Shafer & Freeman Lakes Envtl. Conservation Corp. v. Fed. Energy Regulatory Comm'n

• Decision Date: 26 March 2021
• Docket Number: No. 19-1066,19-1066
• Citation: 992 F.3d 1071
• Parties: SHAFER & FREEMAN LAKES ENVIRONMENTAL CONSERVATION CORPORATION, et al., Petitioners v. FEDERAL ENERGY REGULATORY COMMISSION, Respondent Northern Indiana Public Service Company and United States Department of the Interior, Intervenors
• Court: U.S. Court of Appeals — District of Columbia Circuit

992 F.3d 1071

SHAFER & FREEMAN LAKES ENVIRONMENTAL CONSERVATION CORPORATION, et al., Petitioners

v.FEDERAL ENERGY REGULATORY COMMISSION, Respondent

Northern Indiana Public Service Company and United States Department of the Interior, Intervenors

No. 19-1066

United States Court of Appeals, District of Columbia Circuit.

Argued October 5, 2020

Decided March 26, 2021

Robert O. Fleming Jr., Atlanta, GA, argued the cause for petitioners. With him on the briefs was Alan I. Saltman.

Elizabeth E. Rylander, Attorney, Federal Energy Regulatory Commission, argued the cause for respondent. With her on the brief were David L. Morenoff, Acting General Counsel at the time the brief was filed, and Robert H. Solomon, Solicitor. Robert M. Kennedy Jr. and Beth G. Pacella, Attorneys, entered appearances.

Justin D. Heminger, Attorney, U.S. Department of Justice, argued the cause for intervenor U.S. Department of the Interior in support of respondent. With him on the brief were Jeffrey Bossert Clark, Assistant Attorney General at the time the brief was filed, Eric Grant, Deputy Assistant Attorney General at the time the brief was filed, and Robert J. Lundman, Attorney.

Charles R. Sensiba, Washington, DC, J. Houston Shaner, Atlanta, GA, Michael Bryan Little, Merrillville, IN, and Angela J. Levin, San Francisco, CA, were on the brief for intervenor Northern Indiana Public Service Company, LLC in support of respondent.

Before: Rogers and Millett, Circuit Judges, and Sentelle, Senior Circuit Judge.

Millett, Circuit Judge:

In the dry summer of 2012, scientists from the United States Fish and Wildlife Service discovered that endangered mussels were dying on the banks of the Tippecanoe River in northwest Indiana. The Service placed responsibility on the upstream Oakdale Dam, which significantly restricts the flow of water downstream in order to generate hydroelectricity and to create a lake behind the dam. In the ensuing years, the Service worked with the dam operator to develop new procedures that would require the dam to release more water during drought periods. After a lengthy process of interagency cooperation and public dialogue, these new procedures were approved by the Federal Energy Regulatory Commission, which is the federal agency with licensing authority over hydroelectric dams on federally regulated waters.

Concerned about these changes to the dam's operations, several local governmental entities and a non-profit organization have petitioned for review of both the Commission's decision and the Fish and Wildlife Service's Biological Opinion upon which the Commission relied. We conclude that many of the petitioners’ challenges to the validity of the Biological Opinion were not raised on rehearing before the Commission and so are not properly before us. We otherwise find no error in the agencies’ expert scientific analyses. But we hold that the agencies failed to adequately explain why the new dam procedures do not violate a regulation prohibiting the Fish and Wildlife Service from requiring more than "minor" changes to the Commission's proposal for dam operations. Because vacating the agencies’ decisions would subject the dam operator to contradictory legal obligations imposed by separate agencies, we grant the petition in part, deny the petition in part, dismiss the petition in part, and remand to the Commission without vacatur for further proceedings consistent with this opinion.

I

A

The Endangered Species Act instructs the Secretary of the Interior and the Secretary of Commerce to make a list of all species that are either "endangered" or "threatened[.]" 16 U.S.C. § 1533. The Act then forbids "any person" to "harass, harm, pursue, hunt, shoot, wound, kill, trap, capture, or collect" any endangered species—a set of prohibited acts collectively referred to as "take." Id. §§ 1532(19), 1538(a)(1)(B). Violation of this prohibition can lead to civil and criminal liability. Id. § 1540.

The Act also imposes specific responsibilities on all other federal agencies. See 16 U.S.C. § 1536. As relevant here, before a federal agency can grant a license or permit to a private party, the agency must ensure that its action is "not likely to jeopardize the continued existence of any endangered species or threatened species or result in the destruction or adverse modification of [the critical] habitat of such species[.]" Id. § 1536(a)(2).¹ To give effect to that obligation, the Act creates a system of "[i]nteragency cooperation," in which the federal agency proposing to act (known as the "action agency") must "consult" with one of the two expert wildlife agencies—the Fish and Wildlife Service (which is part of the Department of the Interior) or the National Marine Fisheries Service (which is within the Department of Commerce)—whenever it is contemplating a project that might affect a listed species. Id. § 1536(a)(3) ; see City of Tacoma v. FERC , 460 F.3d 53, 75 (D.C. Cir. 2006). This consultation process "reflects Congress's awareness that [those] expert agencies * * * are in the best position to make discretionary factual determinations about whether a proposed agency action will create a problem for a listed species and what measures might be appropriate to protect the species." City of Tacoma , 460 F.3d at 75.

While the consultation process can take a variety of forms, the action agency often performs a preliminary review to determine whether the proposed action could affect any listed species. See 50 C.F.R. § 402.14(a) ; see also 16 U.S.C. § 1536(c) ; 50 C.F.R. §§ 402.10 – 402.13. If the action agency determines—and the wildlife agency concurs—that no listed species or critical habitats are likely to be adversely affected, then no formal consultation is required. 50 C.F.R. § 402.14(b)(1). But if either the action agency or the wildlife agency concludes that the proposed action "may affect" a listed species or its critical habitat, then a formal consultation begins. Id. § 402.14(a).

That interagency process culminates in the wildlife agency issuing a "biological opinion." See 16 U.S.C. § 1536(b) ; 50 C.F.R. § 402.14. A Biological Opinion is a document in which the wildlife agency comprehensively examines the proposed action's anticipated effects on listed species and critical habitat. See 16 U.S.C. § 1536(b)(3)(A) ; 50 C.F.R. § 402.14(h). In particular, the wildlife agency must give its opinion on whether the proposed action is "likely to jeopardize the continued existence of [a listed] species or result in the destruction or adverse modification of [critical] habitat"—that is, whether the action would violate the Endangered Species Act. See 16 U.S.C. § 1536(a)(2) ; 50 C.F.R. § 402.14(h)(1)(iv). If the wildlife agency concludes that the action is likely to jeopardize the continued existence of a listed species, its Biological Opinion must provide the action agency with "reasonable and prudent alternatives" (if any) to the proposed action that would prevent such harm and avoid a violation of the Act. See 50 C.F.R. § 402.14(h)(1)(iv)(A), (h)(2). On the other hand, if the wildlife agency concludes that the proposed action is not likely to jeopardize the continued existence of any listed species, the wildlife agency issues a "no jeopardy" Biological Opinion, which gives the action agency a green light to proceed consistent with the Endangered Species Act. See 50 C.F.R. § 402.14(h)(1)(iv)(B).

Even if the proposed action will not "jeopardize the continued existence" of a listed species, it may still cause some harm to the species. That type of harm is referred to as "incidental take." See 50 C.F.R. § 402.14(i). When such harm is reasonably certain to occur, the wildlife agency must include an "Incidental Take Statement" as part of its Biological Opinion. See 16 U.S.C. § 1536(b)(4) ; 50 C.F.R. § 402.14(g)(7), (i). As relevant here, the Incidental Take Statement (i) specifies the extent of the anticipated take, (ii) identifies any "reasonable and prudent measures" that the wildlife agency considers "necessary or appropriate to minimize such impact," and (iii) sets forth detailed "terms and conditions" that the action agency or licensed private party must undertake to implement those reasonable and prudent measures. 16 U.S.C. § 1536(b)(4) ; see also 50 C.F.R. § 402.14(i). Most relevantly for this case, the Fish and Wildlife Service ("Service") regulations provide that the "reasonable and prudent measures" in an Incidental Take Statement "cannot alter the basic design, location, scope, duration, or timing of the action and may involve only minor changes" to the proposed federal agency action. 50 C.F.R. § 402.14(i)(2).

So long as the action agency and private parties implement the "reasonable and prudent measures" and the associated "terms and conditions[,]" the Incidental Take Statement provides a safe harbor from any civil or criminal liability associated with incidental take. See 16 U.S.C. § 1536(o )(2) ; Sierra Club v. United States Army Corps of Eng'rs , 803 F.3d 31, 36 (D.C. Cir. 2015).

Once the wildlife agency has issued its Biological Opinion (including any Incidental Take Statement), the action agency must "determine whether and in what manner to proceed with the action in light of its [ 16 U.S.C. § 1536 ] obligations and the Service's biological opinion." See 50 C.F.R. § 402.15(a). The Supreme Court has observed that, while the Biological Opinion "theoretically serves an advisory function, in reality it has a powerful coercive effect on the action agency." Bennett v. Spear , 520 U.S. 154, 169, 117 S.Ct. 1154, 137 L.Ed.2d 281 (1997) (formatting modified). That is because the action agency and private parties are shielded from civil and criminal liability only if they comply with the wildlife agency's recommendations. "The action agency is technically free to disregard the Biological Opinion and proceed with its proposed action, but it does so at its own peril (and that of its employees)[.]" Id. at 170, 117 S.Ct. 1154.

B

The Federal Power Act gives...