Weyerhaeuser Co. v. United States Fish and Wildlife Serv.

Citations: 139 S. Ct. 361; 202 L. Ed. 2d 269; 2018 U.S. LEXIS 6932Docket: 17-71

Court: Supreme Court of the United States; November 27, 2018; Federal Supreme Court; Federal Appellate Court

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In Weyerhaeuser Co. v. United States Fish and Wildlife Service, the Supreme Court addressed the designation of critical habitat for the endangered dusky gopher frog under the Endangered Species Act. The Fish and Wildlife Service proposed to designate a site in St. Tammany Parish, Louisiana, known as "Unit 1," as critical habitat, despite it being a commercial timber plantation where the frog had not been seen for decades. The Service argued that Unit 1 was essential for conservation due to its high-quality breeding ponds.

A report commissioned by the Service indicated that designating Unit 1 could restrict future development and result in significant economic loss for the landowners, estimated at $33.9 million. Nonetheless, the Service concluded that the conservation benefits outweighed these costs and proceeded with the designation.

Weyerhaeuser and other landowners contested the designation in court, claiming that Unit 1's closed-canopy environment was unsuitable for the frog, which prefers open-canopy forests. The District Court upheld the designation and supported the Service’s economic methodology, rejecting the landowners' arguments regarding exclusion from critical habitat. The Fifth Circuit affirmed, stating that the definition of "critical habitat" does not require the area to be currently habitable and that the Service's decision regarding exclusion was within its discretionary authority.

The Supreme Court held that critical habitat designation under §1533(a)(3)(A)(i) requires the area to be habitat for the species. This provision mandates that the Secretary must designate critical habitat only if it qualifies as habitat for the endangered species, thereby clarifying the limitations on the designation authority.

The Secretary has the authority to define critical habitat, but the broader category of habitat remains undefined. The Service acknowledges that critical habitat must be habitat but contends that it can include areas requiring modification for species sustainability, contrary to Weyerhaeuser's argument that habitat must support current survival. The Court of Appeals is tasked with interpreting "habitat" under §1533(a)(3)(A)(i) and evaluating the Service's findings regarding Unit 1. 

The Secretary's decision not to exclude an area from critical habitat under §1533(b)(2) is subject to judicial review, as the Administrative Procedure Act presumes agency actions are reviewable. The Service posits that this presumption is overcome because the decision is allegedly committed to agency discretion. However, §1533(b)(2) establishes a process for evaluating the impact of critical habitat designation, requiring the Secretary to consider economic and other impacts and allowing exclusion if the benefits of exclusion outweigh those of designation. The discretionary nature of the Secretary's decision does not eliminate judicial standards for reviewing the decision-making process. Weyerhaeuser's claims regarding inadequate consideration of statutory factors are typical grounds for judicial review of agency discretion. The Court of Appeals should assess whether the Service's decision regarding Unit 1 was arbitrary, capricious, or an abuse of discretion. The case has been vacated and remanded for further proceedings.

Weyerhaeuser Company challenged the designation of their property as critical habitat for the endangered dusky gopher frog under the Endangered Species Act (ESA). The landowners argued that their land should not be classified as critical habitat because it was not currently suitable for the frog's survival. The lower court ruled that the ESA did not impose such a limitation on critical habitat designations. Additionally, the ESA allows the Secretary of the Interior to exclude areas from critical habitat if the benefits of exclusion outweigh those of designation. The landowners contested the Secretary's decision not to exclude their land, but the court determined that the Secretary's actions were not subject to judicial review. The Supreme Court granted certiorari to examine both issues. The dusky gopher frog, which has suffered severe habitat loss, particularly due to urban development and agriculture, was listed as endangered in 2001, with its habitat historically comprising longleaf pine forests in the southeastern U.S. The designation of critical habitat requires the Secretary to include areas essential for the conservation of the species, as mandated by the ESA.

Critical habitat designation under the Endangered Species Act (ESA) involves identifying specific areas within and outside the geographical range of a species that contain essential physical or biological features for its conservation. Before designating critical habitat, the Secretary must consider the economic and other relevant impacts, and may exclude areas if the benefits of exclusion outweigh the benefits of designation, unless such exclusion would lead to the species' extinction. Critical habitat designations do not limit private landowner rights but impose conditions on federal actions that could affect the designated areas. Federal agencies must consult with the Secretary to ensure their actions do not adversely affect critical habitats. If an agency action is likely to harm critical habitat, it must either terminate the action, adopt an alternative, or seek an exemption.

The U.S. Fish and Wildlife Service initially did not designate critical habitat for the dusky gopher frog due to resource constraints. Following litigation, it proposed critical habitat for four areas with existing frog populations, identifying essential features like ephemeral ponds and open-canopy forests necessary for the species' conservation. However, the Service concluded that designating only these four sites would be insufficient for the frog's long-term survival, as local events could threaten the entire species.

The Service proposed designating a 1,544-acre site in St. Tammany Parish, Louisiana, known as "Unit 1," as unoccupied critical habitat for the dusky gopher frog, the last known population of which was documented there in 1965. Although the site has been largely converted to a closed-canopy timber plantation, it contains five high-quality ephemeral ponds, and the Service determined that an open-canopy forest could be restored with reasonable effort. Despite the absence of open-canopy forests and the frogs themselves, the Service concluded that the site met the criteria for unoccupied critical habitat due to its essential breeding ponds and its separation from existing frog populations.

Following this proposal, the Service commissioned a report assessing the economic impacts of the designation, particularly for landowners, including the Weyerhaeuser Company, who own and lease parts of Unit 1. While the designation does not directly affect timber operations, it complicates development plans in the fast-growing area. Developers would likely need to obtain Clean Water Act permits, which would require consultation with the Service under the Endangered Species Act (ESA). The consultation could lead to three possible outcomes regarding wetland development: no permitting requirements, partial denial of permits affecting 60% of the site (valued at $20.4 million), or complete denial of permits, resulting in a loss of $33.9 million.

The Service determined that these potential economic costs were not disproportionate to the conservation benefits, thus deciding not to exclude Unit 1 from critical habitat designation. Weyerhaeuser and the family landowners sought to challenge this designation in Federal District Court, arguing that the frog could not survive without converting the surrounding timber plantation to an open-canopy forest. However, the District Court upheld the designation, affirming that Unit 1 qualified as unoccupied critical habitat, as the Service deemed it essential for the species' conservation.

Weyerhaeuser contested the Service’s decision to include Unit 1 in the dusky gopher frog’s critical habitat, arguing that the Service did not sufficiently balance the benefits of this designation against its economic impacts. Weyerhaeuser claimed the Service employed an unreasonable methodology for assessing economic impacts and overlooked several cost categories. The court upheld the Service’s methodology and dismissed Weyerhaeuser’s exclusion challenge. The Fifth Circuit affirmed this ruling, stating that the definition of critical habitat does not require a "habitability" standard and that the decision to exclude Unit 1 was beyond judicial review as it fell within the agency's discretion. Judge Owen dissented, asserting that Unit 1 could not be deemed essential for species conservation due to the absence of necessary open-canopy forest. The Fifth Circuit denied a rehearing en banc, with dissenting judges arguing that critical habitat must inherently be habitat and that the Service's exclusion decision should be reviewable for abuse of discretion. The Supreme Court granted certiorari to address two questions: whether "critical habitat" must also be habitat and whether courts can review an agency's decision regarding economic impacts on critical habitat designations. The analysis initiated with the definition of "critical habitat," emphasizing that it must be a subset of "habitat" vital for endangered species conservation. Additionally, the Court addressed the standing of Weyerhaeuser to challenge the designation, agreeing with lower courts that the decline in land value due to the designation constituted a concrete injury under Article III.

Only the habitat of an endangered species qualifies for designation as critical habitat. Even if an area is deemed essential for the species' conservation, it cannot be designated as critical habitat unless it also qualifies as habitat. The Center for Biological Diversity asserts that the statutory definition of critical habitat is self-contained and does not necessitate further interpretation of "habitat," which remains undefined. However, the definition specifies critical habitat as areas occupied by the species that contain essential physical or biological features for conservation, alongside unoccupied areas deemed essential by the Secretary. This definition specifies what constitutes critical habitat but does not define habitat broadly.

The Service acknowledges that critical habitat must be habitat but argues that habitat may include areas needing modifications to sustain a population. Weyerhaeuser contends that habitat cannot include areas where the species cannot currently survive, while the Service disputes this, maintaining that the frog could potentially survive in Unit 1. The Court of Appeals found that critical habitat designations are not restricted to areas qualifying as habitat, noting that the Endangered Species Act (ESA) and its regulations do not impose a habitability requirement. Consequently, the court did not interpret "habitat" in this context or evaluate the Service’s findings regarding Unit 1. The judgment was vacated and remanded to the Court of Appeals for further consideration.

Weyerhaeuser also argues that, even if Unit 1 is critical habitat for the dusky gopher frog, it should have been excluded under Section 4(b)(2) of the ESA, which mandates that the Secretary consider the economic impacts of designating critical habitat and allows for exclusion if the benefits outweigh the costs.

An area is eligible for critical habitat designation under Section 4(a)(3)(A)(i) of the Endangered Species Act (ESA) only if it constitutes habitat for the species in question. Thus, the argument from landowners regarding the necessity of land being "essential for the conservation of the species" is deemed unnecessary. The U.S. Fish and Wildlife Service (Service) commissioned a report to evaluate the economic impacts of proposed critical habitat designations, concluding that the costs were not disproportionate to the conservation benefits, leading to a decision not to exclude any areas. Weyerhaeuser contends this conclusion was flawed, arguing that the Service improperly compared the costs of Unit 1 against the benefits of all proposed critical habitats rather than solely against Unit 1's benefits. Additionally, Weyerhaeuser claims the Service failed to account for specific economic impacts, such as the costs of replacing timber and lost tax revenue for St. Tammany Parish. The Court of Appeals did not review Weyerhaeuser's claim, believing the decision not to exclude areas was unreviewable. The Administrative Procedure Act provides a presumption of judicial review unless a statute explicitly precludes it or the action is committed to agency discretion. The Service asserts that Section 4(b)(2) of the ESA grants the Secretary discretion regarding exclusions from critical habitat, which the courts accepted. However, this creates a tension with the requirement that courts must intervene when agency actions are arbitrary or capricious, necessitating a narrow interpretation of the unreviewable actions exception to allow for judicial review where possible.

Skepticism exists regarding the Service’s interpretation of the §701(a)(2) exception, as previous applications typically involved unreviewable agency decisions, such as fund allocations or final actions. In contrast, the current case pertains to a common situation where federal courts routinely assess agency orders affecting private rights. Section 4(b)(2) mandates that the Secretary must consider economic impacts and other relevant factors before designating critical habitat, with the authority to exclude areas if the benefits of exclusion surpass those of designation, unless such exclusion risks species extinction. The precedent set in Bennett v. Spear confirms that this process requires a careful evaluation of impacts and allows for judicial review of the Secretary's decision for abuse of discretion. The Service argues that its interpretation of the Secretary's discretion renders decisions not to exclude entirely unreviewable, relying on the discretionary language of the statute. However, this interpretation does not exempt the Secretary from the procedural obligations set forth in Section 4(b)(2), which necessitates consideration of economic and other impacts in exclusion decisions.

Weyerhaeuser argues that the agency failed to adequately consider all relevant statutory factors in its decision-making process. Specifically, it claims the Service overlooked certain costs and improperly combined the benefits of designating Unit 1 with those of the entire proposed critical habitat. Federal courts typically evaluate such claims to determine if an agency's decision constitutes an abuse of discretion under §706(2)(A). The assessment involves examining whether the agency considered relevant factors and if there was a clear error in judgment. Section 4(b)(2) mandates the Secretary to evaluate economic impacts and benefits before excluding areas from critical habitat designation. The statute provides a meaningful standard for judicial review of the Secretary's discretion, contrary to the Court of Appeals' conclusion that the decisions were unreviewable. As a result, the Court of Appeals did not assess whether the Service's evaluation of costs and benefits was flawed, leading to an arbitrary or capricious decision regarding Unit 1. Consequently, the judgment of the Fifth Circuit is vacated, and the case is remanded for further consideration. Justice Kavanaugh did not participate in this decision.