Court Opinion

ID: 2814862
Source: CourtListenerOpinion
Date Created: 2015-07-07 17:02:16.856857+00
Date Added: 2024-06-11T11:30:33.763803
License: Public Domain

FOR PUBLICATION

  UNITED STATES COURT OF APPEALS
       FOR THE NINTH CIRCUIT

BUILDING INDUSTRY ASSOCIATION              No. 13-15132
OF THE BAY AREA; BAY PLANNING
COALITION,                                    DC No.
             Plaintiffs-Appellants,       4:11-cv-04118-
                                               PJH
                  v.

UNITED STATES DEPARTMENT OF                 OPINION
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.

     Appeal from the United States District Court
          for the Northern District of California
   Phyllis J. Hamilton, Chief District Judge, Presiding
2       BLDG. INDUS. ASS’N V. U.S. DEP’T OF COMMERCE

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

                         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. Plaintiffs-
Appellants 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
     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
6    BLDG. INDUS. ASS’N V. U.S. DEP’T OF COMMERCE

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 procedures for 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.
     BLDG. INDUS. ASS’N V. U.S. DEP’T OF COMMERCE              7

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

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
     BLDG. INDUS. ASS’N V. U.S. DEP’T OF COMMERCE            9

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 property owners 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
10 BLDG. INDUS. ASS’N V. U.S. DEP’T OF COMMERCE

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 summary judgment
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.
     BLDG. INDUS. ASS’N V. U.S. DEP’T OF COMMERCE 11

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

                        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
     BLDG. INDUS. ASS’N V. U.S. DEP’T OF COMMERCE 13

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

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 jointly administers 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
     BLDG. INDUS. ASS’N V. U.S. DEP’T OF COMMERCE 15

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 methodology under 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
16 BLDG. INDUS. ASS’N V. U.S. DEP’T OF COMMERCE

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
     BLDG. INDUS. ASS’N V. U.S. DEP’T OF COMMERCE 17

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

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

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.