## Facts

- BP operated an oil refinery at Cherry Point, Washington, with a single tanker dock.
- BP applied to the U.S. Army Corps of Engineers (Corps) for a permit under § 10 of the Rivers and Harbors Act to construct an additional/northern dock segment at the Cherry Point terminal.
- BP represented that the new dock would reduce spill risk by shortening tanker anchorage time and adding spill-containment features, and it asserted the refinery was operating at full capacity so tanker traffic would not increase.
- The Corps prepared an Environmental Assessment (EA) under NEPA and issued a Finding of No Significant Impact (FONSI), concluding the project would not significantly affect the human environment and would reduce oil-spill risk; the Corps did not prepare an Environmental Impact Statement (EIS).
- The Corps’ EA did not meaningfully evaluate whether the added dock capacity could make increased tanker calls reasonably foreseeable, or whether increased traffic could raise oil-spill risk and related environmental effects.
- After the permit issued, the Washington State Department of Natural Resources released a report indicating the added dock could increase spill risk by facilitating increased tanker traffic, while also stating market forces could increase traffic even without the new dock.
- Ocean Advocates and other plaintiffs sued the Corps under the APA, arguing the Corps violated NEPA by failing to prepare an EIS and by failing to address cumulative environmental effects tied to tanker traffic; BP intervened in support of the permit.
- The district court granted summary judgment for the Corps and BP, reasoning that an EIS was not required because tanker traffic would increase due to market forces even without the dock expansion.
- Plaintiffs appealed, and the Corps and BP pursued cross-appeal issues related to the Magnuson Amendment dispute.

## Issues

1. Whether NEPA required the Corps to prepare an EIS for BP’s Cherry Point dock project because increased tanker traffic and related spill risk were reasonably foreseeable environmental effects of the permitted action.
2. Whether the Corps’ EA and FONSI were arbitrary and capricious for relying on assumptions (including “full capacity” and no traffic growth) and for failing to evaluate indirect and cumulative effects associated with increased vessel traffic.
3. Whether the district court erred by treating market-driven growth in tanker traffic as defeating NEPA causation where the permitted dock capacity could be linked to additional traffic and risk.
4. Whether the permit and project raised unresolved compliance questions under the Magnuson Amendment’s limits on increasing crude-oil receiving capacity at covered Puget Sound facilities.

## Decision

- The Ninth Circuit reversed in part the district court’s summary judgment on the NEPA claim.
- The court held the Corps’ decision to issue a FONSI and forego an EIS was arbitrary and capricious because the agency did not take the required hard look at the environmental consequences of reasonably foreseeable increased tanker traffic and associated oil-spill risk.
- The court rejected the view that market forces necessarily sever NEPA causation; even if traffic might grow without the dock, the record supported a sufficiently close causal link between the permit and the facility’s ability to accommodate greater traffic, which could increase spill risk.
- The Ninth Circuit remanded for preparation of an EIS addressing the traffic and spill-risk questions and for further proceedings consistent with its NEPA holdings.
- On the Magnuson Amendment issue, the Ninth Circuit concluded the district court had applied an incorrect reading of the statutory restrictions and/or permit terms and remanded for additional consideration and record development regarding whether the permit would unlawfully increase crude-oil receiving capacity.

## Legal Principles

- NEPA requires federal agencies to take a hard look at environmental consequences before approving major federal actions that may significantly affect the human environment; an EIS is required when the record raises substantial questions about potentially significant effects.
- An EA and FONSI are inadequate where the agency fails to analyze reasonably foreseeable indirect effects, including traffic-related effects, and cumulative impacts in the affected region.
- NEPA’s causation inquiry asks whether there is a “reasonably close causal relationship” between the federal action and the environmental effect; the presence of market forces does not automatically remove an effect from NEPA review if the federal permit meaningfully relates to the ability of the project to bring about that effect.
- Where credible information calls into question an agency’s assumptions or conclusions about risk (including oil-spill risk in sensitive waters), the agency must address that information and explain its reasoning rather than rely on conclusory statements.
- Statutory limits such as the Magnuson Amendment can constrain federal permitting for crude-oil facilities; courts may require further agency consideration when the record and permit terms leave material questions about capacity increases and compliance.

## Conclusion

The Ninth Circuit held that the Corps could not rely on an EA and FONSI for BP’s Cherry Point dock permit without analyzing whether the added dock capacity made increased tanker traffic and oil-spill risk reasonably foreseeable, and it ordered an EIS on remand while also sending back unresolved questions about compliance with the Magnuson Amendment’s capacity limits.


Ocean Advocates v. United States Army Corps of Engineers, 402 F.3d 846 (2004)