04.27.2017

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A forest products trade association has standing to challenge the critical habitat designation for the northern spotted owl, the U.S. Court of Appeals for the District of Columbia Circuit held in Carpenters Industrial Council v. Zinke, No. 15-5304 (April 11, 2017). The case is now sent back to the district court for a decision on the merits.

Background

In 2012, the U.S. Fish and Wildlife Service (the Service) issued a rule designating more than 9.5 million acres of federal forest lands in California, Oregon and Washington as critical habitat for the northern spotted owl. Several business, trade groups and counties sued to challenge the legality of the critical habitat designation.

While the lawsuit was pending in the district court, the D.C. Circuit issued Swanson Group Manufacturing v. Jewell, 790 F.3d 235 (D.C. Cir. 2015). In Swanson, the court held that a group of lumber industry plaintiffs did not have standing to challenge the Bureau of Land Management’s failure to sell timber as required by statute. The Swanson court held that the plaintiffs’ allegations were insufficient to support standing because they were conclusory and did not demonstrate that the challenged action would cause them economic injury. After the D.C. Circuit’s opinion in Swanson, the district court in this case ruled that none of the plaintiffs had standing, in part based on the court’s conclusion that their allegations of economic harm were “indistinguishable” from the allegations in Swanson. Carpenters Industrial Council v. Jewell, 139 F. Supp. 3d 7 (D.D.C. 2015).

The case and controversy requirement of the U.S. Constitution limits the jurisdiction of federal courts and requires plaintiffs to demonstrate standing to sue. U.S. Const. art. III, § 2, cl. 1. Generally, to establish standing, a plaintiff must allege (1) a concrete and particularized injury that is actual or imminent, (2) that the injury is caused by the defendant’s conduct and (3) that the requested relief is likely to redress the injury. Lujan v. Defenders of Wildlife, 504 U.S. 555, 560–61 (1992). Where a plaintiff alleges that it will suffer economic harm as a result of government action, the D.C. Circuit requires the complaint and declarations together to demonstrate a “substantial probability of injury-in-fact, causation, and redressability.” Sierra Club v. Jewell, 764 F.3d 1, 7 (D.C. Cir. 2014). An association may establish standing by showing that at least one of its members would have standing in its own right.

The American Forest Resource Council (the Council), one of the plaintiffs in the suit, submitted a declaration from its president to show that the Council had standing. The declaration alleged that several of its members would suffer economic injury because they had previously obtained timber from lands designated as critical habitat, and the critical habitat designation would decrease their timber supply.

The Court’s Analysis

The D.C. Circuit had no difficulty concluding that the Council had standing to challenge the critical habitat designation based on this declaration. The court noted that “[c]ommon sense and basic economics tell us that a business will be harmed by a government action when (i) the government action decreases the supply of a raw material from a source that the business relies on and (ii) the business cannot find a replacement without incurring additional cost.” Slip op. at 9. The court relied on its holding in Mountain States Legal Foundation v. Glickman, 92 F.3d 1228, 1233 (D.C. Cir. 1996), that “[g]overnment acts constricting a firm’s supply of its main raw material clearly inflict the constitutionally necessary injury.”

In upholding the Council’s standing, the court articulated a three-step test to determine when a plaintiff alleging that a government action will decrease supply of a raw material has standing based on economic injury. In such instances, a plaintiff must demonstrate (1) a substantial probability that the challenged government action will cause a decrease in the supply of raw material from a particular source; (2) a substantial probability that the plaintiff manufacturer obtains raw material from that source; and (3) a substantial probability that the plaintiff will suffer some economic harm as a result of the decrease in the supply of raw material from that source.

Regarding the first requirement, the court held that the critical habitat designation would clearly decrease timber harvesting on designated lands. The court cited parts of the rule designating the critical habitat in which the Service stated that timber harvesting in designated forests should be limited. “The text of the Rule therefore confirms what common sense suggests. A regulation that imposes restrictions on the Government’s ability to offer timber from designated forest lands for harvest is substantially probable to cause a decline in the timber supply from those lands.” Slip op. at 10.

With regard to the second requirement, the court noted that the declaration asserted that the Council included several lumber companies that obtained their supply of timber from lands that were designated as critical habitat.

Finally, with regard to the third requirement, the court explained that it was “Economics 101” that decreasing the supply of timber from designated lands is substantially probable to cause economic harm to the companies that previously got timber from those lands. The court cited assertions in the declaration that several Council members faced supply shortages without timber from designated federal lands. “Unless the company can fully replace the source of the supply at zero additional cost to the company (and by zero, we mean zero), then the company has suffered an economic harm.” Slip op. at 11.

Thus, the court concluded that the Council had standing because it showed that it was substantially probable to suffer economic injury as a result of the critical habitat designation.

The court distinguished this case from its prior decision in Swanson by noting the differences in the particular declarations in the two cases. Unlike the Council, the court explained, the plaintiffs in Swanson had not shown the extent of their reliance on timber sales from the land at issue, nor did they show that their injuries were attributable to inadequate timber supply as opposed to an independent source.

Conclusion

The D.C. Circuit’s decision in this case may make it easier for forest products, mining, oil and gas, and other enterprises to establish standing based on “common sense” economic injuries resulting from government actions that decrease the supply of raw materials by restricting access or availability otherwise. This decision, especially as compared with Swanson, also reinforces the importance of submitting well-written declarations that allege sufficient facts to support standing requirements.

© 2017 Perkins Coie LLP 


 

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