At issue in this case was whether the Fish and Wildlife Service (FWS) retained sufficient discretionary control over an incidental take permit issued to Simpson Timber to require FWS to reinitiate consultation with itself when two additional species found on Simpson Timber's land were listed as threatened after the permit was issued. The Environmental Protection Information Center (EPIC) sued to enjoin logging on Simpson's 380,000 acres of timberland until FWS reinitiated and completed consultation regarding the potential effect of Simpson's incidental take permit for the northern spotted owl on the newly listed marbled murrelet and coho salmon. The district court dismissed EPIC's claim on Simpson's 12(b)(6) motion. The Ninth Circuit reviewed the matter de novo and affirmed the district court's dismissal.

Regulations implementing section 7 of the Endangered Species Act (ESA)[1] require an agency to reinitiate consultation where "discretionary Federal involvement or control over the action has been retained or is authorized by law and . . .[i]f a new species is listed or critical habitat designated that may be affected by the identified action."[2] In the present case the identified action was the thirty-year incidental take permit issued by FWS to Simpson Timber in 1992 allowing Simpson to take a limited number of northern spotted owls during logging operations.

The court concluded that determining whether FWS retained discretionary involvement or control over Simpson's incidental take permit turned on whether the agency had retained the power to "implement measures that inure to the benefit of the protected species."[3] The court found that nothing in the permit documents gave FWS authority to implement measures to benefit species other than the spotted owl.

The permit documents in question included FWS's biological opinion letter and the habitat conservation plan (HCP) and implementation agreement (IA) submitted by Simpson as conditions of the permit. EPIC argued that a passage in the HCP wherein Simpson promised to submit timber harvest plans (THPs) designed to "'ensure compatibility with the habitat requirements of other species . . . considered sensitive by state and federal regulatory agencies'" required Simpson to implement measures to benefit any species listed after the HCP was granted.[4] The court rejected this argument because the passage applied only to species listed when the permit was issued. The court also rejected EPIC's argument that a regulation allowing FWS "to amend any permit for just cause"[5] provided the federal discretion triggering FWS's duty to reinitiate consultation, stating that the discretion must have been retained by the permit language in the first place for this regulation to have effect.

Finally, the court pointed out that although the conditions of Simpson's incidental take permit did not require FWS to reinitiate consultation regarding the marbled murrelet or coho salmon, Simpson is not allowed under the ESA to take those species. Furthermore, under section 9 of the ESA, either FWS or EPIC could seek relief if the marbled murrelet or coho salmon were threatened with imminent harm by Simpson's logging activities. In such a circumstance FWS would have the authority to revoke Simpson's spotted owl permit because activities covered by the permit were being conducted in violation of the ESA.

The dissent argued that the majority impermissibly read a new requirement into the ESA regulation quoted above, a requirement unwarranted by statute, unsupported by the permit documents, and inconsistent with Ninth Circuit precedent. The dissent stated that the ESA regulation "does not require the parties to anticipate the specific purpose for which discretion may be exercised in order for there to be sufficient discretionary control that it can benefit a newly listed species."[6]

The dissent identified multiple sources of discretion authorizing FWS to reconsider Simpson's permit. Specifically, a regulatory phrase written into the permit "reserve[d] the right to amend any permit for just cause at any time during its term."[7] The implementation agreement stated that nothing in the permit limited the government's authority or responsibility to fulfill its responsibilities under the ESA.[8] The dissent concluded that "[t]hese sources of discretion, together with the promises made by Simpson in its HCP, provide sufficient remedial authority for FWS to implement measures that inure to the benefit of the marbled murrelet and coho salmon,"[9] thereby satisfying the condition of retained federal discretion that triggers FWS's duty to reinitiate consultation.