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Natural Resources Defense Council v. Houston

Citation: 28 ELR 21368
No. 97-16030 et al., 146 F.3d 1118/46 ERC 1865/(9th Cir., 06/24/1998)

The court holds that the Bureau of Reclamation violated the Endangered Species Act (ESA) by renewing water supply contracts with several water districts in California before consulting with the U.S. Fish and Wildlife Service (FWS) and the National Marine Fisheries Service (NMFS). The districts rely on water from the Friant Dam on the San Joaquin River. The court first holds that the ESA applies to the contract renewals. Negotiating and executing contracts is clearly agency action, and the Bureau had discretion to alter the terms of the renewal contracts during the negotiating process. The court next holds that by executing the contracts without first obtaining either the required concurrence from the NMFS that the proposed action was not likely to affect a threatened species or a properly issued NMFS "no jeopardy" biological opinion, the Bureau acted arbitrarily and capriciously and in violation of the ESA. The NMFS has jurisdiction over the winter-run chinook salmon, which was listed as a threatened species prior to execution of all but one contract renewal. Although the Director of the NMFS stated that formal consultation was not required, the Director also refused to concur in the Bureau's opinion that the salmon would not be affected adversely. By relying on the NMFS in this case, the Bureau did not meet its independent responsibilities under the ESA. Regardless of the NMFS' position that a formal consultation was unnecessary, the Bureau had a clear legal obligation to at least request a formal consultation under the circumstances. The court also holds that the Bureau violated ESA § 7(d) when it executed 10 contracts before completing the formal consultation process with the FWS, which had jurisdiction over other species in the Friant area. The contracts constituted an irreversible and irretrievable commitment of resources. Therefore, the Bureau was not permitted to proceed until FWS found that the contracts were not likely to affect a protected species. Moreover, the Bureau could not skirt the procedural requirements of ESA § 7(d) by including a catchall savings clause in the illegally executed contracts. Even if a savings clause could preserve the contracts, it is inadequate to serve that purpose here because it forecloses the reasonable and prudent alternative of reallocating contracted water from irrigation to conservation. In addition, the court holds that the ESA claim did not become moot once the FWS issued its no jeopardy biological opinion. Had the biological opinion been rendered before the contracts were executed, the FWS would have had more flexibility to make, and the Bureau to implement, suggested modifications to the proposed contracts. The court then holds that the district court's decision to rescind the contracts that violated the ESA was not an abuse of discretion. While the court has the discretion to preserve the contracts if the procedural flaw could have been rectified in another way, there is no reason to compel that result here. An injunction would not serve any purpose if the contracts are not invalidated.

The court further holds that the district court did not err in setting aside the water contract that was executed before the chinook salmon was listed. After the original contract expired and before the renewed contract was validated in state court, the government continued to deliver water to the district. This discretionary activity of delivering water without a contract, coupled with the fact that the contract explicitly stated that the United States was not bound by the contract until it was validated in state court, support the district court's conclusion that the Bureau had an obligation to withdraw the contract and initiate an NMFS consultation once the salmon was listed. The court also rejected four other districts' claims that their water contracts should be upheld. Their arguments either were meritless or were not raised below.

The court next holds that the National Environmental Policy Act claim brought by the organization challenging the contracts is moot. The organization received complete relief by virtue of the contract rescission and by the Central Valley Project Improvement Act's (CVPIA's) requirement that anenvironmental impact statement be completed on the Friant Dam before the reexecution of the contracts. The court next holds that the district court erred in finding that the California Fish and Game Code § 5937 claim was not ripe. When the Bureau is not complying with § 5937 and its obligation to comply with the statute is in dispute, a determination of the § 5937 issue is ripe. The rescission of the water contracts is unrelated to the timeliness of the § 5937 claim, as the Bureau's duty to comply with state law exists independent of any contractual arrangements with the water districts. Further, although the district court correctly concluded that § 5937 is not preempted by the CVPIA, it failed to rule on several issues pertaining to if and how the statute applies to the Friant dam. Thus, the court remanded these issues for a determination on the merits. Last, the court held that the district court did not abuse its discretion in denying the water districts' motion for further discovery under Fed. R. Civ. P. 56(f). The water districts never formally filed such a motion, and if there was any error, it was harmless.

Counsel for Plaintiffs
Philip F. Atkins-Pattenson
Sheppard, Mullin, Richter & Hampton
Four Embarcadero Ctr., 17th Fl., San Francisco CA 94111
(415) 434-9100

Counsel for Defendant
Gregory K. Wilkinson
Best, Best & Krieger
400 Mission Sq.
3750 University Ave., Riverside CA 92502
(909) 686-1450

Before Skopil and Nelson, JJ.