Center for Biological Diversity v. U.S. Army Corps of Engineers

          Appeal from the United States District Court No. 8:17-cv-00618-SDM-MAP for the Middle District of Florida

          Before ED CARNES, Chief Judge, and MARTIN and ROGERS, ^[*] Circuit Judges.

          ROGERS, CIRCUIT JUDGE

         Under the Clean Water Act, the Army Corps of Engineers regulates discharges into wetlands that are waters of the United States, and must consider the direct and indirect environmental effects of such discharges before issuing a permit to discharge. Mining for phosphate ore (used to make phosphoric acid that is in turn used to make fertilizer) produces dredged and fill material that Mosaic, a fertilizer manufacturer engaged in phosphate mining, seeks to discharge into such wetlands. The subsequent process of manufacturing fertilizer from the mined phosphate ore generates a radioactive byproduct, phosphogypsum. The primary question in this case is whether the Corps must take into account certain environmental effects of producing and storing phosphogypsum-distant in time and place from the wetland discharges accompanying the phosphate mining- merely because phosphogypsum is a byproduct of manufacturing fertilizer from the mined ore. While it is true that the Corps must consider indirect environmental effects, the Supreme Court has made clear that indirect effects must be proximate, and do not include effects that are insufficiently related to an agency's action. Dep't of Transp. v. Pub. Citizen, 541 U.S. 752, 767 (2004). In assessing this proximate cause limitation, the Corps may reasonably take into account the fact that the distantly caused effects in question are subject to independent regulatory schemes. Id. In granting the discharge permit in this case without addressing the environmental effects of phosphogypsum, the Corps relied in part on the fact that other agencies directly regulate these effects. Such reasoning in this case by the Corps was not arbitrary, capricious, or an abuse of discretion. Other bases asserted for rejecting the Corps' discharge permit also lack merit, and the district court accordingly properly upheld the Corps' permit.

         I.

         Mosaic wishes to extend its mining operations within the central Florida phosphate mining district. Mosaic must obtain mining permits from the Florida Department of Environmental Protection ("FDEP"), which, under authority delegated to it by the EPA, issues permits for phosphate mining in Florida, with conditions and requirements regarding pollutant discharge. See 33 U.S.C. §§ 1311(a), 1342(a) (describing the National Pollutant Discharge Elimination System ("NPDES") permit program). In connection with these planned mining operations, Mosaic seeks to discharge dredged and fill material into waters of the United States. This activity is subject to regulation under the Clean Water Act, which prohibits the discharge of pollutants into the waters of the United States absent an appropriate permit. See id. § 1344(a). The Corps has regulatory authority over the applicable permit here, the Section 404 permit, to allow the discharge of dredged or fill material into navigable waters. See id. § 1344.

         In 2010 and 2011, Mosaic sought four Section 404 permits under the Clean Water Act to carry out this discharge activity.^[1] The Corps' issuance of a Section 404 permit counts as a major federal action, so the Corps was required to consider the environmental impact of issuing such a permit to Mosaic, which it did. As documented in its 500-page report, the Corps considered-among many other things-direct effects, such as how the discharge of dredged material into surrounding wetlands might affect the water quality of those wetlands. See 40 C.F.R. § 1508.8(a). The Corps also considered indirect effects, such as how that discharge might through stormwater runoff be carried to and affect the quality of distant waters. Id. § 1508.8(b).

         Because the Corps' action constitutes a major federal action, the Corps must also comply with the National Environmental Policy Act ("NEPA"). NEPA requires federal agencies to "take a 'hard look' at the potential environmental consequences of their actions." Ohio Valley Envt'l Coal v. Aracoma Coal Co., 556 F.3d 177, 191 (4th Cir. 2009) (quoting Robertson v. Methow Valley Citizens Council, 490 U.S. 332, 350 (1989)). Under NEPA, agencies are required to produce environmental-impact statements that account for the direct, indirect, and cumulative effects of major proposed actions. Direct effects are "caused by the action and occur at the same time and place"; indirect effects "are caused by the action and are later in time or farther removed in distance, but are still reasonably foreseeable." 40 C.F.R. § 1508.8. By "reasonably foreseeable," the regulations mean effects that are "sufficiently likely to occur that a person of ordinary prudence would take [them] into account in reaching a decision." See EarthReports, Inc. v. FERC, 828 F.3d 949, 955 (D.C. Cir. 2016) (quoting Sierra Club v. FERC, 827 F.3d 36, 47 (D.C. Cir. 2016)).

         The Corps determined that Mosaic's four mining-related projects had similarities that provided a basis for evaluating their environmental consequences together in one area-wide environmental-impact statement. The area-wide environmental-impact statement served as the project-specific NEPA analysis for each of the four permit applications. In 2016, the Corps published a draft Section 404 analysis and public-interest review for one of the proposed projects, the South Pasture Mine Extension. In doing so, the Corps also prepared a supplemental environmental assessment focusing on the South Pasture Mine Extension, to be read in conjunction with the area-wide environmental-impact statement for purposes of NEPA. In connection with the proposed Section 404 permit for the South Pasture Mine Extension, the Corps formally consulted with the Fish and Wildlife Service to obtain a biological opinion analyzing the potential effects that the mine extension would have on certain species. Ultimately, in November 2016, the Corps issued Mosaic a Section 404 permit for the South Pasture Mine Extension.

         Accordingly, Mosaic will be able to discharge dredged and fill material into the waters of the United States in connection with mining phosphate at the South Pasture Mine Extension for subsequent use in fertilizer production. Phosphate mining is a form of strip mining. After excavating the sand, clay, and phosphate ore from the site, Mosaic engages in a beneficiation process to separate the sand and clay from the valuable phosphate ore. The phosphate ore is then transported to Mosaic's fertilizer plants for processing into phosphoric acid. Phosphoric acid in turn is used to produce fertilizer. But the process of producing phosphoric acid generates waste in the form of phosphogypsum, a radioactive byproduct. Approximately five tons of phosphogypsum waste is created for every ton of useful phosphoric acid produced, for a total of over 30 million tons generated each year. Because phosphogypsum contains radioactive uranium and other metals that the EPA considers to pose a risk to humans and the environment, it must be stored and left to "weather" (reduce in radioactivity) in large open-air "stacks" that are hundreds of acres wide and hundreds of feet tall. The Corps determined that the environmental effects of phosphogypsum production and storage fell outside the scope of its NEPA review. This led Bio Diversity to file suit.

         Bio Diversity's complaint raises several claims under the Administrative Procedure Act ("APA"), NEPA, and the Endangered Species Act. The Corps moved for and was granted summary judgment. The district court found that there was nothing arbitrary and capricious about the Corps' determination that phosphogypsum stacks fell outside the scope of its NEPA analysis. Rather, the district court found that the Corps rationally treated fertilizer plants and their phosphogypsum waste as independent from the mining activities authorized by the Section 404 permit. The district court also approved the Corps' decision to analyze all four closely related projects in a single area-wide environmental-impact statement for NEPA purposes. Finally, the court rejected Bio Diversity's claim under the Endangered Species Act that the Corps was required to consult with the Fish and Wildlife Service before finalizing the area-wide environmental-impact statement. Bio Diversity appeals.

         II.

         As the district court properly determined, it was reasonable for the Corps to conclude that the environmental effects of phosphogypsum production and storage fell outside the scope of its NEPA review. NEPA and its regulations require agencies to consider only those effects caused by the agency's action, but phosphogypsum-related effects are caused by the Corps' Section 404 permit in only the most attenuated sense. In traditional legal terms, even if the Corps' permit is a but-for cause of those effects, it is not a proximate-or legally relevant- cause. Moreover, because the Corps lacks the authority to regulate phosphogypsum wholesale, the "rule of reason" instructs that the Corps need not consider its effects. Finally, the Corps' scoping decision is consistent with its own regulations, the Corps' interpretation of which is entitled to deference.

         NEPA requires agencies to consider the "environmental impact of the proposed action." 42 U.S.C. § 4332(C)(i). Here, the Corps' action is the issuance of a Section 404 permit authorizing the discharge of dredged and fill material into United States waters. The Corps did not issue a mining permit, nor a permit to produce fertilizer or to store phosphogypsum-it has no jurisdiction to regulate or authorize any of that. Having defined the federal action, "[t]o determine whether [NEPA] requires consideration of a particular effect, [the court] must look at the relationship between that effect and the change in the physical environment caused by the major federal action at issue." Metro. Edison Co. v. People Against Nuclear Energy, 460 U.S. 766, 773 (1983). Only the effects caused by that change in the environment-here, the discharge into U.S. waters-is relevant under NEPA.

         Phosphogypsum-related effects are, at most, tenuously caused by the discharge of dredged and fill material allowed by the Corps' permit. Phosphogypsum is a byproduct not of dredging and filling-nor even of phosphate mining or beneficiation-but of fertilizer production. Further, the fertilizer production takes place far from and long after the Corps-permitted discharges. Further still, the EPA and the FDEP-not the Corps-directly regulate fertilizer plants and phosphogypsum, including the "design, construction, operation, and maintenance of phosphogypsum stack systems." See 42 U.S.C. § 6901 et seq. Mosaic's fertilizer production will add to existing gypstacks, as they are called, but will not result in any new stacks. Even the nearest fertilizer plants and gypstacks to the South Pasture Mine Extension receive phosphate rock from many different sources outside of the Corps' jurisdiction. That means that gypstacks and the effects of phosphogypsum will continue to exist so long as, and to the extent that, Florida and the EPA allow-regardless of the Corps' permitting decision.

         Bio Diversity focuses on what it deems a but-for causal relationship between the Corps' permit and the production of phosphogypsum. That relationship focuses on the fact that Mosaic's fertilizer plants, which produce phosphogypsum, receive phosphate ore from local mines the company also owns. Bio Diversity therefore contends that "but for" the Corps' Section 404 permit, phosphogypsum's environmental effects would be diminished because Mosaic would not be able to obtain as much phosphate, thereby reducing its fertilizer (and phosphogypsum byproduct) production, if it could not discharge dredged and fill material into U.S. waters, which necessarily accompanies Mosaic's phosphate mining here. But the happenstance that Mosaic is the company mining the phosphate and discharging dredged and fill material into U.S. waters, and also the company running the fertilizer plant that produces phosphogypsum, does not change the fact that these events are insufficiently related to one another. NEPA does not stretch this far.

         NEPA does not cover all "effects that are 'caused by' a change in the physical environment in the sense of 'but for' causation." Metro. Edison Co., 460 U.S. at 774. Instead, NEPA requires a "reasonably close causal relationship between a change in the physical environment and the effect at issue," akin to the "familiar doctrine of proximate cause." See id. Agencies and courts must "look to the underlying policies or legislative intent in order to draw a manageable line between those causal changes that may make an actor responsible for an effect and those that do not." Id. at 774 n.7. The Corps reasonably determined that its Section 404 permit is not a proximate cause of attenuated phosphogypsum-related effects, and the competing line suggested by Bio Diversity is anything but manageable.

         Whatever causal relationship exists between the Corps-approved discharges and the effects of phosphogypsum, it is not a reasonably close one. Phosphogypsum is created and stored miles from the authorized discharges. In addition, phosphogypsum will only be created so long as Mosaic continues to operate in the fertilizer industry, the market continues to demand fertilizer with phosphoric acid, and phosphogypsum's regulators continue to permit its creation and storage throughout Florida. Intervening events such as these ordinarily break the causal chain.

         Given this tenuous causal chain, it was sensible for the Corps to draw the line at the reaches of its own jurisdiction, leaving the effects of phosphogypsum to phosphogypsum's regulators. The Corps' line respects the jurisdictional boundaries set by Congress and inherent in state-federal cooperation. The Clean Water Act empowers the Corps to grant Section 404 permits to "restore and maintain the chemical, physical, and biological integrity of the Nation's waters" by regulating "the discharge of pollutants into the navigable waters." 33 U.S.C. § 1251(a)(1). No federal law empowers the Corps to protect the environment writ large or to regulate phosphate mining as such, much less fertilizer production or phosphogypsum stacking. Whatever federal regulatory powers there are over phosphogypsum-related effects, Congress granted to the EPA, leaving the bulk of control over phosphate mining and fertilizer production to the states. See 42 U.S.C. § 6901 et seq. Requiring the Corps to enter those regulatory spheres not only offends congressional design but risks duplicative, incongruous, and unwise regulation. Because the Corps does not generally regulate phosphogypsum, it has no subject-matter expertise in that area.

         "The scope of the agency's inquiries must remain manageable if NEPA's goal of 'ensur[ing] a fully informed and well considered decision' is to be accomplished." Metro. Edison Co., 460 U.S. at 776 (quoting Vermont Yankee Nuclear Power Corp. v. NRDC, 435 U.S. 519, 558 (1978)). Far from manageable, the new inquiries required of the Corps would bog down agency action in the name of duplicative and potentially incoherent regulation.

         The Corps' decision not to consider phosphogypsum-related effects is fully justified by the rule of reason announced in Public Citizen. 541 U.S. at 767. The rule of reason "ensures that agencies determine whether and to what extent to prepare an [environmental-impact statement] based on the usefulness of any new potential information to the decisionmaking process." Id. Thus, "where an agency has no ability to prevent a certain effect due to its limited statutory authority over the relevant actions, the agency cannot be considered a legally relevant 'cause' of the effect." Id. at 770.

         The Corps has no categorical statutory authority under the Clean Water Act to prevent phosphogypsum-related effects apart from the possibility that they are direct, indirect, or cumulative effects of the discharges into U.S. waters. This supports the Corps' decision not to consider those effects. Section 404 of that Act authorizes the Corps to "issue permits . . . for the discharge of dredged or fill material into the navigable waters at specified disposal sites." 33 U.S.C. § 1344(a). That section further authorizes the Corps to reject such a permit "whenever [it] determines . . . that the discharge of such materials into such area will have an unacceptable adverse effect on municipal water supplies, shellfish beds and fishery areas (including spawning and breeding areas), wildlife, or recreational areas." Id. § 1344(c). The Corps has no categorical power to refuse a permit for any other reason, such as its dislike of the applicant's business or downstream effects not sufficiently caused by "the discharge of such materials." The Corps accordingly properly relied upon the fact that phosphogypsum-related effects are primarily regulated by other agencies in its determination not to consider those effects, and did so without violating NEPA.

         This makes good sense in light of the existing regulatory landscape over phosphogypsum. Mosaic and others already produce fertilizer in Florida, and gypstacks will exist in Florida regardless of the Corps' actions. Thus, current and future phosphogypsum will cause environmental effects with or without the Corps' permit-subject only to regulation by Florida and the EPA. On the flip side, Florida or the EPA could regulate those gypstacks out of existence even if the Corps were to grant Mosaic its Section 404 permit. Requiring the Corps to consider the effects of phosphogypsum is not reasonable when it is independent of the regulators more directly responsible for evaluating those effects.

         Further, that the Corps could indirectly mitigate future phosphogypsum-related effects by conditioning the supply of phosphate ore does not mean the Corps must consider wielding its regulatory powers with that ulterior motive in mind. The rule of reason turns, at least in part, on the agency's statutory authority, not on what outcomes an agency might achieve through indirect coercion. If the Corps were required to consider all effects that it might indirectly police-even those far from its proper sphere of regulatory authority-its NEPA review would have to account for every conceivable environmental effect of fertilizer's use. It is foreseeable, for instance, that farmers will use Mosaic's fertilizer to treat their crops and that some fertilizer will be carried by stormwater runoff into sewers and streams. Extending Bio Diversity's logic, because the Corps could indirectly mitigate those effects by denying Mosaic its Section 404 permit and thereby choking its fertilizer plants of phosphate, the Corps must consider the environmental effects of crop fertilization. That cannot be right.

         Public Citizen fatly held that "where an agency has no ability to prevent a certain effect due to its limited statutory authority over the relevant actions, the agency cannot be considered a legally relevant 'cause' of the effect." 541 U.S. at 770. There, an agency within the Department of Transportation was tasked with setting federal safety standards and registration requirements for Mexican-domiciled commercial vehicles operating in the United States. See id. at 758-59. In earlier years, Congress had enacted a moratorium on the agency's registration of Mexican-domiciled motor carriers. Eventually, Congress and the President agreed to lift the moratorium-but only after the agency promulgated new safety and registration rules. See id. at 760. In the course of that rulemaking, the agency conducted a NEPA analysis of the environmental effects of its proposed rules, such as the effects on air quality caused by the increased number of roadside inspections its new rules would bring about. See id. at 761. An environmental group sued, contending that the agency was required to consider the environmental effects of the increased number of Mexican-domiciled motor carriers operating within the U.S. because of the lifting of the moratorium. That was necessary, according to the environmental group, because the agency's rulemaking was a but-for cause of the lifting of the moratorium. See id. at 765-66.

         Despite this "but for" relationship between the agency's rulemaking and the lifting of the moratorium, the Supreme Court held that NEPA did not require the agency to consider effects that it "ha[d] no ability categorically to prevent." See id. at 768. That followed because the rule of reason recognizes that it is pointless to require agencies to consider information they have no power to act on, or effects they have no power to prevent. In Public Citizen, the agency had the statutory authority only to promulgate safety and regulation standards-not to keep the moratorium in place or modify its lifting, which only Congress and the President could do.

         That rule applies in much the same way here. The Corps has no ability categorically to prevent fertilizer production or the creation and storage of phosphogypsum. As in Public Citizen, it is irrelevant that the Corps' action is, in an attenuated way, a but-for cause of phosphogypsum production, because Florida and the EPA have primary authority to regulate or prevent phosphogypsum's creation and storage. Thus, here too it would be pointless to require the Corps to gather and examine information regarding effects that it has no authority to prevent.

         It is true that the agency in Public Citizen had no discretion to refuse registration (absent the moratorium) to a motor carrier that complied with its regulations. But that is beside the point. Individual registration was not at issue; rulemaking was, and the agency did have discretion to set safety and registration standards. The Supreme Court rejected the idea that the agency could indirectly mitigate the environmental effects of lifting the moratorium by (i) not promulgating any new rules or (ii) setting burdensome standards so that fewer motor carriers could meet them and operate in the U.S. See id. at 765-68. The Court held that it was not enough that the agency could, in fact, mitigate those effects, when the agency was not statutorily authorized to base its decision on those ancillary effects. See id. The same is true here: The Corps could, in fact, mitigate the effects of phosphogypsum by rejecting the Section 404 permit and choking off Mosaic's supply of phosphate ore. But the Corps is not statutorily authorized to base its permitting decision on environmental effects that are so indirectly caused by its action.

         The Corps could conceivably hinge its permitting decision on the effects of phosphogypsum, but only by ignoring the Clean Water Act's text and misapplying its implementing regulations. The Clean Water Act does not give the Corps the discretion to deny a Section 404 permit for any reason of its choosing. Although the first subsection of § 1344 says the Corps "may issue permits . . . for the discharge of dredged or fill material into the navigable waters at specified disposal sites," 33 U.S.C. § 1344(a), the Act also provides that the Corps

is authorized to deny or restrict the use of any defined area for specification . . . as a disposal site [i.e., deny a permit], whenever [it] determines . . . that the discharge of such materials into such area will have an unacceptable adverse effect on municipal water supplies, shellfish beds and fishery areas (including spawning and breeding areas), wildlife, or recreational areas.

Id. § 1344(c). Read together, those provisions limit the Corps' discretion to grant or issue permits. The Corps may not deny a permit for any reason under the sun- including its distaste for later conduct the applicant will engage in-but only if the allowed discharge will directly, indirectly, or cumulatively have an unacceptable environmental effect. And the scope of that analysis is bounded by proximate cause and the rule of reason. Because the Corps cannot deny a permit because of phosphogypsum effects, which are beyond the scope of § 1344(c), the Corps was not required to consider those effects. See Pub. Citizen, 541 U.S. at 767-68. Thus, as in Public Citizen, the Corps' Section 404 permit for the discharge of dredged material is not a proximate cause of the effects of Mosaic's fertilizer production, and such effects need not be considered under NEPA.

         The same is true under the Clean Water Act's implementing regulations. Those regulations require the Corps to conduct a public-interest review before granting a permit, but that obligation is not an authorization to deny a permit based on the environmental impacts of non-agency action. In the first place, regulations cannot contradict their animating statutes or manufacture additional agency power. See, e.g., FDA v. Brown & Williamson Tobacco Corp., 529 U.S. 120, 125-26 (2000); Manhattan Gen. Equip. Co. v. Comm'r of Internal Revenue, 297 U.S. 129, 134-35 (1936). Because the statute authorizes the Corps to deny a permit only if the discharge itself will have an unacceptable environmental impact, the regulations cannot empower the Corps to deny permits for any other reason- including downstream phosphogypsum-related effects of fertilizer production.

         The regulations also focus the Corps' review on the effects of its action. The regulations provide that "[t]he decision whether to issue a permit will be based on an evaluation of the probable impacts, including cumulative impacts, of the proposed activity and its intended use on the public interest." 33 C.F.R. § 320.4(a)(1) (emphasis added). Again, the "proposed activity" is the proposed federal action that triggers NEPA-here, the issuance of the discharge permit. Obligating the Corps to consider whether the discharge of dredged and fill material is in the public interest, is not the same as authorizing the Corps to consider whether fertilizer production and its consequences are in the public interest.

         To take an alternative, unbounded view of the public-interest review would be to appoint the Corps de facto environmental-policy czar. Rather than consider whether the Corps' own action is in the public interest, that broader view would have the Corps consider whether fertilizer production and use is really worth the cost. And that could be just the beginning. The next time the Corps is asked to approve a section of a gas pipeline running through a wetland, would the Corps be required to consider whether the country's reliance on fossil fuels is really in the public interest?

         The D.C. Circuit's outlier opinion in Sabal Trail provides little support for Bio Diversity's argument. See Sierra Club v. FERC (Sabal Trail), 867 F.3d 1357 (D.C. Cir. 2017). There, FERC authorized the construction and operation of a pipeline network that would feed gas directly to power plants that would burn the gas. See id. at 1363. The Sierra Club sued and argued that FERC failed to consider the greenhouse-gas effects of burning that gas at the power plants. The D.C. Circuit, over a powerful dissent, held that FERC was required to consider those downstream environmental effects.

         Sabal Trail is both questionable and distinguishable. First, the causal relationship between the agency action and the putative downstream effect was much closer there than it is here. FERC authorized a pipeline that would pump gas directly into a power plant to be burned, causing greenhouse-gas emissions. The Corps, on the other hand, approved only the discharge of dredged and fill material-one small piece of Mosaic's mining operations, which extracts a sand, clay, and phosphate ore mixture, which is supplied to beneficiation plants where the phosphate ore is separated out, which is then transported to fertilizer plants to make phosphoric acid, which results in phosphogypsyum byproduct, and the phosphoric acid is used to produce fertilizer. The phosphogypsum produced as a byproduct when phosphate ore is processed into phosphoric acid is only then stored around the state of Florida and liable to produce environmental effects. That articulated causal chain bears little resemblance to the two-link version in Sabal Trail.

         Second, the scope of the agency's statutory authority in Sabal Trail was much broader than the Corps' here, and the rule of reason hinges, in any given case, on the scope of the agency's statutory authority because an agency need not consider an effect it has no statutory authority to prevent. See Pub. Citizen, 541 U.S. at 770. In Sabal Trail, FERC was statutorily empowered to deny a pipeline certificate on the ground that its construction and operation "is [not] required by the present or future public convenience and necessity." See 15 U.S.C. § 717f(e). The Sabal Trail court understood that to mean "FERC could deny a pipeline certificate on the ground that the pipeline would be too harmful to the environment." See Sabal Trail, 867 F.3d at 1373. But here, as discussed, the Corps has no broad statutory authority to deny a discharge permit based on the public convenience and necessity of the operation of Mosaic's fertilizer plants. See 33 U.S.C. § 1344(c).

         Third, Sabal Trail is at odds with earlier D.C. Circuit cases correctly holding that "the occurrence of a downstream environmental effect, contingent upon the issuance of a license from another agency with the sole authority to authorize the source of those downstream effects, cannot be attributed to the [agency]; its actions 'cannot be considered a legally relevant cause of the effect for NEPA purposes.'" Sabal Trail, 867 F.3d at 1381 (Brown, J., concurring in part and dissenting in part) (quoting Sierra Club v. FERC (Freeport), 827 F.3d 36, 47 (D.C. Cir. 2016) and citing Sierra Club v. FERC (Sabine Pass), 827 F.3d 59, 68 (D.C. Cir. 2016) and EarthReports, Inc. v. FERC, 828 F.3d 949, 952 (D.C. Cir. 2016)).

         Fourth, the legal analysis in Sabal Trail is questionable at best. It fails to take seriously the rule of reason announced in Public Citizen or to account for the untenable consequences of its decision. The Sabal Trail court narrowly focused on the reasonable foreseeability of the downstream effects, as understood colloquially, while breezing past other statutory limits and precedents-such as ...