Dollars Do Count—In the Designation of Critical Habitat, At Least

Landowners who object to the listing of endangered species pursuant to Section 4 of the Endangered Species Act (ESA) are often chagrined to learn that agencies need not consider the economic impacts of their listing decisions.  In designating critical habitat under Section 4, however, the ESA requires the Secretary of the Interior (or Commerce, in some instances) to take into consideration the economic impact, and any other relevant impacts, of the designation.  In fact, economic impacts can justify the exclusion of an area from designation, upon a finding that “the benefits of such exclusion outweigh the benefits of specifying such area as part of the critical habitat.” Currently, the required economic impact analysis usually accompanies the final rule for designation of critical habitat.  On February 28, 2012, however, President Obama directed that the regulations be revised to require contemporaneous release of draft scientific and economic analyses, prior to adoption of the final rule.  To effect this change, the U.S. Fish and Wildlife Service (FWS) and the National Marine Fisheries Service recently released a proposed rule that addresses the timing of economic analyses for critical habitat designations.  Comments on the proposed rule are due by October 23, 2012.  The proposed rule also resolves a difference between two federal courts about whether to assess all effects of a proposed designation, including those ascribed to other factors, or only those incremental impacts that can be directly attributed to a designation of critical habitat.  The proposed rule would adopt a preference for incremental analysis, which has been the agencies’ de facto rule since 2004. The importance of timely economic and “benefits of exclusion” analyses are illustrated by the recent FWS decision to exclude privately-owned land in Garfield County, Colorado from designation as critical habitat for a listed plant, the Penstemon debilis.  The Penstemon debilis, or Parachute beardtongue, exists nowhere else in the world but Garfield County.  Initially, FWS had proposed to exclude some, but not all, of the privately-owned habitat, on which thrive three of four known populations of the plant.  In response, the landowner proposed to revise an existing conservation agreement with Colorado Natural Areas Program (CNAP), providing protection for all critical habitat on its land, and obviating the need for a federal designation.  FWS accepted this proposal, citing the success of the 25-year relationship between the landowner and CNAP, which actually predates the listing of Penstemon debilis.  The revised agreement not only protects additional acreage, but also commits the landowner to adoption of voluntary best management practices on habitat that is proximate to its oil and gas wells. In its final designation decision, FWS concluded that the benefits of exclusion of the habitat outweigh the benefits of designation, in part because the revised agreement with CNAP will afford a greater degree of protection than would otherwise occur, since threatened plants and their habitat on privately-owned land are not protected against “take” except in the case of a federal “nexus.”  In addition, the analysis of economic impacts anticipated substantial losses of oil and gas revenue, even when measured by the “incremental impact” standard. Under these circumstances, FWS found, “(c)onservation cannot occur without cooperation from [the landowner].”

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