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U.S. Supreme Court: Endangered Species Act Does Not Trump Agencies' Specific Statutory Mandates

Beveridge & Diamond, P.C, June 26, 2007

In its first substantive ESA decision in several years, the United States Supreme Court ruled today that the Endangered Species Act does not trump specific statutory mandates applicable to federal agency actions.  In a 5-4 opinion in National Home Builders Ass'n v. Defenders of Wildlife, No. 06-340, the Court ruled that the United States Environmental Protection Agency's (“EPA”) decision to transfer NPDES permitting authority to a state under Clean Water Act (“CWA”) Section 402(b) does not require consultation with NOAA Fisheries or the United States Fish and Wildlife Service (“FWS”) under Section 7(a)(2) of the Endangered Species Act, 16 U.S.C. § 1536(a)(2). 

At issue was EPA’s decision to transfer NPDES permitting authority to the State of Arizona.  Although Arizona satisfied the nine statutory criteria for transfer set forth in CWA Section 402(b), the Ninth Circuit Court of Appeals held that EPA also had an obligation to comply with ESA Section 7(a)(2).  The Court observed that the Ninth Circuit’s broad reading of ESA Section 7(a)(2) would have had impacts far beyond CWA Section 402(b), the specific statutory provision involved here: “Reading the provision broadly would . . . partially override every federal statute mandating agency action by subjecting such action to the further condition that it pose no jeopardy to endangered species.”  The Supreme Court rejected the Ninth Circuit’s reading of ESA Section 7(a)(2).    

The Court acknowledged the tension between CWA Section 402(b) and ESA Section 7(a)(2).  CWA Section 402(b) provides “that the EPA ‘shall approve’ a transfer application unless it determines that a state lacks adequate authority to perform the nine functions specified in the section.”  ESA Section 7(a)(2) requires that each federal agency “shall, in consultation with . . . the Secretary, insure that any action authorized, funded, or carried out by such agency ... is not likely to jeopardize” endangered or threatened species or their habitats.  As framed by the Supreme Court, “the question presented [was] whether § 7(a)(2) effectively operates as a tenth criterion on which the transfer of permitting power under the first statute [i.e., the CWA] must be conditioned.”  The Court reasoned that an affirmative answer to this question “would effectively repeal 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.”  The Court determined that Congress did not intend such a repeal.

In the absence of a repeal by Congress of CWA Section 402(b)'s requirements, the Court was left with a “fundamental ambiguity that is not resolved by the statutory text” of ESA Section 7(a)(2).  The Court determined that it was “appropriate to look to the implementing agenc[ies’] expert interpretation” of the scope of Section 7(a)(2)’s consultation requirements in order to resolve the tension between the two statutes.  50 C.F.R. § 402.03, a regulation jointly promulgated by NOAA Fisheries and FWS, provides that ESA “Section 7 . . . appl[ies] to all actions in which there is discretionary Federal involvement or control.” (emphasis added by the Court).  The Court concluded “that this interpretation is reasonable in light of the statute’s text and overall statutory scheme, and that it is therefore entitled to deference under Chevron.”

The Court thus confirmed that ESA Section 7(a)(2)’s consultation requirements apply only to discretionary federal actions.  They do not apply to non-discretionary federal agency actions undertaken pursuant to specific statutory mandates.  According to the Court, Justice Alito writing for the majority, because EPA did not have discretion to deny Arizona’s transfer application once Arizona demonstrated that it has adequate authority to perform the nine functions set forth in CWA Section 402(b), EPA’s transfer of NPDES permitting authority did not require consultation under ESA Section 7(a)(2).

In a dissent joined by Justices Souter, Ginsberg, and Breyer, Justice Stevens criticized the majority’s distinction between mandatory and discretionary agency actions: “Today, the Court . . . erroneously concludes that the ESA contains an unmentioned exception for nondiscretionary agency action....”  According to Justice Stevens, this approach is not only “fundamentally inconsistent with” the ESA and 50 C.F.R. § 402.03, but also inconsistent with Supreme Court precedent.  He observed that in the seminal case of TVA v. Hill, 437 U.S. 153 (1978), “Chief Justice Burger’s exceptionally thorough and admirable opinion explained that § 7 ‘admits of no exception.’” 

The Court reversed the opinion of the Ninth Circuit and remanded the case for further proceedings consistent with the majority opinion.

To see a complete copy of the Supreme Court opinion, click here.

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For more information regarding the implications of the NAHB decision, please contact Timothy Sullivan  (410) 230-1355, Karen Hansen (202) 789-6056 or Fred Wagner (202) 789-6041.