CHAPTER 19 AN EVOLVING LANDSCAPE OF PRIORITIES FOR SPECIES, HABITATS, AND BIODIVERSITY

• Jurisdiction: Derecho Internacional

International Mining and Oil & Gas Law, Development, and Investment (April 2017)
CHAPTER 19
AN EVOLVING LANDSCAPE OF PRIORITIES FOR SPECIES, HABITATS, AND BIODIVERSITY
Patricio Leyton Partner,
Ferrada Nehme Ltda. Santiago Nicholas L. Owens Senior HSE Representative,
Anadarko Petroleum Corporation Houston Kathleen C. Schroder Partner,
Davis Graham & Stubbs LLP Denver

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PATRICIO LEYTON is a Partner with Ferrada Nehme Ltda., in Santiago. Mr. Leyton is the main partner in charge of environmental and natural resources matters. His natural ability for managing complex projects has led him to advise several national and foreign firms, consolidating the firm as one of the leading environmental practices of the country. Mr. Leyton leads a consolidated and robust team in the context of the new Chilean environmental institutional design and its challenges. His expertise allows him to tackle different aspects of environmental law, including environmental assessment, community relationships, environmental litigation, and more recently the implementation of extended producer liability legislation. His clients highlight his genuine commitment, his personal attention to every detail, and his impressive knowledge of the law and practice of environmental matters. His team works side by side and in cooperation with the litigation and public law practices. Mr. Leyton received a Law degree from the Universidad de Chile and an LLM from Georgetown University.

NICHOLAS L. OWENS is a Senior HSE Representative with Anadarko Petroleum Corporation in Houston, Texas where he focuses on biodiversity, endangered species, and wildlife issues affecting Anadarko's North America onshore assets, Gulf of Mexico holdings, and Mozambique Africa liquid natural gas (LNG) Project. In his time at Anadarko he has engaged widely in the development of policy affecting endangered species and wildlife, providing advice and guidance to mitigate and minimize impacts from regulatory changes affecting natural resource extraction. Additionally, he leads the company's biodiversity program to meet performance standards from the International Finance Corporation associated with project finance for the Mozambique LNG Project, one of the world's largest LNG projects. Prior to joining Anadarko Mr. Owens worked as a private consultant managing the permitting and siting of a wide variety of major energy related projects. Mr. Owens earned his B.S. in Biology from Eastern Illinois University.

KATHLEEN C. SCHRODER is a partner at Davis Graham & Stubbs LLP in Denver where her practice focuses on all aspects of energy development on federal lands. Ms. Schroder counsels clients on oil and gas leasing and development on federal lands and agency compliance with the National Environmental Policy Act and the National Historic Preservation Act. She has extensive experience with the Endangered Species Act, including the process for listing species as threatened or endangered, the process for obtaining permits under section 10 of the Act, and the development of conservation agreements for candidate species. Ms. Schroder is active with the Rocky Mountain Mineral Law Foundation, serving as a trustee to this organization and authoring several papers. She is currently a vice-chair, and former chair, of the Public Land and Resources Committee within the ABA's Section of Environment, Energy, and Resources and sits on the board of directors of Western Energy Alliance. Ms. Schroder began her career as an attorney-advisor in the U.S. Department of the Interior's Office of the Solicitor as part of the Solicitor's Honors Program, where she advised the multiple bureaus within Interior. She then spent 10 years with a boutique law firm in Denver. She holds a B.A. from Rice University and a J.D. from the University of Colorado School of Law. Following law school, she clerked for Justice Alex J. Martinez of the Colorado Supreme Court.

I. INTRODUCTION

Increasingly, focus is being placed on the intrinsic value of the natural world and species. An evolution of terminology and scale is occurring that redefines nomenclature such as "critical habitat" and expands the benchmarks of analyses employed, moving from a habitat-based approach to an ecosystem-based approach. Terms such as "net conservation gain" (NCG) have found their way into a multitude of recent regulations to herald a new era of mitigation and offsets where age-old business standards will change and greater transparency will be required. This paper examines and compares efforts in the United States and Chile to apply the "mitigation hierarchy" that involves avoiding, minimizing, and compensating for impacts, as well as a mitigation standard of NCG. This paper also describes lending standards from groups such as the International Finance Corporation (IFC) that incorporate these concepts and will affect resource extraction.

II. CRITICAL HABITAT

The concept of critical habitat appears in the United States' Endangered Species Act (ESA). Although this concept is not expressly incorporated in Chilean law, the IFC and other lending institutions incorporate and utilize the concept of critical habitat as well.

A. Critical Habitat in U.S. Policy

Introduction to the ESA. The ESA is one of several key environmental laws passed in the 1970s and serves to protect and recover critically imperiled species and the ecosystems upon which they depend.¹ The statute grants authority to administer the ESA to the "Secretary."² The Secretary is defined as either the Secretary of the Department of Interior (DOI) or the Department of Commerce (DOC). Under the DOI, the U.S. Fish and Wildlife Service (FWS) administers the ESA with primary responsibility over terrestrial and freshwater organisms. Under the DOC, the National Marine Fisheries Service (NMFS) administers the ESA with its

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responsibilities mainly pertaining to marine wildlife. Hereafter, the FWS and NMFS may be referred to jointly as "the Services." The Services list species and designate critical habitat under notice-and-comment rulemaking processes.³ Approximately 2,300 species are currently listed as endangered or threatened under the ESA.⁴

Introduction to Critical Habitat. Critical habitat is a formally delineated area that provides for the continued viability of imperiled species listed as either threatened or endangered under the ESA. The strength of its prohibitive power captured broad attention in 1978, making the snail darter and Tellico Dam household names and endangering the ESA itself.⁵ Over time, Congress has weakened critical habitat by conditioning its designation on economic considerations, prudency, and determinability. Despite it all, it has continued to evolve and remains a useful enforcement tool in court.⁶

Development of Critical Habitat in U.S. Policy. When Congress passed the ESA in 1973, it recognized the importance of the specific habitats species depend upon, stating that "[i]f the protection of endangered and threatened species depends in large measure on the preservation of the species' habitat, then the ultimate effectiveness of the Endangered Species Act will depend on the designation of critical habitat."⁷ The focus on habitat loss comes as no surprise given scientists for decades have been warning that it is the single most important threat to biodiversity.⁸ When species are listed under the ESA, "to the maximum extent prudent and determinable," the agencies are to simultaneously designate "critical habitat."⁹ Critical habitat is to include those "specific areas within the geographical area occupied by the species . . . on which are found those physical or biological features" which are "essential to the conservation of the species" and "which may require special management features or protection";¹⁰ additionally, critical habitat is to include "specific areas outside the geographical area occupied by the species" if the Secretary determines such areas are "essential for the conservation of the species."¹¹ In delineation of those habitats deemed to be "critical," the ESA also makes clear that critical habitat should not consist of the "entire geographical area which can be occupied by the threatened or endangered species," except in circumstances determined by the Secretary.¹²

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At the inception of the ESA, Section 7, which deals with critical habitat, did not have a central role. At just a couple sentences in length, Section 7 requires all federal agencies to "insure that any action authorized, funded, or carried out by such agency . . . is not likely to jeopardize the continued existence of any endangered species or threatened species or result in the destruction or modification of habitat of such species which is determined by the Secretary . . . to be critical . . . ."¹³ Section 7 relates only to federal actions, and thus state and private actions are not considered relating to impacts on critical habitat. By 1997, the Service had designated critical habitat for only a handful of the more than 1,200 species on the threatened and endangered species list, noting that "designating critical habitat for species . . . provides little conservation benefit."¹⁴ The general thinking at this point in time was that if agencies undertaking federal actions are mandated to consult with the Services on potential impacts to protected resources, designation of critical habitat was duplicative as impacts could be addressed through consultation.

For years, the Services observed the mandate to designate critical habitat concurrently with a listing largely in the breach.¹⁵ By 2007 fewer than half (482 of 1,007) of the listed species had designated critical habitat¹⁶ and by 2011, that number had risen only slightly (607 of the 1,372 listed species),¹⁷ a marked improvement from 1997 mainly driven by judicial decisions. Most if not all litigation concerning critical habitat appears to be bore from the Services' inability...