Court Reluctantly Upholds Designation of Critial Habitat for Frog

by Nossaman LLP
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Last week, the United States District Court for the Eastern District of Louisiana upheld the designation of approximately 1,544 acres of privately-owned timber land located in Louisiana as critical habitat for the dusky gopher frog (Rana sevosa), concluding that even though the frog was last spotted on the property in the 1960s and the only known wild populations of the frog are all located in the State of Mississippi, the designation by the U.S. Fish and Wildlife Service (Service) was not arbitrary or capricious.  Markle Interests, LLC v. U.S. Fish and Wildlife Service, No. 13-234c and 13-413 (Aug. 22, 2014).  

Before finalizing the critical habitat designation, the Service had analyzed the potential economic impacts of the designation on the private property, analyzing three scenarios:  (1) development without the need for a federal permit or approval; (2) partial development because the necessary federal permit or approval would require conservation of 60% of the property; and (3) no development because the necessary federal permit or approval could not be granted in light of impacts to the designated critical habitat.  The Service estimated that the economic impact under the second and third scenarios would be a loss of $20.4 million and $33.9 million, respectively.  In the final rule designating the critical habitat, the Service stated that because it "did not identify any disproportionate costs that are likely to result from the designation[,] the Secretary [did] not exercis[e] his discretion to exclude any areas from this designation of critical habitat for the dusky gopher frog based on economic impacts."  

After dismissing a challenge to plaintiffs' standing, the court explained that under the Endangered Species Act (ESA), both occupied and unoccupied property may be designated as critical habitat.  Thus, the mere fact that the frog was not currently occupying the private property was not determinative.  The court also explained, however, that in order for the Service to designate an area that is not occupied by the species, in addition to considering the economic impact of the designation, the Service must find, based on the best scientific data available, that the designation is "essential for the conservation of the species" and "a designation limited to [the] present range [of the species] would be inadequate to ensure the conservation of the species."

As every independent peer reviewer of the proposed rule concluded that limiting the critical habitat designation to occupied and unoccupied areas in Mississippi would be inadequate to "conserve" the frog, and as the land located in Louisiana contained ephemeral ponds that could play a key role in the future breeding success of the frog, the court found that the Service's "determination seems reasonable and, therefore, entitled to Chevron deference."  Turning to the issue of economic impacts, which the court described as "the most compelling issue advanced by plaintiffs in challenging the validity of the Rule," the court concluded that in light of the "somewhat paralyzing standard of review," it had to defer "to the agency's expertise in its methods for cost projections and its refusal to except [the property] from the designation."      

While the court's ruling was based primarily on the deference accorded the Service under the ESA and the Administrative Procedure Act, it was certainly not without its fireworks.  For example, in one portion of the opinion the court described defendants' attack on standing grounds as "utterly frivolous."  The court also stated, summarizing its view of the issues and the law:  "The Court has little doubt that what the government has done is remarkably intrusive and has all the hallmarks of governmental insensitivity to private property.  The troubling question is whether the law authorizes such action and whether the government has acted within the law.  Reluctantly, the Court answers yes to both questions."  

While plaintiffs did not prevail in the district court, this dispute is far from over.  First, as the court pointed out, plaintiffs did not allege in their complaint that the designation constitutes an unconstitutional taking under the Fifth Amendment.  Such a claim could still be presented to the Court of Federal Claims.  Second, a notice of appeal was filed just four days after the decision was issued.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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