Agred Foundation v. U.S. Army Corps of Engineers ( 2021 )

United States Court of Appeals
For the Eighth Circuit
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No. 20-2102
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Agred Foundation
lllllllllllllllllllllPlaintiff - Appellant
v.
The United States Army Corps of Engineers; The Honorable Mark T. Esper, in his
official capacity as Secretary of the United States Army
lllllllllllllllllllllDefendants - Appellees
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Appeal from United States District Court
for the Western District of Arkansas - Texarkana
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Submitted: February 18, 2021
Filed: July 8, 2021
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Before SMITH, Chief Judge, WOLLMAN and STRAS, Circuit Judges.
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SMITH, Chief Judge.
The AGRED Foundation (AGRED) seeks a declaratory judgment regarding its
rights and obligations under a written agreement with the United States. The United
States Army Corps of Engineers (USACE), acting on behalf of the United States,
moved to dismiss for lack of subject matter jurisdiction on the grounds that AGRED
lacks standing. The district court1 dismissed AGRED’s claim after concluding that its
injury was not caused by the USACE. We affirm.
I. Background
Lake Erling is a man-made reservoir located in Lafayette County, Arkansas.
International Paper Company (IP) built Lake Erling in 1956 as a water source for its
paper mill. The lake, which spans approximately 7,100 acres, covers some land
owned by the United States. In 1952, before building the lake, IP entered into an Act
of Exchange with the United States.2 The Act of Exchange granted IP the right to
flood the government’s land, with several conditions. In relevant part, the Act of
Exchange (1) prohibited IP from placing restrictions on the public’s use of Lake
Erling and (2) required IP to allow public access to the lake over IP’s land. The Act
of Exchange stated:
It is understood and agreed that International Paper Company
shall place no restrictions upon the public use of the water area of the
industrial water supply reservoir located on its lands either for flood
control, recreational, wild life, or fishing and hunting purposes; and that
1
The Honorable Susan O. Hickey, Chief Judge, United States District Court for
the Western District of Arkansas.
2
The United States entered into the Act of Exchange pursuant to 33 U.S.C.
§ 558b, which provides:
In any case in which it may be necessary or advisable in the execution
of an authorized work of river and harbor improvement to exchange land
or other property of the Government for private lands or property
required for such project, the Secretary of the Army may, upon the
recommendation of the Chief of Engineers, authorize such exchange
upon terms and conditions deemed appropriate by him, and any
conveyance of Government land or interests therein necessary to effect
such exchange may be executed by the Secretary of the Army . . . .
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it will permit and grant access over its lands adjoining the water area
over and through routes to be agreed upon and designated by the
Company and the United States.
Compl., Ex. A, at 7, Agred Found. v. U.S. Army Corps of Eng’rs, No. 4:18-cv-04136-
SOH (W.D. Ark. 2018), ECF No. 1-1. IP satisfied its obligations under the Act of
Exchange, allowing public access to the lake and maintaining public access points
over its land.
This state of affairs continued until 2013, when IP conveyed its interest in the
land beneath Lake Erling to AGRED. As part of the conveyance, AGRED agreed to
assume all of IP’s obligations and duties under the Act of Exchange. AGRED and the
United States entered into a Memorandum of Understanding (“Memorandum”)
regarding routes of public access to the lake. For example, the parties stipulated that
the boat launch ramp at one end of the lake would continue to be a route of public
access to Lake Erling and that designating the ramp as a route of public access
“fulfills the parties’ designation obligations in the Act of Exchange.” Compl., Ex. D,
at 2, Agred Found. v. U.S. Army Corps of Eng’rs, No. 4:18-cv-04136-SOH (W.D.
Ark. 2018), ECF No. 1-4. The Memorandum did not address charging fees for other
access to the lake.
Once AGRED assumed ownership of Lake Erling, it began charging fees for
certain access to the water. This included fees for adjoining landowners to have
private access to the lake, fees for permits to build or maintain structures along the
water, and fees for boat and trailer decals. In March 2016, Friends of Lake Erling
Association (FOLEA), a group of individuals who either live near or use the lake,
sued AGRED for declaratory and injunctive relief in the Lafayette County Circuit
Court. FOLEA sought to prevent AGRED from charging fees related to accessing
Lake Erling. In June 2016, the state court granted FOLEA’s motion for summary
judgment. It agreed with FOLEA that AGRED’s fee-generating program constituted
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an impermissible restriction on the public’s access to the lake pursuant to the Act of
Exchange and permanently enjoined AGRED from charging fees to access the lake.
AGRED appealed, but the Arkansas Court of Appeals dismissed the appeal in
October 2017 for lack of a final order and remanded the case for further
consideration. See AGRED Found. v. Friends of Lake Erling Ass’n, 2017 Ark. App.
510 (2017). The state court litigation is ongoing.3
Shortly after FOLEA sued AGRED, but prior to the state court’s injunction,
AGRED contacted the United States, requesting that it publicly recognize that
AGRED is entitled to charge fees under the terms of the Act of Exchange. The United
States, acting through the USACE, responded in August 2016 that it takes no position
on the issue. It explained that “the Act of Exchange neither authorizes nor prohibits
fee-setting and fee-collecting”; that “the [Memorandum], like the Act of Exchange,
is silent on fee-setting and fee-collecting”; and that “[b]oth instruments speak for
themselves[] as to what they include and what they omit.” Compl., Ex. E, at 1, 2,
Agred Found. v. U.S. Army Corps of Eng’rs, No. 4:18-cv-04136-SOH (W.D. Ark.
2018), ECF No. 1-5. It also noted that “fee-setting and fee-collecting by [AGRED]
are not matters within the [USACE’s] purview.” Id. at 2.
Disappointed by the USACE’s response, AGRED filed this action against the
USACE, seeking a declaratory judgment that its fee-generating program is consistent
with its rights under the Act of Exchange. The USACE moved to dismiss for lack of
subject matter jurisdiction on the grounds that (1) AGRED lacks standing to sue,
(2) the USACE is entitled to sovereign immunity, and (3) the Declaratory Judgment
Act is not applicable to this case. The USACE maintained that it takes no position
regarding whether AGRED is permitted to charge fees under the Act of Exchange.
3
The Lafayette County Circuit Court again granted summary judgment to
FOLEA in May 2020. AGRED filed a second appeal, which is pending.
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The district court granted the USACE’s motion to dismiss, concluding that it
lacked subject matter jurisdiction over AGRED’s claim because AGRED does not
have standing.4 The district court held that AGRED had suffered an injury but that the
injury alleged—being sued in state court by FOLEA—was not caused by the USACE.
Rather, it found that “[t]he Lafayette County litigation was precipitated by
[AGRED’s] decision to charge fees—not [the USACE’s] decision to remain silent on
the issue.” Agred Found. v. U.S. Army Corps of Eng’rs, No. 4:18-cv-04136, 2020 WL
2114928, at *5 (W.D. Ark. May 4, 2020). AGRED timely appealed.
II. Discussion
Article III of the Constitution extends the judicial power of the United States
to “Cases” and “Controversies” only. U.S. Const. art. III, § 2. “Constitutional
standing (as opposed to statutory standing) is a threshold question that determines
whether a federal court has jurisdiction over a plaintiff’s claims.” Kuhns v. Scottrade,
Inc., 868 F.3d 711, 716 (8th Cir. 2017).
The irreducible constitutional minimum of standing contains three
requirements. First and foremost, there must be alleged (and ultimately
proved) an injury in fact—a harm suffered by the plaintiff that is
concrete and actual or imminent, not conjectural or hypothetical.
Second, there must be causation—a fairly traceable connection between
the plaintiff’s injury and the complained-of conduct of the defendant.
And third, there must be redressability—a likelihood that the requested
relief will redress the alleged injury. This triad of injury in fact,
causation, and redressability constitutes the core of Article III’s
case-or-controversy requirement . . . .
Steel Co. v. Citizens for a Better Env’t, 523 U.S. 83, 102–104 (1998) (cleaned up).
4
Because the standing issue was dispositive, the district court did not address
sovereign immunity and the applicability of the Declaratory Judgment Act.
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A plaintiff who brings suit in federal court has the burden of establishing
standing. Id. If he cannot, his complaint must be dismissed for lack of subject matter
jurisdiction. Iowa Right To Life Comm., Inc. v. Tooker, 717 F.3d 576, 584 (8th Cir.
2013). “We review a district court’s dismissal for lack of subject matter jurisdiction
de novo.” Kuhns, 868 F.3d at 715.
AGRED argues that the district court erred in concluding that it does not have
standing. Because the parties do not dispute the district court’s finding that AGRED
suffered an injury-in-fact, we go straight to the second requirement of causation. For
causation to exist, “the injury has to be fairly traceable to the challenged action of the
defendant, and not the result of the independent action of some third party not before
the court.” Lujan v. Defs. of Wildlife, 504 U.S. 555, 560 (1992) (cleaned up).
“[T]raceability . . . requires the plaintiff to show a sufficiently direct causal
connection between the challenged action and the identified harm. That connection
cannot be overly attenuated.” Dantzler, Inc. v. Empresas Berríos Inventory &
Operations, Inc., 958 F.3d 38, 47 (1st Cir. 2020) (quotations and citation omitted).
We agree with the district court that AGRED has not established a causal
connection between its injury and the USACE’s conduct.5 The injury to AGRED, as
alleged by AGRED and articulated by the district court, is that “[AGRED] is subject
to a state-court injunction preventing it from charging fees relating to the use of its
property without being subject to contempt and sanctions.” Agred Found., 2020 WL
5We note that AGRED argues at length that the district court erred in
concluding that it lacks standing because it caused its own injury. This misconstrues
the district court’s holding and confuses the issues. While the district court did find
that AGRED caused its own injury when it “opened the door for third parties to file
suit,” the relevant finding was that AGRED’s “injury was not caused by [the
USACE’s] failure to recognize their right to charge fees.” Agred Found., 2020 WL
2114928, at *5 (emphasis added). The relevant question before us is whether the
USACE caused AGRED’s injury.
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2114928, at *4. AGRED contends that the USACE caused this injury by failing to
acknowledge its rights to charge fees under the Act of Exchange. We are not
convinced.
There are several kinks in AGRED’s causal chain. First, AGRED’s alleged
injury, the state-court injunction, results directly from FOLEA’s thus far successful
lawsuit, not from the USACE’s refusal to take a position on the issue of fee-charging.
FOLEA—not the USACE—sued AGRED. In fact, AGRED did not ask the USACE
to take a position as to fee-charging until after FOLEA sued. Therefore, the injury
began independently of any action or inaction by the USACE. Second, the USACE
did not announce its position until five months after the state court litigation
began—and over one month after the state court’s ruling. The fact that AGRED’s
injury had been ongoing for five months before the USACE’s alleged wrongdoing
renders it logically implausible as a cause of AGRED’s asserted injury. Third, when
the USACE did take the position that it believed the Act of Exchange to be silent on
the issue of fee-setting, this had no effect on the state court litigation. At base,
AGRED’s theory of causation is that the USACE caused its injury by failing, after the
fact, to agree with AGRED’s interpretation of the Act of Exchange. “For purposes of
Article III, too many factors stand in the way of a direct causal relationship.” Miller
v. Redwood Toxicology Lab’y, Inc., 688 F.3d 928, 936 (8th Cir. 2012).
AGRED attempts to reframe the issue by painting itself as the “object” of the
USACE’s action or inaction. See Alexis Bailly Vineyard, Inc. v. Harrington, 931 F.3d
774, 777–78 (8th Cir. 2019) (“When a plaintiff is the object of government action,
‘there is ordinarily little question that the action or inaction has caused him
injury . . . .’” (quoting Lujan, 504 U.S. at 561–62)). For example, it argues that it is
under threat of future enforcement because the USACE could later decide that
fee-setting is not allowed and then enforce the relevant portion of the Act of
Exchange against AGRED. It is true that “[i]n pre-enforcement cases,” an injury can
arise from the “credible threat of” enforcement or prosecution. See, e.g., id. at 778
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(holding that plaintiffs had standing to seek a declaratory judgment that a provision
of Minnesota law was unconstitutional because they faced a credible threat of
enforcement of the law, which the defendants had the authority to enforce). But this
is not a pre-enforcement case because AGRED’s injury is not the threat of future
enforcement from the USACE. That is neither the injury the district court found nor
the injury that AGRED has argued thus far. Regardless, this injury is speculative and
not imminent, given that the USACE has repeatedly refused to take a position on the
fees and views them as being outside its “purview.” See Steel Co., 523 U.S. at 103(explaining that the injury must be “actual or imminent, not conjectural or
hypothetical” (internal quotation marks omitted)).
AGRED also tries to reframe this as a contract dispute between itself and the
USACE. AGRED relies on Maytag Corp. v. International Union, United Automobile,
Aerospace & Agricultural Implement Workers of America, where we explained that
“[i]n the context of disputes between parties to a contract, the declaratory judgment
remedy ‘is intended to provide a means of settling an actual controversy before it
ripens into a violation of the civil or criminal law, or a breach of a contractual duty.’”
687 F.3d 1076, 1081 (8th Cir. 2012) (quoting Rowan Cos. v. Griffin, 876 F.2d 26, 28
(5th Cir. 1989)). But this requires, among other things, that the “contractual dispute
[be] real, in the sense that it is not factually hypothetical.” Id. at 1082.
Here, there is no real contractual dispute between AGRED and the USACE.
The USACE expressly stated that it not only takes no position regarding AGRED’s
contractual obligations, but also that fee-setting and fee-collecting “are not matters
within [its] purview.” Compl., Ex. E, at 2. AGRED claims that “[b]ecause it is the
[USACE] that would have authority to enforce any provision of the Act of Exchange
that might limit AGRED’s rights in its own property, AGRED’s injury is ‘fairly
traceable’ to the Act of Exchange and the [USACE].” Appellant’s Reply Br. at 9. This
argument is logically flawed; even if the USACE is the only party with the authority
to enforce a contract under the Act of Exchange, this does not mean that it will choose
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to do so. We find the same logical flaw in AGRED’s claim that it has standing
because “AGRED and the [USACE] are the only parties to the Act of Exchange and
therefore the only parties with any standing or authority to assert any right under the
Act of Exchange.” Id. at 8 (citation omitted). AGRED’s lack of standing against
someone else does not create standing against the USACE.
AGRED fails to meet the causation requirement for standing because it cannot
show that its injury is fairly traceable to the USACE. Accordingly, the district court
properly dismissed its claim for lack of subject matter jurisdiction.
III. Conclusion
For the foregoing reasons, we affirm the district court’s judgment.
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