Last fall a federal court in the Western District of Texas upheld a challenge to the U.S. Fish & Wildlife Service’s (Service) decision to list the lesser prairie chicken (LEPC) as a threatened species under the federal Endangered Species Act (ESA). Permian Basin Petroleum Assoc’n et al., v. U.S. Dep’t. of Interior, No. 7:14-cv-00050-RAJ (W.D. Tex. Sept. 1, 2015). As explained in our previous QuickStudy discussing that decision, the court found that the Service’s listing decision was arbitrary and capricious. Rather than simply remand the decision back to the Service to address the flaws in its reasoning, the court vacated the listing, meaning the LEPC is no longer subject to the protections of the ESA.

Rather than immediately appealing the court’s decision, the Service filed a motion with the trial court asking the court to amend its judgment (Motion to Amend) by remanding the rule to the Service without vacatur, which would leave the ESA protections in place while the Service corrected deficiencies in its original listing decision. The motion was opposed by the plaintiffs in the case, and the parties made a number of filings over the next four months providing supplemental information in support of their respective positions. On Monday, February 29, the court issued an order denying the Service’s motion. As a result, the LEPC remains an unlisted species, pending either an appeal to the Fifth Circuit or a new listing decision by the Service. 

Basis for Denying the Motion

In denying the Service’s motion, the court held that the Service failed to meet the applicable legal standard for amending its original judgment – a clear error of law or manifest injustice. On the contrary, the court found that this case represented the rare situation where vacatur rather than remand was warranted. It reaffirmed that the Service’s original analysis of its own Policy for Evaluation of Conservation Efforts in listing decisions (PECE) was insufficient and its reasoning was invalid. Specifically, the Service had failed to consider updated enrollment statistics for the Western Association of Fish and Wildlife Agencies’ (WAFWA) Range Wide Conservation Plan (Range Wide Plan) which were in its possession prior to the final decision, and it made improper assumptions that affected the entire evaluation.   

Key among the improper assumptions made by the Service in its original PECE analysis was the assumption that industry would have no incentive to participate in the Range Wide Plan or otherwise conserve the species if it were not listed. The court determined that the Service had provided no valid basis for that assumption. In its filings in support of its Motion to Amend, the Service made a number of assertions intended both to shore up that assertion and to demonstrate that the species was likely to suffer irreparable harm if the listing was not reinstated. In particular, the Service raised concerns about the effectiveness of the Range Wide Plan itself, and also alleged that four wind energy developers were taking advantage of the vacatur to push forward with projects that they otherwise would not have pursued because of adverse impacts to LEPC habitat.

WAFWA and two of the named wind energy developers took exception to the Service’s allegations, sending letters to the Service that were subsequently filed with the court. WAFWA’s letter directly refuted the Service’s assertions that several of the potential projects it had identified were imminent, and pointed out that even if constructed, those projects would impact only 0.1% of the area in the species’ estimated range. WAFWA also pointed out that record precipitation in 2015 had alleviated the severe drought conditions that were affecting LEPC populations prior to the original listing decision, and that oil prices are down roughly 70% over the last year, greatly diminishing the threat to the species from oil and gas development activities. Despite that drop in activity, however, WAFWA stated that 98% of Range Wide Plan enrollment fees have been paid and no companies have requested to withdraw from the program. 

The letters submitted by the two wind energy developers refuted a number of assertions by the Service regarding their projects and potential impacts on LEPC. The letters contained information demonstrating that the projects did not or would have the impact claimed by the Service (indeed one of the projects is located several miles from where the Service claimed and not in LEPC habitat), that the project layouts had been revised to avoid and minimize potential impacts in consultation with the Service, and that decisions regarding the timing and construction of the projects was driven by financing and commercial considerations rather than the vacatur of the listing.   

The court relied heavily on the information provided by WAFWA and the wind energy companies, in addition to information provided by the plaintiffs, to conclude that the Service failed to meet its burden of proving that the vacatur has had or will have disruptive effects, or that the threats to the species are imminent and substantial. On the contrary, the court stated that the evidence presented suggests just the opposite – that the threats to the LEPC are subsiding and not substantial. As a result, the court denied the Service’s Motion to Amend and allowed the vacatur to stand.

What Now?

For the time being, the LEPC continues as an unlisted species which is not entitled to the protections of the ESA. Importantly, the court also clarified that the vacatur applies across the entire range of the species. The Service had argued that if the vacatur did stand its effect should be narrowly limited to the areas of New Mexico and west Texas represented by the plaintiffs. The court disagreed, indicating that by not tailoring its vacatur initially, it had implicitly rejected that argument. Accordingly, early suggestions following the court’s original ruling that the Service might interpret the vacatur as applying only in the Permian Basin are no longer a concern.   

What’s Next?

While the LEPC is not currently protected, developers should continue to consider the effects of their activities on the species and take steps to avoid and minimize their impacts to LEPC and their habitat. This is important not only for the sake of responsible development, but also because the status of the species could change within the coming year. The Service will likely file an appeal. The appeal may be of the court’s original decision to vacate the listing, its denial of the Motion to Amend, or perhaps both. It is likely that any such appeal would not be decided until later in the year, unless the Service seeks and obtains an expedited hearing on an appeal of the denial of its Motion to Amend. Although success on any such appeal has to be considered unlikely based on the lower court’s reasoning, particularly in its denial of the Motion to Amend, it cannot be ruled out entirely. Developers moving forward with projects on the assumption that the species will remain unprotected might suddenly find that construction of the Project requires authorization – potentially at a critical time in the construction or financing process.   

While the Service and the Department of Justice are still deciding their appellate strategy, it is likely that the Service has already begun working on a new listing decision for the LEPC. There is some thought that the Service may expedite its new listing decision in an effort to reinstate protections for the LEPC as quickly as possible. If so, the new rule could perhaps be published as early as this summer. However, the Service must be very cautious not to be seen as pre-decisional. The court’s initial ruling made clear that the Service’s original analysis and assumptions were invalid. In its filings in support of its Motion to Amend, the Service made a number of arguments intended to expand on its original analysis and provide a justification for reversing the vacatur and reinstating legal protections for the species. However, the court determined that the information provided by the plaintiffs, WAFWA, and the wind energy developers clearly contradicted those arguments. In light of the court’s findings, and absent a successful appeal, it will be incumbent on the Service to find new and different justifications to support a re-listing. If one assumes that the Service put forth its very best arguments in support of its Motion to Amend, then it is questionable what other legitimate bases the Service will be able to provide. There is a real risk that a new decision to list the species will be seen as having been predetermined, with the analysis designed to fit the desired outcome. That would likely result in a fresh legal challenge to the new rule. A second successful challenge could deal a crippling blow to the Service’s efforts to provide legal protection for the species.

A Better Approach?

To avoid such a setback, if an appeal is not successful the Service might be wise to forestall a new listing decision for a year or more. That may provide time for oil prices to rebound and for the Service’s predictions of renewed drought due to climate change to be borne out. If or when that happens, and the Range Wide Plan has not proven effective, then the threats to the species may finally justify a listing. Of course, it is also possible, and it should be the hope of both industry, the Service, and the environmental community, that the existing, voluntary framework will prove to be effective at minimizing threats and mitigating impacts of development on the LEPC and its habitat, such that a listing is ultimately unnecessary.