FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
BUTTE ENVIRONMENTAL COUNCIL, No. 09-15363
Plaintiff-Appellant,
D.C. No.
v.
2:08-cv-01316-
UNITED STATES ARMY CORPS OF GEB-CMK
ENGINEERS; UNITED STATES
ORDER AND
FISH AND WILDLIFE SERVICE;
AMENDED
CITY OF REDDING,
OPINION
Defendants-Appellees.
Appeal from the United States District Court
for the Eastern District of California
Garland E. Burrell, District Judge, Presiding
Argued and Submitted
February 11, 2010—San Francisco, California
Filed June 1, 2010
Amended September 1, 2010
Before: Diarmuid F. O’Scannlain, Stephen S. Trott and
Richard A. Paez, Circuit Judges.
Opinion by Judge O’Scannlain
13135
13138 BUTTE ENVIRONMENTAL COUNCIL v. USACE
COUNSEL
Donald B. Mooney, of the Law Office of Donald B. Mooney,
Davis, California, argued the cause for the plaintiff-appellant
and filed a brief.
Kurt Kastorf, of the U.S. Department of Justice, argued the
cause for defendant-appellees the U.S. Army Corps of Engi-
neers and the U.S. Fish and Wildlife Service. Jason Walta, of
the U.S. Department of Justice Environment and Natural
Resources Division, filed a brief. Veronica Rowan, of the
Department of the Interior, Lisa H. Clay, of the U.S. Army
BUTTE ENVIRONMENTAL COUNCIL v. USACE 13139
Corps of Engineers, John C. Cruden, Acting Assistant Attor-
ney General, David C. Shilton, of the U.S. Department of Jus-
tice Environment and Natural Resources Division, Lewis M.
Barr, of the U.S. Department of Justice Environment and Nat-
ural Resources Division, and Meredith L. Flax, of the U.S.
Department of Justice Environment and Natural Resources
Division, were also on the brief.
Rick W. Jarvis, of Jarvis, Fay, Doporto & Gibson, LLP, Oak-
land, California, filed a brief on behalf of defendant-appellee
the City of Redding.
Brandon M. Middleton, of the Pacific Legal Foundation, Sac-
ramento, California, filed a brief on behalf of the Pacific
Legal Foundation as amicus curiae in support of the
defendants-appellees. M. Reed Hopper, of the Pacific Legal
Foundation, was also on the brief.
ORDER
The opinion filed in this case on June 1, 2010, and reported
at 607 F.3d 570, is hereby amended. An amended opinion is
filed concurrently with this order.
No petitions for rehearing or for rehearing en banc shall be
entertained.
OPINION
O’SCANNLAIN, Circuit Judge:
We must decide whether the decisions of two federal agen-
cies approving the construction of a business park on pro-
tected wetlands in California were arbitrary and capricious.
13140 BUTTE ENVIRONMENTAL COUNCIL v. USACE
I
A
We begin by setting forth the relevant framework of the
two federal statutes at the center of this appeal: the Clean
Water Act (“CWA”), 33 U.S.C. § 1251 et seq., and the
Endangered Species Act (“ESA”), 16 U.S.C. § 1531 et seq.
1
Congress enacted the CWA to “restore and maintain the
chemical, physical, and biological integrity of the Nation’s
waters.” 33 U.S.C. § 1251(a). “Under §§ 301 and 502 of the
Act, 33 U.S.C. §§ 1311 and 1362, any discharge of dredged
or fill materials into ‘navigable waters’—defined as the
‘waters of the United States’—is forbidden unless authorized
by a permit issued by the [U.S. Army] Corps of Engineers
pursuant to § 404, 33 U.S.C. § 1344.” United States v. River-
side Bayview Homes, Inc., 474 U.S. 121, 123 (1985). The
Supreme Court has upheld as reasonable the Corps’ interpre-
tation of the CWA “to require permits for the discharge of fill
material into wetlands adjacent to the ‘waters of the United
States.’ ” Id. at 139; see also Rapanos v. United States, 547
U.S. 715, 742 (2006) (plurality opinion) (“[O]nly those wet-
lands with a continuous surface connection to bodies that are
‘waters of the United States’ in their own right, so that there
is no clear demarcation between ‘waters’ and wetlands, are
‘adjacent to’ such waters and covered by the Act.”).
The Corps may issue a permit pursuant to section 404 of
the CWA only if conditions set forth in regulations developed
by the Corps and the Environmental Protection Agency
(“EPA”) are met. See 33 U.S.C. § 1344(b). These implement-
ing regulations provide that “no discharge of dredged or fill
material shall be permitted if there is a practicable alternative
to the proposed discharge which would have less adverse
impact on the aquatic ecosystem, so long as the alternative
BUTTE ENVIRONMENTAL COUNCIL v. USACE 13141
does not have other significant adverse environmental conse-
quences.” 40 C.F.R. § 230.10(a). Under the regulations, “[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.” Id.
§ 230.10(a)(2). If a proposed activity “does not require access
or proximity to or siting within the special aquatic site in
question to fulfill its basic purpose (i.e., is not ‘water depen-
dent’), practicable alternatives that do not involve special
aquatic sites are presumed to be available, unless clearly dem-
onstrated otherwise.” Id. § 230.10(a)(3).
2
The ESA directs the Secretaries of Commerce and the Inte-
rior to determine whether any species is “endangered” or
“threatened,” 16 U.S.C. § 1533(a)(1), and to “designate any
habitat of such species which is . . . considered to be critical
habitat,” id. § 1533(a)(3)(A)(i). Under the ESA, a species’
“critical habitat” includes areas occupied by the species that
are “essential to the conservation of the species” and that
“may require special management considerations or protec-
tion.” Id. § 1532(5)(A)(i). It also includes areas not occupied
by the species that are nonetheless essential to the species’
conservation. Id. § 1532(5)(A)(ii).
“Section 7 of the ESA prescribes the steps that federal
agencies must take to ensure that their actions do not jeopar-
dize endangered wildlife and flora.” Nat’l Ass’n of Home
Builders v. Defenders of Wildlife, 551 U.S. 644, 652 (2007).
Section 7(a)(2) provides specifically that:
Each Federal agency shall, in consultation with
and with the assistance of the Secretary [of Com-
merce or the Interior], insure that any action autho-
rized, funded, or carried out by such agency . . . is
not likely to jeopardize the continued existence of
any endangered species or threatened species or
13142 BUTTE ENVIRONMENTAL COUNCIL v. USACE
result in the destruction or adverse modification of
habitat of such species which is determined by the
Secretary . . . to be critical . . . .
16 U.S.C. § 1536(a)(2). The ESA requires the Secretary to
provide at the conclusion of consultation “a written statement
setting forth the Secretary’s opinion, and a summary of the
information on which the opinion is based, detailing how the
agency action affects the species or its critical habitat.” Id.
§ 1536(b)(3)(A); see 50 C.F.R. § 402.14(h).
B
With the relevant statutory and regulatory framework in
mind, we turn now to the facts of this case.
1
a
After years of researching potential sites for economic
development, the City of Redding, California, decided to con-
struct a business park on a 678-acre site located on wetlands
along Stillwater Creek, and started to draft an environmental
impact statement (“EIS”). The proposed site contains critical
habitat for several ESA-listed species under the jurisdiction of
the Secretary of the Interior, including the threatened vernal
pool fairy shrimp, the endangered vernal pool tadpole shrimp,
and the threatened slender Orcutt grass. These ESA-listed
species occupy the site’s vernal pools—shallow depressions
that fill with rainwater in the fall and winter and then dry up
in the spring. Final Designation of Critical Habitat for Four
Vernal Pool Crustaceans and Eleven Vernal Pool Plants in
California and Southern Oregon, 70 Fed. Reg. 46,924, 46,925
(Aug. 11, 2005). Their critical habitat also consists of unoccu-
pied upland areas that serve as important sources of nutrients
in the vernal pool ecosystem. Id.
BUTTE ENVIRONMENTAL COUNCIL v. USACE 13143
With an eye to satisfying the conditions of both the CWA
and the ESA, the City issued a draft EIS regarding the pro-
posed development of the so-called Stillwater Business Park
in February 2005. The draft EIS served as a precursor to the
City’s eventual application for a section 404 permit, which the
City was required to obtain because the proposed develop-
ment would entail the discharge of dredged or fill material
into protected wetlands. The document also served to address
the effects of the proposed development on ESA-listed spe-
cies, which the City was required to protect because the proj-
ect would involve the expenditure of federal grant money.
Based on a comparison of over a dozen potential sites, the
draft EIS concluded that the Stillwater site was the least envi-
ronmentally damaging practicable alternative. In support of
this conclusion, the draft EIS explained that the proposed
Stillwater site was “responsive” to the basic purpose of the
City’s project: “to increase the activity of contributory eco-
nomic sectors by constructing a business park within [the
City’s] sphere of influence capable of attracting and accom-
modating diverse business and industrial users.” According to
the draft EIS, accomplishing this purpose required a site large
enough to accommodate at least one 100-acre parcel, and the
proposed Stillwater site satisfied this requirement.
The draft EIS further explained that the proposed Stillwater
site met various cost, technological, and logistical feasibility
criteria. It stated, for example, that the proposed site was
available for acquisition; that it did not “result in adverse
social or economic effects on existing development”; that it
was “capable of being served by city utilities”; and that it did
not entail unreasonable development costs.
Finally, the draft EIS concluded that the proposed Stillwa-
ter site was the least environmentally damaging of the poten-
tial sites that satisfied both the project’s purpose and the
feasibility criteria. The draft EIS acknowledged that develop-
ment of the proposed site would entail the construction of var-
13144 BUTTE ENVIRONMENTAL COUNCIL v. USACE
ious buildings, bridges, roads, and paths, as well as the
extension of water, sewer, electrical, and other utility lines. It
maintained, however, that the proposed site would have “less
direct” effects on the wetlands and the endangered and threat-
ened species living there than the other leading sites under
consideration. Accordingly, the draft EIS announced that the
Stillwater site was the City’s “preferred” location for a new
business park.
b
The Army Corps of Engineers reviewed and commented on
the City’s draft EIS. In a letter dated May 4, 2005, the Corps
stated that the City’s proposed Stillwater site “does not appear
to be the [least environmentally damaging practicable alterna-
tive], as there may be less environmentally damaging alterna-
tives for this project . . . . Alternatives that have fewer impacts
to waters while still meeting the project’s purpose and need
appear to exist.” The Corps argued that “the screening criteria
used for selecting practicable alternatives [were] too restric-
tive to determine a [least environmentally damaging practica-
ble alternative] and eliminate[ ] reasonable alternatives such
as alternative 4”—a site the City had rejected because a 100-
acre parcel could not be developed there without filling or
altering an 8,300-foot-long tributary. Finally, the Corps noted
that “[f]urther efforts to address and reduce direct, indirect,
secondary and cumulative impacts within the preferred and
alternative project sites appear to be practicable.”
c
The EPA made similar comments in April and June 2005.
Like the Corps, the EPA questioned the City’s rejection of
alternative 4, arguing that the City had not “articulated a com-
pelling need for a contiguous 100-acre parcel as a centerpiece
of the project.” Skeptical that a business park would be “im-
practicable unless conceived as a single geographic entity,”
BUTTE ENVIRONMENTAL COUNCIL v. USACE 13145
the EPA urged the City to consider developing several smal-
ler, “disaggregated” parcels instead of a single large one.
d
In September 2005, the City issued a supplemental draft
EIS, which responded to comments on the original draft. In
particular, the supplemental draft EIS defended the City’s
decision to reject potential sites that would be unable to sup-
port at least one 100-acre parcel. It identified various potential
business-park users that required parcels of at least 100 acres
for their manufacturing and distribution needs, and clarified
that the purpose of the project was to construct not just any
business park, but “a medium to large parcel business park.”
(Emphasis added.) Furthermore, the supplemental draft EIS
maintained that a park spread across several “disaggregated”
parcels would not be “desirable or conducive to the users
expressing interest in the area,” because such a park would
lack the “synergy” made possible by a single, contiguous site.
According to the supplemental draft EIS, such “synergy”
would result from “[c]lose product availability, sharing of
resources, and streamlining [of] business practices.”
In addition, the supplemental draft EIS reported that “dis-
cussions with the resource agencies over the past several
months resulted in modifications to [the proposed Stillwater
site] that reduced potential impacts to sensitive environmental
resources.” The City agreed, for instance, to modify the “foot-
print” of the proposed site “to reduce impacts to waters of the
U.S.”; to “us[e] stormwater [best management practices] to
minimize impacts to receiving waters”; and to designate 296
acres of the 678-acre site as “permanent Open Space,” where
“[n]o ground disturbance (e.g., bike paths, roads, etc.) will be
allowed.” According to the supplemental draft EIS, these and
other modifications reduced the “direct wetland impacts” of
the proposed Stillwater project from 7.13 acres (as reported in
the draft EIS) to 6.50 acres. They likewise reduced the “direct
impacts” of the project on ESA-listed plants and crustaceans.
13146 BUTTE ENVIRONMENTAL COUNCIL v. USACE
e
In November 2005, the EPA issued further comments in
light of the supplemental draft EIS. One of the EPA’s remain-
ing concerns was that the City’s analysis of the other alterna-
tive sites was not as detailed as its analysis of the preferred
Stillwater site. The EPA was also concerned that the City had
not developed an “off-site mitigation plan for unavoidable
impacts to waters of the U.S. and endangered species.” The
EPA thus urged the City to include such a plan in its final
EIS.
f
In February 2006, the City published its final EIS. In addi-
tion to compiling the City’s earlier responses to comments,
the final EIS devoted a section to addressing the EPA’s most
recent concerns. The City maintained that its discussion of
alternative sites was sufficiently detailed, and directed the
EPA to specific portions of the draft and supplemental EISs.
The City also highlighted its proposed “compensatory mitiga-
tion” efforts—efforts “to offset unavoidable adverse impacts
to wetlands, streams, and other aquatic resources.” Compen-
satory Mitigation for Losses of Aquatic Resources, 73 Fed.
Reg. 19,594, 19,594 (Apr. 10, 2008). According to the final
EIS, compensatory mitigation would be “achieved through
on-site and off-site preservation of habitat in the Open Space
Area and other suitable areas,” and would involve “creation,
restoration, and enhancement of wetland features.” The final
EIS included a mitigation monitoring program “to ensure the
effective implementation and enforcement of adopted mitiga-
tion measures and permit conditions.”
2
The City formally applied for a section 404 permit in
March 2006, and the Corps completed its evaluation of the
City’s application in August 2007. Accepting that the “overall
BUTTE ENVIRONMENTAL COUNCIL v. USACE 13147
project purpose” was “to construct a medium to large sized
regional business park,” the Corps agreed that the City needed
a single, contiguous site that could be divided into “one 100
acre parcel and numerous parcels ranging from 20 to 50
acres.” The Corps reviewed the alternative sites considered by
the City, as well as one additional site—known as the Mitch-
ell site, located directly north of the Stillwater site—that the
City had not considered. Based on its review, the Corps deter-
mined that the proposed Stillwater site would have 2.145
acres of direct impact, and 2.724 acres of indirect impact, on
“waters of the United States.” Nevertheless, the Corps con-
cluded that the proposed Stillwater site was the least environ-
mentally damaging practicable alternative; in the Corps’ view,
the City had “clearly demonstrated that there are no practica-
ble alternative sites available,” including no “practicable alter-
natives having less adverse impact on the aquatic ecosystem.”
The Corps further concluded that issuance of a section 404
permit would not be contrary to the public interest. Accord-
ingly, the Corps granted the City’s application.
3
The Corps was not the only federal agency whose approval
the City required. Section 7 of the ESA required consultation
with the U.S. Fish and Wildlife Service (“FWS”), which “ad-
ministers the ESA with respect to species under the jurisdic-
tion of the Secretary of the Interior.” Home Builders, 551 U.S.
at 651. The City initiated formal consultation with the FWS
in October 2006.
In December 2006, the FWS issued a written biological
opinion on the City’s proposed development of the Stillwater
site. In the opinion, the FWS reviewed the current status of
the ESA-listed species and their critical habitat. It then evalu-
ated the direct and indirect effects of the proposed action
against an “environmental baseline” of all other past and pres-
ent human activities in the area. For purposes of the opinion,
the FWS presumed that “indirect effects” would occur as the
13148 BUTTE ENVIRONMENTAL COUNCIL v. USACE
result of any proposed development within 250 feet of the
species’ known populations. The FWS further evaluated what
it called “cumulative effects”—“the effects of future State,
Tribal, local or private actions that are reasonably certain to
occur in the action area.”
Based on its review, the FWS determined that the proposed
Stillwater site contained 356.6 acres of critical habitat shared
by the vernal pool fairy shrimp and the vernal pool tadpole
shrimp. According to the FWS, the proposed development
would destroy 234.5 acres of this critical habitat (amounting
to 5.4% of the fairy shrimp’s critical habitat unit 5 and 0.04%
of its 597,821 acres of total critical habitat nationwide, and
5.4% of the tadpole shrimp’s critical habitat unit 1 and 0.10%
of its 228,785 acres of total critical habitat nationwide). The
FWS also determined that the proposed development would
directly affect 0.56 acres, and indirectly affect 6.42 acres, of
the crustaceans’ aquatic habitat. The FWS noted, however,
that the City proposed to offset these effects by creating or
restoring 0.56 acres of aquatic habitat, and preserving another
18.64 acres, at other on- and off-site locations.
As for the threatened slender Orcutt grass, the FWS
reported that the proposed site contained 500 acres of the
plant’s critical habitat, of which 242.2 acres (amounting to
3.7% of the plant’s critical habitat unit 2 and 0.26% of its
94,213 acres of total critical habitat nationwide) would be
destroyed. According to the FWS, the proposed development
would also directly affect 0.07 acres, and indirectly affect
4.33 acres, of suitable grass habitat itself. The FWS again
noted, however, that the City promised to compensate for
these losses by creating or restoring 0.14 acres of suitable
grass habitat and preserving another 15.94 acres.
The FWS acknowledged that “the proposed project would
contribute to a local and range-wide trend of habitat loss and
degradation,” and “to the fragmentation and reduction of the
acreage of the remaining listed vernal pool species habitat.”
BUTTE ENVIRONMENTAL COUNCIL v. USACE 13149
Nonetheless, the FWS concluded that “the Stillwater Business
Park project, as proposed, is not likely to jeopardize the con-
tinued existence of the . . . vernal pool fairy shrimp, vernal
pool tadpole shrimp, and slender Orcutt grass.” The FWS fur-
ther concluded that “the proposed project would not result in
the adverse modification or destruction of critical habitat” for
those species.
C
In June 2008, Butte Environmental Council, a nonprofit
environmental organization, filed suit against the Corps and
the FWS in federal district court. The Council sought judicial
review under the Administrative Procedure Act (“APA”), 5
U.S.C. §§ 702, 704, of the Corps’ decision to issue a permit
for the City’s proposed project and the FWS’s biological
opinion that the project would not adversely modify the criti-
cal habitat for endangered and threatened species. After the
Council amended its complaint to add the City as a defendant,
the parties filed cross-motions for summary judgment.
The district court granted summary judgment in favor of
the agencies and the City. It held that “the Corps was neither
arbitrary nor capricious when rationally concluding the Still-
water site was the [least environmentally damaging practica-
ble alternative],” and that the FWS’s biological opinion stated
“a rational connection between the facts found and the con-
clusion reached.” (Internal quotation marks and brackets
omitted.) The Council timely appealed.
II
We review de novo the district court’s grant of summary
judgment. Bering Strait Citizens for Responsible Res. Dev. v.
U.S. Army Corps of Eng’rs, 524 F.3d 938, 946 (9th Cir.
2008). Under the APA, we must set aside agency action that
is “arbitrary” or “capricious.” 5 U.S.C. § 706(2)(A).
13150 BUTTE ENVIRONMENTAL COUNCIL v. USACE
Review under the arbitrary and capricious stan-
dard is deferential; we will not vacate an agency’s
decision unless it “has relied on factors which Con-
gress had 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 differ-
ence in view or the product of agency expertise.”
Home Builders, 551 U.S. at 658 (quoting Motor Vehicle Mfrs.
Ass’n of the United States, Inc. v. State Farm Mut. Auto. Ins.
Co., 463 U.S. 29, 43 (1983)). “[A] court is not to substitute
its judgment for that of the agency, and should uphold a deci-
sion of less than ideal clarity if the agency’s path may reason-
ably be discerned.” FCC v. Fox Television Stations, Inc., 129
S. Ct. 1800, 1810 (2009) (internal quotation marks and cita-
tions omitted).
III
The Council challenges the Corps’ decision to issue the
City a section 404 permit to discharge dredged or fill material
into the wetlands along Stillwater Creek. The Council con-
tends that the Corps’ decision was arbitrary and capricious for
a handful of reasons, none of which we find persuasive.
[1] First, the Council argues that the Corps failed to apply
the proper presumption under 40 C.F.R. § 230.10(a)(3), which
provides that where a proposed activity is not water depen-
dent, “practicable alternatives that do not involve special
aquatic sites are presumed to be available, unless clearly dem-
onstrated otherwise.” Here, the Corps acknowledged that the
proposed project was not water dependent. It then expressly
concluded, based on a review of over a dozen alternative sites,
that the City had “clearly demonstrated that there are no prac-
ticable alternative sites available.” Contrary to the Council’s
assertion, the Corps applied the proper presumption and found
BUTTE ENVIRONMENTAL COUNCIL v. USACE 13151
that it had been rebutted under the appropriate standard. See
Bering Strait Citizens, 524 F.3d at 948.
[2] Second, the Council argues that the Corps’ decision to
issue a section 404 permit was inconsistent with its earlier
criticism of the City’s draft EIS. The Council downplays,
however, the extent to which the City modified its original
plan in response to the Corps’ comments. The City responded
by, among other things, modifying the “footprint” of the pro-
posed site “to reduce impacts to waters of the U.S.” and des-
ignating 296 acres of the 678-acre site as “permanent Open
Space.” As a result of these and other changes, the “direct
wetland impacts” of the proposed site were reduced from 7.13
to 6.50 acres. “The Corps’ ultimate decision was not a rever-
sal but simply the culmination of [years] of investigations,
meetings, and reports.” Friends of the Earth v. Hintz, 800
F.2d 822, 834 (9th Cir. 1986).
Indeed, the process worked just as it should. Agencies are
entitled to change their minds, Home Builders, 551 U.S. at
658-59, and the Corps followed the proper procedures in
doing so here. “Certainly, the Corps’ initial comments were
preliminary and subject to change as understanding of permit
issues expanded, the factual record developed, and the mitiga-
tion plan [was] created.” Hintz, 800 F.2d at 834. Given the
back-and-forth between the City and the Corps, we have no
trouble discerning the path of the agency’s reasoning over
time.
[3] Third, the Council maintains that the Corps never made
an “independent determination” of the project’s purpose or
the size of the parcels needed. On such matters, the Council
contends, the Corps “simply deferred” to the City’s judgment.
The record, however, suggests otherwise. Far from blindly
accepting the project’s stated purpose, the Corps initially
expressed skepticism that the City needed a site large enough
to accommodate a 100-acre parcel, arguing that “the screen-
ing criteria used for selecting practicable alternatives [were]
13152 BUTTE ENVIRONMENTAL COUNCIL v. USACE
too restrictive.” In response, the City revised its EIS to clarify
that “a medium to large parcel business park” was necessary
to meet the manufacturing and distribution needs of interested
business-park users and to create the desired “synergy”
among the park’s occupants. It is true that the Corps ulti-
mately accepted the City’s revised statement of purpose and
conducted its analysis in light of it. But “the Corps has a duty
to consider the applicant’s purpose,” where, as here, that pur-
pose is “genuine and legitimate.” Sylvester v. U.S. Army
Corps of Eng’rs, 882 F.2d 407, 409 (9th Cir. 1989). The
Corps’ consideration of the project’s stated purpose was not
unreasonable.
[4] Fourth, the Council argues that the Corps should not
have rejected the Mitchell site as a practicable alternative. In
its decision, the Corps noted that when the City entered the
market for a site in 2001, the offering price of the Mitchell
property was about $2.6 million, but that by 2006, when the
City was ready to make a purchase, the price had risen to $12
million. The Council maintains that the Corps erred by evalu-
ating the Mitchell property on the basis of its value in 2006
rather than 2001. The Council, however, misreads the Corps’
decision. Although the Corps did mention that the offering
price of the Mitchell site had risen since 2001, it nowhere
relied on that fact in its substantive evaluation of the site.
Rather, in rejecting the site, the Corps emphasized that the site
was “not contiguous with property already owned by the
City”; that “[t]he topography and geology of the site [was] not
conducive for the purposes of the proposed development”;
and that “[t]he amount of property available for development
[was] too small to achieve the overall project purpose.” In
terms of cost, the Corps focused only on the cost of infrastruc-
ture, which it believed would be “substantially more” with
respect to the Mitchell site than with respect to others. Given
that the Corps’ analysis did not reflect any consideration of
the cost of acquiring the Mitchell site, the Council’s challenge
to the rejection of the site fails.
BUTTE ENVIRONMENTAL COUNCIL v. USACE 13153
[5] Finally, the Council asserts that the Corps improperly
relied on the City’s proposed off-site mitigation as part of its
analysis. The Council argues specifically that the Corps
allowed the adoption of off-site mitigation measures to relieve
the City of its responsibility to adopt the least environmen-
tally damaging practicable alternative. But while it is true that
the Corps made compensatory mitigation a condition of the
permit, there is no indication that such mitigation was meant
as an obligation in place of the City’s responsibility to adopt
the least environmentally damaging practicable alternative, as
opposed to an obligation in addition to it. “[C]ompensatory
mitigation is a critical tool in helping the federal government
to meet the longstanding national goal of ‘no net loss’ of wet-
land acreage and function,” Compensatory Mitigation for
Losses of Aquatic Resources, 73 Fed. Reg. 19,594, 19,594
(Apr. 10, 2008), and nothing suggests that the Corps abused
it in this case.
[6] In sum, the Corps stated a rational connection between
the facts found and the conclusion that the proposed Stillwater
site was the least environmentally damaging practicable alter-
native. We therefore conclude that the Corps’ decision to
issue the City a permit was neither arbitrary nor capricious.
IV
The Council also challenges as arbitrary and capricious the
FWS’s biological opinion that the City’s proposed Stillwater
project “would not result in the adverse modification or
destruction of critical habitat for vernal pool fairy shrimp, ver-
nal pool tadpole shrimp, or slender Orcutt grass.”
A
[7] The Council contends that the FWS applied an
improper definition of “adverse modification” under section
7 of the ESA. The regulations implementing section 7 define
“destruction or adverse modification” as “a direct or indirect
13154 BUTTE ENVIRONMENTAL COUNCIL v. USACE
alteration that appreciably diminishes the value of critical
habitat for both the survival and recovery of a listed species.”
50 C.F.R. § 402.02. In Gifford Pinchot Task Force v. U.S.
Fish & Wildlife Services, 378 F.3d 1059 (9th Cir. 2004), we
held that “the regulatory definition of ‘adverse modification’
contradicts Congress’s express command.” Id. at 1069. We
explained that Congress enacted the ESA “not merely to fore-
stall the extinction of [a] species (i.e., promote a species[’]
survival), but to allow a species to recover to the point where
it may be delisted.” Id. at 1070 (emphases added) (citing 16
U.S.C. § 1532(3)). “Because it is logical and inevitable that a
species requires more critical habitat for recovery than is nec-
essary for the species[’] survival,” id. at 1069, we faulted the
regulations for requiring appreciable diminishment of “the
value of critical habitat for both the survival and recovery of
a listed species” in order for “adverse modification” to occur,
50 C.F.R. § 402.02 (emphases added). We concluded that
“[w]here Congress in its statutory language required ‘or,’ the
agency in its regulatory definition substituted ‘and.’ ” Gifford
Pinchot, 378 F.3d at 1070.
[8] According to the Council, the FWS applied a definition
of “adverse modification” that did not account for the “recov-
ery needs” of the affected species, as required under Gifford
Pinchot. The FWS, however, expressly stated:
This biological opinion does not rely on the regu-
latory definition of ‘destruction or adverse modifica-
tion’ of critical habitat at 50 CFR 402.02. Instead,
we have relied upon the statute and the August 6,
2004, Ninth Circuit Court of Appeals decision in
Gifford Pinchot Task Force v. U.S. Fish and Wildlife
Service (No. 03-35279) to complete the following
analysis with respect to critical habitat.
Nothing in the biological opinion suggests otherwise. We
therefore reject the Council’s contention that the FWS applied
BUTTE ENVIRONMENTAL COUNCIL v. USACE 13155
a definition of “adverse modification” that ignored the value
of critical habitat for the recovery of the affected species.
B
[9] Taking a different tack, the Council contends that the
FWS’s finding of no “adverse modification” conflicts with its
determination that the proposed Stillwater project would
destroy 234.5 acres of critical habitat for the vernal pool crus-
taceans and 242.2 acres of critical habitat for slender Orcutt
grass. Gifford Pinchot, however, did not alter the rule that an
“adverse modification” occurs only when there is “a direct or
indirect alteration that appreciably diminishes the value of
critical habitat.” 50 C.F.R. § 402.02 (emphasis added); see
Gifford Pinchot, 378 F.3d at 1070 (taking issue only with the
use of “and” instead of “or” in the regulatory definition of
“adverse modification”); id. at 1075 (discussing appreciable
diminishment). An area of a species’ critical habitat can be
destroyed without appreciably diminishing the value of criti-
cal habitat for the species’ survival or recovery. As the FWS’s
ESA consultation handbook explains:
Adverse effects on individuals of a species or con-
stituent elements or segments of critical habitat gen-
erally do not result in jeopardy or adverse
modification determinations unless that loss, when
added to the environmental baseline, is likely to
result in significant adverse effects throughout the
species’ range, or appreciably diminish the capabil-
ity of the critical habitat to satisfy essential require-
ments of the species.
U.S. Fish & Wildlife Serv. & Nat’l Marine Fisheries Serv.,
Endangered Species Consultation Handbook: Procedures for
Conducting Consultation and Conference Activities Under
Section 7 of the Endangered Species Act 4-34 (1998) (bold-
face removed). The FWS’s determination that critical habitat
would be destroyed was thus not inconsistent with its finding
13156 BUTTE ENVIRONMENTAL COUNCIL v. USACE
of no “adverse modification.” After all, the project would
destroy only a very small percentage of each affected species’
critical habitat, whether viewed on a unit or nationwide basis.1
[10] The Council maintains, however, that the FWS’s
focus on the project’s large-scale impact on the species’ criti-
cal habitat “mask[ed] the Project’s localized impact.” “Focus-
ing solely on a vast scale can mask multiple site-specific
impacts that, when aggregated, do pose a significant risk to a
species.” Gifford Pinchot, 378 F.3d at 1075. But where, as
here, there is no evidence in the record that “some localized
risk was improperly hidden by use of large scale analysis, we
will not second-guess the FWS.” Id.
C
[11] Finally, the Council faults the FWS for failing to
address the rate of loss of critical habitat for the species in
question. Neither the ESA nor its implementing regulations,
however, require that the FWS calculate a rate of loss. Rather,
they require only that the FWS evaluate “the current status of
the listed species or critical habitat,” “the effects of the
action,” and the “cumulative effects on the listed species or
critical habitat.” 50 C.F.R. § 402.14(g)(2)-(3). We are satis-
fied that the FWS faithfully conducted such analysis here.
[12] Applying the proper definition of “adverse modifica-
tion,” the FWS reasonably concluded that the effects of the
proposed project would not appreciably diminish the value of
the species’ critical habitat. Accordingly, we hold that the
FWS’s finding of no “adverse modification” was neither arbi-
trary nor capricious.
1
Accordingly, we express no opinion on whether the “adverse modifica-
tion” inquiry under section 7 of the ESA properly focuses on the effects
of an action on a particular unit of critical habitat or on total critical habitat
nationwide.
BUTTE ENVIRONMENTAL COUNCIL v. USACE 13157
V
For the foregoing reasons, the judgment of the district court
is
AFFIRMED.