March 11, 2013

Econonic analysis and the Endangered Species Act

By Damien M. Schiff Senior Attorney

Today’s Wall Street Journal has an oped “Fishing for wildlife lawsuits” (behind paywall) from the Editors criticizing, inter alia, the Fish and Widlife Service’s proposed policy interpreting how to assess the economic impacts of critical habitat designation under the Endangered Species Act.  The editorial takes aim at the Service’s proposed adoption of the “baseline” approach to economic impact analysis.  (PLF filed comments on the proposed policy developing this critique).  Under the baseline approach, the Service estimates what the world would look like without the designation, then compares that economic state to what the word would look like with the designation.  Thus, economic impacts that can be attributed to critical habitat and to other causes (such as the listing of a species) are omitted from the impact designation.  In practice, this approach produces perfunctory analyses that underestimate the costs of Endangered Species Act regulation.

But the baseline approach proposed by the Service is misguided for another reason, not mentioned in the Journal‘s oped, viz., the failure to assess the cumulative economic impacts of designation.  That’s a requirement that federal agencies routinely observe when, for example, assessing environmental impacts under the National Environmental Policy Act.  It’s remarkable that the Service does not conduct such an assessment:  the tale of the straw that broke the camel’s bank would seem to compel such an analysis in order to produce a non-arbitrary assessement.  Nevertheless, the Ninth Circuit in Home Builders Association of Northern California v. United States Fish & Wildlife Service rejected the cumulative impacts requirement.  The court distinguished NEPA from the ESA on the ground that the former is concerned with preventing environmental harm, whereas the latter is concerned with protecting the environment.  Yet, the Tenth Circuit Court of Appeals held in New Mexico Cattle Growers Association v. United States Fish & Wildlife Service that exempting the ESA from NEPA precedents on a “beneficial to the environment” ground is untenable.  Ultimately, this is an issue that the Supreme Court must resolve.

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