Calvert Cliffs' Coordinating Committee v. AEC and the requirement of "balancing" under NEPA

The National Environmental Policy Act is two years old this month. In its short lifetime NEPA has passed rapidly through several phases of administrative and judicial interpretation.¹ In retrospect, none of the court cases involving NEPA appears more important than Calvert Cliffs' Coordinating Committee v. AEC, 1 ELR 20346 (D.C. Cir. 1971). An earlier ELR Comment probed several aspects of this decision in detail (see 1 ELR 10125), but did not discuss the court's finding that federal agencies must employ a "finely tuned and 'systematic' balancing analysis" in resolving conflict between environmental economic. social, aesthetic and other values. This comment will examine the nature of the balancing analysis which the opinion in Calvert Cliffs' requires.

A comment is warranted at the present time because at least two federal agencies — the Atomic Energy Commission and the Council on Environmental Quality — are interpreting the Calvert Cliffs' decision to allow agencies to include both environmental costs and expected benefits in environmental impact statements. The argument for including both project benefits and project costs in impact statements apparently is that in order to perform a "balancing analysis," the pros and cons of a proposed action must be set out in one document. The impact statement, the argument goes, is the logical choice.

[2 ELR 10004]

Before examining this point of view, it is perhaps useful to discuss the nature of the "balancing" activity which the court finds is required by NEPA in every federal decision or legislative recommendation affecting the environment. The court concludes from its reading of NEPA, §§ 102(2)(A) and (B), that agencies must develop techniques to balance "environmental amenities" against "economic and technical considerations" in a "finely tuned and 'systematic' balancing analysis" that results in a decision which uses all practicable means consistent with other national policies and values to protect the environment. 1 ELR 20347-8. In describing how balancing is to take place, the court appears to call for the general use throughout federal government of a new kind of "cost-benefit analysis" which has been made sophisticated enough to weigh environmental factors accurately and comprehensively in the balance. 1 ELR 20348-9.

The court offers no specific instructions as to how such an analysis might be carried out. Its failure to do so has caused some confusion, most of which is unwarranted. Perhaps the court should have stated explicitly that it was not advocating the wholesale importation into certain federal decisions of rigorous economic cost-benefit analysis, such as that which has developed over many years for evaluating proposed water resources projects. The court clearly did not mean to approve any particular technique of balancing cost and benefits; its broad language conveys the common-sense notion of "trading-off" where competing interests must be equitably balanced.

In examining what the court in Calvert Cliffs' meant by an analysis of costs and benefits, we must remember that this case was decided against a background of other environmental cases in which federal agencies were required to balance environmental factors against competing factors. For example, although not cited in Calvert Cliffs' with respect to "balancing," Scenic Hudson Preservation Conference v. FPC, 354 F.2d 608, 1 ELR 20292 (1965), and Udall v. FPC, 387 U.S. 428, 1 ELR 20117 (1967), required the FPC to "consider" environmental impacts under a specific provision of the Federal Power Act. In Calvert Cliffs' Judge Wright views "consideration" and "balancing" as synonymous and accords great weight to the concept of "consideration" of environmental factors, although he concedes in his discussion of what adequate "consideration" of environmental impact might entail that NEPA uses the world only once, in § 102(2)(B). See footnote 5, 1 ELR 20347. If the balancing operation which Judge Wright finds mandated by NEPA is the same as the "consideration" which the FPC is required to give environmental factors, then there already exists a good deal of law and experience on "balancing" and how it might be done. See, e.g., Presiding Examiner's Initial Decision on Remand in the High Mountain Sheep case, 1 ELR 30017 (February 23, 1971), on remand under Udall v. FPC, supra.

There are definite dangers in allowing strict economic cost-benefit analysis to dominate the "consideration" which Calvert Cliffs' says must be given to environmental factors. Portions of the legislative history of NEPA, adequately reflected in the text of NEPA itself, show great concern that unquantifiable, subjective factors somehow be taken into account in environmental decision-making. See especially §§ 102(2) A, (B) and (G). Prior decision-making in government has often been destructive, precisely because cost-benefit information and techniques were used to the exclusion of "softer" environmental information and techniques. As the Natural Resources Defense Council has stated, "To insure that adequate consideration is given to non-quantifiable factors, when an agency utilizes cost-benefit analysis it must rigorously specify the premises on which the analysis is based, including theoretical assumptions, analytic techniques, and data sources, so that independent evaluation of such decisions can be made." See Comments on the Guidelines of the Council on Environmental Quality (January 13, 1972). If this goal is accomplished, it will be possible in the overall assessment which NEPA requires to consider quantifiable cost-benefit information alongside non-quantifiable information and analysis, without prejudice to the latter.

"Balancing" and the AEC's Guidelines

The Atomic Energy Commission, faced with implementing the Calvert Cliffs' decision, not only for plants and operations which it may license or operate in the future, but for current activities as well, has issued several implementing guidelines. In September, 1971, the Commission published revised guidelines, describing them as an interim statement of policy and procedure for the implementation of NEPA in accordance with the Calvert Cliffs' opinion. 36 Fed Reg. 18071 (Sept. 9, 1971). The pre-Calvert Cliffs' procedures appear at 36 Fed. Reg. 13233 (July 16, 1971). They in turn superseded procedures set out at 35 Fed. Reg. 9042 (May 28, 1970). Further, the September 9 guidelines have been slightly modified on two occasions. See 36 Fed. Reg. 19158 (September 30, 1971), and 36 Fed. Reg. 21579 (Nov. 11, 1971).

Under the September 9 guidelines applicants for nuclear power plant permits or licenses are required to submit new — or in some cases supplemental — impact statements that reflect the requirements of the Calvert Cliffs' decision. These guidelines require that each impact statement include a benfit-cost analysis that considers and balances the environmental impact of the facility, and the alternatives available for reducing of avoiding adverse environmental effects, against the environmental, economic, technical and other benefits of the facility. Subsection A.3, App.D. It is this requirement which broadens the content of the Commission's impact statements to include discussion [2 ELR 10005] of project benefits of all kinds alongside the environmental costs. (No mention is made of importing non-environmental costs into the statement).

On January 13, 1972, the Commission published a notice of availability of a proposed guide for benefit-cost information which applicants must submit. 37 Fed. Reg. 548 (Jan. 13, 1972). These guidelines, which are actually tabular forms to be filled in by applicants, apply only to certain categories of completed and nearly-completed facilities. Their full title is Proposed AEC Guide to the Preparation of Benefit-Cost Analyses To Be Included In Applicants' Environmental Reports (For Defined Classes of Completed and Partially-Completed Nuclear Facilities). Additional forms for plants at earlier stages of construction will be issued separately. The draft forms supplement (1) the draft Guide to the Preparation of Environmental Reports for Nuclear Power Plants (issued for comment and interim use in February 1971); (2) the Scope of Applicant's Environmental Report with Respect to Transportation, Transmission Lines and Accidents (issued September 1, 1971); and (3) Considerations of Accidents in Implementation of the National Environmental Policy Act of 1969 (issued December 1, 1971).

The Commission in its proposed guide recognizes that benefit-cost analysis in the environmental area is an evolving art. The proposed guide tries to avoid setting out rigid rules or techniques for performing the analyses. The Commission calls its own approach "acceptable," but goes on to say that applicants may elect to use other measures and methods if they are as acceptable and relevant. This viewpoint is consistent with the informal approach of the court of appeals. More importantly, the Commission also recognizes the thrust of the court of appeals' requirement that each individual plant be considered on its own merits. In individual cases parts of the general guide may be inapplicable or inadequate. The techniques of analysis implied by the general guide may also be inapplicable or inadequate.

There still remains, however, the disturbing decision to import into the NEPA impact statement a full consideration of all the benefits associated with a particular project. Thus, instead of a detailed treatment of environmental costs, as specifically contemplated by the text of NEPA § 102(2)(C) and its legislative history, the AEC's impact statements will pit environmental costs against all manner of benefits — "environmental, economic, technical and other …" Subsection A.3, App.D. In an agency whose primary expertise will remain oriented to the engineering and economic aspects of atomic power, such a change in emphasis in impact statement preparation invites applicants to use the 102 process to develop the reasons why the project should go forward.Obviously NEPA was not intended to achieve such a result. The act states that the detailed statement of environmental consequences prepared under § 102(2)(C) "shall accompany the proposal through existing agency review processes." As desirable as such a result might seem, NEPA was not intended to require agencies to abandon their ordinary decision-making processes where their pending decisions might have a major environmental impact. Rather, the act required them to add a special preliminary procedure when such impacts might occur. After completion of § 102 review, the national environmental policy established by the act requires agencies to consider the results of that one-sided inquiry in reaching a decision under normal agency decision-making processes,

The Natural Resources Defense Council has argued to the Council on Environmental Quality that the CEQ's guidelines should be amended to include a requirement that benefits be set out in a separate section of the statement, independent of the "detailed statement" of environmental impact and alternatives specifically required by NEPA. This is a compromise between the AEC position and the position that all discussion of benefits should be excluded from the statement. See Comments on the Guidelines of the Council on Environmental Quality (submitted Jan. 13, 1972). ELR simply suggests a minor modification of the NRDC approach. Agencies should be allowed to attach to the statement any descriptive material or benefit analysis, including cost-benefit analysis, which may exist at the time the statement is circulated. Such an approach would assist readers of impact statements to obtain a more comprehensive view of the project under review, but would at the same time protect the integrity of the impact statement.This suggestion requires the formal adoption and expansion of CEQ's current informal practice of requesting that economic cost-benefit analyses be attached to, and circulated with, impact statements, particularly for water resource projects under the Corps of Engineers' authority. See Statement of the Honorable Russell E. Train, Chairman, Council on Environmental Quality, Before the Senate Committee on Interior and Insular Affairs, p. 8 (November 3, 1971). Such an approach would also satisfy the view expressed in the House Appropriations Committee Conference Report that impact statements should include full information, "not only as to the impact upon the environment but also the significant economic impact on the public and the affected areas and industries … including employment, unemployment and other economic impacts." Train, supra, p. 9.

An attractive argument can be made, however, for the NRDC and AEC approach. If either the AEC or the NRDC approach were adopted, NEPA would function virtually as an "administrative procedure act" for that class of federal actions involving major environmental impacts. Agency decision-making, from the original conception of the proposed action right down to the final agency decision, could be conducted solely on the basis of information contained in the impact statement. The rules governing decision could be developed from [2 ELR 10006] the requirements of § 102. NEPA applies to any proposed federal action with possible major environmental consequences; thus, perhaps more artfully than the Administrative Procedure Act itself, NEPA covers federal agency rule-making and adjudication and any other action which might escape the two traditional categories of federal action under the APA. Provisions for comment by sister agencies and by state and local governments would apply to all components of the decision. Similarly, the decision would be exposed to public comment to the extent NEPA requires.

The Role of Environmental Lawyers Where "Balancing" is Involved in Environmental Cases

"Balancing," as construed by the court, requires agencies to expand the scope of their decision-making process to include factors well outside their usual range of specialization or expertise. What special ability has an administrative agency to make the kind of non-technical balancing decisions to which Judge Wright refers? Does committing this kind of decision to a typical exercise of agency discretion still make sense? The expertise of many agencies is not only inappropriate, it inhibits conflict resolution where non-developmental environmental factors are at stake.

The implications for attorneys faced with "balancing" situations is clear: they must point out the essentially non-technical nature of the determinations being made; ask for careful agency articulation of decisions and of regulations where balancing is involved;² call for wider public hearings and interagency consultation; ask for removal of decisions to political forums more suited to the decision pending (including "remand" to the legislature)³; and perhaps ask for judicial review of imbalanced decisions on the theory that deference to discretion (associated in the administrative process with expertise) is inapplicable and that the court is better equipped to weigh equities in some instances of environmental harm than is the agency decision-maker.⁴

Calvert Cliffs' and Judicial Review

The chances for, and the scope of, judicial review under NEPA are both affected by the decision in Calvert Cliffs':

We conclude, then, that Section 102 of NEPA mandates a particular sort of careful and informed decisionmaking process and creates judicially enforceable duties. The reviewing courts probably cannot reverse a substantive decision on its merits, under Section 101, unless it be shown that the actual balance of costs and benefits that was struck was arbitrary or clearly gave insufficient weight to environmental values. But if the decision was reached procedurally without individualized consideration and balancing of environmental factors — conducted fully and in good faith — it is the responsibility of the courts to reverse. As one District Court has said of Section 102 requirements: "It is hard to imagine a clearer or stronger mandate to the Courts." [Footnote 13 omitted.] 1 ELR 20349

It is open to the courts to spell out the kinds of information which agencies should require in balancing (1) from § 102, (2) from an interpretation of the substantive requirements of § 101, and (3) from the requirement of § 102(2)(D) that alternatives be studied. The court says:

… by compelling a formal "detailed statement" and a description of alternatives, NEPA provides evidence that the mandated decisionmaking process has in fact taken place and, most importantly, allows those removed from the initial process to evaluate and balance the factors on their own. 1 ELR 20348.

The court probably was focusing on the information requirements of federal administrators well up the chain of responsibility for agency decisions. However, the evaluation and balancing of factors, in the sense in which the court intended, lends itself to judicial review. Neither the specification of factors of importance to the policy goals of NEPA, nor the actual balancing carried out by the agency decision-maker, is a special talent of most federal agencies. The courts therefore have a unique role to play in moving the administrative process toward the thorough, meaningful implementation of NEPA.

1. For previous ELR Comments on NEPA, see the table of contents for Volume Year 1971, 1 ELR 10000.

2. EDF v. Ruckelshaus, 1 ELR 20059 (D.C. Cir. Jan. 1971).

3. See J. Sax, Defending the Environment 175 ff. (1971).

4. See Sive, Some Thoughts of an Environmental Lawyer in the Wilderness Administrative Law, 70 Colum. L. Rev. 612 (1970).