sboxermanFeatured Expert Column – Environmental Law and Policy

by Samuel B. Boxerman, Sidley Austin LLP, with Joel F. Visser, an associate with the firm.

On September 1, 2015 a federal district court in Texas vacated a United States Fish and Wildlife Service (“FWS”) rule listing the lesser prairie chicken as threatened under the Endangered Species Act (“ESA”). In Permian Basin Petroleum Association v. Department of the Interior, the court found FWS failed to follow its own procedures for evaluating the effects of a voluntary state-lead program designed to protect the species. This decision could serve to limit future ESA listing decisions when state-lead conservation efforts designed to protect species are in place.

The federal government has been considering whether the lesser prairie chicken (a member of the grouse family) should be listed since 1995. The process has drawn substantial attention pitting environmental NGOs asserting the species’ needed ESA protection against landowners concerned with restrictions on their rights to make beneficial use of land across several western states. Oil and gas interests, among others, have been extremely concerned with a potential listing, as the bird’s habitat includes areas with active oil and gas exploration.

In recent years, Texas, New Mexico, Oklahoma, Kansas, and Colorado had developed a voluntary program that sought to protect the lesser prairie chicken without the restrictions that would result from a federal ESA listing. The program provides financial incentives for private landowners to maintain and enhance lesser-prairie-chicken habitat within the bird’s historic range. The incentives are funded by fees contributed by participating industry members, which are used to provide incentives for landowners to set aside land and improve and preserve habitat.

The states had urged the federal government to defer action—but facing a deadline arising out of a settlement of litigation with an environmental group, FWS issued a final rule on April 16, 2014 listing the lesser prairie chicken as a threatened species under the ESA. At the time of the listing decision, the states’ program was in its initial stages and enrollment was still limited. To date, however, the program has collected more than $42 million in fees and enrolled nearly 100,000 acres through landowner contracts.

Lesser Prairie Chicken

Lesser Prairie Chicken

The Permian Basin Petroleum Association and four New Mexico counties challenged the rule, alleging FWS had failed to account for the state-led voluntary program. When making listing determinations under the ESA, FWS is required to “tak[e] into account those efforts, if any, being made by any State … to protect such species.” 16 U.S.C. § 1533(b)(1)(A). To implement that requirement, FWS adopted a Policy for Evaluation of Conservation Efforts When Making Listing Decisions (“PECE”). The PECE directs FWS to consider conservation efforts that have not yet been fully implemented by evaluating the likelihood the conservation effort will be implemented and prove effective in protecting the species at issue. The regulations provide nine criteria for determining whether a program will be implemented and six criteria to determine whether the program will be effective. The court held FWS had failed to fully apply these criteria when making its listing decision.

As an initial matter, the court determined FWS was entitled to only limited deference in its interpretation of its obligations under the PECE. Because the PECE is neither a statute nor an agency regulation issued after notice-and-comment rulemaking, the court found neither Chevron nor Auer deference was warranted and instead evaluated FWS’s actions under the Skidmore standard, which affords no substantial deference to FWS’s conclusions.

Applying that standard, the court held the agency “failed to conduct the ‘rigorous’ analysis” of the states’ program required by the PECE and failed to consider “important aspects of the problem, rendering its conclusions therein arbitrary and capricious.” First, the court found FWS’s entire analysis was tainted by the improper assumption that industry’s incentive to enroll in the voluntary program would dissolve if FWS failed to list the species as threatened. The court found this assumption was inconsistent with the agency’s prior position in the PECE that incorporating voluntary programs into an ESA analysis would increase participation and that FWS had offered no reasoned basis to change its position. The court further found FWS’s improper assumption “replaced and prevented any meaningful analysis” of “whether the conservation effort will be implemented.”

In addition, the court faulted FWS’s primary focus in its PECE analysis on the fact that few landowners had enrolled in the program at the time of FWS’s evaluation. The court explained that the entire purpose of the PECE analysis was to project implementation over time for newly developed programs, and that FWS cannot focus solely on existing levels of participation. Instead, the court held that FWS must project future participation based on, among other things, participation in other, similar conservation efforts and the types of incentives the program has to encourage participation. The court also found FWS failed to consider in its analysis the most recent participation numbers it received just before publishing its decision.

As a result of these failings, the court held FWS had not fully evaluated the parties who would participate in the program over time, the projected funding levels for the program, and the level of commitment of existing and projected participants. The court also criticized FWS’s rigid application of certain criteria, finding the PECE was intended to provide flexibility to encourage voluntary conservation programs. Given these deficiencies with respect to implementation, the court likewise found that FWS’s assessment of program effectiveness was tainted.

If upheld, the court’s vacatur of the lesser-prairie-chicken ESA listing could have important implications for future listing decisions and for state voluntary conservation programs. By vacating FWS’s decision making process here, the court has raised the bar significantly—FWS cannot give short shrift to state voluntary programs and must justify its conclusions regarding future implementation. Indeed, by confirming that programs in their nascent stages must be considered with care, the decision gives states considerably more flexibility in determining when and how to develop conservation plans to protect habitat in lieu of listing a species under the ESA. It also could increase interest in voluntary conservation programs among states and private landowners.