Penford Corporation v. Natl. Union Fire Insurance Co.

United States Court of Appeals
FOR THE EIGHTH CIRCUIT
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No. 11-1661
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Friends of the Norbeck; *
Native Ecosystems Council, *
*
Appellants, *
*
vs. *
*
United States Forest Service; * Appeal from the United States
Rick Cables, Regional Forester, * District Court for the
* District of South Dakota.
Appellees, *
*
State of South Dakota; Jeff Vonk, in *
his official capacity as Secretary of *
the South Dakota Department of *
Game, Fish, and Parks, *
*
Intervenors below - Appellees. *
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Submitted: October 18, 2011
Filed: November 16, 2011
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Before MURPHY, BYE, and SMITH, Circuit Judges.
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MURPHY, Circuit Judge.

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Friends of the Norbeck and Native Ecosystems Council (collectively Friends
of the Norbeck) brought this action against the United States Forest Service in
connection with its Norbeck Wildlife Project (the Project). The State of South
Dakota and the South Dakota Department of Game, Fish, and Parks (collectively
South Dakota) intervened to defend the Project. The district court dismissed the1
complaint, concluding in relevant part that Friends of the Norbeck failed to exhaust
the administrative remedies for their National Environmental Policy Act (NEPA)
claim and that the Project was not arbitrary, capricious, or contrary to the Norbeck
Organic Act (NOA). On appeal, Friends of the Norbeck argue that the Forest Service
violated NEPA and the NOA by approving the Project. We affirm.
I.
The Norbeck Wildlife Preserve is located within the Black Hills National
Forest in South Dakota. The Forest Service manages the approximately 28,000 acres
of public land within the Preserve. The NOA created the Preserve in 1920 by stating
that the land "be set aside for the protection of game animals and birds, and be
recognized as a breeding place therefor." 16 U.S.C. § 675. It contains one of the last
old growth forests in the Black Hills and provides habitat for many species of animals
and birds, some of which have been designated as rare or sensitive.
Years of wildfire suppression in the Preserve have led to the predominance of
ponderosa pine in overly dense stands, decreasing the prevalence of other types of
habitat and creating a substantial risk of catastrophic fire. Additionally, in 2006 the
mountain pine beetle began killing ponderosa pine stands within the Black Elk
Wilderness at the center of the Preserve. The outbreak is expected to spread
throughout the Preserve by 2013 and kill nearly all of the late successional pines by
The Honorable Jeffrey L. Viken, United States District Judge for the District1
of South Dakota.
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2020. The Forest Service developed the Project, which consists of thinning trees
through controlled fire and select logging on 6,000 acres, to respond to these two
threats and to "improve the habitat for game animals and birds."
The Forest Service's past management actions in the Preserve have been the
subject of federal litigation and congressional legislation. In 1994 and 1995, the
Forest Service approved two unrelated logging projects in the Preserve, which were
challenged by the Sierra Club Black Hills Group. The Tenth Circuit remanded for the
Forest Service to reconsider the projects, holding that the Forest Service must develop
projects that comply first with the "narrow parameters" of the NOA, supplemented
with the more general mandate of the National Forest Management Act (NFMA).
Sierra Club-Black Hills Group v. U.S. Forest Service, 259 F.3d 1281, 1288–89 (10th
Cir. 2001).
In 2002 Congress explicitly authorized the two logging projects that the Tenth
Circuit had addressed and stated generally that the Forest Service "is authorized to
use the full spectrum of management tools including prescribed fire and silvicultural
treatments to benefit game animal and bird habitat in meeting the purposes of the
Norbeck Organic Act." Pub. L. No. 107-206 § 706(h). Congress also required the
Forest Service and the South Dakota Department of Game, Fish, and Parks (South
Dakota Parks Department) to enter into a memorandum of understanding on
procedures for monitoring the effects of management activities, consulting on habitat
management, and reviewing and recommending any changes to the direction of the
Preserve. Id. § 706(i).
In response to the congressional directive, the Forest Service and South
Dakota Parks Department began a joint assessment of the Preserve. Because the
unique habitat needs of the Preserve's game animal and bird species sometimes
conflict with one another and it is not possible to design management activities
around every species, the Forest Service and South Dakota Parks Department
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biologists, with stakeholder input, selected twelve species that use key habitat
elements with the objective that habitat management for those species "will provide
for all game animals and birds" in the Preserve. This is referred to as the focus
species list, and the Project is designed around the habitat needs of these game
animals and birds.
The Forest Service began preparing an Environmental Impact Statement (EIS)
in 2007 with a proposed action plan and a no action alternative. It then added two
additional alternatives to take into account the mountain pine beetle outbreak and
included all four alternatives in the EIS. The Forest Service released the final EIS in
March 2010. The Forest Service district ranger issued a Record of Decision,
selecting alternative 4, which proposed prescribed burning and logging throughout
the Preserve, with modifications to eliminate any action in the Black Elk Wilderness
and to adjust the timing of the activities to minimize the impact on spring breeding.
Friends of the Norbeck challenged the decision in administrative proceedings,
and the administrative appeals officer affirmed. Friends of the Norbeck then filed this
action in federal court, and South Dakota intervened in support of the Project. The
district court dismissed the complaint, concluding in part that Friends of the Norbeck
failed to exhaust the administrative remedies for their NEPA claim and that the
Project was not arbitrary, capricious, or contrary to the mandate of the NOA. On
appeal, Friends of the Norbeck pursue only their claims that the Forest Service
violated NEPA by not preparing an EIS for the focus species list and that the Project
violates the NOA because it will kill or displace game animals and birds as well as
damage their habitat.
II.
We first address whether Friends of the Norbeck can bring their NEPA claim
in federal court. While NEPA does not authorize a private right of action, the
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Administrative Procedure Act (APA) permits judicial review of whether an agency's
action complied with NEPA. Sierra Club v. Kimbell, 623 F.3d 549, 558–59 (8th Cir.
2010). NEPA's purpose is to ensure a fully informed and well considered decision,
Vt. Yankee Nuclear Power Corp. v. Natural Res. Def. Council, Inc., 435 U.S. 519,
558 (1978), and disclosure to the public that the agency has considered environmental
concerns in its decisionmaking. Balt. Gas & Elec. Co. v. Natural Res. Def. Council,
Inc., 462 U.S. 87, 97 (1983). As such, NEPA's mandate is "essentially procedural"
and its rules do not govern the substance of the decision itself. Vt. Yankee Nuclear
Power Corp., 435 at 558. An agency "is not constrained by NEPA from deciding that
other values outweigh the environmental costs" so long as "the adverse environmental
effects of the proposed action are adequately identified and evaluated." Robertson
v. Methow Valley Citizens Council, 490 U.S. 332, 350 (1989).
Before a party can challenge an action by the Forest Service in federal court,
it must exhaust administrative remedies. 7 U.S.C. § 6912(e); see Ace Property & Cas.
Ins. Co. v. Fed. Crop Ins. Corp., 440 F.3d 992, 999 (8th Cir. 2006) (concluding that
7 U.S.C. § 6912(e) codifies the judicial doctrine of exhaustion). The requirement of
exhaustion serves two purposes. Woodford v. Ngo, 548 U.S. 81, 89 (2006). First,
it protects administrative agency authority by allowing the agency to correct its own
mistakes "before it is haled into federal court" and by discouraging disregard of its
procedures. Id. (quotation omitted). Second, it promotes efficiency by resolving
disputes before the agency rather than through litigation in federal court. Id. When
challenging an agency's compliance with NEPA, parties must "structure their
participation so that it alerts the agency to the parties' position and contentions in
order to allow the agency to give the issue meaningful consideration." Dep't of
Transp. v. Public Citizen, 541 U.S. 752, 764 (2004) (quotation omitted). Failure to
raise an objection before the agency results in its waiver. Cent. S.D. Coop. Grazing
Dist. v. Sec'y. of U.S. Dep't of Agric., 266 F.3d 889, 901 (8th Cir. 2001).
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Friends of the Norbeck argue that they exhausted their claim that the Forest
Service violated NEPA by failing to conduct a separate EIS of the focus species list.
They cite their comments in the Project's EIS that the focus species list is "heavily
weighted towards 'weedy species' that can tolerate or even thrive amid human
disturbances"; that predators "known to be secretive and averse to human disturbance
. . . were dismissed"; and that "[t]he list needs to be reformulated," as well as the
Forest Service's response that the "selection of focus species is outside the scope of
this EIS."
These comments challenge which species were included in the list, not the
process of developing the list. NEPA, however, does not govern which substantive
choice an agency makes. Vt. Yankee Nuclear Power Corp., 435 U.S. at 558. Friends
of the Norbeck's comments in the EIS were insufficient to give the Forest Service an
opportunity to consider their claim that NEPA required an EIS for the focus species
list before being sued in federal court, Public Citizen, 541 U.S. at 764, and Friends
of the Norbeck have not pointed to any other way that they raised their procedural
claim in the administrative appeal. We therefore agree with the district court that
Friends of the Norbeck failed to exhaust the administrative remedies for their NEPA
claim. Friends of the Norbeck do not assert that an exception to exhaustion applies,
and consequently we conclude that judicial review is improper.
Because we determine that Friends of the Norbeck did not exhaust their
administrative remedies, we do not need to reach the additional arguments raised by
Forest Service and South Dakota against Friends of the Norbeck's NEPA claim.2
South Dakota's argument that this court lacks subject matter jurisdiction lacks2
substance. We conclude that the language in the 2002 legislation exempting the
authorized logging projects from NEPA and judicial review does not extend to the
focus species list, which was completed five years later and was only tangentially
related to the 2002 legislation. See Pub. L. No. 107-206 § 706(j).
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III.
We turn next to Friends of the Norbeck's contention that the Project violates
the NOA. The Forest Service contends that its management actions in the Preserve
are "committed to agency discretion by law" and that judicial review is inappropriate
under 5 U.S.C. § 701(a)(2) of the APA, relying on Tamenut v. Mukasey, 521 F.3d
1000, 1005 (8th Cir. 2008).
The statutory exception to judicial review in the APA is "very narrow" and "is
applicable in those rare instances where statutes are drawn in such broad terms that
in a given case there is no law to apply." Citizens to Preserve Overton Park, Inc. v.
Volpe, 401 U.S. 402, 410 (1971) (quotation omitted). Determining whether an action
is committed to agency discretion "requires careful examination of the statute on
which the claim of agency illegality is based." Webster v. Doe, 486 U.S. 592, 600
(1988). The conclusion that agency action is not susceptible to review is supported
by the "absence of any statutory factors to guide the agency's decision-making
process, in combination with the open-ended nature of the inquiry." Tamenut, 521
F.3d at 1004.
The Forest Service argues that the NOA, which directs that the Preserve "be set
aside for the protection of game animals and birds, and be recognized as a breeding
place therefor," 16 U.S.C. § 675, does not include statutory factors by which to
measure the agency's management decisions. We disagree. Not all agency action in
the Preserve would be acceptable. Unlike the regulation at issue in Tamenut, which
provides that the Board of Immigration "may at any time reopen or reconsider on its
own motion any case in which it has rendered a decision," Tamenut, 521 F.3d at 1002
(emphasis omitted), the NOA's mandate provides standards, albeit broad ones, for the
Forest Service's decisions with respect to game animals and birds and guidance to the
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courts for evaluating those decisions. C.f. Sierra Club-Black Hills Group, 259 F.3d
at 1285–89 (reviewing the Forest Service's action for compliance with the NOA).
Having concluded that judicial review of the Forest Service's management
decisions is not precluded, we turn to Friends of the Norbeck's claim that the Project
violates the NOA. We review de novo a district court's decision on whether an
agency action violates the APA. Nebraska ex rel. Bruning v. U.S. Dep't of Interior,
625 F.3d 501, 509 (8th Cir. 2010). Under the APA, we will only set aside the Forest
Service's action if it is " 'arbitrary, capricious, an abuse of discretion, or otherwise not
in accordance with the law.' " Friends of Richards-Gebaur Airport v. F.A.A., 251
F.3d 1178, 1185 (8th Cir. 2001) (quoting 5 U.S.C. § 706(2)(A)). A decision is
arbitrary and capricious if
the agency has relied on factors which Congress has not intended it to
consider, entirely failed to consider an important aspect of the problem,
offered an explanation for its decision that runs counter to the evidence
before the agency, or is so implausible that it could not be ascribed to a
difference in view or the product of agency expertise.
Motor Vehicle Mfrs. Ass'n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983).
Under this standard a court should not substitute its judgment for that of the
agency, but "the agency must examine the relevant data and articulate a satisfactory
explanation for its action including a rational connection between the facts found and
the choice made." Id. (quotation omitted). When the resolution of a dispute
"involves primarily issues of fact and analysis of the relevant information 'requires
a high level of technical expertise, we must defer to the informed discretion of the
responsible federal agencies.' " Cent. S.D. Coop. Grazing Dist., 266 F.3d at 894
(quoting Marsh v. Oregon Natural Res. Council, 490 U.S. 360, 377 (1989)).
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Friends of the Norbeck argue that the decision to approve the Project was
arbitrary and capricious because the Forest Service failed to consider how displaced
game animals and birds will survive during burning and thinning and how certain
game animal and bird species will be protected in the long term if individual animals
are killed and their habitat depleted while the Project is executed. Our careful review
of the record reveals however that the Forest Service did consider the direct and
indirect effects of the Project on the Preserve's focus species, the management
indicator species for the Black Hills National Forest, and species of local concern.
It also evidences that each of these species benefits from different aspects of the
Project and that the district ranger modified certain parameters of the proposed action
before approving the Project in order to further mitigate possible adverse effects.
The Record of Decision and final EIS make clear that the Forest Service
considered the habitat needs of various game animal and birds as well as the effects
of the burning and logging activities. These documents show that the Project is
expected to benefit song sparrow, ruffed grouse, mountain bluebird, mountain goat,
bighorn sheep, white tailed deer, and elk by reducing the encroachment of pine in
other habitat areas and eliminating some of the dense undergrowth. Several of the
species Friends of the Norbeck highlight as subject to displacement or death through
the burning and logging, such as Merriam's turkey and white tailed deer are described
as abundant throughout the Black Hills and are at little long term risk. Others, such
as elk, are expected to benefit from additional foraging habitat but will suffer from
the loss of cover, due largely to the mountain pine beetle outbreak. The Forest
Service plans to leave some stands of pine untouched to benefit the northern
goshawk, black-backed woodpecker, and brown creeper, which nest and forage in
dense old growth forest. The management actions are also directed at limiting the
spread of the mountain pine beetle by reducing stand density. The aim is both to
retain more mature pine and promote a faster rate of old growth replacement.
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The district ranger also adjusted the parameters of the approved Project in the
Record of Decision to try to mitigate the adverse impact on game animals and birds.
The Forest Service modified the timing of logging to stop operations during the
spring to avoid disturbing migratory patterns, nesting birds and deer fawning and elk
calving. It deferred any action in the Black Elk Wilderness to retain more mature
pine and avoid man made disturbances in the area, and it eliminated two proposed
clearcut actions. The alternative of no action, which would not create disturbances
in the Preserve, was also compared by the district ranger with alternative 4. He then
stated that "[a]lternative 4 would result in the retention of more large trees and mature
habitat than any other alternative . . . [and that] these habitat components will be most
lacking on the landscape" and concluded that "from the perspective of providing
habitat for game animals and birds, which is the founding purpose of [the Preserve],
[a]lternative 4 is the environmentally preferred alternative."
The Forest Service is faced with two imminent threats, either of which would
dramatically degrade the habitat available for game animals and birds in the Preserve
if left unchecked. It must also balance the competing demands of many of the focus
species: Merriam's turkey need open pine and meadows in summer but dense old
growth in winter; the black-backed woodpecker thrive on mountain pine beetle,
which destroys the nesting habitat for brown creeper; elk benefit from open pine for
foraging but need dense stands for cover. The complex and technical nature of these
tradeoffs make deference to the Forest Service's assessment appropriate. See Marsh
v. Oregon Natural Res. Council, 490 U.S. at 377.
Friends of the Norbeck basically advocate for no action in the Preserve, but
Congress specifically authorized the use of prescribed burning and select logging to
carry out the mandate of the NOA. The Forest Service seriously considered the no
action alternative and provided ample explanation for why that option was inadequate
to protect game animals and birds. When an agency "has considered relevant
evidence and arrived at a rational result, a party's mere dissatisfaction with the
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agency's decision does not entitle it to relief." Cent. S.D. Coop. Grazing Dist., 266
F.3d at 898. We conclude that the Forest Service's decision to approve the Project
was neither arbitrary nor capricious.
IV.
Accordingly, we affirm the judgment of the district court.
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