Opinion ID: 78002
Heading Depth: 2
Heading Rank: 1

Heading: Whether section 7(a)(2) of the ESA applies to FEMA's administration of the NFIP

Text: A regulation promulgated jointly by the Secretaries of Commerce and the Interior provides that section 7 applies to all actions in which there is discretionary Federal involvement or control. 50 C.F.R. § 402.03. During the pendency of this appeal, the Supreme Court had the opportunity to rule upon the validity of that regulation. It upheld the regulation as reasonable and affirmed that section 7(a)(2) covers only discretionary agency actions and does not attach to actions ... that an agency is required by statute to undertake once certain specified triggering events have occurred. Nat'l Ass'n of Home Builders, 127 S.Ct. at 2536. Therefore, the primary issue for us to consider regarding section 7(a)(2) of the ESA is whether FEMA has any discretion in its administration of the NFIP such that it is bound by the requirements of section 7(a)(2). FEMA and the FWS argue that this case is similar to National Association of Home Builders and that FEMA does not have the required discretion under the NFIA. We disagree. The Supreme Court defined the requisite discretion for section 7(a)(2) of the ESA as the discretion to consider the protection of threatened or endangered species as an end in itself. Id. at 2537. This does not, as the parties conceded at oral argument, require the statute at issue to use environmental terminology for agency discretion to be found: there is no environmental-words test. See, e.g., In re Operation of Mo. River Sys. Litig., 421 F.3d 618 (8th Cir.2005) (finding sufficient agency discretion in administration of the Flood Control Act of 1994, which required the consideration of flood control and navigation, primarily, in agency's construction of a dam and reservoir system). Accordingly, we ask whether FEMA has discretion in administering the NFIP to consider the protection of endangered or threatened species as an end. In operating the NFIP, FEMA is required to make flood insurance available in those areas with adequate land use and control measures, as judged by comprehensive eligibility criteria developed by FEMA. 42 U.S.C. § 4012(c). FEMA develops the eligibility criteria pursuant to the authority conferred by 42 U.S.C. § 4102(c). That provision requires FEMA to consider studies and investigations, and such other information as [it] deems necessary to develop comprehensive criteria designed to encourage, where necessary, the adoption of adequate State and local measures which, to the maximum extent feasible, will, in addition to reducing the development of flood-prone land,  otherwise improve the long-range land management and use of flood-prone areas. Id. (emphasis added). This statutory scheme bears little resemblance to the scheme in National Association of Home Builders, where no discretion was found. In National Association of Home Builders, the Supreme Court considered the interplay between the seemingly conflicting mandates of the Clean Water Act (CWA) and the ESA. The CWA established the National Pollution Discharge Elimination System (NPDES), which is designed to prevent harmful discharges into the Nation's waters. Nat'l Ass'n of Home Builders, 127 S.Ct. at 2525. Although the Environmental Protection Agency (EPA) initially administers the NPDES permitting system for each state, it must transfer that permitting authority to a state upon application and satisfaction of nine statutory criteria. Id. Those criteria test the authority under state law of the would-be administering agency to carry out the NPDES program. Id. at 2525 & n. 2. The respondents before the Court argued that the EPA has discretion to consider listed species in making an NPDES transfer decision. Id. at 2537. The Court rejected the argument, stating that [n]othing in the text of [the CWA's operative provision] authorizes the EPA to consider the protection of threatened or endangered species as an end in itself when evaluating a transfer application. Id. Additionally, the Court noted that to the extent that some of the [CWA] criteria may result in environmental benefits to marine species, there is no dispute that [the state at issue] has satisfied each of those statutory criteria. Id. In other words, although the CWA requires the EPA to consider whether [a state] has the legal authority to enforce applicable water quality standards, ... the permit transfer process does not itself require scrutiny of the underlying standards or of their effect on marine or wildlife. Id. at 2537 n. 10. Here, by contrast, Congress set out several purposes for FEMA to consider in FEMA's development of the criteria relevant to its assessment of whether a requesting locality has adequate land use and control measures in place. 42 U.S.C. § 4102(c). Moreover, those purposes are broad and contemplate restriction of land development and consideration of whether a locality's land-use measures will otherwise improve land management and use. Therefore, although FEMA is required to issue flood insurance to localities that satisfy certain criteria, FEMA itself is charged with developing those criteria and enjoys broad discretion in so doing. See Nat'l Wildlife Fed'n v. FEMA, 345 F.Supp.2d 1151, 1173-74 (W.D.Wash.2004) (finding that FEMA has discretion in its development of the eligibility criteria). FEMA also enjoys broad discretion in its implementation of the community rating system program pursuant to 42 U.S.C. § 4022(b). See id. at 1174 (finding that FEMA has discretion in designing the community rating system program). Congress directed FEMA to design the program and, in its discretion, to reward localities with discounted insurance premiums for the adoption of floodplain management regulations that exceed the minimum criteria discussed above. 42 U.S.C. § 4022(b). Among the purposes Congress directed FEMA to consider in designing the program is the protection of natural and beneficial floodplain functions. Id. § 4022(b)(1)(B). We find that the language of 42 U.S.C. § 4022(b)(1) provides ample discretion for FEMA to consider listed species. Based upon our review of the NFIA's scheme for the development of eligibility criteria and of the purposes served by the community rating system program, we are satisfied that FEMA has discretion to consider endangered and threatened species in its administration of the NFIP. Indeed, this finding is consistent with FEMA's own regulations implementing the NFIP, wherein wildlife and environmental concerns are considered. See 44 C.F.R. § 60.5(b)(2) (imposing the condition that certain communities [r]equire a setback for all new development from the ocean, lake, bay, riverfront or other body of water,... designated by the Administrator according to the flood-related erosion hazard and erosion rate, ... and depending upon the geologic, hydrologic, topographic and climatic characteristics of the community's land, and explaining that [t]he buffer may be used for ... wildlife habitat areas); id. § 60.6(b)(1) (requiring that communities seeking an exception from the obligation to adopt adequate flood plain regulations shall explain in writing to [FEMA] the nature and extent of and the reasons for the exception request and shall include sufficient supporting economic, environmental, topographic, hydrologic, and other scientific and technical data, and data with respect to the impact on public safety and the environment); id. § 60.22(c)(2) (requiring that communities, in adopting floodplain regulations, consider [d]iversion of development to areas safe from flooding ... in light of the need to prevent environmentally incompatible flood plain use); id. § 60.25(b)(9) (requiring that participating States maintain the ability to [e]stablish minimum State flood plain management regulatory standards consistent ... with other Federal and State environmental and water pollution standards for the prevention of pollution during periods of flooding). FEMA and the FWS alternatively argue that even if FEMA has the requisite discretion to consider the effects of its administration of the NFIP on listed species, the issuance of flood insurance is not a legally relevant cause of the development in the Florida Keys that threatens the listed species. We are not persuaded. By its terms, section 7(a)(2) of the ESA applies to any action authorized, funded, or carried out by the agency at issue. 16 U.S.C. § 1536(a)(2); see also 50 C.F.R. § 402.02 (providing examples of agency action). The applicable regulations direct agencies, in considering whether formal consultation is required, to determine whether any action may affect listed species or critical habitat. 50 C.F.R. § 402.14(a). A later portion of the same regulation confirms that agencies must consider the effects of the action as a whole. Id. § 402.14(c). The [e]ffects of the action include the direct and indirect effects of an action on the species or critical habitat, and [i]ndirect effects are those that are caused by the proposed action and are later in time, but still are reasonably certain to occur. Id. § 402.02. This statutory and regulatory framework for determining when an agency action requires section 7(a)(2) consultation is materially indistinguishable from the framework of the National Environmental Policy Act (NEPA) considered by the Supreme Court in Department of Transportation v. Public Citizen, 541 U.S. 752, 124 S.Ct. 2204, 159 L.Ed.2d 60 (2004). The issue in Public Citizen was whether NEPA and the Clean Air Act required the Federal Motor Carrier Safety Administration (FMCSA) to evaluate the environmental effects of cross-border operations of Mexican-domiciled motor carriers. Id. at 756, 124 S.Ct. 2204. The FMCSA was charged with promulgating safety and financial regulations for motor carriers and with granting registrations to motor carriers willing and able to comply with those regulations. Id. at 758-59, 124 S.Ct. 2204. It had no statutory authority to impose or enforce emissions controls or to establish environmental requirements unrelated to motor carrier safety. Id. at 759, 124 S.Ct. 2204. After reviewing NEPA's framework, the Court determined that the environmental effects of cross-border operations could not be considered effects of the FMCSA's issuance of regulations and registrations because the FMCSA simply lacks the power to act on the environmental consequences of what Congress required it to do. Id. at 768, 124 S.Ct. 2204. The Court summarized its holding: where an agency has no ability to prevent a certain effect due to its limited statutory authority over the relevant actions, the agency cannot be considered a legally relevant `cause' of the effect. Id. at 770, 124 S.Ct. 2204. Although the statutory frameworks considered here and in Public Citizen are quite similar, the facts of the cases are not. Here, FEMA has the authority in its administration of the NFIP, as discussed above, to prevent the indirect effects of its issuance of flood insurance by, for example, tailoring the eligibility criteria that it develops to prevent jeopardy to listed species. Therefore, its administration of the NFIP is a relevant cause of jeopardy to the listed species. This is confirmed by the FWS's own interpretation that section 7 applies to the NFIP and its findings made during formal consultation with FEMA that the NFIP jeopardizes listed species because development is encouraged and in effect authorized by FEMA's issuance of flood insurance. See Fla. Key Deer I, 864 F.Supp. at 1232, 1236. Public Citizen does not mandate a different result because it stands for nothing more than the intuitive proposition that an agency cannot be held accountable for the effects of actions it has no discretion not to take. Critical to the result in Public Citizen was the fact that the FMCSA had no ability to countermand the President's lifting of the moratorium [on qualified Mexican motor carriers] or otherwise categorically to exclude Mexican motor carriers from operating within the United States. 541 U.S. at 766, 124 S.Ct. 2204. Having determined that section 7(a)(2) applies to FEMA's administration of the NFIP, we discuss whether the ESA requires FEMA to independently analyze the FWS's proposed reasonable and prudent alternatives prior to adopting them.