Categor(ies): NEPA

Suits Brought Under NEPA Must Allege Final Agency Action

Karst Environmental Education and Protection, Inc., et al. v. Environmental Protection Agency et al.
No. 06-5059 (D.C. Cir. Jan. 30, 2007)

Background

In 1998, the City of Bowling Green and Warren County, Kentucky, decided to build a 4,000 to 6,000 acre industrial park and transportation complex six miles south of Mammoth Cave National Park. The complex, to be called the Kentucky Trimodal Transpark (Transpark), was to be built on a karst plain, an area that is characterized by sinkholes, caves, and underground streams and rivers. Adjacent to the site is an area listed in the National Register of Historic Places and other Reconstruction-era African-American communities that have applied for historical status.

The county and city created the Inter-Modal Transportation Authority (ITA), which was authorized, among other things, to apply for and receive grants from federal agencies. In 2004, the ITA began construction of the first phase of the Transpark. During the next few years, the Federal Highway Administration (FHA) allocated $8.75 million to ITA for highway construction and expansion and then began the reviews required by the national Environmental Policy Act (NEPA) and the National Historic Preservation Act (NHPA). NEPA requires federal agencies, where there are “major Federal actions significantly affecting the quality of the human environment,” to prepare an environmental impact statement (EIS) which assesses the environmental impact of the proposed project and identifies alternatives. 42 U.S.C. § 4332(C). NHPA requires that, prior to funding or licensing a federal or federally assisted undertaking, federal agencies must (1) “take into account the effect of the undertaking on any district, site, building, structure, or object that is included in or eligible for inclusion in the National Register,” and (2) “afford the Advisory Council on Historic Preservation . . . a reasonable opportunity to comment with regard to such undertaking.” 16 U.S.C. § 470f.

Federal agencies other than the FHA also became involved. The Federal Aviation Administration had to approve the closing of the existing airport and study the feasibility of replacing it with a new one. Congress approved $3.75 million for the U.S. Environmental Protection Agency (EPA) to spend on water and sewer infrastructure and $1.75 million for the Department of Housing and Urban Development (HUD) to spend on a training center. The Tennessee Valley Authority, pursuant to a “Valley Advantage” contract, awarded $500,000 to Metalforming for the installation of electrical equipment.

The appellants, collectively referred to as Karst, filed a complaint alleging that EPA, HUD, and TVA violated both NEPA and the NHPA by failing to conduct the required reviews. The district court granted EPA and HUD’s joint motion to dismiss for lack of subject matter jurisdiction under Federal Rule of Civil Procedure 12(b)(1), finding that HUD had taken no final agency action and that a request for EPA advice on the Transpark did not amount to a major federal action.

Holding

After finding that Karst had Article III standing to bring the lawsuit, the court turned to the merits of the action. In Public Citizen v. U.S. Trade Representative, 5 F.3d 549 (D.C. Cir. 1993), the court held that, because NEPA creates no private right of action, challenges to agency compliance with the statute must be brought under the Administrative Procedure Act (APA), 5 U.S.C. § 551 et seq. That statute requires “final agency action for which there is no other adequate remedy in a court.” Id. § 704. More recently, the U.S. Court of Appeals for the Ninth Circuit reached the same conclusion with respect to the NHPA. See San Carlos Apache Tribe v. United States, 417 F. 3d 1091 (2005). In this case, the court expressed agreement with the Ninth Circuit’s conclusion.

Karst did not argue that either EPA or HUD had engaged in final agency action, but, instead, argued that the federal government was so intrinsically involved in the funding, permitting, and construction of the Transpark that, in effect, the project had been federalized. Karst cited two cases to support its claim: Maryland Conservation Council v. Gilchrist, 808 F.2d 1039 (4th Cir. 1986), and Macht v. Skinner, 916 F.2d 13 (D.C. Cir. 1990).

Gilchrist involved a challenge to a plan to construct a highway, part of which would cross a state park and require the approval of several federal agencies, including the Interior Department, which had substantially funded the park. Under these circumstances, the court said, a non-federal project is “considered a federal action” because “it cannot begin or continue without prior approval of a federal agency.”808 F.2d at 1042. In Macht, this court approved the reasoning in Gilchrist, but limited the federalization theory to situations of “substantial” federal involvement. In that case, the court found insufficient evidence of federal involvement because the federal agencies had discretion over “only a negligible portion of the entire project,” in contrast to Gilchrist, “where several agencies had discretion over a substantial part of the highway project.” 916 F.2d at 19.

The court concluded that Karst’s federalization argument had two flaws. First, the statement in Macht approving the rationale behind the Gilchrist decision is dictum. There is no binding precedent in this circuit adopting the federalization theory. Second, when Gilchrist and Macht were decided, it had not yet been decided that there was no private cause of action under NEPA. Once it was determined that a NEPA case must be brought pursuant to the APA, there must be an allegation that there has been final agency action, Karst has not alleged that either EPA or HUD engaged in final agency action. Therefore, the court affirmed the district court’s dismissal as to those two agencies.

The remaining defendant, TVA, did undertake final agency action by making the grant to Metalforming. However, this grant was made months before Karst filed its complaint. The district court found, and the appellate court agreed, that the claim against TVA was moot when it was filed. Karst argued, however, that TVA could still impose measures on Metalforming to mitigate any environmental harm caused by the electrical equipment paid for by the agency’s grant. However, Karst’s complaint did not allege that the TVA had such authority; in fact, the complaint doesn’t mention the Valley Advantage contract. This issue was first raised in Karst’s reply brief.

The appellate court noted that the district court should have dismissed the claim against EPA and HUD under Rule 12(b)(6) — failure to state a claim rather than under Rule 12(b)(1) — lack of subject matter jurisdiction. Nonetheless, it is appropriate to affirm the dismissal if dismissal is otherwise appropriate.

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Published by the National Association of Attorneys General with the cooperation and support of the Office of Enforcement and Compliance Assurance of the U.S. Environmental Protection Agency.

Paula Cotter
Chief Counsel for Environment