President Barack Obama recently ordered the heads of five federal agencies (U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Agriculture, U.S. Environmental Protection Agency and National Oceanic and Atmospheric Administration) to develop further agency-wide approaches for mitigating impacts on natural resources.  Memorandum on Mitigating Impacts on Natural Resources From Development and Encouraging Related Private Investment, 80 Fed. Reg. 68743 (Nov. 3, 2015).  These approaches will be important because they influence how and when agencies approve development projects.  The Memorandum states that it is internal guidance and lacks the effect of law.  However, the agencies may adopt legally enforceable rules and policies in response to the Memorandum, and it remains to be seen what effect the Memorandum may have on development and other projects requiring agency authorization in the meantime.

The Memorandum directs agencies to adopt a “net benefit” or at a minimum a “no-net loss” goal for the land, water, wildlife and other natural resources that the agencies manage.  The Memorandum also directs the agencies to prioritize avoiding harmful effects on natural resources and minimizing those effects when avoidance is not possible.  It further directs that such harms be compensated for, preferably in advance of the harmful impacts from a development project, such as through the use of mitigation banks.

The Memorandum directs the agencies to identify high-value areas that contain “irreplaceable natural resources” where development should be avoided and to seek to identify areas where development is appropriate.  According to the Memorandum, this type of federal zoning or earmarking of places to develop and places to protect aims to bring clarity to developers, to encourage a marketplace for mitigation and to reduce timelines for development projects.

Under the Memorandum, finalization of “strengthened” mitigation policies is required within one year for most agencies and within two years for the U.S. Forest Service.  The Forest Service is specifically directed to develop and implement mitigation guidance within 180 days and adopt formal mitigation regulations by the end of the two-year period. 

The Memorandum appears to follow the approach reflected in the Department of the Interior’s Order No. 3330, issued on October 31, 2013.  That Order established the DOI’s mitigation strategy to apply a landscape-scale approach to development-related conservation priorities, avoid and minimize project impacts, and ensure consistency in mitigation decisions related to development projects.  On October 23, 2015, in response to Order No. 3330, the DOI issued its Public Lands Landscape-Scale Mitigation Policy.

The Presidential Memorandum is also similar to the policy behind the Clean Water Act’s wetland program.  That program generally requires no-net loss of wetlands and allows developers to pay for the restoration and preservation of wetlands in established mitigation banks as compensatory mitigation for filling wetlands on their project sites.  The CWA requires that mitigation bank credit be applied within the same watershed as the impacted wetlands and that the credit compensates resources that serve a similar function as the ones harmed.

As the agencies embark on producing their mitigation strategies and policies in response to the Memorandum, it remains to be seen what the ultimate effect will be on agency plans, programs and projects.  The “landscape” approach to mitigation, avoidance of areas with “irreplaceable” resources, advance compensatory mitigation and other elements of the Memorandum may have significant ramifications in terms of how BLM and Forest Service land and resource management plans are updated and amended.  The Memorandum also may have important implications for how individual development projects are permitted, including wetland permitting and mitigation requirements, the Endangered Species Act consultation process and the timelines for federal project approvals.  In the coming months, project developers, trade associations, NGOs and other stakeholders can be expected to take advantage of any opportunities to participate in the upcoming agency processes for developing mitigation guidance, issuing regulations and other policy-making actions under the Memorandum.

© 2015 Perkins Coie LLP