Endangered Species Act Regulations: New and Improved?

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The Endangered Species Act has been credited with preventing extinctions but criticized for failing to recover species and imposing unfair burdens on property owners. This week, the U.S. Fish and Wildlife Service and the National Marines Fisheries Service finalized several new Endangered Species Act regulations intended to improve the law’s implementation and promote species recovery.  Lawsuits challenging those regulations are expected from several states and conservation groups.

What changes do these final regulations make in the law’s implementation? Will they help with recovery efforts? And how will they fare in the courts? Join us as we discuss the new ESA final regulations and help separate fact from fiction.


Jonathan Wood, Senior Attorney, Pacific Legal Foundation

Moderator: Daren Bakst, Senior Research Fellow in Agricultural Policy, Roe Institute for Economic Policy Studies, The Heritage Foundation


Teleforum calls are open to all dues paying members of the Federalist Society. To become a member, sign up on our website. As a member, you should receive email announcements of upcoming Teleforum calls which contain the conference call phone number. If you are not receiving those email announcements, please contact us at 202-822-8138.

Event Transcript

Operator:  Welcome to The Federalist Society's Practice Group Podcast. The following podcast, hosted by The Federalist Society's Environmental Law & Property Rights Practice Group, was recorded on Tuesday, August 20, 2019, during a live teleforum conference call held exclusively for Federalist Society members.     


Micah Wallen:  Welcome to The Federalist Society's teleforum conference call. This afternoon's topic is on "Endangered Species Act Regulations: New and Improved?" My name is Micah Wallen, and I am the Assistant Director of Practice Groups at The Federalist Society.


      As always, please note that all expressions of opinion are those of the experts on today's call.


      Today we are fortunate to have with us Jonathan Wood, who is a Senior Attorney at the Pacific Legal Foundation. We also have our moderator, Daren Bakst, who is a Senior Research Fellow in Agricultural Policy at the Roe Institute for Economic Policy Studies at The Heritage Foundation. After our speakers give their opening remarks, we will then go to audience Q&A. Thank you for sharing with us today. Daren, the floor is yours.


Daren Bakst:  Thank you, Micah. I really appreciate it. And I want to thank everybody who's called in to today's program and everybody who's listening to the recording of this program.


      So last Monday, August 12, the Fish and Wildlife Service, and that's part of the Department of the Interior, and the National Marine Fishery Service, which is part of the Department of Commerce, they released final regulations that the agencies assert will improve the implementation of the Endangered Species Act. Now, these regulations, they haven't been published in the Federal Register as of yet, and when they do get published in the Federal Register, the effective date is 30 days after publication, according to the rules. Now, these regulations finalize three different rules that were initially proposed in July of 2018.


      In today's teleforum, Jonathan, who, as mentioned is a Senior Attorney at the Pacific Legal Foundation, is going to highlight the major changes made by these rules. And then after that, Jonathan and I will have a bit of a back and forth discussing the rules. And what we'll do is we'll also try to dispel some of those myths that have been out there regarding the rules. So at this point, I just want to turn the program over to Jonathan.


Jonathan Wood:  Thank you, Daren. And thank you to The Federalist Society for hosting this discussion. Any description of the new rules is inevitably going to give short shrift to them. The final rules themselves cover several hundred pages, so I can only focus on those that either are the most important or are getting the most attention. But for that, six things stand out in the rules.


      Probably the most significant change in terms of practical effect is to eliminate a blanket prohibition on the take of threatened species. Under the Endangered Species Act, the take of endangered species is categorically forbidden by the statute. And take is a really broad term. Most people when they hear it think of things like intentionally harming or capturing a protected species, but under the ESA and Supreme Court precedent, it's far broader than that. Almost any activity you engage in that affects a single member of a species or its habitat could trigger the take liability, including ordinary land use activities that modify habitat. So trimming a forest, dealing with farming, these activities can inadvertently cause harm to species or their habitat and trigger liability under the statute.


      When Congress passed the law, it treated the take prohibition as a last line of resort for endangered species. And the debate makes clear that they didn't expect this to apply to threatened species which are not currently at risk of extinction but may become endangered decades into the future. However, since the 1970s, there's been a regulation called the Blanket 4(d) Rule that has automatically extended the take prohibition to threatened species unless the Fish and Wildlife Service issues its own species-specific rule for that species. The new rule would eliminate that blanket rule, and going forward, only regulate take of threatened species on a species by species basis.


      The principal justification for that change is -- there are two. The first is that it will provide better incentives to landowners and states to recover species. Under the old rule, if you had an endangered species on your property, there was little incentive to recover it because even if you did and it became threatened, you'd still face the exact same burdensome regulations. So the idea is here, now, landowners see some benefit for taking efforts to recover species.


      And the second justification for the change is that it aligns the Fish and Wildlife practice with the National Marine Fishery Service, which regulates marine species. That agency has never had a Blanket 4(d) Rule, so you've essentially had two separate lines of Endangered Species Act and limitation between the two agencies. And this will align the two agencies under the same rule.


      The second big change in the new rules is a response to the Supreme Court's recent decision Weyerhaeuser. So the Weyerhaeuser case concerned a designation of 1,500 acres of land in Louisiana as critical habitat for a frog that didn't live there and, according to the landowners, couldn't live there. The land would require substantial modification to create habitat there for the frog. The new rule says that -- restores a presumption that the agency should only designate occupied areas as critical habitat for a species before considering unoccupied areas.


      The explanation for that is that it's more likely to benefit a species and reduce conflict. When you designate an area that's unoccupied, you're imposing pretty significant burdens on landowners. In the Weyerhaeuser case, the anticipated costs of the designation to the landowner was as high as $34 million. But you don't necessarily get any benefit for the species. So this is to try to discourage designations of unoccupied habitat like that while still allowing them to happen where necessary.


      So going forward, the agency can still designate unoccupied areas if they contain one of the biological features required for the species and the agency determines that there's a reasonable likelihood that the area will actually contribute to the recovery of  the species. And for that, they might look at who owns the land, whether they've expressed an interest in restoring habitat, but they'll try to less likely create the conflict that happened in Weyerhaeuser by designating unoccupied areas where the landowner has no interest in restoring habitat.


      Two other sort of medium changes are -- one is a reform to the consultation process, the interagency operations of whenever some agency wants to do a project and they affect endangered species, it has to go to the Fish and Wildlife Service and consult on the impacts of those projects. In practice, this has been a very burdensome and drawn-out process. Projects routinely get tied up in the process. And the new rule proposes several provisions that would streamline that process by getting more of the analysis done initially so that when projects are implemented, there's less analysis at the back end.


      A second moderate change is to make clear that the standard for delisting species is the same as the standard for listing species. Under the statute, the exact same five factor test applies to both, but in practice, the agencies have put a thumb on the scale against delisting. And courts have generally endorsed that approach saying it's better to be cautious to keep species on the list until you are absolutely certain that they no longer merit listing. The new rule gets rid of that thumb on the scale and restores the same standard to listing and delisting decisions. The principal justification for that is that if you don't delist species when they recover, you make it too hard to delist species. You can actually undermine efforts to recover species since the prospect of them being delisted and regulatory restrictions being lifted seems too remote.


      And then finally, the rules do quite a bit of tinkering or technical improvements that have been getting quite a bit of attention despite their relatively modest effect. Those include a change to allow the Fish and Wildlife Service and the National Marine Fishery Service to acknowledge or reference the costs imposed on the regulated public whenever a species is listed. The statute itself is clear that those costs can't be considered in determining whether a species gets listed as endangered or threatened. But going forward, the agencies have eliminated a gag rule that previously forbade them from even acknowledging what those costs may be. This has been justified primarily on transparency grounds, that the public will be better informed about species issues if it had some sense for what regulations cost. And this will allow the agency to provide that public input.


      And the other thing that I would categorize as a small but nonetheless important change is to codify the agency's approach to interpreting the foreseeable future. A threatened species can only be listed if they are likely to become endangered in the foreseeable future. And in several controversial cases, the agency has tried to grapple with what does that mean in terms of climate change? If a species is healthy or growing today but may face challenges 50, 75, 100 years down the road, how much confidence do we have to have in those impacts before we can say that a species will likely become endangered in the foreseeable future?


      The new rule codifies an approach that the agency has followed for the past decade. In 2009, then-Solicitor of the Interior, David Bernhardt, now the Secretary of Interior, wrote a memo explaining that to determine the foreseeable future, the agency has to consider the likelihood that the anticipated effects will actually happen and the likelihood that we can predict what species will do in response to that. In practice, this means that the agency has to engage in some analysis and in discussion of modeling before basing a listing decision on climate change impacts, but it hasn't prevented the agency from making those sorts of listings.


      There are several species during the Obama administration that were listed citing this memo and explaining how climate change impacts, say, 50 years down the road are predictable, but 150 maybe not. So we're going to make the decision to list it as threatened for this reason. And going forward, the new rules essentially codify that approach to make it binding on the agency and the public going forward.


      And so I think those are probably the most important or noteworthy aspects of the changes. And with that, I'll kick it back over to Daren.


Daren Bakst:  Thank you, Jonathan. So there are, I think, like three criticisms that I keep reading about and hearing about regarding the ESA final rules, and I think you addressed a lot of these, but I want to just kind of go through each of them and see what you said. One of the first ones and the ones I see a lot is that there's these media reports that the rules are going to allow the government to take costs into consideration when listing species. And it's just everywhere. It doesn't seem accurate. What do you think about that myth?


Jonathan Wood:  Yeah, that's probably been the most widely reported myth about the new rules. The reality is that the Fish and Wildlife Service and the National Marine Fisheries Service can't take costs into account in making a listing decision, and there's no regulation they could ever issue to allow them to do so. Under the statue, you have to determine whether a species is endangered or threatened based on five factors, none of which entail costs. And the courts have long held that costs are not a relevant factor, that whether a species -- the threats facing a species are purely scientific. So the agency acknowledges in the rule it will not consider costs. It will continue to list species the same way it has in the past, but it will nonetheless report those costs in appropriate cases.


      As I said, that won't affect the listing decision. It's motivated partly by transparency and partly by public policy or political concern, the idea that if the public is better informed about economic impacts, it might affect support or possible reforms to the Endangered Species Act. I've heard a lot of environmental groups are concerned that this will basically tilt the scales against the Endangered Species Act by reporting exceedingly high numbers.


      I'm a little skeptical of that risk given that there are other provisions of the act that require cost-benefit analysis and routinely result in extremely high numbers. There was a fish on the west coast several years ago that had critical habitat designated for it that was expected to cost $600 million a year to protect, and that didn't undermine public support for the Endangered Species Act. In reality, the biggest effect of that change will be to better inform not only public but also policy folks who are interested in what kind of reforms might lower the cost of the Endangered Species Act and make it more effective.


Daren Bakst:  And actually, the EPA does something pretty similar when it comes to setting the national ambient air quality standards because they're not supposed to consider anything other than the science. But they kind of inform the public about the costs and the benefits. At least allegedly, they don't take this into consideration when establishing the standards. So it's not like there's anything particularly novel about this idea.


Jonathan Wood:  Allegedly, it's the big part of that. And so the big concern from environmental groups is that even if listing decisions ostensibly aren't based on economic impacts, there's some concern that  behind the scenes, it will exert some influence. But the fact that other agencies have been doing this for a while, even under provisions that prohibit consideration of cost makes it less likely that that kind of rule change is going to be struck down by a court, be considered arbitrary or capricious.


Daren Bakst:  One of the second myths that I keep reading about, or at least the criticisms, and you can tell me if this is a myth, is the one regarding climate change, and that the rule somehow is going to prevent climate change to be considered, at least as it regards to threatened species. So what are the critics referring to here?


Jonathan Wood:  That's not clear. You're right that it's been widely reported this will make it harder to protect species affected by climate change. The clearest statements I've seen in some of the coverage has been about the listing process which I think misunderstands the way that the listing process has worked for the past decade. As I said, the new rule essentially codifies the guidance that has been in place for the last 10 years since 2009 and has nonetheless allowed several species to be listed based on threats to climate change.


      That said, there are provisions in the rule that I could see having an impact on some of those species more indirectly. For instance, under the critical habitat provisions, there's a requirement to consider whether the critical habitat designation will actually benefit an endangered or threatened species. And for those affected by climate change rather than habitat modification, it seems to me there's a plausible argument that the designation likely won't benefit the species. So I expect you'll see conflict over that going forward.


      Whenever a species is proposed for listing, one of the long-standing controversies in the law is that although there are species obviously threatened by climate change, the law itself doesn't have many tools to address that threat. To the extent the agencies are actually looking at, "Okay, what are the benefits we're going to get from imposing these burdens?", that kind of problem will have to be addressed.


Daren Bakst:  Third, I think the other criticism kind of connects to the Blanket 4(d) Rule, and that is that the change made in the ESA rules will actually make it more difficult to protect threatened species. And how would you respond to that criticism?


Jonathan Wood:  Well, yeah, you're right. A lot of the coverage has sort of assumed that anything that reduces regulations, that inherently reduces protections for species. I think we have a long history of implementation of the Endangered Species Act that sort of rebuts that assumption. Most of the most successful parts of the law, things like habitat conservation plans, candidate conservation agreements, and other non-statutory approaches the agencies have developed to encourage active recovery efforts demonstrate that in many cases, not regulating, but instead working and collaborating with states and landowners is actually more effective. And the so-called 4(d) reform or threatened species reform is aimed at making those more common for threatened species. Given that they don't face such immediate threats of extinction, the opportunity to experiment and work with more stakeholders is an opportunity that the agency wants to take more advantage of.


Daren Bakst:  Jonathan, inevitably, there's going to be litigation. What's the status of litigation? Have you heard anything, and what kind of arguments do you think we should expect?


Jonathan Wood:  So no lawsuits have been filed yet, but several States Attorneys General have announced that they will sue and that they expect to have a dozen or so states join them. It looks like the effort will be led by Massachusetts and California, and I'm sure lots of other conservation groups will either join in that lawsuit or file their own lawsuits. The reality is every time any change is proposed to the way the Endangered Species Act is implemented, that does get litigated. So this wouldn't be out of the norm.


      At this stage, it's probably too early to say what the lawsuits will entail. I doubt any will be filed until the new rules go into effect. But given the nature of the Endangered Species Act and some of the coverage so far, I would expect you'll see the standard APA type claims of you didn't respond to comment or you should've allowed more time for comment, as well as substantive criticisms about whether the changes in the rule were either consistent with the text of the Endangered Species Act or advance its purpose.


      The Endangered Species Act is probably one of the statutes least governed by modern textualism. There was a decision from the Supreme Court back in the '70s called TVA v. Hill that announced that the ESA establishes a policy that the value of endangered species are incalculable, and it is the government's overriding concern to protect them. And that's generally been relied on by courts, mostly out of context, but nonetheless relied on to basically say that notwithstanding the text of the statute, it should always be interpreted to maximize protections for endangered species. So I expect you'll see a lot of those kinds of policy-based challenges filed.


Daren Bakst:  And of course, try to simply assume that more regulation equals greater protection, and that can be problematic. And hopefully, they'll understand the importance of proper incentives for property owners.


Jonathan Wood:  Yeah. And I think one of the interesting questions as the litigation is filed and moves forward is how much of a role Chevron plays because the agency has been very vocal about saying these rules are not only better for property rights, but also better for endangered species. And so I'll be curious to see whether they get credit for those policy arguments to the same extent as the agency has gotten in the past, given some of the posturing and rhetoric over these new rules.


Daren Bakst:  So Jonathan, my last question before we take questions from the audience is connected to the Congressional Review Act. Have you heard anything about the House or Senate trying to pass a Congressional Review Act resolution disapproval of these final rules? And granted, the President's going to veto anything, but still, just be interested to know if you've heard anything as relates to the Congressional Review Act.


Jonathan Wood:  Sure, yeah. There was a report last week that Democratic members on the Senate side were looking at using the Congressional Review Act to disapprove the rule. I tend to agree with you that the prospect of a joint resolution of disapproval passing and being signed by the President is rather remote, but it does seem to me that there's some interest in Congress exercising review over this rule, regardless of what ultimately comes from that.


      And in the long run, I think that that discussion is healthy because it suggests that the Congressional Review Act is working in the bipartisan manner its authored intended. It serves both to supervise agencies issuing rules that increase regulation as well as rules that decrease regulations and restores Congress to its proper role of making those, or at least exercising influence over those policy decisions.


Daren Bakst:  So Micah, do we have any questions?


Micah Wallen:  No questions lined up as of yet. Until then, Daren, I'll throw it back over to you, and I'll let you know if we have a question come through the lines.


Daren Bakst:  Jonathan, the thing that kind of gets me is if anybody makes -- if the government makes any change to the limitation of the ESA, it's going to be criticized, even if it actually would benefit species. Can folks that actually want to prove this understanding of how incentives play a critical role -- what can be done? What can be done by folks that recognize the importance and making sure that states and property owners can be a critical ally in conserving species? How can that message be communicated better? It's a real struggle, apparently.


Jonathan Wood:  I mean, I'm no marketing expert, so I'm not sure how helpful my thoughts would be on the messaging, but you're right. And one of the realities of the policy and politics surrounding the Endangered Species Act is that anything new will be attacked using the exact same rhetoric. Last week, I actually went back and looked at some of the coverage whenever the Obama administration proposed what it deemed improvements to the act, and it's amazing how much the rhetoric perfectly tracks what's been said about the Trump proposals, including for things that in hindsight seem incredibly small.


      At one point, the Obama administration proposed to change the paperwork required to petition to have a species listed as endangered. And the coverage, as I said, it was exactly like what you heard last week, the accusations that the Obama administration was gutting the Endangered Species Act, was kowtowing to industry, and the oil industry in particular. It just seems that for whatever reason or politics or such that whenever any sort of change or update is proposed to the act, the exact same rhetoric will be recycled against it.


      That said, there's a lot of important work and progress that's been made from some of those improvements that deserves to get more attention, to be highlighted. For instance, the 4(d) rule change, the change for threatened species actually builds on several successful efforts during the Obama administration to work with states, landowners, and conservationists to develop programs to protect and recover species without relying on Endangered Species Act regulations.


      And in fact, the Obama administration used species specific tailored deregulatory rules for threatened species more than any other president since -- I'm going to blank on which one, but I think it was Carter. So the first time in decades that there was increased avoidance of the Blanket Rule and increased reliance on reducing regulations to encourage active recovery efforts. So there's plenty there to talk about and to promote, but I'm not sure what will get through in terms of media or policy discussions.


Daren Bakst:  I know that there are claims that the ESA has helped to prevent species from becoming extinct, but when you look at the law and whether or not it has actually succeeded in delisting species based on recovery, it doesn't have a very good success rate. And over the last 45 years of the law, it hasn't had a good success rate, only about 2 to 3 percent of those listed species have actually been delisted because of recovery.


      There seems to be this kind of -- it's hard. If the goal is to recover species, there need to be changes to how the law is implemented, and that's what the administration's doing, and also to the underlying statute itself. But right now they're focusing on the implementation side of things. I mean, first of all, I don't want to get back to a marketing question again, but that is a problem. And there seems to be like any change to actually improve the law is gutting the law. And what other changes do you think may need to be made to actually improve the implementation of the law?


Jonathan Wood:  Yeah, it certainly would be nice to see Congress get more engaged in thinking about how to better incentivize landowners to conserve species. It's the simple fact that most species depend on private land for most of their habitat, so the incentives faced by the private landowners are absolutely huge in determining outcomes for species. And traditionally, the regulation of Endangered Species Act has gotten the incentives backwards. We regulate and punish landowners who have endangered species on their property or habitat on their property. There has not yet been a single case in which a takings claim for those kinds of regulations have succeeded. So from the perspective of the landowner, there's really no prospect that you'll be compensated for the burdens being imposed on you. And in that case, most landowners will reasonably try to avoid those burdens.


      So it would be great to see Congress get more involved and look at how to provide stronger, better incentives for recovery efforts. But in the meantime, implementation of the act will fall to the agencies, as is has, and there have been things that they've done to try to improve the implementation over the years, and many of them have improved things considerably. I think this will be one of them.


      And I think one of the things about the rules that could have a tremendous effect for practitioners and landowners is that I think there will be more opportunities to require the agency to engage in cost-benefit analysis so that we can, one, ensure that regulations are actually tailored to achieve their goals rather than simply going beyond what's necessary. Historically, cost-benefit analysis played a very small role in Endangered Species Act regulations, but that's likely to change for a couple of reasons, including the Supreme Court's recent Weyerhaeuser decisions which says that an agency has to engage in rigorous cost-benefit analysis when designating critical habitat. Anyone affected by critical habitat designation, go to court and challenge the use of cost-benefit analysis in that case.


      And the second is that the change to the threatened species regulations will require cost-benefit analysis before imposing take for those species. The standard in the statute is really broad. It says you can regulate activities affecting threatened species if necessary and advisable to the conservation of species. Under the Supreme Court's 2015 decision in Michigan v. EPA, that broad standard inherently requires consideration of costs and benefits. If you don't do it, according to the Supreme Court, the agency's actions are inherently arbitrary and capricious. So I expect we'll see the agency have to do a lot of work to understand and prove what exactly are the benefits of regulating take of species in a world where, generally, species aren't recovering, and what are the costs being imposed on landowners to justify the fit between those costs and benefits.


Daren Bakst:  So one of the things that a former colleague of mine has written about, and I'm sure others have written about, is that there's not very good cost information out there about the compliance costs for the ESA, particularly the impact on private property owners. Do you think that even with the cost information being allowed to be communicated during the listing process, do you think that there's going to be any good data? Do they really get an accurate sense of really the true scope and magnitude of the costs imposed on property owners as a result of the ESA?


Jonathan Wood:  You're right. That's certainly very difficult a thing to measure, but it's not that different from the cost-benefit analysis that happens under other statutes. So when EPA has to issue a regulation governing water pollution or air pollution, figuring out what those costs and benefits actually are is really complicated. And there's plenty to criticize in the way that the agency has gone about doing it, but there are at least standards to guide the agency that force it to engage in some sort of analysis and judicial review if the agency strays too far from rigorous cost-benefit analysis.


      The other thing is that there are mechanisms within the Executive branch and the White House and OMB and OIRA to try to make sure that the cost-benefit analysis [inaudible 27:42]. And there are also procedures within the Executive branch to try to make cost-benefit analysis more reliable, including in OMB and OIRA to sort of double check the work and make sure it's defensible, as well as the President's recent executive order back in, I think, 2016 or 2017, imposing regulatory burden budgets on agencies so that going forward, they have an incentive to avoid unnecessary burdens because doing so limits their ability to achieve other aims and goals of the agency.


Daren Bakst:  Yeah, I think one of the issues you and I have discussed certainly is that the costs of the ESA are borne primarily by the property owners, private property owners. And this is a -- society has decided that we want to conserve species, but society as a whole really doesn't bear the costs of it, at least not as much as probably they should. And instead, the costs are then passed on to the property owners. Is there anything jumping out to correct that imbalance?


Jonathan Wood:  Well, the obvious answer to how do you solve that problem is a more robust implementation of the takings clause. The Supreme Court in Armstrong several decades ago explained that the purpose of the takings clause is to ensure that individual landowners don't bear costs that should rightly be borne by the public generally. And that principle clearly applies here. If the public values endangered species and wants to see them protected and recovered, it should bear those costs rather than imposing them on innocent landowners who are often engaged in activities that most people take for granted on their own private property.


      I said earlier a little bit what the take prohibition means but didn't give examples about what it means in practice. Often, the people that get caught up in take prohibition enforcement are doing things that most people wouldn't think could possibly lead to the threat of a felony conviction or hundreds of thousands of dollars in fines. They're building homes in residential neighborhoods. They're farming. They're cutting trees -- they're harvesting trees from a private forest. The simple reality is we impose burdens on landowners for activities that are otherwise perfectly lawful and innocent. And yet, very little compensation is offered or only rarely offered. If compensation is available, it's because some other program just happened to align with benefits to the species.


      So the Farm Bill typically includes quite a bit of conservation spending which can indirectly benefit endangered species, but the ESA itself provides no mechanism to either compensate landowners for losses borne under ESA regulations or to proactively compensate them for efforts they may undertake to advance the goals of the Endangered Species Act. And solving that either requires Congress to once again look at the act and how to fix that problem, or courts to more seriously enforce the takings clause.


Daren Bakst:  Sometimes, certain groups will argue, "Well, the ESA hasn't worked as well as it should because we don't have enough money being spent on species conservation, and that's why." Yet, what's interesting is that the—and I'd be interested in your take on that—but also, what's interesting is that they don't ever really take in -- they don't take into account the actual cost to the property owners and the compliance cost. And when agencies don't have as much money to spend to do something, it is not a bad idea, from their perspective, to then simply impose those costs of regulations. And I think the ESA is a very good example of that. So to truly capture the really -- what's actually costing the U.S. and taxpayers and property owners would, I think, surprise a lot of people. But what would your take be just on the cost issue, that we don't spend enough?


Jonathan Wood:  You're certainly right that it is odd that we have a statue that's over 45 years old and no one really has a good grasp on how much it costs in terms of overall economic impact. We've gone through a little bit of why that is and provisions of the act that either forbid or discourage cost-benefit analysis and some Supreme Court precedent that has made that more difficult. And this is one of the primary reasons why under the EPA and Supreme Court precedent that we generally require cost-benefit analysis. It has a restraining influence on agencies so that they don't go further than Congress intended, that they are required to somewhat internalize the costs they're imposing on the public in making decisions and putting on the agency the requirement to explain why those burdens are worth bearing.


      That kind of analysis typically hasn't been done under the Endangered Species Act, but there are elements in the new rules that makes it more likely that that kind of analysis will be incorporated more in the 4(d) process and critical habitat process and a few other places. But as with any other cost-benefit analysis requirement, truly maximizing the benefits requires that industry and property owners and practitioners enforce them against the agency, require that they -- make them do good cost-benefit analysis, and if they don't, take them to court to impose more meaningful standards.


Daren Bakst:  Jonathan, my last question is do you think these final rules are going to help conserve species?


Jonathan Wood:  Yes. There are some rules that I think are so small and technical that they won't have that much of an impact, but several that I think meaningfully will improve the incentives for private landowners to contribute to species recovery. The biggest one of those is the threatened species change that we talked about quite a bit. And the reason why I think that is, in part, National Marine Fisheries Services has taken the approach endorsing the new rule for the last 45 years, and there is no evidence that it's caused harm to species. And the efforts by the Obama administration to rely on reduced regulatory burdens to encourage and spur recovery efforts makes me think that making that the more common process will, in the long run, improve the incentives and encourage efforts to recover species.


      So if there are no questions in the queue, I wonder if I might pose one to see, Daren, what you think about it, and that's about the role of Chevron going forward. There's long been a push to get the Supreme Court to sort of pare down Chevron and impose meaningful standards, if not eliminate it entirely. And one of the statute's that's been most significant in shaping the worst implementations of Chevron, the times where it really provides no enforcement of the statute as written, is under the Endangered Species Act is that generally, decisions are reviewed on a policy basis rather than a legal. So the case that says that Chevron applies to provisions that have criminal enforcement applications is, unsurprisingly, an ESA case. Daren, what do you think is likely to happen going forward, given the political dynamics of this rule and the uncertainty over the future of Chevron?


Daren Bakst:  Sure. Good question. But I will say that a lot of questions that I think that are thought of as policy questions are really legal questions that the court should be answering to be just deferential to think that we're not even going to focus on the plain text of the statute and to actually kind of look at some type of general statutory objective of protecting the species at almost all costs makes no sense to me. That's not what the court should be doing.


      Certainly, the whole deference problem is a concern. It's also a concern for the courts to try to make policy type decisions too, but I think what's happened, obviously, and I'm sure has been stressed over and over again with The Federalist Society, is that the courts themselves have just not provided the check on the agencies. Not even merely on the policy decisions, not just simply not where they're -- a lot of times, it's one thing where the agencies are just filling in gaps, but the reality is that the courts are not even reviewing what are just plain legal questions.


      And one of the big problems I have, even with the application of Chevron, is sometimes the court will say that a statute is -- when it's clearly ambiguous, when it's convenient, they'll say, "Oh, well, it's actually not ambiguous." Or they'll actually just simply forget to even discuss Chevron altogether. So Chevron comes in when it's useful sometimes. So it's not simply just the Chevron standard itself, it's also -- it's not even consistently applied. So yes, it's a whole mess that starts with Congress delegating too much responsibility to the agencies. And I'd love to see nondelegation doctrine revitalized or come back to life, but it has been dead since the 1930s.


      And there's really just, again, simply no check on the agencies, so there's no reason to expect that the administrative state's not going to continue to expand. The Congressional Review Act's a nice solution to some extent, but it has limited impact. And there are obviously other alternatives out there, and I think that Administrative Procedure Act reform is something I hope that will continue to be discussed because there needs to be major changes when it comes to providing checks on agencies and insuring that when the government does take action that impacts Americans, that it's actually policies that represent the will of the people that are making the law, which is Congress, as opposed to the will of bureaucrats. So I guess I could talk all day about that issue, but it's a --


Jonathan Wood:  -- You're right. There are lots of opportunities out there to reinvigorate textualism, nondelegation, to push back on deference under the ESA. It's amazing how many of the worst doctrines either have their birth in environmental cases or expand it significantly in environmental cases. And I'll be curious to see, especially since the positions have somewhat switched where people who might support these changes are probably going to, on average, be more skeptical of Chevron than the people who oppose these changes, on average, are more prone to support Chevron.


      So I'll be very curious to see what role deference plays whenever the inevitable lawsuits are filed against these rules because I'm sure the agency will rely on it since they're trying to defend their rules. But I'll be curious to see what the other plaintiffs and defendants have to say about what extent you just defer to the agencies as opposed to interpreting the text.


Daren Bakst:  Well, just in practice, looking at the final rules, for example, looking at the Blanket 4(d) Rule and the agencies deciding to just start treating threatened and endangered species differently, as they're supposed to be, and to make the Fish and Wildlife Service policy consistent with the Department of Commerce's policy, they're just following what the law says. And it's kind of amazing that the Fish and Wildlife Service had a 4(d) rule in the first place.


      So what bothers me is that when an agency actually tries to respect the rule of law and get back to the plain text of the statute, it becomes such a headache for them that -- who knows what will happen in the courts? But realistically, courts should be like, "Yeah, you're basically getting it back to what the law actually says." And really, what would happen before was the agencies were going well beyond, I think, what the plain language of the law said. And that's what should be looked at skeptically from courts in my opinion, not when actually the agencies are working well within the law. So this desire by the agencies to get back well within the text shouldn't be so much of a problem, but as we know, it can be.


Jonathan Wood:  One of the interesting things in the new rules is that the agency certainly could have taken the approach you just mentioned of, "Our new rule is the only legally correct one. The old rule we're getting rid of was infirm under the statute." But they didn't take that approach and said that the rule tries to say that the old rule was a reasonable interpretation. The new rule, which is it's exact opposite, is also a reasonable interpretation. So it seems to me they're very much shaping this up as sort of maximal Chevron case where they get the deference no matter which of two opposite positions they take. And I'll be curious, given the way that the wind in the judiciary has been blowing against Chevron, how that works out.


Devon Bakst:  I think in the comments, if I remember my comments, the proposed rule and others, I think they said that it had similar language in the proposed rule. And I don't think it was a reasonable interpretation, but they decided to go that route for some strategic reason I'm not aware of.


Micah Wallen:  We did have a question come through on the line that's lined up, so without further ado, we can jump to that question.


Caller 1:  Yeah, just any thoughts on how -- your thoughts on how this rule might affect HCP agreements between the agencies and the state, and particularly if critical habitat is being amended or created using unoccupied habitat.


Jonathan Wood:  All the rules are designed to be prospective, so any existing HCPs or candidate conservation agreements and similar programs should continue and be unaffected. The rules overall tend to increase flexibility for the agency to achieve HCP which are habitat conservation plans and candidate conservation agreements and other nonregulatory approaches more easily. So for instance, one of the criticisms of the candidate conservation and some of the habitat conservation planning process is that it can be so burdensome that, really, only the most sophisticated parties can participate. So a county or state might be able to afford it as well as, say, major industry, but individual or groups of smaller landowners can't navigate that process.


      One of the upsides to the 4(d) reform that I see is that it allows the agency to basically create larger carveouts and allow certain activities to go forward without a permit, even for those landowners who otherwise probably couldn't navigate the HCP or CCA process. So to some extent, this will allow the benefits of those programs to be extended further by allowing them to apply to more people.


Daren Bakst:  One thing connected to ESA, and also, we were talking about Chevron, obviously, one solution to provide and reassert congressional power is the REINS Act. And without getting into all the details of the REINS Act, there is kind of an idea of trying to integrate certain concepts of the REINS Act within specific statutes themselves. So I believe there was legislation that was introduced maybe last Congress that would have actually had Congress review -- I don't know if it would be listings, but there would become a -- within the ESA itself, there would be a congressional review component to the agency action. And I don't know if that's a good idea or not, but I believe there was legislation along those lines, just to throw that out there.


Jonathan Wood:  So I'm not familiar with the legislation, but one thing I do know is that most everything done under the Endangered Species Act is subject to the Congressional Review Act, and most listing decisions and critical habitat designations, in my experience, have been submitted to Congress under the CRA. So there already is that avenue for review. Now, it's a negative. It gives Congress a chance to disapprove a rule by going through the CRA process rather than an affirmative endorsement by Congress. I don't know what the presumption would have been under the other --


Daren Bakst:  -- It was the REINS Act type of presumption. It's a positive.


Jonathan Wood:  Okay. So it's the opposite of that where if Congress does nothing, the rules go into effect. But there's at least that avenue. And I suppose getting Congress more involved would be better in the long run because Congress is who the Constitution entrusts to make these sorts of big policy cost-benefit type analysis. And much of the controversy under the Endangered Species Act isn't over the science of whether the species is endangered or not; it's about the policy question of, okay, well then, what do we do about it? What's the best way to protect and restore habitat to protect the species and grow its population?


      And under the ESA, there's a tendency for the agency to sort of conflate the scientific question with the policy question. If Congress were more involved, you might have more opportunities to separate those two things out which would lead not only to better science because you don't politicize it quite so much, but also better policy since people have to be frank about what the costs and benefits are and what the reasons are for and against particular approaches.


Daren Bakst:  I'm glad you brought that up because one of the biggest problems, I think, with the science is that science questions really are not science questions, they're policy questions. A science question should be objective, and no value judgements made to an objective question, whereas the policy questions do inherently have value judgements made. And one way to maybe address that problem with ESA is to separate the listing process from any type of regulatory component of the law so that the listing decision is purely science based and just has no connection to the regulations whatsoever.


      So you're simply just decoupling any regulatory implications of the law from the listing process altogether. So you might have a listing of a species that may or may not mean anything, but the agencies would then figure out, okay, we've listed a species as threatened or endangered, and now we're going to actually do an analysis, a policy analysis, a cost-benefit analysis to determine what type of regulatory implications that means in terms of protecting a specific species. Any thoughts on the decoupling?


Jonathan Wood:  That idea has been around for a while, and to some extent, the threatened species reform will result in decoupling for a threatened species. No prohibitions will automatically kick in for those species without the agency going through some sort of analysis to determine what those protections should be. So to some extent, that will be the test of whether decoupling improves the science and improves policy decision making.


Micah Wallen:  We have one more question that came through, if we want to jump there.


Jonathan Wood:  Okay, great.


Caller 2:  Hi. You talked about the possibility that this would be a compensable taking under certain circumstances, but yet, when there is a regulatory type of taking, the government effectively needs to take all of its useful value in order for there to be something that's compensable. Do you have any suggestion as to what the next step might be or what you would envision the compensability calculation or analysis in order to get around that total taking basically being necessary for regulatory takings to be compensable?


Jonathan Wood:  The caller is exactly right that the reason why there has been no taking found in the Endangered Species Act is that they are all analyzed under Penn Central's multifactor test. The agencies are very careful in using the permitting process to ensure that they never take all productive use or all economically beneficial use of property. They leave something, even if the value of property might decline considerably. There are Penn Central cases that have lost, despite their reduction in value well over 90 percent. So I think if the takings clause is going to become a more significant player in Endangered Species Act issues, it will mean strengthening Penn Central significantly so that whenever the agency seriously impinges on the value of the property, it must require the payment of just compensation.


Daren Bakst:  And so ultimately, Congress can develop whatever compensation scheme they'd want to come up with, and certainly there's been legislative proposals out there. It does get tricky to figure out what the magic number is in terms of do you figure it out based on a reduction 50 percent; is that a magic number? Is there some other number? But it would be nice to actually see regulatory takings compensated because there really is, for all practical purposes, no real such thing as, generally speaking, as a regulatory takings, at least in practice. And I think that needs to change. I think that's it for me. Jonathan?


Jonathan Wood:  So I think the last comment I'll make is, as we said earlier in the program, we expect lots of litigation to be filed over this issue, and I'd encourage the audience to pay pretty close attention to that case. I mean, odds are, given the effect of the Endangered Species Act, you probably have clients whose interests will be affected by the outcome of that litigation. But also, given the role of the administrative doctrines in Endangered Species Act issues and in these in particular, I expect that the outcome of those cases will have impacts far beyond the Endangered Species Act. I mean, Chevron, nondelegation and other principles in this debate will not stop under the Endangered Species Act, but instead will apply to all sorts of statutes where those kinds of doctrines are invoked.


Micah Wallen:  And on behalf of The Federalist Society, I would like to thank both of our experts for the benefit of their valuable time and expertise today. We welcome listener feedback by email at info@fedsoc.org. Thank you all for joining us. We are adjourned.


Operator:  Thank you for listening. We hope you enjoyed this practice group podcast. For materials related to this podcast and other Federalist Society multimedia, please visit The Federalist Society's website at www.fedsoc.org/multimedia.