[Senate Hearing 114-494]
[From the U.S. Government Publishing Office]







                                                        S. Hrg. 114-494

    THE PRESIDENTIAL MEMORANDUM ISSUED ON NOVEMBER 3, 2015 ENTITLED 
             ``MITIGATING IMPACTS ON NATURAL RESOURCES FROM
                  DEVELOPMENT AND ENCOURAGING RELATED
                          PRIVATE INVESTMENT''

=======================================================================

                                HEARING

                               BEFORE THE

                              COMMITTEE ON
                      ENERGY AND NATURAL RESOURCES
                          UNITED STATES SENATE

                    ONE HUNDRED FOURTEENTH CONGRESS

                             SECOND SESSION

                               __________

                             MARCH 15, 2016







[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]












                       Printed for the use of the
               Committee on Energy and Natural Resources


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               COMMITTEE ON ENERGY AND NATURAL RESOURCES

                    LISA MURKOWSKI, Alaska, Chairman
JOHN BARRASSO, Wyoming               MARIA CANTWELL, Washington
JAMES E. RISCH, Idaho                RON WYDEN, Oregon
MIKE LEE, Utah                       BERNARD SANDERS, Vermont
JEFF FLAKE, Arizona                  DEBBIE STABENOW, Michigan
STEVE DAINES, Montana                AL FRANKEN, Minnesota
BILL CASSIDY, Louisiana              JOE MANCHIN III, West Virginia
CORY GARDNER, Colorado               MARTIN HEINRICH, New Mexico
ROB PORTMAN, Ohio                    MAZIE K. HIRONO, Hawaii
JOHN HOEVEN, North Dakota            ANGUS S. KING, Jr., Maine
LAMAR ALEXANDER, Tennessee           ELIZABETH WARREN, Massachusetts
SHELLEY MOORE CAPITO, West Virginia
                      Colin Hayes, Staff Director
                Patrick J. McCormick III, Chief Counsel
                         Heidi Hansen, Counsel
            Angela Becker-Dippman, Democratic Staff Director
                Sam E. Fowler, Democratic Chief Counsel
           Spencer Gray, Democratic Professional Staff Member
           
           
           
           
           
           
           
           
           
           
           
           
           
           
           
           
           
           
           
           
           
           
           
           
           
           
           
                            C O N T E N T S

                              ----------                              

                           OPENING STATEMENTS

                                                                   Page
Murkowski, Hon. Lisa, Chairman and a U.S. Senator from Alaska....     1
Cantwell, Hon. Maria, Ranking Member and a U.S. Senator from 
  Washington.....................................................     7

                               WITNESSES

Bean, Michael, Principal Deputy Assistant Secretary for Fish and 
  Wildlife and Parks, U.S. Department of the Interior............    12
Ferebee, Brian, Associate Deputy Chief, National Forest System, 
  U.S. Department of Agriculture.................................    21
Longan, Sara, Executive Director, Office of Project Management & 
  Permitting, Alaska Department of Natural Resources.............    41
Lashley, Doug, Managing Member, GreenVest........................    49
Scarlett, Hon. Lynn, Managing Director, Public Policy, The Nature 
  Conservancy....................................................    53
Sims, Shaun, President, Wyoming Association of Conservation 
  Districts, and Member, Wyoming Stock Growers Association.......    60
Skaer, Laura, Executive Director, American Exploration & Mining 
  Association....................................................    65

          ALPHABETICAL LISTING AND APPENDIX MATERIAL SUBMITTED

Bean, Michael:
    Opening Statement............................................    12
    Written Testimony............................................    14
    Responses to Questions for the Record........................    87
Cantwell, Hon. Maria:
    Opening Statement............................................     7
    Opening Statement of Hon. John H. Chafee before the Committee 
      on Environment and Public Works on March 14, 1996..........     9
Ferebee, Brian:
    Opening Statement............................................    21
    Written Testimony............................................    23
    Responses to Questions for the Record........................   110
Lashley, Doug:
    Opening Statement............................................    49
    Written Testimony............................................    51
    Response to Question for the Record..........................   131
Longan, Sara:
    Opening Statement............................................    41
    Written Testimony............................................    44
    Responses to Questions for the Record........................   125
Murkowski, Hon. Lisa:
    Opening Statement............................................     1
    Letter to President Obama dated February 24, 2016............     3
Scarlett, Hon. Lynn:
    Opening Statement............................................    53
    Written Testimony............................................    55
    Response to Question for the Record..........................   135
    Supplemental Letter for the Record...........................   140
Sims, Shaun:
    Opening Statement............................................    60
    Written Testimony............................................    62
    Responses to Questions for the Record........................   136
Skaer, Laura:
    Opening Statement............................................    65
    Written Testimony............................................    67
    Response to Question for the Record..........................   139
 
    THE PRESIDENTIAL MEMORANDUM ISSUED ON NOVEMBER 3, 2015 ENTITLED 
    ``MITIGATING IMPACTS ON NATURAL RESOURCES FROM DEVELOPMENT AND 
                ENCOURAGING RELATED PRIVATE INVESTMENT''

                              ----------                              


                        Tuesday, March 15, 2016

                                       U.S. Senate,
                 Committee on Energy and Natural Resources,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 10:09 a.m. in 
Room SD-366, Dirksen Senate Office Building, Hon. Lisa 
Murkowski, Chairman of the Committee, presiding.

  OPENING STATEMENT OF HON. LISA MURKOWSKI, U.S. SENATOR FROM 
                             ALASKA

    The Chairman. Good morning. The hearing will come to order. 
The focus of our hearing this morning is a Presidential 
Memorandum issued in November 2015 entitled, ``Mitigating 
Impacts on Natural Resources from Development and Encouraging 
Related Private Investment.''
    We originally scheduled this hearing in January to continue 
the Committee's dialogue on mitigation which began last summer 
with a joint field hearing that we held with the Committee on 
Environment and Public Works. We were forced to postpone this 
hearing when we went to the floor with our broad bipartisan 
energy bill, but it has remained a priority for us and I am 
pleased that we have it back before the Committee today. That 
is because mitigation, as a Federal practice, has become a tool 
that, all too often, causes resource development projects to 
cost more and proceed slowly, if at all.
    For Alaskans seeking any form of development, whether it is 
a road, a mine or of any energy resource, mitigation has become 
almost a household word. This is also true throughout many 
Western states for grazing, timber harvest or again, any 
development across regions where the Federal Government owns so 
much land.
    The Presidential Memorandum provides a definition for 
mitigation, and I will quote here, ``Mitigation means avoiding, 
minimizing, rectifying, reducing over time and compensating for 
impacts on natural resources. As a practical matter all of 
these actions are captured in the terms avoidance, minimization 
and compensation.'' That is a long definition, but I think it 
is important to state because definitions are important. This 
definition of mitigation must be taken together with the 
President's pronouncement of a new mitigation principle. Again 
I will quote the Memorandum which says, ``Agencies' mitigation 
policies should establish a net benefit goal or, at a minimum, 
a no net loss goal for natural resources the agency manages.''
    It is true that President George H.W. Bush established a no 
net loss principle for wetlands, and that President George W. 
Bush challenged Federal agencies to expand wetlands outside the 
context of mitigation. This Memorandum dramatically asserts 
that agencies should establish a net benefit goal for 
mitigation, and applies that goal beyond wetlands to 
potentially all natural resources that an agency manages. For 
Alaskans and for the constituents of many Senators of this 
Committee, this spells trouble.
    There is reason to fear this Memorandum will, at a minimum, 
elongate an already lengthy permitting process, and at worse, 
encourage agencies to shut down development completely. Many 
fear that development will become an exercise in pay to play 
and only the largest businesses, with the most clearly 
profitable or the most highly favored projects, will be able to 
afford that unfair gain.
    The Administration will deny this and insist that its goal 
is to facilitate the balance, efficiency, interagency 
coordination and consistency across agencies that manage our 
Federal lands, especially as they issue permits for 
development. It discounts, it even discards, our concerns.
    The Administration claims to want, and again, I am quoting 
the Memorandum, ``Strong environmental outcomes while 
encouraging development and providing services to the American 
people.'' Now none of us would deny the importance of that, but 
when one looks at this Administration's actions it is hard to 
believe that this is the true goal.
    To provide the Administration the opportunity to clarify 
its intent and address legitimate concerns, 18 of my fellow 
Senators and I sent the President a letter on February 24. I am 
providing a copy of that letter for the record of this hearing 
and each of the Administration's witnesses.
    [The information referred to follows:]
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    The Chairman. The letter asks three basic questions about 
the Memorandum. Through today, we have received no response.
    Regrettably, the Council on Environmental Quality, the 
White House agency that apparently took the lead on the 
preparation of the Memorandum, was unable to provide a witness 
for today's hearing.
    We will hear this morning from two panels of witnesses to 
help us try to make sense of this Memorandum and what it means 
for resource development. Our first panel will feature 
officials from two agencies under the Committee's jurisdiction 
charged with implementing the Memorandum, and our second panel 
will feature some of those who stand to be impacted by it.
    The Memorandum has already led to confusion, mistrust and, 
in the State of Alaska's case at least, even fear rather than 
the clarity and the streamlining it advertises; therefore, we 
will act swiftly to continue oversight on this topic and to 
ensure that it does not become yet another obstacle to 
responsible development.
    With that, I will turn to my Ranking Member, Senator 
Cantwell, for her comments this morning.

 STATEMENT OF HON. MARIA CANTWELL, U.S. SENATOR FROM WASHINGTON

    Senator Cantwell. Thank you, Madam Chair, and thanks for 
holding this hearing.
    Mitigation is very general but a fundamental aspect of 
environmental policy. Last November the President issued a 
Memorandum seeking more effective and consistent mitigation of 
negative environmental impacts from natural resource 
development.
    Building on work already completed by the Department of the 
Interior, the President directed five Federal agencies to adopt 
clear, consistent mitigation plans. His Memorandum incorporates 
lessons learned over several decades from existing mitigation 
programs about how to provide more predictability and entice 
more private investment into conservation. I applaud this 
important, what I would consider, modest step forward and work 
with everyone at various stages of implementation and 
modernization.
    As the great conservationist, Aldo Leopold, said and I 
should note that his daughter, Estelle, is a long time resident 
of Washington State and worked with the University of 
Washington, ``Conservation will ultimately boil down to 
rewarding the private landowner, who conserves the public 
interest.''
    Beginning in early in the 20th century, Congress has 
included some kind of mitigation requirement in many statutes 
governing public lands and natural resources. It is bedrock 
law, but this was not always the case. For virtually all of the 
19th century, Federal law did not require corporations or 
government officials to mitigate impacts of mining, logging, 
drilling, omissions or construction.
    It is not oversimplifying to say that the failure to 
mitigate is the reason we created our national parks, our 
national forests, why we passed the National Environmental 
Policy Act, the Clean Air Act and the Clean Water Act. We also 
established the Abandoned Mines Lands Program and created a 
Super Fund because failure to mitigate these impacts of 
factories and mines had an impact on all of us.
    As we have learned in every state in this country, it is 
much more expensive to fix the unmitigated development after 
the fact, than it is to do the right thing up front.
    So I hope that we don't try to re-litigate all of these 
things, but my hope is that we move forward. Today, before we 
hear from our witnesses, I want to emphasize two points.
    First, the Presidential Memorandum does not create any new 
mitigation requirements at any agency. It is merely guidance. 
At every agency, the legal requirements to mitigate harm to the 
environment were the same the day before the Memorandum as the 
day after. In fact, the Memorandum is peppered with caveats 
about how it should be applied. Phrases like ``to the extent 
allowed by an agency's authority'' and ``consistent with 
existing legal authorities'' appear about ten times in a five-
page document. So the President is acting well within the 
boundaries set by Congress.
    The second point I want to emphasize is that the concepts 
in the Memorandum have long and bipartisan support over a long 
period of time. Beyond the general directive to make mitigation 
more consistent across Federal agencies, and I believe, to make 
sure that we are good stewards, there are two significant 
directives.
    First, agencies should establish a ``net benefit'' goal or 
``at a minimum, no net loss.'' Second, agencies should 
encourage advanced compensation mitigation, including 
mitigation banking. It was George H.W. Bush who established the 
``no net loss'' policy for wetlands in an Executive Order in 
1989. Fifteen years later it was George W. Bush who established 
the ``net gain'' policy for wetlands, moving beyond the goal of 
stemming the tide of habitat loss.
    Now, I don't think that monetizing nature is always the 
best way to manage it, but in many cases it has created an 
incentive that brings private sector investment into an 
equation that can result in better outcomes. And this is old 
news. Many of our colleagues over a period of time have worked 
for this.
    Senator John Chaffe, the Chairman of the Environmental 
Public Works Committee, was a champion of mitigation banking. I 
ask unanimous consent to enter into the record a statement from 
his hearing 20 years ago on the topic.
    The Chairman. Without objection.
    [The information referred to follows:]
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    Senator Cantwell. One of those things that he said was, 
``One of the most gratifying things about mitigation banking is 
that it enjoys wide support. It can reduce the time and expense 
incurred by permit applicants in working with the Federal and 
state officials.'' Senator Chaffe was not alone. Senator Kip 
Bond of Missouri said this about mitigation banking on the 
Floor in 1999, ``As a matter of policy, we have a great 
opportunity with mitigation banking to protect wetlands by 
making wetland protection a profitable, private enterprise.''
    Even Majority Leader then, Trent Lott, felt the same way. 
He called mitigation banks, ``An incentive-based strategy for 
environmental protection that enjoys bipartisan support. 
Mitigation banks provide great environmental benefits better 
than piecemeal mitigation.''
    I understand this hearing today, but I want to say that I 
think these issues have long been discussed by our former 
colleagues. They have recognized that once regulators can 
decide that a proposed mine and highway upgrade or oil-filled 
exploration or wind farm or other development should move 
ahead, it is really a simple question of how to just mitigate 
the resulting damage. For decades now most agencies have had 
different answers. The result has been a patchwork of ad hoc 
mitigation that neither matches the cumulative effects of the 
development nor provides any predictability. We can do better 
in this.
    In the State of Washington, managing growth in Puget Sound 
has often been challenging. We currently have 18 wetland 
mitigation banks spread across ten counties. These banks have 
helped my state improve the patchwork approach.
    As we will hear in a moment, the Interior Department has 
begun to approach mitigation more systematically as well. The 
establishment of solar energy zones in the Southwest, while not 
a perfect process, has been an early test of the concepts in 
the Presidential Memorandum.
    Madam Chair, I hope that we will hear more from our 
witnesses today on this issue and continue to make sure that we 
are making improvements so that we are the good stewards that 
are required of us.
    Thank you.
    The Chairman. Thank you, Senator Cantwell.
    We have two panels here this morning. On our first panel we 
have Mr. Michael Bean, who is the Principal Deputy Assistant 
Secretary for Fish and Wildlife. Mr. Bean is here on behalf of 
the Department of the Interior. I understand he will be able to 
speak to policy for the whole department including both the 
Fish and Wildlife Service side as well as Bureau of Land 
Management.
    Also joining us is Mr. Brian Ferebee, who is the Associate 
Deputy Chief of the National Forest System, to discuss how the 
Department of Agriculture is incorporating the Presidential 
Memorandum into its mitigation work.
    Gentlemen, thank you for joining us this morning.
    Mr. Bean, if you want to proceed first with your five 
minutes, then we will go to Mr. Ferebee and have an opportunity 
for questions.
    So welcome.

STATEMENT OF MICHAEL BEAN, PRINCIPAL DEPUTY ASSISTANT SECRETARY 
    FOR FISH AND WILDLIFE AND PARKS, U.S. DEPARTMENT OF THE 
                            INTERIOR

    Mr. Bean. Thank you, Chairman Murkowski, Ranking Member 
Cantwell, members of the Committee. Thank you for the 
opportunity to testify before you today regarding the 
Department's policies and practices relating to mitigation and 
the recent Presidential Memorandum on that subject.
    The Department is committed to facilitating responsible 
economic development both on public lands and elsewhere while 
protecting and conserving both natural and cultural resources. 
Effective mitigation practices are key to accomplishing those 
dual goals.
    As my written statement describes in more detail, the 
Department and its agencies, particularly the Fish and Wildlife 
Service, have been given Congressionally-mandated mitigation 
responsibilities as far back as 1934 with enactment of the Fish 
and Wildlife Coordination Act which requires that wildlife 
conservation receive equal consideration with other features of 
water resource development programs.
    The Fish and Wildlife Service issued a formal mitigation 
policy as far back as 1981. Its purpose was to guide the 
implementation of the service's mitigation responsibilities 
under the Coordination Act, the National Environmental Policy 
Act and other laws.
    Last week on March 7, the Service announced proposed 
revisions to its policy to provide a framework for more 
efficient and effective mitigation measures while facilitating 
a review and approval of development projects.
    As my testimony also details, the experience gained by our 
sister agencies, the Army Corps of Engineers and EPA, under 
Section 404 of the Clean Water Act, have been very informative 
for the Department's ongoing efforts to improve its own 
mitigation policies. The mitigation rule published by those two 
agencies in 2008 dealt thoughtfully and constructively with a 
broad array of mitigation issues. It improved the transparency 
and predictability of mitigation decisions.
    Based on the Department of the Interior's own mitigation 
experience and that of its sister agencies, Interior Secretary 
Sally Jewell issued an order in Fall of 2013 on improving 
mitigation policies and practices of the Department. In that 
order Secretary Jewell directed the Department and its Bureaus 
to follow a common set of principles for its mitigation 
decisions and use a landscape scale approach to guide deciding 
and compensatory mitigation efforts.
    The policy issued last Fall was one of many steps to be 
completed in response to the Secretary's order. That policy set 
forth a number of principles to guide mitigation decisions. 
Among them were that the sequence of avoidance first, then 
minimization of impacts, and finally compensation should 
generally be followed, and otherwise that all mechanisms for 
compensatory mitigation should be held to the same standards. 
Another was that beneficial impacts of mitigation should endure 
at least as long as the impacts being mitigated.
    Rather than break new ground these and other principles 
represent best practices gained from decades of experience and 
can be found in policy documents dating back to prior 
Administrations.
    Consistent with the Secretary's order and Departmental 
policy, the Department's Bureaus are revising their mitigation 
policies to ensure they're responsive to emerging best 
practices and compatible with similar policies being developed 
by sister agencies and states.
    The Departmental policy was issued contemporaneously with 
issuance by the President with the Presidential Memorandum. 
This Memorandum is consistent with and reinforces the 
mitigation work already ongoing at the Department, encourages 
private investment and restoration for mitigation purposes and 
provides expanded mitigation options for development interests.
    The Memo was designed to ensure consistency and 
transparency as agencies across the Federal Government develop 
mitigation measures. The Department is committed to working 
collaboratively and sharing its experience in developing 
mitigation measures that provide certainty and predictability 
to project proponents. The Department is continuing its work 
with partner agencies, including Agriculture and EPA, to share 
and adopt a common set of best practices to create an 
environment that allows us to build the economy while 
protecting healthy ecosystems.
    In sum, the dual goals of advancing safe and responsible 
development while promoting the conservation of America's lands 
and natural resources for generations to come can be furthered 
through intelligent mitigation policies. The Department is 
working to ensure mitigation is applied consistently, 
predictably and effectively so that permit applicants and 
developers can proceed with projects that achieve their needs 
while protecting our nation's valuable natural and cultural 
resources.
    Thank you for your interest and for the opportunity to 
testify today.
    I'm happy to answer your questions.
    [The prepared statement of Mr. Bean follows:]
    
    
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    Mr. Ferebee.

 STATEMENT OF BRIAN FEREBEE, ASSOCIATE DEPUTY CHIEF, NATIONAL 
         FOREST SYSTEM, U.S. DEPARTMENT OF AGRICULTURE

    Mr. Ferebee. Madam Chair, Ranking Member Cantwell and 
members of the Committee, thank you for the opportunity to 
discuss the efforts of the Forest Service to implement the 
recent Presidential Memorandum on mitigation.
    The Forest Service's goal is to enable responsible, 
economic development on National Forest System lands while 
protecting natural and cultural resources. Our laws, including 
the Organic Act and the Multiple Use Sustained Yield Act, 
authorize the agency to appropriately minimize affects from the 
use of National Forest System lands to sustain goods and 
services the public receives from those lands.
    The Forest Service currently works with the proponent and 
the public to identify and mitigate impacts to a broad range of 
resources from activities on National Forest System lands.
    We first look to avoid impacts, then to minimize impacts, 
and finally to compensate residual impacts to important 
resources. This is known as implementing the mitigation 
hierarchy.
    We proactively work with proponents in the design and 
siting phase in order to reduce adverse impacts to resources. 
If adverse impacts can be avoided, no further mitigation 
actions are necessary; however, sometimes it is not practical 
or possible to avoid adverse impacts and we work with the 
proponents to minimize impacts to the extent practical.
    Only at that point do we consider compensatory mitigation 
to address remaining impacts to improve or to import no 
sensitive resources. In that case, the agency identifies 
appropriate mitigation actions through a project review and 
engagement with other Federal agencies, states, tribes, the 
proponent and the public. We find that proactive work with the 
proponent and the implementation of the mitigation hierarchy 
can lead to successful projects with improved outcomes for 
local communities, proponents and the National Forest System.
    While individual units of the Forest Service have been 
successful in developing and implementing proponent driven 
projects that involve compensatory mitigation, the Forest 
Service, overall, does not have as much experience as other 
agencies. The Presidential Memorandum calls for the Forest 
Service to develop policy on mitigation. The direction provides 
an opportunity for my agency to learn from past experiences and 
develop a consistent, systematic approach to mitigation for the 
future.
    As public input is important when developing new policies 
and procedures, we will engage with our stakeholders, including 
proponents, as we move forward. We are also focusing on 
learning from those with extensive expertise in this area, 
including other Federal agencies, states, tribes and non-
profits. A new agency policy will help us make our 
implementation of the full suite of mitigation options more 
consistent, predictable and effective.
    Thank you for the opportunity to present this testimony, 
and I'll be glad to answer your questions.
    [The prepared statement of Mr. Ferebee follows:]
    
    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    
    The Chairman. Thank you, Mr. Ferebee.
    Let's go ahead and begin this morning. Before I get into my 
questions, the letter that I mentioned in my opening statement 
that I, along with 18 other Senators, sent to the President on 
February 24th, have both of you seen that letter?
    Mr. Bean. Yes.
    Mr. Ferebee. Yes.
    The Chairman. Recognizing that you have seen it, do you 
know where we are with a response to that inquiry? As you know 
there were three very specific questions that we had outlined. 
Are you, your respective agencies, working on a written 
response to our letter?
    Mr. Bean. I do not know the status.
    The Chairman. Mr. Ferebee?
    Mr. Ferebee. I do not know the status either.
    The Chairman. Have you been asked for input to the letter 
to respond to those questions?
    Mr. Bean. I have not as yet.
    Mr. Ferebee. I have not as yet either.
    The Chairman. Okay. Well this is important for us to, 
exercise the level of oversight that, I think, is important. I 
would like to think that the President, or whether it is CEQ 
who is drafting the response, that they would certainly seek 
input from the agencies tasked with implementing this 
Memorandum. Hopefully from what we get with the hearing this 
morning, we will see greater commitment to a response.
    I will begin with you, Mr. Bean, as you are speaking on 
behalf of Department of the Interior. To what extent do the 
agency's legal authorities prohibit or modify the application 
of the principles and mandates outlined in this Presidential 
Memorandum? That is actually one of the direct questions that 
we included in that letter.
    Mr. Bean. Yes. The policy, the Memorandum, is quite clear, 
I think, that in Section 1 its purposes are to be accomplished 
consistent with existing missions and legal authorities. In 
Section 5 of the Memorandum it states that it is not intended 
to supersede existing laws and shall be implemented consistent 
with applicable laws.
    So I think the answer is that it has not changed, it is not 
intended to change, any legal authority that the Interior 
Department or other agencies have.
    The Chairman. Given that, given the fact that you have 
differing legal authorities of the agencies, how does this 
Memorandum result in these consistent standards and guidance 
while at the same time giving what you are referring to as 
right-tailored approaches?
    I will further clarify my question here because what the 
concern has been is that different agencies have differing 
interpretations of not only definitions of words, but of 
standards and guidance. So what the aim of this Memorandum is 
to do is to lead to policies that are clear, work similarly 
across agencies and are implemented consistently across 
agencies. How do you do that if you have differing legal 
authorities, different interpretations? How do you make that 
work?
    Mr. Bean. I'm happy to offer an answer to that, Senator.
    I think the answer is that each agency can follow a set of 
general principles that are consistent across the agencies.
    For example, the preference given to advanced compensation. 
From experience over the last several decades, it's quite clear 
that mitigation efforts don't always succeed. They sometimes 
fail.
    The advantage of mitigation banking, for example, is that 
it ensures successful mitigation prior to impacts being 
authorized. So to the extent agencies have the authority to 
favor advanced mitigation, this policy encourages them to use 
that authority.
    The policy also makes clear that there should be equal 
standards or comparable standards for various forms of 
mitigation. What I mean by that is as follows, when mitigation 
is required there are typically at least three ways it can be 
addressed.
    The permittee or developer can carry out mitigation 
activities him or herself, or the permittee or developer can 
purchase credits from a mitigation bank or can make a 
contribution to what is known as an in lieu fee fund. But the 
point is that, whichever method is chosen, the standards should 
be the same so that there's a level playing field, so that's a 
principle that is reflected in this Presidential Memorandum as 
well.
    The Chairman. But are the standards the same between what 
BLM applies verses what Forest Service applies?
    Mr. Bean. I can't speak as to the Forest Service. I would 
say within the Interior Department the effort is to have 
similar principles guide mitigation decisions for all Interior 
agencies whether it's Fish and Wildlife Service, BLM or others.
    The Chairman. Well, I know that that is the design of the 
Memorandum.
    My five minutes are up and I want to press further in this 
because I think this is exactly our problem. It looks good on 
paper but convince me how the application actually comes to 
bear.
    Senator Cantwell.
    Senator Cantwell. Mr. Bean and Mr. Ferebee, one of the 
questions is about mitigation and durability. We obviously are 
in a very changing environment, particularly with climate 
change and habitat loss, ocean acidification, drought, fire, 
makes all the mitigation issues even more challenging. So how 
do agencies adapt to these projects under that kind of just 
dynamic change in the ecosystem?
    Mr. Bean. I'll be happy to offer an answer to that.
    I think you're correct that climate change does introduce a 
new element of uncertainty as to the future of mitigation 
projects and their ability. So to the best of our ability we 
try to take into account the projected future for a mitigation 
site to ensure that if it's going to be designated as 
mitigation, to compensate for some allowable development. It 
will endure over time.
    The durability issue is most often raised in context of 
ensuring that commitments made on public lands can be sustained 
over time on private lands, conservation easements, conveyance, 
other property interests can be fairly effective ways of 
securing commitments that endure over time. On public lands the 
challenge is to have a commitment for compensation or for 
mitigation that survives the next planning cycle, but you're 
certainly right that climate change introduces a new element of 
uncertainty which we are just beginning to grapple with.
    Senator Cantwell. Mr. Ferebee.
    Mr. Ferebee. Thank you for the question, Senator Cantwell.
    While the Forest Service is in the process of developing 
its national policy, the terms like durability are the types of 
terms that we are trying to think through, engage with our 
Federal and state partners, as well as the private sector, that 
see the type of work that they've done as they address this 
particular term as well as many other common terms that are 
used when it comes to mitigation.
    And so, our answer to your question, given where we are 
with respect to just developing our national policy, is this 
term and many other terms are the types of terms that we are 
engaging with our partners in trying to learn from their 
experiences to ensure that we're developing a policy that's not 
only good currently, but good going forward in the future.
    Senator Cantwell. Well when I just think about my own state 
and, believe me, we have had the most challenging questions for 
sure, science. Science has always been our guide.
    While, I know, these are changing dynamics, I guess I would 
just continue to say that while the term durability here is a 
concern or interest or what have you, because of those changing 
dynamics, this is all based on science. That is what we have to 
continue to focus on.
    One question I do have is maybe an over reliance on 
compensation. I do not have an example here where that has 
become a problem in our state, but beyond the mitigation 
hierarchy in which you want to make sure that there are 
agencies working together, how do you avoid making sure that 
somebody just does not prioritize market solutions as opposed 
to maybe just saying no to a project because you should have 
said no or the market solutions dominate over broader policies? 
Is that a concern?
    Mr. Bean. My understanding is to take the example of the 
Corps of Engineers and their Clean Water Act Program that a 
relatively few of the permits that they issue require 
compensation because they have successfully avoided or 
minimized impacts to a point where they are insignificant. For 
those remaining projects that receive permits that require some 
element of compensation, over 40 percent of those in recent 
years have been able to compensate by a purchase of credits 
from mitigation banks.
    So it's a relatively small subset, and that example of 
projects that are allowed to go forward based upon compensation 
and of those a substantial fraction choose the mitigation 
banking credit purchase option as a preferable alternative that 
speeds mitigation and facilitates permitting.
    Senator Cantwell. I am glad you said that word because that 
is the notion that comes to mind to me is basically it forces 
people to think ahead and it allows for the development to 
happen in a faster time period because you decide, up front, 
what mitigation needs to happen across a broad area.
    My time is expired, Madam Chair.
    The Chairman. Senator Capito.
    Senator Capito. Thank you, Madam Chair, and I want to thank 
our witnesses today.
    Mr. Ferebee, I have a question in the Monongahela and the 
George Washington National Forests which are in West Virginia.
    Dominion recently had sited a pipeline, and it was 
undergoing the FERC process. It was going through, in and 
around the Cheat Mountain region, and the Forest Service 
objected to the planned route as part of the FERC process. The 
route was then altered. They have altered their route to add 
another 30 miles to the pipeline to avoid the specific areas.
    Using that as an example, one of the concerns that I have 
with this Memorandum is the vague and, somewhat, variable 
applications. As a matter of fact, Ms. Goldfuss, with the 
Council of Environmental Quality, said recently in a House 
hearing that companies should simply pick a smart place to 
build their project.
    This particular pipeline and others I am sure around the 
country go through not just public lands, but through private 
lands as well when they are being sited. I would like to know 
what extent you think these new mitigation regulations could 
have, what kind of impact they might have on a project such as 
that, a project that is a public/private project?
    Mr. Ferebee. Thank you for the question, Senator.
    So the national policy that we're currently working on will 
have no effect on currently being worked upon projects. We are 
having conversations internally as we develop our national 
policy to make sure our employees, that are engaging in 
activities that may require either avoidance, minimization or 
compensatory mitigation, understand, kind of, the thinking 
within the agency as we develop our policy so that we won't 
have to go back to proponents and have modification of 
projects. So, our intent is to continue to work with those 
proponents, move those projects forward and not go back and 
revisit them.
    Senator Capito. Well, in terms of the private land issue, 
is that something that is taken into consideration on something 
that is a 60-mile or it is longer than that? If you say you 
discontinue into the public land, you are not allowed to go 
into these areas, obviously that is going to have an impact on 
the private landowner on the other side. Is that something you 
think could be influenced by these mitigation requirements?
    Mr. Ferebee. So, our experience and our practice typically 
is when we are engaging in those types of activities, we really 
try to bring all of the key players to the table so we can have 
a conversation and look at the landscape and the project that's 
being proposed and try to work with the proponent to come up 
with the best alignment for both the proponent and all the 
affected, and potentially affected, landowners. And so private 
landowners would be a part of that conversation.
    Senator Capito. So that they could be affected by that.
    Let me ask you on the compensation issue, advanced 
compensation. That is certainly not a new concept. Those 
mitigation banks are utilized now and would be a part of this 
new Memorandum that has been issued.
    Do you believe that the economic burden for some companies 
to develop these durable mitigation plans--when you are talking 
about buying into a mitigation bank--does that disadvantage a 
small business in any way? Does it become prohibitive to them 
and only the larger, more well-funded entities are going to be 
able to enter into these kinds of agreements?
    I would like to hear comment from both of you on that.
    Mr. Bean. I'd be happy to try to answer that, Senator.
    I think the goal here is to have the mitigation 
requirement, the compensatory mitigation requirement, reflect 
the impact of the development project.
    Senator Capito. Right.
    Mr. Bean. And it would be respective of the size of the 
pocketbook, if you will, of the developer.
    Senator Capito. Right.
    Mr. Bean. As a matter of principle what this and other 
policies related to mitigation try to achieve is certainty that 
the impact being mitigated is fully mitigated. So it's 
irrespective of the size of the developer or the project 
proponent. It has everything to do with the size of the impact 
of the project itself on a particular resource.
    Mr. Ferebee. The Forest Service, okay, there we go.
    The Forest Service would take a very similar approach. We 
would focus on the impact to be minimized to ensure that we 
redeem our responsibility.
    Senator Capito. Right.
    Mr. Ferebee. When it comes to meeting our multiple use, 
sustained yield Agriculture responsibilities.
    Senator Capito. Okay.
    Thank you.
    The Chairman. Senator King.
    Senator King. Thank you, Madam Chair.
    This is an interesting issue. I want to go back, not talk 
about the Memo itself, but the fact of the Memo and what it is. 
It is not an Executive Order, is that correct?
    Mr. Bean. That's correct.
    Senator King. And it is careful, I note, at the end and at 
the beginning to say that whatever is in the Memo is subject to 
all existing laws and authorities. That's correct?
    Mr. Bean. Yes, Sir, that's correct.
    Senator King. So again, the question arises. What is it?
    I am familiar with Executive Orders. I am familiar with 
regulations. I am familiar with guidance. I am familiar with 
statutes. I am familiar with the constitutional provisions. But 
what is this creature? What is the legality of this Memo? It 
sort of says here is what we want you do to, but you do not 
have to do it if it is inconsistent with your statute. I am not 
being argumentative, I just want to understand where this fits 
into the, sort of, constitutional scheme of the President's 
authority.
    Mr. Bean. Certainly it does not expect or require agencies 
to do things they lack the authority to do. My understanding is 
to the extent agencies have the discretion within their 
existing authorities to act consistently with the Memorandum, 
the Memorandum directs them to do so. But it does not either 
create new authority or contradict existing authority. In that 
respect it's very similar to an Executive Order which also 
directs Federal agencies to use their existing discretionary 
authorities in particular ways.
    Senator King. I think the goals are salutary that the idea, 
I mean, of the language encouraging agencies to share and adopt 
a common set of their best practices to mitigate, et cetera. 
That makes sense. I mean, that is good Administration and good 
practice.
    I am still unsure about the legal basis for, you know, 
consistent with my responsibilities it shall be the policy of 
the Department of Defense. In other words, the document seems a 
little schizophrenic in that it sounds prescriptive. Shall and 
then it says, unless the statute says you cannot. I do not want 
to dwell on this, but I think it is an interesting, sort of, 
separation of powers question.
    Going to the substance. The problem that I see, and again, 
I think the goals are salutary, is we always seem to run into 
trouble with one-size-fits-all prescriptions. The Bureau of 
Land Management may have a whole different set of problems and 
a situation in Utah may be entirely different from a situation 
in West Virginia or Pennsylvania.
    Do you feel that the policies and principles that are 
established are of enough general application that we will not 
get into a problem where an agency say, well the President has 
told us to do this, but that may not be the appropriate fit for 
that situation? Do you see the problem that I am seeking?
    Mr. Bean. Yes, Senator.
    I believe that the purpose and effect of the President's 
Memorandum is to articulate some general principles of broad 
applicability and not to focus narrowly on particular outcomes 
or particular projects, but rather to provide an overarching 
set of principles to guide how agencies apply their mitigation 
authorities.
    I think it, to a large degree, simply assembles in one 
place, a number of existing best management practices that are 
the product of decades of experience by the Fish and Wildlife 
Service and others trying to implement mitigation programs.
    Senator King. I presume there is some sharing of these 
kinds of best practices now but the Memorandum, sort of, brings 
into focus that as a policy decision or as a policy directive 
of how the agencies are to carry out their responsibilities?
    Mr. Bean. Yes, that's correct.
    I think I referred a moment ago to the 2008 rule of EPA and 
the Army Corps of Engineers under the Clean Water Act which 
really was a well-considered and thoughtful rule to articulate, 
again, some fairly general standards for mitigation. The 
experience that those agencies have had implementing that 
authority as well as the Fish and Wildlife Service's experience 
implementing its 1981 policy that really informed mitigation 
practice throughout the Federal Government and has enabled the 
President, in this Memorandum, to bring together those best 
management practices under a single Memo.
    Senator King. In a few seconds left, talk to me about 
advanced mitigation. Is that a situation where you predict what 
the effects are going to be and you say here is what we are 
going to do to ameliorate those effects?
    Mr. Bean. Yes.
    Many states, probably most state transportation 
departments, now have mitigation banks to carry out mitigation 
in advance of future highway development projects. They know 
they're going to be building highways in the future. They know 
they're going to have to mitigate for those, so they have begun 
to anticipate that by investing in conservation actions and 
creating banks up front. So it is a way of anticipating future 
needs and having, if you will, off-the-shelf mitigation to 
accomplish that.
    Senator King. May I have one follow up question, Madam 
Chair?
    The Chairman. Yes.
    Senator King. How about a project that involves, in effect, 
comes with its mitigation in it, a renewable energy project, 
for example, that has benefits to the environment in 
minimization of emissions, et cetera.
    Does that count as mitigation or do you have to have a 
specific other mitigation? In other words, you're siting an 
energy project that may have an impact on a stream. Does this 
Memorandum conceive that the Fish and Wildlife Service will 
take into account the environmental benefits of that project as 
opposed to its environmental costs or is it treated as a strip 
mall development? Do you see what I am saying?
    Mr. Bean. Yes, I understand your question, Sir.
    I think that it will depend upon the resource that is 
affected. For example, in the case of a wind energy project 
which has clear environmental benefits in terms of reduced 
reliance on fossil fuels. If that project poses a risk of 
killing a Bald Eagle, the Fish and Wildlife Service will have 
to authorize that take of the Bald Eagle and it will have to 
ensure that minimization and compensation for that is part of 
the project itself. So the two aren't necessarily addressing 
the same set of resource concerns.
    And as a general matter, I think the objective is to have 
the sorts of benefits you describe in your hypothetical project 
acknowledge and take into account. But they may not be directly 
relevant to the particular resource impacts for which the Fish 
and Wildlife Service or other agencies are responsible.
    Senator King. That is the problem.
    I have had experience, for example, in hydro permitting 
where the Fish and Wildlife Service says we are only interested 
in the fish, and the environmental benefits of developing a 
renewable energy project and the reduction in asthma or 
whatever other benefits there are, that is not part of our 
equation. There is no balancing to be had. Comment on that.
    Mr. Bean. Well in terms of the Fish and Wildlife Service 
applying the laws applicable to it, in that case, probably the 
Fish and Wildlife Coordination Act, the requirements of that 
law are that the Service at least recommend measures to give 
equal consideration to fish and wildlife impacts as project 
purposes. So the Service exercises its authority with respect 
to how that authority is circumscribed or defined by Congress.
    So again, if it's a Bald Eagle or if it's an endangered 
species, the Fish and Wildlife Service is obligated by law to 
ensure that impacts to those particular resources----
    Senator King. Those are the easy cases. I mean, that is a 
clear endangered species, but I am talking about more subtle, 
you know, trout population in the river.
    The point I am trying to make is if you are doing a project 
that has environmental benefits, that should be part of the 
analysis of mitigation as opposed to if you are building a real 
estate development that has no externalities in terms of 
environmental benefits.
    Mr. Bean. It certainly is taken into account as part of the 
NEPA process to evaluate the project and its alternatives. 
That's probably the place where it is most salient.
    Senator King. Thank you.
    Thank you, Madam Chair.
    The Chairman. Senator Gardner.
    Senator Gardner. Thank you, Madam Chair, and thank you both 
for being here today. I have just a couple of questions.
    I think in Mr. Ferebee's statement you said this Memorandum 
was designed to ensure clarity. I would like to drive maybe a 
little bit more toward finding that clarity, if we could.
    In the example from Senator King, the windmill, the wind 
turbine, takes an eagle and so the mitigation would be required 
up front by Fish and Wildlife Service. Could you walk me 
through, Mr. Bean, an example of what would be required of say, 
a coal mine? How would this effect a coal mine or coal lease?
    Mr. Bean. That would depend upon what resources were 
affected by the coal mine or coal lease.
    The Fish and Wildlife Service, for example, would need to 
review that project if it took an endangered species. If it 
didn't it would not be subject, I would guess, to Fish and 
Wildlife Service review, other than through the NEPA process.
    Senator Gardner. But would the coal mine have to prove to 
you first that it did not or would you be proving that to them 
under this mitigation? I mean, is this going to trigger some 
kind of an ESA-style consultation process across the Federal 
Government to the agencies that are now involved?
    Mr. Bean. I don't think it will trigger any new process to 
the extent that a hypothetical coal mine on Federal land, for 
example, requires Federal approval. That would continue to be 
subject to the consultation process as it currently is. It 
would not be affected in any way by this Memo.
    Senator Gardner. Would the Memorandum require then that if 
you are looking at the net benefit goal, no net loss goal, the 
mitigation avoidance, minimization and compensation, would then 
an agency of the Federal Government be looking at perhaps the 
coal mines' climate impact as a result of this Memorandum?
    Mr. Bean. I would say no, not as a result of this 
Memorandum. It probably would do so as a result of NEPA's 
requirements however.
    Senator Gardner. Okay. So there would not be any kind of 
mitigation requirement on carbon or anything like that as a 
result of the Memorandum?
    Mr. Bean. That's my understanding, correct.
    Senator Gardner. Is there any look at the economic impact 
of the Memorandum's requirements?
    Mr. Bean. I don't know what analysis of economic impact may 
have been done by the President or the Executive Branch. I 
don't know.
    Senator Gardner. Okay.
    Let me just ask you a series of questions here. Would 
access to a coal lease be more or less likely under this 
Memorandum?
    Mr. Bean. I don't think it will be affected one way or the 
other.
    Senator Gardner. You don't think so.
    What about access to oil or gas leases? You do not think 
that would be effected by the Memorandum?
    Mr. Bean. No, because what the Memorandum says several 
times is that it is to be implemented consistent with agencies' 
authorities and is not to supersede or change existing law.
    Senator Gardner. Do you think that a coal, oil or gas lease 
would be as timely as it is today or would it take more time to 
get the permit as a result of this Memorandum?
    Mr. Bean. The objective is to provide for more timely 
review to expedite and facilitate permitting, in particular, 
large infrastructure projects really were the motivating factor 
behind this and other initiatives of the Administration. 
Projects like transmission lines that might cross multiple 
jurisdictions and require review by multiple agencies. The 
President recognized that we need to do a better job of 
expediting permit reviews for projects like that.
    Senator Gardner. So you believe this will speed up the 
permitting process?
    Mr. Bean. I believe it will, and I know that is its 
purpose, its intent.
    Senator Gardner. And will those reviews be more costly or 
less costly with this Memorandum in place?
    Mr. Bean. I believe that they will be money saving reviews.
    Senator Gardner. Okay, what does that mean if we are 
talking about avoidance, minimization and compensation? How 
would you define this no net loss goal as it applies to say, a 
transmission line and how is that not going to cost somebody 
more money?
    Mr. Bean. The compensation requirement is a requirement to 
take into account the impacts to a protected resource after all 
of the reasonable avoidance and minimization measures have been 
carried out. It's a way, if you will, to internalize the 
externality in terms of its impact upon a protected resource.
    So for a particular project it may result in, it will 
result in a cost, whatever the compensation is, but I don't 
think that cost is going to be any greater as a result of this 
Memo than it is currently.
    Senator Gardner. I guess I am trying to understand what 
exactly this Memo does then if it is designed just to make 
things faster, it seems to add a couple of new requirements 
though, no net loss goal, net benefits, sensitive areas. It 
talks about compensation and irreplaceable character. I just do 
not understand quite the purpose then that this Memorandum, 
sort of legal limbo that it is in, is accomplishing.
    Mr. Bean. Let me give you one example.
    The Memo encourages what is referred to as landscape-level 
decisions about mitigation. Historically the practice for 
mitigation has been to site mitigation, compensatory 
mitigation, as close to the area of impact as possible. In 
fact, over time however, it's quite clear that isn't always the 
most intelligent place to site compensatory mitigation. And in 
fact, if you take a step back and take a broader look at where 
needs for the protected resource are most acute, you might 
decide that it makes more sense, it does more good, to site the 
compensatory mitigation some distance from where the point of 
impact is.
    So what this Memorandum does, among other things, is to 
encourage agencies to use that landscape-level approach in 
deciding where to site mitigation activity.
    Senator Gardner. So for instance, if there was a timber 
project in Western Colorado that was approved, the agencies 
would go through their analyses and perhaps it was decided that 
there needed to be some kind of compensatory action taking 
place. As a result, perhaps that compensation could occur in 
Pennsylvania?
    Mr. Bean. In theory, yes. I think that's probably unlikely 
in practice, but it certainly could be someplace distant from 
the timber project in Western Colorado. It could be somewhere 
100 miles or 200 miles away.
    Senator Gardner. Is that a new requirement then on this 
that all of a sudden some, because this timber permit was 
approved here and they would have to do something in some other 
area, far removed from where they are doing. Is that something 
that takes place today?
    Mr. Bean. To the extent that today there are requirements 
to compensate for impacts that are not avoided or minimized, 
it's not a new requirement.
    Senator Gardner. Could you give me an example, perhaps, of 
say, a Western Slope Colorado timber project that has been 
required to do something like this already?
    Mr. Bean. Let me give you a different example from Colorado 
which is Colorado is one of five states that have together 
developed a conservation strategy for the Lesser Prairie 
Chicken.
    And under that strategy, coal, excuse me, not coal, but oil 
and gas projects who elect to participate pay a fee for 
participation in that mitigation program. And those fees are 
collected by the State of Colorado and the other four states 
and used to purchase conservation activities, easements or 
other enhancement activities. And those are sited where they do 
the most good for the Lesser Prairie Chicken. That may not be 
in very close proximity to where the development that is being 
mitigated is taking place, but it is in the place that does the 
most good for the resource. So that's an example ongoing in 
which that's the principle of using a landscape level view of 
where the conservation needs are greatest to site mitigation 
investments, where they're most productive.
    Senator Gardner. Mr. Bean, I am glad you used that example 
because I think there has been some discussion on whether the 
U.S. Fish and Wildlife Service acknowledges the good science 
that the State of Colorado has done. I will take that as an 
endorsement of the science that Colorado has put forward.
    Mr. Bean. No question about the science.
    The Chairman. Senator Warren.
    Senator Warren. Thank you, Madam Chair.
    In November the President introduced a Memorandum about how 
agencies should mitigate the impact on the environment of their 
actions and the actions that they approve, and the document 
outlines some pretty common sense steps.
    First, developers should try to avoid causing any damage to 
the environment. Second, if that doesn't work, they should 
minimize the harm. And third, for damages that can't be 
prevented they should try to offset it in some way to make sure 
there's no net harm to the environment.
    The Memorandum seems to aim for long lasting, meaningful 
offsets that the American people can be sure are actually 
happening. It seems like pretty basic stuff to me, but 
listening to some of the reaction to this Memorandum you might 
think this represents a shocking new initiative. So Mr. Bean, 
help me understand this. Is the type of mitigation described in 
the Presidential Memorandum a new policy for the Interior 
Department?
    Mr. Bean. No, it is not. The Fish and Wildlife Service has 
had since 1981 a general mitigation policy that incorporates 
many, if not most, of the elements of the President's 
Memorandum. So it is newly assembled in one place, if you will, 
and applicable broadly across the Federal agencies. But for the 
Fish and Wildlife Service there is not a lot that is new in it.
    Senator Warren. Okay.
    And we have heard some suggestion that the mitigation 
policy outlined in the Presidential Memorandum somehow goes 
beyond current law. So Mr. Bean, could you describe the current 
authority that has allowed the Interior Department to require 
mitigation measures like those that are addressed in the 
Memorandum, the ones that are already there?
    Mr. Bean. Yes, Senator Warren.
    I mentioned already several statutes that provide the 
authority for the Interior Department to recommend or require 
mitigation. They include the Fish and Wildlife Coordination Act 
which is a 1934 statute, the Endangered Species Act----
    Senator Warren. You said 1934?
    Mr. Bean. '34.
    Senator Warren. I just wanted to make sure I heard you. 
Keep going.
    Mr. Bean. Yes, 1934.
    The Endangered Species Act, the Bald and Golden Eagle 
Protection Act, and others. The Service also routinely 
recommends to other Federal agencies through the NEPA process, 
mitigation measures for impacts to fish and wildlife resources, 
generally.
    Senator Warren. Alright, thank you.
    Now there has been some talk that this Memorandum will 
somehow prevent future development of Federal land. So one more 
time, Mr. Bean, will this Memorandum prevent any projects from 
moving forward that would otherwise be able to proceed?
    Mr. Bean. I believe the answer to that is no.
    Senator Warren. Well, we have been using these mitigation 
efforts for a long time and they are backed up by solid law. 
Attempts to characterize this Presidential Memorandum as a 
radical, new, anti-development policy, sounds like to me it is 
just grasping at straws.
    This Memo says that if developers are going to damage some 
of our nation's most precious resources then they should 
minimize or make up for the damage they do. Developers may 
squirm and kick about this, but it seems right to me.
    Thank you. Thank you for being here.
    Thank you, Madam Chair.
    The Chairman. Thank you.
    I would like to get back to some more specific examples 
because I think it probably helps to give some clarity here. 
You mentioned, Mr. Bean, the example of a transmission line 
when you were speaking to my colleagues. But recognizing that 
the Departments that the two of you are representing have 
different underlying statutes and missions, if you have got a 
transmission line that is going to cross lands that both of 
your agencies manage, which authorities then will determine 
which or what form of mitigation is sought? Which agency would 
determine then which appropriate mitigation measures you look 
to? Which agency determines the metrics that are going to be 
used? Which agency is the arbiter? How do you decide, kind of, 
who is on top here? What do you do?
    Mr. Bean. I'll be happy to try to answer that, Senator.
    I don't think the question is who's on top? I think the 
question is how they would coordinate our respective reviews of 
the project?
    The Chairman. Well, because you have just said to Senator 
Gardner that you think that this process allows for a more 
expedited process but, again, you have got different mission 
sets, you have got different agencies. You are all involved in 
this together. How do you decide this process in a way that is 
quick, efficient, clear and with some certainty?
    Mr. Bean. Through serious efforts to coordinate between 
agencies.
    The Chairman. Okay. Tell me how that works, because I do 
not know. The Alaskans that are sitting right behind you will 
tell you coordination between Federal agencies is great on 
paper but it does not exist in reality. So convince me.
    Mr. Bean. I would say that in my experience dealing with 
renewable energy projects in the West, many of which entail 
Bureau of Land Management, Forest Service and other agency 
interests, sometimes Corps of Engineers' interest, there's been 
a fairly good record of coordination amongst those agencies to 
ensure that there is a common approach taken. And although each 
agency may have different jurisdictional responsibilities, the 
Corps, for example, focused on wetlands. The Interior 
Department focused perhaps on wildlife resources and others 
focused on other resources. In those examples, there's been a 
fairly successful effort to have a common approach that allows 
projects to proceed with due speed and intelligent review. I 
don't doubt that there are examples where it has failed or has 
not performed as well.
    The Chairman. I guess I am trying to think of one where it 
has worked in Alaska, because in my head I am going to GMT-1. I 
am going to CD-5. I am going to Shell. I am going to our miners 
in the Fortymile. I am trying to find one example we can 
actually look to and say that there was a coordinated effort 
within the agencies where, despite differing interpretations, 
there has been a better process. I am looking for one example 
because in Alaska we have not seen where it has worked yet.
    Let me ask another question, and I will include you in 
this, Mr. Ferebee.
    When we had the briefings by your respective agencies on 
this Memorandum, staff indicated that best available science 
would be used to determine what mitigation measures land owners 
would use. Do your agencies use the same definition for what 
qualifies as best available science?
    Mr. Bean. I don't know that we have definitions, per se. I 
would say----
    The Chairman. Well if you do not have a definition--and you 
say best available science is going to be used to determine 
what mitigation measures apply--how does this work?
    Mr. Bean. I would say, first of all, that the best 
available science requirement is inherent in our 
responsibilities under the Administrative Procedure Act.
    The Chairman. Okay, if it is inherent in yours, and Mr. 
Ferebee, is it inherent in the Department of Agriculture to 
look to best available science?
    Mr. Ferebee. Yes, and the Forest Service has it described. 
And how we describe it----
    The Chairman. Okay, so you have got a definition.
    Mr. Ferebee. Yes, we have it described.
    The Chairman. Okay. Do you know if it is the same as within 
Interior?
    Mr. Ferebee. I do not know what the definition is.
    The Chairman. Don't you think that that would be important 
if you are trying to provide for this expedited process that 
gives greater clarity to make sure that you are operating off 
of similar definitions?
    Mr. Ferebee. I would say Senator, that as I think Mr. Bean 
said previously, I think agreeing on principles, understanding 
the differences around authorities but agreeing on principles 
and desire to end states a project--that's the thing where we 
put most of our focus when we're talking about compensatory 
mitigation efforts.
    The Chairman. I would not disagree that agreeing on 
principles is good, but when you get down to implementation and 
you have agencies that have different interpretations or 
different definitions, whether it is a different definition of 
what is best available science, a different interpretation of 
irreplaceable natural resources, a different interpretation of 
landscape scale, a different interpretation of watershed scape, 
it makes it tough to get to the place where, Mr. Bean, you are 
suggesting that this cooperation/collaboration really all 
works.
    My time has expired again, and I will turn to my colleagues 
here because we have got Senator Barrasso and then Senator 
Heinrich, and I am assuming Senator King you also wanted to ask 
a second round?
    Senator King. I am here for the second panel.
    The Chairman. Okay.
    Senator Barrasso.
    Senator Barrasso. Thank you very much, Madam Chairman.
    Mr. Bean, Mr. Ferebee, you know at the beginning of the 
hearing you were shown a letter and discussed the letter from 
February 24th about this Memorandum. It almost looked like this 
was the first time you had ever seen the letter. Is that true?
    Mr. Bean. No, Sir, I'd seen the letter previously.
    Senator Barrasso. It just seemed that the responses we are 
getting was that people maybe had not read it or comprehended 
it. Nineteen Senators, bipartisan from the Committee, I would 
ask will you commit to providing a response by April 1st?
    Mr. Bean. I note the director, excuse me, the letter is 
directed to the President, so I really cannot commit the 
President to a particular date, no.
    Senator Barrasso. Will you be participating in the response 
to it?
    Mr. Bean. I do not know.
    Senator Barrasso. I mean, if it is related to this, we will 
see if the President decides to ignore it. Is that the idea? 
Should I just maybe, change it and then send it to you 
directly? Would that be helpful in getting a response by April 
1st from the Administration?
    Mr. Bean. I'm sure you will get a response. I just don't 
know when, Sir.
    Senator Barrasso. Well we have seen this movie before where 
it is not even sure that we get a response.
    It is interesting the Memorandum places undue emphasis on a 
new concept called ``advanced compensation,'' which the 
Memorandum describes as opportunities to offset foreseeable, 
harmful impacts to natural resources in advance.
    The Memorandum goes on to directly link a potential 
reduction in permitting times to upfront mitigation. This means 
that project proponents may be required to pay millions in 
mitigation costs before their project even breaks ground. It 
seems to me just a way to hold projects hostage. Effectively 
saying that a permit will be delayed or not even considered at 
all unless some sort of advanced payment is made.
    Mr. Bean, in the future is there any guarantee this 
advanced compensation will ensure a project is approved?
    Mr. Bean. Well, first let me say that advanced compensation 
is not a new concept. It's been around since at least the mid-
1990's.
    And indeed, most states, including your own, I believe, the 
state transportation departments have indulged, have 
participated in advanced compensation by establishing 
mitigation banks for future highway projects. Those departments 
of transportation recognize that as they build highways in the 
future they will need to mitigate the impacts of those on 
wetlands, in particular. And so, most state DOTs, again, I 
believe including your own, have taken this initiative to 
establish mitigation banks to meet those future mitigation 
needs through advanced compensation.
    Senator Barrasso. Is this a way to basically just prevent 
projects from developing and moving forward?
    Mr. Bean. It's a way to facilitate and expedite projects, 
Sir.
    Senator Barrasso. I want to discuss the concept of 
irreplaceable natural resources for a moment.
    The Memorandum defines this term literally as something 
that cannot be restored or replaced. Does the Department 
consider finite natural resources to be irreplaceable?
    Mr. Bean. I don't know that the Department has a position 
on that.
    The Fish and Wildlife Service over the years has sometimes 
found some resources to be irreplaceable. For example, complex 
coral reefs on Hawaii, as one example, or in Colorado peat moss 
fans are among resources the Fish and Wildlife Service has 
found to be irreplaceable because they accumulate over time in 
matter of inches over a millennium.
    Senator Barrasso. My current concern goes to things like 
coal, oil, gas, things that are resources. Using terms like 
irreplaceable natural resources without context to me is 
confusing. It is vague. It could be applied without discretion.
    I think without a clear definition, and what you just 
described is very different than how others may interpret it, 
without a clear definition the agency could declare an entire 
landscape or watershed as irreplaceable.
    How can we expect your employees on the ground to make 
decisions about mitigation when we fail to actually have a 
substantive definition for this irreplaceable natural resource?
    Mr. Bean. Well I would say that the Fish and Wildlife 
Service has had, since 1981, a policy that refers to 
irreplaceable resources and has not generated the sorts of 
confusion or inconsistency that you express a fear about.
    Senator Barrasso. So could you provide for the record a 
written distinction between the Department's definition of an 
irreplaceable natural resource and a scarce or sensitive 
natural resource?
    Mr. Bean. I will be happy to try to do that.
    I would note that the Congress itself and the Federal Land 
Policy and Management Act referred to scarcity of resource 
without defining that, so we're in the same boat with respect 
to that.
    Senator Barrasso. Thank you, Madam Chairman.
    The Chairman. Thank you.
    Senator Heinrich.
    Senator Risch.
    Senator Risch. Second panel.
    The Chairman. We do have a second panel and I would like to 
turn to them. I have a longer series of questions that I will 
submit for the record, and I would encourage my colleagues to 
do the same.
    But to both of you gentlemen, in the second panel we will 
be hearing from Sara Longan, who is the Executive Director for 
the Office of Project Management and Permitting in the Alaska 
Department of Natural Resources. In her recommendations, she 
has asked for a series of requests to be responded to by the 
Federal agencies, in terms of mitigation, such things as the 
requirement for a formal rulemaking process.
    She has made the request that it is made expressly clear 
how new Federal mitigation policies might impact non-Federal 
lands. The Memo and resulting dialogue has provided few 
assurances that new Federal actions will not impose new Federal 
mitigation policies affecting state, private, Native 
corporation or tribal lands.
    She also goes on to ask for clarifying guidelines as it 
relates to the Alaska Native Claims Settlement Act and the 
Alaska National Interest Lands Act (ANILCA).
    While these specific questions have not been raised 
directly here, know that I share Ms. Longan's concerns and 
would like to have responses to that as well.
    The Chairman. With that, gentlemen, we will thank you and 
bring up the second panel.
    While everyone is getting seated, I will introduce the 
panel very quickly.
    Dr. Sara Longan, who I just referenced, is the Executive 
Director of the Office of Project Management and Permitting at 
the Alaska Department of Natural Resources. She joins us to 
discuss her experience in Alaska helping to implement 
mitigation measures across both the Army Corps of Engineers and 
the Bureau of Land Management, and some of the lessons there.
    We have Mr. Doug Lashley, who is the Managing Member of 
GreenVest, LLC, here to speak about wetlands restoration; Lynn 
Scarlett, who is the Global Managing Director of The Nature 
Conservancy; and Mr. Shaun Sims, I will ask my colleague from 
Wyoming to introduce him. And finally, Laura Skaer.
    Ms. Skaer. Correct.
    The Chairman. The Executive Director for the American 
Exploration and Mining Association.
    Senator Barrasso, if you would like to introduce Mr. Sims?
    Senator Barrasso. Thank you very much, Madam Chairman.
    I am so pleased to introduce Shaun Sims. He is a fifth 
generation rancher from Evanston, Wyoming. He serves as 
President of the Wyoming Association of Conservation Districts 
and is an active member of the Wyoming Stock Growers 
Association.
    He has served for more than a decade in his local 
Conservation District and was elected to the National 
Association of Conservation Districts Executive Board. Just 
last year Shaun and his wife, Lacey, were inducted into the 
Wyoming Agriculture Hall of Fame for their wonderful 
contributions to both agriculture as well as their communities 
in Wyoming.
    Shaun wears many hats. He offers a unique perspective to 
the Memorandum that we are here to discuss today. So welcome to 
Shaun and to the other witnesses. Thank you very much, Madam 
Chairman, for convening this hearing.
    The Chairman. Great, thank you.
    With that, we will begin with Ms. Longan and ask that you 
all try to limit your testimony to five minutes. Your full 
statements will be included as part of the record.
    Welcome to all of you.
    Ms. Longan.

STATEMENT OF SARA LONGAN, EXECUTIVE DIRECTOR, OFFICE OF PROJECT 
    MANAGEMENT AND PERMITTING, ALASKA DEPARTMENT OF NATURAL 
                           RESOURCES

    Ms. Longan. Thank you.
    Chairwoman Murkowski, Ranking Member Cantwell and members 
of the Committee, my name is Sara Longan. I am the Executive 
Director of the Office of Project Management and Permitting 
within the Alaska Department of Natural Resources. On behalf of 
Governor Bill Walker, thank you for this opportunity to 
testify.
    Today's testimony will highlight mutual mitigation 
interests the state shares with the Federal agencies 
participating in the Presidential Memorandum on mitigation. At 
the same time, we have significant concerns with regard to 
implementation of the Memo and resulting policies that may, 
unnecessarily, duplicate and excessively burden resource 
development opportunities in Alaska.
    I hope to address specific challenges and encourage our 
Federal partners to think creatively and within their existing 
authorities to improve the current mechanisms already in place 
to avoid, minimize and mitigate unavoidable impacts to 
resources.
    Collaboration among the agencies and impacted stakeholders 
is a must and should help foster a coordinated regulatory 
process that can be flexible and allow for responsible resource 
development while creating more effective modes of mitigation.
    It is concerning that the Memo is seeking new mitigation 
goals when existing mitigation requirements already impose 
significant challenges to both regulators and developers in 
Alaska. It has long been recognized that the no net loss policy 
is a particular concern in Alaska where 63 percent of the 
nation's wetlands are found. These wetlands are predominately 
pristine, which offers a tremendously small inventory of 
threatened or previously disturbed wetlands that would even be 
eligible for mitigation.
    In 1994, the Army Corps of Engineers and the EPA produced 
the Alaska Wetlands Initiative Report, specifically noting 
Alaska's unique challenges, concluding that a predictable and 
flexible regulatory program is essential. This report is 
referenced in the Clean Water Act 2008 Mitigation Rule; 
however, there is room for improvement to show how the Federal 
regulators are implementing their own advice by making the 404 
program in Alaska more practical and flexible.
    The Bureau of Land Management is developing new mitigation 
requirements to offset impacts from development within the 
National Petroleum Reserve Alaska, NPRA, which ultimately 
required mitigation fees in the sum of $8 million from 
ConocoPhillips Alaska for the proposed Greater Moose's Tooth 1, 
or GMT-1, project. For the past decade and longer the GMT-1 
project area has been subject to multiple National 
Environmental Policy Act, NEPA, analyses and integrated 
activity planning resulting in numerous stipulations and lease 
mitigation measures; however, these Federal Government 
protections are seemingly unrecognized by BLM as they implement 
additional mitigation requirements and now attempt to require 
more compensatory funds from developers.
    Conoco voluntarily provides mitigation payments to 
communities impacted by GMT-1, including the critical supply of 
natural gas to the Native Village of Nuiqsut, which is a much 
cleaner and cheaper alternative to diesel burning. Multiple 
subsistence programs, education and workforce development and 
emergency response assistance programs are funded by Conoco in 
order to fulfill the company's efforts in being a Good 
Neighbor.
    It is imperative that new, compensatory mitigation fees 
required by BLM or any other Federal agency seeking to get into 
the business of compensation will not compete with the existing 
sources of voluntary support offered to impacted Alaskan 
communities. The NPRA grant program, required by Federal law, 
has administered over $150 million to the North Slope villages 
as a result of NPRA leasing. Other industry funding sources 
also exist.
    The Federal agencies should fully understand any potential, 
unintended consequence that may result from implementing this 
Memo. Due to the history of regulatory challenges, briefly 
summarized here, we view the Memo as a step in the wrong 
direction. We question the level of consultation the Federal 
Government undertook prior to its issuance.
    Terms such as ``harmful impacts'' or ``irreplaceable 
character'' are left to potentially conflicting interpretation 
and implementation of multiple Federal agencies to determine 
what these terms mean as well as how to best implement policies 
in order to achieve these ambiguous and far reaching goals.
    We urge the Federal agencies to undertake a regulatory cost 
analysis and NEPA review of this proposed, major Federal action 
to help determine commercial and cumulative impacts. A formal 
rulemaking process should be followed. The Federal agencies 
should make expressly clear how non-Federal lands might be 
impacted.
    Thank you.
    [The prepared statement of Ms. Longan follows:]
    
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    The Chairman. Thank you, Ms. Longan. I appreciate your 
emphasis on the situation within the NPRA, and I will ask you 
some questions about that as well.
    Mr. Lashley, welcome to the Committee.

     STATEMENT OF DOUG LASHLEY, MANAGING MEMBER, GREENVEST

    Mr. Lashley. Good morning, Chairman Murkowski and Senator 
King and members of this Committee.
    Thank you for your invitation to testify today regarding 
the Presidential Memorandum issued November 3, entitled, 
``Mitigating Impacts on Natural Resources from Development and 
Encouraging Related Private Investment.''
    My name is Doug Lashley, and I am the Founder and CEO of a 
small business containing ten employees known as GreenVest. We 
are a private investment influence involving encouraging 
related private investment which is the subject of this 
Committee review.
    GreenVest has been around for 22 years. We're headquartered 
in Annapolis, Maryland. We also have offices in Raleigh, North 
Carolina and Edison, New Jersey. We primarily do work on the 
Eastern seaboard throughout the Mid-Atlantic region. We are 
known as an environmental mitigation banking firm.
    In just the last three months GreenVest has hired three new 
people, we have written contracts for over $18 million worth of 
new mitigation project work and are extremely interested in 
seeing the momentum in good quality, compensatory mitigation 
continuing.
    Mitigation banking is a key part of the Federal permitting 
process and the final part of the obligation to avoid, minimize 
and mitigate in the Federally-recognized mitigation hierarchy 
to offset project impacts. This form of advanced compensatory 
mitigation means that the environmental benefits are achieved 
before the project is permitted. Mitigation bankers restore 
wetlands and other areas with important natural resources.
    Using our own capital, we then seek credits from the 
Federal permitting agencies. These credits can then be 
purchased by developers, and by developers I mean private, 
public and individual developer activities. A review of core 
permit data has shown in the last five years that the 
utilization of mitigation banks verses other types of 
mitigation can reduce the permit processing time significantly.
    The approach used in our industry recognizes the ecosystem 
values of the watershed, its water, wetlands, habitats, 
riparian forests and provides multiple incentives for 
restoration and improvement of these ecosystem functions. 
Credit potential is established by restoring and enhancing 
degraded wetlands, streams, forests and upland habitats which 
will generate functional uplift to the natural systems and 
provide a means of realizing economic value from the 
properties.
    This is the GreenVest core mission and business. We create 
credits for transportation agencies, counties, the energy 
industry and the private development community. One hundred 
percent of the work that we do results in permanent 
conservation easements with financial protections assuring 
long-term durability.
    Our firm welcomed the Presidential Memorandum because it 
provides a framework to achieve efficiency within the various 
Federal agencies involved in permitting development projects. 
It's also recognition that the good work that our industry has 
undertaken the last 20 years in helping generate good quality, 
compensatory mitigation is a key factor in helping expedite the 
restoration of our country's infrastructure.
    With continued coordination from the Administration amongst 
all relevant Federal agencies, we can accelerate permitting in 
a balanced and efficient way by, in part, relying on the use of 
wetland and ecosystem service banks.
    The work at GreenVest in the Mid Atlantic is helping negate 
some of the negative conditions that exist in our landscape 
while better achieving a balance between economic stability and 
growth within our communities. Integrated economic growth and 
ecological restoration ensures future sustainability in the 
United States and throughout the world. It is clear that in 
today's complex financial markets economic strategies that 
involve the restoration and protection of natural resources 
will succeed and prosper.
    Current regulations provide a framework to generate 
economic value through the protection of these resource values 
and the development of ecological assets. What is needed is 
more collaboration between permitting authorities as well as 
capital from the private sector. An increasing flow of private 
capital incentivized by consistent regulatory environment means 
more in increasing large scale projects.
    We believe implementation of the Presidential Memorandum is 
a great opportunity for agencies that have an impact on the 
permitting process to find cost savings and efficiencies at a 
significant level. The Presidential Memorandum has already 
helped generate a significant level of interest in continuing 
to promote the investment of private capital as evidenced by 
the recent announcements about the infusion of both private 
endowments and Wall Street money in the $1 billion range.
    The Department of the Interior has also just announced the 
establishment of a natural resource investment center to 
enhance the prospect that the private sector will invest in 
these projects. This type of continued involvement and 
recognition by government that the private sector 
entrepreneurial skills, creativity and bringing capital to the 
table will help address the need to balance economic growth 
with environmental quality and is fundamentally a sound policy.
    I appreciate the opportunity to testify today and look 
forward to your questions.
    Thank you.
    [The prepared statement of Mr. Lashley follows:]
    
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    The Chairman. Thank you.
    Ms. Scarlett, welcome.

 STATEMENT OF THE HONORABLE LYNN SCARLETT, MANAGING DIRECTOR, 
             PUBLIC POLICY, THE NATURE CONSERVANCY

    Ms. Scarlett. Thank you very much, Chairman Murkowski and 
Ranking Member Cantwell and members of the entire Committee. 
Thank you for this opportunity to testify.
    I have met with many people on this Committee during my 
nearly eight-year tenure at the Interior Department in the G.W. 
Bush Administration. During that time, I became familiar with 
mitigation policies of Interior bureaus. I saw the ways in 
which effective application of policies to avoid, minimize and 
mitigate impacts could support efficient, predictable agency 
decision-making.
    I'm now Global Managing Director of Public Policy at The 
Nature Conservancy (TNC). Our global focus at TNC is on how to 
support economic development while preventing impacts to the 
most critical lands and waters in a predictable manner. 
Mitigation done well, we believe, can result in positive 
outcomes for businesses, communities and the environment.
    We believe the November 2015 Presidential Memorandum on 
mitigation can support project efficiency and better 
environmental outcomes. These are twin objectives that we 
share. As others have stated today, mitigation is not a new 
concept in the U.S. policy arena, but the track record, as some 
have noted for efficient project review and robust 
environmental outcomes, could be improved.
    Direct agency rules have stymied private sector projects 
and investment in restoration. Programs have fallen short of 
their potential to support good conservation outcomes and more 
project efficiency. Recognizing these shortcomings, the Bush 
Administration clarified a set of rules on wetlands mitigation. 
The focus was on more clarity and predictability.
    We believe the Presidential Memorandum can actually help 
affirm these advances. We believe it can enhance consistency 
across the array of agency mitigation policies, where feasible, 
under existing law. The key emphasis on measurable performance 
standards in the past, lack of clarity and consistency has 
resulted in inadequate environmental outcomes but has also been 
bad for project developers causing project delays, increased 
costs and an unpredictable setting for developers.
    We have long believed that these policies needed some 
common sense updates. We have core principles for mitigation 
policies and projects, and we would be happy to share them with 
you. Among these principles is that mitigation decisions should 
be applied in a landscape context, if possible, and use early 
planning. This approach enables developers to know in advance 
what areas should be avoided or prioritized. This enables more 
efficient project review when project proponents and agencies 
have clear expectations.
    One good example, as several have mentioned, is the Western 
Solar Plan. That plan supports efficient project review and 
creates clear expectations for mitigation in advance. The 
approach, we're told, has reduced project permitting time by 
more than half.
    We think the Presidential Memorandum could build on this 
type of success. Effectively implemented, the Memorandum could 
yield project review efficiencies, reduced Administrative 
effort, greater predictability and certainty for project 
proponents. Our focus will be on the implementation, that is, 
on the guidance that agencies develop under the Memorandum and 
of course, our long standing work in the field, working 
collaboratively with industry and others on advancing 
mitigation polices.
    We think there's a potential to lead to better outcomes for 
the environment and communities and, of course, all of this 
consistent with existing law.
    Thank you very much.
    [The prepared statement of Ms. Scarlett follows:]
    
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    The Chairman. Thank you.
    Mr. Sims, welcome.

  STATEMENT OF SHAUN SIMS, PRESIDENT, WYOMING ASSOCIATION OF 
   CONSERVATION DISTRICTS, AND MEMBER, WYOMING STOCK GROWERS 
                          ASSOCIATION

    Mr. Sims. Thank you, Chairman Murkowski, Ranking Member 
Cantwell and Committee members. Thank you for the invitation to 
join you today and the opportunity to provide you with my 
thoughts and input on natural resource conservation, mitigation 
and multiple use.
    I'm Shaun Sims, a fifth generation cattle and sheep rancher 
from Uinta County, located in Southwest Wyoming. I'm an elected 
Supervisor of the Uinta County Conservation District, President 
of the Wyoming Association of Conservation Districts and member 
of the Wyoming Stock Growers Association. I, along with my 
family, raise cattle, sheep and hay. Our family is committed to 
sound natural resource management, and we practice it every day 
on our ranch.
    As part of our operation, we also host 28 wind turbines 
subsequently providing for alternative energy development. Our 
ranch operates in four counties, two states and in an area 
where there is active oil and gas development, among many other 
land uses. We also provide world-class mule deer and antelope 
populations, and have large swaths of sage grouse habitat that 
are considered core area, as designated by the State of 
Wyoming.
    We believe multiple use and conservation of our resources 
works in concert with one another and not independently. We 
must make a living from our resources, and we must take care of 
our resources so that we can make that living.
    I am deeply concerned with the November 3, 2015 
Presidential Memorandum, ``Mitigating Impacts on Natural 
Resources from Development and Encouraging Related Private 
Investments'' and the implications it may have on our family's 
ranching operation and other industries in my state in the 
West. The underlying principles of avoidance, minimization and 
compensation are generally sound and are already being 
practiced at the local, state and Federal levels. The document 
seeks consistency within/across agencies. That can have merit; 
however, as we have seen with the sage grouse plans, it can 
also preclude effective, locally-driven conservation.
    This Memorandum introduces some new concepts that cause me 
concern. First, the Memorandum introduces a new concept of 
increased private investment and resource restoration and 
enhancement. My sense is that this will be accomplished through 
mandatory or mandated compensatory actions not through the 
encouragement of economic activity that can enable resource 
users to be willing investors. I have witnessed firsthand what 
I refer to, and I realize this is a strong word, but frankly in 
my opinion, it is accurate, project approval through coercion.
    Second, the definition of advanced compensation is based on 
the Memorandum and environmental benefits achieved before a 
project's harmful impacts occur. This language leaves one 
questioning: whether the intent is to go beyond concurrent 
mitigation, which is current standard for most mitigation 
projects. Although the definition of durability is consistent 
with current definitions as needing to be at least equal to the 
length of the impact, the document later states that agencies 
should address the resilience of the measures and benefits to 
potential future environmental change. This appears to 
establish a type of strategy of let's guess what the future 
holds for resource changes and mitigate for those unknowns.
    Based on the cursory review of the U.S. Fish and Wildlife 
Service's proposed revisions, it is obvious mitigation for 
climate change is a major focus. The issue I see with this 
approach is that there are all sorts of dynamics in a natural 
environment that can change the face and condition of a 
resource base: fire, flood, drought and other naturally 
occurring events. How will anyone ever be able to provide 
mitigation of sufficient durability to account for any 
potential fire environment--any potential future environmental 
change when we're talking about a dynamic system that is ever-
changing itself?
    In addition, the concept of mitigation to provide for a net 
environmental gain at this point is premature. This approach 
also assumes that baseline resource information exists at a 
level to provide certainty on how to get to net gain or no net 
loss. Although there are many efforts aimed at developing these 
baselines, I am not convinced they are sufficient to begin 
mandating and implementing in the timeframe contemplated by the 
Memorandum.
    Also, landscape- or watershed-level approaches are 
discussed in the Memorandum. Again, this makes sense from a 
natural resource management perspective; however, I question 
what size of the landscape or the level of the watershed that 
is being contemplated.
    Lastly, the Memorandum discusses irreplaceable natural 
resources. I am concerned that this is basically yet one more 
land designation designed to limit our productive use of our 
resource base. There appears to be no shortage of attempts by a 
designation of one sort or another to further limit the ability 
of farmers and ranchers, as well as other industries, to 
responsibly develop and utilize our resources.
    Interpretation of these points is most concerning if left 
wide open, and depending on who is interpreting this, could 
have a chilling effect on future resource development.
    Thank you, Madam Chairwoman and members of the Committee.
    [The prepared statement of Mr. Sims follows:]
    
    
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    The Chairman. Thank you, Mr. Sims.
    Ms. Skaer.

    STATEMENT OF LAURA SKAER, EXECUTIVE DIRECTOR, AMERICAN 
                EXPLORATION & MINING ASSOCIATION

    Ms. Skaer. Chairman Murkowski, Ranking Member Cantwell, 
members of the Committee, the American Exploration and Mining 
Association appreciates the opportunity to provide testimony 
today.
    Before we address the Memorandum, we want to thank you for 
your leadership on critical minerals and much needed permitting 
reform. America has great mineral wealth and our members are 
ready, willing and able to find and produce the minerals 
America requires in an environmentally and socially responsible 
manner.
    Let me be clear, we support mitigation. Unfortunately, the 
directives in the Memorandum will unnecessarily create 
confusion, cause delays, increase costs and hinder the ability 
of America to lessen its dependence on foreign sources of 
strategic and critical minerals.
    For more than six years this Administration has sought to 
change the management of our public lands and natural resources 
from Congressionally-mandated multiple use to protection, 
preservation and soft recreation, while elevating wilderness 
values above wealth and job creating activities like mining, 
grazing and energy production.
    It began with the internal Treasured Landscapes Memorandum 
in 2010, which placed a priority on wilderness preservation and 
creating national monuments, followed by Secretarial Order 3310 
which Congress promptly defunded.
    Fracking rules, co-leasing moratoria, millions of acres of 
new national monuments without local stakeholder input, massive 
mineral withdrawals including more than ten million acres, 
ostensibly for conserving sage grouse habitat--even though Fish 
and Wildlife acknowledges that mining is a secondary threat and 
this Memorandum on mitigation--all designed to prohibit job 
creation on industries and activities that disturb and degrade 
the land.
    The Constitution gives Congress, not the Executive Branch, 
the authority to make laws for managing public land. The 
President's authority is limited to implementing those laws. 
Congress has enacted a number of land management statutes with 
a single theme, managing for multiple use, sustained yield, 
while recognizing competing values, protection, preservation, 
fish and wildlife, outdoor recreation, with the need for 
minerals, energy, food and fiber.
    This Memorandum goes far beyond implementation and is in 
direct conflict with the Mining Law, the Organic Act, the 
Federal Land Policy and Management Act, and the National Forest 
Management Act. These acts contain preventative standards such 
as prevent unnecessary or undue degradation or minimize 
disturbance where practicable and feasible. Both recognize 
there will be necessary and reasonable degradation.
    Unnecessary or undue degradation in minimizing impacts 
clearly authorized onsite mitigation of direct impacts but do 
not authorize or require offsite mitigation, compensatory 
mitigation, advanced mitigation and certainly do not authorize 
or require net benefit, no net loss or avoidance if resources 
are determined to be irreplaceable. A directive to avoid is a 
directive to veto. Congress could have adopted these standards 
but did not and chose to adopt preventative standards.
    While the Memorandum claims no legal effect and purports to 
adhere to existing authorities, it is marching orders from the 
Chief Executive. Agency personnel will feel pressure to comply, 
which will result in uncertainty, project delays, increased 
costs and perhaps permit extortion where project proponents are 
pressured to provide compensatory mitigation or a net benefit 
in return for a permit.
    Many terms such as important, scarce, sensitive, 
irreplaceable, and net benefit are subjective, vague, 
ambiguous, undefined and untethered to existing statute or 
regulation. Project proponents will face the same dilemma Alice 
faced in her exchange with Humpty Dumpty in Through the Looking 
Glass, which is to be master. That's all.
    In the Sage Grouse Land Use Plan Amendments without 
statutory authority, in direct conflict with FLPMA and at the 
insistence of the Fish and Wildlife Service, BLM 
inappropriately applied a net conservation gain or benefit 
mitigation standard in Sage Grouse habitat. This ESA standard 
was inserted at the last minute and was not vetted through the 
NEPA process. Furthermore, Fish and Wildlife has no authority 
to impose ESA recovery standards with respect to an unlisted 
species.
    Also, without notice and comment and without regard to 
mineral potential, Fish and Wildlife required BLM to withdraw 
more than ten million acres from mineral entry, ostensibly to 
conserve Sage Grouse habitat of irreplaceable character. No 
analysis of mineral potential, no analysis of economic impacts, 
no analysis of cumulative impacts, and no opportunity for 
public comment.
    So while the Memorandum purports to respect existing law, 
the Sage Grouse Land Use Plans demonstrate the pressure to 
comply with its directives even when those directives violate 
existing law. It is up to Congress to change mitigation 
policies and how the public lands are managed, not the 
Executive Branch.
    Thank you. I look forward to your questions.
    [The prepared statement of Ms. Skaer follows:]
    
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    The Chairman. Thank you, Ms. Skaer.
    I am going to yield to Senator Barrasso, and then we will 
turn to Senator King.
    Senator Barrasso. Thank you very much, Madam Chairman.
    Mr. Sims, you mentioned project approval through coercion. 
We have heard Ms. Skaer talk about permit extortion. You are 
pretty mild compared to the things I heard at the Stock Growers 
picnic and Hall of Fame banquet this year when you were 
inducted. I mean, we were hearing about not just government 
coercion but, you know, government action to compel and in some 
ways, government action to corrupt because sometimes just 
trying to comply makes it almost illegal in terms of sort of 
the things that you have to do.
    So, I just have a couple of questions with regard to what 
we are seeing here today. I am very pleased that you are here 
to talk to the Committee. In your testimony, you highlighted 
the importance of both multiple use management and conservation 
in your daily life. You have lived that. Your family has lived 
it in Wyoming.
    If the Federal agencies fundamentally change their 
management mission from multiple use to something that 
prioritizes avoidance over everything else, how is that going 
to affect your work in the Conservation Districts?
    Mr. Sims. When you develop resources, there is a level of 
disruption or what you would need to mitigate for. That is what 
Conservation Districts do best. We try to mitigate for those 
things, make the environment better. But we realize that we 
need to use those resources. That is part of the conservation, 
we're going to conserve those resources. We're going to 
conserve the environment that we're using that hosts those 
resources.
    The issue I see is we have an avoidance, we have a 
minimization and we have a compensatory hierarchy with this, 
with the whole mitigation thing. I see a jump, a push, to go to 
the compensatory mitigation which does not necessarily benefit 
that project or that area that is being impacted when we're 
talking about a landscape that could be across the nation or in 
a Sage Brush Steppe.
    So the avoidance portion of that, I don't think, allows us 
to develop those resources and do our jobs.
    Senator Barrasso. You raise some significant issues about 
future planning that is going to be required by this 
Memorandum's mitigation policies. In your view, did the 
agencies have the ability to address all these possible future 
environmental changes on the landscape?
    Mr. Sims. I do not. I think when they talk about baseline 
and no net loss and the net gain, at this point, there are 
efforts in the State of Wyoming, I know, that will define these 
and show that level of habitats we have or those things, but 
they are far from completed. There's been a lot of work done on 
that.
    Senator Barrasso. You also express concerns with the 
concept of durability and the undue burden that this is going 
to play on projects.
    The Memorandum defines durability loosely saying that the 
environmental benefits of mitigation must last, it says, at 
least as long as the harmful impacts of the project. This means 
that at some point some agency official can determine how long 
the harmful effects of the project will last. It is going to be 
their speculation. It seems possible that ongoing projects 
could be reexamined under these new terms.
    I am wondering if you have heard of any projects that are 
completed in phases that may be delayed under these new 
policies?
    Ms. Sims. Personally I have not. I know that some of the 
oil and gas, as they were developed, and they were continued to 
go. There was one instance where a road was moved from a Sage 
Grouse lek as part of the mitigation for a new portion of that 
project.
    It's ironic. They moved the road from the Sage Grouse lek, 
moved it over to another area and the Sage Grouse moved over to 
where the new road was. It was due to the dust in the water, 
but they did try to mitigate for that. But that was a 
requirement to continue another portion of the project.
    Senator Barrasso. It is amazing.
    Thank you, Madam Chairman.
    The Chairman. Thank you.
    Senator King.
    Senator King. Thank you, Madam Chair.
    It seems to me this is an interesting hearing and 
discussion because this core question is, is this Memorandum 
regulatory or wreckatory? Is it advice to the agencies or does 
it create additional regulatory burdens? Certainly whoever 
helped the President with the drafting knew what they were 
doing legally because there are all kinds of statements at the 
end that says this does not increase authority, this does not 
expand existing regulation, it is simply advice to the 
agencies.
    Ms. Longan, if it is non-regulatory, isn't consistency, 
timeliness and predictability across Federal agencies a good 
thing? I have been working in regulatory affairs for 35 years, 
and I have always thought that was something that we wanted. My 
question is what new imposition does this Memorandum place upon 
the development process in Alaska or anywhere else?
    Ms. Longan. Thank you for the question.
    Yes, consistency and coordination among the Federal 
agencies that are operating under multiple or different 
authorities is always a good thing.
    What I should underscore is that in Alaska the predominant 
form and legal authority to require compensatory mitigation 
comes from the Clean Water Act as well as from the Endangered 
Species Act. There are several other Federal agencies listed in 
this Memorandum that aren't currently requiring any form of 
compensatory mitigation. To that end, then, that is striking 
the developers in Alaska as something incredibly new and in 
addition to what is already required in our state.
    Senator King. Well, it says right in it, this Memorandum is 
not intended to, and does not, create any right or benefits 
substantive of procedural, enforceable at law and equity by any 
party against the United States, etcetera. Nothing in this 
Memorandum shall be construed to impair or otherwise effect the 
authority granted by law to an Executive department.
    It is called the Administration for a reason. They are 
supposed to administer the laws. That is part of 
implementation. I am having a hard time figuring out how this 
imposes new burdens. It seems to me that is the core question 
that we are discussing here today.
    You had eloquent testimony on this. Give me your thoughts, 
please?
    Ms. Skaer. Well Senator, you have the Chief Executive 
issuing a Memorandum saying the word shall in it, you know? 
This is what we shall do, yet, the agencies all operate under 
different statutes that have different goals. Congress provided 
different standards for how you manage the public lands whether 
there is mitigation or not.
    Senator King. But isn't what the President is saying, he is 
clearly qualified. It says----
    Ms. Skaer. Yes, it does.
    Senator King. As you are--to be consistent with Federal 
law, in so far as you are consistent, try to be----
    Ms. Skaer. Okay.
    Senator King. Try to have the same rules for all these 
different agencies. Is that not a benefit to your----
    Ms. Skaer. Well, except that you have different goals and 
different rules and different mitigation standards depending on 
whether it's a listed species under the Endangered Species Act 
or you're developing a mine or an energy project.
    In the Sage Grouse Land Use Plans, there are six lawsuits 
now so the administrative record has been filed with the 
courts. We see great pressure from Fish and Wildlife, BLM, to 
adopt the net benefit recovery standard, and BLM saying that 
violates our statute. We can't do that under FLPMA. It prevents 
unnecessary undue degradation and Fish is saying if you want 
``not listed, not warranted,'' you will do this.
    And so----
    Senator King. Right.
    Ms. Skaer. You know, it's clear that the statute provided 
one set of rules but the agencies were pushing in a different 
direction.
    Senator King. I have had the experience of having OSHA 
telling me my bulldozers had to have backup noise, backup 
signals and the Department of Environmental Protection saying 
no, that is a violation of the noise standard. So my suggestion 
was you guys go in a room and work this out, but I understand 
how you can have inconsistencies.
    Ms. Scarlett, several strong words have been used and I 
think the words were extortion and pressure. What about the 
danger of advanced mitigation being used as a, kind of, 
pressure point. If you provide enough advanced mitigation, we 
will expedite or I do not think it would be that explicit? But 
human nature being what it is, address that concern that has 
been expressed here?
    Ms. Scarlett. Thank you very much.
    At The Nature Conservancy, we see two dimensions of the 
mitigation policy as important and as going in tandem. One is 
the large landscape planning and advanced mitigation 
opportunities where applicable under the law. The other is more 
clearly stating goals.
    In the context of clearly stated goals, that is what it is, 
what impacts you are striving to mitigate against, that allows 
the focus then to be on addressing those. That's quite a 
different process than one where you have no clear goals and 
therefore you get into simply a negotiation. Well, $8 million 
sounds good, $6 million sounds good, so we think those things 
together actually can advance good outcomes.
    I want to point to one example which will help us 
understand that. It predates, of course, this Memorandum, but 
it is the San Diego Association of Governments, 18 governments, 
lots of development in the area, transportation systems and so 
forth. They did a large landscape effort, advanced mitigation 
effort, so that they would be able to expedite transportation 
projects over many, many years. The effect of that has probably 
been to have development costs and also significantly reduce 
the timing. We think that's a best practice, and we think it's 
one consistent with what this is striving to do but striving to 
get all the agencies to more consistently apply that kind of 
approach.
    Senator King. It seems to me the consistency, timeliness 
and predictability are virtues. The question is whether this 
Memorandum achieves that, but that seems to be the goal.
    Thank you, Madam Chair.
    The Chairman. Thank you, Senator King. I so appreciate the 
fact that you come, you listen, you ask these very probing 
questions. I think the goal is admirable, absolutely. I think 
you said it was salutary, and I would agree. I am just trying 
to understand whether or not this gets us there or not, so I 
appreciate your line of questioning.
    Ms. Longan, I want to go back to you with regards to what 
we saw within the NPRA and the effort to align the mitigation 
interests between BLM and the Army Corps of Engineers within 
the NPRA. And again to try to drill down to see if, in fact, 
this Memorandum really gets us any closer because I think what 
we saw with the experience within the NPRA that the 
compensation requirement was $8 million. Ms. Scarlett, you 
said, in your example, $8 million right? Is $6 million right?
    It was certainly my sense all throughout that when it came 
to that requirement that they were putting in front of Conoco, 
when it came to the compensation, it was what could they land 
on that Conoco would finally agree to?
    One of the questions that I am asking Mr. Bean for on the 
record, was exactly how was that $8 million payment developed? 
What were the metrics that were used in determining exactly 
what that compensation would be, because as of this point in 
time, I have yet to be shown anything that would give clarity 
to anybody who is looking to do a project up there in terms of 
what metrics we are using? Do you have any clear sense as to 
how that $8 million in compensation was calculated or 
determined, or again, the metrics that were in place then?
    Ms. Longan. No, it's not clear to the state, and we 
actually worked to serve BLM as a cooperating agency during the 
NEPA review for GMT-1. We do not know which metrics or 
parameters were used for BLM to derive the $8 million 
mitigation cost.
    I want to take a moment to just recognize BLM Alaska's 
attempts to increase in transparency since they issued the 
decision for GMT-1. They recognize that perhaps they could have 
done a better job. BLM is holding workshops throughout the 
state seeking input from the communities and from the public to 
help BLM determine how best to now use those $8 million to 
effectively mitigate impacts.
    It's important to realize that BLM cannot consistently 
follow metrics or parameters to estimate mitigation costs 
because those metrics are not in place in any regulation or 
well established policy, so it is unlikely, if not improbable, 
that BLM can be consistent in applying any metric that does not 
exist.
    The Chairman. So, it is throwing the dart at the board and 
seeing where it lands as this point in time? Is it that random?
    Ms. Longan. Our sense was that yes, it was that random, and 
there was a bit of a push and a rush to determine these 
mitigation costs, again, because I'm hearing about mitigation 
in advance. Well, in advance is a relative term. Anecdotally 
and in my observation, the mitigation is always, typically, in 
advance and needs to be established, if not occurring, before a 
permit is issued.
    So in the case of GMT-1, BLM was under pressure as was the 
applicant to make decisions and issue the permits and 
authorizations under BLM authority, and mitigation certainly 
was, sort of, a last minute decision yet to be made.
    The Chairman. It sounds like it fits into what was said 
earlier, permit through coercion. Then the fact that BLM is now 
using some of that $8 million to develop its landscape level, 
regional mitigation strategy. So in effect, what you have is 
the private party, Conoco, bearing the burden of paying for BLM 
to develop its regional mitigation strategy. I do not know if 
that is unprecedented, but it certainly is unusual.
    I asked the question of Mr. Bean earlier when he was saying 
that the whole purpose of this Memorandum is to get to that 
point where it is expedited. It helps to reduce overall costs. 
It provides greater certainty. I suggested to him that I was 
searching in my head to try to think of an example, at least in 
our state, where we have seen the process made better because 
of this coordination/collaboration. I couldn't come up with 
anything. Can you share anything with the Committee here?
    Ms. Longan. Sure, I will try.
    In terms of coordinating the NEPA review and regulatory 
outcomes, GMT-1 comes close to being a good example, Senator. 
What was unfortunate in that is, again, there were multiple 
Federal agencies needing to issue permits and authorization. 
Really at the helm of that was BLM as well as the Corps of 
Engineers who has to issue 404 permits. As I stated in my oral 
testimony, that is a requirement almost all the time because 
Alaska, as you're very familiar, is so covered in wetlands.
    So the government agencies back home in Alaska are trying 
very hard to collaborate and coordinate, and I am seeing 
impressive areas of improvement there. But herein we have the 
problem of unknown, unexpected and unclear guidelines or non-
existing guidelines that require Conoco to pay for compensatory 
mitigation. The mitigation required for GMT-1, again, was in 
addition to what Conoco was very used to paying under the Clean 
Water Act. So the policies that BLM is still working to develop 
are very new to us in Alaska, and it's, sort of, policy on 
paper so it's hard for developers or even the State of Alaska 
to understand the process, and to understand exactly what 
mechanism is used to determine compensatory mitigation costs.
    The Chairman. Fair enough.
    Let me ask about the one recommendation in your letter here 
that asks that it be made clear how new Federal mitigation 
policies might impact our non-Federal lands, specifically 
state, private, Native corporation or tribal lands. What is 
your concern there?
    Ms. Longan. Thank you for the question.
    We have a strong concern that the Memo does not seem to 
provide guidance on how non-Federal lands might be impacted. We 
understand that this Memo is set forth to establish mitigation 
goals which we strongly support; however, we also understand 
that the decision-making is delegated to the Federal agencies.
    Multiple Federal agencies are listed in this Memorandum. 
They are responsible for making those decisions, implementing 
policy where regulations do not exist and they are the ones who 
will then require how or if compensatory mitigation will impact 
state, Native corporation, tribal or private lands.
    This is concerning to us. We are expecting that existing 
local and state authorities will not be marginalized by any new 
mitigation policy or outcome based on the issuance of this 
Memorandum.
    The Chairman. I recall a conversation that I had with a 
tribal member down in Southeastern Alaska who is concerned 
about some of the mitigation requirements, and in their 
community with their tribal lands, the concern was the 
mitigation costs could actually be more than the cost of their 
overall project. This was a small, small tribal organization. 
So it is something, again, where there is certainly a lack of 
clarity here.
    Let me ask Ms. Longan, Mr. Sims and Ms. Skaer, you have 
suggested that some of the definitions are troubling. I, in my 
comments to the agency witness, indicated that there was lack 
of clarity within agencies whether it was best available 
science.
    Mr. Sims, you have mentioned the same concern shared by 
Senator Barrasso about how we define irreplaceable natural 
resources. In terms of those troubling definitions contained 
within this Memorandum, what gives you the most pause or cause 
for concern?
    Ms. Skaer, you want to go?
    Ms. Skaer. The avoid irreplaceable resources or resources 
of irreplaceable character, you know, mineral deposits, 
economic mineral deposits are rare and they're hard to find and 
they are where God put them. And sometimes God put them where 
there were some other resources of value. You can't avoid those 
if you're going to develop the minerals that America needs. So 
that seems to be one of those things that is in the eye of the 
beholder. What's irreplaceable to me may not be irreplaceable 
to you.
    The other one is the net benefit or net conservation gain. 
How do we measure that? Is it two to one? Five to one? Ten to 
one? A hundred to one, you know? And what are the parameters 
for that? You know, there's so many of these definitions. 
They're not tied or tethered to existing statute or regulation 
where the agency can look at their regulations and say ``okay, 
we defined mitigation to mean . . . '' These are terms that are 
very subjective.
    The Chairman. Mr. Sims.
    Mr. Sims. I would echo my panelist's comment on that.
    The other thing, the durability, say you have a project and 
you've done everything you can think of. You've put in some 
compensatory mitigation and your project lasts 30 years or 50 
years, and down the road it becomes evident that maybe what you 
did was not enough or it was but you did it in a full faith 
effort and you've expended those resources.
    Mitigation, generally, if it's not compensatory, costs 
money or it's a change in design or it's a change in the way 
you put it on the ground. So there's all sorts of that 
mitigation, and now are these agencies going to be able to come 
back and say no, you need to change this or you need to add to 
this so the durability of your mitigation can continue on for 
the life of the project?
    That unknown, that--how do you plan for that far ahead in a 
habitat or for a species conservation is very difficult to do.
    The Chairman. Ms. Longan.
    Ms. Longan. Thank you.
    I also echo the comments from my fellow panel members. The 
term irreplaceable natural resources or resources that have an 
irreplaceable character is certainly most concerning to us. And 
it's not the simplicity in actually defining these terms. That 
seems easy enough. The complexity comes with then multiple 
Federal agencies, again operating under multiple authorities 
that aren't consistent, actually having to implement their 
policies in order to achieve that very ambiguous and vague term 
of not impacting resources with an irreplaceable character.
    Harmful impacts is extremely subjective and vague to us 
also. What hasn't been clearly stated is how the goals set 
forth to minimize harmful impacts may or may not interact or 
coincide with existing Federal laws and definitions, how it may 
or may not coincide or interact with existing mitigation 
requirements. For example, the outcomes from the NEPA process 
that obviously is going to work to avoid, minimize and mitigate 
harmful impacts or a definition close to that term. It is not 
expressly clear how these new mitigation goals, again, will 
coincide or interact with multiple Federal laws that already 
require mitigation.
    The Chairman. Let me ask you, Mr. Lashley, about the issue 
that Mr. Sims has brought up about the durability requirement. 
What impact might this have on the work that you do, how the 
banking community might assess the risk and effectively assign 
a dollar value to a bank's risk of assuming liability for the 
durability of a project's mitigation efforts in perpetuity 
while also at the same time ensuring the mitigation measures 
are durable in light of unknown potential, future environmental 
issues? So you have got an uncertainty out there. How do you 
bank that or is that an issue for you yet?
    Mr. Lashley. Thank you, Madam Chairman, for the opportunity 
to answer that question.
    First, I applaud Mr. Sims for the work that he's doing in 
Wyoming. It's admirable, and I say that because it illustrates 
the complexity of having uniform standards. What's good for the 
hydrology, the soils, the habitat, all of the ecosystem values 
that exist in Wyoming are completely different than in Alaska 
or Florida or Maine or Nevada.
    And when it comes to durability and banking it is built 
into the existing law. So the use of the word durability, it's 
an adjective. It describes the fact that under almost all 
banking guidelines that exist today and some are still 
evolving, but under all banking guidelines that we work in 
affect water quality. So reduction of nutrients, protection of 
streams, protection and restoration of wetlands, in addition to 
forestry banking guidelines under most state rules, have a 
durability component.
    We have to maintain and monitor the projects in order to 
secure credits. Our credits are released over a period of from 
five to ten years, I'm sorry, two to ten years, so our average 
bank project is a ten-year process.
    We have financial assurances and bonds to make sure that 
corrective action is taken. If we don't take that corrective 
action to solve a climatic issue, a weather-related issue, then 
our credits are withdrawn from our ledger and they can't be 
used to offset new impacts.
    At the end of the regulatory release of our projects, and 
keep in mind there's a permanent conservation easement on all 
the acreage that's within the bank domain, that the work that 
we're doing, we have to provide long-term, the word perpetual 
is used and nobody really can understand what perpetual is, 
although it means a very long time. We have to provide a fund 
that is handed over to a long-term steward, usually a non-
profit, a river keeper, a bay keeper, and they have to maintain 
the site in perpetuity.
    So durability is not new based on our interpretation of the 
Presidential Memorandum, it's something that we assume right 
now and build into our projects.
    The Chairman. Ms. Scarlett, I think this will be my last 
question here this afternoon. I appreciate the staying power of 
this panel here.
    When we talk about collaboration and coordination, in my 
mind, the better results come when you truly have all the 
stakeholders involved and engaged and a level of coordination 
with the state and the local entities. Western Governors 
Association has sent multiple letters to the Department of the 
Interior pushing this and given your background, your 
government service and in your current role, I would think that 
you probably agree that it only makes sense to have all 
stakeholders engaged here. But as I read it, the Presidential 
Memorandum is silent with respect to collaboration and 
engagement with states and local governments and private sector 
stakeholders, and only contains a kind of passing reference to 
that.
    How would you recommend that we can ensure that Federal 
agencies really are collaborating and coordinating and engaging 
on mitigation with all of the stakeholders and really pulling 
in the states? If Ms. Longan, in her capacity in the Department 
of Natural Resources, is not involved in this process, it seems 
to me you've got a real deficiency and you have a process then, 
effectively, that does not work whether it is in Alaska, 
whether it is in Wyoming or elsewhere? How do we correct this, 
because in my view it is an error of omission. I hope it is not 
purposeful, but it is clearly not there now. What is your 
advice here?
    Ms. Scarlett. Yeah, thank you very much, Senator.
    Collaboration is a hallmark of what The Nature Conservancy 
is all about. Everywhere we work that is the approach that we 
utilize. And as you may recall during my tenure at the 
Department of the Interior, a central tenant was cooperative 
conservation. Indeed, we put out or worked to have the 
President put out an Executive Order on cooperative 
conservations. So clearly that is critical.
    I think for our attention at The Nature Conservancy on the 
Memorandum and, as you noted, there are some salutary 
underpinnings, that is trying to enhance project efficiency and 
at the same time also enhance environmental outcomes. The key, 
really, is going to be in the agencies and their follow on. The 
Memorandum is asking the agencies to actually develop follow on 
policy guidance.
    So we intend to participate through the public comment 
process to ensure that guidance both provides some of the 
clarity that has been discussed here with respect to 
terminology but also is inclusive of the importance of 
stakeholder engagement and so on and so forth. So both in the 
follow on guidance that will be promulgated by the agencies and 
then of course, in the on the ground practices, we remain 
vigilant about the inclusion of stakeholder engagement.
    The Chairman. I think we have heard good praise, high 
praise, for what is going on in the State of Wyoming. Certainly 
in Alaska, because we are so distinct and oftentimes our issues 
are just that much bigger or more complicated, I think it is 
important that we look to the states as well in terms of how 
they have been handling the issue of mitigation and have been 
for a long time, and obviously being good stewards in so many 
cases.
    Again, I worry about those in Washington, DC sitting here 
as Federal agencies basically telling you in the West or us in 
the North how it is going to be. That is not a very 
collaborative process. I would certainly encourage that as we 
are working through many of the issues that have been raised, 
not only here in this Committee but in discussions around the 
country, that the best practices that we have seen in many of 
our states are looked to for a level of guidance.
    I appreciate the input of all of you here this morning and 
know that we will await a response to the letter that 19 of us 
have signed to the Administration asking for greater clarity 
here. I am sure that there will be more questions for the 
record that will be submitted by my colleagues.
    This is an issue that, particularly for us in the Western 
states, is as significant as anything because if the 
opportunity to develop, whether it is a coal lease, whether it 
is grazing lands, whether it is an opportunity to access our 
oil resources up North or whether it is putting in a new 
runway, if there is not some clarity and again, some general 
understanding as to how you proceed before you put your pen to 
paper, it is a great way to shut down just about everything.
    My hope is that what we will see is greater certainty that 
allows our states, our tribes and our private entities a path 
forward that is reasonable. Because right now, what we are 
seeing is a lot of frustration and a lot of just real 
consternation about the practices that are being advanced back 
here from our Federal agencies.
    I will end with Senator King's words that the goals are 
laudatory or salutary, I think, was his description. Getting 
there is our challenge, and right now we are clearly not there 
yet. So we have got a ways to go.
    With that, I thank you all and appreciate you being here.
    [Whereupon, at 12:23 p.m. the hearing was adjourned.]

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