A three-judge panel of the Fifth Circuit Court of Appeals heard oral arguments in early August on the appeal of the decision rendered by the U.S. District Court for the Southern District of Texas in The Aransas Project v. Shaw.  The district court’s decision, issued on March 11, 2013, held that the Texas Commission on Environmental Quality’s (“TCEQ's”) water management policies constituted a “taking” of whooping cranes in violation of Section 9 of the Endangered Species Act (“ESA”).   The district court’s decision was based on a small line of cases under the ESA finding that governmental regulatory action under certain circumstances can trigger ESA liability for a “take.”  The court also found “proximate cause” under the ESA between TCEQ’s issuance of water rights permits and the harm or death of up to 23 whooping cranes in the winter of 2008-2009.

This merits ruling is controversial, as is the remedy – which is currently stayed -- ordered by the lower court. In particular, the court enjoined TCEQ from approving new water permits for the Guadalupe and San Antonio Rivers until the State of Texas (the “State”) provides reasonable assurances to the court that such permits would not constitute a “take” of whooping cranes in violation of the ESA. The State and various intervenors appealed the district court’s ruling, and expedited briefing and oral argument followed the Fifth Circuit’s granting of a stay of the lower court’s ruling earlier this summer.

At oral argument before the Fifth Circuit, the State focused on two primary legal issues. First, the State asserted that its role in permitting private conduct (namely, issuing water rights permits under which separate legal entities then conduct water withdrawals) is not, in and of itself, an act that can violate the ESA. In support of this position, the State argued that the ESA line of cases relied upon by the district court are simply wrongly decided as a matter of law. The State also analogized the implications of the lower court’s ruling, arguing by extension of the district court’s reasoning that ESA “take” liability could be triggered by routine State functions such as issuing drivers’ licenses when it cannot be ruled out that individual drivers might harm or kill endangered species in the ordinary course of driving. The State’s second primary argument was that the chain of causation between the State’s issuance of water rights permits and the death of or harm to the whooping cranes in the winter of 2008-2009 was too attenuated to constitute proximate cause under the ESA as a matter of law. Thus, even if all of the factual allegations made by plaintiffs were true, which the State contested, liability under the ESA was still not triggered by the TCEQ’s issuance of water rights permits. In connection with this argument, and responding to panel questions of whether the district court’s causation analysis was too narrow (e.g., did not fully consider drought conditions that were occurring at the relevant time), the State highlighted the fact that the court had adopted almost wholesale the plaintiff’s findings of fact.

The State’s arguments were supported by arguments by the Intervenors that focused on the lower court’s refusal to abstain, under the Burford doctrine, from addressing the myriad of Texas Water Code issues implicated by the ESA claims. Particular emphasis was made on the complex process the State has been undertaking under Senate Bill 3 (enacted by the Texas legislature in 2007) for extensive water planning, including environmental flows for species protection, and on the draconian practical impacts that the lower court’s ESA ruling would have on the State process (e.g., no new water rights permits absent federal court approval and a lengthy and indeterminate process associated with the ESA relief ordered by the district court). In this respect, Intervenors pointed out that there are state-based solutions and that Plaintiff’s concerns over species could be addressed consistent with the Supremacy Clause by challenges in state court or petitions for TCEQ rulemakings.

Plaintiffs/Appellees defended the district court’s consideration of causation issues and highlighted particular testifying experts’ opinions at trial. During this last segment of the oral argument, the panel continued its focus on whether the district court fully considered all causation factors that may have affected the lack of water and resulting lack of food sources in the whooping cranes’ habitat. In addition, Appellees challenged the basis for Intervenors’ Burford abstention arguments, asserting in contrast that there was no process with TCEQ whereby the whooping cranes could be protected under state law. There was also considerable interest by the panel during Appellee’s oral argument on the scope and appropriateness of the remedy ordered by the district court.

A recording of the oral argument is available at: http://www.ca5.uscourts.gov/OralArgumentRecordings.aspx.