South Dakota's first agricultural wetland mitigation bank may soon be open for business through the support of a number of SD farm groups. Photo courtesy of USDA NRCS South Dakota.
According to the South Dakota Farm Bureau, a proposal currently under review by the Natural Resources Conservation Service (NRCS) may soon create the framework for South Dakota’s first agricultural wetland mitigation bank. Wayne Smith, Wetlands & Land Use Specialist with the SD Farm Bureau, explained that the process began in 2014 when the Bureau received a SD NRCS Conservation Innovation Grant (CIG) to create the framework under which a mitigation bank would operate. That product was turned back over to SD NRCS in September 2015, which has since been elevated to Washington D.C. for review and approval.
NRCS Wetland Mitigation Banking Program
That first step was taken shortly after the NRCS Wetland Mitigation Banking Program was authorized under the 2014 Agriculture Act (Farm Bill). The NRCS Bank is intended for the express use of agricultural producers needing to comply with wetland conservation compliance provisions that were originally established under the 1985 Farm Bill. In 1985, in order to remain eligible for most USDA programs, producers had to certify that: 1) they had not planted or produced an ag commodity on a converted wetland, and 2) they had not manipulated a wetland to make ag production possible (i.e. removing trees and stumps). Options for wetland conservation compliance included: 1) avoid the wetland, 2) minimize any potential impact to the wetland, or 3) mitigate the wetland through on or offsite restoration, enhancement, or creation. If a producer wanted to mitigate, it was often left up to them to locate and restore/create a wetland of similar “function and value”, or made to compete for prohibitively expensive wetland credits with developers, the Department of Transportation, etc.
The U.S. Department of Agriculture (USDA) announced on January 28th that it was putting $9 million toward a new wetland mitigation bank program specifically designed to provide agricultural producers with an affordable option to meet their conservation compliance responsibilities. Grants up to $1 million per award will be given to states or regions with a high wetland conservation compliance workload. Funds may not provide direct payments to producers, but instead will be made available to offset the costs incurred by 3rd parties in establishing a wetland mitigation bank, or modifying an existing bank to meet NRCS requirements. In South Dakota, the 3rd party responsible for the first grant application of its kind will be the SD Farm Bureau in partnership with Dakota Wetland Partners (DWP). This last entity, a private LLC, will provide the technical expertise for the day-to-day operations of the mitigation bank. Other supporting organizations include the SD Soybean Association and the SD Corn Growers Association. Grant applications are due March 28th.
The Mitigation Process
The key tenet of the NRCS Wetland Mitigation Banking Program is to target agricultural wetlands by focusing on temporary and seasonal, isolated, degraded, cropped wetlands that typically get driven over, tilled, and sprayed each year. Providing that the bank framework is approved and the grant is awarded, the first step for producers interested in mitigation would be to contact their local USDA Farm Service Agency (FSA) office to request a certified wetland determination. NRCS personnel will provide a wetland determination which identifies the location of the wetlands on the producer’s land and the scope of the required protection in order to maintain USDA program eligibility. Once a determination has been made, and at the producer’s invitation, DWP personnel will then visit with the producer to determine the number of credits to be mitigated (1 credit = 1 acre). It will also provide a list of wetland units for sale within the same regional geographic area, or sub-basin (Figure 1). Mitigation outside of a sub-basin where the wetland is located is not allowed.
Selling Wetland Credits
Landowners interested in selling wetland credits should contact DWP to determine: 1) the number of converted wetlands that the landowner is willing to reestablish, or 2) locations to create a new wetland. Prior converted wetland areas need to exhibit some moderate to serious need for habitat improvement. Payment will be given in exchange for: 1) allowing restoration of the wetlands, and 2) long-term protection of those wetlands. All restoration costs are to be paid by the Exchange, and long-term management costs are to be covered by the grant managed by the Farm Bureau. A minimum 50 foot average buffer may also be required to protect the integrity of the restored/created wetland.
Determining the value of wetland credits takes place between buyer and seller. The price will be determined by supply and demand in an open market system. A seller may set a price, but if too high, buyers have the opportunity to look elsewhere. A percentage of the selling price will go towards both DWP and the SD Farm Bureau for restoration and administration. A deed restriction will stay in effect on the restored/created wetland as long as the mitigated wetland remains mitigated.
For more information, contact:
South Dakota Wetland Exchange
c/o Dakota Wetland Partners, LLC
P.O. Box 91836
Sioux Falls, SD 57109