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National Association for Advancement of Colored People v. Medical Center Inc.

decided: August 18, 1978.

NATIONAL ASSOCIATION FOR THE ADVANCEMENT OF COLORED PEOPLE, PUERTO RICAN CIVIL RIGHTS LEAGUE, INC., OLDER AMERICANS COALITION, WILMINGTON UNITED NEIGHBORHOODS, BRANDYWINE TRINITY UNITED METHODIST CHURCH, ON BEHALF OF THEIR MEMBERS AND OTHERS SIMILARLY SITUATED, AND SARAH BRATCHER, RAYMOND W. BROWN, MARIA GALINDEZ, FOR HERSELF AND AS PARENT AND GUARDIAN FOR HIS MINOR CHILDREN REYNALDO GALINDEBZ, AND PEDRO GALINDEZ, MILAGRO QUINONES, MARIA MIRAN, ON BEHALF OF THEMSELVES AND OTHERS SIMILARLY SITUATED, APPELLANTS,
v.
THE MEDICAL CENTER, INC., DAVID MATHEWS, U. S. SECRETARY OF HEALTH, EDUCATION, AND WELFARE, AMOS BURKE, DIRECTOR OF THE BUREAU OF COMPREHENSIVE HEALTH PLANNING AND WILLIAM C. GORDON, DIRECTOR OF THE HEALTH PLANNING COUNCIL, INC.



APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF DELAWARE D.C. Civil No. 76-298

Before Rosenn, Hunter and Higginbotham, Circuit Judges.

Author: Rosenn

Opinion OF THE COURT

In response to the penetrating impact of man's activity on all elements of the natural environment, Congress declared it to be the continuing policy of the United States "to create and maintain conditions under which man and nature can exist in productive harmony." National Environmental Policy Act of 1969 ("NEPA" or "the Act") § 101(a), 42 U.S.C. § 4331(a) (1970). To implement this policy, Congress adopted the broad substantive and procedural requirements of NEPA and directed "to the fullest extent possible" that the laws and regulations of the federal government be administered consistent with environmental considerations. NEPA § 102, 42 U.S.C. § 4332 (1970).

Adoption of NEPA was intended to provide "a legislative mandate and a responsibility (for Federal officers) to consider the consequences of their actions on the environment."*fn1 Consequently, the Act requires all agencies of the Government to make a detailed statement on the environmental impact ("environmental impact statement" or "EIS") of every recommendation or report concerning Proposed legislation made by the agency. NEPA § 102(2) (C), 42 U.S.C. § 4332(2)(C) (1970). NEPA also requires those agencies to file impact statements in other situations as well. In recognition, however, of "the conflict between protection of the environment and advancement of other important national goals,"*fn2 the Act does not apply to all agency action; rather, its application is limited only to those "Major Federal actions" which significantly affect the quality of the human environment. NEPA § 102(2) (C), 42 U.S.C. § 4332(2)(C) (1970) (emphasis supplied).

In this case we must determine whether the action of the United States Department of Health, Education, and Welfare ("H.E.W." or "Secretary") in approving a capital expenditure by the Wilmington Medical Center ("WMC" or "Center"), a private non-profit hospital, constitutes "major Federal" action for purposes of NEPA and so requires H.E.W. to file an EIS. The district court concluded that the approval constituted minimal federal involvement with what is essentially private action. It therefore held that H.E.W. had no obligation to file an EIS. We agree and affirm.

I. FACTS

WMC is the primary provider of hospital care to the citizens of New Castle County, Delaware. It presently operates three hospitals within the city of Wilmington the General Division, the Memorial Division, and the Delaware Division which have a capacity of 994 beds.*fn3 However, after several years of extensive planning, the Center now proposes to consolidate its operations to provide more efficient and broader health care delivery for the entire county. It therefore has adopted a plan, designated Plan Omega, which calls for an extensive restructuring of hospital services and the relocation of much of the Center's facilities. Plan Omega is an $88 million capital expenditure project the main elements of which are as follows: (1) the complete renovation of the Delaware Division, leaving it with a capacity of 250 beds, (2) the closing of the Memorial and General Divisions, and (3) the opening of a new $60 million, 800 bed tertiary care hospital in suburban Stanton, some eight miles from Wilmington. The ultimate effect of the plan would be to expand the total hospital care capacity of the county, improve health care delivery, and to reduce substantially the in-patient facilities of the city of Wilmington. The program would result in the transfer of most special pediatric, obstetric, tertiary care, and sophisticated services from Wilmington to Stanton.

In the spring of 1976, pursuant to section 1122 of the Social Security Act, 42 U.S.C. § 1320a-1 (Supp. V 1975) ("section 1122"), WMC sought capital expenditure approval of Plan Omega by the Secretary of H.E.W.*fn4 Following proper procedure under that section, WMC made an application to the Delaware Bureau of Comprehensive Health Planning and to a local health planning group for review of the relocation plan. Both organizations undertook studies to determine Delaware's need, as defined by its health care policy and standards set by the federal government, for expansion of WMC's facilities and expenditure of funds by it. The state and local agencies certified the WMC plan as necessary and the Secretary issued a section 1122 approval of Plan Omega in August of 1976. As a consequence of this approval, WMC was assured that the Secretary would not withhold payment of the capital component of WMC's charges to patients under medicare, medicaid, and child health programs on the ground that the component charge was the product of an unnecessary capital expenditure.*fn5

Once it received section 1122 approval, WMC moved forward with Plan Omega;*fn6 it prepared to obtain financing for the project. With construction and the potential withdrawal of substantial health care services from Wilmington imminent, plaintiffs organizations and individuals representing the poor, the elderly, the handicapped, and several racial and ethnic minorities of Wilmington filed a lawsuit on September 10, 1976, approximately one month before WMC planned to issue construction bonds for the facility.*fn7 Plaintiffs contended that the construction of a large modern suburban hospital and the resultant reduction in services provided by the urban hospitals, would lead to the creation of a dual hospital system: the Stanton facility serving the white affluent suburban population, and the Wilmington facilities serving the class represented by the plaintiffs. Plaintiffs asserted that such a system would lead to the eventual deterioration of the quality of health care provided in Wilmington. Furthermore, they alleged that the removal of critical services to the suburban hospital would make the services virtually inaccessible to many of the residents of Wilmington.

Plaintiffs charged that implementation of Plan Omega would violate Title VI of the Civil Rights Act of 1964, 42 U.S.C. § 2000d (1970) and section 504 of the Rehabilitation Act of 1973, 29 U.S.C. § 794 (1976). They asserted that the Secretary should have given specific consideration to those provisions prior to approving the plan under section 1122. Plaintiffs also charged that the relocation plan was in violation of NEPA, in that the Secretary issued an approval of the capital expenditure without first filing an environmental impact statement as required for all "major Federal actions significantly affecting the quality of the human environment." NEPA § 102(2)(C), 42 U.S.C. § 4332(2)(C) (1970). Plaintiffs therefore asked that Plan Omega be enjoined.

In response to these contentions, the district court directed H.E.W. "to determine whether Plan Omega violate(d) Title VI or § 504 (of the Rehabilitation Act)." N. A. A. C. P. v. Wilmington Medical Center, Inc., 426 F. Supp. 919, 925 (D.Del.1977). It then directed the Secretary "to reconsider his position" that NEPA was inapplicable to the section 1122 approval of Plan Omega. Id. at 926.

After receipt of this mandate, H.E.W. wrote the court and explained that it would treat plaintiffs' Title VI and Rehabilitation Act complaints as though they had been filed administratively. In so doing, the Secretary concluded that Plan Omega, as originally presented, would have violated the civil rights protections afforded under Title VI and the Rehabilitation Act. H.E.W. then undertook extensive negotiations with WMC and after several months, the agency and the Center signed an agreement pertaining to Plan Omega, encompassing civil rights assurances recommended by H.E.W.*fn8 In accordance with the district court's mandate, H.E.W. also filed a supplemental report with the court, reconsidering the Secretary's prior decision not to file an impact statement for the section 1122 approval. Although the agency determined that Plan Omega would have a significant impact on the quality of the human environment,*fn9 it concluded nonetheless that it was not required to file an EIS because its approval was not a "major Federal" action within the meaning of NEPA.

The plaintiffs returned to court once again and, on a motion for partial summary judgment, asked the district judge to declare the Secretary's section 1122 approval invalid for failure to comply with NEPA. In response, H.E.W. filed a cross-motion for partial summary judgment seeking approval of its actions. The district court granted the Government's motion, concluding that the Secretary's action under section 1122 was not "major Federal" action as the term was used in NEPA. N. A. A. C. P. v. Wilmington Medical Center, Inc., 436 F. Supp. 1194 (D.Del.1977). Plaintiffs appeal from the judgment entered by the district court and ask us to reverse.*fn10 We decline to do so.

II. REQUIREMENTS OF NEPA

NEPA provides in pertinent part that:

to the fullest extent possible . . . 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 resources which would be involved in the proposed action should it be implemented.

NEPA § 102(2)(C), 42 U.S.C. § 4332(2)(C) (1970) (emphasis supplied).*fn11

NEPA thus requires an EIS only for "major Federal actions significantly affecting the quality of the human environment." As a preliminary matter, therefore, we must address the question of the precise meaning of this phrase. We believe that the phrase may be read in one of two ways: either it requires a unitary standard, compelling a court to conclude that a federal action is major so long as the action relates to a substantial impact on the human environment, or it requires a dual standard, compelling a court to determine not only the environmental impact of an action but also whether the agency action itself is of a major scope. Plaintiffs ask us to adopt the former approach to NEPA; H.E.W. advocates the latter reading of the EIS requirement.

In support of the unitary approach, plaintiffs cite Minnesota Public Interest Research Group v. Butz, 498 F.2d 1314 (8th Cir. 1974), in which the ...


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