United States
  Protection Agency
Wetlands  Compensatory Mitigation
  The objective of the Clean Water Act (CWA) is "to restore and maintain the
  chemical, physical, and biological integrity of the Nation's waters."  Toward
  achievement of this goal, the CWA prohibits the discharge of dredged or fill
  material into waters of the United States unless a permit issued by the Army
  Corps of Engineers or approved State under CWA Section 404 authorizes such
  a discharge.

  When there is a proposed discharge, the impact of the discharge must be
  avoided and minimized  to the extent practicable. For unavoidable impacts,
  compensatory mitigation is required to replace the  loss of wetland functions in
  the watershed.  Compensatory mitigation is defined as, "the restoration, creation,
  enhancement, or in exceptional cases preservation of wetlands and/or other aquatic resources for the purpose
  of compensating for unavoidable impacts."
                    Source: Federal Guidance for the Establishment, Use and Operation of Mitigation Banks. 60 Fed. Reg. 228, 58605 58614. 1995
          Mitigation Sequencing Guidelines

   In 1990, the Environmental Protection Agency (EPA)
   and the Department of Army entered into a
   Memorandum of Agreement (MOA) to clarify the type
   and level of mitigation required under Section 404
   regulations. The agencies established a three-part
   process, known as mitigation sequencing to help guide
   mitigation decisions:
   1. Avoid - Adverse impacts are to be avoided and no
   discharge shall be permitted if there is a practicable
   alternative with less adverse impact.
   2. Minimize - If impacts cannot be avoided, appropriate
   and practicable steps to minimze adverse impacts must
   3. Compensate - Appropriate and practicable
   compensatory mitigation is required for unavoidable
   adverse impacts which remain.
  The American Crocodiles, a Federal Endangered Species,
  makes its home in the Everglades Mitigation Bank.
                         Methods of Compensatory Mitigation:

                             Proposed projects that will cause adverse impacts to wetlands and
                             other aquatic resources typically require some type of compensatory
                         mitigation. The Army Corps of Engineers (or approved state authority)
                         is responsible for determining the appropriate form and amount of
                         compensatory mitigation required. Some types of mitigation are wetland
                         establishment,  restoration, enhancement and protection/maintenance.

                          Establishment (Creation): The development of a wetland or other
                         aquatic resource through manipulation of the physical, chemical or
                         biological characteristics where a wetland did not previously exist.
                         Successful creation results in a net gain in wetland acres.

                          Restoration: Re-establishment or rehabililitation of a wetland or other
                         aquatic resouce with the  goal of returning natural or historic functions
                         and characteristics to a former or degraded wetland. Restoration  may
                         result in a gain in wetland function and/or wetland acres.

                          Enhancement: Activities conducted within existing wetlands that
                         heighten, intensify, or improve one or more wetland functions.
                         Enhancement is often undertaken for a specific purpose such as to
                         improve water quality, flood water rention or wildlife habitat.
                         Enhancement results in a change in wetland function(s), but does not
                         result in a gain in wetland acres.

                          Protection/Maintenance (Preservation): The protection of ecologically
                         important wetlands or other aquatic resources into perpetuity through
                         the implementation of appropriate legal and physical  mechanisms (i.e.
                         conservation easements, title transfers).  Preservation may include
                         protection of upland areas adjacent to wetlands  as necessary to ensure
                         protection and/or enhancement  of the aquatic ecosystem. Preservation
                         does not result in a net gain of wetland  acres and should only be  used in
                         exceptional  circumstances.

                        Source: US Army Corps of Engineers Regulatory Guidance Letter No. 02 2, December 24,

Mechanisms for Compensatory Mitigation:
Compensatory mitigation for unavoidable wetland impacts
can be located on or adjacent to the development site (on-
site mitigation) or when environmentally preferable can
be performed at another location (off-site mitigation).
Mitigation Banking and In-Lieu Fee Programs are
typically off-site mitigation, while  project-specific
mitigation can be located on-  or off-site.
   Project Specific Mitigation: Restoration, creation,
   enhancement and, in exceptional circumstances,
   preservation of wetlands undertaken by a permittee
   in order to compensate for wetland impacts
   resulting from a specific project. The permittee
   performs the mitigation after  the permit is issued
   and is ultimately responsible for implementation
   and success of the mitigation.
Mitigation Banking: A wetlands mitigation bank is a wetland
area that has been restored, created, enhanced or (in
exceptional circumstances) preserved, which is then set aside
to compensate for future conversions of wetlands for
development activities. The value  of a bank is determined by
quantifying the wetland  functions restored  or created in terms
of "credits." Permittees,  upon approval of  regulatory
agencies, can acquire these credits to meet  their requirements
for compensatory mitigation. The bank sponsor is ultimately
responsible for success of the project.

In-Lieu Fee Mitigation:  Mitigation that occurs where a
permittee provides funds to an in-lieu-fee sponsor, generally a
public agency or non-profit organization, instead of
completing project-specific mitigation or purchasing credits
from a mitigation bank.  The Fee Adminstrator is responsible
for the the success of the mitigation.
 Federal Wetlands Mitigation Policy Guidance
 Available at: www.epa.gov/owow/wetlands/guidance
   Memorandum Of Agreement Between The Department of the Army and The Environmental Protection
     Agency. 1990. Contains the policy and procedures to be used in determining the type and level of
     mitigation necessary to demonstrate compliance with the Section 404(b)(l) guidelines.
   Federal Guidance for the Establishment, Use and Operation of Mitigation Banks. Interagency guidance
     issued in 1995 to clarify the use of mitigation banks to compensate for authorized impacts to aquatic
   Federal Guidance on the Use ofln-Lieu-Fee Arrangements for Compensatory Mitigation under Section 404 of
     the Clean Water Act and Section 10 of the Rivers and Harbors Act. Interagency guidance issued in 2000 to
     clarify the agencies policy on the manner in which in-lieu-fee mitigation may be used to satisfy
     compensatory mitigation requirements.
   National Wetlands Mitigation Action Plan. Interagency guidance issued in 2002 to further achievement of
     the national goal of achieving no net loss of wetlands. Includes a series of actions to improve the
     ecological performance and results of wetlands compensatory mitigation under the Clean Water Act and
     related programs.
   Wetlands  Mitigation Regulatory Guidance Letter (RGL). Guidance to Corps field staff on Compensatory
     Mitigation Projects (issued in  2002). This RGL supports the national policy for  "no overall net loss"  of
     wetlands, clarifies mitigation requirements for authorized impacts to aquatic resources and reinforces the
     Corps commitment to protect waters of the United States.

 Recent Evaluations ofWetiands Compensatory Mitigation
   BANKS AND FEES: The Status of Off-Site Wetland Mitigation in the United States. 2002. Environmental
     Law Institute, Washington, B.C.  Available at www.eli.org
   Stakeholder Forum on Federal Wetlands Mitigation. 2001-2003. Environmental Law Institute, Washington,
     B.C. Available at www.eli.org
   National Academy of Sciences. Compensating for Wetland Losses  Under the Clean Water Act 2001. National
     Academy Press, Washington, B.C. Available at www.nap.edu
    Wetlands Protection: Assessments Needed to Determine Effectiveness ofln-Lieu-Fee Mitigation. 2001.
     General Accouting Office Report GAO-01-325. Available at www.gao.gov