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1MDEQ WETLAND MITIGATION BANKING HANDBOOK

Michigan Department of Environmental QualityLand and Water Management Division

MDEQ Wetland Mitigation Banking Handbook

September 2001

2 MDEQ WETLAND MITIGATION BANKING HANDBOOK

3MDEQ WETLAND MITIGATION BANKING HANDBOOKTABLE OF CONTENTS

Section 1: An Introduction to Wetland Mitigation Banking . . . . . . . . . . . . . . . . . . . 7What is Wetland Mitigation Banking?An Overview of the Wetland Mitigation Banking Handbook

Section 2: Process for Estalishment of a Bank . . . . . . . . . . . . . . . . . . . . . . . . .12Pre-proposalBanking Agreement ProposalWetland Mitigation Banking Agreement

Section 3: Planning Considerations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15Site SelectionDefinition of Functional GoalsSize of the Mitigation BankLocation: Public or Private Lands?DesignIncorporation of Upland AreasPreservation of Existing Wetlands

Section 4: Wetland Mitigation Banking Agreements . . . . . . . . . . . . . . . . . . . . . 23Elements of a Banking AgreementSignatories to the Banking Agreement

Section 5: Bank Construction and Initial Management . . . . . . . . . . . . . . . . . . . . 25Construction Permit RequirementsMonitoring and Certification of Mitigation CreditsRegistry of Mitigation Bank Credits

Section 6: Use of Mitigation Bank Credits . . . . . . . . . . . . . . . . . . . . . . . . . . . 29In-kind and Out-of-kind MitigationService Area

Section 7: Long-term Management and Protection . . . . . . . . . . . . . . . . . . . . . . 32MonitoringFinancial AssurancesLong-term Protection

Section 8: State Priority Wetland Restoration Areas . . . . . . . . . . . . . . . . . . . . . 34

Section 9: Additional Assistance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35


Preface

Wetland mitigation banking is the creation or restoration of wetlands in order to provide mitigationcredits which can be used to offset permitted wetland losses. These credits may be used by theperson who establishes the bank or may be sold to another party. Mitigation banking has thepotential to provide significant financial benefits to a bank sponsor while improving the state’swetland regulatory program. Mitigation banking can benefit the state’s wetland resources byproviding advance replacement for permitted wetland losses, consolidating small projects into larger,better designed and managed units, and by encouraging integration of wetland mitigation projectswith watershed planning. Mitigation banking can benefit a wetland permit applicant by reducingpermit processing time and costs, and by increasing certainty regarding the availability of adequatemitigation sites. The sale of bank credits by a bank sponsor who is also a permit applicant may alsoprovide an opportunity for offsetting the costs associated with the creation and monitoring of wetlandmitigation. For those interested in wetland restoration and protection, the sale of mitigation bankcredits may also provide a funding mechanism for future projects.

The Michigan Department of Environmental Quality adopted administrative rules for wetlandmitigation banking in December 1997. These rules define the legal requirements associated with theestablishment, use, and long-term management of wetland mitigation banks. The administrativerules for wetland mitigation banking may be found at R281.951 - R281.961. This handbook isdesigned to assist those interested in better understanding this program and to facilitate thedevelopment of mitigation banks. It provides an overview of the process for establishing a wetlandmitigation bank in Michigan including information on planning, design, and management of wetlandmitigation banks and development of wetland mitigation banking agreements.

For additional information or assistance regarding Michigan’s wetland mitigation banking program,please contact:

Michigan Department of Environmental QualityLand and Water Management Division

Inland Lakes and Wetlands UnitP.O. Box 30458

Lansing, Michigan 48909Telephone: 517-373-8000


What is Wetland Mitigation Banking?

Michigan’s wetland statute, Part 303, Wetlands Protection, of the NaturalResources and Environmental Protection Act, 1994 PA 451, as amended(NREPA), requires that persons planning to conduct certain activities inregulated wetlands apply for and receive a permit from the state beforebeginning the activity. Decisions on wetland permit applications are basedon the review of the proposed project in light of the criteria in Part 303 andassociated administrative rules. Part 303 provides for the issuance ofpermits for wetland alteration when impacts are unavoidable and when theimpact to the wetland is, on balance, deemed to be in the public interest.However, Part 303 also recognizes that the permitted loss of wetlands mayresult in the loss of wetland functions and values which provide publicbenefits, such as flood storage, water quality protection, fish and wildlifehabitat, and groundwater recharge. Therefore, as a condition of the permit,the applicant may be required to create or restore wetland areas in aprocess known as compensatory mitigation, or more commonly, mitigation.

Wetland mitigation has traditionally been provided on a permit-by-permitbasis. That is, the permit applicant is responsible for the design andconstruction of new or restored wetlands to replace the area impacted bythe permitted activity. This process can effectively replace lost functions,such as flood storage or stormwater treatment, but it can havedisadvantages. From the point of view of the applicant, design andconstruction of new wetland areas may be complex and time consuming.From the point of view of the resource, the new wetlands may be too smallor isolated to fully replace the lost wetland functions and values, or may bein a less than ideal setting which may never support a fully functionalwetland system. This approach may also result in a delay from the time ofwetland loss to the time of wetland replacement.

Wetland mitigation banking is a concept that has been developed nationallyin an attempt to address these issues. In a wetland mitigation bankingprogram, new wetlands are created or restored in advance of anticipatedlosses in order to meet the future needs of a particular watershed orecoregion. Once these wetlands are established, they can providemitigation credits that can be used to offset permitted losses. These creditsmay be used by the person who establishes the bank, known as the banksponsor, or may be sold to another party.

Administrative rules authorizing wetland mitigation banking in Michigan,promulgated under Part 303, took effect on December 25, 1997. Mitigationbanking offers an alternative, and a potentially more effective, means ofreplacing permitted wetland losses and complying with wetland permitconditions.

The Michigan Department of Environmental Quality (MDEQ) has developeda mitigation banking program to meet multiple goals. Mitigation bankingmay benefit Michigan’s wetland resources by providing for establishment ofnew wetlands in advance of losses. Mitigation banking also consolidates

Section 1: An Introduction to Wetland Mitigation Banking

Mitigation banking means the processof restoring or creating self-sustainingfunctioning wetlands, or, in exceptionalcircumstances, preserving high-qualityand threatened wetlands, as priorreplacement for wetlands that areexpected to be unavoidably impactedby development within a watershed orecoregion.


small mitigation projects into larger, better designed and managed units.Michigan’s wetland resources will also benefit from the better integration ofwetland mitigation projects and watershed based resource planning that canresult from mitigation banking.

Mitigation banking may benefit a wetland permit applicant by reducingpermit processing time and costs, and by increasing certainty regarding theavailability of adequate mitigation sites. Although the availability of bankcredits will not effect whether a permit is issued, it may reduce the effort andtime involved in finding mitigation. The sale of bank credits by a banksponsor who is also a permit applicant can also offset the cost of creatingand monitoring mitigation.

There are several significant legal differences between wetland mitigationbanking and permit-by-permit mitigation. Both types of mitigation may beused to meet legally mandated permit requirements. However, in thetraditional permit-by-permit process, the permit holder is responsible forensuring that mitigation wetlands are created as planned and maintained inperpetuity, and is usually liable for any problems associated with a mitigationsite. In a mitigation banking process, the legal responsibility for constructingand maintaining these wetlands is transferred to the bank sponsor. SeeFigure 1 for a comparison between mitigation banking and traditionalmitigation.

The administrative rules for wetland mitigation banking do not apply tomitigation designed specifically to meet the wetland permit requirementsassociated with a single permitted project. A mitigation site dedicated to usefor a single project is not a “bank,” even if it is constructed prior to permittedlosses. Nor is this guidance intended to apply to certain types ofconsolidated, pre-project mitigation. Types of projects not covered by themitigation banking program include:

• Voluntary wetland creation or restoration projects carried out byindividuals or agencies which were not planned or designed for use asmitigation sites. A banking agreement must be in place prior to creationor restoration of wetlands for a bank.

• Consolidated general permit mitigation sites developed in accordancewith the Memorandum of Agreement between the MDEQ, the MichiganDepartment of Transportation, and other public transportation agencies.

• Wetland restoration projects supported by certain other governmentprograms, such as the U.S. Department of Agriculture Wetland ReserveProgram and Michigan’s Nonpoint Source and Clean Michigan Initiativeprograms, cannot be used as mitigation banks. Check with eachprogram for eligibility requirements.

The administrative rules for wetland mitigation banking guide theestablishment and use of mitigation banks. General provisions of theserules include the following:

• Mitigation banks will usually be sites where wetlands have been createdor restored specifically to offset future permitted losses. Wetlandrestoration refers to the establishment of wetlands at locations where

The purpose of the wetland mitigationbanking rules is to provide for thestatewide establishment and operationof mitigation banks as an alternativewetland mitigation option that willprotect and enhance the wetlandresources of the state while expeditingthe regulatory process.


they were historically present, but have ceased to exist as the land wasaltered for other purposes. This situation typically occurs in areas thatwere historically drained for agriculture. Wetland creation refers to theconstruction of wetlands where they did not previously exist, eitherthrough excavation to alter the landscape or through flooding of formerupland areas. Because restoration represents a return to historicalconditions, it is typically less costly and more successful than wetlandcreation.

• Under certain circumstances, limited mitigation credit may be given forthe preservation of existing wetlands which have exceptional publicvalues. The administrative rules include specific criteria defining whensuch credit may be authorized. Credit for wetland preservation isdiscussed in greater detail in Section 3.

Figure 1 - Comparison of Permit-by-Permit Mitigation and Mitigation Banking

Permit-by-Permit Mitigation Wetland Mitigation Banking

How many permits are associatedwith the wetland mitigation site?

Usually only one Usually used to mitigate formultiple projects in watershedor ecoregion

Where are the mitigationrequirements for a given projectdefined?

In the wetland permit In the wetland permit

Where is the specific design of thewetland mitigation site defined?

In the wetland permit In the Wetland MitigationBanking Agreement

What regulations apply to themitigation site?

Part 303 and Rule 281.924 Part 303, Rule 281.924, andRules 281.951 -281.961

Who is responsible for approving themitigation site?

The MDEQ The MDEQ

Who is responsible for successfulcreation of the bank?

The permittee The mitigation bank sponsor

Who is liable for problemsassociated with operation of thebank?


When are the mitigation wetlandsconstructed and evaluated?

Prior to the permitted projectunless a concurrent scheduleis approved and financialassurances are provided

Prior to the permitted projectsfor which mitigation creditsare used

Where are monitoring requirementsfor the mitigation site defined?

In the wetland permit In the Wetland MitigationBanking Agreement

Who is responsible for maintainingthe mitigation site in perpetuity?


Who is responsible for monitoringand maintenance of the mitigationwetland?



• The goal of mitigation banks should be the establishment of diverse,multipurpose and self-sustaining wetland systems. Such goals improvethe management of the state’s wetland resources by establishing highquality systems which are viable over time.

• Mitigation banks should address the needs of the local area. Theplanning and design of wetland mitigation banks should generallyaddress the needs of watershed or ecoregion in light of anticipatedwetland losses due to development within the watershed or ecoregion.Banking efforts should be integrated with other ongoing planning effortsand coordinated with managerial resource agencies and local units ofgovernment.

• Mitigation banking does not alter the criteria for issuance of wetlandpermits. The purpose of wetland mitigation, i.e., to offset unavoidable,permitted impacts to wetlands and their associated functions and values,is defined in existing state and federal law and regulations. Wetlandmitigation banking is an alternative process for meeting therequirements of wetland permits, but does not alter criteria for reviewand issuance of wetland permits.

• It may not always be possible to use a mitigation bank. Because mostwetland functions are to some degree site specific, a wetland mitigationbank cannot always be used to offset losses. Where the loss of wetlandfunctions can only be replaced on the same site or in close proximity, theuse of a mitigation bank at another site may not be approved by theMDEQ.

An Overview of the Wetland Mitigation Banking Handbook

National experience has shown mitigation banking programs will not workeffectively without comprehensive planning, design, and approval. Thepayoff for this effort is the availability of a mitigation bank which may make iteasier to comply with some individual permit conditions, and which moreeffectively replaces unavoidable losses. In order to meet the dual goals ofimproving resource management and facilitating the permit process,mitigation banking must include the following steps which are addressed ingreater detail throughout this handbook.

• Adequate initial planning. In general, planning for a wetland mitigationbank should be done within the context of a particular watershed orecoregion. The plan should take into account anticipated permittablelosses due to development, the overall wetland needs of the area, andthe concerns of local government.

• Good site selection. Choosing the right site can make the differencebetween a successful bank and a failure. Sites that require verycomplex design and construction strategies to achieve wetland functionsshould be avoided. It should be noted that wetland restoration is muchmore likely to be successful than wetland creation. Therefore, seekingout sites where wetlands existed historically is a good strategy.


• Site specific design. The proposed wetland should be designed to meetspecific resource management goals suited to the needs of thewatershed or ecoregion, and reflect the physical characteristics of thesite. It should provide multiple ecological benefits such as water qualitymanagement, wildlife habitat, flood control, and, where possible,educational and recreational opportunities.

• Early coordination with the MDEQ. A written preliminary proposalidentifying the location and conceptual design of a proposed bankshould be submitted to the MDEQ for review and comment.

• Completion of a formal Wetland Mitigation Banking Agreement. Thebank sponsor must enter into a formal, legal agreement with the MDEQbefore construction of the mitigation bank begins. Other interestedparties may also be signatory to this agreement. The agreement willdefine how the bank will be constructed, operated, and used. Withoutthis up-front agreement, the MDEQ will not approve the use of therestored or constructed wetland site as a mitigation bank site.

• Construction and evaluation. The bank sponsor is responsible forconstruction of the mitigation bank, and for evaluation of the success ofwetland establishment. Once the bank sponsor certifies that wetlandshave been established, the MDEQ is asked to approve those “credits.”Wetland credits that are approved by the MDEQ will be listed in aregistry that is available to the public.

• Use of the mitigation bank. Credits may be used by the bank sponsorfor their own purposes when authorized in a permit (e.g., by atransportation agency to offset the impacts of a highway project) or maybe sold to a permittee who has been authorized by the MDEQ to usecredits from the bank.

• Long-term management. Once established, a wetland mitigation bankmust be maintained in perpetuity. A conservation easement isnecessary to ensure protection of the wetlands and their associatedfunctions and values to the exclusion of other possibly conflicting uses.Long-term monitoring may be required to ensure that the wetlandcontinues to function as planned.


Bank sponsor means a person whoindependently or in cooperation withanother person is responsible for theestablishment, operation, and long-termmanagment of a wetland mitigationbank.

Section 2: Process for Establishment of a Bank

The sponsor of a wetland mitigation bank is the individual or organizationresponsible for establishment and operation of the bank. The sponsor maybe a landowner, a for-profit company, a nonprofit organization, a unit ofgovernment or government agency, or a partnership among any of theseentities. The bank sponsor provides mitigation credits which may be used tomeet mandatory conditions of wetland permits. In doing so, the banksponsor assumes many of the legal responsibilities which are carried by thepermit applicant in a more traditional permit-by-permit mitigation process.

The following general process for the development of wetland mitigationbanks has been developed to assist potential bank sponsors in submittingproposals to the MDEQ:

Step One: Early coordination and submittal of a pre-proposal

The potential bank sponsor should contact the MDEQ to discuss mitigationbanking early in the planning process. Once a site is selected by the banksponsor, the sponsor should submit a pre-proposal to the MDEQ. TheMDEQ will then review the pre-proposal, inspect the site, and providefeedback to the bank sponsor. The pre-proposal should be made in writingand include the following information:

• The name of the bank sponsor and any associated agencies ororganizations.

• A site location map and any other available maps or aerial photos of theproperty.

• A description of the site including existing hydrology, vegetation, andland use.

• The conceptual design of the bank, including a description of theapproximate acreage and type of wetlands to be created or restored.

• Permission for the MDEQ to enter the site for inspection.

• Notification that the bank will or will not be used to meet requirements oflocal, state, or federal agencies, and identification of the agencies.

The goal of this first step is a conceptual evaluation of the bank location andproposal. While detailed plans are not required, the bank sponsor shouldhave a definite vision for the bank and be able to provide the informationdescribed above. Review of the proposed bank location and pre-proposalby the MDEQ should assist the bank sponsor in identify potential problems.However, final decisions on proposed banks are based on the sitedevelopment plan submitted, and achievement of a mutually acceptablebanking agreement.


This second phase will involve the development of a specific proposal by thebank sponsor. The goal of this phase is the involvement of interestedparties and the refinement of the concept to the point where a final designand management proposal can be made. It is also important to docontingency planning in this phase in an effort to reasonably foresee eventswhich could impair the bank’s success and develop strategies to addressthem.

All aspects of bank development should be considered during proposaldevelopment, including monitoring, long-term management, performancestandards and all of the elements required in a banking agreement. Theelements of a banking agreement are discussed in Section 4. Aftersubmittal by the bank sponsor, the MDEQ will review the banking agreementproposal and provide feedback.

The bank sponsor is required to notify local units of government andadjacent property owners of the proposed mitigation bank, and should do soas early as possible in the planning process. The bank sponsor is alsoresponsible for securing all necessary local permits and complying with alllocal requirements. The comments of local agencies must be included inthe mitigation banking proposal submitted to the MDEQ.

The second phase may also involve submittal of a permit application.Construction of a bank will likely require a permit under the Inland Lakesand Streams, Wetlands Protection, and/or Floodplain Parts of the NREPA.

Step Three: The wetland mitigation banking agreement

The banking agreement, acceptable to both parties, is signed by the banksponsor and by the MDEQ. The USEPA will provide comments on thedesign of the bank prior to approval to ensure that future use of the bank willbe consistent with federal standards. If the bank sponsor anticipates use ofthe bank as mitigation for projects permitted by the USACE, then theUSACE should also be a signatory. In some instances, it will be appropriatefor local agencies to be signatory to banking agreements. For instance, alocal government may need to sign the banking agreement if the mitigationbank will also be used to satisfy the requirements of permits issued under alocal wetland ordinance.

Once a formal wetland mitigation banking agreement is in place, the banksponsor will need to comply with all of the responsibilities outlined in theagreement including construction in accordance with the design andspecifications, monitoring of the wetlands, tracking of credits, financialassurance, long-term management, corrective action, and legal protectionof the bank site. The MDEQ will review monitoring reports, conductnecessary site reviews, approve mitigation bank credits when the wetlandsare established in accordance with the design and specifications, and reviewongoing reports to determine that the wetland bank is being managed in

Step Two: Development and submittal of a banking agreement proposal

accordance with the banking agreement. The MDEQ will also authorize useof credits from the bank for appropriate permits and track the use of thebank and the availability of credits.

14

The development of a successful mitigation bank requires careful andextensive planning. The sponsor needs to give consideration to a numberof critical issues based on the bank’s goals, the location, and the types ofwetland area to be developed.

Site Selection

The selection of the bank site is probably the most critical decision. The sitewill, in large part, determine the ecological success of the bank, the area thebank can serve, and the demand for credits from the bank. Choosing a sitewherein wetland functions can be successfully and economically created iscritical to bank success.

The area a bank can serveis defined in theadministrative rules.Wetland mitigation banksshould be established on awatershed or ecoregionbasis. The overall intentof the bank should be toreplace those wetlandfunctions which areunavoidably lost as aresult of permittedactivities in the watershedor ecoregion.

A watershed is defined bythe administrative rules asa drainage area withinwhich the replacement ofcertain wetland functionsmay be authorized by theuse of a mitigation bank.Functions which should bereplaced in the samewatershed include floodstorage, water qualityprotection, andgroundwater recharge.Watershed areas aremapped in Figure 1 in theadministrative rules,reproduced here asFigure 2. Note that areaswhich drain directly to theGreat Lakes are combinedwith adjacent rivershedsfor purposes of the rules.

Service area means an area in which abank can reasonably be expected toprovide appropriate compensatorymitigation for impacts to wetlands. Theservice area will be defined on awatershed or ecoregion basis.

2 -

Section 3: Planning Considerations

15


In some instances, wetland functions can only be adequately replaced in aparticular portion of a watershed, or a subwatershed. One example wouldbe the replacement of wetlands which serve to maintain baseflow andprotect the water quality of a small trout stream. Likewise, the loss ofwetlands near an inland lake may need to be offset by the establishment ofwetlands in the same lake basin. Use of a particular mitigation bank maybe limited by such localized considerations. All of these potential usesshould be considered when selecting a bank site.

An ecoregion is a geographic area of relatively uniform geology, climate,and plant community and is assumed to provide similar habitat. Ecoregionsdo not follow watershed boundaries. However, when the major

Source: Albert, Dennis A. 1995. Regional landscape ecosystems of Michigan,Minnesota, and Wisconsin: a working map and classification. Gen. Tech. Rep.NC-178. St. Paul, MN: U.S. Department of Agriculture, Forest Service, North CentralForest Experiment Station.

Sub-subsection VI.1.1. Maumee Lake PlainSub-subsection VI.1.2. Ann Arbor MorainesSub-subsection VI.1.3. Jackson InterlobateSub-subsection VI.2.1. Battle Creek Outwash

PlainSub-subsection VI.2.2. Cassopolis Ice-Contact

RidgesSub-subsection VI.3.1. Berrien SpringsSub-subsection VI.3.2. Southern Lake Michigan

Lake PlainSub-subsection VI.3.3. JamestownSub-subsection VI.4.1. LansingSub-subsection VI.4.2. GreenvilleSub-subsection VI.5.1. Sandusky Lake PlainSub-subsection VI.5.2. Lum InterlobateSubsection VI.6. Saginaw Bay Lake PlainSub-subsection VII.1.1. StandishSub-subsection VII.1.2. Wiggins LakeSub-subsection VII.2.1. CadillacSub-subsection VII.2.2. Grayling Outwash PlainSub-subsection VII.2.3. Vanderbilt MorainesSubsection VII.3. Newaygo Outwash PlainSubsection VII.4. ManisteeSub-subsection VII.5.1. WilliamsburgSub-subsection VII.5.2. Traverse CitySubsection VII.6. Presque IsleSub-subsection VII.6.1. OnawaySub-subsection VII.6.2. StutsmanvilleSub-subsection VII.6.3. Cheboygan

Figure 3 - Michigan’s Lower Peninsula Ecoregion Boundaries

Watershed means a drainage areawithin which the replacement ofcertain functions, includinghydrologic, water quality, and aquatichabitat functions, may be authorizedby the use of a mitigation bank.


consideration is replacement of lost wetland habitat for plants or animalsthat do not rely on watersheds, it can be assumed that similar habitat can bereplaced within the same ecoregion. For purposes of the mitigation bankingprogram, the maps shown in Figures 3 and 4 will be used to defineecoregion boundaries.

When selecting a site for a wetland mitigation bank, the bank sponsorshould consider the following factors:

• Location in a watershed or ecoregion.

• Proximity to other waterbodies.

• Historic losses of various types of wetlands in the watershed orecoregion.

Figure 4 - Michigan’s Upper Peninsula Ecoregion Boundaries

Source: Albert, Dennis A. 1995. Regional landscape ecosystems of Michigan,Minnesota, and Wisconsin: a working map and classification. Gen. Tech. Rep.NC-178. St. Paul, MN: U.S. Department of Agriculture, Forest Service, North CentralForest Experiment Station.

Sub-subsection VIII.1.1. St. IgnaceSub-subsection VIII.1.2. RudyardSub-subsection VIII.1.3. Escanaba/Door PeninsulaSub-subsection VIII.2.1. Seney Sand Lake PlainSub-subsection VIII.2.2. Grand Marais Sandy End Moraine and OutwashSub-subsection VIII.3.1. Northern lake Michigan (Hermanville) Till PlainSub-subsection VIII.3.2. GwinnSub-subsection VIII.3.3. DeertonSubsection IX.1. Spread Eagle-Dunbar BarrensSubsection IX.2. Michigamme HighlandSub-subsection IX.3.1. Brule and Paint RiversSub-subsection IX.3.2. Winegar MoraineSubsection IX.5. Lac Veaux Desert Outwash PlainSub-subsection IX.6.1. Gogebic-Penokee Iron RangeSub-subsection IX.6.2. EwenSub-subsection IX.6.3. BaragaSub-subsection IX.7.1. GaySub-subsection IX.7.2. CalumetSub-subsection IX.7.3. Isle RoyaleSubsection IX.8. Lake Superior Lake Plain

Ecoregion means a geographic regionof relatively homogenous ecologicalsystems. For the purpose of thewetland mitigation banking rules, themapped sub-sections found in thepublication entitled RegionalLandscape Ecosystems of Michigan,Minnesota and Wisconsin, Dennis A.Albert, 1994, North Central ForestExperiment Station, United StatesDepartment of Agriculture, shall beused to identify ecoregion boundaries.


• Anticipated future losses of wetland types in the watershed or ecoregion.

• Specific wetland functions needed in the watershed or ecoregion.

• Consistency with existing watershed or ecoregion management plans.

• Specific primary and secondary wetland functions to be provided by themitigation bank.

• Ability of the site to support a diverse wetland system.

Given these considerations, it is clear that planning for wetland mitigationbanking may be most effective when carried out as one component of awatershed planning process. Even in the absence of this type of planning,good coordination with local units of government, including the County DrainCommissioner, is extremely important. It is absolutely critical that long-termdevelopment and mitigation requirement trends be considered in sitingmitigation banks to assure their long-term viability.

Definition of Functional Goals

Targeted functional goals for the mitigation bank wetlands should be definedearly in the planning process. The functional goals of the bank will drive siteselection, design, and ultimate use of the bank. Goals should be defined asspecifically as possible. For example, the goal of a bank may be to “providea set amount of flood storage in a particular basin” rather than simply “floodstorage”; or to “provide feeding and nesting habitat for identified species ofwaterfowl” as opposed to “wildlife habitat”.

While most wetlands can provide multiple physical, chemical, and biologicalfunctions, certain uses may be incompatible without thoughtful planning.For example, the fluctuations in water level which may occur in a wetlanddesigned for groundwater recharge may render the area unsuitable forwaterfowl nesting habitat.

Size of the Mitigation Bank

Determining an appropriate size for the proposed mitigation bank requiresconsideration of both anticipated mitigation needs and of the minimum areaneeded to achieve functional goals. Small wetland areas can providedistinct water quality benefits, and may be appropriate to the needs of asmall subbasin. On the other hand, larger areas often are more beneficialto wildlife, and are also more efficient to administer.

Because of the cost involved in monitoring bank performance and trackinguse, the administrative rules require that a proposed wetland mitigationbank provide a minimum of 10 acres of new wetland. However, recognizingthat some bank sponsors may be able to more effectively create severalsmall wetland sites, each functioning within a discrete subbasin, a wetlandmitigation bank may be comprised of multiple sites, each with a minimumsize of one acre, administered under a single banking agreement.

A wetland mitigation bank shallprovide a minimum of 10 acres of newwetland. The new wetland may consistof multiple sites that are minimum sizeof 1 acre each and shall beadminstered under a single bankingagreement.


Location: Public or Private Lands?

Wetland mitigation banks may be located on either public or private lands.However, a wetland bank may be established on public lands only if itfurthers established management objectives which have been defined bythe agency responsible for managing the land, and with the approval of theagency responsible for the land.

Some hypothetical examples of appropriate use of public lands include:

• The restoration or creation of wetlands in a state wildlife area inaccordance with plans developed by the Michigan Department of NaturalResources (MDNR). In some instances, another government agency ora private organization may be able to fund the implementation of aproject designed by the MDNR. The bank sponsor may also agree toprovide an endowment for the long-term management of the site. TheMDNR would be directly involved in all stages of planning such amitigation bank project, and a MDNR signature on the bankingagreement would be required.

• Restoration or creation of wetlands on property owned by local units ofgovernment to meet their flood management, water quality, recreational,or other goals. Mitigation banking may be particularly appropriate in thecontext of comprehensive watershed planning.

• Restoration or creation of wetlands on school property to meet multiplegoals, including educational opportunities.

• Establishment of mitigation bank sites on land acquired by a publicagency specifically to meet its own mitigation requirements. Publictransportation agencies in particular often complete plans for roadconstruction and improvement well in advance of construction, and maybenefit from being able to create mitigation banks to offset these lossesin advance.

Arrangements for lease or permitted use of the public lands must be madebetween the bank sponsor and the land managing agency prior to submittalof the mitigation banking proposal.

Because future use or alteration of the land used for mitigation banks will belimited, the land owner or land management agency must be a party to thebanking agreement. The mitigation bank sponsor will be responsible for anyneeded remedial action in the event of bank failure, unless otherwisestipulated in the banking agreement.

Design

Factors that the bank sponsor should consider when designing a siteinclude:

• Wetland restoration - the preferred option. In most instances, therestoration of wetland hydrology and vegetation on sites which werehistorically altered is more likely to produce a functional wetland system


than an attempt to create wetlands where they never occurred. Inaddition, wetland restoration is typically a more cost effective alternative.Blocking existing drain tiles or other drainage systems may be a fairlystraightforward process, although experience has shown that the soilsmay not become saturated for up to a year or more following blockageof drain tiles. The presence of wetland seed banks in the soil mayfacilitate the reestablishment of a wetland plant community.

In designing a system which involves alteration of existing drainage,precautions must be taken to achieve the proper wetland hydrology, yetavoid flooding other property owners. Existing drain tile systems mayprovide an outlet for neighboring property owners, and a new drainageoutlet may need to be established to meet their needs. Technicalexperts should be consulted during the design of any wetland restorationproject. In addition, any work involving county drains must beundertaken in cooperation with the county drain commissioner.

In any wetland restoration project, consideration should be given to thetype of wetland which occurred historically on the site. Maps ofpre-European settlement wetland vegetation based on Michigan’sGeneral Land Office surveys, are available from the Michigan ResourceInformation System. The wetland mitigation banking rules allowconsideration of out-of-kind mitigation to help restore the historicbalance of wetland types within a watershed or ecoregion. Thus,restoration of the wetlands which historically existed may ultimatelyfacilitate use of the mitigation bank.

• Wetland creation - feasible in some locations. Wetland creation is oftenmore expensive and less successful than restoration. Excavation downto the water table is likely to be expensive, and determining the elevationneeded to achieve correct hydrologic conditions is often complicated. Inmany instances, it is difficult to provide an adequate water supply on asite which has always been upland. Wetland vegetation may also bedifficult to establish in upland soils which do not contain a wetland seedbank.

Nonetheless, some wetland creation projects are successful if properhydrology and soils are provided. Again, expert technical advice isessential. A water budget should be prepared to determine theappropriate frequency and duration of saturation and inundation for theproposed site. It may be helpful to design water control structures oroutlets to be adjustable while the wetland is being established, and fixedonce appropriate hydrologic conditions are established. The addition ofhydric or mineral soils may also be necessary.

• Designing for diversity. Most natural wetlands are complex, diverseecosystems, which typically include a variety of wetland types.Wetlands established in mitigation banks are most likely to providevaluable habitat if they are designed to support a variety of wetlandvegetation. Variation in water depths (from saturated soil to shallowopen water), gentle slopes, irregular bottom contours, and nativeplantings and seedings can be useful methods to increase diversity.Habitat structures such as brush piles, snags, and stump islands, are a

Wetland restoration means thereestablishment of wetlandcharacteristics and functions at a sitewhere they have ceased to exist throughthe replacement of wetland hydrology,vegetation, or soils.

Wetland creation means the physicaland biological establishment of awetland where a wetland did notformerly exist.


critical element in natural wetlands and should also be part of thewetland design.

The administrative rules for wetland mitigation banking allowconsideration of out-of-kind mitigation if the bank proposed for use is adiverse wetland complex, and thus the establishment of this type ofsystem will benefit the bank sponsor as well.

• Design the system to be self-sustaining. Wetlands established inmitigation banks must be maintained in perpetuity. Therefore, it is highlydesirable that the system be self-sustaining or low maintenance. Anystructures such as dikes, dams, and water control structures that mustbe maintained by the bank sponsor will add to the long-term cost of thebank. Where such structures are incorporated into the bank design,financial assurances will be required to ensure that they are maintainedin perpetuity.

The MDEQ recognizes that the wetland plant community initiallyestablished in the mitigation bank may change over time due to naturalsuccession. However, the site should not develop into a monotypicstand of low value vegetation (particularly invasive, non-native species).Mitigation banking sites which develop in this undesirable manner mayneed to be actively managed or replanted.

Incorporation of Upland Areas

In many instances, wetland functions will be achieved or enhanced by theinclusion of upland areas within a mitigation bank. For example, uplandareas may provide a necessary component of the overall habitatrequirement of wildlife species which are dependent on wetlands. Uplandsmay also serve as buffers between the mitigation site and adjacent landuses, thereby protecting and enhancing the quality of the mitigationwetlands.

For these reasons, the inclusion of uplands in mitigation bank plans isencouraged, and indeed may be essential in order to fully meet functionalgoals. However, these areas will not be included directly in the calculationof wetland mitigation “credits” available in the bank. It should be noted thatthe permit holder is not required to provide mitigation for the loss of uplandinclusions in a wetland complex, and it is thus generally inappropriate toprovide credit for the replacement of uplands. An exception to this generalrule is made in banks established in state priority wetland restoration areaswhere limited credit for upland areas may be given (See Section 8).

Preservation of Existing Wetlands

Wetland mitigation usually requires either the creation or restoration ofwetlands to offset the impacts resulting from permitted activities. Whenpreservation of existing wetlands is used as mitigation, the result is a netloss of wetland resources. Therefore, mitigation credit is not typicallyoffered for preservation of existing wetlands.


However, the administrative rules on wetland mitigation banking providespecial consideration for the preservation of certain exceptional wetlandresources, offering partial credit for the inclusion of these resources inmitigation banks. In order to receive credits, the MDEQ must determine thatthe preserved wetlands meet all of the following criteria:

1. The preserved wetland must perform exceptional physical or biologicalfunctions which are essential to the preservation of the natural resourcesof the state, or be of an ecological type which is rare or endangered.Examples would include wetlands which provide habitat for plants oranimals which are included on the state or federal list of threatened orendangered species, rare wetland types such as lakeplain wet prairie, orwetlands which provided groundwater recharge as documented by apublic agency.

2. The preserved wetland must be under demonstrable threat of loss ordegradation due to human activities that are not under the control of thebank sponsor and that are not otherwise restricted by state law.Wetlands which are already well protected by state law and which do notgain additional protection by being included in a mitigation bank will notbe given credit. However, in some instances, these wetlands arethreatened by factors not regulated by state law. For example, awetland complex having extensive upland inclusions may be threatenedby the imminent development of those inclusions. Sensitive wetlandtypes such as fens and bogs may be threatened by runoff from adjacentupland development. Wetlands may be impacted by unregulatedactivities, such as cutting of vegetation and livestock grazing.

3. The preserved wetland must be protected by inclusion in the bank. Thebanking agreement must specify management measures that will betaken to protect those exceptional wetland functions which qualified thesite for mitigation credit. Examples include: establishment of a bufferzone to protect the wetland from the impacts of adjacent land uses,vegetation management such as controlled burns to help maintain wetprairie vegetation, or control of incompatible uses such as grazing orcutting of vegetation.

Generally, no more than 15 percent of the total wetland acreage in amitigation bank may be preserved wetlands. This limit is increased to25 percent in mitigation banks established in state priority wetlandrestoration areas (See Section 8). In addition, only partial credit is given forpreserved wetlands. Ten acres of preserved wetland equal one mitigationcredit, and thus, 10 acres must be preserved to obtain the same credit asone acre of created or restored wetland.

Wetland preservation means theprotection of an ecologically criticalwetland in perpetuity through theimplementation of appropriate legaland physical mechanisms.


The administrative rules require that a wetland mitigation bankingagreement be completed prior to establishment of the mitigation bank. Thiscontractual agreement defines the requirements and obligations of the banksponsor, the resource agencies, and any other parties. It sets performancestandards for the bank and specifies guidelines for bank use. This legaldocument takes the place of those individual permit conditions whichtraditionally defined the goals and standards for a mitigation site, althoughthe individual permit is still the vehicle by which use of the bank isauthorized.

Completion of a wetland mitigation banking agreement prior toestablishment of the bank is necessary to ensure that previously existingsite conditions are evaluated and that resource agencies will be able toauthorize mitigation credits for wetlands created or restored at the site.

Elements of a Banking Agreement

While each banking agreement should address the particular concerns ofthe parties involved, the administrative rules require that a bankingagreement include the following elements:

• Legal identification of the bank sponsor.

• Mitigation bank location and size, including a legal description of theproperty.

• Ownership of the mitigation bank site and documentation that the banksponsor is authorized to use the property, including a title search and awarranty deed.

• Copies of comments from local units of government and adjacentproperty owners, and documentation of efforts to resolve local issues.

• Bank goals and objectives and the geographic area to be served. Thegoal statement should indicate the types of wetlands to be developedand types of wetland losses for which the bank is to be used.

• An analysis of the ability of the site to support a diverse wetland system.

• A description of baseline conditions at the proposed bank site, includinga plan view and cross-section, a delineation of all existing surface watersor wetlands, and a description of the soils, vegetation, hydrology, andland use history of the site.

• The site development plan, including a description of the design, a waterbudget, a planting plan, a plan view and cross-section, and aconstruction schedule.

• A long-term site management plan.

• Consistency with existing watershed and ecosystem management plans.

Mitigation banking agreement means aformal written agreement between thebank sponsor and the MDEQ thatidentifies all relevant establishment,operation, and managementconsiderations of a wetland mitigationbank.

A person who chooses to establish andoperate a mitigation bank shall enterinto a written mitigation bankingagreement with the MDEQ beforeconstruction of the mitigation bank orany sale or use of credits from thebank.

Section 4: Wetland Mitigation Banking Agreements


• Long-term development trends in the area.

• Accounting procedures to be used to track the availability, sale, and useof mitigation credits and procedures for notifying the MDEQ of the saleor use of credits.

• Performance standards for determining mitigation bank success andcertification of credits.

• A monitoring plan to evaluate achievement of performance standardsand reporting protocol. This plan should include a description of themonitoring methods and frequency, and the location of transects, photopoints, monitoring wells, and staff gauges.

• Provisions for financial assurances to be used to complete remedialaction in the event of bank default or failure, and for release of financialassurances once a completed bank is determined by the MDEQ to beself-sustaining. Cost estimates for the construction, planting,maintenance and monitoring of the bank should be provided by the banksponsor.

• Provisions for maintenance of the site in perpetuity.

• Assumption of liability for construction and operation by the banksponsor. Purchasers of credits and other signatories to the bankingagreement are to be held harmless.

Other elements not specifically required in the rules may also beappropriate.

Signatories to the Banking Agreement

The primary signatories to all wetland mitigation banking agreements will bethe mitigation bank sponsor and the MDEQ. Additional parties to thebanking agreement may include the following, as appropriate:

• Federal or local agencies if the bank will also be used to meet mitigationrequirements of federal or local agencies. If it is anticipated that themitigation bank may be used for projects under the USACE jurisdiction,the USACE should be party to the banking agreement.

• The landowner or land management agency, if the bank site is notowned by the sponsor.

• Groups which intend to assume responsibility for long-term managementof the bank, if different from the bank sponsor.

• Any other group which will play a role in the establishment or operationof the bank.


Construction Permit Requirements

It is the responsibility of the bank sponsor to obtain any necessaryconstruction permits prior to initiating wetland creation or restorationactivities. Permits from the MDEQ will be needed if existing regulatedwetlands or other surface waters are impacted. Other state or localapprovals may also be necessary.

Permit review criteria in NREPA will be applied in reviewing a permitapplication to construct a mitigation bank that involves regulated wetlands,lakes, streams, and floodplains. The applicant or bank sponsor shouldexpect that a permit will not be issued if it results in unacceptable impacts toexisting waters, wetlands, or other sensitive regulated resources.

Significant alteration of natural undisturbed wetlands (e.g., flooding offorested wetlands or wet meadows; excavation of wet meadows or othershallow water areas) will generally not be considered acceptable since thismay result in the loss of specific wetland habitat types. On the other hand,restoration of hydrology in historically drained wetlands is likely to be anacceptable practice.

Other examples of construction which might be unacceptable includeimpoundment of natural streams; construction of floodings which willinterfere with drainage of neighboring property, or which may inundateneighboring property; or projects which will alter high quality habitat orhabitat for protected species. Early coordination with resource agenciesand local units of government will assist the bank sponsor in identification ofpotential problems and unacceptable design elements.

Monitoring and Certification of Bank Credits

Monitoring the establishment of wetlands in the mitigation bank is theresponsibility of the bank sponsor. The monitoring schedule andrequirements should be fully outlined in the banking agreement. Thepurpose of monitoring is to determine whether defined performancestandards are met and whether the wetlands are achieving functional goals.A wetland scientist should be consulted in designing a monitoring programto ensure that wetland conditions are adequately evaluated.

Monitoring must be initiated at least one year prior to anticipated sale or useof credits in order to allow time to determine whether wetland hydrology hasbeen established. Monitoring will typically continue on an annual basis untilperformance standards for the full establishment of the bank are met.Additional monitoring may be required as part of the long-term managementplan.

The bank sponsor shall obtain thenecessary construction permits for thealteration of existing wetlands orsurface waters and all other requiredfederal, state, or local approvals beforeinitiating wetland creation orrestoration activities. The permitreview criteria in the act will beapplied in reviewing an application toconstruct a mitigation bank.

The administative rules do not preemptthe need to obtain local approval forconstruction of a wetland mitigationbank under local zoning ordinances orother local regulations.

Section 5: Bank Construction and Initial Managment


Monitoring parameters will include:

• Hydrology. A record and description of hydrologic development includinga measurement of inundation and saturation (typically measured withstaff gauges or with monitoring wells).

• Plant community structure. Evaluated by identifying and quantifying theplant community along transects or in sample plots using standardtechniques.

• Animal community structure. Particularly where provision of habitat isone of the major goals of the mitigation bank.

• Wetland area. By delineating and surveying the limits of the wetlandactually established in the bank.

• Other measures needed to evaluate the functions of the mitigationwetlands, as defined in the banking agreement.

The monitoring design should measure achievement of performancestandards associated with the functions and values defined in the bankingagreement.

Newly established wetlands will not become fully functional for some time.The banking agreement should include criteria to define when a particularsystem is considered functional, based on the goals of the mitigation bank.For forested systems, the bank may be considered functional before treesare mature based on other criteria established in the banking agreement.

The MDEQ may authorize credits from the mitigation bank according to thefollowing schedule:

• The use of 50 percent of potential mitigation bank credits will be allowedafter the MDEQ agrees that construction has been completed inaccordance with plans and specifications, and design hydrology hasbeen achieved and maintained for at least one calendar year.

• The use of an additional 25 percent of credits will be allowed when thewetland plant community achieves 50 percent of design cover, based onperformance standards defined in the banking agreement.

• The use of the final 25 percent of credits will not be allowed until thewetlands are fully functional and meet the performance standardsdefined in the banking agreement.

Other performance standards will be established in the banking agreementon a site-specific basis. In general, a performance standard should beincluded for the frequency and duration of inundation and saturation foreach wetland type. Performance standards for percent cover and diversityof wetland vegetation should also be included for each wetland type.Examples of performance standards are provided in Figure 5.

Before credits can be approved by the MDEQ, the bank sponsor mustcertify that the wetlands have been established in accordance with the


banking agreement. The bank sponsor must prepare a report, including allmonitoring data and the delineation of new wetlands, an evaluation of thestatus of the wetlands as compared to the design criteria, and a list of thenumber and type of credits for which approval is requested. The MDEQ willhave 60 days to review the sponsor’s certification, and may either approveor deny the certification. The certification of credits may be denied if thewetlands do not meet the performance standards outlined in the bankingagreement. The MDEQ may also deny certification if there is not sufficientinformation in the monitoring report to evaluate the status of wetlands in themitigation bank.

Registry of Mitigation Bank Credits

The MDEQ will maintain a registry of established wetland mitigation banksand approved mitigation credits. The registry will track the generation anduse of credits and provide information to the public regarding the availabilityof credits.

The registry will include all of the following information:

1. A general description of the bank.2. The total number of credits in the bank, the number previously

used to meet mitigation requirements, the number offered forsale by the bank sponsor, and the number sold.

3. The number of acres of each major ecological type of wetland.4. The defined service area of the bank.5. The name and address of the bank sponsor.6. The date of bank establishment by banking agreement, and the

date of approval of mitigation credits.7. An identification code for each approved mitigation bank.

Figure 5 - Performance Standard Examples

• In the spring, the hydrology of the forested wetland will range from saturation within ____ inches ofthe surface to approximately ____ inches of standing water; in the summer, variable but should besaturated within ____ to ____ inches of the surface.

• Water depth in the emergent wetland will vary from ____ to ____ inches of standing water.• Under normal climatic conditions, saturation and inundation of the wetland shall range from

approximately ____ inches of standing water to saturated within ____ inches of the surface inaccordance with the attached water budget.

• The wetland will support a predominance of wetland vegetation, represented by a minimum of____native wetland species at the end of the monitoring period.

• The minimum number of freestanding trees/shrubs per acre will be ____.• Percent cover by wetland species will be ____ % or more.• Invasive species including but not limited to, Phragmites australis (Common Reed), Lythrum

salicaria (Purple Loosestrife), Phlaris arundinacea (Reed Canary Grass), and _________, shall belimited to ten percent of the total plant cover within the created wetland.

• Wetlands shall be free of oil, grease, man-made debris, and all other contaminants.• The minimum number of habitat structures per acre will be _____.

Note: Each wetland type should have its own set of performance criteria.


Within 60 days of the sale of approved mitigation bank credits, the banksponsor is required to report the sale and the per credit sale price to theMDEQ. The sale price will not be included in the registry.

The information contained in the registry will be available to the publicthrough the internet at www.deq.state.mi.us/lwm.


The MDEQ (and, if applicable, the USACE) will determine when credits froma wetland mitigation bank can be used to satisfy mitigation requirements aspart of the wetland permit process. Use of credits will be based on whetheror not the wetland types present in a bank will effectively replace wetlandfunctions and values which are being lost due to the permitted project. TheMDEQ can authorize the use of bank credits to satisfy all or a part of thewetland mitigation requirements associated with a permit.

This section discusses some of the factors which will guide permit decisionsregarding the use of banks. Some of the factors that the MDEQ willconsider in determining whether credits from a particular mitigation bankcan be used are:

• The location of the mitigation bank and its defined service area relativeto the permitted wetland impact.

• The wetland types represented in the bank relative to the permittedwetland impact.

• The sustainable wetland functions provided by the bank relative to thepermitted wetland impact.

In-kind and Out-of-Kind Mitigation

The basic purpose of wetland mitigation is to replace those public benefitsassociated with wetlands which are unavoidably impacted due to permittedactivities. The administrative rules for Part 303 require that mitigationproposals should give consideration to replacement of the predominantfunctional values lost within the impacted wetlands.

Wetland function is directly related to wetland type, and for this reason thereis a general preference for “in-kind” mitigation, that is, replacement ofunavoidably lost wetlands with the same type of wetlands. Routine approvalof “out-of-kind” mitigation could result in the gradual replacement of diversewetland ecosystems with those types of wetlands which are easiest tocreate (generally open water or cattail-dominated ponds).

However, in some circumstances it may be more beneficial to the resourceto allow for use of a wetland bank which includes a different type of wetlandthan that impacted by the permitted project. The MDEQ may consider theuse of out-of-kind bank credits based on one or more of the followingcriteria:

• The types of wetlands restored or created in the wetland mitigation bankhelp to restore the historic balance or wetland types within thewatershed or ecoregion. An approximate map of pre-Europeansettlement wetland conditions in Michigan has been developed by theMichigan Natural Features Inventory. This map is based on GeneralLand Office Surveys, and is available in a digital format.County-by-county summaries of historic wetland conditions are included

The establishment and use of amitigation bank are voluntary. Thepermit applicant has the option ofproviding compensatory mitigation fora single permitted action at the time ofpermit issuance.

In-kind mitigation means replacementof unavoidably lost wetland resourceswith created, restored, or, inexceptional circumstances, preservedwetlands of a similar physical/biological type, with the goal ofreplacing as fully as possible thefunctions of the lost wetland.

Section 6: Use of Mitigation Bank Credits

Out-of-kind mitigation means thereplacement of unavoidably lostwetland resources with created,restored, or, in exceptionalcircumstances, preserved wetlands thatare physically or biologically differentthan the wetlands that were lost.Out-of-kind mitigation may result in thereplacement of different wetlandfunctions than the functions that werelost.


in Michigan Natural Features Inventory’s Wetland Trends in MichiganSince 1800: A Preliminary Assessment.

• The mitigation bank provides particular wetland functions that meetdefined resource management needs and goals articulated in anestablished watershed or ecosystem plan, and will contribute to theoverall health of the ecosystem.

• The mitigation bank supports a diverse wetland complex which offsetscumulative primary and secondary impacts within the watershed.Ideally, a well designed mitigation bank will include a variety of habitattypes, thereby mimicking many natural wetland complexes.

• The bank will be used to mitigate for the loss of wetland types whichcannot readily be recreated, such as peatlands.

Determination of mitigation ratios will be part of the permit decision made bythe MDEQ in accordance with the administrative rules for Part 303 (or, ifappropriate, by USACE staff in accordance with federal requirements).

Service Area

The service area of the bank will be defined in the banking agreement. Thearea to be served by a wetland mitigation bank must be appropriate to thefunctions provided. Many wetland functions, particularly water quality andhydrologic functions, are dependent upon location in a watershed. Loss ofthese locally important wetland functions and values may result in increasedwater management costs to the local community. Wetland functions canimpact an entire watershed (Figure 2), but usually have a more direct impacton a smaller subbasin, such as a creekshed or inland lake watershed.

Some other wetland functions, such as provision of wildlife habitat, are lessdependent on watershed boundaries, although maintenance of wildlifecorridors may be essential, particularly for non-migratory species. Anecoregion (Figures 3 and 4) may be a more logical unit for consideringreplacement of habitat functions. The administrative rules for Part 303define the sequence to be followed in locating mitigation wetlands. Thissequence will be followed in determining whether a bank can be used tomeet individual permit requirements. In general:

• Functions that are dependent upon the location of the wetland in thesubwatershed shall be replaced by mitigation credits from a bank orother site within the same subwatershed. An example would bemitigation of the loss of wetlands which help to attenuate nonpointsource runoff to an inland lake. These wetlands would have to bereplaced in the lake basin. Likewise, impacts to wetlands in a highlyflood-prone creekshed would likewise have to be mitigated in the samecreekshed.

• Functions which are watershed dependent, but which are not specific toa subwatershed, will be replaced in the same watershed as the impact.For example, wetlands which provide flood storage within one of the

Site-specific functions shall be replacedon site where practical and where theMDEQ has determined that on-sitereplacement is environmentallypreferable. In these instances, use of amitigation bank is not appropriate.

In-kind mitigation is required unlessthe MDEQ determines that it is notpractical or that in-kind mitigation isnot essential and that out-of-kindwetland mitigation provides a greaterbenefit to the wetland resources of thestate.


watersheds defined in Figure 2 would have to be replaced in thatwatershed.

• Functions such as migratory bird habitat, that are not dependent uponlocation in the watershed, must be replaced either within the samewatershed or within the same ecoregion. In addition to migratory birdhabitat, the loss of a wetland type such as lakeplain prairie, is anotherexample in which the restoration of wetlands in the same ecoregion, inan area which historically supported this wetland type, might be allowed.

Many wetland impacts result in the loss of multiple wetland functions, someof which are more site specific than others. Because of this, mitigationrequired by an individual permit can be split so that location-specificfunctions are replaced on site or within the same subwatershed area, whileother functions are replaced though a bank that has a larger defined servicearea. For example, a road construction project may reduce flood storageand protection of adjacent water bodies, but may also impact wildlife habitatwhich is better replaced away from traffic corridors. In this instance, it maybe deemed beneficial to split mitigation acreage, replacing some functionson-site or in the same sub-watershed and others elsewhere in theecoregion.

In order to provide the greatest wetland benefits, a mitigation plan submittedwith a permit application may include use of on-site mitigation, off-sitemitigation, and a mitigation bank in any combination that will replace thefunctions and values of the impacted wetland. That is, bank credits may beoffered to provide only a portion of the total mitigation package.


Wetland mitigation banks established in accordance with Michigan’s wetlandregulatory program are expected to be protected and maintained inperpetuity. Long-term management and protection of the bank, includingsite maintenance, monitoring, remedial action, and notification ofsubsequent owners of limitations on the property, is the responsibility of thebank sponsor. The bank sponsor may enter into a legal agreement with agovernmental agency or a nonprofit resource management organization tomanage the mitigation bank. Responsibility for the long-term managementof a wetland mitigation bank may also be transferred through the sale orlease of the property or through an agreement with another person if theMDEQ approves of the transfer and if the mitigation banking agreement isamended accordingly.

Monitoring

Until such time as the wetlands in the mitigation bank are deemed to be fullyestablished and self-sustaining, monitoring will be required to ensure thatwetland areas used to replace permitted losses are maintained. Initialmonitoring requirements were outlined in Section 5. Long-term monitoringwill also be required in some mitigation banks to ensure that the wetlandscontinue to be fully functional systems. This will be particularly important inwetlands which are slow to mature, such as forested systems. Long-termmonitoring may not be necessary (or of shorter duration) for wetland areasthat are more readily established and stable over time.

Long-term monitoring requirements are highly site specific and will beoutlined in the banking agreement. In general, the focus is the same as theinitial monitoring, an assessment of whether the functional goals andperformance standards of the mitigation bank are being met. This is doneby evaluating hydrology, plant and animal communities, and other factorsdictated by the goals of the bank. In addition, the integrity of any structures,such as dikes or dams, should also be routinely evaluated.

Long-term monitoring will differ from initial monitoring in that the frequencyand intensity of monitoring may be reduced significantly once wetlands arefully functional. In the event that long-term monitoring identifies a problem,for example a change in hydrology that results in loss of wetland character,correction of the problem is the responsibility of the bank sponsor or theentity which has assumed long-term management responsibility.

Financial Assurances

Because mitigation banks are designed to provide wetland benefits tocompensate for those which are permanently and unavoidably lost throughthe permit process, assurances are needed so that the replacement ofwetland benefits is successful and permanent. Good design and planningincrease the likelihood of success. However, prior to the use of mitigationcredits, the bank sponsor will be required to provide financial assurances,such as a surety bond or letter of credit, to ensure that the mitigation bank

Section 7: Long-term Managment and Protection

Long-term management is theresponsibility of the mitigation banksponsor and shall include sitemaintenance, monitoring of wetlandconditions, remedial action needed tofully establish and maintain wetlandcharacteristics in accordance withpermit requirements, and notificationof subsequent owners of limitations onthe property.


achieves the goals set forth in the banking agreement. The MDEQ’sconcerns are twofold. First, that sufficient funds are available to correctproblems that arise with the bank once credits are sold and to maintain thebank in perpetuity. Second, the MDEQ needs to be able to readily accessthe funds in the event of bank failure.

The MDEQ envisions two basic types of financial assurance that would beneeded by most bank sponsors. First, financial resources must be readilyavailable to perform any remedial action which may be necessary in theearly phases of the bank. Once credits are being used, the wetlands mustbe functional and meet the performance standards established in thebanking agreement. Therefore, financial resources must be available tocorrect bank failure. The types of activities which may be necessary includereplanting, soil amendments to encourage plant growth, repair of watercontrol structures, regrading to achieve appropriate elevations to supporthydrology; removal of invasive nuisance vegetation, or other measuresneeded to achieve the functional goals of the bank.

The second component of financial assurance deals with the long-termmanagement and care of the bank. Some banks may be perpetuallyself-sustaining and therefore, will not require long-term care. Sites that arenot fully self-sustaining and involve features such as water control structuresand extensive management will require more substantial financialresources, and these resources will need to remain in place over a longerperiod of time.

Financial assurances for mitigation banks can be provided through a suretybond or a letter of credit. A surety bond, sometimes referred to as aperformance bond, is a third party agreement where a third party (thesurety) guarantees to a second party (the MDEQ) the successfulperformance of the first party (the bank sponsor). Bonds are typicallyissued by insurance companies (the surety). The first party’s failure toperform has severe consequence on his/her credit rating. Letters of credit,or Irrevocable Letters of Credit, are issued by financial institutions followinga review of the financial standing of the applicant. It is similar to a line ofcredit and thus, an outstanding Letter of Credit may effect a company’sability to borrow.

The details of the types, amounts, and schedules for financial assuranceswill be negotiated and established as part of the banking agreement. Thebank sponsor should submit an estimate of costs associated with potentialcorrective action and management of the bank with the banking agreementproposal.

Long-term Protection

Mitigation wetlands must be protected in perpetuity in order to maintain thepublic benefits for which the wetland was created. Whether the mitigationbank is located on public or private lands, future use of the property will belimited to those uses which are compatible with protection of the wetlandsand associated functions. Long-term protection of the mitigation bankthrough a permanent conservation easement is required. The easementruns with the land and applies to all future property owners.


The administrative rules provide for the designation of state priority wetlandrestoration areas by the MDEQ in cooperation with the MDNR. These areintended to be areas which have been impacted by significant historicwetland losses, and which have a high potential for successful wetlandrestoration.

Certain incentives are offered to encourage wetland mitigation bankestablishment in state priority wetland restoration areas. These can include:

• Up to 15 percent of planned wetland credits may be used prior to theestablishment of wetland conditions after the banking agreement issigned, all approvals are obtained, and financial assurances have beenprovided.

• The MDEQ may approve partial mitigation credit for uplands that arevital to the successful functioning of wetlands in the mitigation bank.The condition of these uplands must be protected under a conservationeasement. The banking agreement must specify the credit received foruplands based on the extent to which the uplands directly enhance ormaintain the integrity of the aquatic ecosystem, but in no case can morethan 0.5 credits be authorized for each acre of upland. No more than 10percent of the total acreage for which mitigation credit is given in amitigation bank may be upland.

• The MDEQ may approve mitigation credit for the preservation of certainexisting wetlands which provide exceptional functions or which representrare wetland types, such as lakeplain wet prairie. No more than 25percent of the wetland acreage approved in a mitigation bank can be forthe preservation of existing wetlands.

A wetland mitigation bank established in a state priority wetland restorationcan utilize any or all of the incentives if approved by the MDEQ in thebanking agreement.

The MDEQ may, in cooperation withthe MDNR, designate priority wetlandrestoration areas in large formerwetland complexes which have beenimpacted by significant historic loss ordegradation of wetlands and whichhave a high potential for successfulwetland restoration.

Section 8: State Priority Wetland Restoration Areas


The following are sources of information about Michigan’s wetlandmitigation banking program:

• Administrative Rules for Wetland Mitigation Banking• Process for Developing Mitigation Banks in Michigan (MDEQ Fact Sheet)• Frequently Asked Questions Regarding Wetland Mitigation Banking

(MDEQ Fact Sheet)• Administrative Rules for Part 303 of the NREPA• Part 303 of the NREPA

Those interested in developing a mitigation bank should thoroughly reviewthe administrative rules for wetland mitigation banking and supportingmaterials.

The MDEQ believes that the benefits of wetland mitigation banking to thebank sponsor, permit applicants, and the state’s wetland resources greatlyoutweigh the up-front planning and coordination that is necessary. Becauseof this, staff at the MDEQ are available to assist bank sponsors through allstages of the banking process. Please contact the Inland Lakes andWetlands Unit, Land and Water Management, Michigan Department ofEnvironmental Quality at 517-373-1170 for assistance.

Section 9: Additional Assistance

MDEQ Wetland Mitigation Banking Handbook › course › rd › 415 › Ingham › bankwshd.pdf ·...

Documents

Transcript of MDEQ Wetland Mitigation Banking Handbook › course › rd › 415 › Ingham › bankwshd.pdf ·...