Earlier this month, the U.S. Fish and Wildlife Service (USFS) and the National Oceanic and Atmospheric Administration's (NOAA) National Marine Fisheries Service (collectively, "the Services") finalized and issued two joint, interrelated rules regarding the designation of critical habitats pursuant to section 4(b)(2) of the Endangered Species Act. The Services also issued a draft policy that addresses critical habitat designations.

The first rule—Listing Endangered and Threatened Species and Designating Critical Habitat; Implementing Changes to the Regulations for Designating Critical Habitat (81 FR 7413)—clarifies procedures used for designating critical habitats, and describes the criteria that will be used in making such determinations.

The second rule—Interagency Cooperation - Endangered Species Act of 1973, as Amended; Definition of Destruction or Adverse Modification of Critical Habitat (81 FR 7214)—revises the definition of "destruction or adverse modification" of a critical habitat. The change is meant to focus on the physical and biological features of a habitat that are "essential to the conservation of a listed species." The changes also place an emphasis on the ability of the habitat to support a species throughout its life cycle. The previous definition was invalidated by the D.C. Circuit in 2004, and this new 2016 rule retains and codifies the policies the Services have had in place since 2004.

Both of these rules are part of the Services' response to Executive Order 13563 (January 18, 2011), which directed the agencies to review and modify or streamline existing regulations.

In addition to the two rules, the Services also issued a draft policy—Policy Regarding the Implementation of Section 4(b)(2) of the Endangered Species Act (81 FR 7226)—related to critical habitat designations. This policy considers factors that may play a role in agencies' decision-making process with regard to critical habitat designations. The consideration of certain types of situations—such as voluntary conservation easements, national security issues, and economic concerns—in the context of critical habitat designation exclusions is also discussed.

Both final rules and the final policy become effective on March 14, 2016.

While the Services hail the developments as a major step toward streamlining and clarifying the designation of critical habitat pursuant to the Endangered Species Act, both environmental groups and the regulated community have expressed concerns. Of particular concern to the parties is the revised definition of "destruction or adverse modification" of critical habitats in 81 FR 7214. There is apprehension that these revisions will give the Services too much discretion in defining and applying this standard.

Some environmental groups believe the changes will enable the Services to allow negative impacts to significant portions of critical habitat, as long as the negative impacts do not affect the value of the critical habitat designation as a whole. These groups believe the rules could increase negative impacts to, and potentially contribute to the destruction of, critical habitat. On the other hand, the regulated community has expressed concern that the designations will place too much emphasis on how impacts affect the ability of future potential habitat to support a species. In the past, the focus of critical habitat designation was on whether the impacts from the action would reduce the value of the entire critical habitat.

As both groups have pointed out, the Services made relatively few changes from the proposed regulations to the final published rules, despite the fact that they received numerous comments on the proposals. As a result, litigation from both sides seems highly likely.