## Facts

- The U.S. Fish & Wildlife Service (FWS) listed the Mexican spotted owl as a threatened species under the Endangered Species Act (ESA) in 1993.
- After multiple rulemakings and litigation, FWS issued a final rule designating several million acres as critical habitat for the owl.
- Arizona Cattle Growers’ Association challenged the designation under the Administrative Procedure Act (APA) and ESA, arguing:
  - FWS improperly designated certain areas as “occupied” critical habitat even though no owls had been found in those specific areas at the time of listing.
  - FWS used an unlawful economic methodology by applying a “baseline” approach that treated impacts from the owl’s listing as background conditions rather than as costs of critical habitat designation.
- The district court granted summary judgment to the federal defendants and an intervenor supporting the designation.
- Arizona Cattle appealed; the court of appeals reviewed the agency action under the APA’s arbitrary-and-capricious standard.

## Issues

1. Whether FWS unlawfully designated areas as “occupied” critical habitat when owl presence in those specific areas was not confirmed at the time of listing.
2. Whether FWS’s use of the “baseline” (incremental) approach to evaluating economic impacts of critical habitat designation was contrary to the ESA or arbitrary and capricious under the APA.

## Decision

- The Ninth Circuit affirmed summary judgment for the government and intervenor.
- The court upheld FWS’s designation of disputed areas as “occupied” critical habitat.
- The court upheld FWS’s use of the baseline methodology for the ESA § 4(b)(2) economic analysis.

## Legal Principles

- Under APA review, a court upholds ESA scientific determinations if the agency provides a rational explanation grounded in the record and the decision is not arbitrary or capricious.
- For ESA “occupied” critical habitat, FWS may apply a scientifically reasonable understanding of occupancy within the species’ known range; “occupied” need not be limited to locations with contemporaneous confirmed sightings at the time of listing.
- In evaluating “economic impact” under ESA § 4(b)(2), FWS may use a baseline method that separates (a) effects attributable to listing (treated as the regulatory baseline) from (b) incremental effects attributable to critical habitat designation, and may analyze only the incremental effects.

## Conclusion

The Ninth Circuit sustained FWS’s critical habitat designation for the Mexican spotted owl, holding that FWS reasonably exercised scientific judgment in treating certain suitable areas as “occupied” habitat and permissibly assessed economic impacts using a baseline methodology focused on incremental effects of designation rather than costs already attributable to the species’ listing.


Ariz. Cattle Growers' Ass'n v. Salazar, 606 F.3d 1160 (9th Cir. 2010)