Proactive compliance for data center land development: How to navigate the Endangered Species Act

As the data center market continues to expand its reach, site suitability has become increasingly critical to success. Access to large swaths of land, water resources, and power connectivity lead the list of challenges developers face in this growing market. But another issue is continually presenting itself – biodiversity and habitat protection. In both rural and urban environments, the land needed to provide for a data center can be protected land or home to sensitive species, which both lead to regulatory and environmental concerns.

While state regulations vary on the topic, federal regulations like the Endangered Species Act (ESA) are more broadly applicable to development projects. The ESA requires land developers and site managers to be proactive in understanding, interpreting, and applying to effectively manage risks and avoid construction delays, while also minimizing environmental impacts. The ESA lists species as “threatened” or “endangered” and provides a framework for the conservation and protection of such species and their habitats. It prohibits the “take” of listed species, which is inclusive of both lethal and non-lethal actions and is defined as “to harass, harm, pursue, hunt, shoot, wound, kill, trap, capture, or collect, or to attempt to engage in any such conduct.” The terms “harass” and “harm” are further defined to include activities that interrupt a species’ essential life functions of breeding, feeding, or sheltering.

How is the ESA applicable to data center site development?

Several sections of ESA are particularly relevant to site development, with Section 7 and Section 4 being the most applicable.

Section 7

Under Section 7, whenever a data center developer is working on a project that involves federal government approval, funding, or permits such as those needed for water management or other environmental concerns, they must check to see if any endangered plants or animals might be affected. This process most often starts when applying for permits under laws like the Clean Water Act, but it can happen any time federal involvement is required, such as when getting approved for federal funding. Section 7 is critical for land developers in that it guides how projects are reviewed and managed. Even if a project could affect endangered species, it may still be allowed to move forward if it follows certain conditions laid out in official documents called Biological Opinion (BO) and Incidental Take Statement (ITS). The BO looks at whether the project will put species at risk or damage important habitats, while the ITS explains how much incidental harm is permitted and what steps the developer must take to reduce that harm.

For projects without a federal connection, project owners must still assess potential impacts to listed species. In this case, Section 10 of the ESA allows them to apply for an Incident Take Permit (ITP) that allows the project to move forward with an acknowledgement of the potential for incidental harm to listed species during normal development activities.

Section 4

Section 4 outlines how species are officially listed as threatened or endangered and enables the designation of critical habitat. For data center developers, understanding these regulations is crucial, as projects may overlap with these protected habitats. Section 4(d) allows for special rules tailored to threatened species, which can simplify compliance while focusing on the most significant risks to those species. For example, a Section 4(d) rule once permitted tree clearing in suitable forested habitat for the northern-long eared bat during its hibernation period, meaning construction could proceed if timed appropriately. However, when the species was reclassified as endangered in March 2023, this flexibility was revoked, requiring stricter protections and potentially impacting project timelines and site activities.

Determining ESA applicability at a site

Best practice is to consider ESA compliance as early as possible in the siting and due diligence phases of the data center lifecycle. We recommend the following steps when evaluating for ESA compliance:

• Conservatively and thoroughly consider all activities associated with a planned action
• Utilize USFWS Information for Planning and Consultation (IPaC) and state agency databases to explore potential impacts to listed species and critical habitats
• Determine whether planned development includes a federal nexus (e.g., permitting, funding, authorization, etc.)
• Evaluate how development activities may affect species identified by IPaC and state databases
• Implement best management practices (BMP) and avoidance and minimization measures (AMM) to reduce or eliminate the likelihood of adverse impacts to listed species

Land developers should start by evaluating the potential for listed species to be present on or near a site, and subsequently, the potential for adverse impacts from proposed actions. The USFWS’ IPaC tool is a valuable resource for obtaining general information pertaining to listed species and critical habitat locations. Developers can create a site-specific action area within the tool to ensure the most relevant data is gathered. In addition, state-specific fish and game agencies, natural heritage centers, and/or Tribal resources may be able to provide further information.

While Section 7 requires federal agencies to assess for impacts to listed species, this task is often reverted to the client. Thus, land developers must determine the potential effects for each listed species within their action area and submit the proper documentation. For some species, IPaC can provide an automated determination of effects through species-specific Determination Keys, in which the user answers a series of questions relevant to specific development details and the species of concern.

A determination of effects will result in one of three possible outcomes.

• No Effect (NE): The proposed action will not affect a listed species or designated critical habitat
• May Affect, Not Likely to Adversely Affect (MANLAA): The effects on a listed species or designated critical habitat are expected to be discountable, insignificant, or completely beneficial, and as such, “take” is not reasonably certain to occur
• May Affect (MA): The proposed action may pose an effect on a listed species or designated critical habitat, and as such, “take” may occur

Evaluating potential impacts

In evaluating the potential for impacts to listed species through traditional means, several variables must be considered.

1. Understanding and evaluating key project elements both conservatively and transparently is critical to making an appropriate determination of effects for a listed species, and subsequently, to ensuring that risks are adequately managed. Developers should consider any activities that would otherwise not occur but for the proposed action, such as tree clearing, water withdrawals, erosion and sedimentation to water bodies, drilling and blasting, chronic noise or light pollution, point source or non-point source discharge, or the application of herbicides and/ or pesticides.
2. A detailed understanding of listed species’ biology and life history is necessary to evaluate proposed actions in the context of the ESA. For example, at a high level, tree clearing may be a concern for listed species of bats and birds, while impacts to streams may affect listed species of fish or freshwater mussels. However, a more detailed understanding of species-specific biology and phenology may further inform the potential for impacts(or lack thereof) resulting in a more conclusive species-specific determination of effects.
3. Site managers should implement species-specific BMPs and AMMs. BMPs and AMMs are variable in scope and are generally species-specific (and sometimes state- or region-specific). They may reduce or eliminate the likelihood of adverse impacts to a listed species of concern. BMPs and AMMs may include, but are not limited to, avoidance of certain activities during sensitive life stages (such as time-of-year restrictions on tree clearing during a bat species’ pup-rearing season or active season), or engineering controls meant to reduce the impact of anthropogenic activities on the surrounding environment such as downward-facing light fixtures or silt fencing meant to alleviate downstream sedimentation.

What are the benefits of evaluating for ESA compliance early in siting and due diligence process?

"For data centers specifically, including ESA compliance early in the process demonstrates commitment to responsible development, which can help foster trust and support within local communities and ensure that stakeholders feel their concerns for biodiversity and habitat protection are respected," says Chris Kriegner, Principal, Biodiversity and Ecology

Conducting a thorough and transparent evaluation of project activities, assessing potential impacts on listed species, and implementing species-specific management practices are essential steps for achieving compliance and minimizing risk under the ESA. Early, proactive coordination with experts and regulatory agencies supports responsible project development while safeguarding sensitive species and habitats. By integrating ESA considerations at the outset, project teams can avoid costly delays, adapt plans efficiently, and foster positive relationships with stakeholders and regulators.