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San Luis & Delta-Mendota Water Authority v. Jewell

United States Court of Appeals, Ninth Circuit

March 13, 2014

San Luis & Delta-Mendota Water Authority; Westlands Water District; Stewart & Jasper Orchards; Arroyo Farms, LLC; King Pistachio Grove; State Water Contractors; Metropolitan Water District of Southern California; Coalition for a Sustainable Delta; Kern County Water Agency; Family Farm Alliance, Plaintiffs-Appellees,
v.
Sally Jewell, as Secretary of the Department of the Interior; U.S. Department of the Interior; U.S. Fish & Wildlife Service; Daniel M. Ashe, as Director of the U.S. Fish and Wildlife Service; Ren Lohoefener, as Regional Director of the U.S. Fish and Wildlife Service, Pacific Southwest Region, U.S. Department of the Interior; United States Bureau of Reclamation; Michael L. Connor, as Commissioner of the U.S. Bureau of Reclamation, U.S. Department of the Interior; David Murillo, as Director of the U.S. Bureau of Reclamation, Mid-Pacific Region, U.S. Department of the Interior; Mark Cowin, Director, California Department of Water Resources; United States Department of Justice; U.S. Environmental Protection Agency; Gina McCarthy, in her official capacity as Administrator of the Environmental Protection Agency; U.S. Department of Transportation; Anthony Foxx, in his official capacity as Secretary of Transportation; Maritime Administration; Paul N. Jaenichen, Sr., in his official capacity as Acting Maritime Administrator; U.S. Department of Homeland Security; Jeh Johnson, in his official capacity as Secretary of Homeland Security; Federal Emergency Management Agency; William Craig Fugate, in his official capacity as Administrator of the Federal Emergency Management Agency; United States Army Corps of Engineers; Thomas P. Bostick, Commanding General and Chief of Engineers, United States Army Corps of Engineers, Defendants, California Department of Water Resources, Intervenor-Plaintiff-Appellee, and Natural Resources Defense Council; The Bay Institute, Intervenor-Defendants-Appellants. SAN LUIS & DELTA-MENDOTA WATER AUTHORITY; WESTLANDS WATER DISTRICT; STEWART & JASPER ORCHARDS; ARROYO FARMS, LLC; KING PISTACHIO GROVE; METROPOLITAN WATER DISTRICT OF SOUTHERN CALIFORNIA; COALITION FOR A SUSTAINABLE DELTA; KERN COUNTY WATER AGENCY; FAMILY FARM ALLIANCE, Plaintiffs, CALIFORNIA DEPARTMENT OF WATER RESOURCES, Intervenor-Plaintiff, and STATE WATER CONTRACTORS, Plaintiff-Appellant,
v.
SALLY JEWELL, as Secretary of the Department of the Interior; U.S. FISH & WILDLIFE SERVICE; DANIEL M. ASHE, as Director of the U.S. Fish and Wildlife Service; REN LOHOEFENER, as Regional Director of the U.S. Fish and Wildlife Service, Pacific Southwest Region, U.S. Department of the Interior; UNITED STATES BUREAU OF RECLAMATION; MICHAEL L. CONNOR, as Commissioner of the U.S. Bureau of Reclamation, U.S. Department of the Interior; DAVID MURILLO, as Director of the U.S. Bureau of Reclamation, Mid-Pacific Region, U.S. Department of the Interior; UNITED STATES DEPARTMENT OF JUSTICE; U.S. ENVIRONMENTAL PROTECTION AGENCY; GINA MCCARTHY, in her official capacity as Administrator of the Environmental Protection Agency; U.S. DEPARTMENT OF TRANSPORTATION; ANTHONY FOXX, in his official capacity as Secretary of Transportation; MARITIME ADMINISTRATION; PAUL N. JAENICHEN, SR., in his official capacity as Acting Deputy Maritime Administrator; U.S. DEPARTMENT OF HOMELAND SECURITY; JEH JOHNSON, in his official capacity as Secretary of Homeland Security; FEDERAL EMERGENCY MANAGEMENT AGENCY; WILLIAM CRAIG FUGATE, in his official capacity as Administrator of the Federal Emergency Management Agency; UNITED STATES ARMY CORPS OF ENGINEERS; THOMAS P. BOSTICK, Commanding General and Chief of Engineers, United States Army Corps of Engineers; U.S. DEPARTMENT OF THE INTERIOR, Defendants-Appellees, NATURAL RESOURCES DEFENSE COUNCIL; THE BAY INSTITUTE, Intervenor-Defendants-Appellees. SAN LUIS & DELTA-MENDOTA WATER AUTHORITY; WESTLANDS WATER DISTRICT; STEWART & JASPER ORCHARDS; ARROYO FARMS, LLC; KING PISTACHIO GROVE; COALITION FOR A SUSTAINABLE DELTA; KERN COUNTY WATER AGENCY; FAMILY FARM ALLIANCE; STATE WATER CONTRACTORS, Plaintiffs, CALIFORNIA DEPARTMENT OF WATER RESOURCES, Intervenor-Plaintiff, and METROPOLITAN WATER DISTRICT OF SOUTHERN CALIFORNIA, Plaintiff-Appellant,
v.
SALLY JEWELL, as Secretary of the Department of the Interior; U.S. DEPARTMENT OF THE INTERIOR; U.S. FISH & WILDLIFE SERVICE; DANIEL M. ASHE, as Director of the U.S. Fish and Wildlife Service; REN LOHOEFENER, as Regional Director of the U.S. Fish and Wildlife Service, Pacific Southwest Region, U.S. Department of the Interior; UNITED STATES BUREAU OF RECLAMATION; MICHAEL L. CONNOR, as Commissioner of the U.S. Bureau of Reclamation, U.S. Department of the Interior; DAVID MURILLO, as Director of the U.S. Bureau of Reclamation, Mid-Pacific Region, U.S. Department of the Interior; UNITED STATES DEPARTMENT OF JUSTICE; U.S. ENVIRONMENTAL PROTECTION AGENCY; GINA MCCARTHY, in her official capacity as Administrator of the Environmental Protection Agency; U.S. DEPARTMENT OF TRANSPORTATION; ANTHONY FOXX, in his official capacity as Secretary of Transportation; MARITIME ADMINISTRATION; PAUL N. JAENICHEN, SR., in his official capacity as Acting Deputy Maritime Administrator; U.S. DEPARTMENT OF HOMELAND SECURITY; JEH JOHNSON, in his official capacity as Secretary of Homeland Security; FEDERAL EMERGENCY MANAGEMENT AGENCY; WILLIAM CRAIG FUGATE, in his official capacity as Administrator of the Federal Emergency Management Agency; UNITED STATES ARMY CORPS OF ENGINEERS; THOMAS P. BOSTICK, Commanding General and Chief of Engineers, United States Army Corps of Engineers, Defendants-Appellees, NATURAL RESOURCES DEFENSE COUNCIL; THE BAY INSTITUTE, Intervenor-Defendants-Appellees. SAN LUIS & DELTA-MENDOTA WATER AUTHORITY; WESTLANDS WATER DISTRICT; STEWART & JASPER ORCHARDS; ARROYO FARMS, LLC; KING PISTACHIO GROVE; STATE WATER CONTRACTORS; METROPOLITAN WATER DISTRICT OF SOUTHERN CALIFORNIA; COALITION FOR A SUSTAINABLE DELTA; KERN COUNTY WATER AGENCY; FAMILY FARM ALLIANCE, Plaintiffs-Appellees, CALIFORNIA DEPARTMENT OF WATER RESOURCES, Intervenor-Plaintiff-Appellee,
v.
SALLY JEWELL, as Secretary of the Department of the Interior; U.S. DEPARTMENT OF THE INTERIOR; U.S. FISH & WILDLIFE SERVICE; DANIEL M. ASHE, as Director of the U.S. Fish and Wildlife Service; REN LOHOEFENER, as Regional Director of the U.S. Fish and Wildlife Service, Pacific Southwest Region, U.S. Department of the Interior; UNITED STATES BUREAU OF RECLAMATION; MICHAEL L. CONNOR, as Commissioner of the U.S. Bureau of Reclamation, U.S. Department of the Interior; DAVID MURILLO, as Director of the U.S. Bureau of Reclamation, Mid-Pacific Region, U.S. Department of the Interior; UNITED STATES DEPARTMENT OF JUSTICE; U.S. ENVIRONMENTAL PROTECTION AGENCY; GINA MCCARTHY, in her official capacity as Administrator of the Environmental Protection Agency; U.S. DEPARTMENT OF TRANSPORTATION; ANTHONY FOXX, in his official capacity as Secretary of Transportation; MARITIME ADMINISTRATION; PAUL N. JAENICHEN, SR., in his official capacity as Acting Deputy Maritime Administrator; U.S. DEPARTMENT OF HOMELAND SECURITY; JEH JOHNSON, in his official capacity as Secretary of Homeland Security; FEDERAL EMERGENCY MANAGEMENT AGENCY; WILLIAM CRAIG FUGATE, in his official capacity as Administrator of the Federal Emergency Management Agency; UNITED STATES ARMY CORPS OF ENGINEERS; THOMAS P. BOSTICK, Commanding General and Chief of Engineers, United States Army Corps of Engineers, Defendants-Appellants, and NATURAL RESOURCES DEFENSE COUNCIL; THE BAY INSTITUTE, Intervenor-Defendants. SAN LUIS & DELTA-MENDOTA WATER AUTHORITY; WESTLANDS WATER DISTRICT, Plaintiffs-Appellants, and STEWART & JASPER ORCHARDS; ARROYO FARMS, LLC; KING PISTACHIO GROVE; COALITION FOR A SUSTAINABLE DELTA; KERN COUNTY WATER AGENCY; FAMILY FARM ALLIANCE; STATE WATER CONTRACTORS; METROPOLITAN WATER DISTRICT OF SOUTHERN CALIFORNIA, Plaintiffs, CALIFORNIA DEPARTMENT OF WATER RESOURCES, Intervenor-Plaintiff,
v.
SALLY JEWELL, as Secretary of the Department of the Interior; U.S. DEPARTMENT OF THE INTERIOR; U.S. FISH & WILDLIFE SERVICE; DANIEL M. ASHE, as Director of the U.S. Fish and Wildlife Service; REN LOHOEFENER, as Regional Director of the U.S. Fish and Wildlife Service, Pacific Southwest Region, U.S. Department of the Interior; UNITED STATES BUREAU OF RECLAMATION; MICHAEL L. CONNOR, as Commissioner of the U.S. Bureau of Reclamation, U.S. Department of the Interior; DAVID MURILLO, as Director of the U.S. Bureau of Reclamation, Mid-Pacific Region, U.S. Department of the Interior; UNITED STATES DEPARTMENT OF JUSTICE; U.S. ENVIRONMENTAL PROTECTION AGENCY; GINA MCCARTHY, in her official capacity as Administrator of the Environmental Protection Agency; U.S. DEPARTMENT OF TRANSPORTATION; ANTHONY FOXX, in his official capacity as Secretary of Transportation; MARITIME ADMINISTRATION; PAUL N. JAENICHEN, SR., in his official capacity as Acting Deputy Maritime Administrator; U.S. DEPARTMENT OF HOMELAND SECURITY; JEH JOHNSON, in his official capacity as Secretary of Homeland Security; FEDERAL EMERGENCY MANAGEMENT AGENCY; WILLIAM CRAIG FUGATE, in his official capacity as Administrator of the Federal Emergency Management Agency; UNITED STATES ARMY CORPS OF ENGINEERS; THOMAS P. BOSTICK, Commanding General and Chief of Engineers, United States Army Corps of Engineers, Defendants-Appellees, NATURAL RESOURCES DEFENSE COUNCIL; THE BAY INSTITUTE, Intervenor-Defendants-Appellees. STATE WATER CONTRACTORS, Plaintiff-Appellant,
v.
SALLY JEWELL, as Secretary of the Department of the Interior; UNITED STATES DEPARTMENT OF JUSTICE; DANIEL M. ASHE, as Acting Director of the U.S. Fish and Wildlife Service; U.S. FISH & WILDLIFE SERVICE; MARK COWIN, Director, California Department of Water Resources; CALIFORNIA DEPARTMENT OF WATER RESOURCES, Defendants-Appellees. METROPOLITAN WATER DISTRICT OF SOUTHERN CALIFORNIA, Plaintiff-Appellant,
v.
U.S. Fish & Wildlife Service; Sally Jewell, Secretary of the Department of the Interior; Daniel M. Ashe, Acting Director of the U.S. Fish and Wildlife Service; United States Bureau of Reclamation; J. William McDonald; California Department of Water Resources; Mark Cowin, Director, California Department of Water Resources, Defendants-Appellees.

Argued and Submitted September 10, 2012—Las Vegas, Nevada

Appeal from the United States District Court for the Eastern District of California Nos. 1:09-cv-00407-OWW-DLB, 1:09-cv-00631- OWW-DLB, Oliver W. Wanger, Senior District Judge, Presiding D.C.

Robert H. Oakley (argued), Ethan Carson Eddy, and Charles R. Scott, United States Department of Justice, Environment & Natural Resources Division, Washington, D.C.; Ignacia S. Moreno, United States Department of Justice, Assistant Attorney General, Washington, D.C.; Jim Monroe, Department of the Interior, Office of the Solicitor, Sacramento, California, for Federal Defendants-Appellants.

Katherine Poole (argued) and Doug Obegi, Natural Resources Defense Council, San Francisco, California; Trent W. Orr and George M. Torgun, Earthjustice, San Francisco, California, for Defendant-Intervenors-Appellants.

Daniel J. O'Hanlon (argued), Hanspeter Walter, and Rebecca R. Akroyd, Kronick, Moskovitz, Tiedemann & Girard, Sacramento, California; Craig Manson, General Counsel, Westlands Water District, Fresno, California; Steven O. Sims, Michelle C. Kales, and Geoffrey M. Williamson, Brownstein Hyatt Farber Schreck LLP, Denver, Colorado, for Plaintiffs-Appellees-Cross-Appellants San Luis & Delta-Mendota Water Authority and Westlands Water District.

Gregory K. Wilkinson (argued), Steven M. Anderson, Melissa R. Cushman, and Steven G. Martin, Best Best & Krieger LLP, Riverside, California, for Plaintiffs-Appellees State Water Contractors.

Marcia L. Scully, Interim General Counsel; Linus Masouredis, Chief Deputy General Counsel, The Metropolitan Water District of Southern California, Sacramento, California; Christopher J. Carr, William N. Sloan, and Travis Brandon, Morrison & Foerster LLP, San Francisco, California, for Plaintiff-Appellee-Cross-Appellant The Metropolitan Water District of Southern California.

Clifford T. Lee (argued), Deputy Attorney General; Kamala D. Harris, Attorney General of California; Kathleen A. Kenealy, Senior Assistant Attorney General; Robert W. Byrne, Supervising Deputy Attorney General; Cecilia L. Dennis, and Gary Alexander, Deputy Attorneys General, San Francisco, California, for Plaintiff-Intervenor-Appellee, California Department of Water Resources.

Before: Morris S. Arnold, [*] Johnnie B. Rawlinson, and Jay S. Bybee, Circuit Judges.

SUMMARY [**]

Environmental Law

The panel reversed in part and affirmed in part the district court's judgment invalidating a 2008 biological opinion by the U.S. Fish and Wildlife Service that concluded that the Central Valley and State Water Projects jeopardized the continued existence of the delta smelt and its habitat.

The Central Valley Project and the State Water Project, operated respectively by the U.S. Bureau of Reclamation and the State of California, supply water originating in northern California to agricultural and domestic consumers in central and southern California. The source of the water—the estuary at the confluence of the San Francisco Bay and the Sacramento-San Joaquin Delta—is the lone habitat for the delta smelt, a threatened species under the Endangered Species Act ("ESA"). After the Bureau of Reclamation requested a biological opinion ("BiOp"), the U.S. Fish and Wildlife Service ("FWS") concluded that the Central Valley operations would threaten the delta smelt and, as required by the ESA, proposed alternatives to ameliorate the effect on the smelt, including reducing the water exported to southern California. The plaintiffs-appellees—various water districts, water contractors, and agricultural consumers—brought suit under the Administrative Procedure Act against various federal defendants. The district court concluded that the 2008 BiOp was arbitrary and capricious.

Concerning the scope of the record, the panel held that the district court overstepped its bounds in admitting additional declarations from the parties' experts. The panel held that it would consider the BiOp and evidence submitted by the parties that the FWS considered in making its decision, and the testimony of the four experts the district court appointed pursuant to Federal Rule of Evidence 706.

Concerning the merits, the panel held that the 2008 BiOp's reliance on raw salvage figures to set the upper and lower Old and Middle Rivers flow limits was not arbitrary and capricious. The panel also held that the 2008 BiOp's determination of X2 (the point in the Bay-Delta at which the salinity is less than two parts per thousand) was not arbitrary and capricious. The panel further held that the BiOp's incidental take statement was not arbitrary and capricious because it included adequate explanation and support for its determinations. The panel also held the record supported the BiOp's conclusions regarding the indirect effects of project operations. The panel disagreed with the district court's determination that the FWS's own regulations and the Administrative Procedure Act required the FWS to explain that the reasonable and prudent alternatives satisfied 50 C.F.R. § 402.02's non-jeopardy factors. The panel held that the FWS's consideration of these factors could be reasonably discerned from the record to satisfy any explanation requirements.

Concerning the cross appeal, the panel held that the FWS did not violate the ESA by not separating the discretionary from nondiscretionary actions when it set the environmental baseline. The panel also held that the Bureau of Reclamation did not violate the ESA by accepting the 2008 BiOp. The panel affirmed the district court's judgment with respect to the National Environmental Policy Act ("NEPA") claims, and held: NEPA does not require the FWS to prepare an Environmental Impact Statement in conjunction with the issuance of the BiOp; and the Bureau of Reclamation's provisional adoption and implementation of the BiOp triggered its obligation to comply with NEPA. The panel affirmed the district court's order remanding to the Bureau of Reclamation so that it can complete an Environmental Impact Statement evaluating the effects of its adoption and implementation of the BiOp.

Eighth Circuit Judge Arnold dissented from Parts III, IV.A., IV.B, IV.E, and V.B. of the majority opinion, and concurred in the rest. Judge Arnold would uphold the district court's limited admission of evidence outside the administrative record as relevant to the Old and Middle River flow limits and determination of X2, and agreed with the district court that the FWS's determination as to the flow prescription and X2 was arbitrary and capricious. Judge Arnold disagreed with the basis of the district court's conclusion that the non-jeopardy elements must be addressed in the BiOp or administrative record, but would affirm on the issue. Finally, Judge Arnold believes the district court should have found the Bureau of Reclamation independently liable under the ESA for relying on a legally flawed BiOp.

Judge Rawlinson concurred in the bulk of the majority opinion, but dissented from Part V.C.2. Judge Rawlinson disagreed only with the rationale and conclusion that the Bureau of Reclamation's adoption and implementation of the BiOp triggered its obligation to comply with NEPA by preparing an Environmental Impact Statement that is generally required under the ESA.

TABLE OF CONTENTS

I. FACTS AND PROCEEDINGS BELOW ........... 26

A. Background. . ............................ 26

1. The Sacramento-San Joaquin Delta.. ....... 26

2. The delta smelt.. ....................... 31

B. Proceedings Leading To The Present Controversy ........................................ 33

1. The FWS's 2008 Biological Opinion. . ..... 33

2. The present case.. ...................... 39

II. STANDARDS OF REVIEW. . .................. 43

III. THE SCOPE OF THE RECORD ................ 45

IV. MERITS OF THE BiOp ....................... 50

A. The 2008 BiOp's Reliance on Raw Salvage Figures to Set the Upper and Lower OMR Flow Limits Was Not Arbitrary and Capricious.. .................. 53
1. The FWS's choice of a more conservative model to calculate flow limits in Figures B-13 and B-14 was supported by substantial evidence. . . . . . 56
2. The BiOp's determination of OMR flow limits was influenced by more than Figures B-13 and B-14 ................................... 64
3. The OMR flow limits exist as one part in a dynamic monitoring system that accounts for the smelt population as a whole.. ............. 71
B. The 2008 BiOp's Determination of X2 Was Not Arbitrary and Capricious.. .................. 74
1. The FWS was not arbitrary and capricious in comparing DAYFLOW to CALSIM II. . . . . . 75
2. The BiOp sufficiently explained the fall X2 locations.. ............................ 85
C. The BiOp's Incidental Take Statement Is Not Flawed ........................................ 91
1. The ITS reasonably uses different data sets for adult and juvenile take limits.. ............ 93
2. The FWS reasonably uses an average cumulative salvage index .......................... 94
D. The Record Supports the BiOp's Conclusions Regarding the Indirect Effects of Project Operations ........................................ 96
1. Project operations indirectly affect smelt food supply.. .............................. 98
2. Project operations indirectly affect the smelt through water contamination ............. 101
3. Project operations indirectly affect the smelt through the "other stressors" of predation, macrophytes, and microcystis. . .......... 103
a. Predation .......................... 104
b. Aquatic Macrophytes. . .............. 107
c. Microcystis. . ...................... 109
E. The FWS Is Not Required to Support the "Non-Jeopardy" Elements of its RPA .............. 110

V. CROSS-APPEAL.. .......................... 119

A. Segregating Discretionary From Nondiscretionary Actions ................................. 119
B. Reclamation Did Not Violate the ESA by Accepting the 2008 BiOp. . ......................... 124
C. Application of NEPA to the FWS and Reclamation ....................................... 124
1. Application of NEPA to the FWS ......... 127
2. Application of NEPA to Reclamation ...... 133

VI. CONCLUSION ............................. 153

GLOSSARY OF TERMS. . ...................... 154

PARTIAL DISSENT BY JUDGE ARNOLD ......... 155

PARTIAL DISSENT BY JUDGE RAWLINSON. . . . . 161

OPINION

BYBEE, Circuit Judge,

BYBEE, Circuit Judge, with whom ARNOLD, Circuit Judge, joins as to Parts I, II, IV.C, IV.D, V.A, and V.C, and with whom RAWLINSON, Circuit Judge, joins except as to Part V.C.2:

As the district court aptly put it, these cases arise from the "continuing war over protection of the delta smelt." San Luis & Delta-Mendota Water Auth. v. Salazar, 760 F.Supp.2d 855, 863 (E.D. Cal. 2010). We are joined to the fray. The district court invalidated a biological opinion by the Fish and Wildlife Service that concluded that the Central Valley and State Water Projects jeopardize the continued existence of a three-inch fish and its habitat. We reverse in part and affirm in part.

The Central Valley Project and the State Water Project, operated respectively by the Bureau of Reclamation (Reclamation)[1] and the State of California, are perhaps the two largest and most important water projects in the United States. These combined projects supply water originating in northern California to more than 20, 000, 000 agricultural and domestic consumers in central and southern California. The source of this water, the estuary at the confluence of the San Francisco Bay and Sacramento-San Joaquin Delta (Bay-Delta), is also the lone habitat for the delta smelt, a threatened species under the Endangered Species Act. 16 U.S.C. § 1531 et seq.

In 2008, Reclamation requested a biological opinion (BiOp) from the U.S. Fish and Wildlife Service (FWS), in accord with the Endangered Species Act (ESA), on whether its continued operations would jeopardize the smelt. In a more than 400-page opinion—described by the FWS as the most complex biological opinion ever prepared—the FWS concluded that the Central Valley operations would threaten the delta smelt and, as required by the Endangered Species Act, proposed "reasonable and prudent alternatives" that Reclamation should take to ameliorate the effect on the smelt. The alternatives recommended by the FWS would reduce the water exported from northern California to southern California through the Central Valley and State Water Projects. Reclamation has notified the FWS that it intends to operate the Projects in compliance with the biological opinion.

The plaintiffs-appellees—various water districts, water contractors, and agricultural consumers[2]—brought suit under the Administrative Procedure Act against various federal defendants, including Reclamation, the FWS, and the Secretary of the Interior, to prevent the federal defendants from implementing the biological opinion and its proposed alternatives. The district court, in a lengthy and comprehensive opinion, was deeply critical of the biological opinion and concluded that it was arbitrary and capricious. The court accused the FWS of repeatedly "ignoring [the] best science available" to reach a "results-driven choice." 760 F.Supp.2d at 940, and "show[ing] no inclination to fully and honestly address water supply needs beyond the species, " even as it "interdict[s] the water supply for domestic human consumption and agricultural use for over twenty million people who depend on the Projects for their water supply, " id. at 956–57 (quoting the FWS).

We are acutely aware of the consequences of this proceeding. As a court, however, we are limited in our review of matters within the expertise of an agency. We may review the FWS's biological opinion and Reclamation's implementation for arbitrariness, caprice, or actions otherwise not in accordance with law. 5 U.S.C. § 706(2)(A). Although the FWS must employ "the best scientific and commercial data available, " 16 U.S.C. § 1536(a)(2), it is "not required to support its finding that a significant risk exists with anything approaching scientific certainty, " Indus. Union Dep't v. Am. Petroleum Inst., 448 U.S. 607, 656 (1980) (plurality opinion). And, "[w]hen examining this kind of scientific determination . . . a reviewing court must generally be at its most deferential." Baltimore Gas & Elec. Co. v. NRDC, 462 U.S. 87, 103 (1983). For the reasons explained below, we conclude that the district court failed to observe these standards and we reverse its judgment.

We recognize the enormous practical implications of this decision. But the consequences were prescribed when Congress determined that "these species of fish, wildlife, and plants are of esthetic, ecological, educational, historical, recreational, and scientific value to the Nation and its people." 16 U.S.C. § 1531(a)(3). As the Supreme Court observed in Tennessee Valley Authority v. Hill: "It may seem curious to some that the survival of a relatively small number of three-inch fish . . . would require the permanent halting of a virtually completed dam, " but "the explicit provisions of the Endangered Species Act require precisely that result." 437 U.S. 153, 172–73 (1978). Such species have been "afforded the highest of priorities, " by Congress, even if it means "the sacrifice of the anticipated benefits of the project and of many millions of dollars in public funds." Id. at 174 (footnote omitted). The law prohibits us from making "such fine utilitarian calculations" to balance the smelt's interests against the interests of the citizens of California. Id. at 187. Consequently, any other "[r]esolution of these fundamental policy questions" about the allocation of water resources in California "lies . . . with Congress and the agencies to which Congress has delegated authority, as well as with state legislatures and, ultimately, the populace as a whole." Baltimore Gas & Elec., 462 U.S. at 97.

I. FACTS AND PROCEEDINGS BELOW

A. Background

1. The Sacramento-San Joaquin Delta

"The history of California water development and distribution is a story of supply and demand. California's critical water problem is not a lack of water but uneven distribution of water resources." United States v. State Water Res. Control Bd., 182 Cal.App.3d82, 98 (Cal.Ct.App. 1986). California's Central Valley comprises some of the most productive farmland in the world. Extending 450 miles from north to south, and averaging 100 miles wide east to west, the Central Valley includes two principal rivers: The Sacramento River begins in the northern part of the valley, runs south past Sacramento, and is fed by the Feather and American Rivers. The San Joaquin River begins in the Sierra Nevadas, northeast of Fresno, runs west and northwest into the Central Valley, and is fed by smaller rivers, including the Calaveras, Chowchilla, Fresno, Kings, Merced, Mokelumne, Stanislaus, and Tuolumne Rivers. The two rivers converge in the Sacramento-San Joaquin Delta and form an estuary that joins Suisun Bay, San Francisco Bay, and the Pacific Ocean. Although over 70 percent of California's water originates north of Sacramento, more than 70 percent of the state's demand is in the south. The water from this region supplies irrigation for seven million acres of agriculture and more than twenty million people, nearly half of California's residents. See Where Does California's Water Come From?, Aquafornia, The California Water News Blog, Aug. 13, 2008, 9:29 a.m., http://www.aquafornia.com/index.php/where-does-californias-water-come-from/. See generally Dugan v. Rank, 372 U.S. 609, 612–13 (1963); United States v. Gerlach Live Stock Co., 339 U.S. 725, 728–29 (1950); San Luis & Delta-Mendota Water Auth. v. United States, 672 F.3d 676, 681–83 (9th Cir. 2012); Westlands Water Dist. v. United States, 337 F.3d 1092, 1095–96 (9th Cir. 2003); In re Bay-Delta Programmatic Envtl. Impact Report Coordinated Proceedings, 184 P.3d 709, 715–17 (Cal. 2008); State Water Res. Control Bd., 182 Cal.App.3dat 97–100.

In an effort to manage the increasing and conflicting demands placed on the water flowing through the Sacramento-San Joaquin Delta region, California and the United States have embarked on two massive projects. First, in 1933, California proposed the Central Valley Project (CVP), a plan to transfer water from the Sacramento River to water-deficient areas in the San Joaquin Valley and from the San Joaquin River to the southern regions of the Central Valley. State Water Res. Control Bd., 182 Cal.App.3dat 98–100. Reclamation took over the project in 1935, and it is now "the largest federal water management project in the United States." Central Delta Water Agency v. United States, 306 F.3d 938, 943 (9th Cir. 2002). The CVP consists of a series of dams, including Shasta, Folsom, and Nimbus Dams; 21 reservoirs; 11 hydropower plants; and 500 miles of canals and aqueducts. In re Bay-Delta, 184 P.3d at 716 n.1. In 1992, Congress adopted the Central Valley Project Improvement Act (CVPIA), Pub. L. No. 102-575, 106 Stat. 4706, which Congress described as designed "to achieve a reasonable balance among competing demands for use of Central Valley Project water, including the requirements of fish and wildlife, agricultural, municipal and industrial and power contractors." CVPIA, § 3402(f), 106 Stat. at 4706.

In 1951, California approved what is known as the State Water Project (SWP), the largest state-built water project in the United States. San Luis & Delta-Mendota Water Auth., 672 F.3d at 683. Managed by the California Department of Water Resources (DWR), "[t]he SWP serves the domestic water needs of approximately two-thirds of all Californians, " principally in Southern California. In re Bay-Delta, 184 P.3d at 716. SWP consists of "21 dams and reservoirs, . . . five power plants, 16 pumping plants, and 662 miles of aqueduct." Id. at 716 n.2. In 1994, eight state agencies and 10 federal agencies formed the CALFED Bay-Delta Program (CALFED) to address comprehensively the challenges of managing the Bay-Delta estuary. Id. at 717.

The CVP and SWP each operate a major station for pumping water from the Bay-Delta to canals and aqueducts that will carry the water to the south. Both plants are located near Tracy, California, and together they reverse the natural flow of the southern part of the Bay-Delta through two distributaries of the San Joaquin, Old, and Middle Rivers, referred to as "OMR." San Luis & Delta-Mendota, 760 F.Supp.2d at 863. The CVP operates the Jones Pumping Plant, capable of diverting 4, 600 cubic feet per second (cfs). Nearby, the SWP operates the Harvey O. Banks Pumping Plant, with a capacity of 10, 300 cfs, although it generally operates at or below 6, 680 cfs. BiOp at 82, 108, 159–60. The plants have been constructed with louvers that allow water to pass through into the pumping plant, but will prevent most fish from entering the plants. The process of the fish entering the plants, known as entrainment, traps some 52 different species of fish. BiOp at 67. The salvaged fish are hauled in trucks injected with oxygen and released at sites on the Sacramento and San Joaquin Rivers. BiOp at 67, 145. Over a recent 15-year period, more than 110 million fish were salvaged from the Jones and Banks facility. BiOp at 160. This number, however, greatly underestimates the number of fish actually entrained at the facilities, because fish less than 30 mm (1.2 inches) are not efficiently collected at the louvers. BiOp at 160–61. Smaller fish, especially those in the juvenile or larval stage, are killed in the pumps. BiOp at 210. Those that are salvaged frequently do not survive the salvage process. BiOp at 338.

The Colorado River and the SWP have historically been the major supply of water for southern California. As the result of an interstate agreement signed in 2003, California will receive less water from the Colorado River. Quantification Settlement Agreement, San Diego Water Authority, http://www.sdcwa.org/quantification-settlement-agreement (last visited July 29, 2013). As a consequence, southern California has sought more water from SWP. BiOp at 89–90. Increased demand for water from SWP has had a predictable effect on the water flowing into the Bay-Delta. As more water is diverted from the rivers that feed the Delta into the southern Central Valley, the salinity of the Delta and its estuaries increases along with the threat to the species that thrive there.

The Delta generally describes a large lowland area with a labyrinth of natural channels in and around the confluence of the Sacramento and San Joaquin Rivers. . . .
The major factor affecting water quality in the Delta is saltwater intrusion. Delta Lands, situated at or below sea level, are constantly subject to ocean tidal action. Salt water entering from San Francisco Bay extends well into the Delta, and intrusion of the saline tidal waters is checked only by the natural barrier formed by fresh water flowing out from the Delta.

State Water Resources Control Bd., 182 Cal.App.3dat 107. Since the 1970s, Reclamation and a raft of state agencies have worked to mitigate the effects of increased water salinity on Suisun Bay resulting from the upstream diversion of water that would otherwise naturally flow through Suisun. BiOp at 112–13. Salinity levels in Suisun Bay are highly sensitive to diversion from the Delta.

Two related standards are used to describe the salinity of the Bay-Delta. The first is the Low Salinity Zone or LSZ. BiOp at 147. The LSZ is the transition point between the freshwater of the inland rivers and brackish water flowing eastward from San Francisco Bay and the Pacific Ocean, and includes water ranging in salinity from 0.5 parts per thousand to six parts per thousand. BiOp at 191. The second is referred to as X2. X2 represents the point in the Bay-Delta at which the salinity is less than two parts per thousand. See Westlands Water Dist. v. Dep't of Interior, 376 F.3d 853, 876 (9th Cir. 2004). The LSZ, which encompasses a larger region of the Bay-Delta, is generally centered around X2. Together, these regions are largely determined by Bay-Delta outflow, which is the difference between the inflow and the water exported. The agencies use X2 as a marker for the LSZ as well as a habitat indicator for fish and as a regulatory standard. BiOp at 149–50, 236; San Luis & Delta Mendota, 760 F.Supp.2d at 864 & nn.4–5. They express the location of X2 as its distance in kilometers east of the Golden Gate Bridge, Westlands Water Dist., 376 F.3d at 876.

2. The delta smelt

The delta smelt (Hypomesus transpacificus) is a small, two-to-three inch species of fish endemic to the San Francisco Bay/Sacramento-San Joaquin Delta Estuary. BiOp at 140–41. Once an abundant species in the Bay-Delta ecosystem, the delta smelt is now in imminent danger of extinction. In March 1993, the species was listed as threatened under the ESA, and the FWS designated the Bay-Delta system a critical habitat for the delta smelt in 1994.[3]50 C.F.R. § 17.11; BiOp at 140. Yet, over the past decade, the delta smelt population has been decimated even relative to these depleted levels, with a measured decline since 2000 of up to three orders of magnitude below historic lows.[4] San Luis & Delta-Mendota, 760 F.Supp.2d at 866. As a consequence, the FWS announced in 2010 that reclassifying the delta smelt from a threatened to an endangered species was warranted but precluded by higher priority listings.[5] Id.

The ESA provides "both substantive and procedural provisions designed to protect endangered species and their habitat." Am. Rivers v. Nat'l Marine Fisheries Serv., 126 F.3d 1118, 1121 (9th Cir. 1997).[6] One such protection, § 7(a)(2) of the ESA, requires federal agencies to "insure that any action authorized, funded, or carried out by such agency . . . is not likely to jeopardize the continued existence of any endangered species or threatened species or result in the destruction or adverse modification of habitat of such species." 16 U.S.C. § 1536(a)(2). Should the agency find that its proposed action may affect a listed species or critical habitat, it must formally or informally consult with the Secretary of the Interior, or his or her delegee. 16 U.S.C. § 1536(a)(4); 50 C.F.R. § 402.14(a); see Am. Rivers, 126 F.3d at 1122. If no effect is found, consultation is not required.

50 C.F.R. § 402.14. Formal consultation is required when the acting agency or consulting agency determines that the proposed action is likely to adversely affect a listed species or critical habitat. 50 C.F.R. §§ 402.13, 402.14. Formal consultation requires the consulting agency, here the FWS, to issue a biological opinion stating whether the proposed action is likely to jeopardize such species or habitat. 16 U.S.C. § 1536(b); 50 C.F.R. § 402.14. Should the action jeopardize the species or habitat, the consulting agency must suggest any "reasonable and prudent alternatives" (RPA) that would allow the projects to continue operation without causing jeopardy to the species or adverse modification to its critical habitat. 16 U.S.C. § 1536(b)(3)(A). Once it receives the BiOp, the acting agency "shall determine whether and in what manner to proceed with the action in light of its section 7 obligations and the [FWS's] biological opinion." 50 C.F.R. § 402.15(a). If, after consultation, the agency determines that it cannot comply with § 7(a)(2), it may apply for an exemption, which can only be authorized by the Endangered Species Committee, an ad hoc panel composed of executive branch members and at least one appointee from the state in which the project is to occur. 16 U.S.C. § 1536(e); 50 C.F.R. §§ 402.15(c), 451.

B. Proceedings Leading To The Present Controversy

1. The FWS's 2008 Biological Opinion

Reclamation sought a biological opinion from the FWS as part of its continued long-term operation of the CVP and its coordinated operations with state agencies of the SWP. BiOp at 1, 8[7] Following § 7(a)(2) review and a subsequent formal consultation, the FWS issued a biological opinion in 2005 (2005 BiOp). The 2005 BiOp found that the proposed coordinated operations of the CVP and SWP would not have an adverse effect on the continued existence and recovery of the delta smelt and its critical habitat. San Luis & Delta-Mendota, 760 F.Supp.2d at 863. The Natural Resources Defense Council-defendants-intervenors-appellants in the present case-challenged the FWS's conclusion in U.S. District Court for the Eastern District of California, and the court found the 2005 BiOp arbitrary and capricious. Kempthorne, 506 F.Supp.2d at 387. After conducting an extensive evidentiary hearing, the district court issued an interim remedial order and findings of fact and conclusions of law, which covered, among other things, the effects on delta smelt of negative flows in OMR. See San Luis & Delta-Mendota, 760 F.Supp.2d at 864. The district court ordered Reclamation and DWR to implement a winter "pulse flow" in OMR of no more negative than - 2, 000 cfs, and to "operate the CVP and SWP to achieve a daily average net upstream (reverse) flow in the OMR not to exceed -5, 000 cfs on a seven-day running average during a defined period in the spring."[8] Id.; Int. Rem. Order at 5-7. The district court also ordered the FWS to complete a new BiOp in just nine months, a deadline that it would ultimately extend to one year. San Luis & Delta-Mendota, 760 F.Supp.2d at 865; Int. Rem. Order at 2.

The FWS issued a new delta smelt biological opinion on the deadline, December 15, 2008 (2008 BiOp or BiOp).[9]BiOp at 1–396. In stark contrast to the 2005 BiOp, the 2008 BiOp concluded that the "coordinated operations of the CVP and SWP, as proposed, are likely to jeopardize the continued existence of the delta smelt" and "adversely modify delta smelt critical habitat." BiOp at 276–78. With respect to the delta smelt, the FWS entered five findings of fact: (1) "Diversions of water from the Delta have increased since 1967 when the SWP began operation in conjunction with the CVP." BiOp at 276. The CVP/SWP operations have entrained smelt, including adults, larvae, and juveniles, at the Banks and Jones facilities; reduced smelt habitat; and reduced the Delta outflows, altering the location of the LSZ; (2) "The delta smelt is currently at its lowest level of abundance since monitoring began in 1967"; (3) "Under the proposed CVP/SWP operations, inflows to the Delta are likely to be further reduced, as water demands upstream of the Delta increase, most notably on the American River." BiOp at 276. This is likely to "cause increased relative entrainment of adult delta smelt in the winter and spring, and of larval and juvenile delta smelt in the spring"; (4) "Other baseline stressors will continue to adversely affect the delta smelt, such as contaminants, microcystis, aquatic macrophytes, and invasive species"; (5) To recover, delta smelt will need a more abundant adult population, an increase in the quality and quantity of spawning, rearing, and migratory habitat, a reduction in contaminants and pollutants, a reduction in exposure to disease and toxic algal blooms, and a reduction in entrainment at water-diversion facilities in the Bay-Delta. BiOp at 276-77. With respect to delta smelt critical habitat, the FWS found that "past and present operations of the CVP/SWP have degraded these habitat elements" such that they are "insufficient to support successful delta smelt recruitment at levels that will provide for the species' conservation." BiOp at 278.

The FWS recommended five components and listed six separate actions as "reasonable and prudent alternatives" (RPA):

RPA Component 1 (Actions 1 and 2). Component 1 protects the adult delta smelt li fe stage by controlling OMR flows during the vulnerable December to March period. It has two proposed actions. Action 1 is "designed to protect upmigrating delta smelt" and describes the two periods when delta smelt are most vulnerable to entrainment: in December and when the first flush appears. BiOp at 280-81. Action 1 therefore proposes limiting the negative flows at OMR based on a "daily salvage index." Id. In effect, this means that when the "daily salvage index" reaches a critical point ("the risk threshhold"), the Projects have to reduce their diversion for 14 days. During that period, OMR flows can be "no more negative than -2, 000 cfs" for a 14-day running average and "no more negative than -2, 500 cfs" for a 5-day running average. BiOp at 281, 329. Action 2 follows from Action 1 but covers the period from December through March, when pre-spawning adult delta smelt are vulnerable to entrainment. BiOp at 352. During that period, OMR flows can be no more negative than -5, 000 cfs, although the FWS expected that flows would generally be in the range of-2, 000 cfs to - 3, 500 cfs.

RPA Component 2 (Action 3). Component 2 protects larval and juvenile delta smelt by limiting OMR flows following the completion of Component 1 when the Bay-Delta water temperatures reach 12°C, or when a spent female smelt is detected in trawls at Jones or Banks or is found in the salvage facilities. Action 3 requires the CVP/SWP projects to maintain their average OMR flows between -1, 250 and - 5, 000 cfs until June 30, or until the mean water temperature reaches a target level, whichever occurs earlier. BiOp at 290, 357-58.

RPA Component 3 (Action 4). Component 3 improves smelt habitat by increasing Bay-Delta outflow during the fall. Action 4 requires that in September and October, in years when the precipitation and runoff is defined as "wet or above normal, " Reclamation and DWR must provide sufficient Delta outflow to maintain X2 no more eastward than 74 km from the Golden Gate in wet years and 81 km in above-normal years.[10] BiOp at 282-83, 369.

RPA Component 4 (Action 6[11]). Component 4 restores habitat by establishing a program to create or restore intertidal and associated subtidal habitat to the Bay-Delta and Suisun Marsh. Action 6 requires DWR to create or restore at least 8, 000 acres in the Delta and Suisun Marsh. BiOp at 283.

RPA Component 5. Component 5 monitors and reports on the implementation, success, and possible improvements of Components 1–4.[12]

Finally, the FWS issued an "incidental take statement" (ITS) in accord with 50 C.F.R. § 402.02. For purposes of the ITS, the FWS presumed that its reasonable and prudent alternatives would be implemented. Based on that premise, the FWS found that, as a result of CVP/SWP operations, there would be a take of the delta smelt, and that although the extent of the take would be difficult to estimate, smelt entrainment would be minimized when OMR flows were regulated according to the FWS's proposed RPA. BiOp at 285–86. As a consequence, the FWS concluded that "this level of anticipated take is not likely to result in jeopardy to the species or destruction or adverse modification of critical habitat when the RPA is implemented." BiOp at 293.

2. The present case

The first of six complaints challenging the FWS's 2008 BiOp was filed in March 2009. San Luis & Delta-Mendota, 760 F.Supp.2d at 865. "Plaintiffs moved for a preliminary injunction . . . to prevent Reclamation from implementing Component 2 of the RPA, alleging that FWS violated the National Environmental Policy Act ("NEPA") and the ESA." Id. The district court granted the motion in part, finding that plaintiffs-appellees were likely to succeed on the merits of their NEPA claim, and requiring the FWS to make specific written findings to justify weekly decisions regarding OMR flow restrictions. Id.

Plaintiffs-appellees sought a preliminary injunction against the implementation of RPA Component 3. Id. Following an evidentiary hearing, [13] the district court issued a preliminary injunction confirming that plaintiffs-appellees had succeeded on their NEPA claims and finding that plaintiffs-appellees were likely to succeed on the merits of their ESA claim. Id.

In December 2010, the district court entered final judgment on the primary claims in a 115-page opinion. Id. at 967–70. Although the FWS's 2008 BiOp reached antipodal conclusions to the 2005 BiOp—which reached a no-jeopardy conclusion and was found arbitrary and capricious—the district court once again found the 2008 BiOp to be arbitrary and capricious under the ESA and the APA and remanded the BiOp, its RPA, and Reclamation's provisional acceptance of the RPA to the agency. San Luis & Delta-Mendota, 760 F.Supp.2d at 855, 970. The court's remand required the completion of yet a third BiOp analyzing the impact of CVP and SWP operations on the delta smelt. San Luis & Delta-Mendota, 760 F.Supp.2d at 870. In March 2011, the district court entered final judgment on all remaining claims.

Although the district court accepted the BiOp's central conclusion that "Project operations are likely to jeopardize the continued existence and/or adversely modify the critical habitat of the delta smelt, " id. at 969, the district court determined that there were a number of specific flaws with the BiOp, id. at 967–70. We will briefly set forth the district court's principal objections here—which are highly technical and somewhat obtuse out of context—and explain them in more detail in the discussion section.

First, the district court found the BiOp's reliance on analyses using raw salvage figures—e.g., those calculations that incorporated the absolute "raw" number of smelt entrained in pumping stations, as opposed to the smelt entrained as a percentage of the total population—to be arbitrary and capricious and not the result of the best available science. Id. at 968. These calculations significantly influenced the upper and lower OMR flow limits in Actions 1, 2, and 3.

Second, the district court found that the BiOp's use of two different models, CALSIM II and DAYFLOW, that predict the location of X2, introduced bias requiring a corrective calibration or, at the very least, explanation. Id. The district court also found that the bias produced by the comparison of CALSIM II to DAYFLOW tainted the BiOp's justification for Action 4, which involves the management of X2. In addition, the district court found that the BiOp did not sufficiently explain why it is essential in Component 3 (Action 4) to maintain X2 at the specific locations of 74 km upstream from the Golden Gate Bridge following "wet years" and 81 km following "above-normal years." Id. at 969.

Third, the district court found that the BiOp did not sufficiently explain why different data sets were used to calculate the incidental take limit for juvenile and for adult smelt, and why these limits were calculated using an average of previous years' smelt salvage (which would be expected to be exceeded in 50% of all future years).

Fourth, the district court found the BiOp did not adequately support its conclusions that Project operations are reasonably certain to indirectly affect the delta smelt by limiting delta smelt food supply, by increasing harmful pollution and contaminants, and by increasing the detrimental impact of the "other stressors" of predation, macrophytes, and microcystis on delta smelt. Id.

Fifth, the district court held that the BiOp failed to analyze economic feasibility, consistency with the purpose of the action, and consistency with the action agency's authority, as required by § 402.02. See 5 U.S.C. ...


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