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Calfee v. Tennessee Department of Transportation

Court of Appeals of Tennessee, Nashville

July 11, 2017


          May 16, 2017 Session

         Direct Appeal from the Chancery Court for Davidson County No. 15-402-I Claudia Bonnyman, Chancellor

         This case involves an attempt by several landowners to challenge a permit issued by the Tennessee Department of Transportation that allowed the placement of water pipelines along two state highways to connect an industrial facility to the Nolichucky River. The trial court dismissed the complaint based on its conclusion that none of the plaintiffs had standing to maintain this action. We reverse and remand for further proceedings.

         Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Chancery Court Reversed and Remanded

          Elizabeth L. Murphy, Nashville, Tennessee, for the Appellants, Ann Calfee, Don Bible, Jeremiah Cluesman, Ruth Dolin, Jack Renner, and Rueben Stone.

          Herbert H. Slatery III, Attorney General and Reporter, and Bruce Michael Butler, Senior Counsel, for the Appellee, Tennessee Department of Transportation.

          Michael K. Stagg, Christopher W. Hayes, W. Travis Parham, and Joseph Landon Watson, Nashville, Tennessee, for the Appellee, U.S. Nitrogen, LLC.

          Jerry W. Laughlin, Greeneville, Tennesssee, for the Appellee, Industrial Development Board of the Town of Greeneville and Greene County, Tennessee.

          Brandon O. Gibson, J., delivered the opinion of the court, in which J. Steven Stafford, P.J., W.S., and Arnold B. Goldin, J., joined.



         I. Facts & Procedural History[1]

         On May 2, 2014, the Tennessee Department of Transportation ("TDOT") received an application for a "Use and Occupancy Permit for Utilities" that would allow two water pipelines to be installed in the highway right-of-way along two state highways in Greene County. The proposed pipelines would run approximately ten miles from an industrial facility to the Nolichucky River. The first pipeline would withdraw water from the Nolichucky River and supply it to the industrial facility, and the second would discharge effluent back to the river. The cover letter enclosed with the application was from U.S. Nitrogen, the chemical production facility that would be served by the pipelines. However, enclosed documents identified the interested party as the Industrial Development Board of the Town of Greeneville and Greene County.

         On June 9, 2014, TDOT denied the permit application. As the basis for its denial, TDOT explained that its "Rules and Regulations for Accommodating Utilities Within Highway Rights-of-Way, " set forth at Tenn. Comp. R. & Regs. 1680-06-01-.01, et seq., apply to utilities, "which provide essential services to the general public." TDOT concluded that the applicant for the permit "would not provide any public services to the general community." As such, the permit was denied, citing Tennessee Code Annotated section 54-5-802(8)[2] and Tenn. Comp. R. & Reg. 1680-06-01-.01, et seq.

         After some discussions between TDOT and the Industrial Development Board, TDOT confirmed in a subsequent letter that the original permit application was denied "because it appeared that the proposed pipelines would be for the private use of U.S. Nitrogen and would not provide service to any other businesses or members of the general community." However, according to this letter, TDOT had come to a "new understanding" that the Industrial Development Board would "own and control" the pipelines and make them "available" to serve other customers in addition to U.S. Nitrogen. This letter invited the Industrial Development Board to resubmit the application and "clarify the intent to make these utility services available to the broader public."

         On July 18, 2014, the Industrial Development Board resubmitted the application with the stated intention to correct "the mistaken belief that the [Industrial Development Board] water project would benefit only U.S. Nitrogen." The second application again noted that the purpose of the project was to intake and discharge water between the Nolichucky River and a water tank located on "the U.S. Nitrogen property footprint." The second application indicated that U.S. Nitrogen would be "the operator of the Pipeline Project for all purposes" under the law and responsible for all costs to design, build, operate, and maintain it. However, the second application described the pipeline project as a "recruiting tool to attract other industry to western Greene County, " including two other manufacturers.

         On July 31, 2014, TDOT reversed its original position and approved the use and occupancy permit application for the Industrial Development Board. Thereafter, TDOT responded to numerous emails from concerned citizens and explained that the application was approved because the Industrial Development Board certified that it would "own and control" the pipelines and make them "available" to other businesses in addition to U.S. Nitrogen. Several concerned landowners filed a petition for writ of certiorari within sixty days of the issuance of the permit, but it was eventually dismissed for lack of subject matter jurisdiction, as the trial court concluded that the proper way to challenge the permit was by way of a request for a declaratory order from TDOT and a declaratory judgment action under the Uniform Administrative Procedures Act, Tenn. Code Ann. § 4-5-223, -225.

         On March 6, 2015, six landowners submitted a "Petition for Declaratory Order and Injunctive Relief" to TDOT in accordance with Tennessee Code Annotated section 4-5-223(a), which provides, "Any affected person may petition an agency for a declaratory order as to the validity or applicability of a statute, rule or order within the primary jurisdiction of the agency." TDOT did not respond to the petition for a declaratory order. The six petitioners then sought a declaratory judgment in chancery court regarding the validity of the use and occupancy permit, pursuant to Tennessee Code Annotated section 4-5-225, which provides, in pertinent part:

(a) The legal validity or applicability of a statute, rule or order of an agency to specified circumstances may be determined in a suit for a declaratory judgment in the chancery court of Davidson County, unless otherwise specifically provided by statute, if the court finds that the statute, rule or order, or its threatened application, interferes with or impairs, or threatens to interfere with or impair, the legal rights or privileges of the complainant.[3]The agency shall be made a party to the suit.
(b) A declaratory judgment shall not be rendered concerning the validity or applicability of a statute, rule or order unless the complainant has petitioned the agency for a declaratory order and the agency has refused to issue a declaratory order.

         In their "Second Amended Complaint, " which is controlling for this appeal, the six petitioners alleged that a "Use and Occupancy Permit for Utilities" is reserved for a "utility, " pursuant to TDOT Rules and Regulations and Tennessee statutes. Therefore, the petitioners claimed that TDOT exceeded its authority by issuing the use and occupancy permit to the Industrial Development Board and/or U.S. Nitrogen, as neither of those entities is a utility. The Second Amended Complaint noted the representation in the permit application that the Industrial Development Board would "construct, own, and operate" the pipeline system, but according to the complaint, the Industrial Development Board did not in fact own, operate, or maintain the pipelines. In fact, the complaint alleged that the Industrial Development Board would be prohibited by statute from operating any manufacturing, industrial, or commercial enterprise. See Tenn. Code Ann. § 7-53-102. The complaint also alleged that TDOT was not authorized to grant a permit as a "corporate recruitment" or "economic development tool" for private water lines that do not deliver goods or services to the public. The petitioners claimed that the permit was void ab initio.

         The six petitioners alleged that they are all landowners in East Tennessee who are "directly affected" by the permit in question. Two of the petitioners -- Don Bible and Jack Renner -- own, manage, and reside at large farms that border both the Nolichucky River and Highway 340, where the permit allowed the pipelines to be installed in the highway right-of-way. Mr. Bible had objected in writing to TDOT before the permit was issued to inform TDOT that there was no available or designated right-of-way between the edge of the highway and his private property. According to Mr. Bible, who had lived at the property for fifty years, the highway had "shifted over the years" and "taken up with pavement whatever [right-of-way] was available." Mr. Bible obtained a report of a licensed surveyor and title attorney, and he attached photographs of the edge of his property purporting to show the marked location of an underground telecommunications cable that was previously installed in the right-of-way but that now lies under the pavement. The complaint alleged that presently "there is no right-of-way beyond the edge of the pavement, " and only "a 2 foot space" separated the white line on the pavement and the fence running along the edge of his property near the highway. Despite Mr. Bible's objections and no trespassing signs, contractors for U.S. Nitrogen and the Industrial Development Board and representatives of TDOT "came onto the Bible property" with armed security guards, cut his driveway, and installed the pipelines "across Bible property" on the land between the pavement and his fence. Mr. Bible contends that the pipelines "now lie on his private property based on his surveys and deed searches conducted by legal counsel." The complaint alleged that the pipelines were placed there only by the perceived authority of the disputed TDOT permit.

         Petitioner Jack Renner owns another large farm along the affected highway. According to the Second Amended Complaint, his property deed showed that his property goes to the edge of the road and that there is no easement or right-of-way beyond the edge of the pavement. Mr. Renner was asked by a representative of the Industrial Development Board if he would grant permission for the pipes to be laid on his property, but he refused. Two weeks later, the pipes were laid "over his farmland." According to the complaint, TDOT was responsible for "managing the Use and Occupancy of the highway [rights-of-way] . . . as well as the construction of utility facilities within those [rights-of-way]."

         All six of the petitioners - including Mr. Bible and Mr. Renner - own properties that border the Nolichucky River downstream from the pipelines. According to the Second Amended Complaint:

Plaintiff Ann Calfee is a citizen and resident of Cocke County on Turner Ridge Road. She also owns approximately 1.12 acres of land also in Cocke County on the Nolichucky River, immediately downstream of the pipeline take-out and discharge at the river. Ms. Calfee has riparian rights, and recreational uses that will be particularly and negatively affected by the pipes using the highway right-of-way to locate their water withdrawal and chemical waste discharge just upstream of her property. One of the two pipes will withdraw approximately 2 million gallons of water from the river every day, year round, with no limit for drought conditions. The second pipe will discharge chemical wastewater back to the river. During August of 2014, without the pipes in operation, the Nolichucky River at the proposed withdrawal location was approximately 4.5 feet at its deepest spot, and typically 1-2 feet deep at others. At and above the Calfee property, the riverbed rises atypically, shallowing out into shoals and riffles that are ankle deep in summer and fall seasons. The river widens there and water levels are shallow year round, unlike most other areas of the river. There are no tributary streams between the pipe intake/outflow and the Calfee property to replace the lost flow with anything other than chemical waste. Petitioner Calfee uses the river at her property regularly especially during summer months to fish, recreate with the family and 'float' the river with neighbors and community. The loss of 1-2 million gallons of water immediately upstream will dry the riverbed at the Calfee and other petitioners' properties for the first time in the known history of the area. The loss will be unprecedented and due entirely to locating these industrial pipes at the river above a particularly shallow stretch of the river, so that the lines can use a public highway right of way. Ms. Calfee and other petitioners have standing because the consequence of the pipe location particularly affects the Calfee property and will have the direct and unusual impact of ...

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