Opinion ID: 6332151
Heading Depth: 2
Heading Rank: 3

Heading: Impact on Water Rights

Text: The Ranchers next contend that even if the baseline approach is permissible, the Service failed to properly account for the economic impact of critical habitat designation on the Ranchers’ water rights. According to the Ranchers, the Service “ignored these costs because of a mistaken assumption that ranchers cannot own water rights within the National Forest.” Aplt. Br. at 14. The district court ruled in favor of the Service on this issue, finding the Service’s economic assessment to be reasonable. The court also concluded that the Ranchers did not provide any evidence to show that the designation of critical habitat might result in a taking of the Ranchers’ water rights. Because the costs associated with a potential taking were too speculative, the court found it reasonable for the Service not to include such costs in its economic analysis. 15 15 The Ranchers ask us to vacate the parts of the district court’s order where the court purported to adjudicate the status of the Ranchers’ grazing and water rights on federal lands. We decline to do so because the district court clarified its order (continued . . .) 30 Appellate Case: 21-2019 Document: 010110671606 Date Filed: 04/15/2022 Page: 31 Our review is guided by the Administrative Procedure Act. We must set aside agency actions that are “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.” 5 U.S.C. § 706(2)(A). We owe the district court no deference in assessing agency actions under the APA. N.M. Farm & Livestock Bureau, 952 F.3d at 1221. After a close review of the administrative record, we conclude the Service adequately considered the impact of critical habitat designation on the Ranchers’ water rights. In its final critical habitat rule, the Service described the ways in which it considered the specific impacts of designation on grazing and water access. For example, the Service acknowledged that cattle guards and fencing may impede access to water and that the Forest Service may need to develop alternative water sources or shift cattle grazing patterns. The Service also accounted for a potential reduction in animal unit months due to grazing changes or restricted access to water. Rather than ignoring those costs, the Service expressly incorporated the costs into its economic impact analysis. See 81 Fed. Reg. at 14287 (“[W]e incorporate costs associated with the development of after the Ranchers filed a motion under Fed. R. Civ. P. 59(e) to alter or amend the judgment. The court explained that its ruling is limited to the administrative record before it and that the court is not adjudicating “the status of the Associations’ members’ grazing rights in another case on another record or whether, in an open-record action, the Associations’ members could successfully assert a claim for just compensation for the taking of their water rights.” See App., Vol. 5 at 972–73. Because the district court adequately addressed the Ranchers’ concerns, we need not vacate the district court’s order. 31 Appellate Case: 21-2019 Document: 010110671606 Date Filed: 04/15/2022 Page: 32 alternative water sources for cattle based on information provided by the Forest Service.”). The record demonstrates that the Service not only considered the impacts of designation on the Ranchers’ water rights, but also that the agency planned for measures to ensure the Ranchers would continue to have access to water on their federal allotments. While we will set aside an agency decision if the agency “entirely failed to consider an important aspect of the problem,” here the Service plainly took the impact on water rights under consideration when determining critical habitat. See Nat’l Ass’n of Home Builders, 551 U.S. at 658 (quoting Motor Vehicle Mfrs. Ass’n of U.S., Inc. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983)). In addition to considering the impact of designation on the Ranchers’ access to water, the Service also conducted a separate analysis to determine whether designation would result in any takings of private property. This assessment was conducted in accordance with Executive Order 12630, which requires agencies to avoid unnecessary takings and to assess any potential takings implications of federal actions. The Service concluded that because the “critical habitat protection requirements apply only to Federal agency actions, few conflicts between critical habitat and private property rights should result from this designation.” 81 Fed. Reg. at 14314. The Ranchers argue the agency underestimated the economic impacts of critical habitat designation because it did not consider the costs associated with 32 Appellate Case: 21-2019 Document: 010110671606 Date Filed: 04/15/2022 Page: 33 taking the Ranchers’ water rights. To be sure, the Service’s takings assessment focused solely on the designation’s impact on private property and did not assess whether the designation of critical habitat would constitute a taking of the Ranchers’ water rights on federal land. In fact, the Service expressly stated in the final rule that it “did not conduct an analysis of privately owned water rights because it is beyond the scope of the environmental assessment and economic analysis.” Id. at 14275. But as the district court explained, the Ranchers provided no information during the rulemaking process upon which the Service could have concluded that the Ranchers possess private water rights in Units 3 and 4 and that a taking of those rights was likely to occur. The Ranchers also failed to submit evidence to support an accurate assessment of the costs of such a taking (i.e., the economic value of the Ranchers’ water rights). Instead, the Ranchers vaguely asserted without any support that the designation of critical habitat would result in “the loss of the stock water rights that we ranchers own in these allotments” and the “ability to make beneficial use of the water.” App., Vol. 1 at 151. The Service could not have discerned from these bare assertions that the Ranchers possess vested water rights, the infringement of which would rise to the level of a taking that must be compensated by the government and included in the Service’s economic impact analysis. And as the final rule makes clear, the Service anticipates that measures will be implemented to ensure the Ranchers’ cattle have continued access to water in the allotments. 33 Appellate Case: 21-2019 Document: 010110671606 Date Filed: 04/15/2022 Page: 34 As we previously explained, the ESA does not require the Service to analyze all economic impacts—no matter how speculative—of designating critical habitat. Indeed, the ESA clearly bestows discretion upon the administrators of the statute to assess costs. 16 U.S.C. § 1533(b)(2); Weyerhaeuser, 139 S. Ct. at 371. Given the Service’s broad discretion to consider economic costs and the Ranchers’ lack of evidence in the record showing that designation constitutes a taking of their property rights, we conclude the Service adequately assessed the economic impacts on the Ranchers’ water rights.