                                                                         [PUBLISH]

                 IN THE UNITED STATES COURT OF APPEALS

                          FOR THE ELEVENTH CIRCUIT

                            ________________________

                                   No. 97-8872
                            ________________________

                          D. C. Docket No. 3:95-CV-37-JTC

RICHARD S. HILL;
DERRILL M. MAXWELL, et al.,
                                                                Plaintiffs-Appellants,

                                        versus

WAYNE W. BOY, Col., District Engineer,
Savannah, U.S. Army Corps of Engineers;
JOHN H. ZIRSCHKY, Acting Assistant
Secretary of the Army (Civil Work), et al.,
                                                               Defendants-Appellees.

                            ________________________

                     Appeal from the United States District Court
                        for the Northern District of Georgia
                          _________________________

                                    (July 2, 1998)

Before ANDERSON and BIRCH, Circuit Judges, and COHILL*, Senior District Judge.

ANDERSON, Circuit Judge:


___________________
* Honorable Maurice B. Cohill, Senior U.S. District Judge for the Western District of
Pennsylvania, sitting by designation.
       In this case, the appellants challenge the United States Army Corps of Engineers’

issuance of a section 404 permit under the Clean Water Act, 33 U.S.C. § 1344, for the

proposed construction of a reservoir and dam in Carroll County, Georgia. We affirm in

part, vacate in part, and remand. Because we conclude that the Corps of Engineers did not

adequately consider the potential adverse environmental impact of a petroleum pipeline

that crosses underneath the proposed reservoir, we vacate in part and remand to the district

court with instructions for the district court to remand the section 404 permitting decision

to the Corps of Engineers.

                      I. FACTS AND PROCEDURAL HISTORY

       On August 10, 1994, the United States Army Corps of Engineers (“Corps”)

issued a section 404 permit under the Clean Water Act (“CWA”), 33 U.S.C. § 1344,1 to

the Carroll County Water Authority (“Water Authority”). The section 404 permit

authorized the Water Authority to discharge 320,000 cubic yards of dredged and/or fill

material into the waters of Snake Creek and adjoining wetlands for the construction of

an earthen dam and a 650 acre reservoir.2 The reservoir is proposed to be used as a

       1
         Section 404 of the CWA provides that “the Secretary [of the Army] may
issue permits . . . for the discharge of dredged or fill material into the navigable
waters at specified disposal sites.” 33 U.S.C. § 1344 (1986).
       2
        Over thirty-three acres of wetlands and three miles of the Snake Creek’s
channel would be impacted by the discharge of the dredged and/or fill material.
The section 404 permit required that the Water Authority implement a “Wetland
Replication and Restoration Plan” in which approximately 19.77 acres of
wetlands would be created and approximately 37.43 acres of existing wetlands
would be preserved.
                                             2
public water supply and for compatible public recreational activities. In issuing the

section 404 permit and approving the project,3 the Corps prepared an Environmental

Assessment (“EA”) in which the Corps concluded that

      the proposed work will not have significant adverse effects on the quality
      of the human environment. The proposed action does not constitute a
      major Federal Action significantly affecting the quality of the human
      environment; and, therefore, does not require the preparation of a detailed
      statement under Section 102(2)(C) of the National Environmental Policy
      Act of 1969 (42 U.S.C. 4321 et seq.).

In making a “finding of no significant impact” (“FONSI”), and thus deciding not to

prepare an environmental impact statement (“EIS”), the Corps assumed that a liquid

petroleum pipeline that crosses underneath the proposed Snake Creek reservoir would

be relocated by the Water Authority.4 In the EA for the Snake Creek project, the Corps

responded to objections raised by the public, including objections raised by the

plaintiffs in the instant case. The Corps stated the objections about the petroleum

pipeline and the Corps’ responses as follows:




      3
         The Administrator of the Environmental Protection Agency (EPA) did
not seek to overrule the Corps’ issuance of the section 404 permit nor seek to
enjoin the activities authorized by the permit.
      4
         Although the Water Authority stated in its application for the section
404 permit that a natural gas pipeline crossed underneath the proposed site of the
Snake Creek reservoir and that “[n]o activities that release oils or other
pollutants will be permitted in or around the proposed reservoir,” the Corps
learned that a petroleum pipeline crosses underneath the site of the proposed
reservoir.
                                            3
       (g) The application indicated that a natural gas pipeline crossed the
       project area, when in fact the pipeline is a liquid petroleum pipeline. The
       applicant has indicated that the pipeline would be relocated. . . .
       (p)(4) The application did not contain a contingency plan for actions to be
       taken in the event of a spill from the petroleum line currently located
       within the project area. This plan is not necessary since the line would be
       relocated.

(public objections underlined). In the appendix to the EA, entitled “Evaluation For

Compliance With 404(B)(1) Guidelines,” the Corps stated that “there is a liquid

petroleum transfer line passing through the project area. There is no known

documentation of any accidental spills from this pipeline. The applicant would be

required to relocate this line outside the limits of the project area prior to reservoir

impoundment.” However, the relocation of the petroleum pipeline was not made a

condition of the Water Authority’s section 404 permit and the administrative record

before the Corps did not indicate that any specific plan of relocation existed.

       In May 1995, the appellants, a number of property owners whose homes are

located below the proposed dam (hereinafter “the property owners”), filed a four-count

complaint against the EPA and the Corps. In Count I, the property owners challenged

the Corps’ issuance of a section 404 permit to the Water Authority, alleging that the

Corps failed to clearly demonstrate that the proposed Snake Creek reservoir was the

least environmentally damaging practicable alternative. In Count II, the property

owners alleged that the EPA should have vetoed the Corps’ issuance of the section 404




                                              4
permit under section 309(c) of the CWA, 33 U.S.C. § 1344(c).5 In the third count of

their complaint, the property owners alleged that the Corps failed to prepare an EIS as

required under the National Environmental Policy Act (“NEPA”), 42 U.S.C. §

4332(2)(C). Finally, in Count IV, the property owners alleged that the Corps’ issuance

of the section 404 permit was arbitrary, capricious, and otherwise not in accordance

with the CWA or its implementing regulations, in violation of the Administrative

Procedure Act (“APA”), 5 U.S.C. § 706(2)(A).6

      In an August 5, 1996 order, the district court granted the defendants’ motion for

partial summary judgment and dismissed the property owners’ claims (Counts I and II)

brought under the citizen suit provision of the Clean Water Act, 33 U.S.C. §

1365(a)(2).7 In the same order, the district court also entered a protective order


      5
         Section 1344(c) provides that the EPA Administrator “is authorized to
prohibit the specification . . . of any defined area as a disposal site” and “is
authorized to deny or restrict the use of any defined area for specification . . . as
a disposal site. . . .” 33 U.S.C. § 1344(c) (1986). This provision gives the EPA
authority to veto the Corps’ issuance of a section 404 permit.
      6
         Section 706(2)(A) of the APA provides that a “reviewing court shall . . .
hold unlawful and set aside agency action, findings, and conclusions found to be
arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with
law.” 5 U.S.C. § 706(2)(A) (1996).
      7
         Section 1365(a)(2) provides that “any citizen may commence a civil
action on his own behalf . . . against the Administrator [of the EPA] where there
is alleged failure of the Administrator to perform any act or duty under this
chapter which is not discretionary with the Administrator.” 33 U.S.C. §
1365(a)(2) (1986).
       In dismissing Counts I and II of the property owners’ complaint, the
                                            5
prohibiting the property owners from engaging in any discovery and limiting the

court’s review on Counts III and IV to the administrative record. Subsequently, in a

January 30, 1997, order, the district court granted summary judgment to the defendants

on Counts III and IV of the property owners’ complaint and denied the property

owners’ motion to remand the section 404 permitting decision to the Corps. The

property owners appeal.

                                   II. DISCUSSION

      The “object of NEPA is to require federal agencies to consider environmental

values when making decisions [and] [t]he initial responsibility of the federal agency is

to determine the extent of the environmental impact.” C.A.R.E. Now, Inc. v. Federal

Aviation Admin., 844 F.2d 1569, 1572 (11th Cir. 1988). Section 102(2)(C) of NEPA,

42 U.S.C. § 4332(2)(C), requires a federal agency to prepare an EIS when a major




district court relied on Preserve Endangered Areas of Cobb’s History, Inc.
[P.E.A.C.H.] v. United States Army Corps of Engineers, 87 F.3d 1242, 1249-50
(11th Cir. 1996). In P.E.A.C.H., as in the instant case, the plaintiffs brought a
CWA citizen suit under § 1365(a)(2) against the Army Corps of Engineers and
against the EPA for failing to use its authority to veto the Corps’ issuance of a
section 404 permit. The court in P.E.A.C.H. concluded that § 1365(a)(2) did not
authorize citizen suits against the Corps and dismissed the plaintiffs’ §
1365(a)(2) action against the EPA because the court concluded that the EPA’s
authority to veto a section 404 permit is discretionary and that § 1365(a)(2) only
provides citizens with a cause of action against the EPA for performance of “an
act or duty . . . which is not discretionary.” Id. at 1249-50. Based on the holding
of P.E.A.C.H., we conclude that the district court properly granted summary
judgment against the property owners on Counts I and II.
                                            6
federal action significantly affects the quality of the human environment.8 In order to

assist federal agencies in determining whether they must prepare an EIS, the federal

Council on Environmental Quality (“CEQ”) has issued regulations which provide

guidance to the agencies. See Sabine River Auth. v. United States Dep’t of Interior,

951 F.2d 669, 677 (5th Cir. 1992) (citing Sierra Club v. Marsh, 769 F.2d 868, 870 (1st

Cir. 1985)). The CEQ regulations direct federal agencies to prepare an EA in order to

determine whether the environmental effects of a proposed project are “significant.”

40 C.F.R. §§ 1501.3, 1501.4, 1508.9, 1508.27 (1998). Under these regulations, the

purpose of an EA is to “[b]riefly provide sufficient evidence and analysis for

determining whether to prepare an environmental impact statement or a finding of no

significant impact.” 40 C.F.R. § 1508.9(a)(1) (1998). Thus, an agency will reach one

      8
        Section 102(2)(C) of NEPA provides that
      (2) all agencies of the Federal Government shall . . .
         (C) include in every recommendation or report on proposals for
      legislation and other major Federal actions significantly affecting
      the quality of the human environment, a detailed statement by the
      responsible official on–
             (i) the environmental impact of the proposed action,
             (ii) any adverse environmental effects which cannot be
      avoided should the proposal be implemented,
             (iii) alternatives to the proposed action,
             (iv) the relationship between local short-term uses of man’s
      environment and the maintenance and enhancement of long-term
      productivity, and
             (v) any irreversible and irretrievable commitments of the
      resources which would be involved in the proposed action should it
      be implemented.
42 U.S.C. § 4332(2)(C) (1994).
                                           7
of two conclusions in an EA: “either that the project requires the preparation of an EIS

to detail its environmental impact, or that the project will have no significant impact . .

. necessitating no further study of the environmental consequences which would

ordinarily be explored through an EIS.” Sabine River Auth., 951 F.2d at 677.

       We review an agency’s decision not to prepare an EIS under an “arbitrary and

capricious” standard of review. See Preserve Endangered Areas of Cobb’s History,

Inc. [P.E.A.C.H.] v. United States Army Corps of Engineers, 87 F.3d 1242, 1248 (11th

Cir. 1996) (applying an arbitrary and capricious standard of review to Corps’ decision

not to prepare an EIS); North Buckhead Civic Ass’n v. Skinner, 903 F.2d 1533, 1538

(11th Cir. 1990) (adopting “the arbitrary and capricious standard when reviewing

agency action in NEPA cases).9 The District of Columbia Circuit has listed four

criteria to be considered in determining whether an agency’s decision not to prepare an

EIS is arbitrary and capricious:

       First, the agency must have accurately identified the relevant
       environmental concern. Second, once the agency has identified the
       problem it must have taken a “hard look” at the problem in preparing the
       EA. Third, if a finding of no significant impact is made, the agency must
       be able to make a convincing case for its finding. Last, if the agency does
       find an impact of true significance, preparation of an EIS can be avoided
       only if the agency finds that changes or safeguards in the project
       sufficiently reduce the impact to a minimum.




       On the authority of P.E.A.C.H. and North Buckhead, we reject the
       9

property owners’ argument that we should use a “reasonableness” standard of
review rather than an arbitrary and capricious standard of review.
                                             8
Coalition on Sensible Transp., Inc. v. Dole, 826 F.2d 60, 66-67 (D.C. Cir. 1987)

(quoting Sierra Club v. United States Dep’t of Transp., 753 F.2d 120, 127 (D.C. Cir.

1985)).

       In challenging the Corps’ decision not to prepare an EIS and arguing that the

Corps’ EA was deficient, the property owners primarily challenge the Corps’

assumption that the petroleum pipeline, which crosses underneath the proposed Snake

Creek reservoir, would be relocated by the Water Authority. The property owners

contend that the administrative record is devoid of any evidence that the Water

Authority actually plans to relocate the pipeline.10 Furthermore, the property owners

have proffered substantial evidence suggesting that the Water Authority has decided

not to relocate the pipeline.11


       10
          The property owners contend that no plan has ever existed to reroute
the petroleum pipeline. They allege that there are no easements for the
purported rerouting of the pipeline, no documents indicating where the pipeline
allegedly is to be rerouted, and no contract between the Water Authority and the
owner of the pipeline to relocate the pipeline.
       11
           The evidence proffered by the property owners suggests that, after a
meeting with the owner of the petroleum pipeline, the Water Authority decided
not to relocate the pipeline. The evidence also suggests that the Water Authority
made this decision prior to the Corps’ issuance of the permit. Relying on Florida
Power & Light Company v. Lorion, 470 U.S. 729, 105 S. Ct. 1598 (1985), the
Corps argues that we should not consider this evidence because a reviewing
court is limited to the administrative record and should not consider new
evidence raised for the first time in the district court. In discussing the
“fundamental principles of judicial review of agency action,” the Court in
Florida Power stated that “‘[t]he focal point for judicial review should be the
administrative record already in existence.’” Id. at 1607 (quoting Camp v. Pitts,
                                           9
       We conclude that the current record does not support the Corps’ assumption that

the petroleum pipeline will be relocated. In determining whether a remand is

necessary, we address the question of whether the issuance of the Corps’ EA would be

arbitrary and capricious based on the opposite assumption that the pipeline will not be

removed.12 Assuming that the pipeline will not be removed, we conclude that the

Corps’ finding of no significant impact and resulting decision not to prepare an EIS

was arbitrary and capricious. The first three criteria listed in Coalition on Sensible

Transportation require an agency deciding not to prepare an EIS to identify the relevant

environmental concern, take a “hard look” at the problem in preparing the EA, and

make a convincing case in support of a finding of no significant impact. Coalition on

Sensible Transp., 826 F.2d at 66-67. We conclude that the Corps failed to satisfy these

three criteria in assessing the potential adverse environmental impacts resulting from

leaving the petroleum pipeline underneath the proposed reservoir. In finding that the



411 U.S. 138, 142, 93 S. Ct. 1241, 1244 (1973)). However, the Court also noted
that a reviewing court may remand a case to the agency for additional
investigation or explanation “[i]f the record before the agency does not support
the agency action, if the agency has not considered all relevant factors, or if the
reviewing court simply cannot evaluate the challenged agency action on the
basis of the record before it.” Id. at 1607. Because the record before the Corps
does not support its assumption that the pipeline will be relocated, and because
the Corps does not contest the truth of the property owners’ assertion that there
is no present intention on the part of the Water Authority to relocate the pipeline,
we remand this issue, see infra, without need to address when such newly
proffered evidence can appropriately be considered.
       12
            We make this assumption in order to test whether a remand is necessary.
                                            10
Snake Creek project “will not have significant adverse impacts on the quality of the

human environment,” the Corps explicitly assumed that the pipeline would be removed.

Thus, it is clear that the Corps did not identify the environmental concerns related to

the pipeline remaining underneath the proposed reservoir, did not take a “hard look” at

the potential adverse environmental consequences of such a pipeline,13 and did not

make a convincing case for its finding of no significant impact from such a pipeline.

Therefore, we conclude that the Corps violated NEPA by failing to adequately consider

all relevant environmental factors prior to making its finding of no significant impact.

      Because we conclude that the record does not support the Corps’ assumption

that the pipeline will be relocated and because we conclude that the Corps’ failed to

adequately consider the environment impact of the pipeline remaining underneath the

proposed reservoir, we hold that a remand is necessary. On remand, the Corps should

consider whether the petroleum pipeline will remain underneath the proposed Snake

Creek reservoir and, if it will remain, whether the presence of such a pipeline

necessitates the preparation of an EIS for the Snake Creek project.14

      13
          In response to a public comment expressing concern that the Water
Authority’s section 404 permit application did not contain a contingency plan in
the event of an oil spill or leak from the pipeline in the project area, the Court
stated that a “[contingency] plan is not necessary since the line would be
relocated.”
      14
          On the other hand, if the Corps determines on remand that the pipeline
will be relocated, none of the other arguments asserted on appeal by the property
owners persuade us that the Corps’ issuance of the EA was arbitrary or
capricious. We also agree with the district court’s reasoning in rejecting the
                                            11
                                   III. CONCLUSION

      Based on the foregoing, we affirm the grant of summary judgment as to Counts I

and II.15 However, with respect to Counts III and IV, we vacate the district court’s

grant of summary judgment in favor of the Corps and remand the case to the district

court with instructions for the district court to remand the section 404 permitting

decision to the Army Corps of Engineers for consideration of any change in the

purported plan to relocate the petroleum pipeline and, if the pipeline is not to be

relocated, for consideration of whether the presence of the pipeline underneath the

reservoir would have a significant adverse impact on the quality of the environment.

      AFFIRMED IN PART, VACATED IN PART, AND REMANDED WITH

      INSTRUCTIONS.




property owners’ argument that the entire administrative record was not
forwarded to the district court. See District Court Order, at 5 (January 30, 1997).
Finally, in light of our decision to remand the section 404 permitting decision to
the Corps for consideration of any change in the alleged plan to relocate the
petroleum pipeline and in light of the fact that the only significant newly
proffered evidence relates to that issue, we conclude that the property owners’
appeal of the district court’s order prohibiting discovery and limiting review to
the administrative record is moot.
      15
           See supra note 7.
                                            12
