Facts of the Case

The Clean Water Act (CWA) instructs the Environmental Protection Agency (EPA) to turn over pollution permitting authority to a state if the state's proposal meets nine listed criteria. When Arizona issued such a proposal, the EPA regional office raised the concern that the transfer might violate Section 7(a)(2) of the Endangered Species Act (ESA), which prohibits agencies from taking actions that might jeopardize endangered species. In accordance with the ESA, the EPA consulted with the Fish and Wildlife Service (FWS). The FWS's opinion was that the ESA was inapplicable because the agency had no authority to consider any additional factors beyond the nine CWA criteria (none of which concerned endangered species). On the advice of the FWS, the EPA approved the transfer.

The Defenders of Wildlife challenged the transfer, arguing that the ESA imposed an authoritative, independent requirement on the EPA's decision to approve the transfer. The agency countered the ESA was not an independent source of authority. Rather, the ESA imposes requirements only on the discretionary decisions of federal agencies. Since its decision was non-discretionary under the CWA, the agency argued, the ESA did not apply. The U.S. Court of Appeals for the Ninth Circuit agreed with Defenders of Wildlife and invalidated the transfer. The Ninth Circuit found the FWS opinion legally flawed and the EPA's reliance on it "arbitrary and capricious." It noted that the EPA's decision was inconsistent with previous transfers of permitting authority, in which the impact on endangered species was considered.

Question

1) Can a court require that state Clean Water Act pollution permitting programs include protections for endangered species?

2) Does Section 7(a)(2) of the Endangered Species Act constitute an independent source of authority for federal agencies?

3) Is the EPA's approval of a state permitting program the legally relevant cause of impacts to endangered species resulting from future private land use activities?

4) Was the Court of Appeals correct that the EPA's decision to transfer pollution-permitting authority to Arizona under the Clean Water Act was arbitrary and capricious because it was based on inconsistent interpretations of Section 7(a)(2) of the Endangered Species Act? If so, should the Court of Appeals have sent the case back to the EPA for further proceedings without ruling on the interpretation of Section 7(a)(2)?

Conclusion

No to all. By a 5-4 vote the Court reversed the Ninth Circuit and sustained the FWS's determination that Section 7(a)(2) of the Endangered Species Act applies only to discretionary actions of federal agencies. EPA's transfer of permitting authority was a nondiscretionary action, so the EPA needed only to consider the nine criteria in the Clean Water Act. The majority opinion held that Section 7(a)(2)'s provisions for protecting endangered species do not establish a "tenth criterion" for the EPA to consider before transferring permitting authority. By this interpretation the Court sought to "harmonize[]" the ESA with the CWA, in keeping with the Court's interpretive principle that a statute should generally not be interpreted to repeal an earlier statute unless the more recent statute has explicit language to that effect. Because the Court found that the decisions of the EPA and FWS consistently and reasonably interpreted both statutes, it deferred to the views of the administrative agencies. Justice Stevens's dissent argued that the ESA's requirements properly applied to all agency decisions both discretionary and non-discretionary, and that EPA's interpretation was not entitled to deference because "[t]he Departments of the Interior and Commerce, not EPA, are charged with administering the ESA."