# Petition for Writ of Certiorari — Arizona Cattle Growers' Ass'n v. Salazar > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386017_2566%3A1 ## Record - **Collection:** Supreme Court brief - **Document type:** Petition for Writ of Certiorari - **Published:** January 1, 2011 - **Citation:** 562 U.S. 1216 ## Text OUP ee VUUll, U-Y. LED voll) 1-454 Oci 1- 20 In aperrice OF THE CLERK Supreme Court of the Anited States 4 ARIZONA CATTLE GROWERS’ ASSOCIATION, Petittoner, VS. SALAZAR, et al, Respondents * On Petition For Writ Of Certiorari ‘To The United States Court Of Appeals For The Ninth Circuit eee ae PETITION FOR WRIT OF CERTIORARI -@ NORMAN LD. JAMES Counsel of Record KFENNEMORE CRAIG, PC 3003 North Central Avenue Suite 2600 Phoenix, AZ 85012 2913 (602) 916-5346 njyames@{claw.com ‘THOMAS J. WARD NATIONAL ASSOCIATION OF HOME BUEHLDERS 1201 15th Street, NW Washington, D.C. 20005-2800 (202) 266-8200 Counsel for Petitioner Arizona Cattle Growers’ Association COCKLE LAW HRIEF PRINTING CO. (800) 225-6964 OR CALL COLLECT (40?) 342-2831 QUESTIONS PRESENTED Under § 4 of the Endangered Species Act (“ESA”), 16 U.S.C. § 1533, the Fish and Wildlife Service (“FWS”) designated more than 8.6 million acres of federal land in four states as “critical habitat” for the Mexican spotted owl. Despite stating in its rulemaking that that there are only 1,176 to 2,352 known owls, FWS concluded that all of this land 1s occupied by owls. To analyze the economic impacts of designating critical habitat, FWS used the “baseline” approach, under which it ignored impacts to land and resource users related to the species’ listing. The agency concluded that there would be no tmpacts from designating critical habitat other than a small amount of administrative costs. The Ninth Circuit Court of Appeals upheld the agency’s action, including its use of the baseline approach, even though that methodology has been rejected” by another circuit as contrary to the ESA. The questions presented are: 1. Was FWS required to analyze and consider all of the economic impacts that result’ from designating particular areas as critical habitat under ESA § 4(b)(2), including impacts that also may be related to the species’ listing? 2. Was it lawful for the Ninth Circuit to substitute its own rationale for the rationale provided by FWS in- order’ to’ affirm’ the — agency’s determination that all 8.6 million acres of critical habitat are occupied by owls? PARTIES TO THE PROCEEDING The petitioner is the Arizona Cattle Growers’ Association. The respondents are Ken Salazar, the Secretary of Interior; the Department of the Interior; Rowan W. Gould, Acting Director of the Fish and Wildlife Service;' the Fish and Wildlife Service; and the Center for Biological Diversity, which intervened in proceedings below to support the government’s action. The New Mexico Cattle Growers Association submitted a brief to the Ninth Circuit Court of Appeals as amicus curiae in support of petitioner addressing the lawfulness of FWS’s analysis of the economic impacts of designating critical habitat. CORPORATE DISCLOSURE STATEMENT The Arizona Cattle Growers’ Association is a non- profit Arizona corporation whose members consist of cattle ranchers and associated businesses in Arizona. It has no parent corporation or subsidiaries, and has issued no shares of stock to the public. Mr. Gould is substituted for former Director H. Dale Hall pursuant to Supreme Court Rule 35.3 1 M1 TABLE OF CONTENTS QUESTIONS PRESENTED ................ 0.0... cc ceeeee eens PARTIES TO THE PROCEEDING ....................... Ml CORPORATE DISCLOSURE STATEMENT ........ 11 PETITION FOR WRIT OF CERTIORARI ............ I CITATIONS OF REPORTS OF OPINIONS ENTERED IN THE CASE.......................... anal l BASIS KOR SUPREME COURT Fis Panes Ce ao vavccigitisstianeaias ssa fdeMen aes l STATUTORY PROVISIONS INVOLVED IN THE SPRINT sax uns cesencunyabuweesscuncubenysaaeiaes awa asa tee 2 STAT ENGIN © OR THE, CAS. ...05.ccccccccnsscsnscveseccense 2 I OVERVIEW OF THE CASE...................... : 2 ill. THE ADMINISTRATIVE PROCEEDINGS CONCERNING THE CRITICAL HABITAT LPR Ia PORN REI iacsvicu) cccadeacecdedesectuiventaaieinaamans 4 A. Background on the Mexican Spotted GUE sacncycctccuansausvecscesedese eater eee ee eee A 83. Prior Attempts to Designate Critical of | See daxupsuudaeeausiveteneveenaes 6 C. The 2004 Critical Habitat Rule ............ 7 Il. THE COURT PROCEEDINGS BELOW .... 11 A. The District Court’s Decision................ 11 B. The Ninth Circuit’s Opinion ................. 12 TABLE OF CONTENTS ~— Continued REASONS FOR GRANTING THE PETITION..... ITT. THIS CASE PRESENTS IMPORTANT LEGAL QUESTIONS CONCERNING THE ROLE OF CRITICAL HABITAT UNDER THE ENDANGERED SPECIES PERE ois od nda evsnaseaeeetininsenvsaerdicrausa nee ae THk COURT SHOULD RESOLVE THE CONFLICT BETWEEN THE NINTH AND TENTH CIRCUIT COURTS OF APPEALS REGARDING THE REQUIREMENTS IMPOSED BY ESA § 4(b)(2)....................008. A. Statutory and Regulatory Background ... B. The “Baseline” Approach and the Tenth Circuit’s Decision in New Mexico Cattle aac ccnticcssisaecinataknssenisianctereates C. Gifford Pinchot and Subsequent Cases Rejecting New Mexico Cattle Growers .... D. The Ninth Circuit’s Opinion Should Be NI soc cuvuceeccsusnsssccunaavess suduneustpenieaies THE COURT SHOULD REVIEW THE NINTH CIRCUIT’S UNLAWFUL SUBSTI- TUTION OF ITS OWN REASONING TO SUPPORT THE AGENCY’S CRITICAL HABITAT DESIGNAPION .................0.-2c00 A. Statutory and Regulatory Background ... 19 19 21 3] 31 TABLE OF CONTENTS — Continued Page B. The Court Should Review the Ninth Circuit’s Determination that All 8.6 Million Acres of Critical Habitat Are CPOE OF SRWVED inva irinkicdcsisvrlccctacdceess. OO CONCLUSION ......... aneesuneeees 39 a TABLE OF CONTENTS — Continued Page APPENDIX OPINION SOUGHT TO BE REVIEWED Ariz. Cattle Growers’ Ass'n v. Salazar, 606 F.3d RFE, BME caves sssxcvssuscctusescsasiansscssensene App. 1 DISTRICT COURT OPINION AND ORDER Ariz. Cattle Growers’ Ass’n v. Kempthorne, 534 FE. Supp. 2d 1013 (D. Ariz. 2008)....... SRC EES App. 35 AGENCY RULE REVIEWED ON APPEAL Final Designation of Critical Habitat for the Mexican Spotted Owl, 69 Fed. Reg. 531°2 I Docs cp ivn tin caligeaidevucsveecsanssniens sess App. 82 STATUTES I eR as cad cn'saeusduyses seaneseasvanevecss App. 339 16 U.S.C. § 1533(a)(1)............. Sesilevneuats or couseecs App. 340 Se RR a BPE ER ssc csnsvessdessensencesvncsscess App. 340 Be ee BROCCO EA) vnvscescncvcsasesesescnenssaneess App. 341 16 U.S.C. § 1533(bX2)......... Mth ee edevate ea diaeeiaa App. 341 REGULATIONS IM Fons nsnsncdne bactsarsecsasaveaeessunnt App. 342 BO C.F.R. § 424.02(d)...0cccccccccccceccsccececessesteseeeee App. 342 TABLE OF CONTENTS -- Continued Page eee A eee ee 50 CLFR. § 424.19 ooocccccccccccccscsceseeceseesseseeseeseeeen App. 346 LEGISLATIVE HISTORY H.R. Rep. No. 95-1625 (1978)................csscseeee. App. 347 . BOD: INO. BO-7S CUB 7G) vicscccssnsccrscersasscvcsescoes App. 358 Congressional Record, Oct. 14, 1978 (House Consideration and Passage of H.R. 14104, Me PIII oo 40s ccnaccssccucacedecsdacvecssors App. 362 Thee. WOR. INO. BF CIGD) occ cesincecivcisccccecscces App. 372 MISCELLANEOUS PORTIONS OF THE RECORD U.S. Dep't of Interior, Fish and Wildlife Service, Recovery Plan for the Mexican Spotted Owl (Strix occidentalis lucida) (1995).................. App. 380 U.S. Dep't of Interior, Fish and Wildlife Service, Environmental Assessment for Designation of Critical Habitat for the Mexican Spotted Owl (Aug. 18, 2004)......... App. 415 Vl1ll TABLE OF AUTHORITIES Page CASES Am. Textile Mfrs. Inst., Inc. v. Donovan, 452 a a ace cebanasaseces puaohnu be texsvesee Ariz. Cattle Growers’ Ass’n v. Kempthorne, 534 P, SUDO. SA LORS CL. APIS. BOG) cvcccecseccocvccsccsesssscecess 1 Ariz. Cattle Growers’ Ass'n v. Salazar, 606 F.3d eS oc susunsaubeebuseucececeaucees ] Ariz. Cattle Growers’ Ass’n v. U.S. Fish and Wildlife Serv., 273 F.3d 1229 (9th Cir. 2001) ...18, 27 Bennett v. Spear, 520 U.S. 154 (1997) ....... 4, 17,33, 38 Burlington Truck Lines, Inc. v. United States, ee ee a Sa aiidiidanscdcuucyaivesvenkucisvedscocasucnssescsouee Cape Hatteras Access Pres. All. v. Dep’t of Interior, 344 F.Supp.2d 108 (D.D.C. Neh intel ao cateasataduasacsnenercayencaacunibeusens 24, 33, 35 Catron County Bd. of Comm’rs v. U.S. Fish and Wildlife Serv., 75 F.3d 1429 (10th Cir. 1996) .....6, 23 Chevron U.S.A., Inc. v. NRDC, 467 U.S. 837 BRIE SRC Raa ta mae Sos Speake had Ree aS See 12 Ctr. for Butological Diversity v. BLM, 422 PF. Supp. 2a 1116 (N.D. Cal. 2006) ........ccccsccsssseseess 24 Ctr. for Biological Diversity v. Norton, 240 F. Supp. 2d 1090 (D. Ariz. 2003)..................cesceeeeceees 7 Defenders of Wildlife v. Flowers, 414 F.3d 1066 ST es ass asbbauiteaiekin ss 18, 27 Douglas County v. Babbitt, 48 F.3d 1495 (9th RT oes cecal or Ais dual cst sow aswanaraanencante oes 7 TABLE OF AUTHORITIES — Continued Page FDA v. Brown & Williamson Tobacco Corp., S29 U.S. TO Ce rar ibncescsnccccsescccees. ee Fund for Animals v. Rice, 85 F.3d 535 (11th Cir. b.) Er ee 9 Gifford Pinchot Task Force v. U.S. Fish and Wildlife Serv., 378 F.3d 1059 (9th Cir. 2004) ..... passim Home Builders Ass’n of N. Cal. v. Norton, 293 BF. Supp. Bel F CE Be ee aaeecsssavcccsccessccscsccccees 23 Home Builders Ass’n of N. Cal. v. U.S. Fish and Wildlife Serv., 268 F. Supp. 2d 1197 (E.D. Cal. 2008) ... Snr peer ee ssccceeelsy SO TABLE OF AUTHORITIES — Continued Page 50 C.F.R. § 424.17(b)(2) ............ caaaneieneats reves LOWLY 50 C.F.R. § 424.19............ jraoiaa sanacunanes 3, 21 AGENCY RULEMAKING Determination of Critical Habitat for the Mexican Spotted Owl, 60 Fed. Reg. 29914 Sn ee a uaneanaaaendaindaeanae, ee 6 Final Designation of Critical Habitat for the Mexican Spotted Owl, 66 Fed. Reg. 8530 a MR) eR pa rl isc eh Sy eT ¥ Final Designation of Critical Habitat for the Mexican Spotted Owl, 69 Fed. Reg. 53182 Se WE, SEED sk sshcuseboesddabsrassadsscssntensiaisaesienents passim Final Determination of Critical Habitat for the Southwestern Willow Flycatcher, 62 Fed. FOR. TDOISS (FULY ZA, LOOT a. ccecccsccescccceccseccesevees 21, 22 Final Rule to List the Mexican Spotted Owl as Threatened Species, 58 Fed. Reg. 14248 (Mar. ee RRR nach Bagh ORDO eS RR TE PRD 4,5,6 Interagency Cooperation Regulations; Final Rule, 43 Fed. Reg. 870, (Jan. 4, 1978)....................32 Listing Endangered and Threatened and Designating Critical Habitat; Amended Procedures to Comply with the 1982 Amendments to the Endangered Species Act, 49 Fed. Reg. 38900 (Oct. 1, 1984) ......cc0..00000--.--20, 21 X11] TABLE OF AUTHORITIES — Continued Page Revocation of Critical Habitat for the Mexican Spotted Owl, Loach Minnow, and Sptkedace, 63 Fed. Reg. 14378 (Mar. 25, 1998).......... 6 COURT RULES Supreme Court Rule 13.3........ , OTHER AUTHORITIES Arizona Statistical Abstract 2003 Data Handbook (Pia Montoya ed.) (2008)............. 18 Endangered Species Act Amendments of 1978, Pub. L. No. 95-632, 92 Stat. 3751 (1978).....19, 31, 33 George Cameron Coggins, “A Premature Evaluation of American Endangered Species Law,” Endangered Species Act: Law, Policy, and Perspective (Donald C. Baur et al. eds., 2002)... ais aoe is 16 U2. Dept of Interior, Recovery Plan for the Mexican Spotted Owl (Strix occidentalis lucida) (1995) ............ Nay SAA ecvccedt. @. 4. 35 Webster’s New Collegiate Dictionary (1979) . 13 PETITION FOR WRIT OF CERTIORARI The Arizona Cattle Growers’ Association (““ACGA”) hereby petitions for a writ of certiorari to review the judgment of the United States Court of Appeals for the Ninth Circuit in this case. 4 CITATIONS OF REPORTS OF OPINIONS ENTERED IN THE CASE The opinion of the Ninth Circuit, reproduced in the appendix (“App.”) at 1-34, is reported at 606 F.3d 1160. The opinion and order of the district court, App. 35-81, is reported at 534 F. Supp. 2d 1013. BASIS FOR SUPREME COURT JURISDICTION The Ninth Circuit entered its judgment on June 4, 2010. App. 1. On July 30, 2010, Justice Kennedy extended the time period within which to file a petition for a writ of certiorari to and including October 1, 2010. The present petition is timely filed under 28 U.S.C. § 2101(c) and under Rule 13.3 of this Court. The jurisdiction of this Court is invoked under 28 U.S.C. § 1254(1). The ACGA is a trade association whose members consist of ranchers and various associate members in the ranching industry. The ACGA has members in the ranching business throughout Arizona, many of whom hold grazing permits authorizing livestock 2 grazing on federal lands designated as critical habitat for the Mexican spotted owl. —_—___—_— @ —_____- sv STATUTORY PROVISIONS INVOLVED IN THE CASE The case involves various provisions of the Endangered Species Act and its implementing regulations, which are reproduced at App. 339-346. ze amine STATEMENT OF THE CASE I. OVERVIEW OF THE CASE This case concerns’ the requirements for designating land as critical habitat under’ the Endangered Species Act (“ESA”), 16 U.S.C. § 1531 et seq. Once designated, critical habitat restricts land uses through the application of ESA § 7(a)(2), 16 U.S.C. § 1536(a)(2). Federal actions that) would destroy or adversely modify a listed species’ critical habitat are prohibited, unless a special exemption is tranted under 16 U.S.C. § 1536(h). To balance the interests of land and resource users with the interests of wildlife protection, Congress has required the Fish and Wildlife Service (““FWS”) to consider the economic costs and other impacts produced by the designation of critical habitat, and has authorized IWS to exclude areas from critical habitat based on those impacts as long as exclusion will not result in the species’ see also 5O C.FE.R. extinction. 16 U.S.C. § 1533(b)(2): § 424.19. In this case, FWS designated more than 8.6 million acres of federal land in four states as critical habitat for the Mexican spotted owl. Final Designation of Critical Habitat for the Mexican Spotted Owl, 69 Fed. Reg. 53182 (Aug. 31, 2004) (“2004 Critical Habitat Rule”) (codified at 50 C.FE_R. § 17.95(b)) (App. 82-338). As a result, activities occurring on this land are now subject to the requirements imposed by ESA’ § 7(a)(2). FWS, however, determined that no economic costs would be imposed on land or resource users. App. 307-311. KF WS obtained this anomalous result by using the “baseline” approach, under which the = agency considers only the incremental economic costs above the existing regulatory baseline. The regulatory baseline includes all costs that are related to the species’ listing as endangered or threatened Consequently, few, if any, economic impacts are attributed to the designation of critical habitat under the baseline approach, even when millions of acres of land are designated, as this case illustrates. This means that there are no regulatory benefits from excluding areas from critical habitat, making the analysis mandated by § 4(b)(2) meaningless. For these reasons, the Tenth Circuit rejected the baseline approach as contrary to the ESA. N.M. Cattle Growers Ass'n v. U.S. Fish and Wildlife Serv., 248 F.3d 1277, 1285 (10th Cir. 2001). The Ninth Circuit rejected the Tenth Circuit’s holding and approved the baseline approach, creating a direct conflict between P} g these circuits. The Ninth Circuit also upheld FWS’s determination that all 8.6 million acres of critical habitat are occupied by owls’ by’ improperly substituting its own rationale for that of the agency and speculating that large numbers of undiscovered owls exist, requiring millions of acres of critical habitat. See, e.g., Motor Vehicle Mfrs. Ass’n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 50 (1983) (“|AJn agency’s action must be upheld, if at all, on the basis articulated by the agency itself.”). In so doing, the court violated the requirement that critical habitat be designated based on the best scientific data available, and not on speculation or surmise - an additional requirement imposed by Congress to protect the interests of land and resource users. See Bennett v. Spear, 520 U.S. 154, 176-77 (1997). ll. THE ADMINISTRATIVE PROCEEDINGS CONCERNING THE CRITICAL HABITAT DESIGNATION A. Background on the Mexican Spotted Owl The Mexican spotted owl was listed as a threatened species under the ESA in 1993. Final Rule to List the Mexican Spotted Owl as Threatened Species, 58 Fed. Reg. 14248 (Mar. 16, 1993) (“Listing Rule”) (codified at 50 C.F.R. § 17.11(h)). The owl’s range extends from the southern Rocky Mountains in Colorado and the Colorado Plateau in southern Utah through Arizona, New Mexico and west Texas to the southern end of the Mexican Plateau in central Mexico. Listing Rule, 58 Fed. Reg. at 14248-49. Within this geographic area, the owl occupies “disjunct localities that correspond to isolated mountain systems and canyons.” App. 89; see also App. 383-385, 419. The primary basis for listing the owl was the modification of suitable habitat resulting from timber harvesting on National Forests in Arizona and New Mexico and the threat of catastrophic wildfires. Listing Rule, 58 Fed. Reg. at 14266-70. Since its listing, the Mexican spotted owl population in the United States has hovered around 2,000 birds. In the Listing Rule, FWS estimated that the owl population in the United States totaled 2,160 birds in 1990. Jd. at 14249. In its 1995 recovery plan, FWS stated that although it lacked data on the owl’s population, the species appeared to be stable and well distributed throughout its historic range. See U.S. Dept of Interior, Recovery Plan for the Mexican Spotted Owl (Strix occidentalis lucida) 11-12 (1995) (“Recovery Plan”); App. 383-385." In its 2004 Critical Habitat Rule, FWS stated that the owl’s population size and distribution are similar to the species’ historic population. App. 93. The agency also stated that the total number of known owls on federal “The Recovery Plan is available at http://www.fws.gov, southwest/es/arizona/MSO. htm (visited September 24, 2010) Excerpts are reproduced in the appendix 6 land in the southwestern United States ranges from 1,176 to 2,352 birds. App. 94. B. Prior Attempts to Designate Critical Habitat When it listed the owl in 1993, FWS failed to designate critical habitat, stating that critical habitat was not determinable because “maps in sufficient detail to accurately delineate areas on the ground are not presently available.” Listing Rule, 58 Fed. Reg. at 14270. Two years later, FWS_ published a _ rule designating over 4.6 million acres of land in Arizona, Colorado, New Mexico, and Utah as critical habitat. Determination of Critical Habitat for the Mexican Spotted Owl, 60 Fed. Reg. 29914 (June 6, 1995). At that time, FWS estimated that the United States contained about 7.3 million acres of suitable owl habitat, but acknowledged that this estimate was likely overstated. 7d. at 29917. The 1995 designation was challenged on the ground that FWS failed to comply with the National Environmental Policy Act (NEPA), 42 U.S.C. § 4321 ef seg., and was revoked. Revocation of Critical Habitat for the Mexican Spotted Owl, Loach Minnow, and Spikedace, 63 Fed. Reg. 14378 (Mar. 25, 1998).’ " The circuit courts also are split on whether FWS must comply with NEPA in designating critical habitat. The Tenth Circuit has held that NEPA applies to the designation of critical habitat. Catron County Bd. of Comm'rs v. U.S. Fish and Wildlife Serv., 75 F3d 1429 (10th Cir. 1996). The Ninth Circuit, in (Continued on following page) FWS issued a new critical habitat rule in February 2001, designating 4.6 million acres of land in Arizona, Colorado, New Mexico, and Utah. Final Designation of Critical Habitat for the Mexican Spotted Owl, 66 Fed. Reg. 8530 (Feb. 1, 2001). Environmentalists challenged the new designation, asserting that the exclusion of a substantial portion of the National Forest land initially proposed as critical habitat was arbitrary and capricious. The district court agreed, vacated the 2001 rule, and ordered FWS to publish a new critical habitat designation. Ctr. for Biological Diversity v. Norton, 240 F. Supp. 2d 1090, 1109 (D. Ariz. 2003). C. The 2004 Critical Habitat Rule In response to the district court’s order, and instead of publishing a new proposed rule for public review and comment (see 16 U.S.C. § 1533(b)(5)A)), FWS issued a notice announcing that it had reopened the comment period on the agency’s 2000 proposed rule and, ultimately, issued a new critical habitat designation in 2004. App. 97-98. This time, FWS designated as critical habitat more than 8.6 million acres of federal land in Arizona, Colorado, New Mexico, and Utah. App. 238. In Arizona alone, nearly 4 million acres of land were designated, including more than 3.2 million acres of National Forest land. contrast, has held that NEPA does not apply. Douglas County v Babbitt, 48 F.3d 1495 (9th Cir. 1995). 8 The starting point for FWS’s designation was the protected activity centers or “PACs,” which are established around each known owl nest on federal land. Each PAC contains a minimum of 600 acres and includes the best owl nesting and roosting habitat in the area. App. 88. A total of 1,176 Mexican spotted owl PACs has been identified on federal land. App. 93-94. FWS noted the existence of some non-territorial birds (called “floaters”) as well as dispersing juvenile owls. App. 218-219. But the agency did not provide any estimate of the number of owls outside PACs or state that large numbers of non-territorial owls likely exist. Instead, the agency explained that Mexican spotted owls are not migratory and exhibit high site fidelity. App. 222, 223, 226. While the PACs include known nest and roost sites and the bulk of the associated foraging territory, they make up only a small percentage of the total! land designated as critical habitat. For example, FWS stated in its environmental assessment that the National Forests of Arizona and New Mexico contain 987 PACs that cover 643,396 acres (about 651 acres per PAC) and an additional 5.4 million acres of “suitable” owl habitat. App. 425. Nearly 5.3 million acres of this land were designated as critical habitat — almost 60 percent of the total designation. App. 238. Thus, most of the land designated as critical habitat in Arizona and New Mexico National Forests is “suitable” habitat outside an owl PAC. 9 The reason for the large discrepancy between the area within the PACs and the total area designated as critical habitat is that FWS also relied on guidelines provided in the Recovery Plan to identify potential owl habitat, which was then designated as critical habitat. App. 87-88, 100, 233-234, 333-334." The Recovery Pian generally describes three types of land, protected areas, restricted areas, and other forest and woodland types, and recommends varying levels of protection for each type. App. 88-89, 395-414. Protected areas include owl PACs, areas containing slopes greater than 40 percent in mixed-conifer and pine-oak forests that have not been logged within the past 20 years, and certain administratively reserved lands such as federal wilderness areas. App. 88, 100, 396-397, 402, 404-406. FWS explained that protected areas are “areas where owls are known to occur or are likely to occur.” App. 100. In contrast, restricted areas do not qualify as protected areas, but instead contain “mixed-conifer forest, pine-oak forest, and riparian areas where potential nesting and roosting habitat exist.” App. 88 “ Recovery plans are guidance documents that impose no obligations on any agency, entity, or person to implement the various tasks listed in the plan. See Fund for Animals v. Rice, 85 F.3d 535, 547-48 (11th Cir. 1996). FWS is not required to follow the same rulemaking procedures and make the same findings required for designating critical habitat. Compare 16 U.S.C. § 1533(f) with 16 U.S.C. § 1533(aX3), (b)(2), (b)4) & (b)(5). In contrast to critical habitat, recovery plans do not specifically identify habitat areas, but instead describe recommended management actions. LO (emphasis added); see also App. 406-407 (discussion of “restricted areas” in the Recovery Plan). In determining whether all 8.6 million acres are occupied by owls, however, FWS did not distinguish between PACs with recent occupancy records, other protected areas, and restricted areas with potential owl habitat. The agency instead stated that all of these areas are occupied because they are “within the geographic area occupied by the species” and “devised around known owl nest sites.” App. 121, 135, 233. FWS also stated that it “consider|ed] protected areas to be occupied on a more permanent basis and restricted areas to be temporally occupied.” App. 121. FWS did not explain what “temporally occupied” means, nor did the agency provide a definition of “occupied” habitat. In analyzing economic and other impacts under § 4(b)(2), FWS used the baseline approach, explaining that “[t]he economic effects already in place due to the listing of the owl as threatened is the baseline upon which we analyzed the economic effects of the designation of critical habitat.” App. 308. FWS concluded that the only “[{i]mpacts associated solely with this rulemaking” would be some additional administrative costs, which were estimated to be about 25 percent of $72,000 to $238,000 annually App. 309 (emphasis added), 310-311. According to FWS, livestock grazing, timber harvesting, mining, oil and gas development, and other private land and resource uses occurring within critical habitat would not be affected by the designation 11 Il THE COURT PROCEEDINGS BELOW A. The District Court’s Decision The ACGA filed suit in the District of Arizona, alleging that FWS violated the ESA and the Administrative Procedure Act (“APA”), 5 U.S.C. § 551 et seq., in issuing the 2004 Critical Habitat Rule. Among other things, the ACGA alleged that FWS had designated unoccupied areas as critical habitat without making the specific findings required by 16 U.S.C. § 1532(5)(A)Gi) and 50 C.F.R. § 424.12(e). The ACGA further alleged that FWS violated 16 U.S.C. § 1533(b)(2) by failing to analyze all of the economic impacts of the critical habitat designation and concluding that the designation would not impact any land and resource users. The district court entered an order granting summary judgment against the ACGA on all claims. App. 81. The court upheld FWS’s analysis of the economic impacts of designating the owl’s critical habitat. App. 70-80. It narrowly interpreted ESA §$ 4(b)(2), and held that, as a matter of law, FWS is prohibited from considering impacts that may be related to the species’ listing. App. 77-79. The court rejected the Tenth Circuit’s holding in New Mexico Cattle Growers, concluding that the Ninth Circuit’s decision in Gifford Pinchot Task Force v. U.S. Fish and Wildlife Serv., 378 F.3d 1059 (9th Cir. 2004), eliminated the basis for the Tenth Circuit’s ruling. App. 75-76. 12 On the challenge to FWS’s designation of unoccupied areas, the district court found the word “occupied” as used in the definition of critical habitat to be ambiguous, and applying Chevron U.S.A., Inc. v. NRDC, 467 U.S. 837 (1984), accepted FWS’s interpretation as reasonable. App. 60-66. Unfortunately, the district court misapprehended the agencys rule, stating that FWS “interpreted ‘occupied’ to include those ‘areas where owls are known to occur or are likely to occur,” and then assuming that owls are likely to occur throughout all 8.6 million acres of critical habitat. App. 63-64 (citing 2004 Critical Habitat Rule, 69 Fed. Reg. at 53185). However, FWS actually stated that protected areas ~ which are only a small subset of the critical habitat — are “areas where owls are known to occur or are likely to occur.” App. 100. Based on this error, the court found that the agency’s occupancy determination was supported by the best available science. App. 64-66. B. The Ninth Circuit’s Opinion The ACGA appealed from the district court’s judgment. On appeal, the Ninth Circuit affirmed the district court, holding that FWS’s analysis of economic impacts’ resulting from the _ critical designation was not arbitrary and _ capricious. App. 27-33. The court approved use of the baseline approach for evaluating economic impacts and rejected New Mexico Cattle Growers, concluding that the Tenth Circuit had relied on a “faulty premise” regarding the regulatory impact of critical habitat and that the baseline approach is “more logical.” App. 29-31. Like the district court, the Ninth Circuit relied on Gifford Pinchot to support its rejection of the Tenth Circuit’s holding. App. 29-30. The ACGA argued on appeal that the term “occupied” is not ambiguous and has no specialized or unique meaning. Instead, the plain meaning of “occupied” is to “reside in,” U.e., occupied areas must actually contain members of the species. See, e.g., Webster’s New Collegiate Dictionary 787 (1979). The Ninth Circuit held that “occupied” “does not provide a clear standard,” and rejected the ACGA’s argument on the basis that “reside in” is too narrow. App. 12-14. Because FWS provided no definition of “occupied” in the rule, the Ninth Circuit relied on F'WS’s Consultation Handbook, which defines “occupied critical habitat” for the purpose of § 7 consultation as “critical habitat that contains individuals of the species at the time of the ... project analysis. A species does not have to occupy critical habitat throughout the year for the habitat to be considered occupied.” App. 11 (emphasis added). Following that definition, the court held that “FWS has authority to designate as ‘occupied’ areas that the owl uses with sufficient regularity that it is likely to be present during any reasonable span of time.” App. 12. Based on its interpretation of “occupied,” the Ninth Circuit held that FWS did not designate any unoccupied areas as critical habitat. App. 16-19. The court determined that owls utilize far more territory than the area within a PAC and that there are 14 actually a much larger number of owls, providing adequate support for FWS’s occupancy determination. App. 16-25. The court gave no weight to FWS’s estimate of the number of owls occupying federal land in the southwest, emphasizing that the PACs “reflect only known owl sites.” App. 18, 25 (emphasis original). Rather the court found that “there is record support for the existence of substantially greater numbers of owls and undiscovered sites,” as well as “areas used by nonterritorial owls, areas used for juvenile dispersal, or areas used for owl migration.” App. 25. REASONS FOR GRANTING THE PETITION The Ninth Circuit’s opinion effectively rewrites the ESA. It changes the method used to analyze the economic impacts of designating critical habitat in a way that renders the analysis meaningless, and blurs the distinction between “occupied” and “unoccupied” areas that appears on the face of the statute and in FWS’s regulations If left undisturbed, the Ninth Circuit’s opinion will have far-reaching consequences. It upsets the national uniformity in the administration of the ESA by creating a square conflict with the Tenth Circuit. This conflict is particularly problematic given that endangered species and their critical habitat may be found in multiple states and cross circuit court boundaries, as this case illustrates. Further, by marginalizing the role that economics plays in 15 designating critical habitat and allowing large expanses of land to be treated as “occupied” without credible scientific evidence that the species’ members are actually present, the decision upsets the balance between land and _ resource users and_ wildlife protection intended by Congress. The opinion also warrants review because it contravenes’ well-established administrative law principles and principles of statutory interpretation. Although critical habitat must be based on the best scientific information available, the Ninth Circuit engaged in_- result-driven decision-making by substituting its own reasoning for that of the agency, and then engaged in impermissible speculation about the number of Mexican spotted owls in the southwestern United States and how much land is truly critical to the species. This Court should grant the petition and resolve the questions created by the Ninth Cuircuit’s erroneous construction of the ESA and _ restore Congress’s intent that economics play a central role in the designation of critical habitat and that land “occupied” by a species be construed narrowly and limit the scope of critical habitat. I. THIS CASE PRESENTS IMPORTANT LEGAL QUESTIONS CONCERNING THE ROLE OF CRITICAL HABITAT UNDER THE ENDANGERED SPECIES ACT Since its enactment in 1973, the ESA has evolved into one of the nation’s most demanding environmental 16 laws. As one commentator stated, “The ESA is not the single most important federal environmental statute, but — whether one applauds or deplores this turn of events — the law is now a primary obstacle to land development and related activities in America.” George Cameron Coggins, “A Premature Evaluation of American Endangered’ Species Law,” in Endangered Species Act: Law, Policy, and Perspective 1 (Donald C. Baur et al. eds., 2002). Critica! habitat is an important component of the ESA’s regulatory scheme. This case concerns the role of critical habitat under the ESA and the balancing of interests intended by Congress when critical habitat is designated through the consideration of economic impacts and the use of the best scientific data available under § 4(b)(2). FWS is required to designate critical habitat at the same time a species is listed as threatened or endangered “to the maximum extent prudent and determinable.” 16 U.S.C. § 1533(a)(3)(A); 50 C.E.R. § 424.12(a). Following its designation, critical habitat restricts land and resource uses through the application of ESA § 7(a)(2), 16 U.S.C. § 1536(a)(2). See Natl Ass’n of Home Builders v. Defenders of Wildlife, 551 U.S. 644, 651-52 (2007). For example, the presence of critical habitat for the snail darter was the basis for the injunction that prevented the Tellico Dam’s completion in Tennessee Valley Authority v. Hill, 437 U.S. 153, 161-62, 171 (1978). Moreover, if a proposed action may adversely affect a species’ critical habitat, the agency must engage in 17 consultation with FWS to ensure that critical habitat is not adversely modified. See 50 C.F.R. § 402.14. This process may result in_ restrictions or other modifications to the proposed action to avoid adverse modification. Id. § 402.14(h); see also Bennett, 520 U.S. at 158, 169-70 (discussing the restrictions resulting from § 7 consultation). The term “action” has been defined broadly as “all activities or programs of any kind authorized, funded, or carried out, in whole or in part, by Federal agencies,” and includes “the granting of licenses, contracts, leases, easements, rights-of-way, permits, [and] grants-in-aid.” 50 C.F.R. § 402.02. Thus, almost any discretionary federal action potentially triggers the requirements imposed by § 7(a)(2). As various federal regulatory programs have expanded, an increasing number of private land uses require some sort of federal permit or have some other federal! nexus that triggers the application of § 7(a)(2). See, e.g., Rapanos v. United States, 547 U.S. 715, 724-29 (2006) (plurality opinion) (describing the expansion of jurisdiction asserted by the Corps of Engineers under the Clean Water Act). In addition, private activities that take place on federal land such as livestock grazing, timber harvesting, mining, and oi] and gas development necessarily involve some type of federal authorization and are affected by the designation of critica) habitat. This is especially problematic in the western states (including states in the Ninth and Tenth Circuits), which contain millions of acres of federal land and 18 whose economies depend on the ability to access and use federal land.” Many of the ACGA’s members, for example, depend on federal land for their ranching operations and hold grazing permits from the Forest Service or the Bureau of Land Management. Finally, the requirements of § 7(a)(2) apply only to species’ habitat that is formally designated as “critical” under ESA § 4. See Ariz. Cattle Growers’ Ass'n v. U.S. Fish and Wildlife Serv., 273 F.3d 1229, 1244 (9th Cir. 2001) (‘[TJhere is no evidence that Congress intended to allow [FWS] to regulate any parcel of land that is merely capable of supporting a protected species.”). Federally authorized or funded activities taking place in areas that are not occupied by members of a listed species normally will not be subject to § 7(a)(2) unless critical habitat is present. See, e.g., Defenders of Wildlife v. Flowers, 414 F.3d 1066, 1069-70 (9th Cir. 2005) (the Corps of Engineers had no obligation to consult with FWS when no listed species occupied the project area and no critical habitat was present). Consequently, the designation of critical habitat expands the activities potentially subject to § 7(aX2) by subjecting land uses with a federal nexus to the “adverse modification” standard regardless of whether members of the species are found in the project area. ° More than 60% of the land in Arizona — over 45 million acres — is in some form of federal ownership or control. See Arizona Statistical Abstract 2003: Data Handbook (Pia Montoya ed.) 198-99 (2003). to Because of the regulatory burdens imposed by critical habitat, when the ESA was amended in 1978 to create greater flexibility and reduce resource conflicts, Congress specifically addressed critical habitat. It enacted a definition of critical habitat that distinguishes between occupied and _ unoccupied areas, required that critical habitat designations be based on the best scientific data available, and required that economic impacts be considered. Unfortunately, in this case, the Ninth Circuit has undermined the role that economic considerations should play when critical habitat is designated, and based on its own speculation upheld the designation of millions of acres of land in four western states with no verified record of occupancy. Il. THE COURT SHOULD RESOLVE THE CONFLICT BETWEEN THE NINTH AND TENTH CIRCUIT COURTS OF APPEALS REGARDING THE REQUIREMENTS IMPOSED BY ESA 8§ 4(b)(2) A. Statutory and Regulatory Background In 1978, Congress amended the ESA to authorize IWS to exclude areas from critical habitat based on economic considerations. Endangered Species Act Amendments of 1978, Pub. L. No. 95-632, § 12(7), 92 Stat. 3751, 3766 (1978) (current version at 16 U.S.C. § 1533(b)(2)) (App. 341-342). This statute requires FWS to evaluate and consider the economic costs associated with designating areas as critical habitat and, based on those costs, authorizes the 20 exclusion of areas that satisfy the definition of critical habitat, subject only to the limitation that an area’s exclusion may not result in the species’ extinction. Congress explained that this provision was added to provide greater flexibility in designating critical habitat and to reduce conflicts between critical habitat and land use activities by requiring economics and other non-biological factors to be considered. See H.R. Rep. No. 95-1625, at 7-10, 16-17 (1978), reprinted in 1978 U.S.C.C.A.N. 9453, 9457-60, 9466-677 (App. 348-354). In amending the ESA in 1982, Congress again emphasized that economic impacts should play an important role in critical habitat designation, explaining that the consideration of economic impacts under § 4(b)(2) provides a “counter-point to the listing of species without due consideration for the effects on land use and other development interests.” H.R. Rep. No. 97-567, at 12 (1982), reprinted in 1982 U.S.C.C.A.N. 2807, 2812 (App. 375-376). In 1984, FWS adopted new rules governing the listing of species and the designation of critical habitat, which are codified at 50 C.F.R. part 424. See Listing Endangered and Threatened and Designating Critical Habitat; Amended Procedures to Comply with the 1982 Amendments to the Endangered Species Act, 49 Fed. Reg. 38900 (Oct. 1, 1984). These rules require FWS to “identify any significant activities that would either affect an area considered for designation of critical habitat or be likely to be affected by the designation,” and to “consider the probable economic 21 and other impacts of the designation upon proposed or ongoing activities.” 50 C.FLR. § 424.19. In its rulemaking preamble, FWS stated that this analysis should focus “primarily on the economic. costs associated with designation, which was the intent of Congress in requiring such analyses,” and not on the biological impacts of critical habitat, which “are more properly addressed in_ determining whether designation is prudent and will be of benefit to a species.” 49 Fed. Reg. at 38907; see also 50 C.F.R. § 424.12(a)(1) (criteria for determining when the designation of critical habitat is not prudent). B. The “Baseline” Approach and the Tenth Circuit’s Decision in New Mexico Cattle Growers In New Mexico Cattle Growers, the Tenth Circuit addressed the economic analysis mandated by ESA § 4(b)(2), concluding that all economic impacts of critical habitat must be considered, regardless of whether the impacts may be attributable to the species’ listing. 248 F.3d at 1284-85. At issue was FWS’s_ critical habitat designation for’ the southwestern willow flycatcher, which included 600 miles of rivers and streams in Arizona, California and New Mexico. Final Determination of Critical Habitat for the Southwestern Willow Flycatcher, 62 Fed. Reg. 39129, 39137, 39139-46 (July 22, 1997). As in this case, the designation included both areas with recent nest sites (areas with occupancy records) and areas with the potential to support nest sites in the future. Id. at 39133. 22 FWS concluded that no economic impacts would result from the designation, reasoning that critical habitat would not cause any “incremental” impacts on land and water uses beyond those already caused by the species’ listing. In other words, the impacts attributable to the flycatcher’s listing were regarded as “the baseline upon which critical habitat is imposed.” Jd. at 39137-38. The agency’s reasoning was based on the similar definitions of “jeopardize the continued existence of” and “destruction or adverse modification” in the regulations governing §7 consultation. Jd. at 39131; see 50 C.F.R § 402.02 (definitions). Both definitions rely on “an appreciable detrimental effect on both survival and recovery of the species” to determine when a proposed action would violate § 7(a)(2). Jd. FWS explained that due to this similarity, in the context of §7 consultation “actions satisfying the standard for adverse modification are nearly always found to also jeopardize the species concerned.” /d. The Tenth Circuit squarely rejected this reasoning, holding that FWS’s “baseline” approach renders the consideration of economic impacts required by Section 4(b)(2) “virtually meaningless” and is “not in accord with the language or intent of the ESA.” N.M. Cattle Growers, 248 F.3d at 1285. The Tenth Circuit explained that “Congress intended that the FWS conduct a full analysis of all of the economic impacts of a critical habitat designation, regardless of whether those impacts are attributable co-extensively to other causes,” including the species’ listing. Jd. For 23 support, the court relied on its decision in Catron County, which held that the designation of critical habitat causes impacts to the human environment, triggering the application of NEPA. Jd. at 1284 (discussing Catron County, 75 F.3d at 1437). C. Gifford Pinchot and Subsequent Cases Rejecting New Mexico Cattle Growers After New Mexico Cattle Growers was issued, the courts and FWS began to discard the baseline approach as contrary to the ESA. See, e.g., Home Builders Ass’n of N. Cal. v. U.S. Fish and Wildlife Serv., 268 F. Supp. 2d 1197, 1225-30 (E.D. Cal. 2003) (vacating the designation of 400,000 acres of land as critical habitat for the Alameda whipsnake); Home Builders Ass’n of N. Cal. v. Norton, 293 F. Supp. 2d 1 (D.D.C. 2002) (vacating the designation of 4.1 million acres of land as critical habitat for the red-legged frog). In these cases and others, FWS conceded that its analysis of economic impacts was inadequate based on New Mexico Cattle Growers. In 2004, the Ninth Circuit issued its opinion in Gifford Pinchot, holding that FWS’s rule defining “destruction or adverse modification” was too narrow because the definition “explicitly requires appreciable diminishment of the critical habitat necessary for survival” before the adverse modification standard would be triggered. 378 F.3d at 1069-71. As a result, the court invalidated several biological opinions concerning timber harvesting in National Forests on 24 the ground that FWS failed to consider whether adequate critical habitat would remain to ensure recovery of the northern spotted owl. Jd. at 1071-72. Although Gifford Pinchot involved a challenge to biological opinions issued under ESA §7, and therefore did not address the requirements of § 4(b)(2) or the designation of critical habitat generally, several district courts subsequently have held that Gifford Pinchot undermined the Tenth Circuit’s reasoning. Notably, the first court to do so was in the District of Columbia Circuit. Cape Hatteras Access Pres. All. v. Dep't of IJnterior, 344 F. Supp. 2d 108, 126-32 (D.D.C. 2004) (approving the baseline approach and rejecting N.M. Cattle Growers); see also Ctr. for Biological Diversity v. BLM, 422 F.Supp. 2d 1115, 1151-53 (N.D. Cal. 2006) (hoiding that FWS improperly considered co-extensive project modification costs in analyzing the impact of designating critical habitat and rejecting New Mexico Cattle Growers). The district court in this case relied on the foregoing decisions to reject New Mexico Cattle Growers and hold that FWS is prohibited from considering impacts that may be co-extensive with the impacts from the species’ listing under § 4(b)(2). App. 76-80. On appeal, the Ninth Circuit approved the baseline approach and affirmed FWS’s determination that the only economic impact resulting from designating 8.6 million acres of federal land as critical habitat would be a small amount of administrative costs incurred by federal agencies. 25 App. 27-33. Relying on Gifford Pinchot, the Ninth Circuit rejected New Mexico Cattle Growers, concluding that the Tenth Circuit had relied on a “faulty premise” regarding the regulatory impact of critical habitat, and that the baseline approach is “more logical.” App. 30-31. Even more recently, the Ninth Circuit approved the baseline approach in rejecting a challenge to the designation of 850,000 acres of land in California and southern Oregon as critical habitat for a group of “vernal pool” species, relying on its opinion in this case. Home Builders Ass’n of N. Cal. v. U.S. Fish and Wildlife Serv., __. F.3d ___, 2010 U.S. App. LEXIS 16439 at *23-*26 (9th Cir. Aug. 9, 2010). D. The Ninth Circuit’s Opinion Should Be Reversed At present, the baseline approach is valid in the Ninth Circuit, allowing FWS to ignore all economic costs related to designating critical habitat that are considered co-extensive with the species’ listing. The Tenth Circuit, however, has not overruled or modified New Mexico Cattle Growers, and it remains the law in that circuit. By itself, this situation results in legal uncertainty when a species is found in multiple circuits, as is the case with the Mexican spotted owl and southwestern willow flycatcher. Indeed, if this case had been brought by a different party in a different state, New Mexico Cattle Growers would have been controlling precedent, and the result would have been different. 26 Moreover, listed species are found throughout the United States, and despite the requirement that critical habitat be designated concurrently with a species listing, see 16 U.S.C. §1533(aX3)(A), a majority of species do not have critical habitat designated.” Consequently, the conflict between the Ninth and Tenth Circuits is certain to result in more confusion as additional species are listed and more critical habitat is designated. Equally troubling is the likelihood that the Ninth Circuit’s position on the analysis mandated by § 4(a)(2) will be adopted by other circuits simply because it is the most recent judicial pronouncement on the issue. In fact, the Ninth Circuit’s opinion is erroneous for several reasons, and should be reversed by the Court before this conflict spreads to other circuits. 1. The Ninth Circuit misread New Mexico Cattle Growers. The Tenth Circuit discussed but did not rely on the similar definitions of “jeopardize the continued existence of,” which applies to the species, and “destruction or adverse modification” of critical habitat in FWS’s §7. consultation rules in condemning the baseline approach. The court explained: * According to FWS’s website, there are 1,371 species of wildlife, fish and plants listed as threatened or endangered in the United States, but only 596 of those species has critical habitat. See http://www.fws.gov/endangered/species/ (visited September 15, 2010). 27 But the question of whether the impacts of listing and a CHD (eritical habitat designation] are co-extensive is not the precise question before us. Rather the question is whether the FWS must analyze all of the economic impacts of critical habitat designation (regardless of whether the impacts are co-extensive with other causes), or only those impacts that are a “but for” result of the CHD. N.M. Cattle Growers, 248 F.3d at 1284. The Tenth Circuit decided the issue based on the plain language of ESA § 4(b)(2), holding that the baseline approach conflicts with the language and intent of the statute. Id. at 1285. The ESA’s language is clear: FWS must take into consideration the economic and other impacts of designating particular areas as criticr! habitat. 16 U.S.C. § 1533(b)(2). It is not qualified, «or example, by a statement that impacts that might also result from a species’ listing (or from some other factor) may be disregarded by the agency, which is precisely what occurs under the baseline approach. 2. Regardless of the approach used to analyze the economic impacts under § 4(b)(2), if the bulk of the land designated as critical habitat is not occupied by members of the species, the designation of critical habitat imposes significant regulatory burdens. As explained, § 7(a)(2) does not apply if no members of a species and no critical habitat are present in the project area. See, e.g., Defenders of Wildlife, 414 F.3d at 1069-70; Ariz. Cattle Growers’, 273 F.3d at 1244. Thus, in unoccupied areas, any regulatory burdens 28 imposed by § 7(a)(2) result solely from the critical habitat designation. Under the baseline approach, however, all 8.6 million acres of critical habitat for the owl were not only treated as being currently occupied, but as being occupied forever. For example, if a rancher’s grazing allotment is currently occupied by an owl, the baseline approach assumes that the allotment will always be occupied, triggering § 7 consultation when his grazing permit is renewed a decade from now. Such assumption defies logic. Once an area has been designated as_ critical habitat, any future discretionary federal action that modifies the habitat triggers § 7, regardless of whether members of the species are present, imposing a regulatory burden on land users. The baseline approach ignores this impact. 3. It is axiomatic that “‘a reviewing court should not confine itself to examining a particular statutory provision in isolation.” Nat’l Ass’n of Home Builders, 551 U.S. at 666 (quoting FDA v. Brown & Williamson Tobacco Corp., 529 U.S. 120, 132 (2000)). The Ninth Circuit violated this principle’ by disregarding the deadline for critical habitat designations. The ESA requires that, “to the maximum extent prudent and determinable,” FWS designate critical habitat concurrently with the listing decision. 16 U.S.C. § 1533(a)(3)(A); see also 50 C.FER. § 424.17(b). If critical habitat is not then determinable, FWS must complete the designation within one year. 16 U.S.C. § 1533(b)(6)(C); 50 C.E.R. 29 § 424.17(b)(2). Unless critical habitat is not prudent, the ESA affords no other exceptions or delays. 16 U.S.C. § 1533(a)(3); see also NRDC v. U.S. Dep't of the Interior, 113 F.3d 1121, 1127 (9th Cir. 1997) (FWS “failed to discharge its statutory obligation to designate critical habitat when it listed the [species], or to articulate a rational basis for invoking the rare o 4 ” imprudence exception.”). If FWS complies with the law, there is no regulatory baseline against which the economic impacts of designating critical habitat can be compared. In that case, the economic analysis is situated precisely where Congress intended: concurrent with listing and serving as a counter-point to listing based solely on biology. Consequently, the baseline approach — which assumes that there is a pre-existing regulatory baseline — conflicts with the statutory scheme established by Congress. The Ninth Circuit dismissed this point, stating that “listing the species 1S a necessary antecedent to designating critical habitat.” App. 32. But the statute and FWS’s rules expressly require critical habitat to be designated “concurrently” with the listing, not “subsequently.” See 16 U.S.C. § 1533(a)(3)(A)(i); 50 C.E.R. §§ 424.12, 424.17(b). 4, The Ninth Circuit also misapphed Gifford Pinchot. As explained, in Gifford Pinchot, the court did not address the requirements imposed by ESA § 4 for the designation of critical habitat. The case instead involved a challenge to biological opinions issued under § 7. As a result, the reasoning of Gifford 30 Pinchot is inapplicable to, and should not control how critical habitat is designated.’ Moreover, FWS did not rely on Gifford Pinchot to justify its use of the baseline method. FWS instead stated that it was “reviewing [Gifford Pinchot] to determine what effect it may have on the outcome of consultations pursuant to Section 7 of the Act.” App. 85. The agency also took the position, as it did in designating critical habitat for the southwestern willow flycatcher, that critical habitat provides little benefit to species and is a waste of agency time and resources. App. “4-87. If critical habitat imposes no regulatory burdens on land users and provides no conservation benefit to the owl, it should not have been designated in the first place. See 50 C.EF.R. § 424.12(a)(1)(ii). In short, FWS concluded there would be no economic impacts from designating critical habitat across 8.6 million acres of land in four states for the Mexican spotted owl. On its face, this is an absurd result that underscores the fundamental problem ' For example, as explained above, critical habitat must be designated concurrently with the species’ listing, at which time FWS is unlikely to know what actions might be required for the future recovery of the species. In addition, FWS is authorized to exclude from critical habitat areas that are “essential to the conservation of the species,” 16 U.S.C. § 1532(5A)(G), based on economic and other impacts. The authority to exclude areas that meet the definition of critical habitat based on economic grounds is not consistent with the overarching recovery goal assumed by the Gifford Pinchot court. 31 with the baseline approach and demonstrates why it conflicts with the ESA, as the Tenth Circuit correctly held. This Court should grant the petition and reverse the Ninth Circuit’s approval of the baseline approach. Il. THE COURT SHOULD REVIEW THE NINTH CIRCUIT’S UNLAWFUL SUBSTI- TUTION OF ITS OWN REASONING TO SUPPORT THE AGENCY’S’ CRITICAL HABITAT DESIGNATION A. Statutory and Regulatory Background In defining critical habitat in 1978, see Endangered Species Act Amendments of 1978, Pub. L. No. 95-632, § 2(1), 92 Stat. 3751 (1978), Congress deliberately distinguished between areas that are occupied by members of a_ listed species and unoccupied areas, allowing FWS to designate unoccupied areas as critical habitat only “upon a determination ... that such areas are essential to the conservation of the species.” 16 U.S.C. § 1532(5)(A)(i) & (ii) (App. 339). Notably, Congress was critical of FWS’s failure to differentiate between areas “which are truly critical to the continued existence of a species” and areas “needed for population expansion,” stating: [AJs much as 10 million acres of Forest Service land is involved in the critical habitat being proposed for the grizzly bear in three Western States. Much of the land involved in this proposed designation is not 32 habitat that is necessary for the continued survival of the bear. It instead is being designated so that the present population within the true critical habitat can expand. S. Rep. No. 95-874, at 10 (1978) (App. 359); see also H.R. Rep. No. 95-1625, at 25, reprinted in 1978 U.S.C.C.A.N. at 9475 (criticizing FWS’s rule defining critical habitat because it “could conceivably lead to the designation of virtually all of the habitat of a listed species as its critical habitat”) (App. 356)." The two-part definition of critical habitat enacted by Congress’ effectively creates a_ regulatory hierarchy. Geographic areas not occupied by members of the species normally should not be designated as critical habitat. See, e.g., H.R. Rep. No. 95-1625, at 18, reprinted in 1978 U.S.C.C.A.N. at 9468 (“the Secretary should be extremely circumspect in the designation of critical habitat outside of presently occupied area of the species”) (App. 354). Instead, land outside of occupied areas may be designated as critical habitat “only when a designation limited to its * Prior to the 1978 ESA amendments, FWS adopted rules governing § 7 consultation, which defined critical habitat as: “tAlny air, land, or water ... and constituent elements thereof, the loss of which would appreciably decrease the likelihood of the survival and recovery of a listed species or a distinct segment of its population. ... Critical habitat may represent any portion of the present habitat of a listed species and may include additional areas for reasonable’ population expansion.” Interagency Cooperation Regulations; Final Rule, 43 Fed. Reg. 870, 874-75 (Jan. 4, 1978). 33 present range would be inadequate to ensure the conservation of the species.” 50 C.F.R. § 424.12(e); see also Cape Hatteras, 344 F.Supp. 2d at 125 (“Designation of unoccupied land is a _ more extraordinary event than designation of occupied lands. [FWS’s] regulation prohibits designation of unoccupied lands unless designation of occupied lands is insufficient.”). Congress also added the requirement that critical habitat designations be based on the best available scientific data. Endangered Species Act Amendments of 1978, Pub. L. No. 95-632, § 11(4), 92 Stat. at 3765 (currently at 16 U.S.C. § 1533(b)(2)). This Court explained that the purpose of this requirement, which also appears in ESA § 7(a)(2), is to “ensure that the ESA not be implemented haphazardly, on the basis of speculation or surmise” and “to avoid needless economic dislocation produced by agency officials zealously but unintelligently pursuing their environmental objectives.” Bennett, 520 U.S. at 176-77. Thus, the determination of whether an area is occupied must be based on credible scientific data, not on speculation. B. The Court Should Review the Ninth Circuit’s Determination that All 8.6 Million Acres of Critical Habitat Are Occupied by Owls A fundamental rule of administrative law is that a court, when reviewing an administrative rule, “may not supply a reasoned basis for the agency’s action 34 that the agency itself has not given.” State Farm, 463 U.S. at 43 (citing SEC v. Chenery Corp., 332 U.S. 194, 196 (1947)). “It is well established that an agency’s action must be upheld, if at all, on the basis articulated by the agency itself.” Jd. at 50 (citing Chenery, 332 U.S. at 196; Burlington Truck Lines, Inc. v. United States, 371 U.S. 156, 168 (1962); Am. Textile Mfrs. Inst., Inc. v. Donovan, 452 U.S. 490, 539 (1981)). In upholding the critical habitat determination, the Ninth Circuit violated this basic rule, and then compounded its error by engaging in speculation about the number of Mexican spotted owls in the southwest and how much habitat is truly critical. FWS designated more than 8.6 million acres of federal land in four states as critical habitat, with no evidence that the bulk of this land is used by owls. FWS knew the locations of the vast majority of the birds when it designated critical habitat as well as the locations of habitat essential to their continued survival — the PACs. FWS stated in the 2004 Critical Habitat Rule that there are a total of 1,176 designated PACs and that the number of known owls on federal land in the southwest ranges from 1,176 to 2,352, depending on whether one bird or a pair occupies each PAC. App. 94. FWS explained that a PAC includes a minimum of 600 acres, including the best nesting and roosting habitat in the area and the most proximal and highly used foraging areas. App. 88, 218. The agency stated that some non-territorial “floaters” exist as well as 35 dispersing juvenile owls. App. 218-219. But FWS gave no estimate of the number of owls outside PACs, and did not state that significant numbers of undiscovered owls exist. Nor did FWS state that Mexican spotted owls are migratory. Instead, it stated that owls exhibit high site fidelity; once dispersing male owls settle in a territory (the area defended by an owl) they rarely make additional movements outside their home range. App. 222, 223, 226. Otherwise, it would make no sense to identify and protect owl PACs. See App. 396-403 (Recovery Plan guidance for PACs). Assuming that each PAC contains 650 acres, /.e., the average size of the PACs on National Forests in Arizona and New Mexico, see App. 425, the total area is 764,000 acres — less than 10 percent of the 8.6 million acres designated as_ critical habitat. Consequently, most of the land designated as critical habitat is outside of a PAC with no verifiable record of current or recent occupancy by an_e owl. Nevertheless, FWS did not make the findings required under its rules to designate unoccupied areas as critical habitat. See 50 C.F.R. 424.12(e); see also Cape Hatteras, 344 F. Supp. 2d at 125. Instead, FWS explained: “Because the specific areas being designated are within the geographical area occupied by the species, we (1.e., the Secretary of Interior) are not required to make a separate determination as to whether the lands included are essential to the conservation of the owl.” App. 135. In other words, FWS stated that critical habitat is “occupied” under 36 the statute as long as it is found generally within a species’ range. As explained, the district court misapprehended the rationale given by the agency, stating that FWS “interpreted ‘occupied’ to include those ‘areas where owls are known to occur or are likely to occur.’” App. 63-64. In the cited portion of the rule, however, FWS actually stated that owls are known to occur or are likely to occur in “protected areas,” i.e., PACs and pine-oak forests with slopes greater than 40 percent and where no timber harvesting has occurred in the past 20 years. App. 100. On appeal, the Ninth Circuit supplied an entirely different rationale, asserting that (1) there are actually a much larger number of owls than the estimate of known owls given by the agency in its rule, and (2) owls use far more territory than the area within a PAC. App. 17-19, 20-21, 24-25. This reasoning was based on speculation rather than credible scientific data. First, the Ninth Circuit emphasized that the PACs “reflect only known owl sites,” contending that “owl populations have been estimated to be significantly greater than the maximum 2,352 owls reflected ‘y the number of PACs.” App. 18 (emphasis original). As support, the court referred to a 1999 “pilot study” mentioned in the agency’s environmental assessment, which estimated that the Upper Gila Mountains Recovery Unit, exclusive of tribal lands, contains 2,950 owls. But FWS’s environmental assessment also stated that “la] reliable estimate of the number of Mexican spotted owls found range-wide is not currently available.” 37 App. 420. In the 2004 Critical Habitat Rule, FWS discussed two population studies, a 1999 study reporting population declines of 10 percent or greater in central Arizona and west-central New Mexico, and a 2003 study concluding that the decline in the Arizona population was likely temporary, while the New Mexico population appeared to be continuing to decline. App. 93-94. Furthermore, FWS responded to a comment concerning the possible delisting of the owl by stating that the species’ populations may be declining. App. 110. The Ninth Circuit’s assertion that “significantly greater” numbers of unknown owls exist was simply speculation. Second, the Ninth Circuit explained that “PACs represent only the best habitat used by the owl,” and that owls “regularly use substantial areas outside their PACs for foraging.”. App. 20 #£(emphasis original). According to FWS, however, a PAC includes 75 percent of an owl’s foraging territory and “the most proximal and highly used foraging areas.” App. 88, 218. If a PAC contains approximately 75 percent of an owl’s foraging area, and PACs account for less than 800,000 acres of the critical habitat, how is it possible that owls regularly use the remaining 7.8 million acres for foraging, as the court held? But even if a much larger area is used to account for foraging and other activities, the amount of critical habitat is still grossly excessive. Assuming that the home range associated with each PAC is 2,000 acres, the total area equals 2.35 million acres. Further, if the number of PACs is doubled to account for large numbers of dispersing juveniles and “floaters” — an assumption 38 that has no support in the record — the total area still would be 4.7 million acres. The numbers simply do not add up, notwithstanding the Ninth Circuit’s efforts to justify them. The bottom line is that the amount of land designated as_ critical habitat is — grossly disproportionate to the number of known owls on federal land in the southwest. The Ninth Circuit affirmed the agency on the basis that thousands of unknown owls exist requiring millions of acres of additional critical habitat. This improper speculation violated the requirement that the designation of critical habitat be based on the “best scientific data available.” 16 U.S.C. § 1533(b)(2); Bennett, 520 U.S. at 176-77. Even worse, it is speculation by the court, which cannot substitute its own reasoning for that of the agency in order to uphold the agency’s decision, as this Court has held. E.g., State Farm, 463 U.S. at 50. FWS did not rely on the existence of thousands of undiscovered owls, and there is no credible scientific data supporting the Ninth Circuit’s inexpert opinion. The ACGA submits that the Court should review this result-driven determination, which violated a fundamental administrative law _ principle § and implicates important issues concerning’ the designation of critical habitat, including’ the appropriate standard for designating unoccupied areas as critical habitat and the application of the 3Y requirement that critical habitat be designated on the basis of the best scientific data available — — _¢ EE CONCLUSION For the foregoing reasons, the ACGA urges the Court to grant the petition and review the Ninth Circuit’s erroneous determination regarding the method FWS used in considering economic impacts under ESA § 4(b)(2) and that court’s erroneous determination that the entire critical habitat area is occupied by owls. Dated: October 1. 2010. Respectfully submitted, NORMAN D. JAMES Counsel of Record FENNEMORE CRAIG, P.C 3003 North Central Avenue Suite 2600 Phoenix, AZ 85012-2913 (602) 916-5346 ‘THOMAS J. WARD NATIONAL ASSOCIATION O} HOME BUILDERS 1201 15th Street, NW Washington, D.C. 20005-2800 (202) 266-8200 Counsel for Petitioner Arizona Cattle Growers’ Association Su reme UOuil, V.o. , FILED No. 2 oe ach { 7010 Jn The OFFICE OF THE CLERK Supreme Court of the United States ARIZONA CATTLE GROWERS’ ASSOCIATION Py titiorner SALAZAR, et al ) y Respondent / * On Petition For Writ Of Certiorari To The United States Court Of Appeals For The Ninth Circuit —_____——_ APPENDIX TO PETITION FOR WRIT OF CERTIORARI . NORMAN ID). JAME Counsel of Record FENNEMORE CRAIG, P.C 3003 North Central Avenue Suite 2600 Phoenix, AZ 85012-2913 (602) 916-5346 njames@{fclaw.com THOMAS J. WARD NATIONAL ASSOCIATION O} HOME BUILDERS 1201 15th Street, NW Washington, D.C. 20005-2800 (202) 266-8200 Counsel for Petitioner Arizona Cattle Growers’ Association (HM CKLE LAW HRIkF PRINTING (‘t) Mid) JZ #4 ORCA COLLECT (402) 442-2851 APPENDIX OPINION SOUGHT TO BE REVIEWED Ariz. Cattle Growers’ Ass’n v. Salazar, 606 F.3d 1160 (9th Cir. 2010)...........0...000000... oe es App. 1 DISTRICT COURT OPINION AND ORDER Ariz. Cattle Growers’ Ass’n v. Kempthorne, 534 F. Supp. 2d 1013 (D. Ariz. 2008) .......ccccccc0e00+. App. 35 AGENCY RULE REVIEWED ON APPEAL Final Designation of Critical Habitat for the Mexican Spotted Owl, 69 Fed. Reg. 53182 CERN: AE Ay MD sacacnsenceesccbiavestccsskech vonsesseccascenes App. 82 STATUTES SF Male OE UD cso ceusnaacenicchincesetsusasesinancenaces App. 339 16 U.S.C. § 1533(a)1)..... eee eee eeceeeee eee ees App. 340 16 U.S.C. § 1533(a)(3 MA)... eee cee eeeeeee ees App. 340 BPO .2.C. © TBBOTOK ANA). ccecccsssssescsccscccsesseceses App. 34] 16 U.S.C. § 1533(D)Q).cccccccccccccscseevevecevsveeseseees App. 341 REGULATIONS ee de Oe CD ionencgccsccesnessvnssieceds ate App. 342 50 C.FR. § 424.02(d)..ccccccccccccscecsesveveveveevevevee App. 342 Be ee MON cae pense davnsuentissceeshinid¢cneesesn vives App. 342 as OP ME ia bs ns sabankscevepnsousbansssvshecuneent App. 346 il APPENDIX — Continued LEGISLATIVE HISTORY H.R. Rep. No. 95-1625 (1978).................ccccseees App. 347 ee. OI. FOG. Tee 1 OI ve nirssvncsceddeensassseabcenns App. 358 Congressional Record, Oct. 14, 1978 (House Consideration and Passage of H.R. 14104, Tr Oe PRN vais cies ckvses os casaicstamiversnnnson App. 362 ES.0e. MOD. DOG.. OT-OG7 (IGGL)... css cncsensrscannnsenns App. 372 MISCELLANEOUS PORTIONS OF THE RECORD U.S. Dep’t of Interior, Fish and Wildlife Service, Recovery Plan for the Mexican Spotted Owl (Strix occidentalis lucida) (1995)..............065 App. 380 U.S. Dep't of Interior, Fish and Wildlife Service, Environmental Assessment for Designation of Critical Habitat for the Mexican Spotted Owl (Aug. 18, 2004)......... App. 415 App. ] FOR PUBLICATION UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT ARIZONA CATTLE GROWERS’ ASSOCIATION, Plaintiff-Appellant, 5s KEN SALAZAR, in his official capacity as Secretary of the Interior; H. DALE HALL, in his official capacity as Director of Fish & Wildlife Service; UNITED STATES DEPARTMENT OF THE INTERIOR; PAUL K. CHARLTON; ERIC H. HOLDER JR., Attorney General, Defendants-Appellees, CENTER FOR BIOLOGICAL DIVERSITY, Defendant-intervenor-Appellee. No. 08-15810 D.C. No. 2:06-CV-01744- SRB OPINION Appeal from the United States District Court for the District of Arizona Susan R. Bolton, District Judge, Presiding Argued and Submitted November 4, 2009—San Francisco, California Filed June 4, 2010 Before: Betty B. Fletcher, William C. Canby, Jr., and Susan P. Graber, Circuit Judges Opinion by Judge B. Fletcher: App. 2 COUNSEL Norman D. James, Fennemore Craig, Phoenix, Arizo- na, for the plaintiff-appellant, Arizona Cattle Grow- ers’ Association. Andrew C. Mergen, Rebecca Riley, & Robert H. Oak- ley, U.S. Department of Justice, Environment and Natural Resources Division, Washington, D.C., for the defendant-appellee, U.S. Fish and Wildlife Ser- vice. Karen Budd-Falen, Budd-Falen Law Offices, LLC, Cheyenne, Wyoming, for amicus curiae, New Mexico Cattle Growers’ Association. Marc D. Fink, Center for Biological Diversity, Duluth, Minnesota, and Matt Kenna, Western Environmental Law Center, Durango, Colorado, for defendant- intervenor-appellee Center for Biological Diversity. OPINION B. FLETCHER, Circuit Judge: Arizona Cattle Growers’ Association (“Arizona Cat- tle”) appeals from the district court’s grant of sum- mary judgment rejecting its challenge to the United States Fish and Wildlife Service’s (““FWS”) designa- tion of critical habitat for the Mexican Spotted Owl. Arizona Cattle argues that the FWS unlawfully desig- nated areas containing no owls as “occupied” habitat and that the FWS calculated the economic impacts of the designation by applying an impermissible App. 3 “baseline” approach. We have jurisdiction under 28 U.S.C. § 1291, and we affirm. Il BACKGROUND A. Litigation History In 1993 the Mexican Spotted Owl was listed as a threatened species under the Endangered Species Act (“ESA”). The listing decision prompted a series of lawsuits alternately seeking to compel the FWS to designate critical habitat for the owl and, following the FWS’s designation of habitat, attacking that designation. The first such lawsuit was in 1995 to compel the FWS to designate critical habitat and resulted in the FWS’s issuing a final rule designating 4.6 million acres of critical owl habitat, a designation that was quickly challenged in court and then revoked in 1998. After another lawsuit was filed to compel the FWS to designate habitat, the FWS proposed a rule in 2000 to designate 13.5 million acres of critical habitat and in 2001 the agency promulgated a final rule that again designated 4.6 million acres. That rule was later struck down and, rather than propose a new rule, the FWS reopened the comment period on the rule it proposed in 2000. In 2004 the FWS designated ap- proximately 8.6 million acres of critical habitat. It is this designation, the 2004 Final Rule, that Arizona Cattle challenges in the current action. App. 4 Arizona Cattle moved for summary judgment to set aside the 2004 Final Rule as invalid on several grounds, only two of which are appealed. First, Arizo- na Cattle argues that the FWS impermissibly treated areas in which no owls are found as “occupied” under the ESA and, in doing so, bypassed the statutory re- quirements for designating unoccupied areas. Second, Arizona Cattle challenges the FWS’s determination of the economic impacts of the designation, arguing primarily that the FWS applied an impermissible “baseline” approach that did not account for economic impacts of the critical habitat designation that are also attributable to the listing decision. The district court rejected Arizona Cattle’s arguments and grant- ed the Appellees’ cross-motions for summary Jjudg- ment. B. The 2004 Final Rule The FWS relied on three types of habitat man- agement areas, first outlined in a Recovery Plan created in 1995, as a starting point for the 2004 Final Rule: protected areas, restricted areas, and other forest and woodland types. Protected areas are those areas containing known owl sites, termed Protected Activity Centers (“PACs”); “steep slope” areas meeting certain forest conditions; and legally and administra- tively reserved lands. “PACs include a minimum of 600 acres... that includes the best nesting and roost- ing (z.e., resting) habitat in the area .... and the most proximal and highly used foraging areas.” However, PACs contain only 75% of necessary foraging areas App. 5 for the owl. Restricted areas include non-steep slope areas with appropriate forest conditions that are “adjacent to or outside of protected areas.” “Areas out- side of PACs, including restricted areas, provide addi- tional habitat appropriate for foraging.” According to the 2004 Final Rule, restricted areas “also provide habitat for nonterritorial birds[,] ... support dispers- ing juveniles, and ... provide replacement nest/roost habitat on the landscape through time.” The FWS used these categories to “develop| | alternatives for critical habitat designation,” selecting protected and restricted areas as a starting point for potential owl critical habitat.' In the 2004 Final Rule the FWS adopted an alternative that excluded all tribal lands from designation, refined critical habitat unit boundaries, and excluded certain areas that did not contain PACs. The FWS also excluded “Wildland- Urban Interface” areas identified as being at high risk of catastrophic wildfire. The 2004 Final Rule concluded that all of the designated habitat was occupied by the owl. Il. STANDARD OF REVIEW We review the grant of summary judgment de novo, reviewing directly the agency’s action under the ‘As discussed in greater detail below, the FWS also analyzed the areas meeting these habitat characteristics for evidence of owl presence and used this information to refine its eventual designation. App. 6 Administrative Procedure Act’s arbitrary and capri- cious standard. Gifford Pinchot Task Force v. U.S. Fish & Wildlife Serv., 378 F.3d 1059, 1065 (9th Cir. 2004). [A]Jn agency rule would be arbitrary and ca- pricious if the agency has relied on factors which Congress has not intended it to con- sider, entirely failed to consider an important aspect of the problem, offered an explanation for its decision that runs counter to the evi- dence before the agency, or is so implausible that it could not be ascribed to a difference in view or the product of agency expertise. Motor Vehicle Mfrs. Ass’n of the U.S., Inc. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983). In recognition of the agency’s technical expertise the court usually defers to the agency’s analysis, particu- larly within its area of competence. See Earth Island Inst. v. Hogarth, 494 F.3d 757, 766 (9th Cir. 2007); Nat'l Ass’n of Home Builders v. Norton, 340 F.3d 835, 843-44 (9th Cir. 2003). However, the court need not defer to the agency when the agency’s decision is without substantial basis in fact, and there must be a rational connection between the facts found and the determinations made. KLarth Island, 494 F.3d at 766. Il. THE FWS PROPERLY DESIGNATED ONLY OCCUPIED AREAS AS CRITICAL HABITAT We first consider whether the owl “occupied” the designated areas, as defined by the ESA. We conclude that the FWS permissibly interpreted the word App. 7 “occupied” in the ESA to include areas where the owl was likely to be present and that, applying this definition, the FWS designated only “occupied” areas. A. The ESA and the Definition of “Occu- pied” The ESA defines a species’ critical habitat as (i) the specific areas within the geo- graphical area occupied by the species, at the time it is listed ... , on which are found those physical or biological features (I) es- sential to the conservation of the species and (11) which may require special management considerations or protection; and (ii) specific areas outside the geograph- ical area occupied by the species at the time it is listed ... , upon a determination by the Secretary that such areas are essential for the conservation of the species. 16 U.S.C. § 1532(5)(A). The statute thus differenti- ates between “occupied” and “unoccupied” areas, imposing a more onerous procedure on the designa- tion of unoccupied areas by requiring the Secretary to nake a showing that unoccupied areas are essential for the conservation of the species. Although this appeal turns primarily on the factual question of whether the FWS treated unoccupied areas as occu pied to avoid this more onerous process, we face the preliminary issue of what it means for an area to be “occupied” under the ESA. App. 8 It is useful to unpack this inquiry into two com- ponents: uncertainty and frequency. Uncertainty is a factor when the FWS has reason to believe that owls are present in a given area, but lacks conclusive proof of their presence. Frequency is a factor when owls are shown to have only an intermittent presence in a given area. Occasionally, both factors will play a part in determining whether an area is “occupied.” Be- cause the ESA permits only one of two possible out- comes for this inquiry—occupied or unoccupied— when the result is best characterized by a spectrum, we must determine the scope of the FWS’s authority to categorize as “occupied” those areas that may not fit neatly into either pigeonhole. We have ampre guidance on the “uncertainty” issue. The ESA provides that the agency must de- termine critical habitat using the “best scientific data available.” 16 U.S.C. § 1533(b)(2); see also id. § 1533(b)(6)(C)(ii). This standard does not require that the FWS act only when it can justify its decision with absolute confidence. See, e.g., Pub. Citizen Health Research Group v. U.S. DOL, 557 F.3d 165, 176 (3d Cir. 2009); Greenpeace Action v. Franklin, 982 F.2d 1342, 1354-55 (9th Cir. 1992). Although the FWS cannot act on pure speculation or contrary to the evi- dence, the ESA accepts agency decisions in the face of uncertainty. Compare Ariz. Cattle Growers’ Ass’n v. U.S. Fish & Wildlife, 273 F.3d 1229, 1244 (9th Cir. 2001), with Sw. Ctr. for Biological Diversity v. Bab- bitt, 215 F.3d 58, 60-61 (D.C. Cir. 2000). App. 9 Turning to the “frequency” component, Arizona Cattle asserts that the word “occupied” is unambigu- ous and must be interpreted narrowly to mean areas that the species “resides in.” In the context of the owl, they argue that such areas consist only of the 600- acre PACs. The FWS argues for a broader interpreta- tion. It suggests that where a geographic area is used with such frequency that the owl is likely to be pre- sent, the agency may permissibly designate it as occupied. FWS contends that, at a minimum, this includes the owl’s “home range” and may include other areas used for intermittent activities. We cannot agree that “occupied” has an unam- biguous, plain meaning as Arizona Cattle suggests. The word “occupied,” standing alone, does not provide a clear standard for how frequently a species must use an area before the agency can designate it as critical habitat. Cf Amoco Prod. Co. v. Vill. of Gambell, 480 U.S. 531, 548 n.14 (1987) (explaining that there is “clearly” no plain meaning to the phrase “public lands which are actually occupied”). Merely replacing the word “occupied” with the word “resides” does not resolve this ambiguity. Rather, Arizona Cattle’s argument that “occupied” is limited to areas where the species “resides” only underscores the “Home range is the “area used by an animal during its normal activities”; in the case of the owl, estimates of the owl’s home range size have varied substantially. Studies cited in the 1995 Recovery Plan, for example, estimated home range sizes varying from a low of 645 acres to a high of 3,831 acres. App. 10 flexibility of determining whether an area is “occu- pied.” Viewed narrowly, an owl resides only in its nest; viewed more broadly, an owl resides in a PAC; and viewed more broadly still, an owl resides in its territory or home range. Determining whether a species uses an area with sufficient regularity that it is “occupied” is a_ highly contextual and fact- dependent inquiry. Cf Cape Hatteras Access Pres. Alliance v. United States DOI, 344 F. Supp. 2d 108, 119-20 (D.D.C. 2004). Relevant factors may include how often the area is used, how the species uses the area, the necessity of the area for the species’ conser- vation, species characteristics such as degree of mobility or migration, and any other factors that may bear on the inquiry. Such factual questions are within the purview of the agency’s unique expertise and are entitled to the standard deference afforded such agency determinations. See Earth Island, 494 F.3d at 766. Having found the term “occupied” dependent on a number of factors, we must look to whether the agency’s proposed interpretation is permissible as applied to the owl’s habits and habitat. Arizona Cattle argues that the FWS has never previously defined “occupied critical habitat.” Thus, it contends, the agency interpretation urged on appeal is merely a self-serving construction found only in the FWS’s legal briefs and is entitled to no deference. But the agency has defined “occupied critical habitat” in a manner very similar to the proposed interpretation. App. 11 In its Endangered Species Consultation Handbook, the agency defines “occupied critical habitat” as critical habitat that contains individuals of the species at the time of the [Section 7] pro- ject analysis. A species does not have to oc- cupy critical habitat throughout the year for the habitat to be considered occupied (e.g. migratory birds). Subsequent events affect- ing the species may result in this habitat be- coming unoccupied. U.S. Fish & Wildlife Serv. & Nat'l Marine Fisheries Serv., Endangered Species Consultation Handbook 4- 34 (1998), available at http://www.fws.gov/endangered/ pdfs/Sec7/handbook/ch4.pdf. This definition recogniz- es that a species need not be present continuously for habitat to be considered “occupied.” It also demon- strates that “occupied” habitat is not limited to areas in which the species “resides,” as it includes habitat that merely “contains individuals of the species.” At the very least, this definition is entitled to deference “proportional to its power to persuade” pursuant to the Supreme Court’s holding in Skidmore v. Swift & Co., 323 U.S. 134 (1944), and subsequent cases. See United States v. Mead Corp., 533 U.S. 218, 235 (2001) (giving Skidmore deference to interpretations con- tained in agency manuals or enforcement guidelines); Bamonte v. City of Mesa, 598 F.3d 1217, 1228 (9th Cir. 2010) (explaining that, under Skidmore, agency positions not afforded the force of law are entitled to deference “proportional to [their] power to persuade” (internal quotation marks omitted)). The definition in ee App. 12 the handbook appears to be the result of the agency’s considered judgment and, for the reasons we express below, we are persuaded by the agency’s position that “occupied” should not be interpreted in a restrictive fashion. The FWS permissibly rejected Arizona Cattle’s “resides in” interpretation as too narrow. Looking to the context of the present appeal provides a solid justification for this rejection. The record demon- strates, for example, that PACs include only 75% of the owl’s foraging habitat. Even if we assume that each owl “resides in” a PAC, we are not persuaded that Congress intended a definition of “occupied” that would exclude areas likely to be regularly used by the species. This is particularly true where those areas contain resources necessary for species conservation. Arizona Cattle’s proposed interpretation would also exclude habitat for nonterritorial owls that may not be under constant or uniform use despite frequent owl presence. Cf. Cape Hatteras Access Pres. Alliance, 344 F. Supp. 2d at 119-20 (noting the agency’s exami- nation of areas for “consistent use”). The FWS has authority to designate as “occu pied” areas that the owl uses with sufficient regulari- ty that it is likely to be present during any reasonable span of time. This interpretation is sensible when considered in light of the many factors that may be relevant to the factual determination of occupancy. For example, Arizona Cattle’s “reside in” interpreta- tion would make little sense as applied to non- territorial, mobile, or migratory animals—including App. 13 the owl—for which it may be impossible to fix a determinate area in which the animal “resides.” Such a narrow interpretation also would mesh poorly with the FWS’s authority to act in the face of uncertainty.* We are further persuaded by our decision in Gifford Pinchot. In that case we invalidated an agen- cy interpretation of the ESA that effectively eliminat- ed the independent significance of critical habitat as a measure to protect endangered species. See Gifford Pinchot, 378 F.3d at 1070; see aiso Sierra Club v. U.S. Fish & Wildlife Serv., 245 F.3d 434, 441-43 (5th Cir. 2001). The same logic leads us here to reject Arizona Cattle’s attempt to shackle the FWS with an overly narrow definition of “occupied.” Critical habitat— including “occupied critical habitat”—-is defined in relation to areas necessary for the conservation of the species, not merely to ensure its survival. See 16 U.S.C. § 1532(5)A); Gifford Pinchot, 378 F.3d at 1070; Sierra Club, 245 F.3d at 441-42. Limiting the ‘It is easy to envision other contexts in which this interpre tation is even less helpful: consider salmon that swim upstream to spawn, periodical cicadas that live underground for years before emerging as adults, migratory birds, or other animals that require a diverse array of habitats. ‘By way of example, because PACs represent only known owl sites, Arizona Cattle’s proposed interpretation that only PACs are “occupied” because they reflect where the ow] “resides” is likely substantially underinclusive and places a burden on the agency to count every owl. See Sw. Ctr. for Biological Diversity, 215 F.3d at 60-61 (explaining that the ESA’s requirement to use the best scientific data available did not require the agency to conduct independent studies to count every single animal!) App. 14 agency to designating habitat only where the owl “resides” focuses too narrowly on ow] survival and ignores the broader purpose of the critical habitat designation. Our decision is also informed by Supreme Court precedent that has treated the word “occupied” with considerable breadth. In Amoco Production Co., the Court distinguished a statute referring to land “in Alaska” from a statute referring to “public lands which are actually occupied.” 480 U.S. at 547-48 n.14. The Court explained that while “in Alaska” had a “precise geographical/political meaning| |,” the phrase “public lands which are actually occupied” did not and was properly construed to include substantial areas of adjacent waters. Jd. (citing Hynes v. Grimes Pack- ing Co., 337 U.S. 86, 110-16 (1949)). The Court’s interpretation of “actually occupied” as_ including adjacent waters suggests that it is permissible for the FWS to interpret “occupied” more broadly than merely the area where an individual or species “re- sides.” Finally, this interpretation is supported by the purpose of the ESA “‘to prevent animal and plant species endangerment and extinction caused by man’s influence on ecosystems, and to return the species to the point where they are viable components of their ecosystems.” Trout Unlimited v. Lohn, 559 F.3d 946, 949 (9th Cir. 2009) (quoting H.R. Rep. No. 95-1625, at 5 (1978), reprinted in 1978 U.S.C.C.A.N. 9458, App. 15 9455).° Where data are inconclusive or where habitat is used on a sporadic basis, allowing the FWS to designate as “occupied” habitat where the species is likely to be found promotes the ESA’s conservation goals and comports with the ESA’s policy of “institu- tionalized caution.” See 16 U.S.C. § 1531; cf, e.g., Defenders of Wildlife v. Flowers, 414 F.3d 1066, 1074 (9th Cir. 2005); Sierra Club v. Marsh, 816 F.2d 1376, 1386 (9th Cir. 1987) (“Congress clearly intended that [agencies] give the highest of priorities and the bene- fit of the doubt to preserving endangered species.” (internal quotation marks omitted)). It is possible for the FWS to go too far. Most obvious is that the agency may not determine that areas unused by owls are occupied merely because those areas are suitable for future occupancy. Such a position would ignore the ESA’s distinction between occupied and unoccupied areas. See Ariz. Cattle Growers’ Ass’n, 273 F.3d at 1244. We note as a caveat, however, that determining whether an area is occu- pied or merely will be occupied in the future may be *Arizona Cattle cites to the legislative history surrounding the enactment of the statutory definition of “critical habitat.” Although this history suggests that Congress was concerned that agencies were giving equal status to “lands needed for population expansion” as to those presently occupied by the species and that Congress intended the agency to be circumspect about designating unoccupied areas, the history sheds little light on what frequency of species use renders an area “occupied,” the issue of substance in this case. See S. Rep. No. 95-874, at 10 (1978). App. 16 complicated in the context of migratory or mobile species. The fact that a member of the species is not present in an area at a given instant does not mean the area is suitable only for future occupancy if the species regularly uses the area.° Having thus framed the inquiry, we turn to the primary issue before the court: whether the FWS included unoccupied areas in its critical habitat designation. B. The FWS Did Not Designate Unoccu- pied Areas as Critical Habitat After a thorough review of the record we find that the FWS did not arbitrarily and capriciously treat unoccupied areas as occupied. We reiterate that when an agency is acting within its expertise to make a scientific determination “a reviewing court must generally be at its most deferential.” Balt. Gas & Elec. Co. v. NRDC, 462 U.S. 87, 103 (1983); Lands Council v. McNair, 537 F.3d 981, 993 (9th Cir. 2008) (en banc), abrogated in part on other grounds by Winter v. NRDC, 129 S. Ct. 365 (2008). *Consider, for instance, habitat that a currently living owl has migrated through—and used—in the recent past, and through which owls are hkely to migrate and use simiitarly in the future. While owl presence in this area at a particular time may be limited, we are disinclined to nold that the FWS must find this area “unoccupied” simply because, despite owl use in the recent past and foreseeable future, no owl is using the area during a particular temporal window. App. 17 The FWS took, as a starting point for its 2004 designation, the three types of habitat management areas that it developed in the 1995 Recovery Plan. Simply by virtue of the definitions of these habitat management types, there is a direct link between the designated territory and owl occupancy. PACs are explicitly defined with reference to frequent owl presence, and non-PAC protected areas and restricted areas are “devised around” and “adjacent to” PACs. More to the point, we note significant record support for owl] occupancy of these areas in the form of studies correlating the habitat characteristics of protected and restricted areas with owl presence. Cf. Gifford Pinchot, 378 F.3d at 1066; cf also Envtl. Prot. Info. Ctr. v. U.S. Forest Serv., 451 F.3d 1005, 1017 (9th Cir. 2006) (rather than counting individual animals, an agency may in appropriate cases use habitat as a proxy). The agency did not stop there. It further refined its designation by adding and removing areas on the basis of evidence of owl occupancy or lack thereof. A striking example of this is the FWS’s analysis of owl occupancy in the proposed critical habitat in Arizona.’ This analysis proceeds, unit by unit, through the addition of areas to the critical habitat proposal on the basis of information about known owl} locations. It also demonstrates that the FWS, even where it could ‘This document is particularly significant because Arizona contains the largesi 2reas of designated critical habitat. App. 18 not identify known owl sites (PACs) with certainty, was considering other evidence of current owl] use in designating habitat, such as “owl calling routes.” A point of recurring significance to our analysis is that PACs reflect only known owl sites. Although the 2004 Final Rule identified 1,176 PACs, owl popula- tions have been estimated to be significantly greater than the maximum 2,352 owls reflected by this number of PACs. For example, the 2004 Environmen- tal Analysis notes that more owls than this may exist in a single recovery unit: “a pilot study (Ganey et al., 2000) conducted in 1999 estimated the number of Mexican spotted owls for the Upper Gila Mountains Recovery Unit, exclusive of tribal lands, as 2,950.” Since the listing of the species, the FWS has repeat- ediy revised upward its estimates of owl populations and identified new PACs. Likewise, the 2004 Final Rule recognizes that “[a]dditional surveys are likely to document more owls.” Efforts by the FWS to identi- fy other evidence of owl presence when it is unable to fix the location of a PAC with certainty are, therefore, highly significant. Even more significant is the fact that the FWS excluded areas with evidence of few or no owls. The 2004 Final Rule explains that the FWS “did not designate some areas that are known to have widely scattered owl sites, low owl population densities, and/or marginal habitat quality.” We find this state- ment supported by record evidence explaining the FWS’s decision to exclude several areas due to an absence of owls. We likewise find that the record App. 19 demonstrates that where the FWS did include areas in which owl presence was uncertain—such as the North Kaibab Ranger District (“NKRD”), the Peloncillo Mountains, the Prescott National Forest, and certain “sky islands”—it did so after thoughtful consideration of owl occupancy. Finally, we note that a comparison of the areas designated in the 2004 Final Rule to PAC locations confirms that the FWS excluded the vast majority of critical habitat units that contained no PACs and refined the boundaries of the critical habitat units to exclude large areas that are distant from PACs. The FWS’s process for designating critical habi- tat gives us a strong foundation for our conclusion that the agency did not arbitrarily and capriciously treat areas in which owls are not found as “occupied.” With this context in mind, we turn to Arizona Cattle’s specific arguments that the agency improperly desig- nated unoccupied areas as critical habitat and our reasons for disagreement. 1. The FWS Did Not Impermissibly Change Course in the 2004 Final Rule from Its Approach to Prior Designations Arizona Cattle argues that the 1995 Recovery Plan and the agency’s prior proposed habitat designa- tions demonstrate that the FWS considered only PACs to be occupied and intended non-PAC areas— specifically restricted habitat—-to provide future owl App. 20 habitat. This, it contends, is proof that the 2004 Final Rule must have falsely labeled restricted areas as “occupied.” Arizona Cattle singles out an e-mail that it contends is a smoking gun demonstrating that the FWS made an abrupt shift in its description of pro- tected and restricted areas, deciding to refer to these areas as “suitable habitat outside of PACs” rather than “unoccupied habitat.” We have already suggested some of the reasons why it would be inappropriate to read the 2004 Final Rule as treating PACs as the only areas occupied by the owl. We pause here to explain this conclusion further. First, the 2004 Final Rule is explicit that PACs represent only the best habitat used by the owl. The record also demonstrates that the FWS believed that owls may use habitat within a one-mile buffer around PACs and that PACs were intended to “mini- mize activities occurring in close proximity to owl nests ... and preserve the best habitat close to known nesting and roosting sites.” As already dis- cussed, the record reflects that known, territorial owls regularly use substantial areas outside of their PACs for foraging. For these owls, we find that the agency’s suggestion that the owl’s home range is an appropriate measure of the territory occupied by the owl is well-supported by the record. Even that measure would not present a complete picture of the territory occupied by the ow] because PACs reflect only known owl sites. It is implausible to beheve the FWS intended—or was statutorily re- quired—to limit “occupied” habitat to PACs, or to the App. 21 home range of only known owls, when such a decision would be significantly underinclusive. Similarly, it is clear that PACs and the owl’s home range do not reflect areas used by nonterritorial owls or areas used for certain other intermittent owl activities, such as dispersal or migration. The agency points out in the 2004 Final Rule, for example, evidence that “some [owls] migrate considerable distances 12-31 miles... during the winter.” It does not appear that the FWS intended to limit “occupied” habitat to PACs, nor was this decision arbitrary and capricious. As to the FWS’s purported shift in approach between the 2004 Final Rule and earlier agency actions, we find that it reflects merely a change in the agency’ perspective, a movement away from an unnecessarily restrictive view of the areas the owl “occupies.” In other words, the apparent difference between the 2004 Final Rule and the agency’s prior approach did not arise because the agency suddenly decided to treat substantial areas where owls were not present as “occupied.” The agency simply reas sessed its previous approach, which focused narrowly on “known nesting sites” as the areas occupied by the owl, adopting the broader approach that we have held reflects the proper definition of “occupied.” See Nat’ *The 2004 Final Rule also notes that “some [owls] remain in the general area but exhibited shifts in habitat use patterns.” Such shifts in habitat use could also explain some of the state- ments in the previous rule that discuss replacement of nesting and roosting habitat over time. App. 22 Ass’n of Home Builders v. Defenders of Wildlife, 551 U.S. 644, 658-59 (2007) (explaining that agencies may change their minds if proper procedures are followed and federal courts ordinarily review only an agency’s final action); Motor Vehicle Mfrs. Ass’n, 463 U.S. at 44; PLMRS Narrowband Corp. v. FCC, 182 F.3d 995, 1001-02 (D.C. Cir. 1999). Because we conclude that the 2004 Final Rule remained withir. permissible bounds, we find no fault in the rule on this front. The e-mail that Arizona Cattle contends demon- strates the FWS’s shift in approach is explicit that this change was one of agency perspective and was entirely consistent with the evidence of the areas used by the owl. The e-mail states that, in its previ- ous discussion of “occupied habitat,” the agency was “really referring to ... known nesting sites” and that “non-PAC protected areas, restricted areas, and other forest and woodland types within one mile of a PAC . may be used by owls at any given time.” It ex- plains that, although a narrow definition of “occupied habitat” that focused exclusively on nesting might not include these areas, non-PAC protected areas and restricted areas “may potentially harbor an owl at any given time.” The same e-mail states that the FWS believed these areas were, in fact, presently used by owls—even if they had been previously labeled “unoccupied” under an unnecessarily restric- tive approach to that term. Thus, statements in prior agency actions as to the suitability of certain areas for “future owl occupancy” or characterizing restricted areas as “unoccupied” lose their force because they App. 23 reflect this change in approach rather than a contra- diction as to owl presence or use of these areas. We will “uphold a decision of less than ideal clarity if the agency’s path may be reasonably discerned.” Nat’ Ass'n of Home Builders, 551 U.S. at 658 (internal quotation marks omitted); see also Wetlands Action Network v. U.S. Army Corps of Eng’rs, 222 F.3d 1105, 1122 n.8 (9th Cir. 2000). We find the e-mail’s explanation for the agency’s change in perspective supported by the record. For example, the record contains notes taken at a meet- ing that demonstrate the FWS’s focus on assuring that the agency could identify a “reasonable expecta- tion” of occupancy in the areas it planned to desig- nate. The record likewise demonstrates the agency’s view that restricted areas are “temporally occupied” even if not used full-time for nesting purposes. As we have already explained, there is sufficient record support for the agency’s decision in the 2004 Final Rule not to treat PACs as the only areas occupied by the owl. Another example is an e-mail in which the agency explains that, although the exclusion of cer- tain land resulted in the FWS’s proposing to desig- nate an area that contained no PACs, the agency considered the restricted area occupied. The FWS was not attempting to designate areas devoid of owls as “occupied” in the 2004 Final Rule. Although seeming inconsistencies between the FWS’s decisions may shed light on the agency’s process, and changes from past positions that are unsupported by evidence are unlawful, ultimately it is the 2004 Final App. 24 Rule that is before the court and our inquiry is whether the FWS exceeded its authority or deviated from the evidence.’ See Nat’l Ass’n of Home Builders, 551 U.S. at 658-59; Wetlands Action, 222 F.3d at 1122 n.8. The FWS’s analysis solidly demonstrates the connection between the designated areas and owl occupancy, notwithstanding that the agency previous- ly adopted an unnecessarily restrictive view of the areas the owl occupied as limited to known nesting sites. The agency’s approach in the 2004 Final Rule was supported by the evidence and within permissi- ble bounds. 2. The Amount of Land Designated Is Not Disproportionate to the Num- ber of Owls Arizona Cattle also argues that even using the owl’s substantially larger home range as the appro- priate measure for the territory occupied by the owl, "Arizona Cattle does point to a few statements in the record questioning owl presence in areas proposed for designation in what eventually became the 1995 Final Rule. These statements are dated and their applicability to the 2004 Final Rule is questionable. The record reflects evolving agency knowledge as to owl population and location in the decade between the listing of the owl and the 2004 Final Rule, a point that is explicit in the 1995 Recovery Plan and that Arizona Cattle acknowledges in its reply brief. These isolated statements of disagreement with the FWS’s approach in a prior rule promulgated in the mid-1990s do not overcome the record support for the agency’s decision in 2004. App. 25 the FWS has designated a grossly disproportionate amount of land compared to the amount the ow! occupies. It ties this argument to a seemingly simple calculation: multiplying the 1,176 PACs by the maxi- mum estimated home range size of the ow] of 3,831 acres, the resultant area is only approximately 4.5 million acres, in contrast to the 8.6 million acres designated. This calculation, however, rests on a faulty assumption that the PACs represent all extant owls. We have already explained that PACs reflect only known owl sites and that there is record support for the existence of substantially greater numbers of owls and undiscovered sites. Nor does this calcula- tion, tied as it is to the number of PACs, reflect areas used by nonterritorial owls, areas used for juvenile dispersal, or areas used for owl migration. Arizona Cattle’s argument does not overcome the strong evidence that the FWS was focused on designating is areas occupied by OW "We note again here the complexity of determining whether an area is occupied in the context of a mobiie species. Areas used for juvenile dispersal, for example, may be necessary for ow! survival but only used for portions of the year. The record reflects that juvenile dispersal involves the connection of owl groups into “metapopulations.” It does not mean that habitat used for dispersal is not used by owls, but is rather under intermittent use for routine owl movement from one area to another. Regardless, we do not rest our holding on this point because, even absent this rationale, the FWS has sufficiently, justified the designation App. 26 3. The FWS’s Decision to Include the North Kaibab Ranger District in the Designation Was Not Arbitrary and Capricious Finally, we turn to the single specific location’ where Arizona Cattle contends that the FWS has failed to demonstrate owl occupancy: the NKRD. Citing a letter to the FWS detailing certain studies conducted in the area without owl sightings, Arizona Cattle maintains that the agency treated the NKRD as occupied despite evidence that owls were in fact absent from the District. Arizona Cattle, however, overlooks a responsive memorandum by the agency in which the F'WS explains that it declined to rely on those studies because it concluded that the studies were not reliable evidence that owls were not present. This memorandum also explains the reasons for the agency's conclusion that owls are present, including a history of owl sightings in the NKRD. This is precise- ly the sort of decision within the agency’s technical expertise that we are not free to second-guess. This memorandum, along with the FWS’s diligent review of the proposed designation for owl occupancy, Although Arizona Cattle points to areas where it contends that the amount of land designated is disproportionate to the number of PACs contained in the area, this argument is simply a variant on Arizona Cattle’s mathematical argument we reject above. In addition, even as to known owls the argument relies on the 600-acre PACs, rather than a more accurate measure of occupied area App. 27 detailed above, persuades us that the FWS’s decision had a sound basis in fact. We conclude that the agency designated only “occupied” areas as critical habitat, even though it may not have identified with certainty in all cases a known owl constantly inhabiting that territory. The process that the FWS used to select habitat for desig- nation, the measures it took to exclude areas where owls were absent or use by owls was infrequent, and its careful work to confirm the presence of owls in the designated areas demonstrate that the FWS desig- nated areas that correspond to habitat where the owl is likely to be found. The agency action was neither based on speculation nor counter to the evidence. IV. THE FWS’S ECONOMIC ANALYSIS WAS NOT ARBITRARY AND CAPRICIOUS Arizona Cattle challenges the FWS’s analysis of the economic impacts of the critical habitat designa- tion. For the reasons expressed below, we find no fault with the agency’s economic analysis. A. The FWS Permissibly Used the Base- line Approach in Conducting the Eco- nomic Analysis The decision to list a species as endangered or threatened is made without reference to the economic effects of that decision. See N.M. Cattle Growers Ass’n v. U.S. Fish & Wildlife Serv., 248 F.3d 1277, 1282 (10th Cir. 2001). Listing alone results in certain App. 28 protections for the species, including a requirement that federal agencies “insure that any action author- ized, funded, or carried out by such agency ... is not likely to jeopardize the continued existence of any endangered species or threatened species.” 16 U.S.C. § 1536(a)(2); see also, e.g., id. § 1538. These protec- tions may impose economic burdens. In contrast to the listing decision, under the ESA the agency may designate critical habitat only after considering the economic impact of the designation on any particular area. Jd. § 1533(b)(2). The agency has discretion to exclude any area from the designation if the agency determines “that the benefits of such exclusion outweigh the benefits of specifying such area as part of the critical habitat,” unless exclusion would result in extinction of the species. Jd. This can be a delicate balancing act. After critical habitat is designated, the ESA requires that federal agencies “ansure that any action authorized, funded, or carried out by such agency ... is not likely to... result in the destruction or adverse modification” of critical habi- tat. Jd. § 1536(a)(2); see also Gifford Pinchot, 378 F.3d at 1069. The crux of the parties’ dispute over the FWS’s economic analysis is whether the FWS was required to attribute to the critical habitat designation eco- nomic burdens that would exist even in the absence of that designation. The parties agree that the FWS applied the “baseline” approach to the economic analysis. Under this approach, any economic impacts of protecting the owl that will occur regardless of the App. 29 critical habitat designation—in particular, the bur- dens imposed by listing the owl—are treated as part of the regulatory “baseline” and are not factored into the economic analysis of the effects of the critical habitat designation.” Arizona Cattle, relying on the Tenth Circuit’s decision in New Mexico Cattle Growers Association, argues that this was error and that the F'WS was required to apply a “co-extensive” approach to the economic analysis. Under the co-extensive approach, the agency must ignore the protection of a species that results from the listing decision in con- sidering whether to designate an area as critical habitat. Any economic burden that designating an area would cause must be counted in the economic analysis, even if the same burden is already imposed by listing the species and, therefore, would exist even if the area were not designated. In New Mexico Cattle Growers Association the Tenth Circuit held that the baseline approach was impermissible under the ESA. See 248 F.3d at 1285. It did so, however, relying on an FWS regulation that defined “destruction or adverse modification” as effectively identical to the standard for determining “For example, suppose that the decision to list the owl as endangered resulted in a ban on logging in a particular area, and that designating that area as critical habitat would inde- pendently result in the same ban. Because the listing decision would result in the logging ban even if the agency did not designate critical habitat in that area, the baseline approach would not treat the ban as a burden that was imposed by the critical habitat designation. App. 30 whether an agency action places a species in “jeop- ardy.” See id. at 1283-85; see also Gifford Pinchot, 378 F.3d at 1069-70." The Tenth Circuit held that this regulation rendered an economic analysis relying on the baseline approach “virtually meaningless” be- cause it allowed the agency, in all cases, to find no economic impact to the critical habitat designation. See N.M. Cattle Growers Ass’n, 248 F.3d at 1283-85. Our court and others have since found the agency’s definition of “adverse modification” too narrow. See Gifford Pinchot, 378 F.3d at 1070; see also Ctr. for Biological Diversity v. BLM, 422 F. Supp. 2d 1115, 1151-53 (N.D. Cal. 2006); Cape Hatteras Access Pres. Alliance, 344 F. Supp. 2d at 128-30. We therefore reject the Tenth Circuit’s approach in New Mexico Cattle Growers Association as relying on a faulty premise and hold that the FWS may employ the baseline approach in analyzing the critical habitat designation. The baseline approach is, if anything, more logical than the co-extensive approach. The very notion of conducting a cost/benefit analysis is under- cut by incorporating in that analysis costs that will exist regardless of the decision made.” Moreover, the “The Tenth Circuit declined to address whether the FWS’s definition of “adverse modification” was invalid. See N.M. Cattle Growers, 248 F.3d at 1283-85. “We note further the confusion engendered by the co- extensive approach on the “benefit” side of the equation. If the FWS must consider “burdens” imposed by the critical habitat designation as if there were no protections imposed by the (Continued on following page) App. 31 practical relevance of the economic analysis under the ESA is to determine the benefits of excluding or including an area in the critical habitat designation: if there is no net benefit (such as a reduction in economic impacts) to excluding the area, the agency must designate it. See 16 U.S.C. § 1533(b)(2). The baseline approach, in contrast to the co-extensive approach, reflects this purpose. Congress has directed the FWS to list species, and thus impose a regulatory burden, without consid- eration of the costs of doing so. See 16 U.S.C. § 1533(a); N.M. Cattle Growers, 248 F.3d at 1282. It would be strange to conclude that Congress intended the FWS to consider costs at the critical habitat phase that the agency was barred from considering at the listing phase where, as a result, the analysis would bear little relationship to reality.” It would also 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 decision to listing decision, must it also assume that in the absence of the critical habitat designation the species is entirely unprotected in considering the “benefits” of designating a particular area? The co-extensive approach runs the risk of becoming a_ purely academic exercise. “Although the Tenth Circuit is likely correct that inclusion of the costs of listing in the critical habitat analysis does not affect the FWS’s listing process, see N.M. Cattle Growers, 248 F.3d at 1285, it has clear potential to distort the critical habitat analysis. App. 32 exclude an area from critical habitat for economic reasons is discretionary. See 16 U.S.C. § 1533(b)(2); Bennett v. Spear, 520 U.S. 154, 172 (1997). The sim- pler explanation is that the economic analysis of the critical habitat designation is exactly what it sounds like and is not intended to incorporate the burdens imposed by listing the species. Arizona Cattle argues that if the FWS designated critical habitat at the same time as it listed the species, see 16 U.S.C. § 1533(a)(3), there would be no baseline to which to compare the critical habitat designation. Even if the FWS lists the species concur- rently with designating critical habitat, however, listing the species is a necessary antecedent to desig- nating habitat. We see little inconsistency with the FWS’s considering the burdens imposed by the criti- cal habitat designation while taking into account those necessarily imposed by the listing decision even in these circumstances. Finally, Arizona Cattle argues that the baseline approach allows the FWS to treat the economic analysis as a mere procedural formality. We reject the argument that, as a matter of course, the FWS will neglect its duty to perform a thorough economic analysis. To hold otherwise would amount to a pre- sumption that the FWS will act in an arbitrary and capricious fashion, a presumption that is inconsistent with the deference the court affords agencies. See, e.g., Smith v. U.S. Forest Serv., 33 F.3d 1072, 1077 n.2 (9th Cir. 1994). Furthermore, contrary to Arizona Cattle’s contention that the impact of designating App. 33 critical habitat cannot be negligible, the costs of a critical habitat designation could, in fact, be sub- sumed by the burdens imposed by listing the spe- cies—any burden that is entirely “co-extensive” with the listing decision will reflect exactly such a case. We hold that the FWS permissibly applied the baseline approach in conducting the economic analy- sis of the effects of the designation. B. Remaining Arguments We can easily dispose of Arizona Cattle’s two remainin;, challenges to the FWS’s economic analysis. First, Arizona Cattle suggests that the FWS’s analy- sis ignored the economic effects of designating unoc- cupied habitat. Having already rejected’ this argument’s premise—that the FWS'’s critical habitat designation included unoccupied habitat—-we need give »o further consideration to this argument. Se- eond, Arizona Cattle asserts that the FWS’s economic ysis ignored the difference between the jeopardy and adverse modification standard in light of Gifford Pinchot, and should have considered the economic impacts of additional consultations and project. modi- fications that the adverse modification standard imposes. Ar [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386017_2566%3A1. Public record. Not legal advice.