Court Opinion

ID: 2670364
Source: CourtListenerOpinion
Date Created: 2014-04-18 00:01:48.288271+00
Date Added: 2024-06-11T09:18:39.884666
License: Public Domain

FOR PUBLICATION

    UNITED STATES COURT OF APPEALS
         FOR THE NINTH CIRCUIT

 NATURAL RESOURCES DEFENSE                            No. 09-17661
 COUNCIL; CALIFORNIA TROUT; SAN
 FRANCISCO BAYKEEPER; FRIENDS OF                        D.C. No.
 THE RIVER; THE BAY INSTITUTE, all                   1:05-cv-01207-
 non-profit organizations,                            OWW-GSA
                 Plaintiffs-Appellants,

                      and                                OPINION

 METROPOLITAN WATER DISTRICT OF
 SOUTHERN CALIFORNIA, Plaintiff in
 Related Case,
                         Plaintiff,

                       v.

 SALLY JEWELL, in her official
 capacity as Secretary of the Interior;*
 DAN ASHE, in his official capacity as
 Director of the U.S. Fish and
 Wildlife Service; MICHAEL J.
 CONNOR, in his official capacity as
 Commissioner of the U.S. Bureau of
 Reclamation; ANDERSON-
 COTTONWOOD IRRIGATION
 DISTRICT; PACIFIC REALTY

  *
    Sally Jewell is substituted for her predecessor, Kenneth L. Salazar, as
Secretary of the Interior. Fed. R. App. P. 43(c)(2).
2                 NRDC V. JEWELL

ASSOCIATES, LP; RECLAMATION
DISTRICT 1004; BEVERLY F.
ANDREOTTI; BANTA-CARBONA
IRRIGATION DISTRICT; PATTERSON
IRRIGATION DISTRICT; WEST SIDE
IRRIGATION DISTRICT; BYRON
BETHANY IRRIGATION DISTRICT;
CARTER MUTUAL WATER COMPANY;
HOWALD FARMS, INC.; MAXWELL
IRRIGATION DISTRICT; MERIDIAN
FARMS WATER COMPANY; OJI
BROTHERS FARMS, INC.; HENRY D.
RICHTER; SUTTER MUTUAL WATER
CO.; TISDALE IRRIGATION AND
DRAINAGE COMPANY; WINDSWEPT
LAND AND LIVESTOCK COMPANY;
CITY OF REDDING; COELHO FAMILY
TRUST; EAGLE FIELD WATER
DISTRICT; MERCY SPRINGS WATER
DISTRICT; ORO LOMA WATER
DISTRICT; CONAWAY PRESERVATION
GROUP; DEL PUERTO WATER
DISTRICT; WEST STANISLAUS
IRRIGATION DISTRICT; FRESNO
SLOUGH WATER DISTRICT; JAMES
IRRIGATION DISTRICT;
TRANQUILLITY IRRIGATION
DISTRICT; CHRISTO D. BARDIS;
ABDUL RAUF; TAHMINA RAUF;
DAVID AND ALICE TE VELDE
FAMILY TRUST; FRED TENHUNFELD;
FAMILY FARM ALLIANCE,
              Defendants-Appellees,
                  NRDC V. JEWELL                       3

SAN LUIS & DELTA-MENDOTA
WATER AUTHORITY; WESTLANDS
WATER DISTRICT; CALIFORNIA
FARM BUREAU FEDERATION; STATE
WATER CONTRACTORS; CALIFORNIA
DEPARTMENT OF WATER
RESOURCES; GLENN-COLUSA
IRRIGATION DISTRICT; NATOMAS
CENTRAL MUTUAL WATER
COMPANY; PELGER MUTUAL WATER
COMPANY; PLEASANT GROVE-
VERONA MUTUAL WATER
COMPANY; RECLAMATION DISTRICT
108; RIVER GARDEN FARMS
COMPANY; PRINCETON-CODORA-
GLENN IRRIGATION DISTRICT;
PROVIDENT IRRIGATION DISTRICT;
KERN COUNTY WATER AGENCY,
   Defendant-intervenors–Appellees.

     Appeal from the United States District Court
         for the Eastern District of California
  Oliver W. Wanger, Senior District Judge, Presiding

           Argued and Submitted En Banc
    September 19, 2013—San Francisco, California

                 Filed April 16, 2014
4                        NRDC V. JEWELL

       Before: Alex Kozinski, Chief Judge, M. Margaret
    McKeown, Kim McLane Wardlaw, Raymond C. Fisher,
       Ronald M. Gould, Richard C. Tallman, Johnnie B.
     Rawlinson, Richard R. Clifton, Consuelo M. Callahan,
    Milan D. Smith, Jr., and N. Randy Smith, Circuit Judges.

             Opinion by Judge Milan D. Smith, Jr.

                           SUMMARY**

                    Endangered Species Act

     The en banc court reversed the district court’s judgment
in favor of federal defendants in an action brought by
environmental groups concerning long-term water contracts
the federal Bureau of Reclamation entered pertaining to
California’s Central Valley Project, the threatened delta
smelt, and the requirement under Section 7(a)(2) of the
Endangered Species Act that federal agencies must consult
with the United States Fish and Wildlife Service or the
National Oceanic and Atmospheric Administration’s National
Marine Fisheries Service prior to taking any agency action
that could affect an endangered or threatened species or its
critical habitat.

   The en banc court held that intervening events did not
render the action moot. The en banc court also held that the
contractual provisions of the Delta-Mendota Canal Unit
Water Services Contracts before the court did not deprive

  **
     This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
                     NRDC V. JEWELL                         5

plaintiffs of standing to bring a procedural challenge under
Section 7(a)(2) of the Endangered Species Act. Further,
concerning the Sacramento River Settlement Contracts, the en
banc court held that the federal Bureau of Reclamation was
required to engage in Section 7(a)(2) consultation because, in
renewing the challenged contracts, it retained “some
discretion” to act in a manner that would benefit the delta
smelt.

                        COUNSEL

Barbara J. Chisholm (argued), Hamilton Candee, Casey A.
Roberts, Rachel J. Zwillinger, Altshuler Berzon LLP, San
Francisco, California; Katherine Poole, Douglas Andrew
Obegi, Natural Resources Defense Council, San Francisco,
California; Trent W. Orr, Michael R. Sherwood, Earthjustice,
Oakland, California, for Plaintiffs-Appellants.

Robert H. Oakley (argued), Andrew C. Mergen, Environment
& Natural Resources Division, Department of Justice,
Washington, D.C.; Ignacia S. Moreno, Assistant Attorney
General, Environment & Natural Resources Division,
Washington, D.C., for Federal Defendants-Appellees.

Stuart L. Somach (argued), Andrew M. Hitchings, Somach
Simmons & Dunn, Sacramento, California; Steven P. Saxton
(argued), Kevin M. O’Brien, Downey Brand LLP,
Sacramento, California; J. Mark Atlas, Attorney at Law,
Willows, California; Jeffrey A. Meith, David Steffenson,
Minasian, Spruance, Meith, Soares & Sexton, LLP, Oroville,
California; Lynette M. Frediani, City of Redding, Redding,
California; Scott A. Morris, Daniel J. O’Hanlon, Hanspeter
6                    NRDC V. JEWELL

Walter, Rebecca R. Akroyd, Kronick, Moskovitz, Tiedemann
& Girard, Sacramento, California; Steven Lamon, John
Fischer, Murphy Austin Adams Schoenfeld LLP,
Sacramento, California, for Defendant-Intervenors-Appellees.

                         OPINION

M. SMITH, Circuit Judge:

    In this appeal, we address the requirement under Section
7(a)(2) of the Endangered Species Act (ESA), 16 U.S.C.
§ 1531 et seq., that federal agencies must consult with the
United States Fish and Wildlife Service (FWS) or the
National Oceanic and Atmospheric Administration’s National
Marine Fisheries Service (Service) prior to taking any agency
action that could affect an endangered or threatened species
or its critical habitat. We reaffirm that Section 7(a)(2)
requires such consultation, so long as the agency has “some
discretion” to take action for the benefit of a protected
species. Karuk Tribe of Cal. v. U.S. Forest Serv., 681 F.3d
1006, 1024 (9th Cir. 2012) (en banc) (quoting NRDC v.
Houston, 146 F.3d 1118, 1126 (9th Cir. 1998)). We hold
that: (1) intervening events have not rendered this action
moot; (2) the contractual provisions before us do not deprive
Plaintiffs-Appellants (Plaintiffs) of standing to bring a
procedural challenge under Section 7(a)(2); and (3) the
federal Bureau of Reclamation (Bureau) was required to
engage in Section 7(a)(2) consultation because, in renewing
the challenged contracts, it retained “some discretion” to act
in a manner that would benefit the delta smelt. We therefore
reverse the district court’s judgment and remand for further
proceedings.
                      NRDC V. JEWELL                          7

I. Background

   A. Statutory Structure

    The ESA protects endangered and threatened species and
their critical habitats. Under the ESA, the Secretary of the
Interior and the Secretary of Commerce are charged with
identifying threatened and endangered species and
designating critical habitats for those species. 16 U.S.C.
§ 1533. The FWS and the Service administer the ESA. See
50 C.F.R. §§ 17.11, 222.101(a), 223.102, 402.01(b).

    Section 7 of the ESA requires federal agencies to ensure
that none of their activities jeopardizes the continued
existence of endangered or threatened species or adversely
modifies those species’ critical habitats.          16 U.S.C.
§ 1536(a)(2); see also Karuk Tribe, 681 F.3d at 1020.
Section 7’s implementing regulations provide that “[e]ach
Federal agency shall review its actions at the earliest possible
time to determine whether any action may affect listed
species or critical habitat[s].” 50 C.F.R. § 402.14(a). If an
agency determines that an action may affect a listed species
or habitat, Section 7(a)(2) requires that the agency consult
with the FWS or the Service before engaging in the action.
We have previously explained:

       The purpose of consultation is to obtain the
       expert opinion of wildlife agencies to
       determine whether the action is likely to
       jeopardize a listed species or adversely
       modify its critical habitat and, if so, to
       identify reasonable and prudent alternatives
       that will avoid the action’s unfavorable
       impacts.     The consultation requirement
8                    NRDC V. JEWELL

       reflects “a conscious decision by Congress to
       give endangered species priority over the
       ‘primary missions’ of federal agencies.”

Karuk Tribe, 681 F.3d at 1020 (quoting Tenn. Valley Auth. v.
Hill, 437 U.S. 153, 185 (1978) and citing Turtle Island
Restoration Network v. Nat’l Marine Fisheries Serv.,
340 F.3d 969, 974 (9th Cir. 2003)).

    Section 7(a)(2) consultation is required so long as the
federal 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
v. U.S. Dep’t of the Navy, 383 F.3d 1082, 1092 (9th Cir.
2004)). There is no duty to consult, however, for actions
“that an agency is required by statute to undertake.” Nat’l
Ass’n of Home Builders v. Defenders of Wildlife, 551 U.S.
644, 669 (2007); see also Nat’l Wildlife Fed’n v. Nat’l
Marine Fisheries Serv., 524 F.3d 917, 928 (9th Cir. 2008)
(stating that this exception resolves “the problem of an
agency being unable to ‘simultaneously obey’ both Section 7
and a separate statute which expressly requires an agency to
take a conflicting action” (quoting Home Builders, 551 U.S.
at 666)); 50 C.F.R. § 402.03 (providing that Section 7(a)(2)
consultation is only required for proposed agency actions
over which “there is discretionary Federal involvement or
control”).

    Once Section 7(a)(2) consultation is complete, the
FWS or the Service must provide the agency with a
written biological opinion “setting forth the Secretary’s
opinion, and a summary of the information on which the
opinion is based, detailing how the agency action affects the
                      NRDC V. JEWELL                          9

species or its critical habitat.” 16 U.S.C. § 1536(b)(3)(A);
see also 50 C.F.R. § 402.14(h). If the Secretary concludes
that the proposed agency action would place the listed
species in jeopardy or adversely modify its critical habitat,
“the Secretary shall suggest those reasonable and prudent
alternatives which he believes would not violate
[Section 7(a)(2)] and can be taken by the Federal agency
. . . in implementing the agency action.” 16 U.S.C.
§ 1536(b)(3)(A).

   B. Factual and Procedural History

    The Bureau manages California’s Central Valley
Project—a series of dams, reservoirs, canals, and pumps that
diverts and draws water from the California River Delta. The
Central Valley Project delivers approximately seven million
acre-feet of water to California water users each year and is
one of the largest water storage and distribution systems in
the world.

    The delta smelt is a small fish that lives in the California
River Delta. In 1993, the FWS concluded that the delta
smelt’s population had declined by ninety percent over the
previous twenty years and listed it as a “threatened” species
under the ESA. Determination of Threatened Status for the
Delta Smelt, 58 Fed. Reg. 12,854, 12,855 (Mar. 5, 1993).
The FWS further determined that “Delta water diversions,”
including the Central Valley Project, are the most significant
“synergistic cause[]” of the decline in the delta smelt
population. Id. at 12,859.

    In the 1960s, the Bureau entered into a number of long-
term contracts pertaining to the Central Valley Project. In
2004, two groups of these contracts had expired, or were
10                   NRDC V. JEWELL

about to expire: (1) the Delta-Mendota Canal Unit Water
Service Contracts (DMC Contracts); and (2) the Sacramento
River Settlement Contracts (Settlement Contracts). (The
DMC Contracts and the Settlement Contracts are sometimes
referred to collectively as the Contracts.) The Settlement
Contracts are forty-year agreements between the Bureau and
holders of certain senior water rights. These contracts grant
the Bureau some rights to the encumbered water while also
providing senior rights holders a stable supply of water. The
DMC Contracts are water supply agreements that allow water
users, who do not claim rights as senior users, to draw water
from the Delta-Mendota Canal.

    In the early 2000s, the Bureau prepared a proposed
Operations Criteria and Plan (Plan) to, inter alia, provide a
basis for renewing the Contracts. Pursuant to Section 7 of the
ESA, the Bureau next initiated consultation with the FWS
regarding the effect of the proposed Plan on the delta smelt.
The FWS rendered an initial Biological Opinion in 2004 (the
2004 Opinion), which concluded that the Bureau’s Plan
would not jeopardize the delta smelt. We subsequently
invalidated the 2004 Opinion. See Gifford Pinchot Task
Force v. U.S. Fish & Wildlife Serv., 378 F.3d 1059, 1069 (9th
Cir. 2004), amended by 387 F.3d 968 (9th Cir 2004). In
2005, the FWS issued a revised Biological Opinion (the 2005
Opinion), which also concluded that the Plan would not
jeopardize the delta smelt. The district court invalidated the
2005 Opinion, and the Bureau did not appeal.

    Also in 2004 and 2005, the Bureau itself prepared
biological assessments that concluded that renewal of the
Contracts would not adversely affect the delta smelt. The
Bureau also requested additional consultation with the FWS
regarding its plans to renew the Contracts. The FWS
                      NRDC V. JEWELL                         11

responded via a series of letters, in which it concurred with
the Bureau’s determination that renewing the Contracts was
not likely to adversely affect the delta smelt. Each FWS
concurrence letter explained that renewing the Contracts
would increase the demand for water, but that, according to
the 2004 Opinion and the 2005 Opinion, this demand would
not adversely affect the delta smelt. The letters did not assess
the Contracts’ potential effects on the delta smelt beyond the
reasoning borrowed from the invalidated 2004 Opinion and
2005 Opinion.

    Throughout 2004 and 2005, the Bureau renewed 141
Settlement Contracts and 18 DMC Contracts based on the
FWS’ concurrence letters. On December 15, 2008, the FWS
issued a revised Biological Opinion (the 2008 Opinion),
which, contrary to the findings of the 2004 Opinion and 2005
Opinion, concluded that the Bureau’s Plan would jeopardize
the delta smelt and adversely modify its critical habitat.

    In 2008, Plaintiffs filed a Third Amended Complaint in
the United States District Court for the Eastern District of
California, challenging the validity of the 41 renewed
Contracts that they deem most harmful to the delta smelt. In
seeking to set aside these contracts, Plaintiffs argue that the
Bureau violated Section 7(a)(2) of the ESA by failing to
adequately consult with the FWS prior to renewing the
Contracts. In a series of opinions, the district court granted
summary judgment in favor of Defendants-Appellees
(Defendants). The district court held that Plaintiffs lack
Article III standing to challenge the DMC Contracts because
Plaintiffs cannot establish that their injuries are fairly
traceable to the Bureau’s alleged procedural violation. The
district court further held that, while Plaintiffs have standing
to challenge the Settlement Contracts, Plaintiffs’ claims
12                    NRDC V. JEWELL

regarding these contracts fail as a matter of law because
Section 7(a)(2)’s consultation requirement does not apply to
the Settlement Contracts.

II. Analysis

     A. Mootness

    We first consider whether intervening events have
rendered this action moot. Defendants argue that this appeal
is now moot because after the 2005 Biological Opinion was
invalidated, the Bureau engaged in a renewed consultation
with the FWS, which led to the issuance of the 2008 Opinion.

       1. Legal Standard

    Article III’s “case-or-controversy” requirement bars
federal courts from deciding “‘questions that cannot affect the
rights of litigants in the case before them.’” DeFunis v.
Odegaard, 416 U.S. 312, 316 (1974) (per curiam) (quoting
North Carolina v. Rice, 404 U.S. 244, 246 (1971) (per
curiam)). It is not enough that a case presents a live
controversy when it is filed; an actual controversy must exist
at all stages of federal court proceedings. Friends of the
Earth, Inc. v. Laidlaw Envtl. Servs. (TOC), Inc., 528 U.S.
167, 189–90 (2000).

    A case is not moot if a federal court can grant the parties
any effective relief. Forest Guardians v. Johanns, 450 F.3d
455, 461 (9th Cir. 2006). Moreover, “[t]he party asserting
mootness bears the burden of establishing that there is no
effective relief that the court can provide.” Id.
                      NRDC V. JEWELL                          13

        2. Discussion

    This action is not moot because the 2008 Opinion does
not provide Plaintiffs with the relief that they seek. The 2008
Opinion concluded that the Bureau’s Plan would likely
jeopardize the delta smelt and adversely modify its critical
habitat. In so doing, the 2008 Opinion explained that the
Bureau’s Plan must be modified from what the Bureau
envisioned in 2004 and 2005, and the Opinion identified a
“reasonable and prudent alternative” to the proposed Plan that
would avoid jeopardizing the delta smelt.

    The issuance of the 2008 Opinion does not moot this
appeal. The 2008 Opinion merely assesses the general effects
of the Bureau’s Plan, and it does not represent a consultation
with the FWS concerning the impact of the Bureau’s decision
to renew the specific contracts before us. Although the DMC
Contracts and Settlement Contracts were renewed based on
now-invalidated opinions, the Bureau has never reconsulted
with the FWS regarding the effects of renewing these
contracts, nor has it sought to amend the challenged contracts
to incorporate the protections proposed in the 2008 Opinion.
The remedy Plaintiffs seek is an injunction requiring
reconsultation with the FWS and renegotiation of the
challenged contracts based on the FWS’ assessment. This
relief remains available.

    B. Standing—The DMC Contracts

    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.

       1. Legal Standard

    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.

       2. Discussion

    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.

III.     Conclusion

    We reverse the district court’s judgment and remand for
further proceedings consistent with this opinion.

       REVERSED AND REMANDED.