843R92OO1
Final Report
Partnerships in Restoration Workshop
Mitigation Banking Workgroup
\
December 22,1992
Parametrix, Inc.
Environmental Protection Agency
SEPA
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PARTNERSHIPS IN RESTORATION WORKSHOP
MITIGATION BANKING WORKGROUP
FINAL REPORT
Submitted by:
TRACEY P. MCKENZIE
Parametrix, Inc. .
5808 Lake Washington Blvd. NE
Kirkland, Washington 98033
MICHAEL RYLKO
Environmental Protection Agency
1200 Sixth Avenue HW-113
Seattle, Washington 98101
(206) 553-4014
December 22, 1992
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TABLE OF CONTENTS
Pa2e
IN'1R.ODUCflON . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1
APPROACH. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 2
MITIGATION BANKING MODELS EVALUATED..................... 2
Model I-Comprehensive Mitigation Bank. . . . . . . . . . . . . . . . . . . . . . . . . .. 2
Model 2-Consolidated Mitigation for Small, Unrelated Projects. . . . . . . . .. 2
Model 3-Advanced Consolidated Restoration. . . . . . . . . . . . . . . . . . . . . . .. 3
Model 4- Mitigation as it Currently Exists. . . . . . . . . . . . . . . . . . . . . . . . . .. 3
MITIGATION BANKING ELEMENTS AND SUB-ELEMENTS CONSIDERED 3
ASSESSING TIlE RELATIONSHIP BETWEEN TIlE FOUR MODELS AND
VARIOUS BANKING ELEMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 3
DISCUSSION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 8
PLANNING ELEMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 8
Establishing Consensus Mechanisms/Integrating with Regulatory Processes. .. 8
Establishing Regional Geographic Boundaries. . . . . . . . . . . . . . . . . . . . . . .. 8
Establishing Regional Restoration Priorities. . . . . . . . . . . . . . . . . . . . . . . . .. 8
Developing Criteria for and Commitment to Bank Use. . . . . . . . .. . . . . . . .. 9
Accepting Risk Burden. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 10
TECHNICAL ElEMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 10
Consolidating Site Selection Effort. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 10
Consolidating Site Design Efforts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 11
Developing Technical Criteria for Establishing Credit and Debit Mitigation
Units. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 11
Undertaking Up-front Construction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 11
Developing/Agreeing on Functionally Based Monitoring Scheme. . . . . . . .. 12
POUCY ELEMENTS. ........... . .. . . . . . . . . . .... . . . .. . . . . . . . . .. 12
Defining the Relationship to Regulatory Processes. . . . . . . . . . . . . . . . . . .. 12
Defining Participant Obligations and Responsibilities. . . . . . . . . . . . . . . . .. 12
Developing Formal Agreements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 12
Developing Policies and Procedural Guidelines for Site Administration. . .. 13
Establishing the Administrative Agent. . . . . . . . . . . . . . . . . . . . . . . . . . . .. 13
SITE ADMINISTRATION ElEMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 13
Administering Credit Brokerlng and Credit Tracking. . . . . . . . . . . . . . . . .. 13
Cost Recovery Mechanisms. . . . . . ". . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 14
SITE MANAGEMENT ELEMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 14
Managing and Maintaining Mitigation Site. . . . . . . . . . . . . . . . . . . . . . . . .. 14
Contingency Work: Monitoring and Reporting. . . . . . . . . . . . . . . . . . . . .. 14
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T;\BLE OF CONTENTS (continued)
FINANCIAL ELEMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Up-front Financing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Decreasing Costs per Unit Effort. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Identification of Funding and Other Resources for Establishment and
Administration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
OWNERSmP ELEMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
One Owner, One User, Private. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
One Owner, One User, Public. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Public Sector Owner, Multiple Users. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Private Sector Owner, Multiple Users. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SUMMARY AND RECOMMENDATIONS
...... ...... .................
REFERENCES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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INTRODUCfION
Mitigation banking has been described as a means to comply with policies of no net loss of
wetland resources in a manner that optimizes ecological benefits while improving the cost
effectiveness of compensatory mitigation. Kusler (1992) provides a relatively comprehensive
summary of the pros and cons of mitigation banking.
The U.S. Army Corps of Engineers sponsored a workshop April 16 and 17,1992 to provide
participants opportunities to meet and share information about wetland restoration programs
and specific projects and for developing workable concepts and partnerships for wetland
restoration.
This forum provided an opportunity to form into smaller workgroups to discuss specific
issues (e.g., mitigation banking). The workgroup had about 40 participants representing a
broad spectrum of interests. Participants included individuals from local, state, and federal
resource agencies, legal offices, consulting firms, port district, and the private sector.
At the beginning of the discussion, the participants in this workgroup were asked if, based
on their current perception of its advantages and disadvantages, mitigation banking should
be actively pursued in Washington State. About 90 percent felt that mitigation banking
should be actively pursued at this time; 10 percent felt unsure, and no one expressed clear
opposition to active pursuit of the concept. This crude poll perhaps emphasizes what many
have considered inevitable-namely, that compensatory mitigation for loss of wetlands using
banking concepts is likely to occur in Washington State in the near future.
For the purposes of this workgroup, a "mitigation bank" is defined as a wetland or other
aquatic habitat creation, restoration, or enhancement project that replaces several impacted
wetlands in advance of the actual impact (Lewis 1990); Washington Department of Ecology
[WDOE] 1992; Environmental Protection Agency [EP A] 1992). Starting with this broad,
inclusive definition, the workgroup explored a range of mitigation banking models in order
to determine the relative strengths, weaknesses, commonalities, and appropriate applications
of each model.
The workgroup's premise was that there are different types of mitigation banks, each with
its own distinct application. In this respect, the group explored the conclusion that
developing and testing several types of mitigation banks may be appropriate if the full scope
of wetland management goals is to be achieved. Ideally and pragmatically, both regulatory
and resource planning processes would be used to determine the specific objectives of a
given type of mitigation bank. The planning process could be used as the primary
mechanism for bank site selection and design; regulatory program guidance could provide
the administrative and regulatory agreements for mitigation bank use.
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APPROACH
MITIGATION BANKING MODELS EVALUATED
The group considered and discussed three generic mitigation bank models to represent the
range of compensatory mitigation banking options that could be incorporated into existing
planning and regulatory processes. For comparative purposes, the three bank models were
also evaluated against compensatory mitigation as currently required. The criteria for
determining which mitigation banking models would be discussed were generally
characterized as:
. The size of the impact and corresponding mitigation (Le, could the model be used
to offset both small and large impacts?).
. The types of impacts and corresponding regulatory authorities (e.g, could the model
be applied more broadly than to just the Clean Water Act [CW A] 404 process?).
. The degree of need for comprehensive planning (Le., is the model likely to be part
of longer term proactive and concerted resource management efforts?).
The resulting models are described below.
Model I-Comprehensive Mitj~ation Bank
This form of mitigation bank is established primarily within a locally based comprehensive
management and land use planning effort such as a Special Area Management Plan (SAMP)
or Advanced Identification Process (AlP) (e.g., Mill Creek SAMP, Gray's Harbor SAMP,
Eugene AlP, Juneau AIP) typically supported by state and federal regulatory programs. A
comprehensive mitigation bank could be used to mitigate for large and small wetland
impacts regulated by any level of government. This type of bank could be used by both
public and private development entities.
Model 2-Consolidated Miti~ation for Small. Unrelated Projects
This form of mitigation bank is established to provide cost-effective, simple compensatory
mitigation for two types of small project impacts: 1) those for which compensation would
not likely be required otherwise because of the lack of practicable mitigation options (e.g.,
federal 404 nationwide permits) and 2) those from which the ecological benefit of mitigation
would be marginal because of small size or isolated location. Furthermore, this type of
mitigation bank could potentially be used to compensate for impacts beyond 404
requirements (e.g., impacts regulated under local shoreline permits). Because this approach
would likely result in out-of-kind mitigation, regional restoration goals-based on state and
federal planning-would need to be developed. Both private and public development
entities could use this model.
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Model 3-Advanced Consolidated Restoration
This type of mitigation bank would most likely be developed to consolidate mitigation
requirements for a number of related projects. For example, a single development entity
such as a port district may have long-term plans that would impact a number of wetlands
over many years and involve several 404 permits. Assuming that all other criteria for using
a mitigation bank are met (Le., impact avoidance, minimization, and then emphasis on
replacement of unavoidably impacted functions), the developer may choose to consolidate
the anticipated compensatory mitigation requirements. Alternatively, two or more distinct
development entities each may expect to have compensatory mitigation requirements for
work in a geographically similar area (e.g., a given watershed or estuary).
This model differs from Model 2 in that the development projects could be of any size and
would likely be required to provide compensatory mitigation whether or not a mitigation
bank were available. This form of mitigation banking could be used by either public or
private developers. Although this model would not necessarily require integration with a
wetland/aquatic resource planning process, such integration would clearly be advantageous.
Model 4-Miti~ation as it Currently Exists
The workgroup included present mitigation as a basis for comparing the status quo and the
three bank models. The current regulatory process does not regularly use comprehensive
planning approaches for identifying, selecting, and pro actively implementing mitigation
priorities. The existing process also does not easily allow consolidation of compensatory
mitigation debts. In addition, the current regulatory and mitigation process is not likely to
require mitigation for smaller projects because of the high cost per unit, limited ecological
benefit, and limited regulatory application (Le., narrow emphasis on federal CW A 404
permit impacts).
MITIGATION BANKING ELEMENTS AND SUB-ELEMENTS CONSIDERED
Based on a limited literature review, the workgroup developed a list of procedural and
technical elements and sub-elements associated with mitigation banking (Table 1). These
elements were then evaluated and discussed in the context of the different mitigation
models. Because the workgroup discussed only a limited number of these elements, the
amount of detail provided in the following sections varies considerably. Summary
documents on mitigation banking by WDOE (1992), Short (1988), Boule (1991), Ford
(1991), and EP A (1992) elaborate on the various mitigation banking elements identified.
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Table 1.
Elements or a mitigation bank.
Planning elements
Establish regional geographic boundaries for consolidating off-site mitigation
requirements.
Establish regional restoration priorities.
Establish participant consensus.
Defme participation obligations and responsibilities.
Select site(s).
Develop policies and procedural guidelines for site administration.
Establish administrative agent.
Develop legal agreement (MOAs).
Defme relationship to regulatory framework.
Administer credit broke ring.
Track credit.
Perform contingency work.
Conduct long-term management.
Conduct monitoring/reporting.
Obtain up-front fmancing.
Determine how reimbursement costs are calculated.
Identify funding and other resources for establishment and administration.
Conduct fmancial management.
One owner, one user-public or private sector.
Public owner, multiple users.
Private owner, multiple users.
Technical elements
PoUcy elements
Site administration/
management elements
Financial elements
Ownership elements
ASSESSING THE RELATIONSHIP BE1WEEN THE FOUR MODELS AND VARIOUS
BANKING ELEMENTS
Using the identified elements of a mitigation bank and the four models (three types of
mitigation banks and mitigation status quo), a matrix was created and presented (Table 2).
The goals were to identify those elements considered the most important in developing the
various mitigation banking models and to discuss the necessary information and procedural
aspects necessary for satisfying these elements. Through this process, the group attempted
to fill in the matrix with the following information:
1. Whether the relationship between the bank model and a given bank element was
generally advantageous or disadvantageous with respect to establishing a responsive
and effective management tool.
2. Whether a particular sub-element was necessary or unnecessary in order to pursue
and implement a given bank model.
3. Whether a given bank model could be used by different combinations of user groups
(i.e., development entities).
Table 3 summarizes a pre-workgroup run-through of the matrix based on literature findings
and professional judgment.
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Table 2. Mitigation banking models matrix.
Mitigation Banking Elements
Modell
Comprehensive
mitigation bank
Model 2
Consolidated
mitigation for small
projects
Model 3
Advanced
consolidated
mitigation
Model 4
Mitigation as exists
Planning
Establish consensus mechanism
Establish restoration priorities
Establish units for consolidating off-
site mitigation
Develop and commit to criteria for
bank use
Accept risk burden
Technical
Consolidate site selection effort
Consolidate site design
Develop technical criteria for crediting
and debiting mitigation units
Develop/agree on functionally based
monitoring scheme
Undertake up-front construction
Policy
Define participation obligations and
responsibilities
Define relationship to regulatory
framework
Develop policies and procedural
guidelines for site administration
Develop formal agreements
Establish administrative agents
Site administration/management
Administer credit brokering
Develop cost-recovery mechanism
Track credit
Maintain site
Perform contingency work
Monitor/report
Conduct long-term management
Financial
Obtain up-front financing
Costs decrease per unit effort
Identify funding and other resources
for establishment and
administration
Ownership/potential users
One private owner, one user
One public owner, one user
Public owner, multiple users
Private owner. multiple users
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Table 3. Matrix based on literature and proCessional judgment (notes on page 7).
Mitigation Banking Elements Model 11 Model 2 Model 3 Model 4
Comprehensive Consolidated Advanced Mitigation as exists
mitigation bank mitigation for small consolidated
projects mitigation
Planning
Establish consensus mechanism +N(A) + N (A) + N (A) 1N(D)
Establish restoration priorities +N(A) +N(A) -N(D) -N(D)
Establish units for consolidating off- Large area (A)2
site mitigation Sub-watershed (A) Near impact' Typically on site
Develop and commit to criteria Cor
bank use4 +N +N 1N -N
Accept risk burden +N(D) +N(D) +N(D) N(D)
Technical
Consolidate site selection effort +N(A) +N(A) +N(A) -N(D)
Consolidate site design +N(A) +N(A) +N(A) -N(D)
Develop technical criteria for crediting
and debiting mitigation units
Develop/agree on functionally based +N(A) + N (A) 1N 1N
monitoring scheme
Undertake up-front construction +N(A) +N(A) +N(A) 1N
+N(A) +N(A) +N(A) -N(D)
Polky
Define participation obligations and
responsibilities +N(A) +N(A) +N(A) +N(A)
Define relationship to regulatory
Cramework +N(A) +N(A) +N(A) +N(A)
Develop policies and procedural
guidelines Cor site administration4
Develop formal agreements +N +N 1N 1N
Establish administrative agents +N(A) +N(A) +N(A) 1N
+N(A) +N(A) ?N -N(D)
Site administration/management
Administer credit brokering +N +N 1N -N
Develop cost-recovery mechaoism4 +N +N -N -N
Track credit +N +N 1N -N
Maintain site +N(A) +N(A) +N(A) +N(A)
Perform contingency work +N(A) +N(A) +N(A) +N(A)
Monitor/report +N(A) +N(A) 1N -N
Conduct long-term management +N(A) +N(A) +N(A) +N
Fmancial
Obtain up-front financing + N(D) +N(D) +N(D) -N
Costs decrease per unit effort Yes (A) Yes (A) Yes (A) No (D)
Identify funding and other resources
for establishment and +N +N +N 1N
administration 4
Ownenhip/potential usen
One private owner, one user -p -p +p +p
One public owner, one user -p +p +p +p
Public owner, multiple users +p +p +p -p
Private owner, multiple users +p +p +p -p
Key
+N = Necessary -p = Not possible
-N = Unnecessary (A) = Advantageous
N = May be necessary (D) = Disadvantageous
+ P = Possible
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Table 3. Matrix based on literature and professional judgment (continued).
Notes
1.
These models are dermed on pages 3,4, and S.
2.
Model 2 could be located and designed to provide a practical mechanism for securing mitigation for small impacts
scattered throughout a relatively large region and for which compensatory mitigation would not otherwise be required.
Given the large number of project impacts that currently fall into this category, this type of bank, if effectively designed,
would likely be both financially viable and clearly ecologically advantageous.
3.
Locating mitigation projects on site or as close to the site as possible (i.e., within proximity) is desirable in the absence
of clearly dermed restoration priorities. Ecologically, however, there may be more optimal locations for restoration than
at the project impact site. For this reason, Models 1 and 2 are labeled advantageous here.
4
These four elements would be required of Models 1 and 2, may be necessary for Model 3 to a lesser extent, and would
not be required for Model 4. The development of these elements would present additional temporal and monetary costs
but would not appear to have much intrinsic value in and of themselves. Simply, these elements would be purely
additional costs associated with a banking approach.
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DISCUSSION
PLANNING ELEMENTS
Establishine Consensus Mechanisms/Intewatin~ with Re~latory Processes
The first step is to determine which entities are going to participate in the development and
establishment of a given mitigation bank. Will satisfying resource protection goals and
balancing the interests of the economic development community be possible? How are the
individual objectives of the resource agencies different with respect to regulatory policies
and mitigation priorities? Resource agencies should actively reach general agreement on
the concept and procedures of mitigation banking before numerous individual proposals are
considered. In order to avoid obstacles once bank design and implementation actually
begins, certain ground rules must be set in advance (Ford 1991). The current interagency
meetings exploring a mitigation bank agreement with the Washington Department of
Transportation (WDOT) could provide valuable guidance in this respect.
The different approaches to mitigation banking will all require coalition and consensus
building and a willingness to break from traditional positions and roles if mitigation banks
are going to be fairly and objectively evaluated (Le., tested). Through this process thoughts
and attitudes typically associated with mitigation banking can be refined and the real
challenges more clearly defined.
Establishine Re~onal GeoVaphic Boundaries
This element is deciding on an appropriate regional geographic boundary for a given
mitigation bank. Some examples of regional geographic boundaries include:
. Watersheds or basins within watersheds.
. Upper/lower portions of major watersheds or sub-basins.
. More regionalized units such as Northern Puget Sound, Southern Puget Sound, and
Hood Canal.
. Areas at high development risk.
. Areas awaiting long-term comprehensive planning.
. Areas where the costs per unit of mitigation effort unit will ensure a high probability
of bank success.
While the geographic unit for Models 3 and 4 would typically be confined to the vicinity of
project impacts, Modell would be better suited to a watershed or sub-basin unit, and Model
3 could possibly be applied to a more regional geographic area.
Establishin2 Re~onal Restoration Priorities
National Research Council (1992) states that successful restoration will be achieved only if
individual projects and actions acknowledge the (ecological/environmental) system within
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which the action is taking place-hence the need to establish geographic units containing
system functions of interest and to establish goals and objectives for enhancement.
Establishing regional restoration priorities involves local, state, and federal entities, other
public entities, private development interest groups, and environmental and conservation
organizations.
Models 1 and 2 necessitate that this step occurs; Models 3 and 4 do not, and one could thus
argue that Models 1 and 2 would more likely result in a successful restoration approach.
Even though this step can be costly, this element would be desirable for Models 3 and 4,
as well.
Issues to consider in establishing regional restoration priorities include:
1. Deciding whether mitigation banking can be done in the absence of comprehensive
wetland/aquatic resource planning.
2. Identifying the key components (e.g., resource inventory, threat assessment,
development of long-range vision) of comprehensive wetland/aquatic resource
planning.
3. Identifying the key mechanisms for implementing necessary planning elements (e.g.,
Growth Management Act, watershed management plans, etc.).
4. Selecting priority restoration objectives. For example, restoration goals could be
historic habitat types that have been lost, specific wetland/aquatic resource functions,
or benefits to specific fish and wildlife species or assemblages.
5. Deciding whether regional restoration goals are pursued in a manner consistent with
accepted mitigation sequencing (Le., avoidance, minimization, compensation). Is
there general agreement that regional restoration goals would supersede the
sequencing on-site/in-kind, on-site/out-of-kind, off-site/in-kind, off-site/out-of-kind?
In addition, ultimate requirements for on-site vs. off-site and in-kind vs. out-of-kind
mitigation will need to be established, to some extent, on a case-by-case basis in
consideration of the specific types of resource function impacted.
6. Examining historical and current inventories of wetlands/aquatic resource and
planning for future changes in land use and growth.
Develooin~ Criteria for and Commitment to Bank Use
This element involves deciding if participation is mandatory or voluntary. Currently
participation generally is voluntary for both public and private entities. Some forms of
mitigation banking such as a SAMP may require mandatory commitment to a mitigation
bank (Ford 1991). This sub-element also involves defining the roles and responsibilities of
each participant in the mitigation bank in a detailed agreement.
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Acceptin2 Risk Burden
Each participant must accept a certain level of risk (irrespective of the form of mitigation
bank implemented). One option for minimizing the risk of poor policy precedents would
be to pursue a pilot-scale mitigation banking project (or projects) in the geographic area of
interest (e.g., Puget Sound, State of Washington) before opening the door to a myriad of
proposals. The pilot project would provide low risk testing for both the workability and
process of establishing and tailoring mitigation banks. Participants must recognize that not
all forms of mitigation banking or all established mitigation banks may be successful (based
on restoration goals and objectives) or desirable (e.g., benefit per unit effort may be limited;
the use of a given type of mitigation bank may hinder the effectiveness of the mitigation
sequencing process [avoidance, minimization, compensation]).
Participants also accept other risks. Project proponents may not be able to use a mitigation
bank they have "bought" into for each and every permitted project. For example, in some
instances, resource agencies may insist on on-site or in-kind mitigation. Project proponents
must also recognize that they may be required to go through the sequencing process before
a mitigation bank can be used to compensate for impacts-a requirement determined largely
by the risk of any associated wetland planning processes and the status of a possible general
permit. Furthermore, mitigation credits will depend on the degree of ecological success of
the mitigation project as determined by agreed-upon criteria.
For the development entity, significantly more risk may be associated with any form of
advance mitigation (Models 1,2, and 3). As monitoring, performance criteria, performance
bonding, and contingency actions become more commonly required for individual mitigation
projects, however, the risk burden might be expected to lessen in comparison. For the
resource itself, more acreage will likely be restored through mitigation banking Models 1
and 2 than through mitigation as it currently exists, even while mitigation sequencing
procedures are maintained.
TECHNICAL ELEMENTS
Consolidatin2 Site Selection Effort
For Models 1 and 2 and to a lesser extent Model 3, sites would be selected for a mitigation
bank in response to regional aquatic resource protection and restoration priorities identified
during the planning process. Site selection criteria that reflect the goals of restoration
priorities should be considered and defined. Some criteria may include proximity to project
impacts, size, local restoration objectives, development goals, cost, biophysical characteristics,
position within the landscape, feasibility of site acquisition, risk of development, et cetera.
Consideration must be given to conducting an inventory of land and existing and potential
ecological functions to determine which areas meet the criteria.
In contrast to mitigation status quo (Model 4), all of the mitigation banking models (Le.,
Models 1, 2, and 3) would better allow consolidation of mitigation efforts. Consolidation
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would allow potentially significant improvement in both the cost per unit of mitigation effort
and the ecological benefit per unit of mitigation effort.
Consolidatin2 Site Desip Efforts
Investing more time in the design and implementation of a consolidated mitigation project
would improve the chance for success, promote realization of restoration/mitigation
priorities, and be more likely to acknowledge the site's biophysical characteristics, natural
constraints, and a larger array of opportunities. Considering more than one site design
(preferred design and prioritized alternatives) is probably wise.
Developin2 Technical Criteria for Establishin2 Credit and Debit Miti2ation Units
This sub-element involves defining bank credit and debit units and establishing a credit and
debit process. Establishing a credit and debit system could be based on a range of
functional units or "currencies" that should acknowledge the value of the pre-restoration site
and extent of restoration activity (i.e., restoration versus enhancement). In the context of
Models 1 and 2, this element could force the further development and refinement of
functionally based evaluation procedures. Such procedures would directly benefit
understanding of wetland system functions and assessment of progress toward no-net-Ioss
goals.
Agreement on standard methods for evaluating and quantifying habitat quality and "value"
is essential. An alternative to a functional/habitat basis for a credit and debit process is use
of a mitigation acreage ratio for establishing exchanges (Ford 1991). It is also possible to
combine acreage and functional/habitat replacement into a credit and debit process.
In establishing the technical criteria for debits and credits, consideration of how the timing
of credit use (with respect to ecological development) will affect the amount of credit
accepted is also important (i.e., is 1 unit of S-year-old wetland worth less than 1 unit of 20-
year-old wetland?).
Undertakine Up-front Construction
This element is completely advantageous to both the resource itself and the resource
agencies in that temporal losses are minimized, and the increased incentive to the
development entity to successfully complete and document the mitigation action as quickly
as possible would likely improve compliance with both requirements and mitigation intent.
Even with assurances based on agreed-to criteria, up-front construction and associated costs
could be viewed as a substantial risk if a problem with accessing mitigation credit arose.
In the case of mitigation banking, however, the advantages of up-front construction are that
economies of scale should reduce overall costs even though the initial investment may be
large.
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Develooin~/ A~eein~ on Functionally Based Monitorin~ Scheme
This element requires that the mitigation bank participants define and agree to a monitoring
scheme that can support identified performance criteria. It is generally agreed that a
functionally based monitoring scheme is the most appropriate. Is there an ideal
methodology, or would specific monitoring schemes need to be devised using existing
methods as guidance? Is anyone existing assessment method available for broad use, or
would existing methods need to be modified for the particular site and situation? Examples
of methods available to evaluate the functions and values of wetlands include HEP, WET
fi, Wetland Values (Reppert et al. 1979), and Habitat Assessment Protocol (Simenstad et
al. 1991) for estuarine areas (habitat function only). All participants in the bank must agree
on the method and parameters to be used. Similarly, participants would have to agree on
appropriate ecological models and/or reference sites to use in the design and evaluation of
monitoring data.
POLICY ELEMENTS
Detinin~ the Relationshio to Re~latory Processes
The legal framework of the Memorandum of Agreement (MOA) or other legal agreement
should acknowledge and incorporate the regulatory frameworks defined by the resource
agencies, preferably across all levels of government. Use of a mitigation bank could be
directly related to the existing standard sequencing process (e.g., mitigation banking is to be
used only after prescribed mitigation sequencing), or, if the mitigation bank is the result of
an approved planning process and subsequent issuance of a general permit, such sequencing
may not be necessary. Whereas all four models could be applied to just the federal 404
permitting process, the strength of Models 1 and 2 is their ability to
accommodate/consolidate similar types of permitting at each level of government. The role
of the regulatory process in establishing and implementing a mitigation bank must be
defined in detail. Does the regulatory process primarily drive the way a bank is
implemented? Or, can available planning processes provide a primary mechanism by which
to design and establish a bank? The most effective and integrated approach would likely
merge both regulatory and planning entities.
Detinin~ Particioant Oblilations and Responsibilities
All participants in a mitigation banking project should clearly identify in writing their
assumed responsibilities and obligations in carrying the project forward in order to identify
role overlap and gaps and broadly clarify joint expectations.
Developin~ Formal A~eements
A formal agreement must reflect the elements specific to each form of mitigation bank
established. The agreement should be simple but formal and clearly written and should:
1) define the allowable, required, and prohibited uses of a bank site and 2) describe the
formation process, structure, implementation process, and operation. Some items requiring
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formal agreement might include specific debit and credit procedures, design of bank
development and management plans, bank life, geographic area of applicability, and
evaluation methodology for assessing the degree of restoration success (EP A 1992). Maddux
(1986) and Short (1988) identify necessary components of a formalized agreement. Other
examples of such agreements are included in Boule (1991). WDOT is currently working on
such agreements with regulatory entities.
Developinl: Policies and Procedural Guidelines for Site Administration
Up-front agreements for mitigation bank administration need to be established and will
depend on the type and specific purpose of the mitigation bank and the participants.
Different mitigation banking models may be used under different circumstances. Will
policies for site administration differ throughout the range of mitigation bank models (Le.,
would WDOT agreements work well as a model for other types of mitigation bank?)?
Establishine the Administrative Aeent
The administrative agent should be responsible for at least managing the mitigation bank
site and administering credits and debits to the bank. Would the signatories to the legal
agreement be the administrative agents for the bank? Which entities would be appropriate
to select as representative administrative agents? Will the choice differ depending on bank
type? What are the specific criteria for being the administrative agent? Could the
administrative agent be the bank developer, or should the administrative agent be an
independent third party not associated with the development interest (e.g., land trusts, other
non-profit entities)? These questions would be worth considering during mitigation bank
development.
SITE ADMINISTRATION ELEMENTS
Administerine Credit Brokerin~ and Credit Trackin~
Are credits given only for those portions of the bank that are "functioning"? Or are credits
awarded for the most part based on acreage? If credits are based on acreage replacement,
must the mitigation be in-kind only? Can additional credits be given for the same parcel
twice (e.g., does the value of the habitat increase over time)? What accounting method is
used for crediting and debiting activities? Can credits be sold or transferred to participants
of the bank or to parties not included in the original formal legal document? Many of these
types of decisions may need to be reviewed and approved by some form of interagency
oversight committee.
Bank credits and debits should based on a method of evaluating habitat function. The
specific assessment methods and monitored parameters will depend on the bank's specific
function objectives. Determining a method for evaluating habitat function is perhaps one
of the most difficult elements, but it is also one of the most important because the credit
used to offset a project's impacts will depend on the ecological evaluation methodology.
The methodology would be used to assess both pre- and post-mitigation functions. Some
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examples of evaluation methodologies include Adamus et a1. (1987), Zedler and Langus
(1990), US Fish and Wildlife Service (USFWS) (1980), Karr et a1. (1986), Baird (1989),
Reppert et a1. (1979), and Simenstad et al. (1991).
Cost Recovery Mechanisms
Costs include investment of resources in terms of people and money (for restoration,
acquisition, monitoring, management, maintenance, and administration). If multiple entities
are allowed to use a given bank as needed, up-front funding must be secured to develop the
bank. This up-front funding could come from resource agencies, private non-profit entities,
or a core of development interests.
As one specific example, the funding for a mitigation bank similar to Model 2 (for small,
unrelated projects) would probably have to come from either resource agencies or non-profit
funding since development interests would have little direct incentive to provide mitigation
that would largely be used by other developers-unless, that is, there were market incentives
to provide such a service. Such incentives would have to be grounded on the belief that the
regulatory agencies would routinely require mitigation for individual, small projects. These
requirements would in turn be practical only if the per-unit cost of the mitigation were
within reason.
SITE MANAGEMENT ELEMENTS
Centralizing long-term management responsibility from a myriad of development interests
to a single site-management entity makes implementation and oversight of monitoring,
performance criteria evaluation, contingency implementation, and site maintenance easier
and potentially less expensive per unit effort. With respect to this element, Models 1 and
2 would be advantageous.
ManalPnl and Maintainin2 Miti~ation Site
Over what time period should the site be actively managed and maintained (e.g., until all
credits have been expended or until the banks goals and objectives are met and
documented)? What stewardship entity should oversee long-term management and
maintenance needs?
Contin~ency Work: Monitorin~ and Reportin2
The same ecological evaluation methodology used to quantify credits should be used to
monitor the degree of ecological success of the mitigation project in meeting intended goals.
A time schedule for monitoring and report preparation and submittal should be clearly
articulated in the formal agreement. Similarly, the financial responsibilities for correcting
identified problems or initiating contingency actions must be clearly defined and linked to
quantifiable performance standards.
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FINANCIAL ELEMENTS
Up-front Financinl:
Establishing a mitigation bank will involve significant up-front expenses. Should up-front
costs be the sole responsibility of bank participants? How can financing be guaranteed?
Some form of financial assurance will likely be necessary. Such financial assurance could
be in the form of a letter of credit with a standby trust, a fully funded trust, or a surety
performance bond with a standby trust (EP A 1992).
Decreasinl: Costs per Unit Effort
The costs for a bank should be less than for piecemeal mitigation, especially in the long
term.
Identification of Fundinl: and Other Resources for Establishment and Administration
The financial responsibility of the bank should be tied to the parties that develop and
receive the credits from the bank.
OWNERSHIP ELEMENTS
Boule (1991) describes a number of examples of different ownership/user scenarios.
Argonne (no date) identified 40 mitigation banks at some phase of development. Of these,
only seven were used by private interests for mitigation; 28 of these banks were related to
state development activities. A number of port-development-related mitigation banks were
also identified.
One Owner. One User. Private
An example of this type of participant would be a large housing development or other
planned development that results in small encroachments into wetlands.
One Owner. One User. Public
This type of participant could include state departments of transportation, public port
districts, cities, and counties.
Public Sector Owner. Multiple Users
This type of participant could include port districts, utilities, road, public works, cities,
counties, and so on.
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Private Sector Owner. Multiple Users
No banks of this type exist, but prototypes are proposed in New Jersey and California. A
typical participant might be a coalition of developers within a given geographic area.
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SUMMARY AND RECOMMENDATIONS
1. There is more than one type of mitigation bank. Many of the broad conceptual
criticisms of mitigation banking appear to be based on a single and overgeneralized
conceptual model of what a mitigation bank is. Each type of mitigation bank has a
specific potential application and its own strengths and drawbacks. A number of these
mitigation bank types merit close consideration and test application before myriad banks
are proposed and accepted-that is, mitigation bank options should be actively but
methodically pursued.
2. Many critical and yet common elements are associated with the range of mitigation
banking models. Policies and guidance on these common elements should take place
in a regional context rather than on a case-by-case basis to ensure predictability,
consistency, and efficiency in the design, testing, and acceptance of mitigation banking
approaches.
3. Mitigation bank development can be approached through regulatory and/or planning
processes. Nationally, most existing mitigation banks have been developed and
implemented almost completely with a relatively narrow regulatory focus. From this
perspective, most mitigation banks developed to date have resulted from reactive rather
than proactive resource agency efforts-that is, resource agencies have been responding
to development-oriented proposals rather than formulating various best-case mitigation
bank models. Currently, however, a number of mitigation banking projects under
development are being proposed as part of comprehensive planning activities (e.g.,
Eugene, Mill Creek).
4. Discussion and design of mitigation banks need to be incorporated into non-regulatory
resource agency planning processes. Examples of such planning processes might include
the Puget Sound Management Plan's wetlands program and local government watershed
and wetland management plans. Although SAMPs and AlPs are examples of such
locally based planning processes, both require extensive time commitments on the part
of the regulatory programs that may hinder the efficient transfer of useful mitigation
banking models.
5. Regional planning forums and processes should be utilized in the design and
implementation of mitigation banks. The permit-by-permit regulatory approach will not
likely be able to effectively or efficiently handle the workload associated with developing,
testing, and transferring mitigation banking applications. Where localized restoration
goals are not yet developed, regional restoration goals and objectives could be used to
objectively guide the design of mitigation bank sites. The Puget Sound Management
Plan's wetland restoration element is one potential example of such a regional planning
forum/process.
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REFERENCES
Adamus, P.R., ARA Inc., E.J. Clairain, Jr., R.D. Smith and R.E. Young. 1987. Wetland
Evaluation Technique (WET). Vol. II. Methodology. U.S. Army Corps of Engineers
Waterways Experiment Station. 178 pp.
Argonne National Laboratory. 1992. Wetland Mitigation Banking Project Summary,
Argonne National Laboratory, Argonne, Illinois.
Baird, K. 1989. High quality restoration of riparian ecosystems.
Management Notes, 7: pp. 60-64.
Restoration and
Boule, M.E. 1992. Mitigation Banking: Opportunities and Constraints, presented to the
Snohomish County Planning Department, Everett, Washington.
Environmental Protection Agency.
Atlanta, Georgia.
1992. Mitigation Banking Guidance, Region IV,
Ford, K.E. 1991. Wetland Mitigation Banking: A Potential Tool for Resource
Management Planning, Masters Thesis. University of 'Yashington.
Karr, J.R., Fansch K.D., Angermeier, P.L., Yant P.R., and U. Schlosser. 1986. Assessing
biological integrity in running waters: a method and its rationale, Special Publication
5, Illinois Natural History Survey, Urbana, Dlinois.
Kusler, J. 1992. The Mitigation Banking Debate in: Natural Wetlands Newsletter. Vol.
14, No.1.
Lewis, R. R. 1990. Wetland restoration, creation, enhancement terminology: suggestions
for standardization. pp. 417-422 In: J.A Kusler and M.E. Kentula (eds) Wetland
Creation and Restoration. The Status of the Science. Island Press. Washington, DC.
Maddux, R.D. 1986. Estuarine mitigation banking: a chance for predictability. University
of Washington. Master of marine affairs thesis, Seattle, Washington. 202 pp.
Natural Research Council, 1992. Restoration of Aquatic Ecosystems, National Academy
Press.
Reppert, R.T., W. Sigleo, E. Stakhiv, L. Messman, and C. Meyers, 1979. Wetland Valves
Concepts and Methods for wetlands evaluation. U.S. Army Corps of Engineers, Institute
for Water Resources, Research Report 79-R1.
Short, C. 1988. Mitigation Banking. U.S. Fish and Wildlife Service, BioI. Report. 88 (41)
Washington DC.
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Simenstad, C.A, C.D. Tanner, R.M. Thorn, and L.L. Gonquest. 1991. Estuarine Habitat
Assessment Protocol, U.S. Environmental Protection Agency, Region 10, Seattle, W A.
U.S. Fish and Wildlife Service. 1980. Habitat Evaluation Procedures. ESM 102. Fish and
Wildlife Service, Division of Ecological Services, Washington, D.C.
Washington Department of Ecology. 1992. Wetlands Mitigation Banking, Washington
Department of Ecology, Olympia, Pub. No. 92-12.
Zealer, J.B. and R. Langes. 1990. A manual for assessing restored and natural coastal
wetlands. Pacific Estuarine Research Laboratory, San Diego State University, California.
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