Agencies running from agency discretion.

• Author: Ruhl, J.B.
• Position: Continuation of III. Institutional Symptoms of Agency Discretion Aversion A. The Agencies - Trade-Offs and Gaming through Conclusion, with footnotes, p. 140-181

1. Blatant Arbitrage

   One bold discretion gaming strategy agencies employ is to pull out the nondiscretion claim only when needed to stave off the ESA and NEPA and put it back in the box for all other purposes. Although we found no example of an agency simultaneously declaring in one judicial forum that it has discretion--such as for purposes of deflecting a mandamus action--but in another courtroom claiming nondiscretion for purposes of the ESA or NEPA, the case law is replete with examples of agencies changing their tune regarding their discretion depending on the audience. (234) Generally, this inconsistency is the result of an agency flexing its muscle when broadly describing the scope of its discretion in a regulatory program to regulated entities or the public, but then backing off when confronted with claims that it improperly omitted ESA or NEPA assessments for particular actions under the program. The obviousness of such flip-flopping, however, has not escaped judicial detection--courts have frequently made agencies eat their words.

   For example, in the most recent of FEMA's trio of no discretion claim losses involving its flood insurance program, (235) the court noted that while FEMA on the one hand argued lack of discretion for purposes of ESA consultation, a finding that the agency indeed does enjoy "discretion to consider endangered and threatened species ... is consistent with FEMA's own regulations implementing the NFIP, wherein wildlife and environmental concerns are considered." (236) Similarly, in the Karuk Tribe case involving Forest Service review of mining notices of intent, (237) whereas the agency insisted that "approval of a [notice of intent] is merely a decision not to regulate the proposed mining activities" and thus not an exercise of discretion, (238) the agency had in a 2005 commentary on the same program emphasized that it has "broad discretion to regulate the manner in which mining activities are conducted on the national forest lands." (239) The agency also had on numerous occasions rejected notices on the basis of impacts to species and the environment, thus "exercising ... judgment by formulating and applying different criteria when deciding whether to approve or deny [notices of intent].... This is the very definition of discretion." (240) Other examples include the Bureau of Reclamation insisting it has no discretion to renegotiate any terms of water delivery contracts when a prior agency legal opinion concluded it had "considerable discretion," (241) the NMFS arguing that it was bound by a myriad of statutes to manage hydroelectric dam operations in a nondiscretionary manner when it had previously declared that Congress had not prescribed the precise manner of operations or levels of power generation, (242) and the Bonneville Power Administration's contention that it could not renegotiate terms of power delivery contracts notwithstanding its declaration in a prior report that it "possesses a great deal of discretion in contract matters." (243) In short, courts have made agencies fess up when it appears they have been talking out of both sides of their mouths.

2. Fuzzy Lines

   When an agency clearly has at least some discretion to exercise, a subtler discretion gaming strategy is to build flexibility into the reach of the nondiscretion claim by obscuring the boundary between discretionary and nondiscretionary actions. For example, the Corps's water infrastructure maintenance memo draws a line between the nondiscretionary "responsibility to maintain Civil Works structures so that they continue to serve their congressionally authorized purposes" versus the discretionary "how and when of the maintenance activities [which] may be subject to Section 7 consultation if the process of maintenance (as opposed to the results of maintenance) could affect listed species." (244) When a particular action falls in this trio of buckets--maintaining purposes, process of maintenance, and results of maintenance--will not always be self-evident. The agency could use this ambiguity as cover to sort discrete actions into discretionary or nondiscretionary modes and thus allow the agency to both retain power when desired and optimize the discretion doctrines, such as when protection against mandamus for a particular action outweighs protection from the ESA and NEPA.

   Indeed, this kind of line blurring was involved when federal agencies responsible for water management on the Snake and Columbia Rivers concocted a "reference operation" they contended was mandated by the aggregate of federal statutes governing the rivers' management and thus outside the scope of ESA consultation. (245) When pressed, the agencies conceded that they "chose the reference operation approach in order to avoid 'trying to precisely determine the extent of the Action Agencies' discretionary operation.'" (246) The Ninth Circuit flatly rejected this attempt to "sweep so-called 'nondiscretionary' operations" outside the reach of ESA consultation. (247)

   To be fair to infrastructure and resource management agencies, the beginning and end of their discretion often is not as neat and tidy as issuing a one-off permit to build a home. Maintaining and operating a major reservoir system and managing a national forest are broad agency functions involving an ongoing multitude of different decisions across time and space. If every discrete decision were subject to ESA and NEPA assessment and its ensuing rounds of litigation, agency management could grind to a halt. But if an agency wants to deal with that problem by drawing lines between discretionary and nondiscretionary actions, it can expect courts to demand clarity and accuracy.

3. Decision Disaggregation

   Another gaming tactic evident from the discretion aversion case law is to carve up a particular regulatory action into more granular decision components and tag threshold determinations as nondiscretionary, thereby squeezing as much of the ESA and NEPA out of the regulatory program as possible while still retaining sufficient discretion to effectively control the regulated activity at will. (248) This strategy was at the core of the Forest Service's approach to regulation of mining in national forests dealt with in Karuk Tribe, which purported to divide the process into what the agency described as a nondiscretionary first-step review of mining notices of intent and, based on that review, possibly move the notice to a second-step discretionary plan of operations negotiation. (249) The court easily detected the kink in that strategy, as the only way the agency could have decided to move a mining project from first-step notice of intent status onto the second-step planning of operations process is to reach a judgment at the first step based on the notice of intent, which the court observed is "the very definition of discretion." (250)

   As described in Hammond u. Norton, the BLM used a similar approach in disaggregating its review of pipeline rights of way, though the discretion was phased out rather than phased in. (251) BLM conducted full ESA and NEPA assessments when granting a pipeline the necessary right-of-way across BLM land, which could have included imposing environmental protection conditions. (252) From that point, according to its regulations, the BLM's only additional discretion over the project was to approve a plan of development incorporating, among other things, the environmental protection measures imposed in the right-of-way, and then to issue a notice to proceed when the agency was satisfied the project would fully comply with the plan of development. (253) Although an invention of the agency's rules, the Hammond court agreed that the no-looking-back effect of the phase out of discretion insulates the plan of development decision from NEPA. (254)

   Some agencies have employed similar decision disaggregation strategies but in a less obviously sequential format as the Forest Service used for mining Karuk Tribe or the BLM used for rights-of-way in Hammond. For example, the Corps has developed a complex permitting system for implementing section 404 of the CWA, which requires permits for discharges of fill material into waters of the United States. (255) The permitting system spans from "general permits," which the agency promulgates by regulation for later use by any action fitting into a general set of parameters, to "individual permits" issued after a comprehensive agency review of a specific permit application. (256) For general permits, which cover many different kinds of small-scale activities, NEPA compliance is conducted at the time of promulgation of the rule creating the permit, thus obviating (in theory) the later need for users of the permit to conduct NEPA review, whereas NEPA review for specific permits is conducted at the time of permit application review. (257) In this sense, use of a general permit by a qualifying project does not constitute an exercise of Corps discretion. However, many of the general permits require the user to submit a "preconstruction notification" and allow the Corps to request and review more detailed site-specific information and impose additional conditions on the use of the general permit. (258) Although this approach seems similar to the Forest Service's process for reviewing mining notices, (259) the Corps nonetheless treats these reviews as part of general permitting and thus not triggering NEPA review. (260) While some courts have held that the act of verifying the applicability of a general permit with no additional conditions added does not convert the process into an individual permitting decision, others have reasoned that more intensive review of notifications could trigger more demanding process requirements of the Corps, which would include NEPA assessment. (261) And some courts have held that the Corps fully crosses the line into NEPA territory when it incorporates conditions on the project's use of the general...