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"Builders caught in crossfire of gnatcatcher habitat listing - Needless plan could delay or kill new housing and imperil species protection"

06/01/2000 Southern California Builder

Recent action by the U.S. Fish & Wildlife Service (USF&WS) declaring nearly 800,000 acres of Southern California's landscape as critical habitat for the threatened coastal California gnatcatcher could produce additional delays of up to two years for many developments, force landowners to set aside sizable portions of their property or ante up large sums of money in mitigation and perhaps totally sink some projects.

Home builders and industry experts also fear it will deliver potent new weapons to anti-growth environmentalists and narrow-minded NIMBY activists who will use them to halt or delay badly-needed housing in some of the Southland's fastest growing regions.

The Service insists its action on the gnatcatcher doesn't place new burdens on property owners. But home builders are likely to be caught in a perilous crossfire if their land has been tagged as critical habitat for the gnatcatcher when they seek a permit from another federal agency - such as the U.S. Army Corps of Engineers for building near waterways. Then that agency must "consult" with USF&WS over whether the builder is affecting critical habitat for the threatened bird.

Veteran endangered species consultants and attorneys who have studied the USF&WS's Feb. 7 publication of the proposed gnatcatcher habitat rule contend it raises a host of dilemmas.

"The Fish & Wildlife Service has designated four times more habitat than can "remotely be considered critical."

"It is unnecessary to designate critical habitat since existing provisions of the Endangered Species Act already provide the bird with "a huge blanket of protection."

"Assignment of critical habitat for the gnatcatcher and other species threatens to disrupt long-anticipated and much-praised multi-species habitat conservation plans in Southern California. They do a much more effective job of preserving a diverse array of at-risk plants, animals and insects than dealing piece meal with individual endangered or threatened species such as through the Service's gnatcatcher plan.

USF&WS's designation will be "used as a delaying tactic by a lot of anti-growth and NIMBY groups. We're already seeing that happen," states Michael Brandman, Ph.D. from the Michael Brandman Associates consulting firm of Tustin, which represents builders, landowners, cities and special districts on endangered species issues. He is on the board of BIASC's Orange County and Riverside chapters.

Designation of critical habitat for the gnatcatcher "is going to allow the Service to regulate impacts on unoccupied habitat," offers Ed Sauls of The Sauls Co. in Laguna Beach, a development consulting firm to the building industry and past president of the BIA's Riverside chapter.

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In 1993, the Fish & Wildlife Service listed the coastal California gnatcatcher as a threatened species. The Service describes the creature as "a small, insect-eating bird that ranges from Southern California to northwestern Baja California, Mexico."

Primary habitat for the gnatcatcher is coastal sage scrub, which can be found on roughly 400,000 acres in the Southland; only about 200,000 of them are considered good quality habitat for the bird, according Laer Pearce from Laer Pearce & Associates, a Laguna Hills consultant who represents major landowners in Orange County and elsewhere on endangered species issues.

There are exemptions in the law, Sauls observes, and the "intent of the exceptions is if [the Service] told everyone where the species is found to be, it is to the species' detriment."

"More radical environmental organizations felt differently," Brandman injects. "Based on their own agenda," these groups have filed lawsuits attempting to force the Service into designating critical habitat. One of them concerned the gnatcatcher.

In February 1999, USF&WS indicated that it was "consider[ing] only 124,000 acres to be prudent for critical habitat" in protecting the gnatcatcher, the agency acknowledges. Yet in response to the lawsuit, on Feb. 7, 2000 the Service published a proposed rule designating nearly 800,000 acres as critical habitat for the bird. "Much of that was based upon presence [on the land] of plants such as coastal sage scrub," says Pearce.

"But there are only 400,000 acres of coastal sage scrub in Southern California," Pearce adds. And "if you apply biological guidelines and evaluate habitat, only about 200,000 acres are good quality habitat. That means [USF&WS] has designated four times more habitat than should remotely be considered critical. It says to me that this is an illegal designation because [the law] defines critical habitat as habitat essential to survival of the species."

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Beyond questions about the designation's legality, it is not supposed to affect home builders or other private parties. That's not how it works in practice. The Endangered Species Act states that only federal agencies - "not states, municipalities, private businesses or individuals" are impacted by critical habitat designations, according to the NAHB guide.

"The designation of critical habitat on privately owned land does not mean the government would like to acquire or control the land," the Fish & Wildlife Service assures the public in its own published information. But there is a catch, USF&WS admits: "If a landowner needs a federal permit or receives federal funds for a specific activity, the federal agency would consult with the Service to determine how the action may affect the gnatcatcher or designated critical habitat. Section 7 of the [Endangered Species] Act [ESA] requires federal agencies to consult with the Service on any activities they authorize, fund or carry out which 'may affect' a listed species or 'adversely modify' its designated critical habitat."

"Although Section 7(a)(2) encompasses only federal conduct, critical habitat designations impact [home] builders as well," NAHB's manual states. "For example, when the [U.S. Army] Corps [of Engineers] issues permits to fill wetlands under Section 404 of the [federal] Clean Water Act, it must remain faithful to its ESA Section 7(a)(2) critical habitat duties as a federal agency. Thus, the Corps may not issue the permit to a home builder applicant if the fill activity will destroy critical...habitat for an endangered species."

So if a home builder is seeking a federal permit, "or if there's federal funding [for a project] such as highway construction or school funding, then the Corps consults with the [Fish & Wildlife] Service on whether [its action] could affect a threatened species such as the gnatcatcher," Sauls says.

The project may not be occupied by any gnatcatchers. It may or may not host coastal sage. Many properties in the proposed 800,000-acre critical habitat designation announced in February only consist of so-called "linkage areas" over which the birds may fly while traveling "from one known occupied area or preserve to another," according to Sauls.

"That can cover almost any piece of property, especially with a bird like the gnatcatcher that can fly and land almost anywhere. "Imagine that you have a piece of property not occupied by gnatcatchers. But it is in a corridor or linkage area between two of their preserves," he notes. "And your project will wipe out that linkage. The Service could conclude your project will adversely affect the species." The builder "might end up being required to mitigate for impacts to habitat that is not even occupied by the species," Sauls says. And in some cases, projects might be held up permanently.

Who is affected by this consultation process?

"Almost everyone needs a 404 [permit] from the Corps [of Engineers]," observes Rob Thornton with the BIASC-member law firm of Nossaman, Guthner, Knox & Elliott in Irvine. He has represented both landowners and home builders as well as NAHB on several high-profile lawsuits related to the Endangered Species Act. "That will trigger consultations and, in effect, create a permit requirement that frankly gives the Service leverage over development of property despite its protestations to the contrary."

"That means you have to then enter into negotiations with the Service and get a favorable biological opinion," Thornton says. "If they find critical habitat, the Service will either say you can't develop the property or impose mitigation to reach the conclusion that you can." Action by USF&WS "could involve setting aside part of the property, acquiring other property [to preserve habitat], reducing the size of the project or eliminating the project altogether."

The Service "argues that since [landowners] are already obligated to consult on impacts to the gnatcatcher, [consultations with other federal agencies such as the Army Corps of Engineers] don't impose new obligations," Thornton says. "That's fallacious," he quickly adds, citing Service-issued maps marking locations of known gnatcatcher sightings as well as proposed critical habitat for the bird. "It's clear from the map showing the known locations of gnatcatchers that there are literally hundreds of thousands of acres of property being designated as critical habitat that have no gnatcatchers on it."

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One BIASC member caught in the crossfire of USF&WS's designation of habitat for the gnatcatcher is Richard Jemison, a land investment and development consultant in Laguna Hills. He consults for a Texas partnership that owns investment property in the eastern Los Angeles County cites of Glendora and San Dimas.

His is one of many stories emerging from builders and landowners across the Southland.

Environmental impact reports (EIRs) are now being prepared on two parcels of land earmarked for residential development. Before the Feb. 7 gnatcatcher habitat designation, "we had no gnatcatcher critical habitat," Jemison affirms. Neither property was "occupied by the species in the opinion of our biologists. We had a relatively small amount of land - less than 10% of 400 acres in coastal sage, primary habitat for the gnatcatcher.

"When they designated [habitat], they included all of our property as critical habitat without any apparent biological justification," Jemison exclaims.

This was despite Service materials reassuring the public that "the best available scientific and commercial information about the physical and biological needs of the species" are to be used in determining this designation.

Among his property set aside as critical habitat are "non-native grass lands, eucalyptus trees, coastal live oak woodlands and disturbed areas from former orchard and equestrian uses that are clearly not habitat," Jemison points out. The USF&WS proposed rule on gnatcatcher habitat specifically includes all active agricultural lands, which would not include what is currently understood as occupancy by gnatcatchers.

Since he believes it is likely that a permit will be required from the U.S. Army Corps of Engineers over wetlands issues on the two parcels because in part the Corps is becoming more restrictive in its regulation, Jemison now faces a consultation between the Corps and USF&WS over critical habitat for the gnatcatcher. As a result, "we expect a minimum of two [additional years added] to our process if the [proposed] rule setting aside the 800,000 acres" for the gnatcatcher is made final. A decision from the Service is expected in September.

If the Army Corps refuses a Section 404 permit to "take" wetlands "because you might adversely affect gnatcatcher habitat, that could mean substantial mitigation through the [Fish & Wildlife] Service and significant delays through the Corps of easily a year or more," consultant Sauls concurs.

In the meantime if the proposed rule becomes final as written, Jemison says, "we don't know if we will even be able to conduct fuel modification for fire control in the area."

Jemison plans to continue pursuing local approvals, including the EIR. But he won't get a wetlands permit from the Corps until the gnatcatcher habitat matter is resolved.

"We used to think [property] had to be physically occupied" by the listed species in order to qualify as critical habitat under the Endangered Species Act, he says. "Because there are no standards for exclusion, no objectives for the species and no limit on Service decisions, the rule is based on semantics, not science. Claiming it does not have enough funds for property analysis, rather than conduct appropriate biological surveys to determine critical habitat, the [USF&WS] wrongfully stretched the meaning of the term 'occupied' to include wherever the bird can fly. It hands total discretion to the Service.

In addition, USF&WS "has introduced the theory of natural succession. It means if your property doesn't have gnatcatchers today, didn't have them in the past and doesn't really have coastal sage habitat but could support it, it will be considered critical habitat. And there is no procedure for finding out."

Jemison visited Washington, D.C., where he described his plight to NAHB officials and Members of Congress.

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The USF&WS's proposed habitat designation has produced confusion and fear in the building industry about passing powerful new weapons into the hands of anti-housing interests.

Extremists among the environmentalists "have viewed and will view designation of critical habitat and how it may be used as a tool to challenge future entitlements, and challenge land owners to consult with the Service whether they need to or not," Brandman says. Project opponents often select their targets based on official notices on all developments that they request from local land-use agencies. "Local agencies send out notices over granting permits to particular builders," he offers. There are notices of public hearings as well as EIRs or other documents that are issued.

"They find out about a project by seeing which builders want permits," Brandman continues. "Then if there is coastal sage scrub they assume it's occupied [by the gnatcatcher]. This causes confusion [among] local decision-makers who don't want to violate the [Endangered Species] Act. They may delay approval of a project and inform the builder, 'We think you need to consult with the Service even though the builder knows from his consultants and attorneys that he doesn't need to consult. But not everyone understands that."

In the end, it will lead to "[project] applicants having to spend more time and money at hearings, hiring consultants and dealing with perceived and nonexistent issues," cautions Brandman.

Jemison's group had already moved to dedicate 60% of the property as open space. "Now we're threatened with losing 100% of the property."

That's because "a number of questions are not answered by the [proposed] rule," he adds. "How do you conduct habitat conservation or a mitigation plan where your land is now supposedly 100% critical habitat? Can you get a permit to 'take' critical habitat and then reestablish critical habitat" on another part of the same property "if 100% of our property is now critical habitat? Theoretically, we can't 'take' existing critical habitat to create mitigation. And all of the marginal or adjacent habitat on our property and neighboring properties are now designated as critical habitat.

"The problem is that the rule is not clear and the Fish & Wildlife Service has implemented ESA habitat conservation plans and defined terms differently prior to this proposed rule. This is a sea change in the way endangered species will be dealt with in the future. Similar approaches are being used for all species."

That uncertainty will poison the development potential of many properties that were once considered prime parcels, either for development or for use as mitigation or as a mitigation bank. "We were looking at some land in Riverside County," Jemison relates, "but we walked away as soon as it was designated" as critical habitat for the gnatcatcher. "You can't talk about buying property until [it survives] a Section 7 consultation [with USF&WS]. That will bring a screeching halt to all land acquisition by [investors] who are aware of it."

"Each case is different [and] it is not clear how the law should be interpreted in every situation," confirms Charles Gale, BIASC director of governmental affairs. "The critical habitat program has led to considerable confusion in the regulated community," notes the guide from NAHB.

"The affect of critical habitat designation is unclear on a case-by-case basis," agrees attorney Thornton. "It will certainly increase procedural obligations on landowners [who wish] to develop their property.

"Clearly, there is a high likelihood for litigation [by] environmentalists who will challenge a project on the grounds it is violating the rule on no-adverse modification of critical habitat," Thornton says. "The remedy is usually an injunction against the builder. They will use that to try and halt projects." The "result could be even more restrictions by the Fish & Wildlife Service [and] prohibiting projects or more mitigation requirements."

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Confusion also greets "landowners who are already contributing to multi-species habitat conservation plans," notes Brandman.

Natural Communities Conservation Plans (NCCPs) are "created under California law and recognized by the federal government," notes Pearce. Their "purpose is to protect the most important habitat for a range of species to give them the best chance for survival."

Under these plans, landowners "agree to set property aside as habitat management regimes and other modifications to development," attorney Thornton says.

NCCPs have been hailed by federal, state and local officials starting with U.S. Interior Secretary Bruce Babbitt and USF&WS Director Jody Clarke and major environmental groups such as the Nature Conservancy. "They are recognized as a good approach that balances the rights of private landowners with the need to protect species," Pearce says.

They also "allow development to proceed on less significant habitat," offering some certainty to builders about where their projects can go, he notes. "Landowners get assurances they can develop properties where the [NCCP] allows it," adds Thornton.

That is why more radical environmentalists don't like NCCPs, because they permit some species to be taken. Some conservationists "won't stand for that," according to Pearce. "They don't want you to be able to walk in the same neighborhood as these birds."

Even though they comprise a small minority of environmentalists and don't represent the views of mainstream environmental organizations, groups such as the Southwest Center for Biological Diversity "have used the courts very effectively to force the Service into" designating critical habitat for the gnatcatcher and other species, Pearce says.

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