Hood Canal Sand & Gravel, LLC v. Brady, 129 F. Supp. 3d 1118

Background

In July 2014 the U.S. Navy acquired an easement over portions of Washington State’s bedlands adjacent to property owned by Hood Canal Sand and Gravel, LLC, which blocks Hood Canal from building a pier for shipping.
Hood Canal sued federal and state defendants alleging (1) agency action exceeded authority under 10 U.S.C. § 2663(c) (brought via the APA), (2) equal protection violations, and (3) a NEPA violation for failure to prepare an EIS.
State defendants were dismissed earlier; the third amended complaint proceeded only against Federal Defendants.
Federal Defendants moved to dismiss for lack of subject matter jurisdiction and failure to state a claim; the court considered the recorded easement in ruling.
The court dismissed all claims: APA/§ 2663(c) claim for lack of prudential standing (zone of interests), both equal protection theories (class-of-one and classification) for failure to state a claim, and the NEPA claim for lack of Article III standing and because the easement preserves the status quo (no EIS required).

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
APA claim under 10 U.S.C. § 2663(c) — prudential standing (zone of interests)	Hood Canal: § 2663(c) acquisition exceeded authority and Hood Canal is adversely affected, so it can sue under the APA.	Federal Defs: Hood Canal’s interests (in building a pier) are not within the zone of interests § 2663(c) protects.	Dismissed — plaintiff lacks prudential standing; § 2663(c) does not protect Hood Canal’s pier/land-use interest.
Equal protection — class-of-one	Hood Canal: it was singled out because other pending leases were expressly excluded from easement restrictions; no rational basis for different treatment.	Federal Defs: other excluded leases (aquaculture, geoduck, salmon pen, wet storage) are not similarly situated because they do not seek pier construction.	Dismissed — Hood Canal is not similarly situated to excluded applicants.
Equal protection — classification	Hood Canal: easement discriminates against commercial docks/vessel traffic while allowing residential docks.	Federal Defs: distinction rationally furthers legitimate interests (protecting military operations and conservation).	Dismissed — rational basis review applies and the classification is rationally related to legitimate government interests.
NEPA procedural claim	Hood Canal: failure to prepare an EIS before easement acquisition injures its interests (pier project; potential increased truck traffic and pollution).	Federal Defs: Hood Canal lacks Article III and prudential standing; the easement preserves the status quo and does not require an EIS.	Dismissed — no Article III standing (no concrete environmental injury); even on prudential grounds, acquisition preserves environment (prohibits development), so NEPA EIS not required.

Key Cases Cited

Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375 (1994) (federal courts limited jurisdiction presumption)
Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007) (plausibility standard for Rule 12(b)(6))
Lujan v. Nat’l Wildlife Fed’n, 497 U.S. 871 (1990) (zone-of-interests and environmental standing principles)
Bennett v. Spear, 520 U.S. 154 (1997) (focus on statute’s purpose for zone-of-interests test)
Match-E-Be-Nash-She-Wish Band of Pottawatomi Indians v. Patchak, 132 S. Ct. 2199 (2012) (statute covering land use can encompass nearby owners’ interests)
Engquist v. Oregon Dep’t of Agriculture, 553 U.S. 591 (2008) (class-of-one equal protection framework)
Vill. of Willowbrook v. Olech, 528 U.S. 562 (2000) (intentional disparate treatment and class-of-one standard)
F.C.C. v. Beach Commc’ns, Inc., 508 U.S. 307 (1993) (rational-basis standard and deference to conceivable rationales)
Heller v. Doe, 509 U.S. 312 (1993) (burden on plaintiff to negative every conceivable rational basis)
Douglas County v. Babbitt, 48 F.3d 1495 (9th Cir. 1995) (no EIS required when federal action maintains environmental status quo)