United States District Court, D. Minnesota
Gerald W. Von Korff and Jonathan D. Wolf, RINKE NOONAN, P.O. Box 1497, St. Cloud, MN 56302, for plaintiff.
Carol Lee Draper, UNITED STATES DEPARTMENT OF JUSTICE, 601 D Street NW, Room 3106, Washington DC 20579; Friedrich A. P. Siekert, Assistant United States Attorney, UNITED STATES ATTORNEY'S OFFICE, 600 United States Courthouse, 300 South Fourth Street, Minneapolis, MN 55415, for defendants.
Robert E. Cattanach and Michael R. Drysdale, DORSEY & WHITNEY LLP, 50 South Sixth Street, Suite 1500, Minneapolis, MN 55402, for intervenor defendant.
Jill S. Nguyen, Assistant Attorney General, MINNESOTA ATTORNEY GENERAL'S OFFICE, 445 Minnesota Street, Suite 1800, St. Paul, MN 55101, for amicus curiae Minnesota Department of Natural Resources.
Matthew A. Sagsveen, Assistant Attorney General, NORTH DAKOTA ATTORNEY GENERAL'S OFFICE, 500 North Ninth Street, Bismarck, ND 58501, for amicus curiae State of North Dakota.
MEMORANDUM OPINION AND ORDER ON MOTIONS TO DISMISS AND MOTION FOR PRELIMINARY INJUNCTION
JOHN R. TUNHEIM, District Judge.
This case involves a large-scale flood diversion project being planned in the Fargo-Moorhead region of Minnesota and North Dakota ("diversion project" or "project"). Plaintiff Joint Powers Authority of Richland County, North Dakota, and Wilkin County, Minnesota ("Joint Powers" or "JPA"), which was formed to represent the interests of political subdivisions and citizens affected by the diversion project,  brought this action against the United States Army Corps of Engineers ("the Corps") and various individuals (collectively, "federal defendants" or simply, "the Corps"), alleging violations of the National Environmental Policy Act ("NEPA") and the Administrative Procedure Act ("APA"). The Corps is the federal entity involved in developing the diversion project on the Red River, in response to flooding in Fargo, North Dakota, and Moorhead, Minnesota, and surrounding areas, most recently in 2009.
The JPA initially filed this action on August 19, 2013. The Court later granted a motion to intervene filed by the Corps' local sponsor in developing the project: the Fargo-Moorhead Diversion Board of Authority ("Diversion Authority" or "Authority"). Part of the diversion project involves a ring levee around the three North Dakota communities of Oxbow, Hickson, and Bakke ("OHB ring levee"). Construction on the OHB ring levee began last summer - in June 2014 - and portions of the eastern and southern sides of the ring levee have been built. On June 13, 2014, the JPA filed an action in Wilkin County District Court against the Diversion Authority, seeking to enjoin the construction of the OHB ring levee because Minnesota's environmental review of the diversion project had not yet been completed. This Court granted the Authority's motion to enjoin the state court action, but welcomed the JPA to assert its state law claims in this action. Richland/Wilkin Joint Powers Auth. v. U.S. Army Corps of Eng'rs ( Richland/Wilkin ), 38 F.Supp. 3d 1043, 1045 (D. Minn. 2014).
The JPA filed a third amended complaint on November 4, 2014. In it, the JPA asserts NEPA violations against the Corps in Counts I and II. In Counts III-V, it also alleges against both defendants violations of the Minnesota Environmental Rights Act ("MERA"), the Minnesota Environmental Policy Act ("MEPA"), and state and local permitting laws. The JPA has brought a preliminary injunction motion, seeking to enjoin construction of the OHB ring levee. The Corps and the Diversion Authority have both brought motions to dismiss the state and local law claims found in Counts III-V of the third amended complaint. The Corps argues that sovereign immunity bars the state and local law claims against the federal government. The Authority makes several arguments in favor of dismissal, one of which is that any application of Minnesota law to construction in North Dakota violates the United States Constitution's so-called dormant Commerce Clause.
Because state and local environmental law does not bind the federal government, the Court will grant the Corps' motion to dismiss Counts III-V of the third amended complaint. Claims III and IV as asserted against the Diversion Authority are not precluded by the dormant Commerce Clause, however, so the Court will deny the Authority's motion to dismiss these counts. The Court will dismiss Count V against the Authority. Finally, the Court concludes that the JPA has shown a fair chance of prevailing on the merits of at least some of its state law claims, and has met the other preliminary injunction factors. Consequently, the Court will grant the JPA's motion for a preliminary injunction.
I. DIVERSION PROJECT BACKGROUND
The adjacent communities of Fargo, North Dakota, and Moorhead, Minnesota, and the Red River Basin more broadly, have routinely experienced significant flooding, particularly in the last 25 years. (Ex. E ("FEIS Executive Summary") at 14, Feb. 12, 2015, Docket No. 162.) In particular, the record 2009 spring flood reached a flood stage of 40.8 feet. ( Id. ) The Corps characterized that flood as a 2-percent chance (otherwise called a 50-year (i.e., twice in 100 years)) event. ( Id. ) The affected cities had largely been responding to flooding with short-term emergency measures. ( Id. )
Several entities came together to propose various permanent measures to reduce the flood risk in the Fargo-Moorhead metropolitan area. These measures included a noaction alternative and the continued use of emergency measures; non-structural mitigation measures; flood barriers, including levees; increased conveyance of flood waters, including through the construction and use of water diversion channels; and flood storage. ( Id. ) The various alternatives were analyzed for their effectiveness, environmental effects, social effects, acceptability, implementability, cost, risk, separable mitigation, and cost effectiveness. ( Id. ) An initial Alternatives Screening Document was issued in December 2009 that resulted in two diversion concepts being carried forward: one in Minnesota and one in North Dakota. ( Id. ) All diversion channel options involve the construction upstream of a "control structure" or, as the Minnesota Department of Natural Resources ("MDNR") characterizes it, a high-hazard dam. (Ex. B (Decl. of Aaron Snyder ("Snyder Decl.")) ¶ 12, Feb. 12, 2015, Docket No. 162.)
A draft Environmental Impact Statement ("Draft EIS" or "DEIS") was completed in May 2010 and released on June 11, 2012, proposing three possible plans: a National Economic Development plan ("NED"), which would have the capacity to divert 40, 000 cubic feet of water per second (cfs) in Minnesota; the Locally Preferred Plan ("LPP"), which would divert 35, 000 cubic feet per second on the North Dakota side; and the Federally Comparable Plan ("FCP"), which would involve a diversion rate of 35, 000 cfs on the Minnesota side. (FEIS Executive Summary at 14-17.) Pursuant to the joint request of the cities of Fargo and Moorhead and counties of Clay and Cass, the Assistant Secretary of the Army for Civil Works approved the designation of the LPP as the tentatively selected plan on April 28, 2010. ( Id. at 16.)
In September 2010, hydraulic modeling indicated that the LPP "would have more extensive downstream impacts than previously anticipated." ( Id. at 17.) As a result, a supplemental DEIS ("SDEIS") was released in April 2011. ( Id. ) That SDEIS assessed and tentatively recommended several changes to the LPP, including reducing the capacity of the diversion channel, "raising upstream tie-back levee elevations, adding a 50, 000 acre-foot storage area and a 150, 000 acre-foot staging area, and compensating most affected landowners within the storage and staging areas." ( Id. ) These revisions reduced the downstream impacts of the diversion project, but increased the upstream impacts. ( Id. ) The addition of the staging area decreased the capacity requirements of the diversion channel to 20, 000 cfs. (Snyder Decl. ¶ 20.) It was initially estimated that the staging area would be utilized once every four years. ( Id. ¶ 21.)
In July 2011, the Final Feasibility Report and EIS ("FEIS") was released, which considered comments received on the SDEIS and made several more revisions. (FEIS Executive Summary at 17.) In a December 19, 2011 report ("Chief's Report") to the Secretary of the Army, the then-Acting Chief of the Engineers of the Corps, Major General Merdith W. B. Temple, recommended the diversion project for authorization. (Second Decl. of Bruce Spiller ("Second Spiller Decl."), Ex. A ("Chief's Report") at 9, July 8, 2014, Docket No. 69.) The Office of Management and Budget ("OMB") then determined the project was consistent with Administration policy and the final Record of Decision was signed on April 3, 2012. (Snyder Decl. ¶ 24; see also Ex. D (Record of Decision ("ROD")), Feb. 12, 2015, Docket No. 162.)
Subsequent design and engineering studies led to additional proposed modifications. (Ex. H ("Supplemental EA") at 7, Feb. 12, 2015, Docket No. 162.) One of these modifications was the OHB ring levee, which would protect the OHB communities - all of which lie within the SDEIS's new flood-water staging area - from being flooded. ( Id. at 7, 22-23.) In September 2013, the Corps released a supplemental environmental assessment ("EA") which evaluated various versions of this modification, along with a no-action alternative, and which ultimately proposed a full levee around the OHB communities. ( Id. at 22-23, 55.) The EA also proposed in-town levees for Fargo, which would reduce the usage of the staging area to once every ten years. ( Id. at 32, 36.)
Last year, Congress enacted the Water Resources Reform and Development Act of 2014 ("WRRDA 2014" or "WRRDA"). Pub. L. No. 113-121, 128 Stat. 1193 (2014). The President signed WRRDA into law on June 10, 2014. Id. In response to the Corps' recommendation that the diversion project be approved, WRRDA 2014 specifically authorized the project. Pub. L. No. 113-121, § 7002(2)(4). The law authorizes a total project cost of $1, 924, 300, 000. Id. $846, 700, 000 of the project would be federally funded; $1, 077, 600, 000 would be non-federally funded. Id. The law notes that that project should be "carried out by the Secretary substantially in accordance with the plan, and subject to the conditions, described in the respective reports designated in this section." Id. § 7002.
Although the project has been authorized, no federal construction funding has been earmarked for it yet, and construction funds were not included in the President's FY 2015 or FY 2016 budgets. (Decl. of Kent Lokkesmoe ¶ 17, July 22, 2014, Docket No. 80.) The project has received $40 million total in federal funds to date; it has received portions of that $40 million in each fiscal year since 2008. (Snyder Decl. ¶ 26.) Those funds have been used for the feasibility study and project design. ( Id. )
The Authority began construction on the OHB levee in June 2014 and has completed portions of it along its southern and eastern borders. (Ex. A (Decl. of Brett R. Coleman ("Coleman Decl.")) at 6-7, Feb. 12, 2015, Docket No. 162.) The Corps is overseeing this work. ( Id. ) The Corps has determined that the OHB ring levee is integral to the diversion project and the Diversion Authority is thus receiving in-kind contribution credit for its work on the levee toward the required non-federal cost of the project pursuant to 42 U.S.C. § 1962d-5b(a)(4). (Second Spiller Decl., Ex. B ("Integral Determination Report").)
II. THE STATE OF MINNESOTA AND THE DIVERSION PROJECT
As the Court discussed in greater detail in its prior order, the State of Minnesota has expressed concerns about the diversion project and the scope of the Corps' environmental review on several occasions. See Richland/Wilkin, 38 F.Supp. 3d at 1046-48. As to the OHB ring levee in particular, the MDNR expressed the concern that beginning construction on the levee prior to the completion of the state's environmental review would violate Minnesota law, unless the levee was an independent project that would be constructed even if the full diversion project was not. Id. at 1048.
The MDNR determined that, because the project included a Class I high-hazard dam, it would require the MDNR - as the responsible governmental unit ("RGU") - to complete a full State EIS, in addition to the federal environmental review. (Decl. of Randall Doneen ("First Doneen Decl.") ¶ 12, July 22, 2014, Docket No. 81.); see also Minn. R. 4410.4400, subp. 18. Although the Corps did not address all of the Diversion Authority's comments on its DEIS and SDEIS, it recognized the state's need to complete its own review and agreed with the MDNR that the state process would begin when the Corps' FEIS was released. (Decl. of Michael R. Drysdale ("Drysdale Decl."), Ex. E ("FEIS App. U"), Feb. 12, 2015, Docket No. 152.)
Minnesota's environmental review of the entire diversion project is ongoing. (Second Decl. of Randall Doneen ("Second Doneen Decl.") ¶ 2, Mar. 12, 2015, Docket No. 180.) The MDNR expects to release its own State DEIS in August of 2015. ( Id. ) After a public comment period, the MDNR will complete a State FEIS and an adequacy determination. ( Id. ) It expects to complete this process by late fall of 2015 or early 2016. ( Id. ¶ 3.) The state is considering several options, including a no-build alternative; the diversion project as proposed in the Corps' Final EIS; the diversion project as proposed, but moving the high-hazard dam one mile north; and the Distributed Storage Alternative ("DSA") favored by the JPA. (Decl. of Gerald Von Korff ("Third Von Korff Decl."), Ex. E (MDNR Final Scoping Decision) at 6-10, July 15, 2014, Docket No. 71.) The MDNR released a Final Scoping Decision Document for its DEIS in 2014. (First Doneen Decl. ¶ 40; Second Doneen Decl. ¶ 5.) Also in 2014, the MDNR completed a screening report on the DSA option favored by the JPA, which concluded that the DSA "does not meet the project purpose of flood protection from catastrophic flood events." (Second Doneen Decl. ¶ 6.) However, public comments could cause the MDNR to reconsider the DSA option and thus the MDNR has cautioned that "it is incorrect to say that the DSA has been dropped from consideration in the State environmental review." ( Id. ¶ 7.)
In August 2014, Governor Dayton wrote the Assistant Secretary of the Army for Civil Works to express strong concern over the diversion project. (Decl. of Gerald Von Korff ("Fifth Von Korff Decl."), Ex. 1, Feb. 11, 2015, Docket No. 125.) The Governor noted that while Minnesota would only accrue some 10% of the benefits of the project, it would nevertheless bear much of the cost because the staging area would result in flooding of Minnesota farmland that generally does not flood. ( Id. at 2.) Indeed, the Governor specifically stated that "a major feature of the Project's design appears to be the flooding of Minnesota (and North Dakota) farmland in order to assure North Dakota developers that their investments will be safeguarded." ( Id. ) The letter stated that "construction of the [OHB] Ring Levee, prior to completion of Minnesota's EIS, violates our state's law." ( Id. ) The Governor urged a halt to any construction on the project in general, and the OHB ring levee in particular. ( Id. at 3.) The Governor also met directly with Diversion Authority officials regarding his concerns. (Decl. of Darrell Vanyo ("Third Vanyo Decl.") ¶ 2, Feb. 12, 2015, Docket No. 159.) The Diversion Authority responded in September 2014 with several concessions: (1) the OHB ring levee - which is being constructed entirely in North Dakota - would only be built to 100-year flood protection levels (i.e., a level that would be useful to the OHB cities whether the broader diversion project is completed or not); (2) no other construction on the diversion project's actual diversion channel would take place until the State EIS is complete (although the letter also encouraged the MDNR to complete its DEIS by July 1, 2015); and (3) the Diversion Authority would add representation from a broader geographic area, including upstream Minnesota interests. (Third Vanyo Decl., Ex. A.) More recently, the Governor has called for a complete freeze on all summer 2015 diversion project construction, pending Minnesota's environmental review.
III. THIS PROCEEDING
The JPA filed its third amended complaint on November 4, 2014. (Third. Am. Compl., Nov. 4, 2014, Docket No. 112.) The JPA lists as defendants the Corps and the individual Corps officials, along with the Diversion Authority as defendant-intervenor. ( Id. ) The Corps alleges five counts. Counts I-II, under NEPA, are only against the federal defendants. ( Id. at 1, ¶ 123.) Counts III-V, which assert state and local law claims, are against the federal defendants and the Diversion Authority. ( Id. at 1, ¶ 123.)
Count I alleges that the federal defendants violated NEPA in the DEIS and FEIS by (1) failing to address appropriate alternatives to the LPP; (2) failing to address the claim that the LPP may violate Minnesota law; and (3) failing to address the argument that the project violates Executive Order 11988 and state and national flood plain management policy. ( Id. ¶¶ 88-117.) Count II alleges that the federal defendants violated NEPA by filing only an EIS and Finding of No Significant Impact ("FONSI") as to the OHB ring levees. ( Id. ¶¶ 118-22.)
Count III, against both the federal defendants and the Authority, is styled as a MERA claim, but it cites both the definition of pollution in MERA and MEPA's ban on state action that significantly impacts the environment when feasible and prudent alternatives are available. ( Id. ¶¶ 123-30.) Count IV, also against both the federal defendants and the Authority, alleges that ongoing construction - on the OHB ring levee, in particular - violates MEPA; specifically, violates Minnesota Rule 4410.3100's bar on starting a project before an EIS has been completed and determined adequate. ( Id. ¶¶ 131-33.) Finally, Count V, against all defendants, alleges violations of state and local permitting laws, since construction on the OHB ring levee has begun but the applicable permits on other parts of the project, like the dam, have not been issued. ( Id. ¶¶ 134-39.)
The JPA filed a motion for a preliminary injunction, seeking a temporary halt to any construction on the OHB ring levee. (Pl.'s Mot. for Prelim. Inj., Feb. 11, 2015, Docket No. 122.) The Corps filed a motion to dismiss the state and local law claims - Counts III-V. (Corps Partial Mot. to Dismiss Third Am. Compl., Feb. 11, 2015, Docket No. 141.) The Diversion Authority also filed a motion to dismiss Counts III-V. (Diversion Authority Mot. to Dismiss/Remit, Feb. 11, 2015, Docket No. 145.)
Finally, the State of Minnesota through the MDNR filed an amicus brief, arguing against dismissal of the state law claims against the Diversion Authority and supporting the injunction motion. (Amicus Br. of MDNR ("MDNR Br."), Mar. 12, 2015, Docket No. 179.) The State of North Dakota filed a motion to appear as amicus curiae and lodged a brief in support of the opposition to the preliminary injunction motion and in support of the Authority's dismissal motion. (State of North Dakota's Unopposed Mot. for Leave to Participate as Amicus Curiae, Mar. 25, 2015, Docket No. 185; Amicus Br. of State of North Dakota ("North Dakota Br."), Mar. 25, 2015, Docket No. 188.) The Court will grant North Dakota's unopposed motion to appear as amicus curiae.
I. MOTIONS TO DISMISS
A. Standards of Review
1. Rule 12(b)(1) Dismissal Motion
A motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(1) challenges the Court's subject matter jurisdiction and requires the Court to examine whether it has authority to decide the claims. Uland v. City of Winsted, 570 F.Supp.2d 1114, 1117 (D. Minn. 2008). Both the Corps' sovereign immunity argument for dismissal, and the Authority's standing argument, are analyzed under the Rule 12(b)(1) standard. See Brown v. Dosal, No. 10-4315, 2011 WL 1990445, at *2 (D. Minn. May 23, 2011). It is the plaintiff's burden to establish that jurisdiction exists. Osborn v. United States, 918 F.2d 724, 730 (8th Cir. 1990). In deciding a motion to dismiss for lack of subject matter jurisdiction, the Court is "free to weigh the evidence and satisfy itself as to the existence of its power to hear the case." Id. (quotation marks omitted). If the Court finds that jurisdiction is not present, it must dismiss the matter. Fed.R.Civ.P. 12(h)(3); Ruhrgas AG v. Marathon Oil Co., 526 U.S. 574, 583-84 (1999). The Court is generally barred, however, "from dismissing a case with prejudice if it concludes subject matter jurisdiction is absent." Cnty. of Mille Lacs v. Benjamin, 361 F.3d 460, 464 (8th Cir. 2004) (emphasis added).
A motion to dismiss for lack of subject matter jurisdiction pursuant to Rule 12(b)(1) may challenge the plaintiff's complaint either on its face or on the factual truthfulness of its averments. See Osborn, 918 F.2d at 729 n.6. A facial challenge, such as one based on the defendant's sovereign immunity, "does not call upon the Court to engage in a factual review by inquiring into and resolving factual disputes." Issaenko v. Univ. of Minn., No. 13-3605, 2014 WL 4954646, at *9 (D. Minn. Sept. 30, 2014) (internal quotation marks and alterations omitted). In a facial challenge to jurisdiction, the Court will decide "whether the asserted jurisdictional basis is patently meritless by looking to the face of the complaint, and drawing all reasonable inferences in favor of the plaintiff." Id. (internal quotation marks omitted). In a factual attack, the Court ...