Appendix — National Ass'n v. Defenders of Wildlife
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(2) TILED US.
No. _ 06-340 SEP 6 - 2006
OFFICE
In The OF THE CLERK
Supreme Court of the United States
°
NATIONAL ASSOCIATION OF HOME BUILDERS, et ai.,
Petitioners,
vs.
DEFENDERS OF WILDLIFE, et ai.,
Respondents.
+
On Petition For Writ Of Certiorari
To The United States Court Of Appeals
For The Ninth Circuit
e
APPENDIX TO PETITION
FOR WRIT OF CERTIORARI
VOLUME I, PAGES 1 TO 317
e
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
— —
APPENDIX
TABLE OF CONTENTS
App.
VOLUME I
OPINION SOUGHT TO BE REVIEWED
Defenders of Wildlife v. U.S. Environmental Protection
Agency, 420 F.3d 946 (9th Cir. August 22, 2005)........ 1-68
ORDER ON REHEARING
Defenders of Wildlife v. U.S. Environmental Protection
Agency, 450 F.3d 394 (9th Cir. June 8, 2006)...... 134-158
AGENCY DECISIONS REVIEWED ON APPEAL
Approval of Application by Arizona to Administer
the National Pollutant Discharge Elimination
System (NPDES) Program; Arizona, 67 Fed. Reg.
79,629 (December 30, 2002) ...........ccrcccccsssccresscervecees 69-76
United States Department of the Interior, U.S. Fish
and Wildlife Service, Arizona Ecological Services
Field Office Biological Opinion (December 3,
STIED cisicnchtnnemnniubinhsaiieninnnstdeniansenvnnindiiin abatuntiione 77-124
Order, United States District Court, District of
SE GI Bien HIN crtiettctcncncticcniesetnscntnnnencocngnts 125-133
STATUTES i
Se II) TIED wsnsicsissticinensiteniitesneitandpannesiniinntapininae 182-183
ly SI BE ccrnicrinscninidtaninenenennistineniimmeniic 184-202
Be ee MUNN SII sineesiinaneicndtmodsicniannedeninianinnbenitii 159-162
Be NE SETI trrecsiciussenonsinntiundninaiiimenndtenipiieiinn 162
ee is SINNED EB vccncnndinensetiscerisenaneiamincanennein 163-181
il
APPENDIX
TABLE OF CONTENTS - Continued
App.
REGULATIONS
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Te ee | , ae 206-207
4B CFR. Bectiem BBBBB.....000.cccccccssccesosesesecsccssooceeses 207-210
eee MUD I ib iidcessccstocidicitsntienssicisecioshoccciictiditabonietiiin 210
FF re ID Te thicicincisnctrcseninscnsdenincestioncnnies 211-215
re I FE a docecnecccncecesinticescncscnesecscesones 215-221
a I Be cscs ceccscenccevecscscenssnvcescenccsoies 221-223
ees CINE SII vadrcceccssccnncnniocsninnspiivicoateietonns 223-225
ey I isc scececssnencstniincesseameentiowmnesos 225-229
ee a IE ive cnccinicissiniecinstnhaguteinccnetiiapesicsinubisesiietiiientaias 230
ener ees CIN IE Bb rsiccencassacccnevecvatennsistencdenssenes 230-235
er re HI I cd scisrinconiinssnapritvndinttionmsonacheietii 235-243
ee HID GID i hiiccinnctccninsccesersuonsenmnnsenends 243-244
FEDERAL REGISTER
Memorandum of Agreement Between the Environ-
mental 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.
11,208 (Pobruary 22, F001) ........000cccccsssccsscosecseseseses 245-317
ill
APPENDIX
TABLE OF CONTENTS - Continued
App.
VOLUME II
Interagency Cooperation - Endangered Species Act
of 1973, as Amended; Final Rule, 51 Fed. Reg.
Be GEREN Ge, TIPO ceserccicdntenscnicrnssstenienssenenescnees 318-480
Application to Administer the National Pollutant
Discharge Elimination System (NPDES) Pro-
gram; Arizona, 67 Fed. Reg. 49,916 (August 1,
SEE iiniedssttrenniibatapbiahiieinenes seseeneessonsenenssensnnensansneceeess 543-561
LEGISLATIVE HISTORY
Endangered Species Act of 1973, Pub. L. No. 93-205, -
Ne GE iicrencisecnendonednsicnmisintsitesancedvnel 481-483
H.R. Conf. Rep. No. 95-1804 (1978) ............cccceeeeeeees 484-487
E.R. Rep. No. 96-1625 (1978)..............cccccsorrrsssssorsese 488-497
Bs SN ens PPE AU arr tctinschicciccncvasenencossscsccncteceess 498-507
H.R. Conf. Rep. No. 96-697 (1979) .................020:e00008 508-517
H.R. Rep. No. 97-567 (1982)...............sssessscsssssseesssees 518-528
Bs Bh eh PR CP a cerccccccsccccneseteseesessdnainenccenes 529-542
MISCELLANEOUS PORTIONS OF RECORD
Biological Evaluation for Endangered Species Act
Consultation on USEPA’s Proposed Approval
of the State of Arizona’s NPDES Program and
Transmittal Letter (June 21, 2002)............00..00.... 583-623
U.S. EPA and U.S. Fish and Wildlife Service/DOI
Interagency Elevation Document (October 4,
STTTIET saleestiiciliccceeiihdaasicaseieaia ha healt hati iniiihalata teins eaaitinatia 562-582
App. 1
420 F.3d 946
United States Court of Appeals, Ninth Circuit
DEFENDERS OF WILDLIFE; CENTER FOR
BIOLOGICAL DIVERSITY; CRAIG MILLER, Petitioners,
V.
UNITED STATES ENVIRONMENTAL
PROTECTION AGENCY, Respondent,
NATIONAL ASSOCIATION OF HOME BUILDERS;
STATE OF ARIZONA; ARIZONA CHAMBER
OF COMMERCE, Intervenors.
DEFENDERS OF WILDLIFE;
CENTER FOR BIOLOGICAL DIVERSITY,
Plaintiffs-Petitioners,
V.
ROBERT B. FLOWERS, Chief of Engineers and
Commander, U.S. Army Corps of Engineers.,
Defendant-Respondent,
CHRISTINE TODD WHITMAN,
Administrator U.S. Environmental Protection Agency,
Defendant-Respondent,
GALE NORTON; STEVEN WILLIAMS,
Defendants-Respondents,
CONTINENTAL RESERVE II, LLC,
Defendant-Intervenor/Intervenor,
HB.LAND DEVELOPMENT COMPANY;
STEPHEN A. OWENS, State of Arizona, ex-rel,
Director Arizona Department of Environmental Quality;
GROSVENOR HOLDINGS; NATIONAL ASSOCIATION
OF HOME BUILDERS; HOME BUILDERS ASSOCIATION
OF CENTRAL ARIZONA; SOUTHERN ARIZONA
HOME BUILDERS ASSOCIATION; SAGUARO RANCH
INVESTMENTS LLC; SAGUARO RANCH
DEVELOPMENT CORPORATION,
Defendant-Intervenors/Intervenors.
App. 2
Nos. 0371439, 03-72894.
Argued and Submitted Nov. 1, 2004.
Filed Aug. 22, 2005.
Michael P. Senatore (argued), Michael P. Senatore,
Defenders of Wildlife, Washington, D.C., Eric R. Glitzen-
stein, Meyer & Glitzenstein, Washington, D.C., Vera S.
Kornylak, Arizona Center for Law in the Public Interest,
Tucson, AZ (on the brief), for the petitioners.
Robert L. Gulley (argued), Thomas L. Sansonetti,
Robert L. Gulley, John M. Lipshultz, Andrew Mergen, U.S.
Department of Justice, Washington, D.C. (on the brief), for
respondents Environmental Protection Agency and U.S.
Fish and Wildlife Service.
James T. Skardon, Office of the Arizona Attorney
General, Phoenix, AZ, for intervenor State of Arizona.
Russell S. Frye, Collier Shannon Scott, P.L.L.C.,
Washington, D.C., for intervenors Arizona Chamber of
Commerce, et al.
Norman D. James, Esq. (argued), Norman D. James,
Thomas R. Wilmoth, Fennemore Craig, Phoenix, AZ, for
intervenors National Association of Home Builders, et al.
On Petition for Review of an Order of the Environ-
mental Protection Agency. EPA No. 67-Reg. 79629, No. CV-
02-01195-CK.J.
Before: REINHARDT, THOMPSON, and BERZON,
Circuit Judges.
BERZON, Circuit Judge:
Under federal law, a state may take over the Clean
Water Act pollution permitting program in its state from
the federal Environmental Protection Agency (EPA) if it
applies to do so and meets the applicable standards. This
App. 3
case concerns Arizona’s application to run the Clean Water
Act pollution permitting program in Arizona. When
deciding whether to transfer permitting authority, the
Fish and Wildlife Service (FWS) issued, and the EPA
relied on, a Biological Opinion premised on the proposition
that the EPA lacked the authority to take into account the
impact of that decision on endangered species and their
habitat.
The plaintiffs in this case challenge the EPA’s transfer
decision, particularly its reliance on the Biological Opin-
ion’s proposition regarding the EPA’s limited authority.
This case thus largely boils down to consideration of one
fundamental issue: Does the Endangered Species Act
authorize — indeed, require — the EPA to consider the
impact on endangered and threatened species and their
habitat when it decides whether to transfer water pollu-
tion permitting authority to state governments? For the
reasons explained below, we hold that the EPA did have
the authority to consider jeopardy to listed species in
making the transfer decision, and erred in determining
otherwise. For that reason among others, the EPA's
decision was arbitrary and capricious. Accordingly, we
grant the petition and remand to the EPA.
I. Background
A. The National Pollution Discharge Elimination
System (NPDES)
The Clean Water Act (“the Act”), passed in 1972,
established the National Pollution Discharge Elimination
(“pollution permitting”) System. That System gave the
EPA authority to issue permits for the discharge of pollut-
ants into navigable waters. See 33 U.S.C. § 1342(a). The
Act further provides that a state may apply to the EPA to
administer the federal pollution permitting program
App. 4
regarding waters within its borders. § 1342(b). The EPA
Administrator must determine whether the state has met
nine specified criteria and “shall approve” state applica-
tions that meet those criteria. Id.
The state transfer provisions of § 1342(b) have proven
popular. Arizona was the forty-fifth state to obtain pollu-
tion permitting authority from the EPA. See 67 Fed.Reg.
79,629 (Dec. 30, 2002) (announcing approval of Arizona’s
pollution permitting authority); 65 Fed.Reg. 50,528,
50,529 (Aug. 18, 2000) (listing then-approved states).
Once the EPA transfers a permitting program to a
state government, the EPA Administrator maintains an
oversight role to assure that the state follows Clean Water
Act standards. 33 U.S.C. § 1342(c)(2). If the Administrator
determines that the state is not following those standards,
the Administrator must demand corrective action. If the
state does not take such action, the Administrator must
withdraw approval of the state program. § 1342(c)(3).
B. The Endangered Species Act
In 1973, one year after the enactment of the Clean
Water Act, Congress passed the Endangered Species Act,
“the most comprehensive legislation for the preservation of
endangered species ever enacted by any nation.” Tenn.
Valley Auth. v. Hill, 437 U.S. 153, 180, 98 S.Ct. 2279, 57
L.Ed.2d 117 (1978). The present case focuses on section 7
of the Endangered Species Act, 16 U.S.C. § 1536.
Section 7(aX2) imposes substantive and procedural
requirements on “each Federal agency” with regard to
“any action authorized, funded, or carried out by such
agency.” 16 U.S.C. § 1536(a)(2). Each agency must “insure”
that such actions are “not likely to jeopardize the contin-
ued existence of any endangered species or threatened
App. 5
species or result in the destruction or adverse modification
of [critical] habitat of such species.” Jd. Agencies must use
the “best scientific and commercial data available” to
make such decisions, and must do so “in consultation with
and with the assistance of the Secretary [of the Interior]}.”
Id.
Endangered Species Act regulations’ describe the
consultation and action requirements imposed on agen-
cies. Section 7’s requirements apply “to all actions in
which there is discretionary Federal involvement or
control.” 50 C.F.R. § 402.03. An agency must determine if a
proposed action “may affect” either endangered or threat-
ened species (denominated “listed species,” § 402.02) or
those species’ critical habitat, and, if so, must seek formal
consultation with the FWS, or, for marine species, the
National Marine Fisheries Service. § 402.14(a). During
such consultations, the FWS issues a Biological Opinion
analyzing whether the action is likely to jeopardize any
listed species or its habitat. § 402.14(h). The federal
agency then makes a final decision regarding whether and
how to pursue the proposed action. § 402.15(a).
A Biological Opinion must include a “summary of the
information on which the opinion is based,” a “detailed
discussion of the effects of the action on listed species or
critical habitat,” and “[t]he Service’s opinion on whether
the action is likely to jeopardize the continued existence of
a listed species or result in the destruction or adverse
modification of critical habitat.” § 402.14(h).
' The relevant Endangered Species Act regulations were jointly
issued by the FWS, Department of the Interior, National Marine
Fisheries Service, National Oceanic and Atmospheric Administration,
and Department of Commerce. See 50 C.F-.R. ch. 4.
App. 6
The “effects of the action” include “direct and indirect
effects .. . together with the effects of other activities that
are interrelated or interdependent with that action, that
will be added to the environmental baseline[, which]
includes the past and present impacts of all Federal, State,
or private actions and other human activities in the action
area.” § 402.02. “Indirect effects are those that are caused
by the proposed action and are later in time, but still are
reasonably certain to occur.” Jd.
By its terms, section 7(a)(2) applies only to “federal
agenclies],” not to state governmental bodies. Accordingly,
the EPA’s pollution permitting decisions are subject to
section 7(a)(2), but state pollution permitting decisions are
not.
Noting that the “EPA now consults with the [FWS and
National :4Jarine Fisheries Service] under section 7 of the
[Endangered Species Act] on ... approval of State Na-
tional Pollutant Discharge Elimination (NPDES) permit-
ting programs” but recognizing that after transfer, section
7 will not apply to the state’s permitting decisions, the
EPA signed a Memorandum of Agreement with the FWS
governing the two agencies’ involvement with transferred
pollution permitting programs. See 66 Fed.Reg. 11,202,
11,202, 11,207 (Feb. 22, 2001). Asserting that the “EPA’s
oversight includes consideration of the impact of permitted
discharges on waters and species that depend on those
waters,” id. at 11,215, the Memorandum lists several
procedures that the EPA and FWS will establish to ensure
that they communicate federal endangered species concerns
App. 7
to state water pollution permitting agencies.’ Jd. at 11,216.
The Memorandum is not, however, binding on states. Jd.
at 11,206 (“[T]he MOA ... does not impose any require-
ments on States.”). Rather, the EPA will “encourage the
State... to facilitate the involvement of permittees” in the
described processes. Jd. at 11,216 (emphasis added).
C. The EPA’s approval of Arizona’s pollution per-
mitting transfer application
The State of Arizona (Arizona) applied on January 14,
2002 for transfer of pollution permitting authority regard-
ing Arizona waterways (except those on Indian land). 67
Fed.Reg. 49,916, 49,917 (Aug. 1, 2002). Under that pro-
posal, the Arizona Department of Environmental Quality
(ADEQ) was to be responsible for issuing water pollution
permits. The EPA’s regional office in San Francisco deter-
mined that the transfer could affect listed species in
Arizona and so initiated formal section 7 consultation with
FWS. Announcing this decision, the EPA stated that
“[slection 7(a)(2) of the [Endangered Species Act] places a
statutory requirement (separate and distinct from [33
U.S.C. § 1342(b)]) for EPA to ‘insure that any action
authorized, funded or carried out [by EPA]’” is unlikely to
jeopardize listed species or adversely modify their critical
habitat, and that the EPA is therefore “required” to consult
regarding the transfer decision. 67 Fed.Reg. at 49,917
(final alteration in original); see also id. at 49,919."
* We discuss these procedures in more detail in Part III(D)\(2Xa),
infra.
* The EPA has followed the section 7 consultation process before
transferring permitting authority to states for more than a decade
Every pollution permitting transfer decision since 1993 has involved
(Continued on following page)
App. 8
During the course of the consultation, FWS field office
staff in Arizona expressed serious reservations about the
proposed transfer. FWS staff noted that section 7 consulta-
tions regarding past pollution permits in Arizona had led
to mitigating measures to protect species’ critical habitat,
and feared that, without such mandatory consultation,
Arizona would issue permits without mitigating measures.
As a result, there could be harm to certain listed species
and habitat, particularly the southwestern willow fly-
catcher, Pima pineapple cactus, Huachuca water umbel,
cactus ferruginous pygmy owl,‘ “and perhaps other spe-
cies.” The staff concluded “that the transfer of this pro-
gram from EPA to the State causes the loss of protections
some form of EPA consultation with FWS regarding endangered
species. See 66 Fed.Reg. 12,791 (Feb. 28, 2001) (Maine); 63 Fed.Reg.
51,164 (Sept. 24, 1998) (Texas); 61 Fed.Reg. 65,047 (Dec. 10, 1996)
(Oklahoma); 61 Fed.Reg. 47,932 (Sept. 11, 1996) (Louisiana); 60
Fed.Reg. 25,718 (May 12, 1995) (Florida); 59 Fed.Reg. 1535, 1543 (Jan.
11, 1994) (announcing 1993 approval of South Dakota's application
after FWS consultation). Earlier pollution permitting transfer decisions
do not appear to have been preceded by Endangered Species Act
consultation. See, e.g., 52 Fed.Reg. 27,578 (July 22, 1987) (Utah); 51
Fed.Reg. 44,518 (Dec. 10, 1986) (Arkansas); 49 Fed.Reg. 39,063 (Oct. 3,
1984) (Rhode Island); 47 Fed.Reg. 17,331 (Apr. 22, 1982) (New Jersey); ~
44 Fed.Reg. 61,452 (Oct. 25, 1979) (Alabama); 39 Fed.Reg. 26,061 (July
16, 1974) (announcing approval of applications from fifteen states in the
early years of Clean Water Act operation).
* We note that FWS has proposed removing the pygmy ow! from
the list of threatened and endangered species, although the owl
currently remains listed. See 70 Fed.Reg. 44,547 (Aug. 3, 2005). Even if
the FWS eventually de-lists the pygmy owl, that would not affect our
analysis of this case for two reasons. First, we focus on the agency's
action based on the record before it, which includes the pygmy owl’s
listed status. Second, the EPA’s action can affect multiple listed species
in Arizona, not only the pygmy owl. While we illustrate our analysis
with examples of individual listed species, including the pygmy owl, our
analysis applies with equal force even if the FWS de-lists any such
species.
App. 9
to species resulting from the section 7 process, and the
impact of this loss must be taken into account in the
effects analysis in the biological opinion.” In response, EPA
staff opined that the EPA lacked the legal authority to
base its transfer decision on these concerns, because the
agency does “not have the legal authority to reguiate the
non-water-quality-related impacts associated with State
NPDES-permitted projects that are of concern to FWS,
including the authority to object to such permits based on
non-water quality related impacts to listed species.”
To resolve this disagreement, staff of the two agencies
developed an “Interagency Elevation Document,” summa-
rizing their respective opinions. Pursuant to the Memo-
randum of Agreement, this document transferred
authority over the Biological Opinion to the Director of
FWS, the Director of the National Marine Fisheries
Service, and the Deputy Assistant Administrator of Water
at the EPA. See 66 Fed.Reg. 11,202, 11,209 (Feb. 22, 2001).
After the consultation at the national level between
the EPA and FWS, the Field Supervisor of the Arizona
Ecological Services Field Office of the FWS issued a
Biological Opinion recommending approval of the transfer
of permitting authority to Arizona. Noting the loss of
section 7 consultation, the Biological Opinion recognized
that, after the transfer, no federal agency would have the
legal authority to consult with developers concerning the
potential impact on listed species of any pollution permits.
Such consultation had lead to measures protecting listed
species, including the Pima pineapple cactus, razorback
sucker, Gila topminnow, southwestern willow flycatcher,
and cactus ferruginous pygmy owl. Although Arizona could
voluntarily consult with FWS regarding pollution permits,
App. 10
neither the EPA nor FWS could require Arizona to act on
behalf of listed species.
After recognizing this impact of the transfer of permit-
ting authority, the Biological Opinion concluded that the
loss of any conservation benefit is not caused by EPA’s
decision to approve the State of Arizona’s program.
Rather, the absence of the section 7 process that ex-
ists with respect to Federal [Clean Water Act] permits
reflects Congress’ decision to grant States the right to
administer these programs under state law provided
the State’s program meets the requirements of 402(b)
of the Clean Water Act.
The Biological Opinion goes on to conclude:
While reviewing this above referenced approval, the
FWS has spent considerable time analyzing direct
and indirect effects. In the course of this analysis, our
field office staff biologists have expressed concerns
that the approval will result in loss of section 7 con-
sultation-related conservation benefits. We have
stated our belief that the loss of section 7 conserva-
tion benefits is an indirect effect of the authorization.
Furthermore, we have stated that this loss of conser-
vation benefits will appreciably reduce the conserva-
tion status of the cactus ferruginous pygmyowl and
the Pima pineapple cactus. Notwithstanding this, our
final opinion is that the loss of section 7-related con-
servation benefits, which would otherwise be provided
by section 7 consultations, is not an indirect effect of
the authorization action.
In changing from a Federal permitting program to a
State permitting program, the permit-related section
7 processes for consultation will no longer apply. Es-
sentially, there will be no substantive change in the
permit program, but there will be a reduction in the
App. 11
number of mechanisms available to both of our agen-
cies to protect federally-listed species and critical
habitat in Arizona. We believe that the assumption of
the program by the State of Arizona will not cause
development, and concur that EPA’s (Clean Water
Act]-mandated approval of the program has only an
attenuated causal link to the reduction in Federal
[Endangered Species Act] conservation responsibili-
ties.
As an alternative to this lack-of-causation analysis,
the Biological Opinion stated that other federal and state
laws would sufficiently protect endangered species, so that
transfer of permitting authority would not likely jeopard-
ize such species or their critical habitat. These other laws
included section 9 of the Endangered Species Act, 16
U.S.C. § 1538, which outlaws “taking” an endangered
species. The Biological Opinion’s reliance on this statute
contrasted with earlier FWS staff concerns that “section 9
does not generally apply to plant species (such as the Pima
pineapple cactus) and it is not effective for extremely rare,
but wide-ranging species (such as the cactus ferruginous
pygmy-owl). FWS therefore does not believe that section 9
enforcement offsets the effects of approving this program.”
Independently of the Biological Opinion, an official at
the Arizona Game and Fish Department* indicated that
* The just-quoted passage mentioned two species in passing in the
midst of concluding that any harm to those species was not an indirect
effect of the EPA’s transfer decision. Elsewhere, the Biological Opinion
noted the listed species in Arizona but did not specifically discuss the
effect of the transfer on any of these species.
* The official, Bob Broscheid, whose title at the Arizona Game and
Fish Department is “Project Evaluation Program Supervisor,” wrote to
an official at the EPA’s regional office that would supervise Arizona’s
permitting decisions. He also carbon copied an ADEQ official. Broscheid’s
(Continued on following page)
App. 12
his department had “worked cooperatively with ADEQ”
when reviewing past water pollution permit applications
and “look[ed] forward to continuing this level of coopera-
tion between our agencies.” Noting the EPA-FWS Memo-
randum of Agreement, the official asserted that “[t]his
agreement will serve as a guideline for EPA, FWS, and the
State of Arizona to ensure that NPDES permits will not
negatively impact endangered and threatened species.”
The EPA’s response to the Game and Fish Department
official’s statement was: “EPA appreciates the commenter’s
support. As with all comments submitted, we have consid-
ered these comments in making our final determination on
the application.”
FWS staff had earlier suggested the development of a
formal memorandum of understanding with ADEQ or the
Arizona State Lands Department, but did not mention the
Game and Fish Department. No such memorandum of
understanding was ever signed, and no official from either
ADEQ or the State Lands Department submitted a letter
similar to the Game and Fish Department letter.
The EPA approved the permitting authority transfer
two days after the FWS issued the Biological Opinion, see
67 Fed.Reg. 79,629 (Dec. 30, 2002), noting its belief that the
Biological Opinion “appropriately considered all relevant
information regarding the effects of the approval.” The
Arizona Department of Environmental Quality (ADEQ)
currently operates the program, issuing permits for water
pollution. See ADEQ: Permits, at http://www.azdeq.gov/
letter describes the Game and Fish Department’s understanding of its
role but does not purport to speak for ADEQ.
App. 13
environ/water/permits/index.html (last visited July 5,
2005).
Petitioners, Defenders of Wildlife, the Center for
Biological Diversity, and Craig Miller, a resident of Pima
County, Arizona (collectively, Defenders) challenge the
pollution permitting transfer in two lawsuits, consolidated
before us. In the first, Defenders filed a petition for review
of the EPA’s transfer decision with this court. The petition
alleges that the EPA failed adequately to consider the
transfer’s impact on endangered and threatened species
and their habitat, and, in particular, that the EPA’s reli-
ance on the Biological Opinion violated the Endangered
Species Act and was arbitrary and capricious under the
Administrative Procedure Act. See 5 U.S.C. § 706(2)(A).
Three other sets of parties have since intervened, support-
ing the transfer but taking some issue with the EPA’s
administrative practices and reasoning: the National
Association of Home Builders and several Arizona home
builders’ associations (Home Builders); the Arizona Cham-
ber of Commerce and several other business associations
(Chamber); and Arizona.
Defenders also filed an Endangered Species Act and
Administrative Procedure Act suit in district court in
Arizona alleging, among other claims, that the Biological
Opinion supporting the pollution permitting transfer does
not comply with Endangered Species Act standards. The
district court held that this court has exclusive jurisdiction
over the Biological Opinion challenge pursuant to 33
U.S.C. § 1369(b)(1)(D), and ordered that challenge severed
from other claims in the district court, transferred to this
court, and consolidated with Defenders’ suit challenging
the EPA transfer.
App. 14
II. Jurisdiction & Standing
Before proceeding to the merits, we must satisfy
ourselves that we have subject-matter jurisdiction over
this case and that petitioners have standing to raise their
claims. See B.C. v. Plumas Unified Sch. Dist., 192 F.3d
1260, 1264 (9th Cir. 1999). The Chamber contends this
court lacks jurisdiction to hear Defenders’ challenge to the
Biological Opinion, and the Home Builders maintain that
Defenders do not have standing to bring this action.
Neither argument is convincing.
A. Subject-Matter Jurisdiction
“(A]ny interested person” may seek judicial review of
the EPA Administrator’s pollution permitting or state
transfer decisions in the circuit court in which the person
resides, so long as that circuit is directly affected by the-
Administrator’s action. 33 U.S.C. § 1369(b)(1). Section
1369(b)(1)(D) grants this court subject matter jurisdiction
to review “any determination as to a State permit program
submitted under section 1342(b).” The Chamber argues
that § 1369(b) authorizes review only of the EPA Adminis-
trator’s transfer decision, not of a Biological Opinion
completed by the FWS that informs that decision.
We disagree. The Supreme Court has noted tha’
biological opinions typically have a “virtually determna-
tive effect” on the ultimate agency action. Bennett v Spear,
520 U.S. 154, 170, 117 S.Ct. 1154, 137 L.Ed.2d 251 (1997);
see also id. at 169, 117 S.Ct. 1154 (noting the’ a Biological
Opinion “in reality ... has a powerful cercive effect on
the action agency” with the potential t» “alter[{] the legal
regime to which the action agency isSsubject”) It would be
anomalous to review the ultimat« agency “determination”
App. 15
while ignoring the reasoning contained in a biological
opinion “virtually determinative” of that action.
The actual sequence of events in this instance in [sic]
consistent with the Supreme Court’s observations in
Bennett regarding the impact of a biological opinion on an
agency’s final decision. The EPA Administrator’s decision-
making process before approving Arizona’s permitting
transfer application included section 7 consultation with
FWE and the consideration of the Biological Opinion that
resulted from it: The initial dispute between the EPA and
FWS regarding the Biological Opinion was “elevated” to
the national level, and the final Biological Opinion incor-
porated the results of consultation between the EPA and
FWS. The final EPA decision, in turn, followed the issu-
ance of the Biological Opinion by two days. In its unpub-
lished Response to Comments regarding Arizona’s
application to assume permitting authority, released the
same day as its final decision, the EPA noted that it had
“considered the [biological] opinion of the FWS in proceed-
ing with its approval action.” The EPA went on to approve
the Biological Opinion’s conclusions, stating its determina-
tion that “FWS appropriately considered all relevant
information regarding the effects of the approval action on
listed species and designated and proposed critical habitat
in arriving at its conclusion, including a broad range of
direct and indirect effects of EPA’s approval action,” and
declaring that “no information has been submitted which
would indicate that the conclusions in FWS’s biological
opinion are incorrect.”
The EPA, as part of the statutorily mandated consul-
tation process, approved of and relied upon the Biological
Opinion when considering Arizona’s transfer application.
App. 16
Evaluating the Opinion’s evidentiary and analytic basis is
thus integral to reviewing the EPA’s final decision.’
We conclude that we have jurisdiction to consider the
adequacy of both the section 7 consultation and the Bio-
logical Opinion that resulted from it while reviewing the
EPA’s final decision.
B. Standing
Petitioners who “allege [1] personal injury [2] fairly
traceable to the defendant’s allegedly unlawful conduct
and [3] likely to be redressed by the requested relief”
establish Article III standing. Allen v. Wright, 468 U.S.
737, 751, 104 S.Ct. 3315, 82 L.Ed.2d 556 (1984). As De-
fenders’ members meet this three-part test, Defenders has
organizational standing to represent their interests.
Several Defenders’ members reside in Arizona and
photograph and observe in Arizona various named, listed
species — such as the cactus ferruginous pygmy owl,
Huachuca water umbel, and the other species noted in
Part I.C, supra — and hike and camp in these species’
various habitats. These members do so regularly and plan
to continue doing so in the future, because, among other
reasons, these activities bring them recreational, aes-
thetic, and spiritual fulfillment. The members’ activities
occur on and near land — such as the upper San Pedro
River region, the Sonoran Desert near Saguaro National
Park and Tortolita Mountains Park, and the Verde River
region — where significant commercial and residential
‘ The EPA does not argue otherwise. Indeed, the EPA’s argument
in this court largely replicates the Biological Opinion’s reasoning,
confirming that the reasoning was a key factor in its decision.
App. 17
development is taking place, development that depends on
water pollution permits. The members assert, consistently
with the Biological Opinion, that section 7 consultation
has in the past led to miugation measures by real estate
developers in these areas and has thereby protected listed
species and their habitat. They further assert that the loss
of section 7 consultation would mean that developers of
future projects would not engage in such mitigation
measures and that listed species, and the members’
interest in their activities involving them, would thereby
be harmed.
The members thus “observe[] or work[] with ...
particular animal[s and plants| threatened by a federal
decision,” Lujan v. Defenders of Wildlife, 504 U.S. 555, 566,
112 S.Ct. 2130, 119 L.Ed.2d 351 (1992); allege a harm to
those animals and their habitat throughout Arizona; and
assert “that [they have] an aesthetic or recreational
interest in a particular place, or animal, or plant species
... impaired by a defendant’s conduct.” Ecological Rights
Found. v. Pac. Lumber Co., 230 F.3d 1141, 1147 (9th Cir.
2000) (citing Friends of the Earth, Inc. v. Laidlaw Enviti.
Servs., Inc., 528 U.S. 167, 182-83, 120 S.Ct. 693, 145
L.Ed.2d 610 (2000)); see also Kootenai Tribe of Idaho uv.
Veneman, 313 F.3d 1094, 1109-10 (9th Cir. 2002) (holding
that regular “recreation and nature appreciation” on land
covered by challenged agency action established injury-in-
fact). Those allegations meet the criteria for demonstrat-
ing an adequate injury in an environmental case.
The Home Builders’ argue that alleging harm
throughout the state of Arizona cannot establish standing,
because the state encompasses too large an area to permit
a sufficiently specific injury-in-fact allegation. The De-
fenders’ members who filed declarations, however, mention
App. 18
specific subareas within the state where they engage in
activities related to particular listed species and where
development is occurring. Our cases require no greater
precision. Res. Ltd., Inc. v. Robertson, 35 F.3d 1300, 1303
(9th Cir. 1993); see also Kootenai Tribe, 313 F.3d at 1110
(finding standing where party alleged harm to 58.5 million
acres of land). Moreover, in light of the statewide impact of
the EPA’s transfer decision, alleging an injury-in-fact
covering large areas within the state simply reflects the
relatively broad nature of the potential harm.
The alleged injuries are fairly traceable to the EPA’s
pollution permitting transfer decision. As alleged by
Defenders, that decision will remove water pollution
permitting decisions from the significant protections
provided by section 7.
Finally, the alleged injuries would be redressable by a
court order vacating or mitigating the EPA’s transfer
decision. The protections accorded by the Endangered
Species Act would then come back into operation.
Additionally, section 7(a)(2) of the Endangered Species
Act contains both substantive and procedural require-
ments, and the plaintiffs in this case have alleged viola-
tions of both requirements. They thus have alleged, in
addition to substantive noncompliance, “procedural”
harms, as described in Lujan and subsequent cases — here,
lack of adequate consultation between the EPA and the
FWS, including reliance on a legally improper Biological
Opinion.
Reliance on procedural harms alters a plaintiff’s
burden on the last two prongs of the Article III standing
test. See Lujan, 504 U.S. at 572 n. 7, 112 S.Ct. 2130. To
establish standing by alleging procedural harm, the
App. 19
members must show only that they have a procedural
right that, if exercised, could protect their concrete inter-
ests and that those interests fall within the zone of inter-
ests protected by the statute at issue. See Pub. Citizen v.
Dep't of Transp., 316 F.3d 1002, 1015 (9th Cir. 2003), rev’d
on other grounds, 541 U.S. 752, 124 S.Ct. 2204, 159
L.Ed.2d 60 (2004); Tyler v. Cuomo, 236 F.3d 1124, 1136
(9th Cir. 2000); Churchill County v. Babbitt, 150 F.3d 1072,
1077 (9th Cir. 1998), amended by 158 F.3d 491 (9th Cir.
1998).
The members have met these procedural harm re-
quirements. They have, first, established a reasonable
probability that the challenged action will threaten their
concrete interests. See Citizens for Better Forestry v. U.S.
Dept of Agric., 341 F.3d 961, 969-70 (9th Cir. 2003);
Douglas County v. Babbitt, 48 F.3d 1495, 1501 n. 6 (9th
Cir. 1995). We held in Citizens for Better Forestry that
violating the procedural requirements for forestry deci-
sions meets that bar, as the violation lessens the likelihood
that environmental considerations will be attended to in
making those decisions. Jd. at 972-75. Similarly, the use of
improper section 7 consultation by reason of an inade-
_quate biological opinion lessens the likelihood that the
impact of the proposed action on listed species and their
habitats will be recognized and accounted for in making
the transfer decision. See id. at 972.
An association has standing to sue on behalf of its
members who have individual standing if “the interests at
stake are germane to the organization’s purpose, and
neither the claim asserted nor the relief requested requires
the participation of individual members in the lawsuit.”
Laidlaw, 528 U.S. at 181, 120 S.Ct. 693. The interests at
stake — the protection of endangered species — plainly
App. 20
relate to Defenders’ mission. Nor does this lawsuit require
the active involvement of individual members, as the relief
sought will run equally to all of them.
Accordingly, we hold that Defenders has standing to
challenge the EPA’s pollution permitting transfer decision.
See Defenders of Wildlife v. Flowers, 414 F.3d 1066 (9th
Cir. 2005) (holding that Defenders has standing to chal-
lenge particular construction permits in Arizona because
of “their members’ interest” in species that might live
where construction would occur).
enn
III. The Merits
A. Standard of Review
Under the Endangered Species Act, each agency has
an obligation to “insure” that any action it takes is “not
likely to jeopardize” listed species or their critical habitats.
See § 1536(a)(2);° 50 C.F.R. § 402.15(a) (requiring each
* The relevant portions of section 7(a) of the Endangered Species
Act provide:
(1) The Secretary shall review other programs administered by
him and utilize such programs in furtherance of the purposes of
this chapter. All other Federal agencies shall, in consultation with —
and with the assistance of the Secretary, utilize their authorities
in furtherance of the purposes of this chapter by carrying out pro-
grams for the conservation of endangered species and threatened
species listed pursuant to section 1533 of this title.
(2) Each Federal agency shall, in consultation with and with the
assistance of the Secretary, insure that any action authorized,
funded or carried out by such agency (hereinafter in this section
referred to as an “agency action”) is not likely to jeopardize the
continued existence of any endangered species or threatened spe-
cies or result in the destruction or adverse modification of habitat
of such species which is determined by the Secretary . . . to be criti-
cal, unless such agency has been granted an exemption for such
(Continued on following page)
App. 21
agency to determine how to proceed “in light of its section
7 obligations and the Service’s biological opinion”). De-
fenders allege that the EPA failed to satisfy this obligation
and thus acted arbitrarily and capriciously, in violation of
the Administrative Procedure Act.’ See 5 U.S.C. § 706(2)(A);
Am. Mining Cong. v. EPA, 965 F.2d 759, 763 (9th Cir. 1992)
(applying § 706(2)(A) arbitrary and capricious review to
§ 1369(b) petition).
An agency decision will survive arbitrary and capri-
cious review if it is
rational, based on consideration of the relevant fac-
tors and within the scope of the authority delegated to
the agency by the statute ... . Normally, an agency
rule would be arbitrary and capricious if the agency
has relied on factors which Congress had not intended
it to consider, entirely failed to consider an important
aspect of the problem, offered an explanation for its
decision that runs counter to the evidence before the
agency, or is so implausible that it could not be as-
cribed to a difference in view or the product of agency
expertise.
Motor Vehicle Mfrs. Ass’n v. State Farm Mutual Auto. Ins.
Co., 463 U.S. 29, 42-43, 103 S.Ct. 2856, 77 L.Ed.2d 443
(1983) (citations omitted). Agency decisions may not, of
course, be inconsistent with the governing statute. 5
U.S.C. § 706(2)(A) (instructing courts to “set aside” agency
action by the Committee pursuant to subsection (h) of this sec-
tion. In fulfilling the requirements of this paragraph each agency
shall use the best scientific and commercial data available.
16 U.S.C. §§ 1536(aX1)-(2) (emphasis added).
* All parties agree that arbitrary and capricious review applies to
Defenders’ petition for review.
App. 22
action “not in accordance with law”). Also, internally
contradictory agency reasoning renders resulting action
“arbitrary and capricious”; such actions are not “ ‘founded
on a reasoned evaluation of the relevant factors.” Ariz.
Cattle Growers’ Ass’n v. U.S. Fish and Wildlife, 273 F.3d
1229, 1236 (9th Cir. 2001) (quoting Marsh v. Or. Natural
Res. Council, 490 U.S. 360, 378, 109 S.Ct. 1851, 104
L.Ed.2d 377 (1989)); see also Gen. Chem. Corp. v. United
States, 817 F.2d 844, 857 (D.C. Cir. 1987) (finding agency
action “arbitrary and capricious” because it was “inter-
nally inconsistent and inadequately explained”).
Defenders allege, in particular, that the EPA’s reliance
on the Biological Opinion was arbitrary and capricious, as
the Biological Opinion is itself invalid. See Res. Ltd., 35
F.3d at 1304 (holding that an action agency may not
arbitrarily and capriciously rely on a flawed biological
opinion); Pyramid Lake Paiute Tribe v. U.S. Dep't of the
Navy, 898 F.2d 1410, 1415 (9th Cir. 1990) (same). An
agency can satisfy the arbitrary and capricious standard of
review, however, even if it relies on an “admittedly weak”
Biological Opinion, if there is no “information the Service
did not take into account which challenges the [biological]
opinion’s conclusions.” Id. at 1415 (cited in Res. Ltd., 35
F.3d at 1304). The upshot is that we must consider
whether the EPA, through the Biological Opinion or
otherwise, considered all the relevant Endangered Species
Act factors and offered an explanation for its decision that
is both “plausible” and internally coherent.
Applying this test, we first examine the consistency of
the EPA’s reasoning. Next, we examine the Biological
Opinion, including its legal conclusion regarding the
effects of the transfer decision on listed species and their
App. 23
habitat. We then review the other information relied on by
the EPA.
B. Coherent reasoning?
As an initial matter, the EPA’s approval of Arizona’s
transfer application cannot survive arbitrary and capri-
cious review because the EPA relied during the adminis-
trative proceedings on legally contradictory positions
regarding its section 7 obligations. Its reasoning was
therefore “internally inconsistent and inadequately ex-
plained.” Gen. Chem. Corp., 817 F.2d at 857.
The EPA definitively stated several times during the
decisionmaking process, including when announcing its
final decision, that section 7 requires consultation regard-
ing the effect of a permitting transfer on listed species.
The agency so stated when announcing its Memorandum
of Agreement with the FWS, see 66 Fed.Reg. 11,202,
11,206 (Feb. 22, 2001); when announcing that it had
initiated section 7 consultation regarding Arizona’s appli-
cation because, pursuant to 50 C.F.R. § 402.14(a), approv-
ing that application “may affect” listed species, see 67
Fed.Reg. 49,916, 49,917, 49,919 (Aug. 1, 2002); when
responding, in an unpublished document, to comments
regarding Arizona’s application (noting that “[t]here is no
doubt” that the pollution permitting transfer “is an action
mandating formal consultation under section 7”); and
when announcing the approval of Arizona’s application.
See 67 Fed.Reg. 79,629, 79,630 (Dec. 20, 2002) (noting that
section 7(a)(2) generally “requires” consultation and that
the EPA consulted with FWS “under section 7(a)(2)”).
Also, before deciding that consultation was necessary,
the EPA first determined that transferring pollution
> —
App. 24
permitting authority to Arizona “may affect” listed species
and their critical habitat. See 50 C.F.R. § 402.14(a) (requir-
ing consultation when an agency determines its action
“may affect” listed species or critical habitat). The EPA, in
its unpublished biological evaluation, made this determi-
nation in recognition that in the absence of section 7
consultation on each permitting decision, “there will be a
reduction in the number of mechanisms available to the
[FWS] to protect Federally-listed species and designated
critical habitat in Arizona.”
—— —*
Despite the lucidity and consistency of its position on
the consultation point in the administrative proceedings,
in litigation the EPA’s lawyers have taken varying stances
on the same issue. Before the Fifth Circuit, the EPA
“suggest[ed]” that section 7 compelled consultation regard-
ing pollution permitting transfers and, when necessary to
protect species, allowed conditioning such transfers on
formal agreements requiring states to follow section 7
procedures when issuing permits. Am. Forest & Paper
Ass’n v. EPA, 137 F.3d 291, 297 (5th Cir. 1998). The Fifth
Circuit rejected the latter position and did not address the
former. Jd. at 298 & n. 6.
The EPA’s brief in this case states that American
Forest “supports a finding that EPA lacks” authority to
protect endangered species when considering pollution
permitting approvals. The same brief, however, maintains
that we need not decide the question because the agency
did not rely on this position in its decision in this case. At
oral argument, the EPA declined to take a position as to
whether it has an obligation under section 7(a)(2) to consult
with FWS with regard to permitting transfer decisions -—
even though, during the decisionmaking process, the
App. 25
agency unequivocally stated several times that it does
have such an obligation.
The EPA’s post-decision equivocation cannot have any
impact on our consideration of the validity of the transfer
decision. We must review the EPA’s actions based on the
“grounds ... upon which the record discloses that its
action was based.” SEC v. Chenery Corp. (Chenery I), 318
U.S. 80, 87, 63 S.Ct. 454, 87 L.Ed. 626 (1943); see also
Gifford Pinchot Task Force v. U.S. FWS, 378 F.3d 1059,
1072 n. 9 (9th Cir. 2004). The record shows unequivocally
that the EPA based the action under review in this case on
its belief that section 7 required consultation. We must
judge its reasoning taking that position into account.
Doing so, we conclude that the obligation to consult —
which, under the regulations, applies only to federal
agency actions that “may affect” listed species, 50 C.F.R.
§ 402.14(a) — and the reasons given in the Biological
Opinion for concluding that the transfer decision would
not have an indirect effect on endangered species cannot
coexist under section 7(a)(2). The Biological Opinion
reasoned that there could be no such effect, because (1) the
EPA has no authority to disapprove transfer applications
because of an impact on listed species, section 7(a)(2) of
the Endangered Species Act notwithstanding; (2) any
impact on the post-transfer protection of listed species was
the result of Congress’ determination that states have no
consultation or mitigation obligations, not of the transfer
decision; and (3) the potential future impact on listed
species would be caused entirely by new private develop-
ment, and the transfer decision would not cause such
development. By relying on this line of reasoning after
determining that it did have a consultation obligation, the
EPA decided that it had to consult but had no authority to
App. 26
do anything concerning the matter about which it had to
consult. One would not expect that Congress would set up
such a nonsensical regime. Not surprisingly, it did not.
Section 7(a)(2) makes no legal distinction between the
trigger for its requirement that agencies consult with FWS
and the trigger for its requirement that agencies shape
their actions so as not to jeopardize endangered species.”
Instead, in one, integrated provision, the statute provides
that agencies “shall, in consultation with and with the
assistance of the [FWS], insure that any action authorized,
funded, or carried out by such agency ... is not likely to
jeoparcize the continued existence of any endangered
species or threatened species or result in the destruction
or adverse modification of [critical] habitat of such species
.... An agency’s obligation to consult is thus in aid of its
obligation to shape its own actions so as not to jeopardize
listed species, not independent of it. Both the consultation
obligation and the obligation to “insure” against jeopardiz-
ing listed species are triggered by “any action authorized,
funded, or carried out by such agency,” and both apply if
such an “action” is under consideration.
This being the case, the two propositions that underlie
the EPA’s action — that (1) it must, under the Endangered
Species Act, consult concerning transfers of CWA permit-
ting authority, but (2) it is not permitted, as a matter of
" As described above, section 7 consultation is triggered by a
determination that an agency action “may affect” listed species, 50 C.F.R.
§ 402.14(a), and an obligation to act to mitigate harm to such species is
triggered if the FWS determines that the agency action is “likely to
jeopardize” listed species or “adverse[ly] modifly]” their habitat.
§ 402.14(h). If an agency action cannot legally affect listed species — as
the Biological Opinion _concludes regarding the EPA’s approval of
Arizona's application — then the “may affect” standard is not met.
App. 27
law, to take into account the impact on listed species in
making the transfer decision — cannot both be true. Be-
cause the agency’s decisionmaking was based on contra-
dictory views of the same words in the same statutory
provision, the ultimate decision was not the result of
reasoned decisionmaking.
Additionally, the third prong of the Biological Opin-
ion’s reasoning — that it is private development, not the
EPA’s transfer decision, that would cause any impact on
listed species — suffers from an independent lack of plausi-
bility. Events can, of course, have more than one cause.
Events can be caused by several actions in a “but-for”
causal chain. If any one of the necessary actions does not
take place, the ultimate event does not occur. See, e.g.,
Olympic Airways v. Husain, 540 U.S. 644, 653, 124 S.Ct.
1221, 157 L.Ed.2d 1146 (2004) (“[T]here are often multiple
interrelated factual events that combine to cause any
given injury.”). Obviously, without private decisions to
construct new developments, there will be no Clean Water
Act construction permits and no impact from the issuance
of such permits on listed species or their habitats. Just as
obviously, without the transfer of permitting authority
from the federal to the state government, developers could
be required, as they were before the transfer decision, to
mitigate any impact from their development on listed
species. So the impact of private development will be
different depending upon whether the federal or state
government does the permitting. In other words, the two
sets of decisions together -— the private development
decisions and the governmental transfer decision — but not
either one independently, have the potential to affect listed
species and their habitat. The Biological Opinion’s deter-
mination to the contrary disregards the obvious cause
App. 28
analysis and thus fails the reasoned decisionmaking
standard.
‘For these reasons, the transfer decision cannot stand.
We must remand to the agency for a plausible explanation
of its decision, based on a single, coherent interpretation of
the statute.
C. Statutory power to protect species?
Even viewed in isolation, the first explanation for the
EPA’s no impact conclusion — that the loss of section 7
consultation was not an effect of its transfer decision
because the agency had no authority to base its transfer
decision on the loss of consultation — fares no better.
Under the statutory regime, the statutory obligation
is to “insure” against likely jeopardy of listed species. The
two critical factors triggering this obligation are (1) that
the “action” be one for which the agency can fairly be
ascribed responsibility, namely, an action “authorized,
funded or carried out” by the agency; and (2) that there is
the requisite nexus to an impact on listed species, namely,
a direct or indirect effect “likely to jeopardize the contin-
ued existence of any endangered species or threatened
species or result in the destruction or adverse modification
of [critical habitat].” 16 U.S.C. § 1536(a)(2). There are,
consequently, three relevant statutory concepts governing
the reach of section 7(a)(2): the nexus to any impact on
listed species, the nature of the obligation to “insure”
against jeopardizing listed species, and the actions cov-
ered.
App. 29
-1. Nexus
The case law indicates that 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. Otherwise, the requisite nexus is absent.
A seminal section 7 indirect effects case, National
Wildlife Federation v. Coleman, 529 F.2d 359 (5th Cir.
1976), held that the Department of Transportation was
responsible for development encouraged by interstate
highway construction, because the Department did “con-
trol this development to the extent that [it] control[s] the
placement of the highway and interchanges.” Jd. at 374.
Recently, the Supreme Court in Department of Transporta-
tion v. Public Citizen, 541 U.S. 752, 770, 124 S.Ct. 2204,
159 L.Ed.2d 60 (2004) endorsed a similar standard to that
used in National Wiidlife Federation, albeit under a
different statute.
Public Citizen concerned the application of the Na-
tional Environmental Policy Act (NEPA), 42 U.S.C.
§§ 4321-4370f, regulations to the U.S. Department of
Transportation’s (DOT) regulations governing safety rules
for Mexican trucks traveling on American roads. The
NEPA regulations share with the Endangered Species Act
regulations a similar definition of “indirect effects.” Com-
pare 40 C.F.R. § 1508.8(b) (“Indirect effects ... are caused
by the action and are later in time or farther removed in
distance, but are still reasonably foreseeable.”) with 50
C.F.R. § 402.02 (“Indirect effects are those that are caused
by the proposed action and are later in time, but still are
reasonably certain to occur.”).
The question in Public Citizen was whether DOT was
required under NEPA to develop an environmental impact
App. 30
statement with regard to the pollution caused by the entry
of Mexican trucks onto United States highways under the
North American Free Trade Agreement. The Court held
“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.” Pub. Citizen, 541 U.S. at 770, 124
S.Ct. 2204 (emphasis added); see also id. at 767, 124 S.Ct.
2204 (analogizing “cause” inquiry for purpose of defining
“indirect effects” to proximate cause inquiry in tort law)
Given the similarity in the applicable regulations, we
adopt the Public Citizen standard for purposes of deter-
mining the likely effects of agency action under section
7(a\(2) of the Endangered Species Act. Accordingly, decid-
ing whether the Biological Opinion followed Endangered
Species Act regulations defining “indirect effects” requires
us to determine whether the EPA can consider and act
upon the loss of section 7 consultation benefits in deciding
whether to transfer pollution permitting authority to
Arizona. If so, then the EPA’s transfer decision can be a
cause of the loss of section 7 consultation benefits; the loss
of those benefits should have been included in the Biologi-
cal Opinion as an indirect effect of the potential transfer
decision; and the loss of those benefits should have been
considered and acted upon by the EPA.
2. “Insure that any action ... is not likely to
jeopardize the continued existence of any
[listed] species”
Authority over the loss of section 7(a)(2) consultation
could be grounded in either the Clean Water Act or the
App. 31
Endangered Species Act. The former option is not pre-
: sented here," so we focus on whether the obligation in
section 7(a)(2) to “insure” against jeopardizing listed
species empowers the EPA to make decisions to preserve
listed species and their habitat even if the Clean Water Act
does not so specify. If so, then the EPA has the authority —
indeed, because section 7(a)(2) speaks in mandatory terms,
the duty — to deny a pollution permitting transfer applica-
tion that meets Clean Water Act standards but would
jeopardize protected species.
The language in section 7(a)(2) providing that each
federal agency “shall ... insure that any action author-
ized, funded or carried out by such agency”” will not
jeopardize listed species or their critical habitat is ad-
dressed to each agency, without exception. Our question is:
what does it require each agency to do?
The ordinary meaning of “insure” as used in this
context requires agencies to take action, as dictionary
definitions make clear. To “insure” is “[t]}o make (a person)
sure (of a thing)” and (“[tlo make certain, to secure, to
guarantee (some thing, event, etc.)”)."" VII THE OXFORD
" No party questiened the EPA’s determination that Arizona’s
transfer application met the Clean Water Act factors. Cf Am. Forest & ©
Paper Ass'n v. EPA, 137 F.3d 291, 298 (5th Cir. 1998) (“EPA's discretion
lies .. . in ensuring that those [§ 1342(b)] criteria are met.”).
* We refer to such actions as “agency actions.”
” This definition is consistent with those in dictionaries in print at
the time Congress enacted the Endangered Species Act in 1973. See,
e.g., WEBSTER’S NEW WORLD DICTIONARY OF THE AMERICAN
LANGUAGE 466, 731 (2d College Ed. 1972) (defining “insure” as “same
as ensure,” which is defined as “to make sure or certain; guarantee;
secure”). “Insure” has multiple definitions, but the alternatives are
inapposite to section 7(a)(2). They include “to pledge one’s credit,” “to
engage by pledge or contract,” and “to secure the payment of a sum of
(Continued on following page)
App. 32
ENGLISH DICTIONARY 1059 (2d ed. 1989) (emphasis
removed). Unless an agency has the authority to take
measures necessary to prevent harm to endangered
species, it is impossible for that agency to “make certain”
that its actions are not likely to jeopardize those species.
Otherwise, agencies would be forced to choose between
violating section 7’s prohibition on agency actions that are
likely to jeopardize listed species and acting beyond their
powers to protect such species.
The Supreme Court’s seminal section 7 case, Tennes-
see Valley Authority v. Hill, 437 U.S. 153, 180, 98 S.Ct.
2279, 57 L.Ed.2d 117 (1978), confirms this textual inter-
pretation:
One would be hard pressed to find a statutory provi-
sion whose terms were any plainer than those in § 7
of the Endangered Species Act. Its very words af-
firmatively command all federal agencies ‘to insure
that actions authorized, funded, or carried out by
them do not jeopardize the continued existence’ of an
endangered species or ‘result in the destruction or
modification of habitat of such species... .’ This lan-
guage admits of no exception.
437 U.S. at 173, 98 S.Ct. 2279 (first alteration added,
other alterations in original) (citation omitted). An
money in the event of loss." THE OXFORD ENGLISH DICTIONARY
1059 (2d ed. 1989).
“ The Chamber refers to a case of this court as purportedly
limiting Hill, National Wildlife Federation v. Burlington Northern
Railroad, Inc., 23 F.3d 1508 (9th Cir. 1994). This court cannot, of
course, limit any holding of the Supreme Court; only the Court or, for
statutory cases, Congress may do that. See Rodriguez de Quijas v.
Shearson/Am. Express, Inc., 490 U.S. 477, 484, 109 S.Ct. 1917, 104
L.Ed.2d 526 (1989).
(Continued on following page)
App. 33
“affirmative command” by a superior authority — here,
Congress ~ ordinarily carries with it both the obligation
and the authority to obey that command. For example,
despite policy arguments in favor of continuing construc-
tion of the dam, the Court in Hill relied on Congress’s use
of “the plainest of words” and section 7’s equally plain
legislative history, id. at 194, 98 S.Ct. 2279, to hold that
further construction was in “irreconcilable conflict” with
section 7. Jd. at 193, 98 S.Ct. 2279; see also id. at 184, 98
S.Ct. 2279 (“The plain intent of Congress in enacting this
statute was to halt and reverse the trend toward species
extinction, whatever the cost.”).
Hill’s analysis of the legislative history of the Endan-
gered Species Act confirms that the authority conferred on
agencies to protect listed species goes beyond that con-
ferred by agencies’ own governing statutes. Hill noted that
earlier endangered species legislation, as well as earlier
versions of the bills that became the present Endangered
Species Act, included the qualifier “insofar as is practica-
ble and consistent with [an agency’s] primary purpose.”
See Pub.L. 89-669 § l(b), 80 Stat. 926 (1966); Hill, 437
U.S. at 181 & n. 26, 98 S.Ct. 2279. The final version of the
Further, National Wildlife Federation was not a case concerning a
federal action, and therefore did not raise any section 7(a)2) issue.
Moreover National Wildlife Federation merely supports the obvious
proposition that a preliminary injunction is an equitable remedy and a
court need not grant an injunction “for every violation of law.” 23 F.3d
at 1512.
Finally, far from abandoning the statutory interpretation in Hill,
the Supreme Court has since National Wildlife Federation relied on and
quoted Hill in reiterating the conclusion that “Congress| | inten{ded] to
provide comprehensive protection for endangered and threatened
species.” See Babbitt v. Sweet Home Chapter, 515 U.S. 687, 699, 115
S.Ct. 2407, 132 L.Ed.2d 597 (1995).
App. 347
statute “carefully omitted [those] reservations,” id. at 182,
98 S.Ct. 2279, and replaced them with the universal terms
of section 7. The “pointed omission” of such qualifications
amounted to an “explicit congressional decision to require
agencies to afford first priority to the declared national
policy of saving endangered species.” Jd. at 185, 98 S.Ct.
2279 (emphasis added); see also id. at 174, 98 S.Ct. 2279
(“Congress intended endangered species to be afforded the
highest of priorities.”) (quoted in Wash. Toxics Coalition v.
EPA, 413 F.3d 1024, 1033 (9th Cir. 2005)).
Another aspect of the statute’s structure and history,
not directly at issue in Hill, bolsters the conclusion that
section 7 includes an affirmative grant of authority to
attend to protection of listed species within agencies’
authority when they take actions covered by section
7(a\(2). Section 7(a)(1) of the Endangered Species Act
directs agencies to “utilize their authorities in furtherance
of the purposes of this chapter by carrying out programs
for the conservation of [listed] species.” 16 U.S.C.
-§ 1536(a)(1). Section 7(a)(2), in contrast, does not refer to
agencies’ existing “authorities,” but instead directs agen-
cies that, when considering covered “actions,” they are to
proceed in a manner not likely to jeopardize listed species.
The House Report indicates that this distinction
between the two sections was, as one would expect, delib-
erate. The Report noted the requirement of present section
7(a)(2) as imposing a “further require{ment]” beyond that
of section 7(a)(1)."° See H.R.Rep. No. 93-412, at 14 (1973),
** This history is consistent with the “canon of statutory interpreta-
tion which holds that terms of the same statute are not to be construed
so as to be redundant.” Agredano v. Mutual of Omaha Cos., 75 F.3d 541,
544 (9th Cir. 1996).
App. 35
reprinted in 1 CONGRESSIONAL RESEARCH SERVICE,
A LEGISLATIVE HISTORY OF THE ENDANGERED
SPECIES ACT OF 1973, AS AMENDED IN 1976, 1977,
1978, 1979, AND 1980, at 153 (1982) [hereinafter LEGIS-
LATIVE HISTORY] (emphasis added). The contrasting
language of the two sections indicates that the “further
requirement” imposed by section 7(a)(2) turns on the
distinction between using existing authority to promote
conservation of species and conferring an additional, do-
no-harm obligation — and reciprocal authority — applicable
when the agency’s own actions could cause harm to en-
dangered species.
That Congress so provided is confirmed by Represen-
tative Dingell’s statement concerning the final bill, relied
upon by the Supreme Court as an authoritative statement
of section 7’s intent: “‘[T]he agencies of Government can
no longer plead that they can do nothing about [harm to
threatened or endangered species]. They can, and they
must. The law is clear’”” Hill, 437 U.S. at 184, 98 S.Ct.
2279 (quoting 119 Cong. Rec. 42913 (1973), emphasis in
Hill).”
Representative Dingell was the House manager of the Endan-
gered Species Act. Hill, 437 U.S. at 183, 98 S.Ct. 2279.
” Another portion of Dingell’s same statement was quoted in an
earlier case of this court, County of Okanogan v. Nat'l Marine Fisheries
Serv., 347 F.3d 1081 (9th Cir. 2003), to support the proposition that -
“[t}here is authority that the [Endangered Species Act] does not grant
powers to federal agencies they do not otherwise have.” Jd. at 1085
(citing Hill, 437 U.S. at 183, 98 S.Ct. 2279). The portion of Dingell’s
statement quoted in Okanogan was also quoted in Hill, but it is not the
Supreme Court’s own language. Much more of Dingell’s same state-
ment, including the language we quote in the text, appears as well in
Hill.
(Continued on following page)
App. 36
After the Supreme Court decided Hill in 1978, Con-
gress amended the Endangered Species Act, creating a
narrow exception to section 7’s requirements. See Pub.L.
No. 95-632, 92 Stat. 3751 (1978). The 1978 amendment did
not change section 7’s substantive provisions. Instead,
Congress created a process by which agencies could apply
to an “Endangered Species Committee” for exemptions,
§ 1536(g), and specified standards by which to judge such
applications, § 1536(h). The Senate Report described this
exemption as a direct response to Hill, stating that Hill
represented “the type of Federal action which should be
eligible for review” for a section 7(g) exemption. S.Rep. No.
95-874, at 2 (1978), reprinted in 3 LEGISLATIVE HIS-
TORY, at 940.
The limited exemption created by the 1978 amend-
ments and contained in sections 7(g) and (h) has no direct
application here, as the EPA did not apply for it. Its terms,
however, serve to confirm that the interpretation of the
“insure” requirement in Hill remains controlling.
Sections 7(g) and (h) focus on practical concerns, not
legal constraints on agency power to protect species. To.
obtain an exemption, an agency must show that “there are
no reasonable and prudent alternatives to the agency
action,” the benefits of the action “clearly outweigh the
benefits of alternative course of action consistent with
To say that “there is authority” regarding a proposition is not to
state a holding of this court. There is, as we judges are well aware in
our daily work, often conflicting “authority” for any proposition.
Okanogan had no need to survey, as we do today, all the relevant
authority, as it went on to decide the case before it on independent
grounds. Because the Okanogan panel rested its opinion on other
points, it did not decide the question now before us.
App. 37
conserving the species or its critical habitat, and such
action is in the public interest,” and the action has regional
or national significance. § 1536(h)(1)(A\(i)-(iii). Critically, no
section 7(g) exemption may be granted until after consulta-
tion is completed. § 1536(g)(1); 50 C.F.R. § 402.15(c). Thus,
at the time consultation occurs, all parties must operate
under the assumption that all of section 7(a)(2)’s substan-
tive requirements apply to the action agency. The net
effect of the section 7(g) and (h) exemption, then, is to
leave the consultation requirement in effect as it was
previously; to leave in place the kinds of “agency actions”
to which the section 7(a)(2) requirement applies; but to
provide a set of procedures and substantive standards for
limiting in some circumstances the mandate that agencies
“insure” that their actions are not likely to jeopardize
listed species.
That the 1978 amendments reiterated rather than
retreated from Hill’s underlying understanding of the
Endangered Species Act is confirmed by the history of
those amendments. The House Report summarized Con-
gress’s understanding of Hill’s conclusion that “[t]he
pointed omission of any type of qualifying language in the
statute revealed congressional intent to give the continued
existence of endangered species priority over the primary
missions of federal agencies.” H.R.Rep. No. 95-1625, 10
(1978), reprinted in 2 LEGISLATIVE HISTORY, at 734
(emphasis added). Congress did nothing to alter this
conclusion. Instead, in enacting the 1978 amendments,
Congress once again refused to adopt an amendment that
would have limited section 7 compliance to situations
when compliance is “practicable and consistent with
[agencies’] primary responsibilities.” S.Rep. No. 95-874, at
58-59 (1978), 3 LEGISLATIVE HISTORY at 996-97.
~-
=
App. 38
Congress's rejection of this amendment underlines its
continued understanding, consistent with Aill, that
section 7(a)(2) specifies that agencies must when acting
affirmatively refrain from jeopardizing listed species, even
if the agency’s governing statute does not so provide. The
only exception to this rule lies in a section 7(g) exemption.
We conclude that the obligation of each agency to
“insure” that its covered actions are not likely to jeopard-
ize listed species is an obligation in addition to those
created by the agencies’ own governing statute. The next
question we must decide is whether the EPA’s transfer
decision is the kind of agency action to which that obliga-
tion applies.
3. Actions “authorized, funded, or carried out”
by an agency
As we interpret section 7(a)(2) in light of the case law,
the Endangered Species Act confers authority and respon-
sibility on agencies to protect listed species when the
agency engages in an affirmative action that is both within
its decisionmaking authority and unconstrained by earlier
agency commitments. The decision to approve a state's
pollution permitting transfer application meets these
criteria and is thus the sort of decision to which section
7(a)(2) applies. The Biological Opinion’s reasoning that the
EPA had no choice but to disregard the impact of the
transfer on listed species in Arizona was therefore incon-
sistent with the statute.
Section 7(a)(2) applies to all agency actions “author-
ized, funded, or carried out” by the agency in question.
This language does indicate that some agency actions are
not covered — those the agency does not “authorize ]},
App. 39
fund[], or carrly] out.” Our determination as to whether
the transfer decision is covered thus depends on the
meaning of those terms.”
The regulatory provision that delineates the actions
covered by section 7(a)(2) reads: “Section 7 and the re-
quirements of this Part apply to all actions in which there
is discretionary Federal involvement or control.” 50 C.F.R.
§ 402.03. Although there is no statutory reference to
“discretionary involvement or control,” there is the limita-
tion, just noted, to actions “authorized, funded, or carried
out” by the agency. As that limiting language is the only
possible source for the regulation’s “discretionary” qualifi-
cation of “all actions,” we take the regulation as a gloss on
what the statutory limitation means and interpret the
term “discretionary” accordingly.
Arizona and the Chamber note that the Clean Water
Act specifies that the EPA “shall approve” state applica-
tions that meet certain enumerated factors. 33 U.S.C.
§ 1342(b). They argue that this language precludes EPA
“discretion” to act on behalf of listed species, and that,
applying 50 C.F.R. § 402.03, section 7 does not apply.
However, “an agency cannot escape its obligation to
comply with the [Endangered Species Act] merely because
it is bound to comply with another statute that has consis-
tent, complementary objectives.” Wash. Toxics, 413 F.3d at
1032. Applying this principle, we reject, for two reasons,
’* Because we conclude that approving Arizona's application is an
“authorizing” action, and because no party argued that the EPA's use of
some other authority — such as its grant-making authority, see 33
U.S.C. § 1256, which helped Arizona implement the pollution permit-
ting program — we do not decide whether any action besides the
transfer decision triggered section 7(a)(2).
App. 40
Arizona and the Chamber’s argument that § 1342(b) of the
Clean Water Act eliminates any obligation to follow section
7(a)(2) of the Endangered Species Act.
First, the EPA makes no argument that its transfer
decision was not a “discretionary” one within the meaning:
of 50 C.F.R. § 402.03. Indeed, it could not so argue for, as
we have seen, the agency recognizes that it had a duty to
consult, a duty the regulations would preclude if the
federal involvement in or control of the transfer decision
was not sufficiently “discretionary.” We may not affirm the
EPA's transfer decision on grounds not relied upon by the
agency. See Chenery I, 318 U.S. at 87, 63 S.Ct. 454; see also
Gifford Pinchot Task Force, 378 F.3d at 1072 n. 9. Further,
we ordinarily defer to an agency’s interpretation of its own
regulation. See United States v. Cleveland Indians Base-
ball Co., 532 U.S. 200, 220, 121 S.Ct. 1433, 149 L.Ed.2d
401 (2001). As the EPA evidently does not regard § 402.03
as excluding the transfer decision, we should not so
interpret the regulaiions.
Second, cases applying § 402.03 are consistent with
our understanding that the regulation’s reference to
“discretionary ... involvement” is congruent with the
statutory reference to actions “authorized, funded, or
carried out” by the agency. Put another way, imposing
section 7(a)(2)’'s substantive requirements in those cases
would have gone beyond the limited command of the
statute.
Our § 402.03 “discretionary ... involvement or con-
trol” cases hold section 7(a)(2) inapplicable if the agency in
question had “no ongoing regulatory authority” and thus
was not an entity responsible for decisionmaking with
respect to the particular action in question. Wash. Toxics,
App. 41
413 F.3d at 1033. For example, we have relied on the
“discretionary ... involvement” regulation to find section
7(a\(2) inapplicable where the agency lacked any deci-
sionmaking authority over the action of the kind chal-
lenged. See Ground Zero Ctr. for Non-Violent Action v. U.S.
Dep't of the Navy, 383 F.3d 1082, 1092 (9th Cir. 2004)
(holding that the action at issue fell outside the agency’s
authority because the risk of harm to listed species arose
from the President’s decision regarding the Navy’s nuclear
submarine force, not the Navy’s obedience to that order);
see also Marbled Murrelet v. Babbitt, 83 F.3d 1068, 1074
(9th Cir. 1996) (holding section 7(a)(2) inapplicable where
a different agency made the ultimate decisions, while the
respondent agency “merely provided advice,” without
authorizing, funding or carrying out anything). Other
cases have found section 7(a)(2) inapplicable where the
challenged action was legally foreordained by an. earlier
decision, such as where the agency lacked the ability to
amend an already-issued permit “to address the needs of
endangered or threatened species.” Envtl. Prot. Info. Ctr. v.
Simpson Timber Co., 255 F.3d 1073, 1082 (9th Cir. 2001)
(cited in Wash. Toxics, 413 F3d at 1032) (applying
§ 402.16, which has similar language to § 402.03); see also
Sierra Club v. Babbitt, 65 F.3d 1502, 1509 (9th Cir. 1995)
(cited in Wash. Toxics, 413 F.3d at 1032) (holding that
section 7(a)(2) did not apply because the agency had no
“(Jability to influence” a project based on a right-of-way
granted prior to the Endangered Species Act’s enactment).
In contrast, we have held that section 7(a)(2) does
apply where the agency in question had continuing deci-
sionmaking authority over the challenged action. See
Wash. Toxics, 413 F.3d at 1032 (holding that section 7(a)(2)
applies to the EPA's registration of pesticides because of its
App. 42
“ongoing discretion to register pesticides, alter pesticide
registrations, and cancel pesticide registrations”); Turtle
Island Restoration Network v. Nat'l Marine Fisheries Serv.,
340 F.3d 969 (9th Cir. 2003) (holding that section 7(a)(2)
applies to the granting of permits — a quintessential
“authorizing” action — for future fishing); see also Sierra
Club, 65 F.3d at 1508 (citing O’Neill v. United States, 50
F.3d 677, 680-81 (9th Cir. 1995), and noting that section 7
applies to already-approved projects “if the project’s
implementation depended en an additional agency ac-
tion”); Envtl. Prot. Info. Ctr, 255 F.3d at 1082; Natural
Res. Def. Council v. Houston, 146 F.3d 1118, 1125-26 (9th
Cir. 1998) (holding that section 7(a)(2) applies to “renewal
of water contracts” because the agency had power to set
the terms of — that is, to “authorize” — the renewed con-
tracts, and was not bound to reaffirm merely the previ-
ously-negotiated terms); Pac. Rivers Council v. Thomas, 30
F.3d 1050, 1053 (9th Cir. 1994) (holding that section
7(a)(2) did apply when there was “ongoing agency action”
in that the agency retained power to authorize and carry
out land use decisions).
In sum, we understand our cases applying the “discre-
tionary ... involvement” regulation to interpret that
regulation to be coterminous with the statutory phrase
limiting section 7(a)(2)’s application to those cases “author- -
ized, funded, or carried out” by a federal agency. Where a
challenged action has not been “authorized, funded, or
carried out” by the defendant agency, we have held that
section 7(a)(2) does not apply. Where the challenged action
App. 43
comes within the agency’s decisionmaking authority and
remains so, it falls within section 7(a)(2)’s scope.”
Like the agencies in Washington Toxics, Pacific Rivers
and Houston but not the other § 402.03 cases noted above,
the EPA had exclusive decisionmaking authority over
Arizona’s pollution permitting transfer application. The
The dissent concludes that because the Clean Water Act requires
the EPA to consider a list of nine requirements when evaluating a
state’s pollution permitting transfer application, the EPA had no
discretion to reject Arizona’s application on Endangered Species Act
grounds. The EPA has repeatedly taken the position that the question
whether the EPA has sufficient discretion, applying 50 C.F.R. § 402.03,
under the Endangered Species Act is not before us and has twice asked
us to remand any question concerning such discretion. See EPA CR
28(j) letter of July 27, 2005 (“EPA did consult. The only issue before this
Court is the adequacy of that consultation. For the same reason, the
Court should not reach the question regarding whether the EPA has
sufficient discretion to trigger consultation regarding the approval of
the transfer of 402 permitting authority to the State.”); EPA CR 28(j)
letter of Aug. 4, 2005 (“Respondents again emphasize that the issue of
whether or not the [EPA] can properly rely on 50 C.F.R. § 402.03 in
deciding whether or not it must consult regarding its approval of the
State of Arizona’s Clean Water Act 402 Permitting Program is not
before the Court in this case because EPA did consult regarding the
approval of the program.”). As noted in Part III.B, supra, the EPA has
taken contradictory positions regarding its section 7(a)(2) obligations.
The dissent does not explain its disagreement with that portion of our
opinion.
The dissent argues that we should nonetheless affirm the EPA’s
action based on § 402.03 because the question is one of statutory
interpretation. But that is simply not so; § 402.03 is a regulation, not a
statute. The dissent offers no analysis of the key statutory provision,
section 7(a)(2) of the Endangered Species Act, nor does it offer any
response to our interpretation of the plain language, intent and history
of that section. Although the dissent does offer an interpretation of the
Clean Water Act, that interpretation only matters if we are wrong
about section 7(a)(2) of the Endangered Species Act and the EPA was
wrong under 50 C.F.R. § 402.03 in consulting about the transfer of
permitting authority.
App. 44
EPA's decision authorized the transfer, thus triggering
section 7(a)(2)’s consultation and action requirements.
4. Other Circuits
Although Washington Toxics and the cases are fully
consistent with our analysis, this case is the first in which
we have specifically addressed the question whether
section 7(a)(2) of the Endangered Species Act provides a
modicum of additional authority to agencies, beyond that
conferred by their governing statutes, to protect listed
species from the impact of affirmative federal actions.
Other circuits, however, have considered the question. The
reasoning of those opinions reflects an existing intercircuit
conflict on the question before us, with two circuits read-
ing section 7(a)(2) as we do and two concluding that
section 7 does not itself authorize agencies to protect listed
species even when it is their own action that is jeopardiz-
ing then. Compare Defenders of Wildlife v. Administrator,
EPA, 882 F.2d 1294, 1299 (8th Cir. 1989), and Conserva-
tion Law Found. v. Andrus, 623 F.2d 712, 715 (1st Cir.
1979) with Am. Forest & Paper Ass’n v. EPA, 137 F.3d 291,
294, 298-99 (Sth Cir. 1998), and Platte River Whooping
Crane Critical Habitat Maint. Trust v. FERC, 962 F.2d 27,
34 (D.C. Cir. 1992). We do not find the D.C. Circuit and
Fifth Circuit cases persuasive, as they do not reflect a full
consideration of the text and history of section 7(a)(2).
The First Circuit, writing a year after the Supreme
Court decided Hill, noted that the Endangered Species Act
“will continue to apply of its own force to major actions
taken by the [agency],” regardless of the contents of the
specific statute under which the agency acted. Conserva-
tion Law Found., 623 F.2d at 715. Thus, although the
App. 45
governing statute in that case may have contained stan-
dards “less stringent than those of the [Endangered
Species Act]” with regard to the protection of listed spe-
cies, “[t}he [Endangered Species Act] by its terms applies
to all action by the Secretary.” Jd. Consequently, “[i]f [the
secretary] cannot ... insure that exploration will not
jeopardize the continued existence of [listed species], he
will not approve exploration plans.” /d.
A decade later, the Eighth Circuit echoed Conserva-
tion Law Foundation, writing that “[e]ven though a federal
agency may be acting under a different statute, that
agency must still comply with the [Endangered Species
Act].” Defenders of Wildlife, 882 F.2d at 1299; John W.
Steiger, The Consultation Provision of Section 7(a)(2) of the
Endangered Species Act and Its Application to Delegable
Federal Programs, 21 ECOLOGY L.Q. 243, 274 (1994)
(describing as “well established” the proposition that
“section 7(a)(2) provides an independent source of author-
ity that is in addition to the authority the Agency is
granted in its programmatic statutes”).
The D.C. Circuit has indicated that the Endangered
Species Act does not empower an agency to impose condi-
tions on an interim, annual license that, unlike the pollu-
tion permitting transfer decisions at issue here, the agency
was obliged to issue without any deliberation. In so con-
cluding, the D.C. Circuit noted in passing the language of
section 7(a)(2), but reasoned that section 7(a)(1) instructs
agencies to “utilize their authorities,” and that this section
7(a)(1) language “does not expand the powers conferred on
an agency by its enabling act.” Platte River, 962 F.2d at 34
(emphasis in original).
App. 46
Platte River did not recognize the obvious differences
between section 7(a)(1) and 7(a)(2) in both language and
purpose. The D.C, Circuit did not, for example, discuss at
all the meaning of the term “insure” in section 7(a)(2),
absent from section 7(a)(1). Nor did it notice the difference
between affirmative agency attempts to protect listed
species (section 7(a)(1)) and a do-no-harm directive per-
taining to affirmative agency actions with likely adverse
impact on listed species (section 7(a)(2)). Finally, the D.C.
Circuit in Platte River did not mention the availability of
exemptions from section 7(a)(2) under the 1978 amend-
ments, or the repeated decision of Congress not to approve
proposed amendments that would have limited the reach
of section 7(a)(2) so as to accord with the D.C. Circuit’s
reading of the unamended statute. For all these reasons,
we do not find Platte River’s cursory consideration of the
question persuasive.
The Fifth Circuit relied on Platte River to hold that
section 7(a)(2) does not permit the EPA to require a state
to consult with FWS before issuing a water pollution
permit. Am. Forest & Paper Ass’n, 137 F.3d at 294, 298-99.
While we do not pass on the precise question decided in
American Forest, we do note that, aside from the deficien-
cies of Platte River on which the Fifth Circuit relied,
American Forest rested on a fundamental misconception
concerning section 7(a)(2): The Fifth Circuit stated that it
is “largely beside the point” whether the EPA's transfer
decision is an “agency action,” because “[e]ven if EPA were
required to consult with the agencies ... EPA lacks au-
thority to” require states to protect listed species. Id. at
298 n. 6. Section 7(a)(2), however, specifies that if an
agency is contemplating a covered “agency action,” it has
an obligation both to consult and to “insure” against
App. 47
taking action likely to jeopardize species. The Fifth Cir-
cuit’s notion that the consultation and assurance aspects
of the statute are independent is simply incorrect.
In sum, the better reasoned out-of-circuit authority, as
well as our own precedent, supports our conclusion that
section 7(a)(2) independently empowers EPA to make
pollution permitting transfer decisions on behalf of listed
species and their habitat when undertaking covered
actions.
5. Summary
We hold that approving Arizona’s pollution permitting
transfer application was an agency action “authorized” by
the EPA, thus triggering both section 7(a)(2)’s consultation
requirement and its mandate that agencies not affirma-
tively take actions that are likely to jeopardize listed
species. The EPA may have complied with its obligations
under the Clean Water Act, but compliance with a “com-
plementary” statute cannot relieve the EPA of its inde-
pendent obligations under section 7(a)(2). See Wash.
Toxics, 413 F.3d at 1033. Section 7(a)(2) imposes a duty on
the EPA to “insure” its transfer decision is not likely to
jeopardize protected species or adversely modify their
habitat, and this duty exists alongside Clean Water Act
provisions as the agency’s “first priority.” Hill, 437 U.S. at
185, 98 S.Ct. 2279.
We therefore conclude that, under Public Citizen, the
EPA's transfer decision will cause whatever harm may
flow from the loss of section 7 consultation on the many
projects subject to a water pollution permit, and that harm
App. 48
constitutes an indirect effect of the transfer.” The Biologi-
cal Opinion, which ignored this effect while recognizing
that section 7 consultations concerning pollution permit-
ting permits have saved species’ critical habitat in the
past, was therefore deficient. The EPA erred by relying on
this fatally deficient Biological Opinion.
D. Other bases for the EPA’s transfer decision
Having concluded that the Biological Opinion upon
which the EPA relied was flawed in its basic legal prem-
ise,” we now consider whether that Opinion’s other analy-
ses, or any analysis outside the Biological Opinion that the
EPA relied upon, saves the validity of the EPA’s transfer
decision.
1. No “detailed discussion” of effects on all
listed species
Consistent with its underlying legal analysis, the
Biological Opinion never considered in any detail the
likely real-world impact of the transfer decision on listed
species in Arizona. The failure to conduct that inquiry
* Defenders also challenge the Biological Opinion and the EPA for
failing to analyze the “cumulative effects” of the pollution permitting
transfer, as required by Endangered Species Act regulations. See 50
C.F.R. § 402.14(gX3) (requiring consideration of “cumulative effects”);
§ 402.02 (defining “cumulative effects”). As we consider the loss of
section 7 consultation benefits on future permits an “indirect effect” of
the EPA’s transfer decision, we need not consider Defenders’ argument
that the EPA and Biological Opinion should have also considered that
effect as part of a “cumulative effect.”
* See supra, Parts III(B){C). ~
App. 49
fatally infects the Opinion’s truncated alternative causa-
tion analysis.
50 C.F.R. § 402.14(h)(2) requires a biological opinion
to include a “detailed discussion of the effects of the action
on listed species or critical habitat.” The Biological Opin-
ion on which the EPA relies does not do so. Instead, it
refers to a website summarizing listed species’ status, but
includes no discussion of how the pollution permitting
transfer might affect any particular species. The Biological
Opinion concludes that the transfer will not likely jeopard-
ize any species — but only because, once again, “it is not
the proposed action itself that is jeopardizing these spe-
cies.”
Defending the Biological Opinion, the Home Builders
argue that the “effects of the action” — which the Biological
Opinion must consider under 50 C.F.R. § 402.14(h) -
exclude the impact of Arizona water pollution permits on
terrestrial species.” Neither the Biological Opinion nor the
EPA, however, used this argument to support the agency
action. We may not affirm the EPA’s transfer decision on
grounds not relied upon by the agency. See Chenery I, 318
U.S. at 87, 63 S.Ct. 454; see also Gifford Pinchot Task
* The record indicates that a large portion of permits issued by
ADEQ — up to 20,000 permits annually — will be for “stormwater
construction |discharges].” This reference is to storm water that flows
over a construction site, picking up various pollutants and carrying
them across terrestrial and eventually into aquatic habitat. Stormwater
Discharges from Construction Activities, EPA-NPDES, at http://cfpub1.
epa.gov/npdes/stormwater/const.cfm?program-id=6 (last visited July 5,
2005). Such permits relate to the construction itself, not to a discrete
discharge during construction. As a practical matter, a developer could
not perform any construction activities without such a permit.
App. 50
orce, 378 F.3d at 1072 n. 9. Accordingly, we need not
decide the merits of the Home Builders’ argument.
It is understandable that EPA has not embraced the
Home Builders’ analysis. According to the Home Builders,
the section 7 consultations and EPA-requested mitigation
undertaken in the past regarding federal pollution permits
were improper, because the EPA took into account as
indirect effects the long-run impact of development on
terrestrial upland species. This argument is based on a
flawed reading of Endangered Species Act regulations.
A Biological Opinion must discuss the effects of an
agency action, § 402.14(h), including the action’s direct
effects, indirect effects, and “effects of other activities that
are interrelated or interdependent with that action,”
meaning those actions “that are a part of a larger action
and depend on the larger action.” § 402.02. If a construc-
tion project cannot go forward without a water pollution
permit, then the entire project is “interrelated or interde-
pendent” with the proposed discharge and must be consid-
ered in a Biological Opinion.
The Home Builders cite a different regulation, requir-
ing a more limited analysis. See § 402.12(c), (d)(2) (describ-
ing requirements of a biological assessment to include only
discussion of effects on listed species and habitat in the
“action area”). But that limited analysis applies to what an
action agency must do before formal section 7 consultation
begins, and does not excuse agencies from other section 7
requirements that consultation may trigger.
The Home Builders also cite cases relating to portions
of development projects that “could exist independently of
each other.” Wetlands Action Network v. U.S. Army Corps
of Eng’rs, 222 F.3d 1105, 1116 (9th Cir. 2000). Seemingly,
App. 51
the Home Builders argue that, because section 7 does not
require consultation or mitigation with regard to a devel-
opment project truly independent of the one covered by a
permit, section 7 also does not cover development projects
that are dependent on the permit in question. On the
contrary, section 7 covers development projects “interre-
lated or interdependent with” the discharge permitted by a
permit, and therefore covers in many instances the devel-
opment that will take place if construction-connected
stormwater discharge is permitted.
Neither the FWS nor the EPA makes any argument
that justifies the Biological Opinion’s failure to analyze, in
detail, the likely effect of such future development projects
fostered by pollution permits on specific species. This
failure is especially telling in light of the benefits of
section 7 consultation regarding water pollution permits.
That consultation, as the Biological Opinion noted, has led
various developers to alter their development plans,
preserving thousands of acres of listed species’ habitat. For
example, such mitigation has “maintain[ed] dispersal and
movement corridors” for the pygmy owl. FWS staff had
noted that the absence of section 7 consultation could
harm specific species, yet the Biological Opinion did not
spell out those concerns in any detail.
By not considering the transfer’s specific impact on
listed species — at least those as to which specific concerns
had been expressed — the Biological Opinion “failed to
consider an important aspect” of the transfer decision.
Motor Vehicle Mfrs. Ass’n v. State Farm Mutual Auto. Ins.
Co., 463 U.S. 29, 43, 103 S.Ct. 2856, 77 L.Ed.2d 443
(1983).
App. 52
2. Alternatives to section 7 consultation
The Biological Opinion notes state and federal endan-
gered species protections that exist without section 7
consultation, including: (1) the Memorandum of Agree-
ment between the EPA and FWS, EPA oversight over
ADEQ; (2) the Endangered Species Act’s anti-take provi-
sions; and (3) Arizona state law. The EPA relies on these
protections as sufficient to assure against jeopardizing
listed species. None of these protections, however, are
sufficient substitutes for section 7’s consultation and
mitigation mandates.
a. Memorandum of Agreement
The Memorandum of Agreement provides the closest
substitute for the provisions of section 7. It cannot, how-
ever, replace section 7, because it does not grant the
federal government any authority to require Arizona to
engage in the kind of consultation and mitigation meas-
ures EPA had conducted before the transfer.
Under the Memorandum, the EPA will review ADEQ
permits and identify those that “may raise issues regard-
ing” listed species. 66 Fed.Reg. 11,202, 11,216 (Feb. 22,
2001). For projects posing a significant threat to listed
species, the FWS “will work with the State ... to reduce
the detrimental effects stemming from the permit.” Jd.
The FWS, however, has no statutory authority to mandate
that the state revise any problematic permits, nor does the
EPA. In contrast, all federal agencies have a duty, in
consultation with the FWS, to ensure that their actions
are not likely to jeopardize any listed species or their
designated habitat. § 1536(a)(2).
App. 53
The Memorandum also provites that the “EPA will
use the full extent of its CWA [Clean Water Act] authority
to object to a State ... permit where EPA finds ... that a
State ... permit is likely to jeopardize” listed species. 66
Fed.Reg. at 11,216. However, the Clean Water Act does not
grant the EPA authority to make pollution permitting
transfer decisions for the benefit of all endangered species;
the EPA has that authority only when one also considers
the Endangered Species Act.” As a result, Endangered
Species Act concerns raised by a permit are cognizable
under the Clean Water Act only fortuitously, if at all.
Unless the EPA is willing to use the authority granted by
section 7 in addition to that accorded by the Clean Water
Act, the EPA’s ability to object to permits and thereby
conserve listed species will be quite limited.
In sum, the Memorandum calls for the EPA and the
FWS to discuss listed species matters with ADEQ, but
relies on ADEQ voluntarily to cooperate with those federal
agencies. We assume that ADEQ will consider any listed
species issues raised in good faith. Nothing in the record,
however, indicates that ADEQ even has authority under
state law to require permit applicants to protect listed
species. Section 7 thus provides protection for species that
reliance on purely voluntary action by the state cannot
supply.
* Pollution permitting standards that apply to both federal
permits, 33 U.S.C. §1342(a), and state permits, § 1342(b)(1)A),
incorporate concerns for the effect of pollutants on aquatic species
living in waterways affected by water pollution. See, e.g., 33 U.S.C.
§ 1317(a\(1) (listing effect of toxic pollutants on “affected organisms in
any waters” as a factor to consider in issuing permit). These powers do
not extend to terrestrial species, nor do they include section 7(a)(2)'s
prohibition-on agency actions that are likely to jeopardize listed species.
App. 54
b. EPA oversight
For similar reasons, EPA oversight under 33 U.S.C.
§ 1342(c) provides a weak substitute for section 7 consulta-
tion. Such oversight relates to different substantive
standards — those of the Clean Water Act, rather than the
Endangered Species Act. The Clean Water Act standards
governing permitting decisions will not directly relate to
protection of most — if any — listed species, and so cannot
substitute for section 7 coverage.
c. Endangered Species Act anti-take provi-
sions
The Endangered Species Act makes it a crime to
“take” any species listed as endangered, defining “take” as
“harass, harm, pursue, hunt, shoot, wound, kill, trap,
capture, or collect, or to attempt to engage in any such
conduct.” 16 U.S.C. § 1538(a); 16 U.S.C. § 1532(19). The
Supreme Court has upheld regulations that define “take”
to include any act “which actually kills or injures wildlife,”
where such acts may include “significant ... modification
or degradation” of listed species’ habitat.“ See Babbitt v.
Sweet Home Chapter of Cmties. for a Great Or, 515 US.
687, 691, 115 S.Ct. 2407, 132 L.Ed.2d 597 (1995) (uphold-
ing 50 C.F.R. § 17.3). Section 10 of the Endangered Species
Act creates an “incidental take” permit program pursuant
to which the Secretary of Interior may grant permits for
* The regulation defines “[hjarm in the definition of ‘take’ in the
Act [as] an act which actually kills or injures wildlife. Such act may
include significant habitat modification or degradation where it
actually kills or injures wildlife by significantly impairing essential
behavioral patterns, including breeding, feeding or sheltering.” 50
-C.F.R. § 17.3.
App. 55
activity — such as some construction projects — that may
incidentally “take” an endangered species specimen, so
long as the permittee sufficiently mitigates the risk of a
take. See 16 U.S.C. § 1539. These anti-take provisions
apply to all actors, not only the federal government.
§ 1538(a)(1). Accordingly, private developers are subject to
sections 9 and 10 regardless of whether the EPA or a state
government issues the developers’ water pollution permits.
Sections 9 and 10 are important provisions, but they
are not substitutes for section 7 coverage. Section 7 covers
any federal agency action that could threaten species or
their critical habitat. While the anti-take provisions
prohibit “lejliminating a threatened species’ habitat,”
Envtl. Prot. Info. Ctr., 255 F.3d at 1075, or “significant .. .
modification or degradation where it actually kills or
injures wildlife,” 50 C.F.R. § 17.3, the effectiveness of these
prohibitions depends on their enforcement by the appro-
priate authorities. “[T]he Government cannot enforce the
§ 9 prohibition until an animal has actually been killed or
injured.” Sweet Home, 515 U.S. at 703, 115 S.Ct. 2407.
Accordingly, after-the-fact enforcement cannot prevent
threats to listed species the way section 7 can. Prevention
of takings may come from the section 10 permitting
process, but private parties choose whether to pursue a
section 10 incidental take permit. Defenders of Wildlife v.
Bernal, 204 F.3d 920, 927 (9th Cir. 2000). Private parties
only have an incentive to do so if there is a meaningful
threat of section 9 enforcement.
On this record, there is no indication that section 9 is
or will be enforced meaningfully enough to provide a
sufficient substitute for section 7. The record reflects no
instances in which F'WS has initiated a section 9 enforce-
ment action with regard to listed species in Arizona.
App. 56
Additionally, FWS staff stated in the Interagency Eleva-
tion Document that they did “not believe that section 9
enforcement is an acceptable substitute for section 7
consultation.” This opinion reflected staff concerns, ex-
pressed in interna] emails, that section 9 is ill-suited to
protect species such as the pygmy owl, whose numbers are
so low that section 9 enforcement may come too late to
prevent extinction. The Biological Opinion contains no
indication the FWS will increase section 9 enforcement nor
any other analysis alleviating FWS staff concerns. The
absence of record evidence of section 9 enforcement is
confirmed by our own research, which reveals public
notices regarding only two applications for incidental take
permits for projects occurring in Arizona since January I,
2001. See 69 Fed.Reg. 75,556 (Dec. 17, 2004); 69 Fed.Reg.
15,362 (Mar. 25, 2004). Compared to the large number of
construction projects in the state, this low number sug-
gests that developers do not feel that section 9 enforce-
ment is sufficiently likely for them to apply for section 10
permits.
d. Arizona state law
The Biological Opinion notes one Arizona law that
prohibits the taking of “native plants” — which, the Opin-
ion notes, includes endangered or threatened plants -
from any land within the state without following certain
procedures. See Ariz.Rev.Stat. § 3-904. The Opinion
implies that this law partially fills a gap left open by the
Endangered Species Act, which limits the taking of endan-
gered plants on federal land only, not all land. See 16
U.S.C. § 1538(a)(2)(B).
App. 57
The Arizona statute, however, is not an adequate
substitute for section 7(a)(2)'s limitation on granting
permits that could jeopardize listed species. As the Bio-
logical Opinion notes, the Arizona statute merely requires
private landowners to notify a state agency of plans to
destroy certain plants on their property and regulates
when that destruction may take place. See Ariz.Rev.Stat.
§ 3-904. It does not prohibit such destruction, or set
standards to be taken into account in the issuance of water
pollution permits. The Biological Opinion does not discuss
the standards that govern Arizona’s regulation of native
plant takes, and does not indicate that Arizona considers
the listed status of plants for federal purposes in granting
native plant take permits. ~
In sum, the Biological Opinion fails to provide a
reasoned explanation concerning why Arizona’s native
plant law adequately substitutes for section 7, even for
plants. As it obviously does not do so for animals, § 3-904
is no substitute for section 7(aX2) of the Endangered
Species Act.
3. The EPA’s reliance on the Biological Opinion
The EPA had an independent duty under section
7(aX(2) to ensure that its pollution permitting transfer
decision was not likely to jeopardize listed species or
adversely modify their habitat. Arbitrarily and capri-
ciously relying on a faulty Biological Opinion violates this
duty. Res. Ltd., 35 F.3d at 1304; Pyramid Lake, 898 F.2d at
1415.
When considering challenges to agency actions based
on factual objections to the Biological Opinion, however,
we have held that an agency can satisfy the arbitrary and
App. 58
capricious standard of review even if it relies on an “ad-
mittedly weak” Biologica] Opinion, if there is no “informa-
tion the Service did not take into account which challenges
the [biological] opinion’s conclusions.” Jd.; see also Stop H-
3 Ass’n v. Dole, 740 F.2d 1442, 1460 (9th Cir. 1984). This
holding is based on the notion that action agencies should
be able to rely on the expert judgments inat underlie most
Biological Opinions. See id. (twice noting reasonableness
of action agency’s reliance on “the expert agency”) (empha-
sis added). Here, however, the Biological Opinion’s flaws
are legal in nature. Discerning them requires no technical
or scientific expertise. The EPA should have understood
the legal errors of the Biological Opinion’s analysis. Its
failure to do so led to an action based on reasoning “not in
accordance with law” and is thus arbitrary and capricious.
See 5 U.S.C. § 706(2)(A).
Even applying the Pyramid Lake standard, the EPA
acted arbitrarily and capriciously. Information not consid-
ered by the Biological Opinion that challenges its conclu-
sion includes FWS staff members’ articulated, specific
concerns about the impact of the loss of section 7 consulta-
tion, supported by information regarding the effect of past
section 7 consultations.
The EPA notes that it relied on two pieces of evidence
supporting its conclusion beyond that contained in the
Biological Opinion and argues that consideration of this
evidence provided the reasoned consideration that the
arbitrary and capricious standard requires.”
* Any explanation for its decision based on facts or reasoning not
in the Biological Opinion must, of course, satisfy the EPA’s substantive
(Continued on following page)
App. 59
The first such evidence is the EPA’s own Biological
Eva) uation. This report focused largely on Clean Water Act
requirements and devoted only a few pages to endangered
species. The report summarizes the EPA-FWS Memoran-
dum of Agreement, Endangered Species Act anti-take
provisions, EPA oversight of ADEQ’s permit program, and
Arizona’s native plant laws, without addressing their
limitations, discussed above. The report’s “Discussion of
Effects” notes the loss of section 7 consultation, but other-
wise focuses on Clean Water Act compliance and repeats
the protections afforded by other programs. It does not
discuss the impact on listed species of the loss of section 7
consultation and mitigation and so adds nothing to the
Biological Opinion.
The second piece of evidence on which the EPA relies
is an “assurance[|] from the Arizona Game and Fish
Department ... that Federally-listed species would not
suffer” from the lack of section 7 consultations. This
document is from an Arizona official of a state department
that is not the one that will issue Clean Water Act permits.
He writes that the EPA-FWS Memorandum of Agreement
“will serve as a guideline for ... Arizona to ensure that
[pollution] permits will not negatively impact endangered
and threatened species.”
There is no indication that Arizona would be bound by
this letter. The ADEQ, the agency primarily responsible
for implementing Arizona’s pollution permitting authority,
has not subscribed to its assurances. Nor does the letter
writer explain by what authority Arizona will “ensure that
obligations under section 7(aX2) and the arbitrary and capricious
standard of review discussed above.
App. 60
... permits will not negatively impact endangered and
threatened species,” or indicate that his agency has any
authority to do so, let alone authority as broad as the
protections mandated by the Endangered Species Act as
applied by the EPA.
In the abstract, voluntary compliance by state agen-
cies willing to follow FWS recommendations to the same
extent as would the EPA might substitute for section 7
coverage. The EPA, however, could not so conclude without
first analyzing the likelihood that ail relevant Arizona
agencies can and would live up to the Game and Fish
Department’s promises, as well as considering the effec-
tiveness of federal oversight if Arizona agencies fail to live
up to any such promises.
Given its serious faults, the independent evidence on
which EPA relies cannot fill in the crucial gaps in the
Biological Opinion. Neither the Biological Opinion nor the
EPA, consequently, adequately considered indirect effects
of the transfer. The EPA thus “entirely failed to consider
an important aspect of the problem.” State Farm, 463 U.S.
at 43, 103 S.Ct. 2856. Because neither the Biological
Opinion nor the EPA examined all relevant data, the EPA’s
transfer decision was arbitrary and capricious.
4. Summary
The EPA’s most serious errors were (1) its failure to
understand its own authority under section 7(a\(2) to act
on behalf of listed species and their habitat and (2) its
failure to discuss the specific effects of its decision on the
various listed species present in Arizona. It is possible that
some combination of state and federal protections for
listed species and state agency cooperation with the
App. 61
federal Memorandum of Agreement might sufficiently
replace the benefits of section 7 consultation so that no
harm to listed species would be “reasonably certain to
occur” as a result of losing section 7 consultation. 50 C.F.R.
§ 402.02. But the EPA could not so conclude without
specifically analyzing each listed species within Arizona
and without more certain assurances of voluntary state
cooperation from officials at all relevant Arizona agencies,
as well as a more careful consideration of the actual
protection accorded by other federal and state statutory
provisions and the Memorandum of Agreement.
IV. Remedy
Typically, when an agency violates the Administrative
Procedure Act and the Endangered Species Act, we vacate
the agency’s action and remand to the agency to act in
compliance with its statutory obligations. In certain
instances, however, “when equity demands, the [chal-
lenged action) can be left in place while the agency follows
the necessary procedures.” Idaho Farm Bureau Fed’n v.
Babbitt, 58 F.3d 1392, 1405 (9th Cir. 1995).
We have carefully considered whether equitable
considerations warrant allowing Arizona to maintain its
authority over pollution permitting decisions while the
EPA “follows the necessary procedures,” beginning with
consultations with the FWS based on legal understandings
consistent with this opinion. Arizona has undoubtedly
expended significant funds to obtain and implement
pollution permitting authority and granted a significant
App. 62
number of permits pursuant to this authority.” We cannot
reverse the expenditure of those funds nor the issuance of
those permits. We further recognize the administrative
difficulties in transferring a program like pollution per-
mitting from Arizona back to the EPA and very possibly
back to Arizona again. Based on the desire of Arizona to
keep its pollution permitting authority and the record of
other states obtaining and maintaining their own pollution
permitting authority, even after full consultation regard-
ing the transfer’s effect on endangered and threatened
species, see supra note 3, it seems likely that Arizona will
again apply for pollution permitting authority. Finally, we
note that all of the actors in this case — Arizona, the EPA,
and FWS -— operated in a somewhat murky legal environ-
ment. Faced with two circuit court cases suggesting that
the EPA lacked authority to make pollution permitting
transfer decisions based on Endangered Species Act
concerns, “the extent of doubt whether the agency chose
_ correctly” was not insignificant. Sugar Cane Growers
Coop. v. Veneman, 289 F.3d 89, 98 (D.C. Cir. 2002).
Other factors, however, weigh heavily in favor of
vacating the EPA’s approval of Arizona’s transfer applica-
tion. As noted above, Arizona annually issues tens of
thousands of pollution permits pursuant to the EPA’s
action. See supra note 22. We have concluded that, absent
section 7 coverage, we have no strong assurances that
* For instance, one type of water pollution permit issued by
Arizona under its pollution permitting authority, stormwater discharge
permits, account for approximately 20,000 permit applications annually.
ARIZ. DEP’T OF ENVT’L QUALITY, ADEQ Director Steve Owens
Unveils a Web-based System to Apply for Stormwater Discharge Permits,
at http://www.azdeq.gov/function/news/2003/june.html# 609 (last visited
July 5, 2005).
App. 63
these permits will not allow development projects that are
likely to jeopardize listed species or adversely modify their
habitat. The purpose of the Endangered Species Act — to
conserve endangered and threatened species rather than
allow them to go extinct, see 16 U.S.C. § 1531 — renders
the risk of harm to listed species too great. This is particu-
larly true in this case, in which the record suggests that
one species — the pygmy owl — numbers less than 100.
Temporary harms while the agency “follow[ed] the neces-
sary procedures,” Idaho Farm Bureau, 58 F.3d at 1405,
could lead to the permanent harm of extinction. See id.
(noting “the potential extinctiun of an animal species” as a
crucial factor to consider when determining whether a
challenged agency action should be vacated). Our concern
with the risk of extinction comports with our understand-
ing of the Endangered Species Act’s “institutionalized
caution mandate.” Wash. Toxics, 413 F.3d at 1030 (quoting
Sierra Club, 816 F.2d at 1389). Without greater assur-
ances that harm to listed species would not occur, our
“institutionalized caution” makes us unwilling on the
present record to order any remedy other than vacation of
the EPA’s approval of Arizona’s transfer application.
For the just-stated reasons, we vacate the EPA’s
decision to approve Arizona’s pollution permitting applica-
tion. Pursuant to 28 U.S.C. § 1631, we transfer Defenders’
Endangered Species Act and Administrative Procedure Act
suit challenging the validity of the Biological Opinion to
the district court where it was originally filed for proceed-
ings consistent with this opinion. The petition for review is
GRANTED and REMANDED to the EPA for proceedings
consistent with this opinion.
App. 64
THOMPSON, Senior Circuit Judge, dissenting:
Because | disagree with the conclusion in Part III of
the majority opinion that the EPA had the authority to
consider the impact on endangered and threatened species
in making its decision to transfer administration of the
pollution permitting system to the State of Arizona, I
respectfully dissent.
As the majority observes, the requirements of section
7 of the Endangered Species Act “apply to all fagency]
actions in which there is discretionary Federal involve-
ment or control.” 50 C.F.R. § 402.03. “Where there is no
agency discretion to act, the [Endangered Species Act]
does not apply.” Natural Res. Def. Council v. Houston, 146
F.3d 1118, 1125-26 (9th Cir. 1998). We have previously
held that an agency lacks the requisite discretion to act
when the agency does not have the authority to take
action on behalf of endangered or threatened species.
Ground Zero Ctr. for Non-Violent Action v. United States
Dep't of the Navy, 383 F.3d 1082, 1092 (9th Cir. 2004)
(where agency lacks discretion, to require compliance with
section 7 of the Endangered Species Act “would be an
exercise in futility”); Turtle Island Restoration Network v.
Nat'l Marine Fisheries Serv., 340 F.3d 969, 974 (9th Cir.
2003) (“(T]he discretionary control retained by the federal
agency must have the ability to inure to the benefit of a
protected species. If no discretion to act is retained, then
consultation would be a meaningless exercise.”) (internal
citation omitted); Sierra Club v. Babbitt, 65 F.3d 1502,
1509 (9th Cir. 1995) (“[W]here . . . the federal agency lacks
the discretion to influence the ... action, consultation
would be a meaningless exercise; the agency simply does
not possess the ability to implement measures that inure
to the benefit of the protected species.”).
App. 65
The majority interprets the “discretionary involve-
ment” language of 50 C.F.R. § 402.03 to be “coterminous
with” all actions “authorized, funded, or carried out” by a
federal agency. Stated differently, the majority now holds
that any action which comes within a federal agency’s
decisionmaking authority falls within the scope of section
7(a)(2) of the Endangered Species Act. In my view, our
cases do not take such an expansive view of the meaning
of § 402.03. Rather, we have consistently recognized 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 endan-
gered or threatened species. See Marbled Murrelet v.
Babbitt, 83 F.3d 1068, 1074-75 (9th Cir. 1996) (federal
agency's decision to consult with and to provide advice to
private entity was not discretionary agency action trigger-
ing section 7); Sierra Club v. Babbitt, 65 F.3d at 1508-1510
(holding that although the Bureau of Land Management
retained the right to object to a road development project
in three specified circumstances, “the agency simply (did)
not possess the ability to implement measures that inure
to the benefit of the protected species.”); cf. Turtle Island
Restoration Network, 340 F.3d at 975 (concluding that
Congress’ decision to use the words “‘including but not
limited to’” in the statute granting the Fisheries Service
the authority to issue fishing permits “contemplated that
the list of potential obligations that the United States had
under the Agreement was not exhausted by those listed in
the subsection”).
App. 66
Here, the EPA did not have discretion to deny transfer
of the pollution permitting program to the State of Ari-
zona; therefore its decision was not “agency action” within
the meaning of section 7 of the Endangered Species Act.’
The Clean Water Act, by its very terms, permits the EPA
to consider only the nine specified factors. If a state’s
proposed permitting program meets the enumerated
requirements, the EPA administrator “shall approve” the
program. 33 U.S.C. § 1342(b). This Congressional directive
does not permit the EPA to impose additional conditions.
Although the majority quite properly concludes that a
federal agency cannot escape its obligation to comply with
section 7 of the Endangered Species Act when it is “bound
to comply with another statute that has consistent, com-
plementary objectives,” Wash. Toxics Coalition v. EPA, 413
F.3d 1024 (9th Cir. 2005), here, the EPA has an obligation
* The majority concludes that pursuant to SEC v. Chenery Corp.,
318 U.S. 80, 87, 63 S.Ct. 454, 87 L.Ed. 626 (1943) (Chenery J), it may
not deny the petition for review on this basis because the EPA did not
contend that it lacked discretion to consult under section 7 in conjunc-
tion with the transfer of pollution permitting authority to Arizona. We
have, however, previously declined to take such a broad view of Chenery
and instead have observed that although “[glenerally, a reviewing court
may only judge the propriety of an agency’s decision on the grounds
invoked by the agency, . . . the court is not so bound when, as here, the
issue in dispute is the interpretation of a federal statute.” Ry. Execu-
tives’ Ass’n v. ICC, 784 F.2d 959, 969 (9th Cir. 1986). The majority's
conclusion further disregards our obligation to review an agency's
statutory mandate de novo, see Portland Adventist Med. Ctr. v. Thomp-
son, 399 F.3d 1091, 1095 (9th Cir. 2005); see also Am. Rivers v. FERC,
201 F.3d 1186, 1194 (9th Cir. 2000) (noting that review of “substantive
issues of statutory construction” “proceed|(s] along [a] different analytic
path []” and is “subject to [a] separate standard|] of review” than
review of an agency’s compliance with procedural requirements), and,
in doing so, to “give effect to the unambiguously expressed intent of
Congress.” Chevron v. Nat'l Res. Defense Council, 467 U.S. 837, 843, 104
S.Ct. 2778, 81 L.Ed-2d 694 (1984).
App. 67
‘to evaluate the state’s application against nine exclusive
requirements. 33 U.S.C. § 1342(b); see also Am. Forest &
Paper Ass'n v. EPA, 137 F.3d 291, 297 (5th Cir. 1998) (“The
language of [§ 1342(b)] is firm: .. . ‘Unless the Administra-
tor of EPA determines that the proposed state program
does not meet [the specified) requirements, he must
approve the proposal.’”) (quoting Save the Bay, Inc. v. EPA,
556 F.2d 1282, 1285 (5th Cir. 1977)); Natl Res. Defense
Council v. EPA, 859 F.2d 156, 173-74 (D.C. Cir. 1988)
(observing that “(t]he [Clean Water Act] specifies prerequi-
sites for state assumption of the program ... and com-
mands the Administrator to approve the state permit
system once he determines that the statutory require-
ments and administrative guidelines are met.”). To impose
the additional requirement of consultation under section 7
would be inconsistent both with the EPA’s statutory
obligation to consider only the requirements enumerated
in § 1342(b) and with the Clean Water Act’s clearly ex-
pressed objectives. See 33 U.S.C. § 1251(b) (“It is the policy
of the Congress to recognize, preserve, and protect the
primary responsibilities and rights of States to prevent,
reduce, and eliminate pollution,” and “that the States will
manage ... and implement” the NPDES pollution permit-
ting program).
Nor, in my view, does the EPA possess the kind of
continuing authority to monitor states’ administration of
their pollution permitting programs that would render its
oversight discretionary. As the majority notes, the EPA’s
limited oversight under 33 U.S.C. § 1342(c) relates only to
the substantive standards of the Clean Water Act and does
not grant any additional continuing review authority that
would permit meaningful section 7 consultation.
App. 68
The EPA’s authority to grant or to deny the State of
Arizona’s application to administer the pollution permit-
ting program was nondiscretionary; I would deny the
petition for review.
App. 69
67 Fed. Reg. 79629 (Dec. 30, 2002)
ENVIRONMENTAL PROTECTION AGENCY
FRL-7432-2]
State Program Requirements; Approval of
Application by Arizona To Administer the
National Pollutant Discharge Elimination System
(NPDES) Program; Arizona
AGENCY: Environmental Protection Agency (EPA).
ACTION: Notice.
SUMMARY: On December 5, 2002, the Regional Admin-
istrator for the Environmental Protection Agency, Region
IX (EPA), approved the application by the State of Arizona
to administer and enforce the Arizona Pollutant Discharge
Elimination System (AZPDES) Program, for all areas
within the State, other than Indian country. The authority
to approve State programs is provided to EPA in section
402(b) of the Clean Water Act (CWA). The State will
administer the approved program through the Arizona
Department of Environmental Quality (ADEQ), subject to
continuing EPA oversight and enforcement authority, in
place of the National Pollutant Discharge Elimination
System (NPDES) program previously administered by
EPA in Arizona. The program is a partial program to the
extent described in the section of this Notice entitled
National Pollutant Discharge Elimination System
(NPDES) program “Scope of the AZPDES Program.” In
making its decision, EPA considered and addressed all
comments and issues raised during the public comment
period.
App. 70
DATES: Pursuant to 40 CFR 123.61(c), the AZPDES
program was approved and became effective on December
5, 2002.
FOR FURTHER INFORMATION CONTACT: Mat-
thew Mitchell, USEPA Region IX (WTR-5), 75 Hawthorne
Street, San Francisco, CA, 94105, (415) 972-3508 or Chris
Varga, Federal Permits Unit, Arizona Department of
Environmental Quality, 1110 W. Washington St., Phoenix,
AZ, 85007, (602) 771-4665. Part of the State’s program
submission and supporting documentation is available
electronically at the following Internet address: http://
www.adeq.state.az.us/environ/water/permits/federal.html
SUPPLEMENTARY INFORMATION: Arizona’s appli-
cation was described in the Federal Register (67 FR
49916) on August 1, 2002, in which EPA requested com-
ments. Notice of Arizona’s application was published in the
Arizona Republic on August 13, 2002. A public hearing on
the application was held on September 4, 2002, in Phoe-
nix, AZ.
Section 402(c)(1) of the CWA provides that ninety days
after a State has submitted an application to administer
the NPDES program, EPA’s authority to issue such per-
mits is suspended unless EPA disapproves or approves the
State’s application. 40 CFR 123.21(b)(1). This ninety day
statutory review period ended on October 8, 2002. How-
ever, because of the many complex issues that were raised
with respect to the State’s program and the need to ad-
dress them in a comprehensive manner, EPA was unable
to make a final decision by October 8, 2002. Thus, EPA
suspended issuance of NPDES permits in Arizona on
October 8, 2002. However, failure to make a decision by
the October 8, 2002 deadline did not mean that the State
: App. 71
automatically gained NPDES authority. It is EPA’s inter-
pretation that a State agency does not gain NPDES
authority unless and until EPA approves the State pro-
gram, consistent with CWA section 402(b) and 40 CFR
123.1. As of December 5, 2002, the ADEQ is now author-
ized to issue AZPDES permits under the CWA in all areas
within the State, except for in Indian country.
A. Scope of the AZPDES Program
The AZPDES program is a partial program which
conforms-to the requirements of section 402(n)(3) of the
CWA. Specifically, Arizona is being approved to administer
both the NPDES permit program covering point source
dischargers to State waters and the pretreatment program
covering industrial sources discharging to publicly owned
treatment works.
Pursuant to CWA section 402(d), in specified circum-
stances EPA retains the right to object to AZPDES permits
proposed by ADEQ, and if the objections are not resolved,
to issue the permits itself. EPA also will retain jurisdiction
over all NPDES permits it has issued in Arizona until
ADEQ reissues them as AZPDES permits. Finally, EPA
and State have agreed that EPA may retain permitting
authority in certain limited circumstances, as set forth in
the Memorandum of Agreement between EPA and ADEQ.
As part of operating the approved program, ADEQ
generally will have the lead responsibility for enforcement.
However, EPA will retains [sic] its full statutory enforce-
ment authorities under CWA sections 308, 309, 402(i) and
504. Thus, EPA may continue to bring federal enforcement
action under the CWA in response to any violation of the
CWA, as appropriate. In particular, if EPA determines that
App. 72
the State has not taken timely and/or appropriate en-
forcement action against a violator in Arizona, EPA may
take its own enforcement action.
B. Public Comments
The EPA received numerous public comments concern-
ing the Arizona program.
Several commenters urged the EPA to approve the
State’s program. The EPA agrees that the State program
should be approved at this time outside Indian country.
Several commenters were concerned about impacts on
endangered species and historic properties associated with
EPA’s approval of the AZPDES program. In addition, a few
commenters urged that the EPA reject Arizona’s program
application on a variety of grounds.
All public comments are addressed in EPA’s Response
to Comments Document, dated December 5, 2002. In
addition, EPA actions taken in accordance with the re-
quirements of the Endangered Species Act and the Na-
tional Historic Preservation Act are described below in
Section C.
C. Other Federal Statutes
Endangered Species Act
Section 7(a)(2) of the Endangered Species Act (ESA),
16 U.S.C. 1536(a)(2), requires that federal agencies en-
sure, in consultation with the United States Fish &
Wildlife Service (FWS) that actions they authorize, fund,
or carry out are not likely to jeopardize the continued
existence of listed threatened or endangered species (listed
App. 73
species) or result in the destruction or adverse modifica-
tion of critical habitat designated for such listed species.
EPA consulted with the FWS under section 7(a)(2) of
the ESA regarding the effects of the AZPDES program
approval on listed species and designated critical habitat.
On December 3, 2002, the Service issued a biological
opinion concluding that EPA’s approval of Arizona’s
NPDES-application is not likely to jeopardize the contin-
ued existence of listed threatened or endangered species or
result in the destruction or adverse modification of their
critical habitat. In the opinion, the FWS also stated that it
does not anticipate that EPA’s action will result in the
incidental take of listed species. Issuance of the biological
opinion with these findings concludes the consultation
process required by ESA section 7(a)(2) and reflects the
Service’s agreement with EPA that the approval of the
State program meets the substantive requirements of the
ESA. :
National Historic Preservation Act
Section 106 of the National Historic Preservation Act
(NHPA), 16 U.S.C. 470(f), requires Federal agencies to
take into account the effects of their undertakings on
historic properties and to provide the Advisory Council on
Historic Preservation (ACHP) an opportunity to comment
on such undertakings. Under the ACHP’s regulations (36
CFR part 800), the Agency consults with the appropriate
State Historic Preservation Officer (SHPO) and/or Tribal
Historic Preservation Officer on federal undertakings
that have the potential to affect historic properties
listed or eligible for listing in the National Register of
Historic Places. During EPA’s review of the Arizona
App. 74
NPDES application, EPA engaged in discussions with the
Arizona SHPO regarding EPA’s determination that ap-
proval of the State permitting program would have no
effect on historic properties.
On August 23, 2002, EPA provided the Arizona
SHPO’s Office with EPA’s determination that approval of
Arizona’s application would have no effect on historic
properties in Arizona. As part of the coordination process,
the SHPO’s Office raised certain issues regarding approval
of the Arizona program for further discussions. By letter
dated September 23, 2002, the SHPO withdrew these
issues for consideration and informed EPA that it was
working with ADEQ to coordinate its activities in the
protection of Arizona’s cultural resources. On October 18,
2002, the SHPO and ADEQ entered into a Memorandum
of Understanding (MOU) assuring the SHPO that it would
receive notices of certain proposed permit actions. This
MOU further provides for coordination between ADEQ
and the SHPO to resolve any identified issues to ensure
that AZPDES permits will comply with Arizona water
quality standards and Arizona laws protecting historic
properties. For those permits with the potential to ad-
versely affect historic properties, ADEQ and the SHPO
agreed to seek ways to avoid, minimize or mitigate any
adverse effects to historic properties stemming from the
proposed permit. EPA believes that the agreement be-
tween ADEQ and the SHPO is consistent with EPA's
determination that approval of the State permitting
program would have no effect on historic properties.
App. 75
Regulatory Flexibility Act
Based on General Counsel Opinion 78-7 (April 18,
1978), EPA has long considered a determination to ap-
prove or deny a State NPDES program submission to
constitute an adjudication because an “approval,” within
the meaning of the APA, constitutes a “license,” which, in
turn, is the product of an “adjudication.” For this reason,
the statutes and Executive Orders that apply to rulemak-
ing action are not applicable here. Among these are provi-
sions of the Regulatory Flexibility Act (RFA), 5 U.S.C. 601
et seg. Under the RFA, whenever a Federal agency pro-
poses or promulgates a rule under section 553 of the
Administrative Procedure Act (APA), after being required
by that section or any other law to publish a general notice
of proposed rulemaking, the Agency must prepare a
regulatory flexibility analysis for the rule, unless the
Agency certifies that the rule will not have a significant
economic impact on a substantial number of small entities.
If the Agency does not certify the rule, the regulatory
flexibility analysis must describe and assess the impact of
a rule on small entities affected by the rule. Even if the
NPDES program approval were a rule subject to the RFA,
the Agency would certify that approval of the State’s
proposed AZPDES program would not have a significant
economic impact on a substantial number of small entities.
EPA’s action to approve an NPDES program merely
recognizes that the necessary elements of an NPDES
program have already been enacted as a matter of State
law; it would, therefore, impose no additional obligations
upon those subject to the State’s program. Accordingly, the
Regional Administrator would certify that this program,
even if a rule, would not have a significant economic
impact on a substantial number of small entities.
App. 76
E. Notice of Decision
I hereby provide public notice that EPA has taken
final action authorizing Arizona to implement the NPDES
program in all areas of the State except for Indian Coun-
try.
Authority: This action is taken under the authority
of section 402 of the Clean Water Act as amended, 42
U.S.C. 1342.
Dated: December 5, 2002.
Wayne Nastri,
Regional Administrator, Region IX.
[FR Doc. 02-32907 Filed 12-27-02; 8:45 am]
App. 77
United States Department of the Interior
[SEAL] U.S. Fish and Wildlife Service [LOGO]
Arizona Ecological Services Field Office
2321 West Royal Palm Road, Suite 103
Phoenix, Arizona 85021-4951
Telephone: (602) 242-0210 Fax: (602) 242-2513
In Reply Refer to:
02-21-02-F-0268 December 3, 2002
E-Mail Transmission
Mr. Terry Oda
Clean Water Act Standards and Permits Office (WTR-5)
U.S. Environmental Protection Agency, Region IX
75 Hawthorne Street |
San Francisco, California 94105
Dear Mr. Oda:
This letter constitutes the U.S. Fish and Wildlife Service’s
biological opinion (BO) pursuant to section 7 of the En-
dangered Species Act of 1973 (16 U.S.C. 1531-1544), as
amended (ESA). At issue is the U.S. Environmental
Protection Agency’s (EPA) approval of the State of Ari-
zona’s Arizona Pollutant Discharge Elimination System
(AZPDES) program and the impacts that may result from
the program transfer. Clean Water Act (CWA) section
402(b) states that EPA “shall approve” a State NPDES
program where the State program meets the conditions
specified in CWA section 402(b). All of the listed threat-
ened and endangered species and their designated or
proposed critical habitats in, adjacent to, or dependent on
surface waters in Arizona are considered in this biological
opinion.
This BO is based on information provided in the June 21,
2002 biological evaluation (BE), Arizona Department of
App. 78
Environmental Quality’s (ADEQ) project proposal, tele-
phone conversations with EPA, field investigations,
meetings, and other sources of information. Literature
cited in this BO ic not a complete bibliography of all
literature available on the species of concern, and its
effects, or on other subjects considered in this opinion. A
complete administrative record of this consultation is on
file at Arizona Ecological Services Field Office in Phoenix,
Arizona.
Consultation History
We received your request for formal consultation and the
attached BE on June 24, 2002. In your letter and BE, you
determined that the proposed transfer of authority to
ADEQ is simply an administrative action that is not likely
to have adverse effects on water quality and therefore is
not likely to adversely affect listed species or critical
habitat. On August 20, 2002, we responded to your letter
and requested more information, including how the section
7 process will continue to be implemented following
AZPDES approval The EPA responded in a letter we
received on August 22, 2002, that it would follow the
“Memorandum of Agreement Between the Environmental
Protection Agency, Fish and Wildlife Service, and National
Marine Fisheries Service Regarding Enhanced Coordina-
tion Under the Clean Water Act and Endangered Species
Act” (National MOA), and that the National MOA “proce-
dures contemplate close cooperation, but not section 7
consultation”.
Under the terms of the National MOA, we continued
exploring ways to retain conservation mechanisms equal
to or greater than those provided under section 7 of the
App. 79
ESA. On September 13, 2002, we met with you and ADEQ
to discuss the issue. At that meeting, ADEQ voluntarily
agreed to provide us copies of all future Notices of Intent
(NOIs) for the approval of construction stormwater per-
mits in northwest Tucson and other identified areas of
concern. ADEQ has also agreed to include a form letter
from us to the applicants informing them of ESA proce-
dures, the potential for section 9 violations of the ESA,
and how non-Federal applicants can obtain a section
10(a)(1)B permit for incidental take of endangered species.
ADEQ recently received a $79,000 grant from EPA to
develop a “Smart Notice Of Intent” system to be used
when Phase II of the construction stormwater permitting
program begins. However, while we see the value in
ADEQ’s offer and intend to accept it, we did not believe
the resulting process would provide the species conserva-
tion equivalent to that required of Federal agencies under
section 7 of the ESA since it does not provide sufficient
guidance for a landowner to determine if listed species
may be adversely affected, will not protect plant species,
and does not protect habitat essential for species recovery.
EPA will provide funding to ADEQ for three years to run
its program although EPA did not include funding as part
of the proposed action and was not considered in this BO.
Subsequently, EPA, ADEQ, and the FWS pursued avenues
to continue protection for listed species under the National
MOA. We elevated our concerns to our Region 2 office.
When our Regional! Director and EPA’s Regional Adminis-
trator could not resolve the issue on October 2, 2002, we
elevated the discussion to our respective Washington, D.C.
headquarters. In discussions with our Washington, D.C.
App. 80
office, we reviewed the definition of “indirect effect”. We
conclude that development in Arizona is reasonably
certain to occur in the future, but the transfer of the
permit authority will not cause the continued real estate
development. Therefore, we are not considering continued
development absent EPA’s administration of the program
to be an indirect effect of the proposed action. This exclu-
sion of certain impacts of development from our evaluation
of indirect effects is dependent on the specific circum-
stances of the program approval action considered in this
consultation and is not necessarily applicable to consulta-
tions on federally permitted actions or other Federal
permit programs. We elaborate on our reasoning in the
Effects of the Action section below.
January 14, 2002: EPA Region 9 received Arizona’s
AZPDES program submission.
January 23, 2002: EPA sent its request for informal
consultation on AZPDES approval.
February 15, 2002: EPA determined that Arizona’s
AZPDES program package is incomplete.
May 30, 2002: Teleconference between EPA Region 9 and
Arizona Ecological Services Field Office (AESO).
June 13, 2002: Teleconference between EPA Region 9 and
AESO.
June 24, 2002: EPA Region 9 submitted Biological
Evaluation to AESO requesting formal consultation and
' Indirect effects are those that are caused by the proposed action
and are later in time, but still are reasonably certain to occur 51
FR19958.
App. 81
determined that the AZPDES approval may affect, but is
not likely to adversely affect all Arizona listed species and
their critical habitats.
July 11, 2002: EPA Region 9, AESO, and FWS Region 2
conferenced.
August 20, 2002: AESO submitted request for more
information to EPA Region 9.
August 22, 2002: EPA indicated that it had already
supplied AESO with the necessary information.
September 13, 2002: AESO, EPA Region 9, and ADEQ
met to discuss ways to ameliorate the loss of Federal
conservation mandates under section 7 after AZPDES
approval. This meeting satisfied Level 1 criteria for
elevation under the National MOA.
September 26, 2002: AESO sent letter to EPA acknowl-
edging EPA's request for formal consultation.
October 2, 2002: FWS Region 2 Director and EPA Region
9 Administrator agreed to elevate issue according to
National MOA satisfying Level 2 requirements.
October 4, 2002: AESO and EPA Region 9 jointly submit-
ted an elevation paper according to the National MOA for
Level 3 review.
October 16, 2002: EPA Region 9 sent AESO copies of ESA
comments it received during its public comment period.
October 28, 2002: EPA Region 9 forwarded AESO copies
of Arizona Game and Fish Department comments regard-
ing AZPDES approval.
App. 82
November 1, 2002: Terry Oda and Steve Spangle met in
FWS Arizona Ecological Services Field Office to discuss
development of BO.
November 14, 2002: Transmitted draft BO to EPA.
November 20, 2002: Received electronic comments on
draft BO from EPA and ADEQ.
November 22, 2002: Telephone conference held between
EPA Region 9 and AESO.
November 27, 2002: Second draft BO sent to EPA.
December 2, 2002: EPA sent second draft BO comments
to AESO.
BIOLOGICAL OPINION
Description of the Proposed Action
The action in review is the proposed approval of AZPDES
for the State of Arizona by EPA Region 9. The CWA au-
thorizes States to administer the National Pollutant
Discharge Eliminating System (NPDES) program provided
the State program meets the conditions specified in CWA
section 402(b) and its implementing regulations. ADEQ
would administer the AZPDES program under State law,
which the EPA will have determined to be at least as
stringent as the CWA and its implementing regulations. A
significant benefit of Arizona’s assumption of the NPDES
program is that the number of State staff dedicated to
permit issuance and permit enforcement will be substan-
tially greater than that which was available to EPA when
it issued NPDES permits for Arizona. Currently, EPA has
2 full-time staff involved in permitting, planning, and
coordination activities for Arizona. There are also 2.5 full
App. 83
time employees currently working on compliance and
enforcement. Arizona currently has 10 staff assigned to its
water permitting program and is expected to hire another
9 staff for an estimated total of 19 staff. Because NPDES
permits are labor-intensive, increased staffing should
provide significant environmental benefits by ensuring
that high-quality permits are issued more timely, and that
expired, but administratively continued, NPDES permits
will be reduced. More State and EPA resources can now be
devoted to permit writing and compliance.
Also, ADEQ has voluntarily agreed to provide us copies of
all future NOIs for the approval of construction stormwa-
ter permits in northwest Tucson and other identified areas
of concern. ADEQ will include a form letter from us to the
applicants informing them of ESA procedures, the poten-
tial for section 9 violations of the ESA, and how non-
Federal applicants can obtain a section 10(a)(1)(B) permit
for incidental take of endangered species.
EPA has agreed to follow the National MOA coordination
process described in detail below for AZPDES permits
where there are concerns about any listed species or their
critical habitat, including aquatic-dependent species or
upland, terrestrial species. EPA notes that it does not have
CWA authority to object to State NPDES permits to
address non-water-quality-related concerns about listed
species or critical habitat.
I. Overview of the Federal Clean Water Act Pro-
grams
A. The Federal Clean Water Act
The CWA established the basic structure for regulating
discharges of pollutants into waters of the United States.
App. 84
It gave EPA the authority to implement pollution control
programs such as setting wastewater effluent standards
for industry. The CWA also required the establishment of
water quality standards (WQS) for all surface waters. The
CWA made it unlawful for any person to discharge any
pollutant from a point source into navigable waters, except
when in compliance with a NPDES permit. It also funded
the construction of sewage treatment plants under the
construction grants program and recognized the need for
planning to address the critical problems posed by non-
point source pollution.
The environmental protection goals of the CWA contain
specific references to protecting “fish”, “shellfish”, “wild-
life”, and “aquatic life”; these terms clearly encompass
federally listed and proposed species. Section 101(a)
provides as its goal to “restore and maintain the chemical,
physical, and biological integrity of the Nation’s waters” 33
U.S.C. § 1251(a)(2). This goal is consistent with the ESA’s
purpose of providing “a means whereby the ecosystems
upon which endangered species and threatened species
depend may be conserved (16 U.S.C. 1531 § 2(b)).
B. Water Quality Standards
Water quality standards are not a part of the proposed
action and therefore are not subject to this consultation.
However, because the AZPDES program must be adminis-
tered to comply with WQS, a brief discussion of WQS and
the status of WQS in Arizona is included.
Section 303 of the CWA requires States to develop water
quality standards which are designed to protect the public
health or welfare, enhance the quality of water and serve
the purposes of the CWA. Water quality standards consist
App. 85
of: 1) designated uses of waterways (e.g., protection and
propagation of fish, shellfish, and wildlife); 2) criteria
which will ensure the protection of designated uses; and 3)
an anti-degradation policy that protects existing uses and
provides a mechanism for maintenance of high water
quality. The CWA directs States to take into consideration,
among other things, the “propagation of fish and wildlife”
when revision or adopting WQS (33 U.S.C. § 1313(c)(2)(A)).
Under the CWA, the State must review and, if necessary,
revise adopted standards once every three years using a
public participation process.
The EPA has a mandatory duty to review and either
approve or disapprove WQS submitted by the State.
Pursuant to 40 CFR 131.21, WQS revisions submitted to
EPA do not become effective for CWA purposes until the
EPA acts to approve them. The CWA requires the EPA to
approve (within 60 days) or disapprove (within 90 days)
any WQS revisions submitted by the State. Upon disap-
proval, the EPA has the statutory duty to promptly pro-
pose and promulgate replacement standards. Where
required under Section 7 of the ESA, EPA consults with
the Service on federally promulgated WQS and on the
approval of new or revised State or Tribal water quality
standards and implementing procedures that are subject
to EPA review and approval under Section 303(c) of the
CWA.
The State of Arizona conducted a complete WQS program
revision on January 10, 1992. Following the State’s adop-
tion and submission of WQS on February 18, 1992, the
EPA initiated formal consultation with the Service pursu-
ant to Section 7 of the ESA on May 21, 1993. That consul-
tation, the first programmatic consultation on the Arizona
WQS, concluded on February 16, 1994 with a BO from the
App. 86
Service. On April 26, 1996, Arizona submitted revisions of
the State WQS to the EPA. On June 27, 1996, EPA initi-
ated Section 7 consultation with the Service on those
revisions, and on December 11, 1998, the consultations on
those revisions was concluded with the Service’s issuance
of a biological opinion. The State adopted revisions to the
April 26, 1996 WQS. These revisions were received by the
EPA on April 11, 2002. If necessary, the EPA’s action on
those revisions will be the subject of a separate consulta-
tion under Section 7.
C. National Pollutant Discharge Elimination System
Permit Program
The CWA sections 307, 318, 402, and 405 establish the
NPDES permit system to regulate the discharge of pollut-
ants from point sources into navigable waters (33 USC
1311, 1342). The NPDES program is the national program
from issuing, modifying, revoking and reissuing, terminat-
ing, monitoring and enforcing permits, and for imposing
and enforcing pretreatment requirements.
1. Permits
Permits are licenses for facilities to discharge a speci-
fied amount of pollutant into a receiving water under
certain conditions. In addition to discharge limita-
tions, NPDES permits impose other requirements
such as monitoring procedures and pollution preven-
tion measures (known as “best management prac-
tices”). Permits typically contain technology based
limits which represent the best conventional technol-
ogy (BCT), for conventional! pollutants (biological oxy-
gen demand, total suspended solids, fecal coliform,
App. 87
pH, and oil and grease), best available technology
economically achievable (BAT) for nonconventional
and toxic pollutants, and secondary treatment limits
for publicly-owned treatment works (POTWs) and
new source performance standards (NSPS) for new
sources. Where technology-based or secondary treat-
ment limits are not sufficient to meet water quality
standards in receiving waters, permits must contain
more stringent limits (known as water quality-based
limits or “WQBELs”) to meet those water quality
standards so that the receiving waters meet those
WQS. The CWA requires that NPDES permits contain
effluent limitations that contribute to the mainte-
nance and attainment of water quality which assures
“the protection and propagation of a balanced popula-
tion of shellfish, fish, and wildlife ... ” (33 U.S.C.
1312(a)).
There are two basic types of permits: individual and
general. An individual permit is a permit specifically
tailored for an individual facility. The permitting au-
thority develops a permit for that facility based on in-
formation contained in the permit application. Before
issuance, the permit is public noticed for 30 days.
Public notice of a draft permit elicits comments from
concerned individuals or agencies. The permitting au-
thority is obliged to respond to all significant com-
ments. A public hearing may be requested in writing
by any interested party. Upon resolution of any is-
sues, the permit may be issued to the facility for up to
five years.
A general permit is developed and issued by a permit-
ting authority to cover multiple facilities within a
specific category. These facilities must be in a geo-
graphical area that corresponds to existing geo-
graphic or political boundaries. General permits are
regulated under 40 CFR 122.28. These permits may
be written to cover categories of point sources having
App. 88
common elements such as storm water point sources;
facilities that involve the same or substantially simi-
lar types of operations; facilities that require the
same effluent limitations or operating conditions or
standards for sewage sludge use or disposal; facilities
that require the same monitoring where tiered condi-
tions may be used for minor difference within class;
and facilities that are more appropriately regulated
by a general permit. The general permit clearly iden-
tifies the applicable conditions for each category or
subcategory of dischargers are subject to the regu-
lated water quality based limits. Typical general per-
mits include those for Concentrated Animal Feeding
Operations (CAFOs), de minimis dischargers, and
storm water dischargers. These permits are subject to
the same administrative processes for review and
comment as individual permits.
After the development of the general permit, dis-
chargers seeking coverage under a general permit
submit to the permitting authority a written notice of
intent (NOI) to be covered by the general permit. The
requirements for the contents of the notice of intent
are specified in the general permit. While there is no
public comment opportunity on the general permit,
the NOI submittal process generally does not provide
a specific opportunity for public comment.
2. Pretreatment
Pretreatment programs are designed to eliminate the
serious problems posed when toxic pollutants are dis-
charged into sewage systems. The CWA called for the
EPA to develop National Pretreatment Standards to
restrict the quantity of toxic industrial pollutants dis-
charged into sewage systems. These standards forbid
certain types of discharges by any sewage system user
(40 CFR 403.5) and place restrictions on 126 toxic
App. 89 .
pollutants for specific industrial categories. Publically
owned treatment works (POTWs) with flows greater
than 5 million gallons per day (mgd) or smaller
POTWs with significant industrial dischargers are
required to develop local pretreatment programs
which must enforce all National Pretreatment Stan-
dards.
II. State NPDES Approval
The purpose of this section is to explain the legislative
authorities that allow a State to be authorized to operate a
NPDES program, the minimum requirements of a State
that wishes to receive authority to operate a NPDES
program, and the process for a State to apply for the
authority to operate a NPDES program. This section will
also provide a description of the current status oi Arizona’s
application for authority to operate the AZPDES program.
A. Legislative Authorities .
States may be approved to administer the NPDES pro-
gram. While the CWA does not require that states operate
the NPDES program, the CWA’s language and legislative
history clearly reflect a Congressional intent that states be
primarily responsible for administering the program (33
U.S.C. 1251(b))'. States may choose to apply for the
' “It is the policy of Congress to recognize, preserve, and protect
the primary responsibilities and rights of States to prevent, reduce, and
eliminate pollution, to plan the development and use (including
restoration, preservation, and enhancement) of land and water re-
sources, and to consult with the Administrator in the exercise of his
authority under this Act. It is the policy of Congress that the states
manage the construction grant program under this Act and implement
the permit programs under sections 402 and 404 of this Act. It is
(Continued on following page)
App. 90
following programs: basic municipal and industrial permit
program, pretreatment program, Federal facilities pro-
gram, general permit program, and sludge permit pro-
gram. The approval process is a shift in administration of
the program from the EPA to the State or Tribe. The State
or Tribe administers the program under State or Tribal
law, which the EPA has determined to be at least as
stringent as the CWA and its implementing regulations.
Any programmatic actions taken by the State or Tribe are
State or Tribal actions, not Federal actions.
B. State Requirements
Under section 402 of the CWA, eligible States can obtain
the EPA’s approval to operate their own NPDES permit
programs, provided they meet the requirements of section
402 (b) and applicable Federal regulations at 40 CFR 122,
123, 124, and 125, and that it has the resources and legal
authority to do so. States must have the legal authority to
implement all of the required provisions, and the program
must be administered in conformance with each provision.
To date, forty-four states have authorized NPDES pro-
grams.
C. Application Process
The EPA has 30 days from receipt of a State program
submission to notify the State whether its submission is
further the policy of the Congress to support and aid research relating
to the prevention, reduction, and elimination of pollution, and to
provide Federal technical services and financial aid to State
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