in-lieu fee programs by michael murphy

King County Mitigation Reserves Program

Developing an In-Lieu Fee Program in King County, WA

History & Lessons Learned

Michael MurphyKC Department of Natural Resources and Parks

[email protected] 206-296-8008


King County, WA

King County Mitigation Reserves ProgramPopulation Growth in King County, WA

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

2,262,977

Source: WA Office of Financial Management (Forecast: 2007 medium projection)


“a program involving the restoration, establishment, enhancement, and/or preservation of aquatic resources through funds paid to a governmental or non-profit natural resources management entity to satisfy compensatory mitigation requirements... Similar to a mitigation bank, an in-lieu fee program sells compensatory mitigation credits to permittees whose obligation to provide compensatory mitigation is then transferred to the in-lieu program sponsor.”

[33 CFR Part 332.2]

In- lieu fee program:


"Without question, the majority of the in-lieu fee programs in operation today largely fail to apply the rules, guidance, and policy that have been established to guide the practice. However, these deficiencies may be a product of the structure of the existing programs and in-lieu fee mitigation policy, rather than the mitigation method itself."

- Jessica Wilkinson, Director of Environmental Law Institute Wetlands Program. (2006)

ELI compensatory mitigation research: http://www.eli.org/Program_Areas/WMB/index.cfm

In- lieu fee mitigation: a history of failure…


OLD: ▪ Case-by-Case,▪ Opportunistic,▪ Area-based▪ Permittees stay involved

NEW: ▪ Watershed approach,▪ Function-based,▪ Permittees pay and have no further mitigation obligation


Major players in MRP:• King County Dept. of Development and Environmental

Services (regulatory arm)• King County Dept. of Natural Resources and Parks

(implementing mitigation)• Interagency Review Team

– US Army Corps of Engineers – WA Dept of Fish– US EPA and Wildlife– USFWS – Muckleshoot Tribe– NMFS –Tulalip Tribes– WA Dept of Ecology


KC and other regulatory agencies work with applicant to: · Avoid and Minimize impacts· Identify onsite mitigation options· Review offsite mitigation options

o Mitigation Banko Permittee-responsibleo ILF program (KC or other)

Proposed environmental impact

How the program works:


KC MRP uses credit fees to:· Select best mitigation site from Roster· Design, construct, monitor, and maintain projects · Determine credits derived from projects

Applicant buys credits

King County satisfies mitigation

obligations

MRP coordinates with regulatory agencies throughout credit “fulfillment” process

Applicant satisfies mitigation obligations

Regulatory agencies quantify functional loss

(Debits)

King County Mitigation Reserves ProgramCalculating Credits and Debits for Compensatory Mitigation in Western Washington

Hydrology – Landscape potential

Hydrology – Values to Society

Hydrology – Site potential

Water Quality – Site potential

Water Quality – Landscape potential

Water Quality – Values to Society

Habitat – Site potential

Habitat – Landscape potential

Habitat – Values to Society

HydrologyScore

Water QualityScore

HabitatScore

Equal weight

Equal weight


• Using watershed plans and analyses (King County, and others)

• Ecology guidance

• KC Staff expertise

Choosing the right sites…

King County Mitigation Reserves ProgramKing County Mitigation Reserves Program Service Areas


• What are we losing?

• What do we need?

• How much are we getting?

Choosing the right mitigation… (Functions and Values)


The Program Instrument (two parts):

1. Basic AgreementA. Legal contractB. Basic operating principlesC. Commitments and consequences

2. Technical Appendices & ExhibitsA. Ecological detailsB. Program operations details


Misperception of changing sequencing requirements (i.e. that ILF allows “paying to pollute”)Financial assurances – what happens if the money runs out? Non-compliance measures – what happens if mitigation fails?Discomfort with potential for out-of-place and out-of-kind mitigationEstablishing parameters for legal enforceabilityMitigation on public land – isn’t it already protected?

Major sticking points during development:


Basic AgreementPurpose: The purpose of this Mitigation Reserves Program In-Lieu Fee Instrument (hereinafter, "Instrument") is to set forth the agreed upon terms specifying responsibilities for the establishment, use, operation, and management of the Sponsor's Mitigation Reserves In-Lieu Fee Program ("Mitigation Reserves Program" or sometimes "MRP"). The King County Department of Natural Resources and Parks is the King County agency responsible for meeting these responsibilities on behalf of the Sponsor. This Instrument consists of two sets of documents: the instant document setting forth the general terms of agreement and establishing the central obligations assumed and consideration provided by each party ("Basic Agreement"), and the Appendices and Exhibits ("Appendices") that establish detailed provisions for operation of the Mitigation Reserves Program, including the Compensation Planning Framework, mitigation planning requirements, and standards and procedural requirements applicable to the Mitigation Reserves Program pursuant to 33 CFR 332. The terms and provisions of the Appendices are hereby incorporated into this Instrument and made a part hereof.


Basic AgreementINTRODUCTIONA. Purpose B. Mitigation Reserves Program Mission and Objectives C. Mitigation Reserves Program Interagency Review Team (IRT)D. The Role of the IRT

BASIC TERMS OF AGREEMENT

II. TRANSFER OF PERMIT MITIGATION RESPONSIBILITY A. Transfer of Permit Mitigation Responsibility II. LEGAL AUTHORITIES Federal State of WashingtonKing County Code ("KCC") and other Local Authorities


A.Fee Collection B.Spending Authority and Disbursement C.Mitigation FeesD.Program Account

1.Land Fee Account 2.Program Administration Account 3.Contingency Fee Account 4.Long Term Management Fund 5.Individual Mitigation Project Accounts 6.Accrual of interest earnings

E.Ability to Direct Funds F.Financial Assurance Requirements

III. FUNDING PROVISIONS

King County Mitigation Reserves ProgramV. RESPONSIBILITIES OF THE CORPS & ECOLOGY AS CO-CHAIRS OF THE IRT

VI. GENERAL PROVISIONS

A.Effect of the Mitigation Reserves Program on Federal, State, and Local Permitting Requirements

B.Decision Making by Consensus C.Entry into Effect, Modification or

Amendment, and Termination of the Instrument

D.Assignment of Obligations under this Instrument

E.Specific Language of this Basic Agreement Shall Be Controlling

F.Notice G.Entire Agreement H.Invalid Provisions I. Effect of Agreement J.Attorneys’ Fees K.Availability of Funds L.Headings and Captions M.Counterparts N.Binding

King County Mitigation Reserves ProgramIV. OPERATION OF THE MITIGATION RESERVES PROGRAM

A.Service Areas B.Advanced Credit Allocation to Sponsor C.Credit Deficit or Fraudulent Transactions

D.Permits E.Permittee Use of Program F.Approval of Mitigation Sites G.Compensation Planning Framework H.Mitigation Site Operational Phases I.Deviation from Mitigation Site Plans J.Credit Release Schedule K.Modification of Credits L.Monitoring Provisions M.Maintenance Provisions N.Contingency Plans/Remedial Actions O.Availability of Credits in the Event

Contingencies or Financial Assurances are Accessed

P.Force Majeure Q.Noncompliance

R.Default S.Notification of Credit Suspension or

Program Suspension T.Sponsor’s Failure to Correct Default U.Unavoidable Delays V.Site Closure W.Service Area Closure. X.Program Closure Y.Closure Provisions Z.Closure Provisions Regarding Funding AA. Mitigation Site Protections AB.Mitigation Site Restrictions on Use AC.Inspection of Mitigation Reserves

Program Sites AD.Accomplishment of Sponsor

Responsibilities; Transfer of Ownership of a Mitigation Site

AE.Transfer of Long Term Management Responsibilities

King County Mitigation Reserves ProgramExpected Benefits • To the regulated community: predictability of cost

and schedule• To the regulators: monitoring/enforcement of

single entity for mitigation of multiple impacts• To the environment:

• Mitigation/restoration activities implemented and managed through time by entities with an interest in successful restoration

• Projects address greatest needs first• Fewer larger projects benefit from economy

and ecology of scale


Questions?

Michael Murphy

[email protected]

206-296-8008

www.kingcounty.gov/mitigation

in-lieu fee programs by michael murphy

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