Friends of Fiery Gizzard v. Farmers Home Admin.

• Decision Date: 03 November 1995
• Docket Number: No. 94-6327,94-6327
• Citation: 61 F.3d 501
• Parties: , 25 Envtl. L. Rep. 21,536 FRIENDS OF FIERY GIZZARD; Sierra Club; Tennessee Scenic Rivers Association; and Tennessee Citizens for Wilderness Planning, Plaintiffs-Appellants, v. FARMERS HOME ADMINISTRATION; David Seivers, State Director of Farmers Home Administration; Town of Tracy City; and Charles Fults, Mayor of Tracy City, Defendants-Appellees.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 501

61 F.3d 501

41 ERC 1569, 25 Envtl. L. Rep. 21,536

FRIENDS OF FIERY GIZZARD; Sierra Club; Tennessee Scenic Rivers Association; and Tennessee Citizens for Wilderness Planning, Plaintiffs-Appellants, v. FARMERS HOME ADMINISTRATION; David Seivers, State Director of Farmers Home Administration; Town of Tracy City; and Charles Fults, Mayor of Tracy City, Defendants-Appellees.

No. 94-6327.

United States Court of Appeals Sixth Circuit.

Argued March 31, 1995.

Decided Aug. 7, 1995.

Rehearing and Suggestion for Rehearing En Banc Denied Nov. 3, 1995.

W. Edward Ramage (argued and briefed), Farris, Warfield & Kanaday, Nashville, TN, for Friends of Fiery Gizzard, Sierra Club, Tennessee Scenic Rivers Assoc., Tennessee Citizens for Wilderness Planning.

Michael L. Roden, Asst. U.S. Atty. (briefed), Nashville, TN, John M. Ebersole (argued), U.S. Dist. Attorney's Office, Office of Gen. Counsel, Atlanta, GA, for Farmers Home Admin.

Michael L. Roden, Asst. U.S. Atty., Nashville, TN, for David Seivers.

Bennett L. Ross (argued and briefed), Jessalyn Hershinger, Bass, Berry & Sims, Nashville, TN, for Town of Tracy City and Charles Fults.

Before: JONES, NELSON, and RONEY, ^* Circuit Judges.

DAVID A. NELSON, Circuit Judge.

Where a detailed "environmental assessment" prepared by the Farmers Home Administration concludes that a water impoundment and treatment project to be funded by the agency will have no significant adverse effects on the human environment, does the fact that people served by the project will enjoy the benefit of an improved water supply mean that the agency must prepare a full-scale environmental impact statement that would not otherwise be required? Answering this question in the negative, the district court denied an application for a preliminary injunction that would have barred the agency from funding the project without first preparing an environmental impact statement. We agree with the district court's reading of the law, and we shall affirm the denial of the injunction.

I

The town of Tracy City, Tennessee, gets most of its water from a plugged and abandoned horizontal coal mine. This makeshift reservoir is clearly not adequate; the town has experienced severe water shortages during periods of drought, and water drawn from the mine at such times has been fouled with sediment. The sediment, according to the U.S. Department of Agriculture's Farmers Home Administration (FmHA), indicates either a disturbance of silt and dirt on the mine floor or a partial collapse of the mine. A further collapse could be catastrophic, the agency says.

The present water system violates Tennessee's Safe Drinking Water and Water Environmental Health Acts. The situation was bad enough to move Tennessee officials to obtain a consent decree, entered by a state chancery court in May of 1989, requiring the town to develop a long-term solution to its water supply problem and establishing penalties for failure to do so.

The town initially explored the possibility of building a dam in the gorge of a watercourse known as Sewanee Creek. The FmHA was prepared to provide financial assistance for a dam and water treatment plant at the Sewanee Creek location, but the town abandoned that site after the U.S. Environmental Protection Agency found that the project would have adverse impacts on the aquatic ecosystem and on the environment.

After considering numerous alternatives, the town eventually chose a site on Big Fiery Gizzard Creek. The new site is about one mile west of downtown Tracy City and half a mile above the Grundy Forest Natural Area, a scenic-recreational preserve managed by the state. The reservoir created by a dam at the Fiery Gizzard site would cover approximately 57 acres of land in a shallow valley where scrub trees have replaced timber cut in the past.

The Tennessee Department of Environment and Conservation created a special task force to review the proposed Fiery Gizzard project and possible alternatives. In July of 1993 the task force concluded that a dam at the Fiery Gizzard site would offer the best prospects for a safe, reliable and affordable water supply. The task force recommended that the Commissioner of Environment and Conservation issue a permit for construction of the project there, and the Commissioner accepted the recommendation.

The Fiery Gizzard site has also been approved by the Tennessee Historical Commission and several federal agencies, including the Environmental Protection Agency, the Interior Department's Fish and Wildlife Service, the Army Corps of Engineers, and the Tennessee Valley Authority. The town has obtained all federal and state permits necessary for construction.

On February 18, 1994, the FmHA announced that it had determined, based on its assessment of the potential environmental impacts of funding the project, that the quality of the human environment would not be significantly affected by the project and that no environmental impact statement would be prepared. This "finding of no significant impact" was based on a 23-page environmental assessment which concluded that "[t]here will be no significant adverse impacts in connection with this project." The assessment went on to forecast a purely beneficial impact:

"The project will have a positive impact on the living environment of the residents of the area. They will be provided with a dependable, sanitary water supply."

Counsel for the Sierra Club and the Tennessee Citizens for Wilderness Planning--two of the plaintiffs herein--submitted a lengthy critique identifying a number of alleged shortcomings in the FmHA's environmental assessment. In July of 1994 the agency responded to these comments in an addendum to the assessment. A "record of decision" prepared at the same time memorialized a determination that the Fiery Gizzard project would be funded without the preparation of an environmental impact statement.

The plaintiff environmental groups promptly brought suit against the FmHA and the town, alleging a violation of the National Environmental Policy Act of 1969, 42 U.S.C. Secs. 4321 et seq. (NEPA). The plaintiffs moved for a preliminary injunction, and the motion was denied. This appeal followed.

II

In enacting NEPA, Congress directed that all federal agencies, "to the fullest extent possible" (42 U.S.C. Sec. 4332), include a detailed statement on environmental impact and other matters "in every recommendation or report on proposals for legislation and other major Federal actions significantly affecting the quality of the human environment...." 42 U.S.C. Sec. 4332(2)(C). (Emphasis supplied.) Funding of the Fiery Gizzard project--a "Class II action" under the FmHA regulations, see 7 C.F.R. Sec. 1940.312--is "presumed to be [a] major Federal action[ ]...." Id. Given this presumption, and given a finding in the environmental assessment that "[t]he proposed project should have a positive effect on the human environment," the plaintiffs contend that the preparation of an environmental impact statement is required under the plain language of the statute.

The statute, however, must be read in the light of the implementing regulations. The Council on Environmental Quality has published regulations telling federal agencies how to comply with NEPA, see 40 C.F.R. Secs. 1500.1 et seq., and the FmHA has promulgated supplemental regulations building on those of the Council. 7 C.F.R. Secs. 1940.301 et seq. These regulations are entitled to substantial deference. Andrus v. Sierra Club, 442 U.S. 347, 357-58, 99 S.Ct. 2335, 2341, 60 L.Ed.2d 943 (1979).

The regulations make it clear that full-scale environmental impact statements--statements that are "very costly and time-consuming to prepare and [have] been the kiss of death to many a federal project," Cronin v. U.S. Dept. of Agriculture, 919 F.2d 439, 443 (7th Cir.1990)--need not be prepared for every major Federal action that might conceivably have a significant effect on the quality of the human environment. There are some variations of approach among the various federal agencies, but the FmHA's regulations prescribe the use of an "environmental assessment process" to identify, on a case-by-case basis, actions that actually will have a significant environmental effect and for which the preparation of an environmental impact statement is therefore necessary. 7 C.F.R. Sec. 1940.313.

The environmental assessment has been described as a "rough-cut, low-budget environmental impact statement." Cronin, 919 F.2d at 443. It serves, among other things, to "[a]id an agency's compliance with [NEPA] when no environmental impact statement is necessary." 40 C.F.R. Sec. 1508.9(a)(2). It also serves to provide "evidence and analysis for determining whether to prepare an environmental impact statement...." 40 C.F.R. Sec. 1508.9(a)(1). In other words, the environmental assessment functions as "a screening device ... [that] allows agencies with limited resources to focus on truly important federal actions." Preservation Coalition, Inc. v. Pierce, 667 F.2d 851, 858 (9th Cir.1982). It is a highly significant "first step" that determines whether the next step will or will not be the preparation of a fully polished, high-budget environmental impact statement. See Charter Township of Huron Mich. v. Richards, 997 F.2d 1168, 1174 (6th Cir.1993).

In deciding, on the basis of the assessment, whether the proposed action is one affecting the quality of the environment "significantly," the agency must look at both the "context" of the action and its "intensity." 40 C.F.R. Sec. 1508.27(a) and (b). "Intensity," Sec. 1508.27(b) explains, means "the severity of impact." This choice of adjectives is significant, we think; one speaks of the severity of adverse impacts, not beneficial impacts.

If the agency reasonably concludes, on the basis of the environmental assessment, "that the project will have no significant adverse environmental consequences," an environmental impact statement is not required....