Seventh Circuit Draws Roadmap For Section 404 Review Of Major Infrastructure Projects

by Perkins Coie
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A recent opinion from the U.S. Court of Appeals for the Seventh Circuit provides a useful roadmap for U.S. Army Corps of Engineers’ review of major infrastructure projects under Section 404 of the Clean Water Act.  See Hoosier Envt’l Council v. U.S. Army Corps of Eng’rs, 722 F.3d 1053 (7th Cir. 2013).  

The decision, authored by Judge Richard Posner, addresses a highway construction project, but it also marks a significant precedent for other types of projects requiring a Section 404 permit.  Most significantly, the decision affirms that the Corps may rely on the reasoned analysis of other governmental agencies regarding the practicability of less environmentally damaging alternatives.  Additionally, the decision clarifies that the Corps may choose to issue a Section 404 permit for a distinct portion of the project where it would be difficult or unmanageable to issue a single Section 404 permit for the entire project due to its size and complexity.  

Section 404 of the Clean Water Act

Under Section 404 of the Clean Water Act, the Corps has permitting authority over the discharge of dredged and fill material into waters of the United States.  33 U.S.C. § 1344.  When the Corps issues a Section 404 permit, it is required to adhere to regulations adopted by the Environmental Protection Agency, which are known as the Section 404(b)(1) Guidelines.      

Under the Guidelines, the Corps is required to deny a Section 404 permit if there is “a practicable alternative to the proposed discharge which would have less adverse impact on the aquatic ecosystem,” unless that alternative would have “other significant environmental consequences.”  40 C.F.R. § 230.10(a).  The Guidelines define “practicable” to mean “available and capable of being done after taking into consideration cost, existing  technology, and logistics in light of  overall project purposes.”  40 C.F.R. § 230.3(q).   

There is relatively little case law involving challenges to the Corps’ “practicability” determinations.  Prior to the decision in Hoosier Environmental Council, courts had not addressed the extent to which the Corps can rely upon the analyses of other governmental agencies in determining the practicability of alternatives.  Courts also had not addressed the timing and scope of the Corps’ practicability determinations for individual projects approved as part of a tiered, environmental review process. 

In addition to making a practicability determination under the Section 404(b)(1) Guidelines, the Corps also is required to determine whether the proposed action is in “the public interest.”  33 C.F.R. § 320.4(a)(1).  The Corps’ regulations list more than 20 factors that the Corps is required to consider when making a public interest determination.   

The Interstate I-69 Project

At issue in Hoosier Environmental Council was the Corps’ decision to grant a permit under Section 404 of the Clean Water Act for construction of a portion of an extension of Interstate I-69 from Indianapolis, Indiana to Evansville, Indiana.

The Federal Highway Administration (FHWA) and Indiana Department of Transportation (INDOT) used a tiered decision-making process under the National Environmental Policy Act (NEPA) to approve the project.  In the first tier (Tier 1), FHWA and INDOT considered a dozen alternative corridors within a broad 26-county study area.  The Tier 1 process resulted in selection of a corridor that connected Evansville and Indianapolis via a relatively direct route, involving approximately 100 miles of new construction.  The Tier 1 decision divided the selected corridor into six sections, each of which would be subject to a separate Tier 2 Environmental Impact Statement under NEPA and Section 404 permit approval process.  Each Tier 2 EIS involved an analysis of alternative alignments and mitigation measures within a section of the selected corridor.  

Hoosier Environmental Council concerned the Section 404 permit for one of the Tier 2 sections, known as Section 3, which involved construction of a 25-mile span of I-69.  In issuing this permit, the Corps concluded that in light of the analysis of wetland impacts prepared by FHWA in reaching its Tier 1 decision, the Corps could limit its review of potential “practicable” alternatives to alignments within the selected corridor in Section 3.  The Corps then determined that filling those wetlands in Section 3 would not violate the Clean Water Act because no less environmentally damaging alternative was practicable and construction of this section of the highway was not contrary to the public interest.   

Project opponents contended that the Corps was obligated to reconsider—as part of its permit decision for Section 3—alternative corridors that had been considered and rejected by FHWA during Tier 1.  In particular, the plaintiffs argued that the Corps improperly failed to consider an alternative route following existing U.S. 41 and I-70 (the “41/70 alternative”).  They argued that in considering the Section 404 permit for the Section 3 project, the Corps was required to determine the least environmentally damaging practicable alternative among all of the alternative corridors considered in Tier 1, rather than confining its review to the alternative alignments for a specific section within FHWA’s selected corridor.  The project opponents also challenged the Corps’ public interest review for the Section 404 permit, arguing that the Corps did not sufficiently consider each of the public-interest factors listed in its regulations. 

The Corps May Rely on the Other Agencies’ Practicability Analysis

The Seventh Circuit held that it was appropriate for the Corps to consider only alignments for Section 3 within the selected corridor.  While stating that the Corps cannot rubberstamp another agency’s assurances concerning practicability and environmental harm, the court agreed that the Corps could rely on the reasoned determination made by the FHWA in its Tier 1 analysis that the “indirect route”—that is, the U.S. 41/70 alternative—would not be practicable.  The court found that the Corps was able to rely on this determination because the Corps participated in the Tier 1 process, even though the Corps explicitly stated that it had made no decisions itself regarding practicability in Tier 1:  

The selection of the corridor, involving a comparison of alternatives that is likely to illuminate practicability, is a task in the first instance for the transportation agencies, in this case the Federal Highway Administration and the Indiana Department of Transportation . . . .  The highway agencies did that and with the advice they received concluded that upgrading the indirect route was not a practicable alternative—the direct route was the least environmentally damaging corridor alternative that was practicable . . . .

Although the Corps has an independent responsibility to enforce the Clean Water Act and so cannot just rubberstamp another agency’s assurances concerning practicability and environmental harm, it isn’t required to reinvent the wheel.  If another agency has conducted a responsible analysis the Corps can rely on it in making its own decision.

Hoosier Environmental Council, 722 F.3d at 1059, 1061.   

The Corps May Limit its Review to Individual Sections of a Large Project if Analysis of the Entire Project Would be Unmanageable

The court also held that it was appropriate for the Corps to consider each Tier 2 section separately for purposes of Section 404 permitting, rather than conducting a single permitting process that included all six Tier 2 sections together.  The court explained that “[t]here is a difference between ‘segmentation’ in its pejorative sense, and—what is within administrative discretion—breaking a complex investigation into manageable bits.”  Id. at 1060 (citation omitted).  In the context of the I-69 extension project, once FHWA “decided that the aggregate wetlands damage that the new highway would create was modest, the further task of determining the optimal alignment of the highway, and the optimal location and design of ancillary structures, within each section to minimize wetlands damage could best be performed piecemeal.”  Id.  

In addition, the court held that where agency decision-making regarding a project has appropriately been broken down into manageable pieces, the Corps may conduct a Section 404 public interest review of each segment rather than the project as a whole.  The court suggested that this is particularly true in the case of the I-69 extension project because a more comprehensive Environmental Impact Statement review had been prepared by another agency at an earlier stage of decision making, and the Corps had contributed to that process.  

The Corps Has Discretion to Determine the Weight Given to Each Factor in its Public Interest Determination

Finally, the court upheld the Corps’ determination that the project was in the public interest, even though the Corps did not separately consider and document its consideration of each factor listed in the section of its regulations that requires a public interest determination.  See 33 C.F.R. 320.4(a)(1).  The court noted that the Corps’ regulations include a long list of factors to consider as part of a public interest determination, but held that that “[i]t would be unrealistic to think that the Corps could, within a reasonable time and with its limited resources—not to mention the limits of human knowledge—actually analyze each of these factors in depth, attach a weight to each, and by adding up all the weights determine whether to approve a project.  The regulation is overly ambitious, and should perhaps be considered aspirational.”  772 F.3d at 1062.  The court found that the Corps had in fact considered each of the factors listed in its regulations, “so far as it was possible to do so,” and therefore upheld the public interest determination.  

Conclusion: Important Guidelines Established for Infrastructure Projects

The Seventh Circuit’s opinion in Hoosier Environmental Council provides important signposts to help guide the environmental review process for infrastructure projects that require approvals from federal agencies.  Most significantly, the court held that the Corps need not reinvent the wheel when conducting its analysis under Section 404.  Instead, the Corps may accept the analysis of other agencies with specialized expertise regarding the practicability of alternatives.

* Perkins Coie and the authors of this article represent the Indiana Department of Transportation as co-defendant in the lawsuit addressed in this article.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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