and that "significance exists if it is reasonable to anticipate a cumulatively significant impact on the environment." Id. § 1508.27(b)(7). Further, the regulations make clear that "'cumulative impact' is the impact on the environment which results from the incremental impact of the action when added to other past, present, and reasonably foreseeable future actions regardless of what agency (Federal or non-Federal) or person undertakes such other actions." Id. § 1508.7.
In addition, CEQ regulations obligate federal agencies to adopt supplemental procedures, including specific criteria for identifying classes of actions that typically require environmental assessments
to determine whether an EIS is necessary, and classes of actions that typically require an EIS. Id. § 1507.3. The USPS's environmental procedures specify that new construction, "including lease-construction," of a postal facility of 30,000 or more square feet normally requires an environmental assessment, but does not normally require an EIS. 39 C.F.R. § 775.4(a)(2)(i)(A), (b)(1) (1993).
2. Standard of Review
The FONSI issued by the USPS constitutes a formal determination that the actions within its scope will not significantly affect the quality of the human environment and that, therefore, the preparation of an EIS is not warranted. In addition, implicit in the USPS's decision to limit the scope of the FONSI to its own actions is a second determination that the Project, as a whole, is not a major federal action.
In reviewing the first determination, this Court initially must be satisfied that the procedural requirements of NEPA have been satisfied. In particular, this Court must ensure that the environmental assessment "contains the type of reasoned elaboration required to support the agency's determination of no significant impact" in order to confirm that the USPS "has taken a 'hard look' at the environmental consequences which are likely to result" from its actions. Town of Orangetown, 718 F.2d at 35.
If NEPA's procedural requirements are satisfied, it is well settled that this Court must then determine whether the threshold finding that no EIS need be prepared is "arbitrary, capricious or abuse of discretion." Cross-Sound Ferry Servs., Inc. v. United States, 573 F.2d 725, 731-32 (2d Cir. 1978); accord Hanly II, 471 F.2d at 828-29 (citing the Administrative Procedure Act § 10, 5 U.S.C. § 706(2)(A)). Under this standard, the reviewing court "must consider whether the decision was based on a consideration of the relevant factors and whether there was a clear error of judgment." Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402, 416, 28 L. Ed. 2d 136, 91 S. Ct. 814 (1971).
In this context, it is arbitrary and capricious for an environmental assessment to "fail to address a significant environmental concern" resulting from a major federal action, Foundation on Economic Trends, 756 F.2d at 154 (citing Vermont Yankee Nuclear Power Corp. v. NRDC, 435 U.S. 519, 553, 55 L. Ed. 2d 460, 98 S. Ct. 1197 (1978)), or "for an agency not to take into account all relevant factors in making its determination" that no EIS is required, Hanly I, 460 F.2d at 648 (citing Overton Park, 401 U.S. at 416).
Relying primarily on Kleppe v. Sierra Club, 427 U.S. 390, 412, 49 L. Ed. 2d 576, 96 S. Ct. 2718 (1976), and Marsh v. Oregon Natural Resources Council, 490 U.S. 360, 377, 104 L. Ed. 2d 377, 109 S. Ct. 1851 (1989), LMP argues that this Court also should apply the "arbitrary and capricious" standard to the USPS's second determination, namely that the Project as a whole is not a federal action. However, Kleppe and Marsh are inapposite because neither case involved review of an agency determination that a particular action was a non-federal action outside of NEPA's reach rather than a federal action subject to NEPA. In Kleppe, the Supreme Court reviewed an agency decision to exclude certain federal actions from an EIS assessing the environmental impacts of other federal actions. See Kleppe, 427 U.S. at 408-15. The Kleppe Court applied the "arbitrariness" standard on the group is that assessing the relatedness and feasibility of the actions, all of which were federal actions potentially subject to NEPA, "requires a high level of technical expertise and is properly left to the informed discretion of the responsible federal agencies." Id. at 412. Similarly, in Marsh the Court used the "arbitrary and capricious" standard to review an agency decision not to supplement an EIS to take account of additional information on the environmental impact of a major federal action. Like the Kleppe Court, the Marsh Court reasoned that the agency's decision is "a classic example of a factual dispute the resolution of which implicates substantial agency expertise." Marsh, 490 U.S. at 376-77.
In contrast, the determination of whether an action is a federal action, as opposed to a private action, depends primarily upon the application of the legal standard "major Federal action" to the relevant facts. When the facts material to a determination of the scope of a "major Federal action" -- such as the degree of control the federal agency exerts over related private actions -- are in dispute, courts generally are no less expert than agencies in settling such disputes. Further, because such determinations are often implicit, agencies may not have engaged in fact-finding on the issue. For these reasons, courts apply the less deferential "reasonableness under the circumstances" standard in reviewing whether an agency has properly drawn the line between federal action and private action. See Sugarloaf Citizens Ass'n v. FERC, 959 F.2d 508, 512 (4th Cir. 1992); Goos v. ICC, 911 F.2d 1283, 1291-92 (8th Cir. 1990); Sierra Club v. Hodel, 848 F.2d 1068, 1088-92 (10th Cir. 1988).
Judicial review of administrative action is generally limited to the administrative record. See Florida Power & Light Co. v. Lorion, 470 U.S. 729, 743-44, 84 L. Ed. 2d 643, 105 S. Ct. 1598 (1985); Friends of the Earth v. Hintz, 800 F.2d 822, 828 (9th Cir. 1986). However, because NEPA does not require agencies to document their determinations that certain actions are private actions outside of the scope of NEPA, the administrative record is less complete on this issue than on it is on the issue of the scope of the environmental effects of the conceded federal actions. Therefore, in reviewing that determination, this Court will have recourse to the supplemental affidavits filed respectively by all parties to this action. Cf. Sierra Club v. United States Army Corps of Eng'rs, 772 F.2d 1043, 1052 (2d Cir. 1985) (endorsing recourse to affidavits from agency when "agency's record is so sparse as to make judicial review ineffectual").
3. Review of USPS Determinations Regarding Its Participation in the Project
First, this Court will assess whether the determination that the Project, as a whole, was not a major federal action was "reasonable under the circumstances." Second, this Court will assess whether the FONSI was "arbitrary and capricious."
a. The determination that the Project as a whole is not a major federal action was "reasonable under the circumstances"
As indicated above,
CEQ regulations define "major Federal actions" to include "actions with effects that may be major and which are potentially subject to Federal control and responsibility." 40 C.F.R. § 1508.18 (1992). Accordingly,
the distinguishing feature of "federal" involvement is the ability to influence or control the outcome in material respects. The EIS process is supposed to inform the decision-maker. This presupposes [the decision-maker] has judgment to exercise. Cases finding "federal" action emphasize authority to exercise discretion over the outcome.
Sierra Club v. Hodel, 848 F.2d at 1089 (quoting W. Rodgers, Environmental Law 763 (1977)); see also Almond Hill Sch. v. United States Dep't of Agric., 768 F.2d 1030, 1039 (9th Cir. 1985) (no federal action where indirect federal funding "seemed marginal at most" and where federal officials had no decision-making role). In assessing the degree of federal control and responsibility, this Court must consider both de lure and de facto influence. See Goos, 911 F.2d at 1294. In addition, federal actions with "cumulative or synergistic" impacts must be assessed in combination. Kleppe, 427 U.S. at 410; accord City of Rochester, 541 F.2d at 972-73; Town of Huntington v. Marsh, 859 F.2d 1134, 1142-43 (2d Cir. 1988).
Landmark West! identifies five actions of the USPS that, in combination, purportedly federalize the Project: (i) "terminating" its lease, (ii) vacating the old Ansonia Station building, (iii) asserting superior sovereignty, (iv) "lending" $ 15 million to the Project, and (v) paying for its condominium before vacating the old building. Further, Landmark West! has articulated six theories under which it contends that some or all of these USPS actions make the entire Project a "major Federal action." These theories are: leverage, causation, federal funding, contractual control, partnership, and preventing local environmental review.
Leverage. Landmark West! emphasizes that the USPS's leasehold interest in the old Ansonia Station gave the USPS leverage to bargain with the Project's developers.
However, Landmark West!'s portrayal of this leverage betrays its essentially obstructive, and therefore limited, nature: the USPS "could slow construction and raise costs by forcing LMP to 'build around' an operating post office" and "by doing nothing USPS could force LMP to build a project without Broadway retail space. thus depriving LMP of up to $ 198 per square foot per year for 16 years."
The evidence indicates that the USPS used this limited leverage not to control the design or construction or the Project, other than the New Facility,
but rather to obtain favorable financial terms from LMP through arms-length negotiation.
The fact that the USPS might have been able to exercise its leverage to control the Project, but did not do so, does not implicate NEPA. Cf. Defenders of Wildlife v. Andrus, 201 U.S. App. D.C. 252, 627 F.2d 1238, 1246 (D.C. Cir. 1980) ("No agency could meet its NEPA obligations if it had to prepare an environmental impact statement every time the agency had the power to act but did not do so.").
Causation. Landmark West! also contends that "but for" the actions of the USPS -- including its decision to vacate the old Ansonia Station building and accept a promissory note rather than cash in exchange -- the Project could not have gone forward. There is no dispute that "but for" the USPS decision to vacate the old Ansonia Station building, the Project would not be taking its present form. This is not, however, the equivalent of the Project being derailed or radically redesigned. Moreover, the fact that a federal action is a "but for" cause of a non-federal action does not, in itself, subject the non-federal action to NEPA. See Ringsred v. City of Duluth, 828 F.2d 1305, 1308 (8th Cir. 1987); Save the Bay, Inc. v. United States Corps of Eng'rs, 610 F.2d 322, 327 (5th Cir.), cert. denied, 449 U.S. 900 (1980); N.A.A.C.P. v. Medical Ctr., Inc., 584 F.2d 619, 630-34 (3d Cir. 1978); Sugarloaf Citizens Ass'n, 959 F.2d at 514.
Rather, federal action must be sufficiently "interrelated" to otherwise non-federal action in order to subject the non-federal action to NEPA. City of Boston v. Volpe, 464 F.2d 254, 257-58 (1st Cir. 1972); see also Friends of the Earth, Inc. v. Coleman, 518 F.2d 323, 328-29 (9th Cir. 1975) (federal action must be functionally interdependent with otherwise non-federal action, and not merely complementary, to federalize non-federal action). In this regard, it is significant that the old Ansonia Station building occupied only the western portion of the Site, so it would not have prevented development of the eastern portion of the Site.
In order to assess the causative significance of the USPS's actions, this Court need not accept LMP's claim that the "46-story tower that constitutes most of the [Project] is being built entirely on the eastern portion of the Site,"
nor determine whether a "similar" project built on the entire Site would have been architecturally feasible had the USPS remained in the old Ansonia Station building.
In terms of causation, this Court is satisfied that given LMP's undisputed intention to develop at least the eastern portion of the Site, and absent any evidence that LMP would not have been able to build the bulk of the Project there, the USPS's decision to vacate the old building is insufficient to federalize the entire Project.
Federal funding. Landmark West! contends that the USPS's financial participation in the Project constitutes "federal funding" within the meaning of cases holding that such funding federalizes the entire project for NEPA purposes. The USPS did pay LMP $ 9.8 million for the New Facility, and it also accepted a $ 15 million promissory note, rather than cash, in exchange for its leasehold interest in the old Ansonia Station building. But the cost of the entire Project has been estimated at more than $ 250 million.
In cases considering whether federal funding federalizes an entire project,
courts have considered the degree to which the funding was essential to the project. See, e.g., Proetta, 484 F.2d at 1148-49; Almond Hill, 768 F.2d at 1039. Here both the relative magnitude of the USPS's financial participation and an opinion from LMP's financial advisor
warrant the conclusion that the USPS's financial participation was incidental to the Project. Thus, even if the transactions between the USPS and LMP involved "federal funding," subjecting the entire Project to NEPA on this basis alone would "let the tail wag the dog." Friends of the Earth, 518 F.2d at 329.
Nonetheless, this Court cannot accept Landmark West!'s characterization of the $ 9.8 million payment and the acceptance of a promissory note as "federal funding" as the term is used in NEPA cases. These transactions between the USPS and LMP were part of market transactions that did not give the USPS control over the Project as a whole. It is significant that the CEQ regulation's definition of "major Federal action" excludes certain funding assistance "with no Federal agency control over the subsequent use of such funds." 40 C.F.R. § 1508.18(a) (1992). Further, in cases in which "federal funding" has subjected a project to NEPA, the funding has been active, as opposed to the passive deferral of a payment, and programmatic, in the sense of being provided primarily to directly further a policy goal of the funding agency. See, e.g., San Francisco Tomorrow v. Romney, 472 F.2d 1021, 1022 (9th Cir. 1973) (urban renewal loans and grants); Named Individual Members of San Antonio Conservation Soc'y v. Texas Highway Dep't, 446 F.2d 1013, 1028 (5th Cir. 1971), cert. denied, 406 U.S. 933, 32 L. Ed. 2d 136, 92 S. Ct. 1775 (1972) (federal highway aid). In such cases, there is more likely to be federal legislative control over the recipients and uses of such funds, because funds flow from the Treasury pursuant only to Congressional appropriation and control, see U.S. Const. art. I, § 9, cl. 7; 31 U.S.C. § 1301 (1988), and because programmatic funding is more likely to carry regulatory strings than are federal payments for goods or services.
There is no reason to believe that purchase of the New Facility involved anything more than an arms-length payment for the purchase of the New Facility, as opposed to a federal grant to LMP to build the Project.
Therefore, while the USPS's purchase of the New Facility required the USPS to prepare an environmental assessment of the New Facility, it did not require the USPS to trace LMP's use of the $ 9.8 million in order to assess the environmental impact. Similarly, there is nothing to suggest that the USPS's decision to accept a promissory note rather than cash was not a negotiated structuring of LMP's payment for the surrender of the USPS's leasehold. The USPS's decision to accept deferred payment in return for relinquishing the deferred benefit of lower rent payments over the life of the lease carries none of the potential legal strings of a federal loan. Overall, Landmark West! has failed to establish the existence of any legal control by the USPS over the Project resulting from the USPS's acceptance of the promissory note, other than the limited contractual control discussed next.
Contractual control. The USPS has extremely limited contractual ability to control the Project, other than the New Facility, particularly with respect to its environmental effects. As documented in the Agreement between the USPS and LMP, the ability of the USPS to influence or control the design and construction of the Project extends almost exclusively to the New Facility, with purely incidental negative control over other aspects of the Project. Under the Agreement, the USPS generally is permitted to veto certain changes and additions to those portions of the Project plans that "pertain to" the construction of the New Facility or the construction of other portions of the Project that would affect sufficiently the use and operation of the New Facility.
The Agreement also grants the USPS the limited ability to change the plans pertaining solely to the New Facility, which will constitute 45,000 square feet of a building that will approach 800,000 square feet.
Such minimal control is insufficient to federalize the Project. Cf. Macht v. Skinner, 286 U.S. App. D.C. 296, 916 F.2d 13, 19 (D.C. Cir. 1990) (project is not federalized by fact that federal agency "has discretion over only a negligible portion of the Project").
Further, the Agreement has been structured to insulate LMP from control by the USPS. The Pledge does give the USPS the power to vote against changes in the Lincoln Metrocenter Partners, L.P. partnership agreement.
However, there is no indication that this gives the USPS any control over the size of the Project, its shape, or its uses.
Partnership. Landmark West! contends that the degree of the USPS's participation in the Project -- particularly the fact that Opera's promissory note to the USPS is secured by Opera's limited partnership interest in LMP -- makes the USPS a "de facto development partner" of LMP.
A number of cases have suggested that a non-federal entity can be subjected to NEPA if it acts in partnership with a federal agency. See Sierra Club v. United States Army Corps of Eng'rs, 732 F.2d 253, 259 (2d Cir. 1984); Biderman, 497 F.2d at 1147; Proetta, 484 F.2d at 1148-49; Dalsis, 424 F. Supp. at 787.
These cases use the term "partnership" to refer to an admixture of factors already analyzed in this opinion -- namely, funding, causation, and control. See Sierra Club v. United States Army Corps of Eng'rs, 732 F.2d at 259 (partnership rationale requires "necessary nexus" of federal funding); Biderman, 497 F.2d at 1147 (partnership or joint venture implies federal funding); Proetta, 484 F.2d 1146 at 1148-49 (no partnership where non-federal actions could proceed independently of federal funding). The facts of Dalsis, the only of these cases in which a "partnership" was found to exist, illustrate the concept of partnership as used in this context. In Dalsis, the United States Department of Housing and Urban Development ("HUD") facilitated an urban renewal project by funding the demolition of substandard buildings and by approving, "pursuant to a special environmental clearance," the private development of a mall. Id. Although HUD did not directly fund the development of the mall, Judge Elfvin ruled that the private developer could be enjoined in the event HUD failed to comply with NEPA. Id. Under these circumstances, HUD was a significant causative factor, both as a matter of law and as a matter of fact, in the private development. More significantly, HUD apparently approved the development only after reviewing its environmental effects, thus providing HUD control over the environmental impact of the development. As discussed above, the indicia of the USPS's de facto and de jure control over the Project are much weaker in the present case, and the USPS had no control over the environmental impact of the Project as a whole. Accordingly, this Court declines to hold that the USPS entered into a "partnership" with LMP, as that term is used in cases construing the reach of NEPA.
Preventing local environmental review. Landmark West! contends that the USPS's ability to invoke superior sovereignty "shields" the entire Project from local environmental review. However, the Project complies with local zoning laws except for the loading docks.
The invocation of superior sovereignty will permit the loading docks only if they are used exclusively by the USPS. Since the USPS, the loading docks, and the ability to invoke superior sovereignty are essentially a "package" deal, the Project is not subject to local environmental review regardless of whether the USPS participates.
Conclusion. As the USPS has emphasized, the ubiquitous actions and inactions of federal agencies affect the likelihood of private undertakings, as well as their benefits and burdens, in innumerable ways. In this context, it would make no sense to require federal agencies to assess the environmental impact of private actions over which they have no control, solely on the basis of the incidental effects of federal action on the private action. Fortunately, there is no indication that in enacting NEPA Congress intended to do so.
In this case, the USPS has participated, on an arms-length basis, in a private development. Factually, its actions were merely incidental to the private development and, legally, the development has been insulated from USPS control. Accordingly, this Court holds "reasonable under the circumstances" the USPS's implicit determination that the environmental impact of the Project as a whole did not have to be considered in the environmental assessment underlying the FONSI.
b. The FONSI was not "arbitrary and capricious"
Landmark West! argues that the FONSI was "arbitrary and capricious" because it was based upon an environmental assessment that failed to consider relevant environmental impacts, including the effects of the Project as a whole or, at a minimum, a claimed increase in pedestrian and vehicular traffic to the Broadway side of the Project. The neighborhood group advances a number of theories under which the USPS had an obligation to assess these impacts, including the argument that the entire Project is itself an impact of the USPS's "abandonment" of the old Ansonia Station building, and the contention that the entire Project is a "cumulative impact" subject to assessment.
Landmark West! argues that the USPS's abandonment of the old Ansonia Station building required the USPS to assess the environmental impact of the proposed subsequent use of the western portion of the Site -- specifically, construction of the entire Project. To support this contention, Landmark West! relies upon cases holding that when a federal agency sells federal land, NEPA requires assessment of the environmental consequences of prospective buyers' likely uses of the land. See Lockhart v. Kenops, 927 F.2d 1028, 1035-36 (8th Cir.), cert. denied, 116 L. Ed. 2d 148, 112 S. Ct. 186 (1991); Conservation Law Found. v. General Srvs. Admin., 707 F.2d 626, 634 (1st Cir. 1983). This Court in extremely hesitant to extend the rule of Lockhart from the context of a sale of federally owned land to the context of a substantial modification of a federal lease for privately owned office space. Even if this Court were to do so, the USPS would not be responsible for assessing the likely future uses of the entire Site. Rather, the USPS would be obligated only to assess the effect of modifying its lease, and of abandoning the old Ansonia Station building, on the reuse of the space that it controlled under the lease. (It should be noted that the USPS controlled only a portion of the old Ansonia Station building, a building that no longer exists.) Without deciding that the USPS was required to do so, this Court observes that the USPS made such an assessment. The USPS expressly determined that a building similar to the Project would be built regardless of whether it vacated the old Ansonia Station building and that, therefore, the effect of its vacating the old building on the reuse of the space was merely a reconfiguration of the uses in the Project.
This Court does not find this conclusions to be arbitrary or capricious.
Consequently, the USPS considered the rearrangement of space on both vehicular and pedestrian traffic.
Landmark West! also contends that the entire Project falls within the "cumulative impact" of the USPS's actions. CEQ regulations define "cumulative impact" as "the impact on the environment which results from the incremental impact of the [federal] action when added to other past, present, and reasonably foreseeable future actions" of others, including private parties. 40 C.F.R. § 1508.7 (1992) (emphasis supplied). Thus, the USPS is required to assess the impacts of its actions in the context of the foreseeable actions of others. See United States v. 27.09 Acres of Land, More or Less, 760 F. Supp. 345, 351 (S.D.N.Y. 1991). This entails the consideration of the foreseeable actions of others as background factors, but does not require that the impacts of others' actions be weighed in assessing the significance of USPS actions. Rather, the USPS need weigh only the marginal impacts of its own actions.
In preparing the amended environmental assessment, the USPS was obligated to consider all of its actions relating to the Project, including the relocation of the Ansonia Station post office and the construction of the New Facility (including the five loading docks). While the amended environmental assessment typically refers to the federal action being assessed merely as the "relocation" of the USPS operations, it also takes into account the actual construction of the New Facility,
and the invocation of superior sovereignty to allow the loading docks,
where relevant. Clearly, it would have been preferable for the USPS to make clear that the construction of the New Facility was an action under study. But it was sufficient for the USPS to assess the impact of this construction, without explicitly identifying the construction of the New Facility as federal action.
As indicated above, it was proper for the USPS not to consider the construction of the Project, other than the New Facility, a federal action.
The USPS was obliged to consider the Project as a backdrop to its own actions, and the USPS did so. The amended environmental assessment acknowledges the proposed Project, as well as other proposed development projects, in its discussion of the proposed USPS's actions on "Land Use and Zoning Patterns."
The amended environmental assessment also discusses, as background considerations, the impacts of the proposed Project on traffic and housing.
This Court notes that the emphasis of the amended environmental assessment on the relocation of operations, and the lack of emphasis on the construction of the New Facility and the background influence of other proposed projects, makes the document less than a model of forthright disclosure of potential impacts. However, the Second Circuit has made clear that an EIS, which is a more comprehensive document than an environmental assessment, compare 40 C.F.R. § 1508.9 (definition of environmental assessment) with 40 C.F.R. § 1508.11 (definition of EIS), need not discuss environmental impacts in "exhaustive detail," but rather need only "furnish such information as appears to be reasonably necessary under the circumstances for the evaluation of the project." Britt v. United States Army Corps of Eng'rs, 769 F.2d 84, 91 (2d Cir. 1985). The amended environmental assessment addresses all relevant considerations in sufficient detail, so its shortcomings in emphasis cannot be deemed to render "arbitrary and capricious" the FONSI it inspired.
For the foregoing reasons, Landmark West!'s motion for summary judgment is denied, LMP's motion for summary judgment is granted, and the USPS's motion for summary judgment is granted. Accordingly, the complaint is dismissed and the Clerk is directed to enter judgment in favor of the defendants.
DATED: December 29, 1993