Blackwell v. Tenn. Valley Auth.

622 F.Supp.3d 543

Gary L. BLACKWELL, AS TRUSTEE OF GARY BLACKWELL REVOCABLE LIVING TRUST, et al., Plaintiffs v. TENNESSEE VALLEY AUTHORITY, et al., Defendants

No. 5:22-cv-19-BJB

United States District Court, W.D. Kentucky, Paducah Division

Signed August 18, 2022

E. Frederick Straub, Jr., Matthew S. Eddy, Whitlow, Roberts, Houston & Straub, PLLC, Paducah, KY, for Plaintiffs.

Christopher Sanders, David D. Ayliffe, Frances R. Koho, John Edward Pevy, Tennessee Valley Authority, Knoxville, TN, for Defendant Tennessee Valley Authority.

MEMORANDUM OPINION & ORDER

Benjamin Beaton, District Judge

In 1933, Congress created the Tennessee Valley Authority to help control floods, improve navigation, develop the regional economy, and generate electricity throughout much of the southeastern United States. 16 U.S.C. § 831; United States ex rel. TVA v. Welch, 327 U.S. 546, 553, 66 S.Ct. 715, 90 L.Ed. 843 (1946). Congress gave TVA discretion over the development of the Tennessee River system, including construction projects big and small. 16 U.S.C. § 831y-1. One big example is the Kentucky Dam, near the confluence of the Tennessee and Ohio Rivers, which created Kentucky Lake, stretching 184 miles across the Kentucky-Tennessee border. TVA has also permitted much smaller projects, such as the private docks scattered across Kentucky Lake, some of which are at the center of this dispute.

TVA issued Gary and Carol Blackwell a permit to build one such dock on the shoreline near their home. Several years later, the Blackwells discovered two additional docks nearby. After some investigating, the Blackwells discovered that TVA issued permits to Michael and Cheryl Mott and William and Darda Work to build docks on the shoreline even though their lots were further from the shore than the Blackwells'. This upset the Blackwells. So they sued the Motts and Works in state court, alleging they had no legal interest in the land from which the docks extended. The state court ruled that TVA owned the land and was a necessary party, so the court dismissed the case.

Not to be deterred, the Blackwells sued TVA, the Motts, and the Works in this Court, alleging that TVA acted arbitrarily and capriciously by granting the dock permits because TVA regulations require the private permittees' land to be "immediately adjoining" TVA land. TVA moved to dismiss for lack of jurisdiction, arguing first that it has total discretion to grant permits, second that ownership of the land cannot be contested, and third that the permittees' land is adjoining TVA land. Because the land is adjoining TVA land and the permitting decision is otherwise within TVA's discretion, the Court grants TVA's motion.

I. Allegations

In 1939, the United States acquired approximately 229,000 acres of land to build Kentucky Dam and create the "Kentucky Reservoir" in order to control flooding, navigation, and produce electricity. See The Kentucky Project, Technical Report No. 13 at 1 (TVA 1951) (DN 7-2). Over time, TVA sold off some its land to private owners. One such area, called the Sledd Creek Cabin Area, was subdivided into residential lots in 1959 and sold off throughout the '60s. DN 7-6. TVA continues to own the shoreline, however, including everything from a 375-foot contour elevation down into the Reservoir. DN 1-1; DN 1-4. In order to allow access to the Reservoir through TVA land, each lot included easement rights granting the "the right of ingress to and egress from the waters of Kentucky Lake over and upon the adjoining [TVA-owned] land lying between the 375-foot contour elevation and the waters of the lake." DN 1-4 at 1; DN 1-5 at 1; DN 1-6 at 1; Complaint (DN 1) ¶¶ 17-19. Each conveyance also included, as a real covenant running with the land, a prohibition on the construction or maintenance of any structure below the 381-foot contour elevation "except water-use facilities constructed in accordance with plans approved by [TVA]." DN 1-4 at 2; DN 1-5 at 3; DN 1-6 at 3.

So the Motts acquired lot 30 (DN 1-2), the Blackwells acquired lot 33 (DN 1-1), and the Works acquired lot 31 (DN 1-3). In the photo below, the Blackwells' lot is closest to the shore; the Buckingham lot (not involved in this case) is further from the shore; the Works' lot (marked as the Collins lot) is further still; and the Motts' lot is not visible but sits right below the Works' lot. Abutting all the lots, toward the end of the inlet, is a swath of wooded land that TVA retained. That TVA land juts inland from the shoreline—which TVA also owns—and is bisected by the pathway (marked in red) that runs from the Works' lot to the area where the docks are located. The lot names on the exhibit, filed with a permit request, do not all match the current ownership.

Image materials not available for display.

Works' 26a Permit (DN 1-8) at 6

Map showing the easement from the Works' lot through TVA land to the permitted dock Eventually, the Blackwells wanted to build a dock so they could access the lake from their lot. DN 7-7. But they needed a permit to construct anything on TVA land. Section 26a of the TVA Act requires TVA approval prior to the construction, operation, or maintenance of any obstruction affecting navigation, flood control, or public lands or reservations across, along, or in the Tennessee River or any of its tributaries. 16 U.S.C. § 831y-1.¹ TVA issued regulations to govern the permitting process for these obstructions, including docks. 18 C.F.R. § 1304.1.² The Blackwells followed the process and applied for a permit.

TVA issued the Blackwells a permit that made clear that the "Land fronting your lot is TVA PUBLIC LAND" and that the permit to build a dock there "conveys no property rights, grants no exclusive license, and in no way restricts the general public's privilege of using shoreland owned by or subject to public access rights owned by TVA. It is also subject to any existing rights of third parties." Blackwells' 26a Permit (DN 7-7) at 2. Several years later, the Motts and Works also sought permits for boat docks. Compl. ¶¶ 20-21; Motts' 26a Permit; Works' 26a Permit. TVA issued them permits to build docks just to the left of the Blackwells' dock. Motts' 26a Permit at 7-8; Works' 26a Permit at 6-8. But because their lots were further from the shoreline, TVA gave them easements for paths to the lake through the land to the left of their lots. Id. The images above and below display lines showing the paths going from the lots, through the adjoining TVA land, to the docks on the shore.

The Blackwells don't like that their neighbors' new docks "interfere[e] with their sight line of Kentucky Lake." Compl. ¶ 27. The Blackwells were never told about their neighbors' permits and believe that the docks intrude on their easement. ¶¶ 23-29. They didn't appeal TVA's permitting decision. See 18 C.F.R. § 1304.6. Instead, concerned about their property value and view, the Blackwells sued the Motts and Works in Marshall County Circuit Court, alleging that they had no right to build docks on the land. ¶ 32. The state court ruled that the docks were on TVA land and could "be equated to docks belonging to TVA," thus TVA was a necessary party. State Court Order (DN 1-10) at 2-3. The court also said the docks "cannot possibly violate the right" of the Blackwells' easement and noted that the Motts and Works have similar easements that do not require them to "take the shortest path to access the lake." Id. at 3. The court also noted that all the lots adjoined TVA land, even if the Blackwells were closer to the shore. Id. But because TVA was a required party, the court declined to make a "final determination" and partially dismissed the case for a lack of jurisdiction. Id.; DN 1-12. The Court of Appeals affirmed, ruling that the land was owned by TVA and the state courts lacked jurisdiction to resolve the dispute. DN 1-13 at 8-9.

Undaunted, the Blackwells filed another lawsuit here, alleging that TVA acted arbitrarily and capriciously by issuing permits to the Motts and Works because their lots don't adjoin TVA land as required by TVA regulations. Compl. ¶¶ 40-48. TVA moved to dismiss for lack of jurisdiction, arguing the statute gives the agency complete and unreviewable discretion over permits. Motion to Dismiss (DN 7-1) at 10. TVA also argues that the Blackwells cannot challenge its ownership of the land. Id. at 14. The Blackwells contend that TVA regulations require the permittees' lands to adjoin TVA land, which the Motts and Works don't, and that issue is reviewable. Blackwells' Response (DN 9) at 6-7. The Blackwells also specify that they are not questioning ownership of the land—just TVA's decision to permit the docks under its own regulations. Id. at 11. TVA replies that the regulations still give it total discretion, and in any event the permittees' lands do in fact adjoin TVA land. Reply (DN 10) at 7-11.

II. Standard of review

A motion to dismiss for lack of jurisdiction can "challenge the sufficiency of the pleading itself (facial attack) or the factual existence of subject matter jurisdiction (factual attack)." Cartwright v. Garner, 751 F.3d 752, 759-60 (6th Cir. 2014). A facial challenge is reviewed for plausibility and the court takes the allegations of the complaint as true. Id. The same standard applies to a motion to dismiss on jurisdictional grounds under Rule 12(b)(1), when that motion is "more accurately considered a Rule 12(b)(6) motion to dismiss." Lindenbaum v. Realgy, LLC, 13 F.4th 524, 527 (6th Cir. 2021).³

A factual challenge to jurisdiction, however, allows a court to review and weigh evidence. Cartwright, 751 F.3d at 759-60. While the parties raise some factual issues here, the dispositive issues are all legal. So the challenge is facial and the plausibility standard should apply. Muscogee (Creek) Nation v. Okla. Tax Comm'n, 611 F.3d 1222, 1227 & n.1 (10th Cir. 2010). Still, "documents attached to the pleadings become part of the pleadings and may be considered on a motion to dismiss." Commercial...