September 12, 2013

The ESA and economic impacts

By Damien M. Schiff Senior Attorney

Last month, as I’ve noted already, the United States Fish & Wildlife Service and the National Marine Fisheries Service finalized joint amendments to their regulations implementing the Endangered Species Act’s critical habitat provisions.  One of these amendments codifies the agencies’ recent practice of assessing only the “incremental” economic impact of critical habitat designation.  This incremental approach the agencies prefer to the so-called “coextensive” approach, whereby all impacts of critical habitat are assessed.  In contrast, under the incremental approach, only those impacts are considered that are solely attributable to critical habitat designation and cannot be attributed to any other cause, such as a species’s listing.  It’s not surprising that the Services would prefer the incremental approach, as its use gives the public the false impression that critical habitat designation has little or no economic impact.

But what I find peculiar in the preamble to the Services’ regulatory amendments is the agencies’ collapsing of two distinct criticisms of their proposal:  the coextensive vs. incremental approach, and the cumulative impact vs. incremental approach.  I’ve already noted above the disagreement about the former.  But the latter is also a serious shortcoming of the Services’ approach that is separate from the coextensive vs. incremental debate.

One can understand, if not necessarily agree, with the Services’ position that assessing critical habitat economic impacts requires that one compare the world with critical habitat to a world without critical habitat.  In other words, if an impact would occur regardless of critical habitat, then, say the agencies, that impact should not be attributed to critical habitat.  But, properly to understand the true incremental impact of a designation requires, in my view, an assessment of the increment as well as the baseline, to which the increment is added.  That is to say, one cannot know the true incremental impact of a designation unless one understands how the status quo will be changed.  Otherwise, one might miss the straw (i.e., increment) that broke the camel’s back (i.e., baseline + increment).  This process shouldn’t be unusual for the Service; after all, agencies have been conducting cumulative impact assessments under the National Environmental Policy Act for decades.

What is the Services’ reason for rejecting cumulative impacts?  “[I]n most circumstances it is not practical to conduct a robust evaluation of baseline effects due to data limitations and resource and time constrains.”  In other words, we the agencies don’t have the time or money to do what we ought to.  That’s not much of an excuse.

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