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Farm Groups’ Suit Requests to Set Aside Federal Rule Designating over 1.8 Million Acres of Critical Habitat

On July 31, 2017, three non-profit organizations representing farming and ranching entities brought suit against the U.S. Fish and Wildlife Service (FWS). The groups allege that the FWS failed to comply with the federal Regulatory Flexibility Act (RFA) when it designated critical habitat for the Yosemite toad and two species of yellow-legged frogs under the federal Endangered Species Act (ESA). The Regulatory Flexibility Act requires federal agencies to analyze the impacts of proposed rules on small entities, which the RFA defines to include small businesses, small organizations, and small governmental jurisdictions. The suit requests declaratory relief establishing that a critical habitat designation is not categorically exempt from the Regulatory Flexibility Act when the designation directly regulates only federal agencies. It also seeks to set aside the FWS’ final rule, or enjoin its enforcement against small entities. [California Cattlemen’s Association et al v. U.S. Fish And Wildlife Service et al, Case No. 1:2017cv01536 (D. D.C.)].

 

The Plaintiffs

The California Cattlemen’s Association, the California Wool Growers Association, and the California Farm Bureau Federation sued the FWS on behalf of themselves and their members. Both associations and the Farm Bureau are non-profit organizations that represent farmers, ranchers, beef producers, sheep and wool producers, and other agricultural interests. Their suit alleges that they and their members have or will be aggrieved by the FWS’ final rule designating critical habitat.

The three organizations commented on the proposed rule in 2013 as part of a larger group, then submitted additional comments in March 2014. Their separate comments stated that the FWS did not use the best available scientific data available as required by the Endangered Species Act, and identified its disagreements with the FWS’ scientific analysis regarding the Yosemite toad. The comments also explained how the designation of critical habitat would economically impact ranchers who use federal grazing allotments in national forests. The comments stated that if modifications to grazing allotments are required, ranchers with grazing permits would experience significant hardship and in some circumstances would be required to shut down completely.

 

The Regulatory Flexibility Act

The Regulatory Flexibility Act requires agencies to describe the impact of their rulemaking on small entities. The RFA defines “small entities” to include small businesses, small organizations, and small governmental jurisdictions. The RFA requires an initial Regulatory Flexibility Analysis for the proposed rule and a final Regulatory Flexibility Analysis for the final rule, and outlines the specific contents for each. The agency’s initial analysis must include a justification for an agency’s proposed rule, a statement of objectives, an estimate of the number of small entities to which the rule would apply, and a description of alternatives that accomplish the same objectives of applicable statutes and minimize economic impact on small entities.

The final Regulatory Flexibility Analysis must include a statement of changes to the proposed rule based on public comment on the initial analysis, an estimate of the number of small entities to which the rule applies or a statement on why that estimate is not available, and a description of how the agency minimized economic impacts on small entities, including why the final rule was adopted while the other alternatives were rejected.

The requirements for initial and final Regulatory Flexibility Analyses do not apply if the agency certifies that the final rule would not “have a significant economic impact on a substantial number of small entities.” 5 U.S.C. § 605.

 

The Final Rule

The FWS published the final rule on August 26, 2016, and it became effective a month later. It designated over 1.8 million acres in California as critical habitat for the Sierra Nevada yellow-legged frog, the northern population of the mountain yellow-legged frog, and the Yosemite toad. The FWS’ final economic analysis was edited to incorporate comments to the draft economic analysis, and was published with the final rule.

Significant to the farm groups’ lawsuit, the FWS’ proposed and final rules stated that only federal agencies would be directly regulated by the critical habitat designation. Federal agencies are not small entities. Thus, the FWS concluded, the rule would not have a significant economic impact on a substantial number of small entities.

 

The Complaint

The California Cattlemen’s Association, the California Wool Growers Association, and the California Farm Bureau Federation filed their suit against the FWS on July 31, 2017 in the U.S. District Court for the District of Columbia.

Plaintiffs’ challenge the FWS’ claim that it need not conduct Regulatory Flexibility Analyses because the critical habitat designation directly regulates only federal agencies. The suit alleges that the FWS did not comply with the Regulatory Flexibility Act because the FWS’ draft economic analysis was incomplete and did not meet the requirements for an initial Regulatory Flexibility Analysis. Similarly, the plaintiffs allege that the FWS was required to, but did not, publish a final Regulatory Flexibility Analysis.

The plaintiffs claim that they are small entities under the Regulatory Flexibility Act because they are small organizations, defined by the RFA as “any not-for-profit enterprise which is independently owned and operated and is not dominant in its field[.]” 5 U.S.C. § 601(6). They allege that they and their members will be irreparably harmed if the FWS is not enjoined from enforcing its final rule against small entities.

The plaintiffs also allege that the FWS’ conclusion is arbitrary, capricious, and not in accordance with the law in violation of the federal Administrative Procedure Act.

The relief sought includes a declaration that critical habitat designations are not categorically exempt from the Regulatory Flexibility Act because only federal agencies and not small entities are directly regulated. The plaintiffs ask the court to set aside the FWS’ final rule or enjoin its enforcement against small entities, and to remand the final rule to complete initial and final Regulatory Flexibility Analyses.

 

Conclusion and Implications

This case was only recently filed so there may not be a conclusion for quite some time. However, the outcome of this case could have implications for how the FWS must consider impacts on small businesses, organizations, and local governments when designating critical habitat. The required analysis could bring to light the scope and depth of a rulemaking’s impact on small entities, and give them a more visible spot at the table in the rulemaking process.

(Lauren Bernadett, David Ivestor)