Filing 57

ORDER by Judge Hamilton denying 45 Motion for Summary Judgment; granting 50 Motion for Summary Judgment; granting 51 Motion for Summary Judgment (pjhlc2, COURT STAFF) (Filed on 11/30/2012)

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1 2 UNITED STATES DISTRICT COURT 3 NORTHERN DISTRICT OF CALIFORNIA 4 5 6 BUILDING INDUSTRY ASSOCIATION OF THE BAY AREA, et al., 7 Plaintiff(s), 8 9 No. C 11-4118 PJH v. ORDER RE MOTIONS FOR SUMMARY JUDGMENT UNITED STATES DEPARTMENT OF COMMERCE, et al., 10 11 Defendant(s). ___________________________________/ 12 13 Plaintiffs’ and defendants’ motions for summary judgment came on for hearing 14 before the court on September 12, 2012. Plaintiff Building Industry Association of the Bay 15 Area and Bay Planning Coalition (“plaintiffs”) appeared through their counsel, Theodore 16 Hadzi-Antich. Defendants Department of Commerce, National Oceanic and Atmospheric 17 Administration, U.S. National Marine Fisheries Service, John Bryson, and Eric C. Schwaab 18 (“defendants” or “federal defendants”) appeared through their counsel, Kristen Floom. 19 Defendant-intervenor Center for Biological Diversity (“defendant-intervenor”) appeared 20 through its counsel, Emily Jeffers. Having read all the papers submitted and carefully 21 considered the relevant legal authority, the court hereby GRANTS defendants’ and 22 defendant-intervenor’s motions for summary judgment, and DENIES plaintiffs’ motion for 23 summary judgment as follows. 24 BACKGROUND 25 This is a case about environmental regulations and the designation of the “critical 26 habitat” for a threatened species, namely, the green sturgeon. The facts of the case are 27 largely undisputed. The Endangered Species Act (“ESA”) provides for the protection of 28 species that are either “endangered” (in danger of becoming extinct) or “threatened” (likely 1 to become endangered in the foreseeable future). If a species meets either of those 2 criteria, it is “listed” as either threatened or endangered. Once a species is listed, the 3 government has the authority to designate certain areas as “critical habitat” that are 4 necessary to the conservation of the species, and which may require special protection. 5 The Departments of Commerce and the Interior are responsible for these decisions, and 6 have delegated those responsibilities (in the context of certain species, including the green 7 sturgeon) to the National Marine Fisheries Service (“NMFS”). 8 9 The green sturgeon was listed as a threatened species, which enabled NMFS to determine which areas, if any, were to be designated as “critical habitat,” and thus 10 deserving of special protection. Section 4(b)(2) of the ESA sets forth the procedure by 11 which “critical habitat” areas are designated: 12 13 14 15 16 The Secretary shall designate critical habitat, and make revisions thereto, under subsection (a)(3) on the basis of the best scientific data available and after taking into consideration the economic impact, the impact on national security, and any other relevant impact, of specifying any particular area as critical habitat. The Secretary may exclude any area from critical habitat if he determines that the benefits of such exclusion outweigh the benefits of specifying such area as part of the critical habitat, unless he determines, based on the best scientific and commercial data available, that the failure to designate such area as critical habitat will result in the extinction of the species concerned. 17 18 19 16 U.S.C. § 1533(b)(2). As the text of section 4(b)(2) shows, the ESA is designed not only to protect the 20 habitats of certain species, but also to achieve that protection without creating unnecessary 21 economic impact. Congress delegated to the Secretary of Commerce (who then delegated 22 to the NMFS) both the power to “designate” critical habitats for the green sturgeon, and to 23 “exclude” those areas from designation based on economic impact, national security 24 impact, or any other relevant impact. 25 NMFS endeavored to perform this “critical habitat” designation for the green 26 sturgeon, and performed various analyses of the species, the physical and biological areas 27 necessary to conservation of the species, the economic interests that would be impacted 28 by conservation, and ultimately, the conservation value of each specific area. NMFS 2 1 looked at each area that it was considering designating as a “critical habitat,” and assigned 2 each area a conservation value rating of “high,” “medium,” or “low.” NMFS also was aware 3 of section 4(b)(2)’s language regarding exclusion of those areas where designation would 4 have a large economic impact, and thus analyzed the economic impact of designating each 5 area. NMFS ultimately decided that all areas found to have a “high” conservation value 6 rating would not be eligible for exclusion; in other words, they would all be designated as 7 critical habitat. NMFS issued a “final rule” codifying this decision, and this final rule gave 8 rise to this litigation. 9 Plaintiffs Building Industry Association of the Bay Area (“BIABA”) and Bay Planning 10 Coalition (“BPC”) both represent property owners impacted by NMFS’ decision to designate 11 certain lands as “critical habitat.” Specifically, BIABA is a “nonprofit association of builders, 12 contractors, and related trades and professions involved in the residential construction 13 industry,” and BPC is a nonprofit organization representing the interests of “business and 14 property owners in the San Francisco Bay Area” whose “mission is to ensure a healthy and 15 thriving San Francisco Bay Area for commerce, recreation, and the natural environment.” 16 See Complaint, Dkt. 1 at ¶¶ 6-7. Plaintiffs filed suit against defendants Department of 17 Commerce (and John Bryson1 in his official capacity as Secretary of the Department of 18 Commerce), NMFS (and Eric C. Schwaab in his official capacity as assistant administrator 19 for NMFS), and the National Oceanic and Atmospheric Administration, asserting three 20 causes of action: (1) failure to take into consideration economic impacts in high 21 conservation value (“HCV”) areas under ESA section 4(b)(2); (2) failure to balance the 22 benefits in HCV areas under ESA section (4)(b)(2); and (3) violations of the National 23 Environmental Policy Act (“NEPA”) and the Administrative Procedure Act (“APA”). NEPA 24 requires federal agencies to examine the environmental effects of proposed federal actions 25 and to inform the public of the environmental concerns that went into the agency’s decision 26 27 28 1 Plaintiff’s complaint originally named as a defendant Gary Locke, in his official capacity as Secretary for the United States Department of Commerce, but defendants have substituted John Bryson pursuant to Fed. R. Civ. P. 25(d). 3 1 making, and requires the government to prepare environmental impact statements to that 2 effect. The APA provides a right of judicial review to a person “suffering legal wrong 3 because of agency action, or adversely affected or aggrieved by agency action within the 4 meaning of a relevant statute,” if agency action is “arbitrary, capricious, an abuse of 5 discretion, or otherwise not in accordance with law.” Plaintiffs filed this action against the federal defendants on March 10, 2011, in the 6 7 U.S. District Court for the District of Columbia. On April 13, 2011, the Center for Biological 8 Diversity (“CBD”) filed a motion to intervene, which was granted. On August 1, 2011, the 9 case was transferred to the Northern District of California. Plaintiffs moved for summary 10 judgment on all three of their claims on April 13, 2012, and the federal defendants and the 11 defendant-intervenor filed cross-motions for summary judgment. DISCUSSION 12 13 A. Legal Standard 14 A party may move for summary judgment on a “claim or defense” or “part of . . . a 15 claim or defense.” Fed. R. Civ. P. 56(a). Summary judgment is appropriate when there is 16 no genuine dispute as to any material fact and the moving party is entitled to judgment as a 17 matter of law. Id. 18 A party seeking summary judgment bears the initial burden of informing the court of 19 the basis for its motion, and of identifying those portions of the pleadings and discovery 20 responses that demonstrate the absence of a genuine issue of material fact. Celotex Corp. 21 v. Catrett, 477 U.S. 317, 323 (1986). Material facts are those that might affect the outcome 22 of the case. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A dispute as to a 23 material fact is “genuine” if there is sufficient evidence for a reasonable jury to return a 24 verdict for the nonmoving party. Id. 25 Where the moving party will have the burden of proof at trial, it must affirmatively 26 demonstrate that no reasonable trier of fact could find other than for the moving party. 27 Soremekun v.Thrifty Payless, Inc., 509 F.3d 978, 984 (9th Cir. 2007). On an issue where 28 the nonmoving party will bear the burden of proof at trial, the moving party may carry its 4 1 initial burden of production by submitting admissible “evidence negating an essential 2 element of the nonmoving party's case,” or by showing, “after suitable discovery,” that the 3 “nonmoving party does not have enough evidence of an essential element of its claim or 4 defense to carry its ultimate burden of persuasion at trial.” Nissan Fire & Marine Ins. Co., 5 Ltd. v. Fritz Cos., Inc., 210 F.3d 1099, 1105-06 (9th Cir. 2000); see also Celotex, 477 U.S. 6 at 324-25 (moving party can prevail merely by pointing out to the district court that there is 7 an absence of evidence to support the nonmoving party’s case). 8 9 When the moving party has carried its burden, the nonmoving party must respond with specific facts, supported by admissible evidence, showing a genuine issue for trial. 10 Fed. R. Civ. P. 56(c), (e). But allegedly disputed facts must be material – the existence of 11 only “some alleged factual dispute between the parties will not defeat an otherwise properly 12 supported motion for summary judgment.” Anderson, 477 U.S. at 247-48. 13 When deciding a summary judgment motion, a court must view the evidence in the 14 light most favorable to the nonmoving party and draw all justifiable inferences in its favor. 15 Id. at 255; Hunt v. City of Los Angeles, 638 F.3d 703, 709 (9th Cir. 2011). In adjudicating 16 cross-motions for summary judgment, the Ninth Circuit “evaluate[s] each motion separately, 17 giving the nonmoving party in each instance the benefit of all reasonable inferences.” 18 ACLU of Nevada v. City of Las Vegas, 466 F.3d 784, 790-91 (9th Cir. 2006) (citations 19 omitted). 20 B. Legal Analysis 21 Plaintiffs’ first and second causes of action both arise under section 4(b)(2) of the 22 ESA, and both are premised on the argument that defendants’ blanket designation of all 23 high conservation value areas, without any balancing of economic interests, constituted a 24 violation of defendants’ duties under the ESA. Even though plaintiffs’ first and second 25 causes of action are based on the same legal theory, each uses a different statutory hook 26 from the text of the ESA. The first cause of action is based on defendants’ alleged “failure 27 to take into consideration economic impacts in high conservation value areas.” See Dkt. 1 28 at 11. The second cause of action is based on defendants’ alleged “failure to balance the 5 1 benefits in HCV areas.” Id. For reference, section 4(b)(2) of the ESA is as follows, with 2 relevant portions underlined: 3 8 The Secretary shall designate critical habitat, and make revisions thereto, under subsection (a)(3) on the basis of the best scientific data available and after taking into consideration the economic impact, the impact on national security, and any other relevant impact, of specifying any particular area as critical habitat. The Secretary may exclude any area from critical habitat if he determines that the benefits of such exclusion outweigh the benefits of specifying such area as part of the critical habitat, unless he determines, based on the best scientific and commercial data available, that the failure to designate such area as critical habitat will result in the extinction of the species concerned. 9 Plaintiffs argue that the first sentence of section 4(b)(2) - specifically, the words 4 5 6 7 10 “shall designate . . . after taking into consideration the economic impact” - creates a 11 nondiscretionary duty to account for economic impact in all areas, even HCV areas, when 12 making a decision to designate critical habitat. In plaintiffs’ words, “[n]o area, now matter 13 how it may be classified by NMFS, is excepted from the requirement to consider economic 14 impacts.” Pls.’ Mot. Summ. J., Dkt. 45 at 11. 15 Plaintiffs then point to the second sentence as setting forth the methodology for such 16 a “consideration.” Plaintiffs argue that the word “outweigh” serves to “direct the 17 government to conduct the assessment of economic impacts specifically by a balancing-of- 18 the-benefits methodology.” See Dkt. 45 at 11. In plaintiffs’ view, the “second sentence of 19 Section 4(b)(2) prescribes the manner in which the duty to consider economic impacts 20 mandated in the first sentence must be performed.” Id. at 14. Plaintiffs do concede that 21 “the ultimate decision whether to exclude any area from critical habitat is discretionary,” but 22 they emphasize that “the requirement to consider economic impacts by means of balancing 23 the benefits is mandatory.” Id. at 11. 24 For their part, defendants do concede that they had a mandatory duty to “consider” 25 the economic impacts of designating an area as critical habitat. However, they take issue 26 with plaintiffs’ interpretation of section 4(b)(2)’s second sentence as imposing a 27 “mandatory” balancing test. They argue that “[t]here is no statutory requirement that NMFS 28 balance the benefits of designation of critical habitat against the benefits of exclusion,” and 6 1 that NMFS “was not required to use any particular methodology” to “consider” the economic 2 impact of designation. Defs.’ Cross-Mot. Summ. J., Dkt. 50 at 10-11. Instead, defendants 3 characterize section 4(b)(2) as having two components: (1) an initial, mandatory 4 requirement to consider economic (and other) impacts, and (2) a “wholly discretionary 5 process” by which the agency can exclude certain areas from designation. Id. at 11. And 6 as defendant-intervenor adds, the ESA “does not dictate the manner in which NMFS 7 performs the analysis,” and “[h]ad Congress intended NMFS [] to conduct critical habitat 8 designations using a balancing-of-the-benefits methodology, it would have explicitly so 9 required.” Def.-Int.’s Mot. Summ. J., Dkt. 51 at 7, 8-9. 10 As evidence of NMFS’ consideration, the federal defendants point to an economic 11 analysis report prepared by an outside consultant, Industrial Economics, Inc. (the “Indecon 12 report”). See Dkt. 48, Ex. 22. According to defendants, the Indecon report “considered 14 13 potentially affected economic activities, calculated a total economic impact score for each 14 critical habitat unit, and characterized the associated economic costs for each unit as high, 15 medium, or low.” Dkt. 50 at 14. After reviewing the Indecon report, NMFS prepared a 16 report of its own, titled the “Final ESA Section 4(b)(2) Report.” See Dkt. 48, Ex. 21. 17 Defendant-intervenor argues that the section 4(b)(2) report shows that NMFS actually did 18 balance the benefits of conservation with the economic impact, even though it was not 19 obligated to do so. Specifically, defendant-intervenor points to the report’s use of specific 20 dollar thresholds to represent the economic impact of designating each particular area as 21 critical habitat. Even though NMFS ultimately concluded that no HCV areas would be 22 excluded from designation, defendant-intervenor argues that this “does not mean NMFS 23 did not weigh the benefits of exclusion against those of designation,” but instead shows 24 only that NMFS “determined that because HCV areas were critical to the recovery of the 25 green sturgeon, those areas would not be eligible for exclusion even when economic costs 26 were high.” Def.-Int.’s Reply, Dkt. 55 at 7-8. 27 28 7 1 The parties thus present two issues for the court to decide: 2 (1) What is the scope of NMFS’ duty under section 4(b)(2) of the ESA? Was it 3 obligated only to “consider” the economic impact of designation, or both to “consider” the 4 economic impact and to balance that impact with the environmental effects of designation? 5 (2) Whatever the scope of the duty, did NMFS comply with it? 6 Regarding the first issue, the court finds that the text of section 4(b)(2) is clear in requiring 7 NMFS to “consider” the economic impact of designation. See Bennett v. Spear, 520 U.S. 8 154, 172 (1997) (“the fact that the Secretary’s ultimate decision is reviewable only for 9 abuse of discretion does not alter the categorical requirement that, in arriving at his 10 decision, he ‘tak[e] into consideration the economic impact, and any other relevant 11 impact.’”) (emphasis in original). However, the statutory text does not specify any particular 12 methodology that must be used to accomplish this “consideration.” Thus, the court rejects 13 plaintiffs’ argument that defendants were obligated to perform a balancing test. In fact, the 14 second sentence of section 4(b)(2) shows that the entire “exclusion” process itself is 15 discretionary. A simple reordering of the sentence (without changing the meaning) makes 16 this clearer: “If the Secretary determines that the benefits of such exclusion outweigh the 17 benefits of specifying such area as part of the critical habitat, he may exclude any area 18 from critical habitat.” Based on the plain text of the statute, even if the secretary does 19 determine that the benefits of exclusion outweigh the benefits of designation, he is still not 20 obligated to exclude that area from designation. Instead, he “may exclude” the area from 21 designation. Accordingly, even if NMFS was somehow obligated to perform a balancing 22 test, it was not obligated to exclude any area from designation regardless of the results of 23 that balancing test. 24 Thus, the key question is whether NMFS did indeed “tak[e] into consideration the 25 economic impact” of designation before issuing its final rule. The court finds that the 26 administrative record, especially NMFS’ “Final ESA Section 4(b)(2) Report,” shows that 27 NMFS did satisfy its duty to consider economic impacts. The section 4(b)(2) report makes 28 clear each step of the NMFS’ analysis. After identifying the specific areas to be analyzed, 8 1 the report “determine[s] the benefits of designation,” and then “determine[s] the benefits of 2 exclusion.” Dkt. 48, Ex. 21 at 15-18. In the section describing the economic benefits of 3 exclusion, NMFS notes that it was “able to monetize estimates of the economic impacts 4 resulting from a critical habitat designation,” and that “[s]everal factors were considered in 5 developing the economic impacts, including the level of economic activity within each area, 6 the level of baseline protection afforded to green sturgeon by existing regulations for each 7 economic activity within each area, and the estimated economic impact (in dollars) 8 associated with each activity type.” Id. at 17. After describing the benefits of both 9 designation and exclusion, the report then sets forth NMFS’ “exclusions based on economic 10 impacts.” Id. at 18. This section specifically states that “to weigh the benefits of 11 designation against the benefits of exclusion, we compared the conservation value ratings 12 with the range of high to low annualized economic cost estimates,” and includes a chart 13 showing this comparison. Id. at 18, 27. NMFS “selected dollar thresholds representing the 14 levels at which the potential economic impact associated with a specific area appeared to 15 outweigh the potential conservation benefits of designating that area.” Id. at 18. To 16 determine those thresholds, NMFS “examined the range in economic impacts across all 17 areas within a conservation value rating category, determined where the breakpoint 18 occurred between relatively low economic impacts and relatively high economic impacts, 19 and selected a value within the range of that breakpoint where economic impacts may 20 outweigh the conservation benefits for that area.” Id. After determining this dollar 21 “threshold” for all areas, including HCV areas, “four decision rules were established based 22 on these dollar thresholds.” Id. While plaintiffs obviously disagree with NMFS’ rule that “all 23 areas with a conservation value rating of ‘High’ were not eligible for exclusion regardless of 24 the level of economic impact because of the threatened status of the green sturgeon,” the 25 record shows that NMFS did properly consider the economic impacts before deciding that 26 HCV areas would be ineligible for exclusion, and thus satisfied its duty under section 27 4(b)(2) of the ESA. In fact, the mere presence of these economic analyses in the record 28 would be enough to establish that NMFS satisfied its duty, because in this circuit, an 9 1 agency is entitled to a presumption that it considered all relevant information “unless 2 rebutted by evidence in the record.” Rock Creek Alliance v. U.S. Fish & Wildlife Service, 3 663 F.3d 439, 443 (9th Cir. 2011); see also Kern County Farm Bureau v. Allen, 450 F.3d 4 1072, 1081 (9th Cir. 2006). Even if the court accepted plaintiffs’ reading of the statute and 5 required NMFS to perform the “balancing” test urged by plaintiffs, it appears that 6 defendants cleared that higher bar. Regardless, the court holds only that defendants were 7 required to, and did, “consider” economic impacts, and makes no determination as to the 8 exact methodology required for such consideration. 9 As to the ultimate designation decision reached by NMFS, the court notes that the 10 Administrative Procedures Act does not allow for court review of an agency’s action if 11 “agency action is committed to agency discretion by law.” 5 U.S.C. § 701(a)(2). An agency 12 action is committed to agency discretion by law if the underlying “statute is drawn so that a 13 court would have no meaningful standard against which to judge the agency’s exercise of 14 discretion.” Heckler v. Chaney, 470 U.S. 821, 830 (1985). In this case, section 4(b)(2) of 15 the ESA does not provide any standard by which to judge an agency’s decision not to 16 exclude an area from critical habitat designation. As explained above, the second sentence 17 of section 4(b)(2) establishes a discretionary process by which the secretary may exclude 18 areas from designation, but does not set forth any standard governing when a certain area 19 must be excluded from designation. Put another way, section 4(b)(2) provides a standard 20 of review to judge decisions to exclude, but provides no such standard to review decisions 21 not to exclude. Thus, the agency action in this case is committed to agency discretion by 22 law, and the APA precludes court review of NMFS’ ultimate decision. See also Cape 23 Hatteras Access Preservation Alliance v. U.S. Dept. of the Interior, 731 F.Supp.2d 15, 29 24 (D.D.C. 2010) (“The plain reading of the statute fails to provide a standard by which to 25 judge the Service’s decision not to exclude an area from critical habitat.”); Home Builders 26 Ass’n of Northern California v. U.S. Fish & Wildlife Service, 2006 WL 3190518 (E.D. Cal. 27 2006) (“[T]he court has no substantive standards by which to review the [agency’s] 28 10 1 decisions not to exclude certain tracts based on economic or other considerations, and 2 those decisions are therefore committed to agency discretion.”). 3 Finally, plaintiffs’ third cause of action is based on the allegation that defendants’ 4 failure to prepare either an environment assessment or an environmental impact statement, 5 as required by NEPA, constitutes a violation of the APA. However, plaintiffs concede that 6 the Ninth Circuit has held that “NEPA does not apply to critical habitat designations,” and 7 that plaintiffs are merely “preserving their NEPA claim for appeal.” Pls.’ Reply, Dkt. 52 at 8 20 (citing Douglas County v. Babbitt, 48 F.3d 1495 (9th Cir. 1995)); Dkt. 45 at 21. On that 9 basis alone, summary judgment in favor of defendants is justified. 10 However, even if the Ninth Circuit were to accept plaintiffs’ invitation to “revisit” 11 Babbitt, plaintiffs would still lack standing to bring a NEPA claim. To assert a NEPA claim, 12 “a plaintiff must allege injury to the environment; economic injury will not suffice.” Ranchers 13 Cattlemen Action Legal Fund v. U.S. Dept. of Agriculture, 415 F.3d 1078, 1103 (9th Cir. 14 2005). As alleged in the complaint, plaintiffs are property owners, business owners, and 15 developers who would be forced to “incur costs by taking specific measures to ensure that 16 the use and development of their properties located within the designated habitat areas 17 does not run afoul of [ESA] prohibitions.” Dkt. 1 at ¶¶ 6-7. These injuries appear to be 18 purely economic. However, after defendants and defendant-intervenor raised the standing 19 issue in their motions, plaintiffs attempted to articulate an environmental injury by claiming 20 that the critical habitat designation “interferes with their ability not only to achieve economic 21 goals, but also to preserve and maintain for their members a physical environment that can 22 support and sustain those economic goals by securing important environmental values 23 such as aesthetics, water access, and shoreline access.” Dkt. 52 at 17. Plaintiff BPC 24 further claims that one of its “explicit mission[s]” is to “ensure there is sufficient geographic 25 territory available for its members on which they may develop and engage in commerce, 26 while preserving the environment.” Id. at 18 (emphasis added by plaintiffs). Even as stated 27 by plaintiffs, any alleged injury is purely economic. While plaintiffs may have the “mission” 28 of engaging in commerce in a way that minimizes damage to the environment, that is not 11 1 the same as alleging that the environment itself would be harmed as a result of ESA 2 designations, which is the proper test for NEPA standing. Ranchers Cattlemen, 415 F.3d 3 at 1103; see also Cal. Forestry Ass’n v. Thomas, 936 F.Supp. 13, 22 (D.D.C. 1996) (finding 4 no standing where the environmental injury alleged by plaintiffs was “in fact no more than 5 an economic injury in disguise.”) (internal citation omitted). 6 Accordingly, the court GRANTS summary judgment in favor of the federal 7 defendants and the defendant-intervenor on all three of plaintiffs’ causes of action. 8 Plaintiffs’ motion for summary judgment is DENIED. The Clerk shall close the file. 9 10 IT IS SO ORDERED. 11 Dated: November 30, 2012 _____________________________ PHYLLIS J. HAMILTON United States District Judge 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 12

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