[Federal Register Volume 60, Number 228 (Tuesday, November 28, 1995)]
[Notices]
[Pages 58605-58614]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-28907]
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DEPARTMENT OF DEFENSE
Department of the Army
Corps of Engineers
ENVIRONMENTAL PROTECTION AGENCY
DEPARTMENT OF AGRICULTURE
Natural Resources Conservation Service
DEPARTMENT OF THE INTERIOR
Fish and Wildlife Service
DEPARTMENT OF COMMERCE
National Oceanic and Atmospheric Administration
Federal Guidance for the Establishment, Use and Operation of
Mitigation Banks
AGENCIES: Corps of Engineers, Department of the Army, DOD;
Environmental Protection Agency; Natural Resources Conservation
Service, Agriculture; Fish and Wildlife Service, Interior; and National
Marine Fisheries Service, National Oceanic and Atmospheric
Administration, Commerce.
ACTION: Notice.
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SUMMARY: The Army Corps of Engineers (Corps), Environmental Protection
Agency (EPA), National Resources Conservation Service (NRCS), Fish and
Wildlife Service (FWS) and National Marine Fisheries Service (NMFS) are
issuing final policy guidance regarding the establishment, use and
operation of mitigation banks for the purpose of providing compensation
for adverse impacts to wetlands and other aquatic resources. The
purpose of this guidance is to clarify the manner in which mitigation
banks may be used to satisfy mitigation requirements of the Clean Water
Act (CWA) Section 404 permit program and the wetland conservation
provisions of the Food Security Act (FSA) (i.e., ``Swampbuster''
provisions). Recognizing the potential benefits mitigation banking
offers for streamlining the permit evaluation process and providing
more effective mitigation for authorized impacts to wetlands, the
agencies encourage the establishment and appropriate use of mitigation
banks in the Section 404 and ``Swampbuster'' programs.
DATES: The effective date of this Memorandum to the Field is December
28, 1995.
FOR FURTHER INFORMATION CONTACT: Mr. Jack Chowning (Corps) at (202)
761-
[[Page 58606]]
1781; Mr. Thomas Kelsch (EPA) at (202) 260-8795; Ms. Sandra Byrd (NRCS)
at (202) 690-3501; Mr. Mark Miller (FWS) at (703) 358-2183; Ms. Susan-
Marie Stedman (NMFS) at (301) 713-2325.
SUPPLEMENTARY INFORMATION: Mitigating the environmental impacts of
necessary development actions on the Nation's wetlands and other
aquatic resources is a central premise of Federal wetlands programs.
The CWA Section 404 permit program relies on the use of compensatory
mitigation to offset unavoidable damage to wetlands and other aquatic
resources through, for example, the restoration or creation of
wetlands. Under the ``Swampbuster'' provisions of the FSA, farmers are
required to provide mitigation to offset certain conversions of
wetlands for agricultural purposes in order to maintain their program
eligibility.
Mitigation banking has been defined as wetland restoration,
creation, enhancement, and in exceptional circumstances, preservation
undertaken expressly for the purpose of compensating for unavoidable
wetland losses in advance of development actions, when such
compensation cannot be achieved at the development site or would not be
as environmentally beneficial. It typically involves the consolidation
of small, fragmented wetland mitigation projects into one large
contiguous site. Units of restored, created, enhanced or preserved
wetlands are expressed as ``credits'' which may subsequently be
withdrawn to offset ``debits'' incurred at a project development site.
Ideally, mitigation banks are constructed and functioning in
advance of development impacts, and are seen as a way of reducing
uncertainty in the CWA Section 404 permit program or the FSA
``Swampbuster'' program by having established compensatory mitigation
credit available to an applicant. By consolidating compensation
requirements, banks can more effectively replace lost wetland functions
within a watershed, as well as provide economies of scale relating to
the planning, implementation, monitoring and management of mitigation
projects.
On August 23, 1993, the Clinton Administration released a
comprehensive package of improvements to Federal wetlands programs
which included support for the use of mitigation banks. At that same
time, EPA and the Department of the Army issued interim guidance
clarifying the role of mitigation banks in the Section 404 permit
program and providing general guidelines for their establishment and
use. In that document it was acknowledged that additional guidance
would be developed, as necessary, following completion of the first
phase of the Corps Institute for Water Resources national study on
mitigation banking.
The Corps, EPA, NRCS, FWS and NMFS provided notice [60 FR 12286;
March 6, 1995] of a proposed guidance on the policy of the Federal
government regarding the establishment, use and operation of mitigation
banks. The proposed guidance was based, in part, on the experiences to
date with mitigation banking, as well as other environmental, economic
and institutional issues identified through the Corps national study.
Over 130 comments were received on the proposed guidance. The final
guidance is based on full and thorough consideration of the public
comments received.
A majority of the letters received supported the proposed guidance
in general, but suggested modifications to one or more parts of the
proposal. In response to these comments, several changes have been made
to further clarify the provisions and make other modifications, as
necessary, to ensure effective establishment and use of mitigation
banks. One key issue on which the agencies received numerous comments
focused on the timing of credit withdrawal. In order to provide
additional clarification of the changes made to the final guidance in
response to comments, the agencies wish to emphasize that it is our
intent to ensure that decisions to allow credits to be withdrawn from a
mitigation bank in advance of bank maturity be make on a case-by-case
basis to best reflect the particular ecological and economic
circumstances of each bank. The percentage of advance credits permitted
for a particular bank may be higher or lower than the 15 percent
example included in the proposed guidance. The final guidance is being
revised to eliminate the reference to a specific percentage in order to
provide needed flexibility. Copies of the comments and the agencies'
response to significant comments are available for public review.
Interested parties should contact the agency representatives for
additional information.
This guidance does not change the substantive requirements of the
Section 404 permit program or the FSA ``Swampbuster'' program. Rather,
it interprets and provides internal guidance and procedures to the
agency field personnel for the establishment, use and operation of
mitigation banks consistent with existing regulations and policies of
each program. The policies set out in this document are not final
agency action, but are intended solely as guidance. The guidance is not
intended, not can it be relied upon, to create any rights enforceable
by any party in litigation with the United States. The guidance does
not establish or affect legal rights or obligations, establish a
binding norm on any party and it is not finally determinative of the
issues addressed. Any regulatory decisions made by the agencies in any
particular matter addressed by this guidance will be made by applying
the governing law and regulations to the relevant facts. The purpose of
the document is to provide policy and technical guidance to encourage
the effective use of mitigation banks as a means of compensating for
the authorized loss of wetlands and other aquatic resources.
John H. Zirschky,
Acting Assistant Secretary (Civil Works), Department of the Army.
Robert Perciasepe,
Assistant Administrator for Water, Environmental Protection Agency.
James R. Lyons,
Assistant Secretary, Natural Resources and Environment, Department of
Agriculture.
George T. Frampton, Jr.,
Assistant Secretary for Fish and Wildlife and Parks, Department of the
Interior.
Douglas K. Hall,
Assistant Secretary for Oceans and Atmosphere, Department of Commerce.
Memorandum to the Field
Subject: Federal Guidance for the Establishment, Use and Operation of
Mitigation Banks
I. Introduction
A. Purpose and Scope of Guidance
This document provides policy guidance for the establishment, use
and operation of mitigation banks for the purpose of providing
compensatory mitigation for authorized adverse impacts to wetlands and
other aquatic resources. This guidance is provided expressly to assist
Federal personnel, bank sponsors, and others in meeting the
requirements of Section 404 of the Clean Water Act (CWA), Section 10 of
the Rivers and Harbors Act, the wetland conservation provisions of the
Food Security Act (FS) (i.e., ``Swampbuster''), and other applicable
Federal statutes and regulations. The policies and procedures discussed
herein are consistent with current requirements of the Section 10/404
regulatory program and ``Swampbuster'' provisions and are intended only
to clarify the applicability of existing requirements to mitigation
banking.
[[Page 58607]]
The policies and procedures discussed herein are applicable to the
establishment, use and operation of public mitigation banks, as well as
privately-sponsored mitigation banks, including third party banks (e.g.
entrepreneurial banks).
B. Background
For purposes of this guidance, mitigation banking means the
restoration, creation, enhancement and, in exceptional circumstances,
preservation of wetlands and/or other aquatic resources expressly for
the purpose of providing compensatory mitigation in advance of
authorized impacts to similar resources.
The objective of a mitigation bank is to provide for the
replacement of the chemical, physical and biological functions of
wetlands and other aquatic resources which are lost as a result of
authorized impacts. Using appropriate methods, the newly established
functions are quantified as mitigation ``credits'' which are available
for use by the bank sponsor or by other parties to compensate for
adverse impacts (i.e., ``debits''). Consistent with mitigation policies
established under the Council on Environmental Quality Implementing
Regulations (CEQ regulations) (40 CFR Part 1508.20), and the Section
404(b)(1) Guidelines (Guidelines) (40 CFR Part 230), the use of credits
may only be authorized for purposes of complying with Section 10/404
when adverse impacts are unavoidable. In addition, for both the Section
10/404 and ``Swampbuster'' programs, credits may only be authorized
when on-site compensation is either not practicable or use of a
mitigation bank is environmentally preferable to on-site compensation.
Prospective bank sponsors should not construe or anticipate
participation in the establishment of a mitigation bank as ultimate
authorization for specific projects, as excepting such projects from
any applicable requirements, or as preauthorizing the use of credits
from that bank for any particular project.
Mitigation banks provide greater flexibility to applicants needing
to comply with mitigation requirements and can have several advantages
over individual mitigation projects, some of which are listed below:
1. It may be more advantageous for maintaining the integrity of the
aquatic ecosystem to consolidate compensatory mitigation into a single
large parcel or contiguous parcels when ecologically appropriate;
2. Establishment of a mitigation bank can bring together financial
resources, planning and scientific expertise not practicable to many
project-specific compensatory mitigation proposals. This consolidation
of resources can increase the potential for the establishment and long-
term management of successful mitigation that maximizes opportunities
for contributing to biodiversity and/or watershed function;
3. Use of mitigation banks may reduce permit processing times and
provide more cost-effective compensatory mitigation opportunities for
projects that qualify;
4. Compensatory mitigation is typically implemented and functioning
in advance of project impacts, thereby reducing temporal losses of
aquatic functions and uncertainty over whether the mitigation will be
successful in offsetting project impacts;
5. Consolidation of compensatory mitigation within a mitigation
bank increases the efficiency of limited agency resources in the review
and compliance monitoring of mitigation projects, and thus improves the
reliability of efforts to restore, create or enhance wetlands for
mitigation purposes.
6. The existence of mitigation banks can contribute towards
attainment of the goal for no overall net loss of the Nation's wetlands
by providing opportunities to compensate for authorized impacts when
mitigation might not otherwise be appropriate or practicable.
II. Policy Considerations
The following policy considerations provide general guidance for
the establishment, use and operation of mitigation banks. It is the
agencies' intent that this guidance be applied to mitigation bank
proposals submitted for approval on or after the effective date of this
guidance and to those in early stages of planning or development. It is
not intended that this policy be retroactive for mitigation banks that
have already received agency approval. While it is recognized that
individual mitigation banking proposals may vary, it is the intent of
this guidance that the fundamental precepts be applicable to future
mitigation banks.
For the purposes of Section 10/104, and consistent with the CEQ
regulations, the Guidelines, and the Memorandum of Agreement Between
the Environmental Protection Agency (EPA) and the Department of the
Army Concerning the Determination of Mitigation under the Clean Water
Act Section 404(b)(1) Guidelines, mitigation means sequentially
avoiding impacts, minimizing impacts, and compensating for remaining
unavoidable impacts. Compensatory mitigation, under Section 10/404, is
the restoration, creation, enhancement, or in exceptional
circumstances, preservation of wetlands and/or other aquatic resources
for the purpose of compensating for unavoidable adverse impacts. A site
where wetlands and/or other aquatic resources are restored, created,
enhanced, or in exceptional circumstances, preserved expressly for the
purpose of providing compensatory mitigation in advance of authorized
impacts to similar resources is a mitigation bank.
A. Authorities
This guidance is established in accordance with the following
statutes, regulations, and policies. It is intended to clarify
provisions within these existing authorities and does to establish any
new requirements.
1. Clean Water Act Section 404 (33 U.S.C. 1344).
2. Rivers and Harbors Act of 1899 Section 10 (33 U.S.C. 403 et
seq.)
3. Environmental Protection Agency, Section 404(b)(1) Guidelines
(40 CFR Part 230). Guidelines for Specification of Disposal Sites for
Dredged or Fill Material.
4. Department of the Army, Section 404 Permit Regulations (33 CFR
Parts 320-330). Policies for evaluating permit applications to
discharge dredged or fill material.
5. 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
(February 6, 1990).
6. Title XII Food Security Act of 1985 as amended by the Food,
Agriculture, Conservation and Trade Act of 1990 (16 U.S.C. 3801 et
seq.).
7. National Environmental Policy Act (42 U.S.C. 4321 et seq.),
including the Council on Environmental Quality's implementing
regulations (40 CFR Parts 1500-1508).
8. Fish and Wildlife Coordination Act (16 U.S.C. 661 et seq.).
9. Fish and Wildlife Service Mitigation Policy (46 FR pages 7644-
7663, 1981).
10. Magnuson Fishery Conservation and Management Act (16 U.S.C.
1801 et seq.).
11. National Marine Fisheries Service Habitat Conservation Policy
(48 FR pages 53142-53147, 1983).
The policies set out in this document are not final agency action,
but are intended solely as guidance. The guidance is not intended, nor
can it be relied upon, to create any rights
[[Page 58608]]
enforceable by any party in litigation with the United States. This
guidance does not establish or affect legal rights or obligations,
establish a binding norm on any party and it is not finally
determinative of the issues addressed. Any regulatory decisions made by
the agencies in any particular matter addressed by this guidance will
be made by applying the governing law and regulations to the relevant
facts.
B. Planning Considerations
1. Goal Setting
The overall goal of a mitigation bank is to provide economically
efficient and flexible mitigation opportunities, while fully
compensating for wetland and other aquatic resource losses in a manner
that contributes to the long-term ecological functioning of the
watershed within which the bank is to be located. The goal will include
the need to replace essential aquatic functions which are anticipated
to be lost through authorized activities within the bank's service
area. In some cases, banks may also be used to address other resource
objectives that have been identified in a watershed management plan or
other resource assessment. It is desirable to set the particular
objectives for a mitigation bank (i.e., the type and character of
wetlands and/or aquatic resources to be established) in advance of site
selection. The goal and objectives should be driven by the anticipated
mitigation need; the site selected should support achieving the goal
and objectives.
2. Site Selection
The agencies will give careful consideration to the ecological
suitability of a site for achieving the goal and objectives of a bank,
i.e., that it posses the physical, chemical and biological
characteristics to support establishment of the desired aquatic
resources and functions. Size and location of the site relative to
other ecological features, hydrologic sources (including the
availability of water rights), and compatibility with adjacent land
uses and watershed management plans are important factors for
consideration. It also is important that ecologically significant
aquatic or upland resources (e.g., shallow sub-tidal habitat, mature
forests), cultural sites, or habitat for Federally or State-listed
threatened and endangered species are not compromised in the process of
establishing a bank. Other significant factors for consideration
include, but are not limited to, development trends (i.e., anticipated
land use changes), habitat status and trends, local or regional goals
for the restoration or protection of particular habitat types or
functions (e.g., re-establishment of habitat corridors or habitat for
species of concern), water quality and floodplain management goals, and
the relative potential for chemical contamination of the wetlands and/
or other aquatic resources.
Banks may be sited on public or private lands. Cooperative
arrangements between public and private entities to use public lands
for mitigation banks may be acceptable. In some circumstances, it may
be appropriate to site banks on Federal, state, tribal or locally-owned
resource management areas (e.g., wildlife management areas, national or
state forests, public parks, recreation areas). The siting of banks on
such lands may be acceptable if the internal policies of the public
agency allow use of its land for such purposes, and the public agency
grants approval. Mitigation credits generated by banks of this nature
should be based solely on those values in the bank that are
supplemental to the public program(s) already planned or in place, that
is, baseline values represented by existing or already planned public
programs, including preservation value, should not be counted toward
bank credits.
Similarly, Federally-funded wetland conservation projects
undertaken via separate authority and for other purposes, such as the
Wetlands Reserve Program, Farmer's Home Administration fee title
transfers or conservation easements, and Partners for Wildlife Program,
cannot be used for the purpose of generating credits within a
mitigation bank. However, mitigation credit may be given for activities
undertaken in conjunction with, but supplemental to, such programs in
order to maximize the overall ecological benefit of the conservation
project.
3. Technical Feasibility
Mitigation banks should be planned and designed to be self-
sustaining over time to the extent possible. The techniques for
establishing wetlands and/or other aquatic resources must be carefully
selected, since this science is constantly evolving. The restoration of
historic or substantially-degraded wetlands and/or other aquatic
resources (e.g., prior-converted cropland, farmed wetlands) utilizing
proven techniques increases the likelihood of success and typically
does not result in the loss of other valuable resources. Thus,
restoration should be the first option considered when siting a bank.
Because of the difficulty in establishing the correct hydrologic
conditions associated with many creation projects and the tradeoff in
wetland functions involved with certain enhancement activities, these
methods should only be considered where there are adequate assurances
to ensure success and that the project will result in an overall
environmental benefit.
In general, banks which involve complex hydraulic engineering
features and/or questionable water sources (e.g., pumped) are most
costly to develop, operate and maintain, and have a higher risk of
failure than banks designed to function with little or no human
intervention. The former situations should only be considered where
there are adequate assurances to ensure success. This guidance
recognizes that in some circumstances wetlands must be actively managed
to ensure their viability and sustainability. Furthermore, long-term
maintenance requirements may be necessary and appropriate in some cases
(e.g., to maintain fire-dependent plant communities in the absence of
natural fire; to control invasive exotic plant species).
Proposed mitigation techniques should be well-understood and
reliable. When uncertainties surrounding the technical feasibility of a
proposed mitigation technique exist, appropriate arrangements (e.g.,
financial assurances, contingency plans, additional monitoring
requirements) should be in place to increase the likelihood of success.
Such arrangements may be phased-out or reduced once the attainment of
prescribed performance standards is demonstrated.
4. Role of Preservation
Credit may be given when existing wetlands and/or other aquatic
resources are preserved in conjunction with restoration, creation or
enhancement activities, and when it is demonstrated that the
preservation will augment the functions of the restored, created or
enhanced aquatic resource. Such augmentation may be reflected in the
total number of credits available from the bank.
In addition, the preservation of existing wetlands and/or other
aquatic resources in perpetuity may be authorized as the sole basis for
generating credits in mitigation banks only in exceptional
circumstances, consistent with existing regulations, policies and
guidance. Under such circumstances, preservation may be accomplished
through the implementation of appropriate legal mechanisms (e.g.,
transfer of deed, deed restrictions, conservation easement) to protect
wetlands and/or other aquatic resources, accompanied by
[[Page 58609]]
implementation of appropriate changes in land use or other physical
changes as necessary (e.g., installation of restrictive fencing).
Determining whether preservation is appropriate as the sole basis
for generating credits at a mitigation bank requires careful judgment
regarding a number of factors. Consideration must be given to whether
wetlands and/or other aquatic resources proposed for preservation (1)
perform physical or biological functions, the preservation of which is
important to the region in which the aquatic resources are located, and
(2) are under demonstrable threat of loss or substantial degradation
due to human activities that might not otherwise be expected to be
restricted. The existence of a demonstrable threat will be based on
clear evidence of destructive land use changes which are consistent
with local and regional land use trends and are not the consequence of
actions under the control of the bank sponsor. Wetlands and other
aquatic resources restored under the Conservation Reserve Program or
similar programs requiring only temporary conservation easements may be
eligible for banking credit upon termination of the original easement
if the wetlands are provided permanent protection and it would
otherwise be expected that the resources would be converted upon
termination of the easement. The number of mitigation credits available
from a bank that is based solely on preservation should be based on the
functions that would otherwise be lost or degraded if the aquatic
resources were not preserved, and the timing of such loss or
degradation. As such, compensation for aquatic resource impacts will
typically require a greater number of acres from a preservation bank
than from a bank which is based on restoration, creation or
enhancement.
5. Inclusion of Upland Areas
Credit may be given for the inclusion of upland areas occurring
within a bank only to the degree that such features increase the
overall ecological functioning of the bank. If such features are
included as part of a bank, it is important that they receive the same
protected status as the rest of the bank and be subject to the same
operational procedures and requirements. The presence of upland areas
may increase the per-unit value of the aquatic habitat in the bank.
Alternatively, limited credit may be given to upland areas protected
within the bank to reflect the functions inherently provided by such
areas (e.g., nutrient and sediment filtration of stormwater runoff,
wildlife habitat diversity) which directly enhance or maintain the
integrity of the aquatic ecosystem and that might otherwise be subject
to threat of loss or degradation. An appropriate functional assessment
methodology should be used to determine the manner and extent to which
such features augment the functions of restored, created or enhanced
wetlands and/or other aquatic resources.
6. Mitigation Banking and Watershed Planning
Mitigation banks should be planned and developed to address the
specific resource needs of a particular watershed. Furthermore,
decisions regarding the location, type of wetlands and/or other aquatic
resources to be established, and proposed uses of a mitigation bank are
most appropriately made within the context of a comprehensive watershed
plan. Such watershed planning efforts often identify categories of
activities having minimal adverse effects on the aquatic ecosystem and
that, therefore, could be authorized under a general permit. In order
to reduce the potential cumulative effects of such activities, it may
be appropriate to offset these types of impacts through the use of a
mitigation bank established in conjunction with a watershed plan.
C. Establishment of Mitigation Banks
1. Prospectus
Prospective bank sponsors should first submit a prospectus to the
Army Corps of Engineers (Corps) or Natural Resources Conservation
Service (NRCS)\1\ to initiate the planning and review process by the
appropriate agencies. Prior to submitting a prospectus, bank sponsors
are encouraged to discuss their proposal with the appropriate agencies
(e.g., pre-application coordination).
\1\ The Corps will typically serve as the lead agency for the
establishment of mitigation banks. Bank sponsors proposing
establishment of mitigation banks solely for the purpose of
complying with the ``Swampbuster'' provisions of FSA should submit
their prospectus to the NRCS.
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It is the intent of the agencies to provide practical comments to
the bank sponsors regarding the general need for and technical
feasibility of proposed banks. Therefore, bank sponsors are encouraged
to include in the prospectus sufficient information concerning the
objectives for the bank and how it will be established and operated to
allow the agencies to provide such feedback. Formal agency involvement
and review is initiated with submittal of a prospectus.
2. Mitigation Banking Instruments
Information provided in the prospectus will serve as the basis for
establishing the mitigation banking instrument. All mitigation banks
need to have a banking instrument as documentation of agency
concurrence on the objectives and administration of the bank. The
banking instrument should describe in detail the physical and legal
characteristics of the bank, and how the bank will be established and
operated. For regional banking programs sponsored by a single entity
(e.g., a state transportation agency), it may be appropriate to
establish an ``umbrella'' instrument for the establishment and
operation of multiple bank sites. In such circumstances, the need for
supplemental site-specific information (e.g., individual site plans)
should be addressed in the banking instrument. The banking instrument
will be signed by the bank sponsor and the concurring regulatory and
resource agencies represented on the Mitigation Bank Review Team
(section II.C.2). The following information should be addressed, as
appropriate, within the banking instrument:
a. Bank goals and objectives;
b. Ownership of bank lands;
c. Bank size and classes of wetlands and/or other aquatic resources
proposed for inclusion in the bank, including a site plan and
specifications;
d. Description of baseline conditions at the bank site;
e. Geographic service area;
f. Wetland classes or other aquatic resource impacts suitable for
compensation;
g. Methods for determining credits and debits;
h. accounting procedures;
i. Performance standards for determining credit availability and
bank success;
j. Reporting protocols and monitoring plan;
k. Contingency and remedial actions and responsibilities;
l. Financial assurances;
m. Compensation ratios;
n. Provisions for long-term management and maintenance.
The terms and conditions of the banking instrument may be amended,
in accordance with the procedures used to establish the instrument and
subject to agreement by the signatories.
In cases where initial establishment of the mitigation bank
involves a discharge into waters of the United States requiring Section
10/404 authorization, the banking instrument will be made part of a
Department of the Army permit for that discharge. Submittal of an
[[Page 58610]]
individual permit application should be accompanied by a sufficiently-
detailed prospectus to allow for concurrent processing of each.
Preparation of a banking instrument, however, should not alter the
normal permit evaluation process timeframes. A bank sponsor may proceed
with activities for the construction of a bank subsequent to receiving
the Department of the Army authorization. It should be noted, however,
that a bank sponsor who proceeds in the absence of a banking instrument
does so at his/her own risk.
In cases where the mitigation bank is established pursuant to the
FSA, the banking instrument will be included in the plan developed or
approved by NRCS and the Fish and Wildlife Service (FWS).
3. Agency Roles and Coordination
Collectively, the signatory agencies to the banking instrument will
comprise the Mitigation Bank Review Team (MBRT). Representatives from
the Corps, EPA, FWS, National Marine Fisheries Service (NMFS) and NRCS,
as appropriate given the projected use for the bank, should typically
comprise the MBRT. In addition, it is appropriate for representatives
from state, tribal and local regulatory and resource agencies to
participate where an agency has authorities and/or mandates directly
affecting or affected by the establishment, use or operation of a bank.
No agency is required to sign a banking instrument; however, in signing
a banking instrument, an agency agrees to the terms of that instrument.
The Corps will serve as Chair of the MBRT, except in cases where
the bank is proposed solely for the purpose of complying with the FSA,
in which case NRCS will be the MBRT Chair. In addition, where a bank is
proposed to satisfy the requirements of another Federal, state, tribal
or local program, it may be appropriate for the administering agency to
serve as co-Chair of the MBRT.
The primary role of the MBRT is to facilitate the establishment of
mitigation banks through the development of mitigation banking
instruments. Because of the different authorities and responsibilities
of each agency represented on the MBRT, there is a benefit in achieving
agreement on the banking instrument. For this reason, the MBRT will
strive to obtain consensus on its actions. The Chair of the MBRT will
have the responsibility for making final decisions regarding the terms
and conditions of the banking instrument where consensus cannot
otherwise be reached within a reasonable timeframe (e.g., 90 days from
the date of submittal of a complete prospectus). The MBRT will review
and seek consensus on the banking instrument and final plans for the
restoration, creation, enhancement, and/or preservation of wetlands and
other aquatic resources.
Consistent with its authorities under Section 10/404, the Corps is
responsible for authorizing use of a particular mitigation bank on a
project-specific basis and determining the number and availability of
credits required to compensate for proposed impacts in accordance with
the terms of the banking instrument. Decisions rendered by the Corps
must fully consider review agency comments submitted as part of the
permit evaluation process. Similarly, the NRCS, in consultation with
the FWS, will make the final decision pertaining to the withdrawal of
credits from banks as appropriate mitigation pursuant to FSA.
4. Role of the Bank Sponsor
The bank sponsor is responsible for the preparation of the banking
instrument in consultation with the MBRT. The bank sponsor should,
therefore, have sufficient opportunity to discuss the content of the
banking instrument with the MBRT. The bank sponsor is also responsible
for the overall operation and management of the bank in accordance with
the terms of the banking instrument, including the preparation and
distribution of monitoring reports and accounting statements/ledger, as
necessary.
5. Public Review and Comment
The public should be notified of and have an opportunity to comment
on all bank proposals. For banks which require authorization under an
individual Section 10/404 permit or a state, tribal or local program
that involves a similar public notice and comment process, this
condition will typically be satisfied through such standard procedures.
For other proposals, the Corps or NRCS, upon receipt of a complete
banking prospectus, should provide notification of the availability of
the prospectus for a minimum 21-day public comment period. Notification
procedures will be similar to those used by the Corps in the standard
permit review process. Copies of all public comments received will be
distributed to the other members of the MBRT and the bank sponsor for
full consideration in the development of the final banking instrument.
6. Dispute Resolution Procedure
The MBRT will work to reach consensus on its actions in accordance
with this guidance. It is anticipated that all issues will be resolved
by the MBRT in this manner.
a. Development of the Banking Instrument
During the development of the banking instrument, if any agency
representative considers that a particular decision raises concern
regarding the application of existing policy or procedures, an agency
may request, through written notification, that the issue be reviewed
by the Corps District Engineer, or NRCS State Conservationist, as
appropriate. Said notification will describe the issue in sufficient
detail and provide recommendations for resolution. Within 20 days, the
District Engineer or State Conservationist (as appropriate) will
consult with the notifying agency(ies) and will resolve the issue. The
resolution will be forwarded to the other MBRT member agencies. The
bank sponsor may also request the District Engineer or State
Conservationist review actions taken to develop the banking instrument
if the sponsor believes that inadequate progress has been made on the
instrument by the MBRT.
b. Application of the Banking Instrument
As previously stated, the Corps and NRCS are responsible for making
final decisions on a project-specific basis regarding the use of a
mitigation bank for purposes of Section 10/404 and FSA, respectively.
In the event an agency on the MBRT is concerned that a proposed use may
be inconsistent with the terms of the banking instrument, that agency
may raise the issue to the attention of the Corps or NRCS through the
permit evaluaiton process. In order to facilitate timely and effective
consideration of agency comments, the Corps or NRCS, as appropriate,
will advise the MBRT agencies of a proposed use of a bank. The Corps
will fully consider comments provided by the review agencies regarding
mitigation as part of the permit evaluation process. The NCRS will
consult with FWA is making its decisions pertaining to mitigation.
If, in the view of an agency on the MBRT, an issued permit or
series of permits reflects a pattern of concern regarding the
application of the terms of the banking instrument, that agency may
initiate review of the concern by the full MBRT through written
notification to the MBRT Chair. The MBRT Chair will convene a meeting
of the MBRT, or initiate another appropriate forum for communication,
typically within 20 days of receipt of notification, to resolve
concerns. Any such effort to address concerns
[[Page 58611]]
regarding the application of a banking instrument will not delay any
decision pending before the authorizing agency (e.g., Corps or NRCS).
D. Criteria for Use of a Mitigation Bank
1. Project Applicability
All activities regulated under Section 10/404 may be eligible to
use a mitigation bank as compensation for unavoidable impacts to
wetlands and/or other aquatic resources. Mitigation banks established
for FSA purposes may be debited only in accordance with the mitigation
and replacement provisions of 7 CFR Part 12.
Credits from mitigation banks may also be used to compensate for
environmental impacts authorized under other programs (e.g., state or
local wetland regulatory programs, NPDES program, Corps civil works
projects, Superfund removal and remedial actions). In no case may the
same credits be used to compensate for more than one activity; however,
the same credits may be used to compensate for an activity which
requires authorization udner more than one program.
2. Relationship to Mitigation Requirements
Under the existing requirements of Section 10/404, all appropriate
and practicable steps must be undertaken by the applicant to first
avoid and then minimize adverse impacts to aquatic resources, prior to
authorization to use a particular mitigation bank. Remaining
unavoidable impacts must be compensated to the extent appropriate and
practicable. For both the Section 10/404 and ``Swampbuster'' programs,
requirements for compensatory mitigation may be satisfied through the
use of mitigation banks when either on-site compensation is not
practicable or use of the mitigation bank is environmentally preferable
to on-site compensation.
It is important to emphasize that applicants should not expect that
establishment of, or purchasing credits from, a mitigation bank will
necessarily lead to a determination of compliance with applicable
mitigation requirements (i.e., Section 404(b)(1) Guidelines or FSA
Manual), or as excepting projects from any applicable requirements.
3. Geographic Limits of Applicability
The service area of a mitigation bank is the area (e.g., watershed,
county) wherein a bank can reasonably be expected to provide
appropriate compensation for impacts to wetlands and/or other aquatic
resources. This area should be designated in the banking instrument.
Designation of the service area should be based on consideration of
hydrologic and biotic criteria, and be stipulated in the banking
instrument. Use of a mitigation bank to compensate for impacts beyond
the designated service area may be authorized, on a case-by-case basis,
where it is determined to be practicable and environmentally desirable.
The geographic extent of a service area should, to the extent
environmentally desirable, be guided by the cataloging unit of the
``Hydrologic Unit map of the United States'' (USGS, 1980) and the
ecoregion of the ``Ecoregions of the United States'' (James M. Omernik,
EPA, 1986) or section of the ``Descriptions of the Ecoregions of the
United States'' (Robert G. Bailey, USDA, 1980). It may be appropriate
to use other classification systems developed at the state or regional
level for the purpose of specifying bank service areas, when such
systems compare favorably in their objectives and level of detail. In
the interest of the integrating banks with other resource management
objectives, bank service areas may encompass larger watershed areas if
the designation of such areas is supported by local or regional
management plans (e.g., Special Area Management Plans, Advance
Identification), State Wetland Conservation Plans or other Federally
sponsored or recognized resource management plans. Furthermore,
designation of a more inclusive service area may be appropriate for
mitigation banks whose primary purpose is to compensate for linear
projects that typically involve numerous small impacts in several
different watersheds.
4. Use of a Mitigation Bank vs. On-Site Mitigation
The agencies' preference for on-site mitigation, indicated in the
1990 Memorandum of Agreement on mitigation between the EPA and the
Department of the Army, should not preclude the use of a mitigation
bank when there is no practicable opportunity for on-site compensation,
or when use of a bank is environmentally preferable to on-site
compensation. On-site mitigation may be preferable where there is a
practicable opportunity to compensate for important local functions
including local flood control functions, habitat for a species or
population with a very limited geographic range or narrow environmental
requirements, or where local water quality concerns dominate.
In choosing between on-site mitigation and use of a mitigation
bank, careful consideration should be given to the likelihood for
successfully establishing the desired habitat type, the compatibility
of the mitigation project with adjacent land uses, and the
practicability of long-term monitoring and maintenance to determine
whether the effort will be ecologically sustainable, as well as the
relative cost of mitigation alternatives. In general, use of a
mitigation bank to compensate for minor aquatic resource impacts (e.g.,
numerous, small impacts associated with linear projects; impacts
authorized under nationwide permits) is preferable to on-site
mitigation. With respect to larger aquatic resource impacts, use of a
bank may be appropriate if it is capable of replacing essential
physical and/or biological functions of the aquatic resources which are
expected to be lost or degraded. Finally, there may be circumstances
warranting a combination of on-site and off-site mitigation to
compensate for losses.
5. In-kind vs. Out-of-kind Mitigation Determinations
In the interest of achieving functional replacement, in-kind
compensation of aquatic resource impacts should generally be required.
Out-of-kind compensation may be acceptable if it is determined to be
practicable and environmentally preferable to in-kind compensation
(e.g., of greater ecological value to a particular region). However,
non-tidal wetlands should typically not be used to compensate for the
loss or degradation of tidal wetlands. Decisions regarding out-of-kind
mitigation are typically made on a case-by-case basis during the permit
evaluation process. The banking instrument may identify circumstances
in which it is environmentally desirable to allow out-of-kind
compensation within the context of a particular mitigation bank (e.g.,
for banks restoring a complex of associated wetland types). Mitigation
banks developed as part of an area-wide management plan to address a
specific resource objective (e.g., restoration of a particularly
vulnerable or valuable wetland habitat type) may be such an example.
6. Timing of Credit Withdrawal
The number of credits available for withdrawal (i.e., debiting)
should generally be commensurate with the level of aquatic functions
attained at a bank at the time of debiting. The level of function may
be determined through the application of performance standards tailored
to the specific restoration, creation or enhancement activity at the
bank site or through the use of an appropriate functional assessment
methodology.
[[Page 58612]]
The success of a mitigation bank with regard to its capacity to
establish a healthy and fully functional aquatic system relates
directly to both the ecological and financial stability of the bank.
Since financial considerations are particularly critical in early
stages of bank development, it is generally appropriate, in cases where
there is adequate financial assurance and where the likelihood of the
success of the bank is high, to allow limited debiting of a percentage
of the total credits projected for the bank at maturity. Such
determinations should take into consideration the initial capital costs
needed to establish the bank, and the likelihood of its success.
However, it is the intent of this policy to ensure that those actions
necessary for the long-term viability of a mitigation bank be
accomplished prior to any debiting of the bank. In this regard, the
following minimum requirements should be satisfied prior to debiting:
(1) banking instrument and mitigation plans have been approved; (2)
bank site has been secured; and (3) appropriate financial assurances
have been established. In addition, initial physical and biological
improvements should be completed no later than the first full growing
season following initial debiting of a bank. The temporal loss of
functions associated with the debiting of projected credits may justify
the need for requiring higher compensation ratios in such cases. For
mitigation banks which propose multiple-phased construction, similar
conditions should be established for each phase.
Credits attributed to the preservation of existing aquatic
resources may become available for debiting immediately upon
implementation of appropriate legal protection accompanied by
appropriate changes in land use or other physical changes, as
necessary.
7. Crediting/Debiting/Accounting Procedures
Credits and debits are the terms used to designate the units of
trade (i.e., currency) in mitigation banking. Credits represent the
accrual or attainment of aquatic functions at a bank; debits represent
the loss of aquatic functions at an impact or project site. Credits are
debited from a bank when they are used to offset aquatic resource
impacts (e.g. for the purpose of satisfying Section 10/404 permit or
FSA requirements).
An appropriate functional assessment methodology (e.g., Habitat
Evaluation Procedures, hydrogeomorphic approach to wetlands functional
assessment, other regional assessment methodology) acceptable to all
signatories should be used to assess wetland and/or other aquatic
resource restoration, creation and enhancement activities within a
mitigation bank, and to quantify the amount of available credits. The
range of functions to be assessed will depend upon the assessment
methodology identified in the banking instrument. The same methodology
should be used to assess both credits and debits. If an appropriate
functional assessment methodology is impractical to employ, acreage may
be used as a surrogate for measuring function. Regardless of the method
employed, the number of credits should reflect the difference between
site conditions under the with-and without-bank scenarios.
The bank sponsor should be responsible for assessing the
development of the bank and submitting appropriate documentation of
such assessments to the authorizing agency(ies), who will distribute
the documents to the other members of the MBRT for review. Members of
the MBRT are encouraged to conduct regular (e.g., annual) on-site
inspections, as appropriate, to monitor bank performance.
Alternatively, functional assessments may be conducted by a team
representing involved resources and regularly agencies and other
appropriate parties. The number of available credits in a mitigation
bank may need to be adjusted to reflect actual conditions.
The banking instrument should require that bank sponsors establish
and maintain an accounting system (i.e., ledger) which documents the
activity of all mitigation bank accounts. Each time an approved debit/
credit transaction occurs at a given bank, the bank sponsor should
submit a statement to the authorizing agency(ies). The bank sponsor
should also generate an annual ledger report for all mitigation bank
accounts to be submitted to the MBRT Chair for distribution to each
member of the MBRT.
Credits may be sold to third parties. The cost of mitigation
credits to a third party is determined by the bank sponsor.
Party Responsible for Bank Success
The bank sponsor is responsible for assuring the success of the
debited restoration, creation, enhancement and preservation activities
at the mitigation bank, and it is therefore extremely important that an
enforceable mechanism be adopted establishing the responsibility of the
bank sponsor to develop and operate the bank properly. Where
authorization under Section 10/404 and/or FSA is necessary to establish
the bank, the Department of the Army permit or NRCS plan should be
conditioned to ensure that provisions of the banking instrument are
enforceable by the appropriate agency(ies). In circumstances where
establishment of a bank does not require such authorization, the
details of the bank sponsor's responsibilities should be delineated by
the relevant authorizing agency (e.g., the Corps in the case of Section
10/404 permits) in any permit in which the permittee's mitigation
obligations are met through use of the bank. In addition, the bank
sponsor should sign such permits for the limited purpose of meeting
those mitigation responsibilities, thus confirming that those
responsibilities are enforceable against the bank sponsor if necessary.
E. Long-Term Management, Monitoring and Remediation
1. Bank Operational Life
The operational life of a bank refers to the period during which
the terms and conditions of the banking instrument are in effect. With
the exception of arrangements for the long-term management and
protection in perpetuity of the wetlands and/or other aquatic
resources, the operational life of a mitigation bank terminates at the
point when (1) Compensatory mitigation credits have been exhausted or
banking activity is voluntarily terminated with written notice by the
bank sponsor provided to the Corps or NRCS and other members of the
MBRT, and (2) it has been determined that the debited bank is
functionally mature and/or self-sustaining to the degree specified in
the banking instrument.
2. Long-term Management and Protection
The wetlands and/or other aquatic resources in a mitigation bank
should be protected in perpetuity with appropriate real estate
arrangements (e.g., conservation easements, transfer of title to
Federal or State resource agency or non-profit conservation
organization). Such arrangements should effectively restrict harmful
activities (i.e., incompatible uses \2\) that might otherwise
jeopardize the purpose of the bank. In exceptional circumstances, real
estate arrangements may be approved which dictate finite protection for
a bank (e.g., for coastal protection projects which prolong the
ecological viability of
[[Page 58613]]
the aquatic system). However, in no case should finite protection
extend for a lesser time than the duration of project impacts for which
the bank is being used to provide compensation.
\2\ For example, certain silvicultural practices (e.g. clear
cutting and/or harvests on short-term rotations) may be incompatible
with the objectives of a mitigation bank. In contrast, silvicultural
practices such as long-term rotations, selective cutting,
maintenance of vegetation diversity, and undisturbed buffers are
more likely to be considered a compatible use.
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The bank sponsor is responsible for securing adequate funds for the
operation and maintenance of the bank during its operational life, as
well as for the long-term management of the wetlands and/or other
aquatic resources, as necessary. The banking instrument should identify
the entity responsible for the ownership and long-term management of
the wetlands and/or other aquatic resources. Where needed, the
acquisition and protection of water rights should be secured by the
bank sponsor and documented in the banking instrument.
3. Monitoring Requirements
The bank sponsor is responsible for monitoring the mitigation bank
in accordance with monitoring provisions identified in the banking
instrument to determine the level of success and identify problems
requiring remedial action. Monitoring provisions should be set forth in
the banking instrument and based on scientifically sound performance
standards prescribed for the bank. monitoring should be conducted at
time intervals appropriate for the particular project type and until
such time that the authorizing agency(ies), in consultation with the
MBRT, are confident that success is being achieved (i.e., performance
standards are attained). The period for monitoring will typically be
five years; however, it may be necessary to extend this period for
projects requiring more time to reach a stable condition (e.g.,
forested wetlands) or where remedial activities were undertaken. Annual
monitoring reports should be submitted to the authorizing agency(ies),
who is responsible for distribution to the other members of the MBRT,
in accordance with the terms specified in the banking instrument.
4. Remedial Action
The banking instrument should stipulate the general procedures for
identifying and implementing remedial measures at a bank, or any
portion thereof. Remedial measures should be based on information
contained in the monitoring reports (i.e., the attainment of prescribed
performance standards), as well as agency site inspections. The need
for remediation will be determined by the authorizing agency(ies) in
consultation with the MBRT and bank sponsor.
5. Financial Assurances
The bank sponsor is responsible for securing sufficient funds or
other financial assurances to cover contingency actions in the event of
bank default or failure. Accordingly, banks posing a greater risk of
failure and where credits have been debited, should have comparatively
higher financial sureties in place, than those where the likelihood of
success is more certain. In addition, the bank sponsor is responsible
for securing adequate funding to monitor and maintain the bank
throughout its operational life, as well as beyond the operational life
if not self-sustaining. Total funding requirements should reflect
realistic cost estimates for monitoring, long-term maintenance,
contingency and remedial actions.
Financial assurances may be in the form of performance bonds,
irrevocable trusts, escrow accounts, casualty insurance, letters of
credit, legislatively-enacted dedicated funds for government operate
banks or other approved instruments. Such assurances may be phased-out
or reduced, once it has been demonstrated that the bank is functionally
mature and/or self-sustaining (in accordance with performance
standards).
F. Other Considerations
1. In-lieu-fee Mitigation Arrangements
For purposes of this guidance, in-lieu-fee, fee mitigation, or
other similar arrangements, wherein funds are paid to a natural
resource management entity for implementation of either specific or
general wetland or other aquatic resource development projects, are not
considered to meet the definition of mitigation banking because they do
not typically provide compensatory mitigation in advance of project
impacts. Moreover, such arrangements do not typically provide a clear
timetable for the initiation of mitigation efforts. The Corps, in
consultation with the other agencies, may find there are circumstances
where such arrangements are appropriate so long as they meet the
requirements that would otherwise apply to an offsite, prospective
mitigation effort and provides adequate assurances of success and
timely implementation. In such cases, a formal agreement between the
sponsor and the agencies, similar to a banking instrument, is necessary
to define the conditions under which its use is considered appropriate.
2. Special Considerations for ``Swampbuster''
Current FSA legislation limits the extent to which mitigation
banking can be used for FSA purposes. Therefore, if a mitigation bank
is to be used for FSA purposes, it must meet the requirements of FSA.
III. Definitions
For the purposes of this guidance document the following terms are
defined:
A. Authorizing agency. Any Federal, state, tribal or local agency
that has authorized a particular use of a mitigation bank as
compensation for an authorized activity; the authorizing agency will
typically have the enforcement authority to ensure that the terms and
conditions of the banking instrument are satisfied.
B. Bank sponsor. Any public or private entity responsible for
establishing and, in most circumstances, operating a mitigation bank.
C. Compensatory mitigation. For purposes of Section 10/404,
compensatory mitigation is the restoration, creation, enhancement, or
in exceptional circumstances, preservation of wetlands and/or other
aquatic resources for the purpose of compensating for unavoidable
adverse impacts which remain after all appropriate and practicable
avoidance and minimization has been achieved.
D. Consensus. The term consensus, as defined herein, is a process
by which a group synthesizes its concerns and ideas to form a common
collaborative agreement acceptable to all members. While the primary
goal of consensus is to reach agreement on an issue by all parties,
unanimity may not always be possible.
E. Creation. The establishment of a wetland or other aquatic
resource where one did not formerly exist.
F. Credit. A unit of measure representing the accrual or attainment
of aquatic functions at a mitigation bank; the measure of function is
typically indexed to the number of wetland acres restored, created,
enhanced or preserved.
G. Debit. A unit of measure representing the loss of aquatic
functions at an impact or project site.
H. Enhancement. Activities conducted in existing wetlands or other
aquatic resources which increase one or more aquatic functions.
I. Mitigation. For purposes of Section 10/404 and consistent with
the Council on Environmental Quality regulations, the Section 404(b)(1)
Guidelines and the Memorandum of Agreement Between
[[Page 58614]]
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, mitigation means sequentially avoiding
impacts, minimizing impacts, and compensating for remaining unavoidable
impacts.
J. Mitigation bank. A mitigation bank is a site where wetlands and/
or other aquatic resources are restored, created, enhanced, or in
exceptional circumstances, preserved expressly for the purpose of
providing compensatory mitigation in advance of authorized impacts to
similar resources. For purposes of Section 10/404, use of a mitigation
bank may only be authorized when impacts are unavoidable.
K. Mitigation Bank Review Team (MBRT). An interagency group of
Federal, state, tribal and/or local regulatory and resource agency
representatives which are signatory to a banking instrument and oversee
the establishment, use and operation of a mitigation bank.
L. Practicable. Available and capable of being done after taking
into consideration cost, existing technology, and logistics in light of
overall project purposes.
M. Preservation. The protection of ecologically important wetlands
or other aquatic resources in perpetuity through the implementation of
appropriate legal and physical mechanisms. Preservation may include
protection of upland areas adjacent to wetlands as necessary to ensure
protection and/or enhancement of the aquatic ecosystem.
N. Restoration. Re-establishment of wetland and/or other aquatic
resource characteristics and function(s) at a site where they have
ceased to exist, or exist in a substantially degraded state.
O. Service area. The service area of a mitigation bank is the
designated area (e.g., watershed, county) wherein a bank can reasonably
be expected to provide appropriate compensation for impacts to wetlands
and/or other aquatic resources.
John H. Zirschky,
Acting Assistant Secretary (Civil Works), Department of the Army.
Robert Perciasepe,
Assistant Administrator for Water, Environmental Protection Agency.
Thomas R. Hebert,
Acting Undersecretary for Natural Resources and Environment,
Department of Agriculture.
Robert P. Davison,
Acting Assistant Secretary for Fish and Wildlife and Parks,
Department of the Interior.
Douglas K. Hall,
Assistant Secretary for Oceans and Atmosphere, Department of
Commerce.
[FR Doc. 95-28907 Filed 11-27-95; 8:45 am]
BILLING CODE 3710-92-M
