Two judges on the D.C. Circuit Court of Appeals expressed skepticism Friday that USDA's Farm Service Agency needed to conduct a more thorough analysis of the environmental impacts of granting a loan guarantee to build a broiler chicken facility in Maryland.

While not expressing clear positions on the litigation, Circuit Judges Neomi Rao and A. Raymond Randolph seemed to have sharper questions for Food & Water Watch attorney Tarah Heinzen, whose group is challenging the FSA’s environmental analysis, than they did for Justice Department lawyer Michael Buschbacher.

District Court Judge Beryl Howell ruled against FWW earlier this year, finding that FSA’s environmental assessment, prepared to comply with the National Environmental Policy Act, was legally sufficient, prompting the appeal.

A favorable decision for FWW could prompt more scrutiny of the role of FSA loan guarantees in encouraging the expansion of concentrated animal feeding operations, the target of opposition from environmental groups in numerous states, including North Carolina and Iowa.

FWW contends that FSA should have examined not simply the individual effects of the chicken facility, which can produce more than 1 million birds per year, but the cumulative effects of all the operations in the Choptank River watershed.

The government, however, has continued to press its argument that FWW lacks standing to challenge the $1.2 million loan guarantee because setting aside the guarantee would not necessarily “redress” the group’s injuries.

Seeking a loan guarantee is a purely voluntary process, Buschbacher said, arguing there is no incentive for the farmer and the lender to restart the loan process if there’s a possibility that FSA might impose more conditions on the loan guarantee, such as by requiring more environmental mitigation.

“There's a likelihood that she would have to comply with new and potentially costly mitigation measures,” Buschbacher said of the producer who received the loan. “But she wouldn't get anything in return. She already has the loan.”

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FWW Legal Director Tarah Heinzen, however, said the district judge had it right when she concluded that FSA could revoke the guarantee.

But Rao asked, “How do we know a loan guarantee would even be sought again?” Heinzen said the lender would have “a strong financial interest” in restoring the protection of the federal guarantee and noted that at the time of the 2018 complaint, there were still 13 years left on the 15-year loan, “with more than a million dollars still owed.”

Rao wondered aloud whether a new NEPA rule issued in July would prevent further NEPA review because it specifically excludes FSA loan guarantees from the law.

Heinzen, however, said FWW’s challenge should be governed by FSA’s NEPA regulations in effect at the time the complaint was filed.

Notably missing from the argument was Circuit Judge Merrick Garland, who was supposed to be on the three-judge panel. Garland was just picked by President-elect Joe Biden as his choice for attorney general. The court did not say why Garland was not present or how it planned to adjudicate the case — whether Garland would listen to the arguments later and then participate in the decision, for example.

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