Trump’s move to redefine water rule threatens wetland banks
SATURDAY, JUNE 16, 2018
GAINESVILLE, Fla. – A private firm is making big money selling promises about some gator-infested Florida swampland.
The Panther Island Mitigation Bank isn’t another land boondoggle, but part of a federal system designed to restore wetlands across the United States. Panther Island’s owners preserved one of the nation’s last stands of virgin bald cypress trees, 4 square miles on the western edge of the Everglades where they cleared away invasive plants and welcomed back wood storks, otters and other native flora and fauna.
Banks like this sell “wetlands mitigation credits” to developers for up to $300,000 apiece, offsetting the destruction of marshes by construction projects elsewhere. It’s a billion-dollar industry that has slowed the loss of U.S. wetlands, half of which are already gone.
This uniquely American mix of conservation and capitalism has been supported by every president since George H.W. Bush pledged a goal of “no net loss” of wetlands, growing a market for mitigation credits from about 40 banks in the early 1990s to nearly 1,500 today. Investors include Chevron and Wall Street firms, working alongside the Audubon Society and other environmental groups. Now the market is at risk. Administrator Scott Pruitt’s Environmental Protection Agency has completed a proposal for implementing President Donald Trump’s executive order to replace the rule known as Waters of the United States, or WOTUS, with a much more limited definition of what constitutes a protected federal waterway.
Pruitt on Thursday told a group of farmers and businesspeople in Lincoln, Nebraska, that the proposal faces months of internal reviews before being released for public comment. If implemented, it would reduce the number of wetlands under federal protection, and thereby the need for developers to buy mitigation credits.
“It would destroy wetland mitigation banking at the federal level,” said Royal Gardner, who specializes in mitigation banking as a professor at Florida’s Stetson University College of Law.
Wetlands are protected under the Clean Water Act because they are vital to the nation’s water quality. Their dense vegetation helps filter out toxins as water flows through. Wetlands provide key fish and bird habitat, and protect coastal land from hurricanes.
Mitigation banks are not a panacea, but they are the government’s preferred method of protecting wetlands from damage from development, a preference that has fueled the market for mitigation credits. The system began decades ago under the U.S. Army Corps of Engineers, but it initially wasn’t well designed, and the market failed to take off.
That began to change after 2001, when the National Research Council identified a chief problem: The Corps was letting developers who lacked the necessary expertise design and build the restoration projects. Some failed to replace what was lost or lacked plans to maintain them.
The Corps and EPA revamped the system in 2008, requiring developers to collaborate with conservation experts, and to get the science right before selling any credits. Since then, the market has seen its biggest growth, with innovative projects proving to be both profitable and ecologically sustainable.
Panther Island was designed with the help of Audubon, which manages the neighboring Corkscrew Swamp Sanctuary, and the society will continue managing the land after all the credits have been sold.
“The devil’s in the details with these mitigation banks and their offsetting impacts. If you’re not doing it in a way that offsets the natural water storage losses, then you’re passing the buck to future generations,” sanctuary director Jason Lauritsen said. “What you see now is this beautiful landscape of diverse native species that have taken root and are filling in. We are showing that it can be done.”
The country is still losing wetlands. There is no national-level data that show how close mitigation banks are to achieving the “no net loss” goal. But Corps permit data show that from 2002 to 2015, when the agency allowed about 350 square miles of wetlands to be filled, developers were required to purchase about 800 square miles of compensatory mitigation credits, mostly from banks.
The Obama administration sought to include even more wetlands as protected waterways under the WOTUS rule, and investors responded positively, because sustained government support reduced the market’s risk.
Trump’s order directs the EPA and Corps to consider adopting the late Supreme Court Justice Antonin Scalia’s 2006 definition, which would limit Clean Water Act protections for nonnavigable waterways to those that remain covered by water year-round and connected to navigable rivers, lakes or streams. This could remove many waters from federal oversight, and hit mitigation banking hard, experts say.
Protecting fewer wetlands and streams would mean fewer impacts to these resources will be regulated, and less mitigation required to compensate for them, said Jessica Wilkinson, a senior policy adviser at The Nature Conservancy, which sponsors 13 wetland and stream mitigation banks in five states.
“That’s not good for trying to achieve the objectives of the Clean Water Act in general if we’re no longer protecting these waters,” Gardner said. “If the Trump administration goes forward with a definition of WOTUS that severely restricts what waters are protected, then their market evaporates.”