Petition for Writ of Certiorari — White Oak Realty, LLC, et al., Petitioners v. Army Corps of Engineers, et al.

APPENDIX

ia

APPENDIX TABLE OF CONTENTS

Page

i.

Opinions Entered in Conjunction with

Judgment Sought to be Reviewed

Unpublished Opinion of

The United States Court of Appeals

For the Fifth Circuit

entered July 11, 2018 ............................. 1a

Order and Reasons of

The United States District Court

For the Eastern District of Louisiana

Re: Granting Defendants’ Motion for

Summary Judgment

entered September 14, 2016 ................ 18a

Order and Reasons of

The United States District Court

For the Eastern District of Louisiana

Re: Granting Defendants’ Motion for

Summary Judgment

entered March 28, 2017........................ 39a

ii.

Other Opinions and Orders Entered in the

Case

Order of

The United States District Court

For the Eastern District of Louisiana

Re: Granting Plaintiffs’ Unopposed

Motion to Amend Complaint

entered December 11, 2013 .................. 52a

iia

Order and Reasons of

The United States District Court

For the Eastern District of Louisiana

Re: Denying Defendants’ Motion to Dismiss

entered September 4, 2014 .................. 54a

Order and Reasons of

The United States District Court

For the Eastern District of Louisiana

Re: Granting in Part Defendants’

Motion for Judgment on the Pleadings;

Dismissing Plaintiffs’ Substantive

Due Process Claims

entered January 28, 2016 .................... 82a

iii. Order on Re-Hearing

Order of

The United States Court of Appeals

For the Fifth Circuit

Re: Denying Petition for Rehearing

entered September 11, 2018 .............. 100a

iv. Judgment Sought to be Reviewed

Judgment of

The United States Court of Appeals

For the Fifth Circuit

entered September 19, 2018 .............. 102a

v.

Statutes at Issue

33 U.S.C.A. § 2213 (2007) ............................. 104a

33 U.S.C.A. § 2219 ........................................ 116a

33 U.S.C.A. § 2241 (1996) ............................. 117a

iiia

33 U.S.C.A. § 2283 (2007) ............................. 121a

33 U.S.C.A. § 2283 (2016) ............................. 130a

42 U.S.C.A. § 1962d-5b (2007) ...................... 147a

vi. Other Material

Letter to

George W. House from

Colonel Edward R. Fleming

Re: Response to November 9, 2012 Letter

dated February 20, 2013 .................... 154a

Map of Idlewild, Stage 2 Borrow Area Plaquemines Parish

undated ............................................... 161a

Letter to

Colonel Alvin B. Lee from

Jean-Paul Layrisson

Re: Idlewild Property [Westbank M]

dated June 12, 2008 ........................... 162a

Letter to

Jean-Paul Layrisson from

Colonel Alvin B. Lee

Re: Response to June 12, 2008 Request Letter

dated July 9, 2008 .............................. 165a

Letter to

Linda C. LaBure from

Gerald A. Spohrer

Re: Grant Right of Entry,

With Attachments,

dated September 24, 2007 .................. 168a

iva

Letter to

Thomas Carrere from

Gerald A. Spohrer

Re: Westbank & Vicinity

Hurricane Protection Project

dated September 5, 2007 .................... 174a

Excerpts from Decision Record of

Individual Environmental Report #31

dated October 29, 2010 ....................... 179a

Corps Internal Memorandum Entitled

“Contractor-Furnished Borrow

Mitigation Policy – Issues and Solutions”

undated ............................................... 196a

1a

[ENTERED: July 11, 2018]

IN THE UNITED STATES COURT OF

APPEALS FOR THE FIFTH CIRCUIT

No. 17-30438

WHITE OAK REALTY, L.L.C.; CITRUS REALTY,

L.L.C.,

Plaintiffs - Appellants

v.

UNITED STATES ARMY CORPS OF ENGINEERS;

THOMAS P. BOSTICK, Lieutenant General, United

States Army Chief of Engineers, in his official

capacity; JOHN W. PEABODY, Major General,

Commander, Mississippi Valley Division, United

States Army Corps of Engineers, in his official

capacity;

RICHARD

L.

HANSEN,

Colonel,

Commander, New Orleans District, United States

Army Corps of Engineers, in his official capacity,

Defendants - Appellees

Appeal from the United States District Court

for the Eastern District of Louisiana

USDC No. 2:13-CV-4761

Before WIENER,

Judges.1

GRAVES,

and

HO,

1 Judge Ho concurs in the judgment only.

Circuit

2a

PER CURIAM:*

This dispute involves a challenge to

environmental mitigation requirements imposed by

the U.S. Army Corps of Engineers (the “Corps”) as a

prerequisite to excavate and sell soil from private

property for use in the Corps’s projects. Appellant

claims the mitigation requirements are contrary to

federal law and unconstitutional. The district court

granted the Corps summary judgment on all claims.

We affirm.

BACKGROUND

In the wake of Hurricanes Rita and Katrina,

Congress tasked the Corps with a series of projects

collectively known as the Greater New Orleans

Hurricane and Storm Damage Risk Reduction

System (“HSDRRS”). The HSDRRS required

construction, on an “emergency schedule,” of

numerous levees, floodwalls, gates, and pumps within

Southeastern Louisiana. Corps engineers estimated

that completion of the HSDRRS would require

31,000,000 cubic yards of suitable “borrow material.”2

In order to acquire the needed material, the

Corps considered three options: (1) “governmentfurnished” borrow material, (2) “contractor-furnished”

borrow material, and (3) supply contracts. Only the

government-furnished

and

contractor-furnished

options are relevant to this appeal.

Pursuant to 5TH CIR. R. 47.5, the court has

determined that this opinion should not be published and is not

precedent except under the limited circumstances set forth in

5TH CIR. R. 47.5.4.

*

2 “Borrow material” refers to soil “dug in one

for use at another.”

location

3a

Under the government-furnished option, the

Corps would seek to directly obtain the property rights

to extract borrow material from an identified piece of

land. Under the contractor-furnished option, the

Corps would require construction contractors to work

“in partnership with a landowner to provide suitable

borrow material from the landowner’s property.”

In 2008, the Corps considered acquiring the

rights to mine government-furnished borrow

material on Idlewild, a tract of land owned by White

Oak Realty, LLC (“White Oak”). In response, White

Oak, fearing a potential eminent domain action

against its property, sent the Corps letters informing

the Corps that it was “pursuing the property for

contractor supply borrow material,” and requesting

that the Corps “cease and desist any and all activity

pertaining to government supplied borrow at

Idlewild.” The Corps declined to cease consideration

of Idlewild as a source of government-furnished

borrow material. Nonetheless, the Corps informed

White Oak that it remained “free to utilize [its]

property in any manner” pending further notification

on the Corps’s intentions. The Corps never pursued

an eminent domain action.

In 2009, White Oak applied for a permit to

excavate clay on Idlewild as a source for contractorsupplied borrow material. The Corps pre-approved3

Pre-approval did not guarantee that the Corps’s

contractors would select Idlewild as a source of borrow material.

It merely meant that the Corps would list Idlewild as a preapproved site. Contractors were “not obligated to select a site

from the contractor-furnished clay source list.” “Agreements for

use of a contractor-furnished site would solely be between a

construction contractor and the landowner, and at no point in

time would the landowner have an agreement with the [Corps].”

3

4a

the permit in October 2010 — with a caveat. As part

of its review, the Corps had determined that clay

excavation on Idlewild would cause adverse

environmental impact on bottomland hardwood

forests (“BLH”). To offset that impact, the Corps

required mitigation of those environmental impacts

“through the purchase of mitigation bank credits.”

Purchase of bank credits was only required,

however, if Idlewild’s resources were excavated “for

use in building the HSDRRS.” “[I]f borrow excavated

at [Idlewild] [was] not used in the construction of a

[Corps] water resources project, there [was] no

[Corps] requirement that impacts to non-wetland

bottomland hardwoods be mitigated.”

Upset by the cost of available mitigation bank

credits, White Oak proposed to fulfill its mitigation

requirements by placing 158.36 acres of “wetland

and jurisdictionally determined non-wetland” forest

in a conservation servitude. The Land Trust for

Southeast Louisiana would then work to ensure that

the land remained pristine.

The Corps rejected White Oak’s proposal on

the grounds that mitigation bank credits were

“preferred by both statute and regulation” and were

“the most efficient, timely and effective means to

achieve the required compensatory mitigation for

impacts to contractor-furnished borrow area.” The

Corps further explained that the “creation and

approval of a mitigation plan is a lengthy and

detailed process that can take a year or more.” “Not

only [did] the [Corps] not have the manpower to

devote to this process for every contractor-furnished

borrow site, but it would significantly delay the

approval and use of those sites.”

5a

The parties then exchanged correspondence

for a number of years discussing whether a nonmitigation bank alternative would suit the Corps.

Eventually, on February 20, 2013, District

Commander Edward Fleming sent a final notice to

White Oak reiterating the bank credit mitigation

requirement.

In response, White Oak filed the instant suit

against the Corps on June 10, 2013, alleging that:

(1) the Water Resources Development Act (“WRDA”)

does not authorize the Corps to require private

parties to pay for the mitigation costs, (2) the WRDA

does not authorize the Corps to require purchase of

mitigation bank credits in this instance, and (3) a

taking under the Corps’s mitigation plan would be

unconstitutional under the Fifth Amendment.

Shortly thereafter, the Corps filed a motion to

dismiss the complaint for lack of Article III standing,

which the district court denied. The parties then

filed cross motions for summary judgment. After

summary judgment briefing had concluded, White

Oak moved to supplement the administrative record.

On May 4, 2016, the district court denied

White Oak’s motion to supplement as untimely and

unnecessary. The court subsequently granted

summary judgment in favor of the Corps on all

claims. This appeal timely followed.

STANDARD OF REVIEW

“This court reviews a grant of summary

judgment de novo, applying the same standard to

review the agency’s decision that the district court

6a

used.” Baylor Cty. Hosp. Dist. v. Price, 850 F.3d 257,

261 (5th Cir. 2017).

As an initial matter, White Oak claims that

the district court erred in applying Chevron

deference to the Corps’s interpretation of the WRDA.

White Oak argues that only Skidmore deference is

owed because the Corps’s interpretation does not

carry the force of law. See Skidmore v. Swift & Co.,

323 U.S. 134 (1944).

“To determine the appropriate level of

deference to the [Corps’s] interpretation of the

[WRDA], we are guided by the two-step analysis set

forth in United States v. Mead Corp., 533 U.S. 218,

226-27 (2001).” See Knapp v. U.S. Dep’t of Agric., 796

F.3d 445, 454 (5th Cir. 2015). “[A]dministrative

implementation of a particular statutory provision

qualifies for Chevron deference when it appears [(1)]

that Congress delegated authority to the agency

generally to make rules carrying the force of law,

and [(2)] that the agency interpretation claiming

deference was promulgated in the exercise of that

authority.” Mead, 533 U.S. at 226-27. “It is fair to

assume generally that Congress contemplates

administrative action with the effect of law when it

provides for a relatively formal administrative

procedure tending to foster the fairness and

deliberation that should underlie a pronouncement

of such force.” Id. at 230.

Congress delegated to the Corps the power to

develop mitigation plans under the WRDA. See 33

U.S.C. § 2283(d). Congress further provided for a

formal administrative procedure for developing those

plans, requiring the Corps to “make a draft of the

7a

plan available for review and comment by applicable

environmental resource agencies and the public,”

and “consider any comments received from those

agencies and the public on the draft plan.” See id.

§ 2283(h)(7). The record indicates that the Corps

promulgated the mitigation requirements pursuant

to these procedures. Accordingly, the district court

properly afforded the Corps’s decisions Chevron

deference. See Mead, 533 U.S. at 226-27, 230.

Under Chevron, we employ a two-step

analysis when reviewing an agency construction of a

statute. First, we answer “the question whether

Congress has directly spoken to the precise question

at issue.” See Chevron, U.S.A., Inc. v. NRDC, Inc.,

467 U.S. 837, 842 (1984). “If the intent of Congress is

clear, that is the end of the matter; for the court, as

well as the agency, must give effect to the

unambiguously expressed intent of Congress.” Id. at

842-43. “If, however, the court determines Congress

has not directly addressed the precise question at

issue, the court does not simply impose its own

construction on the statute[.]” Id. at 843. “Rather . . .

the question for the court is whether the agency’s

answer is based on a permissible construction[.]” Id.

DISCUSSION

White Oak presents four arguments on appeal.

First, White Oak challenges the Corps’s power under

the WRDA to impose the mitigation requirement on

a private party. Second, White Oak contends that

the Corps violated the WRDA by demanding that

White Oak purchase wetland mitigation bank

credits. Third, White Oak claims that the mitigation

requirement amounted to an unlawful taking under

8a

the Fifth Amendment. Fourth, White Oak asserts

that the district court erred in denying its request to

supplement the record.

Before turning to the merits of White Oak’s

arguments, however, we first address the Corps’s

contention that White Oak lacks Article III standing

to assert any of its claims.

I.

White Oak has Article III standing.

The Corps maintains that White Oak lacks

Article III standing because it cannot allege an

injury. First, the Corps claims White Oak did not

possess a property interest in the borrow material at

the relevant time. Second, the Corps argues that

White Oak’s “lost profits or lost business

opportunities” are entirely speculative. We disagree.

“Because the WRDA establishes no specific

right to judicial review of an agency action, [White

Oak] must establish standing under the general

provisions of the APA.” Envtl. Def. Fund v. Marsh,

651 F.2d 983, 1003 (5th Cir. Unit A Jul. 1981). To do

so, White Oak “must allege some injury in fact, and

that the injury is arguably within the zone of

interests4 to be protected or regulated by the

statutes that the agencies (are) claimed to have

violated.” Id. (internal quotations omitted). “The

Supreme Court has indicated that courts should not

be austere in granting standing under the APA to

challenge agency action taken pursuant to a

statute.” Id.

The Corps does not argue that White Oak’s alleged

injuries fall outside of the WRDA’s “zone of interest.” We

therefore do not address that issue on appeal.

4

9a

The Corps asserts that the mitigation

requirement could not have injured White Oak

because “White Oak did not own the borrow” at the

relevant time. Though White Oak did sell the right

to mine the clay from its property, the purchase

price was $5.60 “per ton of Materials mined and

removed.” White Oak therefore retained an ongoing

financial interest in mining the clay, which, White

Oak asserts, the Corps’s mitigation requirements

inhibited by excluding White Oak from the borrow

market. White Oak’s retained financial interest in

the per ton purchase price, and alleged injury

thereto, is sufficient to establish Article III standing.

See Cottrell v. Alcon Labs., 874 F.3d 154, 163 (3d Cir.

2017) (quoting Danvers Motor Co. v. Ford Motor Co.,

432 F.3d 286, 291, 293 (3d Cir. 2005)) (stating that

financial harm is a “classic” and “paradigmatic” form

of injury in fact).

The Corps next argues that any potential lost

business opportunities are “entirely speculative”

because “contractors may choose their own sites from

which to obtain borrow” and “there was no guarantee

that Idlewild borrow would ever be used.” The record

shows that the lost business opportunity was not as

speculative as the Corps asserts. The mining

company that held the rights to White Oak’s borrow

material had a contract to provide borrow from

Idlewild in connection with specific Corps’s

contracts. The mining company’s contract was

“contingent upon acceptance of the pit” by the Corps.

“It is unrealistic to believe that these Corps

[mitigation requirements] [did] not have a direct

impact” on the fulfillment of that contract. See

Marsh, 651 F.2d at 1004.

10a

The district court did not err in concluding

that White Oak had Article III standing to bring its

claims. We accordingly turn to the merits of White

Oak’s arguments on appeal.

II.

The mitigation requirement is permissible.

White Oak first argues that the Corps’s

mitigation requirement conflicts with the WRDA for

two reasons: (1) it is inconsistent with WRDA

provisions requiring mitigation planning prior to

project implementation; and (2) the WRDA does not

grant the Corps authority to require private parties

to pay for mitigation. Neither argument has merit.

1.

Corps

reasonably

required

mitigation for Idlewild impacts.

According to White Oak, the Corps’s “post hoc

imposition of mitigation responsibility” conflicts with

the WRDA’s requirement that the Corps “assess

potential impacts and submit a specific plan for

mitigation as part of a project proposal . . . before it

is approved.” We are unpersuaded.

There are, as White Oak asserts, provisions in

the WRDA indicating that the Corps must undertake

mitigation prior to project implementation and

budgeting. For example, § 2283 states that

mitigation “shall be undertaken or acquired before

any construction of the project.” 33 U.S.C.

§ 2283(a)(1) (emphasis added). Section 2283 further

states that the Corps “shall not submit any proposal

for the authorization of any water resources project”

unless that proposal contains a “specific plan to

mitigate for damages to ecological resources.” See id.

§ 2283(d)(1) (emphasis added). These provisions

11a

provide some support to White Oak’s argument that

mitigation plans must be set forth in advance of

project implementation.

The WRDA is not, however, as clear as White

Oak asserts. For instance, § 2283 also states that the

Corps may implement mitigation requirements

“concurrently with lands and interests in lands for

project purposes.” Id. § 2283(a)(1) (emphasis added).

Likewise, Congress authorized the Corps to “mitigate

damages to fish and wildlife resulting from any water

resources project under [its] jurisdiction, whether

completed, under construction, or to be constructed.”

Id. § 2283(b)(1) (emphasis added). Section 2280,

regarding budgeting, provides that a total budget

“shall be automatically increased” for mitigation

authorized by the WRDA. These provisions indicate

that the Corps can account for, and impose,

mitigation as needed during the course of a project.

The WRDA is, therefore, ambiguous with

respect to whether the Corps may impose mitigation

requirements after project implementation. As a

result, we may not “impose [our] own construction”

on the statutory language. Chevron, 467 U.S. at 843.

Rather, “the question for the court is whether the

[Corps’s] answer [to this issue] is based on a

permissible construction of the statute.” Id. It is.

The Corps interprets the WRDA as requiring

mitigation for all “habitat losses caused by water

resources projects.” Following that reasoning, the

Corps concluded that “impacts to [BLH] associated

with borrow that will be used in construction of a

[Corps] water resources project must be mitigated.”

Therefore, the Corps determined that the WRDA

12a

required mitigation for any impact to Idlewild “if . . .

selected by construction contractors for use in

building the HDRRS.” This is an entirely permissible

construction of the statute.

The WRDA commands that the Corps

mitigate for any impacts “resulting from” or “created

by” a water resource project. 33 U.S.C. §§ 2283(b)(1),

(d)(1). To fulfill that mandate, Congress authorized

the Corps to mitigate damages resulting from “any

water resources project under [its] jurisdiction.” Id.

§ 2283(b)(1) (emphasis added). Indeed, Congress

expressly stated its intent that the Corps “include

environmental protection as one of the primary

missions of the Corps of Engineers in planning,

designing, constructing, operating, and maintaining

water resources projects.” See id. § 2316(a).

The district court did not err in concluding

that the Corps’s mitigation requirement was a

reasonable interpretation of this statutory scheme

and was therefore entitled to Chevron deference.

2.

Corps reasonably required White

Oak to bear costs.

White Oak next argues that the mitigation

requirement fails Chevron deference because it adds

private entities to a statutory scheme that

unambiguously excludes them. Again, we disagree.

Contrary to White Oak’s contention, the

WRDA does not unambiguously exclude the option of

shifting mitigation costs to third-parties. In fact,

“mitigation costs . . . shall be subject to cost sharing

or reimbursement to the same extent as such other

project costs are shared or reimbursed.” Id. § 2283(c).

13a

Without a doubt, the WRDA does not define

the meaning of “third-party mitigation arrangement”

in great specificity. There is also a lack of detail on

the “extent” of permissible “cost sharing” and

“reimbursement.” That is to say, the WRDA is

ambiguous on the question presented. As a result, “the

question for the court is whether the [Corps’s] answer

[to this issue] is based on a permissible construction

of the statute.” See Chevron, 467 U.S. at 843.

In light of the statutory provisions cited

above, we conclude that it is. The district court did

not err in concluding that the Corps reasonably

interpreted the WRDA in shifting the initial

mitigation costs to private parties.

III.

The purchase requirement is permissible.

White Oak argues unconvincingly that the

Corps violated the WRDA by limiting White Oak’s

mitigation options to the purchase of upland

mitigation bank credits.

White Oak’s argument is essentially that the

Corps violated the WRDA’s preference for “in-kind”

mitigation by demanding the purchase of “wetland”

mitigation bank credits for the loss of “upland”

forests. This argument fails to recognize that the

WRDA only requires “in-kind” mitigation “to the

extent possible.” 33 U.S.C. § 2283(d)(1). There is no

evidence that the Corps unreasonably concluded that

in-kind mitigation was not possible in this instance.

The parties agree that no upland BLH credits

were available to purchase. White Oak’s only

proposed in-kind alternative was its conservation

lien plan. The Corps rejected this alternative,

14a

however, on the grounds that it would be less

efficient, timely, and effective than requiring the

purchase of wetland mitigation credits. Further, the

Corps stated that it did not have the resources to

devote to the extensive process of reviewing the plan.

White Oak has presented no evidence that the Corps

unreasonably reached that conclusion.

We therefore agree with the district court that

the purchase requirement “is in line with the plain

language of the WRDA and is a reasonable

interpretation thereof.”

IV.

There was no unconstitutional taking.

White Oak contends that the Corps’s

mitigation and purchase requirements amount to an

unconstitutional taking under the Fifth Amendment.

The argument is meritless. Indeed, White Oak

cannot meet either prong of a takings analysis.

“When evaluating whether governmental

action constitutes a taking, a court employs a twopart test.” Hearts Bluff Game Ranch, Inc. v. United

States, 669 F.3d 1326, 1329 (Fed. Cir. 2012). “First,

as a threshold matter, the court determines whether

the claimant has identified a cognizable Fifth

Amendment property interest that is asserted to be

the subject of the taking.” Id.; see also Dennis

Melancon, Inc. v. New Orleans, 703 F.3d 262, 269

(5th Cir. 2012) (“[A] plaintiff first must demonstrate

that he has a protectable property interest[.]”).

“Second, if the court concludes that a cognizable

property interest exists, it determines whether that

property interest was ‘taken.’” Hearts Bluff, 669 F.3d

at 1329.

15a

White Oak’s takings claim fails to assert

either a protected property interest or a taking.

First, White Oak has no property interest in

selling borrow material to the Corps’s contracting

program. In its efforts to sell to the Corps, White

Oak voluntarily5 entered into a market over which

the Corps possessed strong regulatory control. “[A]

protected property interest simply ‘cannot arise in

an area voluntarily entered into . . . which, from the

start, is subject to pervasive Government control[.]’”

Dennis, 703 F.3d at 272 (omission in original)

(quoting Mitchell Arms, Inc. v. United States, 7 F.3d

212, 216 (Fed. Cir. 1993)).

Second, even if White Oak could allege a

protected property interest, such as the right to sell

borrow to non-Corps entities or otherwise

commercially develop its property,6 White Oak has

White Oak claims that the Corps “forced” it to

excavate clay on part of Idlewild, which then effectively

deprived White Oak of use of the remaining land because of the

prohibitive mitigation costs needed to continue excavation.

There is no evidence in the record that the Corps ever “forced”

White Oak to pursue participation in the borrow material

market.

5

White Oak purchased Idlewild with the intent to

commercially develop the property, and argues that clearing

the BLH on Idlewild cannot require mitigation under the

WRDA because White Oak cleared the BLH prior to obtaining a

Corps’s contract and would have done so for its planned

development project either way. This argument is unpersuasive

for at least three reasons. First, it is unsupported by the record.

There is no indication that White Oak cleared Idlewild for any

purpose other than participation in the federal borrow material

market. Second, the Corps only required mitigation if the

borrow material was used for a Corps project. Therefore, if

White Oak cleared Idlewild for a non-Corps related purpose, no

6

16a

failed to show that the Corps ever “took” any

property. From the beginning, the Corps informed

White Oak that it was “free to utilize [its] property

in any manner [it] choose[s].” The Corps then preapproved Idlewild as a borrow site, thus granting

White Oak the ability to mine borrow material for

Corps’s projects, subject to the mitigation

requirement. At worst, the mitigation requirement

frustrated White Oak’s ability to sell its clay to

Corps’s contractors at a competitive price. However,

“[f]rustration and appropriation are essentially

different things.” Omnia Commercial Co. v. United

States, 261 U.S. 502, 513 (1923). White Oak “has

done no more than [complain] that a prospective

business opportunity was lost.” See United States v.

Grand River Dam Auth., 363 U.S. 229, 236 (1960).

Indeed, White Oak’s owner could not identify any

damage to White Oak outside a lost business

opportunity. This is insufficient to establish a

“taking” under the Fifth Amendment. See AllainLebreton Co. v. Dep’t of Army, 670 F.2d 43, 45 (5th Cir.

1982) (finding no taking where “the company’s

complaint [was] that the Corps refuses to conduct its

affairs so as to help the company develop its land”).

Accordingly, the district court did not err in

granting the Corps summary judgment on White

Oak’s takings claim.

mitigation would be required. Third, White Oak’s theory would

allow parties to avoid the WRDA’s mitigation requirements by

impacting the environment prior to receiving a Corps contract,

even when that impact results from a clear intent to sell to the

Corps. This would be contrary to Congress’ intent that the

Corps mitigate impacts resulting from Corps’s projects. See 33

U.S.C. § 2316(a).

17a

V.

No error in declining

supplemental evidence.

to

consider

Finally, White Oak urges us to consider the

Corps’s Comprehensive Environmental Document

(“CED”), which was not part of the administrative

record during summary judgment briefing, because,

according to White Oak, the CED “is inconsistent

with the decision to impose mitigation” on Idlewild.

We decline to do so.

“When reviewing an agency action under the

APA, we review ‘the whole record or those parts of it

cited by a party.’” Medina Cty. Envtl. Action Ass’n v.

Surface Transp. Bd., 602 F.3d 687, 706 (5th Cir.

2010) (quoting 5 U.S.C. § 706). “Supplementation of

the administrative record is not allowed unless the

moving party demonstrates ‘unusual circumstances

justifying a departure’ from the general presumption

that review is limited to the record compiled by the

agency.” Id. (quoting Am. Wildlands v. Kempthorne,

530 F.3d 991, 1002 (D.C. Cir. 2008)).

Neither party cites persuasive authority that

evidence of an inconsistent agency decision is the type

of “unusual circumstance” justifying supplementation.

Nonetheless, we need not determine that issue. Even

assuming that evidence of an inconsistent decision

could justify supplementation, the district court

correctly determined that the CED is not

inconsistent with record evidence and adds nothing

to the consideration of this case.

CONCLUSION

Having found no error in the district court’s

analysis, we AFFIRM in full.

18a

[ENTERED: September 14, 2016]

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF LOUISIANA

WHITE OAK REALTY, LLC

CIVIL ACTION

VERSUS

NO: 13–4761

UNITED STATES ARMY CORP

OF ENGINEERS, ET AL.

SECTION “H”(3)

ORDER AND REASONS

Before the Court are Cross-Motions for

Summary Judgment (Docs. 100, 102). For the

following reasons, summary judgment is granted in

favor of Defendants.

BACKGROUND

This is a civil action for declaratory and

injunctive relief. The plaintiffs are White Oak

Realty, LLC and Citrus Realty, LLC.

The

defendants are the United States Corps of Engineers

(the “Corps”) and various Corps employees. The

dispute involves mitigation requirements imposed by

the Corps on a tract of land in Southeast Louisiana

(“Idlewood Stage 2”), jointly owned by Plaintiffs.

In response to the devastation caused by

Hurricanes Katrina and Rita, Congress authorized

the Corps to undertake a series of projects

collectively known as the Hurricane and Storm

Damage Risk Reduction System (“HSDRRS”). One

of these projects involves the use of soil and clay

(“borrow material”) to reinforce levees and floodwalls

in the Gulf South. In order to respond to the

19a

unprecedented amount of borrow material needed

for this project, the Corps instituted the contractorfurnished borrow program. The contractor-furnished

borrow program allows landowners to have their

land pre-qualified as a suitable source for borrow

material based on certain requirements.1 These

government-approved properties are then placed on

a list for selection as supply sources by contractors

working on the levee project. Contractors may then

select a borrow supplier from that list, and the

borrow is excavated for use on the Corps’s projects.

At some point in 2010, Plaintiffs discovered

the presence of borrow material on their property.

They subsequently filed a “suitability determination”

with the Corps to confirm the borrow material could

be used in HSDRRS projects. Some of the property

(Idlewild Stage 1) was quickly qualified and clay

mining began. On other portions (Idlewild Stages 2

and 3), the Corps approved the land’s use for borrow

material but found that the excavation of borrow

material would cause “unavoidable impacts” to the

bottomland hardwood (“BLH”) forests on the

property, and therefore mitigation would be

required. In addition, the portions of the land that

were wetlands were excluded from excavation.

Plaintiffs, therefore, sought to mine clay only from

the uplands portions of Idlewild Stage 2 and that

area was later cleared of the BLH forest.

In a letter dated November 4, 2010, the Corps

notified Plaintiffs that Idlewood Stage 2 “appears to

be acceptable for use as a source” of borrow material.

The letter confirmed the preliminary report’s

1 Doc. 115-4, p. 12.

20a

determination that excavation would harm the

environment.

The letter required “proof of

mitigation to the Corps[] . . . prior to excavation.”

The Corps issued a similar letter on April 14, 2011,

reaffirming the requirement that the impacts to the

BLH forests on the land be mitigated. The letter

informed Plaintiffs that their “compensatory

mitigation requirements may be met” by obtaining

credits from select mitigation banks.

Plaintiffs subsequently hired Mitigation

Strategies, LLC (“Mitigation Strategies”) hoping to

convince the Corps of the “legal and factual errors

underlying [its] mitigation requirements.” Mitigation

Strategies argued to the Corps on numerous

occasions that mitigation was neither necessary nor

appropriate under the law. In the alternative, if

mitigation was required, Mitigation Strategies

argued the law required in-kind mitigation, rather

than the purchase of credits from mitigation banks.

The Corps disagreed. A February 20, 2013

letter from the District Commander reiterated the

Corps’s position that if borrow material from

Idlewood Stage 2 is used in connection with the

HSDRRS project, the impacts to the BLH forests on

that land must be mitigated (the “Mitigation

Requirement”). It further confirmed the Corps’s

position that such mitigation must occur through the

purchase of mitigation bank credits (the “Purchase

Requirement”).

As a result of the Corps’s position, Plaintiffs

filed this suit, arguing that the Water Resource

Development Act of 2007 (“WRDA”), 33 U.S.C.

§ 2201 et seq., does not require mitigation for

Idlewood Stage 2 or alternatively, that the WRDA

21a

does not authorize the Corps to mandate the

purchase of mitigation credits as the sole form of

compensatory mitigation.

Plaintiffs also assert

claims under the Takings Clause of the Fifth

Amendment.2 The parties have filed cross-motions

for summary judgment on all of Plaintiffs’ claims.

LEGAL STANDARD

“The [APA] allows a federal court to overturn

an agency’s ruling only if it is arbitrary, capricious,

an abuse of discretion, not in accordance with law, or

unsupported by substantial evidence on the record

taken as a whole.”3 The Court begins with the

“presumption that the agency’s decision is valid, and

the plaintiff has the burden to overcome that

presumption by showing that the decision was

erroneous.”4 The agency’s factual findings will be

upheld so long as they are supported by substantial

evidence.5

“The agency’s legal conclusions are

reviewed de novo, except for questions of statutory

interpretation, where the court owes substantial

deference to an agency’s construction of a statute

that it administers.”6

The Court must also be mindful of the twostep process of judicial review of agency action

Plaintiff’s due process claims have previously been

dismissed by this Court. Doc. 142.

2

3 Buffalo Marine Servs. Inc. v. U.S., 663 F.3d 750, 753

(5th Cir. 2011).

4 Tex. Clinical Labs, Inc. v. Sebelius, 612 F.3d 771, 775

(5th Cir. 2010).

5 Buffalo Marine Servs. Inc., 663 F.3d at 753.

6 Id.

22a

outlined in Chevron, U.S.A., Inc. v. Natural

Pursuant to

Resources Defense Council, Inc.7

Chevron, a court reviewing an agency’s construction

of a statute must first ask “whether Congress has

directly spoken to the precise question at issue.”8 If

Congressional intent is clear, “that is the end of the

matter.”9

If, however, the statute is silent or

ambiguous with regard to the specific issue, the

question then becomes whether agency action is

“based on a permissible construction of the

statute.”10 “If Congress has explicitly left a gap for

the agency to fill, there is an express delegation of

authority to the agency to elucidate a specific

provision of the statute by regulation. Such

legislative regulations are given controlling weight

unless they are arbitrary, capricious, or manifestly

contrary to the statute.”11 Indeed, the Court cannot

substitute its own construction of a statutory

provision for a reasonable interpretation made by

the administrator of an agency.”12

I.

Jurisdiction

LAW AND ANALYSIS

At the outset, Defendants argue that this

Court lacks jurisdiction under the APA to hear

Plaintiffs’ claims because no final agency action has

7 467 U.S. 837 (1984).

8 Id. at 842.

9 Id. at 843.

10 Id. at 843–44.

11 Id.

12 Id. at 844.

23a

taken place. Defendants originally propounded this

argument in their Motion to Dismiss.13 Under a Rule

12(b)(1) standard, this Court held that the Corps’s

February 20, 2013 letter constituted a final agency

action.14 Defendants have reurged this argument in

their summary judgment motion and argue that

Plaintiffs cannot carry the burden of proving that

the February 20 letter was “rights-determining.”

In order to be considered final, an agency

action must (1) “mark the consummation of the

agency’s decision-making process,” and (2) “be one by

which rights or obligations have been determined, or

from which legal consequences will flow.”15

Defendants contend that Plaintiffs cannot meet the

second prong because the February 20 letter merely

states the Corps’s opinions on the borrow program

requirements and the legal authority upon which it

relies. Defendants heavily on the Fifth Circuit’s

opinion in Belle Co. v. US Army Corp, which states

that a jurisdictional determination that the

plaintiff’s property contained wetlands was not a

final determination because the plaintiff had an

array of alternatives to choose from and was not

required to act in any particular way.16 After

13 Doc. 32.

14 Doc. 42.

15 Bennett v. Spear, 520 U.S. 154, 168–69 (1997).

16 Belle Co. v. U.S. Army Corps of Engineers, 761 F.3d

383 (5th Cir. 2014), cert. denied sub nom. Kent Recycling

Servs., LLC v. U.S. Army Corps of Engineers, 135 S. Ct. 1548

(2015), reh'g granted, order vacated, 136 S. Ct. 2427 (2016),

and cert. granted, judgment vacated sub nom. Kent Recycling

Servs., LLC v. U.S. Army Corps of Engineers, 136 S. Ct. 2427

(2016).

24a

Defendants filed their motion, however, the Supreme

Court reversed and remanded Belle for further

consideration in light of Army Corp v. Hawkes Co.17

In Hawkes, the Supreme Court held that a

jurisdictional determination that a particular piece

of property contains “waters of the United States”

and is subject to the Clean Water Act is a final

agency action.18 It stated that “[t]he definitive

nature of the approved [jurisdictional determination]

. . . gives rise to ‘direct and appreciable legal

consequences.’”19 Despite this, Defendants subsisted

at oral argument in their belief that no final agency

action has occurred in this case, and this Court

ordered supplemental briefing.

In their supplemental briefing, Defendants

argue that the February 20, 2013 letter at issue here

differs from the jurisdictional determination in

Hawkes and therefore does not amount to a final

agency action. Defendants argue that the letter

“requires nothing of [Plaintiffs] and they are free to

do as they choose with the property.”20 Defendants’

argument, however, ignores the Court’s analysis in

Hawkes, which states that a jurisdictional

determination declaring property as wetlands is a

final agency action because it results in legal

consequences, namely the loss of the five year safe

harbor. This is true despite the fact that such a

Kent Recycling Servs., LLC v. U.S. Army Corps of

Engineers, 136 S. Ct. 2427 (2016).

17

18 U.S. Army Corps of Engineers v. Hawkes Co., 136 S.

Ct. 1807 (2016).

19 Id.

20 Doc. 165.

25a

declaration does not require the property owner “to

do or refrain from doing anything to its property.”21

It simply notifies the property owner that a permit

will be required prior to taking certain actions on the

property.22 Indeed, just as in Hawkes, the letter at

issue here does not require the Plaintiffs to do or

refrain from doing anything but merely requires that

they show proof of mitigation prior to supplying

borrow material to the Corps. This requirement is a

“direct and appreciable legal consequence” for

Plaintiffs under the analysis set forth in Hawkes. In

addition, Defendants have not identified an

alternative route by which Plaintiffs could have the

Corps’s action reviewed. Accordingly, this Court

holds that the February 20, 2013 letter constitutes a

final agency action, and this Court therefore has

jurisdiction to hear Plaintiffs’ claims.

II.

The Mitigation Requirement

The Court next considers Plaintiffs’ argument

that the Corps’s Mitigation Requirement conflicts

with the plain language of the WRDA. Under

Chevron, this Court must first consider “whether

Congress has directly spoken to the precise question

at issue”—that is, whether the Corps can require

mitigation for the loss of BLH forests on property

from which contractor-supplied borrow material is

excavated for use in a Corps project. Plaintiffs allege

that the WRDA does not require mitigation for

impacts that do not directly result from a water

resource project. Specifically, Plaintiffs allege that

the WRDA is intended to address only those

21 Belle Co., 761 F.3d at 391.

22 Id.

26a

environmental impacts that directly result from a

water resource project—such as those impacts

sustained by the land on which a levee is erected—

and not those that result indirectly—such as those

sustained by land from which borrow material is

taken for use on the levee. Plaintiffs argue that

requiring mitigation for indirect impacts is

inconsistent with the statutory plan set forth by the

WRDA.

First, Plaintiffs argue that the WRDA

requires the Corps to assess potential environmental

impacts in advance of a project and plan for

mitigation of those impacts.23 Indeed, 33 U.S.C.

§ 2283(d)(1) states that a proposal for a water

resources project must contain “a recommendation

with a specific plan to mitigate for damages to

ecological resources, including terrestrial and

aquatic resources, and fish and wildlife losses

created by such project.” Plaintiffs argue that the

Mitigation Requirement conflicts with this mandate

because Defendants are unable to assess and plan

for the impacts resulting from the excavation of

contractor-furnished borrow material until the

contractor selects a borrow supplier. Because it is

not known at the outset which suppliers will be

selected and the environmental impact of extracting

borrow material from the land owned by those

suppliers, the Corps cannot plan to mitigate those

impacts in advance. Plaintiffs argue that the total

project impact will not be known before the project is

begun, making it impossible to comply with the

proposal requirements of 33 U.S.C. § 2283(d).

23 See 33 U.S.C. § 2283(d).

27a

Second, Plaintiffs argue that the Mitigation

Requirement conflicts with the WRDA’s requirement

that mitigation must occur before construction

begins on the project (and therefore before the

impact has occurred). Indeed, the WRDA states that

mitigation “shall be undertaken or acquired before

any construction of the project . . . commences, or []

shall be undertaken or acquired concurrently with

lands and interests in lands for project purposes

(other than mitigation of fish and wildlife losses.)”24

Plaintiffs argue that the Mitigation Requirement is

inconsistent with the WRDA because it does not

require mitigation prior to construction, but rather,

only requires that mitigation occur before borrow is

excavated from a supplier’s land.

In addition,

mitigation is only required if a supplier is selected to

provide borrow for the project. However, the

impact—the destruction of BLH forests—may have,

as here, long predated the mitigation.

Finally, Plaintiffs argue that the Mitigation

Requirement conflicts with the WRDA’s budget

requirements. Pursuant to 33 U.S.C. § 2283, costs

of mitigation must be accounted for in the project

budget. Plaintiffs contend that the Mitigation

Requirement allows the Corps to shift these costs to

private contractors and suppliers and circumvent

their inclusion in the project budget.

In response to Plaintiffs’ argument that the

Mitigation Requirement is inconsistent with the

prior

planning,

budgeting,

and

mitigating

requirements of the WRDA, Defendants point to the

plain language of the WRDA, which states that the

24 33 U.S.C. § 2283(a).

28a

Corps must mitigate for losses “resulting from any

water resources project” or “created by such project.”

Indeed, the WRDA, does not address a distinction

between “direct” and “indirect” impacts, as Plaintiffs

have coined them. Based on the plain language of

the WRDA, Defendants argue that the Corps’s

determination that impacts to borrow sites resulting

from levee construction must be mitigated is per se

reasonable and rationally based. They argue that

this provision is unambiguous and thus entitled to

deference under Chevron step one.

In assessing both of the parties’ arguments, it

is clear to this Court that the WRDA is ambiguous

as to whether the Corps can require mitigation for

the loss of BLH forests on property from which

contractor-supplied borrow material is excavated for

use in building levees as part of the HSDRRS

project. While the plain language of the statute

seems to indicate that all impacts must be mitigated,

Plaintiffs point to some of the statute’s requirements

that may be inconsistent with such a rule. For

instance, the WRDA could be read, as Plaintiffs

have, to require that the Corps submit a proposal

and budget for the mitigation of all impacts of a

water resources project at the time authorization is

sought for that project.25 If the WRDA mandates

such a comprehensive proposal, then the Mitigation

Requirement, through which the extent of mitigation

required is not determined until a supplier is

selected by a contractor, would be inconsistent with

this mandate.

25 See 33 U.S.C. § 2283(d)(1).

29a

Having found that the WRDA is ambiguous as

to the precise question at issue, this Court must

move to Chevron Step Two and determine “whether

the agency’s answer is based on a permissible

construction of the statute.” This Court holds that it

is.

As Plaintiffs point out, “[t]he WRDA statutory

scheme contemplates that the Corps, not private

parties, will be conducting mitigation.”26 Typically if

borrow is required for a Corps project, the Corps will

acquire a borrow site and pay just compensation to

the owner.27 The Corps then mitigates for impacts

caused by excavation on the land that it has

acquired. That said, the aftermath of Hurricane

Katrina was not a typical situation. The project of

reinforcing the levees and floodwalls in the New

Orleans area, which required an “unprecedented

amount of borrow material,” was undertaken on an

expedited schedule “in light of the risk posed to the

area by an unfinished system.”28 “In order to

facilitate the use of vast amounts of borrow material

needed to construct the [HSDRRS], [the Corps]

determined that it was in the best interest of the

Government for certain construction contracts to

require the contractor to furnish its own borrow

material.”29 The Corps therefore instituted the

contractor-furnished borrow program, a shift from

usual protocol.

26 Doc. 111.

27 Doc. 102-1.

28 Doc 102-1.

29 Doc. 115-17, p. 19.

30a

While

the

contractor-furnished

borrow

program may differ from the typical process in which

borrow is furnished by the government, the end

result is the same—borrow is excavated from land

for use on a Corps project. That said, this Court can

see no policy reason why mitigation should not still

be required. “Plaintiffs do not contest that the Corps

must mitigate for impacts caused by the Corps’s own

borrow excavation in the government-furnished

borrow program, or elsewhere.”30 The Corps cannot

then bypass this obligation by using contractorfurnished borrow instead. Such a holding would be

counter to the policy espoused by the WRDA.

Policy arguments aside, the Mitigation

Requirement is a reasonable interpretation of the

WRDA. The WRDA plainly states that the Corps is

required to mitigate for any impacts “resulting from”

or “created by” a water resources project such as the

HSDRRS. Plaintiffs admit that the impacts created

on land from which government-furnished borrow is

excavated are project impacts that must be

mitigated. It necessarily follows, then, that impacts

created on the land from which contractor-furnished

borrow is excavated are project impacts as well.

Each are effects on the land from which borrow is

removed for a Corps’s project. The WRDA does not

differentiate between impacts that are created on

land owned by the government or otherwise. This

Court finds that the Corps was reasonable in

reaching this conclusion and requiring mitigation of

the impacts to BLH on these sites, especially in light

of the substantial deference owed to an agency’s

construction of a statute under its administration.

30 Doc 111, p. 3.

31a

Accordingly, this Court holds that the Corps’s

imposition of the Mitigation Requirement is based on

a permissible construction of the statute and does

not violate the WRDA.

III.

The Purchase Requirement

Having held that the Mitigation Requirement

complies with the WRDA, this Court must now

address Plaintiffs’ arguments regarding the

Purchase Requirement, which mandates that the

only way to satisfy the Mitigation Requirement is to

purchase mitigation bank credits. The question at

issue here is whether the Corps can require the

purchase of wetland mitigation credits as the sole

option for satisfying the Mitigation Requirement.

Plaintiffs argue that this requirement is arbitrary

and capricious.

The WRDA speaks expressly to the mitigation

of BLH forests, stating that “mitigation plans shall

ensure that impacts to bottomland hardwood forests

are mitigated in-kind, and other habitat types are

mitigated to not less than in-kind conditions, to the

extent possible.”31 In-kind mitigation of the impacts

to upland BLH forests requires the purchase of

upland mitigation credits from the same region or an

alternative mitigation plan addressing upland BLH

forests. Instead, the Corps has required Plaintiffs to

purchase credits from a wetland mitigation bank in

the same region.

At oral argument, the parties agreed there are

no upland BLH mitigation credits available to

purchase in the region at issue. In addition, the

31 See 33 U.S.C. § 2283(d).

32a

record reveals that the Corps felt that consideration

of individual mitigation projects would be less

efficient, timely, and effective than requiring the

purchase of credits. The Corps explained that “[t]he

creation and approval of a mitigation plan . . . is a

lengthy and detailed process that can take a year or

more. . . . Not only does the [Corps] not have the

manpower to devote to this process for every

contractor-furnished borrow site, but it would

significantly delay the approval and use of those

sites.”32 As previously discussed, the HSDRRS was

undertaken on an expedited basis, and the Corps did

not feel it had time to consider individual mitigation

plans. “The advantage of mitigation banks is that

they have already been approved and credits are

readily available.”33 Accordingly, for all intents and

purposes, mitigation in-kind was not possible, and

the Corps resorted to the next most applicable form

of mitigation—wetland BLH mitigation bank

credits from the same region. This decision was not

arbitrary and capricious, but rather, was in line with

“the objective of ensuring that Risk Reduction

System projects are expeditiously built to protect the

residents of Greater New Orleans.”34

In addition, Corps regulations reveal a

preference for mitigation through mitigation bank

credits.35 The regulations reveal that bank credits are

preferred for several reasons: (1) they can “help reduce

risk and uncertainty;” (2) they can “help reduce risk

32 Doc. 115-17, p. 19–20.

33 Id.

34 Doc. 106.

35 33 C.F.R. § 332.3; see also 33 U.S.C. § 2317b.

33a

that mitigation will not be fully successful;” (3) they

“typically involve larger, more ecologically valuable

parcels, and more rigorous scientific and technical

analysis, planning and implementation than

permittee-responsible mitigation;” (4) they require

“site identification in advance, project-specific

planning, and significant investment of financial

resources that is often not practicable for many inlieu fee programs.”36 Indeed, the Corps admits that

pursuant to the WRDA it is ultimately responsible

for ensuring that mitigation is completed. Requiring

the purchase of mitigation credits, then, eliminates

the possibility that the Corps will be required to step

in to complete a mitigation project or that mitigation

will go unfinished.

Finally, Plaintiffs make much ado about the

Corps’s requirement that they pay for mitigation,

arguing that it is the Corps’s responsibility to pay for

and undertake mitigation. Indeed, this Court agrees

that the ultimate responsibility for mitigation lies

with the Corps. The Mitigation and Purchase

Requirements put the initial onus on the landowner

or contractor to foot the bill for the mitigation

credits, but the cost will ultimately lie with the

Corps. As the mitigation credits increase the

contractors’ expenses, so too will the amount it

charges the Corps for those services increase. This

Court does not find then that the Corps has, as

Plaintiffs put it, attempted to shift its

responsibilities under the WRDA by implementing

the Mitigation and Purchase Requirements.

36 33 C.F.R. § 332.3(b)(2).

34a

For all of the foregoing reasons, this Court

holds that the Purchase Requirement is in line with

the plain language of the WRDA and is a reasonable

interpretation thereof. The Corps was not arbitrary

or capricious in requiring the purchase of mitigation

credits to satisfy the Mitigation Requirement.

IV.

Takings Claim

Finally, Plaintiffs allege the Corps’s actions

constitute a taking. The Takings Clause of the Fifth

Amendment prohibits the government from taking

private property for public use without just

compensation.37 Plaintiffs allege that the Mitigation

and Purcahse Requirements amount to takings

under the analysis set forth in Nollan v. California

Coastal Comm’n, 483 U.S. 825 (1987), Dolan v. City

of Tigard, 512 U.S. 374 (1994), and Koontz v. St.

Johns River Water Management District, 133 S. Ct.

2586 (2013), because the Corps has “commanded

that Plaintiffs relinquish funds in order to use their

property in a particular way.” Plaintiffs seek a

declaratory judgment that “the Corps’s actions

violate the Takings Clause of the Constitution’s Fifth

Amendment” and an injunction allowing Plaintiffs to

forgo the Corps’s Mitigation Requirement.38

In response, Defendants argue that the

takings cases cited by Plaintiffs are inapplicable

U.S. Const. amend. V, cl.4. The purpose of the

Takings Clause is to prevent the government “from forcing

some people alone to bear public burdens which, in all fairness

and justice, should be borne by the public as a whole.”

Armstrong v. United States, 364 U.S. 40, 49 (1960).

37

38 Doc. 31, p. 30.

35a

here.39 Defendants point out that Nollan, Dolan,

and Koontz each consider whether the conditions of a

land use permit amount to a taking. Unlike these

cases, Plaintiffs’ land is not subject to any regulatory

action or land-use permit, but instead, the

Mitigation and Purchase Requirements are

obligations set forth in the Corps’s contracts with

levee contractors. Defendants argue that, therefore,

this line of cases and the per se takings analysis used

therein are inapplicable. Plaintiffs rebut that the

Mitigation and Purchase Requirements are

regulatory despite being imposed through a contract

because they implicate the sovereign interest of the

federal government and its public policy. Plaintiffs

contend that the Mitigation and Purchase

Requirements are regulatory actions subject to a per

se takings analysis.

In support of their position, Plaintiffs point to

cases discussing whether a law is regulatory or

proprietary as part of a federal preemption

analysis.40 While these cases provide some helpful

Defendants also propound jurisdictional arguments

already rejected by this Court. Doc. 142.

39

See Se. Louisiana Bldg. & Const. Trades Council,

AFL-CIO v. Louisiana ex rel. Jindal, 107 F. Supp. 3d 584, 597–

603 (E.D. La. 2015) (discussing whether a state law prohibiting

project labor agreements was proprietary or regulatory and

thus subject to preemption by the NLRA); Bldg. & Const.

Trades Dep’t, AFL-CIO v. Allbaugh, 295 F.3d 28, 36 (D.C. Cir.

2002) (discussing whether an executive order that that

provided that no federal agency could require bidders for a

construction contract to enter into a project labor agreement

was regulatory or proprietary and thus preempted by the

NLRA); Cardinal Towing & Auto Repair, Inc. v. City of

Bedford, Tex., 180 F.3d 686, 696 (5th Cir. 1999) (discussing

40

36a

language regarding whether the government’s

actions are proprietary or regulatory, none address

the question at hand.41 The issue is whether the per

se takings analysis used in Dolan, Nollan, and

Koontz should be extended to apply to conditions set

forth by contract, rather than in land use permits.

Plaintiffs have not provided this Court with any case

using a per se takings analysis when the condition at

issue was contractual. Accordingly, this Court

declines to extend the per se takings analysis to this

matter.

Even assuming, however, that the per se

takings analysis applied here, Plaintiffs could not

succeed on their takings claim regarding the

Mitigation Requirement. In Koontz, the Supreme

Court held that a monetary exaction for mitigation

as a condition of a land use permit must have an

essential nexus and rough proportionality to the

impacts of the proposed development.42 Regulations

lacking a nexus and proportionality will be

considered takings.

Plaintiffs argue that the

Mitigation Requirement cannot satisfy this test

because the BLH forests on Idlewild Stage 2 were

cut down years ago. “The requirement that those

whether a towing ordinance was proprietary or regulatory and

thus preempted by federal law).

41 See Allbaugh, 295 F.3d at 36 (“A condition that the

Government imposes in awarding a contract or in funding a

project is regulatory only when, as the Supreme Court

explained in Boston Harbor, it ‘addresse[s] employer conduct

unrelated to the employer’s performance of contractual

obligations to the [Government].’”).

42 Koontz v. St. Johns River Water Mgmt. Dist., 133 S.

Ct. 2586, 2599 (2013).

37a

trees now be replaced is not sufficiently related to

the excavation of clay for HSDRRS use because the

trees are gone whether Plaintiffs excavate and sell

This Court finds,

clay to the Corps or not.43

however, that Plaintiffs removed the trees at issue

after their land had been approved for use in the

contractor-furnished borrow program and the

Mitigation Requirement had been instituted.

Plaintiffs therefore ask this Court to find that the

Mitigation Requirement constitutes a taking by

looking to events that occurred after its

announcement. Plaintiffs cannot convert the

Mitigation Requirement into a taking by their own

unilateral acts. Such a holding would lead to absurd

results, in which parties subject to mitigation

requirements could simply destroy the valued

resources to avoid mitigating their loss. This Court

holds that the Mitigation Requirement has the

essential nexus and proportionality to the impacts

on the BLH forests on Idlewild Stage 2. The

requirement requires mitigation as mandated by the

WRDA for only those portions of BLH that are

affected by the excavation of borrow material for use

on the HSDRRS project. The WRDA communicates

the government’s clear interest in protecting BLH

forests. Accordingly, Plaintiffs would not succeed on

their per se takings claim even if such analysis

applies in these circumstances.

CONCLUSION

For the foregoing reasons, summary judgment

is granted in favor of Defendants. Plaintiffs’ APA

and per se takings claims are dismissed with

43 Doc 100-1, p. 43.

38a

prejudice. The only remaining claim is Plaintiffs’

regulatory takings claim.

New Orleans, Louisiana, this 14th day of

September, 2016.

/s/

JANE TRICHE MILAZZO

UNITED STATES DISTRICT JUDGE

39a

[ENTERED: March 28, 2017]

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF LOUISIANA

WHITE OAK REALTY, LLC

CIVIL ACTION

VERSUS

NO: 13–4761

UNITED STATES ARMY CORP

OF ENGINEERS, ET AL.

SECTION “H”(3)

ORDER AND REASONS

Before the Court is Defendants’ Motion for

Summary Judgment (Doc. 185). For the following

reasons, the Motion is GRANTED.

BACKGROUND

This is a civil action for declaratory and

injunctive relief. The plaintiffs are White Oak

Realty, LLC and Citrus Realty, LLC.

The

defendants are the United States Corps of Engineers

(the “Corps”) and various Corps employees. The

dispute involves mitigation requirements imposed by

the Corps on a tract of land in Southeast Louisiana

(“Idlewood Stage 2”), jointly owned by Plaintiffs.

In response to the devastation caused by

Hurricanes Katrina and Rita, Congress authorized

the Corps to undertake a series of projects

collectively known as the Hurricane and Storm

Damage Risk Reduction System (“HSDRRS”). One

of these projects involves the use of soil and clay

(“borrow material”) to reinforce levees and floodwalls

in the Gulf South. In order to respond to the

unprecedented amount of borrow material needed

40a

for this project, the Corps instituted the contractorfurnished borrow program. The contractor-furnished

borrow program allows landowners to have their

land pre-qualified as a suitable source for borrow

material based on certain requirements.1 These

government-approved properties are then placed on

a list for selection as supply sources by contractors

working on the levee project. Contractors may then

select a borrow supplier from that list, and the

borrow is excavated for use on the Corps’s projects.

At some point in 2010, Plaintiffs discovered

the presence of borrow material on their property.

They subsequently filed a “suitability determination”

with the Corps to confirm the borrow material could

be used in HSDRRS projects. Some of the property

(Idlewild Stage 1) was quickly qualified and clay

mining began. On other portions (Idlewild Stages 2

and 3), the Corps approved the land’s use for borrow

material but found that the excavation of borrow

material would cause “unavoidable impacts” to the

bottomland hardwood (“BLH”) forests on the

property, and therefore mitigation would be

required. In addition, the portions of the land that

were wetlands were excluded from excavation.

Plaintiffs, therefore, sought to mine clay only from

the uplands portions of Idlewild Stage 2 and that

area was later cleared of the BLH forest.

In a letter dated November 4, 2010, the Corps

notified Plaintiffs that Idlewood Stage 2 “appears to

be acceptable for use as a source” of borrow material.

The letter confirmed the preliminary report’s

determination that excavation would harm the

1 Doc. 115-4, p. 12.

41a

environment.

The letter required “proof of

mitigation to the Corps[] . . . prior to excavation.”

The Corps issued a similar letter on April 14, 2011,

reaffirming the requirement that the impacts to the

BLH forests on the land be mitigated. The letter

informed Plaintiffs that their “compensatory

mitigation requirements may be met” by obtaining

credits from select mitigation banks.

Plaintiffs subsequently hired Mitigation

Strategies, LLC (“Mitigation Strategies”) hoping to

convince the Corps of the “legal and factual errors

underlying [its] mitigation requirements.” Mitigation

Strategies argued to the Corps on numerous

occasions that mitigation was neither necessary nor

appropriate under the law. In the alternative, if

mitigation was required, Mitigation Strategies

argued the law required in-kind mitigation, rather

than the purchase of credits from mitigation banks.

The Corps disagreed. A February 20, 2013

letter from the District Commander reiterated the

Corps’s position that if borrow material from Idlewood

Stage 2 is used in connection with the HSDRRS

project, the impacts to the BLH forests on that land

must be mitigated (the “Mitigation Requirement”). It

further confirmed the Corps’s position that such

mitigation must occur through the purchase of

mitigation bank credits (the “Purchase Requirement”).

As a result of the Corps’s position, Plaintiffs

filed this suit, arguing that the Water Resource

Development Act of 2007 (“WRDA”), 33 U.S.C.

§ 2201 et seq., does not require mitigation for

Idlewood Stage 2 or alternatively, that the WRDA

does not authorize the Corps to mandate the

42a

purchase of mitigation credits as the sole form of

compensatory mitigation. This Court has previously

dismissed all of Plaintiff’s claims on summary

judgment, save a regulatory takings claim.

Defendant has filed the instant Motion for Summary

Judgment seeking dismissal of that remaining claim.

LEGAL STANDARD

Summary judgment is appropriate “if the

pleadings, depositions, answers to interrogatories,

and admissions on file, together with affidavits, if

any, show that there is no genuine issue as to any

material fact and that the moving party is entitled to

a judgment as a matter of law.”2 A genuine issue of

fact exists only “if the evidence is such that a

reasonable jury could return a verdict for the

nonmoving party.”3

In determining whether the movant is entitled

to summary judgment, the Court views facts in the

light most favorable to the non-movant and draws all

reasonable inferences in his favor.4 “If the moving

party meets the initial burden of showing that there

is no genuine issue of material fact, the burden shifts

to the non-moving party to produce evidence or

designate specific facts showing the existence of a

genuine issue for trial.”5 Summary judgment is

2 Fed. R. Civ. P. 56(c) (2012).

3

Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248

(1986).

4 Coleman v. Houston Indep. Sch. Dist., 113 F.3d 528,

532 (5th Cir. 1997).

5 Engstrom v. First Nat’l Bank of Eagle Lake, 47 F.3d

1459, 1462 (5th Cir. 1995).

43a

appropriate if the non-movant “fails to make a

showing sufficient to establish the existence of an

element essential to that party’s case.”6 “In response

to a properly supported motion for summary

judgment, the non-movant must identify specific

evidence in the record and articulate the manner in

which that evidence supports that party’s claim, and

such evidence must be sufficient to sustain a finding

in favor of the non-movant on all issues as to which

the non- movant would bear the burden of proof at

trial.”7 “We do not . . . in the absence of any proof,

assume that the nonmoving party could or would

prove the necessary facts.”8 Additionally, “[t]he

mere argued existence of a factual dispute will not

defeat an otherwise properly supported motion.”9

LAW AND ANALYSIS

I.

Procedural History

As a threshold matter, Plaintiffs dispute the

appropriateness of considering Defendants’ second

motion for summary judgment. They argue that

Defendants’ motion is improper under the

scheduling order and should be considered under the

standard of a motion for reconsideration.

6 Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986).

7 John v. Deep E. Tex. Reg. Narcotics Trafficking Task

Force, 379 F.3d 293, 301 (5th Cir. 2004) (internal citations

omitted).

8 Badon v. R J R Nabisco, Inc., 224 F.3d 382, 394 (5th

Cir. 2000) (quoting Little v. Liquid Air Corp., 37 F.3d 1069,

1075 (5th Cir. 1994)).

9 Boudreaux v. Banctec, Inc., 366 F. Supp. 2d 425, 430

(E.D. La. 2005).

44a

This case has followed an unusual procedure.

Initially, the Court set a scheduling order

establishing a trial date, as well as a deadline for

non- evidentiary pre-trial motions. After the parties

filed a motion for judgment on the pleadings and

cross-motions for summary judgment, however, the

Court vacated the scheduling order pending

resolution thereof.10 The parties moved for summary

judgment on all claims except the regulatory taking

claim at issue herein. The Court granted summary

judgment in Defendants’ favor and dismissed all of

Plaintiffs’ claims, save their regulatory takings

claim. Thereafter, a scheduling conference was held

to select a trial date upon which to try Plaintiffs’

remaining claim. In addition to a trial date, the

Court set a new discovery deadline and pre-trial

motion deadline as well. Thereafter, the parties

conducted discovery, and Defendants filed the

instant motion for summary judgment within the

deadline set by the Court.11 Defendants argue that

the deposition testimony obtained after their first

motion for summary judgment was important in

making their arguments in the instant motion.

“Courts have found that a subsequent

summary judgment motion based on an expanded

record is permissible.”12 The Fifth Circuit has stated

that such a determination is in the district court’s

discretion.13

“That discretion may be exercised

10 Doc. 140.

11 Defendants requested a one week extension from the

date originally set in the scheduling order. Doc. 178.

12 Enlow v. Tishomingo Cty., Miss., 962 F.2d 501, 506

(5th Cir. 1992).

13 Id.

45a

whether or not new evidence is submitted with the

subsequent motion.”14 This Court, therefore, finds it

appropriate to allow Defendants’ successive

summary judgment motion. Defendants move for

summary judgment on a claim not yet addressed by

this Court after additional discovery and within the

deadlines set by the Court’s revised scheduling

order. It is in the interest of efficiency to review

Defendants’ motion in lieu of proceeding directly to a

potentially unnecessary trial.

Accordingly, this

Court rejects Plaintiffs’ procedural objections and

proceeds to the merits of Defendants’ motion.

II.

Defendants’ Arguments for Dismissal

The Fifth Amendment of the Constitution

prohibits the government from taking private

property without just compensation. “A ‘taking”‘

may occur either by physical invasion or by

regulation.”15 In Plaintiffs’ remaining claim, they

assert that the Purchase Requirement constitutes

a regulatory taking.

Plaintiffs seek equitable

relief—namely, exclusion from the Purchase

Requirement. Under the Supreme Court’s decision

in Penn Central Transportation Co. v. City of New

York, three key factors’ guide the regulatory

taking analysis: “(1) the economic impact on

the claimant; (2) the extent of interference with

the claimant’s investment-backed expectations;

and (3) the character of the government’s

14 Johnson v. PPI Tech. Servs., L.P., 605 F. App’x 366,

367 (5th Cir. 2015).

15 Hearts Bluff Game Ranch, Inc. v. United States, 669

F.3d 1326, 1328 (Fed. Cir. 2012).

46a

action.”16 “The Fifth Circuit has explained that ‘[i]n

order for regulatory action to rise to the level of an

unconstitutional taking, there must be a complete

deprivation of the owner’s economically viable use of

his property.’”17 Before a takings claim can be

considered, however, a court must determine

whether the plaintiff holds a property interest that

is protected by the Fifth Amendment.18 Defendants

allege that Plaintiffs cannot succeed on their

regulatory takings claim either because this Court

lacks jurisdiction over the claim or because Plaintiffs

lack a compensable property interest in the property

allegedly taken.

This Court will consider each

argument in turn.

A. Jurisdiction

At the outset, Defendants reassert many of

the arguments previously made in their Motion for

Judgment on the Pleadings alleging that this Court

lacks jurisdiction to hear Plaintiffs’ takings claim.

Defendants argue that Congress has not withdrawn

Tucker Act jurisdiction over Plaintiffs’ claims, and

thus Plaintiffs’ claims should be brought in the

United States Court of Federal Claims. This Court

has already addressed these arguments, and

Defendants’ renewed objection to jurisdiction does

not dissuade this Court from its prior holding.

16 Hackbelt 27 Partners, L.P. v. City of Coppell, 661 F.

App’x 843, 850 (5th Cir. 2016).

17 Laredo Rd. Co. v. Maverick Cty., Texas, 389 F. Supp.

2d 729, 739 (W.D. Tex. 2005) (quoting Matagorda County v.

Russell Law, 19 F.3d 215, 223 (5th Cir. 1994)).

18 See Ruckelshaus v. Monsanto Co., 467 U.S. 986, 1001

(1984).

47a

Accordingly, this Court again holds that it has

jurisdiction to hear Plaintiffs’ takings claims for the

reasons stated in Record Document 142.

B. Compensable Property Interest

Next, Defendants argue that Plaintiffs lack a

compensable property interest in the property that

they allege was taken. At the outset, the parties

dispute the nature of Plaintiffs’ takings claim.

Defendants characterize Plaintiffs’ claim as alleging

a taking of the clay itself as well as the business

opportunity to sell the clay as part of the HSDRRS

project. They argue that Plaintiffs’ ownership of

Idlewild Stage 2 does not give them a right to insist

that their clay be purchased by the Corps, to demand

they be exempt from the Purchase Requirement, or

to dictate the terms of the Corps’s contracts.

Plaintiffs, on the other hand, characterize

their claim as one for a loss of rights in an existing

asset. They argue that their right to mine the borrow

material from Idlewild Stage 2 is inherent in their

interest in the property and that the Purchase

Requirement destroyed the right to realize profits

from that material. Plaintiffs argue that ownership

“means that a landowner has the right to exercise

those property rights that are inherent in ownership,

such as mining and realizing the value of subsurface minerals, and it is that interest that

Defendants have destroyed in this case.”

“Property interests . . . are not created by the

Constitution. Rather, they are created and their

dimensions are defined by existing rules or

understandings that stem from an independent

48a

source such as state law.”19 In order to identify the

“existing rules,” a court must identify “the group of

rights” inhering to a party’s relation to a physical

thing.20

[U]nder Louisiana law, the essential

features of the “bundle of rights”

commonly characterized as “property”

are: (1) usus—the right to use or

possess, i.e., hold, occupy, and utilize

the property; (2) abusus—the right to

abuse or alienate, i.e., transfer, lease,

and encumber the property, and (3)

fructus—the right to the fruits, i.e., to

receive and enjoy the earnings, profits,

rents, and revenues produced by or

derived from the property.21

Under Louisiana law, the borrow material on

Idlewild Stage 2 is a “product.” Products are things

the production of which result in the diminution of

the property.22 Products belong to the owner of the

property.23

The Court therefore agrees that

Plaintiffs have a right to and interest in the products

of Idlewild Stage 2—that is, they have a right to

receive earnings from the borrow material derived

from the property. The Purchase Requirement,

however, does not destroy Plaintiffs’ right to the

19 Id.

Dennis Melancon, Inc. v. City of New Orleans, 703

F.3d 262, 269 (5th Cir. 2012).

20

21 Id.

22 La. Civ. Code art. 488.

23 Id.

49a

products of the land as Plaintiffs allege. The

requirement does not affect their right to mine and

sell the borrow material on their property. Rather,

Defendants’ characterization is more fitting—the

Purchase Requirement resulted in the taking of a

business opportunity. Specifically, the Purchase

Requirement lessened the value of the sale of the

borrow material for use on the HSDRRS project. The

law is clear that such is not a compensable property

interest. “The sovereign must only pay for what it

takes, not an opportunity the owner loses.”24

In Hearts Bluff Game Ranch v. U.S., the

plaintiff alleged a taking when the Corps denied it a

permit to create a mitigation bank on its property.25

The Federal Circuit Court held that the plaintiff did

not have a compensable property right in obtaining a

mitigation bank permit.26

It stated that even

without the permit, the plaintiff was “still able to

sell, assign, or transfer the land, or exclude others

from its use, as it always was able to do.”27 The

court went on to say that it has “rejected claims of a

cognizable property interest in government

programs where the government has discretionary

authority to deny access to that program.”28

In Schooner Harbor Ventures, Inc. v. U.S., the

plaintiff alleged a takings claim when it was

Allain-Lebreton Co. v. Dep’t of Army, New Orleans

Dist., Corps of Engineers, 670 F.2d 43, 45 (5th Cir. 1982).

24

25 Hearts Bluff Game Ranch, Inc., 669 F.3d at 1328.

26 Id. at 1331–32.

27 Id. at 1331.

28 Id.

50a

required to give seventy-seven acres of property to

the Fish and Wildlife Service (“FWS”) to be used as a

wildlife refuge in order to sell another parcel of land

to the U.S. Navy.29 The plaintiff alleged that “it

could not sell to the Navy without meeting the

Navy’s conditions, and that FWS’s determination of

the scope of those conditions constitutes a taking.”30

The Federal Circuit Court agreed with the lower

court’s decision that the plaintiff did not have a

compensable right to sell its property to the United

States without any conditions imposed upon the

sale.31 It noted that the conditions did not attempt

to limit to whom plaintiff sold the property. “[T]he

only possible direct limitation on its right of

alienation was . . . the inability to sell [to the Navy]

without conditions.”32

As in these cases, here, the only limitation on

Plaintiffs’ right to sell the borrow material on its

property is the condition that it is required to

purchase mitigation credits if the borrow will be

used in the HSDRRS project. The imposition of this

condition is in the Corps’s sole discretion, and it does

not destroy any of the “bundle of rights” that

Plaintiffs have in owning the land. Plaintiffs are still

entitled to mine and sell the borrow material on

their property. Accordingly, Plaintiffs do not have a

29 Schooner Harbor Ventures, Inc. v. United States, 569

F.3d 1359, 1361 (Fed. Cir. 2009).

30 Id. at 1364.

31 Id. The court went on to say that the district court

erred in not focusing on the plaintiff’s right to develop its land

without restriction.

32 Id.

51a

compensable property interest in selling their

borrow material for use in the HSDRRS without

satisfying the Purchase Requirement.33 They

therefore cannot succeed on their regulatory takings

claim, and the claim must be dismissed.

CONCLUSION

For the foregoing reasons, Defendants’ Motion

for Summary Judgment is GRANTED, and

Plaintiffs’

claims

are

DISMISSED

WITH

PREJUDICE.

New Orleans, Louisiana, this 28th day of

March, 2017.

/s/

JANE TRICHE MILAZZO

UNITED STATES DISTRICT JUDGE

33 Defendants also argued that Plaintiffs did not even

own the borrow material on Idlewild Stage 2 at the time of the

alleged taking. However, in light of its holding, this Court need

not address this argument.

52a

[ENTERED: December 11, 2013]

IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF

LOUISIANA

WHITE OAK REALTY

LLC, and CITRUS

REALTY, LLC,

)

)

)

)

Plaintiffs,

)

CIVIL ACTION

)

NO. 13-04761

v.

)

)

JUDGE JANE

UNITED STATES ARMY )

TRICHE MILAZZO

CORPS OF ENGINEERS; )

LIEUTENANT

) MAGISTRATE DANIEL

GENERAL THOMAS P. )

E. KNOWLES, III

BOSTICK, United States )

Army Chief of Engineers, )

in his official capacity;

)

MAJOR GENERAL

)

JOHN W. PEABODY,

)

Commander, Mississippi )

Valley Division, United

)

States Army Corps of

)

Engineers, in his official )

capacity; and COLONEL )

RICHARD L. HANSEN, )

Commander, News Orleans )

District, United States

)

Army Corps of Engineers, )

in his official capacity,

)

)

Defendants. )

53a

ORDER GRANTING PLAINTIFFS’

UNOPPOSED MOTION TO AMEND

COMPLAINT

For good cause shown and in the interests of

justice, Plaintiffs White Oak Realty, LLC and Citrus

Realty, LLC’s Consent Motion to Amend Complaint

is hereby GRANTED. Plaintiffs shall file their

Second Amended Complaint (in the exact form

attached to their Motion) within seven (7) days of the

entry of this Order.

Pursuant to the agreement of all parties:

(1)

Defendants will file their renewed

Motion to Dismiss within the time

period set forth in Federal Rule of Civil

Procedure 15(a);

(2)

Plaintiffs will respond to Defendants’

renewed Motion to Dismiss in the time

period set forth in LR 7.5; and

(3)

The currently scheduled oral argument

date of March 5, 2014 will remain as

previously ordered.

IT

IS

FURTHER

ORDERED

that

Defendants' Motion to Dismiss (R. Doc. 25) is

DENIED WITHOUT PREJUDICE.

Signed this 11th day of December, 2013.

/s/

United States District Judge

Jane Triche Milazzo

54a

[ENTERED: September 4, 2014]

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF LOUISIANA

WHITE OAK REALTY, LLC

CIVIL ACTION

VERSUS

NO: 13–4761

UNITED STATES ARMY CORP

OF ENGINEERS, ET AL.

SECTION “H”(3)

ORDER AND REASONS

Before the Court is a Motion to Dismiss or

Alternatively for a More Definite Statement.1 For

the following reasons, the Motion is DENIED.

BACKGROUND2

This is a civil action for declaratory and

injunctive relief. The plaintiffs are White Oak

Realty, LLC and Citrus Realty, LLC.

The

defendants are the United States Corps of Engineers

(the “Corps”) and various Corps employees. The

dispute involves mitigation requirements imposed by

the Corps on a tract of land in Southeast Louisiana

(“Idlewood Stage 2”) jointly owned by Plaintiffs.

In response to the devastation caused by

Hurricanes Katrina and Rita, Congress authorized

the Corps to undertake a series of projects

collectively known as the Hurricane and Storm

Damage Risk Reduction System (“HSDRRS”). One

1 R. Doc. 32.

The following facts are drawn primarily from the

second amended complaint. See generally R. Doc. 31.

2

55a

of these projects involves the use of soil and clay

(“borrow material”) to reinforce levees and floodwalls

in the Gulf South. Under the applicable statutes and

regulations, the Corps determines whether a

particular location is a suitable source of borrow

material and if so whether mitigation of losses to

fish and wildlife is necessary.3

At some point in 2010, Plaintiffs discovered

the presence of borrow material in Idlewood

Stage 2.4 They subsequently filed a “suitability

determination” with the Corps to confirm the borrow

material could be used in HSDRRS projects. In

October 2010, the Corps issued a preliminary report

approving the use of borrow material from Idlewood

Stage 2 and nine other sites.5 The report found that

the excavation of borrow material from Idlewood

Stage 2 would cause “unavoidable impacts” to the

environment.6 Accordingly, if Idlewood Stage 2 were

ultimately approved for HSDRRS projects, the

landowner or contractor would be required to

provide compensatory mitigation prior to excavation

by purchasing credits from a mitigation bank.7

In a letter dated November 4, 2010, the Corps

notified Plaintiffs that Idlewood Stage 2 “appears to

be acceptable for use as a source” of borrow

3 See 33 U.S.C. § 2283.

The complaint is unclear as to when Plaintiffs

discovered the borrow material.

4

5 See R. Doc. 31-1.

6 Id. at p. 15.

7 Id.

56a

material.8 The letter confirmed the preliminary

report’s determination that excavation would harm

the environment.9 The letter required Plaintiffs to

“provide proof of mitigation to the Corps[] . . . prior

to excavation.”10 The Corps issued a similar letter

on April 14, 2011, reaffirming the requirement that

Plaintiffs provide mitigation.11 The letter informed

Plaintiffs that their “compensatory mitigation

requirements may be met” by obtaining credits from

select mitigation banks.12

Plaintiffs subsequently hired Mitigation

Strategies, LLC (“Mitigation Strategies”) hoping to

convince the Corps of the “legal and factual errors

underlying

[its]

mitigation

requirements.”13

Mitigation Strategies argued to the Corps on

numerous occasions that mitigation was neither

necessary nor appropriate under the law. In the

alternative, if mitigation was required, Mitigation

Strategies argued the law required in-kind

mitigation, rather than the purchase of credits from

mitigation banks.

The Corps disagreed. On June 24, 2011, the

Corps informed Plaintiffs that mitigation is

“require[d] [to] be accomplished through the

purchase of bank credits.”14 Mitigation Strategies

8 R. Doc. 31-3 at p. 2.

9 Id. at p. 3.

10 Id.

11 See R. Doc. 31-5.

12 Id. at p. 2.

13 R. Doc. 31 at ¶64.

14 R. Doc. 31-6 at p. 2.

57a

responded to this letter with further efforts to

convince the Corps that mitigation was unnecessary.

These efforts culminated in a February 20, 2013

letter from the District Commander.15 The letter

reiterated the Corps’s previous position that borrow

material from Idlewood Stage 2 could not be

excavated for use in HSDRRS projects until credits

were purchased from a mitigation bank (the

“Mitigation Requirement”).16

Plaintiffs filed suit against the Corps and

various Corps employees on June 10, 2013. They

contend that the Water Resource Development Act

(“WRDA”), 33 U.S.C. § 2201 et seq., does not

authorize mitigation for Idlewood Stage 2 or

alternatively that the WRDA does not authorize the

Corps to mandate the purchase of mitigation credits

as the sole form of compensatory mitigation.

Plaintiffs also assert claims under the Takings

Clause and the Due Process Clause of the Fifth

Amendment.

LEGAL STANDARD

I.

Motion to Dismiss for Lack of Subject Matter

Jurisdiction—Rule 12(b)(1)

A Rule 12(b)(1) motion challenges the subject

matter jurisdiction of a federal district court. “A case

is properly dismissed for lack of subject matter

jurisdiction when the court lacks the statutory or

constitutional power to adjudicate the case.”17 In

15 See R. Doc. 17-7.

16 See id.

17 Home Builders Ass’n of Miss., Inc. v. City of Madison,

143 F.3d 1006, 1010 (5th Cir. 1998).

58a

ruling on a Rule 12(b)(1) motion to dismiss, the court

may rely on (1) the complaint alone, presuming

the allegations to be true; (2) the complaint

supplemented by undisputed facts; or (3) the

complaint supplemented by undisputed facts and by

The

the court’s resolution of disputed facts.18

proponent of federal court jurisdiction bears the

burden of establishing subject matter jurisdiction.19

II.

Motion to Dismiss for Failure to State a

Claim—Rule 12(b)(6)

To survive a Rule 12(b)(6) motion to dismiss, a

plaintiff must plead enough facts “to state a claim to

relief that is plausible on its face.”20 A claim is

“plausible on its face” when the pleaded facts allow

the court to “draw the reasonable inference that the

defendant is liable for the misconduct alleged.”21 In

reviewing the legal sufficiency of a complaint, the

Court is mindful that Rule 12(b)(6) motions are

disfavored under the law and rarely granted.22

III.

Motion for a More Definite Statement—Rule

12(e)

A district court will grant a motion for a more

definite statement when the challenged pleading “is

18 Den Norske Stats Oljeselskap As v. HeereMac Vof, 241

F.3d 420, 424 (5th Cir. 2001).

See Physicians Hosps. of Am. v. Sebelius, 691 F.3d

649, 652 (5th Cir. 2012).

19

20 Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007).

21 Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).

22 Lowery v. Tex. A & M Univ. Sys., 117 F.3d 242, 247

(5th Cir. 1997).

59a

so vague or ambiguous that the [moving] party

cannot reasonably prepare a response.”23 When

adjudicating such motions, the Court must assess

the complaint in light of the minimal pleading

requirements of Rule 8.24 Rule 8(a)(2)requires that a

pleading contain “a short and plain statement of the

claim showing that the pleader is entitled to relief.”25

“Specific facts are not necessary; the statement need

only give the defendant fair notice of what the . . .

claim is and the grounds upon which it rests.”26 In

light of the liberal pleading standard set forth in

Rule 8, Rule 12(e) motions are disfavored.27

LAW AND ANALYSIS

Defendants move to dismiss this action on

multiple grounds. Specifically, Defendants argue

that (1) Plaintiffs lack Article III standing; (2)

Plaintiffs have not challenged a “final agency action”

under the Administrate Procedure Act (“APA”), 5

U.S.C. § 501 et seq.; (3) dismissal is warranted under

the doctrine of “prudential standing;” and (4)

Plaintiffs fail to state a claim for relief under the

23 Fed. R. Civ. P. 12(e). The moving party “must point

out the defects complained of and the details desired.” Id.

24 Babcock & Wilcox Co. v. McGriff, Siebels & Williams,

Inc., 235 F.R.D. 632, 633 (E.D. La. 2006).

25 Fed. R. Civ. P. 8(a)(2).

26 Erickson v. Pardus, 551 U.S. 89, 93 (2007) (internal

quotation marks and citations omitted).

27 See Mitchell v. E–Z Way Towers, Inc., 269 F.2d 126,

132 (5th Cir.1959); Who Dat Yat Chat, LLC v. Who Dat, Inc.,

Nos. 10–1333, 10–2296, 2012 WL 2087439, at *6 (E.D. La. June

8, 2012).

60a

Takings Clause and Due Process Clause of the Fifth

Amendment.

I.

Whether Jurisdiction is Proper

Defendants’ first two arguments—lack of

Article III standing and final agency action under

the APA—are threshold issues that affect this

Court’s subject matter jurisdiction.28 The Court

addresses the jurisdictional challenges first.29

A. Article III Standing

The doctrine of standing derives from Article

III of the Constitution, which limits the jurisdiction

of federal courts to “Cases” and “Controversies.”30 A

case is not justiciable unless the plaintiff has

standing to sue.31 Article III standing has three

elements: “(1) an injury in fact, (2) a sufficient

causal connection between the injury and the

conduct complained of, and (3) a likel[ihood] that the

28 See United States v. Hays, 515 U.S. 737, 742 (1995)

(“The federal courts are under an independent obligation to

examine their own jurisdiction, and standing ‘is perhaps the

most important of [the jurisdictional] doctrines.’”) (alteration in

original) (quoting FW/PBS, Inc. v. Dallas, 493 U.S. 215, 230–

31 (1990)); Peoples Nat’l Bank v. Office of Comptroller of

Currency of U.S., 362 F.3d 333, 336 (5th Cir. 2004) (“If there is

no ‘final agency action,’ a federal court lacks subject matter

jurisdiction.”).

See Sinochem Int’l Co. LTD v. Malaysia Int’l

Shipping Corp., 549 U.S. 422, 431 (2007) (“[J]urisdictional

questions ordinarily must precede merits determinations in

dispositional order.”).

29

30 U.S. Const. art. III, § 2.

31 See Steel Co. v. Citizens for a Better Env’t, 523 U.S.

83, 102 (1998).

61a

injury will be redressed by a favorable decision.”32

The party invoking the federal court’s jurisdiction

bears the burden of establishing these elements.33

Nonetheless, the Supreme Court has cautioned that

where, as here, standing is challenged on the

pleadings, “general factual allegations of injury

resulting from the defendant’s conduct may

suffice.”34 This follows from the presumption that

general allegations in a complaint encompass the

specific

facts

necessary

to

support

those

35

allegations.

An injury sufficient to establish Article III

standing must be “(a) concrete and particularized . . .

and (b) actual or imminent, not conjectural or

hypothetical.”36 Plaintiffs’ allegations of injury are

multiple. Specifically, Plaintiffs allege (1) that an

existing contract has been harmed,37 (2) that the

Mitigation Requirement is prohibitively expensive,

and (3) that they are now subject to increased

32 Susan B. Anthony List v. Driehaus, 134 S. Ct. 2334,

2341 (2014) (alteration in original) (internal quotation marks

omitted).

33 See Lujan v. Defenders of Wildlife, 504 U.S. 555, 561

(1992).

34 Id. at 560.

35 Steel Co., 523 U.S. at 104.

36 Lujan, 504 U.S. at 560 (internal quotation marks and

citation omitted).

37 At some point after the Corps issued the preliminary

report, Plaintiffs contracted with an independent mining

company to excavate, process, and sell borrow material from

Idlewood Stage 2. The contract provided that Plaintiffs would

receive a royalty payment on each ton of borrow material sold.

62a

business competition. At the pleadings stage, these

allegations clearly suffice to establish injury-infact.38

In order to establish the requisite causal

connection between injury and misconduct, the

plaintiff need not show that the defendant’s actions

“are the very last step in the chain of causation,”39 or

that the defendant’s actions are a proximate cause of

his injury.40 Rather, the plaintiff need only establish

his injury is “fairly traceable” to the defendant’s

actions.41

Plaintiffs’ injuries are fairly traceable to the

Mitigation Requirement. Plaintiffs’ contract with the

mining company was directly affected by the

Mitigation Requirement. Moreover, Plaintiffs allege

it will cost approximately $1.64 million to purchase

mitigation credits.42 Obviously, Plaintiffs would not

be subject to this financial burden but for the

Mitigation Requirement. Plaintiffs further allege the

38 See Envtl. Defense Fund v. Marsh, 651 F.2d 983, 1003

(5th Cir. 1981) (“Economic injury from business competition

created as an indirect consequence of agency action can serve

as the required ‘injury in fact.’”); Lujan, 504 U.S. at 578

(finding that “a company’s interest in marketing its product

free from competition” is a “legally cognizable injur[y]” for

purposes of Article III standing). It should be noted that just

like the Plaintiffs in this matter, the plaintiffs in Marsh alleged

a violation of the WRDA.

39 Bennet v. Spear, 520 U.S. 154, 168–69 (1997).

40 Lexmark, 134 S. Ct. at 1391 n.6.

41 Clapper v. Amnesty Int’l USA, 133 S. Ct. 1138, 1147

(2013).

42 R. Doc. 31 at ¶62.

63a

Mitigation Requirement has made their business

significantly less profitable, as it requires them to

sell borrow material above market price in order to

recoup the cost of purchasing mitigation credits.43

In response, Defendants narrowly focus on the

allegations in the complaint relating to the business

relationship between Plaintiffs and the mining

company. They argue that Plaintiffs are only harmed

by the Mitigation Requirement insofar as the mining

company is harmed. According to Defendants, this

causal chain is too attenuated to establish standing.

Defendants’ argument unduly restricts and

misreads the allegations in the complaint. Plaintiffs

have clearly alleged the Corps requires the

contractor or Plaintiffs to provide mitigation.44

Thus, if Plaintiffs are required to purchase

mitigation credits, the resulting economic injury is

directly traceable to the Mitigation Requirement.

Unlike Defendants’ tortuous argument, the

allegations

establishing

causation

are

straightforward:

the

Mitigation

Requirement

imposes a substantial cost on Plaintiffs that

prohibits the profitable sale of borrow material from

Idlewood Stage 2.

Having sufficiently pleaded an injury-in-fact

fairly traceable to the Mitigation Requirement,

Plaintiffs need only establish redressability, that is,

“a likelihood that the requested relief will redress

the alleged injury.”45 A plaintiff must demonstrate

43 See id. at ¶82.

44 See, e.g., id. at ¶51.

45 Steel Co., 523 U.S. at 103.

64a

redressability for each form of relief sought.46 But

where, as here, a plaintiff seeks both declaratory and

injunctive relief, these two inquires essentially

collapse into one.47

Plaintiffs seek a declaration that the

Mitigation Requirement violates the WRDA, the

Takings Clause, and the Due Process Clause.

Plaintiffs also request the Court to enjoin the Corps

from requiring any mitigation at all or alternatively

from requiring the purchase of mitigation credits as

the sole form of compensatory mitigation. The Court

clearly has the power to provide the requested relief

and finds that a judgment in favor of Plaintiffs

would redress their injuries.48

Plaintiffs have

sufficiently pleaded the triad of injury-in-fact,

causation, and redressability, and therefore have

established standing to sue under Article III.

B. Judicial Review Under the APA

The Federal Government is immune from suit

absent a waiver of sovereign immunity.49 The APA

provides such a waiver and allows judicial review of

St. Bernard Citizens for Envtl. Quality, Inc. v.

Chalmette Refining, L.L.C., 354 F. Supp. 2d 697, 705 (E.D. La.

2005).

46

See Consumer Data Indus. Ass’n v. King, 678 F.3d

898, 906 (10th Cir. 2012) (finding that “if injunctive relief . . .

meets the redressability requirement, . . . the same must be

true of declaratory relief.”

47

Cf. Steel Co., 523 U.S. at 108 (noting that when a

plaintiff “ha[s] alleged a continuing violation or the imminence

of a future violation . . . injunctive relief . . . would remedy that

alleged harm.”).

48

49 Loeffler v. Frank, 486 U.S. 549, 554 (1988).

65a

agency action when (1) the claimant does not seek

money damages,50 (2) no other statute precludes

judicial review,51 and (3) the challenged action is not

committed to agency discretion by law.52 Plaintiffs

do not seek money damages. Moreover, nothing in

the WRDA expressly or implicitly precludes judicial

review, nor is the provision under which Plaintiffs

have filed suit—33 U.S.C. § 2283—discretionary.53

Where, as here, the relevant statute does not

provide for judicial review,54 the APA authorizes

judicial review of “final agency action for which there

is no other adequate remedy” at law.55 The question

presented is whether the District Commander’s

February 20, 2013 letter constitutes “final agency

action” for purposes of the APA. The parameters of

this inquiry are well-defined. In order to be

considered final, agency action must (1) “mark the

consummation of the agency’s decision-making

process,” and (2) “be one by which rights or

obligations have been determined, or from which

50 5 U.S.C. § 702.

51 5 U.S.C. § 701(a)(1).

52 5 U.S.C. § 701(a)(2).

The relevant portions of the statute use the

imperative “shall.” See, e.g., 33 U.S.C. § 2283(a)(1)(A), (d).

Given the language chosen, a finding of agency discretion

“would fly in the face of [the] text.” Bennett, 520 U.S. at 175.

53

See Marsh, 651 F.3d at 1003 (“[T]he WRDA

establishes no specific right to judicial review of an agency

action.”).

54

55 Belle Co. v. U.S. Army Corps of Eng’rs, No. 13–30262,

2014 WL 3746464, at *2 (5th Cir. 2014); 5 U.S.C. § 704.

66a

legal consequences will flow.56 In undertaking this

two-part inquiry, the Court is “guided by the

Supreme Court’s interpretation of the APA’s finality

requirement as ‘flexible’ and ‘pragmatic.’”57

Agency action satisfies the first part of this

inquiry when the agency “has asserted its final

position on the factual circumstances underpinning

its action,” or when the action “has proceeded

through an administrative appeal process and is not

subject to further agency review.”58 Reviewing the

allegations in the complaint in the light most

favorable to Plaintiffs, the Court finds that the

District

Commander’s

letter

marks

the

consummation of the Corp’s decision- making

process.59

Defendants have not identified any

allegations in the complaint nor provided any

evidence to the contrary.

Instead, Defendants contend the District

Commander’s letter is not final because it does not

affect Plaintiffs’ legal rights or obligations.

Defendants quote the following language from

National Pork Producers Council v. E.P.A. in support

of their position: “an agency’s actions are not

56 Bennett, 520 U.S. at 177–78.

57 Qureshi v. Holder, 663 F.3d 778, 781 (5th Cir. 2011)

(quoting Abbott Labs. v. Gardner, 387 U.S. 136, 149–50 (1967)).

58 Belle Co., 2014 WL 3746464, at *4.

See Ciba-Geigy Corp. v. E.P.A., 801 F.2d 430, 437

(D.C. Cir. 1986) (finding guidance letter marked consummation

of decision-making process where court had “no reason to

believe that the [author] lack[ed] authority to speak for [the

agency] . . . or that his statement of the agency’s position could

be appealed to a higher level of [the agency’s] hierarchy.”).

59

67a

reviewable when they merely reiterate what has

already been established.”60 Because the Mitigation

Requirement has been in effect for years, Defendants

argue the District Commander’s letter could not

have affected Plaintiffs’ legal rights. The Court

disagrees for multiple reasons.

First, National Pork Producers is inapposite.

In that case, the court found guidance letters issued

by the EPA that “merely restate [a statute’s]

prohibition . . . have no effect on a party’s rights or

obligations.”61 The letter issued in this case does not

merely restate the requirements of the WRDA.

Plaintiffs argue the letter provides an inaccurate

restatement of the WRDA’s mitigation requirement.

Moreover, unlike the letters in National Pork

Producers, the District Commander’s letter clearly

imposes an affirmative obligation, namely, to

purchase mitigation credits prior to the excavation of

borrow material from Idlewood Stage 2.

This

mandate clearly determines rights or obligations by

imposing legal consequences on Corps officials

administering the Mitigation Requirement and on

landowners like Plaintiffs who must comply with the

requirement.62

The final hurdle to judicial review is that

Plaintiffs have no other adequate remedy at law.63

60 635 F.3d 738, 756 (5th Cir. 2011).

61 Id.

See Nat’l Envtl. Dev. Ass’n’s Clean Air Project v.

E.P.A., 752 F.3d 999, 1007 (D.C. Cir. 2014).

62

63 See Sackett v. E.P.A., 132 S. Ct. 1367, 1372 (2012); 5

U.S.C. § 704.

68a

Given that the WRDA does not provide a private

right of action, the Court can conceive of no other

way that Plaintiffs could obtain the relief requested

other than by filing suit under the APA. Judicial

review is proper.

II.

Whether Plaintiffs State a Claim for Relief

Having determined that jurisdiction is proper,

the Court may now proceed to a merits

determination. Defendants move to dismiss all of

Plaintiffs’ claims for lack of prudential standing or

alternatively to dismiss Plaintiffs’ Fifth Amendment

claims under Rule 12(b)(6). The Court addresses

each argument separately.

A. “Prudential Standing” or “Right to Sue”?

The Supreme Court’s standing jurisprudence

has historically consisted of two strands: “Article

III standing, which enforces the Constitution’s

case-or-controversy requirement . . . and prudential

standing, which embodies judicially self-imposed

limits on the exercise of federal jurisdiction.”64 As

recently as 2012, the Supreme Court reaffirmed that

a litigant must establish both Article III standing

and prudential standing as a sine qua non to suit

under the APA.65

The Supreme Court’s recent decision in

Lexmark appears to have severed the legs from the

64 Elk Grove Unified Sch. Dist. v. Newdow, 542 U.S. 1,

11–12 (2004) (internal quotation marks and citations omitted).

65 See Match-E-Be-Nash-She-Wish Band of Pottawatomi

Indians v. Patchak, 132 S. Ct. 2199, 2210 (2012).

69a

doctrine of prudential standing.66 In a unanimous

opinion issued earlier this year, the Court explained

that the idea that a federal court “can[] limit a cause

of action that Congress has created merely because

‘prudence’ dictates” is fundamentally inconsistent

with a federal court’s “virtually unflagging” obligation

to exercise jurisdiction.67 Thus, the proper inquiry is

not whether a federal court should decline to exercise

jurisdiction but instead whether a particular plaintiff

“falls within the class of plaintiffs whom Congress

has authorized to sue [under the relevant statute].”68

A plaintiff establishes the statutory “right to

sue”69 if (1) his interests “fall within the zone of

interests protected” by the statute, and (2) his

See Excel Willowbrook, L.L.C. v. JP Morgan Chase

Bank, Nat’l Ass’n, Nos. 12–20367, 12–20375, 12–20376, 12–

20377, 12–20378, 12–20381, 12–20382, 12–10784, 2014 WL

1633508, at *5 (5th Cir. 2014) (recognizing that “the continued

vitality of prudential ‘standing’ is now uncertain in the wake of

the Supreme Court’s recent decision in Lexmark.”).

66

67 Lexmark, 134 S. Ct. at 1386–88.

68 Id. at 1387.

Unlike when a court considers Article III

standing, “[t]he absence of a valid (as opposed to arguable)

cause of action does not implicate subject-matter jurisdiction,

i.e., the court’s statutory or constitutional power to adjudicate

the case.” Id. at 1387 n.4 (emphasis in original). Accordingly,

to the extent the doctrine of prudential standing remains

viable, it should no longer be considered alongside Article III

standing as a threshold jurisdictional requirement. Rather,

prudential standing—in whatever form it still exists—is

properly considered on a motion to dismiss for failure to state a

claim upon which relief can be granted.

69 After striking down the doctrine prudential standing,

the Court applied its newly- articulated framework under the

heading “Static Control’s Right To Sue Under § 1125(a).” See

id. at 1387 (emphasis added).

70a

injuries are proximately caused by a violation of the

statute.70 When applied to suit under the APA, the

zone-of-interests test “is not especially demanding.”71

“[T]he test forecloses suit only when a plaintiff’s

‘interests are so marginally related to or inconsistent

with the purposes implicit in the statute that it

cannot reasonably be assumed that Congress

intended to permit the suit.’”72

Defendants

argue

that

Plaintiffs

impermissibly apply the zone of interests test to

multiple provisions of the WRDA, namely, 33 U.S.C.

§§ 2281 and 2283. Citing the Supreme Court’s 1997

decision in Bennett, they argue the test should only

be applied to the provision under which suit is

brought—in this case, 33 U.S.C. § 2283. According to

Defendants, Section 2283 does not protect Plaintiffs’

interests. The Court disagrees with this line of

argument for multiple reasons.

First, Bennett does not support the proposition

for which it is cited. The plaintiffs in Bennett alleged

that a biological opinion issued by the Fish and

Wildlife Service violated, inter alia, Section 1536 of

the Endangered Species Act of 1973 (“ESA”), 16

U.S.C. § 1531 et seq.73 One of the issues presented

70 See id. at 1388–91.

The first element—often referred

to as the “zone-of-interests” test—has historically formed part

of the prudential standing doctrine. See id. at 1368. Despite the

apparent repudiation of this doctrine, the zone-of-interests test

remains relevant for determining a plaintiff’s statutory right to

sue. See id. at 1388–90.

71 Id. at 1389.

72 Id. at 1389 (quoting Patchak, 132 S. Ct. at 2210).

73 520 U.S. at 157–60.

71a

was whether the plaintiffs had prudential standing

to bring this claim under the APA.74 The court of

appeals held that the zone of interests test was not

met, “since petitioners are neither directly regulated

by the ESA nor seek to vindicate its overarching

purpose of species preservation.”75 The Supreme

Court reversed, holding that whether the zone of

interests test is met “is to be determined not by

reference to the overall purpose of the Act in

question [here, species preservation], but by

reference to the particular provision of law upon

which the plaintiff relies.”76 Accordingly, the Court

applied the zone of interest test to Section 1536.77

Fairly read, Bennett does not stand for the

proposition that a court is per se precluded from

considering the overall purpose of the statutory

scheme in applying the zone of interests test. Rather,

Bennett merely held that it was legal error for the

court of appeals to focus solely on the ESA’s purpose

to the exclusion of the provision under which suit

was brought. Nothing in the opinion categorically

forbids the district court from considering the

overarching purpose of an act in determining

whether a provision of that act protects a particular

plaintiff’s interests.

Second, even assuming Bennett requires the

zone of interest test only be applied to the statutory

provision allegedly violated, the Lexmark Court

74 See id. at 174–77.

75 Id. at 175 (emphasis added).

76 Id. at 175–76 (alteration in original).

77 See id. at 176–77.

72a

overruled Bennett on this point.78 The plaintiffs

in Lexmark brought suit under the Lanham

Act, alleging false advertising under 15 U.S.C.

§ 1125(a).79 As in Bennett, the Court addressed

whether the plaintiff’s interests were co-extensive

with those protected by the relevant statute so as to

establish prudential standing under the APA. Unlike

Bennett, however, the Lexmark Court answered this

question by “examining a detailed statement of the

statute’s purposes.”80

The Court found that

statement in a separate provision of the Lanham

Act—Section 1127.81 The Court then compared the

interests articulated in Section 1127 with those

asserted by the plaintiff, ultimately concluding the

latter fell within the aegis of the former.82 In fact,

78 Whether Lexmark overruled Bennett is a question of

first impression in the federal courts.

79 See 134 S. Ct. at 1384.

80 Id. at 1389.

81 Id. Section 1127 provides in relevant part as follows:

“The intent of this chapter is to regulate

commerce within the control of Congress by

making actionable the deceptive and misleading

use of marks in such commerce; to protect

registered marks used in such commerce from

interference by State, or territorial legislation;

to protect persons engaged in such commerce

against unfair competition; to prevent fraud

and deception in such commerce by the use of

reproductions, copies, counterfeits, or colorable

imitations of registered marks; and to provide

rights and remedies stipulated by treaties and

conventions respecting trademarks, trade

names, and unfair competition entered into

between the United States and foreign nations.”

82 See id. at 1393.

73a

the Court did not even mention Section 1125 in its

zone-of-interests analysis.

Lexmark makes clear that—whatever the

previous import of Bennett—a court may properly

consider the overall purpose of a Congressional act

when applying the zone of interests test, especially if

that purpose is expressly articulated in a separate

provision of the act. Like the Lanham Act, the

WRDA contains a detailed statement of the statute’s

overarching purposes:

Enhancing

national

economic

development (including benefits to

particular regions of the Nation not

involving the transfer of economic

activity to such regions from other

regions), the quality of the total

environment (including preservation

and enhancement of the environment),

the well-being of the people of the

United States, the prevention of loss of

life, and the preservation of cultural

and historical values shall be addressed

in the formulation and evaluation of

water resources projects to be carried

out by the Secretary, and the associated

benefits and costs, both quantifiable

and unquantifiable, and information

regarding potential loss of human life

that may be associated with flooding

and coastal storm events, shall be

displayed in the benefits and costs of

such projects.83

83 33 U.S.C. § 2281(a).

74a

The Plaintiffs’ alleged economic injuries fall

squarely within the auspices of the interests

protected by the WRDA. This conclusion finds

support in Fifth Circuit precedent. In Marsh, the

Fifth Circuit interpreted a substantially similar

statement of purpose in a federal water resources

statute.84 That statement required federal water

projects to further the objectives of “enhancing

regional economic development, the quality of the

total environment . . . the well-being of the people of

the United States, and the national economic

development.”85

The Fifth Circuit found this

language to be “explicit evidence that Congress

intends federal projects to be governed in part by

considerations of local economic development, such

as the economic well-being of the [plaintiff].”86

Section 2281(a) of the WRDA contains a

virtually

identical

statement

of

purpose.87

Accordingly, it follows that one objective of the

WRDA is to promote local economic development,

which includes the economic well-being of those

affected by WRDA regulations. Plaintiffs allege that

a regulation promulgated under the WRDA—the

Mitigation Requirement—has caused them economic

injury. Under the liberal zone-of-interest test

applicable to the APA, the Court has no problem

concluding that the interests asserted in the

84 See 651 F.3d at 1004–05.

85 Id. at 1004 (alteration in original) (quoting 42 U.S.C.

§ 1962-2).

86 Id. at 1004.

87 See supra note 83.

75a

complaint are sufficiently consistent with

interests the WRDA is designed to protect.

the

Plaintiffs have passed the zone-of-interest

test, and the Court must now determine whether the

allegations in the complaint establish proximate

causation.88 The question presented “is whether the

harm alleged has a sufficiently close connection to

the conduct the statute prohibits.”89 Put differently,

a court inquires whether the plaintiff’s injuries are

“too remote from the defendant’s unlawful

conduct.”90

Applying these precepts to the case at bar, the

Court finds that Plaintiffs have adequately pleaded a

causal connection between their injuries and

Defendants’ alleged misconduct. The economic injury

alleged by Plaintiffs would not have occurred but for

the Mitigation Requirement. Accordingly, Plaintiffs

have the right to sue under Section 2283 of the

WRDA.

B. The Takings Clause

The Takings Clause of the Fifth Amendment

prohibits the government from taking private

property for public use without just compensation.91

88 See Lexmark, 134 S. Ct. at 1393.

89 Id. at 1390.

90 Id. (internal quotation marks omitted).

U.S. Const. amend. V, cl.4. The purpose of the

Takings Clause is to prevent the government “from forcing

some people alone to bear public burdens which, in all fairness

and justice, should be borne by the public as a whole.”

Armstrong v. United States, 364 U.S. 40, 49 (1960).

91

76a

The Supreme Court recognizes two distinct classes of

The first

takings that require compensation.92

involves the “direct appropriation” of private

property or the “practical ouster of [the owner’s]

possession.”93 The other type of taking—a so-called

“regulatory taking”—occurs when government

regulation of private property is “so onerous that its

effect is tantamount to a direct appropriation or

ouster.”94

Plaintiffs allege the Corps’s actions

constitute a regulatory taking.

The Supreme Court has generally eschewed

any set formula for determining whether a

regulatory

action

constitutes

a

taking.95

Nonetheless, certain bright-line rules have emerged.

For example, when the owner is required to endure a

“permanent physical invasion” of his property, the

government must provide just compensation.96

Another type of per se taking occurs when a

regulation “denies all economically beneficial or

productive use of land.”97

92 See Yee v. City of Escondido, Cal., 503 U.S. 519, 522–

23 (1992).

93 Lucas v. S.C. Coastal Coalition, 505 U.S. 1003, 1014

(1992).

94

Lingle v. Chevron U.S.A. Inc., 544 U.S. 528, 537

(2005).

Tahoe–Sierra Pres. Council, Inc. v. Tahoe Reg’l

Planning Agency, 535 U.S. 302, 326 (2002); Lucas, 505 U.S. at

1015.

95

96 Lingle, 544 U.S. at 538.

97 Lucas, 505 U.S. at 1015.

77a

Neither of these situations is presented by the

case at bar.

Plaintiffs do not allege a direct

appropriation of their land. Moreover, the

allegations in the complaint do not indicate that

Plaintiffs have been completely deprived of any

beneficial uses so as to leave their property

“economically idle.”98 Rather, Plaintiffs allege the

Mitigation Requirement made Idlewood Stage 2 “less

valuable,”99 thereby implying the land still retains

some value. The Supreme Court has clarified that

the “total takings rule” only applies in the

“extraordinary circumstance” where government

regulation “wholly eliminate[s] the value” of private

property.100

Subject to one exception inapplicable here,101

the constitutionality of a regulatory taking is

measured against the “justice and fairness” of the

governmental action.102 To elucidate these abstract

concepts, the Supreme Court has enumerated

multiple factors a court may consider, including “the

98 Id. at 1019.

99 See R. Doc. 31 at ¶83; see also id. at ¶118 (alleging

the Mitigation Requirement “substantially decreases the value

of the Idlewild Stage 2 tract”); id. at ¶134 (“[T]he economic

impact of the [Mitigation Requirement] . . . is . . . in the form

of . . . dramatic depreciation of property value.”).

100 See Tahoe–Sierra, 535 U.S. at 1483.

In Lingle, the Supreme Court held that land-use

exactions are not subject to the multi-factor balancing test

described infra but are instead analyzed according to the

Court’s decisions in Nollan v. California Coastal

Communication, 483 U.S. 825 (1987), and Dolan v. City of

Tigard, 512 U.S. 374 (1994). See Lingle, 544 U.S. at 546–48.

101

102 See E. Enters. v. Apfel, 524 U.S. 498, 523 (1998).

78a

regulation’s economic effect on the landowner, the

extent to which the regulation interferes with

reasonable investment-backed expectations, and the

character of the government action.”103 This inquiry

is necessarily fact-intensive,104 and is therefore

“seldom” appropriate for resolution on the

pleadings.105 The Court finds no reason to deviate

from this general rule and will therefore deny the

motion to dismiss.

C. Due Process

The Fifth Amendment forbids the deprivation

of “life, liberty, or property, without due process

of law.”106 Due process offers both substantive

103 Palazzolo v. Rhode Island, 533 U.S. 606, 617 (2001)

(citing Penn Cent. Transp. Co. v. New York City, 438 U.S. 104

(1978)).

104 See Tahoe–Sierra, 535 U.S. at 322 (“Our regulatory

takings jurisprudence . . . is characterized by essentially ad hoc,

factual inquiries, . . . designed to allow careful examination and

weighing of all the relevant circumstances.”) (internal

quotation marks and citations omitted); Yee, 503 U.S. at 523

(noting that a regulatory takings analysis “necessarily entails

complex factual assessments of the purposes and economic

effects of government actions.”).

McDougal v. Cnty. of Imperial, 942 F.2d 668, 676

(9th Cir. 1991). As the Ninth Circuit explained in an earlier

opinion: “Th[e] admonition [against Rule 12(b)(6) dismissal] is

perhaps nowhere so apt as in cases involving claims of inverse

condemnation where the Supreme Court itself has admitted its

inability to develop any set formula for determining when

compensation should be paid, . . . resorting instead to

essentially ad hoc, factual inquiries to resolve this difficult

question.” Hall v. City of Santa Barbara, 833 F.2d 1270, 1274

(9th Cir. 1986) (internal quotation marks and citation omitted).

105

106 U.S. Const. amend. V, cl. 3.

79a

and procedural protections.107

The procedural

component ensures that an individual is given notice

and an opportunity to be heard before he or she is a

deprived of a property interest,108 whereas the

substantive component “bars certain arbitrary,

wrongful government actions regardless of the

fairness of the procedures used to implement

them.”109

Defendants move to dismiss Plaintiffs’ claim

for violation of their rights to procedural due process.

The complaint, however, does not assert a

procedural due process claim. Rather, it alleges the

Corps’s decision to impose the Mitigation

Requirement was arbitrary and capricious.110

Accordingly, Plaintiffs clearly invoke the substantive

protections of the Due Process Clause.111 Because

Plaintiffs have not asserted a procedural due process

claim, the motion to dismiss same is denied.

107 See Frazier v. Garrison I.S.D., 980 F.2d 1514, 1528

(5th Cir. 1993).

108 See Cleveland Bd. of Educ. v. Loudermill, 470 U.S.

532, 542 (1985).

Zinermon v. Burch, 494 U.S. 113, 125 (1990)

(internal quotation marks omitted).

109

See R. Doc. 31 at ¶¶138–44. Plaintiffs’ opposition

memorandum also makes clear that their claim is one for

substantive due process; not procedural due process. See R.

Doc. 37 at p. 24–25.

110

111 In “rare cases,” a substantive due process claim may

be premised on a deprivation of property. See Simi Inv. Co. v.

Harris Cnty., Tex., 256 F.3d 323, 323–24 (5th Cir. 2001) (per

curiam). The Court need not address whether this case

presents one of those rare circumstances.

80a

III.

Whether the Court Should Compel a More

Definite Statement

Defendants

argue

the

complaint

is

impermissibly vague for failure to “put forward a

specific legal theory supported by citations.”112 This

argument is deficient from root to stem. The law is

clear that a complaint need not identify with

precision the legal basis for the relief requested.113

Rather, a complaint satisfies the liberal pleading

requirements of Rule 8 if it alleges facts sufficient to

provide notice of a claim.114 The complaint does just

that. Moreover, by filing a motion to dismiss discrete

claims, Defendants refute their own argument that

the complaint is too vague to answer.115 The motion

for a more definite statement is denied.

CONCLUSION

Plaintiffs have established standing and

therefore the justiciability of this case under Article

112 R. Doc. 32-1 at p. 24.

See McManus v. Fleetwood Enters., Inc., 320 F.3d

545, 551 (5th Cir. 2003) (“The plaintiff need not correctly

specify the legal theory, so long as the plaintiff alleges facts

upon which relief can be granted.”); Dileo v. Lakeside Hosp.,

No. 09–2838, 2010 WL 1936221, at *3 (E.D. La. May 12, 2010)

(“Although plaintiffs do not specifically identify the legal basis

for their claims, such specificity is not required under the

federal rules.”).

113

114 See Swierkiewicz v. Sorema N.A., 534 U.S. 506, 514

(2002).

See Murungi v. Tex. Guaranteed, 646 F. Supp. 2d

804, 811 (E.D. La. 2009) (denying motion for more definite

statement where defendant had previously filed answers and

motions to dismiss).

115

81a

III. Furthermore, the Court finds that judicial

review is proper under the APA, that Plaintiffs state

a claim for relief under the Fifth Amendment, and

that the complaint satisfies the notice pleading

requirement of Rule 8. Accordingly, the instant

Motion is denied in its entirety.

New Orleans, Louisiana, this 2nd day of

September, 2014.

/s/

JANE TRICHE MILAZZO

UNITED STATES DISTRICT JUDGE

82a

[ENTERED: January 28, 2016]

UNITED STATES DISTRICT COURT EASTERN

DISTRICT OF LOUISIANA

WHITE OAK REALTY, LLC

CIVIL ACTION

VERSUS

NO: 13–4761

UNITED STATES ARMY CORP

OF ENGINEERS, ET AL.

SECTION “H”(3)

ORDER AND REASONS

Before the Court is Defendants’ Motion for

Judgment on the Pleadings (Doc. 84). For the

following reasons, the Motion is GRANTED IN

PART. Plaintiffs’ Substantive Due Process claims

are DISMISSED.

BACKGROUND

This is a civil action for declaratory and injunctive

relief. The plaintiffs are White Oak Realty, LLC and

Citrus Realty, LLC. The defendants are the United

States Corps of Engineers (the “Corps”) and various

Corps employees. The dispute involves mitigation

requirements imposed by the Corps on a tract of

land in Southeast Louisiana (“Idlewood Stage 2”)

jointly owned by Plaintiffs.

In response to the devastation caused by

Hurricanes Katrina and Rita, Congress authorized

the Corps to undertake a series of projects

collectively known as the Hurricane and Storm

Damage Risk Reduction System (“HSDRRS”). One

of these projects involves the use of soil and clay

(“borrow material”) to reinforce levees and floodwalls

83a

in the Gulf South. Under the applicable statutes and

regulations, the Corps determines whether a

particular location is a suitable source of borrow

material and if so whether mitigation of losses to

fish and wildlife is necessary.1

At some point in 2010, Plaintiffs discovered

the presence of borrow material in Idlewood

Stage 2.2 They subsequently filed a “suitability

determination” with the Corps to confirm the borrow

material could be used in HSDRRS projects. In

October 2010, the Corps issued a preliminary report

approving the use of borrow material from Idlewood

Stage 2 and nine other sites.3 The report found that

the excavation of borrow material from Idlewood

Stage 2 would cause “unavoidable impacts” to the

environment.4 Accordingly, if Idlewood Stage 2 were

ultimately approved for HSDRRS projects, the

landowner or contractor would be required to

provide compensatory mitigation prior to excavation

by purchasing credits from a mitigation bank.5

In a letter dated November 4, 2010, the Corps

notified Plaintiffs that Idlewood Stage 2 “appears to

be acceptable for use as a source” of borrow

material.6 The letter confirmed the preliminary

report’s determination that excavation would harm

1 See 33 U.S.C. § 2283.

The complaint is unclear as to when Plaintiffs

discovered the borrow material.

2

3 See Doc. 31-1.

4 Id. at p. 15.

5 Id.

6 Doc. 31-3 at p. 2.

84a

the environment.7 The letter required Plaintiffs to

“provide proof of mitigation to the Corps[] . . . prior

to excavation.”8 The Corps issued a similar letter on

April 14, 2011, reaffirming the requirement that

Plaintiffs provide mitigation.9 The letter informed

Plaintiffs that their “compensatory mitigation

requirements may be met” by obtaining credits from

select mitigation banks.10

Plaintiffs subsequently hired Mitigation

Strategies, LLC (“Mitigation Strategies”) hoping to

convince the Corps of the “legal and factual errors

underlying

[its]

mitigation

requirements.”11

Mitigation Strategies argued to the Corps on

numerous occasions that mitigation was neither

necessary nor appropriate under the law. In the

alternative, if mitigation was required, Mitigation

Strategies argued the law required in-kind

mitigation, rather than the purchase of credits from

mitigation banks.

The Corps disagreed. On June 24, 2011, the

Corps informed Plaintiffs that mitigation is

“require[d] [to] be accomplished through the

purchase of bank credits.”12 Mitigation Strategies

responded to this letter with further efforts to

convince the Corps that mitigation was unnecessary.

7 Id. at p. 3.

8 Id.

9 See Doc. 31-5.

10 Id. at p. 2.

11 Doc. 31 at ¶64.

12 Doc. 31-6 at p. 2.

85a

These efforts culminated in a February 20, 2013

letter from the District Commander.13 The letter

reiterated the Corps’s previous position that borrow

material from Idlewood Stage 2 could not be

excavated for use in HSDRRS projects until credits

were purchased from a mitigation bank (the

“Mitigation Requirement”).14

Plaintiffs filed this suit against the Corps and

various Corps employees on June 10, 2013. They

contend that the Water Resource Development Act

(“WRDA”), 33 U.S.C. § 2201 et seq., does not

authorize mitigation for Idlewood Stage 2 or

alternatively that the WRDA does not authorize the

Corps to mandate the purchase of mitigation credits

as the sole form of compensatory mitigation.

Plaintiffs also assert claims under the Takings

Clause and the Due Process Clause of the Fifth

Amendment.

In this Motion, Defendants move for a partial

judgment on the pleadings, arguing that this Court

lacks jurisdiction over Plaintiffs’ Fifth Amendment

takings and substantive due process claims. This

Court will address each of Defendants’ arguments in

turn.

LEGAL STANDARD

Rule 12(c) provides that a party may move for

judgment on the pleadings after pleadings are closed

but early enough not to delay trial.15 The standard

13 See Doc. 17-7.

14 See id.

15 Fed. R. Civ. P. 12(c) (2014).

86a

for determining a Rule 12(c) motion based on a lack

of subject matter jurisdiction is the same as a Rule

12(b)(1) motion to dismiss.16

A Rule 12(b)(1) motion challenges the subject

matter jurisdiction of a federal district court. “A case

is properly dismissed for lack of subject matter

jurisdiction when the court lacks the statutory or

constitutional power to adjudicate the case.”17 In

ruling on a Rule 12(b)(1) motion to dismiss, the court

may rely on (1) the complaint alone, presuming the

allegations to be true, (2) the complaint

supplemented by undisputed facts, or (3) the

complaint supplemented by undisputed facts and by

the court’s resolution of disputed facts.18

The

proponent of federal court jurisdiction—in this case,

the Plaintiff—bears the burden of establishing

subject matter jurisdiction.18

LAW AND ANALYSIS

Defendants assert three grounds on which

they allege that this Court lacks jurisdiction to hear

Plaintiffs’ takings and substantive due process

claims. First, Defendants allege that Plaintiffs’

takings claims are barred because the United States

has not waived its sovereign immunity from claims

seeking declaratory and injunctive relief from a

5C ALAN WRIGHT & ARTHUR MILLER, FED.

PRAC. & PROC. CIV. § 1367 (3d ed.).

16

17 Home Builders Ass’n of Miss., Inc. v. City of Madison,

143 F.3d 1006, 1010 (5th Cir. 1998).

Den Norske Stats Oljesels kap As v. Heere MacVof,

241 F.3d 420, 424 (5th Cir. 2001).

18

See Physicians Hosps. of Am. v. Sebelius, 691 F.3d

649, 652 (5th Cir. 2012).

18

87a

takings claim if just compensation is available.

Second, Defendants allege that federal courts do not

have jurisdiction to grant declaratory or injunctive

relief under the Takings Clause. Third, Defendants

argue that “Plaintiffs’ substantive due process claim

is jurisdictionally barred because it is subsumed by

the takings claim and is therefore premature.” This

Court will address each argument in turn.

At the outset, the Court notes that it declines

Plaintiffs’ request to defer ruling on this matter.

“Federal courts are courts of limited jurisdiction”

and as such, must consider jurisdictional attacks

before any attack on the merits.19 Accordingly, this

Court will address whether it has jurisdiction to

hear Plaintiffs’ takings and due process claims.

A. The Takings Claim

The Takings Clause of the Fifth Amendment

prohibits the government from taking private

property for public use without just compensation.20

Plaintiffs allege the Corps’s actions constitute a

regulatory taking. A “regulatory taking” occurs

when government regulation of private property is

“so onerous that its effect is tantamount to a direct

Plaintiffs seek a

appropriation or ouster.”21

In re FEMA Trailer Formaldehyde Products Liab.

Litig. (Mississippi Plaintiffs), 668 F.3d 281, 286 (5th Cir. 2012).

19

U.S. Const. amend. V, cl.4. The purpose of the

Takings Clause is to prevent the government “from forcing

some people alone to bear public burdens which, in all fairness

and justice, should be borne by the public as a whole.”

Armstrong v. United States, 364 U.S. 40, 49 (1960).

20

21

(2005).

Lingle v. Chevron U.S.A. Inc., 544 U.S. 528, 537

88a

declaratory judgment that “the Corps’s actions

violate the Takings Clause of the Constitution’s Fifth

Amendment” and an injunction allowing Plaintiffs to

forgo the Corps’s Mitigation Requirement.22

Plaintiffs’ Second Amended Complaint expressly

states that they “do not claim monetary damages as

just compensation for a taking” because they have

not yet complied with the Corps’s requirement to

purchase mitigation credits.

Defendants argue that the only available

remedy for a Fifth Amendment takings claim is “just

compensation” and that the United States has not

waived its sovereign immunity from claims seeking

declaratory or injunctive relief from a taking. They

also argue that, under the Tucker and Little Tucker

Acts, federal courts do not have jurisdiction to grant

declaratory or injunctive relief under the Takings

Clause.

The Tucker Act grants the United States

Court of Federal Claims jurisdiction over claims for

money damages “against the United States founded

either upon the Constitution, or any Act of Congress

or any regulation of an executive department, or

upon any express or implied contract with the

United States, or for liquidated or unliquidated

damages in cases not sounding in tort.”23 Likewise,

the Little Tucker Act states that:

the district courts shall have original

jurisdiction, concurrent with the United

States Court of Federal Claims, of . . .

22 Doc. 31, p. 30.

23 28 U.S.C. § 1491.

89a

any other civil action or claim against

the United States, not exceeding

$10,000 in amount, founded either upon

the Constitution, or any Act of

Congress, or any regulation of an

executive department, or upon any

express or implied contract with the

United States, or for liquidated or

unliquidated damages in cases not

sounding in tort . . . .24

Neither of these statutes create substantive rights,

“but are simply jurisdictional provisions that operate

to waive sovereign immunity for claims premised on

other sources of law.”25

The Supreme Court has made it clear that

both the Tucker and Little Tucker Acts provide the

United States’ “consent to suit for certain moneydamages claims.”26 Indeed, “[t]he Court of Claims

was established, and the Tucker Act enacted, to open

a judicial avenue for certain monetary claims

against the United States.”27 The Acts have “long

been construed as authorizing only actions for money

judgments and not suits for equitable relief against

the United States.”28 Plaintiffs do not seek money

damages on their takings claim. Instead, they seek

both a declaration that the Corps has violated the

24 28 U.S.C. § 1346.

25 United States v. Bormes, 133 S. Ct. 12, 16–17 (2012)

(internal quotations omitted).

26 Id. at 16.

27 Id. at 17.

28 Richardson v. Morris, 409 U.S. 464, 465–66 (1973).

90a

Takings Clause by imposing an unconstitutional

condition and an injunction permitting Plaintiffs to

furnish borrow material to HSDRRS projects

without such conditions. Plaintiffs’ claims neither

directly nor indirectly seek payment from the United

States, and as such, their claims fall outside of the

Tucker Act’s grant of jurisdiction.

A few cases, however, support the argument

that a district court may have jurisdiction to

consider a request for equitable relief on a Takings

Claim if a claim for just compensation would not be

available.29 Plaintiffs argue that such is the case

here. Plaintiffs rely on the Supreme Court’s decision

in Eastern Enterprises v. Apfel in making their

argument that a takings claim for just compensation

is unavailable to them and therefore equitable relief

is the appropriate remedy.

In Eastern Enterprises, the plaintiff argued

that the payments required by the Coal Industry

Retiree Health Benefit Act of 1992 (the “Coal Act”)

constituted an unconstitutional taking.30 The Coal

Act required plaintiff to make payments to a

privately-operated fund for the benefit of retired

miners who had previously worked for the company

when it was involved in the coal industry.31 The

See E. Enterprises v. Apfel, 524 U.S. 498 (1998);

Washington Legal Found. v. Texas Equal Access to Justice

Found., 270 F.3d 180 (5th Cir. 2001) (holding prospective relief

was appropriate when an action for just compensation was not

available) cert. granted, judgment vacated sub nom. Phillips v.

Washington Legal Found., 538 U.S. 942 (2003) (holding no

taking occurred).

29

30 Id.

31 Id.

91a

plaintiff did not seek just compensation, but rather,

requested a declaratory judgment that the Coal Act

violated the Constitution and a corresponding

injunction against its enforcement.32 A plurality of

the Supreme Court held that because the Coal Act

mandated payments to be made to a privatelyoperated fund, monetary relief against the

government was not a remedy that was available to

plaintiff, and therefore equitable relief was an

appropriate remedy.33

The Supreme Court

reaffirmed its prior statement that “the Declaratory

Judgment Act ‘allows individuals threatened with a

taking to see a declaration of the constitutionality of

the disputed governmental action before potentially

uncompensable damages are sustained.’”34

Plaintiffs argue that this case is analogous to

Eastern Enterprises because the Corps’s Mitigation

Requirement mandates that they pay funds to a

third- party mitigation bank. Defendants rebut this

statement by arguing that it is the levee contractor,

not Plaintiffs, who must purchase mitigation credits

prior to excavating the borrow material from

Plaintiffs’ property.

The Environmental Report

prepared by the Corps states that “[c]ompensatory

mitigation is required to be completed prior to

[environmental] impacts. The landowners or

contractors will accomplish compensatory mitigation

through the purchase of mitigation bank credits at

an appropriate mitigation bank . . . .”35 In the

32 Id.

33 Id. at 521.

34 Id.

35 Doc. 31-1.

92a

Suitability Determination, the Corps further states

that it will “require verification from landowners

that mitigation obligations have been met prior to

excavation.”36

Regardless, this Court fails to see how such a

distinction disrupts Plaintiffs’ argument. Whether

Plaintiffs or a third-party contractor pay funds to a

third-party mitigation bank to purchase mitigation

credits, an action for just compensation against the

government would not be available to Plaintiffs.

Because Plaintiffs are required to pay those amounts

to a party other than the government, they would be

unable to seek repayment from the government if

the Mitigation Requirement was a taking. Like in

Eastern Enterprises, the lack of a compensatory

remedy renders equitable relief the appropriate

remedy in this case.

Defendants attempt to make the distinction

that the payments at issue in Eastern Enterprises

were statutorily mandated by the Coal Act, whereas

here mitigation credits need only be purchased if

Plaintiffs seek to have their borrow material used in

an HSDRRS project. They argue that equitable

relief is available only where Congress has

affirmatively withdrawn the right to pursue an

action for just compensation by statute. In making

this argument, Defendants rely on Preseault v. I.C.C.

In Preseault, the Supreme Court held that equitable

relief was not available for claims arising out of the

Amendments to the National Trails System Act

because the Amendments did not exhibit an

unambiguous intention to withdraw a Tucker Act

36 Doc 31-2.

93a

remedy.37

This Court finds that the facts of

Preseault are readily distinguishable from those

presented here.

In Preseault, the plaintiffs challenged the

Amendments to the Trails Act, which authorized the

preservation of railroad tracks not currently in

service and authorized the interim use of that land

as recreational trails.38 The Amendments specified

that those tracks-turned-trails were not to be treated

as abandoned.39 The plaintiffs argued that this

provision ran afoul of state laws that provide that

property subject to a right-of-way easement, such as

those used by many railroads, reverts back to the

landowner upon abandonment.40

The plaintiffs

argued that the provision of the Amendments that

prevented these rights-of-way from being abandoned

constituted a taking.41

The plaintiffs therefore

sought a ruling that this portion of the Trails Act

was a taking without just compensation.42 The

Supreme Court held that such an action was

premature because the plaintiffs had not yet sought

just compensation under the Tucker Act.43

In Preseault, there was no mechanism—

established by statute or otherwise—that prevented

37 Preseault v. I.C.C., 494 U.S. 1 (1990).

38 Id.

39 Id.

40 Id.

41 Id.

42 Id.

43 Id. at 17.

94a

the plaintiffs from seeking just compensation for the

alleged taking from the government. By contrast,

the plaintiffs in Eastern Enterprises and here are

prevented from seeking just compensation from the

government because the payments of which they

complain are required to be paid to third parties.

This is a wholly different situation than that set

forth in Preseault. A Tucker Act remedy is not

available to Plaintiffs and, therefore, whether

Congress has withdrawn it is of no moment.

Accordingly, this Court relies on the Supreme

Court’s ruling in Eastern Enterprises “that it is

within the district courts’ power to award such

equitable relief” in holding that it has jurisdiction

over Plaintiffs’ claims for injunctive and declaratory

relief.

To the extent that this holding still raises

questions as to the waiver of sovereign immunity,

this Court additionally holds that the APA waives

sovereign immunity for Plaintiffs’ equitable claims

under the Takings Clause. The APA states that:

A person suffering legal wrong because

of agency action, or adversely affected

or aggrieved by agency action within

the meaning of a relevant statute, is

entitled to judicial review thereof. An

action in a court of the United States

seeking relief other than money

damages and stating a claim that an

agency or an officer or employee thereof

acted or failed to act in an official

capacity or under color of legal

authority shall not be dismissed nor

relief therein be denied on the ground

95a

that it is against the United States or

that the United States is an

indispensable party.44

Here, Plaintiffs seek declaratory and injunctive

relief on the ground that the Corps’s Mitigation

Requirement constitutes an uncompensated taking.

Plaintiffs claim that the Corps’s actions have

violated their right not to have property taken

without just compensation.45 By its plain language,

the APA waives sovereign immunity for this claim.

Plaintiffs allege the Corps—a government agency—

has violated a legal right—the right not to have

property taken without just compensation—and

have requested equitable relief to remedy such.46

5 U.S.C. § 704 states, however, that the APA’s

waiver of sovereign immunity applies only when

44 5 U.S.C. § 702.

The phrase ‘legal wrong’ under the Act means the

invasion of a legally protected right. Braude v. Wirtz, 350 F.2d

702 (9th Cir.1965).

45

THOMAS

W.

MERRILL,

ANTICIPATORY

REMEDIES FOR TAKINGS, 128 HARV. L. REV. 1630, 1643–

44 (2015) (“The problems, as always, arise in regulatory

takings cases. With respect to the federal government, the APA

contains a general waiver of sovereign immunity for actions

seeking relief other than ‘money damages.’ Thus, insofar as one

can seek declaratory or equitable relife [sic] for takings (the

issue of this Essay), the APA clears the way for suits in federal

courts of general jurisdiction. The Tucker Act, which authorizes

suits against the United States founded ‘upon the

Constitution,’ has been held to constitute a waiver of sovereign

immunity for claims seeking compensation for takings. Because

there is no other waiver of federal sovereign immunity for

claims for compensation, sovereign immunity stands as a

barrier to such claims outside the jurisdictional limits

prescribed by the Tucker Act.”).

46

96a

there is “no other adequate remedy.” “In effect, § 704

withdraws the limited waiver of immunity under [5

U.S.C.] § 702 if an adequate judicial remedy is

already available elsewhere.”47 The question then

becomes whether there is some other avenue

through which Plaintiffs could seek an adequate

remedy. This Court has already established that no

compensatory remedy is available to Plaintiffs.

Accordingly, § 704 does not prevent the APA’s

waiver of sovereign immunity from applying in this

case.

Defendants next challenge Plaintiffs’ Takings

Claim on the merits. They argue that Plaintiffs are

not entitled to injunctive relief because they are not

able to show a substantial threat of irreparable harm

in light of the availability of an action for just

compensation under the Takings Clause.

This

Court dismisses this argument for the same reason

it dismissed those made above. The provision under

the Mitigation Requirement mandating that

Plaintiffs (or their contractors) buy mitigation

credits from third-party mitigation banks renders a

claim for just compensation against the government

unavailable. Accordingly, Plaintiffs are not

forestalled from showing irreparable harm in

seeking injunctive relief. Plaintiffs’ takings claims,

therefore, survive.

B. Substantive Due Process

Defendants next argue that Plaintiffs’

substantive due process claim is “jurisdictionally

barred as premature and is subsumed by their

Consol. Edison Co. of New York v. U.S., Dep’t of

Energy, 247 F.3d 1378, 1383 (Fed. Cir. 2001).

47

97a

Takings Claim.” The substantive due process clause

“bars certain arbitrary, wrongful government actions

regardless of the fairness of the procedures used to

implement them.”48 The Supreme Court has held

that substantive due process should not apply where

another specific constitutional provision provides

protection against the challenged governmental

action.49 The Fifth Circuit, however, has rejected a

blanket rule that the Takings Clause will always

subsume a substantive due process claim relating to

the deprivation of property.50 Instead, the Fifth

Circuit has held that “a careful analysis must be

undertaken to assess the extent to which a plaintiff’s

substantive due process claim rests on protections

that are also afforded by the Takings Clause.”51

“Except in the rare cases of deprivations of property

based on, for example, illegitimate and arbitrary

governmental abuse, vague statutes, or retroactive

statutes, the takings analysis established by the

Supreme Court and [the Fifth] circuit should control

constitutional violations involving property rights

that have been infringed by governmental action.”52

Plaintiffs’ due process claim alleges the

following:

48 Zinermon v. Burch, 494 U.S. 113, 125 (1990) (internal

quotation marks omitted).

Graham v. Connor, 490 U.S. 386, 395 (U.S. 1989);

John Corp. v. City of Houston, 214 F.3d 573 (5th Cir. 2000).

49

50 John Corp., 214 F.3d at 583.

51 Id.

52 Simi Inv. Co. v. Harris Cty., Tex., 256 F.3d 323 (5th

Cir. 2001).

98a

140. Application of a Mitigation

Requirement to the impact on upland

BLHs [Bottomland Hardwood Forest] of

borrow mining, but not to any other

upland borrow mining impacts, is an

arbitrary deprivation of a property

interest in violation of the Due Process

Clause.

141. Characterization of the Idlewild

Stage 2 tract as “bottomland hardwood

forest” within the meaning of the

WRDA arbitrarily expands jurisdiction

in excess of statutory authority and

deprives Plaintiff of a property interest

in violation of the Due Process Clause.

142. Imposition of the Credit Purchase

Requirement when only costly wetlands

credits are available, rather than

allowing statutorily prescribed in-kind

mitigation, is an arbitrary deprivation

of a property interest in violation of the

Due Process Clause.53

Plaintiffs seek “declaratory and injunctive relief

from the Corps’s arbitrary and irrational imposition

of restraints that would deprive Plaintiffs of a

property interest.”54 Plaintiffs allege that this claim

is not a takings claim because it does not presuppose

lawful government action but instead complains of

arbitrary and irrational governmental action.

Defendants rebut that these allegations are the same

53 Doc. 31, p. 31.

54 Doc 85, p. 14.

99a

facts that support Plaintiffs’ takings claim—the

parties’ disagreement over the Corps’s interpretation

of the mitigation required under the WRDA as it

applies to Idlewild Stage 2. This Court agrees. These

facts are not in line with those cases in which the

Fifth Circuit has allowed a substantive due process

claim to subsist independently of a takings claim.55

Plaintiffs do not allege that a statute is

unconstitutionally vague or that the government has

abused its power in some way. Plaintiffs’ substantive

due process claims amount to a disagreement over

the Corps’s decisions regarding mitigation. Their

takings claim is sufficient to address these concerns.

Accordingly, Plaintiffs’ substantive due process

claims are dismissed with prejudice.

CONCLUSION

For the foregoing reasons, Defendants’ Motion

is GRANTED IN PART, and Plaintiffs’ substantive

due process claims are DISMISSED WITH

PREJUDICE.

New Orleans, Louisiana, this 28th day of

January, 2016.

/s/

JANE TRICHE MILAZZO

UNITED STATES DISTRICT JUDGE

See John Corp., 214 F.3d at 583 (holding that

although Takings Clause claim was not ripe, plaintiffs could

pursue substantive due process claim based on allegations that

demolition

of

buildings

was

carried

out

under

unconstitutionally vague laws); Simi Inv. Co., 256 F.3d 323

(5th Cir. 2001) (holding that plaintiff had alleged illegitimate

governmental conduct sufficient to support a substantive due

process claim when he alleged that the defendant had created a

“nonexistent park” to benefit private interests).

55

100a

[ENTERED: September 11, 2018]

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 17-30438

WHITE OAK REALTY, L.L.C.; CITRUS REALTY,

L.L.C.,

Plaintiffs - Appellants

v.

UNITED STATES ARMY CORPS OF ENGINEERS;

THOMAS P. BOSTICK, Lieutenant General, United

States Army Chief of Engineers, in his official

capacity; JOHN W. PEABODY, Major General,

Commander, Mississippi Valley Division, United

States Army Corps of Engineers, in his official

capacity;

RICHARD

L.

HANSEN,

Colonel,

Commander, New Orleans District, United States

Army Corps of Engineers, in his official capacity,

Defendants - Appellees

Appeal from the United States District Court

for the Eastern District of Louisiana

ON PETITION FOR REHEARING

Before WIENER, GRAVES, and HO, Circuit Judges.

PER CURIAM:

101a

IT IS ORDERED that the petition for

rehearing is DENIED.

ENTERED FOR THE COURT:

/s/

UNITED STATES CIRCUIT JUDGE

102a

[ENTERED: September 19, 2018]

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 17-30438

D.C. Docket No. 2:13-CV-4761

WHITE OAK REALTY, L.L.C.; CITRUS REALTY,

L.L.C.,

Plaintiffs – Appellants

v.

UNITED STATES ARMY CORPS OF ENGINEERS;

THOMAS P. BOSTICK, Lieutenant General, United

States Army Chief of Engineers, in his official

capacity; JOHN W. PEABODY, Major General,

Commander, Mississippi Valley Division, United

States Army Corps of Engineers, in his official

capacity;

RICHARD

L.

HANSEN,

Colonel,

Commander, New Orleans District, United States

Army Corps of Engineers, in his official capacity,

Defendants - Appellees

Appeal from the United States District Court for the

Eastern District of Louisiana

Before WIENER,

Judges.1

GRAVES,

and

1 Judge Ho concurs in the judgment only.

HO,

Circuit

103a

JUDGMENT

This cause was considered on the record on

appeal and was argued by counsel.

It is ordered and adjudged that the judgment

of the District Court is affirmed.

IT IS FURTHER ORDERED that plaintiffsappellants pay to defendants-appellees the costs on

appeal to be taxed by the Clerk of this Court.

Certified as a true copy and issued as the

mandate on Sep 19, 2018

Attest: Lyle W. Cayce

Clerk, U.S. Court of Appeals, Fifth Circuit

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33 U.S.C.A. § 2213

§ 2213. Flood control and other purposes

Effective: November 8, 2007

Currentness

(a) Flood control

(1) General rule

The non-Federal interests for a project with costs

assigned to flood control (other than a

nonstructural project) shall-(A) pay 5 percent of the cost of the project

assigned to flood control during construction

of the project;

(B) provide all lands, easements, rights-ofway, and dredged material disposal areas

required only for flood control and perform all

related necessary relocations; and

(C) provide that portion of the joint costs of

lands, easements, rights-of-way, dredged

material disposal areas, and relocations which

is assigned to flood control.

(2) 35 percent minimum contribution

If the value of the contributions required under

paragraph (1) of this subsection is less than 35

percent of the cost of the project assigned to flood

control, the non-Federal interest shall pay during

construction of the project such additional

amounts as are necessary so that the total

contribution of the non-Federal interests under

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this subsection is equal to 35 percent of the cost

of the project assigned to flood control.

(3) 50 percent maximum

The non-Federal share under paragraph (1) shall

not exceed 50 percent of the cost of the project

assigned to flood control. The preceding sentence

does not modify the requirement of paragraph

(1)(A) of this subsection.

(4) Deferred payment of amount exceeding

30 percent

If the total amount of the contribution required

under paragraph (1) of this subsection exceeds 30

percent of the cost of the project assigned to flood

control, the non-Federal interests may pay the

amount of the excess to the Secretary over a 15year period (or such shorter period as may be

agreed to by the Secretary and the non-Federal

interests) beginning on the date construction of

the project or separable element is completed, at

an interest rate determined pursuant to section

2216 of this title. The preceding sentence does not

modify the requirement of paragraph (1)(A) of

this subsection.

(b) Nonstructural flood control projects

(1) In general

The non-Federal share of the cost of

nonstructural flood control measures shall be 35

percent of the cost of such measures. The nonFederal interests for any such measures shall be

required to provide all lands, easements, rightsof-way, dredged material disposal areas, and

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relocations necessary for the project, but shall not

be required to contribute any amount in cash

during construction of the project.

(2) Non-Federal contribution in excess of 35

percent

At any time during construction of a project, if

the Secretary determines that the costs of land,

easements, rights-of-way, dredged material

disposal areas, and relocations for the project, in

combination with other costs contributed by the

non-Federal interests, will exceed 35 percent, any

additional costs for the project (not to exceed 65

percent of the total costs of the project) shall be a

Federal responsibility and shall be contributed

during construction as part of the Federal share.

(c) Other purposes

The non-Federal share of the cost assigned to other

project purposes shall be as follows:

(1) hydroelectric power: 100 percent, except that

the marketing of such power and the recovery of

costs of constructing, operating, maintaining, and

rehabilitating such projects shall be in

accordance with existing law: Provided, That

after November 17, 1986, the Secretary shall not

submit to Congress any proposal for the

authorization of any water resources project that

has a hydroelectric power component unless such

proposal contains the comments of the

appropriate Power Marketing Administrator

designated pursuant to section 7152 of Title 42

concerning the appropriate Power Marketing

Administration’s

ability

to

market

the

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hydroelectric power expected to be generated and

not required in the operation of the project under

the applicable Federal power marketing law, so

that, 100 percent of operation, maintenance and

replacement costs, 100 percent of the capital

investment allocated to the purpose of

hydroelectric power (with interest at rates

established pursuant to or prescribed by

applicable law), and any other costs assigned in

accordance with law for return from power

revenues can be returned within the period set

for the return of such costs by or pursuant to such

applicable Federal power marketing law;

(2) municipal and industrial water supply: 100

percent;

(3) agricultural water supply: 35 percent;

(4) recreation, including recreational navigation:

50 percent of separable costs and, in the case of

any harbor or inland harbor or channel project,

50 percent of joint and separable costs allocated

to recreational navigation;

(5) hurricane and storm damage reduction: 35

percent;

(6) aquatic plant control: 50 percent of control

operations; and

(7) environmental protection and restoration: 35

percent; except that nothing in this paragraph

shall affect or limit the applicability of section

2283 of this title.

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(d) Certain other costs assigned to project

purposes

(1) Construction

Costs of constructing projects or measures for

beach erosion control and water quality

enhancement shall be assigned to appropriate

project purposes listed in subsections (a), (b), and

(c) and shall be shared in the same percentage as

the purposes to which the costs are assigned,

except that all costs assigned to benefits to

privately owned shores (where use of such shores

is limited to private interests) or to prevention of

losses of private lands shall be borne by nonFederal interests and all costs assigned to the

protection of federally owned shores shall be

borne by the United States.

(2) Periodic nourishment

(A) In general

In the case of a project authorized for

construction after December 31, 1999, except

for a project for which a District Engineer’s

Report is completed by that date, the nonFederal cost of the periodic nourishment of the

project, or any measure for shore protection or

beach erosion control for the project, that is

carried out-(i) after January 1, 2001, shall be 40

percent;

(ii) after January 1, 2002, shall be 45

percent; and

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(iii) after January 1, 2003, shall be 50

percent.

(B) Benefits to privately owned shores

All costs assigned to benefits of periodic

nourishment projects or measures to privately

owned shores (where use of such shores is

limited to private interests) or to prevention of

losses of private land shall be borne by the

non-Federal interest.

(C) Benefits to Federally owned shores

All costs assigned to the protection of federally

owned shores for periodic nourishment

measures shall be borne by the United States.

(e) Applicability

(1) In general

This section applies to any project (including any

small project which is not specifically authorized

by Congress and for which the Secretary has not

approved funding before November 17, 1986), or

separable element thereof, on which physical

construction is initiated after April 30, 1986, as

determined by the Secretary, except as provided

in paragraph (2). For the purpose of the

preceding sentence, physical construction shall be

considered to be initiated on the date of the

award of a construction contract.

(2) Exceptions

This section shall not apply to the Yazoo Basin,

Mississippi, Demonstration Erosion Control

Program, authorized by Public Law 98-8, or to

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the Harlan, Kentucky, or Barbourville, Kentucky,

elements of the project authorized by section 202

of Public Law 96-367.

(f) “Separable element” defined

For purposes of this Act, the term “separable

element” means a portion of a project-(1) which is physically separable from other

portions of the project; and

(2) which-(A) achieves hydrologic effects, or

(B) produces physical or economic benefits,

which are separately identifiable from those

produced by other portions of the project.

(g) Deferral of payment

(1) With respect to the projects listed in

paragraph (2), no amount of the non-Federal

share required under this section shall be

required to be paid during the three-year period

beginning on November 17, 1986.

(2) The projects referred to in paragraph (1) are

the following:

(A) Boeuf and Tensas Rivers, Tensas Basin,

Louisiana and Arkansas, authorized by the

Flood Control Act of 1946;

(B) Eight Mile Creek, Arkansas, authorized

by Public Law 99-88; and

(C) Rocky Bayou Area, Yazoo Backwater Area,

Yazoo Basin, Mississippi, authorized by the

Flood Control Act approved August 18, 1941.

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(h) Assigned joint and separable costs

The share of the costs specified under this section for

each project purpose shall apply to the joint and

separable costs of construction of each project

assigned to that purpose, except as otherwise

specified in this Act.

(i) Lands, easements, rights-of-way, dredged

material disposal areas, and relocations

Except as provided under section 2283(c) of this title,

the non-Federal interests for a project to which this

section applies shall provide all lands, easements,

rights-of-way, and dredged material disposal areas

required for the project and perform all necessary

relocations, except to the extent limited by any

provision of this section. The value of any

contribution under the preceding sentence shall be

included in the non-Federal share of the project

specified in this section.

(j) Agreement

(1) Requirement for agreement

Any project to which this section applies (other

than a project for hydroelectric power) shall be

initiated only after non-Federal interests have

entered into binding agreements with the

Secretary to pay 100 percent of the operation,

maintenance, and replacement and rehabilitation

costs of the project, to pay the non-Federal share

of the costs of construction required by this

section, and to hold and save the United States

free from damages due to the construction or

operation and maintenance of the project, except

for damages due to the fault or negligence of the

United States or its contractors.

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(2) Elements of agreement

The agreement required pursuant to paragraph

(1) shall be in accordance with the requirements

of section 1962d-5b of Title 42 and shall provide

for the rights and duties of the United States and

the non-Federal interest with respect to the

c

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