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Effective October 30, 2013, a new rule will limit the economic impacts that federal regulators may consider when designating property as “critical habitat” under the ESA. The rule, jointly proposed last year and promulgated last month by the U.S. Fish and Wildlife Service (“USFWS”) and NOAA Fisheries (together, the “Services”), also requires the Services to publish a draft economic analysis for public comment at the time they propose critical habitat for listed species. It codifies the Services’ use of a “baseline” approach, limiting the scope of economic impacts considered in habitat designations to “incremental” (but for) effects.

By not considering the broader context of overall ESA regulation when designating critical habitat, the magnitude of economic effects will likely be minimized in regulatory documents, potentially skewing public perception of the actual consequences of the action being proposed. For example, a proposed designation of nearly 14 million acres of habitat for Northern spotted owls is characterized as “minor” under the incremental approach, despite the larger impacts of listing-based ESA regulation over the past two decades (i.e., reduction of Pacific Northwest timber jobs by over 50%—a decline attributable, according to the USFWS, to the owl listing as well as market globalization and industrial modernization). However, the ESA explicitly prohibits consideration of economic impacts in listing decisions—including coextensive impacts of listing and critical habitat designation. The rule will not be welcomed by property owners and users affected by habitat designations.

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