Presidential Directive Mandates Expansive and Likely Unlawful No Net Loss Compensatory Mitigation Requirement for Most Federal Development Permitting

Posted on November 12, 2015 by Jeffrey Lepo

 

On November 3, 2015, President Obama issued a Presidential Memorandum establishing policies that are a significant departure from existing practice regarding compensatory mitigation for effects to natural resources from most federally approved projects.  The Memorandum, entitled “Mitigating Impacts on Natural Resources from Development and Encouraging Private Investment,” applies to all permits and authorizations issued by the Department of Defense (e.g., the U.S. Army Corps of Engineers), the Department of Agriculture (e.g., the Forest Service), the Department of Interior (e.g., BLM, USFWS, Bureau of Ocean Energy Management, etc.), EPA and National Oceanic and Atmospheric Administration  (e.g., National Marine Fisheries Service (NMFS) ), including actions taken by USFWS and NMFS pursuant to the Endangered Species Act.  Although it cannot be known today how the new policies will ultimately be implemented, the Memorandum is, at least as written, both anti-development and potentially draconian. 

 

The new Memorandum states that it is establishing certain policies premised upon “a moral obligation to the next generation to leave America’s natural resources in better condition than when we inherited them.”  In furtherance of this moral obligation, the President has established it to be the policy of the identified federal bodies (and all bureaus and agencies within them):

 

·         To avoid and to minimize harmful effects to land, water, wildlife and other ecological resources (natural resources), and to require compensatory mitigation for, the projects they approve.

 

·         To establish a net benefit goal or, at a minimum, a no net loss goal for mitigation of the natural resources each agency manages that are important, scarce or sensitive.

 

·         To give preference to advance compensation mechanisms in establishing compensatory mitigation.  “Advance compensation” is defined to mean a form of compensatory mitigation for which measurable environmental benefits (defined by performance standards) are achieved before a given project’s harmful impacts to natural resources occur.  This policy preference appears to somehow contemplate that compensatory mitigation will be achieved before the project is constructed and operated.

 

·         To use large-scale plans to identify areas where development is most appropriate, where natural resource values are irreplaceable and development policies should require avoidance, and where high natural resources values result in the best locations for protection and restoration.

 

The Memorandum also establishes certain deadlines for action, principally by the agencies of the Department of Interior (e.g., one year deadline for BLM to “finalize a mitigation policy that will bring consistency to the . . . application of avoidance, minimization and compensatory actions [f]or development activities and projects impacting public lands and resources.”; one year deadline for USFWS to finalize compensatory mitigation policy applicable to its Endangered Species Act responsibilities).

 

Some federal laws (e.g., Clean Water Act Section 404 permitting for filling of waters of the United States) already have well-developed compensatory mitigation programs; however, most federal permitting schemes have not been interpreted or implemented to authorize or require compensatory mitigation, let alone at no net loss or net benefit levels.  Accordingly, to the extent that the Memorandum is intended to require net benefit or no net loss compensatory mitigation through many/most federal permitting programs, such a directive would be a significant departure from existing practice, of untested legality, and arguably contrary to existing law.

 

Moreover, to demonstrate that compensation has occurred at a net benefit or no net loss, unless the adverse effects are offset through generation or preservation of in-kind resources (e.g., a duck for a duck), the “damage” to affected natural resources must first be valued.  Accordingly, if implemented so that compensatory mitigation is broadly required, the policy could lead to an extensive, time consuming and complicated valuation process.  One worst case scenario would be for this policy to result in some form of new natural resources damages assessment, the time and expense for which would be challenging to rationalize in the context of a development proposal where cost and time are relevant (i.e., for every development project).

 

Unless the Memorandum is rescinded or feebly implemented, or its implementation is held unlawful, it has significant strategic, permitting, legal and financial implications for many, if not most, major development projects.  Of course, it is likely to be difficult or impossible to challenge the new policies established in the Memorandum, except on a project-by-project permit-by-permit basis.  As such, the pressure for project proponents to navigate (rather than litigate) the new policies will be substantial. 

ADVENTURES IN WATER QUALITY MITIGATION

Posted on January 13, 2010 by Rick Glick

The regulated community is experimenting with solutions to water quality regulatory problems that are market based and implemented on a watershed scale. Such efforts are being met with guarded interest by agencies, environmental organizations and the public, but offer the best hope for true ecological restoration. Oregon has recently passed legislation to foster ecosystem services markets to facilitate this approach. 

 

The Clean Water Act addresses water quality degradation through establishment of water quality standards and imposition of technology based effluent limitations in point source discharge permits. The receiving waters are tested periodically to see if standards are being attained, and if not, then Total Maximum Daily Loads are set and waste load allocations given to point sources so that permits can be adjusted. Non-point sources are given load allocations in the TMDL, but since there is no direct regulatory enforcement mechanism, and since funding sources are limited, compliance is not assured. 

 

This model has worked out pretty well for dealing with municipal and industrial waste water discharges, and toxics in receiving waters have been  much reduced. However, there has been little effect on water quality degradation related to non-point sources. In Oregon, over 1,200 streams are listed as water quality limited, and the vast majority are on the list for non-point source related problems, such as warmer ambient water temperatures and nutrient loading. What to do?

 

 

The conventional response is to ratchet up permit requirements for point sources, or impose local mitigation requirements on those caught in the Clean Water Act § 401 water certification web.  As it is said, if all you have is a hammer, all your problems are nails. There are, however, other tools in the box. Here are a couple of examples of ecomarket approaches.

 

Clean Water Services is the second largest sewerage agency in Oregon. It has four treatment outfalls discharging to the flat, slow moving Tualatin River. The discharge raises  receiving water temperatures, and when it came time to renew its four permits, the agency was facing stricter requirements to control thermal loading. Rather than installing mechanical chillers at the outfalls, the CWS proposed a large-scale riparian revegetation program. It was projected that the massive tree planting effort would take about ten years to match the cooling effect of the chillers, but would double the cooling as the trees matured. And with such an effort come ancillary habitat and other ecological benefits throughout the watershed that no chiller could provide. The Oregon Department of Environmental Quality approved the program and it is being implemented.

 

Idaho Power Company has proposed a similar approach to resolve water temperature problems associated with its Hells Canyon Complex on the Snake River. The HCC is comprised of three dams and reservoirs that together generate over 1,100 MW.  The HCC is undergoing relicensing, which triggers the CWA 401 water quality certification process before both the Oregon and Idaho Departments of Environmental Quality, as the Snake River is a border stream. A temperature control structure installed in the HCC’s largest reservoir would probably solve the regulatory problem, but would offer few ecological benefits. Instead, the company is proposing an ambitious upstream watershed improvement program comprised of riparian planting, fencing, wetlands enhancement, irrigation efficiency upgrades and flow augmentation. The Snake River watershed is vast and complex, with heavy human influence throughout, so a program on this scale will be tough to implement. However, the potential upside piques the imagination. 

 

Official policy favors such watershed approaches. EPA has adopted a water quality trading policy that encourages transactions between point and non-point sources with a focus on reducing nutrient loads and thus restoring depleted dissolved oxygen. EPA also recognizes the potential for applying the policy to temperature problems. Last year the Oregon legislature enacted Senate Bill 513 , which establishes state policy supporting development of ecosystem services markets to facilitate watershed scale solutions to water quality restoration. 

 

I have been appointed to the SB 513 working group tasked with developing the policy and making further recommedations to the legislature. One of the greatest challenges is the lack of reliable metrics. Because there are myriad other upstream influences on water temperature, it is exceedingly difficult to measure the effect of an upstream tree planting program on downstream temperatures. Further, the benefits from watershed programs are long term in nature. 

 

Thus, there is risk both to the permittee and the regulatory agency that someone will sue to require immediate and measureable results. But if the goal of the overall regulatory program is truly ecological protection and restoration, then we must go beyond compliance for the sake of compliance and focus on outcomes. The huge potential for sustainable, widespread benefits resulting from watershed approaches makes this an effort well worth making.