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FRIENDS OF THE EARTH v. U.S. ARMY CORPS OF ENGINE.

August 10, 2000

FRIENDS OF THE EARTH, INC., ET AL., PLAINTIFFS,
V.
UNITED STATES ARMY CORPS OF ENGINEERS, DEFENDANT. FRIENDS OF THE EARTH, INC., ET AL., PLAINTIFFS, V. UNITED STATES ARMY CORPS OF ENGINEERS, DEFENDANT. FRIENDS OF THE EARTH, INC., ET AL., PLAINTIFFS, V. UNITED STATES OF ARMY CORPS OF ENGINEERS, DEFENDANT.



The opinion of the court was delivered by: Paul L. Friedman, District Judge.

OPINION

When it passed the National Environmental Policy Act of 1969 ("NEPA"), Congress declared a "broad national commitment to protecting and promoting environmental quality." Robertson v. Methow Valley Citizens Council, 490 U.S. 332, 348, 109 S.Ct. 1835, 104 L.Ed.2d 351 (1989). "The sweeping policy goals announced in § 101 of NEPA are . . . realized through a set of `action-forcing' procedures that require that agencies take a `hard look at environmental consequences.'" Id. at 350, 109 S.Ct. 1835 (quoting Kleppe v. Sierra Club, 427 U.S. 390, 410 n. 21, 96 S.Ct. 2718, 49 L.Ed.2d 576 (1976)). In particular, NEPA requires a federal agency to assess the potential environmental impacts of any "major federal action" prior to going forward. See 42 U.S.C. § 4332. The "twin aims" of this requirement are to "place upon an agency the obligation to consider every significant aspect of the environmental impact of a proposed action" and to "inform the public that [the agency] has indeed considered environmental concerns in its decisionmaking process." Baltimore Gas & Electric Co. v. Natural Resources Defense Council, 462 U.S. 87, 97, 103 S.Ct. 2246, 76 L.Ed.2d 437 (1983) (citations omitted).

Plaintiffs bring these lawsuits because they claim that defendant, the United States Army Corps of Engineers (the "Corps"), did not further the twin aims of NEPA when it determined that NEPA did not require an environmental impact statement ("EIS") prior to the permitting of three casinos on the Mississippi coast. In particular, plaintiffs maintain that the Corps failed to consider a range of direct environmental impacts, indirect impacts, and cumulative impacts of the projects when it found that the three casino projects would have no significant impacts on the environment that would require evaluation through an EIS. After careful consideration of the parties' cross-motions for summary judgment, the submissions of defendant-intervenors, the administrative records and the arguments of counsel at the May 19, 2000 motions hearing in these matters, the Court concludes that the Corps failed to consider adequately a number of the potential impacts of the three projects and that an EIS was required for all three projects.*fn1 The Court therefore will grant plaintiffs' motion for summary judgment.

I. BACKGROUND

By virtue of a strange quirk of Mississippi law, gambling establishments in Mississippi may only be built on floating vessels. See MISS.CODE ANN. § 97-33-1(a); MISS.CODE ANN. § 27-109-1. As a consequence, over twenty casinos have been permitted, and at least fourteen have been built, on large floating barges along the Mississippi coast in the past decade. The most recent projects to move forward are the three casinos at issue in these cases: the Casino World casino; the Circus Circus casino; and the Royal D'Iberville casino. The Casino World and Circus Circus projects are proposed to be built on the relatively undeveloped coast of the St. Louis Bay, while the Royal D'Iberville project is proposed for the more developed Bay of Biloxi.

Because of their location, all three proposed casinos would have an impact on navigable waters. The casino developers therefore were required to apply to the Corps for a permit under Section 404 of the Clean Water Act, 33 U.S.C. § 1344, and Section 10 of the Rivers and Harbors Act. See 33 U.S.C. § 403.*fn2 Under NEPA, the granting of such permits may constitute "major federal actions significantly affecting the quality of the human environment" that require the Corps to conduct an EIS. 42 U.S.C. § 4332(C). In order to determine whether the granting of each of the casino permits was a "major federal action," the Corps undertook an environmental assessment ("EA") for each project. See 40 C.F.R. § 1501.4(b). In each case, the Corps made a "finding of no significant impact" ("FONSI") and therefore determined that no EIS was required. See Casino World Administrative Record ("CWAR") at 1087-1134; Circus Circus Administrative Record ("CCAR") at 23852440; Royal D'Iberville Administrative Record ("RDAR") at 299-335.

A. Casino World

The Corps' evaluation of the Casino World project began with the Hancock County Port and Harbor Commission's submission of an application for the necessary permit in May of 1996. CWAR at 8.*fn3 The permit application described a casino development that included the mooring of two 600 foot long casino barges, a floating gazebo that is 150 feet in diameter, and an elevated access road to the barges and gazebo. CWAR at 31. The casino barges, gazebo and road would cover about 4.8 acres of water bottom. CWAR at 31. The proposed casino development also includes a 450-room hotel, a 2000-seat entertainment facility, a tennis court complex, a parking garage, a golf course and a recreational vehicle park to be built on the uplands adjacent to the moored casino. CWAR at 31.

On June 14, 1996, the Corps issued a Public Notice of the Casino World application. Over the next two years, the Corps received numerous comments, including comments from the U.S. Environmental Protection Agency ("EPA"), the Fish and Wildlife Service ("FWS"), the National Marine Fisheries Service ("NMFS"), and the Mississippi Department of Marine Resource ("MDMR"), all suggesting that the Corps prepare an EIS. These agencies all expressed concern regarding the potential environmental impacts of the Casino World development, including the potential impacts on water quality and habitat, the secondary impacts of the upland development, and the cumulative impacts of the numerous casino projects along the coast. See CWAR 540-42; 612-13; 616; 641-46; 818-21. The Corps disagreed with these comments and issued its EA and FONSI on March 3, 1998. The permit was issued on March 25, 1998. See CWAR 119.

B. Circus Circus

As proposed, the Circus Circus casino would be located just to the east of the Casino World project on the St. Louis Bay. The Pine Hills Development Partnership, the organization hoping to develop the Circus Circus site, applied for a permit under Section 404 of the Clean Water Act and Section 10 of the Rivers and Harbors Act in May of 1996. The Circus Circus proposal encompasses a floating casino with dimensions of approximately 300 feet by 500 feet along with numerous landside facilities, including a conference center, theaters, food and beverage courts, entertainment facilities, a pedestrian rotunda, a hotel and surface and structured parking. See CCAR at 298.

C. Royal D'Iberville

The third project at issue — the Royal D'Iberville casino project — applied for permits under Section 404 of the Clean Water Act and Section 10 of the Rivers and Harbors Act on September 25, 1997. The work proposed in navigable waters entailed a 462 foot by 120 foot floating casino barge, a concrete ramp and deck, a steel bulkhead, and four mooring caissons. See RDAR at 153. The proposed project also includes the upland construction of a porte cochere, a parking garage and parking lot, and a 300-room hotel. See RDAR at 153.

The Corps published a notice of the Royal D'Iberville application on March 23, 1998.*fn4 Two federal agencies — the FWS and the NMFS — and the Mississippi Department of Wildlife, Fisheries and Parks submitted comments opposing the issuance of the permit in the absence of the preparation of an EIS. See RDAR 218-23; 224, 229. The commenting agencies again raised concerns regarding the impacts of the project on aquatic habitat and water quality as well as the indirect and cumulative impacts of the project. The Corps nevertheless released a FONSI on October 6, 1998, determining that an EIS was not warranted, and issued the permit the next day.

D. Proposed Programmatic EIS

During the pendency of the permit applications, the EPA and the Department of the Interior also expressed concern regarding the cumulative casino development along the Mississippi coast to the Secretary of the Army. In response, Deputy Assistant Secretary of the Army Michael L. Davis issued a memorandum on March 4, 1998 instructing the Corps that "pending completion of a Programmatic Environmental Impact Statement (PEIS) for casino development in Harrison and Hancock counties, all pending and future casino permit applications in specified locations in said counties shall be held in abeyance." RDAR at 170. Despite the instructions of the memorandum, the Corps issued all of the permits in these matters. At the time of the May 19, 2000 motions hearing, the preliminary scoping of the PEIS had only just begun.

II. DISCUSSION

Under the Administrative Procedure Act, a reviewing court may only set aside agency actions, findings or conclusions when they are arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law. 5 U.S.C. § 706(2)(A). An agency action is arbitrary and capricious if an agency has "entirely failed to consider an important aspect of the problem, offered an explanation for its decision that runs counter to the evidence before the agency, or is so implausible that it could not be ascribed to a difference in view or the product of agency expertise." Motor Vehicle Mfr. Ass'n v. State Farm Mutual, 463 U.S. 29, 42, 103 S.Ct. 2856, 77 L.Ed.2d 443 (1983).

Review of agency action "is to be based on the full administrative record that was before the [agency] at the time [it] made [its] decision." Citizens to Preserve Overton Park v. Volpe, 401 U.S. 402, 420, 91 S.Ct. 814, 28 L.Ed.2d 136 (1971). In certain limited circumstances, however, a court may consider evidence not included in the administrative record that more fully explicates an agency's decision. See Beach Communications, Inc. v. FCC, 959 F.2d 975, 987 (D.C.Cir. 1992); Esch v. Yeutter, 876 F.2d 976, 991 (D.C.Cir. 1989); Carlton v, Babbitt, 26 F. Supp.2d 102, 106-07 (D.C. 1998). In these consolidated cases, the Court allowed plaintiffs to supplement the record on the basis of plaintiffs' representation that additional evidence was needed to identify those impacts that were not considered by the Corps at all and therefore were not reflected in the record. See Memorandum Opinion and Order of April 21, 2000. The Court, however, held that it would only use the evidence submitted by plaintiffs when it was necessary to identify unaddressed impacts. See id. at 5. After reviewing the full administrative record, the Court concludes that the issues raised by plaintiffs are reflected in the record in nearly every instance and that supplementation of the record is largely unnecessary. Except where otherwise indicated, the Court therefore has confined its review to the administrative record.

The Corps in these cases was required to act in compliance with the requirements of NEPA. As this Court has stated previously:

NEPA provides that a federal agency must prepare an environmental impact statement for "proposals for . . . major federal actions significantly affecting the quality of the human environment." 42 U.S.C. § 4332(2)(C); see also 40 C.F.R. § 1502.3. When considering a proposed action under NEPA, an agency must first determine whether the action is one that normally requires or one that normally does not require an environmental impact statement. 40 C.F.R. § 1501.4(a). . . .
If an agency chooses not to prepare an environmental impact statement and does not invoke a categorical exclusion, the agency is required to prepare an environmental assessment to determine whether an environmental impact statement is necessary. 40 C.F.R. § 1501.3, 1501.4(a) & (b), 1508.9. Although not as detailed and thorough as an environmental impact statement, an environmental assessment requires the agency to carry out a preliminary environmental inquiry to determine whether the proposed action is a major activity having significant effects on the environment. If the agency determines that no environmental impact statement is required, it must report its decision in a "finding of no significant impact" ("FONSI"). 40 C.F.R. § 1501.4(e), 1508.13. If it determines that the proposed action does have a significant effect on the environment, it must then prepare an environmental impact statement. 40 C.F.R. § 1501.4.

Anacostia Watershed Soc'y v. Babbitt, 871 F. Supp. 475, 481-82 (D.C. 1994).

In reviewing an agency decision to forego preparation of an EIS in favor of a FONSI, as is the case here, the reviewing court must apply a four-step analysis:

First, the agency must have accurately identified the relevant environmental concern. Second, once the agency has identified the problem, it must have taken a "hard look" at the problem in preparing the EA. Third, if a finding of no significant impact is made, the agency must be able to make a convincing case for its finding. Last, if the agency does find an impact of true significance, preparation of an EIS can be avoided ...

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