Graphics: Federal RegisterDownload AudioA federal appeals court last week ruled the U.S. Fish and Wildlife Service was following the law when it designated a California-sized piece of the Alaskan Arctic as critical habitat for the polar bear. The ruling dismayed the state of Alaska, the oil industry and several Native groups. They’d challenged the habitat designation, saying it was too broad and would deter activity in the region. Let’s take a look at this designation and what it could mean for the industry.The first thing to know is that this habitat is an enormous area, but 96 percent of it is off-shore, covering sea-ice or sea. The 4 percent that’s on land is a band of coast that stretches from the Canadian border in the northeast to Barrow, and all the barrier islands, down to Hooper Bay in Western Alaska.U.S. Fish and Wildlife Biologist Ted Swem says the habitat designation won’t require anyone to get any new permits. For oil companies, he says, it just adds a question for federal permits they’d have to get anyway.“In my experience it adds paragraphs or pages to the length of a document, and that requires the project applicant and the federal agency with which we’re working to add more text, and we have to have more thought, and more discussion … . But it doesn’t add weeks or months to the process.”That’s because, Swem says, regardless of whether the habitat is designated, the polar bear is listed as a threatened species. Under the Endangered Species Act, he says, any federal permit for development in this area of the Arctic already requires consultation with his agency, to evaluate its impact on the bear. And here’s the thing: even without the habitat designation, Swem says Fish and Wildlife still has to look at the impact on the habitat, because harming the habitat could harm the bear.“Every place there’s critical habitat, there is also polar bears,” as Swem put.The habitat designation adds a new question– what’s the impact on the bear’s habitat? — but the answer is roughly the same.“Not just roughly, but I would say it would be the same.Swem says. “It has been the same. In my experience, the answer is the same.”Swem cites Point Thomson, the Exxon project on the North Slope, as an example. Exxon got the crucial wetlands permit for that in 2012, when the polar bear habitat designation was in place, before the legal challenge put it on hiatus.“And it was right on the coast and it is in critical habitat, and I would contend that it didn’t affect that development at all, to have that project within critical habitat,” Swem says.The Corps of Engineers’ wetlands permit required Exxon to bring two drilling pads in from the coast a bit and shrink a third, to accommodate polar bears coming ashore. The Corps also required Exxon to pay compensation for filling 267 acres of wetlands, at a 3-to-1 ratio. That meant paying a conservation fund to preserve 801 acres elsewhere. Exxon won’t say how much they had to pay, but safe to say it was several million dollars.Joshua Kindred, an environmental attorney for the Alaska Oil and Gas Association, an industry trade group, contends the habitat designation adds exponentially to that kind of cost.“If an area of land in which say a developer want to develop is critical, then the Corps puts sort of an automatic multiplier on the value of that land, from a wetlands mitigation standpoint,” he said.That’s not how the Corps of Engineers sees it.“There’s no one thing that says ‘OK this is habitat for a polar bear, therefore the wetland mitigation ratio is X,’” says Sheila Newman, chief of the Special Actions Branch, in the regulatory arm of the Corps of Engineers-Alaska District.It’s not easy to explain the Corp’s evaluation methods. Newman says they examine wetland “functions” but have no standard assessment tool. They use several. Newman says they’re trying to pare down the methodologies so companies can better predict their mitigation costs.“But, you know, we are not there yet,” she says.But, she says, in all the assessment tools in use, it wouldn’t make a difference whether an area is a designated critical habitat, or just a place known to see polar bears.“So the critical habitat designation, in itself, does not make a difference at all,” she said.Kindred, from the Alaska Oil and Gas Association, says the designation, if nothing else, adds uncertainty to a project. He says AOGA and the other plaintiffs haven’t decided yet whether to pursue their legal challenge further.