Court Opinion

ID: 2667228
Source: CourtListenerOpinion
Date Created: 2014-04-04 13:25:32.588151+00
Date Added: 2024-06-11T13:23:37.357493
License: Public Domain

UNITED STATES DISTRICT COURT
                             FOR THE DISTRICT OF COLUMBIA

APPALACHIAN VOICES, et al.,                    :
                                               :
                        Plaintiffs,            :      Civil Action No.:       08-0380 (RMU)
                                               :
                        v.                     :      Re Document Nos.:       35, 39
                                               :
STEVEN CHU,                                    :
in his official capacity as Secretary of the   :
Department of Energy, et al.,1                 :
                                               :
                        Defendants.            :

                                      MEMORANDUM OPINION

      GRANTING THE PLAINTIFFS’ MOTION TO FILE A SECOND AMENDED COMPLAINT;
     DENYING AS MOOT THE PLAINTIFFS’ MOTION FOR RELIEF UPON RECONSIDERATION

                                        I. INTRODUCTION

        This matter comes before the court on the plaintiffs’ motion for relief upon

reconsideration and their motion to file a second amended complaint. The plaintiffs, nonprofit

organizations devoted to the environmental preservation of the Appalachian Mountains region,

brought suit against the defendants, the Department of Treasury (“DOT”) and the Department of

Energy (“DOE”), alleging that the defendants erroneously failed to consider the environmental

consequences of a program that provides tax credits to companies that use “clean coal”

technology. The plaintiffs filed their first amended complaint on August 12, 2008.

        On November 10, 2008, the court dismissed the first amended complaint for lack of

standing. The plaintiffs now move for relief upon reconsideration of that order. In the

alternative, the plaintiffs seek leave to file a second amended complaint to remedy the

1
        The court has substituted Secretary of Energy Steven Chu for the original named defendant,
        former Secretary of Energy Samuel Bodman, pursuant to Federal Rule of Civil Procedure 25(d).
deficiencies that prompted the dismissal of the first amended complaint. The defendants oppose

both motions. Because the plaintiffs’ proposed second amended complaint remedies the

deficiencies in the first amended complaint, the court determines that granting the plaintiffs leave

to file a second amended complaint is in the interest of justice. As a result, the court denies as

moot the plaintiffs’ motion for relief upon reconsideration of the order dismissing the first

amended complaint.

                                       II. BACKGROUND

                                        A. Factual History

       The Energy Policy Act of 2005 provides for the allocation of up to $1.65 billion in tax

credits for investment in “clean coal” facilities. Pub. L. No. 109-58 at § 1307, 119 Stat. 594 at

999-1006 (2005); see also 26 U.S.C. §§ 48A(d)(1), 48B(d)(1). The Internal Revenue Service

(“IRS”) will allocate the tax credits only if DOE, after reviewing project applications, “provides a

certification of feasibility and consistency with energy policy goals (‘DOE certification’) for the

project.” IRS Not. 2006-24 at 4.01 (Mar. 13, 2006). Recipients of tax credits under 26 U.S.C.

§§ 48A and 48B have five years and seven years, respectively, to place their project into service.

26 U.S.C. § 48A(d)(2)(E); IRS Not. 2006-25 at § 4.02(10) (Mar. 13, 2006). If a recipient fails to

meet the conditions required to place its project into service within that time period – for

example, if it fails to receive all required federal and state environmental approvals – it forfeits

the tax credit. IRS Not. 2006-24 at App. A; IRS Not. 2006-25 at App. A.

       In the 2006 round of tax credits, IRS allocated $1 billion in credits to nine clean coal

projects: the Duke Energy Cliffside Modernization Project (“the Cliffside project”), located in

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North Carolina, and eight other projects in various locations around the country. 1st Am. Compl.

¶¶ 42-45. On January 29, 2008, Duke Energy obtained a construction permit to begin building

the new Cliffside plant. Id. ¶ 69.

                                      B. Procedural History

       On March 3, 2008, the plaintiffs filed their complaint and moved for a preliminary

injunction, claiming that the defendants had violated the National Environmental Policy Act

(“NEPA”), 42 U.S.C. §§ 4321 et seq., and the Administrative Procedure Act (“APA”), 5 U.S.C.

§§ 551 et seq., by failing to conduct an Environmental Impact Study (“EIS”) evaluating the

environmental impacts of the tax credit program. See generally Compl.; Pls.’ Mot. for Prelim.

Inj. The plaintiffs then filed an amended complaint adding a claim under the Endangered Species

Act (“ESA”), 16 U.S.C. §§ 1531 et seq., alleging that the defendants erroneously failed to consult

with the U.S. Fish and Wildlife Service and the U.S. National Marine Fisheries Service before

allocating the tax credits. 1st Am. Compl. ¶ 2. The defendants opposed the preliminary

injunction motion and moved to dismiss the first amended complaint, maintaining that the

plaintiffs lacked standing to bring suit. Defs.’ Opp’n to Pls.’ Mot. for Prelim. Inj. at 11-21;

Defs.’ Mot. to Dismiss 1st Am. Compl. at 8-20.

       On November 10, 2008, the court granted the defendants’ motion to dismiss. See

generally Mem. Op. (Nov. 10, 2008). It held first that the plaintiffs had failed to adequately

allege injury-in-fact with respect to the eight projects other than Cliffside because they had

asserted no particularized connection to or interest in those sites. Id. at 6-9. The court also

concluded that the plaintiffs had failed to assert a fairly traceable causal connection between the

tax credits and the decision to go forward with the Cliffside project. Id. at 9-14. The plaintiffs

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now move for relief upon reconsideration of the court’s November 10, 2008 order. See generally

Pls.’ Mot. for Relief Upon Recons. In the alternative, the plaintiffs seek leave to file an amended

complaint, which they maintain satisfies the traceability requirement at this stage of the

proceedings. See generally Pls.’ Mot. to Amend. The defendants oppose both motions. See

generally Defs.’ Opp’n to Pls.’ Mot. for Relief Upon Recons.; Defs.’ Opp’n to Pls.’ Mot. to

Amend.

                                         III. ANALYSIS

             A. Legal Standard for a Motion for Leave to Amend the Complaint

       Under Federal Rule of Civil Procedure 15(a), a party may amend its pleading once as a

matter of course at any time before a responsive pleading is served. FED . R. CIV . P. 15(a).

Additionally, Rule 15(a) allows a party to amend its pleading to add a new party. Id.; Wiggins v.

Dist. Cablevision, Inc., 853 F. Supp. 484, 499 (D.D.C. 1994); 6 FED . PRAC. & PROC. 2d § 1474.

According to decisions of this circuit, Rule 15(a) “guarantee[s] a plaintiff an absolute right” to

amend the complaint once at any time so long as the defendant has not served a responsive

pleading and the court has not decided a motion to dismiss. James v. Hurson Assocs., Inc. v.

Glickman, 229 F.3d 277, 282-83 (D.C. Cir. 2000) (citing FED . R. CIV . P. 15(a)). If there is more

than one defendant, and not all have served responsive pleadings, the plaintiff may amend the

complaint as a matter of course with regard to those defendants that have yet to answer. 6 FED .

PRAC. & PROC. 2d § 1481. Motions to dismiss and for summary judgment do not qualify as

responsive pleadings for the purposes of Rule 15. James, 229 F.3d at 283; Bowden v. United

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States, 176 F.3d 552, 555 (D.C. Cir. 1999); U.S. Info. Agency v. Krc, 905 F.2d 389, 399 (D.C.

Cir. 1990).

       Once a responsive pleading is served, however, a plaintiff may amend the complaint only

by leave of the court or by written consent of the adverse party. FED . R. CIV . P. 15(a); Foman v.

Davis, 371 U.S. 178, 182 (1962). The grant or denial of leave lies in the sound discretion of the

district court. Firestone v. Firestone, 76 F.3d 1205, 1208 (D.C. Cir. 1996). The court must,

however, heed Rule 15’s mandate that leave is to be “freely given when justice so requires.” Id.;

Caribbean Broad. Sys., Ltd. v. Cable & Wireless P.L.C., 148 F.3d 1080, 1083 (D.C. Cir. 1998).

Indeed, “[i]f the underlying facts or circumstances relied upon by a plaintiff may be a proper

subject of relief, he ought to be afforded an opportunity to test his claim on the merits.” Foman,

371 U.S. at 182. Denial of leave to amend therefore constitutes an abuse of discretion unless the

court gives sufficient reason, such as futility of amendment, undue delay, bad faith, dilatory

motive, undue prejudice or repeated failure to cure deficiencies by previous amendments. Id.;

Caribbean Broad. Sys., 148 F.3d at 1083.

       Denial of leave to amend based on futility is warranted if the proposed claim would not

survive a motion to dismiss. James Madison Ltd. v. Ludwig, 82 F.3d 1085, 1099 (D.C. Cir.

1996). An amended complaint is futile if it merely restates the same facts as the original

complaint in different terms, reasserts a claim on which the court previously ruled, fails to state a

legal theory or could not withstand a motion to dismiss. Robinson v. Detroit News, Inc., 211 F.

Supp. 2d 101, 114 (D.D.C. 2002) (quoting 3 FED . PRAC. 3d § 15.15[3]); Willoughby v. Potomac

Elec. Power Co., 100 F.3d 999, 1003 (D.C. Cir. 1996) (affirming the district court’s denial of

leave to amend given the “little chance” that plaintiff would succeed on his claim).

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       As for undue delay, the text of Rule 15 does not prescribe a time limit on motions for

leave to amend. FED . R. CIV . P. 15(a); Caribbean Broad. Sys., 148 F.3d at 1084. Accordingly, a

court should not deny leave to amend based solely on time elapsed between the filing of the

complaint and the request for leave to amend. Atchinson v. District of Columbia, 73 F.3d 418,

426 (D.C. Cir. 1996) (citing Hayes v. New England Millwork Distribs., Inc., 602 F.2d 15, 19 (1st

Cir. 1979)). Nor does the prolonged nature of a case affect whether the plaintiff may amend its

complaint. Caribbean Broad. Sys., 148 F.3d at 1084 (concluding that the length of litigation is

relevant only insofar as it suggests bad faith or prejudice). Rather, the court should take into

account the actions of other parties and the possibility of resulting prejudice. Atchinson, 73 F.3d

at 426; Caribbean Broad. Sys., 148 F.3d at 1084.

     B. The Court Grants the Plaintiffs’ Motion to File a Second Amended Complaint

       The plaintiffs seek to amend their complaint to “cur[e] the defect identified by the Court

in granting Defendants’ motion to dismiss.” Pls.’ Reply in Support of Mot. to Amend at 2; see

also Pls.’ Mot. to Amend. More specifically, the proposed second amended complaint would

supplement the allegations in the first amended complaint in two ways. First, it would

incorporate a list of all species covered by the ESA “that inhabit the states potentially affected by

the construction, operation and maintenance of Duke Energy’s North Carolina facility and those

states within regions that produce vast quantities of coal.” Proposed 2d Am. Compl. ¶ 61.

Second, it would include an allegation that “representing roughly seven (7) percent of

construction costs, the tax credits were at least a substantial factor motivating Duke Energy to

construct its North Carolina project . . . and/or to install and operate those types of advanced coal

technologies identified in the Energy Policy Act of 2005.” Id. ¶ 47.

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       The defendants oppose the motion, stating that permitting the plaintiffs to amend their

complaint “would reward undue delay and unduly prejudice” the defendants by stalling

resolution of this matter. Defs.’ Opp’n to Pls.’ Mot. to Amend at 3-4. In addition, the defendants

maintain that the court should deny the motion because amending the complaint would be futile

because it would not cure the jurisdictional defects that caused the court to dismiss the first

amended complaint. Id. at 4-6. The court will address each argument raised in the defendants’

opposition in turn.

       As an initial matter, the court will not deny a motion to amend based on untimeliness

unless it concludes that the defendants have been prejudiced by the delay or that the plaintiffs

have deliberately protracted the disposition of the case. See Atchinson, 73 F.3d at 426;

Caribbean Broad. Sys., 148 F.3d at 1084. The defendants have provided no indication that either

of these justifications is present here. See Defs.’ Opp’n to Pls.’ Mot. to Amend at 3-4. They fail

to identify any specific way in which they would be prejudiced if the plaintiffs were allowed to

amend their complaint, advancing only a general complaint that the plaintiffs should not be

allowed to create further delay in this case. Id. Nor have the defendants provided any

information from which the court could infer that the plaintiffs exercised bad faith to prolong

these proceedings. Id. To the contrary, the plaintiffs first requested leave to file a second

amended complaint shortly after the court issued its memorandum opinion identifying the factual

deficiencies in the first amended complaint, which suggests that they lack any intent to cause

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unfair delay.2 Thus, there is no justification for denying the plaintiffs’ motion solely because of

the time that has elapsed since the plaintiffs filed their original complaint.

        The more challenging question facing the court is whether the plaintiffs’ motion to amend

their complaint should be denied based on futility. The defendants maintain that it should,

contending that “the changes Plaintiffs propose making to their complaint would not cure the

jurisdictional defects identified by the Court in granting Defendants’ motion to dismiss.” Defs.’

Opp’n to Pls.’ Mot. to Amend at 4. More specifically, the defendants assert that the list of

endangered species that inhabit the states potentially affected by the Cliffside project is not

relevant to the plaintiffs’ claims. Id. at 4-5. Furthermore, the defendants argue that the

plaintiffs’ complaint would not satisfy the traceability prong of the standing analysis even if the

complaint included the additional allegation regarding the effect of the tax credit on the decision

to build the Cliffside plant. Id. at 5-6.

        It is not clear how the first proposed addition to the complaint – the list of endangered

species that inhabit the states potentially affected by the Cliffside project – is relevant to the

plaintiffs’ claims. The plaintiffs fail to address this issue in their reply, focusing only on the

second proposed addition to their complaint. See Pls.’ Reply in Support of Mot. to Amend at 2-

2
        The defendants also urge the court to deny the plaintiffs’ request to amend their complaint
        because it was raised for the first time in their reply in support of their motion for relief upon
        reconsideration. Defs.’ Opp’n to Pls.’ Mot. to Amend at 3 & n.1. This argument, however, is
        based on a misstatement of the facts: although the plaintiffs did not file their formal motion to
        amend until January 12, 2009 – the same day they filed their reply in support of their motion for
        relief upon reconsideration – they raised their request to amend the complaint for the first time in
        their motion for relief upon reconsideration. See Pls.’ Mot. for Relief Upon Recons. at 11
        (stating that “[i]f this Court finds that Plaintiffs have insufficiently pled their claims, Plaintiffs
        request leave to amend their complaint pursuant to Fed. R. Civ. Proc. 15(a)(2)”). Therefore, the
        court will not deny the plaintiffs’ motion to amend their complaint on this basis.

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3. Therefore, the court cannot conclude that the complaint could withstand dismissal as a result

of the first proposed addition to the complaint.

       The key inquiry, then, is whether the second proposed addition would allow the

complaint to withstand a motion to dismiss. In addressing this question, the court is cognizant of

the fact that the plaintiffs’ burden is lower now than it will be at the summary judgment stage.

To satisfy the standing analysis at this stage, the plaintiffs need only offer general factual

allegations of injury resulting from the defendant’s conduct, and the court must presume that

those allegations embrace the specific facts necessary to support the claim. Sierra Club v. Envtl.

Prot. Agency, 292 F.3d 895, 898-99 (D.C. Cir. 2002); see also Cmty. Nutrition Inst. v. Block, 698

F.2d 1239, 1247-48 (D.C. Cir. 1983), rev’d on other grounds, 467 U.S. 340 (1984) (stating that

at the motion to dismiss stage, the plaintiffs were not required to prove causation, but were “only

required to assert a fairly traceable causal connection between the challenged action and the

alleged injury”). Based on this standard, the court concludes that the plaintiffs have surmounted

the hurdle – albeit by only a slight margin – necessary to allow them to amend their complaint.

In other words, the additional allegation concerning the nexus between the allocation of the tax

credits and the decision to pursue the Cliffside project cures the defect that caused the court to

dismiss the first amended complaint for failure to allege traceability. Compare Fl. Audubon

Soc’y v. Bentsen, 94 F.3d 658, 670 (D.C. Cir. 1996) (concluding, at the summary judgment stage,

that “the presence and number of third-party links in this causal chain independently corroborate

that appellants’ claim of causation is ‘entirely speculative’ and insufficient for standing”) with

Fed. for Am. Immigration Reform, Inc. v. Reno, 93 F.3d 897, 908 n.9 (D.C. Cir. 1996) (noting

that the causal relationship that the plaintiff alleged was more direct than the attenuated causal

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chain in Florida Audubon, observing that there was evidence indicating that the plaintiffs’ injury

was fairly traceable to the defendants’ actions and adding that “the instant case remains at the

pleading stage”). In sum, because the court cannot conclude that the plaintiffs’ proposed second

amended complaint would not survive a motion to dismiss, the plaintiffs are entitled to amend

their complaint.3

                                         IV. CONCLUSION

       For the foregoing reasons, the court grants the plaintiffs’ motion to file a second amended

complaint.4 An Order consistent with this Memorandum Opinion is separately and

contemporaneously issued this 23rd day of September, 2009.

                                                          RICARDO M. URBINA
                                                         United States District Judge

3
       Following the production of the administrative record, the plaintiffs will be required to point to
       concrete evidence to substantiate their assertion that the allocation of the tax credits was at least
       a substantial factor motivating Duke Energy’s decision to proceed with the Cliffside project. See
       Fl. Audubon Soc’y v. Bentsen, 94 F.3d 658, 672 (D.C. Cir. 1996) (noting that “[a]s we review a
       grant of summary judgment here, we need not accept appellants’ alleged chain of events if they
       are unable to demonstrate competent evidence to support each link”).
4
       This holding renders moot the plaintiffs’ motion for relief upon reconsideration of the order
       dismissing the first amended complaint. See, e.g., P & V Enters. v. U.S. Army Corps of Eng’rs,
       466 F. Supp. 2d 134, 135 n.1 (D.D.C. 2006).

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