News and Events
Wetland Mitigation Banks: An Option to Consider
Karl Wagner, a real estate developer and forester from South Georgia, purchased 500 acres along the Sequatchie River near Dunlap, Tennessee in 2009. Over time, he found that more than 200 acres of the land was flood-prone and not well suited for development . What, then, could he do with this investment? Mr. Wagner had heard of wetland mitigation banks, but like many property owners, he did not have a lot of information. He contacted Terracon to learn more. As it turned out, it was an excellent decision.
What is a Wetland Mitigation Bank?
Wetlands and Waters of the U.S. (WOUS) are protected under the Clean Water Act (CWA) of 1972 and the Rivers and Harbors Act of 1899 (RHA). These laws make it illegal to dredge or fill jurisdictional WOUS.
However, there are times when construction and development can unavoidably impact a protected wetland or body of water. The Environmental Protection Agency (EPA), the U.S. Army Corps of Engineers (USACE), and states administer programs (called Section 404 programs) that make provisions for these circumstances.
One of these provisions is known as wetland mitigation banking. Wetland mitigation banking is a form of environmental market trading. Property owners can, at their own expense, restore, enhance, or construct a wetland, which creates wetland credits. Wetland credits can be sold to other developers who are facing expenses and delays that can be associated with impacting jurisdictional WOUS.
The key to success with a wetland mitigation bank is finding land that has enough hydrology to maintain saturated soil conditions. From the first time I set foot on this property I knew it would make an ideal wetland mitigation bank.
Why was it ideal? Historically, many wetlands have been drained through the installation of ditches and tiles and converted to farmlands. Such farmlands make ideal wetland mitigation banks because they are typically large enough to justify the effort, and hydrology can be restored to its natural state. Inspection of Mr. Wagner’s site revealed that at some point channels had been excavated to drain flood waters. Conditions on this site were just right to build a wetland mitigation bank.
Submitting a Prospectus
One of the first steps to completing a wetland mitigation bank is submitting a Prospectus to an IRT (see left). The Prospectus provides detailed and thorough information about the objectives for the bank, how it will be established, and how it will be operated. It is vital that a prospective bank sponsor choose an experienced consultant to help navigate this process.
Terracon has strong teams in place to help projects like this succeed. The team who supported Mr. Wagner included me, Amanda Herrit, a natural resource expert; Travis Stamper, a biologist and wetland expert; Rob Witcher, a design engineer from one of Terracon’s Atlanta offices; and Nancy McReynolds, a historical resource expert for one of Terracon’s other Atlanta offices.
One of the most significant technical challenges to gaining approval for a wetland mitigation bank is proving that you have a viable site. The key to any restored wetland is hydrology. If you cannot reestablish sufficient hydrology to the site, the wetland bank could fail.
After inspecting Mr. Wagner’s site, and reviewing the Prospectus, the IRT agreed that it looked promising, but there was concern about soil types not being hydric in some of the locations that would be used for the bank. When concerns like this arise, an IRT might issue fewer credits for a bank. For Mr. Wagner’s project, Terracon had established shallow monitoring wells across the site to shallow groundwater levels during data collection for the Prospectus. The data from these wells provided the bank sponsor and regulatory agencies assurance that the bank would be able to sustain necessary hydrology. Therefore the IRT did not reduce the number of credits for these areas.
The Banking Instrument
After the Prospectus has been approved, a Bank Instrument has to be developed that details how the bank will be constructed and maintained and how credits will be released and sold. The Banking Instrument serves as a contract between the IRT and Bank Sponsor. Credits are typically released over a time period and are tied to execution of the Banking Instrument, completion of construction, completion of required plantings and annual monitoring events showing the success of the bank.
Above and Beyond Technical Consulting
Terracon understands that clients need us for more than technical expertise. We are members of a team, which must help ensure the overall success of their project.
A typical “restored” wetland mitigation bank takes about two years from initial data collection until it is authorized to begin construction, after the Banking Instrument has been signed. For Mr. Wagner’s project, this long permitting period had the potential to cause cash flow pressures when the project was ready to begin construction. Terracon was able to help.
Among the entities who typically purchase wetland mitigation bank credits are state departments of transportation. Terracon saw the Tennessee Department of Transportation (TDOT) as a key part of the success of this project. Early on, Terracon arranged for the TDOT representative responsible for purchasing wetland mitigation bank credits to tour the site and to begin negotiations for the purchase of credits. TDOT purchased all of the credits released at the time of the signing of the Banking Instrument. This provided Mr. Wagner with the necessary cash flow to complete the bank and helped ensure the financial success of the project.
Are you a property owner who wants to consider becoming a bank sponsor? Or, maybe you are a developer who might benefit from purchasing wetland mitigation bank credits. Wetland mitigation banking offers advantages to both groups. Contact Terracon to see how we can assist in the overall success of your project.