CUMBERLAND – “It's moving at a pace slower than most any other permit we deal with just because of the complexity of it,” Dave Davis, director of the Office of Wetland and Stream Protection at the Virginia Department of Environmental Quality (DEQ), told The Herald during a discussion of the Cobbs Creek Reservoir Mitigation Plan.

Henrico's Mitigation Plan is “unique” and large and one step closer to being finalized. But it still has a long way to go.

Although an amendment to the state budget was passed this year and signed by the Governor, allowing Henrico to mitigate within the Cumberland State Forest, the County is still in negotiations with the Department of Forestry and the final mitigation plan still has to receive its final approval from both the DEQ and U.S. Army Corps of Engineers (USACE).

Not only is the reservoir project itself large and complex and slow moving, the component of mitigation seems to have a life of its own, like an unwieldy tributary that dries, floods and meanders its own course downhill regardless of boards', Counties' or regulator's wishes.

In all, the 1,117-acre augmentation reservoir will flood over 15 miles of stream, almost 31 acres of wetland and 4.6 acres of open water in northern Cumberland County. And according to state and federal law, Henrico is required to insure there is “no net loss” of wetlands and streams as a result of the project.

According to the Code of Virginia, mitigation involves not only avoiding and minimizing impacts “to the maximum extent practicable,” but also “compensating for remaining unavoidable impacts of a proposed action.”

Talking about the wetland acres alone, Davis told The Herald, “we don't generally permit something that large. But, compared to the stream impact, it's merely a small piece of the puzzle.”

Davis is quick to point out that although this is a large amount of mitigation, it is also not a typical project. This large amount of mitigation is not due to a private, for-profit use of the land like the construction of a Wal-Mart or a subdivision. It is a public water supply,” he points out.

Henrico's final mitigation plan seeks to demonstrate how it will compensate for the unavoidable impact of the reservoir. It details three aspects of mitigation: wetland mitigation at Swift Island, a mitigation site located in Buckingham County; mitigation of 75 percent of the stream credits through the Department of Forestry, primarily in the Cumberland State Forest; and mitigation of 25 percent of stream credits through private mitigation banks.

Cumberland State Forest

The biggest struggle for the mitigation plan seems to revolve around Henrico's goal of compensating within the Cumberland State Forest.

Henrico plans to compensate for streams flooded by the reservoir by preserving a buffer area along streams in the Cumberland State Forest. Henrico will pay the Department of Forestry not to harvest any trees within a 100-foot buffer along 58 miles of stream in the Cumberland State Forest.

The proposed compensation is so unique that a special amendment in the state budget, that will bring almost $10 million to the Department of Forestry, was passed this year to help it move forward. An amendment that, in its original form, would have stopped mitigation in the Cumberland State Forest all together.

The mitigation plan is so unique that an unofficial opinion from the Attorney General's office has been written on whether the state forest could be used for mitigation services.

It is so unique, a special report, now available from the National Mitigation Banking Association's website, was completed by mitigation bankers last year. The report suggests that the plan will damage the mitigation banking market by using the state forest and that the plan does not appropriately or sufficiently compensate for the streams and wetlands flooded by the reservoir.

All that has happened in the last few months.

Six years ago, when the State Water Control Board approved the permit for the reservoir, the board members also recognized that the plan was unique. The board requested that the mitigation plan be presented to them again once it was finalized to ensure the compensation was satisfactory, according to Davis.

The two major reasons they wanted a final review, Davis explains, is because of the size of the project and the suggested plan of mitigating within the Cumberland State Forest.

“Now, nobody was anticipating that there was going to be a six-year gap,” Davis says.

Since the time the permit was approved, negotiations between Cumberland, Henrico and Powhatan counties regarding the reservoir project stalled out. The DEQ almost cancelled the permit. Negotiations resumed in 2010 and Henrico became the owner of the project. Powhatan is still in negotiations with Henrico.

A lot has changed in six years. And, in some ways, those changes have made defending the mitigation plan even more difficult.

Davis confirms that the mitigation landscape is changing rapidly and it can be difficult for a slow moving project like Cobbs Creek Reservoir to keep pace.

For one thing, in 2005 when the application and analysis were originally being work on by the DEQ, there were very few compensation options in that watershed, Davis explains. He continues, “There was maybe one mitigation bank, but they had very few credits.”

Davis explained that when looking for compensation, the DEQ starts by looking to compensate at the impact site and then spread out from there, “because you want to keep the compensation close to where the impact is.”

Compensating on-site was out of the question for the project, since the entire Cobbs Creek sub-watershed will be flooded and become part of the reservoir.

“With the overriding public interest of, well, having water supply for people, the applicant looked for….unique alternatives to keep the project moving forward,” Davis explained.

And so, the idea of mitigation within the Cumberland State Forest arose.

However, now mitigation banking has become more prevalent and more credits are available on the market.

And some mitigation bankers, who have invested money in developing compensatory mitigation banks, are not happy about Henrico's deal with the Department of Forestry.

There are a lot of mitigation credits that need to be handled due to the size of the Cobbs Creek Reservoir project and, according to Deputy Secretary of Agriculture and Forestry Travis Hill, mitigation bankers were worried that the credits they had available weren't going to be used for this very large project.

The Budget Amendment

According to Hill, the original amendment introduced in the General Assembly this year would have prohibited mitigation in the state forest entirely, due to the pressure of the private mitigation bankers.

Hill said, “We want to recognize the fact that the banks are out there and give them their due. And I think this is a fairly unique project that the state needs from a water source perspective. …We want that to happen from an economic development perspective and a water supply perspective. We like to see the private bankers get a share of it.”

And as outlined in the approved budget amendment, a partial compromise has been reached.

William Mawyer, assistant director of public utilities, explained that Henrico County had initially intended to purchase all of the remaining stream credits through the state forest. It's final plan now includes the purchase of 25 percent of those credits from private mitigation bankers, as outlined in the state budget amendment.

The amendment item to the state budget specifies that $9,840,690 will be deposited into the Virginia State Forest Mitigation Fund, a fund created by the amendment, that would come from the stream mitigation purchase between the Department of Forestry and Henrico County.

“These funds shall be used solely for forest land or conservation easement acquisition,” the amendment reads. Seven percent of the funds will go towards long term management of mitigations.

The amendment also seeks to dampen the possibility of any further plans of mitigating within the state forest. The amendment concludes that in future mitigation projects, public or private, state forests cannot be used to mitigate wetland or stream impacts “until such time as due consideration has been given to the availability of mitigation credits available from private sources.”

Additonal Steps

Another major change, also in the same direction, has been in connection with mitigation requirements at the federal level.

In 2008 The Mitigation Rule was passed, a law that establishes a preference hierarchy for mitigation. It requires that mitigation first be sought from mitigation banks, followed by in-lieu fee programs, and then permittee-responsible mitigation.

Julie S. Hamilton, with the USACE, confirmed that because the permit was issued before 2008 it will not be required to retroactively agree with the new legislation.

Henrico's mitigation plan has yet to be approved by the USACE. It will be reviewed by the branch chief, but, according to Hamilton, the Corps is still waiting for one item to be clarified.

Once again, mitigation in the Cumberland State Forest seems to pose part of the problem,

In particular, clarification is required regarding the mineral rights in the state forest, which are owned by the federal government.

Hamilton confirmed that because those rights are owned by the federal government, preservation projects in the state forest could potentially be undercut. Or, perhaps more appropriately, undermined.

It's complex, there are a lot of facets, and it's moving slowly. But, the DEQ, at least “believes that when you make certain commitments and agreements, you owe it to the applicant to abide by them,” Davis says.

And, for now, Henrico is full-steam ahead. The County published an Invitation for Bids for up to 21,000 credits last month, allowing private bankers to get their share of the mitigation action.

The list of bidders will be submitted to the DEQ and reviewed, along with the rest of the plan by the State Water Control Board. If the plan is approved by the board, Henrico plans to contract with the successful “low bidders” by late June or early July, according to Mawyer.

And although the price of nearly $10 million has been set, Henrico is also still in negotiations with the Department of Forestry regarding mitigation. Mawyer explained that the negotiations are revolving around the contract and defining responsibilities, particularly who is going to meet the long- and short-term monitoring requirements of the compensation.

Hill was confident that an agreement would be reached, he said it was now just a matter of “getting those last few pieces put into place.”

If all goes well with the June water board review and the USACE review and if the contract with the Department of Forestry is indeed finalized, then that meandering mitigation tributary may finally find its way to the edge of the reservoir where many think it belongs.