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"Court Decision Aids Developers and Builders Who Come Into Contact With Endangered Species"

California Real Estate Journal
By: Robert D. Thornton, Paul S. Weiland
03/20/06

In a precedent-setting interpretation of the California Endangered Species Act, the Court of Appeal held that "the statute not only allows but expressly compels giving consideration to economic objectives."

This decision in Environmental Protection Information Center v. California Department of Forestry and Fire Protection resolves several key issues raised by the 1997 amendments to the act. It provides a major boost to the use of habitat-conservation plans as a tool for the resolution of endangered species and development conflicts in the state.

Pacific Lumber Co.'s Habitat-Conservation Plan

The decision is the latest in the long battle over logging on the Pacific Lumber Co. lands in Humboldt County. In 1999, Pacific Lumber entered into an historic agreement with the state and the federal governments regarding the protection of the Headwaters Forest - a 5,000-acre old-growth redwood forest - and the conservation and management of endangered species habitat on 200,000 other acres owned and managed by Pacific Lumber.

As part of the agreement, the state and federal wildlife agencies approved a habitat-conservation plan and related state and federal endangered species permits to govern timber operations by Pacific Lumber under the state and federal endangered species laws.

The habitat-conservation plan established a comprehensive program to conserve and restore the habitat of the northern spotted owl, the marble murrelet, salmon and steelhead.

Among many conservation measures, the habitat-conservation plan created a series of marbled murrelet conservation areas in which no harvesting will be allowed for the 50-year duration of the habitat-conservation plan.

In consideration of these and other conservation measures, the habitat-conservation plan and related permits authorized Pacific Lumber to harvest timber on its lands within the habitat of several endangered species.

Two environmental groups challenged the California Endangered Species Act permit issued to Pacific Lumber to implement the habitat-conservation plan.

The trial court held that the state agencies that approved Pacific Lumber's timber harvesting plans acted in violation of the law and commanded the agencies to set aside their determinations, including the state incidental take permit. But the Court of Appeal reversed the trial court decision and upheld the validity of the California Endangered Species Act permit.

The Court of Appeal Decision

The environmental groups alleged that the Department of Fish and Game determination to issue a California Endangered Species Act permit was invalid for a number of reasons.

First, the environmental groups contended that the Department of Fish and Game deferred mitigation for impacts to the marbled murrelet in violation of the "fully mitigate" provisions of act. The court disagreed with the plaintiffs and held that "there is nothing in the law to require full mitigation be achieved in the short term or concurrently with the issuance of the incidental take permit."

Second, the environmental groups contended that the Department of Fish and Game improperly balanced "the needs of the endangered murrelet against the economic needs of [Pacific Lumber]." In response, the court held that the California Endangered Species Act requires the Department of Fish and Game to give consideration to economic objectives.

Third, the environmental groups argued that the habitat-conservation plan violated the California Endangered Species Act because it included certain provisions that insulated Pacific Lumber from additional mitigation requirements in the event of unforeseen circumstances such as a large earthquake or a large fire.

The plaintiffs argued that the "No Surprises" provisions of the Pacific Lumber habitat-conservation plan violated the California Endangered Species Act because they did not ensure "full mitigation" in the event of unforeseen circumstances. The court disagreed with the plaintiffs and held that the full mitigation requirement of the California Endangered Species Act does not extend to unforeseen circumstances.

Implications for the Real Estate Industry

Developers and builders are likely to benefit from the Court of Appeal decision in a number of ways.

For the first time, an appellate court has interpreted the California Endangered Species Act as compelling consideration of the applicant's economic objectives. Historically, the environmental community has claimed that an applicant's economic objectives should not be considered by the Department of Fish and Game in the California Endangered Species Act permitting decisions.

The 1997 amendments to the California Endangered Species Act required permit applicants to minimize and "fully mitigate" the impacts of taking an endangered species. The Legislature, however, did not indicate over what time period the "fully mitigate" obligation may be satisfied.

The court resolved this issue by concluding that applicants may mitigate the impact of a project on endangered species over the life of the permit. This interpretation provides further support for many large-scale habitat-conservation plans in the state that address the effects of development activities over the life of the plan.

Across the state, regional habitat-conservation plans are being developed to provide a landscape-level, multiple-species approach to conservation and land-use development. These multiple-species habitat-conservation plans cover millions of acres of land and offer the promise of streamlined permitting and regulatory certainty to the development community.

While there are many hurdles that must be overcome before streamlined permitting becomes a reality, the Court of Appeal decision effectively removes a few of the hurdles by clarifying the parameters within which both the Department of Fish and Game and regulated entities must operate.

Finally, the decision is one of a small number of Court of Appeal decisions to date that interpret the California Endangered Species Act permitting provisions. As such, it is important precedent upon which the development community may rely when developing habitat-conservation plans, submitting them to the Department of Fish and Game for approval, and defending incidental take permits issued by that agency.

Robert D. Thornton and Paul S. Weiland are attorneys with Nossaman, Guthner, Knox & Elliott's Irvine office.

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