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Does your property have a stream that is eroding away? Does it have wetlands, perhaps limiting the available area for agriculture? If so, you may be eligible to work with the Wetland and Stream Mitigation “Fee-In-Lieu-Of” (FILO) program, administered by the Kentucky Department of Fish and Wildlife Resources (KDFWR).
We are a group of specialists who undertake stream and wetland restoration projects on eligible properties. To do so, landowners may either agree to a conservation easement on their property or sell it in its entirety to KDFWR.
FILO’s mission is to offset the loss of aquatic resources in the state due to development, roads etc., as required by Federal regulations. Projects are funded from the Mitigation Fund held in trust solely for compensating for aquatic resources loss. No state tax general funds or hunting/fishing license dollars are used.
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Are you a landowner interested in contributing to stream and wetland mitigation? Read more about what projects entail down below. For more technical information about credit rates, click here.
Stream Instability and Habitat
We work on streams that are unstable, eroding, and have trees removed from stream banks. Projects whose primary purpose is sewer improvements or utility lines do not qualify. Properties with existing wetlands or indicators of potential wetlands (hydrology, soil, vegetation) may be eligible for preservation, enhancement, rehabilitation or establishment of wetland habitat.
Both Stream Banks
Generally, both sides of the stream must be available for work. In many cases, several landowners may be involved in the same project to provide access to both banks and appropriate protection.
Stream and Wetland Size
A minimum of 1,000 feet of the stream is needed to develop stream projects; the longer the project, the better. Wide, deep streams or rivers are often too big and expensive to undertake restoration. Instead, we work on smaller intermittent or perennial streams. As for wetlands, the ideal size varies from project to project.
Mineral Ownership
The project area cannot be mined or developed for coil, oil, gas or other mineral production. Projects are screened during the initial evaluation to determine ownership of mineral rights. Sites, where coal, oil, or gas rights cannot be restricted, will not qualify. However, in some cases, projects can be developed where there are mineral leases if they are no longer active or do not interfere with the project area.
Project Assessment
Potential projects are screened by FILO members. Call us to discuss your situation and determine whether you may qualify. Landowners expressing interest are under no obligations. If the project has potential, we assess the streams/wetlands, then prepare and present a conceptual plan to the U.S. Army Corps of Engineers, which has the final authority on project approval.
Property Title
A property title review is conducted when a project is selected for funding. The title review is required to verify ownership and to identify existing easements, liens, or other issues that may need to be addressed before a project is developed.
Permanent Protection
All projects must be permanently protected. Landowners can sell their property to KDFWR or opt for a permanent conservation easement. Signing the easement contract allows FILO to begin restoration design and survey the easement boundary.
More information about Conservation Easements:
Engineering
We analyze streams and watersheds to develop detailed design plans. Analysis may include hydraulic considerations, stream flow, channel dimensions, stress, construction specifications, and a construction budget estimate. Private engineering firms are typically hired to complete the project design plans, construction specifications, and budget. Again, this is at no cost to the landowner.
Construction
Construction involves reshaping stream banks, constructing new channels, installing rock or wood structures to direct flow and reduce erosion, and planting trees along the stream within the easement, usually during winter or early spring.
Monitoring
Stream projects are monitored annually for a minimum of 7 years to measure success and make any adjustments needed after construction. Wetland projects are monitored for 10 years. After this initial period of monitoring, projects enter the long-term management (LTM) phase. This may include suppressing exotic/invasive species, supplemental planting, signage, fencing, etc.
Effective 04/05/2022 - There are no available AMU Wetland Credits in the Upper and Lower Cumberland River Service Areas.
Effective 02/10/2020 - Due to availability, check in advance prior to purchasing credits.
Effective 11/17/2014 - No Credits are currently being sold in Big Sandy Service Area.
For credit assistance, contact Clifford.Scott@ky.gov or phone at 502-564-5101.
The EIU rate is based on the Eastern Kentucky Stream Assessment Protocol (EKSAP) and applies to the following Service Areas: Big Sandy River, Upper Kentucky River, Upper Licking River and Upper Cumberland River.
The AMU rate is based on the Central Kentucky Assessment Protocol (CKAP) and applies to the following Service Areas: Lower Kentucky River, Lower Licking River, Lower Cumberland River, Green and Tradewater River, Salt River, Jackson Purchase and Northern Kentucky.
Regardless of Kentucky's location, mitigation units for wetlands are determined using the CKAP.
In-Lieu Fee Mitigation Program
Kentucky Revised Statute 150.255 authorizes the Kentucky Department of Fish & Wildlife Resources to conduct mitigation and to recover costs associated with conducting mitigation. No state general fund tax or Department license dollars are used to fund the program.
Federal regulations require that in-lieu fee Sponsors use full cost accounting in setting credit prices in accordance with the “Final Rule” at 33 C.F.R. §332.8(o)(5)(ii). This means that credit rates must be sufficient to fund all costs of an in-lieu fee mitigation program. The Sponsor shall determine the cost of compensatory mitigation credits.
Pursuant to federal regulation, the Instrument authorized by the U.S. Army Corps of Engineers for the in-lieu fee program officially established the Department as an in-lieu fee Sponsor and the rules for setting credit rates. The Instrument may be viewed at: http://fw.ky.gov/fish/documents/filoinstrument.pdf. The Instrument requires the Department to set fees,
“…to reflect the expected costs associated with the mitigation, based on "full cost accounting" and include, as appropriate: land or easement acquisition, project planning and design, construction, plant materials, labor, legal fees, monitoring, remediation or adaptive management activities, administrative costs, contingencies (including construction and real estate expenses), long term management and protection, financial assurances, or other costs. The Sponsor may adjust fees as necessary ...”
The in-lieu fee mitigation credit rate funds activities in three main categories of activities required to implement mitigation:
The credit rate is based on the historical and forecasted costs of implementing mitigation projects, including property and conservation easement costs. Administrative and Reserve percentages are added to those costs.
Historically, the Corps of Engineers set the in-lieu fee credit rate based on the average cost of previous mitigation projects. Under this past practice, the rate was adjusted after project costs were incurred. That approach to setting the credit rate created a situation where in-lieu fees could be paid at a rate lower than future actual costs of mitigation projects, which could result in less mitigation.
The 2008 Final Rule on mitigation changed this practice by requiring that in-lieu fee Sponsors set credit rates to fully fund all costs and change to a credit based accounting system for compliance. The in-lieu fee program now sets the rate not only from examining past project costs but also by estimating future project costs to comply with the 2008 Final Rule. This guards against defaulting on mitigation credit replacement since the in-lieu fee program is responsible to replace mitigation credits equal to the amount sold. The in-lieu fee program has identified potential future projects and set the credit rate at an amount needed to fund those projects instead of relying solely on the average rate of completed projects.
A general explanation of the in-lieu fee program costs funded by the credit rate is provided below:
Administrative Costs:
The credit rate includes a percentage that is used to fund the administration of the program. That percentage varies between 10-20% and is based on current and projected operational expenses as well as projected sales.
Administrative functions include tasks completed by the Department or other state government staff, or professional services, for identifying, planning, and operating the program, including equipment and materials. Operation of the program may include other aspects necessary to complete mitigation projects such as design, monitoring, management, easement enforcement, legal actions, or other activity.
Service Area Costs:
This category funds the design, construction, and monitoring of individual mitigation projects: property work, survey, design, construction and monitoring. The percentage of each credit that is devoted to the Service Area is between 70-80%. Monies from credit sales are distributed to the Service Area (a region based on river basins and physiography) from where they originated. There are ten service areas across the state. Funds from a service area are dedicated solely for projects in that same area.
The following project related tasks are funded from the Service Area portion of credit sales:
Property acquisition or other permanent protection mechanisms:
Permanent protection is required for all mitigation projects. This is accomplished by deed restrictions for property purchases or easements on other properties. Property acquisition and permanent protection involves costs associated with legal reviews, title opinions, curative work to correct defective property titles, surveys, and property costs. Some in-lieu fee mitigation sites involve the acquisition of large tracts of land to conduct stream mitigation in headwaters while others are limited to an easement to create a protected buffer of land along the riparian corridor of a stream project.
Engineering design:
This is the phase of mitigation projects that involves surveying property boundaries for creating the easement, topographic surveys, analyses for the project such as shear stress, hydraulic, and sediment loading calculations, the development of design plans showing plan form, longitudinal profile, cross sections, specifications for structures, standard drawings, preparing permit applications, and development of a construction budget. Engineering services include construction oversight to ensure that construction correctly implements the design plans and verify construction invoices. Engineering services are typically contracted to private firms.
Construction:
This phase involves capital construction of individual mitigation projects. Construction contracts are awarded to private companies through a low-bid process. The construction is typically bonded and includes a warranty period on the contract. Normally, the construction of mitigation projects is classified as heavy construction. Construction typically requires heavy equipment such as an excavator, dozer, bobcat, and/or other equipment. This phase also includes the planting of trees and/or other vegetation.
Adaptive management:
Each project includes a percentage of the overall project costs that is set aside to cover unexpected costs. The percentage set aside for adaptive management varies but usually is 10% of the project budget.
Monitoring (minimum of five years post-construction):
All projects are monitored after completion as required by the Instrument and the Corps of Engineers and Kentucky Division of Water permits for each project. Each project must meet performance standards during the monitoring period before mitigation credits are validated. Monitoring includes conducting an as-built survey(s), hydrogeomorphological measurements and observations, and vegetation surveys. The monitoring period is a minimum of five years but may last longer depending on the permit requirements for a particular project. Monitoring is typically contracted to the engineering firm that completed the design of the project.
Reserve:
The Reserve has multiple purposes and is 10%-15% of the credit rate. It functions as financial assurance, a funding source for long-term management, easement monitoring and enforcement, legal actions, or for funding additional mitigation projects. The Reserve has a minimum non-wasting limit that functions as an endowment. The non-wasting limit enables the program to maintain enough funding to meet mitigation obligations over the long-term. The Reserve is maintained by credit sales and interest accruing to the program account. The credit price includes a percentage dedicated to the Reserve upon receipt of payment for each credit sale. Interest accruing to the in-lieu fee account (except for the Administrative percentage) is included in the Reserve on a monthly basis. Activities funded by the Reserve are subject to the approval of the Corps of Engineers, except for minor actions that do not require permit authorization.
The following tasks and activities are funded by the Reserve:
Long-term management:
Long-term management is required for all mitigation projects. Management actions can include maintaining property boundaries, managing vegetation such as periodic burning of fire-dependent communities or suppressing exotic/invasive species, supplemental planting, signage, fencing, maintenance, or other items necessary to maintain mitigation sites.
Financial assurances and contingency:
The Reserve provides funding to act as a contingency for the program. The in-lieu fee mitigation program is required to have the financial backing to ensure that the credits sold are replaced and fulfilled by successfully implementing mitigation projects. The Reserve provides assurances that funding will be available to create additional mitigation credits in any service area.
Legal:
Legal actions, including litigation, may be funded from the reserve. Examples may include enforcement of easement violations.
Mitigation projects:
The Reserve, except for the non-wasting minimum amount, may also be used to fund mitigation projects. Mitigation projects funded by the Reserve may generate mitigation credits in the service area where they are located.
Before
Before
During Construction Phase
During Construction Phase
Before (Eroding Banks)
After
Before (Erosion Along Right Bank)
Immediately After
After (During Growing Season)
Before (View of Valley and Eroding Channel)
After (View of Valley After Construction)
Before (Close Up of Erosion)
After (Close Up of New Stream and Banks)
Above: over 90,000 feet of unstable headwater streams will be restored on Veteran’s Memorial WMA to reduce erosion and siltation impacts downstream and to improve stream and wetland habitat along riparian corridors. The project was targeted for 2013-2014 construction.