Building Industry Ass'n v. U.S. Dept. of Commerce , 792 F.3d 1027 ( 2015 )


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  •                  FOR PUBLICATION
    UNITED STATES COURT OF APPEALS
    FOR THE NINTH CIRCUIT
    BUILDING INDUSTRY ASSOCIATION              No. 13-15132
    OF THE BAY AREA; BAY PLANNING
    COALITION,                                    DC No.
    Plaintiffs-Appellants,       4:11-cv-04118-
    PJH
    v.
    UNITED STATES DEPARTMENT OF                 OPINION
    COMMERCE; NATIONAL OCEANIC
    AND ATMOSPHERIC
    ADMINISTRATION; UNITED STATES
    NATIONAL MARINE FISHERIES
    SERVICE; GARY LOCKE, in his
    official capacity as Secretary for the
    United States Department of
    Commerce; ERIC C. SCHWAAB, in
    his official capacity as Assistant
    Administrator for the United States
    National Marine Fisheries Service,
    Defendants-Appellees,
    CENTER FOR BIOLOGICAL
    DIVERSITY,
    Intervenor-Defendant–Appellee.
    Appeal from the United States District Court
    for the Northern District of California
    Phyllis J. Hamilton, Chief District Judge, Presiding
    2       BLDG. INDUS. ASS’N V. U.S. DEP’T OF COMMERCE
    Argued and Submitted
    March 5, 2015—Pasadena, California
    Filed July 7, 2015
    Before: Harry Pregerson, Barrington D. Parker, Jr.*,
    and Jacqueline H. Nguyen, Circuit Judges.
    Opinion by Judge Parker
    SUMMARY**
    Endangered Species Act
    The panel affirmed the district court’s summary judgment
    in favor of the United States Department of Commerce and
    others in an action brought by property owners under the
    Endangered Species Act and the Administrative Procedure
    Act, challenging the designation of critical habitat for a
    threatened species, the southern distinct population of green
    sturgeon, and the regulations implementing that designation.
    The panel held that, when considering the economic
    impact of its designation, the National Marine Fisheries
    Service complied with section 4(b)(2) of the Endangered
    Species Act and was not required to follow the specific
    *
    The Honorable Barrington D. Parker, Jr., Senior Circuit Judge for the
    U.S. Court of Appeals for the Second Circuit, sitting by designation.
    **
    This summary constitutes no part of the opinion of the court. It has
    been prepared by court staff for the convenience of the reader.
    BLDG. INDUS. ASS’N V. U.S. DEP’T OF COMMERCE           3
    balancing-of-the-benefits methodology argued for by
    appellants. The panel also held that section 4(b)(2)
    establishes a discretionary process by which the agency may
    exclude areas from designation, but does not set standards for
    when areas must be excluded from designation. Accordingly,
    an agency’s discretionary decision not to exclude an area
    from designation is not subject to judicial review. Finally,
    the panel held that appellants’ claim under the National
    Environmental Policy Act failed because the Act does not
    apply to critical habitat designations.
    COUNSEL
    Theodore Hadzi-Antich (argued) and M. Reed Hopper,
    Pacific Legal Foundation, Sacramento, Californiam, for
    Plaintiffs-Appellants.
    David C. Shilton (argued), Robert H. Oakley, and Kristen
    Floom, Attorneys, and Robert G. Dreher, Acting Assistant
    Attorney General, United States Department of Justice,
    Environment & Natural Resources Division, Washington,
    D.C., for Defendants-Appellees.
    Emily Jeffers (argued) and Miyoko Sakashita, Center for
    Biological Diversity, San Francisco, California, for
    Intervenor-Defendant–Appellee.
    4    BLDG. INDUS. ASS’N V. U.S. DEP’T OF COMMERCE
    OPINION
    PARKER, Senior Circuit Judge:
    This appeal, arising under the Endangered Species Act
    (“ESA”) and the Administrative Procedure Act (“APA”),
    requires us to review the designation of critical habitat for a
    threatened species–the southern distinct population segment
    of green sturgeon (the “Southern DPS of green sturgeon”)–
    and the regulations implementing that designation. The
    context for this litigation is the impact of the designation on
    local property owners and on the residential construction
    industry in the Sacramento-San Joaquin Delta and within the
    Sacramento River basin of Northern California. Plaintiffs-
    Appellants Building Association of the Bay Area (“BIABA”)
    and the Bay Planning Coalition (“BPC”) appeal from a
    judgment of the District Court for the Northern District of
    California (Phyllis J. Hamilton, J.). The district court
    concluded that the agencies’ procedures leading to the
    designation complied with the ESA and the APA, granted
    Defendants’ motions for summary judgment and dismissed
    the case.
    Appellants’ main contention on this appeal is that, when
    designating critical habitat for the Southern DPS of green
    sturgeon, the National Marine Fisheries Service (the
    “NMFS”) violated section 4(b)(2) of the ESA by failing to
    follow a specific, obligatory methodology imposed by that
    section, which required the agency to balance the
    conservation benefits of designation against the economic
    benefits of exclusion from designation. Appellants also
    contend that NMFS’s decision not to exclude certain areas
    from critical habitat designation is subject to judicial review
    and that NMFS abused its discretion in not excluding those
    BLDG. INDUS. ASS’N V. U.S. DEP’T OF COMMERCE          5
    areas. Finally, Appellants challenge the dismissal of their
    claim that, as part of the designation process, NMFS was
    required to comply with the National Environmental Policy
    Act (“NEPA”) and failed to do so.
    As explained below, we conclude that, when considering
    the economic impact of its designation, NMFS complied with
    section 4(b)(2) and was not required to follow the specific
    balancing-of-the-benefits methodology argued for by
    Appellants. We also conclude that section 4(b)(2) establishes
    a discretionary process by which the agency may exclude
    areas from designation, but does not set standards for when
    areas must be excluded from designation. Accordingly, an
    agency’s discretionary decision not to exclude an area from
    designation is not subject to judicial review. Finally,
    Appellants’ NEPA claim fails because NEPA does not apply
    to critical habitat designations. See Bear Valley Mutual
    Water Co. v. Jewell, ___F.3d,___, 
    2015 WL 3894308
    (9th
    Cir. Jun. 25, 2015); Douglas Cnty. v. Babbitt, 
    48 F.3d 1495
    ,
    1501–08 (9th Cir. 1995). Accordingly, we affirm.
    BACKGROUND
    I.
    The Southern DPS of green sturgeon is one of two
    population segments of green sturgeon, a bottom-dwelling
    fish that occupies coastal estuaries and marine waters from
    Mexico to Alaska. Final Rulemaking to Designate Critical
    Habitat, 74 Fed. Reg. 52,300, 52,301 (Oct. 9, 2009). The
    Southern DPS of green sturgeon originates from coastal
    watersheds south of the Eel River in northwestern California,
    but the only known spawning population of the species is
    located in the Sacramento River. Construction of dams and
    6    BLDG. INDUS. ASS’N V. U.S. DEP’T OF COMMERCE
    associated structures have altered the Southern DPS of green
    sturgeon’s habitat by substantially increasing the fish’s
    spawning area and reducing the success of its spawning.
    Proposed Threatened Status for Southern Distinct Population
    of North American Green Sturgeon, 70 Fed. Reg. 17,386,
    17,389 (Apr. 6, 2005). The Southern DPS has been further
    threatened by pesticides, bycatching, poaching and the
    introduction of new exotic species. 
    Id. Section 4
    of the ESA, 16 U.S.C. § 1533, and the
    implementing regulations, establish the procedures for adding
    species to the list of threatened and endangered species. See
    16 U.S.C. § 1531(b) (Congress enacted the ESA “to provide
    a means whereby the ecosystems upon which endangered
    species and threatened species depend may be conserved,
    [and] to provide a program for the conservation of such
    endangered species and threatened species”). The Secretaries
    of Commerce and the Interior are responsible for
    administering the ESA, but have delegated their
    responsibilities for marine species and anadromous fish to
    NMFS. See 50 C.F.R. § 402.01(b).
    In 2001, Intervenor-Appellant, the Center for Biological
    Diversity (the “CBD”), along with two other organizations,
    petitioned NMFS to list the green sturgeon as “threatened” or
    “endangered” under the ESA, and to designate critical habitat.
    Threatened Status for Southern Distinct Population Segment
    of North American Green Sturgeon, 71 Fed. Reg. 17,757
    (Apr. 7, 2006). After reviewing the petition, NMFS
    concluded that only the Southern DPS and not the Northern
    DPS of the green sturgeon was a threatened species.
    Accordingly, in April 2005, it published a proposed rule
    listing the Southern DPS as “threatened.” 
    Id. BLDG. INDUS.
    ASS’N V. U.S. DEP’T OF COMMERCE              7
    Under the ESA, as soon as a species has been listed as
    either threatened or endangered, agencies are required to
    consider designating critical habitat. See 16 U.S.C.
    § 1533(b)(6)(C). Critical habitat is defined as “the specific
    areas within the geographical area occupied by the species . . .
    on which are found those physical or biological features
    (I) essential to the conservation of the species and (II) which
    may require special management considerations or
    protection.” 
    Id. § 1532(5)(A)(i).
    Before designating any
    particular area as critical habitat, an agency must “tak[e] into
    consideration the economic impact, the impact on national
    security, and any other relevant impact,” of the designation.
    
    Id. § 1533(b)(2).
    The agency “may exclude any area from
    critical habitat if [it] determines that the benefits of such
    exclusion outweigh the benefits of specifying such area as
    part of the critical habitat” unless exclusion will result in the
    extinction of the species. 
    Id. As previously
    noted, a critical
    issue on the appeal is whether this balancing requirement is
    mandatory or discretionary.
    In order to develop a conservation program to protect the
    Southern DPS of green sturgeon, NMFS formed a critical
    habitat review team, which included representatives from
    NMFS, the Fish and Wildlife Service and the U.S. Bureau of
    Reclamation, all of which had experience in green sturgeon
    biology and in the critical habitat designation process.
    Proposed Rulemaking to Designate Critical Habitat, 73 Fed.
    Reg. 52,084, 52,087 (Sept. 8, 2008). NMFS’s critical habitat
    review team performed an economic and biological analysis
    of every area under consideration for critical habitat
    designation.
    To aid in its analysis of the economic impact of
    designation, NMFS commissioned a report by Industrial
    8    BLDG. INDUS. ASS’N V. U.S. DEP’T OF COMMERCE
    Economics, Inc. This report estimated the economic impact
    on the forty-one areas proposed for designation as critical
    habitat and, to further refine the analysis, included alternative
    “low” and “high” impact scenarios. See Final Economic
    Analysis at 3–5. Beyond the economic impacts, NMFS also
    considered the national security impacts and the impacts on
    Indian lands that would be associated with designating areas
    as critical habitat. Final Rulemaking to Designate Critical
    Habitat, 74 Fed. Reg. 52,300, 52,337–39 (Oct. 9, 2009).
    As part of the process of evaluating the benefits of habitat
    designation, NMFS assigned “conservation values” to the
    areas it was considering for critical habitat designation, which
    include “High” for areas deemed to have a high value of
    promoting conservation of the species (high conservation
    value or “HCV” areas), “Medium,” “Low” or “Ultra-low”
    areas. Final Rulemaking, 74 Fed. Reg. at 52,333. Areas
    designated as having “Medium” and “Low” conservation
    values were potentially eligible for exclusion if the estimated
    economic impacts exceeded certain threshold dollar amounts.
    See Final ESA Section 4(b)(2) Report. “Ultra-low” areas
    were those areas initially categorized as “Low,” and where
    the presence of the Southern DPS of green sturgeon was
    likely, but not confirmed.
    NMFS ultimately decided that all HCV areas were
    essential to the conservation of the Southern DPS of green
    sturgeon, which was “unlikely to survive” without these
    areas, and thus, there was no economic impact that would
    warrant the exclusion of HCV areas from critical habitat
    designation. See Final Biological Report. NMFS excluded
    fourteen areas from designation. The areas that were not
    excluded represented the different habitats needed to support
    the Southern DPS, including habitats that were important for
    BLDG. INDUS. ASS’N V. U.S. DEP’T OF COMMERCE            9
    spawning, rearing, feeding, and migration.          See Final
    Rulemaking, 74 Fed. Reg. at 52,301.
    In October 2010, NMFS promulgated a rule designating
    as critical habitat for the Southern DPS of green sturgeon
    approximately 11,421 square miles of marine habitat, 897
    square miles of estuary habitat and hundreds of additional
    miles of riverine habitat in Washington, Oregon and
    California. Final Rulemaking, 74 Fed. Reg. at 52,345–51,
    codified at 50 C.F.R. § 226.219. The estuary and coastal
    habitat designations included areas in which the green
    sturgeon migrated and foraged. 
    Id. NMFS found
    that it was
    necessary to designate critical habitat for the Southern DPS
    of green sturgeon because its only confirmed spawning area
    at that time was the Sacramento River and “the concentration
    of spawning adults in the Sacramento River place[d] this
    [population] at [a] . . . greater risk of extinction.” Proposed
    Threatened Status, 70 Fed. Reg. at 17,396. The final rule
    explained that fourteen areas had been excluded from critical
    habitat designation, despite being valuable to the preservation
    of the Southern DPS of green sturgeon, because NMFS had
    determined that the benefits of exclusion outweighed the
    benefits of designation. Final Rulemaking, 74 Fed. Reg. at
    52331.
    II.
    Appellants represent property owners who allege that they
    have been adversely impacted by NMFS’s designations.
    BIABA is a non-profit association of builders, contractors
    and related trades and professions involved in the residential
    construction industry. Appellant BPC is a non-profit
    organization, representing business and property owners.
    BPC states that its “mission is to ensure a healthy and
    10 BLDG. INDUS. ASS’N V. U.S. DEP’T OF COMMERCE
    thriving San Francisco Bay area for commerce, recreation and
    the natural environment.” In August 2011, Appellants sued
    in the Northern District of California asserting claims under
    the ESA, the APA and NEPA challenging NMFS’s critical
    habitat designations.
    The parties filed cross-motions for summary judgment.
    In November 2012, the district court granted the agencies’
    and the Intervenor-Appellee’s motions for summary judgment
    and denied the building associations’ cross motion. See Bldg.
    Indus. Ass’n of the Bay Area et al. v. U.S. Dep’t of Comm. et
    al., No. C. 11-4118 PJH, 
    2012 WL 6002511
    (N.D. Cal. Nov.
    30, 2012). The district court held that, under section 4(b)(2)
    of the ESA, NMFS had a nondiscretionary duty to “consider”
    the economic impact of all critical habitat designations, but
    was not required to use any particular methodology. The
    court also held that NMFS had complied with its duty to
    consider the economic impact of designation for all areas and
    that NMFS’s decision not to exclude areas from critical
    habitat designation was not subject to judicial review.
    Finally, the district court held that the building associations
    did not have prudential standing to bring NEPA claims, but
    that even if they had standing, NMFS was not required by
    Douglas County v. Babbitt to conduct a NEPA analysis when
    deciding whether to designate critical habitat. This appeal
    followed. We have jurisdiction under 28 U.S.C. § 1291. For
    the reasons that follow, we affirm.
    STANDARDS OF REVIEW
    “We review the grant of summary judgment de novo, thus
    reviewing directly the agency’s action under the
    Administrative Procedure Act’s (APA) arbitrary and
    capricious standard.” Gifford Pinchot Task Force v. U.S.
    BLDG. INDUS. ASS’N V. U.S. DEP’T OF COMMERCE 11
    Fish & Wildlife Serv., 
    378 F.3d 1059
    , 1065 (9th Cir. 2004);
    5 U.S.C. § 706(2)(A). When reviewing an order granting
    summary judgment, “[w]e must determine, viewing the
    evidence in the light most favorable to the nonmoving party,
    whether there are any genuine issues of material fact and
    whether the district court correctly applied the relevant
    substantive law.” McFarland v. Kempthorne, 
    545 F.3d 1106
    ,
    1110 (9th Cir. 2008) (quoting Fitzgerald Living Trust
    (Fitzgerald III) v. United States, 
    460 F.3d 1259
    , 1263 (9th
    Cir. 2006)).
    Under the APA, an agency decision will be set aside only
    if it is “arbitrary, capricious, an abuse of discretion, or
    otherwise not in accordance with law.” 5 U.S.C. § 706(2)(A).
    “Our review [of agency action] is ‘narrow’ but ‘searching and
    careful,’ . . . and we must ensure that the [agency]’s decisions
    are based on a consideration of relevant factors and we assess
    whether there has been a clear error of judgment.” 
    Gifford, 378 F.3d at 1065
    (internal quotation marks and citations
    omitted). “In general, a court reviewing agency action under
    the APA must limit its review to the administrative record.”
    San Luis & Delta-Mendota Water Authority v. Locke,
    
    776 F.3d 971
    , 992 (9th Cir. 2014). A reviewing court may
    not substitute its judgment for that of the agency. See U.S.
    Postal Serv. v. Gregory, 
    534 U.S. 1
    , 7 (2001).
    12 BLDG. INDUS. ASS’N V. U.S. DEP’T OF COMMERCE
    ANALYSIS
    I. NMFS Followed the ESA When Designating Critical
    Habitat.
    A. The ESA Does not Require the Agency to Follow a
    Specific Methodology When Designating Critical
    Habitat Under section 4(b)(2).
    Appellants argue that NMFS violated the ESA and the
    APA because section 4(b)(2) requires an agency to follow a
    specific “balancing-of-the-benefits” methodology when
    considering the economic impact of designating critical
    habitat. According to Appellants, that methodology was not
    followed here because NMFS designated all HCV areas as
    critical habitat without properly considering the economic
    impact of such designations.
    Section 4(b)(2) of the ESA provides:
    The Secretary shall designate critical habitat
    . . . on the basis of the best scientific data
    available and after taking into consideration
    the economic impact, the impact on national
    security, and any other relevant impact of
    specifying any particular area as critical
    habitat. The Secretary may exclude any area
    from critical habitat if he determines that the
    benefits of exclusion outweigh the benefits of
    specifying such area as part of critical habitat,
    unless he determines, based on the best
    scientific and commercial data available, that
    the failure to designate such area as critical
    BLDG. INDUS. ASS’N V. U.S. DEP’T OF COMMERCE 13
    habitat will result in the extinction of the
    species concerned.
    16 U.S.C. § 1533(b)(2).
    The building associations argue that this provision
    requires NMFS not only to “tak[e] into consideration” the
    economic impact of designation, but to balance the economic
    impact against the environmental benefits of designation.
    Although the ESA does not expressly define “taking into
    consideration,” Appellants contend that the phrase “shall
    designate” in the first sentence of section 4(b)(2) creates a
    nondiscretionary duty to consider the economic impact in all
    areas before designating critical habitat and the second
    sentence of section 4(b)(2) modifies the first by setting forth
    a specific balancing-of-the benefits methodology through
    which the agency should consider the economic impact of
    designation. In essence, Appellants argue that the two
    sentences comprise one mandate and require the agency to
    assess whether the economic benefits of excluding an area
    from designation outweigh the conservation benefits of
    including the area.
    We are not convinced that this interpretation is correct.
    Instead, we read the statute to provide that, after the agency
    considers economic impact, the entire exclusionary process
    is discretionary and there is no particular methodology that
    the agency must follow. As we see it, the first sentence of
    section 4(b)(2) uses the mandatory “shall” to modify what the
    agency must take “into consideration” (e.g. economic impact
    or national security impact) and the second sentence uses the
    discretionary “may” to convey that an agency has the
    discretion to “exclude any area from critical habitat if [it]
    determines that the benefits of such exclusion outweigh the
    14 BLDG. INDUS. ASS’N V. U.S. DEP’T OF COMMERCE
    benefits of specifying such area as part of the critical habitat.”
    16 U.S.C. § 1533(b)(2). The term “outweigh” in the second
    sentence limits the agency’s discretion to exclude areas from
    designation. It does not require the agency to weigh the
    economic benefits of exclusion against the conservation
    benefits of inclusion at the first step of the analysis. The
    second sentence clarifies that the agency can only make
    reductions to critical habitat under the exclusion process of
    the second sentence.
    Agency interpretations of this provision also support our
    reading of it. An October 2008 legal opinion from the
    Department of the Interior (which jointly administers the ESA
    along with the Department of Commerce) analyzes the text
    and the legislative history of section 4(b)(2), and concludes
    that there is no specific methodology that an agency must
    employ when considering whether to exclude an area from
    critical habitat designation. This opinion is entitled to
    Skidmore deference. See Skidmore v. Swift & Co., 
    323 U.S. 134
    , 140 (1944) (agency interpretations and opinions
    “constitute a body of experience and informed judgment to
    which courts and litigants may properly resort for guidance”).
    Although we find the text of the statute sufficiently clear
    that resorting to legislative history is not required, we note
    that the legislative history of the ESA supports our
    interpretation of section 4(b)(2). The report of the House
    Merchant Marine and Fisheries Committee on the
    Endangered Species Act’s 1978 Amendments emphasizes
    that the weight given to any impact is within the Secretary or
    agency’s discretion and that the agency is “not required to
    give economics or any other ‘relevant impact’ predominant
    consideration in . . . specification of critical habitat.” See
    BLDG. INDUS. ASS’N V. U.S. DEP’T OF COMMERCE 15
    H.R. Rep. No. 95–1625 at 17, reprinted in 1978
    U.S.C.C.A.N. 9453, 9467 (1978).
    Finally, none of the cases that have interpreted section
    4(b)(2) have found that there is a specific methodology that
    an agency must employ when considering the economic
    impact of designation. Bennett v. Spear, 
    520 U.S. 154
    (1997), which Appellants cite, is not to the contrary because
    it did not involve exclusion from critical habitat. Although
    the case refers to an agency’s “obligation” to consider
    economic impact, this is in reference to the first sentence of
    section 4(b)(2), which requires only that an agency take
    economic impact into consideration. 
    Id. at 172.
    Furthermore,
    when the Bennett Court stated that “another objective [of the
    requirement that each agency use the best scientific and
    commercial data available] is to avoid needless economic
    dislocation,” it was not construing section 4(b)(2), but section
    7(a)(2), which governs interagency cooperation in the context
    of determining which claims fall within section 7. 
    Id. at 176–77.
    Accordingly, we affirm the district court’s
    conclusion that NMFS did not have to apply a specific
    balancing-of-the-benefits methodology under section 4(b)(2).
    B. NMFS Took Into Consideration the Economic
    Impact of Designation in All Areas, Including
    HCV Areas.
    Appellants also argue that NMFS violated the ESA
    because it did not take into consideration the economic
    impact of designation for all areas under consideration as it
    failed to consider the economic impact of designation for
    areas having a high conservation value. This argument is
    belied by the administrative record. The Final ESA Section
    4(b)(2) Report specifically states that “to weigh the benefits
    16 BLDG. INDUS. ASS’N V. U.S. DEP’T OF COMMERCE
    of designation against the benefits of exclusion, NMFS
    compared the conservation value ratings with the range of
    low to high annualized economic cost estimates . . . for each
    area.” Final ESA Section 4(b)(2) Report at 16. ER 92. After
    NMFS identified the specific areas to be analyzed, it
    considered the economic impacts resulting from critical
    habitat designation, including impacts on dredging, in-water
    construction, agriculture, bottom trawl fisheries, dams,
    commercial shipping, power plants, desalination plants, tidal
    wave/energy projects and liquefied gas projects. NMFS
    estimated the annualized economic impact of critical habitat
    designation for each area under consideration, including all
    of the HCV areas, by assessing the level of economic activity
    and the level of baseline protection afforded to the Southern
    DPS of green sturgeon by existing regulations for each
    economic activity for each area proposed for designation.
    Economic impacts were further valued at the upper bound of
    what was expected. Final Rulemaking, 74 Fed. Reg. at
    52,333. NMFS then selected dollar thresholds representing
    the levels at which the potential economic impact associated
    with a specific area appeared to outweigh the potential
    conservation benefits of designating that area.
    The record thus demonstrates that NMFS considered the
    economic impacts of designation in HCV areas, but
    ultimately determined that the HCV areas were critical to the
    recovery of the Southern DPS of green sturgeon and could
    not be excluded from designation. Final Rulemaking, 74 Fed.
    Reg. at, 52,334 (stating that no amount of economic impact,
    no matter how large, could ever “outweigh the conservation
    benefits of designation, based on the threatened status of the
    Southern DPS of green sturgeon and the likelihood that
    exclusion of areas with a High conservation value would
    significantly impede conservation of the species”). This
    BLDG. INDUS. ASS’N V. U.S. DEP’T OF COMMERCE 17
    approach is within NMFS’s powers under the statute because
    “without critical habitat areas,” the Green Sturgeon was
    “unlikely to survive.” See Final Biological Report. Because
    NMFS is precluded by statute from excluding an area if the
    “failure to designate such area as critical habitat will result in
    the extinction of the species concerned,” see 16 U.S.C.
    § 1533(b)(2), the text of the ESA itself supports NMFS’s
    decision not to exclude the HCV areas from designation.
    A reviewing court’s “task is simply to ensure that the
    agency considered the relevant factors and articulated a
    rational connection between the facts found and the choices
    made.” N.W. Ecosystem Alliance v. U.S. Fish & Wildlife
    Serv., 
    475 F.3d 1136
    , 1140 (9th Cir. 2007) (quoting Nat’l
    Ass’n of Home Builders v. Norton, 
    340 F.3d 835
    , 841 (9th
    Cir. 2003)). We find here that NMFS thoroughly justified its
    decision to include all HCV areas in the designation of
    critical habitat.
    II. Appellants’ Challenge to NMFS’s Decision Not to
    Exclude Critical Habitat is Not Reviewable.
    Appellants also argue that the district court incorrectly
    held that while decisions to exclude areas from critical habitat
    designation are reviewable, decisions not to exclude areas are
    not. Appellants contend that the ESA has the dual objectives
    of conserving species, while also avoiding needless economic
    dislocation, and to hold that a key section of the Act was
    intended to be left to the absolute discretion of NMFS cannot
    be squared with the ESA’s statutory language. This
    contention is foreclosed by our decision in Bear Valley, 
    2015 WL 3894308
    , where we held that an agency’s decision not to
    exclude critical habitat is unreviewable.
    18 BLDG. INDUS. ASS’N V. U.S. DEP’T OF COMMERCE
    As we explained in Bear Valley, section 701(a)(2) of the
    APA excludes agency action from judicial review if the
    agency action is “committed to agency discretion by law.”
    5 U.S.C. § 701(a)(2). This occurs when “the statute is drawn
    so that a court would have no meaningful standard against
    which to judge the agency’s exercise of discretion.” Heckler
    v. Chaney, 
    470 U.S. 821
    , 830 (1985); see also Webster v.
    Doe, 
    486 U.S. 592
    , 599–601 (1988) (court could not review
    the director’s decision to fire any employee because the
    deference given to the director under the broad language of
    statute foreclosed any meaningful judicial review). But the
    preclusion of judicial review “is not to be lightly inferred”; it
    must be demonstrated that Congress intended an agency
    action to be unreviewable. Barlow v. Collins, 
    397 U.S. 159
    ,
    166 (1970).
    The first sentence of section 4(b)(2) establishes standards
    for how an agency should view areas under consideration for
    designation (or inclusion). The second sentence, with the use
    of the word “may,” establishes a discretionary process by
    which the Secretary may exclude areas from designation, but
    does not set standards for when areas must be excluded from
    designation. See Bear Valley, 
    2015 WL 3894308
    , at *9; see
    also Cape Hatteras Access Pres. Alliance v. U.S. Dep’t of
    Interior, 
    731 F. Supp. 2d 15
    , 28–29 (D.D.C. 2010) (“[t]he
    plain reading of the statute fails to provide a standard by
    which to judge the [agency’s] decision not to exclude an area
    from critical habitat”); Conservancy of Sw. Fla. v. U.S. Fish
    and Wildlife Serv., 
    677 F.3d 1073
    , 1084, n. 16 (11th Cir.
    2012) (finding that the use of the word “may” in another
    section of the ESA precludes the review of an agency’s
    exercise of discretion). As the most recent proposed policy
    statement clarifying the regulations for implementing section
    4(b)(2) explains: “the decision to exclude is always
    BLDG. INDUS. ASS’N V. U.S. DEP’T OF COMMERCE 19
    completely discretionary, as the Act states that the Secretaries
    ‘may’ exclude areas. In no circumstance is exclusion
    required under the second sentence of section 4(b)(2).” See
    Policy Regarding Implementation of Section 4(b)(2) of the
    Endangered Species Act, 79 Fed. Reg. 27,052, 27,054 (May
    12, 2014).
    Moreover, section 4(b)(2) does not preclude all judicial
    review of designation decisions. When deciding whether to
    designate, the agency must follow certain procedures, only
    the ultimate decision not to exclude a certain area from
    designation as critical habitat is committed to agency
    discretion. Here, NMFS adequately followed the first part of
    section 4(b)(2) in considering economic and other impacts
    and did not act in an arbitrary or capricious manner or
    otherwise abuse its discretion in excluding areas from critical
    habitat designation. Because there is no basis under section
    4(b)(2) for reviewing the decision not to exclude areas from
    designation, there is no basis for reviewing Appellants’ claim
    that this decision was arbitrary and capricious.
    III.     Appellants’ NEPA Claim Fails as a Matter of Law
    Finally, Plaintiffs-Appellants appeal the district court’s
    dismissal of their claim under section 702 of the APA, which
    alleged that NMFS failed to follow NEPA by preparing either
    an Environmental Assessment or an Environmental Impact
    Statement (“EIS”) in connection with the 2009 final rule. If
    a proposed federal action will significantly affect “the quality
    of the human environment,” NEPA generally requires the
    agency to provide an EIS. 42 U.S.C. § 4332(C).
    This contention is foreclosed by the law of this circuit as
    well. We have expressly held that NEPA does not apply to
    20 BLDG. INDUS. ASS’N V. U.S. DEP’T OF COMMERCE
    critical habitat designations. See Bear Valley, 
    2015 WL 3894308
    , at *14; Douglas Cnty. v. Babbitt, 
    48 F.3d 1495
    ,
    1501–08 (9th Cir. 1995) (explaining that critical habitat
    designations are not subject to NEPA because: (1) the ESA
    displaced the procedural requirements of NEPA with respect
    to critical habitat designation; (2) NEPA does not apply to
    actions that do not alter the physical environment; and
    (3) critical habitat designation serves the purposes of NEPA
    by protecting the environment from harm due to human
    impacts); see also Drakes Bay Oyster Co. v. Jewell, 
    747 F.3d 1073
    , 1090 (9th Cir. 2014) (“The Secretary’s . . . designation
    under the ESA, ‘protects the environment from exactly the
    kind of human impacts that NEPA is designed to foreclose.’”)
    (quoting Douglas 
    Cnty., 48 F.3d at 1507
    ). Accordingly, we
    affirm the district court’s decision granting summary
    judgment in favor of Appellees on the NEPA claim.
    CONCLUSION
    For the foregoing reasons, we AFFIRM the judgment of
    the district court.