Supreme Court Relies on CEQ's NEPA Rules to Hold EIS Requirements Inapplicable to Agency Budget Requests

On June 11, 1979, a unanimous Supreme Court reversed¹ a controversial 1978 decision by the Court of Appeals for the District of Columbia Circuit² and ruled that federal agency appropriations requests constitute neither "proposals for legislation" nor recommendations for "major Federal actions" within the meaning of § 102(2)(C) of the National Environmental Policy Act (NEPA).³ The Court held that NEPA's requirements for the preparation of environmental impact statements (EISs) are therefore inapplicable to budget requests and that the Office of Management and Budget (OMB) thus has no procedural obligations under the statute regarding its management of the budget process and is not required to adopt NEPA compliance regulations.

The Court's decision in Andrus v. Sierra Club has finally resolved a longstanding issue regarding the proper interpretation of NEPA's EIS requirement. A more important aspect of the opinion, however, may be its extensive dicta supporting the authoritative nature of the statutory interpretations contained in the Council on Environmental Quality's (CEQ's) new NEPA compliance regulations.⁴ The new regulations, which took effect on July 30, 1979 and are binding on all federal agencies, mandate significant changes in agency compliance procedures.⁵ The Supreme Court's admonition in Andrus that they are to be accorded "substantial deference" should prove a potent weapon in the inevitable legal challenges to their validity.

Background

In 1970, to assist interpretation of and compliance with the infant statute, CEQ published advisory guidelines for the preparation of EISs.⁶ In its guidelines, which were revised in 1973,⁷ CEQ took the position that a federal agency's requests for appropriations were covered by the EIS requirements of § 102(2)(C) of the Act. This provision was honored by federal agencies almost wholly in the breach rather than in the observance,⁸ however, even though some agencies, such as the Department of the Interior, incorporated an identical requirement into their own NEPA compliance procedures.⁹ Relying on both the CEQ guidelines and the Interior Department's regulations, several environmental groups in 1974 brought suit charging that the latter agency had failed to prepare an EIS in conjunction with a reduction in the annual budget request for the National Wildlife Refuge System which would necessitate decreases in staffing and maintenance at wildlife refuges.¹⁰ They also contended that § 102(2)(B) of the Act,¹¹ which directs all federal agencies to develop procedures for the consideration of environmental values in their decision making, require OMB to establish NEPA compliance procedures for processing budget requests.

In 1975, a federal district court in Washington, D.C. ruled for plaintiffs on both points,¹² holding that the budget request for the wildlife refuge system constituted a "proposal for legislation" as well as a "major Federal action" within the meaning of § 102(2)(C) which would have significant environmental effects. The court rejected the defense that EIS preparation was incompatible with the confidentiality and strict internal deadlines of the budget process and ruled that a programmatic EIS then being prepared did not satisfy the Act's requirements because it focused solely on the long-range goals of the refuge system rather than the effects of the reduced annual appropriations request. Furthermore, OMB was directed to adopte formal procedures governing the preparation of impact statements in conjunction with appropriations requests.

The government appealed¹³ and won a substantial reversal of the district court's decision from the D.C. Circuit.¹⁴ The court of appeals warned that preparation of an EIS on the annual budget request for every ongoing federal program would "trivalize" NEPA. The court then held that no EIS was necessary for the refuge system [9 ELR 10123] budget request because it envisioned a relatively constant level of expenditures and was thus "routine." The court noted, however, that an impact statement would be required in conjunction with a budget request if it envisions substantial changes in the status quo or follows a thorough review of a program with significant environmental effects because such a request rises to the level of a "proposal for legislation" under § 102(2)(C). The court thus affirmed the order that under § 102(2)(B) OMB must develop procedures to identify and process those budget requests that require EISs. The Supreme Court granted the government's petition for certiorari¹⁵ and reversed the court of appeals.

The Supreme Court's Decision

Writing for a unanimous Court,¹⁶ Justice Brennan first briefly recapitulated the purposes and structure of NEPA, focusing on § 102(2)(C)'s "action-forcing" requirement for preparation of an EIS in conjunction with environmentally significant "proposals for legislation and other major Federal actions."¹⁷ He noted that there is no basis in the statute for the distinction drawn by the D.C. Circuit between budget requests which are merely "routine" and those that result from a painstaking programmatic review for the purpose of deciding whether a particular appropriations request constitutes a proposal for legislation.

Having determined that the applicability of this portion of § 102(2)(C) to budget requests is an all or nothing proposition, the Court acknowledged that CEQ's advisory guidelines had consistently espoused the view that for EIS purposes legislative proposals should be deemed to include requests for appropriations. Justice Brennan emphasized, however, that the Council's newly issued NEPA regulations adopt a contrary interpretation: they expressly provide that the term "legislation" as used in § 102(2)(C) "does not include requests for appropriations."¹⁸ CEQ had justified its reversal of position by asserting that for a variety of reasons, including considerations of timing and confidentiality, EIS preparation is simply ill-suited to the budget formulation process.¹⁹

The Court firmly established that CEQ's revised view on this point is authoritative, adding that the Council's interpretation of NEPA is entitled to "substantial deference" coming as it does from the agency which NEPA created²⁰ and to which was assigned explicit responsibility to review and appraise federal programs in light of the Act's policy.²¹ Justice Brennan explained that CEQ's change of heart on this aspect of § 102(2)(C) came during a comprehensive rule-making process undertaken to accomplish the Presidentially ordered²² transformation of the advisory guidelines into binding regulations. The imprimatur of the President's order factored heavily in the augmented weight accorded the regulations.²³ In addition, the Court noted, CEQ's interpretation is in harmony with the traditional distinction between "legislation" and "appropriation" clearly articulated in the rules of both the House²⁴ and Senate.²⁵

Justice Brennan then turned his attention to the D.C. Circuit's further conclusion that appropriations requests reflecting major agency initiatives constitute "major Federal actions," and determined in short order that the court of appeals had misconstrued the statute here as well.Appropriations requests, the Court explained, do not in any sense "propose" actions. Instead, such requests seek funds to carry out actions already proposed elsewhere. To require an EIS is conjunction with an appropriation request thus creates, according to the Court, an unnecessary redundancy since preparation of an almost identical impact statement would be required for the underlying specific or programmatic action which the request seeks to fund. Moreover, Justice Brennan noted, even if environmentally significant changes in an ongoing program result from budgetary decisions, an EIS at the appropriation stage would still be redundant because an impact statement would in any event be necessary for such program revisions.

Having concluded that § 102(2)(C)'s EIS requirements are totally inapplicable to appropriations requests, the Court needed only a brief footnote to point out that OMB thus has no NEPA obligations regarding the budget process and to reverse the court of appeals' determination that OMB adopt regulations setting forth NEPA compliance procedures.²⁶

Significance of the Ruling

The Supreme Court's unanimous conclusion in Andrus v. Sierra Club that the reach of NEPA's EIS requirements does not extend to the federal budget process lays to rest a longstanding question of NEPA interpretation which has not so much bedeviled as confounded the few courts that have considered the issue.²⁷ The decision does not by any means seriously would the Act by restricting or narrowing its scope. Few if any agencies have made a serious attempt to complete impact statements on budget proposals, and the ruling thus must be viewed as simply legitimizing the status quo rather than authorizing a retrenchment in agency NEPA compliance efforts. Moreover, as the Court itself pointed out, where a budget request is not simply "routine" and envisions environmentally significant initiatives or program revisions, an EIS must be prepared on the underlying project or program decision in any event.

The Court's decision may, however, indirectly serve to restrict NEPA's reach in the related and controversial area of applying the statutory EIS requirements to proposals for authorizing legislation.²⁸ The potential connection [9 ELR 10124] is the Court's emphatic disapproval of statutory interpretations which lead to "unnecessary redundancy" in the EIS process. Such redundancy is built into the requirement for preparation of an impact statement in conjunction with a proposal for legislation to authorize an environmentally significant project or program since an EIS will again be required when the relevant agency. moves to take the authorized action. The prospect of such redundancy, now tainted with the Supreme Court's disapproval, may well make reviewing courts less than aggressive in enforcing this aspect of the statute's mandate.

The most important aspect of the opinion, however, is not so much the ruling itself as the Court's articulation of its reasoning. Justice Brennan went out of his way to base the decision on the new CEQ regulations which, at the time of the decision, had not even gone into effect. His continual references to various portions of the regulations to make a number of important points throughout the opinion visibly establishes CEQ's rules as the authoritative articulation of NEPA's requirements. The Act's legislative history is notoriously skimpy as compared to those of other major federal environmental laws, and the Court turned immediately, and almost in relief, to CEQ's regulations to fill this void.

The opinion thus sends a clear message to the lower federal courts that the regulations represent a weighty restatement of "what the law is" under NEPA. The Court's direct admonition that "CEQ's interpretation of NEPA is entitled to substantial deference,"²⁹ gives the Council all it could reasonably have wanted in the way of an endorsement of both its new regulations and its expanded role as overseer of NEPA compliance within the executive branch. Given the High Court's embrace of and heavy reliance upon the new NEPA regulations, the various provisions of these rules will likely prove very difficult to challenge successfully.

Conclusion

Andrus v. Sierra Club constitutes the Supreme Court's most thorough treatment of NEPA issues to date. The Court's reasoning was straightforward, and the result is practically unobjectionable. Federal agencies and particularly OMB doubtless breathed a collective sigh of relief at being freed from the threat of having toincorporate EIS preparation into their budget preparation and review processes. CEQ is even more enthusiastic about the decision, viewing it as sweeping support for both the authoritativeness of the statutory interpretations posited in its new NEPA regulations and the propriety of its newly broadened role of coordinating and policing agency compliance with the Act. The new CEQ NEPA rules now go into effect with what amounts to an unrestrained stamp of approval from the Supreme Court, a most auspicious beginning for these ambitious and promising refinements of the NEPA process.

1. Andrus v. Sierra Club, 47 U.S.L.W. 4676, 9 ELR 20390 (U.S. June 11, 1979).

2. Sierra Club v. Andrus, 581 F.2d 895, 8 ELR 20490 (D.C. Cir. 1978); see generally Comment, NEPA and the Budget Process: D.C. Circuit Announces EIS Requirement Applies to "Non-Routine" Annual Requests, 8 ELR 10126 (1978).

3. 42 U.S.C. § 4332(2)(C), ELR STAT. & REG. 41010.

4. 40 C.F.R. §§ 1500-1508, 43 Fed. Reg. 55978 (Nov. 29, 1978), ELR STAT. & REG. 46015.

5. See generally Comment, New Rules for the NEPA Process: CEQ Establishes Uniform Procedures to Improve Implementation, 9 ELR 10005 (Jan. 1979).

6. Preparation of Environmental Impact Statements: Guidelines, 36 Fed. Reg. 7724 (Apr. 23, 1971).

7. 38 Fed. Reg. 20550 (Aug. 1, 1973). These guidelines are found at ELR 46003 in the Administrative Materials section of ELR Current Volume Year IX.

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

9. 36 Fed. Reg. 19344 (Oct. 2, 1971).

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

11. 42 U.S.C. § 4332(2)(B), ELR STAT. & REG. 41010.

12. 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).

13. The briefs on appeal to the D.C. Circuit are summarized at Sierra Club v. Kleppe, ELR PEND. LIT. 65343.

14. Sierra Club v. Andrus, 581 F.2d 895, 8 ELR 20490 (D.C. Cir. 1978); see Comment, NEPA and the Budget Process: D.C. Circuit Announces EIS Requirement Applies to "Non-Routine" Annual Requests, 8 ELR 10126 (1978).

15. The briefs on appeal to the Supreme Court are summarized at Andrus v. Sierra Club, ELR PEND. LIT. 65618.

16. Andrus v. Sierra Club, 47 U.S.L.W. 4676, 9 ELR 20390 (U.S. June 11, 1979).

17. 42 U.S.C. § 4332(2)(C), ELR STAT. & REG. 41010.

18. 40 C.F.R. § 1508.17, 43 Fed. Reg. at 56004, ELR STAT. & REG. 46033.

19. 43 Fed. Reg. at 55989.

20. 42 U.S.C. § 4342, ELR STAT. & REG. 41010.

21. 42 U.S.C. § 4344(3), ELR STAT. & REG. 41011.

22. See Exec. Order No. 11991; 42 Fed. Reg. 26967 (May 25, 1977); ELR STAT. & REG. 45003.

23. 47 U.S.L.W. at 4679, 9 ELR at 20393.

24. Rules of the House of Representatives, Rule XXI(2).

25. Standing Rules of the United States Senate, Rule 16(4).

26. 47 U.S.L.W. at 4681 n.24, 9 ELR at 20395 n.24.

27. See, e.g., cases cited at Comment, 8 ELR at 10126 n.6, 10127 n.11.

28. See generally, Comment, Impact Statements on Legislative Proposals: Enforcing the Neglected Half of NEPA's Mandate, 7 ELR 10145 (1977).

29. 47 U.S.L.W. at 4679, 9 ELR at 20393. See also Warm Springs Dam Task Force v. Gribble, 417 U.S. 1301, 1309-10, 4 ELR 20666, 20668-69 (Douglas, Circuit Justice, 1974).