Ka Makani `O Kohala Ohana Inc. v. Water Supply

• Decision Date: 01 July 2002
• Docket Number: No. 00-17473.,00-17473.
• Parties: KA MAKANI `O KOHALA OHANA INC., a Hawai`i nonprofit corporation, Plaintiff-Appellant, v. WATER SUPPLY, Department of, County of Hawai`i; Milton Pavao, in his capacity as Department Manager of the Department of Water Supply, County of Hawai`i; United States Geological Survey; William Meyer, in his capacity as District Chief of the United States Geological Survey; Department of Housing and Urban Development, United States; Art Agnos, in his capacity as Secretary's Representative of the United States Department of Housing and Urban Development, Defendants-Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

295 F.3d 955

KA MAKANI `O KOHALA OHANA INC., a Hawai`i nonprofit corporation, Plaintiff-Appellant, v. WATER SUPPLY, Department of, County of Hawai`i; Milton Pavao, in his capacity as Department Manager of the Department of Water Supply, County of Hawai`i; United States Geological Survey; William Meyer, in his capacity as District Chief of the United States Geological Survey; Department of Housing and Urban Development, United States; Art Agnos, in his capacity as Secretary's Representative of the United States Department of Housing and Urban Development, Defendants-Appellees.

No. 00-17473.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted May 7, 2002.

Filed July 1, 2002.

COPYRIGHT MATERIAL OMITTED

John G. Nelson, Denver, CO, for the plaintiff-appellant.

Susan L. Pacholski, U.S. Department of Justice, Environment and Natural Resources Division, Washington, DC, for the Federal defendants-appellees.

Michael S. Kagami, Deputy Corporation Counsel, Hilo, HI, for the County of Hawaii defendants-appellees.

Appeal from the United States District Court for the District of Hawaii; Helen Gillmor, District Judge, Presiding. D.C. No. CV 98-254 HG.

Before WALLACE, TASHIMA and TALLMAN, Circuit Judges.

OPINION

TASHIMA, Circuit Judge:

Plaintiff-Appellant Ka' Makani `O Kohala Ohana, Inc. ("Ka Makani"), a citizens' coalition, appeals the district court's summary judgment in favor of Defendants-Appellees County of Hawaii Department of Water Supply ("DWS") and Milton Pavao, its Department Manager; the United States Geological Survey ("USGS") and William Meyer, its District Chief; and the United States Department of Housing and Urban Development ("HUD") and Art Agnos, the Secretary's Representative of HUD (collectively "Appellees") dismissing Ka Makani's action against them. Ka Makani alleged that Appellees' involvement in the Kohala Water Transmission System Project ("Kohala Project") constituted "major federal action" that triggered the requirement to prepare an environmental impact statement ("EIS") under the National Environmental Policy Act ("NEPA"), 42 U.S.C. § 4321, and sought to enjoin Appellees from proceeding with any work on the Project until a federal EIS is completed. This appeal followed. We have jurisdiction pursuant to 28 U.S.C. § 1291, and we affirm.

I. FACTUAL BACKGROUND

In 1987, the DWS began planning for the Kohala Project, a transbasin water diversion system on the Big Island of Hawaii that would transfer up to 20 million gallons of groundwater per day (in Phases I and II, combined) from the northern part of Kohala to South Kohala through an arrangement of groundwater wells, gravity flow pipelines, and storage reservoirs, to provide a reliable supply of potable water for the development of coastal resorts.

USGS involvement in the Kohala Project consisted primarily of the partial funding of and participation in a series of preliminary studies designed to assess the groundwater availability in the basal aquifer of the North Kohala area and a program of test drilling and test pumping in the aquifer. DWS and USGS entered into four Joint Funding Agreements in 1988, dividing the costs of the studies and an interpretative analysis of the data collected evenly between the two, in the amount of $800,000 each. The studies resulted in the publication of two reports in 1995 and were used by the DWS to prove the merits of the project. In addition to the initial studies, the DWS consulted with the USGS about the design of the Kohala Project and requested that the USGS conduct further studies on the impact of the proposed wells on the streamflow of the Polulu Valley Stream, the Kohakohau Stream, the Waikoloa Stream, and the Olaa Flume Spring.

In 1991, HUD became involved in the Kohala Project when Congress passed an appropriations bill allocating $500,000 to the County of Hawaii for an EIS for the development of a water resource system for the community of Kohala. See Department of Veterans Affairs and Housing and Urban Development, and Independent Agencies Appropriations Act of 1991, Pub.L. No. 101-507, Title II, 104 Stat. 1351, 1356-60 (1991). HUD provided the County with application materials for the special purpose grant and gave the County advice regarding its application, including a recommendation to restrict the scope of the activities proposed to be funded by the grant to those exempted from NEPA requirements in order to expedite the approval process. While it is unclear from the record whether HUD restricted the use of the grant funds to the preparation of an EIS alone or had informally approved of its use in the other activities set forth in the County's revised application, there is no doubt that the activities to be funded by the grant were limited to those of a preliminary nature.¹

The DWS only drew upon the grant account once, in 1995, for $30,000 to cover a portion of the payments made to contractors working on the state EIS for the Kohala Project.² In 1998, the DWS notified HUD that the Kohala Project had been placed on hold due to the poor economic climate, but maintained that the project would be resumed at the appropriate time. HUD initially agreed to extend the three-year time limit for use of the grant funds, but later recommended the closing out of the grant. In 1999, Congress authorized Hawaii County to transfer the remaining balance for use in other water system improvement projects subject to HUD's approval. In April 2000, the DWS proposed to use the remaining $470,000 for an unrelated project in South Hilo.

II. STANDARD OF REVIEW

We review the district court's grant of summary judgment de novo. See Hall v. Norton, 266 F.3d 969, 975 (9th Cir.2001). "De novo review of a district court judgment concerning the decision of an administrative agency means we view the case from the same position as the district court." Sierra Club v. Babbitt, 65 F.3d 1502, 1507 (9th Cir.1995) (citation omitted).

Because NEPA does not contain a separate provision for judicial review, we review an agency's compliance with NEPA under the Administrative Procedure Act ("APA"), 5 U.S.C. § 706(2)(A). See Churchill County v. Norton, 276 F.3d 1060, 1071 (9th Cir.2001). Usually, under the APA, we review an agency's decision to determine whether it was "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law;" however, where an agency has decided that a particular project does not require the preparation of an EIS, without having conducted an environmental assessment ("EA"), and we are dealing with primarily legal issues that are based upon undisputed historical facts, we review the decision under the less deferential standard of "reasonableness." See Northcoast Envtl. Ctr. v. Glickman, 136 F.3d 660, 667 (9th Cir.1998) (citing Res. Ltd., Inc. v. Robertson, 35 F.3d 1300, 1304 (9th Cir.1993) (quoting § 706 of the APA, 5 U.S.C. § 706(2)(A))).³

"The `agency's interpretation [of its own regulations] must be given controlling weight unless it is plainly erroneous or inconsistent with the regulation.'" Alhambra Hosp. v. Thompson, 259 F.3d 1071, 1074 (9th Cir.2001) (quoting Thomas Jefferson Univ. v. Shalala, 512 U.S. 504, 512, 114 S.Ct. 2381, 129 L.Ed.2d 405 (1994)); see also Auer v. Robbins, 519 U.S. 452, 461, 117 S.Ct. 905, 137 L.Ed.2d 79 (1997).

III. DISCUSSION

A. NEPA Requirements

NEPA requires a federal agency to prepare a detailed EIS for all "major Federal actions significantly affecting the quality of the human environment." 42 U.S.C. § 4332(2)(C); see Churchill County, 276 F.3d at 1072. Among other things, the EIS must set forth the unavoidable adverse environmental effects of the proposed action and alternatives to the proposed action. Id. The primary issue in this appeal is whether the USGS and HUD involvement in the Kohala Project is sufficiently major to transform it into a "major Federal action," triggering the EIS requirement of NEPA. We conclude that it is not.

"There are no clear standards for defining the point at which federal participation transforms a state or local project into a major federal action." Almond Hill Sch. v. United States Dep't of Agric., 768 F.2d 1030, 1039 (9th Cir.1985). "The matter is simply one of degree." Id. (citation omitted). "`Marginal' federal action will not render otherwise local action federal." Id. To make this determination, we look "to the nature of the federal funds used and the extent of federal involvement." Sierra Club v. Penfold, 857 F.2d 1307, 1314 (9th Cir.1988).

While "significant federal funding" can turn "what would otherwise be" a state or local project into a "major federal action," Alaska v. Andrus, 591 F.2d 537, 540 (9th Cir.1979), consideration must be given to a "great disparity in the expenditures forecast for the state [and county] and federal portions of the entire program." See Friends of the Earth, Inc. v. Coleman, 518 F.2d 323, 329 (9th Cir. 1975) (identifying a large funding disparity and finding that the federal involvement was not sufficient to "federalize" the project for NEPA purposes); see also Village of Los Ranchos de Albuquerque v. Barnhart, 906 F.2d 1477, 1482 (10th Cir.1990) (noting that the federal funding of a large portion of a preliminary study was "minuscule in comparison with the cost of the total bridge project" and did not rise to the level of major federal action). In the present case, the sum total of all of the federal funding that was ever offered to the Kohala Project is $1.3 million,⁴ which is less than two percent of the estimated total project cost of $80 million.⁵ At this point, the State of Hawaii and DWS have spent $3,453,161 on the Kohala Project and intend to fund the rest of the project, when it is ready to proceed, with the proceeds of bonds issued by the State and/or County. We therefore conclude that the federal funding contribution alone could not transform the entire Kohala Project into a "major federal action."

The USGS and HUD also lacked the degree of...