After a two-year effort to obtain legislation by the mitigation banking community, the 2000 Florida Legislature passed HB 2365 sponsored by Representative J.D. Alexander. The Governor signed the bill into law on May 17, 2000. The bill was proceeded by, and in part the result of, a mitigation study undertaken in 1999 by the Legislature's Office of Program Policy Analysis and Governmental Accountability (OPPAGA). The final bill also contains provisions on cumulative impacts and other miscellaneous environmental items.


I. OPPAGA Study and Report.

     In 1999, subsection 373.414(18), Florida Statutes (F.S.), was enacted directing OPPAGA to conduct a one-year study of the various mitigation options available and to issue a written report back to the Legislature. The study was to consider the effectiveness and cost of these options in offsetting adverse effects to wetlands and to identify recommendations for statutory or rule changes to increase the effectiveness of mitigation strategies. Throughout 1999, the OPPAGA staff met with representatives of the mitigation bank industry, development industry, environmental community, Department of Environmental Protection (DEP) and water management districts to study the issues affecting wetland mitigation. The OPPAGA staff also reviewed permitting files and other documentation relating to wetland mitigation in Florida. OPPAGA issued a final report in early March 2000 entitled Policy Review: Wetland Mitigation, Report No. 99-00.

     The OPPAGA report made the following findings and recommendations:


· While regulatory agencies have shown improvement in implementing state wetlands policies, limitations and inconsistencies in methodology and data systems prevents a more accurate and complete evaluation. Statutory direction should be given to DEP and the water management districts requiring the reporting of specific information and consolidating it into a central database.

· Compliance with mitigation requirements of Environmental Resource Permits (ERPs) has increased in recent years.

· The current use of mitigation ratios does not provide a clear picture of the extent to which mitigation activities have offset the loss of wetland functions, because the ratios do not quantitatively measure wetlands functions at the mitigation site or impact site. A wetland assessment methodology, which includes a functional assessment, would allow a more accurate measurement of wetland functions lost and gained. Without the application of such a methodology, there may be inconsistency in the way mitigation is applied. Thus, DEP and the water management districts should develop and adopt a functional assessment methodology that would allow for a more accurate measurement of wetlands functions lost and gained.


· Most public offsite regional mitigation projects do not require a mitigation bank permit for the work to be performed. Therefore, there is not the same level of accountability as there is with private mitigation projects that the mitigation is appropriate or successful. The Legislature should require a memorandum of agreement for public offsite regional mitigation projects.

· Mitigation performed outside the drainage basin where the adverse impacts occurred requires the permittee to perform an in-depth cumulative impact assessment. However, because the definition of "drainage basin" is open to varying interpretations, the application of cumulative impact assessment has been hindered in some districts. The Legislature should either further research the issue, or enforce a consistent delineation of drainage basins and specify the types of cumulative impacts that must be offset inside a specific drainage basin, along with the types of impacts that can be offset even though the mitigation occurs outside the basin.

· Mitigation is becoming more expensive, particularly for single-family landowners. DEP, water management districts, and local governments should create opportunities for single-family homeowners to provide off-site mitigation that does not have to adhere to statutory full-cost accounting requirements. 

     In response to the OPPAGA report, Senator Howard Forman, a member of the Senate Natural Resources Committee, introduced SB 2162 containing language addressing the OPPAGA recommendations. On the House side, Representative J.D. Alexander, Chairman of the House Water and Resource Management Committee, introduced HB 2365 also addressing the OPPAGA recommendations. The original filed bills were dissimilar, and each contained language objectionable to affected interests. During the 2000 Legislative Session, individuals representing mitigation bankers, developers, environmental interests, local governments, DEP and water management districts worked cooperatively to produce a consensus bill that formed the majority of the final HB 2365 passed by the Legislature. Key aspects of this bill are discussed below.

II. Wetland Mitigation Provisions.

(A) Memorandums of Agreement for Money Donation Projects

     DEP, South Florida Water Management District, St. Johns River Water Management District, and several local governments have established and operated mitigation projects allowing ERP applicants to satisfy their mitigation requirements for wetland impacts by donating money to these agencies for DEP or water management district endorsed environmental projects. Section 373.414(1)(b), F.S., was amended to specifically authorize these monetary donations in 1996. The OPPAGA report found that this mitigation option lacked accountability in that there was no third party ensuring that the wetland restoration, enhancement, or preservation activity for which the money was donated was properly undertaken and completed.

     To provide for such accountability, HB 2365 requires a memorandum of agreement (MOA) providing procedures for the operation of restoration, enhancement, preservation, or creation projects for which money is donated as mitigation. The bill requires a governmental entity operating certain mitigation projects to enter into an MOA with either DEP or the applicable water management district. House Bill 2365 does not specify whether DEP or the water management district will enter into the MOA with a local government, and these agencies will have to develop procedures identifying which entity is appropriate. The bill does not require non-governmental entities operating such projects to enter into an MOA.

     The governmental entity establishing or operating a restoration, enhancement, preservation, or creation project for which money is donated as mitigation must enter into an MOA if the project will provide mitigation for five or more permit applicants or will offset 35 or more acres of adverse wetland impacts. One restoration, enhancement, preservation, or creation project is considered to be one or more parcels of land with similar ecological communities intended to be restored, enhanced, preserved, or created under a common scheme. For on-going projects that exceed these thresholds, the governmental entity sponsoring such project must submit a draft MOA to the appropriate water management district or DEP by October 1, 2000. The governmental entity must then make reasonable efforts to obtain a final MOA within one year. If the governmental entity complies with these provisions, it can continue to accept money donated as mitigation towards the project while the MOA is being processed.

     The MOA will establish criteria that each environmental restoration, enhancement, preservation, or creation project must meet. At a minimum, the MOA must contain the following:

· A description of the work that will be conducted in the project and a timeline for completing such work.
· A timeline for obtaining any required environmental resource permit.
· The environmental success criteria that the project must achieve.
· The monitoring and long-term management requirements that must be undertaken for the project.
· An assessment of the project using the criteria of Subsections 373.4136(4)(a) - (i), F.S., (criteria that govern the award of credits to a mitigation bank) until the adoption of the uniform wetland mitigation assessment method.
· A designation of the entity responsible for the completion of the mitigation work.

· A definition of the geographic area where the project may be used as mitigation.
· Full cost accounting for the project, including annual review and adjustment.
· A timetable for the acquisition of any lands necessary for the project.
· Provision for preservation of the site.
· Provision for application of moneys received solely to the project for which they were collected.
· Provision for the MOA's termination and cessation of use of the project as mitigation if any MOA material contingency fails to occur.

     A single MOA can authorize more than one environmental project, or category of projects, as long as the elements listed above are addressed for each project. MOAs are not required for projects undertaken pursuant to the Florida Department of Transportation mitigation program authorized under Section 373.4137, F.S. Additionally, an MOA is not required when DEP, a water management district, or local government establishes, or contracts with a private entity to establish, a mitigation bank permitted under Section 373.4136, F.S.

     The bill also modifies the reporting requirements of Subsection 373.414(1)(b)2., F.S., for money donated as mitigation. Previously, DEP and the water management districts were required to report to the Governor's office twice a year all cash donations accepted as mitigation. The bill changes this reporting requirement to once a year. Additionally, for those mitigation projects that fall below the five applicants or 35 acre threshold of Subsection 373.4136(6), F.S., the bill requires that the report to the Governor's office address, as applicable, success criteria, project implementation status and timeframe monitoring, long-term management, provisions for preservation, and full cost accounting. 

(B) Mitigation for Single Family Homeowners

     HB 2365 authorizes DEP, the water management districts and local governments to establish and manage mitigation areas, or contract with permitted mitigation banks, to provide mitigation options for private single-family lots or homeowners. If these entities elect to establish such mitigation options, they do not have to comply with the provisions of Subsection 373.414(1)(b)1., F.S., which requires charging the full cost of the mitigation project. Thus, it is possible to provide a government-subsidized mitigation option for single-family lots or homeowners. To use one of these mitigation options, the applicant for an ERP must be a private, single-family lot or homeowner, and the land on which the impact will occur must be intended for use as a single-family residence by the current owner. The ERP applicant seeking to use these mitigation options cannot be a corporation, partnership, or other business entity.

(C) Mitigation Service Areas for Mitigation Banks 

     When a mitigation bank is permitted under Section 373.4136, F.S., the bank is given a mitigation service area, which represents the geographic area in which the mitigation bank can potentially be used as mitigation. With a few exceptions, impacts occurring outside of a mitigation bank's mitigation service area cannot use the bank as mitigation.

     A mitigation bank's service area is established, in part, by referencing regional watershed maps adopted by rule by each water management district. At the time the original mitigation bank permitting rules were adopted in 1994, the rules allowed a mitigation service area to be larger or smaller than the regional watershed in which the bank was located. When Subsection 373.4136(6), F.S., was enacted in 1996, a mitigation service area could only extend beyond the regional watershed in which the bank was located if the bank provided "exceptional ecological value" considering several factors listed in the statute.

     In practice, it was difficult to determine whether a mitigation bank provided "exceptional ecological value" as opposed to "normal" ecological value, and instead the statutory factors were simply considered in and of themselves to establish a mitigation service area. The bill modifies Subsection 373.4136(6), F.S., to delete the requirement for determining whether a mitigation bank provides "exceptional ecological value" and directs simply that the statutory factors be considered in determining the boundaries of a mitigation service area. The bill provides that the mitigation service area can be larger than or smaller than the regional watershed in which the bank is located depending upon the statutory factors. Thus, the bill revises the law to reflect a more realistic approach to establishing mitigation service areas. 

(D) Uniform Wetland Mitigation Assessment Method

     In response to concerns identified in the OPPAGA report regarding existing wetland assessment methodologies and the current use of mitigation ratios, HB 2365 directs DEP and the water management districts to develop a uniform wetland mitigation assessment method (the uniform method) by October 1, 2001. In developing the uniform method, DEP and the water management districts are to consult with approved local programs that have an established wetland mitigation program, and DEP is directed to seek input from the United States Army Corps of Engineers to promote consistency between state and federal programs. DEP is required to adopt the uniform method by rule by January 31, 2002. The water management districts are not required to adopt the uniform method by rule, but once DEP adopts the uniform method by rule, it will bind DEP, the water management districts and local governments, and shall be the sole means to determine mitigation needed to offset adverse impacts and to deduct mitigation bank credits. In the event that the uniform method rule is deemed to be invalid, the existing mitigation rules are authorized for use by DEP, the water management districts and local governments.

     HB 2365 contemplates that the uniform method will result in a consistent process for determining mitigation requirements, while recognizing that the uniform method will require the application of reasonable scientific judgment. The uniform method will be designed to determine the value of functions provided by wetlands and other surface waters considering the current conditions of the areas, utilization by fish and wildlife, location, uniqueness, and hydrologic connection, in addition to the factors listed in the existing Subsection 373.4136(4), F.S., for determining credits for mitigation banks. Moreover, the uniform method is to account for the expected time-lag associated with offsetting impacts and the degree of risk associated with the proposed mitigation and is to account for different ecological communities in different areas of the state. Thresholds may be established for minor wetland impacts for which the use of the uniform method will not be required. The application of the uniform method is not subject to the Bert J. Harris Act (Section 70.01, F.S.).



(E) Cumulative Impacts

     HB 2365 legislatively confirms an existing DEP and water management district interpretation of the ERP regulatory criteria addressing cumulative impacts and mitigation. The Legislature specified that if an ERP applicant proposes offsetting mitigation within the same drainage basin as the impact to be mitigated, then the ERP cumulative impact requirement of Subsection 373.414(8), F.S., is satisfied. This provision was enacted in response to a Subsection 120.56(4) petition challenging the agency interpretation as violative of the rule adoption requirements of Subsection 120.54(1), F.S. The enactment of this provision moots the pending challenge.

    Additionally, the Legislature directed OPPAGA to study the cumulative impact requirement of Subsection 373.414(8). Specifically, the OPPAGA study must address the justification for this requirement, changes that could provide clarity and certainty in assessing cumulative impacts, and whether a practicable, consistent, and equitable methodology can be developed for considering cumulative impacts in the ERP program. The OPPAGA report is due July 1, 2001. 

III. Miscellaneous Provisions.

(A) Water Management District Delegation

     HB 2365 also specifically authorizes water management district governing boards to delegate their powers and duties to a governing board member or members, their executive director, or other district staff as designated by the boards. This provision eliminates any doubt that the governing boards, like the heads of state agencies under Section 20.05, F.S., may delegate their powers, duties, and functions under the terms they deem appropriate. However, should a governing board delegate its authority to act on ERP or consumptive use permit applications, or associated variance petitions, then the board must provide a process for referring denials of these applications or petitions to the governing board for final action.

(B) Lake Jesup Basin

     HB 2365 directs the St. Johns River Water Management District to delineate the Lake Jesup basin in Seminole County as a separate and distinct drainage basin for ERP cumulative impact review and as a regional watershed for mitigation bank permit review. This legislative direction was provided in response to a Subsection 120.56(2) proposed rule challenge filed by the Friends of Lake Jesup challenging a proposed district rule amendment that would have eliminated the Lake Jesup regulatory basin by combining it with two other existing basins into one larger basin. The bill mandates continuation of the status quo with regard to this basin and therefore moots both the district governing board's proposed rulemaking concerning the Lake Jesup basin and regional watershed, as well as the related rule challenge.

(C) Seminole Tribe Water Rights Compact

     The South Florida Water Management District is authorized to act in accordance with the Seminole Tribe Water Rights Compact pursuant to the provisions of Section 285.165, F.S. 

D) Environmental Regulation Commission

     Section 20.255, F.S., previously required the Environmental Regulation Commission membership to include at least one, but not more than two, members from each water management district.  HB 2365 removes this requirement, and substitutes for it a requirement that the Governor, in making appointments, shall provide reasonable representation from all sections of the state.

Kathryn Mennella is the General Counsel for the St. Johns River Water Management District. She has been employed by the St. Johns River Water Management District for 16 years. She received her J.D., with honors, from the University of Florida College of Law in 1980, and a B.S., with honors, in forestry from the University of Florida in 1978.

Mary Jane Angelo is a Senior Assistant General Counsel for the St. Johns River Water Management District and Adjunct Professor, University of Florida Levin College of Law. Her current practice focuses on Florida water and wetlands litigation, rulemaking and policy development. Previously, she spent seven years at U.S. EPA in Washington, D.C., first as an Assistant Judicial Officer in the Office of the Administrator and later as an attorney in the Office of General Counsel. At EPA, she had a broad environmental practice, which included water law, pesticides, toxic substances, biotechnology, endangered species and hazardous waste litigation and rulemaking. She has published on a variety of environmental law topics and teaches a skills-oriented course in environmental dispute resolution at the University of Florida. Ms. Angelo received her J.D. and her M.S. in entomology from the University of Florida and her B.S. in biological sciences from Rutgers University.
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Eric T. Olsen is an attorney with Hopping Green Sams & Smith, P.A., concentrating his practice in wetlands and water regulation, mitigation banking, rulemaking and legislation. He received his J.D., with honors, from the University of Florida College of Law in 1989, and his B.A. from Clemson University in 1986. Mr. Olsen was formerly a senior attorney with the St. Johns River Water Management District.