Section 404 of the Clean Water Act requires a permit from the U.S. Army Corps of Engineers before dredged or fill material may be discharged into waters of the United States as a result of development activities. Getting a permit from the Corps can be tricky because of the need to mitigate any impacts to those waters and wetlands.
Mitigation under Section 404 requires replacement of lost aquatic functions and values as a result of development activity. That typically means compensating for a wetland impact with a created, restored, and/or preserved wetland somewhere else. This is no small endeavor and is best left to those who have a vested interest in the ultimate, long-term success of the mitigation project.
Enter the Mitigation Banker
Mitigation banking involves the replacement of wetlands in advance of Corps-permitted wetland impacts. The way it works is that an agency, company or individual enters into an agreement (referred to as the banking “instrument”) with the Corps to complete a wetland mitigation project. That agency, company or individual — the mitigation banker — in turn receives ecological “credits” from the Corps that can then be used to offset future Corps-permitted wetland impacts. The mitigation banker may sell those credits to permittees who need them to offset their impacts. The price is dictated by supply and demand and can range from a few thousand to several hundred thousand dollars per credit. In addition to wetland acreage, the quality and ecological value of the mitigation project also help determine the number of credits assigned by the Corps.
Investing in a Family Business
SWCA’s Houston office was approached by local landowner Suzanne Jamison, managing partner of Gin City Land Company, a family-owned business with interests in real estate and agriculture. Upon learning about mitigation banking, Jamison thought her property would be a good candidate. She had a vision of investing in her family’s future while helping preserve their ties to the family land, which had been farmed for several generations.
She came to the right place. SWCA staff in Houston have helped several clients establish mitigation banks and understand the mitigation banking process to compensate for losses of aquatic resources. The process is quite involved and not to be entered into lightly. It is very technical, requires a great deal of interaction with resource agency personnel, and takes a year or more to complete. However, a knowledgeable consultant can make the task easier, and the rewards can be significant.
A Rewarding Possibility
Monetarily, those rewards require being in the right place at the right time. Mitigation banks have limited “service areas” within which they can sell their credits for impacts. These service areas are typically confined to discrete watersheds commonly delineated by U.S. Geological Survey hydrologic unit codes (HUCs). If a bank falls into the right HUC, say, in an area under significant development pressure that generates a need for wetland mitigation credits, and that bank is the only one in that HUC with credits for sale, then conditions can be ripe for a significant return on investment.
Still, it can be risky business, but there are other benefits to mitigation banking besides financial gain.
Those benefits may include reduced property taxes, as the Corps requires the property be restricted from any other use in perpetuity. Also, the intrinsic value of the land as open space, to be enjoyed by
future generations, can provide a substantial rationale for the project. In the case of Gin City, that was one of the primary reasons for the project. Jamison’s family felt it was important to set aside a portion of their land as an ecological preserve.
“Being the daughter of a farmer,” Jamison says, “I grew up with a constant connection to the land around me and a feeling of permanence in a changing world. It is deeply gratifying to be finally in a position to give back some of what we have taken from the land. We are excited to be able to live on the edge of the raucous wild beauty that this project will become.”
Thanks to SWCA’s coordination with the Corps and help completing the extensive paperwork required, the Gin City Mitigation Bank is scheduled to be fully approved by the end of 2012. In addition, Houston staff coordinated the efforts of a specialty engineering firm to complete the hydrology analysis and restoration planning. SWCA also helped Jamison contract experts to conduct the restoration work that will begin this fall, as well as companies that will plant the first trees. Finally, SWCA will provide long-term monitoring on the site to ensure compliance with the terms of the mitigation banking instrument.
A Win-Win Project
The Gin City Mitigation Bank project is ideal in many ways. First, because the proposed restoration of 500 acres of bottomland hardwood wetland forest occurs in a relatively small HUC, with no overlapping primary service areas from other local mitigation banks, there is a real need for a bank at this location. This restoration also will help reestablish a forested riparian zone along Cedar Bayou in eastern Harris County, benefitting wildlife species (especially waterfowl) that use this region.
Finally, there is demand. Gin City and Cedar Bayou are just miles away from one of the country’s largest petrochemical hubs, Mont Belvieu. Wetland impacts associated with pipeline projects and facility expansions are common, driving a need for mitigation that has yet to be very well satisfied.
Once this project is finished, it will be a win-win for multiple stakeholders. The Corps wins by establishing a mitigation bank in an area of high permit activity, cutting down on permit turnaround time and lessening staff workload. Industry permittees win by getting a no-risk solution to their mitigation needs, allowing them to get their development permits faster so they can start their projects sooner. Jamison and her family win by deriving a new revenue stream from their family land and preserving it for future generations to enjoy.
And last but not least, we all win by realizing the benefits of 500 acres of forested wetland restoration. Those benefits include enhanced water quality in Cedar Bayou (a real plus for downstream Galveston Bay), floodwater retention protecting downstream homes and businesses, restored habitat for multiple wildlife species, and more than 200,000 new trees that will improve air quality and remove carbon dioxide from the atmosphere.
You just can’t get a better deal than that.