Natural Resources Defense Coun, et al v. Kenneth Salazar, et al
FILED OPINION (PROCTER R. HUG, RICHARD A. PAEZ and LIAM O'GRADY) AFFIRMED. Judge: PRH Authoring, Judge: RAP Dissenting, Judge: LO . FILED AND ENTERED JUDGMENT. 
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
NATURAL RESOURCES DEFENSE
COUNCIL; CALIFORNIA TROUT;
BAYKEEPER & IT’S DELTAKEEPER
CHAPTER; FRIENDS OF THE RIVER;
THE BAY INSTITUTE, all non-profit
METROPOLITAN WATER DISTRICT OF
SOUTHERN CALIFORNIA, Plaintiff in
KENNETH LEE SALAZAR, in his
official capacity as Secretary of
the Interior; SAM D. HAMILTON, 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; ANDERSONCOTTONWOOD IRRIGATION DISTRICT;
PACIFIC REALTY ASSOCIATES, LP;
RECLAMATION DISTRICT 1004;
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NRDC v. SALAZAR
BEVERLY F. ANDREOTTI; BANTACARBONA 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 FARM, 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 CONSERVANCY GROUP;
DEL PUERTO WATER DISTRICT;
WEST STANISLAUS IRRIGATION
DISTRICT; FRESNO SLOUGH WATER
DISTRICT; JAMES IRRIGATION
DISTRICT; TRANQUILITY IRRIGATION
DISTRICT; CHRISTO D. BARDIS;
ABDUL RAUF; TAHMINA RAUF;
SACRAMENTO RIVER RANCH, LLC;
FRED TENHUNFELD; FAMILY FARM
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NRDC v. SALAZAR
SAN LUIS & DELTA-MENDOTA
WATER AUTHORITY; WESTLANDS
WATER DISTRICT; CALIFORNIA FARM
BUREAU FEDERATION; STATE WATER
DEPARTMENT OF WATER RESOURCES;
DISTRICT; NATOMAS CENTRAL
MUTUAL WATER COMPANY; PELGER
MUTUAL WATER COMPANY;
PLEASANT GROVE-VERONA MUTUAL
WATER COMPANY; RECLAMATION
DISTRICT 108; RIVER GARDEN
IRRIGATION DISTRICT; PROVIDENT
IRRIGATION DISTRICT; KERN COUNTY
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Appeal from the United States District Court
for the Eastern District of California
Oliver W. Wanger, Senior District Judge, Presiding
Argued and Submitted
May 9, 2011—San Francisco, California
Filed July 17, 2012
Before: Procter Hug, Jr. and Richard A. Paez,
Circuit Judges, and Liam O’Grady, District Judge.*
*The Honorable Liam O’Grady, District Judge for the U.S. District
Court for Eastern Virginia, Alexandria, sitting by designation.
NRDC v. SALAZAR
Opinion by Judge Hug;
Dissent by Judge Paez
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Katherine Poole, Senior Attorney, Natural Resources Defense
Council, San Francisco, California; Hamilton Candee and
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NRDC v. SALAZAR
Barbara J. Chisholm, Altshuler Berzon LLP, for the plaintiffs-appellants.
Andrew C. Mergen and Robert H. Oakley, Attorneys, Environment & Natural Resources Division, Department of Justice, Washington, D.C., for the defendants-appellees.
Daniel J. O’Hanlon, Kronick Moskovitz Tiedemann & Girard,
PC, Sacramento, California; Stuart L. Somach and Andrew
M. Hitchings, Somach Simmons & Dunn, Sacramento, California; Steven P. Saxton, Downey Brand LLP, Sacramento,
California, for the defendant-intervenors-appellees.
HUG, Circuit Judge:
In this appeal, we address whether the renewal of forty-one
water supply contracts by the United States Bureau of Reclamation violates § 7(a)(2) of the Endangered Species Act, 16
U.S.C. § 1536(a)(2) and illegally threatens the existence of
the delta smelt. We conclude that it does not, and we affirm
the judgment of the district court.
The delta smelt is a small fish endemic to the San Joaquin
and Sacramento Rivers Delta Estuary which was declared
endangered by the United States Fish and Wildlife Service
under the Endangered Species Act in 1993. Though previously abundant, the population of the delta smelt has diminished markedly in the last several decades. “The delta smelt
presently has no commercial value, but it was commercially
harvested as bait in the past.” San Luis & Delta-Mendota
Water Auth. v. Salazar, 638 F.3d 1163, 1167 (9th Cir. 2011).
NRDC v. SALAZAR
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Plaintiffs, several conservation groups, argue that in 2005
the United States Bureau of Reclamation (“Bureau”) renewed
forty-one water service contracts with various water users
without conducting an adequate consultation under § 7(a)(2)
of the Endangered Species Act and that the contracts jeopardize the existence of the delta smelt. The contracts at issue fall
into two groups: (1) users who obtain water from the DeltaMendota Canal (“DMC Contractors”); and (2) parties who
claim to hold water rights senior to those held by the Bureau
with regard to the Central Valley Project and who previously
entered into settlement contracts with the Bureau (“Settlement
Generally, the Bureau is a federal water management
agency which operates the Central Valley Project (“CVP”).
The CVP is a network of dams, reservoirs, and pumping facilities which regulates the flow of water in the San Joaquin and
Sacramento Rivers. California’s State Water Project (“SWP”)
operates the same watershed as the CVP and both offices convey water by pumping water from the two rivers. The SWP
consists of dams, canals, and pumping plants and is “the state
analogue to the Central Valley Project.” Sierra Club v.
Andrus, 610 F.2d 581, 586 (9th Cir. 1979), rev’d on other
grounds, California v. Sierra Club, 451 U.S. 287, 290-91
The Bureau and SWP have coordinated management of
CVP. The joint effort began in the 1930s when the Bureau
assumed control of it because California could not finance the
project. The Bureau had to obtain water rights under state law
to operate CVP and a dispute arose regarding the priority of
pre-project water rights. Under California law, a senior holder
of water rights has the right “to fulfill his needs before a
junior appropriator is entitled to use any water.” United States
v. State Water Resources Control Bd., 182 Cal. App. 3d 82,
102 (Cal. Ct. App. 1986). The California Water Rights Board
held hearings on the matter and issued a decision allowing the
Bureau to use CVP water if it first addressed the issue of the
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holders asserting senior water rights. The Board recognized
that senior water rights existed, though undefined, and
required a settlement.
In 1964, the Bureau and those asserting senior water rights
entered into 145 settlement contracts for 40-year terms. The
contracts did not resolve the seniority claims, but guaranteed
Settlement Contractors a certain amount of “base water”
annually without any fee and other “project water” for which
they would pay a fee to receive. The “base water” could only
be reduced by 25% in very dry years.
The Bureau also contracted with a coalition of water service contractors who obtained water from the Delta-Mendota
Canal, the DMC Contractors. These contracts provided for
water delivery to the DMC Contractors annually which the
contractors paid the Bureau to receive. Like the Settlement
Contracts, these contracts were also long-term water supply
The Endangered Species Act (“ESA”) “has both substantive and procedural provisions designed to protect endangered
species and their habitat.” American Rivers v. Nat’l Marine
Fisheries Serv., 126 F.3d 1118, 1121 (9th Cir. 1997). Under
§ 7(a)(2) of the ESA, federal agencies are required 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 or result in
the destruction or adverse modification of habitat of such species.” 16 U.S.C. § 1536(a)(2). An agency which proposes the
action must determine whether its action may affect the listed
species or critical habitat and present its conclusions in a biological assessment. 16 U.S.C. § 1536(c)(1); 50 C.F.R.
§ 402.12. If the agency determines that its action will have no
effect, consultation is not required. 50 C.F.R. § 402.14. If it
finds its proposed action may affect a listed species or critical
NRDC v. SALAZAR
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habitat, it must formally or informally consult with, in this
case, the United States Fish and Wildlife Service (“Service”).
American Rivers, 126 F.3d at 1122.
If the acting agency or consulting agency determines that
the proposed action is likely to adversely affect a listed species or critical habitat, it must engage in a formal consultation.
50 C.F.R. §§ 402.13, 402.14. In a formal consultation, the
consulting agency (the Service) issues a biological opinion
stating whether the action is likely to jeopardize such species
or habitat. 16 U.S.C. § 1536(b); 50 C.F.R. § 402.14. If it finds
jeopardy is likely, then the acting agency (the Bureau) may
suggest reasonable and prudent alternatives to be employed in
order to ensure that the listed species or critical habitat is not
put in jeopardy. 16 U.S.C. § 1536(b). The requirements to
engage in consultation only apply to agency actions “in which
there is discretionary Federal involvement or control.” 50
C.F.R. § 402.03.
In 2003, the Bureau prepared a biological assessment
regarding the affect that the contract renewals would impose
on the delta smelt and also requested a consultation with the
Service. The Service prepared a biological opinion (“2004
opinion”) addressing whether the contract renewals would
likely adversely affect a listed species or critical habitat. The
Service stated in its 2004 opinion that the Bureau’s proposed
action was not likely to threaten the delta smelt. Shortly thereafter, because of an intervening court decision, the Service
issued a new biological opinion in 2005 (“2005 opinion”)
which reached the same conclusion.
As the Service’s opinions were issued, the contracts at issue
in this case had expired or were nearing expiration. Because
the Bureau and the Service determined that the contract
renewals would not adversely affect the delta smelt, in 2004
and 2005 the Bureau renewed 28 contracts with the Settle-
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ment Contractors not to exceed 40-years and 13 contracts
with the DMC Contractors for 25-year terms.
In 2005, plaintiffs in the instant case filed suit against the
government alleging that it violated § 7 of the ESA based on
the Service’s 2004 opinion. The Service then issued its new
2005 opinion and plaintiffs filed another complaint referring
to the 2005 opinion. In reviewing the 2005 opinion, the district court held that it was unlawful because it failed to adequately consider the impacts to the delta smelt’s critical
habitat, did not rely on the best available scientific information, and did not include mandatory mitigation measures to
protect the delta smelt. The district court remanded the 2005
opinion without vacatur and ordered the Bureau and the Service to reconsult on the effects of the CVP and SWP operation on the delta smelt. On December 14, 2007, interim
measures were imposed by the court and were set to expire
automatically on the issuance of a new biological opinion by
the Service. A new opinion was filed by the Service in
Plaintiffs filed another complaint against the government
arguing that the Bureau had violated its legal obligations
under § 7(a)(2) of the ESA by renewing the DMC contracts
and Settlement Contracts. Each party then moved for summary judgment. The district court granted summary judgment
for defendants, finding that plaintiffs lacked standing to challenge the DMC contracts and that the plaintiffs’ claims
against the Settlement Contractors failed because the contracts were not discretionary and were thus exempted from
§ 7(a)(2) compliance.
In 2008, the Bureau completed a new biological assessment
and the Service issued a new biological opinion (“2008 opinion”). In that opinion, the Service found that the CVP and
SWP operations were likely to threaten the delta smelt and
identified “reasonable and prudent alternatives” to avoid such
NRDC v. SALAZAR
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STANDARD OF REVIEW
This court reviews a district court’s grant of summary judgment de novo. Butte Envtl. Council v. U.S. Army Corps of
Engineers, 620 F.3d 936, 945 (9th Cir. 2010). “Mootness, a
question of law, is reviewed de novo.” Tinoqui-Chalola
Council of Kitanemuk and Yowlumne Tejon Indians v. U.S.
Dep’t of Energy, 232 F.3d 1300, 1303 (9th Cir. 2000). Standing to challenge renewal of the DMC contracts is a legal question also reviewed de novo. Salmon Spawning & Recovery
Alliance v. Gutierrez, 545 F.3d 1220, 1224-25 (9th Cir. 2008).
Federal defendants and DMC Contractors argue that the
issuance of the 2008 opinion by the Service eliminates the
“case or controversy” requirement for federal jurisdiction and
makes this appeal moot. A federal court’s jurisdiction is limited to cases or controversies. U.S. Const., Art. III, § 2; Powell v. McCormack, 395 U.S. 486, 496 n.7 (1969). Federal
courts do not have jurisdiction to review a case when no case
or controversy exists. Foster v. Carson, 347 F.3d 742, 745
(9th Cir. 2003). Issuance of a superceding biological opinion
moots a legal challenge to a prior biological opinion. Forest
Guardians v. U.S. Forest Serv., 329 F.3d 1089, 1096 (9th Cir.
2003); American Rivers, 126 F.3d at 1123-24; Idaho Dep’t of
Fish & Game v. Nat’l Marine Fisheries Serv., 56 F.3d 1071,
1074 (9th Cir. 1995).
 In this case, the issues before the court are not moot
because although a new 2008 opinion was issued, parts of that
2008 opinion have been held unlawful by the district court in
San Luis & Delta-Mendota Water Authority v. Salazar, 760 F.
Supp. 2d 855 (E.D. Cal. 2010) (holding that the Service’s reliance on raw salvage numbers to set river flow limits violated
ESA and that its conclusion that projects contributed to
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impacts on predation and microcystis on delta smelt was arbitrary and capricious). Unlike previous cases that this court has
addressed where a new superceding opinion clearly replaced
the old opinion, in this case we have ongoing litigation
regarding the validity of the 2008 opinion and a federal court
which has held that parts of the 2008 opinion violate the ESA.
Moreover, it is unclear whether the 2008 opinion specifically
considered the impact of the forty-one contracts on CVP operation. Because the 2008 opinion has been held, in part, unlawful, and it is unclear if the contracts at issue were considered
in that opinion, this case is not moot on appeal.
Plaintiffs argue that the district court erred in holding that
they did not have standing to challenge the DMC contracts.
To invoke the jurisdiction of the federal courts, a plaintiff
must have Article III standing. Salmon Spawning & Recovery
Alliance, 545 F.3d at 1224-25. To establish Article III standing, a plaintiff must show that: “(1) he or she has suffered an
injury in fact that is concrete and 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.” Id. at 1225. If a plaintiff asserts a procedural injury, he must show that the procedures are designed
to protect a concrete threatened interest and, once shown, his
burden for showing causation and redressability is lessened.
Id. at 1226. In that case, plaintiffs “must show only that they
have a procedural right that, if exercised, could protect their
concrete interests.” Id. (quoting Defenders of Wildlife v. U.S.
E.P.A., 420 F.3d 946, 957 (9th Cir. 2005), overruled on other
grounds by Nat’l Ass’n of Home Builders v. Defenders of
Wildlife, 551 U.S. 644 (2007)).
 In this case, the district court properly held that plaintiffs do not have standing to challenge the DMC contracts.
Plaintiffs’ assertion that the DMC contracts are based on an
improper biological opinion is an assertion of a procedural
NRDC v. SALAZAR
Page: 13 of 26
violation. See Defenders of Wildlife, 420 F.3d at 957 (claim
asserting an inadequate consultation between the Environmental Protection Agency and Fish and Wildlife Service
asserts a procedural violation). Plaintiffs satisfy the injury-infact requirement by their assertion that they believe that the
Bureau has overcommitted water under the contracts which
will harm the delta smelt. See Salmon Spawning & Recovery
Alliance, 545 F.3d at 1225-26. However, plaintiffs fail to
establish a causal connection between the threatened injury
and the Bureau’s action because the DMC contracts include
a shortage provision. The shortage provision expressly allows
the Bureau to take any action to meet its legal obligations,
which includes not delivering water to DMC Contractors if it
is necessary in order to comply with § 7(a)(2) of the ESA.
The DMC contract terms, therefore, expressly require that
water delivery be subject to the requirements of Federal law
and that the Bureau may discontinue or reduce the quantity of
water delivered to the DMC Contractors. The threatened
injury, i.e., jeopardy to the delta smelt, would not be traceable
to the contract renewals because such contracts expressly
allow for § 7(a)(2) compliance. With no threatened injury
there is nothing to redress. Even under a substantive claim
analysis for standing, which imposes a higher burden than a
procedural analysis, plaintiffs’ claim fails because they cannot
show causation. See Warth v. Seldin, 422 U.S. 490, 506-08
(1975) (facts asserted failed to show causation for Article III
standing). Thus, the district court properly determined that
plaintiffs lack standing to challenge the DMC contracts under
both a procedural and a substantive claim analysis.
 Plaintiffs argue that the district court erred in holding
that their claims as to the Settlement Contracts fail because
those contracts do not require compliance with § 7(a)(2) of
the ESA. Section 7(a)(2) of the ESA only applies to federal
agency action “in which there is discretionary Federal
involvement or control.” Nat’l Ass’n of Home Builders v.
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NRDC v. SALAZAR
Defenders of Wildlife, 551 U.S. 644, 666 (2007) (“Home
Builders”) (quoting 50 C.F.R. § 402.03). In Home Builders,
the Supreme Court held § 7 did not apply to the Environmental Protection Agency’s (“EPA”) approval of an application
for Arizona to administer a program under the Clean Water
Act because this was not a discretionary act of the agency. Id.
at 666-67. The salient provisions of the Clean Water Act mandated that the EPA approve the application once nine statutory criteria under 33 U.S.C. § 1342(b) were met. Id. If the
nine criteria were met, the EPA lacked discretion to deny the
application, regardless of § 7(a)(2) requirements. Id. Because
the EPA’s discretion was so limited in determining whether
to approve the applications, it did not trigger the requirements
under § 7(a)(2) of the ESA. Id. at 673. The Court stated that
“[a]s the mandatory language of [50 C.F.R.] § 402(b) itself
illustrates, not every action authorized, funded, or carried out
by a federal agency is a product of that agency’s exercise of
discretion.” Id. at 668.
 In this case, the district court properly held that the
Bureau’s renewal of the Settlement Contracts is not subject to
§ 7(a)(2) of the ESA because its action is not a “discretionary
action.” Under § 8 of the Reclamation Act of 1902, the
Bureau must operate the CVP in conformity with California
water law on the “control, appropriation, use, or distribution
of water used in irrigation, or any vested right acquired thereunder.” 43 U.S.C. § 383; California v. United States, 438 U.S.
645, 675-79 (1978) (holding that California may impose conditions on permits granted to the United States for CVP operation). Section 8 includes the “full recognition” of any “vested
right acquired” under California water law. 43 U.S.C. § 383;
United States v. Gerlach Live Stock Co., 339 U.S. 725, 734
(1950). Under California law, senior appropriative water
rights must be satisfied before junior water rights. Pasadena
v. Alhambra, 33 Cal. 2d 908, 926 (1949). The Central Valley
Project Improvement Act (“CVPIA”), Pub.L. 102-575, 106
Stat. 4714 (1992), requires the Bureau to operate the CVP in
compliance with “all decisions of the California Water
NRDC v. SALAZAR
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Resources Control Board.” CVPIA § 3406(a). The California
Water Resources Control Board issued Decision 990 in which
it agreed to grant the Bureau rights to operate the CVP only
if it addressed the issue of those claiming to hold senior water
rights. Under the Settlement Contracts, negotiated at the
behest of the California Water Resources Control Board, the
Bureau is required to deliver base supply water for free and
that the supply may only be reduced by 25% in critically dry
years. The duty to deliver the base supply water is mandatory.
Under the contracts, the contractors are entitled to 100% of
their base water, which can only be reduced by 25% in very
dry years. Under the CVPIA, the Bureau is required to renew
these contracts upon request. See CVPIA § 3404(c).
 Here, the Bureau’s discretion is limited with regard to
the Settlement Contracts so that § 7(a)(2) of the ESA is not
triggered. The Bureau’s hands are tied historically by those
asserting senior water rights in the CVP. The Bureau was
required to acknowledge such rights in order to operate the
CVP, which it did by entering the Settlement Contracts. We
agree with the district court, which held
Plaintiffs’ claims fail as to the [Settlement Contracts]
because [the Bureau’s] discretion is substantially
constrained by prior contract. Therefore, following
the Supreme Court’s decision in Home Builders,
[551 U.S. 644], Section 7(a)(2) of the ESA does not
apply to the [Settlement] Contract renewal process.
Specifically, Article 9(a) of the [Settlement] Contracts requires [the Bureau] to renew these contracts
for the same quantity of water, the same allocation
of water between base supply and project water, and
the same place of use on specifically designated land
as the original contracts. By executing the original
[Settlement] Contracts, [the Bureau] surrendered its
power to change these terms. Article 9(a) of the [Settlement] Contracts provides for the exact definition
of water rights achieved in the original [Settlement]
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Contracts to be preserved upon renewal. This substantially constrains [the Bureau’s] discretion to
reduce diversions of Sacramento River System water
for the benefit of the Delta smelt or any other reason,
by fixing [Settlement] Contractor quantities, allocations, and places of use upon renewal.
Natural Res. Def. Council v. Kempthorne, No. 1:05-cv-1207,
2009 WL 1575208, at *2 (E.D. Cal. June 3, 2009).
 We hold that the district court properly granted summary judgment for defendants, finding that plaintiffs lack
standing with regard to the DMC contracts and that § 7(a)(2)
of the ESA does not apply to the Settlement Contracts.
PAEZ, Circuit Judge, dissenting:
I respectfully dissent. I agree with the majority that this
case is not moot. I disagree with the majority’s holdings that
the plaintiffs lack standing to challenge the Bureau’s renewal
of the Delta-Mendota Canal (“DMC”) contracts and that
§ 7(a)(2) of the Endangered Species Act (“ESA”), 16 U.S.C.
§ 1536(a)(2), does not apply to the United States Bureau of
Reclamation’s (“Bureau”) renewals of the Sacramento River
Settlement (“SRS”) contracts. Accordingly, I would reverse
the district court’s grant of summary judgment to the defendants and remand for further proceedings.
I can not agree with the majority’s holding that the plaintiffs lack standing to challenge the Bureau’s renewals of the
NRDC v. SALAZAR
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DMC contracts. Because the plaintiffs allege a straightforward procedural injury, they “must show only that they have
a procedural right that, if exercised, could protect their concrete interests.” Defenders of Wildlife v. EPA, 420 F.3d 946,
957 (9th Cir. 2005) (emphasis in original), overruled on other
grounds by Nat’l Assoc. of Home Builders v. Defenders of
Wildlife, 551 U.S. 644 (2007). In my view, the plaintiffs have
easily made such a showing.
The plaintiffs argue that the Bureau violated the ESA when
it renewed the 41 contracts at issue in this case—including the
DMC contracts—without consulting with the United States
Fish and Wildlife Service (the “Service”) on whether its
actions were “likely to jeopardize the continued existence of”
the delta smelt, a threatened species. See ESA § 7(a)(2), 16
U.S.C. § 1536(a)(2).1 I agree with the majority’s conclusion
that the plaintiffs alleged a procedural injury. Our precedent
makes clear, then, that the plaintiffs have standing if they can
demonstrate that ESA compliance by the Bureau could
advance their concrete interest in protecting the delta smelt
and its habitat. See Salmon Spawning & Recovery Alliance v.
Gutierrez, 545 F.3d 1220, 1226 (9th Cir. 2008); Defenders of
Wildlife, 420 F.3d at 957.
The plaintiffs have presented extensive evidence from
which a reasonable factfinder could conclude that the
Bureau’s ESA compliance would likely improve the conditions of the delta smelt and its habitat.2 For example, the
ESA § 7(a)(2) provides that, “[e]ach Federal agency shall, in consultation with and with the assistance of the Secretary [of the Interior], 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 or result in the destruction or adverse modification
of habitat of such species which is determined by the Secretary . . . to be
critical.” 16 U.S.C. § 1536(a)(2).
Because we are reviewing a grant of summary judgment to the defendants, we must resolve all factual disputes in favor of the plaintiffs in
determining whether they have standing. See Lujan v. Defenders of Wildlife, 504 U.S. 555, 561 (1992).
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plaintiffs allege that if the Bureau were to consult with the
Service on the DMC contracts, it might choose to provide less
water to the contractors, which would improve the conditions
of the delta smelt and its habitat. The plaintiffs also allege that
consultation by the Bureau might result in a pricing structure
that is more protective of the delta smelt and its habitat.
Finally, the plaintiffs allege that if the Bureau were to consult
on the contracts, it might choose to alter the timing of water
deliveries, which could inure to the benefit of the delta smelt
and its habitat. The plaintiffs’ allegations and the record evidence to support them would allow a reasonable factfinder to
conclude that the Bureau’s ESA compliance could further the
plaintiffs’ concrete interest in protecting the delta smelt and
its habitat. On this record, I would hold that the plaintiffs have
standing to challenge the DMC contracts.
The majority places unwarranted emphasis on the shortage
provision of the DMC contracts. As the majority explains, this
provision allows the Bureau to forsake water deliveries to the
DMC contractors as necessary to comply with the ESA.3 The
majority concludes that because the terms of the DMC contracts authorize the Bureau to comply with the ESA, the plaintiffs do not have standing to assert a claim that the Bureau is
violating the consultation requirement of ESA § 7(a)(2). This
reasoning makes no sense. That the contracts allow the
Bureau to comply with the ESA certainly does not ensure that
the Bureau will do so. The plaintiffs contend that the Bureau
violated the ESA; the fact that the DMC contracts contain a
shortage provision tells us nothing about whether the plaintiffs are right.4 Therefore, I dissent from the majority’s hold3
Specifically, as the district court noted, each DMC contract contains a
provision that expressly allows the Bureau to take actions to protect Delta
smelt, including not delivering any water to DMC contractors if required
to comply with section 7(a)(2) . . . .” NRDC v. Kempthorne (NRDC I),
2008 WL 5054115 at *15 (E.D. Cal. 2008).
In addition to a shortage provision, the DMC contracts also contain a
liability-release provision that “relieves the Bureau of liability for any
NRDC v. SALAZAR
Page: 19 of 26
ing that the plaintiffs lack standing to challenge the Bureau’s
renewals of the DMC contracts at issue in this case.
I also disagree with the majority’s holding that the requirements of ESA § 7(a)(2) do not apply to the Bureau’s renewals
of the SRS contracts. Pursuant to 50 C.F.R. § 402.03, the
requirements of ESA § 7(a)(2) “apply to all actions in which
there is discretionary Federal involvement or control.” The
Supreme Court upheld this regulation in Nat’l Assoc. of Home
Builders v. Defenders of Wildlife, stating, “§ 7(a)(2)’s nojeopardy duty 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.” 551 U.S. 644, 669 (2007) (emphasis in original). I disagree with the majority’s conclusion that the
Bureau’s renewals of the SRS contracts were not discretionary agency actions.
A federal agency action is not discretionary when “consultation would be a meaningless exercise” and when “the
agency simply does not possess the ability to implement measures that inure to the benefit of the protected species.” Sierra
Club v. Babbitt, 65 F.3d 1502, 1509 (9th Cir. 1995). For
example, when an agency “cannot simultaneously obey the
differing mandates set forth in [ESA] § 7(a)(2)” and another
direct or indirect damage arising from reduced deliveries to DMC Contractors as a result of, among other things, actions taken by the Contracting
Officer to meet legal obligations.” NRDC I, 2008 WL 5054115 at *15
(internal quotation marks omitted). I see one feature of the liability-release
and shortage provisions that could inform our standing analysis, and it
favors the plaintiffs’ redressibility argument. Because the liability-release
and shortage provisions give the Bureau the ability to comply with the
ESA without breaching the DMC contracts, these provisions guarantee
that the DMC contracts are not a barrier to the Bureau’s ability to redress
the plaintiffs’ alleged injuries.
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statutory provision, the agency need not follow § 7(a)(2). See
Home Builders, 551 U.S. at 666 (holding that EPA action was
not discretionary where mandated by the Clean Air Act); see
also Babbitt, 65 F.3d at 1509. On the other hand, “if the project’s implementation depend[s] on additional agency action,”
then the agency “c[an] not avoid the procedural requirements
of section 7(a)(2).” Babbit, 65 F.3d at 1509; see also Karuk
Tribe of California v. U.S. Forest Serv., ___ F.3d ___, 2012
WL 1959231, *17 (9th Cir. 2012) (en banc) (“Under our
established case law, there is ‘agency action’ sufficient to trigger the ESA consultation duty whenever an agency makes an
affirmative, discretionary decision about whether, or under
what conditions, to allow private activity to proceed.”).
The plaintiffs contend that the Bureau’s renewals of the
SRS contracts were discretionary actions for two reasons: (a)
because the Bureau could have chosen simply to not renew
the SRS contracts; and (b) because the Bureau could have
negotiated terms in the renewed SRS contracts that were protective of the delta smelt and its habitat. I agree with the
Discretion Not to Renew the SRS Contracts
Central Valley Project Improvement Act
The majority holds that the Central Valley Project Improvement Act (“CVPIA”) § 3404(c) compels the Bureau to renew
the SRS contracts. Op. at 8180-81. I disagree. CVPIA
§ 3404(c) provides, “the Secretary shall, upon request, renew
any existing long-term repayment or water service contract
for the delivery of water from the Central Valley Project for
a period of twenty-five years and may renew such contracts
for successive periods of up to 25 years each.” CVPIA
§ 3404(c), 106 Stat. 4600, 4707 (1992). By its terms, CVPIA
§ 3404(c) applies only to “long-term repayment [and] water
service” contracts. There are several reasons to conclude that
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the SRS contracts are not “water service” contracts within the
meaning of § 3404(c).5
First, the CVPIA expressly distinguishes SRS contracts
from “water service” contracts in another section, § 3405(a).6
Section 3405(a) thus demonstrates that Congress considered
“water service” contracts and settlement contracts to be two
distinct categories of contracts. Accord Powerex Corp. v.
Reliant Energy Servs., Inc., 551 U.S. 224, 232 (2007) (“A
standard principle of statutory construction provides that identical words and phrases within the same statute should normally be given the same meaning.”).
Second, § 3404(c) refers to contracts for “water from the
Central Valley Project.” The CVPIA defines “Central Valley
Project water” as “[a]ll water that is developed, diverted,
stored or delivered by the Secretary in accordance with the
statutes authorizing the Central Valley Project and in accordance with the terms and conditions of water rights acquired
pursuant to California Law.” § 3403(f) (emphasis added). The
SRS contractors persuasively argue that the water they use is
not “Central Valley Project water” because it is not diverted
by the federal government. Rather, the SRS contractors divert
water directly from the Sacramento River. Because the SRS
contracts do not involve “Central Valley Project water,”
§ 3404(c) seems inapplicable.
Third, until this litigation, the Bureau had taken the position that the SRS contracts are not “water service” contracts
within the meaning of § 3404(c).7 Of course, that the Bureau
It is undisputed that the SRS contracts are not “long-term repayment”
contracts, as referenced in § 3404(c).
Section 3405(a) gives “all individuals or districts who receive Central
Valley Project water under water service or repayment contracts, water
rights settlement contracts, or exchange contracts” the right to transfer
water. (emphasis added).
For example, in its 2004 EIS on the SRS contract renewals, the Bureau
explained that “[t]he CVPIA expressly distinguishes Settlement Contracts
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NRDC v. SALAZAR
has changed course is not fatal to its argument, but it is powerful evidence that Congress did not intend § 3404(c) to apply
to the SRS contracts.8 Moreover, in 2004 Congress passed a
rider to is appropriations bill that provided two additional
years for the SRS contracts to be renewed, apparently contemplating the possibility that the SRS contracts would otherwise
expire. Energy Water Development Appropriation Act, Pub.
L. No. 108-137, 117 Stat. 1827 (2003). For these reasons, I
would hold that CVPIA § 3404(c) does not require renewal of
the SRS contracts.
State Water Resources Control Board Decision 990
I disagree with the majority’s holding that a decision of
California’s State Water Resources Control Board (SWRCB)
requires the Bureau to renew the SRS contracts. Op. at 8181.
In 1961, the SWRCB issued Decision 990 (“D-990”), which
granted the Bureau state water permits to operate the CVP.
Federal law requires the Bureau to comply with this decision.
43 U.S.C. § 383; see also California v. United States, 438
U.S. 645, 653 (1978).
The SRS contractors argue that Condition 23 of D-990
compels the Bureau to renew the SRS contracts. Condition 23
The export of stored water under [the applicable perfrom ‘CVP water service contracts’ or ‘repayment contracts.’ ” The
Bureau even noted that “it is common for commentors to mistake CVPIA
provisions relating to other types of contracts (i.e. water service contracts
or repayment contracts, sometimes referred to as 9(e) contracts) as relating
to all types of CVP water contracts. This is not the case. . . . [T]he provision in Section 3404(c) limiting the term of repayment and water service
contracts to a period not to exceed 25 years does not apply to the Settlement Contracts.” ER 1844-45.
The Bureau now characterizes the SRS contracts as “hybrid” contracts
that are “both water service and settlement contracts.” The CVPIA, however, does not refer to “hybrid” contracts.
NRDC v. SALAZAR
Page: 23 of 26
mits] outside the watershed of Sacramento River
Basin or beyond the Sacramento-San Joaquin Delta
shall be subject to the reasonable beneficial use of
said stored water within said watershed and Delta,
both present and prospective, provided, however,
that agreements for the use of said stored water are
entered into with the United States prior to March 1,
1964, by parties currently diverting water from Sacramento River and/or Sacramento-San Joaquin
Delta. . . .
Like the district court, I read Condition 23 to have simply
imposed a deadline—March 1, 1964—by which the parties
were required to enter into the SRS contracts. It seems
implausible that Condition 23 meant that the SRS contracts,
entered for 40-year terms, were permanent. Therefore, I
would reject the SRS contractors’ argument that D-990 compels renewal of the SRS contracts.
Having concluded that the Bureau has discretion simply not
to renew the SRS contracts, I would hold that the Bureau must
comply with ESA § 7(a)(2). See, e.g., NRDC v. Houston, 146
F.3d 1118, 1126 (9th Cir. 1998); Turtle Island v. Nat’l Marine
Fisheries Serv., 340. F3d 969, 977 (9th Cir. 2003).
Discretion to Negotiate the Terms of the SRS Renewal
The majority holds that a provision contained in the original SRS contracts constrains the Bureau’s discretion to negotiate terms upon renewal that might inure to the benefit of the
delta smelt.9 I disagree. Because I would conclude that the
As the district court noted, “[u]nder certain circumstances, a prior
agreement, permit, or management decision that predates the listing of a
species may constrain a federal agency’s ability to take action on behalf
of that listed species, absolving the agency from the requirement of consultation.” NRDC II, 621 F.Supp.2d at 976 (E.D. Cal. 2009) (citing Babbitt, 65 F.3d at 1509).
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NRDC v. SALAZAR
original SRS contracts do not prevent the Bureau from renewing the SRS contracts on terms that might benefit the delta
smelt and its habitat, I would hold that the Bureau must comply with the consultation requirements of ESA § 7(a)(2). See
Houston, 146 F.3d at 1126 (holding that “there was discretion
available to the Bureau during the negotiation process” where,
like here, the government was entitled to renew water contracts on “mutually agreeable” terms).
The district court correctly noted that we must “look to
general principles concerning the interpretation of contracts”
in interpreting a contract to which the United States is a party.
NRDC v. Kempthorne (NRDC II), 621 F.Supp.2d 954, 980
(E.D. Cal. 2009). One of the bedrock principles of contract
interpretation is that “[a] written contract must be read as a
whole and every part interpreted with reference to the whole,
with preference given to reasonable interpretations.” Klamath
Water Users Protective Ass’n v. Patterson, 204 F.3d 1206,
1210 (9th Cir. 1999) (quoted in NRDC II, 621 F.Supp.2d at
980). Moreover, we must interpret the SRS renewal contracts
“so as to avoid internal conflict.” Trident Ctr. v. Conn. Gen.
Life Ins. Co., 847 F.2d 564, 566 (9th Cir. 1988) (quoted in
NRDC II, 621 F.Supp.2d at 980).
I disagree with the majority’s holding that Article 9(a) of
the original SRS contracts prevents the Bureau from negotiating the terms of the renewed SRS contracts. Article 9(a) of
each original SRS contract provides:
(a) During the term of this contract and any renewal
(1) It shall constitute the full agreement as
between the United States and the Contractor as to the quantities of water and the allocation thereof between the base supply and
Project Water which may be diverted by the
Contractor from the Sacramento River for
NRDC v. SALAZAR
Page: 25 of 26
beneficial use . . . which said diversion, use,
and allocation shall not be disturbed so long
as the Contractor shall fulfill all its obligations hereunder; and
(2) The Contractor shall not claim any right
against the United States in conflict with
the provisions thereof.
Like the district court, the majority interprets Article 9(a) to
mean that the terms of the original SRS contracts constitute
full agreement on all material terms, for all future renewals of
the contracts. Op. at 8181-82. Read in isolation, Article 9(a)’s
use of the phrase “full agreement” does seem to preclude the
possibility of renegotiating the terms of the SRS contracts
upon renewal. Read in context, however, the majority’s interpretation is unworkable because Article 2 of each SRS contract provides:
This contract shall remain in effect until and including March 31, 2004: Provided, That under terms and
conditions mutually agreeable to the parties hereto,
renewals may be made for successive period not to
exceed forty (40) years each. The terms and conditions of each renewal shall be agreed upon not later
than one (1) year prior to the expiration of the then
existing contract. . .
(emphasis added). The language of Article 2 strongly suggests
that the parties anticipated renegotiating the terms of the SRS
contracts upon renewal.
In light of Article 2 and the history of the SRS contracts,
I interpret Article 9(a) to be a partial integration clause, which
merely guarantees that each SRS contract (and renewal
thereof) constitutes a “full agreement” between the parties
with respect to water quantity and allocation. In other words,
it appears that Article 9(a) was included in each SRS contract
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NRDC v. SALAZAR
to avoid litigating the extent of the SRS contractors’ underlying water rights.10 The majority’s interpretation—that Article
9(a) freezes in perpetuity the precise water quantity and allocation terms of each SRS contract—is illogical in light of
Article 2, which expressly states that the terms and conditions
of the renewal contracts must be “mutually agreeable.” Thus,
I would hold that Articles 2 and 9(a) must be harmonized, and
that the only sensible reading of Article 9(a) is that it is a partial integration clause.
Moreover, even if Article 9(a) did constrain the Bureau’s
discretion to renegotiate the water quantity and allocation
terms of the SRS contracts upon renewal—which I do not
think it does—the plaintiffs persuasively point out that Article
9(a), by its terms, does not constrain the Bureau’s discretion
to renegotiate non-quantity contract terms, such as the terms
governing the pricing and timing of water deliveries. Because
the Bureau has discretion to negotiate terms of the SRS
renewal contracts that could inure to the benefit of the delta
smelt, I would hold that it must comply with ESA § 7(a)(2).
I therefore dissent from the majority’s holding that the Bureau
was not required to comply with the consultation requirements of § 7(a)(2) in renewing the SRS contracts.
For the foregoing reasons, I would reverse the district
court’s grant of summary judgment to the defendants and
remand this case to the district court for consideration in the
first instance of the merits of the plaintiffs’ claims involving
the DMC contracts and for further consideration of the plaintiffs’ claims involving the SRS contracts.
The Bureau and the Sacramento River water users entered the SRS
contracts in 1964 after the SWRCB instructed the parties to reach a settlement agreement rather than engage in a “lengthy and extremely costly
adjudication of the waters of the Sacramento River and its tributaries.”
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