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National Audubon Society v. United States Army Corps of Engineers

United States District Court, E.D. North Carolina, Southern Division

September 25, 2019

NATIONAL AUDUBON SOCIETY, Plaintiff,
v.
UNITED STATES ARMY CORPS OF ENGINEERS, COLONEL ROBERT J. CLARK in his official capacity as District Commander of the Wilmington District, and THE TOWN OF OCEAN ISLE BEACH, Defendants.

          ORDER

          LOUISE W. FLANAGAN UNITED STATES DISTRICT JUDGE

         This matter is before the court on the parties’ cross-motions for summary judgment. (DE 47, 55, 57). The issues raised have been fully briefed, and in this posture are ripe for decision. For reasons that follow, summary judgment is granted in favor of defendants.

         STATEMENT OF THE CASE

         Plaintiff is a membership organization that works to conserve and restore habitat for wildlife, with a particular focus on birds and bird habitat. Plaintiff initiated this action August 14, 2017, seeking review of final agency action by defendant United States Army Corps of Engineers (“USACE”) allowing defendant The Town of Ocean Isle Beach (“Ocean Isle”) to construct a type of rock wall known as a “terminal groin” and a beach fillet in that part of Ocean Isle Beach immediately southwest of Shallotte Inlet (“Project”).[1] Particularly, plaintiff seeks judicial review of the record of decision (“ROD”) issued by USACE, granting Ocean Isle a permit allowing discharge of dredged or fill material into navigable waters, pursuant to section 404 of the Clean Water Act, 33 U.S.C. § 1344, et seq. (“CWA”). Plaintiff also challenges the adequacy of an environmental impact statement (“EIS”) prepared by defendant USACE in support of the ROD and permit, pursuant to the National Environmental Policy Act, 42 U.S.C. § 4331, et seq. (“NEPA”). Plaintiff amended its complaint as of right August 28, 2017, joining Ocean Isle as a defendant.

         Defendant USACE is an agency within the United States Department of Defense charged with regulating construction in the waters of the United States, pursuant to the CWA, and defendant Colonel Robert J. Clark (“Clark”) is district commander at defendant USACE’s Wilmington district office (collectively “federal defendants”). Defendant Ocean Isle is an incorporated town located in Brunswick County, North Carolina.

         Plaintiff alleges that the federal defendants approved the Project without proper consideration of environmental consequences. In the first claim for relief, plaintiff alleges that USACE violated NEPA where it failed to evaluate fairly the comparative merits of studied alternatives. In the second claim for relief, plaintiff alleges USACE failed to include certain information in NEPA documents essential to a reasoned choice among alternatives, in violation of regulations promulgated by the Council on Environmental Quality (“CEQ regulations”). In its third claim for relief, plaintiff alleges that USACE failed to evaluate “secondary effects” of the studied alternatives, in violation of the CWA and CEQ regulations. In the fourth claim for relief, plaintiff alleges that USACE selected an alternative other than the Least Environmentally Damaging Practicable Alternative (“LEDPA”), in violation of the CWA. Finally, in the fifth claim for relief, plaintiff alleges USACE failed to “independently evaluate” environmental information submitted by Coastal Planning and Engineering of North Carolina, Inc. (“CPE”), in violation CEQ regulations. In each claim for relief, plaintiff proceeds under the judicial review provisions of the Administrative Procedure Act (“APA”), 5 U.S.C. § 701, et seq.

         Plaintiff moved to complete and supplement the administrative record on February 16, 2018. The court allowed as extra-record evidence certain emails purporting to show a conflict of interest and the lack of independent review by defendant USACE, and denied the motion in remaining part. Nat’l Audubon Soc’y v. United States Army Corps of Engineers, No. 7:17-CV-162-FL, 2018 WL 4760124 (E.D. N.C. Sept. 30, 2018). Thereafter, federal defendants submitted the administrative record to the court. See Nat’l Audubon Soc’y v. United States Army Corps of Engineers, No. 7:18-MC-00010-FL (E.D. N.C. Oct. 16, 2018).[2] The administrative record contains voluminous documents involving the permitting process for the Project, broadly including but not limited to defendant Ocean Isle’s processing agreement with defendant USACE; CPE’s disclosure statement; miscellaneous communications; records from the scoping process; defendant Ocean Isle’s permit application; internal drafts, comments, revisions, and draft EIS (“DEIS”); public notice and comment on DEIS; various agency consultations; internal drafts, comments, revisions, and final EIS (“FEIS”); public notice and comment on FEIS; ROD; and the permit.

         Plaintiff moved for summary judgment on November 21, 2018, relying upon the completed administrative record, as well as declarations from several of its members. Each defendant also moved for summary judgment on January 31, 2019, relying upon the same.

         STATEMENT OF THE UNDISPUTED FACTS

         The undisputed facts may be summarized as follows. Ocean Isle Beach is a coastal barrier island in southwest Brunswick County, North Carolina. (R. 8228). The island spans approximately 5.6 miles west-to-east from Tubbs Inlet to Shallotte Inlet and 0.6 miles north-to-south from the Intracoastal Waterway to the Atlantic Ocean. (R. 8185, 8228). Holden Beach, also a barrier island, lies to the east of Shallotte Inlet, which connects the Atlantic Ocean to the Intracoastal Waterway before joining Shallotte River. (R. 8186). Ocean Isle Beach and Holden Beach provide important habitats for birds and other wildlife, including the piping plover and red knot, which are federally protected shorebirds. (See R. 8253–85).

         In 2001, the United States began protecting Ocean Isle Beach’s shoreline by dredging sand from a “borrow area” in Shallotte Inlet, and placing that sand along approximately three miles of defendant Ocean Isle’s shoreline (“Federal Project”). (R. 8186–87, 8532, 10954). Following initial construction of the Federal Project, the beach was scheduled for renourishment every three years, and in practice renourished in 2006-2007, 2010, and 2014. (R. 8197–98, 8204). The far eastern end of the island was not included in the Federal Project because of the predicted high rates of loss of beach fill due to erosion. (R. 8196). As predicted, severe erosion plagued the eastern end of the island. (See R. 8198). Despite efforts to stop the shoreline’s advance, including use of sandbag revetments beginning in 2005 and additional beach nourishment in 2007, erosion destroyed several houses, portions of streets, and certain utilities. (R. 8197–99, 8204).

         In 2011, the North Carolina General Assembly passed a law allowing construction of terminal groins in North Carolina. (R. 342–45). Following the change in state law, defendant Ocean Isle commissioned CPE to prepare a feasibility study to determine whether a terminal groin would resolve defendant Ocean Isle’s erosion problem along its eastern shoreline. (R. 146–83). CPE preliminarily determined that a terminal groin feasibly would reduce erosion rates and periodic nourishment events, and avert further damage at the eastern end of the island. (R. 181–82).

         In May 2012, defendant Ocean Isle asked defendant USACE to formally initiate the environmental review and approval process for the Project, and after interviewing several environmental consulting firms recommended CPE as the contractor to prepare the EIS for the Project. (R. 40). After reviewing CPE’s qualifications, defendant USACE selected CPE to prepare the EIS. (R. 60–61). CPE executed a disclosure statement representing it had “not entered into and, during the lifetime of the EIS preparation, will not enter into any agreement affording us or any Subcontractors that we may hire with any direct or indirect financial interest in the planning, design, construction or operation” of t he Project. (R. 91). Shortly thereafter, defendant Ocean Isle entered into a processing agreement with defendant USACE. (R. 105–11). On September 15, 2014, defendant Ocean Isle, with CPE acting as its agent, filed a permit application with defendant USACE seeking permission to construct a terminal groin and place approximately 264, 000 cubic yards of sand along the beach. (R. 588–615).

         Environmental review of the Project took place over five years following defendant Ocean Isle’s initial contact with defendant USACE. On January 23, 2015, defendant USACE issued its DEIS, together with public notice seeking comments on the DEIS and proposed project. (R. 3920–33, 3960–4903). Defendant USACE held a public hearing on the proposed project and the DEIS on March 3, 2015. (R. 4926–5015). After reviewing public comment on the DEIS, defendant USACE responded to the comments and issued public notice of its FEIS on April 29, 2016, again requesting public comment. (R. 8161–68, 8170–9522).

         The purpose of defendant Ocean Isle’s project was to reduce erosion along its eastern shoreline, maintain defendant Ocean Isle’s tax base, maintain recreational resources, and balance the needs of the human environment with protecting natural resources. (R. 8196). The FEIS reviewed five project alternatives. Alternative one continued existing beach management practices. (R. 8203–08). Alternative two continued the Federal Project, but removed sand bag barricades where erosion occurs. (R. 8209). Alternative three continued the Federal Project, along with non-federally-sponsored beach nourishment activities along the eastern portion of Ocean Isle. (R. 8210–12). Alternative four provided the same beach fill as alternative three, along with targeted dredging to realign the main channel in the Shallotte Inlet. (R. 8213–14). Finally, alternative five called for constructing a 750-foot terminal groin at the eastern end of the beach and add beach fill to the west of the groin. (R. 8215–16). Alternative five is depicted below:

         (Image Omitted)

         (R. 8226).

         To compare alternatives, the FEIS relied upon light detection and ranging (“LiDAR”) surveys, [3] beach profile surveys, the Delft3D model, [4] and maximum periodic nourishment volume per operation. (R. 8202–03). The FEIS included discussion of each alternative’s economic costs, as well as each alternative’s potential environmental impacts. (See R. 8202–8374). Pursuant to the Endangered Species Act (“ESA”), defendant USACE also consulted the United States Fish and Wildlife Service (“USFWS”) and National Marine Fisheries Service (“NMFS”), both of which determined the terminal groin did not jeopardize the continued existence of threatened or endangered species or result in the destruction or adverse modification of designated critical habitat. (R. 6216, 6446).

         On February 27, 2017, defendant USACE issued its ROD, concluding that the terminal groin was the LEDPA. (R. 10954–55, 10970, 10978–79). In reaching its decision, defendant USACE determined that alternatives one and two were not practicable because they would not meet the Project purpose of mitigating chronic erosion on the eastern shoreline of Ocean Isle. (R. 10971–74). Alternatives three and four were determined to be practicable, but they were not the least environmentally damaging alternative because they would require more frequent and extensive beach nourishment than the terminal groin, jeopardizing the recovery of species harmed during those nourishment operations. (R. 10975, 10977). Alternative four also would disturb intertidal habitat as a result of channel realignment. (R. 10977). In the ROD, defendant USACE responded to comments on the FEIS, justifying its decision. (See R. 11004–50). Thereafter, defendant USACE issued defendant Ocean Isle a permit under the CWA. (R. 11520–70).

         Additional facts pertinent to the instant motions will be discussed below.

         DISCUSSION

         A. Standards of Review

         1. Summary Judgment

         Summary judgment is appropriate where “the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). On cross-motions for summary judgment, the court “consider[s] each motion separately on its own merits to determine whether [any] of the parties deserves judgment as a matter of law.” Defs. of Wildlife v. N. Carolina Dep’t of Transp., 762 F.3d 374, 392 (4th Cir. 2014). The party seeking summary judgment “bears the initial responsibility of informing the district court of the basis for its motion, and identifying those portions of [the record] which it believes demonstrate the absence of a genuine issue of material fact.” Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986).

         Once the moving party has met its burden, the non-moving party must then “come forward with specific facts showing that there is a genuine issue for trial.” Matsushita Elec. Indus. Co. Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586–87 (1986) (internal quotation omitted). Only disputes between the parties over facts that might affect the outcome of the case properly preclude entry of summary judgment. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986) (holding that a factual dispute is “material” only if it might affect the outcome of the suit and “genuine” only if there is sufficient evidence for a reasonable jury to return a verdict for the non-moving party).

         “[A]t the summary judgment stage the [court’s] function is not [itself] to weigh the evidence and determine the truth of the matter but to determine whether there is a genuine issue for trial.” Id. at 249. In determining whether there is a genuine issue for trial, “evidence of the non-movant is to be believed, and all justifiable inferences are to be drawn in [non-movant’s] favor.” Id. at 255; see United States v. Diebold, Inc., 369 U.S. 654, 655 (1962) (“On summary judgment the inferences to be drawn from the underlying facts contained in [affidavits, attached exhibits, and depositions] must be viewed in the light most favorable to the party opposing the motion.”).

         Nevertheless, “permissible inferences must still be within the range of reasonable probability, . . . and it is the duty of the court to withdraw the case from the [factfinder] when the necessary inference is so tenuous that it rests merely upon speculation and conjecture.” Lovelace v. Sherwin-Williams Co., 681 F.2d 230, 241 (4th Cir. 1982) (quotations omitted). Thus, judgment as a matter of law is warranted where “the verdict in favor of the non-moving party would necessarily be based on speculation and conjecture.” Myrick v. Prime Ins. Syndicate, Inc., 395 F.3d 485, 489 (4th Cir. 2005). By contrast, when “the evidence as a whole is susceptible of more than one reasonable inference, a [triable] issue is created, ” and judgment as a matter of law should be denied. Id. at 489-90.

         2. APA

         “A person . . . adversely affected by agency action within the meaning of a relevant statute[, ]” 5 U.S.C. § 702, may bring an action pursuant to the judicial review provisions of the APA, id. § 701, et seq., to challenge “final agency action[.]” Id. § 704. “The reviewing court shall . . . hold unlawful and set aside any agency action, findings, and conclusions found to be . . . arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.” 5 U.S.C. § 706(2)(A). The scope of “arbitrary and capricious” review is narrow, but the court must ensure that “the agency examine[s] the relevant data and articulate[s] a satisfactory explanation for its action including a rational connection between the facts found and the choice made. ” Motor Vehicle Mfrs. Ass’n of U.S., Inc. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983); see N.C. Wildlife Fed’n v. N.C. Dep’t of Transp., 677 F.3d 596, 601 (4th Cir. 2012) (The court “must ensure that the agency has examined the relevant data and articulated a satisfactory explanation for its action, and must not reduce itself to a rubber-stamp of agency action.”) (internal citations and quotation marks omitted). “Both NEPA and CWA claims are subject to judicial review under the APA.” Ohio Valley Envtl. Coal. v. Aracoma Coal Co., 556 F.3d 177, 189 (4th Cir. 2009).

         B. NEPA

         Plaintiff’s first, second, and fifth claims arise under NEPA. NEPA “establishes a national policy to encourage productive and enjoyable harmony” between humans and their environment, “and 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.” Defs. of Wildlife, 762 F.3d at 393. For every major federal action significantly affecting the quality of the human environment, the agency involved must prepare an EIS “that discloses and evaluates, among other things, the environmental impact of the proposed action, unavoidable adverse effects of the proposed action, and alternatives to the proposed action.” Id. at 393–94; 42 U.S.C. § 4332(C); see 40 C.F.R. § 1508.18.

         NEPA mandates “a set of ‘action-forcing’ procedures that require that agencies take a ‘hard look’ at environmental consequences, . . . and that provide for broad dissemination of relevant environmental information.” Robertson v. Methow Valley Citizens Council, 490 U.S. 332, 350 (1989) (internal quotations and citations omitted). “What constitutes a ‘hard look’ cannot be outlined with rule-like precision. At the least, however, it encompasses a thorough investigation into the environmental impacts of an agency’s action and a candid acknowledgment of the risks that those impacts entail.” Nat’l Audubon Soc’y v. Dep’t of Navy, 422 F.3d 174, 185 (4th Cir. 2005). “[A] court reviewing an EIS for NEPA compliance must take a holistic view of what the agency has done to assess environmental impact. Courts may not ‘flyspeck’ an agency’s environmental analysis, looking for any deficiency, no matter how minor.” Id. at 186. “If the agency has followed the proper procedures, and if there is a rational basis for its decision, [the court] will not disturb its judgment.” Hodges v. Abraham, 300 F.3d 432, 445 (4th Cir. 2002).

         1. Defendant USACE’s Oversight of EIS Development

         In preparing an EIS, “[t]he agency shall independently evaluate the information submitted and shall be responsible for its accuracy.” 40 C.F.R. § 1506.5(a). If the agency elects to hire a third party contractor to create the EIS, the regulations impose two requirements. First, the contractor must execute a disclosure statement “specifying that they have no financial or other interest in the outcome of the project.” Id. § 1506.5(c). Second, the agency “shall furnish guidance and participate in the preparation and shall independently evaluate the statement prior to its approval and take responsibility for its scope and contents.” Id. § 1506.5(c).

         a. CPE’s Alleged Conflict of Interest

         The first issue presented is whether CPE had a conflict of interest that prevented it from serving as an unbiased third party contractor.

         Defining “financial or other interest in the outcome of the project” is an issue of first impression for this court. The term broadly covers “any known benefits other than general enhancement of professional reputation. This includes any financial benefit such as a promise of future construction or design work on the project.” Forty Most Asked Questions Concerning CEQ’s National Environmental Policy Act Regulations (“Forty Questions”), 46 Fed.Reg. 18, 026, 18, 031 (Council on Envtl. Quality 1981). Examples of such benefits include “an agreement to perform the construction, ” being “the owner of the construction site, ” or a contract for EIS preparation that contains “incentive clauses or guarantees of any future work on the project.” Guidance Regarding NEPA Regulations, 48 Fed.Reg. 34, 263, 34, 266 (Council on Envtl. Quality 1983).[5]

         The United States Court of Appeals for the Fourth Circuit has not interpreted the scope of § 1506.5(c).[6] However, other circuit courts emphasize the importance of a future benefit arising from approval of the project. The United States Court of Appeals for the Tenth Circuit found a contract for preliminary design work between an applicant and the contractor insufficient to create a conflict of interest where final design work had been omitted from the contract in effect at the time the contractor was employed to develop an EIS. Associations Working for Aurora’s Residential Env’t v. Colorado Dep’t of Transp. (“AWARE”), 153 F.3d 1122, 1128 (10th Cir. 1998). Similarly, the United States Court of Appeals for the Ninth Circuit rejected a claim that a contractor preparing the EIS and also helping an applicant obtain permit approvals created a conflict of interest. Cachil Dehe Band of Wintun Indians of Colusa Indian Cmty. v. Zinke, 889 F.3d 584, 607–08 (9th Cir. 2018).

         The Ninth and Tenth Circuit’s reasoning is persuasive. Section 1506.5(c) addresses conflicts arising from interests in “the outcome of the project.” The CEQ regulations caution that “[w]hen a consulting firm has been involved in developing initial data and plans for the project, but does not have any financial or other interest in the outcome of the decision, it need not be disqualified from preparing the EIS.” Forty Questions, 46 Fed. Reg. at 18, 031. “Further, § 1506.5(c) does not prevent an applicant from submitting information to an agency.” Guidance Regarding NEPA Regulations, 48 Fed. Reg. at 34, 266.

         On July 2, 2012, after reviewing defendant Ocean Isle’s proposal to use CPE as a contractor for the EIS, (see R. 40–44), defendant USACE chose to use CPE, conditional on execution of a disclosure statement and completion of the processing agreement. (R. 93). CPE executed its § 1506.5(c) disclosure statement on July 13, 2012, representing that it had “not entered into and, during the lifetime of the EIS preparation, will not enter into any agreement affording us . . . with any direct or inclirect financial interest in the planning, design, construction or operation of the [project], except with regard to the preparation of the EIS.” (R. 91). CPE also agreed to “make a full disclosure of the scope and extent of the firm’s prior involvement” with the Project in the DEIS. (R. 91). Subsequently, defendants Ocean Isle and USACE completed the processing agreement on August 21, 2012, in which defendant Ocean Isle also represented CPE did not have a conflict of interest. (R. 105–11).

         The record does not disclose that CPE had an interest in the Project outcome. Plaintiff makes much of the fact that CPE, acting as agent for defendant Ocean Isle, submitted the application for a permit to build the terminal groin. (R. 588–615). Relying on emails from an attorney for defendant USACE, (see R. 72, 74), plaintiff asserts this is a conflict of interest. As noted above, the court rejects this position as an incorrect interpretation of the CEQ regulations. The mere fact that CPE filled out a permit application or did preliminary design work on behalf of defendant Ocean Isle does not create an interest in the outcome of the Project unless accompanied with a promise of future work.[7] See Colusa Indian Cmty., 889 F.3d at 607–08; AWARE, 153 F.3d at 1128.

         The record is awash with examples showing no such promise of future work from defendant Ocean Isle existed before the ROD issued. For example, Brad Rosov (“Rosov”), CPE’s primary contact with defendant USACE, commented that “I don’t think that we will have permits in hand in time to go to bid this fall.” (R. 6201 (emphasis added)). In another instance, Rosov listed several items defendant Ocean Isle needed to complete before constructing the terminal groin and indicated that, “due to the 3rd party contract, we are prohibited from assisting the Town with these tasks until the ROD is issued.” (R. 10934). Even CPE’s correspondence with defendant Ocean Isle following issue of the ROD shows that CPE and defendant Ocean Isle had not developed a “Scope of Work and formalized cost associated with the ‘During Construction’ services for the terminal groin project as well as the ‘Year 1 Post-Construction’ services.” (R. 11573).

         Plaintiff asserts that the court already held CPE had a conflict of interest when it allowed certain emails from CPE to defendant Ocean Isle to be considered as extra record evidence. See Nat’l Audubon Soc’y, 2018 WL 4760124 at *5. Plaintiff misinterprets the court’s decision. The court merely held that “any failure to evaluate CPE’s work product in light of CPE’s close association with the permit applicant, namely, defendant Ocean Isle, constitutes the type of ‘bad faith or improper behavior’ that justifies consideration of extra-record evidence.” Nat’l Audubon Soc’y, 2018 WL 4760124 at *5. However, at the time the court issued its prior order, it had not determined what constitutes a conflict ...


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