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Otay Mesa Property, L.P. v. United States Department of The Interior

United States District Court, District of Columbia

September 25, 2018




         Plaintiffs Otay Mesa Property, L.P., Rancho Vista Del Mar, and Otay International, LLC (collectively “Otay Mesa” or “Plaintiffs”) own land in San Diego County, California, that the U.S. Fish and Wildlife Service (“the FWS”) has designated as a “critical habit” for the endangered Riverside fairy shrimp under the Endangered Species Act (“the ESA”), 16 U.S.C §§ 1531-1544. Otay Mesa has filed the instant action against the FWS and its acting Director, the U.S. Department of the Interior (“Interior”), and two high-ranking Interior officers in their official capacities (collectively, “Defendants”) to challenge the propriety of the FWS's critical habitat designation under the Administrative Procedure Act (“APA”), 5 U.S.C. §§ 701-706.[1]This Court has already issued one memorandum opinion in this matter, see Otay Mesa Prop., L.P. v. U.S. Dep't of the Interior, 144 F.Supp.3d 35 (D.D.C. 2015), wherein all disputed issues between Otay Mesa and FWS concerning the critical habitat designation for the endangered Riverside fairy shrimp were resolved save one: namely, whether it was proper for the FWS to assign a ‘critical habitat' designation to 56 acres of Otay Mesa's property that is immediately adjacent to the stock pond that contains the shrimp solely on the basis of the agency's finding that the types of geological features that are generally necessary to support the shrimp species exist on those acres. The FWS had concluded that the 56 acres constituted either “occupied” critical habitat under the first prong of section 1532(5)(A) of Title 16 of the United States Code, or, alternatively, “unoccupied” critical habitat essential for the conservation of the species under the second prong of that same provision, but the agency had not conducted any hydrological studies or other surveys to determine the extent to which the 56 acres of land actually supported the ecological system that is necessary for the shrimp's survival. As explained below, the question of whether or not the FWS employed an appropriate methodology to reach the critical habitat determination at issue in this case depends upon the meaning of the term “occupied” as it appears in the ESA, and also turns on the distinction that that statute makes between the standards for designating occupied and unoccupied critical habitats.

         Before this Court at present are the parties' renewed cross-motions for summary judgment and the supplemental briefs that they have filed regarding these key legal issues. Otay Mesa maintains that it is entitled to judgment as a matter of law, because the FWS improperly designated the 56 acres of land as “occupied” habitat even though the shrimp live only in the one-acre stock pond and not on the land. (See Pls.' 2d Suppl. Br., ECF No. 42, at 8-9.)[2] Otay Mesa further contends that the FWS's occupied critical habitat designation is improper under the ESA because there is no record evidence demonstrating that all 56 acres of adjacent land must be preserved in order to supply water to the one-acre stock pond where the shrimp live, and that the FWS improperly designated the 56 acres as “unoccupied” critical habitat in the alternative because it failed to apply the statutory standard for unoccupied critical habitat designations. (See Id. at 11-13; Pls.' Resp. to Defs.' Suppl. Br. & Pls.' Renewed Mot. for Summ. J., ECF No. 36, at 3-4.) Defendants respond that the Court should order summary judgment in their favor, because the FWS reasonably determined that the stock pond and all 56 adjacent acres satisfy the ESA's definition of occupied critical habitat on the basis of the best available scientific data (Defs.' 2d Suppl. Br., ECF No. 41, at 7-12, 16-22), and the FWS applied the correct legal standards when alternatively designating this area as unoccupied critical habitat under the ESA (id. at 12-16).

         For the reasons explained fully below, this Court finds that the law and record evidence do not support the FWS's “occupied” or “unoccupied” critical habitat designations, and thus the critical habitat determination that Otay Mesa challenges here must be set aside as arbitrary and capricious and contrary to law in violation of the APA. To be specific, the manner in which the FWS determined the scope of the area that the Riverside fairy shrimp occupies is inconsistent with the ESA's prescriptions for making that determination, and when the agency determined the area of unoccupied critical habitat, it failed to employ the statutory standard that is applicable to unoccupied critical habitat designations. Consequently, Otay Mesa's renewed motion for summary judgment must be GRANTED, Defendants' motion for summary judgment must be DENIED, and the designation of Otay Mesa's property as critical habitat must be VACATED. A separate Order that remands this matter to the agency for further proceedings will follow.

         I. BACKGROUND

         A. Prior Proceedings

         The procedural history of this dispute is described in detail in the opinion that the Court previously issued in this case, see Otay Mesa Prop., 144 F.Supp.3d 35; therefore, only a brief recounting of certain relevant background details is necessary here. The long and short of it is that Riverside fairy shrimp are “small freshwater crustacean[s]” that “rely upon ‘vernal pool' hydrology” to grow and reproduce, id. at 44, and since 2001, the FWS has been engaged in rule-making aimed at designating the critical habitat for this endangered species pursuant to the prescriptions of the ESA, see Id. at 47.[3] Two prior rules that the FWS promulgated with respect to these shrimp-one in 2001 and one in 2005-were each challenged in federal court, which resulted in settlement agreements and the subsequent promulgation of revised rules. Id. At issue in this case is the most recent critical habitat designation for this species, which the FWS promulgated by a third rule-making process that took place in 2012 (“2012 Rule”), following the settlement of litigation arising from the 2005 rule.

         Plaintiffs are businesses that own the land in San Diego County, California, including property on which is located a one-acre vernal pool that was formerly a cattle stock pond and is now home to endangered Riverside fairy shrimp. Based upon environmental surveys that showed that the filled stock pond contained adult Riverside fairy shrimp during the wet season and the dried-out bed of that stock pond had Riverside fairy shrimp cysts in it during the dry season, the FWS determined that this endangered species “occupied” the one-acre stock pond at the time the species was listed in 1993-a finding that this Court has already upheld. Id. at 59. In the 2012 Rule, the FWS proceeded to designate as “occupied” critical habitat for the Riverside fairy shrimp not only the stock pond itself, but also approximately 56 acres of surrounding land (which is referred to throughout this Opinion as “Subunit 5c” or “the Property”), and alternatively, the FWS labelled those same areas as “unoccupied” critical habit, for the purpose of the ESA. Id. at 52-53.[4] Otay Mesa has plans to build a recycling center and landfill on the Property, and in the instant context, it represents that the FWS's critical habitat designation “may make the completion of this project infeasible.” (Pls.' Mem. in Supp. of Summ. J., ECF No. 9-1, at 34.) Consequently, Otay Mesa has filed a complaint that contends that the FWS's designation of the one-acre vernal pool and the surrounding 56 acres of land as protected critical habitat under the ESA was an arbitrary and capricious determination, and was also contrary to law, in violation of the APA. See Otay Mesa Prop., 144 F.Supp.3d at 39.

         On September 30, 2015, this Court denied without prejudice the parties' initial cross-motions for summary judgment. Id. In so ruling, the Court found that Otay Mesa had standing to bring its lawsuit, and that the FWS did not act arbitrarily or capriciously with respect to either the economic analysis underlying the critical habitat designation or its decision not to conduct an analysis of the challenged critical habitat designation under the National Environmental Policy Act, 42 U.S.C §§ 4321-4370. See Id. at 39. This Court further found that it had insufficient information to resolve the parties' dispute about the rationality of the scope of the FWS's critical habitat designation, because the Court could not “determine on the record before it whether the FWS has acted arbitrarily in concluding that 56 acres of land surrounding the one-acre pond is, in fact, watershed” for the pond. Id.; see also id. at 39-40 (explaining that “the portion of the administrative record that was submitted to the Court does not explain how the FWS determined that all of the geographic area that it designated as critical habitat qualifies as such” (emphasis added)). Consequently, the Court ordered the parties to file supplemental briefs that addressed the factual underpinnings for the FWS's designation of 56 acres of land as watershed for the one-acre pond, along with any additional supporting documents from the Administrative Record. (See Suppl. Br. Order, ECF No. 31, at 1-2.)

         B. Current Proceedings

         Defendants and Otay Mesa filed the requested supplemental briefs and renewed their cross-motions for summary judgment. (See Defs.' Suppl. Br., ECF No. 33; Pls.' Resp. to Defs.' Suppl. Br. & Pls.' Renewed Mot. for Summ. J., ECF No. 37.) The Court heard oral argument on the parties' renewed motions (Min. Entry of Mar. 15, 2017), and during the hearing, Defendants' counsel explained that the FWS's methodology for determining the scope of the watershed-and thus the area that the FWS had deemed “occupied” or, alternatively, “unoccupied” critical habitat for the Riverside fairy shrimp-consisted of mapping the geographic location of the “primary constituent elements” (“PCEs”) that the FWS had identified for the endangered species at issue (which, as noted, is itself located solely in the one-acre stock pond), and then drawing the boundary of the critical habitat around those areas abutting the stock pond where all three PCEs exist, without additional analysis. (See Mot. Hr'g Tr., 47:4-48:24, Mar. 15, 2017.)[5]

         As a result, it became apparent that the parties' dispute about whether the FWS's designation of the 56 adjacent acres as critical habitat violates the APA is, at bottom, a disagreement over whether the FWS's method of defining the scope of the territory that is “occupied” by the endangered species at issue is consistent with the ESA, which in turn implicates the issue of whether the area around the stock pond qualifies as “occupied” critical habitat under the statute-an issue that this Court did not reach in the context of its earlier summary judgment ruling. See Otay Mesa Prop., 144 F.Supp.3d at 59-61 (explaining that “the FWS [had] decided that the Riverside Fairy shrimp ‘occupied' the stock pond and [also] the watershed area surrounding the stock pond at the time of listing, ” and had determined, in the alternative, that “Subunit 5c qualified as ‘unoccupied' critical habit[, ]” but finding that, regardless, the agency had the statutory authority to make that determination). In other words, the Court discovered that, far from being immaterial, the question of whether the geographic area surrounding the stock pond constitutes “occupied” or “unoccupied” terrain under the ESA was crucial to resolving the merits of Otay Mesa's remaining APA claim. As a result, the Court ordered the parties to file a second round of supplemental briefs, this time addressing (1) whether the “occupied” or “unoccupied” prong of the statutory critical habitat definition applies to the habitat at issue here; (2) whether the ESA authorizes the FWS to delineate the protected critical habitat under either prong by merely mapping the identified PCEs in the general area; and (3) whether this Court should give any weight to the Ninth Circuit's decision in a case that agency counsel raised and relied upon during the hearing-Alaska Oil and Gas Association v. Jewell, 815 F.3d 544 (9th Cir. 2016)-which held that the FWS could designate an area that contains the PCEs for a species as critical habitat without establishing that the species currently uses that area, see Id. at 555-56. (See 2nd Order for Suppl. Briefing, ECF No. 38.)

         The parties filed their second supplemental briefs on May 10, 2017, and May 31, 2017, respectively, and responses followed. (See Defs.' 2d Suppl. Br., ECF No. 41; Pls.' 2d Suppl. Br., ECF No. 42; Defs.' Resp. to Pls.' 2d Suppl. Br., ECF No. 43; Pls.' Resp. to Defs.' 2d Suppl. Br., ECF No. 44.) In its brief, Otay Mesa insists that the “occupied” prong of the critical habitat provision is inapposite because the shrimp are indisputably only present in the pond and not anywhere else on the 56 surrounding acres. (See Pls.' 2d Suppl. Br. at 8.) Otay Mesa argues further that the FWS erred in delineating all 56 acres as “unoccupied” critical habitat because the presence of PCEs, standing alone, is insufficient to support an unoccupied critical habitat designation (id. at 8-17); instead, according to Otay Mesa, the unoccupied critical habitat standards required the FWS to “determine how much, if any, of the 56 acres was necessary to water the stock pond[, ]” and to make a specific finding that “this area was essential to the conservation of the species[, ]” given “that existing occupied habitat was inadequate” (id. at 14). Otay Mesa also maintains that this Court should not afford any weight to the Ninth Circuit's decision in Alaska Oil, because that case dealt with the designation of occupied critical habitat for a species that was highly mobile, while this case concerns unoccupied critical habitat for an essentially immobile species. (Id. at 17.)

         For their part, Defendants insist that the FWS “relied primarily” on the occupied prong of the ESA's critical habitat definition, and that the prescriptions of that provision apply to the instant circumstances. (Defs.' 2d Suppl. Br. at 7.) In Defendants' view, the Riverside fairy shrimp species “occupies” the stock pond and also all of the surrounding acres (despite the actual confinement of the animals themselves to the pond) within the plain meaning of the statute, and furthermore Alaska Oil teaches that it is permissible for the FWS to rely solely on the presence of the PCEs on the acres surrounding the pond, without studying runoff or conducting any other kind of hydrologic analysis, in order to delineate “the specific areas within the geographical area occupied by the species[, ]” 16 U.S.C. § 1532(5)(A)(i). (See Defs.' 2d Suppl. Br. at 7-20.) Defendants further argue that the FWS properly designated the stock pond and the 56 surrounding acres as unoccupied critical habitat in the alternative, see 16 U.S.C. § 1532(5)(A)(ii) (authorizing designation of areas “outside the geographical area occupied by the species” if the Secretary determines such areas “are essential for the conservation of the species”), because the general loss of vernal pool habitat in this area of San Diego County necessitates the preservation of this known vernal pool, and because the Riverside fairy shrimp in this particular pool have unique genetics. (See Defs.' 2d Suppl. Br. at 11-16.) Defendants also maintain that, since no hydrologic studies were readily available at the time of the designation and the ESA only requires that the agency rely on the best available data, the FWS did not need to conduct any hydrologic analysis to support this unoccupied critical habitat designation. (See Id. at 16-19.)

         With the two rounds of supplemental briefing complete, the parties' renewed motions for summary judgment are now ripe for this Court's consideration.


         A. Summary Judgment in APA Cases

         Summary judgment is the appropriate means for determining, as a matter of law, if “agency action is supported by the administrative record and is otherwise consistent with the APA standard of review.” Hill Dermaceuticals, Inc. v. FDA, No. 11-1950, 2012 WL 5914516, at *7 (D.D.C. May 18, 2012) (citing Richard v. INS, 554 F.2d 1173, 1177 & n.28 (D.C. Cir. 1977)). While the ordinary summary judgment standard is laid out in Federal Rule of Civil Procedure 56, “it is well established that, in cases involving review of a final agency action[, ] . . . the standard set forth in [Rule 56] does not apply because of the limited role of [the] court in reviewing the administrative record.” Otsuka Pharm. Co., Ltd. v. Burwell, 302 F.Supp.3d 375, 389 (D.D.C. 2016), aff'd sub nom. Otsuka Pharm. Co. v. Price, 869 F.3d 987 (D.C. Cir. 2017) (alterations in original) (internal quotation marks and citation omitted). In this context, the function of the agency is “to resolve factual issues to arrive at a decision that is supported by the administrative record, whereas ‘the function of the district court is to determine whether or not as a matter of law the evidence in the administrative record permitted the agency to make the decision it did.'” Stuttering Found. of Am. v. Springer, 498 F.Supp.2d 203, 207 (D.D.C. 2007) (quoting Occidental Eng'g Co. v. INS, 753 F.2d 766, 769 (9th Cir. 1985)). In other words, “the district judge sits as an appellate tribunal[, ]” Am. Bioscience, Inc. v. Thompson, 269 F.3d 1077, 1083 (D.C. Cir. 2001), and “[t]he entire case on review is a question of law, and only a question of law[, ]” Marshall Cnty. Health Care Auth. v. Shalala, 988 F.2d 1221, 1226 (D.C. Cir. 1993); see also Cognitive Prof'l Servs. Inc. v. U.S. Small Bus. Admin., 254 F.Supp.3d 22, 32 (D.D.C. 2017) (making clear that the core legal question is “whether the agency acted arbitrarily or capriciously, or in violation of another [APA] standard”) (alteration in original) (internal quotation marks and citation omitted)).

         Notably, “[w]hile the court's review [on summary judgment] must be ‘searching and careful, the ultimate standard of review is a narrow one' and the court ‘is not empowered to substitute its judgment for that of the agency.'” Cape Hatteras Access Pres. All. v. U.S. Dep't of Interior, 731 F.Supp.2d 15, 21 (D.D.C. 2010) (quoting Citizens to Preserve Overton Park v. Volpe, 401 U.S. 402, 416 (1971)). Moreover, in cases involving complex scientific determinations and technical expertise, the Supreme Court has directed that the district court “generally be at its most deferential.” Baltimore Gas & Electric Co. v. Nat. Res. Def. Council, Inc., 462 U.S. 87, 103 (1983); see also Marsh v. Ore. Nat. Res. Council, 490 U.S. 360, 377 (1989) (noting that where a determination “requires a high level of technical expertise, [a court] must defer to the informed discretion of the responsible federal agencies” (internal quotation marks and citation omitted)). However, “[t]his deferential standard cannot permit courts [] merely to rubber stamp agency actions, nor be used to shield the agency's decision from undergoing a thorough, probing, in-depth review.” Guindon v. Pritzker, 31 F.Supp.3d 169, 186 (D.D.C. 2014) (internal quotation marks and citation omitted); see also Otay Mesa Prop., L.P. v. U.S. Dep't of Interior, 646 F.3d 914, 916 (D.C. Cir. 2011) (“Substantial evidence is a deferential standard. But deference is not abdication.”); Huff v. Vilsak, 195 F.Supp.3d 343, 352 (D.D.C. 2016) (noting that, even under the deferential standard of review, “courts retain a role, and an important one, in ensuring that agencies have engaged in reasoned decisionmaking, which means the court must ensure that the decision was based on a consideration of the relevant factors and determine whether there has been a clear error of judgment” (internal quotation marks, brackets, and citation omitted)).

         B. The Chevron Framework

         When assessing the FWS's interpretation of the Endangered Species Act-a statute that that agency administers-this Court is required to apply the familiar two-step framework laid out in Chevron, USA., Inc. v. National Resources Defense Council, Inc., 467 U.S. 837 (1984). See Ass'n of Private Sector Colls. & Univs. v. Duncan, 681 F.3d 427, 441 (D.C .Cir. 2012). Step One directs that, if “Congress has directly spoken to the precise question at issue, ” the Court must give effect to that “unambiguously expressed intent[.]” Nat'l Treasury Emps. Union v. Fed. Labor Relations Auth., 414 F.3d 50, 57 (D.C. Cir. 2005) (internal quotation marks omitted) (quoting Chevron, 467 U.S. at 842-43). In conducting the requisite analysis, the pertinent question is not whether the statutory terms at issue are “‘in some abstract sense, ambiguous, but rather whether, read in context and using the traditional tools of statutory construction,' the terms unambiguously mean what the party claiming victory at Step One says they mean.” Otsuka, 302 F.Supp.3d at 389 (quoting Cal. Indep. Sys. Operator Corp. v. FERC, 372 F.3d 395, 400 (D.C. Cir. 2004)); see also Sierra Club v. EPA, 551 F.3d 1019, 1027 (D.C. Cir. 2008) (explaining that the tools used to evaluate statutory provisions include an examination of the provision in its full context and, as appropriate, references to legislative history).

         If the statute at issue “can be read more than one way” and is thus properly deemed ambiguous, AFL-CIO v. FEC, 333 F.3d 168, 173 (D.C. Cir. 2003) (citation omitted), or if the statute is “silent” regarding the relevant question, Van Hollen, Jr. v. FEC, 811 F.3d 486, 495 (D.C. Cir. 2016), the Court must proceed to Step Two, wherein such ambiguity or silence is generally considered to be “‘an implicit delegation from Congress to the agency to fill in the statutory gaps[, ]'” id. at 495 (quoting FDA v. Brown & Williamson Tobacco Corp., 529 U.S. 120, 159 (2000) (emphasis omitted)). Accordingly, the nature of judicial review at Step Two is “highly deferential[, ]” Vill. of Barrington, Ill. v. Surface Transp. Bd., 636 F.3d 650, 667 (D.C. Cir. 2011), meaning that the court must “accept the agency's [reasonable] construction of the statute, even if the agency's reading differs from what the court believes is the best statutory interpretation[, ]” Nat'l Cable & Telecomms. Ass'n v. Brand X Internet Servs., 545 U.S. 967, 980 (2005) (citation omitted); see also Peter Pan Bus Lines, Inc. v. Fed. Motor Carrier Safety Admin., 471 F.3d 1350, 1353 (D.C. Cir. 2006) (noting that, at Chevron Step Two, the court must defer to the agency's interpretation of a statute if it is “based on a permissible construction of the statute”) (internal quotation marks and citation omitted). Significantly for present purposes, although “[a]n agency's interpretation of its enabling statute and its own regulations is usually entitled to deference, . . . there are limits on when and how far a court should defer to the agency[, and a court] must overturn agency action and interpretation inconsistent with the regulations and statutes themselves.” Shepherd v. Merit Sys. Prot. Bd., 652 F.2d 1040, 1043 (D.C. Cir. 1981).

         C. The Endangered Species Act

         As explained fully in this Court's prior opinion in this case, “Congress enacted the Endangered Species Act in 1973 with the aim of conserving and protecting endangered and threatened species and the ecosystems on which those species depend.” Otay Mesa Prop., 144 F.Supp.3d at 40 (citing 16 U.S.C. § 1531(b)); see also Alaska Oil & Gas Ass'n, 815 F.3d at 550-51 (“The purpose of the ESA is to ensure the recovery of endangered and threatened species, not merely the survival of their existing numbers.”), cert. denied sub nom. Alaska Oil & Gas Ass'n v. Zinke, 137 S.Ct. 2091 (2017), Alaska v. Zinke, 137 S.Ct. 2110 (2017). To accomplish this goal, the Act directs the Secretary of the Interior to list “endangered” and “threatened” species for federal protection, 16 U.S.C. §§ 1532(6), (20), and also to designate geographical areas as “critical habitat” for listed species, where appropriate, id. § 1533(a)(3)(A)(i). “The Department of the Interior administers the ESA for non-marine species and has delegated to the Fish and Wildlife Service (an agency within the Interior Department) the authority to list such species as ‘endangered' or ‘threatened' through rulemaking.” Otay Mesa Prop., 144 F.Supp.3d at 40 (citing 50 C.F.R. § 402.01 (2015)). The FWS is also authorized to make the “critical habitat” determination. See 50 C.F.R. § 424.10. When the agency undertakes to list a species under the ESA or make a critical habitat designation, the ESA requires the agency to rely on the best available scientific data. See 16 U.S.C. § 1533(b).

         As relevant here, the ESA delineates two types of critical habitat for endangered species:

(i) the specific areas within the geographical area occupied by the species, at the time it is listed [as endangered or threatened under the statute], on which are found those physical or biological features (I) essential to the conservation of the species and (II) which ...

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