Walther v. United States of America

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF ALASKA
SCOTT W. WALTHER, )
)
Plaintiff, )
)
vs. )
)
UNITED STATES OF AMERICA, et al., )
) No. 3:15-cv-0032-HRH
Defendants. )
_______________________________________)
O R D E R
Motion to Dismiss Second Amended Complaint1
Defendant United States of America, on behalf of the U.S. Army Corps of
Engineers, moves to dismiss plaintiff’s second amended complaint. This motion is
opposed.2 Oral argument was not requested and is not deemed necessary.
Background
Plaintiff is Scott W. Walther. Defendants are the United States of America and
Christopher D. Lestochi, Colonel, District Commander, U.S. Army Corps of Engineers,
Alaska District.
“Under the [Clean Water Act (CWA)], ‘any discharge of dredged or fill materials
into ... waters of the United States [] is forbidden unless authorized by a permit issued by
1Docket No. 15.
2Docket No. 17.
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the Corps of Engineers pursuant to’ Section 404 of the CWA[.]” Fairbanks N. Star
Borough v. U.S. Army Corps of Engineers, 543 F.3d 586, 589 (9th Cir. 2008) (quoting
Leslie Salt Co. v. United States, 55 F.3d 1388, 1391 (9th Cir. 1995)). “In issuing § 404
permits, the Corps must comply with the § 404(b)(1) Guidelines..., which are
promulgated by the EPA pursuant to 33 U.S.C. § 1344(b)(1), and incorporated by the
Corps into its own regulations.” Kentuckians for Commonwealth v. U.S. Army Corps of
Engineers, 963 F. Supp. 2d 670, 676 (W.D. Ky. 2013). “Under the Corps’ CWA
Guidelines, a § 404 permit cannot issue ‘unless appropriate and practicable steps have
been taken which will minimize potential adverse impacts of the discharge [of fill
material] on the aquatic ecosystem.’” Ohio Valley Environmental Coalition v. Aracoma
Coal Co., 556 F.3d 177, 202 (4th Cir. 2009) (quoting 40 C.F.R. § 230.10(d)). The EPA
and Corps have made “‘no overall net loss’ the goal of the § 404 regulatory program and
agree that mitigation has three components: avoidance, minimization, and compensatory
mitigation.” Id. (citation and footnote omitted). “Avoidance is defined as the selection of
the least environmentally damaging practical alternative.” Id. “Minimization is achieved
through practicable project modifications and permit conditions that minimize adverse
impacts.” Id. “Finally, compensatory mitigation is used where appropriate to compensate
for unavoidable adverse impacts after all avoidance and minimization measures have
been taken.” Id.
“On March 31, 2008, the EPA and the Corps issued revised regulations governing
compensatory mitigation for authorized impacts to wetlands, streams, and other waters of
the United States under CWA Section 404....” Kentuckians for Commonwealth,
963 F. Supp. 2d at 676. The parties refer to these regulations as the “Final Rule.”
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Compensatory mitigation can be accomplished in one of three ways:
(1) mitigation banks, (2) in-lieu fee programs, or (3) permittee-responsible mitigation,
with the use of mitigation banks being the preferred method. Id. § 332.3(b). A
mitigation bank is a wetland, stream, or other aquatic resource area that has been restored,
established, enhanced, or, in certain circumstances, preserved. Id. § 332.2. Units of the
restored, established, enhanced, or preserved resources may be purchased as “credits” by
permittees from the banks to meet their requirements for compensatory mitigation. See
id. An in-lieu fee program is administered by public agencies or non-profit organizations
who have established an agreement with the Corps to use in-lieu fee payments collected
from permittees to conduct wetland, stream, or other aquatic resource restoration,
establishment, enhancement, or preservation activities. See 33 C.F.R. § 332.2.
Plaintiff alleges in his second amended complaint that he purchased land in the
Matanuska-Susitna Borough, and that the Corps persuaded him to abandon plans for
development of this land in favor of subjecting the land to perpetual conservation
easements and contributing the land to a mitigation bank pursuant to the Final Rule.
Plaintiff alleges that he formed and became the owner of a limited liability company,
Pioneer Reserve, LLC, that Pioneer entered into a contract which created a wetland
mitigation bank, and that the land was conveyed to Pioneer subject to perpetual
conservation easements.3 After plaintiff encumbered his land with conservation
easements, Pioneer was awarded wetland mitigation credits that might be sold to CWA
§ 404 permittees in order to satisfy their compensatory mitigation needs.4
3Second Amended Complaint at 5-6, Docket No. 13.
4Id.
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In his second amended complaint, plaintiff challenges the Army Corps of
Engineers’ administration of a 2013 in-lieu fee compensation mitigation program
instrument (“ILF instrument”) with respect to the in-lieu fee program of The
Conservation Fund (“TCF”). In 2013, TCF and the Corps executed an ILF instrument,
superseding a 1998 agreement. At the time the 2013 agreement was entered into, TCF
held approximately $10.7 million of unexpended mitigation funds. Plaintiff alleges that
TCF has not distributed any of those unexpended funds to provide compensatory
mitigation.
On February 27, 2015, plaintiff’s original complaint5 was filed with this court. An
amended complaint was filed May 15, 2015,6 and a second amended complaint was filed
May 19, 2015.7 Each of plaintiff’s three complaints asserts a claim under the “citizen
suit” provision of § 505(a)(2) of the CWA. 33 U.S.C. § 1365(a)(2).8 The first and second
amended complaints added a second claim pursuant to the Administrative Procedure Act,
5 U.S.C. § 701, et seq.9 By his APA claim, plaintiff contends that he has no remedy
available at law based upon an underlying contention that he has suffered and will
continue to suffer a legal wrong as a result of the Corps’ failure to comply with provisions
of the CWA and the Final Rule. Plaintiff seeks relief in the form of an injunction,
prohibiting defendants from authorizing or directing the TCF from disbursing any portion
of its unexpended funds in a manner violative of the Final Rule or from removing
5Docket No. 1.
6Docket No. 11.
7Docket No. 13.
8See id. at 2.
9See id.
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unexpended funds subject to the 2013 ILF instrument. Plaintiff would have the court
order defendants to direct TCF to disburse unexpended funds for the purchase of
available mitigation bank credits in compliance with the Final Rule.10
Discussion
Pursuant to Rule 12(b)(1), Federal Rules of Civil Procedure, defendants move to
dismiss plaintiff’s second amended complaint for lack of subject matter jurisdiction. “A
Rule 12(b)(1) jurisdictional attack may be facial or factual.” Safe Air for Everyone v.
Meyer, 373 F.3d 1035, 1039 (9th Cir. 2004). Here, defendants are making a facial attack.
“In a facial attack, the challenger asserts that the allegations contained in a complaint are
insufficient on their face to invoke federal jurisdiction.“ Id. “The district court resolves a
facial attack as it would a motion to dismiss under Rule 12(b)(6): Accepting the
plaintiff’s allegations as true and drawing all reasonable inferences in the plaintiff’s
favor, the court determines whether the allegations are sufficient as a legal matter to
invoke the court’s jurisdiction.” Leite v. Crane Co., 749 F.3d 1117, 1121 (9th Cir. 2014).
Defendants argue that the court lacks subject matter jurisdiction as to plaintiff’s
citizen suit because the United States has not waived its sovereign immunity. The court
recently addressed this identical issue in Walther v. United States, Case
No. 3:15-cv-0021-HRH. There, the court held that: “[b]ecause Section 505(a)(2) does
not waive immunity for suits against the Corps, the court lacks subject matter jurisdiction
10The mitigation bank which plaintiff created (Pioneer Reserve, LLC) and the TCF
are two of the vehicles by which compensatory mitigation required of § 404 permit
holders may be accomplished. It is a mystery to the court why the Corps would or should
consider authorizing one compensatory mitigation operator to acquire mitigation credits
from another compensatory mitigation operator. Mitigation credits are available for those
required to accomplish mitigation. Having one compensatory mitigation operator acquire
mitigation credits from another similar operator defeats the purpose of the Final Rule.
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over plaintiff’s CWA claim....”11 That holding applies with equal force here. Thus,
plaintiff’s CWA claim is dismissed with prejudice.
Defendants move to dismiss the plaintiff’s APA claim on the ground that
plaintiff’s second amended complaint fails to challenge any final agency action under the
APA. The APA provides for judicial review of “final agency action.” 5 U.S.C. § 704.
“[F]inality is . . . a jurisdictional requirement.” Ukiah Valley Med. Ctr. v. FTC, 911 F.2d
261, 264 n.1 (9th Cir. 1990); City of San Diego v. Whitman, 242 F.3d 1097 (9th Cir.
2001). Two conditions must be satisfied for agency action to be “final.” Bennett v.
Spear, 520 U.S. 154, 177-78 (1997). “First, the action must mark the ‘consummation’ of
the agency’s decision-making process – it must not be of a merely tentative or
interlocutory nature. And second, the action must be one by which ‘rights or obligations
have been determined,’ or from which ‘legal consequences will flow.’” Id. (internal
citations omitted).
Defendants do not dispute plaintiff’s contention that he has no remedy available at
law except for his APA claim.
The essence of plaintiff’s APA claim is a contention that defendants have failed to
direct TCF to use unexpended funds on alternative compensatory mitigation. Defendants
argue that plaintiff’s “challenge addresses the Corps’ ongoing oversight of TCF’s in-lieu
fee program, not any particular final agency action.”12 Defendants argue that plaintiff’s
second amended complaint fails to challenge agency action that consummates a decision-
making process or one which establishes rights or obligations of anyone, or from which
legal consequences will flow. Significantly, plaintiff’s discussion of “the Final Rule”
11Order re Motions to Dismiss and Other Pending Motions at 14, Docket No. 93 in
Walther v. United States, Case No. 3:15-cv-0021-HRH.
12Motion to Dismiss Second Amended Complaint, page 37 of 40, Docket No. 15.
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concludes with the allegation “[i]nstead, the Corps stated that it will either authorize or
direct TCF to disburse a portion of its Unexpended Funds on the preservation of the Non-
threatened Land.”13 Plaintiff’s focus is upon action which he believes defendants should
take in the future, not a final agency decision.
The court takes plaintiff to have conceded defendants’ APA argument because
plaintiff has failed to respond to this argument.
Finally, defendants’ motion to dismiss addresses plaintiff’s contention that the
Corps has given preferential treatment to TCF.14 Plaintiff’s preferential treatment
contention is based upon the Standards of Ethical Conduct for Employees of the
Executive Branch, 5 C.F.R. § 2635.101(b)(8). Those ethics standards regulations provide
that, “[a] violation of this part or of supplemental agency regulations, as such, does not
create any right or benefit, substantive or procedural, enforceable at law by any person
against the United States, its agencies, its officers or employees, or any other person.”
5 C.F.R. § 2635.106(c). Inasmuch as the ethics standards create no enforceable right,
plaintiff’s preferential treatment claim fails.
Plaintiff has not requested, and in any event the court would not grant leave to
amend plaintiff’s second amended complaint. Any attempt to amend plaintiff’s citizen
suit or his ethics complaint would be futile for lack of subject matter jurisdiction as to
either of those matters. As to plaintiff’s APA claim, plaintiff has already amended once
since that claim was originally made, and the court doubts that plaintiff could ever state a
cause of action based upon the failure of the Corps to make the kind of discretionary
decision that plaintiff seeks with respect to the operation of TCF.
13Second Amended Complaint, page 12 of 16, ¶ 73, Docket No. 13.
14Id., page 13-14 of 16.
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Conclusion
Defendants’ motion to dismiss is granted. The clerk of court shall enter judgment
dismissing plaintiff’s second amended complaint with prejudice.
DATED at Anchorage, Alaska, this 4th day of August, 2015.
/s/ H. Russel Holland
United States District Judge
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