Results of the FHWA Domestic Scan of Successful Wetland Mitigation Programs

Executive Summary

From March through June 2005, the Federal Highway Administration conducted a domestic scan tour of eight State departments of transportation that have implemented successful wetland mitigation initiatives involving some form of wetland banking. The scan team members included FHWA headquarters, resource center, and division staff as well as representatives from the U.S. Army Corps of Engineers (COE), U.S. Environmental Protection Agency, U.S. Fish and Wildlife Service, and the Center for Transportation and the Environment at North Carolina State University. The States visited (in chronological order) were Texas, North Carolina, Alabama, Nebraska, Ohio, Pennsylvania, Kentucky, and Minnesota.

Wetland mitigation banking, defined as "the restoration, creation, enhancement and, in exceptional circumstances, preservation of wetlands and/or other aquatic resources expressly for the purpose of providing compensatory mitigation in advance of authorized impacts to similar resources," appears to resolve some of the problems associated with project-by-project mitigation. The advantages of wetland banking include greater ecological benefits on larger land areas, reduced reporting and monitoring time, and expedited permit review processing.

Accordingly, the Transportation Equity Act for the 21^st Century (TEA-21), authorized in 1998, mandates mitigation banking as the preferred mitigation approach for unavoidable impacts to wetlands caused by Federal-aid highway projects. This banking preference remains unaltered in the recently passed reauthorization, the Safe, Accountable, Flexible, and Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU). State DOTs using Federal-aid highway dollars must first look at wetland banking for mitigation before implementing project-by-project mitigation.

The purpose of this report is to describe and analyze State DOT successes with using mitigation banking as observed by the scan team members during the tour. The scan team examined the mitigation banking review team (MBRT) process, the monitoring and measurement of mitigation results and effectiveness, and other related topics that have led to successful wetland banking programs. Problems and pitfalls in the mitigation process were also noted.

Below is a brief description of the State DOT wetland mitigation program highlights, followed by the conclusions and recommendations of the scan team.

State DOT Highlights

Texas

Texas Department of Transportation (TxDOT) supports three wetland mitigation banks that are maintained currently, and managed in perpetuity, by the Texas Parks and Wildlife Department (TPWD). Texas is one of four States (North Carolina, Kentucky, and Minnesota being the others) that has utilized a third-party "mitigation agent" to manage both the short-term and long-term tasks associated with wetland mitigation banking. TxDOT bank sites are considered unique and vital natural resources by both the TPWD and the U.S. Fish and Wildlife Service (USFWS); the sites represent highly diverse wetland habitats located within unusually large, contiguous forested tracts. TPWD has assumed complete ownership and long-term/perpetual management responsibilities for TxDOT's mitigation banks, and TxDOT retains the right to debit all credits approved for the sites until they are exhausted. Like Alabama DOT and Ohio DOT, some of TxDOT's wetland bank sites also include credits for endangered species habitat, and TxDOT encourages public use and recreation on the bank sites as an important element of its wetland banking initiative. TxDOT's banking program is challenged primarily by third-party mineral rights and water supply demand issues that may potentially jeopardize the long-term integrity of its bank sites. Ensuring that these issues are addressed adequately in the wetland banking instruments is a persistent concern for TxDOT.

North Carolina

North Carolina DOT (NCDOT) has completely overhauled its wetland mitigation program, contributing financially and administratively to what has become essentially a new State agency charged with providing advance compensatory mitigation for wetland impacts due to transportation and other infrastructure development. The new program, called the Ecosystem Enhancement Program (EEP), adopts an ecosystem perspective and involves the participation of the NCDOT, NC Department of Environment and Natural Resources (NCDENR), and COE-Wilmington District, whose new roles and responsibilities, and the legal mechanisms supporting them, are detailed in a memorandum of understanding. Since the formation of the EEP, which is administered by NCDENR, no transportation project has been delayed due to insufficient mitigation. One of the hallmarks of the EEP has been the trust established among the agency partners. EEP is still in its start-up phase, and is currently addressing some critical program management issues that include recruiting the private sector, including mitigation bankers, into the EEP and providing business incentives for private sector participation; determining whether and how to include preservation as a viable part of the program objectives; and addressing a shortfall or surplus amount of mitigation in response to projected impacts and/or unforeseen changes and circumstances.

Alabama

Alabama DOT (ALDOT) manages 13 bank sites that support 95 percent of its wetland mitigation needs. ALDOT is one of only three State DOTs (Nebraska and Pennsylvania being the others) on the scan that used Federal-aid dollars initially for its banking initiative. Two of ALDOT's sites have received credits for habitat conservation for the gopher tortoise and the Egret sunflower, both listed species under the Endangered Species Act (ESA). ALDOT encourages public and recreational uses on its sites, including hunting and bird watching. ALDOT has also designed a hunting area on one of its sites for the handicapped. The department believes that when the community shares ownership, the long-term sustainability of its mitigation bank sites is practically ensured. ALDOT continues, however, to seek viable partnerships for the long-term management of its wetland mitigation sites. ALDOT is looking to county governments and environmental organizations to provide the long-term stewardship. Additional challenges include stream mitigation, and ALDOT is seeking more Federal guidance on this issue, as well as enhanced coordination with the new MBRT recently established in the State. ALDOT has found the MBRT process to be cumbersome initially, although it anticipates more efficiencies in the process as the MBRT matures.

Nebraska

Nebraska Department of Roads (NDOR) wetlands mitigation banking initiative is in the midst of a significant transition with regard to geographic service areas (GSAs). The COE-Omaha District Office is implementing a watershed approach, preferably at the HUC-8 or HUC-6 level, as the basis for establishing GSAs in the State. NDOR currently manages 18 wetland bank sites, with at least one in each of the State's 13 major land resource areas (MLRA). NDOR believes that shifting from MLRAs to HUC-8 service areas, of which there are 80 in the State, will jeopardize the viability of its banking program. Until this concern is resolved no further banks are being developed by NDOR. NDOR is currently in a dialogue with the Nebraska Game and Parks Department about options for the long-term management and protection of NDOR's wetland bank sites. The sites are functioning well and provide habitat for a variety of wildlife, including waterfowl and migratory birds, but the sites are relatively small in size (< 20 acres), with only a few exceptions, and they are located generally along roadsides on former borrow pits, excavation sites, or prior converted croplands. The Game and Parks Department has stated that it is not interested in assuming long-term management responsibility for a network of small sites situated along the edges of roadsides. Game and Parks is more interested in larger acreage sites that might hold greater value especially with regard to public use and recreation. NDOR is concerned that developing larger acreage sites would not be a possibility if a HUC-8 GSA is adopted, and finding ways to protect a vast network of small wetland bank sites for the long term will continue to be a key point of discussion.

Ohio

Ohio Department of Transportation (ODOT) has 28 wetland mitigation sites, of which only one could be considered a traditional "bank." For more than a decade ODOT has been most successful at using consolidated sites (i.e., several projects are mitigated at the same location) and/or pooled sites (mitigation site is developed beyond the needs of a single project and extra credits are held for future use). Under this scenario, a compensatory wetland mitigation site proposal and implementation plan is included in the permit application package for a roadway project, and upon approval of the permit application (which can take 8 to 12 months), or through separate mitigation agreement, the mitigation site is constructed simultaneously with the project construction. Ohio DOT's decision to use consolidated or pooled mitigation emerged from the department's frustration with an MBRT process that was too slow and cumbersome to address adequately the mitigation needs of ODOT's 600+ road projects per year, which incur a combined total of less than 12 acres of wetland impacts. To streamline the efficiency of the permitting process associated with these and other impacts, ODOT has negotiated an agreement with the COE-Huntington District that would allow the department to fund five new COE positions in Columbus devoted exclusively to Ohio DOT projects. Ohio shares with Alabama and Texas another innovative measure: ODOT has found that fostering public use of its mitigation sites can contribute positively to the sites' long-term sustainability. One of the most outstanding examples of ODOT's community involvement is found in the New Albany Wetland Conservation Area. The site has become and important educational and recreational resource for the nearby New Albany High School and Middle School and the general public. To date, 3,000 students have used the site for educational purposes, and 180 students continue to use the site annually.

Pennsylvania

Pennsylvania is strikingly similar to Ohio in two regards. Pennsylvania has four COE district offices with jurisdiction in the State, and the term banking has a very distinct, albeit negative, connotation. Opposition to wetland banking in the State, in PennDOT's estimation, has emerged from two schools of thought: one is ecological based, the premise being that after avoidance and minimization, on-site mitigation must be considered first before any consideration of off-site mitigation. Another school of thought, held by some transportation agency officials, is that banking poses a perceived financial obstacle to road design and construction budgets due to the need to program wetland banks as projects on the transportation improvement plan (TIP). PennDOT District 9-0's early experience with banking has shown that individual projects could be expedited and would require less budget if wetland banks were established, and a recent State assessment of wetland mitigation in PA is encouraging PennDOT to expand its program to all engineering districts. Of all the challenges associated with wetland banking, funding is the most critical roadblock to PennDOT's program. Project-specific wetland mitigation as opposed to wetland banking dominates in PennDOT's overall program. To facilitate cost-effective land acquisition, PennDOT attempts to build mitigation on land owned by other Pennsylvania government entities. Right-of-way costs and costs for maintenance are reduced by partnering with State land management agencies to locate mitigation sites on those agencies' lands. The land management agencies retain ownership of the land and long-term maintenance responsibilities. To date, PennDOT has implemented a total of 19 wetland mitigation bank projects in 7 of its 11 districts. These projects represent a combined total of 229 wetland acres with 161 approved credits, of which 55 have been debited against the bank.

Kentucky

The Kentucky Transportation Cabinet (KYTC) has been mitigating for unavoidable wetland impacts since 1995. Recently, the KYTC forged a memorandum of agreement with USFWS and FHWA to launch the KYTC Stream and Wetland Mitigation Program. Like Texas DOT, North Carolina DOT and Minnesota DOT, KYTC has opted to use a third party (in this case, USFWS) to coordinate its mitigation banking activities. In addition to expediting the 404/401 permitting process, this approach has proven beneficial to KYTC in three regards: USFWS can (1) find potential mitigation bank sites faster than KYTC, (2) quickly draft site proposals and implementation plans that meet regulatory standards, and (3) leverage additional funding and negotiate real estate transactions more effectively with land trusts, conservation organizations, and private landowners. USFWS gains certain benefits as well - most importantly, the opportunity to use funding from KYTC to support high quality conservation projects where the protection and management of vital waters and species is provided in exchange for any mitigation and/or conservation credits that may result. With regard to the long-term management of these sites, however, neither USFWS nor KYTC wants to own mitigation properties in perpetuity. Long-term property ownership is still an issue that needs to be resolved. Currently, both USFWS and KYTC seek out other entities (e.g., Southern Conservation Commission, The Nature Conservancy, etc.) to own the mitigation properties and to assume responsibility for implementing the wetland mitigation and corrective measures or improvements required on site, with funding provided by the KYTC.

Minnesota

In the early 1990s the State of Minnesota passed landmark legislation to protect and conserve wetlands. The Wetland Conservation Act of 1991 (WCA), one of the most sweeping protection laws in the country, became effective January 1, 1992, and was fully implemented in 1994. The act is administered by the Minnesota Board of Water and Soil Resources (BWSR), implemented by local government units, and enforced by DNR. BWSR's entry into the wetland mitigation development market created an unanticipated problem for MnDOT, who had been establishing bank sites since 1987 and suddenly found itself competing with BWSR for the acquisition of mitigation sites. Accordingly, MnDOT is transitioning presently to a new statewide umbrella agreement with BWSR, through which MnDOT will transfer funds to BWSR to create wetlands and a bank of wetland credits from which MnDOT can draw for future MnDOT projects with wetland impacts. This is similar to the process that North Carolina DOT uses with the Ecosystem Enhancement Program. Although MnDOT continues to address the numerous administrative issues associated with this transition, the partnership with BWSR offers clear benefits: MnDOT can focus mitigation efforts where needed, particularly in the areas with the highest historical loss of wetlands rather than just within the designated service area or within the watershed; individual DOT districts within Minnesota have the option of placing existing credits in the statewide collective pot; and all future sites will be created and managed as a statewide system. One of the hallmarks of MnDOT's wetland mitigation initiatives is the department's expert use of native prairie and sedge meadow seed mixes. MnDOT has invested generous research dollars to determine the best approaches for cultivating these mixes and has achieved a healthy diversity of plant communities on its wetland sites.

Conclusions

Best Practices observed on the scan include the following:

• Flexibility in the establishment of geographic service areas
• Use of statewide/umbrella banking agreements to reduce bureaucratic processes and red tape
• Utilization of public lands owned by resource agencies or credible, non-profit natural resource groups to obtain land for mitigation, to assist with implementation of mitigation plans, and/or to assume responsibility for long-term management
• Use of Federal-aid highway funds to establish mitigation sites to compensate in advance of future impacts for foreseeable projects
• DOT funding of positions in Federal regulatory and permitting agencies to expedite the permitting process
• Use of in-house experts within State DOTs to achieve cost savings for the design, implementation, and monitoring of wetland sites
• Pooling of mitigation credits for entire State to allow credits to be withdrawn from the banking system even if a bank site is not yet developed within a specific geographic area
• Provision of credits for upland buffers within the wetland mitigation area that serve a clear ecological benefit to the aquatic system
• Public use of a State DOT mitigation site, such as hunting, to increase the public benefit for the expenditure of mitigation dollars and to increase the public value of the resource
• Selection of sites for mitigation that are in a low ecological succession stage (e.g., agriculture sites are often the easiest to convert to wetland areas and often the most ecologically successful sites)
• Selection of restoration sites for mitigation development on lands that were historically wetlands and are thus more responsive to reversion back to a wetland system, rather than creation sites that may require extensive engineering and earth movement
• Incorporating preservation of existing high quality wetlands into a compensatory mitigation plan

Innovative Measures observed on the scan include the following:

• The Alabama DOT has used mitigation sites both for compensation for wetland impacts and for endangered species habitat mitigation.
• The Ohio DOT implemented a consolidated banking approach where mitigation for several projects can be performed at a single site without the necessity of going through the lengthy MBRT site-approval process.
• Ohio DOT has turned over the reporting and monitoring requirements (and long-term management) of one of their mitigation sites to a nearby local school district. Educational value is an under-explored and under-utilized benefit of State wetland mitigation programs.
• Ohio DOT is funding an entire COE regulatory office in Columbus to work on transportation projects. While funding positions for the resource and regulatory agencies is not necessarily a new development, Ohio DOT is funding an entire office that cuts across the four COE districts in Ohio.
• The Kentucky Transportation Cabinet has delegated the mitigation site selection responsibility to the USFWS. Among other benefits, the responsibility for site selection by USFWS gives the agency the opportunity to work towards species recovery efforts, as well as general wetlands functions.
• The Minnesota DOT (MnDOT) consolidates its available mitigation credits statewide into a collective pot administered by an umbrella organization (BWSR). The credits are allocated by wetland type. MnDOT allows credits to be drawn from the collective pool if a particular type of wetland is not within the geographic service area of the highway project site.
• MnDOT is currently focusing mitigation efforts where needed and not necessarily within a particular designated geographic service area.

Continuing Challenges described by the States participating in the scan tour include the following:

• The categorical restriction of mitigation banks to HUC-8 geographic service areas will inhibit mitigation banking.
• The long-term management of mitigation sites is uncertain. Even if the DOT turns the bank sites over to resource agencies that have the expertise to manage natural resources, their limited funding may prevent them from adequately guaranteeing the ecological integrity of bank sites.
• Stream mitigation requirements are vague. DOTs are unsure of how to proceed with stream restoration and definitive Federal guidance is needed.
• DOT management and financial officers are reluctant to fund mitigation banks or sites that will be used to compensate for projects years into the future.
• Federal-aid dollars are not often used to establish mitigation bank sites, and State DOTs should explore all options available to them to meet their mitigation needs.
• The MBRT review process has become more stringent, performance standards have become more austere, and there seems to be subjective interpretations of what constitutes the most reasonable boundaries for geographic service areas. The COE should provide more guidance for performance standards and service areas.
• The MBRT is difficult to organize for site visits and meetings, and timely responses on new bank sites are often not forthcoming.
• Some COE districts are averse to wetland banking. The new COE regulations on banking should provide definitive guidance so that the various COE districts implement consistent policies.
• As a result of SWANCC (i.e., the 2001 U.S. Supreme Court decision in Solid Waste Management Authority of Northern Cook County v. U.S. Army Corps of Engineers that limited the COE's jurisdiction over isolated waters of the United States), impacts to isolated waters may not need to be mitigated and, therefore, may have some effect on the construction of wetland mitigation banks. It is FHWA policy to mitigate for all wetlands regardless of whether or not they are under COE's jurisdiction.
• Invasive and exotic plant species are a persistent challenge in mitigation sites, and permitting agencies and State DOTs are not always in agreement about scientifically acceptable percentages of invasive plant species conditions on mitigation sites.
• Mineral mining rights, water supply needs, and other land use issues are not necessarily abdicated in wetland mitigation areas. Converting banks to other uses threatens the credibility of banking in general, and government-sponsored banks in particular.
• Resource agencies are often reluctant to accept preservation as mitigation, but State DOTs have demonstrated strong support for preservation as a preferred mitigation option in some cases.

Recommendations

The scan team offers the following recommendations to improve the overall effectiveness and efficiency of wetland mitigation banking for State transportation agencies:

• Adopt flexibility where prudent in the use of geographic service areas.
• Improve the effectiveness of the MBRT process.
• Issue guidance on the use of Federal-aid highway funds for mitigation banks.
• Engage inter-agency input in the adoption of functional assessment methodologies.
• Invest more research and technology transfer in invasive plant control and vegetation management.
• Actively promote and share success stories about innovative partnerships.
• Clarify the definition of a "bank."

* Note:This matrix is intended to provide a very surface-level, at-a-glance summary of the data pertaining to the State wetland mitigation programs featured in the scan tour. The DOT wetland mitigation/banking programs in North Carolina, Nebraska, and Minnesota are currently in transition, and thus their data are still evolving. Please refer to the individual State'summaries for qualifying information that provides important context for the figures offered in this matrix.

List of Scan Team Members

Scan team members participating on the Minnesota site visit: (seated front,
left to right) Bonnie Harper-Lore, FHWA Headquarters; Palmer Hough, EPA
Headquarters. (back, left to right) Randal Looney, FHWA-Arkansas Division;
Dennis Durbin, FHWA Headquarters; Jennifer Moyer, USACE Headquarters;
Patricia Bacak-Clements, UFWS-Corpus Christi, TX, Field Office; Morgan
Robertson, EPA Headquarters; Brian Smith, FHWA Resource Center
(Chicago, IL).

The following individuals comprised the inter-agency wetland scan team. They participated on one or more of the State'site visits and contributed to the development of this report.

Federal Highway Administration:
Paul Garrett, FHWA Headquarters
Alex Levy, FHWA Headquarters
Dennis Durbin, FHWA Headquarters
Bonnie Harper-Lore, FHWA Headquarters
Dawn Whiteside, FHWA Headquarters
Patricia Cazenas, FHWA Headquarters
Brian Smith, FHWA Resource Center
Randal Looney, FHWA-Arkansas Division
Rob Ayers, FHWA-North Carolina Division

U.S. Environmental Protection Agency:
Ann Campbell, EPA Headquarters
Palmer Hough, EPA Headquarters
Morgan Robertson, EPA Headquarters

U.S. Army Corps of Engineers:
Katherine Trott, COE Headquarters
Robert Brumbaugh, COE Headquarters
Jennifer Moyer, COE Headquarters

U.S. Fish and Wildlife Service:
Patricia Bacak-Clements, USFWS-Corpus Christi, TX, Field Office

Center for Transportation and the Environment, NC State University
Kathryn McDermott (Scan Tour Facilitator and Reporter)

Glossary of Abbreviations

ALDOT

Alabama Department of Transportation

BWSR

Board of Water and Soil Resources (Minnesota)

CTNC

Conservation Trust of North Carolina

DOT

(State) Department of Transportation

EEP

Ecosystem Enhancement Program (North Carolina)

EPA

U.S. Environmental Protection Agency

ESA

Endangered Species Act

FHWA

Federal Highway Administration

HUC

Hydrologic Unit Category

KYTC

Kentucky Transportation Cabinet

MBRT

Mitigation Banking Review Team

MnDOT

Minnesota Department of Transportation

MOA

Memorandum of Agreement

MOU

Memorandum of Understanding

NCDOT

North Carolina Department of Transportation

NCDENR

North Carolina Department of Environment and Natural Resources

NCWRP

North Carolina Wetland Restoration Program

NDOR

Nebraska Department of Roads

NRCS

Natural Resources Conservation Service

NWP

Nationwide Permit

ODOT

Ohio Department of Transportation

OES

(Ohio DOT) Office of Environmental Services

PADEP

Pennsylvania Department of Environmental Protection

PennDOT

Pennsylvania Department of Transportation

PGC

Pennsylvania Game Commission

SAFETEA-LU

Safe, Accountable, Flexible, and Efficient Transportation Equity Act: A Legacy for Users

SHPO

State Historic Preservation Officer

SWANCC

Solid Waste Management Authority of Northern Cook County vs. U.S. Army Corps of Engineers

TEA-21

Transportation Equity Act for the 21st Century

TEP

Technical Evaluation Panel (Minnesota)

TIP

Transportation Improvement Plan

TNC

The Nature Conservancy

TxDOT

Texas Department of Transportation

TPWD

Texas Parks and Wildlife Department

COE

U.S. Army Corps of Engineers

USFWS

U.S. Fish and Wildlife Service

USGS

U.S. Geological Survey

WCA

Wetland Conservation Act of 1991 (Minnesota)