## Facts

- Canyon Club, Inc. proposed an upscale residential development and golf course on a 359-acre site bordering the Snake River in Teton County, Wyoming, requiring a Clean Water Act (CWA) § 404 dredge-and-fill permit from the U.S. Army Corps of Engineers (Corps).
- The site lay near highly productive bald eagle nesting territory; at the time, bald eagles in the lower 48 states were protected under the Endangered Species Act (ESA).
- A consultant retained by Canyon Club prepared a Biological Assessment (BA), an Environmental Assessment (EA), and a CWA § 404(b)(1) alternatives analysis for the Corps’ use.
- The BA concluded the project “could affect” and was “likely to adversely affect” bald eagles; the Corps entered formal ESA consultation with the U.S. Fish and Wildlife Service (FWS).
- FWS issued a Biological Opinion finding the project not likely to jeopardize the bald eagle’s continued existence, and issued an incidental take statement anticipating loss of three nesting territories.
- The Corps issued an EA and a Finding of No Significant Impact (FONSI), concluding that mitigation and design measures made impacts to wetlands and bald eagles not significant, and granted the § 404 permit in 2002.
- Environmental groups sued under the Administrative Procedure Act (APA), asserting the permit decision violated NEPA and the CWA; the district court ultimately upheld the permit, and the groups appealed.

## Issues

1. Whether the Corps’ CWA § 404(b)(1) alternatives analysis was arbitrary and capricious because it defined the project purpose too narrowly and failed to consider practicable, less damaging alternatives.
2. Whether the Corps violated NEPA by issuing a FONSI based on an EA rather than preparing an Environmental Impact Statement (EIS), given the project’s potential impacts and the agency’s reliance on mitigation and consultation materials.

## Decision

- The Tenth Circuit reversed the judgment upholding the permit and remanded.
- The court held the Corps’ § 404(b)(1) alternatives analysis was arbitrary and capricious because an overly narrow project purpose constrained the range of practicable alternatives, including consideration of off-site or materially different options.
- The court held the Corps’ NEPA review was inadequate because the agency failed to take the required hard look at impacts and reasonable alternatives, and its FONSI was not supported where impacts could be significant and mitigation was not shown to be sufficiently concrete and reliable.
- The court required the Corps to conduct a more thorough review on remand, including preparation of an EIS or other corrective NEPA analysis consistent with the opinion, before issuing any valid § 404 permit.

## Legal Principles

- Under the APA, reviewing courts set aside agency action that is arbitrary and capricious, including where the agency fails to consider relevant factors or fails to connect record facts to its decision with reasoned explanation.
- Under CWA § 404(b)(1) guidelines, a permit may not issue if a practicable alternative exists with less adverse impact on the aquatic ecosystem; “practicable” depends on cost, existing technology, and logistics, not solely an applicant’s preferences.
- An agency may not define a project’s basic or overall purpose so narrowly that it effectively predetermines the outcome and excludes otherwise reasonable alternatives.
- NEPA requires an agency to take a hard look at environmental consequences and reasonable alternatives; an EA must support a FONSI with a reasoned basis when potentially significant effects are present.
- Reliance on mitigation to support a FONSI requires mitigation measures to be sufficiently developed and enforceable; a no-jeopardy ESA biological opinion does not substitute for independent NEPA and CWA alternatives obligations.

## Conclusion

The Tenth Circuit set aside the Corps’ § 404 permit because the agency constrained its alternatives review through an applicant-driven purpose definition and inadequately justified a FONSI despite potentially significant impacts to bald eagle nesting territories and river-corridor habitat, requiring renewed alternatives analysis and preparation of an EIS or equivalent corrective review on remand.


Greater Yellowstone Coal. v. Flowers, 359 F.3d 1257 (10th Cir. 2004)