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Mitigation Banking: A Streamlined and Cost Effective Solution for Fulfilling Compensatory Mitigation Requirements

   May 2018 / Vol 8 Issue 3

Mitigation Banking: A Streamlined and Cost Effective Solution for Fulfilling Compensatory Mitigation Requirements
By: Jaime Zsiros, Appalachia Bank Representative, Ecosystem Investment Partners

 

Over the last decade, the concept of mitigation banking has gained traction across the country with credit purchases from mitigation banks increasing in popularity. This increase in popularity is two-fold. First and most important, mitigation banking provides a streamlined and cost effective mechanism for permittees to meet Section 404 of the Clean Water Act (CWA) compensatory mitigation requirements. Additionally, as established under the 2008 Compensatory Mitigation Rule, the purchase of bank credits has become the preferred mitigation method by the United States Environmental Protection Agency (USEPA) and the US Army Corps of Engineers (USACE) in lieu of permittee responsible mitigation and state specific In-Lieu Fee (ILF) credit purchase.

Many of you are probably wondering “Exactly what is mitigation banking, how does it work, and is it the right solution for me”? This article aims to clarify the aforementioned topics and provide a greater understanding of the mitigation banking concept while promoting this extremely beneficial and cost effective mitigation mechanism.

What is a Mitigation Bank and How Does It Work?
A Mitigation Bank typically consists of tract(s) of land where a mitigation bank owner has created, restored, enhanced, or preserved wetlands, streams, and/or species habitat to provide a mechanism for project developers to offset unavoidable impacts to aquatic resources or species habitat (e.g. compensatory mitigation) permitted and authorized under Section 404 of the CWA. Mitigation banks must receive all pertinent permits and are certified and overseen by regulatory agencies including the USEPA, USACE, state agencies, and the US Fish and Wildlife Service (USFWS) also referred to as an Interagency Review Team (IRT). The formal certification or agreement between the bank owners and regulatory agencies is outlined in a bank instrument. The instrument establishes and addresses liability, performance standards, monitoring requirements, in perpetuity management/preservation and bank credit release numbers and schedules. The instrument also authorizes the geographic service area of the bank. Once regulatory approval is received, credits are certified and issued to the bank developer in stages as performance standards and success criteria are met. These released credits are “banked” and then available for purchase by permittees from the bank owner.

One of the most common misconceptions people have with mitigation banking is it allows project developers to completely abolish or impact natural resources with no checks, balances, or consequences. That is simply not the case. Mitigation banks provide a stream-lined and cost effect mechanism for permittees to fulfill their mitigation requirements through federal and state permit guidelines. Any entity that would be in a position to utilize banks or purchase credits would first need to receive all necessary federal and state permits prior to utilizing credit purchases. All entities must still demonstrate and meet avoidance and minimization criteria.

Advantages of Mitigation Banks and Why this Option Makes Sense for Your Project Purchasing credits from mitigation banks helps permittees accelerate and simplify CWA Section 404 permit compliance while providing several distinct advantages over permittee-responsible mitigation. First and foremost, purchasing mitigation credits delivers project budget certainty by providing predictable pricing and allowing for a one-time credit purchase. In particular, large-scale mitigation banks as owned and managed by Ecosystem Investment Partners (EIP) are extremely cost effective since large-scale banks can achieve economies of scale, reducing cost per credit. Purchasing mitigation bank credits releases you from all long term liability. The liability now falls on the bank owner; however, if you were to choose permittee-responsible (onsite or off-site) mitigation you would hold all liability and responsibility for establishment, monitoring/report submittals, financial instruments, meeting success criteria, etc. Another great benefit of credit purchase is it accelerates your time to permit. Since mitigation banks are already approved, there is no need for subsequent approval. Plus, your mitigation permit requirements are met at the point of sale. In fact, data from all USACE Section 404 permits across the country show that the purchase of mitigation bank credits cut permitting time in half as compared with permittee responsible off-site mitigation.  As previously mentioned, with the passing of the 2008 Compensatory Mitigation Rule the purchase of mitigation credits is the preferred compensatory mitigation method by the USACE and USEPA. Additionally, mitigation credits eliminate upfront costs since you only incur costs of mitigation upon credit delivery. Lastly, credit purchase can reduce your overall credit need. Under permittee responsible mitigation and ILF credit purchase your mitigation has to account for temporal loss, which is the time lapse between mitigation commencement and establishment of anticipated ecological functions. However, when bank credits are used there is no temporal loss of aquatic resources or habitat function.

What makes EIP a Uniquely Qualified Partner for You?
EIP is a leader in large-scale, high quality cost-effect mitigation banking and turn key solutions for wetland, stream, and species habitat impacts. We own and manage 31 mitigation projects on 63,000 acres in 7 states and USACE Districts. We have also restored over 32,000-acres of wetlands and over 105-miles of streams.  What makes us unique is we have the ability to deliver mitigation credits in large volumes across expansive geographic areas by leveraging our network of large-scale mitigation banks. Our core team of 11 professionals brings extensive experience in land acquisition, permitting, site design, regulatory relations, restoration, and credit sales and marketing. Our collaborations with local partner firms not only enhance our regional ecological, engineering, permitting, design and construction expertise, but it also creates jobs for local communities.

At EIP, the most important aspect of our business is customer service and building long-lasting relationships. We are customer focused and results driven company with a proven track record of exceeding our customer’s expectations. EIP has multiple banks within the Appalachia region including West Virginia (westvirsginiamitigation.com), Kentucky (kentuckymitigation.com), and Ohio (buckeyestatemitigation.com). For more information or to discuss your credit needs please do not hesitate to contact Jaime Zsiros, Appalachia Bank Representative, at 321.258.1774 or jaime@ecosystempartners.com.

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