Army Corps of Engineers and EPA Issue New Mitigation Rule
April 16, 2008
Elizabeth Lake - San Francisco
Lawrence R. "Larry" Liebesman- Washington
Abigail Leah "Abby" Ramsden- San Francisco
New Rule Establishes Single Set of Standards
On April 10, 2008, the U.S. Army Corps of Engineers (Corps) and the U.S. Environmental Protection Agency published a much anticipated new regulation known as the “mitigation rule.” 73 Fed. Reg. 19594 (April 10, 2008). It will go into effect on June 9, 2008. The rule establishes one set of standards for all mitigation required under the Clean Water Act’s Section 404 regulatory program. It consolidates previous guidance documents, ranks the permissible compensation mechanisms in order of preference (first, mitigation banks; second, in-lieu fee programs; and third, permittee-responsible mitigation) and provides that all of these compensation options must include a mitigation plan with a uniform, required set of components.
In general, the rule requires all mitigation requirements to satisfy ecologically-driven performance standards based on current science. Standardized reporting criteria will help the Corps evaluate compliance and success of all mitigation methods used to offset impacts to jurisdictional waters. The prioritization of mitigation banks and in-lieu credits managed by third parties reflects the preference for market-based solutions to wetlands conservation, which arguably have a higher likelihood of ecological success and reduce burdens on permittees.
In the long term, the new rule is expected to establish flexible mitigation options, promote use of high resource value mitigation sites and reduce permitting times.
Further discussion of the rule is below and the guidance documents themselves can be found at http://www.epa.gov/wetlandsmitigation/.
How to Mitigate Unavoidable Impacts to Aquatic Resources Under the New Rule
Mitigation Types
The Corps’ general approach to mitigation remains unchanged, with a focus on first avoiding, then minimizing, and finally compensating for unavoidable impacts to wetlands. The rule specifies three options to offset unavoidable impacts:
1) third-party compensation through mitigation banks
2) and in-lieu fee program credits
3) permittee-responsible mitigation under a watershed-based approach
In the first two methods, the permittee uses a third party to help meet mitigation obligations. In the last, the permittee completes and monitors the success of these obligations itself. In addition to clarifying the potential options, the rule now designates an order of preference based on each method’s potential effectiveness for long-term and high-quality resource conservation.
1) Mitigation Banks
The first, and preferred option, is for permittees to purchase credits from an approved mitigation bank. A mitigation bank is a wetland, stream, or other aquatic resource area that has been established by a third-party organization. The bank makes credits available by quantifying the aquatic resource functions it has restored, established, enhanced or preserved within the bank. This option receives more favorable consideration due to a mitigation bank’s ability to conserve larger, more ecologically-viable wetlands.
Mitigation banks are also often established and running at the time a permittee applies for credits, so implementation of mitigation measures can occur in a timely and predictable fashion. The ongoing investment in and expert management of mitigation banks also suggest that mitigation measures will be successful vehicles for wetland conservation in the long term. As mitigation credit prices are linked to the bank’s overall performance, there is a market incentive for banks to implement and maintain the highest level of conservation and restoration practices.
2) In-Lieu Fee Programs
The second option for mitigating impacts involves payment to an in-lieu fee program that will in turn fund aquatic resource creation, restoration, enhancement, or preservation activities. Similar to mitigation banks, in-lieu fee programs may result in consolidation of mitigation efforts and the preservation of larger and more ecologically beneficial wetlands. The rule establishes guidelines aimed at improving the accountability and performance of such programs. For example, in-lieu fee programs must be administered by a nonprofit or government agency that has a prior agreement with the regulatory agencies. The district engineer overseeing the project must approve the release of mitigation bank or in-lieu credits. The Corps also reserves the right to suspend or terminate mitigation bank or in-lieu fee instruments where they fail to meet performance standards.
3) Permittee-Implemented Mitigation
The final and least desirable option in the Corps’ hierarchy allows the permittee itself to restore, establish, enhance, or create aquatic resources. The permittee may implement mitigation measures on-site or adjacent to the site of impacts – the preferred method for permittee-generated mitigation. If nearby aquatic resources do not present restoration opportunities, habitat enhancement may take place off-site at another location, but within the same watershed as the impact location. The site selected for off-site mitigation should strategically improve or maintain existing watershed functions and allow for preservation of riparian areas and buffer zones.
Uniform Standards
The rule describes the kind and level of information the Corps must consider under any of the mitigation options. All mitigation plans must include 12 fundamental components:
1) objectives
2) site selection information
3) site protection instruments (e.g., conservation easements)
4) baseline information (for impact and compensation sites)
5) a credit determination methodology (how the project will mitigate for lost wetland functions and values)
6) a mitigation work plan
7) a maintenance plan
8) ecologically-based performance standards
9) monitoring requirements
10) a long-term management plan
11) an adaptive management plan
12) financial assurances (to ensure successful completion of mitigation measures)
The level of information provided must be commensurate with the scope and scale of the impacts being mitigated.
Mitigation Efforts Going Forward
While the new rule becomes effective on June 9, 2008, permit applications received prior to the effective date will be processed in accordance with existing regulations and guidance. Any permits submitted after the effective date must comply with the new rule unless a district engineer makes a written hardship determination and excuses compliance. A permittee may qualify for a hardship determination if it has already committed substantial resources in reliance on previous permitting guidance.
Existing and new third-party mitigation programs approved 90 days before the rule may continue in operation, but revisions or modifications to operations must be consistent with the new rule. Existing in-lieu fee programs may continue if the Corps determines that their operation is appropriate and consistent with the new rule’s terms. For proposed mitigation bank and in-lieu fee programs, the Corps will engage in a thorough review and approval process that may take up to a year to complete, depending on the existence of endangered species, historic properties, or tribal issues.
For permittees, the new rule provides clear and standardized guidance, and should in the long term provide for timely approval of permit applications. Although it may take a little while for the Corps to work out any internal kinks, the new rule should result in a positive overall benefit to permittees and to watershed restoration efforts.
For more information, email Elizabeth Lake at elizabeth.lake@hklaw.com, Lawrence R. Liebesman at lawrence.liebesman@hklaw.com, or Abigail Ramsden at abigail.ramsden@hklaw.com, or call toll free, 1.888.688.8500.