Banking on the Environment: Pathfinder developers hope to offset impacts of energy development

Land developers Jeff Meyer and Michael Fraley originally proposed to build a giant wind farm on the Pathfinder Ranch near the Oregon Trail in central Wyoming. Instead, the project will be moved to a windswept farming area of Platte County in the southeast part of the state.

As they work on the wind farm project near Chugwater, they are also pursuing a potential environmental mitigation bank back on the Pathfinder ranches in central Wyoming. Improvements on the ranch are intended to compensate for the environmental impacts of new industrial development in Wyoming, including the future wind farm near Chugwater.

Pathfinder Days celebration

Neighbors bring their horses to the Pathfinder Ranch's annual Pathfinder Days celebration. (Dustin Bleizeffer/WyoFile — click to enlarge)

Meyer and Fraley are co-founders of Pathfinder LLC, a company that bought the expansive Pathfinder ranch, and several adjacent properties, about 50 miles southwest of Casper. Their decision to relocate the wind farm and pursue a mitigation bank is a prime example of how wind and other energy developers must adapt to a regulatory landscape where decades of environmental impacts present challenges — and opportunities — for future development.

Avoiding ‘Core Areas’

The wind farm and mitigation bank are headed by two Pathfinder subsidiaries; Pathfinder Renewable Wind Energy LLC, and Pathfinder Conservancy LLC. Pathfinder Renewable Wind Energy has development contracts with the Bordeaux and Slater wind associations, which formed in the last few years to address wind siting issues. These landowner groups control tens of thousands of acres along the Chugwater Creek valley south of Wheatland.

Fraley said the company moved the wind farm from Pathfinder to Chugwater due to several factors.


View Chugwater – Pathfinder in a larger map

Maps show that Platte County contains some of the best wind in the state. The heavily farmed area also lacks sage grouse “core areas” — a state-level designation that includes development restrictions on Wyoming’s prime sage grouse habitat. The presence of sage grouse core areas on the Pathfinder ranches in the Sweetwater region could have circumscribed the project.

But sage grouse were only one factor in the company’s decision to relocate, according to Fraley. Building wind turbines on private wind association land eliminates some of the permits that would have come with siting on leased federal and state lands in central Wyoming.

Most importantly, according to Pathfinder officials, was access to interstate transmission to get the wind energy to out-of-state customers. TransCanada’s proposed Zephyr transmission line will originate near Wheatland, providing the vital link to send power across Utah and Nevada to end users in southern California.

Making Good Here for Impacts There

Back on the Pathfinder ranches, Meyer and Fraley are moving forward with their plan of turning much of the area into an enormous mitigation bank along the Sweetwater and North Platte rivers.

Fraley said a mitigation bank was always part of the plan for the Pathfinder Ranches. It was part of the strategy he and Meyer brought with them when they moved from Jacksonville, Fla., to put Pathfinder LLC together in 2007.

The mitigation bank will contain parts of Pathfinder LLC’s 54,000 acres of deeded ranch land plus its 196,000 acres of BLM and state leases, along with 150,000 acres owned by neighboring ranchers. Fraley said the mitigation bank might end up being one of the largest in the nation.

Mitigation banks have been popular in other parts of the country since the 1990s, including in Colorado and Montana.

But Pathfinder LLC is one of the first two companies to start such a bank in Wyoming.

Mitigation banking

According to the EPA, federal agencies created mitigation banking as a way for developers to transfer the responsibility of offsetting their environmental impacts to a third party. Mitigation banks generate credits by improving wetlands and wildlife populations on lands within the bank, and then selling those credits to developers working elsewhere. Federal agencies set the standards for awarding credits to banks, and use permits to dictate how much compensatory mitigation developers must conduct. The credit sales pay for the habitat investments and along with some profit for the bank owner.Click herefor more information about mitigation banking.

The other company is Florida-based Rock Creek Capital, which has started the permitting process for its Cross A Ranch Mitigation Bank near Encampment.

Fraley has spent the last few years investing millions of dollars in studying the wetlands and wildlife habitat on the Pathfinder Ranches. The backing came from Houston-based Sammons Enterprises, a private company with more than $40 billion in assets.

The idea is to improve riparian areas and increase wildlife populations in the bank to offset industrial impacts elsewhere.

If all goes as planned, wetland and habitat improvements at Pathfinder Mitigation Bank will generate credits that meet the approval of the U.S. Army Corps of Engineers. The Corps of Engineers will then make those credits available to developers who create industrial impacts within a defined Geographic Service Area in the state.

Fraley expects to sell mitigation credits to wind farms, oil and gas companies, residential developers, and highway projects. Companies often buy these credits to speed the permitting process and transfer the risk of managing their mitigation to an outside group. Otherwise, developers would be responsible for mitigating their own impacts to comply with the Clean Water Act and the Endangered Species Act, a time-consuming and costly alternative.

Pathfinder Conservancy plans to recover its mitigation investment by selling credits to other developers. But it is also creating the bank to cover impacts from the proposed wind farm near Wheatland.

“We are going to analyze the wind project and design [it] to avoid impacts,” said Fraley. “In the event that there is an unavoidable impact we would definitely … use credits from our bank to mitigate impacts.”

That plan, however, is contingent on Pathfinder Mitigation Bank getting approval for a large Geographic Service Area that would allow environmental improvements on the west side of the Laramie Range to offset wind development impacts on the east side of the mountains.

Watershed boundaries usually dictate Geographic Service Areas for mitigation banks. Since Pathfinder Ranch and the wind project are both within the North Platte River drainage, the connection between bank and wind farm is possible, under rules in Section 404 of the Clean Water Act.

But while benefits from wetland improvements extend to the entire downstream drainage, critics are quick to point out that it doesn’t always work the same for wildlife.

“It’s very hard to mitigate in another location and actually increase the wildlife populations in other areas,” said Erik Molvar, biologist with the Laramie-based Biodiversity Conservation Alliance.

Wildlife disadvantaged by degraded habitat on one side of the Laramie Range, for example, would be unlikely to benefit from improvements on the Pathfinder Ranch on the other side of the mountains.

The first phase of the mitigation bank will focus on improvements to waterways to allow fish to return up waterways as they had before settlers began altering them. Eventually, the effort will expand to improve sage grouse habitat in an attempt to increase sage grouse numbers on the Pathfinder ranches. But for those improvements to generate mitigation credits, they would have to meet strict scientific standards laid out by the Corps of Engineers. The same would apply to species like mule deer or golden eagles.

Pathfinder Ranch corrals

Pathfinder Ranch corrals. (Dustin Bleizeffer/WyoFile — click to enlarge)

“But we are years from being able to validate those things,” Fraley said. “Until you can validate our ability to improve those habitats and species, we won’t be permitting [wildlife banks], because no [agency] would approve it. You have to have a strong scientific buy-in from all the interested parties before you can do that.”

For now, the company is preparing permitting documents “based on known and accepted science from around the globe.” Onsite inventories will provide more information as it is collected.

While Pathfinder officials believe their proposal fits within the regulatory framework, there is still the question of how it will sit with landowners, sportsmen and others who have a stake in the North Platte River drainage. Does it make sense to impact public lands or waterways in Platte County and make up for that with improvements on the private Pathfinder Ranch three hours drive to the west?

Slater Wind Association member Gregor Goertz said he didn’t mind that Pathfinder’s mitigation bank would be located 150 miles from the wind farm. “It really doesn’t matter to me. It’s crazy to me that they have to do [mitigation],” Goertz said. “In Pathfinder’s long view, they’ll do mitigation efforts [over there] to offset any impacts in this area. But as landowners we don’t think they’ll have any impacts.”

The New Neighbors

The Pathfinder name has a long history in central Wyoming, stretching back to John Fremont and his 1842 expedition to survey the route up the Sweetwater River to South Pass. The well-watered wagon route over the Rockies removed obstacles to emigrant trails and opened development of the West.

John Fremont's Map of 1842 Sweetwater Valley

Pathfinder Renewable Wind Energy gets its name from John Fremont, who surveyed the Sweetwater Valley in 1842. (Courtesy USGS — click to enlarge)

Pathfinder LLC has a much shorter history in the area, but it also hopes to open the door to new development in Wyoming.

Michael Fraley started his career as a real estate developer near Jacksonville, Fla., where he worked on a variety of projects including low-income housing, mitigation banks, and mixed-use developments. At one time Fraley worked for Devlin Group, but he left that company several years ago.

Fraley says Pathfinder LLC uses many of the same skills from his previous career. “It’s just a big real estate deal. You have to remember that. It’s having a large tract of land and determining what the best use is for that land.”

Fraley met Pathfinder LLC co-founder and director Jeff Meyer when growth on outskirts of Jacksonville encroached on Meyer’s tree farms. Meyer put together his land with Fraley’s real estate knowledge to convert a tree farm into a 1,000-acre development.

Meyer grew up in the Amana colonies of Iowa, an area settled by a religious community of German immigrants who practiced a communal life until the 1930s. The group placed a strong emphasis on self-sufficiency and the practice of craftsmanship. Meyer’s grandfather was the founding owner of Amana refrigeration, which produced upright freezers, air-conditioners, and microwave ovens after WWII.

Fraley said Meyer decided to follow his entrepreneurial instincts instead of working for the family company. Meyer moved to Florida and established the Historic Tree Nursery, which cultivated seeds from famous American trees like the Lewis and Clark Cottonwood and the George Washington Tulip Poplar. He later published a book on the subject, and helped found the America’s Famous and Historic Trees Project.

Pathfinder LLC’s Wyoming projects combine Meyer’s interests in community, history, land, and wildlife. “My best friend moved to Dubois, so I was coming up doing elk hunting with him. Obviously it’s windy. I thought, ‘This would be a great opportunity to do something significant,’” Meyer said.

With a combination of hunting, mitigation banking, and wind development in mind, Meyer purchased the Pathfinder Ranch that stretches for miles along Highway 220 between Alcova and Muddy Gap. The ranch is home to big game including deer, pronghorn, elk, and a recently reintroduced herd bighorn sheep, along with a wide variety of birds and small game.

Since establishing Pathfinder LLC and buying the main Pathfinder Ranch in 2007, the company has also bought the Cardwell, Two Iron, Perkins, and Bummer Ranches in Carbon County. Pathfinder LLC also owns the Miracle Mile Ranch along the North Platte River.

Carbon County Map - Pathfinder Parcels

The blue areas on this map show Pathfinder LLC's deeded lands in northern Carbon County. Purple grids measure 6 X 6 miles or one township. Road junction at left is Muddy Gap. At right is Shirley Basin. Tan is BLM land and light blue is state land. Pathfinder Reservoir is at top center. Pathfinder LLC also owns land in Natrona County. (Courtesy of Carbon County GIS office — click to enlarge)

The ranches have an assortment of habitats including riparian areas along the Sweetwater and the North Platte, numerous streams, large areas of upland sage, and mountains with aspen and pine forests. The various properties are spread across approximately 40 miles, from Independence Rock and the Ferris Mountains in the west to Shirley Basin in the east.

The ranches include leased Bureau of Land Management grazing parcels and state lands. The company has preliminary plans to provide roads and signage that will improve public access to state and federal lands in the future.

Fraley wrote in an email that the company has no plans for residential development on the ranches. “[Homebuilding] would possibly be one of the worst uses with the highest impact on the setting, wildlife, and habitat,” he wrote.

Finding the Best Fit

Meyer said he has worked hard at getting to know his neighbors. He’s used his writing skills to put together local histories about ranches both along the Sweetwater River and in the Bordeaux-Slater area.

Those conversations led to what the Pathfinder LLC website calls its “five guiding principles,” according to Meyer. They include protecting wildlife and habitat, enhancing public access, protecting historic treasures, avoiding impacts on viewsheds, and involving community members. The businessmen say those values help Pathfinder LLC maintain public support for its projects.

The new location of the Pathfinder wind farm in Platte County should work well, according to biologist Erik Molvar of the Biodiversity Conservation Alliance.

“[That area] is part of that green triangle that was identified by the Game and Fish and the Wyoming Infrastructure Authority [as having] essentially no identified wind power conflicts but high wind potential. That’s the ideal place to build wind power projects in Wyoming,” Molvar said.

Wyoming Map of Wind Power Potential Overlap with Environmental Considerations

The Biodiversity Conservation Alliance produced this map to show sage grouse areas and wildlife concerns in red, with high wind potential in green. The Pathfinder wind project will now be located in the green triangle of Southeast Wyoming. (Courtesy of Biodiveristy Conservation Alliance — click to enlarge)

But the environmental advantages of developing wind energy in the Platte County area wasn’t just Pathfinder’s discovery. A team formed by former Gov. Dave Freudenthal pushed hard for wind in the southeast region of Wyoming both as a way of avoiding key sage grouse habitat and a way to revitalize an economically depressed agriculture area.

With the Pathfinder wind project committed to Platte County, Meyer and Fraley have turned their attention to making Pathfinder one of the most intensely surveyed private ranches in the state.

Fraley says he has a six-foot tall stack of papers beside his desk detailing the baseline habitat and wildlife inventory of Pathfinder Ranch.  He said the KC Harvey environmental consulting firm of Bozeman, Mont., collected all this data to make informed proposals for how the land might be improved.

“We look at our ranch as a laboratory for development of new science [for conservation], with the goal of responsibly facilitating business,” Fraley said.

Pathfinder has organized its conservation bank under a single umbrella instrument to be submitted to the U.S. Army Corps of Engineers.  That structure allows for multiple mitigation banks to operate underneath the umbrella instrument.

The initial “bank” will be for wetland impacts. But later the company hopes to create other mitigation, or conservation banks.

“Conservation credit banking can be piggy-backed on the Corps of Engineers wetland mitigation process,” said Paige Wolken, the state IRT Chair and regulatory project manager with the Corps of Engineers Wyoming Regulatory Office in Cheyenne.

For example, when developers run into a roadblock due to the presence of threatened or endangered species, state or federal agencies sometimes permit the developer to mitigate the impact by buying mitigation bank credits for that species. This is just the kind of bank that Pathfinder is looking to create for sage grouse, and other wildlife, alongside its wetlands.

“We’re looking at all species habitat that exist on our ranch,” Fraley said.

Map of Sage Grouse Core Areas in the Sweetwater-North Platte area in Wyoming

Light green indicates sage grouse core areas in the Sweetwater-North Platte area. About half of Pathfinder LLC's ranches are within sage grouse core areas. (Photo Courtesy of Wyoming Game and Fish Department — click to enlarge)

The Finger Rock Preserve near Steamboat Springs, Colo., has sold credits to clients as varied as Union Pacific Railroad, Steamboat Ski Corp., Routt County, Rolling Ridge Development, Peabody Coal, and Xcel Energy.

Wolken says that the current yearly wetland impacts in Wyoming amount to less than 100 acres. She said companies like Pathfinder LLC seem to expect that number to grow. Fraley said his company’s research indicates a strong market for wetland mitigation banking in Wyoming.

“We believe its a prosperous business that would at least cover our costs,” Fraley said. “We hope to have a mitigation bank approved by the end of 2012. That’s our goal.”

Prevention Vs. Fixes

Mitigation banks are supposed to avoid a net-loss wetlands, but some observers say it may not be enough to retain healthy wildlife populations in local areas.

Ren Martyn, owner of the Finger Rock Preserve in Colorado, said mitigation typically works well for species that require a small amount of restored habitat and can be easily transported and kept within the site.

“I’m sure you can get your hands around a gopher tortoise that used to live in an area that’s now a subdivision, and you can move that tortoise to a new tract of land, that will be successful,” Martyn said.

But a species like sage grouse that needs large tracts of specific habitat is much more challenging. Wyoming has already seen examples of ineffective mitigation. Molvar pointed to the “millions of dollars” in funds set aside in the Upper Green River Basin to mitigate impacts of drilling to mule deer. Although money is set aside, “The mule deer populations have declined and declined. The mitigation fund has not appeared to slow the decline of wildlife populations or to help them recover,” said Molvar.

“It’s really the wildlife populations [that provide] a measurable barometer of your conservation success. If your wildlife populations are not recovering, then you are not compensating for the losses you’re causing. That’s the bottom line,” Molvar said. “Doing the job right in the first place is where the benefits lie for wildlife.  Not trying to throw some money at a problem that you’ve created after the fact.”

Pathfinder LLC officials say their proposal would differ from the type of mitigation done for drilling in the Upper Green because it has to demonstrate increases in wildlife numbers before getting approval to sell mitigation credits. The benefits have to be “in the bank” to earn IRT approval.

Still, Molvar and the Biodiversity Conservation Alliance would prefer that wind developers focus on minimizing their impacts during the initial phases of construction.

“The ball game is about siting your wind farm in an area where it’s not going to have impacts. That’s the big deal,” Molvar said. “Any additional mitigation off-site is icing the cake once you’ve avoided the major impacts through your siting decisions.”

That is what Pathfinder appears to be doing with its Bordeaux and Slater projects, which neither Fraley, Molvar, Wyoming Game and Fish nor area landowners expect to have wildlife impacts.

In November, 2008, the Biodiversity Conservation Alliance laid out its criteria for good siting decisions in a report called Wind Power in Wyoming: Doing it Smart from the Start. The document made use of scientific data and GIS maps to determine areas that would be most suitable for wind development.

Notably, the report suggested, “By steering wind projects away from lands where industrial development would be prohibited or controversial, wind power generators can reap the benefits of speedier approval processes and strong public support.”

Some Slater and Bordeaux area landowners — particularly those who wish to develop wind energy — strongly support that statement.

“I have every faith in Pathfinder,” said Larry Bacon, who is part of the Bordeaux Wind Energy Association. “I’ve lived in this land for 30 years, and they finally figured out something this land is good for. That’s an amazing concept.”

Bacon’s landowner association represents about 14 landowners who, collectively, own about 15,000 acres.

Pathfinder Ranch

Pathfinder Ranch. (Dustin Bleizeffer/WyoFile — click to enlarge)

“This [wind project] is the least imposing on our environment [and] the communities. I think it’s going to be a big asset to bring in some economic development through the jobs. And my opinion is there’s nothing but good,” Bacon said.

Bacon said he believes Pathfinder Renewable Wind Energy will do a good job of protecting wildlife in the project area. The company currently has a wildlife team in the field collecting baseline habitat and animal population data.

“It’s not going to hurt anything around here.  I think it will be less damaging to the environment than oil wells would be,” Bacon said. “Once the towers are put up and the land is rejuvenated, I think we’re hardly going to know they’re here,” he said.

Chugwater resident Dan Kirkbride, a former Platte County commissioner, said the promise of economic growth has compelled most people to look positively on wind development in Platte County.

“People are hoping that there might be some new jobs for Chugwater, something that would strengthen the community,” said Kirkbride, adding that locals may be in for a bit of a shock when the wind towers are finally erected.

“We may be naive, but everyone is pretty positive and hopeful about it,” said Kirkbride.

Molvar also praised Pathfinder’s efforts at wind farm planning in Platte County.

“From what I’m hearing Pathfinder is doing quite a good job to get the siting right in addition to doing some off-site mitigation as well,” Molvar said.

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Greg Nickerson is a University of Wyoming-trained historian and writer from Big Horn.  He has worked on documentary films in Nicaragua, Yellowstone, and Philadelphia, and held jobs as a museum curator and hunting guide.

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Published on August 30, 2011

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