Endangered and Threatened Wildlife and Plants; Endangered Species Act Compensatory Mitigation Policy

DEPARTMENT OF THE INTERIOR

Fish and Wildlife Service

[Docket No. FWS-HQ-ES-2015-0165; FXES11140900000-178nmdash;FF09E33000]

Endangered and Threatened Wildlife and Plants; Endangered Species Act Compensatory Mitigation Policy

AGENCY:

Fish and Wildlife Service, Interior.

ACTION:

Notice of final policy.

SUMMARY:

We, the U.S. Fish and Wildlife Service (Service or USFWS), announce the final Endangered Species Act (ESA) Compensatory Mitigation Policy. The new policy steps down and implements recent Executive Office, Department of the Interior, and Service mitigation policies that reflect a shift from project-by-project to landscape-scale approaches to planning and implementing compensatory mitigation. The new policy is established to improve consistency and effectiveness in the use of compensatory mitigation as recommended or required under the ESA. The ESA Compensatory Mitigation Policy covers permittee-responsible mitigation, conservation banking, in-lieu fee programs, and other third-party mitigation mechanisms, and stresses the need to hold all compensatory mitigation mechanisms to equivalent and effective standards.

DATES:

This policy is effective on December 27, 2016.

ADDRESSES:

Comments and materials received, as well as supporting documentation used in the preparation of this policy, including an environmental assessment, are available on the Internet at

http://www.regulations.gov

at Docket Number FWS-HQ-ES-2015-0165.

FOR FURTHER INFORMATION CONTACT:

Craig Aubrey, U.S. Fish and Wildlife Service, Division of Environmental Review, 5275 Leesburg Pike, Falls Church, VA 22041-3803; telephone 703-358-2442. Persons who use a telecommunications device for the deaf (TDD) may call the Federal Relay Service at 800-877-8339.

SUPPLEMENTARY INFORMATION:

Background

The mission of the U.S. Fish and Wildlife Service (Service or USFWS) is working with others to conserve, protect, and enhance fish, wildlife, and plants and their habitats for the continuing benefit of the American people. As part of our mission, we continually seek opportunities to engage both the public and private sectors to work with us to conserve species and the ecosystems on which they depend. This collaborative effort includes conservation of endangered and threatened (listed) species and their designated critical habitat protected under the Endangered Species Act of 1973, as amended (ESA; 16 U.S.C. 1531

et seq.

), and other species proposed for listing or at-risk of being listed. The purposes of the ESA are to provide a means whereby the ecosystems upon which listed species depend may be conserved, and to provide a program for the conservation of such species. The Service and National Oceanic and Atmospheric Administration's National Marine Fisheries Service share responsibilities for administering the ESA. However, this policy only applies to the Service and species under our jurisdiction.

This policy is the first comprehensive treatment of compensatory mitigation under authority of the ESA to be issued by the Service. Both the 1995 interagency policy on the establishment and operation of wetland mitigation banks (60 FR 58605, November 28, 1995) and the 2000 interagency policy on the use of in-lieu fee arrangements (65 FR 66914, November 7, 2000) are specific to wetland mitigation, but provide guidance that is generally applicable to conservation banking and in-lieu fee programs for species associated with wetlands or uplands. These interagency policies were superseded by the Environmental Protection Agency—U.S. Army Corps of Engineers 2008 Compensatory Mitigation Rule for Losses of Aquatic Resources (73 FR 19594, April 10, 2008). In 2003, the Service issued guidance on the establishment, use, and operation of conservation banks (68 FR 24753, May 8, 2003). In 2008, we issued recovery crediting guidance (73 FR 44761, July 31, 2008). This ESA Compensatory Mitigation Policy clarifies Service expectations regarding all compensatory mitigation mechanisms recommended or supported by the Service when implementing the ESA, including, but not limited to, conservation banks, in-lieu fee programs, habitat credit exchanges, and permittee-responsible mitigation.

Purpose and Importance of the Policy

The primary intent of the policy is to provide Service personnel with direction and guidance in the planning and implementation of compensatory mitigation, primarily through encouraging strategic planning at the landscape level and setting standards that mitigation programs and projects must meet to achieve conservation that is effective and sustainable. Compensatory mitigation is defined in this policy as compensation for remaining unavoidable impacts after all appropriate and practicable avoidance and minimization measures have been applied, by replacing or providing substitute resources or environments (see 40 CFR 1508.20) through the restoration, establishment, enhancement, or preservation of resources and their values, services, and functions (part 600, chapter 6 of the Departmental Manual (600 DM 6.4C)). While this policy addresses only the role of compensatory mitigation under the ESA, avoidance and minimization of impacts retain their central role in both the section 7 and section 10 processes. Guidance on the application of the mitigation hierarchy is provided in our Mitigation Policy (81 FR 83440, November 21, 2016), regulations implementing the ESA, and other policies and guidance documents specific to various sections of the ESA.

Alignment of the Policy With Existing Directives

By memorandum (80 FR 68743, November 6, 2015), the President directed all Federal agencies that manage natural resources, “to avoid and then minimize harmful effects to land, water, wildlife, and other ecological resources (natural resources) caused by land- or water-disturbing activities, and to ensure that any remaining harmful effects are effectively addressed, consistent with existing mission and legal authorities.” This policy is consistent with the Presidential memorandum (“Mitigating Impacts on Natural Resources From Development and Encouraging Related Private Investment”) issued November 3, 2015; the Department of the Interior (Department) Secretarial Order 3330 entitled, “Improving Mitigation Policies and Practices of the Department of the Interior,” issued October 31, 2013; the new Interior Departmental Manual Chapter on Landscape-Scale Mitigation Policy, 600 DM 6 (October 23, 2015); and is intended to institute the policies and procedures reflected in the guiding principles on mitigation established by the Department through the report to the Secretary entitled, “A Strategy for Improving the Mitigation Policies and Practices of The Department of the Interior,” issued in April 2014 (Clement et al. 2014). These directives emphasize a comprehensive landscape-scale approach to planning and implementing mitigation programs, and they also include a mitigation goal to improve

(

i.e.,

“net gain”) or, at a minimum, to maintain (

i.e.,

“no net loss”) the current status of affected resources, as allowed by applicable statutory authority and consistent with the responsibilities of action proponents under such authority, primarily for important, scarce, or sensitive resources, or as required or appropriate.

The mitigation principles set forth in the above directives, including the landscape scale approach and the goal of “net gain,” have been adopted in both the Service's Mitigation Policy (81 FR 83440, November 21, 2016), and in this policy. The landscape-scale approach to mitigation is not a new concept. For example, in 2013, the Service issued mitigation guidance for two listed songbirds in central Texas based on recovery goals for these species. The songbird mitigation guidance sets minimum standards that must be met by mitigation providers and encourages the use of consolidated compensatory mitigation in the form of permanent protection and management of large, contiguous patches of the species' habitat. Proactive approaches, such as this example, provide greater regulatory certainty for project proponents and encourage the establishment of conservation banks and other mitigation opportunities by mitigation sponsors for use by project proponents.

The mitigation goal (

i.e.,

“net gain” or, at a minimum, “no net loss”) is not necessarily based on habitat area, but on numbers of individuals, size and distribution of populations, the quality and carrying capacity of habitat, or the capacity of the landscape to support stable or increasing populations of the affected species after the action (including all proposed conservation measures) is implemented. In other words, it is based on those factors that determine the ability of the species to be conserved.

Benefits of the Policy

This policy sets forth standards for compensatory mitigation that implement the tenets in the directives cited above and reflect the many lessons learned by the Service during our more than 40-year history implementing the ESA, particularly sections 7 and 10 of the ESA. The standards apply to all compensatory mitigation mechanisms (

i.e.,

permittee-responsible mitigation, conservation banks, in-lieu fee programs, habitat exchanges, and other third-party mitigation arrangements), which are instrumental to achieving effective compensatory mitigation on the landscape and encouraging private investment in compensatory mitigation.

Adherence to the mitigation principles and compensatory mitigation standards identified in this policy will achieve greater consistency, predictability, and transparency in implementation of the ESA. Service offices are encouraged to work with Federal agencies and other partners to establish compensatory mitigation programs based on landscape-scale conservation plans, such as more efficient, better coordinated, and expedited regulatory processes, which can provide project applicants with incentives to mitigate their actions. Compensatory mitigation programs and projects designed and implemented in accordance with the standards set forth in this policy are expected to achieve the best conservation outcomes for listed, proposed, and at-risk species through effective management of the risks associated with compensatory mitigation.

This policy encourages the use of market-based compensatory mitigation programs such as conservation banking in conjunction with programmatic approaches to ESA section 7 consultations and habitat conservation plans (HCPs) that can be designed to achieve a “no net loss” or a “net gain” mitigation goal. Consultations and HCPs that establish a “program” to address multiple, similar actions and/or impacts to one or more species operate on a larger landscape scale and expedite regulatory processes. Market-based mitigation programs improve regulatory predictability, provide efficiencies of scale, and incentivize private investment in species conservation (Fox and Nino-Murcia 2005). The benefits provided by these mitigation programs generally encourage Federal agencies and incentivize applicants to develop proposed actions that fully compensate for adverse impacts to affected species anticipated as a result of their actions.

Discussion

“In enacting the ESA, Congress recognized that individual species should not be viewed in isolation, but must be viewed in terms of their relationship to the ecosystem of which they form a constituent element. Although the regulatory mechanisms of the [ESA] focus on species that are formally listed as endangered or threatened, the purposes and policies of the [ESA] are far broader than simply providing for the conservation of individual species or individual members of listed species” (Conference Report No. 97-835 House of Representatives, September 17, 1982). This comment, made over 30 years ago during reauthorization of the ESA, is a reminder of the challenges still before us.

Incorporating a landscape-scale approach to development and conservation planning, including mitigation, that ensures a “net gain” or, at a minimum, “no net loss” in the status of affected resources, as directed by the Presidential memorandum (80 FR 68743, November 6, 2015), helps address the additive impacts that lead to significant deterioration of resources over time and has the potential to foster recovery of listed species and avoid listing of additional species.

As discussed later in this document, the Service's authority to require compensatory mitigation under the ESA is limited and differs under sections 7 and 10. However, we can more broadly recommend the use of compensatory mitigation to offset the adverse impacts of actions under certain provisions of the ESA and under other authorities, such as the Fish and Wildlife Coordination Act (16 U.S.C. 661

et seq.

) and the National Environmental Policy Act (NEPA; 42 U.S.C. 4321

et seq.

). This policy encourages Service offices to work with Federal agencies and applicants, and to recommend or require, if appropriate, the inclusion of compensatory mitigation for all unavoidable adverse impacts to listed, proposed, and at-risk species and their habitat anticipated as a result of any proposed action. While this practice currently exists for some species, it is not used broadly throughout the Service. Recommending, where applicable, that Federal agencies use their authorities to fully mitigate the adverse effects of their actions (

i.e.,

ensure “no net loss” in the status of affected resources) is consistent with the Presidential memorandum (80 FR 68743, November 6, 2015), the Department's and the Service's mitigation planning goals, and the purposes of the ESA. Effective mitigation that fully offsets the impacts of an action prevents that action from causing a decline in the status of affected species (

i.e.,

achieves “no net loss”).

Compensatory Mitigation Under Sections 7 and 10 of the ESA

The additive effects of impacts adversely affecting listed and at-risk species as a result of many past and current human-caused actions are significant. The number of listed species has increased from slightly more than 300 in 1982 (when the ESA was reauthorized) to more than 1,500 by the end of 2016. While some listed species have been reclassified from endangered to threatened (

i.e.,

“downlisted”) or

removed from either the Federal List of Endangered and Threatened Wildlife or List of Endangered and Threatened Plants (

i.e.,

“delisted”) within the last 40 years, the projected increase in human population growth, increasing demand on our natural resources associated with this projected population growth, accelerated climate change, continued introductions of invasive species, and other stressors are putting even more species at risk and compromising the essential functions of ecosystems necessary to improve the status and recover these species. We cannot expect to change the status trajectories of these species without a commitment to responsible and implementable standards for accomplishing effective, sustainable compensatory mitigation that fully offsets the adverse impacts of actions to species and other resources of concern.

Compensatory mitigation is a conservation measure that can be used within an appropriate context under section 7 of the ESA to address proposed actions that may result in adverse impacts to listed species that cannot be avoided. For example, under section 7(a)(1) of the ESA, all Federal agencies are required to use their authorities to carry out conservation programs for listed species. Federal agencies may choose to develop and implement section 7(a)(1) conservation programs for listed species in conjunction with section 7(a)(2) consultation through a coordinated program. The Service supports these efforts, and we encourage Federal agencies to coordinate with us on development of such programs.

Compensatory mitigation can be used under section 10(a)(1)(B) of the ESA through HCPs developed to address adverse impacts of non-Federal actions on listed and other covered species that cannot be avoided. Landscape-scale HCPs developed for use by multiple applicants to conserve multiple resources are generally the most efficient and effective approaches. The Service supports these efforts and encourages applicants, particularly local and State agencies and organizations, to coordinate with us on the development of such plans.

Landscape-Level Approaches to Compensatory Mitigation

Taking a landscape-level approach to mitigation will assist the Service to modernize our compensatory mitigation procedures and practices and better meet the challenges posed by the growing human population's demands on our natural resources and changing conditions such as those resulting from climate change. Conservation banking is a market-based compensatory mitigation mechanism based on a landscape approach to mitigation that achieves compensation for listed and other resources of concern in advance of project impacts. In-lieu fee programs also establish compensatory mitigation sites but generally not in advance of impacts and often not through a market-based approach. Habitat credit exchanges are a relatively new market-based compensatory mitigation mechanism based on a clearinghouse model that may or may not accomplish mitigation in advance of project impacts. All three of these mitigation mechanisms use a landscape-level approach to consolidate and locate compensatory mitigation in areas identified as conservation priorities. These programs have designated service areas within which proposed actions that meet certain criteria may be mitigated with Service approval. The functions and services provided for listed, proposed, and at-risk species by these compensatory mitigation programs are represented by credits. Credits are used to offset impacts (often referred to as debits). Most credit transactions involve a permittee purchasing the amount of credits needed to offset the anticipated adverse effects of an action from the mitigation project sponsor. The Service must approve credit transactions as to their conservation value and appropriate application for use related to any authorization or permit issued under the ESA.

The conservation banking model is generally perceived as successful at achieving effective conservation outcomes and, when used in conjunction with section 7 consultations and section 10 HCPs, has achieved notable regulatory efficiencies. Results include ecological performance that usually achieves “no net loss,” and often a net benefit, in species conservation; increased regulatory predictability for Federal agencies and applicants; and more efficient and better coordinated permitting processes, especially when multiple agencies with overlapping regulatory jurisdictions are involved.

Permittee-responsible mitigation for many small to moderate impacts often cannot provide adequate compensation because it is often difficult to achieve effective conservation on a small scale. Small mitigation sites are often not ecologically defensible, and it is often difficult to ensure long-term stewardship of these sites. Most individual actions result in small or moderate impacts to species and habitat, yet the additive effects of these actions (often referred to as “death by a thousand cuts”), when not compensated for, can have substantial adverse effects on these resources by degrading the environmental baseline and impairing the potential for future actions. In general, conservation banking, in-lieu fee programs, and similar mitigation mechanisms that consolidate compensatory mitigation on larger landscapes are designed to serve project proponents with small to moderate impact actions, are ecologically more effective, and provide more economical options to achieve compensation than permittee-responsible mitigation.

Furthermore, larger landscape-scale conservation programs with market-based compensatory mitigation opportunities create an economic incentive for private landowners, investors, and mitigation project sponsors to participate in these programs. The most robust programs generate competition among mitigation sponsors and may provide cost-effective means for complying with natural resource laws such as the ESA. To be successful, these market-based and other compensatory mitigation programs must operate transparently and be held to high standards that are uniformly applied across all compensatory mitigation mechanisms. Equally important is transparency in the implementation of the ESA and the development of mitigation programs for use by regulated communities.

Mitigation Defined

Because endangered and threatened species are by definition in danger of extinction or likely to become so in the foreseeable future, avoiding, minimizing, and compensating for impacts to their populations are all forms of mitigation that the Service may consider when administering the ESA. The Council on Environmental Quality (CEQ) NEPA regulations (40 CFR 1508.20) state that mitigation includes:

• Avoiding the impact altogether by not taking a certain action or parts of an action;

• Minimizing impacts by limiting the degree or magnitude of the action and its implementation;

• Rectifying the impact by repairing, rehabilitating, or restoring the affected environment;

• Reducing or eliminating the impact over time by preservation and maintenance operations during the life of the action; and

• Compensating for the impact by replacing or providing substitute resources or environments.

In 600 DM 6, the Department of the Interior states that mitigation, as

enumerated by CEQ, is compatible with Departmental policy; however, as a practical matter, the mitigation elements are categorized into three general types that form a sequence: Avoidance, minimization, and compensatory mitigation for remaining unavoidable (also known as residual) impacts. Historically, those administering the ESA have often used a condensed mitigation sequence—avoid, minimize, and compensate; or avoid, minimize, and mitigate. This policy adopts the Department's definition of compensatory mitigation: Compensation for remaining unavoidable impacts after all appropriate and practicable avoidance and minimization measures have been applied, by replacing or providing substitute resources or environments (see 40 CFR 1508.20) through the restoration, establishment, enhancement, or preservation of resources and their values, services, and functions (600 DM 6.4C). Throughout this policy, “compensatory mitigation” or “compensation” is used in this broad sense to include any measure that would rectify, reduce, or compensate for an impact to an affected resource. We also use the term “minimize” in the broad sense throughout this policy to include any conservation measure, including compensation, which would lessen the impact of the action on the species or other affected resource. We recognize there is some overlap in the use of these terms but, as a practical matter, this use in practice is consistent with the intent of the ESA. Information regarding avoidance and observance of the mitigation sequence can be found at our Mitigation Policy (81 FR 83440, November 21, 2016). This ESA Compensatory Mitigation Policy covers permittee-responsible mitigation, conservation banking, in-lieu fee programs, and all other compensatory mitigation mechanisms.

Implementation

The Service will issue interim guidance containing specific operational steps to assist Service staff in implementing this policy. This interim guidance will be issued in the form of a Director's memorandum, which will be used to develop a Service Manual chapter at a later date. Throughout this policy, the term “implementation guidance” will be used when referencing the interim guidance and future Service Manual chapter.

Changes From the Draft Policy

This final policy differs from the draft policy in a few substantive respects, which we list below, and contains editorial changes in response to comments we received that requested greater clarity of expression regarding various aspects of the policy's purpose, authorities, scope, general principles, framework for formulating mitigation measures, and definitions. The most common editorial change to the final policy addresses the concern that the Service lacks authority to apply compensatory mitigation to the ESA. Reasons cited by the commenters for not applying compensatory mitigation to the ESA included: (a) The ESA does not provide authority to require mitigation; and (b) policy concepts such as “net conservation gain” and a “landscape approach” to conservation are inconsistent with ESA statutory authority and regulatory requirements. This final policy adds new text to 2. Authorities and Coordination that identifies those circumstances under which we have specific authority to require, consistent with other applicable laws and regulations, one or more forms of compensatory mitigation for impacts to federally listed species, proposed species, and candidates as defined in the ESA. This policy provides a common framework for the Service when identifying and implementing compensatory mitigation measures pursuant to the ESA. The policy, however, cannot and does not alter or substitute for the regulations implementing the ESA. We summarize below the few substantive changes from the draft policy, listed by section.

Section 5 in the draft policy, Application of Compensatory Mitigation Under the ESA, was moved in its entirety to replace section 4, as we felt it more appropriate to discuss the policy's application under the ESA after section 2. Authorities and Coordination, and section 3. Scope. Section 4 in the draft policy, Compensatory Mitigation Standards, is now section 5 in this final policy.

In section 5.1,

Siting Sustainable Compensatory Mitigation,

this final policy focuses on overarching considerations and leaves specific factors or examples to be explained in the implementation guidance.

In section 6.1.3, “Preference for Consolidated Compensatory Mitigation,” we removed habitat credit exchanges as a specifically identified preference for compensatory mitigation because we do not yet have the record of success with this mechanism that we have with other mechanisms such as conservation banks.

The bulk of sections 6.2.3, “Ensuring Durability on Public Lands,”, and 6.2.4, “Transfer of Private Mitigation Lands to Public Agencies,” was removed from the policy and will be discussed in the implementation guidance, as well as the prescriptive operational detail from section 6.6,

Managing Risk and Uncertainty.

In section 7.1.4 “Habitat Credit Exchange,” we added text indicating that habitat credit exchanges are a relatively new mitigation mechanism, and warrant additional care and consideration when implementing them. We also removed section 7.1.5, “Other Third-party Compensatory Mitigation,” as this is a purely hypothetical mechanism which seems to differ little from proponent-responsible mitigation, and it was redundant with section 7.3,

Other Compensatory Mitigation Programs or Projects.

In Table 1. “Comparison of Habitat-based Compensatory Mitigation Sites Established Under Different Mechanisms,” we removed the column “Instrument Required” because all discussion of instruments will be in the implementation guidance, and we removed the final row of the table: “Other Third-party Mitigation Site.”

We removed the draft policy's section 8, Establishment and Operation of Compensatory Mitigation Programs and Projects; it will form the basis of the implementation guidance.

Section 9 of the draft policy, Criteria for Use of Third-party Mitigation, has been re-numbered in this policy, and is now section 8.

The majority of section 10, Compliance and Tracking, has been removed from the policy, and will be discussed in the implementation guidance; accordingly, the remaining paragraph has been renumbered in this policy as section 9.

Regarding appendix B, Glossary of Terms Related to Compensatory Mitigation, we removed several terms that are more appropriate for the implementation guidance document as well as items that could be confused with terms used in the ESA's implementing regulations.

Finally, we have removed appendix C, Requirement of the Marine Mammal Protection Act, to avoid confusion with the policy's focus on implementing the ESA.

Summary of Comments and Responses

The September 2, 2016, notice announcing our draft Endangered Species Act Compensatory Mitigation Policy (draft policy) (81 FR 61032) requested written comments, information, and recommendations from governmental agencies, tribes, the scientific community, industry groups, environmental interest groups, and any other interested members of the public.

That notice established a 45-day comment period, ending October 17, 2016, on the draft policy. Several commenters (1) requested an extension of time to provide their comments; (2) asked the Service to revise and recirculate the draft policy for comment; or (3) asked the Service to withdraw the draft policy to allow interested parties additional time to comment. The November 3, 2015, Presidential Memorandum on Mitigation states, “Within 1 year of the date of this memorandum, the Department of the Interior, through the U.S. Fish and Wildlife Service, shall finalize a revised mitigation policy that applies to all of the U. S. Fish and Wildlife Service's authorities and trust responsibilities. The U.S. Fish and Wildlife Service shall also finalize an additional policy that applies to compensatory mitigation associated with its responsibilities under the Endangered Species Act of 1973.” In order to finalize the policy as close as possible to the date outlined in the Presidential Memorandum on Mitigation, we were unable to publish an extension or reopen the comment period.

During the comment period, we received approximately 150 public comment letters, including comments from Federal, State, and local government entities; industry; trade associations; conservation organizations; nongovernmental organizations; private citizens; and others. The range of comments varied from those that provided general statements of support or opposition to the draft policy, to those that provided extensive comments and information supporting or opposing the draft policy in its entirety or specific aspects of the draft policy. The majority of comments submitted included detailed suggestions for revisions addressing major concepts, as well as editorial suggestions for specific wording or line edits.

All comments submitted during the comment period have been fully considered in preparing this final policy. All substantive information provided has been incorporated, where appropriate, directly into this final policy or is addressed below. The comments we received were grouped into general issues specifically relating to the draft policy, and are presented below along with the Service's responses to these substantive comments.

We received several comments requesting clarification on various aspects of the draft policy, including: Reporting; monitoring; financial instruments; coordination with States, tribes, and local groups; the compensatory mitigation mechanisms; and other implementation elements. We recognize the value of these comments and are giving them due consideration. We have removed these elements from this policy and will address them in the implementation guidance.

A. Definitions

Comment (1):

One commenter suggested a more precise definition of compensatory mitigation. The commenter stated the draft policy's definition suggests any remaining impacts must be “unavoidable” and not simply “un-avoided.” The commenter suggests the draft policy's definition is confusing and inconsistent with the ESA language that uses “minimize” and “mitigate.”

Response:

The definition of “compensatory mitigation” in this policy derives from the Department of the Interior's Department Manual (600 DM 6.4C). This definition gives more flexibility in the use of avoidance and minimization measures for listed species than the recommendation provided in the comment. The use of the terms “appropriate and practicable” in this policy's definition give deference to project proponents and Federal agencies.

Comment (2):

Comments included a statement that the definition of landscape-scale approach is unclear.

Response:

Our definition of landscape-scale approach is informed by the definition used in 600 DM 6 and our Service's mitigation policy. The landscape approach to conservation considers the functional context of the species or habitat under consideration. For example, activities involving fairy shrimp might be evaluated at a vernal pool complex or regional scale. Issues affecting sturgeon may require strategies that consider an entire river system, thousands of miles long. Fundamental to this approach is an understanding of what is important to ensure the ecological function of the species or habitat in question, at the appropriate scale. Examples include the North American Waterfowl Management Plan, many fisheries management plans, recovery plans for federally listed species, watershed restoration plans, and State wildlife plans.

B. Policy Is Based on Existing Authority

i. ESA Sections 7 and 10

Comment (3):

Several commenters stated that the mitigation sequence that uses “avoidance” cannot be required under sections 7 and 10 of the ESA, unless it alleviates a jeopardy situation. One of the commenters noted that “avoidance” is voluntary on the part of an action agency or applicant.

Response:

The use of “avoidance” in the mitigation sequence is not a requirement in the sense that all impacts to listed species or critical habitat must be avoided. Through the policy, we are neither requiring nor mandating avoidance. One of the stated purposes of the ESA at section 2(b) is to “provide a means whereby the ecosystems upon which endangered species and threatened species depend may be conserved.” Developing options to avoid impacts to listed resources under sections 7 and 10 is important to furthering this purpose and effectively implementing the ESA.

The policy is consistent with the Presidential memorandum (“Mitigating Impacts on Natural Resources from Development and Encouraging Related Private Investment”) issued November 3, 2015 (see 80 FR 68743, November 6, 2015), in which the President directed all Federal agencies that manage natural resources “to avoid and then minimize harmful effects to land, water, wildlife, and other ecological resources (natural resources) caused by land- or water-disturbing activities, and to ensure that any remaining harmful effects are effectively addressed, consistent with existing mission and legal authorities.” The Service agrees that some impacts to listed species or critical habitat may be unavoidable and that the ESA provides a mechanism for both Federal agencies (section 7) and non-Federal entities (section 10) to receive take coverage in the case of any unavoidable impacts. There are multiple sections of our implementing regulations in title 50 of the Code of Federal Regulations (CFR) at 50 CFR part 402 (§§ 402.10, 402.13) that direct the Service to suggest modifications or make advisory recommendations to Federal action agencies and applicants to avoid the likelihood of adverse effects to listed species or critical habitat. Additionally, if the Service is required to provide a reasonable and prudent alternative under section 7 consultation, the regulations state that such an alternative must be one “that the Director believes would avoid the likelihood of jeopardizing the continued existence of listed species or resulting in the destruction or adverse modification of critical habitat” (50 CFR 402.02). Use of the full mitigation sequence including avoidance and minimization of impacts to listed species is consistent with the purposes and mandates set forth in the ESA.

Comment (4):

Several commenters suggested compensatory mitigation cannot be required under section 7 of

the ESA, and that there is no authority to include such mitigation in reasonable and prudent measures (RPMs) and the accompanying mandatory terms and conditions that the Service includes in incidental take statements. Some stated that compensation is limited to voluntary actions on behalf of the action agency and recommendations on the part of the Service. One comment stated compensation was not appropriate in both RPMs and reasonable and prudent alternatives (RPAs). Another suggested that compensation under section 7 consultation was appropriate but not under section 7(a)(4) conference. Commenters cited the ESA, its implementing regulations, and the Service's 1998 Consultation Handbook.

Response:

As discussed in sections 4.1.2 and 4.1.3 of this policy, compensatory mitigation can play an important role in section 7(a)(2) consultations and 7(a)(4) conferences. Compensatory mitigation can appropriately be included as part of an action subject to consultation, or in reasonable and prudent alternatives to avoid the likelihood of jeopardy, in order to reduce the net adverse effect of an action on proposed or listed species or designated critical habitat. This policy clarifies those circumstances where it may be appropriate to incorporate mitigation into reasonable and prudent measures and terms and conditions as part of a section 7(a)(2) consultation. For example, throughout this policy, “compensatory mitigation” or “compensation” is used to include any measure that would rectify, reduce, or compensate for an impact to an affected resource. Rectifying the impact means “repairing, rehabilitating, or restoring the affected environment” (40 CFR 1508.20). Restoring impacted habitat is a commonly used reasonable and prudent measure that meets the definition of compensatory mitigation in this policy, minimizes the amount or extent of incidental take, and can be accomplished consistent with the ESA and its implementing regulations at 50 CFR part 402.

Comment (5):

Commenters said the policy's emphasis on the role of conservation in the section 7 consultation process is misdirected. Section 7(a)(2) does not include a conservation requirement for Federal agencies.

Response:

The Service respectfully disagrees. Section 7(a)(2) requires that Federal agencies ensure their actions do not jeopardize the continued existence of endangered and threatened species or result in the destruction or adverse modification of critical habitat. This requirement is accomplished through the consultation process, which concludes with the Service's biological opinion. In the event a section 7 consultation concludes with a jeopardy or adverse modification determination, the Service will include reasonable and prudent alternatives (RPAs), when possible, that the action agency can implement to avoid violation of section 7(a)(2) of the ESA. Options for RPAs can include compensatory mitigation in order to avoid a jeopardy or adverse modification situation, as long as they are consistent with the definitions at 50 CFR 402.02. When the Service's biological opinion concludes that the agency action would not result in jeopardy or adverse modification, the Service will include reasonable and prudent measures (RPMs) to minimize any incidental take associated with the action. As described in the policy, minimization of impacts of the taking on the species may include compensation as consistent with the ESA implementing regulations. The Service provides technical assistance during the section 7(a)(2) consultation process to help reduce the need for RPMs and RPAs. These measures fall within the ESA's definition of “conserve,” which means “to use and the use of all methods and procedures which are necessary to bring any endangered species or threatened species to the point at which the measures provided pursuant to [the ESA] are no longer necessary.”

Comment (6):

Several commenters expressed concern that the policy would complicate the process for sections 7 and 10, and cause project delays. The commenters stated that such delays could create increased project costs.

Response:

The Service respectfully disagrees. Mitigation provided in advance of impacts, such as through a conservation banking program, can expedite project reviews by the Service, because the mitigation is already established and has already gone through the due diligence process. Clear guidance on application of compensatory mitigation mechanisms as provided in this policy, should assist Service staff and project proponents implement their ESA responsibilities in a timely fashion. Furthermore, conducting compensatory mitigation may assist in the compliance with other required laws, which may expedite the project process. For example, compensatory mitigation may lower the level of analysis required by NEPA (allowing a mitigated environmental assessment/finding of no significant impact instead of an environmental impact statement).

Comment (7):

One commenter objected to the phrase “recovery measure” when discussing section 7(a)(1) of the ESA. The commenter provided substantial information, including a section of the preamble from the Service's 1986 interagency cooperation rulemaking (51 FR 19926, June 3, 1986), noting the ESA does not mandate specific actions under section 7(a)(1), nor does it authorize the Service to mandate how or when Federal agencies should implement their section 7(a)(1) responsibilities. Specifically, the commenter said that section 7(a)(1) is not a recovery measure, and the policy failed to properly state the basis for such a characterization.

Response:

We agree that the directive under section 7(a)(1) of the ESA does not give the Service authority over other Federal agencies, nor does it specifically authorize actions to be implemented. It does, however, direct other Federal agencies to consult with the Service when developing conservation programs under section 7(a)(1). To this end, the policy provides guidance and recommendations on how Federal agencies may achieve the greatest effectiveness when implementing their section 7(a)(1) obligations.

The policy clearly describes the basis for the use of the term “recovery measure” when describing section 7(a)(1), which comes from the definition of the terms “conserve,” “conserving,” and “conservation” in section 3 of the ESA. Although the word “recovery” is not used in the definition, it clearly describes recovery as “the use of all methods and procedures which are necessary to bring any endangered species or threatened species to the point at which the measures provided pursuant to [the ESA] are no longer necessary.” Additionally, section 7(a)(1) directs all Federal agencies to “utilize their authorities in furtherance of the purposes of [the ESA]”. One of the stated purposes of the ESA is to “provide a means whereby the ecosystems upon which endangered and threatened species depend may be conserved.” The intent is that all Federal agencies have a responsibility, using their existing authorities, to help recover listed species.

Comment (8):

One commenter stated the policy should focus only on implementation of voluntary mitigation actions under the ESA. The commenter noted that mitigation guidance for sections 7 and 10 under the ESA are provided in the habitat conservation planning and consultation handbooks.

Response:

This policy provides greater clarity and detail with regard to mitigation implementation than the

section 7 and habitat conservation planning handbooks. As stated earlier, this policy reflects the many lessons learned by the Service during our more than 40-year history implementing the ESA, particularly sections 7 and 10. We agree that the use of voluntary mitigation programs and actions that further the purposes of the ESA should be encouraged. The development and implementation of voluntary mitigation programs should also be effective and consistent with other forms of mitigation. The policy will guide such voluntary efforts to promote consistency in the same way it will guide mitigation efforts in regulatory processes.

Comment (9):

One commenter recommended we add “and applicants” following “Federal agencies” in two sentences in section 4.1.2.

Response:

Applicants are not typically involved in the establishment of mitigation programs such as conservation banks and in-lieu fee programs; moreover, the responsibility for ensuring a Federal action does not violate section 7(a)(2) of the ESA ultimately lies with the Federal agency proposing the action. We did not make the suggested change.

Comment (10):

One commenter thought the Service should recognize the importance of the Habitat Conservation Plan (HCP) Assurances (“No Surprises”) Rule (63 FR 8859, February 23, 1998) and explicitly state that remediation and alternative mitigation will not erode protections afforded by the No Surprises Rule.

Response:

The Service does recognize the importance of the No Surprises Rule in the section 10 process, and agrees that remediation and alternative mitigation should not erode protections afforded by the No Surprises Rule. The Service works with applicants to develop HCPs that include contingencies for mitigation that does not function as expected, including remediation or alternative mitigation. The No Surprises Rule is not eroded in this case, because these contingencies are included in the HCPs and agreed upon ahead of time.

Comment (11):

One commenter requested clarification of how the draft policy would apply to reinitiation of consultations under section 7(a)(2) of the ESA. Specifically, what would be different, especially with regard to the concepts of “net gain” and “no net loss?”

Response:

During the reinitiation process under section 7(a)(2), the concepts under this policy and their application to any consultation do not change. The ESA's directive to agencies to ensure any action is not likely to jeopardize the continued existence of any endangered or threatened species or adversely modify its critical habitat guides that process. The Service will recommend actions consistent with this policy, including consideration of the goal of a “net gain” or, at a minimum, “no net loss.” Considering the variety of actions under consultation, the reasons for reinitiation, and the multitude of species covered, it is not possible for the policy to provide specific details regarding the application of such concepts during the consultation process.

Comment (12):

One commenter was concerned about section 4.7 (

Effective Conservation Outcomes and Accountability Through Monitoring, Adaptive Management, and Compliance

) of the draft policy, which states that: “A process for achieving remediation or alternative mitigation for compensatory mitigation failures beyond the control of the responsible party (

e.g.,

unforeseen circumstances) must be clearly described in the mitigation instrument, biological and/or conference opinion, or permit.” The commenter asked the Service to the clarify the statement to say that biological opinions issued in connection with section 7 consultations with Federal agencies, other than the Service itself, are not required to provide for unforeseen circumstances, saying that such a requirement is associated with ESA section 10(a) HCPs, but is not required in the context of section 7 consultations by the section 7 handbook, or existing law or regulations. They were concerned the current language of the draft policy could be misinterpreted to mean that section 7 biological opinions must include alternative mitigation for compensatory mitigation failures “beyond the control of the responsible party,” and this policy should not change the section 7 requirements for avoiding jeopardy to the species and adverse modification of critical habitat.

Response:

The development and implementation of mitigation programs should be effective and consistent among all forms of mitigation offered in sections 7 and 10 of the ESA, regardless of whether the mitigation is voluntary or required. Planning for unforeseen circumstances is part of effective mitigation. The policy will guide efforts to promote consistency, and Service staff will work with applicants and Federal agencies to explain how all mitigation standards can be incorporated into their mitigation plans. Nevertheless, the ESA and its implementing regulations ultimately determine how the Service makes decisions regarding listed species. We do not include the statement in question in this final policy; we will address this topic in implementation guidance.

Comment (13):

One commenter stated the Service has no statutory authority to require section 7 consultation on candidate or at-risk species or to include such species in HCPs. If the policy pursues a conservation goal in excess of the Service's actual regulatory and statutory authorities, separate guidance should be issued to draw this clear distinction, in order to provide complete transparency and direction to both Service staff and others in actual implementation.

Response:

The commenter is correct that the Service cannot require section 7 consultation for candidate or at-risk species. ESA section 7 regulations provide for a conference between a Federal action agency and the Service for actions that are likely to jeopardize the continued existence of a proposed species or likely to result in destruction or adverse modification of proposed critical habitat (50 CFR 402.10). Including candidate or other at-risk species in conferences would be voluntary on the part of the Federal agency; however, it is encouraged by the Service and through this policy, and other Federal agencies may voluntarily conference to expedite possible future re-consultations. This is consistent with ESA goals of recovering listed species and, ideally, avoiding the need to list species because threats to them have been addressed. Further, intra-Service consultations and conferences will consider effects of the Service's actions on listed, proposed, and candidate species. Candidate species are treated as if they are proposed for listing for purposes of conducting internal Service conferencing.

Additionally, under section 10 of the ESA, HCPs are voluntary and developed by the applicant, in consultation with the Service. It is the applicant who decides which candidate or non-listed at-risk species they wish to include. The Service has found that many applicants elect to include at-risk species to receive “no surprises” assurances and preclude the need to amend the associated incidental take permit, should the species become listed in the future. The voluntary inclusion of at-risk species in both the conference and HCP processes are proactive approaches to reduce the need for future listing of the species.

Comment (14):

One commenter said the Service mixes the concepts of voluntary conservation recommendations that can be provided under ESA section 7(a)(1) with requirements under ESA section 7(a)(2).

They also commented that neither standard under ESA section 10 imposes a “no net loss” requirement.

Response:

Federal agencies are directed to consult with the Service under ESA section 7(a)(1) to assist their development of programs to conserve listed species. Technical assistance to agencies with actions that require compliance with section 7(a)(2) is a logical nexus for the Service to advise Federal agencies about section 7(a)(1) conservation opportunities associated with these actions. Similarly, technical assistance to non-Federal applicants for incidental take permits under section 10(a)(1)(B) is a logical nexus to advise them about conservation opportunities associated with these actions. This policy provides a framework for such recommendations, and does not otherwise alter or substitute for standards under the ESA or the regulations implementing ESA sections 7(a)(2) and 10(a)(1)(B). Though not required, striving for “no net loss” in the status of the species' conservation is an appropriate mitigation goal, and may be to the benefit of the other agency or private landowner in greater future regulatory certainty or expedited future compliance (

e.g.,

including “at-risk” species).

ii. Authorities—Other

Comment (15):

One commenter requested that we revise section 5.3 of the draft policy to provide more detail about how compensatory mitigation would work in relation to section 4(d) rules for threatened species.

Response:

This policy is intended to be general in nature. More detailed guidance documents covering specific activities may be developed in the future, such as for rules promulgated under section 4(d) of the ESA.

Comment (16):

One commenter said that it was unclear how the policy would “replace” rules promulgated by other Federal agencies for guiding implementation of Federal laws such as the Clean Water Act (33 U.S.C. 1251

et seq.

) and natural resources such as “waters of the United States.” They requested clarification of how the April 10, 2008, joint rulemaking of the U.S. Army Corps of Engineers (USACE) and the Environmental Protection Agency (EPA) (73 FR 19594) applies to ESA actions and what the impact of the policy would be.

Response:

The Service has added clarification to this final policy that it does not replace or alter the referenced April 10, 2008, rule (73 FR 19594). Processes established by applicable statutes and regulations remain in effect and are not superseded by this policy. This policy applies to compensatory mitigation for all species and habitat protected under the ESA and for which the Service has jurisdiction. The April 10, 2008, rule (73 FR 19594) applies to impacts to aquatic resources permitted by section 404 of the Clean Water Act.

Comment (17):

One commenter said that issuance of this policy violates the Administrative Procedure Act (APA; 5 U.S.C. subchapter II) or the Regulatory Freedom Act (RFA).

Response:

The Service complied with all necessary requirements in publishing the final policy. We are unaware of the Regulatory Freedom Act but for the purposes of this response, will assume the commenter is referring to the Regulatory Flexibility Act (RFA) (5 U.S.C. 601

et seq.

). The policy does not require compliance with the APA or the RFA because it is not a regulatory document.

Comment (18):

One commenter was concerned that voluntary mitigation could be abused if an agency were to unreasonably withhold action for the purpose of applying undue pressure to force an applicant to volunteer mitigation measures. They said the policy should acknowledge and protect against this possibility.

Response:

We agree with the commenter that such an approach by Service or other agency staff would be unacceptable. It would also be contrary to this policy and existing authority. Processes established by applicable statutes and regulations remain in effect and are not superseded by this policy.

Comment (19):

One commenter stated that the policy goes beyond the authorities granted the Service in both sections 7 and 10 of the ESA. The other authorities relied on by the Service in adopting this policy, including the Presidential directives and memoranda, cannot legally form the basis for the promulgation of the policy.

Response:

This policy is designed to improve and clarify implementation of the ESA. Towards that end, it seeks to provide a framework for effecting mitigation that reflects a permissible reading of the law, while fulfilling the conservation purposes of the ESA. Federal agencies are directed to consult with the Service under ESA section 7(a)(1) to assist their development of programs to conserve listed species. A mitigation framework may provide valuable expertise for an agency considering their section 7(a)(1) responsibilities. Additionally, a framework may assist agencies with actions that require compliance with section 7(a)(2) of the ESA. Similarly, technical assistance to non-Federal applicants for incidental take permits under section 10(a)(1)(B) of the ESA is a logical nexus to advise them about conservation opportunities associated with these actions. The policy provides a framework for such recommendations and does not otherwise alter or substitute for the regulations implementing ESA sections 7(a)(2) and 10(a)(1)(B). Authority to make recommendations to mitigate impacts to resources covered by the ESA is provided by that statute. Promulgation of this policy is consistent with not only the ESA, but also the Office of Management and Budget's guidelines on interpretive policies. Those guidelines state that public policies, such as this one, guide administrative processes while increasing an agency's predictability to external parties.

Comment (20):

One commenter noted the ESA imposes different standards and prohibitions with respect to pre-listing versus post-listing activities for candidate conservation agreements with assurances (CCAAs) and safe harbor agreements (SHAs). By incorporating the net conservation benefit standard used for SHAs, the Service fails to account for these differences and conflates its treatment of pre-listing and post-listing activities.

Response:

The Service does not intend to change the requirements for CCAAs and SHAs. The intent of the policy is to describe the requirements for converting either of these agreements to a mitigation agreement should a landowner desire to make their conservation more permanent and use it for mitigation.

iii. NEPA

Comment (21):

One commenter said that the policy should recommend that the Service comment on NEPA documents apart from, or in addition to, section 7 consultation.

Response:

We agree that application of the Service's authority to make advisory comments and recommendations under NEPA provides a powerful capability for influencing conservation of a broad array of natural resources while helping agencies and proponents identify appropriate project alternatives. The Service will continue to comment on NEPA documents in addition to conducting section 7 consultations whenever warranted. Our application of NEPA in a mitigation context is covered in the Service mitigation policy (81 FR 83440, November 21, 2016).

Comment (22):

One commenter said the policy would increase the time and resources required by Federal agencies to comply with section 7 of the ESA and by proponents of any projects that may

adversely affect an at-risk species. The commenter said that the policy meets the definition of a major Federal action defined at 40 CFR 1508.18 and should be analyzed in an environmental impact statement to comply with NEPA.

Response:

As explained in more detail below, neither of the two alternatives evaluated in the NEPA assessment would be expected to result in significant effects to the human environment within the meaning of NEPA and the CEQ regulations. Although we describe potential actions and consequences that could flow from each of the alternatives, the nature and scope of environmental consequences that are likely to result from any of the alternatives would depend on a variety of intervening circumstances that are impossible to identify in this analysis. However, we find there is no basis to infer that any such effects, even viewed generously, would be significant.

In addition, because of the programmatic nature of the draft policy and the breadth of activities under consideration, the analyses of environmental effects must be very general, addressing the consequences from each alternative at a programmatic scale. Regardless of the alternative, we anticipate that the majority of the specific actions covered under the policy would receive additional project-specific NEPA review, either by other Federal agencies during their project review or by the Service during review of an ESA section 10(a)(1)(B) application. Those project-specific reviews would include development of appropriately detailed alternatives based on information necessary to complete informed and meaningful effects analyses. That information (

e.g.,

location, timing, duration, and affected resources, etc.) is currently not available. More detailed information is contained in the environmental assessment, which is available on the Internet at

http://www.regulations.gov

at Docket Number FWS-HQ-ES-2015-0165.

C. Net Conservation Gain/No Net Loss

Comment (23):

One commenter stated the policy should more consistently emphasize throughout that “conservation” is the goal for protected species and their habitat, using our full suite of authorities including the ESA. While “no net loss” is appropriate under certain statutes like the Clean Water Act (as acknowledged in the April 10, 2008, joint rulemaking of USACE and EPA (73 FR 19594), for example), “no net loss” is a lower standard than what they have sought in conservation banking and in-lieu fee programs.

Response:

The Service's mitigation policy (81 FR 83440, November 21, 2016) sets a mitigation planning goal of “net conservation gain,” which seeks to improve the status of affected resources, and, at a minimum, maintain the status of those resources (

i.e.,

“no net loss”). Adhering to the standards discussed in section 5 of this policy (Compensatory Mitigation Standards) is the best way to attain this goal, although we recognize that achieving a net conservation gain will not be possible in every circumstance, and in those cases will strive for “no net loss.”

Comment (24):

One commenter strongly opposed the goal of a “net gain” in the policy, stating the Service lacks the underlying statutory authority to require it under the ESA and it will likely result in an uncompensated taking in violation of the U.S. Constitution. The commenter stated that the obligations under the policy, with the use of mandatory language such as “must” and “shall,” constitute a rulemaking.

Response:

This policy adopts mitigation principles established by the Service's mitigation policy (81 FR 83440, November 21, 2016) and establishes compensatory mitigation standards to guide the use of compensatory mitigation under the ESA. The mitigation goal of “net gain” or, at a minimum, “no net loss,” is to assist the Service and its partners in developing mitigation programs and projects to further the purposes of the ESA. One of the stated purposes under section 2 of the ESA is to “provide a means whereby the ecosystems upon which endangered and threatened species depend may be conserved.” Section 3 of the ESA defines “conserved” as “the use of all methods and procedures which are necessary to bring any endangered species or threatened species to the point at which the measures provided pursuant to this Act are no longer necessary.” This conservation purpose of the ESA is served by the policy's goal of a “net gain” when developing compensatory mitigation.

In this context, the policy is not a legally binding rulemaking; the ESA and its implementing regulations determine the Service's decisions for listed species. The policy will not effectively compel a property owner to suffer a physical invasion of property and will not deny all economically beneficial or productive use of the land or aquatic resources. This policy provides consistent standards for the Service, and its partners, to apply when developing compensatory mitigation programs or projects, as appropriate under the authority of the ESA. The use of the terms “must” and “shall” in the policy are directed toward the Service's authority in implementing the ESA.

The policy is broadly framed to encompass all species covered under the ESA, but does not result in any particular actions concerning specific properties. Additionally, this policy substantially advances a legitimate government interest (conservation of species and their habitats) and does not present a barrier to all reasonable and expected beneficial use of private property.

Comment (25):

One commenter stated that the Service does not explain how it will determine or impose mitigation measures to meet a mitigation target that is somewhere between maintaining and improving the status of affected resources.

Response:

The Service, being national in scope of operations, wrote this policy to allow for further clarification on a regional and local scale. This will allow the Service to work with Federal agencies and applicants to develop mitigation measures that meet objectives based on local conditions and tailored to the specific species that are impacted. A less flexible policy could cause rigid adherence to a protocol, which may be more suitable in one region, or for one species, versus another.

Comment (26):

Commenters stated that the ESA requirements to avoid jeopardy or adverse modification and to minimize the impact of any take of listed species do not equate to the no net loss or net gain goal articulated in the draft policy, and the Service has no authority under the ESA to require measures that will result in a “net gain” or “no net loss.” In addition, one commenter said a “net gain” or “no net loss” goal is incompatible with well-established standards for administering sections 7 and 10 of the ESA.

Response:

Action agencies or proponents may adopt Service recommendations provided under this policy as part of their proposed actions, but electing to do so does not change the applicable standards under the ESA or otherwise alter the processes prescribed under the ESA and its regulations.

The Service does not view a “net gain” or “no net loss” goal as incompatible with well-established standards for administering sections 7 and 10 of the ESA. Instead, it is complementary to the ESA requirements to avoid jeopardizing the continued existence of any listed species, or destroying or adversely modifying any designated critical habitat. To achieve

this goal, an action agency or applicant need not abandon the actions they have taken to avoid jeopardizing the continued existence of any listed species, or destroying or adversely modifying any designated critical habitat. Instead, they may complement these actions by including additional measures that allow their action to reach the “net gain” or “no net loss” goal.

Comment (27):

One commenter said by encouraging Service staff to work with applicants to implement “no net loss” or “net conservation gain,” the judgment of applications will no longer be standardized. They said the policy does not state how conservation gain will be measured, whether on a numerical basis or under what circumstances the Service will make a qualitative judgment regarding the level of mitigation that achieves this standard.

Response:

This policy is national in scope, and it is beyond the scope of the policy to provide specific quantifiable measures to achieve a “net conservation gain” or specify the methodology for assessing or measuring the “net conservation gain.” The Service's mitigation goal is to achieve a “net conservation gain” or, at a minimum, “no net loss” of the affected resources. The policy provides the framework for formulating compensatory mitigation measures to achieve this goal. The geographical and ecological breadth of this policy's coverage combined with the variation in project and impact types affecting species and habitats nationwide make the detailed specifications for calculating “no net loss” or “net gain” impossible to include. Such determinations will either be made on a case-by-case basis or will be addressed through additional guidance or planning processes.

Comment (28):

Commenters said the policy should be revised to help Service staff avoid crossing the line between “encouraging” Federal agencies and applicants to achieve “a net gain or, at a minimum, no net loss in the conservation of listed species” and incorrectly representing to Federal agencies and applicants that they are somehow “required” to achieve a “net gain” or, at a minimum, “no net loss” in the conservation of listed species. Commenters added that Service staff should be instructed by the policy to clearly disclose to Federal agencies and applicants at all times that section 7 of the ESA does not require such a “no net loss in the conservation of listed species” or a “net gain” in relation to the “no jeopardy” and “no adverse modification” standards.

Response:

This policy clearly states that the mitigation planning goal is a goal, not a requirement. We expect further clarification on a regional and local scale to reiterate this distinction.

Comment (29):

One commenter stated the goal of “no net loss” is admirable and adequate with respect to the Presidential Memorandum (80 FR 68743, November 6, 2015); however, the commenter is concerned this new language may unfairly prohibit or require mitigation for agricultural actions without due process of assessment.

Response:

The Service will consider the facts specific to the actions that we review under our authorities. This policy does not provide for the Service to categorically deny development or agricultural activities. Instead, our decisions and opinions on those activities will be guided by relevant statutes and regulations.

Comment (30):

One commenter said the sentence, “Losses of habitat that require many years to restore may be best offset by . . . preservation of existing habitat . . .,” is counter to the “no net loss policy.”

Response:

The entire sentence reads, “Losses of habitat that require many years to restore may best be offset by a combination of restored habitat, preservation of existing high-quality habitat, and improved management of existing habitat.” It is the combination and ratios of these three habitat mitigation types that can create a “no net loss” scenario. Improved management can create an immediate conservation benefit and habitat restoration creates a long-term conservation benefit, while preservation of high quality habitat protects existing habitat from being lost. Long-term land management is included in the durability standard.

D. Applicability

Comment (31):

Several commenters had concerns about the applicability of the policy to existing mitigation programs, HCPs and associated incidental take permits, and ongoing section 7 consultations that were initiated between the Federal agency and the Service prior to the effective date of the final policy. The comments requested clarity that the policy does not apply to existing projects or projects currently under development, including the associated real estate and financial assurances.

Response:

The policy states that it applies to Federal and non-Federal actions permitted or otherwise authorized or approved prior to issuance of the policy only under circumstances where the action may require additional compliance review under the ESA. In addition, the policy states that it does not apply where the Service has already agreed in writing to mitigation measures for pending actions, except where new activities or changes in current activities associated with those actions would result in new impacts, or where new authorities or failure to implement agreed-upon recommendations warrant new consideration regarding mitigation. Service offices may elect to apply this policy to actions that are under review as of its effective date (see DATES, above).

Comment (32):

The draft policy does not include any de minimus size consideration. While consultation considers the extent of potential impacts to ESA-listed species, the draft policy does not. It talks in general terms about credit valuation and ratios, but at some point, there should be a consideration of a de minimus project size to which this draft policy would not apply.

Response:

The policy is intended to guide compensatory mitigation projects for listed and at-risk species regardless of the scope, magnitude, or size of the project. As such, it would not be reasonable to attempt to define “de minimis” limits for the application of the policy that would cover all species and mitigation projects across the country. However, step-down guidance derived from this policy for particular species would be more specific for the biological needs of the species and therefore likely consider factors related to the scope of compensatory mitigation projects.

E. Scope of the Policy

Comment (33

): One commenter said that the Service should identify activities and projects that are exempt from the policy.

Response:

We agree that the scope of coverage should be clearly described and have listed those circumstances when the policy does not apply in section 3, Scope.

Comment (34):

One commenter said that it is important for the policy to address species protected under additional Federal laws, including the Bald and Golden Eagle Protection Act (BGEPA; 16 U.S.C. 668-668d) and the Migratory Bird Treaty Act (MBTA; 16 U.S.C. 703-712).

Response:

We agree that conservation of the resources under BGEPA and MBTA is important. However, those resources, and processes specified by those Acts and any implementing regulations or guidance, are beyond the scope of this policy. We discuss these

authorities in the Service mitigation policy (81 FR 83440, November 21, 2016).

Comment (35):

One commenter said that the policy should be limited to listed threatened species, listed endangered species, candidate species, and designated critical habitat.

Response:

We agree that the commenter's list of covered resources is similar to our description of covered resources in section 3, Scope, of this policy. There we state that the policy applies to all species and habitat protected under the ESA and for which the Service has jurisdiction. Endangered and threatened species, species proposed as endangered or threatened, designated critical habitat, and proposed critical habitat are the primary focus of this policy. We also state that candidates and other at-risk species would benefit from adherence to this policy, and encourage all Service programs to develop programs and tools in cooperation with States and other partners.

F. At-Risk Species

Comment (36):

Several commenters suggested only listed species should be covered by the policy, and “at-risk” species references should be removed. Commenters suggested there is no ESA basis for including at-risk species in the policy, that no standards exist for the definition of at-risk species, and that it would create additional burdens on the public. One comment requested clarification of the jurisdiction of the Service, States, and tribes regarding at-risk species.

Response:

The Service has addressed at-risk species through implementation of the ESA under many voluntary programs. Often partners (

e.g.,

other agencies, private landowners) voluntarily consider “at-risk” species for greater regulatory certainty and to expedite future compliance if these “at-risk” species are later listed under the ESA. Under section 6 of the ESA, the Service partners with the States to fund research and recovery actions on listed and at-risk species. Candidate conservation agreements with assurances (CCAAs) are a highly successful program for private landowners providing voluntary conservation for at-risk species. Many HCPs under section 10 of the ESA also include voluntary coverage for at-risk species. These and other proactive efforts for at-risk species, including our draft Policy Regarding Voluntary Prelisting Conservation Actions (79 FR 42525, July 22, 2014), focus on preventing the need to list species under the ESA. The Service also values its partnerships with the States and tribes in conservation of fish and wildlife resources. This final policy aims to strengthen these partnerships and does not extend the Service's jurisdiction over at-risk species. We have included at-risk species, as appropriate, in the policy to further these efforts in preventing the decline of species to the point that protection under the ESA is necessary.

G. Equivalent Standards

Comment (37):

One commenter thought the policy should emphasize that there are no prescribed standards that will dictate mitigation but that every situation will be considered fact-specific and flexible, and be based upon the voluntary actions of the proponent.

Response:

The Service has written this policy in a manner that facilitates further clarification on a regional scale. As with many of the decisions made in impact analysis, determination of when and what type of mitigation should be implemented occurs on a project-by-project basis, under the authority at hand, with information most appropriate for the site or region of impact. Section 7 of this policy, Compensatory Mitigation Mechanisms, allows the Service flexibility in the type of mitigation mechanism used to meet this need. Section 5 of the policy, Compensatory Mitigation Standards, describes the standards we will require or recommend that all mechanisms meet.

H. Landscape-Scale Approach

Comment (38):

Individual actions that harm ESA-listed, proposed, and at-risk species must not be discounted or minimized because they are considered to impart only small or moderate impacts within the broader context of the landscape. The policy should consider how these site-specific impacts could be identified and accounted for prior to development of the most appropriate compensatory approach.

Response:

The Service agrees that small or moderate impacts that have cumulative effects are important to address. In each situation, the project effects analyses should identify all effects to the species under consideration, as well as measures to avoid, minimize, and compensate adverse effects. These analyses can characterize repeated, ongoing actions that may affect a species at a larger scale, and can help inform recovery efforts at a local or regional level. Ideally, the project proponent and the Service would also identify opportunities to support recovery/conservation of that species and include them in the action, if possible. This is a collaborative approach to conservation, consistent with relevant statutes and regulations, and can help offset the cumulative effects of many actions on the landscape.

Comment (39):

One commenter said the draft policy should provide additional guidance on how landscape-scale indirect effects would be evaluated for buffers surrounding existing mitigation sites, including mitigation banks. They recommend clarification regarding the process when additional compensation may be necessary for landscape-scale indirect effects to existing mitigation sites.

Response:

It is difficult at this time to provide specific guidance on buffers and indirect effects given the potential universe of actions that could arise and fact-specific situations of each mitigation site. We declined to provide such guidance in this policy.

Comment (40):

Some commenters were concerned that the landscape-level approach to mitigation planning would focus too narrowly on certain species to the detriment of others, or that purchasing credits from a conservation bank or in-lieu fee program would not equate to replacing lost habitat.

Response:

The goal of a landscape-scale approach to mitigation is to ensure functionally successful compensatory mitigation efforts for the habitats or species under consideration. While no project or habitat benefits all species all the time, using a landscape context to frame mitigation actions should reinforce functionality at the appropriate scale (

i.e.,

tract, regional, range) to benefit the target resource, and in most cases, other resources/species that also rely on that functional system. Using a landscape approach will help ensure the compensatory mitigation measures will meaningfully offset adverse effects to a species/habitat in a way that is ecologically sustainable over the long term. This is a more holistic approach to ensuring the functionality of the ecosystems on which federally listed and at-risk species depend.

Comment (41):

One commenter recommends that the Service consider revising the guidance provided under section 5.1.2 of the draft policy to discuss not only economies of scale associated with conservation banks and small impacts, but also to state that large-scale impacts require large-scale mitigation and such development projects have the potential to create landscape-scale conservation benefit for species, which may not be best achieved through banks.

Response:

The Service agrees large-scale projects have the potential to

provide large-scale mitigation measures to offset adverse effects and ideally contribute to recovery. The examples given in section 5.1.2 of the draft policy are compensatory mitigation programs that can be established in advance of impacts, such as conservation banking or in-lieu fee programs. A large-scale mitigation project implemented in advance of impacts will likely offset the impacts of multiple projects, and is essentially a conservation bank.

Comment (42):

One commenter stated that landscape-scale mitigation is unauthorized and unfeasible. Landscape-scale impact evaluations and required mitigation measures on this basis imports a policy objective into official ESA decisions in excess of statutory authority and is incongruent with the ESA.

Response:

The goal of the ESA is to conserve endangered and threatened species and the ecosystems on which they depend. Through science and technological advances, conservation has more tools than ever to effectively evaluate land use, populations, hydrology, and so forth, at scales relevant to the needs of federally listed and at-risk species. To ensure the most effective mitigation measures for these resources, it is critical to put them in an ecologically functional context,

i.e.,

a landscape. That does not mean every action requires advanced, ecosystem-level quantitative evaluations, but rather that the effects of an action and mitigation measures to offset those effects take into consideration truly functional strategies that will continue to provide long-term resource benefits. This does not expand any existing authorities for ESA implementation.

Comment (43):

We received comments requesting clarification of when programmatic approaches to mitigation would be appropriate.

Response:

This policy does not require the development of programmatic documents to support infrequent compensatory mitigations needs. The decision to develop programmatic approaches to mitigation will be made based upon resource-specific circumstances, such as how frequently agencies and applicants will need to compensate for their impacts.

Comment (44):

Comments included concerns about the Service's proposed extension of critical habitat to areas not currently occupied by a listed species, on the basis that an area may become critical because the species' range is expected to expand to that area. In determining the scale of a landscape-level approach to mitigation, the Service should not ignore the need for a rational connection to the area of actual impact of a proposed project. Instead, it should base requirements for landscape-scale mitigation on demonstrable connections between truly foreseeable or predictable impacts, rather than speculative projections of habitat or range modifications due to climate change.

Response:

The Service agrees that compensatory mitigation must be based on the best available science, and have a rational connection between project effects and proposed mitigation measures. The landscape approach provides the context within which to frame that connection. As our understanding of species' needs, habitats, and climate change increases, we will be better able to address potential future needs of species and their habitats. In planning mitigation strategies, it is also important to recognize uncertainties in future conditions, including habitats, water supplies, temperatures, etc. Those uncertainties should be built into the mitigation strategies to ensure that the proposed mitigation benefits adequately offset adverse effects over the long term. The policy does not address the designation of critical habitat; the regulations for the designation of critical habitat are found at 50 CFR 424.12.

Comment (45):

One commenter said the focus on landscape-scale conservation is laudable, but the draft policy introduces new processes and standards that could make achieving this goal more costly, time-consuming, and burdensome. The policy should include ways to incentivize the creation of landscape-scale mitigation projects that capitalize on the multiple ecosystem services and efficiencies that landscapes provide. More consideration for the self-regulating aspects of natural landscapes that could reduce management and monitoring burdens (lowering costs), and the ability to unstack credits for different listed species when their habitats overlap in space but not in function (increasing market returns), would help make landscapes a priority for the conservation marketplace.

Response:

The landscape approach to conservation provides a conceptual framework to design effective and durable mitigation strategies. The intent is to approach mitigation planning and implementation from an ecologically functional perspective for more effective, durable outcomes. Designing mitigation that works with natural landscapes will help reduce management costs and increase effectiveness. Monitoring also will help confirm our underlying understanding of mitigation benefits and may help identify where our assumptions need revision. This is critical to mitigation success.

Bundled or stacked credits cannot be unbundled or unstacked to offset the effects of multiple projects but can only be used to offset the effects of a single project. Once a unit of habitat is used as mitigation for one project, regardless of the number of listed species it supports, it cannot be used as mitigation a second time.

Comment (46):

One comment suggested that it is unclear why the required inclusion of adjacent ecosystems and human systems, which is how landscapes are defined, into conservation plans will provide a benefit to species that do not require those habitats or ecosystems for survival. The Service should clarify whether it intends mitigation consistent with a landscape-scale approach to require grouping of permittee proposed compensatory mitigation projects or grouping of project proponents, and in situations where this is desired, the benefits should be explained.

Response:

Including consideration of adjacent ecosystems and human systems into a landscape approach to compensatory mitigation recognizes the potential effects those systems may have on the species and habitats under consideration. This is especially important in ensuring long-term ecologic functioning of the compensatory mitigation that benefits the species/habitat. We are increasingly aware that adjacent landscapes and human management actions can significantly affect what was perceived as a protected area. This policy explicitly recognizes those factors in developing long-term, comprehensive conservation strategies for the resources under consideration. Because those strategies will be implemented using market-based and collaborative mitigation tools, the Service will work with our conservation partners to develop effective, feasible measures to put conservation on the ground. The policy does not require permittee proposed mitigation projects to be grouped, but they should be considered in the context of the landscape in which they occur.

Comment (47):

One commenter said that most species lack an up-to-date analysis of conservation status, and few have forward-looking strategies that the Service intends to rely on in implementing the policy. Furthermore, not all landscape-scale conservation strategies noted by the Service are peer-reviewed, publicly vetted, scientifically sound, or without controversy. If the Service intends to rely on such strategies in the context of preparing

recovery plans, status reviews, and similar documents, then these landscape-scale conservation strategies and the process for implementing them must be vastly improved. The Service should let the conservation market identify lands that represent valuable conservation targets and take advantage of “market efficiencies” that are a benefit of the conservation banking and in-lieu fee forms of mitigation.

Response:

The Service agrees on the importance of using the best available scientific information in developing conservation strategies. We rely on our conservation partners to bring their information and expertise into a collaborative process to help us develop those strategies. We also appreciate the assistance of the conservation market in designing, implementing, and expanding our suite of conservation tools to benefit listed and at-risk species.

Comment (48):

One commenter said the policy would benefit from greater recognition that activities associated with the management, monitoring, protections, and assurances need not be as robust in some instances, yet will achieve a functional landscape that is capable of supporting the conservation of listed and at-risk species, different from the actions necessary to provide compensatory mitigation for wetlands and other aquatic resources.

Response:

The Service agrees that some larger landscapes may require less intensive management than smaller areas. However, in most areas of the country, there are few “self-regulating” systems left that are not greatly influenced by invasive species, altered hydrology, ongoing erosion, and climate change. It is important in designing feasible, meaningful mitigation to appropriately scale the monitoring and management actions to most effectively provide resource benefits. This will depend on the resources, landscapes, and scale of the project, and should have a rational connection between the effects being offset and the benefits provided. We declined to modify the policy based on this comment.

Comment (49):

One commenter said the draft policy's example of a proactive, landscape-scale mitigation approach provided by songbird mitigation guidance in Texas to encourage compensatory mitigation opportunities is misleading. The commenter cited two instances in which potential conservation banks were precluded from establishing species credits due to the requirements in the guidance.

Response:

We respectfully disagree. The example used in the policy is intended to show instances where the Service has taken landscape-scale approaches for species conservation and compensatory mitigation. We recognize that not all proposals developed under the Texas example or other local guidance will ultimately be finalized and implemented, but the intent of this policy is to promote consistency and predictability so that mitigation providers may develop programs that are more likely to be implemented.

Comment (50):

Some commenters indicated that the policy should offer far more guidance on when and how the Service would apply a “landscape-level approach” to ESA mitigation, questioned whether the Service would apply a landscape approach differently to species with different range sizes, and stated that the draft policy does not explicitly describe how or whether a landscape approach would apply to listed species with narrow ranges.

Response:

The landscape approach to conservation considers the functional context of the species or habitat under consideration. Working with our conservation partners and project proponents, the Service will use a landscape context to provide the most effective and durable mitigation for listed and at-risk species, while preserving the greatest flexibility to implement those measures at many scales. Given the breadth of species and landscapes under consideration, it is impossible to give a “one size fits all” set of instructions. Using a landscape context to frame mitigation actions should reinforce functionality at the appropriate scale (

i.e.,

tract, regional, range) to benefit the target resource and, in most cases, other resources/species that also rely on that functional system. Though some species may have relatively narrow ranges, their threats may be best addressed at a landscape scale (

e.g.,

invasive species, altered hydrology, climate change). This approach will help ensure the compensatory mitigation measures will meaningfully offset adverse effects to a species/habitat in a way that is ecologically sustainable over the long term.

Comment (51):

One commenter noted that the statement requiring compensatory mitigation to be “sited in locations that have been identified in landscape level conservation plans or mitigation strategies” does not take into account the limited lands available for acquisition or restoration in some areas of the United States and the need to acquire property from willing sellers.

Response:

The Service recognizes conservation opportunities vary across the country by species and habitats. The landscape-scale approach is a way to place those opportunities in an ecologically functional context. The policy allows for compensatory mitigation on public lands (provided certain criteria are met,

e.g.,

“additionality”) and on private lands. It also encourages market-based tools and incentives to take advantage of the unique circumstances in each area. While there may be limitations in available lands in some regions, the policy includes a suite of tools that should provide meaningful options for feasible, durable compensatory mitigation nationwide.

Comment (52):

The policy will result in the creation of a landscape-scale system of conservation banks and other mitigation sites controlled by the Service that will take private land and their resources out of productive use.

Response:

The landscape approach to conservation considers the functional context of the species or habitat under consideration. It does not affect land ownership or control. Working with our conservation partners and project proponents, the Service will use a landscape context to provide the most effective and durable mitigation for listed and at-risk species, while preserving the greatest flexibility to implement those measures at many scales. Providing incentives for a market-based approach to conservation allows many tools to better meet the needs of species as well as the needs of landowner/project proponents. Generally, the use of conservation banking and other mitigation projects will not take resources out of “productive” use. Rather, conservation banks and other mitigation projects located on private land remain under control of the property owner and often provide other productive uses, such as grazing livestock.

I. Metrics

Comment (53):

One commenter stated that the policy should clarify that actions can meet ESA conservation standards using mitigation when adverse effects, and mitigation offsets of those effects, are calculated using tools that consider more than mere gain or loss of animals or habitat. For example, tools like Habitat Equivalency Analysis consider spatial, temporal, and functional parameters that look beyond mere loss or gain to calculate the extent and quality of mitigation required in given situations.

Response:

A discussion of tools used to calculate mitigation is not within the scope of this policy.

Comment (54):

Several commenters were concerned that adequate detail

about how assessment methodologies are developed and applied was not provided in the draft policy. Commenters were also concerned that the numerical loss and benefit to a site is largely a qualitative measurement, and the no methodology for quantification is offered. They said that transparent formulas to calculate “mitigation ratios” are needed to reduce subjectivity and increase transparency. They also noted that equivalent metrics for determining losses due to impacts and gains due to mitigation would aid in the assessment of “no net loss” or “net gain.”

Response:

The Service agrees that transparent formulas to calculate “mitigation ratios” reduce subjectivity and increase transparency. We also agree that equivalent metrics for determining losses due to impacts and gains due to mitigation would aid in the assessment of “no net loss” or “net gain.” This policy does include a statement that equivalent metrics should be used whenever possible.

Details about how to develop and apply assessment methodologies that are quantitative and transparent were not included in the draft, or this final, policy, because these details are species-specific and too complex to describe adequately within the framework of the policy. When detailed descriptions of assessment methodology development and application are prepared by the Service for a species-specific mitigation program, these descriptions are routinely shared with the public.

Comment (55):

One commenter said that since buffers are so important, they should be counted in the crediting of a mitigation site at some ratio of a full credit.

Response:

The Service agrees with this comment. In section 6.6, the policy states, “If buffers also provide functions and services for the species or other resources of concern, compensatory mitigation credit will be provided at a level commensurate with the level of functions and/or services provided to the species.”

Comment (56):

One commenter stated that for the purposes of mitigation, the Service has not shown compelling evidence that adequate assessment methodologies exist to consider adverse and beneficial actions that are fundamentally different in nature. Determining the numerical loss and benefit to a site is largely a qualitative measurement, and the draft policy offers no quantification methodology.

Response:

The policy describes types of mitigation programs or projects that do not directly replace species or habitat losses resulting from development projects. These are the types of programs in which the adverse actions, like habitat development, would be offset by an action that is fundamentally different in nature, such as gating of caves that serve as habitat for the species. The Service acknowledges that these types of credit/debit systems can often be more subjective than the traditional habitat-for-habitat type of mitigation. However, this type of mitigation has been the exception rather than the rule, and we expect Service staff to use other programs or projects only when they are the best option to alleviate the greatest threats to the species involved. When these programs or projects are allowed as mitigation, the Service will clearly explain the link between the threat and the selected mitigation.

Comment (57):

One commenter was concerned that there was no discussion of how successful “surrogate” indicators of incidental take have been in assuring adequate mitigation.

Response:

The use of surrogate indicators for the species impacted, such as the species' habitat, when applying compensatory mitigation in accordance with 50 CFR 402.14(i)(1)(i) is discussed at section 5.2 of the policy. We declined to add additional detail to that discussion.

Comment (58):

One commenter suggested that the Service require that all credits and debits associated with the same species and region be aggregated and reported across all compensatory mitigation mechanisms. They indicated this is critical to ensure an offset achieves “net conservation gain,” to ensure the offsets created by all mechanisms are using the best available science, and to ensure equivalency across multiple mechanisms. They also suggested when the same metric is not used by two different mechanisms; the requirement to define “the relationship (conservation) between credits and debits” can also be used to define the relationship between different credit metrics.

Response:

Currently, the Service uses the Regulatory In-lieu Fee and Banking Information Tracking System (RIBITS) to track credits and debits for conservation banks. The Service intends to work with the USACE to adapt RIBITS for use by the Service to also track credits and debits for in-lieu fee programs. The type of credits that are acceptable for a given species is determined by the Service when a mitigation program for a specific species is developed and implemented. The Service agrees that tracking the types and amounts of credits used across a species' range is a good idea, as it informs our understanding of the species' status. Collecting this type of information and working to achieve consistency requires coordination among Service staff, including those from different program areas. Describing the actions necessary to ensure this coordination occurs is beyond the scope of this policy.

Comment (59):

One commenter suggested a monitoring and verification process should be required of all mitigation. They said the verification process should include a method to verify that the outcomes of the project achieve the performance standard throughout the entire life of the mitigation project, and that method could be the initial assessment method or an abbreviated assessment that still quantifies the quality of the resource. They also suggested the party responsible for conducting the verification should be identified upfront.

Response:

We agree that these are important requirements to ensure that mitigation remains adequate over time. Specific methodologies for such verification are beyond the scope of this policy.

Comment (60):

One commenter said it should be made explicitly clear that while adaptive management is critical as knowledge and conditions change, the necessary updates to metrics or plans do not invalidate previous metrics or credits. They suggested that each credit, and debit if applicable, should be labeled with the method used at the time of assessment. They also suggested that reports should acknowledge when metrics are modified, but credits should still be aggregated across time. They noted that it may be necessary to use a correction method, and these correction methods should be transparent, scientifically supported, and included in all reports.

Response:

We agree in concept; however, this comment goes beyond the scope of the policy.

Comment (61):

One commenter asked that we clarify that plans should rely more on the criteria that define high-quality habitat, including criteria for landscape-scale attributes, indicating these criteria should be consistently reflected in the development of metrics used to define credits and debits within the region. They noted that opportunities to enhance and protect habitat may be outside of predefined conservation areas, but they must meet the definition for high-quality habitat and be deemed acceptable.

Response:

We agree that metrics should define high-quality habitat. We also agree that opportunities to enhance

and protect habitat may be outside of predefined conservation areas, and regardless of location, they should meet the definition for high-quality habitat and be deemed acceptable. This concept is captured in the final policy.

Comment (62):

One commenter liked the concept that ecological performance criteria must be tied to conservation goals and specific objectives identified in compensatory mitigation programs and projects, but they did not think the draft policy adequately describes how to accomplish this objective.

Response:

The level of detail necessary to describe how to accomplish this objective is beyond the scope of this policy and may be addressed in implementation guidance.

Comment (63):

One commenter stated the draft policy should more explicitly recognize the uncertainty associated with mitigation for certain species and describe a framework for managing the uncertainty. They said the policy should describe a framework the Service would use to assess the appropriate balance of avoidance, minimization, and mitigation, as informed by the likelihood of mitigation effectiveness and the species' recovery needs.

Response:

The Service agrees that there is uncertainty associated with mitigation for certain species. This policy includes a discussion of risk management tools. These tools can be used after the Service determines that a mitigation program or project is appropriate. Assessing risks and determining if mitigation is appropriate for a species is not within the scope of this policy, as uncertainty associated with mitigation for certain species will be fact specific.

J. Additionality

Comment (64):

We received two comments on the draft policy's use of “additionality” when developing compensatory mitigation on both public and private lands. Commenters believed additionality is not feasible when coupled with the “no net loss” goal, and that some inconsistencies exist in the descriptions in the text of the draft policy.

Response:

One purpose of using “additionality” as a standard in the policy is to promote the “net gain/no net loss” goal. There are many examples of mitigation sites and programs that have achieved these standards. The concept of compensatory measures providing additional benefits above baseline conditions is described in general terms in the policy. Those descriptions in the text are intended to give context to the conservation benefits of mitigation actions being additive to baseline conditions on both private and public lands.

K. Durability

Comment (65):

Some commenters were concerned that the requirement for perpetual management of mitigation sites places an undue burden on mitigation providers, or that perpetual management would be detrimental to the resource. They said that the imposition of perpetual endowment and adaptive management places burdens on all projects, and it would be impossible for industry to manage and maintain mitigation sites in perpetuity.

Response:

Perpetual management of mitigation sites is essential to assure durability of compensatory mitigation. The species and resources present on a mitigation site will dictate what management actions are undertaken. Management plans are tailored to the needs of the site. Mitigation providers should carefully consider the long-term commitment they are making when they agree to implement a compensatory mitigation project. Mitigation that is permanent is expected to have appropriate financial and real estate assurances to meet the durability standard in the policy.

L. Collaboration and Coordination

Comment (66):

One commenter said the policy would mandate the Service to work directly with landowners, potentially resulting in the loss of confidential information. The commenter noted recent conservation plans produced in Texas were developed by stakeholders and administered through State agencies to preserve confidentiality of private landowners.

Response:

The Service has a long history of working with private landowners to conserve fish and wildlife resources, including endangered and threatened species. Our partnerships with private landowners are essential to achieving our conservation mission. The policy does not include a mandate to work directly with landowners, but supports the ESA and its implementing regulations, which allows us to work with a variety of entities towards the recovery of listed species, and encourages cooperative conservation with all of our partners, including the exchange of ideas and information to better inform species management and evaluation. As noted in the policy, transparency in compensatory mitigation programs and ESA implementation is essential to achieving success. The Service is considerate of confidentiality, and any personal information maintained by the Service is protected by law (

e.g.,

Freedom of Information Act, 5 U.S.C. 552; Privacy Act, 5 U.S.C. 552a) to prevent unlawful dissemination.

Comment (67):

One commenter was concerned that the Service developed the policy without having addressed concerns raised by States and other parties regarding the Service's mitigation policy. They said that moving forward with this guidance without finalizing the overarching mitigation policy was premature, and created uncertainty and confusion over what the Service was likely to adopt.

Response:

This compensatory mitigation policy is a step-down policy under the final Service mitigation policy, which published in the

Federal Register

on November 21, 2016 (81 FR 83440). There were no substantial changes between the draft and final Service mitigation policy. In finalizing the Service's mitigation policy, we fully considered all comments and concerns raised by States and other parties. We also considered those comments as we developed this policy.

Comment (68):

Two commenters addressed the relationship between this policy and mitigation policy developments underway in other agencies. One commenter was concerned that while interagency cooperation is addressed in the draft policy, it only provided a history of previous ESA requirements. They were concerned that the draft policy did not address the relationship between similar policies being developed by other Federal land management agencies such as the Bureau of Land Management and the U.S. Forest Service. Another commenter noted that other Federal agencies are also responding to the Presidential memorandum (“Mitigating Impacts on Natural Resources From Development and Encouraging Related Private Investment”) issued November 3, 2015. They said that this created the opportunity for the Service to enter into agreements with other Federal agencies to work together on the implementation of similar mitigation policies and to avoid conflicts, delays, and inefficiencies.

Response:

At the time this policy is being finalized, neither the Bureau of Land Management nor the U.S. Forest Service has published final mitigation policies or regulations. The Service did provide comments on their proposed policies, and we did receive comments on this policy from those agencies. This policy, like the Service mitigation policy published November 21, 2016 (81 FR 83440), was developed in accordance with the November 3, 2015, Presidential Memorandum; the

Secretary of the Interior's Order 3330 entitled, “Improving Mitigation Policies and Practices of the Department of the Interior” (October 31, 2013); and Departmental Manual chapter (600 DM 6) on Landscape-Scale Mitigation Policy (October 23, 2015). The commenter's concern is anticipated by those documents, which envision the various agencies' mitigation policies applying common principles, terms, and approaches, thereby providing greater consistency and predictability for the public. Subsequent agreements between the Service and other agencies may be developed as need arises.

Comment (69):

One commenter said the draft policy would be improved if it built upon and utilized the USACE and EPA's definitions and mitigation policies. They said that a reconciliation of terms and process should be part of the Service's next steps.

Response:

We agree that this policy should apply concepts and definitions compatible with those developed through decades of mitigation practice under the Clean Water Act. Accordingly, we have developed this policy to use the same terms and approaches found in regulations and guidance promulgated by the USACE and EPA whenever possible. In some cases, we also recognized the need for language tailored to authorities, processes, and resources covered by the ESA rather than the Clean Water Act; in these cases, the policy's language complies with the Departmental Manual on Landscape-Scale Mitigation Policy (600 DM 6).

Comment (70):

One commenter said that the implementation of this policy will establish an inconsistent ESA framework because the National Marine Fisheries Service did not adopt the Service's mitigation policy (81 FR 83440, November 21, 2016). The commenter said this approach is contrary to the typical practice of promulgating joint regulations by the two agencies that provide for uniform application of the ESA. The commenter stated that by unilaterally proposing this policy and the Service mitigation policy (81 FR 83440, November 21, 2016), the Service is creating disparate requirements that will impose significant and additional regulations on project sponsors based on the possibility of a species being affected.

Response:

This policy is not a rulemaking and cannot otherwise alter or substitute for the existing regulations applied by both the National Oceanic and Atmospheric Administration (NOAA) and the Service in implementing the ESA. We also have coordinated development of both this policy and the Service mitigation policy (81 FR 83440, November 21, 2016) with NOAA, and incorporated their suggestions and modifications. Also, this policy was required under the Presidential Memorandum on Mitigation, the Department of the Interior Secretarial Order 3330, and 600 DM 6.

Comment (71):

One commenter said that the Service and other agencies risk unnecessary duplication of efforts and conflicting requirements, which will further delay project approval. They encouraged the Service to consider mitigation frameworks already in place before adding another layer of mitigation requirements to an already complex and burdensome project approval process.

Response:

We agree that existing mitigation programs and frameworks, as well as existing mitigation and conservation plans, should be considered. The Service recognizes that there may be existing plans developed by State and local governments and other stakeholders with characteristics that may be useful in mitigation planning depending on the specific action and the affected resources. The Service will work with project proponents and other stakeholders in reviewing existing programs, frameworks, and plans for applicability in the context of a specific action.

Comment (72):

One commenter said the policy would complicate other agencies' processes. They said that it would increase opportunities for the Service to force concessions from other Federal agencies and permittees, and that it has the potential to violate organic acts and will undoubtedly complicate the approval process for mining operations and other land users.

Response:

The scope of this policy does not limit the existing discretion of an action agency, or hold the action agency or applicant responsible for mitigation beyond an action agency's own authority, mission, and responsibilities. The Service recognizes that the authorities and processes of different agencies may limit or provide discretion regarding the level of mitigation for a project. This policy is not controlling upon other agencies, and the Service acknowledges that there may be limitations (

e.g.,

agency-specific authorities and 600 DM 6) on the implementation of measures that would achieve the policy's goal of “net conservation gain” or a minimum of “no net loss” when the costs of such mitigation are reimbursable by project beneficiaries under laws and regulations controlling agencies' activities (

e.g.,

Bureau of Reclamation). Other agencies may voluntarily adopt Service recommendations, which may expedite their other requirements.

Comment (73):

Some commenters expressed interest in a collaborative approach to mitigation planning on a landscape level. One commenter expressed support for additional engagement with stakeholders; another commented that the role of State wildlife data, analyses, and expertise should be utilized to the greatest extent possible; another commenter was skeptical of the collaborative approach preferred by the Service.

Response:

The Service agrees that developing multi-scale conservation plans and strategies benefits from many invested stakeholders that bring their unique insights and perspectives to ensure a more comprehensive and robust blueprint, and looks forward to building on our conservation partnerships through collaborative planning efforts. Our State partners in particular are critical to successful compensatory mitigation of federally listed and at-risk species. They bring statutory responsibility, data, expertise, and management capabilities to better ensure successful, durable mitigation efforts on the ground.

Comment (74):

Several commenters were concerned about the level of coordination undertaken by the Service on establishment of mitigation programs, and encouraged the Service to engage with both mitigation partners and with State agencies, to avoid duplication of effort and cross-jurisdictional issues and to improve outcomes. One commenter urged the Service to expedite reviews by working with agencies that already have established mitigation policies and programs.

Response:

The Service agrees that we have common goals with our partners and achieve much better outcomes when we work together on coordinated mitigation programs, especially where our jurisdiction overlaps with that of other agencies as it often does with our State wildlife agency partners. The Service intends to continue working with all of our partners.

M. Transparency

Comment (75):

One commenter requested clarification on the Service's meaning of “direct oversight” in the draft policy regarding compensatory mitigation programs and projects. The commenter also requested clarification on use of third-party evaluators in preparing monitoring reports for programs or projects.

Response:

The policy identifies the Service's authority for direct oversight

of compensatory mitigation programs and projects through sections 7 and 10 of the ESA. Under sections 7 and 10, the Service oversees the terms and conditions of the incidental take permit (section 10) or of the incidental take statement (section 7). Details on the roles of third-party evaluators involved in specific project actions are beyond the scope of the policy.

Comment (76):

We received several comments pertaining to the availability of information generated from mitigation programs. Commenters recommended the policy include standards for transparency of data and documents, participation of stakeholders, and consistency of data reported through mitigation programs.

Response:

Information on conservation banks is available to the public on the Regulatory In-lieu Fee and Banking Information Tracking System (RIBITS), and the Service intends to work with the USACE to add Service-approved in-lieu fee programs to that platform. As noted in the policy, the Service will share appropriate information concerning mitigation programs with the public, with the exception of personally identifiable information or other information that would be exempt under the Freedom of Information Act. We declined to add specific standards for transparency to the policy. Prescriptive standards for the type of data to be shared would not be reasonable for a policy that covers the myriad listed species across the country. Such standards would be better suited for species-specific guidance.

N. Preference for Advance Mitigation

Comment (77):

One commenter stated the policy should adopt an approach similar to that taken in the HCP handbook to identify exceptions to the requirement to mitigate in advance of impacts.

Response:

The policy is intended to provide standards and guidance to improve consistency of compensatory mitigation programs and projects for listed, proposed, and at-risk species. The preference for advance mitigation is based on the years of experience with compensatory mitigation programs. We realize that in some cases advance mitigation may not be possible, or even preferable; however, attempting to identify exceptions for this preference would not be reasonable, considering the vast diversity of species and programs that would occur across the country.

Comment (78):

Several commenters were concerned about the draft policy's preference for compensatory mitigation in advance of project impacts. One commenter specifically identified that reclamation of mining operations often lacks the ability for advanced mitigation on site. Other commenters cited that: The process of project permitting and financing determinations would likely not allow for advanced mitigation; the Service should provide incentives such as higher ratios for “after impact mitigation”; advance mitigation would be considered pre-decisional; or it is impossible to provide mitigation in advance of impacts.

Response:

We recognize that project scheduling and implementing on-site mitigation may not always align with the Service's preference for advance mitigation; however, conservation banks, in-lieu-fee programs, and other third-party mechanisms provide advanced mitigation options that reduce timing and other constraints. The Service's current practice to recommend mitigation in advance of impacts under sections 7 and 10 of the ESA is based on years of experience in compensatory mitigation practices. This policy promotes the development of advanced mitigation mechanisms, providing more options for mitigation users. The Service agrees that mitigation ratios can be used to incentivize mitigation accomplished in advance of impacts, but the discussion of specifics is beyond the scope of this policy. The Service does not consider advance mitigation to be pre-decisional, as the majority of advance mitigation programs, such as conservation banking, are established prior to any impacts, and projects that will mitigate at such sites may be unknown at the time of bank establishment. In all cases, the Service will evaluate the appropriateness of using a specific site or proposal as compensatory mitigation to offset the unavoidable impacts of a project at the time the Service reviews the project that will likely result in the impacts.

O. Eligible Lands

Comment (79):

Several commenters supported mitigation projects and programs on public lands and wanted us to add more flexibility to the policy. One commenter stated that if mitigation projects and programs occur on public lands, the land manager should be prepared to implement and fund alternative mitigation if a change in law allows incompatible uses to occur on mitigation lands. One commenter did not support mitigation projects and programs on Federal lands, but was in favor of it on State lands, and wanted State lands specifically mentioned in the policy.

Response:

Compensatory mitigation can occur on public lands, either Federal or State lands, and in some cases, such siting may lead to the best ecological outcome. Compensatory mitigation for impacts on public lands can be sited on both public and private lands. Compensatory mitigation for impacts on private lands can be located on public lands, but it is this combination, or that particular change in ownership classification, where Service staff should be attentive to additional considerations before making such a recommendation. These additional considerations are necessary to achieve the “net gain” or, at a minimum “no net loss,” goal of the policy.

Comment (80):

Several commenters provided comments on split estates. Commenters said the Service is arbitrarily limiting areas on which mitigation can occur by not allowing lands with split estates to qualify as mitigation lands; split estates do not necessarily result in an unsuitable mitigation site; and the holder of the rights would have to secure their own authorization under the ESA from the Service prior to exercising their rights.

Response:

The Service agrees that there are cases in which lands with split estates can be used for mitigation. The policy advises caution because we strive to ensure the durability of mitigation projects and programs, but the policy does mention possible remedies and that there could be other approaches to using lands with split estates for mitigation. A detailed discussion of remedies and other approaches is not within the scope of this policy.

P. Tribal Lands/Tribal Rights

Comment (81):

We received some comments regarding the siting of mitigation projects on tribal lands or on lands on which tribes hold treaty rights. One commenter expressed the need for local mitigation projects to be sited in or near reservation lands as well as on traditional off-reservation sites, to benefit the natural resources of the native peoples; another commenter was concerned that locating mitigation outside of treaty areas for projects that impact the resources in treaty areas would harm the treaty rights and the resources of the tribes. Other commenters asked that tribes be consulted in the siting and approval of mitigation sites and programs. Others were concerned about the impacts of habitat restoration and long-term management on treaty resources.

Response:

The Service is committed to upholding our trust responsibilities to federally recognized tribes to conserve shared natural resources, consistent with the Service's Native American

Policy (revised January 2016; see 81 FR 4638, January 27, 2016). This is accomplished under this policy by ensuring that mitigation projects and programs are located in areas that provide the most benefit to the affected resources, while respecting treaty rights. The Service recognizes the importance of tribal involvement and expertise when siting mitigation projects and when developing service areas and management plans for conservation banks and other types of mitigation mechanisms. Specific guidance on Service coordination with tribes is beyond the scope of this policy.

Comment (82):

We received some comments requesting specific guidance on facilitating creation of conservation banks on tribal lands, comments on including tribal cultural uses and practices as allowable uses on mitigation lands, and a suggestion for developing mitigation principles similar to those developed with the USACE in the State of Washington for specific mitigation programs.

Response:

The Service agrees that these are all important considerations, and such guidance and suggestions will be more effectively addressed in step-down guidance at a later time.

Comment (83):

We received comments regarding the applicability of the policy to tribes, or to a specific HCP under development, and a suggestion that the Service consult with any tribes who so request before finalizing this policy.

Response:

The Service notified tribal contacts when we made the draft policy available for review and comment (81 FR 61032, September 2, 2016). We addressed all tribal comments, as appropriate, as we developed the final policy. The policy applies to all forms of compensatory mitigation for all species and habitat protected under the ESA and for which the Service has jurisdiction. The policy is flexible with regard to its application to specific mitigation projects or programs that are under development at the time this policy is finalized, leaving that decision to individual Service offices.

Q. Service Areas

Comment (84):

Several commenters requested more detail in the policy about requirements for developing service areas.

Response:

Specific considerations for developing service areas are beyond the scope of this policy and will be provided in implementation guidance.

R. Credit Bundling

Comment (85):

A few commenters were concerned about credit bundling, also known as credit stacking, where multiple resources exist on the same unit area. One commenter was concerned that any resources bundled or stacked with a listed species would suffer, as the site would be managed only for the benefit of the listed species and not the other resource(s), and wanted multi-agency review teams to be aware of this when authorizing mitigation banks. Other commenters wanted the Service to make it clear that credits could potentially be used for multiple purposes, and another wanted the Service to allow mitigation credits to be used to compensate for multiple impact projects.

Response:

The Service encourages credit bundling where multiple resources exist on the same unit area and where management actions benefit those multiple resources. However, bundled credits can only be used to compensate for one impact project (

i.e.,

the credits can never be “unbundled” or “unstacked” to compensate for multiple projects). If two resources, such as a California red-legged frog (CRLF) and a wetland regulated pursuant to section 404 of the Clean Water Act are bundled together in a credit, that credit may be used to compensate for impacts to both resources from the same project, or to compensate for impacts to CRLF or to wetlands. If the credit were used to compensate for CRLF, then it can no longer be used to compensate for wetlands (

i.e.,

that portion of the credit is “retired”). Unbundling these functions and services would result in a net loss of habitat and would undermine the Service's efforts to conserve the species. This approach is consistent with the policies and regulations of the USACE, and other State and Federal agencies the Service works with on multi-agency-approved mitigation projects and programs.

S. Mitigation Mechanisms

Comment (86):

One commenter suggested the

Benefits of the Draft Policy

section be clarified to include other mitigation mechanisms that may not be market-based. The commenter suggested that the first sentence of the final paragraph of that section be modified to read: “This draft policy would encourage mitigation in conjunction with programmatic approaches to ESA section 7 consultations and HCPs designed to focus on conservation outcomes that achieve “no net loss” or “net gain” through the use of market-based approaches (

e.g.,

conservation banks), in-lieu fee programs, permittee-responsible, and other third-party implemented mitigation programs.”

Response:

The Service considers that one of the benefits of this policy is the opportunity it creates for a market-based approach to mitigation as highlighted in the Presidential Memorandum of November 3, 2015, on Mitigating Impacts on Natural Resources From Development and Encouraging Related Private Investment (80 FR 68743, November 6, 2015), especially those that can be established in advance of impacts. Conservation banking is a proven example of this approach. The policy does not preclude the other mechanisms mentioned by the commenter. We declined to adopt the commenter's suggested sentence.

Comment (87):

Several commenters stated that the draft policy was confusing and complex, citing the Service's definition of compensatory mitigation being too broad, lack of a mitigation protocol, and need for a guidance document to ensure a separation of regulatory and nonregulatory authority, goals, and standards. One comment stated the complexity of obtaining approval, as well as cost, for a mitigation site would discourage investment.

Response:

One purpose of the policy is to provide predictability and thereby reduce uncertainty of investment for market-based mitigation programs. We acknowledge that the nature of existing compensatory mitigation mechanisms and programs currently being implemented is complex. We have revised the draft policy so that this final policy addresses overarching goals and standards only, and we will later provide more detailed implementation guidance. However, providing a mitigation “protocol” that covers the breadth of species and circumstances across the country would not be reasonable. We anticipate species- or geographic-specific guidance to be developed under the umbrella of this policy.

Comment (88):

We received two comments regarding section 7.2,

Short-Term Compensatory Mitigation,

in the draft policy. One comment indicated it may not be helpful, particularly when dealing with aquatic species. The other requested more detail in this section and stressed it should be more widely used.

Response:

The use of short-term compensatory mitigation is a novel approach, with long-term results yet to be evaluated. The policy fully acknowledges that it is likely to be limited in use, for a variety of reasons, primarily the ability to predict all temporal losses of an impact in order to provide an appropriate offset for those losses. However, the concept may be

useful in some circumstances. Thus, it is included in the policy in an effort to provide additional flexibility to conserve listed, proposed, and at-risk species.

Comment (89):

Several commenters requested that the Service express a preference for conservation bank credits over other forms of compensatory mitigation. One commenter requested the Service add a preference for rehabilitation or restoration over preservation and that the Service prohibit use of alternative forms of mitigation if conservation bank credits are available in the same proposed service area.

Response:

As stated in section 6 of this policy, the appropriate form of compensatory mitigation must be based on the species' needs and the nature of the impacts adversely affecting the species. All mitigation tools listed in the policy are capable of being strategically sited, consolidated, and provided in advance of impacts if they are designed to do so. These preferences will provide the best outcomes for species when they are implemented in any mitigation tool, and, therefore, we have retained flexibility for applicants when selecting mitigation tools. We decline to prohibit the use of alternative forms of mitigation where conservation bank credits are available, as that would limit flexibility and inherent choice of the applicant(s).

T. Climate Change

Comment (90):

Several commenters addressed sections of the draft policy that referenced climate change for consideration in mitigation planning. Some commenters were concerned about the uncertainty of calculating the effects of climate change for compensatory mitigation and the use of mitigation ratios to address climate change. One commenter said the policy should provide more detail on integrating climate change effects in the analysis of mitigation programs. Another requested the basis for the term “accelerated” climate change used in the policy.

Response:

Consistent with the Departmental Manual (600 DM 6), the Service recommends that climate change be considered when evaluating the effects of an action and developing appropriate mitigation measures. The Service recognizes the science of climate change is advancing, and assessment methodologies are continually being refined to address the effects of climate change to specific resources and at differing scales. Including specific information on these topics is beyond the scope of this policy. Therefore, the policy is written with language to ensure that it does not become quickly outdated as methodologies evolve. We use the term “accelerated climate change” in a general sense to reference a substantial portion of scientific literature and scholarly articles on the subject, including reports produced by the Intergovernmental Panel on Climate Change.

The final policy follows:

U.S. Fish and Wildlife Service

Endangered Species Act Compensatory Mitigation Policy

1. Purposes

This policy adopts the mitigation principles established in the U.S. Fish and Wildlife Service (Service) Mitigation Policy (81 FR 83440, November 21, 2016), establishes compensatory mitigation standards, and provides guidance for the application of compensatory mitigation through implementation of the Endangered Species Act of 1973, as amended (ESA; 16 U.S.C. 1531

et seq.

). Compensatory mitigation (compensation) is defined in this policy as compensation for remaining unavoidable impacts after all appropriate and practicable avoidance and minimization measures have been applied, by replacing or providing substitute resources or environments (see 40 CFR 1508.20) through the restoration, establishment, enhancement, or preservation of resources and their values, services, and functions (600 DM 6.4C). This policy applies to all Service compensatory mitigation requirements and recommendations involving ESA compliance. It is also intended to assist other Federal agencies carrying out their statutory and regulatory responsibilities under the ESA and to provide applicants with guidance on the appropriate use of compensatory mitigation for proposed actions. The standards and guidance in the policy will also assist mitigation providers in developing compensatory mitigation project proposals.

Adherence to the principles, standards, and guidance identified in this policy is expected to: (1) Provide greater clarity on applying compensatory mitigation to actions subject to ESA compliance requirements; (2) improve consistency and predictability in the implementation of the ESA by standardizing compensatory mitigation practices; and (3) promote the use of compensatory mitigation at a landscape scale to help achieve the purposes of the ESA.

This policy encourages Service personnel to collaborate with other agencies, academic institutions, nongovernmental organizations, tribes, and other partners to develop and implement compensatory mitigation measures and programs through a landscape-scale approach to achieve the best possible conservation outcomes for activities subject to ESA compliance. It also encourages the use of programmatic approaches to compensatory mitigation that have the advantages of advance planning and economies of scale to: (1) Achieve a net gain in species' conservation; (2) reduce the unit cost of compensatory mitigation; and (3) improve regulatory procedural efficiency.

Appendices A and B provide a list of acronyms and a glossary of terms used in this policy, respectively.

2. Authorities and Coordination

This policy is focused on compensatory mitigation that can be achieved under the ESA. The Service's authority to require mitigation is limited, and our authority to require a “net gain” in the status of endangered and threatened (listed) or at-risk species has little or no application under the ESA. However, we can recommend the use of mitigation, and in particular compensatory mitigation, to offset the adverse impacts of actions under the ESA. Other statutes also provide the Service with authority for recommending compensatory mitigation for actions affecting fish, wildlife, plants, and their habitats (

e.g.,

Fish and Wildlife Coordination Act (FWCA; 16 U.S.C. 661-667e), National Environmental Policy Act (NEPA; 42 U.S.C. 4321

et seq.

), and Oil Pollution Act (33 U.S.C. 2701

et seq.

)). In addition, statutes such as the Clean Water Act (CWA; 33 U.S.C. 1251

et seq.

) and Federal Power Act (16 U.S.C. 791a-828c) provide other Federal agencies with authority to recommend or require compensatory mitigation for actions that result in adverse effects to species or their habitats. These other authorities are often used in combination with, or to supplement the authorities under, the ESA to recommend or require compensatory mitigation for a variety of resources including at-risk species and their habitats. For example, the ESA and the Federal Land Policy and Management Act (43 U.S.C. 1701

et seq.

) together provide a greater impetus to conserve desert tortoise habitat than either statute alone.

Synchronizing environmental review processes, especially through early coordination with project proponents, allows the Service to provide comments

and recommendations for all mitigation types (

i.e.,

avoidance, minimization, and compensation) included as part of proposed actions in an effort to reduce impacts to listed, proposed, and at-risk species and designated and proposed critical habitat. For example, the Service may comment on proposed actions under NEPA and State environmental review statutes (

e.g.,

California Environmental Quality Act and Hawaii Environmental Policy Act). Coordination of environmental review processes generally results in conservation outcomes that have a greater likelihood of meeting the Service's mitigation goal.

The supplemental mandate of NEPA (42 U.S.C. 4335) adds to the existing authority and responsibility of the Service to protect the environment when carrying out our mission under the ESA. The Service's goal is to provide a coordinated review and analysis of the impacts of proposed actions on listed, proposed, and at-risk species, and designated and proposed critical habitat that are also subject to the requirements of other statutes such as NEPA, CWA, and FWCA. Consultation, conference, and biological assessment procedures under section 7 and permitting procedures under section 10(a)(1)(B) of the ESA can be integrated with interagency cooperation procedures required by other statutes such as NEPA or FWCA. This is particularly the case for cumulative effects. Cumulative effects are often difficult to analyze, are defined differently under different statutes, and are often not adequately considered when making decisions affecting the type and amount of mitigation recommended or required.

3. Scope

The ESA Compensatory Mitigation Policy covers all forms of compensatory mitigation, including, but not limited to, permittee-responsible mitigation, conservation banking, in-lieu fee programs, and other third-party mitigation projects or arrangements, for all species and habitat protected under the ESA and for which the Service has jurisdiction. Endangered and threatened species, species proposed as endangered or threatened, and designated and proposed critical habitat, are the primary focus of this policy. Candidates and other at-risk species would also benefit from adherence to the standards set forth in this policy, and all Service programs are encouraged to develop compensatory mitigation programs and tools to conserve at-risk species in cooperation with States and other partners.

This policy does not apply retroactively to approved mitigation programs; however, it does apply to amendments and modifications to existing conservation banks, in-lieu fee programs, and other third-party compensatory mitigation arrangements unless otherwise stated in the mitigation instrument. Examples of amendments or modifications to which this policy applies include authorization of additional sites under an existing instrument or agreement, expansion of an existing site, or addition of a new type of resource credit such as addition of a new species credit.

This policy does apply to other Federal or non-Federal actions permitted or otherwise authorized or approved prior to issuance of this policy under circumstances where the action may require additional compliance review under the ESA if: New information becomes available that reveals effects of the action to listed species or critical habitat not previously considered; the action is modified in a manner that causes effects to listed species and critical habitat not previously considered; authorized levels of incidental take are exceeded; a new species is listed or critical habitat is designated that may be affected by the actions; or the project proponent specifically requests the Service to apply the policy. This policy does not apply to actions that are specifically exempted under the ESA. It also does not apply where the Service has already agreed in writing to mitigation measures for pending actions, except where new activities or changes in current activities associated with those actions would result in new impacts, or where new authorities, or failure to implement agreed upon recommendations warrant new consideration regarding mitigation. Service offices may elect to apply this policy to actions that are under review as of December 27, 2016,

This policy clarifies guidance given in the Service's “Guidance for the Establishment, Use, and Operation of Conservation Banks,” published in the

Federal Register

on May 8, 2003 (68 FR 24753), and “Guidance on Recovery Crediting for the Conservation of Threatened and Endangered Species,” published in the

Federal Register

on July 31, 2008 (73 FR 44761).

4. Application of Compensatory Mitigation Under the ESA

Sections of the ESA under which the Service has authority to recommend or require compensatory mitigation for species or their habitat are identified below. In this section, we provide guidance on applications of these ESA authorities within the context of compensatory mitigation. The compensatory mitigation standards set forth in section 5. Compensatory Mitigation Standards of this policy apply to compensatory mitigation programs and projects established under the ESA, as appropriate.

4.1.

Section 7—Interagency Cooperation

Section 2(c)(1) of the ESA directs all Federal departments and agencies to conserve endangered and threatened species. “Conserve” is defined in section 3 of the ESA as all actions necessary to bring the species to the point that measures provided pursuant to the ESA are no longer necessary (

i.e.,

recovery or the process through which recovery of listed species is accomplished). This requirement to contribute to the conservation of listed species is reaffirmed in section 7(a)(1) of the ESA. Congress recognized the important role Federal agencies have in conserving listed species.

When the ESA was enacted in 1973, section 7 was a single paragraph directing “all Federal departments and agencies . . . [to] utilize their authorities in furtherance of the purposes of [the ESA] by carrying out programs for the conservation of endangered species and threatened species listed pursuant to section 4 of [the ESA]

and

[emphasis added] by taking such action necessary to insure that actions authorized, funded, or carried out by them do not jeopardize the continued existence of such endangered species and threatened species or result in the destruction or modification of habitat of such species which is determined . . . to be critical.” In 1979, section 7 was amended to create subsections 7(a)(1) and 7(a)(2). Federal agencies have separate responsibilities concerning species and their habitats under these two subsections. Section 7(a)(1) is a recovery measure that requires Federal agencies to carry out programs for the conservation of listed species. Section 7(a)(2) is a stabilization measure that requires Federal agencies to ensure actions they authorize, fund, or carry out are not likely to jeopardize the continued existence of a listed species or destroy or adversely modify critical habitat.

4.1.1. Section 7(a)(1)

Section 7(a)(1) of the ESA states, “. . . Federal agencies shall, in consultation with and with the assistance of the Secretary, utilize their authorities in furtherance of the purposes of [the ESA] by carrying out programs for the conservation of

endangered species and threatened species.” The Secretary's section 7(a)(1) consultation role has been delegated to the Service, and the Service therefore consults with and assists Federal agencies to accomplish these conservation programs. “Conservation,” as it is defined in section 3 of the ESA, means “to use and the use of all methods and procedures which are necessary to bring any endangered species or threatened species to the point at which the measures provided pursuant to this Act are no longer necessary.” Through this policy, the Service encourages Federal agencies to use section 7(a)(1) to achieve a goal of a “net gain” through their mitigation policies and approaches so that they may help bring endangered and threatened species to the point where they no longer need to be listed pursuant to the ESA.

Mitigation Goal:

Development of landscape-scale conservation programs for listed and at-risk species that are designed to achieve a net gain in conservation for the species.

Guidance:

One way that Federal agencies can meet their responsibility under section 7(a)(1) of the ESA is by working with the Service and other conservation partners to develop landscape-scale conservation plans that include compensatory mitigation programs designed to contribute to species recovery. Landscape-scale approaches to compensatory mitigation, such as conservation banking and in-lieu fee programs, are more likely to be successful if Federal agencies, especially those that carry out, fund, permit, or otherwise authorize actions that can use these programs, are involved in their establishment and support their use. For example, the Federal Highway Administration, as part of its long-term planning process, can use its authorities to work with the Service and other conservation partners on conservation programs for listed species that may be impacted by anticipated future actions. The conservation programs can include identifying priority conservation areas, developing crediting methodologies to value affected species, and developing guidance for offsetting those impacts that is expected to achieve “no net loss,” or even a “net gain,” in conservation for the species. These tools and information can then be used by conservation bank sponsors and other mitigation providers to develop compensatory mitigation opportunities (

e.g.,

conservation banks) for use by the Federal Highway Administration, and also by State departments of transportation and other public and private entities seeking compensation to offset the impacts of their actions for those same species. The resulting compensatory mitigation program provides conservation for the species that would otherwise not have been achieved—a contribution to listed species conservation under section 7(a)(1) of the ESA by the Federal agency.

4.1.2. Section 7(a)(2)

Section 7(a)(2) of the ESA states, “[e]ach Federal agency shall . . . insure that any action authorized, funded, or carried out, by such 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 [critical] habitat.” The Service determines through consultation under section 7(a)(2) whether or not the proposed action is likely to jeopardize the continued existence of listed species or destroy or adversely modify critical habitat. The Service then issues a biological opinion stating our conclusion and, in the case of a finding of no jeopardy (or jeopardy accompanied by reasonable and prudent alternatives that can be taken by the Federal agency to avoid jeopardy), formulates an incidental take statement, if such take is reasonably certain to occur, that identifies the anticipated amount or extent of incidental take of listed species and specifies reasonable and prudent measures necessary or appropriate to minimize such impacts under section 7(b)(4) of the ESA. If the proposed action is likely to adversely affect critical habitat, the Service's biological opinion also analyzes whether adverse modification is likely to occur and specifies reasonable and prudent alternatives to avoid adverse modification, as necessary and if available. If the listed species is a marine mammal, incidental taking is authorized pursuant to section 101(a)(5) of the Marine Mammal Protection Act (MMPA; 16 U.S.C. 1361

et seq.

) prior to issuance of an incidental take statement under the ESA.

Mitigation Goal:

The Service should work with Federal agencies to assist them in proposing actions that are not likely to jeopardize the continued existence of any listed species or result in the destruction or adverse modification of any designated critical habitat, as required under section 7(a)(2) of the ESA. While not required under section 7(a)(2), the Service may also encourage Federal agencies and applicants (consistent with Federal action agency authorities) to include compensation as part of their proposed actions to offset any anticipated impacts to these resources that are not avoided to achieve a “net gain” or, at a minimum, “no net loss” in the conservation of listed species.

Guidance:

The Service should coordinate with Federal agencies and encourage them to use their authorities under appropriate statutes (

e.g.,

Federal Land Policy and Management Act) to avoid, minimize, and offset adverse impacts to listed species and designated critical habitat using the full mitigation sequence. Compensation is a component of the mitigation sequence that can be applied to offset adverse effects of actions on listed species and critical habitat. Furthermore, the Service can work with Federal agencies to establish compensatory mitigation programs such as conservation banking and in-lieu fee programs that incentivize offsetting the effects of their actions through the appropriate use of compensation while expediting regulatory processes for the Federal agencies and applicants. Due to economies of scale, such mitigation programs are particularly effective at providing more effective and cost-efficient compensation opportunities for offsetting the effects of multiple actions that individually have small impacts.

4.1.2.1. Proposed Actions and Project Descriptions

To better implement section 7(a)(2) of the ESA and prevent species declines, the Service will work with Federal agencies and applicants to identify conservation measures, using the full mitigation sequence, that can be included as part of proposed actions for unavoidable impacts to listed species and critical habitat to achieve, at a minimum, “no net loss” in the species' conservation. The mitigation sequence should be observed (

i.e.,

avoid first, then minimize, then compensate), except where circumstances may warrant a departure from this preferred sequence. For example, it may be preferable to compensate for the loss of an occupied site that will be difficult to maintain based on projected future land use (

e.g.,

the site is likely to be isolated from the population in the future) or climate change impacts. The Service will consider conservation measures, including compensatory mitigation, as appropriate, proposed by the action agency or applicant as part of the proposed action when developing a biological opinion addressing the effects of the proposed action on listed species and critical habitat. This consideration of beneficial actions (

i.e.,

compensatory mitigation) is consistent with our implementing regulations at 50 CFR 402.14(g)(8). Federal agencies should coordinate early with the Service on the

appropriateness of such beneficial actions as compensation for anticipated future actions.

4.1.2.2. Jeopardy or Adverse Modification Determinations and RPAs

When the Service issues a biological opinion with a finding of jeopardy or adverse modification of critical habitat, we include reasonable and prudent alternatives (RPAs) when possible. RPAs may include any and all forms of mitigation, including compensatory mitigation, that can be applied to avoid proposed actions from jeopardizing the existence of listed species or destroying or adversely modifying critical habitat, provided they are consistent with the regulatory definition of RPAs at 50 CFR 402.02.

4.1.2.3. No Jeopardy and No Adverse Modification Determinations and RPMs

When the Service issues a biological opinion with a finding of no jeopardy, we provide the Federal agency and applicant (if any) with an incidental take statement, if take is reasonably certain to occur, in accordance with section 7(b)(4) of the ESA. The incidental take statement specifies the amount or extent of anticipated take, the impact of such take on the species, and any reasonable and prudent measures (RPMs) and implementing terms and conditions determined by the Service to be necessary or appropriate to minimize the impact of the take.

RPMs can include mitigation, in appropriate circumstances, if such a measure minimizes the effect of the incidental take on the species, and as long as the measure is consistent with the interagency consultation regulations at 50 CFR 402.14. RPMs should also be commensurate with and proportional to the impacts associated with the action. The Service should provide an explanation of why the measures are necessary or appropriate. If the proposed action includes conservation measures sufficient to fully compensate for incidental take, it may not be necessary to include additional minimization measures (beyond monitoring) through RPMs.

4.1.3. Section 7(a)(4)

Section 7(a)(4) of the ESA states, “[e]ach Federal agency shall confer with [the Service] on any agency action which is likely to jeopardize the continued existence of any species proposed to be listed . . . or result in the destruction or adverse modification of critical habitat proposed to be designated for such species.” The conference is designed to assist the Federal agency and any applicant to identify and resolve potential conflicts at an early stage in the planning process.

Mitigation Goal:

The Service should work with Federal agencies to assist them in proposing actions that are not likely to jeopardize the continued existence of any species proposed for listing or result in the destruction or adverse modification of any proposed critical habitat, in accordance with section 7(a)(4) of the ESA. The Service should also encourage Federal agencies and applicants to include compensation as part of their proposed actions to offset any anticipated impacts to resources that are not avoided to achieve a net gain or, at a minimum, no net loss in their conservation.

Guidance:

The Service should coordinate with Federal agencies and encourage them to use their authorities to avoid and minimize adverse impacts to proposed and at-risk species and proposed critical habitat using the full mitigation sequence. The Service may recommend compensatory mitigation for adverse effects to proposed or at-risk species during informal conference or in a conference report or conference opinion, or the Federal action agency or applicant may propose compensatory mitigation as part of the action. If a conference opinion or report determines that a proposed action is likely to jeopardize the continued existence of a proposed species or adversely modify or destroy proposed critical habitat, the Service will include RPAs, if any are available, that may include compensatory mitigation. If the species is subsequently listed or critical habitat is designated prior to completion of the action, the Service will give appropriate consideration to compensatory mitigation when confirming the conference opinion as a biological opinion or if formal consultation is necessary. This consideration of beneficial actions is consistent with our implementing regulations at 50 CFR 402.14(g)(8).

4.2.

Section 10—Conservation Plans and Agreements

4.2.1. Safe Harbor and Candidate Conservation Agreements

Under a candidate conservation agreement with assurances (CCAA), private and other non-Federal property owners may voluntarily undertake conservation management activities on their properties to address threats to unlisted species and to enhance, restore, or maintain habitat benefiting species that are candidates or proposed for listing under the ESA or other at-risk species in exchange for assurances that no further action on their part is required should

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