New Mexico Cattle Growers Ass'n v. United States Fish & Wildlife Service

F I L E D
United States Court of Appeals
Tenth Circuit
PUBLISH
MAY 11 2001
UNITED STATES COURT OF APPEALS
PATRICK FISHER
Clerk
TENTH CIRCUIT

NEW MEXICO CATTLE GROWERS
ASSOCIATION; NEW MEXICO CATTLE
GROWERS ASSOCIATION, a nonprofit
organization; NEW MEXICO PUBLIC
LANDS COUNCIL, a nonprofit corporation;
NEW MEXICO WOOL GROWERS, INC., a
nonprofit corporation; NEW MEXICO FARM
AND LIVESTOCK BUREAU, a nonprofit
corporation; NEW MEXICO WHEAT
GROWERS ASSOCIATION, a non profit
corporation; COALITION OF
ARIZONA-NEW MEXICO COUNTIES FOR
STABLE ECONOMIC GROWTH, a nonprofit
organization; HIDALGO COUNTY CATTLE
GROWERS ASSOCIATION, a nonprofit
organization, on behalf of themselves and
their members; PRODUCTION CREDIT
ASSOCIATION OF NEW MEXICO,

Plaintiffs - Appellants,
No. 00-2050
v.

UNITED STATES FISH AND WILDLIFE
SERVICE, an Agency of the United States
Department of Interior; GALE A. NORTON, *
Secretary of the United States Department of
the Interior; JOHN ROGERS, United States
Fish and Wildlife Service Director and Fish
and Wildlife Service Regional Director;

Pursuant to Fed. R. App. P. 43(c)(2), Gale A. Norton is substituted for
*

Bruce Babbitt, Secretary of the Interior, as a defendant in this action.
 NANCY KAUFMAN, Southwest Regional
Director, United States Fish and Wildlife
Service,

Defendants - Appellees.

APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW MEXICO
(D. Ct. No. CIV-98-275-LH)

Marc R. Stimpert (Karen Budd-Falen and John M. McCall, with him on the
briefs), Budd-Falen Law Offices, P.C., Cheyenne, Wyoming, appearing for
Appellants.

Katherine J. Barton, United States Department of Justice, Environment & Natural
Resources Division, Appellate Section, Washington, DC (Lois J. Schiffer,
Assistant Attorney General, John A. Bryson, and Jean E. Williams, United States
Department of Justice, Environment & Natural Resources Division, Appellate
Section, Washington, DC; John W. Zavitz, Assistant United States Attorney,
Albuquerque, New Mexico; Benjamin Jesup, United States Department of the
Interior, Office of the Solicitor, Washington, DC, and Janet Spaulding, United
States Department of the Interior, Office of the Solicitor, Albuquerque, New
Mexico, with her on the brief), appearing for Appellees.

Before TACHA, Chief Judge, KELLY, Circuit Judge, and LUNGSTRUM, †
District Judge.

TACHA, Chief Circuit Judge.

The New Mexico Cattle Growers Association, New Mexico Farm &

Honorable John W. Lungstrum, Chief District Judge for the District of
†

Kansas, sitting by designation.

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Livestock Bureau, New Mexico Wool Growers, Inc., New Mexico Wheat

Growers Association, New Mexico Public Lands Council, Albuquerque

Production Credit Association, Coalition of Arizona/New Mexico Counties for

Stable Economic Growth, and Hidalgo County Cattle Growers Association

(collectively “Appellants”) all represent, in some fashion, elements of New

Mexico’s agricultural industry. Appellants appeal an order of the district court

dismissing their suit against Appellee U.S. Fish & Wildlife Service (“FWS”). We

exercise jurisdiction pursuant to the Administration Procedures Act (“APA”), 28

U.S.C. §§ 701-06, and reverse.

I.

The Southwestern Willow Flycatcher (“flycatcher”), empidonax traillii

extimus, is one of four sub-species of the willow flycatcher, a small bird that

nests in riparian areas along river beds. On July 23, 1993, the FWS published its

“Proposed Rule to List the Southwestern Willow Flycatcher as Endangered With

Critical Habitat.” 58 Fed. Reg. 39495. On February 27, 1995, the FWS issued

its “Final Rule Determining Endangered Status for the Southwestern Willow

Flycatcher.” 60 Fed. Reg. 10694. The Final Rule listed the flycatcher as

endangered, but deferred the critical habitat designation (“CHD”) in order to

gather more information. However, the FWS did not, on its own initiative, move

forward with the CHD for the flycatcher.

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 On March 20, 1997, the U.S. District Court for the District of Arizona, in

the case Southwest Ctr. for Biological Diversity v. Babbitt, Civ. No. 96-1874-

PHX-RGS (D. Ariz. March 20, 1997), ordered the FWS to complete the CHD for

the flycatcher within 120 days. Pursuant to the court order, the FWS issued its

CHD for the flycatcher on July 22, 1997. At that time, the known population of

the flycatcher was between 300 and 500 nesting pairs spread across seven states

and parts of Mexico. The CHD designated eighteen critical habitat units,

including four in New Mexico, totaling 599 miles of stream and river beds.

The Endangered Species Act (“ESA”), which controls CHDs, requires the

FWS to perform an economic analysis of the effects of the CHD before making a

final designation. 16 U.S.C. § 1533(b)(2). In order to determine what the

“economic impact” of a CHD will be, the FWS has adopted an incremental

baseline approach (the “baseline approach”). The baseline approach utilized by

the FWS is premised on the idea that the listing of the species (which will occur

prior to or simultaneously with the CHD) will have economic impacts that are not

to be considered. The primary statutory rationale for this position comes from 16

U.S.C. § 1533(b)(1)(A), which states that listing determinations be made “solely

on the basis of the best scientific and commercial data available.” Thus, the

baseline approach moves any economic impact that can be attributed to listing

below the baseline and, when making the CHD, takes into account only those

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economic impacts rising above the baseline. Using the baseline approach, the

FWS determined that the flycatcher CHD resulted in no economic impact, stating

that “[c]ritical habitat designation will . . . result in no additional protection for

the flycatcher nor have any additional economic effects beyond those that may

have been caused by listing and by other statutes.” Division of Economics, U.S.

Fish and Wildlife Service, Economic Analysis of Critical Habitat Designation for

the Southwestern Flycatcher, S3 (1997).

The appellants filed suit in district court in March 1998, challenging the

flycatcher designation and alleging that the FWS had violated various provisions

of both the ESA and the National Environmental Protection Act (“NEPA”). In

August 1998, the FWS filed its administrative record (“AR”) with the district

court. The appellants objected that the AR was incomplete. The FWS responded

that the AR was complete and refused to supplement it. The appellants

proceeded to file their opening brief, and the FWS filed its response. Included

with the FWS’s response brief was an eleven-page declaration (“declaration”) by

Jamie Rappaport Clark, the Secretary of the FWS. Accompanying the declaration

were approximately 77 pages of attachments.

The appellants objected to the introduction by the FWS of an extra-record

document and characterized the declaration and its attachments as a post-hoc

rationalization of the FWS’s actions. The FWS characterized the declaration as

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providing background information and an explanation of the AR. On December

21, 1999, the district court ruled the declaration and its attachments to be

admissible and proceeded to rule on the merits in favor of the FWS on all counts.

This appeal followed.

Specifically, the appellants make the following arguments on appeal: (1)

that the FWS’s adoption of the baseline approach to measuring the economic

impact of the flycatcher CHD is an erroneous construction and, thus, a violation

of the ESA; (2) that the district court erred in ruling the declaration and its

attachments admissible; (3) that the FWS misapplied the critical habitat definition

set forth in the ESA; (4) that the FWS violated NEPA by applying the baseline

approach to the environmental impact analysis undertaken in the EA; (5) that the

FWS failed to address adequate alternatives to the CHD pursuant to NEPA 1; and

(6) that the FWS, in making the flycatcher CHD, failed to properly cooperate

with state and local agencies as required by NEPA. Because we rule in favor of

the appellants on the first issue raised by holding that the baseline approach to

1
On July 3, 1997, the FWS published its environmental assessment (“EA”)
of the CHD, which determines whether an environmental impact statement is
necessary under the National Environmental Protection Act (“NEPA”). The EA
analyzed three alternatives: (1) the proposed alternative; (2) an alternative
designating more area; and (3) a “no action” alternative. Again, using the
baseline approach, the FWS determined that there were no environmental impacts
of the CHD above the listing baseline, and thus issued its finding of no significant
impact (“FONSI”) on October 16, 1997. Because the FWS made a FONSI, no
environmental impact statement (“EIS”) was made under NEPA.

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economic impact analysis is not permitted by the ESA, thus setting aside the

flycatcher CHD, we need not address any of the other issues raised.

II.

This case is before us on review pursuant to the APA. Our standard of

review of the lower court’s decision in an APA case is de novo. Sac & Fox

Nation v. Norton, 240 F.3d 1250, 1260 (10th Cir. 2001). “[W]e owe no

deference to the district court’s decision.” Id. When reviewing agency action,

our scope of review is set forth in the APA. “[W]e cannot set aside an agency

decision unless it fails to meet statutory, procedural or constitutional

requirements, or unless it is arbitrary, capricious, an abuse of discretion, or

otherwise not in accordance with law.” Id.; see 5 U.S.C. § 706(2)(A)-(D); see

also, Publ. Lands Council v. Babbitt, 167 F.3d 1287, 1293 (10th Cir. 1999).

Normally, when the agency decision at issue involves interpretations of

federal statutes, we owe deference to that decision as set forth in Chevron,

U.S.A., Inc. v. Natural Resources Def. Council, Inc., 467 U.S. 837, 842-43

(1984). Indeed, the district court in this case, applying Chevron deference to the

FWS’s use of the baseline approach, did not find it to be a violation of the ESA.

The appellants, however, argue that Chevron deference is not applicable in this

case. We agree.

The FWS concedes, in fact, that Chevron deference is not due the FWS’s

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use of the baseline approach in making CHDs. Because the statutory

interpretation resulting in the baseline approach has never undergone the formal

rulemaking process, it remains an informal interpretation not entitled to

deference. Hunnicutt v. Hawk, 229 F.3d 997, 1000 (10th Cir. 2000) (“‘Where

the agency’s interpretation of the statute is made informally, however, such as by

a ‘program statement,’ the interpretation is not entitled to . . . deference.’”

(quoting Fristoe v. Thompson, 144 F.3d 627, 631 (10th Cir. 1998))). Instead, we

simply ask if the agency’s interpretation is “well reasoned” and has the “power to

persuade.” Fristoe, 144 F.3d at 631 (quoting S. Ute Indian Tribe v. Amoco Prod.

Co., 119 F.3d 816, 834 (10th Cir. 1997), overruled on other grounds by Amoco

Prod. Co. v. S. Ute Indian Tribe, 526 U.S. 865 (1999)).

III.

Our primary task in construing statutes is to “determine congressional

intent, using ‘traditional tools of statutory interpretation.’” NLRB v. United Food

& Commercial Workers Union, 484 U.S. 112, 123 (1987) (quoting INS v.

Cardoza-Fonseca, 480 U.S. 421, 446 (1987)). “As in all cases requiring statutory

construction, ‘we begin with the plain language of the law.’” St. Charles Inv. Co.

v. CIR, 232 F.3d 773, 776 (10th Cir. 2000) (quoting United States v. Morgan,

922 F.2d 1495, 1496 (10th Cir. 1991)). “In so doing, we will assume that

Congress’s intent is expressed correctly in the ordinary meaning of the words it

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employs. . . . Where the language of the statute is plain, it is improper for this

Court to consult legislative history in determining congressional intent.” Id.

However, “if the statutory language is ambiguous, a court can then resort to

legislative history as an aid to interpretation.” United States v. Simmonds, 111

F.3d 737, 742 (10th Cir. 1997).

Enacted in 1973, the ESA, 16 U.S.C. § 1531 et seq., was the congressional

response to increasing concern about the extent to which “various species of fish,

wildlife, and plants in the United States have been rendered extinct as a

consequence of economic growth and development untempered by adequate

concern and conservation.” 16 U.S.C. § 1531(a)(1). The stated purpose of the

ESA is, in part, “to provide a means whereby the ecosystems upon which

endangered species and threatened species depend may be conserved, [and] to

provide a program for the conservation of such endangered species and

threatened species.” Id. § 1531(b).

The process set forth in the ESA for the protection of endangered and

threatened species and the conservation of their ecosystem begins by granting the

Secretary of the Interior, through the FWS, authority to list species in need of

protection as either endangered or threatened. Id. § 1533(a). The ESA

enumerates the factors to be considered by the agency when making a listing

decision, including “the present or threatened destruction, modification, or

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curtailment of its habitat or range.” Id. § 1533(a)(1). Further, the ESA

specifically requires that the listing determination be based “solely on the basis

of the best scientific and commercial data available.” Id. § 1533(b)(1)(A). Thus,

economic analysis is not a factor in the listing determination. Once a species is

listed, all federal agencies are required to consult with the FWS to “insure that

any action authorized, funded, or carried out by such agency . . . is not likely to

jeopardize the continued existence of any endangered species or threatened

species.” Id. § 1536(a)(2).

In addition to the protections afforded listed species by the ESA, the Act

requires the agency to designate “critical habitat” for all listed species, to the

extent determinable. Id. § 1533(a)(3). Critical habitat is defined as:

(i) the specific areas within the geographic area occupied by the species, at
the time it is listed . . . on which are found those physical or biological
features (I) essential to the conservation of the species and (II) which may
require special management considerations or protection; and (ii) specific
areas outside the geographic 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.

Id. § 1532(5)(A). Thus, the CHD may include specific areas found both inside of

and outside of the geographic area occupied by the species.

The CHD is required to be based on “the best scientific data available”

considering “the economic impact, and any other relevant impact, of specifying

any particular area as critical habitat.” Id. § 1533(b)(2). The agency “may

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exclude” a particular area from the CHD if the agency determines that “the

benefits of such exclusion outweigh the benefits of specifying such area as part

of the critical habitat, unless . . . the failure to designate such area . . . will result

in the extinction of the species concerned.” Id. § 1533(b)(2). Once critical

habitat is designated, federal agencies must consult with the FWS to “insure that

any action authorized, funded, or carried out by such agency . . . is not likely to .

. . result in the destruction or adverse modification of [designated critical]

habitat.” Id. § 1536(a)(2). Thus, agency action that is prohibited is both (1)

action that is likely to jeopardize the existence of a listed species and (2) action

that is likely to result in the adverse modification of any area within a CHD.

The crux of the statutory dispute is in determining the meaning of

“economic impact” in 16 U.S.C. § 1533(b)(2). The baseline approach adopted by

the FWS utilizes a “but for” method for determining what economic impacts flow

from the CHD. Thus, unless an economic impact would not result but for the

CHD, that impact is attributable to a different cause (typically listing) and is not

an “economic impact . . . of specifying any particular area as critical habitat.”

Conversely, the approach advocated by the appellants would take into account all

of the economic impact of the CHD, regardless of whether those impacts are

caused co-extensively by any other agency action (such as listing) and even if

those impacts would remain in the absence of the CHD. The issue presented is a

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question of first impression in this circuit and, to our knowledge, has not been

decided by any of our sister circuits.

The root of the problem lies in the FWS’s long held policy position that

CHDs are unhelpful, duplicative, and unnecessary. Between April 1996 and July

1999, more than 250 species had been listed pursuant to the ESA, yet CHDs had

been made for only two. S. Rep. No. 106-126, at 2 (1999). Further, while we

have held that making a CHD is mandatory once a species is listed, Forest

Guardians v. Babbitt, 174 F.3d 1178, 1186 (10th Cir. 1999), the FWS has

typically put off doing so until forced to do so by court order. S. Rep. No. 106-

126, at 2 (1999).

In turn, the policy position of the FWS finds its root in the regulations

promulgated by the FWS in 1986 defining the meaning of both the “jeopardy

standard” (applied in the context of listing) and the “adverse modification

standard” (applied in the context of designated critical habitat). Action violating

the jeopardy standard is action reasonably expected “to reduce appreciably the

likelihood of both the survival and recovery of a listed species.” 50 C.F.R.

402.02. Action violating the adverse modification standard is action “that

appreciably diminishes the value of critical habitat for both the survival and

recovery of a listed species.” Id. Thus, the standards are defined as virtually

identical, or, if not identical, one (adverse modification) is subsumed by the other

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(jeopardy). See Am. Rivers v. Nat’l Marine Fisheries Serv., 1999 U.S. App.

LEXIS 3860 *5 (9th Cir. Jan. 11, 1999) (agreeing with the agency that

“‘jeopardy’ and ‘critical habitat’ . . . are ‘closely related,’ and [thus] the jeopardy

discussion properly ‘encompasses’ the critical habitat analysis”). While these

regulatory definitions are not before us today, they have been the cause of much

confusion in that they inform the FWS’s interpretation of the ESA’s economic

impact language. 2

Consistent with its long standing position, the FWS argues in the instant

case that the impacts of the flycatcher listing and the flycatcher CHD are co-

extensive. The FWS stated in its economic analysis that, because all actions “that

result in adverse modification of critical habitat will also result in a jeopardy

decision, designation of critical habitat for the flycatcher is not expected to result

in any incremental restrictions on agency activities.” Division of Economics,

U.S. Fish and Wildlife Service, Economic Analysis of Critical Habitat

Designation for the Southwestern Flycatcher, S3 (1997). The CHD itself states

that “[c]ommon to both [the jeopardy standard and the adverse modification

2
Though these regulatory definitions are not before us today, federal
courts have begun to recognize that the results they produce are inconsistent with
the intent and language of the ESA. See, e.g., Sierra Club v. U.S. Fish and
Wildlife Service, 245 F.3d 434 (5th Cir. 2001) (holding that the adverse
modification standard of 50 C.F.R. 402.02 is inconsistent with the ESA).

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standard] is an appreciable detrimental effect on both survival and recovery of a

listed species,” and thus “actions satisfying the standard for adverse modification

are nearly always found to also jeopardize the species concerned, and the

existence of a critical habitat designation does not materially affect the outcome

of consultation.” 60 Fed. Reg. 39,131 (July 22, 1997). Moreover, the FWS

continues to assert that agency action that is “likely to adversely modify critical

habitat but not to jeopardize the species for which it is designated are extremely

rare historically, and none have been issued in recent years.” Appellee’s Brief at

31.

However, as we have previously said, the fact that the FWS says that no

real impact flows from the CHD does not make it so. Catron County Bd. of

Comm’rs v. United States Fish & Wildlife Serv., 75 F.3d 1429, 1436 (10th Cir.

1996) (“[W]e disagree with the [Ninth Circuit] that no actual impact flows from

the critical habitat designation. Merely because the Secretary says it does not

make it so. The record in this case suggests that the impact will be immediate

and the consequences could be disastrous.”). Because Catron County dealt with

whether an environmental impact statement had to be prepared pursuant to NEPA

when the FWS made a CHD, the court was dealing specifically with the

environmental impacts of the CHD rather than its economic impacts. However,

our holding in that case casts doubt on the FWS’s position in this case.

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 In fact, the district court in this case, by granting the appellants standing to

challenge the CHD, implicitly acknowledged that they have been impacted by the

flycatcher CHD. N.M. Cattle Growers Ass’n v. United States Fish & Wildlife

Serv., 81 F. Supp. 2d 1141, 1153 (D.N.M. 1999) (holding that the appellants had

alleged an injury in fact flowing from the flycatcher CHD). 3 If none of the

impacts of the CHD are actually attributable to the CHD, the district court’s

standing decision is rendered incoherent. If the injury alleged is attributable

wholly to listing, then the appellants suffer no injury from the CHD, and cannot

establish standing to challenge it. The district court’s standing determination

further points to the inconsistency between the policy position of the FWS and

the language of the ESA itself. But the question of whether the impacts of listing

and a CHD 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.

It is true that the ESA clearly bars economic considerations from having a

3
For example, the district court found that the plaintiffs had alleged and
substantiated that because of the CHD, “fencing has been erected and continues
to be erected on both sides of the length of the Tularosa and San Francisco
Rivers. . . . Due to the fencing, [a rancher] has been forced to reduce the size of
his herd . . . [and] the fencing limits his access to river water which causes his
significant inconvenience and financial harm.” N.M. Cattle Growers Ass’n, 81 F.
Supp. 2d at 1153.

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seat at the table when the listing determination is being made. “The addition of

the word ‘solely’ is intended to remove from the process of the listing or

delisting of species any factor not related to the biological status of the species. .

. . [E]conomic considerations have no relevance to determinations regarding the

status of species.” H.R. Rep. No. 97-567, pt. 1, at 29 (1982), reprinted in 1982

U.S.C.C.A.N. 2807. However, Congress clearly intended that economic factors

were to be considered in connection with the CHD. 16 U.S.C. § 1533(b)(2).

The statutory language is plain in requiring some kind of consideration of

economic impact in the CHD phase. Although 50 C.F.R. 402.02 is not at issue

here, the regulation’s definition of the jeopardy standard as fully encompassing

the adverse modification standard renders any purported economic analysis done

utilizing the baseline approach virtually meaningless. We are compelled by the

canons of statutory interpretation to give some effect to the congressional

directive that economic impacts be considered at the time of critical habitat

designation. Bridger Coal Co./Pac. Minerals, Inc. v. Dir., Office of Workers’

Compensation Programs, 927 F.2d 1150, 1153 (10th Cir. 1991) (“We will not

construe a statute in a way that renders words or phrases meaningless, redundant,

or superfluous.”). Because economic analysis done using the FWS’s baseline

model is rendered essentially without meaning by 50 C.F.R. § 402.02, we

conclude Congress intended that the FWS conduct a full analysis of all of the

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economic impacts of a critical habitat designation, regardless of whether those

impacts are attributable co-extensively to other causes. Thus, we hold the

baseline approach to economic analysis is not in accord with the language or

intent of the ESA.

The FWS contends that should they be forced to abandon the baseline

approach and consider all of the economic impact of a CHD, even if that impact

is attributable co-extensively to another cause, they will be injecting economic

analysis improperly into the listing process. The only two federal courts to

consider this question come to essentially the same conclusion. N. M. Cattle

Growers Ass’n, 81 F. Supp. 2d at 1158; Trinity County Concerned Citizens v.

Babbitt, 1993 WL 650393 *4 (D.D.C. Sept. 20, 1993) (holding that absent the

baseline approach, “the Secretary would be required to include . . . certain costs

that might have already been incurred as a result of the listing of the species, for

example, through the ESA’s jeopardy and take provisions,” even though “the

Secretary is expressly forbidden from considering such economic costs in making

the decision to list species”). We cannot agree.

Requiring that the FWS comply with the intent of the legislative body by

considering economic impacts at a point subsequent to listing does not inject

economic considerations into the listing process, but rather, situates those

considerations in precisely the spot intended by Congress. Moreover, should this

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ruling result in certain areas being excluded from future CHDs, it will not

undermine congressional intent that economic factors be excluded from the

listing decision. The listing of the species will remain in effect and the

significant protections afforded a species by listing will not be undermined.

Indeed, if the FWS’s position that the protections afforded by a CHD are

subsumed by the protections of listing is accepted, this ruling will result in no

decreased protection for endangered species or their habitat.

IV.

As set forth above, the baseline approach to economic analysis pursuant

the 16 U.S.C. § 1533(b)(2) is expressly rejected. The flycatcher CHD is thus set

aside and the FWS is instructed to issue a new flycatcher CHD in compliance

with this opinion as required by the ESA. Accordingly, the decision of the

district court is REVERSED and the case is REMANDED to the district court for

proceedings not inconsistent with this decision.

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