[Federal Register Volume 77, Number 165 (Friday, August 24, 2012)]
[Proposed Rules]
[Pages 51503-51510]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-20438]


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DEPARTMENT OF THE INTERIOR

Fish and Wildlife Service

DEPARTMENT OF COMMERCE

National Oceanic and Atmospheric Administration

50 CFR Part 424

[Docket No. FWS-R9-ES-2011-0073; Docket No. NOAA-120606146-2146-01; 
4500030114]
RIN 1018-AY62; 0648-BC24


Endangered and Threatened Wildlife and Plants; Revisions to the 
Regulations for Impact Analyses of Critical Habitat

AGENCIES:  Fish and Wildlife Service, Interior; National Marine 
Fisheries Service (NMFS), National Oceanic and Atmospheric 
Administration (NOAA), Commerce.

ACTION: Proposed rule.

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SUMMARY: We, the U.S. Fish and Wildlife Service (FWS) and the National 
Marine Fisheries Service (NMFS) (collectively referred to as the 
``Services'' or ``we''), propose to revise our regulations pertaining 
to impact analyses conducted for designations of critical habitat under 
the Endangered Species Act of 1973, as amended (the Act). These changes 
are being proposed as directed by the President's February 28, 2012, 
memorandum, which directed us to take prompt steps to revise our 
regulations to provide that the economic analysis be completed and made 
available for public comment at the time of publication of a proposed 
rule to designate critical habitat.

DATES: We will accept comments from all interested parties until 
October 23, 2012. Please note that if you are using the Federal 
eRulemaking Portal (see ADDRESSES below), the deadline for submitting 
an electronic comment is 11:59 p.m. Eastern Standard Time on this date.

ADDRESSES: You may submit comments by one of the following methods:
     Federal eRulemaking Portal: http://www.regulations.gov. 
Search for FWS-R9-ES-2011-0073, which is the docket number for this 
rulemaking.
     U.S. mail or hand delivery: Public Comments Processing, 
Attn: FWS-R9-ES-2011-0073; Division of Policy and Directives 
Management; U.S. Fish and Wildlife Service; 4401 N. Fairfax Drive, PDM-
2042; Arlington, VA 22203.
    We will post all comments on http://www.regulations.gov. This 
generally means that we will post any personal information you provide 
us (see the Request for Information section below for more 
information).

FOR FURTHER INFORMATION CONTACT: Nicole Alt, U.S. Fish and Wildlife 
Service, Division of Conservation and Classification, 4401 N Fairfax 
Drive, Suite 420, Arlington, VA 22203, telephone 703/358-2171; 
facsimile 703/358-1735; or Marta Nammack, National Marine Fisheries 
Service, Office of Protected Resources, 1315 East-West Highway, Silver 
Spring, MD 20910, telephone 301/713-1401; facsimile 301/713-0376. If 
you use a telecommunications device for the deaf (TDD), call the 
Federal Information Relay Service (FIRS) at 800-877-8339.

SUPPLEMENTARY INFORMATION: 

Executive Summary

    Why we need to publish a rule. The Services have decided to revise 
our regulations to provide the public earlier access to the draft 
economic analysis supporting critical habitat designations, consistent 
with the President's memorandum (Memorandum for the Secretary of the 
Interior, Proposed Revised Habitat for the Spotted Owl: Minimizing 
Regulatory Burdens, 77 FR 12985 (March 5, 2012)). The President's 
February 28, 2012, memorandum directed the Secretary of the Interior to 
revise the regulations implementing the Endangered Species Act to 
provide that a draft economic analysis be completed and made available 
for public comment at the time of publication of a proposed rule to 
designate critical habitat. Both transparency and public comment will 
be improved if the public has access to both the scientific analysis 
and the draft economic analysis at the same time. We are therefore 
publishing a proposed rule to achieve that goal and seeking public 
comments. Because the Act and its implementing regulations are jointly 
administered by the Departments of the Interior and Commerce, the 
Secretary of the Interior consulted with the Secretary of Commerce on 
the revision of this regulation. The proposed revisions would also 
address several court decisions and are informed by conclusions from a 
2008 legal opinion by the Solicitor of the Department of the Interior. 
Specifically, we propose to revise 50 CFR 424.19 to clarify the 
instructions for making information available to the public, 
considering the impacts of critical habitat designations, and 
considering exclusions from critical habitat. The proposed rule is 
consistent with Executive Order 13563, and in particular with the 
requirement of retrospective analysis of existing rules, designed ``to 
make the agency's regulatory program more effective or less burdensome 
in achieving the regulatory objectives.
    This rule proposes the following changes:
    (1) We propose to change the title of Sec.  424.19 from ``Final 
Rules--impact analysis of critical habitat'' to ``Impact analysis and 
exclusions from critical habitat.'' We propose to remove the current 
reference to ``[f]inal rules'' to allow this section to apply to both 
proposed and final critical habitat rules. We propose to add the term 
``exclusions'' in the title to more fully describe that this section 
addresses both impact analyses and how they inform the exclusion 
process under section 4(b)(2) of the Act for critical habitat.
    (2) We propose to divide current Sec.  424.19 into three 
paragraphs. The division into three paragraphs closely tracks the 
requirements of the Act under section 4(b)(2) and provides for a 
clearly defined process for considerations of exclusions as required 
under the Act.
    (3) Proposed paragraph (a) would implement the direction of the

[[Page 51504]]

President's February 28, 2012, memorandum by stating that, at the time 
of proposing a designation of critical habitat, the Secretary will make 
available for public comment the draft economic analysis of the 
designation. This proposed paragraph also carries over the first half 
of the first sentence of the existing regulation, with modifications.
    (4) Proposed paragraph (b) would implement the first sentence of 
section 4(b)(2) of the Act, which directs the Secretary to consider the 
economic impact, the impact on national security, and any other 
relevant impact of specifying any particular area as critical habitat. 
This paragraph states that the impact analysis should focus on the 
incremental effects resulting from the designation of critical habitat.
    (5) Proposed paragraph (c) would implement the second sentence of 
section 4(b)(2) of the Act, which allows the Secretary to exclude areas 
from the final critical habitat designation under certain 
circumstances.

Background

    The purposes of the Endangered Species Act of 1973, as amended (16 
U.S.C. 1531 et seq.) (Act), are to provide a means to conserve the 
ecosystems upon which listed species depend, to develop a program for 
the conservation of listed species, and to achieve the purposes of 
certain treaties and conventions. Moreover, the Act states that it is 
the policy of Congress that the Federal Government will seek to 
conserve threatened and endangered species, and use its authorities in 
furtherance of the purposes of the Act.
    In passing the Act, Congress viewed habitat loss as a significant 
factor contributing to species endangerment. Habitat destruction and 
degradation have been a contributing factor causing the decline of a 
majority of species listed as threatened or endangered under the Act 
(Wilcove et al. 1998). The present or threatened destruction, 
modification, or curtailment of a species' habitat or range is included 
in the Act as one of the factors on which to base a determination that 
a species may be threatened or endangered. One of the tools provided by 
the Act to conserve species is designation of critical habitat.
    Critical habitat represents the habitat necessary for the species' 
recovery. Once designated, critical habitat provides for the 
conservation of listed species in several ways. Specifying the 
geographic location of critical habitat facilitates implementation of 
section 7(a)(1) of the Act by identifying areas where Federal agencies 
can focus their conservation programs and use their authorities to 
further the purposes of the Act. Designating critical habitat also 
helps focus the efforts of other conservation partners, such as State 
and local governments, nongovernmental organizations, and individuals. 
Furthermore, when designation of critical habitat occurs near the time 
of listing, it provides early conservation planning guidance to bridge 
the gap until the Services can complete more thorough recovery 
planning.
    In addition to serving as a notification tool, the designation of 
critical habitat also provides a significant regulatory protection--the 
requirement that Federal agencies consult with the Services under 
section 7(a)(2) of the Act to ensure that their actions are not likely 
to destroy or adversely modify critical habitat. The Federal 
Government, through its role in water management, flood control, 
regulation of resources extraction and other industries, Federal land 
management, and funding, authorization, or conduct of myriad other 
activities, may propose actions that are likely to affect critical 
habitat. The designation of critical habitat ensures that the Federal 
Government considers the effects of its actions on habitat important to 
species' conservation and avoids or modifies those actions that are 
likely to destroy or adversely modify critical habitat. This benefit 
should be especially valuable when, for example, species presence or 
habitats are ephemeral in nature, species presence is difficult to 
establish through surveys (e.g., when a species such as a plant's 
``presence'' may be limited to a seed bank), or protection of 
unoccupied habitat is essential for the conservation of the species.
    The Secretaries of the Interior and Commerce (the ``Secretaries'') 
share responsibilities for implementing most of the provisions of the 
Act. Generally, marine and anadromous species are under the 
jurisdiction of the Secretary of Commerce and all other species are 
under the jurisdiction of the Secretary of the Interior, though 
jurisdiction is shared between the two departments for some species, 
such as sea turtles and Atlantic salmon. Authority to administer the 
Act has been delegated by the Secretary of the Interior to the Director 
of the FWS and by the Secretary of Commerce to the Assistant 
Administrator for NMFS.
    This proposed rule addresses two developments related to 50 CFR 
424.19. First, the Solicitor of the Department of the Interior issued a 
legal opinion on October 3, 2008, regarding the Secretary of the 
Interior's authority to exclude areas from critical habitat designation 
under section 4(b)(2) of the Act (M-37016, ``The Secretary's Authority 
to Exclude Areas from a Critical Habitat Designation under Section 
4(b)(2) of the Endangered Species Act'' (Oct. 3, 2008)) (DOI 2008). The 
Solicitor concluded, among other things, that, while the Act requires 
the Secretary to consider the economic impact, the impact on national 
security, and any other relevant impact, the decision whether to make 
exclusions under section 4(b)(2) of the Act is at the discretion of the 
Secretary; that the Secretary has wide discretion when weighing the 
benefits of exclusion against the benefits of inclusion; and that it is 
appropriate for the Secretary to consider impacts of a critical habitat 
designation on an incremental basis. The Services have based this 
proposed rule on the reasoning and conclusions of this opinion and the 
President's February 28, 2012, memorandum.
    Second, the President's February 28, 2012 memorandum that directed 
the Secretary of the Interior to revise the implementing regulations of 
the Act to provide that an analysis of the economic impacts of a 
proposed critical habitat designation be completed by the Services and 
made available to the public at the time of publication of a proposed 
rule to designate critical habitat. The memo stated: ``Uncertainty on 
the part of the public may be avoided, and public comment improved, by 
simultaneous presentation of the best scientific data available and the 
analysis of economic and other impacts.''

Discussion of Proposed Revisions to 50 CFR 424.19

    This proposal would revise 50 CFR 424.19 to clarify the 
instructions for making information available to the public, 
considering the impacts of critical habitat designations, and 
considering exclusions from critical habitat.
    In proposing the specific changes to the regulations that follow, 
and setting out the accompanying clarifying discussion in this 
preamble, the Services are establishing prospective standards only. 
Nothing in these proposed revised regulations is intended to require 
(now or at such time as these regulations may become final) that any 
previously completed critical habitat designation be reevaluated on 
this basis. Furthermore, if this proposed rule is finalized, we will 
adopt the requirements of this regulation after the effective date. For 
proposed critical habitat designations published prior to the effective 
date of any final regulation,

[[Page 51505]]

the Services will continue to follow their current practices.

Statutory Authority

    The proposed regulatory changes described below derive from 
sections 4(b)(2) and 4(b)(8) of the Act. For the convenience of the 
reader, we are reprinting those sections of the Act here:

    (2) The Secretary shall designate critical habitat, and make 
revisions thereto, under subsection (a)(3) on the basis of the best 
scientific data available and after taking into consideration the 
economic impact, the impact on national security, and any other 
relevant impact, of specifying any particular area as critical 
habitat. The Secretary may exclude any area from critical habitat if 
he determines that the benefits of such exclusion outweigh the 
benefits of specifying such area as part of the critical habitat, 
unless he determines, based on the best scientific and commercial 
data available, that the failure to designate such area as critical 
habitat will result in the extinction of the species concerned.
* * * * *
    (8) The publication in the Federal Register of any proposed or 
final regulation which is necessary or appropriate to carry out the 
purposes of this Act shall include a summary by the Secretary of the 
data on which such regulation is based and shall show the 
relationship of such data to such regulation; and if such regulation 
designates or revises critical habitat, such summary shall, to the 
maximum extent practicable, also include a brief description and 
evaluation of those activities (whether public or private) which, in 
the opinion of the Secretary, if undertaken may adversely modify 
such habitat, or may be affected by such designation.

Definition of Key Terms

    Under the first sentence of section 4(b)(2) of the Act, the 
Services are required to take ``into consideration the economic impact, 
the impact on national security, and any other relevant impact, of 
specifying any particular area as critical habitat.'' This is referred 
to as the ``impact analysis.'' Under the second sentence of section 
4(b)(2) of the Act, the Secretary (via delegated authority to the 
Services) may exclude an area from critical habitat after identifying 
and weighing the benefits of inclusion and exclusion. This is referred 
to as the ``weighing of benefits''.
    An economic analysis is a tool that informs both the required 
impact analysis and the discretionary weighing of benefits. 
Additionally, the draft economic analysis informs the determinations 
established under other statutes, regulations, or directives that are 
applicable to rulemakings generally, including critical habitat 
designations. However, the draft economic analysis only addresses the 
consideration of the potential economic impact of the designation of 
critical habitat.
    An ``incremental analysis'' is a method of determining the probable 
impacts of the designation that seeks to identify and focus solely on 
the impacts over and above those caused by existing protections and is 
used in the impact analysis, weighing of benefits, and economic 
analysis.

Relationship of the Key Terms

    The purpose of the impact analysis is to inform the Secretary's 
decision about whether and/or how to consider excluding any particular 
area from a designation of critical habitat, as authorized by the 
second sentence of section 4(b)(2) of the Act. Information that is used 
in the impact analysis can come from a variety of sources, one of which 
is the draft economic analysis of the proposed designation of critical 
habitat. The Secretary must consider the probable economic, national 
security and other relevant impacts of the designation of critical 
habitat. This comparison is done through the method of an incremental 
analysis; that is, comparing conditions with and without the 
designation of critical habitat. The incremental analysis methodology 
is also used in the economic analysis.

Proposed Revisions to 50 CFR 424.19

    We propose to change the title of this section from ``Final rules--
impact analysis of critical habitat'' to ``Impact analysis and 
exclusions from critical habitat.'' The current reference to ``[f]inal 
rules'' would be deleted to allow for the application of this section 
to both proposed and final critical habitat rules. We propose to add 
the term ``exclusions'' to the title to more fully describe that this 
section addresses both impact analyses and how they inform the 
exclusion process under section 4(b)(2) of the Act for critical 
habitat.
    In the following text, we frequently refer to the current 
regulatory language at 50 CFR 424.19 and then give detailed information 
about how we propose to revise that language. For your convenience, we 
set out the current text of Sec.  424.19 here:

    The Secretary shall identify any significant activities that 
would either affect an area considered for designation as critical 
habitat or be likely to be affected by the designation, and shall, 
after proposing designation of such an area, consider the probable 
economic and other impacts of the designation upon proposed or 
ongoing activities. The Secretary may exclude any portion of such an 
area from the critical habitat if the benefits of such exclusion 
outweigh the benefits of specifying the area as part of the critical 
habitat. The Secretary shall not exclude any such area if, based on 
the best scientific and commercial data available, he determines 
that the failure to designate that area as critical habitat will 
result in the extinction of the species concerned.

Rationale for the Proposed Paragraph (a)

    We propose to divide current Sec.  424.19 into three paragraphs. 
The first two sentences of proposed paragraph (a) are new and are being 
added to comply with the Presidential Memorandum. They would read:
    At the time of publication of a proposed rule to designate critical 
habitat, the Secretary will make available for public comment the draft 
economic analysis of the designation. The draft economic analysis will 
be summarized in the Federal Register notice of the proposed 
designation of critical habitat.
    The President's February 28, 2012 memorandum directed the Secretary 
of the Interior to take `prompt steps' to revise the regulations. The 
first sentence of this proposed change to the regulations will comply 
with the President's direction. The second sentence specifies that a 
summary of the draft economic analysis would be published in the 
Federal Register notice of the proposed designation of critical 
habitat. The draft economic analysis itself would be made available on 
http://www.regulations.gov along with the proposed designation of 
critical habitat or on other Web sites as deemed appropriate by the 
Services.
    The third sentence of proposed paragraph (a) would carry over the 
first half of the first sentence of the existing Sec.  424.19, with 
modifications. It would read:

    The Secretary will, to the maximum extent practicable, when 
proposing and finalizing designation of critical habitat, briefly 
describe and evaluate in the Federal Register notice any significant 
activities that are known to have the potential to affect an area 
considered for designation as critical habitat or be likely to be 
affected by the designation.

    This language implements section 4(b)(8) of the Act. We propose to 
add ``to the maximum extent practicable'' to track the statutory 
language. For the same reason, we would replace ``identify'' with 
``briefly describe and evaluate.'' We emphasize, however, the statutory 
term ``brief,'' i.e., the description and evaluation is not meant to be 
an exhaustive analysis. The Services cannot predict the outcome of any 
potential section 7 consultation. Rather, the purpose of this language 
in section 4(b)(8) is merely to alert the public generally to the 
relationship between the designation of critical habitat and activities 
on the landscape. We add the phrase ``in the Federal Register notice'' 
to make clear that this

[[Page 51506]]

brief description and evaluation will be published in the Federal 
Register notice of the designation of critical habitat.
    We would keep the modifier ``significant'' with respect to 
activities, which clarifies that the statutory language should not be 
interpreted to apply to all activities, however insignificant. We 
propose to replace ``would * * * affect an area'' with ``are known to 
have the potential to affect an area'' to make clear that the Services 
are not able to predict with certainty what activities to address, but 
must infer the activities from the best available information.

Rationale for the Proposed Paragraph (b)

    Proposed paragraph (b) would implement the first sentence of 
section 4(b)(2) of the Act (``The Secretary shall designate critical 
habitat * * * after taking into consideration the economic impact, the 
impact on national security, and any other relevant impact, of 
specifying any particular area as critical habitat.''). The proposed 
first sentence would carry over the second half of the first sentence 
of the existing Sec.  424.19, with modifications, and would thus repeat 
the basic statutory requirement. We propose to replace ``after 
proposing designation of such an area'' with ``[p]rior to finalizing 
the designation of critical habitat'' to expressly provide for more 
flexibility in the timing of the consideration. The proposed first 
sentence would read:

    Prior to finalizing the designation of critical habitat, the 
Secretary will consider the probable economic, national security, 
and other relevant impacts of the designation upon proposed or 
ongoing activities.

    The statute itself requires only that the consideration occur--it 
does not specify when in the rulemaking process it must occur. That 
being said, we stress that the Act's legislative history is clear that 
Congress intended consideration of economic impacts to neither affect 
nor delay the listing of species. Therefore, regardless of the point in 
the rulemaking process at which consideration of economic impacts 
begins, that consideration must be kept analytically distinct from, and 
have no effect on the outcome or timing of, listing determinations. We 
also note that an draft economic analysis is only one of many pieces of 
information the Secretary uses in consideration of whether to exclude 
areas under section 4(b)(2) of the Act.
    Also in proposed paragraph (b), we retained the phrases 
``probable'' and ``upon proposed or ongoing activities.'' These phrases 
provide guidance that the Services should not consider improbable or 
speculative impacts, and clarify that whatever impacts the Services 
consider are merely generalized predictions. However, the Services do 
not intend that the term ``probable'' requires a showing of statistical 
probability or any specific numeric likelihood. Moreover, the 
``activities'' at issue are only those that would require consultation 
under section 7 of the Act. See DOI 2008 at 10-12. Although impact 
analyses are based on the best scientific data available, any 
predictions of future impacts are inherently uncertain and subject to 
change. Thus, the Services should consider the likely general impact of 
the designation and not make specific predictions of the outcome of 
particular section 7 consultations that have not in fact been 
completed.
    We propose to add the phrase ``national security'' to reflect 
statutory amendments to section 4(b)(2) of the Act (National Defense 
Authorization Act for Fiscal Year 2004, Pub. L. 108-136). Also, we 
propose to add the word ``relevant'' to the other impacts that the 
Services must consider to more closely track the statutory language.
    The first sentence of proposed paragraph (b) uses the term 
``consider,'' which reflects the statutory term ``consideration'' in 
section 4(b)(2) of the Act. The proposed regulations would not further 
define this term. However, we agree with the Solicitor's 2008 Opinion 
that, in the context of section 4(b)(2) of the Act, to ``consider'' 
impacts the Services must gather available information about the 
impacts on proposed or ongoing activities that would be subject to 
section 7 consultation, and then must give careful thought to the 
relevant information in the context of deciding whether to proceed with 
an exclusion analysis. See DOI 2008 at 14-16.
    The second and third sentences of proposed paragraph (b) are 
additions that would provide further guidance on how the Services will 
consider impacts of critical habitat designation. They read:

    The Secretary will consider impacts at a scale that the 
Secretary determines to be appropriate, and will compare the impacts 
with and without the designation. Impacts may be qualitatively or 
quantitatively described.

    The first phrase of the second sentence, ``[t]he Secretary will 
consider impacts at a scale that the Secretary determines to be 
appropriate,'' would clarify that the Secretary has the discretion to 
determine the scale at which impacts are considered. The Secretary 
would determine the appropriate scale based on what would most 
meaningfully or sufficiently inform the decision in a particular 
context. For example, for a wide-ranging species with many square miles 
(kilometers) of potential habitat across several States, a relatively 
coarse-scale analysis would be sufficiently informative, while for a 
narrow endemic species, with specialized habitat requirements and 
relatively few discrete occurrences, it might be appropriate to engage 
in a relatively fine-scale analysis for the designation of critical 
habitat. The Secretary may also use this discretion to focus the 
analysis on areas where impacts are more likely, e.g., non-Federal 
lands. See DOI 2008 at 17.
    The second phrase of the second sentence, ``and will compare the 
impacts with and without designation,'' would clarify that impact 
analyses evaluate the incremental impacts of the designation. This is 
sometimes referred to as an ``incremental analysis'' or ``baseline 
approach.'' For the purpose of the impacts analysis required by the 
first sentence of section 4(b)(2) of the Act, the incremental impacts 
are those probable economic, national security, and other relevant 
impacts of the proposed critical habitat designation on ongoing or 
potential Federal actions that would not otherwise occur without the 
designation. Put another way, the incremental impacts are the probable 
impacts on Federal actions for which the designation is the ``but for'' 
cause.
    To determine the incremental impacts of designating critical 
habitat, the Services compare the protections provided by the critical 
habitat designation (the world with the particular designation) to the 
combined effects of all conservation-related protections for the 
species (including listing) and its habitat in the absence of the 
designation of critical habitat (the world without designation, i.e., 
the baseline condition). Thus, determining the incremental impacts 
requires identifying at a general level the additional protections that 
a critical habitat designation would provide for the species; this does 
not require the prejudging of the precise outcomes of hypothetical 
section 7 consultations. Finally, the Services determine what probable 
impacts those incremental protections will have on Federal actions, in 
terms of economic, national security, or other relevant impacts (the 
incremental impacts). See DOI 2008 at 11. Potential impacts to Federal 
actions could occur on private as well as public lands.
    In addition to using an incremental analysis in the impacts 
analysis, the

[[Page 51507]]

Secretary will use an incremental analysis in the weighing of benefits 
under the second sentence of section 4(b)(2), if the Secretary decides 
to undertake that optional analysis. In that context, the Secretary 
will use an incremental analysis to identify the benefits (economic and 
otherwise) of excluding an area from critical habitat, and will 
likewise use an incremental analysis to identify the benefits of 
specifying an area as critical habitat.
    Benefits that may be addressed in the weighing of benefits can 
result from additional protections, in the form of project 
modifications or conservation measures due to consultation under 
section 7 of the Act; conversely, a benefit of exclusion can be 
avoiding costs associated with those protections. In addition, benefits 
(and associated costs) can result if the designation triggers 
compliance with separate authorities that are exercised in part as a 
result of the Federal critical habitat designation (e.g., additional 
reviews, procedures, or protections under State or local jurisdictional 
authorities). See DOI 2008 at 22-23.
    Finally, because its primary purpose is to facilitate the impact 
analysis and the weighing of benefits, the draft and final economic 
analyses should focus on the incremental economic benefits of the 
designation.
    Use of an incremental analysis in each of these contexts is the 
only logical way to implement the Act. The purpose of the impact 
analysis (described in the third sentence of proposed paragraph (a)) is 
to inform the Secretary's decision about whether to engage in the 
optional weighing of benefits under the second sentence of section 
4(b)(2) of the Act (addressed in proposed paragraph (c)). To understand 
the difference that designation of an area makes and, therefore, the 
benefits of including an area in the designation or excluding an area 
from the designation, one must compare the hypothetical world with the 
designation to the hypothetical world without the designation. This is 
why the Services compare the protections provided by the designation to 
the protections without the designation. This is consistent with the 
general guidance given by the Office of Management and Budget to 
executive branch agencies as to how to conduct cost-benefit analyses. 
See Circular A-4 (available at http://www.whitehouse.gov/omb/circulars/a004/a-4.pdf ).
    Nonetheless, between 2002 and 2008, the Services generally did not 
conduct an incremental analysis; instead they conducted a broader 
analysis of impacts pursuant to New Mexico Cattlegrowers Ass'n v. FWS, 
248 F.3d 1277 (10th Cir. 2001). The genesis of the court's conclusion 
in that case was the definitions of ``jeopardize the continued 
existence of'' and ``destruction or adverse modification,'' which are 
the standards for section 7 consultations in the Services' 1986 joint 
regulations. See 50 CFR 402.02. Both phrases were defined in a similar 
manner in that they both looked to impacts on both survival and 
recovery of the species.
    The court in New Mexico Cattle Growers noted the similarity of the 
definitions, concluding that they were ``virtually identical'' and that 
the definition of ``destruction or adverse modification'' was in effect 
subsumed into the jeopardy standard. 248 F.3d at 1283. According to the 
court, these definitions thus led FWS to conclude that designation of 
critical habitat usually had no incremental impact beyond the impacts 
of the listing itself. Thus, given these definitions, the court 
concluded that doing only an incremental analysis rendered meaningless 
the requirement of considering the impacts of the designation, as there 
were no incremental impacts to consider. Although the court noted that 
the regulatory definitions had previously been called into question, 
id. at 1283 n.2 (citing Sierra Club v. U.S. Fish & Wildlife Serv., 245 
F.3d 434 (5th Cir. 2001)), the validity of the regulations had not been 
challenged in the case before it. Instead, to cure this apparent 
problem, the court held that the FWS must analyze ``all of the impacts 
of a critical habitat designation, regardless of whether those impacts 
are attributable co-extensively to other causes.'' Id. at 1285.
    In 2004, the Ninth Circuit (Gifford Pinchot Task Force v. USFWS, 
378 F.3d 1059 (9th Cir. 2004)) invalidated the prior regulatory 
definition of ``destruction or adverse modification.'' The court held 
that the definition gave too little protection to critical habitat by 
not giving weight to Congress's intent that designated critical habitat 
support the recovery of listed species. Since then, the Services have 
been applying ``destruction or adverse modification'' in a way that 
allows the Services to define an incremental effect of designation. 
This eliminated the predicate for the Tenth Circuit's analysis. 
Therefore, the Services have concluded that it is appropriate to 
consider the impacts of designation on an incremental basis.
    Indeed, no court outside of the Tenth Circuit has followed New 
Mexico Cattle Growers after the Ninth Circuit issued Gifford Pinchot 
Task Force. In particular, the Ninth Circuit recently concluded that 
the ``faulty premise'' that led to the invalidation of the incremental 
analysis approach in 2001 no longer applies. Arizona Cattle Growers 
Ass'n v. Salazar, 606 F.3d 1160, 1173 (9th Cir. 2010). The court held, 
in light of this change in circumstances, that ``the FWS may employ the 
baseline approach in analyzing a critical habitat designation.'' Id. In 
so holding, the court noted that the baseline approach is ``more 
logical than'' the coextensive approach. Id.; see also:
     Maddalena v. FWS, No. 08-CV-02292-H (AJB) (S.D. Cal. Aug. 
5, 2010);
     Otay Mesa Property L.P. v. DOI, 714 F. Supp. 2d 73 (D.D.C. 
2010);
     Fisher v. Salazar, 656 F. Supp. 2d 1357 (N.D. Fla. 2009);
     Home Builders Ass'n of No. Cal. v. USFWS, 2006 U.S. Dist. 
Lexis 80255 (E.D. Cal. Nov. 2, 2006), reconsideration granted in part, 
2007 U.S. Dist. Lexis 5208 (Jan. 24, 2007), aff'd, 616 F.3d 983 (9th 
Cir. 2010);
     CBD v. BLM, 422 F. Supp. 2d 1115 (N.D. Cal. 2006);
     Cape Hatteras Access Preservation Alliance v. DOI, 344 F. 
Supp. 2d 108 (D.D.C. 2004).
    The Solicitor's opinion also reaches this conclusion. See DOI 2008 
at 18-22.
    The Services may still, in appropriate circumstances, also analyze 
the broader impacts of conserving the species at issue to put the 
incremental impacts of the designation in context, or for complying 
with the requirements of other statutes or policies. See:
     Arizona Cattle Growers' Ass'n v. Kempthorne, 534 F. Supp. 
2d 1013 (D. Ariz. 2008), aff'd, 606 F.3d 1160 (9th Cir. 2010);
     Home Builders Ass'n of No. Cal. v. USFWS, 2007 U.S. Dist. 
Lexis 5208 (E.D. Cal. Jan. 24, 2007), aff'd, 616 F.3d 983 (9th Cir. 
2010);
     DOI 2008 at 21.
    The third sentence of proposed paragraph (b) would clarify that 
impacts may be qualitatively or quantitatively described. In other 
words, there is no absolute requirement that impacts of any kind be 
quantified. See Cape Hatteras Access Preservation Alliance v. DOI, 731 
F. Supp. 2d 15 (D.D.C. Aug. 17, 2010).

Rationale for the Proposed Paragraph (c)

    Proposed paragraph (c) would implement the second sentence of 
section 4(b)(2) of the Act, which allows the Secretary to exclude areas 
from the final critical habitat designation under certain 
circumstances. It would read:


[[Page 51508]]


    The Secretary has discretion to exclude any particular area from 
the critical habitat upon a determination that the benefits of such 
exclusion outweigh the benefits of specifying the particular area as 
part of the critical habitat. In identifying those benefits, in 
addition to the impacts considered pursuant to paragraph (b) of this 
section, the Secretary may consider and assign the weight to any 
benefits relevant to the designation of critical habitat. The 
Secretary, however, will not exclude any particular area if, based 
on the best scientific and commercial data available, the Secretary 
determines that the failure to designate that area as critical 
habitat will result in the extinction of the species concerned.

    The first sentence of proposed paragraph (c) would carry over the 
second sentence of the existing section, with modifications. The phrase 
``the Secretary has discretion'' would be added to emphasize that the 
exclusion of particular areas under section 4(b)(2) of the Act is 
always optional. See DOI 2008 at 6-9, 17. For example, the Secretary 
may choose not to exclude an area even if the impact analysis and 
subsequent balancing indicates that the benefits of exclusion exceed 
the benefits of inclusion and such exclusion would not result in the 
extinction of the species.
    Additional minor changes to the first sentence would make it more 
closely track the statutory language.
    The second sentence of paragraph (c) is new. They would codify 
aspects of the legislative history, the case law, and the Services' 
practices with respect to exclusions. The second sentence would clarify 
the breadth of the Secretary's discretion with respect to the types of 
benefits to consider. See:
     CBD v. Norton, 240 F. Supp. 2d 1090 (D. Ariz. 2003);
     Home Builders Ass'n of No. Cal. v. USFWS, 2006 U.S. Dist. 
Lexis 80255 (E.D. Cal. Nov. 2, 2006), reconsideration granted in part 
2007 U.S. Dist. Lexis 5208 (Jan. 24, 2007), aff'd, 616 F.3d 983 (9th 
Cir. 2010);
     DOI 2008 at 25-28.
    For example, the Secretary may consider effects on tribal 
sovereignty and the conservation efforts of non-Federal partners when 
considering excluding specific areas from a designation of critical 
habitat. The House Committee report that accompanied the 1978 
amendments that added Section 4(b)(2) to the Act stated that ``[t]he 
consideration and weight given to any particular impact is completely 
within the Secretary's discretion.'' H.R. Rep. No. 95-1625, at 17. 
Subsequent case law and the Solicitor's Opinion have reflected that 
view, as does the rule proposed here. See:
     CBD v. Salazar, 2011 U.S. Dist. Lexis 26967 (D.D.C. Mar. 
16, 2011);
     Wyoming State Snowmobile Ass'n v. USFWS, 741 F. Supp. 2d 
1245 (D. Wyo. 2010);
     DOI 2008 at 24.
    The third sentence of paragraph (c) essentially repeats the third 
sentence of the existing section. This sentence incorporates the 
limitation in the last clause of section 4(b)(2) of the Act. See DOI 
2008 at 25.

Request for Information

    Any final regulation based on this proposal will consider 
information and recommendations timely submitted from all interested 
parties. We, solicit comments, information, and recommendations from 
governmental agencies, Native American tribes, the scientific 
community, industry groups, environmental interest groups, and any 
other interested parties on this proposed regulation. All comments and 
materials received by the date listed in DATES above will be considered 
prior to the approval of a final document.
    This rulemaking does not modify the current methods and procedures 
of identifying and evaluating potential incremental impacts of a 
designation of critical habitat. Nonetheless, we will accept comments 
on the Services' approach to incremental impacts as well as on the 
manner in which particular impacts are considered and weighed.
    You may submit your information concerning this proposed rule by 
one of the methods listed in ADDRESSES. If you submit information via 
http://www.regulations.gov, your entire submission--including any 
personal identifying information--will be posted on the Web site. If 
your submission is made via a hardcopy that includes personal 
identifying information, you may request at the top of your document 
that we withhold this personal identifying information from public 
review. However, we cannot guarantee that we will be able to do so. We 
will post all hardcopy submissions on http://www.regulations.gov.
    Information and supporting documentation that we receive in 
response to this proposed rule will be available for you to review at 
http://www.regulations.gov, or by appointment, during normal business 
hours, at the U.S. Fish and Wildlife Service, Division of Conservation 
and Classification (see FOR FURTHER INFORMATION CONTACT).

Required Determinations

Regulatory Planning and Review (Executive Orders 12866 and 13563)

    Executive Order 12866 provides that the Office of Management and 
Budget's Office of Information and Regulatory Affairs (OIRA) will 
review all significant rules. The Office of Information and Regulatory 
Affairs has determined that this rule is significant because it raises 
novel legal or policy issues.
    Executive Order 13563 reaffirms the principles of E.O. 12866 while 
calling for improvements in the nation's regulatory system to promote 
predictability, to reduce uncertainty, and to use the best, most 
innovative, and least burdensome tools for achieving regulatory ends. 
The executive order directs agencies to consider regulatory approaches 
that reduce burdens and maintain flexibility and freedom of choice for 
the public where these approaches are relevant, feasible, and 
consistent with regulatory objectives. E.O. 13563 emphasizes further 
that regulations must be based on the best available science and that 
the rulemaking process must allow for public participation and an open 
exchange of ideas. We have developed this rule in a manner consistent 
with these requirements. This proposed rule is consistent with 
Executive Order 13563, and in particular with the requirement of 
retrospective analysis of existing rules, designed ``to make the 
agency's regulatory program more effective or less burdensome in 
achieving the regulatory objectives.''

Regulatory Flexibility Act

    Under the Regulatory Flexibility Act (as amended by the Small 
Business Regulatory Enforcement Fairness Act (SBREFA) of 1996; 5 U.S.C. 
601 et seq.), whenever a Federal agency is required to publish a notice 
of rulemaking for any proposed or final rule, it must prepare, and make 
available for public comment, a regulatory flexibility analysis that 
describes the effect of the rule on small entities (i.e., small 
businesses, small organizations, and small government jurisdictions). 
However, no regulatory flexibility analysis is required if the head of 
an agency, or his designee, certifies that the rule will not have a 
significant economic impact on a substantial number of small entities. 
SBREFA amended the Regulatory Flexibility Act to require Federal 
agencies to provide a statement of the factual basis for certifying 
that a rule will not have a significant economic impact on a 
substantial number of small entities. We are certifying that these 
proposed

[[Page 51509]]

regulations would not have a significant economic effect on a 
substantial number of small entities. The following discussion explains 
our rationale.
    The proposed revisions to the regulations revises and clarifies the 
regulations governing how the Services analyze and communicate the 
impacts of a possible designation of critical habitat, and how the 
Services may exercise the Secretary's discretion to exclude areas from 
designations. The proposed revisions to the regulations apply solely to 
the Services' procedures for the timing, scale, and scope of impact 
analyses and considering exclusions from critical habitat. The changes 
included in these proposed regulatory revisions serve to clarify, and 
do not expand the reach of, potential designations of critical habitat.
    NMFS and FWS are the only entities that are directly affected by 
this rule because we are the only entities that can designate critical 
habitat. No external entities, including any small businesses, small 
organizations, or small governments, will experience any economic 
impacts from this rule. Therefore, the only effect on any external 
entities large or small would likely be positive through reducing any 
uncertainty on the part of the public by simultaneous presentation of 
the best scientific data available and the economic analysis of the 
designation of critical habitat.

Unfunded Mandates Reform Act (2 U.S.C. 1501 et seq.)

    In accordance with the Unfunded Mandates Reform Act (2 U.S.C. 1501 
et seq.):
    (a) On the basis of information contained in the ``Regulatory 
Flexibility Act'' section above, these proposed regulations would not 
``significantly or uniquely'' affect small governments. We have 
determined and certify pursuant to the Unfunded Mandates Reform Act, 2 
U.S.C. 1502, that these regulations would not impose a cost of $100 
million or more in any given year on local or State governments or 
private entities. A Small Government Agency Plan is not required. As 
explained above, small governments would not be affected because the 
proposed regulations would not place additional requirements on any 
city, county, or other local municipalities.
    (b) These proposed regulations would not produce a Federal mandate 
on State, local, or tribal governments or the private sector of $100 
million or greater in any year; that is, this proposed rule is not a 
``significant regulatory action''' under the Unfunded Mandates Reform 
Act. These proposed regulations would impose no obligations on State, 
local, or tribal governments.

Takings (E.O. 12630)

    In accordance with Executive Order 12630, these proposed 
regulations would not have significant takings implications. These 
proposed regulations would not pertain to ``taking'' of private 
property interests, nor would they directly affect private property. A 
takings implication assessment is not required because these proposed 
regulations (1) would not effectively compel a property owner to suffer 
a physical invasion of property and (2) would not deny all economically 
beneficial or productive use of the land or aquatic resources. These 
proposed regulations would substantially advance a legitimate 
government interest (conservation and recovery of endangered and 
threatened species) and would not present a barrier to all reasonable 
and expected beneficial use of private property.

Federalism (E.O. 13132)

    In accordance with Executive Order 13132, we have considered 
whether these proposed regulations would have significant Federalism 
effects and have determined that a Federalism assessment is not 
required. These proposed regulations pertain only to determinations to 
designate critical habitat under section 4 of the Act, and would not 
have substantial direct effects on the States, on the relationship 
between the Federal Government and the States, or on the distribution 
of power and responsibilities among the various levels of government.

Civil Justice Reform (E.O. 12988)

    These proposed regulations do not unduly burden the judicial system 
and meet the applicable standards provided in sections 3(a) and 3(b)(2) 
of Executive Order 12988. These proposed regulations would clarify how 
the Services will make designations of critical habitat under section 4 
of the Act.

Government-to-Government Relationship With Tribes

    In accordance with the President's memorandum of April 29, 1994, 
``Government-to-Government Relations with Native American Tribal 
Governments'' (59 FR 22951), Executive Order 13175, and the Department 
of the Interior's manual at 512 DM 2, we readily acknowledge our 
responsibility to communicate meaningfully with recognized Federal 
Tribes on a government-to-government basis. In our proposed 
regulations, we explain that the Secretaries have discretion to exclude 
any particular area from the critical habitat upon a determination that 
the benefits of exclusion outweigh the benefits of specifying the 
particular area as part of the critical habitat. In identifying those 
benefits, the Secretaries may consider effects on tribal sovereignty.

Paperwork Reduction Act

    This proposed rule does not contain any new collections of 
information that require approval by the OMB under the Paperwork 
Reduction Act. This proposed rule would not impose recordkeeping or 
reporting requirements on State or local governments, individuals, 
businesses, or organizations. An agency may not conduct or sponsor, and 
a person is not required to respond to, a collection of information 
unless it displays a currently valid OMB control number.

National Environmental Policy Act

    We are analyzing these proposed regulations in accordance with the 
criteria of the National Environmental Policy Act (NEPA), the 
Department of the Interior Manual (318 DM 2.2(g) and 6.3(D)), and 
Department of Commerce Departmental Administrative Order 216-6. We will 
complete our analysis, in compliance with NEPA, before finalizing these 
proposed regulations.

Energy Supply, Distribution or Use E.O. 13211)

    Executive Order 13211 requires agencies to prepare Statements of 
Energy Effects when undertaking certain actions. These proposed 
regulations, if made final, are not expected to affect energy supplies, 
distribution, and use. Therefore, this action is not a significant 
energy action, and no Statement of Energy Effects is required.

Clarity of This Proposed Rule

    We are required by Executive Orders 12866 and 12988 and by the 
Presidential Memorandum of June 1, 1998, to write all rules in plain 
language. This means that each rule or policy we publish must:
    (a) Be logically organized;
    (b) Use the active voice to address readers directly;
    (c) Use clear language rather than jargon;
    (d) Be divided into short sections and sentences; and
    (e) Use lists and tables wherever possible.
    If you feel that we have not met these requirements, send us 
comments by one of the methods listed in ADDRESSES. To better help us 
revise the proposed rule,

[[Page 51510]]

your comments should be as specific as possible. For example, you 
should tell us the sections or paragraphs that are unclearly written, 
which sections or sentences are too long, the sections where you feel 
lists or tables would be useful, etc.

References Cited

    A complete list of all references cited in this document is 
available on the Internet at http://www.regulations.gov at Docket No. 
FWS-R9-ES-2011-0073 or upon request from the U.S. Fish and Wildlife 
Service (see FOR FURTHER INFORMATION CONTACT).

Authority

    We are taking this action under the authority of the Endangered 
Species Act of 1973, as amended (16 U.S.C. 1531 et seq.).

List of Subjects in 50 CFR Part 424

    Administrative practice and procedure, Endangered and threatened 
species.

Proposed Regulation Promulgation

PART 424--[AMENDED]

    1. The authority citation for part 424 is revised to read as 
follows:

    Authority:  16 U.S.C. 1531 et seq.

    2. Revise Sec.  424.19, including the section heading, to read as 
follows:


Sec.  424.19  Impact analysis and exclusions from critical habitat.

    (a) At the time of publication of a proposed rule to designate 
critical habitat, the Secretary will make available for public comment 
the draft economic analysis of the designation. The draft economic 
analysis will be summarized in the Federal Register notice of the 
proposed designation of critical habitat.
    The Secretary will, to the maximum extent practicable, when 
proposing and finalizing designation of critical habitat, briefly 
describe and evaluate in the Federal Register notice any significant 
activities that are known to have the potential to affect an area 
considered for designation as critical habitat or be likely to be 
affected by the designation.
    (b) Prior to finalizing the designation of critical habitat, the 
Secretary will consider the probable economic, national security, and 
other relevant impacts of the designation upon proposed or ongoing 
activities. The Secretary will consider impacts at a scale that the 
Secretary determines to be appropriate, and will compare the impacts 
with and without the designation. Impacts may be qualitatively or 
quantitatively described.
    (c) The Secretary has discretion to exclude any particular area 
from the critical habitat upon a determination that the benefits of 
such exclusion outweigh the benefits of specifying the particular area 
as part of the critical habitat. In identifying those benefits, in 
addition to the impacts considered pursuant to paragraph (b) of this 
section, the Secretary may consider and assign the weight to any 
benefits relevant to the designation of critical habitat. The 
Secretary, however, will not exclude any particular area if, based on 
the best scientific and commercial data available, the Secretary 
determines that the failure to designate that area as critical habitat 
will result in the extinction of the species concerned.

    Dated: June 1, 2012.
Eileen Sobeck,
Acting Assistant Secretary for Fish and Wildlife and Parks, U.S. 
Department of the Interior.
    Dated: August 13, 2012.
Alan D. Risenhoover,
Acting Deputy Assistant Administrator for Regulatory Programs, National 
Marine Fisheries Service.
[FR Doc. 2012-20438 Filed 8-23-12; 8:45 am]
BILLING CODE 4310-55-P; 3510-22-P