SUMMARY OF INTERIM PROJECT
A REVIEW OF WETLANDS MITIGATION ISSUES
Presented at Joint Meeting of the Committee on Environmental Protection and the
Committee on Water and Resource Management on January 9, 1997
The policy implications of current trends regarding the use, cost and location of
wetlands mitigation have raised numerous questions of Florida's program.
As used in this interim project report, "mitigation" is the creation, restoration,
enhancement or preservation of wetlands to offset the negative impacts to other
wetlands within the same geographic area which have been dredged and filled. Utilized
by regulators since the early 1970s, mitigation became an integral part of Florida's
wetlands-impact permitting process with the passage of the Warren S. Henderson
Wetlands Protection Act (the Act) in 1984. The Act recognized that wetlands are a
significant environmental resource which should be protected because they facilitate
water recharge, improve water quality and provide wildlife habitat. The Act expanded
state agencies' authority to regulate dredging and filling of wetlands, and established a
public interest test. It also recognized mitigation as an option in the permitting process.
The permitting agencies were directed to consider allowing mitigation in those
circumstances where permit applicants were unable to meet the statutory criteria. The
Act did not require permit applicants to offer mitigation as a way to obtain their
wetlands-impact permits', nor did it require the permitting agencies to accept mitigation.
Although the Act has been amended over the years, the public interest test and
mitigation language remain basically unchanged.
Anecdotally, as many as 20 percent of the total wetlands-impact permits issued by the
Department of Environmental Protection (DEP) and the five water management districts
(WMD) include mitigation requirements as a condition of obtaining these permits. The
exact number is unknown because not all of the agencies maintain their records in such
a way as to easily retrieve this information.
For a permit applicant, mitigation can be as simple as contributing cash to a WMD for
use in a regional wetlands restoration project, or buying "credits" from a mitigation bank
'As used in this report, "wetlands-impact permit" is a generic phrase that includes
dredge-and-fill permits, management and storage of surface water (MSSW) permits,
environmental resource permits (ERPs), and permits issued by federal and local
government agencies for activities which impact wetlands.
to do the same thing. Mitigation can also be as complicated as performing wetlands
restoration activities, such as restoring a natural flow of water to a degraded wetlands
site adjacent to the property where permitted impacts are occurring, and then
monitoring the site for a number of years to ensure success.
Wetlands mitigation may be conducted on the same site as the impacts, on an adjacent
site, or many miles off site. In the 1970s and 1980s, most mitigation was conducted on-
site, with mixed results. As scientific knowledge about wetlands grew, permitting
agencies decided that off-site mitigation was acceptable, as long as it directly offset
permitting impacts. Now, restoration or enhancement of wetlands many miles away
from the disturbed site is acceptable mitigation, as long as these wetlands are in the
same watershed or mitigation service area. The definition of mitigation also has been
expanded to include preservation through the acquisition of wetlands which may or may
not be directly linked to the wetlands that are being disturbed.
In addition, mitigation is no longer the sole responsibility of the permit applicant. As
mentioned previously, the permit applicant may make a cash contribution to DEP or a
WMD, which is supposed to cover the complete costs of wetlands restoration,
enhancement or acquisition at specific agency projects. The applicant may be able to
purchase mitigation "credits" which offset the adverse impacts to the wetland being
dredged and filled. Mitigation banks are parcels of wetlands which are being restored.
For each acre restored, the owner of the bank receives a certain number of credits
(maintained on a ledger) which he can use to offset the negative impacts of his own
development in wetlands, or can sell. As of September 1996, 16 mitigation banks were
fully permitted and operating in Florida. Assigned to these banks are an estimated
12,760 credits, available if the banks accomplish their wetlands restoration goals. Their
prices range from $5,700 to $45,000 per credit. Ten of the banks are entrepreneurial
banks which are in the business to sell credits to developers. Another 24 banks either
have pending permits or are in the pre-application stage.
Based on comments expressed by Members and affected interest groups, staff of the
Committee on Natural Resources researched a number of issues on wetlands
mitigation. The objective of the interim project was to answer Members' questions and
to offer recommendations to improve efficiency, compliance and accountability of the
state's wetlands permitting program. A brief discussion of the research questions
Does wetlands mitigation work? Studies conducted between 1990 and 1992
indicate that wetlands creation projects begun in the time span of 1988-1990
generally were unsuccessful. The studies also determined that a large number
of the mitigation projects were never begun or completed.
DEP and the WMDs conclude that wetlands mitigation projects are more
successful now because the science and planning are better, and there is
greater compliance because of better staffing. Staff of the St. Johns River
WMD, one of the three entities to seek a review of early wetlands mitigation
projects, has responded that with the passage of time, some of the early
mitigation projects are meeting success criteria.
No recent studies have been commissioned. Agency staff state that on-site
projects, if properly designed and located, do provide significant wetlands
Are sufficient procedures and safeguards in place to properly record and
track the sales of mitigation credits, and should credits be-deemed non-
transferable? Florida statutes give broad discretion to DEP and the WMDs in
the mechanics of mitigation bank transactions. Section 373.4136 (7), Florida
Statutes (F.S.), directs DEP and the WMDs to "provide for the accounting of the
award, release, and use of mitigation credits" from a mitigation bank. In s.
373.4136(11), F.S., DEP and the WMDs are authorized to adopt rules related to
the operation, construction and management of mitigation banks. The only
mention of a credit tracking mechanism is in s. 373.4135(6)(d), F.S., which states
that the withdrawal of mitigation credits from a mitigation bank will be
accomplished through a modification of the bank's permit.
The mitigation banking rule Chapter 62-342, Florida Administrative Code -
also does not specify the format or procedures by which credits should be
tracked from the time they are awarded to a bank, to the time they are sold to an
applicant for a wetlands-impact permit.
DEP and the WMDs have intemal guidelines to track credits, and agency staff
have said they are uniform. In addition, Florida WetlandsBank, the first fully
operating entrepreneurial mitigation bank in Florida, has developed its own
format and process by which it keeps track of the number of credits awarded,
sold, and to whom. WetlandsBank's ledgers also link each credit sold with the
permit number of the wetlands-impact permit. However, not all banks operate
this way, and nothing prohibits credits from being sold that are not connected
with any pending wetlands-impact permit. Also, there is no current prohibition on
subsequent sales of credits, therefore, it is possible for a person to "broker"
Should public lands be used as private mitigation banks? Florida statutes
and agency rules contemplate the creation of mitigation banks on public lands.
Policy issues arise with the scenario of having private mitigation banks operate
on publicly-owned lands. From a public policy perspective, there are benefits to
be gained. Lands which the public owns, but which the public agencies do not
have the staff or funds to restore and manage, may benefit from private
involvement. However, some private bankers who acquired land on which to
operate their banks think they will be at a competitive disadvantage with those
banks (operated either by public or private entities) that are located on public
lands. Environmental advocates and the regulatory agencies also disagree on
whether private banks should be allowed on public lands. The U. S. Army Corps
of Engineers (Corps) contends that authorizing private banks on public lands
may actually result in a net loss to the environment, because the destruction of
privately held wetlands will help pay for the restoration work on public wetlands.
Staff of the DEP state that private restoration of public lands which furthers
ecosystem management goals may be acceptable.
Are ratios the best formula to express mitigation for lost wetlands
functions? The amount of mitigation required as a permit condition by DEP and
the WMDs is expressed as a ratio: the amount of wetlands function to be
created, restored, enhanced or preserved for every 1 acre of wetlands disturbed
by development. The ratios are broad ranges which are arrived at subjectively,
but based on the degree or value of the functions of the wetland to be disturbed.
Among these functions are water retention, aquifer recharge, and wildlife habitat.
The ratios also take into account the time lag between when the mitigation
project is conducted and when it begins to provide functional benefits, as well as
a risk factor for failure of the mitigation project. The Corps does not express
mitigation as a per-acre ratio, but as a discussion of the functions that are being
lost and for which compensation should be provided.
Some members of the regulated community state that the ratios are too
subjective, and would prefer an approach based more on an assessment of the
functions of the wetlands to be disturbed, as well as of the wetlands to be
Are mitigation credits securities subject to federal and state securities
regulation? A legal analysis of this issue concludes that securities law requires
a case-by-case analysis of each situation to determine if a particular mitigation
credit is a security. In general, the sale of credits from a banker to a wetlands-
impact permit applicant is not subject to securities regulations.