County Commissioners Association

Memorandum

To: WCCA Public Lands and Energy and Environment Committees

From: Bailey K. Schreiber

Date: August 13, 2018

Re: Mitigation Overview, Authority and Recent Developments

Introduction

In recent months, the Bureau of Land Management, the U.S. Fish and Wildlife Service, the U.S. Forest Service and other federal agencies have rolled back some policies relating to mitigation on public lands put in place during the Obama Administration. Most recently, the BLM issued a new policy providing that compensatory mitigation would no longer be used on public lands and the USFWS rescinded its compensatory mitigation policies.

In light of these developments, this memorandum provides some background on mitigation as a concept generally, federal and state mitigation requirements in Wyoming, and implications for the state and counties.

What is mitigation?

Generally, mitigation is the reduction or elimination of impacts to an environmental resource that may be caused by an action. The resource impacted could be a , wildlife habitat or protected species. Actions that may give rise to mitigation include, for example, development of an oil and gas well pad, laying a pipeline or transmission lines, or grazing cattle or sheep.

Mitigation usually follows the same pattern, called the “mitigation hierarchy.” First, impacts should be avoided. Then, to the extent they cannot be avoided, impact must be minimized. Finally, when impacts can be neither avoided nor minimized, they are compensated.

The Council on Environmental Quality, the agency charged with implementing the National Environmental Policy Act (“NEPA”), defines mitigation more generally, without any prioritization, to include:

a) Avoiding the impact altogether by not taking a certain action or parts of an action. b) Minimizing impacts by limiting the degree or magnitude of the action and its implementation. c) Rectifying the impact by repairing, rehabilitating, or restoring the affected environment. d) Reducing or eliminating the impact overtime by preservation and maintenance operations during the life of the action. e) Compensating for the impact by replacing or providing substitute resources or environments. As discussed in more detail below, mitigation can be mandatory—required by state or federal law as part of the terms of a permit or license—or it can be voluntary.

Notably, the type and degree of mitigation varies depending on the nature and location of an action taken, what resources it affects and what statute controls. For example, a wind developer on land managed by the BLM will be required to mitigate impacts according to the Federal Land Management and Policy Act (“FLPMA”), which prevents BLM from managing public lands in a way that causes unnecessary or undue degradation.1 By contrast, under the (“CWA”), the U.S. Army Corps of Engineers (“Corps”) may require a real estate developer filling in to offset impacts to those wetlands by purchasing or creating credits in a mitigation bank.2

What is compensatory mitigation?

Compensatory mitigation, the third step in the mitigation hierarchy, is the replacement or substitution of resources where impacts to resources cannot be avoided. Compensatory mitigation can take many different forms, including, for example, payments by a permittee to a federal agency to be used to restore resources, the development or purchase of credits from a conservation bank, or the purchase of a conservation easement.

In other words, compensatory mitigation can serve as a means of allowing impacts and development to occur while at the same time limiting damage to natural resources. Some federal statutes restrict the extent of impacts federal agencies can permit on public lands. In a situation where impacts will exceed what the statutes allow, compensatory mitigation can mean the difference between a project being denied and going forward.

Compensatory mitigation has come under increased scrutiny in recent years. Under the Obama Administration, many agencies substantially broadened the concept of compensatory mitigation. The Department of Interior, including BLM and USFWS, adopted policies requiring agencies to approach mitigation on a “landscape-scale” and to require developers to provide a “net conservation gain,” or, at a minimum, no net loss of natural resources.3 These policies have all been subsequently revoked or rescinded, replaced with new policies on compensatory mitigation in some cases.4

1 73 U.S.C. § 1732(b). 2 60 Fed. Reg. 58,605, 58,607. 3 See e.g., Secretarial Order No. 3330, “Improving Mitigation Policies and Practices of the Department of the Interior” (Oct. 31, 2013); Presidential Memorandum, “Mitigating Impacts on Natural Resources from Development and Encouraging Related Private Investment,” 80 Fed. Reg. 68,743 (Nov. 3, 2015); Department of Interior, “Implementing Mitigation at the Landscape-Scale,” Departmental Manual 600 DM 6 (Oct. 23, 2105); Joel P. Clement et al., “A Strategy for Improving the Mitigation Policies and Practices of the Department of the Interior,” (Apr. 2014); USFWS, “U.S. Fish and Wildlife Service Mitigation Policy,” 81 Fed. Reg. 83,440 (Nov. 21, 2016); USFWS, “Endangered and Threatened Wildlife and Plants; Act Compensatory Mitigation Policy,” 81 Fed. Reg. 95,316 (Dec. 27, 2016). 4 Executive Order 18783, “Promoting Energy Independence and Economic Growth,” (Mar. 28, 2017); Secretarial Order 3349, “American Energy Independence,” (Mar. 29, 2017); Secretarial Order 3360, “Rescinding Authorities Inconsistent with Secretary’s Order 3349, ‘American Energy Independence,’” (Dec. 22, 2017); USFWS, “Endangered and Threatened Wildlife and Plants; Endangered Species Act Compensatory Mitigation Policy,” 83 Fed. Reg. 36,469 (July 30 ,2018); USFWS, “Policy; withdrawal,” 83 Fed. Reg. 36,472 (July 30, 2018). When is mitigation required?

Mitigation is required in specific circumstances. As noted above, the type and degree of mitigation required depends on the location and nature of the action taken, the resources affected and what statute controls. The following are some common examples of mitigation that may be required in Wyoming.

Mitigation under the Federal Land Policy Management Act

Most often, in Wyoming, mitigation arises in the context of impacts to BLM-managed lands and is guided by FLPMA. FLPMA requires public lands to be manage “on the basis of multiple use and sustained yield” and “in a manner that will protect the quality of scientific, scenic, historical, ecological, environmental, air and atmospheric, water resource, and archaeological values.”5 Further, under FLPMA, BLM must manage public lands “in a manner which recognizes the Nation’s need for domestic sources of minerals, food, timber, and fiber . . .”6 Finally, FLPMA requires BLM to “take any action necessary to prevent unnecessary or undue degradation of the lands.”7

Agency interpretation of this statutory mandate has varied over the years. In the past, BLM has read these requirements as authorizing the agency to permit a project only to the extent unnecessary and undue degradation does not exist after appropriate mitigation measures are taken.8 At times, BLM relied on compensatory mitigation to prevent what would otherwise be unnecessary or undue degradation.9 This approach has been upheld in federal court.10

However, on July 24, 2018, BLM issued Instructional Memorandum No. 2018-093 (“IM 2018-093”), which reverses the agency’s policy on compensatory mitigation. IM 2018-093 recognizes that BLM has the authority to require certain aspects of mitigation—"avoid, minimize, rectify, and/or reduce anticipated harms, as necessary and appropriate.”11 But, the IM 2018-093 prohibits BLM from requiring compensatory mitigation, providing that compensatory mitigation cannot prevent what would otherwise be unnecessary and undue degradation.12 It continues, “if a proposed use of the public lands would result in [unnecessary and undue degradation], then the BLM cannot authorize that use, even if compensatory mitigation is proposed.”13 IM 2018-093 permits compensatory mitigation but it must be voluntary and forbids BLM from “explicitly or implicitly suggest[ing] that project approval is contingent upon proposing a ‘voluntary’ compensatory mitigation component, or that doing so would reverse or avoid an adverse finding.”14 BLM is also prohibited from accepting monetary contributions for the implementation of compensatory mitigation.15

5 43 U.S.C. § 1701(a)(7), (8). 6 Id. § 1701(a)(12). 7 Id. § 1732(b). 8 See Theodore Roosevelt Conservation Partnership v. Salazar, 661 F.3d 66 (D.C. Cir. 2011). 9 Id. 10 Id. 11 BLM, Instructional Memorandum No. 2018-093, “Compensatory Mitigation,” (July 24, 2018). 12 Id. 13 Id. 14 Id. 15 Id. In sum, while FLMPA may authorize BLM to require all levels of the mitigation hierarchy—avoid, minimize and compensate—it is the agency’s current policy to not require compensatory mitigation under any circumstances. BLM may still require a project proponent to avoid and minimize impacts. A project proponent may voluntarily undertake compensatory mitigation.

Mitigation under the Endangered Species Act

The Endangered Species Act (“ESA”) requires mitigation in very limited circumstances and only for impacts to species that are endangered or threatened. In such a case, the ESA allows the USFWS to issue an incidental take permit (ITP) to an applicant who may incidentally take a listed species but only after the applicant submits a habitat conservation plan, including strategy for minimizing and mitigating the take of a listed species to the maximum extent practicable.16 The USFWS may issue an ITP if it determines that doing so will not jeopardize the species’ survival and may require compensatory mitigation as a condition of the ITP.17 The USFWS may also require mitigation in the context of a threatened species through a Section 4(d) rule.18

Under the Obama Administration, the USFWS issued policies broadening mitigation under the ESA, prioritizing compensatory mitigation and require a net conservation gain for impacts. However, these policies were rescinded on July 30, 2018.19

Mitigation under Wyoming’s Sage-Grouse Compensatory Mitigation Framework

Wyoming state law and policies requires mitigation for impacts to greater sage-grouse habitat in certain circumstances. Under the State of Wyoming Revised Greater Sage-Grouse – Compensatory Mitigation Framework, mitigation is required for impacts in Core Area Populations as identified in Executive Order 2015-4 GSG Core Area Protection (EO 2015-4). Consistent with federal policy, avoidance and minimization are preferred. However, activities occurring in core area and requiring a state permit must comply with stipulations identified in EO 2015-4. If they fail to comply with these stipulations, compensatory mitigation may be required.20

Under the Compensatory Mitigation Framework, impacts to greater sage-grouse or their habitat result in “debits” which are offset by “credits.” Credits can be created in two ways. First, conservation credits may be created by “removing or limiting a threat to GSG or their habitat for the duration of an impact or in perpetuity.”21 Second, restoration credits may be earned by “converting disturbed or low quality habitat to suitable GSG habitat.”22 Credits can be earned through a conservation bank, exchange or other mechanism. The Compensatory Mitigation Framework sets criteria for both conservation and

16 16 U.S.C. § 1539(a)(1)(B). 17 USFWS, Guidance Memorandum, “Guidance for the Establishment, Use, and Operation of Conservation Banks,” (May 2, 2003); U.S. Dep’t of the Interior, “Conservation Banking Overview and Suggested Areas for Future Analysis,” (Sept. 2013). 18 16 U.S.C. § 1533(d). 19 USFWS, “Endangered and Threatened Wildlife and Plants; Endangered Species Act Compensatory Mitigation Policy,” 83 Fed. Reg. 36,469 (July 30 ,2018). 20 Compensatory Mitigation Framework at 6. 21 Id. at 2. 22 Id. restoration credits, which must be approved by the state. Credits may be created by a third party and then sold to developers, or created by a developer itself to offset impacts.

The Compensatory Mitigation Framework approaches mitigation on a state-wide scale without requiring mitigation to take place near impacts or in the same county. Practically, developers will likely seek to offset impacts near where they take place, but this depends on the availability of credits in the immediate area.

Notably, in its proposed changes to its greater sage-grouse plans, BLM intends to rely on Wyoming’s Compensatory Mitigation Framework, which is now arguably stricter than BLM’s mitigation policies, which no longer require compensatory mitigation.

What does this mean for Wyoming counties?

As described abo, federal agencies have relaxed mitigation requirements for impacts to public lands and protected species. The result of this change will likely be additional and more efficient development or use of public lands and resources. These policy shifts may also result in legal challenges over permitted uses and impacts, some of which may be successful if an agency allows development beyond what is statutorily permissible with no or limited mitigation.

In the context of BLM, for example, it is possible that the agency would permit a project that would cause “unnecessary and undue degradation” to public lands, degradation that could have been sufficiently remedied through compensatory mitigation. It may also be that operators continue to offer voluntary compensatory mitigation in the threat of such a lawsuit.

Further, given the relaxed approach federal agencies are taking to mitigation, it is possible that the State of Wyoming may similarly revise its policies in the future.

Needless to say, the issue of mitigation and its application in the State of Wyoming is something WCCA will continue to follow.