Draft Economic Anaylsis of Critical Habitat Designation for the Gulf Sturgeon
	July 2002

TABLE OF CONTENTS 

PREFACE

EXECUTIVE SUMMARY

1        INTRODUCTION AND BACKGROUND

     1.1     Description of Species and Habitat
     1.2     Proposed Critical Habitat
     1.3     Framework for Analysis
     1.4     Methodological Approach
     1.5     Information Sources

2        RELEVANT BASELINE INFORMATION

     2.1     Socioeconomic Profile of the Critical Habitat Areas
     2.2     Baseline Elements

3        SECTION 7 IMPACTS

     3.1     Categories of Economic Impacts Associated with Section 7 Implementation
     3.2     Activities Potentially Affected by Section 7
     3.3     Project Modifications Arising from Section 7 Consultation
     3.4     Regional Economic Impacts
     3.5     Summary of Section 7 Impacts

4        ESTIMATED SECTION 7 COSTS

     4.1     Estimated Costs of Section 7 Consultation
     4.2     Estimated Costs of Project Modifications
     4.3     Total Section 7 Costs
     4.4     Economic Impacts Associated Solely with the Designation of Critical Habitat
     4.5     Potential Impacts on Small Entities (Businesses, Governments, Non-profits)
     4.6     Description of Affected Small Entities

5        POTENTIAL BENEFITS OF PROPOSED CRITICAL HABITAT

     5.1     Categories of Benefits
     5.2     Placing Monetary Values on the Benefits of Section 7 Implementation

PREFACE

The U.S. Fish and Wildlife Service has added this preface to all economic analyses of critical habitat designations:

"The standard best practice in economic analysis is applying an approach that measures costs, benefits, and other impacts arising from a regulatory action against a baseline scenario of the world without the regulation. Guidelines on economic analysis, developed in accordance with the recommendations set forth in Executive Order 12866 ("Regulatory Planning and Review"), for both the Office of Management and Budget and the Department of the Interior, note the appropriateness of the approach: 

'The baseline is the state of the world that would exist without the proposed action. All costs and benefits that are included in the analysis should be incremental with respect to this baseline.'

"When viewed in this way the economic impacts of critical habitat designation involve evaluating the 'without critical habitat' baseline versus the 'with critical habitat' scenario. Impacts of a designation equal the difference, or the increment, between these two scenarios. Measured differences between the baseline and the scenario in which critical habitat is designated may include (but are not limited to) changes in land use, environmental quality, property values, or time and effort expended on consultations and other activities by federal landowners, federal action agencies, and in some instances, State and local governments and/or private third parties. Incremental changes may be either positive (benefits) or negative (costs).

"In New Mexico Cattle Growers Ass'n v. U.S.F.W.S., 248 F.3d 1277 (10^th Cir. 2001), however, the 10th Circuit recently held that the baseline approach to economic analysis of critical habitat designations that was used by the Service for the southwestern willow flycatcher designation was 'not in accord with the language or intent of the ESA.' In particular, the court was concerned that the Service had failed to analyze any economic impact that would result from the designation, because it took the position in the economic analysis that there was no economic impact from critical habitat that was incremental to, rather than merely co-extensive with, the economic impact of listing the species. The Service had therefore assigned all of the possible impacts of designation to the listing of the species, without acknowledging any uncertainty in this conclusion or considering such potential impacts as transaction costs, reinitiations, or indirect costs. The court rejected the baseline approach incorporated in that designation, concluding that, by obviating the need to perform any analysis of economic impacts, such an approach rendered the economic analysis requirement meaningless: 'The statutory language is plain in requiring some kind of consideration of economic impact in the CHD phase.'

"In this analysis, the Service addresses the 10th Circuit's concern that we give meaning to the ESA's requirement of considering the economic impacts of designation by acknowledging the uncertainty of assigning certain post-designation economic impacts (particularly section 7 consultations) as having resulted from either the listing or the designation. The Service believes that for many species the designation of critical habitat has a relatively small economic impact, particularly in areas where consultations have been ongoing with respect to the species. This is because the majority of the consultations and associated project modifications, if any, already consider habitat impacts and as a result, the process is not likely to change due to the designation of critical habitat. Nevertheless, we recognize that the nationwide history of consultations on critical habitat is not broad, and, in any particular case, there may be considerable uncertainty whether an impact is due to the critical habitat designation or the listing alone. We also understand that the public wants to know more about the kinds of costs consultations impose and frequently believe that designation could require additional project modifications.

"Therefore, this analysis incorporates two baselines. One addresses the impacts of critical habitat designation that may be 'attributable co-extensively' to the listing of the species. Because of the potential uncertainty about the benefits and economic costs resulting from critical habitat designations, we believe it is reasonable to estimate the upper bounds of the cost of project modifications based on the benefits and economic costs of project modifications that would be required due to consultation under the jeopardy standard. It is important to note that the inclusion of impacts attributable co-extensively to the listing does not convert the economic analysis into a tool to be considered in the context of a listing decision. As the court reaffirmed in the southwestern willow flycatcher decision, 'the ESA clearly bars economic considerations from having a seat at the table when the listing determination is being made.'

"The other baseline, the lower boundary baseline, will be a more traditional rulemaking baseline. It will attempt to provide the Service's best analysis of which of the effects of future consultations actually result from the regulatory action under review - i.e. the critical habitat designation. These costs will in most cases be the costs of additional consultations, reinitiated consultations, and additional project modifications that would not have been required under the jeopardy standard alone as well as costs resulting from uncertainty and perceptional impacts on markets."

DATED: March 20, 2002

EXECUTIVE SUMMARY

1.       The purpose of this report is to identify and analyze the potential economic impacts that may result from the proposed critical habitat designation for the Gulf sturgeon (Acipenser oxyrinchus desotoi). This report was prepared by Industrial Economics, Incorporated, for the U.S. Fish and Wildlife Service’s Division of Economics and the National Marine Fisheries Service.

2.       Section 4(b)(2) of the Endangered Species Act (Act) requires the Fish and Wildlife Service (FWS) and the National Marine Fisheries Service (NOAA Fisheries) (the Services) to designate critical habitat on the basis of the best scientific data available, after taking into consideration the economic impact, and any other relevant impact, of specifying any particular area as critical habitat. The Services may exclude areas from critical habitat designation when the benefits of exclusion outweigh the benefits of including the areas within critical habitat, provided the exclusion will not result in extinction of the species. 

3.       The focus of this economic analysis is on section 7 of the Act, which requires Federal agencies to ensure that any action authorized, funded, or carried out will not likely jeopardize the continued existence of any endangered or threatened species or result in the destruction or adverse modification of critical habitat. Federal agencies are required to consult with the Services whenever they propose an action that may affect a listed species or its designated critical habitat. Aside from the protection that is provided under section 7, the Act does not provide other forms of protection to lands designated as critical habitat. Because consultation under section 7 only applies to activities that are carried out, permitted, or funded by a Federal agency, the designation of critical habitat will not afford any additional protections for species with respect to strictly private activities.

Proposed Critical Habitat

4.       The Services plan to propose critical habitat designation for the Gulf sturgeon (sturgeon) on the following: 

• Riverine areas in Louisiana, Mississippi, Alabama, and Florida: Pearl River, Bogue Chitto River, Pascagoula River, Leaf River, Bowie River, Big Black Creek, Chickasawhay River, Escambia River, Conecuh River, Sepulga River, Yellow River, Blackwater River, Shoal River, Choctawhatchee River, Pea River, Apalachicola River, Brothers River, Suwannee River, and Withlacoochee River; and
  
  
• Estuarine and marine areas in Louisiana, Mississippi, Alabama, and Florida: Lake Pontchartrain (east of the Lake Pontchartrain Causeway), Lake Catherine, Little Lake, The Rigolets, Lake Borgne, Pascagoula Bay, Mississippi Sound, Pensacola Bay system, Santa Rosa Sound system, nearshore Gulf of Mexico, Choctawhatchee Bay system, Apalachicola Bay system, Suwannee Sound system, and adjacent state waters.

5.       The critical habitat area consists of 1,580 river miles and 2,333 square miles of estuarine and marine habitat within 14 units. The lateral extent of proposed critical habitat is up to the ordinary high water line on each river bank for riverine habitat and the mean high water line for marine habitat. All of the proposed critical habitat areas are currently seasonally occupied by the sturgeon.

Framework and Economic Impacts Considered 

6.       This analysis first identifies land use activities within or in the vicinity of those areas being proposed for critical habitat that are likely to be affected by section 7 of the Act. To do this, the analysis evaluates a “without section 7” scenario and compares it to a “with section 7” scenario. The “without section 7” scenario constitutes the baseline of this analysis. It represents the level of protection that would be afforded the species without section 7 protective measures, such as through section 9 of the Act and other Federal, State, and local laws. The “with section 7” scenario identifies activities likely to involve a Federal nexus that may affect the species or its designated critical habitat, which accordingly have the potential to be subject to future consultations under section 7 of the Act.

7.       Economic activities identified as likely to be affected under section 7 and the resulting impacts that section 7 can have on such activities constitute the upper-bound estimate of the proposed critical habitat economic analysis. By defining the upper-bound estimate to include both jeopardy and critical habitat impacts, the analysis recognizes the difficulty in differentiating between the two in evaluating only the critical habitat effects associated with the proposed rulemaking. This step is adopted in order to ensure that any critical habitat impacts that may occur co-extensively with the listing of the species (i.e., jeopardy) are not overlooked in the analysis.

8.       Upon identifying section 7 impacts, the analysis proceeds to consider the subset of impacts that can be attributed exclusively to the critical habitat designation. To do this, the analysis adopts a “with and without critical habitat approach.” This approach is used to determine those effects found in the upper-bound estimate that may be attributed solely to the proposed designation of critical habitat. Specifically, the “with and without critical habitat” approach considers section 7 impacts that will likely be associated with the implementation of the jeopardy provisions of section 7 and those that will likely be associated with the implementation of the adverse modification provision of section 7. In many cases, impacts associated with the jeopardy standard remain unaffected by the designation of critical habitat and thus would not normally be considered an effect of a critical habitat rulemaking. The subset of section 7 impacts likely to be affected solely by the designation of critical habitat represents the lower-bound estimate of this analysis.

9.       Three primary categories of potential costs are considered in the analysis. These are:

• Costs associated with identifying the effect of the designation on a particular parcel or land use activity (e.g., section 7 consultations).
  
  
• Costs associated with any modifications to projects, activities, or land uses resulting from the outcome of section 7 consultations with the Services.
  
  
• Indirect economic impacts on local industries and enterprises resulting from the physical changes to habitat areas that may be associated with project modifications (e.g., regional economic impacts).

Section 7 Costs

10.     The majority of future section 7 consultations associated with the proposed critical habitat for the sturgeon are likely to address dredging and disposal, other civil works activities carried out by the Army Corps of Engineers (ACOE) (e.g., water supply, beach nourishment, wetland/habitat creation, flood control), private construction projects in wetlands and navigable waterways, oil and gas exploration and pipeline construction, bridge replacement, water quality standards, mission and natural resource management activities at Department of Defense (DOD) sites, emergency management, and dam operation and maintenance. This analysis estimates that, over ten years, approximately 139 formal consultations and 1,314 informal consultations will occur on projects with the potential to affect the proposed critical habitat, plus one additional programmatic consultation on dredging and disposal activities in ACOE’s Mobile, Alabama District. Many of these consultations are likely to result in Service recommendations for project modifications.

11.     Results of the economic analysis are summarized below in terms of landownership category:

•  Federal Agencies: Federal agencies are likely to incur the bulk of costs associated with section 7 implementation for the sturgeon. The following agencies carry out, fund, and/or permit activities with potential section 7 impacts: ACOE, DOD, Minerals Management Service (MMS), Federal Highway Administration (FHWA), Environmental Protection Agency (EPA), Federal Energy Regulatory Commission (FERC), Federal Emergency Management Agency (FEMA), NOAA Fisheries’ Office of Sustainable Fisheries, Coast Guard, Forest Service, and FWS’ National Wildlife Refuge program. Federal lands within the proposed designation are owned and managed by FWS (National Wildlife Refuges), the Forest Service, the Air Force, the Navy, and the National Aeronautics and Space Administration.
  
  
•  State Government and Private Landowners: State and private entities receiving Federal funding or applying for Federal permits will also incur costs related to section 7 implementation for the sturgeon. The state and private activities most likely to result in section 7 consultations are: bridge replacement; construction in wetlands or navigable waterways requiring a section 404 or section 10 permit from ACOE; and construction of interstate oil and gas pipelines requiring a FERC license. Other activities on private land with no Federal nexus, such as most private development, forestry, and farming practices, will not be subject to any additional consultations or project modifications. For all activities on private lands, if no Federal nexus exists, the proposed critical habitat designation creates no additional impacts.

12.     The consultation history since the listing of the sturgeon in September 1991 indicates that the Services would continue to consult on the same range of activities in the absence of critical habitat designation. However, a subset of impacts may be solely attributable to the critical habitat designation. A portion of the total section 7 consultation costs are associated with the administrative effort required to address critical habitat issues during the formal and informal consultation process. In addition, NOAA Fisheries believes it will have to reinitiate certain past consultations to more systematically address habitat impacts. Some activities that required informal consultations with NOAA Fisheries in the past may also require formal consultation under the designation due to increased concerns about habitat impacts.

Section 7 Benefits

13.     Certain categories of benefit may derive from the listing of the sturgeon and the designation of critical habitat. Survival and recovery of the species may lead to benefits such as enhanced existence value and, in the long term, development of commercial and sport fisheries. Protecting sturgeon habitat may produce benefits such as improved ecosystem health, recreational opportunities, flood control, and property values. Insufficient information exists to quantify the secondary benefits of habitat protection. However, several willingness-to-pay studies reported in the economics literature attempt to estimate the non-use value the public holds for preservation of various species of fish. Non-use values represent the public’s willingness-to-pay to preserve a species or enhance a species’ population above and beyond any direct use. While these studies do not predict the willingness to pay individuals would have for the protections afforded to the sturgeon through section 7 of the Act, they support the notion that preservation of the sturgeon may generate substantial benefits to the public. However, because future consultations and project modifications are primarily associated with the listing of the species, associated benefits are also expected to arise primarily from the listing.

Summary

14.     Exhibit ES-1 provides a summary of expected total consultation and project modification costs associated with section 7 implementation for the sturgeon over a ten year period, and identifies the subset of impacts attributable to the designation of critical habitat.

Exhibit ES-1  ESTIMATED TOTAL COSTS ASSOCIATED WITH SECTION 7 IMPLEMENTATION FOR THE GULF STURGEON BY UNIT (TEN YEARS)
Unit	Total Section 7 Costs	Costs Attributable to Critical Habitat
Unit 1	$508,000 to $2,068,000	$23,000 to $28,000
Unit 2	$224,000 to $923,000	$13,000 to $15,000
Unit 3	$175,000 to $622,000	$10,000 to $11,000
Unit 4	$216,000 to $934,000	$12,000 to $15,000
Unit 5	$112,000 to $348,000	$7,000
Unit 6	$265,000 to $893,000	$16,000 to $18,000
Unit 7	$214,000 to $864,000	$10,000 to $12,000
Unit 8	$787,000 to $2,260,000	$172,000 to $228,000
Unit 9	$377,000 to $1,181,000	$92,000 to $109,000
Unit 10	$816,000 to $3,094,000	$78,000 to $95,000
Unit 11	$407,000 to $1,030,000	$24,000 to $26,000
Unit 12	$885,000 to $3,354,000	$66,000 to $81,000
Unit 13	$271,000 to $837,000	$43,000 to $50,000
Unit 14	$55,000 to $259,000	$3,000 to $4,000
Multiple Units	$228,000 to $691,000	$35,000 to $51,000
Consultation Cost Sub-Total	$5,538,000 to $19,358,000	$602,000 to $752,000
Project Modification Cost (All Units)	$37,850,000	$0
Total 1	$43,388,000 to $57,208,000	$602,000 to $752,000
Note: Costs may not sum due to rounding. 1 Total does not include potential programmatic consultation on dredging and disposal activities.

SECTION 1

INTRODUCTION AND BACKGROUND

15.         The U.S. Fish and Wildlife Service (FWS) and the National Marine Fisheries Service (NOAA Fisheries) (the Services) are in the process of proposing designation of critical habitat for the Gulf sturgeon (Acipenser oxyrinchus desotoi). The purpose of this report is to identify and analyze potential economic impacts that could result from the designation. This report was prepared by Industrial Economics, Incorporated (IEc), under contract to FWS’s Division of Economics.

16.         Section 4(b)(2) of the Endangered Species Act (the Act) requires that the Services base the designation of critical habitat upon the best scientific and commercial data available, after taking into consideration the economic impact, and any other relevant impact, of specifying any particular area as critical habitat. The Services may exclude areas from critical habitat designation when the benefits of exclusion outweigh the benefits of including the areas as critical habitat, provided the exclusion will not result in extinction of the species.

17.         Under the listing of a species, section 7(a)(2) of the Act requires Federal agencies to consult with the Services in order to ensure that activities they fund, authorize, permit, or carry out are not likely to jeopardize the continued existence of the species. For designated critical habitat, section 7(a)(2) also requires Federal agencies to consult with the Services to ensure that activities they fund, authorize, permit, or carry out do not result in destruction or adverse modification of critical habitat.

18.         In March 2001, the United States Court of Appeals for the Fifth Circuit instructed the Services to reconsider their previous determination that designation of critical habitat for the sturgeon is not prudent (Sierra Club v. U.S. Fish and Wildlife Service, 245 F.3d 434, 5^th Circuit, 2001). The Proposed Designation of Critical Habitat for the Gulf Sturgeon, published June 6, 2002, reflects the Services’ interpretation of recent judicial opinions on critical habitat designation and the standards for making a prudency determination. However, the March 2001 decision of the Fifth Circuit Court of Appeals found the Services’ definition of destruction or adverse modification as currently contained in 50 CFR 402.02 to be invalid. In response to this decision, the Services are “reviewing the regulatory definition of adverse modification in relation to the conservation of the species.” The Services define jeopardy as any action that would appreciably reduce the likelihood of both the survival and recovery of the species. Adverse modification of critical habitat is currently construed as any direct or indirect alteration that appreciably diminishes the value of critical habitat for conservation of a listed species.

1.1    Description of Species and Habitat

19.         The Gulf sturgeon (sturgeon) is an anadromous fish (ascending rivers from the sea for breeding), inhabiting coastal rivers from Louisiana to Florida during the warmer months and overwintering in estuaries, bays, and the Gulf of Mexico. It is a nearly cylindrical fish embedded with bony plates or scutes, with an extended snout and a suction-type mouth located beneath the head with four barbels in front of the mouth.

20.         Adult sturgeon range between 6 and 8 feet in length, with adult females larger than males. Sturgeon feeding habits in freshwater vary depending on the fish’s life history stage (young-of-year, juvenile, sub-adult, adult). Young-of-year sturgeon remain in freshwater through early February, feeding on aquatic invertebrates and detritus. Juvenile feeding is widely distributed, exploiting scarce food resources throughout the river, including aquatic insects, worms, and bivalve molluscs. It is believed that sub-adult and adult sturgeon do not feed in freshwater but rather fast and lose up to 30 percent of their total body weight and then compensate for the loss during winter feeding in the sea.

21.         Sturgeon are long-lived, with some reaching 42 years in age. Females reach sexual maturity between the ages of 8 and 17, and males between 7 and 21 years. Gulf sturgeon eggs are demersal (they are heavy and sink to the bottom), adhesive, and vary in color from gray to brown to black. Mature females produce an average of 400,000 eggs. Breeding habitat consists of riverine spawning sites with substrates suitable for egg deposition and development, such as limestone outcrops and cut limestone banks, bedrock, large gravel or cobble beds, marl, soapstone, or hard clay.

22.         Historically, the sturgeon occurred from the Mississippi River to Tampa Bay. Its present range extends from Lake Pontchartrain and the Pearl River system in Louisiana and Mississippi east to the Suwannee River in Florida. Incidental sightings are still reported from the mouth of the Mississippi River and Tampa Bay.

23.         The sturgeon supported a commercial fishery in the early twentieth century, providing eggs for caviar, flesh for smoked fish, and swim bladders for isinglass, a gelatin used in food products and glues. Sturgeon numbers declined due to overfishing throughout most of the twentieth century; the decline was exacerbated by habitat loss associated with the construction of water control structures, such as dams and sills. In several rivers throughout its range, dams have severely restricted sturgeon access to historic migration routes and spawning areas.

24.         In identifying areas as critical habitat for the sturgeon, the Services considered those physical and biological features which are essential to the conservation of the species. Such requirements include, but are not limited to, space for individual and population growth and for normal behavior; food, water, air, light, minerals, or other nutritional or physiological requirements; cover or shelter; sites for breeding, reproduction, and rearing of offspring; and habitats that are protected from disturbance or are representative of the historical geographical and ecological distribution of the species. Based on the best available information, the primary constituent elements for the sturgeon are:

• Abundant food items, such as detritus, aquatic insects, worms, and/or molluscs, within riverine habitats for larval and juvenile life stages; and abundant prey items, such as amphipods, lancelets, polychaetes, gastropods, ghost shrimp, isopods, molluscs and/or crustaceans, within estuarine and marine habitats for sub-adult and adult life stages;
  
  
• Riverine spawning sites with substrates suitable for egg deposition and development, such as limestone outcrops and cut limestone banks, bedrock, large gravel or cobble beds, marl, soapstone, or hard clay;
  
  
• A flow regime (i.e., the magnitude, frequency, duration, seasonality, and rate-of-change of freshwater discharge over time) necessary for normal behavior, growth, and survival of all life stages in the riverine environment, including migration, breeding site selection, courtship, egg fertilization, resting, and staging, and for maintaining spawning sites in suitable condition for egg attachment, egg sheltering, resting, and larval staging;
  
  
• Water quality, including temperature, salinity, pH, hardness, turbidity, oxygen content, and other chemical characteristics, necessary for normal behavior, growth, and viability of all life stages;
  
  
• Sediment quality, including texture and other chemical characteristics, necessary for normal behavior, growth, and viability of all life stages; and
  
  
• Safe and unobstructed migratory pathways necessary for passage within and between riverine, estuarine, and marine habitats (e.g., an unobstructed river or a dammed river that still allows for passage)

1.2    Proposed Critical Habitat  

25.         The areas proposed for designation as critical habitat for the sturgeon provide one or more of the primary constituent elements described above. All of the proposed areas require special management considerations to ensure their contribution to the conservation of the sturgeon. The critical habitat area consists of 1,580 river miles and 2,333 square miles of estuarine and marine habitat within 14 units. The lateral extent of proposed riverine critical habitat is up to the ordinary high-water line on each river bank, and up to the mean high-water line for estuarine and marine habitat. All of the proposed critical habitat areas are currently seasonally occupied by the sturgeon. Descriptions of each critical habitat unit are provided below: 

• Unit 1: Pearl River System in St. Tammany and Washington Parishes in Louisiana, and Walthall, Hancock, Pearl River, Marion, Lawrence, Simpson, Copiah, Hinds, Rankin, and Pike Counties in Mississippi. Unit 1 includes the Pearl River main stem from the spillway of the Ross Barnett Dam, downstream to where the main stem river drainage discharges at its mouth joining Lake Borgne, Little Lake, or The Rigolets. It includes the main stems of the East Pearl River, West Pearl River, West Middle River, Holmes Bayou, Wilson Slough, downstream to where these main stem river drainages discharge at the mouths of Lake Borgne, Little Lake, or the Rigolets. Unit 1 also includes the Bogue Chitto River main stem, a tributary of the Pearl River, from its confluence with Lazy Creek just upstream of its crossing with Mississippi State Highway 570, downstream to its confluence with the West Pearl River.
  
  
• Unit 2: Pascagoula River System in Forrest, Perry, Greene, George, Jackson, Clarke, Jones, and Wayne Counties, Mississippi. Unit 2 includes all of the Pascagoula River main stem and its distributaries, portions of the Bowie, Leaf, and Chickasawhay tributaries, and all of the Big Black Creek tributary. It includes the Bowie River main stem beginning at its confluence with Bowie Creek and Okatoma Creek, downstream to its confluence with the Leaf River. The Leaf River main stem beginning from Mississippi Sate Highway 588 downstream to its confluence with the Chickasawhay River is included. The main stem of the Chickasawhay River from the mouth of Oaky Creek downstream to its confluence with the Leaf River is included. Unit 2 also includes Big Black Creek main stem from its confluence with Black and Red Creeks, to its confluence with the Pascagoula River. All of the main stem of the Pascagoula River from its confluence with the Leaf and Chickasawhay Rivers to the discharge of the East and West Pascagoula Rivers into Pascagoula Bay is included.
  
  
• Unit 3: Escambia River System in Santa Rosa and Escambia Counties, Florida, and Escambia, Conecuh and Covington Counties, Alabama. Unit 3 includes the Conecuh River main stem beginning just downstream of the spillway of Point A Dam, downstream to the Florida State line, where its name changes to the Escambia River. It includes the entire main stem of the Escambia River downstream to its discharge into Escambia Bay and Macky Bay. All of the distributaries of the Escambia River including White River, Little White River, Simpson River, and Dead River are included. The Sepulga River main stem from Alabama County Road 42 downstream to its confluence with the Conecuh River is also included.
  
  
• Unit 4: Yellow River System in Santa Rosa and Okaloosa Counties, Florida, and Covington County, Alabama. Unit 4 includes the Yellow River main stem from Alabama State Highway 55, downstream to its discharge at Blackwater Bay. All Yellow River distributaries (including Weaver River and Skim Lake) discharging into Blackwater Bay are included. The Shoal River main stem, a Yellow River tributary, from Florida Highway 85, to its confluence with the Yellow River, is included. The Blackwater River from its confluence with Big Coldwater Creek, downstream to its discharge into Blackwater Bay is included. Wright Basin and Cooper Basin on the Blackwater River are included.
  
  
• Unit 5: Choctawhatchee River System in Holmes, Washington, and Walton Counties, Florida, and Dale, Coffee, Geneva, and Houston Counties, Alabama.
Unit 5 includes the Choctawhatchee River main stem from its confluence with West Fork Choctawhatchee River and East Fork Choctawhatchee River, downstream to its discharge at Choctawhatchee Bay. The distributaries discharging into Choctawhatchee Bay known as Mitchell River, Indian River, Cypress River, and Bells Leg are included. Boynton Cutoff, which joins the Choctawhatchee River main stem, and Holmes Creek are included. The section of Holmes Creek from Boynton Cutoff to the mouth of Holmes Creek is included. The Pea River main stem, a Choctawhatchee River tributary, is included from the Elba Dam to its confluence with the Choctawhatchee River.


• Unit 6: Apalachicola River System in Franklin, Gulf, Liberty, Calhoun, Jackson, and Gadsen Counties, Florida. Unit 6 includes the Apalachicola River mainstem, beginning from the Jim Woodruff Lock and Dam, downstream to its discharge at East Bay or Apalachicola Bay. All Apalachicola River distributaries, including East River, Little St. Marks River, St. Marks River, to their discharge into East Bay and/or Apalachicola Bay are included. The entire main stem of the Brothers River, a tributary of the Apalachicola River, is included.

• Unit 7: Suwannee River System in Hamilton, Suwannee, Madison, Lafayette, Gilchrist, Levy, Dixie and Columbia counties, Florida. Unit 7 includes the Suwannee River main stem, beginning from its confluence with Long Branch Creek, downstream to the mouth of the Suwannee River. It includes all Suwannee River distributaries, including the East Pass, West Pass, Wadley Pass, and Alligator Pass, to their discharge into Suwannee Sound or the Gulf of Mexico. The Withlacoochee River main stem from Florida State Road 6 to its confluence with the Suwannee River is included.
  
  
• Unit 8: Lake Pontchartrain, Lake St. Catherine, the Rigolets, Little Lake, Lake Borgne, and Mississippi Sound in Jefferson, Orleans, St. Tammany, and St. Bernard Parishes in Louisiana, Hancock, Jackson, and Harrison Counties in Mississippi, and Mobile County in Alabama. Unit 8 encompasses Lake Pontchartrain east of the Lake Pontchartrain Causeway, all of Little Lake, the Rigolets, Lake St. Catherine, Lake Borgne, including Heron Bay, and Mississippi Sound. The Mississippi Sound includes adjacent open bays including Pascagoula Bay, Point aux Chenes Bay, Grand Bay, Sandy Bay, Portersville Bay, and Fowl River Bay, and Heron Bay and barrier island passes, including Ship Island Pass, Dog Keys Pass, Horn Island Pass, and Petit Bois Pass. The northern boundary of Mississippi Sound is the shorelines of the mainland between Heron Bay Point, Mississippi and Cedar Point, Alabama. Proposed critical habitat excludes St. Louis Bay, north of the railroad bridge across its mouth; Biloxi Bay, north of the US Highway 90 bridge; and the Back Bay of Biloxi. The southern boundary follows along the broken shoreline of Lake Borgne created by low swampy islands from Malheureux Point to Isle au Pitre. From the northeast point of Isle au Pitre, the boundary continues in a straight north-northeast line to one nautical mile off the western most extremity of Cat Island at 30^o13' N, 89^o10' W. The southern boundary continues one mile offshore of the barrier islands and offshore of the 72 COLREGS lines at barrier island passes (defined at 33 CFR 80.815 (c), (d) and (e)) to the eastern boundary. The eastern boundary is the line of longitude 88^o18.8' W from its intersection with the shore (Point aux Pins) to its intersection with the southern boundary.
  
  
• Unit 9: Pensacola Bay System in Escambia and Santa Rosa Counties, Florida. Unit 9 includes Pensacola Bay and its adjacent main bays and coves. These include Big Lagoon, Escambia Bay, East Bay, Blackwater Bay, Bayou Grande, Macky Bay, Saultsmar Cove, Bass Hole Cove, and Catfish Basin. All other bays, bayous, creeks, and rivers are excluded at their mouths. The western boundary is the Florida State Highway 292 Bridge crossing Big Lagoon to Perdido Key. The southern boundary is the 72 COLREGS line between Perdido Key and Santa Ross Island (defined at 33 CFR 80.810 (g)). The eastern boundary is the Florida State Highway 399 Bridge at Gulf Breeze, FL.
  
  
• Unit 10: Santa Rosa Sound in Escambia, Santa Rosa and Okaloosa Counties, Florida. Unit 10 includes Santa Rosa Sound, bounded on the west by the Florida State Highway 399 bridge at Gulf Breeze, FL. The eastern boundary is the U.S. Highway 98 bridge in Fort Walton Beach, FL. The northern and southern boundaries are formed by the shorelines to the mean high water (MHW) or by the entrance to rivers, bayous, and creeks.
  
  
• Unit 11: Florida Nearshore Gulf of Mexico Unit in Escambia, Santa Rosa, Okaloosa, Walton, Bay, and Gulf Counties in Florida. Unit 11 includes a portion of the Gulf of Mexico as defined by the following boundaries. The western boundary is the line of longitude 87°20.0' W (approximately one nautical mile west of Pensacola Pass) from its intersection with the shore to its intersection with the southern boundary. The northern boundary is the MHW of the mainland shoreline and the 72 COLREGS lines at passes as defined at 30 CFR 80.810 (a-g). The southern boundary is one nautical mile offshore of the northern boundary. The eastern boundary is line of longitude 85°17.0' W from its intersection with the shore (near Money Bayou between Cape San Blas and Indian Peninsula) to its intersection with the southern boundary.
  
  
• Unit 12: Choctawhatchee Bay in Okaloosa and Walton Counties, Florida. Unit 12 includes the main body of Choctawhatchee Bay, Hogtown Bayou, Jolly Bay, Bunker Cove, and Grassy Cove. All other bayous, creeks and rivers are excluded at their mouths/entrances. The western boundary is the US Highway 98 bridge at Fort Walton Beach, FL. The southern boundary is the 72 COLREGS line across East (Destin) Pass as defined at 33 CFR 80.810 (f).
  
  
• Unit 13: Apalachicola Bay in Gulf and Franklin County, Florida. Unit 13 includes the main body of Apalachicola Bay and its adjacent sounds, bays, and the nearshore waters of the Gulf of Mexico. These consist of St. Vincent Sound, including Indian Lagoon; Apalachicola Bay including Horseshoe Cove and All Tides Cove; East Bay including Little Bay and Big Bay; and St George Sound, including Rattlesnake Cove and East Cove. Barrier Island passes (Indian Pass, West Pass, and East Pass) are also included. The southern boundary of this proposed critical habitat unit includes water extending into the Gulf of Mexico one nautical mile from the MHW line of the barrier islands and from 72 COLREGS lines between the barrier islands (defined at 33 CFR 80.805 (e-h)). The western boundary is the line of longitude 85°17.0' W from its intersection with the shore (near Money Bayou between Cape San Blas and Indian Peninsula) to its intersection with the southern boundary. The eastern boundary is formed by a straight line drawn from the shoreline of Lanark Village at 29°53.1'N, 84°35.0' W to a point that is one nautical miles offshore from the northeastern extremity of Dog Island at 29°49.6' N, 84°33.2' W.
  
  
• Unit 14: Suwannee Sound in Dixie and Levy Counties, Florida. Unit 14 includes Suwannee Sound and a portion of adjacent Gulf of Mexico waters extending nine nautical miles out to the state territorial water boundary. Its northern boundary is formed by a straight line from the northern tip of Big Pine Island (at approximately 29°23' N, 83°12' W) to the Federal-State boundary at 29°17' N, 83°21' W. The southern boundary is formed by a straight line from the southern tip of Richards Island (at approximately 29°11' N, 83°04' W) to the Federal-State boundary at 29°04' N, 83°15' W.

1.3    Framework for Analysis

26.         The focus of this economic analysis is on section 7 of the Act, which requires Federal agencies to ensure that any action authorized, funded, or carried out will not likely jeopardize the continued existence of any endangered or threatened species or result in the destruction or adverse modification of critical habitat. Federal agencies are required to consult with the Services whenever they propose an action that may affect a listed species or its designated critical habitat. Aside from the protection that is provided under section 7, the Act does not provide other forms of protection to lands designated as critical habitat. Because consultation under section 7 only applies to activities that are carried out, permitted, or funded by Federal agencies, the designation of critical habitat will not afford any additional protections for species with respect to such strictly private activities.

27.         This analysis first identifies land use activities within or in the vicinity of those areas being proposed for critical habitat that are likely to be affected by section 7 of the Act. To do this, the analysis evaluates a “without section 7” scenario and compares it to a “with section 7” scenario. The “without section 7” scenario constitutes the baseline of this analysis. It represents the level of protection that would be afforded the species under the Act if section 7 protective measures were absent. This level of protection would include other Federal, state, and local laws. The “with section 7” scenario identifies land use activities likely to involve a Federal nexus that may affect the species or its designated critical habitat, which accordingly have the potential to be subject to future consultations under section 7 of the Act.

28.         Economic activities identified as likely to be affected under section 7 and the resulting impacts that section 7 can have on such activities constitute the upper bound estimate of the proposed critical habitat economic analysis. By defining the upper bound estimate to include both jeopardy and critical habitat impacts, the analysis recognizes the difficulty in differentiating between the two in evaluating only the critical habitat effects associated with the proposed rulemaking. This step is adopted in order to ensure that any critical habitat impacts that may occur co-extensively with the listing of the species (i.e., jeopardy) are not overlooked in the analysis.

29.         Upon identifying section 7 impacts, the analysis proceeds to consider the subset of impacts that can be attributed exclusively to the critical habitat designation. To do this, the analysis adopts a “with and without critical habitat” approach. This approach is used to determine those effects found in the upper-bound estimate that may be attributed solely to the proposed designation of critical habitat. Specifically, the “with and without critical habitat” approach considers section 7 impacts that will likely be associated with the implementation of the jeopardy provisions of section 7 and those that will likely be associated with the implementation of the adverse modification provision of section 7. In many cases, impacts associated with the jeopardy standard remain unaffected by the designation of critical habitat and thus would not normally be considered an effect of a critical habitat rulemaking. The subset of section 7 impacts likely to be affected solely by the designation of critical habitat represents the lower-bound estimate of this analysis.

30.         The critical habitat designation for the sturgeon encompasses state-owned lands beneath tidally influenced and navigable waters up to the high water mark. The states of Louisiana, Mississippi, Alabama, and Florida were granted ownership of these lands upon statehood in 1811, 1817, 1819, and 1845, respectively. The majority of riparian lands bordering riverine critical habitat units are in private ownership. Areas adjacent to the proposed critical habitat designation also include lands under state, local, and Federal ownership, with Federal lands being managed by the Service, the Forest Service, the Air Force, the Navy, the National Aeronautics and Space Administration, and the Fish and Wildlife Service. For private lands subject to critical habitat designation, section 7 consultations and modifications to land uses and activities can only be required when a Federal nexus, or connection, exists. A Federal nexus arises if the activity or land use of concern involves Federal permits, Federal funding, or another form of Federal involvement. Section 7 consultations are not required for activities on non-Federal lands that do not involve a Federal nexus.

31.         In addition to activities occurring within the areas proposed for critical habitat designation, this report will examine adjacent activities sponsored or permitted by Federal agencies that may affect the sturgeon and/or adversely modify the proposed critical habitat area.

32.         This report estimates impacts of listing and critical habitat designation on activities that are “reasonably foreseeable,” including, but not limited to, activities that are currently authorized, permitted, or funded, or for which proposed plans are currently available to the public. Accordingly, the analysis bases estimates on activities that are likely to occur within a ten-year time horizon.

1.4    Methodological Approach

33.         This report relies on a sequential methodology and focuses on distilling the salient and relevant aspects of potential economic impacts of designation. The methodology consists of:

• Determining the current and projected economic activity within and around the proposed critical habitat area;
  
  
• Considering how current and future activities that currently take place or will likely take place on Federal and private land could adversely affect proposed critical habitat; 
  
  
• Identifying whether such activities taking place on privately owned property within the proposed critical habitat boundaries are likely to involve a Federal nexus;
  
  
• Evaluating the likelihood that identified Federal actions and non-Federal actions having a Federal nexus will require consultations under section 7 of the Act and, in turn, that such consultations will result in modifications to projects;
  
  
• Estimating per-unit costs of expected section 7 consultations, project modifications and other economic impacts (e.g., secondary impacts to the regional economy) associated with activities in or adjacent to areas proposed as critical habitat;
  
  
• Estimating the upper bound of total costs associated with the area proposed for the designation (including costs that may be attributed co-extensively with the listing of the species) and the lower bound of costs (i.e., costs attributable solely to critical habitat);
  
  
• Determining the benefits that may be associated with the designation of critical habitat; and
  
  
• Assessing the extent to which critical habitat designation will create costs for small businesses and/or affect property values as a result of modifications or delays to projects.

1.5    Information Sources

34.         The primary sources of information for this report were communications with FWS (Panama City, FL; Jacksonville, FL; Daphne, AL; Jackson, MS; and Lafayette, LA Offices) and NOAA Fisheries biologists (Saint Petersburg, FL Southeast Regional Office), and personnel from affected agencies, including: Army Corps of Engineers (New Orleans, LA; Vicksburg, MS; Mobile, AL; and Jacksonville, FL Districts), Minerals Management Service, Environmental Protection Agency, State Departments of Transportation in Florida and Alabama, Federal Energy Regulatory Commission, Federal Emergency Management Agency, Eglin Air Force Base, Tyndall Air Force Base, John C. Stennis Space Center, Pensacola Naval Air Station, Coast Guard, and Forest Service. Publicly available data (e.g., information available on the Internet) were also used to augment the analysis.

SECTION 2

RELEVANT BASELINE INFORMATION

35.         This section discusses the socioeconomic characteristics of areas proposed as critical habitat for the Gulf sturgeon. In addition, this section provides relevant information about regulations and requirements that exist in the baseline (i.e., the “without section 7” scenario) and potentially link to sturgeon conservation.

2.1    Socioeconomic Profile of the Critical Habitat Areas

36.         This section summarizes key economic and demographic information for the counties containing proposed critical habitat for the sturgeon. County level data are presented to provide context for the discussion of potential economic impacts, and to illuminate trends that may influence these impacts. Although county level data may not precisely reflect the socioeconomic characteristics of the areas immediately surrounding the proposed critical habitat for the sturgeon (because the units are located in rivers and other water bodies that cross county barriers), it provides a useful context for the broader analysis.

2.1.1 Population

37.         This critical habitat designation spans a diverse array of urban and rural areas. Exhibit 2-1 lists the population size, per capita income, and population density for all the counties that have critical habitat designated within their boundaries and for the states as a whole. The percent of the state population living within a county containing critical habitat ranges from less than 0.05 percent (Lafayette and Liberty Counties in Florida) to nearly 11 percent (Orleans County in Louisiana). Of the 53 counties, 41 have a lower per capita income and 37 have fewer persons per square mile than their respective state averages. Although these measures vary considerably across states, the data suggests that overall the counties are less densely populated, and have a lower than average income per capita than is found on average in their respective states.

2.1.2  Economic Activity

38.         The proposed designation of critical habitat for the sturgeon lies within the vicinity of several major centers of industrial and commercial economic activity. Understanding the types of businesses that operate around critical habitat provides context for the current activities that occur in the proposed designation and future development pressure on the region.

39.         Exhibit 2-2 provides economic statistics for the 53 counties that include portions of the proposed critical habitat for the sturgeon. The “Number of Establishments” columns show the total number of physical locations at which business activities are conducted with one or more paid employee in the year 2000 for each state. As the exhibit shows, at least 689,000 business establishments operate in the 53 counties containing habitat designation. These figures provide a measure of the average density of commercial and industrial establishments in the region. Specific potential impacts to activities within these industries as a result of section 7 implementation for the sturgeon are discussed in Section 3.

2.2    Baseline Elements

40.          The baseline constitutes the “without section 7” scenario for this analysis. The baseline for the sturgeon includes Federal and state laws, including the prohibition against take of the species contained within section 9 of the Act, as well as voluntary environmental programs that provide protection to the sturgeon in the absence of the protection afforded by the listing and any anticipated additional protection afforded by the proposed critical habitat designation.

         2.2.1  Recovery Plan

41.         An important component of the regulatory baseline is the Gulf Sturgeon Recovery/Management Plan, published in 1995. The Recovery Plan establishes recovery criteria for the sturgeon and proposes actions to restore and maintain sturgeon populations. The ultimate goal of the Recovery Plan is to enable the species to recover to the point that it can be removed from the Federal list of endangered and threatened wildlife and plants. A secondary goal is to recover the species to the point that it can support a commercial fishery. While the Recovery Plan imposes no binding restrictions or obligations on landowners and managers, it serves as an important information source regarding sturgeon habitat areas.

         2.2.2  Overlap with Other Listed Species

42.         Generally, if a consultation is triggered for any listed species, the consultation process will also take into account all other listed species known or thought to occupy areas on or near the project lands. As such, listing or critical habitat-related protections for other threatened or endangered species may benefit the sturgeon as well (i.e., provide baseline protection). However, due to the difficulty in apportioning the costs of consultations between various species as well as awareness that a consultation for the sturgeon would need to be conducted absent consultations for or involving other species, this analysis does not attempt to apportion the consultations and related costs reported by Action agencies between the sturgeon and other listed species. The Services have conducted consultations on the sturgeon in combination with numerous species, as indicated in Exhibit 2-3.

 
        2.2.3 Federal and State Statutes and Regulations

43.         This section provides relevant information about the regulatory elements that exist in the baseline, or the “without section 7” scenario. Where proposed activities directly affect proposed critical habitat areas, these state and local regulations may provide a level of protection to the species even in the absence of section 7. Furthermore, these regulations may influence development and/or affect the section 7 consultation process.

44.         The baseline regulatory elements potentially relevant to this analysis are described in Appendix A. As the Appendix shows, a considerable number of Federal, state, and other regulatory initiatives could provide the sturgeon with some measure of protection absent section 7 consultation.

SECTION 3

SECTION 7 IMPACTS

45.          The previous two sections introduced the geographic areas in which the Services are proposing to designate critical habitat for the sturgeon, the socioeconomic profile of these areas, and general trends associated with population, economic and urban growth. These sections also outlined the baseline level of protection afforded the sturgeon and its habitat, including existing Federal and state laws and policies. This section will identify the current land and water uses in or near the proposed critical habitat areas that may be affected by section 7 implementation for the sturgeon. Importantly, these estimates include the effects of section 7 implementation for all activities associated with the proposed critical habitat area. As such, this section does not distinguish which impacts may be attributable co-extensively to the listing of the sturgeon, versus those impacts attributable solely to the critical habitat designation. Therefore, the estimates in this section should reflect an “upper bound” of impacts caused by the designation.

46.          This section begins with a summary of the categories of economic impact associated with section 7 implementation for the sturgeon. It then provides a general description of the activities and potential Federal nexuses affecting the 1,580 river miles and 2,333 square miles of estuarine and marine habitat proposed as critical habitat for the sturgeon. The section then discusses likely modifications to proposed projects and regional economic impacts associated with implementing section 7 of the Act for the sturgeon. This information is augmented by projections of specific projects likely to require section 7 consultation in each critical habitat unit over the next ten years (see Appendix B).

3.1     Categories of Economic Impacts Associated with Section 7 Implementation

47.          The following section provides an overview of the categories of economic impacts that are likely to arise due to the implementation of section 7 in the geographic area proposed as critical habitat for the sturgeon.

     3.1.1  Technical Assistance

48.          Frequently, the Services respond to requests for technical assistance from other Federal agencies, state agencies, local municipalities, and private landowners and developers with questions regarding whether specific activities may affect a listed species or its critical habitat. Technical assistance costs represent the estimated economic costs of informational conversations between these entities and the Services regarding such potential effects. Most likely, such conversations will occur between municipal or private property owners and the Services regarding lands designated as critical habitat or lands adjacent to critical habitat. The Services’ technical assistance activities are voluntary and occur in instances where a Federal nexus does not exist. Costs to the Services of providing technical assistance to private parties are expected to be small relative to other economic impacts to the Services, Action agencies, and third parties; therefore, this analysis does not quantify the instances and costs of technical assistance efforts.

     3.1.2  Section 7 Consultations

49.          Section 7(a)(2) of the Act requires Federal agencies (Action agencies) to consult with the Services whenever activities that they undertake, authorize, permit, or fund may affect a listed species or designated critical habitat. In some cases, consultations will involve the Services and another Federal agency only, such as the Army Corps of Engineers (ACOE). Often, they will also include a third party involved in projects on non-Federal lands with a Federal nexus, such as private landowners conducting activities that require a Federal permit. In addition, Action agencies may engage in programmatic consultations to develop strategies to consider impacts to the sturgeon and its habitat at the program level, rather than at the individual project level. For example, EPA conducts programmatic consultations with FWS to consider endangered and threatened species when reviewing state water quality standards.

50.          During a consultation, the Services, the Action agency, and, if applicable, the private entity applying for Federal funding or permitting communicate in an effort to minimize potential adverse effects to the species and/or to the proposed critical habitat. Communication between these parties may occur via written letters, phone calls, in-person meetings, or any combination of these. The duration and complexity of these interactions depends on a number of variables, including the type of consultation, the species, the activity of concern, the potential effects to the species and designated critical habitat associated with the proposed activity, and the parties involved.

51.          Section 7 consultations with the Services may be either informal or formal. Informal consultation, which consists of informal discussions between the Services, the Action agency, and the applicant concerning an action that may affect a listed species or its designated critical habitat, is designed to identify and remove potential impacts at an early stage in the planning process. By contrast, a formal consultation is required if the Action agency determines that the proposed action may affect a listed species or designated critical habitat in ways that cannot be resolved through informal consultation. Regardless of the type of consultation or proposed project, section 7 consultations can require substantial administrative effort on the part of all participants. The costs of these efforts are an important component of the impacts assessment.

52.          Under certain circumstances, the designation of critical habitat can result in section 7 consultations with the Services beyond those required by the listing. These include: new consultations, which can occur when activities involving a Federal nexus are proposed in or near critical habitat not thought to be currently occupied by the species; more intensive consultations, in which actions that would previously have been resolved during informal consultation must proceed to formal consultation in order to consider habitat impacts; and reinitiations of consultations, which result when consultations that previously occurred under the listing are reinitiated due to new information or circumstances generated by the designation of critical habitat.

     3.1.3  Project Modifications

53.          The section 7 consultation process may involve some modifications to a proposed project. Projects may be modified in response to voluntary conservation measures suggested by the Services during the informal consultation process in order to avoid or minimize impact to a species and/or its habitat, thereby removing the need for formal consultation. Alternatively, formal consultations may involve modifications that are agreed upon by the Action agency and the applicant and included in the project description as avoidance and minimization measures, or included in the Services’ biological opinion on the proposed action as reasonable and prudent measures (RPMs) and/or discretionary conservation recommendations to assist the Action agency in meeting their obligations under section 7(a)(1) of the Act. In some cases, the Services may determine that the project is likely to jeopardize the continued existence of the species and/or destroy or adversely modify its designated critical habitat. In these cases the Services will include reasonable and prudent alternatives to the proposed project. The reasonable and prudent alternatives are typically developed by the Services in cooperation with the Action agency and, when applicable, the applicant. Alternatively, the Action agency can develop its own reasonable and prudent alternatives, or seek an exemption for the project. All of these project modifications have the potential to represent some cost to the Action agency and/or the applicant. In certain instances, these modifications can lead to broader regional economic impacts.

     3.1.4  Regional Economic Impacts

54.          As outlined in Section 2 of this report, approximately 700,000 business establishments in 53 counties across four states are located in and around the sturgeon critical habitat designation. The consultation process and related project modifications could directly affect the operations of certain of these enterprises operating within particular industries. For example, delayed or modified dredging activities could affect shippers navigating inland waterways, causing cost and revenue effects through shipping delays or the use of alternative transportation means. Other navigation, commercial fishing, hydropower generation, and oil and gas activities could likewise experience direct effects of the section 7 consultation process.

55.          Project modifications or other restrictions that engender cost and revenue impacts involving commercial enterprises can have a subsequent detrimental effect on other sectors of the local economy, especially when the affected industry is central to the local economy. Industries within a geographic area are interdependent in the sense that they purchase output from other industries and sectors, while also supplying inputs to other businesses. Thus, direct economic effects on a particular enterprise can affect regional output and employment in multiple industries.

3.2     Activities Potentially Affected by Section 7

56.          Numerous Action agencies carry out and permit activities and projects in or adjacent to proposed critical habitat areas. These activities may lead to section 7 consultation with the Services, and in some cases specific projects may be modified in order to protect the sturgeon and/or its habitat. This section provides descriptions of activities likely to be affected by section 7 implementation. It also identifies activities unlikely to incur major section 7 impacts. Specific numbers of expected section 7 informal and formal consultations related to these activities in each proposed critical habitat unit are provided in Appendix B. Administrative and project modification costs associated with section 7 implementation for affected projects are provided in Section 4.

57.          This analysis assumes that each activity described will lead to section 7 consultation with either FWS or NOAA Fisheries, and that a consultation with each agency will not be required for a single project. The proposed rule outlines proposed jurisdictional responsibilities for the management of the sturgeon. FWS would be responsible for all consultations on the sturgeon in riverine units and NOAA Fisheries would be responsible for all consultations on the sturgeon in marine units. In estuarine areas, the Services propose to divide consultation responsibilities according to the Action agency involved, such that FWS would consult with the Federal Highway Administration (along with state Departments of Transportation), the Environmental Protection Agency, the Coast Guard, and the Federal Emergency Management Agency. NOAA Fisheries would consult with the Department of Defense, Army Corps of Engineers, Minerals Management Service, and any other affected agencies in estuarine areas. FWS would take the consultation lead for projects extending into the jurisdictions of both Services. Consultations described in this report, below and in Appendix B, are assigned to either FWS or NOAA Fisheries based on this jurisdictional breakdown.

     3.2.1  Activities Likely to Require Section 7 Consultation

58.          Since the listing of the sturgeon as threatened in 1990, FWS has conducted 320 informal and 14 formal consultations, and NOAA Fisheries has conducted 70 informal and 4 formal consultations involving this species. This section summarizes activities likely to lead to section 7 consultation over the next ten years, organized in terms of the Action agency that provides the Federal nexus. Information in this section is based on the record of past consultations, as well as conversations with Action agencies and the Services about future activities. Appendix B provides detailed information on specific projects pertaining to the activities described below.

     Army Corps of Engineers

59.          The Army Corps of Engineers (ACOE) is responsible for carrying out and permitting the majority of activities with the potential to affect riverine, estuarine, and marine areas. ACOE civil works divisions undertake projects to maintain navigation channels and water infrastructure, conduct environmental restoration, and maintain flood control. ACOE regulatory divisions grant permits for private activities in navigable waterways under section 404 of the Clean Water Act and section 10 of the Rivers and Harbors Act. Activities in four district offices of ACOE are potentially affected by the critical habitat proposal: New Orleans, Louisiana; Vicksburg, Mississippi; Mobile, Alabama; and Jacksonville, Florida.

60.          ACOE has engaged in numerous past consultations with the Services, and future impacts to ACOE-operated and regulated projects are anticipated in all proposed critical habitat units. Specific projects expected to lead to consultation with the Services are listed in detail in Appendix B.

                     Dredging

61.          ACOE is responsible for maintaining and improving waterways to support channel navigation. ACOE uses dredges to maintain navigation channels at specified depths and widths to allow for barge transport of shipped goods and other boat traffic. Furthermore, ACOE must occasionally engage in emergency dredging to repair the effects of tropical storms and hurricanes. ACOE also conducts contract dredging projects for other Federal agencies, such as the Coast Guard and military facilities (e.g., Eglin Air Force Base and the Pensacola Naval Air Station in Florida).

62.          Several types of dredges are used to remove accumulated sediment from channels. Mechanical dredges, such as backhoe and dipper dredges, scoop up material with cranes and place it onto barges for removal. More commonly, ACOE uses hydraulic dredges, such as hopper and pipeline dredges, to pump material out of the channel as slurry. Hopper dredges pump slurry into a ship with a large holding compartment, while pipeline dredges pump sediment though a pipe directly into a disposal area. Availability of hydraulic dredges is a major concern to ACOE, as only four hopper dredges and approximately 20 pipeline dredges are available for projects along the Gulf Coast. Dredge availability is a key determinant for scheduling of large-scale dredging projects.

63.          ACOE plans the location and timing of dredging projects to ensure that channel reliability is always maintained. Frequency of dredging varies widely, from almost constant maintenance dredging to once every ten or twenty years, depending on the level of use of the waterway for shipping and the natural rate of sediment deposition. The major navigation channels must be kept at set depths and widths to allow shippers to enter ports. Failure to maintain the navigation channels accordingly greatly affects shippers who may be forced to use smaller vessels, light load (i.e., remove shipped goods to reduce weight and therefore the depth of the barge), use alternative modes of transport, such as rail or truck transport, or travel on to another port. All of these alternatives increase the cost of transporting goods. In extreme cases, commercial facilities may close and economic activities may transfer to other locations.

64.          The major risks of dredging projects to sturgeon are entrainment in dredges, prevention of migratory passage through channels and inlets due to blockage by large dredges, and elevated turbidity causing increased siltation on feeding or spawning areas. Numerous formal and informal consultations on dredging activities are anticipated in the proposed critical habitat units over the next ten years (see Appendix B).

                     Sediment Disposal

65.          ACOE must provide a suitable disposal site for dredged material. The most common disposal methods are: ocean placement, beach nourishment, confined disposal facilities (CDFs), flow-lane and within-banks placement, and capped disposal. Placement of dredged sediment into open or confined disposal sites located in rivers and marine areas poses a risk from disposal of dredging spoils on spawning and feeding habitat. Moreover, sturgeon may be caught in confined disposal cells. Upland disposal and use of dredged sediments for beach nourishment and other restoration projects pose less risk to sturgeon. Numerous consultations on disposal activities are predicted (see Appendix B). Consultations on ACOE’s authorized navigation projects will likely consider both dredging and disposal activities.

                     Beach Nourishment and Wetland/Habitat Creation

66.          Part of ACOE’s mission is to protect beach areas from hurricane and coastal storm damage to coastal communities and promote recreation. Beach nourishment activities are typically carried out in conjunction with waterway dredging projects, which provide a source of beach sand for nourishment projects. Dredged material removed during navigation channel maintenance dredging can be used for marsh creation and beach nourishment. Dedicated dredging projects (independent of navigation dredging) are also commonly utilized to restore wetlands and stabilize beaches along the Gulf of Mexico.

67.          Dredged material may also be used for wetland and habitat creation, as well as other ecosystem restoration projects. These projects are undertaken with the goal of maintaining or re-establishing natural functioning and self-regulating wetland systems. ACOE predicts many informal consultations on beach nourishment and wetland/habitat creation activities over the next ten years. NOAA Fisheries believes that some or all of these consultations on beach nourishment could rise to formal consultation due to the designation of critical habitat; therefore, this analysis predicts formal consultations on most beach nourishment projects for which NOAA Fisheries is the lead agency (see Appendix B).

                     Flood Control/Bank Stabilization

68.          ACOE responsibilities include flood control and damage reduction efforts that range from small, local protection projects, such as construction of levees and non-structural flood control measures, to major dams. Erosion control and bank stabilization activities are typically associated with dredging and marsh creation. Shoreline protection efforts may involve construction of jetties, seawalls, and other hard structures, as well as beach nourishment. ACOE may consult on certain flood control efforts in several units (see Appendix B).

                     Clearing and Snagging

69.          ACOE conducts clearing and snagging activities on an as-needed basis, using barges to remove fallen trees and other debris from river channels. ACOE expects to engage in one formal consultation regarding debris removal on the Choctawhatchee River in Unit 5 (see Appendix B).

                     Dams and Reservoirs

70.          ACOE manages certain reservoirs and dams, such as the Jim Woodruff Dam on the Apalachicola River, to serve a variety of authorized purposes, including navigation, flood control, hydropower generation, water supply, and recreation. Furthermore, ACOE develops engineering safety criteria for safe dams and inspects dams owned or operated by other Federal, state, and local agencies and private interests.

71.          ACOE is responsible for maintenance and repair of its dams. Typical maintenance and repair activities include: powerhouse and/or lock rehabilitation, changes in reservoir release patterns to accommodate hydropower generation schedules, spot dredging to eliminate adverse cross-currents below dams, modifications to accommodate fish passage, upstream levee work, and public use area maintenance activities. Typical water supply activities include: changing the river flow regime to implement allocation formulas according to water control plans, updating/revising the water control plans, and providing special navigation releases from the dams to facilitate barge traffic. In certain cases, ACOE may alter dam release patterns to accommodate sturgeon (i.e., releasing extra water to ensure sufficient flows during spawning season). Activities related to dam maintenance and construction are expected to lead to consultation in several units (e.g., regarding the Jim Woodruff Dam in Unit 6) (see Appendix B).

72.          ACOE may consider constructing new dams with the potential to affect critical habitat. For example, the Okaloosa County Commission in Florida is considering a dam on the Yellow River in Unit 4, which ACOE could construct. If this dam or other new dams are built, they may serve the purposes of water supply, recreation on resulting man-made lakes, and possibly hydropower generation. Construction of new dams may have the potential to affect several of the primary constituent elements for the sturgeon, including natural flow regimes, access to spawning sites, water quality, and safe and unobstructed migratory passage. This analysis predicts that the proposed Yellow River dam project will lead to one formal consultation in Unit 4 to consider impacts to the sturgeon and its habitat.

                     Programmatic Consultations on Dredging and Disposal

73.          The Mobile, Alabama District of ACOE is likely to engage in a programmatic consultation jointly with the FWS Ecological Services Offices in Panama City, Florida (lead office), Daphne, Alabama, and Jackson, Mississippi regarding some or all of its dredging and disposal activities, in order to streamline the consultation process. ACOE and FWS have not yet determined the specifics of this programmatic consultation. For example, it may be a single consultation encompassing the Mobile District’s dredging operations in all affected states and water bodies. Alternatively, it could be organized as one programmatic consultation on riverine activities and one on marine and estuarine activities.

74.          The presence of a programmatic consultation could streamline the consultation process and inform the selection of project-appropriate modifications to protect the sturgeon and its habitat. ACOE may consider the scheduling of its dredging projects and, if feasible, alter the order, scope, and/or the timing of dredging projects in order to avoid conflicts with sturgeon migratory patterns and cumulative habitat impacts. When projects cannot be rescheduled to occur at times when sturgeon are not present, a programmatic consultation could help identify a set of reasonable and prudent measures that would allow the dredging projects to go forward while minimizing harm to the sturgeon and its habitat.

75.          This analysis considers both a with- and without-programmatic consultation scenario. Appendix B identifies projects that are likely to be included in a programmatic consultation, if it is developed. In the without-programmatic scenario, formal consultations are predicted for individual dredging projects in many critical habitat units. In contrast, the with-programmatic scenario predicts that one large programmatic consultation will occur. Then, ACOE will engage in informal consultations with FWS on individual dredging projects. Therefore, the development of the programmatic consultation has the potential to significantly reduce both the administrative costs associated with consultations on dredging and disposal projects and the uncertainty regarding the outcome of any one consultation.

76.          NOAA Fisheries is in the final stages of formal programmatic consultation regarding hopper dredging in the Gulf of Mexico. This programmatic consultation encompasses four ACOE Districts, three of which are affected by proposed critical habitat.

                     Regulated Modifications of Surface Water Bodies

77.          Apart from its civil works activities, ACOE also issues permits under section 404 of the Clean Water Act and section 10 of the Rivers and Harbors Act for private activities that occur in water bodies or involve modifying navigable waterways for construction and maintenance of structures. ACOE typically consults with the Services when issuing individual standard permits for such projects, but the presence of critical habitat may also cause ACOE to elevate nationwide and regional permits and consider them as individual permits. Alternatively, ACOE may update its State and Local Operating Procedures for Endangered Species (SLOPES), which govern how ACOE considers effects on endangered and threatened species when granting section 404 and 10 permits. Updating the SLOPES could streamline the permit process for private activities located in or near sturgeon critical habitat by providing a programmatic approach to consider the sturgeon in nationwide and regional permits, removing the need to elevate each permit and consider it individually. This analysis estimates future consultations based on the past record of permit applications received in each unit and the past proportion of total permits that were individual permits, standard permits, and letters of permission (LOPs). Based on the past permit history across units, approximately 20 percent of total permits are likely to lead to section 7 consultation.

78.          ACOE section 404 and section 10 permits constitute the primary Federal nexus for consultation regarding private development. Coastal and riverside development is an issue of concern along the Gulf Coast, particularly the Florida panhandle. The past consultation history indicates that while development activities are likely to result in numerous informal consultations, the consultations are unlikely to become formal or require project modifications. The typical small-scale development project might involve construction of a dock or other structure; the Services believe such construction is unlikely to adversely affect the sturgeon or its habitat.

79.          Private activities regulated under section 404 and section 10 include:

• Docks, boat launches, fishing piers, and related construction. Numerous private landowners seek permits to construct docks, boat launches, and other structures in and adjacent to rivers and bays. Most of these projects are very small-scale and are regulated under Nationwide and Regional permits, which do not require individual section 7 consultation. However, large-scale marine construction projects may require individual permits.

• Private dredging projects. ACOE issues permits to private parties seeking to undertake small dredging projects to maintain local access to navigation channels.
  
  
• Shoreline stabilization and beach nourishment. Similarly, private parties may request permits to undertake small localized shoreline stabilization, beach nourishment, and restoration projects.
  
  
• Oil and gas. ACOE regulates oil and gas pipelines and installations in the Gulf of Mexico out to the three mile limit (in state waters), as well as oil and gas structures that cross rivers. Oil and gas pipelines are established by digging trenches, often using dredges, and burying the pipes or jetting them underground. In addition, old oil and gas installations, such as old tanks, may be used to create offshore artificial reefs. The vast majority of oil and gas activity occurs in coastal and nearshore areas of Louisiana and Mississippi; oil and gas development is rare in Alabama and Florida.
  
  
• Aquaculture. Private business owners may engage in aquaculture and cultivate oyster beds, which require an ACOE permit. Oyster harvesting, which can impact sturgeon feeding areas by dredging up oysters with a rake, typically requires a Nationwide permit issued by ACOE.
  
  
• Gravel mining. Historically, gravel mining is a regulated activity with the potential to harm sturgeon habitat, as in-stream mining may occur in spawning areas and affect water quality. However, in-stream gravel mining is no longer occurring in any proposed critical habitat units. Near-stream gravel mining persists in the Pearl and Bogue Chitto watershed and other watersheds, however.
  
  
• State or local water supply projects. ACOE issues section 404 permits for state, county, and municipal water supply and dam projects. Within proposed critical habitat, no projects are anticipated for the next ten years.

Minerals Management Service

80.          The Minerals Management Service (MMS) regulates private oil and gas activities in Federal waters, beyond the state-Federal boundary three miles from shore. Although the proposed critical habitat for the sturgeon does not include Federal waters, risk of oil spills that could spread into adjacent state waters provides the basis for MMS to engage in section 7 consultation with the Service regarding potential impacts to the sturgeon and its habitat. In the areas proposed as critical habitat, private oil and gas exploration and transport activities regulated by MMS have the potential to affect Unit 8, offshore of Louisiana and Alabama.

81.          MMS typically conducts formal consultations with NOAA Fisheries on risk of oil spills when offering leases for oil and gas sites in the Gulf of Mexico to private companies. Measures to protect the sturgeon are usually included as nondiscretionary requirements that private companies must follow when they buy an oil and gas lease block. Lease sales require oil spill contingency plans, regardless of the Act, but NOAA Fisheries may request that the plans address ways to mitigate any harmful impacts to sturgeon or its habitat that may result from oil spills. NOAA Fisheries expects MMS to reinitiate previous consultations on lease sales and conduct new formal consultations. MMS may also consult on other miscellaneous mining-related projects that require Environmental Impacts Statements (EISs) or environmental assessments (EAs) under the National Environmental Policy Act (NEPA), such as explosives removal and construction of new waste disposal facilities.

Environmental Protection Agency

82.          EPA engages in section 7 consultation with the Services regarding water quality standards, to ensure that they are protective of endangered and threatened species. EPA expects to consult with the Services once every three years on changes resulting from the triennial review and modification of state delegated water quality standards for Alabama, Florida, Louisiana, and Mississippi under section 303 (c) of the Clean Water Act; these consultations will consider, in part, the impacts on the sturgeon. EPA also consults every two years on listings of impaired water bodies under section 303 (d) of the Clean Water Act, considering both direct effects in impaired water bodies and downstream effects on water bodies from upstream impaired water bodies. Finally, EPA predicts additional consultations related to total maximum daily load (TMDL) levels under section 303 (d) of the Clean Water Act. Consultations on TMDLs arise when the combination of point and non-point source pollutants causes a noncompliance in a body of water, which is then listed in the state's section 303d list of impaired waters. If the noncompliance has the potential to affect the sturgeon, then EPA is likely to informally consult with the Services when determining how much load will be allowed to bring the water body back into compliance.

83.          EPA predicts varying numbers of consultations in each critical habitat unit depending on the existing number of water bodies listed as impaired water bodies and the likelihood of TMDL exceedances (see Appendix B). EPA is also in the process of a national programmatic consultation on water quality criteria, which provide the basis for state delegated water quality programs. This programmatic consultation will consider all 551 listed species that are aquatic or aquatically dependent, including the sturgeon, and EPA will revise criteria if they are not protective of endangered and threatened species.

Federal Highway Administration

84.          The Federal Highway Administration (FHWA) provides partial funding, typically an 80 percent reimbursement, to state Departments of Transportation (DOTs) for road and bridge construction projects. Bridge construction, maintenance, and removal projects in rivers and bays proposed for critical habitat are likely to require section 7 consultation. Bridge projects crossing navigable waterways also require navigation and/or wetlands fill permits from ACOE and location and clearance permits from the Coast Guard. For the purposes of this analysis, section 7 consultations and project modifications associated with bridge projects are attributed to the FHWA nexus.

85.          State DOTs predict several bridge construction and replacement projects crossing rivers and estuarine areas in the proposed critical habitat units. These projects are identified in Appendix B. The primary risk to the sturgeon and its habitat from bridge replacement activities are the use of underwater explosives to remove old bridge structures; the potential for heightened turbidity from equipment used in underwater construction, such as pile jetting, causing sediment to settle on sturgeon feeding and spawning areas; and the potential for blocking migratory movements by in-water construction and demolition activities.

Federal Energy Regulatory Commission

86.          The Federal Energy Regulatory Commission (FERC) consults with the Services on relicensing of private, municipal, and state hydroelectric projects and the interstate transmission of electricity, oil, and natural gas by pipeline. FERC issues licenses of varying duration to hydroelectric projects, and typically engages in section 7 consultation only when the projects are up for relicensing. Only one hydroelectric project, located on the Conecuh River in Unit 3, is expected to undergo relicensing during the ten-year time frame considered in this analysis.

87.          FERC also regulates the transmission of natural gas, oil, and electricity in interstate commerce, and consults with the Services regarding the construction of new pipelines and transmission lines. FERC may also consult regarding issuance of blanket approval certificates for minor structures related to the pipeline transport of oil and gas. FERC expects that approximately 20 informal consultations on oil and gas pipelines and related construction under blanket approval certificates may occur over the next ten years, but is unable to predict consultations in particular critical habitat units. Moreover, many pipeline projects may cross numerous water bodies and therefore may affect multiple units.

     National Marine Fisheries Services - Fisheries Management

88.          NOAA Fisheries’ Office of Sustainable Fisheries develops Fisheries Management Plans (FMPs) to manage fish stocks under the Magnuson-Stevens Fishery Conservation and Management Act, as amended by the Sustainable Fisheries Act of 1996. FMPs contain conservation and management measures designed to prevent overfishing and rebuild overfished stocks, and to protect, restore, and promote the long-term health and stability of each fishery.

89.          In the past, NOAA Fisheries has conducted informal internal consultations on red snapper and reef fish FMPs. NOAA Fisheries predicts that ten informal consultations and two formal consultations on various Gulf of Mexico fisheries will occur over ten years. In addition, NOAA Fisheries expects to reinitiate formal consultation on the shrimp FMP for the Gulf of Mexico in order to consider the sturgeon critical habitat designation.

     Federal Emergency Management Agency

90.          The Federal Emergency Management Agency (FEMA) consults with the Services regarding emergency response projects, such as construction of drainage ditches and berms for beach nourishment and debris removal. For example, one past consultation with NOAA Fisheries addressed emergency trawling of Mississippi Sound. However, FEMA primarily plays a funding role in emergency response and conducts small interim projects, with major cleanup efforts carried out by other agencies such as ACOE. Therefore, FEMA does not anticipate large impacts due to the designation of critical habitat for the sturgeon, and this analysis predicts only two informal consultations over the next ten years in all units.

     Department of Defense

91.          Several Department of Defense (DOD) facilities are located adjacent to proposed critical habitat for sturgeon. Certain military operations have the potential to affect sturgeon and may lead to section 7 consultation. Projects vary according to the mission of the DOD facility.

                Eglin Air Force Base

92.          Eglin Air Force Base (Eglin) encompasses 724 square miles of land ranges and facilities and over 86,500 square miles of water ranges in the Gulf of Mexico. The Air Armament Center tests and evaluates non-nuclear munitions, electronic combat systems and navigation/guidance systems. Three airfields are currently active: Eglin Main, Duke Field and Hurlburt Field Main testing. The major airfield, administrative and living facilities are located in Main Eglin. The Eglin land reservation consists of 27 ranges and 10 auxiliary fields. Eglin borders five of the proposed critical habitat units: Units 4, 9, 10, 11, and 12.

93.          Eglin's mission planners project increased use of Eglin's littoral zone along Santa Rosa Island during the next ten years, as well as the Yellow River, Choctawhatchee Bay, East Bay River and Santa Rosa Sound. Testing and training activities are primarily conducted on the surface waters of the Gulf of Mexico and Santa Rosa Sound and are not expected to affect water quality parameters or the sturgeon's benthic habitat. However, infrequent underwater detonations of explosives in support of these and other missions could impact sturgeon (e.g., due to overpressure from explosions) and its benthic habitat.

94.          The Navy may use Eglin’s littoral zone for various tests, including line charges, underwater mine detection, and sonar testing. Navy littoral warfare exercises include small watercraft operations, beaching of tracked and air cushion vehicles on Santa Rosa Island, and transit to insert personnel and equipment into the Eglin Reservation at or near Wynnhaven Beach. The Navy’s Explosive Ordinance Disposal School also conducts low level live detonations within Eglin as part of its curriculum. These testing and training activities are likely to lead to one or two formal consultations per year. Activity levels on Santa Rosa Island may increase as more military mission activities are transferred to Eglin AFB.

95.          The Army Rangers infrequently use small amounts of explosives to remove log dams within the Yellow River in Eglin that obstruct watercraft navigation. Rangers and Special Operations use inflatable and rigid hull watercraft in shallow waters including beaching and insertion/extraction of ground troops; low altitude helicopter operations over water bodies; and blank and live fire and smoke/flares. Past explosives use on the Yellow River has occurred in the winter months when sturgeon are not normally in the river system. The Eglin Natural Resources Branch may informally consult with the Services during the winter months as well, depending on the nature and location of certain projects (i.e., explosions in spawning habitat).

96.          Other activities that may lead to consultation are road maintenance on stream crossings along tributaries of the Yellow River, and dredging of East Pass at Destin by ACOE (attributed to ACOE in Appendix B). The Services also expect to consult on revisions to Eglin’s Integrated Natural Resources Management Plan (INRMP) once in ten years.

                Tyndall Air Force Base

97.          Tyndall Air Force Base (Tyndall) is an active Air Force installation in Bay County, Florida, just southeast of Panama City in Unit 11. The base covers 28,800 acres on an 18-mile long peninsula. While Tyndall was originally activated as a flexible gunnery school for the Army Air Corps in 1941, it is currently being used by the U.S. Air Force Air Education and Training Command for training of air defense crews, and testing of new weapons systems and air defense tactics.

98.          Tyndall’s Natural Resources Division does not believe that any of its activities in the next ten years will impact the proposed critical habitat. Consequently, consultation on the revision of its INRMP will be concluded informally. Likewise, the Weapons Evaluation Group (WEG) at Tyndall does not believe that its activities will affect the sturgeon or its habitat. WEG launches full-scale and sub-scale drones on a regular basis, and occasionally the launches fail. Usually the drone will fall to the land, but it is possible that a drone could fall offshore into the Gulf of Mexico, within an area designated as critical habitat. It is highly unlikely that Tyndall would initiate consultation over this possibility.

99.          The Navy conducts limited operations onshore at Tyndall, such as the testing of mines and mine avoidance. The Navy has not initiated consultation on this activity in the past, but increased awareness of critical habitat could lead the Navy to initiate new consultations.

                     John C. Stennis Space Center

100.        John C. Stennis Space Center, located within Unit 1 in south Mississippi, is responsible for the National Aeronautics and Space Administration (NASA) rocket propulsion testing in Mississippi, Alabama, Ohio, and New Mexico, as well as test services for government and commercial customers.

101.        According to personnel at the Stennis Space Center, the testing of rockets has solely terrestrial and no aquatic impacts. Because the Space Center primarily tests rockets, the emissions from the rocket launches are limited to the rocket launch site. The Space Center uses Pearl River as a navigational channel, and has a contract with ACOE to dredge the river. ACOE may dredge the river once in the next ten years (attributed to ACOE in Appendix B). Other than the dredging, Stennis Space Center does not anticipate that any other activities in the next ten years will affect the sturgeon or its habitat.

                Pensacola Naval Air Station

102.        Pensacola Naval Air Station (Pensacola NAS) plays a major role in the United States’ naval aviation and naval flight training. It is an 8,400-acre installation located in Escambia and Santa Rosa Counties, Florida in Units 9 and 11. Pensacola NAS currently maintains several training centers, and provides living accommodations for military and civilian personnel.

103.        The Natural Resources Division at Pensacola NAS anticipates informal consultations over the following activities in the next ten years: exotic species control for plants, beach renourishment (bringing in sand to establish sand dunes), and the establishment of shoreline vegetation (planting sea oats and other plants). In addition, ACOE will dredge the surrounding waters every three years under contract to the NAS (attributed to ACOE in Appendix B). Pensacola NAS will also likely consult over the revision of Pensacola NAS’ INRMP in 2010.

104.        A small potential exists for informal consultations regarding riverine training activities by small boat units, and ship-to-shore operations with small boats and landing crafts. Such informal consultations would involve minimal impact and are not quantified in this analysis.

     Coast Guard

105.        The Coast Guard is a military, multi-mission, maritime service tasked with six main responsibilities: (1) maritime safety; (2) maritime law enforcement; (3) protection of natural resources; (4) maritime mobility; (5) national defense; and (6) homeland security. Within these six main responsibilities, the Coast Guard carries out the following missions that occur in the Gulf of Mexico: maritime search and rescue; bridge administration; aids to navigation; recreational boating safety; vessel traffic management; at-sea enforcement of living marine resource laws and treaty obligations; at-sea drug and illegal migrant interdiction; and port security and safety.

106.        Activities that may potentially be impacted by the need to consult under section 7 include aids to navigation, bridge administration, and dredging. Typical aid to navigation activities involve the maintenance and replacement of channel lights, buoys, and permanent pilings. The Coast Guard does not predict consultations on these activities. Buoy or piling replacements or new placement activities may be affected if they occur in critical habitat areas. Specifically, the Coast Guard anticipates some added cost to this activity if time windows are requested by the Services.

107.        Impacts associated with dredging and bridge replacement activities are attributed to ACOE and FHWA, as discussed above.

     Forest Service

108.        Lands owned by the Forest Service border the Conecuh and Yellow Rivers in units 3 and 4, and the Apalachicola River in unit 6, and encompass three National Forests: Apalachicola National Forest in Florida, Conecuh National Forest in Alabama, and DeSoto National Forest in Mississippi. All three forests are managed for multiple uses, including wildlife, water quality, wilderness, recreation, and timber. Conecuh National Forest also has resource extraction activities, including oil and gas, coal, sand and gravel, and building stone mining. DeSoto National Forest has a tree nursery and provides a training area for the Mississippi National Guard.

109.        The Forest Service has not initiated consultations with the Services under the listing of the sturgeon and does not anticipate the need to initiate consultations over the next ten years under either the listing or designation of critical habitat for the sturgeon. Although the Forest Service designates buffer zones along the riverbanks bordering National Forest land, these buffer zones are adopted as best management practices in the forests, not solely to protect listed species and their habitat. The width of the buffer required varies by the forest, soil type, and species of concern.

     3.2.2  Minimally Impacted Activities 

110.        One national seashore and nine national wildlife refuges (NWR), along with one estuarine research facility, are located in or adjacent to proposed critical habitat for the sturgeon. These are:

• Gulf Islands National Seashore (Units 8, 9, 10, and 11);
  
  
• MS Sandhill Crane NWR (Unit 2);
  
  
• Lower Suwannee NWR (Unit 7);
  
  
• Bogue Chitto NWR (Unit 8);
  
  
• Big Branch Marsh NWR (Unit 8);
  
  
• Bayou Sauvage NWR (Unit 8);
  
  
• Bon Secour NWR (Unit 8);
  
  
• Grand Bay NWR (Unit 8);
  
  
• St. Vincent NWR (Unit 11);
  
  
• Cedar Keys NWR (Unit 14); and
  
  
• Apalachicola National Estuarine Research Reserve (Units 3 and 6).

111.        Although some construction and maintenance projects in these parks and refuges may lead to informal section 7 consultation with the Service regarding the sturgeon, this analysis does not attempt to quantify the impacts. These Federal agencies function generally to promote conservation and protect lands, and are not likely to experience major economic impacts due to section 7 implementation for the sturgeon.

     3.2.3  Summary of Impacted Activities

112.        Detailed information on consultations likely to arise for activities in each unit is provided in Appendix B. Exhibit 3-1 summarizes the predicted number of formal and informal consultations by activity. ACOE activities are expected to lead to the largest number of section 7 consultations.

113.       Exhibit 3-2 summarizes the predicted number of formal and informal consultations by unit. Activities in Units 8, 9, and 11 are predicted to lead to the largest number of section 7 formal consultations.

3.3    Project Modifications Arising from Section 7 Consultation

114.       This section summarizes project modifications associated with activities likely to require section 7 consultation. Project modifications are agreed upon by the Services, the Action agency, and, if applicable, the applicant as a result of the informal or formal consultation process. This analysis attributes the cost of project modification to section 7 implementation, even in cases where parties implement conservation measures as a result of the Services’ recommendations during the informal consultation process rather than as reasonable and prudent measures (RMPs) required in a formal consultation.

115.       This section describes typical project modifications by Action agency. Appendix B identifies the modifications that may result from section 7 consultation on specific projects in each proposed critical habitat unit. For example, a consultation on a typical dredging and disposal project could lead to the adoption of dredging windows, changes to the extent or timing of the project, changes to the sequence of dredging, changes to the design or location of disposal sites, and/or implementation of monitoring and research efforts. However, it is unlikely that all of these modifications would apply to a single dredging project, and it is not possible to predict which future dredging projects will require which modifications. Per effort costs associated with modifications described below are summarized in Section 4.4.

         3.3.1  Modifications to Army Corps of Engineers Projects

116.       ACOE may implement or recommend to permit applicants a variety of project modifications to protect the sturgeon and its habitat. Dredging and disposal projects are most likely to require modification. In addition, ACOE is likely to fund additional studies to expand knowledge about sturgeon behavior and migratory patterns as a condition of formal consultations.

         Modifications to Dredging and Disposal Projects

117.       ACOE’s dredging and disposal projects are likely to be modified as a result of potential impacts to the sturgeon and its critical habitat. The adoption of various modifications to dredging and disposal projects may depend, in part, on the development of a programmatic consultation on dredging and disposal activities in the Mobile District of ACOE. Potential project modifications specific to dredging and disposal projects include:

• Dredging windows. ACOE may avoid riverine dredging during spawning months (spring) to avoid precluding passage and creating turbidity that could harm sturgeon eggs, or avoid estuarine dredging during feeding months (winter) to avoid precluding passage through inlets and harming feeding areas. Dredging windows are typically recommended by the Services during informal consultations, since avoiding work during times when sturgeon are known to be in the direct vicinity of the project is the most effective way to avoid harm to the species and its habitat. If ACOE cannot avoid dredging within the time frames suggested in an informal consultation, then ACOE will likely need to initiate a formal consultation to develop modifications to the project that are protective of the sturgeon while allowing the project to move forward on the preferred schedule. At that stage, the Services would not request dredging windows as reasonable and prudent measures (RPM) in a formal consultation without Action agency agreement. Rather, other modifications to the project would likely be required to reduce harm to the sturgeon and its habitat from the unavoidable dredging activity.
  
  
• Minimize extent of dredging activity. For example, ACOE may avoid dredging in deeper portions of the channel for riverine dredging projects, limit dredging of navigation channels to the minimum dimensions necessary, avoid performing advanced maintenance activities, or use silt curtains to enclose dredging sites when dredging in shallow water.

• For hydraulic dredging, ACOE may raise the cutter head above the bottom during pipeline clearing and keep it as close to the surface as practicable while water is being pumped from the pipeline.

• Minimize length of time of dredging impact. ACOE may operate equipment so as to avoid or minimize take of sturgeon. For example, ACOE can refrain from operating dredges 24 hours a day or turn off or reduce pumping speeds of pipeline dredge cutterheads when they are not buried in the substrate.
  
  
• Sequence dredging according to sturgeon migrations. For example, if a dredging project includes both a river mouth and a channel into a bay, ACOE may arrange the project to dredge the estuary first and dredge the river second after most sturgeon have already moved upstream.
  
  
• Adopt measures to warn or detect fish. When bucket dredging, ACOE may discourage sturgeon from entering or remaining in the work area by dropping the bucket into the water and retrieving it empty at least once before beginning work. Fish detection devices can also be affixed to dredges.
  
  
• Minimize extent of disposal activity. In potential estuarine feeding areas, ACOE may limit the depth of dredged material placed in disposal areas in order to allow benthic organisms to recolonize more quickly. FWS suggests that one way to reduce the amount of dredged material requiring disposal is to generate less sediment by reducing overdepth dredging (i.e., “advanced maintenance” dredging beyond the depth required for navigation).
  
  
• Adapt disposal areas. For example, in certain situations, ACOE may use confined rather than open water disposal areas, alter the location of disposal areas, or avoid disposal in deep areas of river channels. Also, when using shallow open water disposal areas with sediment retention structures, ACOE may leave “escape routes” for sturgeon by filling towards the open side so that sturgeon can swim out before the disposal site is filled (see Appendix B).

         Potential Modifications to Dam Projects

118.       Modifications may affect ACOE's activities related to currently operating dams, such as the Jim Woodruff Dam in Unit 6. ACOE may need to alter dam release patterns and update water control plans to minimize deviations from natural flow regimes, especially during critical periods for sturgeon. For example, dam releases should provide for minimum flows during spring spawning periods; provide for minimum flows during periods when sturgeon are in thermal refuge/resting areas; assure that fluctuations in flow do not prevent access to spawning areas or adherence of eggs to substrate; and assure that release patterns do not significantly change the temperature regime in spawning and resting areas during spawning and resting times. Additional modifications may apply to new dam construction, such as the proposed dam on the Yellow River in Unit 4, to ensure that the dam is designed and constructed in a manner that provides for migratory passage and minimizes harm to spawning habitat.

         Potential Modifications to Other Projects

119.       The Services have recommended or required additional modifications to certain past projects that may also apply to some ACOE-operated or ACOE-permitted projects, other than dredging, disposal, and dams. These modifications may include:

• Screen intake structures. Water diversion pump operators and others withdrawing water can cover pump intake structures with screens to prevent fish from being sucked in.
  
  
• Limit tow times for trawl nets. For example, during hurricane debris cleanup, trawlers may stop more frequently to remove snagged fish from trawl nets.
  
  
• Restrict use of underwater explosives. When demolishing and removing underwater structures, operators may alter the timing of blasting, use scare charges to warn sturgeon from entering or remaining in the work area, and/or use airbubble curtains to limit extent of blast pressures.

         3.3.2  Modifications to FHWA Bridge Projects

120.       Bridge construction and replacement activities are likely to involve modifications to avoid and minimize harm to the sturgeon and its habitat. Time windows are often suggested to avoid conducting major construction and removal activities (e.g., pile jetting, explosives detonation) while sturgeon are using the same area. Silt curtains are sometimes used to control turbidity related to pile jetting, dredging, and other underwater construction. Alternatively, the Services may suggest that bridge builders monitor turbidity levels and delay construction until suspended sediment levels decrease. Detonating explosives to remove old bridge structures is the activity most likely to require measures to protect sturgeon. The Services may recommend the use of airbubble curtains to limit the extent of blast pressures, combined with scare charges to warn sturgeon from entering or remaining in the work area.

         3.3.3  Modifications to FERC Pipeline Projects

121.       FERC-licensed interstate pipeline projects may adopt the following modifications: modifying pipeline routes to avoid habitat impacts; restricting timing of construction to prevent conflicts with sturgeon migrations; implementing best management practices to reduce turbidity during construction; using screened intakes for water withdrawals related to hydrostatic testing to prevent entrainment of sturgeon; and modifying construction methods (e.g., use directional drilling rather than open cut construction to place pipeline underground in sensitive areas). Since pipelines are likely to extend over large areas and cross multiple water bodies, modifying the timing and/or route of projects, as well as adopting best management practices, are usually more viable alternatives than using directional drilling, which can be very costly. Moreover, past consultations on pipeline construction suggest that directional drilling is primarily implemented to avoid impacts to wetlands, with secondary benefits to sturgeon.  

         3.3.4  Modifications to Projects at Eglin Air Force Base

122.       Eglin AFB may adapt explosives tests and undertake monitoring and research as a result of the sturgeon listing and critical habitat designation. Eglin biologists may also conduct aerial helicopter surveys to monitor for sturgeon prior to conducting test detonations, and operators may ramp up explosives tests by employing smaller detonations first as a scare tactic. In addition, Eglin sets aside a portion of its annual budget to sponsor sturgeon monitoring studies in Choctawhatchee Bay, Santa Rosa Sound, and the Yellow River.

         3.3.5  Research and Monitoring

123.       The Services may recommend that projects carried out and permitted by various Action agencies, including ACOE dredging and disposal projects, FHWA bridge construction projects, and MMS lease sales, adopt standard monitoring and research measures in order to expand knowledge of sturgeon behavior and migratory habits. Such measures may include:

• Monitoring and reporting of “take” events during project construction;
  
  
• Monitoring of post-project habitat conditions, particularly in likely feeding and spawning habitats;
  
  
• Monitoring of project-area sturgeon subpopulations; and
  
  
• Funding of research useful for sturgeon conservation. Information provided by the New Orleans District of the ACOE indicates that study costs may range from $300,000 to $400,000 for a one year tracking study and $150,000 to $200,000 for other types of studies. Eglin AFB has set aside $40,000 per year to fund sturgeon studies, and MMS has set aside $2 million over ten years to fund a large, multi-year tracking study to enhance knowledge of sturgeon migrations in marine areas.

         3.3.6  Activities Unlikely to Involve Modification

124.       Many activities expected to lead to section 7 consultation are unlikely to involve project modifications. For example, small-scale ACOE-operated and permitted construction and maintenance projects will tend to involve minimal changes. In general, beach nourishment and clearing and snagging projects are also unlikely to involve modifications. However, some project modifications may be adopted if activities such as construction or clearing and snagging are scheduled to occur in particularly sensitive areas or at particularly sensitive times, such as in known spawning areas during spawning months.

125.       Extensive modifications to projects involving the following Federal nexuses are unlikely: MMS, FEMA, Coast Guard, NOAA Fisheries (fisheries management activities), and Forest Service. However, these Action agencies may occasionally offer funding to support sturgeon research and monitoring studies.

 3.4    Regional Economic Impacts

126.       In addition to the direct costs to undertake consultations and project modifications outlined above, physical changes to habitat areas that may be associated with project modifications (e.g., altering the depth of navigation channels) may have other indirect economic impacts on local industries and enterprises in the future. These potential regional impacts are summarized in Exhibit 3-3. Activities that have the potential to be indirectly affected could include shipping channel navigation, commercial fishing, hydropower generation, and oil and gas pipeline construction projects.

127.       However, the extent to which regional economic impacts are realized depends largely on the extent to which projects are stopped or fundamentally altered as a result of modifications to protect the sturgeon and its habitat. For example, impacts to the navigation industry are contingent upon whether the consultation process yields project modifications to dredging activities that restrict or otherwise affect shipping channel navigation and reliability. In general, regional economic impacts would only be incurred if planned projects are not able to proceed as planned and reasonable alternatives cannot be identified. The past consultation record and conversations with the Services suggest that such outcomes are unlikely. While project modifications are likely to add direct costs to individual projects, they are unlikely to alter affected projects so fundamentally that impacts to the regional economy would be incurred (e.g., projects are more likely to be delayed and modified than halted altogether).

128.       Economic activities in sturgeon critical habitat areas that are dependent upon reliable and open shipping channels include deep draft navigation, inland navigation, and commercial fishing. ^, To the extent that future project modifications affect the timeliness and efficacy of dredging activities, resulting shipping constraints or reliability problems could yield broader economic impacts. The probability of a modification significantly affecting project timing and effectiveness, however, is low. For example, while the Services recommend dredging windows as part of some informal consultations, if ACOE determines that dredging windows cannot reasonably be implemented without compromising the project, FWS cannot include them as RPMs during the formal consultation phase.

129.       Potential indirect impacts from changes to water flow as a result of project modifications are uncertain, because both the specifics of future affected projects and the outcomes of associated consultations are uncertain. However, the probability of significant impacts on water flow, even if projects are subject to significant project modifications, appears to be low. A small potential may exist for future flow modifications related to current and/or proposed dams in Units 2, 4, and 6 to affect hydroelectrical power generation, water supply, or recreational opportunities on man-made lakes.

130.       A small potential also exists for limitations on construction of oil and gas pipelines licensed by FERC, which may affect investment in and costs of such projects, creating indirect impacts to the regional economy.

3.5    Summary of Section 7 Impacts

131.       Appendix B summarizes the potential for future section 7 consultations and project modifications for activities affecting the sturgeon and its proposed critical habitat in each unit. Importantly, these estimates reflect the consultation profiles associated with the geographic areas proposed for designation having a Federal nexus, regardless of whether these actions can be attributed co-extensively to the listing. As a result, these estimates are an upper-bound measure of the impacts potentially associated with the proposed designation.

132.       Section 4 provides estimates of the expected economic costs of the consultations on the activities described in this section, as well as summaries of the total section 7 cost of the listing and proposed critical habitat designation for the sturgeon.

SECTION 4

ESTIMATED SECTION 7 COST

133.       This section presents the expected total economic cost of actions taken under section 7 of the Act associated with the geographic area proposed as critical habitat for the sturgeon, including those costs attributable co-extensively to the listing of the sturgeon as threatened. It provides per effort administrative costs of section 7 consultation, and derives total cost estimates of the consultations and modifications associated with the activities described in Section 3. This section also evaluates the costs attributable solely to the proposed designation of critical habitat.

134.       It is important to note that the listing of the sturgeon as threatened under the Act may result in impacts on land use activities that are not associated with section 7. For example, section 9 of the Act prohibits take of listed species, and section 10 outlines permitting procedures for entities whose activities do not involve a Federal nexus. Economic costs associated with these impacts are not included in this analysis because they are not associated with critical habitat.

4.1    Estimated Costs of Section 7 Consultation

135.       Estimates of the cost of an individual consultation were developed from a review and analysis of historical section 7 files from a number of FWS Ecological Services offices around the country. These files addressed consultations conducted for both listings and critical habitat designations. Cost figures are based on an average level of effort for consultations of low, medium, or high complexity, multiplied by the appropriate labor rates for staff from FWS and other Federal agencies.

136.       Estimates take into consideration the level of effort of the Services, the Action agency, and the applicant during both formal and informal consultations, as well as the varying complexity of consultations. Informal consultations are assumed to involve a low to medium level of complexity. Formal consultations are assumed to involve a medium to high level of complexity. Costs associated with these consultations include the administrative costs associated with conducting the consultation, such as the cost of time spent in meetings, preparing letters, and in some cases, developing a biological assessment and biological opinion.

137.       Per effort costs associated with formal consultations and informal consultations are presented in Exhibit 4-1. The low and the high scenarios represent a reasonable range of costs for each type of interaction. For example, when FWS engages in informal consultation regarding a particular activity, the cost of FWS’s effort is expected to be approximately $1,000 to $3,100. The cost of the Action agency’s effort is expected to be $1,300 to $7,900, and the cost of a third party’s effort (if applicable) is expected to be approximately $1,200 to $2,900. The Action agency or the third party may bear the costs of biological assessment, depending on the specifics of the consultation.

138.       Exhibit 4-2 reports estimates of total consultation costs associated with activities with the potential to affect the sturgeon and/or its proposed critical habitat. Exhibit 4-3 reports consultation costs by critical habitat unit. These estimates were generated by multiplying the number of expected consultations (shown in Appendix B) by the per effort cost of these actions.

139.       Based on this analysis, the upper-bound total nominal cost of consultations over the next ten years will range from $5.5 million to $19.4 million. Most of these costs will be borne by Federal agencies other than the Services. In addition, most consultation activity (and related costs) will occur in units 1, 8, 10 and 12.

140.       These consultation costs represent the upper-bound without-programmatic consultation scenario. As previously noted in Section 3.2.1, the development of a programmatic consultation on dredging and disposal activities conducted by the Mobile District of ACOE has the potential to significantly reduce the administrative costs associated with consultations on dredging and disposal projects. After engaging in one intensive programmatic consultation, with an estimated level of effort equivalent to three typical formal consultations, ACOE could engage in streamlined consultations thereafter on individual dredging projects. Exhibit 4-4 illustrates the consultation cost savings associated with the with-programmatic consultation scenario. Additional modification cost savings may be realized as well, but cannot be quantified due to lack of information on the frequency and type of modifications likely to be implemented under the programmatic consultation.

4.2    Estimated Costs of Project Modifications

141.       Estimated per effort costs associated with certain categories of the project modifications described in Section 3.3 are summarized in Exhibit 4-5. Per effort cost data were not available for all potential project modifications; only activities for which cost data were available are included in the table.

142.       The extent to which specific future projects will experience the per effort modification costs outlined in Exhibit 4-5 is uncertain. For example, for a given dredging project, it is difficult to predict whether the project will adopt dredging windows and other modifications (e.g., alter dredging extent, length of time, or sequence), or only certain of the potential modifications. This uncertainty exists for the following reasons:

• New information about sturgeon behavior and migratory patterns as a result of recent and upcoming research studies is influencing the type of project modifications recommended by the Services. The Services are unable to predict how the availability of new data may affect recommended modifications on specific projects.
  
  
• The relationship between the Services and ACOE, the most-affected Action agency, is currently in flux due to potential development of a programmatic consultation on dredging and disposal activities. The presence of this programmatic consultation would likely streamline the consultation process and, potentially, could enable ACOE to adopt project modifications in a manner that would cost less overall than adopting project modifications individually for each project.
  
  
• The Services are reluctant to associate particular project modifications with particular future projects, since future project modifications would only be agreed upon as a result of a negotiated process between the Services, the affected Action agency, and, if applicable, a third party.

143.       Given this uncertainty regarding the implementation of project modifications for predicted future projects, it is not possible to develop an exhaustive range of total modification costs associated with section 7 implementation for the sturgeon. Therefore, this analysis develops one scenario of potential modifications that illustrates the potential magnitude of project modification costs. The scenario is based on several major assumptions:

• Dredging and disposal project modifications. Given 37 authorized ACOE navigation projects that are predicted to lead to formal consultation addressing dredging and disposal activities over the next ten years, this scenario assumes that half will adopt dredging windows and other timing constraints to avoid affecting the sturgeon.

• It assumes that the other half will involve changes to the design and/or operation of the dredging projects, including minimizing the extent and length of time of dredging, altering the dredging sequence, and using fish detectors.

• Bridge project modifications. This scenario assumes that the three known FHWA–funded bridge projects will use silt curtains at a per effort cost of $220,000. Some bridge projects may also implement bubble curtains, but this analysis does not project costs because the technology is still in the testing phase.

• Interstate pipeline project modifications. This scenario assumes that the 20 predicted informal consultations with FERC on pipeline construction will involve one day of changing project designs and implementing best management practices to reduce turbidity. It assumes that any use of directional drilling is associated with baseline regulations protecting wetlands, rather than section 7 implementation for the sturgeon.
  
  
• Research and monitoring. This scenario assumes that three Action agencies will fund sturgeon studies over the next ten years: MMS, ACOE, and Eglin AFB. As noted in Section 3.3.5, these agencies may fund studies at the following levels: ACOE: up to $400,000 for a one year tracking study; Eglin AFB: $40,000 per year to fund sturgeon studies; and MMS: $2 million to fund a large, multi-year tracking study to enhance knowledge of sturgeon migrations in marine areas.

• No additional activities leading to project modifications. This scenario assumes that no other Federal nexuses and activities requiring consultation will involve project modifications.

144.       Based on the scenario described above and the per effort cost data presented in Exhibit 4-5, Exhibit 4-6 derives a total cost estimate of $37.9 million for project modifications associated with the listing and critical habitat designation for the sturgeon over the next ten years. This cost likely represents an upper-bound of modification costs for the activities included in the scenario. However, actual modification costs may be higher, since the assumed scenario is not inclusive of all potential activities that could lead to modifications to protect the sturgeon and its habitat. For example, certain ACOE dam projects could lead to costly alterations in water release patterns in order to guarantee minimum flows for the sturgeon.

4.3    Total Section 7 Costs

145.       The cost estimates presented in Exhibit 4-7 are a function of the number of consultations as detailed in Appendix B, plus the project modification scenario outlined in Section 4.2. Based on this analysis, the total upper-bound estimate of section 7 costs associated with the listing and proposed critical habitat designation for the sturgeon ranges from $43.4 million to $57.2 million over ten years. As discussed in Section 3.4, additional regional economic impacts to various industries (e.g., deep draft navigation, inland navigation) are possible if shipping channel reliability is reduced as a result of restrictions to dredging projects, but they are not quantified due to the low probability that projects will be modified in a manner that creates significant costs to the regional economy.

146.       While the total economic costs associated with section 7 implementation for the sturgeon appear to be high, they must be considered in the context of the value of the economic activity that is predicted to occur over the next ten years in the region. In the 53 counties that include portions of the proposed critical habitat for the sturgeon, construction income was $3.8 billion in 2000. Income from disclosed earnings from agricultural services, including forestry, totaled $299 million in 2000 for these counties, mining activities totaled $995 million, manufacturing activities totaled $6.1 billion, transportation and public utilities totaledd $4.3 billion, wholesale retail trade totaled $9.1 billion, services totaled $15.5 billion, and real estate totaled $3.6 billion. Given a total value of $43.7 billion for annual income and spending on these industries in the 53 affected counties, the estimated upper-bound section 7 costs associated with the listing and proposed critical habitat designation for the sturgeon represent approximately 0.013 percent of the total value of economic activities annually.

4.4    Economic Impacts Associated Solely with the Designation of Critical Habitat

147.       The cost estimates presented in Exhibit 4-7 are an indication of the total costs that may be associated with future section 7 consultations on the sturgeon and its designated critical habitat over the next ten years. These represent costs likely to be incurred by the Services, Action agencies, and non-Federal third parties for activities having a Federal nexus, which would require consultation under section 7 of the Act.

148.       However, a subset of impacts may be attributable solely to the critical habitat designation. For example, activities that required informal consultations in the past may require formal consultation under the designation due to increased concerns about habitat impacts. Other past formal consultations may need to be reinitiated to address habitat-related concerns. In addition, the Services anticipate that a subset of the total predicted consultation costs will be attributable to the extra administrative effort required to address critical habitat issues during the formal and informal consultation process.

149.       Establishing an explicit distinction between listing and designation impacts is difficult, due to a variety of factors that reasonably could be linked to either category. For example, ACOE asserts that the development of the proposed critical habitat designation has caused FWS to adopt a more stringent approach during consultations, resulting in more costly project modifications and an increased number of formal consultations. ACOE believes that the designation of critical habitat has raised awareness of the sturgeon and spurred additional research, causing greater section 7 impacts than had been occurring since the listing of the sturgeon as threatened in 1991. FWS acknowledges that awareness of sturgeon behavior and migratory patterns has increased in recent years, but believes that this change is due to improved research and monitoring studies that have been conducted independent of the proposed designation of critical habitat. Other Action agencies concur that the designation of critical habitat will not significantly change their process for consulting with FWS.

150.       Another example is the potential development of a programmatic consultation on dredging and disposal activities. This programmatic consultation, while intensive to develop, has the potential to reduce consultation and project modification costs on these activities. This initiative, and related cost effects, could conceivably be attributed to critical habitat designation; however, FWS believes that its development arises coextensively with the listing and the critical habitat designation.

151.       In sum, this analysis recognizes that the consultation process between FWS and certain Action agencies is likely to become more intensive, and may be altered through a programmatic approach, over the next ten years. The analysis further assumes, however, that the changes stem primarily from better supporting data about the sturgeon’s behavior and migrations and are best attributed coextensively to listing and critical habitat designation. An extensive past record of formal and informal consultation exists, and FWS asserts that the designation of critical habitat will not alter its consultation process except to add an increment of administrative effort to each consultation. 

152.       This analysis identifies the subset of consultation costs attributable solely to the critical habitat designation based on time estimates from the FWS Panama City, FL Ecological Services Office. The Services estimate that pinpointing activity locations, considering the potential for adverse effects, and incorporating language specific to critical habitat issues will result in up to $35 per effort cost to FWS or NOAA Fisheries and $140 to the Action agency for each informal consultation, and $160 per effort cost to FWS or NOAA Fisheries and $550 to the Action agency for each formal consultation.

153.       NOAA Fisheries also anticipates a small increase in section 7 costs due to the designation of critical habitat. Specifically, NOAA Fisheries believes it will have to reinitiate certain past consultations to more systematically address habitat impacts. Specifically, NOAA Fisheries expects Action agencies to reinitiate the following formal consultations:

• Five formal consultations with MMS on lease sales in Unit 8;
  
  
• One programmatic consultation with ACOE on regionwide hopper dredging; and
  
  
• One formal consultation with NOAA Fisheries on the Gulf of Mexico shrimp Fishery Management Plan.

154.       NOAA Fisheries also believes that its consultations on natural resource management activities at Pensacola NAS and beach nourishment/habitat creation activities in some estuarine and marine units may have remained informal, but for the designation of critical habitat. This analysis quantifies the difference in administrative costs if consultations on the following affected projects had remained informal:

• Pensacola NAS: 4 informal consultations in Unit 9; and
  
  
• Beach nourishment/habitat creation: 10 informals in Unit 8; 6 informals in Unit 9; 6 informals in Unit 10; 4 informals in Unit 12; and 4 informals in Unit 13.

155.       The costs of the reinitiated consultations, along with the cost of conducting formal rather than informal consultations on beach nourishment and Pensacola NAS activities, constitute the universe of costs attributable solely to the critical habitat provision of section 7. Additional project modifications may occur, such a reducing the scale of projects or extending the period of time between projects, but they are not quantified in this analysis due to limited data on the future implementation of such modifications. Exhibit 4-7 presents the costs attributable to critical habitat by unit. Based on this analysis, the total costs attributable exclusively to the critical habitat provision of section 7 may range from $602,000 to $752,000 over ten years.

156.       Under the Regulatory Flexibility Act (as amended by the Small Business Regulatory Enforcement Fairness Act (SBREFA) of 1996), whenever a Federal agency is required to publish a notice of rulemaking for any proposed or final rule, it must prepare and make available for public comment a regulatory flexibility analysis that describes the effect of the rule on small entities (i.e., small businesses, small organizations, and small government jurisdictions). However, no regulatory flexibility analysis is required if the head of an agency certifies that the rule will not have a significant economic impact on a substantial number of small entities. SBREFA amended the Regulatory Flexibility Act to require Federal agencies to provide a statement of the factual basis for certifying that a rule will not have a significant economic impact on a substantial number of small entities. Accordingly, the following represents a screening level analysis of the potential effects of critical habitat designation on small entities to assist the Secretary in making this certification.

157.       This analysis determines whether this critical habitat designation potentially affects a “substantial number” of small entities in counties supporting critical habitat areas. It also quantifies the probable number of small businesses likely to experience a “significant effect.” While SBREFA does not explicitly define either “substantial number” or “significant effect,” the Environmental Protection Agency and other Federal agencies have interpreted these terms to represent an impact on 20 percent or more of the small entities in any industry and an effect equal or greater than three percent or more of a business’ annual revenues. In both tests, this analysis examines the total estimated section 7 costs calculated in earlier sections of this report, including those impacts that may be “attributable co-extensively” with the listing of the species. This results in a conservative estimate (i.e., more likely to overstate impacts than understate them), because it utilizes the upper bound impact estimate from the earlier analysis.

         4.5.1            Identifying Activities That May Involve Small Entities 

158.       Section 3 of this report identifies activities that are within, or will otherwise be affected by, section 7 of the Act for the sturgeon. Exhibit 4-8 presents the land and water use activities that were identified as being potentially impacted by section 7 implementation for the sturgeon under the “with section 7” scenario.

159.       Of the projects that are potentially affected by section 7 implementation for the sturgeon, several occur exclusively on Federal lands and do not have third party involvement (i.e. only the Action agency and the Services are expected to be involved). Thus, small entities should not be affected by section 7 implementation for affected projects with the following agencies:

• Fish and Wildlife Service (activities associated with NWRs);
  
  
• Department of Defense (AFB, Space Center activities); and
  
  
• Forest Service (no consultations anticipated).

160.       Of the projects that are potentially affected by section 7 implementation for the sturgeon that do not occur on exclusively on Federal lands, many are expected to involve no project modifications, or very minor ones (e.g., silt fencing during construction). The greatest share of the costs associated with the consultation process stem from project modifications (as opposed to the consultation itself). Indeed, costs associated with the consultation itself are relatively minor, with third party costs estimated to range from $1,200 to $4,100 per consultation. Therefore, small entities are unlikely to be significantly affected by consultations that do not involve costly project modifications. Thus, this analysis indicates that small businesses involved in consultations with the following Action agencies should not be significantly affected as a result of section 7 implementation:

• Minerals Management Service;
  
  
• Environmental Protection Agency;
  
  
• Federal Emergency Management Agency;
  
  
• Coast Guard;
  
  
• National Marine Fisheries Service; and
  
  
• Army Corps of Engineers (beach nourishment, clearing and snagging projects, and regulated modifications to surface water bodies, such as dock construction and permitting of pipeline construction and maintenance projects)

161.       After excluding the two sets of Action agencies and consultations noted above from the total universe of impacts identified in the body of the analysis, the following Action agencies and consultations remain. This subset represents the group of Action agencies and consultations that may produce significant impacts on small entities. Specifically, these actions feature activities that do not occur exclusively on Federal lands and may involve relatively costly project modifications:

• Army Corps of Engineers (dredging and disposal projects);
  
  
• Federal Highway Administration (bridge projects); and
  
  
• Federal Energy Regulatory Commission (interstate oil and gas pipeline projects).

4.6    Description of Affected Small Entities

162.       This section describes the industries most likely to be affected by section 7 implementation for the sturgeon. Potential indirect regional impacts are also discussed. More information about affected projects can be found in Sections 3 and 4 and in Appendix B of this report.

• Army Corps of Engineers (dredging and disposal projects). As detailed in Exhibit 4-5, ACOE consultations on dredging and disposal projects could lead to project modifications such as: providing dredging windows (avoiding dredging at certain times), minimizing the length of time and extent of dredging, using fish detectors, doing a bucket drop (to warn sturgeon), using silt curtains on dredges, and conducting research and monitoring of sturgeon. If they occur, most of these modification costs are likely to be borne by the Action agency (i.e., ACOE) directly, though some may involve small contractors who own the dredges, or who otherwise carry out dredging activities. Estimating the costs on a per entity basis is difficult, particularly because many costs associated with project modifications are anticipated to be “through costs,” i.e., any increase in costs to private contractors will be passed on to the Federal government, who will ultimately bear most of the costs of these modifications. The SBA set the size standards for businesses involved in “dredging and surface cleanup activities” at $17.0 million in average annual receipts (also referred to as sales or revenues). There are approximately 816 heavy construction operators within the fifty counties included in sturgeon critical habitat areas, of which 767 are identified as small.
  
  
• Federal Highway Administration bridge projects. As described in Table 4-5, FHWA consultations on bridge projects could lead to project modifications that include providing silt and/or bubble curtains during construction, detonating small scare charges to warn sturgeon away from the project site, and conducting research and monitoring of sturgeon. As with dredging projects, this analysis anticipates that most costs associated with project modification compliance will either be borne directly by or passed on to the Federal government, which therefore will ultimately bear most of the costs of these modifications. The SBA set the size standards for “highway and street construction” and “bridge, tunnel, and elevated highway construction” contractors at $28.5 million in average annual receipts. There are approximately 490 heavy construction operators of these types within the fifty counties included in sturgeon critical habitat areas, of which 454 are identified as small.
  
  
• Federal Energy Regulatory Commission pipeline projects. As described in Table 4-5, FERC consultations could lead to project modifications that include pipeline construction management measures, such as altering the project design and implementing best management practices. As with dredging projects, this analysis anticipates that most costs associated with project modification compliance will either be borne directly by or passed on to the Federal government, which therefore will ultimately bear most of the costs of these modifications. The SBA set the size standards for construction operators involved with “water, sewer, pipeline, and communications and power line construction”at $28.5 million in average annual receipts. There are approximately 454 of these contractors operating within the fifty counties included in sturgeon critical habitat areas, of which 365 are identified as small.
  
  
• Potential Regional Impacts (Indirect Effects). As stated in Section 3-4 of the report, physical changes to habitat areas that may be associated with project modifications (e.g., altering the depth of navigation channels) have indirect economic impacts on local industries and enterprises, in addition to the direct costs to undertake consultations and project modifications outlined above. Activities that may be indirectly affected could include shipping channel navigation, commercial fishing, hydropower generation, and oil and gas pipeline construction projects. Several of these activities could involve small entities.

163.       Again, as stated in Section 3-4, the extent to which regional economic impacts are realized depends largely on the extent to which projects are stopped or fundamentally altered as a result of modifications to protect the sturgeon and its habitat. For example, impacts to the navigation industry are contingent upon whether the consultation process yields project modifications to dredging activities that restrict or otherwise affect shipping channel navigation and reliability. In general, regional economic impacts would only be incurred if planned projects are not able to proceed as planned and reasonable alternatives cannot be identified. The past consultation record and conversations with the Services suggest that such outcomes are unlikely. While project modifications are likely to add direct costs to individual projects, they are unlikely to alter affected projects so fundamentally that impacts to the regional economy would be incurred (e.g., projects are more likely to be delayed and modified than halted altogether).

164.       Economic activities in sturgeon critical habitat areas that are dependent upon reliable and open shipping channels include deep draft navigation, inland navigation, and commercial fishing. To the extent that future project modifications affect the timeliness and efficacy of dredging activities, resulting shipping constraints or reliability problems could yield broader economic impacts. The probability of a modification significantly affecting project timing and effectiveness, however, is low. For example, while the Services recommend dredging windows as part of some informal consultations, if ACOE determines that dredging windows cannot reasonably be implemented without compromising the project, FWS cannot include them as RPMs during the formal consultation phase.

165.       Potential indirect impacts from changes to water flow as a result of project modifications are uncertain, because both the specifics of future affected projects and the outcomes of associated consultations are uncertain. However, the probability of significant impacts on water flow, even if projects are subject to significant project modifications, appears to be low. A small potential may exist for future flow modifications related to current and/or proposed dams in Units 2, 4, and 6 to affect hydroelectrical power generation, water supply, or recreational opportunities on man-made lakes.

166.       A small potential also exists for limitations on construction of oil and gas pipelines licensed by FERC, which may affect investment in and costs of such projects, creating indirect impacts to the regional economy.

         4.6.1  Estimated Number of Small Businesses Affected: The “Substantial Number” Test

167.       To be conservative, (i.e., more likely to overstate impacts than understate them), this analysis assumes that a unique entity will undertake each of the projected consultations in a given year, and so the number of businesses affected is equal to the total annual number of consultations (both formal and informal). This analysis also limits the universe of potentially affected entities to include only those within the fifty counties in which critical habitat units lie; this interpretation produces far more conservative results than including all entities nationwide.

168.       First, the number of small businesses affected is estimated. As shown in Exhibit 4-9, the following calculations yield this estimate:

• Estimate the number of businesses within the study area affected by section 7 implementation annually (assumed to be equal to the number of annual consultations);
  
  
• Calculate the percent of businesses in the affected industry that are likely to be small;
  
  
• Calculate the number of affected small businesses in the affected industry;
  
  
• Calculate the percent of small businesses likely to be affected by critical habitat.

169.       This calculation reflects conservative assumptions and nonetheless yields an estimate that is still far less than the 20 percent threshold that would be considered “substantial.” As a result, this analysis concludes that a significant economic impact on a substantial number of small entities will not result from the designation of critical habitat for the sturgeon. Nevertheless, an estimate of the number of small businesses that will experience effects at a significant level is provided below.

         4.6.2 Estimated Effects on Small Businesses: The “Significant Effect” Test

170.       Costs of critical habitat designation to small businesses consist primarily of the cost of participating in section 7 consultations and the cost of project modifications. To calculate the likelihood that a small business will experience a significant effect from critical habitat designation for the sturgeon, the following calculations were made:

• Calculate the per-business cost. This consists of the unit cost to a third party of participating in a section 7 consultation (formal or informal) and the unit cost of associated project modifications. To be conservative, this analysis uses the high-end estimate for each cost.
  
  
• Determine the amount of annual sales that a company would need to have for this per-business cost to constitute a “significant effect.” This is calculated by dividing the per-business cost by the three percent “significance” threshold value.
  
  
• Estimate the likelihood that small businesses in the study area will have annual sales equal to or less than the threshold amount calculated above. This is estimated using national statistics on the distribution of sales within industries.

• Based on the probability that a single business may experience significant effects, calculate the expected value of the number of businesses likely to experience a significant effect.
  
  
• Calculate the percent of businesses in the study area within the affected industry that are likely to be affected significantly.

171.       Calculations for costs associated with section 7 implementation for the sturgeon are provided in Exhibit 4-10 below.

Exhibit 4-10 ESTIMATED ANNUAL EFFECTS ON SMALL BUSINESSES: THE “SIGNIFICANT EFFECT” TEST
Industry Name		Heavy construction: Dredging SIC 1629, 7353	Heavy construction: Bridges SIC 1611, 1622	Pipeline construction SIC 1623
Annual Number of Small Businesses Affected (from Exhibit 4-9)	By formal consultation	3.7	0.4	0
	By informal consultation	2.3	0.5	2.1
Per-Business Cost 1		$240,000	$220,000	$50,000
Level of Annual Sales Below which Effects Would Be Significant (Per-Business Cost / 3%)		$8.3 million	$87.6 million	$2.0 million
Probability that Per-Business Cost is Greater than 3% of Sales for Small Business		42.8%	100%	100%
Probable Annual Number of Small Businesses Experiencing Significant Effects (Number Small Businesses)* (Probability of Significant Effect)		2.6	0.4	1.05
Total Annual Percentage of Small Businesses Bearing Significant Costs in Industry		0.0%	0.0%	0.3%
1 See Exhibit 4-6.

172.       Because the costs associated with designating critical habitat for the sturgeon are likely to be significant for less than two small businesses per year in the affected industries in the study area, this analysis concludes that a significant economic impact on a substantial number of small entities will not result from the designation of critical habitat for the sturgeon. This would be true even if all of the effects of section 7 consultation on these activities were attributed solely to the critical habitat designation.

SECTION 5

POTENTIAL BENEFITS OF PROPOSED CRITICAL HABITAT

173.       The published economics literature has documented that real social welfare benefits can result from the conservation and recovery of endangered and threatened species (Bishop (1978, 1980), Brookshire and Eubanks (1983), Boyle and Bishop (1986), Hageman (1985), Samples et al. (1986), Stoll and Johnson (1984). Such benefits have also been ascribed to preservation of open space and biodiversity (see examples in Pearce and Moran (1994) and Fausold and Lilieholm (1999) both of which are associated with species conservation. Likewise, regional economies can benefit from the preservation of healthy populations of endangered and threatened species, and the habitat on which these species depend.

174.       The primary goal of the Act is to enhance the potential for species recovery. Thus, the benefits of actions taken under the Act are primarily measured in terms of the value the public places on species preservation (e.g., avoidance of extinction, and/or an increase in a species’ population). Such social welfare values may reflect both use and non-use (i.e., existence) values. For example, use values might include the potential for recreational use of a species, should recovery be achieved. Non-use values are not derived from direct use of the species, but instead reflect the utility the public derives from knowledge that a species continues to exist.

175.       In addition, as a result of actions taken to preserve endangered and threatened species, various other benefits may accrue to the public. Such benefits may be a direct result of modifications to projects made following section 7 consultation, or may be collateral to such actions. For example, a section 7 consultation may result in the requirement for buffer strips along streams, in order to reduce sedimentation due to construction activities. A reduction in sediment load may directly benefit water quality, while the presence of buffer strips may provide the collateral benefits of preserving habitat for terrestrial species and enhancing nearby residential property values (e.g., preservation of open space).

176.       This chapter describes the benefits resulting from implementation of section 7 of the Act, in the context of areas affected by the proposed designation. It then discusses the extent to which existing valuation studies can be used to monetize these benefits. Finally, it discusses whether these benefits can be defined on a unit-by-unit basis, and whether these benefits attributable to critical habitat designation can be distinguished from all section 7 related benefits.

177.       As discussed below, it is not feasible to fully describe and accurately quantify the benefits of this designation in the context of this economic analysis. The discussion presented in this report provides examples of potential benefits, which derive primarily from the listing of the species, based on information obtained in the course of developing the economic analysis. It is not intended to provide a complete analysis of the benefits that could result from section 7 of the Act in general or critical habitat designation in particular. Given these limitations, the Services believe that the benefits of critical habitat designation are best expressed in biological terms that can be weighed against the expected cost impacts of the rulemaking.

5.1    Categories of Benefits

178.       Implementation of section 7 of the Act is expected to substantially increase the probability of recovery for the species. Such implementation includes both the jeopardy provisions afforded by the listing, as well as the adverse modification provisions provided by the designation. Specifically, the section 7 consultations that address the sturgeon will assure that actions taken by Federal agencies do not jeopardize the continued existence of the sturgeon or adversely modify its habitat. Note that these measures are separate and distinct from the section 9 “take” provisions of the Act, which also provide protection to this species.

179.       The benefits of critical habitat designation can therefore be placed into two broad categories: those associated with the primary goal of species recovery, and those that derive mainly from the habitat protection required to achieve this primary goal. The sections below describe these two categories of benefits.

         5.1.1  Benefits Associated with Species Recovery

         Existence Value

180.       The sturgeon has some intrinsic existence value that will be enhanced by its survival and recovery. Existence value reflects the utility the public derives from knowledge that a species continues to exist. Potential existence values are discussed below in section 5-2.

         Commercial Fishing

181.       The sturgeon supported a commercial fishery in the early twentieth century, providing eggs for caviar, flesh for smoked fish, and swim bladders for isinglass, a gelatin used in food products and glues. As a result, full recovery of the population could eventually yield economic benefits in the form of allowable harvest. These benefits might include an increase in jobs and expenditures within the Gulf Coast regional economies, or, if considered within the welfare economics context, an increase in producer and consumer surplus.

182.       The exact timing and magnitude of these potential benefits are uncertain. The Gulf Sturgeon Recovery/Management Plan sets forth the recovery objective of delisting the species from discrete management units by the year 2023. Subsequent to delisting, the goal is to establish sufficient self-sustaining populations to support directed fishing pressure within these discrete management units. Under the best case scenario, a viable commercial fishery might develop in 20 to 30 years. Even within this time period, however, the likelihood of the sturgeon population being sufficiently large to yield significant fishing-related benefits is low. Nevertheless, recovery of the sturgeon presents the potential to provide direct and significant economic benefits to the Gulf Coast region in the long term.

         Sport Fishing

183.       Full recovery of the sturgeon population may lead to the development of a recreational sport fishing industry. Associated benefits could include an increase in tourism and recreation-industry jobs and expenditures within the Gulf Coast regional economies. However, as with commercial fishing, the likelihood of the sturgeon population recovering sufficiently to yield a viable sport fishery within a ten year time frame is extremely low.

         5.1.2  Benefits Associated with Habitat Protection

         Ecosystem Health

184.       Sturgeon are an integral part of the ecosystems in which they live. Protecting the primary constituent elements for the sturgeon, including preserving water quality and natural flow regimes, will benefit other organisms that cohabit these areas. Each one of these organisms may in turn provide some level of direct or indirect benefit to the public and local economies.

185.       Understanding the change in aquatic ecosystem health resulting from this designation would entail significant effort to model the likely changes in water quality as well as the ecological benefits of modified flow regimes. While these benefits can be described qualitatively, existing data are not available to quantify the scale of these changes, such as required for monetization. For example, it is widely understood that reduced sedimentation in a river system can benefit various fish, shellfish, and aquatic plant communities. In addition, in some cases reductions in sedimentation may provide direct economic benefit (e.g., reducing the need for, or scale of, dredging operations). Quantifying these changes would, however, require additional information on the make-up of these aquatic communities and the baseline state of environmental quality. More importantly, such quantification would require detailed information on the nature and scope of project modifications resulting from section 7, including the locations of the activities requiring modification. Such information is not currently available due to the uncertainty about the modifications potentially associated with future projects.

Recreational Benefits

186.       In addition to the long-term potential for restoration of a sport fishery for the sturgeon, protecting critical habitat for this species may result in preservation of river, estuarine, and marine habitat suitable for recreational uses such as boating, fishing, and swimming. Conservation of river, estuarine, and marine habitat for recreational use may lead to increased tourism and contribute to the expansion of a tourist economy in certain counties. In addition, such activities are likely to generate social welfare benefits to recreators. Quantification of these benefits, however, is limited by the same information constraints are discussed above.

         Flood Control

187.       Preserving natural environments may also reduce FEMA and county expenditures on bank stabilization and other flood control programs, as well as reducing the impacts of floods that do occur. Modeling the expected change in these factors would require detailed understanding of the location and effects of expected project modifications, as well as models of the hydrology of the affected river systems.

         Other Benefits

188.       Measure undertaken to protect sturgeon habitat could lead to other benefits including: (1) protection of human and livestock drinking water supplies; (2) reduced cost of drinking water treatment and/or future stream restoration/maintenance; and (3) protection and enhancement of property values. Again, quantification and monetization of these categories of benefits would require additional, detailed information.

189.       Additional benefits of designating critical habitat for the sturgeon may include educational/informational benefits (increased awareness by the public of the extent of sturgeon habitat), increased support for existing conservation efforts, and reduced uncertainty regarding the extent of sturgeon habitat. For example, critical habitat designation will provide a firm legal definition of the extent of sturgeon habitat, which may reduce regulatory uncertainty. At this time sufficient information does not exist to quantify or monetize the benefits of this designation, and thus it is not possible to present monetized benefits on a unit-by-unit basis.

5.2    Placing Monetary Values on the Benefits of Section 7 Implementation

190.       As discussed above, sufficient information does not exist to allow for quantification of the secondary benefits of habitat protection (e.g., improved water quality, reductions in flood control costs). Thus, this report focuses on the primary benefit of implementation of section 7 of the Act, expressed in terms of the public’s willingness to pay to enhance the probability of recovery of an endangered species of fish. This discussion focuses on the existing economics literature, as gathered in the course of this analysis.

191.       Benefits transfer is the method used by economists to apply the results of existing valuation studies to a new policy question. For example, the economics literature provides a large number of studies that define the economic surplus associated with recreational fishing trips. These studies are commonly used to predict the value of a fishing day at a site that has not been studied, given various attributes of that site (e.g., species of fish, demographics of the local community, etc.). Two core principals of defensible benefits transfer are (1) the use of studies that apply acceptable techniques to generate welfare values, and (2) similarity between the good being valued in the literature and the good being valued in the policy context to which the transfer is being made.

192.       Exhibit 5-1 provides summaries of several studies reported in the literature that attempt to estimate the non-use value the public holds for preservation of various species of fish. Non-use values represent the public’s willingness-to-pay to preserve a species or enhance a species’ population above and beyond any direct use. For example, Berrens et al. (1996) asked a sample of New Mexico residents their willingness to pay for a hypothetical change in instream flow protection, with a focus on the protection of the Federally endangered silvery minnow. Background information was provided to participants regarding the beneficial uses of instream flows and the cost of protecting them. Respondents were told that the silvery minnow is one of 11 endangered fish that require a minimum amount of water in streams and rivers, and that trust funds are used in some states to buy or lease water for this purpose. Respondents were asked if they would be willing to allow a New Mexico state agency to buy or lease water from willing parties for instream flow protection. If the respondent answered yes to this question, he/she was asked to state his/her willingness to contribute annually to the fund over a hypothetical five-year period. Respondents to this survey indicated a willingness to pay of about $30/year for five years for this program.

193.       As demonstrated in Exhibit 5-1, the estimated values for fish species conservation vary widely between studies. These variations depend on: (1) the good being valued (e.g., dam removal and fish habitat restoration, reduction of future fish injuries resulting from toxic contamination, maintenance of sufficient instream water levels); (2) how the question was asked (e.g., yes/no referendum, elicitation of a willingness to pay using a payment card approach); (3) the sample frame used for the survey (e.g., Montana recreational fishing license holders, all English speaking California households), and (4) the mechanism through which the respondent would actually pay the bid amount (i.e., increase in annual taxes, a one-time fee, an increase in monthly electric bill), as well as other factors. Importantly, in some cases the reported values reflect actions to preserve a number of fish species. Given these differences, it is not possible to predict the willingness to pay individuals would have for the protections afforded to the sturgeon through section 7 of the Act. However, while the values summarized in Exhibit 5-1 do not provide a clear picture of the values the public would place on actions taken to enhance recovery of the sturgeon, they do support the notion that preservation of fish species may generate substantial benefits to the public.

5.3    Assigning Benefits on a Unit-by-Unit Basis and to the Critical Habitat Designation

194.       Where possible, the benefits of critical habitat designation should be described on a unit-by-unit basis, and distinguished from the benefits that result from implementation of the jeopardy provisions of section 7 of the Act. The benefits discussed above arise primarily from the protection afforded to the sturgeon under the section 7 jeopardy provisions. Specifically, future consultations - and any associated project modifications - are expected to be primarily associated with the listing of the species (i.e., the jeopardy provision of section 7), rather than the critical habitat designation (i.e., the adverse modification provision).