## Facts

- Environmental organizations challenged the U.S. Fish and Wildlife Service’s (FWS) issuance of an ESA incidental take permit (ITP) for development in the Natomas Basin near Sacramento, California.
- The Natomas Basin consisted largely of agricultural lands and provided habitat or potential habitat for multiple protected species, including the federally threatened giant garter snake and the state-listed Swainson’s hawk.
- Flood-control planning increased development pressure, raising concerns that induced urbanization would reduce and fragment habitat.
- Local entities developed a Habitat Conservation Plan (HCP) administered by a conservancy to support development while acquiring and managing habitat reserves.
- The HCP identified numerous covered species and used a mitigation formula requiring acquisition of 0.5 acres of reserve habitat for each 1 acre developed.
- The HCP funded habitat acquisition and management through per-acre mitigation fees paid by developers, with an initial fee level and only prospective fee increases.
- Plaintiffs alleged the mitigation ratio, funding structure, and analysis of future growth did not ensure impacts would be minimized and mitigated to the maximum extent practicable or that adequate funding would be available.

## Issues

1. Whether FWS’s issuance of the ITP based on the HCP was arbitrary and capricious under the APA and inconsistent with ESA § 10 requirements.
2. Whether the administrative record supported FWS’s determination that the 0.5:1 mitigation ratio would adequately minimize and mitigate take for covered species.
3. Whether FWS reasonably concluded that funding mechanisms and enforceable commitments would ensure timely acquisition and management of required reserve lands.
4. Whether FWS adequately evaluated foreseeable build-out and cumulative/indirect effects associated with basin-wide urbanization.

## Decision

- The court granted plaintiffs’ summary judgment motion in part and denied it in part.
- The court denied the federal defendant’s and intervenors’ cross-motions for summary judgment to the extent they sought to uphold the challenged permit determinations.
- The court set aside the ITP to the extent it rested on insufficiently supported mitigation assumptions and funding assurances.
- The court effectively remanded the matter to FWS for further consideration consistent with the opinion.

## Legal Principles

- Under the APA, agency action must reflect consideration of relevant data and a reasoned explanation connecting the record to the agency’s conclusions; unexplained technical assumptions are arbitrary and capricious.
- ESA § 10 requires an HCP to minimize and mitigate the impacts of incidental take to the maximum extent practicable, and the agency must rationally explain why proposed mitigation meets that standard.
- FWS must be satisfied, based on record evidence, that the applicant will ensure adequate funding for the conservation program; speculative or weakly supported funding mechanisms may be insufficient.
- ESA permit analysis must account for reasonably foreseeable development and cumulative and indirect effects, not merely immediate, project-by-project impacts.
- Deference to agency expertise does not excuse a failure to address important aspects of the problem or to support key assumptions with record-based analysis.

## Conclusion

The court set aside the incidental take permit because FWS did not adequately justify the HCP’s core mitigation ratio, did not demonstrate reliable funding and enforceable mechanisms to secure habitat acquisition and management, and did not sufficiently address foreseeable basin-wide development and cumulative effects as required by the ESA and the APA.


Nat'l Wildlife Fed'n v. Babbitt, 128 F. Supp. 2d 1274 (E.D. Cal. 2000)