Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca9-13-15132/USCOURTS-ca9-13-15132-0/pdf.json

Nature of Suit Code: 893
Nature of Suit: Environmental Matters
Cause of Action: 

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FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

BUILDING INDUSTRY ASSOCIATION

OF THE BAY AREA; BAY PLANNING

COALITION,

Plaintiffs-Appellants,

v.

UNITED STATES DEPARTMENT OF

COMMERCE; NATIONAL OCEANIC

AND ATMOSPHERIC

ADMINISTRATION; UNITED STATES

NATIONAL MARINE FISHERIES

SERVICE; GARY LOCKE, in his

official capacity as Secretary for the

United States Department of

Commerce; ERIC C. SCHWAAB, in

his official capacity as Assistant

Administrator for the United States

National Marine Fisheries Service,

Defendants-Appellees,

CENTER FOR BIOLOGICAL

DIVERSITY,

Intervenor-Defendant–Appellee.

No. 13-15132

DC No.

4:11-cv-04118-

PJH

OPINION

Appeal from the United States District Court

for the Northern District of California

Phyllis J. Hamilton, Chief District Judge, Presiding

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Argued and Submitted

March 5, 2015—Pasadena, California

Filed July 7, 2015

Before: Harry Pregerson, Barrington D. Parker, Jr.*,

and Jacqueline H. Nguyen, Circuit Judges.

Opinion by Judge Parker

SUMMARY**

Endangered Species Act

The panel affirmed the district court’s summary judgment

in favor of the United States Department of Commerce and

others in an action brought by property owners under the

Endangered Species Act and the Administrative Procedure

Act, challenging the designation of critical habitat for a

threatened species, the southern distinct population of green

sturgeon, and the regulations implementing that designation. 

The panel held that, when considering the economic

impact of its designation, the National Marine Fisheries

Service complied with section 4(b)(2) of the Endangered

Species Act and was not required to follow the specific

* The Honorable Barrington D. Parker, Jr., Senior Circuit Judge for the

U.S. Court of Appeals for the Second Circuit, sitting by designation.

** This summary constitutes no part of the opinion of the court. It has

been prepared by court staff for the convenience of the reader.

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BLDG. INDUS. ASS’N V. U.S. DEP’T OF COMMERCE 3

balancing-of-the-benefits methodology argued for by

appellants. The panel also held that section 4(b)(2)

establishes a discretionary process by which the agency may

exclude areas from designation, but does not set standards for

when areas must be excluded from designation. Accordingly,

an agency’s discretionary decision not to exclude an area

from designation is not subject to judicial review. Finally,

the panel held that appellants’ claim under the National

Environmental Policy Act failed because the Act does not

apply to critical habitat designations. 

COUNSEL

Theodore Hadzi-Antich (argued) and M. Reed Hopper,

Pacific Legal Foundation, Sacramento, Californiam, for

Plaintiffs-Appellants.

David C. Shilton (argued), Robert H. Oakley, and Kristen

Floom, Attorneys, and Robert G. Dreher, Acting Assistant

Attorney General, United States Department of Justice,

Environment & Natural Resources Division, Washington,

D.C., for Defendants-Appellees.

Emily Jeffers (argued) and Miyoko Sakashita, Center for

Biological Diversity, San Francisco, California, for

Intervenor-Defendant–Appellee.

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OPINION

PARKER, Senior Circuit Judge:

This appeal, arising under the Endangered Species Act

(“ESA”) and the Administrative Procedure Act (“APA”),

requires us to review the designation of critical habitat for a

threatened species–the southern distinct population segment

of green sturgeon (the “Southern DPS of green sturgeon”)–

and the regulations implementing that designation. The

context for this litigation is the impact of the designation on

local property owners and on the residential construction

industry in the Sacramento-San Joaquin Delta and within the

Sacramento River basin of Northern California. PlaintiffsAppellants Building Association of the Bay Area (“BIABA”)

and the Bay Planning Coalition (“BPC”) appeal from a

judgment of the District Court for the Northern District of

California (Phyllis J. Hamilton, J.). The district court

concluded that the agencies’ procedures leading to the

designation complied with the ESA and the APA, granted

Defendants’ motions for summary judgment and dismissed

the case.

Appellants’ main contention on this appeal is that, when

designating critical habitat for the Southern DPS of green

sturgeon, the National Marine Fisheries Service (the

“NMFS”) violated section 4(b)(2) of the ESA by failing to

follow a specific, obligatory methodology imposed by that

section, which required the agency to balance the

conservation benefits of designation against the economic

benefits of exclusion from designation. Appellants also

contend that NMFS’s decision not to exclude certain areas

from critical habitat designation is subject to judicial review

and that NMFS abused its discretion in not excluding those

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BLDG. INDUS. ASS’N V. U.S. DEP’T OF COMMERCE 5

areas. Finally, Appellants challenge the dismissal of their

claim that, as part of the designation process, NMFS was

required to comply with the National Environmental Policy

Act (“NEPA”) and failed to do so.

As explained below, we conclude that, when considering

the economic impact of its designation, NMFS complied with

section 4(b)(2) and was not required to follow the specific

balancing-of-the-benefits methodology argued for by

Appellants. We also conclude that section 4(b)(2) establishes

a discretionary process by which the agency may exclude

areas from designation, but does not set standards for when

areas must be excluded from designation. Accordingly, an

agency’s discretionary decision not to exclude an area from

designation is not subject to judicial review. Finally,

Appellants’ NEPA claim fails because NEPA does not apply

to critical habitat designations. See Bear Valley Mutual

Water Co. v. Jewell, ___F.3d,___, 2015 WL 3894308 (9th

Cir. Jun. 25, 2015); Douglas Cnty. v. Babbitt, 48 F.3d 1495,

1501–08 (9th Cir. 1995). Accordingly, we affirm.

BACKGROUND

I.

The Southern DPS of green sturgeon is one of two

population segments of green sturgeon, a bottom-dwelling

fish that occupies coastal estuaries and marine waters from

Mexico to Alaska. Final Rulemaking to Designate Critical

Habitat, 74 Fed. Reg. 52,300, 52,301 (Oct. 9, 2009). The

Southern DPS of green sturgeon originates from coastal

watersheds south of the Eel River in northwestern California,

but the only known spawning population of the species is

located in the Sacramento River. Construction of dams and

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associated structures have altered the Southern DPS of green

sturgeon’s habitat by substantially increasing the fish’s

spawning area and reducing the success of its spawning. 

Proposed Threatened Status for Southern Distinct Population

of North American Green Sturgeon, 70 Fed. Reg. 17,386,

17,389 (Apr. 6, 2005). The Southern DPS has been further

threatened by pesticides, bycatching, poaching and the

introduction of new exotic species. Id.

Section 4 of the ESA, 16 U.S.C. § 1533, and the

implementing regulations, establish the proceduresfor adding

species to the list of threatened and endangered species. See

16 U.S.C. § 1531(b) (Congress enacted the ESA “to provide

a means whereby the ecosystems upon which endangered

species and threatened species depend may be conserved,

[and] to provide a program for the conservation of such

endangered species and threatened species”). The Secretaries

of Commerce and the Interior are responsible for

administering the ESA, but have delegated their

responsibilities for marine species and anadromous fish to

NMFS. See 50 C.F.R. § 402.01(b).

In 2001, Intervenor-Appellant, the Center for Biological

Diversity (the “CBD”), along with two other organizations,

petitioned NMFS to list the green sturgeon as “threatened” or

“endangered” under the ESA, and to designate critical habitat.

Threatened Status for Southern Distinct Population Segment

of North American Green Sturgeon, 71 Fed. Reg. 17,757

(Apr. 7, 2006). After reviewing the petition, NMFS

concluded that only the Southern DPS and not the Northern

DPS of the green sturgeon was a threatened species. 

Accordingly, in April 2005, it published a proposed rule

listing the Southern DPS as “threatened.” Id.

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Under the ESA, as soon as a species has been listed as

either threatened or endangered, agencies are required to

consider designating critical habitat. See 16 U.S.C.

§ 1533(b)(6)(C). Critical habitat is defined as “the specific

areas within the geographical area occupied by the species . . .

on which are found those physical or biological features

(I) essential to the conservation of the species and (II) which

may require special management considerations or

protection.” Id. § 1532(5)(A)(i). Before designating any

particular area as critical habitat, an agency must “tak[e] into

consideration the economic impact, the impact on national

security, and any other relevant impact,” of the designation. 

Id. § 1533(b)(2). The agency “may exclude any area from

critical habitat if [it] determines that the benefits of such

exclusion outweigh the benefits of specifying such area as

part of the critical habitat” unless exclusion will result in the

extinction of the species. Id. As previously noted, a critical

issue on the appeal is whether this balancing requirement is

mandatory or discretionary.

In order to develop a conservation program to protect the

Southern DPS of green sturgeon, NMFS formed a critical

habitat review team, which included representatives from

NMFS, the Fish and Wildlife Service and the U.S. Bureau of

Reclamation, all of which had experience in green sturgeon

biology and in the critical habitat designation process. 

Proposed Rulemaking to Designate Critical Habitat, 73 Fed.

Reg. 52,084, 52,087 (Sept. 8, 2008). NMFS’s critical habitat

review team performed an economic and biological analysis

of every area under consideration for critical habitat

designation.

To aid in its analysis of the economic impact of

designation, NMFS commissioned a report by Industrial

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Economics, Inc. This report estimated the economic impact

on the forty-one areas proposed for designation as critical

habitat and, to further refine the analysis, included alternative

“low” and “high” impact scenarios. See Final Economic

Analysis at 3–5. Beyond the economic impacts, NMFS also

considered the national security impacts and the impacts on

Indian lands that would be associated with designating areas

as critical habitat. Final Rulemaking to Designate Critical

Habitat, 74 Fed. Reg. 52,300, 52,337–39 (Oct. 9, 2009).

As part of the process of evaluating the benefits of habitat

designation, NMFS assigned “conservation values” to the

areas it was considering for critical habitat designation, which

include “High” for areas deemed to have a high value of

promoting conservation of the species (high conservation

value or “HCV” areas), “Medium,” “Low” or “Ultra-low”

areas. Final Rulemaking, 74 Fed. Reg. at 52,333. Areas

designated as having “Medium” and “Low” conservation

values were potentially eligible for exclusion if the estimated

economic impacts exceeded certain threshold dollar amounts. 

See Final ESA Section 4(b)(2) Report. “Ultra-low” areas

were those areas initially categorized as “Low,” and where

the presence of the Southern DPS of green sturgeon was

likely, but not confirmed.

NMFS ultimately decided that all HCV areas were

essential to the conservation of the Southern DPS of green

sturgeon, which was “unlikely to survive” without these

areas, and thus, there was no economic impact that would

warrant the exclusion of HCV areas from critical habitat

designation. See Final Biological Report. NMFS excluded

fourteen areas from designation. The areas that were not

excluded represented the different habitats needed to support

the Southern DPS, including habitats that were important for

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spawning, rearing, feeding, and migration. See Final

Rulemaking, 74 Fed. Reg. at 52,301.

In October 2010, NMFS promulgated a rule designating

as critical habitat for the Southern DPS of green sturgeon

approximately 11,421 square miles of marine habitat, 897

square miles of estuary habitat and hundreds of additional

miles of riverine habitat in Washington, Oregon and

California. Final Rulemaking, 74 Fed. Reg. at 52,345–51,

codified at 50 C.F.R. § 226.219. The estuary and coastal

habitat designations included areas in which the green

sturgeon migrated and foraged. Id. NMFS found that it was

necessary to designate critical habitat for the Southern DPS

of green sturgeon because its only confirmed spawning area

at that time was the Sacramento River and “the concentration

of spawning adults in the Sacramento River place[d] this

[population] at [a] . . . greater risk of extinction.” Proposed

Threatened Status, 70 Fed. Reg. at 17,396. The final rule

explained that fourteen areas had been excluded from critical

habitat designation, despite being valuable to the preservation

of the Southern DPS of green sturgeon, because NMFS had

determined that the benefits of exclusion outweighed the

benefits of designation. Final Rulemaking, 74 Fed. Reg. at

52331.

II.

Appellants represent propertyowners who allege that they

have been adversely impacted by NMFS’s designations. 

BIABA is a non-profit association of builders, contractors

and related trades and professions involved in the residential

construction industry. Appellant BPC is a non-profit

organization, representing business and property owners. 

BPC states that its “mission is to ensure a healthy and

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thriving San Francisco Bay area for commerce, recreation and

the natural environment.” In August 2011, Appellants sued

in the Northern District of California asserting claims under

the ESA, the APA and NEPA challenging NMFS’s critical

habitat designations.

The parties filed cross-motions for summary judgment. 

In November 2012, the district court granted the agencies’

and the Intervenor-Appellee’s motions for summaryjudgment

and denied the building associations’ cross motion. See Bldg.

Indus. Ass’n of the Bay Area et al. v. U.S. Dep’t of Comm. et

al., No. C. 11-4118 PJH, 2012 WL 6002511 (N.D. Cal. Nov.

30, 2012). The district court held that, under section 4(b)(2)

of the ESA, NMFS had a nondiscretionary duty to “consider”

the economic impact of all critical habitat designations, but

was not required to use any particular methodology. The

court also held that NMFS had complied with its duty to

consider the economic impact of designation for all areas and

that NMFS’s decision not to exclude areas from critical

habitat designation was not subject to judicial review. 

Finally, the district court held that the building associations

did not have prudential standing to bring NEPA claims, but

that even if they had standing, NMFS was not required by

Douglas County v. Babbitt to conduct a NEPA analysis when

deciding whether to designate critical habitat. This appeal

followed. We have jurisdiction under 28 U.S.C. § 1291. For

the reasons that follow, we affirm.

STANDARDS OF REVIEW

“We review the grant of summary judgment de novo, thus

reviewing directly the agency’s action under the

Administrative Procedure Act’s (APA) arbitrary and

capricious standard.” Gifford Pinchot Task Force v. U.S.

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Fish & Wildlife Serv., 378 F.3d 1059, 1065 (9th Cir. 2004);

5 U.S.C. § 706(2)(A). When reviewing an order granting

summary judgment, “[w]e must determine, viewing the

evidence in the light most favorable to the nonmoving party,

whether there are any genuine issues of material fact and

whether the district court correctly applied the relevant

substantive law.” McFarland v. Kempthorne, 545 F.3d 1106,

1110 (9th Cir. 2008) (quoting Fitzgerald Living Trust

(Fitzgerald III) v. United States, 460 F.3d 1259, 1263 (9th

Cir. 2006)).

Under the APA, an agency decision will be set aside only

if it is “arbitrary, capricious, an abuse of discretion, or

otherwise not in accordance with law.” 5 U.S.C. § 706(2)(A). 

“Our review [of agency action] is ‘narrow’ but ‘searching and

careful,’ . . . and we must ensure that the [agency]’s decisions

are based on a consideration of relevant factors and we assess

whether there has been a clear error of judgment.” Gifford,

378 F.3d at 1065 (internal quotation marks and citations

omitted). “In general, a court reviewing agency action under

the APA must limit its review to the administrative record.” 

San Luis & Delta-Mendota Water Authority v. Locke,

776 F.3d 971, 992 (9th Cir. 2014). A reviewing court may

not substitute its judgment for that of the agency. See U.S.

Postal Serv. v. Gregory, 534 U.S. 1, 7 (2001).

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ANALYSIS

I. NMFS Followed the ESA When Designating Critical

Habitat.

A. The ESA Does not Require the Agency to Follow a

Specific Methodology When Designating Critical

Habitat Under section 4(b)(2).

Appellants argue that NMFS violated the ESA and the

APA because section 4(b)(2) requires an agency to follow a

specific “balancing-of-the-benefits” methodology when

considering the economic impact of designating critical

habitat. According to Appellants, that methodology was not

followed here because NMFS designated all HCV areas as

critical habitat without properly considering the economic

impact of such designations.

Section 4(b)(2) of the ESA provides:

The Secretary shall designate critical habitat 

. . . on the basis of the best scientific data

available and after taking into consideration

the economic impact, the impact on national

security, and any other relevant impact of

specifying any particular area as critical

habitat. The Secretary may exclude any area

from critical habitat if he determines that the

benefits of exclusion outweigh the benefits of

specifying such area as part of critical habitat,

unless he determines, based on the best

scientific and commercial data available, that

the failure to designate such area as critical

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habitat will result in the extinction of the

species concerned.

16 U.S.C. § 1533(b)(2).

The building associations argue that this provision

requires NMFS not only to “tak[e] into consideration” the

economic impact of designation, but to balance the economic

impact against the environmental benefits of designation. 

Although the ESA does not expressly define “taking into

consideration,” Appellants contend that the phrase “shall

designate” in the first sentence of section 4(b)(2) creates a

nondiscretionary duty to consider the economic impact in all

areas before designating critical habitat and the second

sentence of section 4(b)(2) modifies the first by setting forth

a specific balancing-of-the benefits methodology through

which the agency should consider the economic impact of

designation. In essence, Appellants argue that the two

sentences comprise one mandate and require the agency to

assess whether the economic benefits of excluding an area

from designation outweigh the conservation benefits of

including the area.

We are not convinced that this interpretation is correct. 

Instead, we read the statute to provide that, after the agency

considers economic impact, the entire exclusionary process

is discretionary and there is no particular methodology that

the agency must follow. As we see it, the first sentence of

section 4(b)(2) uses the mandatory “shall” to modify what the

agency must take “into consideration” (e.g. economic impact

or national security impact) and the second sentence uses the

discretionary “may” to convey that an agency has the

discretion to “exclude any area from critical habitat if [it]

determines that the benefits of such exclusion outweigh the

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benefits of specifying such area as part of the critical habitat.” 

16 U.S.C. § 1533(b)(2). The term “outweigh” in the second

sentence limits the agency’s discretion to exclude areas from

designation. It does not require the agency to weigh the

economic benefits of exclusion against the conservation

benefits of inclusion at the first step of the analysis. The

second sentence clarifies that the agency can only make

reductions to critical habitat under the exclusion process of

the second sentence.

Agency interpretations of this provision also support our

reading of it. An October 2008 legal opinion from the

Department of the Interior (which jointlyadministers the ESA

along with the Department of Commerce) analyzes the text

and the legislative history of section 4(b)(2), and concludes

that there is no specific methodology that an agency must

employ when considering whether to exclude an area from

critical habitat designation. This opinion is entitled to

Skidmore deference. See Skidmore v. Swift & Co., 323 U.S.

134, 140 (1944) (agency interpretations and opinions

“constitute a body of experience and informed judgment to

which courts and litigants may properly resort for guidance”).

Although we find the text of the statute sufficiently clear

that resorting to legislative history is not required, we note

that the legislative history of the ESA supports our

interpretation of section 4(b)(2). The report of the House

Merchant Marine and Fisheries Committee on the

Endangered Species Act’s 1978 Amendments emphasizes

that the weight given to any impact is within the Secretary or

agency’s discretion and that the agency is “not required to

give economics or any other ‘relevant impact’ predominant

consideration in . . . specification of critical habitat.” See

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H.R. Rep. No. 95–1625 at 17, reprinted in 1978

U.S.C.C.A.N. 9453, 9467 (1978).

Finally, none of the cases that have interpreted section

4(b)(2) have found that there is a specific methodology that

an agency must employ when considering the economic

impact of designation. Bennett v. Spear, 520 U.S. 154

(1997), which Appellants cite, is not to the contrary because

it did not involve exclusion from critical habitat. Although

the case refers to an agency’s “obligation” to consider

economic impact, this is in reference to the first sentence of

section 4(b)(2), which requires only that an agency take

economic impact into consideration. Id. at 172. Furthermore,

when the Bennett Court stated that “another objective [of the

requirement that each agency use the best scientific and

commercial data available] is to avoid needless economic

dislocation,” it was not construing section 4(b)(2), but section

7(a)(2), which governs interagency cooperation in the context

of determining which claims fall within section 7. Id. at

176–77. Accordingly, we affirm the district court’s

conclusion that NMFS did not have to apply a specific

balancing-of-the-benefits methodologyunder section 4(b)(2).

B. NMFS Took Into Consideration the Economic

Impact of Designation in All Areas, Including

HCV Areas.

Appellants also argue that NMFS violated the ESA

because it did not take into consideration the economic

impact of designation for all areas under consideration as it

failed to consider the economic impact of designation for

areas having a high conservation value. This argument is

belied by the administrative record. The Final ESA Section

4(b)(2) Report specifically states that “to weigh the benefits

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of designation against the benefits of exclusion, NMFS

compared the conservation value ratings with the range of

low to high annualized economic cost estimates . . . for each

area.” Final ESA Section 4(b)(2) Report at 16. ER 92. After

NMFS identified the specific areas to be analyzed, it

considered the economic impacts resulting from critical

habitat designation, including impacts on dredging, in-water

construction, agriculture, bottom trawl fisheries, dams,

commercial shipping, power plants, desalination plants, tidal

wave/energy projects and liquefied gas projects. NMFS

estimated the annualized economic impact of critical habitat

designation for each area under consideration, including all

of the HCV areas, by assessing the level of economic activity

and the level of baseline protection afforded to the Southern

DPS of green sturgeon by existing regulations for each

economic activity for each area proposed for designation. 

Economic impacts were further valued at the upper bound of

what was expected. Final Rulemaking, 74 Fed. Reg. at

52,333. NMFS then selected dollar thresholds representing

the levels at which the potential economic impact associated

with a specific area appeared to outweigh the potential

conservation benefits of designating that area.

The record thus demonstrates that NMFS considered the

economic impacts of designation in HCV areas, but

ultimately determined that the HCV areas were critical to the

recovery of the Southern DPS of green sturgeon and could

not be excluded from designation. Final Rulemaking, 74 Fed.

Reg. at, 52,334 (stating that no amount of economic impact,

no matter how large, could ever “outweigh the conservation

benefits of designation, based on the threatened status of the

Southern DPS of green sturgeon and the likelihood that

exclusion of areas with a High conservation value would

significantly impede conservation of the species”). This

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approach is within NMFS’s powers under the statute because

“without critical habitat areas,” the Green Sturgeon was

“unlikely to survive.” See Final Biological Report. Because

NMFS is precluded by statute from excluding an area if the

“failure to designate such area as critical habitat will result in

the extinction of the species concerned,” see 16 U.S.C.

§ 1533(b)(2), the text of the ESA itself supports NMFS’s

decision not to exclude the HCV areas from designation.

A reviewing court’s “task is simply to ensure that the

agency considered the relevant factors and articulated a

rational connection between the facts found and the choices

made.” N.W. Ecosystem Alliance v. U.S. Fish & Wildlife

Serv., 475 F.3d 1136, 1140 (9th Cir. 2007) (quoting Nat’l

Ass’n of Home Builders v. Norton, 340 F.3d 835, 841 (9th

Cir. 2003)). We find here that NMFS thoroughly justified its

decision to include all HCV areas in the designation of

critical habitat.

II. Appellants’ Challenge to NMFS’s Decision Not to

Exclude Critical Habitat is Not Reviewable.

Appellants also argue that the district court incorrectly

held that while decisions to exclude areas from critical habitat

designation are reviewable, decisions not to exclude areas are

not. Appellants contend that the ESA has the dual objectives

of conserving species, while also avoiding needless economic

dislocation, and to hold that a key section of the Act was

intended to be left to the absolute discretion of NMFS cannot

be squared with the ESA’s statutory language. This

contention is foreclosed by our decision in Bear Valley, 2015

WL 3894308, where we held that an agency’s decision not to

exclude critical habitat is unreviewable.

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As we explained in Bear Valley, section 701(a)(2) of the

APA excludes agency action from judicial review if the

agency action is “committed to agency discretion by law.” 

5 U.S.C. § 701(a)(2). This occurs when “the statute is drawn

so that a court would have no meaningful standard against

which to judge the agency’s exercise of discretion.” Heckler

v. Chaney, 470 U.S. 821, 830 (1985); see also Webster v.

Doe, 486 U.S. 592, 599–601 (1988) (court could not review

the director’s decision to fire any employee because the

deference given to the director under the broad language of

statute foreclosed any meaningful judicial review). But the

preclusion of judicial review “is not to be lightly inferred”; it

must be demonstrated that Congress intended an agency

action to be unreviewable. Barlow v. Collins, 397 U.S. 159,

166 (1970).

The first sentence of section 4(b)(2) establishes standards

for how an agency should view areas under consideration for

designation (or inclusion). The second sentence, with the use

of the word “may,” establishes a discretionary process by

which the Secretary may exclude areas from designation, but

does not set standards for when areas must be excluded from

designation. See Bear Valley, 2015 WL 3894308, at *9; see

also Cape Hatteras Access Pres. Alliance v. U.S. Dep’t of

Interior, 731 F. Supp. 2d 15, 28–29 (D.D.C. 2010) (“[t]he

plain reading of the statute fails to provide a standard by

which to judge the [agency’s] decision not to exclude an area

from critical habitat”); Conservancy of Sw. Fla. v. U.S. Fish

and Wildlife Serv., 677 F.3d 1073, 1084, n. 16 (11th Cir.

2012) (finding that the use of the word “may” in another

section of the ESA precludes the review of an agency’s

exercise of discretion). As the most recent proposed policy

statement clarifying the regulations for implementing section

4(b)(2) explains: “the decision to exclude is always

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BLDG. INDUS. ASS’N V. U.S. DEP’T OF COMMERCE 19

completely discretionary, as the Act states that the Secretaries

‘may’ exclude areas. In no circumstance is exclusion

required under the second sentence of section 4(b)(2).” See

Policy Regarding Implementation of Section 4(b)(2) of the

Endangered Species Act, 79 Fed. Reg. 27,052, 27,054 (May

12, 2014).

Moreover, section 4(b)(2) does not preclude all judicial

review of designation decisions. When deciding whether to

designate, the agency must follow certain procedures, only

the ultimate decision not to exclude a certain area from

designation as critical habitat is committed to agency

discretion. Here, NMFS adequately followed the first part of

section 4(b)(2) in considering economic and other impacts

and did not act in an arbitrary or capricious manner or

otherwise abuse its discretion in excluding areas from critical

habitat designation. Because there is no basis under section

4(b)(2) for reviewing the decision not to exclude areas from

designation, there is no basis for reviewing Appellants’ claim

that this decision was arbitrary and capricious.

III. Appellants’ NEPA Claim Fails as a Matter of Law

Finally, Plaintiffs-Appellants appeal the district court’s

dismissal of their claim under section 702 of the APA, which

alleged that NMFS failed to follow NEPA by preparing either

an Environmental Assessment or an Environmental Impact

Statement (“EIS”) in connection with the 2009 final rule. If

a proposed federal action will significantly affect “the quality

of the human environment,” NEPA generally requires the

agency to provide an EIS. 42 U.S.C. § 4332(C).

This contention is foreclosed by the law of this circuit as

well. We have expressly held that NEPA does not apply to

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critical habitat designations. See Bear Valley, 2015 WL

3894308, at *14; Douglas Cnty. v. Babbitt, 48 F.3d 1495,

1501–08 (9th Cir. 1995) (explaining that critical habitat

designations are not subject to NEPA because: (1) the ESA

displaced the procedural requirements of NEPA with respect

to critical habitat designation; (2) NEPA does not apply to

actions that do not alter the physical environment; and

(3) critical habitat designation serves the purposes of NEPA

by protecting the environment from harm due to human

impacts); see also Drakes Bay Oyster Co. v. Jewell, 747 F.3d

1073, 1090 (9th Cir. 2014) (“The Secretary’s . . . designation

under the ESA, ‘protects the environment from exactly the

kind of human impacts that NEPA is designed to foreclose.’”)

(quoting Douglas Cnty., 48 F.3d at 1507). Accordingly, we

affirm the district court’s decision granting summary

judgment in favor of Appellees on the NEPA claim.

CONCLUSION

For the foregoing reasons, we AFFIRM the judgment of

the district court.

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