Renewed Controversy Over the International Reach of NEPA

After seven years of extensive litigation and controversy, the consideration of environmental impacts mandated by the National Environmental Policy Act (NEPA)¹ has become an integral part of the decision-making process for federal activities throughout the country. One major issue that has been the subject of some litigation but remains unsettled, however, is the international reach of NEPA. More specifically, to what extent are federal agencies required to comply with NEPA and the environmental impact statement (EIS) process² when their activities will have impacts only on the environments of foreign countries. The Council on Environmental Quality (CEQ) issued a memorandum³ to federal agencies last year stating that NEPA requires analysis and disclosure of the environmental impacts of all federal agencies' activities, whether domestic or foreign. In contrast, a recent Nuclear Regulatory Commission (NRC) decision⁴ limited NEPA's application to the broad global effects of international activities and found no requirement for EIS studies of site-specific impacts of particular nuclear export decisions. These contrary interpretations have brought into sharp focus a controversy that should be clarified by CEQ's soon-to-be issued NEPA regulations⁵ that will apply to all federal agencies.

NEPA and the World Environment

The statute does not explicitly limit the required consideration of the environmental impact of federal activities to those effects felt in the United States. In its declaration of a national environmental policy,⁶ Congress recognized the "profound impact of man's activity on the interrelationships of all components of the natural environment." Impact statements must be prepared for all major federal actions "significantly affecting the quality of the human environment."

On the international application of NEPA, § 102(2)(F) states that:

… [t]o the fullest extent possible … (2) all agencies of the Federal government shall … (F) recognize the worldwide and long-range character of environmental problems and, where consistent with the foreign policy of the United States, lend appropriate support to initiatives, resolutions, and programs designed to maximize international cooperation in anticipating and preventing a decline in the quality of mankind's world environment.⁷

This subsection aims to encourage cooperative ventures between the United States and foreign countries to protect the environment on an international scale. The only limitation is that, as with all federal programs, the cooperative endeavors must be consistent with American foreign policy. The subsection does not, however, exempt federal agencies from the responsibility to be aware of the foreign environmental impacts of their programs.

NEPA's legislative history reveals that Congress was concerned about the impact of United States activities on the international environment. Statements made during the debate on NEPA's passage asserted that "the global character of ecological relationships must be the guide for domestic activities,"⁸ and an early House oversight report declared that the "history of the act makes it quite clear that the global effects of environmental decisions are inevitably a part of the decisionmaking process and must be considered in that context."⁹

Judicial Analysis of the Issue

Judicial exploration of the international reach of NEPA has been slow and cautious. The first decision on this issue came in the controversy regarding possible siting of the Alaska oil pipeline.¹⁰ Alternate routes running through either the United States or Canada with different environmental impacts were proposed. The court granted standing to Canadian environmentalists to intervene in the litigation because their interests in the environmental impact of a Canadian route were within the zone of interests protected by NEPA. Although the court did not explore the point, it appears implicit in the holding that the impact on the Canadian environment of the American built pipeline was a matter that the Department of the Interior had to consider in making the ultimate siting decision.

In 1973, three environmental organizations sued the Atomic Energy Commission (AEC) and the Export-Import Bank (Eximbank) to compel them to comply with NEPA in carrying out the nuclear power export program.¹¹ Subsequently, the AEC agreed to prepare a generic EIS on the overall nuclear power export process.¹² [7 ELR 10206] To the court, in Sierra Club v. Atomic Energy Commission,¹³ this essentially settled the matter because the AEC was the lead agency of the export program, and NEPA required only that the lead agency prepare the EIS. This conclusion meant that it was unnecessary to determine the applicability of NEPA to Eximbank's activities. Although the court saw merit to Eximbank's argument that it was merely the financier implementing a consummated trade agreement, the court noted that Eximbank was a federal agency, therefore at least nominally subject to NEPA, and that a large portion of its activities were financing the exportation of American-built nuclear reactors.

In Sierra Club v. Coleman,¹⁴ a court held for the first time that a federal agency must consider exclusively foreign environmental impacts of its activities. The court enjoined the Federal Highway Administration from proceeding with construction of a highway through Colombia and Panama that was to be part of the Pan American Highway system. An EIS had been prepared but only after the project had begun and the preciseroute had been selected. The court found two deficiencies in the EIS: first, it failed to discuss the possible breakdown of the foot-and-mouth disease control program and the disease's spread to the United States; and second, its discussion of alternate routes failed to include the potential cultural extinction of the local Indian tribes through whose land the road would pass. While the first omission related to possible domestic impacts, the second deficiency of the EIS dealt with a site-specific impact that was geographically disconnected from the United States.

The court's attention to this site-specific issue is worthy of note. The EIS briefly mentioned the possible impacts on the local Indian tribes, and the court would not have found the EIS deficient on this score if it did not consider a detailed discussion of the site-specific impact necessary for NEPA compliance. Although the court did not explore this point, the reason it may have required such elaboration is because the Federal Highway Administration was in the position to decide where to place the highway route and thus could mitigate or avoid adverse impacts.

The most recent judicial discussion of the problem of foreign impacts of federal agency activities came in a challenge to the international pest management program, including the distribution, financing, and use of pesticides, carried out by the Agency for International Development (AID), part of the State Department. Several environmental groups sought to compel AID to comply with NEPA by preparing an EIS on the pest management program. In a stipulation approved by the court,¹⁵ AID agreed both to prepare an EIS and to issue regulations to guide the agency in complying with NEPA in other activities.

In the stipulation, AID was required not only to prepare the programmatic impact statement but to account for individual site-specific impacts. The EIS was to contain a description of the scope and nature of the current and reasonably anticipated pest management program and also "a statement with respect to each pesticide included in the pesticide activities of the amounts used, by geographic area and purpose." An assessment was to be made of the pesticide activities:

wherever such impacts or activities occur, subdivided by areas of activity … and, in detail, the limiting factors applicable to those pesticides for which AID will provide assistance including, but not limited to, conditions relating to use, climate, flora, fauna, or geography of areas where each pesticide may be used.

Although the foregoing information was to be included "to the maximum extent practicable," the court clearly indicated that it was concerned with impacts on a less than global scale. AID itself agreed to this in the stipulation:

AID recognizes its responsibilities to conduct its operations in a manner that mitigates or avoids any potential short- or long-term deleterious environmental effects of local, regional or global proportions. AID will ensure that environmental consequences of proposed AID-financed activities are identified and properly analyzed.

The agency was clearly recognizing an obligation under the stipulation to consider site-specific impacts in foreign countries.¹⁶

CEQ Memorandum

As the agency responsible for guiding the federal government's compliance with NEPA,¹⁷ CEQ's interpretations of the Act's requirements carry considerable weight.¹⁸ Although prior to the policy change in [7 ELR 10207] President Carter's Environmental Message¹⁹ CEQ was limited to issuing advisory guidelines and memoranda, the Council's view that NEPA requires consideration of environmental impacts abroad cannot be dismissed lightly or ignored.

In order to encourage a consistent application of NEPA, CEQ concluded in its memorandum²⁰ that the Act "requires analysis and disclosure in environmental statements of significant impacts of federal actions on the human environment — in the United States, in other countries, and in areas outside the jurisdiction of any country." In support of its conclusion, CEQ found in NEPA "no express or implied geographic limitation of environmental impacts to the United States or to any other area." CEQ cited the NEPA procedures of several federal agencies, the Alaska pipeline and Sierra Club v. Coleman decisions, and scholarly commentary to support its "belief that an environmental statement is required whenever U.S. actions would have significant environmental impacts on the U.S., on global resources, or on foreign countries." NEPA's policy of analysis and disclosure of environmental effects is designed to aid American decision makers in understanding "the foreseeable environmental consequences of their decisions … [and] in determining U.S. policies and actions," but it does not "dictate actions on foreign soil or impose U.S. requirements on foreign countries." Finally, CEQ noted that impact statements analyzing environmental effects in foreign countries had the added value of providing "information to cooperating governments which they then could use in making decisions about projects within, or which may affect, their countries. Far from being an imposition, this information can enhance the value of U.S. assistance or participation."

Though a laudable attempt to answer an unresolved question of NEPA interpretations, the CEQ memorandum suffers from several defects. An initial problem is that CEQ's memoranda are only advisory and carry no mandatory authority with other federal agencies. Although CEQ notes that it had "discussions with several agencies" on the question, there is no indication of the full give and take of discussion in the Executive Branch that should precede announcement of a major government policy. CEQ's failure to follow that usual interagency review process, particularly to solicit the reactions of the State Department, means the memorandum reflects merely the views of one agency.²¹ No doubt this will be remedied when CEQ goes through the process of proposing regulations on NEPA compliance. Coupled with an apparent failure to air the issue with all interested government agencies was CEQ's failure to give full consideration to issues of international law, in particular the sovereign authority of nations to control activities within their jurisdictions. CEQ assumes that impact statements "do not dictate actions on foreign soil," but an adequate EIS could influence an American decision maker to request an alternative course of action that would mitigate potential environmental damage. This clearly can be inferred from the Sierra Club v. Coleman decision. CEQ also makes too much of the assumption that other governments will cooperate in preparing the impact statements. Using principles of international law, foreign countries may view even information gathering as an intrusion on their sovereignty and be uncooperative. Finally, the CEQ memorandum may be criticized for not making full use of the AID pesticide decision which recognizes the requirement for discussing country-specific impacts.

Views of the NRC

After a generic impact statement was prepared on the overall export program of nuclear power facilities and materials, as required in Sierra Club v. AEC, the next step was to inquire whether site-specific impacts in the countries receiving the individual shipments should be analyzed in individual impact statements. In In the Matter of Babcock & Wilcox,²² a West German citizens' group attempted to intervene in a licensing proceeding on the export of reactor components for use in constructing a nuclear power station to compel NRC to prepare an EIS on the site-specific environmental impacts of the power station before granting the export license.

The NRC held that the petitioner lacked standing to intervene as a matter of right after concluding that NEPA did not require an analysis of the exclusively foreign site-specific environmental impacts. As an initial finding, the NRC determined that neither NEPA nor its legislative history "unambiguously defines its application to federal actions whose significant environmental impacts occur outside the United States." Rather, the relevant key to § 102(2)(C) in the NRC's view is consideration of global impacts of major federal actions which also have impacts within the United States. NEPA applies only in proportion to the direct impacts of the action on the United States environment:

When the issues concern the domestic German impacts of an American reactor (whose manufacture and transport do not significantly affect the United States environment) to be constructed in Germany under the authority of the German government, following procedures designed to meet the perceived needs of that country, we can no longer find in the statutory language a requirement for our analysis of such impacts.²³

Secondly, the NRC dismissed the authoritativeness of the opinions in the Alaska pipeline case and Sierra Club v. Coleman, finding that although the decisions give "some colorable support" to the requirement that international impacts be assessed, the legal reasoning for such conclusions is absent, and therefore "judicial guidance … remains slender." In addition, the Commission emphasized that in the two cases the United States agency "retained substantive control" over continuing activities of the project, whereas in NRC licensing proceedings once "the export leaves United States territorial [7 ELR 10208] jurisdiction, United States control over the items exported is quite limited."

The NRC also rested its decision on international law and foreign policy considerations.²⁴ In terms of both legal principles and practicality, the agency argued, NEPA's "requirements cannot be met in the foreign context in a manner equivalent to domestic practice without seriously intruding on a foreign state's sovereignty."²⁵ Furthermore, petitioner had already presented its views in West Germany, and the West German government does have sufficient procedures in its own context to air the potential dangers expressed by the petitioner. Since NEPA does not expressly indicate that international law principles of sovereignty should be contravened, the NRC considered that it did not have the authority to breach those principles itself.

The NRC decision in Babcock & Wilcox should be weighed, like the CEQ memorandum, only as the view of one federal agency and not a statement of the policy of the entire Executive Branch.²⁶ The CEQ memorandum was considered by the NRC, but the Council itself was not consulted as its memorandum recommends. Merely relying on the State Department's views is no substitute for a full elaboration of this important question among all interested federal agencies.

Aside from the procedural imperfections, the legal analysis contained in the NRC's decision is flawed. Although NEPA is somewhat ambiguous on the point, it by no means ignore the need to look carefully at international environmental impacts. The NRC concluded too hastily that its NEPA obligations are fulfilled by the generic EIS on the nuclear export program prepared by a separate agency. Secondly, the NRC's reading of Sierra Club v. Coleman ignores the fact that the court found as a separate and independent ground for holding the EIS inadequate the failure to explore fully the specific impact of the highway construction on the local Indian tribes. Finally, the NRC argued that it should not and could not probe the internal workings of the West German government system to see if potential environmental impacts are evaluated, and yet proceeded to do precisely that by concluding that not only does West Germany have adequate procedures for considering the matter but that petitioner already had its day in court there. This undercuts its international law argument and leaves unclear, particularly in light of Sierra Club v. Coleman and the AID decision, what the proper view should be if a country gave inadequate or no consideration to potential environmental impacts.

"Rule of Reason"

In his concurring opinion in the Babcock & Wilcox decision, Commissioner Victor Gilinsky stated that the NRC has "implicitly recognized that NEPA's prescription regarding assessment of global impacts is a flexible one whose precise contours may vary significantly depending on the circumstances in which it is applied."²⁷ While this flexible standard apparently allows preparation of a generic impact statement evaluating the effects on the global environment for broad-based international programs carried out by federal agencies, the NRC seems to apply a "rule of reason" when considering individual site-specific or country-specific actions. The primary factor to be considered under this standard is the agency's level of involvement in the particular project, that is, whether there is continuing agency monitoring of and responsibility for the project so as to affect the project's ongoing activity and a continuing commitment to finance the project. The legal basis for applying the rule of reason here is the international law principle of national sovereignty, that American standards should not be imposed upon work carried out by and in a foreign country. Thus, as the NRC interprets NEPA's requirements where the United States initiates an international development program that could have consequences on the global environment, these effects must be evaluated before the United States decides to implement the program. But where individual impacts occur exclusively in non-American environments and the project is carried out without American involvement, except for the initial grant of funds or license to purchase materials, there is no justification for analyzing the environmental impacts or refusing the initial assistance [7 ELR 10209] even though under American standards the project may be environmentally indefensible.

This theory appears superficially attractive and can draw some legal support from the fact that in Sierra Club v. Coleman the highway construction was actually to be carried out under American auspices. The theory ignores, however, several important factors. First, the court settlement in the AID pesticides case explicitly contemplated evaluation of country-specific impacts even though the United States might be only the supplier of pesticides to the country actually distributing them for local agricultural use. That this was a stipulated settlement between the parties and Sierra Club v. Coleman was a court decision is no basis to ignore the former; both documents are court-approved analyses of the law, and the AID pesticides settlement is the most recent court statement on the issue.

The second factor that must be considered is the nature of foreign assistance programs. When the United States provides financial or technical assistance to foreign countries, it is standard practice for the federal agency to require financial and technical information from the recipient country as to fiscal responsibility and the capability to use the assistance offered. This is in the nature of a contract relationship. The United States will not supply the aid unless it is satisfied with the recipient's ability to use it and that the use conforms to American foreign policy. The same may be said about requiring information on the possible environmental effects of proffered assistance. Foreign countries have no inherent or vested right to receive American assistance, and the American agency may predicate granting the assistance, purely on a contractual basis, on receiving certain information concerning the environmental impacts of the aid. At leastas far as American involvement goes, the license or granting of financial or technical aid is the prerequisite to implementation of the project, and the United States may properly require that the agreement to furnish American aid be consistent with statutory American policy.²⁸

Eximbank Lawsuit

The issue of the scope of NEPA's international application is before the courts again in a suit filed by the Natural Resources Defense Council seeking to compel the Export-Import Bank to conform its decision-making processes to NEPA and to prepare an impact statement before deciding to finance a project that would have a significant environmental impact.²⁹ Eximbank may have been lulled into complacency by the Sierra Club v. AEC court's refusal to reach the issue of Eximbank's compliance with NEPA.The more relevant precedent, however, would appear to be the AID pesticide case where the agency not only was required to promulgate NEPA compliance regulations but to be prepared to consider individual site-specific impacts.

The Council on Environmental Quality now carries the major responsibility for settling this question because of its obligation to promulgate NEPA compliance regulations mandatory for all federal agencies. Before they can be publicly proposed, the provisions of the draft regulations, including those relating to NEPA's international application, doubtless will be the subject of much interagency controversy. CEQ does, however, have the opportunity to develop a strong legal basis for mandating programmatic impact statements for the foreign activities of every federal agency and, using the AID pesticide case as a model, requiring far greater consideration of individual site-specific impacts abroad than now exist.

1. 42 U.S.C. §§ 4321-4361, ELR STAT. & REG. 41009.

2. NEPA § 102(2), 42 U.S.C. § 4332(2), ELR STAT. & REG. 41010.

3. Council on Environmental Quality, Memorandum to Heads of Agencies on Applying the EIS Requirement to Environmental Impacts Abroad (Sept. 24, 1976) (this document is available from ELR, 11 pp. $1.50, ELR Order No. A-1010).

4. In the Matter of Babcock & Wilcox, No. 50-571, 7 ELR 30017 (NRC June 27, 1977).

5. CEQ was given the authority to issue regulations in E.O. 11991, 42 Fed. Reg. 26967 (May 25, 1977), ELR STAT. & REG. 45003. Announced in President Carter's Environmental Message, 7 ELR 50057, this Executive Order gives CEQ the power to issue regulations rather than advisory guidelines as in the past, 40 C.F.R. pt. 1500, ELR STAT. & REG. 46003, governing federal agency implementation of the procedural provisions of NEPA. The proposed regulations are expected to be issued in the next few months.

6. NEPA § 101, 42 U.S.C. § 4331, ELR STAT. & REG. 41009.

7. NEPA § 102(2)(F), 42U.S.C. § 4332(2)(F), ELR STAT. & REG. 41010.

8. 115 CONG. REC. 29082 (Oct. 8, 1969) (remarks of Sen. Jackson).

9. H.R. Rep. 92-316, 92d Cong., 1st Sess., at 32-33 (1971).

10. Wilderness Soc'y v. Morton, 463 F.2d 1261, 2 ELR 20250 (D.C. Cir. 1972).

11. See Comment, Environmentalists Challenge Nuclear Export Program, 3 ELR 10181 (1973).

12. Energy Research & Development Administration, Final Environmental Statement, U.S. Nuclear Power Export Activities (ERDA-1542, Apr. 1976).

13. 4 ELR 20685 (D.D.C. Aug. 3, 1974).

14. 405 F. Supp. 53, 6 ELR 20051 (D.D.C. 1975), injunction continued, 421 F. Supp. 63, 6 ELR 20798 (D.D.C. 1976).

15. Environmental Defense Fund v. Agency for International Development, 6 ELR 20121 (D.D.C. Dec. 5, 1975).

16. The AID regulations for its environmental assessment procedures are found at 22 C.F.R. pt. 216, 41 Fed. Reg. 26913 (June 30, 1976). The court settlement clearly contemplates that site-specific or country-specific assessments will be made, and 22 C.F.R. § 216.5(c)(12) anticipates this requirement:

Broad program assessments may be required in order to assess the environmental effects of a number of individual actions and their cumulative environmental impact in a given country or geographic area, or the environmental impacts that are generic or common to a class of agency actions, or other activities which are not country-specific…. Subsequent Environmental Assessments on major individual actions will be necessary where such follow-on or subsequent activities may have significant environmental impacts on specific countries where such impacts have not been adequately evaluated in the programmatic Environmental Assessment.

There does not appear to be any greater flexibility to this requirement even though 22 C.F.R. § 216.6(c) says that impact statements will be prepared when agency actions significantly affect "other aspects of the human environment at the discretion of the Administrator."

17. NEPA § 204, 42 U.S.C. § 4344, ELR STAT. & REG. 41011.

18. Warm Springs Dam Task Force v. Gribble, 94 S. Ct. 2542, 4 ELR 20666 (Douglas, Circuit Justice, 1974). See also Comment, Supreme Court Ushers in New Era for CEQ in Warm Springs Case, 4 ELR 10130 (1974).

19. Supra note 5.

20. Supra note 3.

21. The issue of the international reach of NEPA has long been a source of conflict between CEQ and the State Department. It could be that CEQ chose not to request the predictably negative reactions of the State Department to a broad interpretation of the Act's international scope for fear that the State Department would be able to block issuance of the memorandum.

22. No. 50-571, 7 ELR 30017 (NRC June 27, 1977).

23. Id. at 30019.

24. For support, the NRC relied on a letter from Louis V. Nosenzo, Deputy Assistant Secretary, Bureau of Oceans and International Environmental & Scientific Affairs, Department of State, to James J. Shea, Director of International Programs, Nuclear Regulatory Commission (May 31, 1977).

25. The NRC relied on its prior decision, In the Matter of Edlow International, 3 NRC 563 (1976), in which American environmental groups sought to intervene in a licensing proceeding regarding export of enriched uranium for use in a nuclear power plant near Bombay, India. See Comment, Environmentalists Attack NRC's Nuclear Fuel Export Licensing, 6 ELR 10190 (1976). In Edlow International, at 585, the NRC said:

It is not for us to make policy decisions for another sovereign nation on the social balance to be struck between energy needs and environmental impacts … [T]he terms and history of the Act are most consistent with an interpretation which avoids speculation regarding another nation's internal affairs. Even if it were assumed that international impacts must be considered … impacts internal to a foreign nation need not be.

26. Since the NRC relied so heavily on the State Department's letter, the decision also reflects that agency's view. It should be noted that the NRC transmitted the license application to the State Department "to obtain the views of the Executive Branch with regard to issuance of the export license," pursuant to Executive Order 11902, 41 Fed. Reg. 4877 (Feb. 3, 1976). There is no indication, however, that the State Department solicited the views of CEQ. Rather, the State Department gave its own views "on behalf of the Executive Branch."

27. Commissioner Gilinsky also pointed out what had not been decided by the NRC in Babcock & Wilcox, specifically "what matters must be considered in examining the 'global' impacts of United States nuclear exports once site-specific impacts within foreign countries have been excluded." Without going further, he noted that ERDA's generic impact statement on nuclear power export activities may have to be supplemented from time to time with new information in order to remain adequate. In fact, the ERDA document may not now be adequate. It may be out-of-date because the Carter Administration seems to have embarked on a new policy for nuclear export materials. Also, the EIS assesses the environmental impacts only in the United States and on the high seas but does not really explore the global impacts in other countries or on the atmosphere.

28. The contract argument could be carried one step further than simple information gathering by requiring that foreign activities funded through United States assistance must include specific plans to mitigate potential environmental damage. (One domestic analog is the mitigation requirements in the Fish and Wildlife Coordination Act, 16 U.S.C. § 662(b), ELR STAT. & REG. 41801.) There are numerous international agreements concerned with the protection of the global environment, and the United States clearly has a stake in an unpolluted and unwasted earth. Rather than an imposition of domestic policy abroad, this is a matter of the United States acting within its rights, when contracting to carry out business with other countries, to enforce a global policy of environmental protection with a sound scientific basis. Global environmental impacts are the result of the accumulated impacts of individual country-specific actions.

29. Natural Resources Defense Council v. Export-Import Bank of the United States, No. 77-0080 (D.D.C., filed Jan. 14, 1977). For a digest summary of the Complaint, see ELR PEND. LIT. 65444. Eximbank is scheduled to file its Answer on November 8, 1977.