Forthcoming CEQ Regulations to Determine Whether NEPA Applies to Environmental Impacts Limited to Foreign Countries

8 ELR 10111 | Environmental Law Reporter | copyright © 1978 | All rights reserved


Forthcoming CEQ Regulations to Determine Whether NEPA Applies to Environmental Impacts Limited to Foreign Countries

[8 ELR 10111]

The extent to which the environmental impact statement (EIS) requirements of the National Environmental Policy Act (NEPA)1 apply to federal actions abroad has become one of the most controversial NEPA questions now concerning the federal courts and agencies. On one hand, the Council on Environmental Quality (CEQ), which has been directed by President Carter to promulgate regulations governing compliance with NEPA by all federal agencies, favors comprehensive application.2 On the other, several federal agencies whose activities involve foreign countries argue that NEPA does not apply to all foreign activities of federal agencies.3 Finally, the American business community warns that the ability of the United States to compete in overseas markets will be drastically eroded if governmentally sponsored or approved exports are subject to NEPA.4

The geographic scope of the controversy has been carefully drawn. There is little disagreement that if a federal activity abroad also affects the United States or the "global commons" (that area such as outer space or the oceans not within another nation's sovereignty), then preparation of an EIS under § 102(2)(C) of NEPA is required. The essence of the controversy is NEPA's applicability if a federal action's environmental effects are limited to areas within the sovereign jurisdiction of one or more foreign countries. A corollary to this question is whether an agency with a program of similar activities in many countries must prepare a site-specific EIS for each individual project as well as a broad generic impact statement for the entire program.

The courts have been faced with this issue several times but have thus far chosen to avoid deciding it. It now seems likely that the controversy will be initially resolved at the highest levels of the Carter Administration as the agencies and the White House wrangle over the content of CEQ's NEPA regulations, due to be issued in the next [8 ELR 10112] few weeks in proposed form. Judicial scrutiny will almost certainly not lag far behind, however, because a case involving the application of NEPA to the activities of the Export-Import Bank has been put on hold pending resolution of the government's position on the international reach of NEPA.

Statutory Background

In its policy and purpose declarations, NEPA speaks both in terms of protection of the "environment," with no indication of boundaries, and in terms of protection of the environment of Americans.5 The section requiring preparation of environmental impact statements refers to "major Federal actions significantly affecting the quality of the human environment,"6 but NEPA does not define the last two words of this phrase.

A separate provision of the Act requires all federal agencies, to the fullest extent possible, to:

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 clearly indicates that NEPA did not intend federal agencies to be unmindfulof environmental effects beyond the borders of the United States. Congress did, however, recognize that foreign policy considerations would have to predominate where federal agencies are attempting to take positive action to protect the international environment.

There are sparse indications in NEPA's legislative history that federal agencies should not act in disregard of adverse environmental impacts in foreign countries.8 As the issue of NEPA's international reach became more controversial after the statute took effect, there followed more statements from legislators that NEPA had been intended to require the international effects of federal decision making to be considered.9

CEQ Activity

In 1976, CEQ issued a memorandum to guide federal agencies in applying the EIS requirements to their foreign activities.10 The memorandum concluded that NEPA required analysis and disclosure of foreign site-specific impacts. To support this conclusion, CEQ found that NEPA contained "no express or implied geographic limitation … to the United States or to any other area." CEQ stressed the information-gathering purpose of the EIS and the benefits of full information for the decision-making process, but was careful to emphasize that the EIS procedure does not "dictate actions on foreign soil or impose U.S. requirements on foreign countries."

Last January, CEQ circulated to federal agencies the international portion of the draft of its forthcoming NEPA regulations. Although the draft will doubtless be changed as a result of intense interagency wrangling before it is released for public comment, CEQ's initial position is worth analyzing.

The Council defined NEPA's term "human environment" as "the natural and physical environment and the interaction of people with that environment" without reference to jurisdictional boundaries. The draft specifically stated that "the human environment is not confined to the geographic borders of the United States."11 The draft then sketched the contours of a new "foreign environmental statement" (FES) which would be required for federal activities which affect only one or more foreign nations.12 Under the draft regulations, an FES would contain essentially the same information as a domestic EIS.

FES preparation would bedifferent in one important respect, however. Agency FES procedures would be allowed to take into account the "practical considerations of operating in the international context" in conforming to NEPA's requirements. For example, an agency could decide to withhold part or all of the FES from public comment if this "would be inconsistent with the accomplishment of the agency's statutory objectives." Second, an agency could limit the public review period or the detail of the FES for the following reasons:

(i) Diplomatic considerations or the relative unavailability of information;

(ii) Whether the Federal agency role is one limited to passing on proposals developed elsewhere (as opposed to situations where the agency is involved in early planning or joint sponsorship); and

(iii) International commercial competition and confidentiality.13

Finally, CEQ noted that its goals in creating this FES process are to ensure full consideration of activities that, first, would be unlawful or strictly regulated in the United States, second, would threaten natural resources of global importance, and, third, might have unanticipated adverse effects in other foreign countries.

This embryonic foreign environmental statement is essentially a new type of EIS. Although CEQ has clearly attempted to modify the statutory procedures to fit international exigencies and realities not present in the domestic sphere, there is serious question as to the [8 ELR 10113] legality of imposing less than the full panoply of procedural obligations applicable to federal actions having domestic impacts. NEPA, by its terms, applies to all federal agencies, and CEQ's creation of a hybrid FES with possible limiations on content and public participation seems to undercut the integrity of the NEPA process. The statute itself contains no exemption from the environmental impact disclosure process for actions abroad. The reference in § 102(2)(F) to consistency with American foreign policy is aimed strictly at the directive to agencies to support affirmative international programs to prevent a decline in the quality of the world environment.

The draft restriction on public disclosure of an FES is perhaps the CEQ proposal's most troublesome deviation from NEPA. The statute explicitly provides that the information contained in an EIS "shall be made available … to the public" as provided by the Administrative Procedure Act (APA).14 The relevant section of the APA15 creates exceptions from disclosure for matters "specifically authorized under criteria established by an Executive order to be kept secret in the interest of national defense or foreign policy and (B) are in fact properly classified pursuant to such Executive order," or for matters specifically exempted from disclosure by statute.

CEQ's draft appears to go beyond these fairly narrow limitations in giving agencies discretion to block the public scrutiny that has been an important part of NEPA. As shown by the public release of the environmental impact statements for the Panama Canal treaties16 and the construction of the Trident submarine base in Bangor, Washington,17 national security and foreign policy considerations have not heretofore been easily accepted reasons for secrecy. Also, while CEQ's Guidelines, which have directed agency implementation of NEPA up to this point, allow an emergency exception to limit the EIS review period,18 there never has been any exception to justify limiting the required detail of the EIS. Furthermore, consistency with an agency's statutory objectives may appear to be a rather vague and facile justification, and NEPA case law has established that the Act may be overriden by an agency's contrary statutory authority only when there is a clear and irreconcilable statutory conflict.19

Although CEQ has attempted to create a procedure that will compel identification of site-specific environmental impacts only in foreign countries and still allow some flexibility for agencies operating in the foreign arena, these questions concerning the hybrid FES indicate that this device may in fact do more damage to NEPA's integrity than simply finding that the statute does not apply to federal actions with wholly foreign environmental impacts.

Case Law Under NEPA

As indicated above, the statutory language and legislative history of NEPA are not dispositive on whether the statute applies to actions having only foreign site-specific environmental impacts. Although the courts have not squarely decided the question,20 a court-approved settlement involving NEPA's application to the Agency for International Development's (AID's) pesticide program has been the nearest thing to a judicial pronouncement thus far.21 The settlement required AID to produce a generic EIS on its entire pesticide program. Site-specific impacts had to be considered initially only as part of this programmatic assessment process, but the parties recognized that a specific subsequent project could, if it significantly affected the environment, trigger preparation of a separate environmental impact statement.22 The ambiguity of the AID settlement on the extent to which subsequent consideration of site-specific impacts was to be required may have influenced CEQ's explicit proposals.

Once the final CEQ NEPA regulations are promulgated, the courts will have an early opportunity to determine whether the Administrator's interpretation of the international reach of NEPA actually conforms to the statute. A suit is presently pending against the Export-Import Bank (Eximbank), a federal agency that provides financial assistance to foreign governments and nationals to purchase American equipment and services for use in development projects overseas. Out of concern over the fact that these projects can often impose substantial adverse effects on the foreign environments, the Natural Resources Defense Council (NRDC) in 1977 sued to compel Eximbank to comply with the EIS requirements of NEPA for individual assistance projects.23 This suit is the outgrowth of a prior action brought by NRDC in which the court found it unnecessary to reach the question whether NEPA extends to the Eximbank's loan programs.24

[8 ELR 10114]

In response to a motion from the Justice Department, the court has agreed to stay the proceedings until the Executive Branch has developed a consistent internal position on the international reach of NEPA. NRDC may, however, be seeking a settlement with Eximbank, patterned after that reached in the AID pesticide case, which would require the bank to prepare regulations and make some analysis of the site-specific environmental impact of its activities. Eximbank, on the other hand, is tenaciously resisting the notion that NEPA applies in any way to its activities. The case may be mooted from a different corner, however. Congress is presently considering an amendment to the Eximbank enabling legislation that would specifically exempt the agency from NEPA.25

As intimated above, there has been profound disagreement among the federal agencies as to whether NEPA applies to exclusively foreign country environmental impacts. The Nuclear Regulatory Commission recently concluded that NEPA does not require EIS preparation for actions with wholly site-specific impacts abroad when it denied the application of a West German citizens group to intervene in a licensing proceeding for the export of nuclear power plant components for West Germany.26 On the other hand, several agencies have prepared impact statements on specific international activities.27 The Agency for International Development has had extensive experience in preparing detailed environmental analyses on its actions abroad as a result of operating under NEPA regulations adopted two years ago in response to the aforementioned settlement. A recent letter from the AID Administrator, who termed the agency's experience in this area "a positive one," undercuts the argument that requiring site-specific EISs would create practical and political problems.28

Extraterritoriality

One final and significant barrier against the application of NEPA's EIS requirements to actions with only site-specific impacts abroad is the presumption against extraterritoriality. This doctrine holds that in the absence of clear congressional indications to the contrary, a law is presumed not to apply beyond the jurisdiction of the United States.29 The presumption derives from two considerations: first, as Congress is primarily concerned with domestic conditions, its laws should apply only within the United States; second, Congress does not usually intend to enact laws that contravene basic precepts of international law.30

It may be inappropriate to apply this doctrine to the question of NEPA's application to federal actions which have site-specific impacts in foreign countries, however. The statute requires neither that a foreign government act in a certain way nor that actions on foreign soil be conducted pursuant to American environmental goals. NEPA is aimed at and reaches only the decision-making process of the federal agencies. Although the effects of the agency's administrative decision may extend abroad, the decision itself, which is all that NEPA reaches, is made on domestic soil and thus can hardly be seen as beyond the scope of congressional authority.

In Foley Bros v. Filardo,31 the United States Supreme Court was faced with the issue of whether Congress intended to subject a private contractor doing work for the United States in the Middle East to the requirements of the American labor laws. The Court, after reviewing the statutory language, the legislative history, and administrative interpretations, concluded that an "intention so to regulate labor conditions which are the primary concern of a foreign country should not be attributed to Congress in the absence of a clearly expressed purpose."32

NEPA's concern is with the procedural conduct of federal agencies. This is a primary concern of the United States rather than any foreign country, even if a particular federal action promises to affect that country significantly. The presumption against extraterritoriality as explicated in Foley is thus factually inapplicable. Moreover, the Foley decision recognized that if the extraterritorial application of a statute does not significantly infringe on the sovereignty of a foreign state, a "clearly expressed" congressional intent to apply the statute internationally is not required; all that is necessary is some proof that Congress intended the law to have international application.33 As indicated above, NEPA's statutory language and legislative record, though not overwhelmingly dispositive, are not bereft of such proof.

The gathering of environmental information by federal agencies can also be viewed as akin to an assistance agency collecting financial and other data to determine the feasibility of a project, which is a widely accepted practice.

Once data on the site-specific environmental effects of an agency action is gathered, it should be noted, NEPA does not dicate the direction of the agency's final decision. "NEPA does set forth significant substantive goals for the Nation, but its mandate to the agencies is essentially procedural."34 NEPA requires only that [8 ELR 10115] United States agencies consider the possible environmental impacts of proposed actions; ultimate decisions to act, assuming the required procedures are followed, are subject to judicial reversal only under the general administrative law prohibition against arbitrary and capricious conduct.

If a project abroad may have adverse environmental effects, the agency may decide to participate anyway, or it may try to negotiate further with the recipient country to minimize these adverse effects. The recipient country, for its part, is free to reject any proposed revisions or even any suggestion that it consider environmental effects. NEPA applies only to the American agency's evaluation of the proposed action. This is a far cry from "environmental imperialism."

Effect on United States Exports

Much of the controversy over the international reach of NEPA has been generated within the American business community, which fears that application of the EIS requirements to specific export licenses would undermine its competitive position abroad. To date, this argument has consisted largely of rhetoric rather than of facts. It is true that many other countries have not established as strict a regime of environmental regulation as the United States and that actions which would offend American environmental sensibilities might be acceptable elsewhere because of the desperately needed economic benefits they promise. Because the government export provisions are divided into non-specific "general" licenses, which cover most exports and are usually issued pro forma, and special-treatment "validated" licenses, covering mostly items that have national security implications, there is no way at present to calculate how much of the massive United States export program, from foodstuffs to computer components to construction equipment, would fall under NEPA's purview. Also, the volume of exports that would actually be subjected to EIS preparation would be further limited because the federal action approving the license would have to be both "major" and produce "significant" environmental effects.

Other Policy Considerations

There is no question that several other policy considerations should be weighed in determining the extent of NEPA's international reach. For example, a project may entail adverse environmental effects and yet be crucially important from a foreign policy standpoint. Courts considering lawsuits challenging agency actions under NEPA have generally been deferential to agency decisions when important national interests are at stake.35

The fear that projects or export licenses may be delayed because of lawsuits has been the most serious concern of those opposed to expanding NEPA's international reach. Although the concern is legitimate, analogous concerns have been rejected by the courts as grounds for restrictive applications of NEPA's requirements in the domestic sphere.36 Furthermore, if the environmental data is collected at the same time as other feasibility data and the agency is diligent in fulfilling the statutory requirements, the NEPA-induced delay could be minimized. An additional factor which may help reduce delay will be the expected provisions in CEQ's new NEPA regulations stream-lining the EIS process.37

Conclusion

NEPA creates a mandatory process of information gathering in order to assure that federal agencies are environmentally informed when they make important decisions and take significant actions. The statute does not exempt any federal agency from its broad EIS requirements. CEQ's forthcoming regulations on the international reach of NEPA and the procedures to be followed when the environmental impacts of federal actions are felt solely in one or more foreign countries promise to be the result of hard compromises among competing agencies. The further the final result departs from the strong and straight-forward requirements applied to non-foreign actions, the greater the danger that a regulatory morass will be created and the integrity of the NEPA process undercut.

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

2. See generally Comment, Reinvigorating the NEPA Process: CEQ's Draft Compliance Regulations Stir Controversy, 8 ELR 10045 (Mar. 1978); Comment, Renewed Controversy Over the International Reach of NEPA, 7 ELR 10205 (Nov. 1977).

3. The Departments of State, Defense, and the Treasury and the Nuclear Regulatory Commission are the most vociferous proponents of this view. See generally "NEPA and Exports — A Limited View," Speech by James L. Kelley, Acting General Counsel, Nuclear Regulatory Commission, at ALI-ABA Nuclear Export Control Seminar, Washington, D.C. (May 5, 1978).

4. See generally Proceedings, Environmental Restraints on U.S.A Exports Conference, sponsored by the National Legal Center for the Public Interest, Washington, D.C. (Apr. 6, 1978).

5. NEPA §§ 2, 101, 42 U.S.C. §§ 4321, 4331, ELR STAT. & REG. 41009.

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

7. NEPA § 102(2)(F), 42 U.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. NO. 92-316, 92d Cong., 1st Sess. 32-33 (1971). See also Letters from Senator Muskie to Stuart Eizenstat, Assistant to the President for Domestic Affairs and Policy (Feb. 2, 1978) and Congressman Leggett to President Carter (Feb. 21, 1978). Such subsequent exploration of congressional intent is not, strictly speaking, part of the legislative history.

10. CEQ, Memorandum to Heads of Agencies on Applying the EIS Requirement to Environmental Impacts Abroad (Sept. 24, 1976).

11. CEQ, Memorandum to Heads of Agencies on Draft Regulations to Implement the National Environmental Policy Act, 40 C.F.R. § 1508.13 (draft) (Dec. 12, 1977).

12. CEQ, Memorandum to Heads of Agencies on Draft Provisions to Implement the National Environmental Policy Act (NEPA) for Agency Activities Affecting the Environment in Foreign Nations and the Global Commons, 40 C.F.R. § 1508. __ (draft) (Jan. 11, 1978).

13. Id. at § 1508. __ (b)(2).

14. 5 U.S.C. § 552.

15. 5 U.S.C. § 552(b).

16. Department of State, Draft EIS, New Panama Canal Treaty Between the United States and the Republic of Panama, CEQ No. 71057 (Aug. 1977). See generally Robinson, Environmental Safeguards in Canal Treaty Clarified, New York L.J. Mar. 28, 1978, at 1, col. 1.

17. See Concerned About Trident v. Rumsfeld, 55 F.2d 817, 6 ELR 20787 (D.C. Cir. 1976); Comment, NEPA and National Defense. Trident Base Allowed to Proceed Despite Inadequate Impact Statement, 6 ELR 10275 (1976).

18. CEQ, Guidelines, Preparation of Environmental Impact Statements, 40 C.F.R. § 1500.11(e), ELR STAT. & REG. 46009.

19. Flint Ridge Development Co. v. Scenic Rivers Ass'n, 426 U.S. 776, 6 ELR 20528 (1976).

20. See generally Sierra Club v. Adams, __ F.2d __, __ n.14, 8 ELR 20281, 20283 n.14 (D.C. Cir. Mar. 14, 1978) (vacating preliminary injunction against construction of Darien Gap Highway in Panama and Columbia), vacating and remanding 405 F. Supp. 53, 6 ELR 20051 (D.D.C. 1975) and 421 F. Supp. 63, 6 ELR 20798 (D.D.C. 1976); Wilderness Soc'y v. Morton, 463 F.2d 1261, 2 ELR 20250 (D.C. Cir. 1972) (standing granted to Canadian environmentalists to challenge Alaskan oil pipeline); Sierra Club v. AEC, 4 ELR 20685 (D.D.C. Aug. 3, 1974) (application of NEPA to Atomic Energy Commission and Export-Import Bank).

21. Environmental Defense Fund v. AID, 6 ELR 20121 (D.D.C.Dec. 5, 1975).

22. Id. at 20122.

23. Natural Resources Defense Council v. Export-Import Bank, No. 77-0080 (D.D.C., filed Jan. 14, 1977). For a summary of the complaint, see ELR PEND. LIT. 65544.

24. Sierra Club v. AEC, 4 ELR 20685 (D.D.C. Aug. 3, 1974).

25. S. REP. NO. 95-844, 95th Cong., 2d Sess. 9 (1978). Interestingly, the World Bank (the International Bank for Reconstruction and Development) has procedures for reviewing and mitigating adverse environmental impacts of its development assistance projects. See INTERNATIONAL INSTITUTE FOR ENVIRONMENT AND DEVELOPMENT, MULTILATERAL AID AND THE ENVIRONMENT: A STUDY OF THE ENVIRONMENTAL PROCEDURES AND PRACTICES OF NINE DEVELOPMENT FINANCING AGENCIES 19-23 (Sept. 1977).

26. In the Matter of Babcock & Wilcox, 5 NRC 1332, 7 ELR 30017 (NRC June 27, 1977).

27. See Panama Canal Treaty Draft EIS, supra note 16; Department of Commerce, EIS on Importation of South African Seal Skins, Moratorium, CEQ No. 60209 (Feb. 12, 1976).

28. Letter from John J. Gilligan, Administrator, AID, to Charles Warren, Chairman, CEQ (Dec. 9, 1977).

29. RESTATEMENT (SECOND) OF THE FOREIGN RELATIONS LAW OF THE UNITED STATES § 38 (1965).

30. Note, The Extraterritorial Scope of NEPA's Environmental Impact Statement Requirement, 74 MICH. L. REV. 349, 355 (1975).

31. 336 U.S. 281 (1949).

32. 336 U.S. at 286.

33. Note, supra note 30, at 356.

34. Vermont Yankee Nuclear Power Corp. v. Natural Resources Defense Council, Inc., No. 76-419, 46 U.S.L.W. 4300, 4311, 8 ELR 20288, 20297 (Apr. 3, 1978).

35. See note 17, supra.

36. See, e.g., Calvert Cliffs' Coordinating Comm. v. AEC, 449 F.2d 1109, 1115, 1 ELR 20346, 20349 (D.C. Cir. 1971).

37. See Comment, Reinvigorating the NEPA Process: CEQ's Draft Compliance Regulations Stir Controversy, 8 ELR 10045 (Mar. 1978).


8 ELR 10111 | Environmental Law Reporter | copyright © 1978 | All rights reserved