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In-Lieu Fee Programs by Michael Murphy

Developing an In-Lieu Fee Program in King County, WA. History & Lessons Learned

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In-Lieu Fee Programs by Michael Murphy

  1. 1. King County Mitigation Reserves Program Developing an In-Lieu FeeProgram in King County, WA History & Lessons Learned Michael MurphyKC Department of Natural Resources and Parks michael.murphy@kingcounty.gov 206-296-8008
  2. 2. King County Mitigation Reserves Program King County, WA
  3. 3. King County Mitigation Reserves Program
  4. 4. King County Mitigation Reserves Program
  5. 5. Population Growth inReserves Program King County Mitigation King County, WA2,500,000 2,262,9772,000,0001,500,0001,000,000 500,000 0 Source: WA Office of Financial Management (Forecast: 2007 medium projection)
  6. 6. King County Mitigation Reserves Program In- lieu fee program: “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]
  7. 7. King County Mitigation Reserves Program In- lieu fee mitigation: a history of failure… "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
  8. 8. King County Mitigation Reserves ProgramOLD: Case-by-Case, Opportunistic, Area-based Permittees stay involvedNEW: Watershed approach, Function-based, Permittees pay and have no further mitigation obligation
  9. 9. King County Mitigation Reserves ProgramMajor 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
  10. 10. King County Mitigation Reserves ProgramHow the program works: Proposed environmental impact KC and other regulatory agencies work with applicant to: Avoid and Minimize impacts Identify onsite mitigation options Review offsite mitigation options o Mitigation Bank o Permittee-responsible o ILF program (KC or other)
  11. 11. King County Mitigation Reserves Program Regulatory agencies quantify functional loss (Debits) Applicant satisfies Applicant buys credits mitigation obligationsKC MRP uses credit fees to: Select best mitigation site from Roster Design, construct, monitor, and maintain projects Determine credits derived from projects MRP coordinates with regulatory King County agencies throughout credit “fulfillment” process satisfies mitigation obligations
  12. 12. Calculating Credits and Debits for CompensatoryKing County Mitigation Reserves Program Mitigation in Western WashingtonHydrology – Site potential HydrologyHydrology – Landscape potential ScoreHydrology – Values to Society Equal weightWater Quality – Site potential Water QualityWater Quality – Landscape potential ScoreWater Quality – Values to Society Equal weightHabitat – Site potentialHabitat – Landscape potential Habitat ScoreHabitat – Values to Society
  13. 13. King County Mitigation Reserves ProgramChoosing the right sites…• Using watershedplans and analyses(King County, and others)• Ecology guidance• KC Staff expertise
  14. 14. KingCounty Mitigation Reserves Program Service AreasKing County Mitigation Reserves Program
  15. 15. King County Mitigation Reserves ProgramChoosing the right mitigation… (Functions and Values)• What are we losing?• What do we need?• How much are we getting?
  16. 16. King County Mitigation Reserves ProgramThe Program Instrument (two parts):1. Basic Agreement A. Legal contract B. Basic operating principles C. Commitments and consequences2. Technical Appendices & Exhibits A. Ecological details B. Program operations details
  17. 17. King County Mitigation Reserves ProgramMajor sticking points during development:• 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 mitigation• Establishing parameters for legal enforceability• Mitigation on public land – isn’t it already protected?
  18. 18. King County Mitigation Reserves ProgramBasic AgreementPurpose: The purpose of this Mitigation Reserves Program In-Lieu FeeInstrument (hereinafter, "Instrument") is to set forth the agreed upon termsspecifying responsibilities for the establishment, use, operation, andmanagement of the Sponsors Mitigation Reserves In-Lieu Fee Program("Mitigation Reserves Program" or sometimes "MRP"). The King CountyDepartment of Natural Resources and Parks is the King County agencyresponsible for meeting these responsibilities on behalf of the Sponsor. ThisInstrument consists of two sets of documents: the instant document settingforth the general terms of agreement and establishing the central obligationsassumed and consideration provided by each party ("Basic Agreement"), andthe Appendices and Exhibits ("Appendices") that establish detailed provisionsfor operation of the Mitigation Reserves Program, including the CompensationPlanning Framework, mitigation planning requirements, and standards andprocedural requirements applicable to the Mitigation Reserves Programpursuant to 33 CFR 332. The terms and provisions of the Appendices arehereby incorporated into this Instrument and made a part hereof.
  19. 19. King County Mitigation Reserves ProgramBasic AgreementINTRODUCTIONA. PurposeB. Mitigation Reserves Program Mission and ObjectivesC. Mitigation Reserves Program Interagency Review Team (IRT)D. The Role of the IRT BASIC TERMS OF AGREEMENTII. TRANSFER OF PERMIT MITIGATION RESPONSIBILITYA. Transfer of Permit Mitigation ResponsibilityII. LEGAL AUTHORITIESFederalState of WashingtonKing County Code ("KCC") and other Local Authorities
  20. 20. King County Mitigation Reserves Program III. FUNDING PROVISIONS A. Fee Collection B. Spending Authority and Disbursement C. Mitigation Fees D. 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
  21. 21. King County Mitigation Reserves ProgramV. RESPONSIBILITIES OF THE CORPS & ECOLOGY AS CO-CHAIRS OF THE IRTVI. GENERAL PROVISIONS A.Effect of the Mitigation Reserves F.Notice Program on Federal, State, and Local G.Entire Agreement Permitting Requirements H.Invalid Provisions B.Decision Making by Consensus I. Effect of Agreement C.Entry into Effect, Modification or J. Attorneys’ Fees Amendment, and Termination of the K.Availability of Funds Instrument L.Headings and Captions D.Assignment of Obligations under this M.Counterparts Instrument N.Binding E.Specific Language of this Basic Agreement Shall Be Controlling
  22. 22. King County Mitigation Reserves Program IV. OPERATION OF THE MITIGATION RESERVES PROGRAMA. Service Areas R. DefaultB. Advanced Credit Allocation to Sponsor S. Notification of Credit Suspension orC. Credit Deficit or Fraudulent Transactions Program SuspensionD. Permits T. Sponsor’s Failure to Correct DefaultE. Permittee Use of Program U. Unavoidable DelaysF. Approval of Mitigation Sites V. Site ClosureG. Compensation Planning Framework W. Service Area Closure.H. Mitigation Site Operational Phases X. Program ClosureI. Deviation from Mitigation Site Plans Y. Closure ProvisionsJ. Credit Release Schedule Z. Closure Provisions Regarding FundingK. Modification of Credits AA. Mitigation Site ProtectionsL. Monitoring Provisions BB. Mitigation Site Restrictions on UseM. Maintenance Provisions CC. Inspection of Mitigation Reserves ProgramN. Contingency Plans/Remedial Actions SitesO. Availability of Credits in the Event DD. Accomplishment of SponsorContingencies or Financial Assurances are Responsibilities; Transfer of Ownership of aAccessed Mitigation SiteP. Force Majeure EE. Transfer of Long Term ManagementQ. Noncompliance Responsibilities
  23. 23. King County Mitigation Reserves Program
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  27. 27. King County Mitigation Reserves ProgramExpected Benefits• To the regulated community: predictability of costand schedule• To the regulators: monitoring/enforcement ofsingle 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
  28. 28. King County Mitigation Reserves Program Questions? Michael Murphy michael.murphy@kingcounty.gov 206-296-8008www.kingcounty.gov/mitigation