The National Marine Fisheries Service (“NMFS”) and the U.S. Fish and Wildlife Service (“USFWS”) (together, the “Services”) have released three final rules related to implementation of the Endangered Species Act (ESA). The rules are available on USFWS’s website and are expected to be published in the Federal Register in the coming days.

The Services have revised their joint regulations on interagency consultations (also known as ESA Section 7 consultations) and regulations related to listing and delisting species and designating critical habitat. In addition, USFWS has again revised how it extends “take” prohibitions to threatened species under ESA Section 4(d). These revisions were made pursuant to the Biden Administration’s direction to review recent agency actions (including the 2019 ESA regulatory revisions) and in response to litigation over ESA regulations issued in 2019.

With the finalization of these rules, the Services significantly broaden their authority to condition federally permitted projects by imposing mitigation – including conservation bank contributions, in-lieu fee programs, offsite restoration, and other “offsets” – to compensate for unavoidable impacts to listed species. In addition, the rules make it easier for the Services to designate unoccupied areas as “critical habitat” by eliminating requirements to find that the habitat contains features essential to the species and that it is reasonably certain to contribute to the species’ conservation. This gives the Services sweeping authority to designate areas that currently are not within the species’ range, presumably in anticipation of changing landscapes caused by climate change.

All changes are prospective, meaning that they do not require changes to Section 7 consultation documents or to listing, delisting or critical habitat designation decisions issued before the rules’ effective date, which will be 30 days after publication in the Federal Register.

New Section 7 Mitigation Conditioning Authority

The final rule implementing interagency (Section 7) consultations retain new language allowing the Services to impose mitigation as a condition (or “reasonable and prudent measure”) in “no-jeopardy” biological opinions to fully compensate for unavoidable take of listed species. Mitigation or “offsets” may include measures outside the action area, including conservation bank funding requirements or requirements to preserve and restore habitat, and may be based on habitat ratios, equivalency modeling, or one-to-one replacement. This is a significant departure from the previous regulations and from past agency policy which stated that mitigation was not appropriate because the ESA’s plain language speaks only to minimizing take in Section 7 consultations. The Services now claim that mitigation conditions are consistent with the ESA because of the overlapping concepts of “minimize” and “mitigate.” The Services explain that this change “will allow the Services to specify measures to offset residual impacts of incidental take that cannot otherwise be feasibly addressed through avoidance and reduction measures.”

According to the final rule, mitigation should not be expected as a condition of every consultation. The Services state that they will impose mitigation only after avoidance and minimization measures are applied if there is remaining, unavoidable take. Offsets within the action area will be prioritized over those outside the action area. However, there is no guidance in the regulations on the potential costs of these measures, only the Services’ assurance that any mitigation must be “proportional” to the impact on species. The regulations do not set forth how proportionality will be determined, e.g., how conservation banking fees will be set to compensate for unavoidable take of listed species. The Services only state that they will work with the action agency and any applicant to ensure that offsets are reasonable, prudent, and not cost-prohibitive “in view of the nature of the action.” The Services intend to release an updated ESA Consultation Handbook with additional guidance and will solicit public comments.

Other Changes to the Section 7 Consultation Regulations

In addition to the significant change in conditioning authority, the final interagency consultation rule removes 50 C.F.R. § 402.17 (“Other provisions”), which was added to the regulations in 2019. Among other things, these provisions described when an effect or consequence of an action is “reasonably certain to occur,” and required that reasonable certainty be based on “clear and substantial” information. The Services claim that this provision created unnecessary confusion with the ESA’s “best available science” requirement, which they now state is sufficient to guide decisions on what effects and consequences are reasonably certain to occur.

The final rule also makes minor revisions for clarity to the definition of “effects of the action,” but confirms that the definition continues to embody the two-pronged test (using the “but for” and “reasonably certain to occur” requirements) for when an effect is a consequence of a proposed action. In addition, the Services have revised the Section 7 reinitiation language to remove a phrase added in 2019 that authorized the Services to reinitiate consultations. The regulations now reflect that only the federal action agency may reinitiate consultation, although the Services may notify the agency when reinitiation appears warranted.

Changes to the Listing, Delisting, and Critical Habitat Designation Rule

The final listing, delisting, and critical habitat rule removes standards imposed in 2019 for designating unoccupied areas as “critical habitat,” making it easier for the Services to designate areas outside a species’ current and historic range. Specifically, these changes (1) remove requirements for the Services to first determine that occupied habitat is inadequate for the conservation of the species before designating unoccupied habitat as critical; (2) strike the requirement for the Services to find, “with reasonable certainty,” that an area will contribute to the conservation of the species before designating it as critical habitat; and (3) eliminate the requirement that unoccupied areas only be designated as critical if they contain one or more of the physical or biological features essential to the species. The Services concede that they must be “exceedingly circumspect” before designating unoccupied areas as critical habitat and state that they will not designate areas that are wholly unsuitable for a species. The Services also confirm that they will comply with Supreme Court precedent and only designate areas that do, in fact, constitute “habitat.” Nevertheless, these changes reopen the possibility for the Services to designate areas outside a species’ range in anticipation of landscape-level changes from climate change.

The Services also revised how they consider future threats to a species and the species’ response to those threats when considering whether to list a species as “threatened.” Specifically, to determine whether a species is likely to become endangered in the “foreseeable future,” as required by the statute, the rule states that “[t]he foreseeable future extends as far into the future as the Services can make reasonably reliable predictions” about threats to species and their response to those threats. This replaces the current standard, under which the Services must find that future impacts are “likely.” In making this change, however, the Services confirm that the farther into the future the threat is expected to occur, the greater the burden on the Services to explain how those future threats and responses remain “foreseeable.”

USFWS Blanket 4(d) Rule

USFWS has separately issued regulations reinstating the agency’s “blanket rule” under Section 4(d) of the ESA which prohibits take of all species listed by USFWS as “threatened.” USFWS states that it will continue to issue species-specific exceptions to the blanket take prohibition as appropriate. This rule returns USFWS to its pre-2019 practice, which differs from NMFS’s approach of prohibiting take of threatened species on a case-by-case basis. The ESA already prohibits take of species listed as “endangered,” so the blanket rule only applies to species listed as threatened.