United States District Court, W.D. Texas, Austin Division
PITMAN, UNITED STATES DISTRICT JUDGE.
the Court are Defendants United States Department of
Agriculture (“USDA”) and Rural Utilities
Service's (“RUS”) Motion to Dismiss, (Dkt.
21); Defendant Green Valley Special Utility District's
(“GVSUD”) Motion to Dismiss, (Dkt. 22); and
accompanying briefing. For the reasons discussed below, the
Court grants both motions and dismisses Plaintiff City of
Schertz's (“Schertz”) Complaint, (Dkt. 1),
case emerged amidst ongoing litigation between Schertz and
GVSUD about the Public Utility Commission of Texas's
(“PUCT”) decision to decertify a portion of
GVSUD's wastewater service area. (Compl, Dkt. 1, at 4).
GVSUD maintains that the decision violates 7 U.S.C. §
1926(b), which enables USDA to extend loans to rural water
and wastewater associations managing utilities in poor
communities. (Id. at 4-5). When USDA and an
association close a loan under § 1926(b), the loan
generally uses the association's customers or service
areas as the collateral, and the statute protects the
government's interest in that collateral by preventing
those customers or service areas from annexation by
municipalities or other associations. (Id. at 5). If
developers want to use a different utility for newly
constructed buildings, or municipalities want to serve those
buildings themselves, they must pay the § 1926(b)
borrower for the ability to do so. (Id. at 6). RUS
will generally only remove § 1926(b) protection from an
association borrower's service area if the borrower
consents; obtaining that consent is often equivalent to a
purchase of property rights. (Id.).
2003, USDA and RUS approved a § 1926(b) loan to GVSUD to
assist GVSUD's investment in water utility
infrastructure, secured by the resulting water utility
revenue. (Id. at 8). After Schertz and Cibolo, an
adjacent city, applied to PUCT to certify them as the
wastewater utility for areas within their boundaries, the
Fifth Circuit held that the 2003 loan protected GVSUD's
ability to provide both water and wastewater service under
§ 1926(b). Green Valley Special Util. Dist. v.
City of Cibolo, Texas, 866 F.3d 339, 343 (5th Cir.
2017). (Compl., Dkt. 1, at 9).
2018, GVSUD applied for another § 1926(b) loan to be
secured by wastewater provision revenues-the subject of this
case. (Id.). USDA and RUS have approved the $5, 430,
000 loan, but the loan has not yet closed. (Id. at
RUS, and GVSUD's motions to dismiss are made under both
Federal Rule of Civil Procedure 12(b)(1) and Rule 12(b)(6).
Rule 12(b)(1) governs their arguments about sovereign
immunity and lack of constitutional standing, while Rule
12(b)(6) applies to their arguments about lack of prudential
standing. Home Builders Ass'n of Miss., Inc. v. City
of Madison, Miss., 143 F.3d 1006, 1010 (5th Cir. 1998)
(discussing application of Rule 12(b)(1)); Harold H.
Huggins Realty, Inc. v. FNC, Inc., 634 F.3d 787, 795 n.2
(5th Cir. 2011) (discussing application of Rule 12(b)(6)).
Because the Court grants their motions based solely on Rule
12(b)(1), see infra Part III.B, the Court discusses
only that standard here.
seeking to challenge the court's subject-matter
jurisdiction to hear a case, including whether the plaintiff
has constitutional standing to bring her claim, may file a
motion under Federal Rule of Civil Procedure
12(b)(1). Home Builders Ass'n of Miss.,
143 F.3d at 1010. The party claiming federal subject-matter
jurisdiction must show that the court indeed has that
jurisdiction. Willoughby v. U.S. ex rel. U.S. Dep't
of the Army, 730 F.3d 476, 479 (5th Cir. 2013). When
evaluating a 12(b)(1) motion to dismiss, the court may look
to “(1) the complaint alone; (2) the complaint
supplemented by undisputed facts evidenced in the record; or
(3) the complaint supplemented by undisputed facts plus the
court's resolution of disputed facts.” Id.
(quoting Spotts v. United States, 613 F.3d 559,
566-67 (5th Cir. 2010)). This material must suffice to
demonstrate constitutional standing: it must assert a
“concrete and particularized” injury (that is,
one affecting the complaining party “in a personal and
individual way”), a “causal connection between
the injury and the conduct complained of, ” and a
likelihood that the injury would be “redressed by a
favorable decision.” Lujan v. Defenders of
Wildlife, 504 U.S. 555, 560-61, 560 n.1 (1992). Of
particular salience to this case is the standing requirement
that plaintiffs must plead more than mere “‘some
day' intentions-without any description of concrete
plans”-to sufficiently allege an injury. Id.
at 564. And while “the risk of real harm” can
“satisfy the requirement of concreteness” for
injuries, “a bare procedural violation” is not
the equivalent of a truly “concrete harm.”
Spokeo, Inc. v. Robins, 136 S.Ct. 1540, 1549 (2016),
as revised (May 24, 2016).
“sovereign immunity deprives the court of jurisdiction,
” so “claims barred by sovereign immunity can be
dismissed only under Rule 12(b)(1) and not with
prejudice.” Warnock v. Pecos Cty., Tex., 88
F.3d 341, 343 (5th Cir. 1996). The Administrative Procedure
Act (“APA”) generally allows federal agencies to
assert sovereign immunity when they have not taken final
agency action. See infra Part III.A (discussing the
conditions under which the APA waives agencies' sovereign
immunity). Thus, motions to dismiss on the basis of sovereign
immunity that argue an agency has not taken final action are
properly made under Rule 12(b)(1). Cf. Tsolmon v. United
States, 841 F.3d 378, 382 (5th Cir. 2016) (“Courts
consider whether the [Federal Tort Claims Act] applies via a
Rule 12(b)(1) motion, because whether the government has
waived its sovereign immunity goes to the court's subject
court does not have jurisdiction, it may not consider further
claims in the case. So, when “a Rule 12(b)(1) motion is
filed in conjunction with other Rule 12 motions, the court
should consider the Rule 12(b)(1) jurisdictional attack
before addressing any attack on the merits” such as a
Rule 12(b)(6) motion. Willoughby, 730 F.3d at 479
(quoting Ramming v. United States, 281 F.3d 158, 161
(5th Cir. 2001)).
Court first turns to USDA and RUS's Rule 12(b)(1) motion.
See Willoughby, 730 F.3d at 479; Part II,
supra. USDA and RUS argue that because the 2019 loan
is not yet closed, they have not yet taken “final
agency action, ...