U.S. to limit oil development in polar bear habitat

ANCHORAGE, Alaska (Reuters) - The U.S. Interior Department will designate within two years protected areas of the Arctic that are considered critical habitat for polar bears and cannot be harmed by oil development as part of a legal settlement with environmental groups on Monday.

The Interior Department formally listed polar bears as threatened in May, but did not create protected areas for them.

Environmental groups said the threatened listing needed to be coupled with habitat designations to protect polar bears from spreading oil development or other industry impacts.

"You can't protect a species without protecting the place where it lives," said Kassie Siegel, a staff attorney for the Center for Biological Diversity, one of the three groups who sued the Bush administration to secure the designation.

"After global warming, oil development is the biggest threat to polar bears," said Siegel.

Oil companies, looking for untapped resources, are turning to the ice-filled waters of the Arctic as potentially lucrative areas for development. Environmentalists see oil development disturbing a delicate habitat for many Arctic wildlife.

The Center for Biological Diversity, Greenpeace and the Natural Resources Defense Council are still suing the government to have polar bears listed as "endangered," a more critical classification than the current "threatened" listing.

The groups are also seeking to force the Interior Department to mandate regulation of greenhouse gas emissions, which the environmentalists argue are the root cause of the polar bears' problems.

When it designated the bears as threatened, the Interior Department acknowledged that the rapidly warming Arctic climate has damaged polar bears' habitat and the species' chances to avoid extinction.

The partial settlement, filed on Monday in U.S. District Court in Oakland, California, establishes a June 30, 2010, deadline for the critical habitat designation that was considered important to the species.

"We certainly intended to make a decision on critical habitat anyway," said Bruce Woods, spokesman for the U.S. Fish and Wildlife Service's Alaska headquarters.

(Editing by Daisuke Wakabayashi and Mohammad Zargham)