1. Wetland Mitigation Compliance James Robb Presented to: Water Pollution Control Board April 13, 2005

2. Voluntary compliance is lacking

3. Not all mitigation sites are constructed

4. Many of those that are constructed do not establish the required area of wetland

5. Failure Rates & Ratios Ratios to achieve 1:1 replacement Forested 3.4:1 Meadow 7.7:1 Shallow 1.2:1 Open water 1.1:1 Insufficient data to evaluate other communities

6. How many permits are we talking about?

7. Wetland Enforcement Track Record 8 Referrals 8 Referrals Results Results Judgment Judgment Commissioner’s order – in appeal Commissioner’s order – in appeal Agreed Order Agreed Order Active Active $80k in fines collected $80k in fines collected Most compliance problems resolved before referral to enforcement Most compliance problems resolved before referral to enforcement Prior to SWANCC (2001) most wetland enforcement handled by federal agencies Prior to SWANCC (2001) most wetland enforcement handled by federal agencies

8. Options for Increasing Compliance Enforcement Enforcement Performance bonds Performance bonds Up-front mitigation Up-front mitigation Mitigation ratios Mitigation ratios Technology Technology

9. Ratios Established by State Law Compared to Ratios Derived from Observed Risk (Without Up-classing)

10. Options for Increasing Compliance Enforcement Enforcement Performance bonds Performance bonds Up-front mitigation Up-front mitigation Mitigation ratios Mitigation ratios Technology Technology In lieu fees In lieu fees Reduce expectations Reduce expectations Better performance standards Better performance standards Design criteria Design criteria

11. Enforcement Positive Positive Fines create a financial incentive to comply Fines create a financial incentive to comply Deterrent effect is broader than single case Deterrent effect is broader than single case Credible threat of enforcement may be necessary for other options Credible threat of enforcement may be necessary for other options Negative Spawns enmity Politically unpopular State resource intensive

12. Performance Bonds Positive Positive Creates a financial incentive to comply Creates a financial incentive to comply A familiar tool to many of our applicants A familiar tool to many of our applicants Can be tied directly to performance Can be tied directly to performance Negative Negative Adds to the cost of mitigation Adds to the cost of mitigation State resources required to enforce terms State resources required to enforce terms What if the applicant defaults? What if the applicant defaults? Unprecedented Unprecedented

13. Up-front Mitigation Positive Positive Impact site directly comparable to mitigation site Impact site directly comparable to mitigation site  risk of net loss  risk of net loss Risk shifts from applicant to provider (e.g., bank) Risk shifts from applicant to provider (e.g., bank)  mitigation ratios  mitigation ratios  department resources consumed  department resources consumed Consolidation of mitigation into larger, better planned attempts (mitigation banks) Consolidation of mitigation into larger, better planned attempts (mitigation banks) Negative  project delays (in the absence of banking) Provider carries all the risk Consolidation/relocation of wetlands

14. Improvements to Technology Positive Positive  reduced risk =  reduced costs  reduced risk =  reduced costs Less confrontational Less confrontational Negative There is little incentive to innovate Has much more to do with performance than compliance

15. In lieu fees Positive Positive Simplifies permitting Simplifies permitting Transfers responsibility from numerous applicants to a few providers Transfers responsibility from numerous applicants to a few providers Providers have other incentives to establish wetlands Providers have other incentives to establish wetlands Negative IDEM cannot own property Accountability Perceived as selling permits Government vs. private efficiency Often state subsidized

16. Reduced Expectations Positive Positive Reduced cost to applicants Reduced cost to applicants If compliance were easier more people would comply If compliance were easier more people would comply Reduced demand on agency resources – less to worry about Reduced demand on agency resources – less to worry about Negative Less likely to reestablish the uses lost False sense of success “Trying is the first step towards failure.”

17. Better Performance Standards Better Performance Standards Positive Positive  confusion/uncertainty  confusion/uncertainty  enforceable  enforceable  expectations =  expectations =  results Negative  flexibility  expectations =  costs Tougher performance standards may result in reduced compliance

18. Design Criteria Positive Positive  confusion  confusion  applicant’s performance burden  applicant’s performance burden Negative  innovation  flexibility Site specific Process based rather than results based Shifts performance burden to IDEM No “cookbook” for successful mitigation IDEM currently lacks the expertise

19. So what is IDEM currently doing to fix the problem? Grant application to fund 2 inspectors Grant application to fund 2 inspectors Database under development Database under development Remote sensing techniques under development Remote sensing techniques under development Implementation of a wetland monitoring strategy Implementation of a wetland monitoring strategy

20. Conclusions Fewer wetlands are established through mitigation than required Fewer wetlands are established through mitigation than required Statutory ratios may exacerbate the problem unless the success rate is improved Statutory ratios may exacerbate the problem unless the success rate is improved None of the options for increasing success/compliance are without drawbacks None of the options for increasing success/compliance are without drawbacks