Skip to main content

Getting more of a good thing? California's new Conservation Banking Legislation

On June 5th, California passed Senate Bill 1148, so enacting legislation under the Fish and Game Code to set up new rules and processes around how Conservation Banking is done in the State.

Read more here and here

What changes will this legislation make, and what prompted California to be the first state in the country to make these kinds of changes? The legislation may have been designed to both promote and improve a stagnating State Conservation Banking industry, but the outcomes of these new rules might not have this desired, positive effect and has not been unanimously supported by the conservation banking community.

It started in California...

State-level Conservation Banking has been done in California 18 years and was a real incubator for the wider Conservation Banking Industry, concurrently operating at the Federal level in California and across the nation. In California there are nearly 30 Conservation Banks approved by the State agencies and State-listed species from the Swainson's Hawk to the Giant Garter Snake and the San Joaquin Kit Fox have been successfully conserved during this time.

Yet, despite the great Conservation Banking that has been going on in California, seemingly fewer banks have been proposed and established in recent years. This month, California Agriculture Magazine featured a study of this 18 year-old industry by professors from the University of Davis, near Sacramento, CA. They noticed this declining trend, and wondered how existing banks fitted into the State's wider large-scale conservation planning framework.

The study used interviews with Conservation Bankers and Regulatory agencies, and showed that, yes, there are some barriers to setting up a State-approved Conservation Bank. They noted that there were a number of issues seen as problematic by both conservation bankers and regulators - perhaps an indication of the complexity of the process overall. There are ecological values, site selection, credit determinations and legal issues to resolve. It's not surprising that most regulators felt getting conservation banks approved was very difficult. And judging by the declining number of proposals being made each year, conservation bankers are also feeling the pain of these challenges.

All these challenges have lead to ever-increasing approval times - sometimes up to seven years. Part of this delay is staff resourcing, and of course since the financial crisis of 2008, regulating agencies have had decreasing resources to draw upon. But the other part the UC Davis study revealed, was that it was hard to assess the costs and the risks of a given conservation bank proposal and hard to resolve decisions such as site selections, credit allocation or ecology on site.

And this is where these new regulations come in: clearer, more useful regulations to guide Conservation-Banking Decision making, and few fee approaches to address resourcing and permitting time within approving agencies.

Still Conservation Banking, but making it better?

These kind of specifications seem to be something both regulators and conservation bankers have been wanting for a while. Overall, the reforms are needed to help streamline the process, reduce delays and disagreements, and ensure everyone find is effective and efficient to keep participating - agencies and Conservation Bankers alike.

So now, under Fish and Game Code, section 1797-1799.1 passed under Senate Bill 1148 State rules on Conservation Banking are here.

These rules provide better procedures, in legislation, for how to evaluate and approved proposed Conservation Banks. They stop short of however, actual Conservation Banking Standards which many feel would better ensure conservation outcomes and allow the prioritization of areas and site to meaningfully assist in site selection.

These new regulations also provide a mechanism of funding greater staff to assist in quicker processing times and better monitoring. This involves charging those prospective conservation bankers hefty application fees. Not everyone this thinks these fees are the most equitable approach - starting a conservation bank is an expensive process regardless, and the additional fees enacted here may make it less attractive for exactly the small private ranchers or landowners that Conservation Banking is supposed to incentivize towards conservation. It may still slow the approval and longevity of the Conservation Banking Program.

It's no question greater financial resources are needed to run the Conservation Banking program smoothly, but should a State agency be funded by the very sector they are charged to oversee? If the sector is funding it, are they then obliged to some level of service, and what happens if that service is not provided? Put another way, should Conservation Bankers be 'paying for the agencies to do their job'? If this opinion holds out, perhaps Conservation Bankers will decide not to engage and again, the long term viability of the program will suffer. While not yet clear which of these positions will stand the test of time, clearly fees to fund better agency resources is not altogether the panacea they appear.

The new rules, but not a 'New Rule'...

Despite lingering concerns about the regulations themselves, this new governance of Conservation Banking is an exciting step in Conservation Banking nationally, expected to be a template for other States to follow. Conservation Banking occurs in several other States and these and others are looking to also increase their programs, so perhaps California's move will contribute to this momentum. Taking it further, there are also desires to see Conservation Banking regulation at the Federal Level, similar to the Mitigation Banking Rule established in 2008 by the US Army Corps of Engineers to oversee Mitigation Banking.

So, if California can put in regulations to keep up the good work in Conservation Banking then this makes it more possible at the Federal Level in the future.
And although California's new regulations are focused at fixing some identified problems, it's more about keeping a program alive and well - let's just hope it does that, and can be the winds of change for other States and across the Nation.


Post a comment

*required