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The President’s Environmental “Net Benefit Goal” – The White House Sets a New Approach to Mitigation

November 16, 2015

On November 3, 2015, President Obama issued a memorandum to the Secretaries of Defense, Interior and Agriculture, and the Administrators of the Environmental Protection Agency and National Oceanic and Atmospheric Administration directing them to revise their existing policies to incorporate a new “net benefit goal” for mitigating impacts from natural resource use.[1] The policy establishes “federal principles for mitigation” incorporating the “net benefit goal.” At a minimum, the President’s memorandum sets a “no net loss” goal for natural resources the agencies manage that are important, scarce, or sensitive, or wherever doing so is consistent with agency mission and established natural resource objectives.”[2] These principles are to be applied consistently across agencies “to the extent permitted by each agency’s legal authorities, in addition to any principles that are specific to the mission or authorities of individual agencies.”[3] Because each of the five agencies in fact has varying statutory authorities and standards, it remains to be seen whether this goal of consistency can be achieved.

While the mitigation goal established in the White House Policy may not be per se new, the implementation of the “net benefit goal” will raise the bar for future project development. The policy shift also points the agencies toward landscape-scale, advance conservation efforts, and the continued “zoning out” of certain areas for development. At bottom, the affirmative goal in the new policy signals a new approach to authorizing land and water-impacting activities, particularly on lands managed by the federal government.

The New Policy

The White House instructs the agencies to develop individual policies incorporating this new “net benefit” standard to avoid, minimize and compensate for natural resource losses.[4] Along with the “net benefit goal” and mitigation hierarchy, the President’s memorandum underscores an emphasis on landscape-scale planning, habitat mitigation banks, and advance conservation measures.[5]

The agencies are to “adopt a clear and consistent approach” for incorporating the mitigation hierarchy (i.e. avoid, minimize, and compensate).[6] In addition to incorporating the net benefit goal, agency policies should take advantage of available large-scale plans and analysis, and give preference to “advance compensation mechanisms that are likely to achieve clearly defined environmental performance standards prior to the harmful impacts of a project.”[7] The policy also requires agencies to consider environmental analysis prepared by third parties including non-governmental agencies. The new policies are to be completed generally within one-to-two years after the date of the memorandum.[8]

Three areas illustrate how the White House Memorandum runs up against and anticipates the limitations of existing agency legal authority. First, section 4(d) directs each federal natural resource trustee agency to develop guidance describing “the considerations for evaluating whether, where, and when restoration banking or advance restoration projects would be appropriate.” But section 5(c) cautions that this direction is “inapplicable to the litigation or settlement of natural resource damage claims.” This exemption appears to recognize that CERCLA limits natural resource trustees to spending recovered damages only “to restore, replace, or acquire the equivalent of “ damaged or lost natural resources, rather than aiming for a new net benefit to such resources.[9] The policy seems to be directed toward early identification of advance restoration projects to influence natural resource damage assessments in advance of the formal CERCLA process.

Second, federal lands managed by the Bureau of Land Management (“BLM”) under the Federal Land Policy and Management Act (“FLPMA”) are subject to a similar neutral rather than affirmative mitigation standard. FLPMA requires BLM to “to prevent unnecessary or undue degradation of the [public] lands.”[10] BLM’s authority therefore is to impose conditions on uses sufficient to “prevent degradation unnecessary to, or undue in proportion to,” the authorized use.[11] This “do no harm” standard appears to be directly at odds with the new affirmative “net benefit goal.”

Third, section 4(c) of the memorandum directs the U.S. Fish and Wildlife Service (“FWS”) to finalize a policy that applies to compensatory mitigation associated with its responsibilities under the Endangered Species Act (“ESA”). The FWS policy is to “provide clarity to and predictability for agencies” and other stakeholders that “take action to conserve species in advance of potential future listing” under the ESA.[12] This directive raises the question of whether the Administration is seeking to avoid a repeat of the legal issue that led to vacatur of the ESA listing for the lesser prairie chicken. See Permian Basin Ass’n, et al. v. U.S. Dep’t of Interior, et al., 2015 WL 5192526 (W.D. Tex. Sept. 1, 2015). The court in Permian Basin Petroleum Association determined that FWS misapplied its own Policy for Evaluation of Conservation Efforts when Making Listing Determinations (“PECE Policy”)[13] by concluding, among other things, that not listing the species under the ESA would reduce industry participation and enrollment in the range-wide conservation plan.[14]

Interior’s Landscape-Scale Mitigation Policy

The White House Memorandum follows shortly behind and builds upon new policies adopted by the Department of the Interior. In October 2015, Interior added a new chapter to its policy manual that appears to have greatly influenced this White House Memorandum.[15] This was made in response to Secretarial Order 3330, “Improving Mitigation Policies and Practices of the Department of the Interior,” issued in October 2013.[16]

Consistent with the President’s memorandum, Interior’s policy reinforces the same mitigation hierarchy, and for resources considered by the department as “important, scarce, [or] sensitive,” instructs each bureau to achieve a minimum of a “no net loss,” or, as required or appropriate, “a net benefit in outcomes.”[17]

Interior’s policy also discusses the need to “identify and promote mitigation measures” that help address the effects of climate change, such as protecting and restoring core or stronghold areas and anticipating shifting wildlife movement patterns.[18] In addition to habitat banking agreements, these measures could be incorporated into other ESA vehicles, such as Candidate Conservation Agreements with Assurances (“CCAA”). The CCAA provides assurances for enrolled and participating landowners that if the species is listed no additional conservation measures will be required. Incorporation of such mitigation measures in a CCAA would place a premium on baseline biological information to rationally predict wildlife movement patterns, and may increase the overall cost to the landowner as FWS could request additional acres to offset the impacts to the species due to climate change.

Lastly, Interior’s policy establishes certain “equivalency principles” when requiring compensatory mitigation measures for residual impacts, and instructs bureaus to hold all mechanisms (e.g., mitigation banks, in-lieu fee programs, permittee-responsible mitigation) to “high, and equivalent standards.”[19] Interior’s policy then provides thirteen factors to gauge whether this equivalency standard has been met. The factors, include among other things, providing rationale for the value of mitigation credits in banking agreements; and that any financial assurances are sufficient to ensure, with a high degree of confidence, that the measure will achieve and maintain its intended outcome. Interior’s policy notes that it may also impose additional requirements on third party compensatory mitigation providers.[20] While these factors are intended to conserve natural resources and provide predictability for developers, it remains to be seen whether the agencies can successfully navigate the criteria in a timely fashion.

Future of the Net Benefit Goal

The new policy is not merely an aspirational goal of the Obama Administration. The recent amendments to federal land management plans for conservation of the greater sage-grouse (“sage-grouse”) required an equivalent “net conservation gain” standard for third-party actions impacting the species’ habitat; thus providing a real-time example to analyze the practical and legal issues associated with this new mitigation standard.[21] As with most policy shifts, it remains to be seen whether new agency mitigation policies developed under the White House memorandum will provide sufficiently specific and achievable standards that will permit the agencies, especially those charged with multiple-use missions, and developers to achieve a balance between development and conservation of natural resources.[22]

It also remains to be seen to what degree the Obama Administration will request input from stakeholders and states, and whether the net result of this change will lead to increased mitigation effectiveness, spur public-private partnerships, and lead to timely environmental reviews. The Administration’s sage-grouse plans and challenges to the new approach taken there may determine how durable the sweeping new “net benefit” approach may be.[23]

[1] Presidential Memorandum, “Mitigating Impacts on Natural Resource from Development and Encouraging Related Private Investment,” (hereinafter “White House Memorandum”) Nov. 3, 2015.

[2] Id. at §3.

[3] Id.

[4] Id. §4. While this mitigation hierarchy provides more specificity with regard to the particular analytical sequence, the hierarchy is derived from the Council on Environmental Quality’s regulations defining mitigation at 40 CFR § 1508.20. It is the measuring-stick of “net benefit” standard that is the new policy direction.

[5] Id. §1. The White House Policy does provide an exemption for “military testing, training, and readiness activities.” Id. §5(d).

[6] White House Policy §1.

[7] Id. §3(a), (c).

[8] See generally Id. §4.

[9] See 42 U.S.C. § 9607(f).

[10] 43 U.S.C. § 1732(b).

[11] Theodore Roosevelt Cons. P’ship v. Salazar, 661 F.3d 66, 76 (D.C. Cir. 2011); Mineral Policy Ctr. v. Norton, 292 F. Supp. 2d 30, 43 (D.D.C. 2003).

[12] Id. §4(d).

[13] 68 Fed. Reg. 15, 100 (Mar. 28, 2003).

[14] Permian Basin Petroleum Ass’n, et al., 2015 WL 5192526, at *9.

[15] U.S. Dep’t of Interior Manual Release, Landscape-Scale Mitigation Policy (600 DM 6) (Oct. 23, 2015) (“Interior Policy”); available at: https://www.doi.gov/sites/doi.gov/files/uploads/TRS%20and%20Chapter%20FINAL.pdf (last visited Nov. 11, 2015).

[16] Secretarial Order 3330 makes no mention of a “net benefit goal.” The Western Governors’ Association expressed concern that “[t]he landscape-based approach envisioned in Secretarial Order 3330 – and increasingly embodied in new federal regulations from the Department of Interior…presents certain legal and regulatory complexities.” See Western Governors’ Assoc. Letter to Interior Secretary Jewell (Jan. 21, 2014); available at: http://www.westgov.org/policies/doc_download/644-wrez-study-request-to-teppc-01-09-09 (last visited Nov. 13, 2015).

[17] Interior Policy at 6.4(B), 6.5.

[18] Interior Policy at 6.6(F)(2), (3).

[19] Interior Policy at 6.7(A).

[20] Interior Policy at 6.7.

[21] See Interior’s Sage Grouse Plans Raise Concerns for Industry, Politicians in 10 Western States, Marten Law News (June 2, 2015).

[22] For example, BLM is charged with managing the lands under its jurisdiction according to principles of “multiple use and sustained yield.” FLPMA, 42 U.S.C. § 1732(a). FLPMA defines multiple-use as the “management of the public lands and their various resource value so that they are utilized in the combination that will best meet the present and future needs of the American people….” §1702(c).

[23] See Otter, et al. v. Jewell, et al., Plfs’ Memo. in Support of Preliminary Injunction, 15-cv-01566-EGS, Dkt No. 15-1, at 2, 19-20, 31-33 (filed Oct. 23, 2015 by Marten Law).


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