Sierra Club v. Van Antwerp

• Decision Date: 30 January 2012
• Docket Number: 10–5345.,10–5297,Nos. 10–5284,s. 10–5284
• Citation: 661 F.3d 1147,398 U.S.App.D.C. 233
• Parties: SIERRA CLUB, et al., Appellees v. Robert L. VAN ANTWERP, Lieutenant General, U.S. Army Corp of Engineers, et al., Appellees.
• Court: U.S. Court of Appeals — District of Columbia Circuit

398 U.S.App.D.C. 233

661 F.3d 1147

SIERRA CLUB, et al., Appellees

v.Robert L. VAN ANTWERP, Lieutenant General, U.S. Army Corp of Engineers, et al., Appellees.

Nos. 10–5284

10–5297

10–5345.

United States Court of Appeals, District of Columbia Circuit.

Argued Sept. 22, 2011.Decided Nov. 29, 2011.As Amended Jan. 30, 2012.

Appeals from the United States District Court for the District of Columbia (No. 1:07–cv–01756).Lane N. McFadden, Attorney, U.S. Department of Justice, argued the cause for federal appellants. With him on the briefs was Lisa E. Jones, Attorney. Jessica O'Donnell, Attorney, and R. Craig Lawrence, Assistant U.S. Attorney, entered appearances.

Douglas M. Halsey, T. Neal McAliley, and Angela D. Daker were on the briefs for appellants Sierra Properties I, LLC, et al.

Eric R. Glitzenstein argued the cause for appellees Sierra Club, et al. With him on the briefs was Howard M. Crystal.

Before: GARLAND and KAVANAUGH, Circuit Judges, and WILLIAMS, Senior Circuit Judge.

Opinion for the Court filed by Senior Circuit Judge WILLIAMS.

WILLIAMS, Senior Circuit Judge:

In 2007 the U.S. Army Corps of Engineers issued a permit authorizing the discharge of dredge and fill material into specified wetlands outside Tampa, Florida; it thereby enabled construction of a large mall. A number of firms are involved on the permittee's side in these appeals, but we will simplify by referring to them all, as well as the project, as “CCTC,” standing for “Cypress Creek Town Center.” Three environmental groups (collectively referred to as the “Sierra Club”) brought suit in district court to challenge issuance of the permit. (The suit names the heads of the Department of the Interior and the U.S. Fish and Wildlife Service as well, but we treat the Corps as a stand-in for all federal defendants.) Plaintiffs invoked three statutes: the National Environmental Policy Act (“NEPA”), the Clean Water Act (“CWA”), and the Endangered Species Act (“ESA”). After some complications described below, the district court issued a decision finding that the Corps had not fully complied with its obligations under NEPA and the CWA, but rejecting the plaintiffs' ESA claim. It granted summary judgment for the Sierra Club on the first two claims and for the Corps on the third. Sierra Club v. Van Antwerp, 719 F.Supp.2d 58 (D.D.C.2010).

CCTC and the Corps appealed, and the Sierra Club cross-appealed. We affirm in part, reverse in part, and remand, concluding that the Corps did satisfy the demands of the three relevant statutes, except for failing to respond, in its treatment of the NEPA and ESA requirements, to a material contention as to the project's impact on an endangered species, the eastern indigo snake.

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Because CCTC proposed to discharge dredge and fill material into wetlands classified as “waters of the United States,” it was required to secure a permit from the Corps under § 404 of the CWA, 33 U.S.C. §§ 1311(a), 1362(7). The Corps originally issued the permit in 2007, allowing CCTC to discharge such material into about 54 acres of wetlands. In exchange, the Corps required various conservation measures, including the preservation, creation, or enhancement of wetlands on about 13 acres of the project site and nearly 120 acres offsite. The Sierra Club filed suit in October 2007, but soon thereafter the Corps observed two unauthorized discharges of “sediments and turbid water” from the project site into nearby Cypress Creek, and accordingly suspended the permit. The district court granted the Corps's request to remand the case to it for a reevaluation of the permit. After issuing a new public notice, the Corps determined that the discharges were the product of “human error” rather than a flaw with the project itself. It reinstated the permit in September 2009, but required additional “corrective measures.” The Sierra Club filed a revised complaint challenging the new permit. The district court granted split summary judgments as noted above.

As we review grants of summary judgment de novo, we are on this appeal in reality reviewing the decision of the Corps, not that of the district court. Natural Resources Defense Council v. Daley, 209 F.3d 747, 752 (D.C.Cir.2000). Our review is governed by the usual standards of 5 U.S.C. § 706(2)(A) and Motor Vehicle Mfrs. Ass'n v. State Farm, 463 U.S. 29, 103 S.Ct. 2856, 77 L.Ed.2d 443 (1983).

* * *

CWA. The governing regulations bar the Corps from granting a CWA fill permit when “[t]here is a practicable alternative to the proposed discharge that would have less adverse effect on the aquatic ecosystem.” 40 C.F.R. § 230.12(a)(3)(i). They specify that “[a]n alternative is practicable if it is available and capable of being done after taking into consideration cost, existing technology, and logistics in light of overall project purposes.” 40 C.F.R. § 230.10(a)(2). If (as here) a project's purpose does not require proximity to water, “practicable alternatives that do not involve special aquatic sites [such as wetlands, see id. § 230.41] are presumed to be available.” Id. § 230.10(a)(3). The Sierra Club contended (and contends here) that in fact there were practicable alternatives—other sites, or alternative ways of using the CCTC site—having less adverse effect. The Corps rejected these claims. Resolution of the practicability issue turns on four subissues: (1) use of the site's fair market value as its cost, rather than CCTC's (lower) out-of-pocket cost; (2) failure on the Corps's part to update the fair market value in its second look at the permit (which took place after the onset of the global financial meltdown in 2008); (3) the Corps's use of 8% as the minimum rate of return necessary for an alternative to be considered practicable; and (4) CCTC's intention to provide more parking per 1000 square feet of retail space than is provided on average, locally and indeed nationally.

For any given minimum rate of return, assumption of a lower cost for the site (see J.A. 613–36, 1660) will tend to render “practicable” less intensive uses, i.e., uses inflicting less ecological damage. This fact drives the Sierra Club's argument for acquisition cost, which in this case happened to be lower than fair market value. But the Sierra Club's contention that the regulation required the Corps to use the developer's acquisition cost is ill-founded.

First, as a matter of simple language, opportunity cost (the value the owner could realize by a current sale) is a well-recognized form of cost. This is obviously true in economics, and the practicability test, though certainly neither a cost-benefit test nor an efficiency test, nonetheless encompasses economic factors. And courts have recognized opportunity cost as a variant of “cost.” Thus, the Supreme Court, in upholding the Federal Communications Commission's decision to set certain rates “on a forward-looking basis untied to [the providers'] investment,” cited opportunity cost by way of analogy. Verizon v. FCC, 535 U.S. 467, 475, 499 n. 17, 122 S.Ct. 1646, 152 L.Ed.2d 701 (2002); see also Natural Gas Clearinghouse v. FERC, 108 F.3d 397, 400 (D.C.Cir.1997). Second, the regulations' evaluation of alternatives requires consideration of cost on both sides of the comparison, and the cost of an alternative project site would presumably be that site's market value. The comparison would be meaningful only if the Corps used the same metric for all options. Third, 40 C.F.R. § 230.10(a)(2), in directing consideration of “cost,” can sensibly (perhaps most sensibly, but we need not so decide) mean the cost of proceeding with the project as planned; for this, clearly, the relevant measure of the developer's land cost is what it foregoes by proceeding (rather than selling the land and realizing its market value). See Corps's Combined Reply and Response Br. 6–7. Fourth, whereas use of opportunity cost minimizes subjective, applicant-specific factors, reliance on the developer's acquisition cost would create the odd possibility that an alternative practicable for one applicant would be impracticable for another. Finally (and this is really a variation of the fourth point), to use out-of-pocket cost would create an anomaly: An applicant with a low acquisition cost could resell the site at market value and thereby enable a successor developer to refute practicability claims that had been fatal for the seller. Accordingly, we have no difficulty whatever deferring to the Corps's reasonable choice to use the land's market value, rather than the developer's acquisition cost.

Peripheral to the acquisition-cost claim is the Sierra Club's attack on the Corps's failure to update the land's market value when it reinstated the permit in 2009, after land values had fallen sharply, especially in the so-called “sand” states, including Florida. The Sierra Club notes that the Corps did update some plans and data, mostly related to the mitigation plan and stormwater management, and it thus claims an arbitrary inconsistency on the Corps's part. But the Corps's decision to update ecological but not economic data appears reasonable in light of the Corps's reasons for reexamining the original permit. As its December 2008 public notice explained, it suspended that permit because of unauthorized discharges of turbid water, and then undertook to decide whether to reinstate, modify, or revoke the permit, saying that its decision would “be based on an evaluation of the reassurances given to the Corps about the likelihood of future discharges of turbid water from the CCTC project site into Cypress Creek and wetlands on the site.” J.A. 1546–47. Though the Corps also stated that it would “evaluate any other facts and issues as necessary,” J.A. 1546, we see no basis in this for requiring it to restart its entire permitting analysis from zero. Given the scope of the 2009 permit re-analysis, it was reasonable for the Corps to update only the plans and data related to ecological matters.

The Sierra Club also...