Introduction
The U.S. Fish and Wildlife Service ("FWS") has made expansive designations of "critical habitat" for wildlife species under the Endangered Species Act ("ESA") in the last three years. For example, FWS designated 4.1 million acres of California private and public land for the California red-legged frog and 406,000 acres for the Alameda whipsnake, and it now proposes the designation of over 1.5 million acres in 36 California counties for vernal pool species. These designations typically encompass large swaths of land far beyond where a species is actually known to exist, often without the scientific and economic analyses required by the ESA.
Increasingly, these wide-ranging critical habitat designations have prompted lawsuits by landowners and other stakeholders leading to judicial invalidation or FWS withdrawal of the designations. The latest "critical habitat" legal setback for FWS occurred on May 9, 2003, when a federal judge threw out its designation of Alameda whipsnake critical habitat. Homebuilders Association of Northern California v. U.S. Fish and Wildlife Service, Memorandum Opinion and Order, CV F 01-5722 (E.D. Cal., May 9, 2003). Before discussing this decision, we will briefly summarize the applicable ESA framework.
The ESA Designation Process
The ESA mandates that FWS designate critical habitat for a species at the same time that it lists the species, unless it can meet two limited exceptions that grant FWS one more year. Critical habitat is defined to be: (1) a subset of the area currently occupied by the species that meets certain criteria, and (2) those areas not currently occupied by the species that are essential for its conservation. FWS' critical habitat analysis must also take into account "the economic impact, and any other relevant impact" of designating particular land as critical habitat. FWS has long maintained that critical habitat adds little to the protection of the species and has dragged its heels in making such designations. Nonetheless, in response to court orders and pressure from interest groups, FWS recently has been more diligent in designating critical habitat.
However, serious problems have arisen from FWS' more aggressive designations. For example, in New Mexico Cattle Growers Association v. U.S. Fish and Wildlife Service, 248 F.3d 1277 (10th Cir. 2001), involving a challenge to the critical habitat designation for the southwestern willow flycatcher, the Tenth Circuit invalidated FWS' approach to analyzing the economic impact of such designations. FWS' practice had been to find that there was no significant incremental economic impact from a critical habitat designation because any impact from designation of critical habitat would be concurrent with that caused by listing a species as endangered. The Tenth Circuit found that this contravened the express language of the ESA and ordered FWS to re-analyze the critical habitat impact, even if it was concurrent with the impacts of listing.
The Homebuilders Association Decision
In the Homebuilders Association decision issued on May 9, a federal district judge in Sacramento invalidated FWS' critical habitat designation for the Alameda whipsnake. Not only did the court find that the FWS economic analysis of the impacts on such designation was flawed under the reasoning in the New Mexico Cattle Growers decision, but it found that FWS failed to accurately designate specific areas currently occupied by the species (FWS appeared to merely presume occupation for many areas) or undertake the scientific analysis necessary to determine those areas essential to the species' recovery. In short, the court decided that many important aspects of the designation process were legally invalid.
The flaws identified by the Homebuilders Association court go to the heart of the critical habitat designation process, and may well dictate that future critical habitat designations be much more modest in geographic scope. Since the New Mexico Cattle Growers decision, FWS has generally agreed to revoke and redo its economic analyses for critical habitat designations. On this basis, it has withdrawn the expansive critical habitat designations for the California red-legged frog and the Coastal California gnatcatcher. However, as a result of the Homebuilders Association case (which FWS may or may not appeal to the Ninth Circuit), FWS must now decide how to address the equally difficult issues of identifying occupied habitat and defining essential habitat.
Implications for Landowners
As many developers, vineyard owners and other landowners have discovered recently, a critical habitat designation of property on which they would like to develop, farm or conduct other activities can greatly impact the use and value of the property. For example, landowners needing to obtain a federal permit to fill wetlands or drainages from the U.S. Army Corps of Engineers must await completion of a consultation between the Corps and FWS that can last anywhere from several months to several years. This consultation must occur whether or not the affected species is actually present on the property if the property falls within designated critical habitat. Moreover, at the end of the consultation, the landowner may well be given a list of conservation, preservation and mitigation measures to protect the species (to avoid or minimize adverse modification of the habitat) that could significantly alter the project footprint and size, or greatly increase the expense or reduce the value of the project. Thus, such designations are of great interest to landowners.
Although the latest legal decisions have resulted in many critical habitat designations being invalidated by a court or withdrawn by FWS, landowners, vineyards and developers should remain vigilant in tracking ESA critical habitat activity. Of particular interest to California clients is FWS' pending designation of critical habitat for fifteen vernal pool species mentioned above, expected to be issued by July 15, 2003.