Presentation by: Rich Doenges, Thurston County Water Resources

1. An evolving effort

2. Topics for this morning
 Regulatory and policy context
 ILF process
 Current progress
 Next steps

3. Current process for compensatory mitigation of wetlands is
broken; most wetland mitigation projects fail to offset lost
wetland function at both temporal and spatial scales.
The causes:
• Poor site selection
• Poor design
• Poor site management and maintenance
• Poor follow-through by regulatory agency

4. ILF Defined
 In a Federal Rule published in April 2008, The U.S. Army
Corps of Engineers (the Corps) and the U.S. Environmental
Protection Agency (EPA) define an in-lieu fee program as:
 “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.”

5. ILF designed to offset for unavoidable environmental damages
to wetlands or other aquatic resources by restoring, creating,
enhancing, or preserving wetland functions within a specific
watershed or geographical area through fees paid by developers
to an ILF sponsor (only non-profits or governmental entities
need apply) in order to purchase wetland functional “credits”
that offset the wetland functional “debits” (as determined by
regulatory agencies and only after they determine the impact(s)
is unavoidable) lost from impacted wetlands.

6. After the wetland credit purchase is complete, the developer
(purchaser) is relieved of any responsibility for the success of
the wetland mitigation and their regulatory requirements for
wetland mitigation.
Sponsor is solely responsible for the success of the mitigation
and must implement the mitigation in three growing seasons
from receipt of the fees. Fees calculated to support the
administration of the program in addition the design,
construction and management of the mitigation site

7. Mitigation (credit producing) sites can be selected in advance
with watershed characterization plans/analyses;
Mitigation sites can be designed to address critical watershed
needs caused by historical loss of wetlands;
Mitigation of small projects combined into larger and more
sustainable wetland complexes;
Reduced transaction time for purchaser and less hassle;
Long term protection and maintenance of mitigation site
But there’s more…

8. Collecting fees and managing accounts;
Selection, design and construction of mitigation sites;
Tracking mitigation credits– sold and invested;
Reporting (death, taxes and reporting…)
Maintenance and long term mitigation site management.

9. How it works, summarized
 Applicants work with regulatory agencies and tribes to identify ways a proposed project can avoid and
minimize environmental impacts.
 Regulatory agencies determine preferred options for mitigating unavoidable impacts. Mitigation
options may include:
 on-site mitigation (if ecologically-feasible and likely to succeed),
 off-site mitigation sponsored by the permittee,
 purchasing credits from a mitigation bank (if one is available), or
 purchasing credits from the Thurston County In-Lieu Fee Program.
 If the applicant chooses to use the TC Water Resources (TCWR) (and the regulatory agencies
approve), the ecological impacts translated into a number of debits associated with the impact.
 The applicant buys credits from the TCWR to offset the debits associated with the impact. By
purchasing credits, the applicant satisfies their compensatory mitigation requirements and
have no further involvement in the mitigation implementation.
 The TCWR chooses a mitigation site from a predefined Roster. Roster sites may be publicly or
privately owned, and will be chosen based on science-based watershed priorities from the watershed
characterization analysis.
 The TCWR plans, implements, monitors and maintains projects at chosen sites that will achieve
ecological “lift.” On balance, completed projects should result in a number of credits equal to or
greater than the number of debits associated with the original impacts.
 *At multiple points in the process, an Interagency Review Team (IRT) will review and approve project
proposals. The IRT is co-chaired by the Corps and the Washington Department of Ecology (Ecology);
other members will include representatives state and federal regulatory agencies, tribes, and local
governments.

10. ILF Components
The County’s assumption of the sponsorship from the PSP in developing an ILF program was a significant
increase in responsibilities in the amended grant contract.
Briefly, the ILF approval process(referred to by Army of Corps of Engineers involves:
 Preparation and approval of three documents: prospectus, instrument and agreement.
 The prospectus is basically an annotated outline summarizing the objectives, operation and
procedures of the ILF program.
 The instrument is the largest and most complex of the ILF documents. It describes in detail where
the ILF will be active, the type of impacts mitigated, how the mitigation sites will be selected and who
will be the sponsor. Additionally, the instrument will include specific procedures, requirements and
description of the physical, technical and financial characteristics of the ILF project, including
the geographical area, project goals and performance measures, operation, maintenance and
financial controls.
 The agreement describes the terms specifying responsibilities for the establishment, use,
operation, and management of the sponsor's In-Lieu Fee Program consistent with federal
regulations and incorporates by reference all of the instrument’s technical findings and
appendices

11. ILF Component DetailsThe Corps and the Department of Ecology are responsible for approving an ILF program through the
certification process. The certification process is defined under the federal mitigation rule (33CFR
Parts 325 and 332, 40 CFR Part 230). The basic certification steps are:
1. Sponsor submits a prospectus to Ecology and the Corps. Once the prospectus is determined
complete by the agencies, a public notice is issued seeking public comment regarding the
proposed project.
2. The Interagency Review Team (IRT) is convened. The IRT may include representatives from
Ecology, Corps, U.S. Environmental Protection Agency, U.S. Fish & Wildlife Service, National
Oceanic and Atmospheric Administration-Fisheries, local and tribal governments, and other
state agencies including the Washington Departments of Fish and Wildlife and Natural
Resources. The IRT reviews and provides technical input regarding the sponsor’s project
design, service area, performances measures, and number of credits available. Public comments
are considered again during this technical review stage.
3. The sponsor submits a draft in-lieu fee instrument for IRT review and comment. These
comments are then incorporated by the sponsor and submitted as a Final Instrument to the IRT.
4. Once the final instrument is approved by the IRT, the sponsor negotiates a binding agreement
with the Corps and Ecology.
5. The approval process is complete once Ecology, the Corps, and sponsor sign the in-lieu fee
agreement which incorporates the instrument in its entirety.

12. Timeline for ILF Approval

13. TC Watershed Characterization
 The goal of watershed characterization is to identify
areas within each watershed that are more suitable for:
 Restoration actions;
 Protection; and
 Higher intensity development.

14. Watershed Characterization
data process and analysis

15. Nisqually
Study Areas

16. The Property That Got Away

17. Mitigation Site Selection Watershed-scale characteristics, such as aquatic habitat
diversity, habitat connectivity, surface water areas (wetlands
and streams), ground water flow patterns
 Extent to which the site has potential to contribute to the
restoration or protection of watershed processes
 Potential of the mitigation-receiving site to successfully
contribute to a gain in functions as a result of mitigation
activities
 Hydrologic conditions, soil characteristics, and other physical
and chemical characteristics
 The size and adequacy of buffers necessary to protect the
mitigation-receiving site from adjacent development or land
use
 Location and availability of hydrologic sources (including
availability of water rights, presence of State-Owned Aquatic
Lands) and other ecological features

18. Mitigation Site Selection
 Compatibility with adjacent land uses and watershed management plans
 Reasonably foreseeable effects the compensatory mitigation project will have on
ecologically important aquatic or terrestrial resources (e.g., shallow sub-tidal habitat,
mature forests), cultural sites, or habitat for federally- or state listed threatened or
endangered species
 Other relevant factors including but not limited to:
Development trends
Anticipated land use changes
Habitat status and trends
Local or regional goals for the restoration or protection of particular habitat types or functions
(e.g., re-establishment of habitat corridors or habitat for species of concern)
Water quality goals
Floodplain management goals
The relative potential for chemical contamination of the aquatic resources.
The relative locations of the impact and mitigation receiving sites in the stream network
Cost of acquisition and implementation
Location with respect to urban centers.

19. Mitigation & Restoration
(don’t mix)
TCWRP will not derive credit from any project(s) already
funded with Salmon Recovery Fund money or any projects
already planned and funded or completed to meet a permit
condition. However, there may be cases when ILF
mitigation fees can be used to implement a salmon
recovery project or other restoration project. For this to
occur, all of the following must apply:
 The project is not funded
 There is not a restriction related to the funding used to
acquire a site where the project will occur
 The project is not a requirement associated with a permit
(e.g. a mitigation project)

20. Identify replacement property and acquire it!
Respond to public comments on ILF Prospectus
Begin preparation of ILF Instrument with IRT

21. Rich Doenges (360) 754-4106
doenger@co.thurston.wa.us
TC ILF Prospectus: http://www.co.thurston.wa.us/waterresources/ilf-
project/ilf-project-announcement.html
Background information on ILF and other mitigation initiatives
http://www.ecy.wa.gov/mitigation/options.html