Babbitt

This is an appeal from the denial of attorney’s fees to the defendant in a lawsuit under the Endangered Species Act. A non-profit environmental group filed the suit and the defendant logging company prevailed. The district court considered the defendant’s claim for fees under two different standards that this court has used in the past to determine whether to award fees to a prevailing defendant in environmental cases. The district court ruled that the defendant in this case was *1093 not entitled to fees under either standard. We affirm the denial and take this opportunity to clarify the law in this area in light of intervening Supreme Court authority.

I

BACKGROUND

This case arose out of a dispute over defendant-appellant Pacific Lumber’s plan to log old-growth redwoods in the Headwaters Forest in Humboldt County, California. The forest, owned by Pacific Lumber, is home to the marbled murrelet and the northern spotted owl, birds protected by the Endangered Species Act (“ESA”), 16 U.S.C. §§ 1531-43 . To conduct the logging in compliance with California law, Pacific Lumber needed a timber harvest plan approved by the California Department of Forestry (“CDF”). See Cal. Pub.…