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October 30, 2002


The opinion of the court was delivered by: John D. Bates, United States District Judge.


Plaintiffs bring this case under the Endangered Species Act of 1973 ("ESA"), 16 U.S.C. § 1531, et seq., the Administrative Procedure Act, 5 U.S.C. § 551, et seq., the Regulatory Flexibility Act, 5 U.S.C. § 601, et seq., the Small Business Regulatory Enforcement Act, 5 U.S.C. § 801, et seq., and the National Environmental Policy Act, 42 U.S.C. § 4321, et seq. They challenge the adoption by the United States Fish and Wildlife Service ("FWS") of final rules designating critical habitats for two species. FWS now moves to vacate the final rules and remand the designations for reconsideration in light of a recent decision by the United States Court of Appeals for the Tenth Circuit. For the reasons stated below, the Court will vacate the existing rules and order a remand to FWS. However, the Court will order a shorter time frame for the promulgation of new rules than FWS has requested.


The ESA requires FWS to determine whether a given species should be listed as endangered or threatened based upon the "best scientific and commercial data available." 16 U.S.C. § 1533(b)(1)(A). Concurrent with the listing of the species, FWS may designate a "critical habitat," id. § 1533(a)(3)(A), defined as:

(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.

Id. § 1532(5)(A). A critical habitat designation should be made based upon the "best scientific data available and after taking into consideration the economic impact, and any other relevant impact, of specifying any particular area as critical habitat." Id. § 1533(b)(2).

On November 6, 2001, plaintiffs Building Industry Legal Defense Foundation, Foothill/Eastern Transportation Corridor Agency, National Association of Home Builders, California Building Industry Association, and Building Industry Association of San Diego County (collectively, "plaintiffs") brought this action against FWS, the United States Department of the Interior, and the respective heads of those agencies (collectively "defendants") to challenge the critical habitat designations. Plaintiffs allege several errors by FWS in promulgating the final rules, including that FWS used the wrong legal standard in making the designations, that FWS's economic analyses were erroneous and inadequate, and that FWS did not properly balance the benefits and impacts of the designations. On March 13, 2002, this Court granted the motion of Center for Biological Diversity, Inc. and Defenders of Wildlife, Inc. ("intervenors"), two environmental groups, to intervene as defendants.

On April 2, 2002, defendants moved to vacate and remand the critical habitat designations, and, accordingly, dismiss plaintiffs' complaint as moot, in light of the Tenth Circuit's decision in New Mexico Cattle Growers Ass'n v. United States Fish & Wildlife Svc., 248 F.3d 1277 (10th Cir. 2001). In that case, the Tenth Circuit reviewed the "baseline" approach used by FWS to analyze the economic impact of critical habitat designation for the southwestern willow flycatcher. Consistent with the baseline approach, FWS had examined only those economic impacts that were solely attributable to the critical habit designation for the species; any economic impacts that were attributable to different causes, such as listing of the species, were not considered. Id. at 1283. Because FWS had determined that the impacts of flycatcher listing were co-extensive with the impacts of designating critical habitat, the agency concluded that no real impact resulted from the critical habitat designation. Id. at 1283-84.

The Tenth Circuit rejected the baseline approach, noting that it rendered FWS's economic analysis "essentially without meaning." Id. at 1285. The proper way to give effect to the congressional intent that economic impacts be considered at the time of critical habitat designation, the court concluded, was for FWS to "conduct a full analysis of all of the economic impacts of a critical habitat designation, regardless of whether those impacts are attributable co-extensively to other causes." Id.

FWS has concluded that the Tenth Circuit's decision in New Mexico Cattle Growers is correct, and thus asks this Court to vacate the critical habitat designations for the arroyo southwestern toad and the Riverside fairy shrimp and remand the matters back to the agency, because the designations, like that in New Mexico Cattle Growers, were based upon a baseline approach. FWS argues, moreover, that it should be given until the spring of 2005 to designate new critical habitats. Plaintiffs, for their part, agree that vacatur and remand are appropriate.

Intervenors, on the other hand, contend that the Tenth Circuit's analysis in New Mexico Cattle Growers was wrong and should not be endorsed by the Court. Although they agree that the economic impact analyses done by FWS are flawed, and that a remand for further consideration of those analyses may be in order, see Intervenors' Response to Mot. to Vacate at 2, they argue that the Court should direct FWS to follow a different methodology for designating critical habitat that would "measure[] the true economic impact (both negative and positive) of the critical habitat designation above and beyond listing," id. at 19 (emphasis added). Citing Sierra Club v. United States Fish & Wildlife Svc., 245 F.3d 434 (5th Cir. 2001), intervenors contend that the baseline approach yields a meaningless economic impact analysis only because, employing misguided FWS regulatory standards at 50 C.F.R. § 402.02, the protections arising out of critical habitat designation are not significantly greater than the protections afforded by listing a species.*fn1 If FWS had a proper understanding of the import of critical habitat designation, intervenors contend, the economic impacts of designation would be more significant and would not overlap with those of listing, and thus the congressional directive to conduct an economic impact analysis could be given effect even excluding impacts attributable to listing. Intervenors also argue that vacatur during remand is improper, and that, in the event the rules are vacated, FWS should be allowed only 100 days to review the matters on remand.


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