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ECONOMIC ANALYSIS OF CRITICAL HABITAT DESIGNATION FOR THE BI-STATE DISTINCT POPULATION SEGMENT OF THE GREATER SAGE- GROUSE DRAFT | May 28, 2014 prepared for: U.S. Fish and Wildlife Service 4401 N. Fairfax Drive Arlington, VA 22203 prepared by: Industrial Economics, Incorporated 2067 Massachusetts Avenue Cambridge, MA 02140 DRAFT Economic Analysis – May 28, 2014 TABLE OF CONTENTS EXECUTIVE SUMMARY CHAPTER 1 BACKGROUND 1.1 Species Description 1-1 1.2 Relevant Federal Actions 1-1 1.3 Proposed Critical Habitat Designation 1-2 1.4 Economic Activities Considered in this Analysis 1-4 1.5 Organization of the Report 1-4 CHAPTER 2 FRAMEWORK FOR THE ANALYSIS 2.1 Background 2-2 2.2 Categories of Potential Economic Effects of Species Conservation 2-4 2.3 Analytic Framework and Scope of the Analysis 2-6 2.4 Information Sources 2-18 2.5 Presentation of Results 2-18 CHAPTER 3 POTENTIAL ECONOMIC COSTS TO LIVESTOCK GRAZING ON FEDERAL LANDS 3.1 Scope and Scale of Livestock Grazing Operations 3-1 3.2 Baseline Conservation 3-2 3.3 Methodology and Project Modification Cost Estimates 3-6 3.4 Incremental Costs to Livestock Grazing 3-11 3.5 Key Uncertainties 3-11 CHAPTER 4 POTENTIAL ECONOMIC COSTS TO LIVESTOCK GRAZING AND AGRICULTURAL OPERATIONS ON PRIVATELY-OWNED LANDS 4.1 Scope and Scale of Private Grazing and Agricultural Operations 4-1 4.2 Methodology 4-5 4.3 Incremental Costs to Private Grazing and Agricultural Operations 4-8 4.4 Key Uncertainties 4-8 CHAPTER 5 POTENTIAL ECONOMIC COSTS TO TRANSPORTATION AND UTILITY INFRASTRUCTURE 5.1 Scope and Scale of Transportation and Utility Infrastructure in Proposed Critical Habitat 5-1 5.2 Incremental Costs to Activity 5-4 5.3 Summary of Results 5-8 5.4 Key Uncertainties 5-9 Draft Economic Analysis – May 28, 2014 CHAPTER 6 POTENTIAL ECONOMIC COSTS TO RECREATION AND OTHER FEDERAL LANDS MANAGEMENT ACTIVITIES 6.1 Scope and Scale of Other Activities on Federal Lands 6-1 6.2 Potential Incremental Costs 6-9 6.3 Key Uncertainties 6-16 CHAPTER 7 POTENTIAL ECONOMIC COSTS TO MINING OPERATIONS 7.1 Scope and Scale of Mining Operations 7-1 7.2 Potential Incremental Costs to Mining Operations 7-9 7.3 Summary of Results 7-12 7.4 Key Uncertainties 7-12 CHAPTER 8 POTENTIAL ECONOMIC COSTS TO RESIDENTIAL DEVELOPMENT 8.1 Scope and Scale of Residential Development 8-1 8.2 Methodology and Project Modification Cost Estimates 8-3 8.3 Administrative Costs to Development Activities 8-8 8.4 Consideration of Non-Section 7 Costs 8-9 8.5 Key Uncertainties 8-16 CHAPTER 9 POTENTIAL ECONOMIC COSTS TO RENEWABLE ENERGY DEVELOPMENT 9.1 Scope and Scale of Renewable Energy Development 9-1 9.2 Potential Incremental Costs 9-5 9.3 Key Uncertainties 9-5 CHAPTER 10 POTENTIAL ECONOMIC COSTS TO TRIBAL ACTIVITIES 10.1 Potential Impacts to Tribal Sovereignty 10-1 10.2 Overview of Affected Tribes 10-2 10.3 Potential Incremental Costs to Tribes 10-6 10.4 Key Uncertainties 10-6 CHAPTER 11 POTENTIAL ECONOMIC BENEFITS 11.1 Potential Benefits of Bi-State DPS Conservation 11-3 11.2 Economic Methods Used to Estimate Benefits 11-6 REFERENCES Draft Economic Analysis – May 28, 2014 APPENDIX A ADDITIONAL STATUTORY REQUIREMENTS A.1 Small Business Regulatory Enforcement Fairness Act (SBREFA) Analysis A-1 A.2 Unfunded Mandates Reform Act (UMRA) Analysis A-7 A.3 Federalism Implications A-7 A.4 Potential Impacts to the Energy Industry A-8 APPENDIX B SENSITIVITY OF RESULTS TO DISCOUNT RATE APPENDIX C INCREMENTAL EFFECTS MEMORANDUM Draft Economic Analysis – May 28, 2014 LIST OF ACRONYMS AND ABBREVIATIONS Act Endangered Species Act AIP Airport Improvement Program AML Appropriate Management Levels APLIC Avian Power Line Interaction Committee ATP Active Transportation Program AUM Animal unit month BIA Bureau of Indian Affairs BLM Bureau of Land Management BLS Bureau of Labor Statistics CDFW California Department of Fish and Wildlife CEC California Energy Commission CEQA California Environmental Quality Act Corps U.S. Army Corps of Engineers CTVA Capital Trail Vehicle Association CWA Clean Water Act DOI U.S. Department of the Interior DPS Distinct Population Segment EIR Environmental Impact Report EPA U.S. Environmental Protection Agency EQIP Environmental Quality Incentives Program ES Executive Summary ESR emergency stabilization and rehabilitation FERC Federal Energy Regulatory Commission FSA Farm Service Agency GAP Gap Analysis Program Draft Economic Analysis – May 28, 2014 GRP Grassland Reserve Program HCP Habitat Conservation Plan IEc Industrial Economics, Incorporated INRMP Integrated Natural Resources Management Plan LRMP Land and Resource Management Plan MRDS Mineral Resource Data System MW megawatt MWh megawatt hours NAICS North American Industry Classification System NBMG Nevada Bureau of Mines and Geology NDOT Nevada Department of Transportation NDOW Nevada Department of Wildlife NEPA National Environmental Policy Act NFWF National Fish and Wildlife Federation NPIAS National Plan of Integrated Airport Systems NRCS Natural Resources Conservation Service NSRE National Survey on Recreation and the Environment OHV off-highway vehicle OMB U.S. Office of Management and Budget PADUS Protected Areas Database of the United States PEA Preliminary Economic Assessment PMU Population Management Unit PPH Preliminary Priority Habitat RFA Regulatory Flexibility Act RMP Resource Management Plan ROW Rights-of-way Draft Economic Analysis – May 28, 2014 RPS Renewables Portfolio Standard Sage-grouse Greater sage-grouse SBA Small Business Administration SBREFA Small Business Regulatory Enforcement Fairness Act Service U.S. Fish and Wildlife Service SGI Sage-grouse Initiative SHOPP State Highway Operations and Protection Program STIP State Transportation Improvement Program TAC Technical Advisory Committee UMRA Unfunded Mandates Reform Act USFS U.S. Forest Service USGS U.S. Geological Survey WHA Wildlife Hazard Assessment WHIP Wildlife Habitat Incentive Program Draft Economic Analysis – May 28, 2014 EXECUTIVE SUMMARY 1. The purpose of this report is to evaluate the potential economic costs associated with the designation of critical habitat for the Bi-State distinct population segment (DPS) of the greater sage-grouse (Centrocercus urophasianus) (hereafter, Bi-State DPS). Specifically, the information presented in this report is intended to assist the Secretary of the U.S. Department of the Interior (DOI) in determining whether the benefits of excluding particular areas from the designation outweigh the benefits of including those areas in the designation.1 This report was prepared by Industrial Economics, Incorporated (IEc), under contract to the U.S. Fish and Wildlife Service (Service). OVERVIEW OF PROPOSED CRITICAL HABITAT 2. The Service published the Proposed Rule for the designation of critical habitat for the Bi- State DPS on October 28, 2013.2 The proposed critical habitat designation spans four units, totaling approximately 1.87 million acres. Of the proposed acreage, 1,394,937 acres are considered currently suitable for occupation by the DPS, and the remaining 472,784 acres are considered currently unsuitable for occupation by the DPS.3 3. Review of the proposed listing rule identified the following economic activities as potential threats to the DPS and its habitat. We therefore focus the analysis of potential impacts of Bi-State DPS conservation on these activities: • Livestock grazing on Federal lands • Grazing and agricultural operations on privately-owned lands; • Transportation and utility infrastructure; • Recreation and management activities on Federal lands; • Mining operations; • Residential development; and • Renewable energy development. 1 16 U.S.C. §1533(b)(2). 2 2013 Proposed Critical Habitat Rule. 78 FR 64328. 3 Acreage estimates based on GIS data provided by the Service on January 7, 2014. Acreage numbers throughout this report may differ from those provided in the Proposed Rule due to minor boundary adjustments included within the GIS data used to inform the Economic Analysis. ES-1 Draft Economic Analysis – May 28, 2014 OVERVIEW OF THE STUDY AREA 4. The proposed critical habitat designation spans eight counties, including portions of Alpine, Inyo and Mono Counties in California; and Carson City, Douglas, Esmeralda, Lyon and Mineral Counties in Nevada. The areas proposed as critical habitat are predominantly rural. Exhibit Executive Summary (ES)-1 presents select economic characteristics for the seven affected counties. 5. For land within the proposed designation, approximately 86 percent occurs on federally- managed lands. However, because the majority of land in the eight affected counties is also federally-managed -- more than 80 percent in some of the affected counties4 -- county representatives emphasize that changes to the management of and allowable uses on Federal lands can result in significant and material impacts on counties’ residents, businesses and their overall economy. County representatives stress that many businesses rely on access to and resources on Federal lands. According to discussions with these representatives, key economic sectors that are “tied” to Federal lands include recreation 5 and tourism, livestock grazing, agriculture, mining, and renewable energy development. EXHIBIT ES-1. SELECT ECONOMIC CHARACTERISTICS FOR COUNTIES AND STATES IN PROPOSED CRITICAL HABITAT 2012 2010 PERSONS MEDIAN MEDIAN DECEMBER 2013 ACRES IN COUNTY POPULATION PER SQUARE HOUSEHOLD HOME UNEMPLOYMENT PROPOSED ESTIMATE MILE INCOME VALUE RATE DESIGNATION Alpine, CA 1,129 1.6 $59,931 $371,300 14.0% 45,533 Inyo , CA 18,495 1.8 $45,000 $246,200 9.0% 28,937 Mono, CA 14,348 4.7 $61,868 $355,600 8.8% 1,044,648 California State 37,999,878 239.1 $61,400 $383,900 8.3% 1,119,118 Carson City, NV 54,838 382.1 $53,987 $221,900 9.7% 2,918 Douglas, NV 46,996 66.2 $61,099 $303,800 10.9% 179,296 Esmeralda, NV 775 0.2 $27,500 $64,200 4.2% 104,888 Lyon, NV 51,327 26.0 $46,088 $144,000 13.9% 207,177 Mineral, NV 4,653 1.3 $33,547 $92,400 11.3% 255,766 Nevada State 2,754,354 24.6 $54,083 $190,900 9.0% 750,044 Sources: U.S.

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