## Facts

- The U.S. Fish and Wildlife Service (FWS) listed the New Mexico meadow jumping mouse as endangered in 2014.
- In 2016, FWS issued a final rule designating roughly 14,000 acres of riparian land in New Mexico, Colorado, and Arizona as the mouse’s critical habitat, including areas where federal grazing permits are common.
- FWS prepared an economic impacts analysis under ESA § 4(b)(2) using a “baseline” approach that counted only incremental costs attributable to the critical-habitat designation, excluding costs attributable to the species’ listing and other preexisting regulatory obligations.
- FWS estimated about $23 million in incremental costs, largely tied to modifying grazing practices, cattle rotation, and water access.
- Two ranching associations whose members hold renewable federal grazing permits within designated areas alleged the rule would increase operating costs, harm livestock operations, reduce ranch property values, and interfere with privately held water rights and related infrastructure in riparian areas.
- The district court upheld the designation; the associations appealed, challenging the economic methodology, consideration of water-rights impacts, and the refusal to exclude certain areas under ESA § 4(b)(2).

## Issues

1. Whether ESA § 4(b)(2) requires FWS to consider all economic impacts associated with listing and designation, or permits a baseline method limited to incremental impacts of critical-habitat designation.
2. Whether FWS adequately considered the designation’s effects on private water rights and related infrastructure as part of the rulemaking.
3. Whether FWS acted arbitrarily and capriciously in declining to exclude particular areas from critical habitat under ESA § 4(b)(2)’s benefits-balancing provision.

## Decision

- The Tenth Circuit affirmed the district court and upheld the 2016 critical-habitat designation.
- FWS’s baseline (incremental-cost) methodology complied with ESA § 4(b)(2) and was not arbitrary or capricious under the APA.
- The administrative record showed FWS considered water-rights concerns and potential constraints on grazing and water infrastructure in the designated areas.
- FWS reasonably explained its decision not to exclude particular areas after weighing conservation benefits against economic and other impacts, and the court deferred to that agency judgment.

## Legal Principles

- Under ESA § 4(b)(2), FWS may use a baseline approach that assesses incremental economic impacts attributable to critical-habitat designation, rather than re-counting impacts attributable to the species’ listing and other existing regulatory requirements.
- APA review of a critical-habitat designation is deferential; a court will uphold the rule if the agency reasonably explained its consideration of relevant factors and supported its conclusions in the record.
- ESA § 4(b)(2) gives FWS discretion to exclude areas when exclusion benefits outweigh designation benefits, subject to the extinction limitation; disagreements with the agency’s weighing of competing considerations do not, without more, establish arbitrary and capricious action.
- An agency adequately considers claimed impacts (including asserted effects on private rights) when it acknowledges them and addresses them in a reasoned manner, even if affected parties seek a different framing or greater detail.

## Conclusion

The Tenth Circuit sustained FWS’s critical-habitat rule for the New Mexico meadow jumping mouse, holding that the ESA permits FWS’s incremental baseline economic analysis, that the agency sufficiently considered asserted water-rights effects, and that FWS reasonably exercised its discretion in refusing to exclude specific areas under ESA § 4(b)(2).


N. N.M. Stockman’s Ass’n v. U.S. Fish & Wildlife Serv., 30 F.4th 1210 (10th Cir. 2022)