June 01, 2015

Critical Habitat in Critical Condition: Can Controversial New Rules Revive It?

Steven Quarles, Brooke Wahlberg, and Sarah Wells

Over its four-decade life span, the Endangered Species Act (ESA or Act), has been accompanied by a nearly universal recognition that, as noble as the law’s mission is, it was misdirected, focusing on species with scant attention to their habitats. See 16 U.S.C. §§ 1531–1544. Said another way, the best method of preventing extinction and promoting recovery of most species is not to pinpoint resources and regulatory constraints on the individual species, as the ESA does, but rather to address those species’ habitat needs. Although the ESA pays lip service to habitat protection in its hortative statement of statutory purpose (“provide a means whereby the ecosystem upon which endangered species and threatened species depend may be conserved”), the Act only treats habitat explicitly in three places: (1) the section 4 authority of the secretaries of the Interior and Commerce to designate particular habitats of endangered and threatened species (listed species) as critical habitat; (2) the section 7 prohibition on federal agency actions that would likely cause destruction or adverse modification of the species’ designated critical habitat, applied in consultations between the U.S. Fish and Wildlife Service or the National Marine Fisheries Service (together, Services) and the action agencies; and (3) the section 5 provision of new, and cataloguing of existing, authorities of the secretaries of the Interior and Agriculture to acquire lands or water to conserve the species.

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Only the two sections providing for designation and protection of critical habitat have any regulatory effect. However, they suffer from inattention. As of January 2015, critical habitat has been designated for fewer than 45 percent of endangered and threatened species. Critical Habitat Fact Sheet, U.S. Fish and Wildlife Service (Service) (Jan. 2015). The Section 7 critical habitat modification standard is twinned with a second standard—that federal agencies ensure their actions are not likely to jeopardize the species’ continued existence—and the jeopardy standard is applied with far greater frequency in the consultation process than is the critical habitat standard. Indeed, those federal officials responsible for administering the Act have found little use for, and indeed have been dismissive of, the critical habitat provisions of the ESA.

In a 1999 hearing before a subcommittee of the Senate Committee on Appropriations, Interior Secretary Bruce Babbitt announced, “I have voiced my concerns about the way we are mandated to use the designation of critical habitat under the Endangered Species Act. It does not work. It does not produce good results.” 145 Cong. Rec. S4423–4424 (daily ed. Apr. 29, 1999). In a hearing that same year, before a subcommittee of the Senate Committee on Environment and Public Works, Service Director Jamie Clark testified that critical habitat designation was, in effect, all process and no benefit. “[I]n 25 years of implementing the Act, we have found that designation of critical habitat provides little additional protection . . . Federal agencies already consult with the Service on activities affecting listed species . . . making critical habitat designation a redundant expenditure of conservation resources.” Hearing before the House Committee on Natural Resources on Endangered Species Act Enforcement, 1999 WL 350545 (F.D.C.H.) (May 27, 1999). In a number of preambles to rules designating critical habitat, as required by court orders, the Service has flatly asserted its negative position on critical habitat designations, proclaiming that “critical habitat designation provides little or no conservation benefit despite the great cost to put it in place . . . Over 20 years of experience in designating critical habitat and applying it as a tool in conserving species leads the Service to seriously question its utility and the value it provides in comparison to the monetary, administrative, and other resources it absorbs.” Endangered and Threatened Wildlife and Plants; Final Determination of Critical Habitat for the Southwestern Willow Flycatcher, 62 Fed. Reg. 39,129, 39,130–31 (July 22, 1997). These criticisms of the concept of critical habitat by the secretary of the Interior, the director of the Fish and Wildlife Service, and the Service itself are directed squarely at the ESA’s provisions regarding critical habitat rather than the Service’s implementing regulations.

The widespread recognition of how feckless ESA’s critical habitat provisions are culminated in 2005, during the last major effort to amend the Act. Support for the repeal of all critical habitat provisions came during House Resource Committee mark-up of the bill, H.R. 3824, from both the leading conservative and the leading liberal Congressmen—House Natural Resources Committee Chairman Richard Pombo and Ranking Minority Member George Miller. The bill then passed on the House floor with a section removing all of the critical habitat provisions. Indeed, Representative Miller and several other U.S. representatives with pro-environmental voting records unsuccessfully sponsored an amendment in the nature of a substitute to H.R. 3824 during floor debate that also would have repealed those same provisions. Additionally, a bipartisan group of senators led by John Chafee and Hillary Clinton requested that The Keystone Center assemble a working group to consider the statutory critical habitat provisions and contemplate alternative means of addressing habitat protection. This working group, not surprisingly, reached no meaningful consensus on the future of the critical habitat provisions or on any better course to habitat protection.

Even the judiciary has seemingly struggled with the critical habitat provisions. For example, different courts have ruled that designation decisions do and do not require compliance with the National Environmental Policy Act and that the “economic impact,” which may be considered under ESA Section 4(b)(2) in decisions to include or exclude areas in designations, should and should not include the cost of listing the species as well as the cost of designation. The courts have carved back the Services’ efforts to render expansive the ESA Section 4(a)(3)(A) not “prudent” exception from the requirement to designate critical habitat. More significantly, judicial decisions have required the Services to identify and substantiate the presence of virtually every factor and term in the ESA Section 3 definition of critical habitat when making their designation decisions. At bottom, the argument could be made that the principal, residual value of the critical habitat provisions might be to prop the fundamental positions of ESA stakeholders—for the environmental community, the minimal proof in the Act that habitat protection is important to species conservation, and, for the regulated community, the only place in the Act where “economic impact[s]” are acknowledged to be a worthy factor in decision making.

Despite the seemingly universal disinterest in the critical habitat provisions, the need to conduct a focused rulemaking to provide some value to them has existed for over a decade. As noted, the essential rule that defines the sole regulatory standard to protect critical habitat—“likely to result in destruction or adverse modification”—was declared invalid by the Fifth Circuit in 2001 and by the Ninth Circuit three years later. See Sierra Club v. U.S. Fish & Wildlife Serv., 245 F.3d 434, 441–42 (5th Cir. 2001); Gifford Pinchot Task Force v. USFWS, 378 F.3d 1059 (9th Cir. 2004). At the time, the Services committed to swift rulemaking to replace the unlawful regulation by spring of 2005. Yet, the intended rulemaking languished until the Services proposed two new sets of rules and a policy on critical habitat in May of 2014 in which, among other regulatory goals, the Services sought to provide a new definition for “destruction or adverse modification of critical habitat.” Interagency Cooperation—Endangered Species Act of 1973, as Amended, Definition of Destruction or Adverse Modification of Critical Habitat, 79 Fed. Reg. 27,060 (May 12, 2014); Listing Endangered and Threatened Species and Designating Critical Habitat; Implementing Changes to the Regulations for Designating Critical Habitat, 79 Fed. Reg. 27,066 (May 12, 2014) (PR); Policy Regarding Implementation of Section 4(b)(2) of the ESA, 79 Fed. Reg. 27,052 (May 12, 2014).

But these proposed rules and draft policy would accomplish far more than just replace a solitary regulation that the courts found to be invalid. The proposed rule that would redefine “destruction or adverse modification” is paired with another proposed rule that would produce the bulk of the potentially expansive amendments to the current regulations. This second proposed rule that would “Implement Changes to the Regulations for Designating Critical Habitat,” 79 Fed. Reg. 27,066, is the proposed rule upon which this article focuses. Even a cursory reading of the preambles to the proposed rules leaves no doubt as to how ambitious they are. Indeed, they appear to constitute a broad and aggressive effort by the Services to breathe new life into critical habitat—to supply the long-perceived need for the ESA to play a more direct habitat protection role to achieve conservation and recovery of listed species and to end the apparent inutility of the Act’s principal habitat feature. As admirable, or as biologically necessary, as this goal may be, however, a more detailed reading of the proposed rules themselves makes it evident that the problem lies not with the current critical habitat regulations that the proposed rules would amend, but rather with the statutory provisions the current regulations were intended to implement. Recall that the public criticisms of the concept of critical habitat by members of Congress, the secretary of the Interior, the director of the Fish and Wildlife Service, and the Service address the Act’s, not the rules’, provisions. Accordingly, many portions of the proposed rules appear to do double duty—one appropriate, the other inappropriate. They would ostensibly amend the current regulations, but also seek to amend the law—not by removing inconvenient statutory words and phrases, but by according them definitions that render them meaningless or ineffectual. This aggressive rulemaking effort serves as vehicle for the Services to repair administratively what they have found dysfunctional in the underlying statute and judicial decisions.

The proposed rule for designation and revision of critical habitat is self-billed as a clarification and “minor edit to the scope and purpose” of the current regulations. PR at 27066. However, this proposed rule is a marked departure from the underlying statutory provisions and from over four decades of the Services’ interpretation and practice regarding the ESA. Furthermore, it appears to be an attempt to overpower courts’ decisions requiring satisfaction of each of the Act’s requirements for designation of critical habitat by rewriting fundamental elements of the statutory definition of critical habitat. Section 3 of the ESA lays out the elements for critical habitat designations:

The term “critical habitat” for a threatened or endangered species means

(1) the specific areas within the geographical area occupied by the species, at the time it is listed…on which are found those physical or biological features (I) essential to the conservation of the species and (II) which may require special management considerations or protection; and (2) specific areas outside the geographical area occupied by the species at the time it is listed…upon a determination by the Secretary that such areas are essential for the conservation of the species.

Courts have required that each of the elements contained in this statutory definition of critical habitat must be satisfied for a critical habitat designation to be valid. Cape Hatteras Access Preservation Alliance v. U.S. Dep’t of the Interior, 344 F. Supp. 2d 108 (D.D.C. 2004); Home Builders Ass’n of N. Cal. v. U.S. Fish & Wildlife Serv., 268 F. Supp. 2d 1197 (E.D. Cal. 2003). On the basis of these decisions, for a critical habitat designation to withstand judicial scrutiny, the Service needs to have (1) found that the designated areas are actually occupied by the species at the time of listing; (2) determined what precise physical or biological features are essential to species’ conservation; (3) identified specific areas, within the geographic area occupied by the species, on which currently existing features essential to conservation of the species are found (potential future features are insufficient); (4) found that the designated area could require special management considerations and protections at some time in the future; (5) for designated unoccupied areas, determined that they, in their entirety, are essential for the conservation of the species; and (6) relied on the best scientific and commercial data available in making all of these determinations. Id.

The proposed rule markedly departs from the courts’ insistence that the Services must find all the elements in the statutory definition of critical habitat prior to exercising their designation authority. Under the proposed rule, critical habitat would not have to be occupied, would not yet have to be habitat, would not yet have to be essential or have features essential to species conservation, and would not have to be limited to specific areas within the species’ geographic range. Combined with the Services’ newly stated intent to rigorously and regularly designate critical habitat (PR at 27073), the concept of critical habitat as it is consistently understood and applied would be revolutionized. Each of these deviations from the standing requirements for critical habitat designations directly contravenes current federal court holdings and the long-standing interpretation of the ESA by Congress, the secretary of the Interior, the director of the Fish and Wildlife Service, and the Service itself. The proposed rule is a new attempt—after decades of recognition of the lack of functionality of the statutory critical habitat provisions—to establish a flexible and imposing regulatory mechanism upon a limited statutory foundation. The proposed rule constitutes a bold effort by the Services to eliminate virtually all statutory elements that serve as constraints on the designation of critical habitat and, instead, to award themselves with largely unfettered discretion in exercising their designation authority. While the Services seek to invigorate the regulatory concept of critical habitat, this end should be accomplished by legislation, not rulemaking.

The Distinction between Designation of Occupied Area and Unoccupied Areas

Section 3 of the ESA allows for an area that is not occupied by a species to be designated as critical habitat, but Congress made clear its preference for designating occupied habitat over unoccupied. By ESA terms, an entire “area” must be found essential to the conservation of the species in order for unoccupied habitat to be designated, while for designation of occupied areas, only “features” within an area must be determined essential to the conservation of the species. This indicates Congress’ intent, that to be designated as critical habitat, unoccupied lands must be more broadly valuable and essential to the species than occupied lands.

However, that congressional intent is lost in the proposed rule, which at times treats designation of occupied and unoccupied areas as interchangeable. This is reflected in the statement in the preamble that

if there is uncertainty as to whether an area was ‘within the geographical area occupied by the species, at the time it is listed,’ the Services may in the alternative designate the area under the second part of the definition if the relevant Service determines that the area is essential for the conservation of the species.

PR at 27072. Because courts generally require proof that areas designated as critical habitat are occupied, the Services would circumvent this requirement by transforming the avenue for designation of unoccupied land into a potential fallback means of designation. See Home Builders, 268 F. Supp. 2d at 1221–22 (striking down a critical habitat designation, because, while uncertainty as to exactly where a species may be found does not mean that a designated area is not critical habitat, “at some point such uncertainty makes it an abuse of discretion for the Service to designate the land as occupied”).

The preamble flatly asserts that “the Act does not require the Services to first prove that the occupied areas are insufficient before considering unoccupied areas.” PR at 27073. To reinforce that position, the proposed rule would excise an “unintentionally limiting” provision in the current regulations that allows designation of unoccupied habitat only where “a designation limited to its present [occupied] range would be inadequate to ensure a conservation of the species.” Id.; 50 C.F.R. § 424.12(e). This statement, and the proposed striking of the current regulation’s limitation, are aimed at mooting the conclusion of a federal court, which has stated unequivocally that “[d]esignation of unoccupied land is a more extraordinary event than designation of occupied lands. . . . The Service cannot attempt to designate as unoccupied those lands it considers occupied and for which it has failed to make the proper showings required by statute.” Cape Hatteras, 344 F.Supp.2d at 125. That court rejected the Service’s attempt to use the statutory provision applicable to unoccupied habitat as a fallback provision, exactly what the Services again seek to do in the proposed rules.

Unoccupied Areas and Features of Occupied Areas Need Not Be Essential at the Time of Designation

The preamble states, “[w]here the best available scientific data suggest that specific unoccupied areas are, or it is reasonable to infer from the record that they will eventually become, necessary to support the species’ recovery, it may be appropriate to find that such areas are essential for the conservation of the species and thus meet the definition of ‘critical habitat.’” PR at 27073. Moreover, unoccupied areas—which ESA Section 3 states must in their entirety be essential to the conservation of the species—can even be devoid of any features essential to conservation section 3 requires of occupied areas (“need not have the features essential to the conservation of the species”). Id. The Services assert that they may designate “areas that do not yet have the features” and “degraded or successional areas that once had the features,” with the understanding that areas “develop features over time” or, “with special management, features may be restored to an [unoccupied] area.” “[T]he Services would identify unoccupied areas, either with the features or not, that are essential to the conservation of a species.” Id.

Based upon this highly flexible understanding of what is “essential” to the species’ conservation, unoccupied areas would not have to be a critical, or even suitable, habitat at the time of designation. The proposed rule effectively reads out the phrase “essential to the conservation of the species” by defining “essential” so loosely. The proposed rule would establish an impressive level of discretion by the Services, which would allow for the designation of virtually any unoccupied area, without reference to the statutory limitations attached to the designation of unoccupied land. Further, the Services declare their intention to employ this discretion to freely designate unoccupied areas:

The Services anticipate that critical habitat designations in the future will likely increasingly use the authority to designate specific areas outside the geographical area occupied by the species at the time of listing. As the effects of global climate change continue to influence distribution and migration patterns of species, the ability to designate areas that a species has not historically occupied is expected to become increasingly important . . . Where the best available scientific data suggest that specific unoccupied areas are, or it is reasonable to infer from the record that they will eventually become, necessary to support the species’ recovery, it may be appropriate to find that such areas are essential for the conservation of the species and thus meet the definition of “critical habitat.”

PR at 27073. This strategy to base designations upon climate change predictions and “infer[ence]” can leave no doubt as to the Services’ desire to broaden their authority to designate unoccupied critical habitat well beyond statutory bounds.

Even were the Services able to designate unoccupied areas that are not essential at the time of designation to reflect future climate change predictions, to do so would be another step in the apparent relaxation of the requirement that critical habitat designations be based upon the “best scientific data available” (ESA Section 4(b)(2))—not upon inferences, assumptions, or “indirect and circumstantial evidence” (as the proposed rule admits at 27069). The Services even go so far as to warn that they will no longer regularly reach the conclusion that designation of critical habitat is not “prudent” or “determinable” for a species, as permitted by ESA Section 4(a)(3)(A), which indicates the agencies’ willingness to forge ahead with designations even where the scientific evidence informing the decisions may be weak.

The proposed rule would also liberate occupied areas from the current “essential to conservation” stricture. It would provide that occupied areas designated as critical habitat are not required to have physical or biological features essential to the conservation of the species at the time of designation. Again, this is in direct contravention of the ESA and judicial holdings. The proposed rule repeatedly insists that “physical and biological features can be the features that support the occurrence of ephemeral or dynamic habitat conditions.” PR at 27069. Essentially, the proposed rule would establish that a reasonable expectation of future features occurring in an area is sufficient for designation. “[T]he Services could conclude that essential physical or biological features exist in a specific area even in the temporary absence of suitable vegetation . . . if there were documented occurrences of the particular habitat type in the area and a reasonable expectation of that habitat occurring again.” PR at 27070. The proposed “definition for ‘physical or biological features’ would clarify that features can be dynamic or ephemeral habitat characteristics.” Id. Further, even degraded habitat that is not ephemeral by nature, but has even one essential physical or biological feature at the time of designation, may be designated as critical habitat. Id. While there could be some argument for designation of habitat that will foreseeably have future essential features where the features’ presence is reliably cyclical (such as vernal pools or ephemeral habitat types), the proposed rule’s contemplation of qualifying degraded habitats as candidates for designation is novel.

The courts have rejected previous Service attempts to designate critical habitat on the basis of “future features.” Home Builders, 268 F. Supp. 2d at 1215 (stating that the Service cannot include within critical habitat areas that are “likely to develop” essential features, because the ESA requires designation of specific areas on which are found features essential to the conservation of the species); Cape Hatteras, 344 F. Supp. 2d at 122–23 (insisting that the Service “may not statutorily cast a net over tracts of land with the mere hope that they will develop” features, concluding that features being “found” in an area “is a prerequisite to designation” and for the Service to assert otherwise “is simply beyond the pale of the statute”). Certainly, designating unoccupied areas on the basis of anticipated climate change effects comes dangerously close to designation on the “mere hope” that the courts have struck down. The proposed rule would moot this case law and alter the statutory definition’s limitation on designation to unoccupied areas or features of occupied areas that are “essential to the conservation of the species” to areas or features that could possibly become “essential to the conservation of the species.”

Critical Habitat Would Not Be Limited to Specific Areas within the Species’ Range

The ESA requires land designated as critical habitat to be identified as “specific areas,” whether occupied or unoccupied by the species. The proposed rule reads the term “specific” out of the law. The preamble to the proposed rule recites the statutory language, including the limitation that “[e]xcept in those circumstances determined by the Secretary, critical habitat shall not include the entire geographical area which can be occupied by the threatened or endangered species.” ESA Section 3, Subsection (5)(C). However, the preamble would seem to allow the Services to designate the full current range of the species and more. Because of the intended loosening of the requirement that features be present, the proposed understanding that special management considerations only need to be possible sometime in the future, and the largely unconstrained designation of unoccupied areas due to the broad interpretation of the term “essential,” there is no firm limitation on the scope of what “areas” can be designated.

The Services expressed their intent to designate as “occupied” areas species’ “breeding areas, foraging areas, and migratory corridors” (PR at 27069), which for many migratory species could cover vast areas. For example, the “areas” used by the Northern long-eared bat (listed as a threatened species on April 2, 2015) for breeding, foraging, and migratory corridors could constitute all or portions of thirty-three states. By expressing that “the term ‘occupied’ includes areas that are used only periodically or temporarily by a listed species during some portion of its life history, and is not limited by those areas where the listed species may be found more or less continuously,” the rule would enable designation of virtually the whole range of a listed species. PR at 27069. Further, “because some species are difficult to survey, or, we may otherwise have incomplete survey information, the Services will rely on the best available scientific data, which may include indirect or circumstantial evidence, to determine occupancy.” PR at 27069. Also, recall that the Services suggest that designation as unoccupied area is always available as a fallback. PR at 27072. For designation of both occupied and unoccupied areas:

[T]he proposed regulations would emphasize that the Secretary would identify areas that meet the definition “at a scale determined by the Secretary to be appropriate.” The purpose of this language is to clarify that the Secretary cannot and need not make determinations at an infinitely fine scale. Thus, the Secretary need not determine that each square inch, yard, acre, or even mile independently meets the definition of “critical habitat.”. . . Instead, the Secretary has discretion to determine at what scale to do the analysis.

PR at 27071. This statement seems disingenuous since the Act does not require critical habitat designations to be made at an “infinitely fine scale,” and certainly not on the basis of inches or yards. But it is far from clear that the Act permits the obverse of that—designation of critical habitat that covers entire regions. One example suffices: were the Service to exercise its generous discretion and designate as critical habitat the nine-state, 200-mile-wide “migratory corridor,” “breeding areas,” and “foraging areas” of the endangered whooping crane, it would be violating the ESA Section 3 admonition to “not include the entire geographical area which can be occupied by the threatened species.” And it would generally be understood to be designating a vast region, not discrete areas. In nearly every way conceivable, the proposed rule departs from the ESA “specific areas” designation limitation.

Can the New Rules Revive Critical Habitat?

The proposed rule redefining the “destruction or adverse modification” standard for critical habitat in section 7 consultation is long-awaited and is necessary for the concept of critical habitat to have any regulatory heft. However, the second proposed rule, which seeks to alter the process and elements for designation of critical habitat, is far from the “minor edit to the scope and purpose” of the regulations that it claims to be. PR at 27066. Through these proposed rules, the Services would sap virtually all meaning from the words defining “critical habitat” in the ESA. While the Services are seeking to invigorate habitat protection, which is widely understood to be necessary for successful species recovery, the problem with the available critical habitat concept lies with the statute, not the regulations. The inherent shortcomings of the ESA as a tool to secure habitat protection have been understood by legislators, agency officials, and the Service itself for decades. The proper vehicle to “fix” the statutory shortcomings is legislation, not rulemaking.

Steven Quarles, Brooke Wahlberg, and Sarah Wells

Mr. Quarles is a partner at Nossaman LLP in Washington, D.C. Ms. Wahlberg is an associate at Nossaman LLP in Austin, Texas. Ms. Wells is an associate at Nossaman LLP in Washington, D.C.