NEPA Alive and Well: The Supreme Court Takes Two

Daniel R. Mandelker

Daniel R. Mandelker is Stamper Professor of Law at Washington University in St. Louis, Missouri, and is the author of NEPA LAW AND LITIGATION (1984 & Supp. 1988) and a coauthor of ENVIRONMENTAL PROTECTION: LAW AND POLICY (1984).

[19 ELR 10385]

Environmental watchdogs awaited with some concern the two National Environmental Policy Act (NEPA)¹ decisions of the Supreme Court during its 1988-1989 term. The issues were important, and the Court had not been especially kind to NEPA in the past. The Court's decisions in the two cases, Robertson v. Methow Valley Citizens Council² and Marsh v. Oregon Natural Resources Council,³ came down on May 1, 1989. The environmental plaintiffs did not win, but the Court, in unanimous decisions written by Justice Stevens, clearly endorsed the statute. Indeed, Justice Stevens wrote that "NEPA declares a broad national commitment to protecting and promoting environmental quality."⁴

The Issues

The Court decided three major issues in its 1989 NEPA decisions.⁵ None required an interpretation of the statutory language; they came instead from what the Supreme Court calls the "common law" of NEPA jurisprudence. The first issue is whether NEPA requires federal agencies to prepare worst case analyses in their impact statements. The second is whether NEPA imposes a duty on federal agencies to mitigate the environmental impacts of their actions. The third, a procedural issue, is which standard of judicial review courts should apply when they review agency actions under NEPA.

Worst Case Analysis

The environmental impact of some governmental actions is expensive and difficult to determine because necessary information is unavailable or expensive to obtain. The Council on Environmental Quality (CEQ) initially responded to this problem by requiring federal agencies to include a hypothetical "worst case analysis" in their impact statements when these problems arose. An example is a worst case analysis of the uncertain environmental impacts of a total cargo loss by an oil tanker, included in an impact statement on a proposed oilport.⁶

Federal agencies resented the worst case analysis requirement because of the time, expense, and difficulties it imposed. In response, CEQ revoked the worst case analysis rule in 1986, but continued to require an analysis based on generally accepted research methods when necessary information is unavailable. Despite this change in the regulation, the Ninth Circuit continued to hold that a worst case analysis was required.

The government appealed the Ninth Circuit's ruling in Robertson v. Methow Valley Citizens Council v. Regional Forester,⁷ in which plaintiffs challenged an impact statement prepared for a major downhill ski resort in a national forest. The Court reversed the Ninth Circuit and upheld CEQ's revocation of the worst case analysis requirement. The decision is important more for its deference to CEQ regulations than it is for an explanation of the kind of analysis that is required in impact statements. The Court relied on an earlier Supreme Court decision in which it upheld a CEQ regulation that had revoked an earlier ruling.⁸ This makes Methow Valley anticlimactic on worst case analysis, but sends an important message to NEPA lawyers on the weight the Court will give to CEQ regulations.

Mitigation

Mitigation of environmental impacts is clearly an important consideration in the environmental analysis required by NEPA. The statute does not require mitigation, but federal courts have regularly held that federal agencies must discuss mitigation measures in their impact statements. The Ninth Circuit went further in Methow Valley and held that NEPA imposes a substantive requirement on federal agencies to mitigate the adverse effects of their proposed action. The Supreme Court reversed.

This decision was again predictable. The Court had earlier held in Strycker's Bay Neighborhood Council, Inc. v. Karlen that a court could not rely on NEPA to reverse [19 ELR 10386] or modify an agency action on the basis of environmental effects contained in an impact statement.⁹ That decision clearly implied that NEPA does not impose substantive duties on federal agencies. Methow Valley relied on Strycker's Bay to hold that NEPA does not impose a substantive duty to mitigate actions that cause adverse environmental impacts.

The Court did make it absolutely clear that NEPA requires a discussion of mitigation measures. "To be sure, one important ingredient of an EIS is the discussion of steps that can be taken to mitigate adverse environmental consequences."¹⁰ This is different, the Court added, from "a substantive requirement that a complete mitigation plan be actually formulated and adopted."¹¹

Justice Stevens also pointed out that the environmental impacts of the action in the Methow Valley case could be mitigated only by state and local governments because they were off site. He observed that it would be incongruous to find that the Forest Service lacked the power to act until the nonfederal agencies had decided what mitigation measures were required.

Judicial Review

Which standard of judicial review courts should apply to agency actions under NEPA has long been a controversial question. Actions taken by federal agencies under NEPA are informal decisionmaking in the classification system of administrative law. Judicial review of informal decisionmaking is governed by the arbitrary and capricious standard adopted by the Supreme Court in Citizens to Preserve Overton Park v. Volpe.¹² The judicial review standards applied in NEPA cases have not entirely followed this guidance, and the problem is complicated under NEPA because judicial review problems arise in a variety of different situations.¹³

The most common case in which judicial review problems arise under NEPA is the case in which an agency decides not to prepare an impact statement on a proposed action. In this type of case the federal courts have applied different judicial review standards. One group has applied the arbitrary and capricious standard and another has applied what is perceived as a more rigorous "reasonableness" standard.

Standard of judicial review problems also arise when courts must decide whether an agency should prepare a supplemental impact statement. This problem has not arisen as frequently as the problem of judicial review when agencies do not prepare impact statements initially. In the supplemental impact statement cases, the courts had applied a variety of judicial review standards. Some of these standards differed from the arbitrary and capricious standard and some were deferential to agency decisions that a supplemental impact statement was not required.

Litigants for some time had been trying to get the Supreme Court to resolve these conflicting judicial views. The Court had denied certiorari with published dissents in two cases that raised questions concerning judicial review of agency decisions not to prepare impact statements initially. The Court finally decided this question in Marsh v. Oregon Natural Resources Council.

At issue in Marsh was an impact statement on a proposed dam in Oregon's Rogue River Basin. The federal agency prepared an impact statement, but plaintiffs brought suit claiming a supplemental impact statement was necessary because of new information. The Supreme Court, again reversing the Ninth Circuit, disagreed.

The Court approved cases holding that agencies should apply a rule of reason when deciding whether to prepare supplemental impact statements. Application of the rule of reason, it held, turns on the value of new information to the decisionmaking process. This holding led the Court to conclude that a decision to prepare a supplemental impact statement is similar to the decision to prepare an impact statement in the first instance. Citing CEQ regulations with approval, the Court held that a supplemental impact statement should be prepared when new information will affect the quality of the environment in a significant manner or to an extent not already considered.¹⁴

The Court next considered the standard of judicial review that should be applied to a decision on whether to prepare a supplemental impact statement. It held that the decision on whether new information constitutes a "significant" effect was not a question of law but "a classic example of a factual dispute the resolution of which implicates substantial agency expertise."¹⁵ This characterization requires application of the arbitrary and capricious standard for judicial review. The Court made it clear that a court should not be unduly deferential when it applies this standard. It should not "automatically defer" to the agency without "carefully reviewing" the record and satisfying itself that the agency had made a "reasoned decision."¹⁶

Marsh resolves an important question involving the standard of judicial review that has troubled the courts from the beginning. The case clearly aligns NEPA judicial review with judicial review of informal decisionmaking generally. Even so, the Court's decision to resolve this issue in a supplemental impact statement case creates some problems. Arguably, less compelling considerations — and hence more lenient judicial review standards — apply when agencies decide whether to supplement impact statements already prepared than when they decide whether to prepare an impact statement at all. The courts have emphasized the importance of enforcing this threshold duty to prepare an impact statement initially. A court could conclude that it can be less watchful when it decides whether an agency should supplement an impact statement in which the agency has already considered the environmental impacts of its proposed action. The open question is thus whether the judicial review standard adopted for supplemental impact statements applies to the preparation of an impact statement in the first instance. The Court did provide some pointed hints on this issue. In a footnote, it discusses federal court decisions that considered the judicial review of agency decisions on whether an impact statement is initially required.¹⁷ This [19 ELR 10387] footnote, and the similarities the Court found in initial and supplemental impact statements, suggests that its decision applies to the preparation of initial impact statements as well.

Conclusion

The Supreme Court's NEPA decisions are of critical importance to the interpretation and implementation of the statute. Since nothing had been heard from the Court for several years, its decisions this term were awaited with considerable interest, especially in view of the changes in the Court's membership.

The Court has made it clear, once more, that it will pay substantial deference to CEQ's interpretation of the statute, a signal to NEPA lawyers to read what CEQ has to say carefully. The Court also applied to decisionmaking under NEPA the same arbitrary and capricious standard of judicial review it applies to informal decisionmaking under other legislation. Finally, again applying its rule that NEPA does not impose substantive duties, the Court made it clear that NEPA does not impose on federal agencies a substantive duty to mitigate the adverse impacts of their actions. The Court has also provided a clear endorsement of the objectives and purposes of the statute. It has cautioned courts to take their judicial review powers seriously, and has told agencies that an analysis of mitigation measures is an important part of their NEPA responsibilities.

NEPA is indeed alive and well!

1. 43 U.S.C. §§ 4321-4370a; ELR STAT. NEPA 001-014.

2. 19 ELR 20743 (U.S. May 1, 1989).

3. 19 ELR 20749 (U.S. May 1, 1989).

4. 19 ELR at 20746. The pages of the decision that follow contain a sweeping endorsement of NEPA's aims and objectives.

5. For background on the cases as they came before the Court, see Masterman, Worst Case Analysis: The Final Chapter?, 19 ELR 10026 (Jan. 1989).

6. See Sierra Club v. Sigler, 675 F.2d 957, 13 ELR 20210 (5th Cir. 1983).

7. 833 F.2d 810, 18 ELR 20163 (1987).

8. Andrus v. Sierra Club, 442 U.S. 347, 9 ELR 20390 (1979).

9. 444 U.S. 223, 10 ELR 20079 (1980).

10. 19 ELR at 20747.

11. Id.

12. 401 U.S. 402, 1 ELR 20110 (1971).

13. The divided case law on this issue is analyzed in Hoskins, Judicial Review of an Agency's Decision Not to Prepare an Environmental Impact Statement, 18 ELR 10331 (1988).

14. 19 ELR at 20752.

15. 19 ELR at 20753.

16. Id.

17. Id. at 20753 n.23.