Court Opinion

ID: 3032593
Source: CourtListenerOpinion
Date Created: 2015-10-13 22:48:07.289474+00
Date Added: 2024-06-11T09:33:02.796011
License: Public Domain

FOR PUBLICATION
  UNITED STATES COURT OF APPEALS
       FOR THE NINTH CIRCUIT

DEFENDERS OF WILDLIFE;                 
CENTER FOR BIOLOGICAL DIVERSITY,
              Plaintiffs-Appellants,
                 v.
ROBERT B. FLOWERS, Lt. General,
Chief of Engineers and
Commander, US Army Corps of
Engineers; CHRISTINE TODD
WHITMAN, Administrator of US
Environmental Protection Agency;
GALE A. NORTON; STEVEN                      No. 03-16884
WILLIAMS,
             Defendants-Appellees,            D.C. No.
                                           CV-02-00195-CKJ
STEVEN A. OWENS, State of
Arizona, ex-rel, Director Arizona
Department of Environmental
Quality; GROSVERNOR HOLDINGS;
NATIONAL ASSOCIATION OF HOME
BUILDERS; SOUTHERN ARIZONA
HOME BUILDERS ASSOCIATION;
HOME BUILDERS ASSOCIATION OF
CENTRAL ARIZONA; SAGUARO RANCH
INVESTMENTS LLC; SAGUARO RANCH
DEVELOPMENT CORPORATION,
 Defendants-Intervenors-Appellees.
                                       

                            8101
8102           DEFENDERS OF WILDLIFE v. FLOWERS

DEFENDERS OF WILDLIFE;                  
CENTER FOR BIOLOGICAL DIVERSITY,
                Plaintiffs-Appellees,
                 v.
ROBERT B. FLOWERS, Lt. General,
Chief of Engineers and
Commander, US Army Corps of
Engineers; CHRISTINE TODD
WHITMAN, Administrator of US
Environmental Protection Agency;
GALE A. NORTON; STEVEN
WILLIAMS,
                         Defendants,         No. 03-16887
STEVEN A. OWENS, State of
Arizona, ex-rel, Director Arizona
                                               D.C. No.
                                            CV-02-00195-CKJ
Department of Environmental                    OPINION
Quality; NATIONAL ASSOCIATION OF
HOME BUILDERS; SOUTHERN
ARIZONA HOME BUILDERS
ASSOCIATION; HOME BUILDERS
ASSOCIATION OF CENTRAL ARIZONA;
SAGUARO RANCH INVESTMENTS LLC;
SAGUARO RANCH DEVELOPMENT
CORPORATION,
           Defendants-Intervenors,
                and
GROSVERNOR HOLDINGS,
   Defendant-Intervenor-Appellant.
                                        
        DEFENDERS OF WILDLIFE v. FLOWERS          8103
 Appeal from the United States District Court
          for the District of Arizona
 Cindy K. Jorgenson, District Judge, Presiding

             Argued and Submitted
   April 11, 2005—San Francisco, California

              Filed July 12, 2005

Before: Warren J. Ferguson, John T. Noonan, and
      Pamela Ann Rymer, Circuit Judges.

          Opinion by Judge Noonan;
          Dissent by Judge Ferguson
8104         DEFENDERS OF WILDLIFE v. FLOWERS

                       COUNSEL

Michael Senatore, Washington, D.C., for plaintiffs-cross-
appellants/appellees Defenders of Wildlife, et al.
               DEFENDERS OF WILDLIFE v. FLOWERS            8105
Todd Aagaard, Assistant United States Attorney, Washington,
D.C., for the defendants-appellees.

Norman D. James, Phoenix, Arizona, for defendant-
intervenor-appellee/cross-appellant Grosvernor Holdings.

Richard Rollman, Tucson, Arizona, and Eric S. Merrifield,
Seattle, Washington, for amicus National Association of
Home Builders.

                          OPINION

NOONAN, Circuit Judge:

   Defenders of Wildlife and the Center for Biological Diver-
sity (collectively Defenders) appeal the grant of summary
judgment to the Army Corps of Engineers (the Corps).
Defenders challenged the decision of the Corps not to consult
with the Fish and Wildlife Service (the Service) on the effect
on the Arizona cactus ferruginous pygmy-owl of two develop-
ments in Arizona. The district court found that the Corps’
determination that the developments would have no effect on
the pygmy owl was not arbitrary or capricious. We affirm its
judgment.

                            FACTS

   The cactus ferruginous pygmy-owl, the bird at the center of
our case, is described in National Ass’n of Home Builders v.
Norton, 340 F.3d 835, 838 (9th Cir. 2003), where a descrip-
tion of its habitat is also set out. In that case, we also
described how the Service came to designate the Arizona
pygmy-owl as a discrete population segment (DPS), distinct
from the pygmy-owls in Texas and in Mexico. We held that
the Service had not demonstrated a rational basis in the listing
rule for its finding that the Arizona pygmy-owl was a signifi-
8106           DEFENDERS OF WILDLIFE v. FLOWERS
cant part of the taxon to which it belongs and therefore the
Service had acted arbitrarily and capriciously in designating
the Arizona pygmy-owl as a DPS. Id. at 852.

   The Continental Reserve Permit. In December 1999, the
Corps received a permit application under the Clean Water
Act, 33 U.S.C. § 1344 (a Section 404 permit application), for
the Continental Reserve project, a 598-acre property being
developed in the town of Marana, Arizona. Continental
Reserve is a master-planned community with single-family
residences, a 9-acre community park, a 10-acre elementary
school site, and large areas of undisturbed open space.

   The Service objected to the Corps’ preliminary determina-
tion that the project would not affect federally listed species
or their critical habitat and that formal consultation under Sec-
tion 7 of the Endangered Species Act (ESA), 16 U.S.C.
§ 1536(a)(2), 50 C.F.R. § 402.14, would not be required. The
Service contended that “this particular project area serves as
a movement corridor for the [pygmy-owl] and likely provides
nesting, roosting, and foraging habitat.”

  On March 22, 2001, the Corps issued its Environmental
Assessment, finding that the proposed activities would have
no impact on the pygmy-owl or adjoining habitat. On that
same date, it issued the Section 404 permit to Continental
Reserve. After the permit had been issued, the Service contin-
ued to object, requesting formal consultation and notifying the
Corps that it did not concur in its “no effect” determination.

   The Entrada de Oro Permit. On November 22, 2000, Gros-
vernor Holdings (Grosvernor), a property owner, submitted a
request to the Corps for an individual Section 404 permit
under the Clean Water Act for the Entrada de Oro project.
Entrada de Oro is a master planned community in Pinal
County, Arizona, comprised of 440 acres which will contain
single family residences, parks, a school site, and open
spaces.
               DEFENDERS OF WILDLIFE v. FLOWERS              8107
   On November 15, 2001, the Corps issued its Environmental
Assessment for the Entrada de Oro project. The Corps noted
that it had withdrawn its initial request for consultation with
the Service after the area had no longer been designated criti-
cal habitat, and that it had “fully considered” the Service’s
comments. On December 5, 2001, the Corps issued Grosver-
nor’s permit. The permit had special conditions that man-
dated, inter alia, regular surveys for pygmy-owls in the future.
After the Entrada de Oro permit had been issued, the Service
requested formal consultation “to ensure that both the Corps
and Grosvernor Holdings are in compliance with the Act.”

                       PROCEEDINGS

   Defenders filed suit against the Corps under the ESA, 16
U.S.C. § 1536(a)(2), 50 C.F.R. § 402.14, and the Administra-
tive Procedure Act (APA), 5 U.S.C. §§ 701-706. Defenders
challenged the Corps’ “no effect” determinations and its deci-
sions to forgo Section 7 consultations with the Service regard-
ing the Continental Reserve and Entrada de Oro projects
under the ESA.

   Grosvernor filed a motion to intervene as of right under
Fed. R. Civ. P. 24(a)(2). The court granted the motion as to
the remedial phase of the litigation, but denied it as to the lia-
bility phase.

   The parties filed cross-motions for summary judgment. On
August 18, 2003, the court issued two orders granting the
Corps’ motions as to its permitting decisions for Continental
Reserve and Entrada de Oro. The court noted that “the ‘no
effect’ determination was a decision for the Corps to make,
not the USFWS.” The court found that

    based upon the best scientific and commercial evi-
    dence in the administrative record and the Corps’
    contemporaneous explanations for their ‘no effect’
    determination, it is clear that the Corps considered
8108          DEFENDERS OF WILDLIFE v. FLOWERS
    the relevant factors based upon the voluminous data
    before it, reasonably rejected the undocumented
    assertions made by the USFWS, and articulated a
    rational connection between the facts and its deci-
    sion to make a ‘no effect’ determination.

  On August 18, 2003, the court entered final judgment
against Defenders. This timely appeal followed.

                         ANALYSIS

   [1] Jurisdiction. The Corps and amici challenge our juris-
diction arguing that the Defenders lack standing. They have,
however, as the district court held, sufficiently established
their members’ interest in the Arizona pygmy-owl; that the
Corps’ decisions arguably may affect the bird and what may
be its habitat; and that a contrary decision would have led to
a remedy. Even now the case is not moot because a court
could design a remedy to provide protection for the bird.

   [2] The Action Agency’s Responsibility. Regulations under
the ESA provide:

    Requirement for formal consultation. Each Federal
    agency shall review its actions at the earliest possible
    time to determine whether any action may affect
    listed species or critical habitat. If such a determina-
    tion is made, formal consultation is required, except
    as noted in paragraph (b) of this section. The Direc-
    tor [of the Fish and Wildlife Service] may request a
    Federal agency to enter into consultation if he identi-
    fies any action of that agency that may affect listed
    species or critical habitat and for which there has
    been no consultation. When such a request is made,
    the Director shall forward to the Federal agency a
    written explanation of the basis for the request.

50 C.F.R. § 402.14(a). The Service can request the action
agency to enter into formal consultation. Nothing in the regu-
                  DEFENDERS OF WILDLIFE v. FLOWERS                     8109
lations mandates the action agency to enter into consultation
after it receives such a request. On the contrary, as the Service
has explained:

     Although the Service will, when appropriate, request
     consultation on particular Federal actions, it lacks
     the authority to require the initiation of consultation.
     The determination of possible effects is the Federal
     agency’s responsibility. The Federal agency has the
     ultimate duty to ensure that its actions are not likely
     to jeopardize listed species or adversely modify criti-
     cal habitat. The Federal agency makes the final deci-
     sion on whether consultation is required, and it
     likewise bears the risk of an erroneous decision.

51 Fed. Reg. 19926, 19949 (June 3, 1986). This court has
come to the same conclusion. See Southwest Center for Bio-
logical Diversity v. U.S. Forest Service, 100 F.3d 1443, 1447-
48 (9th Cir. 1996).

  [3] The “No Effect” Rulings. Our decision in National
Ass’n of Home Builders v. Norton, 340 F.3d 835 was filed
August 19, 2003, one day after the district court entered judg-
ment in the instant case. Our decision puts in doubt the status
of the Arizona pygmy-owl as a significant part of its taxon
and would seem to require its delisting as a DPS.1 We could
   1
     On November 12, 2003, the National Association of Home Builders
filed a request for entry of final judgment with the district court, urging
“entry of judgment pursuant to the Ninth Circuit’s decision that declares
unlawful and vacates the Listing Rule.” Order of the district court in
National Ass’n of Home Builders v. Norton, CV 00-0903 (D. Ariz.), June
28, 2004. The district court took over six months to rule on this motion
and then denied it in the above-referenced order, which has been supplied
to us by Defenders. The district court acknowledged that the error detected
by the Ninth Circuit in the listing rule was substantive, not procedural, and
normally a substantially erroneous listing should be vacated. Citing to two
decisions of other district courts, the district court held that it had the
power to decline to set aside the listing. The court held that if it vacated
8110              DEFENDERS OF WILDLIFE v. FLOWERS
rely on Ass’n of Home Builders in affirming the judgment in
this case. Out of an abundance of caution, we review the dis-
trict court’s decision de novo and hold that the decision rested
on the firm foundation that no pygmy-owls had been found to
live within either project area. True, the Service had once des-
ignated the Entrada de Oro area as critical habitat for the Ari-
zona pygmy-owl; but this designation was vacated by the
district court in Ass’n of Home Builders and thereafter the
Service did not designate it as critical, noting “the lack of
recent, verified locations and our inability to determine the
presence of the primary constituent elements.” 67 Fed. Reg.
at 71040, Table 1. Similarly, the Service’s nondesignation as
critical of the Continental Reserve project area was properly
read by the Corps as a finding that the land “was not essential
to the functioning of Unit 3 as a corridor for movement of
pygmy-owls.”

   Grosvernor’s Appeal. Our disposition of the case makes it
unnecessary to decide Grosvernor’s appeal from the judgment
limiting its intervention.

the rule “the twenty to forty birds comprising the Arizona pygmy-owl
population would be entirely without protection under the ESA during the
remand period.” The court did not note the interest of the victorious plain-
tiffs in having the listing declared void. The court remanded to the Service
without vacating the rule and without setting a time table for action by the
Service. This result was all the more remarkable in that, as the court
observed, the Service had indicated that “its attempts to continue its
research regarding the pygmy-owl population in Arizona may be delayed
by budgetary restraints, suggesting that the period without protection
could be lengthy.” As the court also noted, the Service had not objected
to the vacating of its rule. Opposition to that came only from Defenders,
an intervenor in the case. The upshot is that a listing rule that this court
found to be arbitrary and capricious on August 19, 2003 is still alive in
Arizona in April 2005 with no foreseeable termination in sight.
   The history is also instructive on another point. In oral argument in this
court it was speculated that our case was “a turf war” between the Service
and the Corps. It may have been so at the start. But the Service appears
to be hors de combat. The case is between the Corps and the nongovern-
mental intervenor.
              DEFENDERS OF WILDLIFE v. FLOWERS            8111
  For the reasons stated, the judgment of the district court is
AFFIRMED.

FERGUSON, Circuit Judge, dissenting:

   In tersely affirming the District Court’s judgment, the
majority ignores the plain language of the Endangered Spe-
cies Act’s (“ESA”) implementing regulations, trivializes the
vital process of inter-agency consultation, and ultimately
drives closer to extinction the few existing Arizona pygmy-
owls. The Army Corps of Engineers’ (the “Corps”) decision
to forego consultation with the Fish and Wildlife Service (the
“Service”) was both arbitrary and capricious given the Ser-
vice’s persistent and persuasive objections to the two real
estate developments at issue. I must therefore dissent.

                              I.

   The cactus ferruginous pygmy-owl (the “pygmy-owl”), a
small bird, is about 6.75 inches tall and weighs between 2.2
and 2.6 ounces on average. Determination of Endangered Sta-
tus for the Cactus Ferruginous Pygmy-Owl in Arizona, 62
Fed. Reg. 10730, 10730 (Mar. 10, 1997). “[It] is one of four
subspecies of the ferruginous pygmy-owl” whose range
extends “from lowland central Arizona south through western
Mexico, to the States of Colima and Michoacan, and from
southern Texas south through the Mexican States of Tamauli-
pas and Nuevo Leon.” Id. Pygmy-owls are considered non-
migratory throughout their range and typically fly from tree
to tree instead of on long single flights. Land Options L.L.C.,
DRAFT BIOLOGICAL ASSESSMENT: ENTRADA DEL ORO 20 (Aug. 9,
2001). They are capable of flying only short distances up to
100 feet or more over undisturbed vegetation. Letter from the
U.S. Fish and Wildlife Service to the U.S. Environmental Pro-
tection Agency (Oct. 18, 2002).
8112           DEFENDERS OF WILDLIFE v. FLOWERS
   The Arizona pygmy-owls are a distinctive lot. Unlike the
pygmy-owls in Texas and Mexico, they have unique plumage
and occupy desertscrub and thornscrub habitats. Determina-
tion of Endangered Status for the Cactus Ferruginous Pygmy-
Owl in Arizona, 62 Fed. Reg. at 10731. They are also subject
to unique dangers. “Riverbottom forests and bosques, which
supported the greatest abundance of [Arizona] pygmy-owls,
have been extensively modified and destroyed by clearing,
urbanization, water management, and hydrological changes.”
Id. at 10740. In southern Arizona in particular, the actual loss
and fragmentation of riparian habitat and the potential loss of
additional habitat and movement corridors have contributed to
a significant decline in the total Arizona pygmy-owl popula-
tion from 36 in 2001 to just 18 in 2002. Id. at 10735, 10741;
see also Proposed Designation of Critical Habitat for the Ari-
zona Distinct Population Segment of the Cactus Ferruginous
Pygmy-Owl, 67 Fed. Reg. 71032, 71032 (Nov. 27, 2002).

                              II.

   The majority contends that we could affirm the judgment
in this case based on Nat’l Ass’n of Home Builders v. Norton,
340 F.3d 835, 852 (9th Cir. 2003), where we suggested delist-
ing the Arizona pygmy-owl as a Discrete Population Segment
(DPS). Maj. op. at 8109. The majority’s position is premature
for two reasons. First, we did not vacate the Service’s DPS
listing of the Arizona pygmy-owl in Nat’l Ass’n of Home
Builders; instead, we remanded to the district court for further
proceedings. Those proceedings are pending, and so the Ari-
zona pygmy-owl has not been delisted as a DPS. Second, and
more importantly, we carefully noted in Nat’l Ass’n of Home
Builders that the “Home Builders do not challenge the [Ser-
vice’s] determination that, once severed from the rest of the
western pygmy-owl population, the Arizona pygmy-owls
could be considered endangered.” 340 F.3d at 841 (emphasis
added). Our decision in Nat’l Ass’n of Home Builders, there-
fore, has no bearing on the case before us because the Arizona
pygmy-owl presently remains protected under the ESA.
               DEFENDERS OF WILDLIFE v. FLOWERS              8113
                               III.

   Section 7(a)(2) of the ESA directs all federal agencies, in
consultation with the Service, to “utilize their authorities in
furtherance of the purposes of this chapter by carrying out
programs for the conservation of endangered species and
threatened species,” 16 U.S.C. § 1536(a)(1), and 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 [critical habitat] of
such species.” 16 U.S.C. § 1536(a)(2). The ESA’s implement-
ing regulations further require a federal agency to complete
formal consultation with the Service if the agency determines
that any action on its part “may affect” any listed species or
critical habitat. The federal agency may complete informal
consultation with the Service if the agency determines that
any action on its part may affect, but is “not likely to
adversely affect,” any listed species or critical habitat, and the
Director of the Service concurs in writing to the agency’s
determination. 50 C.F.R. §§ 402.13, 402.14(a).

   The majority reads this statutory and administrative scheme
as affording federal agencies absolute discretion to determine
whether any actions on their part “may affect” any listed spe-
cies or critical habitat. See Maj. op. at 8108 (quoting 51 Fed.
Reg. 19926, 19949 (June 3, 1986)) (“[The Service] lacks the
authority to require the initiation of consultation.”). “Nothing
in the regulations,” the majority concludes, “mandates the
action agency to enter into consultation after it receives such
a request.” Id.

   But while an action agency is not required by law to con-
sult the Service, the minimum threshold for an action agency
to initiate consultation is low. The “may affect” standard
“must be set sufficiently low to allow Federal agencies to sat-
isfy their duty to ‘insure’ under section 7(a)(2) [that species
are not jeopardized].” 51 Fed. Reg. 19926, 19949 (June 3,
8114           DEFENDERS OF WILDLIFE v. FLOWERS
1986). A federal agency “must initiate formal consultation if
its proposed action ‘may affect’ listed species or critical habi-
tat. Any possible effect, whether beneficial, benign, adverse,
or of an undetermined character, triggers the formal consulta-
tion requirement . . .” Id. at 19949 (emphasis added).

   The question, then, is not whether the law mandates the
Corps to consult the Service, but whether the Corps arbitrarily
and capriciously issued “no effect” determinations in the face
of scientific evidence suggesting specific and serious effects
of two real estate developments on the Arizona pygmy-owl.
Put differently, the question is whether the Corps violated the
plain meaning and intent of Section 7(a)(2) of the ESA by
foregoing any consultation with the Service.

                              IV.

   Under 5 U.S.C. § 706, we must set aside agency actions
that are “arbitrary, capricious, an abuse of discretion or other-
wise not in accordance with law.” United States v. Bean, 537
U.S. 71, 77 (2002). To determine whether the Corps’ “no
effect” determinations were “arbitrary and capricious,” we
must decide whether the Corps “considered the relevant fac-
tors and articulated a rational connection between the facts [it]
found and the choice [it] made.” Nat’l Ass’n of Home Build-
ers, 340 F.3d at 841 (quoting Baltimore Gas & Elec. Co. v.
Natural Res. Def. Council, 462 U.S. 87, 105 (1983)). The
Corps’ decision to forego consultation with the Service “must
be reversed [if the Corps] . . . entirely failed to consider an
important aspect of the problem.” Id.

                               A.

   In December 1999, the Corps granted a permit for a 598-
acre property in Pima County, (southern) Arizona known as
the Continental Reserve project. The development is adjacent
to an area then-designated as an Arizona pygmy-owl critical
habitat. The Corps determined that the development would
               DEFENDERS OF WILDLIFE v. FLOWERS            8115
have “no effect” on the Arizona pygmy-owl and issued the
permit. The Service objected to the Corps’ decision contend-
ing specifically that “this particular project area serves as a
movement corridor for the [Arizona] pygmy-owl and likely
provides nesting, roosting, and foraging habitat.” The Corps
nonetheless refused to initiate consultation.

   Review of the administrative record reveals that the Corps’
decision to forego consultation with respect to the Continental
Reserve project was both arbitrary and capricious. The Ser-
vice has persistently objected to the Continental Reserve per-
mit. It has pointed out that the development would (1) result
in “the loss and fragmentation of upland and xeroriparian veg-
etation,” (2) lead to loss of “mesquite and palo verde trees and
saguaro cacti which are components of [Arizona] pygmy-owl
habitat,” and (3) “disrupt habitat connectivity . . . hindering
the . . . movement corridor for the [Arizona] pygmy-owl.”
The Service further underscored how the Continental Reserve
area contains “those physical and biological features that are
essential to the conservation of the species.” A “fragmented
habitat [would] reduce the probability that local groups of
[Arizona] pygmy-owls will recolonize naturally in order to
offset population fluctuations and local population losses.”
Proposed Designation of Critical Habitat for the Arizona Dis-
tinct Population Segment of the Cactus Ferruginous Pygmy-
Owl, 67 Fed. Reg. at 71036.

   Both the Biological Evaluation and the Environment
Assessment that the Corps relied upon to render its “no
effect” determination focused almost entirely on the fact that
no Arizona pygmy-owl was physically located in the project
area or in the immediate surrounding areas. But the actual
physical presence of an Arizona pygmy-owl on or near the
development is not the only way to establish a possible effect
of the development on the species. The ESA implementing
regulations make clear that “any possible effect,” even of “an
undetermined character,” triggers consultation. 51 Fed. Reg.
at 19949. The Corps ignored the Service’s scientifically com-
8116           DEFENDERS OF WILDLIFE v. FLOWERS
pelling evidence demonstrating the effect of the Continental
Reserve project on the potential habitat of Arizona pygmy-
owls. The Corps had a duty to initiate consultation with the
Service about this possible effect.

                               B.

   In January 2001, the Corps granted a permit for a 404-acre
property in Pinal County, (southern) Arizona known as the
Entrada del Oro project. The development was located on an
area then-designated as an Arizona pygmy-owl critical habi-
tat. The developer itself conceded that the property provided
connectivity between the Arizona pygmy-owl breeding habi-
tat along the Salt River and possible Arizona pygmy-owl
breeding areas on the Gila river. The Corps thereafter issued
a “may affect” determination and initiated informal consulta-
tion with the Service. But while the Corps’ request for infor-
mal consultation was pending, a district court vacated the
critical habitat designation in the Entrada del Oro area. The
Corps subsequently withdrew its request and issued a “no
effect” determination.

   Review of the administrative record again reveals that the
Corps’ decision to change its assessment and forego consulta-
tion with respect to the Entrada del Oro project was both arbi-
trary and capricious. The Service pointed out that “because of
the size of the proposed project[,] . . . suitable [Arizona
pygmy-owl] habitat present on site and adjacent areas, and the
location of the project, [it] [did] not believe adverse effects
[were] not likely[,] . . . insignificant[,] or discountable.” The
developer’s own Biological Evaluation further noted that the
Entrada del Oro project “does have potential nest cavities in
saguaros and a few mesquite and paloverde able to support
pygmy-owls” and that “there is suitable habitat within the
440-acre property.”

  The Corps has not shown why the removal of the critical
habitat designation in the Entrada del Oro area rationally
               DEFENDERS OF WILDLIFE v. FLOWERS            8117
eliminates the previously acknowledged effect of the develop-
ment on loss of potential habitat for the Arizona pygmy-owl.
The ESA implementing regulations make clear that formal
consultation is triggered whenever an action “may affect
listed species or critical habitat.” 50 C.F.R. § 402.14(a)
(emphasis added). The Corps, and the majority, illogically
imply that the presence of a critical habitat is necessary to
trigger Section 7 consultation.

                              V.

   At its core, this case is about exercising “institutionalized
caution” in safeguarding endangered species. See Wash. Toxic
Coalition v. EPA, No. 04-35138, slip op. at 7743 (9th Cir.
June 29, 2005) (“Placing the burden on the acting agency to
prove that the action is non-jeopardizing [of the continued
existence of an endangered or threatened species] is consistent
with the purpose of the ESA and what we have termed its
‘institutionalized caution mandate[ ]’.”) (citation omitted);
Tenn. Valley Auth. v. Hill, 437 U.S. 153, 194 (1978)
(“Congress has spoken in the plainest of words . . . in favor
of affording endangered species the highest of priorities . . .
[by] adopting a policy which it described as ‘institutionalized
caution’.”). The Corps ignored the possible effect of two
developments on the additional loss and fragmentation of the
Arizona pygmy-owl. It arbitrarily and capriciously refused to
initiate Section 7 consultation with the Service even though
the Service justifiably demanded it. See Sierra Club v. Marsh,
816 F.2d 1376, 1388 (9th Cir. 1987) (deferring to the Service
as “the agency with the more appropriate expertise”). It may
be that further discussion and investigation could vindicate
the Corps’ present position, but the Corps cannot be permitted
to risk endangering the Arizona pygmy-owl by foregoing any
consultation with the Service.