City of Fernley v. Ernest Conant ( 2023 )


Menu:
  •                              NOT FOR PUBLICATION                         FILED
    UNITED STATES COURT OF APPEALS                       MAR 17 2023
    MOLLY C. DWYER, CLERK
    U.S. COURT OF APPEALS
    FOR THE NINTH CIRCUIT
    CITY OF FERNLEY,                                No.    22-15400
    Plaintiff-Appellant,            D.C. No.
    3:21-cv-00119-MMD-CLB
    and
    DAVID F. STIX, Jr.; DEENA E.                    MEMORANDUM*
    EDMONSTON,
    Intervenor-Plaintiffs,
    v.
    ERNEST A. CONANT, Regional Director of
    the U.S. Bureau of Reclamation; et al.,
    Defendants-Appellees,
    and
    PYRAMID LAKE PAIUTE TRIBE,
    Intervenor-Defendant-
    Appellee.
    CITY OF FERNLEY,                                No.    22-15603
    Plaintiff,                      D.C. No.
    3:21-cv-00119-MMD-CLB
    *
    This disposition is not appropriate for publication and is not precedent
    except as provided by Ninth Circuit Rule 36-3.
    and
    DAVID F. STIX, Jr.; DEENA E.
    EDMONSTON,
    Intervenor-Plaintiffs-
    Appellants,
    v.
    ERNEST A. CONANT, Regional Director of
    the U.S. Bureau of Reclamation; et al.,
    Defendants-Appellees,
    PYRAMID LAKE PAIUTE TRIBE,
    Intervenor-Defendant-
    Appellee.
    Appeal from the United States District Court
    for the District of Nevada
    Miranda M. Du, Chief District Judge, Presiding
    Argued and Submitted March 8, 2023
    Las Vegas, Nevada
    Before: GRABER, BENNETT, and DESAI, Circuit Judges.
    The Truckee Canal runs for thirty-one miles through western Nevada, from
    the Derby Diversion Dam on the Truckee River to the Lahontan Reservoir. Nearly
    twenty-seven miles of the Canal are unlined, allowing water to seep through the
    Canal and recharge the underlying aquifer. After the Canal breached in 2008, the
    Bureau of Reclamation (“Reclamation”) conducted studies to identify repairs that
    2
    would ensure the long-term structural safety of the Canal. Reclamation selected an
    alternative that involves adding an impermeable lining to more than twelve miles
    of the Canal. The City of Fernley alleges that it will be harmed by the chosen
    alternative because the lining will reduce recharge of the aquifer, on which the City
    relies for its municipal water. Intervenors David Stix and Deena Edmonston, who
    own private wells and a permitted groundwater right of use, raise similar
    allegations. The district court dismissed all claims on jurisdictional grounds. The
    City of Fernley and Intervenors (collectively, “Plaintiffs”) timely appeal.
    We review de novo a district court’s dismissal of a complaint. Whitewater
    Draw Nat. Res. Conservation Dist. v. Mayorkas, 
    5 F.4th 997
    , 1007 (9th Cir. 2021),
    cert. denied, 
    142 S. Ct. 713 (2021)
    . We review for abuse of a discretion the denial
    of leave to amend, Smith v. Pac. Props & Dev. Corp., 
    358 F.3d 1097
    , 1100 (9th
    Cir. 2004), and the decision not to exercise supplemental jurisdiction, Bryant v.
    Adventist Health Sys./W., 
    289 F.3d 1162
    , 1165 (9th Cir. 2002). We affirm in part
    and reverse and remand in part.
    1. The district court correctly dismissed Plaintiffs’ claims for violation of
    the National Environmental Policy Act (“NEPA”). Because NEPA does not
    include a private right of action, the Administrative Procedure Act (“APA”)
    provides Plaintiffs’ cause of action. Ashley Creek Phosphate Co. v. Norton, 
    420 F.3d 934
    , 939 (9th Cir. 2005). “[A] statutory cause of action extends only to
    3
    plaintiffs whose interests fall within the zone of interests protected by the law
    invoked.” Lexmark Int’l, Inc. v. Static Control Components, Inc., 
    572 U.S. 118
    ,
    129 (2014) (citation and internal quotation marks omitted). Thus, Plaintiffs must
    show that their interests are “‘arguably within the zone of interests to be protected
    or regulated by the statute’ that . . . was violated,” which in this case is NEPA.
    Match-E-Be-Nash-She-Wish Band of Pottawatomi Indians v. Patchak, 
    567 U.S. 209
    , 224 (2012) (quoting Ass’n of Data Processing Serv. Orgs., Inc. v. Camp, 
    397 U.S. 150
    , 153 (1970)).
    NEPA protects environmental interests. Nuclear Info. & Res. Serv. v.
    Nuclear Regul. Comm’n, 
    457 F.3d 941
    , 950 (9th Cir. 2006). “The universe of
    interests procedurally protected by NEPA is broad,” Navajo Nation v. Dep’t of the
    Interior, 
    876 F.3d 1144
    , 1160–61 (9th Cir. 2017), but not unlimited. We have
    “consistently held that purely economic interests do not fall within NEPA’s zone
    of interests.” Ashley Creek, 420 F.3d at 940. “[T]o assert a claim under NEPA, a
    plaintiff must allege injury to the environment; economic injury will not suffice.”
    Ranchers Cattlemen Action Legal Fund United Stockgrowers of Am. v. USDA,
    
    415 F.3d 1078
    , 1103 (9th Cir. 2005).
    Here, Plaintiffs allege only interests in the use of the aquifer as a water
    source. We have previously held that a statutory claim under NEPA existed where
    municipalities alleged environmental harms, including harm to water quality. See
    4
    City of Davis v. Coleman, 
    521 F.2d 661
    , 671 (9th Cir. 1975) (relying on the
    plaintiff’s allegations that development facilitated by a new freeway interchange
    “may adversely affect the quality and quantity of the city water supply because of
    increased use and the danger of contamination by industrial wastes” (emphasis
    added)); Churchill County v. Babbitt, 
    150 F.3d 1072
    , 1076, 1079 (9th Cir.)
    amended and superseded on denial of reh’g, 
    158 F.3d 491
     (1998) (referencing the
    plaintiff’s allegations of “fire hazards, airborne particles, erosion, unknown
    changes to the underground water supply system, and reduced quality of local
    drinking water,” and adverse effects on “groundwater levels and quality”
    (emphasis added)). But Plaintiffs’ complaints allege only diminution of the water
    supply, that is, quantity alone. The loss of the ability to consume natural resources
    is an economic injury, not an environmental injury.
    2. But the district court abused its discretion by denying Plaintiffs leave to
    amend their NEPA claims on the ground of futility. Plaintiffs asked to amend their
    complaint if the district court ruled that they did not allege a sufficient
    environmental injury under NEPA. We have held that the policy of freely granting
    leave to amend should “be applied with extreme liberality.” Eminence Cap., LLC
    v. Aspeon, Inc., 
    316 F.3d 1048
    , 1051 (9th Cir. 2003) (per curiam) (citation and
    internal quotation marks omitted). A court may deny leave to amend on the
    ground of futility only if it cannot “conceive of facts that would render
    5
    the . . . claim viable.” United States v. Corinthian Colls., 
    655 F.3d 984
    , 995 (9th
    Cir. 2011) (citation and internal quotation marks omitted). Plaintiffs are
    groundwater users with economic interests at stake, but their proposed amendment
    could add allegations of environmental harms that may fall within NEPA’s zone of
    interests.
    The district court applied an incorrect legal standard when it concluded that
    Plaintiffs’ amended allegations could not fall within NEPA’s zone of interests
    because “their interests are fundamentally economic, not environmental.” A
    plaintiff may bring a NEPA claim “even if his or her interest is primarily
    economic, as long as he or she also alleges an environmental interest or economic
    injuries that are ‘causally related to an act within NEPA’s embrace.’” Ranchers
    Cattlemen, 415 F.3d at 1103 (quoting Port of Astoria v. Hodel, 
    595 F.2d 467
    , 476
    (9th Cir. 1979)). The relevant question is not why a plaintiff chooses to sue, but
    whether the plaintiff alleges injury to an environmental interest. WildEarth
    Guardians v. Provencio, 
    923 F.3d 655
    , 668 (9th Cir. 2019). Standing alone, an
    economic interest cannot bring a plaintiff within NEPA’s zone of interests, but an
    economic interest does not destroy a statutory cause of action that would otherwise
    exist. Monsanto Co. v. Geertson Seed Farms, 
    561 U.S. 139
    , 155–56 (2010).
    3. Federal question jurisdiction does not exist over Plaintiffs’ declaratory
    judgment claims. The APA allows parties that are “adversely affected or
    6
    aggrieved by agency action within the meaning of a relevant statute” to sue. 
    5 U.S.C. § 702
    . Because Plaintiffs rely on the APA’s general review provision, they
    may challenge only a final agency action that (1) “mark[s] the ‘consummation’ of
    the agency’s decisionmaking process” and (2) determines rights or obligations, or
    will lead to legal consequences. Bennett v. Spear, 
    520 U.S. 154
    , 177–78 (1997)
    (citations omitted).
    Plaintiffs take the position that, in the Environmental Impact Statement
    (“EIS”), Reclamation improperly adjudicated their claims of legal entitlements to
    water under Nevada law. The EIS includes the following statement:
    [T]he City of Fernley has no legal entitlement to the continued
    existence of seepage water from the Truckee Canal. The City’s claim
    of right to seepage water is not valid under Nevada law, and the City’s
    use of Canal seepage is not a valid Project water delivery.
    But, under Nevada law, Reclamation has no authority to determine what water
    rights Plaintiffs may or may not have. The cited statement in the EIS is merely
    descriptive: at that time, neither the State Engineer nor Nevada courts had granted
    the City the right to continued recharge of the aquifer. Reclamation’s views on the
    City’s water rights did not alter the agency’s obligations under NEPA and thus did
    not affect the sufficiency of the EIS. Reclamation’s statement also has no legal
    effect on Plaintiffs’ ability to pursue their water rights claims through the
    mechanisms provided by Nevada law. Plaintiffs’ request for recognition of a
    “right to recharge” is a question of state law only. See United States v. Orr Water
    7
    Ditch Co., 
    914 F.2d 1302
    , 1307 (9th Cir. 1990). The APA does not give us
    jurisdiction to reach the merits of Plaintiffs’ declaratory judgment claims.
    4. The district court had the authority to decline to exercise supplemental
    jurisdiction over Plaintiffs’ declaratory judgment claims and dismiss them without
    prejudice. The court had already “dismissed all claims over which it has original
    jurisdiction.” 
    28 U.S.C. § 1367
    (c)(3). The court was also within its discretion to
    conclude that Plaintiffs’ claims raise “a novel or complex issue of State law,” 
    id.
    § 1367(c)(1), and that this case presents an “exceptional circumstance[]” in which
    there are “other compelling reasons for declining jurisdiction,” id. § 1367(c)(4).
    The scope of Plaintiffs’ water rights is, as noted above, a question of state
    law. Plaintiffs cite no precedent under Nevada law holding that a groundwater
    right extends to a right to continued seepage. Additionally, Plaintiffs’ request for a
    declaratory judgment of their water rights in this forum is inconsistent with
    Nevada’s system of water rights adjudication. Nevada law requires comprehensive
    adjudication of water rights involving all users. 
    Nev. Rev. Stat. § 533.240
    (1).
    Although we lack jurisdiction over Plaintiffs’ declaratory judgment claims, our
    holding does not prevent them from asserting their water rights claims in other
    proceedings, consistent with state law.
    5. The district court correctly dismissed the City’s federal common-law
    nuisance claim. Federal common law addresses “subjects within national
    8
    legislative power where Congress has so directed or where the basic scheme of the
    Constitution so demands,” including environmental protection. Am. Elec. Power
    Co. v. Connecticut (AEP), 
    564 U.S. 410
    , 421 (2011) (citation and internal
    quotation marks omitted). Yet even if federal common law could apply to the
    City’s claim, Congressional action has displaced any role for federal common law
    in this instance.
    The contours of federal common law are subject to Congressional
    intervention. See New Jersey v. New York, 
    283 U.S. 336
    , 348 (1931). “[W]hen
    federal statutes directly answer the federal question, federal common law does not
    provide a remedy because legislative action has displaced the common law.”
    Native Vill. of Kivalina v. ExxonMobil Corp., 
    696 F.3d 849
    , 856 (9th Cir. 2012).
    “The test for whether congressional legislation excludes the declaration of federal
    common law is simply whether the statute speaks directly to the question at issue.”
    AEP, 564 U.S. at 424 (brackets omitted) (citations and internal quotation marks
    omitted). Relevant to this case, Congress authorized Reclamation to “carry
    out . . . any extraordinary operation and maintenance work on a project facility that
    the [agency] determines to be reasonably required to preserve the structural safety
    of the project facility.” 43 U.S.C. § 510b(a).
    Section 510(b) displaces any application of federal common law because the
    statute grants the agency the authority to conduct extraordinary maintenance in a
    9
    specific set of circumstances. And it delegates to Reclamation the decision
    whether and how to conduct extraordinary maintenance. See AEP, 564 U.S. at 426
    (“The critical point is that Congress delegated to EPA the decision whether and
    how to regulate carbon-dioxide emissions from powerplants; the delegation is what
    displaces federal common law.”). If Reclamation had decided against lining the
    canal, “the federal courts would have no warrant to employ the federal common
    law of nuisance to upset the Agency’s expert determination.” Id.
    AFFIRMED IN PART; REVERSED AND REMANDED IN PART.
    Each party shall bear its own costs on appeal.
    10