By SEEMA MEHTA, TIMES STAFF WRITER

A federal judge in Los Angeles, acceding to a Bush administration request, Monday invalidated protection of several hundred thousand acres of land in Southern California deemed essential to the survival of two imperiled species.

U.S. Fish and Wildlife Service officials have said the request is part of a broad reevaluation of "critical habitat" designations involving millions of acres of protected land, mainly in California.

Environmentalists fear the administration's action is the first step in a broad rollback of protections for rare plants and animals covered by the Endangered Species Act. "This is a huge issue because there are so many other critical habitat designations impacted," said William Snape, vice president of legal affairs for Defenders of Wildlife, in Washington, D.C. "I think it's upwards of 100 species whose habitats are hanging in the balance."

In his ruling Monday, U.S. District Judge Stephen V. Wilson said the Fish and Wildlife Service must redo the economic analysis of the effects of designating more than half a million acres as critical habitat for the coastal California gnatcatcher, a tiny bird, and the San Diego fairy shrimp.

Real estate developers, ranchers and farmers have been lobbying the Bush administration to make it easier and cheaper to build on critical habitat in a number of places around the country.

In the Southern California case, the judge left open the question of whether existing protections would stay in place until a revised economic analysis and new habitat designations are completed in 2004.

Wilson said he will not rule on that issue until he receives additional written arguments from attorneys representing the federal wildlife agency and an environmental group.

"To vacate the critical habitat in place would mean, for a period of time, there would be no critical habitat," Wilson said during a 45-minute hearing. "The court's concern is, how can there be some [protection] in the intervening period? ... There apparently is a movement to begin development of at least part of the land."

This is a key concern of environmentalists, who fear that nullifying existing rules would remove major hurdles for two huge developments--Rancho Mission Viejo's 14,000 homes and a toll road--and allow the destruction of sensitive habitat in southern Orange County.

One of the most controversial provisions of the Endangered Species Act, critical habitat is a category of protected land in which building and other activity can be limited or even barred to ensure the survival of rare plants and animals. The land at issue in Monday's hearing is covered with coastal sage scrub, where the threatened gnatcatcher nests, and dotted with seasonal pools that are home to the endangered fairy shrimp.

In 2000, the Fish and Wildlife Service designated 513,650 acres in Los Angeles, Orange, San Diego, San Bernardino and Riverside counties as critical habitat for the gnatcatcher, and 4,025 acres in Orange and San Diego counties for the fairy shrimp.

Kristen Gustafson, the U.S. Justice Department attorney representing the Fish and Wildlife Service, said lifting the land protection would not affect the species. "The gnatcatcher and fairy shrimp will not suffer harm if the habitat were vacated," she said.

She said both creatures would be adequately protected by other sections of the Endangered Species Act.

Andrew Wetzler, a lawyer who represented the Natural Resources Defense Council at the hearing, disagreed.

"There's no clearer indication of the importance of critical habitat than the fact that Rancho Mission Viejo and the transportation corridor agencies are suing to overturn it," Wetzler said after the hearing.

"We're obviously disappointed that the service once again failed to defend its own regulations," he said. The administration's request to eliminate the designations coincides with a slew of lawsuits brought by developers and other landowners nationwide, challenging how the government conducted its financial analyses of the effect of designating critical habitat.

Before designating habitat, the service is legally required to analyze the economic consequences for developers, property owners, cities and others who have an interest in the land. Until last year, nearly all those analyses had said creating critical habitat would have little to no economic effect.

Developers and others have long argued that habitat designations were far costlier than the government estimated. One developer-funded study in California estimated that the gnatcatcher critical habitat alone would cost the state .5 billion in lost jobs, housing and property value over 20 years.

For many property owners, the designations amount to little more than lines on a map. But compliance can be difficult for landowners dependent on federal subsidies or permits--as many major developers and road builders are.

"This [ruling] is further confirmation of our belief that the law requires a real thorough economic analysis," said Rob Thornton, a lawyer representing the Building Industry Assn. of Southern California, the toll road builders and others.

The Fish and Wildlife Service agreed that a new economic analysis was needed, citing a federal appeals court ruling in May that struck down protection of stream-side habitat in New Mexico for another bird, the Southwestern willow flycatcher.

The 10th Circuit Court of Appeals ruled that the process used to decide what lands to protect did not adequately analyze the financial effect on property owners and others who make a living from the land.

Federal wildlife officials have said they were trying to be consistent with that ruling by reviewing up to 10 habitat designations that protect millions of acres of land.