American Bar Association
Section of Environment, Energy, and Resources
Is There Really a Duty to Consult? Section 7 of the Endangered Species Act, Federal Water
Management, and the Discretionary Function Requirement
Robin Kundis Craig
William H. Leary Professor of Law, University of Utah S.J. Quinney College of Law
Salt Lake City, Utah
31st Annual Water Law Conference
Las Vegas, Nevada
June 5-7, 2013
ABSTRACT
Section 7(a)(2) of the Endangered Species Act appears to require all federal agencies to consult
with the two expert federal agencies when activities that the acting agencies authorize, fund, or
carry out might affect species listed under the Act. This requirement can significantly affect
federal water projects, a fact that has been clear since the U.S. Supreme Court’s 1978 decision in
Tennessee Valley Authority v. Hill. However, in 1986 the two expert agencies promulgated a
joint regulation that limited Section 7’s applicability to actions for which there is “discretionary
Federal involvement or control,” and in 2007 the Court upheld that regulation in National
Association of Home Builders v. Defenders of Wildlife. The discretionary function regulation
now gives the federal agencies that manage water projects a viable legal argument that they do
not have to engage in Section 7 consultations with respect to at least some of their water
management activities. As a result, in a trio of 2012 decisions involving federal water
management, the Ninth Circuit—the most active circuit applying the regulation—developed a
two-part test for determining whether Section 7 consultation is required that is likely to govern
federal water projects for some time to come.
Introduction
Section 7(a)(2) of the federal Endangered Species Act (“ESA”) imposes a mandatory
duty on all federal agencies to “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 species.”1 Agencies fulfill this duty
by consulting informally and formally with the Act’s two expert agencies: The U.S. Fish &
Wildlife Service (“USFWS”), which acts on behalf of the Secretary of the Interior with respect to
terrestrial and most freshwater species; and the National Marine Fisheries Service (“NMFS”),
which acts on behalf of the Secretary of Commerce with respect to most marine and anadromous
1
16 U.S.C. § 1536(a)(2) (2012).
1
species. 2 Formal consultation requires the acting federal agency to produce a Biological
Assessment and the expert agency to produce a Biological Opinion 3 and can result in findings of
jeopardy, reasonable and prudent alternatives (“RPAs”) to the agency’s proposed action to
mitigate harms to listed species,4 and/or an Incidental Take Statement (“ITS”), which insulates
the acting agency from “take” liability under Section 9. 5 In the water law context, application of
Section 7 to can have significant effects on federal water projects, as was demonstrated in the
U.S. Supreme Court’s very first ESA decision, Tennessee Valley Authority v. Hill. 6
Despite Section 7(a)(2)’s mandatory language, since 1986 the USFWS and NMFS have
specified in their joint ESA regulations that “Section 7 and the requirements of [the implementing
regulations for Section 7] apply to all actions in which there is discretionary Federal involvement
or control.” 7 This “discretionary function” requirement nevertheless remained a fairly dormant
part of ESA jurisprudence until June 2007, when the U.S. Supreme Court decided National
Association of Home Builders v. Defenders of Wildlife (“NAHB”), 8 a case that pitted the U.S.
Environmental Protection Agency’s (“EPA’s”) duties under the Clean Water Act 9 against its ESA
Section 7 duty to consult. Since NAHB, the discretionary function requirement has become an
increasingly important factor in whether Section 7 applies in the context of water law, especially
with respect to water projects that federal agencies manage.
This paper summarizes the current state of the law regarding the discretionary function
requirement’s application to water projects. It begins with the expert agencies’ regulation and
case law application of that regulation prior to 2007. The paper then summarizes the Supreme
Court’s decision in NAHB before examining in more detail the regulation’s application to water
projects and the new test created in the U.S. Court of Appeals for the Ninth Circuit.
The Beginnings of the Discretionary Function Requirement
The USFWS’s and NMFS’s 1986 discretionary function regulation was part of a large
rulemaking that established all of the procedural requirements for Section 7 consultations.10
Notably, water resource issues were already recognized as a significant specific context for
Section 7 consultations. 11 The discretionary function regulation itself, however, was
noncontroversial. In the proposed rule, the agencies offered no explanation for this requirement,12
while in the final rule, they clarified only that the regulation “implicitly covers Federal activities
within the territorial jurisdiction of the United States and upon the high seas as a result of the
definition of ‘action’ in § 402.02.” 13
2
Interagency Cooperation—Endangered Species Act of 1973, as Amended; Final Rule, 51 Fed. Reg. 19,926, 19,926
(June 3, 1986).
3
16 U.S.C. § 1536(b)(3)(A) (2012); 50 C.F.R. § 402.14(h)(3) (2012).
4
16 U.S.C. § 1536(b)(3)(A) (2012); 50 C.F.R. § 402.14(h)(3) (2012).
5
16 U.S.C. § 1538 (2012).
6
437 U.S. 153 (1978). In this decision, the Court ruled that Section 7 required it to enjoin completion of the nearlyconstructed Tellico Dam, despite the money already invested and continuing congressional appropriations for the dam,
because the dam would jeopardize the listed snail darter. Id. at 194-95.
7
51 Fed. Reg. 19,926, 19,957 (June 3, 1986), codified at 50 C.F.R. § 402.03.
8
551 U.S. 644 (2007).
9
33 U.S.C. §§ 1251-1387 (2012). Specifically, the case examined the EPA’s duty to delegate permit programs to states
pursuant to Section 402 of the Act. Id. § 1342(b).
10
51 Fed. Reg. 19,926, 19,926 (June 3, 1986).
11
Id. at 19,927.
12
See generally Interagency Cooperation; Endangered Species Act of 1973, 48 Fed. Reg. 29,990 (June 29, 1983)
(offering no explanation for the proposed new § 402.03).
13
51 Fed. Reg. 19,926, 19,937 (June 3, 1986).
2
Before 2007, the discretionary function regulation, 50 C.F.R. § 402.03, had a limited
impact on ESA cases. It was cited in only 36 federal court decisions between 1986 and June
2007, first appearing in August 1994 in the U.S. District Court for the Southern District of
Florida’s opinion in Florida Key Deer v. Stickney. 14 That court concluded that: (1) Section 7(a)(2)
applies to any federal agency action, and hence there cannot be a federal discretion requirement;
(2) as indicated in the expert agencies’ final rulemaking language quoted above, 50 C.F.R. §
402.03 pertained to geographical limitations; and (3) in any case, the Federal Emergency
Management Agency (“FEMA”) had ample discretion to implement its flood control programs,
so Section 7 applied. 15 Moreover, for over a decade after Florida Key Deer, the federal courts
continued to resist the full import of 50 C.F.R. § 402.03, either just mentioning it in passing, 16
focusing issues of Section 7’s applicability on whether there was any “agency action” at all,17 or,
like the Southern District of Florida, refusing to give the regulation its literal meaning. 18 Even the
nine (one of which was later reversed) decisions that applied the regulation to obviate Section 7
consultations did so only in the limited context where the federal agency lacked any ability—
because of statutory mandates or lack of statutory authority, because of lack of control over thirdparty actors, or because the action was already complete and application of Section 7 would be
retroactive—to change, alter, or influence its action to protect ESA-listed species. 19
National Association of Home Builders v. Defenders of Wildlife
The USFWS’s and NMFS’s discretionary function requirement necessarily requires that
federal courts interpret an acting agency’s statutory authority—or, especially in the water law
context, its contractual authority—to determine whether that agency has sufficient discretion to
14
864 F. Supp. 1222 (S.D. Fla. 1994).
Id. at 1238-40.
16
Alabama-Tombigbee Rivers Coal. v. Norton, 338 F.3d 1244, 1247 (11th Cir. 2003); Sierra Club v. Glickman, 156
F.3d 606, 618 (5th Cir. 1998); Defenders of Wildlife v. Gutierrez, 484 F. Supp. 2d 44, 53 (D.D.C. 2007); Northwest
Envtl. Advocates v. NMFS, 2005 WL 1427696, at *9 (W.D. Wash. 2005), aff’d, 460 F.3d 1125 (9th Cir. 2006); Pacific
Coast Fed. of Fishermen’s Ass’ns v. U.S. Bur. of Reclam., 138 F. Supp. 2d 1228, 1240 (N.D. Cal. 2001); Hawksbill
Sea Turtle v. FEMA., 11 F. Supp. 2d 529, 546 n.24 (D.V.I. 1998), remanded without opinion, 215 F.3d 1314 (3rd Cir.
2000); Marbled Murrelet v. Babbitt, 1997 WL 361232, at *6 (N.D. Cal. 1997); Marbled Murrelet v. Babbitt, 1996 WL
531112, at * 2 (N.D. Cal. 1996).
17
Cal. Sportfishing Prot. All. v. FERC, 472 F.3d 593, 597-98 (9th Cir. 2006); Western Watersheds Proj. v. Matejko,
468 F.3d 1099, 1207-08 (9th Cir. 2006), superseding 456 F.3d 922 (9th Cir. 2006); NRDC v. Houston, 146 F.3d 1118,
1125-26 (9th Cir. 1998); International Ctr. for Tech. Assess. v. Thompson, 421 F. Supp. 2d 1, 10-11 (D.D.C. 2006);
Karuk Tribe of Cal. v. U.S. Forest Serv., 379 F. Supp. 2d 1071, 1100-01 (N.D. Cal. 2005), aff’d, 640 F.3d 979, 985-86
(9th Cir. 2011); National Wildlife Fed. v. NMFS., 2005 WL 1278878, at *8-*9 (D. Or. 2005); Washington Toxics
Coal. v. EPA, 2002 WL 34213031, at *4-*5 (W.D. Wash. 2002); Environmental Prot. Info. Ctr., Inc. v. Pac. Lumber
Co., 67 F. Supp. 2d 1113, 1121-22 (N.D. Cal. 1999), vacated on standing grounds, 257 F.3d 1071 (9th Cir. 2001);
Environmental Prot. Info. Ctr., Inc. v. Pac. Lumber Co., 67 F. Supp. 2d 1090, 1108 (N.D. Cal 1999), vacated on
standing grounds, 257 F.3d 1071 (9th Cir. 2001); Cromon Corp. v. U.S., 44 Fed. Cl. 796, 806-07 (Fed. Cl. 1999);
Southwest Ctr. for Biol. Diversity v. FERC, 967 F. Supp. 1166, 1176-77 (D. Ariz. 1997).
18
National Wildlife Fed. v. NMFS, 481 F.3d 1224, 1234 (9th Cir. 2007); Rio Grande Silvery Minnow v. Keys, 469 F.
Supp. 2d 973, 994 (D.N.M. 2002), vacated in light of a superseding Biological Opinion, 601 F.3d 1096 (10th Cir.
2010). But see Defenders of Wildlife v. Norton, 257 F. Supp. 2d 53, 67 (D.D.C. 2003) (holding that Tennessee Valley
Authority did not require the invalidation of the discretionary function regulation).
19
Ground Zero Center for Non-violent Action v. U.S. Dept. of the Navy, 383 F.3d 1082, 1092 (9th Cir. 2004);
Environmental Prot. Info. Ctr. v. Simpson Timber, 255 F.3d 1073 (9th Cir. 2001); Marbled Murrelet v. Babbitt, 83 F.3d
1068, 1074-75 (9th Cir. 1996); Sierra Club v. Babbitt, 65 F.3d 1502, 1504–05 (9th Cir. 1995); National Wildlife Fed. v.
FEMA, 345 F. Supp. 2d 1151, 1174 (W.D. Wash. 2004); Defenders of Wildlife v. Norton, 257 F. Supp. 2d 53, 67-68
(D.D.C. 2003); Center for Biol. Diversity v. NMFS, 2001 WL 2602707, at *2-*4 (N.D. Cal. 2001), rev’d to find that
the agency did have the requisite discretion and authority to be subject to Section 7, sub nom Turtle Island Restoration
Net. v. NMFS, 340 F.3d 969, 975-76 (9th Cir. 2003); WaterWatch of Or. v. U.S. Army Corps of Eng’s, 2000 WL
1100059, at *5 (D. Or. 2000); Strahan v. Linnon, 967 F. Supp. 581, 607-08 (D. Mass. 1997), aff’d, 187 F.3d 623 (1st
Cir. 1998).
15
3
modify its proposed actions to make Section 7 consultation meaningful. As with all acts of
statutory and contractual construction, courts construing the same language can reach different
results. Thus, the U.S. District Court for the Northern District of California concluded that NMFS
lacked discretion to impose conditions on fishing permits to protect species of sea turtles listed
under the ESA, 20 but the Ninth Circuit reversed, finding that “[t]he plain language of the [High
Seas Fishing] Compliance Act provides Fisheries Service with ample discretion to protect listed
species” because Congress had used broad language (“including but not limited to”) to describe
NMFS’s authorities under that Act. 21
In addition, although the statute of limitations has long since run on facial challenges to
50 C.F.R. § 402.03, federal courts nevertheless have long recognized that the regulation is in
tension with both the broad language of Section 7(a)(2) itself 22 and with the sweeping language in
Tennessee Valley Authority. 23 Thus, in the lower decision resulting in the NAHB Supreme Court
decision, the Ninth Circuit interpreted the expert agencies’ regulation to square it with Section
7(a)(2)’s broad applicability, concluding that the “‘discretionary . . . involvement’ regulation [is]
coterminous with the statutory phrase limiting section 7(a)(2)’s application to those cases
‘authorized, funded, or carried out” by a federal agency.’” 24
Nevertheless, in NAHB, the Supreme Court eschewed any attempt to reconcile apparently
conflicting federal statutes in favor of interpretations of agency statutory authority that eliminated
Section 7’s consultation requirement. The case involved the EPA’s delegation of Clean Water Act
permitting authority to the State of Arizona.25 The Clean Water Act requires the EPA to transfer
the permitting program to any state that meets nine statutory criteria.26 The issue for the Court
was whether the EPA had to consult with the expert agencies pursuant to ESA Section 7—or, as
the Court put it, “whether § 7(a)(2) effectively operates as a tenth criterion on which the transfer
of permitting power under the first statute must be conditioned.”27
The Court concluded, 5-4 in an opinion authored by Justice Alito, that Section 7 did not
apply. First, the Clean Water Act left the EPA with no discretion: “By its terms, the statutory
language is mandatory and the list exclusive; if the nine specified criteria are satisfied, the EPA
does not have the discretion to deny a transfer application.”29 Notably, however, the Court also
accorded Chevron and Auer deference to the USFWS’s, NMFS’s, and EPA’s own interpretations
that Section 7 did not apply to Clean Water Act permit program delegations,30 effectively giving
these agencies considerable authority to decide the scope of their own Section 7 duties.
28
Second, applying the ESA as the Ninth Circuit did would effectively use the ESA to
amend the Clean Water Act. 31 This was improper, because the Clean Water Act permitting
provision “does not just set forth minimum requirements for the transfer of permitting authority; it
20
Center for Biol. Diversity v. NMFS, 2001 WL 2602707, at *2-*4 (N.D. Cal. 2001).
Turtle Island Restoration Net. v. NMFS, 340 F.3d 969, 975 (9th Cir. 2003).
22
16 U.S.C. § 1536(a)(2) (2012).
23
437 U.S. 153, 172-74, 188 (1978).
24
Defenders of Wildlife v. EPA., 420 F.3d 946, 969 (9th Cir. 2005), rev’d sub nom National Ass’n of Home Builders
v. EPA, 551 U.S. 644 (2007).
21
26
33 U.S.C. § 1342(b) (2012).
National Association of Home Builders, 551 U.S. at 649.
28
Id. at 649-50.
29
Id. at 661; see also id. at 671-72 (emphasizing this conclusion).
30
Id. at 672-73.
31
Id. at 663-64.
27
4
affirmatively mandates that the transfer “shall” be approved if the specified criteria are met. The
provision operates as a ceiling as well as a floor.” 32
Third, the Court accorded Chevron deference to the USFWS’s and NMFS’s interpretation
of Section 7 in 50 C.F.R. § 402.03, 33 concluding that “[t]his interpretation harmonizes the statutes
by giving effect to the ESA’s no-jeopardy mandate whenever an agency has discretion to do so,
but not when the agency is prohibited from considering such extrastatutory factors.” 34 Unlike the
Ninth Circuit (and other courts before it), therefore, the Court “read § 402.03 to mean what it
says: that § 7(a)(2)’s no-jeopardy duty covers only discretionary agency actions and does not
attach to actions (like the NPDES permitting transfer authorization) that an agency is required by
statute to undertake once certain specified triggering events have occurred.”35
Finally, the Court determined that its previous interpretations of Section 7, and especially
its decision in Tennessee Valley Authority, did not require a different outcome. 36 Specifically,
Tennessee Valley Authority was inapposite because the Court there “had no occasion to answer
the question presented in these cases. That case was decided almost a decade before the adoption
in 1986 of the regulations contained in 50 CFR § 402.03. And in any event, the construction
project at issue in TVA v. Hill, while expensive, was also discretionary.” 37
In the wake of NAHB, therefore, the regulatory “discretionary function” requirement is to
be given its full effect, with federal agencies having a strong argument that courts should give
both the acting agencies’ interpretations of the existence and extent of their own discretion and
the expert agencies’ applications of 50 C.F.R. § 402.03 considerable deference. The Court also
effectively cabined the broad mandatory language of Tennessee Valley Authority, validating a
limitation on Section 7’s applicability that the decision itself would not appear to allow.
Current Application of the Discretionary Function Requirement in the Water Law Context
Water-Related Federal Agency Actions Pursuant to Statutes
U.S. Bureau of Reclamation. A series of federal court decisions have held that, under
the federal reclamation laws, the Bureau of Reclamation often retains sufficient discretion to
trigger Section 7 consultation requirements. For example, the Ninth Circuit held that renewal of
U.S. Bureau of Reclamation contracts in general triggers Section 7 consultation because the
reclamation laws “state that the government is to renew the contracts on ‘mutually agreeable’
terms, 43 U.S.C. § 485h-1(1), that water rights are based on the amount of available project
water, 43 U.S.C. § 485h-1(4), and that the Secretary of the Interior . . . has the discretion to set
rates to cover an appropriate share of the operation and maintenance costs, 43 U.S.C. §
485h(e).” 38 Nevertheless, to trigger Section 7, any federal agency must have sufficient authority
to influence directly the use of the water at issue,39 and the specific language of statutes and other
legal provisions governing Bureau projects remains important. For example, in 2003, the U.S.
District Court for the District of Columbia held that the Bureau had no discretion to send
32
Id.
Id. at 665-69.
34
Id. at 665.
35
Id. at 669.
36
Id. at 669-71.
37
Id. at 670.
38
NRDC v. Houston, 146 F.3d 1118, 1126 (9th Cir. 1998).
39
Center for Biol. Diversity v. U.S. Dept. of Housing & Urban Dev., 541 F. Supp. 2d 1091, 1097-1100 (D. Ariz. 2008),
aff’d, 359 Fed. Appx. 781 (9th Cir. 2009).
33
5
additional water down the Colorado River to help endangered species in the Gulf of California
because “[t]he formulas established by the Law of the River strictly limit Reclamation’s authority
to release additional waters to Mexico, and Section 7(a)(2) of the ESA does not loosen those
limitations or expand Reclamation’s authority.” 40
Most recently, in its 2012 decision in Glen Canyon Trust v. U.S. Bureau of Reclamation,
the Ninth Circuit affirmed the U.S. District Court for the District of Arizona in concluding that
the Bureau of Reclamation lacked sufficient discretion in issuing Annual Operating Plans for the
Glen Canyon Dam on the Colorado River to engage in Section 7 consultation regarding the
endangered humpback chub. 41 The Colorado River Basin Project Act of 1968 42 and the Glen
Canyon Protection Act of 1992 43 require these Annual Operating Plans, and the Colorado River
Basin Project Act specifies that the Annual Operating Plans must “describ[e] the actual operation
[of the Dam] under the adopted criteria for the preceding compact water year and the projected
operation for the current year.” 44 Because the Secretary of the Interior adopted those criteria in
the 1996 Record of Decision for its mandated Environmental Impact Statement under the
National Environmental Policy Act, the Ninth Circuit concluded that the Bureau lacked the
required discretion for Section 7 consultation, because “the statute requires Reclamation to
‘perform [a] specific non-discretionary act[] rather than achieve broad goals;’ namely,
Reclamation does not have the discretion to select different operating criteria for the Dam by
saying so in an [Annual Operating Plan].” 45
U.S. Army Corps of Engineers. In general, the analysis of whether a Section 7
consultation is required in the water law context will vary most widely for the Army Corps,
which operates dams and reservoirs pursuant to a variety of federal statutory provisions. For
example, the United States District Court for the District of New Mexico held that the Army
Corps lacked sufficient discretion in the operation of its Middle Rio Grande dams and reservoirs
to make Section 7 consultation meaningful, because “the reservoirs have rather clear operating
criteria, under which emergency deviation appears to be warranted only for short term situations
of very limited duration and at the determination of the damsite manager.” 46 In contrast, the U.S.
Court of Appeals for the Eighth Circuit held that the Army Corps did have sufficient discretion
under the federal Flood Control Act in its operation of Missouri River dams and reservoirs to
trigger Section 7 consultation requirements, because the Flood Control Act “does not mandate a
particular level of river flow or length of navigation season, but rather allows the Corps to decide
how best to support the primary interest of navigation in balance with other interests.” 47
Other Federal Agencies. Through reasoning similar to the Supreme Court’s in NAHB,
the U.S. District Court for the Eastern District of California concluded in 2011 that FEMA lacks
sufficient discretion to engage in Section 7 consultations when it makes flood insurance available
40
Defenders of Wildlife v. Norton, 257 F. Supp. 2d 53, 67-68 (D.D.C. 2003).
Glen Canyon Trust v. U.S. Bur. of Recl., 691 F.3d 1008, 1011 (9th Cir. 2012).
42
43 U.S.C. § 1552 (2012).
43
Pub. L. No. 102–575, §§ 1802(a), 1804(a), (c)(1)(A) (1992).
44
43 U.S.C. § 1552(b) (2012).
45
Id. at 1018-19.
46
Rio Grande Silvery Minnow v. Keys, 469 F. Supp. 2d 973, 997-98 (D.N.M. 2002), vacated in light of a superseding
Biological Opinion, 601 F.3d 1096 (10th Cir. 2010). See also Miccosukee Tribe of Indians of Fla. v. U.S., 2009 WL
2872989, at *3 (S.D. Fla. 2009) (holding that Congress’s command in the Omnibus Act that the Army Corps construct
a bridge or causeway to replace the Tamiami Trail in the Everglades left the Army Corps with no discretion to consult
pursuant to Section 7).
47
In re Operation of Missouri River Sys. Litig., 421 F.3d 618, 631 (8th Cir. 2005).
41
6
to eligible communities under the National Flood Insurance Act. 48 According to the court, the Act
“provides that FEMA ‘shall make flood insurance available in only those States or areas (or
subdivisions thereof)’” that meet certain criteria; as a result, once those criteria are met, “the
issuance of flood insurance to qualified applicants is mandatory, and, under Home Builders, is an
act not subject to section 7 consultation.”49
More significantly, and proving once again that “discretion” is often in the eyes of the
beholder, the Ninth Circuit wrestled in 2011 and 2012 with the U.S. Forest Service’s obligations
to consult regarding suction-dredge mining operations that affected ESA-listed salmon. In its
2011 opinion in Kanuk Tribe of California v. U.S. Forest Service, the court concluded that, under
the Organic Administration Act 50 and the General Mining Law of 1872,51 the Forest Service
lacked authority to prevent miners from entering and attempting to mine in national forests. 52 As
a result, in receiving the miners’ Notices of Intent to mine, the Forest Service engaged in no
agency action and hence the discretionary function requirement was not relevant. 53 Fourteen
months later, however, the Ninth Circuit sitting en banc reversed, applying its recently formulated
two-step analyses. 54 First, after more closely examining the relevant mining law, the court
determined “that the Forest Service’s mining regulations and actions demonstrate that the agency
affirmatively authorized private mining activities when it approved the four challenged NOIs.” 55
As a result, there was agency action sufficient to trigger Section 7. Second, the Forest Service
retained sufficient discretion to make Section 7 consultation meaningful. The Ninth Circuit
summarized its post-NAHB view of the discretionary function requirement as follows:
[T]o avoid the consultation obligation, an agency’s competing statutory mandate
must require that it perform specific nondiscretionary acts rather than achieve
broad goals. An agency “cannot escape its obligation to comply with the ESA
merely because it is bound to comply with another statute that has consistent,
complementary objectives.” The competing statutory objective need only leave
the agency “some discretion.”
To trigger the ESA consultation requirement, the discretionary control retained
by the federal agency also must have the capacity to inure to the benefit of a
protected species. 56
Because the Forest Service has broad discretion to regulate how mining occurs within the national
forests, it met this standard and had to engage in Section 7 consultation.57
Federal Agency Actions with Respect to Water Contracts
In general, water contracts have created more contentious litigation over Section 7’s
applicability than water-related statutes, and this has been true since even before the NAHB
48
Coalition for a Sustainable Delta v. FEMA, 812 F. Supp. 2d 1089, 1131-32 (E.D. Cal. 2011) (citing 42 U.S.C. §
4012).
49
Id.
50
16 U.S.C. §§ 473-478 (1897).
51
30 U.S.C. § 22 (1872), as amended by 30 U.S.C. § 612 (2006).
52
Karuk Tribe of Cal. v. U.S. Forest Serv., 640 F.3d 979, 984-85 (9th Cir. 2011).
53
Id. at 988-96, 998 n.8.
54
Karuk Tribe of Cal. v. U.S. Forest Serv., 681 F.3d 1006, 1011 (9th Cir. 2012) (en banc), cert. denied sub nom New
49’ers, Inc. v. Karuk Tribe of Cal., --- U.S. ---, 133 S. Ct. 1579 (2013).
55
Id. at 1021.
56
Id. at 1024 (citations omitted).
57
Id. at 1025.
7
decision. 58 Notably, in several early cases the Ninth Circuit upheld the Bureau of Reclamation’s
decisions to go ahead and modify water contracts to effectuate the ESA’s goals.59 More recently,
however, federal agencies have resisted Section 7 consultations for contracts renewals on the
grounds that they lacked sufficient discretion to accommodate species in those renewals.
The federal courts have often found otherwise. 60 For example, in 2002, the New Mexico
District Court determined that the Bureau of Reclamation retained sufficient discretion in its
contracts for the Middle Rio Grande Project and the San Juan-Chama Project to require
consultation under Section 7(a)(2) with respect to the Rio Grande silvery minnow and the
southwestern willow fly-catcher. 61 Contracts for the Middle Rio Grande Project included a
provision regarding drought: “Water Shortages—On account of drouth [sic] and other causes,
there may occur at times during any year a shortage in the quantity of water available from the
reservoir storage complex for use by the District pursuant to this contract. In no event shall any
liability accrue against the United States ... for any damage, direct or indirect, arising out of any
such shortage.” 62 As a result, the court concluded that “[t]he term “drouth and other causes” in
the contract should be interpreted broadly in this case because drought and dryness are what
affect the continued existence of the silvery minnow. Viewed together with BOR’s [Bureau of
Reclamation’s] statutory duty to limit . . . diversions to amounts reasonably needed for beneficial
use, BOR’s discretion becomes even more manifest.” 63 Similarly, contracts under the San JuanChama Project contained three provisions that vested the Bureau with sufficient discretion to
require it to engage in Section 7 consultation:
(1) a provision that “[d]uring periods of scarcity when the actual available water
supply may be less than the estimated firm yield,” the contractors “shall share in
the available water supply” pro rata with other contractors, . . . .; (2) a clause
immunizing [the Bureau of Reclamation] from liability for failure to deliver
water to the contractors because of “shortages” resulting from “drought and any
other causes,” . . .; and (3) a provision reducing contractors’ costs to reflect a
higher portion of water going to fish and wildlife needs . . . .64
Since about 2005, however, the most complex set of cases involving water contracts and
ESA Section 7 consultations have emerged from California’s Central Valley Project, which
delivers water from the Sacramento Bay Delta to points as far south as Los Angeles and San
Diego. 65 The Bureau of Reclamation has been operating the Project in conjunction with
California’s State Water Project since the 1930s,66 but the massive pumps that operate the system
pose a continuing threat to the delta smelt, a tiny fish that the USFWS listed as endangered under
the ESA in 1993, 67 while the water diversions themselves pose a threat to various listed species of
58
See, e.g., Rio Grande Silvery Minnow v. Keys, 333 F.3d 1109, 1129-31 (10th Cir. 2003), vacated because district
court order had lapsed, 355 F.3d 1214 (10th Cir. 2004) (finding that the Bureau of Reclamation had sufficient
discretion in its repayment contracts to warrant Section 7 consultation); O’Neill v. U.S., 50 F.3d 677, 682-83, 686 (9th
Cir. 1995) (holding that w California’s Central Valley Project water contracts contemplate compliance with the ESA).
59
Klamath Water Users Prot. Ass’n v. Patterson, 204 F.3d 1206, 1209, 1213 (9th Cir. 1999); O’Neill v. U.S., 50 F.3d
677, 680, 681, 686 (9th Cir. 1995).
60
E.g., WaterWatch of Or. v. U.S. Army Corps of Eng’rs, 2000 WL 1100059, at *7-*8 (D. Or. 2000).
61
Rio Grande Silvery Minnow v. Keys, 469 F. Supp. 2d 973, 989-96 (D.N.M. 2002), vacated in light of a superseding
Biological Opinion, 601 F.3d 1096 (10th Cir. 2010).
62
Id. at 991-92.
63
Id. at 994.
64
Id. at 995.
65
NRDC v. Salazar, 686 F.3d 1092, 1095 (9th Cir. 2012).
66
Id.
67
Id.
8
salmon. No one questions that the system’s general operations are subject to Section 7
consultation, and there have been numerous Biological Opinions and repeated litigation regarding
the various federal agencies’ compliance with the ESA. 68 However, Section 7’s applicability to
the Project’s contracts has been highly contested. 69
Since the 1930s, the Bureau of Reclamation has entered into a number of water contracts
for delivery of Project water. The most recent ESA Section 7 consultation litigation involves
renewals of 145 Project contracts that the Bureau entered in 1964 to settle potential water rights
conflicts with senior water rights holders. As the Ninth Circuit described these contracts in its
2012 decision in Natural Resources Defense Council v. Salazar (“NRDC v. Salazar”), “The
contracts did not resolve the seniority claims, but guaranteed Settlement Contractors a certain
amount of ‘base water’ annually without any fee and other ‘project water’ for which they would
pay a fee to receive. The ‘base water’ could only be reduced by 25% in very dry years.” 70 The
Ninth Circuit also affirmed the Eastern District of California in concluding that the Bureau lacked
sufficient discretion in renewing these contracts to trigger Section 7 consultation under the ESA:
Under § 8 of the Reclamation Act of 1902, the Bureau must operate the CVP in
conformity with California water law . . . . 43 U.S.C. § 383 . . . . Section 8
includes the “full recognition” of any “vested right acquired” under California
water law. 43 U.S.C. § 383 . . . . Under California law, senior appropriative water
rights must be satisfied before junior water rights. The Central Valley Project
Improvement Act (“CVPIA”), Pub.L. 102–575, 106 Stat. 4714 (1992), requires
the Bureau to operate the CVP in compliance with “all decisions of the California
Water Resources Control Board.” CVPIA § 3406(a). . . . Under the Settlement
Contracts, negotiated at the behest of the California Water Resources Control
Board, the Bureau is required to deliver base supply water for free and that the
supply may only be reduced by 25% in critically dry years. The duty to deliver
the base supply water is mandatory. . . . Under the CVPIA, the Bureau is required
to renew these contracts upon request. See CVPIA § 3404(c). 71
As a result, “the Bureau’s discretion is limited with regard to the Settlement Contracts so that §
7(a)(2) of the ESA is not triggered. The Bureau’s hands are tied historically by those asserting
senior water rights in the CVP.” 72
Conclusion
As the above discussion makes clear, most of the case law interpreting the discretionary
function requirement for ESA Section 7 consultations, both before and after NAHB, comes out of
the Ninth Circuit. In its 2012 en banc decision in Kanuk Tribe, the Ninth Circuit articulated a
two-step analysis for deciding whether Section 7 consultation is required for any particular
68
E.g., In re Consolidated Salmonid Cases, 791 F. Supp. 2d 801 (E.D. Cal. 2011); San Luis & Delta-Mendota Water
Auth. v. Salazar, 760 F. Supp. 2d 865, (E.D. Cal. 2010); Pacific Coast Fed. of Fishermen’s Ass’ns v. Gutierrez, 660 F.
Supp. 2d 1195 (E.D. Cal. 2008); Pacific Coast Fed. of Fishermen’s Ass’s v. Gutierrez, 2008 WL 6124803 (E.D. Cal.
2008).
69
NRDC v. Kempthorne, 621 F. Supp. 2d 954, 972-73 (E.D. Cal. 2009); NRDC v. Kempthorne, 2008 WL 5054115, at
*10 (E.D. Cal. 2008); Pacific Coast Fed. of Fishermen’s Ass’ns, 660 F. Supp. 2d at 1201; Pacific Coast Fed. of
Fishermen’s Ass’ns, 2008 WL 6124803, at *3-*4.
70
NRDC v. Salazar, 686 F.3d at 1095.
71
Id. at 1099.
72
Id. See also Pacific Coast Fed. of Fishermen’s Ass’ns, 660 F. Supp. 2d at 1201; Pacific Coast Fed.n of Fishermen’s
Ass’ns, 2008 WL 6124803, at *3-*4 (concluding the same regarding the Bureau’s lack of discretion under the
Settlement Contracts).
9
federal agency activity: First, whether there is federal agency action within the meaning of
Section 7—that is, an activity authorized, funded, or carried out by the agency, construed broadly;
and second, if so, whether the federal agency has sufficient discretion in carrying out that action,
viewing the action as a whole, to make Section 7 consultation meaningful.73 On March 18, 2013,
the U.S. Supreme Court denied certiorari to review this decision, 74 suggesting that the Kanuk
Tribe analysis has or will become the governing test for assessing Section 7’s applicability to
particular federal agency activities, including their water management activities.
Kanuk Tribe also demonstrated in en banc review that the Ninth Circuit will carefully
examine a federal agency’s authority to alter the activities that it fund, permits, or conducts in
favor of ESA-listed species when determining whether Section 7 consultation is required. Such
authority may exist even when the federal agency has no authority to stop or prevent the activity
in question, so long as it can influence exactly how the activity is conducted.
Nevertheless, the Ninth Circuit’s two other 2012 decisions, Glen Canyon Trust and
NRDC v. Salazar, both applied 50 C.F.R. § 402.03 to find that the Bureau of Reclamation lacked
sufficient discretion to engage in Section 7 consultation. Glen Canyon Trust appears to confirm
earlier decisions that, in general, the Bureau of Reclamation lacks its normal range of statutory
discretion when it is dealing with the Colorado River. NRDC v. Salazar, in contrast, involved a
detailed examination of how the Reclamation Act and California water law influence the
adjustability of certain of the Bureau’s water project contracts. Specifically, the origin and
context of those contracts and their relationship to senior water rights holders can be as important
as the actual terms and language of the contracts in determining whether Section 7 consultation is
necessary as part of their renewal.
On March 5, 2013, the Ninth Circuit granted a petition to rehear NRDC v. Salazar en
banc. 75 Its decision on rehearing might, as in Kanuk Tribe, result in a much closer examination of
the Bureau of Reclamation’s authority and discretion with respect to the Central Valley Project
Settlement Contracts that changes the outcome of the case. Alternatively, as in Glen Canyon
Trust, the Ninth Circuit could determine that the Bureau truly does lack discretion to modify the
Settlement Contracts on renewal. Either way, the Ninth Circuit’s trio of 2012 decisions promises
to provide the guiding law regarding the discretionary function requirement in ESA Section 7
consultations for federal water projects and water-related activities for many years to come.
73
Kanuk Tribe of California, 681 F.3d at 1021; Center for Biol. Diversity v. EPA, 2013 WL 1729573, at *8-*9 (N.D.
Cal. 2013).
74
New 49’ers, Inc. v. Karuk Tribe of Cal., --- U.S. ---, 133 S. Ct. 1579 (2013).
75
NRDC v. Salazar, 710 F.3d 874 (9th Cir. 2013).
10