BATON ROUGE, La. – The National Environmental Banking Association (NEBA) has issued recommendations that directors say can help stabilize and strengthen the $4 billion industry in its effort to combat an “alarming continuation of environmental destruction.”
Privately funded mitigation banks have established a record of success for decades restoring and preserving wetlands and other environmentally sensitive land and, with a few adjustments to a 2008 federal rule, the sector could solidify and expand the gains, NEBA says in a proposal submitted to the U.S. Environmental Protection Agency and U.S. Army Corps of Engineers.
“Banking is the only solution to environmental impacts that does not in some way involve increased costs to taxpayers,’” NEBA said in the document filed in August. NEBA Vice Chairman Danny Moran, who helped draft the recommendations, said a solid set of rules that investors can rely on will vastly increase private investment flowing to restore and protect the environment through mitigation banks.
“The 2008 Wetland Mitigation Rule has served the industry well and now is the time to improve and make changes to the Rule to incorporate what we have learned over the past decade,” said Moran, who is also Managing Director of EcoSystem Renewal LLC, based in Baton Rouge.
Mitigation banks are tracts of land, typically hundreds or thousands of acres, professionally restored to function as part of an integrated ecosystem, with proper hydrology, or water flow, and native, natural landscaping with the appropriate species of trees and vegetation.
Developers of public and private projects can purchase credits in a wetland mitigation bank to mitigate, or offset, their own unavoidable impact to wetlands. Once restored to its original, natural state, the land is protected by a permanent easement and maintained with a dedicated fund for future generations.
The 2008 Wetland Mitigation Rule (33 CFR §§ 332.1-332.8), which NEBA says helped provide a framework for successful mitigation banking, is being reviewed for changes and strengthening. Among a detailed list of proposals to improve the Rule, NEBA recommends that:
*The Interagency Review Team (IRT) format should be retained rather than eliminated but modified to improve its ability to function as the coordination body for mitigation banking projects. The character of the interagency group should be clearly defined, roles of its members clarified, procedural rules strengthened, and timelines rigorously followed.
*Administrative standards should mandate consistency between districts, to improve efficiency and minimize differences over issues such as credit release requirements.
*A provision of the 2008 Rule that allows, and even encourages, permittees to bypass approved bank credits for large projects should be eliminated. The provision currently results in “back room negotiations,” NEBA says, allowing clearly inferior “permittee responsible projects” to go forward.
*The 2008 Rule established that mitigation banks, which pay ordinary income tax rates, are the preferred method of meeting the federal goal of “no net loss of wetlands.” Yet secondary methods, such as so-called In-Lieu Fee (ILF) projects, have been allowed to proliferate in direct competition with mitigation banks. Many of the ILF sponsors are state or local governments and nonprofits, which are usually not taxable, and in many cases avoid full cost-accounting and fail to comply with all 12 elements of the 2008 Rule. NEBA recommends that the amended rule make it clear that ILFs and permittee-responsible projects should not compete directly with mitigation banks.
In summary, NEBA recommends strong leadership, “clear, transparent rules that all can depend upon,” and removal of “intolerable risks” to investors. Making those changes, NEBA says, will “open the floodgates to investment in the environment.”