## Facts

- The U.S. Fish and Wildlife Service (FWS) listed the Arizona population of the cactus ferruginous pygmy-owl as endangered as a “distinct population segment” (DPS) under the Endangered Species Act (ESA).
- The ESA permits listing of “distinct population segments” of vertebrate wildlife, and a 1996 joint agency DPS Policy requires a showing of both (1) “discreteness” and (2) “significance” to the taxon.
- FWS treated western pygmy-owl populations as geographically isolated from eastern populations and divided the western group into an Arizona population and a northwestern Mexico population, using the U.S.–Mexico border as the dividing line.
- In the listing rule, FWS stated the Arizona population occupied a small portion of the species’ current range and that its loss would not significantly curtail the western population’s current range.
- Despite those statements, FWS found the Arizona population “significant,” citing that loss of one of the two western segments would create a “significant gap” in the taxon’s range and referencing a “potential for genetic differences” between eastern and western populations.
- The listing triggered ESA-related restrictions affecting development activities in parts of Arizona, and developer interests challenged the listing under the ESA and the Administrative Procedure Act (APA).
- The district court upheld FWS’s DPS definition and significance determination; the challengers appealed.

## Issues

1. Whether FWS permissibly found the Arizona pygmy-owl population “discrete” for DPS purposes by using the U.S.–Mexico border under the DPS Policy.
2. Whether FWS adequately supported and explained, consistent with the administrative record, its finding that the Arizona population was “significant” to the taxon as required by the DPS Policy.
3. Whether the DPS listing decision, applying the DPS Policy under the ESA and reviewed under the APA, was arbitrary or capricious.

## Decision

- The Ninth Circuit affirmed the agency’s “discreteness” determination and its use of the international border as a permissible delimiter under the DPS Policy where regulatory and conservation regimes differ.
- The court vacated the listing rule and remanded because FWS did not provide a reasoned, record-based explanation for concluding the Arizona population was “significant.”
- The court held that the “significant gap in the range” rationale was insufficiently explained given FWS’s statements that the Arizona population was a small portion of the range and that its loss would not significantly curtail the western range.
- The court found that referencing only a “potential for genetic differences,” without concrete supporting analysis, was too speculative to satisfy the “significance” requirement.

## Legal Principles

- A valid ESA DPS listing requires satisfaction of both DPS Policy prongs: (1) discreteness and (2) significance; discreteness alone does not justify DPS designation.
- The DPS Policy permits reliance on international governmental boundaries to establish discreteness when differences in management, habitat protection, conservation status, or regulatory mechanisms are materially relevant.
- Under APA review, an agency must articulate a reasoned explanation grounded in the administrative record; conclusory or speculative statements do not support a “significance” finding.
- Internal tension between an agency’s factual statements and its ultimate conclusion can render the decision arbitrary and capricious unless the agency explains the relationship coherently.

## Conclusion

The Ninth Circuit allowed FWS to treat an international border as a permissible basis for DPS discreteness, but vacated and remanded the pygmy-owl listing because FWS did not adequately justify—on the record and without internal inconsistency—that the Arizona population was “significant” to the taxon under the DPS Policy.


Nat’l Ass’n of Home Builders v. Norton, 340 F.3d 835 (9th Cir. 2003)