Rose Acre Farms, Inc. v. N.C. Dep't of Env't & Natural Res.

• Decision Date: 30 July 2015
• Docket Number: No. 5:14–CV–147–D.,5:14–CV–147–D.
• Citation: 131 F.Supp.3d 496
• Court: U.S. District Court — Eastern District of North Carolina
• Parties: ROSE ACRE FARMS, INC., Plaintiff, v. NORTH CAROLINA DEPARTMENT OF ENVIRONMENT AND NATURAL RESOURCES, et al., Defendants.

131 F.Supp.3d 496

ROSE ACRE FARMS, INC., Plaintiff,

v.NORTH CAROLINA DEPARTMENT OF ENVIRONMENT AND NATURAL RESOURCES, et al., Defendants.

No. 5:14–CV–147–D.

United States District Court, E.D. North Carolina, Western Division.

Signed July 30, 2015.

Joseph A. Miller, Rose Acre Farms, Inc., Seymour, IN, R. Sarah Compton, R. Sarah Compton, Esq., Raleigh, NC, for Plaintiff.

Anita Leveaux–Quigless, Carolyn Ann McLain, NC Department of Justice, Raleigh, NC, for Defendant.

ORDER

JAMES C. DEVER III

, Chief Judge.

On March 12, 2014, Rose Acre Farms, Inc. ("Rose Acre" or "plaintiff"), filed an action for declaratory judgment [D.E. 1, 5]. Rose Acre seeks an order declaring that certain discharges of pollutants from its farm are exempt from federal permitting requirements and that defendant North Carolina Department of Environment and Natural Resources ("DENR") does not have legal authority under the federal Clean Water Act to require Rose Acre to obtain a National Pollutant Discharge Elimination System ("NPDES") permit. See Compl. [D.E. 5] 19–20. On May 14, 2014, three environmental groups moved to intervene on defendants' behalf (collectively, "defendant-intervenors") [D.E. 25]. On July 8, 2014, the court granted the motion to intervene [D.E. 44].

On August 29, 2014, defendant-intervenors moved for judgment on the pleadings [D.E. 50]. On September 2, 2014, defendants moved to dismiss the complaint for lack of subject-matter jurisdiction [D.E. 53].¹ On September 15, 2014, the United States filed an amicus brief in support of defendants' motion to dismiss and defendant-intervenors' motion for judgment on the pleadings [D.E. 57]. On October 31, 2014, Rose Acre responded in opposition to both motions [D.E. 63]. On November 13, 2014, Rose Acre moved for summary judgment [D.E. 65]. On December 1, 2014, the court extended defendants' and defendant-intervenors' deadline to respond to Rose Acre's motion for summary judgment to 30 days after the court ruled on their pending motions [D.E. 73]. On December 5, 2014, defendants replied to Rose Acre's response [D.E. 85].

On January 8, 2015, the court denied defendant-intervenors' motion for judgment on the pleadings [D.E. 90]. On January 9 and 12, 2015, three amici filed briefs in support of Rose Acre's motion for summary judgment [D.E. 91, 92]. As explained below, the court grants defendants' motion to dismiss for lack of subject-matter jurisdiction.

I.

Rose Acre owns and operates an egg farm in Hyde County, North Carolina. Compl. ¶ 1. The Hyde County farm has 3.2 million laying hens in 12 high-rise, enclosed hen houses. Id. ¶ 32. Each hen house is two stories tall. Id. ¶ 33. Manure accumulates at the bottom of the hen houses, and is periodically removed and composted. Id. Large fans ventilate the hen houses, and this ventilation is necessary for the health of the hens. Id. ¶ 34. After the eggs are collected and washed, the wash water is "land applied." Id. ¶ 35. There has never been a discharge of process wastewater from any production area of the farm into United States or North Carolina waters. Id. ¶ 37.

Pursuant to North Carolina regulations, Rose Acre built a wet detention pond to gather precipitation that falls on the ground around the farm. Id 38. Ventilation systems blow dust, feathers, and manure out of the hen houses, and precipitation may pick up small amounts of these materials in the area surrounding the hen houses. Id. 8, 38. A few times a year, the detention pond discharges into a nearby canal. Id. ¶ 38.

Defendants have required Rose Acre to obtain and be subject to an NPDES permit pursuant to the federal Clean Water Act, 33 U.S.C. §§ 1251 et seq.

("CWA"). Id. 42–43. In 2004, Rose Acre obtained its first five-year NPDES permit. Id. ¶¶ 43, 49. In 2009, following the Environmental Protection Agency's ("EPA") 2008 promulgation of a new rule ("2008 Rule"), DENR required Rose Acre to apply for another permit. Id. ¶ 47–49. Rose Acre applied for a new permit, and DENR issued a final permit on September 24, 2010 ("2010 permit"). Id. ¶ 50. The 2010 permit required no discharge by Rose Acre and imposed best management practices ("BMPs"). Id. ¶ 52. In December 2010, Rose Acre challenged the 2010 permit in the North Carolina Office of Administrative Hearings ("OAH"), arguing that DENR lacked the authority to impose BMPs. Id. ¶ 53.

On March 15, 2011, the United States Court of Appeals for the Fifth Circuit vacated the 2008 Rule in pertinent part. Id. ¶ 54; see Nat'l Pork Producers Council v. EPA, 635 F.3d 738 (5th Cir.2011)

. Specifically, the Fifth Circuit held that the EPA could not require permitting unless there was an actual discharge of pollutants into navigable water. Nat'l Pork Producers Council, 635 F.3d at 751–53. There has never been such a discharge at the Hyde County farm. See Compl. ¶ 44. In the North Carolina administrative proceeding, Rose Acre moved for summary judgment and argued that it need not obtain an NPDES permit because it never discharged pollutants into navigable water. Id. ¶ 55. In opposition to the motion, DENR claimed that the dust, feathers, and manure that landed on the ground outside the hen houses may have been carried into the detention pond and constituted discharges of pollutants into state waters. Id. ¶ 56.

The North Carolina administrative law judge ("ALJ") recommended summary judgment for Rose Acre. Id. ¶ 57. The North Carolina Environmental Management Commission ("EMC") rejected the AU's recommendation and ordered an evidentiary hearing to determine whether Rose Acre discharged pollutants. Id. ¶ 58. Rose Acre appealed to the North Carolina Superior Court. Id. ¶ 59. On January 4, 2013, the Superior Court remanded the case for an evidentiary hearing before the OAH. Id.

On March 12, 2014, Rose Acre filed suit in this court seeking a declaratory judgment [D.E. 5]. Rose Acre seeks an order declaring that any discharge that occurs as a result of precipitation carrying dust, feathers, and manure into other waters constitutes agricultural stormwater and is therefore exempt from NPDES permitting requirements, and declaring that DENR lacks the authority to require Rose Acre to obtain an NPDES permit. See id. 19–20.

II.

Rose Acre alleges subject-matter jurisdiction under 28 U.S.C. §§ 1331

, 1332, and 2201. Compl. ¶ 15. Defendants move to dismiss Rose Acre's complaint for lack of subject-matter jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(1) or, alternatively, for the court to exercise its discretion under the Declaratory Judgment Act to decline jurisdiction or to abstain pursuant to Rule 12(b)(6). See [D.E. 53, 54]. A motion to dismiss under Rule 12(b)(1) of the Federal Rules of Civil Procedure tests subject-matter jurisdiction, which is the court's "statutory or constitutional power to adjudicate the case." Steel Co. v. Citizens for a Better Env't, 523 U.S. 83, 89, 118 S.Ct. 1003, 140 L.Ed.2d 210 (1998) (emphasis omitted). A federal court "must determine that it has subject-matter jurisdiction over the case before it can pass on the merits of that case." Constantine v. Rectors & Visitors of George Mason Univ., 411 F.3d 474, 479–80 (4th Cir.2005). Rose Acre bears the burden of establishing that this court has subject-matter jurisdiction in this action. See, e.g., Steel Co., 523 U.S. at 104, 118 S.Ct. 1003 ; Evans v. B.F. Perkins Co., 166 F.3d 642, 647 (4th Cir.1999) ; Richmond, Fredericksburg & Potomac R.R. v. United States, 945 F.2d 765, 768 (4th Cir.1991). When, as here, a defendant facially challenges the sufficiency of the allegations to support subject-matter jurisdiction, "the trial court must apply a standard patterned on Rule 12(b)(6) and assume the truthfulness of the facts alleged." Kerns v. United States, 585 F.3d 187, 193 (4th Cir.2009).

A.

In order for the court to have diversity jurisdiction under

28 U.S.C. § 1332

, the matter in controversy must exceed the sum or value of $75,000 and the action must be between "citizens of different States." 28 U.S.C. § 1332(a)(1). Here, the court lacks subject-matter jurisdiction under 28 U.S.C. § 1332 because this action is not between "citizens of different states." Rose Acre has sued DENR and two agency employees in their official capacities. Compl. ¶¶ 12–14. See Moor v. Cty. of Alameda, 411 U.S. 693, 717, 93 S.Ct. 1785, 36 L.Ed.2d 596 (1973) ("There is no question that a State is not a ‘citizen’ for purposes of the diversity jurisdiction."); Wisconsin v. Md. Nat'l Bank, 734 F.2d 1015, 1016 (4th Cir.1984) (per curiam) ("It is settled that a State is not a citizen for purposes of diversity jurisdiction, and that 28 U.S.C. § 1332 does not deal with cases in which a State is a party."). As a state agency, DENR is "the arm or alter ego of the State" and is not a citizen for purposes of diversity jurisdiction. S.C. Dep't of Disabilities & Special Needs v. Hoover Universal, Inc., 535 F.3d 300, 303 (4th Cir.2008) (quotation omitted). Similarly, state officials sued in their official capacities are also the alter ego of the state and are not considered citizens for diversity purposes. See, e.g., Comm'r of Labor v. Dillard's, Inc., 83 F.Supp.2d 622, 626 (M.D.N.C.2000) ; Eure v. NVF Co., 481 F.Supp. 639, 641 (E.D.N.C.1979). Thus, defendants are not citizens for diversity purposes, and there is no action between citizens of different states. Accordingly, the court does not have diversity jurisdiction under section 1332.

B.

As for federal-question jurisdiction under 28 U.S.C. § 1331

, a federal court has "original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the United States." 28 U.S.C. § 1331. A claim generally arises under federal law when federal law creates the cause of action. See, e.g., Gunn v. Minton, ––– U.S. ––––, 133 S.Ct. 1059, 1064, 185 L.Ed.2d 72 (2013) ; Grable & Sons Metal Prods., Inc. v. Darue Eng'g & Mfg., 545 U.S. 308, 312, 125 S.Ct. 2363, 162 L.Ed.2d 257 (2005) ; Franchise Tax Bd. of Cal. v. Constr. Laborers Vacation Tr. for S. Cal., 463 U.S. 1, 8–9, 103...