“Critical Habitats” Remain a Source of Critical Uncertainty for Builders


A U.S. District Court  for the District of Columbia has joined the debate regarding whether the U.S. Fish and Wildlife Service is required to comply with the National Environmental Policy Act, 42 U.S.C. §§ 4321–4347 (NEPA), when designating critical habitat based upon the requirements of the Endangered Species Act (ESA). A geographically based distinction in agency policy has resulted from a split in the U.S. Courts of Appeals on the question of whether an environmental impact statement (EIS) is required for critical habitat designations. The Tenth Circuit Court of Appeals, in Catron County Board of Commissioners, New Mexico, v. United States Fish and Wildlife Service, et al., 75 F.3d 1429, 1436 (10th Cir. 1996), held that the Fish and Wildlife Service must comply with NEPA when designating critical habitat under the ESA. 75 F.3d at 1436. By contrast, the Ninth Circuit, in Douglas County v. Babbitt, et al., 48 F.3d 1495, 1502-07 (9th Cir. 1999), held that the Fish and Wildlife Service does not have to comply with NEPA when designating critical habitat. NEPA is generally understood to be a “procedural statute” that is designed to ensure that federal agencies make fully informed and well-considered decisions. While the U.S. Court of Appeals for the District of Columbia circuit has not had an occasion to rule on this NEPA issue, on November 13, 2015, the U.S. District Court for the District of Columbia issued a Memorandum Opinion agreeing with the Ninth Circuit that NEPA is not applicable to critical habitat determinations. The case is Otay Mesa Property, L.P., v. United States Department of the Interior

In 2012, the Fish and Wildlife Service issued a rule designating 57 acres of land owned by Otay in San Diego County, California, as a critical habitat for an endangered species, the Riverside fairy shrimp. Species that the Fish and Wildlife Service lists as endangered or threatened receive certain protections under Federal, State, and local law, which the Fish and Wildlife Service refers to as “baseline” protections. For example, Section 9 of the ESA prohibits the “take” of endangered wildlife, where “take” means to “harass, harm, pursue, hunt, shoot, wound, kill, trap, capture, or collect, or to attempt to engage in any such conduct.” 16 U.S.C. §§ 1532(19), 1538(a)(1); 50 C.F.R. § 17.21(c). In turn, Section 10(a)(1)(B) authorizes landowners and local governments who desire to engage in activities or projects that may incidentally result in the “take” of a protected species to apply for a permit by demonstrating, among other things, that “the applicant will, to the maximum extent practicable, minimize and mitigate the impacts of such taking [and that] the taking will not appreciably reduce the likelihood of the survival and recovery of the species in the wild[.]” 16 U.S.C. § 1539(a)(1)(B), (2)(A)–(B). Similar protections exist on the state level; for example, California requires the responsible state government entity(ies) for project approval under the California Environmental Quality Act to consider the environmental effects of certain proposed projects. See Cal. Pub. Res. Code §§ 21000–21189.3, § 21002.1.

Otay plans to build a recycling facility and landfill on its property on a portion of the 56 acres that encompass a one acre vernal pool. (A vernal pool is a seasonal body of standing water.) Otay estimates that it will take at least 10 years to acquire all of the permits and authorizations it will need to build these facilities, which will serve a pressing need of San Diego in the near future. The Fish and Wildlife Service designated these 57 acres as a watershed and critical habitat for this species of shrimp, but Otay challenged this action as being unsupported by the evidence set forth by the agency, as well as being arbitrary and capricious under the Administrative Procedure Act (APA).

Before the District Court were the parties’ cross-motions for summary judgment. Otay contended that it is entitled to judgment as a matter of law because the record clearly demonstrates that the process that the Fish and Wildlife Service used to determine whether or not Otay’s property should be declared a critical habit for the Riverside fairy shrimp was flawed, and thus it reached the wrong conclusion. Specifically, Otay maintains that the Fish and Wildlife Service “(1) wrongly designated the property as a critical habitat even though it does not qualify as such under the ESA; (2) conducted a faulty economic analysis with respect to the critical habitat designation; (3) improperly neglected to perform a NEPA analysis of possible environmental impacts of the critical habitat designation; and (4) failed to articulate its reasons for determining that preservation of all 57 acres is essential to conservation of the species.”  In contrast, the Fish and Wildlife Service asserted that it is entitled to summary judgment because Otay does not have standing and it’s critical habitat determination was not arbitrary or capricious in violation of the APA because it conducted a proper economic analysis, reasonably determined that a NEPA analysis was not warranted, and has articulated rational and well-supported reasons for concluding that Otay’s property qualifies a critical habitat for ESA purposes. 

The District Court held that Otay has standing to make this challenge, but that the Fish and Wildlife Service’s action was not arbitrary and capricious under the APA. Moreover, the District Court concluded that the Fish and Wildlife Service was not obliged to comply with NEPA, while it decided whether to designate a critical habitat for a protected species. However, the District Court also noted that the administrative record must be supplemented because it does not presently contain the factual basis for the Fish and Wildlife Service’s determination that 56 acres that surround the vernal pool composed a watershed serving the vernal pool. Accordingly, it denied both parties’ motions without prejudice.  The district Court found itself in “no position to assess the rationality of the [Fish and Wildlife Service’s] decision that the 56 acres of Subunit 5c that surround the one-acre stock pond constitutes watershed for the vernal pool on the property.”  The District Court has ordered the parties to file supplemental briefing and submit additional materials from the administrative record on this limited factual question.