NEPA and the Budget Process: D.C. Circuit Announces EIS Requirement Applies to 'Non-Routine' Annual Requests

On May 15, 1978, the United States Court of Appeals for the District of Columbia Circuit tried its hand at resolving the thorny question of the applicability of the National Environmental Policy Act's (NEPA's) environmental impact statement (EIS) requirements to the federal budget process. The court ruled in Sierra Club v. Andrus¹ that the Fish and Wildlife Service of the Department of the Interior was not required to prepare an individual impact statement in conjunction with its submission to the Office of Management and Budget (OMB) of a "routine" annual budget request for the National Wildlife Refuge System which envisioned roughly constant funding levels. The court suggested that an EIS would be necessary, however, for budget requests which follow programmatic reviews or contemplate revised funding levels that will work environmentally significant changes in a program's status quo. In addition, the court directed OMB to develop formal procedures for complying with its NEPA obligations regarding such requests.

The D.C. Circuit's decision bears close examination as the most extensive judicial interpretation of this largely unexplored aspect of NEPA. Not surprisingly, the ruling opens more doors than it closes, and further administrative and judicial specification of the contours of NEPA's requirements in this area will undoubtedly be necessary.

Background

Concerned over possible decreases in staffing and maintenance at federal wildlife refuges, three environmental organizations brought suit in 1974 seeking a declaratory judgment that the Fish and Wildlife Service was required to prepare an environmental impact statement on each annual appropriations request for the National Wildlife Refuge System.² They also sought a ruling that OMB must establish NEPA compliance procedures for processing such budget proposals. In June 1975, Judge Pratt of the federal district court in the District of Columbia granted summary judgment for plaintiffs on both claims.³ Relying on the Council on Environmental Quality's NEPA compliance guidelines,⁴ Interior's NEPA regulations,⁵ and two early judicial decisions under the Act,⁶ the court ruled that such budget requests constituted both "proposals for legislation" and "major Federal actions" within the meaning of § 102(2)(C) of the Act⁷ which, because of their direct connection to an environmentally important program, had significant environmental effects.

The district court rejected the government's arguments that taking the time to prepare and circulate impact statements on all such requests would wreak havoc with the government's strict internal timetables and compromise the traditional confidentiality of the budget process. Judge Pratt also held that a programmatic impact statement then being prepaid did not satisfy NEPA's mandate with respect to the specific annual budget request at issue because it focused solely on the long-range goals of the refuge system.

An environmental impact statement was thus required on the Fish and Wildlife's Service's annual appropriations proposal for the refuge system, and OMB was ordered to establish formal procedures for determining when and how budgetary environmental impact statements are to be prepared. The government promptly appealed the district court's decision.

Sierra Club v. Andrus

On appeal, Judge Leventhal, writing for himself and Judge Bazelon, reversed the first of the lower court's rulings and affirmed the second.⁸ The majority characterized as "simple and logical" plaintiffs' argument that NEPA's requirement for preparation of an impact statement to accompany "every recommendation or report on proposals for legislation" which promise to have significant environmental effects [8 ELR 10127] encompasses annual appropriations requests for environmentally related programs. The court noted, however, that this proposition leads to the conclusion that an impact statement must be prepared for every budget request for the annual operation of ongoing environmental and conservation programs or of agencies whose activities have significant environmental effects. This is, in the court's view, an "absurd" result which would overburden and "trivialize" NEPA.

Applying the "rule of reason" in interpreting the statute's requirements,⁹ Judge Leventhal determined that the term "proposals for legislation" was not meant to encompass "routine" budget requests for the continuation of ongoing programs without any changes in the status quo. The court distinguished two earlier cases¹⁰ upon which plaintiffs relied for their contention that budget requests were per se proposals for legislation within the meaning of NEPA. Those rulings, it noted, involved appropriations requests for the initiation and construction of new projects rather than the maintenance of existing federal activities at current levels, and were therefore inconclusive as to the Act's application to budget requests for the operation of ongoing programs.¹¹ Thus, Judge Leventhal held that the district court had erred in ruling an EIS was required for every annual budget request with significant environmental ramifications, and specifically for the challenged National Wildlife Refuge System budget request which envisioned some changes in system operations within a relatively constant level of expenditures.

The court went on to emphasize, however, that NEPA impact statements may be required in conjunction with a budget request that proposes more than slight changes in the status quo or which accompanies or follows a full-scale review of an ongoing program that has significant environmental ramifications. Such a budget request constitutes a proposal for legislation within the meaning of the statute because it envisions, in Judge Leventhal's phrase, "usher[ing] in a considered programmatic course following a programmatic review" reflecting choices that should be considered with full knowledge of pertinent environmental consequences and alternatives.¹²

Having determined that NEPA may apply to budget requests related to a programmatic review or a proposal to change the status quo, the court hastened to add that federal agencies must have wide discretion in deciding when such reviews should be conducted. Judge Leventhal expressly declined to resolve whether a court may ever mandate an agency to undertake such a "new look" at existing programs. In this case, he pointed out, the Fish and Wildlife Service voluntarily undertook a long-range analysis of alternate program priorities and expenditures for the refuge system and preparation of a programmatic EIS after plaintiffs filed this lawsuit.¹³

On the subject of OMB's NEPA obligations, the court held that § 102(2)(B) of the Act,¹⁴ which directs all federal agencies to "identify and develop methods and procedures" to integrate environmental factors into agency decision making, imposes a clear and specific duty on OMB, as manager of the federal budget process, to promulgate guidelines identifying those budget requests which will require impact statements. Judge Leventhal expressed the opinion that this would not be an onerous task.He predicted that preparation of environmental impact statements in connection with budget proposals would be necessary in relatively few instances. Furthermore, he suggested, the confidentiality of the budget process prior to final review by the President and submission of the budget to Congress can be preserved by disclosing proposals for major program reviews in general outline without publicizing specific dollar projections.

Agreeing with the majority's narrow holding that an impact statement was not required for the annual budget requests challenged in this case, Judge MacKinnon nonetheless dissented sharply from its conclusion that NEPA applies to budget requests that represent significant changes in ongoing programs and its affirmance of the lower court's order mandating the Office of Management and Budget to develop formal NEPA compliance guidelines. In his view, budget requests do not attain the status of "proposals" until they are formally transmitted to Congress by the President and cannot be considered "proposals for legislation" in any event because they seek appropriations and Congress has traditionally distinguished "legislation" from "appropriations." Judge MacKinnon also contended that the imposition of NEPA's requirements in the budget process is irreconcilable with the traditional confidentiality of agency budget requests until they are formally submitted to Congress.

[8 ELR 10128]

Discussion

NEPA explicitly requires preparation of impact statements in conjunction with environmentally significant "proposals for legislation."¹⁵ One basic thesis underlying this requirement is that Congress should be fully informed as to a legislative proposal's environmental effects before it acts upon the measure. A second purpose is to make the agency in which the proposal originates aware of the relevant environmental factors at the time it decides whether to recommend the measure for legislative approval.

Judge Leventhal noted that the budget request for a new project necessarily contemplates a change in the status quo, while a request for the continuation of an existing federal program may not. He then drew the same distinction between budget requests which either envision substantial changes in ongoing environmentally significant programs or are prepared in conjunction with full-scale programmatic reviews and requests which seek only to maintain the funding of such programs at existing levels. The former reflect policy choices that, in his view, should be made with full consideration of environmental consequences and alternatives under NEPA. Requiring impact statements for the latter, however, which in essence represent bureaucratic inertia rather than new agency decisions, would push NEPA's logic to "ridiculous extremes."

Judge Leventhal was quite clearly trying to chart a middle course between what he saw as the facially appealing but basically unreasonable position taken both by plaintiffs and by defendants and Judge MacKinnon in dissent. On the one hand, he was unwilling to carve a hole in the statute by ruling that no budget request, even one which represents a policy decision to terminate an environmentally significant program that may not be subject to analysis under NEPA in any other context, shall ever require preparation of an EIS. On the other hand, however, he wished to avoid the wasted effort of preparing impact statements on annual budget requests where an agency contemplates no new decision regarding an ongoing program whose surrounding circumstances remain the same. The majority opinion attempts to resolve this dilemma, but as Judge Leventhal himself admitted, it lacks the convincing legal support that accompanied the contentions advanced by plaintiffs, defendants, and the dissent.

Open Questions

Because the court based its interpretation of the statute on general considerations of "reasonableness" rather than explicit language in the Act, its legislative history, or the case law, the opinion may raise more legal questions than it answers. Perhaps the most obvious loose end is how courts in future cases are to determine the threshold at which a particular budget request for an ongoing program envisions a significant change in the status quo and whether the request is accompanied by a "programmatic" review so as to fall outside the exemption for "routine" requests. Though failing to sketch out useful guidelines, the Sierra Club v. Andrus decision indicates that the D.C. Circuit will view any budget request that does not contemplate substantial changes in total funding levels or in the scope or nature of operations as "routine" for NEPA purposes and thus beyond the reach of the EIS requirement. The impression that "routineness" is to be interpreted broadly and that a programmatic review is to be found only when an agency formally declares one has begun is reinforced by Judge Leventhal's prediction that relatively few impact statements on budgetary proposals will actually have to be prepared.

A second point which is sure to require further judicial consideration is whether an agency may have a judicially enforceable duty under NEPA to undertake a formal review of ongoing programs and prepare an impact statement in conjunction with the resulting budget requests. Judge Leventhal left open the question of whether such a "new look" may be required as a result of "vastly changed circumstances" surrounding a program, but he implied that securing such a judicial order would be a formidable task by noting that agencies have wide discretion to determine when such a review is to be conducted. Finding such a judicially enforceable duty to undertake programmatic reviews may become more necessary, however, if the court's decision in Sierra Club v. Andrus has the effect of leading agencies to become more circumspect in voluntarily beginning such reappraisals as part of the budget process because of the added burden of NEPA compliance.

A third unknown is how the Office of Management and Budget will respond to its obligation to develop formal procedures for implementing its NEPA obligations regarding budget requests. OMB's past performance reflects a fairly consistent disinclination to do more than the minimum required under NEPA,¹⁶ and it might thus choose to establish straightforward procedures for EIS preparation and simply restate without embellishment the principles set forth in Sierra Club v. Andrus. Alternatively, an ambitious effort by OMB to provide further guidance to agencies and courts alike in interpreting and applying NEPA's requirements in this area might immeasurably facilitate the implementation of this aspect of the Act.

Judge Leventhal recognized the validity of OMB's concern for the need to minimize the adverse consequences to the confidentiality of the budget process. To allay the agency's fears on this score, he predicted that impact statements on budget requests would be necessary in relatively few instances. He also suggested that disclosure of proposals for program reviews and significant changes in the status quo "can probably be disclosed in general outline" without breaching budget confidentiality through the disclosure of specific dollar projections. While this suggestion may represent a sensible compromise between NEPA's demands for disclosure and the need to insulate the budget process from full public scrutiny, a retreat to generality in budget request impact statements may diminish the utility of the NEPA process in this context.

A fourth concern raised, albeit indirectly, by Sierra [8 ELR 10129] Club v. Andrus is the problem of judicial enforcement of the NEPA obligation to prepare impact statements on certain budget proposals. Attempts to enforce the statutory requirement for preparation of impact statements in conjunction with legislative proposals have been fraught with difficulties.¹⁷ The courts have generally steered clear of granting any relief that might interfere with ongoing legislative processes.¹⁸ One possible mechanism by which the courts could police agency compliance with NEPA in the budgetary context would be to grant a declaratory judgment that an EIS is required in connection with a particular budget request and then order that funding for the program in question remain at current levels until the impact statement is completed or the defects in it remedied. Substantial separation of power issues might arise, however, if such an order were to collide with a congressional decision to halt or reduce funding for the program.

Conclusion

The application of NEPA's impact statement requirement of federal budget requests is one of the few remaining aspects of § 102(2)(C) that has not been subjected to exhaustive judicial exploration. The D.C. Circuit has stepped into this void by ruling in Sierra Club v. Andrus that "routine" budget requests for existing programs are outside NEPA's scope while requests which envision environmentally significant changes in the status quo or embody a policy choice with important environmental consequences must be accompanied by impact statements. The court's ruling seems to strike a reasonable balance between applying the broad language of the Act concerning impact statements for "proposals for legislation" and avoiding the pitfalls of trivializing the EIS process and undercutting the traditional confidentiality of budgetary requests. Because the D.C. Circuit based its interpretation of the Act almost totally on the amorphous "rule of reason" rather than strong support in the statutory language, legislative history, or case law, however, other courts may choose to adopt divergent views of NEPA's requirements in this area. Furthermore, the practical viability of this resolution will depend, at least initially, on OMB's performance in shouldering its responsibility under the decision to establish formal procedures and guidelines to aid other agencies in understanding and meeting their NEPA duties with regard to budget requests.

In addition, the decision leaves open important questions around which further litigation is sure to develop, such as the proper test for determining if a particular budget request is "routine" and the broader issue of whether an agency may have a judicially enforceable duty in certain circumstances to undertake a full-scale review of an ongoing program and prepare an EIS in connection with its next budget request. Sierra Club v. Andrus thus appears to be an early chapter rather than the denouement of judicial explication of the obligation of federal agencies to prepare environmental impact statements in the context of the budgetary process.

1. __ F.2d __, 8 ELR 20490 (D.C. Cir. May 15, 1978).

2. See Comment, Sierra Club Seeks to Require NEPA Impact Statements on Annual Appropriations Proposals, 5 ELR 10071 (1975).

3. Sierra Club v. Morton, 395 F. Supp. 1187, 5 ELR 20383 (D.D.C. 1975); see Comment, United States District Court Extends Impact Statement to Annual Budget Request, 5 ELR 10123 (1975).

4. 40 C.F.R. § 1500.5(a)(1); 38 Fed. Reg. 20550 (Aug. 1, 1973), ELR STAT. & REG. 46004. CEQ's recently proposed NEPA compliance regulations would specifically exclude appropriation requests from "proposals for legislation," but the Council has indicated that it intends to reevaluate this provision in light of Sierra Club v. Andrus. 40 C.F.R. § 1508.16 (proposed), ELR STAT. & REG. 46017.

5. 36 Fed. Reg. 19344 (Oct. 2, 1971).

6. Environmental Defense Fund v. Tennessee Valley Authority, 468 F.2d 1164, 1181, 2 ELR 20726, 20733-34 (6th Cir. 1972); Scientists' Institute for Public Information, Inc. v. AEC, 481 F.2d 1079, 1088, 3 ELR 20525, 20529 (D.C. Cir. 1973).

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

8. __ F.2d __, 8 ELR 20490. The court stated preliminarily that although it had little doubt some of plaintiffs' members use the Refuge System, the complaint's allegations to this effect were not supported by affidavits, and defendants could thus raise the issue of plaintiffs' standing on remand. The majority declined to consider plaintiffs' further contention that the injury to their informational interests caused by the absence of an EIS on the annual budget request provided an independent basis for standing. In his dissent, Judge MacKinnon stated that such injuries to informational interests do not represent a cognizable ground for standing to sue under NEPA. He also contended that plaintiffs must show, in addition to use of the Refuge System, a "causal connection" between the budget request and an identifiable adverse impact to a specific refuge.

9. The court derived this rule from Scientists' Institute for Public Information, Inc. v. AEC, 481 F.2d 1079, 1092, 3 ELR 20525, 20531 (D.C. Cir. 1973) and NRDC v. Morton, 458 F.2d 827, 834, 837, 2 ELR 20029, 20032, 20034 (D.C. Cir. 1972). It also found support for this approach in the Supreme Court's recent opinion in Vermont Yankee Nuclear Power Corp. v. NRDC, 46 U.S.L.W. 4301, 4309, 8 ELR 20288, 20295 (Apr. 3, 1978).

10. Environmental Defense Fund v. Tennessee Valley Authority, 468 F.2d 1164, 1181, 2 ELR 20726, 20733-34 (6th Cir. 1972); Scientists' Institute for Public Information, Inc. v. AEC, 481 F.2d 1079, 3 ELR 20525 (D.C. Cir. 1973).

11. Judge Leventhal also cited two other recent decisions applying NEPA to proposals for legislative authorization of particular projects as implicit support for this distinction. Realty Income Trust v. Eckerd, 564 F.2d 447, 7 ELR 20541 (D.C. Cir. 1977); Atchison, Topeka & Santa Fe R.R. v. Callaway, 431 F. Supp. 722, 7 ELR 20377 (D.D.C. 1977).

The court accepted without question the principle that budget requests for the construction or implementation of a new federal project or program which will have significant environmental effects must be accompanied by an EIS. It should be noted, however, that an impact statement would in any event be required before an agency could undertake such activities after congressional approval of funding because they would at that point represent major federal actions.

12. The court noted that although a budget request following a full-scale program review may have no greater effect upon the environment than the previous year's "routine" budget request for the same program for which no EIS was required, an impact statement may now be necessary because the current request constitutes a proposal for legislation that triggers NEPA.

13. The adequacy of this programmatic impact statement was not challenged on appeal.

14. 42 U.S.C. § 4332(2)(B), ELR STAT. & REG. 41010.

15. 42 U.S.C. § 4332(2)(C), ELR STAT. & REG. 41010.

16. R. LIROFF, A NATIONAL POLICY FOR THE ENVIRONMENT: NEPA AND ITS AFTERMATH 122-24, 213 (1976); W. RODGERS, ENVIRONMENTAL LAW 705, 714 (1977); F. Anderson, The National Environmental Policy Act in FEDERAL ENVIRONMENTAL LAW 250-51, 331-35 (Dolgin & Guilbert eds. 1974).

17. Anderson, supra note 16 at 331-32; Comment, Impact Statements on Legislative Proposals: Enforcing the Neglected Half of NEPA's Mandate, 7 ELR 10145 (1977).

18. See, e.g., Realty Income Trust v. Eckerd, 564 F.2d 447, 7 ELR 20541 (D.C. Cir. 1977); Chamber of Commerce v. Department of the Interior, 439 F. Supp. 672, 8 ELR 20054 (D.D.C. 1977); Wingfield v. OMB, __ F. Supp. __, 7 ELR 20362 (D.D.C. Apr. 4, 1977); Anderson, supra note 16 at 332.