Johnston v. Davis, 80-2297

• Decision Date: 25 January 1983
• Docket Number: No. 80-2297,80-2297
• Citation: 698 F.2d 1088
• Parties: , 13 Envtl. L. Rep. 20,415 Matt JOHNSTON, Mike Johnston, Associated Enterprises, Inc., a Wyoming corporation, and Bard Ranch Company, a Wyoming corporation, Plaintiffs-Appellants, v. R.M. DAVIS, Administrator of the Soil Conservation Service, United States Department of Agriculture, et al., Defendants-Appellees. Toltec Watershed Improvement District, Intervenor.
• Court: U.S. Court of Appeals — Tenth Circuit

Page 1088

698 F.2d 1088

18 ERC 2008, 13 Envtl. L. Rep. 20,415

Matt JOHNSTON, Mike Johnston, Associated Enterprises, Inc. a Wyoming corporation, and Bard Ranch Company, a Wyoming corporation, Plaintiffs-Appellants, v. R.M. DAVIS, Administrator of the Soil Conservation Service United States Department of Agriculture, et al Defendants-Appellees Toltec Watershed Improvement District, Intervenor.

No. 80-2297.

United States Court of Appeals, Tenth Circuit.

Jan. 25, 1983.

Kim D. Cannon, Sheridan, Wyo. (Henry A. Burgess, Sheridan, Wyo., with him on the brief) of Burgess & Davis, Sheridan, Wyo., for plaintiffs-appellants.

Dirk D. Snel, Dept. of Justice, Washington, D.C. (Carol E. Dinkins, Asst. Atty. Gen., Laura Frossard, Dept. of Justice, Washington, D.C., and Toshiro Suyematsu, U.S. Atty., Cheyenne, Wyo., with him on the brief), for defendants-appellees.

Fred W. Phifer, Wheatland, Wyo. (Sky D. Phifer, Wheatland, Wyo., with him on the brief) of Phifer & Phifer, Wheatland, Wyo., for intervenor.

Before SETH, Chief Judge, and McWILLIAMS and McKAY, Circuit Judges.

McKAY, Circuit Judge.

This case presents the latest chapter in litigation concerning the Toltec Reservoir Project. ¹ In this appeal, the plaintiffs rely on provisions of the National Environmental Policy Act of 1969 ("NEPA"), 42 U.S.C. Secs. 4321-4347 (1976) to challenge the project. They assert that the lower court erred in declaring that the Environmental Impact Statement ("EIS") describing the project was in full compliance with NEPA. ²

The plaintiffs initiated this action in federal district court on September 20, 1978, demanding that the defendants prepare an EIS for the proposed reservoir. On October 12, 1978, the court ordered the defendants to prepare an EIS. The Soil Conservation Service ("SCS") published the final EIS in January 1980 and filed a counterclaim seeking a declaratory judgment that the document complied with the requirements of NEPA. After a trial on the matter, the district court granted the declaratory judgment.

The plaintiffs claim that the court erred in approving the EIS. They claim that the EIS does not comply with NEPA, because the SCS failed to consider a full range of environmental costs in comparing project alternatives and because the SCS applied an unreasonable discount factor in calculating the economic benefits of the project.

I. The Standard of Review

Section 102(2)(C) of NEPA requires that all federal agencies prepare a detailed statement of environmental consequences--the EIS--"in every recommendation or report on proposals for legislation and other major Federal actions significantly affecting the quality of the human environment." NEPA Sec. 102(2)(C), 42 U.S.C. Sec. 4332(2)(C). NEPA contemplates that the preparation of an EIS will enhance environmental quality by compelling both disclosure and consideration of environmental factors in the agencies' decision-making process. See NEPA Sec. 2, 42 U.S.C. Sec. 4321. See also Save Lake Washington v. Frank, 641 F.2d 1330 (9th Cir.1981); Montgomery Environmental Coalition v. Costle, 646 F.2d 568 (D.C.Cir.1980); Sierra Club v. Morton, 510 F.2d 813 (5th Cir.1975); Iowa Citizens for Environmental Quality, Inc. v. Volpe, 487 F.2d 849 (8th Cir.1973); Silva v. Lynn, 482 F.2d 1282 (1st Cir.1973). In preparing an EIS, an agency is expected to take a "hard look" at the environmental consequences of the proposed action, and explicitly examine five subjects listed in the provisions of NEPA. ³ See Environmental Defense Fund v. Andrus, 619 F.2d 1368, 1376-77 (10th Cir.1980). In reviewing an agency's EIS, the court examines whether there is a reasonable, good faith, objective presentation of these subjects. Id. We stated the standard of review in Save Our Invaluable Land (SOIL), Inc. v. Needham, 542 F.2d 539 (10th Cir.1976), cert. denied, 430 U.S. 945, 97 S.Ct. 1580, 51 L.Ed.2d 792 (1977), as follows:

Judicial review of an EIS is limited to a consideration of the following: (1) does the EIS discuss all of the five procedural requirements listed in 42 U.S.C. Sec. 4322(C); (2) does the EIS constitute a good faith compliance with the demands of NEPA; and (3) does the statement contain a reasonable discussion of the subject matter involved in the five respective areas?

542 F.2d at 542. See also, Manygoats v. Kleppe, 558 F.2d 556 (10th Cir.1977); Sierra Club v. Stamm, 507 F.2d 788 (10th Cir.1974), National Helium Corp. v. Morton, 486 F.2d 995 (10th Cir.1973), cert. denied, 416 U.S. 993, 94 S.Ct. 2405, 40 L.Ed.2d 772 (1974). In applying this standard, the reviewing court must examine the data and methodology that underlie the EIS. However, this examination is performed for the limited purpose of insuring that the document is a good faith, objective, and reasonable explanation of environmental consequences that responds to the five topics of NEPA's concern.

II. Application of the Standard to the Toltec Reservoir EIS

A. "Unconsidered" Environmental Costs.

The plaintiffs claim that the EIS does not reasonably compare alternatives to the Toltec Reservoir Project, see NEPA Sec. 102(2)(C)(iii), 42 U.S.C. Sec. 4332(2)(C)(iii), because it does not fully consider or quantify a number of "environmental costs" resulting from the construction of the project. They claim that the EIS inadequately assesses the loss of productive capacity of inundated meadowland, the effect of severance by the reservoir of ranching lands, tax losses, depletion of water from a downstream reservoir, and the creation of mud flats adjacent to the reservoir.

The loss of productive capacity, the depletion of water from a downstream reservoir and the creation of mud flats are all effects identified in the EIS. Testimony in the record indicates that the SCS considered and evaluated these effects in preparing the EIS. The remaining two purported effects, severance and tax losses, were not discussed in the EIS. However, the record raises a substantial question whether these effects can be treated as adverse impacts of the project.

We agree with the district court that the plaintiffs have failed to demonstrate that the five effects they cite were inadequately discussed in the EIS. The EIS need not discuss every nuance of a proposed action, nor need it give various questionable effects the weight demanded by various proponents or opponents. See EDF v. Andrus, 619 F.2d at 1368. Instead it must give a reasonable and balanced discussion sufficient to permit an informed choice of alternatives. Id. The EIS provides a reasonably detailed discussion of the five subjects mandated by NEPA. See Save Our Invaluable Land, 542 F.2d at 542. The plaintiffs have failed to convince us that the alleged omissions detract materially from the assessment of environmental consequences or that they indicated bias or lack of good faith by the SCS in preparing the EIS.

B. The Discount Rate.

The plaintiffs claim that by applying a 3 1/4 percent discount rate in the economic analysis of the Toltec Reservoir Project, the EIS fails to comply with the requirements of NEPA. They claim that the use of this discount rate results in an unrealistic assessment of the present value of the project, and thereby prevents reasonable comparison of alternatives. See NEPA Sec. 102(2)(C)(iii), 42 U.S.C. Sec. 4332(C)(iii).

Congress has specified the discount rate formula to be used by federal agencies in calculating the present value of water resource projects. See Water Resources Development Act of 1974 ("WRDA"), Sec. 80, 42 U.S.C. Sec. 1962d-17 (1976). In prescribing the discount rate formula, Congress stated that it applies to "plan formulation and evaluation." WRDA Sec. 80(a), 42 U.S.C. Sec. 1962d-17(a). We conclude that by stating the application of the formula in such general terms, Congress intended it to be used in environmental impact statements as well as other types of project evaluations. Accordingly, the 3 1/4 percent discount rate can be used in the Toltec Reservoir Project EIS to compare alternatives, provided that the selection of this rate complies with the provisions of WRDA.

In utilizing the 3 1/4 percent discount rate, the SCS relied on section 80(b) of WRDA, which provides as follows:

In the case of any project authorized before January 3, 1969, if the appropriate non-Federal interests have, prior to December 31, 1969, given satisfactory assurances to pay the required non-Federal share of project costs, the discount rate to be used in the computation of benefits and costs for such project shall be the rate in effect immediately prior to December 24, 1968, and that rate shall continue to be used for such project until construction has been completed, unless otherwise provided by a statute enacted after March 7, 1974.

WRDA Sec. 80(b), 42 U.S.C. Sec. 1962d-17(b). Section 80(b) recognizes that prior to the passage of WRDA, federal agencies applied an unrealistically low discount rate to water projects. The provision permits continued use of this low discount factor for certain projects commenced prior to the passage of WRDA. The apparent purpose of this provision is to permit continued construction of qualifying projects planned and authorized before the enactment of WRDA, notwithstanding the economic inefficiency that the projects exhibit when evaluated under a realistic discount rate. Section 80(b) represents a legislative judgment that water projects authorized under the past practice of using low discount rates should not be jeopardized by the new policy of applying a more realistic discounting formula.

Section 80(b) applies the discount rate in effect immediately prior to December 24, 1968, to projects authorized before January 3, 1969, provided that the non-federal sponsors have, prior to December 31, 1969, given "satisfactory assurances" to pay the required non-federal share of the project costs. The plaintiffs do not contest the SCS's determination that the Toltec Reservoir Project was authorized before January 3, 1969, or that...