Surveying the landscape – an approach to compensatory mitigation

Posted on December 9, 2016 by Thomas Lavender

Not that there is anything wrong with wetlands mitigation banking.  I, for one, would certainly like to own one with the perceived return on investment and lack of control on the market – but, there is another option that achieves the same “no net loss” goal for impacting wetlands.

While we all recognize that the Corps’ mitigation rule establishes a hierarchy that favors the purchase of credits from approved mitigation banks, permitted responsible mitigation is still allowable under certain circumstances.  In fact, most recently in South Carolina the landscape mitigation approach has been successfully used to further economic development projects.  In at least one instance, the landscape approach was used entirely in lieu of the purchase of mitigation banking credits.  In another, a hybrid approach was used which combined a permittee-responsible-project with the purchase of credits.

How did it work – you ask?  Rather well, I might say.  But how did it work? 

In each instance, the applicant involved a conservation entity to serve as the sponsor for the project.  Desirable property was identified which had previously been targeted for preservation by a state or federal resource agency.  The sponsor then entered into an agreement with the applicant to secure the mitigation property and, if necessary, perform any enhancement work to achieve the required mitigation credit for the project.  The applicant agreed to reimburse the sponsor for acquiring, holding, and enhancing the mitigation property.  In one instance, the sponsor will ultimately convey the property to a state resource agency.  The mitigation property will be transferred to the state resource agency, subject to a restrictive covenant to encumber the property as approved by the Corps and the resource agency.  The mitigation property only partially satisfied the mitigation obligation.  A small credit purchase for the balance was also necessary.   In the other instance, the mitigation obligation will again be partially satisfied by the purchase of the mitigation property by the sponsor on behalf of the applicant and then transferred to the federal resource agency.  However, the ratio of the credit purchase and the property purchase were approximately equal.  This approach seemed to work more effectively because it also provided for the involvement of an approved mitigation bank which did not object to the project.

Why do it – you ask?  Time and money – when time is money. 

On many large economic development projects there is often resistance from third parties or resource agencies.  Working with these third parties and resource agencies to identify desirable mitigation properties can facilitate consensus for securing a 404 permit in a timely manner.  The approach only works for the applicant when the permit timeline tracks with the project and the cost of the landscape mitigation approach is essentially equivalent to the cost of purchasing credits from an approved mitigation bank.

Try it, you might like it, Mikey. 

Wisconsin’s Multi-Discharger Variance for Phosphorus – A Progress Report

Posted on June 8, 2015 by Linda Bochert

On May 5, 2015, the Wisconsin Department of Administration (WDOA) released its Preliminary Determination that compliance with the Wisconsin water quality-based effluent limitations (WQBEL) for phosphorus will cause “substantial and widespread adverse social and economic impacts on a statewide basis”, thus providing the foundation for availability of a statewide multi-discharger variance (MDV).

What brought this on?

In posts in 2011 and 2013, I described Wisconsin’s phosphorus reduction rule, including its compliance options of water quality trading and adaptive management. Recognizing that these innovative compliance alternatives to traditional construction are not viable for all dischargers, in 2014 Wisconsin enacted legislation to authorize a statewide MDV for those dischargers that cannot meet the WQBEL for phosphorus without a major facility upgrade.  Under the MDV, a point source will have more time to meet its phosphorus limitations.  However, during the extended period, they will be obligated to either implement nonpoint source reductions or to provide funding to counties to implement existing, but seriously underfunded, nonpoint source reduction programs.  The expectation is that most permittees will choose to fund their local county.  At $50/pound for the difference between the actual pounds of phosphorus discharged and the target value of 0.2 mg/L, we are talking about real money.

The MDV legislation required the WDOA, in consultation with the Wisconsin Department of Natural Resources (WDNR), to conduct a study to:

“determine whether attaining the water quality standard for phosphorus . . . through compliance with water quality based effluent limitations by point sources that cannot achieve compliance without major facility upgrades is not feasible because it would cause substantial and widespread adverse social and economic impacts on a statewide basis.”

Based on work conducted by ARCADIS, The University of Massachusetts Donohue Institute, and Sycamore Advisors, consultants to WDOA and WDNR, the Preliminary Determination concludes that, without this variance:

·         “almost 600 Wisconsin businesses will be impacted as they continue to work their way out of the recession”

·         Wisconsin communities will experience a minimum cost of “$3.4 billion in capital expenditures which will rise to nearly $7 billion when accounting for interest” to meet increased capital costs

·         Annual operations and maintenance (O&M) cost of $405 million along with debt service will “equate to $708 million annually”

·         In 2025 when the full impact of the costs will be felt, statewide impacts will result in:

o   4,517 fewer jobs

o   $283.3 million in foregone wages

o   $616.6 million reduction in gross state product

o   11,000 fewer Wisconsin residents

A hearing on the Preliminary Determination was held on May 12, and written comments are due by June 11.  The next step is for WDNR to submit a request to the United States Environmental Protection Agency (USEPA) to approve the MDV for phosphorus for Wisconsin.   Once implementation of the MDV begins, much-needed nonpoint source funding can begin to flow.

Additional relevant documents are accessible via the WDNR website

Reducing Phosphorus to Wisconsin Waters – Another Tool in the Toolkit

Posted on July 2, 2014 by Linda Bochert

Imagine a nutrient reduction program that achieves financially manageable point source reductions while generating new cash for nonpoint source reductions, has bi-partisan support and requires no new state regulatory or fee programs.  Not possible you say?  Meet the Wisconsin Clean Waters, Healthy Economy Act, now codified at Wis. Stat. s. 283.16.

 In prior postings, I have described Wisconsin’s phosphorus reduction rule, including its compliance options of water quality trading and adaptive management. These are innovative alternatives to traditional construction but, unfortunately, not viable for all dischargers.

Now Wisconsin has another tool:  a multi-discharger variance, based on a finding of statewide social and economic impact, available to dischargers that cannot meet the water quality based effluent limitation (WQBEL) for phosphorus without a major facility upgrade.   Under the variance, a point source will still be required to decrease its phosphorus discharge -- meeting interim limitations of 0.8 mg/L, 0.6 mg/L, 0.5 mg/L, and the final WQBEL over four WPDES permit terms; and while doing so will make payments to the counties within its basin, providing cost-share dollars for nonpoint source phosphorus reductions.  At $50/pound for the difference between the actual pounds of phosphorus discharged and the target value of 0.2 mg/L, this is expected to generate real money -- which the counties will use to implement existing, but seriously underfunded, nonpoint source reduction programs.

Because point sources have installed treatment and reduced their phosphorus discharges by 90% or more to meet Wisconsin’s prior technology-based limit of 1.0 mg/L, the remaining primary contributors of phosphorus to our waters are nonpoint sources.  Yet getting funding for nonpoint source controls has been an ongoing, and largely unsuccessful, effort.  For context, the Green Bay Metropolitan Sewerage District (GBMSD) currently removes about 95% of the phosphorus it receives; while the wastewater it discharges accounts for less than 3% of the total phosphorus to the lower Green Bay.  With an investment of $200 million in capital improvements GBMSD could increase its removal to 98% -- a reduction of less than 2% of the total phosphorus load to the bay.   Redirecting significant dollars to nonpoint source programs should be a game-changer.

The Wisconsin Department of Natural Resources (WDNR) has been reissuing WPDES permits with phosphorus WQBELs and compliance schedules based on the phosphorus reduction rule that went into effect in December 2010.  The variance law went into effect on April 25, 2014, but won’t become available to WPDES permit holders until approved by USEPA.  The rule package is expected to be sent to USEPA for approval in January 2015, once the statewide economic impact analysis is completed. 

We have an opportunity for creative and meaningful point source and nonpoint source participation in reducing phosphorus discharges to our waters.  But time is of the essence.  Note to USEPA:  there is much to like here – please don’t let the moment pass us by.

EPA Tries to Silence Employees Who (Weakly) Criticize Cap-And-Trade

Posted on November 11, 2009 by Rodney Brown, Jr.

Obama’s EPA finds itself embroiled in a controversy that recalls the Bush Administration: trying to control what the agency’s employees can say about climate change. Today’s controversy is more limited, and more nuanced, than earlier ones. EPA is no longer asking its employees to deny that climate change exists. Instead, EPA has asked two of its attorneys to stop identifying themselves as EPA experts when they publicly criticize a cap-and-trade system for regulating greenhouse gases. Still, I wonder why EPA cares.

EPA previously allowed the attorneys to criticize cap-and-trade as private citizens. The two wrote letters and opinion pieces claiming cap-and-trade doesn’t work, primarily because companies can buy “offsets” that allow them to continue operations without reducing their emissions. They claim a carbon tax would work better than cap-and-trade.

Their writings have not had much effect on the debate in Congress and elsewhere. So the two recently switched from the written word to YouTube, posting a carefully produced video in which they more assertively cite their EPA credentials and experience to justify their critique of cap-and-trade. And as Grist recently noted, EPA took the bait.

EPA should stop worrying about the two attorneys. The two fail to recognize that cap-and-trade works fine when it’s done right. In fact, EPA itself runs one of the most successful cap-and-trade programs in the world. Several years ago, EPA needed to reduce smog in the eastern US. Instead of using typical command-and-control regulations, EPA created the NOx Budget Trading Program. Just last month, EPA released a report on the results achieved by that program. According to EPA, “summertime NOx emissions from power plants and large industrial sources were down by 62 percent compared to year 2000 levels and 75 percent lower than in 1990.”

And the emitters were able to achieve these reductions at a lower cost by trading with other emitters who had cheaper options for compliance. Smithsonian magazine reported a recent estimate that businesses paid only $3 billion to achieve emission reductions that would have cost them $25 billion under traditional command-and-control regulation.

The two attorneys don’t even need to worry about companies finding ways to avoid compliance with the system. Last year, only two emitters failed to comply out of 2,568, even then by only a modest amount. This is not a system full of loopholes.

Finally, the two attorneys ignore the fact that their own agency, under the Obama administration, will get to write the rules for how companies comply with a carbon cap-and-trade system. Both the Waxman-Markey and Boxer-Kerry bills require EPA to write rules regulating how companies can use “offsets” to comply with the system. Surely the agency can write rules that make this cap-and-trade system work as well as the NOx system the agency already runs.

And one more thing: As Grist reports, many experts think that the alternative — a carbon tax — may not achieve the emission reductions we need. We can only guess what carbon price might lead to the right amount of emission reductions. We’ll get the tax revenues we predict, but not necessarily the carbon reductions.

So the two attorneys should lighten up on their criticisms. But even if they don’t, EPA should stop worrying about them so much.