A new approach to issuing economic impact analyses associated with the proposed designation of critical habitat under the Endangered Species Act (ESA) is included in a final rule jointly issued by the U.S. Fish and Wildlife Service and the National Oceanic Atmospheric Administration (Services). 

The rule also codifies the discretion the ESA provides to the Secretary of the Interior to exclude any particular area from the critical habitat upon a determination that the benefits of such exclusion outweigh the benefits of specifying the particular area as part of the critical habitat.

Previously, the Services evaluated the economic impact of a critical habitat designation only after the designation was proposed.  The new rule requires that the Services release the draft economic analysis at the same time the critical habitat designation is proposed for a listed species.  The revision responds to a Presidential Memorandum (March 5, 2012, FR), which directed that the designation process be made more transparent by providing the public simultaneous access to both the scientific analysis and the economic analysis of a proposed critical habitat designation.

“Publishing a proposed critical habitat rule and making available the associated economic analysis at the same time means that the Services will need to spend more time analyzing and understanding the economic impacts of designating critical habitat before making the proposal public,” state the Services.  “However, public stakeholders will have more information at the time they are reviewing critical habitat proposals.”

Incremental analysis

In the final rule, the Services also clarify that the economic analysis of designating critical habitat will be a baseline or incremental analysis.  The Services describe an incremental analysis as one that focuses on the economic impacts with and without the designation.  This effectively means that the analysis does not need to consider the economic impacts of the ESA listing itself.
The incremental approach has come under fire from industry, which says it does not consider the real economic impact of a critical habitat designation.  Some commenters have argued that the incremental approach can be limited to the administrative costs the Services incur in designating critical habitat.  Congress has also weighed in on the issue. 

“By using an incremental approach, the economic hardships faced by private property owners and state governments whose lands are designated as critical habitat are greatly discounted,” 23 Republican senators wrote to the Services when the rule was proposed.  “This limited analysis is neither fair nor a true accounting of the costs that come with a critical habitat designation and can lead to designation of lands as critical habitat in areas where the true costs greatly exceed the actual or perhaps only theoretical benefits.”

Click here for the Services final rule.