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Stream Mitigation Summit:
Exploring Opportunities to
Facilitate Investment in
Compensatory Stream
Mitigation in the Colorado
River Basin
March 7-8, 2018 Denver, Colorado
Prepared by
Meridian Institute
with support from
the Walton Family
Foundation
Colorado River Basin Stream Mitigation Summit:
Highlights and Next Steps March 7-8, 2018 Denver, Colorado
Introduction
Meridian Institute was asked by the Walton Family Foundation (WFF) to work with
stakeholders to develop strategies to create enabling conditions for public and private
investment in Clean Water Act (CWA) Section 404 mitigation projects that contribute to river
restoration in one or more Colorado River Basin (CRB) state(s). To begin this process, Meridian
reviewed literature, regulation, and documents from stream mitigation programs, and
interviewed key stakeholders and thought leaders to better understand opportunities for and
obstacles to investment in stream mitigation projects in CRB states. Meridian’s interviews
suggested that three initial conditions needed to catalyze greater investment in stream
mitigation in this region include: consistent enforcement of mitigation requirements of
permitted impacts to jurisdictional waters, clear procedures for stream mitigation, and greater
certainty and understanding regarding the amount and location of demand for stream
mitigation credits.
Following these conversations, Meridian organized a Summit in early 2017 with a subset of key
stakeholders to further the discussion. Summit participants identified a set of strategies to
facilitate investment in the CRB, with an initial focus on two specific near-term efforts: field
testing and desk analysis to provide feedback on the beta version of the Wyoming Stream
Quantification Tool, which will inform development of the Colorado Stream Quantification
Tool, and an assessment of demand for current and future stream mitigation in Colorado. While
the strategies identified focus on Colorado as an initial area of emphasis, they could inform
future mitigation investment in other parts of the CRB as well.
Upon completion of these workstreams, Meridian organized a second Summit in March 2018
with key stakeholders in stream mitigation to provide feedback on the two reports, discuss
other challenges identified at the previous Summit, and coordinate next steps to further
investment in stream mitigation in Colorado. The following is a summary of the information
shared and discussion that took place at the March 2018 Stream Mitigation Summit.
Participant News and Updates
Meeting participants shared a number of developments in stream mitigation in Colorado and
other states in the CRB.
Stream Mitigation Summit Highlights and Next Steps • March 7-8, 2018 Page 2 of 12
Development of Mitigation Banks and In-Lieu Fee Programs
• The Colorado State Land Board (SLB) manages state land, held in trust, for the purpose of
generating revenue for public schools. They are in the process of developing five stream
mitigation banks across the state in partnership with mitigation bankers, some of which
are paired with Endangered Species Act (ESA) banks. The SLB model for creating
mitigation banks allows bankers two years to evaluate a site and create a feasible plan for
establishing a bank. From there, the SLB leases the land to the banker to develop a
mitigation project. There are five projects currently underway, each in various phases of
planning and regulatory review.
• The Nature Conservancy (TNC) established one of the country’s oldest and largest in-lieu
fee (ILF) programs in Virginia in 1995, with over 100 banks across the state. Their program
operates under guidance from the U.S. Army Corps of Engineers (USACE) and the
Virginia Department of Environmental Quality (DEQ). In 2003, they established their first
stream mitigation bank, and in 2007 a unified stream methodology for projects was
developed. Projects typically require two years of review by the interagency review team
(IRT) before being approved. Credits are released over a ten-year monitoring period,
based upon the fulfillment of criteria for site success.
• The National Forest Foundation is working to establish Colorado’s first ILF program for
streams and wetlands on the Western Slope. They are currently in the final review period
with USACE, after which they expect the plan to enter a 75-day comment period for
approval or denial of the instrument. All proposed projects will be implemented on (or
directly adjacent to) US Forest Service land, which will require a unique approach to flow
assurances and monitoring.
Watershed and Restoration Planning
• The Colorado Water Conservation Board (CWCB) is in the process of creating a database
of watershed plans across the state. This collection includes watershed plans of different
varieties at the HUC 8 level, including pre-fire mitigation strategies, Environmental
Protection Agency (EPA) nine element plans, stream management plans, environment and
recreational assessments, and others. Their work culminated in a GIS data layer, available
upon request, which managers and planners can use for integrated watershed planning in
their area of interest.
• The Colorado Department of Natural Resources (DNR) through Colorado Parks and
Wildlife (CPW) is partnering with the Northern Colorado Water Conservancy District,
Denver Water, Grand County, and others on the Windy Gap Firming Project. The effort is
a series of restoration and bypass projects in Grand County that would mitigate effects of
two trans-mountain water development projects. The project includes efforts to improve
habitat for native cutthroat trout, which may present an opportunity for stream mitigation
banks and ILFs on Colorado’s Western Slope.
• CWCB manages the Colorado Watershed Restoration Program, which provides funding
for monitoring of a variety of restoration projects. They currently monitor approximately
100 projects under the program.
Stream Mitigation Summit Highlights and Next Steps • March 7-8, 2018 Page 3 of 12
• The Colorado Natural Heritage Program (CNHP) has worked with CPW to create a series
of wetland priority species habitat scorecards showing conditions needed by state Tier 1
and Tier 2 wetland species. The scorecards could help inform mitigation projects. CNHP is
also creating an online watershed planning toolbox, which will be piloted in two sub-
basins in Colorado, including data on wetland landscape position, hydrologic flow paths,
and likely functions, along with layers like irrigated lands. CNHP is identifying likely
historic wetlands and priority areas for restoration in the pilot area, based on current and
likely historic wetland extent, along with driving hydrogeomorphic processes and
ecological functions. Their next step is to ground-truth the GIS information and determine
which restoration activities are feasible and have the most potential for functional lift,
while involving local stakeholders and watershed plans in the process.
Development and Revision of the Wyoming Stream Quantification Tool
Over the past few years, USACE and Region 8 of the EPA, in coordination with Stream
Mechanics and state agencies, have been working to develop Stream Quantification Tools (SQT)
for use in Wyoming and Colorado. The purpose of the tools is to create a consistent approach
for permittees, bankers, ILF sponsors, and USACE regulators to determine the number of debits
associated with stream impacts and credits generated by subsequent mitigation. USACE
released a beta version of the Wyoming SQT in August 2017 for a four-month public comment
period. During that period, Meridian partnered with Otak, Inc. to test the tool at six field sites
in Wyoming and Colorado, and provide feedback on its utility in the field, as well as the
likelihood of the tool to lead to environmentally sound and stable mitigation. Otak, Inc.
submitted a report on their findings to the USACE during the public comment period.
Based on the feedback provided during the public comment period, as well as feedback from
the USACE Engineer Research and Development Center (ERDC), EPA and USACE are in the
process of developing a new version of the Wyoming SQT and a beta version of an SQT for
Colorado. The agencies are considering the following improvements to the tool: addition of a
scientific technical support document explaining more thoroughly the design of the tool;
increased simplicity and clarity for users; an improved approach to flow alteration assessment;
and clarifying the applicability of the tool within a wider range of stream types. There will be
minor differences between the Wyoming and Colorado tools, the majority of which are related
to differences in state standards for measuring performance curve data.
During the Summit, Otak, Inc. provided a brief presentation on the findings and
recommendations from their field and desk studies. Their main takeaways included:
1) Consider alternative metrics for sediment and flow regimes that better represent
physical functions and boundary conditions;
2) Incorporate channel evolution and hydrologic regime to set the context for metrics and
classification that reflect an understanding of watershed context and river functions;
Stream Mitigation Summit Highlights and Next Steps • March 7-8, 2018 Page 4 of 12
3) Consider an alternative to bankfull measurement, such as median annual peak flow and
at-a-station hydraulic geometry; and
4) Reduce the number of metrics and clarify the methods used for calculations to help
simplify the tool and make it easier to understand.
Following the presentation, participants shared a number of comments on the development of
the tool and feedback on the presentation, including the following:
• When reviewing the SQT, it is important to consider that it was created to calculate debits
and credits at project sites and needs to be accessible and understandable to individuals
from a variety of backgrounds, including those responsible for reviewing permit
applications (e.g., USACE staff and IRT members), as well as the regulated public. It is
important to balance accuracy with feasibility to implement in the broader context of the
compliance market.
• While linear feet is often the simplest way to measure impact and mitigation, for more
complex stream systems, such as braided streams, this may not be practical. To address
this, agencies are looking to identify which metrics are most relevant for different stream
types. As an alternative, participants suggested the use of valley length (as opposed to
stream length) or “functional feet” as a substitute for linear feet. Valley length has the
advantage of redirecting the emphasis of mitigation onto the condition of the entire
corridor rather than the stream channel itself. However, removing linear feet as a
measurement could reduce the potential for development of stream mitigation programs
because of concerns about the ability to accurately capture the total restoration achieved.
In addition, a linear foot is the metric used in the national USACE Operation &
Maintenance Business Information Link (OMBIL) Regulatory Module (ORM) database. If
the SQT uses valley length, it will be challenging to reconcile this metric with the data in
the ORM database. As an alternative hybrid approach, participants suggested that channel
length could be used to calculate debits, while valley length could be used for calculating
credits. This approach may address the need for consistency with the ORM database,
while deterring ILF sponsors and bankers from taking advantage of linear feet
measurements, and focusing mitigation outcomes on corridor-wide lift. Currently, the
proposal for the SQT is to use functional feet, which would be derived by multiplying
linear feet by a value for function.
• It is important for the designers of the tool to take steps to reduce the ability of users to
“game the system.” For example, using linear feet as the primary method of measurement
could incentivize ILF sponsors and/or bankers to increase sinuosity of a stream (and
therefore total stream length) as much as possible to gain the most linear feet. Training to
help IRT members recognize ways to “game the system” will enable them to vet incoming
projects to avoid manipulation.
• Adjustments and/or improvements to the tool will be made as projects are implemented
and the IRT, USACE, and the EPA gain a more thorough understanding of how the tool
works in practice. For that reason, the tool design is flexible to accommodate future
changes in metrics, as needed.
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• Once the tool is published and mitigation banks have been established in Colorado, it will
be important to evaluate the degree to which mitigation projects are achieving
environmental targets, and if not, whether modifications to the tool and/or its metrics
could help improve ecological effectiveness of mitigation projects.
Development of Colorado Stream Mitigation Procedures
The three USACE districts in Colorado are collaborating to create the Stream Mitigation
Procedures (SMP), a companion piece to the Colorado SQT. While the SQT will provide an
approach to measurement of impacts and potential lift, the SMP will elaborate on USACE
policies and procedures for implementing stream mitigation in Colorado. The SMP will include
information regarding topics such as guidelines for when to use the SQT, the threshold for
requiring mitigation of stream impacts, site selection guidance, information on reference
streams, real estate protection, levels of assurance necessary for instream flows, the necessity for
a watershed approach to mitigation, and guidelines for monitoring. USACE plans to release the
SQT, technical support document, and SMP simultaneously in 2018 (exact timing to be
determined).
Attendees offered the following suggestions for the USACE to consider when developing the
Colorado SMP:
• Strike a balance between clear requirements and flexible implementation. Include
clarity regarding requirements for hydrological assurance and options for meeting those
requirements. However, ensure that the policies are flexible enough to allow for creative,
new approaches to ensuring flows required to maintain mitigation.
• Address issues associated with “gaming the system.” As described above, participants
mentioned concerns regarding the ability of applicants to “game the system” through use
of the SQT. To address this issue, the SMP could include a requirement that applicants
(permittees on the debit side or bankers/sponsors on the credit side) provide additional
information regarding how they determined what reference data to use, and articulate
assumptions regarding other critical measurements. In addition (or as an alternative), the
SMP could include guidance for IRT members regarding what to consider during
evaluation of proposed mitigation or development projects (e.g., a checklist, questions to
ask, etc.). This guidance could help ensure thorough and consistent evaluation.
• Consider including incentives for indicators of corridor health, such as presence of beavers
or biodiversity, to encourage mitigation project designers to focus on floodplain function
in addition to stream channel health.
Stream Mitigation Summit Highlights and Next Steps • March 7-8, 2018 Page 6 of 12
Analysis of Demand for Colorado Stream Mitigation
In 2017, Meridian partnered with a team from Texas State University (TSU) to analyze current
and future demand for stream mitigation in the state of Colorado. The purpose of the analysis,
available here, was to reduce uncertainty for potential investments in the region and project
demand from 2017 to approximately 2022. At the Summit, the TSU team provided an overview
of the findings and offered an opportunity for discussion among participants. The TSU team
shared that while 13 of the 89 HUC-8 watersheds in Colorado have current demand for
compensatory stream mitigation, mainly in north-central Colorado along the I-25 corridor, very
few stream credits are available to mitigate impacts. Related to future growth, they noted that
future impacts will mainly be located in the Denver metropolitan area, northeastern Colorado
along I-76, west-central Colorado around Grand Junction, and between Colorado Springs and
Pueblo. Finally, they discussed challenges for compensatory stream mitigation, such as securing
adequate hydrological assurance of mitigation sites, ensuring that mitigation projects yield the
desired ecological results, and the potential for investors to “game the system” to use the most
profitable sites or maximize credit ratios. Key comments from participants following the
presentation included:
• The report serves as a novel model for the stream mitigation industry and could spur a
significant increase in investment from financial groups looking to enter the marketplace.
• This model for demand analysis could have a number of applications outside stream
mitigation, including watershed planning and prioritization of restoration sites based on
likely future impacts.
• Changes in policy could greatly affect the estimated demand for stream mitigation in
Colorado, including potential changes in the threshold requirements for stream mitigation,
the implementation of an enforced stream mitigation policy, changes in ratios of stream
impacts to mitigation and therefore price of credits, schedules for releasing credits to be
sold, and level of flow assurances required for mitigation.
Hydrological Assurance
A main barrier identified at the 2017 Summit was Corps requirements to ensure flows in
perpetuity, given the system of water rights and limited water resources in Colorado. During
the 2018 Summit, the group discussed critical challenges and identified potential solutions
related to hydrological assurance for mitigation projects.
Securing Water Rights for Instream Flows
CWCB provides three potential options for obtaining instream flow water rights through their
program:
Stream Mitigation Summit Highlights and Next Steps • March 7-8, 2018 Page 7 of 12
• A Temporary Lease is a ten-year lease that allows use of 180 days of water per year for a
maximum of three years. If used, the lease cannot be renewed. This method of obtaining a
water right requires approval from the Colorado Division of Water Resources and must be
used in conjunction with an existing instream water right of at least the same flow rate.
The processing period for this lease is significantly shortened, because there is no need to
appear in water court.
• A Long-Term Lease allows the lessee to use water each year for a defined period of time
(CWCB has not established a maximum number of years for this type of lease). The lease
requires an appearance in water court, and typically requires adding instream flows to the
water right being leased. The lease requires historic consumptive use and injury analyses,
has the potential to be objected to by other water users, and is a considerably more in-
depth process than a temporary lease. It could be possible to obtain a temporary lease to
begin a mitigation project, during which time a long-term lease is attained. This may result
in substantial added risk to the ILF sponsor or mitigation banker, given that a long-term
lease is not assured before the project begins.
• A Permanent Purchase requires an appearance in water court to change a water right to be
protected under the CWCB instream flow program. It requires the same analyses as a long-
term lease and has the same risk for objectors in court. This type of water right ensures the
highest amount of flow assurance among these three options. However, the biggest
challenges with this option are the low availability and cost of senior water rights.
However, it may be possible to offset the high cost of this water right by leasing water
downstream from the mitigation site.
Identifying Partnership Opportunities
• In 2018, the Colorado Water Trust is implementing a pilot program, Request for Water,
which is an open request to the public to voluntarily place excess water into streams
through temporary or permanent instream flow protections. Contributions to the program
are due at the end of April 2018, when the Water Trust will evaluate the rights coming in
and their potential use for the CWCB instream flow program, among other options. ILF
sponsors and mitigation bankers may find opportunities to collaborate through this
program. Depending on the success of the pilot program, the Water Trust will decide
whether to continue in future years.
• Agreements with mutual ditch companies may provide a unique solution to water rights.
Bankers and ILF sponsors could potentially lease from companies with trans-basin shares
for consumptive use to avoid water court. This would require hiring a local water rights
consulting firm, engineer, and water rights attorney with a good rapport in the area to
explore potential options.
• There are many organizations in the conservation and recreation communities looking for
and experimenting with creative ways to return water to Colorado watersheds. Finding
local partners to explore potential solutions may be a path forward for ILF sponsors and
bankers.
Stream Mitigation Summit Highlights and Next Steps • March 7-8, 2018 Page 8 of 12
• There may be opportunities to enter non-diversion agreements or agreements to change
the timing of diversions with ranchers to keep the river wet during critical periods.
Approaches like this are being tried in Grand and Crystal counties.
Selecting Sites in Relation to Water Rights
• Banks and ILFs could develop site selection models that look for potential senior water
rights or areas without all water allocated and then examine demand for stream mitigation
in the area. Another option to explore is how to create a mitigation bank in a low-demand
area, where junior water rights may be adequate for flow assurances.
• Water rights are typically required when making an alteration to a stream that changes its
function away from what it has been historically. ILF sponsors and bankers may be able to
use historic photos and stream data to prove historic flows were higher than currently
allocated, without the need for water court. However, changes, such as adding storage
functions to the river (e.g., beaver habitat), may require a water right, as water stored for
longer than 72 hours necessitates a storage right and storage may injure downstream water
rights. It is also important to note that even with historic proof, another water right holder
can still claim injury. To help ensure this method of flow assurance, the ILF sponsor or
banker would likely need to establish relationships with downstream water users and
demonstrate the added benefits to their water, such as improved quality or less sediment.
Implications for Policy Decisions
As the Colorado SMP is developed, USACE could explore the potential to assign credits
differently to different types of flow assurances, depending on the level of certainty – as
hydrological assurance increases, the number of credits would increase, which would allow ILF
sponsors and bankers to select the most relevant option from a range of choices. It was also
noted that larger service areas would make it easier to identify high quality sites for mitigation
that also have access to water rights.
Monitoring for Success
Participants discussed the importance of long-term monitoring to ensure ecological lift. The
group noted several important considerations related to site monitoring.
• As noted above, as mitigation banks are established in Colorado, it will be critical to
monitor for ecological lift, and, if needed, make adjustments to the SQT and SMP to
achieve desired outcomes.
• EPA is working on guidance for long-term ecological monitoring.
• Monitoring for different projects around the state provides an opportunity to create a
coordinated database with GIS data regarding native and invasive plant species, and
historical hydrologic data, among others. Monitoring can help to ground-truth GIS and
remote sensing data to ensure accuracy of different data collection methods.
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• Restoration projects often have limited budgets for monitoring; however, focusing on the
most important indicators for different types of sites can make monitoring more efficient
and affordable.
• As stated above in the participant updates, CWCB has funding available for various types
of monitoring projects for up to five years.
• It may be possible to fund monitoring through the sale of credits. This could be included in
the SMP as a “tax” on bankers and ILF sponsors for monitoring purposes.
Coordination with Other Mitigation Frameworks
Pairing CWA Section 404 mitigation with other types of mitigation, such as ESA banks, could
represent an opportunity for increasing investment in stream mitigation in Colorado.
Participants offered the following ideas:
• The SLB is currently in the process of developing a combined bank in Colorado that would
offer ESA credits for the Preble’s meadow jumping mouse, as well as stream mitigation
credits.
• CPW does extensive work with habitat creation/restoration for native cutthroat trout,
which has the potential to be combined with stream mitigation work.
• One challenge to combined ESA-CWA banking is the potential to remove focus on overall
biodiversity of a site in favor of protecting a single species.
• There may be opportunities to combine CWA stream mitigation and required mitigation
for mining operations. However, this can be challenging since damage from a mine
blowout does not necessarily create the need for CWA Section 404 stream mitigation.
• Attendees also mentioned potential opportunities to coordinate with mitigation
frameworks at the state and national levels, such as total maximum daily loads (TMDLs),
non-point source impacts, and the Colorado Department of Public Health and
Environment (CDPHE) Watershed 319 program.
Next Steps
In their closing statements, attendees expressed appreciation for the value of the Summit as a
space to share ideas, and optimism for the path ahead. Throughout the Summit, the following
next steps emerged.
1. Summit participants will continue to exchange relevant information with one another
Following the Summit, Meridian shared a number of documents that were mentioned by
participants during the discussion. Attendees may continue to exchange information with
one another by responding to emails related to the Summit, or by sending materials to
Meridian for distribution.
Stream Mitigation Summit Highlights and Next Steps • March 7-8, 2018 Page 10 of 12
2. Prepare a summary of ideas related to the Colorado SMP
Meridian will extract suggestions offered at the Summit related to the SMP and create a
stand-alone document with these ideas to share with USACE.
3. Develop a reference document on options for flow assurances
Meridian will coordinate with partners to prepare a document that lays out the various
options for flow assurances in Colorado in order of certainty that were identified at the
Summit. Meridian will invite DNR to review and then send to USACE for possible use in
the development of the SMP.
4. Plan to evaluate the first set of mitigation banks and ILFs established in Colorado
Participants expressed an interest in a third-party evaluation of mitigation projects to
determine if mitigation projects are achieving ecological lift. This will inform if adjustments
in the SQT, SMP, or mitigation design, are needed to foster environmentally sound
mitigation projects. CWCB expressed interested in partnering on this effort.
5. Consider organizing another Summit next year and inviting additional stakeholders
Participants highlighted a number of relevant stakeholders to include in future summits
including CDPHE, recreation users, the agricultural community, the State Revolving Fund
Green Program, additional attendees from DNR, major permittees, such as Denver Water,
the Colorado Water Trust, IRT members, and various counties around the state. One
participant also suggested a future summit where attendees walk through a mock
establishment of a mitigation bank in Colorado to learn how challenges identified play out
in practice.
6. Review and comment on the Colorado SQT, science document, and SMP
Summit attendees are encouraged to review the Colorado SQT beta version and associated
documents when they are released and submit input through the public comment process.
Stream Mitigation Summit Highlights and Next Steps • March 7-8, 2018 Page 11 of 12
Appendix A: Participant List
Julie Ash
Senior Project Engineer, Project Manager
Otak
Linda Bassi
Section Chief
Colorado Water Conservation Board
Jackie Corday
Water Resources Section Manager
Colorado Parks and Wildlife
Jeff Deatherage
Water Supply Chief
Colorado Division of Water Resources
Mindy Gottsegen
Conservation Services Manager
Colorado State Land Board
Karen Hamilton
Manager, Aquatic Resource Protection and
Accountability Unit
US Environmental Protection Agency
Karen Johnson
Director of Wetland and Stream Mitigation
The Nature Conservancy
Jason Julian
Associate Professor, Department of
Geograhy
Texas State University
Matt Kondratieff
Aquatic Research Scientist
Colorado Parks and Wildlife
Sarah Marshall
Wetland Ecologist
Colorado Natural Heritage Program,
Colorado State University
Julia McCarthy
Environmental Scientist
US Environmental Protection Agency
Emily Olsen
Colorado Program Manager
National Forest Foundation
Becky Pierce
Wetland Program Manager
CDOT
Adam Riggsbee
President
RiverBank
George Schisler
Aquatic Research Section Leader
Colorado Parks and Wildlife
Peter Skidmore
Program Officer
The Walton Family Foundation
Stream Mitigation Summit Highlights and Next Steps • March 7-8, 2018 Page 12 of 12
Allan Steinle
Chief, Regulatory Division
US Army Corps of Engineers
Chris Sturm
Stream Restoration Coordinator
CO Water Conservation Board
Luke Swan
Senior Geomorphologist/Project Manager
Otak
Rusty Weaver
Assistant Professor, Department of Geography
Texas State University
Meridian Institute
Sophie Gutterman
Project Assistant and Fellow
Meridian Institute
Diana Portner
Mediator and Program Manager
Meridian Institute
Jennifer Pratt Miles
Senior Mediator
Meridian Institute