Natural Resources Defense Council v. Norton (236 F. Supp. 3d 1198, 2017)

MEMORANDUM DECISION AND ORDER RE -MOTIONS TO DISMISS (Docs. 1029, 1030, 1031, 1032, 1036).

Lawrence J. O’Neill, UNITED STATES CHIEF DISTRICT JUDGE

I. INTRODUCTION

On April 28, 2016, Plaintiffs, a coalition of environmental interest groups led by the Natural Resources Defense Council, filed the currently operative Fourth Supplemental Complaint (“4SC”), which includes three pre-existing claims brought under the Administrative Procedure Act (“APA”), 5 U.S.C. § 701 et seq., and the Endangered Species. Act (“ESA”), 16 U.S.C. §§ 1531 et seq., alleging that the U.S. Bureau of Reclamation (“Bureau” or “Reclamation”) and the U.S. Fish and Wildlife'Service (“FWS” or “Service”) acted unlawfully by renewing, implementing, and approving the renewal and implementation of certain long-term water contracts in reliance on a 2005 Biological Opinion (“2005 FWS Smelt OCAP BiOp”) issued by FWS pursuant to the ESA, that the agencies knéw, or should have' known, was inadequate to protect the ESA-listed delta smelt. Doc. 575 (filed Apr. 8, 2008). Specifically, the pre-existing claims challenged renewal of two sets of contracts: (1) those held by the Sacramento River Settlement (“SRS”) Contractors; and (2) those held by the Delta-Mendota Canal Unit (“DMC”) Contractors. Id.

The 4SC added three new claims to this action: the Fourth Claim for Relief alleges FWS failed to conduct an adequate consultation on the effects of the SRS and DMC Contract renewals on delta smelt; the Fifth Claim for Relief alleges Reclamation failed to reinitiate consultation on the alleged impact of the SRS Contracts on ESA-listed winter-run and spring-run Chinook salmon; and the Sixth Claim for Relief alleges Reclamation and the SRS Contractors have unlawfully “taken” winter-run and spring-run Chinook in violation of Section 9 of the ESA (“Section 9”), 16 U.S.C. § 1538(a).

The SRS Contractors move to dismiss the First, Second, Third, Fifth, and Sixth Claims for Relief. Doc. 1031 (“SRS MTD”). The Federal Defendants move to dismiss the Fifth and Sixth Claims for Relief. Doc. 1032 (“FD MTD”). The DMC Contractors move to dismiss the First, Second, and Third Claims for Relief. Doc. 1033 (“DMC MTD”). James Irrigation District and Del Puerto Water District (collectively, “JID Parties”) join in the motions to dismiss the First, Second, and Third Claims for Relief, Docs. 1029 & 1030 (“JID Joinder”), as does the Banta-Carbona Irrigation District, Patterson Irrigation District, West Stanis-laus Irrigation District, and the West Side Irrigation District (collectively, “Banta-Carbona Parties”). Doc. 1036 (“Banta-Car-bona Joinder”). No party moves to dismiss the Fourth Claim for Relief. Plaintiffs oppose the motions. Doc. 1039 (“Pltf. Opp”). All moving parties filed replies. Docs. 1040 & 1041 (“JID Reply”), 1042 (“DMC Reply”), 1043 (“FD Reply”), 1044 (“SRS Reply”).

On October 20, 2016, the Court issued a Memorandum Decision and Order resolving certain aspects of the pending motions and requesting supplemental briefing on others. Doc. 1045 (“October 20, 2016 Order”). After stipulating to an extension of time for the filing of supplemental briefs, Doc. 1047, supplemental briefs were filed in December 2016 and January 2017. Docs. 1048, 1052, 1054.

II. LEGAL BACKGROUND

“Under the ESA, the Secretary- of the Interior and the Secretary of Commerce are charged with identifying threatened and endangered species and designating critical habitats for those species.” Nat. Res. Def. Council v. Jewell, 749 F.3d 776, 779 (9th Cir. 2014) (“NRDC v. Jewell”) (citing 16 U.S.C. § 1533). FWS and the National Marine Fisheries Service (“NMFS”) administer the ESA on behalf of the Departments of the Interior and Commerce, respectively. See 50 C.F.R. §§ 17.11, 222.101(a), 223.102, 402.01(b). Section 7 of the ESA requires federal agencies to ensure that their activities do not jeopardize the continued existence of listed endangered or threatened species or adversely modify those species’ critical habitats. 16 U.S.C. § 1536(a)(2); see also Karuk Tribe of Cal. v. U.S. Forest Serv., 681 F.3d 1006, 1020 (9th Cir. 2012). Section 7’s implementing regulations provide that “[ejach Federal agency shall review its actions at the earliest possible time to determine whether any action may affect listed species. or critical habitat[s].” 50 C.F.R. § 402.14(a). An agency proposing to take an action (often referred to as the “action agency”) must first inquire of FWS or NMFS whether any threatened or endangered species “may be present” in the area of the proposed action. See 16 U.S.C. § 1586(c)(1). If endangered species may be present, the action agency must prepare a “biological assessment” (“BA”) to determine whether such species “is likely to be affected” by the action. Id. If the BA determines that a threatened or endangered species “is likely to be affected,” the agency must formally consult with FWS. See id. § 1536(a)(2); 50 C.F.R. § 402.14(a).

Formal consultation results in the issuance of a “biological opinion” (“BiOp”) by FWS. See 16 U.S.C. § 1536(b); If the BiOp concludes that the proposed action would jeopardize the species or destroy or adversely modify critical habitat, see id. § 1536(a)(2), then the action may not go forward unless FWS can suggest a “reasonable and prudent alternative[ ]” (“RPA”) that avoids jeopardy, destruction, or adverse modification. Id. § 1536(b)(3)(A). If the BiOp concludes that jeopardy is not likely and that there will not be adverse modification of critical habitat, or that there is a RPA to the agency action that avoids jeopardy and adverse 'modification, and that the incidental taking of endangered or threatened species will not violate Section 7(a)(2), the consulting agency shall issue an “Incidental Take Statement” (“ITS”) which, if followed, exempts the action agency from the prohibition on takings found in Section 9 of the ESA. 16 U.S.C. § 1536(b)(4); Aluminum Co. of Am. v. Administrator, Bonneville Power Admin., 175 F.3d 1156, 1159 (9th Cir. 1999). Even after consultation is complete, an agency has a duty to reinitiate formal consultation under certain circumstances, including if: “the amount or extent of taking specified in the incidental take statement is exceeded”; “new information reveals effects of the action that may affect listed species or critical habitat in a manner or to an extent not previously considered”; or “the identified action is subsequently modified in a manner that causes an effect to the listed species or critical habitat that was not considered in the biological Opinion.” 50 C.F.R. § 402.16.

Section 9, prohibits, among other actions, the “take” of any listed animal species by any “person subject to the jurisdiction of the United States.” 16 U.S.C. § 1538(a)(1)(B). The ESA defines “take” as “to' harass, harm, pursue, hunt, shoot, wound, kill, trap, capture, or collect, or to attempt to engage in-any such conduct.” 16 U.S.C. § 1532(19). Two safe harbor provir sions described in greater detail below immunize persons from Section 9 liability and penalties where takings committed during otherwise lawful activities occur in compliance with the terms and conditions of either an ITS issued after Section 7 consultation or an Incidental Take Permit (“ITP”) issued pursuant to ESA Section 10.16 U.S.C. § 1539.

III. FACTUAL AND PROCEDURAL HISTORY

A. The Central Valley Project and the State Water Project

The Central Valley Project (“CVP”) and the State Water Project (“SWP”), “operated respectively by [Reclamation] and the State of California, are perhaps the two largest and most important water projects in the United States.” San Luis & Delta-Mendota Water Auth. v. Jewell, 747 F.3d 581, 592 (9th Cir. 2014) (“San Luis v. Jewell ”). “These combined projects supply water originating in northern California to more, than 20,000,000 agricultural and domestic consumers in central and souther California.” Id. As part of CVP operations, Reclamation releases water stored, in CVP reservoirs in northern California, which then flows down the Sacramento River- to the Sacramento-San Joaquin Delta (“Delta”). Id. at 594. Pumping plants -in the southern region of the Delta then divert the water to various users south of the Delta. See id. at 594-95.

B. Delta Smelt

The delta smelt (Hypomesus transpaci-ficus) is a “small, two-to-three inch species of fish endemic to the [Delta].” Id. at 595. In 1993, FWS concluded the delta smelt’s population had declined by- ninety percent over the previous twenty years and listed it as a “threatened” species. under the ESA, Determination of Threatened Status for the Delta Smelt, 58 Fed. Reg. 12,854, 12,855 (Mar. 5, 1993). FWS further determined that “Delta water diversions,” including those resulting from operations of the CVP, are the most significant “synergistic cause[ ]” of the decline -in the delta smelt population. Id. at 12,859.

C. Winter-Run Chinook

Winter-run Chinook (Oncorhynchus tshawytscha) are listed as “endangered” under the ESA. Endangered and Threatened Species: Final Listing Determinations for 16 ESUs of West Coast Salmon, and Final 4(d) Protective Regulations for Threatened Salmonid ESUs, 70 Fed. Reg. 37,160 (June 28, 2005). According to the 4SC, the winter-run Chinook’s population “has declined precipitously since the'early 1980s, from an estimated historic high of 117,808 in 1969 to as few as 191 adult individuals returning to Spawn in 1991.” 4SC ¶ 64. Winter-run Chinook historically inhabited the upper Sacramento River and its tributaries. Id. ¶ 66. The'construction of Shasta Dam blocked access to almost all of the winter-run Chinook’s rearing waters. Id. Today, the upper Sacramento River below Keswick Dam is the only remaining spawning area used by winter-run Chinook. Id. It is alleged that the winter-run Chinook is “at high risk of extinction” and that-a'prolonged drought could have devastating effects on. the species. Id. It is further alleged that winter-run .Chinook are- particularly 'vulnerable during the “temperature management season,” which generally lasts from June through October. Id. ¶ 67.

Adult winter-run Chinook migrate up the Sacramento River in the winter and spring and then hold below the Keswick Dam for several months before spawning. During these critical months, the salmon require cold water for the maturation of their gonads and the development . of fertilized eggs and embryos.

Id.

D. Spring-Run Chinook

The spring-run Chinook (Oncorhynchus tshawytscha) historically displayed the second largest salmon run in the Central Valley watershed and supported the bulk of the region’s commercial fishery. Id. ¶ 68. Only remnant independent natural spring-run Chinook, populations survive, relying principally upon small tributaries of the Sacramento River below Shasta Dam for spawning. Id. ¶¶ 68, 71. Like winter-run Chinook, spring-run Chinook require cold water temperatures for successful spawning, egg incubation, and rearing. Id. ¶ 72.

E. . Long-Term Contract Renewal/Operations and Criteria Plan

“In the 1960s, the Bureau entered into a number of long-term contracts pertaining to the CVP.” NRDC v. Jewell, 749 F.3d at 780. “The [SRS] Contracts are forty-year agreements between the Bureau and holders of certain senior water rights.” Id. “These contracts grant the Bureau some rights to the encumbered water while also providing senior rights holders a stable supply of water.” Id. The DMC Contracts allow junior water users to draw water from the Delta-Mendota Canal. Id. By 2004, the DMC Contracts and the SRS Contracts had expired or were about to expire. Id. On June 30, 2004, the Bureau prepared an operational plan, the Operations Criteria and Plan (“OCAP” or “2004 OCAP”), to provide, among other things, a basis for renewing various contracts, including the DMC and SRS Contracts. Id.

F. ESA § 7 Consultations Leading Up to Contract Renewal

Pursuant to ESA § 7, the Bureau initiated consultation with FWS regarding the effect of the OCAP on the delta smelt. Id. at 780-81. FWS issued an initial BiOp in 2004 (the “2004 FWS Smelt OCAP BiOp”), which concluded that the OCAP would not jeopardize the delta smelt. Id. at 781. The Bureau re-initiated consultation after the Ninth Circuit’s decision in Gifford Pinchot Task Force v. U.S. Fish & Wildlife Serv., 378 F.3d 1059, 1069 (9th Cir. 2004), which invalidated a regulation upon which the 2004 FWS Smelt OCAP BiOp relied. NRDC v. Jewell, 749 F.3d at 781. In 2005, FWS issued a revised BiOp (the “2005 FWS Smelt OCAP BiOp”), which also concluded that the OCAP would not jeopardize the delta smelt. Id.

Reclamation separately requested .a BiOp. from NMFS on whether continued operation of the CVP pursuant to the OCAP would jeopardize various species under that agency’s jurisdiction, including the winter-run and spring-run Chinook. See PCFFA v. Gutierrez, No. 1:06-cv-245-OWW-GSA (“PCFFA”), Doc. 69 ¶ 77 (First Amended Complaint) (“PCFFA FAC”). NMFS issued a BiOp on October 22, 2004 regarding the effects of the OCAP on the species under its jurisdiction/ including several salmonid species (“2004 NMFS Salmonid OCAP BiOp”). 4SC ¶ 107.

' Also in 2004 and 2005, the Buread prepared BAs that concluded that renewal of the Contracts’ would not adversely affect the delta smelt. NRDC v. Jewell, 749 F.3d at 781. The Bureau requested additional consultation with FWS regarding its plans to renew the Contracts. Id.

FWS responded via a series of letters, in which it concurred with the Bureau’s determination that renewing the Contracts was not likely to adversely affect the delta smelt. Each FWS concurrence letter explained that renewing the Contracts would increase.the demand for water,. but that, according to the 2004 and 2005 [FWS Smelt OCAP] BiOps, this demand would not adversely affect the delta smelt. The letters did-not assess the Contracts’ potential effects on the delta smelt beyond the reasoning borrowed from the now-invalidated 2004 Opinion'and 2005 Opinion.

Id. (emphasis added).

Again, Reclamation separately consulted with NMFS on the effects of renewing the Contracts on the listed salmonid species under NMFS’s jurisdiction. 4SC ¶ 108. As was the case with FWS, NMFS concurred that executing the Contracts would not adversely impact listed salmonids. Id.

In 2004 and 2005, the Bureau renewed 141 SRS Contracts and 18 DMC Contracts based on FWS’s and NMFS’s concurrence letters. NRDC v. Jewell, 749 F.3d at 781.

G. Plaintiffs Challenge the 2004/2005 FWS Smelt OCAP BiOp

In February 2005, Plaintiffs initiated this lawsuit, challenging the 2004 FWS Smelt OCAP BiOp. Doc. 1. Subsequent amendments to the Complaint updated Plaintiffs’ allegations to include challenges to the 2005 FWS Smelt OCAP BiOp. Doc. 403 (Second Amended Complaint (“SAC”)). Among other things, the SAC alleged that the 2005 FWS Smelt OCAP BiOp did not “adequately consider or addi’ess the effects of [the] long-term water service contracts on threatened and endangered species,” id. ¶32, and that the Bureau “has taken and is taking actions that could foreclose implementation of reasonable and prudent alternatives that would avoid jeopardy, including but not limited to signing and implementing new long-term contracts promising delivery of substantially increased quantities of water, in violation of [ESA] section 7(d).” Id. ¶ 81. In 2007, the 2005 FWS Smelt OCAP BiOp was set aside as unlawful. Nat. Res. Def. Council v. Kempthorne, 506 F.Supp.2d 322 (E.D. Cal. 2007). The Bureau did not appeal.

H.Parallel Challenge to the 2004 NMFS Salmonid OCAP BiOp

On August 9, 2005, a coalition of environmental organizations largely overlapping with the present Plaintiffs filed a parallel complaint against Reclamation and NMFS alleging that the NMFS 2004 OCAP Salmonid BiOp was inadequate. Pac. Coast Fed’n of Fishermen’s Associations v. Gutierrez, 606 F.Supp.2d 1122, 1131 (E.D. Cal. 2008) (“PCFFA I”). Plaintiffs similarly sought to “[e]njoin and set aside any and all actions” that relied on it, including the delivery of water under long-term water contracts at issue here. Id. at 1183 (“Existing renewal and any new water service contracts have already been challenged in this litigation.”); PCFFA FAC at 38.

I. District Court Ruling in PCFFA

On May 20, 2008, the previously assigned district judge found that NMFS acted arbitrarily and capriciously by failing to consider certain facts in the NMFS 2004 Salmonid OCAP BiOp. PCFFA I, 606 F.Supp.2d at 1193-94; In July 2008, the Court considered Plaintiffs’ motion for injunctive relief, seeking implementation of remedies designed to aid salmonids in the Sacramento River basin. In the context of this request for injunctive relief, the Court-concluded that the Bureau had a “mandatory (i.e., non-diseretionary) legal obligation to make releases from Shasta Reservoir for delivery to the [SRS] Contactors.” Pac. Coast Fed’n of Fishermen’s Associations v. Gutierrez, 606 F.Supp.2d 1195, 1201 (E.D. Cal. 2008) (“PCFFA II”). Plaintiffs did not seek to amend or supplement their complaint in PCFFA.

J. Third Amended Complaint in This Case

In June 2008, Plaintiffs filed the Third Amended Complaint (“TAC”) in this case, directly challenging the sufficiency of FWS’s ESA consultation undertaken in connection with the renewal of 41 Contracts. See Doc. 575 ¶¶ 44-47, 69, 72-73. In seeking to set aside these contracts, Plaintiffs argued that the Bureau violated § 7(a)(2) of the ESA by failing to consult adequately with the FWS prior to renewing the Contracts. Id. ¶ 85.

K. FWS Issues Revised Biological Opinion

On December 15, 2008, the FWS issued a revised BiOp (the “2008 FWS Smelt OCAP BiOp”), which, contrary to the findings of the 2004 and 2005 FWS Smelt OCAP BiOps, concluded that the OCAP would jeopardize the delta smelt and adversely modify its critical habitat. NRDC v. Jewell, 749 F.3d at 781. The 2008 BiOp became the subject of numerous lawsuits. See generally San Luis & Delta Mendota Water Auth. v. Salazar, 1:09-cv-407-LJO-BAM. Plaintiffs in this matter intervened as defendants in the challenge to the 2008 FWS Smelt OCAP BiOp. See id.

L. NMFS Issues a Revised BiOp

On June 4, 2009, NMFS issued a revised BiOp (“2009 NMFS Salmonid OCAP BiOp”). See San Luis & Delta-Mendota Water Auth. v. Locke, 776 F.3d 971, 988 (9th Cir. 2014) (“San Luis v. Locke”). Three months later, the previously assigned district, judge entered final judgment in PCFFA, and closed the matter. PCFFA, 1:06-CV-0245-OWW-GSA, Doc. 458 (Judgment, Sept. 9, 2009).

M. District Court and Ninth Circuit Rulings on Plaintiffs’ TAC

In rulings in late ’2008 and 2009 in this case, the previously assigned district judge held that Plaintiffs did not have standing to challenge renewal of the DMC Contracts and that Plaintiffs’ challenge to the SRS Contracts failed as a matter of law because Federal Defendants lacked discretion to modify the SRS Contracts to benefit Plaintiffs’ interests. Nat. Res. Def. Council v. Kempthorne, 2008 WL 5054115, at *22 (E.D. Cal. Nov. 19, 2008) (“NRDC v. Kempthorne ”). A divided three-judge panel of the Ninth Circuit Court of Appeals affirmed. Nat. Res. Def. Council v. Salazar, 686 F.3d 1092 (9th Cir. 2012).

The Ninth Circuit subsequently voted to hear the case en banc, and the en banc panel reversed and remanded. NRDC v. Jewell, 749 F.3d at 776. The en banc decision first found that the issuance of the 2008 FWS Smelt OCAP BiOp did not moot Plaintiffs’ challenge to the Contracts:

This action is not moot because the 2008 Opinion does not provide Plaintiffs with the relief that they seek. The 2008 Opinion concluded that the Bureau’s Plan would likely jeopardize the delta smelt and adversely modify its critical habitat. In so doing, the 2008 Opinion explained that the Bureau’s Plan must be modified from what the Bureau envisioned in 2004 and 2005, and the Opinion identified a “reasonable and prudent alternative” to the proposed Plan that would avoid jeopardizing the delta smelt.

The issuance of the 2008- Opinion does not moot this appeal. The 2008 Opinion merely assesses the general effects of the Bureau’s Plan, and it does not represent a consultation with the FWS concerning the impact of the Bureau’s decision to renew the specific contracts before us. Although the DMC Contracts and Settlement Contracts were renewed based on now-invalidated opinions, the Bureau has never reconsulted with the FWS regarding the effects of renewing these contracts, nor has it sought to amend the challenged contracts to incorporate the protections proposed in the 2008 Opinion. The remedy Plaintiffs seek is an injunction requiring reconsul-tation with the FWS and renegotiation of the challenged contracts based on the FWS’ assessment. This relief remains available.

Id. at 782.

On the issue of standing related to the DMC Contracts, the previously assigned district judge held that Plaintiffs could not establish that their injury is fairly traceable to the Bureau’s alleged procedural violation because: (1) the DMC Contracts contain a shortage provision that absolves the government from, liability for breaches that- result from complying with, its legal obligations; (2) this provision permits the Bureau.to take necessary actions to meet its legal obligations under the ESA, so .(3) the Bureau could not have negotiated any contractual terms that better protect the delta smelt, and, therefore, any injury to the delta smelt is not traceable to the contract renewal process. NRDC v. Kempthorne, 2008 WL 5054115, at *11-18.

The Ninth Circuit rejected this reasoning, finding instead that “to establish standing, a litigant who asserts a procedural violation under Section 7(a)(2) need only demonstrate that compliance with Section 7(a)(2) could protect his concrete interests.” 749 F.3d at 783 (emphasis in original). The Ninth Circuit concluded that the consultation could have led to revisions that could have benefitted the delta smelt:

Contrary to the district court’s finding, the shortage provision does not provide the delta smelt with the greatest possible -protection. Nothing about the shortage provision requires the Bureau to take actions to protect the delta smelt. The provision is permissive, and merely absolves the United States of liability if there is a water shortage resulting from, inter alia, “actions taken ... to meet legal obligations.” But even if we read the provision to place an affirmative obligation on the Bureau to take actions to benefit the -delta smelt-,-the provision only concerns the quantity of water that will be made available to the DMC Contractors. There are various other ways in which the Bureau could have contracted to benefit the delta smelt, including, for example, revising the contracts’ pricing scheme or changing the timing of water deliveries. Because adequate consultation and renegotiation could lead to such revisions, Plaintiffs have standing to assert a procedural challenge to the DMC Contracts.

Id. at 783-84.

With regard to the SRS Contracts, the previously assigned district judge held that,, although Plaintiffs. , have standing to assert procedural challenges to them, the Bureau was not required to consult under Section 7(a)(2) prior to renewing the SRS Contracts because the Bureau’s discretion in renegotiating these contracts was “substantially constrained” in light of a line of cases, including Nat’l Ass’n of Home Builders v. Defenders of Wildlife, 551 U.S. 644, 669, 127 S.Ct. 2518, 168 L.Ed.2d 467 (2007), which stands for the proposition that there is no duty to consult for actions “that an agency is required by statute to undertake.” Nat. Res. Def. Council v. Kempthorne, 621 F.Supp.2d 954, 1000 (E.D. Cal. 2009), decision clarified, 627 F.Supp.2d 1212 (E.D. Cal. 2009), on reconsideration, No. 1:05-CV-1207-OWW-SMS, 2009 WL 2424569 (E.D. Cal. Aug. 6, 2009). In holding that the Bureau was not.required to consult under Section 7(a)(2) prior to renewing, the SRS Contracts, the previously assigned district judge focused on Article 9(a) of the oiiginal SRS Contracts, which provides in pertinent part:

During the term of this contract and any renewal thereof it shall constitute full agreement as between the United States and -the Contractor as to the quantities of water and the allocation thereof between base supply and Project water, which may be diverted by the Contractor from the Sacramento River for beneficial use on the land shown on Exhibit B which said diversion, use, and allocation shall not be disturbed so long as the Contractor shall fulfill all of its obligations hereunder, and the Contractor shall not claim any right against the United States in conflict with the provisions hereof.

Id. at 979 (emphasis omitted). This provision, according to the district court, “substantially constrained” the Bureau’s discretion to negotiate new terms in renewing the contracts, thereby absolving the Bureau of the duty to consult under Home Builders. Id.

The Ninth Circuit rejected this reasoning as well:

Section 7(a)(2)’s consultation requirement applies with full force so long as a federal agency retains “some discretion” to take action to benefit a protected species, [citations] While the parties dispute whether Article 9(a) actually limits the Bureau’s authority to renegotiate the Settlement Contracts, it is clear that the provision does not strip the Bureau of all discretion to benefit the delta smelt and its critical habitat.

First, nothing in the original Settlement Contracts requires the Bureau to renew the Settlement Contracts. Article 2 of the original contracts provides that “renewals may be made for successive periods not to exceed forty (40) years each.” (emphasis added). This language is permissive and does not require the Bureau to execute renewal contracts. Since the FWS has concluded that “Delta water diversions” are the most significant “synergistic cause[]” of the decline in delta smelt, 58 Fed. Reg. at 12,859, it is at least plausible that a decision not to renew the Settlement Contracts could benefit the delta smelt and their critical habitat.

But even assuming, arguendo, that the Bureau is obligated to renew the Settlement' Contracts and that Article 9(a) limits the Bureau’s discretion in so doing, Article 9(a) simply constrains future negotiations with regard, to “the quantities of water and the allocation thereof....” Nothing in the provision deprives the Bureau of discretion to renegotiate contractual terms that do not directly concern water quantity and allocation. And, as .[is the case] with re: spect to the DMC Contracts, the Bureau could benefit the delta smelt by renegotiating the Settlement Contracts’ terms with regard to, inter alia, their pricing scheme or the timing of water distribution.

For these reasons, we conclude that, in renewing the Settlement Contracts, thé Bureau retained “some discretion” to act in a manner that would benefit the delta smelt. The Bureau was therefore. required to'engage in Section 7(a)(2) consultation prior to renewing the Settlement Contracts.

NRDC v. Jewell, 749 F.3d at 785. The matter was reversed and remanded for further proceedings. Id.

N. Stay of this Case and Further FWS Consultation

On June 15, 2015, the Court stayed this litigation to allow Reclamation to reinitiate ESA-consultation on the contract renewals. Doc. 979. Thereafter, Reclamation requested FWS’s concurrence that the impacts of these contract renewals on delta smelt were assessed in the 2008 FWS Smelt OCAP BiOp. 4SC ¶¶ 103, 105. FWS responded by sending a letter of concurrence (“2015 LOC”), concluding that “all of the possible effects to delta smelt and its critical habitat by operating the CVP to deliver water under the SRS and DMC Contracts were addressed in the [2008 FWS Smelt OCAP BiOp].” Id. ¶ 106.

O. Plaintiffs Obtain Leave to Amend

On April 22, 2016, the Court granted Plaintiffs’ motion for leave to file the 4SC, permitting the addition of three new claims. Doc. 1018. The Fourth Claim for Relief challenges the sufficiency of FWS’s re-consultation, which resulted in the issuance of the 2015 LOC. 4SC ¶¶ 177-182. No party objected to adding this claim, which is a natural extension of the existing litigation.

Plaintiffs’ Fifth Claim alleges that Reclamation unlawfully failed to request re-initiation of consultation with NMFS on the impacts of SRS Contract renewals on the winter-run and spring-run Chinook. 4SC ¶¶ 183-188. Specifically, Plaintiffs allege that the 2009 NMFS Smelt OCAP BiOp constituted new information that revealed effects of the SRS Contracts that NMFS did not consider in consultation over the contracts.Id. ¶ 186. Plaintiffs also allege that massive mortality episodes impacting the 2014 and 2015 generations of winter-run and spring-run Chinook constituted independent new information that should have triggered re-consultation. Id. ¶ 187.

Plaintiffs’ Sixth Claim for relief alleges Reclamation and the SRS Contractors illegally caused the take of winter-run and spring-run Chinook during 2014 and 2015 because Reclamation made excessive deliveries to the SRS Contractors that depleted the cold water reserves in Shasta Reservoir, causing temperature increases fatal to the 2014 and 2015 “brood years” of winter-run and spring-run Chinook. 4SC ¶¶ 189-193.

P. October 20, 2016 Order

In response to multiple motions to dismiss, the Court issued an order resolving some aspects of those motions and requesting supplemental briefing on others. See October 20, 2016 Order. Specifically, the Court denied the DMC Contractors’ and SRS Contractors’ motion to dismiss the First and Third Claims for Relief because Plaintiffs admit they included these claims in the 4SC for informational purposes only. The Court found it was not unreasonable to leave claims on which judgment has already entered in an operative complaint for this reason, particularly given the exceedingly complex procedural history of this case. Id. at 19.

The Court found that allegations in the Second Claim for Relief that pertain directly to Reclamation’s reliance on the 2005 FWS Smelt OCAP BiOp are moot in light of the fact that FWS issued the 2008 FWS Smelt OCAP BiOp, which superseded and in large part rejected the 2005 FWS Smelt OCAP BiOp. Id. at 19-20. While the Court found other allegations in the Second Claim pertaining to ongoing obligations and the 2015 consultation were not moot, the Court nevertheless concluded those remaining allegations must be dismissed for failure to comply with the ESA’s 60-day notice requirement. Id. at 20-25.

The. Court resolved some challenges to the Fifth and Sixth Claims for Relief, but requested supplemental briefing on other issues, which are discussed in greater detail below.

IV. STANDARD OF DECISION

A motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6) is a challenge to the sufficiency of the allegations set forth in the complaint. A 12(b)(6) dismissal is proper where there is either a “lack of a cognizable legal theory” or “the absence of sufficient facts alleged under a cognizable legal theory.” Balistreri v. Pacifica Police Dept., 901 F.2d 696, 699 (9th Cir. 1990). In considering a motion to dismiss for failure to state a claim, the court generally accepts as true the allegations in the complaint, construes the pleading in the light most favorable to the party opposing the motion, and resolves all doubts in the pleader’s favor. Lazy Y. Ranch LTD v. Behrens, 546 F.3d 580, 588 (9th Cir. 2008).

To survive a 12(b)(6) motion to dismiss, the plaintiffs must allege “enough facts to state a claim to relief that is plausible on its face.” Bell Atl Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). “A claim has facial plausibility when the Plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). “The plausibility standard is not akin to a ‘probability requirement,’ but it asks for more than a sheer possibility that a defendant has acted unlawfully.” Id. (quoting Twombly, 550 U.S. at 556, 127 S.Ct. 1955). “While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a Plaintiffs obligation to provide the ‘grounds’ of his ‘entitlement to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Twombly, 550 U.S. at 555, 127 S.Ct. 1955 (internal citations omitted). Thus, “bare assertions ... amountpng] to nothing more than a ‘formulaic recitation of the -elements’ ... are not entitled to be assumed true.” Iqbal, 556 U.S. at 681, 129 S.Ct. 1937. “[T]o be entitled to the presumption of truth, allegations in a complaint ... may not simply recite the elements of a cause of action, but must contain sufficient allegations of underlying facts to give fair notice and to enable the opposing party to defend itself effectively.” Starr v. Baca, 652 F.3d 1202, 1216 (9th Cir. 2011). In practice, “a complaint ... must contain either direct or inferential allegations respecting all the material elements necessary to sustain recovery under some viable legal theory.” Twombly, 550 U.S. at 562, 127 S.Ct. 1955; see also Starr, 652 F.3d at 1216 (“the factual allegations that are taken as true must plausibly suggest an entitlement to relief’). To the extent that the pleadings can be cured by the allegation! of additional facts, a plaintiff should be afforded leave to amend. Cook, Perkiss and Liehe, Inc. v. N. Cal. Collection Serv., Inc., 911 F.2d 242, 247 (9th Cir. 1990) (citations omitted).

.V. DISCUSSION

A. Fifth Claim for Relief

Plaintiffs’ Fifth Claim alleges that Reclamation unlawfully failed to request re-initiation of Consultation with NMFS on the impacts of SRS Contract “implementation” on the winter-run and spring-run Chinook. 4SC ¶¶ 183-88. Specifically, Plaintiffs allege that the 2009 NMFS Sal-monid OCAP BiOp constituted new information that revealed effects of the SRS Contracts that NMFS did not consider in consultation over the contractsJd 11186. Plaintiffs also allege that massive mortality episodes impacting the 2014 and 2015 generations of winter-run and spring-run Chinook constituted independent new information that should have triggered re-consultation. Id. ¶ 187.

.An agency is required to reinitiate consultation where

discretionary Federal - involvement or control over the action has been retained or is authorized by law and:

(a) If' the amount or extent of taking specified in the incidental take statement is exceeded;

(b) If new information reveals effects of the action that may affect listed species or critical habitat in a manner or to an extent'not' previously considered;

(c) If the identified action is subsequently modified in a manner that causes an effect to the listed species or critical habitat that was not considered in the biological opinion; or

(d) If a new species is listed or critical habitat designated that may be affected by the identified action.

50 C.F.R. § 402.16 (emphasis added). The duty to reinitiate consultation lies with both the action agency and the consultation agency. See id.; see also Envtl. Prot. Info. Ctr. v. Simpson Timber Co., 255 F.3d 1073, 1076 (9th Cir. 2001) (“EPIC”).

Plaintiffs allege that Reclamation has “discretionary federal involvement and control over the implementation of the SRS Contracts.” 4SC ¶ 186. Federal Defendants dispute this, arguing that “while Reclamation retains some limited discretionary control or involvement in implementing the terms of the SRS Contracts, that level of involvement is not sufficient to trigger re-initiation because in the end, Reclamation ultimately cannot unilaterally alter the existing terms of the contracts in a manner that will inure to the benefit of [the] species.” FD MTD at 9.

Plaintiffs argued in the initial round of briefing that the Ninth Circuit’s decision in NRDC v. Jewell controls on the issue of discretionary involvement and control. The relevant portion of that decision addressed Plaintiffs’ claim, contained in the TAC, that Reclamation violated- Section 7(a)(2) by failing to consult adequately with FWS over impacts to delta smelt prior to renewing the SRS Contracts. See 749 F.3d at 781. The previously assigned district judge ruled that Reclamation was not required to comply with Section 7.in connection with renewal of the SRS contracts because the terms of the original SRS Contracts “substantially constrained” Reclamation’s discretion to modify the terms during the renewal process. Id. at 784. The Ninth Circuit reversed, holding that the appropriate question is not whether the agency’s discretion is “substantially constrained” but rather whether the agency retains “some discretion” to take action for the benefit of a protected species. Id. Applying the “some discretion” standard, the Ninth Circuit reasoned:

In holding that the Bureau was not required to consult under Section 7(a)(2) prior to renewing the Settlement Contracts, the district court focused on Article 9(a) of the original Settlement Contracts, which provides in pertinent part:

During the term of this contract and any renewals thereof: (1) It shall constitute full agreement as between the United States and the Contractor as to the quantities of water and the allocation thereof between base supply and Project water which may be diverted by the Contractor from its source of supply for beneficial use on the land shown on Exhibit B ...; (2) The Contractor shah not claim any right against the United States in conflict with the provisions hereof,

(emphasis added). According to the district court, the Bureau was not required to consult because this provision “substantially constrained” the Bureau’s discretion to negotiate new terms in renewing the contracts.

In so concluding, the district court applied an erroneous standard. Section 7(a)(2)’s consultation, requirement applies with full force so long as a federal agency retains “some discretion” to take action to benefit a protected species. [Citations] While the parties dispute whether Article 9(a) actually limits the Bureau’s authority to renegotiate the Settlement Contracts, it is clear that the provision does not strip the Bureau of all discretion to benefit the delta smelt and its critical habitat.

First, nothing in the original Settlement Contracts requires the Bureau to renew the Settlement Contracts. Article' 2 of the original contracts provides that “renewals may be made for successive periods not to exceed forty (40) years each.” (emphasis added). This language is permissive and does not require the Bureau to execute renewal contracts. Since the FWS has concluded that “Delta water diversions” are the most significant “synergistic cause[]” of the decline in delta smelt, 58 Fed. Reg. at 12,859, it is at least plausible that a decision not to renew the Settlement Contracts could benefit the delta smelt and their critical habitat.

But even assuming, arguendo, that the Bureau is obligated to renew the Settlement Contracts and that Article 9(a) limits the Bureau’s discretion in so doing, Article 9(a) simply constrains future negotiations with regard to “the quantities of water and the allocation thereof...,” Nothing in the provision deprives the Bureau of discretion to renegotiate contractual terms that do not directly concern water, quantity and allocation. ... [T]he Bureau could benefit the delta smelt by renegotiating the Settlement Contracts’ terms with regard to, inter alia, their pricing scheme or the timing of water distribution.

For these reasons, we conclude that, in renewing the Settlement Contracts, the Bureau retained “some discretion” to act in a manner that would benefit the delta smelt. The Bureau was therefore required to engage in Section 7(a)(2) consultation prior to renewing the Settlement Contracts.

Id. at 784-85 (italics in original; underlining added). NRDC v. Jewell unambiguously held that the Section 7(a)(2) consultation requirement applies to the renewal of the SRS Contracts;

In the October 20, 2016 Order,' the Court' concluded that NRDC v. Jewell’s holding is '“directly relevant to the Fourth Claim 'for Relief in the 4SC, which' challenges the sufficiency of the consultation between Reclamation' and FWS as to impacts to delta smelt related to renewal of the SRS Contracts.” October 20, 2016 Order at 28. However; Plaintiffs’ Fifth Claim for relief demands re-initiation of consultation regarding the : previously-executed SRS Contracts. After carefully considering the nature and scope of the Fifth Claim for relief, the Court concluded in the October 20, 2016 Order that “the only logical reading of the Fifth Claim for Relief is that Plaintiffs allege Reclamation retains discretionary involvement or control over SRS Contract implementation and that the new information alleged in the complaint regarding impacts of SRS Contract implementation on salmonids requires re-initiation of the consultation regarding SRS Contract adoption.” Id. at 30, The Court then explained that “[t]here -is a significant hurdle associated with such an allegation, rooted in a line of authority highlighted by Federal Defendants.” Id. Because it is .critical to the analysis here, the Court repeats its explanation of that line of authority here:

While -acknowledging the holding of NRDC v. Jewell, Federal Defendants argue that once executed, “the terms of the SRS Contracts are set and Reclamation administers the" contract's as executed.” FD MTD at 10. Therefore, Federal Defendants’ argument continues: “Reclamation does not retain the authority to alter the contract terms to inure to the benefit of listed species and thus, re-initiation on the execution of the SRS contracts has not been triggered.” Id. Federal Defendants’ position finds support in EPIC, which concerned a lawsuit brought against FWS for its alleged failure to re-initiate. consultation over the impact an ITP issued to [ ] Simpson Timber for the northern spotted owl might have on two other species (the marbled murrelet and the coho salmon) listed after the issuance of the ITP. FWS retained some ongoing. authority over the ITP:

ten years after the permit’s issuance, the FWS will review- the permit and evaluate whether Simpson has complied with its terms before allowing Simpson to continue logging operations under the permit. The .FWS can also suspend the permit at any time in the event of “any significant violation or breach” of the permit; it also has the authority to revoke the permit if activities authorized under .it result in the taking of threatened species not the subject of the permit, including the marbled murrelet and coho salmon.

Id. at 1078. In evaluating whether FWS retained sufficient discretionary involvement" or control, the Ninth Circuit first confirmed that the appropriate standard comes from Sierra Club v. Babbitt, 65 F.3d 1502 (9th Cir. 1995). EPIC, 255 F.3d at 1079. As EPIC summarized:

Sierra Club involved a suit against the Bureau of Land Management (“BLM”) for its failure to consult with the FWS about the effect of a proposed logging road on the. northern spotted owl. A private timber company was going to build a road on public land pursuant to a right-of-way agreement with the BLM. The Sierra Club claimed that the agreement represented ongoing agency action and that the BLM was required to consult with the FWS about the potential impact of the road on a newly listed species, the spotted owl, because the BLM retained discretionary involvement and control over the right-of-way. Upder the right-of-way agreement, the BLM could object to the timber company’s project in three limited instances, none of which was at issue or related to endangered or threatened species. [Sierra Club, 65 F.3d] at 1509 n. 10. We held that the BLM did not have a duty to consult with the FWS because it could not influence construction of the roadway for the benefit of the spotted owl:

In light of the statute’s plain language, the agency’s regulations, and the casé law construing the scope of “agency action,” we conclude that where, as here, the federal agency lacks the discretion to influence the private action, consultation would be a meaningless exercise; the agency simply does not possess the ability to implement measures that inure to the benefit of the protected species.

Id. at 1509 (emphasis added). • Under Sierra Club, to survive a Rule 12(b)(6) motion to dismiss, EPIC must allege facts to show that the FWS-retained sufficient discretionary involvement or control over Simpson’s permit “to implement measures that inure to the benefit of the” [species in question]. Id.

EPIC, 255 F.3d at 1079-80 (emphasis added).

⅜¾⅜ ¾* ‘

The Ninth Circuit then examined the ITP issued to Simpson Timber to determine whether it reserved to FWS “discretionary involvement and control to such an extent that it must reconsult on the impact of Simpson’s spotted owl permit on marbled murrelet and coho salmon.” Id. at 1080. Ultimately, the Ninth Circuit concluded that neither the ITP nor' any permit-related documents reserved to FWS such discretionary involvement or control. Id. at 1080-82. Critically for purposes of this case, the EPIC court next addressed the applicability of Natural Resources Defense Council v. Houston, 146 F.3d 1118, 1126 (9th Cir. 1998). In Houston, Reclamation was required to consult with NMFS because Reclamation’s renewal of certain CVP water contracts, which were statutorily mandated to be negotiated on “mutually agreeable” terms with water users, involved at least “some” agency discretion tó set the contract terms because Reclamation had discretionary power to decrease the total supply of water for sale and thereby decrease the amount of water granted in the renewed contracts. Id. The Ninth Circuit' applied similar reasoning in NRDC v. Jewell to the SRS Contract renewal process.

In EPIC, however, the Ninth Circuit' emphasized that Houston should not be read to “suggest ... that once the renewed contracts were executed, the agency had continuing discretion to amend them at any time to.address the needs of endangered or threatened species.” 255 F.3d at 1082. Rather, the terms'of the contract or agreement must be examined to determine whether and to what extent the agency retained discretion to impose measures to protect the species in question. See id. (finding terms-of ITP permit issued regarding impacts to spotted owl did not give FWS the power to implement measures to benefit species other than the spotted owl); see also Crowman Corp. v. United States, 51 Fed.Cl. 654, 656 (2002) (finding contract term permitting agency to adjust the time period'for contract operations in the event that, an “act of Government” disrupted contract operations, reserved to the agency the discretionary authority to re-initiate consultation to evaluate impact of contracted operations on recently-listed species”).

Contrary to Plaintiffs’ suggestion, Pltf. Opp. at 8, in light of EPIC, the Ninth Circuit’s holding in NRDC v. Jewell is not law of the case with respect to Plaintiffs’ Fifth Claim for relief. In other words, NRDC v. Jewell’s holding that Reclamation has discretion in the renewal process to alter the timing of water distribution and the pricing scheme related to contracted-for water does not necessarily mean Reclamation retained similar discretion in the executed contracts (or otherwise possess similar discretion pursuant to law) that would-permit revisions to executed contracts.

October 20, 2016 Order at 30-33.

The Court then requested supplemental briefing addressing the following questions:-

(1) In light of the Court’s ruling that EPIC controls as to the Fifth Claim for Relief and necessitates an examination of SRS Contracts themselves to determine whether Reclamation retains discretion under the Contracts to act on behalf of salmonid species, are there provisions in the' SRS Contracts that support Plaintiffs’ allegation that Reclamation retains such discretion?

(2) Relatedly, on what authority may the Court consider Plaintiffs’ allegations that Reclamation actually has exercised discretion over contract implementation in practice?

Id. at 37.

1. Interpretation of EPIC

While the 'Court has determined' that EPIC controls disposition of the Fifth Claim for Relief, the parties are not on the same page as to- how EPIC should, be applied. EPIC generically holds that “to survive a Rule 12(b)(6) motion to dismiss, [a plaintiff] must allege facts to-show that [the action agency] retained sufficient discretionary involvement or control over [the permit or contract in question] to implement measures that inure to the benefit of the [relevant species].” EPIC, 255 F.3d at 1080. Plaintiffs point to numerous contract provisions and other aspects of law they claim grant to Reclamation the discretion to take action to implement the SRS Contracts in ways that would benefit winter-run and spring-run Chinook salmon and their habitats. Doc. 1048 at 1-10.

Federal Defendants advocate for a more narrow reading of EPIC, based in part on EPIC’s application of Houston. As in the October 20, 2016 Order, in Houston, Reclamation was required to consult' under the ESA before renewing certain water contracts because in negotiations Reclamation had the power to decrease the total supply of water granted in those contracts. EPIC, 255 F.3d at 1082 (citing Houston, 146 F.3d at 1125-16, internal quotations omitted). The Plaintiffs in EPIC argued that Houston demonstrated that “existing contracts and permits that are in no way related to the ESA or do not provide mechanisms to protect threatened and endangered species may réquire alteration if necessary to comply with the ESA.” EPIC, 255 F.3d at 1082. The Ninth Circuit rejected this interpretation of Houston, instead finding that Houston did not stand for the proposition that “once the renewed contracts were executed, the agency had. continuing discretion to amend them at any time to address the needs of endangered or threatened species.” Id. Federal Defendants advocate for turning, this negative into an affirmative rule that would require allegations that the agency retained continuing discretion to amend the renewed contracts to address the needs of endangered or threatened species. See Doc. 1052 at 3-4. According to Federal Defendants, EPIC's generic holding — that “to survive a Rule 12(b)(6) motion to dismiss, [a plaintiff] must allege facts to show that [the action agency] retained sufficient discretionary involvement or control over [the permit or contract in question] to implement measures that inure to the benefit of the [relevant species],” 256 F.3d at 1080—is further limited by the more specific requirement that the type of discretion the action agency must retain under the circumstances is discretion to modify the contracts themselves to benefit the species.

A close examination of how the EPIC court evaluated the terms of the ITP at issue in that case suggests Federal Defendants are correct. EPIC focused on examining the ITP to determine whether the action agency retained discretionary control to modify or add to the ITP’s terms by: “mak[ing] new requirements to protect species that subsequently might be listed as endangered or threatened”; “expanding] the conservation goals of the [ITP]". an(j “demanding] additional measures to protect new species.” Id. at 1081-82 (emphasis added). See Nat'l Wildlife Fed’n v. Fed. Emergency Mgmt. Agency, 345 F.Supp.2d 1151, 1170 (W.D. Wash. 2004) (emphasizing that EPIC involved a completed contract between the agency and a private entity and interpreting EPIC as holding that FWS did not “ ‘retain discretionary control [under the permit] to make new requirements to protect' the marbled murrelet or. the coho salmon ... or impose new requirements on the company” (quoting EPIC, 255 F.3d at 1081-83)). In other words, in order to trigger the requirement for re-consultation under EPIC and 50 C.F.R. § 402.16 in the context of an executed and otherwise valid contract, the action agency must have retained sufficient discretion in that contract to permit material revisions to it that might benefit the listed species in question.

This interpretation harmonizes EPIC with its discussion of Houston. As mentioned above, EPIC found that. even though the statutory mandate to negotiate the contracts at issue in Houston on mutually agreeable terms created sufficient discretion to require consultation prior to contract execution, nothing suggested that “once the renewed contracts were executed, the agency had continuing discretion to amend them at any time to address the needs of endangered or threatened species.” 255 F.3d at 1082. This was a direct repudiation of. the Houston plaintiffs’ argument, that “existing contracts and permits that are in no way related to the ESA or do not provide mechanisms to protect threatened and endangered species may require alteration if necessary to compfy with the ESA.” Id. EPIC’s discussion of Houston strongly suggests that in the context of a previously-executed contract, the type of discretion EPIC demands is discretion to modify that contract. Put another way, the re-consultation regulation requires as a pre-requisite “discretionary Federal involvement or control over the action.” 50 C.F.R. § 402.16. In light of EPIC’s discussion of Houston, the “action” in the present circumstances is contract execution. Once executed, Reclamation would only retain discretion over contract execution if the contract in question provided Reclamation authority to modify the contractual arrangement.

This interpretation also makes sense from a practical perspective. Imagine under the circumstances of the present case that discretion to act on behalf of the species in question (without discretion to modify the contracts) triggered a re-consultation that led to a jeopardy determination. Imagine further that jeopardy could not be avoided simply through modifications to the way Reclamation exercised the discretion it did possess (within the existing contractual arrangement) to act on behalf of the species. Without any discretion to modify the contract, this would result in Reclamation being required to invalidate an existing and otherwise valid Reclamation contract. In other words, this would force Reclamation to breach the contract in question. This practical implication is particularly meaningful in the present case because the SRS Contracts are crucial to Reclamation operating the CVP in compliance with state law. This cannot be what Congress intended to be the result of the Section 7 consultation requirement, and the Court will not interpret the re-consultation regulation, 50 C.F.R. § 402.16’s, to produce such an absurd result.

Plaintiffs have pointed to no provision in the SRS Contracts, nor to any other authority, that suggests Reclamation has retained discretion to impose revisions to the executed contracts to address the needs of the relevant listed species. Rather, as mentioned, Plaintiffs point to numerous provisions that they allege provide discretion over contract implementation. None of the contractual provisions cited satisfies EPIC.

2. SRS Contract Background

Before evaluating each- of the purported sources of contractual discretion highlighted by Plaintiffs, it is helpful to review the SRS Contracts in a more general sense. Subject to the conditions in each contract, an SRS Contractor is “authorized to divert from its Source of Supply at the locations shown in Exhibit A, for beneficial use within the area delineated on Exhibit B ... the Contract Total designated in Exhibit A ... in accordance with the monthly operating schedule” submitted by the SRS Contractor. Glenn-Colusa Irrigation District Contract No. 14-06-200-855A-R-1 (“GCID Contract”), art. 3(a), located in the Supplemental Administrative Record (“SAR”) at 2695-2737. Before April 1 in each Water Year, and as revisions are needed, each SRS Contractor submits a written schedule, “indicating the Contract Total to be diverted by the Contractor during each month under this Settlement Contract. The United States shall furnish water to the Contractor in accordance with the monthly operating schedule or any revisions thereof.” Id. at art. 3(c), SAR 2705. The Contract Total is defined as the sum of Base Supply and Project Water and is set forth in each Exhibit A. See, e.g., id. at art. 1(e) & Ex. A, SAR 2700, SAR 2732. The Contract Total may be reduced only in a Critical Year, and then only by 25 percent. Id. at art. 5(a), SAR 2708. The Contractor in turn agrees to pay for Project Water as provided for in- Article 8 at “Rates -and Charges established in accordance with: (i) - the Secretary’s then current rate setting policies for the Project; and (ii) applicable Reclamation law and associated rules and regulations, or policies.” Id. at art. 8(a). SAR 2709-10.

3. Article 3(i)

Article 3(i) of the SRS Contracts provides:

[I]f there is a shortage of Project Water because of actions taken by the Contracting Officer to meet legal obligations then ... no liability shall accrue .'against the United States of any of its officers, agents, or employees for any damage direct or indirect, arising therefrom.

Id. at art. 3(i), SAR 2707. Plaintiffs argue that this provision allows Reclamation to reduce the diversion of project water" by SRS Contractors in order “to meet legal obligations.” Doc. 1048 at 3. Citing the 2009 NMFS Salmonid OCAP BiOp as an example of a relevant legal obligation, Plaintiffs argue that under Article 3(i) Reclamation retains discretionary control and involvement that could benefit listed species “affected by the diversions of project water.” Id. at 4.

Federal Defendants rejoin that discretion over project water is immaterial to Plaintiffs’ claims because project water was not at issue during the complained-of releases in 2014 and 2015, which consisted exclusively of base supply water, See Doc. 1052 at 7-8. As discussed above, under the circumstances presented in this case, an agency is required to reinitiate consultation where two elements are present: (1) “discretionary Federal involvement or con-tool over the action has been retained or is authorized by law”; and (2) “new information reveals effects of the action that may affect listed species or critical habitat in a manner or to an extent not previously considered.” 50 C.F.R. § 402.16. According to Federal Defendants’ position, to trigger reconsultation- under § 402.16, the discretion retained must be discretion that could allow Reclamation to modify a contract to address or ameliorate the exact “new effects of the action” complained of. However, nothing in the regulation limits the reconsultation obligation in this way. It is not beyond credulity to imagine ways that Reclamation could modify a contract to mitigate harm caused by one aspect of SRS Contract implementation by exercising discretion over other aspects of SRS Contract implementation.

More compelling are the SRS Contractors’ arguments regarding interpretation of Article 3(i), The SRS Contractors maintain that Article 3(i) simply limits the federal government’s liability for' damages when there is a shortage of project water due to actions taken by Reclamation to comply with legal obligations. This Court’s predecessor previously concluded that Article 3(i) is a “force majeure clause” and that “because supplies of Project Water may only be reduced when Project Water is necessary to meet legal obligations, this does' not create a level of discretion in the Contracting Officer or the Bureau that satisfies” the. standard set forth in Home Builders, 551 U.S. at 673, 127 S.Ct. 2518. Nat. Res. Def. Council v. Kempthorne, No. 1:05-CV-01207-OWW-SMS, 2009 WL 2849626, at *2 (E D. Cal. Sept. 1, 2009), rev’d on other grounds sub nom. Nat. Res. Def. Council v. Jewell, 749 F.3d 776 (9th Cir. 2014). In Home Builders, the Supreme Court deferred to a regulatory interpretation of Section 7’s consultation and no