Ninth Circuit Rules Injury from Future Water Rights Restrictions Too Speculative for Article III Standing

On February 21, 2017, the U.S. Court of Appeals for the Ninth Circuit held that the San Luis & Delta-Mendota Water Authority and Westlands Water District (collectively, “Water Contractors”) lacked Article III standing to pursue an Endangered Species Act (“ESA”) claim against the U.S. Department of the Interior and U.S. Bureau of Reclamation (collectively, the “Federal Defendants”) in connection with the Federal Defendants’ water flow augmentation for the Lewiston Dam.  San Luis & Delta-Mendota Water Authority v. Haugrud, Case Nos. 14-17493, 14-17506, 14-17515, and 14-17539.

The Water Contractors alleged that the Federal Defendants failed to conduct formal consultation under ESA section 7 for their 2013 release of Trinity River water from the Lewiston Dam in an amount that exceeded the designated applicable water release schedule for the dam, thereby causing economic injury to the Water Contractors and their members.  In particular, the Water Contractors alleged that the Federal Defendants’ action would cause the imposition of more stringent regulations on the operations of the Central Valley Project, restricting water deliveries to their members and adversely impacting the agricultural industry, in the event that the reduction of cold water storage resulted in insufficient flows and adversely impacted winter run and spring run salmon egg incubation.

The Court declined to find that the Water Contractors had standing to pursue their ESA claim, holding that the alleged injuries were speculative and not traceable to the Federal Defendants.

The Court did not reach the question of whether economic injury is an interest that is protected under ESA section 7.

Fifth Circuit Issues Contentious Dissent Over Designation of Louisiana Land

On June 13, 2016, the U.S. Court of Appeals for the Fifth Circuit, in a 2-1 decision, held that the U.S. Fish and Wildlife Service (FWS) had properly included approximately 1,500 acres in Louisiana as designated critical habitat for the endangered dusky gopher frog (Rana sevosa), even though the frog did not inhabit the land and significant alterations would be required before the land could even be considered habitable.  Markle Interests, L.L.C. v. U.S. Fish & Wildlife Serv., 827 F.3d 452 (5th Cir. 2016).  (For a further discussion of the panel decision, see our prior E-Alert.)

On February 13, 2017, by a vote of eight to six, the Fifth Circuit denied a petition for rehearing en banc.  In response to the denial, Judge Edith Jones, a Ronald Reagan appointee, drafted a 32-page dissent that was joined by the other five Circuit Judges that voted in favor of rehearing.  In addition to walking through the legal and policy arguments in favor of rehearing, the dissent made a number of not-so-subtle jabs at the other members of the court.  For example, the dissent begins with the following:

“The protagonist in this Endangered Species Act (ESA) case–the dusky gopher frog–is rumored to ‘play dead,’ ‘cover its eyes,’ ‘peak [sic] at you[,] and then pretend to be dead again.’ . . .  The panel majority regrettably followed the same strategy in judicial review–play dead, cover their eyes, peek, and play dead again.  Even more regrettably, the court refused to rehear this decision en banc.”

With a petition for writ of certiorari likely on the horizon, one can only guess as to whether such a dissent increases or decreases the likelihood of Supreme Court review.


Endangered Species Act Case Roundup

Two noteworthy cases have recently been issued by the Ninth Circuit Court of Appeals and the U.S. District Court for the Northern District of California.  The two cases address: (1) the interplay between the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA) and the Endangered Species Act (ESA) and (2) the use of the deliberative process privilege to withhold potential administrative record documents in ESA litigation.

In Center for Biological Diversity v. U. S. Environmental Protection Agency, 2017 U.S. App. LEXIS 1826 (9th Cir. Feb. 2, 2017), the Ninth Circuit reversed in part a district court’s dismissal of plaintiffs’ claims arising from their citizen suit alleging that the U.S. Environmental Protection Agency (EPA) violated the ESA when it registered certain pesticide active ingredients and pesticide products without undertaking consultation with the National Marine Fisheries Service and the U.S. Fish and Wildlife Service (collectively, the Service).  Specifically, plaintiffs argued that reregistering pesticide products pursuant to FIFRA triggered EPA’s duty to consult with the Service under ESA section 7.

The Ninth Circuit affirmed the district court’s decision in large part, including with respect to the following:

  • The claims identifying EPA’s issuance of Reregistration Eligibility Decisions (RED) as an agency action were either time-barred by the general six-year statute of limitations or jurisdictionally barred because an ESA section 7 claim raised after EPA took public notice and comment must comply with the jurisdictional provisions of FIFRA. FIFRA requires that a petition for review be made in the court of appeals within 60 days of the entry of the contested final order.
  • EPA’s continued discretionary control of the pesticide’s registration did not constitute final agency action because plaintiffs failed to identify an affirmative agency action that would trigger the need for consultation.
  • EPA’s completion of pesticide reregistration for a specific active ingredient was simply a fact, not an affirmative agency action, and therefore could not trigger ESA section 7 consultation.

The Ninth Circuit reversed the district court with respect to claims regarding EPA’s approval of individual pesticide products.  The Ninth Circuit agreed with the district court that the approval of individual pesticide products was an affirmative agency action, but reversed the district court’s holding that the claims were barred by the collateral attack doctrine.  The Ninth Circuit held that the issuance of REDs was distinct from the approval of individual products under FIFRA, and the approval of individual products was based on new information not considered in issuing REDs.

In Desert Survivors v. U.S. Department of the Interior, 2017 U.S. Dist. LEXIS 16536 (N.D. Cal. Feb. 6, 2017), the Northern District of California addressed whether the deliberative process privilege properly applies to documents withheld in actions subject to review under the Administrative Procedure Act (APA).  Plaintiffs argued that the Service’s withholding of 55 documents containing regional office comments on the Service’s “Final Policy on Interpretation of the Phrase ‘Significant Portion of its Range’ in the Endangered Species Act” was improper because, in reviewing an agency action under the APA, courts must “review the whole record,” which includes “everything that was before the agency pertaining to the merits of its decision.”  The district court disagreed, holding that, as a general matter, the deliberative process privilege applies to actions under the APA, including ESA actions.  Thus, the balancing test set forth in F.T.C. v. Warner Communications Inc., 742 F.2d 1156 (9th Cir. 1984) governs the question of whether the documents are protected under the deliberative process privilege.  That balancing test examines whether the party’s need for the withheld materials to allow for accurate fact-finding outweighs the government’s interest in non-disclosure.  The court did not reach the ultimate issue of whether the privilege applied to the documents the Service withheld.  Rather, the court directed the Service to provide an updated privilege log describing the documents in greater detail and to file all the documents under seal so that plaintiffs could select a sample of documents for in camera review.

President Trump Announces Supreme Court Nominee

On January 31, 2017, President Trump announced Judge Neil M. Gorsuch as his nominee to fill the ninth seat of the United States Supreme Court, left vacant since Justice Antonin Scalia’s passing in February 2016.  Judge Gorsuch currently sits as a judge on the United States Court of Appeals for the Tenth Circuit.  President George W. Bush nominated Gorsuch to his current Tenth Circuit seat in 2006.  Early in his legal career, Judge Gorsuch clerked for Supreme Court Justices Byron R. White and Anthony M. Kennedy.  Many predict that Gorsuch will follow in the footsteps of the late Justice Scalia; like Justice Scalia before him, Judge Gorsuch favors strict construction of the Constitution and statutes.  Notably, in 2016, Gorsuch wrote a concurring opinion in Gutierrez-Brizuela v. Lynch, criticizing the long-standing Chevron doctrine, which provides for deference to agency regulations where statutes are ambiguous.  While Gutierrez-Brizuela focused on immigration law, the Chevron doctrine has played a significant role in challenges against environmental regulations, such as those associated with the Endangered Species Act.   Should Gorsuch be confirmed and ultimately play a role in upending the Chevron doctrine, it could have a potentially tremendous impact on the regulated community.

White House Chief of Staff Orders Freezing of Pending Regulations

On January 20, 2017, Reince Priebus, the White House Chief of Staff and Assistant to the President, issued a memorandum to the heads of all executive departments and agencies ordering them to freeze the processing of all regulations.  The stated intent of this action is to ensure that “the President’s appointees or designees have the opportunity to review any new or pending regulations.”  At the outset, the memo states that, with the exception of regulations addressing any “emergency situations” or “urgent circumstances relating to health, safety, financial, or national security matters” and those subject to statutory or judicial deadlines, no regulations are to be sent to the Office of the Federal Register (“OFR”) until they have been reviewed and approved by an agency or department head appointed by President Trump and vetted with the Office of Management and Budget Director. In addition, new or pending regulations that have been already been sent to the OFR, but not yet published, should be withdrawn (consistent with OFR procedures).

While on its face, this memo appears to only affect those regulations that are currently under review and have not yet been published as final in the Federal Register, it is clear that the intention is to allow the new administration to re-evaluate final rules that have not yet taken effect and possibly even those that have.   For those regulations that have been published in the Federal Register, but have not yet taken effect, the memo orders the agencies to temporarily postpone their effective date for 60 days from January 20th (not from the published effective date), for the stated purpose of “reviewing questions of fact, law, and policy.”  Further, the memo states that in instances where it is permissible, the agencies should consider proposing a notice-and-comment period that extends beyond the 60-day moratorium.

Relying on the Regulatory Planning and Review Executive Order (“E.O.”) 12866 issued in 1993 by President Clinton, as well as E.O. 13422 (which amended E.O. 12866 to include, among other things, the definition of agency “guidance”) issued by President Bush in 2007, the memo employs a broad definition of the term “regulation.”  In other words, the memo purports to require the review and consideration of any instrument, including guidance documents, memoranda and opinions that have a “binding” regulatory effect or would otherwise influence the interpretation of law by an agency.

While not plainly stated in the memo, the regulatory freeze may allow the incoming administration to identify already finalized regulations and potentially refer those to Congress for disapproval utilizing the Congressional Review Act (“CRA”) of 1996.  Under the CRA, Congress can “disapprove” a regulation issued as a final rule by a federal agency by issuing a joint “disapproval resolution” within 60 legislative days of the regulation being referred to Congress.  While the CRA has been rarely utilized, most notably due to the level of effort needed to pass each resolution and because of the threat of Presidential veto, it is likely to be utilized in this instance, in part because efforts are underway to streamline the process (e.g. H.R. 21 (“Midnight Rules Relief Act of 2017”) would allow the “bundling” of multiple regulations into a single joint resolution) and the same party controls both the Legislative and the Executive branches.

The potential effect of the memo is broadly sweeping, with numerous rules issued by the U.S. Fish and Wildlife Service, National Marine Fisheries Service, and other agencies, particularly in areas relating to endangered species likely to be reviewed and considered for their effects on the regulated communities. For example, on January 25, 2017, the wildlife agencies announced that they would be delaying the effective date for revisions to the Regulations for Candidate Conservation Agreements with Assurances from January 26th to March 21st.  What is certain is that many of the regulations developed at the end of the Obama administration are unlikely to survive this process.

NMFS Publishes Cook Inlet Beluga Whale Recovery Plan

On January 5, 2017, the National Marine Fisheries Service (NMFS) published notice of the availability of the final Recovery Plan for the Cook Inlet Beluga Whale (Delphinapterus leucas).  The Endangered Species Act (ESA) requires the preparation and implementation of recovery plans for all listed species, unless the Secretary of Commerce determines that doing so does not promote the recovery of the species.  NMFS listed the Cook Inlet distinct population segment (DPS) of beluga whale (CI beluga) as endangered under the ESA in 2008 and designated critical habitat in 2011.

Photo: NOAA Fisheries

Approximately 340 CI beluga remained in 2014, down from a high of nearly 1300 in 1979.  The Cook Inlet is a semi-enclosed tidal estuary in southcentral Alaska; CI beluga are the most reproductively and demographically isolated of all the Alaskan beluga whales.  As such, CI beluga are highly susceptible to stochastic events.

The Recovery Plan acknowledges that the reasons for the CI beluga’s decline are not well understood.  In order to focus efforts and resources on actions that are more likely to benefit CI beluga recovery, the Recovery Plan identifies ten potential threat types and rates their overall relative concern to CI beluga.  The Plan focuses recovery efforts on threats identified as of medium or high relative concern including catastrophic events (e.g., natural disasters; spills; mass strandings), cumulative effects of multiple stressors, noise, disease agents (e.g., pathogens, parasites, and harmful algal blooms), habitat loss or degradation, reduction in prey, and unauthorized take.  Threats of low relative concern that will be reassessed from time to time include pollution, predation, and subsistence hunting.

The Recovery Plan specifies a minimum population size of 520 individuals to downlist CI beluga from endangered to threatened and 840 individuals to delist.  Recommended recovery actions include research, monitoring, education/outreach efforts, and threat management, such as evaluating the effect of prey abundance on the DPS’s fitness.

Texas Cactus and Three Other Species Proposed for Downlisting or Delisting by U.S. Fish and Wildlife Service

On December 28, 2016, the U.S. Fish and Wildlife Service (Service) published a proposed rule to reclassify the Tobusch fishhook cactus (Sclerocactus brevihamatus ssp. tobuschii), downlisting the species from endangered to threatened under the Endangered Species Act (ESA).  The Service concluded that, while the Cactus is not in danger of extinction, it is likely to become endangered in the foreseeable future.  This proposed rule and the accompanying 12-month finding were precipitated by the same ESA petition, citizen suit, and settlement agreement that compelled the Service’s recent 12-month finding and proposed rule delisting the black-capped vireo.

The cactus is a diminutive plant endemic to the Edwards Plateau of Central Texas. When listed as endangered in 1979, only four sites were known (two of which had been destroyed by floods) and fewer than 200 individuals were observed.  Since then, the Service has learned that the riparian sites originally identified were atypical, and a great number of populations have been documented in upland sites.  Populations of the species have been confirmed in 105 areas and include over 3,000 individuals.  Based on modeling, the Service estimates a total population of about 480,000 individuals.  Other reasons underlying the species’ original listing (habitat destruction, altered stream flows, and illegal collection) are now considered to have minimal impact on the species.  Yet—due to continued threats from the demographic and genetic consequences of small population sizes and geographic isolation, insect parasitism, feral hog depredation, changes in wildfire cycles and vegetation, and unknown long-term effects of land use changes and climate change—the Service concluded that the species warrants continued listing under the ESA as threatened.  The comment period for the proposed rule downlisting the cactus runs through February 27, 2017.

On January 6, 2017, the Service reached 12-month findings and issued proposed rules for three additional species—lesser long-nosed bat (Leptonycteris curasoae yerbabuenae) (proposed delisting), Kuenzler hedgehog cactus (Echinocereus fendleri var. kuenzleri) (proposed downlisting), and gypsum wild-buckwheat (Eriogonum gypsophilum) (proposed delisting).  Each of these species was included in the same 2016 settlement agreement that drove the Service’s 12-month findings and proposed rules for the Tobusch fishhook cactus and the black-capped vireo.

U.S. Fish & Wildlife Finalizes First-Ever ESA Compensatory Mitigation Policy

On December 27, 2016, the U.S. Fish & Wildlife Service (FWS) issued its final Endangered Species Act (ESA) Compensatory Mitigation Policy (Policy) – the first policy to comprehensively address compensatory mitigation under the ESA.  The Policy applies to all forms of compensatory mitigation involving ESA compliance required or recommended by FWS, including conservation banks, in-lieu fee programs, permittee-responsible mitigation, and other third-party mitigation mechanisms.  It is a step-down policy addressing the compensatory mitigation component of the mitigation hierarchy, as defined in FWS’s revised and final Mitigation Policy (Nov. 21, 2016) (as reported here), which compensates for or offsets “unavoidable impacts after all appropriate and practicable avoidance and minimization measures have been applied.”

The Policy advances and implements a shift from a project-by-project to a landscape-scale approach to mitigation as directed in the Presidential memorandum, “Mitigating Impacts on Natural Resources From Development and Encouraging Related Private Investment” (Nov. 3, 2015).  The Policy further implements the mitigation goal, established in the Presidential memorandum and FWS’s Mitigation Policy, of a net gain or, at a minimum, no net loss, in sensitive natural resources (i.e., listed, proposed, at-risk species, and their habitats), consistent with FWS’s and action agencies’ authorities and responsibilities, as applicable, under the ESA.  As many commenters noted, the mitigation goal of “net gain/no net loss” in the status of species’ conservation is not required under sections 7 or 10 of the ESA.  However, nothing in the ESA precludes FWS from adopting such “enhanced” mitigation goals and recommending mitigation plans accordingly.  Project proponents who implement compensatory mitigation developed to achieve FWS’s enhanced mitigation standard are expected to enjoy such benefits as greater future regulatory certainty and expedited permit processes.

It is a long-held tenet of conservation planning that landscape-level approaches to mitigation can achieve greater conservation benefits by encouraging private investment in compensatory mitigation, thus leveraging economies of scale and incentivizing advance mitigation.  The Policy encourages market-based approaches to mitigation with a preference for conservation banking that consolidates compensatory mitigation on larger landscapes.  According to FWS, the benefits of a comprehensive landscape-level, market-based approach to compensatory mitigation include standardization and greater consistency and transparency in implementation in the ESA, as well as regulatory flexibility and predictability for the regulated community.

Comment Period Open on City of San Diego Vernal Pool HCP

On December 23, 2016, the U.S. Fish and Wildlife Service published a notice of availability and request for public comment in the Federal Register with respect to the draft Environmental Impact Report/Statement (EIR/S) for the City of San Diego Vernal Pool Habitat Conservation Plan (VPHCP).  Comments are due by February 21, 2017.  The species covered by the VPHCP were previously covered by the San Diego Multiple Species Conservation Program, but the portion of that Plan providing coverage for vernal pool species was struck down by the United States District Court for the Southern District of California.  Center for Biological Diversity v. Bartel, 470 F. Supp. 2d 1118 (2006).

The Federal Register notice explains that “[t]he purpose of issuing an ITP to the City would be to permit incidental take of the covered species resulting from local development authorized by the City and conditioned on the City’s minimization and mitigation of the impacts of such take in accordance with an approved VPHCP.”  The alternatives to issuance of an incidental take permit being considered in the EIR/S are no action (i.e., not issuing the permit) and an expanded conservation alternative that provides greater benefits for the covered species.  The covered species are the San Diego fairy shrimp (Branchinecta sandiegonensis), Riverside fairy shrimp (Streptocephalus woottoni), San Diego button celery (Eryngium aristulatum var. parishii), spreading navarretia (Navarretia fossalis), San Diego mesa mint (Pogogyne abramsii), California Orcutt grass (Orcuttia californica), and Otay mesa mint (Pogogyne nudiuscula).