|
Alaska wetland mitigation costs soaring State proposing its own program as a way to reduce costs for public, private developers, get remediation for state-owned lands TIM BRADNER For Petroleum News
Wetlands mitigation costs in Alaska have soared, and that’s partly because privately owned mitigation banks certified by the U.S. Army Corps of Engineers see a good money-making opportunity.
In fact, it’s a money machine, critics say.
The Army Corps tells developers how many acres they need for mitigation and hand them a list of approved mitigation banks. There are just a handful of these in Alaska, so it’s not a robust market.
A mitigation bank is typically organized around a piece of property that is owned by one or more landowners or has been purchased by an investor group specializing in this niche market.
“Often times, Alaska mitigation bankers are a consortium of private landowners sometimes backed by outside mitigation investment groups,” said Sara Longan, a state Department of Natural Resources official who directs DNR permitting actions.
There’s no shortage of capital available for mitigation banks. “There are many for-profit investment groups and bankers nationwide,” Longan said.
These are essentially private real estate transactions. Mitigation banks buy property and work with the Army Corps to certify the wetland values. When developers require compensatory mitigation, in order to comply with the Clean Water Act, they approach the available bankers and the outcome is a financial negotiation between the two parties.
Little transparency The Corps has no role in these transactions and only gets involved in specifying how many acres and what types of land must be in the mitigation. The per-acre fee is negotiated and is private. There is little transparency.
“Mitigation banker information and specific bank mitigation costs are not typically publicly available,” Longan said.
This is troubling to many Alaskans including Bill Jeffress, principal consultant with SRK Consulting, of Anchorage. No one knows where the money goes or what many of the mitigation banks use the money for, Jeffress said.
“This is almost extortion. These are private organizations and there’s no public input or review by a state or federal agency,” he said.
There is no mechanism for dispute resolution if the price is too high, Jeffress said.
In practice, major corporations like oil companies operating on the North Slope often just write a check to get on with their business.
“Everyone wants their permit and if there’s a dispute the Corps will say, ‘we’ll just hold the permit’ until things are worked out,” Jeffress said. The delays make disputing an acreage fee not a realistic option.
Raising the bar However, the high prices extracted raise the bar for all developers, like mining companies and even real estate developers near larger communities.
Jeffress also said the Corps has given latitude to the private mitigation banks to make decisions on classifying lands that affect the price of mitigation. For example, lands in the Kuparuk River oil field on the North Slope have been classified as “urban,” he said, as if the land was in midtown Anchorage. That raises the price.
Similarly, land at the Red Dog Mine north of Kotzebue was classed as “rural” as if it were adjacent to a village, rather than “remote,” which is actually the case at Red Dog. That classification raises the price, too.
Lack of transparency isn’t the case with all organizations in the mitigation field, however. Greatland Trust, of Anchorage, is a nonprofit In-Lieu Free provider that works with developers to find acreage for mitigation. It also buys and owns some lands to gain wetlands credits, said Pat Pourchot, acting director of Greatland Trust, who is a former state Commissioner of Natural Resources.
“We’re quite open about what we do and in fact we like to brag about it,” Pourchot said. “We’ve preserved a lot of wetlands.”
Not everyone is as open as Greatland Trust, however. Pourchot acknowledged that mitigation banks are private organizations, and keep their information tight, mainly because they’re in the buying and selling of properties.
“We’d like to know what some of their prices are (the banks),” Pourchot said.
One organization certified to work on Slope Not only is the market limited, with just a handful of groups in the mitigation business but there is now only one organization, The Conservation Fund, that is certified to work on the North Slope. Other banks and in-lieu providers are certified in other parts of the state.
Another problem is that because of the way the federal program is structured there are few options in finding suitable off-site acreage. The mitigation must be done in Alaska, for example, and as close to the project site as possible and preferably in the same watershed, the Army Corps says.
There’s also not a lot of disturbed acreage in Alaska that can be restored as wetlands, particularly on the North Slope. Almost all of the Slope, and most of the state, is pristine.
Pristine lands can be preserved such as through a conservation easement as an alternative under the Corps program, but it isn’t the agency’s preference. In any event, locking up more Alaska land isn’t an appealing policy outcome, said Jeffress. He would prefer to see the money used for restoring disturbed sites, where that is possible.
State proposing own program Meanwhile, all of this is a sure-fire prescription for rising costs, which is exactly what has happened.
Ed Fogels, deputy state commissioner of Natural Resources, said the state of Alaska is now proposing its own in-lieu fee mitigation program, mainly to create mitigation opportunities using public lands. DNR’s goal is to lower costs for developers, Fogels said in an interview.
An application by the DNR has been submitted to the U.S. Army Corps of Engineers for approval.
One aspect of a state in-lieu fee program is that state-owned lands would become available, greatly expanding the pool of land eligible for compensatory mitigation, Longan said. More restoration, enhancement of aquatic resources and preservation would result.
There are also disturbed sites on state-owned lands that would become eligible for restoration with the money paid by private developers.
Longan told a state legislative committee in a briefing last year that more than 25 states now operate their own wetlands mitigation banks under the Army Corps’ oversight. The major goal in these states is to reduce the cost of mitigation for state highways and transportation projects, she said.
Alaska could similarly benefit. “Since 2009 the state Department of Transportation and Public Facilities has spent an estimated $8.3 million with mitigation banks and in-lieu fee programs for statewide airport, highway and maintenance projects,” Longan said.
The Alaska Railroad Corp. has spent about $2 million since 2000 on mitigation, she said.
“These costs are likely conservative and may increase in the near term due to emerging federal mitigation policies or the limited availability of compensatory mitigation banking opportunities in Alaska,” Longan said.
| 