Second Circuit, CEQ Clarify Permissibility of Interim Actions Prior to Completion of Program EIS

In one of the first direct judicial responses to the Supreme Court's discussion last term in Kleppe v. Sierra Club¹ of NEPA's programmatic impact statement requirements, the Second Circuit Court of Appeals has denied² a motion for rehearing of its earlier decision in Natural Resources Defense Council v. Nuclear Regulatory Commission.³ Instead the court reaffirmed its conclusion that the Nuclear Regulatory Commission (NRC) cannot license any commercial activities related to spent-fuel reprocessing and mixed-oxide fuel use by nuclear power plants until NRC has completed its supplemental NEPA inquiry into the safeguards aspect of the generic issue of plutonium recycling. This ruling, in combination with a recently-issued Council on Environmental Quality Memorandum to executive agencies, clarifies, at least to some extent, Kleppe's impact on one of the gray areas in NEPA law, the question of what interim action may be taken prior to completion of a programmatic impact statement.

The rehearing petition in Natural Resources Defense Council, Inc. v. NRC had argued that under Kleppe, individual NRC licensing actions could go forward if accompanied by adequate impact statements, despite the fact that the generic impact statement is as yet incomplete. This contention was based on footnotes 16⁴ and 26,⁵ in Kleppe which apparently approve of such action in certain circumstances. Justice Powell suggested in footnote 16 that so long as the impact statement covering an individual action is adequate, there is no basis for enjoining that action pending preparation of a broader program statement. Footnote 26 followed this up by apparently disapproving the notion that completion of a program statement must preceed approval of individual projects. Noting that approval of one coal lease or mining plan does not foreordain the approval of others, the Supreme Court stated that "an agency could approve one pending project that is fully covered by an impact statement, then take into consideration the environmental effects of that existing project when preparing the comprehensive statement on the cumulative impact of the remaining proposals."⁶

Viewing these footnotes as an opening, NRC urged the Second Circuit to reconsider its earlier refusal to allow interim licensing. The court remained unconvinced, however, and denied NRC's motion for rehearing on September 8, holding that Kleppe did not require reassessment of its previous ruling that such interim action would violate NEPA.

The court gave two reasons for its holding. First, it found that the individual impact statements for interim licensing activities, which NRC has limited to site-specific effects in order to streamline the process, would necessarily be inadequate until the generic EIS dealing with programmatic impacts is completed. In the court's view NEPA requires that the cumulative impacts of individual interim actions be considered by the agency in taking those actions. Until a comprehensive impact statement discussing these impacts is completed and available to the decision maker, the cumulative effects of each individual action must therefore be considered in its specific EIS. This finding that the individual impact statements for interim actions would be inadequate differentiated the case from situations where an injunction against interim action would be unjustified under footnote 16 of Kleppe.

As the second basis for its ruling, the Second Circuit distinguished Kleppe's allowance of individual licensing on the ground that the specific coal leases and mining plans at issue there had "independent utility" and were "substantially independent" from the programmatic issue of regional development. The court viewed interim plutonium licensing, on the other hand, as clearly tied to the anticipated wide-scale use of mixed-oxide (uranium and plutonium) fuel and as a commitment of substantial resources to that major new technology.

This second standard has been formulated in different ways by a number of different courts,⁷ but taken together these precedents provide firm support for the Second Circuit's conclusion and the analysis upon which it was based. The recent Seventh Circuit case of Swain v. Brinegar,⁸ which is the capstone of this body of case, law, articulates the test as whether the individual action forecloses future alternative courses of programmatic action, including, of course, the alternative of taking no further action. This test is substantially congruent to the one established by footnote 26 of Kleppe which emphasizes the question of whether an individual [6 ELR 10255] action will commit the agency to future approval of other programmatic actions.

With regard to the first standard, i.e., whether the individual interim action was accompanied by an adequate NEPA impact statement, the Second Circuit's decision hoisted NRC with its own petard. The Commission, in announcing its interim licensing policy,⁹ opted to streamline the process by reserving analysis of the overall environmental effects on plutonium recycling and transport for the generic EIS, leaving only site-specific impacts to be discussed in the individual statement for each interim action. The court ruled that this failure to consider cumulative impacts of interim actions in the accompanying individual statements necessarily rendered those statements an inadequate basis for interim decision making in the absence of a completed generic or "comprehensive" EIS discussing such impacts.

In a Memorandum¹⁰ on Kleppe dispatched to the heads of executive agencies on September 16, 1976, the Council on Environmental Quality described the rehearing denial in Natural Resources Defense Council v. NRC as "the first [decision] to apply Kleppe's interim licensing rule." CEQ went on to restate that rule as a three-pronged standard. According to the Council, for interim action to proceed under footnotes 16 and 26 of Kleppe, an agency must (1) find no significant interdependence between the individual action and the other action to be covered in the comprehensive EIS, (2) prepare an adequate individual EIS for the interim action, and (3) make a commitment to analyze the action's cumulative effects in the forthcoming comprehensive statement. The third part of this formula is clearly an appropriate consideration under the guiding language of footnotes 16 and 26 in Kleppe, but unlike parts (1) and (2) it is not susceptible to immediate judicial review. Instead, its ultimate enforcement would hinge on a future judicial proceeding to determine whether the comprehensive EIS actually considers the interim action's cumulative impacts fully and adequately.

In CEQ's view, its formulation provides useful clarification of the law on this point, and allows "action to proceed before the comprehensive EIS is complete in appropriate circumstances without prejudicing future choices," while ensuring "feedback from the interim action into the comprehensive analysis." The Council also commented favorably on the Natural Resources Defense Council v. NRC rehearing denial, noting that it confirmed the need for interim licensing to have independent utility and substantial independence from other programmatic action.

Although its exact outline is still vague, a consensus does seem to be emerging on the question of the permissibility of interim action prior to completion of a comprehensive or programmatic EIS. CEQ's statement of the standard seems both clear and complete, but it is too early to know around which of the various verbal formulations the consensus will coalesce. This may not be crucially important in any event, however, since each sets substantially the same practical test. Ultimately, then, future NEPA disputes in this area will come to revolve primarily around questions of fact concerning the nexus between interim and future action in each particular case.

The importance of the rehearing denial in Natural Resources Defense Council v. NRC is that it reiterates, in the wake of the Second Circuit's reversal¹¹ of its earlier ruling in Conservation Society of Southern Vermont v. Secretary of Transportation¹² and the dicta in footnotes 16 and 26 of Kleppe, that there are indeed situations where interim action must be enjoined under NEPA.¹³ The Second Circuit's ruling in Natural Resources Defense Council v. NRC gives one example of such a situation and provides guidance to other courts which may later face this question. However, decisions in future litigation will undoubtedly place additional buoys, both in terms of different fact situations where interim action may or may not proceed and of further refinements governing of the standards in this area of NEPA law.

1. __ U.S. __, 96 S. Ct. 2718, 6 ELR 20532 (June 28, 1976). See Comment, NEPA Off the Top: The Supreme Court Interprets Impact Statement Requirement, 6 ELR 10164 (Aug. 1976).

2. Natural Resources Defense Council, Inc. v. Nuclear Regulatory Commission, __ F.2d __, 6 ELR 20723 (2d Cir. Sept. 8, 1976).

3. __ F.2d __, 6 ELR 20513 (2d Cir. May 26, 1976).

4. __ U.S. __, __, 96 S. Ct. 2718, 2729, 6 ELR 20532, 20536 (June 28, 1976).

5. __ U.S. __, __, 96 S. Ct. 2718, 2733, 6 ELR 20532, 20538 (June 28, 1976).

6. Id.

7. See, e.g., Swain v. Brinegar, __ F.2d __, 6 ELR 20609, 20611 (7th Cir. July 20, 1976) ("substantial utility independent" of the program, foreclosure of possible programmatic alternatives); Conservation Society of Southern Vermont v. Secretary of Transportation, 531 F.2d 637, 640, 6 ELR 20207, 20209 (2d Cir. Feb. 18, 1976) ("local utility," "no irreversible or irretrievable commitment of resources" for the programmatic action); Trout Unlimited v. Morton, 509 F.2d 1276, 1285, 5 ELR 20151, 20154-55 (9th Cir. 1974) ("substantially independent," "independent significance"); Sierra Club v. Callaway, 499 F.2d 982, 990, 4 ELR 20731, 20735 (5th Cir. 1974) ("separate viable entity"); Environmental Defense Fund v. Armstrong, 356 F. Supp. 131, 139, 3 ELR 20294, 20297 (N.D. Cal. 1973), aff'd, 487 F.2d 814, 4 ELR 20001 (9th Cir. 1973) ("undertaken individually and not as an indivisible integral part" of the program).

8. __ F.2d __, 6 ELR 20609 (7th Cir. July 20, 1976). See Comment, Seventh Circuit Reverses Ban on Impact Statement Delegation, Requires Extension of Impact Statement Scope, 6 ELR 10201 (Sept. 1976).

9. 40 Fed. Reg. 53057 (Nov. 14, 1975).

10. Council on Environmental Quality, Memorandum on Kleppe v. Sierra Club and Flint Ridge Development Co. v. Scenic Rivers Ass'n of Oklahoma, Sept. 16, 1976.

11. 531 F.2d 637, 6 ELR 20207 (2d Cir. Feb. 18, 1976). See Comment, Fallout from SCRAP II and the 1975 NEPA Amendments: Second Circuit Reverses Itself in Conservation Society, 6 ELR 10081 (Apr. 1976).

12. 508 F.2d 927, 5 ELR 20068 (2d Cir. 1974). The court there upheld an injunction against construction of a 20-mile segment of Route 7 pending completion of an EIS on the entire 280-mile Route 7 corridor. See Comment, Second Circuit Reaffirms Greene County and Upholds Programmatic Impact Statement for Route 7 Corridor, 5 ELR 10030 (Feb. 1975).

13. The Seventh Circuit's recent decision in Swain v. Brinegar, __ F.2d __, 6 ELR 20609 (7th Cir. July 20, 1976) provides another illustration. See Comment, supra note 5.