Study Methodology and Summary Findings
Study Methodology
ELI identified existing and proposed wetland mitigation banks, umbrella banks, and in-lieu-fee programs using published and unpublished research, surveys, and interviews. Interviews were conducted with the 38 Corps district offices. These interviews were supplemented by discussions with state wetland managers in all 50 states, other relevant regulatory agencies, in-lieu-fee sponsors, and in a limited number of cases, bank sponsors. The list of approved and pending mitigation banks and umbrella banks was verified by state wetland regulatory programs and Corps districts in November and December 2001.
The majority of the information analyzed was based on banking instruments, bank permits, and in-lieu-fee agreements. Published and unpublished research, and interviews with key experts on wetland compensatory mitigation were also valuable sources. Relevant documents were obtained for all existing and proposed banks and on all approved in-lieu-fee programs.[1] In general, authorizing instruments or banking instruments were collected for each verified approved wetland mitigation bank and in-lieu-fee program. In some instances, additional information, such as permits, bank plans, financial information, and correspondence were collected. Federal, state, and local laws, regulations, and guidance related to mitigation banking and in-lieu fee programs across the country were also identified and collected.
Although this study collected and analyzed a large amount of information on wetland mitigation banking and in-lieu-fee mitigation, there are important aspects of these compensatory mitigation approaches that cannot be address by examining authorizing instruments on a national scale. In addition, although many of the conclusions do apply to mitigation banks and in-lieu-fee programs on the whole, they cannot necessarily be used to make assumptions about the relative success or failure of any individual bank or in-lieu-fee project.
The compiled data on wetland mitigation banks, umbrella banks, and in-lieu-fee programs are also available through the “Banks and Fees Databases,” ELI’s database with detailed information collected during the study searchable by a variety of criteria.
Summary Findings
Findings from this study provide a basis for establishing and implementing more effective and uniform standards for off-site compensatory wetland mitigation — in particular, wetland mitigation banking and in-lieu-fee mitigation. This study did not address on-site mitigation or permittee-responsible off-site mitigation. As such, the findings that follow do not address these forms of compensatory mitigation.
The preference for wetland mitigation banking and the timing of credit release
Wetland mitigation banking is defined as mitigation “in advance of development actions.”[2] Despite this definition, early credit release is a defining component of wetland mitigation banking. As many as 92 percent of the nation’s banks allow credits to be withdrawn from a mitigation bank in advance of bank maturity. On average, banks allow for the advance debiting of 66 percent of credits prior to attaining final performance criteria and 42 percent of credits prior to achieving any performance criteria.
Compensatory mitigation methods
The majority of wetland mitigation banks and in-lieu-fee mitigation projects employ multiple compensatory mitigation methods. Although restoration is a central component of banks and in-lieu-fee mitigation, enhancement, creation, and preservation are equally prevalent. In practice, preservation is common and is not being treated as a mitigation method to be used only in “exceptional circumstances.” Of the 143 mitigation banks that provide information on the wetland mitigation methods employed, 62 percent conduct restoration activities, 65 percent conduct enhancement activities, 45 percent conduct creation activities, and 44 percent conduct preservation activities. At least five banks provide credits through preservation alone. Of the 60 active in-lieu-fee programs with available documentation on mitigation methods, 95 percent allow restoration, 62 percent allow creation, 75 percent allow enhancement, and 88 percent allow preservation.
Public access and transparency
To date, with the exception of a few Corps districts and states that provide banking instruments and other documentation on their web sites, the public has very little access to information on banking, in-lieu-fee mitigation, and other forms of compensatory mitigation.[3]
Although banking instruments routinely indicate that the wetland classification system developed by Cowardin (1979) will be used to define wetland type, they often fail to do so. Descriptions of wetland types in banking instruments are generally not uniform and are often inadequate.
There is considerable variation among authorizing instruments for mitigation banks, umbrella banks, and in-lieu-fee programs. This inconsistency inhibits the ability of the public and regulatory agencies to compare banks or programs and to evaluate whether the necessary components are included in the agreements.
Credit systems to encourage no net loss
Many wetland mitigation banks and in-lieu-fee programs employ creation, a mitigation method with a lower rate of success, and preservation, which does not contribute to the national no net loss goal. In addition, the vast majority of banks with upland acreage assign credits to these areas. Of the 90 banking instruments that indicate that uplands are present on the mitigation site, 99 percent include the acreage in the valuation of bank credits.
Banking instruments often require higher mitigation ratios for upland acreage and for certain wetland types or mitigation methods. Higher mitigation ratios may also be assigned when the impacted wetland is of “high quality,” to reflect the magnitude of the impact, or for impacts that result in greater temporal loss of wetland functions. However, the practice of “tailoring” mitigation ratios to better meet the no net loss goal is inconsistent and often insufficient to accommodate higher mitigation failure risks and the replacement of lost wetlands with non-wetland acreage.
Financial assurances
Few in-lieu-fee programs require the posting of financial assurances prior to the collection of fees. Although the majority of today’s mitigation banks have financial assurances for bank establishment, oversight, and bank closure, banks established by government agencies require few, if any, such assurances.
Performance standards
Almost a third of the authorizing instruments for in-lieu-fee programs and over a third of the instruments for wetland mitigation banks fail to specify required performance standards. Despite the importance of wetland hydrology, only a little over half of the banks with performance standards incorporate hydrologic criteria and very few include standards for water quality, soils, wildlife habitat, or other criteria, while 95 percent of all banks with performance standards include vegetative standards.
Functional assessment of wetlands
Although wetland experts have professed the advantages of using functional assessment techniques to evaluate lost wetland functions and define the number of mitigation credits available at a bank or the amount of mitigation necessary under an in-lieu-fee program, these approaches are used infrequently. Sixty-one percent of all banks define credits by acreage and about 23 percent of all banks have established a combined approach, which relies upon best professional judgment to scale wetland acreage according to some value of functionality.
Design standards
Although 30 percent of all banks have adopted some form of design standards, no consensus exists for the type and range of information used to evaluate effective mitigation site design and construction.
Enforcement, remedial action, and contingency plans
Enforcement actions for failed wetland mitigation banks were not found to be any more common or stringent than for other types of compensatory mitigation, for which enforcement has been poor. Seventy-three percent of all banks have some form of contingency plans in the event of bank failure. However, the plans are inconsistent and often include only minimal information. Only 31 percent of the banks with contingency plans specify potential enforcement mechanisms. Seven in-lieu-fee programs do not provide any information on which party has legal responsibility for meeting mitigation obligations when the funds are collected. Half of the active in-lieu-fee program agreements are silent as to whether the sponsor has legal responsibility for completing the mitigation.
Monitoring and long-term management
Today, most wetland banking instruments include some reference to monitoring and maintenance provisions, although 14 percent do not. Of those banks with monitoring provisions, no bank is monitored for less than three years and 97 percent of the banks require monitoring for five years or more. Only 22 banks indicate that the length of the monitoring period is based on the final achievement of performance criteria.
Monitoring for in-lieu-fee mitigation is not required in the majority of the existing programs. Several in-lieu-fee programs do not require mitigation sites to be protected in perpetuity and only 76 percent of all mitigation banks indicate how the land will be protected.
Geographic service areas
Twenty-six percent of the active in-lieu-fee programs, including over half of the state-sponsored programs, do not have mandated delineated geographic service areas. While ninety-six percent of all mitigation banking instruments include information on service areas, virtually all banking instruments indicate that the bank may be debited outside of the service area on a case-by-case basis. These out-of-service-area trades are not adequately tracked by the regulatory agencies.
The watershed approach and site selection
Despite the support of watershed planning by both the scientific community and regulatory agencies, less than one percent of all banking instruments specifically reference consistency with a watershed management plan. Only two states — Michigan and North Carolina — explicitly require in their banking statutes or regulations that mitigation sites be planned in a watershed context. Few in-lieu-fee programs are guided by a formal watershed plan.
Detailed siting criteria are generally not outlined in the majority of mitigation banking instruments and only ten states have statutes, regulations, or guidelines that outline bank siting criteria.
In-lieu-fee mitigation
Tracking data on in-lieu-fee funds is unavailable or incomplete for 45 percent of the nation’s in-lieu-fee programs. Most of the programs that do not maintain complete records are administered by the Corps. Twenty-six percent of the active in-lieu-fee programs do not have mandated delineated geographic service areas. Only 22 percent of all in-lieu-fee program agreements specify the procedure or plan that the sponsor must establish and follow to select mitigation sites.
Only eight in-lieu-fee programs specify that they only provide in-kind mitigation. Sixty-five percent of the in-lieu-fee programs do not require that the collected funds be spent in a specific time frame. Nine in-lieu-fee programs verified that they have used collected funds for activities other than mitigation. In-lieu-fee programs currently fail to adequately document funds received, impacts permitted, how funds are spent, types of projects funded, and the status of projects conducted, making it difficult for the public and regulatory agencies to monitor the effectiveness of these programs.
Umbrella mitigation bank agreements
Although the Corps’ oversight role of umbrella mitigation banks appears, on the whole, adequate, in certain states the Corps provides very little oversight.
Gray-area and ad hoc mitigation
Gray-area mitigation, or off-site mitigation other than mitigation banking, in-lieu-fee mitigation, or permittee-responsible off-site mitigation, is commonplace. Sixty percent of the Corps districts and 59 percent of the state regulatory agencies indicate that they have utilized this method of compensatory mitigation. Forty-two percent of the Corps districts have accepted ad hoc in-lieu fees and 32 percent of the states reported that ad-hoc fees had been accepted in their states. In the vast majority of these districts and states, no records have been maintained to document these in-lieu-fee transactions.
Last updated July 2002.
[1] Authorizing instruments were not available for the following banks: Cheval Tournament Players Club, FL; Hillsborough County Utilities Department Mitigation Bank, FL; Northlakes Park Mitigation Bank, FL; Polk Parkway Bank, FL; Polk Regional Drainage Project Bank, FL; Southeast Mitigation Bank, FL; Turner Citrus, Inc., FL; Marion I Sustainable Mitigation Project, FL; Winfield Creek Mitigation Bank (DuPage County), IL; Downers Grove Mitigation Bank (DuPage County), IL; North Glen Ellyn Mitigation Bank (DuPage County), IL; Knollwood Mitigation Bank (DuPage County), IL. Cornerstone Mitigation Bank (DuPage County), IL. Authorizing instruments were not available for the following in-lieu-fee programs: Louisville and Jefferson County Metropolitan Sewer District, Kentucky; Northern Kentucky University, Kentucky; the 27 programs administered by the Buffalo Corps district; Ducks Unlimited, ID.
[2] Federal Guidance for the Establishment, Use and Operation of Mitigation Banks. 60 Fed. Reg. 228, 58605-58614. 1995. Emphasis added.
[3] Only seven Corps districts provide information on the approved mitigation banks in their jurisdictions:Â Charleston, Chicago, Galveston, New Orleans (minimal), Portland, St. Louis, and Wilmington.
Cite: Environmental Law Institute. 2002. “Banks and Fees: The Status of Off-Site Wetland Mitigation In the United States” Washington, DC: Environmental Law Institute. <www2.eli.org/wmb>. July 2002.
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