Can areas unoccupied and uninhabitable by a species listed under the federal Endangered Species Act (ESA) nonetheless be designated by the U.S. Fish and Wildlife Service (FWS) as “critical habitat” of that species? The U.S. Supreme Court has agreed to review a case—Weyerhaeuser Company v. U.S. Fish and Wildlife Service—posing that question. As the lower courts upheld the FWS decision by applying a fundamental, yet controversial doctrine of administrative law known as Chevron deference and deferring to FWS’ reading of the ESA to authorize it to do so, the case affords the Supreme Court an opportunity to revisit and rework that doctrine if it chooses. The case also presents a second ESA issue: whether the FWS’ decision not to exclude an area from critical habitat because of the economic impact of that designation is subject to judicial review.

Background

The ESA authorizes the FWS to list species it finds to be threatened or endangered and generally protects listed species and their habitat in two ways: first, prohibiting any person from “taking” listed species without authorization and, second, calling on federal agencies to ensure that any actions they authorize, fund, or carry out are not likely to jeopardize the continued existence of any listed species or result in the destruction or adverse modification of the “critical habitat” of any listed species.

The ESA generally directs the FWS when listing species also to designate “any habitat of such species which is then considered to be critical habitat . . .” and defines “critical habitat” as:

• [1] the specific areas within the geographical area occupied by the species, at the time it is listed . . . on which are found those physical and biological features . . . essential to the conservation of the species and . . . 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 [FWS] that such areas are essential for the conservation of the species.

The ESA also requires the FWS to “take into consideration the economic impact . . . of specifying any particular area as critical habitat” and provides that FWS:

• . . .may exclude any area from critical habitat if it determines that the benefits of such exclusion outweigh the benefits of specifying such area as part of the critical habitat.”

The Weyerhaeuser Company Decision

In 2010, the FWS designated critical habitat for the endangered dusky gopher frog, which included a 1,544-acre site not occupied by the frog. That site, moreover, contained only one of the three physical and biological features the FWS determined necessary for dusky gopher frog habitat, several ephemeral ponds that could support the frog’s reproduction. Those ponds, however, were surrounded by upland forest that (absent prescribed burning and other voluntary measures by the landowners to create habitat and introduce frogs) the FWS admitted was “unsuitable as habitat” for the frog.

In making this decision, the FWS also declined to exclude the site from critical habitat based on its weighing of the economic impacts and benefits of the designation.

Weyerhaeuser and other owners of the site sued the FWS seeking to invalidate the critical habitat designation. The trial court ruled in favor of the FWS, and the Court of Appeal, 2-1, affirmed that ruling (then entitled Markle Interests, L.L.C. v. U.S. Fish and Wildlife Service). The panel majority of the Fifth Circuit Court of Appeals deferred to the FWS’ interpretation of the ESA that areas “essential for the conservation of the species” may include areas not currently habitable by the frog. Chevron deference, named for the U.S. Supreme Court’s decision in Chevron, U.S.A., Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837 (1984), generally calls for courts to defer to an agency’s interpretation of a statute Congress has charged it with enforcing as long as the agency’s interpretation is not contrary to the statute’s plain meaning and, if the statute is ambiguous, the agency’s interpretation is reasonable, even if the court would have read the statute differently. Observing that “[t]here is no habitability requirement in the text of the ESA” and the ESA calls on the FWS to designate “essential” areas without further specifying “essential” to mean “habitable,” the court concluded that FWS’ interpretation was not unreasonable.

Rejecting Weyerhaeuser’s challenge to the FWS’ refusal to exclude the site based on the economic impacts of its designation as critical habitat, the panel majority ruled that since the ESA committed the decision not to exclude an area to the discretion of the FWS and did not provide any “judicially manageable standards” for judging how the agency should exercise its discretion, the FWS’ decision not to exclude the area is “not reviewable” by the court.

Weyerhaeuser petitioned for a rehearing en banc, which the court rejected on a vote of 8 to 6 over a strenuous dissent. Weyerhaeuser petitioned the U.S. Supreme Court to review the case, and on January 22, 2018, the Supreme Court agreed to do so.

Conclusion and Implications

Because designation of land as critical habitat may substantially constrain its use, development, and value, landowners naturally have much at stake and thus good reason to care whether the FWS may extend critical habitat designations over areas that listed species cannot inhabit. The Ninth Circuit recently confronted much the same issue in Bear Valley Mutual Water Co. v. Jewell, 790 F.3d 977 (9th Cir. 2015)) and reached generally the same result as the Fifth Circuit. Much thus rides on how the U.S. Supreme Court resolves that issue.

While the ESA requires the FWS to consider the economic impacts of designating critical habitat before deciding to do so, the FWS generally has analyzed such impacts in ways that render the exercise largely meaningless. The Fifth Circuit’s ruling that courts cannot even review FWS decisions not to exclude areas for economic reasons serves to further diminish the role of economic considerations in critical habitat designations. A Supreme Court ruling may leave this status quo largely undisturbed or perhaps lead to more meaningful consideration of economic impacts.

Chevron deference has been central to judicial review of administrative decisions since 1984. It has, as well, remained controversial throughout that time. While criticism of the doctrine has mounted, the Supreme Court has slightly narrowed the circumstances for applying it. Justice Gorsuch, when serving in the Tenth Circuit, denounced it as “a judge-made doctrine for the abdication of judicial duty” to decide what the law means. If the High Court is inclined to repudiate or revise the Chevron doctrine, this case provides an opportunity.

Markle Interests, L.L.C. v. U.S. Fish and Wildlife Service, Case No. 14-31008 (5th Cir. Feb. 13, 2017) http://www.ca5.uscourts.gov/opinions/pub/14/14-31008-CV1.pdf, and see,

Markle Interests, L.L.C. v. U.S. Fish & Wildlife Serv., 827 F.3d 452 (5th Cir. 2016)

(David Ivester)