Environmental Law

Still Catching Up on SCOTUS decisions: Home Builders v. Defenders

By Keith Rizzardi

Section 402(b) of the [CWA] requires that the Environmental Protection Agency transfer certain permitting powers to state authorities upon an application and a showing that nine specified criteria have been met. Section 7(a)(2) of the [ESA] provides that a federal agency must consult with agencies designated by the Secretaries... of Commerce and the Interior in order to “insure that any action authorized, funded, or carried out by such agency ... is not likely to jeopardize the continued existence of any endangered species or threatened species.” The question presented is whether ? 7(a)(2) effectively operates as a tenth criterion on which the transfer of permitting power under the first statute must be conditioned.  

Id. at 2524 -2525.  Here, Arizona applied to the EPA to administer its permitting program.  “The EPA initiated consultation with the FWS to determine whether the transfer of permitting authority would adversely affect any listed species.”  Id. at 2526-27.  Initially, the FWS reasoned that the transfer would indirectly adversely effect protected habitat, with the EPA disagreeing and concluding that ? 402(b) of the CWA that mandates that the EPA “shall approve” a transfer request where nine statutory criteria are met “stripped it of authority to disapprove a transfer based on any other considerations.”  Id. at 2527.  Ultimately, “the FWS issued its [BO], which concluded that the requested transfer would not cause jeopardy to listed species.”  Id.  The EPA then approved the transfer of permitting authority to Arizona, concluding that the state met all nine statutory factors. See related article by Howard Fisher, "Supreme Court: State Entitled to Issue Water Discharge Permits," in the Arizona Daily Star (June 25, 2007).

      Reviewing the EPA’s transfer decision, the Ninth Circuit held that EPA’s approval “was arbitrary and capricious because the EPA ‘relied during the administrative proceedings on legally contradictory positions regarding its section 7 obligations.’”  Id. at 2528.  Rather than remand to the EPA for a plausible explanation, the panel majority, then “reviewd the EPA’s substantive construction of the statutes at issue and held that the ESA granted the EPA both the power and the duty to determine whether its transfer decision would jeopardize threatened or endangered species.  Id. (noting that the Circuit “in effect addda tenth criterion to those species in ? 402(b)”).  Thus, that court vacated the EPA’s decision.

      First, the Supreme Court noted “that if the EPA’s action was arbitrary and capricious . . . the proper course would have been to remand to the agency for clarification of its reasons.”  Id. at 2529 (“In so doing esolving the merits it inth Circuiterroneously deprived the agency of its usual administrative avenue for explaining and reconciling the arguably contradictory rationales . . . .”).  Dismissing respondents’ claim that EPA had initial inconsistent statements, the Court emphasized that “courts ordinarily are empowered to review only an agency’s final action.”  Id. at 2530 (“e fact that a preliminary determination by a local agency representative is later overruled at a higher level within the agency does not render the decisionmaking process arbitrary and capricious.”).  

      Second, the Court turned to the substantive statutory question.  On one hand, ? 406(b) of the CWA states that the EPA “shall approve” a transfer application if the state meets the nine criteria.  Id. at 2531.  On the other hand, “? 7(a)(2) of the ESA is similarly imperative: it provides that ‘ch Federal agency shall . . . insure that any action authorized, funded, or carried out by such agency . . . is not likely to jeopardize’ endangered or threatened species or their habitats.”  Id. at 2532 (second alteration added).  Thus, a literal application of the two statutes would result in a repeal of “the mandatory and exclusive list of criteria set forth in ? 402(b), and replace it with a new, expanded list that includes ? 7(a)(2)’s no-jeopardy requirement.”  Id.  However, the Court concluded that “ile the language of ? 7(a)(2) does not explicitly repeal any provision of the CWA (or any other statute), reading it for all that it might be worth runs foursquare into our presumption against implied repeals.”  Id. at 2533.

      Articulating the conflict where “ agency cannot simultaneously obey the differing mandates set forth in ? 7(a)(2) of the ESA and ? 402(b) of the CWA,” the Court resorted to “the implementing agency’s expert interpretation, which cabins ? 7(a)(2)’s application to “‘actions in which there is discretionary Federal involvement or control.”  Id. at 2534 (quoting 50 CFR ? 402.03).  “The regulation’s focus on ‘discretionary’ actions accords with the commonsense conclusion that, when an agency is required to do something by statute, it simply lacks the power to ‘insure’ that such action will not jeopardize endangered species.”  Id. at 2534-35. 

      Lastly, the Court rejected respondents’ contention that the EPA’s decision to transfer the permitting authority to Arizona is a discretionary action because “it involves some exercise of judgment as to whether a State has met the criteria set forth in ? 402(b).”  Id. at 2537.  Emphasizing that ? 402(b) “clearly does not grant he EPAthe discretion to add another entirely separate prerequisite,” the Court found respondents’ argument unavailing.  Reversing the Ninth Circuit, the five Justices concluded:

Applying Chevron, we defer to the agency’s reasonable interpretation of ESA ? 7(a)(2) as applying only to “actions in which there is discretionary Federal involvement or control.”  Since the transfer of . . .  permitting authority is not discretionary, but rather is mandated once a State has met the criteria set forth in ? 402(b) of the CWA, it follows that a transfer of . . . permitting authority does not trigger ? 7(a)(2)'s consultation and no-jeopardy requirements.  

Id. at 2538 (quoting 50 CFR ? 402.03). 

Photo of the Cactus Ferruginous Pygmy Owlfrom Defenders of Wildlife.  The owl’s habitat was one that FWS initially thought would be indirectly but adversely affected by the permit transfer.

Full post as published by ESA Blawg on June 01, 2008 (boomark / email).