1. The Endangered Species Act The Implications for Electric Utilities Thomas C. Jackson Baker Botts L.L.P. Thomas.jackson@bakerbotts.com November 2005

2. The ESA is still the “pit bull” of environmental law The Act provides protections for: –Listed species and their habitat (§§ 7 and 9) –Critical habitat (§ 7)

3. ESA potentially affects electric utilities in myriad ways: –Construction of new generating facilities, substations, power lines –Construction and operation of wind turbines –Construction and generation of hydropower facilities

4. Presence of a member of an endangered or threatened species or its habitat can: –Trigger need for extensive surveys and studies –Result in project delays –Result in loss of power generation –Trigger need for an incidental take permit –Trigger need for mitigation measures

5. Reach of the Act is broad: –Currently 1,269 species in the U.S. listed as endangered or threatened (524 animals, 745 plants) –Species are found in all 50 states (and DC), with heavy concentrations in HI, CA, TX, AZ and the Southeast –Currently 283 candidate species

6. LISTING ISSUES Bush Administration has listed very few species –Budget constraints Environmental groups continue to file listing petitions –E.g., petition to list 225 candidate species

7. LISTING ISSUES Continued litigation over listing actions and inaction leads to continued pressure on FWS to list additional species –Most recent listings driven by court order –Lawsuit by Center for Biological Diversity and others seeking imposition of a schedule for listing all current candidate species

8. LISTING ISSUES Status of “species” depends in part on how it is defined –Species, subspecies, distinct population segment (or ESU) Defenders of Wildlife v. DOI (D. Or. 1/31/05) - Court rejected FWS attempt to divide gray wolf population into only 3 DPSs due to perceived effort to downlist large geographic areas based on recovery in limited area

9. –Where you look - is species endangered throughout all or a significant portion of its range Defenders - must consider historic range of gray wolf, not just current range or areas necessary to ensure viability of species

10. SALMON ESUs Alsea Valley Alliance (9th Cir. 2001) - court overturns listing of Oregon Coast coho salmon because it did not include hatchery populations

11. SALMON ESUs New hatchery policy adopted in June - hatchery populations to be considered in listing determinations in appropriate circumstances; NOAA Fisheries will consider impact of hatchery population on wild populations NOAA fisheries has generally maintained the listing status of West Coast salmon ESUs

12. CRITICAL HABITAT DESIGNATION Required by statute but long ignored by FWS FWS has made it clear that it does not believe CH adds much protection for listed species

13. CRITICAL HABITAT DESIGNATION But environmental groups continue to push for designation of CH, e.g., Canada lynx Critical habitat now designated for 466 species; by some estimates covers 40% of California Landowners continue to challenge CH designations - e.g., California gnatcatcher, red-legged frog, piping plover

14. CRITICAL HABITAT DESIGNATION Several recent decisions require more precise explanation by FWS of basis for designation, including identification of primary constituent elements and determination of what habitat is occupied –E.g., Cape Hatteras Access Preservation Alliance (2004); Home Builders Ass'n of N. Cal. (2003)

15. CRITICAL HABITAT DESIGNATION FWS has adopted a policy of excluding many areas from designation –Areas covered by approved HCPs –Areas covered by other types of plans (federal, state, local, plans) –Tribal lands –Economic impacts

16. CRITICAL HABITAT DESIGNATION Some exclusions have been challenged in court FWS has issued memorandum outlining policy; additional guidance expected –Recognizes value of promoting partnerships with landowners –Rejects use of "precautionary principle" in designating critical habitat

17. ADVERSE MODIFICATION Section 7 of the ESA prohibits federal agencies from engaging in activities that jeopardize the continued existence of a species or adversely modify critical habitat

18. ADVERSE MODIFICATION Long defined by FWS as "alteration that appreciably diminishes the value of critical habitat for both the survival and recovery of a listed species" –Substantial overlap with definition of "jeopardy,“ which is defined as appreciably diminishing the likelihood of both survival and recovery of a species

19. ADVERSE MODIFICATION Long term effort by environmental groups to strengthen adverse modification prohibition Sierra Club (2001) - Fifth Circuit invalidates adverse modification definition –Rejects requirement that activity affect both survival and recovery as inconsistent with the statute, which defined “critical habitat” as areas with features essential to the conservation of the species and “conservation” as recovery

20. ADVERSE MODIFICATION Recent decisions - Gifford Pinchot (9th Cir. 2004), American Motorcycle Ass'n (N.D. Cal. 2004) - agree with Sierra Club and put added pressure on FWS to redefine adverse modification FWS internal guidance states that it will no longer rely on the regulatory definition of adverse modification but has yet to propose a replacement

21. JEOPARDY STANDARD Forest Guardians v. Veneman (D. Ariz. 3/31/05) - reasoning of Gifford Pinchot applies to definition of “jeopardy” as well –Federal action jeopardizes the continued existence of a species if it reduces appreciably the likelihood of recovery

22. SCOPE OF SECTION 7 OBLIGATIONS 7(a)(2) - Defenders of Wildlife v. EPA (9th Cir. 2005) - obligation to ensure against jeopardy not constrained by Agency’s organic statute 7(a)(1) - Florida Key Deer (S.D. Fla. 3/29/05) - Agency obligation to use authorities to conserve species not satisfied by general program; agency must take specific steps to conserve specific species

23. HCPs Hundreds of HCPs now in place –Increase in program activity coincided with FWS adoption of "No Surprises" policy No Surprises litigation –Spirit of the Sage (D.D.C. 2003) - Court overturned FWS regulation establishing new permit revocation standards for HCPs that implement the "No Surprises" policy

24. HCPs –FWS reissued regulation in essentially the same form –Litigation is continuing

25. REFORM EFFORTS H.R. 3824 - Threatened and Endangered Species Recovery Act of 2005 –Makes a number of significant changes to ESA Eliminates critical habitat provisions Establishes new incentive programs Allows for alternative consultation procedures for specific categories of actions

26. REFORM EFFORTS Eliminates the “God Squad” Requires payment of aid to property owners who forego a final use determined by FWS to be inconsistent with Section 9 take prohibition Eliminates NOAA jurisdiction –Passed by House –Uncertain prospects in Senate