Design of US Habitat Banking Systems to Support the Conservation ...

More documents

Recommendations

Info

A DETAILED LOOK AT WETLAND AND CONSERVATION BANKINGfactored into the management requirements for thebank during both its active and long-term managementphases. The costs of these actions could also beincluded in any assessment of the remedial and longtermmanagement funding needed to ensure that thebank replaces lost wildlife functions.Financial assurance mechanismsFinancial assurances may be “in the form of performancebonds, irrevocable trusts, escrow accounts,casualty insurance, letters of credit, legislativelyenacteddedicated funds for government operatedbanks or other approved instruments.” 213 The federalguidance does not provide MBRTs or bank sponsorswith additional direction on the most appropriateform of financial assurances, but a failed bank inNew Jersey offers some caution against assuming allfinancial assurances are equally effective. The NewJersey bank used performance bonds as a financialassurance. When the bank first showed signs of failurethe state regulatory agency’s mitigation councilattempted to call their bond. The threat of callingthe bond caused the developer to begin to implementremedial actions at the site, and new bonds wereposted to cover the additional work necessary to bringthe bank into conformance. A year later, however, thebank sponsor filed for Chapter 11 protection and thenwent bankrupt. The agency subsequently discoveredthat the sponsor had failed to pay the bond premiums,making it impossible to call the bond. As a result ofthis experience, the state now recommends that banksuse a letter of credit for their financial assurance. 214This example demonstrates that, at a minimum, financialassurances should be current for the life of thebank, not renewable on an annual or bi-annual basis.Additionally, because calling financial assurances canbe difficult, bank instruments should include provisionsfor the suspension of the release of credits if thebank is operating at a deficit as a less cumbersomefirst step in enforcement. 215The transfer of bank ownershipIn some cases, mitigation banks remain the property ofthe bank sponsor, even after all of the credits are sold.Banks sponsored by private entities, however, moreoften seek to transfer the long-term ownership of thebank to a natural resource agency, such as a state wildlifeagency, or to a non-profit organization, such as aland trust. If a bank site is transferred to a third party,the banking instrument should indicate the party thatwill be responsible for holding the fee title or other realestate protection instruments (e.g. conservation easements),carrying out management responsibilities, andmanaging the long-term stewardship endowment. 216 Astewardship endowment is an agreed upon contributionthat funds long-term stewardship activities. Thesefunds should be invested such that the interest generatedeach year is sufficient to cover the annual level offunding needed to carry out management obligations.In some cases, these arrangements can be complicated.For example, the bank sponsor may retain the fee titleto a bank site and transfer a conservation easement onthe site to a land trust. In some cases, the land trustmay then hold the easement and retain the stewardshipendowment but the responsibility for carrying outthe long-term management duties may remain withthe banker. The banker may then need to make annualrequests to the land trust for the funds to cover themanagement activities.Bank monitoring & reportingMitigation banking instruments spell out the banksponsor’s monitoring and reporting requirements. Theinstrument should indicate the monitoring parametersthat must be measured and should be “based on scientificallysound performance standards prescribed for thebank.” 217 Monitoring provisions should be designed toprovide the MBRT with sufficient information to determineif performance standards are being met and whenremedial measures are necessary. Reporting provisionsgenerally indicate the intervals at which the bank sponsormust submit monitoring reports to the MBRT.213 Banking Guidance (1995), § I, E, 5.214 New Jersey Department of Environmental Protection. TelephoneInterview. 28 Mar. 2002.215 Banks and Fees (2002), p. 68-69.216 For more information on the role of land trusts in taking over thelong-term stewardship of wetland mitigation sties, see: Kihslinger,Rebecca L., Jessica Wilkinson, Palmer Hough and Sherry Teresa.2007. “Taking on the Long-Term Stewardship of Wetlands MitigationSites.” Exchange. Vol. 26, No. 2. Washington, DC: Land Trust Alliance.217 Banking Guidance (1995), § II, E, 3.50 Environmental Law Institute
A DETAILED LOOK AT WETLAND AND CONSERVATION BANKINGThe 1995 Banking Guidance states that monitoringshould be conducted until the MBRT is “confidentthat success is being achieved (i.e., performance standardsare attained).” 218 It suggests that this periodwill typically be five years but that it may be necessaryto extend the monitoring period for projects thattake longer to become established, such as forestedwetlands. NRC’s 2001 study concluded that a five-yearmonitoring period may not be sufficient for determiningwhether mitigation goals will be achieved, particularlyfor many restored systems. 219 Ideally, banksshould tie their required monitoring periods directly toachieving final performance criteria. In practice, ELI’s2002 study found that the majority (60 percent) ofbanks require monitoring for five years. Twelve percentof the banks reviewed (15 banks) required monitoringuntil specific performance standards were met; andone bank had a monitoring period of five years or untilperformance standards were met.State wildlife agencies can take a lead role in workingwith the MBRT to design monitoring provisions for theresident wetland species that are listed as species ofconcern in the state wildlife action plan.Credit releaseIn the perfect case, MBRTs would not allow banks tosell credits until after the lost aquatic resource functionsare fully replaced, thus eliminating any temporalfunctional loss. However, the federal agencies acknowledgethe significant up-front financial investmentand risk incurred by wetland mitigation bankers. Inresponse, the agencies allow some percentage of thebank’s anticipated credits to be debited before thebank meets all of its performance standards. The agenciessuggest that the amount or percentage of creditsallowed for early release should be commensurate withthe amount of financial assurances that are in placeand the bank’s likelihood of success. 220 Credits maythen be release in phases (i.e. phased credit release),as banks meet ecological performance standards.“Performance-based” credit release tied to meetingecological performance standards is one of thestrengths of wetland mitigation banking. In practice,however, banks are often allowed to sell credits beforeany performance standards are met or any mitigationactivities are carried out on the ground. The agenciesdo suggest that three minimum requirements be metprior to any debiting: (1) the banking instrument andmitigation plans are approved; (2) the bank site hasbeen secured; and (3) the appropriate financial assuranceshave been established. 221 When preservation isthe mitigation method employed all credits are oftenreleased as soon as the appropriate legal and realestate protections are secured. 222 In these cases, thefinancial security for long-term management shouldbe provided as credits are sold (i.e., the endowment isfunded incrementally concurrent with credit sales).ELI’s 2002 study found that as many as 92 percent ofthe nation’s banks allow credits to be released from abank in advance of the bank meeting all of its performancestandards and 90 percent allow credits to besold prior to meeting any performance standards. 223Performance standardsPerformance standards are the measurable outcomesof a wetland compensatory mitigation project that canbe used to determine if a compensatory mitigationproject is meeting its stated objectives. 224 A bank’smonitoring requirements are often tied to performancestandards – the monitoring parameters that thesponsor must measure and report are designed to demonstrateto the MBRT that the performance standardsare being met. And, meeting performance standards isoften the basis for a bank’s credit release schedule.The 1995 Banking Guidance suggests that performancestandards should be “tailored to the specific restoration,creation or enhancement activity at the bank siteor through the use of an appropriate functional assessmentmethodology.” 225 The NRC study suggested that221 Banking Guidance (1995), § II, D, 6.222 Banking Guidance (1995), § II, D, 6.218 Banking Guidance (1995), § II, E, 3.219 NRC (2001), p. 112.220 Banking Guidance (1995), § II, D, 6.223 Banks and Fees (2002), p. 63-64.224 NRC (2001), p. 15.225 Banking Guidance (1995), § II, D, 6.Design of U.S. Habitat Banking Systems to Support the Conservation of Wildlife Habitat and At-Risk Species 51
Page 3:
Design of U.S. HabitatBanking Syste
Page 7 and 8: EXECUTIVE SUMMARYExecutive SummaryA
Page 9 and 10: EXECUTIVE SUMMARYbanks or habitat b
Page 11 and 12: IntroductionIntroductionAvariety of
Page 13 and 14: WETLAND AND CONSERVATION BANKING IN
Page 27 and 28: State Wildlife Action Plans3. State
Page 29 and 30: STATE WILDLIFE ACTION PLANSshed). C
Page 31 and 32: STATE WILDLIFE ACTION PLANSPlans th
Page 33 and 34: STATE WILDLIFE ACTION PLANSFuture i
Page 35 and 36: A DETAILED LOOK AT WETLAND AND CONS
Page 55: A DETAILED LOOK AT WETLAND AND CONS
Page 65 and 66: ConclusionsConclusionsThis report c
Page 67 and 68: CONCLUSIONSsuch as habitat conserva
Page 69 and 70: CONCLUSIONSthe state Attorney Gener
Page 71 and 72: CONCLUSIONSGeneral RecommendationsF
Page 73: AppendicesA. Federal Wetland Compen
Page 76 and 77: APPENDIX AProjects for Aquatic Reso
Page 78 and 79: APPENDIX Aland mitigation banks, um
Page 80 and 81: APPENDIX BMemphis District, U.S. Ar
Page 82 and 83: APPENDIX BJacksonville District, U.
Page 84 and 85: Appendix CAppendix CState Wetland M
Page 86 and 87: APPENDIX CState Statute(s) Regulati
Page 88 and 89: Appendix DAppendix DState Conservat
Page 90 and 91: APPENDIX Emitigation banking and ha
Page 92 and 93: APPENDIX EDelaware (Phase IV)Delawa
Page 94 and 95: APPENDIX Estaff intend to make the
Page 96 and 97: APPENDIX EMitigation banking regula
Page 98 and 99: APPENDIX EMississippi (Phase IV)The
Page 100 and 101: APPENDIX ENew Mexico (Phase III)The
Page 102 and 103: APPENDIX Eand mitigation banking. 1
Page 104 and 105: APPENDIX EVirginia (Phase III)Virgi
Page 106 and 107:
APPENDIX Egation bank may be used t
Page 108 and 109:
APPENDIX FGeorgiaGeorgia Department
Page 110 and 111:
Appendix GWETLAND MITIGATION BANKIN
Page 112 and 113:
APPENDIX GWETLAND MITIGATION BANKIN
Page 114 and 115:
Page 116 and 117:
Page 118 and 119:
APPENDIX GErwin, K.L. 1991. An Eval
Page 120 and 121:
APPENDIX GPorej, D. 2004. Faunal As
Page 122 and 123:
Appendix HAppendix HBibliography of
Page 124 and 125:
APPENDIX HEcosystem Marketplace, Sp
Page 126:
APPENDIX ILegal and Financial Mecha
show all

Design of US Habitat Banking Systems to Support the Conservation ...

Create successful ePaper yourself

Delete template?

Save as template?