30 ELR 10721 | Environmental Law Reporter | copyright © 2000 | All rights reserved

Cross-Examining Market Approaches to Protecting Endangered Species

Nancy K. Kubasek, M. Neil Browne, and Michael D. Meuti

Nancy K. Kubasek is Professor of Legal Studies at Bowling Green State University, M. Neil Browne is a Distinguished Teaching Professor of Economics at Bowling Green State University. Michael D. Meuti is a J.D. candidate at Stanford Law School.

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If a value system is simply presupposed and obeyed as the given structure of the world that all are made to accept and serve, it can become systematically destructive without our knowing there is a moral choice involved.1

Imagine your shock were you to find your home missing. After walking around for several minutes, you notice that your neighbors' homes are gone as well. Confused, you decide to go out to find something to eat. However, after searching for a place to eat for hours, you discover that your habitat has no food left. First, one neighbor dies, then another. Soon there is almost none of your kind remaining.

Mutatis mutandis, for various plant and animal species in North America, this bleak scenario describes the out-come of their imposed interaction with economic development. As human beings have expanded the territory on which they live, numerous species have lost their habitat and their lives.

To protect threatened species, the U.S. Congress enacted the "pit bull of environmental laws,"2 the Endangered Species Act (ESA),3 in 1973. Since its enactment, the ESA has been mired in controversy,4 and as the so-called Property Rights Movement in the United States has gained support throughout the 1990s,5 the controversy has escalated.6 The unfortunate result has been a failure to reauthorize the statute since it expired in 1993.7

What provisions should a "new and improved" ESA include to incorporate the interests of both landowners and environmentalists? What policy models ensure forceful protection of biodiversity and, at the same time, show proper respect toward landowners' property rights?

This Article seeks to contribute to such discussions by reviewing arguments championing market forces as an organizing principle for improved environmental policy.8 Part I will make the case for the importance of protecting species on private land and will discuss how this necessity creates an inevitable tension between supporters of the ESA and property rights advocates. Part II will review the ESA's current approach to protecting biodiversity on private lands as well as recent calls for "market approaches" to endangered species protection.

Part III will note the prevalence of such market approaches in other areas of American public policy to establish the cultural ethos that propels similar arguments with respect to the protection of endangered species. Specifically, it will review the evolution of these approaches in criminal justice, health care, and education. Finally, Part IV will highlight several cautions that militate against our increasing reliance on market arguments for environmental policy. In particular, we need to remind ourselves that "the market" is an abstraction that performs in certain fashions only to the extent that the attributes of any reification of the market are replicated in the realm where the market approaches are activated.

Part I: Endangered Species and the Need to Regulate Private Land

Communities have a multitude of reasons for protecting endangered species. Among them are the interests in preserving nature's beauty, maintaining balance in our various ecosystems, and ensuring that species about which we know little are available in the future for scientific research.9 We have all benefitted greatly from the extensive biodiversity we inherited, and we should desire to pass along as much as we can to our own children.

If we wish to extend our natural heritage to our descendants, protecting endangered species that reside on private land is a must.10 Passing laws that merely prohibit the hunting and trapping of endangered species is not enough. Habitat destruction has been implicated as a primary cause of [30 ELR 10722] dwindling populations for almost all imperiled species.11 Thus, protecting species requires protecting the habitat in which they reside, and currently, "more than half of all endangered and threatened species have at least 81 percent of their habitat on private lands."12

Clearly then, any statute that aims to protect our nation's biodiversity must to some extent regulate the private land on which at-risk species reside if the statute is to be effective. But such regulation is prima facie anathema to landowners. They see any restrictions on their ability to use their land as they please as unjust restrictions on their private-property rights.

Invoking the Fifth Amendment's Takings Clause13 and the doctrine of "regulatory takings" recently expanded by U.S. Supreme Court decisions in cases such as Lucas v. South Carolina Coastal Council14 and Dolan v. City of Tigard15 as their primary weapons, landowners have recently launched an assault on the ESA16 and other environmental laws that seek to limit their property rights.17

The conflict between the desires of private landowners and of those people who wish to protect endangered and threatened species is inescapable. This tension highlights the need for alternative policy approaches—policies that can potentially numb this tension and thereby satisfy both environmentalists and landowners.

Part II: The ESA: Our Current Approach to Biodiversity Preservation

Recognizing the importance of biodiversity preservation, Congress passed our nation's first legislative attempt to protect endangered species in 1966.18 Seven years later, it strengthened the commitment to protect imperiled species and to prevent unnecessary extinction by passing the ESA.19 In the Act's statutory findings, Congress found that:

(1) various species of fish, wildlife and plants in the United States have been rendered extinct as a consequence of economic growth and development untempered by adequate concern and conservation; and

(2) other species of fish, wildlife and plants have been so depleted in numbers that they are in danger of or threatened with extinction.20

To remedy such problems and to preserve the species' "esthetic, ecological, educational, historical, recreational, and scientific value to the Nation and its people,"21 Congress passed the ESA, thereby bringing conservation to the forefront of U.S. public policy.

ESA § 422 delegates the responsibility of determining which species are at-risk of extinction to the Secretary of the Interior23 and the Secretary of Commerce.24 After considering "the present or threatened destruction, modification, or curtailment of [a particular species'] habitat or range; over-utilization for commercial, recreational, scientific, or educational purposes; disease or predation; the inadequacy of existing regulatory mechanisms; [and] other natural or manmade factors affecting its continued existence,"25 the Secretary may designate a species as endangered, threatened, or not at risk. A species qualifies as an endangered species if it is "in danger of extinction throughout all or a significant portion of its range."26 Threatened species are those likely to become endangered in the foreseeable future.27 Species that fall into neither of these categories are not listed.

The ESA protects listed species in two primary ways. First of all, its ESA § 728 imposes an affirmative duty on federal agencies to ensure that "any action authorized, funded, or carried out by [an] agency . . . is not likely to jeopardize the continued existence of any endangered species or threatened species or result in the destruction or adverse modification of [the critical] habitat of such species."29 The U.S. Fish and Wildlife Service (FWS) defined "actions" as

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all activities or programs of any kind authorized, funded, or carried out, in whole or in part, by Federal agencies in the United States or upon the high seas. Examples include, but are not limited to:

(a) actions intended to conserve listed species or their habitat;

(b) the promulgation of regulations;

(c) the granting of licenses, contracts, leases, easements, rights-of-way, permits, or grants-in-aid; or

(d) actions directly or indirectly causing modifications to the land, water, or air.30

To effectuate this duty, the ESA requires those federal agencies planning new projects to consult with the Secretary of the Interior to determine whether the proposed projects would likely encroach upon the habitat of any listed species.31 Additionally, if the Secretary determines that listed species reside on the land on which the proposed project will take place, the federal agency must prepare a biological assessment32 to determine the likely extent that the agency's project will affect the species.33

After the Secretary of the Interior receives the biological assessment, he or she reviews it and within 90 days, issues a biological opinion expressing the FWS' findings regarding the proposed project.34 If the Secretary determines that the proposed action will not place the species in jeopardy, the agency may proceed with the project without further consideration. However, if the Secretary holds that the project is likely to threaten the continued existence of the species, the biological opinion will include a list of "reasonable and prudent alternatives"35 that would permit the agency to proceed with the project and still accommodate the listed species.

Although ESA § 7 has been labeled "the heart of the ESA"36 and has been subject to much litigation,37 in recent years, it has not been nearly as controversial as the ESA's other method of protecting listed species.38 ESA § 939 forbids anyone to "take" any endangered species.40 Congress defined "to take" as "to harass, harm pursue, hunt, shoot, wound, kill, trap, capture, or collect, or to attempt to engage in any such conduct."41 Although threatened species are not automatically protected by this provision, the Secretary may choose to extend the prohibition on "taking" to threatened species.42

Because ESA § 9 applies to private property as well as federal land,43 it places limits on the ways in which property owners may use their land.44 For instance, a landowner with red cockaded woodpeckers on her land may not use her land to hunt the endangered birds. Few would argue with such a restriction on land use. However, the limitations on property owners' rights go further. The inclusion of ambiguous words such as "harm" and "harass" in the congressional definition of "to take" have created uncertainties for landowners. What kind of activities would constitute "harm" or "harassment" of endangered species?

The FWS issued regulations in an attempt to answer these questions. More to the point, the FWS defined "harm" as "an act which actually kills or injures wildlife. Such acts may include significant habitat modification or degradation where it actually kills or injures wildlife by significantly impairing essential behavior patterns, including breeding, feeding, or sheltering."45 Because it includes habitat destruction as an activity that may create "harm," the FWS' definition has perplexed many landowners by placing ambiguous limits on their ability to develop their property. It is the prohibition against causing "harm" to endangered species that has been the thorn in the side of property owners.46

This definition of "harm," although it had been on the books since 1975, did not receive the judicial stamp of approval until the mid-1990s.47 In Babbitt v. Sweet Home Chapter of Communities for a Great Oregon,48 the Supreme Court faced a broad challenge to the FWS' "harm" regulation. The plaintiffs49 argued that Congress' intent in passing [30 ELR 10724] the ESA was limited to activities directly intended to affect wildlife, and that the FWS lacked the authority to transform developmentactions into violations of ESA § 9.50 After losing at the district court level,51 appealing the case, and triumphing on appeal to the D.C. Circuit,52 the plaintiffs were forced to defend their arguments before the Supreme Court. The Court held, by a 6-3 vote, that the FWS' interpretation of the "harm" restriction was reasonable,53 and thus entitled to deference under Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc.54 Because the Sweet Home decision "leaves for later case-by-case resolution of the 'difficult questions of proximity and degree' of determining what circumstances establish a prohibited ESA § 9 taking of protected wildlife,"55 its long-term consequences remain unclear.56 However, the Supreme Court did, through its decision, keep the door open for destruction of habitat to remain actionable under ESA § 9.

Despite the attempts of the FWS and the courts57 to eradicate the ambiguity surrounding its limitations of land use, much uncertainty remains concerning ESA § 9's "taking" prohibition. Numerous landowners have recognized the threats that endangered species could pose to their economic prosperity and have even begun taking steps to ensure that ESA § 9 will not apply to them. Environmental lawyer Michael Bean notes,

The ESA's prohibition against taking endangered species has occasionally prompted landowners to take pre-emptive action designed to ensure that endangered species never have the opportunity to occupy their land. Such actions contravene the spirit of the statute and frustrate its purpose, though they do not necessarily violate its letter. And similar fears, no less significantly, have instilled in other landowners a reluctance to carry out land management practices that could benefit rare species.58

While it is difficult to measure the extent that landowners currently engage in such practices, they are increasingly being encouraged to do so.59 Other landowners have followed a "shoot, shovel, and shut up" policy60—killing endangered species on their property before the FWS discovers any members of the species inhabiting the property owner's land.61

Because ESA § 9 offers landowners no incentive to preserve endangered species' habitat and actually provides an incentive to engage in activities that are detrimental to the species' prospects for survival, this portion of the Act has come under attack in recent years. Property rights advocates argue that by impeding landowners' ability to develop their land, ESA § 9 commits a regulatory "taking" of property.62 Thus, they argue that they are entitled to compensation for the economic value that their land loses.63

Environmentalists attack ESA § 9 for its ineffectiveness at addressing the problems associated with habitat loss. Only a few of the numerous ways that species lose habitat are prohibited by ESA § 9's "taking" provision.64 Furthermore, environmentalists recognize ESA § 9's questionable incentive structure. They argue that the faulty regulatory framework actually creates further harm to endangered species by implicitly encouraging property owners to destroy their habitat or even to take their lives. For this reason, they argue that ESA § 9 is not effective and that it actually works against the purposes of the ESA.

Amidst the clamor of ESA § 9's critics has emerged a consensus: this part of the ESA needs revision. Yet, consensus regarding the issue of how to revise ESA § 9 has yet to emerge. However, support for so-called market approaches is growing among both land rights advocates and environmentalists. Such approaches, claim individuals from both factions, will create an incentive structure that will placate landowners by providing them with something in return for their conservation efforts, yet will also make ESA § 9 more effective by increasing the amount of land allocated to endangered species preservation.

Advocates of market approaches point to other areas of environmental law in which markets have allegedly strengthened the resolve of private-sector entities to follow the laws, thereby strengthening the effectiveness of the laws under consideration. The classic case is the Clean Air Act Amendments of 1990.65 Whereas the original Clean Air Act (CAA) set up rigid emissions standards that factories and other polluters were forced to meet, the 1990 Amendments set up a market for emissions credits that polluters could buy and sell from one another.66 The emergence of this market permitted companies that were able to inexpensively reduce [30 ELR 10725] their pollution to sell to other companies the additional credits that pollution reduction would save. Consequently, the 1990 Amendments provided firms with an incentive to reduce pollution even after they had achieved compliance with the law. Any company that could reduce pollution for less than the price for which it could sell its emissions credits would augment its bottom line by spending money to pollute less.67 In this way, supporters argued, permitting firms to follow the profit motive would lead to a lower level of total pollution than would requiring the same firms to adhere to a rigidly structured administrative regulation.68

Some parties have extended this logic to the protection of endangered species and have advocated the creation of a similar market for endangered species.69 They propose that free trade in endangered species is the best method to ensure their survival. Consider, for example, the following excerpt from a Senate Report on the Endangered Species Conservation Act of 196970

From a pragmatic point of view, the protection of an endangered species of wildlife with some commercial value may permit the regeneration of that species to a level where controlled exploitation of that species can be resumed. In such a case businessmen may profit from the trading and marketing of that species for an indefinite number of years, where otherwise it would have been completely eliminated from commercial channels in a very brief span of time.71

Permitting free trade in endangered species will provide those who own the species with the incentive to take good care of them, according to this logic.72

Despite the "common sense" sound of such arguments, they are made very rarely. They seem to offer greater promise on blackboards where human motivation and institutional structures can be assumed, such that market forces can play themselves out in salutary form. But the idea of protecting endangered species so that they can be harvested by eager "buyers" of that service is a strong enough paradox that few policy analysts take such proposals seriously.

Hence, most calls for a "market approach" to endangered species conservation do not involve instituting actual markets where endangered species can be bought and sold. Nonetheless, they are premised upon many of the same foundations that undergird the championing of actual markets as a mechanism for determining relative resource values.

The unifying thread in any market approach to environmental policy is the belief that the optimal way to determine what alternative course of action is appropriate is to encourage the calculation of self-interest by two contending interests, one who possesses the environmental resources and the other who wishes to possess them.73 The resulting terms of trade, the emergent number and quality of species, are presumed to be the best society can do in terms of maximizing its financial well-being.

Each of these calculations by contending, atomistic rational agents is assumed to be based on a careful and fully informed weighing of monetary incentives. These calculations, though dependent on a rich array of aleatory factors that enrich some and impoverish others, are accepted as socially proper thereby legitimizing the existing distribution of property and wealth.

While we will return to this point later, it is apposite here to point out that the actual calculations that result in market contracts do not take explicit recognition of the community's interests.74 This problem is especially important in environmental policy because the environment is largely an entity belonging to the community. To believe that the forces of supply and demand provide optimal estimates of resource value requires one to believe that the proper meaning of "society" is nothing more than the aggregation of individual preferences.75

One market approach to biodiversity preservation, the habitat conservation plan (HCP), has already found its way into the ESA. ESA § 1076 provides a list of exceptions to ESA § 9's prohibition against takings. Among these exceptions are permits issued by the Secretary that authorize "any taking otherwise prohibited by section [9(a)(1)(B) 16 USCS § 1538(a)(1)(B)] if such taking is incidental to, and not the purpose of, the carrying out of an otherwise lawful activity."77 Such permits, which were incorporated into the ESA by its 1982 Amendments,78 may be issued when a landowner desires to develop his land but discovers that doing so would likely cause harm to an endangered species by destroying the species' habitat.

The Secretary may issue a permit for "incidental take" of a species only when the landowner submits an HCP. HCPs require property owners to undertake some conservation-oriented action in return for the Secretary's issuing an [30 ELR 10726] ESA § 10 permit.79 Although this option has been available to landowners since 1982, HCPs were very rarely used until the past decade. Between 1982 and 1991, the FWS approved only 11 HCPs.80 Between 1994 and 1997, however, "the number of HCPs skyrocketed to 193,"81 and by the end of January 1998, an additional 37 HCPs had been approved.82 The increasing number of HCPs reflects the growing interest of the FWS in long-term ecosystem planning,83 as well as the desires of landowners to build their plans on a foundation of regulatory certainty.84

Candidate Conservation Agreements (CCAs) represent another instantiation of a market approach to endangered species protection. These agreements are premised on the idea that the best way to prevent a species from becoming extinct is to never let it get close to extinction. Toward that end, CCAs seek to remove "threats to the covered species so as to nullify the need to list them as threatened or endangered under the [ESA]"85 by allowing states and private-sector entities to take responsibility for protecting species that are candidates for listing. In return for entering into these agreements, landowners receive "Candidate Conservation Assurances," defined by the FWS as,

assurances provided in the [CCA] and authorized in an enhancement of survival permit for covered species, by either [the FWS or NMFS], or jointly, to a non-Federal property owner or State or local land management agency that would allow the property owner or agency to take individuals of the covered species or alter or modify habitat consistent with the levels agreed upon and specified in the Agreement, even if the covered species are eventually listed. Such assurances may apply to whole parcels, or portions thereof, of the property owner's or land management agency's property as designated in the Agreement. These assurances are dependent upon the Agreement being adequate to remove the need to list the covered species, if such actions were undertaken by other property owners similarly situated within the range of the species. The assurances are also dependent on the property owner's or land management agency's compliance with the obligations in the Agreement and in the enhancement of survival permit.86

The FWS reinstituted CCAs in 199287 and has since used them to such a high degree that some commentators have accused the FWS of using the agreements as a replacement for the ESA's provisions for listing.88

Safe harbor agreements constitute a third market approach to endangered species preservation. These agreements are another example of an incentives program using market principles. Under a Safe Harbor Agreement, the FWS agrees to "freeze" a landowner's responsibilities under the ESA if that landowner "voluntarily undertake[s] management activities on [his or her] property to enhance, restore, or maintain habitat benefiting federally listed species."89 As long as the landowner's actions do not "degrade a species' population and habitat below baseline levels,"90 the landowner may engage in actions that would normally violate ESA § 9's "take" prohibition.

This policy arose as a way to alleviate landowners' fears that if they did too good a job of maintaining acceptable habitat, additional listed species would colonize their land and thereby thwart any future development of their land.91 According to a U.S. Senate report, these fears might motivate some property owners to "destroy potential habitat in order to avoid attracting listed species . . . . [However], safe harbor agreements . . . provide some degree of certainty that [land-owners] will be able to use their property in the future consistent with the terms of the agreement."92 In this way, Safe Harbor Agreements remove the disincentive to "do too much," much like the CAA Amendments of 1990.

The Safe Harbor Policy has generated immense support from landowners.93 Today, Safe Harbor Agreements cover about 24,000 acres of land in North Carolina and about 84,000 acres in South Carolina.94 Although the Safe Harbor Policy is not currently included in the ESA, at least one ESA reauthorization bill has included a provision for such agreements.95

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A final example of a market-based reform to endangered species conservation is the FWS' recent implementation of a "No Surprises Policy." Introduced by Secretary of the Interior Bruce Babbitt in 1994,96 this policy promises landowners that if they agree to participate in an HCP, they will not be saddled with further restrictions on their land use. This policy applies regardless of future developments affecting the species' chances of surviving.97 Thus, landowners can continue with their development plans even if a species that lives on land covered by an HCP and is not listed at the inception of the HCP later should become "listed."

Babbitt's No Surprises Policy won widespread support from property owners. By freezing the responsibilities of landowners, the policy provided regulatory certainty and stability that enables them to plan how they will develop their land.98 Although the policy is not officially part of the ESA, several bills for ESA reauthorization have included "No Surprises Clauses" modeled after the Babbitt policy. For instance, the Senate bill S. 1180 in the 105th Congress99 would have required each HCP to include a No Surprises provision100 based on the following statutory subsection:

No surprises—A person who has entered into, and is in compliance with, a conservation plan under this subsection may not be required to undertake any additional mitigation measures for species covered by such plan if such measures would require the payment of additional money, or the adoption of additional use, development, or management restrictions on any land, waters, or water-related rights that would otherwise be available under the terms of the plan without the consent of the permittee.101

All these policies, it is argued, will improve upon the Act's protection of biodiversity, as well as create a regulatory apparatus less hostile to landowners. Supporters of these policies urge that HCPs, CCAs, Safe Harbor Agreements, and No Surprises all provide landowners with the market incentive to engage in actions that are beneficial to imperiled species.102 Furthermore, they argue, these policies remove the "shoot, shovel, and shut up" incentives of the ESA as it was implemented throughout the 1980s.

The underlying market logic of these arguments is clear. From the perspective of many supporters of these policies, the only legitimate associations among people are those formed voluntarily. In other words, "command-and-control" regulation103 is in all cases an invalid infringement on personal liberty and an impediment to social progress.104 Allow parties to come together on their own terms, and the agreements they strike through voluntary negotiation will yield the optimal outcome for both the interested parties and society at large. Place restrictions on people's freedom, and the inevitable drain on efficiency will retard social advancement.

Examining the model of humanity on which these policies are based further reveals the underlying market thought. Landowners, from the viewpoint of those who advocate market approaches to ESA implementation, fit the description of Rational Economic Man (a.k.a. homo economicus)—a rationally calculating, utility maximizing, atomistic creature of Enlightenment thought.105 These arguments assume that landowners are narrowly self-interested, and that they reach decisions by weighing the relative benefits and costs of different alternatives. If the economic loss of land use restrictions outweighs the potential costs of criminal punishment under the ESA, then the landowners will shoot, shovel, and shut up. Alternatively, if the cost of land use restrictions is meager compared to that of being punished, then landowners will follow the letter of the law.

The model landowner in these arguments further mirrors homo economicus in that his rational, self-interested approach to decisionmaking leads to his automatically responding to incentives. Again, if the law provides the landowner with an incentive to kill species, he'll kill species. If it creates incentives to conserve habitat, then that is what he will do.

Indeed, the descriptions of incentive-based approaches are infused with market rhetoric. Michael Bean argues: "Through [incentive-based approaches], landowners can eventually come to regard endangered species as assets and opportunities, rather than liabilities and encumbrances."106 Once a suitable incentive structure provides a landowner with such a lens, the landowner will automatically invest the proper amount of time, energy, and resources into preserving his newly recognized "asset."

This mechanistic amoral responsiveness to financial incentives is a hallmark of market thought. According to this logic, implementing market approaches to biodiversity preservation will take advantage of voluntary, nonintrusive improvements in the protection of species. By allowing individual property owners to freely contract with the FWS, the proper amount of land and other resources will be allocated to protecting endangered species. In this way, supporters of the various "market approaches" to the ESA argue, the result achieved by these market approaches will be superior to those achieved by administrative fiat.

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Implicit in their advocacy of market approaches is the belief that free exchange will make all parties better off. The market narrative tells us that two parties will agree to an exchange only when both are made better off by the exchange.107 These exchanges will continue until no one else desires to trade. Thus, we can be certain that individual happiness (or "utility," in economic parlance) will be maximized. Then axiomatically, it is at this point that the optimal trade off between land development and biodiversity preservation has been reached. Market processes will permit the expression of social preferences through private exchanges, and the inevitable result of this market process is the socially optimal level of "production" (in this case, biodiversity protection).

Part III: The Prevalence of Market Approaches in Recent American Public Policy

The extent to which we are increasingly turning to market approaches to environmental policy108 should come as no surprise. Since the 1980s, the partnership between the government and the private sector that characterized the "mixed economy" has fallen from popular favor.109 Where government was once called on to regulate the outcomes of the market, laissez-faire is the prevailing ethos today. Industries that were once heavily regulated, such as the communications and airline industries, were "deregulated" to make way for the forces of the market to work their magic.110 Throughout the 1980s and 1990s, an increasing number of tasks were given to the market, including many tasks that once belonged to the state and federal governments.111

Prisons are an apt example of the tendency to delegate public functions to private entities. As government officials watched the prison population triple and spending on prisons increase 700 percent since 1980,112 they began to search for alternatives to keep the costs down. They found the answer in privately operated prisons.113

In recent years, private prisons have become big business.114 Due to private corrections firms' promises to house inmates at only a fraction of the price that states pay,115 an increasing number of states are passing statutes granting permission for state and local authorities to contract with private companies that build and manage prisons.116 By 1997, 60,000 inmates were under the supervision of private companies,117 and a year later, the number had climbed to 74,000.118

The health care industry has also witnessed a powerful shift toward privatization. The presence of for-profit corporations in the health care industry today is so dominant that it is easy to forget that throughout the majority of this century, hospitals and other institutions within the health care industry were run by nonprofit community organizations. Citing the need to alleviate problems with use incentives under the old system, the federal and state governments began passing laws119 to permit the provision of health care services by for-profit companies and to subsidize such companies120 in the 1970s.

Since that time, privatized managed care blossomed into a huge industry. While only about 30 percent of American workers with health insurance received their coverage through a managed care organization in the late1980s, about 75 percent do today,121 and while only 26 percent of health management organization (HMO) members were enrolled in investor-owned plans in 1985, 62 percent were by 1998.122

Education is a third exemplar of the burgeoning power of market thought. Although schools have traditionally been understood as agents of society whose purpose was to further social ends,123 in recent years there has been wide-spread advocacy of permitting market forces to work on public education.

Arguments that public schools ought to function more like producers in a product market have grown increasingly common over the past three decades. The idea originated in the thought of Adam Smith,124 but was revived in the mid-1950s when Milton Friedman published an article proposing [30 ELR 10729] a voucher plan to alleviate the perceived inefficiencies of public schools.125 By exposing schools to the market force of competition, vouchers would provide a strong incentive for the schools to become more efficient and effective.126 The logic of this argument grew increasingly popular throughout the 1980s, and by the early 1990s, Milwaukee implemented the nation's first voucher program.127 Cleveland followed suit in 1996,128 and numerous school districts are currently considering voucher programs.

Should this trend be expanded even more in the environmental domain? What do we lose when we remove social deliberation from the political process to the halls of private exchange?

Part IV: Reconsidering the Market Approach

The trend toward market solutions for pressing social problems may represent a self-reinforcing cycle. The more public functions become subject to market forces, the more deeply ingrained market thought becomes on the American psyche.129 This possibility is especially likely in the United States because of the relatively extreme forms of individualism that guide our understanding of human behavior.130 Additionally, as we allocate more tasks to the private sector, we take tasks and resources away from government. As government has increasingly less to do and even less with which to do it, the public realm itself becomes less of a desirable alternative to accomplishing society's goals.131 Consequently, the more we turn to the market to solve our problems, the closer we grow to developing a parallax view preventing us from seeing any solution other than the imposition of markets as well as from seeing some of the shortcomings of the market approach.

Our cultural predilection toward individualism leads us to treat markets as if they are ordained by God.132 From such a perspective, society consists of nothing more than a group of "loosely linked individuals who view themselves as independent of collectives; are primarily motivated by their own preferences, rights, and the contracts they have established with others; give priority to personal goals over the goals of others; and emphasize rational analyses of the advantages and disadvantages to associating with others."133 Consequently, markets fit perfectly into the individualistic worldview—societal institutions that encourage us to pursue our own interests and that allocate satisfaction of these interests through competition134 seem natural to us. When we hear calls for regulation of the market, we tend to think that government is "intervening" or "getting in the way."

Although we often think of markets as if they occur naturally, they don't. For millennia, human societies existed without coordinating their economic activities according to the market metaphor.135 Nonetheless, when government steps in to correct a market failure or to guide the market's "invisible hand," its actions are often seen as "interfering" with the naturally occurring, and therefore optimal, fruits of market processes.136 According to this argument, the market is self-regulating, and thus government has no place in the economy. Indeed, this belief in a self-regulating market, similar to self-regulating systems in the natural world,137 is the cornerstone of modern laissez-faire economics.

Yet actual markets can never be self-regulating because their very existence depends on government's playing a positive role.138 If government did not set up the social and legal infrastructure that makes markets possible, the market would be unable to function. Private-property rights, perhaps the fundamental cornerstone of the market, cannot exist without legal sanction.139 Nor can a market function effectively without governmental intervention to enforce contracts. Not only is there a role for government in the market, but also the market cannot exist without some level of government "interference."

Recognizing this foundational role for government leads us to another important point often overlooked by advocates of market approaches. The market itself is not a concrete, unimorphic institution that naturally arises out of human beings' exercising their free will. The specific property rights and rules of contract that a society chooses to grant or not to grant through political deliberation determine the results of market processes.

For instance, if the United States were to alter the tax code such that the maximum income that a household could earn in a given year were $ 250,000, demand curves for a myriad of products would shift. Sales of yachts would plummet. The Rolex Company would be forced to change their budget projections due to an inevitable drop in sales. Even the demand curve for HCPs would shift—as landowners would be able to reap less financial benefit from developing their land, they would be less inclined to undertake development projects and therefore more willing to allow endangered species' habitat to stand undisturbed.

The point here is that all market approaches are premised on a prior governmental framework. They are not alternatives [30 ELR 10730] to government; they derive from prior governmental action. This perspective is significant because it forces us to ask which institutional arrangements government should establish as a framework for implementing whatever approaches are settled on as means to protect endangered species.

In the case of the market approaches to endangered species protection described earlier, changes in budget distributions within the government sector would also produce changes in how the "market" operates. Since the ESA was passed, the FWS has lacked sufficient resources to fully enforce the Act's provisions.140 This shortcoming is a key reason that the FWS decided to pursue policies such as CCAs and No Surprises. If the agency had been adequately funded, then it would have been able to offer effective protection to endangered species without granting such concessions to property owners. The increasing severity of this lack of funds has placed the FWS at a notable bargaining disadvantage in negotiations with landowners.141 As the agency's funds dwindle, it grows more and more desperate to enter into CCAs and to approve HCPs142 because these agreements give species at least some protection—more than they might receive under a weakly enforced ESA. However, this scenario is not a necessary outgrowth of some abstract "market process."143

Imagine the difference between the HCPs and CCAs that exist now, and those that would exist if the government were to allocate to endangered species preservation the amount it currently spends on defense. With such a massive budget, the FWS could enforce the ESA much more stringently, which would bolster its power position in HCP and CCA negotiations. Thus, the FWS would not agree to enter into HCP or CCA contracts unless landowners agreed to undertake more substantive conservation measures than are the current norm.

Furthermore, the FWS' larger budget and augmented bargaining position would permit it to do away with policies such as No Surprises and Safe Harbor Agreements and instead require that property owners conduct their development plans in accordance with the needs of imperiled species even as those needs grow more demanding.

The point here is not that HCPs, CCAs, No Surprises, and Safe Harbor Agreements are bad policies because they involve the government's granting concessions to private landowners, but rather that the notion of these policies as contracts reached by two parties each pursuing its own self-interest overlooks a crucial dimension of the negotiating process, namely, power.144 Furthermore, budgetary allocations within the public sector as well as across society, produce the set of power relations that determines the outcome of negotiations. Thus, the market is far from an independent entity operating apart from government. Consequently, market results have no predetermined nor uniform appearance.

Instead, the market is a multifaceted abstraction that functions as an outgrowth of democratic deliberations145—where and how we permit markets to function, so they will function. For example, passing a law permitting the sale of sex, votes, or uncles is within our realm of options. However, markets do not function in these realms because we have decided democratically that such exchanges ought to be blocked.146 Thus, we can see that markets do not arise naturally; they are sanctioned and encouraged toward certain outcomes through political processes.

Furthermore, because government creates markets via regulation of property rights, contract law, and tax policy, government also has the ability to shape the market. For this reason, we can best understand any existing market not as the market for X, but rather as a market for X. Were our definition of property rights, our tax code, or our enforcement of private contracts to change, the demand curves for Product X would change as well, thus creating a different market with different equillibria and different results.

Part V: Conclusion

Despite the enthusiasm of environmental practitioners, academics, and property owners for "market approaches" to endangered species conservation, programs such as HCPs, CCAs, Safe Harbor Agreements, and No Surprises must be reviewed. Starting by enumerating our goals for biodiversity preservation and then comparing the results of these policies to those goals would provide us with clear direction for future reform of the ESA. However, throughout the dialogue on the proper approach to endangered species protection, it is crucial that we all keep certain market attributes in mind.

First, the market is not an institution that stands beyond the realm of government; instead, it is only a policy device. Not only does government have the capacity to shape the outcomes of market processes, but its legal and economic infrastructure necessarily shape the way markets perform. Thus, we do not face an alternative between "command-and-control" regulation on one hand, and "the market approach" on the other. We must choose from among the various forms of regulation, including alternative market constellations, available to us.

Furthermore, advocating "the market approach" means almost nothing. Which market do you advocate? The abstraction that we label "the market" has many faces, and consequently there are many different market approaches. All of these market approaches, however, have in common the fact that the results they generate are a function of political decisionmaking regarding property rights, contracts, and blocked exchanges. Thus, HCPs, CCAs, or any other policy should be supported or opposed on the basis of how well its results match our goals, not merely because it causes [30 ELR 10731] our society to behave more like a market. Furthermore, when such policies are in place, we should not accept their outcomes as the inevitable result of market processes.

Instead, we should constantly reevaluate their performance, and if the results deviate from our goals, then we should pursue different policy alternatives. Only after we examine the relative merits and demerits of how a particular market approach functions should we decide whether the results of that market should be deemed optimal for the valuable task of protecting endangered species.

1. JOHN McMURTRY, UNEQUAL FREEDOMS: THE GLOBAL MARKET AS AN ETHICAL SYSTEM 10 (1998).

2. See Oliver A. Houck, Symposium on Clinton's New Land Policies: Reflections on the Endangered Species Act, 25 ENVTL. L. 689, 691 (1995).

3. 16 U.S.C. §§ 1531-1544, ELR STAT. ESA §§ 2-18.

4. Daniel J. Rohlf, Pacific Salmon: There's Something Fishy Going on Here: A Critique of the National Marine Fisheries Service's Definition of Species Under the Endangered Species Act, 24 ENVTL, L. 617, 670 (1994).

5. See generally Nancie G. Marzulla, The Property Rights Movement: How It Began and Where It Is Headed, in LAND RIGHTS: THE 1990S' PROPERTY RIGHTS REBELLION 1-30 (Bruce Yandle, ed., 1995).

6. See Shi-Ling Hsu, The Potential and the Pitfalls of Habitat Conservation Planning Under the Endangered Species Act, 29 ELR 10592, 10593 (Oct. 1999).

7. See M. Neil Browne & Nancy K. Kubasek, A Communitarian Green Space Between Market and Political Rhetoric About Environmental Law, 37 AM. BUS. L.J. 127, 164 (1999).

8. See DEBORAH STONE, POLICY PARADOX: THE ART OF POLITICAL DECISION MAKING 17-34 (1997) for an enlightening discussion of the contrast between the "market model" of society and the "political model" of society.

9. See Nancy K. Kubasek et al., It Takes an Entire Village to Protect an Endangered Species: Individualism, Overlapping Spheres, and the Endangered Species Act, 10 FORDHAM ENVTL. L.J. 155, 178-83 (1999).

10. See Daniel A. Hall, Symposium on Habitat Conservation Plans: Using Habitat Conservation Plans to Implement the Endangered Species Act in Pacific Coast Forests: Common Problems and Promising Precedents. 27 ENVTL. L. 803, 804 (1997).

11. See David S. Wilcove et al., Quantifying Threats to Imperiled Species in the United States, 8 BIOSCIENCE 607 (1998).

12. Hsu, supra note 6, at 10594 (citing DAVID S. WILCOVE ET AL., REBUILDING THE ARK: TOWARD A MORE EFFECTIVE ENDANGERED SPECIES ACT FOR PRIVATE LAND (1996)).

13. The Takings Clause states that private property shall not "be taken for public use, without just compensation." U.S. CONST. amend. V.

14. 505 U.S. 1003, 22 ELR 21104 (1992). In the Lucas case, the Supreme Court concluded that the South Carolina Beachfront Management Act's restrictions on beachfront development denied Lucas of all economically beneficial use of his land. More significantly, the Court developed a rule that when a regulation has such an effect on the value of a property owner's land, she must be compensated for the full amount of the regulatory taking unless the regulation is justified by the state's common law of property or nuisance. Id. at 1027-29, 22 ELR at 21110-11. And in the recent case of City of Monterey v. Del Monte Dunes at Monterey, Ltd., 526 U.S. 687, 29 ELR 21133 (1999), not only did the Supreme Court reaffirm this standard, but it also found that the plaintiffs had a right to have a jury determine whether they had been denied all economically viable uses of their land.

15. 512 U.S. 374, 24 ELR 21083 (1994). In its decision in Dolan, the Court established a two-part inquiry to determine whether the required relationship between permit conditions and expected effects of proposed development had been met. First, the Court looked for the "essential nexus" between the conditions required for issuance of the permit and the legitimate state interest in enacting these requirements. Id. at 386, 24 ELR at 21086. Next, it asked whether there exists a "rough proportionality" between the degree of the required exaction and the proposed project. Id. at 388, 24 ELR at 21086.

16. This assault has taken place in the popular press, in the halls of Congress, and in debates over the U.S. Fish and Wildlife Service (FWS) policy rather than in the courts. See Murray D. Feldman & Michael J. Brennan, Judicial Application of the Endangered Species Act and the Implications for Takings of Protected Species and Private Property, 26 ELR 10646, 10652 (Dec. 1996). See also id. at 10652-53 (reviewing court cases in which private property owners have sued the FWS alleging a violation of the Takings Clause). For an example of a proposed ESA reauthorization bill that would have required the FWS to compensate landowners for any drop in property values caused by obeying the ESA, see H.R. 2275, 104th Cong. (1995).

17. For a discussion of the recent property rights assault on federal wetlands preservation laws, see Browne & Kubasek, supra note 7, at 154-60.

18. See the Endangered Species Preservation Act of 1966, codified at 16 U.S.C.A. § 668aa (repealed 1973).

19. 16 U.S.C §§ 1531-1544, ELR STAT. ESA §§ 2-18.

20. Id. § 1531(a), ELR STAT. ESA § 2(a).

21. Id. § 1531(a)(3), ELR STAT. ESA § 2(a)(3).

22. Id. § 1533, ELR STAT. ESA § 4.

23. The Secretary of the Interior is charged with listing at-risk terrestrial species and acts through the FWS. Id. at § 1532(15), ELR STAT. ESA § 3; 5 U.S.C. § 903.

24. The Secretary of Commerce is responsible for listing imperiled aquatic species. To do so, the Secretary acts through the National Marine Fisheries Service (NMFS), Id.

25. 16 U.S.C § 1533(a)(1), ELR STAT. ESA § 4(a)(1). These are the only criteria that the appropriate Secretary is permitted to consider when making a determination of a species' status.

26. Id. § 1532(6), ELR STAT. ESA § 3(6).

27. Id. § 1532(20), ELR STAT. ESA § 3(20).

28. Id. § 1536, ELR STAT. ESA § 7.

29. Id. § 1536(a)(2), ELR STAT. ESA § 7(a)(2).

30. 50 C.F.R. § 402.02.

31. This process is known as informal consultation. Kubasek et al., supra note 9, at 191.

32. A biological assessment is defined as, "information prepared by or under the direction of the federal agency concerning listed and proposed species and designated and proposed critical habitat that may be present in the action area and the evaluation of potential effects [of] the action on such species and habitat." 50 C.F.R. § 402.02.

33. 16 U.S.C. § 1536(c), ELR STAT. ESA § 7(c).

34. Id. § 1536(b), ELR STAT. ESA § 7(b).

35. 50 C.F.R. § 402.02.

36. See James H. Bolin Jr., Of Razorbacks and Reservoirs: The Endangered Species Act's Protection of Endangered Colorado River Basin Fish, 11 PACE ENVTL. L. REV. 35, 45 (1993).

37. Chris Woodley, The Sonoran Pronghorn: The Air Force's Strongest Adversary, 6 DICK. J. ENVTL. L. POL'Y 299 (1997).

38. See Barton H. Thompson Jr., The Endangered Species Act: A Case Study in Takings & Incentives, 49 STAN. L. REV. 305, 314-15 (reviewing the controversy surrounding ESA § 9).

39. 16 U.S.C. § 1538, ELR STAT. ESA § 9.

40. Id. § 1538(a)(1)(B), ELR STAT. ESA § 9(a)(1)(B).

41. Id. § 1532(19), ELR STAT. ESA § 3(19).

42. Id. §§ 1533(d), 1538(a)(1)(G), ELR STAT. ESA §§ 4(d), 9(a)(1)(G).

43. See Hsu, supra note 6, at 10594.

44. The ESA provides several methods of enforcing the "taking" prohibition. The government may pursue criminal or civil penalties against persons accused of violating ESA § 9. Id. § 1540(a)-(b), ELR STAT. ESA § 11(a)-(b). Additionally, ESA § 11(b) provides for actions by either government or private citizens for injunctive relief against alleged violators. Id. §§ 1540(e)(6), 1540(g), ELR STAT. ESA §§ 11(e)(6), 11(g). Most suits regarding an alleged violation of ESA § 9 have been brought as suits for injunctive relief by private parties. Steven P. Quarles et al., Sweet Home and the Narrowing of Wildlife "Take" Under Section 9 of the Endangered Species Act, 26 ELR 10003, 10004 (Jan. 1996).

45. 50 C.F.R. § 17.3.

46. See Bean, infra note 58, at 10702. Despite the current focus on the definition of "harm," the FWS' definition of harassment could be equally frustrating to property owners. The FWS stated:

Harass in the definition of "take" in the [Endangered Species] Act means an intentional or negligent act or omission which creates the likelihood of injury to wildlife by annoying it to such an extent as to significantly disrupt normal behavioral patterns which include, but are not limited to, breeding, feeding, or sheltering. . . .

50 C.F.R. § 17.3. The extent to which this definition will haunt property owners in the future hinges on how the word "intentional" will be construed. If the FWS construes it to prohibit only those actions intended to injure wildlife, then it will pose little threat to landowners. On the other hand, if the FWS requires only that the act itself (e.g., clearing out a wooded area to build homes or a new shopping mall) is "intentional" and does not require intent to injure wildlife, then landowners could face hurdles beyond those brought by the definition of "harm."

47. Babbitt v. Sweet Home Communities for a Great Or., 515 U.S. 687, 691, 25 ELR 21194 (1995) (citing 40 Fed. Reg. 44412, 44416 (1975)).

48. 515 U.S. 687, 25 ELR 21194 (1995).

49. The plaintiffs in Sweet Home were small landowners, logging companies, and families dependent on the forest products industries in the Pacific Northwest and in the Southeast, and organizations that represent their interests. Id. at 692, 25 ELR at 21195.

50. See Quarles et al., supra note 44, at 10004.

51. Sweet Home Chapter of Communities for a Great Or. v. Lujan, 806 F. Supp. 279, 23 ELR 21151 (D.D.C. 1992).

52. Sweet Home Chapter of Communities for a Great Or. v. Lujan, 17 F.3d 1463, 24 ELR 20680 (D.C. Cir. 1994), reh'g en banc denied with accompanying opinions, 30 F.3d 190, 24 ELR 21470 (D.C. Cir. 1994).

53. 515 U.S. at 703, 25 ELR at 21198. The Court stated: "We need not decide whether the statutory definition of "take" compels the Secretary's interpretation of 'harm,' because our conclusions that Congress did not unambiguously manifest its intent to adopt respondents' view and that the Secretary's interpretation is reasonable suffice to decide this case." Id.

54. 467 U.S. 837, 14 ELR 20507 (1984).

55. Feldman & Brennan, supra note 16, at 10649 (quoting Sweet Home, 515 S. Ct. at 703, 25 ELR at 21199.

56. See generally Quarles et al., supra note 44. The authors argue that because the Court relied on a narrow definition of "harm," the Sweet Home decision will narrow the definition of "take" such that only those habitat modifications that can be shown to actually have caused the death or injury of a member of a protected species will be construed to violate § 9.

57. For additional cases in which the courts have attempted to determine how the FWS' "harm" regulation applies to private land, see, e.g., Palila v. Hawaii Dep't of Land & Natural Resources, 852 F.2d 1106, 18 ELR 21199 (9th Cir. 1988); Sierra Club v. Yeutter, 926 F.2d 429, 21 ELR 20755 (5th Cir. 1991); American Bald Eagle v. Bhatti, 9 F.3d 163, 24 ELR 20173 (1st Cir. 1993); Forest Conservation Council v. Rosboro Lumber Co., 50 F.3d 781, 25 ELR 20706 (9th Cir. 1995); Marbled Murrelet v. Babbitt, 83 F.3d 1060, 26 ELR 20995 (9th Cir. 1996).

58. See Michael J. Bean, The Endangered Species Act and Private Land: Four Lessons Learned From the Past Quarter Century, 28 ELR 10701, 10706 (Dec. 1998). See also id. at 10702.

59. See id. NATIONAL ASS'N OF HOME BUILDERS, DEVELOPER'S GUIDE TO ENDANGERED SPECIES REGULATION (1996).

60. See Robert H. Nelson, Shoot, Shovel, and Shut Up, FORBES, Dec. 4, 1995, at 82.

61. Hsu, supra note 6, at 10596.

62. For a review of such arguments, see generally Blaine I. Green, The Endangered Species Act and Fifth Amendment Takings: Constitutional Limits of Species Protection, 15 YALE J. ON REG. 329 (1998).

63. See Feldman & Brennan, supra note 16.

64. See Bean, supra note 58, at 10704.

65. Pub. L. No. 101-549, tit. IV, 104 Stat. 2399 (1990) (codified at 42 U.S.C §§ 7401-7671q, ELR STAT. CAA §§ 101-618).

66. Richard H. Pildes & Cass R. Sunstein, Reinventing the Regulatory State, 62 U. CHL L. REV. I, 119 (1995).

67. See Jeffrey M. Hirsch, Emissions Allowance Trading Under the Clean Air Act: A Model for Future Environmental Regulations?, 7 N.Y.U. ENVTL. L.J. 352, 354-357(1999).

68. Note, however, that this argument says nothing about the distribution of pollution. If the firms who purchase emissions credits (and thus pollute more) are concentrated in a particular geographic area or near a particular socioeconomic or ethnic population segment, then these communities suffer the brunt of the costs of lowering total pollution.

69. See, e.g., Jonathan Scott Mile, Doing the Right Thing for Profit: Markets, Trade, and Advancing Environmental Protection, 44 DRAKE L. REV. 611, 628-29 (1996) (noting the success of permitting markets for ivory in preserving elephants).

70. Pub. L. No. 91-135, 83 Stat. 275.

71. S. REP. NO. 91-526, at 3 (1969), quoted in National Ass'n of Home Builders v. Babbitt, 130 F.3d 1041, 28 ELR 20403 (D.C. Cir. 1997).

72. See Terry L. Anderson & Donald R. Leal, The Rise of the Enviro-Capitalists, WALL ST. J., Aug. 26, 1997, at A16.

73. See ELIZABETH ANDERSON, VALUE IN ETHICS AND ECONOMICS 146 (1993) for an analysis of the moral emptiness of basing resource allocation on market norms that make no distinctions among urgent needs and mere tastes. The desires of the bargaining parties are accepted as being socially desirable with no forum whatsoever provided for deliberating about the quality of the desires for the community of which they are a constitutive component.

74. See MICHEL ALBERT, CAPITALISM VS. CAPITALISM (1993) for a discussion suggesting that market calculations are not even respectful of the interests of the buyers and sellers themselves, except in a very short-term sense of well being.

75. That these preferences are articulated as if everything has a monetary value commensurable with alternative uses of resources means that any important human dimension that is not smoothly monetized is disadvantaged in the calculations. See HANNAH ARENDT, THE HUMAN CONDITION 165 (1974) for a well-developed argument that in a commercial society everything becomes little but an exchange value, a commodity.

76. 16 U.S.C. § 1539, ELR STAT. ESA § 10.

77. Id. § 1539(a)(1)(B), ELR STAT. ESA § 10(a)(1)(B).

78. Endangered Species Act Amendments of 1982, Pub. L. No. 97-304, 96 Stat. 1411, 1422 (codified at 16 U.S.C. § 1539, ELR STAT. ESA § 10).

79. 16 U.S.C. § 1539(a)(2)(A), ELR STAT. ESA § 10(a)(2)(A), states:

No permit may be issued by the Secretary authorizing any taking referred to in paragraph (1)(B) unless the applicant therefor submits to the Secretary a conservation plan that specifies—

(i) the impact which will likely result from such taking;

(ii) what steps the applicant will take to minimize and mitigate such impacts, and the funding that will be available to implement such steps;

(iii) what alternative actions to such taking the applicant considered and the reasons why such alternatives are not being utilized; and

(iv) such other measures that the Secretary may require as being necessary and appropriate for purposes of the plan.

80. See Eric Fisher, Habitat Conservation Planning Under the Endangered Species Act: No Surprises & the Quest for Certainty, 67 U. COLO. L. REV. 371, 373 (1996).

81. Hsu, supra note 6, at 10594.

82. Id.

83. See Feldman & Brennan, supra note 16, at 10648-49 (noting the change in the FWS' implementation of the ESA from saving one species at a time toward a holistic approach to ecosystem management).

84. See Amy C. Derry, No Surprises After Winstar: Contractual Certainty and Habitat Conservation Planning Under the Endangered Species Act, 17 VA. ENVTL. L.J. 357, 379 (1998).

85. Announcement of Draft Policy for Candidate Conservation Agreements. 62 Fed. Reg. 32183, 32185 (June 12, 1997).

86. Id. at 32186.

87. CCAs were introduced in the early 1980s, but were officially phased out in 1985. See Martha F. Phelps, Candidate Conservation Agreements Under the Endangered Species Act: Prospects and Perils of an Administrative Experiment, 25 B.C. ENVTL. AFF. L. REV. 175, 187 (1997).

88. See id.

89. Safe Harbor Agreements and Candidate Conservation Agreements With Assurances, 64 Fed. Reg. 32706, 32707 (June 17, 1999).

90. J.B. Ruhl, The Endangered Species Act and Private Property: A Matter of Timing and Location, 8 CORNELL J.L. & PUB. POL'Y 37, 49 (1998) (citing Safe Harbor Agreements and Candidate Conservation Agreements, 62 Fed. Reg. 32289, 32191-92 (June 12, 1997) (amending 50 C.F.R. § 17.22)).

91. See Hsu, supra note 6, at 10599.

92. S. REP. NO. 105-128, at 35 (1997).

93. See Bean, supra note 58, at 10706.

94. Id. at 10707.

95. See S. 1180, 105th Cong. § 5 (1997). The bill provides:

The Secretary may enter into agreements with non-Federal persons to benefit the conservation of endangered species or threatened species by creating, restoring, or improving habitat or by maintaining currently unoccupied habitat for endangered species or threatened species. Under an agreement, the Secretary shall permit the person to take endangered species or threatened species included under the agreement on lands or waters that are subject to the agreement if the taking is incidental to, and not the purpose of, the carrying out of an otherwise lawful activity, except that the Secretary may not permit through an agreement any incidental taking below the baseline requirement[.]

Id.

96. Fisher, supra note 80, at 374-375.

97. See S. REP. NO. 105-128, at 59-60 (1997).

98. See Sharon R. Siegel, Applying the Habitat Conservation Model to Fisheries Management: A Proposal for a Modified Fisheries Planning Requirement, 25 COLUM. J. ENVTL. L. 141, 204 (2000).

99. Sen. Dirk Kempthorne (R-Idaho) sponsored S. 1180, which was introduced on September 16, 1997. 143 CONG. REC. S9422 (1997).

100. S. 1180, 105th Cong. § 5(1) (1997).

101. Id. § 5(ii).

102. See, e.g., Bean, supra note 58, at 10708 (arguing that although the HCP provision in ESA § 10 appears to weaken the ESA, it actually strengthened the Act by providing the FWS with the ability to influence land use decisions).

103. See, e.g., Michael E. Kraft, Making Decisions About Environmental Policy, in BETTER ENVIRONMENTAL DECISIONS: STRATEGIES FOR GOVERNMENTS, BUSINESSES, AND COMMUNITIES 15 (Ken Sexton et al. eds., 1999) (noting that "'command-and-control' regulation increasingly is being supplemented with the use of market incentives [and other alternatives]").

104. See ROBERT KUTTNER, EVERYTHING FOR SALE: THE VIRTUES AND LIMITS OF MARKETS 320 (1996) (noting economists' blanket preference for incentive-based regulation over "command-and-control" regulation).

105. See, e.g., JULIE A. NELSON, FEMINISM, OBJECTIVITY, AND ECONOMICS 31 (1996).

106. Bean, supra note 58, at 10708 (italics added).

107. See MILTON FRIEDMAN & ROSE FRIEDMAN, FREE TO CHOOSE: A PERSONAL STATEMENT 13 (1980).

108. See generally RICHARD F. KOSOBUD & JENNIFER M. ZIMMERMAN, EDS., MARKET-BASED APPROACHES TO ENVIRONMENTAL POLICY: REGULATORY INNOVATIONS TO THE FORE (1997); THOMAS STERNER, ED., THE MARKET AND THE ENVIRONMENT; THE EFFECTIVENESS OF MARKET-BASED POLICY INSTRUMENTS FOR ENVIRONMENTAL REFORM (1999).

109. See KUTTNER, supra note 104, at 29-38.

110. See generally ROBERT F. HIMMELBERG, ED., REGULATORY ISSUES SINCE 1964: THE RISE OF THE DEREGULATION MOVEMENT (1994).

111. See Nancy Ehrenreich, A Trend?: The Progressive Potential in Privatization, 73 DENV. U. L. REV. 1235-36 (1996) ("Antigovernment sentiment is running high in the United States today . . . . No one says that more government is better; privatization is the pet solution of the day.").

112. Oliver Barber, Lock-Up for Government Contractor Impunity: Private Prisons Denied Section 1983 Immunity, 71 TEMP. L. REV. 417 (1998).

113. See Alyssa Van Duizend, Should Qualified Immunity Be Privatized? The Effect of Richardson v. McKnight on Prison Privatization and the Applicability of Qualified Immunity Under 42 U.S.C. § 1983, 30 CONN. L. REV. 1481, 1482 (1998) (labeling the privatization of public functions "a governmental necessity").

114. "Today, twenty-one companies generate more than $ 250 million in annual revenues, and manage eighty-eight prisons under government contracts." See Barber, supra note 112, at 418.

115. According to Corrections Corporation of America President David Myers, private companies can save up to 15 percent by building prisons in ways that require less staff. See Field of . . . Dreams?, CAL. J., Feb. 1, 1999 (accessed via Lexis-Nexis Academic Universe, online subscription database—no page numbers given).

116. See Van Duizend, supra note 113, at 1483 (noting that currently, at least 22 states have passed such laws).

117. See Matt Bai, On the Block, NEWSWEEK, Aug. 4, 1997, at 60.

118. See Barber, supra note 112, at 418.

119. See, e.g., the federal HMO Act, which was passed in 1973 and is codified at 42 U.S.C. § 300 et seq.

120. These laws established little regulation and left oversight of the industry, for the most part, to the market. Alice A. Noble & Troyen A. Brennan. The Stages of Managed Care Regulation: Developing Better Rules, 24 J. HEALTH POL., POL'Y & L. 1275, 1277-78(1999).

121. See id. at 1275.

122. See Worse Quality Medical Care in For-Profit HMOs Than in Not-For-Profits, HEALTH LETTER, Aug. 1999, at 11.

123. See Henry M. Levin, The Economics of Educational Choice, in MARKET APPROACHES TO EDUCATION: VOUCHERS AND SCHOOL CHOICE 26-27 (Elchanan Cohn ed., 1997). According to Levin, public schools fulfill the following social functions: "preservation and support [of] the fundamental political, social, and economic institutions that comprise [democratic] societies"; provision of common knowledge and values necessary for effective democracy; generation of equal opportunities for the disadvantaged; contribution to economic growth; and provision of the foundational knowledge necessary for scientific progress. Id.

124. See id. at 30.

125. Id. at 29.

126. See, e.g., Gary S. Becker, Public Schools Need a Little Peer Pressure, BUS. WK., Nov. 18, 1996, at 30; Milton Friedman, Public Schools: Make Them Private, 5 EDUC. ECON. 341-44 (1997).

127. For a thorough review of Milwaukee's experience with vouchers, see JOHN F. WITTE, THE MARKET APPROACH TO EDUCATION: AN ANALYSIS OF AMERICA'S FIRST VOUCHER PROGRAM (2000).

128. Mark Walsh, For First Time, Students Use Vouchers for Religious Schools, EDUC. WK., Sept. 4, 1996, at 18-19.

129. See JOHN McMURTRY, UNEQUAL FREEDOMS: THE GLOBAL MARKET AS AN ETHICAL SYSTEM 2-33 (1998) (arguing that we are trapped within the boundaries of market logic).

130. See Kubasek et al. supra note 9, at 157-61 for an analysis of the historical and philosophical devotion of Americans to a radical form of individualism.

131. See KUTTNER, supra note 104, at 7.

132. See McMURTRY, supra note 129, at 60.

133. HARRY C. TRIANDIS, INDIVIDUALISM & COLLECTIVISM 2 (1995).

134. See ROBERT L. HEILBRONER, THE WORLDLY PHILOSOPHERS: THE LIVES, TIMES, AND IDEAS OF THE GREAT ECONOMIC THINKERS 11 (1953) for a discussion of the importance of competition in market thought.

135. See generally KARL POLANYI, THE GREAT TRANSFORMATION (1944).

136. See, e.g., Gregory B. Christainsen & Robert H. Haveman, Public Regulations and the Slowdown in Productivity Growth, 71 AM. ECON. REV. 320 (arguing against regulation, which they define as "interventions into market processes"); ROBERT LEONE, WHO PROFITS: WINNERS, LOSERS, AND GOVERNMENT REGULATION 117 (1986) (arguing that all government "intervention" in the market is political in nature).

137. See KUTTNER, supra note 104, at 17.

138. See CASS R. SUNSTEIN, FREE MARKETS AND SOCIAL JUSTICE 4-5 (1997).

139. Id. at 203-04, 384-85.

140. See Nancy Kubasek et al., The Endangered Species Act: Time for a New Approach, 24 ENVTL. L. 329-53 (1994).

141. See Hsu, supra note 6, at 10596.

142. See id. at 10596-97 (noting criticisms directed toward the FWS for its excessive generosity when reviewing HCP proposals).

143. See ROBERTO UNGER, LAW IN MODERN SOCIETY 10 (1976) for a discussion of the irrelevance of the market abstraction for policy.

144. See Hamish Stewart, A Critique of Instrumental Reason in Economics, 11 ECON. & PHIL. 73 (1995) for an explanation of the naivete of assuming that preferences themselves are not created by the very market institutions that are said to be responsive to preferences. His point is that power relationships are crucial to shaping particular market outcomes.

145. See generally HENRY TAM, COMMUNITARIANISM: A NEW AGENDA FOR POLITICS AND CITIZENSHIP (1998) for a communitarian alternative to the traditional dichotomization between market and governmental approaches to problems.

146. See generally MICHAEL WALZER, SPHERES OF JUSTICE (1983).

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