May 09

Coverage of the National Mitigation and Ecosystem Banking Conference – May 11

Conference coverage courtesy of Becca Madsen of Madsen Environmental.

…continuing coverage on the National Mitigation and Ecosystem Banking conference in Sacramento, California from May 8-11.

Friday, May 11

Breakfast Plenary – Legislative and Regulatory Update
Regulations are the true driver of mitigation banking, so conference planners always leave the ‘good stuff’ – aka a round-up of regulatory news – for the last day.

First to speak was Peggy Strand Esq., of Venable LLP, which is the firm that represents the National Mitigation Banking Association. Ms. Strand saw no major policy or regulatory changes coming out of Congress or the agencies, but provided two ideas to agencies for what could be done to improve wetland mitigation:
• Oversee permittee-responsible mitigation with the same scrutiny as banking, and
• Pursue enforcement actions to ensure that permittees seek high quality mitigation.

Gary Frazer, Assistant Director for Endangered Species with the U.S. Fish and Wildlife Service, noted that the agency supported the growth of conservation banking for several reasons. First, to provide an incentive for strategic (as opposed to opportunistic) species conservation. He also appreciated the landscape perspective potential of banking. Finally, the agency is faced with larger projects to evaluate, particularly with renewable energy development and regional development plans, which can be well-suited to compensatory mitigation via conservation banking.

One of the key policy issues the U.S. FWS is confronting are settlement agreements. The agency has completed a great deal of listing determinations and critical habitat designations and that will continue to be a large part of the workload. The increased number of listed species means that there will be more evaluations, and potentially greater use of conservation banking. For example, following a proposed listing of the dunes sagebrush lizard in southeastern New Mexico/west Texas, oil and gas companies have begun working on a Candidate Conservation Agreement with Assurances, which has a lot of characteristics of conservation banking. In March of 2012, the agency requested public comment on various landowner endangered species incentive programs. One issue on which they particularly want comments is how and whether the agency should provide incentives for candidate (pre-compliance) species, including the use of banking. The agency also has provided increased internal training for agency staff on conservation banking.

Denise Keehner, Director of the Office of Wetlands, Oceans and Watersheds with the US EPA, discussed the 2008 Rule and pressure from the industry to improve consistency and implementation. In response, her agency is investing in training, including Interagency Review Team ‘bootcamps,’ and trainings relating to stream restoration. The EPA is also holding regular meetings across regions to bring up issues and hopefully improve consistency of implementation across regions. Regarding the watershed approach, the agency has had requests for greater clarification and they have responded by compiling examples of watershed approach and supporting Environmental Law Institute’s development of a handbook.

There has also been great deal of work on the part of both EPA and the Corps to clarify the legacy of the SWANCC and Rapanos Supreme Court decisions. In April of 2011, the agencies released draft guidance on which waters were covered under the Clean Water Act. Draft guidance that was released reaffirmed protections for wetlands, maintained exemptions for agriculture, and focused on small headwater streams. Comments were gathered and considered and in February of 2012, draft final guidance was released for interagency review. Final guidance is expected to come out this Spring. Beyond guidance, the agency has the intention to proceed with rulemaking.

Other agency efforts related to wetlands include data collection and analysis, including the National Wetlands Condition Assessment and a Status and Trends Report. In March of this year, an Executive Order (EO) was released requiring efforts to streamline permitting of infrastructure development – a requirement that all agencies are dealing with. The message from DC was to focus on the economy and job growth, and to make permitting efficient and timely to achieve this while protecting the environment.

Angela Somma, Chief of the Endangered Species Division at NOAA, spoke about her agency’s efforts related to species recovery and opportunities for conservation banks. NOAA does not currently have internal policy guidance related to conservation banking. Their focus has been to support experimentation at the regional level that will inform national guidance they are developing and they hope to release by early 2013. Regions like the Southwest region and Northwest region have developed or are developing regional guidance to help staff members understand and encourage the use of conservation banking for aquatic species recovery. Ms. Somma noted that she was interested in replicating the Western adoption of conservation banking to the East coast, where the agency was listing more anadromous fish species. That said, getting the attention of the agency for fish banking has been a struggle because of normal agency focus on the marine environment.

Margaret (Meg) Gaffney-Smith, the Chief of the Regulatory Program of the U.S. Army Corps of Engineers, discussed issues related to her agency’s regulation and oversight of compensatory mitigation. One of the biggest issues for her office was guidance on Clean Water Act jurisdiction in light of Supreme Court decisions, which the previous speaker noted. Ms. Gaffney-Smith noted “Obviously it’s highly controversial and there are people interested in it on both sides.” Another major focus of her office has been the release of new nationwide permits, with new categories for alternative energy development. She also echoed that there was administration pressure to streamline permitting processes: “How fast can we get things done when it comes to energy transmission infrastructure” while complying with environmental laws. “It’s going to be an extreme challenge and a lot of the burden is going to come back to the Corps.” Like the EPA, the Corps is also working on guidance in the form of handbooks on multiple issues including real estate, watershed assurance, and the HGM method. Other activities the agency is taking include internal trainings, cumulative effects modeling and piloting in Appalachia and the Puget Sound.

Breakfast Plenary Q & A
Below is a small sample of audience questions.

Q: Is there anything the banking community can do to help the ACE Districts in their timeliness of uploading bank data to RIBITS?
A: No, but Districts are getting much better. One of the things that could be helpful would be to notify a District of inaccurate information.

Q: An earlier speaker address the idea of an audit of the 2008 Rule – is there any interest in this?
A: The EPA and Corps have been talking about taking stock of the Rule, and the agencies were committed focusing on this in 2013.

Q: There was some discussion of consolidating NOAA into the Department of Interior – can you comment?
A: The Government Accountability Office (GAO) is doing work with DOI and Department of Commerce and there is a lot of exploratory work to be done. The focus on the Executive Order (EO) [requiring streamlining] will focus the agency on our existing statues and get better conservation results. In terms of communication, the EO requires transportation projects to be posted on a ‘dashboard’ so the public can track timelines.

Q: Are there any initiatives to expand conservation banking?
A: There is no legislative action on the Endangered Species Act in the foreseeable future. All agencies are reviewing regulation to be responsive to the EO, such as the process for designating critical habitat, but… the agency doesn’t anticipate changing policy that would affect the need for compensatory mitigation. They are looking into creative uses of HCPs. As well, the number of species listings is increasing and petitions are increasing.

Q: There is a clear preference for wetland mitigation bank [in the 2008 Rule], but no parallel requirement for conservation banking. Is there an initiative to change that?
A: We can inform actions, and encourage, but there are limits to what we can dictate and drive in Section 10 applications.

Session on Users/Customers-Needs & Challenges
This final session gave mitigation industry folks an outsider’s perspective of using bank credits.

Brian Plant, Counsel for Remy, Thomas, Moose & Manley, gave a presentation on the a permit applicant’s process and opportunities for bank credit use. Within a 404 permit, the application needs to make a statement about their proposed compensatory mitigation. The Corps reviews for accuracy and then puts it out for public notice – which is helpful for mitigation bankers.

There are some emerging state issues that impact the permit application process. For example in California, although isolated waters do not fall under federal (US ACE jurisdiction), they do fall under protections of California state law. State policy tends to focus on avoidance and on-site restoration and may require separate mitigation requirements beyond federal mitigation. Applicants have to demonstrate that the proposal is ‘LEDPA’ – the least environmentally damaging practicable alternative. Although there is a requirement of sequencing (avoiding, minimization, and only as a last step compensatory mitigation), mitigation is always in the background, he notes. Mr. Plant provided some background on the 2008 Rule (for aquatic compensatory mitigation). “At the end of the day we want quick and efficient ways to solve our mitigation problems, and that’s what mitigation banks do for us.” He thinks that there are opportunities to include bank credits in HCPs.

Corrie Veenstra, Ecologist, with the Office of Planning, Environment and Realty, at the Federal Highway Administration, spoke about FHWA connections to mitigation banking – particularly the federal aid highway program. The agency directs funds to state transportation projects, but does not pick projects. These state Departments of Transportation (DOTs) are consistent buyers of credits in this economy. Many impacts from highways are in areas with no banks, but bank credits outside the service area of the impact are often used. DOTs may not be aware of banks in their project areas, so it is important to communicate with the agencies. FHWA has an ‘Every Day Counts’ initiative, which – like other agency efforts – is aimed at streamlining processes in developing transportation infrastructure.

David C. Robinson, CEO of Mitigation Procurement Systems, discussed the benefits of outsourcing restoration work rather than creating permittee-responsible mitigation banking or in-house restoration for an in-lieu fee program. A customer’s risk is reduced if they purchase credits from either an ILF or mitigation bank (thereby transferring legal liability for the success of the restoration) whereas permittee responsible mitigation incurs risks for an indefinite period. Even ILF programs have risks… of spending too much. Mr. Robinson highlighted NC EEP staffing costs which translated into higher restoration costs and productivity than contracted restoration work. He noted that the ILF program had less flexibility in reducing staffing than external organizations during a downturn in demand for restoration. Mr. Robinson featured several graphs of risk related to the proportion of outsourced work. He noted that in-house restoration requires staffing and skills beyond what would be needed for contracted restoration. Overall, Mr. Robinson emphasized the benefits of outsourced, contracted wetlands and stream restoration.

This concludes the 2012 National Mitigation Banking and Ecosystem Conference. The 2013 conference is scheduled to take place in New Orleans. Until then, laissez les bon temps rouler!

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