Amicus Curiae Brief — Weyerhaeuser Company, Petitioner v. United States Fish and Wildlife Service, et al.

No. 17-71

================================================================

In The

Supreme Court of the United States

-----------------------------------------------------------------WEYERHAEUSER CO.,

Petitioner,

v.

U.S. FISH & WILDLIFE SERVICE, et al.,

Respondents.

-----------------------------------------------------------------On Writ of Certiorari to the

United States Court of Appeals

for the Fifth Circuit

-----------------------------------------------------------------BRIEF OF THE INSTITUTE FOR POLICY

INTEGRITY AT NEW YORK UNIVERSITY

SCHOOL OF LAW AS AMICUS CURIAE

IN SUPPORT OF FEDERAL RESPONDENTS

-----------------------------------------------------------------RICHARD L. REVESZ*

JASON A. SCHWARTZ

INSTITUTE FOR POLICY INTEGRITY

NEW YORK UNIVERSITY SCHOOL OF LAW

139 MacDougal St., 3rd Floor

New York, NY 10012

Tel: (212) 998-6185

richard.revesz@nyu.edu

*Counsel of Record

================================================================

COCKLE LEGAL BRIEFS (800) 225-6964

WWW.COCKLELEGALBRIEFS.COM

i

QUESTIONS PRESENTED

Amicus curiae addresses an issue that Petitioner and

its supporters raise in relation to the second question

presented. The second question is:

Whether an agency decision not to exclude an area

from critical habitat designation because of the

economic impact of designation is subject to judicial

review.

ii

TABLE OF CONTENTS

Questions Presented .................................................... i

Table of Authorities.................................................... iv

Interest of the Amicus Curiae..................................... 1

Summary of the Argument ......................................... 3

Argument ..................................................................... 4

I. FWS Considered Ancillary and Unquantified

Benefits in the Critical Habitat Designation.... 4

II. Ancillary Benefits Must Be Given Due

Consideration Under the Endangered Species

Act, Executive Orders, and Best Practices for

Cost-Benefit Analysis ........................................ 8

A. Petitioner and Its Supporters Wrongly

Disparage Ancillary Benefits ....................... 8

B. The Endangered Species Act Requires

Consideration of All Benefits—Direct and

Ancillary...................................................... 12

C. Executive Orders and Guidelines Require

Federal Agencies to Consider Ancillary

Benefits in Regulatory Impact Analyses ... 15

D. For Over Twenty-Five Years, Under

Administrations of Both Parties, FWS Has

Consistently Assessed the Ancillary Benefits

of Critical Habitat Designations ................ 18

E. It Would Be Arbitrary to Treat Ancillary

Benefits Differently Than Indirect Costs .. 21

F. Courts Require Agencies to Account for the

Indirect Consequences of Regulation......... 24

iii

III.

Unquantified Benefits Also Must Be Given

Due Consideration Under Executive Orders

and Best Practices for Cost-Benefit Analysis

.................................................................... 25

Conclusion ................................................................. 29

iv

TABLE OF AUTHORITIES

Cases

Am. Dental Ass’n v. Martin, 984 F.2d 823 (7th Cir.

1993) ........................................................................ 25

Am. Trucking Ass’ns v. EPA, 175 F.3d 1027 (D.C. Cir.

1999) .................................................................. 25, 28

Bus. Roundtable v. SEC, 647 F.3d 1144 (D.C. Cir.

2011) ........................................................................ 23

Competitive Enter. Inst. v. Nat’l Highway Traffic

Safety Admin., 956 F.2d 321 (D.C. Cir. 1992) ....... 25

Corrosion Proof Fittings v. EPA, 947 F.2d 1201 (5th

Cir. 1991)................................................................. 25

Ctr. for Biological Diversity v. Nat’l Highway Traffic

Safety Admin., 538 F.3d 1172 (9th Cir. 2008) ....... 23

Entergy Corp. v. Riverkeeper, Inc., 556 U.S. 208

(2009)....................................................................... 28

Michigan v. EPA, 135 S. Ct. 2699 (2015) ................. 24

Mont. Envtl. Info. Ctr. v. Office of Surface Mining, 274

F. Supp. 3d 1074 (D. Mont. 2017) .......................... 23

Public Citizen v. Fed. Motor Carrier Safety Admin.,

374 F.3d 1209 (D.C. Cir. 2004) ............................... 28

Sierra Club v. Sigler, 695 F.2d 957 (5th Cir. 1983) ..23

U.S. Sugar Corp. v. EPA, 830 F.3d 579 (D.C. Cir.

2016) ........................................................................ 24

Whitman v. Am. Trucking Ass’ns, 531 U.S. 457

(2001)....................................................................... 25

v

Statutes

16 U.S.C. § 1531(a)(5) ............................................... 12

16 U.S.C. § 1533(a)(3)(B)(i) ....................................... 12

16 U.S.C. § 1533(b)(2) ........................................... 5, 12

16 U.S.C. § 1536(h)(1)(A)(ii) ...................................... 13

Legislative History

H.R. Rep. 95-1804 (1978) .......................................... 14

124 Cong. Rec. 38,134 (Oct. 14, 1978) ...................... 13

Regulatory History

40 Fed. Reg. 8668 (Feb. 28, 1975) ............................. 17

46 Fed. Reg. 3471 (Jan. 14, 1981) ............................. 17

52 Fed. Reg. 25,399 (July 7, 1987) ............................ 17

55 Fed. Reg. 8292 (Mar. 7, 1990) .............................. 27

57 Fed. Reg. 1796 (Jan. 15, 1992) ....................... 19, 27

77 Fed. Reg. 35,118 (June 12, 2012) ............... 8, 10, 22

82 Fed. Reg. 39,160 (Aug. 17, 2017) ................... 20, 21

Executive Orders

Exec. Order 11,949, 42 Fed. Reg. 1017 (Jan. 5,

1977) ........................................................................ 14

Exec. Order 12,866, 58 Fed. Reg. 51,735 (Oct. 4,

1993) ............................................................ 15, 16, 26

Exec. Order 13,563, 76 Fed. Reg. 3821 (Jan. 21,

2011) ............................................................ 15, 16, 26

vi

Exec. Order 13,777, 82 Fed. Reg. 12,285 (Mar. 1,

2017) ........................................................................ 15

Other Authorities

Arrow, Kenneth J. et al., Benefit-Cost Analysis in

Environmental, Health, and Safety Regulation: A

Statement of Principles (1996) ............................... 26

DeMuth, Christopher C. & Douglas H. Ginsburg,

Rationalism in Regulation, 108 Mich. L. Rev. 877

(2010)....................................................................... 23

Envtl. Prot. Agency, Draft Regulatory Impact

Analysis: Proposed Rulemaking to Establish LightDuty Vehicle Greenhouse Gas Emission Standards

and Corporate Average Fuel Economy Standards

(2009)....................................................................... 23

Envtl. Prot. Agency, Guidelines for Preparing

Economic Analyses (2010) ................................ 17, 28

Envtl. Prot. Agency, What Are the Guidelines?,

https://www.epa.gov/environmental-economics/

guidelines-preparing-economic-analyses ............... 16

Office of Mgmt. & Budget, Exec. Office of the

President, Circular A-4 (2003) ................... 16, 21, 26

Office of Mgmt. & Budget, Exec. Office of the

President, Circular A-107 (1975) ........................... 14

Indus. Econ. Inc., Economic Analysis of Critical

Habitat Designation for the Alameda Whipsnake

(2000) (prepared for FWS) ...................................... 20

Indus. Econ. Inc., Economic Analysis of Critical

Habitat Designation for the Dusky Gopher Frog:

Final (2012) (prepared for FWS) .................... passim

vii

Indus. Econ. Inc., Economic Analysis of Critical

Habitat Designation for the Guajón (2007) (prepared

for FWS) .................................................................. 20

Indus. Econ. Inc., Economic Analysis of Critical

Habitat Designation for the Mountain YellowLegged Frog (2006) (prepared for FWS) .......... 19, 27

Rascoff, Samuel J. & Richard L. Revesz, The Biases of

Risk Tradeoff Analysis: Towards Parity in

Environmental and Health-and-Safety Regulation,

69 U. Chi. L. Rev. 1763 (2002) ........................... 1, 22

Revesz, Richard L., Quantifying Regulatory Benefits,

102 Cal. L. Rev. 1423 (2014) .............................. 1, 26

1

INTEREST OF THE AMICUS CURIAE 1

The Institute for Policy Integrity at New York

University School of Law 2 (“Policy Integrity”) is a

nonpartisan, not-for-profit think tank dedicated to

improving the quality of government decisionmaking

through advocacy and scholarship in administrative

law, economics, and public policy. Policy Integrity is a

collaborative effort of faculty; a full-time staff of

attorneys, economists, and policy experts; and law

students.

An area of special concern for Policy Integrity is

the promulgation of rational environmental

regulations justified by balanced cost-benefit analysis.

Policy Integrity has specific expertise in the proper

scope and estimation of costs and benefits, as well as

in the application of economic analysis to regulatory

decisionmaking. Our director, Richard Revesz, has

published extensively on the need for federal agencies

to thoroughly assess both ancillary benefits and

unquantified benefits. See, e.g., Richard L. Revesz,

Quantifying Regulatory Benefits, 102 Cal. L. Rev.

1423 (2014); Samuel J. Rascoff & Richard L. Revesz,

The Biases of Risk Tradeoff Analysis: Towards Parity

in Environmental and Health-and-Safety Regulation,

69 U. Chi. L. Rev. 1763 (2002). Policy Integrity has

The parties have submitted letters to the Clerk granting

blanket consent to the filing of amicus briefs. No counsel for any

party authored this brief in whole or in part, and no person or

entity other than amicus and its counsel made a monetary

contribution intended to fund the preparation or submission of

this brief.

2 No part of this brief purports to present New York University

School of Law’s views, if any.

1

2

previously submitted amicus briefs to this Court on

ancillary benefits and unquantified benefits. See

Policy Integrity Amicus Br., Michigan v. EPA, 135 S.

Ct. 2699 (2015) (No. 14-46).

Petitioner and their amici invite the Court to use

the second question presented in this case as an

opening to comment on the merits of how the Fish and

Wildlife Service (FWS) weighed the costs and benefits

of a critical habitat designation. Petitioner and their

amici specifically encourage this Court not to take into

account important ancillary and unquantified

benefits. Consequently, Policy Integrity has a

significant interest in this Court’s framing and

resolution of the second question presented.

3

SUMMARY OF THE ARGUMENT

After qualitatively assessing both the direct

conservation benefits to the dusky gopher frog and the

ancillary benefits to property values, coexisting

species, ecosystem services including water quality,

aesthetic values, and recreational opportunities, the

Fish and Wildlife Service (FWS) decided not to

exclude certain land (Unit 1) from the critical habitat

designation. J.A. 95–98, 189–90.

Petitioner and its supporters seek to overstep the

bounds of the second question presented on the

reviewability of decisions not to exclude areas from

critical habitat designations, and they tack on the

additional request that this Court comment on the

merits of FWS’s decision not to exclude Unit 1 from

designation as critical habitat. E.g., Pet’r Br. 56 (“This

Court may itself decide that FWS’s determination was

an abuse of discretion.”); Wash. Legal Found. & Allied

Educ. Found. Amici Br. 30. (“Given the factual record,

the Court may wish to consider declaring that FWS

abused its discretion.”); see also Alabama et al. Amici

Br. 3.

Embedded in their request for the Court’s

comment is the flawed assumption that neither

ancillary benefits nor unquantified benefits deserve

any weight when comparing the costs and benefits of

critical habitat designations. E.g., Markle Interests et

al. Br. 15 (“The Service’s economic analysis found only

ancillary benefits.”); id. 50 (“[T]he conservation

benefit to the frog amounts to nil.”); Wash. Legal

Found. Br. 33 (“[T]he study confined its discussion to

consideration of ‘ancillary benefits’. . . . [T]he relevant

4

‘benefits’ of FWS’s designation are precisely zero.”).

Those attempts to belittle and ignore ancillary and

unquantified benefits contravene the plain text of the

Endangered Species Act and violate both guiding

principles and longstanding agency practices for

rational, balanced economic analysis.

The 1978 amendments to the Endangered Species

Act authorized the agency to consider a broad scope of

“benefits,” consistent with Executive Orders and

guidance from the Office of Management and Budget

on regulatory impact analysis. For at least twenty-five

years, under administrations of both political parties,

FWS has consistently assessed the ancillary and

unquantified benefits of critical habitat designations.

Courts have repeatedly required agencies to account

for the indirect and unquantified consequences of

regulation, and courts unmistakably allow the

consideration of ancillary and unquantified benefits

when not expressly precluded by statute.

Should this Court reach the merits of how FWS

weighed the costs and benefits of its critical habitat

designation, the Court should recognize that it is

appropriate for agencies to fully consider ancillary

and unquantified benefits—indeed, had FWS failed to

consider important ancillary or unquantified benefits

of its critical habitat designation, that omission would

have been arbitrary.

ARGUMENT

I. FWS Considered Ancillary and Unquantified

Benefits in the Critical Habitat Designation

The Endangered Species Act requires the agency

to “tak[e] into consideration the economic impact . . .

5

and any other relevant impact, of specifying any

particular area as critical habitat.” 16 U.S.C.

§ 1533(b)(2). The statute then gives the agency

discretion to exclude certain areas from designation if

“the benefits of such exclusion outweigh the benefits

of specifying such area as part of the critical habitat.”

Id.

Following those statutory instructions, FWS

considered both the direct and ancillary benefits of

designating critical habitat for the dusky gopher frog

(as well as the direct and indirect costs). In the

Federal Register publication of the rule designating

critical habitat for the frog, FWS explains that the

“direct benefits . . . are best expressed in biological

terms” that are difficult to “quantify or monetize.” J.A.

189. FWS also more broadly referred to the

“qualitative discussion” of all of the designation’s

“economic benefits” contained in the Final Economic

Analysis. Id.; see also J.A. 190 (further concluding

that “Our economic analysis did not identify any

disproportionate costs” as compared to the total

economic benefits of the designation).

The Final Economic Analysis explains that—

under the best practices for assessing costs and

benefits provided by Executive Order 12,866 and the

Office of Management and Budget (OMB)’s Circular

A-4—federal agencies consider both direct and

ancillary benefits. Indus. Econ. Inc., Economic

Analysis of Critical Habitat Designation for the Dusky

Gopher Frog: Final at 2-18 (2012) (prepared for FWS)

6

[hereinafter FEA]. 3 The direct benefit of the critical

habitat designation is “the potential to enhance

conservation” of the dusky gopher frog, id., and a

valuation of the direct benefit would reflect “public

willingness to pay for wildlife-viewing opportunities”

and “to assure that the species will exist for future

generations,” as well as the frog’s existence value, id.

at 5-1. Unfortunately, the data necessary to quantify

or monetize the direct benefits did not exist. Id.

The Final Economic Analysis then lists numerous

ancillary benefits. While these ancillary benefits were

not the primary motivation for the critical habitat

designation, they are nevertheless important and

exist independently of any conservation benefits

accruing specifically to the dusky gopher frog. The

ancillary benefits of the critical habitat designation

arise through two pathways. First, the critical habitat

designation protects certain environmental conditions

and features, called “Primary Constituent Elements.”

Id. at 2-18. For example, the critical habitat

designated as Unit 1 was selected to protect its

“ephemeral wetland habitat.” J.A. 153, 160–161, 167

(meaning isolated ponds, free of chemicals and

sediment, with surface water lasting at least 195 days

during breeding season). Maintaining those

ephemeral wetlands “may generate other social

benefits aside from the preservation of the [dusky

gopher frog] species.” FEA, supra, at 2-18. Second, the

designation and subsequent conservation efforts may

3 Some pages of the Final Economic Analysis are omitted from

the Joint Appendix. The full report is available at

https://www.regulations.gov/document?D=FWS-R4-ES-20100024-0157.

7

preserve certain portions of undeveloped land in Unit

1. Id. at 5-2. The resulting open space preserved from

development may generate ancillary benefits.

Overall, the important categories of potential

ancillary benefits from the designation of critical

habitat for the dusky gopher frog include:

• Property value benefits for adjacent or

nearby landowners from increased open

space or decreased density of development;

• Benefits to other coexisting species from the

preservation of ephemeral wetlands and

open spaces, including use and non-use

values for those species;

• Improvements

to

ecosystem

health,

biodiversity gains, and ecosystem service

benefits, including potential improvements

in water quality;

• Aesthetic benefits and public willingness to

pay to preserve wetland habitats or open

spaces;

• Increased

recreational

throughout the region;

opportunities

• Possible gains to regional employment,

output, or income stemming from the above

benefits; and

• Benefits to state and local governments,

because identification of these critical

habitats and the features they contain will

assist local governments with long-range

planning.

8

Id. at 2-18, 5-1 to 5-3; 77 Fed. Reg. 35,118, 35,144

(June 12, 2012). 4

Petitioner and its supporters wrongly portray all

these ancillary benefits as worthless.

II. Ancillary Benefits Must Be Given Due

Consideration Under the Endangered

Species Act, Executive Orders, and Best

Practices for Cost-Benefit Analysis

A. Petitioner and Its Supporters Wrongly

Disparage Ancillary Benefits

In attacking how FWS weighed the benefits of

including Unit 1 in the critical habitat designation,

Petitioner ignores the designation’s many ancillary

benefits. First, Petitioner accuses FWS of “invo[king]”

the direct “‘biological’ benefits” of “the designation as

a whole” to justify specifying Unit 1 as critical habitat,

rather than focusing on “area-specific” benefits

particular to Unit 1. Pet’r Br. 53. In fact, all the

ancillary benefits listed in the Final Economic

Analysis “are only anticipated related to the

avoidance of development in Unit 1.” FEA, supra, at

5-2. 5 Because FWS considered both direct and

4 Several pages from the Federal Register publication of the

critical habitat designation, including sections on compliance

with requirements for various regulatory analyses, are omitted

from the Joint Appendix.

5 The other units designated as critical habitat mostly either are

already “managed to benefit the gopher frog,” already have

development plans that “include leaving proposed critical

habitat areas as wetlands/open space,” or are areas where “largescale development . . . appears unlikely.” FEA, supra, at ES-7, 214, 3-1 to 3-3, 4-11. Therefore, the “incremental[ ]” and

“additional” conservation efforts “anticipated . . . as a result of

9

ancillary benefits in deciding not to exclude Unit 1,

and because all the potential ancillary benefits will

accrue from Unit 1’s designation, FWS made an areaspecific determination for Unit 1’s inclusion.

Petitioner’s argument ignores the existence of the

ancillary benefits from Unit 1.

Second, Petitioner argues that the Final Economic

Analysis offers a “deficient” explanation of how FWS

weighed costs and benefits, and Petitioner

mischaracterizes the economic analysis as “briefly

discuss[ing] a handful of ‘weak[ ] and speculative’

economic benefits (on which FWS did not rely).” Pet’r

Br. 54 n.15. In fact, the Final Economic Analysis’s

Chapter 5 on “Potential Economic Benefits” lists four

categories of direct use and non-use values; explains

the data challenges that prevented quantifying or

monetizing those direct benefits; and qualitatively

describes multiple important ancillary benefits,

including property value benefits, aesthetic benefits,

recreation benefits, ecosystem service benefits such as

water quality, biodiversity and habitat maintenance

benefits, and use and non-use values for preserving

co-existing species. FEA, supra, at 5-1 to 5-3; see also

id. at 2-18. In the Federal Register publication of the

rule, when FWS discusses its qualitative

consideration of “economic benefits,” J.A. 189, it is

referring to the entire suite of both direct and

ancillary benefits examined in Chapter 5 of the

economic analysis, and the agency explicitly relies on

all those benefits in concluding that the costs of

designation were not “disproportionate.” J.A. 190 (the

critical habitat designation” will occur in Unit 1, and so Unit 1’s

designation generates the ancillary benefits. Id. at 5-2.

10

paragraph concluding that costs were not

disproportionate immediately follows the paragraph

referencing the FEA’s discussion of economic

benefits). Again, Petitioner’s argument ignores the

relevance of ancillary benefits.

Third, Petitioner argues that all possible benefits

are “speculative” because no “biological benefit” can

occur in Unit 1 without both voluntary translocation

of the dusky gopher frog and voluntary management

of the site as frog habitat, and Unit 1’s landowners

allegedly have not agreed to undertake such actions.

Pet’r Br. 54–55. Yet again, Petitioner is ignoring the

important categories of ancillary benefits, many of

which can occur independently of frog translocation or

management of the site as frog habitat. Regardless of

frog translocation or habitat management, the

preservation of ephemeral wetlands and open spaces

in Unit 1 may raise adjacent property values, benefit

other coexisting species, improve ecosystem services

like water quality, preserve aesthetic benefits, and

increase recreational opportunities throughout the

region. J.A. 97–98. Additionally, the designation itself

produces useful environmental information that may

assist local governments with their long-term

planning. 77 Fed. Reg. at 35,144.

Landowner Respondents even more explicitly

disparage ancillary benefits as inferior: when their

brief incorrectly alleges that “[t]he Service’s economic

analysis found only ancillary benefits,” Markle Br. 15,

the word “only” reads as an attempt to trivialize.

Landowner Respondents then conspicuously omit any

reference to ancillary benefits when dismissing “the

11

conservation benefit to the frog” as “amount[ing] to

nil.” Id. at 50.

Amici Washington Legal Foundation also attempt

to trivialize ancillary benefits. After wrongly

concluding that the Final Economic Analysis “could

not identify any ‘direct benefits,’” Wash. Legal Found.

Br. 32—in fact, the analysis identified several direct

use and non-use values, though it could not quantify

them, FEA, supra, at 5-1—the amici mischaracterize

the economic analysis as “confin[ing] its discussion to

consideration of ‘ancillary benefits,’” Wash. Legal

Found. Br. 33. Amici then dismiss all those ancillary

benefits as unconnected to “the purpose of designating

critical habitat designation: to ensure the survival of

an endangered species.” Id. Consequently, amici

conclude that “the relevant ‘benefits’ of FWS’s

designation are precisely zero.” Id. In other words,

amici deem ancillary benefits to be worthless and

irrelevant to the purpose of the Endangered Species

Act. See also Alabama et al. Amici Br. 3 (failing to

mention ancillary benefits in their critique of FWS’s

consideration of benefits); Am. Farm Bureau Fed’n et

al. Amici Br. 35 (same).

Contrary to amici’s argument, ancillary benefits

are highly relevant to decision made under the

Endangered Species Act, as explained in the next

section of this brief. By ignoring important categories

of ancillary benefits, Petitioner and its supporters

contravene the plain text and congressional intent of

the Endangered Species Act.

12

B. The Endangered Species Act Requires

Consideration of All Benefits—Direct and

Ancillary

Section 4(b)(2) of the Endangered Species Act—

which grants discretion to exclude areas from critical

habitat designations if “the benefits of such exclusion

outweigh the benefits of specifying such area”—places

no limiting qualifiers on the term “benefits.” 16 U.S.C.

§ 1533(b)(2). Congress knew how to limit the

consideration of benefits to only those benefits

accruing specifically to the endangered species. For

example, Congress instructs the agency not to

designate any Department of Defense lands as critical

habitat if those lands are already “subject to an

integrated natural resources management plan” that

the agency determines already adequately “provides a

benefit to the species for which critical habitat is

proposed for designation.” 16 U.S.C. § 1533(a)(3)(B)(i)

(emphasis added). By comparison, Section 4(b)(2)’s

open-ended use of the word “benefits” indicates that

all benefits count, whether direct benefits to a

particular endangered species or ancillary benefits to

other species, habitats, and interests. Indeed, the

word harkens back to the congressional finding and

declaration that introduces the Endangered Species

Act: “the Nation’s heritage in fish, wildlife, and

plants” is “for the benefit of all citizens.” 16 U.S.C. §

1531(a)(5) (emphasis added). Consequently, it was

reasonable for FWS to interpret the undefined term

“benefits” broadly to include all direct and ancillary

benefits.

The legislative history from the 1978 statutory

amendments that added Section 4(b)(2) confirms the

13

broad scope of the word “benefits.” The language for

Section 4(b)(2) originated in a bill drafted by the

House Subcommittee on Fisheries and Wildlife

Conservation and the Environment, chaired by Rep.

Leggett. During the House’s consideration and

passage of the legislation, in the middle of discussing

the “discretion” now given to the Secretary in

weighing the costs and benefits of critical habitat

designation, Rep. Leggett recalled that:

The ultimate goal of the Endangered

Species Act is the conservation of the

ecosystem on which all species, whether

endangered or not, depend for survival.

124 Cong. Rec. 38,134 (Oct. 14, 1978) (statement of

Rep. Leggett), reprinted in S. Comm. on Env’t & Pub.

Works, 97th Cong., A Legislative History of the

Endangered Species Act of 1973, as Amended in 1976,

1977, 1978, 1979 and 1980, at 825 (1982) [hereinafter

Leg. Hist.]. In other words, the chair of the drafting

committee believed that ancillary benefits to nonendangered species, and to the ecosystems they share

with endangered species, were relevant to critical

habitat designations.

A related provision introduced in the 1978

amendments required an interagency Endangered

Species Committee to exempt certain federal actions

from consultations and restrictions if “the benefits of

such action clearly outweigh the benefits of

alternative

courses

of

action.”

16

U.S.C.

§ 1536(h)(1)(A)(ii). A Joint Explanatory Statement of

the House-Senate Conference Committee on the 1978

amendments explained that the word “benefits” in

14

that related provision “shall include, but not be

limited to, ecological and economic considerations,”

and that the interagency committee “should also

consider the national interest . . . the esthetic,

ecological, educational, historical, recreational and

scientific value of any endangered or threatened

species; and any other factors deemed relevant.” H.R.

Rep. No. 95-1804 (1978), reprinted in Leg. Hist.,

supra, at 1211.

In addition to that expansive and open-ended list,

the Joint Explanatory Statement of the House-Senate

Conference Committee also recommended that the

interagency Endangered Species Committee should

consult the criteria “in OMB Circular A-107 and in

Executive Order 11,949” on the scope of costs and

benefits to consider. Id. President Ford issued

Executive Order 11,949 to broaden the title and scope

of his prior Executive Order 11,821, from “inflation

impact statements” to the broader “economic impact

statements.” 42 Fed. Reg. 1017 (Jan. 5, 1977). OMB’s

Circular A-107, issued in 1975 under Executive Order

11,821, guided agencies on their evaluation of

regulatory impacts, and notably it both encouraged

agencies to consider “secondary cost and price effects”

and also recognized that not all important benefits

could be quantified. Office of Mgmt. & Budget, Exec.

Office of the President, Circular A-107 § 4(b)(1)–(2)

(1975) (advising that “benefits should be quantified to

the extent practical” and so implicitly including

unquantifiable effects in the “comparison of the

benefits”). 6 It is notable that, from the time of the 1978

Available at https://www.fordlibrarymuseum.gov/library/

document/0039/18514794.pdf (see page 34 of the pdf).

6

15

amendments, Congress intended that the term

“benefits” be understood by reference to the federal

government’s guiding documents on regulatory costbenefit analysis, which advised agencies to consider

indirect effects and unquantified benefits. Of course,

those original documents referenced by Congress—

Circular A-107 and Executive Order 11,949—were the

precursors to the federal government’s current

guiding documents on cost-benefit analysis: Circular

A-4 and Executive Orders 12,866 and 13,563. 7 As

explained in the next section, those current guidelines

continue to require federal agencies to fully consider

both ancillary and unquantified benefits.

C. Executive Orders and Guidelines Require

Federal Agencies to Consider Ancillary

Benefits in Regulatory Impact Analyses

To accurately evaluate costs and benefits in

regulatory impact analyses, executive orders require

federal agencies to consider not only direct effects, but

also all important indirect benefits (sometimes called

ancillary benefits or co-benefits) as well as indirect

costs (sometimes called countervailing risks).

Executive Order 12,866 instructs agencies to “assess

all costs and benefits,” including “both quantifiable

. . . and qualitative measures,” where benefits include

7 Executive Order 12,866 remains the guiding order on

regulatory

cost-benefit

analysis

under

the

Trump

administration, and recent executive orders have continued to

cite elements of Executive Order 13,563 as well. See Exec. Order

No. 13,777 § 2(a)(ii)-(iii), 82 Fed. Reg. 12,285, 12,285 (Mar. 1,

2017). Regardless, Executive Orders 12,866 and 13,563 were the

operative orders in 2012, when FWS finalized its critical habitat

designation rule for the dusky gopher frog.

16

any “other advantages” relevant to the determination

and consistent with statutory requirements. Exec.

Order No. 12,866 § 1(a), 58 Fed. Reg. 51,735, 51,735

(Oct. 4, 1993) (emphasis added). Executive Order

13,563 affirms those instructions and elaborates that

agencies must accurately measure the “actual results

of regulatory requirements.” Exec. Order No. 13,563 §

1, 76 Fed. Reg. 3821, 3821 (Jan. 21, 2011). The orders

make no distinction between the treatment of direct

and indirect effects.

The Office of Management and Budget under

President George W. Bush issued Circular A-4, to

“standardiz[e] the way benefits and costs of Federal

regulatory actions are measured.” Office of Mgmt. &

Budget, Exec. Office of the President, Circular A-4 at

1 (2003) [hereinafter Circular A-4]. The Circular

instructs agencies to consider “any important

ancillary benefits” (defined as any “favorable

impact . . . secondary to the statutory purpose of the

rulemaking”), and stresses that “[t]he same standards

of information and analysis quality that apply to

direct benefits and costs should be applied to ancillary

benefits and countervailing risks.” Id. at 26.

The Environmental Protection Agency (EPA) has

also developed its own Guidelines for Preparing

Economic Analyses, to “establish a sound scientific

framework for performing economic analyses of

environmental regulations and policies.” Envtl. Prot.

Agency,

What

Are

the

Guidelines?,

https://www.epa.gov/environmental-economics/

guidelines-preparing-economic-analyses (last visited

July 1, 2018). These guidelines, which were

substantially updated in 2010 after extensive peer

17

review, stress the importance of assessing “all

identifiable costs and benefits,” including both direct

effects “as well as ancillary [indirect] benefits and

costs.” Envtl. Prot. Agency, Guidelines for Preparing

Economic Analyses 11-2 (2010). 8 Though not binding

on other agencies, EPA’s Guidelines reflect deep and

careful thinking about environmental economics and

provide a useful synthesis of best analytical practices

that other agencies can follow. See FEA, supra, at 2-4

n.33 (citing the Guidelines).

Indeed, EPA has a long history of considering

ancillary benefits in regulatory decisions made under

administrations of both political parties. For example,

under President Ford in 1975, EPA considered the

“indirect benefits from induced mass transit

improvements” in proposing a new transportation

control plan for metropolitan Boston to regulate

automobile emissions. 40 Fed. Reg. 8668, 8673 (Feb.

28, 1975). Under President Carter, EPA’s cost-benefit

analysis of warning labels for hazardous chemicals

considered the “indirect benefits of the labeling

regulation,” including the “incentives for the

development of safer substitutes.” 46 Fed. Reg. 3471,

3472 (Jan. 14, 1981). And under President Reagan,

EPA explained that it intended to “consider the full

spectrum of the potential impacts of regulation,”

including

“indirect

benefits

accruing

from

concomitant

reductions

in

other

regulated

pollutants.” 52 Fed. Reg. 25,399, 25,406 (July 7, 1987).

Available at https://www.epa.gov/sites/production/files/201709/documents/ee-0568-11.pdf.

8

18

As discussed in the next section, agencies have

long considered the ancillary benefits of critical

habitat designations, stretching from at least 1992

through to the current presidential administration.

D.

For Over Twenty-Five Years, Under

Administrations of Both Parties, FWS Has

Consistently

Assessed

the

Ancillary

Benefits of Critical Habitat Designations

FWS has a long history, under administrations of

both political parties, of assessing ancillary benefits in

its critical habitat designations. For example, in 1992

during the George H.W. Bush administration, FWS

issued its Determination of Critical Habitat for the

Northern Spotted Owl. In that designation, FWS

wrote:

Designation of critical habitat for the

spotted owl is expected to provide a wide

range of economic benefits to society.

These economic benefits are whenever

possible defined in monetary terms.

They include use values as well as

intrinsic or preservation values. Benefits

provided by preservation of the owl’s

habitat include the same types of direct

and indirect use values of old growth

forest ecosystems. Habitat preservation

also provides water quality protection,

scenic and air quality, biological

diversity, and other environmental

services.

Benefits

of

critical

habitat

designation are in addition to those

19

provided by listing of the owl as

threatened or those derived from other

actions taken by land management

agencies to provide protection to the owl

and its habitat. Only the incremental

protection provided by critical habitat

designation, and the ancillary benefits

attributable to that action, are compared

with the incremental costs of restricting

timber harvest and other economic

effects of designating critical habitat.

57 Fed. Reg. 1796, 1819 (Jan. 15, 1992) (emphases

added).

Throughout the administrations of Presidents Bill

Clinton and George W. Bush, FWS’s economic

analyses routinely discussed ancillary benefits. For

example, in the 2006 analysis of the critical habitat

designation for the mountain yellow-legged frog, FWS

listed such “ancillary benefits” as adjacent property

value increases, “increased water quality resulting

from fewer recreators impacting streams (e.g.,

reduced siltation), improved biological information

resulting from surveys of frog habitat, and reduced

threat of catastrophic fire related to increased fire

suppression activities.” Indus. Econ. Inc., Economic

Analysis of Critical Habitat Designation for the

Mountain Yellow-Legged Frog 9 (2006) (prepared for

FWS); 9 see also, e.g., Indus. Econ. Inc., Economic

Analysis of Critical Habitat Designation for the

9

Available at https://www.fws.gov/economics/Critical%20

Habitat/Final%20Reports/Mountain%20yellowlegged%20frog/MYLF_FEA1_2006.08.14.pdf.

20

Guajón 9–10 (2007) (prepared for FWS) (“For

example, conservation of guajón habitat may reduce

erosion in stream watersheds, improving water

quality in downstream reservoirs.”); 10 Indus. Econ.

Inc., Economic Analysis of Critical Habitat

Designation for the Alameda Whipsnake 18 (2000)

(prepared for FWS) (listing such benefits as

biodiversity, ecosystem health, and wildlife

viewing). 11

More recently, in its August 2017 designation of

critical habitat for certain populations of endangered

and threatened Atlantic sturgeon, the National

Marine Fisheries Service—FWS’s partner agency in

administering the Endangered Species Act—wrote:

Other benefits of designation include

ancillary benefits to other commerciallyimportant aquatic species associated

with Atlantic sturgeon habitat; non-use

values for sturgeon and their habitats;

and increased state, local and public

awareness of the importance of these

areas, that could generate non-federal

conservation efforts and benefits.

82 Fed. Reg. 39,160, 39,234 (Aug. 17, 2017). Though

in that rulemaking the National Marine Fisheries

Service ultimately excluded certain areas from

Available at https://www.fws.gov/economics/Critical%20

Habitat/Final%20Draft%20Reports/Guajon/Guajon_FinalDEA_

5.29.07.pdf.

11

Available at https://www.fws.gov/economics/Critical%20

Habitat/ESA%20Reports%20as%20of%20August%202005/Alam

eda%20whipsnake/Final%20Report/SNAKEFN4.DOC.

10

21

habitat designation, it did so only after considering all

the important ancillary benefits. Id.

FWS’s reliance on ancillary benefits in its critical

habitat designation for the dusky gopher frog is

consistent with this twenty-five-year-long practice

under the Endangered Species Act. Moreover, its

consideration of ancillary benefits is consistent with

the agency’s consideration of indirect costs, as

explained in the next section.

E. It Would Be Arbitrary to Treat Ancillary

Benefits Differently Than Indirect Costs

Even as they dismiss ancillary benefits as

worthless, Petitioner and its supporters criticize

FWS’s alleged failure to consider all indirect costs,

such as lost tax revenue to the local government and

secondary hazards arising from any controlled burns

set to manage the frog habitat. Pet’r Br. 54; Wash.

Legal Found. Br. 31. 12 There are two fatal problems

with this argument.

First, the agency already accounted for indirect

effects like taxes and fires. FWS’s economic analysis

detailed both the direct and indirect costs of the

12 Lost tax revenue, assuming it existed, would not properly be

characterized as a “cost”; rather, it would be a distributional

effect, since taxes are transfer payments from private parties to

the government. See Circular A-4, supra, at 14 (“[T]he revenue

collected through a . . . tax is a transfer payment.”). Potential

environmental or health hazards resulting from controlled

burns, assuming they existed, would clearly be indirect costs, as

they are highly analogous to the prototypical example of

countervailing risks offered by OMB’s Circular A-4: namely,

“adverse safety impacts from more stringent fuel-economy

standards,” see id. at 26.

22

critical habitat designation. The agency explained

that costs were uncertain and so considered a range of

scenarios, under which the monetized direct costs for

Unit 1’s designation could be as little as $0, or as much

as $34 million. FEA, supra, at ES-9. Then FWS also

qualitatively considered a variety of indirect costs,

including costs from regulatory uncertainty, stigma

costs to property values, and lost oil and gas

production. Id. at 2-17, 4-8. Finally, the agency

considered, but ultimately dismissed as unlikely, both

possible indirect lost tax revenue for the local

government, 77 Fed. Reg. at 35,127, and possible

indirect health or environmental effects from the

controlled burns necessary to manage habitat for the

dusky gopher frog, id. at 35,126.

Second, there is no reason for agencies to treat

indirect benefits differently than indirect costs.

Indeed, it is hard to imagine anything more arbitrary

or capricious than taking indirect consequences of

regulation into account if they are negative while

ignoring them if they are positive.

Indirect benefits “are simply mirror images” of

indirect costs. Samuel J. Rascoff & Richard L. Revesz,

The Biases of Risk Tradeoff Analysis: Towards Parity

in Environmental and Health-and-Safety Regulation,

69 U. Chi. L. Rev. 1763, 1793 (2002). The terms

“benefit” and “cost” are merely convenient labels for

positive effects versus negative effects and do not

reflect any distinction warranting different analytical

treatment. For example, EPA’s original analysis of its

greenhouse gas standards for passenger cars counted

consumers’ fuel savings “as negative costs (i.e.,

positive benefits).” Envtl. Prot. Agency, Draft

23

Regulatory Impact Analysis: Proposed Rulemaking to

Establish Light-Duty Vehicle Greenhouse Gas

Emission Standards and Corporate Average Fuel

Economy Standards at xiii (2009). Furthermore,

agencies are required to treat costs and benefits alike

and consider each with comparable analysis, and may

not “put a thumb on the scale by undervaluing the

benefits and overvaluing the costs.” Ctr. for Biological

Diversity v. Nat’l Highway Traffic Safety Admin., 538

F.3d 1172, 1198 (9th Cir. 2008); see also Bus.

Roundtable v. SEC, 647 F.3d 1144, 1148–49 (D.C. Cir.

2011) (chastising the agency for “inconsistently and

opportunistically fram[ing] the costs and benefits of

the rule”); Sierra Club v. Sigler, 695 F.2d 957, 979 (5th

Cir. 1983) (holding that if an agency “trumpet[s]”

economic benefits, it must also disclose costs); Mont.

Envtl. Info. Ctr. v. Office of Surface Mining, 274 F.

Supp. 3d 1074, 1098 (D. Mont. 2017) (finding it

“arbitrary and capricious” to “quantify socioeconomic

benefits while failing to quantify costs”).

According to two former administrators of the

Office of Information and Regulatory Affairs, the

office charged with reviewing agencies’ cost-benefit

analyses, there are “no legal, political, or intellectual

. . . impediments to treating ancillary benefits and

countervailing risks equally in cost-benefit analysis.”

Christopher C. DeMuth & Douglas H. Ginsburg,

Rationalism in Regulation, 108 Mich. L. Rev. 877, 888

(2010). Given the lack of a logical distinction between

indirect costs and indirect benefits, Petitioner and its

supporters cannot reasonably contend that FWS must

consider those indirect costs that support their

arguments, while also insisting that indirect benefits

24

are irrelevant and worthless. Such an illogical

distinction would be arbitrary and capricious, and

would violate legal precedents on the consideration of

indirect regulatory effects, as described further in the

next section of this brief.

F. Courts Require Agencies to Account for the

Indirect Consequences of Regulation

At a minimum, consideration of ancillary benefits

is permissible when not expressly precluded by

statute. See U.S. Sugar Corp. v. EPA, 830 F.3d 579,

625–26 (D.C. Cir. 2016) (explaining that the statutory

“text does not foreclose the Agency from considering

co-benefits and doing so is consistent with the

[statute’s] purpose”). Since the Endangered Species

Act does not expressly preclude the consideration of

ancillary benefits—to the contrary, the plain text,

legislative history, and statutory purpose require it,

see supra Section II.B.—FWS had discretion to weigh

ancillary benefits against economic costs in deciding

whether to exclude areas from critical habitat

designations.

Moreover, when agencies choose or are required to

justify rules by a cost-benefit analysis, courts have

repeatedly instructed agencies to consider indirect

effects. In the recent case Michigan v. EPA, 135 S. Ct.

2699, 2707 (2015), this Court explained that the

advantages and disadvantages of regulation included

not just direct compliance costs, but indirect “harms

that regulation might do to human health or the

environment.” Numerous rulings from several U.S.

Courts of Appeals similarly require agencies to

account for the indirect effects of regulation when

25

weighing costs and benefits. See Am. Trucking Ass’ns

v. EPA, 175 F.3d 1027, 1051–52 (D.C. Cir. 1999)

(holding that EPA must consider the indirect health

costs of reducing a pollutant rather than only “half of

a substance’s health effects”), rev’d on other grounds

sub nom. Whitman v. Am. Trucking Ass’ns, 531 U.S.

457 (2001); Competitive Enter. Inst. v. Nat’l Highway

Traffic Safety Admin., 956 F.2d 321, 326–27 (D.C. Cir.

1992) (striking down a rule for failing to consider

indirect safety effects); Corrosion Proof Fittings v.

EPA, 947 F.2d 1201, 1224–1225 (5th Cir. 1991)

(holding that EPA must consider the indirect safety

effects of substitute options for car brakes when

banning asbestos-based brakes under the Toxic

Substances Control Act); see also Am. Dental Ass’n v.

Martin, 984 F.2d 823, 826 (7th Cir. 1993) (criticizing

the Occupational Safety and Health Administration

because its “consideration of the indirect costs of the

rule is thus incomplete”).

Although those precedents focus on the

consideration of indirect costs rather than indirect

benefits, as explained above, there is no logical reason

for agencies to treat indirect benefits differently than

indirect costs.

III. Unquantified Benefits Also Must Be Given

Due Consideration Under Executive Orders

and Best Practices for Cost-Benefit Analysis

Neither the ancillary nor the direct benefits of the

critical habitat designation for the dusky gopher frog

should be ignored simply because they cannot

currently be fully quantified or monetized.

26

To the contrary, the executive orders governing

regulatory analysis instruct agencies to give due

consideration to all important unquantified costs and

benefits. Exec. Order No. 12,866 § 1(a), 58 Fed. Reg.

at 51,735 (“Costs and benefits shall be understood to

include both quantifiable measures (to the fullest

extent that these can be usefully estimated) and

qualitative measures of costs and benefits that are

difficult to quantify, but nevertheless essential to

consider.”); see also Exec. Order No. 13,563 § 1, 76

Fed. Reg. at 3821. OMB’s Circular A-4 cautions

agencies against ignoring the potential magnitude of

unquantified benefits, because the most efficient rule

may not have the “largest quantified and

monetized . . . estimate.” Circular A-4, supra, at 2.

Indeed, it is widely recognized in the economic

literature that cost-benefit analysis requires proper

consideration of effects that “defy quantification but

are thought to be important.” Kenneth J. Arrow et al.,

Benefit-Cost Analysis in Environmental, Health, and

Safety Regulation: A Statement of Principles 8

(1996). 13 The mere fact that a benefit cannot currently

be quantified says little about its magnitude. In fact,

some of the most substantial categories of monetized

benefits that appear in current regulatory impact

analyses were once considered unquantifiable. See

Richard L. Revesz, Quantifying Regulatory Benefits,

102 Cal. L. Rev. 1423, 1436 (2014) (explaining, for

example, how the key valuation of mortality risk

13 Available at http://www.aei.org/wp-content/uploads/2014/04/benefitcost-analysis-in-environmental-health-and-safetyregulation_161535983778.pdf.

27

reductions—also known as the “value of statistical

life”—had “initially evaded quantification”).

Proper consideration of unquantified benefits has

long been part of best agency practice. Recall how in

1978, Congress referred the interagency Endangered

Species Committee to OMB’s Circular A-107, which

advised agencies that “benefits should be quantified

to the extent practical” but implicitly recognized that

some important benefits could not be quantified. See

supra Section II.B. FWS has a long history, stretching

back over twenty-five years and through

administrations of both political parties, of following

that advice and weighing unquantified benefits in its

critical habitat designations. For example, in 1992,

FWS explained that “economic benefits are whenever

possible defined in monetary terms” but proceeded to

discuss numerous benefits in qualitative terms,

including biodiversity and ecosystem services. 57 Fed.

Reg. at 1819; see also, e.g., Indus. Econ. Inc., Economic

Analysis of Critical Habitat Designation for the

Mountain Yellow-Legged Frog, supra, at 9 (2006)

(“Data required to quantify and monetize these

benefits (e.g., incremental changes in water

quality . . .) are not readily available.”).

Agencies have long weighed unquantified

environmental benefits in a variety of contexts. For

example, in response to criticisms of its benzene

regulations under the Clean Air Act, EPA under

President George H.W. Bush “reject[ed] the position

that only quantified information can be considered in

the decisions.” 55 Fed. Reg. 8292, 8302 (Mar. 7, 1990).

Similarly, in EPA’s Guidelines on Preparing Economic

Analyses, the agency writes: “In reality . . . there are

28

often effects that cannot be monetized, and the

analysis needs to communicate the full richness of

benefit and cost information beyond what can be put

in dollar terms. . . . Benefits and costs that cannot be

quantified should be presented qualitatively.”

Guidelines, supra, at 11-2.

Courts agree that agencies have an obligation to

consider reasonably foreseeable but difficult to

quantify regulatory effects. See, e.g., Public Citizen v.

Fed. Motor Carrier Safety Admin., 374 F.3d 1209,

1219 (D.C. Cir. 2004) (“The mere fact that the

magnitude of [an effect] is uncertain is no justification

for disregarding the effect entirely.”); Am Trucking

Ass’ns v. EPA, 175 F.3d at 1052 (rejecting the idea

that EPA could ignore health effects that are

“difficult, if not impossible, to quantify reliably”).

The fact that the data necessary to quantify and

monetize the direct and ancillary benefits of the

critical habitat designation did not exist in no way

diminishes the relevance of these benefits to FWS’s

decision. Agencies are expected to weigh unquantified

effects against monetized costs and benefits in

accordance with their judgment and expertise. See

Entergy Corp. v. Riverkeeper, Inc., 556 U.S. 208, 235

(2009) (Breyer, J., concurring in part and dissenting

in part) (writing approvingly of EPA’s ability to

“describe environmental benefits in non-monetized

terms and to evaluate both costs and benefits in

accordance with its expert judgment and scientific

knowledge”). That is precisely what FWS did here.

29

CONCLUSION

Should this Court enlarge the scope of the second

question presented as Petitioner and its supporters

seek and so reach the merits of how FWS weighed the

costs and benefits of its critical habitat designation,

the Court should recognize that it is appropriate for

agencies to fully consider ancillary and unquantified

benefits.

Respectfully submitted,

Richard L. Revesz *

Jason A. Schwartz

INSTITUTE FOR POLICY INTEGRITY

NEW YORK UNIVERSITY SCHOOL

OF LAW

139 MacDougal St., 3rd Floor

New York, NY 10012

Tel: (212) 998-6185

richard.revesz@nyu.edu

*Counsel of Record