Opinion ID: 456159
Heading Depth: 1
Heading Rank: 8

Heading: doe's failure to prepare an environmental assessment or

Text: ENVIRONMENTAL IMPACT STATEMENT 356 The National Environmental Policy Act of 1969 (NEPA) provides that 357 The Congress authorizes and directs that, to the fullest extent possible ... all agencies of the Federal Government shall ... include in every recommendation or report on proposals for legislation and other major federal actions significantly affecting the quality of the human environment, a detailed statement by the responsible official on 358 (i) the environmental impact of the proposed action, [and] 359 (ii) any adverse environmental effects which cannot be avoided should the proposal be implemented, [and] 360 .... 361 (v) any irreversible and irretrievable commitments of resources which would be involved in the proposed action should it be implemented. 362 NEPA Sec. 102(2)(C), 42 U.S.C. Sec. 4332(2)(C). 363 The detailed statement of section 102(2)(C), generally called an environmental impact statement (EIS), is thus required only for legislative proposals and other major federal actions significantly affecting the quality of the human environment. When an agency determines that contemplated major Federal action does not fall within this category, regulations promulgated by the Council on Environmental Quality generally require the agency to explain its finding of no significant impact in a concise public document called an environmental assessment (EA). 40 C.F.R. Secs. 1501.4(a)-(b), 1508.9 (1984). The environmental assessment must [b]riefly provide sufficient evidence and analysis for determining whether to prepare an environmental impact statement or a finding of no significant impact. Id. Sec. 1508.9(a)(1); see Andrus v. Sierra Club, 442 U.S. 347, 358, 99 S.Ct. 2335, 2341, 60 L.Ed.2d 943 (1979) (CEQ interpretations of NEPA are entitled to substantial deference); Foundation on Economic Trends v. Heckler, 756 F.2d 143, 146-47 (D.C.Cir.1985). We believe that an 'assessment' statement must provide convincing reasons why a ... project with 'arguably' potentially significant environmental impact does not require a detailed impact statement. Maryland-National Capital Park & Planning Comm'n v. United States Postal Office, 487 F.2d 1029, 1040 (D.C.Cir.1973). 364 In reviewing an agency's decision not to prepare an environmental impact statement, this court makes four related inquiries. We ask (1) whether the agency took a 'hard look' at the problem; (2) whether the agency identified the relevant areas of environmental concern; (3) as to the problems studied and identified, whether the agency made a convincing case that the impact was insignificant; and (4) if there was an impact of true significance, whether the agency convincingly established that changes in the project sufficiently reduced it to a minimum. Sierra Club v. Peterson, 717 F.2d 1409, 1413 (D.C.Cir.1983); see also Kleppe v. Sierra Club, 427 U.S. 390, 410 n. 21, 96 S.Ct. 2718, 2730 n. 21, 49 L.Ed.2d 576 (1976); Potomac Alliance v. United States Nuclear Regulatory Comm'n, 682 F.2d 1030, 1035 (D.C.Cir.1982) (Bazelon, J., concurring); Scientists' Institute for Pub. Information, Inc. v. Atomic Energy Comm'n, 481 F.2d 1079, 1092 (D.C.Cir.1973). 365 In June of 1980, DOE prepared and published a lengthy environmental assessment of mandatory appliance standards at the levels proposed in the June 1980 notice. See 1980 Environmental Assessment, J.A. at 225; see also 45 Fed.Reg. 43,976, 44,086 (1980) (summary). DOE evaluated the effect of mandatory standards on air quality, see 1980 Environmental Assessment Sec. 3.5.1, J.A. at 267, water quality, see id. Sec. 3.5.3, J.A. at 281, solid waste disposal, see id. Sec. 3.5.4, J.A. at 283, and various socioeconomic factors affecting consumers, see id. Sec. 3.6.1, J.A. at 285, manufacturers, see id. Sec. 3.6.2, J.A. at 289, and the nation, see id. Sec. 3.6.3. The assessment reported that 366 [n]o significant adverse environmental or socioeconomic impacts have been found to result from instituting the [standards] as proposed. On the contrary, the effects of the Program should be primarily positive. In addition, most alternatives to the Program appear unlikely to achieve equivalent savings of energy and are therefore unlikely to significantly affect the nation's environmental quality or to benefit the environment to the same degree as the proposed action. 367 Id. at S-11, J.A. at 241. The assessment concluded that the promulgation of mandatory standards would not be a major federal action affecting the environment, see id.; see also 45 Fed.Reg. 43,976, 44,027 (1980). DOE therefore did not take the further step of preparing a full-scale EIS. 368 In the April 1982 proposal, DOE discussed three consequences of its new proposal to issue no-standard standards that might be relevant to NEPA. Those consequences were: (1) the failure to establish energy efficiency standards in states that did not have any state-mandated standards in effect; (2) possible federal exemption of state standards from the preemptive effect of DOE's proposed rules; and (3) possible federal preemption of state standards in the event states failed to apply for exemptions, or DOE denied exemption applications from states. See 47 Fed.Reg. 14,424, 14,457 (1982). DOE declared that [t]he first element clearly would not be environmentally significant since it is simply a continuation of the status quo. Id. 70 As to the second element, DOE decided to review the environmental consequences of granted exemptions from federal preemptions on a case-by-case basis. DOE expressed its belief that the third element would not have significant environmental impacts, a determination it purportedly based on the 1980 Environmental Assessment. Id. 369 DOE received critical comments on its refusal to prepare an Environmental Impact Statement or even an Environmental Assessment. The California Energy Commission accurately noted that the 1980 Environmental Assessment did not evaluate the impact of rules prescribing no mandatory standards. See Comment No. 2097 at 10, J.A. at 2571; see also 1980 Environmental Assessment Sec. 2.1, J.A. at 249. In the Commission's view, the 1980 Environmental Assessment was concerned with a completely different set of proposals, and did not support DOE's new position. 370 In its August 1983 notice, DOE further considered the environmental impact of preempting state standards. DOE first constructed a worse-case scenario, under which it assumed that all states had mandatory appliance efficiency standards as stringent as California's, which in fact were the most stringent state standards in the nation. See 48 Fed.Reg. 39,376, 39,408 (1983). DOE determined that even if all these hypothetical state standards were preempted, and even under further assumptions that unrealistically increased the adverse effects of preemption, the total effect of preemption would be an increase in energy use of .95 Quads per year. This increase in energy use was lower than the decrease in use of 1.6 Quads per year that DOE found environmentally insignificant in the 1980 Environmental Assessment. DOE concluded from that comparison that even under highly unfavorable assumptions, the preemption of state standards would have no significant environmental impact. Id. DOE also attempted a realistic appraisal of the preemptive consequences of its final rules, and emerged with much smaller possible increases in energy consumption. These, too, were viewed as insignificant, evidently because the increased annual consumption DOE predicted was a far lower figure than the decreased consumption analyzed in the 1980 Environmental Assessment. Finally, DOE expressed its disbelief that a no-standard standard determination would result in any increase in energy usage compared to the base case. Id. 371 We first consider DOE's view that increases in energy consumption are environmentally significant only if a decrease in consumption of the same amount would be environmentally significant. Only on that premise does the 1980 Environmental Assessment support DOE's present position, since the 1980 document was wholly concerned with evaluating the largely beneficial effects of proposed mandatory standards. DOE is correct in pointing out that both beneficial and adverse effects on the environment can be significant within the meaning of NEPA, and thus require an EIS. But that general principle does not solve DOE's problem, which is to show that increased energy consumption would have, Quad for Quad, precisely the same degree of impact on the environment as decreased consumption. That proposition is far from self-evidently true. It might be that relatively slight increases in consumption would have quite dramatic environmental effects, even if a corresponding decrease had very moderate effects. As the 1980 Environmental Assessment itself demonstrates, calculating the effect on the environment of shifting energy consumption is a most complex matter: increased energy consumption might, for example, conceivably require new generating capacity, with possible accompanying changes in air quality, water quality, and the character of the environment at the sites of new construction. DOE's notices set forth no arguments or expert judgments in support of its view that increases and decreases in energy consumption of the same amount have equal impact. We are simply told without elaboration that this is so. That bald assertion does not amount to convincing reasons why potential impacts are truly insignificant, Maryland-National Capital Park & Planning Comm'n v. United States Post Office, 487 F.2d 1029, 1049 (D.C.Cir.1973), and we accordingly cannot uphold the agency's refusal to prepare an EA on that theory. 372 DOE appeared to offer another rationale for its decision, although it gave that rationale far less prominence. DOE concluded that for the reasons explained earlier, its no-standard determinations would not increase consumption at all. DOE apparently had two reasons in mind: (1) market forces would, even if state standards were preempted, continue to encourage the production and sale of efficient appliances; and (2) a procedure was available through which states could seek exemption from federal preemption. We think, however, that DOE's mere statement of these arguments is not enough. DOE's own realistic scenario predicted that some increased consumption would result from preemption of existing state standards. That finding casts into doubt DOE's apparent belief that market forces would prevent the preemption of state standards from having any impact at all. DOE's analysis of federal standards does not support its conclusion that state standards did not increase appliance efficiency. The analysis of federal standards considered levels unrelated to state-mandated levels, and in any event concluded only that each federal standard for a product type, considered alone, would not save significant energy under a very high definition of significance. DOE's general confidence in the efficacy of the market cannot sustain an unelaborated finding, if DOE indeed intended to make one, that state standards had not resulted in any increased appliance efficiency. We note, too, that California and other states vigorously contended that regulation had been effective in promoting greater efficiency, and that comments of manufacturers supported that view. 373 Similarly, DOE does not tell us why the availability of the exemption procedure could be relied upon to prevent significant impact. DOE did not, so far as the record reveals, conduct any substantial investigation into the likelihood that DOE would in fact grant exemptions for state standards at levels current when the final rules were promulgated. Thus, even assuming that every state with mandatory standards would seek exemption--an assumption that, as events actually unfolded, proved mistaken 71 --DOE did not even tentatively determine the likelihood that those standards would survive its own scrutiny. We recognize that DOE could not make predictions with much certainty about applications it had not yet received. But DOE obviously acquired substantial information about state standards during the course of this rulemaking, and DOE had well-developed general views about the effect of mandatory efficiency standards on the market. DOE would have drawn on exactly that expertise in making decisions on state applications. We think, therefore, that DOE should have made a more thorough effort to explain its judgment that state applications would be granted. In particular, DOE should have supported that judgment by discussing the efficiency levels actually mandated by state standards in effect and DOE's interpretation of the statutory criteria for granting exemptions. After all, DOE affirmatively argued that even if preempting state standards might otherwise significantly affect the environment, the exemption procedure diminished the consequences of preemption enough so that an EA or EIS was unnecessary. Having relied on a particular prediction to defeat the application of NEPA to a major federal action, DOE was required to produce convincing reasons in support of the prediction. Instead, however, DOE produced almost no reasons at all. 374 We have rejected as arbitrary and capricious both grounds on which DOE defended its refusal to undertake the first and least burdensome step towards compliance with section 102(2)(C) of NEPA--the preparation of an Environmental Assessment. On this ground alone we would be constrained to vacate the final rules under review and remand for reconsideration in accordance with NEPA.