3.

already uses "template" HCPs in some areas to assist small landowners, but eliminating unnecessary HCP sections would aid small landowners still more. It would also increase support for the HCP program, since procedural requirements with little practical value tends to generate public skepticism. FWS is already revising its NEPA regulations to categorically exclude low-effect HCPs.

Section 7 of the ESA requires federal agencies to consult with the FWS whenever any
action they authorize, fund, or carry out may affect a listed species. Under the
Section 7 regulations, such consultation can conclude informally if the federal agency
determines-with written FWS concurrence-that the proposed action "is not likely to
adversely affect" the species or its critical habitat (formal consultation requires
preparation of a full biological opinion). In the case of an HCP, FWS is the federal
agency and the action being consulted on is issuance of the permit. In the case of a
"low-effect" HCP, since take is authorized by the incidental take permit (not the
incidental take statement in a biological opinion, as in most federal actions) and the
effects of the take are by definition minor (i.e., not likely to adversely affect the
species), informal consultation might be possible and could help streamline the permit
review process.

This leaves open the question whether Section 7 consultation should be required for
larger-scale HCPs, and the relationship generally between the Section 7 and Section
10 programs. Congress should clarify its intent about the level of Section 7 review
required for HCPs in light of current practice and existing duplication between the
two programs.

The above changes could be accomplished by policy revisions, federal regulation, or legislation. At a minimum, Congress should explicitly recognize the need for a streamlined HCP process for small landowners and other low-effect HCPs and should mandate development of specific, integrated procedures for addressing this problem.

Eliminating or relaxing NEPA requirements from the HCP process would obviously save both time and money. However, such savings would ultimately have to be balanced against a reduced scope of analysis of environmental effects.

One alternative to the NEPA problem would be to prepare EAs for all categories of HCPs. Currently, an HCP requires an EIS if the activities it addresses are expected to have major environmental effects significantly affecting the quality of the human environment. However, document preparation and public notification requirements for EAs are considerably simpler and more flexible than for EISS. Another alternative would be to include a NEPA-style alternatives analysis within the HCP. This would expand the alternatives analysis currently required by Section 10 from a consideration of endangered species effects only to consideration of all environmental effects. These options could achieve a balance between the need to make informed environmental decisions and doing so in an expedited and cost-efficient manner.

4.

5.

The primary risk of an expedited HCP process and "short-form" HCP is that the impacts of multiple low-effect projects might become cumulatively significant. This might happen, for example, if excessive habitat, important habitat elements, or genetically important individuals were lost because of uncoordinated or inadequately considered permit issuance. The methods suggested in the proposal are intended to prevent this result.

What constitutes a "taking" is not always clear, particularly where the "harm" and
"harass" definitions are involved. Private landowners consequently may be uncertain
whether specific activities are likely to result in a prohibited taking and therefore
require a Section 10 permit. FWS staffs may also be uncertain about where,
precisely, an action triggers a "harm" or "harassment." FWS would assist
landowners and their own staffs by more clearly defining such take thresholds (see
Guidance at the Time of Listing for further discussion of this topic).

Section 10(a)(2)(B) provides statutory criteria for issuing Section 10 permits. These are necessarily broadly defined, first, because they are not biological standards per se, and, second, because they must address numerous species, which may differ extensively in biology and status. FWS could clarify significantly how it determines HCP adequacy by developing a set of general biological standards applicable to all HCPs and species (similar to those described in the "No Surprises" policy), and more specific standards for individual species where appropriate.

Seed Money for Community-Based HCPs

Problem

In 1982, Congress recognized that the ESA's ban on the take of threatened and endangered species could substantially restrict the use of private lands and thus created a process in Section 10 of the Act by which the Secretary of the Interior or Commerce could issue a permit to a private or other nonfederal person to allow the incidental take of a listed species in the course of otherwise lawful activity and, thus, avoid the take prohibitions of Section 9. The permit applicant must present an HCP that, among other things, demonstrates the steps the applicant will take to minimize and mitigate the impacts of its proposed activities on listed species and the funding that will be available to carry out those steps.

The primary benefit of HCPs is the regulatory certainty they provide to private landowners in long-term land use planning activities and the flexibility they offer in designing integrated conservation and land use programs. This is especially true of large-scale, regional, or multiple-species HCPs of the type often undertaken by local communities or large corporations.

The problem is that developing HCPs of this type can be very expensive-particularly with HCPs pursued by local jurisdictions or other entities (e.g., special districts, land trusts) that affect large planning areas and numerous landowners and land use activities. Local government permittees in effect act as an agent for all their citizens in the HCP process, must balance diverse community interests, and often must support the process without a lot of cash reserves.

Initiating and completing a community-level or region-wide HCP usually requires advance biological studies, administrative support, and full-time consultants to collect data, facilitate negotiations, and prepare the HCP and associated documents. All this can take years and cost thousands of dollars.

Community-level HCP applicants often must struggle to financially support their HCP development programs. The situation often improves once the HCP is approved and being implemented because funding mechanisms by then are in operation. It is the initial investment-the start-up capital-that can be particularly difficult to obtain, and a shortage of such funds may act as a disincentive for some communities to embark on the process. Conversely, availability of funding assistance or "seed money" for initiating HCP programs would encourage communities to pursue HCPs, facilitate the process once begun, and send a message that the government values their efforts.

Proposal

Congress and the FWS could significantly assist the conservation of endangered species on private lands by establishing an HCP development assistance program. This could be done by establishing a program that provides "seed money" to local communities, other government jurisdictions, or other multi-landowner entities that commit to the HCP process. These funds could be provided through special appropriations, grant or matching grant funds, a revolving loan fund (RLF), or other mechanisms. The approach suggested here is the creation of an RLF. Such funds should go first to a public entity, then, where appropriate, be funneled to other organizations, coalitions, etc. To the maximum extent possible, the money should be loaned to the parties responsible for the development of the HCP.

Discussion

Congress should explicitly recognize the benefit of partnerships between the public and private sector, and the advantages to communities, landowners, and species represented by multi-landowner HCPs of appropriate biological and jurisdictional scales.

While there are benefits to HCP applicants of grant funds, the advantage of an RLF is that these loans would be repaid by the recipient and the fund would become self-financing and "revolve," thus removing any need for continued federal funding. Under this proposal, federal funds would be provided to state and local governments to be used as loans to help defray the costs of the development of HCPs. This could possibly be accomplished through

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a limited number of appropriations, perhaps even a one-time appropriation of approximately $25 million.

Because this source of funding could comprehensively address the costs associated with HCP development for an ecosystem, it would greatly reduce transaction costs. It would further facilitate multi-party regional planning and the development of habitat-specific or multispecies HCPs involving one or more local governments, as opposed to providing funding for a single landowner.

RLFs have proven successful in other contexts. This approach has been proposed by the Administration and supported by states and local governments as a funding source for activities under the Safe Drinking Water Act, including both infrastructure and operating costs. It makes maximum use of federal grant funds by requiring the use of loans that are intended to ultimately replace the need for continued federal funding. This would be even more true if state matching funds were required. The proposal would limit the use of the funds to activities for which a revenue stream would be created, thus ensuring repayment of the loan.

Seed money could take other forms as well, such as grants, matching grants, or Congressional appropriations. Precedent for Congressional appropriation assistance was established when, between 1992 and 1994, Congress appropriated $298,000 to support development of the Brevard County HCP in Florida.

Considering the diverse benefits, an HCP assistance program that helps communities develop regional- or community-level HCPs would be money well spent.

"No Surprises" Policy

Problem

A major mechanism for reconciling private land use with listed species conservation under the ESA is habitat conservation planning authorized under Section 10(a)(1)(B) of the Act. The primary incentive for obtaining an HCP permit is the regulatory certainty it is supposed to provide landowners during the life of the HCP. It is, therefore, essential for participating landowners that the original HCP "deal remain a deal." In particular, landowners have indicated that greater assurances are needed to ensure that HCP agreements, implemented in good faith by the affected landowner, will not be reopened at a later time with greater mitigation demands for more money or more land. The issue thus becomes how to provide such assurances, even if the needs of the affected species changed over the life of the HCP permit.

Proposal

On August 11, 1994, Secretary Babbitt announced the Administration's new HCP "No Surprises" policy designed to provide the additional assurance of certainty sought by landowners considering HCPs. The "No Surprises" policy stated that the FWS would not require additional land or financial compensation beyond the level of mitigation initially agreed to under the terms of a properly functioning HCP.

The policy also stated the general principle that if additional mitigation measures which had otherwise been adequately covered under the terms of an HCP, were subsequently deemed necessary for the conservation of a species, the obligation for such mitigation would be carried by the FWS and others, not the HCP permittee. The policy stated that if extraordinary circumstances nevertheless warranted a review of the mitigation package for a given HCP, any such reconsideration would be limited to potential modifications within any conserved habitat areas or to the HCPs operating conservation program, and, that no additional changes could be required that would involve the payment of additional money or restrictions on additional land without the consent of the HCP permittee.

While the "No Surprises" policy has received wide support from landowners considering HCPs, the Dialogue Group agreed that the policy should be converted from an administrative policy statement into permanent language within the ESA.

Discussion

Reforms of the HCP process occur within the context of a broader debate about the appropriateness of ESA regulatory controls on the use of private lands. Recognizing that this broader issue will be extensively debated by Congress, this proposal regarding the "No Surprises" policy assumes for purposes of discussion only the continued existence of some form of land use restrictions under the ESA.

The ESA presently relies upon HCPs as a major vehicle for reconciling the use of private lands with endangered species conservation. As previously noted, regulatory certainty is perhaps the primary incentive associated with an HCP. To the extent that the "No Surprises" policy provides such certainty for species that are adequately provided for under an HCP, statutory ratification of the policy ensures permanency of the policy.

The risk associated with the policy is that a given species covered by an HCP incidental take permit could still experience a decline in its population despite the mitigation plan under the HCP. Because of the "No Surprises" assurances provided to HCP permittees, however, the range of remedial options available to the FWS may be constrained or limited. Thus, the policy represents a trade-off between certainty and conservation flexibility in the face of unforeseen circumstances.