USB
ST< United States Environmental Protection Agency
Office of Wetlands, Oceans and Watersheds
Washington, D.C. 20460 »
^ ^ United States Department of the Army
U.S. Army Corps of Engineers
Washington, D.C. 20314
AUG 23 1993
MEMORANDtlM TO THE FIELD
SUBJECT: ESTABLISHMENT AND USE OF WETLAND MITIGATION BANKS IN
THE CLEAN WATER ACT SECTION 404 REGULATORY PROGRAM
1. This memorandum provides general guidelines for the establishment and use of wetland >
mitigation banks in the Clean Water Act Section 404 regulatory program. This memorandum
serves as interim guidance pending completion of Phase I of by the Corps of Engineers'
Institute for Water Resources study on wetland mitigation banking1, at which time this
guidance will be reviewed and any appropriate revisions will be incorporated into final
guidelines.
2. For purposes of this guidance, wetland mitigation banking refers to the restoration,
creation, enhancement, and, in exceptional circumstances, preservation of wetlands or other-
aquatic habitats expressly for the purpose of providing compensatory mitigation in advance of
discharges into wetlands permitted under the Section 404 regulatory program. Wetland
mitigation banks can have several advantages over individual mitigation projects,, some of
which are listed below:
a) Compensatory mitigation,, can be implemented and functioning in advance of project
impacts, thereby reducing temporal losses of wetland functions and uncertainty over
whether the mitigation will be successful in offsetting wetland losses.
b) It may be more .ecologically advantageous for maintaining the integrity of the
aquatic ecosystem to consolidate compensatory mitigation for impacts to many
smaller, isolated or fragmented habitats into a single large parcel or contiguous
parcels.
'The Corps of Engineers Institute for Water Resources, under the authority of Section
307(d) of the Water Resources Development Act of 1990, is undertaking a comprehensive
two-year review and evaluation of wetland mitigation banking to assist in the development of
a national policy on this issue. The interim summary report documenting the results of the
first phase of the study is scheduled for completion in the fall of 1993.
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c) Development of a wetland mitigation bank can bring together financial resources
and planning and scientific expertise not practicable to many individual mitigation
proposals. This consolidation of resources can increase the potential for the
establishment and long-term management of successful mitigation.
d) Wetland mitigation banking proposals may reduce regulatory uncertainty and
provide more cost-effective compensatory mitigation opportunities.
3. The Section 404(b)(l) Guidelines (Guidelines), as clarified by the "Memorandum of
Agreement Concerning the Determination of Mitigation under the Section 404(b)(l)
Guidelines" (Mitigation MOA) signed February 6, 1990, by the Environmental Protection
Agency and the Department of the Army, establish a mitigation sequence that is used in the
evaluation of individual permit applications. Under this sequence, all appropriate and
practicable steps must be undertaken by the applicant to first avoid and then minimize
adverse impacts to the aquatic ecosystem. Remaining unavoidable impacts must then be
offset through compensatory mitigation to the extent appropriate and practicable.
Requirements for compensatory mitigation may be satisfied through the use of wetland
mitigation banks, so long as their use is consistent with standard practices for evaluating
compensatory mitigation proposals outlined in the Mitigation MOA. It is important to
emphasize that, given the mitigation sequence requirements described above, permit
applicants should net anticipate that the establishment of, or participation in, a wetland
mitigation bank will ultimately lead to a determination of compliance with the Section
404(b)(l) Guidelines without adequate demonstration that impacts associated with the
proposed discharge have been avoided and minimized to the extent practicable.
4. The agencies' preference for on-site, in-kind compensatory mitigation does not preclude
the use of wetland mitigation banks where it has been determined by the Corps, or other
appropriate permitting agency, in coordination with the Federal resource agencies through the
standard permit evaluation process, that the use of a particular mitigation bank as
compensation for proposed wetland impacts would be appropriate for offsetting impacts to
the aquatic ecosystem. In making such a determination, careful consideration must be given
to wetland functions, landscape position, and affected species populations at both the impact
and mitigation bank sites. In addition, compensation for wetland impacts should occur,
where appropriate and practicable, within the same watershed as the impact site. Where a
mitigation bank is being developed in conjunction with a wetland resource planning initiative
(e.g., Special Area Management Plan, State Wetland Conservation Plan) to satisfy particular
wetland restoration objectives,, the permitting agency will determine, in coordination with the
Federal resource agencies, whether use of the bank should be considered an appropriate form
of compensatory mitigation for impacts occurring within the same watershed.
5. Wetland, mitigation banks should generally be in place and functional before credits may
be used to offset permitted wetland losses. However, it may be appropriate to allow
incremental distribution of credits corresponding to the appropriate stage of successful
establishment of wetland functions. Moreover, variable mitigation ratios (credit acreage to
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impacted wetland acreage) may be used in such circumstances to reflect the wetland functions
attained at a bank site at a particular point in time. For example, higher ratios would be
required when a bank is not yet fully functional at the time credits are to be withdrawn.
6. Establishment of each mitigation bank should be accompanied by the development of a
formal written agreement (e.g., memorandum of agreement) among the Corps, EPA, other
relevant resource agencies, and those parties who will own, develop, operate or otherwise
participate in the bank. The purpose of the agreement is to establish clear guidelines for
establishment and use of the mitigation bank. A wetlands mitigation bank may also be
established through issuance of a Section 404 permit where establishing the proposed bank
involves a discharge of dredged or fill material into waters of the United States. The
banking agreement or, where applicable, special conditions of the permit establishing the
bank should address the following considerations, where appropriate:
a) location of the mitigation bank
b) goals and objectives for the mitigation bank project;
c) identification of bank sponsors and participants;
d) development and maintenance plan;
e) evaluation methodology acceptable to all signatories to establish bank credits
and-ftssess bank success in meeting the project goals and objectives;
f) specific accounting procedures for tracking crediting and debiting;
g) geographic area of applicability;
h) monitoring requirements and responsibilities;
i) remedial action responsibilities including funding; and
j) provisions for protecting the mitigation bank in perpetuity.
Agency participation in a wetlands mitigation banking agreement may not, in any way,
restrict or limit the authorities and responsibilities of the agencies.
7. An appropriate methodology, acceptable to all signatories, should be identified and used
to evaluate the success of wetland restoration and creation efforts within the mitigation bank
and to identify the appropriate stage of development for issuing mitigation credits. A full
range of wetland functions should be assessed. Functional evaluations of the mitigation bank
should generally be conducted by a multi-disciplinary team representing involved resource
and regulatory .agencies and other appropriate parties. The same methodology should be
used to determine the functions and values of both credits and debits. As an alternative,
credits and debits can be based on acres of various types of wetlands (e.g., National Wetland
Inventory classes). Final determinations regarding debits and credits will be made by the
Corps, or other appropriate permitting agency, in consultation with Federal resource
agencies.
8. Permit applicants may draw upon the available credits of a third party mitigation bank
(i.e., a bank developed and operated by an entity other than the permit applicant). The
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Section 404 permit, however, must state explicitly that the permittee remains responsible for
ensuring that the mitigation requirements are satisfied.
9. To ensure legal enforceability of the mitigation conditions, use of mitigation bank credits
must be conditioned in the Section 404 permit by referencing the banking agreement or
Section 404 permit establishing the bank; however, such a provision should not limit the
responsibility of the Section 404 permittee for satisfying all legal requirements of the permit.
(date)
ROBERT H. WAYLAND, HI
Director
Office of Wetlands, Oceans,
and Watersheds .
U.S. Environmental Protection Agency
MICHAEL L. DAVIS <
Office of the Assistant Secretary
of the Army (Civil Works)
Department of the Army
(date)
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