Defenders, Wildlife Ctr., Bio. Div. V. U.S. E.P.A.

• Decision Date: 08 June 2006
• Docket Number: No. 03-72894.,No. 03-71439.,03-71439.,03-72894.
• Citation: 450 F.3d 394
• Parties: DEFENDERS OF WILDLIFE; CENTER FOR BIOLOGICAL DIVERSITY; Craig Miller, Petitioners, v. UNITED STATES ENVIRONMENTAL PROTECTION AGENCY, Respondent, National Association of Home Builders; State of Arizona; Arizona Chamber of Commerce, Intervenors. Defenders of Wildlife; Center for Biological Diversity; Craig Miller, Petitioners, v. United States Environmental Protection Agency; Robert B. Flowers, Respondents.
• Court: U.S. Court of Appeals — Ninth Circuit

450 F.3d 394

DEFENDERS OF WILDLIFE; CENTER FOR BIOLOGICAL DIVERSITY; Craig Miller, Petitioners, v. UNITED STATES ENVIRONMENTAL PROTECTION AGENCY, Respondent, National Association of Home Builders; State of Arizona; Arizona Chamber of Commerce, Intervenors.

Defenders of Wildlife; Center for Biological Diversity; Craig Miller, Petitioners, v. United States Environmental Protection Agency; Robert B. Flowers, Respondents.

No. 03-71439.

No. 03-72894.

United States Court of Appeals, Ninth Circuit.

June 8, 2006.

Eric R. Glitzenstein, Esq., Meyer & Glitzenstein, Washington, DC, Vera S. Kornylak, Arizona Center for Law in the Public Interest, Tucson, AZ, for Petitioners.

David C. Shilton, Esq., U.S. Department of Justice Environment & Natural Resources Division, Christie Whitman, U.S. Environmental Protection Agency, Robert

Gulley, U.S. Department of Justice Civil Division/Appellate Staff, Washington, DC, Kevin V. Ryan, Office of the U.S. Attorney, San Jose, CA, for Respondent.

Norman D. James, Esq., Fennemore & Craig, PC, James T. Skardon, Esq., Office of the Arizona Attorney General, Phoenix, AZ, Sonia D. Overholser, Esq., Russell S. Frye, Esq., Collier Shannon Scott, PLLC, Washington, DC, for Intervenors.

Before STEPHEN REINHARDT, DAVID R. THOMPSON, and MARSHA S. BERZON, Circuit Judges.

ORDER

The panel has voted to deny the petition for panel rehearing. The full court was advised of the petition for rehearing en banc. A judge requested a vote on whether to rehear the matter en banc. The matter failed to receive a majority of the votes of the nonrecused active judges in favor of en banc. FED. R. APP. P. 35. The request for panel rehearing and rehearing en banc is DENIED. Judge Kozinski's and Judge Kleinfeld's dissents from denial of en banc rehearing, and Judge Berzon's concurrence in denial of en banc rehearing, are filed concurrently herewith.

KOZINSKI, Circuit Judge, with whom Judges O'SCANNLAIN, KLEINFELD, TALLMAN, CALLAHAN and BEA join, dissenting from denial of rehearing en banc:

Less than two years ago, the Supreme Court unanimously reversed our interpretation of the National Environmental Policy Act (NEPA). See Dep't of Transp. v. Pub. Citizen, 541 U.S. 752, 124 S.Ct. 2204, 159 L.Ed.2d 60 (2004). Tone-deaf to the Supreme Court's message, the panel majority in this case interprets the Endangered Species Act (ESA) in precisely the same incorrect way we interpreted NEPA, dramatically expanding agencies' obligations under the law. Along the way, the majority tramples all over the Fish and Wildlife Service's (FWS) reasonable interpretation of the ESA, deliberately creates a square inter-circuit conflict with the Fifth and D.C. Circuits, and ignores at least six prior opinions of our own court. Finally, the decision is one of considerable importance to the federal government and the states of our circuit. This is precisely the kind of case we should take en banc to set our own house in order.

Background

The Clean Water Act (CWA) instructs that the Environmental Protection Agency (EPA) "shall" transfer pollution permitting authority to a state if the state's proposal meets nine criteria. See 33 U.S.C. § 1342(b). None of the criteria involves consideration of endangered species. Arizona applied to take over the CWA permitting process within its borders — the forty-fifth state to do so. There is no dispute that its proposal met all nine criteria listed in the CWA.

The EPA regional office in San Francisco, however, was worried that the transfer might affect endangered species. See 16 U.S.C. § 1536(a)(2) (section 7(a)(2) of the ESA) (requiring federal agencies to "insure" that their actions do not jeopardize endangered species). It thus initiated consultation with FWS pursuant to ESA section 7. The regional office also stated publicly that section 7 required EPA to take endangered species into account when making a transfer decision. FWS's local office in Arizona similarly expressed concerns about the transfer.

Next, the matter was "elevated," meaning the national offices of EPA and FWS took over. After national-level discussions, FWS reversed course, recommending immediate approval of the transfer. That agency issued a Biological Opinion (BiOp) concluding that any impact of the transfer on endangered species would be the unavoidable result of (1) Congress's decision to make ESA section 7 inapplicable to the states, and (2) Congress's decision to require transferring the permitting process to the states, provided the nine criteria were met (none of which included consideration of endangered species). Thus, under FWS's interpretation, the ESA was inapplicable: EPA's decision to grant the transfer could not "cause" any impact on endangered species because the decision was non-discretionary. Two days after receiving FWS's recommendation, EPA approved the transfer.

Discussion

In striking down EPA's transfer approval, the majority makes five fundamental blunders: First, it mistakes EPA's internal deliberations for analytical inconsistency. Second, the majority fails to give appropriate deference to FWS's interpretation of the ESA. Third, the majority treats the ESA as superior to all other laws, thereby nullifying a crucial ESA regulation and forcing agencies to violate their governing statutes. Fourth, the majority contradicts the Supreme Court's recent pronouncement in Public Citizen. Finally, the majority dismisses the reasoned opinions of two other circuits, creating a square conflict.

1. The majority first finds that EPA's decisionmaking process was internally inconsistent. See Defenders of Wildlife, 420 F.3d at 959-62. On the one hand, EPA stated several times that the ESA required it to consider endangered species before approving the transfer. On the other hand, the agency concluded it had no discretion under the CWA to take endangered species into account when making the transfer decision. Thus, the majority finds, EPA's decision "cannot stand." Id. at 962.

The majority makes a big fuss over the supposed internal inconsistency in EPA's reasoning, but the so-called problem is of the panel's own making. The only "inconsistency" is between the San Francisco regional office's interpretation of the ESA and the interpretation by EPA headquarters in Washington, D.C. In other words, EPA changed its mind upon further reflection at a higher level. The agency's position is that adopted by EPA at the national level; the position taken by the agency's regional office was simply overruled by the national office in Washington. There is no inconsistency in the agency's final action, which is the only one we are entitled to review. See 5 U.S.C. § 704.

The majority also points out that EPA's final action in this case was inconsistent with the actions it has taken when other states have applied for a transfer. See Defenders of Wildlife, 420 F.3d at 952 n. 3 (noting that all of EPA's transfer decisions since 1993 — six besides Arizona — have taken endangered species into account, whereas none before 1993 did). But there is no indication that EPA's deliberations in the other cases were ever elevated to the national level. As far as we know, this is the only case in which EPA's Washington, D.C. office has opined on the applicability of the ESA to the transfer of the CWA permitting process. Moreover, an agency is not locked into a particular position forever; it is entitled to change its view over time. See Mesa Verde Constr. Co. v. N. Cal. Dist. Council of Laborers, 861 F.2d 1124, 1130 (9th Cir.1988) (en banc). EPA's actions in other cases are irrelevant to whether its analysis was internally inconsistent in this one.

In any event, the majority's finding of an inconsistency in EPA's analysis, if correct, should have been the end of the case the majority should have remanded to EPA for further clarification, as the agency asked the panel to do. See Defenders of Wildlife, 420 F.3d at 969 n. 19. Even the majority itself says it "must remand" to EPA for clarification. See id. at 962. Instead, it embarks on a 17-page boondoggle, conducting the very analysis that EPA should have had an opportunity to conduct for itself. See Gonzales v. Thomas, ___ U.S. ___, ___, 126 S.Ct. 1613, 1614, 164 L.Ed.2d 358 (2006) ("The Ninth Circuit's failure to remand is legally erroneous, and that error is `obvious in light of Ventura,' itself a summary reversal.").

2. In faulting EPA for its alleged internal inconsistencies, the majority misconstrues the way the ESA was meant to operate. Under the ESA, a federal agency must consider whether its action "may affect" endangered species. 50 C.F.R. § 402.14(a). If the agency thinks endangered species might be affected, it must ask FWS whether its supposition is correct — whether its action would, in fact, affect endangered species — and, if so, what the impact on endangered species will be. See id.; id. §§ 402.14(e), (h). Then, FWS must respond by issuing a BiOp that the agency must take into account before making its decision. See id. §§ 402.14(e), 402.15(a).

In this case, EPA was initially concerned that its approval of Arizona's transfer application might affect endangered species. EPA does not administer the ESA, so it doesn't have the expertise to know for sure. See Am. Forest & Paper Ass'n v. EPA, 137 F.3d 291, 297 (5th Cir. 1998). In order to find out whether its transfer approval would, in fact, affect endangered species, EPA did exactly what it was supposed to do: It asked FWS, the agency that is charged with administering the ESA. See United States v. McKittrick, 142 F.3d 1170, 1174 (9th Cir.1998). And FWS did exactly what it was supposed to do: It responded with a BiOp informing EPA that its approval would not, in fact, affect endangered species. See p. 395 supra. With this advice from the congressionally designated experts in hand, EPA decided that its initial concerns were unfounded and that it could go forward with the transfer approval.

The majority finds this perfectly logical...