Anderson et al v. McCarthy et al

Filing 62

ORDER RE 26 MOTION TO INTERVENE AND 20 MOTION TO DISMISS. (whalc2, COURT STAFF) (Filed on 5/13/2016)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE NORTHERN DISTRICT OF CALIFORNIA
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For the Northern District of California

United States District Court

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JEFF ANDERSON; BRET ADEE; DAVID
HACKENBERG; LUCAS CRISWELL;
GAIL FULLER; CENTER FOR FOOD
SAFETY; AMERICAN BIRD
CONSERVANCY; PESTICIDE ACTION
NETWORK NORTH AMERICA;
POLLINATOR STEWARDSHIP COUNCIL,

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No. C 16-00068 WHA

ORDER RE MOTION TO
DISMISS AND MOTION
TO INTERVENE

Plaintiffs,
v.
GINA MCCARTHY; ENVIRONMENTAL
PROTECTION AGENCY,
Defendants.
/

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INTRODUCTION

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In this challenge to federal agency action, defendants move to dismiss for lack of

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subject-matter jurisdiction under Rule 12(b)(1). In addition, several trade associations that

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would be affected by the outcome of this case move to intervene. To the extent stated below,

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the motion to dismiss is DENIED. The motion to intervene is GRANTED.
STATEMENT

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This case challenges the United States Environmental Protection Agency’s regulation of

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pesticides. Plaintiffs are several bee keepers, farmers, and organizations concerned about the

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effect of pesticides on honey bees and other pollinators. Defendants are the EPA and its
Administrator, Gina McCarthy.

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According to plaintiffs’ complaint, many crop seeds, like corn and soybean seeds, are

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coated with pesticides called neonicotinoids. After the coating is applied, the seeds absorb a

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small portion of the chemical coating. The rest of the coating, however, “is either scraped off

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the seeds and blown away as dust during machine planting, or sloughed off into the surrounding

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soil and groundwater” (Compl. ¶ 34). The effects of the chemical “dust off” extend beyond the

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full-grown plants, the seeds themselves, and result in the death of honey bees, catastrophic

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hazard to aquatic systems, and “destruction of rural invertebrate life across a vast portion of the

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United States” (id. at ¶ 37).

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The EPA regulates pesticide use via the Federal Insecticide, Fungicide, and Rodenticide
Act. Under FIFRA, a pesticide is defined as a “mixture of substances that are intended to

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prevent, destroy, repel or mitigate a pest.” 7 U.S.C. 136(u)(1). Pesticides must be registered

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with the EPA before they can be used, meaning that the EPA must grant a license that

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establishes the terms and conditions under which the pesticide may be lawfully sold,

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distributed, and used. FIFRA allows the EPA to exempt by regulation any pesticide which the

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Administrator determines will not have “unreasonable adverse affects on the environment.” 7

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U.S.C. 136w(b); 7 U.S.C. 136a(c)(5).

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In 1988, the EPA exempted from FIFRA certain “treated articles.” If an article were

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treated with a pesticide that had already been registered, and the treatment was for the

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protection of the article itself, then that new use of the pesticide to treat that article would be

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exempt from new registration under FIFRA. For example, “paint treated with a pesticide to

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protect the paint coating, or wood products treated to protect the wood against insect or fungus

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infestation” are exempt if the specific pesticide has already been registered for such use. 40

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C.F.R. 152.25(a).

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In 2003, the EPA clarified the “treated article” exemption as it related to coated seeds,

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as set forth in a release titled “Harmonization of Regulation of Pesticide Seed Treatment in

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Canada and the United States” (Compl. ¶ 36). Through this action, the EPA stated that

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pesticide-coated seeds were pesticides under FIFRA, but would be exempt as “treated articles”

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if they had been treated with an already-registered pesticide and their effects did not “extend

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beyond the seed itself” (ibid) (emphasis added).

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In 2013, the EPA issued a “Guidance for Inspecting Alleged Cases of Pesticide Related

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Bee Incidents,” which announced that a “[t]reated seed (and any resulting dust-off from a

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treated seed) may be exempted from registration under FIFRA as a treated article and as such its

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planting is not considered a pesticide use” (id. at ¶¶ 39–40). This new policy was never

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promulgated in a formal regulation and did not undergo the typical process that would

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accompany a formal regulation. “The 2013 Guidance directly affects beekeepers and other

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Plaintiffs in that it states there will not be investigation or enforcement against any of their bee
kills or other harm caused by neonicotinoid-coated seeds or resulting contaminated dust because

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the kills and other harm incidents are not considered a ‘pesticide use’” (id. at ¶ 41).

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In January 2016, plaintiffs brought this lawsuit, alleging that the 2013 Guidance

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constituted a final agency action reviewable under the Administrative Procedure Act. In Claims

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I, III, and IV, plaintiffs assert that the 2013 Guidance is (1) in excess of the EPA’s statutory

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authority, (2) is arbitrary and capricious, and (3) failed to comply with the rulemaking

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requirements set forth in the APA. Claim II alleges the EPA failed to regulate and enforce

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FIFRA by neglecting to enforce pesticide regulations in regards to treated seeds. Now,

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defendants move to dismiss under Rule 12(b)(1) for lack of subject-matter jurisdiction, asserting

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that the 2013 Guidance did not constitute final agency action and is thus unreviewable under the

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APA. Furthermore, several trade associations that would be affected by the outcome of this

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case move to intervene. This order follows full briefing and oral argument.

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ANALYSIS
MOTION TO DISMISS.

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1.

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The issue presented by the instant motion to dismiss is whether the 2013 Guidance and

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the EPA’s actions constituted final agency action, such that subject-matter jurisdiction is proper

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under the APA. Dismissal is appropriate under Rule 12(b)(1) when the district court lacks

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subject-matter jurisdiction over the claim. There are two permissible jurisdictional attacks

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under Rule 12(b)(1): a facial attack, where the court’s inquiry is limited to the allegations in the
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complaint; or a factual attack, which permits the court to look beyond the complaint at

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affidavits or other evidence. Savage v. Glendale Union High Sch., 343 F.3d 1036, 1039 n. 2

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(9th Cir. 2003). If the moving party asserts a facial challenge, the court must assume that the

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factual allegations asserted in the complaint are true and construe those allegations in the light

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most favorable to the plaintiff. Warren v. Fox Family Worldwide, Inc., 328 F.3d 1136, 1139

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(9th Cir. 2003). If the moving party asserts a factual attack, a court may resolve the factual

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disputes by “look[ing] beyond the complaint to matters of public record, without having to

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convert the motion into one for summary judgment.” White v. Lee, 227 F.3d 1214, 1242 (9th

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Cir. 2000).
Importantly, however, “jurisdictional finding of genuinely disputed facts is

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inappropriate when the jurisdictional issue and the substantive issues are so intertwined that the

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question of jurisdiction is dependent on the resolution of factual issues going to the ‘merits’ of

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an action.” Safe Air for Everyone v. Meyer, 373 F.3d 1035, 1039 (9th Cir. 2004) (internal

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citations and quotations omitted). The question of jurisdiction and the merits of an action are

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intertwined where “a statute provides the basis for both the subject-matter jurisdiction of the

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federal court and the plaintiff’s substantive claim for relief.” Ibid.

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As stated above, the issue raised by this motion is whether the 2013 Guidance

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constituted final agency action. “As a general matter, two conditions must be satisfied for

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agency action to be final: First, the action must mark the consummation of the agency’s

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decisionmaking process — it must not be of a merely tentative or interlocutory nature. And

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second, the action must be one by which rights or obligations have been determined, or from

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which legal consequences will flow.” Fairbanks N. Star Borough v. U.S. Army Corps of

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Engineers, 543 F.3d 586, 591 (9th Cir. 2008) (internal quotation omitted).

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Here, this order finds that the factual dispute between the parties — whether the 2013

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Guidance constituted final agency action — is “so intertwined” with the merits that a

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“jurisdictional finding of genuinely disputed facts is inappropriate.” If the 2013 Guidance did

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consummate a new rule, and thus a final agency action, then defendants clearly violated federal

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law by failing to comply with rulemaking requirements. If the 2013 Guidance did not constitute
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final agency action, then subject-matter jurisdiction is lacking, and the case must be dismissed.

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Plaintiffs allege that the 2013 Guidance qualifies as a final agency action because it extended

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the 2003 rule from exempting treated seeds whose effects did not “extend beyond the seed

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itself,” to something much broader, namely exempting all coated seeds, whether or not their

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environmental affects were contained to the seeds themselves or extended far beyond (such as

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affecting honey bees and other wildlife).

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In our circuit, essentially all environmental cases concerning subject-matter jurisdiction

stage. See, e.g. High Sierra Hikers Ass’n v. Blackwell, 390 F.3d 630 (9th Cir. 2004); River

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Runners for Wilderness v. Martin, 593 F.3d 1064 (9th Cir. 2010); Northcoast Envtl. Ctr. v.

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are decided only after reviewing the administrative record, typically at the summary judgment

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United States District Court

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Glickman, 136 F.3d 660 (9th Cir. 1998); Or. Natural Desert Ass’n v. U.S. Forest Service, 465

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F.3d 977 (9th Cir. 2006). So too here. At this stage, without the benefit of the entire

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administrative record, this order cannot find as a matter of law that the 2013 Guidance did not

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constitute final agency action.

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Defendants argue that the 2013 Guidance is not an agency action because it is not “the

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whole or part of an agency rule, order, license, sanction, relief, or the equivalent or denial

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thereof, or a failure to act.” 5 U.S.C. 551(13). Instead, defendants contend the 2013 Guidance,

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at least in regards to coated seeds, merely constituted a recommendation. An agency action,

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however, “is meant to cover comprehensively every manner in which an agency may exercise

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its power.” Whitman v. American Trucking Ass’ns, 531 U.S. 457, 478 (2001). Based on the

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current record, without resolving factual disputes, it is plausible that defendants’ decision to

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exempt coated seeds from FIFRA, without regard to their effects beyond the seeds themselves,

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constituted agency action.

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Next, defendants argue that even if the 2013 Guidance constituted agency action, it was

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not final within the meaning of the APA. Specifically, the sentence in the 2013 Guidance

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which states “[t]reated seed (and any resulting dust-off from treated seed) may be exempted

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from registration under FIFRA and as such its planting is not considered a pesticide use” (Mann

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Decl. Exh. 1 at 7), does not amount to a “definitive statement of the agency’s position.” Or.
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may ultimately prevail on this issue, the current record does not support this conclusion as a

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matter of law. Plaintiffs allege that defendants’ action determined rights and obligations, and

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due to changing the policy regarding the coated seeds exemption, “legal consequences will

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flow.” Bennett v. Spear, 520 U.S. 154, 178 (1997). Specifically, plaintiffs allege and assert in

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declarations that the EPA’s action will result in use of neonicotinoid-coated seeds on 150

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million agricultural acres, which will introduce millions of pounds of insecticides into

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agricultural areas, leading to devastating effects on the business of the bee-keeper plaintiffs

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(Opp. at 18). Without resolving genuine factual disputes, and without the benefit of the full

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administrative record, this order cannot determine, as a matter of law, that defendants’ action

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Nat. Desert Ass’n v. U.S. Forest Serv., 465 F.3d 977, 982 (9th Cir. 2006). While defendants

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United States District Court

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was insufficiently final.

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This motion presents a close call, as defendants put forth a strong argument in support of

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dismissal of the lawsuit at the Rule 12 stage, even without the benefit of the full administrative

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record. Defendants, however, do not cite one decision from our court of appeals affirming a

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Rule 12 dismissal in a case similar to ours. In the most analogous case to ours, Oregon Natural

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Desert Association, 465 F.3d at 979, our court of appeals reversed the district court’s dismissal

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under Rule 12(b)(1) and remanded for a determination on the full administrative record. This

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precedent is in line with other decisions from our court of appeals, in which essentially all

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environmental/administrative cases concerning subject-matter jurisdiction are decided only after

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reviewing the administrative record, typically at the summary judgment stage. Accordingly,

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this order finds the matter better suited for adjudication at the summary judgment stage and thus

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defendants’ motion to dismiss for lack of subject-matter jurisdiction is DENIED.

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2.

MOTION TO INTERVENE.

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Separate from defendants’ motion to dismiss, several not-for-profit trade associations

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move to intervene in our case as a matter of right. They include CropLife America, the

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American Seed Trade Association, the Agricultural Retailers Association, the American

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Soybean Association, the National Cotton Council of America, the National Association of

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Wheat Growers, and the National Corn Growers Association. All are represented by the same
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counsel. These proposed intervenors seek to “protect their members’ vital interests in the

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development, distribution, sale, and use of the seed treatments and treated seed that are at issue

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in this case and in an effective, efficient regulatory process for these products” (Br. at 1).

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Under Rule 24(a)(2), a party is entitled to intervene as a matter of right if (1) the motion

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is timely, (2) the movant claims a significantly protectable interest relating to the property or

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transaction which is the subject of the action, (3) the disposition of the action may as a practical

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matter impair or impede the movant’s ability to protect that interest, and (4) the movant’s

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interest is inadequately represented by the parties to the action. Wilderness Soc’y v. U.S. Forest

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Serv., 630 F.3d 1173, 1177 (9th Cir. 2011) (en banc). “A liberal policy in favor of intervention
serves both efficient resolution of issues and broadened access to the courts. By allowing

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parties with a practical interest in the outcome of a particular case to intervene, we often prevent

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or simplify future litigation involving related issues; at the same time, we allow an additional

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interested party to express its views before the court.” United States v. City of Los Angeles, 288

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F.3d 391, 397–98 (9th Cir. 2002) (internal quotation omitted).

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Defendants do not oppose intervention by proposed intervenors. Plantiffs do oppose,

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solely on the basis that proposed intervenors have failed to demonstrate a protectable interest

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sufficient to warrant intervention. Plaintiffs assert, in essentially conclusory fashion, that the

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economic harm alleged is insufficient to warrant intervention. For the reasons stated below,

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however, the proposed intervenors, whose interests can be broken down into three separate

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groups, all satisfy Rule 24(a)(2)’s test for intervention.

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Each intervenor has demonstrated a protectable interest. First, as demonstrated by the

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voluminous declarations accompanying the motion, CropLife members own more than two

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dozen neonicotinoid seed treatment registrations issued by the EPA through FIFRA (Lattimore

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Decl. at ¶ 4). If plaintiffs obtain the relief they seek, seeds treated with these registered

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products will likely be removed from the market. Furthermore, CropLife asserts that many of

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its members have seed treatment registrations pending, which could become null if plaintiffs

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win this lawsuit, thus affecting CropLife members’ development work.

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Second, the grower intervenors (the National Corn Growers Association, the National

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Association of Wheat Growers, the National Cotton Council of America, and the American

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Soybean Association) have demonstrated a sufficient interest in our case. The declarations aver

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that “over 95 percent of corn seed planted in the United States is treated with a neonicotinoid

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pesticide” (Novak Decl. at ¶ 3). Large portions of soybean, cotton, and wheat are also grown

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using treated seeds. Accordingly, as sworn to in the declarations accompanying the motions,

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the availability of these treated seeds is critical to the growers’ farming operations (Wilkens

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Decl. at ¶ 5; Adamas Decl.. at ¶ 5; Stoner Decl. at ¶ 4).

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Third, the American Seed Trade Association and the Agricultural Retailers Association
have a sufficient protectable interest in our case. The ASTA represents approximately 740

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companies that develop, produce, and distribute seeds in the Untied States and abroad (LaVigne

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Decl. at ¶ 2). Of the seeds sold by these companies, 75% are treated with pesticides (id. at ¶ 3).

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The ARA represents over 300 agricultural retailers and distributors who supply farmers and

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ranchers with products, including the sale of seed, nutrients, and crop protection products.

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ARA members also apply registered pesticides to the seeds themselves (Coppock Decl. at ¶¶

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3–5). As sworn to in the declarations, these organizations’ members will face economic harm if

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plaintiffs obtain the relief they seek and the organizations will also confront enhanced

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regulatory burdens.

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Our court of appeals favors a “liberal policy in favor of intervention.” City of Los

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Angeles, 288 F.3d at 397. Here, proposed intervenors have satisfied the elements set forth in

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Rule 24(b)(2). Accordingly, the motion to intervene is GRANTED.

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CONCLUSION

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For the reasons stated above, defendants’ motion to dismiss under Rule 12(b)(1) is

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DENIED. To the extent stated herein, the motion to intervene is GRANTED. As stated in a previous

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order (Dkt. No. 54), defendants shall lodge the administrative record by JUNE 30, 2016. The

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administrative record shall include all emails and memoranda discussing whether the agency

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should proceed by guidance versus some other procedure and/or discussing whether the guidance

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would constitute final agency action. The deadline for any party to file a summary judgment

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motion shall be AUGUST 11, 2016, to be heard on the normal 35-day track.

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IT IS SO ORDERED.
Dated: May 13, 2016.

WILLIAM ALSUP
UNITED STATES DISTRICT JUDGE

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