Walther v. United States of America

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF ALASKA
SCOTT W. WALTHER, )
)
Plaintiff, )
)
and )
)
PIONEER RESERVE, LLC, )
)
Proposed Intervenor-Plaintiff, )
)
vs. )
)
UNITED STATES OF AMERICA, et al., )
)
Defendants, )
) No. 3:15-cv-0021-HRH
and )
)
THE SU-KNIK MITIGATION BANK and )
SU-KNIK ENVIRONMENTS, LLC, )
)
Intervenor-Defendants. )
__________________________________________)
O R D E R
Motions to Dismiss and Other Pending Motions
Defendant United States of America, on behalf of the U.S. Army Corps of Engineers,
moves to dismiss plaintiff’s amended complaint.1 This motion is opposed.2 Intervenor-
1Docket No. 59.
2Docket No. 65.
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defendants also move to dismiss plaintiff’s amended complaint.3 This motion is opposed.4
Oral argument was requested and has been heard on the motions to dismiss.
Also pending in this case are plaintiff’s motion for a preliminary injunction,5 Pioneer
Reserve LLC’s motion to intervene,6 plaintiff’s motion to supplement the administrative
record,7 and plaintiff’s motion for summary judgment.8
After hearing oral argument, the court granted the motions to dismiss and denied
all of the other pending motions, except for plaintiff’s motion for summary judgment. This
written order provides a more detailed explanation for the court’s rulings as well as
disposes of plaintiff’s motion for summary judgment.
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. Intervenor-defendants are The Su-Knik Mitigation Bank and Su-Knik
Environments, LLC.
3Docket No. 60.
4Docket No. 66.
5Docket No. 5.
6Docket No. 75.
7Docket No. 87.
8Docket No. 88.
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“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
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
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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. Plaintiff refers to these regulations as the “Final Rule.”
When evaluating compensatory mitigation options, the district
engineer will consider what would be environmentally
preferable. In making this determination, the district engineer
must assess the likelihood for ecological success and
sustainability, the location of the compensation site relative to
the impact site and their significance within the watershed, and
the costs of the compensatory mitigation project.
33 C.F.R. § 332.3(a)(1). Permissible mitigation methods include restoration, enhancement,
establishment, and preservation. Id. § 332.3(a)(2). When preservation is used as the
method of mitigation, certain criteria must be met, including that the resources to be
preserved must be “under threat of destruction or adverse modifications[.]” Id. §
332.3(h)(iv).
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). However, this preference
“does not override a district engineer’s judgment as to what constitutes the most
appropriate and practicable compensatory mitigation based on consideration of
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case-specific circumstances.” 73 Fed. Reg. 19594, 19,628 (April 10, 2008).
“A mitigation bank is an offset of preserved and restored wetlands used to
compensate for the environmental impact of more destructive land use.” Hearts Bluff
Game Ranch, Inc. v. United States, 669 F.3d 1326, 1327 (Fed. Cir. 2012). “Landowners can
apply for mitigation banking instruments to participate in the program, and then can sell
credits under the instrument to developers to offset environmentally destructive projects
covered by section 404 permits under the Clean Water Act.” Id. “The Corps is in charge
of the mitigation banking program and it has issued regulations to establish procedures for
granting instruments for mitigation banks.” Id.
Any private or public entity (referred to as a sponsor) may propose to establish a
mitigation bank. 33 C.F.R. § 332.2. “The district engineer will establish an Interagency
Review Team (IRT) to review documentation for the establishment and management of
mitigation banks....” Id. § 332.8(b)(1). The IRT is composed of federal, tribal, state and/or
local regulatory and resource agency representatives. Id. at § 332.8(b)(2). The “[m]itigation
banking instrument [MBI]” is the “legal document for the establishment, operation, and use
of a mitigation bank.” Id. § 332.2. The sponsor must propose properties for the mitigation
bank site, which are then incorporated into the MBI. Id. § 332.8(d)(1).
Plaintiff alleges that he purchased two parcels of property (the Seldon and Edgerton
parcels) and that beginning in or around 2006, the Corps encouraged him to turn this
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property into a mitigation bank.9 Plaintiff alleges that he formed a limited liability
company, Pioneer Reserve, LLC, which “entered into a contract ... with the Corps” and this
contract “created a wetland mitigation bank known as the Pioneer Reserve Mitigation
Bank....”10 “Following full execution of the Contract, [plaintiff] recorded perpetual
conservation easements on his Land and paid ... $140,000[] to a third-party non-profit
organization, as a ‘financial assurance’ to ensure Pioneer’s ongoing performance under the
Contract.”11 After plaintiff “encumbered his Land with perpetual conservation easements,
... Pioneer was awarded wetland mitigation credits that it could sell to CWA § 404
permittees in order to satisfy their compensatory mitigation needs.”12 Although plaintiff
alleged that he “remained the owner of the encumbered Land,”13 his counsel clarified at
oral argument that title to the land is held by Pioneer Reserve.
Plaintiff alleges that on February 5, 2009, the Mat-Su Borough and the Corps
“entered into a mitigation banking agreement ... forming [the] Su-Knik” mitigation bank.14
“The Corps ... awarded Su-Knik’s banking credits based on the Borough recording a
9Amended Complaint at 5, ¶¶ 24-28, Docket No. 49.
10Id. at 6, ¶ 33-34.
11Id. at ¶ 35.
12Id. at ¶ 37.
13Id. at ¶ 38.
14Id. at 9, ¶¶ 61-62.
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conservation easement on a Borough-owned property known as the Fish Creek Parcel.”15
Plaintiff alleges that “[t]he Fish Creek Parcel is an inaccessible Black Spruce swamp, with
no viable economic use” and that it “is comprised of undevelopable, high quality
wetlands.”16 Plaintiff alleges that Su-Knik’s banking credits are not valid because they are
“based solely on the Borough’s preservation of the non-threatened Fish Creek Parcel....”17
Plaintiff alleges that in September 2012, the Corps issued a § 404 permit to the
Alaska Railroad Corporation (ARRC) which required ARRC to buy mitigation credits from
Su-Knik.18 Plaintiff alleges that the Corps has issued seventeen § 404 permits for which
compensatory mitigation was provided, at least in part, from the Su-Knik mitigation bank.19
Plaintiff alleges that the Corps required the ARRC to purchase mitigation credits from Su-
Knik even though
(i) Pioneer’s wetland banking credits were the highest ranked
ecologically preferable alternative source of compensatory
mitigation, (ii) the ARRC’s permitted impacts to [waters of the
United States] occurred in Pioneer’s service area, and (iii)
Pioneer’s service area was the only mitigation bank service
area that encompassed the ARRC’s permitted impacts to
15Id. at 10, ¶ 66.
16Id. at ¶¶ 72-73.
17Id. at 11, ¶ 76.
18Id. at 10, ¶ 65.
19Id. at 11, ¶ 79.
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[waters of the United States.]20
On February 10, 2015, plaintiff commenced this action. In his amended complaint,
plaintiff asserts a claim under the “citizen suit” provision in Section 505(a)(2) of the CWA
and claims under the APA.21 Plaintiff seeks declaratory and injunctive relief. Plaintiff
requests that the court declare that the Corps violated the Final Rule when it awarded
mitigation banking credits to Su-Knik.22 Plaintiff also requests that the court declare that
the “CWA § 404 permits that were issued with compensatory mitigation requirements
being satisfied by the permittee(s) purchasing banking credits from Su-Knik were unlawful
in that they were issued in violation of the CWA and the Final Rule[.]”23 Plaintiff requests
that the Corps be enjoined “from requiring, or authorizing any CWA § 404 permittee to
satisfy its compensatory mitigation requirement by purchasing mitigation banking credits
from Su-Knik until such time as Su-Knik is awarded mitigation banking credits in full
compliance with the requirements of the Final Rule[.]”24 And, plaintiff requests that the
court “order the Corps to comply with the Final Rule and take steps to ensure that the
20Id. at 7, ¶ 40.
21Plaintiff appears to be challenging two final agency actions, each which would be
a separate APA claim.
22Amended Complaint at 13, Docket No. 49.
23Id. at 12.
24Id.
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Borough, as sponsor of the Su-Knik, provides alternative compensatory mitigation, in
compliance with the Final Rule, to support the award of all banking credits that Su-Knik
has already sold[.]”25
Defendant the United States and intervenor-defendants (referred to colletively as
“defendants” herein) now move to dismiss plaintiff’s amended complaint.
Discussion
Pursuant to Rule 12(b)(1), Federal Rules of Civil Procedure, defendants move to
dismiss plaintiff’s CWA claim 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 because the United
States has not waived its sovereign immunity. “As a sovereign, the United States is
25Id.
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immune from suit unless it waives its immunity.” Shirk v. United States ex rel. Dep’t of
Interior, 773 F.3d 999, 1003 (9th Cir. 2014). “Federal agencies and instrumentalities, as well
as federal employees acting in their official capacities within their authority, are similarly
immune from suit.” South Delta Water Agency v. United States, Dep’t of Interior, Bureau
of Reclamation, 767 F.2d 531, 536 (9th Cir. 1985). “Absent a waiver of sovereign immunity,
courts have no subject matter jurisdiction over cases against the [federal] government.”
Kaiser v. Blue Cross of Cal., 347 F.3d 1107, 1117 (9th Cir. 2003).
Plaintiff alleges that this court has jurisdiction of his CWA claim pursuant to Section
505(a)(2) of the CWA, which provides, in pertinent part, that:
any citizen may commence a civil action on his own behalf–
* * *
(2) against the Administrator where there is alleged a failure of
the Administrator to perform any act or duty under this
chapter which is not discretionary with the Administrator.
33 U.S.C. § 1365(a)(2).
The CWA states that “[e]xcept as otherwise expressly provided in this chapter, the
Administrator of the Environmental Protection Agency (hereinafter in this chapter called
‘Administrator’) shall administer this chapter.” 33 U.S.C. § 1251(d). Plaintiff contends that
the “[e]xcept as otherwise expressly provided” language means that the Administrator
may be someone other than the Administrator of the EPA. Plaintiff argues that because the
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CWA expressly provides that the Corps administers the § 404 permitting program, the
Corps is the Administrator for purposes of Section 505(a)(2) claims involving § 404 permits.
Plaintiff cites to National Wildlife Federation v. Hanson, 859 F.2d 313 (4th Cir. 1988),
in support of his argument. There, the plaintiff brought Section 505(a)(2) claims against
both the EPA and the Corps. Id. at 314-15. On appeal, the government argued that the
district court had lacked subject matter jurisdiction because “the NWF’s suit did not qualify
as a citizen suit under section 1365(a)(2) because the NWF challenged the Corps’ exercise
of discretion with respect to wetlands and not the EPA administrator’s failure to carry out
a mandatory duty.” Id. at 315. The court rejected this argument, explaining that
Sections 404 and 505(a) of the Clean Water Act, 33 U.S.C. §§
1344 and 1365(a) must be read together. Section 1344 autho-
rizes the Secretary of the Army acting through the Army Corps
of Engineers to regulate the discharge of dredged or fill
material into United States waters, including wetlands. The
Corps’ permit decisions must be based on EPA guidelines.
Section 1344(c) authorizes the Administrator of the EPA to
block or override a Corps’ permit decision. Section 1365(a)(2)
authorizes any citizen to commence a civil action “against the
Administrator where there is alleged a failure of the Adminis-
trator to perform any act or duty under this chapter which is
not discretionary with the Administrator.”
* * *
Congress cannot have intended to allow citizens to challenge
erroneous wetlands determinations when the EPA Administra-
tor makes them but to prohibit such challenges when the Corps
makes the determination and the EPA fails to exert its author-
ity over the Corps’ determination. Section 1365(a)(2) should be
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interpreted in conjunction with Civil Procedure Rule 20
(joinder) to allow citizens to sue the Administrator and join the
Corps when the Corps abdicates its responsibility to make
reasoned wetlands determinations and the Administrator fails
to exercise the duty of oversight imposed by section 1344(c).
Id. at 315-16.
However, “Hanson is contrary to a series of other cases[.]” Alliance To Save
Mattaponi v. U.S. Army Corps of Engineers, 515 F. Supp. 2d 1, 6 (D.D.C. 2007). In Preserve
Endangered Areas of Cobb’s History, Inc. v. U.S. Army Corps of Engineers, 87 F.3d 1242,
1245 (11th Cir. 1996), the plaintiff brought claims under Section 505(a)(2) against the Corps
and the EPA. The district court dismissed these claims on a motion to dismiss “ruling that
neither the EPA nor the Army Corps of Engineers was subject to suit in this case.” Id. The
court of appeals affirmed the dismissal of the Section 505(a)(2) claims against the Corps
because
Section (a)(2) of the citizen suit provision of the Clean Water
Act does not clearly and ambiguously waive sovereign
immunity in regard to the Army Corps of Engineers. The
statute states that a citizen can sue ‘where there is alleged a
failure of the Administrator to perform any act or duty under
this chapter which is not discretionary ...’ 33 U.S.C. §
1365(a)(2). It does not refer to the Army Corps of Engineers.
We must conclude that Congress did not intend to waive
sovereign immunity in regard to suits against the Army Corps
of Engineers under the Clean Water Act.
Id. at 1249.
In Cascade Conservation League v. M.A. Segale, Inc., 921 F. Supp. 692, 695 (W.D.
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Wash, 1996), the plaintiff brought Section 505(a)(2) claims against the Corps, the chief
administrator of the Corps, the EPA, and the EPA Administrator. The court dismissed the
plaintiff’s Section 505(a)(2) claims against the Corps because the “Administrator” is defined
in Section 1251(d) as the Administrator of the EPA and thus “[u]nder the rules of
construction..., the Court may not extend the waiver beyond the statute’s express terms to
include the Corps. This conclusion is reinforced by the fact that the statute elsewhere refers
specifically to the ‘Secretary,’ meaning ‘the Secretary of the Army, acting through the Chief
of Engineers.’” Id. at 696 (quoting 33 U.S.C. § 1344(d)). The court concluded that
“‘Administrator’ ... is not a catchall term.” Id.
And the court in Alliance To Save Mattaponi, 515 F. Supp. 2d at 6, found “Hanson
... unpersuasive,” explaining that
[h]owever puzzled the court may have been by the statute, and
even if the court were correct that “Congress cannot have
intended to” waive sovereign immunity as to EPA but not as
to the Corps, Congress’s presumed intent is not the question
when a court interprets a sovereign immunity waiver. Where
possible, such an interpretation “begins and ends with the
express terms of the statute. The Court must rely on plain
meaning interpretation to the extent possible, and must resolve
any ambiguities against a finding of waiver.” Cascade Conser-
vation League, 921 F. Supp. at 697; see also Ardestani v. INS,
502 U.S. 129, 137 (1991) (waivers “must be strictly construed in
favor of the United States”). Here, a bar to CWA suits against
the Corps “is precisely what the express terms of the statute
accomplish, so the Court must assume that it was what
Congress intended. ‘[C]ourts must presume that a legislature
says in a statute what it means and means in a statute what it
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says there.’” Cascade Conservation League, 921 F. Supp. at 697
(quoting Connecticut Nat’l Bank v. Germain, 503 U.S. 249
(1992)).
Contrary to plaintiff’s contention, these courts have not ignored the plain language
of Section 505(a)(2) or Section 1251(d). Section 505(a)(2) only waives sovereign immunity
as to the suits against the Administrator. Section 1251(d) expressly defines the term
“Administrator” to mean the Administrator of the EPA. Section 1251(d) contemplates that
the Administrator of the EPA may not administer all portions of the CWA, but it does not
suggest that the term “Administrator” refers to anyone other than the Administrator of the
EPA. Because Section 505(a)(2) does not waive immunity for suits against the Corps, the
court lacks subject matter jurisdiction over plaintiff’s CWA claim and this claim is
dismissed with prejudice.
Defendants also move to dismiss plaintiff’s APA claims on the grounds that plaintiff
lacks standing and that such claims are barred by the statute of limitations. As indicated
at oral argument, the court has serious doubts as to plaintiff’s standing but assumes for
purposes of the instant motions to dismiss that plaintiff has standing to bring his APA
claims.26 As for whether plaintiff’s APA claims are barred by the statute of limitations, “[a]
motion to dismiss based on a statute of limitations defense is proper under Rule 12(b)(6).”
26Even if the court were to have found that plaintiff lacked Constitutional standing
or prudential standing, or both, the court would have been inclined to give plaintiff leave
to amend his standing allegations as to his APA claims.
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Piazza v. Brackett, Case No. 1:11 CV 01536 AWI, 2013 WL 3166283, at *2 (E.D. Cal. June
20, 2013). “Such a motion may be granted only ‘if the assertions of the complaint, read with
the required liberality, would not permit a plaintiff to prove that the statute was tolled.’”
Id. (quoting Jablon v. Dean Witter & Co., 614 F.2d 677, 682 (9th Cir. 1980)).
“APA claims are subject to a six-year statute of limitations.” Hells Canyon
Preservation Council v. U.S. Forest Srvc., 593 F.3d 923, 930 (9th Cir. 2010). Both of
plaintiff’s APA claims involve a challenge to the validity of the Su-Knik mitigation bank
instrument, which makes the relevant date for determining whether the statute of
limitations has run the date on which the Corps approved that instrument. Plaintiff alleges
that the Corps and the Borough “entered into a mitigation banking agreement” on
February 5, 2009.27 Plaintiff filed this action on February 10, 2015, which was six years and
five days later. Thus, plaintiff’s APA claims, as currently pled, are barred by the statute of
limitations, and these claims are dismissed. Plaintiff’s APA claims are, however, dismissed
without prejudice because plaintiff may be able to fix the statute of limitations problem.
Conclusion
Defendants’ and intervenor-defendants’ motions to dismiss28 are granted. Plaintiff’s
amended complaint is dismissed. Plaintiff’s CWA claim is dismissed with prejudice, and
27Amended Complaint at 9, ¶ 61, Docket No. 49.
28Docket Nos. 59 and 60.
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plaintiff’s APA claims are dismissed without prejudice. Plaintiff may file a second
amended complaint as to his APA claims only. Should plaintiff elect to file a second
amended complaint, that complaint shall be filed on or before August 27, 2015.
Because plaintiff currently has no viable claim, his motion for a preliminary
injunction29 is denied. For the same reason, his motion for summary judgment30 is denied.
Because plaintiff is being given leave to amend as to his APA claims, Pioneer Reserve’s
motion to intervene31 is denied as moot. For the same reason, plaintiff’s motion to
supplement the administrative record32 is summarily denied with leave to renew should
plaintiff elect to file a second amended complaint.
DATED at Anchorage, Alaska, this 27th day of July, 2015.
/s/ H. Russel Holland
United States District Judge
29Docket No. 5.
30Docket No. 88.
31Docket No. 75.
32Docket No. 87.
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