IN THE

United States Court of Appeals FOR THE SECOND CIRCUIT

R.L. VALLEE, INC., Plaintiff-Appellant,

WESCO, INC., TIMBERLAKE ASSOCIATES, L.L.P., Plaintiffs,

- v. -

VERMONT AGENCY OF TRANSPORTATION, et al., Defendants-Appellees.

ON APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF VERMONT

BRIEF FOR PLAINTIFF-APPELLANT R.L. VALLEE, INC.

DANIEL A. SEFF, ESQ. MSK ATTORNEYS 275 College Street Burlington, VT 05401 Telephone: (802) 861-7000 Email: dseff@mskvt.com

Counsel for Plaintiff-Appellant R.L. Vallee, Inc.

i

CORPORATE DISCLOSURE STATEMENT

Pursuant to Rule 26.1 of the Federal Rules of Appellate Procedure, Plaintiff-

Appellant R.L. Vallee, Inc. states that it does not have a parent corporation, and

that no publicly held corporation owns 10% or more of its stock.

ii

TABLE OF CONTENTS

CORPORATE DISCLOSURE STATEMENT ........................................................................ i TABLE OF AUTHORITIES .............................................................................................. v JURISDICTIONAL STATEMENT ...................................................................................... 1 STATEMENT OF THE ISSUES PRESENTED FOR REVIEW ................................................. 1 STATEMENT OF THE CASE ........................................................................................... 3

A. Nature of the Case ................................................................................. 3 B. Relevant Procedural History ................................................................. 4 C. Disposition Below ................................................................................. 5 D. Statement of Facts ................................................................................. 6

1. VTrans’ 2013 Categorical Exclusion Application ................................................................................ 10

2. VTrans’ CE Request Avoids Discussing

Certain Indirect Effects and There is Evidence that FHWA Effectively Decided and Approved the CE Request Before VTrans Formally Submitted It .................................................. 10

3. VTrans’ CE Request Contains Additional

Errors ......................................................................................... 15 4. In 2018 and Again in 2019, FHWA Admits

that the DCE Will Be Re-Evaluated ......................................... 17 5. The March 11, 2020 Hearing on the MSJ

Cross-Motions ........................................................................... 18

iii

6. Vallee Moves to Re-Open Oral Argument to Discuss New Facts Concerning Whether a NEPA “Hard Look” at All Indirect Effects was Property Undertaken .......................................................... 20

7. FHWA Re-Evaluates the 2013 DCE in April

2020 But Fails to Notify the District Court or Vallee Until July 1, 2020 ...................................................... 22

8. Four Business Days After FHWA Files the

Re-Evaluation Notice, the District Court Grants VTrans and FHWA’s MSJ Cross-Motions, Denies Vallee’s MSJ Cross-Motion and Motion to Re-Open ................................................ 25

SUMMARY OF THE ARGUMENT .................................................................................. 26 STANDARD OF REVIEW .............................................................................................. 33 ARGUMENT ............................................................................................................... 33 I. THIS COURT SHOULD VACATE THE DISTRICT COURT’S

DECISION AND REMAND THIS CASE WITH INSTRUCTIONS

TO PERMIT VALLEE TO AMEND ITS 2018 COMPLAINT IN

LIGHT OF FHWA’S 2020 RE-EVALUATION OF THE 2013

DCE, WHICH RE-EVALUATION RELEGATED THE 2013

DCE TO THE STATUS OF NON-FINAL AGENCY ACTION .................................. 33

II. THERE IS NO GENUINE DISPUTE AS TO ANY MATERIAL

FACT AND VALLEE IS ENTITLED TO JUDGMENT AS MATTER

OF LAW THAT THE DDI PROJECT DOES NOT QUALIFY FOR

A CATEGORIAL EXCLUSION ............................................................................ 40 A. NEPA and Categorical Exclusions Generally ..................................... 40

B. NEPA/APA Standard of Review......................................................... 44

C. The DDI Project Does Not Qualify for a DCE ................................... 45

iv

1. It is Axiomatic that a Highway Interchange Designed to Have Significant Impacts on Traffic Patterns Does Not Qualify for a DCE........................... 46

2. VTrans and FHWA Did Not Take a “Hard Look” at the Project’s Indirect Effects ..................................... 50

3. VTrans’ DCE Application is Insufficient as a Matter of Law ......................................................................... 55

4. The DCE is Not Supported by the

Administrative Record .............................................................. 56

CONCLUSION ............................................................................................................. 59 CERTIFICATE OF COMPLIANCE WITH TYPE-VOLUME LIMIT, TYPEFACE REQUIREMENTS, AND TYPE-STYLE REQUIREMENTS ................................ 62

v

TABLE OF AUTHORITIES

PAGE

CASES 6801 Realty Co., LLC v. USCIS, 719 F. App’x 58 (2d Cir.

2018) (summary order) ................................................................................. passim

6801 Realty Co., LLC v. USCIS, No. 15 Civ. 5958 (AMD), 2016 WL 7017354 (E.D.N.Y. Nov. 30, 2016), aff’d, 719 F. App’x 58 (2d Cir. 2018) .......................................................................................34

Bennett v. Spear, 520 U.S. 154 (1997) ....................................................................34

Brady Campaign to Prevent Gun Violence v. Salazar, 612 F. Supp. 2d 1 (D.D.C. 2009) .....................................................................................52

Constitution Pipeline Co., LLC v. N.Y. State Dep’t of Envtl. Conservation, 868 F.3d 87 (2d Cir. 2017) ...........................................................45

Fairbanks N. Star Borough v. U.S. Army Corps of Eng’rs, 543 F.3d 586 (9th Cir. 2008) .......................................................................................34

Friends of the Earth, Inc. v. U.S. Army Corps of Eng’rs, 109 F. Supp. 2d. 30 (D.D.C. 2000) ..................................................................................52

Iowa League of Cities v. EPA, 711 F.3d 844 (8th Cir. 2013) ..................................35

N. Alaska Envtl. Ctr. v. U.S. Dep’t of the Interior, 965 F.3d 705 (9th Cir. 2020) ......................................................................................................39

Nat’l Ass’n of Home Builders v. Defenders of Wildlife, 551 U.S. 644 (2007) ............................................................................................................45

New Mexico v. McAleenan, 450 F. Supp. 3d 1130 (D.N.M. 2020) .....................................................................................................................35

Newman v. Annucci, No. 3:17-CV-0918 (LEK/DEP), 2019 WL 3050520 (N.D.N.Y. July 12, 2019) ......................................................................39

R.L. Vallee, Inc. v. Vt. Agency of Transp., No. 5:18-CV-104, 2020 WL 4689788 (D. Vt. July 8, 2020) ...................................................... passim

vi

RB Jai Alai, LLC v. Sec’y of Fla. Dep’t of Transp., 112 F. Supp. 3d 1301 (M.D. Fla. 2015), vacated, No. 6:13-cv-1167-Orl-40GJK, 2016 WL 3369259 (M.D. Fla. Feb. 2, 2016) ................................... 37, 50

Scahill v. D.C., 909 F.3d 1177 (D.C. Cir. 2018) .....................................................39

Schwebel v. Crandall, 967 F.3d 96 (2d Cir. 2020) ..................................................33

Senville v. Peters, 327 F. Supp. 2d 335 (D. Vt. 2004) ...................................... 53, 59

Sharkey v. Quarantillo, 541 F.3d 75 (2d Cir. 2008) ......................................... 34, 35

Sierra Club v. Bosworth, 510 F.3d 1016 (9th Cir. 2007) ................................. 51, 52

Travelers Ins. Co. v. 633 Third Assocs., 973 F.2d 82 (2d Cir. 1992) .....................................................................................................................38

U.S. Army Corps of Eng’rs v. Hawkes Co., 136 S. Ct. 1807 (2016) ....................................................................................................................34

West v. Sec’y of Dep’t of Transp., 206 F.3d 920 (9th Cir. 2000) .................... passim

Zbitnoff v. James, No. 5:14-CV-132, 2016 WL 4251047 (D. Vt. Aug. 10, 2016), aff’d, 708 F. App’x 25 (2d Cir. 2017) ........................................41

STATUTES 5 U.S.C. § 704 ................................................................................................... 28, 33

5 U.S.C. § 706(2)(A) ............................................................................. 45, 50, 56, 58

28 U.S.C. § 1291 ........................................................................................................ 1

28 U.S.C. § 1331 ........................................................................................................ 1

28 U.S.C. § 2412(d) .................................................................................................60

42 U.S.C. § 4332(2)(C) ..................................................................................... 40, 41

REGULATIONS

23 C.F.R. § 771.115(b) (2013) .................................................................................44

23 C.F.R. § 771.117(a) (2013) ......................................................................... passim

vii

23 C.F.R. § 771.117(c) (2013) .................................................................................44

23 C.F.R. § 771.117(d) (2013) ......................................................................... passim

23 C.F.R. § 771.117(d)(1) (2013) ............................................................................46

23 C.F.R. § 771.117(d)(2) (2013) ............................................................................46

23 C.F.R. § 771.129 (2020) .................................................................... 2, 27, 36, 37

40 C.F.R. § 1508.4 (2013) .......................................................................................43

40 C.F.R. § 1508.7 (2013) .......................................................................................51

40 C.F.R. § 1508.8 (2013) ...................................................................................2, 51

40 C.F.R. § 1508.27 (2013) .....................................................................................42

40 C.F.R. § 1508.27(a) (2013) .................................................................................42

40 C.F.R. § 1508.27(b) (2013) .......................................................................... 42, 43

COURT RULES

FED. R. APP. P. 39 .....................................................................................................60

FED. R. CIV. P. 56(a) .................................................................................................33

SECOND CIRCUIT LOCAL RULE 39.1 .........................................................................60

OTHER AUTHORITIES

Chittenden County Metropolitan Planning Organization, Exit 16 Scoping Study, Colchester, Vermont, Final Scoping Report dated December 2011 ............................................................ 32, 56, 57, 58

VTrans, Exit 16 DDI Diverging Diamond Interchange, http://www.exit16ddi.vtransprojects.vermont.gov/pdfs/190306_Exit_16_DDI_Brochure_FINAL.PDF ............................................................... 9

VTrans, Project Overview, Diverging Diamond Interchange, http://www.exit16ddi.vtransprojects.vermont.gov/project-overview/ ............................................................................................................6, 9

1

JURISDICTIONAL STATEMENT

This appeal brings on for review Plaintiff-Appellant R.L. Vallee, Inc.’s

(“Vallee” or “Appellant”) challenge, pursuant to the National Environmental

Policy Act of 1969, 24 U.S.C. §§ 4321 to 4370m-12 (“NEPA”), and the

Administrative Procedure Act of 1946, 5 U.S.C. §§ 500-596 (“APA”), of

Defendant-Appellee the Federal Highway Administration’s (“FHWA”) 2013

approval of a Documented Categorical Exclusion requested by Defendant-

Appellee the Vermont Agency of Transportation (“VTrans”) for a large highway

redesign project in Colchester, Vermont (the “DDI Project” or the “Project”).

The District Court had subject matter jurisdiction pursuant to 28 U.S.C. §

1331 because the case arose under federal law.

Vallee filed its Notice of Appeal on August 11, 2020 (Joint Appendix

(“Appx”) 431-432).

This is an appeal from the District Court’s final Order (Appx009-029) and

Judgment (Appx030), which disposed of all parties’ claims. Pursuant 28 U.S.C. §

1291, the Court of Appeals has jurisdiction to hear this appeal.

STATEMENT OF THE ISSUES PRESENTED FOR REVIEW

1. Should this case be remanded to the District Court with instructions to

permit Vallee to amend its 2018 Complaint because the 2013 Documented

Categorical Exclusion (“2013 DCE” or “DCE”) that FHWA granted to VTrans for

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the DDI Project, which DCE was the subject of Vallee’s 2018 Complaint, was

supplanted by FHWA’s 2020 re-evaluation of the DCE conducted pursuant to 23

C.F.R. § 771.129 (2020)? This issue is discussed in Argument Point I, below.

2. Is Vallee entitled to judgment as a matter of law that, under NEPA, an

environmental impact statement (“EIS”) is required for the DDI Project because

the Project would have “significant impacts on travel patterns” as that phrase is

used in 23 C.F.R. § 771.117(a) (2013)? This issue is discussed in Argument Point

II.C.1, below.

3. Is Vallee entitled to judgment as a matter of law that VTrans and

FHWA failed to take a required hard look at all of the DDI Project’s “indirect

effects” as that phrase is defined in 40 C.F.R. § 1508.8 (2013)? This issue is

discussed in Argument Point II.C.2, below.

4. Is Vallee entitled to judgment as a matter of law that VTrans’

application for the 2013 DCE is insufficient in that it fails to state that “significant

environmental effects will not result” from the DDI Project, as required by 23

C.F.R. § 771.117(d) (2013)? This issue is discussed in Argument Point II.C.3,

below.

5. Is Vallee entitled to judgment as a matter of law that the 2013 DCE is

not supported by the Administrative Record? This issue is discussed in Argument

Point II.C.4, below.

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STATEMENT OF THE CASE

A. Nature of the Case.

On December 27, 2013, FHWA approved a DCE requested by VTrans for a

large highway project in Colchester, Vermont known as Colchester HES 5400(14)

(Appx235-243, Appx590-591). The Project involves construction of a new-to-

Vermont, and generally new, highway interchange design whereby traffic passing

under (or over) a highway switches sides of the road. Instead of traffic staying on

the traditional right-side of the road, in a Diverging Diamond Interchange (“DDI”)

configuration traffic flips to the left side of the road halfway through the

interchange (Appx201 fig.2). This configuration eliminates left turns across

opposing traffic to allow cars to reach on-ramps and eliminate the need for large

cloverleafs.

VTrans proposes to construct the Project at Exit 16 of Interstate 89 (“I-89”).

Under the existing configuration, Route 2/7 passes under I-89. In order to convert

the existing intersection into a DDI configuration, the geometry under and around

the highway overpass, including the on- and off-ramps, will be altered. Most

notably, the southbound and northbound lanes of Route 2/7 will switch sides in the

interchange and then cross back to connect with the traditional road geometry on

2/7. The roadway will be widened and the off/on ramp geometry will be

reconfigured.

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In addition, the Project includes substantial improvements to Route 2/7 and

the surrounding roads. Upper Mountain View Drive and Lower Mountain View

Drive will be widened and new turn lanes will be added to both roads to

accommodate increased traffic from private development.

In order to complete the Project, land from over thirty landowners and

tenants must be acquired (Appx401). The Project will require two to three years of

construction and will result in travel disruption. Travel lanes on Route 2/7 and I-

89, including highway on- and off-ramps, will need to be closed at intermittent

times of the day and throughout the night.

Vallee maintains that the Project does not qualify for a DCE and that an EIS

must be prepared. Moreover, the Administrative Record (“AR”) demonstrates that,

instead of taking a “hard-look” at the Project’s environmental consequences as

NEPA requires, FHWA and VTrans worked together to shield the Project from

environmental review. In particular, the agencies worked together to limit review

of the Project’s “indirect effects.”

B. Relevant Procedural History.

In December 2013, FHWA approved a DCE for the Project that VTrans

requested in July 2013 (App235-243, Appx590-592).

Vallee filed its Verified Complaint for Declaratory and Injunctive Relief on

July 2, 2018 challenging the DCE pursuant to NEPA and the APA (Appx031-276)

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(“Complaint”). FHWA and VTrans filed their Answers on October 11, 2018.

(Appx277-306, Appx307-353).

On August 1, 2019, Vallee moved for summary judgment (Appx006, ECF

No. 33). On October 4, 2019, FHWA and VTrans cross-moved for summary

judgment (Appx006, ECF Nos. 36, 39).

On March 11, 2020, the District Court held a hearing on the parties’

summary judgment cross-motions (Appx354-416). The March 11th hearing is

discussed in the Statement of Facts, below.

On June 17, 2020, Vallee moved to reopen oral argument to discuss new

facts (Appx007, ECF No. 48).

On July 1, 2020, FHWA filed a Notice of 23 C.F.R. 771.129(c) Re-

Evaluation (Appx417-430) (“Re-Evaluation Notice”) stating that in April 2020

FHWA had re-evaluated the 2013 DCE at VTrans’ request. The Re-Evaluation

Notice is discussed in the Statement of Facts, below.

C. Disposition Below.

On July 8, 2020, one week after FHWA filed the Re-Evaluation Notice (with

the July 4th holiday weekend falling in the middle), the District Court (Hon.

Geoffrey W. Crawford) denied Vallee’s motions for summary judgment and to

reopen oral argument and granted VTrans and FHWA’s cross-motions for

summary judgment, thereby finally disposing of the case and all parties’ claims.

6

R.L. Vallee, Inc. v. Vt. Agency of Transp., No. 5:18-CV-104, 2020 WL 4689788

(D. Vt. July 8, 2020) (Appx009-029). The District Court issued a separate

Judgment, as well (Appx030).

D. Statement of Facts.

The Project centers on the construction of a “diverging diamond

interchange” and constitutes a major redesign of the Exit 16 interchange to I-89.

See VTrans, Project Overview, Diverging Diamond Interchange,

http://www.exit16ddi.vtransprojects.vermont.gov/project-overview/ (last visited

Nov. 30, 2020);1 see also Appx552-575. FHWA defines a diverging diamond

interchange as a design that:

accommodates left-turning movements onto arterials and limited-access highways while eliminating the need for a left-turn signal phase at signalized ramp terminal intersections. On the cross street, the traffic moves to the left side of the roadway between the signalized ramp intersections. This allows drivers of vehicles on the cross street who want to turn left onto the ramps the chance to continue to the ramps without conflicting with opposing through traffic and without stopping.

Appx201; see also VTrans’ Project description (Appx566-567). FHWA materials

depict the traffic flow in a typical diverging diamond interchange (Appx201 fig.2).

1 Vallee relied on this VTrans webpage in its summary judgment Motion.

See Vallee’s Statement of Undisputed Material Facts in Support of Plaintiffs’ Motion for Summary Judgment, ECF No. 33-2, at 4, ¶ 12 (Aug. 1, 2019).

7

The Project would be constructed at Exit 16 of I-89. Under the existing

configuration, Route 2/7 passes under I-89. In order to convert the interchange to a

DDI configuration, the geometry under and around the highway overpass will be

altered. The south and northbound lanes of Route 2/7 will switch sides in the

interchange and then cross back to connect with the traditional road geometry on

Route 2/7. If the Project is built, traffic will pass to the “wrong” side of Route 2/7

as it approaches I-89, thereby allowing some vehicles to turn left without crossing

lanes with oncoming traffic (Appx565-567).

This substantial change in existing traffic patterns (Appx565-567) was an

express goal in VTrans’ 2013 DCE application to FHWA:

The purpose of this project is to develop transportation improvements that will increase safety (Hazard Elimination System (HES)), reduce traffic congestion, increase bike/pedestrian safety, increase traffic flow and Level of Service (LOS), and facilitate mobility in the U.S. Route 2/7 corridor from the South Park Drive to the Rathe Road intersection in the town of Colchester. The need for the project is due to the area being designated a High Crash Location (HCL) by VTrans with one high crash roadway segment and one high crash intersection (pages 9 and 10 Final Scoping Report) in the project area. Pedestrian travel in the U.S. Route 2/7 corridor is also challenging due to the lack of pedestrian facilities (sidewalks and pedestrian signals). The project will also reduce traffic delays and queues at the signalized intersections in the project area. Long vehicle queues extend through adjacent intersections creating gridlock during peak hours of travel; vehicle queues occasionally extend onto the northbound through

8

lanes of Interstate 89 mainline creating a particularly dangerous situation; delays at several intersection approaches exceed the threshold for LOS-F during peak hours of travel; and for some intersection approaches, existing traffic volumes exceed capacity in both A.M. and P.M. peak hours. The proposed interchange improvements will be designed to accommodate design year traffic volumes projected on the basis of standard traffic engineering methodology which takes into account demographics, land use, current trends, municipal planning and zoning, etc. The zoning in the corridor is completely commercial/industrial, and not directed at any specific development.

Appx237 (emphasis added).

The DDI is an “unconventional interchange design.” (Appx565; see also

Appx534, ¶ 76). This redesign substantially increases the interchange’s capacity to

handle traffic (Appx104).

The Project includes the expansion of Lower Mountain View Drive

(“LMVD”) and Upper Mountain View Drive (Appx569-571). VTrans will expand

each road and install an additional turn lane so as to increase capacity and to

decrease wait times at the intersection (id.). Expansion of LMVD is intended to

accommodate increased traffic from private development and growth at the end of

LMVD (Appx534-537).

The Project also entails expanding Route 2/7 north of the I-89 Exit 16

interchange to accommodate additional lanes in some places (Appx570-574).

9

Changes in access control will be required to widen the ramps (Appx235). This

will increase the roadway’s capacity (Appx473).

The Project is proposed to be constructed over two to three “seasons.” See

VTrans, Project Overview, Diverging Diamond Interchange,

http://www.exit16ddi.vtransprojects.vermont.gov/project-overview/ (last visited

Nov. 30, 2020). The first “season” would entail construction of off-road

improvements such as stormwater systems, blasting ledge to allow for future

expansion and utility relocation (id.). Due to the blasting location, closures on

parts or all of Route 2/7 and the I-89 ramps will be required during blasting

periods. See VTrans, Exit 16 DDI Diverging Diamond Interchange,

http://www.exit16ddi.vtransprojects.vermont.gov/pdfs/190306_Exit_16_DDI_Bro

chure_FINAL.PDF (last visited Nov. 30, 2020).2

Further, due to the utility relocation, portions of Route 2/7 will have to be

closed for periods of time (id.). This work will require closure of at least one lane

of Route 2/7 at all times to repave, resurface and expand Route 2/7 (id.). The

construction of the Double-Diamond intersection will likely require closing Route

2/7 in its entirety, and the closure of I-89 off- and on-ramps for periods of time

2 Vallee relied on these two official VTrans webpages in its summary

judgment Motion. See Vallee’s Statement of Undisputed Material Facts in Support of Plaintiffs’ Motion for Summary Judgment, ECF No. 33-2, at 6-7, ¶¶ 25-33 (Aug. 1, 2019).

10

(id.). Traffic is so heavy in the area that construction will mostly occur between

7:00 PM and 6:00 AM (id.). However, due to the nature of the construction

(including blasting), some work in both seasons that requires the closure of some

or all of Route 2/7 must occur during the day (id.).

There has not been an assessment as to the impact on area businesses –

which depend on through traffic for success – of two-plus years of construction,

associated road closures (whether at night or during the day), construction-related

traffic diversions and increased delays.

1. VTrans’ 2013 Categorical Exclusion Application.

On July 31, 2013, VTrans submitted to FHWA a request for a categorical

exclusion for the Project, including a cover letter (“CE Cover Letter”) and a

“Categorical Exclusion Environmental Analysis Sheet” (“Categorical Analysis”).

The CE Cover Letter and the Categorical Analysis are referred to collectively as

VTrans’ “CE Request.” (Appx235-243).

2. VTrans’ CE Request Avoids Discussing Certain Indirect Effects and There is Evidence that FHWA Effectively Decided and Approved the CE Request Before VTrans Formally Submitted It.

What VTrans fails to mention in its CE Request, but which is evident from

the Administrative Record, is that FHWA and VTrans coordinated efforts to

insulate the Project from environmental review. FHWA was not an impartial

reviewer of VTrans’ CE Request, but rather served as a partner with VTrans to

11

avoid the “hard look” NEPA mandates. In particular, the two parties coordinated

efforts to avoid having to review the Project’s indirect effects.

Specifically, VTrans and FHWA coordinated and figured out how to avoid

reviewing the effects of Costco’s gas station development, which can only proceed

after the LMVD improvements are constructed. This coordination is laid out in a

series of August 2012 email communications (Appx477-479).

On August 2, 2012, FHWA’s Mr. Sikora and Messrs. Rice, LaCroix and

Ramsey of VTrans met to discuss how to deal with the Project’s indirect and

cumulative impacts (id.). Mr. Ramsey’s meeting notes, sent via email to Mr.

Sikora and others, state that indirect effects are “but for” – “but for the action, the

result would not have happened.” (Appx478-479).

“Cumulative Impacts” are something different and, according to Mr.

Ramsey, when it comes to cumulative impacts, only the “resources” impacted are

reviewed (id.). His notes go on to discuss the arguments VTrans must make – after

these arguments were discussed with FHWA – to classify the Costco project as

something other than a “but-for” effect (id.).

As explained by VTrans’ Mr. Ramsey, the parties determined that VTrans

needed to state that the DDI Project came first and that Costco was not a “but-for”

project (Appx479). In addition, the Ramsey notes stated that VTrans should not

take any money for the DDI Project from Costco’s Act 250 application as a

12

requirement for the highway interchange upgrade (id.). According to Mr. Ramsey,

doing so “could tie us into their project and Indirect Effects; ‘but for.’” (Appx479).

These communications between VTrans and FHWA to try to figure out how

to classify the Costco project so as to avoid further environmental review were

necessitated because the Costco project is a classic “but-for” project. In June 2013,

Vallee attorney Jon Anderson forwarded to FHWA’s Mr. Sikora a copy of

Costco’s State of Vermont Act 250 Permit and approval decision (Appx493-543).

Mr. Anderson called to FHWA’s attention certain factual findings and permit

conditions concerning traffic mitigation for the Costco project (Appx493).

As detailed in the Act 250 decision that Mr. Anderson sent to FHWA,

Costco proposed to construct a twelve-pump fueling station at the eastern end of

LMVD (Appx493-543). Because the Costco gas station would generate so much

traffic, and because the existing traffic conditions were congested and unsafe,

traffic mitigation measures were necessary (id.).

In Costco’s Act 250 application, and as adopted by the State Act 250

Commission (“Commission”) in its decision, Costco proposed as mitigation the

following:

Costco will construct or fund the construction of dual WB left-turn lanes and an exclusive NB right-turn lane at US 7/Lower Mountain View Drive and a second right-turn lane on the Eastbound (“EB”) approach on Upper Mountain View Drive. It is recommended that the storage length for the WB through/right-turn lane be

13

increased from 170’ to 200’, the storage length for the WB left-turn lane will be 175’ and the storage length for the Northbound right turn will be 225’. The dual left-turn lanes on Lower Mountain View Drive for vehicles accessing US 7 will not significantly improve the ability for vehicles to make left turns on to US 7, given that this movement is impacted by queue spillback from the I-89 SB Ramps, but they will improve queue storage on Lower Mountain View Drive for this movement. The cost of these improvements is estimated at $720,000. Exhibits #15 and #79.

Appx532, ¶ 62.

The Commission determined that this mitigation needed to be constructed

prior to Costco operating a fueling station. The Commission wrote:

The Applicants have proposed and the Commission accepts, the following improvements as mitigation of the increased traffic that will be caused by the Project:

1. Costco will complete the improvements needed at

the Lower Mountain View Drive/US 7 intersection, namely the construction of dual WB left-turn lanes and an exclusive NB right-turn lane.

2. Costco will construct a second right-turn lane on

the EB approach on Upper Mountain View Drive. 3. Costco will increase the storage length for the WB

through/right-turn lane on Lower Mountain View Drive from 170-feet to 200-feet.

4. Costco will post signs asking drivers to not block

the driveways of other businesses on Lower Mountain View Drive and the road in front of these driveways shall be crosshatched. The Commission does not adopt Vallee’s suggestion that police be posted at these driveways.

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5. Costco will contribute $720,000 toward the

intersection improvements at Lower Mountain View Drive, Upper Mountain View Drive, and along the Exit 16 corridor, subject to reimbursement for its “fair share” contribution above $583,721.

Appx536.

Specifically, the Commission held that Costco’s permit to operate the

fueling station was “condition[ed]” on “completion of the Lower and Upper

Mountain View Drive improvements. . . .” (Appx537). The LMVD and Upper

Mountain View Drive (“UMVD”) improvements are Costco-related improvements

and Costco cannot open or operate its fueling station “but-for” these improvements

(id.).

These same LMVD and UMVD improvements were included in VTrans’

plans as of 2013 when it applied for and received the DCE (Appx569-571).

Despite the fact that FHWA and VTrans received notice that the Costco project

was a “but-for” impact – i.e., one that could not occur absent the NEPA-reviewed

DDI Project being completed (Appx493-543), neither FHWA nor VTrans updated

their categorical exclusion analysis to include the Costco project as an “indirect

effect.”

Rather, in the CE Request, VTrans wrote, “[a]fter extensive research and

evaluation of project resource impacts, it was determined that the Colchester HES

15

NH 5600 (14) project will not have any Indirect Effects.” (Appx242).

Furthermore, it appears VTrans made its decision as to how to classify Costco

prior to submitting its CE Request to FHWA (Appx477-479). On October 2,

2012, FHWA’s Lawrence Dwyer sent an email to FHWA employees stating that

FHWA determined the Project qualified for a CE, and that the Costco project need

not be considered an “indirect effect.” (Appx480). Mr. Dwyer’s email states that

FHWA communicated this to VTrans and that VTrans would be filing a CE

request shortly (id.). Thus, FHWA effectively approved VTrans’ CE Request

before it was filed, and it communicated this information to VTrans (Appx480).

It appears that no consideration was given in 2013, after the Commission

linked the Costco project to the DDI Project (Appx493-543), as to whether

FHWA’s October 2012 determination (Appx480) was still valid and reasonable.

Of note, Costco has now paid substantial sums to VTrans as payment for the

improvements at LMVD. See Vallee’s Statement of Undisputed Material Facts in

Supp. of Pltfs.’ Mot. for Summ. J., ECF No. 33-2, at 12, ¶ 66 (Aug. 1, 2019).

3. VTrans’ CE Request Contains Additional Errors.

VTrans describes the DDI Project as the “modernization of a highway.”

(Appx235). In actuality, the Project involves the complete redesign and

reconfiguration of a highway interchange and roadway traffic patterns that would

increase substantially the interchange’s capacity to process traffic (Appx552-576).

16

VTrans’ CE Request states clearly that the Project’s purpose is to “reduce

traffic congestion . . . increase traffic flow and Level of Service (LOS), and

facilitate mobility in the U.S. Route 2/7 corridor from the South Park Drive to the

Rathe Road intersection in the town of Colchester.” (Appx237). The operative

FHWA regulations, however, provide that only those projects which “do not have

significant impacts on travel patterns” may qualify for a CE. See 23 C.F.R. §

771.117(a) (2013).

In addition, VTrans stated in its CE Request that the Project “will not

involve substantial planning, resources, or expenditures. . . .” (Appx235) (emphasis

added). VTrans was far less confident when it wrote of the Project: “nor is it

likely to induce significant alterations in land use, planned growth, development

patterns, traffic volumes, or traffic patterns.” (Id.) (emphasis added).

VTrans’ CE Request was similarly vague on the issue of whether

environmental impacts would result. VTrans stated: “No significant environmental

impact is expected to result from construction or maintenance of this facility.”

(Appx235) (emphasis added).

VTrans wrote that “[b]est management practices for stormwater . . . control

during and after construction . . . will be designed to minimize any potential

adverse effects coming from our roadway.” (Appx238, ¶ 4) (emphasis added).

VTrans did not assure FHWA that Sunnyside Brook, Lake Champlain and

17

Sunderland Brook would not suffer adverse effects. Rather, VTrans speculated

that no secondary impacts were “anticipated.” (Id.) (emphasis added).

In its Categorical Analysis, VTrans claimed there would be no business

displacements and that takings would not be substantial (Appx240, ¶ 11). And yet,

the Administrative Record contains a list of “Affected Properties-Conceptual

Plans” that shows the taking of property from at least fourteen landowners

(Appx578-579). This figure was increased later to thirty landowners (Appx401).

On December 27, 2013, FHWA approved and executed VTrans’ CE Request

(Appx590-592; see also Appx421).

4. In 2018 and Again in 2019, FHWA Admits that the DCE Will Be Re-Evaluated.

On July 2, 2018, Vallee filed its Complaint in the District Court challenging

the 2013 DCE (Appx031-276). In their October 11, 2018 Answer (Appx277-306),

the Federal Defendants admitted the 2013 DCE would be re-evaluated in the

future. See Appx299, ¶ 213 (“Federal Defendants admit that FHWA has not

reevaluated its approval of a categorical exclusion for the Project, and avers that it

will do so at an appropriate time prior to the authorization of construction on the

Project.”); and Appx300, ¶ 218 (“Federal Defendants admit that VTrans has not

yet sought a reevaluation of the Project, and aver that FHWA expects to perform a

reevaluation at an appropriate time prior to the authorization of construction on the

18

Project.”). See also Fed’l Dfts.’ Answer, ECF No. 15, ¶¶ 225-226, 257, 260 (Oct.

11, 2018) (Appx300-301, Appx303, Appx304).

Thereafter, the parties cross-moved for summary judgment (Appx006, ECF

Nos. 33, 36, 39 (the “MSJ Cross-Motions”)). In their October 4, 2019

Memorandum of Law in support of their MSJ Cross-Motion and in opposition to

Vallee’s MSJ, the Federal Defendants again admitted the 2013 DCE requires re-

evaluation. See Fed’l Dfts.’ Cross-Mot. for Summ. J., Mem. in Support, Etc., ECF

No. 36, at 12 n.5 (Oct. 4, 2019) (“Because work on the Project has not yet

commenced, and VTrans requires further authorization from FHWA prior to

receiving funding for the Project, FHWA is required under its NEPA regulations to

conduct a re-evaluation of the categorical exclusion. . . .”) (citing 23 C.F.R. §

771.129(c) (2013)).

5. The March 11, 2020 Hearing on the MSJ Cross-Motions.

During the District Court’s March 11, 2020 hearing on the MSJ Cross-

Motions, Vallee’s counsel, Alexander LaRosa, raised the Federal Defendants’

above-described admissions concerning FHWA’s upcoming re-evaluation of the

2013 DCE (Appx357). Mr. LaRosa suggested the Court could “stay these

proceedings to see how the re-evaluation works out.” (Appx359). Chief Judge

Crawford responded that “waiting always lies within my authority.” (Appx360).

19

The Federal Defendants’ counsel in the District Court, Joshua Wilson,

resisted Mr. LaRosa’s suggestion that the case should be stayed pending FHWA’s

coming re-evaluation: “Questions about what the [FHWA] may do in the future,

what regulations may apply to what the agency does in the future, simply aren’t in

front of the Court because there’s been no final agency action with respect to

those claims. . . .” (Appx384) (emphasis added).

Chief Judge Crawford responded to Mr. Wilson, stating: “But help me with

the sort of gloomy prospect of doing this case two times, is that inevitable,

assuming that the plaintiffs bring a similar challenge to [FHWA’s] future review?”

(Appx384). Mr. Wilson acknowledged Vallee’s expressed desire to “voluntarily

dismiss” or “withdraw” its claims pending FHWA’s coming re-evaluation of the

2013 DCE (Appx385), but he emphasized that “the issue in front of the Court now

is did the agency act appropriately in 2013.” (Id.). Chief Judge Crawford

responded to Mr. Wilson as follows:

I could kind of sit on my hands for a couple of months and wait for the re-evaluation and the amended complaint addressing it, but I don’t want to sit on my hands for years waiting for that. I need a little sort of pragmatic guidance from you as to what you think will happen.

Appx385. “I know the re-evaluation is very likely to happen,” Mr. Wilson

replied.” (Id.) And “when that’s over the re-evaluation will yield what it yields.”

(Appx386).

20

Near the end of the March 11, 2020 hearing, Mr. LaRosa made a final plea

to stay the case pending the coming FHWA re-evaluation so that Vallee could

amend its 2018 Complaint and the entire case could be litigated in a single

proceeding:

[M]aybe the appropriate vehicle is to stay this case and have consideration after the DCE so that we could file as re-evaluated so that an amended complaint could be brought forth, if necessary, or that the issues would be mooted because there would be a different determination if a DEA or an EIS was being performed.

Appx404-405 (emphasis added).

The March 11, 2020 hearing concluded with Chief Judge Crawford

obtaining counsels’ approval for him to make an unaccompanied site visit to the

Project property (Appx414-415).

6. Vallee Moves to Re-Open Oral Argument to Discuss New Facts Concerning Whether a NEPA “Hard Look” at All Indirect Effects was Property Undertaken.

On June 12, 2020, Vallee received documents pursuant to a subpoena to

VTrans in a separate matter. Among the documents were emails that show Costco

offering a “substantial” “lump-sum” “incentive” “bonus” payment to VTrans

officials to ensure that the LMVD and UMVD improvements were completed first

once the DDI Project construction commenced. Specifically, Costco offered an

undisclosed “substantial” payment to VTrans, and VTrans solicited such payment

from Costco, so as to manipulate the construction schedule and construction bid

21

documents to incentivize and prioritize the completion of the LMVD and UMVD

improvements. See Pltfs.’ Mot. to Re-Open Oral Arg. to Present New Facts, ECF

No. 48 (June 17, 2020), at Exs. 1-5 (ECF No. 48-1).

On January 13, 2020 Costco and VTrans setup a meeting to discuss the DDI

Project (ECF No. 48-1, Ex. 1). That meeting was to take place on January 21,

2020 (id.). Two weeks later, on February 6, 2020, Costco’s counsel, Mark Hall,

sent an email to VTrans’ counsel, Jenny Ronis, wherein Mr. Hall shed light what

was apparently discussed in January (ECF No. 48-1, Ex. 2). Mr. Hall explained

that the parties discussed Costco making a “lump” payment to VTrans for a

“priority bid” on the DDI Project (id.). Mr. Hall characterized this as a “one-off

payment.” (Id.). While Costco’s offer would not be a “blank check,” Mr. Hall

assured VTrans the amount for the priority bid would be “substantial.” (Id.).

On February 11, 2020, VTrans’ Michael LaCroix followed up on Costco’s

offer to make a substantial payment to alter VTrans’ DDI Project construction

schedule. In an email to Costco’s Mark Marchisano, Mr. LaCroix highlighted that

VTrans’ needed to know the amount of Costco’s “lump-sum financial incentive

figure.” (ECF No. 48-1, Ex. 3). Mr. LaCroix indicated that the deal was not truly

one of partnership, but rather simply a deal whereby Costco would make a “lump-

sum ‘bonus’ for [VTrans] completing the intersection work prior to an agreed upon

completion date.” (Id.). Mr. Marchisano responded in a February 11th email that

22

Costco agreed with VTrans’ characterization of the deal and was working on

finalizing the exact “bonus” figure internally (ECF No. 48-1, Ex. 4).

On March 9, 2020, two days before the March 11, 2020 MSJ Cross-Motions

hearing, Costco and VTrans re-affirmed their commitment to this payment

relationship (ECF No. 48-1, Ex. 5). In a March 9th (9:41 AM) email, VTrans’ Mr.

LaCroix asked Costco’s Mr. Marchisano to confirm that Costco was still interested

in making a substantial payment for “incentivizing” an “altered construction

sequencing plan.” (Id.). Mr. Marchisano responded minutes later (at 9:55 AM),

confirming that Costco was “absolutely” interested (id.). Mr. LaCroix responded

at 10:25 AM that VTrans was “looking forward working with [Costco] on this and

anxious to see the fruits of our labor.” (Id.).

On June 17, 2020, upon learning of these new facts, Vallee moved the

District Court to re-open the record and oral argument (ECF No. 48). Vallee

maintained that these facts bore directly on statements made by FHWA and

VTrans in their Answers, MSJ Cross-Motions, and at the March 11th motions

hearing (ECF No. 48).

7. FHWA Re-Evaluates the 2013 DCE in April 2020 But Fails to Notify the District Court or Vallee Until July 1, 2020.

On July 1, 2020, FHWA filed in the District Court “Federal Defendants’

Notice of 23 C.F.R. 771.129(c) Re-Evaluation.” (Appx417-430) (“Re-Evaluation

Notice”). FHWA’s Re-Evaluation Notice was filed at the same time as

23

Defendants-Appellees’ oppositions to Vallee’s Motion to Re-open (Appx007-008,

ECF Nos. 50-51). The Re-Evaluation Notice consists of a covering Notice

document (Appx417-419), an April 6, 2020 letter and documentation VTrans

submitted to FHWA (Appx421-428), and an April 17, 2020 email message from

FHWA to VTrans (Appx430) that FHWA describes as a “[n]otice of completion

and approval of §771.129(c) re-evaluation dated April 17, 2020.” (Appx418).

VTrans submitted its re-evaluation documentation to FHWA on April 6,

2020 (Appx421-428), which was less than a month after the March 11, 2020

District Court hearing on the MSJ Cross-Motions (Appx354-416). Neither VTrans

nor FHWA alerted the District Court or Vallee at the time that the DCE re-

evaluation was underway. FHWA approved the re-evaluation eleven days later on

April 17, 2020 (Appx430). And yet, FHWA and VTrans did not inform the Court

or Vallee for over two months (Appx417-430).

FHWA’s attorney in the District Court asserted that he “first became aware

of the completion of the §771.129(c) re-evaluation process for this Project on June

26, 2020” (Appx418), which was more than two months after FHWA’s April 17,

2020 re-evaluation completion and approval (Appx430). Federal Defendants

stated that they “provide[d] this [Re-Evaluation Notice] in the interest of

transparency given Plaintiffs’ prior arguments to the Court regarding NEPA re-

evaluation.” (Appx418).

24

In VTrans’ April 6, 2020 submission to FHWA for re-evaluation, VTrans

identified numerous “changes in the scope of the work or the design of this

project since the issuance of the original CE” on December 27, 2013 (Appx421)

(emphasis added). Despite these numerous changes, VTrans “made the

determination that the [2013] Categorical Exclusion remains valid” and it

“request[ed] FHWA concurrence.” (Appx422).

In addition to the numerous 2020 Scope changes (Appx421), VTrans

changed its Project assessment language. In VTrans’ 2013 CE Request to FHWA,

VTrans wrote of the Project: “nor is it likely to induce significant alterations in

land use, planned growth, development patterns, traffic volumes, or traffic

patterns,” and “[n]o significant environmental impact is expected to result from

construction or maintenance of this facility.” (Appx235) (emphasis added). By

contrast, VTrans’ April 6, 2020 re-evaluation request states:

This project will not induce significant impacts to planned growth or land use for the area; will not require the relocation of significant numbers of people; will not have a significant impact on any natural, cultural, recreational, historic or other resource; will not involve significant air, noise, or water quality impacts; will not have significant impacts on travel patterns; and will not otherwise, either individually or cumulatively, have any significant environmental impacts.

Appx422 (emphasis added).

25

Vallee maintains that the 2020 DCE re-evaluation contains many of the

same issues that Vallee raised in its 2018 Complaint, along with additional issues

based on new and updated facts and circumstances and a new and updated

administrative record. Moreover, the 2014 revisions to 23 C.F.R. § 771.117(c) and

771.117(d) changed the requirements for a FHWA categorical exclusion in ways

that were “specifically intended to limit the application of these CEs.” (Appx017).

The District Court recognized the regulatory revisions (Appx017) but declined to

apply them to 2013 DCE (Appx024). There is no dispute that 2014 regulatory

revisions apply to the 2020 DCE re-evaluation.

8. Four Business Days After FHWA Files the Re-Evaluation Notice, the District Court Grants VTrans and FHWA’s MSJ Cross-Motions, Denies Vallee’s MSJ Cross-Motion and Motion to Re-Open.

On July 8, 2020, four business days after FHWA filed the Re-Evaluation

Notice, the District Court granted VTrans and FHWA’s MSJ Cross-Motions,

denied Vallee’s MSJ Cross-Motion and Motion to Re-Open (Appx009-030). The

last page of the dismissal decision contained a passing reference to VTrans’ April

6th re-evaluation request:

The parties agree, moreover, that a further CE determination will be necessary in connection with the funding and final approval of the project. By letter dated April 6, 2020, VTrans staff communicated their decision that following re-evaluation and changes in the scope of the DCD project, a categorical exclusion remains

26

appropriate. Compliance of the re-evaluation with NEPA is not before the court.

Appx029. See also Appx024 (“The parties agree that a second CE determination

will be required before VTrans proceeds with any construction. Defendants

recently filed a notice of exactly such a determination.”) (citations omitted).

Vallee filed its Notice of Appeal on August 11, 2020 (Appx431-432).

SUMMARY OF THE ARGUMENT

In July 2013, VTrans requested a DCE from FHWA for the DDI Project

(Appx235-243). In December 2013, FHWA approved VTrans’ DCE request

(Appx590-591). Vallee filed its Complaint in July 2018, alleging the DDI Project

does not qualify for a DCE (Appx031-076).

In its October 2018 Answer, FHWA admitted it planned to re-evaluate the

2013 DCE (Appx277-306, ¶¶ 213, 218, 225-226, 257, 260). FHWA re-confirmed

in its October 2019 MSJ Cross-Motion that the 2013 DCE required re-evaluation

by FHWA (see ECF No. 36, at 12 n.5).

During the March 11, 2020 District Court hearing on the parties’ cross-

motions for summary judgment (ECF Nos. 33, 36, 39), Vallee’s counsel

highlighted FHWA’s admissions concerning FHWA’s upcoming DCE re-

evaluation (Appx357). Counsel asked the District Court to stay the case pending

FHWA’s DCE re-evaluation so that Vallee could then amend its 2018 Complaint

and the entire case could be litigated in a single proceeding (Appx359, Appx404-

27

405). Chief Judge Crawford replied that he had the authority to wait and that he

would consider waiting a couple of months for FHWA’s re-evaluation and Vallee’s

resulting amended pleading (Appx360, Appx385).

On April 6, 2020, less than a month after the March 11th MSJ Cross-

Motions hearing, VTrans submitted documentation to FHWA for re-evaluation of

the 2013 DCE (Appx421-428), including a list of DDI Project changes that were

made since FHWA approved the original DCE more than six years earlier

(Appx421). On April 17, 2020, FHWA completed its DCE re-evaluation pursuant

to 23 C.F.R. § 771.129 (2020), and issued its approval (Appx418, Appx430).

FHWA and VTrans did not inform the District Court or Vallee about the

April 2020 DCE re-evaluation process until July 1, 2020 (Appx417-419). This

was the case even though the then-upcoming DCE re-evaluation was a major topic

of discussion at the March 11, 2020 MSJ Cross-Motions hearing (Appx357-360,

Appx384-386, Appx404-405).

On July 8, 2020, the District Court handed down a final merits ruling on the

parties’ MSJ Cross-Motions, which was less than five business days after FHWA

filed the July 1, 2020 Re-Evaluation Notice (Appx417-430). The District Court

granted VTrans and FHWA’s MSJ Cross-Motions, denied Vallee’s MSJ Cross-

Motion and Motion to Re-Open (Appx009-030).

28

The APA requires in relevant part that there must be “final agency action”

before a litigant can challenge an agency’s action in court. 5 U.S.C. § 704. In

Point I of the Argument, below, Vallee maintains respectfully that the 2013 DCE,

which is the subject of Vallee’s 2018 Complaint, no longer constituted FHWA’s

“final agency action” concerning the DDI Project after April 2020, which is when

FHWA re-opened and re-evaluated the 2013 DCE. Rather, the April 2020 re-

evaluation represents FHWA’s final agency action.

As explained below in Point I of the Argument, there is a Circuit split as to

whether § 704’s “final agency action” requirement is jurisdictional or an element

of an APA claim. The Second Circuit has yet to rule on the issue. Vallee agrees

with those Circuits holding that § 704’s “final agency action” requirement is

jurisdictional and Vallee encourages this Court respectfully to so hold. But this

Court need not resolve that question in order to vacate the District Court’s decision

and remand this case with instructions to permit Vallee to amend its 2018

Complaint in light of FHWA’s 2020 re-evaluation of the 2013 DCE. This is so

because, at a minimum, § 704 presents a “question of statutory standing that

permits resolving the case on threshold, non-merits grounds.” 6801 Realty Co.,

LLC v. USCIS, 719 F. App’x 58, 59 n.1 (2d Cir. 2018) (summary order) (internal

quotation marks omitted) (citing cases).

29

With the utmost respect, the District Court lacked authority to rule on the

merits because subject matter jurisdiction was lacking and/or because statutory

standing was lacking. Either way, the defect(s) that arose after Vallee filed its

2018 Complaint could have been corrected by Vallee filing an amended pleading –

something Vallee proposed to do back in March 2020 (Appx404-405).

Accordingly, Vallee requests respectfully in Point I, below, that this Court

vacate the District Court’s July 8, 2020 Order and Judgment (Appx009-030) and

remand this case to the District Court with instructions to permit Vallee to amend

its 2018 Complaint (Appx031-276) in light of FHWA’s April 2020 re-evaluation

(Appx417-430) of the 2013 DCE (Appx235-243, Appx590-591).

In the alternative, if this Court elects to reach the merits of this dispute,

Vallee submits respectfully that, for the reasons discussed below in Point II of the

Argument, there is no genuine dispute as to any material fact and Vallee is entitled

to judgment as a matter of law that the DDI Project does not qualify for a

categorical exclusion. In addition, Vallee submits respectfully that this Court

should enter an injunction prohibiting VTrans and its contractors and agents from

performing or continuing any work on the DDI Project, and prohibiting FHWA

from disbursing any funds for the DDI Project, until FHWA and VTrans comply

with their EIS obligations under NEPA. This is so for four independent reasons:

30

(1) Per 23 C.F.R. § 771.117(a) (2013), a highway interchange designed to have significant impacts on traffic patterns does not qualify for a DCE;

(2) VTrans and FHWA did not take a hard look at the Project’s indirect

effects, as required by NEPA; (3) VTrans’ DCE application is insufficient as a matter of law because it

did not meet the threshold which requires proving that “significant environmental effects will not result,” as required by 23 C.F.R. § 771.117(d) (2013); and

(4) The DCE is not supported by the Administrative Record.

The DDI Project is intended to have a significant impact on travel patterns

(see, e.g., Appx201 fig.2, Appx237, Appx565-567). As the Court held in West v.

Secretary of the Department of Transportation, 206 F.3d 920, 929 n.10 (9th Cir.

2000), “an interchange designed to have a substantial effect on traffic patterns does

not qualify for a documented categorical exclusion.” See Argument Point II.C.1,

below.

Moreover, VTrans and FHWA did not take a hard look at the Project’s

indirect effects, as required by NEPA. Specifically, VTrans and FHWA

coordinated efforts to avoid treating a proposed Costco gas station as an ‘indirect

effect’ of the DDI Project, thereby insulating the Costco proposal’s effects –

including traffic, pollution, noise and stormwater impacts – from NEPA review

(Appx242, Appx477-480, Appx493-543). See Argument Point II.C.2, below.

31

In addition, VTrans’ DCE application was insufficient as a matter of law

because of VTrans’ qualified statements therein about the DDI Project’s

environmental impacts. VTrans stated that “[n]o significant environmental impact

is expected to result from construction or maintenance of this facility.” (Appx235)

(emphasis added). VTrans also stated that “[b]est management practices for

stormwater . . . control during and after construction will be designed to minimize

any potential adverse effects coming from our roadway.” (Appx238, ¶ 4)

(emphasis added). Moreover, VTrans failed to state affirmatively that Sunnyside

Brook would not suffer adverse environmental effects. Rather, VTrans stated that

no secondary impacts were “anticipated.” (Appx238, ¶ 3) (emphasis added).

FHWA regulations do not authorize a DCE in situations where significant

environmental effects “might not” result, “may not” result, or are “not likely to”

result. Rather, 23 C.F.R. § 771.117(d) (2013) states that the applicant must submit

documentation demonstrating that significant environmental effects “will not”

result. Id. (emphasis added). VTrans’ DCE application fails to meet this standard

as a matter of law. See Argument Point II.C.3, below.

Finally, the DCE is not supported by the Administrative Record. VTrans’

DCE application states in relevant part that the DDI Project is “[not] likely to

induce significant alterations in . . . traffic volumes, or traffic patterns.”

(Appx235). This finding is contradicted by the Administrative Record, which

32

contains a December 2011 “Exit 16 Scoping Study” (Appx076-199). RSG Inc.

prepared the Scoping Study for the Town of Colchester and the Chittenden County

Metropolitan Planning Organization in partnership with VTrans (Appx077).

The Scoping Study analyzed four potential alternatives for the study

corridor: (A) a no-build alternative; (B) a conventional alternative; (C) a Double

Crossover Diamond (DCD) alternative; and (D) a roundabout alternative

(Appx094-095). Each build alternative was evaluated to assess its feasibility

(alignment, lane configuration, cost, etc.), effectiveness (traffic and safety

performance), and impacts (environmental, archeological, historical, right of way,

etc.). (Appx102). The build alternatives were then compared to the no-build

option and to each other (Appx102-108).

The Scoping Study concluded that the Double Crossover Diamond (or DDI)

“performs substantially better than the conventional and roundabout alternatives

by increasing capacity and reducing congestion.” (Appx109) (emphasis added).

Thus, FHWA’s approval of a DCE application containing VTrans’ assertion that

the DDI Project is “[not] likely to induce significant alterations in . . . traffic

volumes, or traffic patterns” (Appx235) is not supported by the Administrative

Record. See generally 23 C.F.R. § 771.117(a) (2013) (actions having “significant

impacts on travel patterns” do not qualify for a CE). In short, FHWA’s DCE

33

approval was “arbitrary, capricious, an abuse of discretion, or otherwise not in

accordance with law.” 5 U.S.C. § 706(2)(A). See Argument Point II.C.4, below.

STANDARD OF REVIEW

The Court below ruled on cross-motions for summary judgment. Hence, the

applicable standard of review is de novo, in each case construing the evidence in

the light most favorable to the non-moving party. Schwebel v. Crandall, 967 F.3d

96, 102 (2d Cir. 2020). Summary judgment is appropriate where there is “no

genuine dispute as to any material fact and the movant is entitled to judgment as a

matter of law.” FED .R. CIV. P. 56(a).

ARGUMENT

POINT I

THIS COURT SHOULD VACATE THE DISTRICT COURT’S

DECISION AND REMAND THIS CASE WITH INSTRUCTIONS

TO PERMIT VALLEE TO AMEND ITS 2018 COMPLAINT IN

LIGHT OF FHWA’S 2020 RE-EVALUATION OF THE 2013

DCE, WHICH RE-EVALUATION RELEGATED THE 2013

DCE TO THE STATUS OF NON-FINAL AGENCY ACTION.

Under the APA, “[a]gency action made reviewable by statute and final

agency action for which there is no other adequate remedy in a court are subject to

judicial review. . . .” 5 U.S.C. § 704. In general, two conditions must be satisfied

for agency action to be considered “final”:

First, the action must mark the consummation of the agency’s decisionmaking process -- it must not be of a merely tentative or interlocutory nature. And second, the

34

action must be one by which rights or obligations have been determined or from which legal consequences will flow.

Bennett v. Spear, 520 U.S. 154, 177-78 (1997) (internal quotation marks and

citations omitted), quoted in U.S. Army Corps of Eng’rs v. Hawkes Co., 136 S. Ct.

1807, 1813 (2016). See also Sharkey v. Quarantillo, 541 F.3d 75, 88 (2d Cir.

2008) (same).

“An agency’s determination does not satisfy the first condition if the agency

has not rendered its last word on the matter.” 6801 Realty Co., LLC v. USCIS, No.

15 Civ. 5958 (AMD), 2016 WL 7017354, at *3 (E.D.N.Y. Nov. 30, 2016) (internal

quotation marks omitted) (citing cases), aff’d, 719 F. App’x 58 (2d Cir. 2018).

“One clear indication that an agency has issued its last word on a subject is that no

further agency decisionmaking can be expected.” Id. at *3 (quoting Fairbanks N.

Star Borough v. U.S. Army Corps of Eng’rs, 543 F.3d 586, 593 (9th Cir. 2008)

(“No further agency decisionmaking on that issue can be expected, a clear

indication that the first prong of the Bennett finality test is satisfied.”)).

There is a Circuit split as to whether § 704’s “final agency action”

requirement is jurisdictional or an element of an APA claim. The Fourth, Fifth,

Ninth, Tenth and Eleventh Circuits hold that the requirement is jurisdictional,

whereas the District of Columbia, Third, Sixth, Seventh and Eighth Circuits hold

that it is not. See generally New Mexico v. McAleenan, 450 F. Supp. 3d 1130,

35

1190-91 (D.N.M. 2020) (citing cases); see also Iowa League of Cities v. EPA, 711

F.3d 844, 863 n.12 (8th Cir. 2013) (requirement not jurisdictional). The Second

Circuit has yet to rule on the issue. See Sharkey, 541 F.3d at 87-88 (noting the

issue but declining to decide it); and 6801 Realty Co., LLC v. USCIS, 719 F. App’x

58, 59 n.1 (2d Cir. 2018) (summary order) (same).

Vallee agrees with those Circuits holding that § 704’s “final agency action”

requirement is jurisdictional and Vallee encourages this Court respectfully to so

hold. But this Court need not resolve that question in order to vacate the District

Court’s decision and remand this case with instructions to permit Vallee to amend

its 2018 Complaint in light of FHWA’s 2020 re-evaluation of the 2013 DCE. This

is so because, at a minimum, § 704 presents a “question of statutory standing that

permits resolving the case on threshold, non-merits grounds.” 6801 Realty, 719 F.

App’x at 59 n.1 (internal quotation marks omitted) (citing cases).

In 2018 when Vallee filed suit, the 2013 DCE represented FHWA’s final

agency action. But in April 2020 – yet unbeknownst to Vallee and the District

Court until July 1, 2020 – the 2013 DCE no longer represented FHWA’s final

agency action. At VTrans’ April 6, 2020 request, FHWA undertook a DCE re-

evaluation review pursuant to 23 C.F.R. § 771.129(c). (Appx417-430). Section

771.129 states:

36

The [FHWA] must determine, prior to granting any new approval related to an action or amending any previously approved aspect of an action, including mitigation commitments, whether an approved environmental document remains valid as described in this section. . . . (c) After the [FHWA] issues a combined final EIS/ROD, ROD, FONSI, or CE designation, the applicant must consult with the [FHWA] prior to requesting any major approvals or grants to establish whether or not the approved environmental document or CE designation remains valid for the requested [FHWA] action. These consultations will be documented when determined necessary by the[FHWA].

23 C.F.R. § 771.129 (2020) (emphasis added).3

Between April 6 and April 17, 2020, FHWA “determine[d] . . . whether

[the] approved [2013 DCE] remain[ed] valid.” Id. § 771.129. On April 17th,

FHWA completed its re-evaluation and approval of the 2013 DCE. See Appx418

(describing FHWA’s April 17th email message to VTrans (Appx430) as “[n]otice

of completion and approval of §771.129(c) re-evaluation”).

Research revealed one case confronting the issue of whether a § 771.129 CE

re-evaluation constitutes final agency action. In RB Jai Alai, LLC v. Secretary of

Florida Department of Transportation, 112 F. Supp. 3d 1301 (M.D. Fla. 2015),

vacated on other grounds, No. 6:13-cv-1167-Orl-40GJK, 2016 WL 3369259

3 The Re-Evaluation Notice does not indicate which version of § 771.129

was considered by VTrans and FHWA. The above-quoted 2020 version is current as of November 28, 2018. Vallee assumes this is the applicable text of § 771.129.

37

(M.D. Fla. Feb. 2, 2016), the Court held that FHWA’s CE re-evaluation pursuant

to § 771.129 “re-opened” the original CE and represented FHWA’s new § 704

“final agency action”:

[P]ursuant to Defendants’ ongoing duty to ensure the lawfulness of their actions, they re-examined the Flyover Project in light of the changed circumstances, reconsidered the project’s categorical exclusion, and determined that the CE classification remained appropriate. This conduct expressly re-opened the CE and constitutes final agency action. . . .

112 F. Supp. 3d at 1315 (emphasis added).

Likewise in the instant case, FHWA “expressly re-opened” the 2013 DCE

when it “re-examined the [DDI] Project in light of the changed circumstances.”

RB Jai Alai, 112 F. Supp. 3d at 1315. See Appx421 (listing DDI Project changes

considered by FHWA). Cf. 6801 Realty Co., LLC v. USCIS, 719 F. App’x 58, 59

(2d Cir. 2018) (summary order) (holding that USCIS’s re-opening of an initial H-

1B visa denial decision “rendered the agency’s decision non-final and

unreviewable under the APA”) (footnote omitted). “The [DCE] reopening was not

an informal revision that offered a mere possibility of success; [FHWA] actually

reopened the decision and actively [considered] new evidence.” 6801 Realty, 719

F. App’x at 60. See 23 C.F.R. § 771.129 (2020) (quoted above) (requiring FHWA

to “determine . . . whether an approved [DCE] remains valid”); and Appx421-428

(VTrans’ new evidence submitted for re-evaluation by FHWA).

38

Vallee submits respectfully that the District Court should have allowed it to

amend its 2018 Complaint after FHWA filed the Re-Evaluation Notice (Appx417-

430), as FHWA’s act of re-opening the 2013 DCE and re-evaluating it rendered the

2013 DCE non-final. Vallee’s counsel requested as much during the March 11,

2020 hearing (Appx405), and Chief Judge Crawford said he would consider doing

so to avoid the “gloomy prospect of doing this case two times.” (Appx384); see

also Appx385 (“I could kind of sit on my hands for a couple of months and wait

for the re-evaluation and the amended complaint addressing it. . . .”).

Instead, on July 8, 2020 the District Court handed down a final merits ruling

on the parties’ MSJ Cross-Motions (Appx009-030), which was less than five

business days after FHWA filed the Re-Evaluation Notice (Appx417-430). With

respect, Vallee submits that the District Court’s merits ruling was improper given

that, at a minimum, § 704 presents a “question of statutory standing that permits

resolving the case on threshold, non-merits grounds.” 6801 Realty, 719 F. App’x

at 59 n.1 (internal quotation marks omitted) (citing cases).

Courts in this Circuit and elsewhere hold that a plaintiff can cure a standing

defect by filing an amended complaint alleging facts that arose after the original

complaint was filed. See, e.g., Travelers Ins. Co. v. 633 Third Assocs., 973 F.2d

82, 88 (2d Cir. 1992) (vacating dismissal with instructions to allow plaintiff to file

an amended complaint to cure a standing defect), cited with approval in Newman v.

39

Annucci, No. 3:17-CV-0918 (LEK/DEP), 2019 WL 3050520, at *4 n.6 (N.D.N.Y.

July 12, 2019). See also N. Alaska Envtl. Ctr. v. U.S. Dep’t of the Interior, 965

F.3d 705, 712 n.5 (9th Cir. 2020) (courts can “rely on an amended complaint that

satisfies the jurisdictional defects of an original complaint”); and Scahill v. D.C.,

909 F.3d 1177, 1184 (D.C. Cir. 2018) (“a plaintiff may cure a standing defect

under Article III through an amended pleading alleging facts that arose after filing

the original complaint”).

With the utmost respect, the District Court should have allowed Vallee to

amend its 2018 Complaint after FHWA re-opened and re-evaluated the 2013 DCE.

Doing so would have allowed the District Court and the litigants to address in a

single proceeding the issues Vallee raised in its 2018 Complaint along with

additional issues based on new and updated facts and circumstances (Appx421-

428) and a new and updated administrative record. Alternatively, Vallee maintains

respectfully that the District Court should have issued a nonprejudicial dismissal

based on the fact that the 2013 DCE no longer constituted FHWA’s final agency

action. Cf. 6801 Realty, 719 F. App’x at 59-60 & n.1.

Moreover, the 2014 revisions to 23 C.F.R. § 771.117(c) and 771.117(d)

changed the requirements for a FHWA CE in ways that were “specifically intended

to limit the application of these CEs.” (Appx017). If given the opportunity, Vallee

would raise all these issues in an amended pleading.

40

In sum, Vallee submits respectfully that this Court should vacate the

decision below and remand this case with instructions to permit Vallee to amend

its 2018 Complaint now that FHWA has re-opened the 2013 DCE and completed

its 2020 re-evaluation thereof.

POINT II

THERE IS NO GENUINE DISPUTE AS TO ANY MATERIAL

FACT AND VALLEE IS ENTITLED TO JUDGMENT AS

MATTER OF LAW THAT THE DDI PROJECT DOES NOT

QUALIFY FOR A CATEGORIAL EXCLUSION.

For the reasons discussed above in Point I, Vallee submits respectfully that

this Court should vacate the District Court’s July 8, 2020 decision and remand this

case with instructions to permit Vallee to amend its 2018 Complaint in light of

FHWA’s 2020 re-evaluation of the 2013 DCE. In the alternative, if this Court

elects to reach the merits of this dispute, Vallee submits respectfully that, for the

reasons discussed below, there is no genuine dispute as to any material fact and

Vallee is entitled to judgment as a matter of law that the Project does not qualify

for a categorical exclusion.

A. NEPA and Categorical Exclusions Generally.

NEPA requires federal agencies to prepare a detailed report known as an

environmental impact statement (“EIS”) for all “major Federal actions significantly

affecting the quality of the human environment. . . .” 42 U.S.C. § 4332(2)(C). See

generally Zbitnoff v. James, No. 5:14-CV-132, 2016 WL 4251047, at *2 (D. Vt.

41

Aug. 10, 2016) (NEPA “requires the preparation of an EIS by any federal agency

that intends to take action which has a significant effect on the environment”)

(citing § 4332(2)(C)), aff’d, 708 F. App’x 25 (2d Cir. 2017). Specifically, NEPA

requires that, “to the fullest extent possible”:

all agencies of the Federal Government shall . . . 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.

42 U.S.C. § 4332(2)(C) (emphasis added).

As the Zbitnoff Court observed, “[m]ore concrete guidance about the nature

and scope of an EIS is provided by rules promulgated by the Council on

Environmental Quality (‘CEQ’). These appear at 40 C.F.R. §§ 1500.1-1518.4.”

Zbitnoff, 2016 WL 4251047, at *2.

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The applicable CEQ regulations (e.g., those in effect in 2013) provide that

the term, “‘Significantly’ as used in NEPA requires considerations of both context

and intensity. . . .” 40 C.F.R. § 1508.27 (2013). The “context” prong requires that:

the significance of an action must be analyzed in several contexts such as society as a whole (human, national), the affected region, the affected interests, and the locality. Significance varies with the setting of the proposed action. For instance, in the case of a site-specific action, significance would usually depend upon the effects in the locale rather than in the world as a whole. Both short- and long-term effects are relevant.

40 C.F.R. § 1508.27(a) (2013). “Intensity” refers to “the severity of impact.” 40

C.F.R. § 1508.27(b) (2013). The CEQ regulations state that the following factors

(among others) should be considered in evaluating “intensity”:

(1) Impacts that may be both beneficial and adverse. A significant effect may exist even if the Federal agency believes that on balance the effect will be beneficial. (2) The degree to which the proposed action affects public health or safety. (3) Unique characteristics of the geographic area such as proximity to historic or cultural resources, park lands, prime farmlands, wetlands, wild and scenic rivers, or ecologically critical areas.

*** (5) The degree to which the possible effects on the human environment are highly uncertain or involve unique or unknown risks.

***

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(7) Whether the action is related to other actions with individually insignificant but cumulatively significant impacts. Significance exists if it is reasonable to anticipate a cumulatively significant impact on the environment. Significance cannot be avoided by terming an action temporary or by breaking it down into small component parts.

**** 40 C.F.R. § 1508.27(b) (2013).

Section 1508.4 provides:

Categorical exclusion means a category of actions which do not individually or cumulatively have a significant effect on the human environment and which have been found to have no such effect in procedures adopted by a Federal agency in implementation of these regulations (§1507.3) and for which, therefore, neither an environmental assessment nor an environmental impact statement is required. An agency may decide in its procedures or otherwise, to prepare environmental assessments for the reasons stated in §1508.9 even though it is not required to do so. Any procedures under this section shall provide for extraordinary circumstances in which a normally excluded action may have a significant environmental effect.

40 C.F.R. § 1508.4 (2013) (bold emphasis added).

The 2013 FHWA regulations define “categorical exclusions” (“CEs”) as:

actions which meet the definition contained in 40 CFR 1508.4, and, based on past experience with similar actions, do not involve significant environmental impacts. They are actions which: do not induce significant impacts to planned growth or land use for the area; do not require the relocation of significant numbers of people; do not have a significant impact on any

44

natural, cultural, recreational, historic or other resource; do not involve significant air, noise, or water quality impacts; do not have significant impacts on travel patterns; or do not otherwise, either individually or cumulatively, have any significant environmental impacts.

23 C.F.R. § 771.117(a) (2013) (emphasis added).

The 2013 FHWA regulations identify twenty-one categories of actions

which meet the CE criteria. See 23 C.F.R. §§ 771.117(c) (2013) (listing

categories); and 771.115(b) (2013) (“Actions that do not individually or

cumulatively have a significant environmental effect are excluded from the

requirement to prepare an EA or EIS. . . .”).

The FHWA regulations also provide that other actions “may be designated

as CEs only after the FHWA approval. . . .” 23 C.F.R. § 771.117(d) (2013). In

order to obtain a § 771.117(d) “documented” CE, “[t]he applicant shall submit

documentation which demonstrates that the specific conditions or criteria for these

CEs are satisfied and that significant environmental effects will not result. . . .”

Id. (emphasis added). The regulations contain a nonexclusive list of examples of

the types of actions which may be designated as documented CE’s after FHWA

approval. Id. § 771.117(d)(1)-(12).

B. NEPA/APA Standard of Review.

“Through a set of action-forcing procedures, NEPA requires that agencies

take a hard look at environmental consequences, but it is well settled that NEPA

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itself does not mandate particular results; it simply prescribes the necessary

process.” Constitution Pipeline Co., LLC v. N.Y. State Dep’t of Envtl.

Conservation, 868 F.3d 87, 100 (2d Cir. 2017) (internal quotation marks and

brackets omitted).

NEPA does not provide a private right of action, hence courts review agency

actions under the APA. Brodsky v. U.S. Nuclear Regulatory Comm’n, 704 F.3d

113, 119 (2d Cir. 2013) (“Because NEPA does not itself provide for judicial

review, the APA controls.”). Under the APA, courts review contested agency

actions to determine if they are “arbitrary, capricious, an abuse of discretion, or

otherwise not in accordance with law.” 5 U.S.C. § 706(2)(A). An agency’s

actions are arbitrary and capricious if the agency has:

relied on factors which Congress had 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.

Nat’l Ass’n of Home Builders v. Defenders of Wildlife, 551 U.S. 644, 658 (2007)

(quotation marks omitted). “Although highly deferential, this standard ‘does not

equate to no review.’” Brodsky, 704 F.3d at 119 (quotation marks omitted).

C. The DDI Project Does Not Qualify for a DCE.

In July 2013, VTrans requested a DCE pursuant to two 23 C.F.R. §

771.117(d) subcategories:

46

(1) Modernization of a highway by resurfacing, restoration, rehabilitation, reconstruction, adding shoulders, or adding auxiliary lanes (e.g., parking, weaving, turning, climbing). (2) Highway safety or traffic operations improvement projects including the installation of ramp metering control devices and lighting.

23 C.F.R. § 771.117(d)(1)-(2) (2013). See Appx235.

Vallee submits respectfully that this Court should reject the 2013 DCE

because: (1) it is axiomatic that a highway interchange designed to have significant

impacts on traffic patterns does not qualify for a DCE; (2) VTrans and FHWA did

not take a hard look at the Project’s indirect effects, as required by NEPA; (3)

VTrans’ DCE application is insufficient as a matter of law because it did not meet

the threshold which requires proving that “significant environmental effects will

not result,” as required by 23 C.F.R. § 771.117(d) (2013) (emphasis added); and

(4) the DCE is not supported by the Administrative Record.

1. It is Axiomatic that a Highway Interchange Designed to Have Significant Impacts on Traffic Patterns Does Not Qualify for a DCE.

FHWA’s DCE approval is fatally flawed. A DCE may be used only for

additional actions not listed in 23 C.F.R. § 771.117(c) that “meet the criteria for a

CE in the CEQ regulations (40 CFR 1508.4) and paragraph (a) of this section.” 23

C.F.R. § 771.117(d) (2013). FHWA regulations forbid the use of a CE for projects

that will have “significant impacts on travel patterns.” 23 C.F.R. § 771.117(a)

47

(2013). See generally West v. Sec’y of Dep’t of Transp., 206 F.3d 920, 929 (9th

Cir. 2000) (quoting § 771.117(a)).

Hence, if the Project would have “significant impacts on travel patterns”

then, ipso facto, it is not eligible for a [D]CE. 23 C.F.R. § 771.117(a) (2013). As

the West Court explained:

It is axiomatic that a new, fully-directional interchange cannot simultaneously relieve traffic congestion and yet have no significant impact on travel patterns. The interchange construction project, therefore, fails the first prong of the test for a DCE – satisfying the general [§ 771.117(a)] CE criteria – and is inconsistent with the terms used in the regulation.

206 F.3d at 929 (footnote omitted).

In West, the plaintiff appealed a district court’s dismissal of his claims

challenging FHWA’s decision to categorically exclude from NEPA review a two-

stage highway interchange project. The Ninth Circuit reversed in part and

remanded the case with directions for additional environmental review. The fact

that Stage 1 of the interchange had been constructed and was operational did not

render the case moot. Id. at 925-26. West held that the district court failed to

consider the procedural requirements for using a CE and looked only to FHWA’s

conclusion that the project would not result in any significant environmental

impacts. Accordingly, West reversed the district court’s decision approving

48

FHWA’s use of a CE for the two-stage interchange construction project. See 206

F.3d at 928-29.

The West defendants claimed “the project fits most appropriately under the

DCE example, ‘Approvals for changes in access control,’ 23 C.F.R. § 771(d)(7),

because the FHWA was required to approve the new interchange in advance of

construction.” West, 206 F.3d at 928. West rejected this argument as follows

using language applicable here:

“Approvals for changes in access control,” however, is not defined in the regulations, the legislative history, or case law. For guidance, we look to the non-exclusive list of actions identified in the regulations for DCEs, as well as the itemized list of categorically excluded actions. See 23 C.F.R. § 771.117(c). The types of projects described in those places suggest strongly that a DCE is not appropriate for a highway interchange construction project. None of the examples listed in the DCE regulations approaches the magnitude of this project – an entirely new, $18.6 million, four-lane, “fully-directional” interchange constructed over a former Superfund site and requiring 500,000 cubic yards of fill material, 30,000 tons of crushed surfacing, and 32,000 tons of asphalt concrete pavement. To the contrary, the other examples provided in 23 C.F.R. § 771.117(d) suggest that the FHWA intends a very different scale of project to escape the more detailed environmental review that would occur in an environmental assessment. For example, projects for which a DCE is potentially available include “modernization of a highway by resurfacing, restoration, rehabilitation, reconstruction, adding shoulders, or adding auxiliary lanes,” “highway safety or traffic operations improvements projects including the installation of ramp metering control devices and lighting,” “bridge rehabilitation, reconstruction or

49

replacement or the construction of grade separation to replace existing at-grade railroad crossings,” and other similar activities. See 23 C.F.R. § 771.117(d). We conclude, therefore, that “approvals for changes in access control” listed in 23 C.F.R. § 771.117(d)(7) does not embrace this project. The statutory requirement in 23 C.F.R. § 771.117(d), that the FHWA approve a state’s plans to add access and exit points to an interstate highway, is not synonymous with the “approval for changes in access control” in 23 C.F.R. § 771.117(d) for which a documented categorical exclusion may be used.

West, 206 F.3d at 928 (bold emphasis added) (footnotes omitted).

In the instant matter, VTrans, perhaps aware of West, did not apply for a

DCE under § 771.117(d)(7) (“changes in access control”). Rather, VTrans sought

a DCE under § 771.117(d)(1) and (2) (quoted above). See Appx235. In its CE

Request, VTrans acknowledged that “the [Project] will require FHWA approval for

changes in access control (Interstate 89 ramp widening). . . .” (Appx235).

In West, the Court held that “[i]t is axiomatic that a new, fully-directional

interchange cannot simultaneously relieve traffic congestion and yet have no

significant impact on travel patterns.” 206 F.3d at 929. West confirms that a DCE

is not available for the DDI Project. See West, 206 F.3d at 929 n.10 (holding that

“an interchange designed to have a substantial effect on traffic patterns does not

qualify for a documented categorical exclusion”). Cf. RB Jai Alai, LLC v. Sec’y of

Fla. Dep’t of Transp., 112 F. Supp. 3d 1301, 1317-22 (M.D. Fla. 2015) (FHWA

project consisting of changing existing at-grade intersection to above-grade,

50

elevated highway overpass, and also involved adding frontage roads to allow

access to local roadways, widening state road to include additional left-turn lanes,

and improving sidewalks, bicycle lanes, drainage systems, and landscaping, was

not the type of major federal action that could be categorically excluded under

NEPA), vacated on other grounds, No. 6:13-cv-1167-Orl-40GJK, 2016 WL

3369259 (M.D. Fla. Feb. 2, 2016).

Indeed, in the “Categorical Exclusion Environmental Analysis Sheet”

accompanying VTrans’ 2013 DCE application, VTrans admitted – albeit indirectly

– that the Project is intended to have a significant impact on travel patterns

(Appx237). In addition, the Project involves the complete flip of traffic flow at the

interchange (Appx201 fig.2, Appx565-567).

In sum, the Project is not eligible for a DCE because the proposed highway

interchange at the heart of the Project “cannot simultaneously relieve traffic

congestion and yet have no significant impact on travel patterns.” West, 206 F.3d

at 929. As such, FHWA’s DCE approval was “arbitrary, capricious, an abuse of

discretion, or otherwise not in accordance with law.” 5 U.S.C. § 706(2)(A).

2. VTrans and FHWA Did Not Take a “Hard Look” at the Project’s Indirect Effects.

FHWA and VTrans did not properly consider the Project’s indirect effects as

required by the regulations. Rather, they worked together to limit the scope of

review so as to avoid considering obvious and known indirect effects.

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A CE is defined as a category of actions which do not individually or

cumulatively have a significant effect on the human environment. The terms

within this definition are defined broadly. The CEQ Regulations’ definition of

“effects” includes “indirect effects.” Indirect effects are defined as follows:

Indirect effects, which are caused by the action and are later in time or farther removed in distance, but are still reasonably foreseeable. Indirect effects may include growth inducing effects and other effects related to induced changes in the pattern of land use, population density or growth rate, and related effects on air and water and other natural systems, including ecosystems.

40 C.F.R. § 1508.8 (2013). Cumulative impacts on the other hand are incremental

and minor impacts that occur over time due to a NEPA regulated development.

See 40 C.F.R. § 1508.7 (2013).

In Sierra Club v. Bosworth, 510 F.3d 1016, 1027 (9th Cir. 2007), the Court

found that the United States Forest Service (“USFS”) failed to properly assess the

foreseeable environmental consequences of a categorical exclusion for certain fuel

reduction projects in national forests. Although USFS analyzed various data prior

to establishing the categorical exclusion, the Court found that its evaluation was

“inadequate as a cumulative impacts analysis because it offers only conclusory

statements that there would be no significant impact.” Id. at 1028. The Court

rejected USFS’s approach for assessing foreseeable environmental impacts in

which the agency “summarily conclude[d], without citing hard data to support its

52

conclusion, that there were no cumulative impacts” because “this is precisely the

reason why a global cumulative impact analysis must be performed. . . .” Id. at

1029.

In Brady Campaign to Prevent Gun Violence v. Salazar, 612 F. Supp. 2d 1

(D.D.C. 2009), the Court overturned a CE issued by the Department of the Interior

because the agency failed to evaluate the project’s foreseeable indirect effects.

Brady explains that a court’s function is to “ensure that the agency has adequately

considered and disclosed the environmental impact of its actions and that its

decision is not arbitrary or capricious.” Id. at 17 (quoting City of Olmsted Falls,

Ohio v. FAA, 292 F.3d 261, 269 (D.C. Cir. 2002)).

The scope of this review includes “an inquiry into whether the agency has

made its decision based on a consideration of the relevant facts and whether it has

failed to consider an important aspect of the issues associated with its decision.”

Id. at 17 (internal quotation marks omitted). The Brady Court held that “ignoring

possible environmental impacts, or explaining in conclusory form that such

impacts are not of concern, is insufficient under NEPA.” Id. at 21. See also

Friends of the Earth, Inc. v. U.S. Army Corps of Eng’rs, 109 F. Supp. 2d. 30

(D.D.C. 2000), where the Court found that “[i]ndirect impacts need only to be

‘reasonably foreseeable’ to require an assessment under NEPA.” Id. at 41 (quoting

40 C.F.R. § 1508.8(b)).

53

In Senville v. Peters, 327 F. Supp. 2d 335, 348-49 (D. Vt. 2004), the Court

rejected a VTrans-prepared EIS because it failed to adequately consider and

discuss indirect and cumulative impacts. Senville concerned VTrans’ failure to

consider the indirect effects of an EIS, but it applies equally in CE situations.

Here, the Administrative Record confirms the agencies’ failures to

adequately consider indirect effects. Rather, there was a specific and determined

attempt to avoid conducting an indirect effects analysis for the Costco

development. As is made clear by Costco’s Act 250 Land Use Permit (Appx493-

543), Costco cannot operate its fueling station – a major and substantial

development – without the completion of improvements to LMVD and UMVD

(Appx536). These roadway improvements are part of the NEPA-regulated DDI

Project (Appx569-571), and thus the Costco project is a “but-for” impact and

NEPA requires that it be analyzed as such.

Instead of taking this required approach, VTrans stated summarily,

incorrectly and in a misleading fashion in its 2013 CE Request that, “[a]fter

extensive research and evaluation of project resource impacts, it was determined

that the Colchester HES NH 5600 (14) project will not have any Indirect Effects.”

(Appx242). And yet, Costco’s project is a “but-for” impact that requires analysis

under NEPA.

54

One year before VTrans submitted its 2013 CE Request to FHWA

(Appx235-243), and before the Costco project was conditioned on the completion

of the LMVD and UMVD improvements (Appx537), which are elements of the

DDI Project (Appx569-571), FHWA predetermined its DCE approval and

communicated its decision to VTrans (Appx480).

The “but-for” relationship that exists between the DDI Project and the

Costco project was made clear in the 2020 course of dealing between VTrans and

Costco. Costco’s secret offer to make a substantial lump-sum incentive bonus

payment to VTrans to alter the DDI Project’s construction schedule in order to

allow Costco to open its fueling station full-time is the essence of a “but-for”

relationship. See Pltfs.’ Mot. to Re-Open Oral Arg. to Present New Facts, ECF

No. 48 (June 17, 2020), at Exs. 1-5 (ECF No. 48-1).

Indeed, it is the type of financial arrangement that VTrans warned against in

August 2012 discussions with FHWA (Appx478-479). Yet, because FHWA and

VTrans preordained the Costco project as something other than a “but-for” impact

(id.), the 2020 financial arrangement between VTrans and Costco was ignored. A

true and honest “hard-look” required VTrans to disclose its financial arrangements

with benefitted and involved private parties instead of hiding behind a

predetermined CE decision.

55

As a result of these arbitrary and capricious predetermined decisions, the

Costco development’s effects – including traffic, pollution, noise and stormwater

impacts – were not considered or analyzed properly. VTrans and FHWA’s

decision to avoid an in-depth review of the DDI Project’s indirect effects is the

essence of an arbitrary and capricious action.

3. VTrans’ DCE Application is Insufficient as a Matter of Law.

In July 2013, § 771.117(d) provided that “[t]he applicant shall submit

documentation which demonstrates that the specific conditions or criteria for these

CEs are satisfied and that significant environmental effects will not result. . . .” 23

C.F.R. § 771.117(d) (2013) (emphasis added). Section 771.117(d) does not

authorize a DCE in situations where significant environmental effects “might not”

result, “may not” result, or are “not likely to” result. Rather, § 771.117(d) states

that the applicant must submit documentation demonstrating that significant

environmental effects “will not” result. Id. (emphasis added).

In its 2013 DCE application, VTrans wrote in part that: “The [DDI Project]

will not involve substantial planning, resources, or expenditures; nor is it likely to

induce significant alterations in land use, planned growth, development patterns,

traffic volumes, or traffic patterns. No significant environmental impact is

expected to result from construction or maintenance of this facility.” (Appx235)

(emphasis added). VTrans’ qualified ‘determinations’ are insufficient as a matter

56

of law to meet the DCE requirements. (By contrast, VTrans was confident in

concluding that the Project “will not involve substantial planning, resources, or

expenditures. . . .” (Appx235) (emphasis added).)

Further, VTrans wrote that “[b]est management practices for stormwater . . .

control during and after construction will be designed to minimize any potential

adverse effects coming from our roadway.” (Appx238, ¶ 4) (emphasis added).

VTrans also did not state affirmatively that Sunnyside Brook would not suffer

adverse environmental effects. Rather, VTrans stated that no secondary impacts

were “anticipated.” (Appx238, ¶ 3) (emphasis added).

Hence, FHWA’s approval of VTrans’ DCE application was “arbitrary,

capricious, an abuse of discretion, or otherwise not in accordance with law,” 5

U.S.C. § 706(2)(A), because VTrans’ application did not meet the threshold ‘will

not result’ requirement of 23 C.F.R. § 771.117(d) (2013).

4. The DCE is Not Supported by the Administrative Record.

VTrans’ DCE application states in relevant part that the DDI Project is

“[not] likely to induce significant alterations in . . . traffic volumes, or traffic

patterns.” (Appx235). This finding is contradicted by the Administrative Record,

which contains a December 2011 “Exit 16 Scoping Study” (the “Scoping Study”)

(Appx076-199). RSG Inc. prepared the Scoping Study for the Town of Colchester

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and the Chittenden County Metropolitan Planning Organization in partnership with

VTrans (Appx077).

The Scoping Study analyzed four potential alternatives for the study

corridor: (A) a no-build alternative; (B) a conventional alternative; (C) a Double

Crossover Diamond (DCD) alternative; and (D) a roundabout alternative

(Appx094-095). Each build alternative was evaluated to assess its feasibility

(alignment, lane configuration, cost, etc.), effectiveness (traffic and safety

performance), and impacts (environmental, archeological, historical, right of way,

etc.). (Appx102). The build alternatives were then compared to the no-build

option and to each other (Appx102-108). The Scoping Study concludes as follows:

The Exit 16 Scoping Study Steering Committee – which includes staff from the town of Colchester, VTrans, CCMPO and other stakeholders – recommends the Double Crossover Diamond (DCD) as the preferred alternative for the Exit 16 Interchange area. The DCD performs substantially better than the conventional and roundabout alternatives by increasing capacity and reducing congestion as well as improving safety (by eliminating left turn conflicts with oncoming traffic) at the Exit 16 interchange area. Improvements at Hercules Drive and Rathe Road intersections with US 2/7, as described in section 4.1.5, are also recommended to move forward as a package with the DCD to provide a comprehensive solution to the congestion and safety issues in the US 2/7 study corridor.

Appx109 (bold emphasis added).

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Given that the Administrative Record contains a report concluding that the

Double Crossover Diamond (or DDI) “performs substantially better than the

conventional and roundabout alternatives by increasing capacity and reducing

congestion” (id.) (emphasis added), FHWA’s approval of a DCE application

containing VTrans’ assertion that the Project is “[not] likely to induce significant

alterations in . . . traffic volumes, or traffic patterns” (Appx235) (emphasis added)

is not supported by the Administrative Record. In other words, FHWA’s DCE

approval was “arbitrary, capricious, an abuse of discretion, or otherwise not in

accordance with law.” 5 U.S.C. § 706(2)(A). See generally 23 C.F.R. §

771.117(a) (2013) (actions having “significant impacts on travel patterns” do not

qualify for a CE); and West v. Sec’y of Dep’t of Transp., 206 F.3d 920, 929 n.10

(9th Cir. 2000) (holding that “an interchange designed to have a substantial effect

on traffic patterns does not qualify for a documented categorical exclusion”).

In sum, Vallee submits respectfully that there is no genuine issue as to any

material fact and Vallee is entitled to judgment as a matter of law that the DDI

Project does not qualify for a DCE because: (1) a highway interchange designed to

have significant impacts on traffic patterns does not qualify for a DCE; (2) VTrans

and FHWA did not take a hard look at the Project’s indirect effects, as required by

NEPA; (3) VTrans’ DCE application is insufficient as a matter of law because it

did not meet the threshold which requires proving that “significant environmental

59

effects will not result,” as required by 23 C.F.R. § 771.117(d) (2013); and (4) the

DCE is not supported by the Administrative Record.

In addition, Vallee submits respectfully that this Court should enter an

injunction prohibiting VTrans and its contractors and agents from performing or

continuing any work on the DDI Project, and prohibiting FHWA from disbursing

any funds for the DDI Project, until FHWA and VTrans comply with their EIS

obligations under NEPA. Cf. Senville v. Peters, 327 F. Supp. 2d 335, 370 (D. Vt.

2004) (enjoining VTrans and FHWA “from construction and/or ground-disturbing

work in connection with Segments A-B [of the circumferential highway project]

until such time as [they] have fully complied with the National Environmental

Policy Act”).

CONCLUSION

Vallee requests respectfully that this Court vacate the District Court’s July 8,

2020 Order and Judgment (Appx009-030) and remand this case to the District

Court with instructions to permit Vallee to amend its 2018 Complaint (Appx031-

276) in light of FHWA’s April 2020 re-evaluation (Appx417-430) of the 2013

DCE (Appx235-243, Appx590-591).

In the alternative, Vallee requests respectfully that this Court grant summary

judgment to Vallee and hold that the DDI Project does not qualify for a DCE

because: (1) a highway interchange designed to have significant impacts on traffic

60

patterns does not qualify for a DCE; (2) VTrans and FHWA did not take a hard

look at the Project’s indirect effects, as required by NEPA; (3) VTrans’ DCE

application is insufficient as a matter of law because it did not meet the threshold

which requires proving that “significant environmental effects will not result,” as

required by 23 C.F.R. § 771.117(d) (2013); and (4) the DCE is not supported by

the Administrative Record.

In addition, requests respectfully that this Court enter an injunction

prohibiting VTrans and its contractors and agents from performing or continuing

any work on the DDI Project, and prohibiting FHWA from disbursing any funds

for the DDI Project, until FHWA and VTrans comply with their EIS obligations

under NEPA.

Finally, Vallee requests respectfully that this Court award Vallee its fees and

other expenses under the Equal Access to Justice Act, 28 U.S.C. § 2412(d), and

costs pursuant to Fed. R. App. P. 39 and Second Circuit Local Rule 39.1.

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Dated: November 30, 2020 Burlington, Vermont Respectfully submitted,

By: /s/ Daniel A. Seff Daniel A. Seff, Esq. MSK ATTORNEYS 275 College Street

P.O. Box 4485 Burlington, VT 05406-4485 Phone: (802) 861-7000 Fax: (802) 861-7007 Email: dseff@mskvt.com

Counsel for Plaintiff-Appellant R.L. Vallee, Inc.

On the Brief: Alexander J. LaRosa, Esq.*

(* – Application for Second Circuit admission forthcoming)

62

CERTIFICATE OF COMPLIANCE WITH TYPE-VOLUME LIMIT, TYPEFACE REQUIREMENTS, AND TYPE-STYLE REQUIREMENTS

This Brief complies with the word limitation of Local Rule 32.1(a)(4)(A)

because this Brief contains 13,517 words, excluding the parts of the Brief

exempted by Fed. R. App. P. 32(f).

This Brief complies with the typeface requirements of Fed. R. App. P.

32(a)(5) and the type style requirements of Fed. R. App. P. 32(a)(6) because this

Brief was prepared in a proportionally spaced typeface using Microsoft Word 2019

in Times New Roman 14-point font.

Dated: November 30, 2020 Burlington, Vermont Respectfully submitted,

By: /s/ Daniel A. Seff Daniel A. Seff, Esq. MSK ATTORNEYS 275 College Street

P.O. Box 4485 Burlington, VT 05406-4485 Phone: (802) 861-7000 Fax: (802) 861-7007 Email: dseff@mskvt.com

Counsel for Plaintiff-Appellant R.L. Vallee, Inc.