## Facts

- The Clean Water Act (CWA) authorizes EPA to transfer National Pollutant Discharge Elimination System (NPDES) permitting authority to a state if the state satisfies nine criteria; EPA “shall approve” a qualifying application under CWA §402(b).
- The Endangered Species Act (ESA) requires federal agencies, through consultation, to ensure their actions are not likely to jeopardize listed species or adversely modify critical habitat under ESA §7(a)(2).
- Arizona applied for authority to administer its own NPDES program.
- EPA initiated consultation with the Fish and Wildlife Service (FWS) regarding potential effects of the transfer on listed species.
- EPA concluded that CWA §402(b)’s mandatory approval language left no authority to deny the transfer based on ESA concerns once the nine criteria were met.
- FWS issued a biological opinion finding the transfer would not jeopardize listed species, and EPA approved Arizona’s application.
- Environmental groups challenged EPA’s approval; the National Association of Home Builders intervened in support of EPA and Arizona.

## Issues

1. Whether ESA §7(a)(2) effectively adds a “tenth criterion” that EPA must satisfy before approving a state’s NPDES program transfer under CWA §402(b).
2. Whether EPA’s approval decision is subject to ESA §7(a)(2) where CWA §402(b) uses mandatory language requiring approval once statutory criteria are met.
3. Whether EPA’s approval was arbitrary and capricious based on the agency’s handling of its ESA responsibilities during the administrative process.

## Decision

- The Supreme Court reversed the Ninth Circuit.
- ESA §7(a)(2) does not impose an additional substantive condition on EPA’s CWA §402(b) transfer decision beyond the nine statutory criteria.
- Because CWA §402(b) unambiguously requires EPA to approve a state program that satisfies the specified criteria, ESA consultation cannot be used to convert that outcome into a discretionary decision subject to an ESA-based veto.
- The Court rejected the Ninth Circuit’s conclusion that EPA acted arbitrarily and capriciously, characterizing the record as reflecting resolution of an internal agency disagreement rather than unexplained inconsistency.

## Legal Principles

- When a statute mandates agency action upon satisfaction of specified criteria, an agency generally may not add extra prerequisites not found in the statute’s enumerated list.
- ESA §7(a)(2), as implemented by regulation, applies to federal actions involving discretionary federal involvement or control; mandatory actions compelled by another statute are not treated as discretionary for §7(a)(2) purposes.
- Courts may defer under Chevron to a reasonable agency interpretation reconciling overlapping statutory schemes, including the scope of ESA §7(a)(2) in relation to a mandatory directive in another statute.
- Refusing to treat ESA §7(a)(2) as an implied override of a separate statutory command does not eliminate ESA protections; other federal actions and oversight mechanisms may still trigger ESA obligations.

## Conclusion

The Court held that EPA’s mandatory duty under CWA §402(b) to approve a qualifying state NPDES program transfer cannot be conditioned on ESA §7(a)(2) as an extra “tenth criterion,” and it upheld EPA’s approval of Arizona’s application.


Nat'l Ass'n of Home Builders v. Defs. of Wildlife, 551 U.S. 644 (2007)