▪ Superferry EIS Case Summary pt. I: Do Statutory Exemptions Mean Anything?

What purpose is served by the Legislature providing for an environmental assessment "exemption" if there are always exceptions to the exemption? 

That is the question raised by the Hawaii Supreme Court's opinion in the "Hawaii Superferry EIS case," Sierra Club v. State of Hawaii Dep't of Trans., No. 27407 (Aug. 31, 2007).

This post looks at the substantive issue in the case -- whether DOT erred when it determined that improvements to Maui's Kahului Harbor were within the categorical administrative exemptions to the Hawaii Environmental Policy Act, Haw. Rev. Stat. ch. 343, and therefore no Environmental Assessment was necessary. The Hawaii Supreme Court held DOT was wrong, and the improvements were not exempt.  The issue of "standing" took up a majority of the court's opinion, and I deal with that issue in this post.

I won't go into a blow-by-blow outline of the court's reasoning, which you can read for yourself, but will hit some key points that seem to have been overlooked so far in the analysis of the opinion.

I.  EA Needed, Unless Exempt

For certain triggering events, the government is required to produce an Environmental Assessment, unless the action has been declared "exempt."  As the court noted:

Projects are subject to the law if they (1) are either initiated by a government agency ("agency actions") or by a private party who requires government approvals for the project to proceed ("applicant actions"), and (2) propose one or more of nine enumerated land uses or administrative acts, known as "triggers." See HRS § 343-5(a)(1)-(9); Guidebook [for the Hawaii State Environmental Review Process], supra, at 9. If a triggering event occurs, an EA must be prepared, unless the program or project is declared exempt.

Slip op. at 7 (emphasis added).  There was no dispute that the improvements to the State's Kahului, Maui, harbor facility necessary for the Superferry's Maui service were a "trigger" to an EA, and the only question was whether the State DOT was correct when it declared the improvements fell within a categorical exemption. 

II.  Administrative Exemption Rulemaking

In chapter 343, the Legislature delegated to the State of Hawaii Environmental Council the authority to create rules for the processing of EA's and EIS's, and the authority to establish a process by which certain actions may be declared exempt because they will "probably" have little environmental effect:

(a)  After consultation with the affected agencies, the council shall adopt, amend, or repeal necessary rules for the purposes of this chapter in accordance with chapter 91 including, but not limited to, rules which shall:

. . . .

     (7)  Establish procedures whereby specific types of actions, because they will probably have minimal or no significant effects on the environment, are declared exempt from the preparation of an assessment;

Haw. Rev. Stat. § 343-6(a)(7).  These rules are set forth in Haw. Admin. R. § 11-200-1 et seq. and are published here.  Those rules provide categorical exemptions for certain "classes of action," set forth in detail in Haw. Admin. R. § 11-200-8(A).

III.  Agency Determinations of Categorical Exemption & Standards of Review

The very existence of a statutory exemption regime implies that the Legislature contemplated there are circumstances when an agency can determine there is no need for an EA.  The common meaning of the word exemption suggests some form of immunity or release from some duty.  Thus, it would have made little sense for the Legislature to have empowered the council to create an exemption process were it not understood that whatever actions determined to be exempt would be, for the most part, immune from full-blown judicial review each and every time a third party complained that the categorical exemption was applied in error. 

Otherwise, if every exemption determination was subject to an in-depth de novo legal challenge on the basis that the agency was merely incorrect, then there would be as a practical matter no "exemption" at all.  Such an interpretation would instead represent only a shift in the forum from the agency to a court, and a shift in the players from the public to self-appointed litigants.

Thus, it seems like the issue posed by the case was not whether the Superferry merited its exemption because it probably would or would not have environmental effects, but whether DOT exceeded its authority when it determined Superferry fell within one of the categorical exemptions.  But that is not the way the issue was framed by the opinion.  In other words, the case was essentially decided on the standard of review.

The federal courts, in challenges to a federal agency's decision to declare a proposed activity exempt (also known as a Categorical Exclusion, or a "CATEX") from an EA under the National Environmental Policy Act, rely upon a fairly deferential standard of review: the decision may only be set aside if it is "arbitrary and capricious."  See, e.g., Marsh v. Oregon Natural Resources Council, 490 U.S. 360 (1989); Alaska Center for the Environment v. U.S. Forest Service, 189 F.3d 851 (9th Cir. 1999).  A deferential standard permits agencies, not courts, to make exemption decisions, and keeps the policy and technical discussions in the Legislature's intended fora (the agencies), with a court intervening only when it appears the agency has exceeded its authority or its discretion.

In contrast, the Hawaii Supreme Court's treatment of the standard of review -- refusing to recognize agency discretion in the determination of whether a proposed class of actions will "probably have minimal or no significant effects on the environment" -- has, in effect, transferred the legislative delegation of power to determine categorical exemptions from agencies to whomever can demonstrate "standing" in a lawsuit.  And, as we all know, the Hawaii Supreme Court's standing criteria are notoriously low and notoriously flexible, permitting practically anyone claiming "environmental" or "recreational" injury to sue; it is more of a technical hurdle for plaintiffs' lawyers to plead around than a realistic gatekeeping device.  More on the standing issue here.

IV.  Exempt...Unless Not Exempt?

The non-deferential standard of review applied by the Hawaii Supreme Court means that there is little standing in the way of a lawsuit whenever it can be alleged that the agency is merely incorrect.  An action that has been determined to be within a categorical exemption can be challenged when, in a paraphrase of the statute, it "probably will [not] have minimal or no significant effects on the environment."  But if  a categorical exemption can be easily challenged, is there really an exemption as the term is commonly used? 

In that vein, however, the Superferry opinion may simply be the terminus of a road the court started down long ago.  As the opinion itself referenced, the court has in earlier cases taken on the role of "qualitative" judge of exemption determinations.  See Kahana Sunset Owners Ass'n v. County of Maui, 86 Haw. 66, 947 P.2d 378 (1997).  In that case, the court held that an exemption was inconsistent with "the letter and the spirit" of chapter 343, which impliedly required agencies to not only generate classes of exempt activities, but to make a determination in every case that the proposed activity will "probably have minimal or no significant effects on the environment." 

What the Superferry opinion adds on top of that is a non-deferential standard of review virtually assuring that judges may in any case micromanage an exemption determination, with the decision as to whether to hold up an exempted action turned over to anyone who meets the court's low threshold of standing to sue.   

The end result of the Superferry opinion seems to be that the Legislature's exemptions don't appear, in the court's view, to exempt much of anything.

* * * * *

Sidebar: A commenter asks a good question --

wasn't the issue not that the DOT was wrong, per se, but that it didn't follow the proper exemption process and consider secondary impacts? that would probably have been suspect even under the federal court standard.

One of the problems is contained in the language of the exemption rules themselves.  That language is an "exception to the exceptions," and provides that actions which have been declared exempt "because [usually] they will probably have minimal or no significant effects on the environment" can be declared not exempt because they may nonetheless have significant impact in a particular case:

    All exemptions under the classes in this section are inapplicable when the cumulative impact of planned successive actions in the same place, over time, is significant, or when an action that is normally insignificant in its impact on the environment may be significant in a particularly sensitive environment.

Haw. Admin. R. § 11-200-8(B). This process is similar to federal agency treatment of categorical exemptions under NEPA, so it should not impact the deference level of the standard of review.   

To address your two questions. 

First, my read of the opinion wasn't that it was limited to process analysis, as it would have been under a deferential standard of review.  The court dealt with the qualitative validity of the DOT's decision, not just whether it followed procedures. The arbitrary and capricious standard means that a court doesn't really inquire whether an agency is correct or not, just whether it is in the ballpark and has otherwise remained within its legal constraints.  Statutes like HEPA are "study and disclose" regimes, not "zero tolerance" laws; they are risk measurement tools, not guarantees against environmental harm.  So the issue under a deferential standard of review is not necessarily the risk involved, but whether the agency has been provided enough information to analyze the risk before it makes its decision. 

The court's treatment of the issue begins on page 83 of the slip opinion, and focuses on the question of the scope of the exempted action: whether it was simply minor improvements to Kahului Harbor, or whether the exemption determination also was required to look at the bigger picture, the Superferry project (either in whole, or as it relates to Maui service).  The court avoided ruling that the project needed to be considered as a whole, relying instead on "secondary impacts," holding, as you note, that the record did not indicate that DOT considered secondary impacts.  See slip op at 90 - 101.  Would it have made any difference to the court if the record did show that DOT considered, but rejected, alleged secondary impacts? 

This goes to the second part of your comment, and you may be right that even under a deferential standard of review, DOT's exemption may have been insufficient.  We don't know, of course, how the Hawaii Supreme Court would apply an "arbitrary and capricious" standard to the record in the Superferry case and whether that would be enough to alter the outcome.