During his Jan. 23, 2007, State of the Union address, President George W. Bush announced an ambitious renewable and alternative fuels standard that includes an initiative to achieve production of 35 billion gallons of renewable and alternative fuels by 2017. The president's new targeted amount is approximately five times the current Congressionally mandated production target of 7.5 billion gallons by 2012.
 
 In 2007, the USDA reported that a staggering 90.5 million acres of corn will be planted in 2008. If realized, it would be the largest planted acreage since 1944 and 12.1 percent more than 2007. Much of the increase reflects greater demand for corn that will be turned into ethanol, as well as government incentives to produce ethanol. The combination will foster continued growth in the corn-based ethanol sector for the near future. Corn farmers will need approximately 129,000 square miles of additional farmland—an area the size of Kansas and Iowa—to meet the mandate. With the need for this much land, farmers and corn-based ethanol producers will inevitably have to understand, navigate and comply with the Endangered Species Act. 
 
 The ESA is a powerful piece of legislation that has already been used against farmers who have mistakenly violated it. The costs associated with navigating and complying, or not complying, with the ESA's regulations will increase and must be included in the cost of corn-based ethanol production. The hidden environmental impact, which has only been discussed tangentially in the press, may be substantial. 
 
 Current discussions regarding the environmental impacts of corn-based ethanol have focused primarily on environmental compliance regarding air, soil and water standards. None of the discussions, however, have analyzed the costs associated with the increasing need for arable land and the resulting inevitable confrontation with the ESA's requirements for that land. A detailed discussion of the permitting process required by the ESA illustrates the barriers that corn growers may have to overcome if they want to devote new cropland to ethanol production.
 
 The ESA's Effect, 'Taking' Prohibition
 When the ESA was passed in 1973 it gave the secretary of the interior the authority to promote, preserve and protect the continued existence of threatened and endangered species. In addition to protecting the species themselves, the secretary could establish critical habitat for them. 
 
 The ESA thus preserves not only threatened and endangered species, but also "the ecosystems upon which endangered species and threatened species depend." It gives the federal government the power to take "appropriate" steps to achieve its purposes, including the establishment of programs to preserve endangered species and their habitat.
 
 One of the ESA's primary enforcement mechanisms is the prohibition against the "taking" of endangered and threatened species. Taking occurs in one of two ways. The first occurs if private landowners or governmental entities conduct or attempt to engage in activities on their land that might incidentally "harass, harm, pursue, hunt, shoot, wound, kill, trap, capture or collect" a listed endangered species. The second occurs if the critical habitat of an endangered species is either modified or degraded to the point where it actually kills or injures the listed species by significantly impairing essential behavioral patterns, including breeding, feeding or sheltering. 
 
 The latter type of taking need not be intentional to violate the ESA. Any agricultural use of land may be enough to trigger a violation.

 Recognizing that there is significant potential for unintentional taking of endangered species and their habitat, Congress amended the ESA in 1982 to create permitting procedures that would allow for an "incidental take" that happens unintentionally when landowners are carrying out an otherwise lawful activity. 
 
 The Permitting Process for an 'Incidental Take'
 Initially, an applicant for an incidental take permit must submit a habitat conservation plan that specifies the impacts that are likely to result from the activity being pursued and the measures that the landowner will undertake to minimize and mitigate those impacts. 
 
 After the landowner develops a habitat conservation plan, it must be submitted along with the application for an incidental take for federal agency review, which involves the publication of the permit application in the Federal Register to allow for public comment. 
 
 Because issuing an incidental take permit is a federal action, the permitting process is also subjected to National Environmental Policy Act procedures. NEPA promotes the analysis and disclosure of the environmental issues and impacts that involve a proposed federal action. NEPA requirements can be satisfied in three ways. First, an environmental impact statement is required when the project or activity would significantly affect the quality of the human environment. Second, a categorical exclusion can be granted to activities that do not have a significant effect on the environment. Third, an environmental assessment can be prepared when it is unclear whether an environmental impact statement is needed or when the project does not require an environmental impact statement but is not eligible for a categorical exclusion. 
 
 In addition, issuing an "incidental take" permit is also subject to the ESA. Section 7 of the ESA requires all federal agencies, in consultation with the Fish and Wildlife Service or National Marine Fisheries Service, to ensure that any federal action is not likely to jeopardize an endangered species or threatened species or destroy or harm critical habitat.
 
 Processing an "incidental take" permit application is a four-step process that can take 10 months or longer. It consists of:
 
 ›	Publishing the habitat conservation plan and NEPA 
 	analyses in the Federal Register and making them available 

 	for public review and comment
 ›	Evaluating the comments received
 ›	Conducting a consultation under Section 7 of the ESA
 ›	Determining whether the habitat conservation plan meets 
 	all the criteria of the ESA. 
 
 In order to expedite the process, the services developed a category of habitat conservation plans called "low-effects habitat conservation plans" which apply to activities that are minor in scope and impact. Even so, the process of issuing low-effects habitat conservation plans can take up to three or more months. 
 
 ESA Violations and Permit Costs
 If a private landowner does not obtain an incidental take permit and subsequent land development activities result in a taking of a threatened or endangered species, the private landowner could face both civil and criminal penalties. Civil penalties range from $500 per violation for an "unknowing" violation to a maximum of $25,000 per violation for a "knowing taking." The maximum criminal penalty for knowing violations is a $50,000 fine and one year of imprisonment for each taking.
 
 If a take or other violation of the ESA occurs, the act also allows private citizens to file suits for such violations against private landowners. These citizen suits require private citizens to file a 60-day notice of intent to sue with the landowner and the agency. If the citizen suit is successful, the private citizen may recover litigation costs, including attorneys' fees.
 
 The costs for permitting are also high. They can range from thousands to hundreds of thousands of dollars if litigation is involved and take years to reach a resolution. Additionally, since a habitat conservation plan is part of the NEPA process, other environmental impacts unrelated to the species or its habitat must be analyzed, resulting in additional costs relating to compliance and project delays. Furthermore, both the habitat conservation plan and NEPA analysis processes are open to the public for comment, which allows scrutiny of the cropland expansion and lays the basis for a citizen suit after the permitting process is completed. 

 
 Conflicts Involving Ethanol Production
 Confrontations between the preservation of wildlife and corn-based ethanol production are already occurring. Seneca White Deer Inc. and Empire Green Biofuels recently entered into a memorandum of understanding to allow for public wildlife tours on the Empire Green Biofuels' premises. The controversy erupted from Empire Green Biofuels' planned construction of an ethanol and biofuels electricity production center on the white deer preserve. As soon as Empire Green Biofuels' plans were announced, Seneca White Deer 
 
 Inc. stated it would fight the proposed development, including filing a lawsuit if negotiations failed. 
 
 Earlier this year, Ducks Unlimited and the Audubon Society, among others, effectively pressured the USDA to reverse its two previous decisions to halt enrollment into its Conservation Reserve Program for 2007 and 2008 and to allow landowners, primarily farmers, to withdraw lands already in the program without penalty. The primary motivation for the USDA in proposing these changes to the CRP was to allow these lands to be used for the increased production of corn-based ethanol. Both Ducks Unlimited and the Audubon 
 
 Society argued that a probable consequence of such a decision was the encroachment on wildlife habitat. 
 
 These confrontations with the ESA will likely continue as the United States bases expansion of its renewable fuel standards on corn-based ethanol. Farmers and others in the corn-based ethanol industry should start to familiarize themselves with the ESA, its regulatory framework and how it impacts the cost of their industry. 
 
 Francis Chin of Bracewell & Giuliani LLP has extensive experience in commercial and environmental regulatory litigation. Reach him at <a href="mailto:francis.chin@bgllp.com">francis.chin@bgllp.com</a>.

The Endangered Species Act's Hidden Costs for Ethanol Production

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Upcoming Events

2024 International Fuel Ethanol Workshop & Expo

Biodiesel Summit: Sustainable Aviation Fuel & Renewable Diesel

Carbon Capture & Storage Summit

North American SAF Conference & Expo

2025 International Biomass Conference & Expo

The Endangered Species Act's Hidden Costs for Ethanol Production