Legal Alerts Dec 4, 2018

U.S. Supreme Court Limits Agency Discretion Under ESA

Critical Habitat for Endangered Species Decision

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In a victory for landowners and other regulated entities, the U.S. Supreme Court unanimously limited the U.S. Fish and Wildlife Service’s discretion when designating critical habitat under the federal Endangered Species Act. In its Weyerhaeuser Co. v. U.S. Fish and Wildlife Service decision last week, the Supreme Court held that only “habitat” may be designated as “critical habitat” under the ESA and that FWS decisions regarding whether to exclude a certain area from a critical habitat designation due to economic considerations are subject to judicial review.
 
FWS May Only Designate Habitat as “Critical Habitat”
The Weyerhaeuser case stemmed from FWS’ designation of 1,544 acres of private property in Louisiana as critical habitat essential for the conservation of the endangered dusky gopher frog — even though no such frogs occupied the property and the property in its current condition cannot be inhabited by the endangered frog. FWS nonetheless designated the subject property as critical habitat for the species because, theoretically, modifications to the property — such as replacing portions of the property’s closed-canopy timber plantation with an open-canopy pine forest — could allow the property to support a sustainable population of the endangered frogs.
 
The Court did not actually address whether the FWS erred in designating the subject property as critical habitat, but rather addressed the very narrow question of whether critical habitat must also be “habitat.” Rejecting the Fifth Circuit U.S. Court of Appeal’s prior holding to the contrary, the Supreme Court held that the ESA does not authorize FWS “to designate [an] area as critical habitat unless it is also habitat for the species.”
 
The Supreme Court, however, did not define “habitat.” Rather, the High Court sent the case back to the Fifth Circuit to consider the definition of habitat and whether it may include areas, like the property in question, that would require some degree of modification to support a sustainable population of a given species.
 
FWS Decisions to Exclude Property from Critical Habitat Subject to Judicial Review
The designation of property as critical habitat could potentially restrict its development if the planned use requires a federal permit or federal funding. The ESA, however, requires FWS to consider the economic impact of specifying an area as critical habitat before acting. The statute also authorizes FWS to exclude an area from critical habitat designation if FWS determines that the political, social, economic or other benefits of such exclusion outweigh the benefits of designating the area as critical habitat.
 
In the more momentous of the Supreme Court’s two holdings, the Court held that FWS’ determination of whether to exclude property from a critical habitat designation based on economic or other factors is subject to judicial review. For years, FWS has maintained that it enjoys full discretion on whether to exclude property from a critical habitat designation based on economic considerations, and that its discretion could not be reviewed by federal courts.
 
The Supreme Court disagreed with FWS and the Fifth Circuit, holding that a federal court may review FWS’ economic analysis and determination to ensure they are not arbitrary, capricious or an abuse of discretion. The Supreme Court then sent the case back to the Fifth Circuit to determine whether the FWS’ assessment of the costs and benefits of its designation of the Louisiana property passed legal muster. Ultimately, the Supreme Court’s holding may provide property owners with a potent legal argument to challenge critical habitat designations.
 
If you have any questions about this decision or how it may impact your agency, please contact the authors of this Legal Alert listed to the right in the firm’s Environmental Law & Natural Resources practice group, or your BB&K attorney.
 
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Disclaimer: BB&K Legal Alerts are not intended as legal advice. Additional facts or future developments may affect subjects contained herein. Seek the advice of an attorney before acting or relying upon any information in this communiqué.

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