Pub. 8 2018 Issue 3

15 MINING FOCUS Litigation challenging the Obama critical habitat rules was filed in late 2016 by Alabama and 19 other states, who argued that the rules were so broad that vast areas of uninhabited habitat could be designated as critical habitat in hopes of future reintroduction, unduly limiting economic activity in the meantime. That case, Alabama v. National Marine Fisheries Svc, was settled by the new Trump administration in 2017, with the FWS agreeing to reconsider the disputed rules. The settlement did not affect FWS’ prior designation of the Weyerhaeuser Company property as critical habitat for the dusky gopher frog. Two aspects of the Weyerhaeuser Company’s predicament are relevant to mine developers and other landowners contemplating development of land that could in the future be considered critical habitat by FWS. Once designated as critical habitat, the issuance of any necessary federal permit – for example, wetlands permitting under the Clean Water Act – would require agency consultation under section 7 of the ESA, and result in restrictive permit conditions even though no frogs were present on the property. Second, although FWS determined that the habitat designation would have an impact in excess of $35 million, mostly from lost timber and real estate development revenue, FWS argued that its decision to find those costs “not disproportionate” to the biological benefits of the designation could not even be reviewed by the courts. After an initial federal district court decision in favor of FWS, a panel of the U.S. Court of Appeals for the Fifth Circuit upheld the ruling in favor of FWS in a 2-1 decision, over a strong dissent by Judge Edith Jones. A subsequent request for review by the full Court was denied, although with six judges dissenting, demonstrating significant divisions over interpretation of the ESA. The U.S. Supreme Court agreed to hear the case in January 2018. The two key legal issues being considered by the Supreme Court are whether the text of the Endangered Species Act requires that unoccupied habitat have the physical and biological features necessary for the endangered species to survive. The second is whether the FWS’ balancing of the economic costs of a critical habitat designation against biological benefits is reviewable by the courts, or left purely to the agency’s discretion. On its face, the case of the dusky gopher frog seems to be one of almost incredible regulatory overreach, where FWS imposed a significant regulatory hurdle on future development of private property, even though the property undisputedly could not biologically support the species in question. The lower courts that upheld the FWS actions were highly deferential to agency decision making, but the Supreme Court may be less likely to do so. The situation is even more complicated in light of the (as of this writing) current vacancy on the Supreme Court. If the current liberal and conservative wings of the Court split 4-4, the lower court decision will be upheld, and FWS will face fewer regulatory constraints in subjecting unoccupied “habitat” to regulatory limitations under the ESA. X John W. Andrews is an attorney with the Salt Lake City office of Snell & Wilmer. Andrews focuses his practice in Environmental and Natural Resources and has more than 30 years of practice experience in public lands, real estate, minerals and Native American law issues. The FWS’ action on the dusky gopher frog played out in the context of Obama administration efforts to drastically increase the scope of critical habitat designations under the ESA.