State shifts from 404 primacy to wetlands mitigation options

State agencies are collaborating on ways to improve wetlands permitting despite funding cuts.

What was once an investigation into whether or not the State of Alaska should try to assume primacy over Clean Water Act Section 404 wetlands permit reviews has morphed into a look at developing a broader “404” program.

During the 2013 legislative session state lawmakers approved spending that allowed the state to explore the possibility of applying to take on 404 wetlands permitting. Those permits are now issued by the U.S. Army Corps of Engineers for the Environmental Protection Agency.

Section 404 of the Clean Water Act limits the impact development projects can have on wetlands.

Senate Bill 27 provided $1.5 million per year for fiscal years 2014 to 2016 to the Department of Natural Resources and the Department of Environmental Conservation for pre-primacy application work. The bill also allowed for seven new positions between the departments to focus on the initiative, DEC Program Manager Ben White said.

Michigan and New Jersey are the only states to have assumed primacy over wetlands permits within their borders. States that do have to adhere to federal standards and the EPA still holds veto power over any 404 applications.

In 2014, the Legislature decided to cut the funding, essentially suspending the work. White said some contracts were already in place through the end of 2014 when the funding was cut.

“Unfortunately the plug was kind of pulled a little early and we weren’t able to get as far into exploration as we’d hoped,” White said.

Exactly what it would take for the State of Alaska to assume the responsibility of 404 permitting is still unclear, he said. The timeline of the work called for a decision on whether or not to apply for primacy to the EPA sometime in fiscal year 2016.

“At this point we’re finishing up what work we can and trying to figure out what our next steps are,” White said. “We’re also working. We’ve kind of shifted our focus from 404 assumption to areas where we as a state could improve the process, the 404 permitting process.”

That shift in focus has led the state’s 404 program development team to look at options for new general development permits and ways to expedite current ones. White said the state is currently partnering with the Corps to possibly revamp general placer mine permit renewals.

A complete 404 permit also requires a Section 401 water quality permit from DEC. The state was starting to explore ways to combine the two into what could be a DNR permit, making “sort of a one-stop shop for permits so an applicant can come in and talk to one group and process it,” he said.

The engineering and consulting firm HDR Inc. recently issued a report to DNR and DEC that investigates options for the state when it comes to wetlands mitigation banking, which is growing in popularity nationwide. It was one of the last pieces of work done under SB 27.

“At some point I think the state’s going to have to explore being involved in mitigation banking as far as assisting in the setup of banking,” White said.

The EPA and Corps of Engineers issued new standards in 2008 that “promote no net loss of wetlands by improving wetland restoration and protection policies,” according to the EPA.

The rules increased the use of mitigation banking, which allows a project developer to improve off-site wetlands as a compromise for possible damage that could occur as a result of the project. Mitigation banking is only allowed after avoidance and minimization of on-site wetlands damage has been exhausted.

Sharmon Stambaugh, a large project coordinator for DNR said the department took the lead on compensatory wetlands mitigation efforts. She has been looking at whether state lands could provide an opportunity for mitigation.

The state could potentially save, and even make money if it started a compensatory wetlands mitigation bank program or became what is known as an in-lieu fee sponsor, Stambaugh said.

State transportation departments are some of the biggest customers of mitigation banks. Since 2009, Alaska DOT has spent about $8 million to meet 404 requirements and offset damage its projects have done to wetlands across the state.

Nationwide, 31 states have some wetlands mitigation banking options. With roughly 65 percent of the nation’s wetlands in Alaska it only makes sense for the state to have such a program, White said.

Former Fish and Game commissioner Frank Rue is currently the executive director of the Southeast Alaska Land Trust in Juneau, one such in-lieu fee sponsor.

An in-lieu fee sponsor organization is certified by the Corps of Engineers to take on the responsibility of finding wetlands to preserve that will offset those damaged by a development project.

“A landowner can come to us and say, ‘This is what the Corps has told me my obligation is for the wetlands impact I’m causing,’” Rue said. “They ask us, ‘What would it cost me to just pay you a fee to take on this obligation?’”

The impact to wetlands is measured in terms of acres and wetland type.

Once a conversation is had about the project and a price is hammered out the landowner or developer sends the trust a check and the trust in-turn sends the Corps a letter stating the obligation has been transferred.

The whole process is overseen and approved by the Corps of Engineers.

“Once we send that letter to the Corps, the Corps gives the green light to the project and the project doesn’t have to worry anymore about meeting their obligation for wetlands mitigation. We have to do that,” Rue said.

From there, the Southeast Alaska Land Trust begins the hunt for a similar size piece of property with similar wetlands — as rated by the Corps — to purchase from a private landowner. The property will be as close to the impacted site as possible, he said.

Often the parcels are virtually undevelopable, Rue said, which makes finding someone willing to sell them easier. If the situation allows, the trust will donate the property to a local government or to the state while keeping an easement that prevents development.

When a landowner wants to keep the parcel private the trust can purchase an easement — essentially development rights — to keep the wetlands intact.

The trust currently holds easements on 3,400 acres in Southeast.

Final cost of using a mitigation bank or in-lieu fee sponsor varies greatly, Rue said, because it all depends on the value of the property.

He said the state could become an effective in-lieu fee sponsor, particularly because nearly all shoreline areas are state-owned.

“If you’re trying to replace or protect something equivalent to what was lost the state really has all the cards. I think they could play a big role for inter-tidal fill,” he said.

Stambaugh suggested the state look south to what is being done in the rest of the country in terms of wetlands restoration being used for banking instead of strict preservation.

“There are different ways that you can provide compensatory mitigation. Preservation is not used in the Lower 48 very much because there isn’t much left to preserve in many states, but here it’s the primary way,” she said. “You can avoid and minimize the impacts but then you have to compensate. Preservation is not the preferred method. Restoration of wetlands and bringing marginal wetlands into productive ecological value, that’s considered a higher priority.”

She said the state has “tons of land” where compensatory mitigation and restoration could be done.

Elwood Brehmer can be reached at [email protected].

11/18/2016 - 1:56pm