High Court Must Review ESA Decision that Endangers Ability to Appeal Agency Actions

st_tammany_navA group of Louisiana landowners is asking the Supreme Court to review a US Court of Appeals for the Fifth Circuit decision that dramatically expands the scope of the Endangered Species Act (ESA).  Weyerhaeuser Co. and Markle Interests, L.L.C.. v. U.S. Fish and Wildlife Service.  Their concerns are well-justified; the appeals court upheld land-use restrictions imposed by the Fish and Wildlife Service (FWS) for the purpose of protecting an endangered species of frog—even though the frog does not exist in Louisiana and could not live on the Petitioners’ land unless they substantially modified it.

But Supreme Court review is warranted for an additional and perhaps more important reason: the Fifth Circuit agreed with FWS that the Service’s refusal to undertake a cost-benefit analysis of its actions was not subject to judicial review.  As Judge Edith Jones stated in dissent, that decision plays havoc with administrative law and significantly undercuts the “strong presumption” that the actions of federal administrative agencies are subject to judicial review.

Worse still, the appeals court established a double-standard.  It permits environmental groups to seek judicial review when FWS invokes cost considerations as a reason not to impose land-use restrictions, but it denies landowners the right to go to court when FWS reaches the opposite conclusion.  That denial is particularly troubling, given that FWS’s own studies indicated that its land-use restrictions could cost landowners up to $34 million while providing no discernable benefit to the endangered frog.

FWS’s Designation of “Critical Habitat”

Once an animal species has been listed as “endangered,” the ESA generally requires FWS to designate “critical habitat” for the species.  Any property so designated becomes subject to significant land-use restrictions, designed to prevent land uses inconsistent with conservation of the species.  While designations tend to focus on land currently occupied by the species, the ESA also permits unoccupied land to be designated if doing so is “essential” for the conservation of the species.

The current range of the dusky gopher frog, which FWS classified as endangered in 2001, is limited to several counties in southern Mississippi.  FWS determined that the frog’s future looked dim unless steps were taken to expand the frog’s range, so it decided to look for land outside Mississippi to include within the designated critical habitat.  It hit upon 1,400 acres of privately owned woodland located more than 50 miles away in Louisiana.

Landowners Object to Designation

The owners of this very valuable land were not pleased.  They pointed out that: (1) according to FWS’s own studies, the designation would reduce property values by as much as $34 million; (2) FWS has no right to introduce a species without the landowner’s permission, and they did not intend to grant permission; and (3) FWS conceded that the frog could not survive on the designated land unless significant modifications were made to the land, and they did not intend to make any modifications.  But FWS nonetheless persisted, apparently reasoning that the landowners would eventually cave in and come to the negotiating table (and allow introduction of the frog) once they realized that FWS held a veto power over virtually all development of the wooded acreage.

Lower Courts Rule Against the Landowners

The landowners challenged the critical-habitat designation in federal court; their principal claim was that the designation violated numerous provisions of the Endangered Species Act.  A Fifth Circuit three-judge panel rejected those claims by a 2-1 vote, and the court denied rehearing en banc—with Judge Jones (joined by five other judges) dissenting from the denial.

In seeking Supreme Court review, the landowners argue that the ESA bars FWS from designating uninhabited land as critical habitat unless the endangered species could actually survive on the land in its current, unmodified condition.  The six dissenters agreed with that claim, which draws strong support from the ESA=s statutory language.

In its brief urging the Supreme Court to grant review, Washington Legal Foundation focused on another one of the landowners’ claims: that the ESA prohibits FWS from designating land as critical habitat when, as here, the costs to landowners vastly outweigh the benefits that the designation would provide to the endangered species.  Unfortunately, the Fifth Circuit majority refused even to consider that claim, ruling that FWS’s decision not to undertake a cost-benefit analysis was not subject to judicial review.  That no-judicial-review ruling creates a dangerous precedent that urgently requires a response from the Supreme Court.

“Strong Presumption” of Judicial Review

The Supreme Court has long recognized a “strong presumption” that the actions of a federal administrative agency are subject to judicial review.  That presumption is based in part on the Administrative Procedure Act (APA), which expressly creates a right of action to contest any “final agency action for which there is no other adequate remedy in a court.”  The APA recognizes one very narrow exception to this right: those instances in which a determination is “committed to agency discretion by law.”  The Fifth Circuit lacked any statutory basis for invoking that exception to conclude that the ESA grants FWS unreviewable discretion in deciding whether cost-benefit considerations warrant the exclusion of particular land from a critical-habitat designation.

The Fifth Circuit supported its non-reviewability determination by pointing to the Supreme Court’s decision in Heckler v. Cheney, in which plaintiffs challenged the failure of the Food and Drug Administration (FDA) to take enforcement action against several States’ use of lethal-injection drugs that had not been approved by FDA as “safe and effective” for human use.

Heckler held that FDA’s non-action was not subject to judicial review under the APA, stating that an agency’s decision not to prosecute or enforce is a decision generally committed to an agency’s absolute discretion.  The Fifth Circuit sought to analogize FWS’s decision not to exclude a particular area from critical habitat to Heckler’s analysis of an agency’s decision not to bring an enforcement action.

That analogy makes little sense.  Any FWS decision not to exclude a particular area from critical habitat is, by definition, a decision to include the area in the designation—thereby subjecting the area to burdensome government regulation.  Nothing in the text of the ESA so much as hints that Congress intended to exempt FWS cost-benefit determinations from judicial review.  Indeed, the “strong presumption” of judicial review is reinforced in this instance by an ESA provision stating that FWS “shall” take “economic impact” into consideration when designating critical habitat for an endangered species.

A Statutory Double-Standard

The Fifth Circuit’s decision to bar judicial review is particularly troubling because the evidence overwhelmingly supports the landowners’ contention that FWS was unable to identify any benefits of the critical-habitat designation that would offset the admittedly severe economic burdens imposed on the landowners.  The inability of FWS’s studies to identify how designation might benefit the dusky gopher frog is unsurprising, given that (barring a change of heart by the landowners) there is no prospect that the frog ever will or could live on the land.

One is left with the distinct impression that the Fifth Circuit held that FWS’s cost-benefit determination was unreviewable because the court realized that the determination was economically indefensible.  But as the Supreme Court recently explained in Michigan v. EPA, “One would not say that it is even rational, never mind appropriate, to impose billions of dollars in economic costs in return for a few dollars in health or environmental benefits.”

Moreover, the Fifth Circuit’s ruling creates a double standard that Congress could not plausibly have intended.  Numerous courts have concluded that when an environmental group objects to an FWS decision to exclude a particular area from a critical-habitat designation on the basis of a cost-benefit determination, the agency decision is subject to judicial review under an abuse-of-discretion standard.  The courts justified judicial review under those circumstances by reasoning that the ESA provides “meaningful standards” against which to judge an FWS decision to exclude the area.  Courts can just as easily utilize those “meaningful standards” to review an FWS decision to include the area.

A Serious Challenge to the Presumption of Reviewability

Supreme Court review of the Fifth Circuit’s decision is particularly warranted because it represents a frontal assault on the presumption of reviewability of agency action.  Numerous federal statutes use language similar to language found in the ESA when describing the authority of agencies to act or not act.  The ESA, like virtually all such statutes, provides FWS and other agencies some degree of discretion in deciding how to carry out their statutory functions.

But if courts follow the lead of the Fifth Circuit and begin interpreting that grant of discretion as a signal that an agency’s decision to undertake significant regulatory action is not reviewable, then little will be left of the “strong presumption” of reviewability.

Also published by Forbes.com on WLF’s contributor page.

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