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In 2003, the United States Department of the Interior (DOI) established three distinct population segments (DPSs) for the gray wolf, which encompassed its entire historic range. In addition, DOI downlisted the gray wolf from an endangered to threatened species in the Eastern and Western DPSs, despite the wolf’s continued absence from ninety-five percent of its historic range. The U.S. District Court for the District of Oregon properly invalidated DOI’s dysfunctional downlisting of the gray wolf. DOI’s interpretation of “significant portion of its range” was inconsistent with the text, intent, and purposes of the Endangered Species Act (ESA). In addition, DOI inverted its DPS policy, which provides different populations of the species different levels of protection in different portions of its historic range. Achieving the recovery plan goals did not warrant downlisting the gray wolf. DOI also failed to address the five downlisting factors of section 4(a) of the ESA across a significant portion of the gray wolf’s historic range. Nevertheless, DOI could have established two DPSs encompassing the populations of gray wolves in the western Great Lakes and northern Rocky Mountains, and could have accordingly downlisted these populations to threatened species status.