Driftless Area Land Conservancy v. Rural Utilities Service

In the
United States Court of Appeals
For the Seventh Circuit
____________________
Nos. 22-1347, 22-1709 & 22-1737
DRIFTLESS AREA LAND CONSERVANCY, et al.,
Plaintiffs-Appellees, Cross-Appellants,
v.
RURAL UTILITIES SERVICE, et al.,
Defendants-Appellants, Cross-Appellees,
and
AMERICAN TRANSMISSION COMPANY LLC, ITC MIDWEST LLC,
and DAIRYLAND POWER COOPERATIVE,
Intervening Defendants-Appellants, Cross-Appellees.
____________________
Appeals from the United States District Court
for the Western District of Wisconsin.
Nos. 21-cv-096-wmc & 21-cv-306-wmc — William M. Conley, Judge.
____________________
ARGUED SEPTEMBER 28, 2022 — DECIDED JULY 19, 2023
____________________
Before EASTERBROOK, HAMILTON, and BRENNAN, Circuit
Judges.
2 Nos. 22-1347, 22-1709 & 22-1737
EASTERBROOK, Circuit Judge. The Cardinal-Hickory Creek
Project is a planned electric transmission line that would de-
liver wind energy from Iowa to Southern Wisconsin. The util-
ity companies responsible for the line asked the Fish and
Wildlife Service to allow construction across the Upper Mis-
sissippi River National Wildlife and Fish Refuge alongside a
road and railroad that already cross the Refuge.
In October 2019 the Rural Utilities Service completed an
environmental impact statement assessing this transmission
line under the National Environmental Policy Act, 42 U.S.C.
§4332(2)(C). The Fish and Wildlife Service and the Army
Corps of Engineers adopted the statement for their own use
in considering the project. In December 2019 the Fish and
Wildlife Service determined that permi]ing the line to pass
through the Refuge would be “compatible” with its “major
purposes” under the Refuge Act. 16 U.S.C. §668dd(d)(1)(A).
The agency issued a right-of-way permit in September 2020.
Several environmental advocacy groups sued, arguing
that the permit violates the Refuge Act and that the environ-
mental impact statement is deficient under the National Envi-
ronmental Policy Act. While litigation was pending, the utility
companies applied for an amended permit slightly altering
the route, which still would largely parallel the road. They
also asked the Fish and Wildlife Service to consider a land ex-
change under 16 U.S.C. §668dd(b)(3) as an alternative to the
permit. While reviewing these new requests, the agency dis-
covered that it had relied on incorrect easement documents in
issuing its original compatibility determination. By a le]er
dated August 27, 2021, it revoked the determination and per-
mit. This le]er also promised to consider the proposed land
Nos. 22-1347, 22-1709 & 22-1737 3
exchange. Almost two years have passed, but the agency has
not issued a new decision.
Despite the absence of an effective decision, the litigation
continued. The district court entered a declaratory judgment
that, under the Refuge Act, the agency’s compatibility deter-
mination could not support a crossing either by right of way
(the rescinded decision) or land transfer (the pending pro-
posal). The court also vacated the Rural Utilities Service’s de-
cision to adopt the environmental impact statement and re-
manded to the agency for further proceedings, although it de-
clined to enjoin ongoing construction of the project on private
land outside the Refuge. 580 F. Supp. 3d 588 (W.D. Wis. 2022).
The agencies and utility companies appealed, and the advo-
cacy groups cross-appealed from the denial of injunctive re-
lief. (There were earlier appeals too, but the issues those deci-
sions resolved do not affect the parties’ current disputes. See
Driftless Area Land Conservancy v. Huebsch, 969 F.3d 742 (7th
Cir. 2020); Driftless Area Land Conservancy v. Valcq, 16 F.4th 508(7th Cir. 2021).)
We must first ensure that the district court had subject-
ma]er jurisdiction. The utility company defendants maintain
that the challenge to the revoked permit is moot.
A claim is moot “when the issues presented are no longer
live or the parties lack a legally cognizable interest in the out-
come. [This occurs] only when it is impossible for a court to
grant any effectual relief whatever to the prevailing party.”
Chafin v. Chafin, 568 U.S. 165, 172 (2013) (cleaned up). But a
case does not inevitably become moot when a party chooses
to stop the challenged conduct. Cessation implies mootness
only when it is “absolutely clear” that the “allegedly wrongful
behavior could not reasonably be expected to recur.” Friends
4 Nos. 22-1347, 22-1709 & 22-1737
of the Earth, Inc. v. Laidlaw Environmental Services (TOC), Inc.,
528 U.S. 167, 190 (2000).
We presume that an agency acts in good faith when it al-
ters its course of action. Ozinga v. Price, 855 F.3d 730, 734 (7th
Cir. 2017). This does not end our inquiry, however. An
agency’s decision to change course does not moot a lawsuit
when the change is “not implemented by statute or regulation
and could be changed again.” Sefick v. Gardner, 164 F.3d 370,
372 (7th Cir. 1998). That is the case here. Although the Fish
and Wildlife Service has revoked the original compatibility
determination, it has not promised never to issue a new per-
mit for the crossing. Tellingly, the agency itself does not argue
that the litigation has become moot.
The district court therefore had jurisdiction to review both
the revoked right-of-way permit and the proposed land ex-
change under the Refuge Act. But jurisdiction alone does not
allow a court to reach the merits. Final agency action also is
essential to judicial review. See 5 U.S.C. §704 (part of the Ad-
ministrative Procedure Act or APA).
“[T]wo conditions … generally must be satisfied for
agency action to be ‘final’ under the APA.” Army Corps of En-
gineers v. Hawkes Co., 578 U.S. 590, 597 (2016). The challenged
action must represent the “consummation” of an agency’s de-
cisionmaking process and must determine “rights or obliga-
tions”. Ibid. (citing BenneP v. Spear, 520 U.S. 154, 177–78
(1997)). In other words, §704 asks whether a “terminal event”
has occurred. Salinas v. Railroad Retirement Board, 141 S. Ct.
691, 697 (2021).
In Hawkes the Supreme Court found that the Army Corps
of Engineers’ determination that waters on the plaintiffs’
Nos. 22-1347, 22-1709 & 22-1737 5
property were subject to the Clean Water Act was a final
agency action. This determination was the end of the agency’s
decisionmaking process: it was issued “after extensive fact-
finding” and was to remain valid for five years. 578 U.S. at
597–98. It was also “definitive”: plaintiffs were denied a safe
harbor from liability under the Clean Water Act, even though
the determination did not itself impose monetary liability. Id.
at 598–600.
By contrast, the Fish and Wildlife Service’s current stance
regarding the proposed transmission line does not meet the
Court’s criteria of finality. The compatibility determination is
not a final action. Even before it was rescinded, the determi-
nation was just a prerequisite to a permit rather than the end
of the agency’s process. And although the right-of-way permit
may have “consummated” the agency’s decisionmaking pro-
cess while it stood, the agency has revoked it. A revoked per-
mit lacks legal consequence. It neither allows nor forbids the
challenged crossing. Ma]ers are back where they were before
the permit issued: under consideration at the agency.
Once an agency has made a final decision, a reviewing
court evaluates whether that decision is supported by sub-
stantial evidence. 5 U.S.C. §706(2)(E). In Hawkes the agency’s
decision was issued after “extensive factfinding”, which gave
the Court a record to review. That’s impossible here: now that
the Fish and Wildlife Service has rescinded the compatibility
determination and permit, the court lacks an administrative
record. To determine whether a permit allowing the transmis-
sion line to cross the Refuge would be “compatible” with the
Refuge’s “major purposes”, 16 U.S.C. §668dd(d)(1)(A), a court
needs to evaluate the agency’s factual findings about compat-
ibility, as well as any findings about the “major purposes” of
6 Nos. 22-1347, 22-1709 & 22-1737
this particular Refuge; until the agency has made its record
and articulated findings based on that record, a judicial deci-
sion is premature.
The potential land transfer likewise is not ready for judi-
cial review. The Fish and Wildlife Service agreed to consider
a proposal but has not reached a decision. Agreeing to review
a proposal cannot be the “consummation” of the agency’s de-
cisionmaking process, as the decision is still to come. Again,
the Fish and Wildlife Service has not produced a record of any
factfinding in support of a transfer. How can a court review a
decision that has not been made based on a record that has
not yet been produced?
Sometimes courts review decisions that an agency has
reached but has yet to enforce. See AbboP Laboratories v. Gard-
ner, 387 U.S. 136 (1967); Hawkes, 578 U.S. at 597–600. But pre-
enforcement review does not imply the propriety of pre-deci-
sion review. San Francisco Herring Association v. Department of
the Interior, 946 F.3d 564 (9th Cir. 2019), does not hold other-
wise, despite plaintiffs’ protestations—there, too, the agency
had made a final decision, though review occurred before it
had been enforced.
The Fish and Wildlife Service has not issued a final deci-
sion that could harm plaintiffs. The agency has not permi]ed
a land transfer and perhaps never will. Approval of the trans-
mission line would require further proceedings: a new com-
patibility determination and permit, evaluating the amended
permit application, deciding to abandon the permit in favor
of a land exchange, or abandoning the crossing.
The district court gave two reasons for declaring unlawful
actions that the agency may or may not ever take. First,
Nos. 22-1347, 22-1709 & 22-1737 7
relying on its erroneous conclusion that the permit consti-
tuted a final decision even after its revocation, the court held
that a land exchange was “very likely” subject to the same
standard as the permit and so could not replace the construc-
tion permit. 580 F. Supp. 3d at 599. Second, it found that
“hardship to the parties” weighed in favor of review. The
judge expressed concern that delayed review would leave the
project “nearly completed” everywhere except the Refuge,
creating a sunk cost so large that a reviewing court would
have “li]le choice but to approve” the crossing. Id. at 599–600.
Neither of these rationales justifies ignoring §704’s finality
requirement. We do not share the district court’s certainty that
the statutory requirements for a land exchange and right-of-
way permit are identical. The Refuge Act uses different words
to describe the standard the different potential actions must
meet. An inquiry into whether a land exchange is “suitable”
under 16 U.S.C. §668dd(b)(3) may differ from the compatibil-
ity analysis for a right-of-way permit under 16 U.S.C.
§668ee(1), if only because a land exchange entails an increase
in the Refuge’s extent, which must be offset against a loss else-
where. The Fish and Wildlife Service recently opined that
land exchanges do not require compatibility determinations
but that their “conservation benefits” must “outweigh identi-
fiable harm” and “further the Refuge System’s mission and
the individual refuge purposes.” Department of the Interior,
Office of the Solicitor, M-37078 (May 31, 2023). In other words,
the agency must determine a swap’s net effects. But without
knowing what land the agency agrees to acquire and cede, it
is impossible for a reviewing court to evaluate whether the
agency’s decision about net benefits is supported by substan-
tial evidence.
8 Nos. 22-1347, 22-1709 & 22-1737
In finding that the standards of review for a land exchange
and right-of-way permit are identical, the district court relied
on a single decision: Friends of Alaska National Wildlife Refuges
v. Bernhardt, 463 F. Supp. 3d 1011 (D. Alaska 2020). That deci-
sion was reversed by a panel of the Ninth Circuit. Friends of
Alaska National Wildlife Refuges v. Haaland, 29 F.4th 432, 443–44
(9th Cir. 2022). The panel decision was vacated pending en
banc review. 54 F.4th 608 (9th Cir. 2022). The agency has since
withdrawn from the exchange, the appeal has been dis-
missed, and the district court’s decision has been vacated.
2023 U.S. App. LEXIS 14927 (9th Cir. June 15, 2023). We do not
express any opinion on the merits of the question other than
to say that the Ninth Circuit did what our district court should
have done: it terminated the litigation once the agency re-
scinded its decision.
Any “hardship to the parties” from delayed review cannot
override §704’s finality requirement. In AbboP Laboratories the
Court permi]ed pre-enforcement review where the plaintiffs
faced hardship in the form of a choice between complying
with the final agency action or incurring civil or criminal pen-
alties. 387 U.S. at 152–53. The agency’s actions here have not
put plaintiffs to a choice. Whatever hardship they face comes
not from the agency’s promise to consider a land exchange
but from the utility companies’ decision to build on their own
land. The cost of construction is one the utility companies
have opted to incur and bear the risk of, not one imposed by
the agency. In the absence of any final agency action under
§704, the district court erred in reviewing the merits of the
proposed land exchange.
Plaintiffs’ request for relief against the Rural Utilities Ser-
vice under the National Environmental Policy Act likewise is
Nos. 22-1347, 22-1709 & 22-1737 9
premature. Dairyland Power Cooperative, a utility company
with a nine percent ownership interest in the project, has told
the Service that, after the transmission line is complete, it may
seek a federal loan that will replace some or all of the line’s
current private financing. Dairyland has yet to make any pro-
posal to the Service, so financing is even farther from finality
than is the land swap.
We grant that the Environmental Impact Statement for
the transmission line is “final” in the sense that multiple agen-
cies have adopted it. But an EIS differs from a decision to ap-
prove any given action. NEPA requires an agency to include
a statement as part of its “recommendation or report” for
“major Federal actions significantly affecting the quality of
the human environment”. 42 U.S.C. §4332(2)(C). It is the deci-
sion incorporating the statement into a recommendation or
report that is a reviewable agency action. Citizens for Appropri-
ate Rural Roads v. Foxx, 815 F.3d 1068, 1079 (7th Cir. 2016). Yet
the Rural Utilities Service has yet to issue a recommendation
or report on any proposal, because Dairyland has not made
one. When the agency adopted the environmental impact
statement, that did not “consummat[e]” its decisionmaking
process, Hawkes, 578 U.S. at 597, but took just one preliminary
step toward an eventual decision. And the agency’s conclu-
sion that the statement complies with the National Environ-
mental Policy Act lacks legal consequences—any entitlements
will flow from the ultimate funding decision. To which we
add that it is not possible to evaluate the environmental con-
sequences of any decision, such as the extension of federal
credit, before knowing what that decision would entail.
Environmental impact statements are required only for
“major” federal actions “significantly affecting the quality of
10 Nos. 22-1347, 22-1709 & 22-1737
the human environment”. 42 U.S.C. §4332(2)(C). It is not ob-
vious that funding part of a project that will be completed
with or without federal assistance is a major federal action.
The transmission line that plaintiffs object to will be in opera-
tion before Dairyland even requests funding. If the agency de-
cides that federal loans will replace some private financing,
that decision may or may not “significantly” affect the envi-
ronment.
That leaves only plaintiffs’ cross-appeal of the district
court’s refusal to issue a permanent injunction against con-
struction of the transmission line on non-federal land. The
court entered a preliminary injunction barring activities sub-
ject to the Army Corps’ authorization under the Clean Water
Act, 2021 U.S. Dist. LEXIS 210178 (W.D. Wis. Nov. 1, 2021), and
plaintiffs argue that it abused its discretion by failing to make
that injunction permanent. But the activities plaintiffs seek to
enjoin here are not subject to federal authorization; they are
privately funded and take place on land outside of federal
control. Thus, the preliminary injunction cannot provide a ba-
sis to enjoin the entire project.
The district court did not abuse its discretion by declining
to enter a permanent injunction. We affirm its denial. In all
other respects, we vacate the judgment of the district court
and remand for the dismissal of this litigation. The decision
that we have vacated will not have any authoritative or prec-
edential effect in any future suit, once any of the federal agen-
cies makes a new decision.