[Federal Register Volume 60, Number 43 (Monday, March 6, 1995)]
[Notices]
[Pages 12286-12293]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-5280]
[[Page 12285]]
_______________________________________________________________________
Part II
Department of Defense
Department of 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; Notice
Federal Register / Vol. 60, No. 43 / Monday, March 6, 1995 /
Notices
[[Page 12286]]
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), Natural Resources Conservation Service (NRCS), Fish and
Wildlife Service (FWS) and National Marine Fisheries Service (NMFS) are
proposing guidance regarding the establishment, use and operation of
mitigation banks for the purpose of providing compensatory mitigation
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 associated with
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: Written comments must be submitted on or before April 20, 1995.
ADDRESSES: All comments concerning this proposed document should be
submitted in writing to: Mitigation Banking Docket, Wetlands Division,
Mail Code (4502F), U.S. Environmental Protection Agency, 401 M Street,
SW., Washington, DC 20460.
FOR FURTHER INFORMATION CONTACT: Mr. Jack Chowning (Corps) at (202)
272-1725; Ms. Julie Metz (Corps) at (703) 355-3065; Mr. Thomas Kelsch
(EPA) at (202) 260-8795; Ms. Sandra Byrd (NRCS) at (202) 690-3501; Mr.
Michael Long (FWS) at (703) 358-2183; Ms. Susan-Marie Stedman (NMFS) at
(301) 713-2325.
SUPPLEMENTARY INFORMATION: Mitigating the harmful effects 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 a sequential approach to
mitigating these harmful effects by first avoiding unnecessary impacts,
then minimizing environmental harm, and, finally, compensating for
remaining 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 mitigating unavoidable adverse
wetland losses in advance of development actions, when compensatory
mitigation cannot be achieved at the development site or is not as
environmentally beneficial. It typically involves the consolidation of
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 within
environmentally sound limits as a means for compensating for authorized
wetland impacts. 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.
This notice responds to a need identified in the Corps national
study for more detailed guidance on the policy of the Federal
government regarding the establishment, use and operation of mitigation
banks. The proposed guidance is 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.
The agencies are specifically soliciting public comment on the proposed
guidance and will consider all comments submitted by the public in
developing final guidance. A copy of the proposed guidance is published
with this notice.
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.
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
[[Page 12287]] expressly to assist Federal personnel, bank sponsors,
and others in meeting the purpose and goals 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 (FSA) (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.
The policies and procedures 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 or as excepting such projects from
any applicable requirements.
Mitigation banks 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 for
projects that qualify and provide more cost-effective compensatory
mitigation opportunities;
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. The existence of mitigation banks can contribute towards
attainment of the goal for no overall net loss of the Nation's wetlands
by providing applicants with opportunities to compensate for authorized
impacts when mitigation might not otherwise be required.
II. Policy Considerations
The following policy considerations provide general guidance for
the establishment, use and operation of mitigation banks. This policy
applies to all 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, the fundamental precepts of this guidance should
apply to all future mitigation banks.
For the purposes of Section 10/404, 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
expressly 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 not establish any
new requirements.
1. Clean Water Act Section 404 (33 USC 1344).
2. Rivers and Harbors Act of 1899 Section 10 (33 USC 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 USC 3801 et seq.).
7. National Environmental Policy Act (42 USC 4321 et seq.),
including the Council on Environmental Quality's implementing
regulations (40 CFR parts 1500-1508).
8. Fish and Wildlife Coordination Act (16 USC 661 et seq.).
9. Fish and Wildlife Service Mitigation Policy (46 FR 7644-7663,
1981).
10. Magnuson Fishery Conservation and Management Act (16 USC 1801
et seq.).
11. National Marine Fisheries Service Habitat Conservation Policy
(48 FR 53142-53147, 1983).
B. Planning Considerations
1. Prospectus
Prospective bank sponsors are encouraged to submit a prospectus to
[[Page 12288]] the Army Corps of Engineers (Corps) or Natural Resources
Conservation Service (NRCS)\1\ to initiate the planning and review
process by the appropriate agencies (e.g., pre-application
coordination). The purpose of the prospectus is to provide information
to the agencies regarding the general need for and technical
feasibility of a bank, as well as its potential for providing
compensatory mitigation within a particular watershed or other
designated geographic area (i.e., bank service area). Formal agency
involvement and review is initiated with submittal of a prospectus. The
submittal of a prospectus and establishment of an approved mitigation
bank in no way guarantees use of a bank to satisfy compensatory
mitigation requirements of any authorized activity.
\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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2. Goal Setting
The overall goal of a mitigation bank should be the establishment
or reestablishment of a self-sustaining, functioning aquatic system,
which replaces the functions and acreage of wetlands and other aquatic
resources anticipated to be adversely affected within a watershed or
other designated geographic area. It is desirable to set the particular
objectives (i.e., determining the type and character of compensatory
mitigation to be developed) for a mitigation bank in advance of site
selection. The goal and objectives should be driven by the anticipated
mitigation need; the site selection should support achieving the goal
and objectives.
3. Site Selection
Consideration should be given to the ecological suitability of a
site for achieving the goal and objectives of a bank, i.e., that it
possess 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 upland resources (e.g., mature forests) or
cultural sites, or threatened and endangered species habitat are not
compromised in the process of establishing a bank. Other factors for
consideration include development trends (i.e., land use changes),
habitat status and trends, local or regional goals for the restoration
or protection of particular habitat types or functions (e.g.,
reestablishment of habitat corridors), water quality and floodplain
management goals, and establishment of habitat for species of concern.
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
must 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, may not be counted toward bank credits.
Federally funded wetland conservation projects undertaken via
separate authority and for other purposes, such as the Wetlands Reserve
Program, Farmers 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.
4. Technical Feasibility
Mitigation banks should be planned and designed to be self-
sustaining over time to the extent possible and pose little risk of
failure. The techniques for restoring and creating wetlands and/or
other aquatic resources must be carefully selected, since restoration/
creation science is constantly evolving. The restoration of historic or
substantially degraded wetlands and/or other aquatic resources
utilizing proven techniques increases the likelihood of mitigation
success and lessens the loss of valuable uplands due to wetland
creation. Thus, restoration should be the first option considered when
siting a bank.
In general, banks which involve complex hydraulic engineering
features and/or questionable water sources (e.g., pumped) are more
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 be avoided to the extent
possible. 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).
Mitigation techniques should be sufficiently well understood and
reliable to allow the development of detailed construction plans and
specifications for review and approval. 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.
5. 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.
Consistent with existing regulations, policies and guidance, 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 under exceptional circumstances. 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 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
[[Page 12289]] 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 (e.g., by Section 10/404 or the
FSA ``Swampbuster'' provisions). The existence of a demonstrable threat
must 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. 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 generally require a greater number of
acres from a preservation bank than from a bank which is based on
restoration, creation or enhancement.
6. 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. 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. The
presence of upland areas may increase the per-unit value of the aquatic
habitat in the bank, but upland areas are not directly counted as
mitigation credits.
7. Mitigation Banking and Watershed Planning
Mitigation banks should be planned and developed to address
resource needs within a particular watershed. Moreover, decisions
regarding the location and uses of a mitigation bank, as well as the
type of wetlands and/or other aquatic resources to be restored,
created, enhanced or preserved may often be made within the context of
ecological objectives set for the watershed. Watershed planning efforts
often identify categories of activities having minimal adverse effects
on the aquatic ecosystem which could be authorized under a general
permit. In order to reduce 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. Mitigation Banking Instruments
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. 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:
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;
d. Description of baseline conditions;
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.
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 the
Department of the Army (DA) permit. The permit application to establish
a bank will be evaluated by the Corps on its own merits pursuant to
Section 10/404 policies and procedures. As such, preparation of a
banking instrument 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 DA authorization. It
should be noted, however, that a bank sponsor who proceeds in the
absence of a banking instrument does so as 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).
2. 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 comply with the
terms of that instrument.
The Chair of the MBRT will be the Corps, 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. Either agency may delegate that
responsibility to another Federal, state, tribal or local agency, as
appropriate.
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 up front. For this reason, the MBRT will strive to obtain
consensus\2\ on its actions. The MBRT will review and reach consensus
on the banking instrument and final plans for the restoration,
creation, enhancement, and/or preservation of wetlands and other
aquatic resources. Once the banking instrument has been signed, the
MBRT will not typically be involved in the operation of a bank on a
project-specific basis. Periodically, the MBRT will review monitoring
and accounting reports. In the event a bank [[Page 12290]] sponsor
proposes remedial actions, or an agency on the MBRT considers remedial
actions to be necessary, the MBRT will review and reach consensus on
the specific remedial measures to be implemented at a bank.
\2\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. Under consensus,
agreements or decisions are made without voting. An agreement is
reached through a process of gathering information and viewpoints,
discussion, analysis, persuasion, a combination or synthesis of the
proposals and/or development of totally new solutions that are
acceptable to the group. The goal of consensus is to reach an
agreement or decision with which everyone can agree, but not
necessarily unanimity. A consensus agreement is a recognition by a
group that it has reached the best achievable solution for the
parties involved.
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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.
3. 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 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.
4. 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 the agency representatives on the MBRT
cannot reach consensus on the content of the banking instrument within
a reasonable timeframe, or if an agency representative considers that a
particular decision raises concern regarding the application of
existing policy or procedures, an agency may request the issue be
reviewed by a higher level within each agency. If resolution is still
not achieved, any agency(ies) may initiate interagency review through
written notification to, as appropriate, the Corps District Engineer,
EPA Regional Wetlands Division Director, FWS Field Supervisor, NMFS
Habitat Coordinator, NRCS State Conservationist and corresponding
management levels within other agencies represented on the MBRT. 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), or an appropriate designee,
will lead necessary discussions to achieve interagency concurrence on
the issue of concern, and forward documentation of the resolution to
the MBRT Chair for distribution 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 not comply with the terms of
the banking instrument, that agency may raise the issue to the
attention of the Corps or NRCS through the permit evaluation 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 and initiate discussion as
necessary. The Corps will fully consider comments provided by the
review agencies regarding mitigation as part of the permit evaluation
process. The NRCS will consult with FWS in 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 10 days upon receipt of notification, to resolve
concerns. If resolution is not reached, an agency may request that the
issue be reviewed by higher levels within each agency consistent with
the procedures described in the preceding paragraph. Invoking this
dispute resolution procedure to address concerns regarding the
application of a banking instrument will not delay any permit decision
pending before the authorizing agency (i.e., Corps or NRCS).
This guidance does not affect in any way the Corps statutory
authorities and responsibilities under Section 404 of the Clean Water
Act or Section 10 of the Rivers and Harbors Act. The ability of an
agency to elevate a particular permit or policy issue in accordance
with the Section 404(q) Memoranda of Agreement between the Department
of the Army and the Federal advisory agencies will not be limited in
any way by this guidance. Similarly, EPA's authority to deny or
restrict authorization of a CWA permit in accordance with Section
404(c) will not be limited in any way by this guidance.
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 in so far as the use complies
with the terms of the banking instrument. Mitigation banks established
for FSA purposes may be debited only in accordance with the mitigation
and replacement provisions of 7 CFR part 12.
Mitigation banks may also be used to compensate for adverse impacts
to wetlands and/or other aquatic resources authorized under other
resource protection programs such as state regulatory programs. 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 under more than one program.
2. Relationship to Mitigation Requirements
For purposes 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 participation in, a mitigation bank will
ultimately 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. [[Page 12291]]
3. Geographic Limits of Applicability
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. Designation of the service area should be based on
consideration of hydrologic, edaphic and biotic criteria, and be
stipulated in the banking instrument.
The geographic extent of a service area should be guided by the
cataloging unit of the ``Hydrologic Unit Map of the United States''
(USGS, 1980) and 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 hydrologic and biotic classification
and mapping 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
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 watershed
management plans.
4. Use of a Mitigation Bank vs. On-Site Mitigation
As indicated in 1990 Memorandum of Agreement on mitigation between
the EPA and DA, compensatory mitigation should be undertaken in areas
adjacent or contiguous to the site of the aquatic resource impacts when
practicable and environmentally preferable. This preference for on-site
mitigation is established because on-site mitigation often has greater
potential for compensating for particular aquatic functions. For
example, on-site mitigation may be the most appropriate option for
compensating for 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.
The preference for on-site mitigation, however, 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. In making the latter determination,
careful consideration must be given to wetland functions, landscape
position, affected species populations at the impact and mitigation
bank sites, and potential on-site compensation areas. In general, it
may be desirable to provide compensation for minor aquatic resource
impacts through consolidation in a well-managed bank. There may also be
circumstances warranting a combination of on-site and off-site (i.e.,
bank) mitigation to compensate for losses.
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 and is environmentally preferable to on-site
compensatory mitigation. Moreover, for projects that might otherwise
cause or contribute to significant degradation (40 CFR part 230.10(c)),
a bank may only be used when it is demonstrated that use of the bank
will prevent or replace the lost functions that give rise to the
significant degradation finding, and where a reasonable assurance of
success is provided.
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, nor vice-versa. 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. 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.
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 may be appropriate to allow limited
debiting based upon a projected level of aquatic functions at a bank
(e.g. 15% of the total credits projected for the bank at maturity).
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 requirements should be satisfied prior to debiting: (1)
Banking instrument and final 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 within the first full growing season
following initial debiting of a bank. The temporal loss of functions
associated with the debiting of projected credits may require higher
compensation ratios. Further debiting of the bank should not occur
until the allocated projected credits have accrued and additional
credits have accrued to match proposed debiting.
Credits based solely on 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) acceptable to all signatories should be used to assess
wetland and/or other aquatic resource restoration, creation
[[Page 12292]] and enhancement efforts 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, credits and debits can be based on simple
indices (e.g. acres) of various classes of wetlands and/or other
aquatic resources (e.g., Cowardin et al, 1979, as modified for National
Wetland Inventory mapping conventions). Regardless of the method
employed, credits should be based on 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) and members of the MBRT
for review. Alternatively, functional assessments may be conducted by a
team representing involved resource and regulatory agencies and other
appropriate parties.
Bank sponsors will 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 will submit a statement to each member
agency of the MBRT. The bank sponsor will also generate an annual
ledger report for all mitigation bank accounts for similar
distribution.
Credits may be sold to third parties. The cost of mitigation
credits to a third party is determined by the bank sponsor.
8. Party Responsible for Bank Success
The bank sponsor is responsible for assuring the success of the
restoration, creation, enhancement and preservation activities at the
mitigation bank. This responsibility must be clearly documented in the
banking instrument and in any authorization approving the use of the
bank as compensatory mitigation. Where authorization under Section 10/
404 and/or FSA is necessary to establish the bank, the DA permit or
NRCS plan should be conditioned accordingly to ensure that provisions
of the banking instrument are enforceable. In circumstances where
establishment of a bank does not require such authorization, adequate
mechanisms (i.e., legal and financial assurances) need to be in place
to ensure that provisions of the banking instrument are enforceable.
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 applicable, and
signatories of the instrument are responsible for carrying out its
provisions. With the exception of arrangements for the long-term
management and protection in perpetuity of the bank, 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
Mitigation banks should be protected in perpetuity with appropriate
real estate arrangements. In exceptional circumstances, real estate
arrangements may be approved which dictate finite protection for a
bank. 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.
All banks must be protected by legal instruments which effectively
prevent harmful activities (i.e., incompatible uses\3\) that would
jeopardize their continued conservation purpose. Acceptable instruments
are deed restrictions, conservation easements or other enforceable
legal mechanisms.
\3\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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Banking instruments should identify the entity responsible for the
management of the bank beyond its operational life as a means to assure
the conservation purpose of the bank. 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 management of the bank
beyond its operational life, as necessary. 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 need to 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). Annual monitoring reports should be submitted
to the authorizing agency(ies) and members of the MBRT.
4. Remedial Action
The banking instrument should stipulate the 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 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 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, 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- [[Page 12293]] 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 leaving the
potential for project impacts to go unmitigated for a significant time
period. The Corps, in consultation with the other agencies, may find
there are some exceptional circumstances where such arrangements are
appropriate. In such cases, a formal agreement between the sponsor and
the agencies, similar to a banking instrument, is necessary to define
the limited circumstances and conditions under which its use is
considered appropriate.
2. Special Considerations for ``Swampbuster''
Note to readers: Current FSA legislation limits the extent to
which mitigation banking can be used for FSA purposes. FSA requires
that mitigation be conducted on prior-converted cropland as opposed
to farmed wetlands or other degraded wetland systems. If this
legislation is not modified to be consistent with the mitigation
provisions commonly used by other wetland regulatory programs,
including the Section 10/404 program, then the final mitigation
banking guidance will be appropriately annotated to identify the FSA
constraints.
III. Definitions
For the purposes of this guidance document the following terms are
defined:
A. Bank sponsor. Any public or private entity responsible for
establishing and, in most circumstances, operating a mitigation bank.
B. 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 expressly for the purpose of compensating for
unavoidable adverse impacts which remain after all appropriate and
practicable avoidable and minimization has been achieved.
C. Creation. The establishment of a wetland or other aquatic
resource where one did not formerly exist.
D. Credit. A unit of measure representing the accrual or attainment
of aquatic functions at a mitigation bank.
E. Debit. A unit of measure representing the loss of aquatic
functions at an impact or project site.
F. Enhancement. Activities conducted in existing wetlands or other
aquatic resources to achieve specific management objectives or provide
conditions which previously did not exist, and which increase one or
more aquatic functions. Enhancement may involve trade-offs between
aquatic resource structure, functions, and values; a positive change in
one function may result in negative effects to other functions.
G. 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 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.
H. 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.
I. 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.
J. Practicable. Available and capable of being done after taking
into consideration cost, existing technology, and logistics in light of
overall project purposes.
K. 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.
L. Restoration. Re-establishment of previously existing wetland or
other aquatic resource character and function(s) at a site where they
have ceased to exist, or exist only in a substantially degraded state.
M. 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.
[FR Doc. 95-5280 Filed 3-3-95; 8:45 am]
BILLING CODE 3710-92-M
