KATY-CYPRESS WETLANDS MITIGATION BANK

The purchase of wetlands from KCWMB yields an immediate solution to developers' mitigation needs.

Scenario

The Vandaly Development Company wants to develop a 25-acre apartment property. The site includes approximately 4 acres of wetlands for which the company must obtain a permit.

The Permitting Process

Section 404 of the Clean Water Act of 1972 gives the Army Corps of Engineers (Corps) the power to regulate any jurisdictional wetland fills in the United States. While the EPA maintains a veto power over any wetland fills, the Corps acts as the prime agent overseeing all Section 404 permits. In addition to a Section 404 permit, a landowner must comply with all state laws by obtaining a Section 401 certification. In Texas, the Texas Commission on Environmental Quality (TCEQ) oversees and grants all Section 401 certifications by determining whether a project complies with Texas Surface Water Quality Standards and other applicable water quality requirements. In practice, both of these permits can be obtained at the same time by contacting each agency and coordinating the information and certification process.

Before obtaining these permits, Vandaly must first try to avoid impacting these wetlands. If avoidance is not possible, the impact must be minimized. It is only after avoidance and minimization have been deemed insufficient to protect these wetlands that the Corps and TCEQ will consider Vandaly's permit application. One requirement for obtaining a permit is that Vandaly "mitigate" this impact by replacing the affected wetlands with a similar type of wetland in the same region. This procedure of "avoid, minimize, mitigate" is called "sequencing" and it is strictly enforced. Obtaining approval for a mitigation plan is the most difficult part of the permitting process. In the past, traditional off-site mitigation was the only solution for Vandaly. Today there is an alternative: purchasing wetlands from a wetland mitigation bank.

Compare the Alternatives

The KCWMB Solution

With the wetland mitigation bank option, Vandaly simply contacts KCWMB to determine if the apartment project is located within KCWMB's service area. If so, Vandaly must hire a wetlands consultant to assess the project's impact. Vandaly then presents the analysis to the Corps and TCEQ and obtains their approval to mitigate with wetlands from KCWMB. Vandaly purchases the requisite number of wetlands from KCWMB, thereby satisfying its wetland obligations.

Vandaly avoids all the issues surrounding designing, building, monitoring and maintaining its own wetlands mitigation project. Most importantly, all of Vandaly's potential wetland liability issues are eliminated with the purchase of the wetland credits.

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Traditional Off-site Mitigation

With traditional off-site mitigation, Vandaly must build an off-site wetland in addition to developing the apartment site. The first step of a mitigation plan is site selection. This is not an easy task because the tract must have the correct soil characteristics to support wetlands as well as an adequate long-term natural water supply. After locating such a site, wetland experts, ecological consultants and civil engineers must be called in to formulate a wetland mitigation plan.

The Corps and TCEQ, acting as the lead governmental agencies, must approve any wetland mitigation plan. Implementation of such a plan may commence only after the Corps and TNRCC have given their approval. Once construction has begun, invariably there are problems with contractors, delays and cost overruns because the creation of wetlands is highly sophisticated. Once the earthen work has been completed, it may take several years for the proper plants to take root, cover the area and create a wetland habitat. During this time the wetlands are under constant threat from invasion by upland plants or nonnative species, insufficient habitat development due to poor soil conditions, or even scant growth due to an inadequate long-term water supply.

The Corps, TCEQ and other governmental agencies monitor the wetlands during this period in order to ensure that the mitigation site is, and will be, a fully functioning, self-sustainable wetland. Before the agencies sign off on the project, which may take three to five years, Vandaly is exposed to the potential liability of having to reconstruct the wetlands at the same or a more suitable site if they should fail. This liability is very real. Wetlands can only exist under the proper soil, water and plant conditions. Since Vandaly is attempting to convert an upland site into a wetland, it is essentially placing the new wetland in an area with a high risk of failure, thereby exposing itself to additional remediation costs should the wetland fail.

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		The Alternatives
	The KCWMB Solution With the wetland mitigation bank option, Vandaly simply contacts KCWMB to determine if the apartment project is located within KCWMB's service area. If so, Vandaly must hire a wetlands consultant to assess the project's impact. Vandaly then presents the analysis to the Corps and TCEQ and obtains their approval to mitigate with wetlands from KCWMB. Vandaly purchases the requisite number of wetlands from KCWMB, thereby satisfying its wetland obligations. Vandaly avoids all the issues surrounding designing, building, monitoring and maintaining its own wetlands mitigation project. Most importantly, all of Vandaly's potential wetland liability issues are eliminated with the purchase of the wetland credits. Top			Traditional Off-site Mitigation With traditional off-site mitigation, Vandaly must build an off-site wetland in addition to developing the apartment site. The first step of a mitigation plan is site selection. This is not an easy task because the tract must have the correct soil characteristics to support wetlands as well as an adequate long-term natural water supply. After locating such a site, wetland experts, ecological consultants and civil engineers must be called in to formulate a wetland mitigation plan. The Corps and TCEQ, acting as the lead governmental agencies, must approve any wetland mitigation plan. Implementation of such a plan may commence only after the Corps and TNRCC have given their approval. Once construction has begun, invariably there are problems with contractors, delays and cost overruns because the creation of wetlands is highly sophisticated. Once the earthen work has been completed, it may take several years for the proper plants to take root, cover the area and create a wetland habitat. During this time the wetlands are under constant threat from invasion by upland plants or nonnative species, insufficient habitat development due to poor soil conditions, or even scant growth due to an inadequate long-term water supply. The Corps, TCEQ and other governmental agencies monitor the wetlands during this period in order to ensure that the mitigation site is, and will be, a fully functioning, self-sustainable wetland. Before the agencies sign off on the project, which may take three to five years, Vandaly is exposed to the potential liability of having to reconstruct the wetlands at the same or a more suitable site if they should fail. This liability is very real. Wetlands can only exist under the proper soil, water and plant conditions. Since Vandaly is attempting to convert an upland site into a wetland, it is essentially placing the new wetland in an area with a high risk of failure, thereby exposing itself to additional remediation costs should the wetland fail. Top

Scenario

The Permitting Process

The Alternatives

The KCWMB Solution

Traditional Off-site Mitigation