Hot Water: Tennessee Stream Mitigation Fee Program still under fire

There is a lot of “inside baseball” from Tennessee politics in this article we came across (I did not post the first few paragraphs but they can be read at the link provided). But the meat of the story agrees with the narrative arc of so many wetland and stream fee arrangements: Politically influential interests establish a pay-and-pave program to sell the public mitigation and relieve themselves of the burden of performing up-front successful mitigation in advance of impacts (as from mitigation banks). The fee-program is largely ignored and papers over its shortcomings with year after year of glossy reports — but then the economics of pay me now, I’ll build it later, begins to catch up with them — resulting in a tangled mess.

Well, there is at least one one difference between the eerily similar stories of neighboring North Carolina’s fee program: North Carolina’s program had collected $58 million when the creek hit the fan, whereas the Tennessee Stream Mitigation Program had managed only a $54 million war chest.   


PART 1 of 7

By Kelleigh Nelson

July 8, 2012

……The developer bypassed applying for and receiving proper permits, bypassed state environmental laws, and failed to abide by the federal Clean Water Act.

Key to Alphabet Soup Environmental Groups

TDEC – Tennessee Department of Environmental Conservation

TWRA – Tennessee Wildlife Resources Agency

TWRF – Tennessee Wildlife Resources Foundation

TSMP – Tennessee Stream Mitigation Program

AMEC – American Engineering Consulting (Ireland owned)

TDOT – Tennessee Department of Transportation

WWTP – Waste Water Treatment Plant

CWA – Clean Water Act

WRC – Wolf River Conservancy

Tennessee Water Rights

Tennessee Water Law, (T.C.A. 69-3-102 (a) (b), states, “waters of the state are held in trust for the citizens..”). So, the citizens of Tennessee own the rivers, the lakes, the streams, the aquifers, the channels, the spillways, every drop…yes, all of Tennessee’s water. We own it. That’s what the law states. So why then is the state selling our streams and our water rights for $200 per linear square foot through the Tennessee Stream Mitigation Program (TSMP) “In Lieu Fee” program? The Federal Clean Water Act (CWA) requires “No Net Loss” regarding mitigation issues. Easy enough. Whatever natural resources are damaged due to development, that same amount MUST be replaced (mitigated). Thus, the “No Net Loss” standard. An “In Lieu Fee” is substituted for the “No Net Loss” requirement in the CWA, when the stated requirement cannot be met, or would be quite difficult to satisfy.

In other words, if you pay a fee “In Lieu Of” repairing the stream you are damaging with the development, the Tennessee Stream Mitigation Foundation is supposed to use those funds to recreate a similar water way to replace the one which was lost. This means, “No Net Loss.” According to the Tennessee Stream Mitigation Program (TSMP) they have made great strides to provide mitigation to offset stream impacts permitted through §404/401 of the federal Clean Water Act. These “Mitigation measures” are supposed to include:

1. Restoration of degraded stream reaches and/or “riparian zones”; (those areas that surround water bodies in the watershed and are composed of moist to saturated soils, water-loving plant species and their associated ecosystems)

2. New (relocated) stream channels;

3. Removal of pollutants from and hydrologic buffering of storm water runoff; and

4. Any other measures which have a reasonable likelihood of increasing the resource value of a state water.

In layman’s terms, this is saying it is supposed to be nearly impossible for a developer to destroy a stream. However, the law is set up to where the developer is to try to build around the stream first. If that doesn’t work, they’re supposed to engineer and find a newly approved path to direct the stream with minimal damage. Lastly…and here’s the caveat, if that doesn’t work, the developer writes a check and destroys the stream. In other words, any developer can simply buy the stream through “In-Lieu-Fee” rather than fixing or mitigating the problem he’s made, and therefore, destroy the stream for development purposes. The check is supposed to go to repairing a stream somewhere else, but once it is written, the company is off the hook. They have no responsibility in terms of correcting the stream or mitigating any downstream damage to other property owners, as in the case of the Wolf River Airport.

The money goes to the TSMP and they are supposed to either repair the damaged stream or find another stream that is in need of repair within close proximity to this development and use the monies for same. Every foot of stream damaged is to be replaced with a foot of stream. This is “NO NET LOSS” required by the Clean Water Act. The Tennessee Stream Mitigation Program began in 2002 and so far $56 million has gone into the program so developers could do what they want with a stream.

What is happening in Tennessee is, rather than doing “No Net Loss,” they’re paying this “In Lieu Fee.” The TSMP is just taking a fee rather than doing all of the work they’re supposed to do according to the Federal Rules of Mitigation and the Federal Clean Water Act. When wetland mitigation, which is legal, came down to the states in the 2002 Memorandum of Understanding from the Federal Government, it was mandated that it be under the Tennessee Wildlife Resources Agency, (TWRA). The Agency was to establish a Tennessee Wildlife Resources Foundation (TWRF) and this foundation is to administer the mitigation program.

In addition, developers can purchase “mitigation credits” which are basically an acre a piece, and cost $40,000. These credits are not readily available to the smaller developers who couldn’t afford three or four acre purchases of these credits. However for the big developers, the price is not outrageous. In the case of Wolf River Airport, there are two streams upstream from the airport that both come down and converge on the airport property. They are about a mile to a mile and a half away. With the curvature of the streams, or the natural bends of the streams, each is about three miles of stream.

Norfolk-Southern and William Adair bought 4900 ft., and in another case, 3600 ft. of stream and paid money into a bank account for causing damage and tearing up those streams. Rather than mitigate properly and consider downstream use, or downstream impacts, as called for under the Federal Rules of Mitigation, the TSMP just put the money in an account. The key here in Tennessee is that they took the money and put it into an account that was not consistent with the 2002 agreement they had reached with the federal government under the Clean Water Act when Mitigation came to this state. What they did was they put that money in a private bank account off the books of the state of Tennessee. That bank account currently has $13 Million in it, and has had over $56 million run through it. The TSMP takes the money, the land, and the water through the Mitigation Banks. The non-profits, for-profits, and other third party organizations run the Mitigation Banks. The Corps of Engineers is doing their books (reports) and filings in order to keep it off of the books of the state, bypassing the CLEAN WATER ACT. This is against both state and federal law.

They couldn’t have it on the books because IN LIEU FEE is not in the regulations or the law and doesn’t meet the federal mitigation requirements of NO NET LOSS. All of this is to get around the federal CLEAN WATER ACT, and Tennessee’s own water laws. This is an illegal process of taking money and putting it into an off-the-books bank account and nobody knows what they’re doing with it. TSMP even put $5.4 million into Fannie Mae–outside of state fiscal oversight–and they’re totally unregulated!

There’s no cap on how much nature these developers can tear up. In the Wolf River Airport case, the developers bought 4600 ft. of one stream and 3600 feet of another. However, there are three miles of each stream, and they’re tearing up the entire two streams all the way to the Wolf river.

Mitigation is supposed to rectify any downstream impacts, but as you’ll see in this story, it is simply not happening. Codifying (to reconcile the law and incorporate it into the law) the “In Lieu Fee” and “No Net Loss,” is the official stated goal of mitigation.

In fact, an amendment was even removed from SB2211 in the House that would have made downstream impacts a more significant issue. We’ll get to SB2211 and HR2349 later in this tome.

In Part 2, we’ll discuss the Cast of Characters.

Click here for part —–> 1, 2, 3, 4, 5, 6, 7,

© 2012 Kelleigh Nelson – All Rights Reserved



Why did the Governor refuse to sign a non-binding Resolution? Perhaps the rest of this story will explain the Governor’s stance. Also remember, Governor Haslam’s family owns Pilot Oil/Flying J. Bear…

Comment (1)

A 404 Permit applicant may consider a range of options to mitigate impacts. An applicant may propose to conduct the mitigation with the project either on-site or off-site. An applicant might also consider using a private mitigation bank if one is available. Another option for applicants is to pay a fee to another entity that is approved by the Corps of Engineers to conduct the mitigation in-lieu of doing the mitigation themselves. This method of mitigation is termed “in-lieu fee mitigation”. The Kentucky Wetland and Stream Mitigation Fund is funded through in-lieu fee mitigation. The monies in the fund are used to implement projects that improve degraded streams and wetlands throughout the Commonwealth with the majority of projects focused on stream restoration and enhancement on private lands. Thus, the success of the program is largely dependent on cooperation and development of partnerships with private landowners.

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