WHAT IS REASONABLE?: THE CONSIDERATION OF ECONOMIC EFFECTS IN REASONABLE AND PRUDENT ALTERNATIVES UNDER THE ENDANGERED SPECIES ACT
Although only a few inches in size, the delta smelt (Hypomesus transpacificus) has become a topic of intense debate in water-scarce California. When the United States Fish and Wildlife Service (FWS or Service) determined that these small fish were a threatened species in 2005, the Service invoked the significant protections of § 7 of the Endangered Species Act (ESA) and water agencies that managed the delta smelt’s habit were suddenly precluded from diverting water in ways that could negatively affect the fish.
The rivers that flow into the delta provide water to around two-thirds of Californians and large amounts of farmland. FWS’s determination that the diversions would endanger the delta smelt and were therefore prohibited was criticized as “put[ting] fish above the needs of millions of Californians.” When the cutback in water diversions began, farmers who had depended on the diversions were forced to institute alternative methods, including abandoning fertile land. The problem was exacerbated by the fact that there was no other source of water in the region to irrigate the fields. As of 2010, estimates suggested that there had been $2.2 billion in agricultural losses as a result of the decrease in water diversions. 
FWS proposed Reasonable and Prudent Alternatives (RPAs) that would allow the water diversions to continue, but even those required that the diversions to be limited to protect the delta smelt. According to the plaintiffs, this alternative failed to resolve the water supply problems for farmers who had previously relied on water diversions from the agency. As a result, various water agencies and farmers challenged the Service’s decision in the case San Luis and Delta-Mendota Water Authority v. Jewell.
Because of conflicts like those at issue in San Luis, the ESA has been a source of contention, with environmental groups, private parties, and the courts debating the propriety of protecting endangered species at the expense of economic development. On one end of the spectrum, the Supreme Court held in Tennessee Valley Authority v. Hill (TVA) that economic considerations are not relevant to Reasonable and Prudent Alternative (RPA) determinations. Alternatively, the Fourth Circuit has held that economic considerations must be included in the analysis of RPAs. In San Luis the Ninth Circuit adhered to the holding of TVA and held that the consideration of economic effects on private parties was inappropriate for an RPA analysis.
Despite the complicated nature of the San Luis conflict and the significant economic effects that the FWS’s decision may have on farmers, the Ninth Circuit correctly determined that the economic effects on these private third parties did not need to be explicitly analyzed in the RPAs. The text of the ESA and the stated purpose of the ESA indicate that economics are not relevant to RPAs. In addition, RPAs do not restrict the options of agencies, but simply identify one way for the agency to proceed, despite the jeopardy determination, and the ESA already allows for the consideration of economics in the exemption provision. Finally, allowing for the consideration of economics in the creation of RPAs would impair the functioning of the ESA and would not clearly advance any goal that the private parties could hope to accomplish.
II. Alternative Interpretations of the RPA Provision
Following the TVAdecision in 1978, courts have generally understood the ESA to prohibit an interest-balancing approach to the protection of endangered species. This interpretation of the ESA is supported by the text and context of the statute. Still, conflicts often arise when development projects are restricted by the ESA. There are those who argue that all species are inherently valuable and ought to be protected, while others believe that changing conditions and social development are more important than preserving those species that cannot adapt. The various groups involved in these conflicts struggle to compromise because of their diametrically opposed views as to the value of species.
This difference in priorities extends to the circuit courts of appeals. For example, as described above, the Ninth Circuit determined in San Luis that RPAs need not address third party economic consequences. In Dow Agroscience LLC v. National Marine National Marine Fisheries Service, however, the Fourth Circuit held that it was necessary to consider economic consequences in adopting an RPA.
The facts of Dow are analogous to those in San Luis. The Fourth Circuit addressed the question of whether an insecticide manufacturer could challenge a Biological Opinion (BiOp) provision that limited the registration of its products based on the agency’s failure to consider economic consequences. One of the manufacturer’s claims was that an RPA suggesting “buffer zones” for pesticide use was unreasonable because the National Marine Fisheries Service failed to explicitly address the economic feasibility of the buffer system. The National Marine Fisheries Service argued that it did not have “‘to explain why [it] chose one recommended and prudential alternative over another.’” The Fourth Circuit rejected this argument, finding that the definition of RPA in C.F.R. § 402.02 indicated that “economic feasibility” was a requirement that the Service must show. Because the National Marine Fisheries Service did not discuss economic feasibility at all, the court held that the RPA was insufficient, flatly rejecting the idea that “the economic feasibility requirement [is] simply a limitation that the reasonable and prudent alternative be economically possible.”
Alternatively, in San Luis, the Ninth Circuit dismissed the idea that downstream economic effects ought to be considered in the RPA analysis. Initially, the district court considered the downstream effects of the RPA on water for human consumption and agricultural use. However, the Ninth Circuit concluded that FWS is simply not required to address anything other than jeopardy in its RPA analysis because, while other factors are mentioned in the regulations, they are not explicitly included in the ESA. Moreover, the Ninth Circuit criticized the district court’s application of “economic feasibility” language, instead holding that the feasibility requirement in the regulations applied only to the actual implementation of the RPA, not to affects on third parties. Based on that interpretation, the Ninth Circuit held that FWS’s RPA was feasible because FWS’s recommendations had in fact been implemented based on an interim order and were therefore economically possible to implement.
Not surprisingly, given the importance of water in drought-stricken California, this decision was met with criticism. Following the Ninth Circuit decision, the media characterized the conflict, somewhat unjustly, as a “humans vs. fish battle,” in which the Ninth Circuit had chosen “environmentalists over growers.” In 2014, the California State Water Project met only five percent of users’ requests for water as a result of the drought and decreased water diversions. As a result of the intense public scrutiny over the decreased diversions from the delta, it is unsurprising that a private party and a water authority both petitioned for review of the Ninth Circuit’s decision in the Supreme Court. The petitioners noted the extreme economic effects of the San Luis decision and the Ninth Circuit’s failure to weigh those economic consequences. They also argued that the Ninth Circuit’s failure to consider the economic consequences was in conflict with the Fourth Circuit’s holding in Dow. Ultimately, the Supreme Court denied the petitions for certiorari.
III. RPA Provision in Context
The ESA was designed to prevent the extinction of wildlife and plant-life, but it allows some flexibility by permitting FWS to propose RPAs by which the agency can continue to pursue its action without jeopardizing endangered species.  In this way, RPAs balance the ESA’s goal of preserving endangered species with an agency’s goals of continuing development and implementing its action.  Fundamentally, an RPA “must be a measure that ‘can be taken by the Federal agency or applicant in implementing the agency’s action.’”
The Ninth Circuit’s decision in San Luis reflects the appropriate standard for RPAs based on the text and context of the RPA provision. The RPA language in the ESA does not include any reference to economic considerations. The provision states: “If jeopardy or adverse modification is found, the Secretary shall suggest those reasonable and prudent alternatives which he believes would not violate [the no-jeopardy/no adverse modification provisions] of this section and can be taken by the Federal agency or applicant in implementing the agency action.” While other provisions of the ESA explicitly include economic considerations, there is no mention of economic considerations in the RPA provision. Thus, the only explicit requirement for a RPA is that it must eliminate the risk of jeopardy to the endangered species.
Moreover, the purpose of the ESA suggests that economic considerations are not relevant to the RPA analysis. The ESA was created because endangered species were being undervalued by society. The Act allowed the government to speak for endangered species and communicate their competing demands for water allocations and other resources. In fact, when the ESA was initially created, economic considerations were intentionally excluded from the Act because the focus of the legislation was on preservation, regardless of the cost involved. Through subsequent amendments, Congress has continued to state that economics are not to play a role in the listing process.
Accordingly, courts have consistently held that, under the ESA, the Secretary is “not even required to pick the best alternative or the one that would most effectively protect the [endangered species] from jeopardy,” as long as the alternative prevents jeopardy and it is possible for the agency to implement the alternative. The Service thus has a large degree of discretion in creating RPAs, as long as jeopardy is avoided.  In practice, the Service’s decisions can be, and often are, influenced by politics or economics or any variety of social factors, but an RPA need not explicitly include consideration of downstream economic consequences on parties who are not directly involved in the agency action. Thus, an alternative may be “reasonable,” “prudent,” and “economically and technologically feasible,” even if it will have significant negative economic effects.
Significantly, the exemption process for jeopardy findings under § 1536 does provide for economic considerations through a cost–benefit analysis and a weighing of the overall effects on the public interest. In fact, in the House Report for the Endangered Species Act Amendments of 1982, Congress explicitly indicated that any “balancing between science and economics should occur subsequent to listing through the exemption process.” Congress explicitly stated that the exemption process include a broad range of economic criteria. Moreover, Congress indicated that this exemption analysis was broader than the initial consultation process and should include a “significantly larger” search for alternatives than was required for consultation.
A. The Flexible Nature of RPAs
The flexible quality of RPAs also reveals that the RPA analysis should not be read to include economic considerations. The RPA provision was adopted in response to the TVA decision as a way to add some flexibility to the ESA. The RPA directive in the ESA simply states that“[i]f jeopardy or adverse modification is found, the Secretary shall suggest those reasonable and prudent alternatives which he believes would not violate [the no-jeopardy provision] of this section and can be taken by the Federal agency or applicant in implementing the agency action.” RPAs were thus designed to provide agencies with an option to avoid the “no jeopardy” prohibition on agency action, making them permissible, rather than mandatory, alternatives.
A jeopardy determination can stop any federal action, and the adoption of an RPA is only one way by which agencies can then proceed with the action, despite the jeopardy determination. In practice, FWS almost always proposes RPAs. One scholar noted that a theme was that the Service consistently made an effort to find an alternative that would be feasible for the agency, both in terms of economics and general practicality. This option minimizes the negatives impacts of the ESA on agencies by balancing agency interests against the Act’s preservation purpose. Congress intended that the consultation process surrounding a jeopardy finding would often result in a mutually beneficial resolution, and the Service’s effort to find practical alternatives illustrates that it uses RPAs to help agencies continue their actions. The ESA only prohibits action that jeopardizes the continued existence of endangered species, so an agency is free, upon a jeopardy finding, to independently design and implement any action that avoids such jeopardy. Thus, an agency can determine whether or not to consider the economic effects of the alternative action or whether or not to implement FWS’s recommendation at all. Although it has been argued that FWS’s recommended RPAs have “a powerful coercive effect on the action agency,” the agency remains free, under the law, to develop its own solution. 
Overall, RPAs are only one of many tools available to agencies when they are facing a jeopardy determination. The flexible and permissive nature of RPAs, and the fact that they are not mandatory, demonstrate that there is no need to consider downstream economic effects within the RPA analysis. In addition, as explained above, the exemption provision in § 7 already considers downstream economic effects in those exceptional cases in which such an analysis is necessary. 
B. Consequences of a Broader Standard
Because the RPA option was created as a way to allow agency actions to proceed despite a jeopardy finding, foreclosing the ability to find RPAs in some circumstances would decrease the likelihood that agencies could proceed with actions after a jeopardy finding. In fact, the agency could even be forced to forgo its action if the Service determines that there are no RPAs. At that point, an agency’s only option would be the exemption process, which is already available in the rare circumstances when it is necessary to weigh additional factors that are not included in the consultation process.
Changing the RPA analysis to include downstream economic effects would also upset the existing balance in § 7. RPAs allow agencies to proceed under § 7 despite a jeopardy determination, and making this allowance more demanding would increase the power of the jeopardy finding, making § 7 stricter overall. This change would similarly increase the strength of the exemption provision as agencies come to rely on it more as the only option for avoiding the jeopardy determination.
Perhaps most importantly, adding this additional requirement may not have any effect on the Service’s behavior. FWS likely already considers these economic factors implicitly.As Congress has recognized “there is some degree of flexibility in Section 7,” and FWS has significant discretion in determining when and how to enforce its provisions. Thus, because making the analysis of economic effects explicit only complicates procedures under the statute and impairs the functioning of the RPA process, while potentially expanding the exemption process, the RPA analysis should not include a consideration of downstream economic consequences.
The Ninth Circuit correctly determined in San Luis that the RPA analysis need not include a consideration of downstream economic consequences. The ESA’s preservation intent indicates that economics are largely irrelevant under the Act. In addition, the purpose of RPAs and the exemption provisions of § 7 demonstrate that economic considerations are not necessary in the RPA process because agencies can pursue these considerations in other ways. Finally, considering economics in § 7 would fundamentally alter the functioning of the ESA, without necessarily providing any benefit to the private parties. Thus, requiring consideration of downstream economics in RPAs is simply not the answer to California’s water problem. The delta smelt is an indicator species, reflecting the health of the Delta ecosystem, and its endangered status demonstrates that the water system is deteriorating.  Rather than blaming the threatened delta smelt and the ESA for California’s water problems, the parties must begin to craft a solution in light of drought that will maintain the water system for use by endangered species and humans. 
Gillian is the Form & Style Editor for Environmental Law, Lewis & Clark Law School; J.D. expected 2016.
- 16 U.S.C. § 1536. ↵
- Kate Galbraith, Threatened Smelt Touches Off Battles in California’s Endless Water Wars, N.Y. Times, Feb. 2015, available at http://www.nytimes.com/2015/02/15/us/threatened-smelt-touches-off-battles-in-californias-endless-water-wars.html. ↵
- Kyle Roberson, One Fish, Two Fish, More Fish, No Water: Granting an Exemption Under the Endangered Species Act Due to Economic Woes in the Central Valley of California, 19 San Joaquin Agric. L. Rev. 169, 172–73 (2010) (internal quotation marks omitted).↵
- Id. at 173–74.↵
- Id. at 193.↵
- Roberson, supra note 3, at 173–74; Natural Res. Def. Council v. Kempthorne, 506 F. Supp. 2d 322, 322–387 (E.D. Cal. 2007).↵
- Id. at 598–99.↵
- Id. at 600–01.↵
- 747 F.3d 581 (9th Cir. 2014).↵
- 437 U.S. 153 (1978).↵
- Id. at 184.↵
- See Dow AgroSciences LLC v. Nat’l Marine Fisheries Serv., 707 F.3d 462 (4th Cir. 2013).↵
- San Luis, 747 F.3d at 636–37.↵
- Fedrico Cheever, Butterflies, Cave Spiders, Milk-Vetch, Bunchgrass, Sedges, Lilies, Checker-Mallows and Why the Prohibition Against Judicial Balancing of Harm Under the Endangered Species Act Is A Good Idea, 22 Wm. & Mary Envtl. L. & Pol’y Rev. 313, 313 (1998).↵
- Jon A. Souder, Chasing Armadillos Down Yellow Lines: Economics in the Endangered Species Act, 33 Nat. Resources J. 1095, 1110 (1993).↵
- Id. at 1096.↵
- Id. at 1110.↵
- See San Luis and Delta-Mendota Water Authority v. Jewell, 747 F.3d 581, 636–37 (9th Cir. 2014).↵
- 707 F.3d 462 (4th Cir. 2013).↵
- Id. at 474–75.↵
- Id. at 464.↵
- Id. at 473–74.↵
- Id. at 474 (quoting Southwest Center for Biological Diversity v. U.S. Bureau of Reclamation, 143 F.3d 515, 523 (9th Cir. 1998)).↵
- Id. ↵
- Id. at 474–75.↵
- See San Luis and Delta-Mendota Water Authority v. Jewell, 747 F.3d 581, 636–37 (9th Cir. 2014).↵
- Id. at 635–36.↵
- Id. at 636. ↵
- Id. ↵
- Id. at 637. ↵
- While the San Luis decision may have further decreased the water available to farmers, California’s drought is the primary reason that farmers are suffering. Endangered species are sometimes compared to the “canary in the coal mine,” indicating that agency policy is posing “imminent harms to public welfare.”Zygmunt Plater, Classic Lessons from A Little Fish in A Pork Barrel-Featuring the Notorious Story of the Endangered Snail Darter and the TVA’s Last Dam, 32 Utah Envtl. L. Rev. 211, 239 (2012). In this case, perhaps the delta smelt is best viewed as the “canary in the coal mine” indicating that California is suffering from extreme water shortages that cannot be resolved by water diversions. ↵
- Dan Levine, In Drought-Stricken California, Court Rules Smelt Fish Get Water, Reuters, Mar. 2014, available at http://www.reuters.com/article/2014/03/13/us-usa-california-water-idUSBREA2C1MB20140313. ↵
- Galbraith, supra note 2. ↵
- Petition for Writ of Certiorari at *4–*5, State Water Contractors v. Jewell, No. 14-402, 2015 WL 132973 (U.S. Jan. 12, 2015), 2014 WL 5017959; Petition for Writ of Certiorari at *2, Stewart & Jasper Orchards v. Jewell, No. 14-377, 2015 WL 132972 (U.S. Jan. 12, 2015), 2014 WL 4948941. ↵
- Petition for Writ of Certiorari at *21–*26, State Water Contractors, 2015 WL 132973 (U.S. Jan. 12, 2015), 2014 WL 5017959; Petition for Writ of Certiorari at *19–*21, Stewart & Jasper Orchards, No. 14-377, 2015 WL 132972 (U.S. Jan. 12, 2015), 2014 WL 4948941. ↵
- State Water Contractors v. Jewell, No. 14-402, 2015 WL 132973 at *1 (U.S. Jan. 12, 2015); Stewart & Jasper Orchards v. Jewell, No. 14-377, 2015 WL 132972 at *1 (U.S. Jan. 12, 2015). ↵
- Jacquelyn V. Raley, Narrow Mouth Toad v. Too Narrow Road: Maryland’s First Attempt at Balancing the Protection of Endangered Species with the Protection of Public Safety, 5 U. Balt. J. Envtl. L. 193, 193 (1995). ↵
- 16 U.S.C.A. § 1536(b)(3)(A) (2012). ↵
- Hannah Gosnell, Section 7 of the Endangered Species Act and the Art of Compromise: The Evolution of A Reasonable and Prudent Alternative for the Animas-La Plata Project, 41 Nat. Resources J. 561, 568 (2001). ↵
- Dow AgroSciences LLC v. Nat’l Marine Fisheries Serv., 707 F.3d 462, 474 (4th Cir. 2013). ↵
- 16 U.S.C. § 1536(b)(3)(A) (2012). ↵
- See, e.g., Id. § 1533(b)(2) (designation of critical habitat). ↵
- See Robert S. Nix, Bennett v. Spear: Justice Scalia Oversees the Latest “Battle” in the “War” Between Property Rights and Environmentalism, 70 Temp. L. Rev. 745, 774 (1997) (“[T]here is no textual support in section seven, or the rest of the ESA, for the proposition that the economic interests of the plaintiff-private landowners fall under the zone of interests protected by section 1536.”). ↵
- Jason F. Shogren & Patricia H. Hayward, Biological Effectiveness and Economic Impacts of the Endangered Species Act, 32 Land & Water L. Rev. 531, 532 (1997). ↵
- Roberson, supra note 3, at 169–70. ↵
- Shogren & Hayward, supra note 54, at 537. ↵
- See, e.g., H.R. Conf. Rep. No. 97-835, at 19 (1982), reprinted in 1982 U.S.C.C.A.N. 2860, 2860. (“The principal purpose of these amendments is to ensure that decisions in every phase of the process pertaining to the listing or delisting of species are based solely upon biological criteria and to prevent non-biological considerations from affecting such decisions.”). ↵
- See, e.g.,Sw. Ctr. for Biological Diversity v. U.S. Bureau of Reclamation, 143 F.3d 515, 523 (9th Cir. 1998). ↵
- Gosnell, supra note 15, at 576–77. ↵
- Id. ↵
- See, e.g., Brief for the Federal Defendants in Opposition at *15–*18, Stewart & Jasper Orchards v. Jewell, No. 14-377, 2015 WL 132972 (U.S. Jan. 12, 2015) and State Water Contractos v. Jewell, No. 14-402, 2015 WL 132973 (U.S. Jan. 12, 2015), 2014 WL 7169717. ↵
- 16 U.S.C. § 1536(h) (2012) ↵
- H.R. Rep. No. 97-567, at 11 (1982), reprinted in 1982, 1982 U.S.C.C.A.N. 2807, 2811. ↵
- H.R. REP. No. 95-1625, at 22 (1978), reprinted in 1978 U.S.C.C.A.N. 9453, 9472 (explaining that the exemption process should include considerations of “(1) the cost impact on consumers, business markets, federal, state, and local governments; (2) the effect on productivity of wage earners, businesses and government; (3) the effect on competition; (4) the effect on supplies of important materials, products, and services; (5) the effect on employment; and (6) the effect on energy supply and demand”). ↵
- Id. (“During the consultation process, the Secretary and the federal agency are required to evaluate a narrower range of possible alternatives to the proposed action.”). ↵
- Gosnell, supra note 15, at 569. ↵
- 16 U.S.C. § 1536(b)(3)(A) (2012). ↵
- Reed D. Benson, So Much Conflict, Yet So Much in Common: Considering the Similarities Between Western Water Law and the Endangered Species Act, 44 Nat. Res. J. 29, 48–49 (2004). ↵
- Gosnell, supra note15, at 562–63. ↵
- Id. at 575 (citing See Oliver A. Houck, The Endangered Species Act and Its Implementation by the U.S. Departments of Interior and Commerce, 64 U. Colo. L. Rev. 278, 319–20 (1993)). ↵
- Gosnell, supra note 15, at 576 (“[T]he FWS has relied on identifying reasonable and prudent alternatives to questionable projects subject to Section 7 consultation as a way of minimizing the impact of the law and appeasing developers.”); Robin Kundis Craig, Does the Endangered Species Act Preempt State Water Law?, 62 U. Kan. L. Rev. 851, 877 (2014) (“[T]he Section 7 consultation process can often mitigate conflicts that exist between the exercise of the federal agency’s water rights and species protections, either through reasonable and prudent alternatives or Incidental Take Statements or both.”). ↵
- H.R. Rep. No. 95-1625, at 12 (1978, reprinted in 1978 U.S.C.C.A.N. 9453, 9462 (“The evidence presented to the committee suggests that in many instances good faith consultation between the acting agency and the fish and wildlife service can resolve many endangered species conflicts.”). ↵
- Id. (citing See Houck, supra note 64, at 319–20). ↵
- 16 U.S.C. § 1536(a)(2) (2012). ↵
- See, e.g., Gosnell, supra note 15, at 590. ↵
- Pyramid Lake Paiute Tribe of Indians v. U.S. Dep’t of Navy, 898 F.2d 1410, 1418 (9th Cir. 1990) (An “agency is given discretion to decide whether to implement conservation recommendations put forth by the FWS.”); Grand Canyon Trust v. U.S. Bureau of Reclamation, 691 F.3d 1008, 1014 (9th Cir. 2012), as amended (Sept. 17, 2012). ↵
- Bennett v. Spear, 520 U.S. 154, 169 (1997). ↵
- H.R. Rep. No. 95-1625, at 12 (1978), reprinted in, U.S.C.C.A.N. 9453, 9462 (“Any determination by the fish and wildlife service that the activity may jeopardize the continued existence of listed species does not necessarily mandate any particular action by the acting agency.”). ↵
- Id. at 183. ↵
- Gosnell, supra note 15, at 568.↵
- Gosnell, supra note 15, at 576–77. ↵
- H.R. Rep. No. 95-1625, at 11 (1978), reprinted in 1978 U.S.C.C.A.N. 9453, 9461. ↵
- Roberson, supra note 3, at 195; Craig, supra note 61, at 890. ↵
- See Roberson, supra note 3, at 197. ↵