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

Heading: Baseline Approach

Text: The Ranchers argue that even if N.M. Cattle Growers does not apply, the Service’s use of the baseline approach still violates Section 4(b)(2) of the ESA. They say this is because the statute itself requires the Service to analyze all the costs of designating critical habitat, even costs that would exist regardless of the critical habitat designation, such as costs associated with the listing of a species. By applying the baseline approach, the Ranchers contend the Service underestimated the costs associated with designating the Jumping Mouse’s critical habitat. In response, the Service argues that the baseline approach is a reasonable application of Section 4(b)(2)’s economic impact analysis requirement. The Service further contends that its decision to use the baseline approach should be given deference under Chevron, U.S.A., Inc. v. Nat. Res. Def. Council, Inc., 467 U.S. 837 (1984), because the agency codified the baseline approach through formal rulemaking in 2013. See 78 Fed. Reg. 53058 (2013). 11 11 The Ranchers claim that our decision in Gutierrez-Brizuela v. Lynch, 834 F.3d 1142 (10th Cir. 2016), bars the Service from applying its 2013 baseline approach regulation in this circuit until we expressly overrule N.M. Cattle Growers. While Guiterrez-Brizuela primarily concerned a retroactive application of an agency rule, we explained that when an agency adopts an interpretation of a statute that (continued . . .) 24 Appellate Case: 21-2019 Document: 010110671606 Date Filed: 04/15/2022 Page: 25 The district court rejected the Service’s Chevron argument. Relying on our precedent, the court explained that Chevron only applies to legislative rules and that the substance of the Service’s rule makes it an interpretative rule rather than a legislative rule. We agree with the district court that Chevron deference is not warranted here. The Service’s rule endorsing the baseline approach is an interpretive rule to which Chevron does not apply. See United States v. Mead Corp., 533 U.S. 218, 232 (2001) (interpretive rules “enjoy no Chevron status as a class”); Aposhian v. Barr, 958 F.3d 969, 979–80 (10th Cir. 2020) (rule is interpretive if it “attempts to clarify an existing rule but does not change existing law, policy, or practice” and “simply advises the public of the agency’s construction of the statute and rules which it administers” (cleaned up)). Although the rule was promulgated through formal rulemaking, that alone does not entitle the agency’s interpretation to deference under Chevron. The rule did not change existing policy or practice because the Service regularly used the baseline approach in states outside this circuit. App., Vol. 5 at 1031. Moreover, the agency’s explanation in the final directly conflicts with judicial precedent, the agency “may enforce its new policy judgment only with judicial approval.” Id. at 1145 (quoting De Niz Robles v. Lynch, 803 F.3d 1165, 1174 n.7 (10th Cir. 2015)). But as we previously explained, the Service’s use of the baseline approach in this instance does not directly conflict with N.M. Cattle Growers because that decision was based on the Service’s problematic conflation of the costs of jeopardizing a species with the costs of adverse modification of habitat. Because the adverse modification definition was later nullified by other courts and modified by the Service, the Service’s formal adoption of the baseline approach did not overrule N.M. Cattle Growers. 25 Appellate Case: 21-2019 Document: 010110671606 Date Filed: 04/15/2022 Page: 26 rule shows that this is a mere clarification of an existing practice and that the purpose of the rule is to advise affected parties of the agency’s construction of the ESA. As the preamble to the rule states, [W]e revise 50 CFR 424.19 to clarify the instructions for . . . considering the impacts of critical habitat designations, and considering exclusions from critical habitat. . . . [T]hese revisions will not change how we implement the Act; rather, the revisions serve to codify the current practices of the agencies. 78 Fed. Reg. at 53058 (emphasis added). 12 Based on this description of the rule and the fact that the Service routinely used the baseline approach prior to its formal adoption of the methodology, we conclude the Service’s rule is not entitled to deference under Chevron. Because Chevron does not apply, we review the Service’s interpretation of the ESA under the standard set forth in Skidmore v. Swift & Co., 323 U.S. 134, 140 (1944). See Mead, 533 U.S. at 237–38. Skidmore review of an agency action depends upon “the thoroughness evident in its consideration, the validity of its reasoning, its consistency with earlier and later pronouncements, and all those factors which give it power to persuade.” 323 U.S. at 140. We also recognize that the “latitude the ESA gives the Secretary in enforcing the statute, together with the degree of regulatory expertise necessary to its enforcement, establishes 12 Despite this statement in the rule, the Service still argues that the final rule “marks a change in existing agency practice.” Serv. Aple. Br. at 24 n.6. The Service offers no support for this contention other than the substance of the final rule itself, which plainly describes the rule’s effect as a codification of existing practice. 26 Appellate Case: 21-2019 Document: 010110671606 Date Filed: 04/15/2022 Page: 27 that we owe some degree of deference to the Secretary’s reasonable interpretation” of the statute. Nat’l Ass’n of Home Builders, 551 U.S. at 665 (quoting Babbitt v. Sweet Home Chapter of Communities for a Great Ore., 515 U.S. 687, 703–04 (1995)). Before examining the agency’s interpretation of the statute, we first look to its text to determine whether Congress has already addressed the question at issue. Kientz v. Comm’r, SSA, 954 F.3d 1277, 1280 (10th Cir. 2020). The issue before us is whether the ESA requires the Service to use or not use a particular methodology in its economic impact analysis of critical habitat designation. The relevant portion of Section 4(b)(2) of the ESA reads as follows: 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. 16 U.S.C. § 1533(b)(2). Because the statute only commands the Service to conduct an economic impact analysis and does not prescribe the exact methodology that must be used, we agree with the Service that the ESA does not “clear[ly] and unambiguous[ly]” address the suitability of the baseline approach. See Wedelstedt v. Wiley, 477 F.3d 1160, 1165 (10th Cir. 2007). We may therefore consider whether the agency’s interpretation of the statute is permissible. The Service contends the baseline approach is a reasonable application of Section 4(b)(2)’s economic impact requirement. Recall that the baseline 27 Appellate Case: 21-2019 Document: 010110671606 Date Filed: 04/15/2022 Page: 28 approach adopts a “but for” causation requirement in that it “moves any economic impact that can be attributed to listing [or other causes] below the baseline and, when making the [critical habitat designation], takes into account only those economic impacts rising above the baseline.” N.M. Cattle Growers, 248 F.3d at 1280. The baseline approach is consistent with Section 4(b)(2), which requires the Service to consider “the economic impact . . . of specifying any particular area as critical habitat.” 16 U.S.C. § 1533(b)(2). Under the plain language of the provision, the only costs that must be considered by the Service are the costs related to the designation of critical habitat. A reasonable way to determine those costs is to “compare the hypothetical world with the designation to the hypothetical world without the designation”—i.e., the baseline approach. 78 Fed. Reg. at 53062. Examining other costs that would exist regardless of designation does not support the Secretary’s goal of determining whether to designate or exclude an area as critical habitat. 13 Such an approach would also be inconsistent 13 The Ninth Circuit and several district courts have upheld the baseline approach as a reasonable interpretation of Section 4(b)(2). See Ariz. Cattle Growers’ Ass’n v. Salazar, 606 F.3d 1160, 1173 (9th Cir. 2010) (“The very notion of conducting a cost/benefit analysis is undercut by incorporating in that analysis costs that will exist regardless of the decision made.”); Fisher v. Salazar, 656 F. Supp. 2d 1357, 1371 (N.D. Fla. 2009) (“[T]he baseline approach is a reasonable method, consistent with the language and purpose of the ESA, for assessing the actual costs of a particular critical habitat designation. . . . Costs that exist independently of the critical habitat designation cannot be costs ‘of specifying any particular area as critical habitat.’”); Cape Hatteras Access Pres. All. v. U.S. Dep’t of Interior, 344 F. Supp. 2d 108, 130 (D.D.C. 2004) (“To find the true cost (continued . . .) 28 Appellate Case: 21-2019 Document: 010110671606 Date Filed: 04/15/2022 Page: 29 with OMB guidance, which directs agencies to “measure the costs and benefits of a regulatory action against a baseline.” App., Vol. 1 at 127 (citing OMB, Circular A-4 (Sept. 17, 2003)). We are not persuaded by the Ranchers’ argument that the ESA requires the Service to consider the costs of listing when examining the economic impact of critical habitat designation. The Ranchers cannot logically argue that the ESA forbids the Service from considering economic costs when making a listing determination, Aplt. Br. at 20, but requires the Service to consider those costs when making a decision that has no impact on listing. See N.M. Cattle Growers, 248 F.3d at 1284 (“[T]he ESA clearly bars economic considerations from having a seat at the table when the listing determination is being made.”). 14 As the Ninth Circuit has explained, it would “be strange to conclude that Congress intended to use the critical habitat designation to require the agency to consider the previously irrelevant costs of listing the species, particularly given that the of a designation, the world with the designation must be compared to the world without it.”). 14 The Ranchers claim that the costs of listing should be taken into account when designating habitat because critical habitat designation increases the likelihood that one will commit a taking in violation of the ESA, citing Babbitt, 515 U.S. at 691, for support. The Ranchers read Babbitt as holding that the government can prove a violation of the take provision “solely by demonstrating habitat modification.” Aplt. Br. at 22. But Babbitt does not stand for this proposition. The regulation at issue in Babbitt—which the Court held was reasonable— defined the ESA’s take provision to include “significant habitat modification or degradation where it actually kills or injures wildlife.” 515 U.S. at 690 (emphasis added). The qualifying phrase regarding the actual killing of wildlife makes it clear that habitat modification on its own does not constitute a taking. 29 Appellate Case: 21-2019 Document: 010110671606 Date Filed: 04/15/2022 Page: 30 decision to exclude an area from critical habitat for economic reasons is discretionary.” Ariz. Cattle Growers’ Ass’n v. Salazar, 606 F.3d 1160, 1173 (9th Cir. 2010). Other than giving effect to statutory language—a problem that has been corrected since N.M. Cattle Growers—there is simply no reason why the Service should consider certain costs only to subtract them later in the process. We therefore conclude the baseline approach complies with Section 4(b)(2) of the ESA.