Private-sector profit helps feds enforce stiff wetland rules

HILLS — What a better sales pitch for an idea than this?

As if on cue earlier this month, a flock of Canada geese suddenly appeared, banking just right in flight to let the early morning light hit off their chests, turning the white color to yellow.

Below them, quarry company Vice President Todd Scott was standing in 40 acres, talking about how this spot had been marginal farm land, subject to periodic, crop-ruining floods from the Iowa River that runs next to it.

But he's changed all that.

Scott's company, River Products Co. Inc. of Iowa City, is in the process of transforming the 40 acres into a forested wetland and grassy wetland, which in 10 years the company will donate to the Johnson County Conservation Department or a not-for-profit nature conservancy, along with an escrow fund to help manage it in perpetuity.

'Industry and the environment can exist and work together,' Scott said. 'Yeah, in our industry, we impact the environment. We dig big holes.

'But we can also do things like this, and leave properties just as we found them or better than we found them for the future.'

This wetland-creating venture, though, is not coming simply out of the kindness of River Products Co.'s heart.

Instead, it is an example of a joint public sector-private sector enterprise driven by stringent federal regulations that require the adequate replacement of wetlands, streams or other aquatic resources that are effected by new roads and highways or by private development.

In years past, it was not uncommon for a developer, for example, to establish a small wetland to replace one that a development had disturbed — the result of which meant that many insubstantial new water features dotted the landscape, making it hard for federal regulators to monitor and regulate.

Dan Hayes, the Regulatory Branch program manager in Iowa for the Army Corps of Engineers's Rock Island District, said a federal Government Accounting Office report in 2004 concluded that the Corps was not tracking required wetland mitigation projects adequately and that many of the projects had failed.

From that GAO report, Hayes said, came the federal rule that greatly expanded the creation of something called the wetland mitigation bank.

It is just such a bank that Todd Scott at River Products has created along the Iowa River in Johnson County, on the east of edge of Hills.

In the banking arrangement, River Products purchased land not previously a wetland and it is investing to create a new wetland under the rigorous oversight of an Interagency Review Team comprised of the Corps, the Environmental Protection Agency, the U.S. Fish and Wildlife Service, the Iowa Department of Natural Resources and the Natural Resources Conservation Service.

As the new wetland gets established, the mitigation bank owner gradually sells a credit representing a piece of the new wetland to those whose developments are affecting existing wetlands or streams and who need to replace what they are disturbing.

Judy Joyce, wetland scientist at EarthView Environmental Inc. in Coralville, said creating a new, federally approved wetland can cost a developer perhaps $100,000 an acre. That's if the developer chooses to do so on his or her own property once construction expenses and maintenance and monitoring requirements are factored in over a number of years.

Joyce said a wetland mitigation bank such as the River Products's provides a developer with the ability to buy the credit needed to replace a wetland, likely at a lower cost, while freeing up the developer from having any need for long-term monitoring.

Maintenance and monitoring become the responsibility of the bank owner, who at the same time can create a large wetland and enjoy a smaller per-acre cost, she said.

Hayes said the Corps has put greater emphasis on mitigation banks since new regulations went into place in 2008, and the change has resulted in more success. In most instances, the Corps asks developers to use mitigation banks if they can, he said.

'By concentrating the mitigation on one area and carefully planning it, it's easier to monitor and more environmentally beneficial instead of having numerous, tiny sites all over the landscape,' Hayes said.

A revenue producer

Across the nation, there are hundreds of mitigation banks, but in Iowa the number is small. Only six are in operation, and more are needed, both the Corps's Hayes and River Products' consultant Joyce said.

Rob Davis, Cedar Rapids Public Works Department engineer, said the city has purchased wetland bank credits for projects that turned unpaved roads to paved ones on 76th Avenue SW and 60th Avenue SW. In total, it's paid $86,300 for 2.2 acres of credit at two different banks.

But the city also has created its own small mitigation sites because it has found wetland bank credits often are not available, he said.

River Products's riverbank in Johnson County and the Brophy Creek bank in Clinton County are the only two in Eastern Iowa. The others are in Jasper County and Dallas County (which is publicly owned) in Central Iowa and Woodbury and Harrison County in Western Iowa.

Why River Products? As Scott explained, he is a Drake Law School graduate who spent summers during college working for the Johnson County Natural Resources Conservation Service and intended to go into environmental law.

But after three years in private law practice, he joined his uncle's company, River Products.

He said learned about mitigation banks as a possible revenue producer and as a solution for the quarry's own needs. The work of a quarry can disturb wetlands, and the company needs to replace what it impacts, he said.

As a result, the company is building a 40-acre wetland bank for those who need to buy credits as well as another of similar size nearby for its own wetland needs. It has purchased another 200 acres of farmland to the south for possible future wetland development, Scott said.

River Products's environmental consultant Joyce said buying land as an investment to create a wetland mitigation bank is no different from buying land on which to build houses or to build anything else.

'If you think of developing the land into a marketable product, that really is what (mitigation) banking is,' she said.

She said wetlands have a value of $50,000 to $60,000 or more an acre.

For a project to improve a drainage area off Highway 6, the city of Coralville purchased 0.8 acres of credit for forested wetland in the River Products bank for $51,200, according to Dan Holderness, Coralville's city engineer. That's $64,000 an acre.

The Johnson County Secondary Roads Department purchased .14 acres of credit of forested wetland and .56 acres of credit for grassy wetland for a bridge replacement project on Sharon Center Road. The cost, $45,120, according to Greg Parker, Johnson County engineer, figures out to be $64,457 an acre.

'A little crazy'

Scott said it's too soon to know if River Products's investment in a wetland bank will make the company money over 10 years. But he said that is part of the idea. For now, it's all been upfront costs and a leap of faith, he said.

Joyce said the 40-acre bank is flood plain that River Products is now restoring to what it was in the days before it was farmed.

'We had a couple of local farmers who thought we were a little crazy doing what we're doing,' Scott said.

Creating the wetland to federal standards has required the excavation of soil to get the land to the proper level in relation to the water table so the land is wet — but not too wet or too dry.

Of the 40 acres, about 36 acres will be wetland, the other four a buffer of existing trees on the field's perimeter. About 16.5 of the 36 acres will be newly created forested wetland, the rest grassy wetland.

Five hundred white-colored tubes are standing in what will be forest, each tube — translucent to allow in light and with holes to allow in air — protecting a young tree.

Some 3,200 will be planted to make sure at least 1,600 survive. There trees are hardwoods and nut-producers — swamp white oak, pin oak, burr oak, sycamore, pecan, shell bark hickory and others.

Joyce said River Products has sold only a small number of the 36 acres of credits on the site, as federal rules allow only a slow release of credits for sale as the wetland gets established, in this case over 10 years.

To date, Johnson County Secondary Roads and two private developers also have purchased credits. Another 3 to 4 acres will be released for purchase in the spring, Joyce said.

In 10 years, Scott will have established the wetland, sold the credits and met federal regulatory requirements. After that, he will transfer the land along with a portion of money from the credit sales to a third-party entity to care for the land in perpetuity.

Joyce said the economic incentive for River Products and other wetland bank owners to establish large new wetlands has raised the level of oversight of wetland mitigation from the days when individual developers added 'one-half-acre holes' here and there to which regulators never paid much attention.

'We all need sand and gravel for roads,' Joyce said of her client, quarry executive Scott. 'But Todd has kids, and he wants to leave an environment for his kids that he's proud of.

'He wants to show this off, and say, 'Look what I did. I build roads. I make buildings. But I also provided this so if you want to go duck hunting or you want to look for grouse, this is here for you.''