On February 11, 2016, the U.S. Fish and Wildlife Service (FWS) and the National Marine Fisheries Service (NMFS) (collectively the agencies) finalized several changes to the agencies’ proposed rules and policyrelating to critical habitat designation under the Endangered Species Act (ESA). These changes, which will impact both the Section 7 consultation and designation of critical habitat processes under the ESA, were first proposed in May 2014. The final rules and policy do not, in the view of the agencies, alter the substance of the rules and policy as proposed in May 2014; however, the final versions incorporate new language meant to make the intent of those changes clearer. With these new rules and policy, the industry will continue to face significant regulatory challenges at both existing and proposed development projects.

Changes to the Section 7 Consultation Process

Section 7(a)(2) of the ESA requires federal agencies “insure that any action authorized, funded, or carried out” by that agency is not likely to “result in the destruction or adverse modification” of designated critical habitat. Following decisions from the Fifth (2001) and Ninth (2004)Circuits, rejecting the agencies’ definition of “destruction or adverse modification” as unduly narrow, the agencies proposed a new definition. Under that proposed definition, destruction or adverse modification would have included any “direct or indirect alteration that appreciably diminishes the conservation value of critical habitat for listed species.” The term “alteration” included, in turn, “effects that preclude or significantly delay the development of the physical or biological features that support the life-history needs of the species for recovery.”

During the comment period on the proposed rule, the agencies received numerous comments asserting that the proposed wording created confusion by employing unfamiliar and undefined terms of art. In response to these comments, in the final rule the agencies eliminate the novel phrase, “conservation value,” in favor of what the agencies maintain is a more straightforward definition. An “adverse modification” now means “direct or indirect alteration that appreciably diminishes the value of critical habitat for the conservation of a listed species.” Implementation of the final rule will reveal the extent to which the agencies in fact have clarified their intent, particularly with respect to what constitutes “diminishing the value” of critical habitat.

The final rule also omits the originally proposed phrase, “support ...life-history needs,” in its explanation of the type of “alterations” that may appreciably diminish the value of critical habitat. The agencies removed this language in part because “life-history needs” is not a particularly well-defined term. But more importantly, the agencies appear to be responding to several comments which interpreted use of the term “support” to “lower the bar” below the required statutory threshold (i.e., the statute refers only to physical or biological features of habitat “essential to,” not merely supportive of, conservation of the species). To address this issue, the final definition of “destruction of adverse modification” simply incorporates the existing statutory requirement and now covers actions “that alter the physical or biological features essential to the conservation of a species or that preclude or significantly delay development of such features.” Despite incorporation of this new language, the agencies have stated that these definitional changes will not alter their current practices for Section 7 consultation; however, the new language will certainly assist in supporting the agencies’ broad interpretations of the requirements of Section 7 consultation and critical habitat designation.

Changes to the Designation of New Critical Habitat

Section 4(a)(3) of the ESA requires the Secretary of the Interior to designate each listed species’ “critical habitat,” a term defined in the statute as including “the specific areas within the geographical area occupied by the species. . .on which are found those physical or biological features essential to the conservation of the species and which may require special management considerations or protection[.]”.

In May 2014, the agencies proposed to revise the definition of “critical habitat” to clarify two issues. First, the agencies revised the definition of the term, “geographical area occupied by the species.” The final ruleadheres in substance to the proposed interpretation: a species occupies an area “that may generally be delineated around [the] species’ occurrences, as determined by the Secretary (i.e., range).” Under this definition, these areas do not need to be used by the species on a regular basis; rather, migratory corridors and seasonal or periodic habitats also qualify.

Second, the agencies affirmed their proposed interpretation of the “physical or biological features” of critical habitat. The final, revised definition makes clear that these features include “dynamic or ephemeral habitat characteristics.” For example, changes to vegetation or topography after a flood might be a dynamic or ephemeral characteristic of the local habitat. We interpret these two points of “clarification” as generally broadening the scope of what could be deemed critical habitat, further expanding the reach of perhaps the most stringent environmental statute on the books.

The agencies also have finalized an updated policy statement on areas they will consider excluding from designation, even though the areas might otherwise qualify as critical habitat. Like the May 2014 proposal, the final policy lays out a variety of factors the agencies will consider in applying this exclusion. Chief among these is the existence of voluntary conservation plans or public-private conservation partnerships. These plans or partnerships, however, are still simply items the agencies will consider; their existence does not require the agencies to exclude an area from designation. This guidance is intended to formalize and clarify the agencies’ pre-existing practices for exclusion from critical habitat designation.

Each of the new rules and policies will take effect on March 14, 2016.