American Geological Institute

Government Affairs Program


Wetlands Restoration and Improvement Act Update (12-9-98)

The House Subcommittee on Water Resources and Environment approved the Wetlands Restoration and Improvement Act (H.R. 1290) on June 4th, 1998. This bill, sponsored by Rep. Walter Jones (R-NC), would amend Section 404 of the Water Quality Act of 1987, a reauthorization of the Federal Water Pollution Control Act of 1972, more commonly known as the Clean Water Act. The purpose of H.R. 1290 is to "promote the restoration, conservation, and enhancement of wetlands through the establishment of a responsible wetlands mitigation banking program." The bill focuses on the establishment of mitigation banking statutes. Mitigation banking is a market-based arrangement where the construction or restoration of wetlands compensates for "unavoidable" impacts to other wetlands. This bill was put forth as a means to "prevent and reverse the continued net loss of wetlands while accommodating desirable economic and community growth". Although the bill did not make it out of committee during the 105th Congress, it will probably serve as a starting point for legislation in the next Congress. This update provides background on the issue of mitigation banking as well as a summary of the subcommittee markup session at which the bill was approved.

Issues surrounding wetlands can be contentious and are central to the delay in Clean Water Act reauthorization. Many of the grants included in the 1987 Clean Water Act reauthorization were phased out by 1990. Over the past eight years, Congress has appropriated funds towards accomplishing goals outlined in the CWA, however specific dollar amounts are no longer mandated and allocation is at the discretion of Congress. A summary of other Clean Water Act issues is available on the AGI website at www.agiweb.org/legis105/cwupdate.html.

H.R. 1290 was first referred to the House Committee on Transportation and Infrastructure on April 10, 1997 as a measure to allow for "eco-safe development". Introducing this bill, Rep. Jones stated that this measure will provide practical rules and guidelines to foster the security of mitigation banking charters. Mitigation banking is a means for development on wetlands while keeping in line with the no-net-loss policy proposed during the National Wetlands Policy Forum in 1988 and instituted in 1989, at the beginning of President George Bush's term in office. This policy does not propose a halt to development on wetlands. Instead, it promotes the pursuit of compensation efforts, such as mitigation banking, to offset wetlands destroyed. Unlike other bills proposed during this Congress (e.g. H.R. 2762), H.R. 1290 does not address the definition of wetlands, which landowners and developers often feel is too constrictive. This bill currently has 9 cosponsors: Rep. Richard Burr (R-NC), Rep. Bob Clement (D-TN), Rep. Vernon Ehlers (R-MI), Rep. Wayne Gilcrest (R-MD), Rep. J.D. Hayworth (R-AZ), Rep. Chris John (D-LA), Rep. Mike Parker (R-MI), Rep. Jim Saxton (R-NJ), and Rep. Billy Tauzin (R-LA). Despite the fact that the bill's sponsors are either Republicans or conservative Democrats, mitigation banking is not exclusively a conservative issue. The concept of wetlands mitigation banking was endorsed by the Clinton administration's 1993 Wetlands Plan. Senators Kit Bond (R-MO) and John Breaux (D-LA) circulated a draft Wetlands Protection Act concerning mitigation banking and streamlining of its regulations, but did not introduce a bill.

Administration Initiative
On October 18th, 1997, Vice-President Al Gore announced the Clean Water Initiative that includes the goal of having a net gain of 100,000 wetland acres per year starting in 2005. The Administration has proposed $568 million in their FY1999 budget to accomplish objectives defined in their Clean Water Action Plan. More specifically, interagency projects concerning the Florida Everglades and California Bay-Delta ecosystem would receive an additional $58 million and $54 million, respectively. The Army Corps of Engineers' wetlands program would have $11 million added to its budget, while the EPA's state grant assistance for wetlands protection would have no net change. The methods proposed to protect and ameliorate wetlands include improving federal restoration programs and expanding restoration incentives to landowners.

Appropriations Action
The House VA, HUD, and Independent Agencies Appropriation Subcommittee has earmarked an additional $59 million over last year's budget for the EPA. The corresponding Senate bill, S. 2168, was marked up on June 11th, 1998. Despite falling short of the President's request by $367 million, they are fully funding the President's Clean Water Initiative. Funds for the Army Corps of Engineers come from Energy and Water Development Appropriations subcommittees in the House and Senate. The Senate subcommittee recommended funding greater than the FY'98 budget but less than the President's FY'99 request. The Senate then passed their appropriations bill (S. 2138) on June 18th, 1998. The House passed the Energy and Water Development appropriations bill (H.R. 4060 ) on June 22nd, 1998. More information on final FY99 appropriations can be found on the AGI website.

Potential Benefits of H.R. 1290
In remarks on the House floor, Rep. Jones argued that codifying wetlands statutes within Section 404 will help mitigation banks overcome any reluctance to take on projects stemming from fears of legal uncertainty. The mitigation bank is an entity that creates or restores wetlands. After acquiring a permit to develop on wetlands, landowners pay the mitigation bank for creating the wetlands that compensate for the wetlands being destroyed. This is somewhat similar to the concept of emissions trading. In 1992, there were 40 mitigation banks in existence. Nearly all of them were directly sponsored by the users of the bank (developers) and did not offer credits on the open market. The establishment of H.R. 1290 may make the atmosphere of opening "commercial" or entrepreneurial banks more favorable. This bill would give farmers, landowners, and developers more options in the use of their land because mitigation banking could become a viable and economically feasible option. With prior establishment of mitigation banks, the wetlands created may already be functional before the project site is impacted. Through permitting requirements, more wetland acreage may be created than is actually being destroyed. The time needed to review permit applications may also be reduced. Finally, consolidation of "postage stamp"-sized remediation efforts may have a constructive effect on the environment. H.R. 1290 is supported by the National Wetlands Coalition, a group from the petroleum and mining industries, utilities, developers, and mitigation banks.

Potential Detriments of H.R. 1290
Studies report that mitigation projects often fail to follow scientific (namely hydrologic) design, leading to a loss of effectiveness. Because it may take ten years for a site to become fully functional, mitigation credits might be withdrawn before true functionality is attained. Cases have been cited where mitigation credits were withdrawn before the bank (meaning wetlands) was functional. Development proceeded, and the mitigation bank failed. The result was a net loss of wetlands. Net loss within a particular area may result when the location of the mitigation bank is far removed and outside of the impacted site's watershed. Because the restoration of existing wetlands is sometimes acceptable towards mitigation bank credits, the withdrawal of those credits for development purposes would result in a net loss of acreage.

The joint policy of the EPA and the Corps of Engineers regards mitigation as the least environmentally desirable option when developing on wetlands. Their policy states that a permit applicant must take all proper and feasible steps to first avoid and then minimize adverse impact to wetlands. This is the established sequence that must be followed before a permit may be granted to allow for the third option-compensation. In FY97, only 0.2% of permit requests were denied. The compensation involves a developer paying the mitigation bank for wetlands "credits". The wetlands created by the mitigation banks "compensate" for those destroyed by the developer. The National Resources Defense Council (NRDC) believes that codifying the third option of this sequence (mitigation/compensation) without the first two in this succession (avoidance and minimization) may result in an undue favoring of the option with statutes over the more environmentally sound alternatives. The ease of mitigation banking may result in it being a more economically desirable option than the environmentally preferred avoidance or minimization of impact. The bill also states a preference for using mitigation banking for projects of less than 35 acres, which would also favor mitigation over the established sequence of avoidance, minimization, and mitigation. A number of these issues are addressed in a non-binding memorandum of agreement between the EPA and the Army Corps of Engineers.

The NRDC has voiced concerns about this bill to the EPA. The group states that over 100,000 acres of American wetlands are being destroyed each year despite policy measures being in place to protect wetlands. They believe that H.R. 1290 lacks oversight of the ecological success of the created wetlands, allows for the compensatory wetlands to be far removed for those destroyed, permits credits to be sold before wetlands are created, exempts existing mitigation banks from new compliance safeguards, lessens agency oversight, and is vulnerable to abuse due to loose definitions of terms.

Effect on Geoscientists
If Rep. Jones' prediction is correct, having a codified statute will increase the growth of mitigation banking. Therefore, environmental consulting firms contracted by mitigation banks could see an increase of work in this field. Some mitigation banks are operated by state departments of transportation, port authorities, and federal agencies, so there may also be a concentration of work in those offices. Because there is a call for more science to be utilized in mitigation bank planning, grant money may be designated for efficacy studies if the need is emphasized. The Administration's Clean Water Initiative supports partnerships to achieve the outlined goals. One example of this is the EPA's Proposal Marketplace, where one can submit a project for funding by the agency. Earth science teachers could propose a project/learning activity for a group of classes concerning wetlands and have the EPA fund it.

Water Resources and Environment Subcommittee Markup Session (6-4-98)
The subcommittee chairman, Rep. Sherwood Boehlert (R-NY), made opening comments concerning bipartisan support for H.R. 1290. He stated that it would codify policy promoted by the Clinton administration and add accountability to mitigation banking practices. The no-net-loss policy mentioned earlier would become part of the Clean Water Act and consequently proceed from policy to law. Rep. Robert Borski (D-PA), the ranking member of the subcommittee, believes that legislation addressing wetlands should include the Tulloch rule. This rule supports the Army Corps of Engineers' and EPA's regulation of earth-moving activities on wetlands such as excavation, draining, or clearing. However, Section 404 of the Clean Water Act only gives authorization to regulate activities that would result in the filling of wetlands. This Tulloch rule was challenged in a federal district court and struck down on January 23rd, 1997 and upheld by the U.S. Court of Appeals on June 19th, 1998. In addition to Rep. Borski, Rep. Oberstar (D-MN) would also want to include this rule within H.R. 1290. As the ranking member of the Committee on Transportation and Infrastructure, Rep. Oberstar announced his intentions to bring up the Tulloch rule at the meeting of the full committee. He also plans on questioning the failure of banks, the definition of service area size, and the role of citizens in the mitigation banking process.

Although supportive of the Tulloch Rule, Rep. Boehlert believes that it would too narrowly define the bill. Rep. Gilcrest (R-MD) supports this bill as a cosponsor, but both he and Rep. Baker (R-LA) have concerns about property rights. The bill, as is, will likely be passed by the full committee if not encumbered by many amendments addressing some of the Democrat's environmental concerns.

Another issue discussed surrounding H.R. 1290 was the "sequencing process". Rep. Borski introduced an amendment to add wording to the bill requiring a permit applicant to first avoid impact of the wetlands and then minimize damage before resorting to compensating for the damage through mitigation banking. He feels that the first two options should be codified if the third one, mitigation banking, is to be codified by H.R. 1290. This amendment was defeated by a 12 to 16 vote. Due to technicalities, the subcommittee voted again. For the second vote, the Borski amendment was defeated 14 yeas to 19 nays. While some of the amendment's opposition support sequencing itself, many felt that sequencing was already in effect through agency policy, and codification should be saved for a more comprehensive Clean Water Act reauthorization bill. The sentiments against including sequencing in this bill are shared by the National Wetlands Coalition as reflected in a letter to subcommittee chairman Boehlert.

An amendment was proposed by Rep. Robert Menendez (D-NJ) to hold the Secretary of the Army accountable to mitigation bank charters by allowing citizens to sue the Secretary. It was defeated. Rep. Ellen Tauscher (D-CA) proposed an amendment to define the word "service area" to make sure that the wetlands created to replace destroyed ones were within the same watershed. This was also defeated. The one amendment to pass was introduced by Rep. Earl Blumenauer (D-OR) that clarified the preference for in-kind compensation. It would promote the exchange of similar types of wetlands (i.e. peat bog for peat bog) rather than out-of-kind replacements (i.e. marsh for peat bog). The Blumenauer amendment passed 24-8. In the end, the subcommittee voted to pass H.R. 1290, the Wetlands Restoration and Improvement Act, 24-10. The next step will be consideration by the full committee on Transportation and Infrastructure.

Resources and Related Links
CRS report "Wetland Mitigation Banking: Status and Prospects" on the CNIE website
Molnia, Bruce F., 1998. GSA Today. April 1998, p.10-14.
EPA's Office of Wetlands, Oceans, and Watersheds
Thomas website
"Watersheds"
AGI GAP update on the Clean Water Act
1998 Energy and Environment Issues Guidebook (EESI)
Markup hearing transcripts
EPA/COE memorandum of understanding
CSU Applied Resource Economics and Policy Group
National Resources Defense Council
National Wetlands Coalition


Please send any comments or requests for information to the AGI Government Affairs Program.

Contributed by Joy Roth, AGI Government Affairs Intern
Last updated July 21, 1998; Revised December 9, 1998


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