On April 11, 2017, a three-judge panel of the U.S. Court of Appeals for the District of Columbia Circuit (“D.C. Circuit”) held in Carpenters Industrial Council v. Zinke, 2017 U.S.App.LEXIS 6175, that a lumber company trade association had standing to challenge a U.S. Fish and Wildlife Service (“USFWS”) regulation designating critical habitat for the northern spotted owl (Strix occidentalis caurinan). Reversing the district court’s decision, the D.C. Circuit found that plaintiff demonstrated a substantial probability that the regulation would decrease the supply of timber from forest lands where the association’s members obtain timber, thereby causing the members to suffer economic harm. The opening paragraphs of the decision suggest that the D.C. Circuit was struck by the magnitude of the region affected by USFWS’s regulation. “To put the agency’s action in perspective,” the D.C. Circuit stated, “the designated critical habitat is roughly twice the size of the State of New Jersey. For Easterners, imagine driving all the way up and then all the way back down the New Jersey Turnpike, and you will get a rough sense of the scope of the critical habitat designation here.”

The D.C. Circuit applied what the Court itself characterized as a “common sense” approach to whether plaintiff had demonstrated that the federal government caused the alleged economic harm. The Court applied a three-part test, asking whether there is a substantial probability that (1) the challenged action will cause a decrease in supply of raw material from a particular source; (2) the plaintiff manufacturer obtains raw material from that source; and (3) will suffer economic harm from a decrease in the supply of raw material from that source. The D.C. Circuit found that the association made the required showing through a declaration documenting that there would be a reduction in lumber supply from a primary source of lumber, and that the association’s members would be unable to meet customer demand and maintain current production levels.

The Obama Administration-era northern spotted owl critical habitat regulation designated 9.5 million acres of forest lands in California, Oregon, and Washington. The D.C. Circuit’s decision means that the parties and the lower court can proceed to the merits of the challenge.