THE SECRETARY'S DECISION TO GRANT
THE PERMITS WAS ARBITRARY, CAPRICIOUS

AND AN ABUSE OF DISCRETION

As demonstrated at Points I-III, supra, the Secretary has violated the procedural requirements of NEPA. His decision to grant the permits, therefore, must be set aside under the Administrative Procedure Act, which requires the reviewing court to "hold unlawful and set aside agency action . . . [taken] without observance of procedure required by law." 5 U.S.C. § 706 (2) (D) (Supp. V.).

In addition to its procedural requirements, however, NEPA also establishes substantive standards (NEPA § 101, 42 U.S.C. § 4331) designed to insure that its policies are implemented. While it has been held that these substantive standards "leave room for a responsible exercise of discretion and may not require particular substantive results in particular problematic instances," Calvert Cliffs, 449 F.2d at 1112, "discretion to decide does not include a right to act perfunctorily or arbitrarily." Ely v. Velde, 451 F.2d 1130, 1138 (4th Cir. 1971).

The traditional standard of the Administrative Procedure Act which requires a reviewing court to set aside action which is "arbitrary, capricious [or] an abuse of [132] discretion," 5 U.S.C. § 706 (2) (A), applies fully to substantive decisions under NEPA. And, numerous courts have so held.s

8G See, e.g., Hanly v. Mitchell, 3 ERC 1152, 1157 (2d Cir., 1972); Calvert Cliffs, 449 F.2d at 1115; Ely v. Velde, 451 F.2d at 1138; Goose Hollow Foothills League v. Romncy, 334 F. Supp. 877, 879 (D. Ore., 1971); Echo Park v. Romney, 3 ERC 1255, 1256 (C.D. Cal., 1971): Scherr v. Volpe, 3 ERC 1588, 1589 (W.D. Wis., 1971); NRDC v. Grant, 3 ERC 1883, 1890 (E.D. N.C., 1972); Akers v. Resor, 3 ERC 1979, 1982 (W.D. Tenn., 1972); EDF v. Corps of Engineers (Gillham Dam), 325 F. Supp. 749, 763 (E.D. Ark., 1971).

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The Supreme Court recently articulated the governing standard in another environmental case, involving federal highway legislation. Citizens to Preserve Overton Park v. Volpe, 401 U.S. 402 (1971). The Court ruled that to make a finding that agency action was not arbitrary, capricious, or an abuse of discretion:

the court must consider whether the decision was based on a consideration of the relevant factors and whether there has been a clear error in judgment. . . ." (401 U.S. at 417).

The focus of inquiry under the standards of the APA is twofold: whether the agency's principal assumptions and determinations reasonably conform to the statutory standard, and whether the relevant facts available 87 to the agency [133] rationally support its ultimate conclusions. Without a requirement of reasoned decisionmaking, effective judicial review would be impractical if not impossible, and administrative litigants and the public would be set adrift on a "sea of unconscious preference and irrelevant prejudice." Columbia Broadcasting System v. FCC, No. 24,655 (D.C. Cir., Nov. 15, 1971) slip op. at 15. This inquiry is broader than the good or bad faith of the agency.

A. The Secretary Did Not Take Into Account All Relevant Environmental Factors

While courts have held-prior to enactment of NEPA -that an administrative decision which ignores relevant environmental factors is arbitrary and an abuse of the

S7 An agency may not [omit] to inform itself and [act] ignorantly when intelligent action is possible." Isbrandtsen v. United States, 96 F. Supp. 883, 892 (S.D. N.Y., 1951), aff'd, 342 U.S. 950 (1952). See also, Scenic Hudson v. FPC, 354 F.2d 608 (2d Cir., 1965), cert denied, 384 U.S. 941 (1966). As emphasized in Wellford v. Ruckelshaus, 439 F.2d 598, 601 (D.C. Cir., 1971), the courts have an "obligation to ensure that the administrator has made a reasoned decision which conforms to the legislative language and purpose."

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administrator's discretion, NEPA has, of course, made meaningful consideration of the environment explicit. The passage of NEPA removed the guess work regarding what the parameters of the Secretary's consideration of these environmental factors must be. He must-to the "fullest extent possible," using "all practicable means" (NEPA §§ 102(1), 101 (b), 42 U.S.C. $$ 4332(1), 4331 (b))-study environmental factors with a view to minimizing harm, and he must use that information to balance the benefits of the project against the environmental costs, taking into consideration alternatives to the proposal.

[134] As set forth in detail in the preceding sections of this brief, both in its Impact Statement and in the decisionmaking process generally, the Interior Department failed to consider adequately numerous critical aspects of the proposed project. These include the alternative of deferral, the alternative of a route through Canada, future development of natural gas resources, and the alternative of a common corridor through Canada containing both gas and oil pipelines. Moreover, the Department has failed to determine and even preliminarily quantify the extent of environmental degradation which could be caused by this project, largely because of the many environmental unknowns (P. App. B). Therefore, the Secretary could not base his decision on a comparison of environmental costs and economic benefits.

Clearly the Secretary's decision to grant the permits could not possibly have been "based upon a consideration of" or "taken into account" the factors cited above, within the meaning of NEPA, because he lacked essen

88 In Scenic Hudson v. FPC, 354 F.2d 608 (2d Cir., 1965) ccrt. denied, 384 U.S. 941 (1966), for example a decision of the Commission was set aside for a failure to compile a record sufficient to support its decision. The Court found that many relevant factors had not been treated thoroughly, including various alternatives to the proposal, burial of the transmission lines, and effects on fish. See also Udall v. FPC, supra.

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tial information about them.89 "Consideration" of the environmental impacts [135] of a Canadian pipeline, within the meaning of NEPA, was not possible without knowledge of the environmental savings which could be achieved by a common corridor. The Secretary did not have that knowledge because no analysis of those savings was ever done. "Consideration" of the benefits of deferral, within the meaning of NEPA, required knowledge about the informational gaps that could be filled by deferral for varying lengths of time. The Secretary did not have that knowledge because such an assessment was never made by the Department. Similarly, because in so many areas there was not even a general determination of environmental harm which might be caused by the project, the decisionmaking process could not possibly evaluate the relative costs and benefits of the pipeline in any rational manner.

Thus, the Secretary's principal assumptions in this case conform neither to the statutory standard set out by Congress, nor the legislative purpose in passing NEPA. He did not have the information necessary to a rational decision minimizing environmental harm. His decision, therefore, is arbitrary and must be reversed. Hanly v. Mitchell, 2 ELR 20216 (2d Cir., 1972).

89 The Secretary might have had much of this information had he followed the procedures mandated by the Act as set forth at pp. 49ff., supra. In particular, the Secretary has not had the benefit of the views of (1) other federal agencies with interest and/or knowledge concerning the project; (2) relevant state agencies in Washington and California; (3) individual experts within those agencies; (4) knowledgeable public experts; (5) the general public; and (6) the Canadian government. As indicated at pp. 49ff., that benefit would have been substantial.

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[136]

B. The Secretary Arbitrarily, Capriciously, And In Abuse of Discretion Based His Decision On Speculative Nonenvironmental Grounds

The Secretary's decision to reject both the Canadian alternative and the alternative of deferral was based essentially upon asserted disadvantages to national security and to the economy of the nation, the State of Alaska, and the Alaskan natives from delayed delivery of North Slope oil. Yet, the Secretary did not have essential estimates of the environmental advantages of deferral or the Canadian alternative against which .to balance the asserted disadvantages. See pp. 133-135, supra. And, with respect to the Canadian alternative, the information upon which the estimates of delay and practical difficulty were based was so needlessly speculative as to render the decision regarding it totally arbitrary.

In rejecting the Canadian alternative in his Statement of Reasons, Secretary Morton relied primarily on three factors:

1. Financing difficulties caused by Canadian requirements for participation in the financing and ownership of the pipeline;

2. The Canadian requirement that pipelines operate as common carriers, as a result of which a share of the capacity of the pipeline might ultimately have to be used for transport of Canadian Arctic oil; and

3. Delay required for obtaining Canadian approval and for construction of the longer Canadian route. [137] No one in the Department has ever seriously discussed any of these subjects with the Canadian government nor has anyone in the Department undertaken any independent analysis of them. The speculative nature of