Baton Rouge Business Report: Why are Louisiana coastal restoration projects bogged down?

RS CEO George Howard is quoted in this interesting article regarding the implementation of the new performance-based contracting model for coastal restoration projects in Louisiana.

coastal restoration

Why are Louisiana coastal restoration projects bogged down?

Baton Rouge Business Report

By Stephanie Riegel

Published November 7, 2019


In 2017, Louisiana lawmakers passed a bill that got little attention at the time but had the potential to make a big difference, long term, in getting coastal restoration projects done more quickly.

The legislation, dubbed Pay for Success by the Gov. John Bel Edwards administration, established the framework for an alternative delivery model for coastal restoration projects that enabled the state Coastal Protection and Restoration Authority to contract with the private sector to deliver a predetermined amount of restored marshland—and assume all the risk.

Under the model, known as performance-based contracting, the contractor finances the project and handles everything from acquiring land rights and securing permits to design, engineering and construction. The state doesn’t have to pay until a project is delivered, and even then it doesn’t have to remit the full amount until several years later, once the marsh had proven it is sustainable, hence the term “performance based.”

The bipartisan legislation was a rare win-win during an otherwise contentious legislative session, and was hailed by private sector contractors and environmental groups alike because it promised to put BP oil spill settlement dollars, already earmarked for the state and sitting in a trust fund in Washington, to work restoring the coast of a state that is losing a football field of coastline every 30 minutes.

But more than two years later, Pay for Success has yet to be implemented. Earlier this year, the CPRA issued its first RFP seeking a performance-based contractor for a marsh restoration project in the Barataria Basin in Plaquemines Parish. But in August, the agency threw out the four proposals that came back, saying they all were too expensive.

Contractors, who each spent hundreds of thousands of dollars acquiring the land rights needed to even bid on the project, are frustrated and raising questions about why an approach that seems like such an ideal solution has yet to be deployed.

CPRA officials acknowledge they, too are frustrated, and want to use this new tool in their tool box. But they say the numbers have to make sense, especially when funding is coming from a pot of money controlled—not so much by them—but by four separate federal agencies.

“It is a bureaucratic mess when you are talking about federal oil spill dollars,” CPRA Board Chair Chip Kline says. “But I would like to see, and I believe we will see, performance-based contracting be successful.”

Flexible and efficient

Performance-based contracting has been used specifically for marsh and wetland recreation projects in other states for years, most notably North Carolina, whose legislation was the template on which Louisiana’s was based.

Advocates of the approach say there are several advantages to performance- or outcome-based contracting over traditional design-bid-build. For one, private contractors—usually teams of engineering, dredging and environmental consulting firms—shoulder the upfront costs rather than the state.

This is important in Louisiana because while the state, on paper, has $7.2 billion in three different pots of BP oil spill money to spend on coastal restoration over the next 15 years, it doesn’t have all the cash on hand today. Even if it did, it can’t spend it without getting certain federal approvals.

coastal restoration

Perhaps more significantly, under performance-based contracting the contractor assumes a much greater share of the risk, essentially guaranteeing the work. The contractor doesn’t get paid until a project is completed and, even then, it may only end up getting 65% or 75% of what it’s owed. The rest comes several years later, after the restored marshland has stood the test of time.

The model is also more efficient because private contractors are motivated to work more quickly and have more flexibility than the state or the CPRA when it comes to acquiring land rights.

“The private sector can work with landowners in different ways than the government can,” says lobbyist Scott Kirkpatrick, who advocates for infrastructure funding. “They’re not hamstrung by as many regulations.”

Some even believe the private sector is more effective than the state in obtaining permits from the U.S. Army Corps of Engineers, which is frequently blamed for dragging its feet on coastal restoration projects.

But all those pros come with a con: They add to the cost of the project, and how could they not? If a contractor isn’t going to recoup his front-end costs for years and has to guarantee the work, that’s going to make the project more expensive.

On the other hand, the longer the state waits to start restoring marshland, the more expensive the undertaking will be in the long run. A 2017 study by The Water Institute of the Gulf determined the cost to restore an acre of wetlands doubles over 20 years. So if the state can enlist the private sector to jump start projects now and pay the front-end costs, everyone is better off in the long run—at least in theory.

“The beauty of performance-based contracting is if we can find a way to get either private investments or other investments into the program so we can projects on the ground sooner rather than later that is a good thing,” Kline says.

Government mindset?

Earlier this year, the CPRA issued its first RFP under the performance-based contracting model to do a marsh restoration in a particularly vulnerable area of the Barataria Basin in Plaquemines Parish. The RFP challenged qualified responders to demonstrate their ability to restore as much new marshland as possible within the required area at a cost not to exceed $65 million.

After an initial round of procurement, four teams led by well-known firms eventually submitted proposals: Maryland-based Ecosystem Investment Partners, Dallas-based Ecological Service Partners, North Carolina’s Restoration Systems and Houston-based Resource Environmental Solutions. Though all four came in at $65 million or less, Restoration Systems received the highest score from the selection committee. It also had the second-lowest price—$64.7 million, or $92,500 per acre.

coastal restoration

All four proposals, however, were rejected on the grounds they were too expensive—not by the CPRA, but by the Trustee Implementation Group, or TIG, that oversees the particular pot of BP settlement dollars that is funding this project.

That pot is called the Natural Resource Damage Assessment, or NRDA, and will eventually total $5 billion. But the spending of NRDA dollars is tightly controlled. Though the CPRA has some authority over the money, it cannot act alone. Representatives from the National Oceanic and Atmospheric Administration, the Environmental Protection Agency, the U.S. Treasury Department and the U.S. Fish and Wildlife Service all have representatives on the TIG and they all have to give the green light to spending on projects as well.

Kline and others say they’re not completely convinced the TIG understands the long-term value in using performance-based contracting.

“I think there were concerns at the TIG level on the premium the state would have to pay to make this mechanism work under the initial RFP,” Kline says. “We know we are going to have to pay a premium to make this work up front but we have to justify the value of getting a project on the ground sooner rather than later and how does that equate to the number of dollars we want to pay?”

Restoration Systems CEO George Howard says the value comes not only having the private sector shoulder the front-end cost but also the performance guarantee that’s inherent in such contracts. He says when the TIG looked at Restoration Systems’ proposal—all the proposals, actually—it wasn’t factoring in the 20% premium that a five-year warranty on an expensive marsh restoration project costs.

He also believes, however, there’s a government mindset at play, one that is resistant to change and innovation.

“I think there is a certain amount of bureaucratic inertia at the federal level that is embedded in the processes that has grown around the NRDA funding mechanism,” he says. “There is a resistance to letting the private sector come in and do this in a turnkey manner.”

Take two

Despite the initial hiccups, CPRA officials say they remain committed to figuring out how to make performance-based contracting work. After the initial unsuccessful RFP, they invited all four teams to meet with them, one on one, and suggest ways the RFP could be modified so that prices can be lowered.

One suggestion on the table is to shorten the warranty required in the initial RFP from five years to three. Another suggestion is to remove from the RFP a clawback provision that would enable the CRPA to not only withhold payment from a contractor if a restoration project fails, but to also go after them for any payments that have been made in the event a project doesn’t “perform.”

“We said if you can do a three-year warranty with no clawbacks that would lower the cost a good bit,” Howard says. “The clawback is like a belt and suspenders approach.”

Kline says his agency is sincerely interested in trying to make something work and is mulling over numerous modifications. Howard and others are optimistic that a second RFP can be drafted in such a way that lessens their risk and, therefore, their proposed price tag.

If that happens, will the federal agencies controlling the purse strings be willing to go along?

“We feel very positive about dealing with the state,” Howard says. “We’re still concerned about the federal trustees and their general support for this project. We wish we could interact with the TIG directly. It seems to act like something of a star chamber.”

Dept of Interior to shift away from ‘project-by-project’ management

Interior Secretary Sally Jewell has unveiled the outlines of a new landscape-level mitigation strategy across millions of acres of federal land that she said is designed to take the department’s agencies away from narrowly focused project-by-project assessments. The mitigation strategy includes four key objectives the department will work to implement in the coming months in an effort to take a broader approach to managing public lands – landscape-level planning, banking, in-lieu fee arrangements and other mitigation tools.
READ MORE AT  http://www.eenews.net/greenwire/2014/04/10/stories/1059997717

An Oregon Wetland That Saved A Highway From Flooding

Last summer, highway officials in Oregon teamed up with a local landowner to use a nearby wetland as a natural sponge for floodwater. By removing a mile-long wall of dirt, they freed the river to spread out into its natural flood plain. Since then, even when the Necanicum has over-topped its banks, it hasn’t sent its waters to flood the highway. It’s a big change from how things used to be.
READ MORE AT:
http://ijpr.org/post/wetland-saved-highway-101-flooding?utm_referrer=http%3A//m.ijpr.org/%3Futm_referrer%3D%23mobile/10420

Forestry Management in Riparian Buffers

A Guide to Implementing Neuse River Basin and Tar-Pamlico River Basin Riparian Buffer Rules for Forest Management Activities was published by the NC Forest Service in July 2012 but worth re-reading or reading for the first time. The rules apply to perennial streams, intermittent streams, ponds, lakes, and estuaries located in either river basin. READ MORE at http://ncforestservice.gov/publications/Forestry%20Leaflets/WQ11.pdf

Stream Mitigation Benefits to Private Landowners

Section 404 of the Clean Water Act authorizes the Secretary of the Army to issue permits for the discharge of dredged or fill material into streams, wetlands, and other waters. Applicants for Section 404 permits generally must mitigate for unavoidable impacts to streams and wetlands associated with their development. Stream mitigation may include such on-the-ground activities as preservation or restoration of vegetated riparian buffers; fencing of livestock from riparian buffers; stream bank stabilization activities; installation of in-stream habitat structures; and reshaping of streams to make them more stable and less likely to erode.
READ MORE at:  http://www.etowahriver.org/stream%20mitigation.pdf
 

Marcellus drillers feel heat as EPA mulls expanded Clean Water Act oversight

Wetlands were early casualties of the Marcellus Shale boom. Beginning in 2007, oil and gas drillers in West Virginia built well pads, roads, compressor stations and pipelines through streams and wetlands at nearly 50 sites without Clean Water Act permits, according to a Greenwire review of U.S. EPA compliance orders for drilling in the state.

 

Credit: Annie Snider, E&E reporter, Greenwire

First of two stories on wetlands in Marcellus Shale states

JANE LEW, W.Va. — Wetlands were early casualties of the Marcellus Shale boom. Beginning in 2007, oil and gas drillers in West Virginia built well pads, roads, compressor stations and pipelines through streams and wetlands at nearly 50 sites without Clean Water Act permits, according to a Greenwire review of U.S. EPA compliance orders for drilling in the state. As the drilling spread, concerns about potential wetland violations were eclipsed by questions from regulators and the public about the drilling technique — hydraulic fracturing, or fracking — and its possible impact on drinking water quality and public health.

But wetland issues re-emerged in December when a Chesapeake Energy Corp. subsidiary agreed to pay nearly $10 million to settle a Clean Water Act violation linked to fracking operations. The tab includes a $3.2 million civil fine — one of the largest levied for damaging wetlands without permits. That big penalty, combined with several years of concerted educational efforts, has driven companies into a permitting process they should have been going through in the first place, regulators say. But now a pending regulatory change expected to extend protections for waters and wetlands stands to redraw the map for oil and gas activities in the region, according to industry staff, consultants and other stakeholders. The rule shift, they say, could alter the economics of gas drilling.

READ MORE at:

http://www.eenews.net/login?r=%2Fgreenwire%2F2014%2F02%2F11%2Fstories%2F1059994398

NC House Committee on Wetland and Stream Mitigation to meet Feb. 27

NORTH CAROLINA GENERAL ASSEMBLY

The House Committee on Wetland and Stream Mitigation (LRC)(2013) will meet at the following time:

Thursday

February 27, 2014

9:00 AM

544 Legislative Office Bldg

Map: http://www.ncleg.net/graphics/downtownmap.pdf

Co-Chairs
Rep. David R. Lewis (Co-Chair) House Appointment
Rep. Chris Millis (Co-Chair) House Appointment
Legislative Members
Rep. Kelly M. Alexander, Jr. House Appointment
Rep. Becky Carney House Appointment
Rep. Rick Catlin House Appointment
Rep. Kelly E. Hastings House Appointment
Rep. Charles Jeter House Appointment
Rep. Chuck McGrady House Appointment
Rep. Garland E. Pierce House Appointment
Rep. Phil Shepard House Appointment
Rep. Paul Stam House Appointment
LRC Member
Rep. Tim Moore Ex Officio

Drone’s Eye View

Photo was taken from approximately 500 vertical feet above ground level looking North Northwest upstream along the Cache La Poudre River (Colorado) and down on the 3-Bell conservation easement.

 

 

 

 

The bottom center of the photo clearly shows a healthy oxbow ecosystem dominated by sandbar willow and cottonwood galleries. Upstream are remnant oxbows which have been heavily degraded by human agricultural practices. Drone under control of Raymond Holz; still picture clipped from video.

 

Southern Environmental Law Center – North Carolina Activity Update

The Southern Environmental Law Center is using the power of the law to champion North Carolina’s environment — from clean energy and healthy air, to rivers and wetlands, to the protection of special places from the Smokies to the Outer Banks. SELC has offices in Chapel Hill and Asheville. SELC is focusing on several transportation projects, including the Monroe Bypass and the replacement Bonner Bridge as well as overall transportation financing reform, Cape Hatteras National Seashore wildlife protection, and the Titan American cement plant in the Cape Fear River basin.

For the latest information on SELC’s current efforts in North Carolina, go to http://www.southernenvironment.org/north_carolina/

Construction Industry Compliance Assistance Center (CICA)

Thumbs up to one construction industry compliance advocacy group for what it is saying about mitigation banking!
+ + + It is a regulatory preference that the wetlands are kept undisturbed. Where avoidance is not practical, wetland substitution, or replacement, at another site often provides a sound solution for the need to preserve wetland habitats. Until the mid-1990s the developer had just two options:
1. Mitigate the impacted wetlands on-site. The developer could replace the lost wetlands on the same site but at a potential loss of expensive real estate value.
2. Mitigate the impacted wetlands off-site by purchasing another piece of property and construct compensatory wetlands. This option is usually prohibitive considering cost and the time requirements because developer must locate and purchase the land, secure the necessary permits and convert the property it into an acceptable wetland.

A relatively new concept called mitigation banking offers a new alternative that simplifies the process for the development community. Preserves, called mitigation banks, are large areas of constructed, restored, or preserved wetlands set aside for the express purpose of providing compensatory mitigation for impacts to habitat. A bank is authorized to sell the habitat values created on the preserve. These values, known as credits, are sold to landowners who need to substitute wetlands for those lost to development where avoidance or on-site mitigation is not feasible. Get a quote from Central Penn Contracting on the construction.
+ + +
For more on CICA, go to http://www.cicacenter.org/mitigation.html