There are a new set of regulatory guidelines regarding mitigation banking up for debate in Texas. In fact, public comments are due by Feb. 9 for the new U.S. Army Corps of Engineers (USACE) Fort Worth District mitigation banking guidelines.
Important Changes – and Not Just for Mitigation Bankers
If you are not in the mitigation banking or environmental industry, then you may be thinking, “This is a bunny hugger-fish squeezer issue.” I’m kidding a bit with this (as a lifelong fish squeezer myself), but make no mistake. These changes will affect anyone who needs to buy mitigation, including people who put pipelines in the ground, construct roads across the landscape, and build commercial and residential real estate in our towns and cities. These changes affect the developments and infrastructure that keep our economy moving in many possible ways.
To facilitate this growth while maintaining its obligation to the public of enforcing no net loss of waters of the U.S. (WOUS), the USACE is proposing changes to the mitigation banking policies and procedures involved with the permitting of mitigation banks. The USACE has provided new templates to help expedite consultants’ work and the USACE and Interagency Review Team (IRT) review time. These new templates also assist potential new bank sponsors to understand exactly what is expected and what their financial commitment is likely to be.
Clarity regarding quantifiable benchmarks for mitigation bank success is included in the new proposal. It spells out what will be expected in terms of invasive species control, stems per acre in planting, and stream buffer widths. All of this will reduce reviewing time and help the bank sponsor better estimate restoration costs.
Requiring information on reference streams and oversight by the stream designer throughout the construction process may help to guarantee restoration success and true no net loss of stream resources. Knowing these and other official policies ahead of time can help the mitigation bank sponsor choose properties with a high probability of success and a shorter permitting timeframe. These positives may help drive down the costs of establishing a bank, the benefits of which are passed on to the consumer in the form of reduced credit prices.
Some of the proposed guidelines will require additional work, such as a Phase I Environmental Site Assessment (ESA) and possibly title searches of adjacent properties the bank sponsor (the person starting the bank) does not own. Requirements for the initiation of mitigation activities and the additional jurisdictional determinations may alter how much money is needed for the initial investment and how quickly the bank sponsor could see a return on investment. If the costs to establish and maintain a mitigation bank rise, those costs will be recovered in the price of credits purchased.
Next you may say, “But this is only for the Fort Worth District. How will this affect me if I don’t operate within the District?”
In reality, the districts look to one another to determine what is working and what isn’t. I have worked on projects in the Galveston District where IRT members cited the Fort Worth District as guidance on what they should do, and vice versa. I have personally used guidelines from the Sacramento, Charleston, Vicksburg and Savannah Districts as justifications for certain points made in my past mitigation plans. Furthermore, the Fort Worth District is considered one of the more influential districts for regulations regarding mitigation banking, so when the district issues a guidance, you can be assured that many people are listening.
Don’t forget – Texas is one of the fastest growing mitigation markets in the country, so while you may not be in the Fort Worth District now, you may be soon. The Fort Worth District covers such economic powerhouses as Dallas, Austin, San Antonio and Midland-Odessa. If the Galveston District decides to adopt all or some of these policies, you can lump in Houston, Beaumont and Corpus Christi, among others.
A Snapshot of Proposed Changes
So what are some of the high points addressed? Many of these have been perennial points of discussion between the USACE, the IRT, the bank sponsors and their consultants, so you may recognize a few of them:
- Phase 1 ESA (ASTM E-1527-13) would be required at the Prospectus phase.
- Invasive species would be limited to 0 percent in the overstory and mid-story, and 1 percent in the herbaceous layer.
- All baseline data (functional assessments, jurisdictional determinations, etc.) must not have been collected more than 2 years prior to the draft mitigation banking instrument (MBI).
- Streams with the potential for lateral migration may require an additional buffer to accommodate future channel alignments.
- Dependent upon the location of the proposed mitigation bank site and potential for mineral extraction on properties adjacent to the proposed site, a title abstract – including a 100-year title search – may be required on adjacent properties (which the sponsor may or may not own).
- Bank sponsors should provide a Minerals Assessment Report (i.e. remoteness opinion) that assesses the minerals present on and under the land to determine the potential for future development.
- All mineral rights that can be retired must be retired, and if any mineral rights cannot be retired, a Mineral Management Plan must be developed using the Minerals Assessment Report to specifically identify potential areas for mineral exploration and extraction.
- A jurisdictional determination will be required at both the third and final credit releases.
- Mitigation activities must begin within 1 year of the initial credit release.
Help USACE Develop Their Guidelines
All of the new proposed guidelines can be found on the Fort Worth District website. The public (that means you!) is encouraged to provide comments to the Regulatory Branch of the USACE Fort Worth District. Again, comments are due by Feb. 9.
Some of you may not be familiar with the down and dirty details of mitigation banking, but that is OK. You may have extremely valuable input regarding drilling and extraction techniques, title searches, or the mitigation needs in current infrastructure development.
The USACE and IRT would value the knowledgeable, industry-specific information only you can provide to help them tailor their guidance to be as ecologically and economically sound as possible. The USACE is open to your participation and would appreciate your help!
RS&H has been involved in the permitting of many mitigation banks in the role of the sponsor’s consultant. Should you have any questions about these new guidelines or mitigation in general, we do hope you will reach out to us. We would love to hear your fresh perspectives.