D.C. Circuit Review – Reviewed: Permitting Authority

Key Takeaways

• D.C. Circuit vacated EPA’s approval of Florida’s permitting authority.
• Court found Fish and Wildlife Service’s exemption illegal, arbitrary, capricious.
• Decision reinstates ESA permit requirement for projects affecting endangered species.
• Ruling may limit states’ ability to assume CWA permitting from EPA.
• Dissenting judge argued EPA had authority; split highlights regulatory uncertainty.

Pulse Analysis

The intersection of the Clean Water Act (CWA) and the Endangered Species Act (ESA) has long required separate permitting streams: the U.S. Army Corps of Engineers issues CWA permits, while the Fish and Wildlife Service or National Marine Fisheries Service handle ESA compliance. In August 2020, Florida petitioned the EPA to assume CWA permitting authority and proposed a streamlined process that would waive the need for a second ESA permit. The EPA, after a no‑jeopardy consultation with the Fish and Wildlife Service, granted the request, effectively allowing projects to bypass ESA liability if they followed Florida’s state‑level procedures.

The D.C. Circuit’s unanimous opinion, authored by Judge Pan, applied the arbitrary‑and‑capricious standard, finding both the Service’s exemption and its no‑jeopardy finding deficient. The court held that the Service overstepped statutory limits by shielding permit applicants from ESA liability, and that the EPA’s reliance on that flawed agency action rendered its approval unlawful. Judge Henderson’s dissent underscored a split view on the scope of EPA discretion, highlighting the legal ambiguity surrounding inter‑agency coordination when states seek to assume federal permitting functions.

Practically, the decision reinstates the dual‑permit requirement, meaning developers must secure both CWA and ESA clearances for projects that could affect threatened species. It also signals to other states that attempts to consolidate permitting authority will face rigorous judicial review, potentially curbing efforts to expedite infrastructure development. Industry stakeholders should anticipate renewed compliance costs and monitor future litigation as agencies refine their collaborative processes under heightened scrutiny.