Opinion ID: 6332151
Heading Depth: 3
Heading Rank: 1

Heading: New Mexico Cattle Growers

Text: The Ranchers’ position is not without support. In 2001, we rejected the Service’s use of the baseline approach to measure the economic impact of designating critical habitat for the endangered southwestern willow flycatcher. Id. at 1285–86. As the Ranchers point out, we specifically concluded “the baseline approach to economic analysis is not in accord with the language or intent of the ESA.” Id. at 1285. Standing on its own, this language might foreclose the Service’s argument here that the baseline approach is an acceptable application of Section 4(b)(2) of the ESA. But a careful review of N.M. Cattle Growers shows that we arrived at this conclusion only because of an implementing regulation in effect at the time—but since replaced—that resulted in the baseline approach rendering Section 4(b)(2) “virtually meaningless.” Id. When we decided N.M. Cattle Growers, the Service took the position that critical habitat designations were “unhelpful, duplicative, and unnecessary.” Id. at 1283. This position can be traced to a regulation that gave actions likely to jeopardize a listed species the same meaning as actions likely to result in the adverse modification of an area designated as critical habitat. The similarities in definitions had a determinative effect on the Service’s economic analysis of critical habitat designation. Using the baseline approach, the Service would commonly conclude that critical habitat designation had no economic impact. 19 Appellate Case: 21-2019 Document: 010110671606 Date Filed: 04/15/2022 Page: 20 This was so because any costs associated with protecting critical habitat from destruction or adverse modification (i.e., Section 7 consultations, preventative measures) were the same as the costs incurred for protecting the listed species from jeopardy. For instance, in its economic analysis of the willow flycatcher’s critical habitat designation, the Service concluded that because all actions “that result in adverse modification of critical habitat will also result in a jeopardy decision, designation of critical habitat for the flycatcher is not expected to result in any incremental restrictions on agency activities.” Id. at 1283–84 (quoting Division of Economics, U.S. Fish and Wildlife Service, Economic Analysis of Critical Habitat Designation for the Southwestern Flycatcher, S3 (1997)). We found this approach untenable in N.M. Cattle Growers because Section 4(b)(2) requires “some kind of consideration of economic impact in the [critical habitat designation] phase” and the identical standards for jeopardy and adverse habitat modification rendered “any purported economic analysis done utilizing the baseline approach virtually meaningless.” Id. at 1285. Because the Service did not consider the co-extensive costs of designating the Jumping Mouse’s critical habitat, the Ranchers contend the designation directly conflicts with N.M. Cattle Growers. But the Ranchers fail to take into account that the problem we identified in N.M. Cattle Growers has since been remedied. Shortly after we decided the case, the Fifth and Ninth Circuits nullified the regulatory definition of “destruction or adverse modification” of 20 Appellate Case: 21-2019 Document: 010110671606 Date Filed: 04/15/2022 Page: 21 habitat. 10 See Sierra Club v. U.S. Fish & Wildlife Serv., 245 F.3d 434, 443 (5th Cir. 2001); Gifford Pinchot Task Force v. U.S. Fish & Wildlife Serv., 378 F.3d 1059, 1070 (9th Cir. 2004), amended, 387 F.3d 968 (9th Cir. 2004). Following the nullification, the Service promulgated a new regulation that modified the regulatory meaning of “destruction or adverse modification” of habitat. 50 C.F.R. § 402.02 (2016). Rather than encompassing only actions that affect the survival and recovery of a species, as the jeopardy standard already does, the amended definition of habitat modification covers actions that affect the conservation of a species, which makes the definition broader in scope and effectively addresses our criticism in N.M. Cattle Growers. Compare 50 C.F.R. § 402.02 (“Destruction or adverse modification means a direct or indirect alteration that appreciably diminishes the value of critical habitat as a whole for the conservation of a listed species.”), with id. (“Jeopardize the continued existence of means to engage in an action that reasonably would be expected, directly or indirectly, to reduce appreciably the likelihood of both the survival and recovery of a listed species in the wild by reducing the reproduction, numbers, or distribution of that species.”). Our conclusion in N.M. Cattle Growers that the baseline approach did not comply with the ESA was based solely on the regulatory definitions in effect at 10 Although we acknowledged in N.M. Cattle Growers that the regulatory definitions of “destruction or adverse modification” and “jeopardy” had “been the cause of much confusion,” we did not resolve the conflict because the issue was not before us. 248 F.3d at 1283. 21 Appellate Case: 21-2019 Document: 010110671606 Date Filed: 04/15/2022 Page: 22 the time: “Because economic analysis done using the [Service]’s baseline model is rendered essentially without meaning by 50 C.F.R. § 402.02, we conclude Congress intended that the [Service] conduct a full analysis of all of the economic impacts of a critical habitat designation.” 248 F.3d at 1285 (emphasis added). The Service’s amended definition of “destruction or adverse modification” corrects this problem. Under the new definition, costs associated with adverse modification are not equivalent to jeopardy costs. An action that jeopardizes a species is one that affects the “survival and recovery” of a listed species “by reducing the reproduction, numbers, or distribution of that species,” while an action that adversely modifies habitat is one that “diminishes the value of critical habitat for the conservation of a listed species.” 50 C.F.R. § 402.02. In short, a plain reading of these definitions shows that adverse modification of habitat is no longer “subsumed” within the jeopardy definition. See N.M. Cattle Growers, 248 F.3d at 1283. The Service’s designation of critical habitat for the Jumping Mouse shows how the agency’s cost analysis has changed and how the baseline approach does not render the ESA’s economic impact requirement “meaningless” anymore. Id. at 1285. Although the Service used the baseline approach, it determined there were measurable economic costs attributable solely to the designation of critical habitat. Unlike the Service’s economic analysis for the southwestern willow flycatcher in N.M. Cattle Growers, which found there were no incremental costs resulting from designation, the Service’s economic assessment here determined 22 Appellate Case: 21-2019 Document: 010110671606 Date Filed: 04/15/2022 Page: 23 there were $23 million in economic costs associated with the designation of the Jumping Mouse’s critical habitat. Thus, the Service’s revised definition of “destruction or adverse modification” remedies the problem we identified in N.M. Cattle Growers and the decision does not apply here. According to the Ranchers, the baseline approach still renders Section 4(b)(2) meaningless in occupied areas because the Service routinely attributes all costs in those areas to the presence of the listed species rather than the designation of the areas as critical habitat. The Ranchers argue that this problem is “made worse by the Service’s loose standards for designating occupied critical habitat.” Aplt. Br. at 27 n.2 (citing N.M. Farm & Livestock Bureau v. U.S. Dep’t of Interior, 952 F.3d 1216, 1227 (10th Cir. 2020)). We are satisfied that the Service’s newly adopted regulatory definition of “destruction or adverse modification” of habitat addresses the Ranchers’ concerns. As the Service points out, the overlap in costs between listing and habitat designation in certain cases “reflects the reality that for some species [like the Jumping Mouse,] adversely modifying areas where the species lives does jeopardize the species’ survival.” Serv. Aple. Br. at 32. It may be true that in situations where critical habitat consists only of occupied areas, there will be few incremental costs attributable to critical habitat designation. But those are not the facts before us. In this case, the Service designated both occupied and unoccupied areas as critical habitat and found there were $23 million in costs associated with the habitat designation. Thus, the Service’s use of the baseline approach here clearly did not render 23 Appellate Case: 21-2019 Document: 010110671606 Date Filed: 04/15/2022 Page: 24 Section 4(b)(2) meaningless. If in some future case, a private party believes the Service improperly designated areas as occupied critical habitat or misattributed costs to listing, then the party can challenge that designation under the Administrative Procedure Act. See Weyerhaeuser, 139 S. Ct. at 370.