If you own unimproved real estate, you may want to consider the
opportunities for creating wetland banks on this property. A new
Wisconsin wetlands law provides significant new incentives for
expanding the inventory of wetlands in this state for the benefit
of the environment and the potential pecuniary benefit of the
property owner. As a property owner, you now have the opportunity
to consider the value attached to the creation of new wetlands or
enhancing and expanding pre-existing wetlands on your property as
part of your analysis for future use for certain qualified
properties.
Overview of Wisconsin New Wetlands Law
Wisconsin's new wetlands law1-The Wisconsin Wetland
Reform Act-and its mandatory mitigation requirement for individual
permits has created significant demand for wetland mitigation bank
credits in the state of Wisconsin. While a permit is still required
prior to filling or excavating any wetlands, the new law created
two categories of permits-general permits and individual permits.
General permits are only available under limited circumstances for
projects that will cause only minimal adverse environmental effects
(typically impacts of less than 10,000 square feet). However, if
the project does not qualify for a general permit, an individual
permit is required prior to construction, and compensatory
mitigation is a required component of all individual
permits.2
Wisconsin's new wetlands law allows only three options for
compensatory mitigation: (1) purchasing wetland credits from a
mitigation bank located in the state, (2) paying into a state-run
in lieu fee subprogram (which is yet to be established), or (3) the
permitee can complete wetland mitigation in the same watershed or
within one-half mile of the project (often referred to as
"permitee-responsible mitigation")3. The law
is explicit in its preference for the first two options, as
permitee-responsible mitigation involves significant Department of
Natural Resource (DNR) oversight.4 In addition,
applicants often shy away from permittee-responsible mitigation due
to the onerous long-term monitoring requirements and the
uncertainty that such mitigation projects will be successful. DNR
is now only in the early stages of developing its in lieu fee
subprogram and it is unlikely that this program will be available
as a mitigation option for applicants for quite some time.
Accordingly, until DNR establishes its in lieu fee subprogram, many
applicants are left with only one option-to purchase wetland bank
credits.
A Burgening Demand for Wetland Banks
Currently, in the state of Wisconsin, there are very few banks
with available credits, and oftentimes applicants require special
approval from DNR to purchase these credits if the bank is located
outside of the project's watershed. While there are several
proposed wetland mitigation banks under review, it is uncertain how
many of these will ultimately receive approval and when the
associated credits will become available. Furthermore, even
assuming that all of these banks are approved this year, DNR
anticipates that the demand for credits will continue to quickly
outpace availability-especially in certain watersheds. As such, the
few wetland banks with available credits continue to see the price
that applicants are willing to pay for credits increase. Applicants
have reported that wetland banks are currently charging as much as
$60,000 per wetland credit. It is anticipated that the cost of
credits will continue to rise as project developers are left with
no option other than to pay the mitigation bank owner the asking
price if they wish their project to move forward.
Opportunities for Owners of Wetland Suited
Property
The Wisconsin Wetland Reform Act has created significant
opportunity for landowners to profit by restoring, creating,
enhancing, or preserving a wetland area and generating wetland bank
credits for sale. However, simply preserving an existing wetland
without any additional enhancement will not earn wetland credits
unless the applicant can show that the wetland is under a
demonstrable threat for destruction. Moreover, not all land is
suitable for a wetland bank and not every acre of land in a wetland
bank will earn one wetland credit. Generally, only land that is
currently or was historically wetland is suitable for a wetland
bank. This is because wetland construction projects in areas that
have no wetland history are often unsuccessful.
The number of credits earned per acre depends on the type of
project and the anticipated net environmental benefit from the
project. For example, wetland restoration (e.g., restoring an area
that was historically wetland) will earn one credit per acre
restored, while a project that enhances an existing wetland will
often earn less than one credit per acre.
In addition, the wetland bank must remain wetland in perpetuity
and the landowner will have to establish a conservation easement
for the property. However, the wetland bank can remain privately
owned and the landowner can still use the property for hunting and
other recreational uses so long as they do not directly impact the
integrity of the wetland. There is no requirement that the wetland
bank be available for public use.
Suggestions for Assessing New Wetland Bank
Opportunities
The wetland mitigation bank approval process can be an arduous
process as it involves a multi-step review by an interagency review
team consisting of representatives from several state and federal
agencies. It is important that an environmental consultant with
sufficient wetland experience be involved early in the
process.
The process begins when the applicant (i.e., the bank sponsor)
submits a prospectus outlining the general details of the proposed
wetland mitigation bank. If the interagency review team approves
the prospectus, it will request that the bank sponsor prepare a
formal bank document with more specific details of the proposed
mitigation bank. The bank document will then be published for
public comment. Once the interagency review team issues a final
approval of the bank document, the sponsor can begin work on the
mitigation bank and will have an opportunity to begin selling a
portion of the bank credits to help fund some of the up-front
costs. After the project is completed, the bank sponsor will have
to comply with some long-term monitoring requirements of certain
wetland functional values for an average of 5 to 10 years after the
project has been completed.
While creating a wetland mitigation bank can be
resource-intensive, it can yield significant monetary and
nonmonetary benefits to the landowner under the right
circumstances. If you would like more information as to whether you
may have a viable proposal for a wetland mitigation bank and some
thoughts on how to get started, please contact Joy Page or Art
Harrington at 414-273-3500.
1 2011 Wisconsin Act 118 became effective on July 1,
2012.
2 Wis. Stat. § 281.36(3n)(d).
3 Wis. Stat. § 281.36(3r)(a)(1-3)
4 Wis. Stat. § 281.36(3r)(b)
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.