Applied Wetlands Science - Chapter 7

Rolband, Michael S. et al “Wetland Mitigation Banking” Applied Wetlands Science and Technology Editor Donald M. Kent Boca Raton: CRC Press LLC,2001 CHAPTER 7 Wetland Mitigation Banking Michael S. Rolband, Ann Redmond, and Tom Kelsch CONTENTS Background Regulatory Context The Banking Process Types of Wetland Mitigation Banks Perspectives on Mitigation Banking Ecological Perspective Regulatory Management Perspective User Perspective Economics Demand for the Product Service Area Regulatory Climate Service Area Size Mitigation Ratios Performance Requirements Monitoring and Maintenance Requirements Permitting Difficulty Attitudes about Mitigation Alternatives Regulatory Stability User Requirements Competitive Supply of the Product and Product Alternatives On-Site Opportunity for Wetland Mitigation Off-Site Opportunities for Wetland Mitigation Other Wetland Banks In Lieu Fee Alternatives ©2001 CRC Press LLC Risk Assessment and Presale of the Product Revenue Projections Costs of Mitigation Bank Development Land Costs Hard Costs Soft Costs Long-Term Stewardship Economic Projections References Mitigating the environmental impacts of necessary development actions on wet-lands and other aquatic resources is a central premise of wetland regulatory pro-grams. Offsetting losses through the restoration or creation of replacement wetlands has been promoted as a way to achieve a goal of no net loss of remaining wetland resources while still permitting unavoidable impacts to occur. As evidenced by recent studies, however, the effectiveness of on-site compensatory mitigation efforts has produced mixed results. Success rates range from 27 to 50 percent, due in part to 22 to 34 percent of the mitigation projects never being built (Redmond, 1991; Gallihugh, 1998; DeWeese, 1994; Brown and Veneman, 1998). In response to problems associated with individual mitigation efforts, there has been growing interest in the concept of mitigation banking. Mitigation banking refers to the restoration, creation, enhancement, and, in certain circumstances, the preservation of wetlands, for the purpose of compensating for multiple wetland losses in advance of development actions. It typically involves the consolidation of small, fragmented wetland mitigation projects into one large contiguous site. Units of restored, created, enhanced, or preserved wetlands are expressed as credits which may subsequently be withdrawn to offset debits incurred at a project devel-opment site. Mitigation banks provide greater flexibility to landowners needing to comply with mitigation requirements and can have several advantages over individual mitigation projects. To the advantage of permit applicants, mitigation banks may reduce permit processing times and provide more cost-effective compensatory mitigation. Most permit applicants do not wish to become wetland experts, but rather they are simply seeking authorization to move forward with their development projects. Through the purchase of credits from an approved mitigation bank, these applicants can transfer the responsibility for providing mitigation to an entity who has the expertise, resources, and incentive to ensure that the mitigation is ultimately successful. Mitigation banking also enhances the effectiveness of wetland protection pro-grams. The environment benefits from consolidation of compensatory mitigation into a single large parcel, or contiguous parcels, that maximize the opportunity to successfully restore important wetland functions. Establishment of a mitigation bank often involves financial resources, planning, and scientific expertise not practicable to many project-specific compensatory mitigation proposals. Consolidation of resources can increase the potential for the establishment and long-term management ©2001 CRC Press LLC of successful mitigation. Also, mitigation banking typically ensures that compensa-tory mitigation is implemented and functioning in advance of project impacts. This reduces temporal losses of aquatic functions and uncertainty over whether the mit-igation will be successful in offsetting project impacts. Finally, consolidation of compensatory mitigation within a mitigation bank increases the efficiency of limited regulatory agency resources. The review and compliance monitoring of mitigation projects is improved and, thus, agency ability to ensure the success of efforts to restore, create, or enhance wetlands for mitigation purposes is improved. BACKGROUND The concept of mitigation banking in the United States dates back to the early 1980s when resource agencies, and some in the regulated community, were looking for ways to mitigate wetland impacts more efficiently and effectively. A 1988 U.S. Fish and Wildlife (USFWS) report profiled 13 mitigation banks that were in existence at the time (Short, 1988). Many of these banks were established by enterprising individuals who saw the opportunity to establish joint partnerships to protect and restore priority wetlands using funds from ports, transportation agencies, and others who needed to offset unavoidable impacts. These early efforts were initiated in the absence of any federal or state policies on how to establish mitigation banks. In 1991, in response to a request by Congress, the Corps of Engineers Institute for Water Resources, in collaboration with the Environmental Law Institute and others, initiated a comprehensive study of mitigation banking. The purpose of the study was to determine the potential of mitigation banking for achieving established wetland goals and to determine the applicability of mitigation banking to the U.S. Clean Water Act Section 404 regulatory program. The study included a critical review and evaluation of existing mitigation banks and an analysis of the economic, policy, and other institutional issues affecting banking (Reppert, 1992). The study identified 40 mitigation banks in existence, and another 60 banks that were under development or being considered for approval. An increase in the devel-opment of mitigation banks from 1988 to 1992 was the result of state departments of transportation recognizing the ecological, economic, and administrative benefits of consolidating mitigation efforts. The increase in banks was also instigated in part because the 1991 Intermodal Surface Transportation Efficiency Act specifically authorized the use of federal funds for such purposes. Virtually all of the existing banks identified in the Institute for Water Resources study were single-user banks—banks established by a public agency or private company to satisfy their own mitigation needs. Of those banks under development, however, the survey identified several commercial banks whose intent was to offer mitigation credits for sale to the general public. Local agencies, private entrepre-neurs, and joint ventures between government agencies and private entities sponsored the commercial bank proposals. The Environmental Law Institute in a 1994 study also noted the trend toward commercial banks. ©2001 CRC Press LLC Another important finding of the mitigation banking study was the need for a specific policy providing ecological, economic, and legal standards for the estab-lishment and use of banks. A policy would reduce uncertainty, and in so doing, encourage further investment. At the federal level, the Army Corps of Engineers (Corps) and the U.S. Environmental Protection Agency (USEPA) first acknowledged the potential role for mitigation banks in the Section 404 regulatory program in their 1990 Memorandum of Agreement (MOA). In discussing options for providing com-pensatory mitigation, the memorandum indicates that use of mitigation banks may be acceptable where a bank has been approved by the agencies. In November 1995, the Corps, USEPA, USFWS, National Marine Fisheries Service, and Natural Resources Conservation Service issued the Federal Guidance for the Establishment, Use and Operation of Mitigation Banks. This policy statement details the terms and conditions under which the agencies may approve a mitigation bank for use as compensatory mitigation within the Section 404 regulatory program and the Swampbuster provisions of the Farm Bill. Mitigation banking has been endorsed by both the Bush and Clinton adminis-trations within their comprehensive plans for reforming federal wetland programs. Moreover, Congress has entertained several legislation proposals to promote the use of mitigation banks. In 1998, Congress passed a new transportation bill (TEA-21) that provides further support for the use of mitigation banks to offset wetland impacts that result from transportation projects. In addition to the federal policy, approximately 20 states have established, or are in the process of establishing, policies on mitigation banking. While many of these policies are generally consistent with the federal policy, each is tailored to the unique regulatory requirements of state wetland legislation and is responsive to particular regional conditions. The interest in establishing mitigation banks appears to be increasing, owing in part to the release of federal and state policies. In 1994, the Institute for Wetland Resources identified 46 existing wetland banks in the United States. Only 1 of these 46 was a privately owned bank offering credits to the general public (Environmental Law Institute, 1994). By 1998, the Corps identified over 200 mitigation banks that were either approved or under agency review. Of these 200, approximately 40 existing banks and 75 proposed banks were private commercial banks (unpublished Institute for Wetland Resources survey). Other banking trends include the increased use of mitigation banks as a watershed management tool and the use of mitigation credits for other environmental programs such as endangered species and water quality programs. REGULATORY CONTEXT In the United States, Section 404 of the Clean Water Act establishes a program to regulate the discharge of dredged or fill material into waters of the United States, including wetlands. Activities typically regulated under this program include fills for development, water resource projects such as dams and levees, infrastructure ©2001 CRC Press LLC ... - tailieumienphi.vn