Despite Uncertain Presence of Species, Ninth Circuit Upholds Critical Habitat Designation for Mexican Spotted Owls

Earlier this month, a three-judge panel clarified Endangered Species Act (“ESA”) jurisprudence in the Ninth Circuit by articulating two rules for designating critical habitat. First, the U.S. Fish & Wildlife Service (the “FWS”) and the National Marine Fisheries Service (together, the “Services”) may designate an area as “occupied” critical habitat even though it is not constantly inhabited by a species member, and even though the frequency or extent of the species’ use of the area is uncertain. The Services may designate an area as “occupied” so long as, in the Service’s expert (even if uncertain) opinion, a species member makes regular, if intermittent, use of an area.

Second, economic impacts resulting from the listing of a species should not be considered in designating critical habitat. Rejecting a Tenth Circuit ruling, the Ninth Circuit upheld use of the “baseline” approach to examining economic impacts in critical habitat designations, under which economic effects caused by a listing are not factored into the economic analysis in a critical habitat designation. As a result, economic effects of habitat designations that are co-extensive with, rather than additional to, those of listing decisions will not play a role in critical habitat decisions in the Ninth Circuit. Arizona Cattle Growers’ Ass’n v. Salazar, No. 08-15810, ___ F.3d ___, 2009 U.S. App. LEXIS 29107 (9th Cir. June 4, 2010).

Statutory Background

The Services determine whether to list a species as endangered or threatened under the ESA based on five statutory factors.[1] Listing decisions are made without reference to economic impacts.[2]

Upon listing, the Services are obligated to designate the species’ critical habitat.[3] In doing so, the Services apply a two-tiered test that differentiates between occupied and unoccupied habitat. A species’ critical habitat includes:

1. the specific areas within the geographical area occupied by the species, at the time it is listed … , on which are found those physical or biological features (I) essential to the conservation of the species and (II) which may require special management considerations or protection; and
2. specific areas outside the geographical area occupied by the species at the time it is listed … , upon a determination by the Secretary that such areas are essential for the conservation of the species.[4]

The ESA requires the Services to base critical habitat determinations not only on the “best scientific data available,” but also to consider the economic and other impacts of specifying any particular area as critical habitat, balancing the cost to society against the benefits to the species.[5]

Under ESA § 7(a)(2), absent an exemption, every federal agency must consult with the Service having jurisdiction over the species before taking an action that is likely to jeopardize a threatened or endangered species or destroy or adversely modify critical habitat.

Factual Background

In 1993, the FWS listed the Mexican Spotted Owl (the “owl”) under the ESA. In 2004, the FWS designated almost nine million acres of critical habitat for the owl in Arizona, Utah, Colorado and New Mexico, and determined that all of the designated habitat was “occupied” by the owl under the ESA. In its designation, the FWS included three types of habitat management areas: 1) protected areas, which “contain known owl sites[,] ‘steep slope’ areas meeting certain forest conditions, and legally and administratively reserved lands”; 2) restricted areas, which “provide … habitat appropriate for foraging … additional” to protected areas, and “also provide habitat for nonterritorial birds[,] … support dispersing juveniles, and … provide replacement nest/roost habitat on the landscape through time”; and 3) other forest and woodland types. The FWS determined that protected areas contain 75% of “necessary foraging areas for the owl.”

The Arizona Cattle Growers’ Association (“Arizona Cattle”) challenged the designation, arguing that the FWS: 1) improperly treated areas in which no owls are found as ‘occupied’; and 2) ”applied an impermissible ‘baseline’ approach that did not account for economic impacts of the critical habitat designation that are also attributable to the listing decision.”[6] The Arizona district court rejected both arguments. Arizona Cattle appealed to the Ninth Circuit, which affirmed the lower court.

Analysis

What does “occupied” mean in the context of critical habitat designation?

The Ninth Circuit first considered whether the owl “occupied” the relevant habitat. It concluded that the FWS permissibly interpreted the term to include areas where the owl was likely to be present intermittently. Applying this test, it held that FWS had designated only occupied areas as critical habitat.

The court first addressed the statutory definition of critical habitat and the meaning of “occupation” under the ESA. It identified two “components” relevant to the inquiry: 1) uncertainty, “a factor when the FWS has reason to believe that owls are present in a given area, but lacks conclusive proof of their presence”; and 2) frequency – “a factor when owls are shown to have only an intermittent presence in a given area.” According to the court, “[o]ccasionally, both factors will play a part in determining whether an area is ‘occupied.’” It therefore attempted to determine the scope of the FWS’ authority to determine occupation in ambiguous circumstances.

With respect to uncertainty, the court found that, “[a]lthough the FWS cannot act on pure speculation or contrary to the evidence, the ESA accepts agency decisions in the face of uncertainty.” On frequency, the court considered both parties’ suggested interpretations of occupation. Arizona Cattle asserted that an area is only occupied if a species actually “resides” in it. The FWS contended that, if it decides that an area is used with sufficient frequency such that the species “is likely to be present,” then the FWS can designate that area as occupied. Under the FWS’ interpretation, this area includes, at minimum, a species “home range” (the “area used by an animal during its normal activities”), as well as, potentially, “other areas used for intermittent activities.”

The Court agreed with the FWS, deferring to the Service’s interpretation of the term in the context of the case – which it found “very similar” to the FWS’ interpretation set forth in its 1998 ESA Consultation Handbook.[7] The court found that the handbook and the FWS’ litigation position resulted from the agency’s “considered judgment,” and therefore rejected the more restrictive interpretation proffered by Arizona Cattle. The court also based its decision on the definition of “occupied” on: 1) the broader purpose of the ESA (to prevent species extinction); 2) non-ESA case law in which courts broadly interpreted the term “occupied”; and 3) concepts articulated in its seminal decision in Gifford Pinchot Task Force v. U.S. Fish & Wildlife Service; namely, that the ESA mandates protections that ensure not only species’ survival, but recovery as well.

The court noted that the FWS could “go too far,” and roughly outlined those boundaries by explaining that it “may not determine that areas unused by owls are occupied merely because those areas are suitable for future occupancy.” Still, the court emphasized the importance of deferring to agency expertise in occupation determinations, particularly when migratory and mobile species are at issue.[9]

Did the FWS include unoccupied areas in the owl’s critical habitat?

The court also deferred to the agency’s application of its definition to the specific critical habitat determination for the owl. It noted that the FWS defined protected areas by reference to “frequent owl presence”; “support for owl occupancy” in other areas, including “studies correlating the habitat characteristics of protected and restricted areas with owl presence”; and the FWS’ ongoing efforts to identify evidence of owl presence in the face of uncertainty.[10] The court determined that the FWS did not improperly designate unoccupied areas – “even though it may not have identified with certainty in all cases a known owl constantly inhabiting that territory.”[11]

Was the FWS’ economic analysis arbitrary and capricious?

Arizona Cattle disputed the FWS’ application of the “baseline” approach to the economic analysis required before designating critical habitat, rather than the “co-extensive” approach adopted by the Tenth Circuit. The core of the parties’ dispute over this issue was “whether the FWS was required to attribute to the critical habitat designation economic burdens that would exist even in the absence of that designation.”[12]

Under the “baseline” approach, “any economic impacts of protecting the owl that will occur regardless of the critical habitat designation – in particular, the burdens imposed by listing the owl--are treated as part of the regulatory ‘baseline’ and are not factored into the economic analysis of the effects of the critical habitat designation.” Under the “co-extensive” approach, the FWS “must ignore the protection of a species that results from the listing decision in considering whether to designate an area as critical habitat. Any economic burden that designating an area would cause must be counted in the economic analysis, even if the same burden is already imposed by listing the species and, therefore, would exist even if the area were not designated.”[13]

In New Mexico Cattle Growers Association, the first opinion in which an appellate court addressed the issue, the Tenth Circuit explicitly rejected the “baseline” approach, concluding the Congress “intended that the FWS conduct a full analysis of all of the economic impacts of a critical habitat designation, regardless of whether those impacts are attributable co-extensively to other causes.”[14] The 2001 New Mexico Cattle opinion, however, was premised on critical habitat regulations that the Ninth Circuit invalidated in Gifford Pinchot in 2004. On that basis, and because the Ninth Circuit found the baseline approach more logical than the co-extensive approach anyway, it held that the FWS permissibly applied the baseline approach in Arizona Cattle.

Conclusions

The Arizona Cattle opinion may most directly affect cattle grazing, transmission lines, logging, and other industries in the Western United States that could affect forests designated as the owl’s critical habitat. But in the longer term, by further institutionalizing the precautionary principle in ESA decisionmaking, the opinion could make broader critical habitat designations more defensible in judicial challenges (so long as, for example, the record contains evidence of likely occupation of a duration considered significant by the Service). The opinion also diminishes the importance of economic considerations in the context of critical habitat decisions, making it more difficult to exclude specific areas from critical habitat designations.

For additional information, contact Jessica Ferrell or any other member of Marten Law’s Natural Resource practice group.