Seventh Circuit Reverses Ban on Impact Statement Delegation, Requires Extension of Impact Statement Scope

Prior to Public Law 94-83, the 1975 amendment¹ to NEPA, the Second and Seventh judicial circuits had developed strict interpretations of the statute's requirements concerning federal participation in environmental impact statement (EIS) preparation. Both courts reached these conclusions in the context of the peculiar federal-state interaction that surrounds the planning and construction of federal-aid highways. Now both have recanted. The Second Circuit did so earlier this year in Conservation Society of Southern Vermont v. Secretary of Transportation,² after that case had been tersely remanded by the Supreme Court.³ And the Seventh Circuit has now fallen in step by reversing its earlier ruling in Swain v. Brinegar⁴ that the Federal Highway Administration (FHWA) had improperly delegated preparation of an EIS for an interstate highway segment in Illinois to the state highway department.

Unlike the Second Circuit's approval of an impact statement limited to one segment of a larger highway upgrading effort, the Seventh Circuit went on to hold that the focus of the EIS was illegally restricted to a 15-mile segment of a 42-mile highway project. Coming in the wake of the Supreme Court's opinion in Kleppe v. Sierra Club,⁵ the Seventh Circuit's en banc decision in Swain v. Brinegar⁶ reaffirms the necessity for program impact statements under NEPA in situations where incremental federal decision making threatens to foreclose later project alternatives and thereby to predetermine an entire project's environmental consequences.

Swain concerned a proposed freeway between Peoria and Lincoln, Illinois, which was divided into two segments. The "southern" portion is a 15-mile stretch from Lincoln to the southern end of an already completed 3 1/2-mile segment roughly midway between the two cities. The other, or "northern," segment will run 24 miles from the northern end of the completed 3 1/2 miles of highway to Peoria. The 15-mile long southern segment was to be constructed first, and an environmental impact statement was prepared for that portion of the project.

The owners of a 440-acre farm which lies in the highway's path brought suit against construction of the first segment, alleging that FHWA's approval of the project violated the requirements of NEPA because preparation of the EIS had been illegally delegated to the state highway department, and because the scope of the EIS was inadequate. The district court ruled against the plaintiffs,⁷ but a divided panel of the court of appeals held that preparation of the EIS had in fact been improperly [6 ELR 10202] delegated.⁸ Thereafter, Congress amended NEPA in Public Law 94-83 to provide that an EIS not be deemed legally insufficient simply because it was prepared by a state agency or official so long as the relevant federal official furnishes guidance and participates in its preparation, and independently evaluates the statement prior to its approval and adoption.⁹ The Seventh Circuit then granted a rehearing en banc to determine the effect of this amendment on its earlier ruling.

The court had little trouble concluding that its previous holding on the delegation question could no longer stand. In explaining its decision, the court stated cursorily that "the draft and final statements were adequately reviewed by the Federal Highway Administration (FHWA)," and that the agency "furnished sufficient guidance to the state." The court also found that FHWA "complied with the purposes of NEPA, as amended, by accepting and exercising final authority for the evaluation of the environmental impact of the proposal." The correctness of this disposition of the delegation issue was vigorously challenged by Judge Swygert, author of the original panel opinion, in a concurrence which closely parallels Judge Adams' dissent in Conservation Society.¹⁰

Accusing the majority of making "conclusory statements concerning the contents of the record," Judge Swygert observed that his own examination of both the administrative record and the trial court's opinion revealed no evidence that FHWA played a meaningful role in the preparation of the draft EIS or did more than "rubber stamp" the final statement. He pointed particularly to the lack of independent FHWA evaluation of the final EIS, and to the generally trivial nature of federal comments on the statement. Contending that the majority's holding thus "exalt[s] form over substance and render[s] the statutory requirements of Public Law 94-83 meaningless," Judge Swygert also noted that the majority decision in Conservation Society does not dictate the majority's conclusion in Swain because there was much more evidence of federal guidance and independent evaluation in the former case.

In weighing the adequacy of the impact statement on construction of the 15-mile southern segment, the court undertook a more extensive analysis of both the requirements of NEPA as set forth in the statutory language and in the case law, and the pertinent FHWA regulation concerning the necessary scope of environmental review. Citing the Supreme Court's decision in SCRAP II¹¹ for the principle that the scope of the EIS must be at least as broad as the scope of the federal action being taken, the court found that the proposed federal action in this case was construction of the entire 42-mile highway project rather than simply the 15-mile southern segment. The existing EIS was therefore held inadequate because its scope was restricted solely to the latter segment.

Although noting that project segmentation may be necessary to make highway planning and design more manageable, the court warned that such segmentation may also cause devastating cumulative environmental impacts to be overlooked because of incremental NEPA review, and may predetermine, through construction of the first segment, where the continuation of the highway is to be built before possible alternatives have been fully examined. In order to determine whether the FHWA's segmentation in this case was reasonable, Judge Cummings, writing for the majority, applied a three-pronged test incorporating those factors articulated by other courts and by FHWA's regulation PPM 90-1: (1) does the proposed segment have a substantial utility independent of future expansion? (2) would its construction foreclose significant alternative routes or location for an extension from the segment? (3) has the larger plan, of which this segment is a part, become concrete enough to make it highly probable that the entire plan will be carried out in the near future?

The FHWA lost on all three counts. The court found that the southern segment had no utility other than as a part of the Peoria to Lincoln highway, largely because its northern end, even if connected to the 3 1/2-mile completed segment, would lie in the middle of the countryside, near no "major crossroad, population center or traffic generator." Judge Cummings considered this short completed segment, which begins and ends in a rural area, neither a logical terminus for the southern portion nor a "major highway control element" within the meaning of § 3(a) of PPM 90-1.¹²

The court also held that building the southern section would effectively limit choices for building the northern part, and thus taint environmental evaluation of this second component. This conclusion is apparently based on the court's belief that the 3 1/2-mile completed segment itself does not predetermine to a large extent the paths of both portions of the project, an assumption with which Judges Tone, Pell and Bauer strongly disagreed in dissent.

As to the third test, the majority found that the FHWA was also proceeding with construction of the northern portion of the Lincoln-Peoria highway, and that the two components are really part of a single project within the meaning of NEPA. To FHWA's argument that one EIS for each segment would be sufficient, the court answered that because the potential environmental impacts of the two components are interrelated, they must be evaluated together in a single EIS. The court noted that this requirement should not place an undue burden on the EIS draftsmen, since all that is necessary, in addition to the separate statements which have already been prepared for the two segments, is a supplemental EIS considering the overall environmental impact of the entire 42-mile freeway.

The Seventh Circuit's en banc decision in Swain v. Brinegar, in combination with the Second Circuit's Conservation Society ruling, definitively sets a lax standard of federal involvement in EIS preparation and evaluation under Public Law 94-83, and confirms that the 1975 NEPA Amendment has had the effect intended by some of the statute's critics, i.e., reversal of the Second and Seventh Circuit's previous strict stands on delegation.

[6 ELR 10203]

But Swain, unlike Conservation Society, promises to further full implementation of NEPA in another area, the necessity for early cumulative environmental impact assessment of incremental federal projects that are part of a broader federal program. Because it reaffirms the need for early preparation of programmatic impact statements under NEPA where a particular action is an integral part of a larger program and will by its completion irrevocably foreclose later project alternatives, the decision provides a counterbalance to the Supreme Court's loosening of the requirements for program impact statements in Kleppe v. Sierra Club.¹³

The distinguishing factual characteristic between Conservation Society and Kleppe on the one hand and Swain on the other is the undisputed existence in the latter case of an overall federal program. In the two earlier instances, the courts refused to accept plaintiffs' demands for programmatic impact statements because they could not find formal federal plans or proposals for programmatic action. In Swain, federal planning for construction of both the southern and northern portions of the Lincoin-Peoria freeway was well underway, and the real question before the court was simply whether the FHWA had erred in segmenting environmental impact assessment along these same lines. This is clearly a much less complicated legal and factual situation than the one presented to the Supreme Court in Kleppe v. Sierra Club, and thus not surprisingly led to a much more straightforward opinion.

While Swain adds further support to the established principle of according a broad scope to environmental impact assessment under NEPA, it does not really approach (except in a general way) the Kleppe problem of an unarticulated but de facto federal program encompassing a number of smaller discreet actions and projects. The decision therefore leaves the boundaries of NEPA's requirements for program impact statements basically as it found them, but represents a clear judicial warning against agency retrenchment in the scope of environmental review under the statute.

1. Codified at 42 U.S.C. § 4332(2)(D), ELR 41009.

2. __ F.2d __, 6 ELR 20207 (2d Cir. Feb. 18, 1976).

3. Sub nom. Coleman v. Conservation Society of Southern Vermont, 96 S. Ct. 19, 6 ELR 20068 (Oct. 6, 1975).

4. 517 F.2d 761, 5 ELR 20354 (7th Cir. 1975).

5. __ U.S. __, 6 ELR 20532 (June 28, 1976). See also Comment, NEPA Off the Top: The Supreme Court Interprets Impact Statement Requirement, 6 ELR 10164 (Aug. 1976).

6. __ F.2d __, 6 ELR 20609 (7th Cir. July 20, 1976).

7. 378 F. Supp. 753, 4 ELR 20836 (S.D. Ill. 1974).

8. 517 F.2d 761, 5 ELR 20354 (7th Cir. 1975).

9. Pub. L. 94-83, supra note 1.

10. __ F.2d at __, 6 ELR at 20209.

11. Aberdeen & Rockfish R. Co. v. SCRAP, 422 U.S. 289, 5 ELR 20418 (1975).

12. For the current version, see 23 C.F.R. § 771.3(g), ELR 46524.

13. __ U.S. __, 6 ELR 20532 (June 28, 1976). See Comment, supra note 5.