Regulatory showdown in Calif. wheat field

By Jeremy P. Jacobs | 02/04/2016 01:23 PM EST

TEHAMA COUNTY, Calif. — A wheat farm pockmarked with pooled water here has become a launch pad for an agribusiness legal assault on a major Obama administration rule that redefines the scope of the Clean Water Act.

Modesto farmer John Duarte is locked in a politically charged lawsuit that could have large implications for U.S. EPA’s controversial Clean Water Rule.

Modesto farmer John Duarte is locked in a politically charged lawsuit that could have large implications for U.S. EPA’s controversial Clean Water Rule. Photo by Jeremy P. Jacobs.

TEHAMA COUNTY, Calif. — A wheat farm pockmarked with pooled water here has become a launch pad for an agribusiness legal assault on a major Obama administration rule that redefines the scope of the Clean Water Act.

The owner of the 450-acre tract, John Duarte, is locked in a lawsuit with the administration over whether he violated the new rule by plowing to plant wheat.

The Army Corps of Engineers says the Modesto-based farmer illegally damaged wetlands. It ordered him to stop, issuing a "cease and desist" letter.


Duarte challenged the order in a lawsuit. The Army Corps quickly answered in kind, putting Duarte on the hook for potentially hundreds of thousands of dollars in penalties.

Opponents of the administration’s Clean Water Rule — also known as Waters of the U.S., or WOTUS — which defines which wetlands and streams qualify for Clean Water Act protections, have seized on the case as illustrative of the rule’s overly expansive scope.

Duarte has spoken at an American Farm Bureau Federation conference about the case. The agriculture trade group has released a slickly produced video saying Duarte’s case shows the Army Corps and U.S. EPA trying to "bully" farmers. House Speaker Paul Ryan cited the lawsuit in an Omaha World-Herald op-ed on the water rule.

"John Duarte of rural Tehama County in California was told that he broke the law simply by plowing his land. He was ordered to cease and desist immediately," the Wisconsin Republican wrote. "And this could just be the beginning."

WOTUS has been put on hold by a federal appeals court while litigation from states and trade groups plays out. But if the rule survives legal challenges, Duarte’s politically charged case presents several important questions on the intricacies of the Clean Water Act and EPA’s regulation, especially for farmers who rely on carefully crafted exemptions to the permitting regime.

One of those issues — whether farming activities like certain types of plowing violate the law — has previously reached the Supreme Court. The high court split 4-4 on a 2002 case on the issue when its usual swing vote, Justice Anthony Kennedy, recused himself.

To Duarte, the case is about standing up to the feds. He runs a nursery that sells grapevines and other rootstock to farms throughout California. His customers, he said, frequently tell stories of unfair enforcement actions.

"This came to us," he said. "This is how they bully farm families into not making use of their land — into paying fines that drain their balance sheet."

On a recent rainy day, certain aspects of the case were clear. The seasonal wetlands — or vernal pools — were easily seen on low parts of Duarte’s land, as were furrows crossing the property where Duarte planted wheat.

The furrows cross some pools, but the wetlands don’t look harmed by the shallow ridges. In fact, the most damaged part of the property appears to be where federal regulators dug 3- to 4-foot-deep holes to investigate.

What’s unclear is whether Duarte broke the law.

‘Deep ripping’

Duarte, 49, is tall, with gray hair and blue eyes. He’s a fourth-generation farmer, a descendant of Portuguese immigrants. He runs a nursery that is a $40 million- to $50 million-per-year business.

In 2012, he bought about 2,000 acres in the northwestern Sacramento Valley, hoping to eventually plant high-value crops such as vineyards or nut trees. He sold more than 1,500 acres of the property — the section north of Coyote Creek, a tributary of the Sacramento River.

That fall, he prepped the remaining 450 acres south of Coyote Creek for wheat. He hired a local contractor and paid him $50 per acre to plow the field, telling him to avoid the major wetland features.

"We were actually looking to be very conservative in how we were going to use this property, and make sure we went through the steps properly," Duarte said. "We did not think wheat would be controversial."

When the work was done, Duarte received a call from the Army Corps, which is tasked with enforcing Clean Water Act regulations. The official from the corps’ local office claimed Duarte was "deep ripping" the property, which typically involves penetrating several feet deep, and that he went through wetland features, which required a permit.

Duarte strongly denied deep ripping. Nevertheless, in February 2013, he received a letter saying the Army Corps had determined that he "discharged" materials into vernal pools "which are waters of the United States."

"You are hereby directed to cease and desist all work in waters," the letter went on, "until this violation is resolved."

The letter highlighted potential enforcement actions that could ensue, including fines, penalties and imprisonment.

‘Black letter law’

Duarte said the corps must have been looking at the wrong property because there was no deep ripping on his land.

In October 2013, he filed a lawsuit challenging the cease-and-desist letter.

Specifically, his lawsuit says the letter purports to hold Duarte in violation of the law and, in instructing him to stop all activity, deprives him of using his property.

In legal terms, Duarte’s lawsuit claims the letter violated his constitutional due process rights. And, in particular, he says he should have been granted a hearing either before or after the letter was mailed to refute the allegations in it.

It’s worth noting that Duarte’s lawyers are from the Pacific Legal Foundation, a conservative Sacramento-based group that has a history of challenging regulatory communications and notifications on due process grounds.

The foundation has a successful track record. In 2012, the group represented an Idaho family in challenging an EPA Clean Water Act compliance order — arguing that the order restricted use of their property without a fair hearing. The Supreme Court agreed, ruling that the order may be challenged in court (Greenwire March 21, 2012).

PLF has a similar case at the Supreme Court this term concerning whether an Army Corps determination that a marsh qualifies for federal protections is also subject to judicial review (E&ENews PM, Dec. 11, 2015).

In Duarte’s case, like the others, the government argues that the cease-and-desist letter does not represent a final agency action. And, more importantly, that the letter itself "imposes no legal obligations or liability on its own."

"Plaintiffs suffer no cognizable injury from its issuance," the government wrote in court documents.

A federal judge, however, disagreed. In April 2014, California federal district court Judge Lawrence Karlton ruled that Duarte’s claim could move forward to trial.

The government, he held, "underestimates the force of a command" from a federal agency.

"Having been commanded by the U.S. Government to stop their activities, plaintiffs reasonably believed that they were required to stop their farming activities, and thereby lost their crop," wrote Karlton, who has since died. "If plaintiffs were free to ignore an unconditional command of the U.S. Government, of its agency, the Corps, the [cease-and-desist letter] should have said so."

Lawyers who typically support Clean Water Act enforcement strongly criticized the ruling and argued that it would be reversed later.

A cease-and-desist letter is clearly not a final agency action, said Pat Parenteau, a professor at Vermont Law School. And it’s "black letter law" that an agency action must be final before it may be challenged. He added that a 1997 unanimous Supreme Court decision written by conservative Justice Antonin Scalia further held that in order for someone to sue, an agency’s action must have "legal consequences" or alter the "legal regime."

Duarte’s letter does neither, Parenteau said. And if Duarte’s letter is subject to judicial review, hundreds of thousands of agency communications could wind up in court.

"My goodness, if the court keeps rolling back the time frame for when you can start challenging federal actions," he said before pausing. "You want to talk about a floodgate? That’s just crazy."

Government’s case

In defending the due process case, the government countersued in May 2014, raising claims that immediately put the farming community on guard.

The government’s lawsuit strikes at the scope of an exemption to WOTUS and Clean Water Act enforcement for normal farming activities — including plowing. EPA and its allies have emphasized the exclusion in communicating the WOTUS rule to farmers, seeking to assure them that it won’t threaten their operations.

Duarte’s activities, the government contends, don’t qualify for the exemption for several reasons.

First, the government charges that Duarte’s furrows were dug through vernal pools that he knew he should avoid. They note that in May 2012, before the activities on the property, an environmental consultant recommended that Duarte ask the Army Corps to verify which wetlands qualify as jurisdictional.

The following July, that firm produced a draft delineating the wetlands, suggesting both that the land had not been previously farmed in decades — a key point that will come back later — and that there are more than 16 acres of jurisdictional waters on the property.

"There is no dispute," the government says in court documents, that equipment operated in wetlands found by the environmental consultant.

Second, the government argues that Duarte’s digging changed the bottom elevation of the wetlands on the property.

The key issue here is whether the digging brought up soils that constituted the "addition" or "discharge" of a "pollutant" into those wetlands.

Pointing to the Clean Water Act, the government says a discharge may include redepositing "excavated soil material."

Further, "fill material" is defined to include "material placed in waters of the United States where the material have the effect of … changing the bottom elevation of any portion" of the wetland.

These definitions are separate from the exemption that was first established in 1977 for farming activities.

Third, and perhaps most importantly, the government charges that Duarte did not "plow" this field.

Here, the government relies on Clean Water Act language that says the exemption applies only to land already being farmed. Duarte’s, they argue, was not.

The "particulars of" the definition of "plowing," the government wrote, "plainly refer to tillage on land already" in use.

"There is no question that, at the beginning of 2012, Duarte’s 450-acre parcel was not under cultivation," the government wrote.

The government relies on a declaration from its consultant, Gregory House, a California farmer and lecturer at the University of California, Davis. In a more-than-30-page report, House concluded that the land had not been farmed for 35 to 40 years.

House also said that the property had been "ripped," not "plowed." Further, the government points out that the contractor Duarte hired billed him for "ripping."

Duarte’s team responds

Duarte and his lawyers are quick to refute the government’s case, calling it "ticky tack" and an "extreme reaction" to his due process lawsuit.

They point to regulations from 1975, predating the 1977 exemption, that say plowing will never constitute a "discharge" under the Clean Water Act.

So the issue of whether Duarte was bringing new land into production is irrelevant because he wasn’t causing any sort of discharge.

"If you’re not destroying wetlands, you haven’t caused a discharge," said Peter Prows, Duarte’s attorney from the law firm Briscoe Ivester & Bazel.

They contend that the property was farmed as recently as 1985, and they question the government’s claim that Duarte changed the bottom elevation of any of the wetlands on the property.

The digging, they argue, went only 6 to 10 inches deep, not nearly enough to penetrate the hard clay pan beneath the topsoil, which extends several feet down. Consequently, the digging didn’t destroy or damage the integrity of the wetland.

On the recent visit to the property, it was evident that neighboring properties tilled similarly to grow wheat and other crops and the wetlands were still visible.

Further, Duarte questions why EPA and the Army Corps are bringing the lawsuit against him at a time when they are seeking to reassure farmers that the new rule won’t imperil their businesses.

"If this is illegal," Duarte said, pointing to his property, "it’s really hard to find a legal farming operation."

‘Normal’ farm activities

The plowing-related charge reminds many environmental lawyers of the Supreme Court’s 2002 case Borden Ranch Partnership v. Army Corps of Engineers.

That case involved a property owner seeking to convert land in California’s Central Valley that had previously been used only for cattle grazing into vineyards and orchards using the more aggressive and penetrating deep ripping technique.

Attorney Tim Bishop of Mayer Brown in Chicago argued Borden Ranch on behalf of the property owner. He said that case, just like Duarte’s, should have been resolved by the "perfectly clear" exemption for "normal farming activities" like plowing.

"Duarte’s case is one the corps richly deserves to lose in court," said Bishop, who frequently represents the Farm Bureau. "It is a clear effort to wage war on the normal farming exemption — which Congress mandated but the corps and EPA don’t like."

To others, however, the government’s case against Duarte is a run-of-the-mill enforcement action.

And, moreover, the Supreme Court ultimately upheld a 9th U.S. Circuit Court of Appeals ruling in favor of the Army Corps in Borden Ranch when it split 4-4. That precedent, attorneys say, could control the outcome of Duarte’s case.

Justin Pidot, a former Justice Department environmental attorney, said the case, which is set for trial in June, boils down to whether Duarte was bringing new land into production. Here, Pidot said, it appears he did.

"It sounds to me like the kind of case that conservative groups who oppose broad environmental laws seize on and try to make as an example," said Pidot, who is now a professor at the University of Denver Sturm College of Law. "It makes for good press."

To Duarte, the government’s use of the Clean Water Act to go after farmers has only gotten worse since Borden Ranch.

He contends that the government is trying to block him and others from using their land to establish more conservation areas. His Tehama County property, he noted, has been mapped by the Fish and Wildlife Service as a vernal pool recovery area.

Someone, he said, needed to be a voice for agriculture, which he said is being "bullied."

"The whole government regulatory overreach is hurting agriculture and rural communities nationwide. We see it play out in our customers," he said. "If you applied these types of standards to all the farmlands in the country, we’d be hungry."