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02.06.2017 Legal News

U.S. Fish and Wildlife Service Finalizes ESA Compensatory Mitigation Policy

We reported in our April 2016 edition that the U.S. Fish and Wildlife Service (“FWS”) and the National Marine Fisheries Service (“NMFS”) had recently updated certain Endangered Species Act (“ESA”) regulations and proposed policy changes for ESA compensatory mitigation.  FWS has since finalized its proposed compensatory mitigation policy, providing the first comprehensive policy by FWS on this subject since the ESA was first enacted.  The new policy addresses mitigation required of ESA permittees, species conservation banking, use of in-lieu fee programs to offset species impacts, and other framework aspects for compensatory mitigation.  The policy also sets the marker for how other federal agencies engaged in project permitting and review will address species compensatory mitigation in setting conditions as part of those agencies’ actions and approvals.

In pursuit of a “net gain or, at minimum, no net loss” approach to species protection, the final policy incorporates “landscape-scale” compensatory mitigation.  This approach is designed to broaden the scope of compensatory mitigation to provide greater reliability and efficiencies in species loss mitigation.  FWS intends the new policy to align with several Presidential Memoranda, orders of the Secretary of Interior and other FWS guidance addressing species loss mitigation.  The final policy also integrates relevant legal authorities addressing species loss mitigation during development activities. 

A few key concepts are worth noting.  Consistent with current Department of the Interior guidance, FWS defines “compensatory mitigation” as compensation addressing “remaining unavoidable impacts after all appropriate and practical avoidance and minimization measures have been applied, by replacing or providing substitute resources or environments through the restoration, establishment, enhancement, or preservation of resources and their values, services, and functions.”  The policy therefore reiterates the push for avoidance and minimization of adverse impacts before compensatory mitigation should be used, akin to mitigation for impacts to wetlands.  In the final policy publication, FWS sought to address a number of comments offered during the public comment period for the draft policy and made several changes, in part supplementing the description of its asserted legal authority for requiring (or even allowing) compensatory mitigation.  However, many key aspects of implementation that were included in the proposed policy were struck from the final policy and will instead be folded into implementation guidance to be issued later by the agency.  This has left some wondering about the mechanics of how the policy will really work in practice.

It is important to remember that this is a final policy, not formal regulation, despite mandatory-style language throughout the document.  There also are concerns about whether the policy exceeds FWS’s authority under the ESA and related program regulations. With the change in Administration, and with so much of the final policy prompted by and derived from Presidential memoranda, Secretarial orders, and other agency guidance, it remains to be seen whether, or for how long, the final guidance will survive or whether a very different approach to species compensatory mitigation will follow.

81 Fed. Reg. 95316 (Dec. 27, 2016).