477 F.3d 225 (5th Cir. 2007), 04-31026, O'Reilly v. United States Army Corps of Engineers

Docket Nº:04-31026.
Citation:477 F.3d 225
Party Name:Loretto O'REILLY, Jr., et al., Plaintiffs-Appellees, v. UNITED STATES ARMY CORPS OF ENGINEERS, Defendant-Appellant, Eric A. Bopp, Intervenor-Appellant.
Case Date:January 24, 2007
Court:United States Courts of Appeals, Court of Appeals for the Fifth Circuit

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477 F.3d 225 (5th Cir. 2007)

Loretto O'REILLY, Jr., et al., Plaintiffs-Appellees,



Eric A. Bopp, Intervenor-Appellant.

No. 04-31026.

United States Court of Appeals, Fifth Circuit.

Jan. 24, 2007

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Adam Lawrence Babich (argued), Tulane University School of Law, Karla Raettig, Tulane University Environmental Law Clinic, New Orleans, LA, for Plaintiffs-Appellees.

Jennifer Lynn Scheller (argued), Devon M. Lehman, U.S. Dept. of Justice, Environment & Natural Resouces Div., Washington, DC, for U.S. Army Corps of Engineers.

Walter R. Woodruff, New Orleans, LA, Stanley A. Millan (argued), Jones Walker, Baton Rouge, LA, for Bopp.

Appeals from the United States District Court for the Eastern District of Louisiana.

Before DAVIS and DENNIS, Circuit Judges. [*]

DENNIS, Circuit Judge:

Plaintiffs, residents of St. Tammany Parish, Louisiana, who allege that the environment surrounding their dwellings, businesses, and recreational areas will be unlawfully harmed by a residential subdivision developer's dredging and filling of wetlands, challenge the United States Army Corps of Engineers' ("the Corps") Finding Of No Significant Impact ("FONSI") on the environment under the National Environmental Policy Act of 1969 ("NEPA"), 42 U.S.C. §§ 4321-4370f, which resulted in the Corps's issuance of a permit to dredge and fill wetlands to the developer under § 404 of the Clean Water Act, 33 U.S.C. § 1344. Plaintiffs contend that the Corps acted arbitrarily in issuing the FONSI for the dredge and fill permit because its Environmental Assessment (EA), the basis for the FONSI, (1) does not articulate a rational basis for finding that the mitigation measures imposed by the Corps upon the dredging and filling operations reduce their harmful effects below the level of significant environmental impacts; (2) does not adequately consider the project's cumulative effects; and (3) improperly segments the project by considering only the first of three possible phases of development. Consequently, plaintiffs argue, NEPA required that the Corps prepare a full-fledged environmental impact statement ("EIS") before issuing permits affecting the wetlands.

The district court agreed with plaintiffs and held that the Corps had acted arbitrarily in violation of NEPA because it failed to: (1) articulate or demonstrate how the mitigation measures will succeed; (2) consider the cumulative effects of the project, the permits to third parties, and the growing area urbanization; (3) consider the effects of the current proposal together with the effects of additional phases of the developer's long range residential subdivision plans.

We agree with the district court that the Corps acted arbitrarily in issuing a FONSI based on an EA that fails to articulate how the mitigation measures will render the adverse effects insignificant and to consider the cumulative effects of the project, area urbanization, and permits issued to third parties. But we disagree with the district court's conclusion that the Corps engaged in improper segmentation of the project by failing to include full analysis of two possible future phases of development in its EA. Accordingly, we affirm the district court's holding that the Corps acted arbitrarily in the foregoing respects, but we amend the district court's injunction,

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reverse the balance of its decision, and remand the case to the Corps for further proceedings consistent with this opinion.

I. The NEPA Framework

Before we begin our analysis, we review NEPA's framework, terminology and objectives. "NEPA ... was intended to reduce or eliminate environmental damage and to promote 'the understanding of the ecological systems and natural resources important to' the United States." Dep't of Transp. v. Pub. Citizen, 541 U.S. 752, 756, 124 S.Ct. 2204, 159 L.Ed.2d 60 (2004) (quoting 42 U.S.C. § 4321). Instead of mandating particular environmental results, NEPA "imposes procedural requirements on federal agencies, requiring agencies to analyze the environmental impact of their proposals and actions." Coliseum Square Ass'n, Inc. v. Jackson, 465 F.3d 215, 224 (5th Cir.2006) (quoting Pub. Citizen, 541 U.S. at 756-57, 124 S.Ct. 2204). NEPA's central requirement is that federal agencies must, except in certain qualifying situations, complete a detailed environmental impact statement ("EIS") for any major federal action significantly affecting the quality of the human environment. 42 U.S.C. § 4332(2). To assist these agencies in determining whether an EIS must be prepared, NEPA authorized the Council on Environmental Quality ("CEQ") to promulgate guidelines in the form of regulations. See 40 C.F.R. § 1500.3; see also Coliseum Square, 465 F.3d at 224.

NEPA requires an agency to produce a full EIS only where the agency proposes to undertake a project that qualifies as a "major Federal action[]," and then only when that action "significantly affect[s] the quality of the human environment." 42 U.S.C. § 4332(2)(C); see also Coliseum Square, 465 F.3d at 228. The CEQ regulations define a "[m]ajor Federal action" as "actions with effects that may be major and which are potentially subject to Federal control and responsibility." 40 C.F.R. § 1508.18; see also Coliseum Square, 465 F.3d at 228. Effects, for the purposes of the regulations, "include: (a) [d]irect effects, which are caused by the action and occur at the same time and place," and "(b) [i]ndirect effects, which are caused by the action and are later in time or farther removed in distance, but are still reasonably foreseeable." 40 C.F.R. § 1508.8; see also Coliseum Square, 465 F.3d at 228.

"The CEQ regulations allow an agency to prepare a more limited document, an Environmental Assessment (EA), if the agency's proposed action neither is categorically excluded from the requirement to produce an EIS nor would clearly require the production of an EIS." Pub. Citizen, 541 U.S. at 757, 124 S.Ct. 2204 (citing 40 C.F.R. §§ 1501.4(a), (b)). An EA should be a "concise public document ... that serves to ... [b]riefly provide sufficient evidence and analysis for determining whether to prepare an [EIS]." 40 C.F.R. § 1508.9(a). In some cases, an agency may find that it must complete a full EIS. Where an EA results in a determination that an EIS is not required, however, the agency must issue a Finding of No Significant Impact ("FONSI"). Coliseum Square, 465 F.3d at 224 (quoting Pub. Citizen, 541 U.S. at 757, 124 S.Ct. 2204). The FONSI must briefly state "the reasons why the proposed agency action will not have a significant impact on the human environment." Coliseum Square, 465 F.3d at 224 (citing 40 C.F.R. §§ 1501.4(e), 1508.13).

II. Factual and Procedural Background

A. Agency Proceedings

The Planche family plans to develop its plot of land in St. Tammany Parish, near Covington, Louisiana, as a residential subdivision. The plot includes wooded wetlands

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bordering Timber Creek, which flows through the property to Timber Branch, a tributary of the Tchefunte River. The subdivision development will require dredging and filling of wetlands and the discharge of materials into navigable waters. The Clean Water Act requires that the developer obtain a § 404 permit from the Corps before such discharge and that the Corps comply with NEPA in issuing the permit. 1

In 1999, a representative of the Planche family filed an initial permit for a three-phase project that covered 147.13 total acres including 91.94 acres of wetlands. In September of that same year, the Corps and the Louisiana Department of Environmental Quality jointly posted public notice of the proposed project and its permit application. 2 As a result of that notice, the Corps received public comments, including objections from the United States Environmental Protection Agency. Eventually, the applicant withdrew the initial permit application.

In September 2000, a different representative of the Planche family, August J. Hand, submitted a revised permit application. The new application sought a § 404 permit only for Phase I of the project, covering 81.58 total acres, including 39.54 acres of wetlands. The Corps again posted public notice and accepted comments. The Corps also began NEPA review of the project and determined that, in light of the mitigation measures mandated by the permit conditions required by the Clean Water Act, as well as other state and local laws, 3 the requested permit would have no significant impact on the environment.

Accordingly, on November 18, 2003, the Corps issued a "mitigated FONSI"--a Finding of No Significant Impact concluding that the project's adverse impacts would be reduced to a less-than-significant level via mitigation conditions attached to the permit. See Spiller v. White, 352 F.3d 235, 239 (5th Cir.2003) (approving the use of "mitigated FONSIs"). On December 18, 2003, the Corps issued a § 404 permit allowing dredging and filling in 39.54 acres of the project's wetlands, conditioned on performance of specified mitigation measures.

B. District Court Proceedings

Plaintiffs, residents who "live, work, and recreate" near the proposed development, sued to enjoin the permit. They alleged that the Corps had not complied with NEPA's requirements because it 1) did not prepare an EIS; 2) prepared an inadequate EA; and 3) failed to consider the

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project's direct, indirect, and cumulative effects. Both parties submitted cross-motions for summary judgment, at which point the district court granted Eric Bopp, a part owner of the property and member of the Planche family, permission to intervene on the side of the Corps.

The district court granted the plaintiffs' motion for summary judgment, concluding that the Corps had acted arbitrarily by issuing the § 404 permit without preparing a full EIS in order to comply with...

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