Corps of Engineers and EPA Release New Rule on Wetlands Mitigation

The U.S. Army Corps of Engineers ("Corps") and the U.S. Environmental Protection Agency ("U.S. EPA") just released a new rule covering wetlands mitigation in situations where a permit to fill in federally protected wetlands is required. Wetlands mitigation is ordinarily required as part of obtaining a permit for impacting a covered wetland. Generally, mitigation can be accomplished by three mechanisms:

• Compensatory mitigation (accomplished by permittee)
• Mitigation banks
• In-lieu fee programs

Permittee responsible compensatory mitigation is more frequently used and typically entails the permittee being responsible for creating and monitoring on-site (or off-site) wetlands. Mitigation banks typically consist of a third party owned wetland, portions of which can be "purchased" by the permittee. In-lieu fee programs typically consist of third party entities approved by governmental agencies to accept a fee to conduct activities such as wetland resource restoration, creation, or preservation activities.

The new rule streamlines existing regulations and provides more detailed guidance on how to conduct all of the mitigation activities above. It condenses into one set of comprehensive regulations the standards for compensatory mitigation that were previously outlined in separate guidance documents. More specifically, the rule sets forth 12 fundamental components that must apply to all of the mitigation mechanisms. The rule also establishes preferred options for mitigation in the following order: mitigation bank credits, in-lieu fee program credits, and permittee-responsible mitigation as the third option. The rule encourages mitigation banking and in-lieu fee programs in part because they are more likely to have less risk and uncertainty than permittee responsible mitigation projects.

The final rule goes into effect 60 days following the publication in the Federal Register. According to the rule, applications submitted prior to that date will not be subject to this rule unless the regulating agency determines unique circumstances warrant such application.

The Corps and U.S. EPA regulate the discharge of dredged or fill material into waters of the United States. The Indiana Department of Environmental Management ("IDEM") implements the Section 401 Water Quality Certification Program, which also applies to filling federally protected wetlands. Each requires permitting prior to impact. Mitigation in one of the forms described above is typically required as part of Corps and Section 401 permitting. Mitigation also may be required by IDEM if wetlands protected only by state law are impacted. However, at present, IDEM's mitigation requirements for impacts only to small state-protected wetlands are not currently subject to the new rule.