[Federal Register Volume 78, Number 167 (Wednesday, August 28, 2013)]
[Rules and Regulations]
[Pages 53058-53076]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-20994]


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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. 120606146-3505-01; 
4500030114]
RIN 1018-AY62; 0648-BC24


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

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

ACTION: Final 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''), are finalizing a revision to our regulations 
pertaining to impact analyses conducted for designations of critical 
habitat under the Endangered Species Act of 1973, as amended (the Act). 
This regulation is being finalized 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: This final rule is effective on October 30, 2013.

ADDRESSES: This final rule is available on the Internet at http://www.regulations.gov. Comments and materials received, as well as 
supporting documentation used in preparing this final regulation, are 
available for public inspection, by appointment, during normal business 
hours, at 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.

FOR FURTHER INFORMATION CONTACT: Douglas Krofta, Chief, Endangered 
Species Branch of Listing, 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 
301/427-8469; 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. On August 24, 2012, we published a 
proposed rule in the Federal Register to revise our regulations to 
provide the public earlier access to the draft economic analysis 
supporting critical habitat designations, as directed by the 
President's February 28, 2012, memorandum (Memorandum for the Secretary 
of the Interior, Proposed Revised Habitat for the Spotted Owl: 
Minimizing Regulatory Burdens, 77 FR 12985 (March 5, 2012)). 77 FR 
51503 (Aug. 24, 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 now issuing a final rule to 
achieve these goals. Because the Act and its implementing regulations 
are jointly administered by the Departments of the Interior and 
Commerce, the rule has been developed jointly. This final rule also 
addresses several court decisions and is informed by conclusions from a 
2008 legal opinion by the Solicitor of the Department of the Interior. 
Specifically, we 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. Except for the revision to the timing of making draft economic 
analyses available to the public, these revisions will not change how 
we implement the Act; rather, the revisions serve to codify the current 
practices of the agencies. This final rule is consistent with Executive 
Order 13563, and in particular with the requirement of retrospective 
analysis of existing rules, designed ``to make the

[[Page 53059]]

agency's regulatory program more effective or less burdensome in 
achieving the regulatory objectives.''
    This rule makes the following changes:
    (1) We changed the title of section 424.19 from ``Final Rules--
impact analysis of critical habitat'' to ``Impact analysis and 
exclusions from critical habitat.'' We removed the reference to 
``[f]inal rules'' to allow this section to apply to both proposed and 
final critical habitat rules. We added 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 divided section 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 
consideration of exclusions as required under the Act.
    (3) Paragraph (a) implements the direction of the 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. As 
it was proposed, paragraph (a) included a third sentence, relating to 
section 4(b)(8) of the Act, which would have been carried over from the 
existing regulations with modifications. This sentence is not being 
implemented in this final rule to sharpen this regulation's focus on 
implementing section 4(b)(2) of the Act and to ensure consistency with 
other sections of part 424. Please see the discussion in the 
``Rationale for Revised Paragraph (a),'' below.
    (4) Paragraph (b) implements 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) Paragraph (c) implements 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 a threatened or an endangered species. One of the 
tools provided by the Act to conserve species is designation of 
critical habitat.
    Critical habitat represents the habitat essential 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 resource-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 Fisheries of the National Oceanic and Atmospheric 
Administration.
    This final 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. These conclusions have been 
confirmed by judicial decision. See Building Industry Ass'n of the Bay 
Area v. U.S. Dep't of Commerce, 2012 U.S. Dist. Lexis 170688 (N.D. Cal. 
Nov. 30, 2012).
    Second, the President's February 28, 2012, memorandum 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

[[Page 53060]]

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.'' The Services have based this final rule 
on the reasoning and conclusions of the Solicitor's opinion and the 
President's February 28, 2012, memorandum.

Discussion of the Revisions to 50 CFR 424.19

    This final rule revises 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 making 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 
this final rule to revise the regulations is intended to require that 
any previously completed critical habitat designation be reevaluated on 
this basis. Furthermore, we will implement the requirements of this 
regulation following the effective date. For proposed critical habitat 
designations published prior to the effective date of this final 
regulation, the Services will continue to follow their current 
practices.

Statutory Authority

    The regulatory changes described below derive from sections 4(b)(2) 
of the Act. For the convenience of the reader, we are reprinting 
section 4(b)(2) 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.

Definition of Key Phrases

    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 evaluation 
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) proceeds to a process of considering whether to exclude 
an area from critical habitat after identifying and weighing the 
benefits of inclusion and exclusion. This process is referred to as the 
``discretionary 4(b)(2) exclusion analysis.''
    Based on public comment and for clarity, in this final rule, we 
have changed the reference to the analysis under the second sentence of 
4(b)(2) of the Act from ``optional weighing of benefits'' to 
``discretionary 4(b)(2) exclusion analysis.''
    An economic analysis is a tool that informs both the required 
impact analysis and the discretionary 4(b)(2) exclusion analysis. 
Additionally, the draft economic analysis informs the determinations 
established under other statutes, regulations, Executive Orders, or 
directives that apply to rulemakings generally, including critical 
habitat designations. However, the draft economic analysis addresses 
only 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; it seeks to identify and focus solely on 
the impacts over and above those resulting from existing protections. 
This method applies to the impact analysis, discretionary 4(b)(2) 
exclusion analysis, and economic analysis.

Relationship of the Key Phrases

    The purpose of the impact analysis is to inform the Secretaries' 
decision about whether to engage in the discretionary exclusion 
analysis under 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 Secretaries 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 of economic, national security, and 
other relevant impacts. The incremental-analysis methodology compares 
conditions with and without the designation of critical habitat.

Revisions to 50 CFR 424.19

    We changed the title of this section from that of the previous 
regulation, which read, ``Final rules--impact analysis of critical 
habitat'' to ``Impact analysis and exclusions from critical habitat.'' 
The reference to ``[f]inal rules'' was deleted to allow for the 
application of this section to both proposed and final critical habitat 
rules. We added 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 previous 
regulatory language at 50 CFR 424.19 and then give detailed information 
about how we revised that language. For your convenience, we set out 
the previous text of section 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 Revised Paragraph (a)

    We divided the previous section 424.19 into three paragraphs. The 
two sentences of paragraph (a) are new and have been added to comply 
with the Presidential memorandum. They 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 the revised regulations will comply with the 
President's direction. The second sentence specifies that a summary of 
the draft economic analysis is to be published in the Federal Register 
notice of the proposed designation of critical habitat. The draft 
economic analysis itself is to 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. It 
is this summary of the draft economic

[[Page 53061]]

analysis that will constitute the Services' consideration of the 
economic impact, as required under the first sentence of section 
4(b)(2) of the Act, of the proposed designation of critical habitat for 
a species.
    As set out in the proposed rule, paragraph (a) included a third 
sentence which would have carried over the first half of the first 
sentence of the previous section 424.19, with modifications. As a 
result of public comment and review of the provisions for proposed and 
final rules at 50 CFR 424.16(b) (Proposed rules) and 424.18(a)(2) 
(Final rules--general), respectively, we have removed the proposed 
third sentence from this final regulation.
    Sections 424.16(b) and 424.18(a)(2) govern the contents of Federal 
Register notices for proposed and final rules, respectively. Each 
states that the rule will, to the maximum extent practicable, ``include 
a brief description and evaluation of those activities (whether public 
or private) that . . . may adversely modify such habitat or [may] be 
affected by such designation.'' (The edited language varies slightly 
between the two provisions.) This language implements section 4(b)(8) 
of the Act. The third sentence of the proposed rule was similar. In 
this final rule, we are deleting that sentence because it is redundant 
with the language in sections 424.16(b) and 424.18(a)(2). Compliance 
with section 4(b)(8) of the Act fits more logically in those 
provisions, as they address the contents of Federal Register notices, 
which is the subject of section 4(b)(8) of the Act. This change also 
has the benefit of simplifying section 424.19 so that it addresses only 
one statutory provision (section 4(b)(2) of the Act), rather than two 
different provisions.
    Although the language in sections 424.16(b) and 424.18(a)(2) 
repeats the statutory language, we note that the ``may adversely 
modify'' language could be misinterpreted to suggest that certain 
activities necessarily must undergo section 7 consultation, or that the 
Services must predetermine the result of any future section 7 
consultation. Properly interpreted, this language reflects Congress's 
intent that the Services alert the public to the general relationship 
between the designation of critical habitat and types of activities 
that may occur on the landscape, without definitively asserting that 
consultations are required for such activities, or what the results of 
any consultations might be. Congress's use of the word ``may'' in this 
phrase supports our interpretation. Thus, notwithstanding any statement 
in the proposed or final critical habitat designation about the 
relationship between the designation and particular types of 
activities, Federal agencies must determine whether their individual 
proposed actions trigger the requirement for section 7 consultations. 
And if an agency does consult on an action, the Services will make an 
adverse modification determination by applying the standards of section 
7 to the facts of the action at issue, rather than by looking to the 
general statements made in compliance with section 4(b)(8) of the Act 
in the preamble to the critical habitat designation.

Rationale for the Revised Paragraph (b)

    Paragraph (b) implements 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 first sentence of new section 
424.19(b) carries over the second half of the first sentence of the 
previous section 424.19, with modifications, and thus repeats the basic 
statutory requirement. We replaced ``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. Thus the first sentence of paragraph (b) reads:

    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. 
Furthermore, the Presidential memorandum only required the Services to 
change the timing of the availability of the economic analysis of 
designations of critical habitat and did not speak to the timing of the 
mandatory considerations specified in the Act. 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 of a 
designation of critical habitat 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 a draft economic analysis 
of a critical habitat designation is only one of many pieces of 
information the Secretaries use in determining whether to exclude areas 
under section 4(b)(2) of the Act, if the Secretary decides to engage in 
that discretionary analysis.
    Also in paragraph (b), we retained from previous section 424.19 the 
phrases ``probable'' and ``upon proposed or ongoing activities.'' These 
phrases provide guidance that the Services should not consider 
improbable or speculative impacts. 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 added 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 
added the word ``relevant'' to the other impacts that the Services must 
consider to more closely track the statutory language.
    The first sentence of paragraph (b) uses the term ``consider,'' 
which reflects the statutory term ``consideration'' in section 4(b)(2) 
of the Act. This final regulation does 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 the 
discretionary 4(b)(2) exclusion analysis. See DOI 2008 at 14-16.
    The second and third sentences of paragraph (b) are additions that 
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

[[Page 53062]]

determines to be appropriate,'' clarifies 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 covering a large area 
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. See DOI 2008 at 17.
    The second phrase of the second sentence, ``and will compare the 
impacts with and without designation,'' clarifies that impact analyses 
evaluate the incremental impacts of the designation. This evaluation 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 and its habitat in the absence of the designation of critical 
habitat (the world without designation, i.e., the baseline condition 
including listing). 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 
determination does not require prejudging the precise outcomes of 
hypothetical section 7 consultations. Finally, the Services determine 
the probable impacts of those incremental protections on Federal 
actions, in terms of economic, national security, or other relevant 
impacts (the incremental impacts). See DOI 2008 at 11. Probable 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 Secretary will use an incremental analysis in the 
discretionary analysis under the second sentence of section 4(b)(2), if 
the Secretary decides to undertake that discretionary 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 discretionary 4(b)(2) 
exclusion analysis 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 legal authorities of States 
or local jurisdictions). See DOI 2008 at 22-23.
    Finally, because the primary purpose of an economic analysis is to 
facilitate the mandatory consideration of the economic impact of a 
designation of critical habitat, to inform the discretionary 4(b)(2) 
exclusion analysis, and to determine compliance with relevant statutes 
and Executive Orders, the economic analysis should focus on the 
incremental impact 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 is to inform the Secretary's decision about whether to engage 
in the discretionary exclusion analysis under the second sentence of 
section 4(b)(2) of the Act (addressed in paragraph (c)). To understand 
the difference that designation of an area as critical habitat 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. For this reason, the Services compare the 
protections provided by the designation to the protections without the 
designation. This methodology 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 2007, the Services generally did not 
conduct an incremental analysis; instead, they conducted a broader 
analysis of impacts pursuant to the guidance from the United States 
Court of Appeals for the Tenth Circuit in 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 each 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

[[Page 53063]]

designation. This process 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), reversed on other grounds, 646 F.3d 914 (D.C. Cir. 2011).
     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 paragraph (b) clarifies that impacts may be 
qualitatively or quantitatively described. In other words, there is no 
absolute requirement that impacts of any kind be expressed numerically. 
See Cape Hatteras Access Preservation Alliance v. DOI, 731 F. Supp. 2d 
15 (D.D.C. Aug. 17, 2010).

Rationale for the Revised Paragraph (c)

    Paragraph (c) implements 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. Paragraph (c) 
reads:

    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 given 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 paragraph (c) carries over the second 
sentence of the existing section, with modifications. The phrase ``the 
Secretary has discretion'' has been added to emphasize that the 
exclusion of particular areas under section 4(b)(2) of the Act is 
always discretionary. 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 discretionary 4(b)(2) exclusion analysis indicate that 
the benefits of exclusion exceed the benefits of inclusion, and even if 
such exclusion would not result in the extinction of the species.
    Additional minor changes to the first sentence make it more closely 
track the statutory language.
    The second sentence of paragraph (c) is new. It codifies aspects of 
the legislative history, the case law, and the Services' practices with 
respect to exclusions. The second sentence clarifies 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. Similarly, 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 this final rule. 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 previous Sec.  424.19. This sentence incorporates the 
limitation in the last clause of section 4(b)(2) of the Act. See DOI 
2008 at 25.

Summary of Comments and Recommendations

    On August 24, 2012, we published a proposed rule (77 FR 51503) that 
requested written comments and information from the public on the 
proposed revisions to the regulations pertaining to impact analyses 
conducted for designations of critical habitat under the Act. The first 
comment period opened on August 24, 2012, and closed on October 23, 
2012. In response to that proposed rule, we received numerous requests 
for an extension of the first comment period, and we subsequently 
published a notice (77 FR 66946) that reopened the comment period from 
November 8, 2012, through February 6, 2013. Comments received from both 
comment periods are grouped into general categories specifically 
relating to the proposed regulation revisions.

General Comments

    Comment (1): Many commenters, including federally-elected 
officials, requested an extension of the public comment period 
announced in the proposed regulation revision.
    Response: On November 8, 2012 (77 FR 66946), we reopened the public 
comment period for an additional 90 days to accommodate this request 
and allow for additional review and public comment.
    Comment (2): The Services should set out the clear expectations and 
consequences for publishing and implementing the final regulation.
    Response: We agree with the commenter, and have further clarified 
to the extent possible within this final rule our expectations of the 
implications of this final rule, most specifically in our responses to 
comments. We have

[[Page 53064]]

specifically provided clarifications on: paragraph (a) of the 
regulation, regarding the shift in timing of the economic analysis to 
comply with the intent of the Presidential memorandum of February 28, 
2012; paragraph (b), concerning the incremental approach to impact 
analysis, the use of either a quantitative or qualitative analysis of 
economic impacts as permissible under the Office of Management and 
Budget (OMB) Circular A-4, and the scale of the impact analysis; and 
paragraph (c), the codification of Secretarial discretion as defined by 
the Act and case law. The desired consequences of this revision to the 
regulation are to further provide clarity, promote predictability and 
reduce uncertainty, and to codify established interpretation, 
practices, and prevailing case law.
    Comment (3): One commenter disagrees that the proposed rule would 
not have significant takings implications because the Services should 
apply the Penn Central three-prong test for a taking. Also, the 
commenter states that the ``legitimate governmental interest'' test has 
been invalidated by the U.S. Supreme Court, and the Services erred in 
relying on this test.
    Response: To clarify any confusion in our required determination 
related to these comments, we have amended the language in the takings 
assessment. Again, we reiterate that these revisions to section 50 CFR 
424.19 do not affect private property. They only govern the process by 
which the Services will consider the impacts of designation of critical 
habitat and possible exclusions from those designations, and codify the 
Services' current practices. Therefore, these revisions cannot affect 
areas that have already been designated as critical habitat nor change 
the outcome with respect to future designations, and therefore will not 
affect private property. Contrary to the assertion of the commenter, in 
Penn Central Transportation Co. v. City of New York, 438 U.S. 104 
(1978), the Supreme Court did not set forth a discrete test for 
determining whether a constitutional taking has occurred. Rather, the 
court noted that there was no set formula for what were ``essentially 
ad hoc, factual inquiries,'' although it did identify three factors of 
particular significance: economic impact, reasonable investment-backed 
expectations, and the character of the government action. For a 
government action whose character and effect are limited to improving 
the efficiency and transparency of government procedures and that has 
no on-the-ground impact, there would not be any economic impact or 
interference with reasonable investment-backed expectations.
    Comment (4): One commenter believes that because Federal critical 
habitat triggers additional state or local regulations, this rule 
should perform a takings assessment because ``a landowner is denied 
economically beneficial or productive use of its land'' from the 
designation. The commenter gives an example of Washington's state 
environmental policy act (SEPA) that Federal critical habitat triggers 
Class IV special forest practice restrictions.
    Response: We reiterate that these regulations are procedural or 
administrative in nature, and will have no effect on the environment or 
on private property. These regulations do not designate critical 
habitat themselves, nor will they result in any change to the outcome 
of, public involvement in, or standards used for making any critical 
habitat determination. Therefore, the commenter's example of a state 
statute in which additional protections are triggered when critical 
habitat is designated, would not be affected by these regulatory 
revisions. We have revised the required determination for takings to 
make this more clear.
    Comment (5): Several commenters commented on the rationale for our 
certifications and statements regarding the statutes and executive 
orders in the Required Determinations.
    Response: We have incorporated responses to these comments under 
the appropriate statutes or executive orders in the appropriate 
Required Determinations section, below.
    Comment (6): The Services should recognize the central purpose of 
impact analyses, namely improving the information available to those 
potentially affected by critical habitat designations, and explain how 
this regulation will further that purpose.
    Response: The Services recognize the importance of this regulation 
in providing information to the public and those entities potentially 
affected by the designation of critical habitat. The President's 
February 28, 2012, memorandum directed the Services to promulgate this 
rule ``in order to provide more complete information in the future 
regarding potential economic impacts when critical habitat proposals 
are first offered to the public.'' Another important purpose of the 
impact analysis is to provide information to the Secretaries in order 
for them to consider economic impacts, the impacts to national 
security, and any other relevant impacts under section 4(b)(2) of the 
Act. Additionally, the Secretaries may exclude particular areas from a 
designation of critical habitat based on a discretionary 4(b)(2) 
exclusion analysis using this information.
    Comment (7): Several commenters suggested specific line edits or 
word usage.
    Response: We addressed these comments as appropriate in this 
document.
    Comment (8): Several commenters suggested a change in the title of 
the regulation to ``Analysis of Economic and Other Impacts and 
Exclusions from Critical Habitat.''
    Response: The revised title identified in the proposed and this 
final rule gives equal weight and consideration to all factors under 
section 4(b)(2) of the Act. Changing the title to that suggested by the 
commenter could imply greater consideration of economics, above that of 
national security and other relevant impacts. The Services do not agree 
that economics should be given greater consideration than other 
impacts. Therefore, we rejected this suggested edit.
    Comment (9): The same commenters suggested substantial revisions to 
paragraphs (b) and (c) of the proposed regulation revision, and the 
addition of several paragraphs, and provided specific language edits. 
One commenter stated that the Services should amend paragraph (b) to 
add language directing that analyses are to be consistent with the Data 
Quality Act (i.e., best available data standard), to ensure the scale 
of impact analysis is sufficient to evaluate particular areas for 
exclusion under section 4(b)(2), and to indicate that quantitative 
assessments will be done to the maximum extent practicable. The 
commenter's suggested paragraph (c) would cover data disclosure 
requirements, and the suggested new paragraph (d) would detail the use 
of coextensive and incremental analyses to more fully analyze what the 
commenter viewed as the economic impacts. Finally, the suggested new 
paragraph (e) would state that the Secretaries will use the best 
available scientific and commercial data with respect to quantitative 
and qualitative analyses of the economic impacts of a proposed critical 
habitat designation.
    Response: We disagree with the commenter's suggested edits for both 
procedural and substantive reasons. First, to adopt the changes 
suggested by the commenter would be a significant deviation from the 
previous and proposed text of the regulation and go well beyond the 
Services' intent in undertaking this regulation. Furthermore, because 
they would raise new substantive issues not discussed in the proposed 
rule, any such changes

[[Page 53065]]

likely would need to be proposed as a new regulation, and go through a 
new rulemaking procedure, which would take a significant amount of 
time. To adopt these changes and go through a new rulemaking would be 
counter to the intent of the Presidential memorandum, which was to 
promptly revise our regulations. Moreover, the Services do not find 
that there is a good basis for the substantive suggestions advanced by 
the commenter. Accordingly, the Services decline to expand the scope of 
the rule to address such issues.
    In conducting impact analyses, of which an economic analysis is 
part, the Services use the best available scientific and commercial 
data available. However, the further analysis and interpretation of 
those data are subject to persons seeking correction to the resulting 
disseminated information. As a result of this final regulation, the 
draft economic analysis of the proposed critical habitat designation 
will be available concurrently with the proposed critical habitat 
designation and the Services will seek public comment on both. Any 
concerns identified by the public in analysis or data could be 
identified and considered in the final rule. If someone requests a 
correction under the Information Quality Act (also known as the Data 
Quality Act), the Services will consider the original source of the 
information used (best available scientific and commercial data) will 
be considered against the correction suggested by the complainant. 
Therefore, this recommendation need not be adopted. Further, the 
recommendation for disclosure of data is addressed by the requirements 
for Federal electronic rulemaking as part of the e-Government Act, the 
Administrative Procedure Act (APA), and the Freedom of Information Act 
and would be redundant. We address the commenter's remaining specific 
suggested changes below in our responses grouped by subject matter.

Comments on Paragraph (a) of the Proposed Revision--Shift in Timing of 
Economic Analysis

    Comment (10): The majority of commenters supported the shift in 
timing of the draft economic analysis, and stated that this approach 
will improve the regulatory process. Several commenters expressed 
concern that the shift in timing of the draft economic analysis would 
lead to a reduction in regulatory efficiency. They suggested that the 
Services need to clarify what measures will be taken to ensure that the 
proposed revisions to the economic analysis process will not introduce 
additional delays in the designation of critical habitat.
    Response: We appreciate the concerns expressed by commenters on the 
shift in timing of the draft economic analysis, and we do not 
anticipate a reduction in regulatory efficiencies as a result. The 
Services are committed to doing an analysis sufficient, given the shift 
in timing and process, to provide the information needed by the 
Secretaries to make informed decisions on a factual basis. We do not 
anticipate that the shift in timing of the analysis will introduce 
delays in the designation process, as a summary of the draft economic 
analysis will be made available concurrently with the publication of 
the proposed rule.
    Comment (11): Many commenters stated that shifting the timing of 
the draft economic analysis to be earlier in the rulemaking process 
will provide for earlier, more meaningful participation by the public. 
However, other commenters were concerned that this approach would limit 
public participation by interested and affected stakeholders in the 
decision-making process. They believe it may reduce the time the public 
has to comment on the proposed rule. Further, they stated this approach 
will lead to an overly narrow consideration of economic impacts, or 
might allow economic analyses to be ignored. Several commenters stated 
that, by changing the timing of the economic analysis to be earlier in 
the rulemaking process, the Services may fail to identify and 
adequately analyze impacts.
    Response: Upon publication of the proposed designation of critical 
habitat, which will include a summary of the draft economic analysis, 
we will solicit information from the public through at least a 60-day 
comment period in accordance with our regulations, 50 CFR 424.16(c)(2), 
and the APA. During this comment period, the public will have 
opportunity to review the proposed designation and the supporting draft 
economic analysis, and provide information and comments on both the 
proposed rule and the draft economic analysis simultaneously. The Act 
requires the Secretaries to consider economic impacts of a designation 
of critical habitat, and the Services are committed to conducting an 
economic analysis, based on the best data available, given the shift in 
timing and process, sufficient to provide the information needed by the 
Secretaries to make informed decisions on a factual basis. The economic 
analysis is the vehicle by which we take economic impacts into 
consideration. We do not anticipate that the shift in timing of the 
analysis will result in a failure of the Services to consider probable 
economic impacts.
    Comment (12): The Services should publish an initial notice of 
impact analysis calling for submission of information to be evaluated 
prior to proposing a critical habitat designation. Only following the 
notice of the impact evaluation should the Services publish the 
proposed critical habitat.
    Response: In general, the Services do not anticipate publishing an 
advanced notice of proposed rulemaking (ANPR) for our critical habitat 
actions prior to publication of a proposed designation. However, the 
Services are committed to providing the public with notice and 
materials related to planned actions for each upcoming year. The notice 
and materials will be made available on the Services' Web sites, and 
will include appropriate contact information, which will allow the 
public to provide information to the Services in advance of particular 
rulemakings. Further, the Services will be coordinating with 
potentially affected Federal agencies during the development of the 
critical habitat designation to assess the probable impacts of critical 
habitat designation. Information obtained from this coordination or 
otherwise provided by the public will be used to inform our proposed 
designation and economic analysis. Further, we will request public 
comment and any additional information available on the proposed 
designation and our draft economic analysis at the time the proposed 
rule publishes.
    Comment (13): Several commenters expressed concern over the shift 
in timing of the economic analysis, as the proposed revision would 
allow for the draft economic analysis to take place at the same time 
that critical habitat designation is proposed, creating the potential 
for the analysis of economic impacts to inappropriately interfere with 
the designation process. The economic analysis should not influence the 
identification of critical habitat, which should be based solely on the 
best scientific data available. Any exclusion of critical habitat must 
be supported by the record and be made only at the final rulemaking 
stage.
    Response: We appreciate and are cognizant of this concern. We base 
our identification of critical habitat solely on the best scientific 
data available. Although the relevant Service will have an economic 
analysis at the time it proposes to designate critical habitat, that 
analysis will not influence the biological determination of which areas 
meet the definition of critical habitat. The economic information, 
along with information related to national security

[[Page 53066]]

and other relevant impacts, may be used in the discretionary analysis 
under the second sentence of section 4(b)(2) of the Act. A final 
decision on exclusions from critical habitat will be made at the final 
rulemaking stage and will be supported by information in the supporting 
record for the rulemaking.
    Comment (14): Some commenters expressed concern that when the 
Services propose listing and critical habitat simultaneously, having 
available a draft economic analysis of the proposed critical habitat 
designation might result in that analysis influencing the determination 
of whether a species warrants listing as a threatened or endangered 
species.
    Response: Section 4(b)(1)(A) of the Act states that determinations 
required by section 4(a)(1) of the Act (i.e., determinations regarding 
the listing status of a species) be made solely on the basis of the 
best scientific and commercial data available. While having the draft 
economic analysis for a proposed critical habitat designation completed 
and available concurrent with the proposed listing determination may 
provide the opportunity for a real or perceived influence on the 
listing status ultimately given the species, the Services will ensure a 
separation of the two analyses and determinations. For example, one 
step that FWS has taken to ameliorate this concern is to develop 
listing determinations and critical habitat designation (if prudent and 
determinable) concurrently, but in separate rulemakings. Furthermore, 
the House of Representatives conference report (97-835) for the 1982 
amendments to the Act specifically states that economic considerations 
have no relevance to determinations of species status under the Act.
    Comment (15): Requiring the draft economic analysis to be completed 
at time of critical habitat proposal could result in more findings by 
the Services that critical habitat is not determinable.
    Response: The regulations at 50 CFR 424.12 (a)(2) state that 
``critical habitat is not determinable when one or both of the 
following situations exist: (i) Information sufficient to perform 
required analyses of the impacts of the designation is lacking, or (ii) 
The biological needs of the species are not sufficiently well known to 
permit identification of an area as critical habitat.'' Thus, the 
Services may invoke subparagraph (i) of this provision to find that the 
designation of critical habitat is not determinable if the information 
to perform the economic analysis is lacking. However, it has generally 
not been our practice to find that a designation of critical habitat is 
not determinable on this basis. We do not anticipate using this 
provision with greater frequency in the future as a result of this 
rulemaking.
    Comment (16): Several commenters were concerned that only a draft 
of the economic analysis, and not a final analysis, will be available 
at proposal.
    Response: As a result of this final rule, the Services will be 
providing a summary of our economic analyses within our proposed 
designations of critical habitat. Furthermore, we will make available 
the economic analysis on http://www.regulations.gov in the docket of 
the proposed rulemaking. However, it is the draft economic analysis 
that should be available for the public to review and comment on 
concurrent with the proposed rule. Further, the Services have generally 
found in their experience that most economic analyses do not 
substantively change following public review and comment, so most draft 
analyses can be viewed as approximating the final analysis. However, we 
will incorporate comments and information received on the draft 
analysis as appropriate into the text of our final rule.
    Comment (17): A commenter requested that, in addition to the 
analysis of economic impacts being made available prior to the 
proposal, the regulation be amended to include the analysis of all 
other impacts specified in the statute, and the balancing of all 
relevant benefits be done prior to publication of a proposed rule as 
well.
    Response: While we appreciate the commenter's position, we do not 
agree that it is wise to mandate that these additional analyses and the 
discretionary 4(b)(2) exclusion analysis be available at that stage of 
the designation process in all circumstances. The statute does not 
specify when these additional analyses should be undertaken, and the 
Services find that the purposes of the statute are best served by 
retaining flexibility on this point to respond to the degree of 
available data and agency priorities in a particular circumstance. As a 
matter of practice, NMFS's current procedure is consistent with the 
commenter's request. FWS, as a matter of practice, prefers to retain a 
greater degree of discretion as to the timing of making these analyses 
available, although in cases where specific data on other impacts is 
available at the proposed rule stage, FWS may set forth the evaluation 
of these data and, if applicable, its provisional 4(b)(2) exclusion 
analysis in the proposed rule.
    Comment (18): Providing a summary of the findings of the draft 
economic analysis in the proposed rule as published in the Federal 
Register is redundant if the draft economic analysis is otherwise 
available on the internet.
    Response: This final regulation will require the Services to 
provide a summary of our draft economic analyses within our proposed 
designations of critical habitat. Additional supporting documents will 
be available in the supporting record and http://www.regulations.gov. 
The Services conclude that we will further the purposes of the Act and 
the APA by including the summary of the draft economic analysis in the 
body of the proposed rule, as doing so will facilitate public review by 
having the key information available in one place. Further, that 
summary will provide the supporting information and factual basis for 
the certification of specific required determinations.
    Comment (19): The proposed regulation would require description of 
any significant activities that are known to have the ``potential to 
affect'' an area considered for designation as critical habitat. But 
this language introduces a new standard not in the Act (potential to 
affect). Potential to affect is a broader standard; the standard ``may 
adversely modify'' from the statute should be used. Further, by using a 
new standard, critical habitat proposals would have to segregate 
activities that have the potential to affect from those that may 
adversely modify.
    Response: We have removed the language containing this phrase from 
this final regulation. See the preamble discussion for further 
information.
    Comment (20): The Services should add to paragraph (a), ``To the 
maximum extent practicable'' to lead off. And they should qualify that 
the economic analysis will be released at the same time as the proposed 
rule ``or as soon thereafter as it is available.''
    Response: We have removed the language containing this phrase from 
this final regulation. However, to use this phrase to preface the 
requirements of paragraph (a) would indicate that the Services would 
provide a draft economic analysis to the maximum extent practicable, 
implying that the Services might elect not to release the draft 
economic analysis at the time of the proposed rule if inconvenient, 
which is contrary to the Presidential memorandum of February 29, 2012. 
The Presidential memorandum directs the Services to make available the 
draft economic analysis at the time of publication of the proposed 
critical habitat rule, and the Services intend to fulfill the 
President's direction because it is consistent with the purposes of 
both the Act and the APA.

[[Page 53067]]

Comments on Paragraph (b) of the Proposed Revision--Incremental vs. 
Coextensive Analyses

    Comment (21): Absent a clear regulatory definition of adverse 
modification, the Service cannot reasonably assess the economic impact 
of any critical habitat designation.
    Response: Courts invalidated the previous regulatory definition of 
destruction or adverse modification because they found it to be 
contrary to the language of the Act. However, at this time the Services 
are operating under a 2004 Director's memorandum and a 2005 Assistant 
Administrator's memorandum, which confirm that the Services use the 
statutory conservation standard in implementing the prohibition on 
destruction or adverse modification of critical habitat under section 7 
of the Act. These memoranda provide a clear and reasonable basis for 
the Services to evaluate incremental impacts due to the designation of 
critical habitat in a manner consistent with the purposes and text of 
the Act. Further, the Services plan to propose a new regulatory 
definition for destruction or adverse modification of critical habitat 
in the near future.
    Comment (22): Many commenters oppose the incremental approach to 
conducting economic analyses, arguing that this approach does not 
capture the full impact of a critical habitat designation and that it 
would be less transparent than a coextensive approach. Other commenters 
were supportive of the incremental-analysis approach.
    Response: As we discussed above in the preamble and in the proposed 
rule, we have concluded that an incremental analysis is consistent with 
the Act and general OMB guidance, and is the most logical way of 
analyzing impacts. The Services have consistently been evaluating the 
incremental impacts of a designation in the section 4(b)(2) evaluation 
process. FWS has been using the incremental analysis approach for 
economic analyses since 2007 in areas outside the jurisdiction of the 
Tenth Circuit Court. The Services have not found that there is a 
diminishment or lack of transparency in the process relative to the 
coextensive evaluation.
    Comment (23): The incremental approach is contrary to the Services' 
prior practice and the Presidential memorandum.
    Response: The incremental approach is not contrary to the Services' 
prior practices, nor is it contrary to the Presidential memorandum. The 
Presidential memorandum does not specify the type of analysis to use 
for consideration of impacts. The Services have consistently been 
evaluating the incremental impacts of a designation in the section 
4(b)(2) evaluation process for some time, and this approach has been 
judicially recognized as more logical and appropriate. FWS has been 
using the incremental analysis approach for economic analyses since 
2007 in areas outside the jurisdiction of the Tenth Circuit Court. The 
OMB Circular A-4 supports the use of the incremental approach of 
evaluating the effects of Federal rulemakings, including the evaluation 
of probable economic impacts.
    Comment (24): The incremental approach is not consistent with 
Congressional intent in the Act and legislative history as it relates 
to section 4(b)(2) of the Act. To be more consistent with the Act, the 
Services should conduct an analysis that sums both a baseline and an 
incremental analysis (i.e., coextensive analysis). The Act does not 
qualify the mandatory consideration of economics and other relevant 
factors and, therefore, all impacts should be considered. Another 
commenter stated that the significant lag time between listing and 
critical habitat often done by the Services should not be used to hide 
the costs of the Act as ``listing costs.''
    Response: Congressional intent is reflected in the language of the 
Act. The purpose of consideration of impacts is to inform decisions on 
possible exclusions from critical habitat; in turn, the purpose of 
exclusions is to avoid the probable negative impacts of designating 
particular areas as critical habitat. Fundamentally, it is not an 
``impact'' of a designation if an impact will happen with or without 
the designation--those impacts will not be avoided by exclusion. For 
example, the impacts due to the listing of a species will occur 
regardless of designation of critical habitat or exclusion of areas 
from critical habitat. Exclusion of a particular area because of an 
impact that will occur regardless of the exclusion will be completely 
ineffective at avoiding the impact and is illogical. We conclude that 
Congress did not intend to mandate consideration of impacts that cannot 
be avoided by exclusion from critical habitat, and therefore that 
Congress did not intend to mandate a coextensive analysis.
    With respect to the commenter's assertion that a delay of the 
critical habitat designation may hide the costs of the designation as 
listing costs, we disagree. As discussed above, the incremental-
analysis approach is the correct approach regardless of whether the 
designation occurs at the time of listing, and that approach does not 
serve to ``hide'' the costs of the Act. Under the Act, the costs that 
stem from listing are simply not relevant, except as setting the 
baseline against which to measure the incremental impacts of 
designation. Moreover, as a factual matter, in the vast majority of 
cases, there is no longer a significant time lag between listing and 
critical habitat designation.
    Comment (25): The total economic impact that should be considered 
is the impacts both before and after critical habitat is designated; in 
other words, both the baseline and the incremental together. This 
approach does not contradict the prohibition on consideration of 
economic impacts due to the original listing of a species, but it does 
allow consideration of the full magnitude of all economic pressures on 
a particular community, industry, or activity when considering imposing 
the additional economic cost associated with a critical habitat 
designation, or granting exclusion (i.e., cumulative regulatory and 
economic impact).
    Response: An economic analysis serves to inform the relevant 
Service's consideration of the economic impact of a critical habitat 
designation. That consideration is mandatory under the first sentence 
of section 4(b)(2) of the Act. That consideration, in turn, informs the 
Service's decision as to whether to undertake the discretionary 
exclusion analysis under the second sentence of section 4(b)(2) of the 
Act, and, if the Service chooses to do so, the ultimate outcome of that 
exclusion analysis. As discussed above, only incremental impacts of 
designation can be relevant to this analysis, because those impacts are 
the only ones that can be avoided by excluding a particular area from 
the designation. In other words, it would be illogical to exclude an 
area based on benefits of exclusion that will not in fact follow from 
the exclusion. Because implementation of the exclusions process of 
section 4(b)(2) of the Act necessarily depends on a weighing of the 
incremental benefits of exclusion and inclusion, and because there is 
an implied consistency between the two sentences of 4(b)(2) given that 
the process of the first sentence informs the process of the second, we 
conclude that the consideration of impacts required under the first 
sentence of section 4(b)(2) of the Act is likewise limited to 
incremental impacts.
    The OMB Circular A-4 supports the use of the incremental approach 
of evaluating the effects of Federal rulemakings, including the 
evaluation of probable economic impacts, in complying with other 
statutes and Executive Orders (which the economic analysis also 
informs). Further, as

[[Page 53068]]

discussed in the preamble of our proposal, use of an incremental 
analysis is supported by relevant case law and the Solicitor's M-
Opinion. It has also been the general practice of the Services (outside 
the jurisdiction of the 10th Circuit Court). Moreover, even if there 
was some nonstatutory policy benefit to doing a broader analysis of the 
economic impacts of species conservation, in most circumstances it is 
not practical to conduct a robust evaluation of baseline effects due to 
data limitations and resource and time constraints.
    Comment (26): The incremental approach is overly narrow and allows 
the Services to easily discount the economic impacts of critical 
habitat designations or only consider those immediately visible. The 
Services currently narrowly interpret economic impact as the 
administrative costs incurred by the section 7 consultation process and 
discounts to zero virtually all other economic impacts because they are 
too speculative or are unquantifiable.
    Response: The incremental approach is not overly narrow, as it 
properly focuses on the probable costs resulting from the designation 
of critical habitat. When the Services develop a draft economic 
analysis to consider the economic impacts of designating critical 
habitat, we include reasonably known or probable impacts reasonably 
likely to occur. Using the incremental approach, we often identify 
administrative costs that will result from section 7 consultation in 
critical habitat units that are occupied by the species. Substantive 
changes in the form of project modifications are less likely to be 
attributable solely to critical habitat, as they may also be required 
to avoid jeopardy to the species, which is prohibited regardless of the 
designation of critical habitat. With respect to designation of 
critical habitat units that are unoccupied by the species, the Services 
may more frequently identify higher probable impacts. In that 
circumstance, any project modifications stemming from the consultation 
process would be due solely to the designation of critical habitat and 
the requirement of avoiding its adverse modification, because the 
species is not present in the area. By contrast, certain conservation 
measures that are attributable to the species' listed status, such as 
project modifications undertaken to avoid jeopardy to a species, fall 
under the baseline costs, and are not part of the incremental cost of a 
critical habitat designation.
    Comment (27): Some commenters suggested that the Services use the 
incremental approach on all Federal lands and the coextensive approach 
on all State and private lands. They assert that this dual approach 
would fully analyze any economic impacts and would meet the intent of 
the President in considering maximum exclusion of the final revised 
critical habitat on private and State lands.
    Response: For consistency, the incremental approach should be used 
for the entire designation, and not for specific land ownership. 
Further, based on OMB guidance in Circular A-4, as well as supportive 
case law, the Services' interpretation is that the incremental approach 
is the correct approach for impact analyses (see Comment (19) above for 
further elaboration on use of the incremental approach). Critical 
habitat receives regulatory protection under section 7 of the Act where 
there is a Federal nexus, regardless of land ownership. Even if the 
Services were to use the approach suggested by the commenter, any 
potential exclusion analysis under section 4(b)(2) of the Act would be 
difficult, as two different standards would be applied based on 
landownership, thereby increasing complexity and decreasing 
transparency and credibility of such balancing.
    The last part of the comment, regarding maximizing exclusions from 
critical habitat, is specifically in reference to the directives in the 
Presidential memorandum regarding revision of critical habitat for the 
northern spotted owl. We note that those directives in the Presidential 
memorandum do not apply to all critical habitat rulemaking. However, 
the Services do consider other relevant impacts of a designation of 
critical habitat, including probable impacts to private and State 
lands, in all critical habitat rulemakings. Designation of critical 
habitat on Federal lands provides clear conservation benefits because 
Federal land managers have an obligation under section 7(a)(1) of the 
Act to carry out programs to conserve listed species. A designation of 
critical habitat helps focus such programs. As a result of these 
considerations, the Secretaries may enter into the discretionary 
4(b)(2) exclusion analysis to consider exclusion of non-Federal lands, 
and may exclude particular areas from a designation of critical habitat 
if the benefits of exclusion outweigh the benefits of inclusion.
    Comment (28): Since the Act requires critical habitat to be 
designated concurrent with listing to the maximum extent prudent and 
determinable, if the Services follow the incremental approach, there is 
no regulatory baseline against which the impacts of critical habitat 
may be compared.
    Response: While we agree that in some cases regulatory baseline 
information may be limited at the time of listing, the Services will 
use the best data available in considering the impacts of designating 
critical habitat. Thus, when developing a critical habitat designation 
for a species not yet listed, the Services will use their experience 
and the data that is available, including the regulatory baseline 
condition of comparable surrogate listed species, to establish a 
probable baseline condition, as well as to determine the probable 
incremental impacts. The Services conclude that the use of information 
derived from an evaluation of comparable surrogate species or 
conditions is reasonable and consistent with standard economic 
methodology.
    Comment (29): The incremental approach erroneously assumes that 
occupied critical habitat will forever remain occupied. As a result, 
areas considered occupied critical habitat within the impact analysis 
will have little or no incremental impacts over baseline.
    Response: Neither coextensive nor incremental approaches to 
evaluating impacts are dependent upon the occupancy of a particular 
area in a designation. While we acknowledge that the occupancy of a 
particular area may change over time regardless of designation of 
critical habitat or listing, the Act directs us to designate critical 
habitat at the time a species is listed, to the maximum extent prudent 
and determinable, based on best scientific data available at the time 
of the designation.
    Should an occupied portion of a critical habitat unit become 
unoccupied over time, and a future project is initiated in that area, 
the probable incremental costs associated with any project 
modifications needed to avoid adverse modification generally may be 
higher as they are no longer considered to be part of the baseline. 
However, as impact analyses are done at the time of critical habitat 
designation, it may not be possible to reliably predict when or where a 
range contraction may occur and whether this scenario would occur. In 
any event, the effects of an action on a designation would be evaluated 
in a section 7 consultation within the scope of that consultation and 
will be addressed on a case-by-case basis, and changes in occupancy 
that may result in range contraction as compared to the original 
designation, will be evaluated within the scope of future 
consultations. In some cases, the Services may elect to revise a 
critical habitat designation in

[[Page 53069]]

the event of a serious or unanticipated range contraction to reflect a 
change in a species' range. In a revised rulemaking, the Services could 
reconsider prior exclusions from critical habitat or consider new 
exclusions from critical habitat.
    Comment (30): One commenter cited a 2012 study of 4,000 biological 
opinions conducted under section 7 of the Act that identified no 
instances where a consultation concluded that the action resulted in an 
adverse modification of critical habitat, absent a comparable 
determination that the action would also jeopardize the continued 
existence of the species. As a consequence, the incremental approach 
for evaluating the impacts of critical habitat is of little value.
    Response: Frequently, conservation measures and project 
modifications are negotiated with the Federal action agency during the 
informal and formal consultation processes, which can have the effect 
of precluding an adverse modification determination. The cost of these 
conservation measures and project modifications, if resulting solely 
from the designation, and the cost of the consultation itself 
constitute the incremental impacts of the designation, which must be 
evaluated under section 4(b)(2) of the Act. Thus, the lack of a 
determination of adverse modification in a section 7 consultation does 
not mean there is no incremental impact resulting from the designation.
    Comment (31): The Services have a burden to clearly delineate the 
difference between jeopardy and adverse modification when using the 
incremental approach.
    Response: As part of our evaluation of the probable incremental 
effects, the Services make a reasonable effort to explain the 
distinction between the results of application of the jeopardy and 
destruction or adverse modification standards to the facts of each 
species within the limits of what can be predicted from the best 
available information. In the evaluation of incremental impacts, we 
acknowledge the distinction between jeopardy and adverse modification 
is often most difficult to determine and articulate.
    Comment (32): The Tenth Circuit found that the incremental approach 
is meaningless. Through the use of this approach, the Service has found 
that critical habitat designations covering vast expanses of private 
and public lands have no economic impacts other than incremental 
administrative costs associated with future section 7 consultations. 
The incremental approach does not require the Services to consider all 
economic impacts of a critical habitat designation and is, therefore, 
contrary to the Act and unlawful.
    Response: In the preamble of our proposal and this final rule, the 
Services set forth in detail the rationale as to why the incremental 
approach is permissible and supported by the Act, relevant case law, 
and OMB Circular A-4. In particular, as the Ninth Circuit has noted, 
the Tenth Circuit's conclusion in New Mexico Cattle Growers was based 
on a faulty premise. We also note that there has been confusion as to 
what constitutes ``all'' economic impacts of a designation. OMB 
Circular A-4 states that agencies should evaluate the specific cost and 
benefit of the subject regulation relative to a baseline, which is 
``the way the world would look absent the proposed action. It may be 
reasonable to forecast that the world absent the regulation will 
resemble the present.'' This approach captures all of the impacts that 
are actually relevant to the decision to be made. As applied to the 
decision of whether to exclude an area from a critical habitat 
designation, an incremental approach evaluates the cost solely 
resulting from a specific designation, which equates to the incremental 
difference between the world with and without the designation in place. 
Thus, in determining the incremental impacts of a designation, the 
Services do consider ``all'' of the reasonably likely or probable 
economic impacts of a designation.
    Comment (33): Federal agencies have no authorities to resolve 
circuit court splits involving matters of statutory interpretation. The 
proposed rule is, therefore, unlawful because it represents an improper 
attempt by the Services to resolve a circuit split involving a matter 
of statutory interpretation. Rulemaking is not the way to resolve the 
judicial split between 10th and 9th circuit decisions. Congress or the 
Supreme Court should decide this issue. How would this rule, if 
finalized, apply in the 10th circuit?
    Response: Federal agencies are empowered by Congress to interpret 
the laws that they implement. Courts also interpret the laws, and give 
varying degrees of deference to preexisting agency interpretations. 
Agencies may promulgate a rule that interprets a law differently than 
does a prior judicial opinion. See Nat'l Cable & Telecomms. Ass'n v. 
Brand X Internet Servs., 545 U.S. 967, 982-85 (2005). This is precisely 
what we are doing here. In other words, it is completely appropriate 
for an agency to issue a rule that has the effect of resolving a split 
in the circuit courts, so long as the agency's interpretation of the 
statute is permissible. And once it becomes effective, this regulation 
will apply to all subsequent critical habitat designations, whether or 
not that designation includes area within the geographic scope covered 
by the Tenth Circuit. Further, as we have explained, the more recent 
Ninth Circuit case law examined the predicate for the Tenth Circuit 
decision and found it no longer applied.
    Comment (34): The incremental approach is not consistent with the 
``best scientific data'' requirement.
    Response: The Act specifies that we are to designate critical 
habitat based on the best scientific data available. The incremental 
approach broadly applies to analysis of probable impacts stemming from 
the designation of critical habitat. As stated above, when evaluating 
probable impacts of a critical habitat designation, the Services' 
practice is to consider only those impacts resulting from the critical 
habitat (i.e., incremental approach), and not those impacts associated 
with a species' listed status or other conservation measures undertaken 
for that species. Furthermore, the purpose of the impact analysis is to 
inform decisions regarding exclusions from critical habitat. If the 
Secretaries exercise their discretion to exclude particular areas, the 
incremental impacts will be avoided. Data used to inform the impact 
analysis that are based on probable incremental impacts are the most 
useful in this evaluation. Therefore, the Services do use the best 
scientific information available to evaluate the incremental impacts of 
a critical habitat designation.
    Comment (35): Commenters requested that the Services provide 
clarification of baseline and explain what is meant by ``existing 
protections''?
    Response: ``Existing protections'' make up the ``baseline.'' As 
discussed in the preamble of our proposed regulation revision, the 
baseline condition for impact analyses is the evaluation of the 
combined effects of all conservation-related protections for a species 
(including listing) and its habitat, in the absence of the designation 
of critical habitat. The baseline includes the effects of all 
conservation measures and regulations that are in place as a result of 
the species being listed under the Act (i.e., the world without 
critical habitat for the subject species). An analysis of incremental 
impacts identifies and evaluates those impacts due solely to the 
designation of critical habitat, above and beyond those already in 
place (i.e., baseline condition).
    Examples of existing protections may include: (1) Conservation 
measures such as Service-approved habitat

[[Page 53070]]

conservation plans (HCPs) and safe harbor agreements (SHAs); (2) tribal 
and Federal wildlife-management and wildlife-conservation plans; (3) 
State endangered species act regulations; (4) other conservation 
measures at the State and local levels; and (5) project modifications 
resulting from section 7 consultations to avoid jeopardy to listed 
species.

Comments on Paragraph (b) of the Proposed Revision--Qualitative vs. 
Quantitative Analyses

    Comment (36): Several commenters opposed the use of qualitative 
analyses in estimating potential economic impacts, and stated that all 
analyses should be quantitative in nature. Others suggested that 
consistency with the Act, the President's March 9, 2010, Scientific 
Integrity memorandum, and the Data Quality Act require the Secretary to 
use, to the maximum extent practicable, a quantitative assessment 
method, and only use qualitative assessments if data required to 
conduct the analysis are not available. Further, if the Services adopt 
the incremental approach, the need for robust, quantitative economic 
impact assessments is even greater. The Services should closely examine 
the existing economic conditions and quantitatively compare the impacts 
of any critical habitat designation to ensure they obtain a complete 
picture of the consequences of the regulatory action.
    Response: As described in OMB Circular A-4, ``Sound quantitative 
estimates of benefits and costs, where feasible, are preferable to 
qualitative descriptions of benefits and costs because they help 
decisionmakers understand the magnitudes of the effects of alternative 
actions. However, some important benefits and costs (e.g., privacy 
protection) may be inherently too difficult to quantify or monetize 
given current data and methods.'' Based on our years of designating 
critical habitat and evaluating resulting impacts, the Services have 
found that, in most instances, the data available to provide quantified 
estimates of specific impacts are limited, and as a result, the 
Services have relied on a combination of quantitative and qualitative 
approaches in performing our impact analyses. This approach is 
consistent with Circular A-4, which states ``If you are not able to 
quantify the effects, you should present any relevant quantitative 
information along with a description of the unquantified effects, such 
as ecological gains, improvements in quality of life, and aesthetic 
beauty.'' Our practice is also consistent with the President's March 9, 
2010, Scientific Integrity memorandum, and the Data Quality Act.
    Comment (37): The qualitative approach makes sense under 
environmental law, but could be seen as subjective. However, 
quantitative analysis could be just as subjective based on how the 
numbers are assembled.
    Response: We appreciate the observation. The Services are committed 
to using the best scientific information available in evaluating 
reasonably probable incremental impacts of a critical habitat 
designation in our impact analyses. We use these data, whether 
quantitative or qualitative, to make objective, substantiated 
conclusions.

Comments on Paragraph (b) of the Proposed Revision--Scale of Analyses 
and Other Issues Related to Paragraph (b)

    Comment (38): The Services should establish guidelines for 
determining appropriate and meaningful scale of analyses. Another 
commenter noted that paragraph (b) gives the Secretaries additional 
flexibility to determine the scale of the analysis.
    Response: Setting out defined guidelines for the scale of an 
analysis in regulations would not be practical. Each critical habitat 
designation is different in terms of area proposed, the scope of the 
applicable Federal actions, economic activity, and the scales for which 
data are available. Additionally, the scale of the analysis is very 
fact specific. Therefore, the Services must have flexibility to 
evaluate these different areas in whatever way is most meaningful. For 
example, for a narrow-endemic species, a critical habitat proposal may 
cover a small area; in contrast, for a wide-ranging species, a critical 
habitat proposal may cover an area that is orders of magnitude greater. 
The appropriate scale of the impact analysis for these two species may 
not be the same. For the narrow-endemic species, an impact analysis may 
look at a very fine scale with a great level of detail. In contrast, 
the impact analysis for the wide-ranging species, which may cover wide 
expanses of land or water, may use a coarser scale of analysis, due to 
the sheer size of the proposed designation. Each critical habitat 
proposal includes a description of the scope of the area being 
proposed, and uses the scale of analysis appropriate to that situation.
    Comment (39): Commenters requested that the Services define 
``proposed and ongoing'' activities and ``other relevant impacts,'' to 
promote consistent consideration of impacts of critical habitat 
designations.
    Response: The Services interpret the Act as requiring us to 
consider and evaluate only activities that are proposed or ongoing. We 
note that the regulation sets out the minimum that is required to 
comply with the mandate of the first sentence of section 4(b)(2) of the 
Act. The Services may in appropriate circumstances choose to consider 
other reasonably probable impacts, especially in the discretionary 
exclusion analysis under the second sentence of section 4(b)(2) of the 
Act. The Services cannot speculate about what projects may occur in the 
future, but must rely on information available regarding reasonably 
foreseeable or probable projects as indicated in the original text of 
this revised regulation. To do otherwise would not provide for a 
reasonable or credible impact analysis. Proposed and ongoing also 
captures those section 7 consultations that have already occurred or 
are in progress, so that the possible effects of critical habitat may 
already be known, which allows for a more accurate and credible impact 
assessment.
    Comment (40): The Services should add the phrase ``domestic energy 
security'' following the term ``national security,'' as it is a 
critical component of national security.
    Response: The current language in section 4(b)(2) of the Act 
includes the phrase ``and any other relevant impact.'' The legislative 
history indicates that Congress intended to give the Secretaries broad 
discretion as to what impacts to consider and what weight to give 
particular impacts. H.R. Rep. 95-1625, at 17; see, e.g., Cape Hatteras 
Access Preservation Alliance v. DOI, 731 F. Supp. 2d 15 (D.D.C. 2010) 
(``the Service has considerable discretion as to what it defines to be 
``other relevant impacts'' under the ESA''). Therefore, if the relevant 
Service determines in a particular designation that domestic energy 
security is a relevant impact of that designation, that Service will 
consider the impacts of designation on domestic energy security.
    Comment (41): The change in the proposed revision of the standard 
of ``potential'' to ``probable'' would place a burden on landowners and 
users that is not authorized by the Act. This change is inconsistent 
with the statute because there are no such limitations on impacts 
considered by the Secretaries.
    Response: The word ``potential'' was not in the previous language 
of this regulation. However, the word ``probable'' was in the original 
language of this regulation. As discussed in the preamble of our 
proposal, we are not

[[Page 53071]]

changing the term ``probable.'' The use of this word reflects a 
reasonable interpretation of the statute. Realistically, the Services 
can only consider activities reasonably likely to occur, which we 
interpret for purposes of this rule to mean the same thing as the term 
``probable.''

Comments on Paragraph (c) of the Proposed Revision--Secretarial 
Discretion

    Comment (42): The proposed regulation change would give too much 
latitude to the Services to make inconsistent and arbitrary decisions 
when designating critical habitat, including the discretion to assign 
weights to the benefits of critical habitat designations. The proposed 
rule lacks criteria or guidance, which deprives the public of the 
opportunity to comment on how the rule will be implemented. Although 
the Act affords the Secretaries significant discretion in making these 
determinations, the Secretaries should articulate how they will 
exercise this discretion by regulation. The criteria and guidelines 
should be set forth in the final rule. The final regulation should 
outline how the Secretaries will exercise discretion with requirements 
and guidance to provide public understanding in the analysis of 
designation of critical habitat.
    Response: One purpose of this paragraph of the revised regulations 
is to clarify the relationship between the mandatory consideration of 
impacts under the first sentence of section 4(b)(2) of the Act and the 
discretionary exclusion authority under the second sentence of section 
4(b)(2) of the Act. This distinction has been recognized by courts. 
Building Industry Ass'n of the Bay Area v. U.S. Dep't of Commerce, 2012 
U.S. Dist. Lexis 170688 (N.D. Cal. Nov. 30, 2012). We disagree that it 
would be helpful to include specific guidance as to how this authority 
will be applied in binding regulations. However, the Solicitor's 
Section 4(b)(2) memorandum (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) provides 
general guidance on how to implement section 4(b)(2) of the Act, and we 
are developing additional guidance in a forthcoming joint agency policy 
on section 4(b)(2) exclusions. Ultimately, the weight given to any 
impact or benefit and the decision to exercise discretion to exclude a 
particular area is fact specific and will continue to be addressed in 
each individual rulemaking. As a matter of practice, the Services set 
forth the 4(b)(2) exclusion analysis in the final rule or supporting 
record for any area that the Secretaries exercise their discretion to 
exclude.
    Comment (43): The preamble of the proposed regulation states that 
the weighing of benefits (exclusion analysis) under section 4(b)(2) is 
``optional,'' which raises serious concerns. Section 4(b)(2) requires 
that economic and other impacts be considered in designating critical 
habitat. This step is mandatory. The revisions to section 424.19 should 
make clear that the requirement to consider economic and other impacts 
when designating critical habitat is an integral part of the 
designation process and will be utilized to reduce adverse impacts on 
land and resource users, as Congress intended. With this new approach, 
the Services may consider the economic analysis to be discretionary. 
The Secretary's discretion to exclude or not exclude arises only after 
the Secretary has first engaged in a mandatory consideration of 
economic impacts, followed by a nondiscretionary weighing of benefits. 
The third and final step is a discretionary decision whether to exclude 
or not.
    Response: There are two distinct processes under section 4(b)(2) of 
the Act--one mandatory and one discretionary--and this interpretation 
has been confirmed by the courts (Building Industry Ass'n of the Bay 
Area v. U.S. Dep't of Commerce, 2012 U.S. Dist. Lexis 170688 (N.D. Cal. 
Nov. 30, 2012)). The first sentence of section 4(b)(2) of the Act sets 
out a mandatory requirement that the Services consider the economic 
impact, impact on national security, and any other relevant impacts 
prior to designating an area as part of a critical habitat designation. 
The Services will always consider such impacts as required under this 
sentence for each and every designation of critical habitat. The 
economic analysis is the vehicle by which we consider the probable 
economic impacts of a critical habitat designation. Thus, contrary to 
the suggestion in the comment, we do not consider the consideration of 
the probable economic impacts of a critical habitat designation to be 
discretionary.
    The second sentence of section 4(b)(2) of the Act outlines a 
separate discretionary exclusion-analysis process that the Services may 
elect to conduct depending on the specific facts of the designation. 
The Services are particularly likely to conduct this discretionary 
analysis if the consideration of impacts mandated under the first 
sentence suggests that the designation will have significant 
incremental impacts. In this exclusion analysis the Services analyze 
whether the benefits of excluding a particular area outweigh the 
benefits of including the area and determine whether to exclude such an 
area from the designation if the exclusion will not result in the 
extinction of the species.
    The exclusion analysis outlined in the second sentence of section 
4(b)(2) of the Act is not required under the statute, and for some 
designations the Services may choose not to engage in such an analysis. 
Thus, for the reasons discussed above and in the Solicitor's M-Opinion, 
we disagree with the commenter that the exclusion analysis is 
nondiscretionary.
    However, separate and different from the 4(b)(2) exclusion analysis 
discussed above, agencies are required under E.O. 12866 to assess both 
the costs and the benefits of the intended regulation and, recognizing 
that some costs and benefits are difficult to quantify, propose or 
adopt a regulation only upon a reasoned determination that the benefits 
of the intended regulation justify its costs. The requirement of E.O. 
12866 is applicable to the process of designating critical habitat.
    To minimize confusion between the two analyses, we have changed the 
reference to the analysis under the second sentence of 4(b)(2) of the 
Act in this final rule from ``optional weighing of benefits'' to 
``discretionary 4(b)(2) exclusion analysis.''
    Comment (44): Some commenters were concerned that the Secretaries 
might not exclude areas even if the benefits of exclusion outweigh 
those of inclusion. They argued that this approach would conflict with 
the general principles of E.O. 13563 and the intent of the 2012 
Presidential memorandum. The Secretaries do not have discretion to 
ignore economic or other impacts in designating critical habitat, as 
implied by the Services' claim in having broad discretion in 
development of an economic impact analysis. If agency discretion is 
absolute, then this situation renders criteria set forth in section 
4(b)(2) as serving no purpose. We understand the commenters to mean 
that this would render the Act's requirement that the Services consider 
the impacts of a designation of critical habitat illusory.
    Response: We agree that the requirement of E.O. 12866 (and 
incorporated by E.O. 13563) to assess the costs and benefits of a rule, 
and, to the extent permitted by law, to propose or adopt the rule only 
upon a reasoned determination that the benefits of the intended 
regulation justify the costs is applicable to the process of 
designating critical habitat. However, as discussed above, the 
authority for the assessment

[[Page 53072]]

of costs and benefits to satisfy the provisions of E.O. 12866 and E.O. 
13563 is separate and different from the authority for the 
discretionary exclusion analysis conducted under the second sentence of 
section 4(b)(2) of the Act. Because the discretionary 4(b)(2) exclusion 
analysis and the assessment under the Executive Orders serve different 
purposes, we do not find that the discretionary 4(b)(2) exclusion 
analysis conflicts with the general principles of the Executive Orders. 
In fact, we believe that, in general, excluding an area because the 
benefits of exclusion outweigh the benefits of inclusion, and not 
excluding an area because the benefits of exclusion do not outweigh the 
benefits of inclusion, is fully consistent with the E.O. requirements 
discussed above.
    In this final rule, we acknowledge that the first sentence of 
section 4(b)(2) of the Act sets forth a mandatory consideration of the 
economic, national security, or other relevant impacts of designating 
critical habitat. So we agree with the commenter that there is a 
mandatory consideration of economics and other impacts of designating 
critical habitat. However, we also acknowledge that the second sentence 
of section 4(b)(2) of the Act outlines a separate discretionary 
exclusion-analysis process that the Services may elect to conduct 
depending on the specific facts of the designation. The discretionary 
nature of this process has most recently been upheld in Building 
Industry Ass'n of the Bay Area v. U.S. Dep't of Commerce, 2012 U.S. 
Dist. Lexis 170688 (N.D. Cal. Nov. 30, 2012). We note that the Services 
are particularly likely to conduct this discretionary analysis if the 
consideration of impacts mandated under the first sentence suggests 
that the designation will have significant incremental impacts, and, 
generally, the Services' practice is to exclude an area from a 
designation when the benefits of exclusion outweigh the benefits of 
inclusion, provided that the exclusion will not result in the 
extinction of the species.
    There is no single approach for evaluating and weighing incremental 
impacts resulting from a designation of critical habitat against the 
conservation needs of a species. Thus, the Secretaries must retain 
discretion in choosing the methods of evaluating these issues in the 
context of a particular designation. The Secretaries have broad 
discretion whether to exclude or not (Building Industry Ass'n of the 
Bay Area v. U.S. Dep't of Commerce, 2012 U.S. Dist. Lexis 170688 (N.D. 
Cal. Nov. 30, 2012)); the only conditions are that we must consider 
economic impacts, impacts to national security, and other relevant 
impacts; and we may not exclude an area when such exclusion will result 
in the extinction of the species. As discussed above, The Services' 
ability to apply this discretion is fully consistent with E.O. 12866, 
E.O. 13563, or the Presidential memorandum. The existence of the 
agencies' broad discretion does not mean that section 4(b)(2) of the 
Act serves no purpose. Section 4(b)(2) of the Act gives the agencies 
authority to exclude, absent which exclusions from critical habitat 
would not be possible. This authority serves an important purpose 
(although not the purpose of allowing others to force the agencies to 
exercise that authority).
    Comment (45): The Act requires that, when the economic costs 
outweigh the benefits of designating critical habitat in a certain 
area, the Secretaries must exert their discretion to exclude that area 
from the designation.
    Response: We disagree. The Act is quite clear and specifically 
states that the Secretaries ``may exclude''--we interpret this to mean 
exclusions are always discretionary and never mandatory. This 
interpretation has been upheld by the courts (Building Industry Ass'n 
of the Bay Area v. U.S. Dep't of Commerce, 2012 U.S. Dist. Lexis 170688 
(N.D. Cal. Nov. 30, 2012)). Therefore, exclusion of a particular area 
is never mandatory.
    Comment (46): The Services' section 4(b)(2) impact analyses should 
be reviewable. The proposed regulation would establish that the 
Secretaries' decision not to exclude an area from critical habitat 
regardless of the result of the economic impact analyses would not be 
reviewable. Under the APA, agencies must respond to ``significant 
comments.'' The failure of the Services to provide a meaningful 
response to a request made by the public or other entity, such as by 
providing findings regarding relative costs and benefits of designating 
a particular area, would be arbitrary, capricious, and in violation of 
the law. Further, if the Secretaries reject a request to exclude an 
area from critical habitat, and provide an explanation for that 
decision, that decision would be subject to APA review.
    Response: Recent case law supports our conclusion that exclusions 
are discretionary and the discretion not to exclude an area is 
judicially unreviewable (Building Industry Ass'n of the Bay Area v. 
U.S. Dep't of Commerce, 2012 U.S. Dist. Lexis 170688 (N.D. Cal. Nov. 
30, 2012)). While the Services will consider all significant comments, 
this process does not alter the fact that the Secretary has discretion 
as to whether to enter into the exclusion analysis under section 
4(b)(2) of the Act and whether to exclude any particular areas. For 
example, an appropriate response to a comment seeking to force an 
exclusion analysis and subsequent exclusion would be that the Secretary 
has considered the relevant impacts under the first sentence of section 
4(b)(2) of the Act but declines to exercise the Secretary's discretion 
to make an exclusion.
    Comment (47): The public should be able to review and comment on 
the Secretary's rationale for an exclusion.
    Response: In some cases, the Services are able to provide the 
public with opportunity to review and comment on particular areas 
considered for, or proposed for, exclusion from a designation of 
critical habitat. In other instances, the Services may not know which 
areas will be considered or ultimately excluded from the final 
designation of critical habitat until after receiving public comment. 
If the Secretary chooses to exercise his or her discretion to exclude a 
particular area, the discretionary 4(b)(2) exclusion analysis will be 
presented in the final rule designating critical habitat and supporting 
information will be contained in the administrative record for the 
action. The rationale supporting the exclusion is then available for 
review. This procedure is consistent with the APA. See 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) (specific 
exclusion from critical habitat in final rule was a logical outgrowth 
of the proposed rule because the proposed rule had sought comment on 
whether any areas should be excluded).
    Comment (48): The second sentence indicates that ``the Secretary 
may consider and assign the weight to any benefits relevant to the 
designation of critical habitat.'' This language is an attempt to 
authorize the Secretary to consider factors beyond those specified in 
the Act, which are those directly related to the conservation of the 
species that is the subject of the designation.
    Response: We disagree. The first sentence of section 4(b)(2) of the 
Act requires consideration of ``any'' relevant impacts of designation, 
and the second sentence of section 4(b)(2) of the Act places no 
limitations as to the nature of the benefits that may be weighed in the 
discretionary process of considering exclusions. Nothing in the Act 
suggests that only factors directly related to conservation of the 
species can be

[[Page 53073]]

considered in implementing section 4(b)(2) of the Act. Section 4(b)(2) 
of the Act is inherently broad, and the regulation reflects the manner 
in which the Secretary should use that authority.
    Comment (49): Paragraph (c) should be revised to specifically 
acknowledge and analyze the combined State, local, and volunteer 
conservation-related protections for a species, and the Services should 
compare these protections to the benefits of a critical habitat 
designation. Paragraph (c) should be revised to include language 
defining benefits as including, but not limited to, local and regional 
economic development and sustainability, energy development and 
security, American job security, and volunteer conservation mitigation 
measures.
    Response: While items such as those enumerated in the comment may 
well be relevant in a particular designation and may be considered if 
there is available information, the Services' intent in promulgating 
this revised regulation is to preserve the discretion and flexibility 
to shape the analysis as appropriate for each situation rather than to 
prescribe certain criteria for the discretionary analysis under the 
second sentence of section 4(b)(2) of the Act. Our intent in setting 
forth paragraph (c) is only to restate Secretarial discretion as 
provided by the Act and Congressional intent, and confirmed in relevant 
case law.
    Comment (50): One commenter suggested that we revise paragraph (c) 
to clarify that any exclusion is not set forth until the rule is 
finalized; the commenter suggested the language ``exclude any 
particular area from the [final] critical habitat.''
    Response: While we appreciate the comment, we find that the edit is 
not necessary, because anything set forth in a proposed regulation does 
not have the force of law until the rule is finalized and effective.
    Comment (51): Add language to paragraph (c) to clarify that the 
Secretary has discretion to exclude areas from the ``final'' critical 
habitat ``designation'' upon a determination ``supported by the 
record.''
    Response: We agree that decisions set forth in each rulemaking must 
be supported by the record. In fact, rational decisionmaking supported 
by the administrative record is a bedrock principle of the APA that 
applies to all final agency actions, and as such, does not need to be 
codified within this regulation.
    Comment (52): The discretionary 4(b)(2) exclusion analysis must 
occur prior to including any specific area as critical habitat or 
excluding any specific area from critical habitat in the proposed rule.
    Response: Initially, to the maximum extent prudent and 
determinable, the Services are required to identify those specific 
areas that meet the definition of critical habitat (in 16 U.S.C. 
1532(5)), based on the best scientific data available. Subsequently, 
the Secretaries must consider the economic impact, the impact to 
national security, and any other relevant impact of designating any 
particular area as critical habitat. See 16 U.S.C. 1533(b)(2). We agree 
with the commenter that the Secretaries may exclude a particular area 
from critical habitat only after conducting a discretionary 4(b)(2) 
exclusion analysis (though such weighing and development of a 4(b)(2) 
report could be undertaken prior to release of the proposed rule). 
However, we note that the determination of areas meeting the definition 
of critical habitat is a biological determination and not done via a 
discretionary 4(b)(2) exclusion analysis.

Comments Regarding the Services' Response to the Presidential 
Memorandum

    Comment (53): The proposed rule does not meet the Executive Order 
13563 (January 18, 2011) objectives of promoting predictability and 
reducing uncertainty in regulatory processes. The Services should 
implement the Presidential memorandum of February 28, 2012, in a way 
that is consistent with the entire suite of regulation reform 
directives. The proposed regulation revision is inconsistent with the 
intent of the Presidential memorandum in that it does not promote 
``economic growth, innovation, competitiveness, and job creation,'' nor 
does it avoid the imposition of unnecessary costs and burdens to 
enhance regulatory flexibility. The Services go beyond the Presidential 
memorandum to advance vague standards that can further weaken economic 
impact analysis.
    Response: Many commenters misinterpreted the scope of the 
Presidential memorandum. The Presidential memorandum was issued in 
response to the proposed revised critical habitat designation for the 
northern spotted owl, and focused specifically on the rulemaking 
process for that regulation, as evidenced in the title, Presidential 
Memorandum--Proposed Revised Habitat for the Spotted Owl: Minimizing 
Regulatory Burdens. Due to: (1) Concern for not having the economic 
analysis available with the proposed revised critical habitat for the 
northern spotted owl that would allow for the evaluation of effects, 
and (2) FWS' interpretation that the existing regulations limited the 
ability to provide the economic analysis concurrent with proposal, the 
memorandum further directed the Secretary to revise the relevant 
regulation to shift the timing of the economic analysis such that all 
subsequent critical habitat proposals would be published with a 
concurrent economic analysis. As a result, the core of the memorandum 
speaks to the designation process of the rulemaking for the northern 
spotted owl. This regulation addresses only that portion of the 
memorandum that requires a shift in the timing of the economic 
analysis. Further, the Services chose to revise the regulation to 
codify established interpretation, practices, and prevailing case law. 
We conclude that doing so will in fact provide clarity, promote 
predictability, and reduce uncertainty, consistent with Executive Order 
13563.
    Comment (54): One commenter asked the Services to explain how the 
proposed regulation change will decrease uncertainty and improve public 
participation, as directed by the Presidential memorandum.
    Response: The revisions set forth in this regulation will provide 
clarity, promote predictability, and reduce uncertainty by making the 
economic analyses available concurrently with proposals to designate 
critical habitat so that the public has both the impact analysis and 
the proposal available for comment concurrently earlier in the process. 
The Presidential memorandum states ``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.'' We conclude that this regulation will 
achieve that goal. Further, the Services chose to address other 
relevant points within the revised regulation to codify established 
interpretation, practices, and prevailing case law, which also should 
decrease uncertainty and improve public participation.
    Comment (55): Several commenters interpreted the Presidential 
memorandum to broadly instruct the Services to consider lessening the 
regulatory impacts on private and State land owners, and consider 
impacts to jobs.
    Response: Please refer to our response under Comment 53, above.
    Comment (56): The Services assert that they will use their current 
regulation until the new regulation is finalized, yet it used the 
proposed process in the recent rulemaking for the

[[Page 53074]]

northern spotted owl. This appears to be a predecisional process 
approach for the final northern spotted owl regulation and for this 
proposed regulation.
    Response: For the rulemaking for the northern spotted owl proposed 
revised critical habitat, the FWS followed the existing regulatory 
procedure set forth in 50 CFR 424.19 regarding the timing of the draft 
economic analysis, because it was made available following the 
publication of the proposed designation. The draft analysis used the 
incremental approach to evaluating impacts, which is consistent with 
agency practice since 2007, the Solicitor's memorandum (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) and case law in the Ninth Circuit. Thus we did not 
use a predecisional approach for the northern spotted owl revised 
critical habitat, but followed our normal practice.
    Comment (57): The Services are improperly interpreting the February 
28, 2012, Presidential memorandum, in which the Secretary of the 
Interior was simply directed to provide a draft economic analysis at 
the time of publication of the proposed northern spotted owl critical 
habitat rule. The Presidential memorandum did not require the Service 
to proceed with national rulemaking nor provide direction to utilize 
the incremental analysis in future critical habitat rulemaking.
    Response: The Presidential memorandum specifically directs the 
Secretary of the Interior to ``take prompt steps to propose revisions 
to the current rule (which, as noted, was promulgated in 1984 and 
requires that an economic analysis be completed after critical habitat 
has been proposed) 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.'' While the Presidential 
memorandum directed the Secretary of the Interior to revise the 
regulations to shift the timing of the economic impact analysis for 
critical habitat designation, it did not limit the scope of the 
revision to the regulations. To further provide clarity, promote 
predictability, and reduce uncertainty, the Services chose to address 
other relevant points within the revised regulation to codify 
established interpretation, practices, and prevailing case law.

Comments Not Directly Relevant to This Regulation

    Comment (58): We received numerous specific comments in several 
categories which were not directly relevant to the regulation and are, 
therefore, not addressed in this section. Below, we provide a summary 
of the topic areas that these comments encompass. While not directly 
relevant to this regulation, we may address some of these issues in 
future rulemaking and policy development by the Services.
    (1) Providing guidance for the methodology for conducting economic 
analyses including data collection from and coordinating with 
potentially affected parties;
    (2) Specific methodology for evaluation of direct and indirect 
economic effects;
    (3) The relationship between critical habitat and recovery;
    (4) The detrimental effect critical habitat may have on 
partnerships; and
    (5) Tribal sovereignty and coordination.

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.
    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 final rule is consistent with Executive 
Order 13563 because it is 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 certified at the proposed rule 
stage that this action would not have a significant economic effect on 
a substantial number of small entities. The following discussion 
explains our rationale.
    This final rule 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 final 
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 revisions discussed in this final 
regulatory revision 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 regulated 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.
    We received no comments on the economic impact of this rule or the 
certification. A final regulatory flexibility analysis is not required, 
and one was not prepared.

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.):

[[Page 53075]]

    (a) On the basis of information contained in the ``Regulatory 
Flexibility Act'' section above, these final 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 
final regulations would not place additional requirements on any city, 
county, or other local municipalities.
    (b) These final 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 final rule is not a 
``significant regulatory action''' under the Unfunded Mandates Reform 
Act. These final regulations would impose no obligations on State, 
local, or tribal governments.

Takings (E.O. 12630)

    In accordance with Executive Order 12630, these final regulations 
would not have significant takings implications. These final 
regulations would not have any actual impacts to the environment or to 
private property interests, because they will not result in changes to 
applicable standards for identifying and designating critical habitat, 
the level of opportunity for public comment on critical habitat 
designations, or the outcome of critical habitat determinations. 
Because these final regulations affect only procedural or 
administrative matters, such as the timing of when the draft economic 
analysis will be prepared, they would not have the effect of compelling 
a property owner to suffer any physical invasion of their property; and 
would not deny any use of the land or aquatic resources. Moreover, 
there would be neither any burden to public property from the 
regulations nor any barrier to reasonable and expected beneficial use 
of private property.

Federalism (E.O. 13132)

    In accordance with Executive Order 13132, we have considered 
whether these final regulations would have significant Federalism 
effects and have determined that a Federalism assessment is not 
required. These final 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 final regulations do not unduly burden the judicial system 
and they meet the applicable standards provided in sections 3(a) and 
3(b)(2) of Executive Order 12988. These final 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 final 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 final rule does not contain any new collections of information 
that require approval by the OMB under the Paperwork Reduction Act. 
This final 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 have analyzed this rule in accordance with the criteria of the 
National Environmental Policy Act (NEPA) (42 U.S.C. 4332(c)), the 
Council on Environmental Quality's Regulations for Implementing the 
Procedural Provisions of NEPA (40 CFR parts 1500-1508), the Department 
of the Interior's NEPA procedures (516 DM 2 and 8; 43 CFR part 46), and 
NOAA's Administrative Order regarding NEPA compliance (NAO 216-6 (May 
20, 1999)).
    We have determined that this rule is categorically excluded from 
NEPA documentation requirements consistent with 40 CFR 1508.4 and 43 
CFR 46.210(i). This categorical exclusion applies to policies, 
directives, regulations, and guidelines that are ``of an 
administrative, financial, legal, technical, or procedural nature.'' 
This action does not trigger an extraordinary circumstance, as outlined 
in 43 CFR 46.215, applicable to the categorical exclusion. Therefore, 
this rule does not constitute a major Federal action significantly 
affecting the quality of the human environment.
    We have also determined that this action satisfies the standards 
for reliance upon a categorical exclusion under NOAA Administrative 
Order (NAO) 216-6. Specifically, this action fits within the 
categorical exclusion for ``policy directives, regulations and 
guidelines of an administrative, financial, legal, technical or 
procedural nature.'' NAO 216-6, section 6.03c.3(i). This action would 
not trigger an exception precluding reliance on the categorical 
exclusion because it does not involve a geographic area with unique 
characteristics, is not the subject of public controversy based on 
potential environmental consequences, will not result in uncertain 
environmental impacts or unique or unknown risks, does not establish a 
precedent or decision in principle about future proposals, will not 
have significant cumulative impacts, and will not have any adverse 
effects upon endangered or threatened species or their habitats. Id. 
section 5.05c. As such, it is categorically excluded from the need to 
prepare an Environmental Assessment. In addition, NMFS finds that 
because this rule will not result in any effects to the physical 
environment, much less any adverse effects, there would be no need to 
prepare an Environmental Assessment even aside from consideration of 
the categorical exclusion. See Oceana, Inc. v. Bryson, No. C-11-6257-
EMC, 2013 WL 1563675, *24-25,--F. Supp. 2d--(N. D. Cal. April 12, 
2013). Issuance of this rule does not alter the legal and regulatory 
status quo in such a way as to create any environmental effects. See 
Humane Soc. of U.S. v. Johanns, 520 F. Supp. 2d. 8, 12 (D.D.C. 2007).

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

    Executive Order 13211 requires agencies to prepare Statements of 
Energy Effects when undertaking certain actions. These final 
regulations 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.

[[Page 53076]]

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.

Regulation Promulgation

PART 424--[AMENDED]

0
1. The authority citation for part 424 is revised to read as follows:

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

0
2. Revise Sec.  424.19 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.
    (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 mandatory consideration of impacts conducted pursuant 
to paragraph (b) of this section, the Secretary may assign the weight 
given 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: May 14, 2013.
Rachel Jacobson,
Principal Deputy Assistant Secretary for Fish and Wildlife and Parks, 
U.S. Department of the Interior.
    Dated: August 20, 2013.
Alan D. Risenhoover,
Director, Office of Sustainable Fisheries, performing the functions and 
duties of the Deputy Assistant Administrator for Regulatory Programs.
[FR Doc. 2013-20994 Filed 8-27-13; 8:45 am]
BILLING CODE 4310-55-P; 3520-22-P