At the end of May, the Interior Department announced that the U.S. Fish and Wildlife Service was running out of money. Officials blamed the budget shortfall on the agency’s need to comply with court orders brought on by environmentalists’ lawsuits.

Now, to address its $150 million backlog, the Service plans to approach a host of judges and ask for extensions on critical-habitat designation for 32 species, including the cactus ferruginous pygmy owl, Mexican spotted owl, California red-legged frog, bull trout, and the southwestern arroyo toad.

Added to the Endangered Species Act in 1978, the critical-habitat provision requires Fish and Wildlife to identify habitat that is “essential” for the recovery of a species. But critical habitat has been a “bone of contention” for four administrations, says Hugh Vickery, an Interior Department communications officer. He says environmentalists use the term to mislead people. Critical-habitat court settlements don’t help species, he says; rather, they force “biologists (to) go out, draw a line on a map and designate critical habitat.”

But according to Kieran Suckling, executive director of the Center for Biological Diversity, the agency’s own studies show that species with critical-habitat designation are recovering twice as fast as species without them.

The Center accuses Interior Secretary Gale Norton of orchestrating the budget crisis, by first low-balling the agency’s budget, then refusing the supplemental money congressional Democrats tried to tack onto the budget. “They’re pleading poverty,” says the Center’s Peter Galvin, “But they haven’t asked (Congress) for sufficient funds to carry out their duties.”

Interior Department spokesman Vickery says that’s “a bunch of nonsense,” and says environmentalists are asking the agency to designate critical habitat “at a time when they don’t have the scientific information to do it.”