WASHINGTON, Oct. 12, 2016 - The U.S. Fish and Wildlife Service (FWS) may not have the authority to ensure that mitigation for land use – compensation for resources that would be destroyed – achieve a “net conservation benefit,” as envisioned by the Obama administration in recently proposed policies.

That’s the opinion of Kerry McGrath, an attorney with Hunton & Williams in Washington who conducted a webinar for the National Agricultural Law Center earlier this week. McGrath discussed the administration’s mitigation policies for streams and wetlands, and, as proposed by FWS on Sept. 2, for endangered species. The species mitigation policy proposal carries a comment deadline of Oct. 17, but FWS has received a handful of requests for an extension, including from the American Farm Bureau Federation.

The renewed focus on mitigation results from a memorandum issued by President Obama last November, in which he said agencies “should establish a net-benefit goal or, at a minimum, a no-net-loss goal for natural resources the agency manages that are important, scarce, or sensitive.”

That memo also said agencies “should give preference to advance compensation mechanisms” – in other words, ways to compensate for harmful impacts before they occur.

But McGrath, looking to provide advice on potential areas for comment, said there is “limited statutory authority” for requiring advance compensation or a net benefit. She also noted that since a policy is not a rule, “legally it could be a little difficult” to challenge, as it is not “final agency action.”

In a FAQ document released with its September proposal, FWS acknowledged that under the Endangered Species Act, “there is no mandatory obligation to improve or maintain the current status of affected resources” and said its “preference” is that landowners provide compensatory mitigation before anything happens on the land in question. Another key element of the policy is a preference for “consolidating compensatory mitigation on the landscape,” such as conservation banks, areas set aside that contain habitat for the affected species.

But McGrath said that unlike wetlands mitigation banks, which have steadily grown in number over the past 25 years – there are now close to 2,000 nationwide – there are fewer than 150 conservation banks covering 170,000 acres.

“Wetland mitigation banking is the most established.” McGrath said. “They’re permitting wetland mitigation banks faster than people really need – not that they’re always in areas you need.”

Although FWS has listed conservation banks as an attractive option for landowners, McGrath said that as a “relatively new concept,” there aren’t enough of them to provide the number of conservation credits needed.

“You might be in an area where there aren’t enough credits … so sometimes it’s kind of necessary and it can be a lot cheaper to do your own mitigation,” she said.

In addition to a dearth of conservation banks, McGrath said that there are no “established metrics” for how to use conservation credits. The process is “not really standardized, especially for species.”

Another potential pitfall is that FWS might implement the policy as if it has the legal authority to do so. “There’s certainly the concern that these goals … will be treated by service staff as binding requirements,” she said.

One potential business opportunity for farmers is setting up their own wetlands mitigation or conservation bank, McGrath said. But be prepared for a lot of paperwork. “It’s a permitting process on steroids,” she said, mentioning transaction costs and “not a lot of flexibility.” One unanswered question is whether other uses, such as cattle grazing, would be allowed.

“The answer is not very clear,” she said. “I’ve seen different answers from different Army Corps (of Engineer) districts on cattle grazing.”

In testimony before the Senate Environment and Public Works Committee last month, Ryan Yates, with the National Endangered Species Act Reform Coalition, said the service’s “landscape scale approach is overly expansive and fails to consider the role of states and local jurisdictions in species conservation. The service cannot incorporate landscape scale mitigation into permitting decisions or authorizations without explicit statutory authority, which requires such a broad ecological approach.”


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