Buffalo River Watershed Alliance v. Dep't of Agric.
| Decision Date | 02 December 2014 |
| Docket Number | No. 4:13-cv-450-DPM,4:13-cv-450-DPM |
| Parties | BUFFALO RIVER WATERSHED ALLIANCE; ARKANSAS CANOE CLUB; NATIONAL PARKS CONSERVATION ASSOCIATION; and OZARK SOCIETY PLAINTIFFS v. DEPARTMENT OF AGRICULTURE, Tom Vilsack, in his official capacity as Secretary, United States Department of Agriculture; SMALL BUSINESS ADMINISTRATION, Jean Hulit, in her official capacity as Administrator, Small Business Administration, and Linda Nelson, in her official capacity as Arkansas District Director, Small Business Administration; and FARM SERVICE AGENCY, Juan Garcia, in his official capacity as Administrator, Farm Service Agency, and Linda Newkirk, in her official capacity as Arkansas State Executive Director, Farm Service Agency DEFENDANTS |
| Court | U.S. District Court — Eastern District of Arkansas |
Plaintiffs, a group of environmental groups, claim that the Farm Service Agency and the Small Business Administration violated several environmental laws by guaranteeing loans to C&H Hog Farms without adequately assessing the farm's environmental impact. The Arkansas Department of Environmental Quality approved having approximately 6,500 swine at the farm. No 45 at 6. The Farm Service Agency says it assessed theenvironmental issues and its administrative record supports its finding that C&H wouldn't significantly affect the environment. The Small Business Administration didn't assess the farm's environmental effects and says the law didn't require it to. There are important threshold issues about standing — particularly causation and redressability. Plaintiffs bring claims under the National Environmental Policy Act, the Endangered Species Act, and the Buffalo National River Enabling Act. Plaintiffs also claim that the Farm Service Agency violated its own regulation. The parties agree on the material facts — subject, of course, to some scuffling at the margin — and have supplemented their Local Rule 56.1 statements with brief stipulations. No 33-1, 39, 40 & 43.
1. Facts. C&H Hog Farms, Inc., is in the vicinity of Mount Judea, Arkansas, near the Buffalo National River along Big Creek. Nine of the farm's waste-application fields are on the Creek, one of the River's tributaries. Big Creek flows into the River six stream miles from the farm. C&H is the first large concentrated animal-feeding operation in the Buffalo River watershed to receive an operating permit from the Arkansas Department of Environmental Quality. The next largest farm has roughly 400 swine. Toreceive its permit, C&H had to propose a plan for managing the pigs' waste. This plan included spreading the waste on various fields in the area, including the nine that abut Big Creek.
In early 2012, C&H applied for approximately $3.6 million in loans from Farm Credit Services of Western Arkansas. Farm Credit required further assurances before making the loans, so it and C&H applied for loan guaranties from two federal agencies.
First, the Small Business Administration guaranteed seventy-five percent of a roughly $2.3 million loan from Farm Credit. The Small Business Administration acted without evaluating what effect the farm might have on the environment.
Second, the Farm Service Agency considered backing a second loan. Before it could issue a guaranty for an operation of C&H's size, the Farm Service Agency's regulations required it to prepare an Environmental Assessment. The agency was duty bound to explore how this farm might affect the environment, identify natural resources in the area, analyze alternatives, and propose measures to mitigate any environmental consequences that might flow from the farm. While preparing itsEnvironmental Assessment, the Farm Service Agency reviewed several documents that C&H provided, including the waste-disposal plan submitted to the Arkansas Department of Environmental Quality. The Farm Service Agency also wrote the United States Fish and Wildlife Service, asking about C&H's potential effect on any endangered species in the area. Fish and Wildlife responded that the endangered Gray Bat lived in caves and foraged around C&H. Fish and Wildlife also suggested some potential mitigation steps and highlighted areas for further investigation. Its response, Fish and Wildlife cautioned, was informational, not a blessing.
The Farm Service Agency eventually finished its Environmental Assessment. This evaluation didn't mention the Buffalo River or Big Creek, misstated that C&H would have 2,500 swine, didn't address any alternative locations, didn't mention the Gray Bat, and concluded without explanation that mitigation measures were unnecessary. The Agency then used its assessment to issue a draft Finding of No Significant Impact. It published notice of its conclusion in the Arkansas Democrat-Gazette for three days in August 2012 and welcomed public comment for fifteen days. Nobody commented. In late August 2012, the Agency adopted the Finding of NoSignificant Impact, which cleared the way for its guaranty. The Farm Service Agency guaranteed ninety percent of another $1.3 million loan from Farm Credit to C&H.
The farm began operating in late 2013. C&H currently has approximately 6,500 swine. Give or take a few, there are 4,000 piglets, 2,500 sows, and 3 boars. No 20 at 3. These swine will generate approximately 1,780,000 gallons of waste-filled water each year. Ibid. The water is stored in two small settling ponds near the barns. The ponds seep. It's uncertain how much waste water will seep out, but C&H's engineers estimated that several thousand gallons a day could. No 41 at 4; SBA Record at P-661 & P-680. Each year in the spring and the fall, C&H plans to drain the ponds. After testing nutrient levels in certain nearby fields, C&H will spray the water on them. The nutrient levels in the fields will determine how much waste water is sprayed: the goal is not to exceed acceptable targets for phosphorus, nitrogen, and other nutrients, which the fields need but could be harmful in excess. No 45 at 9. The Buffalo River watershed is characterized by karst geology — underground limestone, which has been eroded over time. No 30 at 3, 30-8 at 5-6 & 40 at 3. Whether there's karst under C&H's farm is unknown.
2. Standing. Plaintiffs are the Buffalo River Watershed Alliance, the Arkansas Canoe Club, the National Parks Conservation Association, and the Ozark Society. The parties agree on the first standing issue — injury in fact. Each group has members who use, enjoy, and care about the Buffalo River; and C&H's farm either has affected, or likely will affect, each group's interests. Lujan v. Defenders of Wildlife, 504 U.S. 555, 562-63 (1992). C&H, though, isn't a party. The Farm Service Agency and Small Business Administration say their guaranties didn't cause Plaintiffs' injuries; and, if they did, this Court can't redress those injuries in the absence of C&H or Farm Credit Services of Western Arkansas.
The legal premise of each guaranty was that C&H couldn't otherwise obtain financing on reasonable terms. 15 U.S.C. § 636 & 7 U.S.C. § 1983. C&H had to, and did, borrow $3.6 million to start this farm. These statutes, coupled with the necessity of the large loans, make it substantially unlikely that C&H would have come into being absent the guaranties. Without the guaranties, there would've been no loans. Without the loans, no farm.
The federal Agencies argue that independent third parties break thecausal chain between the guaranties and Plaintiffs' injuries. Farm Credit, the argument runs, could have forgone the guaranties, and C&H could have borrowed the money on unreasonable terms. That's possible, of course. This argument is a version of the horseshoe-nail theory of causation: too many acts, and too many independent actors, are between the guaranties and C&H's construction to conclude that the guaranties caused any harm. BCS Services, Inc. v. Heartwood 88, LLC, 637 F.3d 750, 754 (7th Cir. 2011) (Posner, J.).
The federal Agencies' argument runs into the record and the statutory premise of each guaranty: Farm Credit Services of Western Arkansas said it wouldn't lend the several million dollars needed by C&H without government backing; and the Agencies could not back the loans without concluding that reasonable financing was otherwise unavailable. The theoretical possibility that the deal could have been done on other terms doesn't undermine causation. The foundational undisputed fact is that Farm Credit, the federal Agencies, and C&H all worked together to get the deal done. The only reasonable conclusion from this record is that C&H wouldn't have gotten financing on do-able terms absent the federal guaranties. The Agencies therefore had sufficient control over C&H's fate to be considered alegal cause of Plaintiffs' injuries. Ashley v. U.S. Department of Interior, 408 F.3d 997, 1003 (8th Cir. 2005).
The federal Agencies also argue that the Arkansas Department of Environmental Quality stands between them and Plaintiffs' injuries. It's true that C&H couldn't have opened without State approval. But that approval would have been empty had the federal Agencies not guaranteed the borrowed money C&H needed. There aren't so many other actors and events involved here that the law should draw a line and say these guaranties were not a legal cause of Plaintiffs' harm. The guaranties weren't horseshoe nails; they and their companion loans were the horses that pulled C&H into operation. Compare Florida Audubon Society v. Betson, 94 F.3d 658 (D.C. Cir. 1996).
The federal Agencies argue that, in any event, a favorable ruling won't redress Plaintiffs' injuries. In one sense, this is an extension of the causation argument: the loans have already been made; Farm Credit Services of Western Arkansas and C&H, both absent third parties, now control C&H's fate. This argument, though, overlooks the federal Agencies' ongoing role in monitoringany conditions placed on their guaranties. 15 U.S.C. § 634 & 7 C.F.R. § 1940.330.
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