On Petition for Review of Orders of the Bureau of Land Management and the Fish and Wildlife Service IBLM Nos. NVN-084650 OR-64807 UTU-82880 WYW-171168 (W0350) IBLM No. CP09-54-000
The opinion of the court was delivered by: Berzon, Circuit Judge:
Argued and Submitted October 11, 2011-Portland, Oregon
Before: Marsha S. Berzon and N. Randy Smith, Circuit Judges, and William E. Smith, District Judge.*fn1
Our case concerns a decision by the Bureau of Land Management ("BLM") to authorize the Ruby Pipeline Project ("Project"). The Project involves the construction, operation, and maintenance of a 42-inch-diameter natural gas pipeline extending from Wyoming to Oregon, over 678 miles. The right-of-way for the pipeline encompasses approximately 2,291 acres of federal lands and crosses 209 rivers and streams that support federally endangered and threatened fish species. According to a Biological Opinion ("the Biological Opinion" or "the Opinion") formulated by the Fish and Wild-life Service ("FWS"), the project "would adversely affect" nine of those species and five designated critical habitats. The FWS nonetheless concluded that the project "would not jeopardize these species or adversely modify their critical habitat." The propriety of the FWS's "no jeopardy" conclusion, and the BLM's reliance on that conclusion in issuing its Record of Decision, are at the heart of this case.
This opinion addresses those challenges to the Project that petitioners Center for Biological Diversity, Defenders of Wildlife et al., and Summit Lake Paiute Tribe have raised under the Endangered Species Act ("ESA"), 16 U.S.C. § 1531 et seq.*fn2 Specifically, we resolve petitioners' claims that the Biological Opinion and its accompanying Incidental Take Statement were arbitrary and capricious because: (1) the Biological Opinion's "no jeopardy" and "no adverse modification" determinations relied on protective measures set forth in a conservation plan not enforceable under the ESA; (2) the Biological Opinion did not take into account the potential impacts of withdrawing 337.8 million gallons of groundwater from sixty-four wells along the pipeline; (3) the Incidental Take Statement miscalculated the number of fish to be killed, by using a "dry-ditch construction method" for water crossings; and (4) the Incidental Take Statement placed no limit on the number of "eggs and fry" of threatened Lahontan cutthroat trout to be taken during construction.
We agree with the first two contentions and so set aside the Biological Opinion as arbitrary and capricious. We also set aside the Record of Decision, as it relied on the invalid Biological Opinion.*fn3
The Endangered Species Act is a comprehensive scheme with the "broad purpose" of protecting endangered and threatened species. Babbit v. Sweet Home Chapter of Comtys. for a Great Or., 515 U.S. 687, 698 (1995); see Tenn. Valley Auth. v. Hill, 437 U.S. 153, 180 (1978). Two interlocking provisions of the Act are of particular significance here: section 9, which prohibits the "take"*fn4 of any member of an endangered or threatened species, 16 U.S.C. § 1538(a)(1)(B), and section 7, which imposes upon federal agencies an "affirmative duty to prevent violations of section 9," Ariz. Cattle Growers' Ass'n v. U.S. Fish & Wildlife, 273 F.3d 1229, 1238 (9th Cir. 2001) (citing 16 U.S.C. § 1536(a)(2)).
Under Section 7, a federal agency must "insure that any action authorized, funded, or carried out by such agency . . . is not likely to jeopardize the continued existence of any endangered species or threatened species or result in the destruction or adverse modification of [critical] habitat of such species." 16 U.S.C. § 1536(a)(2).*fn5 To facilitate compliance with this substantive requirement, section 7 and its implementing regulations also impose specific procedural duties upon federal agencies: Before beginning any "major construction activities," agencies must prepare a "biological assessment" to determine whether listed species or critical habitat "are likely to be adversely affected" by the proposed action. 50 C.F.R. § 402.12 (2012). If so, the action agency must formally consult with the appropriate wildlife agency, in this case the FWS,*fn6 before undertaking the action. 50 C.F.R. § 402.14; see Karuk Tribe of Cal. v. U.S. Forest Serv., 681 F.3d 1006, 1020 (9th Cir. 2012) (en banc); Sierra Club v. Babbitt, 65 F.3d 1502, 1505 (9th Cir. 1995). During the formal consultation process, the FWS must
"[f]ormulate its biological opinion as to whether the action, taken together with cumulative effects, is likely to jeopardize the continued existence of listed species or result in the destruction or adverse modification of critical habitat." 50 C.F.R. § 402.14(g)(4). If the FWS concludes that jeopardy or adverse modification is likely, then any take resulting from the proposed action is subject to section 9 liability (unless that take is authorized by other provisions of the Act not relevant here). See Sierra Club v. Babbitt, 65 F.3d at 1505; Defenders of Wildlife v. EPA, 420 F.3d 946, 966 (9th Cir. 2005), rev'd on other grounds by Nat'l Ass'n of Home Builders v. Defenders of Wildlife, 551 U.S. 644 (2007). Although a federal agency or project applicant is "technically free to disregard the Biological Opinion and proceed with its proposed action, . . . it does so at its own peril (and that of its employees), for 'any person' who knowingly 'takes' [a member of] an endangered or threatened species is subject to substantial civil and criminal penalties, including imprisonment." Bennett v. Spear, 520 U.S. 154, 170 (1997); see also San Luis & Delta-Mendota Water Auth. v. Salazar, 638 F.3d 1163, 1170 (9th Cir. 2011) ("[T]he determinative or coercive effect of a Biological Opinion stems directly from the Service's power to enforce the no-take provision in ESA § 9 . . . .").
If, on the other hand, the FWS concludes in its biological opinion that no jeopardy or adverse modification is likely, but that the project is likely to result only in the "incidental take"*fn7 of members of listed species, then the FWS will provide, along with its biological opinion, an incidental take statement authorizing such takings. 50 C.F.R. § 402.14(i). An incidental take statement must:
(1) specify the impact [i.e., the amount or extent] of the incidental taking on the species; (2) specify the "reasonable and prudent measures" that the FWS considers necessary or appropriate to minimize such impact; [and] (3) set forth "terms and conditions" with which the action agency must comply to implement the reasonable and prudent measures . . . .
Or. Natural Res. Council v. Allen, 476 F.3d 1031, 1034 (9th Cir. 2007) (quoting 16 U.S.C. § 1536(b)(4); 50 C.F.R. § 402.14(i)). "Significantly, the Incidental Take Statement functions as a safe harbor provision immunizing persons from Section 9 liability and penalties for takings committed during activities that are otherwise lawful and in compliance with its terms and conditions." Ariz. Cattle Growers' Ass'n, 273 F.3d at 1239 (citing 16 U.S.C. § 1536(o)).
ESA regulations further require federal agencies and project applicants to "monitor the impacts of incidental take" by "report[ing] the progress of the action and its impact on the species" to the FWS. 50 C.F.R. § 402.14(i)(3). If the amount or extent of incidental taking is exceeded, the action agency "must immediately reinitiate consultation with the FWS." Allen, 476 F.3d at 1034-35 (citing 50 C.F.R. §§ 402.14(i)(4), 402.16(a)). The action agency must also reinitiate consultation if the proposed action "is subsequently modified in a manner that causes an effect to the listed species or critical habitat that was not considered in the biological opinion." 50 C.F.R. § 402.16(c); see also Defenders of Wildlife v. Flowers, 414 F.3d 1066, 1070 (9th Cir. 2005). When reinitiation of consultation is required, the original biological opinion loses its validity, as does its accompanying incidental take statement, which then no longer shields the action agency from penalties for takings. See Allen, 476 F.3d at 1037; U.S. Fish & Wildlife Serv. & Nat. Marine Fisheries Serv., Endangered Species Consultation Handbook: Procedures for Conducting Consultation and Conference Activities under Section 7 of the Endangered Species Act 4-23 (1998) [hereinafter ESA Handbook].
B. The Ruby Pipeline Project: Formal Consultation and the Biological Opinion
In January 2009, Respondent-Intervenor Ruby Pipeline L.L.C. ("Ruby") filed a formal application with the Federal Energy Regulatory Commission (FERC) seeking a Certificate of Public Convenience and Necessity ("Certificate"), see 15 U.S.C. § 717f(c)(1)(A), authorizing the Project. After Ruby and FERC had agreed on the rough scope of the project, FERC requested consultation with the FWS about the proposed license.
FWS's resulting Biological Opinion focused on nine listed species it determined the Project "would adversely affect," as well as the 209 bodies of water the Project would cross that either fall within or connect to the listed species' critical habitats. Five of the species-Lahontan cutthroat trout, Warner sucker, Lost River Sucker, shortnose sucker, and Modoc sucker-inhabit waters in Nevada, Oregon, or both. The other four species-Colorado pikeminnow, humpback chub, razor-back sucker, and bonytail chub-live in the Colorado River system. The FWS determined that the first group of species, the Nevada/Oregon group, would be adversely affected by the Project's stream crossings, while the second group, those in the Colorado River system, would be adversely affected by the use and depletion of ground and surface water during construction.
Crucially, the Biological Opinion factored into its jeopardy determination several "voluntary" conservation actions Ruby had indicated it would facilitate implementing, which the Opinion identified as "reasonably certain to occur." The Opinion explained that these actions, set forth in an Endangered Species Conservation Action Plan (sometimes "CAP"), were "to be implemented by Ruby in the future," "would be beneficial to listed fishes and their habitats, and . . . [would] eventually contribute to the conservation and recovery of these fishes." Whether the Biological Opinion properly relied upon the Conservation Action Plan as mitigating the adverse effects of the Project is the central issue in this case.*fn8
Although it recognized that the Project would adversely affect the nine listed species, the Biological Opinion ultimately concluded that the Project was "not likely to jeopardize the continued existence" of these species or "adversely modify or destroy designated critical habitat." The FWS therefore provided an Incidental Take Statement authorizing "mortality to Lahontan cutthroat trout, Warner sucker, Modoc sucker, Lost River sucker, and shortnose sucker," provided the specified terms and conditions were met. It also "exempt[ed from section 9 liability] all take in the form of harm that would occur from the Project's removal of 49.5 acre-feet of water" from the Colorado River Basin.
The Administrative Procedure Act ("APA") governs our review of agency decisions under the ESA. Karuk Tribe, 681 F.3d at 1017. Under the APA, an agency action is valid unless it is " 'arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.' " Id. (quoting 5 U.S.C. § 706(2)(A)). An agency action is arbitrary and capricious if the agency has: relied on factors which Congress has 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.
Pac. Coast Fed'n of Fishermen's Ass'ns v. Nat'l Marine Fish-eries Serv., 265 F.3d 1028, 1034 (9th Cir. 2001) (quoting Motor Vehicle Mfrs. Ass'n v. State Farm, 463 U.S. 29, 43 (1983)).
A. The Conservation Action Plan
The petitioners' central argument is that the Biological Opinion was arbitrary and capricious because it relied in part on the projected beneficial effects of the Conservation Action Plan for its conclusion that the Project would not jeopardize the nine listed fish species or adversely affect critical habitat. The Conservation Action Plan measures are unenforceable under the procedures established by the ESA, petitioners maintain, but should be, and so cannot be relied upon in assessing the likely impact of the project on listed species. Unless the Conservation Action Plan is binding under the ESA, the FWS will be unable to use the ESA's "strict civil and criminal penalties," Gifford Pinchot Task Force v. U.S. Fish & Wildlife Serv., 378 F.3d 1059, 1063 (9th Cir. 2004), to ensure that the plan is implemented. We agree that the Opinion's reliance on the CAP is inconsistent with the statutory scheme, and that the Opinion is therefore invalid.
a. Development and features of the Conservation Action Plan
In May 2009, FWS staff sent Ruby an "ESA Mitigation and Conservation Action Plan Proposal," suggesting measures that "would address Ruby['s] impacts to listed species and their critical habitats as well as assist with recovery of these listed species." The FWS requested that Ruby file the final Conservation Action Plan with FERC so it could "be included as part of the final biological assessment." This approach, it appears, would have rendered the Conservation Action Plan part of the proposed action, and so enforceable under the ESA. See further discussion at p.12727, infra.
FWS staff then produced a draft Memorandum of Agreement to establish a proposed Conservation Action Plan; the Memorandum attached the Conservation Action Plan that would be the subject of the Agreement. Both documents were revised several times. During the revision process, FERC, the action agency, objected to the inclusion of the Conservation Action Plan as part of the proposed action. The FWS thereupon revised the draft Memorandum of Agreement "to represent a stand-alone agreement between Ruby and [the] agencies," "delet[ing] [the] previous assumption that this Memorandum of Agreement and ESA conservation action plan would be part of the FERC proposed [section 7] action." FWS staff also noted that Ruby contributed language to the revised draft "to provide rationale that the ESA conservation action plan, while related to the ESA proposed action, [was] not interrelated or interdependent for purposes of section 7 effects analysis."
Ultimately, the Memorandum of Agreement was made final and renamed the "Letter of Commitment by Ruby Pipeline LLC regarding the Endangered Species Act Conservation Action Plan for the Ruby Pipeline Project" ("Letter"). The Letter spelled out the nature of and limits on Ruby's commitment "to fund and/or implement conservation measures for the benefit of federally threatened and endangered species that occur within the Ruby Pipeline Project . . . action area." Notably, it characterized the Conservation Action Plan as entirely independent of the requirements of section 7 of the ESA:
Separately, and not in lieu of FERC's . . . Section 7 consultation responsibility, Ruby has agreed to commit to fund conservation actions that are beneficial to listed species and their habitats that occur within the Ruby Project action area, and that will contribute to the conservation and recovery of these species. . . . This Plan is not part of the FERC proposed action for ESA consultation and also is separate from, and in addition to, any reasonable and prudent measures developed as part of the Section 7 consultation with the Service for the Project. . . . [W]hile Ruby has committed to fund the conservation actions identified in the Plan to conserve and assist with recovery of these listed species, the Project is not dependent on these conservation actions. Conversely, the conservation actions identified in the Plan involve projects that already had been identified by the Service . . . and thus could proceed regardless of whether the Project was authorized.
To the Letter was attached a list of, among other things, twelve fish-specific conservation measures; the Letter referred to the attachment as "Ruby's Endangered Species Act Conservation Action Plan." The listed conservation measures, if completed, were to benefit each of the nine listed species that, according to the Biological Opinion, the Project would adversely affect. Included were the construction of a fish migration barrier to protect Lahontan cutthroat trout from invasive non-native trout; improvements to a road adjacent to Modoc sucker spawning and rearing habitat; research and monitoring of Warner sucker populations; and restoration of native riparian vegetation along select tributaries in the Green River Basin, to decrease water loss that could adversely impact the endangered Colorado River fishes.
Ruby committed to funding fully only seven of the twelve Conservation Action Plan measures. For the remaining five measures, Ruby agreed to contribute partial funding, with the remaining funds to be "acquired via cost-share." For four of those five projects, Ruby's partial contribution would amount to twenty-five percent of the costs; the remaining seventy-five percent would be "obtained from other sources." For the remaining partially-funded project, Ruby would pay $150,000, leaving an unspecified amount of "remaining funds" to be acquired elsewhere. The Letter of Commitment indicated that it would be the FWS's responsibility to obtain cost-share funding. Ruby agreed, if the FWS were unable to do so, to "pay any reasonable costs, as determined by Ruby in its sole discretion . . . to ensure the identified conservation action is completed." (Emphasis added.)
The Letter stated that "Ruby anticipate[d] that each of the actions [would] be initiated within five years of Ruby's receipt of its Certificate" from FERC authorizing the Project. (Emphasis added.) It further stated that, if any of the conservation actions could not "be completed for any reason, Ruby [would] work with the Service, other federal agencies, states and/or NGO partners to identify another ESA conservation action that will provide the same or greater conservation benefit for the same species as the conservation action that was originally identified." Nothing in the Letter set forth any penalties or other consequences to be imposed upon Ruby if required CAP measures were underfunded or not implemented.
To the degree there are funding commitments, the CAP measures are, however, in some measure enforceable, albeit not through the ESA's mechanisms. The Action Plan was incorporated into both the FERC Certificate and the BLM's Record of Decision, each of which provides for discretionary agency enforcement.
First, as to the FERC Certificate, the Natural Gas Act authorizes FERC to impose civil penalties of up to $1,000,000 per day for each violation of "any rule, regulation, restriction, condition, or order made or imposed by [FERC]." Id. § 717t-1(a). Condition 1 of the FERC Certificate for the Project states that Ruby "shall follow" the "mitigation measures" described in "its application, supplemental filings . . . , and ...