Part 1 of 3: Five Tips for Successfully Navigating Compensatory Mitigation

How to Keep your Project on Track when Mitigation is Required

Is there a stream, wetland, or other aquatic resource (e.g. pond) on your project site? You’ll need to do some proactive legwork if you suspect your project will impact water resources regulated by the US Army Corps of Engineers (Corps) or waters of the state which are regulated by state regulatory agencies.  Definitions of those waters are on the Corps’, US Environmental Protection Agency’s (EPA), or state regulatory agencies’ websites.

1.  Identify Your Water Resources

Proactive legwork may involve obtaining a third-party survey of the property’s aquatic resources.  The type of assessment needed will depend on your property’s aquatic resources – from a wetland delineation or stream determination to a functional assessment, or rare/threatened/endangered species survey.  In many cases a resource survey is the first requirement regulators will ask for when applying for permits (such as a stormwater discharge permit or site grading plan).

2.  Adjust Your Project Plan to Avoid and Minimize Impact

If regulated waters are at stake, you’ll be asked if you can avoid and/or reduce adverse impacts to those resources.  Engage your consultant to develop a plan to reduce your project’s impact on sensitive resources at your site, a develop a plan that meets regulatory requirements, and keeps your project moving forward.

3.  Know Your Mitigation Options

What happens when your efforts to avoid and reduce adverse impacts isn’t enough?  What do you do when impacts are unavoidable and above regulatory thresholds?  The Corps (and/or state agency) will require a third step called Compensatory Mitigation, which means you will have to compensate for the form and amount of impact the Corps or other regulatory agency determines your project will make. You’re now responsible for a “restoration, establishment, and/or enhancement” project in the affected watershed comparable to your project’s impact.

You have three options when it comes to how to fulfill your compensatory mitigation requirement. And those options follow a preferential hierarchy set in the Corps’ 2008 Final Compensatory Mitigation Rule.

First Choice:  Purchase Mitigation Bank credits available and released for mitigation projects already in the ground, implemented by a private-sector bank sponsor in your watershed. The Corps’ Regulatory In-lieu fee & Bank Information Tracking System (RIBITS) is a web-based repository of information on mitigation and conservation banking activities.

Second Choice:  Purchase In-Lieu-Fee credits from a governmental or non-profit entity who holds the payment in an interest-generating trust fund and uses collected payments to complete future mitigation projects in your watershed.  Many states have wetland in-lieu fee programs in place (some have more than one).  In Tennessee, for example, the Tennessee Mitigation Fund is the only in-lieu fee wetland program for the state.  RIBITS has information about approved in-lieu fee programs in the country.

Third Choice:  Undertake Permittee-Responsible Mitigation (PRM) yourself by restoring or enhancing a wetland or stream on- or off-site in your watershed.

You might prefer one mitigation mechanism over another, but the Corps and state regulators will determine which option you must use, based on numerous site-specific conditions, such as:

• Which watershed your project is in, based on the 8-digit Hydrologic Unit Code (HUC) of your watershed.
• Whether your aquatic resource is designated as an Outstanding National Resource Water, Exceptional State Water, or an impaired water.
• Where the mitigation actions must occur. (Regulators prefer that mitigation occur as close to the point of impact as possible.)
• When the mitigation actions must occur (what actions are required before the permittee can proceed with the project).
• Whether a mitigation bank or in-lieu fee program has credits available in your project’s watershed.
• What ecological performance standards, monitoring, reporting, stewardship, and long-term management are required (for permittee-responsible projects).

4.  Negotiate Based on the Your Situation

The Corps’ determination isn’t always “cut and dry.”  There may be room for negotiation with the Corps and other regulators to determine the amount of mitigation needed and your preferred mitigation mechanism.  The amount of mitigation required should be based on the quality of each affected resource, not just the amount of that resource affected by the project.  For example, mitigation for impacts to a low-quality wetland should not be the same as for a high-quality wetland.  A third-party expert can help you conduct the condition assessments needed to help with this type of negotiation.

There may be situations where you need to negotiate a combination of mitigation mechanisms, such as situations in which banks don’t have enough credits available for your project. You may find you need to purchase a combination of credits from a bank, in-lieu fee program, and/or perform some form of permittee-responsible mitigation.  If you purchase credits from an out-of-watershed-area bank, regulators may require the purchase of additional credits to make up for the geographic distance.  Additional mitigation requirements may apply if the affected resource is designated as an Outstanding National Resource Water, an Exceptional State Water, or an impaired water.  For example, in this type of situation in Tennessee, the state will require mitigation to occur within the same subwatershed where the impact will occur (usually based on the 12-digit HUC).

Keep in mind that various local, municipal, and state regulatory agencies may have requirements that differ from the Corps.  In other words, your project may not require Corps permitting but may require a state, county, or city permit (i.e. for a variance), or vice versa. Knowing which end of the train to start at will save time and money in the negotiation process – which leads to the last tip:

5.  Start at the Right End of the Train

It’s generally best to start at the federal level.  First, get required permitting at the Corps and state levels. Once you have these permits in hand, or proof from those regulatory agencies that permitting isn’t required, you’ll have more success standing before a municipal board to request local permits or approvals. When you start at the local level, oftentimes you may be told that absolutely no impact is acceptable, and you might have to go back to the drawing board.  They won’t necessarily offer this information when rejecting your request, but it’s helpful to know that local regulating agencies are much more inclined to issue permits when federal and state permits are already in place.

Should you purchase credits from a mitigation bank or in-lieu fee program? Read Part 2 on the top four purchasing benefits. Or Part 3 on what to do if permittee-responsible mitigation is your only route. Or connect with us to learn more.