On December 27, 2016, the U.S. Fish & Wildlife Service (FWS) issued its final Endangered Species Act (ESA) Compensatory Mitigation Policy (Policy) – the first policy to comprehensively address compensatory mitigation under the ESA.  The Policy applies to all forms of compensatory mitigation involving ESA compliance required or recommended by FWS, including conservation banks, in-lieu fee programs, permittee-responsible mitigation, and other third-party mitigation mechanisms.  It is a step-down policy addressing the compensatory mitigation component of the mitigation hierarchy, as defined in FWS’s revised and final Mitigation Policy (Nov. 21, 2016) (as reported here), which compensates for or offsets “unavoidable impacts after all appropriate and practicable avoidance and minimization measures have been applied.”

The Policy advances and implements a shift from a project-by-project to a landscape-scale approach to mitigation as directed in the Presidential memorandum, “Mitigating Impacts on Natural Resources From Development and Encouraging Related Private Investment” (Nov. 3, 2015).  The Policy further implements the mitigation goal, established in the Presidential memorandum and FWS’s Mitigation Policy, of a net gain or, at a minimum, no net loss, in sensitive natural resources (i.e., listed, proposed, at-risk species, and their habitats), consistent with FWS’s and action agencies’ authorities and responsibilities, as applicable, under the ESA.  As many commenters noted, the mitigation goal of “net gain/no net loss” in the status of species’ conservation is not required under sections 7 or 10 of the ESA.  However, nothing in the ESA precludes FWS from adopting such “enhanced” mitigation goals and recommending mitigation plans accordingly.  Project proponents who implement compensatory mitigation developed to achieve FWS’s enhanced mitigation standard are expected to enjoy such benefits as greater future regulatory certainty and expedited permit processes.

It is a long-held tenet of conservation planning that landscape-level approaches to mitigation can achieve greater conservation benefits by encouraging private investment in compensatory mitigation, thus leveraging economies of scale and incentivizing advance mitigation.  The Policy encourages market-based approaches to mitigation with a preference for conservation banking that consolidates compensatory mitigation on larger landscapes.  According to FWS, the benefits of a comprehensive landscape-level, market-based approach to compensatory mitigation include standardization and greater consistency and transparency in implementation in the ESA, as well as regulatory flexibility and predictability for the regulated community.