Environmental Banking Extends to Water Quality
Wetland mitigation banking began in Florida in the 1990s.[1] Wetland banking has grown since then, with approximately 140 wetland banks in Florida.[2] Environmental banking has now extended beyond wetland banks to water quality banks, known in Florida as water quality enhancement areas (WQEA). WQEAs are a market-based opportunity to address adverse water quality impacts from stormwater discharges through the sale of enhancement credits.
A WQEA is a natural system[3] constructed, operated, managed, and maintained pursuant to a permit to provide offsite, compensatory, regional treatment within an identified service area.[4] WQEAs utilize green, nature-based approaches to treatment, but they can be supplemented by technology. Florida’s legislation on WQEA followed the successful model of mitigation banking legislation as further informed by the success of Virginia’s nutrient banking program.[5]
WQEAs address contributions of one or more pollutants or other constituents in the watershed, basin, sub-basin, targeted restoration area, waterbody, or section of waterbody in which the WQEA is located that do not meet applicable state water quality criteria.
Florida’s Water Quality Challenges Prompting the Need for Stricter Standards and WQEAs
Florida is subject to extreme storm events and has historically averaged 40 to 60 inches of rain a year.[6] When stormwater falls on pavement, building roofs, and other impermeable surfaces, the runoff flows quickly and can gather sediment, trash, chemicals, nutrients, and other pollutants. The stormwater then flows into rivers, lakes, wetlands, and groundwater aquifers that supply drinking water. Stormwater is a major source of water pollution in Florida.[7]
Florida regulates stormwater under Part IV of F.S. Ch. 373[8] and Ch. 62-330, Florida Administrative Code,[9] which require applicants to apply for an environmental resource permit (ERP) and offer reasonable assurances their activities will not create adverse water quality impacts. To do this, applicants include storm water[10] or surface water[11] management systems[12] in their project designs. These systems manage and treat stormwater with the goal of protecting water quality and preventing flooding or other adverse water quantity impacts.
Stormwater management has historically been primarily done on each project site during the site’s development. The main component of a surface or stormwater management system is typically a retention or stormwater pond that collects stormwater. Stormwater from the project is directed into the pond. In many cases, the stormwater management system is operated and maintained by entities such as homeowner associations, which lack the knowledge and skill to maintain the water quality treatment functions of the surface water management systems.
Over time, pond bottoms build up sediment containing nutrients[13] and other constituents, greatly reducing their ability to treat stormwater. Removal of pond bottom sediment is extremely expensive. The treatment provided by the stormwater pond, therefore, decreases over time. While stormwater water management ponds are typically maintained in a manner that continues to provide flood control, they are not typically maintained in a manner that continues to provide water quality treatment over the long run.
Florida’s original water quality rules were enacted in the 1980s.[14] These rules focused on the removal of sediment or total suspended solids. Rainfall data was outdated, with some rules based on rainfall data from the 1970s. The ERP rules did not sufficiently address water quality, and therefore, water quality continued to deteriorate. Additionally, there were no real maintenance requirements, so systems that were effective when permitted degraded over time.
Recognizing that water quality was continuing to degrade, in 2020 the legislature adopted the Clean Waterways Act,[15] which directed the Florida Department of Environmental Protection (DEP) and the water management districts to update ERP rules to increase nutrient removal through new performance standards using the latest information.[16] F.S. §373.4131(6) (2025) states:
By January 1, 2021: (a) The department and the water management districts shall initiate rulemaking to update the stormwater design and operation regulations, including updates to the Environmental Resource Permit Applicant’s Handbook, using the most recent scientific information available. As part of rule development, the department shall consider and address low-impact design best management practices and design criteria that increase the removal of nutrients from stormwater discharges, and measures for consistent application of the net improvement performance standard to ensure significant reductions of any pollutant loadings to a waterbody.
DEP Adopts New Rules To Improve Water Quality
DEP adopted new rules in 2023, making Florida the first state to adopt rules requiring treatment of stormwater to a specified level of pollutant load reduction for all new development. The new requirements pertain to applicants for ERPs and are set forth in the ERP Applicant’s Handbook Volume I, which is adopted by reference into F.A.C.R. Ch. 62-330. Due to the high cost associated with the new ERP rules, it was necessary for the rules to be ratified by the legislature.
Florida S.B. 7040, signed by Gov. DeSantis on June 28, 2024, approved statewide stormwater nutrient reduction standards developed under the 2020 Clean Waterways Act, with a delayed implementation date for compliance with the strict new nutrient reduction parameters.[17] On December 28, 2025, the new nutrient reduction requirements became effective, creating reduction requirements that will be difficult to meet on the development site with traditional methods.
The rule mandates a shift from traditional presumptive volume-based design to a performance-based approach, heavily focusing on reducing nutrient pollution like total nitrogen (TN), total phosphorus (TP), and total suspended solids (TSS). The treatment performance requirements require a project’s post-project nutrient load to be less than or equal to the pre-development nutrient load or a nutrient reduction under the parameters set forth in the table below, whichever is more protective. Elevated treatment performance is required for discharges to outstanding Florida waters (OFWs) and impaired waters. Further, the requirements also provide an alternative performance standard for redevelopment. (See Chart I).
Impetus for WQEA Legislation
Recognizing the need for more tools to improve water quality, Florida adopted legislation to allow the creation and sales of enhancement credits from WQEAs to offset adverse water quality impacts from stormwater discharges. In 2022, the Florida Legislature passed HB 965,[18] creating F.S. §373.4134, providing for WQEA. This legislation aims to bolster water quality enhancement efforts[19] and recognizes the need for more options to assist in the enhancement of water quality.[20] A WQEA permit will be an additional tool in the DEP and water management district toolboxes to address improved water quality treatment and achieve a net improvement.
WQEAs avoid the water quality issues detailed above by providing offsite treatment on a large scale, regional basis. WQEAs will be an improvement over traditional on-site treatment because the facilities will not only use improved methods to enhance water quality, but also be effectively operated and maintained by a well-financed, competent operating entity in perpetuity.
The legislature specifically found that “water quality will be improved” by WQEAs. These areas will provide regional treatment, including offsite compensatory treatment, which will make enhancement credits[21] available to governmental entities to offset impacts regulated under Part IV of F.S. Ch. 373, “Basin Management Action Plans” (BMAP)[22] or reasonable assurance plans (RAP).[23]
Permits for WQEA will be issued by FDEP under Part IV of F.S. Ch. 373, which provides the authority for ERPs. WQEAs will be subject to the rule requirements in F.A.C.R. Ch. 62-330. DEP is also required to develop rules specific to WQEAs.[24]
F.S. §373.4134 followed the requirements of the wetland mitigation banking statutes located in F.S. §§373.4135 and 373.4136. Section 373.4134 also follows the wetland mitigation banking procedural requirements and protections, such as financial assurances, ledgers, service areas, preservation requirements, and credits.[25] The mitigation banking statutes provide a proven successful model that has undergone years of amendments and scrutiny to provide a regulatory framework that protects Florida’s wetland resources. While mitigation banking statutes provided an initial framework for WQEAs, the new statute includes additional requirements pertaining to WQEAs to protect and enhance water quality. WQEAs will be required to achieve defined performance or success criteria for the reduction of pollutants.
Just as with wetland mitigation banking, the WQEA applicant must comply with all ERP rules, including preventing “adverse impacts to water quantity in receiving waters and adjacent lands or wetlands.”[26] Reductions in pollutant loading required under any state regulatory program are not eligible to be considered as credits.
Permits for Water Quality Enhancement Areas
To obtain a permit to develop a WQEA, the applicant must submit an application to DEP. The applicant must provide reasonable assurances the WQEA will be used to:
1) meet the requirements for an ERP set forth in F.A.C.R. Ch. 62-330, and the ERP applicant’s handbooks;
2) benefit water quality in the same watershed;
3) meet defined performance or success criteria for the reduction of pollutants or other constituents that prevent receiving waters from meeting state water quality criteria;
4) ensure long-term pollutant reduction through effective perpetual operation and maintenance by a responsible entity supported by an endowment or other long-term financial assurance;
5) demonstrate sufficient legal or equitable interest in the WQEA; and
6) provide for permanent preservation under the provisions of F.S. §704.06.[27]
Enhancement Credits and Service Areas
DEP determines the number of enhancement credits available for sale under a WQEA permit using information submitted by the applicant using standard numerical models or analytical tools that establish the WQEA’s ability to remove pollutants or constituents. If the WQEA is within a watershed with a BMAP,[28] then the WQEA applicant must use the same numerical models or analytical tools as used for the BMAP. If the watershed does not have a BMAP, then with FDEP’s approval, the application may include model parameters and results used in a numerical or analytical tool that has been used by FDEP to develop a BMAP in a watershed that has similar characteristics. If these are not available, then the applicant must “use a standard numerical model or analytical tool.”[29] In determining enhancement credits, DEP will also consider rainfall data, anticipated average annual water quality and quantity inflows to the WQEA, and site-specific conditions.
FDEP will determine the service area in which enhancement credits may be sold by the WQEA, which will “depend upon the geographic area in which the water quality enhancement area could reasonably be expected to address adverse impacts.”[30] In 2026 amendments to §373.4134, the legislature clarified that the service area must “at a minimum, consist of a Hydrologic Unit Code 8 (HUC 8) sub-basin as set forth by the United States Geological Survey.”[31]
While only FDEP can issue a permit to develop a WQEA, both FDEP and water management districts, when appropriate, shall authorize the sale of credits to address adverse water quality impacts according to ERPs.[32]
The statute requires monitoring and verification to demonstrate the WQEA is meeting defined performance or success criteria for reduction of pollutants or contaminants. This will assure enhanced protection of the environment.
2026 Legislation
Unfortunately, during the initial bill drafting, a provision was added to S.B. 965, requiring DEP to adopt a rule before a permit could be issued for a WQEA. Although DEP initiated WQEA rule development in 2023, the rulemaking did not sufficiently progress and remains pending.
The good news is that during the 2026 session, the Florida Legislature passed S.B. 848, amending F.S. §373.4134s, to require DEP to issue provisional WQEA permits if an applicant complies with the statutory requirements. DEP may later amend the provisional permit to comply with the rules as ultimately adopted. However, enhancement credits purchased by a developer will not be affected if the WQEA permit is amended; the enhancement credits purchased by a developer are valid in perpetuity.
[1] Susan Roeder Martin, Expanding the Reach: New Opportunities for Mitigation Bank Credits, 100 Fla. B. J. 61 (Mar./Apr. 2026).
[2] FDEP, Mitigation Bank Map, https://ca.dep.state.fl.us/mapdirect/?app=mitbank
[3] “Natural system” is defined as “an ecological system supporting aquatic and wetland-dependent natural resources, including fish and aquatic and wetland-dependent wildlife habitats.” Fla. Stat. §373.4131, (2)(c) (2026).
[4] Florida Senate, 2022 Summary of Legislation Passed, Committee on Environment and Natural Resources.
[5] Despite success in Virginia and North Carolina, there has been limited expansion of the concept of water quality banks in other states.
[6] Meijing Zhang, et al.,University of Florida Institute of Food and Agricultural Sciences, Florida Rainfall Data Sources and Types (2023), available at https://edis.ifas.ufl.edu/publication/AE517.
[7] Environmental Resource Permit Applicant’s Handbook, Vol. I (General and Environmental) (June 1, 2018), available at https://www.swfwmd.state.fl.us/sites/default/files/medias/documents/Appliicant_Hanbook_I_-_Combined.pd_0.pdf.
[8] Fla. Stat. Ch. 373, Part IV, regulates the construction, alteration, operation, maintenance, abandonment, and removal of stormwater management systems, dams, impoundments, reservoirs, works, and appurtenant works. Such projects include dredging and filling in wetlands and other surface waters, as those terms are defined in Fla. Stat. §373.403(13) and (14) (2026).
[9] F.A.C.R. Ch. 62-330.010(2) states the ERP program governs construction, alteration, operation, maintenance, repair, abandonment, and removal of stormwater management systems, dams, impoundments, reservoirs, appurtenant works, and works including docks, piers, structures, dredging, and filling located in, on or over wetlands or other surface waters, as defined and delineated in F.A.C.R. Ch. 62-340.
[10] The terms “surface water management system” and “stormwater management system” are used interchangeably.
[11] “Surface water” means water upon the surface of the earth, whether contained in bounds created naturally, artificially, or diffused. Water from natural springs shall be classified as surface water when it exits from the spring onto the earth’s surface. Fla. Stat. §373.019(21). “Stormwater” means the flow of water that results from, and that occurs immediately following, a rainfall event. Florida Department of Environmental Protection (DEP), Environmental Resource Permit Applicant’s Handbook 2(a)98 (June 1, 2018).
[12] “Stormwater management system” means a system which is designed and constructed or implemented to control discharges which are necessitated by rainfall events, incorporating methods to collect, convey, store, absorb, inhibit, treat, use, or reuse water to prevent or reduce flooding, over-drainage, environmental degradation, and water pollution or otherwise affect the quantity and quality of discharges from the system. Fla. Stat. §373.403(10) (2022).
[13] Nutrients, specifically nitrogen and phosphorous, are naturally present in water and necessary for the healthy growth of plant and animal life. However, too much nitrogen or phosphorous can lead to water quality problems like rapid growth of algal mats, oxygen depletion in the water, and harm to habitat. This can be caused by excess stormwater runoff and fertilizer lost to the environment, among other things. FDEP, General Information: Basin Management Action Plans, available at https://floridadep.gov/sites/default/files/General%20Information%20for%20Basin%20Management%20Action%20Plans_0.pdf#.
[14] The State Water Resource Implementation Rule (originally known as the State Water Policy Rule) was adopted in 1981 and became effective in February 1982. This technology-based rule relies on four key components: 1) A performance standard or goal for the minimum level of treatment; 2) design criteria for best management practices (BMPs) to achieve the performance standard; 3) a rebuttable presumption that discharges from a stormwater management system designed in accordance with the BMP design criteria will not cause harm to water resources; and 4) periodic review and updating of BMP design criteria as more information becomes available to increase their effectiveness in removing pollutants. These rules were developed to meet a performance standard of reducing the average annual post-development stormwater pollutant loading of total suspended solids (TSS) by 80%, or by 95% for stormwater discharges directly into outstanding Florida waters. See note 6; Florida DEP, Submerged Lands and Environmental Resource Coordination Program (Jan. 4, 2020), https://floridadep.gov/water/submerged-lands-environmental-resources-coordination; see also F.A.C.R. 62-40 (2020).
[15] Effective July 1, 2020, Laws of Fla. Ch. 20-150 (2020).
[16] C.S./C.S./S.B. 712 (2020).
[17] See F.A.C.R. 62-330 (2024) and Environmental Resource Permit Applicants Handbook, Vol. I (2024), incorporated by reference into F.A.C.R. 62-330, (2024). Florida’s 2024 Stormwater Rule, enacted via S.B. 7040 (Ch. 2024-275), represents the most significant update to the state’s stormwater regulations in decades. It mandates a shift from traditional presumptive volume-based design to a performance-based approach, heavily focusing on reducing nutrient pollution like total nitrogen (TN), total phosphorus (TP), and total suspended solids (TSS).
[18] C.S./C.S./C.S./H.B. 965.
[19] The bill took effect on July 1, 2022.
[20] A water quality enhancement area is “a natural system constructed, operated, managed, and maintained for the purpose of providing offside regional treatment for which enhancement credits may be provided pursuant to a water quality enhancement area permit….” Fla. Stat. §373.4134(2)(d).
[21] An “enhancement credit” is a standard unit of measure that represents a quantity of pollutant removed. Fla. Stat. §373.4134(2)(a).
[22] A BMAP equitably allocates pollutant reductions to individual basins, to all basins as a whole, or to each identified point source or category of nonpoint sources. Then, the BMAP establishes the schedule for implementing projects and activities to meet the pollution reduction allocations. The BMAP development process provides an opportunity for local stakeholders, government, community leaders, and the public to collectively determine and share water quality cleanup responsibilities. FDEP, Basin Management Action Plans (BMAPs), https://floridadep.gov/dear/water-quality-restoration/content/basin-management-action-plans-bmaps.
[23] A RAP is a control measure FDEP may implement for certain categories of impaired waterbodies. DEP, Restoration Plans, https://fdep.maps.arcgis.com/apps/View/index.html?appid=5a34b0e9d46447559b52d8267083596f.
[24] Fla. Stat. §373.4131(9).
[25] Fla. Stat. §§373.4135 and 373.4136.
[26] Fla. Stat. §373.4134(3)(g).
[27] Fla. Stat. §373.4134(4)(a).
[28] Based on years of water quality monitoring data and analysis, FDEP develops science-based water quality restoration goals to reduce sources of pollution that reach the waterway. See note 14.
[29] Fla. Stat. §373.4134(4)(c).
[30] Fla. Stat. §373.4134(5).
[31] S.B. 848, 2026 Florida Legislature.
[32] Fla. Stat. §373.4134(7).
Susan Roeder Martin
Susan Roeder Martin is a shareholder at Nason Yeager Gerson Harris and Fumero. She participated in the drafting of the initial statute authoring WQEAs. Martin is board certified in state and federal administrative practice. Formerly, she was an attorney at South Florida Water Management District and Florida Power and Light Company. Martin is a Supreme Court certified mediator. She is the former chair of the ELULS of The Florida Bar.
This column is submitted on behalf of the Environmental and Land Use Law Section, Brendan Mackesey, chair, and Steve Conteagüero, editor.
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