Defenders of Wildlife; Center for Biological Diversity; Craig Miller v. UNITED STATES ENVIRONMENTAL  EPA No. PROTECTION AGENCY, 67-Reg. 79629

Volume 1 of 2
FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
 DEFENDERS OF WILDLIFE;
CENTER FOR BIOLOGICAL DIVERSITY;
CRAIG MILLER,
Petitioners,
v. No. 03-71439
UNITED STATES ENVIRONMENTAL  EPA No.
PROTECTION AGENCY, 67-Reg. 79629
Respondent,
NATIONAL ASSOCIATION OF HOME
BUILDERS; STATE OF ARIZONA;
ARIZONA CHAMBER OF COMMERCE,
Intervenors. 
 DEFENDERS OF WILDLIFE;
CENTER FOR BIOLOGICAL DIVERSITY,
Plaintiffs-Petitioners,
v. No. 03-72894
ROBERT B. FLOWERS, Chief of No. CV-02- Engineers and Commander, US  01195-CKJ Army Corps of Engineers.,
Defendant-Respondent, OPINION
CHRISTINE TODD WHITMAN,
Administrator US Environmental
Protection Agency,
Defendant-Respondent, 
10983

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 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. 
On Petition for Review of an Order of the
Environmental Protection Agency
Argued and Submitted
November 1, 2004—San Francisco, California
Filed August 22, 2005
Before: Stephen Reinhardt, David R. Thompson, and
Marsha S. Berzon, Circuit Judges.
Opinion by Judge Berzon;
Dissent by Judge Thompson
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COUNSEL
Michael P. Senatore (argued), Michael P. Senatore, Defenders
of Wildlife, Washington, D.C., Eric R. Glitzenstein, Meyer &
Glitzenstein, Washington, D.C., Vera S. Kornylak, Arizona
Center for Law in the Public Interest, Tucson, Arizona (on the
brief), for the petitioners.
Robert L. Gulley (argued), Thomas L. Sansonetti, Robert L.
Gulley, John M. Lipshultz, Andrew Mergen, U.S. Department
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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, Arizona, 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, Arizona, for interve-
nors National Association of Home Builders, et al.
OPINION
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 case concerns Arizo-
na’s application to run the Clean Water Act pollution permit-
ting 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 spe-
cies and their habitat.
The plaintiffs in this case challenge the EPA’s transfer
decision, particularly its reliance on the Biological Opinion’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
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threatened species and their habitat when it decides whether
to transfer water pollution permitting authority to state gov-
ernments? For the reasons explained below, we hold that the
EPA did have the authority to consider jeopardy to listed spe-
cies 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 peti-
tion and remand to the EPA.
I. Background
A. The National Pollution Discharge Elimination System
(NPDES)
The Clean Water Act (“the Act”), passed in 1972, estab-
lished the National Pollution Discharge Elimination (“pollu-
tion permitting”) System. That System gave the EPA author-
ity to issue permits for the discharge of pollutants into naviga-
ble 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 regarding waters within its bor-
ders. § 1342(b). The EPA Administrator must determine
whether the state has met nine specified criteria and “shall
approve” state applications that meet those criteria. Id.
The state transfer provisions of § 1342(b) have proven pop-
ular. Arizona was the forty-fifth state to obtain pollution per-
mitting 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 stan-
dards. 33 U.S.C. § 1342(c)(2). If the Administrator deter-
mines that the state is not following those standards, the
Administrator must demand corrective action. If the state does
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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 (1978). The present case focuses on
section 7 of the Endangered Species Act, 16 U.S.C. § 1536.
Section 7(a)(2) imposes substantive and procedural require-
ments 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 continued existence of any
endangered species or threatened species or result in the
destruction or adverse modification of [critical] habitat of
such species.” Id. 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 Sec-
retary [of the Interior].” Id.
Endangered Species Act regulations1 describe the consulta-
tion and action requirements imposed on agencies. Section 7’s
requirements apply “to all actions in which there is discretion-
ary Federal involvement or control.” 50 C.F.R. § 402.03. An
agency must determine if a proposed action “may affect”
either endangered or threatened 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.
1The relevant Endangered Species Act regulations were jointly issued
by the FWS, Department of the Interior, National Marine Fisheries Ser-
vice, National Oceanic and Atmospheric Administration, and Department
of Commerce. See 50 C.F.R. ch. 4.
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§ 402.14(a). During such consultations, the FWS issues a Bio-
logical Opinion analyzing whether the action is likely to jeop-
ardize 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 dis-
cussion 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 spe-
cies or result in the destruction or adverse modification of
critical habitat.” § 402.14(h).
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. “In-
direct effects are those that are caused by the proposed action
and are later in time, but still are reasonably certain to occur.”
Id.
By its terms, section 7(a)(2) applies only to “federal agenc-
[ies],” 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 Marine Fisheries Service] under section 7 of the
[Endangered Species Act] on . . . approval of State National
Pollutant Discharge Elimination (NPDES) permitting pro-
grams” 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,
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2001). Asserting that the “EPA’s oversight includes consider-
ation of the impact of permitted discharges on waters and spe-
cies 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 endan-
gered species concerns to state water pollution permitting agen-
cies.2 Id. at 11,216. The Memorandum is not, however,
binding on states. Id. at 11,206 (“[T]he MOA . . . does not
impose any requirements on States.”). Rather, the EPA will
“encourage the State . . . to facilitate the involvement of per-
mittees” in the described processes. Id. at 11,216 (emphasis
added).
C. The EPA’s approval of Arizona’s pollution permitting
transfer application
The State of Arizona (Arizona) applied on January 14,
2002 for transfer of pollution permitting authority regarding
Arizona waterways (except those on Indian land). 67 Fed.
Reg. 49,916, 49,917 (Aug. 1, 2002). Under that proposal, the
Arizona Department of Environmental Quality (ADEQ) was
to be responsible for issuing water pollution permits. The
EPA’s regional office in San Francisco determined 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 “[s]ection 7(a)(2) of the [Endan-
gered 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 49,919.3
2We discuss these procedures in more detail in Part III(D)(2)(a), infra.
3The EPA has followed the section 7 consultation process before trans-
ferring permitting authority to states for more than a decade. Every pollu-
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During the course of the consultation, FWS field office
staff in Arizona expressed serious reservations about the pro-
posed transfer. FWS staff noted that section 7 consultations
regarding past pollution permits in Arizona had led to mitigat-
ing 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, particu-
larly the southwestern willow flycatcher, Pima pineapple cac-
tus, Huachuca water umbel, cactus ferruginous pygmy owl,4
“and perhaps other species.” The staff concluded “that the
transfer of this program from EPA to the State causes the loss
of protections to species resulting from the section 7 process,
and the impact of this loss must be taken into account in the
tion permitting transfer decision since 1993 has involved 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).
4We note that FWS has proposed removing the pygmy owl 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 eventu-
ally 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.
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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 regulate 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,” summariz-
ing their respective opinions. Pursuant to the Memorandum of
Agreement, this document transferred authority over the Bio-
logical 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 Ecologi-
cal 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 mea-
sures protecting listed species, including the Pima pineapple
cactus, razorback sucker, Gila topminnow, southwestern wil-
low flycatcher, and cactus ferruginous pygmy owl. Although
Arizona could voluntarily consult with FWS regarding pollu-
tion permits, neither the EPA nor FWS could require Arizona
to act on behalf of listed species.
After recognizing this impact of the transfer of permitting
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
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program. Rather, the absence of the section 7 process
that exists 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 require-
ments 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 anal-
ysis, our field office staff biologists have expressed
concerns that the approval will result in loss of sec-
tion 7 consultation-related conservation benefits. We
have stated our belief that the loss of section 7 con-
servation benefits is an indirect effect of the authori-
zation. Furthermore, we have stated that this loss of
conservation benefits will appreciably reduce the
conservation status of the cactus ferruginous pygmy-
owl and the Pima pineapple cactus. Notwithstanding
this, our final opinion is that the loss of section 7-
related conservation 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 sec-
tion 7 processes for consultation will no longer
apply. Essentially, there will be no substantive
change in the permit program, but there will be a
reduction in the number of mechanisms available to
both of our agencies to protect federally-listed spe-
cies and critical habitat in Arizona. We believe that
the assumption of the program by the State of Ari-
zona 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
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reduction in Federal [Endangered Species Act] con-
servation responsibilities.5
As an alternative to this lack-of-causation analysis, the Bio-
logical Opinion stated that other federal and state laws would
sufficiently protect endangered species, so that transfer of per-
mitting authority would not likely jeopardize 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 con-
cerns 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 Department6 indicated that his depart-
ment had “worked cooperatively with ADEQ” when review-
ing past water pollution permit applications and “look[ed]
forward to continuing this level of cooperation between our
agencies.” Noting the EPA-FWS Memorandum of Agree-
ment, 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
5The 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.
6The official, Bob Broscheid, whose title at the Arizona Game and Fish
Department is “Project Evaluation Program Supervisor,” wrote to an offi-
cial at the EPA’s regional office that would supervise Arizona’s permitting
decisions. He also carbon copied an ADEQ official. Broscheid’s letter
describes the Game and Fish Department’s understanding of its role but
does not purport to speak for ADEQ.
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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 considered these comments in making our final
determination on the application.”
FWS staff had earlier suggested the development of a for-
mal memorandum of understanding with ADEQ or the Ari-
zona 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 Biologi-
cal Opinion “appropriately considered all relevant information
regarding the effects of the approval.” The Arizona Depart-
ment of Environmental Quality (ADEQ) currently operates
the program, issuing permits for water pollution. See ADEQ:
Permits, at http://www.azdeq.gov/environ/water/permits/
index.html (last visited July 5, 2005).
Petitioners, Defenders of Wildlife, the Center for Biologi-
cal Diversity, and Craig Miller, a resident of Pima County,
Arizona (collectively, Defenders) challenge the pollution per-
mitting transfer in two lawsuits, consolidated before us. In the
first, Defenders filed a petition for review of the EPA’s trans-
fer decision with this court. The petition alleges that the EPA
failed adequately to consider the transfer’s impact on endan-
gered and threatened species and their habitat, and, in particu-
lar, that the EPA’s reliance 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,
supporting the transfer but taking some issue with the EPA’s
administrative practices and reasoning: the National Associa-
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tion of Home Builders and several Arizona home builders’
associations (Home Builders); the Arizona Chamber of Com-
merce 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 sup-
porting 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 Opin-
ion challenge pursuant to 33 U.S.C. § 1369(b)(1)(D), and
ordered that challenge severed from other claims in the dis-
trict court, transferred to this court, and consolidated with
Defenders’ suit challenging the EPA transfer.
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. Plu-
mas 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
[1] “[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 determi-
nation as to a State permit program submitted under section
1342(b).” The Chamber argues that § 1369(b) authorizes
review only of the EPA Administrator’s transfer decision, not
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of a Biological Opinion completed by the FWS that informs
that decision.
[2] We disagree. The Supreme Court has noted that biologi-
cal opinions typically have a “virtually determinative effect”
on the ultimate agency action. Bennett v. Spear, 520 U.S. 154,
170 (1997); see also id. at 169 (noting that a Biological Opin-
ion “in reality . . . has a powerful coercive effect on the action
agency” with the potential to “alter[ ] the legal regime to
which the action agency is subject”). It would be anomalous
to review the ultimate agency “determination” while ignoring
the reasoning contained in a biological opinion “virtually
determinative” of that action.
The actual sequence of events in this instance in consistent
with the Supreme Court’s observations in Bennett regarding
the impact of a biological opinion on an agency’s final deci-
sion. The EPA Administrator’s decisionmaking process
before approving Arizona’s permitting transfer application
included section 7 consultation with FWS and the consider-
ation of the Biological Opinion that resulted from it: The ini-
tial dispute between the EPA and FWS regarding the
Biological Opinion was “elevated” to the national level, and
the final Biological Opinion incorporated the results of con-
sultation between the EPA and FWS. The final EPA decision,
in turn, followed the issuance of the Biological Opinion by
two days. In its unpublished Response to Comments regard-
ing 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 pro-
ceeding with its approval action.” The EPA went on to
approve the Biological Opinion’s conclusions, stating its
determination 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
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that the conclusions in FWS’s biological opinion are incor-
rect.”
The EPA, as part of the statutorily mandated consultation
process, approved of and relied upon the Biological Opinion
when considering Arizona’s transfer application. Evaluating
the Opinion’s evidentiary and analytic basis is thus integral to
reviewing the EPA’s final decision.7
[3] We conclude that we have jurisdiction to consider the
adequacy of both the section 7 consultation and the Biological
Opinion that resulted from it while reviewing the EPA’s final
decision.
B. Standing
[4] 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
(1984). As Defenders’ members meet this three-part test,
Defenders has organizational standing to represent their inter-
ests.
Several Defenders’ members reside in Arizona and photo-
graph 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 mem-
bers do so regularly and plan to continue doing so in the
future, because, among other reasons, these activities bring
them recreational, aesthetic, and spiritual fulfillment. The
members’ activities occur on and near land — such as the
upper San Pedro River region, the Sonoran Desert near
7The 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.
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Saguaro National Park and Tortolita Mountains Park, and the
Verde River region — where significant commercial and resi-
dential development is taking place, development that
depends on water pollution permits. The members assert, con-
sistently with the Biological Opinion, that section 7 consulta-
tion has in the past led to mitigation measures by real estate
developers in these areas and has thereby protected listed spe-
cies and their habitat. They further assert that the loss of sec-
tion 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.
[5] The members thus “observe[ ] or work[ ] with . . . par-
ticular animal[s and plants] threatened by a federal decision,”
Lujan v. Defenders of Wildlife, 504 U.S. 555, 566 (1992);
allege a harm to those animals and their habitat throughout
Arizona; and assert “that [they have] an aesthetic or recre-
ational interest in a particular place, or animal, or plant spe-
cies . . . 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 Envtl.
Servs., Inc., 528 U.S. 167, 182-83 (2000)); see also Kootenai
Tribe of Idaho v. Veneman, 313 F.3d 1094, 1109-10 (9th Cir.
2002) (holding that regular “recreation and nature apprecia-
tion” on land covered by challenged agency action established
injury-in-fact). Those allegations meet the criteria for demon-
strating 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 Defenders’ members who filed
declarations, however, mention 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
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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.
[6] The alleged injuries are fairly traceable to the EPA’s
pollution permitting transfer decision. As alleged by Defend-
ers, that decision will remove water pollution permitting deci-
sions from the significant protections provided by section 7.
[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 requirements, and
the plaintiffs in this case have alleged violations of both
requirements. They thus have alleged, in addition to substan-
tive noncompliance, “procedural” harms, as described in
Lujan and subsequent cases — here, lack of adequate consul-
tation 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. To establish standing by alleging proce-
dural harm, the members must show only that they have a
procedural right that, if exercised, could protect their concrete
interests 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 (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).
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The members have met these procedural harm require-
ments. They have, first, established a reasonable probability
that the challenged action will threaten their concrete inter-
ests. See Citizens for Better Forestry v. U.S. Dep’t 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 decisions meets that bar, as the vio-
lation lessens the likelihood that environmental considerations
will be attended to in making those decisions. Id. at 972-75.
Similarly, the use of improper section 7 consultation by rea-
son of an inadequate 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 ger-
mane 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.
The interests at stake — the protection of endangered species
— plainly 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.
[8] Accordingly, we hold that Defenders has standing to
challenge the EPA’s pollution permitting transfer decision.
See Defenders of Wildlife v. Flowers, No. 03-16884, Slip Op.
at 8108 (9th Cir. 2005) (holding that Defenders has standing
to challenge particular construction permits in Arizona
because of “their members’ interest” in species that might live
where construction would occur).
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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);8 50 C.F.R. § 402.15(a) (requiring each agency
to determine how to proceed “in light of its section 7 obliga-
tions and the Service’s biological opinion”). Defenders allege
that the EPA failed to satisfy this obligation and thus acted
arbitrarily and capriciously, in violation of the Administrative
Procedure Act.9 See 5 U.S.C. § 706(2)(A); Am. Mining Cong.
v. EPA, 965 F.2d 759, 763 (9th Cir. 1992) (applying
8The 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
critical, unless such agency has been granted an exemption for
such action by the Committee pursuant to subsection (h) of this
section. In fulfilling the requirements of this paragraph each
agency shall use the best scientific and commercial data avail-
able.
16 U.S.C. §§ 1536(a)(1)-(2) (emphasis added).
9All parties agree that arbitrary and capricious review applies to
Defenders’ petition for review.
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§ 706(2)(A) arbitrary and capricious review to § 1369(b) peti-
tion).
An agency decision will survive arbitrary and capricious
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 explana-
tion for its decision that runs counter to the evidence
before the agency, or is so implausible that it could
not be ascribed 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 (1983) (citations omitted). Agency
decisions may not, of course, be inconsistent with the govern-
ing statute. 5 U.S.C. § 706(2)(A) (instructing courts to “set
aside” agency 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. FWS, 273 F.3d 1229,
1236 (9th Cir. 2001) (quoting Marsh v. Or. Natural Res.
Council, 490 U.S. 360, 378 (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 “internally 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
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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 arbi-
trary 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 Opin-
ion or otherwise, considered all the relevant Endangered Spe-
cies 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 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 trans-
fer application cannot survive arbitrary and capricious review
because the EPA relied during the administrative proceedings
on legally contradictory positions regarding its section 7 obli-
gations. Its reasoning was therefore “internally inconsistent
and inadequately explained.” Gen. Chem. Corp., 817 F.2d at
857.
The EPA definitively stated several times during the deci-
sionmaking process, including when announcing its final
decision, that section 7 requires consultation regarding 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 application because, pursuant to 50
C.F.R. § 402.14(a), approving that application “may affect”
listed species, see 67 Fed. Reg. 49,916, 49,917, 49,919 (Aug.
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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 permitting
authority to Arizona “may affect” listed species and their crit-
ical habitat. See 50 C.F.R. § 402.14(a) (requiring consultation
when an agency determines its action “may affect” listed spe-
cies or critical habitat). The EPA, in its unpublished biologi-
cal evaluation, made this determination in recognition that in
the absence of section 7 consultation on each permitting deci-
sion, “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 litiga-
tion 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 regarding pollution per-
mitting 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. Id. 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
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this position in its decision in this case. At oral argument, the
EPA declined to take a position as to whether it has an obliga-
tion under section 7(a)(2) to consult with FWS with regard to
permitting transfer decisions — even though, during the deci-
sionmaking process, the 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 (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 con-
cluding 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 disap-
prove transfer applications because of an impact on listed spe-
cies, section 7(a)(2) of the Endangered Species Act notwith-
standing; (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 devel-
opment, and the transfer decision would not cause such devel-
opment. 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 do anything con-
cerning the matter about which it had to consult. One would
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not expect that Congress would set up such a nonsensical
regime. Not surprisingly, it did not.
[9] 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.10 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 jeopardize the contin-
ued existence of any endangered species or threatened species
or result in the destruction or adverse modification of [criti-
cal] 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 jeopardizing 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.
[10] 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 permitting
authority, but (2) it is not permitted, as a matter of law, to take
into account the impact on listed species in making the trans-
fer decision — cannot both be true. Because the agency’s
decisionmaking was based on contradictory views of the same
words in the same statutory provision, the ultimate decision
was not the result of reasoned decisionmaking.
10As described above, section 7 consultation is triggered by a determi-
nation 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 jeopar-
dize” listed species or “adverse[ly] modif[y]” 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.
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[11] 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 (2004) (“[T]here are often mul-
tiple interrelated factual events that combine to cause any
given injury.”). Obviously, without private decisions to con-
struct 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 devel-
opment 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
determination to the contrary disregards the obvious cause
analysis and thus fails the reasoned decisionmaking standard.
[12] 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 con-
sultation was not an effect of its transfer decision because the
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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 “ac-
tion” be one for which the agency can fairly be ascribed
responsibility, namely, an action “authorized, funded or car-
ried out” by the agency; and (2) that there is the requisite
nexus to an impact on listed species, namely, a direct or indi-
rect effect “likely to jeopardize the continued 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 obliga-
tion to “insure” against jeopardizing listed species, and the
actions covered.
1. Nexus
[13] 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 “control this development to the
extent that [it] control[s] the placement of the highway and
interchanges.” Id. at 374. Recently, the Supreme Court in
Department of Transportation v. Public Citizen, 541 U.S.
752, 770 (2004) endorsed a similar standard to that used in
National Wildlife Federation, albeit under a different statute.
Public Citizen concerned the application of the National
Environmental Policy Act (NEPA), 42 U.S.C. §§ 4321-4370f,
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regulations to the U.S. Department of Transportation’s (DOT)
regulations governing safety rules for Mexican trucks travel-
ing on American roads. The NEPA regulations share with the
Endangered Species Act regulations a similar definition of
“indirect effects.” Compare 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 foresee-
able.”) 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
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 (emphasis added); see
also id. at 767 (analogizing “cause” inquiry for purpose of
defining “indirect effects” to proximate cause inquiry in tort
law).
[14] Given the similarity in the applicable regulations, we
adopt the Public Citizen standard for purposes of determining
the likely effects of agency action under section 7(a)(2) of the
Endangered Species Act. Accordingly, deciding whether the
Biological Opinion followed Endangered Species Act regula-
tions 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 pollu-
tion permitting authority to Arizona. If so, then the EPA’s
transfer decision can be a cause of the loss of section 7 con-
sultation benefits; the loss of those benefits should have been
included in the Biological 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.
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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 Endangered
Species Act. The former option is not presented here,11 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 application 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 authorized, funded or
carried out by such agency”12 will not jeopardize listed spe-
cies or their critical habitat is addressed to each agency, with-
out exception. Our question is: what does it require each
agency to do?
[15] The ordinary meaning of “insure” as used in this con-
text requires agencies to take action, as dictionary definitions
make clear. To “insure” is “[t]o make (a person) sure (of a
thing)” and “[t]o make certain, to secure, to guarantee (some
thing, event, etc.)”).13 VII THE OXFORD ENGLISH DICTIONARY
11No party questioned 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.”).
12We refer to such actions as “agency actions.”
13This 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 money in the
event of loss.” THE OXFORD ENGLISH DICTIONARY 1059 (2d ed. 1989).
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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, Tennessee
Valley Authority v. Hill, 437 U.S. 153, 180 (1978), confirms
this textual interpretation:
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 affir-
matively 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
language admits of no exception.
437 U.S. at 173 (first alternation added, other alterations in
original) (citation omitted).14 An “affirmative command” by a
14The 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 (1989).
Further, National Wildlife Federation was not a case concerning a fed-
eral 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 (1995).
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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
construction of the dam, the Court in Hill relied on Con-
gress’s use of “the plainest of words” and section 7’s equally
plain legislative history, id. at 194, to hold that further con-
struction was in “irreconcilable conflict” with section 7. Id. at
193; see also id. at 184 (“The plain intent of Congress in
enacting this statute was to halt and reverse the trend toward
species extinction, whatever the cost.”).
[16] 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 conferred
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 practicable and consistent
with [an agency’s] primary purpose.” See Pub. L. 89-669
§ 1(b), 80 Stat. 926 (1966); Hill, 437 U.S. at 181 & n.26. The
final version of the statute “carefully omitted [those] reserva-
tions,” id. at 182, 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.” Id. at 185 (emphasis added);
see also id. at 174 (“Congress intended endangered species to
be afforded the highest of priorities.”) (quoted in Wash. Tox-
ics Coalition v. EPA, No. 04-35138, 2005 WL 1523669, at *5
(9th Cir., June 29, 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 protec-
tion 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
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carrying out programs for the conservation of [listed] spe-
cies.” 16 U.S.C. § 1536(a)91). Section 7(a)(2), in contrast,
does not refer to agencies’ existing “authorities,” but instead
directs agencies 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, deliberate. The
Report noted the requirement of present section 7(a)(2) as
imposing a “further require[ment]” beyond that of section
7(a)(1).15 See H.R. Rep.No. 93-412, at 14 (1973), 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 endangered species.
That Congress so provided is confirmed by Representative
Dingell’s statement concerning the final bill, relied upon by
the Supreme Court as an authoritative statement of section 7’s
intent:16 “ ‘[T]he agencies of Government can no longer plead
that they can do nothing about [harm to threatened or endan-
gered species]. They can, and they must. The law is clear.’ ”
15This history is consistent with the “canon of statutory interpretation
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).
16Representative Dingell was the House manager of the Endangered
Species Act. Hill, 437 U.S. at 183.
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Hill, 437 U.S. at 184 (quoting 119 Cong. Rec. 42913 (1973),
emphasis in Hill).17
After the Supreme Court decided Hill in 1978, Congress
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 “En-
dangered 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 HISTORY, at 940.
17Another 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 fed-
eral agencies they do not otherwise have.” Id. at 1085 (citing Hill, 437
U.S. at 183). 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 statement, including the language we quote in the
text, appears as well in Hill.
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.
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Volume 2 of 2
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The limited exemption created by the 1978 amendments
and contained in sections 7(g) and (h) has no direct applica-
tion here, as the EPA did not apply for it. Its terms, however,
serve to confirm that the interpretation of the “insure” require-
ment 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 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 consultation is completed.
§ 1536(g)(1); 50 C.F.R. § 402.15(c). Thus, at the time consul-
tation occurs, all parties must operate under the assumption
that all of section 7(a)(2)’s substantive 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 Spe-
cies Act is confirmed by the history of those amendments.
The House Report summarized Congress’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
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HISTORY, at 734 (emphasis added). Congress did nothing to
alter this conclusion. Instead, in enacting the 1978 amend-
ments, Congress once again refused to adopt an amendment
that would have limited section 7 compliance to situations
when compliance is “practicable and consistent with [agen-
cies’] primary responsibilities.” S. Rep. No. 95-874, at 58-59
(1978), 3 LEGISLATIVE HISTORY at 996-97. Congress’s rejection
of this amendment underlines its continued understanding,
consistent with Hill, that section 7(a)(2) specifies that agen-
cies 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.
[17] We conclude that the obligation of each agency to “in-
sure” that its covered actions are not likely to jeopardize 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 obligation 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 responsibility
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 there-
fore inconsistent with the statute.
Section 7(a)(2) applies to all agency actions “authorized,
funded, or carried out” by the agency in question. This lan-
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guage does indicate that some agency actions are not covered
— those the agency does not “authorize[ ], fund[ ], or carr[y]
out.” Our determination as to whether the transfer decision is
covered thus depends on the meaning of those terms.18
[18] The regulatory provision that delineates the actions
covered by section 7(a)(2) reads: “Section 7 and the require-
ments of this Part apply to all actions in which there is discre-
tionary Federal involvement or control.” 50 C.F.R. § 402.03.
Although there is no statutory reference to “discretionary
involvement or control,” there is the limitation, just noted, to
actions “authorized, funded, or carried out” by the agency. As
that limiting language is the only possible source for the regu-
lation’s “discretionary” qualification 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 applications 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 consistent, complementary objectives.” Wash. Toxics,
2005 WL 1523669, at *5. Applying this principle, we reject,
for two reasons, 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.
18Because we conclude that approving Arizona’s application is an “au-
thorizing” 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 permitting program
— we do not decide whether any action besides the transfer decision trig-
gered section 7(a)(2).
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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 “dis-
cretionary.” 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; see also Gifford Pinchot Task Force, 378 F.3d at
1072 n.9. Further, we ordinarily defer to an agency’s interpre-
tation of its own regulation. See United States v. Cleveland
Indians Baseball Co., 532 U.S. 200, 220 (2001). As the EPA
evidently does not regard § 402.03 as excluding the transfer
decision, we should not so interpret the regulations.
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 require-
ments in those cases would have gone beyond the limited
command of the statute.
Our § 402.03 “discretionary . . . involvement or control”
cases hold section 7(a)(2) inapplicable if the agency in ques-
tion had “no ongoing regulatory authority” and thus was not
an entity responsible for decisionmaking with respect to the
particular action in question. Wash. Toxics, 2005 WL
1523669, at *5. For example, we have relied on the “discre-
tionary . . . involvement” regulation to find section 7(a)(2)
inapplicable where the agency lacked any decisionmaking
authority over the action of the kind challenged. 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. Bab-
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bitt, 83 F.3d 1068, 1074 (9th Cir. 1996) (holding section
7(a)(2) inapplicable where a different agency made the ulti-
mate decisions, while the respondent agency “merely pro-
vided 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, 2005 WL 1523669, at *5) (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, 2005 WL 1523669, at *5) (holding
that section 7(a)(2) did not apply because the agency had no
“[ ]ability 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 decisionmaking
authority over the challenged action. See Wash. Toxics, 2005
WL 1523669, at *5 (holding that section 7(a)(2) applies to the
EPA’s registration of pesticides because of its “ongoing dis-
cretion to register pesticides, alter pesticide registrations, and
cancel pesticide registrations”); Turtle Island Restoration Net-
work 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 not-
ing that section 7 applies to already-approved projects “if the
project’s implementation depended on an additional agency
action”); 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 contracts,
and was not bound to reaffirm merely the previously-
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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).
[19] In sum, we understand our cases applying the “discre-
tionary . . . involvement” regulation to interpret that regula-
tion to be coterminous with the statutory phrase limiting
section 7(a)(2)’s application to those cases “authorized,
funded, or carried out” by a federal agency. Where a chal-
lenged 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 comes
within the agency’s decisionmaking authority and remains so,
it falls within section 7(a)(2)’s scope.19
19The dissent concludes that because the Clean Water Act requires the
EPA to consider a list of nine requirements when evaluating a state’s pol-
lution 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 suffi-
cient discretion, applying 50 C.F.R. § 402.03, under the Endangered Spe-
cies 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 empha-
size 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 Pro-
gram is not before the Court in this case because EPA did consult regard-
ing 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.
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[20] 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 EPA’s decision
authorized the transfer, thus triggering section 7(a)(2)’s con-
sultation and action requirements.
4. Other Circuits
Although Washington Toxics and the cases are fully consis-
tent 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 govern-
ing statutes, to protect listed species from the impact of affir-
mative 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 reading 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
jeopardizing then. Compare Defenders of Wildlife v. Adminis-
trator, EPA, 882 F.2d 1294, 1299 (8th Cir. 1989), and Con-
servation 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 (5th 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
But that is simply not so; § 402.03 is a regulation, not a statute. The dis-
sent 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 interpreta-
tion of the plain language, intent and history of that section. Although the
dissent does offer an interpretation of the Clean Water Act, that interpreta-
tion 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 consult-
ing about the transfer of permitting authority.
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Circuit cases persuasive, as they do not reflect a full consider-
ation 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. Conservation Law Found., 623
F.2d at 715. Thus, although the governing statute in that case
may have contained standards “less stringent than those of the
[Endangered Species Act]” with regard to the protection of
listed species, “[t]he [Endangered Species Act] by its terms
applies to all action by the Secretary.” Id. Consequently, “[i]f
[the secretary] cannot . . . insure that exploration will not
jeopardize the continued existence of [listed species], he will
not approve exploration plans.” Id.
A decade later, the Eighth Circuit echoed Conservation
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 estab-
lished” the proposition that “section 7(a)(2) provides an inde-
pendent source of authority 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 conditions on an
interim, annual license that, unlike the pollution permitting
transfer decisions at issue here, the agency was obliged to
issue without any deliberation. In so concluding, the D.C. Cir-
cuit noted in passing the language of section 7(a)(2), but rea-
soned that section 7(a)(1) instructs agencies to “utilize their
authorities,” and that this section 7(a)(1) language “does not
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expand the powers conferred on an agency by its enabling
act.” Platte River, 962 F.2d at 34 (emphasis in original).
Platte River did not recognize the obvious differences
between section 7(a)(1) and 7(a)(2) in both language and pur-
pose. 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 affir-
mative agency attempts to protect listed species (section
7(a)(1)) and a do-no-harm directive pertaining 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 amendments, 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 consider-
ation 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 deficiencies 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 authority 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 taking
action likely to jeopardize species. The Fifth Circuit’s notion
that the consultation and assurance aspects of the statute are
independent is simply incorrect.
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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 per-
mitting 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 affirmatively
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 “complementary” statute
cannot relieve the EPA of its independent obligations under
section 7(a)(2). See Wash. Toxics, 2005 WL 1523669, at *5.
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 along-
side Clean Water Act provisions as the agency’s “first priori-
ty.” Hill, 437 U.S. at 185.
[21] 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 constitutes
an indirect effect of the transfer.20 The Biological Opinion,
which ignored this effect while recognizing that section 7
20Defenders also challenge the Biological Opinion and the EPA for fail-
ing to analyze the “cumulative effects” of the pollution permitting transfer,
as required by Endangered Species Act regulations. See 50 C.F.R.
§ 402.14(g)(3) (requiring consideration of “cumulative effects”); § 402.02
(defining “cumulative effects”). As we consider the loss of section 7 con-
sultation benefits on future permits an “indirect effect” of the EPA’s trans-
fer 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.”
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consultations concerning pollution permitting permits have
saved species’ critical habitat in the past, was therefore defi-
cient. The EPA erred by relying on this fatally deficient Bio-
logical 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 premise,21 we now
consider whether that Opinion’s other analyses, or any analy-
sis 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 fatally infects the Opin-
ion’s truncated alternative causation 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 Opinion 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 con-
cludes that the transfer will not likely jeopardize any species
— but only because, once again, “it is not the proposed action
itself that is jeopardizing these species.”
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 ter-
21See supra, Parts III(B)-(C).
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restrial species.22 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; see
also Gifford Pinchot Task Force, 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 sec-
tion 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, indi-
rect 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 construction project cannot go forward
without a water pollution permit, then the entire project is “in-
terrelated or interdependent” with the proposed discharge and
must be considered in a Biological Opinion.
The Home Builders cite a different regulation, requiring a
22The 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 construc-
tion site, picking up various pollutants and carrying them across terrestrial
and eventually into aquatic habitat. Stormwater Discharges from Con-
struction Activities, EPA-NPDES, at http://cfpub1.epa.gov/npdes/
stormwater/const.cfm?program_id=6 (last visited July 5, 2005). Such per-
mits relate to the construction itself, not to a discrete discharge during con-
struction. As a practical matter, a developer could not perform any
construction activities without such a permit.
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more limited analysis. See § 402.12(c), (d)(2) (describing
requirements of a biological assessment to include only dis-
cussion 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 require-
ments 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, the
Home Builders argue that, because section 7 does not require
consultation or mitigation with regard to a development proj-
ect 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 “interrelated or interdependent with”
the discharge permitted by a permit, and therefore covers in
many instances the development that will take place if
construction-connected stormwater discharge is permitted.
Neither the FWS nor the EPA makes any argument that jus-
tifies 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 regard-
ing water pollution permits. That consultation, as the Biologi-
cal Opinion noted, has led various developers to alter their
development plans, preserving thousands of acres of listed
species’ habitat. For example, such mitigation has “main-
tain[ed] dispersal and movement corridors” for the pygmy
owl. FWS staff had noted that the absence of section 7 consul-
tation 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
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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 (1983).
2. Alternatives to section 7 consultation
The Biological Opinion notes state and federal endangered
species protections that exist without section 7 consultation,
including: (1) the Memorandum of Agreement between the
EPA and FWS, EPA oversight over ADEQ; (2) the Endan-
gered Species Act’s anti-take provisions; and (3) Arizona
state law. The EPA relies on these protections as sufficient to
assure against jeopardizing listed species. None of these pro-
tections, however, are sufficient substitutes for section 7’s
consultation and mitigation mandates.
a. Memorandum of Agreement
The Memorandum of Agreement provides the closest sub-
stitute for the provisions of section 7. It cannot, however,
replace section 7, because it does not grant the federal govern-
ment any authority to require Arizona to engage in the kind
of consultation and mitigation measures EPA had conducted
before the transfer.
Under the Memorandum, the EPA will review ADEQ per-
mits and identify those that “may raise issues regarding”
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.” Id. 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).
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The Memorandum also provides 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 Spe-
cies Act.23 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 per-
mit applicants to protect listed species. Section 7 thus pro-
vides protection for species that reliance on purely voluntary
action by the state cannot supply.
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
23Pollution 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.
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— those of the Clean Water Act, rather than the Endangered
Species Act. The Clean Water Act standards governing per-
mitting 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 provisions
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 regula-
tions that define “take” to include any act “which actually
kills or injures wildlife,” where such acts may include “signif-
icant . . . modification or degradation” of listed species’ habitat.24
See Babbitt v. Sweet Home Chapter of Cmties. for a Great
Or., 515 U.S. 687, 691 (1995) (upholding 50 C.F.R. § 17.3).
Section 10 of the Endangered Species Act creates an “inci-
dental take” permit program pursuant to which the Secretary
of Interior may grant permits for activity — such as some
construction projects — that may incidentally “take” an
endangered species specimen, so long as the permittee suffi-
ciently 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 devel-
opers 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 fed-
24The regulation defines “[h]arm 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.
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eral agency action that could threaten species or their critical
habitat. While the anti-take provisions prohibit “[e]liminating
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 enforce-
ment by the appropriate authorities. “[T]he Government can-
not enforce the § 9 prohibition until an animal has actually
been killed or injured.” Sweet Home, 515 U.S. at 703.
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 inciden-
tal 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 FWS has initiated a section 9 enforcement action with
regard to listed species in Arizona. Additionally, FWS staff
stated in the Interagency Elevation Document that they did
“not believe that section 9 enforcement is an acceptable sub-
stitute for section 7 consultation.” This opinion reflected staff
concerns, expressed in internal emails, that section 9 is ill-
suited to protect species such as the pygmy owl, whose num-
bers 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 con-
firmed by our own research, which reveals public notices
regarding only two applications for incidental take permits for
projects occurring in Arizona since January 1, 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 suggests that developers
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do not feel that section 9 enforcement is sufficiently likely for
them to apply for section 10 permits.
d. Arizona state law
The Biological Opinion notes one Arizona law that prohib-
its the taking of “native plants” — which, the Opinion 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 endangered plants on federal land
only, not all land. See 16 U.S.C. § 1538(a)(2)(B).
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 Biological Opinion notes, the
Arizona statute merely requires private landowners to notify
a state agency of plans to destroy certain plants on their prop-
erty 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 dis-
cuss 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 ade-
quately substitutes for section 7, even for plants. As it obvi-
ously does not do so for animals, § 3-904 is no substitute for
section 7(a)(2) of the Endangered Species Act.
3. The EPA’s reliance on the Biological Opinion
The EPA had an independent duty under section 7(a)(2) to
ensure that its pollution permitting transfer decision was not
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likely to jeopardize listed species or adversely modify their
habitat. Arbitrarily and capriciously relying on a faulty Bio-
logical 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 capri-
cious standard of review even if it relies on an “admittedly
weak” Biological Opinion, if there is no “information the Ser-
vice did not take into account which challenges the [biologi-
cal] opinion’s conclusions.” Id.; 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 that underlie most Biological Opin-
ions. See id. (twice noting reasonableness of action agency’s
reliance on “the expert agency”) (emphasis 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 Bio-
logical 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 considered by the
Biological Opinion that challenges its conclusion includes
FWS staff members’ articulated, specific concerns about the
impact of the loss of section 7 consultation, supported by
information regarding the effect of past section 7 consulta-
tions.
The EPA notes that it relied on two pieces of evidence sup-
porting its conclusion beyond that contained in the Biological
Opinion and argues that consideration of this evidence pro-
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vided the reasoned consideration that the arbitrary and capri-
cious standard requires.25
The first such evidence is the EPA’s own Biological Evalu-
ation. This report focused largely on Clean Water Act require-
ments and devoted only a few pages to endangered species.
The report summarizes the EPA-FWS Memorandum 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, dis-
cussed above. The report’s “Discussion of Effects” notes the
loss of section 7 consultation, but otherwise focuses on Clean
Water Act compliance and repeats the protections afforded by
other programs. It does not discuss the impact on listed spe-
cies 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 Ari-
zona 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 imple-
menting Arizona’s pollution permitting authority, has not sub-
scribed to its assurances. Nor does the letter writer explain by
what authority Arizona will “ensure that . . . permits will not
negatively impact endangered and threatened species,” or
25Any explanation for its decision based on facts or reasoning not in the
Biological Opinion must, of course, satisfy the EPA’s substantive obliga-
tions under section 7(a)(2) and the arbitrary and capricious standard of
review discussed above.
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indicate that his agency has any authority to do so, let alone
authority as broad as the protections mandated by the Endan-
gered Species Act as applied by the EPA.
In the abstract, voluntary compliance by state agencies
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 all relevant Arizona agencies can and
would live up to the Game and Fish Department’s promises,
as well as considering the effectiveness of federal oversight if
Arizona agencies fail to live up to any such promises.
[22] Given its serious faults, the independent evidence on
which EPA relies cannot fill in the crucial gaps in the Biologi-
cal Opinion. Neither the Biological Opinion nor the EPA,
consequently, adequately considered indirect effects of the
transfer. The EPA thus “entirely failed to consider an impor-
tant aspect of the problem.” State Farm, 463 U.S. at 43.
Because neither the Biological Opinion nor the EPA exam-
ined all relevant data, the EPA’s transfer decision was arbi-
trary and capricious.
4. Summary
The EPA’s most serious errors were (1) its failure to under-
stand 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 federal Memorandum of Agree-
ment might sufficiently replace the benefits of section 7 con-
sultation 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 volun-
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tary 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 provi-
sions and the Memorandum of Agreement.
IV. Remedy
Typically, when an agency violates the Administrative Pro-
cedure Act and the Endangered Species Act, we vacate the
agency’s action and remand to the agency to act in compli-
ance with its statutory obligations. In certain instances, how-
ever, “when equity demands, the [challenged action] can be
left in place while the agency follows the necessary proce-
dures.” Idaho Farm Bureau Fed’n v. Babbitt, 58 F.3d 1392,
1405 (9th Cir. 1995).
We have carefully considered whether equitable consider-
ations 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 opin-
ion. Arizona has undoubtedly expended significant funds to
obtain and implement pollution permitting authority and
granted a significant number of permits pursuant to this authori-
ty.26 We cannot reverse the expenditure of those funds nor the
issuance of those permits. We further recognize the adminis-
trative 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
26For 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).
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authority, even after full consultation regarding 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 environment. 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 application. 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 these permits will not allow
development projects that are likely to jeopardize listed spe-
cies 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 particularly 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
necessary procedures,” Idaho Farm Bureau, 58 F.3d at 1405,
could lead to the permanent harm of extinction. See id. (not-
ing “the potential extinction 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 understanding of the Endan-
gered Species Act’s “institutionalized caution mandate.”
Wash. Toxics, 2005 WL 1523669, at *3 (quoting Sierra Club,
816 F.2d at 1389). Without greater assurances that harm to
listed species would not occur, our “institutionalized caution”
makes us unwilling on the present record to order any remedy
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other than vacation of the EPA’s approval of Arizona’s trans-
fer application.
[23] For the just-stated reasons, we vacate the EPA’s deci-
sion to approve Arizona’s pollution permitting application.
Pursuant to 28 U.S.C. § 1631, we transfer Defenders’ Endan-
gered Species Act and Administrative Procedure Act suit
challenging the validity of the Biological Opinion to the dis-
trict court where it was originally filed for proceedings con-
sistent with this opinion. The petition for review is
GRANTED and REMANDED to the EPA for proceedings
consistent with this opinion.
THOMPSON, Senior Circuit Judge, dissenting:
Because I 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 permit-
ting 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 [agency] actions in
which there is discretionary Federal involvement 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 exer-
cise in futility”); Turtle Island Restoration Network v. Nat’l
Marine Fisheries Serv., 340 F.3d 969, 974 (9th Cir. 2003)
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(“[T]he discretionary control retained by the federal agency
must have the ability to inure to the benefit of a protected spe-
cies. If no discretion to act is retained, then consultation
would be a meaningless exercise.”) (internal citation omitted);
Sierra Club v. Babbit, 65 F.3d 1502, 1509 (9th Cir. 1995)
(“[W]here . . . the federal agency lacks the discretion to influ-
ence 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.”).
The majority interprets the “discretionary involvement”
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 endangered or threatened species.
See Marbled Murrelet v. Babbit, 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 triggering section 7); Sierra Club v. Babbit, 65 F.3d at
1508-1510 (holding that although the Bureau of Land Man-
agement 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 Res-
toration 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 obliga-
tions that the United States had under the Agreement was not
exhausted by those listed in the subsection”).
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Here, the EPA did not have discretion to deny transfer of
the pollution permitting program to the State of Arizona;
therefore its decision was not “agency action” within the
meaning of section 7 of the Endangered Species Act.1 The
Clean Water Act, by its very terms, permits the EPA to con-
sider only the nine specified factors. If a state’s proposed per-
mitting 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, complementary objectives,” Wash. Toxics
Coalition v. EPA, ___ F.3d ___, slip op. 7721, 7738 (9th Cir.
Jun. 29, 2005), here, the EPA has an obligation 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 Administrator of EPA
1The majority concludes that pursuant to SEC v. Chenery Corp., 318
U.S. 80, 87 (1943) (Chenery I), it may not deny the petition for review on
this basis because the EPA did not contend that it lacked discretion to con-
sult under section 7 in conjunction 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
“[g]enerally, a reviewing court may only judge the propriety of an agen-
cy’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 fed-
eral statute.” Ry. Executives’ 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. Thompson, 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] dif-
ferent analytic path[ ]” and is “subject to [a] separate standard[ ] of
review” than review of an agency’s compliance with procedural require-
ments), 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 (1984).
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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)); Nat’l Res. Defense Council v. EPA, 859 F.2d 156,
173-74 (D.C. Cir. 1988) (observing that “[t]he [Clean Water
Act] specifies prerequisites for state assumption of the pro-
gram . . . and commands the Administrator to approve the
state permit system once he determines that the statutory
requirements and administrative guidelines are met.”). To
impose the additional requirement of consultation under sec-
tion 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 expressed
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 permitting program).
Nor, in my view, does the EPA possess the kind of continu-
ing authority to monitor states’ administration of their pollu-
tion permitting programs that would render its oversight
discretionary. As the majority notes, the EPA’s limited over-
sight under 33 U.S.C. § 1342(c) relates only to the substantive
standards of the Clean Water Act and does not grant any addi-
tional continuing review authority that would permit mean-
ingful section 7 consultation.
The EPA’s authority to grant or to deny the State of Arizo-
na’s application to administer the pollution permitting pro-
gram was nondiscretionary; I would deny the petition for
review.
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