Back in 2017, Food and Water Watch had challenged the environmental assessment required at the time to comply with the National Environmental Policy Act for a loan guarantee approved by USDA for a poultry farm being constructed in Caroline County, Maryland.
In 2018, the federal district court held that the environmental group had standing to bring the challenge. More recently, A federal court of appeals recently reversed this decision.
A two-judge panel of the U.S. Court of Appeals, District of Columbia, agreed that the group did not have standing in Food and Water Watch v. U.S. Department of Agriculture.
In 2015, a new poultry grower sought loans from MidAtlantic Farm Credit to purchase and build the farm in Caroline County.
Farm Credit applied for a loan guarantee on behalf of the poultry grower from USDA’s Farm Service Agency.
In reviewing the application for the loan guarantee, FSA was required at the time to do an environmental assessment under NEPA. Based on the environmental assessment and public comments, FSA determined that the project would have no significant impact and provided the loan guarantee.
In 2017, Food and Water Watch challenged the environmental assessment, saying that FSA had violated NEPA.
The environmental group also alleged that the farm affected many of its members, including one who lived next door to the farm and another who fished in waters near the farm.
FSA challenged Food and Water Watch’s standing to bring the challenge, but the district court held that the group did have standing. In 2020, the district court dismissed the challenge, holding that the environmental assessment met NEPA requirements. Food and Water Watch has appealed that decision.
Not Over Yet?
American courts have a long tradition of only hearing cases in which the parties can clearly demonstrate being harmed. This means having a legally protectable interest in the dispute, also known as standing.
To have standing, courts typically require:
- The party has an injury-in-fact — the party has suffered or will imminently suffer an injury to a legally protected interest. The injury cannot be hypothetical or abstract.
- The causation relationship between the injury and the defendant’s action is being challenged.
- It must be likely, not merely speculative, that the injury can be solved by a favorable decision, a concept known as redressability.
To the two-judge panel, this case starts and ends with standing. To the panel, Food and Water Watch had failed to establish that a member had an injury-in-fact.
And even if it could show that, the group did not have an injury that a favorable decision or redressability could resolve.
Because this is an appeal of a procedural injury, the argument is that FSA failed to prepare the environmental assessment properly. The court had to determine if vacating the loan guarantee would likely change how the poultry operation operates to resolve the Food and Water Watch members’ asserted injuries.
The environmental group argues that if vacated, the loan guarantee, the lender and the poultry grower could apply for a new guarantee.
The panel points out that this is speculative and may not resolve the members’ injuries. Food and Water Watch speculates that the grower and lender might seek another loan guarantee, but the situation has changed since 2015.
By 2017, when the challenge was brought, the grower had been running the operation for over a year, had additional streams of revenues, and had a history of payments against the existing loan.
Nothing in the record described the borrower’s creditworthiness, or showed how the grower and the lender would react to vacating the loan guarantee.
The panel did not buy the speculation that there would be no farm without the loan guarantee and wanted to see evidence that the same financial situation existed in 2017 as in 2015, which would have required the grower to seek a loan guarantee.
The panel vacated the district court’s decision and remanded it back to the district court to be dismissed for lack of jurisdiction.
Still, Food and Water Watch can request a hearing before the whole court of appeals or appeal to the U.S. Supreme Court, so this may not be the last word in this litigation.
Last year, the Council on Environmental Quality finalized the first regulatory update to the NEPA regulations since 1978.
In these final regulations, USDA loan guarantees were exempted from NEPA review. On the case’s appeal, this exemption was at issue in whether the council has the statutory authority to revise the NEPA regulations.
The panel did not touch this issue because of the dismissal for lack of standing. One judge concurred with the decision and discussed the lack of standing issue. In the future, a court might be called upon to determine if the council has the authority to issue regulations.
This decision might not be the last decision involving this poultry operation, and it will be interesting to see what happens next.
This is not a substitute for legal advice.