Design of US Habitat Banking Systems to Support the Conservation ...

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WETLAND AND CONSERVATION BANKING IN DETAILFederal Wetland Mitigation Banking PolicyUnder §404, compensatory mitigation is required asthe third step of a three-step process designed to meetthe goals of the CWA and support the national no netloss policy (see Box 1). The basic premise of the §404permitting program is that no discharge shall be permittedif a practicable alternative exists that is lessdamaging to the aquatic environment or the dischargewould cause the nation’s waters to be significantlydegraded. In order for a project to be permitted, itmust be demonstrated that, to the extent practicable,steps have been taken to avoid impacts to wetlandsand other aquatic resources, potential impacts havebeen minimized, and compensation will be providedfor any remaining unavoidable impacts. The three-partBox 1. Evolution of the Three-Part Mitigation SequenceIn 1980, EPA issued the final §404(b)(1) Guidelines; the regulations that establishedthe environmental criteria by which the Corps evaluates dredge and fillpermit applications.(1) One of the central concepts embedded in the Guidelinesis that no discharges of dredged or fill material shall be permitted if there is apracticable alternative to the proposed discharge that would have less adverseimpact on the aquatic environment, so long as that alternative does not haveother significant adverse environmental consequences.(2) In other words,impacts to aquatic resources must be avoided to the maximum extent practicable.The Guidelines also require that “appropriate and practicable steps” betaken to minimize potential adverse impacts to the aquatic ecosystem before adischarge can be permitted.(3) The Guidelines further describe habitat “developmentand restoration” as an appropriate method for compensating for permittedimpacts that destroy habitat.(4)In 1990, EPA and the Corps issued a Memorandum of Agreement (MitigationMOA) to elaborate upon the three-part mitigation requirements of the§404(b)(1) Guidelines.(5) The Mitigation MOA defines mitigation as a threepartsequence – avoidance, minimization, and compensation – each step ofwhich has its origins in the Guidelines.(6)The Corps…first makes a determination that potential impacts have beenavoided to the maximum extent practicable; remaining unavoidable impactswill then be mitigated to the extent appropriate and practicable by requiringsteps to minimize impacts and, finally, compensate for aquatic resourcevalues.(7)Resources: (1) 40 C.F.R. § 230 et. seq.; (2) 40 C.F.R. § 230.10(a); (3) 40 C.F.R. § 230.10(d); (4) 40C.F.R. § 230.75(d); (5) U.S. Environmental Protection Agency and U.S. Department of the Army.February 6, 1990. Memorandum of Agreement Between the Environmental Protection Agency andthe Department of the Army Concerning the Determination of Mitigation Under the Clean Water ActSection 404(b)(1) Guidelines; (6) Mitigation MOA (1990), § II.A; (7) Mitigation MOA (1990), § II.C.mitigation sequence – avoid, minimize, compensate– represents the heart of the agencies’ §404 regulatoryprogram.Significant attention has been paid over the past 20years to improving the third step in the process - compensation- to ensure that compensatory mitigationefforts are “ecologically self-sustaining,” 9 protected inperpetuity, and ultimately meet the program’s no netloss goal. Although technically the term “mitigation”refers to all three steps of the three-part sequencingprocess, it is often used to describe the third step only.Satisfying the Third Step: CompensationCurrently, there are three primary mechanisms supportedby EPA and the Corps for permittees to meettheir compensatory mitigation obligations. These are:performing project-specific or permittee-responsiblemitigation, purchasing credits from a mitigation bank,or making a payment to an approved in-lieu fee mitigationsponsor. These last two forms of compensatorymitigation – mitigation banking and in-lieu fee mitigation– are often referred to as “third party” mitigation,since the liability for meeting the compensatorymitigation requirements is transferred to a third party.(For more on in-lieu fee mitigation see Chapter 4, “ATypology of Banks.”.)The Evolution of Wetland Mitigation BankingAlthough permittee-responsible mitigation has beenand remains the dominant mechanism for meetingcompensatory mitigation requirements (approximately60 percent of all required wetland mitigation nationwidewas satisfied by permittee-responsible mitigationin FY 2003), 10 wetland mitigation banking has becomeincreasingly prevalent since its emergence as an alternativein the mid-1980s. The first banks were primarilyadvanced, consolidated mitigation projects developedto address the future anticipated impacts of publicagencies, such as state departments of transportation.9 RGL 02-2 (2002); From the operational guidelines developed bythe National Research Council. See: National Research Council.2001. Compensating for Wetland Losses Under the Clean Water Act,National Academy of Sciences, p. 5. (Hereinafter NRC (2001).)10 Wilkinson, Jessica and Jared Thompson. April 2006. 2005Status Report on Compensatory Mitigation in the United States.Washington, DC: Environmental Law Institute. (Hereinafter 2005Status Report (2006).8 Environmental Law Institute
WETLAND AND CONSERVATION BANKING IN DETAILBanking offered these agencies an option to consolidatetheir compensation and do so in advance of theanticipated impacts.The U.S. Fish and Wildlife Service (FWS or Service)first issued guidance on wetland mitigation banking in1983. 11 Although wetland mitigation banking continuedto grow over the following 15 years, existing federalpolicy on banking did not provide the private sectorwith enough assurances to encourage a major role inthe development of the market.In the mid-1980s, a series of influential studies werereleased that questioned the ecological and administrativeeffectiveness of permittee-responsible mitigation.12 In light of the findings, wetland mitigationbanking gained support as a mechanism that mightserve to address the deficiencies of permittee-responsiblemitigation. Specifically, wetland banking wasviewed as an effective way for compensatory mitigationto be consolidated into larger parcels, thereby allowingfor greater financial, administrative, and ecologicalefficiencies. 13 In response, EPA and the Corps issuedinterim banking guidance in 1993 and final bankingguidance in 1995. 14Following issuance of the federal banking guidancein 1995, the number of wetland mitigation banks,particularly those sponsored by the private sector,soared. The guidance gave state agencies, local governments,and the private sector the regulatory certaintyand procedural framework they needed to seekapproval to operate mitigation banks. 15 (See Chapter11 U.S. Fish and Wildlife Service. June 23, 1983. U.S. Fish andWildlife Service Interim Guidance on Mitigation Banking. ESInstruction Memorandum No. 80.12 Eliot, Wendy. 1985. Implementing Mitigation Policies in SanFrancisco Bay: A Critique. Oakland, CA: California State CoastalConservancy; Race, Margaret Seluk. 1985. “Critique of PresentWetlands Mitigation Policies in the United States Based on anAnalysis of Past Restoration Projects in San Francisco Bay.”Environmental Management 9 (1):71-82; Erwin, Kevin L. 1990.“Wetland Evaluation for Restoration and Creation.” In WetlandCreation and Restoration: The Status of the Science, edited by J. A.Kusler and M. E. Kentula. Washington, DC: Island Press.13 Federal Guidance for the Establishment, Use and Operation ofMitigation Banks, 60 Fed. Reg. 58,605 (1995). § I. B. (HereinafterBanking Guidance (1995).)14 Banking Guidance (1995).15 U.S. Environmental Protection Agency. Mitigation BankingFactsheet. http://www.epa.gov/owow/wetlands/facts/fact16.html.2, “Status – number, distribution, and character ofbanks.”)Additional federal guidance affecting mitigation bankinghas been issued in the intervening years, 16 and inMarch 2006, EPA and the Corps issued a proposed ruleon compensatory mitigation that seeks to establish “toan extent that is feasible and practical, equivalent standardsfor all forms of compensatory mitigation.” 17 Thefinal rule may be issued as early as December 2007.How Wetland Mitigation Banks WorkThe 1995 Guidance defines wetland mitigation banksas wetland or stream restoration, creation, enhancement,or preservation projects undertaken to compensatefor unavoidable losses to wetlands, streams,and other aquatic resources expressly for the purposeof providing compensatory mitigation in advance ofauthorized impacts. 18 Banks are created when anentity – generally a private entrepreneur, state or localagency, or nonprofit organization – enters into a formalagreement with a regulatory agency.The 1995 Banking Guidance established a structure forbanking that is characterized by four distinct components:• The bank site: the physical acreage that has beenrestored, established, enhanced, or preserved;• The bank instrument: the formal agreementbetween the bank sponsor and the regulatoryagency(ies) that establishes liability, performancestandards, management and monitoring requirements,and the terms of bank credit approval;• The Mitigation Bank Review Team: the interagencyteam that provides regulatory review, approval, andoversight of the bank; and• The service area: the geographic area within whichpermitted impacts can be compensated at a givenbank. 1916 RGL 02-2 (2002).17 Compensatory Mitigation for Losses of Aquatic Resources, 71 Fed.Reg. 15,520 (2006) (to be codified at 33 C.F.R. pt. 325 and 332, and40 C.F.R. pt. 230) (proposed Mar. 28, 2006), p. 15,521. (HereinafterProposed Compensatory Mitigation Rule (2006).)18 Banking Guidance (1995). §III.19 U.S. Environmental Protection Agency. Mitigation BankingFactsheet. http://www.epa.gov/owow/wetlands/facts/fact16.html.Design of U.S. Habitat Banking Systems to Support the Conservation of Wildlife Habitat and At-Risk Species 9
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Page 7 and 8: EXECUTIVE SUMMARYExecutive SummaryA
Page 9 and 10: EXECUTIVE SUMMARYbanks or habitat b
Page 11 and 12: IntroductionIntroductionAvariety of
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Page 27 and 28: State Wildlife Action Plans3. State
Page 29 and 30: STATE WILDLIFE ACTION PLANSshed). C
Page 31 and 32: STATE WILDLIFE ACTION PLANSPlans th
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Page 35 and 36: A DETAILED LOOK AT WETLAND AND CONS
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ConclusionsConclusionsThis report c
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CONCLUSIONSsuch as habitat conserva
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CONCLUSIONSthe state Attorney Gener
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CONCLUSIONSGeneral RecommendationsF
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AppendicesA. Federal Wetland Compen
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APPENDIX AProjects for Aquatic Reso
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APPENDIX Aland mitigation banks, um
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APPENDIX BMemphis District, U.S. Ar
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APPENDIX BJacksonville District, U.
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Appendix CAppendix CState Wetland M
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APPENDIX CState Statute(s) Regulati
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Appendix DAppendix DState Conservat
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APPENDIX Emitigation banking and ha
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APPENDIX EDelaware (Phase IV)Delawa
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APPENDIX Estaff intend to make the
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APPENDIX EMitigation banking regula
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APPENDIX EMississippi (Phase IV)The
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APPENDIX ENew Mexico (Phase III)The
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APPENDIX Eand mitigation banking. 1
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APPENDIX EVirginia (Phase III)Virgi
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APPENDIX Egation bank may be used t
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APPENDIX FGeorgiaGeorgia Department
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Appendix GWETLAND MITIGATION BANKIN
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APPENDIX GWETLAND MITIGATION BANKIN
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APPENDIX GErwin, K.L. 1991. An Eval
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APPENDIX GPorej, D. 2004. Faunal As
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Appendix HAppendix HBibliography of
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APPENDIX HEcosystem Marketplace, Sp
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APPENDIX ILegal and Financial Mecha
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