An Ecological Approach to Integrating Conservation and Highway Planning, Volume 1 (2013)

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10 C h a p t e r 3 The first step in implementing an ecosystem approach to trans- portation decision making is to understand the incentives for doing so, the needs of transportation and resource agencies, and barriers to implementation. These topics are discussed in this chapter, and potential solutions are identified in Chapter 4. For the purposes of this report, the two main types of stake- holders in an ecosystem approach to transportation decision making are transportation agencies (FHWA, MPOs, and DOTs) and resource agencies (USACE, EPA, USFWS, NOAA Fisheries, and state regulatory and natural resource management agen- cies), along with NGOs and conservation organizations. Incentives Incentive-based approaches are much more likely to succeed when they respond to the multifaceted interests and needs of each of the individuals and parties involved. Ecosystem approaches are easier to design, agree on, and implement when trust and interagency experience exist and when participants are able or inclined to think creatively about possibilities and solutions. The interests that support implementation of an ecosystem approach for each type of stakeholder were col lected through surveys and interviews. Respondents shared spe- cific incentives to drive the implementation of an ecosystem approach. The identified incentives fell into three main cate- gories: efficient decision making, fiscal benefits, and improved outcomes for the natural environment. These incentives are summarized as follows. Efficient Decision Making and Fiscal Benefits Respondents noted the following efficiency- and financial performance–related incentives: • Achieving mitigation and conservation that are less expen- sive to maintain and for which achievement of ecological objectives is more likely; • Making decisions early using widely available or derived/ modeled data layers; • Data-driven decision making and accountability; • Predictability for project-level environmental permitting and reducing the risk of delay in delivering transportation projects; • Increasing opportunities for agencies to attract and keep motivated and high-performing employees; • Reducing costs of implementing transportation projects; • Improving relationships between transportation and resource agencies; • Increasing opportunities for agencies to “make a differ- ence” by leveraging their contributions with those of other agencies and organizations; • Better targeting of field studies; and • Creating a platform for more innovation through mutual success. Efficient Decision Making More efficient decision making was the incentive most fre- quently mentioned by respondents. With ecosystem approaches, agencies put in more work and make decisions or commitments during planning, which reduces paperwork and analysis late in the project development process. Agencies were looking for increased certainty that time savings and efficiencies would indeed occur in project development in exchange for the upfront investment in planning. Efficiently addressing multiple resource needs from multiple mandates was an incentive primarily for state transportation, regional, and local agencies. Certainty in project scope, scale, schedule, and environ- mental requirements is a big factor and incentive for transpor- tation development. State DOTs also saw the potential to make a meaningful contribution to agency restoration and conserva- tion priorities. From the perspective of state transportation agencies, increased predictability in the ESA Section 7 processes Incentives, Barriers, and Assurance Needs

11 is a primary incentive to develop or participate in conservation banks. The value of this incentive has translated to DOT will- ingness to pay for substantial enhancements to ecosystem con- servation. Again, this activity is more feasible if it occurs before budgets are set. Programmatic (earlier, broader scale, multiproject) approaches typically offer much greater predictability for DOT project timelines by addressing resource needs and resource agency interests at the earliest and most flexible stages. Considering environmental needs and opportunities early in the planning process can enable participating agencies to reach agreement on how certain issues will be handled and what trade-offs may satisfy the interests and regulatory require ments of all participating agencies, while meeting the conservation or enhancement objectives of local gov- ernments. Identifying these needs early in the process assists DOTs and partners in coming to more creative and cost- effective solutions that also deliver more for the environ- ment and the communities. By making collaborative decisions earlier in the review process, the length of time needed for interagency negotiations later in the review process can be sig nificantly reduced. Because construction is usually the largest project cost, construction delays as a result of a lengthy review process can significantly inflate project costs; con- versely, early negotiations that streamline later approvals can yield savings. Some MPOs noted that the public has consistently said that the environment is an important planning consider- ation. In this context, an ecosystem approach helps agencies do their jobs better and helps ensure a more comprehensive and acceptable or defendable product. Crises also serve as powerful incentives. Development of a different, more effi- cient decision-making process sometimes became imperative when a crisis was at hand: a large number of bridge safety needs had to be addressed, the number of permits could not be issued in the time frame needed, or agencies had otherwise reached an impasse. All agencies may require a breakthrough in the efficiency and effectiveness with which they address regulatory issues and conduct the regulatory process when the need is urgent. Ecosystem approaches also help achieve larger agency goals outlined in agency mission statements or environmental laws. Often, such larger goals and objectives, which cut across program areas, can get lost in program-specific efforts or the drive to accomplish a certain number of permits, reviews, or inspections in a certain time. Agency staff can experience the satisfaction of making tangible progress toward these important objectives, coupled with the increased opportunity to make a difference by leveraging their contributions with those of others. Improved environmental decision making at the planning level can help implement effective conservation at the local government level. Ecosystem-based approaches require the collation of environmental data and development of priorities that local governments can then use. The IEF offers an explicit process for doing this. Local officials benefit from valuable planning data and information when watershed, ecoregional, or statewide conservation or green infrastructure planning is done in their area if such information is shared with them. They also get the benefit of resources for environmental restora- tion and possibly permits for projects through joint mitigation efforts. (Green infrastructure refers to an EPA-supported approach by which communities can maintain healthy waters, provide multiple environmental benefits, and support sustain- able communities. Green infrastructure uses vegetation and soil to manage rainwater where it falls. More information is avail- able at http://water.epa.gov/infrastructure/greeninfrastructure/ index.cfm#tabs-1.) Fiscal Benefits Respondents expected that an ecosystem approach will create efficiencies that in turn will generate fiscal benefits related to rising land costs and diminishing availability of high- quality conservation areas. If agency and NGO conservation and restoration priorities are available in planning, local agen- cies can respond early to opportunities to acquire land and/ or conduct habitat improvements. MPOs noted that both regional and local governments have frequently lacked the staff or financial resources to do this early work on their own. Thus, this is an important area in which an investment by transportation and higher levels of government could make a big difference, and where the data investment could be used multiple times, on multiple scales. Insufficient agency resources can be an incentive to partner with others to accom- plish the needed conservation, restoration, and recovery work. Representatives from most agency groups indicated that, although upfront costs are a barrier, they saw eventual cost savings for mitigation conducted in this fashion, which could be directed to more and better mitigation with over- all savings. The newly authorized landscape conservation cooperatives operate on this principle and focus on data and research gaps. More broadly, partnerships leverage mul- tiple funding sources for resource protection, restoration, and enhancement. Together, DOTs, land trusts, and other NGOs and resource agencies can design landscape-scale proj- ects that are implemented with multiple sources of funding and a combination of private and public management and ownership. A back-of-the-envelope analysis of potential cost savings conducted for this project showed that relatively modest invest- ments could produce huge savings, state by state, county by county, municipality by municipality, and project by proj- ect. However, it can be difficult to document or extrapolate

12 environmental cost savings. For many DOTs, two related major obstacles are lack of data on the environment and the expense of collecting the needed environmental data. The long-term nature of environmental programs means that data needed to illustrate effectiveness for annual performance goals and mea- sures are often not available. As noted in Managing for Results: EPA Faces Challenges in Developing Results-Oriented Perfor- mance Goals and Measures, the limited availability of data on environmental conditions is a major challenge in establishing a relationship between a program’s activities and resulting changes in the environment (U.S. Government Account- ing Office 2000). The Heinz Center for Science, Economics & Environment (closed in 2013) had been working on a partner- ship to develop a common set of indicators among federal agencies and gear data to speak to common environmental indicators (Stokstad 2008). In 2008, the Center issued a com- prehensive update on the health of U.S. ecosystems, along with a plea for the U.S. government to coordinate and fund future assessments (Stokstad 2008). The Oregon DOT, in collaboration with the Oregon Bridge Delivery Partners, analyzed the cost–benefit differences between a traditional project permitting approach and the program- matic permitting process used in the Oregon Transportation Improvement Act (OTIA) III State Bridge Delivery Program. Overall, programmatic permitting created delivery efficiencies and economies of scale in the delivery of 365 bridges within the program. The primary benefits measured were reduced costs in four areas: (1) obtaining permits, (2) completing reviews under the National Environmental Policy Act of 1969 (NEPA), (3) providing wetland and habitat mitigation, and (4) completing bridge designs (Oregon Department of Trans- portation 2008). In Oregon’s case, environmental benefits were not calculated and would be additional. The Oregon DOT analysis showed that the mean return on investment for the programmatic permitting process was $3.19 for every $1 expended versus $0.75 for every $1 expended in a tradi- tional permitting approach (Oregon Department of Trans- portation 2008). A true cost–benefit analysis that quantifies all the major benefits of ecosystem-based approaches and generates a net equation of all the factors is not feasible. For one, different parties value the intangible benefits in different ways and to different extents. Florida DOT and nearly 30 cooperating agencies created a vision of a more efficient and environmen- tally meaningful and effective consultation process when they crafted their efficient transportation decision-making frame- work. In interviews, one federal resource agency representa- tive said that federal and state agencies in Florida thought they achieved a 100% improvement in quality of environ- mental analysis and consultation with 50% less effort. The extent to which such intangible benefits are valued, however, depends on the individuals involved. Improved Outcomes for the Natural Environment Responding agencies saw several specific benefits to the natural environment with ecosystem-based approaches: • Satisfying the highest watershed needs and obtaining water quality and habitat function rather than just getting wetland acreage; • Acquiring mitigation and/or conservation lands prior to impacts; • Effectively conserving larger-scale ecosystems, which have less long-term risk of various alterations and secondary impacts from adjacent land use activities; and • Mitigating lost resources beyond what is achievable with isolated project-by-project reviews. Ecosystem-based approaches also offer the following conservation incentives: • Helping recover currently listed species (by supporting iden- tification of biological processes critical to achieving self- sustaining populations) and preventing new species from being listed; • Balancing actions protecting suites of species and consid- ering landscape context; • Improving agencies’ ability to respond to climate change; • Supporting state efforts to efficiently address resource needs in multiple areas from multiple mandates; and • Focusing on ecosystem priorities, including mitigation and conservation with higher rates of long-term success. “Conservation banking” typically establishes larger reserves and enhances habitat connectivity. From the NOAA Fisheries or USFWS perspective, banking reduces the piecemeal approach to conservation efforts that can result from individual projects. Directing smaller individual mitigation actions into a bank streamlines compliance for the individual permit applicants or project proponents while providing an improved benefit to the target resources. By involving an array of diverse organizations with interests in protecting recreation areas; game species; threatened, endangered, and other nongame species; as well as associated habitats, conservation banking can bring together financial resources, planning, and scientific expertise not prac- ticable for smaller conservation actions. Collaborative efforts allow agencies to take advantage of economies of scale (both financial and biological), funding sources, and management, scientific, and planning resources that are not typically available at the individual project level. Off-site conservation may offer the possibility for greater environmental benefit. Many DOTs welcome the opportunity to partner with others and contribute to large-scale conservation that may substantially enhance ecosystem conservation or species recovery.

13 Barriers Despite the benefits, there are barriers to implementing eco- system approaches. Key issues and categories of barriers iden- tified through interviews are described, starting with those most frequently mentioned: • Lack of resources, especially time and staff, and to a lesser extent, training and the need for champions. Insufficient resources such as funding, information and communication systems, staff shortages or staff turnover, and inadequate analysis tools can hinder agencies’ and staffers’ abilities to get to the unconventional, more creative, or larger-scale data- intensive analysis. Lack of funding or high upfront costs of mitigation planning and environmental investments and the competition for funding with transportation are also resource barriers. • Lack of data, information, and tools necessary to implement ecosystem-based approaches. The greatest number of respon- dents said the key barrier was the lack of data and agreement around the most important resources, sensitive areas, or con- servation opportunities; or lack of information on priorities. Other frequent responses included lack of plans that are geo- spatially mapped and lack of long-range, comprehensive, or coordinated information. • Challenges associated with change. Many comments were related to the broader challenge associated with change, including fear of doing something a different way. For exam- ple, some respondents felt that by adhering to established methods, they reduce the risk that their decision could be challenged or their agency sued. Other factors include lack of regulatory requirements or incentives to change and a tendency to prioritize using limited resources to accomplish what is required by law. Specific comments related to change- related challenges include the following: 44 There is a lack of jurisdiction to require and enforce conditions for nonregulated issues. 44 Agreeing to any type of mitigation when the impacts are not well defined can be difficult. Because better definition of impacts typically occurs later in project development, examination is often delayed. 44 There is no requirement to analyze the environmental impacts of long-range plans. State DOTs may complete corridor plans if they choose, but they are not subject to NEPA requirements, and FHWA may not be involved. 44 Changes and direction made at high levels or with man- agement support are not always implemented in the field. 44 The need to cut costs makes it difficult to implement conservation practices. • Ecosystem-based approaches are challenging to implement or there is a lack of understanding of how to implement these approaches. Impact analysis is not usually done at scales greater than the corridor. Uncertainty about how to assign credits was mentioned frequently. Ecosystem-based approaches can also be difficult to implement for newer staff and for those unfamiliar with the processes and interests of other parties involved, how to build a common vision with them, and how to incentivize agreement or movement to a common approach. Staff may not be aware of what decisions can be made at an earlier stage, on broader data sets, and how such early decisions can be effectively accomplished. They may not be aware of higher-level support for ecosystem approaches, or they may be unclear on their immediate supervisor’s position and how to motivate change that would enable the whole group to achieve an optimum solution. • Issues around coordination, communication, and collabora- tion and differences in missions or scope of missions among the agencies. Practitioners noted the difficulty of including all the stakeholders in a geographic area working toward a concerted effort. Others noted that some agencies are hes- itant to share sensitive data, making it difficult to plan. Sev- eral DOTs mentioned issues associated with the idea that mitigation done by private for-profit bankers targets their profit objectives more than environmental objectives. • Restrictions or assumed restrictions in regulations and guid- ance. State regulations were mentioned as sometimes being a barrier. Some respondents had a perception that the sequenc- ing requirements in CWA Section 404(b)(1) guidelines restrict USACE from approving mitigation before permitting a project. This perception could stem from an interpretation of the regulations that require that applicants first avoid and then minimize impacts before the evaluation of their mitiga- tion proposal by USACE. USACE cannot provide firm assur- ance that advanced mitigation work could be used to offset impacts from a future project. • Restrictions in the planning and decision-making process at the various agencies involved. Respondents mentioned the following issues: 44 Breaking down DOT processes and regulatory processes to see where they can better align is difficult. 44 There are severe consequences for not meeting scope, schedule, and budget constraints, because these all drive project delivery. 44 There is a lack of consistency in how planning is con- ducted (e.g., between districts in conducting corridor planning in general and in the corridor planning–NEPA integration process). 44 Regional planning organization and MPO goals are often based on providing after-the-fact remedies to traffic prob- lems that are initially caused by local zoning issues and decisions. 44 Recovery and conservation objectives often fall last among priorities and policy objectives identified in plan- ning and decision making. They typically come after supporting development and improving transportation

14 function (or with resource agencies, benefit to a certain or listed species). • Lack of assurances that mitigation can be paid for today and count for impacts of future projects. • Documentation is an issue for all agencies, but DOTs espe- cially. All early, upfront consultation must be documented and linked to a regulatory process. assurance Needs Many of the barriers identified in the previous section are related to the need for assurance. Both transportation and resource agencies would benefit from closer coordination ear- lier in the transportation decision-making process. For early coordination to be viable, transportation and resource agen- cies need assurance that what they agree to early in the decision- making process, potentially at the planning level, will occur and count later, in project development and permitting. These needs are explored further. Assurances Resource Agencies Can Provide for Transportation Agencies To partner on and implement ecosystem approaches, trans- portation agencies need a variety of assurances that resource or regulatory agencies can provide. Mitigation Counts Investments by DOTs in advance mitigation or conservation are based on agreements, programs, and actions that require long-term commitments and significant investments of time and financial resources. Before committing to these invest- ments, the transportation agencies must have a level of assur- ance from the regulatory agencies that their investments will be recognized and that they will receive credit when the per- mit or consultation is finalized. This does not mean, however, that upfront mitigation guarantees that a future project will be permitted. Transportation funds are constrained to trans- portation purposes, and federal funding for transportation mitigation must be spent for and count for that purpose. Regulatory Compliance Achieved DOTs invest in early environmental planning, consultation, and mitigation to assure that issues on the critical path to proj- ect completion have been resolved. This assurance is accom- plished to the degree that CWA Section 404 reviews and ESA Section 7 consultation processes are complete or key issues are decided. In the past, resource agencies have relied on engi- neering detail, site surveys, and relatively late decision making. This practice has been due in part to having relatively less environmental information available in planning and more engineering details and survey data available in project devel- opment. Opportunities for earlier decision making and achiev- ing the consequent environmental benefits could expand with more data and decision making in planning. Goals, commitments, and any decisions that are made or can be made in the regulatory process should be documented to minimize the potential for revisiting or reopening decisions or agreements. The IEF identifies how and when some of these early discussions and decisions can occur and subsequently feed into the CWA Section 404 reviews and ESA Section 7 con- sultation processes. Reopening Clauses Minimized Reopening clauses are the language in the agreement that describes the conditions under which a decision would be reopened or revisited. The more circumstances under which a decision would be reopened or reconsidered, the less pre- dictability for the DOT, and the less incentive for it to make ecosystem investments up front. The ability to minimize reopening clauses is highly depen- dent on several variables. First, the DOT must be prepared to offer project details, especially mile marker beginning and end points, and basic information on the type of project envi- sioned. Early project review will not be possible without this minimum set of information. Reopening may also occur if the project changes beyond the scope described in the initial consultation. Naturally, broader descriptions are more encompassing and less vulnerable to reopening. Reopening can also occur when the environment or situa- tion for the resource changes substantially from that origi- nally described. Land use change from outside sources; climate change; and threats to species, ecosystems, and water resources from drought, temperature rise, and attendant changes are some of the greatest threats of environmental change that can lead to reopening programmatic decisions. Effective action to avoid and minimize contributions to climate change and over- estimating needed mitigation to offer a compensation buffer are the most effective strategies to minimize this risk. Assurances Transportation Agencies Can Provide for Resource Agencies Resource agencies have needs that must be addressed to ensure regulatory processes are satisfied. Avoidance and Minimization Regulatory agencies must be assured that the requirements of the regulations they carry out are being met. The two main

15 environmental regulations that affect the transportation decision-making process are the CWA and the ESA. The assurance needs related to these two acts are described. Requirements of the Clean Water Act Regulations require that transportation actions avoid and then minimize impacts to Waters of the United States. Typically, the project development and permitting processes provide these assurances. Projects that require filling or excavating wetlands, streams, and other Waters of the United States require permits under Section 404 and state certification under Section 401 of the CWA. Regulatory authority for the Section 404 program lies with USACE, with EPA having ultimate authority over jurisdiction, exemptions, and specification of disposal sites. Table 3.1 describes these agencies’ respective responsibilities. In general, USACE cannot issue a permit if a practicable alternative exists that is less damaging to aquatic resources or if the project results in significant degradation to Waters of the United States. Permit reviews follow guidelines established in CWA Section 404 (b)(1), which specify that applicants must • Avoid impacts on Waters of the United States to the extent possible. • Minimize those impacts that could not be avoided. • Provide compensatory mitigation for unavoidable impacts. Assurances that minimize damage to wetlands and other aquatic resources are provided through the alternatives analy- sis process, in particular the 404(b)(1) guidelines. USACE and EPA view projects in two broad categories: water depen- dent (docks, piers, water intakes) and nonwater dependent. USACE and EPA assume that alternatives that do not involve filling or excavating Waters of the United States always exist for nonwater-dependent projects, such as highway projects. It is up to the applicant to rebut this presumption, a higher “bar,” through material provided in the permit application, or as with most DOTs, during project development. Requirements of the Endangered Species Act By law, USFWS and NOAA Fisheries, referred to as the Ser- vices, cannot allow actions that will jeopardize the existence of a species listed under the ESA. Before they can allow a pro- posed action to proceed, the Services need assurances that the action will not result in this determination. The Services gain a level of assurance during the ESA Section 7 process, including their review of the transportation agency’s biological assess- ment (BA) for the proposed action. Once the Services are confident that the proposed action is not likely to jeopardize the continued existence of a listed species or result in the destruction or adverse modification of designated critical habitat, they issue a final biological opinion (BO) with a concurrence letter and, if required, an incidental take permit for the proposed action. The final approved BO with concurrence letter conveys the Services’ opinion that the proposed project meets the requirements of the ESA. Implementation of Mitigation or Conservation Investment Resource agencies need assurances that the agreed-on conser- vation investment and advance mitigation will be implemented and successful in achieving the proposed function. Advance mitigation is the most easily verified and assured option inso- far as purchase and legal protections occur in advance of any impact. Although longer-term enhancement strategies are more complicated to document, DOTs and resource agencies often work out feasible annual monitoring arrangements. Failure to implement conservation investments could result in fines. Performance of Design Commitments Resource agencies need assurances that transportation proj- ects will be designed as agreed. Design requirements are typically incorporated in DOT design plans. Construction and maintenance requirements are incorporated into the best management practices (BMPs) the agency applies to the proj- ect. DOTs use various lists and tracking mechanisms to ensure that environmental commitments are fulfilled. DOTs have significant incentives to ensure that commit- ments are carried through project design and construction. Table 3.1. Regulatory Agency Authority Under Section 404 of the Clean Water Act USACE Section 404 Responsibility EPA Section 404 Responsibility Implements the program day to day. Performs jurisdictional determinations. Has ultimate authority over jurisdiction, exemptions, and specification of disposal sites through Section 404(b)(1) guidelines. Reviews and issues general and individual permits. Develops policy and guidance. Reviews and comments on indi- vidual permit applications. Enforces most Section 404 actions. Enforces cases referred to EPA.

16 The processes by which DOTs ensure they fulfill their environ- mental commitments are extremely important, as breakdowns in these processes can produce notable negative results. When transportation agencies fail to implement environmental commitments they face increased regulatory burdens, project delays, and loss of regulatory and resource agency and public trust, which affect the agency’s ability to deliver the transpor- tation program or individual projects in a cost-effective and timely manner. It may take years for agencies to recover from an instance of lost trust. Asset Maintenance Resource agencies need an assurance that some entity will maintain the asset or real estate right for its intended mitigation purpose. This responsibility takes planning and can require substantial capital outlay. DOTs typically partner with depart- ments of natural resources (DNRs) or NGOs as long-term managers to align agencies’ missions, interests, and skills with the needs at hand and to further public objectives. Private for- profit mitigation bankers often want to turn a project over to an agency (e.g., a municipality or DNR) after credits have been released. The custodial party’s willingness to assume responsi- bility for land management depends on whether the mitigation strategy and investment will contribute to the organization’s plans and objectives (e.g., watershed plans, ecoregional conser- vation priorities, or state wildlife action plans). Mitigation done wherever it might generate the highest return, where it is conve- nient, or where the land is already owned may not address larger ecosystem objectives. The challenges involved in long-term maintenance are discussed later in this report. Ongoing Management Once an entity assumes ownership, they must keep managing the asset as part of their ongoing work or provide assurances that others will carry out this responsibility. If the DOT is main- taining the asset, then ideally it is incorporated into an asset management or maintenance management system; however, there are different opinions on this. Progress Toward Ecoregional Conservation Objectives Progress toward environmental objectives is of interest to all parties. DOT environmental professionals have a strong inter- est in seeing public dollars well spent and being able to show that environmental funds are not just focused on reports or mitigation investments that fall far short of what could have been accomplished for the resources in question. Although process requirements may be a top objective, resource agencies have core conservation missions and objectives. Resource agencies seek assurances that the conservation investment and/ or advance mitigation by transportation agencies will serve as intended and that net gains are produced for the protected resource at larger scales. All parties have an interest in avoiding future listings of threatened and endangered species. With the new mitigation rule, mitigation bankers have increased incentive to consider watershed needs in bank siting (U.S. Army Corps of Engineers 2008). Environmental NGOs use progress toward conservation objectives to gauge their own success. Thus, there are great potential incentives for the mul- tiple parties involved in determining where advance mitigation will be located.