New ESA regulations on critical habitat

Last week, the United States Fish & Wildlife Service and the National Marine Fisheries Service finalized amendments to the Services’ joint regulations governing the designation of critical habitat.  (PLF filed critical comments on the proposed changes).  Specifically, the amendments affect when and how the Services assess the economic impact, and other impacts, of critical habitat designation.  Under the amendments, the Services must release a draft economic impact analysis at the same time as the proposed critical habitat designation.  Perhaps more importantly, the Services have formally adopted the “incremental” approach to economic impact assessment.  According to the incremental approach, the Services assess a designation’s economic impacts by comparing a world with the designation to a world without the designation.  This approach contrasts with the “baseline” theory, under which all economic impacts attributable to critical habitat designation are assessed, regardless of whether they can also be attributed to other factors, such as a species’ listing.  Recently, the Services have followed the incremental approach (except in the Tenth Circuit), so last week’s amendments simply formalize agency practice.  Nevertheless, the amendments may have pernicious effect.  Obviously, Congress was concerned about critical habitat’s economic impacts; hence, the legislative decision expressly to require consideration of such impacts when designating critical habitat (a direction pointedly absent for the listing process).  The trouble is, by using the incremental approach, the agencies are able to say that critical habitat has little to no economic impact, because most of the impacts can also be attributed to listing.  Yet, Congress was surely aware of this overlap, yet presumably it wanted more than a paper exercise from the agencies.  (I touched on these points in my recent Congressional testimony).  Consequently, we’ll be looking very closely at the amendments’ implementation.