Wetland Mitigation

WETLAND MITIGATION REFERS to efforts to reduce the negative impacts of development on wetlands, and has been required by U.S. law under the Clean Water Act (CWA), the National Environmental Policy Act (NEPA), and other elements of environmental law. The CWA §404 permit program, established in 1972, is administered by the U.S. Army Corps of Engineers (Corps) and overseen by the U.S. Environmental Protection Agency (EPA); wetland mitigation is often required in order to obtain a §404 permit to fill or dredge in a wetland. However, in the 1970s mitigation was not consistently required, and Corps leadership did not agree that requiring mitigation was a necessary part of administering the §404 program.

The White House Council on Environmental Quality drafted NEPA regulations on November 29, 1978 defining mitigation as including five components: Avoidance, minimization, rectification, reduction, and compensation. All federal agencies are required to comply with NEPA; thus the EPA adopted a modified version of mitigation on December 24, 1980, known as the “§404(b)(1) Mitigation Guidelines.” Because these guidelines are binding on the Corps issuance of wetland fill permits, they formalized the administrative requirement for wetland mitigation. The guidelines require a permit applicant to achieve all practicable avoidance and minimization of impacts to wetlands before a permit can be issued. The Corps can require compensation for any remaining unavoidable impact that constitutes “significant degradation.” These three elements constitute mitigation under the CWA, and the Corps must deny a permit where mitigation cannot eliminate significant degradation. The third step, compensatory mitigation, has become an extremely common and important feature of U.S. wetland policy, and has come to symbolize the principle that one environmental feature can replace another, which has become part of the American conception of sustainability (embodied in the policy slogan “no net loss of wetlands” from the late 1980s). This principle is not widely accepted in environmental policy outside the United States, and compensatory mitigation for wetland impacts is rare.

Compensatory wetland mitigation is the restoration, creation, preservation, or enhancement of a wetland using techniques of environmental restoration. As early as 1982, reports began to emerge indicating that compensation sites were of poor quality. These reports became increasingly common, culminating in an infamous report on compensatory mitigation in Florida that found that only 33 percent of required sites had even been constructed. The Corps' limited attention to compliance monitoring continues to be blamed for this. The principal debate over wetland mitigation in the 1980s concerned the Corps' position that extra compensation could reduce the need for avoidance and minimization. The EPA held that all practicable avoidance and minimization must be achieved before compensation can be considered, and this position was formalized into joint EPA and Corps policy in the 1990 Mitigation Memorandum of Agreement (MOA). Since 1990, wetland mitigation has been understood to occur in a sequence: The permittee must first avoid, then minimize, and finally compensate.

The 1990 MOA also established a general preference for compensatory mitigation to occur on the site of the impact, and to be of the same kind of wetland as the impacted wetland; this was known as the “on-site in-kind preference.” As various kinds of off-site and third party mitigation methods became more prevalent in the 1990s, such as wetland mitigation banking and in-lieu fee mitigation, the on-site [Page 1945]in-kind preference gradually relaxed. Historically, most compensatory mitigation has been performed by the permittee, and nearly all compensation was on-site in the 1980s. This was in part because the Corps was reluctant to consider the requirement of off-site compensation “practicable” and therefore simply did not require compensation in cases where on-site compensation was not feasible. The practice of consolidating many compensation sites into a single large “bank” site—often constructed in advance of impact—had been used since the U.S. Fish and Wildlife Service issued guidance on the subject in 1981. However, the effort to streamline environmental regulations, led by a report from Vice President Quayle's Council on Competitiveness in 1991, resulted in the turn to market-led approaches to wetland compensation.

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