Group Does Not Have Standing to Challenge USDA Loan Guarantee for Poultry Farm


Aerial image of poultry barns in Maryland by Chesapeake Bay Program
Aerial image of poultry barns in Maryland by Chesapeake Bay Program

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Back in 2018, I posted on a federal district court decision involving a challenge to a USDA loan guarantee granted to a new Maryland poultry farm in Caroline County. Food & Water Watch (FWW) had challenged the environmental assessment required at the time to comply with the National Environmental Policy Act (NEPA); see that information here. In 2018, the federal district held that FWW had standing to bring the challenge. Still, 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 FWW did not have standing.


Background


In 2015, a new poultry grower sought loans from Mid-Atlantic Farm Credit to purchase and build the farm in Caroline County. Mid-Atlantic applied for a loan guarantee on behalf of the poultry grower from the U.S. Department of Agriculture’s Farm Service Agency (FSA). 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, FWW challenged the environmental assessment, saying that FSA had violated NEPA. FWW also alleged that the farm impacted many of its members, including one who lived next door to the farm and another member who fished in waters near the farm. FSA challenged FWW’s standing to bring the challenge, but the district court held that FWW did have standing. In 2020, the district court dismissed the challenge, holding that the environmental assessment met NEPA requirements. FWW appealed that decision.


What is “Standing”?


In the past, I have written about how American courts have had a long tradition of only hearing cases where the parties can clearly demonstrate to be harmed by a law. This means having a legally protectable interest in the dispute, also known as “standing.” To have standing, courts typically require:

  1. 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.

  2. The causation relationship between the injury and the defendant’s action is being challenged.

  3. It must be likely, not merely speculative, that the injury can be solved by a favorable decision, a concept known as redressability.

Court’s Decision

Aerial image of poultry barns by Chesapeake Bay Program
Aerial image of poultry barns by Chesapeake Bay Program

To the two-judge panel, this case starts and ends with standing. To the panel, FWW had failed to establish that a member had an injury in fact, and even if FWW could, FWW did not have an injury that a favorable decision or redressability could resolve. Because this is an appeal of a procedural injury, FSA failed to prepare the environmental assessment properly. The court has to determine if vacating the loan guarantee will likely change how the poultry operation operates to resolve FWW’s members asserted injuries.


Looking at the arguments, FWW 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. FWW 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 showed the borrower’s creditworthiness and 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. FWW can request before the whole court of appeals or appeal to the U.S. Supreme Court, however, so this may not be the last word in this litigation.


Why Care?


Last year, the Council on Environmental Quality (CEQ) finalized the first regulatory update to the NEPA regulations since 1978. In these final regulations, USDA loan guarantees were exempted from NEPA review. On appeal, this exemption was also the issue of whether CEQ 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 CEQ 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. FWW’s options are pretty limited at this point, with potentially only the full court of appeals hearing the appeal or considering appealing to the U.S. Supreme Court.


References

Food & Water Watch v. U.S. Dep’t of Agric., No. 20-5100, 2021 WL 2546671 (D.C. Cir. June 22, 2021).

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