January 01, 2015

Reconciling the Endangered Species Act and Large-Scale Renewable Energy Projects

Jill E.C. Yung and Matthew J. Sanders

Concern about climate change, controversy over hydraulic fracturing, a desire for energy independence and security—these and other factors virtually guarantee that we will obtain an increasing share of our energy from renewable energy projects. But there is no free lunch. Like all energy development projects, utility-scale solar and wind projects come with certain environmental costs. In particular, the large footprints of these projects can have considerable impacts on species listed as endangered and threatened under the federal Endangered Species Act (ESA). 16 U.S.C. §§ 1531–1544.

Renewable energy developers generally agree with campaigns by environmentalists, government officials, and members of the public to prevent or reduce adverse impacts to protected species, but infrastructure and demand constraints can interfere with efforts to implement these aspirations. To meet conservation objectives in the face of these constraints, a nearly unanimous chorus of authors, speakers, policymakers, and public advocates advise us to “coordinate early,” “think large-scale,” and “plan comprehensively.” These ideas make sense in the abstract, but what do they actually mean? And how do we implement them to help imperiled species not just survive, but recover? This article aims to answer these questions by revisiting the ESA’s mandates, evaluating agencies’ current approaches to species conservation in the context of large-scale wind and solar projects, and providing suggestions for how to produce better outcomes.

We begin with the basics: the effects of large-scale wind and solar projects on endangered and threatened species and the relevant provisions of the ESA. Large-scale solar and wind projects can, in ESA parlance, “take” (kill, harm, harass, etc.) protected species and destroy or fragment their habitat. 16 U.S.C. § 1532(19) (defining “take”). Projects can also diminish the value of movement corridors and habitat linkages, which may be especially important for species resilience in the face of climate change. When solar and wind projects are sited and designed well, they can avoid or minimize many impacts and may even spur and fund conservation or mitigation efforts that lead to improvements for protected species. Stakeholders can, however, harbor divergent views regarding what factors, and in particular in what combination, provide the most sound avoidance guidance, which complicates efforts to design universally acceptable projects.

In most instances, the Secretary of the Interior, acting through the U.S. Fish & Wildlife Service (FWS), is the final arbitrator when conflicts between renewable generation projects and our most limited biological resources arise. Tasked pursuant to the terms of the ESA with identifying, evaluating, and minimizing impacts to terrestrial and freshwater-based species that are (or might need to be) listed as threatened or endangered, the FWS serves as the primary guardian entrusted to conserve hundreds of listed species. Due to the many constituent parts of the ESA, however, implementing this mandate is not as straightforward as it might sound. The ESA, like many environmental laws, can fairly be read in different ways to emphasize different mandates. On the one hand, sections 2 and 4 set forth a broad conservation mandate. Section 2 states that the ESA’s purposes are to provide a program for conserving endangered and threatened species, including the ecosystems on which they depend, and to take steps to achieve the purposes of conservation-oriented international treaties and conventions listed in that section. Section 4, meanwhile, directs the secretary to issue regulations and “recovery plans” required for species conservation, with the ultimate goal declassifying species as threatened or endangered. 16 U.S.C. § 1533(f). Consistent with these provisions, section 3 of the ESA defines “conservation” to mean recovery (i.e., using “all methods and procedures . . . to bring any endangered species or threatened species to the point at which [the ESA’s] measures . . . are no longer necessary”) and “critical habitat” to mean habitat “essential for the conservation of the species.” 16 U.S.C. § 1532(3), (5). Section 4 also gives FWS several tools to pursue these objectives and promote the recovery of endangered and threatened species, including, among other things, the authority to list species for protection, to issue “protective regulations” that permit some “take” in exchange for compliance with a recovery-oriented program, to designate critical habitat, and to develop and implement recovery plans. 16 U.S.C. § 1533(a), (c), (d), (f). Section 9 provides for prosecution of unauthorized “takes.” 16 U.S.C. § 1538.

Despite the ESA’s broad focus and large toolkit, however, project-specific take analyses, consistent with the authorities governing such precise matters, tend to consider only (1) whether circumstances require the project proponent to obtain the FWS’s blessing to avoid liability for an unauthorized take, and (2) in instances where FWS grants such authorization, whether the agency reasonably determined that an otherwise lawful activity would not “jeopardize the continued existence” of the species in accordance with section 7(a)(2) (public land projects) or “appreciably reduce the likelihood of the survival and recovery of the species in the wild” in accordance with section 10 (private land projects). These standards impose a fairly low bar, perhaps ensuring that imperiled species do not reach a point of no return, but doing little to truly facilitate recovery. See 40 C.F.R. §§ 402.02, 402.14(g)(6) (requiring FWS to consider including in a biological opinion only discretionary “conservation recommendations”); FWS & Nat’l Marine Fisheries Serv., Endangered Species Consultation Handbook xii, 4–63 (Mar. 1998) (Consultation Handbook).

Obstacles to Ensuring Recovery and Still Achieving Renewable Energy Targets

If we accept that the ESA’s purposes and provisions can and should be applied more broadly—that biological conservation is a desirable (indeed, the most desirable) outcome—then we must acknowledge the tension in the ESA’s mandates and seek to resolve it in favor of tools that promote the recovery of protected species, not just avoid their jeopardy. Although such an orientation is not expressly required in the context of project-specific decisions, we submit that, as a policy matter, emphasizing conservation and recovery objectives will better use the considerable resources invested in the development of, and mitigation for, utility-scale renewable energy projects, which will in turn yield better outcomes for all stakeholders. Using past experience as a guide, changes in how stakeholders conduct themselves on a micro- and macro-level in siting and permitting proceedings could breathe new life into the restorative intent of the ESA in practice.

On a project-specific (micro) level, existing procedures struggle to achieve timely and openly deliberated decisions. For example, as noted above, ESA section 7 requires a federal agency considering a proposed action that “may affect” a listed species or critical habitat must engage in project-specific “formal consultation” with FWS, unless, through “informal consultation,” the action agency determines, and FWS concurs, that the proposed action “is not likely to adversely affect” a listed species or critical habitat. 50 C.F.R. § 402.14(a), (b); Consultation Handbook at 4-1. Under such consultation, the federal agency proposing to authorize or fund an action that might adversely affect a listed species prepares a biological assessment that describes the project and its potential impacts and proposes mitigation measures. FWS then prepares a biological opinion and an “incidental take” statement.

This formal consultation process recognizes the value of cooperation but offers limited, if any, opportunities for real and timely collaborative problem-solving. Environmental groups and members of the public generally have little opportunity to comment on biological assessments, biological opinions, and incidental take statements as they are being prepared. And although FWS has an obligation to “discuss” matters with the action agency and the applicant during this process, see 50 C.F.R. § 402.14(g)(5); see also 59 Fed. Reg. 34,274, 34,274-32,275 (July 1, 1994), FWS often does its work in isolation, relying largely on the expertise of its own staff. Resource constraints compound the effect of this cloistered evaluation process by preventing FWS from participating more fully as a cooperating agency in the preparation of reviews under the National Environmental Policy Act—a process that is specifically designed to facilitate a dialogue regarding environmental impacts and mitigation measures. See 40 C.F.R. § 1501.6 (detailing the obligations of cooperating agencies).

Other mechanisms in the ESA for authorizing take arguably do a better job of facilitating more collaborative decision making. Section 7 consultation is required where a proposed project has a federal nexus, such as a federal permit or federal funding. In contrast, section 10 of the ESA comes into play for projects that have no such nexus, such as projects located on private land that require only state and local permits but might affect a federally listed species. Under section 10, a developer must prepare a habitat conservation plan (HCP) that sets forth the measures the developer will undertake to minimize and mitigate impacts to listed species. In exchange, the developer receives from FWS an incidental take permit. Compared to formal consultation, the process of preparing, reviewing, and approving HCPs and take permits gives stakeholders earlier and more frequent chances to shape a project. When HCPs are done on a regional level, they can additionally take a broader, ecosystem-based approach that does more than merely compensate for the immediate project impacts. (More on that below.)

The improved transparency of the section 10 process nevertheless comes at a significant cost to developers, which typically makes this approach an unattractive alternative to formal consultation from their perspective. Specifically, while regulations cap the section 7 formal consultation process at 135 days, the section 10 process is open-ended. See 50 C.F.R. § 402.14(e). FWS guidance optimistically states that the process should take twelve months, but several HCPs and take permits have taken significantly longer (several years) to complete. See FWS, Habitat Conservation Plans (Dec. 2005). This lengthy process is not in line with the Obama administration’s goal to increase the speed of decision making on major infrastructure projects, and it can limit the ability of HCPs to be an effective conservation tool. See generally Steering Committee on Federal Infrastructure Permitting and Review Process Improvement, Implementation Plan for the Presidential Memorandum on Modernizing Infrastructure Permitting (May 2014).

Could shortcomings of the section 10 process be improved to create a better permitting alternative? Perhaps. An oft-cited reason for the long processing times is FWS’s lack of adequate resources. To address this issue, two years ago FWS Director Daniel Ashe issued a little known memorandum that provided overt authority for “Reimbursable Agreements and Environmental Reviews for Renewable Energy Projects.” Mem. from Daniel M. Ashe, Director, FWS to Regional Directors, FWS (Feb. 28, 2012) (on file with authors). The memo outlined, for the first time, a clear “framework for developing reimbursable agreements with private developers of renewable energy projects” to provide “sufficient funding” for developing HCPs. Id. at 1. FWS historically avoided such agreements due to concerns that they might compromise the integrity of the agency’s work and could lead to over-hiring. In truth, FWS already had authority to enter into reimbursement agreements. See FWS, Reimbursable and Intergovernmental Agreements—Policy and Procedures, 264 FW 2 (Oct. 9, 2009); Appropriations Act for the Department of the Interior and Related Agencies, Pub. L. No. 106-113, 113 Stat. 1501A–139–140 (2000). The 2012 memo really just clarified the procedures for maintaining the appearance of impartiality of FWS employees.

Even if FWS could secure enough resources to shorten waiting times, however, the unappealing reputation of the section 10 HCP process might persist. The fact that the reimbursable agreements described above seem to have gone unused since their inception suggests that timing is not the only stigma of HCPs. Environmental groups, meanwhile, dislike that the public participation process invites feedback only after the developer and FWS have invested significant time and resources into their preferred solution. Outsiders’ ability to truly influence minimization and mitigation decisions consequently is determined in large part by the willingness of the developer and FWS to change a plan they have already spent months, if not years, negotiating.

Most relevant for the purposes of this article, FWS simply requires applicants in the section 10 process, as in section 7 formal consultation, to implement measures to minimize and mitigate the impacts of take. Project-specific section 10 HCPs are not usually oriented toward the recovery of listed species, nor are they required to be. See 79 Fed. Reg. 27,060, 27,063 (May 12, 2014) (recognizing that the ESA does not create an affirmative duty, in proceedings to authorize takes, to further recovery efforts); Ctr. for Biological Diversity v. U.S. Fish & Wildlife Serv., 202 F. Supp. 2d 594, 597 (W.D. Tex. 2002) (describing FWS, in the context of a section 10 proceeding, as “the regulatory referee charged with keeping the ball somewhere around the 50-yard line as between encroaching human activity and endangered species”). In light of these limitations, neither section 7 nor section 10 provides enforceable requirements or procedural pathways to inject conservation-oriented measures into project-specific take authorizations.

The Programmatic Siting Experiment

The limitations of project-specific proceedings, intensified by the size and recent pace of solar project developments, have inspired several initiatives to consider project impacts and mitigation measures on a programmatic level. These efforts include the 2012 “Final Programmatic Environmental Impact Statement (PEIS) for Solar Energy Development in Six Southwestern States” (Solar PEIS), the California Desert Renewable Energy Conservation Plan (DRECP), and the Arizona Restoration Design Energy Project (RDEP). By focusing on ecosystems (a concept that the ESA mentions but does not emphasize), these efforts aim to steer projects away from the most sensitive resources and provide clear administrable criteria to guide (but not forestall) project development. In exchange for faster and more certain permitting experiences, such efforts offer a platform for imposing minimization and mitigation requirements that go beyond simply avoiding jeopardy. However, the jury is still out on whether a macro-level approach to permitting is more efficient and more inclusive, and whether it can more effectively achieve broad conservation objectives.

For example, the Bureau of Land Management (BLM) recently concluded its first experiment with an alternative, more collaborative approach to mitigation planning for solar projects. As part of its implementation of the Solar PEIS, which aims to site solar energy projects in designated Solar Energy Zones (SEZs) while mitigating their impacts to endangered and threatened species, BLM undertook a pilot project to identify and compensate for the impacts expected to result from the development of the 5,717-acre Dry Lake SEZ in southern Nevada. During this process, BLM engaged with developers, environmental groups, government agencies, and the general public in live workshops and written feedback periods over the course of eighteen months, and specifically identified unavoidable impacts that might warrant mitigation, methods for deriving mitigation fees, and specific mitigation sites and activities. As a result of this process, BLM further reduced the developable area of the Dry Lake SEZ to 3,471 acres (thereby minimizing impacts) and proposed specific mitigation measures to be funded and carried out across a wide landscape in the Gold Butte Area of Critical Environmental Concern.

The pilot program was in many ways a success. Because the program sorted out mitigation obligations in advance of opening the Dry Lake SEZ for a competitive land auction, this approach offered certainty on an aspect of development that has been wildly unpredictable for past projects. Firm mitigation obligations remove a significant development variable, which can be instrumental in efforts to secure favorable financing terms. From the perspective of environmental groups, the process explored the value of mitigation across a wide area for a variety of impacts in more detail than has been typical in project-specific proceedings.

However, the Dry Lake SEZ example had its drawbacks. Some environmental groups thought that the process lacked transparency, as opportunities for public comment followed largely final project documents that BLM did not significantly alter in response to feedback. From developers’ perspective, the process took over eighteen months to define mitigation obligations for an area that can support, at most, about 500 megawatts of development. To put this in context, several projects currently under development are as large, if not larger, than the entire SEZ. Thus, whether the Dry Lake SEZ pilot program is superior model for mitigating project impacts to listed species, and ultimately promoting their recovery, remains an open question.

Is There a Better Way?

If section 7 formal consultation, the section 10 HCP process, and the Dry Lake SEZ pilot program leave us wanting, we are left to wonder if there is a better way to develop conservation-focused mitigation plans for renewable energy projects and if the regulatory agencies, developers, and environmental groups have the collective appetite for something other than the status quo.

One tool for improving outcomes under the ESA is to pattern a decision-making process on the “mitigation hierarchy” that FWS, and the Department of the Interior generally, have already adopted. See Energy & Climate Change Task Force, A Strategy for Improving the Mitigation Policies and Practices of the Department of the Interior: A Report to the Secretary of the Interior, at 2 (Apr. 2014) (Mitigation Report). This approach favors avoiding impacts first, minimizing them second, and mitigating them third. As the Mitigation Report notes, the terms used in this hierarchy are somewhat confusing, since the term “mitigation” is the third step in the hierarchy—“avoid, minimize, mitigate”—and also describes the objective of all three steps together. Id. at 3. To clarify this, the Mitigation Report uses the term “compensatory mitigation” to distinguish the third step, which the mitigation hierarchy, somewhat ironically, aims to avoid altogether. If avoidance works, then there is no need to consider minimization or compensatory mitigation, at least not with respect to the resources with respect to which impacts are avoided. The Mitigation Report stresses the importance of this phased approach where resources are “inherently unique and irreplaceable,” such that “offsetting their loss by creating or restoring them elsewhere” (i.e., compensatory mitigation) “is not possible.” Id. at 11.

How to best wield the mitigation hierarchy as a siting tool, has, however, proven to be an elusive question. Regional efforts such as the Solar PEIS, the DRECP, and Arizona’s RDEP comport with the preference for avoidance by directing development to designated zones and other areas of low resource conflict. However, while zones allow for more careful, programmatic consideration of ecosystem preservation and more environmental stakeholder input, they take ages to develop; the DRECP process began in 2008 and did not produce a draft plan (one that will undoubtedly be hotly contested for the foreseeable future) until late September 2014. Timing issues aside, stakeholders all along the development-conservation spectrum have also been frustrated by efforts to rigidly map out where renewables can and cannot be developed using the best available—but not perfect or site-specific—data. To meaningfully guide siting decisions in areas where programmatic solutions are trailing the pace of development, we must have clear, administrable processes and criteria that identify sites where development is not defensible, and that do so without practically foreclosing development in areas where it may be permissible.

For avoidance to work, in addition to thoughtful and practical siting criteria, environmental groups and developers alike must be candid with their desires, opinions, and plans. Decisions to steer development to specific areas, like decisions to allow development outside those areas, must be based on sound science. And emphasizing avoidance makes sense only for areas of relatively high species and habitat value; for areas where listed species are not abundant or habitat is poor (though nevertheless populated), it may be preferable to emphasize mitigation by, for example, funding conservation of areas that matter more for species of concern.

Avoidance furthermore, and regrettably, will not be possible in every instance. Because specialized and limited infrastructure significantly constrains siting decisions for utility-scale solar projects, not every conflict can be avoided. In such situations, candid dialogue is especially critical. When impacts cannot be avoided but must be minimized (e.g., through better design), prudent developers should reach out to environmental groups and other stakeholders as early as possible. Developers must listen carefully, because issues identified at this initial stage will fester throughout the permitting process and perhaps end in litigation if they are not addressed. By the same token, regulators and environmental groups need to clearly communicate their opinions throughout the process to avoid lulling developers into a false sense of security that inevitably leads to entrenched ideas about what elements should be acceptable.

For environmental stakeholders, collaboration is especially important in section 7 consultations, where access to the process through the applicant may be the only real opportunity to influence agency approvals. For developers, early involvement of all stakeholders can ensure that parties are in agreement on the appropriate mitigation and avoid a guessing game that can result in under- or over-mitigation and/or litigation to secure one particular solution over another. Collaborative development of mitigation can also create an opportunity to discuss mitigation options including ecosystem preservation, scientific research support, and contributions to landscape-level solutions. Those solutions can have significantly greater value than conventional restoration and compensatory acquisition mitigation and can be overlooked in a shortsighted (but rational) effort to meet minimum legal requirements.

Collaborating for Recovery

The ESA, as FWS and the courts have implemented and applied it, has evolved to be something less than what its policy provisions suggest it might have been intended to be. Environmental groups fairly want to establish a regulatory paradigm that reflects the ESA’s underlying goal: ensure that imperiled species not just survive, but recover. That effort seems in tension with pressure from all levels of government to expedite renewable project permits—pressure that will only continue to mount as the sunset date for the critical Investment Tax Credit (ITC) program approaches (to qualify, projects must be completed by December 31, 2016). 26 U.S.C. § 48. Developers, for their part, want a fair permitting process that provides certainty and yields feasible mitigation requirements.

Existing approaches have struggled to meet either goal. Formal consultation is too limited and occurs too late, and section 10 HCPs are cumbersome and riddled with uncertainty. Both approaches aim only to preserve the status quo rather than encourage recovery. Ambitious regional siting programs are directing development to limited areas based on high-level data and after site-specific studies but companies are encountering almost as much opposition in these locations as they did on projects developed outside of zones. To remedy these problems, FWS could commit to making the section 7 process more transparent or processing HCPs on a more reasonable schedule. It may also make sense to focus programmatically only on understanding what areas to prioritize for conservation and avoid unnecessarily restricting development.

We submit, however, that significant and timely advances in efforts to reduce the impact of renewable energy projects on listed species will not come from making new commitments around old approaches. While no mitigation approach is foolproof, the most promising tools are those that (1) encourage voluntary coordination and candid communication about possible development and environmental concerns, (2) occur early in the process, and (3) do not require agencies to step significantly outside of their regulatory comfort zones. Flexible mitigation hierarchies and reasonable ecosystem-based regional conservation planning share these characteristics and present new opportunities to help imperiled species improve, not just survive.

For these approaches to work, environmental groups should work with developers early in the permitting process to develop measures to avoid, minimize, and mitigate adverse effects. This recommendation—to work alongside industry—might seem naïve, but it is important to remember that the utility-scale solar and wind industries are replete with decision makers who are deeply concerned about the environment and the growing threat of climate change. Those decision makers, by virtue of being the project applicant, have unparalleled ability to shape project proposals from the beginning. Regulators, for their part, should help innovate new solutions and be willing to implement them—no small task given their limited resources. If all stakeholders openly and accurately communicate their objectives earlier in the process, we can build large-scale wind and solar projects and prioritize the conservation of endangered and threatened species.

Jill E.C. Yung and Matthew J. Sanders

Ms. Yung is an attorney at Paul Hastings LLP, and was formerly in-house counsel for BrightSource Energy. Mr. Sanders is a supervising clinical attorney and lecturer at Stanford Law School and was formerly an appellate attorney in the Environment & Natural Resources Division of the U.S. Department of Justice.