Dakota Rural Action v. United States Department of Agriculture ( 2023 )

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
DAKOTA RURAL ACTION, et al.,
Plaintiffs,
v.
Civil Action No. 18-2852 (CKK)
UNITED STATES DEPARTMENT OF
AGRICULTURE, et al.,
Defendants.
MEMORANDUM OPINION
(April 4, 2023)
Since the Great Depression, the Farm Service Agency (“FSA”), 1 resident within the
United States Department of Agriculture, has extended loans to family farmers. Like all agency
actions, these loans are subject to the National Environmental Policy Act (“NEPA”). After
notice-and-comment rulemaking, NEPA permits agencies to categorically exempt (“CatEx”)
certain agency actions from further environmental review upon finding that they do not
individually or cumulatively have a significant effect on the human environment. On August 3,
2016, FSA promulgated a new rule doing just that for, among other things, loan actions to
medium-sized “concentrated animal feeding operations” (“CAFOs”). Plaintiffs argue that this
rule was arbitrary and/or capricious and should be vacated pending remand. Defendants agree
that the rule is procedurally infirm, but argue that the agency error was so minor that the Court
should remand the rule to the agency without vacating it. The Court concludes that Plaintiffs
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Defendants in this matter are the United States Department of Agriculture, Tom Vilsack in his
official capacity as Secretary of Agriculture, FSA, and Zach Ducheneaux in his official capacity
as FSA Administrator. Because FSA is the promulgating agency, the Court refers to all
Defendants by “FSA.”
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have the better of the argument and, upon consideration of the pleadings, 2 the relevant legal
authorities, and the entire record, DENIES Defendants’ [31] Motion for Voluntary Remand and
GRANTS Plaintiffs’ [35] Cross-Motion for Summary Judgment.
I. BACKGROUND
The central question before the Court is whether it must vacate the FSA’s promulgation of
a rule creating a new categorical exemption from environmental review for loan actions to
medium CAFOs. The applicable statute, the National Environmental Policy Act, 42 U.S.C. §
4332(2)(C), requires all agencies to undertake a certain degree of environmental review before
effecting an agency decision or policy. Nat’l Trust for Historic Preservation in U.S. v. Dole, 828
F.2d 776, 780 (D.C. Cir. 1987). In addition to requiring an agency to consider the environmental
consequences of its actions, NEPA ensures that “‘the agency will inform the public that it has
indeed considered environmental concerns in its decisionmaking process.’” Brady Campaign to
Prevent Gun Violence v. Salazar, 612 F. Supp. 2d 1, 13 (D.D.C. 2009) (CKK) (quoting Balt. Gas
& Elec. Co. v. Nat. Res. Def. Council, Inc., 462 U.S. 87, 97 (1983)).
The default for such analysis is an “environmental impact statement” (“EIS”) which, by
statute, requires a particularly searching review before an agency takes an action that will
“significantly affect[] the quality of the human environment.” Found. on Econ. Trends v.
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The Court’s analysis has focused on the following documents:
• Defendant’s Motion for Voluntary Remand, ECF No. 31 (“Defs.’ Mot.”);
• Plaintiffs’ Opposition to Motion for Remand Without Vacatur and Cross-Motion for
Summary Judgment, ECF No. 35 (“Pls.’ Mot.”);
• Defendants’ Reply in Support of their Motion for Remand Without Vacatur and
Opposition to Plaintiffs’ Motion for Summary Judgment, ECF No. 36 (“Defs.’
Repl.”)
• Plaintiffs’ Reply in Support of Motion for Summary Judgment, ECF No. 38 (“Pls.’
Repl.”); and
• the Administrative Record, ECF Nos. 39-45 (“AR”).
The Court held oral argument in this matter on September 9, 2022.
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Heckler, 756 F.2d 143, 146 (D.C. Cir. 1985). More commonly, however, an agency prepares an
“environmental assessment” (“EA”) when environmental impact is not clearly established, in
which it explains in more limited terms why an EIS is unnecessary and there will be no
significant environmental impact. See id.; Dole, 828 F.2d at 780. Finally, an agency need not
publish an EA if it determines that the decision falls within a category of actions that “do[es] not
individually or cumulatively have a significant effect on the human environment.” Brady, 612 F.
Supp. 2d at 14 (quoting 40 C.F.R. § 1508.1(d)).
Here, FSA concluded that it need not employ any environmental analysis before taking
certain loan actions to benefit medium-sized CAFOs. CAFOs are industrial operations that raise
animals for harvest, including slaughter. See Gov’t Accountability Office, Concentrated Animal
Feeding Operations: EPA Needs More Information and a Clearly Defined Strategy to Protect Air
and Water Quality from Pollutants of Concern (Sept. 2008) available at
https://www.gao.gov/assets/a280238.html#:~:text=This%20is%20the%20accessible%20text%20
file%20for%20GAO,Concern%27%20which%20was%20released%20on%20September%2024
%2C%202008 (last accessed April 4, 2023 9:03 AM). These businesses, some of which are
family-owned, “raise[] animals in a confined situation for a total of 45 days or more during a 12-
month period and [] bring[] feed to the animals rather than having the animals graze or seek feed
in pastures and fields or on rangeland.” Id. The byproducts of these operations may have
environmental consequences. Id. Among other things, FSA provides certain loan services to
CAFOs. See AR001610. At issue here are loans to “medium” CAFOs, which “stable[] or
confine[][:]” (1) “200 to 699 mature dairy cows, whether milked or dry;” (2) “300 to 999 veal
calves;” and (3) “300 to 99 cattle,” and (4) “37,500 to 124,999 chickens;” among other
categories of animals. 40 C.F.R. § 122.23(b)(6)(i). Plaintiffs challenge a new rule
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implementing a categorical exclusion from environmental review for these operations, 7 C.F.R.
§§ 799.41(a)(9)-(10) (“Final Rule”).
Previously, FSA was required to conduct, at the very least, some degree of environmental
review before providing financial assistance for most medium CAFOs. AR 000019. FSA then
proposed a new rule in which FSA would use an “environmental screening worksheet” (“ESW”)
to determine whether a particular loan action to a medium CAFO should require an EA. AR
001515 (Sept. 3, 2014). The proposed rule did not provide notice that FSA would forgo an ESW
for loan actions to medium-sized CAFOs and instead categorically exempt those actions from
NEPA review.
The record provides no indication the FSA began to consider this course of action until it
received, sometime between September 2014 and August 2016, precisely one comment placed
into the Federal Register, arguing in short shrift: “As proposed the provisions for medium
CAFOs would be an onerous impediment to obtaining financing for operations that will often
include young or beginning farmers.” AR 001610. FSA evidently inferred that the commenter
viewed ESW review for the actions at issue here as overly onerous, so it replied that, under the
proposed rule, “ESW review will be completed for small and medium CAFOs . . . .” Id.; see
also AR 001515 (proposed 7 C.F.R. § 799.41(9)-(10) (Sept. 3, 2014)). In other words, FSA
disagreed, and would continue onwards with ESW review. Oddly, FSA repeated the same reply
to a similar comment in the notice of the Final Rule, despite reversing course in the Final Rule.
See AR 001608, 001620 (Aug. 3, 2016). Again, at this time, FSA provided essentially no notice
that it would reverse course in the Final Rule.
Upon exhaustive review of the record, the Court has been unable to locate FSA’s
reasoning for this change or the sources of data upon which FSA relied. In August 2013, it
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appears that FSA discussed certain new categorical exemptions, although these proposed
categorical exemptions predated the August 2016 exemption for loans to mediums CAFOs. See
AR 000308. There, FSA stated in conclusory fashion that it relied on “its experience
implementing similar actions, the experience of other agencies, and information provided by the
public.” AR 000313. The only category that has any discussion in the record is the “experience
of other agencies” as to the “[p]artial or complete release of loan collateral.” AR 000329. Of
this category, FSA identified only certain practices by the National Park Service which
categorically exclude NEPA review only when an applicant has already demonstrated that its
application would not disturb, inter alia, “the kind and amount of recreational, historical or
cultural resources of the area[,] or the integrity of the existing setting.” AR 000330. The other
agency practices identified utilized environmental worksheets and do not apply a categorical
exemption. See AR 000329-30.
Additionally, although FSA received public comments in 2014 that argued there should
be a CatEx for all loan actions to medium CAFOs, AR 001439, 1444, these comments are largely
the same as the sole comment included in FSA’s 2016 discussion, which repeated FSA’s 2014
position. Again, because this review predates public comments in both 2014 and 2016, there is
no indication in the record that FSA returned to this material when it decided to reverse course
between 2014 and 2016. Moreover, the record does not indicate the extent of FSA’s review of its
own prior loan actions to medium CAFOs, and there is no indication that the review included
loan actions to medium CAFOs.
II. LEGAL STANDARD
Under Rule 56(a) of the Federal Rules of Civil Procedure, “[t]he court shall grant
summary judgment if the movant shows that there is no genuine dispute as to any material fact
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and the movant is entitled to judgment as a matter of law.” However, “when a party seeks review
of agency action under the APA [before a district court], the district judge sits as an appellate
tribunal. The ‘entire case’ on review is a question of law.” Am. Bioscience, Inc. v. Thompson,
269 F.3d 1077, 1083 (D.C. Cir. 2001). Accordingly, “the standard set forth in Rule 56[ ] does not
apply because of the limited role of a court in reviewing the administrative record . . . .
Summary judgment is [ ] the mechanism for deciding whether as a matter of law the agency
action is supported by the administrative record and is otherwise consistent with the APA
standard of review.” Southeast Conference v. Vilsack, 684 F. Supp. 2d 135, 142 (D.D.C. 2010).
The APA “sets forth the full extent of judicial authority to review executive agency
action for procedural correctness.” FCC v. Fox Television Stations, Inc., 556 U.S. 502, 513
(2009). It requires courts to “hold unlawful and set aside agency action, findings, and
conclusions” that are “arbitrary, capricious, an abuse of discretion, or otherwise not in
accordance with law.” 5 U.S.C. § 706(2)(A). “This is a ‘narrow’ standard of review as courts
defer to the agency’s expertise.” Ctr. for Food Safety v. Salazar, 898 F. Supp. 2d 130, 138
(D.D.C. 2012) (quoting Motor Vehicle Mfrs. Ass’n of U.S., Inc. v. State Farm Mut. Auto. Ins.
Co., 463 U.S. 29, 43 (1983)). As the “focal point” in administrative review, the Court’s inquiry
is limited to the administrative record before it. Camp v. Pitts, 411 U.S. 138, 142 (1973).
Absent special circumstances, the Court is not to consider evidence outside the record or
arguments not raised before the agency. See Am. Bottling Co. v. NLRB, 992 F.3d 1129, 1139
(D.C. Cir. 2021).
III. DISCUSSION
The Final Rule here suffers from two fatal infirmities. First, FSA provided no notice that
it would categorically exempt all loan actions to medium CAFOs from any NEPA review, and
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provided the public no opportunity to comment on this change. Second, the record provides
essentially no reasoning for this change. Given the severity of these procedural errors, FSA does
not overcome the presumption of this jurisdiction that a procedurally infirm environmental rule
must be vacated pending remand to the promulgating agency.
As described above, a federal agency may promulgate a regulation identifying
“categories of actions that do not normally have a significant effect on the human environment,
and therefore do not require preparation of an [EA] or [an] [EIS].” 40 C.F.R. § 1501.4(a). Such
a category is termed a “categorical exclusion” or a “CatEx.” To create a CatEx, an agency must
first determine, through notice-and-comment rulemaking, that the excluded actions do not
individually or cumulatively have a significant effect on the human environment. See
Earthworks v. U.S. Dep’t of the Interior, 496 F. Supp. 3d 472, 493 (D.D.C. 2020); Colo. Wild,
Heartwood v. U.S. Forest Serv., 435 F.3d 1204, 1209-10 (10th Cir. 2006). The agency must then
publish the proposed CatEx in the Federal Register, provide an opportunity for public comment,
and submit the CatEx for approval to the Council on Environmental Quality (“CEQ”) (a federal
agency that effects NEPA). Heartwood, 435 F.3d at 1210. Because both notice and comment are
necessary to sustain a CatEx, simply consulting with CEQ, without more, is insufficient to pass
APA review. Heartwood, Inc. v. U.S. Forest Serv., 73 F. Supp. 2d 962, 975 (S.D. Ill. 1999)
(CatEx excluding environmental review of certain amount of timber harvests failed under APA
review where agency failed to explain during notice-and-comment rulemaking why amount of
harvest would not have a significant impact on the environment); see also Pub. Emps. for
Environ. Responsibility v. Nat’l Park Serv., 605 F. Supp. 3d 28, 59-60 (D.D.C. 2022).
Here, FSA concedes that it did not make a finding as to environmental impact. Defs.’
Repl. at 8. Although FSA concedes this error, it evidently concludes that its notice-and-comment
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rulemaking was not otherwise deficient. FSA declaims that it relied on “substantial data,” Repl.
at 11, which “presumably” included loan actions to medium-sized CAFOs, Mot. at 12. Yet it can
point to nothing in the record supporting such a proposition. On the Court’s review of the
record, there is very little data discussed to support any of the new categorical exemptions, much
less the challenged CatEx. See AR 000313-33. In both 2014 and 2016, in response to public
comments, FSA explained that it would not create a CatEx for loan actions to medium CAFOs.
AR 001439 (2014); AR 001610 (2016). In 2016, FSA’s answer is also the last time FSA’s
reasoning for the particular challenged CatEx is mentioned in the record.
As a result, the administrative record itself belies FSA’s arguments in its briefing. More
importantly, FSA’s baseless arguments are post-hoc rationalizations which a reviewing court may
not accept to determine the scope of procedural error. See Humane Soc. of U.S. v. Johanns, 520
F. Supp. 2d 8, 33 (D.D.C. 2007) (CKK). Although FSA may be correct that it undertook a
searching and comprehensive review of the environmental effects of the challenged CatEx, a
regulation may be sustained only on the administrative record before the Court, not an agency’s
mere say-so. See Am. Bottling Co. v. NLRB, 992 F.3d 1129, 1139 (D.C. Cir. 2021). As such, not
only did FSA fail to provide notice-and-comment rulemaking, but it also evidently failed to
undertake the reasoned analysis required by NEPA before creating a CatEx.
The severity of these errors require vacatur. “The ordinary practice is to vacate unlawful
agency action, and district courts in this [C]ircuit routinely vacate agency actions taken in
violation of NEPA.” Standing Rock Sioux Tribe v. U.S. Army Corps of Engs., 985 F.3d 1032,
1050 (D.C. Cir. 2021) (cleaned up). That said, “[a] court is not without discretion to leave
agency action in place while the decision is remanded for [reexamination].” Id. at 1051. The
decision whether to remand without vacatur depends on whether “‘there is at least a serious
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possibility that the agency will be able to substantiate its decision,’ and [whether] ‘vacating
would be disruptive.’” NAACP v. Trump, 298 F. Supp. 3d 209, 244 (D.D.C. 2018) (JDB) (cleaned
up) (quoting Radio-TV News Directors Ass’n v. FCC, 184 F.3d 872, 888 (D.C. Cir. 1999)).
This exception to the general rule is an exception for good reason. Although NEPA is
often considered a “procedural” statute, its purpose is “not to generate paperwork or litigation,
but to provide for informed decision making and foster excellent action.” 40 C.F.R. § 1500.1(a).
If an agency does not explain its actions, and does not afford the public an opportunity to weigh
in, the purpose of environmental notice-and-comment rulemaking is severely undermined. See
Kleppe v. Sierra Club, 427 U.S. 390, 317-18 (1976) (Marshall, J., concurring in part). Moreover,
“‘experience suggests that remand without vacatur sometimes invites agency indifference.’”
Friends of the Earth v. Haaland, 583 F. Supp. 3d 113, 157 (D.D.C. 2022) (RC) (cleaned up)
(quoting In re Core Commc’ns, Inc., 531 F.3d 849, 862 (D.C. Cir. 2008) (Griffith, J.,
concurring)). This case provides an excellent example. Although FSA admitted error in
September 2019, to date, it appears that FSA has taken no action to correct its error. More
importantly, however, there is nothing in the record to confirm FSA’s insistence that it will be
able to substantiate the challenged CatEx on remand. Therefore, on the administrative record
before the Court, vacatur is necessary under this Circuit’s default rule.
IV. CONCLUSION
For the foregoing reasons, Defendants’ [31] Motion for Voluntary Remand is DENIED
and Plaintiffs’ [35] Cross-Motion for Summary Judgment is GRANTED. The Court
DECLARES that Defendant Farm Service Agency’s August 3, 2016 final rule implementing the
National Environmental Policy Act, 81 Fed. Reg. 51,274 (Aug. 3, 2016) is, in part, arbitrary,
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capricious, and not in accordance with law pursuant. The CAFO provisions of the Final Rule are
VACATED. An appropriate order accompanies this Memorandum Opinion.
Dated: April 4, 2023 /s/
COLLEEN KOLLAR-KOTELLY
United States District Judge
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