Thurston County In-lieu Fee Progam

An evolving effort

Topics for this morningRegulatory and policy contextILF processCurrent progressNext steps

ContextCurrent process for compensatory mitigation of wetlands is broken; most wetland mitigation projects fail to offset lost wetland function at both temporal and spatial scales.The causes:

• Poor site selection • Poor design• Poor site management and maintenance• Poor follow-through by regulatory agency

ILF DefinedIn a Federal Rule published in April 2008, The U.S. Army

Corps of Engineers (the Corps) and the U.S. Environmental Protection Agency (EPA) define an in-lieu fee program as:

“A program involving the restoration, establishment, enhancement, and/or preservation of aquatic resources through funds paid to a governmental or non-profit natural resources management entity to satisfy compensatory mitigation requirements... Similar to a mitigation bank, an in-lieu fee program sells compensatory mitigation credits to permittees whose obligation to provide compensatory mitigation is then transferred to the in-lieu program sponsor.”

In-lieu feeaka “show me the money”ILF designed to offset for unavoidable environmental damages to wetlands or other aquatic resources by restoring, creating, enhancing, or preserving wetland functions within a specific watershed or geographical area through fees paid by developers to an ILF sponsor (only non-profits or governmental entities need apply) in order to purchase wetland functional “credits” that offset the wetland functional “debits” (as determined by regulatory agencies and only after they determine the impact(s) is unavoidable) lost from impacted wetlands.

ILFand then….After the wetland credit purchase is complete, the developer (purchaser) is relieved of any responsibility for the success of the wetland mitigation and their regulatory requirements for wetland mitigation.Sponsor is solely responsible for the success of the mitigation and must implement the mitigation in three growing seasons from receipt of the fees. Fees calculated to support the administration of the program in addition the design, construction and management of the mitigation site

Benefits of ILFMitigation (credit producing) sites can be selected in advance with watershed characterization plans/analyses;Mitigation sites can be designed to address critical watershed needs caused by historical loss of wetlands;Mitigation of small projects combined into larger and more sustainable wetland complexes;Reduced transaction time for purchaser and less hassle;Long term protection and maintenance of mitigation site

But there’s more…

Responsibilities of an ILF sponsorCollecting fees and managing accounts;Selection, design and construction of mitigation sites;Tracking mitigation credits– sold and invested;Reporting (death, taxes and reporting…)Maintenance and long term mitigation site management.

How it works, summarized Applicants work with regulatory agencies and tribes to identify ways a proposed project can avoid

and minimize environmental impacts. Regulatory agencies determine preferred options for mitigating unavoidable impacts. Mitigation

options may include: on-site mitigation (if ecologically-feasible and likely to succeed), off-site mitigation sponsored by the permittee, purchasing credits from a mitigation bank (if one is available), or purchasing credits from the Thurston County In-Lieu Fee Program.

If the applicant chooses to use the TC Water Resources (TCWR) (and the regulatory agencies approve), the ecological impacts translated into a number of debits associated with the impact.

The applicant buys credits from the TCWR to offset the debits associated with the impact. By purchasing credits, the applicant satisfies their compensatory mitigation requirements and have no further involvement in the mitigation implementation.

The TCWR chooses a mitigation site from a predefined Roster. Roster sites may be publicly or privately owned, and will be chosen based on science-based watershed priorities from the watershed characterization analysis.

The TCWR plans, implements, monitors and maintains projects at chosen sites that will achieve ecological “lift.” On balance, completed projects should result in a number of credits equal to or greater than the number of debits associated with the original impacts.

*At multiple points in the process, an Interagency Review Team (IRT) will review and approve project proposals. The IRT is co-chaired by the Corps and the Washington Department of Ecology (Ecology); other members will include representatives state and federal regulatory agencies, tribes, and local governments.

ILF ComponentsThe County’s assumption of the sponsorship from the PSP in developing an ILF program was a

significant increase in responsibilities in the amended grant contract.

Briefly, the ILF approval process(referred to by Army of Corps of Engineers involves: Preparation and approval of three documents: prospectus, instrument and agreement.

The prospectus is basically an annotated outline summarizing the objectives, operation andprocedures of the ILF program.

The instrument is the largest and most complex of the ILF documents. It describes in detail where the ILF will be active, the type of impacts mitigated, how the mitigation sites will be selected and who will be the sponsor. Additionally, the instrument will include specific procedures, requirements anddescription of the physical, technical and financial characteristics of the ILF project, includingthe geographical area, project goals and performance measures, operation, maintenance andfinancial controls.

The agreement describes the terms specifying responsibilities for the establishment, use,operation, and management of the sponsor's In-Lieu Fee Program consistent with federalregulations and incorporates by reference all of the instrument’s technical findings andappendices

ILF Component DetailsThe Corps and the Department of Ecology are responsible for approving an ILF program through the certification process. The certification process is defined under the federal mitigation rule (33CFRParts 325 and 332, 40 CFR Part 230). The basic certification steps are:

1. Sponsor submits a prospectus to Ecology and the Corps. Once the prospectus is determinedcomplete by the agencies, a public notice is issued seeking public comment regarding theproposed project.

2. The Interagency Review Team (IRT) is convened. The IRT may include representatives fromEcology, Corps, U.S. Environmental Protection Agency, U.S. Fish & Wildlife Service, NationalOceanic and Atmospheric Administration-Fisheries, local and tribal governments, and otherstate agencies including the Washington Departments of Fish and Wildlife and NaturalResources. The IRT reviews and provides technical input regarding the sponsor’s projectdesign, service area, performances measures, and number of credits available. Public commentsare considered again during this technical review stage.

3. The sponsor submits a draft in-lieu fee instrument for IRT review and comment. Thesecomments are then incorporated by the sponsor and submitted as a Final Instrument to the IRT.

4. Once the final instrument is approved by the IRT, the sponsor negotiates a binding agreementwith the Corps and Ecology.

5. The approval process is complete once Ecology, the Corps, and sponsor sign the in-lieu feeagreement which incorporates the instrument in its entirety.

Timeline for ILF Approval

TC Watershed CharacterizationThe goal of watershed characterization is to

identify areas within each watershed that are more suitable for:

Restoration actions;Protection; andHigher intensity development.

Watershed Characterizationdata process and analysis

Nisqually Study Areas

The Property That Got Away

Mitigation Site Selection Watershed-scale characteristics, such as aquatic habitat

diversity, habitat connectivity, surface water areas (wetlands and streams), ground water flow patterns

Extent to which the site has potential to contribute to the restoration or protection of watershed processes

Potential of the mitigation-receiving site to successfully contribute to a gain in functions as a result of mitigation activities

Hydrologic conditions, soil characteristics, and other physical and chemical characteristics

The size and adequacy of buffers necessary to protect the mitigation-receiving site from adjacent development or land use

Location and availability of hydrologic sources (including availability of water rights, presence of State-Owned Aquatic Lands) and other ecological features

Mitigation Site Selection Compatibility with adjacent land uses and watershed management plans Reasonably foreseeable effects the compensatory mitigation project will have

on ecologically important aquatic or terrestrial resources (e.g., shallow sub-tidal habitat, mature forests), cultural sites, or habitat for federally- or state listed threatened or endangered species

Other relevant factors including but not limited to: Development trends Anticipated land use changesHabitat status and trends Local or regional goals for the restoration or protection of particular habitat types or

functions (e.g., re-establishment of habitat corridors or habitat for species of concern)

Water quality goals Floodplain management goalsThe relative potential for chemical contamination of the aquatic resources. The relative locations of the impact and mitigation receiving sites in the stream

network Cost of acquisition and implementationLocation with respect to urban centers.

Mitigation & Restoration(don’t mix)

TCWRP will not derive credit from any project(s) already funded with Salmon Recovery Fund money or any projects already planned and funded or completed to meet a permit condition. However, there may be cases when ILF mitigation fees can be used to implement a salmon recovery project or other restoration project. For this to occur, all of the following must apply:

The project is not fundedThere is not a restriction related to the funding used to

acquire a site where the project will occurThe project is not a requirement associated with a

permit (e.g. a mitigation project)

Next stepsIdentify replacement property and acquire it!Respond to public comments on ILF ProspectusBegin preparation of ILF Instrument with IRT

More information?Rich Doenges (360) 754-4106 doenger@co.thurston.wa.usTC ILF Prospectus: http://www.co.thurston.wa.us/waterresources/ilf-project/ilf-project-announcement.html

Background information on ILF and other mitigation initiatives http://www.ecy.wa.gov/mitigation/options.html