sboxermanFeatured Expert Column – Environmental Law and Policy

By Samuel B. Boxerman, Sidley Austin LLP with Katharine Falahee Newman, Sidley Austin LLP

A fractured US Court of Appeals for the Fifth Circuit rejected a request seeking rehearing en banc of the court’s decision in Markle Interests, LLC, et al v. U.S. Fish and Wildlife Service, et al. The February 13 decision is the latest in the ongoing legal saga regarding the endangered dusky gopher frog and the designation of private property in Louisiana as “critical habitat”—even though this “shy frog” does not reside on the land and the land does not currently feature the characteristics needed to support the frog.

On June 5, 2016, a majority panel for the Fifth Circuit upheld the district court’s opinion that nearly 1,500 acres of private land in Louisiana (“Unit 1”) is critical habitat for the frog and therefore subject to the requirements of the Endangered Species Act.  In order to be designated as critical habitat, land must meet strict criteria: it must contain physical or biological features essential to conservation of the species. The land in question contains only one of three features considered necessary to support the dusky gopher frog—five ephemeral ponds—and more significantly, is covered with closed canopy pine that make the land uninhabitable by the species. Designation of the land as critical habitat comes at a cost of nearly $34 million in economic impact to the landowners. Despite these facts, the majority held that the land was critical habitat and furthermore, that the US Fish and Wildlife Service’s decision not to carve out Unit 1 from the critical-habitat decisions was judicially unreviewable.

As discussed in a WLF Legal Pulse post last year, many viewed the panel decision as a broad overreach of the ESA’s authority. On February 13, 2017, the full Fifth Circuit voted 8-6 against reconsidering the case, paving the way for it to proceed to the US Supreme Court. The majority did not author a new opinion, but Judge Edith Jones wrote a lengthy opinion on behalf of the six dissenting judges, outlining numerous flaws in the majority’s initial decision. Indeed, as the dissenting opinion colorfully explained:  the dusky frog is known to lay dead, cover its eyes, peak out at you, and then pretend to be dead—and, according to the dissenters, the panel majority “followed the same strategy in judicial review—play dead, cover their eyes, peek, and play dead again.”

First, the dissent outlines that the ESA contains a clear habitability requirement—“[c]ritical habitat is not necessarily all habitat, but its irreducible minimum is that it be habitat.” Judge Jones offers a helpful Venn diagram (see page 13 of the slip opinion) to illustrate this basic concept, which is based on earlier versions of the ESA as well as the clear language of the statute: FWS “shall … designate any habitat of such species which is then considered critical habitat.” 16 U.S.C. § 1533(a)(3)(A)(i)-(ii) (emphasis added).

Because the dusky gopher frog does not now and cannot use the Louisiana land as habitat, the land cannot be considered critical habitat under the ESA. Opinions inconsistent with this language, including a competing Ninth Circuit interpretation in Bear Valley Mutual Water Co. v. Jewell, 790 F.3d 977 (9th Cir. 2015), are simply wrong, according to Judge Jones. The dissent also rejects an objection that a textualist interpretation of the ESA was waived because neither side highlighted it for the panel, noting that accepting such an objection would result in litigants forcing courts to interpret statutory provisions based only on isolated provisions included in their briefs, rather than context.

Second, the dissent found that even if there is no habitability requirement, the majority wrongly applied the critical-habitat standard, based on a review of the statute’s text, drafting history, and other precedent.  According to the dissent, the majority applied a more stringent test for occupied land (requiring the presence of all the relevant physical or biological features) than the unoccupied land, which it accepted as critical habitat on the basis of the presence of a single feature—the ponds. Judge Jones reasons that this leads to absurd results—if an adventurous frog were to “camp out” on Unit 1, making it occupied, it would not qualify as critical habitat based on the majority’s opinion because the land does not contain all the necessary features. The dissent also highlights Ninth Circuit decisions finding is a significant distinction between occupied and unoccupied areas.  Arizona Cattle Growers’ Ass’n v. Salazar, 606 F.3d 1160, 1163 (9th Cir. 2010) (“The statute thus differentiates between ‘occupied’ and ‘unoccupied’ areas, imposing a more onerous procedure on the unoccupied areas.).

The lack of limiting principles on the standards articulated in the majority’s opinion further alarmed the dissenters. There is no check on the Service’s regulation of land if all regulators must present to justify a critical-habitat designation is the presence of a single feature. The three-judge panel concluded that the ESA implementing regulations’ requirement that the Service first find an occupied habitat inadequate before it can consider unoccupied land was an adequate check on overregulation. The dissent notes this was true, but as of March 14, 2016, the inadequacy requirement had been eliminated from the regulations.* Additionally, the panel’s justification that land may eventually be undesignated if conservation is successful does little good to landowners who are currently saddled with critical-habitat designations.

Finally, the dissent rejects the panel’s decision to prohibit judicial review of the Service’s specific decision and justifications not to exclude Unit 1, which the landowners challenged as procedurally deficient and incorrect. Judge Jones notes that the majority’s opinion is in direct conflict with Supreme Court precedent and that the decision is clearly judicially reviewable, if only under a narrow arbitrary-and-capricious standard.

As expected, environmental groups have widely praised the panel’s decision not to overturn the initial ruling in the case, while industry groups and landowner representatives see the dissent as strong support for their positions. The case is not expected to end here, with a petition for writ of certiorari likely in the near future.

*See 81 Fed. Reg. 7414, 7434 (Feb. 11, 2016) (codified at 50 C.F.R. § 424.12 (2016). Those new regulations have been challenged by a group of states. See Alabama v. NMFS, 1:16-cv-00593 (SD Ala.) To date, the new Administration has not weighed in on the litigation, although it offers an opportunity for the resource agencies to reconsider the regulations once new leadership is in place at the agencies.