“Mitigation Banking” may be a difficult term but it is proving to be an essential tool for improving and protecting wetlands, streams and other aquatic resources impacted by development. It will only grow in importance as America yearns for energy security, while continuing to embrace noble goals of “no net loss” of wetlands and “fishable and swimmable” quality under the Clean Water Act (CWA).
For starters, the word “mitigation” is confusing. It has a different meaning in the CWA and aquatic resources context compared to mitigation under Clean Air Act and greenhouse gas programs, where it connotes reduction, even prevention of emissions. For CWA and aquatic impacts, it is essentially about compensation—the actions permittees must take to pay for resulting “sins” of a project making its way through the regulatory process.
This all underscores the most important principle for environmentalists and responsible regulators: “sequencing.” They may be willing to support compensatory mitigation if it is the third and final step, the last resort, after step 1: practicable alternatives analysis and step 2: minimizing unavoidable impacts. Controversy surrounding the first step, when regulators challenge the purpose of a project and whether it really has to be in or near wetlands and other waters, creates a temptation to simply build first and ask forgiveness later. Regulators may also be tempted to skip or marginalize the second step—minimization— where permit applicants are expected to reduce environmental impacts by modifying project features, and go straight to mitigation. Environmentalists argue that deviations in sequencing, which put a priority on avoiding and minimizing harm, can lead to wheeling and dealing to enable unwise development.
“Banking” is also confusing, conjuring up thoughts, for some, of heartless financial transactions far removed from the environmental field. In essence, though, it is a method of pooling credits, keeping score, and consolidating efforts and actions into defined service areas to get the most environmental bang for the buck and improve the operation and maintenance of the restored and protected land, water, and habitat. Collecting and protecting resources (financial and natural) in a targeted, systematic way will increase the chances of ecological success, just as a well-managed central park can provide more benefits to people and wildlife than a hodge-podge of spot parks planted onsite or at the edge of permitted development projects.
The benefits of collective banks over “postage stamp” projects and the desire to say “Yes, If …” rather than “No Way” to development convinced Congress and the Executive Branch in 1991 to endorse mitigation banking in the Intermodal Surface Transportation Efficiency Act of 1991. Linear projects and developments that cross many jurisdictions would need a more comprehensive approach to successfully compensate for impacts to wetlands and wildlife. It was viewed as one of the key tools to fulfill the nation’s new “no net loss of wetlands” goal announced and championed by the Bush Administration in 1989 and codified by Congress in the Water Resources Development Act of 1990 (for purposes of the Army Corps’ Civil Works program).
By the way, the Water Resources Development Act of 1990 also authorized a wetlands mitigation banking program, but limited its scope to a specific location involving the New York and New Jersey Passaic River Mainstem project area.
Potential problems and failures with mitigation projects and banks spawned Governmental reports and oversight hearings in the years that followed.
Concern was also growing with alternative approaches such as “in lieu fees” (where project sponsors would forego doing a mitigation project on their own and instead pay a fee to a governmental or nonprofit entity to serve some environmental purpose but not affiliated with a bank).
‘Noel Net Loss’ & New Rules
December was a busy month for wetlands and the Bush Administration, both in 2002 and 2003. On December 24, 2002 officials from federal agencies signed a statement reaffirming the no net loss of wetlands goal, which staff affectionately called a noel net loss policy statement, and laying out a detailed National Wetlands Mitigation Action Plan. The plan looked to improve coordination and accountability, establish performance standards among the types of mitigation (e.g., onsite vs. offsite, in-kind vs. out-of-kind), and track progress among federal agencies toward no net loss. December 2003 was also a busy month: Officials withdrew plans, issued a year earlier in an advanced notice of proposed rulemaking, to revise the definition of waters of the U.S. (much to the delight of the environmental community who were opposed to a potential rulemaking). In withdrawing the proposal, officials spoke of the Administration’s continuing commitment to no net loss and to increasing the quality and quantity of the nation’s wetlands.
In 2008, the Administration issued a comprehensive and significant new rule on mitigation under the CWA, incorporating the framework and themes of the 2002 plan. EPA and the Army Corps of Engineers joint regulation spelled out procedures and standards for compensatory mitigation of impacts to wetlands, streams and other aquatic resources. It reflected Congress’ preference for mitigation banking in the 2003 Transportation Efficiency Act (TEA-21); acknowledged the need to honor sequencing; embraced watershed based decision-making as a key to ecological success; included new safeguards on the use of in lieu fees; and established an interagency review team process for more efficient coordination. It also made clear a hierarchy of preferred eligible actions for regulatory credit: restoration, establishment (which sounds more accurate than creation), enhancement and (in certain circumstances) preservation.
How is it working? Federal agencies, the National Mitigation Banking Assn.  and environmental advocacy groups have differing takes on the question. As is often the case, states are taking the lead in coordinating various state and local efforts under the federal regulations. Obviously, regional differences matter. For example, in Appalachian states such as Pennsylvania, West Virginia and Ohio, where the number of resource extraction and related infrastructure projects will continue to increase, there are many questions surrounding the opportunities and limitations of banking. Some of the issues relate to CWA, some to the Endangered Species Act, some to drilling, some to mining, and some to road building, pipelines and other linear facilities. Is there a way to measure baseline conditions of streams before and after projects to gauge success? As with wetlands, how much of the restoration work for streams is science and how much is art? How much harder is it given the fact streams are moving (i.e., flowing) targets?
The U.S. Water Alliance, which employs me, and the Environmental Banc & Exchange are hosting a one-day conference to explore those very questions."Banking on Ecological Success in Appalachia: Water, Species, Standards and Trends " will be held on Monday, March 24, at the Sheraton Square Hotel in Pittsburgh, Pa. Attendance is by invitation only, but if interested in participating, please contact Hope Hurley at email@example.com .
Healthy habitat makes all the difference. Clear rules, defensible permits and measurable goals are needed as the stakes get higher in our country’s rush for energy security. Now is not the time to take short cuts that short change environmental sustainability or undermine no net loss goals. Nor is it time to fold the tent on market-based, watershed-focused strategies. When coupled with regulation and enforcement, they offer our best hope to move beyond “no net loss” towards “net gain” in the functions and values of wetlands, streams and other waters.Ben Grumbles is president of the U.S. Water Alliance , a not-for-profit educational organization based in Washington, D.C., committed to uniting people and policies for water sustainability throughout the country. Grumbles has a long career in water and environmental policy, serving the public and teaching law students and environmental professionals, over the past 25 years. He can be reached at firstname.lastname@example.org .