Petition for Writ of Certiorari — National Ass'n v. Defenders of Wildlife

Supreme Court, U.S.

d) FILED

we 66-340 SEP 6 - 2006

——-~— -—— ——-

In The OFFICE OF THE CLERK

Supreme Court of the Anited States

S

NATIONAL ASSOCIATION OF HOME BUILDERS, et ai.,

Petitioners,

Vs.

DEFENDERS OF WILDLIFE, et al.,

Respondents.

+

On Petition For Writ Of Certiorari

To The United States Court Of Appeals

For The Ninth Circuit

+

PETITION FOR WRIT OF CERTIORARI

¢

RUSSELL S. FRYE NORMAN D. JAMES

FRYE Law PLLC (Counsel of Record)

3050 K Street NW, FENNEMORE CRAIG, P.C.

Suite 400 3003 North Central Avenue,

Washington, DC 20007-5108 Suite 2600

(202) 342-8878 Phoenix, AZ 85012-2913

(602) 916-5346

DUANE J. DESIDERIO

THOMAS J. WARD

NATIONAL ASSOCIATION

OF HOME BUILDERS

1201 15th Street, NW

Washington, DC 20005-2800

(202) 266-8200

COCKLE LAW BRIEF PRINTING CO (800) 225-6964

OR CALL COLLECT (402) 342-2831

QUESTIONS PRESENTED FOR REVIEW

On December 5, 2002, the U.S. Environmental

Protection Agency (“EPA”) approved the State of Arizona’s

application to administer the National Pollutant Discharge

Elimination System (“NPDES”) program under Section

- 402(b) of the Clean Water Act, 33 U.S.C. § 1342(b). Section

402(b) states that EPA “shall approve each submitted

program” unless EPA “determines that adequate authority

does not exist” for the state to administer the program in

compliance with nine specified criteria. There was no

dispute that Arizona’s program satisfied those criteria.

Instead, environmental groups contended that EPA

violated Section 7(a)(2) of the Endangered Species Act, 16

U.S.C. § 1536(a)(2), because EPA did not sufficiently

analyze the effects of the loss of, nor require a sufficient

substitute for, consultation with the U.S. Fish and Wildlife

Service. A majority of the Ninth Circuit panel agreed and

vacated EPA’s approval of Arizona’s program. The

questions presented for review are:

1. Can a court append additional criteria to Section

402(b) of the Clean Water Act that require state NPDES

programs to include protections for endangered species?

2. Does Section 7(a)(2) of the Endangered Species

Act constitute an independent source of authority,

requiring federal agencies to take affirmative action to

benefit endangered species even when an agency’s

enabling statutes preclude such action?

3. Did the Ninth Circuit incorrectly apply the

holding of Department of Transp. v. Public Citizen, 541

ii

QUESTIONS PRESENTED - Continued

U.S. 752 (2004), in concluding that EPA’s approval of

Arizona’s NPDES permitting program was the legally

relevant cause of impacts to endangered species resulting

from future private land use activities?

ili

PARTIES TO THE PROCEEDING

Petitioners: National Association of Home Builders,

Southern Arizona Home> Builders Association, Home

Builders Association of Central Arizona, Arizona Chamber

of Commerce, Arizona Mining Association, Arizona

Association of Industries, Greater Phoenix Chamber of

Commerce and American Forest & Paper Association.

Respondents: Defenders of Wildlife, Center for

Biological Diversity and Craig Miller.

Other parties: U.S. Environmental Protection Agency,

U.S. Fish and Wildlife Service and the State of Arizona.

CORPORATE DISCLOSURE STATEMENT

National Association of Home Builders is a non-profit

corporation organized under the laws of Nevada, has no

parent companies or subsidiaries, and has issued no

shares of stock to the public. Said association has more

than 800 state and local home builders associations with

which it is affiliated, but all of those associations are, to

the best of National Association of Home Builder’s

knowledge, non-profit entities that have not issued stock

to the public.

Southern Arizona Home Builders Association and Home

Builders Association of Central Arizona are non-profit

corporations organized under the laws of Arizona, have no

parent companies or subsidiaries, and have issued no

shares of stock to the public. Both associations are

affiliated with National Association of Home Builders.

iv

CORPORATE DISCLOSURE

STATEMENT - Continued

Arizona Chamber of Commerce, Arizona Association of

Industries and Greater Phoenix Chamber of Commerce

are non-profit corporations, have no parent companies or

subsidiaries, and have not issued shares of stock to the

public.

Arizona Mining Association is an unincorporated

non-profit business league, the members of which are

engaged in exploration and mining activities in Arizona. It

has no parent companies or subsidiaries, and has issued

no shares of stock to the public.

American Forest & Paper Association is a not-for-profit

corporation headquartered in Washington, D.C., that is

the national trade association of the forest, paper, and

wood products industry. It has no parent companies or

subsidiaries, and has issued no shares of stock to the

public.

TABLE OF CONTENTS

Page

QUESTIONS PRESENTED FOR REVIEW.................. i

PARTIES TO THE PROCEEDING ................cccccceeeseeees iii

CORPORATE DISCLOSURE STATEMENT................ iii

PETITION FOR WRIT OF CERTIORAR1 ................... 1

CITATIONS OF REPORTS OF OPINIONS ENTERED

alicia ene nnmentbonnanamsenatoese 1

BASIS FOR SUPREME COURT JURISDICTION ...... 1

STATUTORY PROVISIONS INVOLVED IN THE

ESTES NS ec ee 2

STATEMENT OF THE CASE ...........cccccccccccccessssccesseseees 2

I ata ernennenemnnannsonen 2

Il. THE ADMINISTRATIVE PROCEEDINGS

CONCERNING APPROVAL OF ARIZONA'S

Pe areccncochenniccccnensnsceccesscsenconesncccssoneesseeses 3

Ill. THE COURT PROCEEDINGS BELOW........... 5

REASONS FOR GRANTING THE PETITION ............ 8

I. INTRODUCTION: THIS CASE PRESENTS

IMPORTANT QUESTIONS OF FEDERAL

LAW THAT SHOULD BE ADDRESSED BY

ee asenntensnccnssonnssrencscamsevesounesceusneqeonees 8

Il. THE OPINION CREATES A DIRECT CONFLICT

WITH OTHER FEDERAL CIRCUITS REGARDING

THE APPLICABILITY OF SECTION 7(a)(2)

OF THE ESA TO NON-DISCRETIONARY

ED EP Pcasenscccccscesesssccccesssccssecceneece 11

TABLE OF CONTENTS -— Continued

Page

hg Fa iaitertenncrtncstccnaiticenitnnienitaninanniintioa 11

B. The Ninth Circuit’s Opinion Conflicts With

the Fifth Circuit’s Opinion in AFPA ........... 13

C. The Ninth Circuit’s Opinion Conflicts With

the District of Columbia’s Opinion in

ERE? ncccrsnesecseniatsenpmdineneniaiadeamndticnen 15

D. There Are No Opinions From Other

Circuits That Support the Majority’s Novel

Interpretation of Section 7(a)(2)................. 18

Ill. THE MAJORITY DISREGARDED THE SER-

VICES’ LONG-STANDING INTERPRETATION

OF SECTION 7a(2) AND EFFECTIVELY

INVALIDATED SEVERAL IMPORTANT REGU-

LATIONS IMPLEMENTING THAT PROVISION. 20

IV. THE MAJORITY MISCHARACTERIZED AND

MISAPPLIED THIS COURT'S OPINION IN

SE Oe Bi crecserssenccensssnsnssnentasnennsingsemnensovenaenens 22

V. THE MAJORITY MISAPPLIED THIS COURT'S

CAUSATION ANALYSIS AND HOLDING IN

Pe TT icenicenniiinincinstciteinaissiitenininiceatadiie 24

A. Summary of Public Citizen and Its

Rejection of “But For” Causation................. 24

B. The Majority Ignored the Limitations on

the EPA’s Regulatory Authority Under the

CWA and Applied a “But For” Causation

Test, Improperly Attributing All Impacts

Resulting From Real Estate Development

a) 26

IS cocsscsesscanecensssoncsnncenensssoupensneneninnseemmensnaneen 29

vii

TABLE OF AUTHORITIES

Page

CASES

American Forest and Paper Ass’n v. E.PA., 137 F.3d

ee passim

Association to Protect Hammersley, Eld, and Totten

Inlets v. Taylor Resources, Inc., 299 F.3d 1007

SPUN STII icininniinaiisinasincsidndidmnanicnabutasiadipeiatansadntedantiinias 28

Babbitt v. Sweet Home Chapter of Communities for

a Greater Oregon, 515 U.S. 687 (1995) ..............ccceeeeee 22

Bennett v. Spear, 520 U.S. 154 (1997) ...........:ccccccsseeeseereesenees 2

Citizens for a Better Environment v. E.PA., 596

gg ee 12

Conservation Law Foundation of New England, Inc.

v. Andrus, 623 F.2d 712 (1st Cir. 1979)................... 18, 19

Defenders of Wildlife v. Administrator, E.PA., 882

eR RO 18, 19

Defenders of Wildlife v. U.S. Environmental

Protection Agency, 420 F.3d 946 (9th Cir. 2005).....passim

Defenders of Wildlife v. U.S. Environmental

Protection Agency, 450 F.3d 394 (9th Cir. 2006).....passim

Department of Transp. v. Public Citizen, 541 U.S.

SIT cintiinnictithteasintincentinentinetbictaiininibaiineinasiiiinnsiiasiaiaaiidaiiael passim

E.PA. v. California ex rel. State Water Resources

Control Bd., 426 U.S. 200 (1976).............cccccceceeeseeeeee 4,11

Ground Zero Ctr. For Non-Violent Action v. United

States Dep't of the Navy, 383 F.3d 1082 (9th Cir.

NR RESALE ve SN See ence OO 21

In re Operation of the Missouri River System

Litigation, 421 F.3d 618 (8th Cir. 2005).................000-. 19

TABLE OF AUTHORITIES ~— Continued

Page

Marbled Murrelet v. Babbitt, 83 F.3d 1068 (9th Cir.

EISLER nS Te Te TOE Meme OT TE ETT TOT 21

Natural Resources Defense Council, Inc. v. E.PA.,

39> ®t | E. __, aSaeeeennee 27-28

Natural Resources Defense Council, Inc. v. E.PA.,

Fk SEE 11

Natural Res. Def. Council v. Houston, 146 F.3d 1118

SE GI BR acces sscsccsnssenscevensocnneensssenesesteusnenannasomnegnvessen 21

Platte River Whooping Crane Critical Habitat

Maintenance Trust v. FE.R.C., 962 F.2d 27 (D.C.

BE He ices tiricnsdaihaibainchdatinihcalitctaeasiatiictaiiesitinidaiiccibaaiial passim

Public Citizen v. Department of Transp., 316 F.3d

I 25

Riverside Irr. Dist. v. Andrews, 758 F.2d 508 (10th

TTR ee eee DORA er eee ey 20, 28

Save the Bay, Inc. v. Administrator of E.PA., 556

tree ar ee een enems 11

Sierra Club v. Babbitt, 65 F.3d 1502 (9th Cir. 1995)........ 21

Sierra Club v. Glickman, 156 F.3d 606 (5th Cir.

Pa ticiaceaasatcinttniihatiahdattdltarea ihn racer i tastiest tae inateiaiaia 19

South Florida Water Management Dist. v.

Miccosukee Tribe of Indians, 541 U.S. 95 (2004)............ 3

Strahan v. Linnon, 967 F. Supp. 581 (D. Mass.

1997), aff’d, 187 F.3d 623, 1998 WL 1085817 (1st

a 19

Strycker’s Bay Neighborhood Council, Inc. uv.

th Ge Cy TD ccccinnnsnsinnninenintnmemuaminniont 26

Tennessee Valley Authority v. Hill, 437 U.S. 153

FD ccevesnssscsnssmmevesssnstensamemmnanmnnssmmeseenstnil passim

-

ix

TABLE OF AUTHORITIES - Continued

Page

Turtle Island Restoration Network v. Nat'l Marine

Fisheries Serv., 340 F.3d 969 (9th Cir. 2003)................ 21

U.S. v. Mead Corp., 533 U.S. 218 (2001) .0........ccc cece 22

Weinberger v. Romero-Barcelo, 456 U.S. 305 (1982)......... 23

STATUTES

I a MII ni cticrsiincniecisisenipemaleenatdiineaiidabinil 2,17

TERE a ey passim

EE eee aT E NOY One 18

cial 18

a Un UTD chcicccihiiteeiieiiltiaricicieebahaeielnadibaeiibeibeiiae 1

ns TITTTTTT TT sicinicesicionniceliighitisbeiaiaiinnaincbincidaapatiadainit lailhdak ls 1

I, BI iridescent ati 2

rT a iiciciaeiatiiatiate lial aitectaechia detainee 3, 10, 28

EES eae Cee nnn Men 3, 28

8 SRE ere mI MeN E em me 3

TE ee a OE Pe passim

Sr tanita nahin 10

SO iii 5

RELENTLESS ROE Seo 24

EE nr en en eS OTR ESTEE 10

ee ae PUP erilhncchiteiriistceabnietsisiniiteinabesiiapatitaainipiatanibai 10

TABLE OF AUTHORITIES ~ Continued

Page

REGULATIONS

ne Se Ut eicsesisiicceicatveninnaiiicnicitniatnsianiitininhtniaiishimiasauaiii 12

es te I sicsincrniidaststciniccipcccusistiniabliaitinsaippeieuibibiida 11

ee ED circincistsnccsnaisnemniccninincnsintitnisatinesinimen 11

Ny CeIn ccriisicipscichicininnbenvishteinidpevenatenainiaiediedbvunsaienil 29

ee I ccesstnennjenstatinicenteiteniahinieesesceniuninentiain 21, 28

I iciicnnddninesssriesesaseneicictietmnins 7, 19, 20, 22, 29

GO CPR. § 402.14(gNB) .....0....c..cceccecsecssssoscsosscsossescssseseneee: 21

ee MIE Ut iciscshccsicnitiseihtsinesiniiiniiniainptinaataniiiinessamlinialaiagatl 21

OTHER AUTHORITIES

Memorandum of Agreement Between the

Environmental Protection Agency, Fish and

Wildlife Service and National Marine Fisheries

Service Regarding Enhanced Coordination Under

the Clean Water Act and Endangered Species Act;

Notice, 66 Fed. Reg. 11,202 (February 22, 2001)............ 4

Interagency Cooperation — Endangered Species Act

of 1973, as Amended; Final Rule, 51 Fed. Reg.

I Gi IED cctecneccccsscccccsnesnssssnessnnetemnsension 20, 21

Endangered Species Act of 1973, Pub. L. No. 93-205,

ee Oe ivariectemmenidenesnstnenmicnssneuensiieisasiuaionin 16, 17

H.R. Rep. No. 95-1625 (1978)..................ssccsssssrsssssesseesers 17

H.R. Conf. Rep, No. 95-1804 (1978) ..........:ccccccsessseessreeenes 17

H.R. Conf. Rep. No. 96-697 (1979) .........cccccceceesseceeeseeeeeees 17

H.R. Rep. No. 97-667 (1962).................cccccrcsscorrvesessssenees 17

TABLE OF AUTHORITIES ~ Continued

S. Rep. No. 96-151 (1979)

S. Rep. No. 97-418 (1982)

PURER UO ESCO COCO EPPS SESS

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1

PETITION FOR WRIT OF CERTIORARI

National Association of Home Builders, Southern Arizona

Home Builders Association, Home Builders Association of

Central Arizona, Arizona Chamber of Commerce, Arizona

Mining Association, Arizona Association of Industries, Greater

Phoenix Chamber of Commerce and American Forest & Paper

Association (“Home Builders”) jointly petition for a writ of

certiorari to review the judgment of the United States Court of

Appeals for the Ninth Circuit in this case.

¢

CITATIONS OF REPORTS OF

OPINIONS ENTERED IN THE CASE

The opinion of the Ninth Circuit and the dissent,

Appendix (“App.”) 1-68, are reported at 420 F.3d 946. The

order denying the petitions for panel rehearing and

rehearing en banc, the dissents from the denial of

rehearing, and the concurrence, App. 134-58, are reported

at 450 F.3d 394.

*

BASIS FOR SUPREME COURT JURISDICTION

The Ninth Circuit entered its judgment on August 22,

2005, and denied rehearing on June 8, 2006. App. 1 and

App. 134. The present petition is timely filed under 28

U.S.C. §2101(c) and under Rule 13.3 of this Court.

Therefore, this Court has jurisdiction pursuant to 28

U.S.C. §1254(1). Home Builders’ members consist of

businesses whose activities require discharge permits

under the Clean Water Act and will be adversely affected if

State of Arizona’s program is vacated.

o

2

STATUTORY PROVISIONS

INVOLVED IN THE CASE

The Clean Water Act, 33 U.S.C. § 1251, et seg., and the

Endangered Species Act, 16 U.S.C. § 1531, et seq. Relevant

provisions of these Acts and their implementing

regulations are reproduced in App. 159-244.

+

STATEMENT OF THE CASE

I. INTRODUCTION _

This case concerns the relationship between two major

environmental laws, the Clean Water Act (“CWA”) and the

Endangered Species Act (“ESA”), and the authority of

the agencies that administer those laws, the U.S.

Environmental Protection Agency (“EPA”) and the U.S.

Fish and Wildlife Service (“FWS”).

Section 7(a)(2) of the ESA requires each federal

agency to “insure that any action authorized, funded or

carried out by such agency ... is not likely to jeopardize

the continued existence of any endangered species or

threatened species or result in the destruction or adverse

modification of [critical] habitat” designated for such

species. 16 U.S.C. § 1536(a)(2). If a proposed action may

affect such species, the agency consults with FWS, which

issues a biological opinion describing the impacts of the

action and, if necessary, reasonable and prudent alternatives

that would avoid jeopardizing the species’ existence. See

Bennett v. Spear, 520 U.S. 154, 158, 169-70 (1997).

In its opinion, the Ninth Circuit redefined the

obligations of federal agencies under Section 7(a)(2) of the

~~. —

3

ESA, holding that: (1) Section 7(a)(2) grants independent

authority to federal agencies to act for the benefit of listed

species; (2) such authority overrides any conflicting

mandates imposed by Congress in other statutes; and (3)

any “authorizing action” by federal agencies creates an

obligation to exercise this new-found authority. App. 30-44.

Circuit Judge Kozinski, who dissented with five other

judges from the denial of en banc rehearing, explained

that “the majority treats the ESA as superior to all other

laws, thereby nullifying a crucial ESA regulation and

forcing agencies to violate their governing statutes.”

App. 137. In short, the opinion fundamentally alters the

obligations of federal agencies and therefore raises

questions of national importance.

Il. THE ADMINISTRATIVE PROCEEDINGS

CONCERNING APPROVAL OF ARIZONA’S

PROGRAM

Section 301(a) of the CWA prohibits the “discharge of

any pollutant by any person” into navigable waters unless

the discharge complies with one of several different CWA

programs. 33 U.S.C. § 1311(a). One of the CWA’s primary

programs is the National Pollutant Discharge Elimination

System (“NPDES”) program, under which the permitting

authority regulates “the discharge of any pollutant, or

combination of pollutants” threugh the issuance of

permits. 33 U.S.C. § 1342(a\(1); see South Florida Water

Management Dist. v. Miccosukee Tribe of Indians, 541 U.S.

95, 102 (2004). Consistent with Congress’ policy “to

recognize, preserve, and protect the primary responsibilities

and rights of States to prevent, reduce, and eliminate

pollution,” 33 U.S.C. § 1251(b), Section 402(b) of the CWA

contemplates that each state will administer and enforce

4

its own NPDES program with limited oversight by EPA.

See E.PA. v. California ex rel. State Water Resources

Control Bd., 426 U.S. 200, 206-09 (1976).

On January 14, 2002, the State of Arizona requested

NPDES program approval pursuant to Section 402(b) of

the CWA and its implementing regulations. 67 Fed. Reg.

49,916, 49,917 (Aug. 1, 2002) (App. 543-61). EPA’s regional

office prepared a biological evaluation of the impacts of

approving Arizona’s program on _ species listed as

threatened and endangered under the ESA (“listed species”),

concluding such action would not adversely affect any listed

species or their critical habitat. App. 583-623. On June 21,

2002, EPA requested the initiation of consultation with

FWS. App. 585-86.

A dispute developed between EPA and FWS’s Arizona

field office, which objected to the impact Arizona’s program

would have on its use of the ESA to regulate construction,

water use and similar activitiés. App. 562-63. EPA, by

contrast, believed, based on its evaluation of the effects of

approving Arizona’s program, that approval was simply

“an administrative transfer of authority,” and was “not the

cause of future non-discharge-related impacts on

endangered species.” App. 564-65. This dispute was

elevated to senior officials in both agencies’ headquarters

under a 2001 memorandum of agreement governing

coordination between the CWA and the ESA. 66 Fed. Reg.

11,202 (Feb. 22, 2001) (App. 245-318). See also App. 562-82

(interagency elevation document) and App. 78-82

(consultation history).

Ultimately, FWS issued a biological opinion on

December 3, 2002, concluding that EPA’s approval of

Arizona’s program was not likely to jeopardize any listed

5

species or adversely modify their critical habitat. App. 77-

124. FWS agreed that the proposed action merely

constituted an administrative shift in authority and would

not cause increases in requests for CWA permits or real

estate development. App. 113-14. FWS also accepted EPA's

description of its regulatory authority, including EPA’s

inability to object to NPDES permits “based on grounds

other than guidelines and requirements of the CWA.”

App. 114. Finally, FWS concluded that the environmental

impacts of future real estate development in Arizona are

speculative. App. 114-15.

On December 5, 2002, EPA approved Arizona’s

program. 67 Fed. Reg. 79,629 (Dec. 30, 2002) (App. 69-76).

Since that date, the Arizona Department of Environmental

Quality has been administering and enforcing the NPDES

program (known as the AZPDES program) in all portions

of Arizona, other than Native American land. App. 71-72.

Il. THE COURT PROCEEDINGS BELOW

On April 2, 2003, Defend »s of Wildlife, Center for

Biological Diversity and Craig Miller (collectively

“Defenders”) filed a petition with the Ninth Circuit

seeking review of EPA’s approval of Arizona’s program

pursuant to 33 U.S.C. § 1369(b)(1)(D), which provides for

direct review in the circuit courts of EPA’s determinations

regarding state permitting programs. App. 13-14.

Defenders never contended that Arizona’s application or

the AZPDES program failed to meet the requirements of

the CWA. Instead, Defenders alleged that in approving

Arizona’s program, EPA violated Section 7(a)(2) of the

ESA. App. 13. Home Builders, which consist of industry

and trade associations that represent the interests of

6

Arizona businesses required to obtain NPDES permits,

were granted permission to intervene as respondents. /d.

On December 16, 2002, Defenders also filed an

amended complaint in a pending action in Arizona’s

federal district court challenging FWS’s biological opinion

under the Administrative Procedure Act. App. 13. The

district court determined that it lacked jurisdiction to

decide Defenders’ challenge to the biological opinion, and

ordered that the claim be severed and transferred to

the Ninth Circuit. App. 13, 125-33. The Ninth Circuit

consolidated the cases and issued its opinion on August 22,

2005.

A majority of the panel found that FWS’s biological

opinion was “fatally deficient” and that EPA “fail[ed] to

understand its own authority under section 7(a)(2) to act

on behalf of listed species and their habitat.” App. 47-48,

60. The majority acknowledged that Section 402(b) of the

CWA foreclosed EPA’s discretion to act for the benefit of

listed species. App. 53. Nonetheless, the majority held that

Section 7(a)(2) of the ESA grants independent authority to

federal agencies to act for the benefit of listed species, that

such authority overrides any constraints imposed by

Congress in Section 402(b) of the CWA, and that any

“authorizing action” creates an obligation to exercise this

authority. Id.; see also App. 38-39.

To support this holding, the majority focused on the

phrase “insure that any action ... is not likely to

jeopardize” in Section 7(a)(2), concluding Congress

intended this phrase to grant authority to act

affirmatively to benefit listed species, rather than simply

prohibiting actions that jeopardize species. App. 30-38.

7

The majority also concluded that whenever a federal

agency authorizes, funds or carries out an action, Section

7(aX(2) applies: “the EPA had exclusive decisionmaking

authority over Arizona’s pollution permitting transfer

application. The EPA’s decision authorized the transfer,

thus triggering section 7(a)(2)’s consultation and action

requirements.” App. 43-44 (emphasis added). The majority

gave no deference to FWS’s long-standing regulation, 50

C.F.R. § 402.03, which limits the application of Section

7(a)(2) to situations in which a federal agency has discretion

to consider the impacts on listed species. App. 39-42.

The majority concluded that EPA needed to address

“whatever harm may flow from the loss of section 7

consultation” (App. 47) - an effect Congress clearly

intended when it required EPA to approve qualifying state

programs. In the majority's view, however, EPA could not

transfer permitting authority unless it found “sufficient

substitutes for section 7’s consultation and mitigation

mandates.” App. 52. As the remedy, the majority vacated

EPA’s approval of Arizona’s program. App. 61-63.

Senior Circuit Judge Thompson dissented, stating

that “EPA did not have discretion to deny transfer of the

pollution permitting program to the State of Arizona;

therefore its decision was not ‘agency action’ within the

meaning of Section 7 of the [ESA).” App. 66. The dissent

noted that prior circuit opinions recognized, in accordance

with 50 C.F.R. § 402.03, that Section 7(a)(2) applies only to

actions in which an agency has discretion to act for the

benefit of listed species. App. 64-66. Judge Thompson also

pointed out that the majoritys interpretation of the

statute was in direct conflict with other circuits, which

have held that EPA’s obligation in reviewing a state’s

8

program submittal under Section 402(b) of the CWA is

limited to evaluating the nine statutory criteria App. 66-67.

Home Builders, EPA and FWS, and the State of

Arizona, filed petitions seeking rehearing en banc based

on the intra-circuit and inter-circuit conflicts created by

the majority's opinion. On June 8, 2006, the court issued

its order denying both panel and en ‘src rehearing.

App. 134-58. Six circuit judges dissented from the denial of

rehearing, two of whom issued written dissents criticizing

the majority’s opinion on multiple grounds. App. 135-49.

Circuit Judge Kozinski stated, for example, “the majority

tramples all over the [FWS’s] reasonable interpretation of

the ESA, deliberately creates a square inter-circuit conflict

with the Fifth and D.C. Circuits, and ignores at least six

prior opinions of our own court.” App. 135-36. He further

emphasized that “the decision is one of considerable

importance to the federal government and the states

within our circuit,” and that the case should have been

taken en banc “to set our own house in order.” App. 136.

¢

REASONS FOR GRANTING THE PETITION

I. INTRODUCTION: THIS CASE PRESENTS

IMPORTANT QUESTIONS OF FEDERAL LAW

THAT SHOULD BE ADDRESSED BY THIS

COURT.

No dispute exists that: (1) Arizona’s NPDES program

submission satisfied the nine requirements specified by

Congress in Section 402(b) of the CWA as well as EPA’s

implementing regulations; and (2) the plain language of

Section 402(b) forecloses EPA’s discretion to act for the

benefit of listed species in approving a state’s program. See

9

App. 53. Nonetheless, the majority opinion held that the

ESA overndes the Congressional mandates set forth in the

CWA.

In reaching its decision, the majority created a direct

conflict with Fifth and District of Columbia Circuit

opinions interpreting Section 7(a)(2) of the ESA; effectively

invalidated long-standing regulations of FWS and the

National Marine Fisheries Service interpreting the

consultation obligations of federal agencies under Section

7(a)(2); mischaracterized and misapplied this Court’s

holding in Tennessee Valley Authority v. Hill, 437 U.S. 153

(1978) (“TVA”); and facially adopted, but failed to follow,

this Court’s causation analysis in Department of Transp. v.

Public Citizen, 541 U.S. 752, 770 (2004), concluding

instead that EPA was responsible for the impacts caused

by every future real estate development in Arizona

without regard to the agency’s regulatory authority.

The effects of the majority's opinion are significant

and far-reaching. The majority opinion alters the legal

requirements mandated by Congress for states that desire

to administer the NPDES program by imposing a tenth

(and unstated) requirement — that the state’s program

include elements that would “substitute for section 7

coverage” (App. 60). There are five states that currently do

not administer their own permitting programs, two of

which, Alaska and Idaho, are in the Ninth Circuit.’ States

' The states without authority to administer the NPDES program

are Alaska, Idaho, Massachusetts, New Hampshire, and New Mexico,

as well as the District of Columbia, Puerto Rico, and various trust

lands. In addition, a number of states do not have approved programs

that implement all aspects of the NPDES program, and those states

may apply for authority to administer additional aspects of the program

(Continued on following page)

10

without approved programs may be unable to exercise

their right to administer the NPDES program even though

their programs satisfy the criteria established in the CWA

or, under the majority’s logic, would be required to enact

and fund programs to benefit federally-protected wildlife

sufficient to “substitute” for ESA Section 7, undermining

the role Congress intended states to play in administering

and enforcing the CWA and raising significant federalism

concerns. Thus, the majority’s view conflicts with

Congress’ policy “to recognize, preserve, and protect ...

the rights of States to prevent, reduce, and eliminate

pollution,” and that the states “implement the permit

programs under sections 1342 and 1344 of this title.” 33

U.S.C. § 1251(b).

’ The majority opinion also redefines and expands the

obligations of federal agencies under a key provision of the

ESA. Under the majority opinion, federal agencies would

be required, for the first time, to ignore constraints

imposed by Congress in their enabling legislation if doing

so were deemed necessary. to benefit listed species or their

habitat. In addition, the majority opinion adopts a “but-for”

causation standard for determining when agency actions

impact listed species. As Judge Kozinski succinctly stated,

the majority opinion “underminfes} the entire consultative

in the future. A complete list of the states’ program status is available

at Attp://cfpub.epa.gov/npdes/statestats.cfm (visited August 28, 2006).

* These problems extend beyond the NPDES program. Congress

has authorized states to assume, for example, other CWA permitting

programs, including permits to discharge dredged or fill materials

under Section 404 of the CWA, 33 U.S.C. § 1344(g). See also 42 U.S.C.

§ 6926 (authorizing states to administer and enforce hazardous waste

programs); 42 U.S.C. § 7411(c) (authorizing states to implement and

enforce standards of performance for new sources of air pollution).

11

process that the ESA establishes and strik[es] down FWS’s

perfectly reasonable interpretation of the ESA.” App. 140.

The nature of federal agencies’ obligations under Section

7(aX(2) is a matter of national importance given the

pervasive nature of that provision, which applies to all

federal agencies and programs. This Court should

therefore grant the petition.

II. THE OPINION CREATES A DIRECT CONFLICT

WITH OTHER FEDERAL CIRCUITS REGARDING

THE APPLICABILITY OF SECTION 7(a)(2) OF

THE ESA TO NON-DISCRETIONARY FEDERAL

ACTIONS.

A. Background

Section 402(b) of the CWA provides that EPA “shall

approve each ... submitted program unless” the agency

“determines that adequate authority does not exist” to

administer the program in compliance with nine specific

criteria. 33 U.S.C. § 1342(b)(1)-(9) (emphasis added).

See also 40 C.F.R. §§ 123.1(c), 123.61(b). Courts have

consistently recognized that, under the plain language of

the statute, EPA lacks discretion to deny approval if a

state’s program meets those criteria. See E.PA. v. California,

426 U.S. at 208; American Forest and Paper Ass’n v. E.PA.,

137 F.3d 291, 297 (5th Cir. 1998) (“AF'PA”) (the language of

Section 402(b) is “non-discretionary”), following Save the

Bay, Inc. v. Administrator of E.PA., 556 F.2d 1282, 1285 (5th

Cir. 1977) (“Unless the Administrator of EPA determines

that the proposed state program does not meet these

requirements, he must approve the proposal.”); Natural

Resources Defense Council, Inc. v. E.P.A., 859 F.2d 156,

173-74 (D.C. Cir. 1988) (Section 402(b) “commands” EPA to

12

“approve the state permit system” once the statutory

requirements are met); Citizens for a Better Environment

v. E.PA., 596 F.2d 720, 722 (7th Cir. 1979) (“If the state

program satisfies the statutory requirements of section

402(b)... (EPA) must approve the program.”). See also 40

C.FR. pt. 123 (setting forth the procedures and requirements

for approving state NPDES programs).

The criteria established by Congress in CWA

Section 402(b) and contained in EPA’s regulations do not

include implementing procedures to benefit listed species

or their habitat. The majority even acknowledged that

EPA’s discretion under the CWA is limited, stating “the

[CWA] does not grant the EPA authority to make

pollution permitting transfer decisions for the benefit of

all endangered species.” App. 53. The majority instead

held that “the obligation of each agency to ‘insure’ that its

covered actions are not likely to jeopardize listed species

[under ESA Section 7(a)(2)] is an obligation in addition

to those created by the agencies’ own governing statute.”

App. 38 (emphasis added). Thus, according to the

majority, EPA was not constrained by Congress’ statutory

command in Section 402(b) of the CWA when-acting on

Arizona’s application to administer the NPDES program.

As shown below, that holding is in direct conflict with the

Fifth and District of Columbia Circuits and is inconsistent

with opinions from other federal circuits as well as prior

opinions within the Ninth Circuit.

13

B. The Ninth Circuit’s Opinion Conflicts with

the Fifth Circuit’s Opinion in AFPA.

AFPA involved EPA’s approval of Louisiana’s NPDES

permitting program under CWA Section 402(b). As a

condition of approval, EPA required Louisiana to submit

proposed permits to FWS and the National Marine

Fisheries Service (“NMFS”), which EPA would veto if FWS

or NFMS determined that the permit would adversely

impact listed species. AFPA, 137 F.3d at 293-94. The Fifth

Circuit held EPA lacked authority to impose conditions to

benefit listed species, and squarely rejected EPA's

argument that “its decision is not only authorized but

compelled by ESA § 7(a)(2).” Id. at 297 (internal citation

omitted). The court explained:

EPA argues that ESA § 7(a)(2), when construed

alongside the Court’s broad reading of the

statute in [TVA], compels EPA to do everything

reasonably within its power to _ protect

endangered species. The flaw in this argument is

that if EPA lacks the power to add additional

criteria to CWA § 402(b), nothing in the ESA

grants the agency the authority to do so. Section

7 of the ESA merely requires EPA to consult with

FWS or NMFS before undertaking agency action;

it confers no substantive powers.

[T]he ESA serves not as a font of new authority,

but as something more modest: a directive to

agencies to channel their existing authority in a

particular direction. The upshot is that EPA

cannot invoke the ESA as a means of creating

and imposing requirements that are not

authorized by the CWA.

14

Id. at 298-99 (emphasis in original) (internal footnotes and

citations omitted).

The majority rejected the Fifth Circuit’s reasoning in

AFPA, stating that it was not addressing “the precise

question” decided by the Fifth Circuit. App. 46. However,

the issue addressed in AFPA is precisely the same issue

implicated here:

CWA § 402(b), 33 U.S.C. § 1342(b), provides that

the EPA Administrator “shall approve” proposed

state permitting programs that meet nine

specified requirements. The key question is

whether EPA may deny a state’s proposed

program based on a criterion - the

protection of endangered species - that is

not enumerated in § 402(b).

AFPA, 137 F.3d at 297 (emphasis added). According to the

Ninth Circuit, not only can EPA deny a state’s program,

but also EPA must do so when it is necessary to benefit

listed species or their habitat.’

* If the majority’s reading of the ESA were correct, then EPA could

impose additional conditions on the State of Arizona to benefit

endangered species, which is precisely what the Fifth Circuit addressed

in AFPA. See 137 F.3d 293-94. Indeed, in this case, local FWS

employees in an inter-agency elevation document suggested the

development of a “process” “to ensure that EPA uses its authority under

the ESA to provide sufficient protection for the continued existence of

listed species.” App. 571; see also App. 563.

15

C. The Ninth Circuit’s Opinion Conflicts With

the District of Columbia Circuit’s Opinion

in Platte River.

The AFPA court cited and followed Platte River

Whooping Crane Critical Habitat Maintenance Trust v.

FE.R.C., 962 F.2d 27, 34 (D.C. Cir. 1992), noting that the

petitioner in that case “pressed virtually the same

argument EPA advances here.” AFPA, 137 F.3d at 299.

Platte River involved a challenge to annual licenses issued

by the Federal Energy Regulatory Commission (“FERC”)

to two hydroelectric projects on the Platte River.

Environmental groups challenging the annual licenses

relied on Section 7(a)(2), as well as ESA Section 7(a)(1)

and this Court’s holding in TVA, arguing that FERC had

an affirmative obligation to impose conditions to protect

listed species. Jd. at 33-34. The District of Columbia

Circuit rejected that argument, stating:

The Trust reads section 7 essentially to oblige

[FERC] to do “whatever it takes” to protect the

threatened and endangered species that inhabit

the Platte River basin; any limitations on FERC’s

authority contained in the [Federal Power Act]

are implicitly superseded by this general

command. Petitioner relies on [TVA], the famous

“snail darter” case in which the Supreme Court

said that section 7’s legislative history “reveals

an explicit congressional decision to require

agencies to afford first priority to the declared —

national policy of saving endangered species.” We

think the Trust’s interpretation of the ESA is

far-fetched. As the [FERC] explained, the statute

directs agencies to “utilize their authorities” to

carry out the ESA’s objectives; it does not expand

ae 16

the powers conferred on an agency by its

enabling act.

962 F.2d at 34 (emphasis in original) (quoting TVA, 437

U.S. at 185; internal citations omitted).

The majority of the panel in this case criticized the

Platte River court for failing to appreciate the “obvious

differences” between ESA Sectidns 7(a)(1) and 7(a)(2).

App. 46. Section 7(a)(1) directs agencies to “utilize their

authorities in furtherance of the purposes of this chapter

by carrying out programs for the conservation of ...

species.” App. 184. Because Section 7(a)(1) refers to

agencies’ “authorities” while Section 7(a)(2) does not, the

majority concluded Congress intended to grant additional

authority to federal agencies in Section 7(a)(2). App. 34-38.

The majority’s reliance on this distinction is misplaced for

two reasons.

As an initial matter, the unsuccessful petitioners in

Platte River relied on both ESA provisions as well as this

Court’s opinion in TVA to support their argument. In fact,

the court quoted Section 7(a\2) in its opinion. Platte

River, 962 F.2d at 33-34. Therefore, despite the majority's

characterization, the Platte River court’s rejection of the

petitioners’ argument involved an analysis of both Sections

7(a)(1) and 7(a)(2).

Moreover, the legislative history fails to support the

majoritys attempt to distinguish Platte River. In the

original version of Section 7, the obligations of federal

agencies to carry out conservation programs (now

contained in Section 7(a)(1)) and to avoid jeopardy (now

contained in Section 7(a)(2)) were both qualified by the

phrase “utilize their authorities.” Endangered Species Act

of 1973, Pub. L. No. 93-205, § 7, 87 Stat. 884, 892 (1973)

17

(App. 483). Congress separated Section 7 into subsections

in 1978, but explained that this revision merely restated

“existing law.” H.R. Conf. Rep. No. 95-1804, at 18 (1978),

reprinted in 1978 U.S.C.C.A.N. 9484, 9486 (emphasis

added) (App. 487). Agencies’ obligations under “existing

law” were limited by their authorities. This limitation is

supported by ESA Section 2(c), which declared Congress’

policy that federal agencies “shall seek to conserve ...

species and shall utilize their authorities in furtherance of

... this act.” Endangered Species Act of 1973, Pub. L. No.

93-205, § 2(c), 87 Stat. 884, 885 (1973) (currently at 16

U.S.C. § 1531(c)(1)) (emphasis added) (App. 482).

Furthermore, Congress enacted significant

amendments to the ESA in 1978, 1979 and 1982. Although

there are numerous discussions of Section 7(a)(2) and the

inter-agency consultation process in various committee

reports accompanying the amendments, none of those

discussions suggests Section 7(a)(2) grants additional

power to federal agencies or compels agencies to ignore

their statutory mandates. See, e.g., H.R. Rep. No. 95-1625,

at 11-12 and 19-20 (1978), reprinted in 1978 U.S.C.C.A.N.

9453, 9461-62, 9469-70 (App. 490-92, App. 494-97); S. Rep.

No. 96-151, at 3-4 (1979) (App. 503-04); H.R. Conf. Rep.

No. 96-697, at 12-16 (1979), reprinted in 1979

U.S.C.C.A.N. 2572, 2575-79 (App. 509-17); H.R. Rep. No

97-567, at 24-29 (1982), reprinted in 1982 U.S.C.C.A.N.

2807, 2824-29 (App. 518-28); S. Rep. No. 97-418, at 19-20

(1982) (App. 537-42). In short, there is nothing in the

18

legislative history to support the majority’s summary

rejection of Platte River and AFPA.*‘

D. There Are No Opinions From Other

Circuits That Support the Majority’s Novel

Interpretation of Section 7(a)(2).

In addition to rejecting AFPA and Platte River as

“unpersuasive,” the majority relied on Conservation Law

Foundation of New England, Inc. v. Andrus, 623 F.2d 712 (1st

Cir. 1979), and Defenders of Wildlife v. Administrator, E.PA.,

882 F.2d 1294 (8th Cir. 1989), contending an inter-circuit

conflict already existed. App. 44-45. As a preliminary matter, if

the majority were correct, there would be a direct conflict

among five circuits rather than three, lending further

support to this petition.

As Judge Kozinski explained in his dissent (App. 148,

n.5), the opinions from the First and Eighth Circuits are

inapposite. Neither case involved the interpretation of a

statute that on its face precluded the exercise of agency

discretion. In Conservation Law, which involved the sale-of

offshore leases for oil and gas exploration under the Outer

* The majority also criticized the Platte River court for ignoring the

enactment of ESA Sections 7(g) and (h), 16 U.S.C. § 1536(g) and (h).

App. 46. ESA Sections 7(g) and (h) were enacted in the wake of TVA and

create a process by which projects can be declared exempt from Section

7(aX2). These provisions deal with irreconcilable conflicts presented at

the end of the consultation process, when, as in 7VA, a discretionary

federal action would jeopardize a listed species and therefore be

prohibited. See, e.g., S. Rep. No. 97-418, at 16-17 (App. 532) (“The

exemption process was designed to resolve endangered species conflicts

after consultation has been exhausted... .”). They are not relevant to

whether Section 7(a2) applies to non-discretionary actions in the first

place.

19 F

Continental Shelf Lands Act, the First Circuit held the

ESA would continue to apply to future discretionary

actions taken after the lease sale was held (e.g.,

subsequent agency approvals of exploration plans). 623

F.2d at 715. In Defenders of Wildlife, the Eighth Circuit

held that the Federal Insecticide, Fungicide, and

Rodenticide Act does not exempt the EPA from complying

with ESA requirements when registering pesticides. 882

F.2d at 1299-1300. In neither case did the court address

the issue presented here.”

In sum, no circuit court has previously interpreted

Section 7(a)(2) of the ESA as an independent source of

authority, and prior to this case, there was no inter-circuit

conflict. Decisions from other circuits have consistently

stated that the authority of federal agencies is based on

the agencies’ enabling statutes. See In re Operation of the

Missouri River System Litigation, 421 F.3d 618, 630 (8th

Cir. 2005) (“Case law supports the contention that

environmental- and wildlife-protection statutes do not

apply where they would render an agency unable to fulfill

a non-discretionary statutory purpose or require it to

exceed its statutory authority.”), citing 50 C.F.R. § 402.03

and Platte River; Sierra Club v. Glickman, 156 F.3d 606,

616 n.5 (5th Cir. 1998) (the “duty to consult [under Section

7(a)(2)] and the duty to conserve {under Section 7(a)(1)} is

* Notably, in subsequent decisions involving the application of ESA

Section 7(a\2), courts within the First and Eighth Circuits have not

adopted the majority's characterization of those opinions. See In re

Operation of the Missouri River System Litigation, 421 F.3d 618, 630

(8th Cir. 2005); Strahan v. Linnon, 967 F. Supp. 581, 607-08 (D. Mass.

1997), aff'd, 187 F.3d 623, 1998 WL 1085817 at *3 (1st Cir. 1998)

(unpublished) (Section 7(a)(2) does not apply to certificates issued by

the Coast Guard based on the agency’s limited statutory discretion).

20

tempered by the actual authorities of each agency.”), citing

Platte River; Riverside Irr. Dist. v. Andrews, 758 F.2d 508,

512 (10th Cir. 1985) (the ESA “does not, by its terms,

enlarge the jurisdiction of the Corps of Engineers under

the Clean Water Act.”). Therefore, the Ninth Circuit’s

opinion imposes, for the first time since the ESA was adopted

more than 30 years ago, an affirmative and broad-ranging

obligation on all federal agencies to act for the benefit of

listed species, even if their enabling statutes preclude

them from doing so.

Il. THE MAJORITY DISREGARDED THE SERVICES’

LONGSTANDING INTERPRETATION OF SECTION

7(a)(2) AND EFFECTIVELY INVALIDATED SEVERAL

IMPORTANT REGULATIONS IMPLEMENTING

THAT PROVISION.

In 1986, FWS and NMFS (“the Services”) jointly

promulgated rules governing Section 7(a)(2) that

implemented the 1978, 1979 and 1982 ESA amendments.

Interagency Cooperation - Endangered Species Act of 1973,

As Amended; Final Rule, 51 Fed. Reg. 19,926 (June 3,

1986) (codified at 50 C.F.R. pt. 402) (App. 318-480). In this

formal rulemaking, which began in 1983 and involved

public notice and comment, the Services expressly

recognized that an agency’s obligations under Section

7(a)(2) are limited by its existing legal authority.

Included in this rulemaking was 50 C.F.R. § 402.03,

entitled “Applicability,” which states: “Section 7 and the

requirements of this Part apply to all actions in which

there is discretionary Federal involvement or control.”

Moreover, other regulations adopted in this same

rulemaking recognize that a federal agency’s duties under

21

Section 7(a)(2) are limited by its existing authorities. For

example, 50 C.F.R. § 402.02 and § 402.14(g)(8) require that

reasonable and prudent alternatives suggested by the

Services to avoid jeopardy be “consistent with the scope of

the Federal agency’s legal authority and jurisdiction.”

Similarly, 50 C.F.R. § 402.16 requires the re-initiation of

consultation “where discretionary Federal involvement or

control over the action has been retained.”

As Judge Thompson explained in his dissent, the

Ninth Circuit previously recognized, consistent with the

Services’ regulations, “that an agency may have

decisionmaking authority and yet not be empowered,

either as an initial matter or in conjunction with some

continuing authority, to act to protect endangered and

threatened species.” App. 64-65, citing Ground Zero Ctr.

For Non-Violent Action v. United States Dep't of the Navy,

383 F.3d 1082, 1092 (9th Cir. 2004); Turtle Island

Restoration Network v. Nat'l Marine Fisheries Serv., 340

F.3d 969, 974 (9th Cir. 2003); Natural Res. Def. Council v.

Houston, 146 F.3d 1118, 1125-26 (9th Cir. 1998); Marbled

Murrelet v. Babbitt, 83 F.3d 1068, 1074-75 (9th Cir. 1996);

Sierra Club v. Babbitt, 65 F.3d 1502, 1509 (9th Cir. 1995).

* In the preamble to their final rules implementing Section 7(a)(2),

the Services, discussing the regulatory definition of “reasonable and

prudent alternatives,” acknowledged that they “should be mindful of

the limits of a Federal agency’s jurisdiction and authority when

prescribing a reasonable and prudent alternative. An alternative, to be

reasonable and prudent, should be formulated in such a way that it can

be implemented by a Federal agency consistent with the scope of its

legal authority and jurisdiction.” 51 Fed. Reg. 19,937 (App. 365). Under

the majority's interpretation of Section 7(a)(2), however, an alternative

will always be consistent with the agency’s authority and jurisdiction

because the ESA creates an affirmative and independent duty to protect

species, regardless of the limitations in an agency's authorizing statute.

22

In its opinion, in contrast, the majority marginalized

the Services’ interpretation of the obligations imposed by

Section 7(a)(2), variously describing 50 C.F.R. § 402.03 as

a “gloss” on and as being “congruent” and “coterminous

with” the statute. App. 39-42. In other words, the Services’

interpretation must necessarily correspond to the

majority's view of how the ESA should apply. A “reviewing

court must accept the agency’s position if Congress has not

previously spoken to the point at issue and the agency’s

interpretation is reasonable.” U.S. v. Mead Corp., 533 U.S.

218, 229 (2001); see also Babbitt v. Sweet Home Chapter of

Communities for a Greater Oregon, 515 U.S. 687, 703

(1995) (upholding FWS’s rule defining “harm” in the

context of ESA Section 9). Here, the majority gave no

deference to the Services’ long-standing interpretation of

Section 7(a)(2), effectively invalidating regulations that

have applied to federal agencies since 1986. This will lead

to the inconsistent application of the Services’ regulations,

exacerbating the inter-circuit conflict described in the

precedin; section and creating additional confusion about

the duties of federal agencies under the ESA.

IV. THE MAJORITY MISCHARACTERIZED AND

MISAPPLIED THIS COURT’S OPINION IN TVA

v. HILL.

The linchpin of the majority’s interpretation of Section

7(a)(2) was this Court’s opinion in TVA, which was issued

in 1978. App. 32-34. In that case, the Court enjoined

completion of the Tellico Dam based on ESA Section 7

because it was stipulated that the dam’s operation would

jeopardize the continued existence of an endangered

23

species of minnow and destroy that species’ critical

habitat. E.g., 437 U.S. at 171 (“We begin with the premise

that operation of the Tellico Dam will either eradicate the

known population of snail darters or destroy their critical

habitat.”), 174 (“[I]t is clear that TVA’s proposed operation

of the dam will [result in) the eradication of an

endangered species.”) (emphasis in original).

This Court, however, did not hold that Section 7

granted additional powers to federal agencies, nor did the

Court need to reach that issue given the facts of the case.

Instead, the central issue in TVA was whether Congress,

in enacting Section 7, foreclosed the exercise of equitable

discretion in fashioning an appropriate remedy for the

agency’s violation. See Weinberger v. Romero-Barcelo, 456

U.S. 305, 313-17 (1982) (discussing and distinguishing

TVA in the context of an alleged CWA violation).

Since TVA was decided 28 years ago, no circuit court

has adopted the Ninth Circuit’s expansive reading of TVA,

or has otherwise held that Section 7(a)(2) of the ESA

grants additional power to federal agencies. Both the Fifth

Circuit in AFPA and the District of Columbia Circuit in

Platte River rejected attempts to interpret TVA in that

manner. Unfortunately, the majority opinion took this

Court’s language out of context and mischaracterized the

holding of 7'VA. The lower courts in the Ninth Circuit are

now bound by this erroneous reading, and other federal

courts may similarly misapply 7VA. Accordingly, Home

Builders request that the Court grant this petition to

clarify the interpretation of Section 7(a)(2) and to ensure

that additional inter-circuit conflicts do not arise.

24

V. THE MAJORITY MISAPPLIED THIS COURT’S

CAUSATION ANALYSIS AND HOLDING IN

PUBLIC CITIZEN.

In Public Citizen, this Court addressed the obligations

of federal agencies under the National Environmental

Policy Act (“NEPA”), 42 U.S.C. §§ 4321-4370d, an

analogous statute that requires federal agencies to

evaluate the environmental impacts of their actions prior

to proceeding with them. The majority in Defenders

expressly adopted the Public Citizen standard for

determining whether the impacts of a proposed agency

action have a legally relevant nexus to listed species and

their critical habitat and therefore require consultation

with FWS under ESA Section 7(a)(2). App. 29-30. However,

the majority then failed to follow that standard, resulting

in confusion over what standard actually applies. As Judge

Kozinski noted in the dissent to the denial of rehearing en

banc, the majority opinion suggests that the Ninth Circuit

intends to continue to apply the “but for” causation

analysis rejected in Public Citizen to determine whether

environmental impacts are attributable to agency actions.

App. 144 & n.4.

A. Summary of Public Citizen and Its Rejection

of “But For” Causation

In Public Citizen, the Federal Motor Carrier Safety

Administration (“FMCSA”) adopted rules imposing

registration and safety requirements on Mexican-domiciled

motor carriers operating in the United States. To comply

with NEPA, FMCSA prepared an_ environmental

assessment, determining that the rules would noi have a

significant impact on the environment. The agency did not

evaluate the overall environmental impacts caused by

~ 25

Mexican trucks operating in the United States. FMCSA

reasoned that those impacts were caused by the

President’s decision to lift a long-standing moratorium

over which the agency had no control. 541 U.S. at 759-62.

The agencys rules were challenged on _ several

grounds, including the narrow scope of its environmental

assessment. The Ninth Circuit agreed, concluding that

FMCSA violated NEPA by not preparing an environmental

impact statement in order to evaluate fully the

environmental impacts resulting from cross-border truck

traffic. Public Citizen v. Department of Transp., 316 F.3d

1002, 1021-27 (9th Cir. 2003).

This Court reversed, holding FMCSA’s environmental

assessment was sufficient. In approving the scope of

analysis employed by the FMCSA, the Court stated that a

“but for” causal relationship between an agency’s action

and an environmental effect “is insufficient to make an

agency responsible for that particular effect under NEPA

and the relevant regulations. NEPA requires a reasonably

close causal relationship between the environmental effect

and the alleged cause.” 541 U.S. at 767 (quotation marks

omitted). Thus, FMCSA was required to evaluate only

those environmental impacts resulting from activities that

the agency was authorized by Congress to regulate. The

Court concluded:

We hold that where an agency has no ability to

prevent a certain effect due to its limited

statutory authority over the relevant actions, the

agency cannot be considered a legally relevant

“cause” of the effect. Hence, under NEPA and the

implementing CEQ regulations, the agency need

not consider these effects in its [environmental

26

assessment] when determining whether its

action is a “major Federal action.”

Id. at 770. Because FMCSA could not authorize (or

prohibit) cross-border operations by Mexican motor

carriers, the agency appropriately limited the scope of its

analysis to impacts caused by its regulatory program. Id.

B. The Majority Ignored the Limitations on the

EPA’s Regulatory Authority Under the CWA

and Applied a “But For” Causation Test,

Improperly Attributing All Impacts Resulting

From Real Estate Development to EPA’s

Decision.

The majority’ adoption of this Court’s holding in

Public Citizen to determine the proper scope of analysis

under Section 7(a)(2) was appropriate. NEPA is a

procedural statute whose purpose is to ensure that federal

agencies are aware of the impacts of their actions on the

environment. See, e.g., Public Citizen, 541 U.S. at 757-78;

Strycker’s Bay Neighborhood Council, Inc. v. Karlen, 444

U.S. 223, 227-28 (1980). Under ESA Section 7(a)(2),

federal agencies must similarly determine, in consultation

with FWS, whethe: their actions are likely to adversely

affect listed species or critical habitat, and ultimately

whether those impacts are likely to jeopardize listed

species. Thus, the majority correctly stated, following

Public Citizen, that a causal relationship must exist

between a proposed federal action and impacts on listed

species, and that such relationship is dependent on the

agency’s legal authority. See, e.g., App. 29 (“a negative

impact on listed species is the likely direct or indirect

effect of an agency’s action only if the agency has some

control over that result”). The majority then ignored this

27

principle and erroneously assumed that all impacts

resulting from future real estate development in Arizona

are the responsibility of EPA.

The majority opinion rejected EPA’s position that a

“loss of conservation benefit” would not be caused by EPA’s

approval of the State of Arizona’s program. See App. 111-15.

As explained in the biological opinion, however,

“[djevelopments are driven by any number of factors,

including but not limited to demand, supply, economics,

political decisions, zoning regulations, and financial

market stability. Based upon the best available

information, development in the action area will not be

caused by EPA’s proposed approval.” App. 113. The

majority summarily rejected this reasoning as

implausible, concluding instead that future real estate

development and the CWA permits are links in the same

“tut for’ causal chain.” App. 27-28. If this strained

reasoning were applied to FMCSA’s rulemaking in Public

Citizen, the President’s decision to lift the moratorium and

the agency’s promulgation of inspection and safety rules

for Mexican motor carriers would likewise constitute “but

for” links in the same causal chain, requiring FMCSA to

extend the scope of its NEPA analysis to impacts over

which the agency had no control - a result this Court

expressly rejected.

Inherent in the majority’s illogical causation construct

is its erroneous belief that EPA, when issuing CWA

permits, has the authority to control how private land is

used. In administering the NPDES program, the

permitting entity is charged only with authorizing the

discharge of pollutants. It is not charged with regulating,

and is not authorized to regulate, the activity from which

the discharge results. See Natural Resources Defense

28

Council, Inc. v. E.PA., 822 F.2d 104, 128-31 (D.C. Cir.

1987) (holding EPA lacked authority under the CWA to

prohibit an applicant’s construction activities pending

compliance with NEPA). If the activity can proceed

without discharging a pollutant into navigable water, a

. permit is not required, and EPA has no jurisdiction over

the activity under the CWA at all. See, e.g., Association to

Protect Hammersley, Eld, and Totten Inlets v. Taylor

Resources, Inc., 299 F.3d 1007, 1015-18 (9th Cir. 2002).’

For this reason, when EPA consults with FWS under

ESA Section 7(a)(2) in connection with issuing an NPDES

permit, the consultation must be limited to effects on the

water body receiving the discharge and the waters

downstream thereof (i.e., the “action area”). See 50 C.F.R.

§ 402.02 (defining “action area”); Riverside Irr. Dist., 758

F.2d at 512 (the relevant “action area” related to a CWA

permit for the construction of a dam included downstream

aquatic habitat). Real estate development and other

private land uses are not an “effect” of the action because

private land uses are not caused by the issuance of a

* The majority erroneously noted that EPA’s general

governing storm water discharges resulting from construction activities

(which is the permit commonly used by developers) regulates

construction itself, rather than the discharge. See App. 49 n.22 (“

activities without such a permit.”). No authority was cited for

statement, and it cannot be reconciled with the CWA’'s basic framework,

which: (1) recognizes the paramount right of states to regulate land

uses (33 U.S.C. § 1251(b)); and (2) prohibits discharges of pollu

into navigable waters unless they are authorized under one of seve

CWA programs (33 U.S.C. § 1311(a)). Nothing in the CWA suggests that

EPA is authorized to regulate real estate development under the guise

of permitting discharges of pollutants into navigable waters.

29

NPDES permit. Thus, under Public Citizen’s causation

analysis, EPA is not required by Section 7(a)(2) to ensure

that private land uses do not jeopardize listed species or

adversely modify their critical habitat. See 16 U.S.C.

§ 1536(a)(2); 50 C.F.R. §§ 402.01, 402.03.

In short, throughout the program approval process, EPA

maintained it lacked authority under the CWA to regulate

non-water-quality-related impacts resulting from private

land use activities. E.g., App. 564-65 (inter-agency elevation

document), 114 (FWS’s biological opinion). EPA also

consistently maintained that approval of Arizona’s

program under CWA Section 402(b) would merely

constitute a shift in administrative responsibility for

issuing and enforcing permits under the NPDES program.

App. 114, 564, 615. The majority mischaracterized EPA’s

position, ignored EPA’s limited authority under the CWA,

and treated the agency as being legally responsible for

every future land-use activity that might adversely affect

a listed species or its critical habitat. Such holding cannot

be squared with this Court’s holding in Public Citizen, and

it will force agencies to analyze the environmental impacts

of activities over which they have no control.

6

CONCLUSION

The majority opinion redefines and significantly

expands the obligations of federal agencies under Section

7(a)(2) of the ESA, a key provision of that law which

applies to all federal agencies and federal programs. The

opinion also creates conflicts with other federal circuits

and with prior Ninth Circuit opinions, none of which has

30

interpreted Section 7(a)(2) as granting additional

authority to federal agencies..Finally, the opinion ignores

and renders ineffective the FWS’s long-standing

regulatory interpretation regarding the applicability of

Section 7(a)(2), compelling agencies to protect listed

species even when their authorizing statutes preclude

them from doing so. Therefore, this case involves matters

of national importance. For these reasons, Home Builders

respectfully request that this petition be granted.

DATED: September 6, 2006.

Respectfully submitted,

RUSSELL S. FRYE NORMAN D. JAMES

FRYE LAw PLLC (Counsel of Record)

3050 K Street NW, Suite 400 FENNEMORE CRAIG, PC.

Washington, D.C. 20007-5108 3003 North Central Avenue,

(202) 342-8878 Suite 2600

Phoenix, AZ 85012-2913

(602) 916-5346

DUANE J. DESIDERIO

THOMAS J. WARD

NATIONAL ASSOCIATION

OF HOME BUILDERS

1201 15th Street, NW

Washington, D.C. 20005-2800

(202) 266-8200

Counsel for Petitioners