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Markle Interests, L.L.C. v. United States Fish and Wildlife Service

United States Court of Appeals, Fifth Circuit

February 13, 2017

MARKLE INTERESTS, L.L.C.; P&F LUMBER COMPANY 2000, L.L.C.; PF MONROE PROPERTIES, L.L.C., Plaintiffs - Appellants
v.
UNITED STATES FISH AND WILDLIFE SERVICE; DANIEL M. ASHE, Director of United States Fish & Wildlife Service, in his official capacity; UNITED STATES DEPARTMENT OF INTERIOR; SALLY JEWELL, in her official capacity as Secretary of the Department of Interior, Defendants-Appellees CENTER FOR BIOLOGICAL DIVERSITY; GULF RESTORATION NETWORK, Intervenor Defendants-Appellees WEYERHAEUSER COMPANY, Plaintiff - Appellant
v.
UNITED STATES FISH AND WILDLIFE SERVICE; DANIEL M. ASHE, Director of United States Fish & Wildlife Service, in his official capacity; SALLY JEWELL, in her official capacity as Secretary of the Department of Interior, Defendants-Appellees CENTER FOR BIOLOGICAL DIVERSITY; GULF RESTORATION NETWORK, Intervenor Defendants - Appellees

         Appeals from the United States District Court for the Eastern District of Louisiana, New Orleans

         ON PETITION FOR REHEARING EN BANC (Opinion June 30, 2016, 827 F.3d 452)

          Before REAVLEY, OWEN, and HIGGINSON, Circuit Judges.

          STEPHEN A. HIGGINSON, Circuit Judge.

         The court having been polled at the request of one of its members, and a majority of the judges who are in regular active service and not disqualified not having voted in favor (Fed. R. App. P. 35 and 5th Cir. R. 35), the Petition for Rehearing En Banc is DENIED. In the en banc poll, six judges voted in favor of rehearing (Judges Jolly, Jones, Smith, Clement, Owen, and Elrod) and eight judges voted against rehearing (Chief Judge Stewart and Judges Dennis, Prado, Southwick, Haynes, Graves, Higginson, and Costa). Judge Jones, joined by Judges Jolly, Smith, Clement, Owen, and Elrod, dissents from the court's denial of rehearing en banc, and her dissent is attached.

          JONES, Circuit Judge, joined by JOLLY, SMITH, CLEMENT, OWEN, and ELROD, Circuit Judges, dissenting from Denial of Rehearing En Banc:

         The protagonist in this Endangered Species Act (ESA) case-the dusky gopher frog-is rumored to "play dead, " "cover its eyes, " "peak [sic] at you[, ] and then pretend to be dead again." Markle Interests, L.L.C. v. U.S. Fish & Wildlife Serv., 827 F.3d 452, 458 n.2 (5th Cir. 2016). The panel majority regrettably followed the same strategy in judicial review-play dead, cover their eyes, peek, and play dead again. Even more regrettably, the court refused to rehear this decision en banc. I respectfully dissent.

         The panel opinion, over Judge Owen's cogent dissent, id. at 480-94, approved an unauthorized extension of ESA restrictions to a 1, 500 acre-plus Louisiana land tract that is neither occupied by nor suitable for occupation by nor connected in any way to the "shy frog." The frogs currently live upon or can inhabit eleven other uncontested critical habitat tracts in Mississippi. No conservation benefits accrue to them, but this designation costs the Louisiana landowners $34 million in future development opportunities. Properly construed, the ESA does not authorize this wholly unprecedented regulatory action.

         The panel majority upheld the designation of the tract as "unoccupied critical habitat." See 16 U.S.C. § 1532(5)(A)(ii). Relying on administrative deference, the majority reasoned that (1) the ESA and its implementing regulations have no "habitability requirement"; (2) the (unoccupied) Louisiana land is "essential for the conservation of" the frog even though it contains just one of three features critical to dusky gopher frog habitat; and (3) the Fish and Wildlife Service's decision not to exclude this tract from critical-habitat designation is discretionary and thus not judicially reviewable. I respectfully submit that all of these conclusions are wrong.

         Each issue turns essentially on statutory construction, not on deference to administrative discretion or scientific factfinding. The panel majority opinion obscures the necessity for careful statutory exposition. More troublingly, the majority opinion fails to distinguish relevant precedent that recognized Congress's prescribed limit to designations of unoccupied critical habitat. Further, in declaring the decision not to exclude this tract as beyond judicial review, the panel did not notice Bennett v. Spear, 520 U.S. 154, 117 S.Ct. 1154 (1997), which upholds judicial review for this exact statute, and the panel majority ignored recent Supreme Court precedents that have reined in attempts to prevent judicial review of agency action.

         Despite the majority's disclaimers and attempt to cabin their rationale, the ramifications of this decision for national land use regulation and for judicial review of agency action cannot be underestimated. Fifteen states appear as amici urging rehearing en banc. For reasons explained herewith and by Judge Owen's dissent, I would have granted rehearing en banc.

         I. Background

         The U.S. Fish and Wildlife Service (the Service) is one of two agencies tasked with implementing the ESA. The ESA requires the identification and listing of endangered and threatened species. When a particular species is listed, the Service must designate the species' "critical habitat." In particular, the Service

to the maximum extent prudent and determinable . . . shall . . . designate any habitat of such species which is then considered to be critical habitat . . . and . . . may, from time-to-time thereafter as appropriate, revise such designation.

16 U.S.C. § 1533(a)(3)(A)(i)-(ii).

"Critical habitat" is defined in an earlier provision as:
(i) the specific areas within the geographical area occupied by the species, at the time it is listed in accordance with the provisions of section 1533 of this title, 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; ["occupied critical habitat"] and
(ii) specific areas outside the geographical area occupied by the species at the time it is listed in accordance with the provisions of section 1533 of this title, upon a determination by the Secretary that such areas are essential for the conservation of the species. ["unoccupied critical habitat"]

Id. § 1532(5)(A)(i)-(ii).

         Finally, the Service shall designate critical habitat "after taking into consideration the economic impact, the impact on national security, and any other relevant impact, of specifying any particular area as critical habitat, " but it may exclude any area from such designation if "the benefits of such exclusion outweigh the benefits of specifying such area" as critical habitat. Id. § 1533(b)(2).

         Critical-habitat designation is consequential. "Designation of private property as critical habitat can impose significant costs on landowners because federal agencies may not authorize, fund, or carry out actions that are likely to 'result in the destruction or adverse modification' of critical habitat." Otay Mesa Prop., L.P. v. U.S. Dep't of Interior, 646 F.3d 914, 915 (D.C. Cir. 2011) (quoting 16 U.S.C. § 1536(a)(2)).

         The Service listed the dusky gopher frog as endangered in 2001. Final Rule to List the Mississippi Gopher Frog Distinct Population Segment of Dusky Gopher Frog As Endangered, 66 Fed. Reg. 62, 993 (Dec. 4, 2001). Goaded by a lawsuit, and after notice and comment, the Service published a final rule designating critical habitat in 2012. Designation of Critical Habitat for Dusky Gopher Frog, 77 Fed. Reg. 35, 118 (June 12, 2012) [hereinafter Final Designation]. The critical-habitat designation included units spanning several thousand acres in Mississippi, and, as relevant here, Unit 1-consisting of 1, 544 acres in Louisiana, which are not occupied by the dusky gopher frog. Id. The Service was thus required to show that Unit 1-the "specific area"-is "essential for the conservation of the [dusky gopher frog]." 16 U.S.C. § 1532(5)(A)(ii).

         Unlike all of the Mississippi units, Unit 1 is uninhabitable by the shy frog. Final Designation, 77 Fed. Reg. at 35, 131. Unit 1, in fact, contains only one of the three "physical and biological features" deemed necessary to dusky gopher frog habitat-five ephemeral ponds that could support the frog's reproduction. Id. at 35, 123, 35, 132. Worse still, "[a]pproximately ninety percent of [Unit 1] is currently covered with closed canopy loblolly pine plantations, " and the two remaining features essential for the frog's conservation require an open-canopied longleaf pine ecosystem. Markle Interests, L.L.C. v. U.S. Fish & Wildlife Serv., 827 F.3d 452, 482 (5th Cir. 2016) (Owen, J., dissenting); Final Designation, 77 Fed. Reg. at 35, 131. In the Service's own words, "the surrounding uplands are poor-quality terrestrial habitat for dusky gopher frogs." Final Designation, 77 Fed. Reg. at 35, 133. The Service admitted that without "prescribed burning" and creating a "forested habitat (preferably longleaf pine), " among other measures, Unit 1 is "unsuitable as habitat for dusky gopher frogs." Id. at 35, 129, 35, 132.

         Designating Unit 1 as critical habitat also portends significant economic losses to the landowners in Unit 1. The Service acknowledged that critical-habitat designation could result in economic impacts of up to $34 million, stemming from lost development opportunities. Id. at 35, 140.

         Despite Unit 1's flaws, however, the Service asserted that "the presence of the PCEs [the physical and biological features essential for the frog's conservation] is not a necessary element in [the unoccupied critical habitat] determination." Id. at 35, 123. The Service expressed its "hope to work with the landowners to develop a strategy that will allow them to achieve their objectives for the property and protect the isolated, ephemeral ponds that exist there." Id. But of course, the Service's preferred "tools and programs are voluntary, and actions such as habitat management through prescribed burning, or frog translocations to the site, cannot be implemented without the cooperation and permission of the landowner." Id. In addition, the Service stated that its "economic analysis did not identify any disproportionate costs that are likely to result from the designation." Id. at 35, 141. Therefore, the Service included Unit 1 as unoccupied critical habitat.

         The appellants in this case are landowners of Unit 1 involved in timber operations and commercial development. Their suit alleges that because Unit 1 is uninhabitable by the dusky gopher frog, it is not "essential for the conservation of" the frog as required for unoccupied critical habitat. They also allege that the Service never compared the costs and benefits of designating Unit 1 as critical habitat to support its conclusion that designation would cause no "disproportionate" impacts. The district court granted summary judgment in the Service's favor.

         The panel majority affirmed the district court. The panel majority first rejected any notion that the ESA requires critical habitat to be habitable, characterizing such a requirement as an "extra-textual limit." Markle Interests, 827 F.3d at 468 (majority opinion). Second, turning to whether Unit 1 met the definition of unoccupied critical habitat, the panel majority held that "a scientific consensus as to the presence and rarity of a critical (and difficult to reproduce) feature-the ephemeral ponds-. . . justified [the Service's] finding that Unit 1 was essential for the conservation of the dusky gopher frog." Id. at 471. According to the panel majority, "if the ponds are essential, then Unit 1, which contains the ponds, is essential for the conservation of the dusky gopher frog."[1] Id. at 472 n.20. Finally, the panel majority held that the Service's decision not to exclude Unit 1 from critical habitat on the basis of economic impact was unreviewable because that decision is committed to the Service's discretion. Id. at 473-75. All three holdings are incorrect.

         II. Contrary to the Panel Majority's Holding, the ESA Contains a Clear Habitability Requirement

         No one disputes that the dusky gopher frog cannot inhabit Unit 1. The panel majority find that fact irrelevant, however, because looking only at the statute's definitional section, the ESA does not appear to require that a species actually be able to inhabit its "unoccupied critical habitat." They dismiss habitability as an "extra-textual limit" that cannot be found in either "the text of the ESA or the implementing regulations." Markle Interests, 827 F.3d at 468 (majority opinion). Read in context, however, the ESA makes clear that a species' critical habitat must be a subset of that species' habitat. The ESA's implementing regulations are consistent with this subset arrangement. Further, when Congress got around to clarifying critical-habitat regulation in 1978, the contemporary understanding of critical habitat, shared alike by the most fervent proponents and opponents of wildlife and habitat protection, was that it meant a part of the species' actual habitat.

         Unfortunately, the parties here failed to undertake holistic statutory interpretation. Misled by the parties' briefing, the panel also neglected this effort. Another difficulty is the Ninth Circuit's adoption of a similar, non- habitat interpretation of "unoccupied critical habitat." See Bear Valley Mut. Water Co. v. Jewell, 790 F.3d 977, 993-94 (9th Cir. 2015). Nevertheless, given the significance of this case and the fact that the law is clear beyond dispute, it was our court's duty to "state what the law is."

         A. A Species' Critical Habitat Must Be a Subset of the Species' Habitat

The ESA states that the Service
shall, concurrently with making a determination under paragraph (1) that a species is an endangered species or a threatened species, designate any habitat of such species which is then considered to be critical habitat . . . and . . . may, from time-to-time thereafter as appropriate, revise such designation.

16 U.S.C. § 1533(a)(3)(A)(i)-(ii) (emphases added). Whatever is "critical habitat, " according to this operative provision, must first be "any habitat of such species." The fact that the statutory definition of "critical habitat, " on which the entirety of the panel opinion relies, includes areas within and without those presently "occupied" by the species does not alter the larger fact that all such areas must be within the "habitat of such species."

         This is not the only time Congress drew this distinction. For example, the ESA requires federal agencies to consult with the Service to ensure that their activities are "not likely" to result in various adverse impacts on listed species and their critical habitats. See id. § 1536(a)(2). Such consultation is required, inter alia, where agency activities would be likely to "result in the destruction or adverse modification of habitat of such [endangered or threatened] species which is determined by the Secretary, after consultation as appropriate with affected States, to be critical[.]" Id. (emphases added). There, too, Congress separated out the "critical" portion of the habitat from the general "habitat of such species." In other provisions, Congress reiterated its focus on species' habitats. See, e.g., id. § 1533(a)(1)(A) (listing "curtailment of [a species'] habitat" as a factor in determining whether the species is endangered or threatened); id. § 1537(b)(3) (requiring the Service to encourage foreign persons to develop and carry out "conservation practices designed to enhance such fish or wildlife or plants and their habitat"); id. § 1537a(e)(2)(B) (requiring the Service to cooperate with foreign nations in "identification of those species of birds that migrate between the United States and other contracting parties, and the habitats upon which those species depend").

         The ESA's implementing regulations also distinguish between the designations of "critical habitat" and "habitat."[2] For instance, section 402 begins by explaining its "scope" in terms of critical habitat: it "interprets and implements" section 7 of the ESA, which "imposes requirements upon Federal agencies regarding endangered or threatened species . . . and habitat of such species that has been designated as critical ('critical habitat')." 50 C.F.R. § 402.01(a). Section 402.01 goes on to list what measures are required to guard against "the destruction or adverse modification of ['habitat of such species that has been designated as critical']." Id. The consistent focus on species' "habitat" demonstrates, by its use in these passages, that it is a broader concept than "critical habitat." See, e.g., id. § 402.02 (referring to "actions intended to conserve listed species or their habitat"); id. § 402.05(b) (in the context of emergency consultation, referring to "impacts to endangered or threatened species and their habitats").

         The bottom line is that the ESA's text and implementing regulations unequivocally establish that only "habitat of such species" may be designated as critical habitat. Thus, for example, if white-tailed deer were listed as an endangered species, their habitat would include, at a minimum, virtually all of Texas, but their "critical habitat" would be limited to those portions of their habitat that meet the definition of "critical habitat."

         The Service's first task is accordingly to determine whether the land under consideration for critical-habitat designation is "habitat of such species." "Habitat" is defined as "the place where a plant or animal species naturally lives and grows." Webster's Third New International Dictionary 1017 (1961). See also The Random House Dictionary of the English Language 634 (1969) ("[T]he kind of place that is natural for the life and growth of an animal or plant[.]"); Habitat, Black's Law Dictionary (10th ed. 2014) ("The place where a particular species of animal or plant is normally found."). The question thus becomes whether the land under consideration for critical-habitat designation is where the species at issue naturally lives and grows or would naturally live and grow. Only after the Service has answered that question affirmatively can it assess whether the species' habitat meets the statutory definition of "critical habitat."

         B. The Evolution of the ESA Confirms that Limiting a Species' Critical Habitat to the Species' Habitat Was Intentional

         Congress's limitation of critical-habitat designations to the "habitat of such species" was no accident. This limitation can be traced back to the original text of the ESA, which in 1973 contained only two sentences on section 7 consultation, one of which briefly mentioned critical habitat:

All other Federal departments and agencies shall, in consultation with and with the assistance of the Secretary, utilize their authorities in furtherance of the purposes of this Act by carrying out programs for the conservation of endangered species and threatened species listed pursuant to section 4 of this Act and by taking such action necessary to insure that actions authorized, funded, or carried out by them do not jeopardize the continued existence of such endangered species and threatened species or result in the destruction or modification of ...

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