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Natural Resources Defense Council v. U. S. Forest Service


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Natural Resources Defense Council, Southeast Alaska Conservation Council, Sierra Club, National Audubon Society, The Wilderness Society, and Center for Biological Diversity (NRDC) appealed a district court’s dismissal of NRDC’s suit against the United States Forest Service, United States Department of Agriculture, and certain government employees acting in their official capacities (USFS)[1] challenging the 1997 Revision to the Tongass Land Management Plan (Tongass Plan).

Specifically, NRDC claimed the Plan erroneously relied on a forecast market demand for Tongass timber that was almost twice the actual forecast,[2] thus rendering arbitrary and capricious both the Plan under the Administrative Procedure Act (APA).[3] And the USFS conclusion that the production goals justified the risk to “viable, well-distributed populations of wildlife” under former 36 C.F.R. § 219.19.[4] Further, NRDC challenged the Plan’s final Environmental Impact Statement (EIS) as misleading and in violation of the National Environmental Policy Act (NEPA),[5] and on the ground that USFS failed to consider adequate alternatives and cumulative impacts of “highgrading.”[6]

USFS argued that the Ninth Circuit lacked jurisdiction under section 335 of the 2003 Omnibus Appropriations Act[7] and alternatively that the erroneous market forecasts did not influence the Plan’s adoption. The Intervenors argued that if NRDC prevailed on the merits, injunctive relief would be inappropriate because NRDC would suffer no harm, in contrast to the Intervenors whose interests would irreparably suffer.

Writing for the unanimous panel, comprising Judges Gould, Fletcher, and McKeown, Judge Gould held the Ninth Circuit had jurisdiction under 28 U.S.C. § 1291, reversed the district court, and remanded for further proceedings.

The Tongass National Forest, the nation’s largest national forest and the world’s largest intact temperate rainforest at roughly seventeen million acres, is located in Southeast Alaska and comprises approximately seven percent of Alaska, including mainland and many islands of the Alexander Archipelago. The panel held that National Forest Management Act (NFMA)[8] governs management of the Tongass National Forest and requires USFS to “develop, maintain, and, as appropriate, revise land and resource management plans for units of the National Forest System.”[9] The panel further held that NFMA “embraces concepts of multiple use and sustained yield of products and services, obligating [USFS] to balance competing demands on national forests, including timber harvesting, recreational use, and environmental preservation.”[10]

In reviewing the history of the Tongass Plan, the panel invoked the NFMA section, requiring national forest plans to be revised at least every fifteen years, or more frequently if conditions require.[11] The original Tongass Plan approval occurred in 1979. Updates have been approved twice since, the first in 1986 and the second in 1991. The Record of Decision (ROD) for the appealed plan was adopted in May 1997 and the initial EIS was released in January 1997 with an update in May 1997.

During the Tongass Plan revision process, Congress passed the Tongass Timber Reform Act (TTRA),[12] imposing on USFS with regard to the Tongass Plan, a duty to consider “market demand” which “‘(1) meets the annual market demand for timber from [the Tongass National Forest] and (2) meets the market demand from such forest for each planning cycle.'”[13] TTRA provided an exception in subsection (d): lands not suitable for timber harvest need not be subjected to economic considerations.

USFS relied on an analysis by economists David Brooks and Richard Haynes to meet the TTRA imposed obligation to consider market demand. Brooks and Haynes prepared four reports over an eight year period, the 1997 update being the most recent available to USFS. Future average demand forecasts for the upcoming decade were categorized as low, medium, and high, depending on a combination of Alaskan timber’s competitiveness, share of the Japanese market, and Alaskan mills’ share of the domestic market. The report forecasted low, medium, and high demand as 68 million board feet per year (MMBF/year), 110 MMBF/year, and 154 MMBF/year, respectively, roughly half the demand of prior reports.

USFS misinterpreted the forecasts contained in the report by assuming the forecasts referred only to “sawlogs suitable for producing lumber” as opposed to “total National Forest harvest, including both net sawlog and utility volume.”[14] Thus, USFS concluded in its ROD and EIS that average market demand for Tongass timber would range across low, medium, and high demands of 130 MMBF/year, 212 MMBF/year, and 296 MMBF/year, respectively.

USFS contemplated 10 alternatives in the ROD and EIS, finally deciding on alternative 11[15] based on its balancing of competing interests, including forest health and timber production. Alternative 11 provided an average Allowable Sale Quantity (ASQ) of 267 MMBF/year for the subsequent decade, and 3.9 million acres for development land use designations (LUDs) that would allow harvesting timber, approximately sixty percent of which (2.4 million acres) was roadless area.[16] The ROD predicted the actual annual volume of timber sales to vary between 200 MMBF, and 267 MMBF.[17]

When the Tongass Plan was adopted, 36 C.F.R. § 219.19[18] required USFS to “maintain viable populations of existing native and non-native vertebrate species in the planning area.”[19] USFS retained specialists to perform an assessment of each alternative’s risk to wildlife viability. The level of risk each species faced was defined by one of five possible “Outcome” scenarios[20] and the risk to each species under each of the ten plan alternatives was measured accordingly. USFS determined species placement in Outcomes I or II would meet NFMA requirements; placement in Outcome III would sometimes meet NFMA requirements for some species.[21] Thus, a species’ probability of viability was determined to be greater than the sum of the probability of occurrence of Outcomes I and II, but less than the sum of the probability of occurrence of Outcomes I, II, and III.[22] USFS concluded in the ROD that the Tongass Plan, Alternative 11, sufficiently balanced sustainable timber production and risk to wildlife viability.

USFS thus authorized new timber sales projects, including harvest in roadless areas, that NRDC challenged. NRDC based its claims on the USFS’ admitted error in market demand for Tongass timber, asserting (1) the decision to adopt the Plan was arbitrary and capricious, (2) the Plan’s conclusion that risk to wildlife viability was acceptable was arbitrary and capricious, (3) the EIS was misleading based on erroneous economic effects, and (4) the alternatives analysis was inadequate because no alternative reflected the actual demand forecast. NRDC asserted that the EIS was further inadequate in light of its failure to contemplate cumulative effects of State and private logging of high-volume old-growth forest, which NRDC claimed was particularly detrimental to certain wildlife.

The district court separated the trial on the merits from the assessment of relief. Prior to issuing its final decision for USFS, the district court issued a tentative decision and received objection and comment. The district court concluded that the projected market demand was not a significant factor upon which USFS relied in planning Tongass timber sales. Further, the district court ruled against NRDC’s NEPA claims, concluding USFS considered adequate alternatives and could justify its decisions.

During litigation, USFS announced plans to begin road construction into a roadless area and NRDC sought a preliminary injunction and an injunction pending appeal, both of which were denied by the district court. Subsequently, NRDC sought an injunction pending appeal in the Ninth Circuit, which the court granted by a motions panel in light of NRDC’s “likelihood of success on the merits”[23] and the likely “irreparable injury”[24] NRDC would suffer if the timber sale took place.

USFS first defended on the grounds that the Ninth Circuit did not have jurisdiction to review the ROD for the 2003 Supplemental Environmental Impact Statement (SEIS) for the 1997 Revision to the Tongass Land Management Plan. USFS argued that in 2003, Congress passed the Omnibus Appropriations Act,[25] which prohibited review under administrative appeal of the 2003 Supplemental EIS for the 1997 Tongass Land Management Plan, and further prohibited judicial review of the ROD’s adequacy.[26] The 2003 SEIS was a response to a court order that had held the 1997 ROD violated both NEPA and NFMA for failing to consider alternatives recommending more wilderness areas. Upon completing the SEIS, USFS issued the 2003 ROD that adopted the no-action alternative.

The Omnibus Appropriations Act, by its terms, proscribed judicial review of the 2003 ROD. Further, relying on the SEIS statement of purpose, the Ninth Circuit rejected USFS’ argument that the 2003 ROD resulted in a re-adoption of the 1997 Plan because the 2003 SEIS and ROD were in response to a court order and were limited in scope to only the reassessment of the 1997 Plan’s wilderness component. Thus, the Ninth Circuit held it had jurisdiction to review the NRDC challenge to the adequacy of the 1997 Plan.

The panel then considered the merits of NRDC’s appeal, first under NFMA and the APA and second under NEPA. The panel held that USFS acted arbitrarily and capriciously when it relied on the erroneous market demand forecast in approving the 1997 Plan, in derogation of NFMA and the APA. Further, the panel held that USFS failed to meet its duties under NEPA because the 1997 EIS was inadequate in three areas: First, it was misleading in light of its reliance on the erroneous projected demand for Tongass timber; second, it failed to consider alternatives consistent with the actually forecast market demand; and third, it failed to contemplate cumulative effects of State and private logging.

Because USFS was obligated under the APA, to base its decisions on “a consideration of relevant factors,”[27] the Ninth Circuit reviewed the 1997 ROD for a clear error of judgment that would render it arbitrary and capricious as evidenced by an agency explanation “that runs counter to the evidence before the agency.”[28] The Ninth Circuit looked for USFS to “state a rational connection between the facts found and the decision made”[29] to avoid finding that USFS made an arbitrary and capricious decision.

The Ninth Circuit first reviewed the record to find a rational connection between the record and the 1997 plan. USFS included market demand projections in the EIS in response to the TTRA mandate that USFS consider market demand for Tongass timber, and because among the stated goals and objectives of the published ROD was the desire to meet market demand, both annually and for the planning cycle. Based on USFS’ misinterpretation of Brooks and Haynes’ demand projections, the ROD projected low, medium, and high market demand as being 130 MMBF/year, 212 MMBF/year, and 296 MMBF/year, respectively. To arrive at that demand, USFS extrapolated from Brooks and Haynes’ forecast demand of 68 MMBF/year, 110 MMBF/year, and 154 MMBF/year assuming it to be only for sawlog volume and not total volume. Further, USFS adopted Alternative 11, with average ASQ of 267.2 MMBF/year. Thus, because USFS relied on its doubled forecast demand in selecting Alternative 11, the ROD ran “counter to the evidence before the agency.”[30]

However, USFS argued its mistake was harmless because the selection of Alternative 11 did not hinge on the projected market demand. The Ninth Circuit disagreed, holding “[t]he role of harmless error in the context of agency review is constrained”[31] to cases where the mistake “clearly had no bearing on the procedure used or the substance of [the] decision reached.”[32] The panel further held the burden to show harmlessness rested with USFS, and the agency had not met this burden in light of the stated purpose of the ROD to meet forecast demand, the TTRA mandate for USFS to do so, and the commissioned report on market demand, which USFS misinterpreted.

The Ninth Circuit held that ASQ is critical to long term planning of forests and that the ROD established target market demand based on USFS’ misinterpreted projections of demand. Thus, USFS chose an alternative with average annual ASQ of 267 MMBF/year. Because NFMA established competing priorities, timber harvests must be justified as outweighing goals of environmental projection. The Ninth Circuit panel held that in cases, as here, where timber demand is mistakenly assumed too high, the balance of the competing priorities may weigh too heavily in favor of timber harvest.

The Forest Service cited a need to maintain flexibility in the Plan to accommodate changing public needs, economic conditions, and evolving technology. Therefore, the ROD rejected Alternatives 4 and 5 as being inadaptable, and gave preference to Alternatives 2, 3, 6, 10, and 11 as being adaptable, in light of forecast demand and community dependence on timber harvest. The panel interpreted the ROD’s rationale as indicating that USFS incorporated the Brooks and Haynes report’s focus on the low-to-high demand forecasts into the EIS and ROD, and therefore considered the forecasts in adopting Alternative 11.

USFS alternatively argued that the ASQ represented an upper limit on timber sales and thus was unrelated to forecast demand. The Ninth Circuit rejected the USFS argument, viewing the ASQ as a ceiling on allowable timber sales that is inextricably linked to market demands. The panel further pointed out that even if the adopted ASQ were greater than the highest market demand forecast to provide plan flexibility, the record lacked evidence that showed how much greater ASQ would need to be to satisfy flexibility requirements.

USFS also argued that the TTRA mandate to consider market demand was limited in scope to project level decisions, rather than plan level decisions. The Ninth Circuit rejected this argument, holding that even if this were the scope of TTRA, USFS attempted to comply with the TTRA mandate in reliance on erroneous interpretations of forecast demand. Thus, the Ninth Circuit concluded that by commissioning and misinterpreting the Brooks and Haynes forecast demand report, USFS committed clear error in judgment that was not harmless. The Ninth Circuit therefore reversed the district court as to the NFMA claims.

The panel next considered NRDC’s NEPA claim challenging the EIS for the 1997 plan. The court examined whether the Plan’s adoption process complied with NEPA, which requires that “federal agencies carefully weigh environmental considerations and consider potential alternatives to the proposed action before the government launches any major federal action.”[33]

NRDC challenged the EIS on three grounds. NRDC asserted first, that by exaggerating the market demand forecast, the EIS presented misleading economic effects; second, that by failing to consider alternatives that preserve roadless areas to a maximum extent, the alternatives analysis was inadequate; and third, that by failing to consider cumulative effects of State and private harvesting high-volume old growth, the EIS was inadequate. The Ninth Circuit addressed each challenge in sequence.

First, the Ninth Circuit considered whether the inflated demand forecast rendered the EIS misleading to the public in light of NEPA’s mandate to inform the public of relevant factors in agency decision-making. “NEPA is a procedural statute; NEPA does not force an agency to choose the most environmentally sound alternative, but it does ensure that agency action is ‘fully informed and well considered.'”[34] Thus, if an EIS was incomplete to the extent the public and decision maker cannot compare alternatives in a fully informed manner, the EIS may need revision to provide an objective basis for decision under NEPA. NRDC asserted the EIS was misleading because it derived from erroneous demand forecasts that tilted the balance of the Plan away from environmental protection in favor of erroneous economic projections.

Relying on Fourth Circuit precedent that an EIS based on inflated economic benefits violated NEPA and might “defeat the purpose of an EIS by ‘impairing the agency’s consideration of the adverse environmental effects’ and by ‘skewing the public’s evaluation’ of the proposed agency action,”[35] the Ninth Circuit held that the error in demand forecast “subverted NEPA’s purpose of providing decision makers and the public with an accurate assessment of the information relevant to evaluate the Tongass Plan.”[36] The EIS relied throughout on the erroneous interpretation of market demand forecasts in predicting employment benefits and earnings potential of each alternative and thus was held misleading. The panel speculated that had correct demand forecasts and associated employment and earnings benefits been included in the EIS, USFS may have selected a lower environmental impact alternative and thus held that accurate market forecasts were necessary for well-informed and reasoned decision making.

USFS defended by arguing that the 1997 EIS was printed and published prior to receipt of the 1997 Brooks and Haynes report and thus provided for informed and reasoned decision making. The Ninth Circuit disagreed
because the EIS incorporated the Brooks and Haynes report through an “Errata,” which aided USFS in formulating its final decision.

USFS alternatively defended on the ground that, in Appendix M, USFS concluded a supplemental EIS would not be required despite the substantial downward revision in demand forecast of the 1997 Brooks and Haynes report. The panel rejected this defense because Appendix M did not correct the erroneous interpretation of the report found in the economics section of the EIS, nor did Appendix M update the employment or earnings predictions in light of the updated demand forecasts.

USFS argued in the alternative that because Appendix M asserted that short-term demand was not a significant factor in choosing an alternative, the mistaken economic section did not render the EIS misleading. Further, USFS suggested that the Brooks and Haynes report was unreliable and not significant. The panel was not persuaded. USFS asserted in the EIS that the report was reliable and defensible because of its methodology. Because the EIS presented economic information derived from the report, the Ninth Circuit held that short-term demand was significant and that the EIS was, therefore, misleading and in violation of NEPA.

The panel next contemplated whether the alternatives analysis in the EIS was adequate. NEPA requires rigorous exploration and objective evaluation of all reasonable alternatives to proposed actions with significant environmental effects. “This is ‘the heart’ of an EIS.”[37] “‘The existence of a viable but unexamined alternative renders an environmental impact statement inadequate.'”[38] NRDC argued that USFS failed to consider alternatives that would meet demand forecasts while also maintaining intact more habitat, including high-volume, old growth stands. The panel noted that significant consideration was given to environmental protection and benefits to the southeast Alaska economies. But, relying on prior decisions holding that USFS must consider changed circumstances in its alternatives analyses, and noting that the USFS did not include new alternatives with ASQs corresponding to actual forecast demand upon discovering the mistake in interpreting the forecast demand report, the Ninth Circuit held that the EIS inadequately considered viable alternatives in light of the TTRA mandate to attempt to meet market demand. Further, the Ninth Circuit held the scope of considered alternatives too narrow because the EIS considered only alternatives (other than the no harvest alternative) that allocated between 2.4 million and 6.2 million acres of roadless area to LUDs. In other words, no alternative considered LUDs comprising less than 50% roadless area.

The Ninth Circuit’s final consideration was whether the EIS properly considered cumulative effects of State and private logging of old growth stands. The Ninth Circuit previously held that NEPA requires incremental impacts of past, present, and reasonably foreseeable actions be assessed in an EIS to be useful to the public and decision maker seeking to lessen environmental impacts. At a minimum, past projects and their environmental harms must be “cataloged” as part of the EIS, which NRDC argued USFS failed to do.

The Ninth Circuit noted that high volume old growth stands have special value both as an economic resource and as wildlife habitat. The EIS noted that non-federal entities own five percent of the Tongass the heavy development of “which cumulatively impacts old growth forest resources,”[39] but did not describe the effect of continued highgrading, nor did it provide detail on whether or how to lessen the effect of highgrading. Thus, the panel held that the alternatives analysis in the EIS was inadequate in assessing the cumulative effects of highgrading in the past and in the reasonably foreseeable future.

USFS defended by asserting that cumulative impacts need only be assessed when future actions are proposed, but the Ninth Circuit held that cumulative impacts must be addressed in the EIS, and where multiple projects in a region are foreseeable, the cumulative effects should be evaluated in a single EIS. Further, the Ninth Circuit held that NEPA requires cumulative effects to be evaluated prior to adoption of an agency’s decision rather than after the action is approved. The panel held that its review of the record showed a disproportionate level of planned harvesting in particular low-elevation stands, which are areas of critical wildlife habitat. The panel further held that impact to species from logging results not from whether the lands are federal or private, but from the cumulative effects of highgrading, and thus, the EIS should have considered the cumulative effects of both private and federal action.

Because USFS mistakenly interpreted the Brooks and Haynes forecast demand report, and further did not meets its burden of demonstrating the error was harmless, the Ninth Circuit reversed the district court as to NRDC’s NFMA claim under the APA that adoption of the 1997 Tongass plan was arbitrary and capricious. Further, under NEPA, the Ninth Circuit held the EIS to be misleading to decision-makers and the public in its reliance on the mistaken forecast in determining economic benefits to local Alaskan economies. Still further under NEPA, the Ninth Circuit held the EIS inadequate in its alternatives analysis for failing to consider alternatives with less environmental impact while still meeting actual forecast demand. Finally under NEPA, the Ninth Circuit held the EIS inadequate with regard to its failure to consider cumulative impacts of past, present, and reasonably foreseeable harvesting of high volume old growth timber.

The Ninth Circuit maintained the temporary injunction until a permanent injunction is considered on a revised record and is entered by the district court in accordance with the Ninth Circuit’s opinion.

[1] The State of Alaska and Alaska Forest Association (Intervenors) intervened on the issue of remedy in the event that NRDC succeeds on the merits.

[2] USFS conceded the mistaken interpretation both in its briefs and at oral argument.

[3] 5 U.S.C. § 706(2)(A) (2000).

[4] 36 C.F.R. § 219 (2000) was in force at the time of the Plan revisions and thus controlling on appeal and on the merits. The regulation has since been supplanted by National Forest System Land and Resource Management Planning, 65 Fed. Reg. 67,514-81 (Nov. 9, 2000).

[5] 42 U.S.C. §§ 4321-4370f (2000).

[6] “Highgrading is the practice of logging disproportionately in high-volume old-growth areas. High volume old growth areas are superior habitat for many wildlife species, including wolves, the American marten, and marbled murrelets.” Natural Res. Def. Council v. U.S. Forest Serv., 421 F.3d 797, 800 n.4 (9th Cir. 2005).

[7] Pub. L. No. 108-107, 117 Stat. 1240 (2003).

[8] National Forest Management Act of 1976, 16 U.S.C. §§ 472a, 521b, 1600, 1611-1614 (2000) (amending Forest and Rangeland Renewable Resources Planning Act of 1974, Pub. L. No. 93-378, 88 Stat. 476).

[9] 16 U.S.C. § 1604(a) (2000).

[10] Natural Res. Def. Council, 421 F.3d at 801 (citations omitted).

[11] 16 U.S.C. § 1604(f)(5).

[12] 16 U.S.C. § 539d (2000).

[13] Natural Res. Def. Council, 421 F.3d at 801 (citing 16 U.S.C. § 539d(a)).

[14] Id. at 802 (noting that a “sawlog” refers to the portion of a tree suitable for dimension lumber production in contrast to “utility volume,” which goes to other wood products, and further noting a forecast of sawlog demand would be substantially less than a forecast of both sawlog and utility volume demand).

[15] USFS originally considered 11 alternatives, removed one from consideration, but retained the original alternative numbering, hence one of the alternatives was referred to as Alternative 11.

[16] “The ASQ represents the ‘upper decadal limit on the amount of timber that may be offered for sale from suitable timberland on the Tongass National Forest as part of the regularly schedule timber sale program.’ The ASQ applies to sawlog and utility log volumes.” Id. at 802 n.10.

[17] See id. at 802 n.11 (summarizing each of the alternative land use areas and production volumes).

[18] See supra note 400.

[19] 36 C.F.R. § 219.19 (2005).

[20] The proposed Outcome scenarios were as follows: Outcome I: sufficient habitat for well distributed breeding populations; Outcome II: similar to Outcome I, but possible temporary population gaps and low density populations; Outcome III: likely permanent population gaps; Outcome IV: continued species existence but with strong limitations on interactions among local populations; Outcome V: species extinction. Natural Res. Def. Council, 421 F.3d at 804 n.12.

[21] In the January 1997 EIS, USFS originally contemplated that NFMA regulations would be met by species placement in Outcomes I or II. Appendix N of the May 1997 EIS modified this conclusion, determining Outcome III may meet NFMA regulations for “viable and well distributed” populations. NRDC took exception to the modification, but the panel deferred to the scientific expertise of the agency. Id. at 804 n.13 (citing Nat’l Wildlife Fed’n v. U.S. Army Corps of Eng’rs, 384 F.3d 1163, 1174 (9th Cir. 2004)).

[22] Id. at 803 n.14 (providing table that summarizes the range of probable species viability for several alternatives according to the May 1997 EIS).

[23] Id. at 804.

[24] Id.

[25] Pub. L. No. 108-107, 117 Stat. 1240 (2003).

[26]H.R. Rep. No. 108-10, at 269 (2003) (Conf. Rep.).

[27]Gifford Pinchot Task Force v. U.S. Fish & Wildlife Serv., 378 F.3d 1059, 1065 (9th Cir. 2004).

[28] Sierra Club v. U.S. Envtl. Prot. Agency, 346 F.3d 955, 961 (9th Cir. 2003).

[29] Gifford Pinchot, 378 F.3d at 1065.

[30] Sierra Club, 346 F.3d at 961.

[31] Natural Res. Def. Council v. U. S. Forest Serv., 421 F.3d 797, 807 (citing Gifford Pinchot, 378 F.3d at 1071).

[32] Id. (emphasis in original).

[33] Lands Council v. Powell, 395 F.3d 1019, 1026 (9th Cir. 2005).

[34] Natural Res. Def. Council, 421 F.3d at 811 (quoting Vt. Yankee Nuclear Power Corp. v. Natural Res. Def. Council, Inc., 435 U.S. 519, 558 (1978)).

[35] Id. (quoting Hughes River Watershed Conservancy v. Glickman, 81 F.3d 437, 446-48 (4th Cir. 1996)).

[36] Id. at 812.

[37] Id. at 813 (quoting City of Carmel-by-the-Sea v. U.S. Dep’t of Transp., 123 F.3d 1142, 1155 (9th Cir. 1997)).

[38] Id. (quoting Citizens for a Better Henderson v. Hodel, 768 F.2d 1051, 1057 (9th Cir. 1985)).

[39] Id. at 815.

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