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           IN THE UNITED STATES COURT OF APPEALS
                    FOR THE FIFTH CIRCUIT
                                                                           United States Court of Appeals
                                                                                    Fifth Circuit

                                                                                  FILED
                                       No. 17-30438                           July 11, 2018
                                                                             Lyle W. Cayce
WHITE OAK REALTY, L.L.C.; CITRUS REALTY, L.L.C.,                                  Clerk


                 Plaintiffs - Appellants

v.

UNITED STATES ARMY CORPS OF ENGINEERS; THOMAS P. BOSTICK,
Lieutenant General, United States Army Chief of Engineers, in his official
capacity; JOHN W. PEABODY, Major General, Commander, Mississippi
Valley Division, United States Army Corps of Engineers, in his official
capacity; RICHARD L. HANSEN, Colonel, Commander, New Orleans
District, United States Army Corps of Engineers, in his official capacity,

                 Defendants - Appellees


                     Appeal from the United States District Court
                        for the Eastern District of Louisiana
                               USDC No. 2:13-CV-4761


Before WIENER, GRAVES, and HO, Circuit Judges. 1
PER CURIAM:*
       This dispute involves a challenge to environmental mitigation
requirements imposed by the U.S. Army Corps of Engineers (the “Corps”) as a
prerequisite to excavate and sell soil from private property for use in the


       1   Judge Ho concurs in the judgment only.

       * Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH
CIR. R. 47.5.4.
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                                        No. 17-30438
Corps’s projects. Appellant claims the mitigation requirements are contrary to
federal law and unconstitutional. The district court granted the Corps
summary judgment on all claims. We affirm.
                                      BACKGROUND
      In the wake of Hurricanes Rita and Katrina, Congress tasked the Corps
with a series of projects collectively known as the Greater New Orleans
Hurricane and Storm Damage Risk Reduction System (“HSDRRS”). The
HSDRRS required construction, on an “emergency schedule,” of numerous
levees, floodwalls, gates, and pumps within Southeastern Louisiana. Corps
engineers estimated that completion of the HSDRRS would require 31,000,000
cubic yards of suitable “borrow material.” 2
      In order to acquire the needed material, the Corps considered three
options: (1) “government-furnished”                 borrow material,        (2) “contractor-
furnished” borrow material, and (3) supply contracts. Only the government-
furnished and contractor-furnished options are relevant to this appeal.
      Under the government-furnished option, the Corps would seek to
directly obtain the property rights to extract borrow material from an
identified piece of land. Under the contractor-furnished option, the Corps
would require construction contractors to work “in partnership with a
landowner to provide suitable borrow material from the landowner’s property.”
      In 2008, the Corps considered acquiring the rights to mine government-
furnished borrow material on Idlewild, a tract of land owned by White Oak
Realty, LLC (“White Oak”). In response, White Oak, fearing a potential
eminent domain action against its property, sent the Corps letters informing
the Corps that it was “pursuing the property for contractor supply borrow
material,” and requesting that the Corps “cease and desist any and all activity


      2   “Borrow material” refers to soil “dug in one location for use at another.”
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                                      No. 17-30438
pertaining to government supplied borrow at Idlewild.” The Corps declined to
cease consideration of Idlewild as a source of government-furnished borrow
material. Nonetheless, the Corps informed White Oak that it remained “free
to utilize [its] property in any manner” pending further notification on the
Corps’s intentions. The Corps never pursued an eminent domain action.
       In 2009, White Oak applied for a permit to excavate clay on Idlewild as
a source for contractor-supplied borrow material. The Corps pre-approved 3 the
permit in October 2010 — with a caveat. As part of its review, the Corps had
determined      that   clay    excavation     on    Idlewild      would   cause    adverse
environmental impact on bottomland hardwood forests (“BLH”). To offset that
impact, the Corps required mitigation of those environmental impacts
“through the purchase of mitigation bank credits.” Purchase of bank credits
was only required, however, if Idlewild’s resources were excavated “for use in
building the HSDRRS.” “[I]f borrow excavated at [Idlewild] [was] not used in
the construction of a [Corps] water resources project, there [was] no [Corps]
requirement that impacts to non-wetland bottomland hardwoods be
mitigated.”
       Upset by the cost of available mitigation bank credits, White Oak
proposed to fulfill its mitigation requirements by placing 158.36 acres of
“wetland and jurisdictionally determined non-wetland” forest in a conservation
servitude. The Land Trust for Southeast Louisiana would then work to ensure
that the land remained pristine.




       3Pre-approval did not guarantee that the Corps’s contractors would select Idlewild as
a source of borrow material. It merely meant that the Corps would list Idlewild as a pre-
approved site. Contractors were “not obligated to select a site from the contractor-furnished
clay source list.” “Agreements for use of a contractor-furnished site would solely be between
a construction contractor and the landowner, and at no point in time would the landowner
have an agreement with the [Corps].”

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                                 No. 17-30438
      The Corps rejected White Oak’s proposal on the grounds that mitigation
bank credits were “preferred by both statute and regulation” and were “the
most efficient, timely and effective means to achieve the required
compensatory mitigation for impacts to contractor-furnished borrow area.” The
Corps further explained that the “creation and approval of a mitigation plan is
a lengthy and detailed process that can take a year or more.” “Not only [did]
the [Corps] not have the manpower to devote to this process for every
contractor-furnished borrow site, but it would significantly delay the approval
and use of those sites.”
      The parties then exchanged correspondence for a number of years
discussing whether a non-mitigation bank alternative would suit the Corps.
Eventually, on February 20, 2013, District Commander Edward Fleming sent
a final notice to White Oak reiterating the bank credit mitigation requirement.
      In response, White Oak filed the instant suit against the Corps on June
10, 2013, alleging that: (1) the Water Resources Development Act (“WRDA”)
does not authorize the Corps to require private parties to pay for the mitigation
costs, (2) the WRDA does not authorize the Corps to require purchase of
mitigation bank credits in this instance, and (3) a taking under the Corps=s
mitigation plan would be unconstitutional under the Fifth Amendment.
      Shortly thereafter, the Corps filed a motion to dismiss the complaint for
lack of Article III standing, which the district court denied. The parties then
filed cross motions for summary judgment. After summary judgment briefing
had concluded, White Oak moved to supplement the administrative record.
      On May 4, 2016, the district court denied White Oak’s motion to
supplement as untimely and unnecessary. The court subsequently granted
summary judgment in favor of the Corps on all claims. This appeal timely
followed.


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                                 No. 17-30438
                         STANDARD OF REVIEW
      “This court reviews a grant of summary judgment de novo, applying the
same standard to review the agency’s decision that the district court used.”
Baylor Cty. Hosp. Dist. v. Price, 

, 261 (5th Cir. 2017).
      As an initial matter, White Oak claims that the district court erred in
applying Chevron deference to the Corps’s interpretation of the WRDA. White
Oak argues that only Skidmore deference is owed because the Corps’s
interpretation does not carry the force of law. See Skidmore v. Swift & Co., 

(1944).
       “To determine the appropriate level of deference to the [Corps’s]
interpretation of the [WRDA], we are guided by the two-step analysis set forth
in United States v. Mead Corp., 

, 226-27 (2001).” See Knapp v. U.S.
Dep’t of Agric., 

, 454 (5th Cir. 2015). “[A]dministrative
implementation of a particular statutory provision qualifies for Chevron
deference when it appears [(1)] that Congress delegated authority to the
agency generally to make rules carrying the force of law, and [(2)] that the
agency interpretation claiming deference was promulgated in the exercise of
that authority.” 

. “It is fair to assume generally that
Congress contemplates administrative action with the effect of law when it
provides for a relatively formal administrative procedure tending to foster the
fairness and deliberation that should underlie a pronouncement of such force.”

      Congress delegated to the Corps the power to develop mitigation plans
under the WRDA. See 33 U.S.C. § 2283(d). Congress further provided for a
formal administrative procedure for developing those plans, requiring the
Corps to “make a draft of the plan available for review and comment by
applicable environmental resource agencies and the public,” and “consider any
comments received from those agencies and the public on the draft plan.” See
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                                  No. 17-30438

The record indicates that the Corps promulgated the
mitigation requirements pursuant to these procedures. Accordingly, the
district court properly afforded the Corps’s decisions Chevron deference. See

, 230.
      Under Chevron, we employ a two-step analysis when reviewing an
agency construction of a statute. First, we answer “the question whether
Congress has directly spoken to the precise question at issue.” See Chevron,
U.S.A., Inc. v. NRDC, Inc., 

, 842 (1984). “If the intent of Congress
is clear, that is the end of the matter; for the court, as well as the agency, must
give effect to the unambiguously expressed intent of Congress.” 

“If, however, the court determines Congress has not directly addressed the
precise question at issue, the court does not simply impose its own construction
on the statute[.]” 

“Rather . . . the question for the court is whether
the agency’s answer is based on a permissible construction[.]” 

Oak presents four arguments on appeal. First, White Oak
challenges the Corps’s power under the WRDA to impose the mitigation
requirement on a private party. Second, White Oak contends that the Corps
violated the WRDA by demanding that White Oak purchase wetland
mitigation bank credits. Third, White Oak claims that the mitigation
requirement amounted to an unlawful taking under the Fifth Amendment.
Fourth, White Oak asserts that the district court erred in denying its request
to supplement the record.
      Before turning to the merits of White Oak’s arguments, however, we first
address the Corps’s contention that White Oak lacks Article III standing to
assert any of its claims.




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                                   No. 17-30438
I.    White Oak has Article III standing.
      The Corps maintains that White Oak lacks Article III standing because
it cannot allege an injury. First, the Corps claims White Oak did not possess a
property interest in the borrow material at the relevant time. Second, the
Corps argues that White Oak’s “lost profits or lost business opportunities” are
entirely speculative. We disagree.
      “Because the WRDA establishes no specific right to judicial review of an
agency action, [White Oak] must establish standing under the general
provisions of the APA.” Envtl. Def. Fund v. Marsh, 

, 1003 (5th Cir.
Unit A Jul. 1981). To do so, White Oak “must allege some injury in fact, and
that the injury is arguably within the zone of interests 4 to be protected or
regulated by the statutes that the agencies (are) claimed to have violated.” 

omitted). “The Supreme Court has indicated that courts
should not be austere in granting standing under the APA to challenge agency
action taken pursuant to a statute.” 

asserts that the mitigation requirement could not have
injured White Oak because “White Oak did not own the borrow” at the relevant
time. Though White Oak did sell the right to mine the clay from its property,
the purchase price was $5.60 “per ton of Materials mined and removed.” White
Oak therefore retained an ongoing financial interest in mining the clay, which,
White Oak asserts, the Corps’s mitigation requirements inhibited by excluding
White Oak from the borrow market. White Oak’s retained financial interest in
the per ton purchase price, and alleged injury thereto, is sufficient to establish
Article III standing. See Cottrell v. Alcon Labs., 

, 163 (3d Cir. 2017)
(quoting Danvers Motor Co. v. Ford Motor Co., 

, 291, 293 (3d Cir.



      4The Corps does not argue that White Oak’s alleged injuries fall outside of the
WRDA’s “zone of interest.” We therefore do not address that issue on appeal.
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                                  No. 17-30438
2005)) (stating that financial harm is a “classic” and “paradigmatic” form of
injury in fact).
        The Corps next argues that any potential lost business opportunities are
“entirely speculative” because “contractors may choose their own sites from
which to obtain borrow” and “there was no guarantee that Idlewild borrow
would ever be used.” The record shows that the lost business opportunity was
not as speculative as the Corps asserts. The mining company that held the
rights to White Oak’s borrow material had a contract to provide borrow from
Idlewild in connection with specific Corps’s contracts. The mining company’s
contract was “contingent upon acceptance of the pit” by the Corps. “It is
unrealistic to believe that these Corps [mitigation requirements] [did] not have
a direct impact” on the fulfillment of that contract. See 

.
        The district court did not err in concluding that White Oak had Article
III standing to bring its claims. We accordingly turn to the merits of White
Oak’s arguments on appeal.
II.     The mitigation requirement is permissible.
        White Oak first argues that the Corps’s mitigation requirement conflicts
with the WRDA for two reasons: (1) it is inconsistent with WRDA provisions
requiring mitigation planning prior to project implementation; and (2) the
WRDA does not grant the Corps authority to require private parties to pay for
mitigation. Neither argument has merit.
        1.    Corps reasonably required mitigation for Idlewild impacts.
        According to White Oak, the Corps’s “post hoc imposition of mitigation
responsibility” conflicts with the WRDA’s requirement that the Corps “assess
potential impacts and submit a specific plan for mitigation as part of a project
proposal . . . before it is approved.” We are unpersuaded.


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      There are, as White Oak asserts, provisions in the WRDA indicating that
the Corps must undertake mitigation prior to project implementation and
budgeting. For example, § 2283 states that mitigation “shall be undertaken or
acquired before any construction of the project.” 33 U.S.C. § 2283(a)(1)
(emphasis added). Section 2283 further states that the Corps “shall not submit
any proposal for the authorization of any water resources project” unless that
proposal contains a “specific plan to mitigate for damages to ecological
resources.” See 

(emphasis added). These provisions provide
some support to White Oak’s argument that mitigation plans must be set forth
in advance of project implementation.
      The WRDA is not, however, as clear as White Oak asserts. For instance,
§ 2283 also states that the Corps may implement mitigation requirements
“concurrently with lands and interests in lands for project purposes.” 

(emphasis added). Likewise, Congress authorized the Corps to
“mitigate damages to fish and wildlife resulting from any water resources
project under [its] jurisdiction, whether completed, under construction, or to be
constructed.” 

(emphasis added). Section 2280, regarding
budgeting, provides that a total budget “shall be automatically increased” for
mitigation authorized by the WRDA. These provisions indicate that the Corps
can account for, and impose, mitigation as needed during the course of a
project.
      The WRDA is, therefore, ambiguous with respect to whether the Corps
may impose mitigation requirements after project implementation. As a result,
we may not “impose [our] own construction” on the statutory language.

. Rather, “the question for the court is whether the
[Corps’s] answer [to this issue] is based on a permissible construction of the
statute.” 

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                                   No. 17-30438
      The Corps interprets the WRDA as requiring mitigation for all “habitat
losses caused by water resources projects.” Following that reasoning, the Corps
concluded that “impacts to [BLH] associated with borrow that will be used in
construction of a [Corps] water resources project must be mitigated.”
Therefore, the Corps determined that the WRDA required mitigation for any
impact to Idlewild “if . . . selected by construction contractors for use in building
the HDRRS.” This is an entirely permissible construction of the statute.
      The WRDA commands that the Corps mitigate for any impacts “resulting
from” or “created by” a water resource project. 33 U.S.C. §§ 2283(b)(1), (d)(1).
To fulfill that mandate, Congress authorized the Corps to mitigate damages
resulting from “any water resources project under [its] jurisdiction.” 

(emphasis added). Indeed, Congress expressly stated its intent that
the Corps “include environmental protection as one of the primary missions of
the Corps of Engineers in planning, designing, constructing, operating, and
maintaining water resources projects.” See 

      The district court did not err in concluding that the Corps’s mitigation
requirement was a reasonable interpretation of this statutory scheme and was
therefore entitled to Chevron deference.
      2.     Corps reasonably required White Oak to bear costs.
      White Oak next argues that the mitigation requirement fails Chevron
deference because it adds private entities to a statutory scheme that
unambiguously excludes them. Again, we disagree.
      Contrary to White Oak’s contention, the WRDA does not unambiguously
exclude the option of shifting mitigation costs to third-parties. In fact,
“mitigation costs . . . shall be subject to cost sharing or reimbursement to the
same extent as such other project costs are shared or reimbursed.” 

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         Without a doubt, the WRDA does not define the meaning of “third-party
mitigation arrangement” in great specificity. There is also a lack of detail on
the “extent” of permissible “cost sharing” and “reimbursement.” That is to say,
the WRDA is ambiguous on the question presented. As a result, “the question
for the court is whether the [Corps’s] answer [to this issue] is based on a
permissible construction of the statute.” See 

.
         In light of the statutory provisions cited above, we conclude that it is.
The district court did not err in concluding that the Corps reasonably
interpreted the WRDA in shifting the initial mitigation costs to private parties.
III.     The purchase requirement is permissible.
         White Oak argues unconvincingly that the Corps violated the WRDA by
limiting White Oak’s mitigation options to the purchase of upland mitigation
bank credits.
         White Oak’s argument is essentially that the Corps violated the WRDA’s
preference for “in-kind” mitigation by demanding the purchase of “wetland”
mitigation bank credits for the loss of “upland” forests. This argument fails to
recognize that the WRDA only requires “in-kind” mitigation “to the extent
possible.” 33 U.S.C. § 2283(d)(1). There is no evidence that the Corps
unreasonably concluded that in-kind mitigation was not possible in this
instance.
         The parties agree that no upland BLH credits were available to
purchase. White Oak’s only proposed in-kind alternative was its conservation
lien plan. The Corps rejected this alternative, however, on the grounds that it
would be less efficient, timely, and effective than requiring the purchase of
wetland mitigation credits. Further, the Corps stated that it did not have the
resources to devote to the extensive process of reviewing the plan. White Oak
has presented no evidence that the Corps unreasonably reached that
conclusion.
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        We therefore agree with the district court that the purchase requirement
“is in line with the plain language of the WRDA and is a reasonable
interpretation thereof.”
IV.     There was no unconstitutional taking.
        White Oak contends that the Corps’s mitigation and purchase
requirements amount to an unconstitutional taking under the Fifth
Amendment. The argument is meritless. Indeed, White Oak cannot meet
either prong of a takings analysis.
        “When evaluating whether governmental action constitutes a taking, a
court employs a two-part test.” Hearts Bluff Game Ranch, Inc. v. United States,

, 1329 (Fed. Cir. 2012). “First, as a threshold matter, the court
determines whether the claimant has identified a cognizable Fifth Amendment
property interest that is asserted to be the subject of the taking.” Id.; see also
Dennis Melancon, Inc. v. New Orleans, 

, 269 (5th Cir. 2012) (“[A]
plaintiff first must demonstrate that he has a protectable property interest[.]”).
“Second, if the court concludes that a cognizable property interest exists, it
determines whether that property interest was ‘taken.’” Hearts 

.
        White Oak’s takings claim fails to assert either a protected property
interest or a taking.
        First, White Oak has no property interest in selling borrow material to
the Corps’s contracting program. In its efforts to sell to the Corps, White Oak
voluntarily 5 entered into a market over which the Corps possessed strong



        5White Oak claims that the Corps “forced” it to excavate clay on part of Idlewild,
which then effectively deprived White Oak of use of the remaining land because of the
prohibitive mitigation costs needed to continue excavation. There is no evidence in the record
that the Corps ever “forced” White Oak to pursue participation in the borrow material
market.

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                                       No. 17-30438
regulatory control. “[A] protected property interest simply ‘cannot arise in an
area voluntarily entered into . . . which, from the start, is subject to pervasive
Government control[.]’” 

(omission in original) (quoting
Mitchell Arms, Inc. v. United States, 

, 216 (Fed. Cir. 1993)).
       Second, even if White Oak could allege a protected property interest,
such as the right to sell borrow to non-Corps entities or otherwise commercially
develop its property, 6 White Oak has failed to show that the Corps ever “took”
any property. From the beginning, the Corps informed White Oak that it was
“free to utilize [its] property in any manner [it] choose[s].” The Corps then pre-
approved Idlewild as a borrow site, thus granting White Oak the ability to mine
borrow material for Corps’s projects, subject to the mitigation requirement. At
worst, the mitigation requirement frustrated White Oak’s ability to sell its clay
to Corps’s contractors at a competitive price. However, “[f]rustration and
appropriation are essentially different things.” Omnia Commercial Co. v.
United States, 

, 513 (1923). White Oak “has done no more than
[complain] that a prospective business opportunity was lost.” See United States
v. Grand River Dam Auth., 

, 236 (1960). Indeed, White Oak’s
owner could not identify any damage to White Oak outside a lost business
opportunity. This is insufficient to establish a “taking” under the Fifth


       6 White Oak purchased Idlewild with the intent to commercially develop the property,
and argues that clearing the BLH on Idlewild cannot require mitigation under the WRDA
because White Oak cleared the BLH prior to obtaining a Corps’s contract and would have
done so for its planned development project either way. This argument is unpersuasive for at
least three reasons. First, it is unsupported by the record. There is no indication that White
Oak cleared Idlewild for any purpose other than participation in the federal borrow material
market. Second, the Corps only required mitigation if the borrow material was used for a
Corps project. Therefore, if White Oak cleared Idlewild for a non-Corps related purpose, no
mitigation would be required. Third, White Oak’s theory would allow parties to avoid the
WRDA’s mitigation requirements by impacting the environment prior to receiving a Corps
contract, even when that impact results from a clear intent to sell to the Corps. This would
be contrary to Congress’ intent that the Corps mitigate impacts resulting from Corps’s
projects. See 33 U.S.C. § 2316(a).

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Amendment. See Allain-Lebreton Co. v. Dep’t of Army, 

, 45 (5th Cir.
1982) (finding no taking where “the company’s complaint [was] that the Corps
refuses to conduct its affairs so as to help the company develop its land”).
        Accordingly, the district court did not err in granting the Corps summary
judgment on White Oak’s takings claim.
V.      No error in declining to consider supplemental evidence.
        Finally, White Oak urges us to consider the Corps’s Comprehensive
Environmental Document (“CED”), which was not part of the administrative
record during summary judgment briefing, because, according to White Oak,
the CED “is inconsistent with the decision to impose mitigation” on Idlewild.
We decline to do so.
        “When reviewing an agency action under the APA, we review ‘the whole
record or those parts of it cited by a party.’” Medina Cty. Envtl. Action Ass’n v.
Surface Transp. Bd., 

, 706 (5th Cir. 2010) (quoting 5 U.S.C. § 706).
“Supplementation of the administrative record is not allowed unless the
moving party demonstrates ‘unusual circumstances justifying a departure’
from the general presumption that review is limited to the record compiled by
the agency.” 

Wildlands v. Kempthorne, 

, 1002
(D.C. Cir. 2008)).
        Neither party cites persuasive authority that evidence of an inconsistent
agency     decision    is   the   type    of       “unusual   circumstance”    justifying
supplementation. Nonetheless, we need not determine that issue. Even
assuming      that    evidence    of     an    inconsistent    decision   could   justify
supplementation, the district court correctly determined that the CED is not
inconsistent with record evidence and adds nothing to the consideration of this
case.
                                   CONCLUSION
        Having found no error in the district court’s analysis, we AFFIRM in full.
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