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U.S. Supreme Court Reverses Fifth Circuit—Limits Agency Discretion under the Endangered Species Act in Addressing the Dusky Gopher Frog

The U.S. Supreme Court has held that a designation by the U.S. Fish and Wildlife Service (FWS) of critical habitat for a given species for purposes of the Endangered Species Act must be limited to area that is actual habitat of that species. [Weyerhaeuser Co. v. U.S. Fish and Wildlife Service, ___U.S.___, Case No. 17-71 (Nov. 27, 2018).]

Factual and Procedural Background

Under the federal Endangered Species Act (ESA), when the Fish and Wildlife Service designates an animal as an endangered species under the ESA, the FWS is also required to designate a “critical habitat” for that species. Under § 1532(5)(A) of the ESA a critical habitat consists of:

            •(i) the specific areas within the geographical area occupied by the species…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

(ii) specific areas outside the geographical area occupied by the species…upon a determination by the Secretary that such areas are essential for the conservation of the Species. (139 S.Ct. 361, 365).

In 2001, the FWS listed the dusky gopher frog as an endangered species under the ESA and in 2010, the FWS published a proposed critical habitat for the frog. The FWS proposed to designate as critical habitat four areas with known existing dusky gopher frog populations. However, the FWS determined that those four areas alone were not adequate to ensure the frog’s conservation and, therefore, it also designated as critical habitat an additional 1,544 acre site in Louisiana that was not occupied by the frog but that had once been home to the frog. This site, referred to by the FWS as “Unit 1,” was at that time operated as a commercial timber farm but was, according to the FWS, essential for the frog’s survival because of various characteristics and could be restored to a condition suitable for the frog with reasonable effort. The FWS then commissioned a report on the economic impacts of its designations and that report found that, with respect to Unit 1, the designation might bar future development of the site by its owners and thereby result in losses of up to $33.9 million. Despite that, the FWS determined that such potential costs were not disproportionate to the benefits from conservation and therefore proceeded with the proposed designation.

The owners of Unit 1, which included Weyerhaeuser, sued seeking to vacate the FWS’ designation of Unit 1 as critical habitat. They argued that Unit 1 could not be critical habitat for the dusky gopher frog because the frog could not survive in that area in its then existing condition. They also argued that the FWS should have excluded Unit 1 from its critical habitat designation based on the economic impacts of making such a designation.

The trial court found for the FWS on both claims. It determined that Unit 1 satisfied the statutory definition of unoccupied critical habitat, which requires only that the FWS deem the land in question “essential for the conservation [of] the species,” and it also approved the FWS’ methodology for estimating the economic impact of its designation and therefore refused to consider the property owners’ challenge to the FWS’ decision not to exclude Unit 1 based on economic impact considerations. The Fifth Circuit Court of Appeals affirmed the lower court’s decision and also concluded that the FWS’ decision not to exclude Unit 1 was committed to agency discretion by law and, as a result, was not reviewable. (139 S. Ct. 361, 368).

 

The Supreme Court’s Decision

The Court began its analysis by addressing the meaning of the term “critical habitat” for purposes of the ESA. The Court noted that under § 4(a)(3)(A)(i) of the ESA, which is the only authority for critical habitat designations in the ESA but which the lower courts did not analyze, when the FWS designates a species as endangered, it must also “designate any habitat of such specieswhich is then to be considered critical habitat.”

The Court reasoned, based on this language, that only “habitat” of an endangered species is eligible for designation as critical habitat and, therefore, “even if an area otherwise meets the statutory definition of unoccupied critical habitat because the Secretary finds the area essential for conservation of the species, § 4(a)(3)(A)(i) does not authorize the Secretary to designate the area as critical habitat unless it is also habitat for the species.” (139 S. Ct. 361, 369).

Based on this interpretation and because the Fifth Circuit did not initially consider the interpretation of the term “habitat” in § 4(a)(3)(A)(i) or assess the FWS’ administrative findings regarding Unit 1, the Supreme Court vacated the Court of Appeal’s judgment and remanded the case to the Court of Appeal to address those questions.

The Court also held that the decision of the FWS to not exclude an area from critical habitat for economic impact considerations is subject to judicial review. According the Court, under the Administrative Procedure Act there is a strong presumption in favor of judicial review of administrative actions. The FWS contended that in this case that presumption was rebutted because the action in question if committed to agency discretion by law because the section of the ESA permitting the FWS to elect to include or exclude areas for economic considerations, § 1533(b)(2), is a provision “so drawn that a court would have no meaningful standard against which to judge the agency’s exercise of discretion.” (139 S. Ct. 361, 370). However, the Court, after reviewing the text of § 1533(b)(2) of the ESA, found that it was not so drawn such that a court would have no meaningful standard against which to review the FWS’ discretion. The Court also noted that the claim in question in this case was “the sort of claim that federal courts routinely assess when determining whether to set aside an agency decision as an abuse of discretion.” (139 S. Ct. 361, 371) Accordingly, the Supreme Court vacated the Fifth Circuit’s holding on this claim and remanded the case for consideration of the question of whether the FWS’ assessment of the costs and benefits of its designation and its resulting decision not to exclude Unit 1 constituted an abuse of discretion.

Conclusion and Implications

Following this decision, when designating critical habitat for a given species for purposes of the Endangered Species Act,  the FWS will be limited in its ability to so designate any areas that do not then constitute habitat actually occupied by the subject species. Additionally, this decision makes clear that the FWS’ analysis of a given designation’s economic impact and the related determination of whether to include or exclude any particular area based on such analysis is subject to judicial review. The Supreme Court’s opinion is available online at: https://www.supremecourt.gov/opinions/18pdf/17-71_omjp.pdf

(BradleyScheick)