Monday's Big Environmental Decision -- NAHB v. Defenders of Wildlife:

The Supreme Court released another major environmental decision Monday, National Association of Home Builders v. Defenders of Wildlife (NAHB). As in Massachusetts v. EPA, environmentalist groups sought to expand the scope of a major environmental law, over the opposition of the Environmental Protection Agency. Also like Mass v. EPA, the Court split 5-4. Unlike Mass. v. EPA, however, the EPA and industry groups won while the environmentalist groups lost.

NAHB centered on whether the Endangered Species Act requirement that federal agencies consult with the Fish & Wildlife Service (or National Marine Fisheries Service) to insure that agency actions not threaten endangered and threatened species applies to non-discretionary agency actions. At issue was the EPA’s decision to approve the transfer of Clean Water Act (CWA) permitting authority to the state of Arizona. The CWA provides that the EPA “shall” transfer such permitting authority unless the EPA concludes that the state in question fails to meet one of nine specific criteria listed in the Act. Defenders of Wildlife and other environmentalist groups argued that the EPA was also required to consider whether the transfer of permitting authority could jeopardize endangered or threatened species under ESA Section 7(a)(2). As characterized by the Court, Defenders argued, and the Ninth Circuit held below, that Section 7(a)(2) “effectively operates as a tenth criterion on which the transfer of permitting power under the first statute must be conditioned.” Interestingly enough, the relevant federal agencies – the EPA, FWS, and NMFS – all took the contrary view.

The Court, in an opinion by Justice Alito, rejected the environmentalist argument, holding that Section 7(a)(2) of the ESA only applies to discretionary agency actions, and should not be read to modify existing agency statutory obligations. If the CWA provides that the EPA “shall” delegate permitting authority unless one of nine specific criteria is satisfied, then the EPA cannot consider – and is certainly not obligated to consider – other criteria not specified in the Act. Thus, Section 7(a)(2) imposes a broad mandate on federal agencies, but not a “super-mandate” that effectively amends existing statutory authorities. This interpretation of the ESA, the majority noted, was that embraced by the agencies entrusted with implementing the Act, and this interpretation was due deference from the Court. As Justice Alito concluded,

Applying Chevron, we defer to the agency’s reasonable interpretation of ESA §7(a)(2) as applying only to “actions in which there is discretionary Federal involvement or control.” 50 CFR §402.03. Since the transfer of NPDES permitting authority is not discretionary, but rather is mandated once a State has met the criteria set forth in §402(b) of the CWA, it follows that a transfer of [CWA] permitting authority does not trigger §7(a)(2)’s consultation and no-jeopardy requirements. Accordingly, the judgment of the Court of Appeals for the Ninth Circuit is reversed, and these cases are remanded for further proceedings consistent with this opinion.
In the course of his opinion, Justice Alito also took some shots at the Ninth Circuit’s opinion below, specifically noting that if the EPA’s decision to transfer permitting authority to Arizona had been arbitrary and capricious, as the Ninth Circuit held, “the proper course would have been to remand to the agency for clarification of its reasons. . . . But the Ninth Circuit did not take this course; instead, it jumped ahead to resolve the merits of the dispute.”

Justice Stevens wrote the primary dissent, arguing that the language and intent of the ESA required that it apply to all agency actions, even those otherwise constrained by statutory delegations of authority. The apparently conflicting language of the ESA and CWA could be reconciled, Stevens argued, without limiting Section 7(a)(2) to discretionary agency actions. Under this reading, Section 7(a)(2) grants federal agencies the authority to consider – indeed, obligates them to consider – factors that they would otherwise lack statutory authority to consider. This is a significantly broader reading of Section 7(a)(2) than courts and agencies have traditionally adopted. It is one thing to argue that Section 7(a)(2) requires all federal agencies to consider the impact on species – and avoid such impacts – when permissible. It is quite another to say that Section 7(a)(2) means that when a statute tells an agency “Do X unless you find A, B, or C,” an agency is also required to consider and act on “D.”

Justice Stevens approach to agency discretion here is also at odds with his approach in Massachusetts v. EPA. In NAHB, Stevens argues that the EPA’s “authority to transfer permitting authority” to states is “discretionary.” Although the CWA specifically enumerates nine criteria as potential grounds for the EPA to refuse to transfer permitting authority, Justice Stevens argues that the Act leaves the EPA ample room to exercise its independent judgment, and therefore including Section 7(a)(2) consultation does not alter the nature of the EPA’s authority under the CWA. In Mass v. EPA, however, Justice Stevens (correctly in my view) argued that the EPA could not justify a failure to regulate carbon dioxide as a pollutant based upon considerations other than those specifically mentioned in the Clean Air Act (CAA). Because the CAA specifically identified the criteria for the EPA to consider, it had to base its decision on an evaluation of such criteria. Yet confronted here with language in the CWA that is arguably more constraining than the relevant CAA provision, Justice Stevens argued that the EPA still had room to consider other factors – room that a straightforward reading of the CWA would seem to deny.