SB 261 — AN ACT relating to stream and wetland mitigation.

UNOFFICIAL COPY 21 RS BRSB 1378261/GA AN ACT relating to stream and wetland mitigationmitigation. and making an appropriation therefor.

SECTIONSection 1.

A NEW SECTION OF KRS CHAPTER 150 IS CREATED TO READ AS FOLLOWS:

As used in Sections 1 to 3, and 4 of this Act:

(1) "Compensatory mitigation" means the restoration, establishment, enhancement, or preservation of aquatic resources for the purposes of offsetting unavoidable adverse impacts which remain after all appropriate and practicable avoidance and minimization have been achieved;

(2) "Compensatory mitigation project" means compensatory mitigation implemented by the permittee as a requirement of the Department of Army (DA) permit or by a mitigation bank or an in-lieu fee program;

(3) "Compensatory mitigation site" means compensatory mitigation at appropriate locations that are acquired and implemented in a single procurement by the in- lieu fee program in order to meet the state's obligations to the Department of the Army;

(4) "DA permit" means Department of Army permit;

(5) "In-lieu fee program" means a program involving the restoration, establishment, enhancement, and preservation of aquatic resources through funds paid to a governmental or non-profit natural resources management entity to satisfy compensatory mitigation requirements for DA permits.

An in-lieu fee program assumes a liability in exchange for payment from a permittee;

(6) "In-lieu fee program instrument" means the legal document for the establishment, operation, and use of an in-lieu fee program;

(7) "Mitigation bank" means a site, or suite of sites, where resources are restored, established, enhanced, and preserved for the purpose of providing compensatory Page 1 of 5 XXXX Jacketed UNOFFICIAL COPY 21 RS BR 1378 mitigation for impacts authorized by DA permits.

Mitigation banks sell compensatory mitigation credits to permittees whose obligation to provide compensatory mitigation is then transferred to the mitigation bank sponsor;

(8) "Mitigation credit" means a unit of measure representing the accrual or attainment of aquatic functions at a compensatory mitigation site.

The measure of aquatic function is based on the resources restored, established, enhanced, or preserved;

(9) "Mitigation liability" means a requirement under a compensatory mitigation program for land acquisition and physical and biological improvements for which payment has been received and no associated physical or biological improvements have occurred in accordance with the governing instrument with the United States Army Corps of Engineers;

and (10) "Service area" means the geographic area within which impacts can be mitigated at a specific mitigation bank or an in-lieu fee program.

SECTION 2.

A NEW SECTION OF KRS CHAPTER 150 IS CREATED TO READ AS FOLLOWS:

(1) There is established and created in the State Treasury the "Kentucky wetland and stream mitigation fund" for the purpose of restoring, creating, enhancing, or preserving the Commonwealth's wetlands or streams that may be damaged or destroyed due to any project, recovering costs associated with performing these projects, and administering these programs.

(2) The fund shall be deemed a trust and agency fund account and made available solely for the purposes and benefits of the Kentucky wetland and stream mitigation projects.

(3) The fund may receive state appropriations, gifts, grants, federal funds, revolving funds, and any other funds both public and private.

Money deposited in the fund shall be disbursed by the State Treasurer upon the request of the commissioner Page 2 of 5 XXXX Jacketed UNOFFICIAL COPY 21 RS BR 1378 with the approval of the commission, except that funds representing a mitigation liability shall be subject to subsections (3),(4),(5),(6), and (7) of Section 4 of this Act.

(4) Any unallocated or unencumbered balance in the fund shall be invested as provided in KRS 42.500(9), and any income earned from the investments, along with the unallocated or unencumbered balance in the fund, shall not lapse.

(5) The Kentucky wetland and stream mitigation fund shall make a report to the Legislative Research Commission by December 1 of each year that describes the in-lieu fee program, the balance of the fund, and the mitigation liability in the service areas across the Commonwealth.

SECTION 3.

A NEW SECTION OF KRS CHAPTER 150 IS CREATED TO READ AS FOLLOWS:

(1) The Commonwealth may hold a legally binding conservation instrument or deed restriction on mitigation sites.

(2) Governmental and non-governmental entitiesperforming compensatory mitigation shall demonstrate adequate, dedicated financial surety to provide for perpetual land management and hydrological maintenance of lands which they acquire.

Section 4.

(2) The department may establish and manage wetland or stream compensatory mitigation sites or banks, the purpose of which shall be to restore, create, or enhance wetlands and streams as compensatory mitigation where a state agency or other party is required to provide compensatory mitigation, and where the use of banked mitigation is approved by the agency requiring mitigation.

The department Page 3 of 5 XXXX Jacketed UNOFFICIAL COPY 21 RS BR 1378 may create the bank in advance of requests for banked mitigation credits.

(3) There is established and created in the State Treasury the "Kentucky Wetland and Stream Mitigation liabilitiesFund" for the purpose of arestoring, statecreating, enhancing, or governmentalpreserving agencythe Commonwealth's wetlands or privatestreams permitteethat may be satisfieddamaged byor thedestroyed followingdue actionsto inany orderproject, ofrecovering preference:costs associated with performing these projects, and administering these programs.

(a) Purchase of mitigation credits from a compensatory mitigation bank that has been approved by the United States Army Corps of Engineers, provided that the department or the United States Army Corps of Engineers approves of the use of the bank for the required compensatory mitigation;

(b) Payment of a fee into the Kentucky wetland and stream mitigation fund;

or (c) Preparation and implementation of a compensatory mitigation plan.

(4) When mitigation liabilities assumed by the in-lieu fee program in a given service area exceed two million dollars ($2,000,000), the satisfaction of those mitigation liabilities shall be achieved by the in-lieu fee program using the following approaches, listed in the following order of preference:

(a) Purchase of mitigation credits from an approved mitigation bank, provided the cost per credit is equal to or less than the in-lieu fee price;

or (b) Issuance of a competitive solicitation for a commodity purchase using sealed bids or competitive negotiation under KRS Chapter 45A.

(5) The competitive solicitation shall procure compensatory mitigation units utilizing a full-delivery approach.