Eric McCleary. ACES and Ecosytem Markets Conference Ft. Lauderdale, Florida December 10-14, 2012

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2 Eric McCleary ACES and Ecosytem Markets Conference Ft. Lauderdale, Florida December 10-14, 2012

3 A Pilot Environmental Restoration Initiative to Treat Acid Mine Drainage Mitigation Banking Approach NO PUBLIC / TAX-PAYER $

4 Background Lyons Run Watershed in Western Pennsylvania Affected by Acid Mine Drainage 1998 US Army Corps of Engineers Study A Not for Profit 501 c 3 corporation formed in 2004 to develop the Lyons Run Demonstration Project (the corporation includes Board Members, an Executive Director and Technical Consultants)

5 Location

6 Lyons Run

7 Summary of AMD in Lyons Run Lyons Run Loadings 2008 Sampling

8 Existing Conditions of Lyons Run

9 Existing Conditions of Lyons Run

10 Existing Conditions of Lyons Run

11 Background Efforts 2004 Lyons Run Watershed Association is Established and given 501 c 3 status Initial meetings with PA Department of Environmental Protection 2005 Initial meeting w/ Penn Township and Turtle Creek Watershed Association Draft proposals submitted to PA Dept of Environmental Protection 2006 Association meeting with Water Management Division of the PA DEP Mitigation Banking Prospectus submitted to the U. S. Army Corps of Engineers Field meeting held with representatives from the MBRT* Meeting w/ Turtle Creek Watershed Assoc. and Blackthorne Development (*MBRT) = *U. S. Army Corps of Engineers, *The PA Department of Environmental Protection, *U. S. Environmental Protection Agency, *PA Game Commission and *U. S. Fish and Wildlife

12 Background Efforts cont 2007 Second field meeting held at Lyons Run with Mitigation Bank Review Team U. S. Army Corps of Engineers requests water quality monitoring 2008 Year long water samples collected and analyzed 2009 Executive Director hired to assist in the development of the project Project Narrative and Financial Projections formulated The Association participates in the National Mitigation Banking Conference Formal response sent to the U. S. Army Corps of Engineers The Association obtains agreement for the Proposed Treatment System Site (*MBRT) = *U. S. Army Corps of Engineers, *The PA Department of Environmental Protection, *U. S. Environmental Protection Agency, *PA Game Commission and *U. S. Fish and Wildlife

13 Background Efforts cont 2010 Mitigation Banking Prospectus submitted to the MBRT U. S. Army Corps of Engineers publishes Public Notice about the project Comments to Public Notice received by U. S. Army Corps of Engineers and Association responds to comments Participation in the National Mitigation Banking Conference 2011 Lyons Run Watershed Association makes presentation to MBRT to address comments to Public Notice Meeting with PADEP Director, resulting in directive to make this work 2012 Monthly meetings to develop a pilot project directed by the PADEP and Lyons Run to develop banking protocol and credit allocation procedure. (*MBRT) = *U. S. Army Corps of Engineers, *The PA Department of Environmental Protection, *U. S. Environmental Protection Agency, *PA Game Commission and *U. S. Fish and Wildlife

14 The Proposed Remediation SAPS (Successive Alkalinty Producing System) Projected size of construction site : 1 Acre initial SAPS 2,200 Tons Limestone ; 500 Cubic Yards of Organic Compost 1 Acre for the Settling Basin 2 Acres Final Combination Wetland/SAPS 2,200 Tons Limestone ; 500 Cubic Yards of Organic Compost

15 Typical SAPS Under Construction

16 What SAPS look like when completed

17 Conceptual Function Based Credit System (developed by Dave Goerman, PADEP - (717) ) Establishing Reaches Establish existing conditions and reach boundaries of Lyons Run Use water quality, biological physical assessment data to separate reaches. Each reach will need an IBI Macro Score Identify any hot spot locations or excluded tributaries Determine the acreage of each reach (wetted perimeter)

18 Establish the Benchmark Establish a Reference Watershed and Reaches Watershed must be unaffected by AMD and have similar characteristics. Collect or use PADEP macroinvertebrate data and determine macroinvertebrate IBI score according to PADEP technical guidance: Instream Comprehensive Evaluation Surveys. The reference watershed is used to establish the maximum restoration potential for each reach

19 Macroinvertebrate IBI 6 Equally Weighted Metrics (standardized to 1.0 scale) Total Taxa Richness Ephemeroptera + Plecoptera + Trichoptera Taxa Richness (Pollution Tolerance Value 0-4 only) Beck s Index, version 3 Shannon Diversity Hilsenhoff Biotic Index Percent Sensitive Individuals (PTV 0 3) IBI Standardized to 100 scale (or percent) Process uses the decimal form

20 Example IBI Data

21 Credit Calculation - Hypothetical Functional Credit Gain (FCG) = A P x R V x C V x CI diff FCG = Functional Credit gain A P = Area of Project for applicable function group (in acres, 0.00) R V = Resource Value C V = Compensation Value C DIFF = Condition Differential Value (0.00) (this is the difference between the existing condition and the projected condition post project implementation

22 Area of Project Establish the Area for each Stream Reach Average width x length for each reach Reach 1 (mouth to confluence of Byers Run) = 1.77 miles 15 ft. x 9,345 ft. = 140,175 / = 3.22 ac. Reach 2 (confluence to L3 sampling point) = 2.4 miles 7.5 ft. x 12,672 ft. = 95,040 / 43,560 = 2.18 ac. Reach 3 (L3 to upwelling) = 0.45 miles 3 ft. x 2,376 ft. = 7,128 / 43,560 = 0.16 ac.

23 AMD Resource Value Lyons Run is part of a larger restoration effort, and it is assumed for this example that the restoration plan worth would score at least 71 points. Value = 2.5 AMD Resource Value Category Description Value Restoration Plan Worth* > Restoration Plan Worth > Restoration Plan Worth > Restoration Plan Worth < * Based upon the Restoration Plan worth as described in the Bureau of Abandoned Mine Reclamation's Draft AMD Set Aside Program Implementation Guidelines

24 Compensation Value AMD Compensation Value Lyons Run is included in the Turtle Creek Watershed plan and the entire watershed is covered by TMDL Value = 2.5 Category Description Hydrologic Unit Plan (HUP) or Qualified Hydrologic Unit Plan (QHUP) and watershed covered by a TMDL Watershed Plan with Restoration Priorities/Overall Plan and watershed covered by a TMDL No Watershed Plan - Using Active Treatment or Passive treatment with Low-Medium Risk rating and Cost to Benefit Ratio 1.0 No Watershed Plan - Passive treatment with Medium-High Risk rating and Cost to Benefit Ratio 1.0 No Watershed Plan - Passive treatment with Cost to Benefit Ratio 1.0 Value

25 Condition Differential Example IBI Score by Stream Reach Reach 1 = 0.75 (Attaining) Reference Maximum Potential = 0.81 C MAXDIFF = 0.06 Reach 2 = 0.22 (Severely Impaired) Reference Maximum Potential = 0.79 C MAXDIFF = 0.57 Reach 3 = 0.12 (Severely Impaired) Reference Maximum Potential = 0.73 C MAXDIFF = 0.61

26 Condition Differential Stream Reaches with attaining status Potential Maximum differential 0.10 no credit likely to be awarded Potential Maximum differential > 0.10 potential credit may exist Actual differential value used to calculate credit Achieved condition differential must exceed 0.10 Stream Reaches with non-attaining status Credit generation exists, provided physical condition and reference watershed comparison concur Use percent differential achieved method

27 Condition Differential Establish Maximum potential lift achievable Based upon the difference between existing conditions and reference watershed conditions (C MAX DIFF ) Condition differential (C DIFF ) determined for each reach by measuring the condition improvement (C IMPROV ) and subtracting the (C EXIST ) existing condition from it and dividing the result b the maximum potential lift : C DIFF = C IMPROV C EXIST / C MAX DIFF

28 Condition Differential Project Name: Project Example Aquatic Resource Condition Differential Worksheet X Proposed AMD Treatment Condition Differential Calculation Draft Version 1.0 Condition Measure: PA DEP Macroinvertebrate IBI Function Group Reach Existing Resource Condition Value (C EXIST ) Reference Resource Condition Value Potential Maximum Differential Value (C MAXDIFF ) Observed Resource Condition Value (C IMPROV ) Achieved Condition Differential Value (C DIFF ) Percent Differential Achieved Riverine: RS The potential improvement is less than the standard deviation for the IBI and the reach is already attaining (>0.63 IBI Score) Use of percent achieved does not provide a realistic basis for credit determination in this instance.

29 Credit Calculation - Hypothetical Project Name: Project Example Aquatic Resource Function Credit Worksheet X Proposed AMD Treatment Compensation Valuation Draft Version 1.0 Site Identifier: Function Group Reach Area of Project (A P in 0.00 acres) Compensation Value Factor (C V ) Resource Value Factor (R V ) Percent Differential Achieved Compensation Value (credits 0.00) 1a b Riverine: RS 2a b a b

30 Financing of Project Through Private Donations and Sale of Credits Contributions to the 501 c 3 Corporation are tax deductable and will be used to: Acquire the Project Site Construct the Passive Treatment System Monitor and Adjust System to meet Performance Standards Establish the Lyons Run Mitigation Bank Market the Mitigation Bank

31 Lyons Run Mitigation Bank Assurances of Land Control Construction Assurances System and Water Quality/ Biota Monitoring Long Term Management Plans Credit Allocations and Release Schedules Bank Reporting Requirements Financial Assurances Assurances of Perpetual Maintenance

32 Moving the Project Forward Establish Performance Criteria Establish Credit Release Schedules Approve Banking Instrument Structure Approve Long Range Management Plan Structure Continue working with the MBRT Finalize the engineering design of the system Finalize the Banking Instrument Finalize the Long Term Management Plan Finalize Marketing Materials for the Mitigation Bank Succession planning for Lyons Run Organization

33 Thank You