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General Information
What is mitigation banking?
The concept of mitigation banking has been around since the
’70’s. In 1995 the federal agencies released guidance on
establishing, using, and operating mitigation banks. Recently
there has been a renewed interest in its use as a regulatory
tool. Basically, mitigation banking creates an economic
incentive for restoring, creating, enhancing and/or preserving
wetlands.
Mitigation banks typically involve the consolidation of many
small wetland mitigation projects into a larger, potentially
more ecologically valuable site. Further, mitigation banks
require the up-front compensation prior to affecting a wetland
at another site. This ensures the success of the mitigation
before unavoidable damage occurs at another site. With proper
implementation and guidelines, mitigation banking has the
potential to increase ecological benefits, save money for
project applicants, and improve efficiencies in application and
permitting processes.
The draft
rule (WAC 173-700) identifies the criteria necessary for implementing an
environmentally sound banking system in Washington State.
How are wetlands regulated now?
Wetlands are regulated under a number of statutory authorities.
Regulatory agencies from the federal, state and local governments all have
an interest in overseeing wetland protection.
Under current regulatory programs, parties seeking permits for activities
that affect wetlands must first avoid and then minimize those effects. Any
remaining damage must be compensated. Historically, the regulatory
preference for compensation has been on-site creation, restoration, or
enhancement of a wetland. These mitigation efforts have resulted in several
smaller, "postage stamp" wetlands that have had limited success in reaching
full function potential.
The sequencing of avoidance, minimization, and
compensation still applies prior to using credits from any mitigation bank.
However, in contrast to traditional mitigation activities, mitigation
banking requires that compensation--restoration, creation, enhancement, and/or preservation--occurs before a site is affected by a project. Bank
projects are put in place prior to allowing unavoidable impacts by a
project. Credits are generated by this up-front activity. Those credits can
then be used by the bank sponsor or sold to another party to offset impacts
to wetlands that occur in other locations. Again, only impacts that cannot
be avoided or minimized are available for compensation through credits from
a mitigation bank.
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How will state banking rules change existing practices?
The law,
Chapter 90.84.RCW, Wetlands Mitigation Banking, provides no new
authority for regulating wetlands, other than wetland bank projects. Current
sequencing practices of avoidance, minimization, and compensation still
apply. However, the
draft
rule (WAC 173-700) focuses on procedures for certifying banks
as well as the process for implementing banks. Essentially, the draft rule adds
another tool to the regulatory toolbox for protecting wetlands.
Ecological benefits include:
- Ensures greater likelihood of success, since banks must be
up and running before a wetland can be affected.
- Potential to consolidate piecemeal mitigation projects into one
contiguous, unified ecosystem. Such consolidation encourages greater
diversity of habitat and wetland functions and creates more sustainable
systems.
- Reduces temporal losses since mitigation banking projects must be
implemented in advance of impacts. Temporal losses occur when impacts to
existing wetlands are compensated for with soon-to-be or newly constructed wetlands.
- Provides more flexibility for mitigating unavoidable damage by
allowing mitigation to occur off-site when a greater ecological benefit
results.
- Provides a planning tool for meeting wetland needs within a watershed,
basin, or particular landscape, versus being tied to piecemeal mitigation.
- Uses economic incentive to increase compliance. The bank provider
shoulders the burden of demonstrating up front that the mitigation effort
is successful. Monitoring and maintenance are also required of the banker
to ensure continued success after construction is completed.
Economic benefits include:
- Increases efficiencies in permitting. There will be opportunities to
certify banks through local, state and federal permitting activities
concurrently. Those purchasing credits from a bank experience a
more streamlined permit process, since proposed compensatory mitigation is
already constructed and functioning.
- Reduces enforcement burden on regulatory agencies. Each mitigation bank
applicant must demonstrate that performance standards are met prior to the
releasing of credits.
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How does mitigation banking fit within the bigger picture
of watershed
planning?
Ideally, mitigation banking can best be implemented in the context of
watershed planning. Mitigation banks can be designed and located to
address specific watershed needs. This could mean enhancing or restoring
wetland functions that are in short supply or are of critical importance
in a given watershed or drainage basin.
Good ecological assessment of
watersheds, combined with transportation, infrastructure, and development
planning, will allow mitigation banks to be designed and located in areas
where they serve the greatest ecological good.
Who is likely to set up a bank?
Some examples of those with interests in establishing a mitigation bank
are:
- Transportation agencies and utilities, such as the departments of
Transportation or Public Works, have many projects that affect wetlands.
These agencies typically have linear development projects, such as roads
or pipelines, that invariably damage wetlands.
- Local jurisdictions may want to encourage the establishment of a
mitigation bank to help meet local watershed needs.
- Businesses that anticipate having large or ongoing wetland impacts
may create banks rather than mitigating in a piecemeal fashion.
- Entrepreneurs may be interested in creating mitigation banks for the
purpose of selling credits.
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What approach has been used to write and review the draft rule?
Ecology is using a collaborative approach to develop and review the
draft
rule (WAC 173-700). An 18-member advisors
group was formed to develop
the draft rule. The group continues to play a pivotal role by adding diverse
viewpoints from local, state, and federal agencies; environmental
interests; private bank development; agricultural concerns; and
business.
Under the Administrative Procedures Act (Chapter 34.05 RCW), an agency
may test a rule before it is formally adopted. The draft rule is being tested through
a pilot program that was
authorized in 2004. The advisors group is analyzing the
draft rule and identifying necessary revisions.
Click here for more information on the draft rule and pilot program.
What are the key issues that will be addressed through the pilot
program?
The wetland mitigation banking pilot program focuses on essentially two processes.
How will mitigation banks be certified, and how will mitigation banks be
implemented? (Debiting from banks will occur through existing permitting
processes.)
Elements of mitigation banking
Service areas - A service area is loosely defined as "the
designated geographic area in which a bank can reasonably be expected
to provide appropriate compensation for unavoidable impacts to
wetlands." The size of a service area can vary depending upon wetland
function being provided, type of damage anticipated to be offset,
local and regional conditions, etc.
Determination of credits - Considerations for assessing
credit values in a wetland bank include acreage, category type, and/or
function.
Release of credits - Guidelines for releasing credits will
be developed as part of the certification process. Credit release will
be tied to gains in performance such as wetland function.
Use of restoration, creation, enhancement and preservation -
The law requires that the certification process prioritize these types
of mitigation actions.
Streamlined process - The law requires signatures from both
local authorities and Ecology when certifying a mitigation bank
proposal. In addition, the U.S. Army Corps of Engineers has permitting
authority for the sites that will be affected and, in some cases, the
bank sites. The advisory and review team will be looking for ways to
streamline the certification process and approvals.
Identification of inappropriate applications - Some wetland
functions, such as fish habitat, flood storage and attenuation, are
tied to a wetland’s location within the landscape and may not be
appropriate for mitigation banking. Guidelines on how to address this
concern will need to be developed.
For more information
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