The Army-EPA Agreement on Wetlands Mitigation

William L. Want

Editor's 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.

William L. Want practices environmental law in the Charleston, South Carolina, office of Nelson, Mullins, Riley & Scarborough. Mr. Want is the author of The Law of Wetlands Regulation (Clark Boardman, 1989). He is the Chairman of the South Carolina Bar Subcommittee on Hazardous Wastes. He was a senior trial attorney for nine years for the Justice Department's Land and Natural Resources Division in Washington, D.C.

[20 ELR 10209]

The Department of the Army and the Environmental Protection Agency (EPA) recently ended a protracted dispute over the use of wetlands mitigation in the Federal Water Pollution Control Act (FWPCA) § 404 permitting process.¹ On November 15, 1989, they signed a Memorandum of Agreement providing that mitigation alone cannot serve as the basis for issuing a § 404 permit. The Memorandum established various mitigation criteria and created an outburst of opposition from segments of the regulated community. The White House intervened twice to delay its effective date,² and after negotiations among federal agencies and representatives of the regulated community, a revised Memorandum took effect on February 7, 1990.³

The Memorandum generally accepts EPA's longstanding view that harm to wetlands should be avoided,⁴ not simply mitigated as previously allowed by the Corps of Engineers, which administers the § 404 program for the Army.⁵ The revision to the Memorandum grants discretion to EPA and the Corps in applying the § 404 guidelines, but generally does not change them. This Dialogue discusses [20 ELR 10210] EPA's and the Corps' different views on mitigation before the Memorandum of Agreement, the Memorandum's substantive provisions, and the key changes made after White House intervention.

Differences Highlighted in Bersani v. EPA The two agencies' views on the use of wetlands mitigation clashed in Bersani v. United States Environmental Protection Agency.⁶ In that controversial case, the Corps proposed issuing a permit for a shopping center site that would have altered or filled 32 of 50 acres of wetlands, while creating on site nine replacement acres of wetlands, and altering 13 acres of wetlands to enhance their ecological value. Additionally, the developer planned to create 36 acres of replacement wetlands nearby.⁷ The developer claimed that the planned mitigation would more than compensate for the wetlands that would be lost.

The Corps found that in view of the proposed mitigation, the project satisfied the public interest test and other permitting criteria. But EPA vetoed the Corps' permit, based on its differing view of the use of mitigation in the permit process. Both the district and circuit courts upheld EPA's veto, though more on the basis of deference to agency decisions rather than as a specific enforcement of EPA's view on mitigation. Thus, even after the Bersani battle, the dispute over the role of mitigation in the § 404 permit process remained unresolved, and the Corps and EPA continued to differ in individual permit decisions.

How the Memorandum Changes Wetlands Mitigation

Sequencing

The Memorandum resolves EPA's and the Corps' policy differences on mitigation, accepting EPA's sequencing approach of avoidance, minimization, and compensation. Part II.C. states: "The Corps . . . first makes a determination that potential impacts have been avoided to the maximum extent practicable; remaining unavoidable impacts will then be mitigated to the extent appropriate and practicable by requiring steps to minimize impacts and, finally, compensate for aquatic resource values." Similarly, the Memorandum adopts EPA's view that mitigation alone cannot serve as basis for a permit. Part II.C.1. states: "Compensatory mitigation may not be used as a method to reduce environmental impacts in the evaluation of the least environmentally damaging practicable alternatives for the purposes of requirements under § 230.10(a)." Additionally, Part II.C. exempts from the sequencing requirement discharges of dredge and fill materials that would avoid environmental harm or can reasonably be expected to result in environmental gain or insignificant environmental losses.

Amount of Mitigation

The Memorandum states the measure for assessing the extent of mitigation required: Functional value of impacted wetlands must be replaced consistent with the goal of no net loss. Specifically, Part III.B. provides that "for wetlands, such mitigation should provide, at a minimum, one for one functional replacement (i.e., no net loss of values), with an adequate margin of safety to reflect the expected degree of success associated with the mitigation plan . . . ." Significantly, however, the Memorandum does not require this standard where "the mitigation measures necessary to meet this goal are not feasible, not practicable, or would accomplish only inconsequential reductions in impacts. Consequently, it is recognized that no net loss of wetlands functions and values may not be achieved in each and every permit action."⁸

The Memorandum's emphasis on function and value in mitigation inevitably leads to a greater need for scientific information comparing functional value assessments of that which will be lost with that which will be gained, rather than simply comparing numbers of acres. In this regard, Part III.B. states: "Functional values should be assessed by applying aquatic site assessment techniques generally recognized by experts in the field and/or the best professional judgment of federal and state agency representatives. . . ." Thus, just as the business of environmental consulting firms boomed from the need for wetlands determinations, another boom should result from the need for wetlands value assessments, applying such techniques as habitat evaluation procedure and wetlands evaluation technique.

Preferred Types of Mitigation

In accomplishing the goal of no net loss, the Memorandum establishes a preference for in-kind over out-of-kind compensatory mitigation.⁹ Preference also is givento wetlands restoration over wetlands creation because the latter's success is less certain. Additionally, the Memorandum states a preference, if practicable, for on-site mitigation, defined as including that which is adjacent or contiguous to the discharge site.

The uncertainty expressed in the Memorandum as to the success of mitigation efforts¹⁰ apparently led to the inclusion of two other concepts: mitigation banking and monitoring as a permit condition. Mitigation banking allows EPA and the Corps to approve wetlands creation or restoration that will serve as a mitigation credit for future development.¹¹ The Memorandum accepts the mitigation banking concept and states that the agencies will provide additional guidance on it.

The Memorandum contemplates that monitoring of mitigation be imposed as a permit condition, particularly where scientific uncertainty as to mitigation success is high.¹² The agencies are to use the monitoring requirements to enforce the mitigation conditions that in the past were often neglected once the permit was issued.

Changes in the Revised Memorandum

The Memorandum, originally issued on November 15, 1989, was to be effective on December 15, 1989. The effective [20 ELR 10211] date was twice postponed, and the Memorandum was revised before finally becoming effective on February 7, 1990.

The revision did not delete any major components of the original Memorandum, but it made several changes to allow flexibility in applying the § 404 guidelines. The revised Memorandum states repeatedly that it is "guidance" for agency personnel, making it clear that is not mandatory in all circumstances. Under the revised Memorandum, footnote 7 provides that mitigation may not be required where a high proportion of the land is wetlands. This provision responds to complaints that mitigation is not practical in parts of Alaska where a high proportion of developable land is wetlands and hydrologic conditions present technological difficulties for compensatory mitigation. The revised Memorandum provides the agencies with discretion to allow mitigation in geographic areas outside of the dredge and fill discharge site, noting that "mitigation should be undertaken in the same geographic area if practicable . . . ."¹³ Additionally, Part II.C. states that sequencing may not be required where wetland alterations constitute "insignificant environmental losses," a phrase not included in the original Memorandum.

Conclusion

The Memorandum of Agreement on mitigation is an important development in wetlands law. It settles a key dispute between the Army and EPA, continuing a recent trend of resolving disputes between the two agencies.¹⁴ Although wetlands regulation is increasingly vital both to environmentalists and to developers, it has been the subject of seemingly intractable disputes between the Army and EPA. The agreement on mitigation removes a significant obstacle to a federal wetlands regulatory program with unified policy requirements.

1. 33 U.S.C. § 1344, ELR STAT. FWPCA 054 (permits for dredged or fill material).

2. Administration Delays Key Wetlands Protection Plans, Wash. Post, Dec. 15, 1989, at A19; Wetlands Pact Delayed Again, Wash. Post, Jan. 13, 1990, at A1.

3. Memorandum of Agreement between the Environmental Protection Agency and the Department of the Army Concerning the Determination of Mitigation under the Clean Water Act Section 404(b)(1) Guidelines (Feb. 6, 1990), ELR ADMIN. MATERIALS 35223 [hereinafter Wetlands Mitigation MOA].

4. See Ciupek, Protecting Wetlands Under Clean Water Act § 404: EPA's Conservative Policy on Mitigation, NAT'L WETLANDS NEWSL. (Envtl. L. Inst.), Sept.-Oct. 1986, at 12 (quoting EPA testimony on July 31, 1986 before the Environmental Pollution Subcommittee of the Committee on Environment and Public Works).

5. See 33 C.F.R. §§ 320.4(r), 325.4(a); 51 Fed. Reg. 41208 (Nov. 13, 1986) (preamble to Corps regulations). On the FWPCA § 404 program generally, see Kilgore, EPA's Evolving Role in Wetlands Protection: Elaboration in Bersani v. U.S. EPA, 18 ELR 10479 (Nov. 1988).

6. 674 F. Supp. 405, 18 ELR 20001 (N.D.N.Y. 1987), aff'd, 850 F.2d 36, 18 ELR 20874 (2d Cir. 1988).

7. On the Bersani cases generally, see Kilgore, supra note 5.

8. Wetlands Mitigation MOA, supra note 3, Part II.B.

9. Id., Part II.C.3.

10. Id.

11. Id.

12. Id., Part II.D.

13. Id., Part II.C.3. (emphasis added).

14. See, e.g., Memorandum of Agreement between the Army and EPA Concerning the Determination of the Geographic Jurisdiction of the Section 404 Program (Jan. 19, 1989), ELR ADMIN. MATERIALS 35181; Memorandum of Agreement between the Army and EPA Concerning Federal Enforcement of the Section 404 Program (Jan. 19, 1989); ELR ADMIN. MATERIALS 35183; Memorandum of Agreement between the Army and EPA Concerning Previously-Issued Corps Permits (Jan. 19, 1989), ELR ADMIN. MATERIALS 35185.