Editors' Summary: In November 1989, the Army Corps Engineers and the Environmental Protection Agency signed a Memorandum of Agreement outlining mitigation requirements for Federal Water Pollution Control Act § 404 permits. The White House delayed the Memorandum's effective date twice, responding to criticism from the Departments of Energy and Transportation, the oil and gas industry, and development interests in Alaska. In February 1990, a revised Memorandum took effect which retains the sequencing approach to mitigation of avoidance, minimization, and compensation, as well as the requirement that the functions and values of impacted wetlands be replaced consistent with a policy of no net loss. Among other revisions, however, the February 1990 Memorandum contains a controversial provision limiting mitigation requirements where a high proportion of the land is wetlands.

The two Dialogues below consider the February 1990 Memorandum's impact on the role of mitigation in the § 404 program. The first Dialogue concludes that the agreement on mitigation settles a key dispute between the Corps and EPA and removes a significant obstacle to a unified wetlands regulatory policy. The second concludes that the February 1990 revision demonstrates the President's lack of commitment to a no net loss policy and will cause § 404 administrators to back off on permit decisions, resulting in more net loss of wetlands. Despite these differences in perspective, both Dialogues foresee the emergence of a mitigation industry to answer the demand for wetlands determinations, value assessments, and mitigation banking.