The US Army Corps of Engineers and the EPA released a new rule which more clearly defines the agencies' policies on compensatory mitigation.  The new rules are intended to improve the consistency, predictability, and ecological success of mitigation projects mandated by the Clean Water Act.  All forms of compensatory mitigation will now be held to the same standards which mitigation banks have been held to for years.  The report follows the recommendations of the National Research Council to improve the success of wetland restoration and replacement projects by following clear science-based and result-oriented nationwide standards.

Included in the new rule is a preference of mitigation banks over other forms of compensatory mitigation.  Mitigation banks are a “performance-based” form of wetland and stream replacement, unlike in-lieu fee mitigation and permittee-responsible mitigation, the tradable aquatic resource restoration credits generated by banks are tied to the demonstrated achievement of project goals.  In addition compensatory mitigation at a bank is performed in advance of impacts with financial and monitoring assurances to minimize economic risks and maximize ecological success.

The new rules should have lasting effects on the industry.  Smaller mitigation projects will now have to follow the same guidelines as mitigation bankers.  Permittee-responsible compensatory mitigation, mitigation banks, and in-lieu fee mitigation must now have mitigation plans which include the same 12 fundamental components: objectives; site selection criteria; site protection instruments (e.g., conservation easements); baseline information (for impact and compensation sites); credit determination methodology; a mitigation work plan; a maintenance plan; ecological performance standards; monitoring requirements; a long-term management plan; an adaptive management plan; and financial assurances. The tougher standards are likely to drive up the cost and complexity of smaller project plans, making it preferable to purchase credits from a banker.

It is not clear from the new rule how the undermanned Corps intends to enforce such increased oversight of smaller projects.  Preference of mitigation banks should ease some of the burden of regulatory agencies by consolidating small parcel mitigation monitoring efforts.

The new mitigation rule also supports a watershed-based approach to decisions concerning the location of proposed mitigation compensation. This will ensure that projects offset for same-kind impacts in the same localized watersheds.

This is an important step forward for the ecosystem marketplace in the United States.  It should even out the playing field and ensure that the highest functioning natural areas are being created and preserved to offset human impacts.

The new rule, as well as the mitigation banking industry, supports the "mitigation sequence" which requires that all "proposed projects avoid and minimize potential impacts to wetlands and streams before proceeding to compensatory mitigation."

Please view the attached question and answer page below provided by the EPA and AACOE.

To view the new rule or for more information on this subject you may go to:

EPA

USACE