Environmental Advocacy Michael Mittelholzer Assistant Vice President Environmental Policy Douglas Krofta U.S. Fish and Wildlife Service Division of Conservation and Classification 4401 N Fairfax Drive, Suite 420 Arlington, VA, 22203 RE: Draft Policy Regarding Implementation of Section 4(b)(2) of the Endangered Species Act Dear Mr. Krofta, On behalf of the National Association of Home Builders (NAHB) I am pleased to submit these comments on the Draft Policy Regarding Implementation of Section 4(b)(2) of the Endangered Species Act, released by the U.S. Fish and Wildlife Service and the National Oceanic and Atmospheric Administration (hereafter referred to as the Services ) on May 12, 2014. NAHB is a nationwide federation of more than 800 state and local home builder associations. Our organization represents more than 140,000 members including individuals and firms engaged in land development, single and multifamily construction, multifamily ownership, building material trades, and commercial and industrial projects. More than 80 percent of our members are classified as small businesses and meet the federal definition of a small entity, as defined by the U.S. Small Business Administration. NAHB members, and by extension members of the public who are seeking to construct or purchase a new home, are often directly impacted by the Endangered Species Act (ESA) due to the potential for their projects to impact listed species or areas designated as critical habitat. As the number of species on the endangered species list grows, so does the amount of land that is designated as critical habitat. At the same time, the geographic size of critical habitat designations has become larger in recent years, affecting more and more land. Because critical habitat is often found near existing cities and towns, it tends to be highly desirable real estate for community growth and economic development.
Page 2 As a result, it is difficult to develop property without needing some type of federal permit or authorization, which triggers Section 7 of the ESA. Property owners, including NAHB s members, face numerous challenges when undergoing Section 7 consultation, including significant project delays, costly project modifications, or even termination of a proposed project as a result of ESA-related compliance difficulties. Because of the far-reaching effects of the ESA, any changes to the manner in which critical habitat is designated including the exclusion of areas from critical habitat are extremely important. The Services state that the purpose of the 4(b)(2) policy is to complement the revised regulations under 50 CFR 424.19 governing how the Service performs economic impact analyses on all proposed critical habitat designations. 1 Section 7 of the proposal specifically states that, consistent with the revised regulation, the Agencies will base their discretionary exclusions on the results of the probable incremental economics of designating a particular area as critical habitat. 2 NAHB strongly opposed this option when it was proposed and believes many of challenges associated with using the incremental approach will come to light if and when it is used during the 4(b)(2) exclusion process. 3,4 The biggest problem, as it relates to today s policy, is that the incremental approach effectively shifts the economic costs of critical habitat designations to the ESA listing process where the Service is prohibited from considering costs. Ultimately, because this approach will result in fewer costs being attributed to critical habitat designation, it will greatly reduce the usefulness of the 4(b)(2) process. In today s policy, the Services seek to revise the requirements by which federal and non-federal conservation plans and partnerships qualify for exclusions from critical habitat designations under Section 4(b)(2) of the Act. NAHB is concerned that the draft policy fails to give landowners sufficient certainty that the Service will recognize conservation efforts for (1) existing federal permitted Section 10 permits with HCPs, (2) Section 10 permits under development but not yet finalized; State, local government, or private conservation plans. This uncertainty will likely discourage greater adoption of and participation in both federal and nonfederal conservation programs. While NAHB understands that 4(b)(2) exclusion determinations are discretionary, encouraging and supporting the development of voluntary conservation plans by ensuring exemptions from critical habitat designations would significantly increase participation in voluntary conservation. Today s proposal, however, will have the opposite effect if the Services only review completed or nearly completed conservation plans for exclusions. In its current form, the proposed policy does not encourage voluntary conservation plans but will instead result in increased burdens on those partnerships and plans seeking 4(b)(2) exemption approval. NAHB strongly recommends the Services revise the proposed policy to allow greater certainty when making 4(b)(2) determinations. 1 79 Fed. Reg. 27052, May 12, 2014 2 77 Fed. Reg. 27057, y 12, 2014 3 77 Fed. Reg. 51503, August 24, 2012 4 See NAHB, 2013. Comments on Revisions to the Regulations for Impact Analyses of Critical Habitat; Proposed Rule. Available at: http://www.nahb.org/fileupload_details.aspx?contentid=210556&fromgsa=1.
Page 3 I. Background Section 4(b)(2) of the ESA requires that [t]he Secretary shall designate critical habitat... on the basis of the best scientific data available and after taking into consideration the economic impact, the impact on national security, and any other relevant impact, of specifying any particular area as critical habitat. 5 Congress specifically added Section 4(b)(2) in 1978 to provide greater flexibility and reduce conflicts between critical habitat and other land use activities: The result of the committee s proposed amendment would be increased flexibility on the part of the secretary in determining critical habitat. Factors of recognized or potential importance to human activities in an area will be considered by the Secretary in deciding whether or not all or part of that area should be included in the critical habitat. The committee expects that in some situations, the resultant critical habitat will be different from that which would have been established using solely biological criteria. In some situations, no critical habitat would be specified. 6 By 1982, Congress had become concerned about the declining pace of species listings, and felt that the additional impact analyses required by the 1978 amendments to designate critical habitat were causing listings to be delayed. However, recognizing that the restrictions caused by critical habitat have significant impacts on land uses, Congress again emphasized that consideration of economic impacts should play an important role in critical habitat designation: [T]he critical habitat designation, which is to accompany the species listing to the maximum extent prudent, also takes into account the economic impacts of listing such habitat as critical... Desirous to restrict the Secretary s decision on species listing to biology alone, the committee nonetheless recognized that the critical habitat designation, with its attendant economic analysis, offers some counter-point to the listing of species without due consideration for the effects on land use and other development interests. For this reason, the Committee elected to leave critical habitat as an integral part of the listing process. 7 In addition to requiring the evaluation of economic impacts of critical habitat prior to designation, Section 4(b)(2) allows the Services to exclude areas from critical habitat based on economic and other public interest grounds. Specifically, section 4(b)(2) states: 5 16 U.S.C. 1533(b)(2) (emphasis added). 6 H.R. Rep. No. 95-1625, at 17 (1978), reprinted in 1978 U.S.C.C.A.N. 94353, 9467 (emphasis added); see also H.R. Rep. No. 96-167, at 7 (1979), reprinted in 1979 U.S.C.C.A.N. 2557, 2563 ( One of the changes made by the 1978 amendments is the requirement that economics and other factors be considered prior to designating critical habitat ). 7 Id. at 12, 1982 U.S.C.C.A.N. at 2811-12 (emphasis added).
Page 4 The Secretary may exclude any area from critical habitat if he determines that the benefits of such exclusion outweigh the benefits of specifying such area as part of the critical habitat, unless he determines, based on the best scientific and commercial data available, that the failure to designate such area as critical habitat will result in the extinction of the species concerned. 8 Therefore, unless doing so would result in a species extinction, the Secretary has broad authority to exclude any area from critical habitat if he determines that the benefits of exclusion outweigh the benefits of specifying such areas as part of the critical habitat. 9 The plain language of the statute and the legislative history support an exclusion policy that supports and encourages voluntary efforts by landowners and State and local governments to conserve listed species as well as other fish and wildlife. II. Overview of Concerns NAHB strongly supports the exclusion of areas subject to conservation measures from critical habitat designation. Such exclusions are necessary to incentivize private landowners into conserving land for species before the protections of ESA become necessary. While the draft provides insight into the Services path forward when reviewing areas to exclude from critical habitat designations, it fails to assure participants in both private/non federal conservation plans and federal conservation plans that the actions they take to conserve a species will warrant exclusions from critical habitat designations. To alleviate this concern and encourage participation in conservation plans and partnerships, NAHB calls on the Services to allow for an automatic exclusion (or presumption of exclusion) for areas covered by Habitat Conservation Plans (HCPs), Candidate Conservation Agreements with Assurances plans (CCAAs) and Safe Harbor Agreements (SHAs). NAHB is concerned that the Services proposed policy may be interpreted as creating an additional level of federal oversight for existing permitted HCPs prior to granting an exclusion from a proposed critical habitat designation. Ultimately, NAHB believes the Services already enjoys sufficient authority to review and, if needed, revoke an existing Section 10 Incidental Take Permit (ITP) under their Permit Revocation Rule and thus, any additional review should be not duplicated in this policy. NAHB also calls on the Services to revise the criteria for evaluating private and non-federal conservation plans or to make the process less intrusive and burdensome. These modifications to the draft policy will ensure proper implementation and encourage participation. 8 DOI, 2008. The Secretary s Authority to Exclude Areas from a Critical Habitat Designation under Section 4(b)(2) of the Endangered Species Act. Available at: http://www.doi.gov/solicitor/opinions/m-37016.pdf. 9 DOI, 2008. The Secretary s Authority to Exclude Areas from a Critical Habitat Designation under Section 4(b)(2) of the Endangered Species Act. Available at: http://www.doi.gov/solicitor/opinions/m-37016.pdf.
Page 5 III. Specific Concerns with the 4(b)(2) Proposed Rule A. Private/Non-Federal Conservation Plans and Partnerships 1. Benefits of Participation in Conservation Programs Today s proposal seeks to modify the requirements for partnerships, projects and conservation plans developed under state and local authority that may qualify for exclusions from critical habitat designation. Often, these plans and programs protect at-risk or federally listed species and their critical habitat, while allowing economic development to occur. Indeed, the Services have acknowledged that programs and partnerships such as these can implement conservation actions that the Services would be unable to accomplish without private landowners. 10 Despite acknowledging the utility of private and non-federal conservation plans and partnerships, the exclusion of these areas is not automatically guaranteed. Instead the Services will sometimes exclude specific areas from a critical habitat designation based on the existence of these plans or partnerships. 11 In order to be successful, private/non-federal plans must be supported by the Services and automatically excluded from critical habitat designations. If not, future conservation plans may be at risk because applicants will feel uncertainty regarding the utility of their efforts. The Services must codify this change and ensure that land protected through voluntary conservation efforts will not be subjected to critical habitat overlays. This concern is exemplified by a recent comment letter submitted to the Bureau of Land Management (BLM) and U.S. Forest Service (USFS) on September 29, 2014 by the Western Governors Association regarding the lack of effective communication between the agencies and their State partners. 12 Multiple western state wildlife management agencies agreed, in coordination with the BLM and USFS, to develop comprehensive conservation programs on public lands to protect the greater sage-grouse habitat and take other efforts to conserve the species. The goal is to develop coordinated conservation plans across several states that will conserve the species in order to keep the species off of the ESA and to eliminate the need for the Service to designate critical habitat. Since the coordinated effort began on June 12, 2014, the BLM and USFS have been slow to move forward with the reviews of the state conservation plans prepared to date. Given that the Services have already publically stated a deadline of September 2015 to decide whether or not to propose the greater sage-grouse listing under the ESA, the governors of these States fear this delay will adversely affect these State s efforts to protect the species and its habitat resulting in an eventual species listing and designation of critical habitat. Given that these impacted states have already prepared conservation plans, the Services should encourage this type of activity by States and automatically exclude areas covered by these state-based conservation plans them from any future critical habitat designation, if the Service ultimately were propose to protect the species under the Act. Unfortunately the sage-grouse issue is neither new or unique and as such it illustrates the need 10 79 Fed. Reg. 27055 11 79 Fed. Reg. 27054 12 WGA, 2014. Federal Coordination Lacking on greater sage-grouse conservation. Available at http://www.westgov.org/images/ltr_gsg_rollup_mtgs_final.pdf.
Page 6 for greater certainty under the proposed 4(b)(2) policy. Without such clarity it is unlikely states or landowners will invest the resources needed to develop these plans. NAHB supports the recognition of private and other non-federal plans and programs as a viable alternative to the designation of an areas as critical habitat. However, the factors identified by the Services are too intrusive and burdensome and impose obstacles that cannot be overcome in practice. 2. Exclusion Factors When determining whether the benefits of exclusion outweigh the benefits of inclusion, the Services indicate that they will evaluate a variety of factors, including: 13 a. The degree to which the record supports a conclusion that a critical habitat designation would impair the realization of benefits expected from the plan, agreement or partnership; b. The extent of public participation in the development of the conservation plan; c. The degree to which there has been agency review and required determinations; d. Whether National Environmental Policy Act (NEPA) compliance was required; e. The demonstrated implementation and success of the chosen mechanism; f. The degree to which the plan or agreement provides for the conservation of the essential physical or biological features for the species; g. Whether there is a reasonable expectation that the conservation management strategies and actions contained in a management plan or agreement will be implemented; and h. Whether the plan or agreement contains a monitoring program and management to ensure that the conservation mechanisms are effective and can be modified in the future in response to new information. Unfortunately, the series of factors, as the Agencies have provided no metrics. For example, it is uncertain if each factor must be considered or if only three or four are sufficient. Likewise, will the Services give all factors equal weight or will some be deemed more important. If so who will decide and how? What evidence must be provided to demonstrate the thresholds have been met? While the factors provide general direction, the Services provide no indication of how the evaluations will be conducted or what the thresholds might be. While non-federal conservation plans like HCPs do go through a rigorous process consistent with Services exclusion factors, 13 The Services state that we will evaluate the effect of conservation plans and partnerships on the benefits of inclusion and the benefits of exclusion of any particular area from critical habitat by considering a number of factors including.[the eight identified criteria]. NESARC assumes that this formulation is a drafting error and the Services did not intend withhold disclosure of any criteria that they may actually apply. The Service should clarify their intentions as to the applicability of the identified criteria. Further, if the Services intend to use any other criteria, it is imperative that they clearly identify such criteria and allow for public comment on such criteria.
Page 7 many voluntary conservation plans will not address all of these factors. Nevertheless, many voluntary plans are based on the best scientific information available and sound biological principles. Plans that are based on in-depth species and habitat analysis should be regarded as sufficient for exclusion under Section 4(b)(2). Likewise, it is not appropriate for the Services to decide whether to accept a private or statebased plan for exclusion based on the extent of public participation. Rather the Service s exclusionary determination should be based on whether or not these plans are based on sound science and afford adequate protection to the species and its habitat. In short, the Services factors are overbroad and seem designed to exclude most voluntary conservation plans. The Services must clarify that the proposed factors for 4(b)(2) exclusions cannot be construed to give the Services jurisdiction or authority over the underlying private or non-federal plans or agreements; nor should the Services require modifications to these plans based on their decision to designate the area as critical habitat. While the Services have the discretion under 4(b)(2) to determine whether to exclude an area from a final critical habitat designation, this 4(b)(2) exclusion process does not afford the Services any further rights or jurisdiction with respect to the approval or implementation of such measures. B. Federal Conservation Plans and Partnerships 1. Existing Plans NAHB appreciates the Services recommendation that of all areas already covered by federal permitted habitat conservation plans (HCP) that are a mandatory component of all ITPs under Section 10 of the Act be excluded from critical habitat. The exclusion of all existing HCPs from proposed critical habitat designations is consistent with the Services current practices. However, NAHB is opposed to section 3(a) of the Services draft policy that would make exclusions of existing HCPs from critical habitat overlay contingent upon a determination of a Section 10 ITP permit holder s ability to continue to implement the terms of the HCP agreement into the future. 14 NAHB questions the need to retrospectively re-evaluate an ITP permit holder s ability to implement the terms of a HCP after a proposed critical habitat designation has been made since the Services already have the authority (and obligation) to rescind any ITP under the Permit Revocation Rule if continuation of the permitted activity would be inconsistent with the criterion set forth in 16 U.S.C. 1539(A)(2)(B)(iv) and the inconsistency has not been remedied. 15,16 This provision seems duplicative. The Services have the obligation to use this authority to ensure HCPs are performing as expected and should use their existing authority, not create a new opportunity to review already issued ITPs prior to considering their exclusion from a proposed critical habitat designation. NAHB urges the Services to either remove section 3(a) 14 79 Fed. Reg. 27057 15 69 Fed. Reg. 71724 16 50 C.F.R. 17.32(b)(8)
Page 8 or clarify how this provision relates to the Permit Revocation Rule for already issued Section 10 ITPs. 2. Plans Under Development In the proposed policy, the Services state: For CCAAs, SHAs, and HCPs that are still under development, when we undertake a discretionary exclusion analysis, we generally will not exclude those areas from a designation of critical habitat. 17 The average HCP, CCAA, and SHA conservation plan takes between two and five years to complete, and sometimes much longer if the conservation plan is a large, regional plan with a number of landowners. By contrast, the listing process typically takes approximately two to three years. This discrepancy will result in species being listed faster than the states and localities can establish conservation programs. NAHB believes the Services position is inappropriate and will discourage landowners from developing and/or participating in an HCP, CCAA, or SHA. A significant amount of effort goes into the negotiation and completion of an acceptable conservation plan under these programs. The process is both time consuming and expensive, often costing hundreds of thousands of dollars. This commitment and effort should be recognized and encouraged. The Services acknowledge their ability to review not only completed conservation plans, but nearly approved conservation plans as well. NAHB is concerned that in addition to disincentivizing participation in conservation planning, the Services are creating unnecessary uncertainty by not defining what constitutes a nearly approved plan. This vague statement will result in the inconsistent and arbitrary application of the policy, which again, is likely to discourage voluntary conservation efforts. Ultimately, without due consideration for all programs under development, state and local economies will suffer from the burden of the increased habitat designations and decreased participation in CCAAs, SHAs, HCPs and other conservation partnerships. Full and appropriate consideration of such programs will ensure that voluntary conservation plans will be put in place to benefit and protect wildlife, while assisting local economies and businesses by providing regulatory certainty. The failure to do so would effectively nullify the purpose of the plans and discourage their development and use. The Services need to decide whether they truly wish to encourage voluntary conservation plans, or instead wish to impose criteria that discourage their development. C. Exclusions Based on Economic Impacts As part of today s proposal, the Services describe their approach to considering economic impacts within the designation of critical habitat and any decision to exclude areas from a designation. Specifically, the Services state that: 17 79 Fed. Reg. 27055
Page 9 When the Services are determining whether to undertake a discretionary exclusion analysis as a result of the probable economic impacts of designating a particular area, it is the nature of those impacts, not necessarily a particular threshold level that is relevant to the Service s determination. 18 NAHB views this statement as simply giving the Services the flexibility to make decisions as they see fit based on available information, hence, we have no specific objections. The openendedness, however, may cause challenges in practice, so additional guidance could be useful. The Services adoption of the incremental approach when conducting the required economic analysis of proposed critical habitat designations under 4(b)(2), however, still raises concern even more so now that the agencies are planning to use it during the exclusion process. The problem is that the baseline approach only takes into account the immediately visible economic impacts caused by a critical habitat designation and erroneously assumes that habitat is occupied by the species of concern and will remain occupied forever. As a result, critical habitat designations will be deemed to have little or no incremental impacts beyond those attributed to the species listing because the critical habitat is treated as being occupied and therefore, both the jeopardy standard and the adverse modification standard would apply. In reality, however, significant impacts could accrue. For example, new consultations taking place after critical habitat designation may require additional effort to address critical habitat issues above and beyond the listing issues; consultations that have already been completed may require re-initiation to address critical habitat; requirements for additional conservation may be attached to projects to address adverse modification of critical habitat; a land parcel s market value may change post-critical habitat designation; and increased project delays will lead to increased project costs. Similarly, critical habitat designation can result in incremental impacts in cases where there is no federal nexus such as when the designation provides new information to a State or local government about the sensitive ecological nature of a geographic region that triggers additional economic impacts under other State or local laws. NAHB submits that the Services have an obligation to assess the costs of all of these impacts and any others that result from the designation of critical habitat. In the end, the use of the incremental approach will shift the economic costs and regulatory burdens away from the critical habitat designation process, where economic cost must be considered, and towards the ESA s listing process where, conveniently, the Services are prohibited by statute from considering economic costs. Therefore NAHB believes under an incremental approach, the Services will find fewer economic impacts of proposed critical habitat which will significantly lower the likelihood that the Services will use its discretion to exclude areas from final critical habitat designations base solely on the probable incremental economic impacts of proposed critical habitat designations. 18 Id. at 27057.
Page 10 VI. Conclusion NAHB appreciates the opportunity to provide comments on the Services proposed Section 4(b)(2) exclusion policy. Unfortunately, the utility of the entire 4(b)(2) exclusionary process has been significantly diminished by the Services use of the incremental approach when performing the required economic. NAHB submitted comments outlining our concerns on the Service s decision adopt the incremental approach 19 and encourages the Service to consider those prior comments in relationship to this proposed 4(b)(2) policy. 20 NAHB is nonetheless pleased the Services have proposed to exclude not only areas covered by HCPs, CCAAs and SHAs, but will also consider excluding land covered by State and private conservation plans and partnerships. Both the Services and the courts have acknowledged the usefulness of such plans and, partnerships, and as a matter of policy, it makes sense to encourage, rather than discourage, such actions. NAHB recognizes that while the ESA requires the Services to conduct an economic analysis for each proposed critical habitat designation, the decision to exclude an area is discretionary. In exercising this discretion, the Services should avoid imposing the additional burden of critical habitat designations or undue uncertainty on private landowners or states and local governments who have taken affirmative steps to protect species and or the habitats on which these species depend. The Services actions however, will discourage future voluntary conservation projects and partnerships which are the type of activities that the Services have routinely said they seek to encourage. NAHB calls on the Services to revise this policy and clarify the factors by which conservation plans will be evaluated for exclusion under Section 4(b)(2). Thank you for the opportunity to participate in the development of this policy. If you have any questions or would like to discuss any of NAHB s recommendations, please do not hesitate to contact either Dr. Larissa Mark, Environmental Policy Program Manager ESA at 202-266- 8157 or me, at 202-266-2660. Cordially, Michael Mittelholzer Assistant Vice President Environmental Policy 19 NAHB, 2013. Revisions to the Regulations for Impact Analyses of Critical Habitat; Proposed Rule. Available at: http://www.nahb.org/fileupload_details.aspx?contentid=210556&fromgsa=1. 20 50 C.F.R. 424.19