## Facts

- The U.S. Fish and Wildlife Service (FWS) issued two incidental take permits (ITPs) under ESA § 10(a) for separate high-density housing developments on Alabama’s Fort Morgan Peninsula.
- The projects were located in habitat of the endangered Alabama beach mouse (ABM) and would cause habitat loss and fragmentation.
- Each permit was supported by a habitat conservation plan (HCP) providing mitigation funding and designating conservation “set-aside” areas, with some expected conservation measures dependent on future actions by other entities.
- For NEPA compliance, FWS prepared an environmental assessment and issued a finding of no significant impact (FONSI), electing not to prepare an environmental impact statement (EIS).
- Sierra Club challenged the permits under the Administrative Procedure Act (APA), alleging (i) the HCPs did not minimize and mitigate impacts “to the maximum extent practicable” as required by ESA § 10(a)(2)(B), and (ii) the FONSI relied on outdated or insufficient information and failed to assess significant and cumulative effects on the ABM and its limited habitat.

## Issues

1. Whether Sierra Club had Article III standing to challenge issuance of the ITPs.
2. Whether FWS acted arbitrarily and capriciously under the APA by issuing the ITPs without a reasoned, record-supported finding that the HCPs minimized and mitigated impacts to the maximum extent practicable, as required by ESA § 10(a)(2)(B).
3. Whether FWS violated NEPA by issuing a FONSI and not preparing an EIS, where the agency allegedly relied on outdated or insufficient data and failed to take a hard look at direct and cumulative impacts to an endangered species and its habitat.

## Decision

- Sierra Club had standing based on members’ use and enjoyment of the area and the threatened harm to ABM habitat, which was fairly traceable to the permits and redressable by vacatur or suspension.
- The court granted Sierra Club’s motion for summary judgment and denied the federal defendants’ cross-motion.
- The court held FWS’s issuance of both ITPs arbitrary and capricious because the administrative record did not rationally support the selected mitigation measures or show compliance with the ESA “maximum extent practicable” standard.
- The court held FWS’s NEPA analysis arbitrary and capricious because the FONSI rested on outdated or insufficient information and did not reflect a hard-look evaluation of potentially significant and cumulative impacts.
- The court set aside or suspended the ITPs and remanded to FWS for reconsideration consistent with ESA and NEPA, leaving open the possibility of future development if lawfully supported.

## Legal Principles

- Under the APA, a court must set aside agency action that is arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law; the agency must articulate a rational connection between the record and its decision.
- ESA § 10(a)(2)(B) permits an ITP only if the applicant will, to the maximum extent practicable, minimize and mitigate the impacts of the incidental take; the agency must support that finding with reasoned analysis grounded in the record.
- Mitigation findings are deficient when the agency cannot explain why particular mitigation levels satisfy statutory requirements or relies on uncertain, nonbinding future conservation actions by third parties.
- NEPA requires a hard-look assessment of environmental consequences before committing to action; an agency may not rely on stale, incomplete, or speculative assumptions when determining significance.
- Where an action may significantly affect the environment—especially involving an endangered species with limited remaining habitat—an unsupported FONSI may be arbitrary and capricious, requiring preparation of an EIS or renewed analysis.

## Conclusion

The court set aside FWS’s incidental take permits for two coastal housing developments because the agency failed to justify, on the administrative record, that mitigation met ESA § 10’s “maximum extent practicable” requirement and failed under NEPA to support a FONSI with a hard-look analysis using current, adequate information about impacts to the endangered Alabama beach mouse and its habitat.


Sierra Club v. Babbitt, 15 F. Supp. 2d 1274 (S.D. Ala. 1998)