Preliminary address highlights
Michael W Sole, FL DEP Sec of the Env – FL’s st legislature working on/passed WQT, cap & trade. FL wants to take a look new Rule – is going to mitigation banks 1st “bridling ourselves”?
Mark Rey, Undersec for Nat Res & Env, USDA – Farm Bill insiders’ view – some of the things the dept wanted (> conservation funding, reforms on commodity/subsidy payments, incr spending by no more $6bill, don’t pay for it with taxes) aren’t what the Senate & House put forth. Pres promises to veto it as is (no reforms, not as much cons funding as would like, paying for it with taxes/”budget gimmickry”). House & Sen conf committee rushing to change it right now. Interesting ecosystem market development: TIMOs/REITs’ interests now diverging with forest products manufacturing industry b/c landowners want to take advantage of selling ecosys services & the forest prod industry thinks this will incr fiber prices.
Ben Grumbles, EPL Asst Admin for Water – the new Rule is a BIG.DEAL. (likens importance to “no net loss”). Why he likes the new rule: advances the *science* of WL/str miti, > consistent/reliable standards, performance-based, market-based. Still maintain importance of avoidance/minimization/no net loss. EPA & COE working on potential legislation to amend CWA re: jurisdiction, & streamlining permitting process, extending general permit (?) from 5 to 10 years.
George Dunlop, Principal Dep. Asst Sec of Army, Civil Works – a real character. WL miti used to be one size fits all, onsite, which “shackled” mitigation banking, this new rule brings an “opportunity concept” to mitigation. Also heard: semi-quote “compensatory mitigation in the 1990s was shackled by a neo-Marxist, neo-pantheistic system” (wha???). Entrepreneurs need & Rule provides: clarity, transparency, consistency, predictability, timeliness. Warns that “skeptics & saboteurs” will counterattack. Likened agencies/bureaucrats to amoebas – wanting to expand control.
Session: Business of Banking, Primer 102
Due diligence in setting up wetland mitigation banks – talked about what WL mitigation bankers think about when considering setting up a bank, including: Demand for credits (users), service area, who’s influential on the interagency review team, development trends in the area, competition, etc.
Financial assurances – a review of the process that mitigation bankers go through to provide required assurances (what’s required is that mitigation is constructed and has met performance standards). Sec 332.3(n) has specifics. Banker finds a Trustee, Trustee uses bonds, escrow/letter of credit, etc. Diff type of assurance situations, but basically the Trustee or bonder will ensure the work gets done if there’s an issue.
Sales & Marketing Strategies – back to basics: used framework of 7 Habits of Highly Effective People. Good planning and execution goes a long way in miti banking success.
Lunch Speakers
Mostly reiterating major points of new Rule. Corps/EPA have some training set – at joint May 08 national meeting, and an IRT member training in June 08 with training posted online.
Mitigation Laws and Cases of Interest to the Mitigation Banking Industry: what’s a jurisdictional water & legal tests of most recent guidance… and potential new legislation (Clean Water Restoration Act) to bring the def of jurisdictional waters back to pre-2001. Farm Bill item on tax incentives for conservation banking. Industry concerns re: standards of recovery credit trading. Water Resources Development Act of 2007 – establishes preference for mitigation banks; requires water resources projects (e.g. Corps projects) to meet new Rules [correct me if I’m wrong].
Capital Session
Can anyone out there capture the salient points? (Use comments feature)
Water Quality Trading Session
Overview of basics of water quality trading programs (can find full info in Toolkit for Permit Writers at www.epa.gov/waterqualitytrading). NRCS sees role for itself to help create/standardize models to help determine nutrient credits, reviewed NTT tool (Nitrogen Trading Tool, contact: Shaun McKinney). Overview of PA’s trading program.
Highlights from Q & A’s from the Day
Q: concerning pre-selling credits to a 3rd party (financier) for resale…
A: Banker thinks could be bad idea – creating new competition, but could structure the deal so the original banker retains marketing rights.
Q: Regarding financial assurances…
A: If you can’t work out a solution with the regulator & have to actually use your financial assurances, you’re not building trust with the regulator = bad for your business.
Q: Regulator interested in simplicity in dealing with financial assurances.
A: Banker resists this idea as limits financial opportunities; some states have different financial instruments…
Q: What happens when you want to do a conservation easement but the mineral rights are held separately?
A: Write in a contract a waiver of surface entry but allow access [via directional]…
Q: Regarding long-term management assurances…
A: This issue is huge. Banks give funds to [land trusts, etc] for long term management and might find out that’s not really happening. Suggested requirement for financial plan negotiated between the banker and the manager.
Q: Do gov agencies need financial assurances?
A: Yes, but they can self-insure.
Q: Concern about capital carpetbaggers in env markets…
A: Many of these investors have heart in it, but recognize the fear
Comment: Idea for National Miti Banking Industry to set up a clearinghouse of bankers to help match up funders with bankers.
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