March 22, 2018

Can the government ignore its obligation to consider the costs of its regulations?

By Oliver J. Dunford Attorney

Defenders of government regulation often insist that regulations exist to protect us, to keep our foods and drugs safe, or to ensure good stewardship of the environment. Of course, intentions don’t equal results, and government regulation doesn’t always work out as planned. (Often, government itself causes more harm than good.) Regardless, we are assured that government is there to protect us. So what happens when a law expressly requires a government agency to protect individuals and small business from significant costs of government regulation? If the government agency is the U.S. Fish and Wildlife Service, it simply ignores that responsibility.

According to the Regulatory Flexibility Act, a government agency that issues a regulation must prepare a report that describes the rule’s economic impacts on small businesses and the steps the agency took to minimize those impacts. In 2016, the U.S. Fish and Wildlife Service designated over 1.8 million acres in California as critical habitat for three frog and toad species. This rule restricts the use of public and private lands for grazing and timber harvesting and threatens the livelihood of farmers, ranchers, landowners, and local enterprises dependent on these activities. Despite these significant economic impacts on individuals and small businesses, the Wildlife Service refused to prepare the report required by the Regulatory Flexibility Act. Why? According to the Wildlife Service, the critical-habitat rule does not regulate small business that rely on the newly protected land. Rather, it argues, the rule regulates only other federal agencies that are now obligated to enforce the rule’s restrictions.

Last year, we filed a lawsuit against the Wildlife Service to enforce its obligations under the Regulatory Flexibility Act. The Service asked the court to dismiss our lawsuit, and this week, we submitted our Opposition Brief.

We brought the lawsuit on behalf of the California Cattlemen’s Association, the California Wool Growers Association, and the California Farm Bureau Federation, whose members risk losing their livelihoods because of the grazing restrictions required by the new critical-habitat designation. We therefore represent the interests of those members—small businesses who have been significantly impacted by the Service’s rule. In its motion to dismiss, the government argues that we failed to allege an injury that the court could remedy; that our claims were not yet “ripe” for review; and that our clients’ interests aren’t really the type of interests that the Regulatory Flexibility Act was meant to protect.

As we demonstrate in our opposition brief, these arguments have no merit. First, we show that small businesses have in fact been harmed by the rule’s restrictions on grazing in the critical habitat. They have been forced to limit their grazing, to construct barriers for the protection the frog and toad species, and to endure bureaucratic delays.

Second, our claims are “ripe” for review. We raise purely legal questions—what are the legal requirements of the Regulatory Flexibility Act—and no further factual development is required to address those questions.

Finally, the Regulatory Flexibility Act was adopted precisely to protect the interests of small businesses like the members of the California Cattlemen’s Association, the California Wool Growers Association, and the California Farm Bureau Federation. A Senate report accompanying the legislation identified the existing problem as the “tendency of ‘regulations of general and uniform applicability’ to place ‘disproportionate burden[s] upon small businesses.’” Indeed, Congress was “primarily concerned about the high costs of compliance with regulations by small businesses bound to conform their conduct to those regulations.”

The court should reject the government’s attempt to side-step its obligations under the Regulatory Flexibility Act—particularly considering the government’s argument that regulations restrict other federal agencies and not small business that actually bear the brunt of the regulations. If the court accepts this argument, then government agencies can avoid altogether their obligations to consider the costs of regulations on small businesses. But government should be held accountable for the costs it imposes on those it is supposed to protect.

This lawsuit was one of the last cases of our friend and colleague, the late Reed Hopper—a brilliant lawyer and defender of liberty.

Please check out our case page, our previous post on this case, and our opposition brief.

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