The Nickel Report

Federal environmental reviews are high on the list of project time, costs and risk drivers. National Environmental Policy Act (NEPA) analysis and Endangered Species Act (ESA) Section 7 consultation are often chief among those drivers. The impact of preparing an Environmental Impact Statement or Biological Opinion (such as scheduling; consultant, mitigation and market opportunity costs; and litigation risks) often turns on the scope of analysis, which in turn depends on determining which effects will be caused by the action. In August 2019, the US Fish and Wildlife Service (FWS) and National Marine Fisheries Service (NMFS) established, for the first time, a regulatory causation standard governing ESA section 7 consultations, and, in January 2020, the Council on Environmental Quality (CEQ) proposed a new rule clarifying the causation standard and scope of review under NEPA.

Projects that require federal permits or licenses typically undergo environmental reviews pursuant to the ESA, NEPA and other federal environmental laws. At the heart of the government’s review is the evaluation of the environmental effects caused by the federal “action” (e.g., the effects of a discharge of dredged or fill material into waters of the United States authorized by a Clean Water Act section 404 permit, or the effects of a project authorized by a Federal Energy Regulatory Commission license). The scope of this analysis is important. Attributing effects to an action not caused by the action can lead to a variety of problems, including:

• Rendering the NEPA and ESA analyses factually, scientifically and legally unsound based on the lack of a clear description of the action and basis for delimiting the effects of that action, leaving those analyses vulnerable to challenge;
• Failing to establish a limiting principle for the analyses, making them subject to inconsistent approaches by agency staff and varying interpretations by courts;
• Effectively imposing upon the action agency and applicant an improper burden to address and mitigate effects beyond the agency’s jurisdiction and outside the applicant’s control; and
• Distracting from a focus on actual impacts of the agency’s actions and means to address those impacts, thereby attenuating rather than advancing environmental protection.

The law generally distinguishes between two types of causation: proximate (or legal) and cause-in-fact (or “but for”). Proximate cause is “[a] cause that is legally sufficient to result in liability[;] [a] cause that directly produces an event and without which the event would not have occurred.” Black’s Law Dictionary 213. Black’s Law Dictionary includes a frequently cited quote from Prosser and Keeton on Torts:

“‘Proximate cause’ – in itself an unfortunate term – is merely the limitation which the courts have placed upon the actor’s responsibility for the consequences of the actor’s conduct. In a philosophical sense, the consequences of an act go forward to eternity, and the causes of an event go back to the dawn of human events, and beyond. But any attempt to impose responsibility upon such a basis would result in infinite liability for all wrongful acts, and would ‘set society on edge and fill the courts with endless litigation.’ As a practical matter, legal responsibility must be limited to those causes which are so closely connected with the result and of such significance that the law is justified in imposing liability. Some boundary must be set to liability for the consequences of any act, upon the basis of some social idea of justice or policy.” Black’s Law Dictionary at 264 (5th ed. 1984) (citing W. Page Keeton et al., Prosser and Keeton on Torts § 41) (internal citations omitted).

“But for” causation casts a much wider net, capturing a broader series of events that can be traced to a particular action without regard to whether the actor is in a position to control those events, and considers whether an effect would have occurred “but for” the action at issue. Thus, if a CWA section 404 permit was required for a 100 foot stream crossing in order to build a 100 mile linear feature, a NEPA analysis that employed a simple “but for” causation standard would attribute all effects of the entire project to the 404 permit even if the remainder of the project was entirely outside of federal jurisdiction and control. The courts have generally rejected attempts to impose such a standard on agencies’ NEPA analysis, however. See Winnebago Tribe of Nebraska v. Ray, 621 F. 2d 269, 272-73 (8th Cir. 1980) (NEPA analysis of CWA section 404 permit was not required to consider upland impacts of linear corridor even though permit for river crossing was necessary to complete the project). Rather, the US Supreme Court has held that “proximate cause” is the governing standard for determining direct and indirect effects of the action under NEPA (and has not had occasion to address the issue under the ESA, and the ESA regulations did not previously establish a causation standard).

ESA Causation Standard

 In October 2019, new ESA rules promulgated by FWS and NMFS (together, the Services) took effect, including provisions that establish the governing causation standard for ESA section 7 consultations. The new regulations codify the Service’s prior practice of applying “but for” causation, while at the same time acknowledging and incorporating important elements of proximate causation. In so doing, the rule provides important clarification of the standards governing ESA section 7 consultation.

ESA Section 7 directs federal agencies to consult with FWS (or, when appropriate, NMFS) whenever a federal action “may affect” an endangered or threatened species or its designated critical habitat. 50 C.F.R. § 402.14(a). As part of the consultation, the Services must evaluate the effects of the action on listed species or critical habitat. Id. § 402.14(g)(3). How the Services define and interpret “effects of the action,” and determine which effects are appropriately attributable to the action, is critical to obtaining timely and appropriately conditioned federal authorizations.

The new definition promulgated in 2019 establishes a “but for” standard of causation, but adopts important elements of the proximate cause standard. The rule defines “effects of the action” as “all consequences to listed species or critical habitat that are caused by the proposed action…. A consequence is caused by the proposed action if it would not occur but for the proposed action and it is reasonably certain to occur.” 50 C.F.R. § 402.02 (emphasis added). The rule in turn defines “reasonably certain to occur,” and sets forth a nonexclusive list of factors the Services consider when evaluating whether effects caused by the proposed action are “reasonably certain to occur,” including (1) past experience with activities that have resulted from actions that are similar in scope, nature, and magnitude to the proposed action; (2) existing plans for the activity; and (3) any remaining economic, administrative, and legal requirements necessary for the activity to go forward. 50 C.F.R. § 402.17 (a) (1)-(3). Additionally, the rule includes factors for determining whether a consequence is caused by the proposed action, including whether the consequence is so remote in time or place from the action under consultation that it is not reasonably certain to occur or the consequence is only reached through a lengthy causal chain. “The Services’ test to determine the effects of the action, therefore, adopts analogous principles to those identified by courts for proximate causation.” 84 Fed. Reg. at 44,991.

The regulatory language is intended to provide a solid framework with specific factors for both action agencies and the Services to support their analyses.

NEPA Causation Standard

On January 10, 2020, CEQ issued a proposed rule to revise its NEPA regulations. See 85 Fed. Reg. 1,684. “Scope,” as defined by the existing regulations and the proposal, is “the range of actions, alternatives, and impacts to be considered in an environmental impact statement.” Confusion over the scope of review has been a source of delay in NEPA reviews because it can lead an agency to devote significant time and resources to evaluating effects not caused by the proposed action and well beyond the agency’s jurisdiction or control, thereby not only adding delays and costs but also distracting from key environmental issues that the agency can control.

The scope of an agency’s review is limited by a “rule of reason.” Dep’t of Transp. v. Public Citizen, 541 U.S. 752,767-70 (2004). As the Supreme Court has explained, an agency’s NEPA review is appropriately curtailed to exclude environmental effects where the agency lacks the “ability to prevent a certain effect due to its limited statutory authority over the relevant actions.” Id. at 770. “NEPA requires a ‘reasonably close causal relationship’ … analog[ous to] … the ‘familiar doctrine of proximate cause’ … in order to draw a manageable line between those causal changes that may make an actor responsible for an effect and those that do not.” Id. at 767.

Thus, CEQ’s proposal clarifies that “effects” must be “reasonably foreseeable and have a reasonably close causal relationship to the proposed action.” CEQ explains that “but for” causation is insufficient to satisfy the proposed rule’s “close causal relationship.” Rather, CEQ states that the standard “is analogous to proximate cause in tort law.” The analysis should not include effects that the agency has no ability to prevent due to its limited statutory authority or would occur regardless of the proposed action.

Conclusion

Implementation of the new ESA rules, and completion of the NEPA rulemaking, should provide important clarifications of the appropriate scope of analysis under the ESA and NEPA and could thereby reduce costs and risks for projects while improving environmental reviews and associated environmental benefits. To achieve these benefits, it will be essential that project proponents, and their consultants and advisors, understand and account for these new provisions.