Atchafalaya Basinkeeper v. U.S. Army Corps , 894 F.3d 692 ( 2018 )

Case: 18-30257 Document: 00514544106 Page: 1 Date Filed: 07/06/2018
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
FILED
July 6, 2018
No. 18-30257
Lyle W. Cayce
Clerk
ATCHAFALAYA BASINKEEPER; LOUISIANA CRAWFISH PRODUCERS
ASSOCIATION-WEST; GULF RESTORATION NETWORK;
WATERKEEPER ALLIANCE; SIERRA CLUB, and its Delta Chapter,
Plaintiffs - Appellees
v.
UNITED STATES ARMY CORPS OF ENGINEERS,
Defendant - Appellant
BAYOU BRIDGE PIPELINE, L.L.C.; STUPP BROTHERS,
INCORPORATED, doing business as Stupp Corporation,
Intervenor Defendants - Appellants
Appeals from the United States District Court
for the Middle District of Louisiana
Before REAVLEY, JONES, and GRAVES, Circuit Judges.
EDITH H. JONES, Circuit Judge:
The United States Army Corps of Engineers (the “Corps”) and Bayou
Bridge Pipeline, LLC (“Bayou Bridge,” a convenience that includes co-
appellant Stupp Brothers, Inc.), appeal the district court’s grant of a
preliminary injunction preventing Bayou Bridge from constructing a pipeline
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in part through the Atchafalaya Basin of southern Louisiana. The injunction
was based on the Corps’ alleged failure to satisfy the demands of the National
Environmental Policy Act in issuing a construction permit. Because the court
misperceived the applicable regulations, and the Corps’ analysis, properly
understood, vindicates its decision that an Environmental Assessment sufficed
under these circumstances, we vacate the preliminary injunction and remand
to the district court.
BACKGROUND
On December 14, 2017, after a year-long review, the Corps issued Bayou
Bridge a permit under Section 404 of the Clean Water Act (“CWA”),
33 U.S.C. § 1344, and Sections 10 and 14 of the Rivers and Harbors Act of 1899,
33 U.S.C. §§ 403, 408, allowing it to build a 162-mile crude oil pipeline from
Lake Charles, Louisiana to terminals near St. James. Portions of the pipeline
will cross the Atchafalaya Basin, affecting wetlands. The discharge of dredge
or fill material into these wetlands necessitated the Corps’ permitting action
under the Clean Water Act, 33 U.S.C. § 1311(a), while the Rivers and Harbors
Act requires permitting for structures in or affecting “navigable waters” as
defined by regulations.
In discharging its permit responsibilities, the Corps was required to
implement the National Environmental Policy Act (“NEPA”), a procedural
statute, which requires certain steps before federal agencies may approve
projects that will affect the environment. To comply, the agency first prepares
an environmental assessment (“EA”). Sabine River Auth. v. U.S. Dep’t of
Interior, 951 F.2d 669, 677 (5th Cir. 1992). As this court has held, “[a]n EA
should be a ‘concise public document . . . that serves to . . . [b]riefly provide
sufficient evidence and analysis for determining whether to prepare an
[environmental impact statement].’” O'Reilly v. U.S. Army Corps of Eng’rs,
477 F.3d 225, 228 (5th Cir. 2007) (quoting 40 C.F.R. § 1508.9(a)). If the agency
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finds during this process that the proposed action will result in “significant”
effects to the environment, then it must also prepare an environmental impact
statement (“EIS”). Id.; 42 U.S.C. § 4332(C). If the agency finds that the project
will not have a significant impact, it will conclude with a “Finding of No
Significant Impact” (“FONSI”) and no EIS will be required. Sabine River
Auth., 951 F.2d at 677.
In this instance, the Corps authored two EAs, one under the Rivers and
Harbors Act (the “408 EA”), and the other under Section 404 of the CWA (the
“404 EA”). Based on those assessments, which together run over two hundred
pages, plus appendices of nearly 200 pages more, the Corps determined that
an EIS would not be necessary for this project and issued a FONSI.
Atchafalaya Basinkeeper and other organizations interested in the
Atchafalaya basin brought suit in January 2018 against the Corps and sought
a preliminary injunction to redress alleged violations of NEPA and the CWA.
Bayou Bridge and Stupp Brothers intervened as defendants. The district court
held an expedited hearing even before the complete administrative record
could be filed. The court’s decision, filed soon afterward, rejected a number of
Appellees’ contentions but found that Appellees had shown irreparable harm
and had demonstrated a likelihood of success on the merits as well as other
prerequisites of preliminary relief for two of their claims: (1) the EAs violated
NEPA and the CWA by failing to adequately analyze mitigation for the loss of
cypress-tupelo swamp along the pipeline right of way through the Basin, and
(2) the EAs violated NEPA and the CWA by failing to adequately consider
historical noncompliance by other pipelines and the cumulative effects of this
project. The resulting preliminary injunction stopped construction only
“within the Atchafalaya Basin.”
Appellants sought a stay of the injunction pending appeal, which this
court granted in a split decision.
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Appellants raise a number of issues for review: that the district court
applied an incorrect standard for determining injunctive relief; abused its
discretion in finding Appellees likely to succeed on the merits and affirming
the other bases for injunctive relief; and issued an improper and overbroad
injunction. We need only rule on the court’s errors in assessing the likelihood
that Appellees will succeed on the merits. 1
STANDARD OF REVIEW
A grant of a preliminary injunction is reviewed for abuse of discretion.
La Union Del Pueblo Entero v. FEMA, 608 F.3d 217, 220 (5th Cir. 2010).
Factual determinations within the preliminary injunction analysis are
reviewed for clear error, and legal conclusions within the analysis are reviewed
de novo. Id. A preliminary injunction is an extraordinary remedy. In addition
to proving a likelihood of prevailing on the merits, the movant must
demonstrate a substantial threat of irreparable injury if the injunction is not
granted; the threatened injury outweighs any harm that will result to the non-
movant if the injunction is granted; and the injunction will not disserve the
public interest.” Id. at 219. The district court abuses its discretion if it relies
on clearly erroneous factual findings in deciding whether to grant a
preliminary injunction or relies on “erroneous conclusions of law.” O’Reilly,
477 F.3d at 238 (internal citations and quotations omitted).
1 In particular, the parties spar over whether the Supreme Court has determined that
a “substantial likelihood of success on the merits” is invariably required for injunctive relief,
thereby overruling some decisions that implied a “sliding scale” comparing the legal issues
with the strength of the “irreparable harm” to the non-movant. Compare Winter v. Nat. Res.
Def. Counsel, Inc., 555 U.S. 7, 129 S. Ct. 365, (2008) with Productos Carnic, S.A. v. Cent. Am.
Beef & Seafood Trading Co., 621 F.2d 683, 686 (5th Cir. 1980)). Although the district court
here first applied the sliding scale approach, it alternatively referenced the substantial
likelihood of success requirement. Additionally, because the court’s legal errors here, though
no doubt inadvertent, are decisive, we need not wade into that debate.
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The Corps’ actions under the NEPA and CWA are subject to review
under the Administrative Procedure Act (“APA”). As relevant here, a court will
uphold an agency action unless it finds it to be “arbitrary, capricious, an abuse
of discretion, or otherwise not in accordance with law.” 5 U.S.C. § 706(2)(A);
Coastal Conservation Assoc. v. U.S. Dep’t of Commerce, 846 F.3d 99, 110-11
(5th Cir. 2017). This is a demanding standard. The Supreme Court carefully
explained factors that inform judicial review under this provision. Motor
Vehicle Mfrs. Ass’n v. State Farm Mut. Auto Ins. Co., 463 U.S. 29, 43,
103 S. Ct. 2856, 2866-67 (1983), and its words are worth repeating here:
The scope of review under the “arbitrary and capricious” standard
is narrow and a court is not to substitute its judgment for that of
the agency. Nevertheless, the agency must examine the relevant
data and articulate a satisfactory explanation for its action
including a “rational connection between the facts found and the
choice made.” In reviewing that explanation, we must “consider
whether the decision was based on a consideration of the relevant
factors and whether there has been a clear error of judgment.”
Normally, an agency rule would be 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.
(citations omitted).
DISCUSSION
A. The district court decision.
The district court analyzed at length each of the Appellees’ specific
challenges to the procedural and substantive sufficiency of the EAs. The court
rejected the complaint that the Corps’ analysis of the environmental impact on
the Basin of possible oil spills was insufficient and therefore arbitrary and
capricious. The court also rejected the assertion that the Corps provided
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defective public notice of the “type and location of the proposed mitigation”
measures; as the court noted, the public comments, many of which were made
by the Appellees here, were addressed and responded to by the Corps in 26
pages of the Section 404 EA.
The court then focused on specific impacts of this project in the Basin,
i.e., that 455.5 acres of “jurisdictional wetlands” will be temporarily affected
and approximately 142 acres of those wetlands “[will] be permanently
converted from forested to herbaceous wetlands within the permanent right-
of-way.” The Section 404 EA states that “[t]he proposed project will change
and/or reduce wetland functional quality along the proposed ROW by
conversion of forested habitat types.” The EA identifies “[a] key issue(s) of
concern in this watershed is the loss of wetland function and value.”
The court found three failures in the Corps’ ultimate FONSI
determination. First, the court acknowledged that “reliance on mitigation
measures may reduce a project’s impacts below the level of significance,”
quoting O’Reilly, 477 F.3d at 231, and the agency’s reasoning “need not be laid
out to the finest detail . . . .” However, “an EIS involving mitigation” may not
be predicated on “mere perfunctory or conclusory language . . . ,” quoting
O’Reilly, 477 F.3d at 231-32. The court believed the Corps was perfunctory.
Second, the court accepted the Appellees’ reading of the relevant CWA
regulation, 33 C.F.R. §332.3, and concluded it does not “impos[e] a mechanical
and rigid hierarchy” according to which out-of-kind mitigation credits within
the watershed must be substituted for alternative in-kind mitigation
alternatives. The court accordingly criticized the Corps’ EAs for failing to
discuss “how the mitigation choices serve[] the stated goal of ‘replac[ing] lost
functions and services;’” and failing to analyze in the Section 404 EA whether
a ‘preference’ for mitigation bank credits was appropriate or whether the
particular mitigation bank credits to be acquired are “located where it is most
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likely to successfully replace lost functions and services.” (quoting 33 C.F.R.
§ 332.3(b)(1)). The court found the 404 EA “devoid” of data analyzing the
consequence of the “irretrievabl[e] los[s]” of 142 acres of cypress/tupelo swamp
wetlands. Consequently, “there is not one iota of discussion, analysis, or
explanation” how out-of-kind credits mitigate the loss of function of the
cypress/tupelo swamp. The court also found “precious little analysis” of what
“best practices” the Corps required for Bayou Bridge’s construction will be and
how they offset temporary impacts of construction within the Basin. For these
basic reasons, the court determined that the FONSI for this project was
arbitrary and capricious.
Third, the court also discussed Appellees’ contention that because earlier
pipeline projects through the Basin had created spoil banks and other
detrimental conditions, the EAs did not properly address “cumulative impacts”
of this project in terms of those defaults. The court agreed with Appellees’
contention, referring to O’Reilly, 477 F.3d at 234-35, and 40 C.F.R. §§ 1508.7
and 1508.25. It concluded that Appellees had demonstrated a likelihood of
success on the merits in showing the deficiency of the EAs.
Bearing in mind that the Corps’ NEPA obligation was limited to
discussing relevant factors and explaining its decision, not to reaching
conclusions that this court or the district court approves, Robertson v. Methow
Valley Citizens Council, 490 U.S. 332, 350, 109 S. Ct. 1835, 1846 (1989), we
address each of these conclusions in turn.
B. FONSI versus “mitigated FONSI.”
In its critical reliance on O’Reilly, the court misunderstood the difference
between a “mitigated FONSI” at issue in that case and the Corps’ FONSI here.
The “mitigated FONSI” means that without mitigation, a project will have a
“significant” environmental impact. Final Guidance for Federal Departments
and Agencies on the Appropriate Use of Mitigation and Monitoring and
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Clarifying the Appropriate Use of Mitigated Findings of No Significant Impact,
76 Fed. Reg. 3843, 3846 (Jan. 21, 2011). Here, however, after considering all
the circumstances, including—importantly—measures imposed on Bayou
Bridge to comply with the CWA, this project did not have a “significant”
environmental impact.
In O’Reilly, by contrast, the impact of a housing development on adjacent
wetlands was undisputable and irrevocable, yet the Corps utterly failed to
discuss mitigation measures. O’Reilly, 477 F.3d at 232-34. 2 On their face, the
200+ pages in both EAs here acknowledged potential environmental impacts
from the project, discussed third parties’ concerns about those impacts,
referenced in detail the hydrological, horticultural and wildlife environment in
the affected acreage of the Basin, and explained how and where mitigation
bank credits and construction protocols would be adopted to render the
watershed impact not “significant.” The court’s misplaced view that the Corps
issued a “mitigated FONSI” is an error of law that steered it in the wrong
direction. Perhaps the Corps’ discussion might have been improved with the
addition of certain details, but the Corps’ path could “reasonably be discerned”
from the EAs and other publicly available documents and should have been
upheld. Nat’l Ass’n of Home Builders v. Defs. of Wildlife, 551 U.S. 644, 658,
127 S. Ct. 2518, 2530 (2007) (internal quotation marks omitted).
C. Application of out-of-kind mitigation credits.
Separate from the “mitigated FONSI” issue is the question whether the
Corps properly applied CWA regulations when it determined that Bayou
Bridge could (1) utilize approved construction methods within the Basin, and
2The Corps additionally points out that O’Reilly predates Council on Environmental
Quality Regulations that constituted final guidance and clarifications about, inter alia, the
appropriate use of mitigated FONSIs. 76 Fed. Reg. at 3843. Appellees have not directly
challenged the Corps’ adherence to this guidance.
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(2) purchase (a) in-kind mitigation credits, i.e. cypress-tupelo acreage within
the watershed and, when those were exhausted, (b) out-of-kind credits of
bottomland hardwood acreage within the watershed to compensate for the
project’s impact.
When it concluded that the Corps did not sufficiently explain the need
for or alternatives to out-of-kind mitigation credits, or the measures required
to replace “lost aquatic functions and services” from this project, the district
court misread the applicable regulation and failed to acknowledge its
application by means of the Louisiana Wetland Rapid Assessment Method
(“LRAM”). 3 To explain these errors, we begin with the applicable CWA
regulation, pursuant to which the Corps must require “compensatory
mitigation” to “offset environmental losses resulting from unavoidable impacts
to waters of the Unites States . . . .” 33 C.F.R. § 332.3(a)(1). Mitigation is
required to compensate “for the aquatic resource functions that will be lost as
a result of the permitted activity.” Id. Criticizing the Corps’ approval of out-
of-kind mitigation, the district court stated that Section 332.3 does not
“impos[e] a mechanical and rigid hierarchy” establishing a preference for out-
of-kind mitigation. This was incorrect.
The first paragraph of the regulation states that, “in many cases, the
environmentally preferable compensatory mitigation may be provided through
mitigation banks or in-lieu fee programs because they usually involve
consolidating compensatory mitigation projects where ecologically
appropriate, consolidating resources, providing financial planning and
3 The court also clearly erred in stating that, “142 acres of wetlands . . . will be . . .
irretrievably lost.” According to the 404 EA, 142 acres will be converted from forested
wetlands to scrub shrub wetlands and 78 of these acres will have previously been
cypress/tupelo swamp (designated PFO2 in the LRAM tables). “Herbaceous wetlands” also
provide important aquatic functions. Because there will be no filling of wetlands in this
project, converting them to dry land, the Corps found no permanent loss of wetlands.
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scientific expertise (which often is not practical for permittee-responsible
compensatory mitigation projects), reducing temporal losses of functions, and
reducing uncertainty over project success.” § 332.3(a)(1) (emphasis added).
The next section of the regulation, describing “Type and location of
compensatory mitigation,” states that “[w]hen considering options for
successfully providing the required compensatory mitigation, the district
engineer shall consider the type and locations options in the order presented in
paragraphs (b)(2) through (b)(6) of this section. In general, the required
compensatory mitigation should be located within the same watershed as the
impact site . . . .” § 332.3(b)(1) (emphasis added). The first listed option is
“Mitigation bank credits,” which then describes the reasons “the district
engineer should give preference” to them; the reasons include the better
scientific management, large scale, and financial security provided within
mitigation banks. § 332.3(b)(2). Further, mitigation bank credits are preferred
“[w]hen permitted impacts are located within the service area of an approved
mitigation bank, and the bank has the appropriate number and resource type
of credits available.” Id.
The regulation next describes in detail the “Watershed approach to
compensatory mitigation,” § 332.3(c), among whose “Considerations” is that it
“may include on-site compensatory mitigation, off-site compensatory
mitigation (including mitigation banks or in-lieu fee programs), or a
combination . . . .” § 332.3(c)(2)(iii). In regard to “Site selection,” the regulation
specifically authorizes district engineers to require “on-site, off-site, or a
combination . . . [of] compensatory mitigation to replace permitted losses of
aquatic resource functions and services.” § 332.3(d)(2).
Once more, the regulation emphasizes that required “[m]itigation banks
. . . may be used to compensate . . . in accordance with the preference hierarchy
in paragraph (b) of this section.” § 332.3(g).
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If this language does not set up a plain “hierarchy” strongly approving of
mitigation banks—as opposed to the Appellants’ proffered clean-up by Bayou
Bridge of spoil banks created by other pipeline builders long ago—it is hard to
know what would do. See also Compensatory Mitigation for Losses of Aquatic
Resources, 73 Fed. Reg. 19,594, 19,600, (April 10, 2008), referring to
“hierarchy” in this regulation.
As for the district court’s concern that the “hierarchy” would permit out-
of-kind mitigation, i.e., allowing purchases of some bottomland hardwood
credits within the Basin to mitigate the conversion of cypress/tupelo swamp to
shrub scrub wetlands, the regulation says only this: “In general, in-kind
mitigation is preferable to out-of-kind mitigation . . . . Thus, except as provided
in paragraph (e)(2) of this section the required compensatory mitigation shall
be of a similar type to the affected aquatic resource.” § 332.3(e)(1). The critical
exception then authorizes out-of-kind compensatory mitigation “[i]f the district
engineer determines, using the watershed approach . . . that [it] will serve the
aquatic resource needs of the watershed.” § 332.3(e)(2). Further, “[t]he basis
for authorization of out-of-kind compensatory mitigation must be documented
in the administrative record for the permit action.” Id.
In sum, the Corps was authorized to employ out-of-kind credits within
the same watershed if they serve the aquatic resource needs of the watershed
and if the Corps’ reasoning is documented in the administrative record.
§ 332.3(e)(1), (2). That the out-of-kind credits here were within the watershed
is not disputed. What is questioned is whether the Corps sufficiently
documented how those credits serve the Basin’s aquatic resource needs.
No doubt in part because the Appellees did not highlight the Corps’ use
of the LRAM methodology, the district court was not attuned to the agency’s
reasoning about out-of-kind credits. However, because that methodology is of
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public record, and because its use forms a major portion of the 404 EA, we can
review the Corps’ decision within the proper administrative framework.
The LRAM is the type of “functional assessment” tool that the CWA
regulation advises “should be used” to “determine how much compensatory
mitigation is required.” § 332.3(f)(1). Although LRAM is not a formal agency
rule, it was published, subjected to comment by the public and numerous
federal and Louisiana state agencies, and revised following their input. The
LRAM states that its purpose is to “quantif[y] adverse impacts associated with
permit applications and environmental benefits associated with compensatory
mitigation” to determine the amount and type of credits necessary to offset a
given impact. The LRAM consists of nearly 50 pages addressing all types of
wetlands found in Louisiana, including bald cypress/tupelo swamp and
bottomland hardwoods. It uses the prescribed “watershed approach,” and it
assigns a numerical value to wetlands that will be affected by a Corps permit.
The value scores the “lost aquatic functions and services” and the acreage
affected by the permit, and it identifies mitigation banks in the same
watershed where credits can be purchased to offset any loss. Using scientific
data and numerous references, the LRAM scores wetlands impact based on
factors including (1) the number of acres affected by the prospective permitted
project; (2) how difficult particular wetlands are to replace; (3) habitat
condition; (4) hydrologic condition; (5) negative human influences; and
(6) permanent, partial or temporary loss. The LRAM assigns values to the
quality of the wetlands and of the mitigation banks, converts the values into
credits, and determines on a watershed basis how many acres in mitigation
banks must be purchased by the prospective permittee.
In general, the Supreme Court has held that the use of scientific
methodology like that contained in the LRAM is subject to particular judicial
deference. Marsh v. Oregon Nat. Res. Council, 490 U.S. 360, 377-78,
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109 S. Ct. 1851, 1861 (1989). More specifically, the Sixth Circuit has held that
the use of “structural proxies that rationally predict aquatic functionality”
“requires the exercise of complex scientific judgment and deference to the
Corps’ expertise.” Kentuckians for the Commonwealth v. U.S. Army Corps of
Eng’rs, 746 F.3d 698, 713 (6th Cir. 2014). Not to defer to the LRAM would be
an error by this court.
How the LRAM was utilized in the instant 404 EA is clearly referenced,
if not fully explained in background, in twelve pages. Each of the eight
watersheds crossed by this project is individually described, followed by a
summary description of the mitigation bank credits required for each, followed
by a summary chart for each watershed. Notably, although Appellees
challenge only the requirement for out-of-kind mitigation bank purchases in
the Atchafalaya Basin, they do not complain about similar out-of-kind credits
that were also applied to the Terrebonne watershed.
That the LRAM analysis “rational[ly] connect[ed]” the out-of-kind
mitigation bank purchases in the Basin to the “aquatic functions and services”
lost by the project is all that was required either by the CWA regulation, by
NEPA, or by the Supreme Court. Motor Vehicle Mfrs., 463 U.S. at 43,
103 S. Ct. at 2866-67.
First, Bayou Bridge was required to buy bottomland hardwood credits
within the Basin watershed only because it had already purchased all available
cypress/tupelo swamp credits. The Corps was entitled to make this decision
rather than revert to the less-preferred alternatives prescribed in the
regulations.
Second, the Corps’ responsibility under the CWA is to ensure the
protection of aquatic functions and services, which does not include the
protection of tree species as such. The LRAM, properly read and understood,
measures and scales precisely the aquatic functions and services characteristic
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of each type of Louisiana wetland and corresponding mitigation banks
containing those wetlands. The scales differed for bottomland hardwoods and
cypress/tupelo swamp on the basis of factors noted above. Appellees have not
challenged the scientific validity of the LRAM-based analysis and calculations.
Third, as the 404 EA clearly states, “[t]he Louisiana Wetland Rapid
Assessment Method was utilized to determine the acquisition of a total of 714.5
acres of suitable habitat credits, from approved mitigation banks within the
watershed of impact.” It was on the basis of the LRAM that the Corps
determined how many acres Bayou Bridge was required to purchase from
mitigation banks within the Basin. Whether bottomland hardwoods or
cypress/tupelo, both mitigation banks constitute wetlands, and the Corps
concluded that the required purchases made up for the temporary or
permanent conversion from one type of wetland (bottomland hardwood or
cypress/tupelo swamp) to scrub shrub wetland. And as has been mentioned,
Appellees did not contest the out-of-kind mitigation used in part to compensate
for wetland conversion in the Terrebonne watershed.
Fourth, citing Section 332.3(b)(2)-(6), the 404 EA’s discussion of required
compensatory mitigation bank purchases notes that the Corps’ conclusion
accords with “the preferred hierarchy as set forth by the USACE,” i.e. in-basin,
in-kind mitigation first; in-basin, out-of-kind second; etc.
Fifth, contrary to the district court’s skepticism about the Corps’
requirement of Best Management Practices during construction, the 404 EA
concludes its analysis with the following description of “Other Mitigative
Actions”:
(See Department of the Army permit Special Conditions.) The
applicant has avoided and minimized impacts to wetlands through
co-locating the proposed project with other utility ROW’s, the use
of horizontal directional drills, restrictions in construction ROW
width in wetlands [from 100’ to 75’], and restrictions in the width
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of permanently maintained ROW in wetlands [from 30’ to 15’].
These avoidance and minimization measures will result in avoided
wetland impacts.
In addition to the foregoing measures, the 404 permit requires Bayou Bridge
to “re-establis[h] pre-existing wetland contours and conditions immediately
following project completion.” The 404 EA also states that Bayou Bridge
agreed to place its pipeline at a sufficient depth not to impede future spoil bank
removal projects (from previous construction). Another permit condition warns
that modification or adjustments to the pipeline as built may be required “to
facilitate any future . . . hydrologic restoration projects.” The project’s permit
may be modified or even revoked if Bayou Bridge fails to produce photographic
evidence of compliance with the permit conditions.
Sixth, to the extent O’Reilly might be considered to require the Corps to
discuss mitigation alternatives under NEPA (irrespective of the distinction
between a FONSI and a “mitigated FONSI”), that case becomes readily
distinguishable when viewed in light of these EAs. O’Reilly predated and thus
did not involve the mitigation hierarchy and considerations set forth in
33 U.S.C. § 332.3. As Bayou Bridge points out, O’Reilly did not involve
mitigation banks approved under Section 332.8, nor an LRAM-type functional
assessment tool. This court’s decision rested on the fact that the Corps
supplied “only cursory detail as to what” mitigation measures were required or
how they operated. O’Reilly, 477 F.3d at 234. In evaluating this project, the
Corps conducted careful research; hewed to the governing regulations and the
scientifically based LRAM tool; conditioned the permit in accordance with
evolved best management practices; required purchases of acreage within
mitigation banks that will provide the optimal replacement of lost aquatic
functions and services; and produced two significantly reasoned EAs.
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Finally, this explanation of the Corps’ decision process is readily
understood on the basis of the EAs, supplemented by the publicly available
LRAM. That the district court’s opinion did not express this understanding no
doubt is partly attributable to its expedited judicial process, which pressed the
parties’ presentations and lacked the full administrative record. But
regardless of these difficulties, the record suffices to supply a “rational
connection” between the facts about the project and its CWA implications and
the ultimate decision rendered. The Corps’ decision was thus not “arbitrary
and capricious.”
D. Analysis of “cumulative impacts”
The district court asserted that the Corps “myopically” considered this
project’s impacts alone, and it found the EAs deficient for failing to evaluate
the pipeline project’s impact cumulatively with the effect of spoil banks left
from past projects and an alleged history of noncompliance with prior Corps-
approved permits. These criticisms misread the applicable statute and the
EAs. Under NEPA, agencies must consider each “cumulative impact” of
permitted actions, and that term is defined as “the impact on the environment
which results from the incremental impact of the action when added to other
past, present, and reasonably foreseeable future actions.” 40 C.F.R. § 1508.7
(emphasis added). Here, the EAs concluded that because of appropriate
mitigation measures, in terms of construction conditions and limitations in the
permit, and Bayou Bridge’s purchase of compensatory mitigation bank
acreage, there would be no incremental impact; hence, there could be no
cumulative effects with regard to pre-existing spoil banks.
The 408 EA specifically acknowledged past, present and reasonably
foreseeable future actions, including previous pipelines, and maintained its
conclusion that there would be no adverse results from temporary discharges
during this construction. The 404 EA states that the district commander
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reviewed the 408 EA before coming to a finding of no significant impact. The
404 EA does discuss cumulative effects on the environment. It concluded that
“through the efforts taken to avoid and minimize effects . . . and the mandatory
implementation of a mitigation plan . . . permit issuance will not result in
substantial direct, secondary or cumulative adverse impact on the aquatic
environment.”
Although the district court focused on the potential of the project for
wetland alteration or loss, the EA states: “Resulting natural resource
challenges and stresses include permanent loss of wetlands (of which this
project constitutes temporary or conversion impacts, not permanent wetland
loss), loss of wildlife habitat, and impacts to water quality. A key issue(s) of
concern in this watershed is loss of wetland function and value.” (emphasis
added). Not only does this clearly signify no permanent wetland loss, but also,
after explaining mitigation for temporary impacts, monitoring and mitigation
bank purchases in accord with LRAM, the EA states: “Appropriate
compensatory mitigation was purchased at these banks to offset unavoidable
impacts to wetlands that would result from permit issuance.” (emphasis
added). Finally, to recapitulate the permit conditions mentioned previously,
Bayou Bridge’s construction, according to the permit, will leave the smallest
possible footprint and will in several ways be accomplished without hindering
possible future efforts to remove old spoil banks left by prior construction. In
addition, the Corps is authorized under the permit to require replanting of
desirable native tree species and undertake additional compensatory
mitigation, further remediation actions, and/or further monitoring if the initial
mitigation proves inadequate.
The Corps’ analysis is not “myopic” with respect to “cumulative impacts”
from other projects in the past. Our sister circuit has held that a finding of no
incremental impact relieves an agency of the necessity of extensive and
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ultimately uninformative discussion of cumulative effects pursuant to this
regulation. See Nw. Envtl. Advocates v. Nat’l Marine Fisheries Serv., 460 F.3d
1125, 1140-41 (9th Cir. 2006); Northern Plains Res. Council, Inc. v. Surface
Transp. Bd., 668 F.3d 1067, 1082 (9th Cir. 2011); cf. Louisiana Crawfish
Producers Ass’n-West v. Rowan, 463 F.3d 352, 359 (5th Cir. 2006) (“The fact
that the area is suffering environmental losses is part of the past cumulative
impacts study but is not relevant to a finding of future impacts flowing from
the project”) (emphasis added). The Corps acknowledged extrinsic past impacts
on the Basin and explained how this permit will not only remediate the impacts
of this project but will not interfere with further efforts to restore the
watershed.
The court’s concern about cumulative effects based on the alleged past
noncompliance with Corps permit conditions is also misplaced. Not only did
some of those projects predate the Clean Water Act, but Appellants’ factual
information undermines specific charges made by Appellees about certain
permit holders. And in any event, the court’s fear of insufficient Corps
monitoring activity contravenes “the presumption that public officers
discharge[] their duties according to law.” Chaney v. United States, 406 F.2d
809, 813 (5th Cir. 1969). The treatment of “cumulative impacts” by the EAs
was not deficient, much less arbitrary and capricious.
CONCLUSION
For the foregoing reasons, the EAs concerning this permit do not exhibit
the Supreme Court’s criteria for an “arbitrary and capricious” decision. The
agency decision did not “rel[y] on factors which Congress has not intended it to
consider, entirely fail[] to consider an important aspect of the problem, offer[]
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.” Motor Vehicle Mfrs. Ass’n, 463 U.S. at 43,
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103 S. Ct. at 2867. Further, because the court misapplied applicable legal
principles and inadvertently but critically overlooked the LRAM, its decision
was an abuse of discretion. The preliminary injunction is VACATED and
REMANDED for further proceedings.
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REAVLEY, Circuit Judge, dissenting:
We have the law. To compensate for the destruction of environmentally
protected wetlands, a permit must identify acreage apart that will protect the
environment and compensate for what is destroyed. The administrative record
must demonstrate how that decision was made, such that we uphold the
decision not for its correctness but for its rational support.
The district judge carefully studied the justification here and saw that
gaps exist without more than conclusions. Now, the circuit court skips over
those gaps. I dissent and explain myself in two respects.
A. Out-of-Kind Mitigation and the Clean Water Act
The pipeline project will clear 262 acres of wetlands in the Atchafalaya
Basin. That process will impact two resource types: cypress-tupelo swamp and
bottomland-hardwood forest. In turn, the Corps applied its functional
assessment tool (the Louisiana Rapid Assessment Method, or LRAM) and
determined that the project’s impact called for the purchase of 232.8 acres of
cypress-tupelo swamp and 80 acres of bottomland-hardwood forest from
mitigation banks. But in what the Corps labels an “unfortunate[]” turn of
events, one of the chosen mitigation banks did not have the number of
cypress-tupelo acres necessary to match a fully in-kind mitigation. So the
Corps sanctioned instead the purchase of 69 cypress-tupelo acres and 243.8
bottomland-hardwood acres. In other words, the Corps offset cypress-tupelo
harm with 69 in-kind cypress-tupelo acres and 163.8 out-of-kind
bottomland-hardwood acres. The Corps thereby swapped each acre of
unaccounted-for cypress tupelo with an acre of surplus bottomland hardwood—
it treated the two resource types interchangeably.
Under the Clean Water Act and its corresponding regulations, before the
Corps could order the above out-of-kind swap, it bore a duty to (1) determine
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that such mitigation “will serve the aquatic resource needs of the watershed”
and (2) so document that “basis for authorization . . . in the administrative
record.” 33 C.F.R. § 332.3(e)(2).
The court believes a satisfactory explanation lies in the Corps’ LRAM
tool. I disagree. The LRAM lacks a critical explanatory component and thereby
leaves the Corps’ out-of-kind mitigation unsubstantiated.
The court explains the LRAM’s function as follows: “[T]he LRAM scores
wetlands impact based on [various] factors . . . [and] assigns values to the
quality of the wetlands and of the mitigation banks, converts the values into
credits, and determines on a watershed basis how many acres in mitigation
banks must be purchased by the prospective permittee.” In elementary terms,
the LRAM compares land to land (impact site to mitigation bank) and
calculates a ratio that, when applied to impacted acres, produces a suggested
quantity of mitigation acres.
However, the Corps still must accommodate another variable: resource
type. The regulations prefer in-kind over out-of-kind mitigation precisely
because different resource types supply different functions, or said another
way, similar resource types are “most likely to compensate for the functions
and services lost at the impact site.” 33 C.F.R. § 332.3(e)(1). To that end, the
LRAM identifies a laundry list of habitats and groups them into six resource
categories: bottomland-hardwood forest, cypress-tupelo swamp, pine
flatwoods-savanna, coastal prairie, fresh-intermediate marsh, and
brackish-saline marsh. Each category encompasses habitats that either
provide “similar wetland functions or naturally exist together as a community.”
The LRAM then highlights the presumption that “in-kind habitat
replacement” will “assure similar functions and services that are lost at an
impact site are gained at a mitigation site.” Thus, when the Corps applies
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in-kind mitigation to the LRAM’s calculated acreage, there is no need to
manipulate the end product because the Corps’ path is self-explanatory—the
ecological functions intrinsic to both parcels and resource types are fully
documented on both sides of the mitigation equation.
But when the Corps substitutes on the back end a resource that is out of
kind—defined by the LRAM as “a resource of a different structural and
functional type from the impacted resource”—the LRAM can no longer rely on
a presumption of like functions for like resources. How, then, does the LRAM
go about accounting for the variation between the resource impacted on the
front end and the one purchased on the back end? The LRAM’s ratio itself does
not factor in the resource type purchased on the back end. So, lest we assume
that the LRAM’s calculated acreage is entirely fungible across all resource
types—something no party or the court goes so far as to suggest—there must
be something else in the LRAM to translate impacts from one resource to
another (in this case, to justify the one-to-one substitution of bottomland
hardwood for cypress tupelo).
In that crucial respect, the LRAM is conspicuously silent. It mentions
“out of kind” a single time: to define the term. Nowhere does the LRAM explain
how to quantify impacts to one resource in terms of another, much less how
cypress tupelo and bottomland hardwood—habitats of a “different structural
and functional type”—can swap seamlessly for each other in terms of the
basin’s resource needs. As useful as it otherwise may be, the LRAM is simply
not a tool for out-of-kind mitigation.
Nor does the Corps’ Section 404 Environmental Assessment bridge the
explanatory gap. There the Corps grounded its out-of-kind swap on the bare
fact that “there [were] not enough [in-kind] credits available for purchase in
the basin.” But lack of in-kind credits, standing alone, says nothing of the
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“resource needs” of the basin—the principal consideration that must
accompany any order of out-of-kind mitigation. 33 C.F.R. § 332.3(e)(2).
The Corps did not meet its regulatory burden to explain out-of-kind
mitigation in this case. From the administrative record, then, the Corps’ “path
may [not] reasonably be discerned.” Nat’l Ass’n of Home Builders v. Defs. of
Wildlife, 551 U.S. 644, 658 (2007) (internal quotation marks omitted). The
district court was therefore correct to enjoin construction.
B. Mitigated Versus Ambiguous Findings of No Significant Impact
Whatever the ultimate merits of the plaintiffs’ claim under the National
Environmental Policy Act, we ought to at least apply the right standard. I
disagree with the court’s decision to adopt various tiers of scrutiny between
those so-called “mitigated Findings of No Significant Impact” (FONSIs) and
those other FONSIs in which mitigation plays a prominent but facially
ambiguous role.
In O’Reilly v. United States Army Corps of Engineers, 477 F.3d 225 (5th
Cir. 2007), we held insufficient an Environmental Assessment “that fail[ed] to
articulate how the mitigation measures will render the adverse effects
insignificant.” Id. at 227. The Corps argues, however, that O’Reilly’s scrutiny
applies only to mitigated FONSIs, those in which an agency engages in a
two-part finding: (1) project impacts alone would be significant but (2) with
mitigation, the impacts are reduced to insignificance. This case, the Corps says,
does not involve a mitigated FONSI because the agency considered the project
impacts and mitigation all at once before issuing a single finding of no
significant impact. The Corps draws its labels for this distinction from a 2011
guidance document. See 76 Fed. Reg. 3843, 3847–48. And the court appears to
accept the Corps’ distinction wholesale.
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But that distinction is all form with no substance. O’Reilly stands for a
fundamental proposition: When mitigation is a necessary part of a FONSI, the
agency bears a duty to explain why the mitigation will be effective. 477 F.3d at
231–32. Thus framed, there are but two types of FONSIs under O’Reilly:
(1) those in which mitigation is an integral part of the insignificant outcome
and (2) those in which the mitigation is ultimately gratuitous—that is, when
the impacts would be insignificant even without mitigation. There is no third
option.
Of course, the manner in which an agency arrives at its FONSI can make
the role of mitigation apparent on the face of the administrative record. When
the agency issues a formal mitigated FONSI, we know for sure that mitigation
was an integral piece. But, as here, when the Environmental Assessment
lumps project impacts and mitigation into a single consideration with no
further explication, the record obscures whether the impacts would have been
significant absent the mitigation. All the same, these facially ambiguous
assessments can involve necessary mitigation. And that is more than common
sense talking; the Corps’ own guidance document tells us that ambiguous
assessments might well involve mitigation that “reduce[s] the projected
impacts of agency actions to below a threshold of significance.” 76 Fed. Reg.
3843, 3847. In such a case, there is zero substantive difference between a
mitigated FONSI and a facially ambiguous one and, as a consequence, zero
reason to treat the two any different.
So, the question becomes, was mitigation necessary to this project’s
insignificant impact? On the one hand, the Corps is unwilling to concede that
mitigation was necessary to reduce the project’s impact to insignificance. This
despite the pages and pages of the Environmental Assessment detailing the
hundreds of acres of shredded wetlands and corresponding compensatory
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mitigation. See 33 C.F.R. § 320.4(r)(1) (explaining that compensatory
mitigation is meant to rectify “significant resource losses”) (emphasis added).
Nonetheless, that must necessarily mean the project’s impacts would be
insignificant even without mitigation. But as it so happens, the Corps is
unwilling to say that either. And therein lies the paradox—the ambiguous
record here enables the Corps to tiptoe on a nonexistent fence between the only
two realities: mitigation that matters and mitigation that does not.
When an agency cloaks the importance of mitigation behind an
ambiguous administrative record, I would hold the agency to the standard
articulated in O’Reilly.
I respectfully dissent.
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