Extending Marsh's "arbitrary and capricious" review to an initial EIS decision.

• Author: Whetstone, Craig
• Position: Environmental Impact Statement - 1992 Ninth Circuit Environmental Review - Case Note

1. INTRODUCTION

   Since its inception in 1970, the National Environmental Policy Act (NEPA)(1) has focused government and public attention on the environmental effects of proposed agency action. NEPA establishes that it is "the continuing policy of the Federal Government . . . to use all practicable means and measures . . . to create and maintain conditions under which man and nature can exist in productive harmony, and fulfill the social, economic and other requirements of present and future generations of Americans."(2) NEPA requires agencies to prepare an Environmental Impact Statement (EIS) for proposed "major federal actions significantly affecting the quality of the human environment."(3) This creates a judicially enforceable duty for agencies to "take a |hard look' at the environmental effects of their planned action."(4)

   What constitutes a "hard look"? Reviewing courts apply different standards of review to assess an agency's determination not to prepare an initial EIS. Some circuits apply a more stringent "reasonableness" standard, while others use the more deferential "arbitrary and capricious" standard.(5)

   The Supreme Court has refused to determine directly the appropriate standard for judicial review of an agency's failure to prepare an initial EIS.(6) However, in Marsh v. Oregon Natural Resources Council,(7), the Supreme Court held that review of an agency's failure to supplement the EIS is "controlled by the |arbitrary and capricious' standard" of review.(8) In 1992 the Ninth Circuit, in Greenpeace Action v. Franklin,(9) extended Marsh to agency failure to prepare an initial EIS.(10)

   This Chapter examines Greenpeace and its probable effect on future Ninth Circuit decisions. Section II reviews Marsh. Section III offers a brief background of Greenpeace and describes how the Ninth Circuit applied Marsh's reasoning to the context of an initial EIS context. Section IV outlines the probable effect of Greenpeace on future Ninth Circuit decisions. Section V concludes that Greenpeace's holding will increase early involvement by interested parties in the NEPA process, ensuring more successful challenges, and furthering NEPA'S objectives.

2. Marsh v. Oregon Natural Resources Council

   In 1989, the U.S. Supreme Court decided Marsh v. Oregon Natural Resources Council, establishing a single standard for review of agency decisions regarding supplementation of an existing EIS. The Court held that an agency determination that an existing EIS need not be supplemented is to be reviewed under the "arbitrary and capricious" standard of section 706(2)(A) of the Administrative Procedure Act (APA).(11)

   Marsh arose out of a controversial decision to construct a dam at Elk Creek in the Rogue River Basin of southwest Oregon. The plans for the Elk Creek Dam called for a 238 foot high concrete structure that would control run-off from the Elk Creek watershed. The Army Corps of Engineers completed an EIS for the project and began initial preparation of the watershed in 1971. In 1980, the Corps issued a supplemental EIS (SEIS) which paid special attention to the dam's potential effect on water quality, fish production, and fishing.(12) While the SEIS predicted that the dam would not have a major effect on fish production, it speculated that the dam's effect on turbidity, when combined with two other dams already completed in the Rogue river basin, might impair fishing.(13) In 1982, the Corps made the formal decision to proceed with construction on the Elk Creek Dam, concluding that the dam would serve the overall public interest.(14) In 1985, Congress appropriated funds for the project(15) and four Oregon non-profit corporations, including Oregon Natural Resources Council (ONRC), filed suit.(16) ONRC argued that the Corps had violated NEPA by not preparing a second SEIS to review new 1980 information that raised additional concerns regarding the dam's possible adverse affect on fishing. The district court denied relief, holding that the Corps' decision not to prepare a second SEIS was reasonable.(17) On ONRC's appeal, the Ninth Circuit remanded the question of the Corps' failure to prepare the SEIS, holding that the new information was significant and must be addressed.(18) The Corps then appealed to the U. S. Supreme Court, which granted certiorari.(19)

   Writing for the Court, Justice Stevens stated that "NEPA does not work by mandating that agencies achieve particular substantive environmental results,"(20) but noted that "NEPA does require that agencies take a |hard look' at the environmental effects of their planned action, even after a proposal has received initial approval."(21) However, Justice Stevens also found that a challenge to an agency decision not to supplement an existing EIS "is a classic example of a factual dispute the resolution of which implicates substantial agency expertise."(22) Thus, he concluded, "so long as the Corps' decision not to supplement the [EIS] was not |arbitrary or capricious,' it should not be set aside."(23)

   In response to the ONRC's argument that the Supreme Court should not upset the Ninth Circuit's reasonableness standard, the Court asserted that "the difference between the |arbitrary and capricious' and |reasonableness' standards is not of great pragmatic consequence. Accordingly, our decision today will not require a substantial reworking of long-established NEPA law."(24)

   Despite the Court's decision to review under the more deferential arbitrary and capricious standard, it warned that "courts should not automatically defer to the agency's express reliance on an interest in finality without carefully reviewing the record and satisfying themselves that the agency has made a reasoned decision based on its evaluation of the significance - or lack of significance - of the new information.(25) This emphasis on a reasoned decision indicates that regardless of the standard of review, ultimately the Court's judgment is based on whether "agency decisions are founded on a reasoned evaluation |of the relevant factors.'"(26) The Court concluded that "the Corps conducted a reasoned evaluation of the relevant information and reached a decision that, although perhaps disputable, was not |arbitrary or capricious.'"(27)

   In dicta, the Court asserted that the decision whether to prepare a SEIS is similar to the decision whether to prepare an initial EIS because the agency's decision turns on the value of information to the pending decision.(28) Thus, the U. S. Supreme Court opened the door for lower courts to extend Marsh's arbitrary and capricious standard of review to the question of whether an agency's decision not to prepare an initial EIS violated NEPA. In 1992, the Ninth Circuit took the opportunity to apply Marsh in precisely that manner.

3. Greenpeace Action v. Franklin

   In 1978, the North Pacific Fishery Management Council (Council) issued its Fishery Management Plan and an EIS for the Gulf of Alaska pursuant to the Fisheries Conservation Management Act.(29) The plan provided that the Council set annual harvest levels of various species. During late 1990 and early 1991, the Council proposed an increase in the total allowable catch (TAC) of pollock for the 1991 harvest season.(30) Greenpeace objected to the Council's proposed 1991 TAC, alleging that the increase in the TAC would jeopardize the Stellar sea lion, a "threatened species" under the Endangered Species Act(31) (ESA) and that implementing the increase without preparing an EIS would violate NEPA.(32)

   During the process of setting the 1991 pollock harvest levels, the Council consulted with the National...