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hi everyone i'm donna collier chairwoman of the national environmental banking association otherwise known as neba it is a real pleasure to be here with naba's representative in washington d.c mr john paul woodley he issued the 2008 rule on behalf of the corps of engineers so we have the man himself to help us to understand the purpose and intent of the rule we also have mike sprague here a past president of nmba and current board member of neba he will be helping us out with the questions after we hear from mr woodley nevis plan of attack is to identify the most critical issues for our industry and take them on with all of the resources we have we have a strong knowledgeable board of directors that works well together to improve our industry for our members our focus for over a year now has been to improve the consistency and reliability of the application of the hierarchy in the 2008 rule which puts bank credits at number one congressman fulcher and simpson of idaho have supported our industry by including language in recent appropriations legislation to improve the application of the hierarchy urba joined with us in that effort which was successful this legislation has passed the house we expect the senate to approve it right after the election neba then sent a request directly to the current assistant secretary of the army civil works requesting a programmatic review of the application of the hierarchy in all districts we received a very positive letter back from him offering to work with us to make improvements john paul will be representing neba in that effort we are fortunate to have him on our team investors in environmental banks are risking an awful lot by putting funds into projects that will not see a return for many years knowing that the hierarchy will be followed and they will be rewarded with credit sales when they prove successful is critical to the success of the industry and to attracting future investment in restoration projects mr woodley has developed insights and abilities in service at the highest levels of state and federal government he served as deputy attorney general of virginia for government operations then as secretary of natural resources for virginia with overall responsibility for all environmental protection and permitting outdoor recreation and open space management inland and marine fisheries and historic resources in the commonwealth in 2001 he was appointed by president george w bush to the u s department of defense as principal environmental advisor to the secretary of defense from 2003 to 2009 mr woodley served as assistant secretary of the army for civil works responsible for the civil works functions of the department of the army including the civil works activities of the army corps of engineers and arlington national cemetery he implemented a major business process transformation within the corps starting with the first use of performance-based budgeting in core history john paul was involved in the reconstruction of the hurricane protection system for new orleans louisiana after hurricane katrina and the restoration of the florida everglades he issued the 2008 final rule for mitigation a joint core epa regulation his honors include u.s army decoration for distinguished civilian service secretary of defense medal for outstanding public service silver the flurry metal from the army engineer regiment fellow of the u.s section of p-i-a-n-c the world association for water waterborne transport infrastructure distinguished diplomate of navigation and engineering of the academy of coastal ocean port and navigation engineers he resides with his wife in fairfax county virginia with that we will turn this over to john paul who will give us the rundown on the purpose and intent of the hierarchy in the 2008 rule after that we will open up for questions please feel free to submit your questions at any time with that we give you mr john paul woodley thank you donna for that introduction i hear that introduction quite a bit and it always makes me sound like one of these guys who can't keep a job but anyway i i have uh uh very fortunate i have been uh employed since leaving the federal government uh with my firm and my colleagues at advantage strategies uh our firm which is although i'm based in northern virginia uh the firm itself is headquartered in richmond uh but our focus here today is going to be to talk about go back and since we're in the process of uh re-examining the 2008 rule and and making some changes and hopefully some improvements i think it's very helpful for us to talk about the uh what it is that was we were trying to accomplish and what were the main things that that that the rule was intended to uh to accomplish uh back in 2008 and i i suppose we ought to think about because very few people now remember how bad the situation was uh for mitigation back in in 2008 and before uh you know the uh national academy had uh had been commissioned and it spent a great deal of time and effort uh looking into the uh course mitigation activities and basically found them wanting on almost every aspect we couldn't show that the mitigation was was successful we couldn't show the mitigation was taking place we couldn't show that that uh the impacts that were undoubtedly taking place uh had been properly mitigated in any in any systematic way uh and we were uh we had a system going that was uh tended to create fragmented uh uh pockets of mitigation for small impacts uh that were usually only minimally viable certainly a very very uh tenuous of the in their capacity for wildlife habitat and other uh important values that we're trying to mitigate and trying to preserve and so the uh the message was very very clear that the uh the whatever we had then whatever epa uh and the core were were trying to do uh it was not working it was and and it needed a thorough overhaul and so that's the sort of that's the spirit that animated the uh mitigation rule and congress was very strongly encouraging uh the corps and epa to uh to get to work and and produce a rule that that uh joint rule uh that would uh put the mitigation on a modern footing and so the the uh the mitigation rule uh was intended to do two things first or i want to focus on two main aspects of it and the first is the uh the hierarchy which gives a preference for the use of mitigation banks in the mitigation process and the second thing is the interagency review team uh which uh was intended to uh bring all of the agencies that were necessary together to uh and so that the that everyone had the same picture and you didn't get a lot of iterative review uh that was uh that that would slow the process the uh i consider the hierarchy of mitigation to be the heart and soul of the mitigation rule and that's because the uh the the mitigation rule is intended uh to foster uh the the use of mitigation banks and and for the very good reasons that were have been well established uh scientifically and uh and economically uh the the first is that the mitigation bank of course can can produce mitigation on a much larger scale it's on almost lands a landscape scale as opposed to fragmentary mitigation the second thing is that having the mitigation in a mitigation bank where you can impose monitoring requirements financial assurances and other important requirements to ensure that the mitigation is required that's in addition to the fact that you get in a mitigation bank the mitigation actually takes place in advance of the impact that that is being permitted and so the the you get a temporal aspect to the uh mitigation uh benefit as well but it was perfectly clear that uh that unless these unless the mitigation bank was put on a on a firm footing in terms of its regulatory uh posture which didn't exist prior to that time and was given a firm preference in the in the uh mitigation rule so that regulators when they sought to permit unavoidable impacts uh would be required by the rule uh to uh to accept mitigation bank credits before they accepted any other form of uh of mitigation it's unless uh you know and there's flexibility built into the rule there has to be uh and but but unless they can demonstrate that for some reason accepting that mitigation uh bank as the mitigation uh strategy was not in the public interest uh they would they should go straight to the mitigation bank uh and the uh the purpose of that is that one of the benefits of and the the one things we were seeking to do in establishing the mitigation rule uh was to bring uh talents to the table the in in the mitigation arena that did not exist in federal or state government it's simply not their expertise and that is the the expertise of the business people the expertise of the free enterprise entrepreneurial spirit uh that has uh in my opinion is one of the uh great founding principles of this of this country uh and the mitigation bank brings that to the table mitigation bank developers are business people and our regulators are not and they are able to uh price the mitigation and give it a a price in the marketplace that uh it otherwise didn't exist and so that was was a very very important part aspect of the mitigation rule and one that we had with a great deal of difficulty to to put that in place and it doesn't work without the uh the hierarchy being in place as well if there if there's some kind of way to bypass the uh uh the mitigation banks the the businesses that are in place then then uh you know it's the whole system will uh uh be much weaker and so the mitigation hierarchy was in place to protect those values that that were that were represented by mitigation banks the other aspect that i'd like to discuss because it has been the subject of considerable discussion uh and that is and controversy even and that is the interagency review team or irt and i i suppose and you know i i'm not alone in in saying it being and being able to bring forward any number of horror stories about irts that have not done what they're supposed to do and uh and and have have in fact been a problem and every time you get two bankers together they they swap uh stories about the horror stories about the irt but the irt if you it structure is what it's intended to do is to embody a the project management uh concepts and bring project management principles to bear you know the core of engineers they won't build uh a tool shed uh without employing project management principles which include include a a product development team uh a project manager that has empowered to move the project forward uh that that is empowered to uh bring together the resources necessary to complete the project to complete it and and to complete it on a uh given schedule so that the you you produce uh something that is known as a gantt chart uh that shows what time what the timeline is for that to be uh when i was in office uh i used to think that that you could tell when the corps was serious about doing something because if it was serious about if the project was serious if the cover was serious about accomplishing it they would have established a project manager who would create a project delivery team and they would employ project management principles uh and if they were not serious about doing it they would appoint a committee and uh it would have several co-chairs and it would have it would have it would meet uh at irregular intervals and and uh busily accomplished nothing and that tells you something that is that the project the the irt seen as a project delivery team in the context of a project management uh structure makes a lot more sense it's not just a gaggle of regulators who are uh brought together irregularly to argue and indefinitely about uh what their pet agendas should be uh instead it's a group of people who are led by a project manager and led to a goal on a timeline that establishes and the goal being a recommendation you know not the goal is not approval of the bank uh goal the goal is recommendation to the commander of the uh uh district in question as to whether or not the banks should be approved and so that they should reach that recommendation and you know hopefully if they they work hard enough they work with the project developer they will get uh approval of the bank but seen in that context it it it would and and if operated in that spirit and operated under those constraints the irt is a powerful tool and the problem is that there are regulators unlike every other person in the corps of engineers our regulators are not trained in project management and i have you know uh uh i guess it's on me i really i didn't realize that uh it didn't realize that weakness uh when i had up until i left office in in 2010 but it quickly became apparent to me afterward and then i have since then very strongly advocated with anybody who would listen uh that the project managers being trained in i mean that the the regulators in charge of approval of banks uh be trained in project management but just like their colleagues uh right across in the next cube uh then the colleague in the next cubicle at the district headquarters who is working on a runway or a barracks or or some or a dam a lock a dam is a certified project management professional and every corps of engineers district commander is required by the chief of engineers to be a certified project management professional and so the the the corps of engineers uh regulatory uh people who are i mean they're brilliant people and i love them they they are very dedicated and they work extremely hard they're they're underfunded and overworked i'd have no doubt about that i've seen it myself and uh and and they are not trained in the kind of project management skills that are needed to really get the improvement and really operate the irt system the irt concept uh the way it should should be operating the way it was intended to be operated so i've gone on for quite a while donna i know we're wanting to leave some time for questions uh and i hope that that we have uh uh excited some some interest and and uh and got some questions out there well thank you jp you have an insight that we rarely hear we really appreciate your adding your your judgment and experience to our industry we need this pretty bad mike do we have any questions well we do uh we do have a question initially uh jp to be successful what things do you think an irt should do perhaps and maybe shouldn't do okay well that's that that's a topic that uh among us we've been thinking about very hard uh but uh uh i mean the number one thing i've already touched on the irt should operate as a project delivery team uh in the context of the project management principles and that means they operate they they understand the uh resources needed to to complete the project and the time needed to complete the project and they they established a firm timeline of uh for and schedule for completing the project and they adhere to it and they understand when they when when they don't uh the second thing is that they they should recognize that the the uh regulation uh puts the uh puts the corps of engineers puts the the district commander as the leader and the project the district project manager as the leader of the project delivery team and they should follow the lead of that uh that person they should not they have have no ability and should not uh compromise or uh neglect the their individual agencies uh but within the context of the of the procedure for approving the bank they should should be led by the project manager from the corps of engineers uh and uh you know if if their authorities uh don't allow them to to agree to some situation well then then that's that's the law and then that's that is gonna have to be respected but the but it should not be a matter of of uh uh of endless controversy it's it has to be these things have to be resolved and the timelines have to be respected uh the other thing is that the members of the irts and this is something that that they uh that has that is probably my number one pet peeve and that is uh they should recognize that you don't once an issue is resolved and and some form of consensus is uh is achieved if even if you don't agree with it especially if you don't agree with it and if you feel like that that it's not the ideal solution uh it's not it's a process foul to reopen it later in the in the process resolved matters need to be need to remain resolved and not be reopened uh later in in the in the in the process and then the other thing is is sort of a corollary that and that is that the regulators need to the the members of the rt are there because of their role with their own agencies and their they they need to respect that uh and and and not encroach on the roles of the others i the the shorthand i have for that is they need to stay in their lane and that's something that that is hard to do and uh and there's a lot of temptation to go wandering all over the uh all over the map and and and deal with issues that don't pertain to your expertise or your responsibility but that that uh temptation should be resist if possible that's great there's another question here if a banker or presumably a bank is bypassed what is their recourse that is that is an excellent question i think and i believe to say i have to say um uh it's a little embarrassed to say that it points to a weakness in the uh uh in the rule because the answer to that is not at all clear the uh the the core has given itself and court epa have given themselves in this rule a great deal of discretion and that's you know not necessarily bad uh it it is um you know that you're you're trying to do a rule of uniform application and apply it to an infinitely varied landscape uh and so so that the core does have uh i mean the hierarchy is in place and they're told to do this and the regulation governs their activities uh but there's it doesn't appear there's no enforcement there's no no hammer i guess no there's no bad thing that happens if if it's not followed what you can do uh if you at least for an individual permit is if a permit uh is noticed for uh for public comment uh and you get a hold of it and it shows that they they've doing some half-baked uh uh permittee responsible concept when they've got a perfectly good bank that's well within the service area uh then you you know the the it's a comment you can make uh to the uh permit and i i would expect you would probably have uh standing to litigate uh and and to to pro oppose the issuance of the permit uh because it does not meet the requirements of the law uh under the administrative process act uh and uh you know but but you do that the the the likelihood of success is very uh questionable because of the discretion that has been given to the the corps of engineers uh decision makers and uh you know so at least they would have to produce under that circumstance they would have to produce some kind of rationale that uh indicated why they thought it was reasonable for them to go outside of the uh hierarchy and there are reasons to go outside the hierarchy there there are reasons that that that if you don't have a uh a bank in place or if the bank is uh that they're that you would otherwise go to is uh it's in uh it's distant or uh it's in a secondary service area that and it doesn't have the same kind of of credits you know that you but the problem is not that they have the discretion the problem is that they they need to be required to to thoroughly explain why they are uh going away from the mitigation hierarchy and why they believe that that uh the that the mitigation that they're requiring is equally uh effective or or more effective than the mitigation provided by a mitigation bank um you know because let's face it the the reason that the permittee the the applicant is putting forward this oh i don't want to go to a bank he's putting it forward because he thinks he can do he can do it cheaper he thinks he can save money okay i mean if if the banks were if the bank if he didn't then he'd buy credits from the bank in a new york minute uh and so you know that's that's why the the ability of the of banks to provide that kind of uh uh facility for mitigation is one of the selling points of bank credits you say well you don't have to do a a prp you don't have to go and buy some landers et cetera et cetera you can do this you can just write a check to the local banker and and you're done well you know the the if if if the uh uh permit permit applicant is for some reason that's financially advantageous that they not do that uh then uh they're going to to try and justify the use of something that's not a bank and it's some typical thing or bill for instance if it's a local government and they own they already own uh some uh some property in the vicinity and they could do some you know uh they plant a few weeds and call it mitigation and uh and and and pay one tenth of what the uh bank would cost well they're going to try and do that and the court needs to be looking at that and saying that's not going to cut the uh mustard you know it's not going to going to do going to it's not effective mitigation and it doesn't first of all it doesn't meet the hierarchy of the rule and secondly it's it's not effective so anyway uh the the uh you point to you point to what i think is something in the rule that could be could very well be strengthened exactly how you do it and maintain the uh flexibility that the uh that the corps needs to to do in uh its permitting operations is is a very good question and uh you know i have some ideas on that but i don't have time to don't have time i see carlene is about to uh put the hook on i'm hoping we can we can squeeze in another uh one more question at least and this is i think related to the last question do you think one entity should have the final decision based on input from the irt members when approving a bank well i think that is how the system was intended to to uh proceed that the entity and that entity being the uh uh commander of the of the district of the core district in question now the what where it gets complicated uh is if for some reason you're trying to and this is something that comes up in california uh you're trying to establish yourself as a state recognized bank as well as as well as a corps of engineers recognized bank uh and so so that you can use your credits for both uh state permitting and uh and the federal permitting uh in most places it's not as big an issue but um you you know for that you know the situation you have is the the district can cr can can permit the bank and it can be a federally recognized bank but it would not be able to be used to um for and or recognized by the state agencies who are very active in uh the permit permitting decisions and so you have the irt trying to to put that together and and this the the core of engineers can't tell a state agency what to do you know the federalism is uh is still alive and well uh and uh and and so that is that has to be done uh in a collegial uh manner and you know they do barely i don't want to praise them because i've been burned too many times but you know they they work very hard let me say this they work very hard at that in california they are not always as successful as you would want them to be but that i know that they work very hard at it both the state and the federal uh and so uh you know i wish that i wish they could be more successful sometimes and now i'm back hey carly very very uh well done i i enjoyed hearing more about that and uh it's always good to be reminded of the intent of the 2008 rule and get some clarifications so um any final comments from from donna or john paul or michael thank you jp we are really happy to have jp on board as our representative in washington so you can see what he has to bring to neba we're very pleased to have him with us thank you very much thank you donna well thank you all for being here and uh we'll see you plan on raleigh in 2021 all right thank you all right thank you bye-bye