On March 14, 2016, two new federal rules went into effect that could change the way in which the Endangered Species Act (ESA) is implemented throughout the United States. The U.S. Fish & Wildlife Service (FWS) and the National Marine Fisheries Service (NMFS) finalized these rules to update the regulatory provisions on which the agencies rely when fulfilling their duties to carry out the ESA.

In general, the ESA aims to conserve endangered and threatened species and the ecosystems upon which those species depend. Section 4 of the ESA directs the FWS and the NMFS to identify and list endangered and threatened species along with a designated critical habitat for each listed species. Once a species has been listed as endangered or threatened, it is protected under various provisions of the ESA. Specifically, Section 7 requires all federal agencies to consult with FWS and NMFS before taking any action to ensure that such action, funding, or authorization “is not likely to jeopardize the continued existence of any endangered species or threatened species”. These Section 7 consultations are designed to identify and limit adverse effects of federal action on listed species or their habitat. Section 9 prohibits any public or private entity from “taking” an endangered species or undertaking a wide range of other activities that could harm the species. The U.S. Supreme Court has declared that Section 9 can apply very broadly, prohibiting the modification of critical habitat that might have any adverse effect on the listed species.

The first of the new ESA rules that FWS and NMFS promulgated, the Definition of Destruction or Adverse Modification of Critical Habitat Rule, relates to the Section 7 requirement that federal agencies consult with FWS and NMFS before carrying out actions. The ESA specifies that such federal agency consultation must ensure that the contemplated federal action is unlikely to result in “the destruction or adverse modification” of the critical habitat of the species. The ESA does not provide a statutory definition for “destruction or adverse modification.” However, in fulfilling their consultation role, the FWS and NMFS have applied a 1986 regulatory definition for the term and included examination as to whether the survival and recovery of a listed species would be effected by an agency’s alteration of critical habitat. The legality of this approach is questionable because U.S. Courts of Appeals for both the Fifth Circuit and the Ninth Circuit have held that Section 7 of the ESA requires a more stringent standard.

To comply with the more stringent standard provided by the Fifth and Ninth Circuit rulings, the new regulation finalizes the following definition for Section 7 consultations: Destruction or adverse modification means a direct or indirect alteration that appreciably diminishes the value of critical habitat for the conservation of a listed species. Such alterations may include, but are not limited to, those that alter the physical or biological features essential to the conservation or a species or that preclude or significantly delay development of such features. 81 Fed. Reg. 7214, 7216. FWS and NMFS indicate that this rule will not have an impact on Section 7 consultations because the definition change largely formalizes existing processes in effect since 2004 or 2005. However, some commenters, such as the Independent Petroleum Association of America, have expressed worry about the burden of this rule, especially regarding activities conducted on federal land. Others, such as the Michigan Farm Bureau, worry about the costs the rule will impose on small entities. Moreover, the new definition remains ambiguous because the term “value” is neither defined nor does the rule explain how it will be measured. The new definition also fails to identify what “conservation value” includes—whether existing “value” or potential future value?

While Section 7 prescribes requirements that are directly applicable to federal agencies, the effects can carry over into the private sector. For example, in carrying out pesticide registration activities, a settlement agreement requires EPA to consult with the NMFS to determine the impact of registered pesticides on Pacific salmon. As the Washington State Department of Agriculture has pointed out, Section 7 has already affected portions of the US agricultural industry. Monitoring future federal agency consultations with FWS and NMFS may be important to determine whether the rule change will further expand the scope and effect of ESA consultations in the future.

The second of the new ESA rules that FWS and NMFS promulgated, the Implementing Changes to the Regulations for Designating Critical Habitat Rule, concerns the procedures and criteria for designating and revising critical habitat. Section 3 of the ESA defines the critical habitat of a listed species as both “the specific areas within the geographical area occupied by the species, at the time it is listed ” and “specific areas outside the geographical area occupied by the species at the time it is listed [that are] essential for the conservation of the species.” Among the changes made by the new rule is the addition of a regulatory definition for “geographical area occupied by the species,” which expands habitat designation beyond the statutory framework to include areas used at any time in the life cycle of a listed species, even if not used regularly by the species. In another significant change, the new regulations, at 50 C.F.R. § 424.12(b)(2), now mandate that “specific areas outside the geographical area occupied by the species that are essential for its conservation” be identified for critical habitat designations at the time a species is listed. In supporting this change, the FWS and NMFS explain that as a result of climate change, areas previously unoccupied by a listed species may prove critical to support the species: 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. 81 Fed. Reg. 7414, 7435.

In their final rule, FWS and NMFS state that the revisions made by this rule “merely codify or explain” the current guidelines. Nevertheless, industry groups, such as the National, Stone, Sand & Gravel Association, are raising concerns that this rule may increase the geographic extent of critical habitats, requiring landowners to take mitigation measures on previously unaffected land. In the past, critical habitats generally have been geographically limited to areas where the species is found. For example, when FWS recently proposed protection for the Kentucky arrow darter, the proposed critical habitat was limited to 246 miles of streams where it is found. Squire Patton Boggs will continue to monitor the implementation of the rule to determine whether these new rules will result in an expansion of the critical habitat designations for listed species.

The net effect of both of these new rules is an increase in the liklihood that FWS and NMFS will make more adverse modification findings and require more and geographically expanded critical habitat designations. In addition to agriculture, all resource development—e.g., hard rock mining, coal, oil and gas (hydraulic fracturing was identified as a cause of the endangerment when FWS proposed listing the Diamond Darter), logging (to which the Kentucky Arrow Darter listing was linked), and energy infrastructure (including wind and solar installations and electric grid expansions)—are likely to feel the constraints and increased costs of these two new rules.