*fn1,The opinion of the court was delivered by: Justice Alito,NATIONAL ASSOCIATION OF HOME BUILDERS, ET AL., PETITIONERS 06-340 v. DEFENDERS OF WILDLIFE ET AL. ENVIRONMENTAL PROTECTION AGENCY, PETITIONER 06-549 v. DEFENDERS OF WILDLIFE ET AL." />

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National Association of Home Builders v. Defenders of Wildlife

June 25, 2007 *fn1

NATIONAL ASSOCIATION OF HOME BUILDERS, ET AL., PETITIONERS 06-340
v.
DEFENDERS OF WILDLIFE ET AL.
ENVIRONMENTAL PROTECTION AGENCY, PETITIONER 06-549
v.
DEFENDERS OF WILDLIFE ET AL.



On Writs of Certiorari to the United States Court of Appeals for the Ninth Circuit Court Below: 420 F. 3d 946

SYLLABUS BY THE COURT

OCTOBER TERM 2006

Argued April 17, 2007

Under the Clean Water Act (CWA), petitioner Environmental Protection Agency (EPA) initially administers each State's National Pollution Discharge Elimination System (NPDES) permitting program, but CWA §402(b) provides that the EPA "shall approve" transfer of permitting authority to a State upon application and a showing that the State has met nine specified criteria. Section 7(a)(2) of the Endangered Species Act of 1973 (ESA) requires federal agencies to consult with agencies designated by the Secretaries of Commerce and the Interior to "insure" that a proposed agency action is unlikely to jeopardize an endangered or threatened species. The Fish and Wildlife Service (FWS) and the National Marine Fisheries Service (NMFS) administer the ESA. Once a consultation process is complete, a written biological opinion is issued, which may suggest alternative actions to protect a jeopardized species or its critical habitat. When Arizona officials sought EPA authorization to administer the State's NPDES program, the EPA initiated consultation with the FWS to determine whether the transfer would adversely affect any listed species. The FWS regional office wanted potential impacts taken into account, but the EPA disagreed, finding that §402(b)'s mandatory nature stripped it of authority to disapprove a transfer based on any other considerations. The dispute was referred to the agencies' national offices for resolution. The FWS's biological opinion concluded that the requested transfer would not jeopardize listed species. The EPA concluded that Arizona had met each of §402(b)'s nine criteria and approved the transfer, noting that the biological opinion had concluded the consultation "required" by ESA §7(a)(2). Respondents sought review in the Ninth Circuit, petitioner National Association of Home Builders intervened, and part of respondent Defenders of Wildlife's separate action was consolidated with the suit. The court held that the EPA's transfer approval was arbitrary and capricious because the EPA had relied on contradictory positions regarding its §7(a)(2) responsibilities during the administrative process. Rather than remanding the case for the agency to explain its decision, however, the court reviewed the EPA's substantive construction of the statutes. It did not dispute that Arizona had met CWA §402(b)'s nine criteria, but nevertheless concluded that ESA §7(a)(2) required the EPA to determine whether its transfer decision would jeopardize listed species, in effect adding a tenth criterion. The court dismissed the argument that the EPA's approval was not subject to §7(a)(2) because it was not a "discretionary action" under 50 CFR §402.03, §7(a)(2)'s interpretative regulation. The court thus vacated the EPA's transfer decision.

Held:

1. The Ninth Circuit's determination that the EPA's action was arbitrary and capricious is not fairly supported by the record. This Court will not vacate an agency's decision under the arbitrary and capricious standard unless the agency "relied on factors which Congress had not intended it to consider, entirely failed to consider an important aspect of the problem, offered an explanation for its decision that runs counter to the evidence before the agency, or is so implausible that it could not be ascribed to a difference in view or the product of agency expertise." Motor Vehicle Mfrs. Assn. of United States, Inc. v. State Farm Mut. Automobile Ins. Co., 463 U. S. 29, 43. Here, the Ninth Circuit concluded that the EPA's decision was internally inconsistent in its statements during the review process. Federal courts ordinarily are empowered to review only an agency's final action, and the fact that a local agency representative's preliminary determination is later overruled at a higher agency level does not render the decisionmaking process arbitrary and capricious. The EPA's final approval notice stating that §7(a)(2)'s required consultation process had been concluded may be inconsistent with its previously expressed position -- and position in this litigation -- that §7(a)(2)'s consultation requirement is not triggered by a §402 transfer application, but that is not the type of error requiring a remand. By the time the statement was issued, the EPA and FWS had already consulted, and the question whether that consultation had been required was not germane to the final agency decision. Thus, this Court need not further delay the permitting authority transfer by remanding to the agency for clarification. Respondents suggest that the EPA nullified their right to participate in the application proceedings by altering its legal position during the pendency of the transfer decision and its associated litigation, but they do not suggest that they were deprived of their right to comment during the comment period made available under the EPA's regulations. Pp. 10-14.

2. Because §7(a)(2)'s no-jeopardy duty covers only discretionary agency actions, it does not attach to actions (like the NPDES permitting transfer authorization) that an agency is required by statute to undertake once certain specified triggering events have occurred. Pp. 14-25.

(a) At first glance the legislative commands here are irreconcilable. Section 402(b)'s "shall approve" language is mandatory and its list exclusive; if the nine specified criteria are satisfied, the EPA does not have the discretion to deny a transfer application. Section 7(a)(2)'s similarly imperative language would literally add a tenth criterion to §402(b). Pp. 14-15.

(b) While a later enacted statute (such as the ESA) can sometimes operate to amend or even repeal an earlier statutory provision (such as the CWA), "repeals by implication are not favored" and will not be presumed unless the legislature's intention "to repeal [is] clear and manifest." Watt v. Alaska, 451 U. S. 259, 267. Statutory repeal will not be inferred "unless the later statute ` "expressly contradict[s] the original act" ' or such a construction ` "is absolutely necessary [to give the later statute's words] any meaning at all." ' " Traynor v. Turnage, 485 U. S. 535, 548. Otherwise, "a statute dealing with a narrow, precise, and specific subject is not submerged by a later enacted statute covering a more generalized spectrum." Radzanower v. Touche Ross & Co., 426 U. S. 148, 153. The Ninth Circuit's reading of §7(a)(2) would effectively repeal §402(b)'s mandate that the EPA "shall" issue a permit whenever all nine exclusive statutory prerequisites are met. Section 402(b) does not just set minimum requirements; it affirmatively mandates a transfer's approval, thus operating as a ceiling as well as a floor. By adding an additional criterion, the Ninth Circuit raises that floor and alters the statute's command. Read broadly, the Ninth Circuit's construction would also partially override every federal statute mandating agency action by subjecting such action to the further condition that it not jeopardize listed species. Pp. 15-17.

(c) Title 50 CFR §402.03, promulgated by the NMFS and FWS and applying §7(a)(2) "to all actions in which there is discretionary Federal involvement or control" (emphasis added), harmonizes the CWA and ESA by giving effect to the ESA's no-jeopardy mandate whenever an agency has discretion to do so, but not when the agency is forbidden from considering such extra-statutory factors. The Court owes "some degree of deference to the Secretary's reasonable interpretation" of the ESA, Babbitt v. Sweet Home Chapter, Communities for Great Ore., The opinion of the court was delivered by: Justice Alito

551 U. S. ____ (2007)

These cases concern the interplay between two federal environmental statutes. Section 402(b) of the Clean Water Act requires that the Environmental Protection Agency transfer certain permitting powers to state authorities upon an application and a showing that nine specified criteria have been met. Section 7(a)(2) of the Endangered Species Act of 1973 provides that a federal agency must consult with agencies designated by the Secretaries of Commerce and the Interior in order to "insure that any action authorized, funded, or carried out by such agency ... is not likely to jeopardize the continued existence of any endangered species or threatened species." The question presented is whether §7(a)(2) effectively operates as a tenth criterion on which the transfer of permitting power under the first statute must be conditioned. We conclude that it does not. The transfer of permitting authority to state authorities -- who will exercise that authority under continuing federal oversight to ensure compliance with relevant mandates of the Endangered Species Act and other federal environmental protection statutes -- was proper. We therefore reverse the judgment of the United States Court of Appeals for the Ninth Circuit.

I.

A.

1.

The Clean Water Act of 1972 (CWA), 86 Stat. 816, 33 U. S. C. §1251 et seq., established a National Pollution Discharge Elimination System (NPDES) that is designed to prevent harmful discharges into the Nation's waters. The Environmental Protection Agency (EPA) initially administers the NPDES permitting system for each State, but a State may apply for a transfer of permitting authority to state officials. See 33 U. S. C. §1342; see also §1251(b) ("It is the policy of Congress that the Stat[e] ... implement the permit progra[m] under sectio[n] 1342 ... of this title"). If authority is transferred, then state officials -- not the federal EPA -- have the primary responsibility for reviewing and approving NPDES discharge permits, albeit with continuing EPA oversight.*fn2

Under §402(b) of the CWA, "the Governor of each State desiring to administer its own permit program for discharges into navigable waters within its jurisdiction may submit to [the EPA] a full and complete description of the program it proposes to establish and administer under State law or under an interstate compact," as well as a certification "that the laws of such State ... provide adequate authority to carry out the described program." 33 U. S. C. §1342(b). The same section provides that the EPA "shall approve each submitted program" for transfer of permitting authority to a State "unless [it] determines that adequate authority does not exist" to ensure that nine specified criteria are satisfied. Ibid. These criteria all relate to whether the state agency that will be responsible for permitting has the requisite authority under state law to administer the NPDES program.*fn3 If the criteria are met, the transfer must be approved.

2.

The Endangered Species Act of 1973 (ESA), 87 Stat. 884, as amended, 16 U. S. C. §1531 et seq., is intended to protect and conserve endangered and threatened species and their habitats. Section 4 of the ESA directs the Secretaries of Commerce and the Interior to list threatened and endangered species and to designate their critical habitats. §1533. The Fish and Wildlife Service (FWS) administers the ESA with respect to species under the jurisdiction of the Secretary of the Interior, while the National Marine Fisheries Service (NMFS) administers the ESA with respect to species under the jurisdiction of the Secretary of Commerce. See 50 CFR §§17.11, 222.101(a), 223.102, 402.01(b) (2006).

Section 7 of the ESA prescribes the steps that federal agencies must take to ensure that their actions do not jeopardize endangered wildlife and flora. Section 7(a)(2) provides that "[e]ach Federal agency shall, in consultation with and with the assistance of the Secretary [of Commerce or the Interior], insure that any action authorized, funded, or carried out by such agency (hereinafter in this section referred to as an `agency action') is not likely to jeopardize the continued existence of any endangered species or threatened species." 16 U. S. C. §1536(a)(2).

Once the consultation process contemplated by §7(a)(2) has been completed, the Secretary is required to give the agency 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 species or its critical habitat." §1536(b)(3)(A); see also 50 CFR §402.14(h). If the Secretary concludes that the 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 [§7(a)(2)] and can be taken by the Federal agency ... in implementing the agency action." 16 U. S. C. §1536(b)(3)(A); see also 50 CFR §402.14(h)(3). Regulations promulgated jointly by the Secretaries of Commerce and the Interior provide that, in order to qualify as a "reasonable and prudent alternative," an alternative course of action must be able to be implemented in a way "consistent with the scope of the Federal agency's legal authority and jurisdiction." §402.02. Following the issuance of a "jeopardy" opinion, the agency must either terminate the action, implement the proposed alternative, or seek an exemption from the Cabinet-level Endangered Species Committee pursuant to 16 U. S. C. §1536(e). The regulations also provide that "Section 7 and the requirements of this part apply to all actions in which there is discretionary Federal involvement or control." 50 CFR §402.03.

B.

1.

In February 2002, Arizona officials applied for EPA authorization to administer that State's NPDES program.*fn4 The EPA initiated consultation with the FWS to determine whether the transfer of permitting authority would adversely affect any listed species.

The FWS regional office concluded that the transfer of authority would not cause any direct impact on water quality that would adversely affect listed species. App. to Pet. for Cert. in No. 06-340, p. 564. However, the FWS office was concerned that the transfer could result in the issuance of more discharge permits, which would lead to more development, which in turn could have an indirect adverse effect on the habitat of certain upland species, such as the cactus ferruginous pygmy-owl and the Pima pineapple cactus. Specifically, the FWS feared that, because §7(a)(2)'s consultation requirement does not apply to permitting decisions by state authorities,*fn5 the transfer of authority would empower Arizona officials to issue individual permits without considering and mitigating their indirect impact on these upland species. Id., at 565-566. The FWS regional office therefore urged that, in considering the proposed transfer of permitting authority, those involved in the consultation process should take these potential indirect impacts into account.

The EPA disagreed, maintaining that "its approval action, which is an administrative transfer of authority, [would not be] the cause of future non-discharge-related impacts on endangered species from projects requiring State NPDES permits." Id., at 564. As a factual matter, the EPA believed that the link between the transfer of permitting authority and the potential harm that could result from increased development was too attenuated. Id., at 654. And as a legal matter, the EPA concluded that the mandatory nature of CWA §402(b) -- which directs that the EPA "shall approve" a transfer request if that section's nine statutory criteria are met -- stripped it of authority to disapprove a transfer based on any other considerations. Id., at 654-655.

Pursuant to procedures set forth in a memorandum of understanding between the agencies, the dispute was referred to the agencies' national offices for resolution. In December 2002, the FWS issued its biological opinion, which concluded that the requested transfer would not cause jeopardy to listed species. The opinion reasoned that "the loss of section 7-related conservation benefits . . . is not an indirect effect of the authorization action," id., at 117, because

"loss of any conservation benefit is not caused by EPA's decision to approve the State of Arizona's program. Rather, the absence of the section 7 process that exists with respect to Federal NPDES permits reflects Congress' decision to grant States the right to administer these programs under state law provided the State's program meets the requirements of [§]402(b) of the Clean Water Act." Id., at 114.

In addition, the FWS opined that the EPA's continuing oversight of Arizona's permitting program, along with other statutory protections, would adequately protect listed species and their habitats following the transfer. Id., at 101-107.

The EPA concluded that Arizona had met each of the nine statutory criteria listed in §402(b) and approved the transfer of permitting authority. In the notice announcing the approval of the transfer, the EPA noted that the issuance of the FWS's biological opinion had "conclude[d] the consultation process required by ESA section 7(a)(2) and reflects the [FWS'] agreement with EPA that the approval of the State program meets the substantive requirements of the ESA." Id., at 73.

2.

On April 2, 2003, respondents filed a petition in the United States Court of Appeals for the Ninth Circuit seeking review of the transfer pursuant to 33 U. S. C. §1369(b)(1)(D), which allows private parties to seek direct review of the EPA's determinations regarding state permitting programs in the federal courts of appeals. The court granted petitioner National Association of Homebuilders leave to intervene as a respondent in that case. Respondent Defenders of Wildlife also filed a separate action in the United States District Court for the District of Arizona, alleging, among other things, that the biological opinion issued by the FWS in support of the proposed transfer did not comply with the ESA's standards. The District Court severed that claim and transferred it to the Court of Appeals for the Ninth Circuit, which consolidated the case with the suit challenging the EPA transfer. See 420 F. 3d 946 (2005).

A divided panel of the Ninth Circuit held that the EPA's approval of the transfer was arbitrary and capricious because the EPA "relied during the administrative proceedings on legally contradictory positions regarding its section 7 obligations." Id., at 959. The court concluded that the EPA "fail[ed] to understand its own authority under section 7(a)(2) to act on behalf of listed species and their habitat," id., at 977, because "the two propositions that underlie the EPA's action -- that (1) it must, under the [ESA], consult concerning transfers of CWA permitting authority, but (2) it is not permitted, as a matter of law, to take into account the impact on listed species in making the transfer decision -- cannot both be true," id., at 961. The court therefore concluded that it was required to "remand to the agency for a plausible explanation of its decision, based on a single, coherent interpretation of the statute." Id., at 962.

The panel majority, however, did not follow this course of action. Rather, the panel went on to review the EPA's substantive construction of the statutes at issue and held that the ESA granted the EPA both the power and the duty to determine whether its transfer decision would jeopardize threatened or endangered species. The panel did not dispute that Arizona had met the nine criteria set forth in §402(b) of the CWA, but the panel nevertheless concluded that §7(a)(2) of the ESA provided an "affirmative grant of authority to attend to [the] protection of listed species," id., at 965, in effect adding a tenth criterion to those specified in §402(b). The panel dismissed the argument that the EPA's approval of the transfer application was not subject to §7(a)(2) because it was not a "discretionary action" within the meaning of 50 CFR §402.03 (interpreting §7(a)(2) to apply only to agency actions "in which there is discretionary Federal involvement and control"). 420 F. 3d, at 967-969. It viewed the FWS's regulation as merely "coterminous" with the express statutory language encompassing all agency actions that are " `authorized, funded, or carried out' " by the agency. Id., at 969 (quoting 16 U. S. C. §1536(a)(2)). On these grounds, the court granted the petition and vacated the EPA's transfer decision.

In dissent, Judge Thompson explained that the transfer decision was not a "discretionary action" under 50 CFR §402.03 because "[t]he Clean Water Act, by its very terms, permits the EPA to consider only the nine specified factors. If a state's proposed permitting program meets the enumerated requirements," he reasoned, "the EPA administrator `shall approve' the program. 33 U. S. C. §1342(b). This [c]ongressional directive does not permit the EPA to impose additional conditions." 420 F. 3d, at 980.

The Ninth Circuit denied rehearing and rehearing en banc. 450 F. 3d 394 (2006). Writing for the six judges who dissented from the denial of rehearing en banc, Judge Kozinski disagreed with the panel's conclusion that the EPA's analysis was so internally inconsistent as to be arbitrary and capricious. He further noted that, if the panel was correct on this point, the proper resolution would have been to remand to the EPA for further explanation. Id., at 396-398. On the statutory question, Judge Kozinski echoed Judge Thompson's conclusion that once the nine criteria set forth in §402(b) of the CWA are satisfied, a transfer is mandatory and non-discretionary. Id., at 397-399. He rejected the panel majority's broad construction of ESA §7(a)(2), concluding that "[i]f the ESA were as powerful as the majority contends, it would modify not only the EPA's obligation under the CWA, but every categorical mandate applicable to every federal agency." Id., at 399, n. 4.

The Ninth Circuit's construction of §7(a)(2) is at odds with that of other Courts of Appeals. Compare 420 F. 3d 946 (case below), with Platte River Whooping Crane Critical Habitat Maintenance Trust v. FERC, 962 F. 2d 27, 33-34 (CADC 1992), and American Forest & Paper Association v. EPA, 137 F. 3d 291, 298-299 (CA5 1998). We granted certiorari to resolve this conflict, 549 U. S. ___ (2007), and we now reverse.

II.

Before addressing this question of statutory interpretation, however, we first consider whether the Court of Appeals erred in holding that the EPA's transfer decision was arbitrary and capricious because, in that court's words, the agencies involved in the decision "relied ... on legally contradictory positions regarding [their] section 7 obligations." App. to Pet. for Cert. in No. 06-340, at 23.

As an initial matter, we note that if the EPA's action was arbitrary and capricious, as the Ninth Circuit held, the proper course would have been to remand to the agency for clarification of its reasons. See Gonzales v. Thomas, 547 U. S. 183 (2006) (per curiam). Indeed, the court below expressly recognized that this finding required it to "remand to the agency for a plausible explanation of its decision, based on a single, coherent interpretation of the statute." App. to Pet. for Cert. in No. 06-340, at 28. But the Ninth Circuit did not take this course; instead, it jumped ahead to resolve the merits of the dispute. In so doing, it erroneously deprived the agency of its usual administrative avenue for explaining and reconciling the arguably contradictory rationales that sometimes appear in the course of lengthy and complex administrative decisions. We need not examine this question further, however, because we conclude that the Ninth Circuit's determination that the EPA's action was arbitrary and capricious is not fairly supported by the record.

Review under the arbitrary and capricious standard is deferential; we will not vacate an agency's decision unless it

"has relied on factors which Congress had not intended it to consider, entirely failed to consider an important aspect of the problem, offered an explanation for its decision that runs counter to the evidence before the agency, or is so implausible that it could not be ascribed to a difference in view or the product of agency expertise." Motor Vehicle Mfrs. Assn. of United States, Inc. v. State Farm Mut. Automobile Ins. Co., 463 U. S. 29, 43 (1983).

"We will, however, `uphold a decision of less than ideal clarity if the agency's path may reasonably be discerned.' " Ibid. (quoting Bowman Transp., Inc. v. Arkansas-Best Freight System, Inc., 419 U. S. 281, 286 (1974)).

The Court of Appeals concluded that the EPA's decision was "internally inconsistent" because, in its view, the agency stated -- both during preliminary review of Arizona's transfer application and in the Federal Register notice memorializing its final action -- "that section 7 requires consultation regarding the effect of a permitting transfer on listed species." App. to Pet. for Cert. in No. 06-340, at 23.

With regard to the various statements made by the involved agencies' regional offices during the early stages of consideration, the only "inconsistency" respondents can point to is the fact that the agencies changed their minds -- something that, as long as the proper procedures were followed, they were fully entitled to do. The federal courts ordinarily are empowered to review only an agency's final action, see 5 U. S. C. §704, and the fact that a preliminary determination by a local agency representative is later overruled at a higher level within the agency does not render the decisionmaking process arbitrary and capricious.

Respondents also point to the final Federal Register notice memorializing the EPA's approval of Arizona's transfer application. This notice stated that the FWS's issuance of its biological opinion had "conclude[d] the consultation process required by ESA section 7(a)(2)." App. to Pet. for Cert. in No. 06-340, at 73. Respondents contend that this statement is inconsistent with the EPA's previously expressed position -- and their position throughout this litigation -- that §7(a)(2)'s consultation requirement is not triggered by a transfer application under §402 of the CWA.

We are not persuaded that this statement constitutes the type of error that requires a remand. By the time the Federal Register statement was issued, the EPA had already consulted with the FWS about the Arizona application, and the question whether that consultation had been required, as opposed to voluntarily undertaken by the agency, was simply not germane to the final agency transfer decision. The Federal Register statement, in short, was dictum, and it had no bearing on the final agency action that respondents challenge. Mindful of Congress' admonition that in reviewing agency action, "due account shall be taken of the rule of prejudicial error," 5 U. S. C. §706, we do not believe that this stray statement, which could have had no effect on the underlying agency action being challenged, requires that we further delay the transfer of permitting authority to Arizona by remanding to the agency for clarification. See also PDK Labs., Inc. v. United States Drug Enforcement Admin., 362 F. 3d 786, 799 (CADC 2004) ("In administrative law, as in federal civil and criminal litigation, there is a harmless error rule").*fn6

We further disagree with respondents' suggestion that, by allegedly altering its legal position while the Arizona transfer decision and its associated litigation was pending, the "EPA is effectively nullifying respondents' rights to participate in administrative proceedings concerning Arizona's application, and particularly respondents' rights under EPA's own regulations to comment on NPDES transfer applications." Brief for Respondents 28 (citing 40 CFR §123.61(b); emphasis deleted). Consistent with EPA regulations, the agency made available "a comment period of not less than 45 days during which interested members of the public [could] express their views on the State program." §123.61(a)(1). Respondents do not suggest that they were deprived of their right to comment during this period.*fn7

Respondents also contend that if the case were remanded to the EPA, they would raise additional challenges -- including, for example, a challenge to the EPA's provision of financial assistance to Arizona for the administration of its NPDES program. However, as explained below, any such agency action is separate and independent of the agency's decision to authorize the transfer of permitting authority pursuant to §402(b). See n. 11, infra. We express no opinion as to the viability of a separate administrative or legal challenge to such actions.

III.

...


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