A coalition of environmental groups
brought one of a series of challenges to the Mount Graham International
Observatory Project, seeking to protect an endangered subspecies of red
squirrel. The coalition challenged an approval by the U.S. Forest Service and
the U.S. Fish and Wildlife Service (FWS) of a construction site for a large
binocular telescope as failing to comply with both the Endangered Species Act
(ESA) and the National Environmental Policy Act (NEPA).

On cross-motions for summary judgment, the district court held that the federal defendants violated the ESA "by failing to pursue formal consultation before approving the relocation" of the telescope, and NEPA "by failing to prepare an Environmental Impact Statement . . . before approving the relocation" of the telescope. The federal defendants were enjoined from construction until they complied with both the ESA and NEPA. The federal defendants and the University of Arizona, intervening as the entity proposing to build the telescope, appealed. The Ninth Circuit affirmed.

In 1984, the University submitted a proposal to the Forest Service for several telescopes on MountGraham in the CoronadoNational Forest in southeastern Arizona. The Forest Service began an environmental impact statement (EIS) in compliance with NEPA. Recognizing the possible impact on the red squirrel, it also began consultation with FWS in compliance with the ESA. FWS proposed "reasonable and prudent alternatives" (RPA) to minimize the effects on the squirrel. After a third RPA was completed, but before the Forest Service selected one of the three alternatives, Congress passed the Arizona-Idaho Conservation Act (AICA). The AICA provided for the immediate construction of three telescopes under RPA 3, stating that both the ESA and NEPA shall be deemed "satisfied."

After two telescopes were built under RPA 3 and the AICA, the University requested that the third be built in a different location than RPA 3 contemplated, in part because new squirrel middens were located at the RPA 3 location. FWS rejected this site, indicating that it believed Congress did not contemplate a major change in site. In 1993, without a formal consultation under the ESA nor a supplemental environmental analysis under NEPA, the Forest Service and FWS finally approved another location, deeming it to be "the least damaging of the four alternatives to the red squirrels."

After quoting the stated purposes of both the ESA and NEPA, the Ninth Circuit held that those statutes "must be adhered to unless Congress makes an exception." Here Congress did so, but only so far as the terms and conditions listed in RPA 3. The federal defendants argued that AICA's exemption should not be so strictly construed. However, the court quoted A.H. Phillips, Inc. v. Walling,[1] which held that any exemption from remedial legislation (such as the ESA and NEPA) must be narrowly construed. The federal defendants failed to carry their burden in showing that the new site fit within the parameters of AICA's exemption. Therefore, the Forest Service exceeded its authority in approving a site other than that indicated on RPA 3 without complying with the ESA and NEPA. The Ninth Circuit affirmed the district court's injunction against the federal defendants from construction of the third telescope.