________________

[1] 142 FERC ¶ 62,256 at P 16, n.12 (2013)

[2] Commission Chairman Cheryl A. LaFleur’s December 8, 2014 rely to Congressman Robert Hurt.

[3] 153 FERC ¶ 61,299 Appalachian Power Company Project No. 210-252, December 17, 2015

RECORD NUMBER: 15-2348

for the

Fourth Circuit

RICHARD PRESSL AND TERRY PRESSL,

Plantiffs/Appellants.

-- v. --

On Wednesday, 26 October, attorneys representing Rick and Terry Pressl presented oral arguments in their appeal to a three-judge panel of the US 4th Circuit Court of Appeals in Richmond. The three justices hearing the case were William B. Traxlor (SC), Diana Gribbon Motz (MD) and Henry F. Floyd (SC). The Pressls were represented by Caskie and Frost attorneys Frederick Watson and Pavlina Dirom. APCO was represented by Woods Rodgers attorneys Freidman and Pritts. Each side was allotted 20 minutes to present arguments and answer questions from the three-judge panel. 

I attended the hearing along with 12 other lake residents and CURB supporters. First and foremost, it was evident that each of the justices had read all briefs and supporting evidence and were obviously informed and familiar with the case. 

Pressls’ attorney, Frederick Watson, argued that the district court (Judge Moon) lacked federal jurisdiction to hear and rule on Pressls’ state court complaint. The determination of whether APCO possesses adequate state property rights, under its flowage easement to regulate Pressls’ use of their property, belongs in state court. He quoted from a December 2015 FERC order reiterating that APCO must obtain all necessary property rights because neither FERC nor APCO has any right to regulate the private property of others, unless APCO holds the necessary state property rights to do so. The FERC order also stated that if a court found that APCO did not possess the necessary property rights FERC “could require the licensee to obtain the additional rights by easement or eminent domain.” Mr. Watson explained that neither the award of a federal license or approval of a shoreline management plan can change property rights and that FERC also has ordered that all matters concerning property rights should be adjudicated and resolved in a court of appropriate jurisdiction (meaning state court). 

APCO’s attorneys, Friedman and Pritts, used their 20-minute allocation to plead that APCO must follow FERC orders strictly or lose their license. They discussed how the flowage easement phrasing: ‘overflow and/or affect the premises in any manner’ meant that APCO could impose its license and Shoreline Management Plan (SMP) responsibilities upon the Pressls. Both spent a great amount of time explaining that their federal license was a good thing because it saves the lake from chaos, over building of docks and excessive dredging. What they failed to do was present any legal argument why state court was not the proper court to determine APCO’s rights under the flowage easement or provide any evidence for federal jurisdiction.

Opinion – My view, based upon the questions the justices asked and resulting dialog, was the justices feel determination of rights under the flowage easement is not a federal issue and should be adjudicated in state court.  Justices began at 1:30 minutes into the arguments questioning why this matter was not before a state court, and continued to repeat this line of questioning throughout APCO’s arguments to the contrary. Therefore, I expect 4th Circuit to vacate Judge Moon’s district court ruling and direct the Pressl case be remanded to state court for trial. I’m hopeful we will see that order by early December. 

Also, all attorneys received an order from the 4th Circuit on October 27th holding the Nissen appeal in abeyance, pending its decision in Pressl v. APCO. This is extremely good news. When Pressl is won, Nissen will be won, rapidly bringing matters to an unfavorable outcome for APCO. Pressls’ complaint against APCO will be litigated in Franklin County Circuit Court and the matter of APCO’s limited rights under the flowage easement will be decided. There is a reason APCO has never sued anyone in state court – because Virginia easement law is well defined and validated by Virginia Supreme Court decisions, and those decisions do not favor APCO’s innovative contrary claim that a federal license can change an individual’s state property rights.

The District Court’s ruling on Nissens’ Motion to Dismiss for lack of subject matter jurisdiction must be reversed, and without jurisdiction, the subsequent rulings must be vacated. Appalachian Power Company (“APCO”) dedicates a large portion of its brief to a discussion of its duty to obey Federal Energy Regulatory Commission’s (“FERC”) rules and its federal license. APCO’s duty to obey FERC and its federal license is not at issue in this case and is not being challenged. The acquisition of private property rights is, however, essential to being able to regulate what is being conducted on a private individual’s land.  That is the linchpin of this case. Neither APCO’s license nor federal law gives APCO any right to regulate activities on a private property owner’s land.  The flowage easement is APCO’s only source of any rights over the Nissens’ land.

A district court has federal question jurisdiction over all civil actions “arising under the Constitution, laws, or treaties of the United States.” 28 U.S.C. §1331. The Court must examine the APCO’s Complaint under the well-pleaded complaint rule to determine whether the action “arises under” federal law.  The Court, in examining the complaint, must first discern whether federal or state law creates the cause of action. In this case, APCO, being the master of its complaint, engaged in artful pleading and attempted to create a federal cause of action. However, federal jurisdiction will not exist if there is no federal law which creates a cause of action.

A. The Cases Cited by APCO to Establish Federal Cause of Action Do Not Discuss or Rule on the Issue of Federal Cause of Action or Federal Jurisdiction and/or Can Readily Be Distinguished

B. Contrary to APCO’s Assertion, the Sufficiency of APCO’s Property Rights in the Nissens’ Land under the Flowage Easement Is Not a Matter of Fact and Is a Legal Issue for the State Court to Decide

In this case, the interpretation of the scope of the flowage easement does not depend on the resolution of a substantial question of federal law. What the FERC License Orders or Shoreline Management Plan state is not disputed.  This is not a case of interpretation of federal statute or law. This is a case of interpretation of the flowage easement which states that it is complete in all of its terms and provisions and represents the parties’ entire agreement.  If the state court finds APCO’s flowage easement rights insufficient to regulate the Nissens’ shoreline activities, APCO can acquire more property rights, or obtain more property rights through condemnation.

APCO does not own fee simple interest in the Nissens’ land below the contour the elevation of which is 800 feet.  Nevertheless, APCO goes that far,  twisting the language of the flowage easement, making an argument that it in essence obtained fee simple interest in the Nissens’ land below contour the elevation of which is 800 feet and that it was the landowners who merely “reserved” easement for their own benefit, “right to cross” said premises to reach impounded waters for recreational purposes.

APCO’s argument and position has no basis in law or facts. Reservation occurs upon grant of fee simple rights. Not only that the Nissens have not granted fee simple interest to APCO but the word “reserve” is also nowhere to be found in the flowage easement deed.  APCO has via flowage easement deed taken several sticks out of the Nissens’ bundle of rights that comprise their estate in fee. APCO was not granted a fee simple.

As argued by the Nissens in their Opening Brief, APCO was limited to flooding and/or affecting a portion of the Nissens’ land for the purpose of construction, existence, operation and/or maintenance of the dam and/or power station. Accordingly, in order for APCO to prove a violation of its easement, APCO must adduce evidence that the encroachments complained of interfere with one of the aforementioned items.

APCO’s broad interpretation of its right “to remove” and “to affect” is an argument of ownership and to regulate all uses of the easement. In any event, the flowage easement granted APCO limited rights. The determination of the extent of which rights is subject to the state court’s jurisdiction.

It is likewise incorrect when APCO states, as a matter of fact, that the flowage easement gave it the right “to regulate land within the Project boundary.” There is no such language in the flowage easement.

CONCLUSION

For the reasons set forth above, the District Court’s ruling on Nissens’ Motion to Dismiss for lack of subject matter jurisdiction must be reversed and the subsequent rulings must be vacated.

A. The Federal Power Act (FPA), which created the Federal Energy Regulatory Commission (FERC), granted Federal Power Commissioners the authority to award Appalachian Power Company (APCO) a license to develop and operate the Smith Mountain hydropower projects.

B. Neither the FPA, nor the FERC, nor any FERC issued license grants APCO any federal authority or police powers to regulate non-licensee shoreline property owners. The FERC’s authority to regulate its licensee does not extend past APCO and FERC can only enforce the terms of APCO’s license through legally acquired [condemnation or easement purchase] state property rights.

C. The award of APCO’s license was predicated upon the principle that APCO held the necessary state property rights to implement its original 1960 and current FERC license. APCO can only regulate the lands and waters over which it holds necessary state property rights.

D. The FPA does not pre-empt, create or supersede state property rights. APCO’s license and any amendments thereto, cannot alter state property rights. The FERC has no power to adjudicate state property rights. All property right disputes between a shoreline property owner and APCO are within the original jurisdiction of the states and their courts.

E. The judicial power of federal courts is strictly limited by the U.S. Constitution and U.S. Code to hold original jurisdiction for civil matters dealing with constitutional and federal law and U.S. treaties.

F. Federal law allows APCO to remove Pressl’s claim, originally filed in state court, to federal court, but only if the Pressls raised a federal issue/claim. However, the Court must remand all state-law claims back to the state court where Pressl’s claim was originally filed.

G. Determination of Pressl’s flowage easement is purely a state-law matter and not matters federal courts have jurisdiction to determine.

A. Shoreline property owners and holders of flowage easements on Smith Mountain and Leesville Lakes would lose their constitutional right to have a State Court determine their property and easement rights in a jury trial;

B. Shoreline property owners would be required to surrender their deeded easement rights to APCO and accept a revocable license as a replacement;

C. Shoreline property owners could not own docks or easement improvements to access project waters and these improvements could not be covered by title insurance;

D. Shoreline property owners would be required to seek APCO’s permission to make any use of the property in the project boundary;

E. Shoreline property owners would become licensees of APCO and be bound its federal license, shoreline management plan, all future amendments and all new licenses;

F. APCO would have the right to dictate vegetation removal and replacement;

G. APCO would have the right to order dock removal when APCO determines it is no longer in the public interest for the dock to exist;

H. APCO would have the right to remove any structures in the project boundary, even those previously constructed over nearly 40 years while APCO made no attempt to limit such construction; and

I. APCO could impose permit fees and annual fees for docks and other shoreline improvements.

1.  When buyers are told they have an easement to the water for recreational purposes and this access adds materially to the value of the property conveyed, reasonable use (e.g.docks, beaches, boathouses) of the easement for access to the water is necessary for the beneficial use and enjoyment of the property conveyed.[BROWN v. HALEY]

2. The flowage easement granted APCO the right to flood the easement for dam construction, operation and maintenance purposes[SML YACHT CLUB v. RAMAKER]

3. The same flowage easement retained shoreline owners' fee simple ownership of the land and these rights attach to and run with the land title [SML YACHT CLUB v. RAMAKER]

4.  Shoreline owners can exercise all rights of fee simple ownership that were unaffected by APCO's easement to flood, including the right to access to the water for recreational purposes [SML YACHT CLUB v. RAMAKER]

5.  The easement’s scope is determined by the intention of the parties to the grant, ascertained from the circumstances pertaining to the parties and the land at the time of the grant [ANDERSON v. DELORE]

   

 Federal Energy Regulatory Commission licensee orders and Virginia Supreme Court rulings specific to Appalachian’s flowage easement prove how and why Appalachian Power is in violation of its license and Virginia State law. The “shadow” permitting process APCO imposed by deception and duress upon shoreline property owners with their SMP, illegally restricts or denies our recreational access and the beneficial use and enjoyment of our property, unless we agree to sign an APCO permit that takes our property rights without compensation. 

    

    AEP has no authority to deny a shoreline landowner reasonable access to the lake nor does it have the right to dictate how landowners use their property so long as it doesn't interfere with AEP's ability to flood and operate the dam. Virginia’s highest Court has ruled -- quite simply, this is why APCO uses every avoidance maneuver they can to avoid State Court and resolve property disputes.

---

[i] See: 130 FERC ¶ 62,033 Pacific Gas and Electric Company Project No. 2687-148, Paragraph 19 (Issued January 13, 2010)

[ii] See: 142 FERC ¶ 62,256 Project No. 2576-139 ORDER MODIFYING AND APPROVING SHORELINE MANAGEMENT PLAN PURSUANT TO ARTICLE 407 (Issued March 27,2013)

[iii] See: FERC Chairman Cheryl A. Lafleur’s December 8th 2014 response to US Congressman Robert Hurt (eLibrary No. 20141210-0070).

[iv] See: 142 FERC ¶ 62,256 Project No. 2576-139, ORDER MODIFYING AND APPROVING SHORELINE MANAGEMENT PLAN PURSUANT TO ARTICLE 407 (Issued March 27,2013)

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“... Regardless of the manner in which AEP acquired the land, and the documentation regarding the ownership of the land above and below the 800 foot contour line, I believe it has been the opinion of attorneys and courts over the past 40 years that owners of property adjoining the lake have vested property rights in the land below the 800 foot contour line adjoining their property and to the use of the waters of Smith Mountain Lake.  However, the position of AEP at this time is that adjoining landowners do not have any vested property rights or easements to the land below the 800 foot contour line, but merely have a revocable license. In my opinion this conclusion is wrong and contrary to the documentation of ownership of the land below the 800 foot contour line. ... The problem with revocable licenses is that they expire upon a conveyance of the property by the owner to whom the license is issued, and at the whim of AEP can be revoked at any time. The waterfront rights on Smith Mountain Lake and the right to construct boat docks is a very important element in the value of the owners property. A lot without access to the lake, even though it may have a view, may bring $40,000.00 to $50,000.00, whereas a similar lot with lake access and the right to construct a boat dock may bring $400,000.00 to $500,000.00.... In my opinion AEP is using the Shoreline Management Plan and the licensing process to acquire rights to the property adjoining Smith Mountain Lake that they did not acquire in their purchases and condemnation proceedings 40 years ago."