The Regulation Charade

Abstract

Previous articleNext article FreeThe Regulation CharadeJ.B. RuhlJ.B. RuhlVanderbilt University Law School Search for more articles by this author Vanderbilt University Law SchoolPDFPDF PLUSFull Text Add to favoritesDownload CitationTrack CitationsPermissionsReprints Share onFacebookTwitterLinked InRedditEmailQR Code SectionsMore1. IntroductionThe profound irony of the Endangered Species Act (ESA) (16 U.S.C. §§ 1531–44 [2012])1 is that it is both the nation’s premier species and habitat protection statute and a landowner’s best argument for getting rid of a species and its habitat before the ESA steps in to protect them. The statutory feature leading to both conditions is the “toggle switch” effect when the implementing agencies—the United States Fish and Wildlife Service (FWS) for the Department of the Interior and the National Marine Fisheries Service (NMFS) for the Department of Commerce—identify a species for ESA protection, known as “listing” the species. Before a species is listed, there is no regulatory impact; as soon as a species is listed, various programs of the ESA automatically impose a general regime of regulation imposing considerable constraints on public and private land and resource development. Unless done on an emergency basis, however, listing a species takes time to work its way through the administrative rulemaking process. Any landowner who sniffs a potential listing in the air that could lead to constraints on future uses of the land and resources thus has the incentive to remove the species and its habitat from the area before the species is listed, which makes the case for listing yet more compelling, which sounds the landowner alarm louder, and so on. In short, the ESA has a “hard landing” problem that undermines its species protection mission.Concerns about this ESA paradox are nothing new. Commentators, including myself, have for decades bemoaned the ESA’s toggle-switch feature and the perverse incentive structure it erects (see Ruhl 1998a). Since the early 1990s, when Congress became paralyzed over what to do about the ESA, policymakers across the political spectrum have engaged in an ongoing administrative reform program, promulgating an array of instruments to soften the ESA’s regulatory landing (see Ruhl 2015). Nearly everyone agrees this is a big problem, if not the problem, plaguing the ESA’s effectiveness and even getting in the way of other pro-environment policies such as renewable energy (see Ruhl 2013; 2012). Yet the ESA’s hard-landing problem persists.Professor Jonathan Adler has joined the ranks of legal scholars weighing in on the ESA’s hard landing problem. He situates the problem as being fundamentally about science, politics, and judicial review (Adler 2018). Whether a species is imperiled, he argues, is purely a question of science, whereas what to do to protect and rehabilitate such a species—in particular, whether and how to regulate land uses and resource development—involves a blend of science and politics. As a consequence of its hard-landing feature, the ESA conflates all of those questions into one—listing automatically triggers regulation, and hence listing is as much about the regulation as it is about the species. Adler (2018) convincingly argues this amalgam of science and politics inevitably leads to the “science charade” problem that Professor Wendy Wagner (1995) famously revealed is at work in many administrative agency processes. Because interest groups for and against ESA regulation understand that the scientific decision about the status of a species is what decides whether the regulatory toggle switch is thrown, they do everything they can to bend, shape, and game the science, and if in the end they do not get their way, they accuse the agency of playing charades with the other side. That accusation often is made in a court, where the aftermath of the science charade muddies the waters of judicial review.Controversy regarding the ESA science charade is also nothing new. Agencies, legal scholars, and interest groups have launched a dizzying array of proposed solutions. Once again, I have entered that crowded field in the past (see Ruhl 2007; Ruhl and Salzman 2006; Ruhl 2004b). As Professor Adler (2018) documents, a seemingly endless parade of “sound science” bills has marched through Congress (see Ruhl 2004c). None pass. Nothing seems to work.Adler’s (2018) solution to these nagging problems pestering the ESA is to “decouple” species listing and species protection into two separate, sequential agency decision processes. In the first process, the agency identifies a species in need of rehabilitation. This is to be purely about science. Unlike the current situation, however, listing the species would not throw the regulatory toggle switch, at least not all the way or right away. Instead, Adler proposes either that the listing have no regulatory effect until the agency later outlines a regulatory regime specially tailored to that species (a “hard” decoupling) or that some general form of default regulation is put into effect for a limited time period while the agency devises such a specialized species-specific regime (a “soft” decoupling). Adler argues that this decoupling approach will take the science charade out of the species listing process, allowing judicial review of that decision to operate under traditional deferential administrative law principles, and will soften the regulatory landing by requiring tailor-made regulatory regimes that will undergo judicial review in an environment not afflicted with science charading.I have my doubts. To assess Adler’s proposal, this short response works through three steps. First, I outline the ESA’s hard-landing problem in more detail and provide a temporal framework for sorting the various soft-landing solutions that have been put in place through administrative reforms of the past three decades. Next, I introduce the reforms surrounding the ESA listing and regulation programs to unpack what is at stake for purposes of judicial review. The conventional description of ESA judicial review is that it is exclusively about science, and thus it is susceptible to the science charade. Increasingly, however, ESA judicial review is explicitly about regulation—the effectiveness of regulatory programs in protecting species—which has opened up a new kind of challenge I dub the “regulation charade.” Finally, I explain an option already available under the ESA, known as the “4(d) rule,” which has increasingly become the approach of choice for dealing with the snarly listing-regulation issues emanating from the new ESA challenge—climate change (see Ruhl 2008). I close by comparing the 4(d) rule option to Adler’s proposal. My conclusion is that, while it may be too early to tell, Adler’s decoupling proposal presents many of the same promises and pitfalls being revealed in the emerging practice and policy of 4(d) rules, but there is some reason to believe it could be designed to institutionalize more of the former than the latter.2. The ESA’s Hard Landing Problem and Its Progeny of Regulatory ReformsWidely regarded as the “pit bull” of environmental laws (see Quarles [1998] for a discussion on the origins of this reputation),2 the central purpose of the ESA is to “provide a means whereby the ecosystems upon which endangered species and threatened species depend may be conserved” (16 U.S.C. § 1531(b)). Yet the ESA is a relatively lean statute compared to other environmental laws.3 The FWS and the NMFS have authority over several core programs.4 First, under section 4 of the statute, the FWS or the NMFS identifies and “lists” a species as “endangered” or “threatened,”5 designates the “critical habitat” essential to its survival and recovery,6 and develops a “recovery plan” to bring it back to health (see 16 U.S.C. § 1533(a), (f)).7 When a species is listed, all federal agencies must, under section 7 of the statute, coordinate with the listing agency through a process known as “consultation” to ensure actions they fund, carry out, and authorize do not endanger the continued existence of the species or impair its critical habitat (see 16 U.S.C. § 1536(a)(2)).8 Also, section 9 of the ESA prohibits all persons—public, private, state, and local—from “taking” endangered animal species (see 16 U.S.C. 1538(a)(1)(B)–(C)),9 which through a series of court opinions and regulations has been interpreted to include destroying any habitat (not just critical habitat) in a way that actually injures or kills species (see 50 C.F.R. § 17.3 [2017] for the FWS definition of harm, and § 222.102 for the NMFS definition of harm).10 Yet, as is case for many environmental laws, where there is a prohibition, there is also a permit provision. Under sections 7 and 10 (regarding actions federal agencies fund, carry out, and authorize and all other actions, respectively), land use and resource development projects may obtain what is known as incidental “take” authorization to take a species (see 16 U.S.C. §§ 1536(b)(4) and 1539(a)(1)).11 In addition to the regulatory programs, section 11 of the statute provides for a “citizen suit” provision, authorizing persons to sue anyone in violation of the statute, including the listing agencies (see 16 U.S.C. § 1510(g)). With only minor exceptions, this statutory structure has been in place since 1982.Although the consultation and incidental-take-approval programs provide the way through the take, jeopardy, and adverse-modification prohibitions, they are by no means nontrivial in terms of time, cost, and regulatory burden. For example, consultation under section 7 involves a multi-step process in which the “action agency” (the agency proposing the action) and the “consulting agency” (the FWS or NMFS) exchange information and reports about the impacts of the action on listed species (see 16 U.S.C. §§ 1536(b)–(c)). The process, laid out in extensive regulations that the FWS and NMFS have jointly promulgated (see 50 C.F.R. Part 402), can take well over a year and can result in the consulting agency imposing conditions on the action that are, for all practical purposes, binding on the action agency (see Bennett v. Spear, 520 U.S. 154, 169–71 [1997]). Despite efforts by the FWS, the NMFS, and other agencies to reduce these time and resource burdens, in 2004 the General Accounting Office (now the Government Accountability Office) found that federal officials and nonfederal parties still had extensive concerns about the consultation process (see US General Accounting Office 2004).Professor Adler more than adequately describes these and other burdens the ESA imposes on land use and resource development actions. Controversy over the statute’s regulatory impacts began to emerge not long after enactment with the Supreme Court’s high-profile decision in Tennessee Valley Authority v. Hill (437 U.S. 153 [1978]), in which the Court refused to exercise its equitable powers to let the TVA complete a dam that, it was believed at the time, would wipe out a listed fish species in violation of the jeopardy prohibition.12 The case remains one of the iconic judicial decisions of environmental law,13 but Congress was not pleased.14 It responded quickly with the so-called “God Squad” amendment allowing federal agencies to seek exemption from the jeopardy prohibition (16 U.S.C. § 1536(e)). The ESA-versus-property-rights game was on.The pot finally began boiling over in the 1990s when Congress put the ESA in its sights as the poster child for property rights reform. To deflect the assault, Interior Secretary Bruce Babbitt initiated a series of administrative reforms designed to soften the regulatory impact of species listings, and the trend continued through successive administrations. Ironically, as a Democrat, Babbitt instituted a series of pro-landowner reforms that largely diffused Republican congressional criticism. The agencies ramped up an incidental-take permit program, issued permitting handbooks, developed new programs for safe harbors and conservation agreements, and so on, all while Congress sat on the sidelines.15 Administrations since then have added programs such as habitat banking, which is like the wetlands mitigation banking program, recovery crediting, which allows agencies to get credit in advance for doing good things for species when they need to enter into consultations about jeopardy later, and a line of similar reforms going to the present.16One useful way of organizing the dizzying array of administrative reforms is to situate them along a temporal spectrum based on timing relative to the species listing event—some reforms operate in a pre-listing environment, some are incorporated within the listing decision itself, and some operate post-listing. An example of a pre-listing program is the Candidate Conservation Agreement with Assurances, which rewards landowners who engage in substantial conservation efforts on behalf of species that appears headed for listing with the equivalent of a post-listing permit should the species ultimately be listed (see 64 Fed. Reg. 37,276 [1999] and 81 Fed. Reg. 95,053 [2016]).17 A listing-based reform came with the agencies’ promise to spell out in the listing rule itself the activities the listing agency deemed likely and not likely to violate the take prohibition (see 59 Fed. Reg. 34,272 [1994]). An early post-listing reform strategy was the so-called “No Surprises” policy, which protects ESA permittees from bearing the costs of responding to unforeseen circumstances threatening a species covered in the permit (see 63 Fed. Reg. 8,859 [1998]). The aim of these and similar reforms has been to alter the incentive structure that the ESA’s toggle-switch feature imposes on landowners, particularly in the pre-listing context. Babbitt and his successors could not administratively turn the toggle switch into a dial, but they could change what the toggle switch lit up.Surprisingly, most of these and similar administrative reforms designed to alter the ESA’s regulatory impact and incentive structure have met little resistance from either species-protection interest groups or resource-development interest groups. The No Surprises policy was challenged as inconsistent with the ESA, taking over a decade to move from an informal guidance statement to an agency rule finally endorsed procedurally and substantively by the courts.18 Other programs and policies simply permeated into the administrative practice, and have seemed to help allay landowners’ fears without stirring up species protection interest too much—that is, until the listing agencies began to innovate the listing process itself.3. The ESA’s New Judicial Review Problem: The Regulation CharadeIs the ESA a regulatory program infused with science or a science program infused with regulation? It is both, and therein lies the source of its science-charade problems. Professor Adler (2018) comprehensively and insightfully explores the dimensions of the ESA’s “best science” protocols and relates them to the challenges of judicial review. But there is a nuance he is missing, a nuance that will make all the difference for the ESA going forward into the era of climate change.The conventional account of ESA judicial review is that the statute tees up questions of biological science into which courts are not well equipped to intrude. As Professor Adler observes, biological sciences are fraught with incomplete data and uncertainty. Mandating “better” or “more” science in a statute cannot change that reality, and expecting courts to divine “best” or “enough” science has been hard enough as it—it is what opens the door to the science charade—and it will be even more of a mess under such “sound science” reforms. Professor Adler drives this point home using the poster child for ESA “best science”—the gatekeeper listing decision, which is ostensibly to be based only on the best available science.But the “science only” account of the species-listing program is a partial myth. Indeed, even the statute does not get one all the way there. Section 4 opens with a list of criteria for making the listing decision that are classically biological in theme, such as “disease or predation” (16 U.S.C. § 1533(a)(1)(A)–(E)). The provision then mandates that these criteria be evaluated “solely on the basis of the best scientific and commercial data available” (16 U.S.C. § 1533(b)(1)(A)). So far, still all about science. In the next clause, however, the statute requires that the listing decision also “tak[e] into account those efforts, if any, being made by any State or foreign nation, or any political subdivision of a State or foreign nation, to protect such species” (16 U.S.C. § 1533(b)(1)(A)). That does not sound like science—it sounds more like regulation.To be sure, the ultimate decision for listing is about the biological status of the species, but the “efforts to protect” provision requires the agency to reach conclusions first about the status and effects of regulation and then incorporate those conclusions into the species status decision. This requires a court on judicial review of a listing decision to evaluate not only the agency’s quality of scientific analysis, but also its quality of regulatory analysis. But how is a court to engage in review of the listing agency’s evaluation of the legal status and force of state and local “efforts to protect” and how they will influence the future of the species? Is the agency to be accorded the normal arbitrary-and-capricious standard of deference, or are the legal questions to be reviewed de novo? This judicial review conundrum lay rather unexamined for decades while the agencies stayed away from substantial engagement with the “efforts to protect” criterion. Eventually, however, the listing agencies began using it as a way to soften the ESA’s hard landing by using “efforts to protect” as a basis for not throwing the toggle switch.Beginning in the 1990s, the FWS in particular began promoting federal, state, local, and private “efforts to protect” to induce pre-listing conservation actions that could justify decisions either not to list a species or to list it as threatened rather than endangered (see Uchitel 2006). These initiatives did not always go well for FWS, with courts frequently rejecting decisions not to list a species on the “efforts to protect” basis where the regulatory programs relied upon were insufficiently binding or as yet unproven to be effective (see Uchitel 2006). To put it bluntly, the courts were smoking out cases of “regulation charade”—the overselling (or underselling) of the regulatory efforts’ effectiveness in preventing species decline.Tiring of losing these battles, the FWS responded in 2003 with its Policy for Evaluation of Conservation Efforts When Making Listing Decisions (PECE) (see 68 Fed. Reg. 15,100 [2003]). PECE was in essence shaped by the early “efforts to protect” case law, codifying the standards the courts developed as ESA common law. The policy explains how the listing agencies will take into account federal, state, tribal, and private conservation efforts that have been formally adopted, but which have yet to be implemented or to have demonstrated effectiveness, when deciding whether to list a species. PECE explains that “two factors are key in that evaluation: (1) for those efforts yet to be implemented, the certainty that the conservation effort will be implemented and (2) for those efforts that have not yet demonstrated effectiveness, the certainty that the conservation effort will be effective” (see 68 Fed. Reg. 15,114 [2003]). PECE in general has successfully withstood judicial review in cases where it made the difference in the listing decision.19 In this sense, PECE may have dampened the regulation charade, but it still lurks as a concern. For example, in one case a court faulted the FWS for not properly following PECE in the agency’s decision to list a species notwithstanding visible “efforts to protect” (see Permian Basin Petrol. Ass’n v. Dep’t of the Interior, 127 F. Supp. 3d [W.D. Tex. Sept. 1, 2015]).20 Oddly, in another instance the FWS decided not to list a species pursuant to its PECE findings (see 80 Fed. Reg. 59,858 [Oct. 2, 2015]), but landowner and resource development interests protested that the conservation programs the agency found to establish sufficient “efforts to protect” were illegally stringent (see Compl. for Declaratory and Inj. Relief, Otter v. Jewell, No. 1:15-cv-01566 [D.C. Cir. filed Sept 25, 2015] and Compl. for Declaratory and Inj. Relief, W. Expl. LLC v. U.S. Dep’t of the Interior, No. 3:15-cv-00491-MMD-VPC [D. Nev. filed Sept. 23, 2015]). And in general, even regulatory efforts that pass the PECE test have inherent uncertainty as to long-term status and effectiveness, and can in that sense be charaded. Clearly, much still depends on how the listing agency spins the “efforts to protect,” and courts thus are faced with the task of unraveling regulation from science to determine how regulation plays into the science.The PECE experience thus counsels that any reform of the species listing process must take into account both the science charade and the regulation charade effects. Using that frame, I next consider another ESA administrative reform trend not yet mentioned—the section 4(d) rule—and compare it to Professor Adler’s proposal.4. The ESA 4(d) Rule OptionLike all the other administrative reforms Babbitt and his successors promoted, PECE ultimately relies on the ESA’s toggle switch as the leverage supporting the reform’s effectiveness in softening the regulatory landing. All of the reforms, in other words, play off the worst case—a full hard regulatory landing—as the reason for regulated or potentially regulated entities to engage in the program. PECE, for example, relies on the threat of a listing and all that comes with it as the incentive to engage in “efforts to protect” to avoid a listing. None of the reforms get at the nub of the problem—the toggle switch.Long lurking in the background, however, has been the so-called 4(d) rule. As described previously, the sharpest tooth in the ESA’s regulatory array—the take prohibition—applies only to animal species listed as endangered (16 U.S.C. § 1538(a)). If listed as endangered, such species are automatically entitled to the full effect of the take prohibition—the listing agency has no discretion to soften the landing. If listed as threatened, species are not so entitled. Rather, section 4(d) provides that for threatened species the listing agency “shall issue such regulations as [it] deems necessary and advisable for the conservation of such species … [and] may by regulation prohibit with respect to any threatened species any act prohibited under [section 9] with respect to endangered species” (16 U.S.C. § 1533(d)). While not a model of clarity, whatever mandates, authorities, and discretion are buried in this provision were largely mooted as a question for most species when the FWS long ago adopted a regulation specifying that threatened species by default receive the full protections of the take prohibition unless the agency adopts a special rule providing otherwise (50 C.F.R. § 17.31 [2018]). For many years thereafter, the FWS rarely exercised the 4(d) rule option (see Kass 2001). Then along came climate change.Climate change poses a bit of a puzzle for the ESA. If a species is listed in full or in part because of threats from climate change, then arguably whatever is causing climate change, say greenhouse gas (GHG) emissions, constitutes a violation of the take prohibition. The FWS wanted nothing to do with that. In both the Bush and Obama administrations, the FWS steadfastly refused to entertain the notion that section 9 prohibits GHG emissions (Ruhl 2010a). The problem is that the FWS is not the only enforcement entity that can prosecute a section 9 take violation claim—the citizen suit provision of the statute allows any person with standing to do so as well (see 16 U.S.C. § 1510(g)). The FWS closed that door, however, in its first high-profile species listing based largely on the threat of climate change—the polar bear. After a protracted process—which involved, basically, dragging the agency kicking and screaming—in 2008, the FWS listed the polar bear as a threatened species (73 Fed. Reg. 28,212 [2008]) and issued a special rule tailoring protections in such a way as to eliminate GHG emissions from the scope of prohibition (73 Fed. Reg. 76,249 [2008]), meaning citizen suits could not seek to use the listing to go after GHG emissions. Suffice it to say this pleased no one entirely. Some interests sued the FWS claiming that the polar bear should not have been listed at all, but the special rule was too stringent even if the threatened listing were proper. Other interests sued claiming that the species should have been listed as endangered, but the special rule was not stringent enough if the threatened listing were proper. Thus far the courts have rejected all such arguments, upholding the threatened listing and the special rule (see In re Polar Bear Endangered Species Act Listing and Section 4(d) Rule Litig., MDL No. 1993, 709 F.3d 1 [D.C. Cir. 2013] and In re Polar Bear Endangered Species Act Listing Rule and § 4(d) Rule Litig., 2011 WL 6879897 [D.D.C. Oct. 17, 2011]).21 Critically, in the 4(d) rule litigation, the court held that section 4(d) gives the agency unfettered discretion to apply any or all of the section 9 take protections to threatened species without obliging it to make a finding of conservation necessity. Moreover, although the FWS has adopted a default rule that applies all of the take protections to threatened species unless it issues a rule limiting them for specific species, the agency is not required to make a necessity finding if it issues such a rule. The bottom line for the court was that the agency does not have to provide any of the take protections for threatened species and thus need not base its decision about how extensively to apply them on any sort of necessity finding.Since then, not surprisingly, the FWS has adopted the 4(d) rule option for every species it has listed on the basis of climate change threats. This approach effectively decouples the listing decision from the regulatory impact decision and allows the agency to tailor a species-specific protective rule. Because the scope and contours of the special rule are, by judicial interpretation, almost entirely left to agency discretion, it reduces the need for regulation charading. But the section 4(d) rule option has less promise for escaping the science charade, as the agency’s threatened finding will routinely be challenged from both sides as scientifically wrong.5. ConclusionPut side by side, the 4(d) rule option and Professor Adler’s decoupling proposal look very much the same. Section 4(d) allows the listing agency to decouple listing and regulation—it can list the species as threatened and defer adopting a special rule until later. It may do so either with the full take prohibition of section 9 in effect in the interim, which is the equivalent of Professor Adler’s “soft decoupling,” or with none of the prohibition in effect during the interim, which is his “hard decoupling.” And ultimately the special rule can land anywhere in between those two extremes, which is what Adler wants as well.So, why bother with Professor Adler’s proposal? How are they different? First, the section 4(d) rule option is optional. By contrast, Professor Adler wants decoupling to be mandatory for all listings. Second, in order to take advantage of its regulatory design flexibility, the section 4(d) option requires the listing agency to determine that the species is warranted for listing (which industry does not like), but as threatened rather than endangered (which species protection interests do not like). The line between threatened and endangered, however, can be fuzzy, which opens the door to more science charade. By contrast, Professor Adler’s proposal dispenses with those distinctions be extending regulatory design flexibility in all cases.On the other hand, the section 4(d) option, at least as the courts thus far have interpreted it, imposes no criteria on the agency’s regulatory design, thus reducing the agency’s incentive to engage in regulation charade. By contrast, Professor Adler’s proposal does impose some sidebars on the regulatory regime, which may lead to some “fitting” of the regulatory design to meet the political and other factors weighing on the decision. Also, the 4(d) option retains a wider spectrum of regulatory landing impacts—endangered listings with full impact are still on the stable—and thus provides more diversity of strategies for working with the ESA’s structural incentives.Which approach is better is hard to say. The section 4(d) rule option has only recently come to the forefront of listing agency strategy, so there is not yet much experience in the courts to evaluate. In both approaches, all interests will know that listing is the gatekeeper to some regulation, which is what puts the pressure on. Hence it remains to be seen whether decoupling the two domains truly can reduce incentives to engage in science charades, regulation charades, or both. My sense is that decoupling may not be the perfect solution in this regard, but it is likely to produce a more coherent and defensible listing and regulation programs than what is currently in place. Notes *. David Daniels Allen Distinguished Chair in Law, Vanderbilt University Law School. The scientific and legal literature on the ESA that connects with the theme of this Essay is too rich and robust to fully document and recognize here, and hence I refer frequently to my own work on the Endangered Species Act in order to point the reader to other commentary, analysis, and r