In Western Watersheds Project v. Kraayenbrink (PDF), the United States Court of Appeals for the Ninth Circuit  upheld the district court’s decision that the Bureau of Land Management (BLM) violated the Endangered Species Act in adopting amendments to BLM’s grazing regulations and affirmed the district court’s permanent injunction enjoining the amended regulations.  The Ninth Circuit held that BLM violated section 7 of the Endangered Species Act (ESA) by failing to consult with the Fish and Wildlife Service (Service) regarding the amendments and also violated the National Environmental Policy Act by failing to take a "hard look" at the environmental impacts of the proposed regulations and arbitrarily concluded that the proposed regulations would have no significant environmental impact.

BLM began the process of amending the grazing regulations in 2002 and assembled a total of three interdisciplinary teams to review the proposed changes.  Two of these teams criticized the new regulations and concluded they would ultimately lead to environmental harm and would cause a "slow long-term adverse effect on wildlife and biological diversity in general."  BLM ignored these conclusions and in 2006 issued a final rule (PDF) adopting the proposed regulations.  The 2006 regulations made three principal changes to the regulations:  (1) they decreased the level of public input in public rangelands management, (2) they generally made it more difficult for BLM to conduct environmental enforcement on public rangelands, and (3) they ceded ownership rights to permanent rangeland structures and water from the United States to private ranchers.  With respect to the ESA, BLM concluded that the 2006 regulations were merely administrative and would not have an effect on listed or candidate species or proposed or designated critical habitat and therefore no consultation with FWS was required under section 7 of the ESA.

Section 7 of the ESA requires a federal agency to consult with the Service if the federal agency determines that any action on its part may affect any listed species or designated critical habitat.  Here, the Ninth Circuit found that BLM’s conclusion that the 2006 regulations would not affect listed species or critical habitat was arbitrary and capricious.  First, the court noted that the "sheer number of acres affected by the 2006 Regulations and number of special status species who reside on those lands alone suggest that the proposed amendments ‘may affect’ a listed species or its critical habitat."  Second, the Service itself concluded that the 2006 regulations would affect special status species and their habitat.  The Service was primarily concerned with the decrease of public input and change in water ownership, which would reduce habitat quality and have a long-term adverse effect on wildlife.  Third, even BLM’s own scientists advised the agency that a section 7 consultation was necessary.  Finally, plaintiffs submitted extra-record testimony that the regulations would have an adverse effect on wildlife and biological diversity, listed salmonids, and many listed bird species.  Therefore, the court concluded that BLM had no rational basis to conclude that the 2006 regulations would not affect listed species or their habitat.