Major victory for water contractors in Delta smelt litigation

Just an hour ago, a panel of the Ninth Circuit Court of Appeals ruled 2 to 1 that the Bureau of Reclamation did not violate the Endangered Species Act when it renewed 41 water contracts as part of the Central Valley Project.  (PLF filed an amicus brief supporting the water contractors).  Judge Hug, writing for the majority, ruled in NRDC v. Salazar that the Bureau had no obligation to consult with the Fish and Wildlife Service over the impact of the contract renewals on the Delta smelt.  Recall that Section 7 of the ESA requires federal agencies to consult with the Service before undertaking an action (like contract renewal) that may affect a protected species.  In ruling for the government and the water contractors, Judge Hug relied on the Supreme Court’s decision in National Association of Home Builders v. Defenders of Wildlife.  That decision held that Section 7 applies only to discretionary federal actions.  Thus, reasoned Judge Hug, because the Bureau’s renewal of these water contracts was mandated by federal and state law, the Bureau had no obligation to consult.

The majority also ruled that the environmentalist plaintiffs lacked standing to challenge some of the contracts at issue.  Judge Hug reasoned that the plaintiffs could not establish that a failure to consult would harm their aesthetic interests; the contracts at issue had a “shortage” clause which would allow the Bureau to provide more water for the smelt, notwithstanding the contract obligation.

Judge Paez dissented on both standing and on the merits.  On the merits, Judge Paez argued that neither federal law (in particular the Central Valley Project Improvement Act) nor decisions of the State Water Resources Control Board compel the Bureau to renew the contracts.

This is a much-welcomed decision affirming the importance of preserving contract rights in the face of unbalanced environmental regulation.