The U.S. Fish and Wildlife Service (FWS) and the National Marine Fisheries Service (NMFS) (together, the “Services”) this week published proposed revisions to key portions of the Endangered Species Act’s (the “Act”) implementing regulations. The proposals represent significant potential changes to the regulations governing federal agency consultations (Section 7), the criteria by which species are listed or delisted and critical habitat is designated (Section 4), and the protections covering threatened species (Section 4(d)). The preambles to the proposed rules indicate that they are intended to increase clarity, improve consistency, and address conflicting or problematic judicial interpretations.

The proposed rules come during a month in which draft legislation to overhaul the Act has been introduced in both houses of Congress. The legislative proposals include a House bill that would make it far easier to delist species and a Senate bill that would give states a much bigger role in species protection. While these congressional efforts face the usual obstacles to passage, the Services’ rule-making represents an easier path to significantly reform the implementation of the Act.

The Services’ proposed regulatory revisions fall into four categories, each a crucial component to implementation of the Act: (1) listing determinations, (2) criteria for designating critical habitat, (3) protections for threatened versus endangered species (i.e., the “blanket 4(d)” rule) and (4) agency consultation. Below, we summarize some of the most critical proposed revisions and offer our take on what it means for developers and other stakeholders.

(1) Listing Determinations. The proposals include the following important revisions to the factors the Services may consider when determining whether a species is endangered or threatened:

• Economic Impacts. The current regulations specify that the determination of whether a species is endangered or threatened must be made “solely on the basis of the best available scientific and commercial information . . . without reference to possible economic or other impacts of such determination.” The Services propose to remove the prohibition on referencing economic impacts in order to have the flexibility to reference economic or other impacts when doing so would better inform the public.

Removing the prohibition on consideration of economic impacts would introduce into the Services’ listing determinations an option of using the type of cost-benefit analysis used by the Environmental Protection Agency (EPA) when, for example, it proposes or revises a National Ambient Air Quality Standard under the Clean Air Act. If controversy surrounding the regulatory impact analysis accompanying EPA rule-making serves as a guide, this revision to the Act regulations could result in very resource-intensive economic analyses and set up the “battle of the economists” in listing determinations. Interested parties will encourage a heightened use of “commercial information” and other economic data.

• Defining “Foreseeable Future.” The Act defines a “threatened species” as “any species which is likely to become endangered within the foreseeable future throughout all or a significant portion of its range.” Foreseeable future is not currently defined in the Act or its regulations. Pursuant to the proposed revisions, the Services would codify the approach they have taken in recent years in which they consider the foreseeable future on a case-by-case basis, and only to the extent to which the Services can reasonably determine that a future threat—and the species’ response to that threat—is probable.
  The impact of this proposal is likely to manifest in listing determinations for species facing threats from climate change. The proposed rule’s emphasis on reliable, data-driven predictions could make listings based on the threat of glacial melting or sea level rise more difficult to justify (or more easily challenged).

(2) Designating Critical Habitat. Section 4 of the Act requires designation of critical habitat concurrent with listing a species. Proposed revisions to the regulations would alter how the Services decide whether a critical habitat designation is not prudent at the time of listing and when a geographic area not currently occupied by the listed species may nonetheless be designated as critical habitat.

• Not Prudent Determinations. The Services propose to replace the determination of whether a critical habitat designation would be “beneficial to the species” with a non-exhaustive list of circumstances where designation of critical habitat would not be prudent. An example of when a critical habitat designation would not be prudent is when threats to the species’ habitat stem solely from causes related to climate change, such as glacial melting or sea level rise. The Services reason that such threats cannot be addressed through federal management actions and, therefore, it would not be prudent to designate critical habitat.

• Designating Unoccupied Areas. The proposed regulations would restrict when the Services could designate unoccupied habitat (an area the species does not presently occupy) as critical habitat. The revised regulations would permit the designation of unoccupied areas only upon a finding that the unoccupied habitat is essential to the conservation of the species. The Services could consider unoccupied habitat to be essential only if the designation of occupied habitat would be inadequate to ensure the species’ conservation or would require a larger but less effective protected area.
  Note that as the rule-making process for these proposed revisions plays out, the Supreme Court will hear—as the first case before it in October 2018—a challenge to the scope of FWS authority to designate critical habitat. In Weyerhaeuser Co v. FWS, FWS designated 1,500 acres of private land in Louisiana as critical habitat for the endangered dusty gopher frog, even though the frog is not presently found on that land. The Supreme Court will consider whether the Act allows the designation of critical habitat when the land is not currently occupied by the species. The interplay between the finalization of the revised regulations and the Weyerhaeuser case will be closely watched.

(3) Protections for Threatened Species—Elimination of the “Blanket 4(d)” Rule. Section 4(d) of the Act authorizes the FWS to issue regulations deemed “necessary and advisable to provide for the conservation of threatened species,” allowing some flexibility in implementing the Act and managing threatened species. The FWS proposes to remove the blanket rule under Section 4(d) of the Act that automatically conveys the same protections for threatened species as for endangered species. Instead, threatened species would be treated as endangered and subject to Section 9 “take” prohibitions only if FWS promulgates a special rule for that species on a case-by-case basis. This would align the FWS with the NMFS’ approach to protecting threatened species.

We expect industry and states to have a mixed reaction to this proposed change. For example, when the FWS listed the northern long-eared bat as threatened due to white nose syndrome, it would have been unworkable to apply blanket take prohibitions across the 37-state range of the bat. The 4(d) rule was used to narrow the regulated area by protecting bats only when and where they are most vulnerable, giving industry a degree of certainty. Similarly, FWS used a 4(d) rule to obtain landowner consent when the lesser prairie chicken was listed as threatened. Take of the threatened bird was authorized if the landowner participated in the FWS range-wide conservation plan.

If this proposal is adopted, expect significant petition activity from environmental groups seeking either species-specific protections for threatened species or full endangered status for species designated as threatened. Litigation from environmental groups will likely increase in this area, as well.

(4) Interagency Consultation. The Services propose a host of revisions to key definitions and procedures governing the interagency consultation and cooperation required by Section 7 of the Act. Among the key proposals are the following:

• Applicability of Section 7 Consultations. In perhaps the most significant of the potential revisions, the Services are considering creating exceptions to the requirement that so-called “action” federal agencies consult with the FWS or the NMFS. No consultation would be required when the action agency (as opposed to the FWS or NMFS) determines that there is no anticipated “take” and the proposed action will (1) not affect the listed species or critical habitat, (2) result in beneficial or negligible effects to listed species or (3) have effects caused by global processes that cannot be reliably predicted or measured. The Services have not proposed specific language at this time, but by seeking comment on the advisability of such a change, indicated that further revisions to the Act are likely coming.

While this proposal will likely be embraced by action federal agencies (such as the U.S. Forest Service, Bureau of Land Management and Department of Defense) and industry, environmental groups are certain to challenge action agencies’ threshold determinations that no consultation is required because a particular action will not affect a species. We can imagine this will give rise to allegations from environmental groups of the “fox guarding the henhouse.” Note that these particular proposed revisions allowing action agencies to make threshold determinations might not survive judicial scrutiny, as courts have been reluctant to defer to action agencies’ decisions that are related to management of endangered species. See, e.g., Nat’l Wildlife Fed’n v. Nat’l Marine Fisheries Serv., 524 F.3d 917, 935–36 (9th Cir. 2008) (refusing to defer to action agency commitments to future habitat improvements absent “specific and binding” plans).

• Programmatic Consultations. The proposed regulations seek to promote the use of programmatic consultations to improve both process efficiency and conservation in consultations. Programmatic consultations are expected to be used to address similar frequently occurring or routine actions within a particular geographic area (for example, consultations involving a regional road maintenance program), or to address a proposed program, plan, policy or regulation intended to provide a framework for future actions. The Services also expect programmatic consultations to improve species protection by making it easier for action agencies and applicants—viewing actions from the programmatic level—to identify project design criteria, best management practices and other standards that will aid species conservation.

Promoting the use of programmatic consultation should create a win-win for all stakeholders by allowing a tiered approach and avoiding piecemeal and redundant consultations.

• Linking Environmental Baseline to Ongoing Action. The Services propose to create a stand-alone definition of “environmental baseline” that would include past, present and ongoing actions in the action area.
  The revised definition of “environmental baseline” would allow action agencies to build upon prior consultations and incorporate into the analysis the current use of the affected area. Incorporating prior consultations into new consultations should minimize delay and help speed up project development timelines.
• Streamlining Biological Opinions. The Services hope to streamline the formal consultation process by allowing the Services to adopt all or part of an action agency’s initiation package in its biological opinion. Furthermore, the new regulations would allow the Services to incorporate in its biological opinion all or part of its own analyses and findings required to issue a permit under Section 10 of the Act.

Conclusion. The proposed revisions reflect years of consideration by the Services. If adopted, the revised regulations could clarify points of confusion and expedite project development while carrying out the Act’s primary goal of protecting endangered and threatened species. The revisions generally provide the Services with more flexibility, such as by allowing greater use of programmatic consultations and the incorporation of previous consultations into environmental baselines. That flexibility should promote greater efficiency in the Act’s processes. While these revisions might succeed in streamlining implementation of the Act, they will not lead to less controversy. Expect petitions and litigation related to species-specific protections for threatened species as well as challenges to action agencies’ determinations that Section 7 consultations are not required. With Weyerhaeuser Co. v. FWS on the Supreme Court’s fall term docket, the issue of critical habitat designations could end up murkier than before these proposed revisions. Furthermore, if recently introduced legislation gains traction in Congress, these regulatory revisions might only be the start of a more fundamental overhaul of the Act.