Order Code RL30792
CRS Report for Congress
Received through the CRS Web
The Endangered Species Act: Consideration of
Economic Factors
January 5, 2001
Pamela Baldwin
Legislative Attorney
American Law Division
Congressional Research Service ˜ The Library of Congress

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Consideration of Economic Factors under the Endangered
Species Act
Summary
The Endangered Species Act (ESA) provides for the listing and protection of
species that are found to be “endangered” or “threatened” – species that might
become extinct. The listing of a species as endangered triggers the prohibitions in the
Act against “taking” (killing or harming) individuals of the protected species, unless
a permit is obtained to take individuals incidental to an otherwise lawful proposed
action, or an exemption for the proposed action is obtained. Unauthorized taking of
a listed species can result in civil or criminal penalties. These prohibitions and
potential penalties can affect various activities, including development and use of land,
with attendant economic impacts. Therefore, the extent to which likely economic
impacts can be taken into account under the ESA has generated interest and
discussion.
The determination of whether a species should be listed as endangered or
threatened must be based “solely on the basis of the best scientific and commercial
data available.” (“Commercial data” here refers to trade data.) The data that may be
considered at the listing stage may include facts related to a species’ population,
habitat, distribution, etc., as well as threats to its continued survival, but must not
include economic factors.
However, economic factors may be, and in some instances must be, considered
in devising responses to the listing of a species – e.g. in the designation of critical
habitat, in the process for obtaining an exemption for a particular proposed action
from the prohibitions of the ESA, and in the development of the recovery plan for a
listed species. Economic factors also play less direct roles in the permitting processes.
Parts of the ESA relate to commercial importation and trade in listed species.
This report does not address those issues, but rather discusses the ESA generally,
aside from the commercial context, and how some of its provisions relate to the
consideration of economic factors. It will be updated as circumstances warrant.

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Contents
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
The Listing Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Designation of Critical Habitat . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Exemptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Recovery Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
ESA Provisions with Less Direct Economic Effects . . . . . . . . . . . . . . . . . . . . . . 9

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The Endangered Species Act: Consideration of
Economic Factors
Introduction
The Endangered Species Act (ESA)1 provides for the listing and protection of
species that are found to be “endangered” or “threatened” – species that need
conservation efforts because they might become extinct. The listing of a species as
endangered triggers the prohibitions in the Act against “taking” (killing or harming)
individuals of the protected species, unless a permit is obtained to take individuals
incidental to an otherwise lawful proposed action, or unless an exemption for the
proposed action is obtained. Unauthorized taking of a listed species can result in civil
or criminal penalties. These prohibitions and potential penalties can affect various
activities, including the use and development of land, with attendant economic
impacts. Therefore, the extent to which likely economic impacts can be taken into
account under the ESA has been of interest. Some parts of the Act relate to
importation and commercial trading in listed species.2 This report does not address
those issues, but discusses the ESA generally and how some of its provisions, aside
from the commercial context, relate to the consideration of economic factors. It will
be updated as circumstances warrant.
Background
The ESA defines an “endangered species” as any species which is “in danger of
extinction throughout all or a significant portion of its range.” Excepted from this
definition, however, are “species of the Class Insecta determined by the Secretary to
constitute a pest whose protection under the provision of this chapter would present
an overwhelming and overriding risk to man.” This language appears to recognize
the economic or health threats that some insects present. A “threatened” species is
one likely to become an endangered species within the foreseeable future throughout
all or a significant portion of its range.”
The Secretary of the Interior (with respect to terrestrial species) and the
Secretary of Commerce (with respect to anadromous fish and certain other marine
species) decide whether to list a species as endangered or threatened. The listing of
a species triggers certain duties for federal agencies and applicants for federal permits,
1 Act of December 28, 1973, Pub. L. No. 93-205, 87 Stat. 884, codified at 16 U.S.C. §§
1531 et seq.
2 Note too that § 10(b) of the ESA and 50 C.F.R. § 17.23 provide for “hardship exemptions”
in some instances involving subsistence use or where a person had a contract to sell
individuals of a listed species that predated the listing of that species and the person would
suffer economic hardship if the contract were not carried out.

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CRS-2
authorizations, or funding to consult with the Secretary (in practice either the Fish and
Wildlife Service or the National Marine Fisheries Service respectively) if a proposed
action may affect a listed species. This consultation will determine if the proposed
action is likely to jeopardize the continued existence of a species or destroy or
adversely modify habitat of a species determined by the Secretary to be critical.3 If
so, the Secretary is to suggest reasonable and prudent alternatives to the proposed
action that would avoid jeopardizing the listed species.
Listing a species as endangered also means that the prohibitions of the ESA
regarding the “taking” of endangered species apply. “Taking” means to harass, harm,
pursue, hunt, shoot, wound, kill, trap, capture, or collect, or to attempt to engage in
any such conduct.4 The meaning of “harm” is elaborated on in regulations to include
destruction of habitat severe enough to actually kill or injure wildlife by significantly
impairing essential behavioral patterns, including breeding, feeding, or sheltering.5
Current regulations provide that unless a special rule has been promulgated for a
threatened species, threatened species shall receive the same protections as
endangered species.6 Exceptions to the taking prohibitions are allowed as a result of
either the consultation process under § 7 of the Act, or under the § 10 provisions that
allow “incidental take permits” to be issued.
If a development or activity cannot be modified so that it avoids jeopardizing a
listed species, the person or agency proposing the action must either desist, risk
penalties for unlawful takes, or pursue the exemption process provided under the ESA
to exempt that activity (not the species) from the penalties of the Act.
These aspects of the Act will be discussed in greater detail.
The Listing Process
The determination of whether a species should be listed as endangered or
threatened must be based on several factors that relate to the surviving numbers of a
species and threats to its continued existence, but do not include a consideration of
the economic effects of listing.7 While the origins of threats to a species may be
caused by development or other economic activities, listing determinations are
expressly to be made “solely on the basis of the best scientific and commercial data
3 16 U.S.C. § 1536(a) and (b).
4 16 U.S.C. § 1532(19).
5 50 C.F.R. § 17.3.
6 50 C.F.R. § 17.31.
7 16 U.S.C. § 1533(a)(1) states that the Secretary by regulation shall “determine whether any
species is an endangered species or a threatened species because of any of the following
factors:
(A) the present or threatened destruction, modification, or curtailment of its habitat or range;
(B) overutilization for commercial, recreational, scientific, or educational purposes;
(C) disease or predation;
(D) the inadequacy of existing regulatory mechanisms; or
(E) other natural or manmade factors affecting its continued existence.”

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available.” The word “solely” was added in the 1982 amendments to the Act8 to
clarify that the determination of endangered or threatened status was intended to be
made without reference to extraneous conditions such as economic factors. The
committee reports elaborated on this point and also state that “commercial data”
refers to trade data:
...The principal purpose of the amendments to Section 4 is to
ensure that decisions pertaining to the listing and delisting of
species are based solely upon biological criteria and to prevent
non-biological considerations from affecting such decisions. To
accomplish this and other purposes, Section 4(a) is amended in
several instances ....
Section 4(b) of the Act is amended in several instances by
Section 1(a)(2) of H.R. 6133. First, the legislation requires that
the Secretary base his determinations regarding the listing or
delisting of species “solely” on the basis of the best scientific and
commercial data available to him. The addition of the word
“solely” is intended to remove from the process of the listing or
delisting of species any factor not related to the biological status
of the species. The Committee strongly believes that economic
considerations have no relevance to determinations regarding the
status of species and intends that the economic analysis
requirements of Executive Order 12291, and such statutes as the
Regulatory Flexibility Act and the Paperwork Reduction Act not
apply. The Committee notes, and specifically rejects, the
characterization of this language by the Department of the
Interior as maintaining the status quo and continuing to allow the
Secretary to apply Executive Order 12291 and other statutes in
evaluating alternatives to listing. The only alternatives involved
in the listing of species are whether the species should be listed
as endangered or threatened or not listed al all. Applying
economic criteria to the analysis of the alternatives and to any
phase of the species listing process is applying economics to the
determinations made under Section 4 of the Act and is
specifically rejected by the inclusion of the word “solely” in this
legislation.
Section 4(b) of the Act, as amended, provides that listing shall be
based solely on the basis of the best “scientific and commercial
data” available. The Committee did not change this information
standard because of its interpretation of the word “commercial”
to allow the use of trade data. Retention of the word
“commercial” is not intended, in any way, to authorize the use of
economic considerations in the process of listing a species.9
8 Pub. L. No. 97-304, 96 Stat. 1411.
9 H.R. Rep. No. 97-567 at 19-20 (1982).

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The conference report confirms that it was the intent of both chambers that
economic factors not play a role in the listing of species for protection.
Section 2 of the Conference substitute amends section 4 of the
Act in several ways. 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.10
The Committee of Conference (hereinafter the Committee)
adopted the House language which requires the Secretary to base
determinations regarding the listing or delisting of species
“solely” on the basis of the best scientific and commercial data
available to him. As noted in the House Report, economic
considerations have no relevance to determinations regarding the
status of species and the economic analysis requirements of
Executive Order 12291, and such statutes as the Regulatory
Flexibility Act and the Paperwork Reduction Act, will not apply
to any phase of the listing process. The standards in the Act
relating to the designation of critical habitat remain unchanged.
The requirement that the Secretary consider for listing those
species that states or foreign nations have designated or
identified as in need of protection also remains unchanged.11
Therefore, the Act makes it clear that the decision as to whether a species is
endangered or threatened is to be a scientific one in which economic factors do not
play a part. Once this determination has been made, however, economic
considerations may be, and in some instances must be, considered in analyzing what
actions may be taken. This process has been analogized to making a diagnosis of
whether a patient has cancer solely on medical grounds, but later considering
economic factors in determining appropriate treatment once the patient has been
diagnosed.
Designation of Critical Habitat
In contrast to the process for listing a species as needing the protections of the
ESA, in which process economic factors are not to play a part, economic factors
expressly are to be considered in the designation of critical habitat for species.
Concurrently with determining a species to be endangered or threatened, the
Secretary “to the maximum extent prudent and determinable” is to designate the
critical habitat of the species.12
10 H.R. Rep. No. 97-835 at 19 (1982).
11 Ibid., at 20.
12 16 U.S.C. § 1533(a)(3). The reference to prudence reflects the fact that is is necessary to
take into account whether designating the habitat of a listed species would result in specimen
(continued...)

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When the Secretary designates critical habitat, the Secretary must do so:
on the basis of the best scientific data available and after taking
into consideration the economic impact, and any other relevant
impact, of specifying any particular area as critical habitat. The
Secretary may exclude any area from critical habitat if he
determines that the benefits of such exclusion outweigh the
benefits of specifying such area as part of the critical habitat,
unless he determines, based on the best scientific and commercial
data available, that the failure to designate such area as critical
habitat will result in the extinction of the species concerned.13
Therefore, although economic factors are not to be considered in the listing of
a species as endangered or threatened, economic factors may enter into the
designation of critical habitat, and some habitat areas may be excluded from
designation based on such concerns, unless the failure to designate the habitat would
result in the extinction of the subject species.
The significance of designating critical habitat is debatable. The Fish and
Wildlife Service has asserted that designation does not add substantially to the
protections afforded listed species, critical habitat designations are inordinately
expensive compared to listing determinations, and that the agency would prefer not
to use scarce resources to designate critical habitat. In fact, critical habitat has been
designated for less than one fourth of listed species. On the other hand, modification
of critical habitat may trigger § 7 consultation, may affect a finding of “harm,” and
may facilitate development of recovery plans.14
Exemptions
Federal agencies and non-federal persons may seek to have a particular action
exempted from the penalties for taking endangered or threatened species in order to
allow an activity or project to proceed even if that activity or project would destroy
individuals of a listed species and might even jeopardize the continued existence of
that species.
As originally enacted, the Act was an absolute prohibition against activities that
would jeopardize endangered species. When the prospective impoundment of water
behind the nearly completed Tellico dam threatened to eradicate the only known
12 (...continued)
collecting or other public intrusion into that habitat to the detriment of the species. The word
“determinable” refers to whether it has been possible factually to determine the extent of the
critical habitat. If the facts relevant to the designation of critical habitat are not yet available,
the Secretary may postpone designation for an additional year. Eventually, habitat is to be
designated to the maximum extent it is prudent to do so.
13 16 U.S.C. § 1533(b)(2).
14 See Pamela Baldwin, The Role of Designation of Critical Habitat under the Endangered
Species Act, CRS Report for Congress RS20263, July 19, 1999.

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population of the snail darter (a small fish), the Supreme Court concluded that the
“plain language” of the Act at that time mandated that the dam not operate.
Concededly, this view of the Act will produce results requiring
the sacrifice of the anticipated benefits of the project and of many
millions of dollars in public funds. But examination of the
language, history, and structure of the legislation under review
here indicates beyond doubt that Congress intended endangered
species to be afforded the highest of priorities.15
After this Supreme Court decision, the ESA was amended to include a process
by which economic impacts could be reviewed and projects exempted from the
restrictions that otherwise would apply.16 An “Endangered Species Committee”
(Committee), consisting of specified Cabinet officials and one individual from each
affected state reviews applications for exemptions. A federal agency, the Governor
of the state in which an agency action will occur, or a permit or license applicant may
apply to the Secretary for an exemption. The application must describe the
consultation process carried out and provide a statement as to why the proposed
action cannot be modified to conform with the requirements of the statute.
To be eligible for an exemption, the agency concerned and the exemption
applicant must have carried out the consultation processes required under § 7 of the
Act in good faith and must have made a reasonable and responsible effort to develop
and fairly consider modifications or reasonable and prudent alternatives to the
proposed action that do not jeopardize the continued existence of a listed species or
result in the destruction or adverse modification of critical habitat of such a species.
They also must have conducted the required biological assessments and, to the extent
determinable within the time provided, refrained from making any irreversible or
irretrievable commitment of resources that would foreclose the formulation or
implementation of reasonable and prudent alternative measures to avoid jeopardizing
the species and habitat in question. These qualifying requirements are to ensure that
the exemption process will be a meaningful one and that the consideration of the
issues will not be preempted by the commitment of resources and preclusion of
alternatives through actions already taken.
The Secretary, in consultation with the other members of the Committee, holds
a hearing on the application and prepares a report. The report reviews whether the
applicant has made any irreversible or irretrievable commitment of resources;
discusses the availability of reasonable and prudent alternatives and the benefits of
each; provides a summary of the evidence concerning whether the action is in the
public interest and is nationally or regionally significant; and outlines appropriate and
reasonable mitigation and enhancement measures which should be considered by the
Committee.17
15 Tennessee Valley Authority v. Hill, 437 U.S. 153, 174 (1978).
16 16 U.S.C. § 1536(e).
17 16 U.S.C. § 1536(g).

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The Committee then makes a final determination of whether to grant an
exemption. The Committee shall grant an exemption if, based on the evidence, the
Committee determines that:
(i) there are no reasonable and prudent alternatives to the agency
action;
(ii) the benefits of such action clearly outweigh the benefits of
alternative courses of action consistent with conserving the
species or its critical habitat, and such action is in the public
interest;
(iii) the action is of regional or national significance; and
(iv) neither the federal agency concerned nor the exemption
applicant made any irreversible or irretrievable commitment of
resources prohibited by subsection (d) of this section
[commitments as described above that jeopardize species or
critical habitat].18
The Committee also must establish reasonable mitigation and enhancement
measures as necessary and appropriate to minimize the adverse effects of an approved
action on the species or critical habitat. These measures must be funded by the
applicant.
An exemption must be granted for an agency action if the Secretary of Defense
finds the exemption is necessary for reasons of national security.19 The Committee
may not grant an exemption that the Secretary of State finds would violate a treaty
or other international obligation of the United States.20 The President is authorized
to make exemption determinations for a project for the repair or replacement of a
public facility in a major disaster area if the President determines it is (1) necessary to
prevent the recurrence of the natural disaster and to reduce the potential loss of
human life, and (2) to involve an emergency situation which does not allow the
ordinary procedures to be followed.21
An exemption is permanent unless the Secretary finds that the exemption would
result in the extinction of a species that was not the subject of consultation, or was not
identified in the biological assessment and the Committee determines that the
exemption should not be permanent.22
18 16 U.S.C. § 1536(h).
19 16 U.S.C. § 1536(j).
20 16 U.S.C. § 1536(i).
21 16 U.S.C. § 1536(p).
22 16 U.S.C. § 1536(h).

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The costs of required mitigation and enhancement measures specified in an
approved exemption must be included in the overall costs of continuing the proposed
action and the applicant must report annually to the Council on Environmental Quality
on compliance with mitigation and enhancement measures.23 The obligation to fund
mitigation continues throughout the impacts of the exemption.
The Act expressly states that any action for which an exemption is granted is not
to be considered a taking of any endangered species with respect to any activity
necessary to carrying out the exempted action, and that any taking that is in
compliance with the terms and conditions specified in a written statement issued by
the Secretary after the consultation process is not to be considered a taking of the
species concerned. In other words, the penalties that normally apply to the taking of
an endangered or threatened species do not apply to takings resulting from exempted
actions.
There have been only a very few exemption applications filed and only two
exemptions granted (one was in re the Grayrocks dam and the other was to approve
13 timber sales sought by the Bureau of Land Management in the Department of the
Interior, but this latter exemption request was withdrawn before the completion of
appeals). One application was denied (in re the Tellico dam, which was later allowed
by Congress to proceed); one was dismissed as premature (in re the proposed Pittston
oil refinery in Maine); and two others were withdrawn before Committee
consideration.
One commentator has speculated that the low number of exemption applications
may in part be because the process is rigorous, but also because the incentive to
negotiate compromises is strong.
The main reasons for the low number of applications probably
include the small number of jeopardy opinions issued, the
stringent substantive standards for the grant of an exemption,
and the complexity of the process. A likely additional factor is
that most institutions, public or private, recognize that merely by
seeking an exemption they risk being perceived as hostile to
endangered species conservation. As long as public support for
conservation is believed to be high, there is an incentive to
compromise and avoid the need for an exemption.24
Another factor may be that the harm to a species resulting from an exempted
action must be taken into account in reviewing other proposed actions that also may
affect that species; more vigorous conservation actions may be necessary elsewhere
to compensate for the exempted harm in order to recover the species in question.
This fact also may make exemptions less desirable.
23 16 U.S.C. § 1536(l).
24 Michael Bean and Melanie Rowland, THE EVOLUTION OF NATIONAL WILDLIFE LAW, 264-
265 (3d Ed. 1998).

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Recovery Plans
Once a species is listed, the Secretary is to develop a recovery plan for that
species that will assist the species in recovering to the point that the protection of the
ESA is no longer needed. To the extent practicable, the Secretary is to develop
recovery plans for those species that are most likely to benefit from such plans,
“particularly those species that are, or may be, in conflict with construction or other
development projects or other forms of economic activity;...” Recovery plans are to
set goals for the conservation and survival of the species and set out objective,
measurable criteria that would result in a determination that the species could be
removed from listing. A recovery plan also is to contain “estimates of the time
required and the cost to carry out those measures needed to achieve the plan’s goal
and to achieve intermediate steps toward that goal.”25 Although all options must
achieve recovery, the most cost-effective option may be selected.
ESA Provisions with Less Direct Economic Effects
Other ESA provisions may involve economic factors less directly than those
discussed above, especially as implemented administratively. Permit applicants may
confer on possible impacts on species that have been proposed for listing and informal
consultation is available with respect to preliminary project planning for actions that
may affect a listed species. Both of these processes may assist with development of
economic projects and activities so as to avoid both ESA conflicts and the expense
of modifying actions later on. In addition, certain administrative actions afford
landowners and developers greater certainty in moving forward with development
activities.26 These rules, combined with other agency policies and guidelines for
improved processing of permit applications, have been seen by many as facilitating
economic activities and development otherwise affected by the ESA.
25 16 U.S.C. § 1533(f).
26 See the “No surprises” rule (63 Fed. Reg. 8859 (February 23, 1998)), which limits the
changes the government can require a landowner to make to habitat conservation plans that
are the basis for § 10 incidental take permits, and the “Safe harbor” agreements rule (64 Fed.
Reg. 32706 (June 17, 1999)), which allows a landowner to make beneficial habitat
improvements to land and later return to initial baseline conditions without penalties.

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