Court Opinion

ID: 4671843
Source: CourtListenerOpinion
Date Created: 2021-03-26 15:00:47.780444+00
Date Added: 2024-06-11T08:02:48.880969
License: Public Domain

United States Court of Appeals
         FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued October 5, 2020                 Decided March 26, 2021

                         No. 19-1066

SHAFER & FREEMAN LAKES ENVIRONMENTAL CONSERVATION
               CORPORATION, ET AL.,
                   PETITIONERS

                              v.

        FEDERAL ENERGY REGULATORY COMMISSION,
                     RESPONDENT

    NORTHERN INDIANA PUBLIC SERVICE COMPANY AND
     UNITED STATES DEPARTMENT OF THE INTERIOR,
                   INTERVENORS

           On Petition for Review of Orders of the
           Federal Energy Regulatory Commission

    Robert O. Fleming Jr. argued the cause for petitioners.
With him on the briefs was Alan I. Saltman.

    Elizabeth E. Rylander, Attorney, Federal Energy
Regulatory Commission, argued the cause for respondent.
With her on the brief were David L. Morenoff, Acting General
Counsel at the time the brief was filed, and Robert H. Solomon,
Solicitor. Robert M. Kennedy Jr. and Beth G. Pacella,
Attorneys, entered appearances.
                               2
     Justin D. Heminger, Attorney, U.S. Department of Justice,
argued the cause for intervenor U.S. Department of the Interior
in support of respondent. With him on the brief were Jeffrey
Bossert Clark, Assistant Attorney General at the time the brief
was filed, Eric Grant, Deputy Assistant Attorney General at the
time the brief was filed, and Robert J. Lundman, Attorney.

     Charles R. Sensiba, J. Houston Shaner, Michael Bryan
Little, and Angela J. Levin were on the brief for intervenor
Northern Indiana Public Service Company, LLC in support of
respondent.

   Before: ROGERS and MILLETT, Circuit Judges, and
SENTELLE, Senior Circuit Judge.

    Opinion for the Court filed by Circuit Judge MILLETT.

     MILLETT, Circuit Judge: In the dry summer of 2012,
scientists from the United States Fish and Wildlife Service
discovered that endangered mussels were dying on the banks
of the Tippecanoe River in northwest Indiana. The Service
placed responsibility on the upstream Oakdale Dam, which
significantly restricts the flow of water downstream in order to
generate hydroelectricity and to create a lake behind the dam.
In the ensuing years, the Service worked with the dam operator
to develop new procedures that would require the dam to
release more water during drought periods. After a lengthy
process of interagency cooperation and public dialogue, these
new procedures were approved by the Federal Energy
Regulatory Commission, which is the federal agency with
licensing authority over hydroelectric dams on federally
regulated waters.

    Concerned about these changes to the dam’s operations,
several local governmental entities and a non-profit
                                3
organization have petitioned for review of both the
Commission’s decision and the Fish and Wildlife Service’s
Biological Opinion upon which the Commission relied. We
conclude that many of the petitioners’ challenges to the validity
of the Biological Opinion were not raised on rehearing before
the Commission and so are not properly before us. We
otherwise find no error in the agencies’ expert scientific
analyses. But we hold that the agencies failed to adequately
explain why the new dam procedures do not violate a
regulation prohibiting the Fish and Wildlife Service from
requiring more than “minor” changes to the Commission’s
proposal for dam operations. Because vacating the agencies’
decisions would subject the dam operator to contradictory legal
obligations imposed by separate agencies, we grant the petition
in part, deny the petition in part, dismiss the petition in part,
and remand to the Commission without vacatur for further
proceedings consistent with this opinion.

                                I

                                A

     The Endangered Species Act instructs the Secretary of the
Interior and the Secretary of Commerce to make a list of all
species that are either “endangered” or “threatened[.]” 16
U.S.C. § 1533. The Act then forbids “any person” to “harass,
harm, pursue, hunt, shoot, wound, kill, trap, capture, or collect”
any endangered species—a set of prohibited acts collectively
referred to as “take.”       Id. §§ 1532(19), 1538(a)(1)(B).
Violation of this prohibition can lead to civil and criminal
liability. Id. § 1540.

    The Act also imposes specific responsibilities on all other
federal agencies. See 16 U.S.C. § 1536. As relevant here,
before a federal agency can grant a license or permit to a private
party, the agency must ensure that its action is “not likely to
                                 4
jeopardize the continued existence of any endangered species
or threatened species or result in the destruction or adverse
modification of [the critical] habitat of such species[.]” Id.
§ 1536(a)(2).1 To give effect to that obligation, the Act creates
a system of “[i]nteragency cooperation,” in which the federal
agency proposing to act (known as the “action agency”) must
“consult” with one of the two expert wildlife agencies—the
Fish and Wildlife Service (which is part of the Department of
the Interior) or the National Marine Fisheries Service (which is
within the Department of Commerce)—whenever it is
contemplating a project that might affect a listed species. Id.
§ 1536(a)(3); see City of Tacoma v. FERC, 460 F.3d 53, 75
(D.C. Cir. 2006).         This consultation process “reflects
Congress’s awareness that [those] expert agencies * * * are in
the best position to make discretionary factual determinations
about whether a proposed agency action will create a problem
for a listed species and what measures might be appropriate to
protect the species.” City of Tacoma, 460 F.3d at 75.

    While the consultation process can take a variety of forms,
the action agency often performs a preliminary review to
determine whether the proposed action could affect any listed
species. See 50 C.F.R. § 402.14(a); see also 16 U.S.C.
§ 1536(c); 50 C.F.R. §§ 402.10–402.13. If the action agency
determines—and the wildlife agency concurs—that no listed
species or critical habitats are likely to be adversely affected,
then no formal consultation is required.             50 C.F.R.
§ 402.14(b)(1). But if either the action agency or the wildlife
agency concludes that the proposed action “may affect” a listed

    1
       The phrase “jeopardize the continued existence of” means “to
engage in an action that reasonably would be expected, directly or
indirectly, to reduce appreciably the likelihood of both the survival
and recovery of a listed species in the wild by reducing the
reproduction, numbers, or distribution of that species.” 50 C.F.R.
§ 402.02.
                                 5
species or its critical habitat, then a formal consultation begins.
Id. § 402.14(a).

     That interagency process culminates in the wildlife agency
issuing a “biological opinion.” See 16 U.S.C. § 1536(b); 50
C.F.R. § 402.14. A Biological Opinion is a document in which
the wildlife agency comprehensively examines the proposed
action’s anticipated effects on listed species and critical habitat.
See 16 U.S.C. § 1536(b)(3)(A); 50 C.F.R. § 402.14(h). In
particular, the wildlife agency must give its opinion on whether
the proposed action is “likely to jeopardize the continued
existence of [a listed] species or result in the destruction or
adverse modification of [critical] habitat”—that is, whether the
action would violate the Endangered Species Act. See 16
U.S.C. § 1536(a)(2); 50 C.F.R. § 402.14(h)(1)(iv). If the
wildlife agency concludes that the action is likely to jeopardize
the continued existence of a listed species, its Biological
Opinion must provide the action agency with “reasonable and
prudent alternatives” (if any) to the proposed action that would
prevent such harm and avoid a violation of the Act. See 50
C.F.R. § 402.14(h)(1)(iv)(A), (h)(2). On the other hand, if the
wildlife agency concludes that the proposed action is not likely
to jeopardize the continued existence of any listed species, the
wildlife agency issues a “no jeopardy” Biological Opinion,
which gives the action agency a green light to proceed
consistent with the Endangered Species Act. See 50 C.F.R.
§ 402.14(h)(1)(iv)(B).

     Even if the proposed action will not “jeopardize the
continued existence” of a listed species, it may still cause some
harm to the species. That type of harm is referred to as
“incidental take.” See 50 C.F.R. § 402.14(i). When such harm
is reasonably certain to occur, the wildlife agency must include
an “Incidental Take Statement” as part of its Biological
Opinion.       See 16 U.S.C. § 1536(b)(4); 50 C.F.R.
                                6
§ 402.14(g)(7), (i). As relevant here, the Incidental Take
Statement (i) specifies the extent of the anticipated take,
(ii) identifies any “reasonable and prudent measures” that the
wildlife agency considers “necessary or appropriate to
minimize such impact,” and (iii) sets forth detailed “terms and
conditions” that the action agency or licensed private party
must undertake to implement those reasonable and prudent
measures. 16 U.S.C. § 1536(b)(4); see also 50 C.F.R.
§ 402.14(i). Most relevantly for this case, the Fish and Wildlife
Service (“Service”) regulations provide that the “reasonable
and prudent measures” in an Incidental Take Statement “cannot
alter the basic design, location, scope, duration, or timing of the
action and may involve only minor changes” to the proposed
federal agency action. 50 C.F.R. § 402.14(i)(2).

     So long as the action agency and private parties implement
the “reasonable and prudent measures” and the associated
“terms and conditions[,]” the Incidental Take Statement
provides a safe harbor from any civil or criminal liability
associated with incidental take. See 16 U.S.C. § 1536(o)(2);
Sierra Club v. United States Army Corps of Eng’rs, 803 F.3d
31, 36 (D.C. Cir. 2015).

     Once the wildlife agency has issued its Biological Opinion
(including any Incidental Take Statement), the action agency
must “determine whether and in what manner to proceed with
the action in light of its [16 U.S.C. § 1536] obligations and the
Service’s biological opinion.” See 50 C.F.R. § 402.15(a). The
Supreme Court has observed that, while the Biological Opinion
“theoretically serves an advisory function, in reality it has a
powerful coercive effect on the action agency.” Bennett v.
Spear, 520 U.S. 154, 169 (1997) (formatting modified). That
is because the action agency and private parties are shielded
from civil and criminal liability only if they comply with the
wildlife agency’s recommendations. “The action agency is
                                  7
technically free to disregard the Biological Opinion and
proceed with its proposed action, but it does so at its own peril
(and that of its employees)[.]” Id. at 170.

                                  B

     The Federal Power Act gives the Federal Energy
Regulatory Commission (“Commission”) responsibility for
licensing the construction, maintenance, and operation of
hydroelectric projects, including dams, on waters subject to
federal jurisdiction. See 16 U.S.C. § 797(e). 2 When deciding
whether to issue a license to a hydropower project, the
Commission not only must consider “the power and
development purposes for which licenses are issued,” but also
must “give equal consideration to the purposes of energy
conservation, the protection, mitigation of damage to, and
enhancement of, fish and wildlife (including related spawning
grounds and habitat), the protection of recreational
opportunities, and the preservation of other aspects of
environmental quality.” 16 U.S.C. § 797(e); see also 16 U.S.C.
§ 803(a)(1)–(2) (projects must be “best adapted to a
comprehensive plan” for waterway uses); United States Dep’t
of Interior v. FERC, 952 F.2d 538, 544 (D.C. Cir. 1992). Once
issued, licenses can be altered “only upon mutual agreement

     2
        Congress’s jurisdiction over certain waters derives from its
authority to regulate interstate and foreign commerce under the
Constitution. See U.S. CONST. Art. I, § 8, cl. 3; Federal Power
Comm’n v. Oregon, 349 U.S. 435, 442 (1955). In particular, the
Federal Power Act requires the Commission to regulate dams on
“navigable waters,” which means waters “used or suitable for use”
for transporting people or property in interstate or foreign commerce.
See 16 U.S.C. §§ 796(8), 817(1); Turlock Irrigation Dist. v. FERC,
786 F.3d 18, 26 (D.C. Cir. 2015).
                               8
between the licensee and the Commission after thirty days’
public notice.” 16 U.S.C. § 799.

     Like all federal agency actions, Commission licensing
decisions must comply with the Endangered Species Act’s
requirement to avoid jeopardy to listed species. To that end,
the Commission consults with that Act’s statutorily designated
wildlife agencies when deciding whether to issue or amend
licenses for hydroelectric facilities. See, e.g., City of Tacoma,
460 F.3d at 75–76.

                               II

                               A

     Two dams sit on the Tippecanoe River in northern Indiana.
These dams use the flow of the river to generate electricity, and
they also typically provide enough water to sustain two large
reservoirs. The Norway Dam, built in 1923, creates a ten-mile-
long reservoir called Lake Shafer. Further downstream, the
Oakdale Dam, built in 1925, creates a reservoir of similar
length called Lake Freeman. The dams are owned and operated
by a privately owned utility company, the Northern Indiana
Public Service Company LLC (“NIPSCO”).

    The lakes are centers of economic and recreational activity
for the region. More than four thousand private lakefront
properties surround the reservoirs, and the lakes support
substantial boating, fishing, tourism, and related activities.

     For almost eighty years, the Commission took the position
that the portion of the Tippecanoe River near the dams was not
a navigable water for purposes of federal jurisdiction, and so
the dams did not require a license from the Commission. See
Northern Ind. Pub. Serv. Co., 12 FERC ¶ 61274, 61644 (1980).
But in 2000, the agency changed course and determined that
                               9
the Norway Dam and Oakdale Dam portions of the Tippecanoe
River constitute a navigable waterway within the federal
government’s jurisdiction. Northern Ind. Pub. Serv. Co., 92
FERC ¶ 62258, 64378 (2000). In 2007, the Commission issued
a 30-year license to NIPSCO to operate the two dams.
Northern Ind. Pub. Serv. Co., 121 FERC ¶ 62009, at 1 (2007)
(J.A. 92).

     As relevant here, that license required that NIPSCO
operate the dams “in an instantaneous run-of-river mode.”
Northern Ind. Pub. Serv. Co., 121 FERC ¶ 62009, at Article
403 (J.A. 119). In this mode, NIPSCO must ensure that “the
outflow from the Norway Dam approximates the sum of
inflows to Lake Shafer and the outflow from the Oakdale Dam
approximates the sum of inflows to Lake Freeman.” Id. More
specifically, the license required NIPSCO to prevent the water
level of the lakes from fluctuating more than three inches above
or below a target elevation. For Lake Freeman, that elevation
is roughly 610 feet above sea level (technically, 612.45 feet
NGVD). Id. The license allowed deviation from this rule only
during periods of “abnormal river conditions[,]” meaning
abnormally high flows, not abnormally low flows. Id.

                               B

     In the summer of 2012, Indiana experienced an extreme
drought, and water levels on the Tippecanoe River reached
historic lows. Residents living along the stretch of the
Tippecanoe downstream of the dams alerted the Indiana
Department of Natural Resources that the river was drying up
and large numbers of mussels were dying. That July, biologists
from Indiana and the U.S. Fish and Wildlife Service surveyed
the river over several days, and found “substantial numbers of
fresh dead mussels [and] stranded live mussels[.]” J.A. 1056.
Among the dead were numerous mussels listed as endangered
                              10
or threatened under the Endangered Species Act, including
fanshell, clubshell, sheepnose, and rabbitsfoot mussels. See 16
U.S.C. § 1533.

     The Service determined that low water flow out of the
dams was contributing to the mussel deaths. In the Service’s
view, the way in which the dams were being operated caused
less water to reach the lower Tippecanoe River than would
reach it in the absence of the dams, and so the dams partially
caused the mussel deaths in the dried-out river. The Service
then wrote a letter to NIPSCO informing the company that it
must increase water flow out of the Oakdale Dam or risk
potential liability under the Endangered Species Act for “take”
of listed mussels. Alternatively, the Service said, NIPSCO
could try to avoid liability by demonstrating that the dams were
“maintaining the ‘run of the river’ rate of discharge”—in other
words, demonstrate that the dams had no effect on the flow of
the river or the mussel deaths caused by insufficient water. See
J.A. 143.

     NIPSCO opted to increase the water flow out of the
Oakdale Dam. Over the subsequent years, NIPSCO continued
to work with the Service to ensure that enough water was
released from the dams to avoid killing mussels. This
cooperation required NIPSCO to perform a regulatory
balancing act: The increased releases that the Fish and Wildlife
Service requested to protect the mussels forced the company to
violate the Commission’s license requirement that the
company maintain relatively stable lake elevations. To remedy
the situation, NIPSCO sought and received variances from the
Commission allowing temporary violations of the license’s
water-level terms.

    In 2014, the Service devised a plan for protecting the
Tippecanoe River mussels. As described in a “Technical
                                  11
Assistance Letter” sent to NIPSCO, the Service suggested that
NIPSCO could avoid liability under the Endangered Species
Act by releasing enough water to mimic the natural run-of-river
flow that would occur if the dams were not there. While
recognizing that NIPSCO’s license from the Commission
already required the company to operate the dams in what the
Commission called “instantaneous run-of-river mode,”
Northern Ind. Pub. Serv. Co., 121 FERC ¶ 62009, at Article
403 (J.A. 119), the Service defined “run-of-river” operations
differently in its new plan. See J.A. 212. Rather than focusing
on keeping the lake levels steady, as the Commission had
required, the Service advised NIPSCO to calculate the amount
of water needed to approximate the natural flow of water out
of the Oakdale Dam during low-flow conditions.

     The Service then calculated that, in the absence of the
dams, more water would flow into the river downstream than
entered it upstream because of the large watershed surrounding
the downstream portions of the river. More specifically, the
water flow directly beneath the Oakdale Dam under natural
conditions would be 1.9 times the flow measured upstream of
the dams (as measured at the Winamac gauge on the River).3
To that end, the Service advised NIPSCO to release enough
water during low-flow events so that the flow directly below
the Oakdale Dam was 1.9 times the 24-hour daily average flow
at the Winamac gauge. In addition, the Service instructed
NIPSCO to cease electricity generation during low-flow
events, because the Service concluded that engaging the dam’s

     3
        A watershed is, in essence, “a land area that channels rainfall
and snowmelt to creeks, streams, and rivers, and eventually to
outflow points such as reservoirs, bays, and the ocean.” NATIONAL
OCEANIC AND ATMOSPHERIC ADMINISTRATION, What is a
Watershed?       (Dec. 4, 2020), https://oceanservice.noaa.gov
/facts/watershed.html (last visited March 23, 2021).
                               12
turbines caused large fluctuations in water flow that harmed
mussels.

                                C

     Two months later, NIPSCO sought permission from the
Commission to implement the Service’s plan. Technically, this
request came in the form of an application to amend the
definition of “abnormal river conditions” in NIPSCO’s license.
The proposed amendment removed the lower limit on the
elevation of Lake Freeman during low-flow events, allowing
the lake level to fall more than three inches below the target
elevation.

      After the Commission opened the proceedings, a group of
local entities (the “Coalition”) intervened to oppose the
proposed amendment to NIPSCO’s license. The Coalition
included the Shafer & Freeman Lakes Environmental
Conservation Corporation, a local non-profit that owns much
of the land beneath the lakes. It also included Carroll and
White Counties and the City of Monticello, each of which
encompasses or borders part of Lake Freeman. The Coalition
argued that the dams do not alter the natural run of the
Tippecanoe River, and that the Service’s formula for
calculating river flow was “‘junk’ science[.]” J.A. 72, 80. In
the Coalition’s view, the amendment would provide an
“unnatural” benefit to the mussels by releasing more water
from Lake Freeman than the Tippecanoe River would provide
in its natural state. J.A. 45. In support, the Coalition submitted
two reports from professors with expertise in hydrology.

     In practical terms, the Coalition was concerned that Lake
Freeman could be drawn down “in excess of 12 feet,”
preventing almost all recreational use of the lake, with
concomitant effects on homeowners, local businesses, and
tourism. J.A. 46. The Coalition also voiced concern that a
                              13
large drawdown could cause significant environmental and
aesthetic harm to the lakes and lakeshore. For those reasons,
the Coalition asked the Commission to deny the amendment
application and to require NIPSCO to operate the dams as it
previously had.

      As required by the National Environmental Policy Act
(“NEPA”), 42 U.S.C. § 4332, the Commission conducted an
environmental assessment analyzing the consequences of the
proposed amendment. Draft Environmental Assessment for
Non-Capacity Related Amendment to License: Norway-
Oakdale Hydroelectric Project—FERC Project No. 12514-074
(2015) (J.A. 362–522).             The Commission’s draft
environmental assessment was released for public comment.
The assessment evaluated three alternative courses of action:
(1) a “no-action” alternative, in which the Oakdale Dam would
continue operating without change under its current license;
(2) NIPSCO’s “proposed alternative” to operate in accordance
with the Fish and Wildlife Service’s guidance in the Technical
Assistance Letter; and (3) the Commission’s “staff
alternative,” which reflected a potential compromise position.
Under the staff alternative, during periods of low flow,
NIPSCO would cease diverting water for the generation of
electricity, but would still be obligated to prevent Lake
Freeman’s elevation from falling more than three inches below
its target elevation.

     Citing its obligation under the Federal Power Act to
balance wildlife conservation with other interests, the
Commission proposed its “staff alternative” as the best option,
reasoning that it would “avoid adverse effects from project
operations on endangered mussels, while protecting the
numerous resources of Lake Freeman that depend on stable
lake levels.” J.A. 371, 449. The Commission also agreed with
the Coalition’s experts that “[t]here are legitimate concerns”
                              14
with the Service’s approach to calculating water flow.
J.A. 414.

     The Fish and Wildlife Service submitted comments on the
draft that strongly opposed adoption of the Commission staff
alternative, and defended the proposed NIPSCO amendment
that incorporated the Service’s recommendation. The Service
explained that the Commission staff alternative was
“essentially the same” as the no-action status quo because the
staff alternative maintained the status quo limits on lake level
fluctuations, and so would continue to result in inadequate
water flow for mussels. J.A. 528.

     The Commission’s final environmental assessment
adhered to its original conclusion, rejecting the NIPSCO
amendment and concluding that the Commission staff
alternative best balanced the interests of mussels with those
interests that depend on stable lake levels. The Commission
added that its staff alternative would have no “new effects on
environmental and socioeconomic resources associated with
Lake Freeman,” and on that basis issued a Finding of No
Significant Impact—a finding that, under NEPA, no further
environmental review was necessary. J.A. 758. At the same
time, the Commission acknowledged that, under the
consultation provisions of the Endangered Species Act, 16
U.S.C. § 1536, it needed to obtain the Fish and Wildlife
Service’s agreement that its staff alternative would not
adversely affect endangered mussels.

                               D

    Because the Service decidedly did not agree with the
Commission’s conclusion, see J.A. 855, the two agencies
entered into “formal consultation,” and the Service prepared a
Biological Opinion. See 16 U.S.C. § 1536(a)(2), (b); 50 C.F.R.
§ 402.14. The Biological Opinion laid out the Service’s
                               15
scientific evaluation of the competing options and critiqued the
reasoning underlying the staff alternative. For example, the
Service noted that managing the dams to maintain lake level,
as proposed by the staff alternative, historically had caused
unnaturally extreme fluctuations in water flow below the dams
that were harmful to mussels. J.A. 892–893. The Service also
commented that, because NIPSCO rarely generates power from
the dams during low flows, the staff alternative would produce
minimal conservation benefits by merely prohibiting electricity
generation during those low flows. J.A. 907. Nonetheless, the
Service concluded that, under the governing Endangered
Species Act standard, the staff alternative “is not likely to
jeopardize the continued existence of the clubshell, fanshell,
sheepnose, or rabbitsfoot mussels and is not likely to destroy
or adversely modify designated critical habitat.” J.A. 914.
That “no jeopardy” finding cleared the way for the
Commission to proceed with the staff alternative.

     The Service then turned to the statutorily required analysis
of incidental take, and concluded that the staff alternative
would result in some incidental take of mussels. See 16 U.S.C.
§ 1536(b)(4). While this level of incidental take would not
result in jeopardy to the species, the Service proposed a
“reasonable and prudent measure” to “minimize impacts of
incidental take[.]” J.A. 916. Specifically, the Service advised
that NIPSCO should “restor[e] a more natural flow regime
downstream of Oakdale Dam during low-flow periods” by
“[a]dopt[ing] the alternative proposed by NIPSCO in its
request for a license amendment and implement[ing] the
Service [Technical Assistance Letter] of 2014[.]” J.A. 916.

     In other words, the “reasonable and prudent measure” to
minimize incidental take from the staff alternative was to
proceed with the approach to water-flow management
originally recommended by the Service—that is, to maintain
                               16
water flow below the dam during low flows at 1.9 times the
average daily flow at the Winamac gauge. Conditioned on
those terms, the Service issued the necessary Incidental Take
Statement, underscoring that the reasonable and prudent
measure and associated terms and conditions were “non-
discretionary, and must be undertaken by the [Commission] so
that they become binding conditions of any grant or permit
issued to NIPSCO, as appropriate, for the exemption” from
civil and criminal liability under the Endangered Species Act
to apply. J.A. 915.

     Both the Coalition and NIPSCO filed comments with the
Commission on the Biological Opinion. The Coalition argued
that (i) the Service’s “reasonable and prudent measure” was not
based on the best available science; (ii) there would be no
incidental take from the staff alternative; (iii) the “reasonable
and prudent measure” exceeded the Service’s legal authority
because it involved more than a “minor” change to the
Commission’s proposal; and (iv) the Commission need not
defer to the Service’s Opinion. J.A. 938–948. NIPSCO, for its
part, expressed concern about “the clear conflicts between the
Staff Alternative and the measures included in the [Biological
Opinion] to address [Endangered Species Act] compliance[,]”
and pleaded with the Commission and the Service to “continue
to work together to find a solution” that would “provide
regulatory certainty for NIPSCO going forward.” J.A. 927–
928. NIPSCO stated that it “cannot be placed in the untenable
position of choosing between inconsistent compliance
requirements from two federal agencies.” J.A. 928.

    In June 2018, almost a year after receiving the Biological
Opinion, the Commission issued its ruling. See Order
Amending License, Approving Revised Operation and
Compliance Plan, and Terminating Temporary Variance, 163
FERC ¶ 61212 (2018) (J.A. 969–1013). The Commission
                              17
acknowledged that there was “a difference in opinion [between
the two agencies] regarding how best to approximate run-of-
river operations at the Oakdale development.” J.A. 984. The
Commission reiterated its view that its own method was best,
and described the Service’s approach as containing
“inaccuracies” that would “provide greater flows than would
otherwise occur naturally.” J.A. 984–985.

     But the Commission concluded that the Endangered
Species Act “constrains [the Commission’s] discretion to
implement staff’s recommended alternative.” J.A. 985. The
Commission explained that, while it is required to balance a
range of interests under the Federal Power Act, its obligations
under the Endangered Species Act are “more narrowly focused
on protecting threatened and endangered species.” J.A. 985.
So while the Commission “might ordinarily prefer staff’s
alternative to balance non-developmental and developmental
uses under [the Federal Power Act], in this case the
[Endangered Species Act] compels a different result.”
J.A. 985. The Commission added that the risk of “civil and
criminal penalties, including imprisonment” for actions not in
compliance with an Incidental Take Statement weighed against
the staff alternative. J.A. 985.

     In response to the Coalition’s arguments, the Commission
acknowledged that it “must make an independent decision
under the [Federal Power Act] as to what measures should be
included in a license[.]” J.A. 988. But the Commission added
that it is “unlikely to contradict the consulting agency’s
recommendation in the absence of a showing that the biological
opinion and the remainder of the record do not provide
substantial evidence to support them”—a showing that the
Coalition “has not made[.]” J.A. 988. While it had agreed with
the Coalition’s experts, the Commission explained that its
concerns with the Service’s scientific approach were “not
                               18
sufficient to lead us to reject [the Service’s] determination that
additional flows are needed to protect listed species[,]” or that
the staff alternative would result in incidental take. J.A. 988.
The Commission also refused to “review the validity of the
biological opinion, substituting our judgment for that of [the
Service.]” J.A. 989. Rather, “a reviewing court, and not the
Commission, must decide whether [the Service] considered the
relevant factors and adequately explained its choices in the
biological opinion.” J.A. 989. For its part, the Commission
found it appropriate to rely on the Biological Opinion because
it was “thorough,” and there was no evidence that it was so
“fatally flawed” that the Commission would be unreasonable
or arbitrary to credit its determinations. J.A. 989–990.

     Lastly, the Commission rejected the Coalition’s argument
that the Service’s “reasonable and prudent measure” was
contrary to regulation because it constituted a major, rather
than a “minor” change to the project. Under 50 C.F.R.
§ 402.14(i)(2), the Service’s proposed reasonable and prudent
measures, when included in an Incidental Take Statement, may
not “alter the basic design, location, scope, duration, or timing”
of the proposed agency action, and “may involve only minor
changes.” The Commission concluded that the reasonable and
prudent measure proposed by the Service was “designed to
achieve the same purpose” as the staff alternative of
approximating run-of-river flow and protecting mussels, and
its adoption would not “change the * * * basic design, location,
scope, duration, and timing” of the Commission staff
alternative for river flow. J.A. 989. The Commission added
that, “even if * * * the measure would result in a major
change,” it would not reject the measure because it treats the
implementation of reasonable and prudent measures as
“nondiscretionary.” J.A. 989.
                               19
     For those reasons, the Commission granted NIPSCO’s
request for an amended license on the terms that NIPSCO and
the Service had originally requested.

                               E

    In July 2018, the Coalition filed a request for rehearing,
which the Commission denied in January 2019. Order Denying
Rehearing, 166 FERC ¶ 61030 (2019) (J.A. 1021–1036).

     On March 15, 2019, the Coalition filed a petition for
review in this court, seeking review of the Commission’s
orders adopting the license amendment and denying rehearing.
NIPSCO moved to intervene as a respondent. Subsequently, in
the Coalition’s Statement of Issues, the Coalition indicated that
it was also challenging the Service’s Biological Opinion as
arbitrary and capricious and contrary to law. A week later, the
Fish and Wildlife Service moved to intervene as a respondent,
explaining that it had not known prior to the Statement of
Issues that its own Biological Opinion was being challenged.
This court granted both motions to intervene.

                              III

    After intervening, the Fish and Wildlife Service filed a
motion for leave to rely upon its own administrative record in
defending the Biological Opinion against the Coalition’s
arguments that the Biological Opinion violated the
Administrative Procedure Act, 5 U.S.C. § 706, the Endangered
Species Act, and the Service’s implementing regulations. The
Coalition opposes the Service’s filing of its administrative
record. We grant the Service’s motion.

     Under 16 U.S.C. § 825l(b), this court has jurisdiction to
review not only the Commission’s order amending NIPSCO’s
license, but also the Service’s Biological Opinion that was
                              20
prepared in the course of the Commission licensing
proceeding. See American Rivers v. FERC, 895 F.3d 32, 45
(D.C. Cir. 2018); City of Tacoma, 460 F.3d at 76; see also City
of Tacoma v. Taxpayers of Tacoma, 357 U.S. 320, 336 (1958).
The Administrative Procedure Act, in turn, instructs courts to
“review the whole record or those parts of it cited by a party”
when reviewing agency action. 5 U.S.C. § 706. To do so, we
necessarily must have before us the “whole record” for each of
the agency actions we are asked to review. In this case, that
means we must have not just the Commission’s administrative
record, but also the record compiled by the Fish and Wildlife
Service in preparing its Biological Opinion. See Bennett, 520
U.S. at 178 (Biological Opinions are “final agency action”
subject to review under the Administrative Procedure Act).

     The Coalition insists that “[t]he only agency action to be
reviewed here is [the Commission’s] orders issuing and
affirming an operating license amendment.” Coalition Br. 51.
Not so. In its brief, the Coalition challenges both the
Commission’s orders and the Service’s Biological Opinion.
Coalition Br. 2–4. Each of those is an independent challenge
to distinct agency actions resting on their own administrative
records. See City of Tacoma, 460 F.3d at 75.

     Importantly, the Coalition has chosen to go beyond
challenging just the reasonableness of the Commission’s
reliance on the Biological Opinion. It challenges the merits of
that Opinion itself. See Coalition Br. at 29 (“[The Service’s]
Biological Opinion was arbitrary and capricious, an abuse of
discretion, unsupported by substantial evidence, and not based
on the best scientific and commercial data available[.]”).
Because the Coalition seeks to challenge the Biological
Opinion directly—and to have the benefit of a more rigorous
standard of review than we would apply if the Coalition merely
challenged the Commission’s reliance on the Opinion, see City
                                 21
of Tacoma, 460 F.3d at 75—then the Service must be allowed
to defend its decision directly by relying on the record on which
it made its decision. See Florida Power & Light Co. v. Lorion,
470 U.S. 729, 743–744 (1985) (“The task of the reviewing
court is to apply the appropriate APA standard of review to the
agency decision based on the record the agency presents to the
reviewing court.”). We cannot review either the validity of the
Coalition’s objections to the Biological Opinion or the
sufficiency of the Service’s analysis in a vacuum. 4

                                 IV

     The Coalition raises numerous challenges to the Fish and
Wildlife Service’s scientific foundation for its Biological
Opinion, and argues that those purported errors require
invalidation of both the Biological Opinion and the
Commission’s decisions relying on that Opinion. We lack
jurisdiction to address several of the Coalition’s contentions
because they were not raised in its petition for rehearing before
the Commission. And we reject the remainder of the
Coalition’s science-based arguments.

                                 A

     The Federal Power Act requires petitioners challenging a
Commission decision to exhaust their administrative remedies
by “set[ting] forth specifically [in an application for rehearing]
the ground or grounds” on which the petitioner relies. 16
U.S.C. § 825l(a). Giving force to that exhaustion requirement,
the Act expressly limits judicial review to only those matters
that were “urged before the Commission in the application for

     4
      There is no indication here that the Service, in introducing its
own record, is seeking to rely on an ex post rationalization for its
decision. Cf. Walter O. Boswell Mem’l Hosp. v. Heckler, 749 F.2d
788, 793 (D.C. Cir. 1984).
                                22
rehearing unless there is reasonable ground for failure so to
do.” Id. § 825l(b). Those requirements are jurisdictional, and
this court’s review is “limited by the extent to which a
petitioner objected ‘with specificity[.]’”     Indiana Util.
Regulatory Comm’n v. FERC, 668 F.3d 735, 739 (D.C. Cir.
2012) (quoting Allegheny Power v. FERC, 437 F.3d 1215,
1220 (D.C. Cir. 2006)).

     Because exhaustion under the Federal Power Act is
jurisdictional, this court must assure itself that this requirement
has been satisfied regardless of whether the parties raise an
objection. Wabash Valley Power Ass’n v. FERC, 268 F.3d
1105, 1114 (D.C. Cir. 2001). In that respect, a threshold issue
in this case is whether the Coalition’s petition to the
Commission for rehearing adequately put the Commission on
notice that the Coalition was challenging not only the
Commission’s reliance on the Biological Opinion, but also the
substantive validity of the Biological Opinion itself. See Maine
Council of Atlantic Salmon Fed’n v. FERC, 741 F. App’x 807,
807–808 (D.C. Cir. 2018) (no jurisdiction where petitioners
“failed to raise their objections to the [Biological Opinion’s]
validity in their application for rehearing of [the
Commission’s] order”).

     We conclude that the Coalition’s rehearing application
sufficiently raised the validity of the Biological Opinion itself.
The Coalition’s rehearing application argued that the Service
had used a “flawed foundation” in its scientific analysis, that
the Coalition’s experts had “discredited” the Service’s
methodology, and that the Commission had erred by “blindly
accept[ing] the [Biological Opinion] as [representing the] ‘best
science[.]’” J.A. 1016. Tellingly, the Commission itself
understood the Coalition to be challenging the Biological
Opinion directly, stating that “[t]he Protest Coalition asks the
Commission to review the validity of the biological opinion
                               23
and substitute our judgement for that of [the Service.]”
J.A. 1031. While the Commission’s consideration of an issue
cannot itself cure a petitioner’s failure to raise that issue on
rehearing, see Indiana Util. Regulatory Comm’n, 668 F.3d at
739, the Commission’s statement provides strong evidence that
the Coalition’s rehearing application put the Commission on
notice of the issue, see Columbia Gas Transmission Corp. v.
FERC, 404 F.3d 459, 462 (D.C. Cir. 2005).

      But while the Coalition adequately indicated that the
Biological Opinion was a target of its objections, it failed to
raise on rehearing many of the specific objections on which it
now relies. In particular, the Coalition argues before this court
that: (i) the Service improperly “assumed” that the mussel
deaths below Oakdale Dam in 2012 constituted “take” caused
by the dams, and failed to consider the presence of dead
mussels upstream of the dams, Coalition Br. 29–32; (ii) the
Service wrongly excluded data from 2010 when evaluating
certain data related to river flows, Coalition Br. 40–41; and
(iii) the Service used an “improperly large exponent” when
creating its formula for calculating natural water flow on the
Tippecanoe River, Coalition Br. 41–42. None of those
arguments was raised at all, let alone “with specificity,” in the
Coalition’s petition for rehearing before the Commission. See
Indiana Util. Regulatory Comm’n, 668 F.3d at 739; J.A. 1014–
1019.

     The Coalition tries to salvage its challenges by pointing to
the statement in its petition for rehearing that “the protocols
contained in the [Technical] Assistance Letter were not based
on best science.” Coalition Reply Br. 9–10; see J.A. 1015. But
exhaustion is not a Rorschachian enterprise in which the
Commission is expected to espy specific objections from such
vague and formless assertions. See Public Serv. Elec. & Gas
Co. v. FERC, 485 F.3d 1164, 1170 (D.C. Cir. 2007) (a “single
                               24
opaque sentence” is insufficient to preserve an argument);
Connecticut Dep’t of Pub. Util. Control v. FERC, 593 F.3d 30,
36 (D.C. Cir. 2010) (no jurisdiction to address particular
arguments when the petitioners had raised the issue only “in a
general way”). For that reason, we lack jurisdiction to review
the Coalition’s unexhausted arguments.

                                B

    The Coalition challenges the scientific basis of the Fish
and Wildlife Service’s new dam operation procedures. But the
Service’s analysis of the relevant science and record
comfortably passes administrative review.

                                1

     We must uphold the Biological Opinion, as well as the
Commission’s licensing decision based on it, unless either
decision was “arbitrary and capricious” or unsupported by
substantial evidence. 5 U.S.C. § 706(2); see City of Tacoma,
460 F.3d at 75–76. Under that standard, we are “not to ask
whether a regulatory decision is the best one possible or even
whether it is better than the alternatives.” FERC v. Electric
Power Supply Ass’n, 136 S. Ct. 760, 782 (2016). Instead, we
will vacate the decision only if the agency has “relied on factors
which Congress has not intended it to consider, entirely failed
to consider an important aspect of the problem, offered an
explanation for its decision that runs counter to the evidence
before the agency, or is so implausible that it could not be
ascribed to a difference in view or the product of agency
expertise.” Motor Vehicle Mfrs. Ass’n of U.S., Inc. v. State
Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983). The agency
must articulate “a rational connection between the facts found
and the choice made.” Id. (quoting Burlington Truck Lines v.
United States, 371 U.S. 156, 168 (1962)).
                              25
     Under the Endangered Species Act, both the Fish and
Wildlife Service and the Commission are required to “use the
best scientific and commercial data available” when making
their respective decisions. 16 U.S.C. § 1536(a)(2); 50 C.F.R.
§ 402.14(g)(8). This means that the agency “may not base its
[decisions] on speculation or surmise or disregard superior
data[.]” Building Indus. Ass’n of Superior Cal. v. Norton, 247
F.3d 1241, 1246–1247 (D.C. Cir. 2001). But when the science
is uncertain, courts must “proceed with particular caution,
avoiding all temptation to direct the agency in a choice between
rational alternatives.” American Wildlands v. Kempthorne,
530 F.3d 991, 1000–1001 (D.C. Cir. 2008) (internal quotation
omitted). In other words, “we review scientific judgments of
the agency ‘not as a chemist, biologist, or statistician that we
are qualified neither by training nor experience to be, but as a
reviewing court exercising our narrowly defined duty of
holding agencies to certain minimal standards of rationality.’”
Troy Corp. v. Browner, 120 F.3d 277, 283 (D.C. Cir. 1997)
(quoting Ethyl Corp. v. EPA, 541 F.2d 1, 36 (D.C. Cir. 1976)
(en banc)).

                               2

     At the outset, the Coalition argues that the Service
personnel who worked on the Biological Opinion lacked
hydrological expertise and that the Service’s scientific
conclusions are therefore undeserving of deference. That is
incorrect. The Service’s Biological Opinion was based upon
both hydrology and biology, and it is undisputed that the
Service personnel had relevant expertise in biology. The
record also demonstrates that the Service consulted
hydrologists as part of its decision-making process. The
Service’s judgment accordingly merits “the deference
traditionally given to an agency when reviewing a scientific
                                26
analysis within its area of expertise[.]” Appalachian Power
Co. v. EPA, 135 F.3d 791, 802 (D.C. Cir. 1998).

                                3

     The Coalition’s central scientific complaint is that, in its
view, the Service wrongly relied on a method of river-flow
calculation called “linear scaling.” The theory of linear scaling
holds that, in a comparatively homogeneous landscape, a
river’s flow at a given point is correlated linearly to the size of
the river’s watershed at that point. In other words, if a river
downstream at point B has a total watershed three times the size
of the watershed upstream at point A, then the river’s flow rate
at point B will be three times the flow rate at point A.

     As applied here, NIPSCO would take note of the
Tippecanoe River’s flow rate over a 24-hour period upstream
of the dam at a place called the Winamac gauge. NIPSCO
would then release enough water out of the Oakdale Dam such
that the flow rate directly beneath the dam was 1.9 times the
24-hour daily average flow rate at the Winamac gauge. That
multiplier reflects the Service’s determination that the
Tippecanoe’s watershed at the Oakdale Dam is 1.9 times the
size of the river’s watershed at the Winamac gauge. In the
Service’s judgment, linear scaling in this manner is the
soundest available method for guaranteeing that the water flow
out of the Oakdale Dam represents the “natural” flow of the
river during low-flow periods, including with respect to the
natural water flow’s effects on mussels.

     The Coalition objects to the Service’s reliance on linear
scaling. In its view, the better method for ensuring “natural”
flow rates on the Tippecanoe River is not linear scaling, but
instead keeping lake levels relatively constant. If the lakes are
not gaining any elevation, the argument goes, then water is
leaving the lakes at more or less the same rate as it is entering
                                27
them—that is, the “natural” run-of-river flow. The Coalition
contends more specifically that linear scaling is an
inappropriate scientific tool for managing the flow out of a dam
on a day-to-day basis, especially during low flows. For
instance, Robert Criss, one of the Coalition’s hydrology
experts, opined that while linear scaling may be an appropriate
method for measuring “long-term mean flows[,]” there is no
basis for applying linear scaling to low flows on an hourly or
daily basis. J.A. 238, 242. In Dr. Criss’s view, linear scaling’s
predictive approach does not work well in this context because
low flows behave irregularly, and there are many events
(interactions with groundwater, evaporation, localized rain
bursts, withdrawals, additions) that can have an outsized
impact on relative flow rates when flows are low.

     The record is replete with briefs, letters, scientific reports,
and agency and expert opinions elaborating and debating the
merits of the Service’s linear scaling methodology. But the
only question before us is whether the Fish and Wildlife
Service acted reasonably in its analysis and used the “best
scientific and commercial data available,” see 16 U.S.C.
§ 1536(a)(2). The Service’s analysis passes muster.

     First, the agency offered a thorough and reasoned
explanation of its scientific decision-making. The Service’s
methodology is based on a “fundamental characteristic of
watersheds”—namely, that a river’s flow “increases from the
headwaters to the mouth of the river.” J.A. 1104; see J.A. 884
(“[A]s watershed area increases, flow increases in most river
systems[.]”). To use the Service’s example: “At its source
downstream of Lake Itasca in Minnesota, the Mississippi River
is 18 feet wide and can be waded—[whereas] about 1,300 miles
downstream, south of Cairo, Illinois, the Mississippi is more
than 3,500 feet wide.” J.A. 884–885.
                              28
     In a letter to the Commission, the Service recognized that
making predictions of precise daily fluctuations in flow rate is
beyond the current capacity of science, but explained that
“across all [low-flow] events and across the duration of those
events, the Winamac-scaled flows provide the best, science-
based estimate of what flows at Oakdale would be were the
Norway and Oakdale Dams not present.” J.A. 1136 (emphasis
in original; formatting modified).

     The Service substantiated its judgment by conducting its
own analysis that demonstrated the relevance of linear scaling
to addressing low flows on the Tippecanoe River. Upon
evaluating the Tippecanoe River watershed, the Service
determined that the landscape upstream at Winamac shared key
drainage features with the landscape downstream at the
Oakdale Dam.        This conclusion confirmed a “crucial
assumption” underlying the application of linear scaling: The
overall watershed is sufficiently homogeneous to permit
estimation of downstream flow based on upstream flow.
J.A. 1104. The Service also performed a statistical analysis,
examining flow data from low-flow events on the Tippecanoe
River over a period of fourteen-and-a-half years. The Service’s
analysis showed that, during those low-flow events, flow
between two points upstream scaled close to linearly. That is,
downstream flows during those events were similar, on
average, to what linear scaling would have predicted.
J.A. 1136–1137. This finding provides support for the
Service’s approach of applying linear scaling to low-flow
events on the Tippecanoe River.

     The Service emphasized that a key benefit of its linear-
scaling approach was to mimic not just the quantity of water
being released from the Oakdale Dam but also the timing of
those releases. “The central question is not whether the water
that comes into the upper part of the Norway-Oakdale system
                              29
* * * ultimately finds its way out of Oakdale Dam, but whether
or not that flow is interrupted, especially during low flow
periods.” J.A. 1142. The Service explained that mussels can
be adversely affected by “even relatively brief episodes of
inadequate flow downstream.” J.A. 1142, 1157. And
according to the Service, low-flow data between 2012 and 2014
shows that, prior to the issuance of the Service’s Technical
Assistance Letter, NIPSCO routinely permitted “dramatic” and
“highly unnatural” fluctuations in flow out of the dam.
J.A. 966–967. The Service’s recommendation aimed to avoid
inadequate water flows by ensuring a particular amount of
outflow during low-flow periods.

     Another advantage to linear scaling identified by the
Service is that it can be implemented despite the technical
constraints on dam management. As the Biological Opinion
noted, the “1920s vintage equipment” of the dams makes it
“impossible” to precisely match inflows to and outflows from
Lake Freeman, given measurement “lag times” on the river and
other practical difficulties. J.A. 1227. Indeed, the data show
that summer flows out of the downstream Oakdale Dam have
often been less than flows out of the upstream Norway Dam.
J.A. 1229–1231. But concerns like lag time between gauges
and localized weather events are “irrelevant” under the
Service’s approach, because linear scaling “is developed to
function as a general estimator and not a formula for predicting
exact flows for each hour of each day of a specific [low-flow]
event.” J.A. 1137.

     Second, the Service considered and provided a reasoned
explanation for declining to rely just on maintaining the lake
level, as the Coalition proposed. The Service produced a chart
showing that, when the Oakdale Dam was operated to ensure
stable lake levels during the 2012 drought, the flow rates below
the Oakdale Dam fluctuated dramatically and erratically in
                               30
contrast to the relatively steady flow rates upstream. J.A. 1170.
This showed that the lake-level method can result in highly
variable flow rates that do not correspond to the natural flows
upstream. The Service also observed that the water level in the
lake had stayed relatively constant during prior droughts,
whereas most lakes in Indiana had seen a water elevation drop,
and it is “contrary to logic that keeping the two Tippecanoe
Reservoirs level would not deprive water from other parts of
the system during drought periods.”

    The Service added that keeping lake levels constant
ignores all the other possible places where inflow water could
end up rather than downstream, such as into the air through
evaporation,     underground       through    discharges    into
groundwater, or sideways on the surface through withdrawals
from the lakes. The Service acknowledged that, “[h]ad we
perfect information with respect to the losses from the lakes
during dry periods, the temporal dimension of flow through this
long and complex system, and the ability to precisely manage
two 1920s era dams, estimating flow using lake level * * *
might be appropriate.” J.A. 1177. But given that “we don’t
know the water budget for this system[,] * * * we must estimate
with the uncertainty that entails.” J.A. 1177.

    In sum, the Service concluded that “[n]either of the
currently available methodologies (instantaneous run-of-river
and linear scaling) allows us to precisely determine outflows
from Oakdale Dam that will ‘match’ individual [low-flow]
events.” J.A. 1147. But while “[n]either approach is perfect,”
the Service reasonably concluded that its linear scaling
approach represented “the best currently available science” for
ensuring the natural flow of the river in a way that would
“minimize take of mussels caused by the management of the
Norway-Oakdale Complex.” J.A. 968, 1148.
                               31
     The Service’s reasoned and thorough justification for its
approach to managing the Tippecanoe River’s flow satisfies
Administrative Procedure Act review. The agency explained
the scientific basis for its decision, identified substantial
evidence in the record buttressing its judgment, and responded
to the Coalition’s concerns. The point of administrative review
is not to settle the scientific debate, but to ensure that the
Service “explain[ed] the assumptions and methodology used in
preparing the model[.]” In re Polar Bear Endangered Species
Act Listing & Section 4(d) Rule Litig.—MDL No. 1993, 709
F.3d 1, 13 (D.C. Cir. 2013) (brackets omitted). The Service
acknowledged that linear scaling was an imperfect method of
estimating river flow, but reasonably concluded that it was the
best option and reflected the best science, given the
demonstrated flaws in other approaches. “That a model is
limited or imperfect is not, in itself, a reason to remand agency
decisions based upon it.” Appalachian Power Co. v. EPA, 249
F.3d 1032, 1052 (D.C. Cir. 2001). That evidence-based
explanation of the lake-level approach’s drawbacks further
established that the Service’s approach accorded with the “best
scientific * * * data available.” See Building Indus. Ass’n, 247
F.3d at 1246–1247; see also Baltimore Gas & Elec. Co. v.
NRDC, 462 U.S. 87, 103 (1983) (holding that “a reviewing
court must generally be at its most deferential” when
examining an agency decision made “within its area of special
expertise, at the frontiers of science”).

                               4

     Finally, because the Service acted reasonably in using a
linear scaling methodology, the Commission too acted
reasonably in relying on the Service’s resulting scientific
judgments in its Biological Opinion. In reviewing the
Commission’s granting of the amended license, “the critical
question is whether the action agency’s reliance was arbitrary
                               32
and capricious, not whether the [Biological Opinion] itself is
somehow flawed.” City of Tacoma, 460 F.3d at 75 (emphasis
in original). The Commission “satisf[ies] its obligations under
the Act if a challenging party can point to no ‘new’
information—i.e., information the [Service] did not take into
account—which challenges the [Biological Opinion’s]
conclusions.” Id. at 76.

     Here, the Coalition has made no showing that the
Commission overlooked new information or evidence in the
record that had been unavailable to the Service. See J.A. 1031
(Commission observing that “the Protest Coalition has not
provided any additional information to lead us to question” the
Service’s findings). While the Commission agreed with
several of the Coalition’s critiques of the Service’s
methodology, it concluded that these concerns were “not
sufficient to lead us to reject [the Service’s] determination that
additional flows are needed to protect listed species.” J.A. 988.
This record demonstrates the reasonableness of that judgment.

                                V

     The Coalition also presses a legal objection to the
Biological Opinion and the Commission’s reliance on it. By
regulation, the Fish and Wildlife Service requires that the
“reasonable and prudent measures” it proposes to reduce
incidental take cannot work more than a “minor change” in the
proposed agency action. 50 C.F.R. § 402.14(i)(2). The
Coalition contends that, by requiring water flow measures that
accord with its linear scaling model and that can materially
reduce the level of Lake Freeman during low-flow events, the
Service’s reasonable and prudent measure is a major change,
in violation of that regulation. Because neither the Service nor
the Commission adequately explained why the Service’s
reasonable and prudent measure qualified as a minor change,
                                33
we conclude that the agencies acted in an arbitrary manner, and
we remand this issue for consideration by the agencies in the
first instance.

                                A

     Under the Endangered Species Act, the Fish and Wildlife
Service can prescribe in its Incidental Take Statement
“reasonable and prudent measures” that it considers “necessary
or appropriate to minimize” the impacts of any anticipated
incidental take of an endangered or threatened species. See 16
U.S.C. § 1536(b)(4)(ii). By regulation, the Service requires
that any reasonable and prudent measures it proposes “cannot
alter the basic design, location, scope, duration, or timing of the
action and may involve only minor changes.” See 50 C.F.R.
§ 402.14(i)(2).

     The Service has provided guidance on the contours of a
minor change and the types of actions that will exceed its
bounds. In promulgating the minor change rule, the Service
explained that “[s]ubstantial design and routing changes * * *
are inappropriate in the context of incidental take statements
because the action already complies with” the statutory
prohibition against jeopardizing the continued existence of
listed species. See Interagency Cooperation—Endangered
Species Act of 1973, as Amended; Final Rule, 51 Fed. Reg.
19,926-01, 19,937 (June 3, 1986). While “[r]easonable and
prudent measures were intended to minimize” incidental take,
“Congress also intended that the action go forward essentially
as planned.” Id.

     The Service’s Consultation Handbook provides further
detail. See U.S. FISH AND WILDLIFE SERV. & NATIONAL
MARINE     FISHERIES     SERV.,     ENDANGERED     SPECIES
CONSULTATION HANDBOOK (March 1998), https://www.fws
.gov/endangered/esa-library/pdf/esa_section7_handbook.pdf.
                              34
The handbook explains that reasonable and prudent measures
are designed to “minimiz[e] * * * the level of take.” Id. at 4-
53. The Service can include “only actions that occur within the
action area,” such as “actions like education of employees
about the species, reduction of predation, removal or avoidance
of the species, or monitoring.” Id. The agency emphasizes that
“[t]he test for reasonableness is whether the proposed measure
would cause more than a minor change to the project.” Id. And
the agency suggests that whether a change is “minor” may
depend on the overall context: “[T]he effect of measures
costing $10,000 or $100,000 may be critically significant for a
single family boat dock, but minor for a multi-million dollar
development complex.” Id.; see also Westlands Water Dist. v.
United States Dep’t of Interior, 376 F.3d 853, 876 (9th Cir.
2004) (holding that measures that would “likely have broad
system-wide effects” in the Central Valley Water Project and
require “new, significant action * * * cannot be considered to
be a minor change”).

                              B

                              1

     In this case, the Commission adopted its staff alternative
as the preferred action in its environmental assessment. That
approach provided that, during low-flow periods, NIPSCO
would cease generation but would continue to operate the
Oakdale Dam to maintain a constant elevation for Lake
Freeman. The Fish and Wildlife Service concluded that plan
would not jeopardize endangered mussels. But the Service
then required, as a reasonable and prudent measure designed to
avoid incidental take, that NIPSCO instead use linear scaling
to mimic natural flows during low-flow periods. Unlike the
staff alternative, that approach would allow NIPSCO to draw
down Lake Freeman during low-flow periods.
                               35
     It is unclear whether the Service’s reasonable and prudent
measure in this case qualifies as only a minor change within the
meaning of 50 C.F.R. § 402.14(i)(2). Yet nowhere in its record
or the record before the Commission did the Service analyze
whether its proposal satisfied its own governing regulation. An
agency errs if it wholly fails to address a “significant challenge
to the rationality of its decision[.]” Darrell Andrews Trucking,
Inc. v. Federal Motor Carrier Safety Admin., 296 F.3d 1120,
1135 (D.C. Cir. 2002); see also National Env’t. Dev. Ass’n’s
Clean Air Project v. EPA, 752 F.3d 999, 1009 (D.C. Cir. 2014)
(“[An] agency is not free to ignore or violate its regulations
while they remain in effect.”) (quoting United States Lines, Inc.
v. Federal Mar. Comm’n, 584 F.2d 519, 526 n.20 (D.C. Cir.
1978)). By dropping the ball entirely in analyzing and
explaining its compliance with the minor change rule, the
Service failed to address a relevant and substantial matter
bearing directly on its action. While we express no view on
whether the Service’s use of linear scaling as a reasonable and
prudent measure qualifies as a minor change on this record, the
Service’s wholesale failure to analyze the question was
arbitrary and capricious. See State Farm, 463 U.S. at 43.

     In this court (but nowhere in the records before us) the
Service argues that the relevant comparator for identifying a
“minor change” is not the Commission’s preferred staff
alternative, but instead is NIPSCO’s original application for a
license amendment. Interior Br. 43. And because NIPSCO
itself had proposed to follow the Service’s guidance, “the
reasonable and prudent measure made no change at all.”
Interior Br. 44.

     The Service’s choice of comparator is incorrect. The
action agency here is the Commission, not NIPSCO. After
taking input from stakeholders and performing its own
environmental analysis and studies, the Commission “selected”
                                36
its staff alternative as the “preferred option” for agency action.
Importantly, that staff alternative is the action that the Service’s
Biological Opinion analyzed and that the Service concluded
would not result in jeopardy to listed species. By the same
token, the Service’s study of incidental take and formulation of
reasonable and prudent measures focused on the Commission
staff alternative. Indeed, it would make no statutory sense for
the incidental take analysis to use as its baseline operations that
the action agency was not intending to undertake. See 16
U.S.C. § 1536(b)(4) (Incidental Take Statement must include
reasonable and prudent measures “that the Secretary considers
necessary or appropriate to minimize” incidental take resulting
from “agency action”).

                                 2

     Unlike the Service, the Commission addressed whether the
Service’s reasonable and prudent linear scaling measure ran
afoul of the “minor change” regulation. But the Commission’s
rationale fell short. The Commission said that the Service’s
reasonable and prudent measure was only a minor change
because the Service’s approach was “designed to achieve the
same purpose—to approximate run-of-river flow and protect
downstream mussel populations.” J.A. 989. While it may be
relevant for the agency to consider whether a reasonable and
prudent measure is consistent with the aims of the proposed
agency action, “achiev[ing] the same purpose” cannot be the
sole test of whether a change is “minor.” Purposes can be
achieved in many ways, and at greater or lesser costs. For
example, destroying the dam entirely would presumably also
“approximate run-of-river flow and protect downstream
mussel populations[.]” J.A. 989. But such a measure could not
plausibly be labeled “minor.”
                             37
     The Commission also reasoned, in the alternative, that
even if the measure constituted more than a minor change, “we
would not reject it, because we treat the implementation of a
reasonable and prudent measure as nondiscretionary.”
J.A. 989. In the normal course, the Commission could sensibly
treat proposed reasonable and prudent measures as
nondiscretionary, given the “powerful coercive effect” of
Incidental Take Statements issued by the Service. See Bennett,
520 U.S. at 169. But here, the Service’s complete failure to
address an important issue was apparent on the face of the
Biological Opinion. See City of Tacoma, 460 F.3d at 75 (the
Commission acts arbitrarily by relying on a “facially flawed”
Biological Opinion). And since the license amendment granted
by the Commission incorporated the reasonable and prudent
measure, the Service’s failure to adequately support that
reasonable and prudent measure infects the license amendment
as well.

     Because of the errors by both the Service and the
Commission in analyzing whether the Service’s reasonable and
prudent measure qualified as “minor,” we remand for a
reasoned explanation by the Service of its “minor change”
regulation’s application. That explanation is necessary before
the Commission can reasonably rely on the Biological Opinion
in amending NIPSCO’s license to incorporate that measure.

                             VI

     NIPSCO argues that the appropriate remedy for any
agency error in this case is to remand without vacating either
the Incidental Take Statement or the Commission’s orders.
NIPSCO explains that if the Incidental Take Statement were
vacated, NIPSCO would lose the legal protection from
Endangered Species Act liability that its compliance with that
Statement currently provides. And if the Commission’s orders
                               38
are vacated, NIPSCO will be required to revert to maintaining
Lake Freeman at a stable elevation, trapping it once again
between the Scylla and Charybdis of violating its Commission
license or violating the Endangered Species Act.

     We agree with NIPSCO that remand without vacatur is
warranted. See Humane Soc’y of U.S. v. Zinke, 865 F.3d 585,
614 (D.C. Cir. 2017) (looking to the seriousness of the
deficiencies in the agency action and the likely disruptive
consequences of vacatur); Allied-Signal, Inc. v. United States
Nuclear Regulatory Comm’n, 988 F.2d 146, 150 (D.C. Cir.
1993). It is possible that the Commission and the Service “can
redress [their] failure of explanation on remand while reaching
the same result.” Black Oak Energy, LLC v. FERC, 725 F.3d
230, 244 (D.C. Cir. 2013). And the conflicting regulatory
obligations that vacatur would leave NIPSCO betwixt and
between also favor remand without vacatur. Cf. Oglala Sioux
Tribe v. United States Nuclear Regulatory Comm’n, 896 F.3d
520, 538 (D.C. Cir. 2018) (declining to vacate operating license
when licensee had reasonably relied on agency ruling and faced
grave economic harm if license were vacated).

                            *****

     For all of the foregoing reasons, we grant in part, deny in
part, and dismiss in part the Coalition’s petition for review, and
remand this case to the Commission without vacatur for further
proceedings consistent with this opinion.

                                                   So ordered.