The Supreme Court Limits The Scope Of The Endangered Species Act In Defenders of Wildlife

In welcome news for the regulated community, on June 25 the Supreme Court limited the reach of the Endangered Species Act. The opinion in National Ass’n of Home Builders v. Defenders of Wildlife is available at http://www.supremecourtus.gov/opinions/06pdf/06-340.pdf. Crowell & Moring prepared amicus briefs on the winning side for the American Farm Bureau Federation and CropLife America.

The 5-4 opinion, authored by Justice Alito, reverses the Ninth Circuit’s broad reading of the ESA in Defenders of Wildlife v. EPA, 420 F.3d 946 (9th Cir. 2005), rehearing denied, 450 F.3d 394 (9th Cir. 2006). The Ninth Circuit and many other lower courts have viewed the ESA as an uncompromising super-statute. The original source for these broad ESA readings is the Supreme Court’s famous Tellico Dam/snail darter decision, Tennessee Valley Authority v. Hill, 437 U.S. 153 (1978). There, the Supreme Court stated that ESA § 7 “require[s federal] agencies to afford first priority to the declared national policy of saving endangered species.” 437 U.S. at 185. Defenders of Wildlife reduces the force of that rhetoric. It is the first Supreme Court decision that squarely finds and enforces limits on the scope of the ESA.

Defenders of Wildlife addresses the relationship between § 402(b) of the Clean Water Act (33 U.S.C. 1342(b)) and ESA § 7 (16 U.S.C. 1536). ESA § 7(a)(2) requires each federal agency to consult with the U.S. Fish and Wildlife Service (or National Marine Fisheries Service) on the effect the agency action may have on endangered and threatened species listed under the ESA. If the agency action is likely to jeopardize the continued existence of a listed species or adversely modify critical habitat, normally ESA § 7 prevents that action. In contrast, CWA § 402(b) provides that EPA “shall” transfer water pollution permitting authority to a State whose water program meets nine exclusive standards. None of those standards allows consideration of impacts on ESA-listed species.

The Ninth Circuit held that ESA § 7(a)(2) provides a federal agency with overriding authority and legal duties. One portion of the Ninth Circuit’s opinion concludes that a federal agency cannot approve any action procedurally until ESA § 7 consultation with FWS has been completed. Another portion of that opinion reads ESA § 7(a)(2) as substantively prohibiting a federal agency from authorizing any action that is likely to jeopardize the continued existence of a listed species or adversely modify critical habitat, regardless of directives and restrictions on the agency’s authority in other statutes. The Ninth Circuit’s rationale suggests EPA must consider the effects on ESA-listed wildlife of water pollution permits the State of Arizona might issue in the future, even the effects of private development of uplands on desert-dwelling species (like cactus ferruginous pygmy owls) if another portion of that development required a water pollution permit. If EPA could not ensure that such private development supported by a State permit would not jeopardize any listed species in the future, the Ninth Circuit’s view apparently was that ESA § 7 would prohibit EPA from transferring the permitting authority.

In the June 25 decision, the Supreme Court reversed the Ninth Circuit. The Court concluded that ESA § 7 does not apply to EPA’s transfer decision under CWA § 402(b).

The Court’s primary analysis is as follows. The statutory directives in CWA § 402(b) and ESA § 7(a)(2) appear to conflict. See Section III.A of the opinion. Due to this legal uncertainty, courts should grant Chevron deference to the Service’s reasonable interpretation in 50 C.F.R. 402.03 that ESA § 7 operates only to the extent an agency has “discretion” to consider impacts to listed species under its organic statutes. See Section III.C of the opinion.

The majority opinion cites at least three other supporting grounds. First, the “common-sense conclusion,” supported by the Solicitor General, is that an “agency cannot be considered the legal ‘cause’ of an action that it has no statutory discretion not to take.” Id. Second, the more specific CWA § 402(b) should control over the more general ESA § 7. See Section III.B of the opinion. Third, the pertinent federal agencies ultimately interpreted 50 C.F.R. 402.03 as meaning ESA § 7 does not apply to EPA’s transfer decisions under CWA § 402(b), and the agencies’ construction of a lawful rule is normally controlling under Auer v. Robbins. See Section IV of the opinion.

Importantly, the Supreme Court found that TVA v. Hill does not control and does not require the ESA interpretation that affords protection of ESA listed species the highest priority. See Section III.D of the opinion.

All of this provides hope the regulated community can utilize Defenders of Wildlife to avoid future administrative and judicial decisions that would otherwise continue to rely on a three-decade old decision that protection of listed species is an inflexible “first priority . . . whatever the cost.” TVA v. Hill, 437 U.S. at 184-85.