In Building Industry Association of the Bay Area v. U.S. Department of Commerce, a decision with significant implications for property owners, the building industry, and the development community at large, the U.S. Court of Appeals for the Ninth Circuit rejected various challenges to the National Marine Fisheries Service’s (NMFS) critical habitat designation for the southern distinct population segment of North American green sturgeon (Acipenser medirostris), holding that (1) while NMFS must “consider” the economic impacts of designating areas as critical habitat, NMFS is not required to do a cost-benefit analysis, and (2) if NMFS decides not to exclude land from a critical habitat designation, that decision cannot be challenged in court.  2015 U.S. App. LEXIS 11645 (9th Cir. July 7, 2015).

Shortly after NMFS issued a final rule designating critical habitat for the green sturgeon, plaintiffs filed a lawsuit alleging that NMFS failed to comply with Section 4(b)(2) of the Endangered Species Act.  Section 4(b)(2) provides that NMFS “shall” designate critical habitat after considering, among other things, the economic impact of designating any particular area as critical habitat.  NMFS “may” exclude any area from designation if it determines the benefits of exclusion outweigh the benefits of designating the area as critical habitat.

Plaintiffs argued that Section 4(b)(2) created a nondiscretionary duty to “consider” the economic impacts of designating an area as critical habitat, and that it specifically required a “balancing-of-the benefits” methodology when considering such impacts.

The Ninth Circuit rejected this argument, concluding that after NFMS considered the economic impact of the designation, the entire exclusionary process is discretionary and there is no particular methodology that NMFS is required to follow.  The Ninth Circuit found that the use of “outweigh” in the second sentence of Section 4(b)(2) limited the agency’s discretion to exclude areas from designation, but did not require the agency to weigh the economic benefits of exclusion against the conservation benefits of inclusion.

The Ninth Circuit also rejected plaintiffs’ claim that NMFS failed to take into consideration the economic impacts of designating “high conservation value” (HCV) areas, finding that the record demonstrated economic impacts in HCV areas were considered.  And, it was after considering those impacts that NMFS determined that the HCV areas were critical to recovery of the green sturgeon and could not be excluded from designation.

Finally, the Ninth Circuit found that NFMS’s decision not to exclude areas from critical habitat is not reviewable.  Citing its recent decision in Bear Valley Mutual Water Co. v. Jewell, 2015 WL 3894308 (9th Cir. Jun. 25, 2015), the court explained that the decision is unreviewable because section 701(a)(2) of the Administrative Procedure Act excludes agency action from judicial review if the agency action is committed to agency discretion by law.