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 Murphy
KC Department of Natural Resources and Parks
michael.murphy@kingcounty.gov
206-296-8008


King County, WA

Population Growth inReserves Program
King County Mitigation King County, WA
2,500,000
2,262,977

2,000,000

1,500,000

1,000,000

500,000

0

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

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]

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

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

How 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)

Regulatory agencies
quantify functional loss
(Debits)
Applicant satisfies
Applicant buys credits mitigation
obligations

KC 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

Calculating Credits and Debits for Compensatory
Mitigation in Western Washington

Hydrology – Site potential
Hydrology
Hydrology – Landscape potential
Score
Hydrology – Values to Society

Equal weight
Water Quality – Site potential
Water Quality
Water Quality – Landscape potential
Score
Water Quality – Values to Society

Equal weight
Habitat – Site potential

Habitat – Landscape potential Habitat
Score
Habitat – Values to Society


Choosing the right sites…
• Using watershed
plans and analyses
(King County, and others)

• Ecology guidance

• KC Staff expertise

KingCounty Mitigation Reserves Program Service Areas


Choosing the right mitigation…
(Functions and Values)

• What are we losing?

• What do we need?

• How much are we getting?


The Program Instrument (two parts):
1. Basic Agreement
A. Legal contract
B. Basic operating principles
C. Commitments and consequences
2. Technical Appendices & Exhibits
A. Ecological details
B. Program operations details

Major 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?

Basic Agreement
Purpose: 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 Agreement
INTRODUCTION
A. 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 Washington
King County Code ("KCC") and other Local Authorities

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

V. RESPONSIBILITIES OF THE CORPS & ECOLOGY AS CO-CHAIRS OF THE IRT

VI. 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

IV. OPERATION OF THE MITIGATION RESERVES PROGRAM
A. Service Areas R. Default
B. Advanced Credit Allocation to Sponsor S. Notification of Credit Suspension or
C. Credit Deficit or Fraudulent Transactions Program Suspension
D. Permits T. Sponsor’s Failure to Correct Default
E. Permittee Use of Program U. Unavoidable Delays
F. Approval of Mitigation Sites V. Site Closure
G. Compensation Planning Framework W. Service Area Closure.
H. Mitigation Site Operational Phases X. Program Closure
I. Deviation from Mitigation Site Plans Y. Closure Provisions
J. Credit Release Schedule Z. Closure Provisions Regarding Funding
K. Modification of Credits AA. Mitigation Site Protections
L. Monitoring Provisions BB. Mitigation Site Restrictions on Use
M. Maintenance Provisions CC. Inspection of Mitigation Reserves Program
N. Contingency Plans/Remedial Actions Sites
O. Availability of Credits in the Event DD. Accomplishment of Sponsor
Contingencies or Financial Assurances are Responsibilities; Transfer of Ownership of a
Accessed Mitigation Site
P. Force Majeure EE. Transfer of Long Term Management
Q. Noncompliance Responsibilities

Expected 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
michael.murphy@kingcounty.gov
206-296-8008

www.kingcounty.gov/mitigation

In-Lieu Fee Programs by Michael Murphy

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