Reinvigorating the NEPA Process: CEQ's Draft Compliance Regulations Stir Controversy

In a promising but controversial attempt to ensure fuller compliance with the mandates of the National Environmental Policy Act (NEPA), the Council on Environmental Quality (CEQ) has formulated a draft set of regulations which, when made final, will require all federal agencies to follow more rigorous NEPA procedures than has been the case to date. The Council drafted the regulations pursuant to Executive Order 11991, which accompanied President Carter's 1977 Environmental Message and authorized CEQ to promulgate legally binding regulations governing implementation of NEPA's procedural provisions.¹ When finally adopted, the new NEPA regulations will replace CEQ's present advisory guidelines² and necessitate revision of the compliance procedures of the other federal agencies. The rules will result in a greater standardization of NEPA compliance procedures and an increase in the Council's supervisory power over implementation of the statute.

CEQ's initial draft of the regulations, which has been circulated for interagency comment but has not yet been officially released to the public, gives an expansive construction to the statute's requirements and assigns the Council itself a major role in assuring agency compliance with them. The draft provoked a hornets' nest of criticism in the interagency commenting process, however, with other federal agencies objecting that the Council's preliminary proposals exceed the authority granted by the executive order under which they were issued and in some instances go beyond the terms of the Act and the limits set by NEPA case law. The Council's timetable for publishing the proposed regulations for public comment after incorporating interagency suggestions has been pushed back from the original February target date as it has become apparent that portions of the draft regulations will require reconsideration.

This Comment examines selected provisions of the draft regulations and the questions that have been raised concerning their validity. Such an examination indicates both the scope of CEQ's intentions and the serious legal and practical obstacles the Council faces in its attempt to reform the NEPA compliance process.

E.O. 11991

Executive Order 11991 directed CEQ to "issue regulations to Federal agencies for the implementation of the procedural provisions of the Act (42 U.S.C. 4332(2))."³ The regulations are to "be designed to make the environmental impact statement process more useful to decisionmakers and the public; and to reduce paperwork." They are to require impact statements to be "concise, clear, and to the point."⁴ They are also to include procedures "for the early preparation of environmental impact statements" and for "referral to the Council of conflicts between agencies" concerning NEPA's implementation. Other federal agencies are directed to "comply with the regulations issued by the Council except where such compliance would be inconsistent with statutory requirements," and the Council is required to consult with affected agencies before promulgating the rules.

CEQ's Preliminary Draft

Whereas the Council's advisory guidelines deal only with § 102(2)(C) of NEPA,⁵ which requires the preparation of environmental impact statements (EISs), the draft regulations cover the other subsections of § 102(2) as well and look beyond EIS preparation to the implementation of a broader NEPA process stretching from the earliest planning stages to post-project mitigation and monitoring measures. The draft states that "[a]gencies shall integrate the NEPA process with other planning at the earliest possible time to insure that planning and decisions reflect environmental values."⁶

The draft regulations introduce a new procedural step prior to EIS preparation called "scoping."⁷ After an agency decides to prepare an impact statement, it must hold a meeting including affected federal, state, and local agencies and interested members of the public to determine the scope of the EIS and to differentiate between significant issues requiring in-depth analysis and insubstantial or previously analyzed issues meriting no discussion. At this scoping meeting, the lead agency may set time limits for completion of the EIS and the other constituent parts of the NEPA process.

The draft rules emphasize that the impact statement itself is more than simply a disclosure document and must be used to plan actions and make decisions. Statements are to be "analytic" rather than "encyclopedic," normally not more than 150 pages in length (300 pages for proposals of unusual scope or complexity), and are to use a standard format including a short summary of their contents. Some observers have suggested that such a shortened EIS might be vulnerable to the charge that it would be insufficiently detailed under the NEPA case law. They doubt that agencies will take the risk of losing a lawsuit and abandon their current preference for voluminous "kitchen sink" impact statements. CEQ disagrees with this assessment, however, and contends that the record of the scoping process can be used to convince a reviewing court that the lead agency had reasonable grounds for deeming certain matters minor or [8 ELR 10046] extraneous and limiting consideration of them in the EIS.⁸

The "Environmentally Preferable Alternative"

A provision which has stirred considerable controversy is the section governing the consideration of alternatives.⁹ The lead agency is to "vigorously explore" and "objectively evaluate" all reasonable alternatives, devoting "substantially equal treatment" to each, including the proposed action. The agency will have a duty to develop relevant information if the costs of obtaining it are not exorbitant and the information is essential to a reasoned choice among alternatives. The agency must also identify the "environmentally preferable alternative," and, if another alternative has been selected, explain in its public "record of decision" the reasons why "other specific considerations of national policy overrode" the alternative that involves the least harm to the environment.¹⁰

The interagency comments reflected strong objections to this last requirement on the ground that it in effect assigns greater weight to environmental factors than all but overriding national policy considerations in the NEPA balancing test for each particular project. According to this view, a reviewing court could conceivably invalidate an agency decision to proceed with a project as arbitrary by determining that the considerations relied upon in the record of decision were not sufficiently related to overriding national policies. This would in effect be judicial review of the substantive agency decision under NEPA, an issue on which the circuits have split.¹¹

CEQ's response to this objection is that the draft regulations require only an explanation of the agency's choice, not a particular result in the decision-making process.¹² While the draft disclaims any intention of enforcing the "substantive" result-oriented provisions of § 101 of the Act,¹³ it also states that responsibility for the substantive tenability of the final decision lies with the courts as well as with the agency that made it.¹⁴ The Council thus implicitly sides with those courts that view the substantive agency decision to proceed with the project as reversible if found to be arbitrary and capricious in its weighing of environmental harms against project benefits.¹⁵ The Council is surely well aware that although the required explanation might not dictate a particular result, it may serve as the handle for judicial invalidation of the lead agency decision in a subsequent suit challenging the project.

CEQ also made a bold attempt to bolster effors to mitigate the adverse environmental effects of federal actions. An agency is required to state in the record of decision whether "all practicable means to avoid or minimize environmental harm have been adopted" and to condition funding of actions on the implementation of mitigation measures.¹⁶

Preserving the Status Quo

A significant innovation in the draft regulations is a requirement that an agency considering a permit or funding application from a non-federal entity must maintain the environmental "status quo" until it makes a decision on the application.¹⁷ If the agency has not yet issued its record of decision and is aware that the applicant is planning to take preparatory action that would either have an adverse environmental impact or limit the choice of reasonable alternatives, it must notify the applicant that the application will be rejected if the preparatory action proceeds as planned. This provision represents a simple but seemingly effective solution to the persistent problem of environmentally detrimental action by private parties prior to commencement of the NEPA process, an issue first noted by the court in Silva v. Romney.¹⁸

Another noteworthy change is a provision explicitly authorizing cooperation between federal and state or local agencies for the purpose of producing joint impact statements that will satisfy both NEPA and analogous state statues or local ordinances.¹⁹ The draft regulations also mandate greater agency efforts to assure public involvement in the NEPA process. These include multiple public notice procedures, public attendance at the scoping meetings, and public hearings where there is substantial controversy surrounding the proposed action.

The draft rules in addition spell out procedures under § 309 of the Clean Air Act²⁰ for referring to the Council interagency disagreements over proposed actions that might cause unsatisfactory environmental effects.²¹ Such referrals are to be made only for matters which deserve "national attention." The Council may mediate the [8 ELR 10047] dispute that led to the referral, hold public hearings to gather more information, publish findings and recommendations, or, on matters of clear national importance, submit the disagreement together with its own recommendation tothe President for resolution.

CEQ did not attempt to address the complex problem of NEPA's application to the budgetary process in its draft regulations. This issue was instead left for consideration in later interagency discussions. However, the draft does establish an abbreviated EIS process for legislative proposals in which only a draft impact statement would have to be prepared.²² The draft rules would also allow CEQ to grant a waiver of any requirements upon a showing that "a true emergency exists and the essential considerations of national policy require that the waiver be granted."²³

NEPA's Application Abroad

The Council, in an addendum to the draft regulations, tackled a second complex issued left out of the preliminary version — the application of NEPA to federal activities abroad.²⁴ The Council's position is that under § 102(2)(C) full compliance with the standard EIS procedures is required for major federal actions abroad which have significant environmental impacts on the United States, the global commons, or Antarctica. For actions that affect solely the environments of other nations, preparation of an abbreviated "Foreign Environmental Statement" would be required, in which special factors such as diplomatic considerations could be taken into account. Some agencies, such as the State Department and the Nuclear Regulatory Commission, contest the validity of the Council's expansive interpretation of the statutory phrase "the human environment."²⁵ On the other hand, the Agency for International Development has stated that it has "no significant reservations about the preparation of environmental analyses for programs conducted abroad."²⁶

Definition of A "Proposal"

Vying with the international application provision and the "environmentally preferable alternative" issue for the most controversial part of the draft regulations is the definition of the term "proposal":

"Proposal" refers to that stage in the development of an action when an agency subject to the Act has a goal and is actively considering one or more alternative means of accomplishing that goal. A proposal may exist in fact as well as by agency declaration that one exists.²⁷

Several agencies have objected that this provision conflicts with the Second Circuit's 1976 decision in Conservation Society of Southern Vermont v. Secretary of Transportation²⁸ and the Supreme Court's ruling in Kleppe v. Sierra Club.²⁹ In at least one instance in the draft, the Council quite clearly demonstrated a fear of running afoul of Kleppe. In a provision concerning the preparation of impact statements on geographically related proposals by one or more agencies, a situation analogous to the factual circumstances in Kleppe, the Council switched from the mandatory "shall" which is used throughout the regulations, to the discretionary "may."³⁰

Another example of apparent conflict between the draft rules and prior case law is the definition of "major federal action" to include "projects and programs entirely or partly financed, assisted, conducted, regulated or approved by federal agencies." This provision appears to contradict the Fourth Circuit's decision in Carolina Action v. Simon³¹ that NEPA is not applicable to projects constructed with federal revenue sharing funds.

The agencies have a strong argument in objecting to the definition of "proposal" under Kleppe and Conservation Society, indicating that the courts may ultimately have to determine the scope of CEQ's authority under the executive order. Although the President gave the Council the power to dictate executive branch procedures for complying with NEPA, the courts are unlikely to find that this power permits the agency in effect to overrule considered judicial interpretations of statutory provisions that are still in force.

Conclusion

The preliminary draft of CEQ's regulations governing the procedural aspects of NEPA compliance by all federal agencies indicates that the Council has ambitious plans for reforming the NEPA process. CEQ has encountered little disagreement with the proposition that impact statements should be shorter and of more use to the lead agency decision maker. The Council has, however, run into a number of major legal objections to the broad definitions of the terms "proposal" and "major federal action," the requirement that an explanation be offered whenever the "environmentally preferable alternative" to a proposed action is not chosen, and the application of NEPA to federal actions which affect only the environments of other nations.

In addition, language governing the application of NEPA to the budgetary process has yet to be drafted or subjected to interagency discussion and will almost certainly be a subject of heated debate when it is [8 ELR 10048] proposed. Beyond these controversies over particular provisions of the draft regulations lurk other troublesome and as yet unresolved questions, such as the extent to which CEQ can impose its NEPA regulations on independent regulatory agencies.

If the Council thought establishing final NEPA compliance regulations for all federal agencies would be an easy task, it has now learned otherwise. The original rule-making timetable has slipped as CEQ has come to realize that many of the draft provisions are in need of substantial reconsideration. The Council has yet to publish formal proposals and accept comments from the public, after which time more modifications are likely to be made. Moreover, the clear prospect is for a new wave of NEPA litigation aimed at determining the exact meaning, legality, and authoritativeness of the regulations once they are in place. At this poiont it seems fair to assume that establishing the validity and reach of its NEPA compliance rules will be one of CEQ's major endeavors over the next several years.

1. 42 Fed. Reg. 26967, ELR STAT. & REG. 45003 (May 25, 1977).

2. 40 C.F.R. pt. 1500, ELR STAT. & REG. 46003.

3. Section 2(h), 42 Fed. Reg. 26967, ELR STAT & REG. 45003 (May 25, 1977).

4. Id.

5. 42 U.S.C. § 4332(2)(C), ELR STAT. & REG. 41010.

6. 40 C.F.R. § 1501.2 (draft).

7. 40 C.F.R. § 1501.7 (draft).

8. Remarks by Charles Warren, Chairman, Council on Environmental Quality, at the ALI-ABA Environmental Law Conference, cosponsored by the Environmental Law Institute and the Smithsonian Institution, Washington, D.C. (Feb. 10, 1978).

9. 40 C.F.R. § 1502.14 (draft).

10. 40 C.F.R. § 1505.2 (draft).

11. Compare EDF v. Corps of Engineers (Tennessee-Tombigbee), 492 F.2d 1123, 4 ELR 20329 (5th Cir. 1974), Sierra Club v. Froehlke, 486 F.2d 946, 3 ELR 20823 (7th Cir. 1973), Conservation Council of North Carolina v. Froehlke, 473 F.2d 664, 3 ELR 20132 (4th Cir. 1973), and EDF v. Corps of Engineers (Gillham dam), 470 F.2d 289, 2 ELR 20740 (8th Cir. 1972), cert. denied, 412 U.S. 931 (1973); with Lathan v. Brinegar, 506 F.2d 677, 4 ELR 20802 (9th Cir. 1974), and National Helium Corp. v. Morton, 486 F.2d 995, 4 ELR 20041 (10th Cir. 1973).

12. The Council requested an executive order last fall that would have required lead agencies to choose the environmentally preferable alternative or explain the failure to do so. The President rejected the request, and CEQ's contention is that the draft regulations do not represent a surreptitious attempt to accomplish the same result. The Council's approach reflects ideas discussed in a 1974 law review note. See Note, The Least Adverse Alternative Approach to Substantive Review Under NEPA, 88 HARV. L. REV. 735 (1974).

13. 42 U.S.C. § 4331, ELR STAT. & REG. 41009.

14. 40 C.F.R. § 1500.1 (draft).

15. Calvert Cliffs Coordinating Committee v. Atomic Energy Commission, 449 F.2d 1109, 1 ELR 20346 (D.C. Cir. 1971), cert. denied, 404 U.S. 942 (1972). See also, supra note 11.

16. 40 C.F.R. § 1505.2(c), 1505.3(b) (draft).

17. 40 C.F.R § 1506.1(b) (draft).

18. 473 F.2d 287, 3 ELR 20082 (1st Cir. 1973). See Comment, Silva I: The Need for HUD "Status Quo" Regulations, 3 ELR 10155 (Oct. 1973).

19. 40 C.F.R. § 1506.2 (draft).

20. 42 U.S.C. § 7609, ELR STAT. & REG. 42259.

21. 40 C.F.R. § 1504 (draft).

22. 40 C.F.R. § 1506.8 (draft).

23. 40 C.F.R. § 1506.11 (draft).

24. See Comment, Renewed Controversy Over International Reach of NEPA, 7 ELR 10205 (Nov. 1977).

25. Compare 40 C.F.R. § 1508.13 (draft) with In the Matter of Babcock & Wilcox, C.L.I.-77-18, 5 NRC 1332, 7 ELR 30017 (NRC June 27, 1977).

26. Letter from John J. Gilligan, Administrator, Agency for International Development, to Charles Warren, Chairman, CEQ (Dec. 9, 1977).

27. 40 C.F.R. § 1508.21 (draft).

28. 531 F.2d 637, 6 ELR 20207 (2d Cir. 1976) (preparation of EIS for proposed highway corridor not required where there was no overall federal plan for improving the entire 280-mile corridor into a superhighway, even though the trial court had found such improvement to be a "goal" of the state highway departments involved and one in which the Federal Highway Administration acquiesced). See Comment, Fallout from SCRAP II and the 1975 NEPA Amendments: Second Circuit Reverses Itself in Conservation Society, 6 ELR 10081 (1976).

29. ("[T]he contemplation of a project and the accompanying study thereof do not necessarily result in a proposal for major federal action …") 427 U.S. 390, 406, 6 ELR 20532, 20536 (1976); See Comment, NEPA Off the Top: The Supreme Court Interprets Impact Statement Requirement, 6 ELR 10164 (1976).

30. 40 C.F.R. § 1502.4(c) (draft).

31. 522 F.2d 295, 5 ELR 20450 (4th Cir. 1975).