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Trump's move to redefine water rule threatens wetlands banks

Last Updated Jun 15, 2018 at 1:01 pm EDT

A committee of black vultures line a tree at the Panther Island Mitigation Bank, Thursday, June 7, 2018, near Naples, Fla. Experts say the Trump administration's move to redefine what constitutes a waterway under federal law is threatening a uniquely American effort to save wetlands from destruction. The U.S. Environmental Protection Agency is preparing to propose a new rule that would restrict the number of waterways protected under the Clean Water Act. (AP Photo/Brynn Anderson)

GAINESVILLE, Fla. – A private firm is making big money selling promises about some gator-infested Florida swampland.

The Panther Island Mitigation Bank isn’t another land boondoggle, but part of a federal system designed to restore wetlands across the United States. Panther Island’s owners preserved one of the nation’s last stands of virgin bald cypress, 4 square miles (10 square kilometres) on the western edge of the Everglades where they cleared away invasive plants and welcomed back wood storks, otters and other native flora and fauna.

Banks like this sell “wetlands mitigation credits” to developers for up to $300,000 apiece, offsetting the destruction of marshes by construction projects elsewhere. It’s a billion-dollar industry that has slowed the loss of U.S. wetlands, half of which are already gone.

This uniquely American mix of conservation and capitalism has been supported by every president since George H.W. Bush pledged a goal of “no net loss” of wetlands, growing a market for mitigation credits from about 40 banks in the early 1990s to nearly 1,500 today. Investors include Chevron and Wall Street firms, working alongside the Audubon Society and other environmental groups.

Now the market is at risk.

Administrator Scott Pruitt’s Environmental Protection Agency has completed a proposal for implementing President Donald Trump’s executive order to replace the Waters of the United States rule, or WOTUS, with a much more limited definition of what constitutes a protected federal waterway.

The current definition is an overreach that claims federal jurisdiction over “dry creek beds” and “prairie puddles” that are better regulated by the states, Pruitt told a group of farmers and businesspeople in Lincoln, Nebraska, Thursday night.

“We’re going to say what it is, but we’re also going to say what it isn’t. We’re proposing that prairie puddles in North Dakota are not waters of the United States and we’re proposing that ground water is not water of the United States,” Pruitt said. “That’s how you save the economy a billion dollars.”

The EPA said the proposal now faces months of reviews before being released for public comment, but experts in mitigation are already alarmed.

“It would destroy wetland mitigation banking at the federal level,” said Royal Gardner, a professor at Florida’s Stetson University College of Law.

The Associated Press is the first outlet to comprehensively report on the potential harm this proposal could bring to the billion-dollar wetlands mitigation banking industry. The EPA did not specifically address AP questions about how redefining waterways could affect it.

Wetlands are protected under the Clean Water Act because they are vital to the nation’s water quality. Their dense vegetation helps filter out toxins as water flows through. Wetlands provide key fish and bird habitat, and protect coastal land from hurricanes.

Mitigation banks are not a panacea, but they are the government’s preferred method of protecting wetlands from damage from development, a preference that has fueled the market for mitigation credits. The system began decades ago under the U.S. Army Corps of Engineers, but it initially wasn’t well designed, and the market failed to take off.

That began to change after 2001, when the National Research Council identified a chief problem: The Corps was letting developers who lacked the necessary expertise design and build the restoration projects. Some failed to replace what was lost or lacked plans to maintain them.

The Corps and EPA revamped the system in 2008, requiring developers to collaborate with conservation experts, and to get the science right before selling any credits. Since then, the market has seen its biggest growth, with innovative projects proving to be both profitable and ecologically sustainable.

Panther Island was designed with the help of Audubon, which manages the neighbouring Corkscrew Swamp Sanctuary, and the society will continue managing the land after all the credits have been sold.

“The devil’s in the details with these mitigation banks and their offsetting impacts. If you’re not doing it in a way that offsets the natural water storage losses, then you’re passing the buck to future generations,” sanctuary director Jason Lauritsen said. “What you see now is this beautiful landscape of diverse native species that have taken root and are filling in. We are showing that it can be done.”

The country is still losing wetlands. There is no national-level data that shows how close mitigation banks are to achieving the “no net loss” goal. But Corps permit data show that from 2002-2015, when the agency allowed about 350 square miles (906 square kilometres) of wetlands to be filled, developers were required to purchase about 800 square miles (2,070 square kilometres) of compensatory mitigation credits, mostly from banks.

The Obama administration sought to include even more wetlands as protected waterways under the WOTUS rule, and investors responded positively, because sustained government support reduced the market’s risk.

Trump’s order directs the EPA and Corps to consider adopting the late Supreme Court Justice Antonin Scalia’s 2006 definition, which would limit Clean Water Act protections for non-navigable waterways to those that remain covered by water year-round and connected to navigable rivers, lakes or streams. This could remove many waters from federal oversight, and hit mitigation banking hard, experts say.

Protecting fewer wetlands and streams would mean fewer impacts to these resources will be regulated, and less mitigation required to compensate for them, said Jessica Wilkinson, a senior policy adviser at The Nature Conservancy, which sponsors 13 wetland and stream mitigation banks in five states.

“That’s not good for trying to achieve the objectives of the Clean Water Act in general if we’re no longer protecting these waters,” Gardner said. “If the Trump administration goes forward with a definition of WOTUS that severely restricts what waters are protected, then their market evaporates.”

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Associated Press Writer Tess Williams in Lincoln, Nebraska, contributed to this story. Follow Jason Dearen on Twitter: http://www.twitter.com/JHDearen