Case 3:19-cv-06071-RJB Document 63 Filed 08/21/20 Page 2 of 411TABLE OF CONTENTS2INTRODUCTION. 13BACKGROUND . 345I.THE KALAMA METHANOL PROJECT . 3II.STATE COURT CHALLENGES TO ENVIRONMENTAL REVIEWSAND PERMITS . 5III.THE CORPS’ REVIEW AND PERMITS . 6678A. The Clean Water Act and Rivers and Harbors Act.69B. The National Environmental Policy Act.710C. The Endangered Species Act .8111213STANDARDS OF REVIEW . 9ARGUMENT . 10I.1415THE CORPS IGNORED THE INDIRECT AND CUMULATIVEGREENHOUSE GAS IMPACTS CAUSED BY THE KALAMAPROJECT. 10A. NWIW’s Gas Consumption Will Require Building a New RegionalFracked Gas Pipeline. .121617B. The Kalama Project Will Create Significant Greenhouse GasEmissions from Shipping Methanol to China, Producing Olefins, andUsing Methanol as Fuel. .141819C. The Corps Failed to Consider the Cumulative Impacts of the KalamaProject’s Greenhouse Gas Emissions and Other ReasonablyForeseeable Fossil Fuel Projects. .162021222324II.THE CORPS FAILED TO PREPARE AN ENVIRONMENTALIMPACT STATEMENT TO EVALUATE THE PROJECT’SSIGNIFICANT EFFECTS. . 17A. The Kalama Project’s Environmental Effects Are HighlyControversial.182526B. The Kalama Project’s Geographic Area Has Unique Wetland, ScenicAreas, Recreation, and Habitat Characteristics. .19272829PLAINTIFFS’ MOTIONFOR SUMMARY JUDGMENTCAUSE NO. 3:19-CV-06071-RJBiEarthjustice810 Third Ave., Suite 610Seattle, WA 98104(206) 343-7340

Case 3:19-cv-06071-RJB Document 63 Filed 08/21/20 Page 3 of 411C. The Kalama Project Harms Threatened and Endangered Species.212D. The Corps Failed to Consider the Kalama Project’s Full/NonSegmented Impacts. .2134III.5NMFS FAILED TO SET TAKE LIMITS FOR ENDANGERED ANDTHREATENED SPECIES OF SALMON, SEA TURTLES, ANDSOUTHERN RESIDENT KILLER WHALES. . 22A. The Incidental Take Statement Unlawfully Used Take SurrogatesThat Are Coextensive with the Scope of the Project. .2367B. NMFS Failed to Provide Valid Surrogates for Take. .258C. NMFS Failed To Set a Take Limit for Southern Resident KillerWhales. .279101112131415IV.THE CORPS’ PUBLIC INTEREST ANALYSIS IGNORED THEPROJECT’S COSTS. 28A. The Corps Considered Economic Activity That is Beyond the ProperScope of the Public Interest Analysis. .29B. The Corps’ Public Interest Review of the Export Terminal ArbitrarilyCounted the Benefits—but not the Significant Costs—of the Refinery. .30CONCLUSION . 331617181920212223242526272829PLAINTIFFS’ MOTIONFOR SUMMARY JUDGMENTCAUSE NO. 3:19-CV-06071-RJBiiEarthjustice810 Third Ave., Suite 610Seattle, WA 98104(206) 343-7340

Case 3:19-cv-06071-RJB Document 63 Filed 08/21/20 Page 4 of 411TABLE OF AUTHORITIES2Page(s)3Federal Cases4Ariz. Cattle Growers’ Ass’n v. U.S. Fish & Wildlife,273 F.3d 1229 (9th Cir. 2001) . passim56Blue Mountains Biodiversity Project v. Blackwood,161 F.3d 1208 (9th Cir. 1998) .187891011Buttrey v. United States,690 F.2d. 1170, 1180 (5th Cir. 1982) .29, 30Conner v. Burford,848 F.2d 1441 (9th Cir. 1988) .9Ctr. for Biological Diversity v. BLM,833 F.3d 1136 (9th Cir. 2016) .28121314151617181920212223242526Ctr. for Biological Diversity v. Nat’l Highway Traffic Safety Admin.,508 F.3d 508 (9th Cir. 2007) .17Ctr. for Biological Diversity v. Nat’l Highway Traffic Safety Admin.,538 F.3d 1172 (9th Cir. 2008) .17Ctr. for Biological Diversity v. Salazar,695 F.3d 893 (9th Cir. 2012) .25Defenders of Wildlife v. U.S. Envtl. Prot. Agency,420 F.3d 946 (9th Cir. 2005) .9Delaware Riverkeeper Network v. FERC,753 F.3d 1304 (D.C. Cir. 2014) .21Dep’t of Transp. v. Pub. Citizen,541 U.S. 752 (2004) .11Gifford Pinchot Task Force v. U.S. Fish and Wildlife Serv.,378 F.3d 1059 (9th Cir. 2004) .25Kleppe v. Sierra Club,427 U.S. 390 (1976) .21, 22Mall Properties, Inc. v. Marsh,672 F. Supp. 561, 563 (D. Mass. 1987) .29272829PLAINTIFFS’ MOTIONFOR SUMMARY JUDGMENTCAUSE NO. 3:19-CV-06071-RJBiiiEarthjustice810 Third Ave., Suite 610Seattle, WA 98104(206) 343-7340

Case 3:19-cv-06071-RJB Document 63 Filed 08/21/20 Page 5 of 41123456MEIC v. U.S. Office of Surface Mining,274 F. Supp.3d 1074 (D. Mont. 2017) .22, 30N. Plains Res. Council, Inc. v. Surface Transp. Bd.,668 F.3d 1067 (9th Cir. 2011) .10, 11, 13, 14Nat’l Parks & Conservation Ass’n v. Babbitt,241 F.3d 722 (9th Cir. 2001) .17, 18, 21Nat’l Wildlife Fed’n v. Nat’l Marine Fisheries Serv.,235 F. Supp.2d 1143 (W.D. Wash. 2002).23, 247891011National Parks Conservation Association v. Semonite,916 F.3d1075 (D.C. Cir. 2019) .19Ocean Advocates v. U.S. Army Corps of Engineers,402 F.3d 846 (9th Cir. 2005) .18Or. Natural Res. Council v. Allen,476 F.3d 1031 (9th Cir. 2007) .24, 25, 281213141516Port of Kalama v. State of Washington,No. 17-2-01269-08 (Super. Ct. Jul. 12, 2018) .5Robertson v. Methow Valley Citizens Council,490 U.S. 332 (1989) .7S. Fork Band Council of W. Shoshone of Nevada v. U.S. Dep’t of Interior,588 F.3d 718 (9th Cir. 2009) .11, 151718192021Save the Yaak Comm. v. Block,840 F.2d 714 (9th Cir.1988) .21Securities & Exchange Comm’n v. Chenery Corp.,332 U.S. 194 (1947) .25Sierra Club v. FERC,867 F.3d 1357 (D.C. Cir. 2017) .11, 152223Tennessee Valley Auth. v. Hill,437 U.S. 153 (1978) .824State Cases25Columbia Riverkeeper v. Cowlitz Cnty.,S19-011 (WA Shorelines Hearings Board, Petition for Review, filed Sept. 20,2019) .526272829PLAINTIFFS’ MOTIONFOR SUMMARY JUDGMENTCAUSE NO. 3:19-CV-06071-RJBivEarthjustice810 Third Ave., Suite 610Seattle, WA 98104(206) 343-7340

Case 3:19-cv-06071-RJB Document 63 Filed 08/21/20 Page 6 of 411Federal Statutes25 U.S.C. § 706(2)(A).9, 14316 U.S.C. § 1536 .2, 8, 9, 28, 30, 33433 U.S.C. § 403 .6, 285633 U.S.C. § 1311(a) .633 U.S.C. § 1344 .3, 4, 6, 29742 U.S.C. § 4332 .7891011RulesFed. R. Civ. P. 56(c) .9Regulations1233 C.F.R. 320.4 .6, 29, 31, 321333 C.F.R. § 320.1(a).281433 C.F.R. § 322.3 .6, 281540 C.F.R. § 230.91(c)(2) .61640 C.F.R. § 1500.2 .71740 C.F.R. § 1501.4 .71840 C.F.R. § 1508.7 .13, 1719202140 C.F.R. § 1508.8(b) .1040 C.F.R. § 1508.25 .13, 21, 2240 C.F.R. § 1508.27 .7, 17, 18, 20, 21 222250 C.F.R. § 402.14 .8, 23, 2523242542 Fed. Reg. 37,122 (1977) .2980 Fed. Reg. 26,832 (May 11, 2015) .2626272829PLAINTIFFS’ MOTIONFOR SUMMARY JUDGMENTCAUSE NO. 3:19-CV-06071-RJBvEarthjustice810 Third Ave., Suite 610Seattle, WA 98104(206) 343-7340

Case 3:19-cv-06071-RJB Document 63 Filed 08/21/20 Page 7 of 41INTRODUCTION12This case challenges federal permits and approvals for the proposed Kalama3Manufacturing and Marine Export Facility, which would be the largest fracked gas-to-methanol4refinery and export facility in the world, built on the shores of the Columbia River. The Kalama5Project would take methane from fracked gas produced in the western United States and Canada,6turn it into methanol, and ship the methanol to China. The methanol could be used to produce7olefins that will be used as a feedstock for plastics or burned for fuel. The Kalama Project will8have massive greenhouse gas emissions, beginning at the natural gas extraction stage and9continuing all the way to its end use as feedstock or fuel. The refinery alone will use more10natural gas each day than all of the power plants in Washington combined; the entire Project will11cause more than 2,600,000 tons of greenhouse gases to be released into the atmosphere every12year for an estimated 40 years.13The U.S. Army Corps of Engineers (“Corps”) issued permits under the Clean Water Act14(“CWA”) and Rivers and Harbors Acts after undertaking a perfunctory review of environmental15impacts under the National Environmental Policy Act (“NEPA”) and determining that the16Project’s benefits outweighed its reasonably foreseeable detriments. The National Marine17Fisheries Service (“NMFS”) issued a Biological Opinion pursuant to the Endangered Species Act18(“ESA”), reviewing the impacts of the Project on threatened and endangered species.19In its environmental review, the Corps found that the Kalama Project would not have20significant environmental impacts requiring preparation of a full environmental impact statement21(“EIS”) and instead prepared a more truncated environmental assessment (“EA”). It reached this22conclusion only by ignoring many of the Project’s impacts, most notably greenhouse gas23emissions from increased natural gas production and transportation, shipping methanol to China,24olefin production, and the use of methanol as fuel. The Corps considered less than half of the25estimated greenhouse gas emissions caused by the Project in its environmental review—the one26million tons each year that will come directly from the refining process in Washington State.272829PLAINTIFFS’ MOTION FORSUMMARY JUDGMENTCAUSE NO. 3:19-CV-06071-RJB1Earthjustice810 Third Ave., Suite 610Seattle, WA 98104(206) 343-7340

Case 3:19-cv-06071-RJB Document 63 Filed 08/21/20 Page 8 of 411Worse still, the Corps considered the economic benefits of the refinery in its public interest2determination, while omitting its environmental harms, invalidly skewing the balancing.NMFS’s ESA consultation found that the increased shipping would lead to deadly34strandings of juvenile salmon and steelhead and ship strikes that would kill sea turtles and orca5whales. Yet the Biological Opinion and accompanying Incidental Take Statement (“ITS”) set no6meaningful limit on this harm to threatened and endangered marine species, despite NMFS’s7attempt to rationalize its actions after this litigation was filed.8Finally, the Kalama Project would be built near wetlands, natural areas used for9recreation, residences, and public spaces whose views would be impaired by industrial towers10and pollution. The Corps ignored the Project’s detrimental impact on the visual character of the11Lower Columbia River and the Kalama region, further undermining its public interest12determination.Plaintiffs Columbia Riverkeeper et al. (collectively “Riverkeeper”) 1 ask the Court to (1)1314vacate the EA, CWA and Rivers and Harbors Act permits, and NMFS Biological Opinion and its15accompanying ITS (both original and revised); (2) remand to the Corps to prepare an EIS on the16Kalama Project before reconsidering new permits; and (3) remand to the Corps and NMFS to re-17engage in ESA § 7 consultation on the Kalama Project to produce a valid ITS with take limits18that provide a meaningful check on the Project’s harm to threatened and endangered species.1920212223242526271Plaintiffs’ members regularly use and enjoy the Columbia River and areas near the proposedKalama Project. Each of these conservation and public health organizations has a long andcommitted history of involvement with Columbia River protection and opposition to this project,including current and prior litigation challenging state permits for the Project. Plaintiffs andtheir members are harmed by the issuance of the Corps’ permit and NMFS Biological Opinion,and the injuries caused by the agencies’ violations of law can be remedied by the relief sought inthis action. See Declarations of Neal Anderson, Lori Ann Burd, John Flynn, Stephanie Hillman,Miles Johnson, Rebecca Ponzio, and Max Savishinsky, filed concurrently.2829PLAINTIFFS’ MOTION FORSUMMARY JUDGMENTCAUSE NO. 3:19-CV-06071-RJB2Earthjustice810 Third Ave., Suite 610Seattle, WA 98104(206) 343-7340

Case 3:19-cv-06071-RJB Document 63 Filed 08/21/20 Page 9 of 41BACKGROUND12I.THE KALAMA METHANOL PROJECTThe Kalama Project is a proposed methanol manufacturing and export refinery on the34shores of the Columbia River. It has one purpose: to take methane from fracked gas, turn it into5methanol, and ship it to China to produce olefins that will be used as a feedstock for plastics or6burned as fuel. COE 13181–82. 2 It includes a methanol refinery (“Refinery”), a dock and7equipment for shipping methanol to China (“Export Terminal”), and a 3.1-mile pipeline to8provide fracked gas from the regional pipeline system to the Refinery (“Lateral Project”). ECF918, Answer, ¶35. The Corps acknowledged that the Export Terminal and Lateral Project are10connected actions under NEPA, do not have independent utility from the Refinery, and would11not be built without the Refinery. COE 13150.Northwest Innovation Works (“NWIW”) proposed building the Refinery and Export1213Terminal on land leased from the Port of Kalama. COE 11480, 13171–73. Unable to finance the14Project itself, NWIW applied to the U.S. Department of Energy (“DOE”) for a 2 billion loan15guarantee to insure its investment in the Refinery. COE 13150. DOE was a co-author of the EA16and stated that it would rely on the EA to fulfill its NEPA obligations. COE 13150–51. 3The Port owns the upland property where NWIW proposed to build the Refinery. COE171813171–72. The Port is simultaneously a project proponent and co-preparer of the related state19environmental impact statement and supplemental review under Washington’s State20Environmental Policy Act (“SEPA”). COE 12537–42. The Port applied to the Corps for a CWA21§ 404 permit to dredge and fill the Columbia River and a Rivers and Harbors Act § 10 permit to22build the Export Terminal. COE 13151–63, 13173–74.A third entity, Northwest Pipeline, proposed building and operating the Latera Project2324that would transport fracked gas to the Refinery. ECF 18, Answer, ¶39. It received a certificate2526272Citations to the Corps and NMFS Administrative Records will be cited as COE [Bates-stampednumber] and NMFS [Bates-stamped number], respectively.3Upon information and belief, DOE has not yet acted on NWIW’s loan application.2829PLAINTIFFS’ MOTION FORSUMMARY JUDGMENTCAUSE NO. 3:19-CV-06071-RJB3Earthjustice810 Third Ave., Suite 610Seattle, WA 98104(206) 343-7340

Case 3:19-cv-06071-RJB Document 63 Filed 08/21/20 Page 10 of 411of public convenience and necessity from the Federal Energy Regulatory Commission (“FERC”)2in 2015 authorizing the Lateral Project under the Natural Gas Act. Id.; COE 13149. Prior to3issuing the certificate, FERC reviewed the environmental impacts of the Lateral Project in a42015 Environmental Assessment (“FERC EA”). ECF 18, Answer, ¶39; COE 13149, 13177.5The Corps was a cooperating agency in the FERC EA. Id. Northwest Pipeline applied to the6Corps for a separate CWA § 404 permit for the Lateral Project. 4 Id.7If constructed, the Refinery would produce up to 3.6 million metric tons of methanol per8year and would be the largest fracked-gas-to-methanol refinery in the world. COE 12619. The9Refinery would receive fracked gas from the western U.S. and Canada, delivered by the Lateral10Project, and convert the gas to methanol by adding steam and a catalyst, then distilling it into a11liquid. ECF 18, Answer, ¶40; COE 13171–73. The Refinery would use between 270,000 and12320,000 dekatherms of fracked gas per day, both as the feedstock for methanol production and13for the new, onsite 125-megawatt gas-fired electric generating unit that will supply some of the14Refinery’s significant electricity demand, making it by far the largest single gas user in the state15of Washington. Answer, ¶42; COE 13173, 11798. It will also use roughly 100 megawatts of16grid electric power, requiring upgrades to the electric transmission lines to the Kalama Project17site. Id.; COE 7750. An estimated 72 ships per year would take the methanol from the Export18Terminal to China for the production of olefins or for use as fuel. COE 13270.In Washington State alone, emissions associated with the manufacturing process will1920easily exceed 1,000,000 tons of carbon dioxide equivalent per year. COE 12617, 13260. NWIW21and the Port estimate that the Project alone will generate up to an additional 1,600,000 tons of22carbon dioxide equivalent per year in upstream natural gas consumption and downstream23shipping and olefin production, an estimate that likely significantly underestimates emissions.24COE 12617, 13260. NWIW’s estimate does not include many indirect effects or emissions,2526274Plaintiffs do not challenge the CWA § 404 permit for the Lateral Project here.2829PLAINTIFFS’ MOTION FORSUMMARY JUDGMENTCAUSE NO. 3:19-CV-06071-RJB4Earthjustice810 Third Ave., Suite 610Seattle, WA 98104(206) 343-7340

Case 3:19-cv-06071-RJB Document 63 Filed 08/21/20 Page 11 of 411including a new regional gas pipeline or the combustion of methanol as fuel. COE 12731,212711–12.3In addition to the significant greenhouse gas impacts, the Kalama Project would affect the4local environment. The Refinery and Export Terminal will be built on approximately 90 acres of5land along the Columbia River. This stretch of the river is habitat for endangered and threatened6species and provides for local recreation activities and scenic views. COE 13307–08, 2806,713274–75, 13279–81.8II.9STATE COURT CHALLENGES TO ENVIRONMENTAL REVIEWS AND PERMITSTo evaluate the greenhouse gas emissions impacts caused by the Kalama Project, the10Corps primarily relied on initial and draft supplemental state environmental reviews, despite the11fact that a state adjudicatory board, state court, and the Washington Department of Ecology12found these reviews inadequate. COE 13258–60, 13306, 13311–15; Port of Kalama v. State of13Washington, No. 17-2-01269-08, at 5–6 (Super. Ct. Jul. 12, 2018); Northwest Innovation14Works—Kalama permitting, available at rthwest-Innovation-Works-Kalama (last visited16August 20, 2020) (“Ecology Permit Website”). The Port and Cowlitz County conducted the17initial SEPA review for the Kalama Project’s state shoreline development permits and submitted18an EIS and its recommendation of approval to the Washington Department of Ecology in 2016.19COE 7707–13. Several of the Plaintiffs challenged the state EIS, and the Cowlitz County20Superior Court affirmed the state adjudicatory board’s rejection of it, finding the guidance on21which the EIS relied formulaic and inconsistent with the State’s targets for greenhouse gas22reductions. Port of Kalama, No. 17-2-01269-08, ¶6. In response, the Port and County issued a23draft supplemental EIS on November 13, 2018, and a final supplemental EIS on August 30,242019. Ecology Permit Website. Plaintiffs challenged the final supplemental EIS before the state25adjudicatory board for its deficient greenhouse gas emissions analysis, an action that spurred26Ecology to find the final supplemental EIS deficient and to commit to prepare its own second27supplemental EIS. Columbia Riverkeeper v. Cowlitz Cnty., S19-011 (WA Shorelines Hearings2829PLAINTIFFS’ MOTION FORSUMMARY JUDGMENTCAUSE NO. 3:19-CV-06071-RJB5Earthjustice810 Third Ave., Suite 610Seattle, WA 98104(206) 343-7340

Case 3:19-cv-06071-RJB Document 63 Filed 08/21/20 Page 12 of 411Board, Petition for Review, filed Sept. 20, 2019); Ecology Permit Website. Federal Defendants2were aware of the litigation and received from Plaintiffs related communications between3Ecology, NWIW, and the Port. ECF 18, Answer, ¶50.Although the Corps tracked the progress of the state reviews, it did not wait for resolution45of these greenhouse gas emissions disputes. Instead, the Corps’ analysis of greenhouse gas6impacts relied on the inadequate 2016 EIS and draft, inadequate 2018 supplemental EIS. COE713260, 13292, 13311, 13314–15.8III.9THE CORPS’ REVIEW AND PERMITSThe proposed Kalama Project would be built on and near the Columbia River,10necessitating permits from the Corps under the CWA and Rivers and Harbors Act. Before11issuing these permits, the Corps was required to review the environmental impacts of the Project12under NEPA and ensure that the Project will not jeopardize endangered and threatened species13through consultation with NMFS under the ESA.14A.The Clean Water Act and Rivers and Harbors Act15Section 404 of the Clean Water Act requires a Corps permit to discharge dredged or fill16material into waters of the United States. 33 U.S.C. §§ 1311(a), 1344(a)–(e). The Rivers and17Harbors Act requires a Corps permit to build an overwater structure in navigable waters. 3318U.S.C. § 403. The Corps issues individual permits on a case-by-case basis after taking “all19appropriate and practicable steps to avoid and minimize adverse impacts to waters of the United20States.” Id., § 1344(a); see also 40 C.F.R. § 230.91(c)(2). The Corps must, among other things,21prepare site-specific documentation and analysis of waters and wetlands and potential effects to22them, conduct a public interest analysis, and make a formal determination pursuant to the23statutory and regulatory criteria. 33 C.F.R. § 322.3, Parts 323, 325. The public interest factors24include, among others, conservation, economics, aesthetics, general environmental concerns, air25quality, fish and wildlife values, and recreation. 33 C.F.R. § 320.4.26272829PLAINTIFFS’ MOTION FORSUMMARY JUDGMENTCAUSE NO. 3:19-CV-06071-RJB6Earthjustice810 Third Ave., Suite 610Seattle, WA 98104(206) 343-7340

Case 3:19-cv-06071-RJB Document 63 Filed 08/21/20 Page 13 of 4112B.The National Environmental Policy Act3NEPA requires all federal agencies to take environmental considerations into account in4their decision-making “to the fullest extent possible.” 42 U.S.C. § 4332; 40 C.F.R. § 1500.2. 55NEPA requires federal agencies to prepare an EIS before undertaking any “major federal action6significantly affecting the quality of the human environment.” 42 U.S.C. § 4332(2)(C); 407C.F.R. § 1501.4. The purpose of an EIS is to inform the decision-makers and the public of the8significant environmental impacts of the proposed action, means to mitigate those impacts, and9reasonable alternatives that will have lesser environmental effects. Robertson v. Methow Valley10Citizens Council, 490 U.S. 332, 349 (1989).11Whether an action will cause significant adverse effects requires considerations of12context (“society as a whole (human, national), the affected region, the affected interests, and the13locality”) and intensity (“severity of the impact,” including consideration of ten listed factors).1440 C.F.R. § 1508.27. An agency cannot avoid a determination of significance by breaking the15project down into small component parts. Id. If the agency finds that the project has no16significant adverse environmental effects, it may skip a full EIS and prepare a simpler17Environmental Assessm

The U.S. Army Corps of Engineers ("Corps") issued permits under the Clean Water Act fter undertaking a perfunctory review of environmental impacts under the National Environmental Policy Act ("NEPA") and determining that the Project's benefits outweighed its reasonably foreseeable detriments. The National Marine