American Oil and Gas Reporter - November 2016 - 27

WASHINGTONWATCH
Mitigation Policy
Grants Too Much Power
To Federal Agency
The oil and natural gas business must deal with everincreasing regulations. As the Obama administration comes to a
close, we are seeing policy changes that go beyond statutory
language. One example can be found in proposed revisions by
the U.S. Fish & Wildlife Service to its mitigation policy. USFWS
issued the draft policy in March with a goal of implementing it
in early November.
The changes proposed by the service stem from a Nov. 3,
2015, presidential memorandum on mitigating the impacts on
natural resources from development and encouraging related
private investment. The memorandum directed the departments
of Defense, Interior, and Agriculture; the National Oceanic and
Atmospheric Administration; and the Environmental Protection
Agency to establish a "net benefit goal, or at minimum, a no net
loss goal for natural resources that are important, scarce, or sensitive."
Specifically, the memo directed that "agencies shall adopt a
clear and consistent approach for avoidance and minimization
of, and compensatory mitigation for, the impacts on their
activities and the projects they approve."
Thus, USFWS adopted the goals of "net conservation gain"
and "no net loss" in its draft policy. However, the service inappropriately attempts to rewrite the statutory standards under the
Endangered Species and Marine Mammal Protection acts, as
well as the regulatory standards for implementing Section 404
of the Clean Water Act. No legal basis exists for USFWS's draft
policy, and its onerous requirements and ambitious standards
will lead to delays in federal approvals and authorizations.
The draft policy dramatically expands USFWS's authority
over unlisted fish and wildlife. The service's asserted authority
is defined so broadly that it effectively would allow the agency
to require mitigation for any impacts to the natural environment
in the United States, and allows USFWS to "veto" development
projects.
Not only would the draft policy further delay development
by requiring that mitigation be implemented before impacts
occur, but it would compound the mitigation requirements such
that they bore no relationship to the actual impact of a project.
The draft policy leaves significant decisions to the discretion
of individual USFWS employees. Given that the service is sued
frequently for failing to meet its obligations under the ESA,
USFWS cannot realistically assume responsibility for overseeing
mitigation efforts as envisioned in the draft policy.
The public has not had a meaningful opportunity to comment
on the service's proposed mitigation strategy. The draft policy
reflects only one part of a larger mitigation strategy that USFWS
is unveiling in bits and pieces. The public must have the
opportunity to review the entire strategy and assess how it
integrates with other elements as a whole.
Further, USFWS failed to comply with procedural requirements
under the Administrative Procedures Act by not disclosing the
legal authority on which its policy is based. The service also has
failed to prepare a regulatory flexibility analysis as required by

"The authority asserted would allow
USFWS to require mitigation of any
impacts to the natural environment in

the United States.

the Regulatory Flexibility Act.
Finally, by prioritizing compensatory mitigation, the draft
policy discounts and thus discourages measures to avoid and
minimize impacts to species and their habitats. The draft policy's
unwavering focus on mitigating all residual impacts ignores
land users' efforts to avoid and minimize impacts.
Given the breadth of application of this draft policy, and the
impact it will have on oil and natural gas producers, the Independent Petroleum Association of America urged USFWS to
revise this flawed proposal. Comments submitted jointly in
May with the American Petroleum Institute urged USFWS to
"withdraw the entire draft policy, unless reproposed with
significant revisions, making it consistent with the comments
and concerns raised."
Companies needing regulatory approval find themselves in a
bind. As IPAA Director of Government Relations Samantha
McDonald notes, "The new mitigation policy effectively creates
a 'pay-to-play' regulatory mechanism that unfairly bestows
new powers on USFWS to discourage new development. What
is more, this mitigation policy is just the first out of the gate.
The Bureau of Land Management, the Forest Service, and other
agencies are looking to update their own policies implementing
the new 'no net loss' threshold."
While regulations such as this create uncertainty and pose a
threat to economic development projects across the country, environmental groups continue to push regulatory agencies to do
more. WildEarth Guardians announced in late October that it
would resume legal challenges under the ESA. The threat came
in a report from the group that celebrated its 2011 settlement
agreement that forced USFWS to make final listing decisions
for hundreds of species (see December 2011 Washington Watch).
Also worth noting is the photo on the group's website: four
cheering members in front of the White House with t-shirts emblazoned "keep it in the ground." The fight continues.
r

SUSAN GINSBERG is vice

president of crude oil and natural gas regulatory affairs for
the Independent Petroleum Association of America. She covers legislation and regulation,
focusing on the CFTC and
FERC. Her experience in natural gas regulatory affairs
spans 25 years.
NOVEMBER 2016 27

American Oil and Gas Reporter - November 2016

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