Friends of the Payette v. Horseshoe Bend Hydroelectric Co.

• Citation: 988 F.2d 989
• Decision Date: 19 March 1993
• Docket Number: No. 92-36611,92-36611
• Parties: 23 Envtl. L. Rep. 20,530 FRIENDS OF THE PAYETTE, and Idaho Rivers United, Inc., Plaintiffs-Appellants, v. HORSESHOE BEND HYDROELECTRIC CO.; United States Army Corps of Engineers; Robert Volz, District Engineer of United States Army Corps of Engineers, Defendants-Appellees.
• Court: United States Courts of Appeals. United States Court of Appeals (9th Circuit)

Page 989

988 F.2d 989

23 Envtl. L. Rep. 20,530

FRIENDS OF THE PAYETTE, and Idaho Rivers United, Inc., Plaintiffs-Appellants, v. HORSESHOE BEND HYDROELECTRIC CO.; United States Army Corps

of Engineers; Robert Volz, District Engineer of

United States Army Corps of Engineers,

Defendants-Appellees.

No. 92-36611.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted Jan. 5, 1993.

Decided March 19, 1993.

Jim Jones, Boise, ID, for plaintiffs-appellants.

D. Marc Haws, Asst. U.S. Atty., Boise, ID, David P. Hirschi, Salt Lake City, UT, for defendants-appellees.

Appeal from the United States District Court for the District of Idaho.

Before: WRIGHT, Senior Circuit Judge, and FARRIS and KLEINFELD, Circuit Judges.

EUGENE A. WRIGHT, Senior Circuit Judge:

Two environmental groups allege that the Army Corps of Engineers violated the National Environmental Policy Act by issuing a dredge-and-fill permit for a hydroelectric project without preparing an environmental impact statement. Because we conclude that the Corps' action was not arbitrary and capricious, we affirm the district court's dismissal of the action.

I

On March 10, 1992, the Horseshoe Bend Hydroelectric Company began construction of a 9.5-megawatt hydroelectric generating facility on the Payette River near Horseshoe Bend, Idaho. When completed, the facility will work as follows: An inflatable bladder diversion dam will divert up to 3,500 cubic feet of water per second from a four-and-a-half-mile stretch of the river, routing the water down a diversion canal to a power house. The water will then pass over the powerhouse turbines before returning to the river. A minimum flow of 400 cfs will remain in the river channel, also known as the bypass stretch.

The facility is being built at the site of a decommissioned run-of-the-river hydroelectric project, which operated from 1902 to 1954. The new project will expand and use the old project's diversion canal, which had contained valuable wetlands. Project construction has almost completely destroyed those wetlands.

Before starting construction, HBHC and its predecessor in interest, the Boise Cascade Corporation, had to obtain the approval of several state and federal agencies. In July 1986, the Federal Energy Regulatory Commission issued a license for the project to Boise Cascade. Before doing so, FERC prepared an environmental assessment in August 1984 and a supplemental EA in April 1986. Both concluded that the project would not significantly affect the environment. In April 1987, FERC approved Boise Cascade's transfer of its license to HBHC.

HBHC then obtained the necessary state permits allowing it to appropriate water from the river, gain construction access to state-owned lands and build the dam. Lastly, HBHC needed to secure a dredge-and-fill permit from the Army Corps of Engineers. The permit, required by section 404 of the Clean Water Act, would allow HBHC to place dredged or fill material in the river. See 33 U.S.C. § 1344 (1988). HBHC applied for the permit on December 9, 1991. The Corps issued it on March 30, 1992. Although interested parties requested a public hearing, the Corps did not hold one.

Like FERC, the Corps found that the project would not significantly impact the environment within the meaning of the National Environmental Policy Act. Therefore, the agency did not prepare an EIS, but issued instead an EA and a finding of no significant impact. The § 404 permit has 17 conditions designed to mitigate environmental harm.

Friends of the Payette and Idaho Rivers United, Inc., two environmental organizations, filed suit, claiming that the Corps' actions violated NEPA and the Clean Water Act. ¹ They sought a declaration that the Corps had not complied with NEPA and the CWA and an injunction halting the project pending preparation of an EIS.

The district court set the case for trial. Because it found that admission of almost all extra-record evidence was unwarranted, however, the court disallowed the testimony of 13 of Payette's 14 proposed witnesses. It reviewed the Corps' actions based solely on the administrative record and the testimony of William McDonald, the Corps employee who prepared the EA. The court dismissed the suit, holding that the Corps' decision was reasonable.

Payette raises four issues on appeal: (1) whether the Corps' failure to prepare an EIS was reasonable, (2) whether the court erred in holding that the agency's jurisdiction over wetlands in the diversion canal was moot, (3) whether the Corps' permit-granting procedure was flawed for failure to allow adequate public comment and (4) whether the court erred by refusing to allow extra-record evidence. Payette also asks for attorneys fees.

II

A. Decision Not to Prepare EIS

NEPA requires federal agencies to prepare a detailed EIS for "major Federal actions significantly affecting the quality of the human environment." 42 U.S.C. § 4332 (1988). The Corps concedes that the project constitutes a major Federal action. The issue is whether the Corps properly determined that the project will not significantly affect the environment.

After the district court's June 1992 order dismissing the action, we adopted a new standard for reviewing an agency's decision not to prepare an EIS. We no longer employ a "reasonableness" standard. In Greenpeace Action v. Franklin, 982 F.2d 1342, 1350 (9th Cir.1992), we held that "when a litigant challenges an agency determination on grounds that, in essence, allege that the agency's 'expert review ... was incomplete, inconclusive, or inaccurate,' ... the arbitrary and capricious standard is appropriate." (quoting Marsh v. Oregon Natural Resources Council, 490 U.S. 360, 376-77, 109 S.Ct. 1851, 1860-61, 104 L.Ed.2d 377 (1989)). We still must ensure that an agency has taken a "hard look" at the environmental consequences of its action and that its decision is "founded on a reasoned evaluation 'of the relevant factors.' " Id. at 1350 (quoting Marsh, 490 U.S. at 378, 109 S.Ct. at 1861). If we are convinced that its discretion is truly informed, however, we must defer to that discretion. Id.

Payette cites ten bases for its contention that the Corps' decision not to prepare an EIS was erroneous. We reject the contention, but will discuss each basis in turn.

1. Wetlands

Payette contends that the Corps erroneously determined that wetlands will not be affected significantly. The Corps concluded that the mitigation measures required by the permit compensated for any adverse impacts.

We can consider the effect of mitigation measures in determining whether preparation of an EIS is necessary. Friends of Endangered Species, Inc. v. Jantzen, 760 F.2d 976, 987 (9th Cir.1985). If significant measures are taken to " 'mitigate the project's effects,' they need not completely compensate for adverse environmental impacts." Id. (quoting Preservation Coalition, Inc. v. Pierce, 667 F.2d 851, 860 (9th Cir.1982)).

The Corps verified an environmental consultant's estimate that 69.45 acres of wetlands were within the project area. Without mitigation, 30.99 acres of riparian habitat would be lost. Strategic placement of boulders to raise the river stage and irrigation flows from uphill mitigation lands would reduce the loss to 24.69 acres. To compensate for this loss, the Corps required HBHC to implement a mitigation plan that would create 66.64 acres in new wetlands through use of water channels, grass seeding, and tree and shrub planting. The plan also requires monitoring and supplemental mitigation measures if revegetation goals are not met.

Although the measures may not compensate completely for adverse impacts, they are significant. The Corps' conclusion that wetlands would not be affected significantly was not arbitrary and capricious.

2. Water Quality

Payette asserts that the Corps relied inappropriately on the Idaho Department of Environmental Quality's certification of compliance with state water quality standards. IDEQ granted the certification after HBHC agreed to implement a three-year water quality monitoring program following project construction. If monitoring indicates violations of state standards, HBHC must adopt a mitigation plan. Payette contends that this after-the-fact monitoring cannot supplant before-the-fact evaluation and discussion of mitigation measures. It argues that the project will have a significant impact on water quality due to a decrease in oxygen and increases in temperature, light penetration and aquatic plant stimulation.

The district court noted that although the Corps cannot know exactly how the project will affect water quality, the Corps had reviewed studies attempting to model project impacts. The Corps' reliance on these studies and on a monitoring program that should identify problems before they become serious is not arbitrary and capricious.

3. Fisheries

Next, Payette argues that the EA did not adequately consider the project's impact on the fishery in the bypass stretch. The Corps concedes that decreased flows and power turbines will kill fish and that although the power canal will provide run habitat, it will lack other diversity. The Corps' permit, however, requires mitigation measures to compensate for these losses. These measures include (1) a plan to enhance fish habitat in nearby Shaffer Creek, (2) an improved monitoring plan, and (3) additional mandatory mitigation measures if monitoring shows that the mitigation plan has not achieved acceptable results. The measures were strengthened at the insistence of the Fish and Wildlife Service, which approved the project. The Corps' determination that the project would not significantly affect fisheries was not arbitrary and capricious.

4. Endangered Species

Payette contends that the Corps did not evaluate the project's impact on the bald eagles that winter in the project area. We disagree. The Corps, in consultation with the FWS, included two permit conditions designed to protect the eagles and...