A bill to take millions of dollars away from state agencies and hand it to a private industry with a poor track record has been zooming through the Legislature.
The state Department of Transportation has spent $169 million in the last four years trying to make up for the wetlands that have been paved over for construction of roads and bridges.
More than two-thirds of that — $116 million — went to the state's five water management districts, which were supposed to use it to create wetlands or restore wetlands that had been drained. The DOT spent the rest buying "credits" from the state's 50 wetland mitigation banks — a market solution that's supposed to be good for the environment as well as the economy.
The bill, CS/HB 599, orders the DOT to hand over all of its wetlands money to the private mitigation banking industry, despite studies showing that most Florida mitigation banks have done a poor job of restoring wetlands.
Ideally, mitigation banking works like this: A would-be banker buys land that used to be a swamp and was drained for pasture or some other use and restores it. Regulators then calculate how many "credits" the banker can sell to developers. Each credit — which can go for thousands of dollars — is equal to an acre of pristine wetlands that the developers wipe out.
But a 2007 study done for the state Department of Environmental Protection reported that fewer than half of the mitigation banks reviewed had achieved the goals required by their permits.
Most that hit their goals did so only on paper. The reason: The requirements in their permits didn't match what's required to replace the things wetlands do naturally — soak up floods, recharge the aquifer, filter pollution and provide wildlife habitat.
The DEP study came to a dismal conclusion about mitigation banks in general.
"Return of full wetland function may be an impossible goal given current and future human development activities across the Florida landscape," it said.
In a series of articles in 2006, the Tampa Bay Times found more basic problems. Some mitigation banks got more than half their wetland credits for land that was actually dry. Some received credits for simply preserving wetlands, even though that fails to balance out the loss of wetlands elsewhere. One was selling credits even though its owner had done nothing at all for five years.
"A lot of banks are square pegs pounded into round holes," one mitigation bank owner told the Times then. "A lot of them are people looking to cash out on bad pieces of property by turning them into mitigation banks."
How did the bankers get away with such poor performance? A 2005 study by the Government Accountability Office found that regulators hadn't checked on banks after issuing their permits.
Despite those concerns, mitigation banking boomed over the past decade. But when the real estate boom went bust, it led to "a decline in demand and a drop in pricing," National Mitigation Banking Association president Stephen Collins, who runs a West Palm Beach mitigation banking company, wrote to members last fall. "We have all had to 'sharpen our pencils' and look for ways to get more from less."
While private development has fallen on hard times, public agencies like the DOT are still building — and looking to replace paved-over wetlands
The DOT destroys more wetlands each year than any other industry, according to federal regulators. Originally state law said the DOT would offset the damage by paying the state's five water management districts $75,000 an acre to create or restore wetlands. A few years later, legislators said the DOT could use mitigation banks, too.
CS/HB 599 simply strikes out the reference to the water districts. Instead the law would say mitigation will be "carried out by the use of mitigation banks.''
The result, according to an analysis by the House Agriculture & Natural Resources Subcommittee, is that it "will result in a decrease in revenues" for the water management districts. The districts, once considered powerful agencies, suffered serious cutbacks last year and this year have been targeted by a bill that takes control of their spending away from the governor and gives it to the Legislature.
Three legislative committees have approved the mitigation bill unanimously and it's now headed for the House floor. Its companion in the Senate, CS/SB 824, has passed two of its three committees unanimously.
Neither the DOT nor the DEP opposes the bill.
No environmental groups are opposing it either, although the Sierra Club "is generally critical of wetlands mitigation banking," said Frank Jackalone, the club's senior organizing manager in Florida.
Eric Draper, executive director of Audubon Florida, called the bill "troubling'' because a lot of the water management districts use the DOT money to buy environmentally sensitive land.
CS/HB 599 is sponsored by Rep. Ray Pilon, R-Sarasota, who did not respond to a request for comment. When elected in 2010, he received campaign contributions totaling $2,750 from Earthbalance, which operates four mitigation banks, and its chairman, Don Ross, former chairman of the state's Environmental Regulation Commission.
Ross also did not respond to a request for comment, and neither did Terry Lewis, a lobbyist for the Florida Association of Mitigation Bankers.
Times researcher Caryn Baird contributed to this report. Craig Pittman can be reached at [email protected]