Mitigation banking: A win for the environment, residents and investors
May 27, 2014
HUNTINGTON, W.Va. (May 27, 2014) -- Near Camp Creek State Forest in Spanishburg, W.Va., there is a bank under construction. While you cannot apply for a business or home loan at this bank, the transactions projected to occur here are no less significant. Designed to compensate for unwanted impacts to rivers, streams, wetlands and other aquatic resources, mitigation banks, like the one in Spanishburg, are springing up throughout Appalachia with more in the works.
Activities such as mining, hydraulic fracturing, processing chemicals and even just building homes can impair local rivers, streams and wetlands, explained Mark Taylor, a supervisory biologist with the U.S. Army Corps of Engineers Huntington District. Before anyone may legally proceed with such activities, a permit from the U.S. Army Corps of Engineers is often required to satisfy certain conditions of the Clean Water Act and the Rivers and Harbors Act of 1899. Both regulations seek to protect various types of water resources against damage. Through its Regulatory Program, the Corps works hard to make sure undesired impacts to aquatic resources are avoided or minimized, said Taylor.
In some cases, however, activities will unavoidably impair rivers, streams, wetlands and other bodies of water. Federal regulations require those causing the unwanted impacts to restore, establish, enhance or preserve aquatic resources to offset losses. Such efforts, known as compensatory mitigation, help make natural resources exploration, extraction, processing as well as other development activities possible, while protecting aquatic resources and their functions, explained Taylor.
Say a permitted developer wants to build homes, but construction will cause unwanted impacts to nearby wetlands. The developer is required to alleviate the damage caused by his construction operations so there will be no net loss of wetlands. Healthy wetlands are desired because they store, clean and filter water, prevent erosion and reduce the risk of flood damage. They also provide beneficial habitat for plants and animals. The homebuilder can mitigate damage caused to wetlands himself or pick from a menu of compensatory mitigation strategies including mitigation banking. A mitigation bank is a parcel of land or body of water on which the banker has conducted mitigation activities such as environmental restoration in anticipation of future impacts from unrelated projects. Mitigation banking is a form of trade wherein aquatic resources such as wetlands and streams are rehabilitated or restored to create credits fit for sale in the form of acres and functions. These credits are then purchased by those causing unavoidable impacts. Instead of designing, constructing and monitoring the ecological success and long-term protection of mitigation sites themselves, those causing unwanted impacts purchase credits from a mitigation bank developed and maintained by those with the environmental science and business expertise to do it well.
"We became interested in mitigation banking in 2007, but the process for establishing mitigation banks in West Virginia was in a nascent stage then," said David Gibbons, founder and manager of Acadia Capital Group.
Gibbons has invested in the development of two mitigation banks in West Virginia: the nearly 400-acre site in Spanishburg and a more than 500-acre one in Hayes Run, Roane County.
Given the types of operations that occur in West Virginia, including mining, Gibbons knew there would be a need for mitigation banks in the state, he said, so he launched WV Bunrootis, LLC (a name derived from his three children's nicknames) to pursue development of mitigation banks in the state.
In 2008, the U.S. Army Corps of Engineers and the EPA jointly published the "Final Rule for Compensatory Mitigation for Losses of Aquatic Resources" which lays the groundwork for better consistency throughout the United States in the establishment, use and operation of all forms of compensatory mitigation, including banks. The rule requires mitigation bank proposals be reviewed, evaluated and negotiated by a team of regulatory agencies led by the U.S. Army Corps of Engineers. Called the Interagency Review Team (IRT), its role is to work with those seeking to establish mitigation banks to develop a mitigation banking instrument. The instrument explains the terms and conditions for bank approval or certification and seeks to make sure compensatory mitigation will indeed be achieved. Some IRT members also oversee the establishment, use and operation of the banks. In West Virginia, standing members of the IRT include the U.S. Army Corps of Engineers, EPA, U.S. Fish and Wildlife Service, U.S. Department of Agriculture's Natural Resource Conservation Service, West Virginia Department of Environmental Protection and the West Virginia Division of Natural Resources. Once the mitigation bank has been created, the IRT, which the Corps chairs, determines the acres, types and functions in the bank which are available to be sold as credits. Credits are purchased and subtracted from the bank until all the credits have been sold and no additional credits are available. The bank then closes to further purchases of credits, but the mitigation banker is still responsible for monitoring ecological success and long-term protection of the bank for the duration of the conservation easement.
Gibbons hired Alliance Consulting Inc., headquartered in Beckley, W.Va. to design, construct, monitor and maintain the banks at Hayes Run and Spanishburg. Shamrock Environmental Corporation, based in North Carolina, is also participating in construction at the Spanishburg site. Both banks are protected by conservation easements each lasting approximately 100 years, said Braden Hoffman, a senior scientist and project manager with Alliance Consulting Inc.
"Mitigation banking provides positive results for all parties involved with the Clean Water Act Section 404 Permitting Process," Hoffman said. "Mitigation banking gives the resource agencies a cost-effective means to ensure no net loss of jurisdictional waters and their ecological functions while also minimizing review time. It also provides an alternative to traditional permittee-responsible mitigation which provides reduced overall liability. Mitigation banking also offers landowners an alternative means of generating revenue from their property, while still retaining ownership. When done correctly, mitigation banking is a win win proposition for all parties involved," Hoffman said.
Jim Spence, a regulatory project manager with the Huntington District and IRT member, visits proposed mitigation bank sites and works with mitigation bankers and their consultants, which could be private-sector firms like WV Bunrootis LLC, as well as government agencies like the West Virginia Division of Natural Resources and non-profits like The Nature Conservancy, to recommend measures and practices that will most likely result in the highest functional lift or gain. Mitigation is only satisfied when the functional lift of credits is greater than or equal to the functional loss of the aquatic resource for which the credits are purchased to offset, Spence said. He added that compensatory mitigation is the third step in a series of activities to protect water resources.
"We first try to avoid impacts all together which could be accomplished by recommending changes to a design or modifying an activity. If impacts cannot be avoided, we try to minimize them. Finally, if there truly are unavoidable impacts, we may not grant a permit at all or we may grant a permit but will require compensatory mitigation," Spence said.
"We understand development will happen, but we want to make sure aquatic resources are protected," said Taylor.
"We are not for or against development, we simply want to make sure what is lost is replaced," added Spence.
"We create mitigation banks from damaged streams. Improving the streams and committing the banks to a permanent conservation easement ensures that streams, which are a significant asset of West Virginia, remain pristine," explained Gibbons. "Mitigation banking not only serves the business community, but also provides a benefit to the state, residents and the environment. The work we are doing today will benefit West Virginia for the next hundred years, if not longer," said Gibbons. Of his interaction with regulatory agencies, he said, "we made a commitment to the Corps, the West Virginia Department of Environmental Protection and the EPA that we were going to create mitigation banks that would be more than functional, they were going to be projects that would serve as benchmarks for what a mitigation bank should be. We are very proud of both Hayes Run and Spanishburg. Our relationship with each of the regulatory agencies is very positive and we intend to continue to create mitigation banks in West Virginia," Gibbons said.
For the commander of the Huntington District, U.S. Army Col. Leon Parrott, his agency's participation in protecting water resources has been beneficial for the environment, residents of Appalachia and the business and investment community, too.
"It's about leveraging collaboration, environmental science and business expertise to achieve compensatory mitigation in the most efficient and effective manner possible, said Parrott. "When we work cooperatively with all the relevant agencies, with the mitigation bank developers, the permittees and surrounding communities, we reduce uncertainty over whether or not compensatory mitigation will be successful in offsetting impacts," he said.
Back in Spanishburg, the mitigation bank is teeming with vegetation and wildlife. Fish are swimming in the stream undergoing restoration and landscapers are planting seedlings near its banks.
To learn more about mitigation banks and other compensatory mitigation strategies, visit: http://www.usace.army.mil/Missions/CivilWorks/RegulatoryProgramandPermits/mitig_info.aspx