United States District Court Extends Impact Statement to Annual Budget Request

In a far-reaching decision announced June 6, 1975,¹ District Court Judge John H. Pratt has ordered the Department of Interior to prepare, consider and disseminate environmental impact statements on annual budget requests for financing the National Wildlife Refuge System. Judge Pratt found that such requests are "proposals for legislation" within the meaning of § 102(2)(C) of the National Environmental Policy Act of 1969 (NEPA), and are also "major federal actions" which clearly have a significant effect on the environment. Furthermore, the decision orders the Director of the Office of Management and Budget (OMB), also a defendant in the action, to develop formal methods and procedures which will, with respect to OMB's own administrative actions and proposals, "identify those agency actions requiring environmental impact statements to be prepared, considered and disseminated."

The suit, brought by the Sierra Club and other environmental organizations in July 1974, challenged threatened cutbacks in federal ownership, management and financing of the Refuge System. The System consists of more than 350 refuge units, totaling over 30 million acres of land and water, and is administered by the Fish and Wildlife Service, an arm of the Department of the Interior.

The Court's requirement of environmental assessment and statement preparation on annual budget proposals goes beyond the separate obligation to prepare impact statements on major federal action taken outside the budgetary process. To meet their NEPA obligations, most federal agencies prepare statements on the latter type of action as a matter of course. Preparation of impact statements on budgetary proposals is also in addition to any programmatic assessment and statement preparation undertaken by the agency. The court does not suggest the new obligations will duplicate those which already exist. Instead, the court's intent is to cover a new range of federal activities under NEPA's requirement for impact statements. Thus the opinion signifies a major expansion of NEPA responsibilities for the Fish and Wildlife Service, and potentially for all federal units whose annual budget proposals may significantly affect the environment. Nothing in the reasoning of the opinion prevents its extension to other federal agencies which prepare annual budget requests on programs with direct impacts on the environment.

Judge Pratt recognized the increased burden his ruling imposes on the Fish and Wildlife Service and on other federal agencies to which it may be extended. But this burden, Judge Pratt suggested, is what NEPA is all about; both Congress and the courts have made it clear that NEPA requires compliance to the fullest possible extent. In support, he invoked the oft-cited language of the landmark NEPA decision in Calvert Cliffs' Coordinating Committee v. U.S. Atomic Energy Commission.²

[T]he § 102 duties are not inherently flexible. They must be complied with to the fullest extent, unless there is a conflict of statutory authority. Considerations of administrative difficulty, delay or economic cost will not suffice to strip the section of its fundamental importance.

Judge Pratt based his finding that annual proposals for financing the Refuge System are "proposals for legislation" within NEPA principally on the Tellico Dam case (Environmental Defense Fund v. T.V.A.),³ the EIS preparation Guidelines of the Council on Environmental Quality (CEQ),⁴ and Department of Interior Regulations⁵ which track the CEQ guidelines and explicitly include appropriations requests among the types of federal actions to be subjected to the impact statement requirement. Similarly, the judge had no difficulty reaching the conclusion that annual appropriations requests are "major federal actions significantly affecting the quality of the environment." This statutory phrase, he asserted, is intentionally broad, reflecting the purpose of NEPA, to promote an across-the-board adjustment in federal agency decision-making so as to make the quality of the environment a concern of every federal agency. He also considered the extensive nature and size of the Refuge System and the high amount of the System's annual budget in concluding that the scope of the "budget project" is far broader in terms of environmental impact than that of other proposed federal actions requiring impact statements, such as single canals and dams. Pratt further observed that budget decisions obviously have a direct bearing on how the Refuge System will be staffed, managed and maintained, so that the interrelationship between the Refuge System and the budget process is unmistakably important.

The Office of Management and Budget and the Fish and Wildlife Service had argued that it would be impractical if not impossible to add the task of impact statement [5 ELR 10124] preparation on an already overburdened and tightly scheduled budget process. Judge Pratt's characterization of this argument had a slight edge:

Defendants would convey the mistaken impression that appropriations proposals are emergency measures taken in response to some unforeseen event. Yet defendants know in advance that they are required to submit an annual appropriation proposal to Congress.

Pointing to defendants' concession that the budget process extends over 20 months,⁶ the judge concluded that an environmental review and statement during that time should not be impossible to accomplish. He acknowledged that a statement would probably have to be prepared before "final, definite budget decisions" have been reached, since these decisions may not take shape before the last few months of the process. Nonetheless, earlier preparation would be feasible, requiring only "an impact statement that considers the various [budget] alternatives." Moreover, early preparation is desirable — indeed, in the view of some courts, required under NEPA — in order to afford an honest consideration of alternatives rather than permit after-the-fact rationalizations of foregone conclusions.

Defendants had also invoked the alleged confidentiality of budget communications as intra- and inter-governmental memoranda under exemption five of the Freedom of Information Act.⁷ Judge Pratt rejected this argument, relying on the recent case of Renegotiation Board v. Grumman Aircratt.⁸ Exemption five is intended to protect the deliberative or policy-making processes of federal agencies, by allowing for free exchange of advice and criticism, uninhibited by the fear of disclosure. The Renegotiation Board case drew a distinction for the purpose of applying exemption five between "predecisional memoranda prepared in order to assist an agency decision-maker in arriving at his decision, which are exempt from disclosure, and post-decisional memoranda setting forth the reasons for an agency decision already made, which are not." Judge Pratt concluded that since budget appropriation requests are final and cannot be termed predecisional, such requests, whether made by the Department of the Interior or the Office of Management and Budget, are not privileged from disclosure under exemption five. Nor are impact statements accompanying budget requests.

Finally, Judge Pratt found a programmatic impact statement offered by the Fish and Wildlife Service as the agency's assessment of the environmental impact of budget changes over time, among other actions, to be an inadequate substitute for a statement addressing itself specifically to annual appropriations proposals. While a programmatic statement might prove useful in assessing the general long range goals of the Refuge System, its failure to direct itself to specific annual budget requests and to promise annual revisions in the same time frame as that established for budget decisions means it cannot fulfill the mandate of NEPA with respect to those decisions.

The opinion stands as a resounding affirmation of NEPA's application to all federal agencies, including the Office of Management and Budget. Not only must OMB apply NEPA to its own functions, but the way is now open, if the Office so chooses, to develop a role in enforcing agency compliance with NEPA in the budget review process, a function contemplated for OMB in the legislative history of NEPA and by students of the Act's implementation.⁹ Enforcement of agency compliance up to now has been left to CEQ and the courts, and while both have shown remarkable resourcefulness in interpreting and applying the NEPA mandate, they lack the direct day-to-day authority and control over the other federal agencies enjoyed by OMB.

Similarly, the decision extends the application of NEPA to a range of important federal decisions to which it normally would not apply. Such decisions as reductions in funding and manpower levels, reallocation of resources among agency programs, federal involvement in public programs in favor of an increased state role, to "mothball" federal facilities, or to slow the acquisition of privately held lands for inclusion in various federal preserves all have significant impacts on the environment, but would probably not otherwise be subject to NEPA's requirements.

Unfortunately, Judge Pratt left one major apparent inconsistency unresolved. A conflict arises between two objectives discussed in the opinion, the need to prepare and circulate impact statements as early in the budgetary process as possible, and the contrary necessity of protecting "predecisional" communications from disclosure that would impair federal decision-making. Early preparation of impact statements serves the purpose of achieving an assessment of environmental impacts before final commitments are made, rather than after a project has unstoppable momentum or is a fait accompli. It also permits impact statements to accompany proposals through a greater part of the agency decision-making process. On the other hand, disclosure of predecisional memoranda raises the risk of interfering with the free flow of internal debate and uninhibited advice that can be critical in resolving policy differences within an agency and reaching sound decisions. Pratt identified the point of decision in this case as the time when the budget proposal becomes fixed. Thus the agency is left with the choice of waiving the predecisional § 5 exemption to achieve timely preparation and circulation of the impact statement, or preserving the exemption and violating NEPA by releasing an impact statement only after a final definite budget has been [5 ELR 10125] decided upon. Judge Pratt appeared to recognize the conflict, but ducked it. He suggested only that if hardship or inconvenience result, requests for relief should be addressed to the Congress, not to the courts.

An alternative resolution, proposed by the Sierra Club in its reply brief, is for the courts, in applying exemption five, to recognize a distinction between advice, opinions or deliberations which are protected, and factual data which are not.¹⁰ Since environmental impact statements, properly drafted, should focus on factual data concerning the environmental impacts of alternative budget proposals, they need not disclose privileged communications, and thus may be circulated in a more timely fashion. To the extent that a discussion of alternatives, even though limited to facts, exposes policy proposals, these policy proposals can also be subjected to basic environmental analysis as required by NEPA. For reasons that Judge Pratt did not explain, he declined to discuss or adopt this approach in his decision.

The impact of the decision on OMB is uncertain. The order directs OMB to develop formal methods and procedures to identify those agency actions and proposals for which environmental statements must be prepared, considered and disseminated. The order neither expressly requires OMB to put such methods and procedures into effect nor actually commands OMB to prepare impact statements. Thus, there is nothing in the order to prevent OMB from delegating the task of statement preparation entirely to the agencies submitting budget proposals that suggest significant environmental impacts. Decisions as to which proposals may have significant effects on the environment can also be left to the submitting agencies under a narrow reading of the order. Up to now OMB has avoided the imposition of any NEPA responsibilities on its operations, and it can be expected to keep its NEPA functions to a minimum. The Sierra Club has achieved what it sought with respect to OMB, however. It won a ruling that the Office is not exempt from NEPA and must begin to work into its proposals and actions the same kind of environmental review NEPA requires of other agencies, even if OMB's role is limited to taking a hard look at statements prepared by other agencies and submitted to OMB together with annual budget requests.

The most troublesome issue for OMB in resolving how to respond to or implement Judge Pratt's decision is less likely to be whether OMB should consider environmental factors as required by NEPA than whether it must also disclose budget information and its own environmental review of budgets and alternatives prior to the President's transmittal of the annual budget message to the Congress. OMB's commitment to defending the confidentiality of the budget process is absolute. The Office is considering a proposal that it prepare regulations providing for NEPA-type consideration of budget alternatives for programs with environmental impacts which would be released only upon release by the President of his budget message. This rule would protect the confidentiality of the budget process, and permit a consideration of the full range of alternatives by the Congress, which serves as the final decision-maker on all federal budgets. It is not certain, however, that OMB will opt for this limited approach rather than appealing the decision or seeking from Congress an outright exemption for OMB and the budget process from NEPA. Even if OMB does propose such regulations in an attempt to comply with Judge Pratt's ruling, the court may reject them as inadequate in view of the agency's likely refusal to disclose impact statements on the budget before the President's message. In short, the conflict between early statement preparation and confidentiality of the budget process, left unresolved by Judge Pratt, must now inevitably be resolved either by thecourts or in Congress.

While it is unfortunate that the the opinion leaves an important issue unresolved, it effectively shifts the burden of seeking clarification to OMB and the agencies, which, as matters now stand, face a much broader application of NEPA's impact statement requirements to their decision-making process.

1. Sierra Club v. Morton, No. 74-1017, 5 ELR 20383. See also, Comment, Sierra Club Seeks to Require NEPA Impact Statement on Annual Appropriations Proposals, 5 ELR 10071 (May 1975).

2. 449 F.2d 1109, 1 ELR 20346 (D.C. Cir. 1971), cert. denied 404 U.S. 942 (1972).

3. 468 F.2d 1164, 2 ELR 20726 (6th Cir. 1972). In this case, the Court held that an impact statement was required on continuing construction of the Tellico project, even though commenced prior to NEPA's effective date, because such construction is a "major federal action" and because annual appropriations requests covering the project are "proposals for legislation" under NEPA.

4. 38 Fed. Reg. 20550 (August 1, 1973), 40 C.F.R. 1500.5, ELR 46004.

5. 36 Fed. Reg. 19342 (October 4, 1971), § 516.2.5.A.

6. For example, the 20 month period for the FY 1976 budget (budget for the fiscal year beginning July 1, 1975) began in November, 1973.

7. 5 U.S.C. § 552(b)(5), ELR 41002.

8. U.S. Sup. Ct., 43 U.S.L.W. 4502 at 4507 (U.S. Apr. 28, 1975).

9. See, e.g., Anderson, "The National Environmental Policy Act," in Federal Environmental Law, at pp. 333-334.

10. The distinction is discussed in EPA v. Mink, 410 U.S. 73, 3 ELR 20057 (1973), and in an earlier case, Soucie v. David, 1 ELR 20147, (D.C. Cir. 1971).