Statement of Don Rose
On Behalf of Sempra Energy and the Edison Electric Institute
October 19, 1999
Subcommittee on Fisheries, Wildlife, and Drinking Water

Mr. Chairman and Members of the Subcommittee, I am Don Rose, Manager, Land Planning and Natural Resources for Sempra Energy. My staff and I are responsible for performing route and site selection for energy facilities, such as gas and electric transmission lines, obtaining permits for construction, and assuring compliance with environmental laws and regulations. Sempra Energy appreciates the opportunity to appear before the Sub Committee on Fisheries, Wildlife & Drinking Water to discuss the topic of Habitat Conservation Planning and the Endangered Species Act. Sempra Energy is the parent company of Southern California Gas Company and San Diego Gas and Electric (SDG&E;), as well as several unregulated subsidiaries.

Sempra Energy is a Fortune 500 company and has the largest customer base of any energy services company in the United States. As such, the need to expand the energy infrastructure and maintain existing facilities is a constant and massive undertaking and obligation. I appreciate the opportunity to appear before this Subcommittee on behalf of Sempra Energy, the Edison Electric Institute (EEI), and the more than 200 shareholder-owned electric utilities who are likewise members of the EEI. I commend the Subcommittee for the hearings you have been holding on the strengths and weaknesses of the current habitat conservation planning and "incidental take" process under the Endangered Species Act (ESA). The generation and delivery of electricity involves extensive uses of land and water. In order to deliver electric power to commercial users and individual citizens, electric utilities maintain more than 670,000 miles of transmission line rights-of-way (ROW). Hydro-electric projects often preserve significant project lands that can benefit various plants and animals. In addition, nearly 90 percent of the electricity used in the United States is generated from nuclear or fossil fuel in steam-electric processes that depend on water resources for cooling water, makeup water, and other operations essential to providing reliable electricity. Much of the remaining electricity comes from hydropower projects, which rely on the weight of falling water to turn turbines that generate electricity. All of these land and water uses afford opportunities to maintain and protect habitat.

The service territory of SDG&E;, essentially San Diego County and Southern Orange County in California, has more listed species under the Federal ESA than any other County in the continental U.S. There are more candidate species queued up waiting to be listed than any County in the continental U.S. While the likelihood of encountering listed species decreases north of San Diego, the density of endangered species in California is still higher than any state in the continental U.S., making it equally challenging for Southern California Gas Company (SCG) to do their work. Maintaining the energy delivery infrastructure in so vast a region is a significant challenge, and it is compounded by endangered species management concerns.

SDG&E; is the only public utility in the country with an adopted, system-wide, multiple species (110 species are covered) HCP. This HCP has been in operation since December 1995. The development of this HCP involved:

-- commitment of $1.2 million for the creation of a mitigation bank

-- development of an extensive and ongoing training program for construction maintenance personnel, including guidance literature

-- establishment of an on-call environmental surveying team to monitor and insure compliance with the HCP

As these steps indicate, Sempra has made dramatic changes in our corporate culture, imposing rigid standards on the design, construction, and maintenance of energy delivery facilities. I will discuss issues that Sempra's experience with HCP's, and the Endangered Species Act itself. Sempra has benefited from the implementation of our HCP in several ways. Our company is able to:

-- initiate new construction without obtaining additional permits

-- conduct maintenance activities year-round, including during nesting season

-- conduct access road maintenance

These operational advantages save our company time through avoiding unnecessary permit delays, and the investment in stewardship this HCP represents has paid dividends in establishing our company as a protector of the environment in the public eye. The U.S. Fish and Wildlife Service often cites our program when making recommendations to other developers and industries.

Sempra has also encountered several problems implementing our HCP, and unfortunately, these few problems have the potential to neutralize all of benefits listed above. The problems, in my experience, lie not with the concept of HCP's but with the implementation. Sempra agrees with the concept behind HCP's, and recognizes their potential to benefit the species they protect. In fact, we would argue that HCPs should be used more often. In practice, however, HCPs and the administration of ESA have several significant problems that need to be remedied.

1) CONFLICTING REGULATIONS

Like many other complex systems, electric and gas systems require periodic maintenance to avoid shut downs. The resulting outages can cause serious economic and human health problems. Because utilities provide an essential service necessary for public health, safety and welfare, the licensing agencies that regulate utilities, recognizing that poor maintenance will result in system problems, mandate much of the maintenance we do as well as dictating its frequency. For Sempra Energy, these maintenance activities include:

-- insulator washing

-- insulator replacement and repair

-- repair and replacing conductors

-- pole brushing (removal of flammable vegetation from base of wood poles)

-- tree trimming

-- access road re-grading and maintenance

-- pole line inspection

-- repair or replacement of structures supporting utility equipment

-- pipeline erosion repair

-- pipeline leak patrolling

-- pipeline repair & replacement

-- exposed pipeline repair

All of these maintenance operations must be performed when needed and when weather permits. Unfortunately, this means most of these operations must be performed during the spring and summer, which is nesting season of many protected species. As a result, conducting utility field operations in natural areas presents an unavoidable opportunity for conflict with the Endangered Species Act (ESA).

This regulatory conflict may also catch utility customers in an ongoing financial trap. In California our utilities operate under a performance-based rate system that factors in standards of maintenance and system reliability. Poor rates of return, triggered by delays in access to systems for maintenance, can translate into lowered financial ratings; which, in turn, would negatively affect customer rates. When our legal responsibilities conflict, the end result can harm the customer and the species.

2) GREATER RISKS TO THE HABITAT

Of the maintenance activities we conduct, the most important is access road re-grading and maintenance. Without driveable access roads, few of asset maintenance activities (as listed under item 1 ) can be performed. For electric systems, deferred maintenance has potentially serious consequences. Three of the most common are: outages, equipment damage, and fire. If insulators are not washed, flashovers are almost certain, and may be catastrophic. (See attached photograph.) A dirty insulator can conduct electricity on its surface thus causing a short. Flashovers can result in outages and potentially, catastrophic fire. If a flashover occurs, the equipment is always damaged and must be replaced. The flashover can also cause a surge that can damage sensitive customer-owned equipment which relies on the stable operation of the electrical system. Additionally, the reliability of the grid can be seriously compromised.

Of greatest threat to the goals of the ESA, fire is a very possible consequence of these flashovers, especially in the fire prone regions of the desert southwest. If unperformed maintenance results in a fire, extensive damage to the habitat areas of concern, including the potential loss of many species can be expected. Ironically, the same activities that were prevented for the purpose of protecting habitat can facilitate that habitat's destruction by fire.

Gas systems require less maintenance than electric systems because the majority of the system is underground and not exposed to the elements and other activity. However, when maintenance is needed, it is no less critical than for the electric systems. Outages, fire and damage to the environment are all potential consequences of deferred repair and maintenance. The magnitude of the consequences, as with electric equipment, increases with the capacity of the facility.

3) UNEQUAL TREATMENT UNDER THE LAW

One of the problems that a utility finds with HCP's is that they appear to be designed for a one-time use, which is most typical of development versus continuous operations.

Most development must mitigate for certain impacts caused by the development. So it should be. Utilities also mitigate when they develop their facilities, but it doesn't end there as it does with other forms of development. They must continue to mitigate repeatedly in order to operate and maintain these facilities. Even worse than the questionable continual mitigation requirements are the extensive and repeated delays incurred to complete these requirements.

Another example from our experience illustrates what can happen when additional species are listed, and found to be located in the area of an otherwise thorough and exhaustive HCP. As mentioned before, the SDG&E;\1\ HCP covers 110 species system-wide. When our HCP was initiated, the Quino Checkerspot Butterfly was not included in this species list. USFWS told SDG&E; that the Quino Checkerspot was locally extinct in our region, and therefore it need not be included in the HCP. Three years later, however, the butterfly reappeared, alive and well, and in our service territory. We subsequently discovered that the butterfly's primary host plant appears to flourish along SDG&E;'s dirt access roads.

\1\In July of 1998, after the implementation of the HCP, SDG&E; and Southern California Gas Company were joined under the holding company Sempra Energy

As a result of the species re-emergence, the Service has asked Sempra to amended our HCP or apply for a separate Section 10 permit. The application processes for a Section 10 permit normally takes a year or more, during which time much critical maintenance work is shut down or perilously delayed. The Service has been flexible in allowing maintenance in some areas where they feel the butterfly is unlikely to be present. However, the butterfly survey protocols mandated by the Service to determine that the butterfly is not present are extremely detailed, protracted, difficult, expensive, and ultimately limit the time and type of maintenance that can be conducted.

If a small window of opportunity is missed, one must wait an entire year in order to conduct an acceptable survey pursuant to the Service's standards, and performing surveys according to USFWS strict, prescribed standards is no guarantee of acceptance. Recently, the Service declared several surveys conducted by other companies unacceptable. Despite compliance with a rigorous survey protocol prescribed by USFWS, the surveys were not accepted because the surveyed area did not experience enough rain during the time of the survey.

As the result of the USFWS approach to protecting Quino Checkerspot Butterfly, a comprehensive HCP with up-front mitigation, including significant financial and human resource commitments by Sempra, is now practically useless in lieu of the new listing. While an amendment to the HCP is now being prepared, there is no guarantee that how the fix will last, and there is no way to recover the resources and time that have been lost since the new listing. Simply put, it runs counter to reason that such an extensive management program as the SDG&E; HCP, created to protect 110 species, could be de-railed and rendered moot simply because of the addition of one additional species.

4) A PATCHWORK OF RULES

An ironic aspect of HCP's of this nature is that they do not apply to federal land. Thus they are void on lands owned by the same government agency which issued the permit in the first place. The linear nature of energy utilities requires regulation addressed in a more comprehensive manner. A transmission line may travel many miles, and cross military reservations, forest service land, national parks, national wildlife refuges, and other federal lands. The terms of the HCP do not apply in these areas, and separate agreements must be negotiated in each case, limiting an otherwise system-wide HCP. Furthermore, other federal actions, such as the re- licensing of a hydroelectric facility, are not covered by HCPs on federal lands. What ensues is redundant review of the same sorts of activities by the same agencies.

5) THE APPEARANCE OF CONFLICTING MISSIONS

The U.S. Fish and Wildlife employs hundreds of specialists in the fields of biology and species conservation. Electric utilities value this perspective, and we too employ biologists and other environmental professionals to focus our activities and insure that we protect the environment. As our HCP illustrates, the mission of the U.S. Fish and Wildlife Service and utility land managers need not be in conflict. Far too often, however, those who bring biological expertise to the management equation are unaware of the practical implications and stewardship opportunities of the management activity. In such cases, perhaps a multi-disciplinary approach would yield better results. Through cross training, the appointment of an HCP manager well versed in both the biological goals of HCP's and the technology being managed, or the appointment of more personnel in the USFWS with land management expertise, could forge a stronger connection between biological and management goals of an HCP.

FINDING REMEDIES

Sempra Energy is a strong supporter of the goals and intent of the Endangered Species Act, and we feel that the HCP process holds great promise. An operating HCP can be a very valuable tool for a utility. SDG&E; has utilized its HCP on nearly a daily basis. That is, until the Quino Checkerspot butterfly was listed. But to further the goals of the ESA, some remedies to the HCP process should be considered. Some options to consider might include:

-- Habitat-based HCPs should be recognized as protecting all inhabitants of such habitats. In the example we provided, if the butterfly has returned from regional extinction along the access roads, it has also returned to areas in the utilities' service territory other than the access roads. It therefore should be automatically included in the system-wide, habitat- based, SDG&E; HCP that already covers and protects most of the habitats for the plants and animals in the area. In other words, the butterfly is afforded the same protection as the 110 species covered in the plan today, as it resides in similar habitat. In this case, over 200 acres of mitigation bank had been purchased and deeded over for preservation. So, the wildlife agencies have the mitigation in place for future work, work that is being prohibited by the butterfly listing.

-- HCP's should only require mitigation once for such things as building access roads. Maintenance should not require additional mitigation. However, this should not be interpreted as a license to be irresponsible to the environment. Utility crews must adhere to strict protocols when working in environmentally sensitive areas. This includes restoration of damaged habitat. Sempra supports and voluntarily enforces this program.

-- Existing access roads could be given "safe harbor" status much like agricultural lands.

-- HCP's should apply to all lands where habitats need protection and where work must be done, including federal lands.

-- There should not be a regulatory whipsaw created. A utility should not be found in violation of the ESA while performing regulatorily-mandated functions.

-- A separate career track should be developed within the U.S. Fish and Wildlife Service for HCP managers. Such managers would be trained not only in the biological aspects of habitat conservation, but well versed in the various land uses and technologies accommodated by HCPs. This official would be in a position to make long-term planning decisions with regard to individual HCPs. In cooperation with several Federal agencies including the U.S. Fish and Wildlife Service, the Edison Electric Institute supports a course to train federal land management personnel in the specifics of electric utility operation. We strongly recommend that U.S. Fish and Wildlife personnel making HCP and ESA decisions, including final biological opinions, complete the Electric Systems Short Course and similar courses that cover the management of technology and development.

As it stands today, the unreasonableness of the application of the ESA and HCP's to these maintenance activities threatens to undermine the tremendous level of support within utilities for the conservation objectives of the Act. Instead of providing a mechanisim that allows essential generation, transmission, and distribution, and generation activities to occur in predictable compliance with the ESA, the HCP program presents great uncertainty, cost, and risk.

For well over a century, Sempra Energy's utility companies have operated in the naturally abundant but sensitive environment of southern California. Utilities nation wide play a role in the daily stewardship of our nation's natural resources. We place a high value on our role as an environmental steward, and offer these suggestions in the hope that we can find a way to further the underlying goals of the ESA. Working together with Congress and the administration, we hope that we can solve these problems.