* Smith, Circuit Judge, originally on the panel, recused after

oral argument. The case is being decided by a quorum. 28 U.S.C. §

46(d).

1

United States Court of Appeals

Fifth Circuit

FILED

January 24, 2007

Charles R. Fulbruge III

Clerk

UNITED STATES COURT OF APPEALS

For the Fifth Circuit

No. 04-31026

LORETTO O’REILLY, JR., ET AL.,

Plaintiffs-Appellees,

VERSUS

UNITED STATES ARMY CORPS OF ENGINEERS

Defendant-Appellant,

ERIC A. BOPP

Intervenor-Appellant

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’
2

(“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
3

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, 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

(2004) (quoting 42 U.S.C. § 4321). Instead of mandating particular
4

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). 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)
5

[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 (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). 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.
1 Section 404 of the Clean Water Act governs discharge of

dredged or fill materials into navigable waters. Permit applicants

must design their project to avoid adverse wetlands impacts where

“practicable” and to minimize those impacts to an extent

“appropriate and practicable.” “Memorandum of Agreement between the

Department of the Army and the Environmental Protection Agency

Concerning Determination of Mitigation under the Clean Water Act

section 404(b)(1)”, 20 ENVTL. L. REP. 35,223 (Feb. 6, 1990). In

evaluating a permit request, the Corps must comply not only with

the requirements of the Clean Water Act, but also with NEPA’s

procedural requirements. See Sierra Club v. Sigler, 695 F.2d 957,

967 (5th Cir. 1983) (holding that the decision as to whether or not

to issue a § 404 permit must be reviewed under NEPA). It is NEPA

that concerns us here: the parties do not argue that the permit

violated the Clean Water Act; rather the debate is over whether the

Corps failed to meet the procedural requirements imposed upon it

under NEPA.

6

Tammany Parish, near Covington, Louisiana, as a residential

subdivision. The plot includes wooded wetlands 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
2 The Corps placed the notice jointly with the state agency

because Clean Water Act provisions required the applicant to obtain

a state Water Quality Certification. See 33 U.S.C. § 1341.

3 We discuss the specific conditions placed on the permit in

greater detail below.

7

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-thansignificant 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
8

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 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 NEPA. In finding the Corps’s actions arbitrary, the

district court held that the Corps’s EA and FONSI were not

justified under NEPA because the administrative record contained no

support for the Corps’s conclusion that the mitigation measures

would render insignificant the identified adverse impacts of the

project. Further, the court held that the arbitrariness of this

action by the agency was exacerbated by its failure to consider
9

fully the cumulative adverse effects of the project with those of

(1) 72 other permits already issued within a 3 mile radius; (2) the

continued rapid growth and urbanization of that part of St. Tammany

Parish; and (3) phases II and III of the developer’s long range

residential subdivision plans on the Planche family’s other plots

of land in the same area of St. Tammany Parish. The district court

also held that the Corps improperly segmented the entire long range

subdivision plans by considering only Phase I in developing its EA.

O’Reilly v. U.S. Army Corps of Engineers, 2004 WL 179453 404 1

(E.D.La., August 10, 2004) at *6. Accordingly, the district court

(1) granted the plaintiffs’ motion for summary judgment;(2) denied

the defendants’ motion for summary judgment; and (3) enjoined the

§ 404 permit issued by the Corps to the developer.

The Corps and the intervenor appealed. On appeal, however,

only the intervenor contends that the Corps’s EA, FONSI, and permit

should be affirmed. The Corps does not object to the EA or the

FONSI being vacated and the case being remanded to the agency for

further proceedings that may, if additional findings and reasons so

warrant, lead to the preparation of a second EA and another

mitigated FONSI. Both appellants, however, take issue with the

district court’s injunction, which apparently leaves the Corps no

recourse but to prepare a full EIS before granting the developer a

permit to dredge and fill wetlands.
10

III. Discussion of the District Court’s Decision on the Merits

We review the district court’s grant of summary judgment de

novo. Terrebonne Parish Sch. Bd. v. Mobil Oil Corp., 310 F.3d 870,

877 (5th Cir. 2002). Therefore we, like the district court, may

only set aside the Corps’s decision not to prepare an EIS where a

plaintiff establishes that the decision was “arbitrary, capricious,

an abuse of discretion, or otherwise not in accordance with law.”

5 U.S.C. § 706(2)(A); see also Marsh v. Or. Natural Res. Council,

490 U.S. 360, 375-376 (1989); Kleppe v. Sierra Club, 427 U.S. 390,

412 (1976).

Courts may not, of course, use review of an agency's

environmental analysis as a guise for second-guessing substantive

decisions committed to the discretion of the agency. However, this

restriction does not turn judicial review into a rubber stamp. “In

conducting our NEPA inquiry, we must ‘make a searching and careful

inquiry into the facts and review whether the decision . . . was

based on consideration of the relevant factors and whether there

has been a clear error of judgment.’” Marsh, 490 U.S. at 378.

The district court in this case based its decision on three

grounds: (1) the Corps’s failure to demonstrate the feasibility of

the mitigation measures imposed; (2) the Corps’s failure to

consider the cumulative effects of the project, other permits, and

area urbanization; and (3) the Corps’s improper segmentation of

Phase I of the project. We discuss each in turn.
11

A. The Feasibility of the Mitigation Measures

The district court held that “the administrative record

contains no support for the Corps’s conclusion that the mitigation

measures would remove or reduce [to insignificance] the identified

adverse impacts of the project. [T]he EA discusses the project’s

adverse impacts and describes the associated mitigation measures

but nothing in the Document connects the two together.” O’Reilly,

2004 WL 1794531 at *5.

We have consistently accepted the proposition that reliance on

mitigation measures may reduce a project’s impacts below the level

of significance. In Spiller, 352 F.3d at 241, we explicitly

approved that principle, while noting that “we have implicitly

endorsed [such] use[.]” Id. (citing Sierra Club v. Espy, 38 F.3d

792, 803 (5th Cir. 1994) (holding that EAs satisfied NEPA where

they considered appropriate alternatives, including mitigation

measures) and Louisiana v. Lee, 758 F.2d 1081, 1083 (5th Cir. 1985)

(holding that it was proper to consider restrictions placed on

dredging permits in reviewing the agency's decision not to file an

EIS)). Other circuits agree. See, e.g., Cabinet Mountains

Wilderness v. Peterson, 685 F.2d 678, 682 (D.C. Cir. 1982);

C.A.R.E. Now, Inc. v. Fed. Aviation Admin., 844 F.2d 1569 (11th

Cir. 1988); Greenpeace Action v. Franklin, 14 F.3d 1324 (9th Cir.

1992); Roanoke River Basin Ass'n v. Hudson, 940 F.2d 58 (4th Cir.
12

1991); Audubon Soc'y of Cent. Ark. v. Dailey, 977 F.2d 428 (8th

Cir. 1992). 

Furthermore, the Supreme Court has held that proposed

mitigation measures need not be laid out to the finest detail, even

within the more labor-intensive context of an environmental impact

statement. Robertson v. Methow Valley Citizens Council, 490 U.S.

332, 352 (1989) (“There is a fundamental distinction . . . between

a requirement that mitigation be discussed in sufficient detail to

ensure that environmental consequences have been fairly evaluated

. . . and a substantive requirement that a complete mitigation plan

be actually formulated and adopted.”); Miss. River Basin Alliance

v. Westphal, 230 F.3d 170, 176-77 (5th Cir. 2000) (quoting

Robertson, 490 U.S. at 352). Mindful of that distinction, we have

still required that an EIS involving mitigation must include “a

serious and thorough evaluation of environmental mitigation options

for [a] Project to allow its analysis to fulfill NEPA's

process-oriented requirements[.]” Miss. River Basin Alliance, 230

F.3d at 178. We have, moreover, noted that “mere perfunctory or

conclusory language will not be deemed to constitute an adequate

record and cannot serve to support the agency's decision not to

prepare an EIS." Citizen Advocates For Responsible Expansion, Inc.

(I-Care) v. Dole, 770 F.2d 423, 434 (5th Cir. 1985) (citing

Maryland-National Capital Park & Planning Comm’n v. U.S. Postal

Serv., 487 F.2d 1029, 1039 & 1040 (D.C. Cir. 1973)); see also DANIEL
4 Before beginning our review, we pause to note that a number

of the mitigation measures discussed below are included as specific

conditions on the § 404 permit. Specifically, the permittee must 1)

obtain Corps approval for any additional work not shown in the

drawings; 2) prevent any eroded material from entering adjacent

wetlands and/or waterways during construction; 3) comply with local

floodplain ordinances, regulations, or permits; 4) obtain a permit

from the Louisiana Department of Wildlife and Fisheries; 5) create

and record a state conservation servitude in perpetuity on a

100-foot wide buffer zone along the Timber Branch; and 6)

contribute funds to the Louisiana Nature Conservancy sufficient to

acquire, enhance, manage, and administer 47.5 acres of pine

flatwood/savannah wetlands. A failure to comply will result in

revocation of the permit.

5 Anoxic and anaerobic contain little-to-no oxygen; they are,

among other things, less hospitable to plant life and soil-dwelling

13

R. MANDELKER, NEPA LAW & LITIG. § 8:57 (2006) (“an environmental

assessment does not require the full and ‘reasonably complete’

discussion of mitigation measures that is required in an impact

statement. Agencies must develop the record to a reasonable degree,

however, in a manner that thoroughly and fairly evaluates

environmental consequences.”). With these principles in mind, we

examine the Corps’s EA and the reasons set forth there for its

conclusion that each significant environmental impact it had

identified would be reduced to insignificance by its prescribed

mitigation measure.4

i. Adverse Effects on Soils and Flood Capacity

The Corps’s EA predicts that the project will have

substantial, long-term, adverse effects on project site soils,

including: 1) creation of anoxic and anaerobic conditions5 due to
animals.

6 Subsurface drainage refers to the movement of water through

soil or rock beneath the surface of the land. Compacting, or

compressing, the soil and rock in an area reduces the space

available for water to flow. Such poor drainage can result in

increased susceptibility to flooding and contribute to anoxic and

anaerobic soil conditions.

7 Underground aquifers “recharge” or take in more water

largely as that water drains down through porous soil. Increasing

the amount of impervious surfaces in an area (say, by paving),

reduces the amount of water reaching the aquifer.

14

clearing, grading, excavation, and filling; 2) possible impairment

of subsurface drainage due to substrate compaction;6 and 3)

decreased aquifer recharge capability due to an increase in

impervious surfaces.7 All of the above work could contribute to a

possible reduction in the site's flood control functions, including

increased surface runoff volume and rate; reduced subsurface

lateral flow, storage, and recharge; and reduced filtration. 

In discussing the role of mitigation in reducing these

problems, the EA states that the drainage plan incorporated into

the development relies on a 100-foot vegetated buffer zone for

flood water storage as well as creating detention areas.

Additionally, the plan would raise the elevation of the major road.

The EA also notes that the drainage plan meets St. Tammany Parish

requirements. The EA asserts, without data or analysis, that the

project as mitigated should have “minimal [e]ffect” on flooding

within the scope of a 25-year storm, although storms in categories
8 A twenty-five year storm is a storm of such duration and

intensity that it has a likelihood of occurring once in twenty-five

years. See Kennecott v. U.S. Envtl Protection Agency, 780 F.2d 445,

455 (4th Cir. 1985).

9 Non-point source pollution does not come from a clearly

identified source or location, but rather from pollutants

originally deposited on the ground and carried away in surface runoff water. David Zaring, “Agriculture, Nonpoint Source Pollution,

and Regulatory Control: The Clean Water Act’s Bleak Present and

Future”, 20 HARV. ENVTL L. REV. 515, 515 (1996).

15

above a 25-year event could flood the development.8

ii. Increased Non-Point Source Pollution

In its assessment of water quality impacts, the Corps’s EA

notes that the project could cause long-term, adverse impacts from

increased non-point source pollution,9 primarily in the roadside

drainage swales incorporated in the project design. The EA asserts

that the planned 100-foot vegetated buffer will minimize the amount

of sediment entering the river and that the project will comply

with St. Tammany Parish ordinances enacted to control sedimentladen run-off. The EA also states that “Best Management Practices

will be incorporated into project construction and inclusion of

vegetated drainage swales and greenspaces will filter run-off” and

that “[c]ompliance with the recommendations/ requirements of local

ordinances and/or ‘Best Management Practices’ should limit the

volume of sediments entering local waterways.” It neither describes

what these practices may include nor how they will work. Similarly,

the EA states that compliance with required state environmental
16

permits “should eliminate the potential for contamination of ground

water resources,” but does not describe what these permits require.

iii. Loss of Wildlife Habitat

The EA predicts “moderate to major” adverse impacts on

wildlife habitat, which, in turn, would create “long-term” adverse

impacts to wildlife in a localized area. The document also notes

that the project will result in a long-term increase in noise to

levels “loud and frequent enough to disturb wildlife” in adjacent

areas. In discussing mitigation of habitat loss and other adverse

impacts on wildlife, however, the EA states, without explanation,

that the buffer zone “will mitigate some of the impact to aquatic

organisms.” When discussing habitat for non-aquatic wildlife the EA

simply states that the buffer zone will be preserved and may

provide habitat for some species, although others may be eliminated

entirely.

iv. Loss of Wetland Functions

The EA notes that the project will result in a total and

complete loss of wetland functions for the developed portion of the

site, which will, in turn, affect the remaining area directly

affected by the development, as well as nearby wetlands and nonwetlands. Some of the mitigation discussion is built into the

requirements pertinent to flood control, non-point source
17

pollution, and wildlife habitat, discussed above. Beyond that, the

EA says only that “compensatory mitigation for wetland

functionality losses will be required.” The permittee must purchase

credits for 47.5 acres of pine flatwood/savannah wetlands, which

will be acquired from “an approved site within the same USGS

hydrologic watershed.”

v. Adverse Effects on Traffic and Safety

The EA states that the project will result in “adverse and

long-term” impacts on traffic and transportation patterns, and as

a result, could lead to increased safety concerns. The discussion

of mitigation, however, is limited to statements that

“[a]ppropriate adjustments to the local highway system, such as

warning signs, and traffic control signs or signals may be required

to accommodate increases in traffic volume” and that areas of

congestion points may need to be altered. The EA also mentions that

the applicant indicated in 2000 that it would conduct a traffic

study, and that the developer would fund “some identified

improvements” in order to mitigate adverse impacts.

After reviewing the EA’s findings of significant adverse

environmental impacts that will result from the project together

with its reasoning as to the feasibility of the described

mitigation measures imposed, we conclude that the district court
18

correctly held that the EA fails to sufficiently demonstrate that

the mitigation measures adequately address and remediate the

adverse impacts so that they will not significantly affect the

environment. The EA before us lists the potentially significant

adverse impacts, and describes, in broad terms, the types of

mitigation measures that will be employed. As is evident from our

above review of the Corps’s treatment of each individual potential

impact, however, the EA provides only cursory detail as to what

those measures are and how they serve to reduce those impacts to a

less-than-significant level. Because the feasibility of the

mitigation measures is not self-evident, we agree with the district

court that the EA does not provide a rational basis for determining

that the Corps has adequately complied with NEPA.

We recognize that an EA is meant to be a “‘rough-cut,

low-budget’, preliminary look at the environmental impact of a

proposed project.” Spiller, 352 F.3d at 240. The record before us,

however, is simply not sufficient to determine whether the

mitigated FONSI relies on “‘. . . mitigation measures which . . .

compensate for any adverse environmental impacts stemming from the

original proposal’” that, unmitigated, would be significant. Id. at

241 (quoting Cabinet Mountains Wilderness, 685 F.2d at 682). In

other words, the EA fails to tell us “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. §§
19

1501.4(e), 1508.13). We therefore agree with the district court’s

determination that, the Corps acted arbitrarily in relying only on

the information in the current EA to support the issuance of its

mitigated FONSI. In so holding, we pause to note that “[w]e have

never said that deficiencies in an EA can only be cured by

preparing an EIS, and that is not the law.” Fritiofson v.

Alexander, 772 F.2d 1225, 1248 (5th Cir. 1985) (overruled on

unrelated grounds by Sabine River Auth. v. U.S. Dep't of Interior,

951 F.2d 669, 677 (5th Cir. 1992)). Our review of the record today

indicates only that we lack the information that would allow us to

defer to the Corps’s determination that mitigation will reduce the

project’s effects below the level of significance. 

B. Cumulative Impacts

The intervenor argues that the district court incorrectly

determined that “the EA is supported by no real analysis or data

with respect to cumulative effects of this project.” O’Reilly, 2004

WL 1794531 at *5. We begin by reviewing NEPA’s specific

requirements regarding cumulative impact analysis.

The CEQ’s regulations define a project’s cumulative impacts as

“the impact on the environment which results from the incremental

impact of the action when added to other past, present, and

reasonably foreseeable future actions regardless of what agency

(Federal or non-Federal) or person undertakes such other actions.”
20

40 C.F.R. § 1508.7; see also 40 C.F.R. § 1508.25 (requiring that

agencies take cumulative impacts into consideration during NEPA

review). The regulation states that “[c]umulative impacts can

result from individually minor but collectively significant actions

taking place over a period of time.” 40 C.F.R. § 1508.7. In that

vein, we have held that a consideration of cumulative impacts must

also consider “[c]losely related and proposed or reasonably

foreseeable actions that are related by timing or geography.” Vieux

Carre Prop. Owners, Residents, & Assocs., Inc. v. Pierce, 719 F.2d

1272, 1277 (5th Cir. 1983). 

In this case, the intervenor challenges the district court’s

holding with regard to the Corps’s treatment of cumulative impacts.

That court found that the EA “merely recites the potential

cumulative effects of the project in light of other wetlands

destruction in the area but . . . is supported by no real analysis

or data with respect to cumulative effects of this project.”

O’Reilly, 2004 WL 1794531 at *5.

The Corps has already issued 72 other § 404 permits within a

three mile radius of the proposed development, covering a total of

18,086.4 acres, of which 400.9 are wetlands. The EA identifies

those permits, and notes that they cumulatively required “[a] total

of approximately 529.5 acres of compensatory mitigation.” The Corps

acknowledges that although “[c]umulative impacts associated with

this particular project would be considered minor[,]” when
21

considered in conjunction with, inter alia, “historical development

and land use practices,” the cumulative effects “may become major.”

The Corps carefully - and succinctly - describes how such

individual projects can collectively cause fragmenting of state

wetlands and result in increasing environmental pressures due to

development. It notes that “without local governments and the

general public becoming pro-active in long-term land use planning

and local watershed management and guiding development from the

perspective of environmental stewardship, the potential for

environmental impacts to approach a cumulatively significant level

exists.” Furthermore, it acknowledges that this permit covers only

the first phase of a project that may have as many as three phases

of development. Such language would seem to warrant a finding of

significance, but instead the Corps states, without any exposition,

that “mitigation for impacts caused by the proposed project,

possible future project phases, and all Corps permitted projects

will remove or reduce e[x]pected impacts.”

As above, we agree with the district court that this bare

assertion is simply insufficient to explain why the mitigation

requirements render the cumulative effects of this project lessthan-significant, when considered with past, present, and

foreseeable future development in the project area, including the

project’s other two potential phases. The intervenor argues that

“one may presume that through the mitigation requirement contained
22

in NEPA all permits issued prior to the one under consideration had

their respective impacts mitigated to levels of insignificance.” We

cannot accept that presumption as legally and empirically valid,

however, because the Corps’s EA provides no rational basis for

concluding that when the individually “mitigated-to-insignificant”

effects of this permit are added to the actual post-dredge and fill

effects of 72 other permits issued to third parties by the Corps in

the area, that the result will not be cumulatively significant. In

so holding, we do not, as Mr. Bopp asserts, ask the agency to treat

the EA as a “local land-use planning guide.” We simply agree with

the district court’s determination that the EA provides too little

information as to the workability of the mitigation measures to

conclude that the Corps took a “hard look” at the project,

realistically assessed its individual and cumulative environmental

effects, and reasonably found that the mitigation measures imposed

will reduce those effects to a less-than-significant level. 

C. Improper Segmentation

Finally, the intervenor challenges the district court’s

determination that this project, the first phase of a possible

three-phase development plan, constitutes “improper segmentation”,

or “piecemealing”: “an attempt by an agency to divide artificially

a ‘major Federal action’ into smaller components to escape the

application of NEPA to some of its segments.” Save Barton Creek
23

Ass'n v. Fed. Highway Admin., 950 F.2d 1129, 1139 (5th Cir. 1992).

In so holding, the district court identified nothing that rendered

the other two phases "impracticable, financially unattractive, or

generally not feasible.” O’Reilly, 2004 WL 1794531 at *6. It held

that “[t]he record blaringly suggests that the sole reason that

Phases II and III were eliminated . . . was to facilitate the

issuance of the permit so that the project could get underway." Id.

Ultimately, the district court found that "the current project

represents a piecemealing approach for implementing the totality of

the [entire three-phase] project." Id.

“‘As a general rule under NEPA, segmentation of highway

projects is improper for purposes of preparing environmental impact

statements.’” Save Barton Creek, 950 F.2d at 1140 (quoting Piedmont

Heights Civic Club, Inc. v. Moreland, 637 F.2d 430, 439 (5th Cir.

Unit B 1981)). Although the question of piecemealing may arise when

dealing with a multi-phase project, it presents a different problem

than that reviewed in the preceding section on cumulative impacts.

As we have discussed, an assessment of cumulative effects asks

whether a project with individually “mitigated-to-insignificant”

effects may yet result in significant environmental impacts when

those effects are aggregated with the foreseeable effects of other

environmentally impacting human activities and natural occurrences.

An analysis of improper segmentation, however, requires that where

“proceeding with one project will, because of functional or
10 Scholars have noted that the “cumulative effects” and

“improper segmentation” issues raise separate-but-similar

questions: 

Federal agencies may plan a number of related actions but

may decide to prepare impact statements on each action

individually rather than prepare an impact statement on

the entire group. This decision creates a "segmentation"

or "piecemealing" problem.... 

Another related issue is whether an environmental

assessment or impact statement on a project or action

must discuss the cumulative impacts of that project or

action that occur outside the scope of the project or

action. The issue here is what environmental impacts must

be considered in an impact statement on a particular

project or action, not whether a number of projects or

actions must be gathered together in a single

environmental assessment or impact statement. 

Daniel R. Mandelker, NEPA LAW & LITIGATION § 9:11 (2006).

24

economic dependence, foreclose options or irretrievably commit

resources to future projects, the environmental consequences of the

projects should be evaluated together.” Fritiofson, 772 F.2d at

n.10.10

To determine whether a single project is improperly segmented

into multiple parts, this Circuit applies a four-part test that

asks whether “the proposed segment (1) has logical termini; (2) has

substantial independent utility; (3) does not foreclose the

opportunity to consider alternatives; and (4) does not

irretrievably commit federal funds for closely related projects.”

Save Barton Creek, 950 F.2d at 1140 (citing Piedmont Heights, 637

F.2d at 439). It is important to note that “projects”, for the
25

purposes of NEPA, are described as “proposed actions”, or proposals

in which action is imminent. 40 C.F.R. § 1508.23. “‘[T]he mere

‘contemplation of’ certain action is not sufficient to require an

impact statement.’” Fritiofson, 772 F.2d at 1240 (citing Kleppe,

427 U.S. at 404). While a cumulative impact analysis requires the

Corps to include “reasonably foreseeable” future actions in its

review, improper segmentation is usually concerned with projects

that have reached the proposal stage. See Envtl. Def. Fund v.

Marsh, 651 F.2d 983, 999 (5th Cir. 1981). We have stated that in

rare cases “a court [may] prohibit segmentation or require a

comprehensive EIS for two projects, even when one is not yet

proposed, if an agency has egregiously or arbitrarily violated the

underlying purpose of NEPA.” Envtl. Def. Fund, 651 F.3d at n.19. 

In this case, the current § 404 permit allows only the filling

and dredging required to construct Phase I of the planned

development. Although the project as originally submitted was a

three-phase undertaking, the application as eventually approved

included only the first stage. The Corps cites this decrease in

scale as one of the project requirements that reduce the project’s

effects below the level of significance. 

The district court did not apply the independent utility test

laid out above, but simply stated that considering Phase I by

itself constituted improper piecemealing because nothing in the

record suggested that Phases II and III were “impracticable,
26

financially unattractive, or generally not feasible” and that the

two phases were almost certainly “going to be financially viable in

light of the expanding urbanization in St. Tammany Parish."

O’Reilly, 2004 WL 1794531 at *6. Plaintiffs, too, argue that the

current project is wrongly piecemealed because Phases II and III

are reasonably foreseeable. While this argument is relevant to

whether the Corps rationally addressed and mitigated the cumulative

impacts, it does not appropriately address the improper

segmentation question. 

In this respect, we agree with Mr. Bopp that Vieux Carre Prop.

Owners, Residents, & Assocs, Inc. v. Pierce, 719 F.2d 1272, 1277

(5th Cir. 1983), provides the relevant analogy. In that case, a

multi-phase project was submitted, withdrawn, and resubmitted in a

form that included one phase of the original project. Id. at 1276-

78. The court held that the project had not been improperly

segmented because the future phases remained in the speculative,

planning stages. Id. at 1278 (citing Envtl. Def. Fund, 651 F.2d at

999 (“we are here dealing with two projects that are historically

distinct, one of which is proposed and the other still in the

process of study and design. In that situation, NEPA does not yet

require the [agency] to evaluate the environmental impact of the

[second project].”)). 

In the case before us, the record indicates that the three

phases have independent utility - Phase I can stand alone without
11 Improper segmentation can occur absent the expenditure of

federal funds: irrevocable commitment of federal funding is only

one of the factors a court should consider in determining whether

a project has been improperly segmented. Save Barton Creek, 950

F.2d at 1140. The project may yet be susceptible of improper

segmentation: other factors look to the degree of independent

function and utility of the project standing alone. Id. The point

of the inquiry is to determine whether the agency artificially

divided a “major Federal action” into smaller components to escape

the application of NEPA to some of its segments. Id.

27

requiring construction of the other two phases either in terms of

the facilities required or of profitability. Neither plaintiffs nor

the district court identify any evidence that construction of Phase

I irretrievably commits federal funds to construction of Phases II

and/or III or that the future phases have progressed to the

“proposal” stage.11 Nor do they identify any evidence suggesting

that construction of Phase I will foreclose the Corps’s ability to

consider various alternatives to construction of either future

phase. Indeed, Phases II and III would encompass a far larger

quantity of wetlands (80% of their total acreage) than Phase I

(which was 40-50% wetlands). The Corps’s analysis of practicable

alternatives to construction of future phases may, as a result,

prove far different than its analysis for Phase I. 

On this point, therefore, we reverse the district court’s

judgment. The record before us does not reflect that the Corps must

have considered the possible future second and third phases as part

of the present project in conducting its EA and preparing its

FONSI, nor that in failing to do so the Corps has arbitrarily
28

violated the underlying purpose of NEPA. Phases II and III are

relevant to the EA insofar as they relate to the Corps’s analysis

of cumulative impacts. Conducting an EA for Phase I alone, however,

does not offend the prohibition against piecemealing projects in

order to avoid NEPA requirements. We cannot say that the Corps has

acted arbitrarily in this respect.

IV. Discussion of the District Court’s Remedy

As we read the district court’s judgment, it enjoins the

issuance of a dredge and fill permit until an EIS is completed.

The judgment states only that the district court “has ENJOINED the

§ 404 permit . . . .” But in the conclusion of its Memorandum

Opinion, the Court stated, 

The Corps acted arbitrarily, capriciously, or abused its

discretion by issuing the § 404 permit without preparing

a full EIS as required by NEPA. In light of the long-term

and irreversible environmental impacts associated with

this project, the Corp’s [sic] action is wholly at odds

with NEPA. Because the permit was issued without an EIS

in violation of NEPA, Plaintiffs are entitled to an

injunction.... Accordingly; . . . the § 404 permit . . .

issued by the Department of the Army is hereby ENJOINED.

O’Reilly, 2004 WL 1794531 at *6. 

Both the Corps and Mr. Bopp contend that the district court’s

injunction effectively and erroneously mandated that the Corps

complete an EIS for the proposed project. They argue that the

court, instead, should have remanded the case to the Corps with

instructions to the agency to reconsider whether an EA or an EIS is
29

appropriate.

We review a district court’s decision to issue a permanent

injunction for abuse of discretion. VRC, LLC v. City of Dallas, 460

F.3d 607, 611 (5th Cir. 2006) (citing N. Alamo Water Supply Corp.

v. City of San Juan, Tex., 90 F.3d 910, 916 (5th Cir.1996); Thomas

v. Tex. Dept. of Criminal Justice, 220 F.3d 389, 396 (5th

Cir.2000)). “‘The district court abuses its discretion if it (1)

relies on clearly erroneous factual findings when deciding to grant

or deny the permanent injunction, (2) relies on erroneous

conclusions of law when deciding to grant or deny the permanent

injunction, or (3) misapplies the factual or legal conclusions when

fashioning its injunctive relief.’” Liberto v. D.F. Stauffer

Biscuit Co., Inc., 441 F.3d 318, 323 (5th Cir. 2006) (quoting

Peaches Entm’t Corp. v. Entm’t Repertoire Assocs., 62 F.3d 690, 693

(5th Cir. 1995)).

Where, as here, a court determines that an agency has acted

arbitrarily or capriciously, the APA permits the court to “hold

unlawful and set aside” that action. 5 U.S.C. § 706(2). As a

general rule, when “an agency decision is not sustainable on the

basis of the administrative record, then ‘the matter should be

remanded to [the agency] for further consideration.’” Avoyelles

Sportsmen’s League, Inc. v. Marsh, 715 F.2d 897, 905 (5th Cir.

1983) (quoting Camp v. Pitts, 411 U.S. 138, 143 (1973)); see also

Vt. Yankee Nuclear Power Corp. v. Nat’l Res. Def. Council, Inc.,
12 Other circuits follow an approach similar to that used by

this circuit in Fritiofson. See, e.g., Jones v. Gordon, 792 F.2d

821, 829 (9th Cir. 1986); Found. on Economic Trends, 756 F.2d at

154 (D.C. Cir. 1985); Middle Rio Grande Conservancy Dist. v.

Norton, 294 F.3d 1220, 1226 (10th Cir. 2002). In fact, some

30

435 U.S. 519, 549 (1978). Only in “rare circumstances” is remand

for agency reconsideration not the appropriate solution. See Fla.

Power & Light Co. v. Lorion, 470 U.S. 729, 744 (1985) (“. . . the

proper course, except in rare circumstances, is to remand to the

agency for additional investigation or explanation.”). We have

previously addressed this precise question within the NEPA context:

It is also clear that a decision to forego preparation of

an EIS may be unreasonable for at least two distinct

reasons: (1) the evidence before the court demonstrates

that, contrary to the FONSI, the project may have a

significant impact on the human environment, see, e.g.,

Lee, 758 F.2d at 1085, or (2) the agency's review was

flawed in such a manner that it cannot yet be said

whether the project may have a significant impact, see,

e.g., La. Wildlife Fed’n v. York, 761 F.2d 1044, 1053

(5th Cir. 1985); Found. on Economic Trends v. Heckler,

756 F.2d 143, 154 (D.C. Cir. 1985). The appropriate

relief, moreover, depends upon which of these findings

the district court makes. If the court finds that the

project may have a significant impact, the court should

order the agency to prepare an EIS. Lee, 758 F.2d at

1085; Save Our Ten Acres v. Kreger, 472 F.2d 463, 467

(5th Cir. 1973). If the court finds, on the other hand,

that the EA is inadequate in a manner that precludes

making the determination whether the project may have a

significant impact, the court should remand the case to

the agency to correct the deficiencies in its analysis.

See York, 761 F.2d at 1053 (“[we do] not order [an] . .

. EIS because the question of whether the Project may

have significant adverse impacts is still an open one”);

Found. on Economic Trends, 756 F.2d at 154 (“until [the

agency] completes such an evaluation the question whether

the experiment requires an EIS remains an open one”).

Fritiofson, 772 F.2d at 1238-39.12
circuits do not permit the court to ever make the determination

that a project’s effects are significant; instead, those courts

require that the court always remand to the agency. See, e.g.,

Nat’l Audubon Soc’y v. Hoffman, 132 F.3d 7, 18 (2d Cir. 1997). 

31

The district court in this case set out to answer the question

of whether the Corps was arbitrary or capricious “in concluding

that the mitigation measures, upon which the permit was

conditioned, reduced the otherwise significant impacts of the

project to a level of insignificance.” O’Reilly, 2004 WL 1794531 at

*4. In order to reach its affirmative answer to that question, the

court found as follows:

1) that “the Corp’s [sic] failure to employ any analysis

or gather any data with respect to its mitigated FONSI

rendered its decision arbitrary or capricious[]” (Id. at

*5);

2) that “the Corps acted arbitrarily and capriciously in

concluding that the cumulative effects of the project

were sufficiently mitigated” where “the EA [was]

supported by no real analysis or data with respect to

[that issue]” (Id.); and 

3) that “the Corps acted arbitrarily or capriciously in

issuing the permit without considering the effect of the

other two [reasonably foreseeable] phases [of the

development]” (Id. at *6).

We read the district court’s language as describing flaws in the

Corps’s methodology that render its ultimate conclusion unreliable

and that therefore warrants remand to the agency, per the holding

quoted in Fritiofson, above. In other words, the district court

found that the administrative record did not contain sufficient

information to support the agency's conclusion that mitigation
32

rendered the project’s impacts insignificant.

Appellees argue that the district court did, in fact, find

that the project’s impacts were significant, based on its statement

that “[u]ndoubtedly, the environmental impacts associated with [the

project] are significant even when the future phases and cumulative

impacts are not taken into consideration.” Id. at *4. That

statement, however, is taken out of context. As the district court

noted, the Corps does not appear to “[disagree] with Plaintiff’s

contention that there are significant environmental impacts

associated with the proposed . . . project.” O’Reilly, 2004 WL

1794531 at *3. “Rather, the crux of the dispute is whether the

Corps’s FONSI, which was predicated upon the permittee agreeing to

certain mitigation measures, was arbitrary, capricious, or an abuse

of discretion.” Id. The district court focused on the Corps’s

reliance on mitigation, holding that the Corps’s analysis was

insufficient to support its conclusions. At no point did the

district court conclude that there was no possibility that the

project’s effects could become insignificant after mitigation.

Since that possibility has not been entirely foreclosed, the proper

remedy under this court’s precedents is to “remand the case to the

agency to correct the deficiencies in its analysis.” Fritiofson,

772 F.2d at 1239. 

Plaintiffs also argue that the district court’s injunction

should not be read as requiring an EIS, but rather as simply
33

enjoining the permit until the Corps has complied with NEPA. In

doing so, plaintiffs rely on the fact that the bare language of the

separate document final judgment enjoins the § 404 permit, and says

nothing about requiring an EIS. Plaintiffs assert that the language

of the Order serves only to “explain[] why the permit is

illegal[.]” We disagree. The most plausible reading of the

opinion’s concluding paragraph, which explicitly describes the

Corps’s offense as “issuing the § 404 permit without preparing a

full EIS as required by NEPA,” is that the Corps can only become

compliant by completing an EIS. As we have discussed, that reading

runs afoul of our precedent on the issue. For all of the foregoing

reasons, we conclude that the district erred in enjoining the

Corps’ issuance of a § 404 permit until an EIS is prepared.

Therefore, in affirming the district court’s judgment in part, and

reversing it in part, we amend the district court’s injunction

order to enjoin the issuance of the permit pending our remand of

the case to the Corps for further proceedings consistent with this

opinion and the instructions set forth below.

V. Conclusion

Accordingly, we (1) AFFIRM the district court’s determination

that the Corps acted arbitrarily in issuing a FONSI on the basis of

the EA presented for the reasons assigned herein; (2) AMEND the

injunction ordered by the district court to enjoin the Corps from
34

issuing a § 404 permit herein until further orders of the district

court consistent with this opinion; (3) REVERSE the balance of the

district court’s judgment; and (4) REMAND the case to the Corps for

further proceedings including the preparation of a new EA, a new

FONSI, or an EIS, or other appropriate disposition, consistent with

this opinion. 

DISTRICT COURT JUDGMENT AFFIRMED IN PART, AMENDED IN PART, REVERSED

IN PART. CASE REMANDED TO THE UNITED STATES ARMY CORPS OF ENGINEERS

FOR FURTHER PROCEEDINGS AS DIRECTED CONSISTENT WITH THIS OPINION.