Opinion ID: 2670364
Heading Depth: 3
Heading Rank: 2

Heading: Standing—The DMC Contracts

Text: The district court held that Plaintiffs lack standing to challenge the validity of the DMC Contracts because Plaintiffs cannot establish that their injury is fairly traceable to the Bureau’s alleged procedural violation. The district court reasoned that: (1) the DMC Contracts contain a 14 NRDC V. JEWELL provision that absolves the government from liability for breaches that result from complying with its legal obligations (the shortage provision); (2) this provision permits the Bureau to take necessary actions to meet its legal obligations under the ESA; so (3) the Bureau could not have negotiated any contractual terms that better protect the delta smelt, and any injury to the delta smelt is not traceable to the contract renewal process. We reject the district court’s reasoning.
To establish Article III standing, a plaintiff must demonstrate that: (1) he suffered an injury in fact that is concrete, particularized, and actual or imminent; (2) the injury is fairly traceable to the challenged conduct; and (3) the injury is likely to be redressed by a favorable court decision. Friends of the Earth, 528 U.S. at 180–81 (quoting Lujan v. Defenders of Wildlife, 504 U.S. 555, 560–61 (1992)). One who challenges the violation of “a procedural right to protect his concrete interests can assert that right without meeting all the normal standards” for traceability and redressibility. Lujan, 504 U.S. at 572 n.7. Such a litigant need only demonstrate that he has “a procedural right that, if exercised, could protect [his] concrete interests and that those interests fall within the zone of interests protected by the statute at issue.” Defenders of Wildlife v. U.S. Envtl. Prot. Agency, 420 F.3d 946, 957 (9th Cir. 2005), rev’d in part on other grounds by Home Builders, 551 U.S. 664. We have held that alleged violations of Section 7(a)(2)’s consultation requirement constitute a procedural injury for standing purposes. Citizens for Better Forestry v. U.S. Dep’t of Agric., 341 F.3d 961, 971 (9th Cir. 2003) (citing Envtl. Prot. Info. Ctr. v. Simpson Timber Co., 255 F.3d 1073, 1079 NRDC V. JEWELL 15 (9th Cir. 2001)); see also Defenders of Wildlife, 420 F.3d at 957. For this reason, to establish standing, a litigant who asserts a procedural violation under Section 7(a)(2) need only demonstrate that compliance with Section 7(a)(2) could protect his concrete interests. Defenders of Wildlife, 420 F.3d at 957.
Plaintiffs contend that the Bureau violated Section 7(a)(2) by failing to adequately consult with the FWS regarding threats to the delta smelt, and by renewing the DMC Contracts in reliance on what it knew, or should have known, to be a faulty analysis by the FWS. The district court held that Plaintiffs lack standing to bring this claim because the DMC Contracts contain a shortage provision that provides: If there is a Condition of Shortage [of water] because of errors in physical operations of the Project, drought, other physical causes beyond the control of the Contracting Officer or actions taken by the Contracting Officer to meet legal obligations then, except as provided in subdivision (a) of Article 18 of this Contract, no liability shall accrue against the United States or any of its officers, agents, or employees for any damage, direct or indirect, arising therefrom. The district court reasoned that, because this provision absolves the Bureau of liability if it breaches certain contractual provisions “‘to meet legal obligations’ such as Section 7(a)(2) of the ESA,” the Bureau could not have negotiated DMC Contracts that would provide the delta smelt 16 NRDC V. JEWELL with any greater protection. Therefore, the district court concluded that “[the] shortage provision[] break[s] any chain of [causality] between the execution . . . of the DMC Contracts and harm to the delta smelt.” The district court erred in holding that the shortage provision deprives Plaintiffs of standing to challenge the DMC Contracts. Because Plaintiffs allege a procedural violation under Section 7 of the ESA, they need only show that, if the Bureau engages in adequate consultation, the DMC Contracts could better protect Plaintiffs’ concrete interest in the delta smelt than the contracts do currently. Defenders of Wildlife, 420 F.3d at 957. Contrary to the district court’s finding, the shortage provision does not provide the delta smelt with the greatest possible protection. Nothing about the shortage provision requires the Bureau to take actions to protect the delta smelt. The provision is permissive, and merely absolves the United States of liability if there is a water shortage resulting from, inter alia, “actions taken . . . to meet legal obligations.” But even if we read the provision to place an affirmative obligation on the Bureau to take actions to benefit the delta smelt, the provision only concerns the quantity of water that will be made available to the DMC Contractors. There are various other ways in which the Bureau could have contracted to benefit the delta smelt, including, for example, revising the contracts’ pricing scheme or changing the timing of water deliveries. Because adequate consultation and renegotiation could lead to such revisions, Plaintiffs have standing to assert a procedural challenge to the DMC Contracts. NRDC V. JEWELL 17 C. Section 7(a)(2)’s Consultation Requirement—The Settlement Contracts The district court also held that, although Plaintiffs have standing to assert procedural challenges to the Settlement Contracts, Plaintiffs’ claims regarding these contracts fail as a matter of law. The court reasoned that the Bureau was not required to consult under Section 7(a)(2) prior to renewing the Settlement Contracts because the Bureau’s discretion in renegotiating these contracts was “substantially constrained.” We reverse this determination, because consultation is required whenever the agency has “some discretion” to take action for the benefit of a protected species. Karuk Tribe, 681 F.3d at 1024 (quoting Houston, 146 F.3d at 1126 and citing Turtle Island, 340 F.3d at 974–75; Ground Zero Ctr. for Non-Violent Action, 383 F.3d at 1092). 1. Legal Standard Section 7(a)(2)’s consultation requirement is triggered so long as a federal agency retains “some discretion” to take action for the benefit of a protected species. Karuk Tribe, 681 F.3d at 1024 (quoting Houston, 146 F.3d at 1126 and citing Turtle Island, 340 F.3d at 974–75; Ground Zero Ctr. for Non-Violent Action, 383 F.3d at 1092). Whether an agency must consult does not turn on the degree of discretion that the agency exercises regarding the action in question, but on whether the agency has any discretion to act in a manner beneficial to a protected species or its habitat. See Karuk Tribe, 681 F.3d at 1024–25 (explaining that the relevant consideration is only whether the agency could influence third party activities to protect a listed species); see also Nat’l Wildlife Fed’n, 524 F.3d at 928–29 (holding that consultation is required so long as it is possible for the agency to comply 18 NRDC V. JEWELL with both the ESA and other statutory requirements). The agency lacks discretion only if another legal obligation makes it impossible for the agency to exercise discretion for the protected species’ benefit. Id. at 927–28 (citing Home Builders, 551 U.S. at 669). 2. Application In holding that the Bureau was not required to consult under Section 7(a)(2) prior to renewing the Settlement Contracts, the district court focused on Article 9(a) of the original Settlement Contracts, which provides in pertinent part: During the term of this contract and any renewals thereof: (1) It shall constitute full agreement as between the United States and the Contractor as to the quantities of water and the allocation thereof between base supply and Project water which may be diverted by the Contractor from its source of supply for beneficial use on the land shown on Exhibit B . . . ; (2) The Contractor shall not claim any right against the United States in conflict with the provisions hereof. (emphasis added). According to the district court, the Bureau was not required to consult because this provision “substantially constrained” the Bureau’s discretion to negotiate new terms in renewing the contracts. In so concluding, the district court applied an erroneous standard. Section 7(a)(2)’s consultation requirement applies with full force so long as a federal agency retains “some NRDC V. JEWELL 19 discretion” to take action to benefit a protected species. Karuk Tribe, 681 F.3d at 1024 (quoting Houston, 146 F.3d at 1126 and citing Turtle Island, 340 F.3d at 974–75; Ground Zero Ctr. for Non-Violent Action, 383 F.3d at 1092). While the parties dispute whether Article 9(a) actually limits the Bureau’s authority to renegotiate the Settlement Contracts, it is clear that the provision does not strip the Bureau of all discretion to benefit the delta smelt and its critical habitat. First, nothing in the original Settlement Contracts requires the Bureau to renew the Settlement Contracts. Article 2 of the original contracts provides that “renewals may be made for successive periods not to exceed forty (40) years each.” (emphasis added). This language is permissive and does not require the Bureau to execute renewal contracts.1 Since the FWS has concluded that “Delta water diversions” are the most significant “synergistic cause[]” of the decline in delta smelt, 58 Fed. Reg. at 12,859, it is at least plausible that a decision not to renew the Settlement Contracts could benefit the delta smelt and their critical habitat. But even assuming, arguendo, that the Bureau is obligated to renew the Settlement Contracts and that Article 9(a) limits the Bureau’s discretion in so doing, Article 9(a) simply constrains future negotiations with regard to “the quantities of water and the allocation thereof . . . .” Nothing in the provision deprives the Bureau of discretion to renegotiate contractual terms that do not directly concern water quantity and allocation. And, as previously noted with 1 We recognize that the Central Valley Project is governed by a complicated set of federal and state laws, and we express no view as to whether other legal obligations may compel the Bureau to execute renewal contracts with holders of senior water rights. 20 NRDC V. JEWELL respect to the DMC Contracts, the Bureau could benefit the delta smelt by renegotiating the Settlement Contracts’ terms with regard to, inter alia, their pricing scheme or the timing of water distribution. For these reasons, we conclude that, in renewing the Settlement Contracts, the Bureau retained “some discretion” to act in a manner that would benefit the delta smelt. The Bureau was therefore required to engage in Section 7(a)(2) consultation prior to renewing the Settlement Contracts.