United States Court of Appeals For the First Circuit

No. 21-1188

HISTORIC BRIDGE FOUNDATION; FRIENDS OF THE FRANK J. WOOD BRIDGE; NATIONAL TRUST FOR HISTORIC PRESERVATION IN THE UNITED STATES,

Plaintiffs, Appellants,

v.

PETE BUTTIGIEG, in his official capacity as Secretary of the United States Department of Transportation; TODD JORGENSEN, in his official capacity as the Administrator of the Maine Division of the FHWA; STEPHANIE POLLACK, in her official capacity as Deputy Administrator of the Federal Highway Administration; BRUCE VAN NOTE, in his capacity as Commissioner of the Maine Department of Transportation,

Defendants, Appellants.

APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MAINE

[Hon. Lance E. Walker, U.S. District Judge]

Before

Kayatta and Barron, Circuit Judges, and Talwani,* District Judge.

Andrea C. Ferster, with whom Phelps Turner and Conservation Law Foundation were on brief, for appellants. Elizabeth S. Merritt for National Trust for Historic Preservation in the United States, appellant. Jonathan M. Dunitz, with whom Martha C. Gaythwaite and Verrill Dana, LLP were on brief, for Waterfront Maine, Brunswick, LLC,

* Of the District of Massachusetts, sitting by designation. amicus curiae. Sommer H. Engels, with whom Jean E. Williams, Acting Assistant Attorney General, Environment and Natural Resources Division, U.S. Department of Justice, Ellen J. Durkee, Joshua P. Wilson, and Gregory M. Cumming, Attorneys, Environment and Natural Resources Division, U.S. Department of Justice, and Silvio Morales, Attorney, U.S. Department of Transportation, were on brief, for Pete Buttigieg, Todd Jorgensen, and Stephanie Pollack, appellees. Thomas A. Knowlton, Deputy Attorney General, with whom Aaron M. Frey, Attorney General, and James Billings, Chief Counsel, Maine Department of Transportation, were on brief, for Bruce Van Note, appellee.

January 4, 2022 KAYATTA, Circuit Judge. The Frank J. Wood Bridge ("the

Bridge") has served for nearly ninety years as a key connection

between Topsham and Brunswick in Maine. Now though, it is

potentially unsafe and getting worse. So the question is, what to

do? The state of Maine has decided to tear it down and replace it

with a modern bridge. Friends of the Frank J. Wood Bridge and

other historic preservation groups (collectively, "the Friends")

would rather the state rehabilitate the Bridge to preserve its

historic nature and that of the surrounding area. The Federal

Highway Administration (FHWA) eventually approved Maine's

decision. The Friends then asked the United States district court

to review and set aside that approval. In a careful opinion, the

district court considered and rejected the numerous arguments made

by the Friends in seeking to set aside the decision to replace the

Bridge. On de novo review, we now affirm all of the district

court's holdings, save one. Our reasoning follows.

I.

A.

The Frank J. Wood Bridge is a riveted steel through-

truss bridge constructed in 1932 to connect the towns of Topsham

and Brunswick, Maine. It is a "key vehicular and pedestrian

connection" between those communities, carrying pedestrians,

bicyclists, and nearly 19,000 vehicles a day across the

Androscoggin River. The Bridge is also a part of the Brunswick

- 3 - Topsham Industrial Historic District, which includes the historic

Cabot Mill and Pejepscot Paper Company.

Prompted by the collapse of a truss bridge in Minnesota

that caused thirteen deaths and a hundred injuries, the governor

of Maine issued an executive order in 2007 directing the Maine

Department of Transportation (MDOT) to "reassess the safety of

Maine's bridges and take appropriate action to mitigate any safety

concerns." MDOT prepared a report, which provided a "comprehensive

overview of the state of Maine's bridge infrastructure" and

identified forty-four fracture-critical bridges1 within the state,

including the Frank J. Wood Bridge.

In 2015, MDOT launched the Frank J. Wood Bridge

Improvement Project to address the Bridge's "poor structural

conditions and load capacity issues" and to improve "mobility and

safety . . . for pedestrians and bicyclists." MDOT hired an

engineering firm to present preliminary design plans for several

alternatives and to assess the potential cost of each alternative.

MDOT used its consultant's studies and analysis to create a

Preliminary Design Report (PDR), which was open for public comment

prior to the publication of a final report in 2017.

1 A fracture-critical bridge has elements that lack "redundancy," such that the failure of one of those elements "may ultimately lead to a catastrophic failure of the entire bridge."

- 4 - Between the preliminary and final reports, an inspection

of the Bridge was completed in June 2016. That inspection revealed

that the Bridge is "structurally deficient" and is therefore unable

to support some legal vehicle weights. So MDOT placed weight

limits on vehicles that may cross the Bridge. At the time of the

FHWA's final report under review, five-axle trucks and other

commercial vehicles that weigh more than twenty-five tons were

required to take a detour. The FHWA predicted that "[c]ontinued

deterioration will likely result in further [weight

restrictions] . . . and eventual closure" if the Bridge is not

either rehabilitated or replaced.2

To ensure that a roadway connection remained between

these communities, MDOT considered in detail three alternatives to

"no action": Two involved rehabilitating the Bridge to extend its

service life by 75 years -- the only difference between these two

alternatives was that one proposed an additional sidewalk. The

third alternative involved building a new steel girder bridge on

a curved alignment just upstream from the current Bridge, which

2 Though outside the record, we note that MDOT has recently restricted the traffic over the Bridge even further in response to new information revealed by a September 2021 inspection. Now, no commercial vehicle or vehicle that weighs over ten tons (such as fire engines and school buses) may traverse the Bridge. See News Release, MDOT, All Commercial Vehicles Prohibited from Frank J. Wood Bridge (Nov. 23, 2021), https://www.maine.gov/mdot/news/; News Release, MDOT, New Restriction for Frank J. Wood Bridge (Oct. 18, 2021), https://www.maine.gov/mdot/news/.

- 5 - would last for 100 years and would include sidewalks and five-foot

shoulders on both sides to accommodate pedestrians and bicyclists.3

MDOT estimated how much the construction and maintenance of each

alternative would cost. These estimates included myriad cost

assumptions and in-the-weeds decision points, for which MDOT

primarily deferred to its consultant. MDOT then considered how to

compare the alternatives -- either by discounting future costs to

current dollar equivalents (what the parties call the "life-cycle

cost analysis") or by comparing the total costs without taking

into account when those expenses would be incurred (what the

parties call the "service-life analysis"). Although it calculated

life-cycle costs using a discount rate, MDOT principally relied on

non-discounted future costs as the better basis upon which to

compare the alternatives. Its calculations revealed that

replacing the Bridge would cost $17.3 million over the expected

100-year life of the new bridge,4 while rehabilitating the historic

Bridge would cost $35.2 million over 75 years.5 Based on that

3 MDOT also considered three other alternatives but rejected them prior to detailed study: (1) building a new bridge on the same alignment, which would take longer than the other alternatives and require a detour; (2) building a new bridge downstream from the current Bridge, which would cause the river's water to rise substantially; and (3) rehabilitating the Bridge for a 30-year life, which would be imprudent because of the scope of repairs needed. 4 $13.7 million, if discounted. 5 $20.8 million, if discounted.

- 6 - $17.9-million differential and other benefits of a modern bridge,

MDOT concluded that it would seek to build a new bridge and

demolish the Frank J. Wood Bridge.

B.

Because federal funds would be used to construct the

replacement bridge, MDOT was required to apply to the FHWA, a

division of the federal Department of Transportation (DOT), for

approval of its plan. See

(detailing DOT's review

and oversight process for projects receiving federal funds). When

federal funds are sought for projects that may implicate historic

sites, two congressional enactments concerned with preserving

those sites come into play: The National Environmental Policy Act

(NEPA) and section 4(f) of the Department of Transportation Act

("section 4(f)"). See also

(requiring all

federal agencies to "take into account the effect of [any]

undertaking on any historic property").

NEPA is primarily a procedural statute, aimed at

ensuring agencies will carefully consider detailed information

concerning the environmental impacts of their actions. NEPA does

not mandate any specific outcome; it only requires agencies to

conduct environmental studies. DOT v. Pub. Citizen,

(2004). But a full Environmental Impact Statement (EIS) is

only required when a proposed action will "significantly" impact

the "quality of the human environment."

(2)(C).

- 7 - If an agency does not believe an EIS will be required, it will

prepare -- like here -- an environmental assessment to document

its conclusions. If an agency ultimately determines that that an

EIS is not needed, it will issue a Finding of No Significant Impact

explaining that decision.

(c), 1508.9(a)(1),

1508.13 (2018) (amended and reconfigured by

,

43,324 (July 16, 2020)).

Section 4(f), conversely, "imposes a substantive

mandate." Neighborhood Ass'n of the Back Bay, Inc. v. Fed. Transit

Auth.,

(1st Cir. 2006). If a protected property

is "use[d]," the agency may only approve the project if there is

"no prudent and feasible alternative."

(c). By

regulation, an alternative is not feasible "if it cannot be built

as a matter of sound engineering judgment," and an alternative is

not prudent if, among other things, it "results in additional

construction, maintenance, or operational costs of an

extraordinary magnitude."

.

In February 2018, the FHWA opened for public comment a

preliminary Environmental Assessment under NEPA and a Draft 4(f)

Evaluation, which analyzed the various alternatives for the Frank

J. Wood Bridge. The FHWA adopted MDOT's cost estimates and

concurred with MDOT's conclusion that a service-life analysis --

that is, one with no discounting -- was the most accurate

methodology to compare the "expected real costs" of the

- 8 - alternatives. Comparing only the non-discounted figures, the FHWA

concluded that the rehabilitation alternatives were "not prudent

due to [the non-discounted] Service Life Costs of extraordinary

magnitude." 6

The pro-preservation groups commented on these plans

with expert evaluations of various aspects of the state and federal

agencies' reports. One of plaintiffs' experts faulted the FHWA

for failing to discount before comparing its future cost estimates

for each alternative. The expert explained that, contrary to the

decision made here, the FHWA's Office of Asset Management's

"preferred method of comparing the costs of [] project

alternatives" is to discount future costs. See DOT, FHWA, Life-

Cycle Cost Analysis Primer (Aug. 2002). The expert then challenged

"a few cost estimate items," but he simply stated assumptions

without detailing his calculations and without reasoning why the

agency's conclusions were erroneous. The expert concluded that,

if his cost assumptions were used and discounted, rehabilitating

the Bridge would actually be about 4% cheaper over the life of the

project than replacing it, and thus "the replacement and

rehabilitations options are essentially a push."

6 FWHA was also required to consider environmental impacts associated with the project alternatives under NEPA and other statutory schemes, but we do not discuss them here because plaintiffs have not challenged any of the agency's environmental conclusions.

- 9 - The FHWA stood its ground. It issued a Final (Revised)

Environmental Assessment and Final Section (4) Evaluation in

February 2019 that maintained the conclusion that the

rehabilitation alternatives were not prudent. The FHWA explained

that it chose not to make a comparison of the discounted costs

"the primary basis for a decision on this project" because

discounting "is not an indicator of the actual costs a

transportation agency will expend on an alternative over the

timeframe used for the analysis" and because "[s]tate

transportation agencies are not often able to set money aside

today, and make interest earning investments, to pay for future

work." The FHWA then averred -- without any further explanation

-- that "[s]ervice life cost," i.e., the total money it would cost

to construct and maintain a bridge without "translat[ing] or

discount[ing] to current dollar equivalents," "provides a more

accurate comparison of the expected real costs to an agency."

The FHWA concluded that the service-life cost

differential -- $17.3 million over 100 years versus $35.2 million

over 75 years, or 103.4% -- was of such an "extraordinary

magnitude" that it may approve the replacement of the historic

Bridge because any alternatives to this "use" would be imprudent.

See

(c). FHWA did not make a separate determination

that the differential after discounting -- $13.7 million over 100

years versus $20.8 million over 75 years, or 51.8% -- was also of

- 10 - such an "extraordinary magnitude" that it would be imprudent under

section 4(f). After finding no prudent alternative, the FHWA

approved MDOT's plan to construct a modern bridge upstream of the

current Bridge and to tear down the historic Bridge when

construction is finished. The next month, the FHWA issued a

Finding of No Significant Impact, explaining why the project did

not require a full Environmental Impact Statement.

C.

The Friends challenged the FHWA's decision in district

court. They claimed that the agency acted arbitrarily and

capriciously by failing to compare discounted life-cycle costs of

the alternatives. They also made a slew of line-item challenges

to various calculations of costs for each alternative, including

whether the agency justified the decisions: (1) to include a

$4 million temporary bridge in the construction costs of

rehabilitating the historic Bridge; (2) to charge only a

$1 million "premium" for a work trestle needed to construct the

replacement bridge, rather than the full cost of the trestle;

(3) to charge $1.44 more per unit for "structural steel erection"

to rehabilitate the Bridge than to replace it; (4) to estimate

that a rehabilitated Bridge would need to be repainted three times

over its 75-year lifespan at a cost of $4 million per painting;

and (5) to include two $1 million future substructure

rehabilitations in the rehabilitation alternatives' future costs,

- 11 - considering that a recent rehabilitation in 2006 in combination

with the current planned rehabilitation should last an additional

30–75 years.7

The district court rejected the preservation groups'

challenges and affirmed each of FWHA's conclusions. Although it

expressed some "skepticism" regarding certain cost estimates, the

court nevertheless concluded that the challenged estimates were

not "clearly erroneous or so implausible that they cannot be deemed

to reflect administrative expertise about the actual costs

associated" with rehabilitating the Bridge or building a new one.

Plaintiffs appealed.

II.

Agency determinations under NEPA and section 4(f) are

reviewed under the Administrative Procedure Act (APA) and

accordingly "shall not be overturned unless 'arbitrary,

capricious, an abuse of discretion, or otherwise not in accordance

with law.'" Conservation L. Found. v. FHWA,

(1st Cir. 1994) (quoting

(2)(A)). "The task of a

court reviewing agency action under the APA's 'arbitrary and

capricious' standard is to determine whether the agency has

7 The plaintiffs also argued that a deck replacement scheduled for year 40 for the rehabilitated bridge was unnecessary until year 50 and that the new bridge's cost estimates did not include a similar deck replacement, but they did not press these arguments on appeal.

- 12 - examined the pertinent evidence, considered the relevant factors,

and 'articulate[d] a satisfactory explanation for its action

including a rational connection between the facts found and the

choice made.'" Airport Impact Relief, Inc. v. Wykle,

(1st Cir. 1999) (quoting Penobscot Air Servs., Ltd. v.

FAA,

(1st Cir. 1999)). We review the district

court's APA decisions de novo. Assoc. Fisheries of Me., Inc. v.

Daley,

(1st Cir. 1997) (explaining that this

court, in reviewing a decision based on the APA, applies "the same

legal standards that pertain in the district court and afford[s]

no special deference to that court's decision").

Although actions taken under NEPA and section 4(f) "are

subject to a highly deferential abuse of discretion standard of

review," Conservation L. Found.,

, a court

confronting a NEPA challenge should nevertheless "carefully

review[] the record and satisfy[] itself that the agency has made

a rational decision" to "ensure that agency decisions are founded

on a reasoned evaluation of the relevant factors." Airport Impact

Relief,

. And section 4(f) is "more stringent where

it applies." Save Our Heritage v. FAA,

(1st Cir.

2001); see also Citizens to Preserve Overton Park, Inc. v. Volpe,

(1971) (explaining that although "the Secretary's

decision is entitled to a presumption of regularity," that does

not "shield his action from a thorough, probing, in-depth review").

- 13 - III.

We begin with the plaintiffs' line-item challenges to

the cost estimates.8 To start, we see nothing irrational in the

FHWA's decision to rely on the estimates prepared by MDOT based on

conclusions by its contract engineering firm. And, following our

de novo review of the record provided on appeal, we find no basis

in the Friends' preserved arguments to reject any of the challenged

estimates as either unsupported by substantial evidence or as

arbitrary and capricious. Nor do we see any need to discuss them

all in detail in view of the district court's careful review of

the relevant estimates. That said, a few deserve a bit of

attention: (1) the cost differential of structural steel erection

between rehabilitating and replacing the Bridge; (2) the inclusion

of a $4 million temporary bridge in the cost estimates for the

rehabilitation alternatives; and (3) the decision to include only

a $1 million dollar "premium" for an admittedly more expensive

work trestle for the replacement alternative.

First, we acknowledge that there is little, if any,

explanation in the record for the difference in price estimates

used for "structural steel erection" between the alternatives. We

8 The Friends also complain that the FHWA did not adequately consider a 30-year rehabilitation alternative, but we find that it reasonably concluded that a 30-year plan was imprudent due to the substantial repairs necessitated by the results of the 2016 inspection.

- 14 - find no indication, though, that the Friends sought more of an

explanation before the FHWA in the first instance,9 so there was

no occasion for the agency to further explain itself and we decline

to require a more fulsome explanation now.10 See Quincy Com. Ctr.,

LLC v. Mar. Admin.,

(1st Cir. 2006) ("Ordinarily, a

party forfeits its right to challenge agency action post hoc if it

has failed to apprise the agency of its positions in a timely

manner." (citing DOT v. Pub. Citizen, 541 U.S. at 764–66; Vt.

Yankee Nuclear Power Corp. v. NRDC,

(1978);

Valley Citizens for a Safe Env't v. Aldridge,

(1st Cir. 1989))).

Second, we have considered in particular the Friends'

arguments concerning a $4 million temporary bridge. The FHWA

reasoned that rehabilitating the existing Bridge would close it to

traffic for twenty months, resulting in detours. Estimating

traffic volume (at 19,000 vehicles per day), the resulting time

delays, and the value of that lost time to users ($22,000 per day),

9 At oral argument, the Friends contended that they had raised the price differential of structural steel erection before the agency, so we asked them to file a supplemental letter indicating where they had done so. The citations they provided show general complaints about the myriad cost estimates undergirding the FHWA's decision, but none (as described by the Friends) specifically challenge the difference in the cost estimate of structural steel erection between alternatives. 10 Given the possibility that the estimates include labor as well as raw materials, there is nothing self-evidentially off-base about the differing estimates.

- 15 - the agency calculated the bridge closure as imposing a user cost

of $13 million. To avoid that cost, the FHWA therefore adopted

MDOT's decision to include the construction of a temporary bridge

as part of the rehabilitation alternatives. The Friends argue

that the avoided $13 million cost is "fictional." But a longer

drive in distance and time certainly has a cost. And apart from

calling that cost fictional, the Friends do not challenge the

assumptions or calculations made in monetizing it.

The Friends argue, instead, that before deciding to

include a temporary bridge in the rehabilitation alternatives, the

FHWA was required to find either that the social or economic impact

of the detour was "severe" or that a detour would cause a "severe

disruption" to the community. See

. We think

it would be unreasonable to conclude that all project design

questions -- such as, for example, how much steel to use -- must

be framed as separate alternatives to be compared against one

another under the section 774.17 criteria. While we do not reject

the possibility that some design judgments must indeed be treated

as project alternatives subject to weighing under those criteria,

the Friends offer no contextual or principled basis for why this

particular design judgment should have been treated as a project

alternative.

Further, the regulation on which the Friends rely

provides that an alternative is not prudent if it "still causes

- 16 - severe social [or] economic" impacts or "severe disruption to

established communities" only "[a]fter reasonable mitigation."

. The regulation thus presumes that the project

design itself incorporates "reasonable mitigation" of possible

disruption impacts. Notably, the applicable guidance for

designing a bridge project provides that "[t]he method of

maintaining traffic during construction must be considered for all

bridge projects." MDOT, Bridge Design Guide 2-37 (Aug. 2003). A

temporary bridge is one of the ways to handle (that is, mitigate)

traffic issues during construction, one that is considered when

there are "long detour routes, poor quality roads, or high traffic

volumes."

. Thus, following these types of

considerations, the FHWA decided that using a temporary bridge

would eliminate the need for a 20-month detour. Accordingly, there

was no cause for the FHWA to determine whether the disruption to

the community or economic impact was "still . . . severe" because

the detour was eliminated "[a]fter reasonable mitigation," i.e.,

the decision to use the temporary bridge.

.

Finally, the Friends contend that the construction cost

estimate for the work trestle needed to demolish the existing

Bridge and build a new bridge is significantly "understated" and

thus clearly erroneous. In support of this contention, they point

to a report produced by a construction consultant hired by MDOT,

which estimated the cost of the work trestle to be between

- 17 - $1.5 million and $6.5 million. By contrast, the PDR cost estimate

includes only a $1 million "premium" for the work trestle. The

Friends thus argue that the estimate for the work trestle was so

off that it affected MDOT's cost estimates for the replacement

bridge.

The administrative record shows that the FHWA adequately

explained the figure. In response to questions received from the

public, MDOT and the FHWA explained that "[g]enerally, the major

bid items . . . include the cost of work platforms and trestles"

such that construction estimates do not typically include a

separate line item for a work trestle. But, because the site for

this bridge project "is considered more difficult due to its

topography," "an additional $1 million was added" as part of

"miscellaneous" costs. We thus do not see reason to conclude that

adding "only" $1 million to the estimate was unsupported by the

evidence. In short, all but $1 million of the work trestle cost

was already covered by the estimates.

IV.

The historic preservation groups also contend that the

FHWA acted arbitrarily and capriciously by failing to use a life-

cycle cost analysis (i.e., discounting future costs) to compare

the replacement and rehabilitation alternatives.11 Even though the

The Friends separately argue that, under NEPA, declining 11

to use a life-cycle cost analysis is "highly controversial" and

- 18 - agency calculated the life-cycle costs, it never purported to

determine whether the difference in discounted costs was of an

"extraordinary magnitude" because it placed primary weight on the

non-discounted service-life costs.

Discounting future costs customarily increases the

likelihood that there is an apples-to-apples comparison when

deciding between two options with different future effects. See

generally Amy Gallo, A Refresher on Net Present Value, Harvard

Business Review (Nov. 19, 2014) (explaining that discounting is

the "superior method" for businesses "compar[ing] projects and

decid[ing] which ones to pursue"). Indeed, the federal guidelines

we have seen on this topic -- including ones promulgated by DOT

and the FHWA itself -- explain that discounting is the standard

and preferred way to compare future costs. See, e.g., DOT, FHWA,

Life-Cycle Cost Analysis Primer 9 (Aug. 2002) (explaining why

life-cycle cost analysis, including discounting future costs, is

important in considering "several alternatives" for

thus required FHWA to conduct a full EIS. See

(b)(4) (2018) (requiring agencies to consider "[t]he degree to which the effects on the quality of the human environment are likely to be highly controversial") (amended by

, 43,322 (July 16, 2020) (removing "consideration of controversy" from the calculus)). We disagree. Whether an agency compares cost estimates of various alternatives using the appropriate methodology has no bearing on whether there is a controversy over the effects on "the quality of the human environment."

Accordingly, this dispute is not the sort that would require an EIS under the then-existing regulations.

- 19 - "implement[ing] . . . transportation improvement" such as deciding

between "a steel girder bridge" and a "concrete girder bridge");

FHWA, Improving Transportation Investment Decisions Through Life-

Cycle Cost Analysis, https://www.fhwa.dot.gov/infrastructure/

asstmgmt/lccafact.cfm (last updated June 27, 2017); see also OMB,

Guidelines and Discount Rates for Benefit-Cost Analysis of Federal

Programs,

, at *3 (Oct. 29, 1992) ("Discounting

benefits and costs transforms gains and losses occurring in

different time periods to a common unit of measurement," which is

why "[t]he standard criterion for deciding whether a government

program can be justified on economic principles is net present

value"); EPA, Guidelines for Preparing Economic Analyses:

Discounting Future Benefits and Costs 6-6 (Dec. 2010),

https://www.epa.gov/sites/default/files/2017-09/documents/ee-

0568-06.pdf ("Trade-offs (benefits and costs) in this context

reflect the preferences of those affected by the policy, and the

time dimension of those trade-offs should reflect the

intertemporal preferences of those affected. Thus, social

discounting should seek to mimic the discounting practices of the

affected individuals."). We have been pointed to no agency

guideline or regulation (nor have we located any) recommending a

method akin to the service-life analysis applied here.

The FHWA maintains that no regulation actually requires

it to discount costs. This appears to be true, and we are not

- 20 - prepared to hold that failure to compare discounted future costs

is per se arbitrary and capricious. But the fact that a life-

cycle cost analysis is not required does not obviate the

requirement for reasoned decisionmaking. The key inquiry is why

the FHWA decided to forgo its own guidance and that of the Office

of Management and Budget, which say that comparing discounted

future costs is the way to go.

On that question, the only reason given for rejecting

the use of present-value discounting is that states usually do not

set aside funds for future expenses, so there will be no rate of

return as time goes by. But, while discounting "can be understood

in terms of the economic return that could be earned on funds in

their next best alternative use," it can also be understood as

"the compensation that must be paid to induce people to defer an

additional amount of current year consumption." DOT, FHWA, Life

Cycle-Cost Analysis Primer 16 (Aug. 2002) (emphasis added).

Moreover, the FHWA points to nothing about the funding here that

distinguishes it from the funding for projects for which its

guidance calls for discounting. And it seems to overlook the fact

that the source of state funds -- taxpayers -- may well earn funds

on set-aside dollars not spent today. See

("[T]ransportation agency officials are expected to explain and

justify decisions concerning the expenditure of taxpayer dollars,

[and] [d]ocumentation associated with the [life-cycle cost

- 21 - analysis] process is a mechanism for transportation officials to

demonstrate their good stewardship of the public's transportation

infrastructure investment."). Perhaps the FHWA's avoidance of

discounting implies it expected inflation to equal the expected

rate of return over the next 75 years. But see

("Analytically, adjusting for inflation and discounting are

entirely separate concerns, and they should not be confused by

attempting to calculate both at once."). If so, it offered no

support for such an implication. Cf. FCC v. Fox Television

Stations,

(2009) (explaining that an agency must

"display awareness that it is changing positions" and "must show

there are good reasons for the new policy").

In the face of guideline after guideline explaining why

agencies should discount future costs before comparing costs

incurred across time, the agency must do more than simply assert

that its choice is the "more accurate" one. Cf. Dist. 4 Lodge of

the Int'l Ass'n. of Machinists & Aerospace Workers Loc. Lodge 207

v. Raimondo,

(2021) ("Importantly, the Agency

subjected its estimates to peer review and . . . did indeed explain

how its estimates comported with and were derived from the hard

data that was available."). Nor does the provenance of the method

used by the FHWA provide any confidence that the agency acted

rationally. Even on appeal, defendants point to no literature or

other support for use of the counterintuitive service-life method.

- 22 - Rather, it was suggested by a town official with no apparent

relevant expertise and criticized at the time by one of MDOT's own

experts.

Tellingly, the federal defendants on appeal do not seem

to really take issue with the idea that discounting is the proper

and widely accepted best way to compare future costs. Rather, the

gestalt of the FHWA's brief -- as opposed to the state agency's

brief -- is that the failure to consider the discounted costs was

harmless error. The FHWA contends that it did in fact discount

costs, even though service-life analysis was the "primary basis"

for its decision, and that the record is clear that the agency

would have come to the same conclusion had it affirmatively relied

on a discounted-cost comparison. After all, reasons the federal

agency, adding $7.1 million to a project that will otherwise cost

only $13.7 million (i.e., a 53% increase) could be seen as quite

an extraordinary cost that taxpayers should not have to bear.

The Friends argue that if costs were both corrected (by

sustaining their challenges to the various line-item estimates)

and discounted to present value, the resulting delta would be less

than 10%, and thus, according to the Friends, "legally

inconsequential." But of course, we (like the district court)

have rejected the Friends' challenges to the line items that they

seek to reduce. So the point remains: Even with discounting to

- 23 - present value, the Friends' preferred option would increase costs

by over one-half.

That being said, and within boundaries not implicated

here, it is for the FHWA, not this court (or counsel on appeal),

to make the judgment call in the first instance regarding whether

the 53% delta represents an extraordinary cost increase against

which prudence counsels. See SEC v. Chenery Corp.,

(1945) ("[A] reviewing court . . . must judge the propriety of

[agency] action solely by the grounds invoked by the agency. If

those grounds are inadequate or improper, the court is powerless

to affirm the administrative action by substituting what it

considers to be a more adequate or proper basis.").

V.

For the foregoing reasons, we affirm in part and vacate

in part, with instructions that the matter be returned to the FHWA

for the strictly limited purpose of allowing the agency to further

justify use of the service-life analysis and/or to decide whether

a 53% price differential represents a cost of an extraordinary

magnitude under

.

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