Duarte Nursery, Inc. v. United States Army Corps of Engineers
Docket: No. CIV. S-13-2095 LKK/DAD
Court: District Court, E.D. California; April 23, 2014; Federal District Court
Plaintiffs, owners of a nursery, were notified by the U.S. Army Corps of Engineers (Corps) on February 25, 2013, that they had discharged dredged or fill material into U.S. waters without the necessary Department of the Army permit, violating Section 404 of the Clean Water Act. The Corps issued a cease and desist order (CDO) directing the plaintiffs to halt all work in these waters and warned of potential enforcement actions, including fines, imprisonment, and penalties, citing relevant sections of the Clean Water Act. The Corps did not specify the legal authority for issuing the CDO but acknowledged its role in notifying individuals of violations under the Act. Following this, on April 23, 2013, California's Central Valley Regional Water Quality Control Board issued a Notice of Violation (NoV) to the plaintiffs for discharging materials without permits, warning them of civil liability and requesting a mitigation plan. Subsequently, in October 2013, the plaintiffs filed a lawsuit against the Corps and seven officials from the Board, alleging violations of their due process rights under the Fifth and Fourteenth Amendments, claiming that the CDO and NoV led to a loss of $50,000 in unattended wheat crop planting costs.
Plaintiffs argue that defendants have effectively placed a lien on their property by issuing a Compliance Determination Order (CDO) and a Notice of Violation (NoV) without prior or subsequent hearings, violating their Fifth and Fourteenth Amendment Due Process rights. They seek several remedies: declaratory judgments that the lack of hearings is unconstitutional, an injunction against enforcement of the CDO and NoV, a requirement for defendants to notify recipients of the invalidation of these documents, and a declaration that regulations at 33 C.F.R. Part 326 are unconstitutional.
The Army Corps moves to dismiss claims 1, 2, and 5, asserting that the claims are not ripe for review and that plaintiffs have not adequately claimed a Fifth Amendment violation. The State defendants seek dismissal of claims 3 and 4 on similar ripeness grounds and citing Eleventh Amendment sovereign immunity. The court denies the Army Corps' motion to dismiss but grants the State's motion.
Jurisdictional challenges under Fed. R. Civ. P. 12(b)(1) require the plaintiff to establish that jurisdiction exists, with the court presuming factual allegations are true. A motion under 12(b)(6) assesses whether the complaint meets federal pleading standards, necessitating a clear statement of claims that provide fair notice to defendants. The court must accept all factual allegations as true when evaluating such motions.
Legal conclusions and conclusory statements are inadequate for establishing a complaint's validity and are not presumed true in court. The Iqbal and Twombly cases set forth a two-step assessment for motions to dismiss: first, identifying non-conclusory factual allegations; second, determining if these allegations, taken as true and viewed favorably for the plaintiff, plausibly suggest entitlement to relief. The term "plausibility" does not imply a likelihood of success on the merits but rather assesses if the factual allegations, when assumed true, permit a reasonable inference of the defendant's liability. A complaint can fail to demonstrate a right to relief for either lacking a valid legal theory or insufficient factual support.
The plaintiffs assert that the court holds jurisdiction over their Due Process claims against the Army Corps of Engineers under the Administrative Procedure Act (APA) and federal question jurisdiction. The Corps seeks dismissal, claiming the allegations are not ripe for review and, alternatively, that the claims fail to state a valid cause of action. The court must examine three jurisdictional issues: (1) whether a federal statute provides subject matter jurisdiction, (2) whether the United States has waived its sovereign immunity, and (3) whether the claims are ripe for judicial review.
Plaintiffs contend that the Corps' cease and desist order infringes on their Due Process rights under the Fifth Amendment and that related regulations also violate these rights. The court confirms it has jurisdiction under 28 U.S.C. § 1331, as the plaintiffs' right to relief hinges on the interpretation of federal laws and the Constitution, thereby satisfying the requirement for federal jurisdiction in civil actions arising under U.S. law.
Sovereign immunity protects the Federal Government and its agencies from being sued unless explicitly waived. According to Section 702 of the Administrative Procedure Act (APA), this waiver applies to suits seeking non-monetary relief. The 1976 amendment to Section 702 aimed to enhance judicial review of agency actions by removing sovereign immunity as a defense in relevant cases. Plaintiffs are seeking injunctive and declaratory relief regarding an alleged legal wrong caused by the Corps' issuance of a Compliance Determination Order (CDO), which falls under this waiver.
The Corps contends that the case is not ripe for judicial review, arguing that the claims lack sufficient maturity for court intervention since the CDO does not impose legal obligations on its own and does not directly result in cognizable injury. The Corps maintains that the CDO merely notifies alleged violators of their legal obligations under the Clean Water Act (CWA) and potential consequences for violations.
The court, however, disagrees with the Corps' position. It asserts that the issuance of the CDO by a federal agency carries significant weight and can cause injury, as evidenced by the plaintiffs feeling compelled to halt their farming activities due to the CDO's directive. The court emphasizes that the plaintiffs interpreted the CDO as a formal order from the U.S. Government, leading to an actual loss of crops, rather than merely a suggestion for voluntary compliance.
Plaintiffs were not required to comply with the Corps' cease and desist order (CDO), which they argue should have explicitly stated whether it was an order or merely a notification. The Corps cites four cases to support its claim that the CDO lacks legal effect and is not subject to judicial review, but none are applicable to this situation. In Fairbanks North Star Borough v. U.S. Army Corps of Engineers, the issue was whether a jurisdictional determination constituted 'final agency action' under the APA, not a directive to cease activities, which distinguishes it from the current case. Similarly, Route 26 Land Dev. Ass'n focused on 'final agency action' regarding a jurisdictional designation, providing no relevant guidance here. Two additional cases cited by the Corps, Banks v. Page and Howell v. U.S. Army Corps of Engineers, also dealt with 'final agency action' under a different statutory provision and did not include federal constitutional challenges. In contrast, the present case allows for judicial review of alleged constitutional injuries without needing to establish 'final agency action.' The Swanson v. U.S. case is noted as the only relevant precedent regarding the ripeness of a Corps cease and desist order. In Swanson, a plaintiff's immediate lawsuit following a directive to cease work was deemed ripe for judicial determination due to the existing controversy regarding the Corps' regulatory authority.
The Corps referenced Guatay Christian Fellowship v. County of San Diego to support its ripeness argument, noting that in Guatay, the county's cease and desist order did not directly deprive the church of interests, as enforcement required court action. In contrast, the current case lacks similar options for the plaintiffs. The Church did not seek a Use Permit or utilize the appeals process available in the County's code before filing the lawsuit. The Corps' cease and desist order (CDO) does not inform plaintiffs that the Corps lacks authority to act based solely on the CDO, nor does it present an option for an after-the-fact permit. Instead, the CDO mandates immediate voluntary restoration of the site, without mention of an appeals process. While the Corps has regulations allowing for after-the-fact permits, these require initial corrective measures to be completed first. The ambiguity around whether restoration is necessary before seeking a permit further complicates matters. Unlike in Guatay, where a notification process could have been used, the Corps issued a command, denying plaintiffs the chance to contest this order. The Corps' suggestion that plaintiffs must wait for an enforcement action to challenge the CDO is inadequate, as it leaves them unable to farm their land indefinitely without a guarantee of enforcement action. Consequently, the plaintiffs' claims are deemed ripe for judicial review.
To establish a claim under the Due Process clause of the Fifth Amendment, plaintiffs must demonstrate a 'liberty' or 'property' interest, as defined in Mathews v. Eldridge. The plaintiffs assert a property and/or liberty interest in their land and its use for wheat farming, a position not contested by the government. They must also show deprivation of this interest due to an action by the federal government, specifically the issuance of a cease and desist order (CDO). The Corps contends that the CDO does not deprive plaintiffs of their interests, as it serves only to notify alleged violators of legal obligations under the Clean Water Act (CWA) and the potential consequences for violations. The Corps argues that the letter imposes no legal obligations or liabilities, resulting in no cognizable injury for the plaintiffs. However, the plaintiffs complied with the CDO, believing they were bound by the directive, leading to losses in their crop and continued restrictions on their land use. The plaintiffs criticize the Corps' mechanisms for contesting the order as inadequate, particularly the requirement of an after-the-fact permit, which contradicts their claim to operate without such a permit. They assert they have sufficiently stated a claim under the Due Process Clause.
In relation to the state defendants, the plaintiffs allege that officials from the Board violated their Due Process rights by failing to provide a hearing regarding the Notice of Violation (NoV). They assert that the court has jurisdiction under 28 U.S.C. 1331 and Ex parte Young, allowing for state officials to be sued for constitutional violations. The State seeks to dismiss the claims on grounds of sovereign immunity and ripeness for judicial review.
Sovereign immunity typically protects a state and its officials from lawsuits in federal court, barring claims against state officers in their official capacities unless an exception applies. Plaintiffs argue that their suit falls under the Ex parte Young exception, which allows for prospective relief against state officials to address ongoing constitutional violations. The Board counters that the plaintiffs seek retrospective relief, citing precedents like Idaho v. Coeur d'Alene Tribe, Edelman v. Jordan, and Green v. Mansour. However, the plaintiffs maintain that they are addressing an ongoing violation caused by the NoV, which is still in effect. The Board's cited cases do not apply, as they involved issues of state sovereignty or retroactive financial claims, whereas the plaintiffs seek only injunctive relief to stop unconstitutional conduct.
Regarding ripeness, plaintiffs claim that the NoV led them to abandon their crops, thus depriving them of property rights. However, they conceded that their abandonment was due to receiving a federal CDO, not the state NoV. This acknowledgment indicates that the federal action was the true cause of their alleged deprivation. Even if the NoV were considered the cause, plaintiffs have not provided legal authority to support their claim that their voluntary decision to abandon the crops constituted a deprivation of property rights under the Due Process clause. They must demonstrate that the Board or its officials deprived them of property without due process, yet they fail to show any legal consequences arising from the NoV or related regulations that would support their claim.
Plaintiffs claim that the Notice of Violation (NoV) adversely affects their property rights, likening it to an ex parte attachment or lien, as referenced in Connecticut v. Doehr and Tri-State Dev. v. Johnston. However, they fail to substantiate this analogy and do not argue that the NoV constitutes a lien or encumbrance that would inhibit their ability to sell or lease the property. They express concern that the NoV would require disclosure during property transactions, affecting market value. Plaintiffs further contend that the NoV deprives them of their right to use the property for wheat farming, but the NoV merely indicates the Board’s assessment of a legal violation without mandating any action or consequences for non-compliance. The Board has not taken any punitive measures against the plaintiffs, and the lawsuit is deemed not ripe for federal court adjudication.
Consequently, the court denies the Corps' motions to dismiss for lack of jurisdiction and failure to state a claim, while granting the State defendants' motion to dismiss for lack of federal jurisdiction. The lawsuit against specific defendants is dismissed without prejudice due to it not being ripe for judicial review. The court notes that the Cease and Desist Order (CDO) referenced by the parties does not impose legal penalties for non-compliance, and both sides mislabel the nature of the document involved in the proceedings.
Under the Ex parte Young doctrine, plaintiffs can sue state officials in their official capacities for prospective relief to address ongoing constitutional or federal law violations. Rule 12(b)(6) prohibits dismissals based solely on a judge's disbelief of factual allegations, emphasizing that a complaint's plausibility, as outlined in Twombly, is the key standard, retiring the "no set of facts" standard from Conley v. Gibson. The Ninth Circuit has noted the complexity of applying these standards due to the Supreme Court's varying approaches.
Section 1331 grants district courts original jurisdiction over civil actions related to U.S. laws but does not waive sovereign immunity unless plaintiffs challenge "agency action." Agency action encompasses various forms of regulatory decisions or inactions, as defined in 5 U.S.C. 551. In this case, the plaintiffs are contesting a cease and desist order, which the court recognizes as valid agency action. The defendants did not dispute this characterization.
The government argued against the plaintiffs' claims by suggesting that they should have disregarded the order's implications. However, prior rulings, such as Fairbanks, clarified that while jurisdictional determinations may be considered final, they do not impose obligations or commands. In contrast, the cease and desist order explicitly instructs plaintiffs to cease certain activities, qualifying as final agency action under the relevant statutes. The court noted that previous district court decisions cited by the government were either vacated or based on outdated interpretations of the Clean Water Act, which have since been revised by the Supreme Court to allow for judicial review of compliance orders.
