Bad for Species, Bad for People: What’s Wrong with the Endangered Species Act and How to Fix It

Policy Reports | Energy and Natural Resources

No. 303
Saturday, September 01, 2007
by Brian Seasholes

Cosmetic Reform of the Endangered Species Act

In response to the ESA's poor record recovering species and to harm caused by the law's penalties, the Fish & Wildlife Service, Congress and others have offered cosmetic reforms to improve the Act's effectiveness.  Yet these reforms are tacit admissions that the Act's punitive approach has failed and that new approaches are needed.  Unfortunately, these new approaches are largely superficial. They do not remove the ESA's perverse incentives (penalties) that fundamentally undermine the Act.  These initiatives include Safe Harbors, Habitat Conservation Plans, Candidate Conservation Agreements, No Surprises, financial incentives, and requirements to use sound science.

“Cosmetic reforms will not fix the ESA.”

Safe Harbors.  To address the perverse incentives of the ESA, Michael Bean of Environmental Defense (formerly the Environmental Defense Fund) developed the idea of Safe Harbors in the mid-1990s.  Under a “Safe Harbor” agreement, the government agrees to help a landowner develop a habitat conservation plan to improve the prospects for endangered species already on his land or in order to attract species.  Safe Harbors exempts landowners from the ESA's regulations for any additional endangered species they attract to their property as long as species numbers stay above the “baseline,” which is the population of species covered by the Safe Harbor at the time the agreement is signed.

Landowners who sign a Safe Harbors agreement, however, are not off the regulatory hook for the species already on their land (their baseline).  Furthermore, owners of adjacent or nearby property are subject to the full force of ESA regulations.  By attracting endangered species to their land, landowners who sign Safe Harbor agreements could encourage species to spread to neighboring properties.  This “spillover” effect has the potential to create significant problems for adjacent and nearby landowners.

“The Service may allow landowners to use some of their land, if they set aside other land for habitat.”

Habitat Conservation Plans.   A 1982 amendment to the ESA allows the Service to grant “incidental take permits” to private landowners.  These are exceptions to what had been an absolute prohibition on “taking” listed species. 48 Incidental take permits are issued when a landowner submits a Habitat Conservation Plan (HCP).

HCPs require landowners to set aside some of their land for habitat for the endangered species or purchase “mitigation” land elsewhere.  In exchange, the Service allows them to use the rest of their land for such activities as timber cutting and house construction.  Yet HCPs advance the spread of federal zoning of private land, a function traditionally left to municipalities.  HCPs also function like a protection racket, in which the federal government extracts expensive concessions from landowners by threatening them with ESA penalties unless they submit a Plan.

Ben Cone signed an HCP and a Safe Harbor agreement of the type that the environmental lobby and the Service tout as evidence the ESA is flexible and landowner friendly.  Yet Cone, like Toby Murray (see below in “no surprises”), is still angry that he had to spend a great deal of time and over $100,000 in order to recover the right to use his own land.

Candidate Conservation Agreements.  In the 1990s the Service initiated an effort to assure landowners that if they signed agreements to protect species that are officially candidates to be listed, the landowners might be able to stave off Service action, thereby avoiding the ESA's regulations. [See the side bar, “Teddy Bear Conservation.”]

Teddy Bear Conservation

The prototype Candidate Conservation Agreement stems from work done by the Black Bear Conservation Committee (BBCC). In June 1990, the Service proposed to list the Louisiana Black Bear — a cub of which was spared by President Theodore Roosevelt on a hunting trip and which was the namesake for the now ubiquitous “teddy bear” beloved by many children. The bear seemed to be declining due to habitat destruction. 1 In an effort to stave off listing, the BBCC was formed in 1990 by environmental pressure groups, timber industry representatives, academics and private timber owners. 2 The effort was unsuccessful, and the bear was listed in 1992. The BBCC, however, has endured. 3

The BBCC promotes itself as an effort to preempt ESA regulation by formulating a proactive habitat management plan among all the “stakeholders,” especially timber owners in the bear's habitat. It combines elements of an informal HCP and a Candidate Conservation Agreement. Its main accomplishments
to date have been to write a management plan for the bear that was adopted by the Service as the official recovery plan, educate the public, and push federal and state agencies to conserve the bear. The BBCC's proactive image has been hailed by the Sand County Foundation, the Mississippi Fish and Wildlife Foundation and others as an innovative, win-win solution preferable to the usual command-and-control property restrictions imposed.

But beneath this feel-good surface of cooperation, the reality is that the BBCC has relied on the threat of ESA land use controls to force the private landowners who provide most of the bear's habitat to negotiate. Murray Lloyd, cofounder and former president of the BBCC, said the agreement reached by stakeholders, which was basically a region-wide HCP, only came about because of the threat of punitive sanctions contained in the ESA which “served effectively as a cocked two-by-four to keep everyone at the table.” 4 Although the agreement was achieved with the threat of being whacked by the ESA, Lloyd calls the BBCC “a model for natural resource conflict resolution.” 5 Others have swallowed this tale hook, line and sinker. Lloyd's two-by-four analogy is apt because it neatly encapsulates how the ESA often works — people are threatened and intimidated with getting clobbered by law in order to gain their “voluntary” compliance. The ESA is Teddy Roosevelt-style conservation; the federal government speaks softly and carries a big stick.

1 Federal Register, Vol. 55, June 21, 1990, pages 25,341-45.

2 Black Bear Conservation Committee, “About the BBCC: History.” Available at

3 Federal Register, Vol. 57, January 7, 1992, pages 588-595.

4 Murray Lloyd, testimony before the Subcommittee on Drinking Water, Fisheries and Wildlife of the Committee on Environment and Public Works, United States Senate, 104th Congress, First Session, August 3, 1995, page 874.

5 Ibid.

“No Surprises” Agreements.  Another ESA “innovation” is the “no suprises” policy promulgated by the Service and the National Oceanic and Atmospheric Administration, the branch of the Commerce Department that the ESA assigned jurisdiction over marine animals.  The no surprises policy is based on the idea that the federal government will not demand additional concessions from landowners who have signed HCPs.  “A deal is a deal,” said Bruce Babbitt, then Interior Secretary.  “We won't come back ten years from now and say you have to pay more or give more [land].” 49 The government codified the no surprises policy in the Code of Federal Regulations in 1998. 50

On its face, no surprises seems like a good idea because it appears to provide landowners with regulatory certainty.  Yet there are two fundamental problems with the policy.  First, no surprises does not provide the ironclad regulatory certainty its proponents claim.  If there is an “unforeseen circumstance” the federal government can invalidate an HCP and demand more land and/or money from the permittee.  The circumstances can be varied, such as:  If a species covered by the HCP experiences a population decline; if a species not covered by the HCP, but which exists on the land covered by the Plan, subsequently becomes a candidate for listing, or is, in fact, listed under the ESA; or if research conducted subsequent to the signing of the HCP shows that the Plan may be inadequate to accomplish its stated species conservation goals.

The second problem with the no-surprises policy is that, like all HCPs, it is predicated on the fear of the ESA's ability to hinder land-use to gain the “voluntary” cooperation of landowners.  The HCP signed by the Murray Pacific Corporation is a good example.  It was the first HCP to include a “no surprises” provision.  Due to the ESA's protection of the spotted owl and other species, more than 40 percent of the merchantable timber on Murray Pacific's 55,000 acres was off limits.  Faced with the virtual shut down of his family's company, Toby Murray was forced to negotiate with the Service.  He agreed to place 5,500 acres off limits to logging in exchange for the right to use the remainder of his land.  The HCP also covered hundreds of species that could potentially be listed at some point in the future. 51 Murray Pacific's HCP was hailed by the Clinton Administration as a great success, but Toby Murray did not see it that way. 52 “Even though they call these habitat conservation plans voluntary, I didn't feel it was that voluntary,” he stated. 53 He felt this because he was essentially forced to sign the HCP to prevent the shut-down of his family's company. Furthermore, Murray and his family had to sacrifice their land and spend more than $1 million to hire biologists and lawyers to write and implement the plan. 54

“The new initiatives depend on the threat of ESA regulations to gain the cooperation of landowners.”

Financial Incentives.   Starting in the mid-1990s, ESA supporters, Congress and the Service have proffered various financial incentives in attempts to blunt the impacts of the Act's penalties.  One such effort started in 2002 when the Service initiated the Private Stewardship Grant Program (PSGP), which provides up to 90 percent of the funds for projects by private landowners to conserve endangered species.  Under the program, private landowners submit proposals for conservation efforts to protect endangered, threatened or candidate species.  The government chooses to fund these proposals on a competitive basis.  In 2006, the Service awarded more than $6.9 million in grants under the program.  The PSGP provides “incentives…and flexibility” for landowners to engage in endangered species conservation, according to then-Interior Secretary Gail Norton. 55

Congress has also jumped on the financial incentives bandwagon.  Most recently, both houses of Congress have introduced companion bills (S. 700 in the Senate and H.R. 1422 in the House), both of which have broad bipartisan support, to provide tax credits for landowners who conserve endangered species.  However, these bills and the Private Stewardship Grant Program do nothing to remove the perverse incentives caused by the ESA's penalties.  Merely sprinkling a few incentives around cannot mask the enormous harm done by the Act's punitive structure.

Use of “Sound Science.”  Another type of proposed “reform” is to require the Service to use “sound science” to implement the ESA.  Critics correctly point out that the federal government often uses flimsy evidence to justify listing species, as in the case of the Rydberg milk-vetch mentioned previously.  To remedy problems like this, some have proposed amending the Act by requiring the government to utilize specific scientific criteria in listing and protecting species.  The latest such effort is a bill in the Senate, S. 658.  But this bill and all other sound science initiatives treat the symptom — the use of shoddy data — not the root cause, which is the law's power over private property.  As long as the federal government is able to control the use of land and water without having to pay private landowners to do so, it will have few incentives to use valid data.

All of these so-called reforms were initiated largely during the Clinton Administration and expanded during the Bush Administration — an indication that failure to fix the ESA is a bipartisan effort.

“Incentives for landowners to cooperate won't work so long as severe penalties exist.”

Incentives without Disincentives.  Adding incentives to the ESA without removing the disincentives will likely be of limited effectiveness for five reasons.

First, it does nothing to remove the perverse incentives that undermine the purpose of the Act. Public Opinion on Landowners' Rights

Second, the regulatory uncertainty surrounding the implementation of the ESA makes it difficult for landowners, especially those who make a living from their property, to measure the value of a given incentive against the prospect of being walloped by the law's punitive provisions.  Sources of uncertainty include the capriciousness with which the Service enforces the law, and the frequent lawsuits by environmental groups seeking to force the Service to implement more onerous measures.

Third, many landowners, especially those in ESA hotspots, are well aware of the Act's power and so are reluctant to interact with government.  They are wary of federal “carrots” because there are always strings attached.  Landowners also hesitate to allow government biologists on their land because they may find other endangered species.

Fourth, except for Habitat Conservation Plans, these measures have been implemented administratively, not codified into the ESA by Congress, and therefore can be withdrawn at the whim of the Service. Public Support for Endangered Species Act Reform

Fifth, adding incentives is fiscally inefficient.  A far more financially sound approach, and therefore one likely to garner more support from fiscal conservatives, would be to add incentives only after the disincentives have been removed.

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