My wife had the same e-mail on 1 April from CBP. I went ahead and arranged a 1 week guaranteed fast-track passport appointment for her, paid the £30 extra, now I read that her passport IS valid, because she has a digital photograph and machine readable.
After checking her ESTA status, her application is showing expired, now as i've learnt incorrectly.
It's too late to refund the appointment now, but bravo DHS for a right royal screw up, that's now costing additional £30 fast-track, another $14 for ESTA again and what is now going to be a wasted trip to Newport this week.
I wonder how given her passport is valid, that I would have got her ESTA approved again, given DHS think it's invalid though.