Court Reaffirms Section 7 Consultation Required When Agency Retains "Some Discretion" to Take Action to Benefit Protected Species

Natural Resources Defense Council v. Jewell

(2014) ___ F.3d___

The Ninth Circuit Court of Appeals recently reaffirmed that Endangered Species Act ("ESA") Section 7 consultation requirements are triggered whenever a federal agency retains "some discretion" to shape its action for the benefit of a protected species.

This case arose from a challenge to the Bureau of Reclamation's ("Bureau") renewal of more than 150 long-term water contracts and water supply agreements (together, the "contracts"), for water from the Delta-Mendota Canal. The Bureau prepared a biological assessment concluding renewal of the contracts would have no adverse effect and but requested additional U.S. Fish & Wildlife Service ("FWS") consultation. FWS responded with a series of letters finding that water demand would increase, but concurring with the Bureau's conclusion. The Bureau renewed the contracts based on the FWS letters. In 2008, however, FWS issued a revised Biological Opinion that, contrary to its concurrence letters, concluded that the renewal contracts would have an adverse effect on the delta smelt.

The Natural Resources Defense Council ("NRDC") filed suit in District Court to invalidate a number of the contracts. The NRDC alleged, among other issues, that the Bureau violated the Section 7 consultation requirements by inadequately consulting with FWS prior to issuing the renewed contracts. Section 7 consultation is required if an agency determines that its proposed action may affected listed species or critical habitats. The District Court dismissed NRDC's claim, finding that Section 7 consultation was not required because the Bureau's discretion to negotiate new terms relating to the "quantities of water and the allocation thereof" in contracts was "substantially constrained" by the language of the original contracts.

The Ninth Circuit reversed. The Court noted that the right of renewal in the original contracts was permissive and nothing prohibited the Bureau from choosing not to renew the contracts. Further, the Court held that even if the Bureau had no discretion to renew the contracts, the Bureau had the discretion to renegotiate terms unrelated to water quantity and allocation, including, for example, the "pricing scheme or timing of the water distribution." Accordingly, the Court held that the Bureau retained "some discretion" to take action for the benefit of the delta smelt and adequate Section 7 consultation was required.

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