American Geological Institute

Government Affairs Program

Mitigation Banking and the Clean Water Act (10/98)

The following column by GAP Intern Joy Roth is reprinted from the October 1998 issue of The Professional Geologist, a publication of the American Institute of Professional Geologists. It is reprinted with permission.

New wetlands legislation making its way through Congress has the potential to redirect the focus of wetlands "protection" efforts. According to Section 404 of the Clean Water Act, the U.S. Army Corps of Engineers and the Environmental Protection Agency (EPA) are given the authority to regulate the "discharge of dredged and fill material" into "navigable waters." Since that law was established in 1972, the Corps and the EPA have required that wetland damage due to development should be avoided, lessened, or compensated in descending order of preference. If passed, the Wetlands Restoration and Improvement Act (H.R.1290), introduced in April 1997 by Rep. Walter Jones (R-NC), will amend the Clean Water Act to address the last of those regulation options: compensation. This bill is centered around the concept of mitigation banks, which are commercial enterprises that create wetlands. A developer wishing to build on wetlands may purchase wetlands "credits" from a mitigation bank, which (ideally) already has created the wetland acreage to compensate for those being developed. 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.

Jones predicts that having a codified statute will increase the growth of mitigation banking by providing the statutory platform that business interest feel is necessary before entering into ventures. In 1992, there were 40 mitigation banks in existence. Nearly all of them were directly sponsored by the users of the bank and did not offer wetlands credits on the open market. Most of these were operated by port authorities, state departments of transportation, and federal agencies. Today, approximately 100 mitigation banks are either operating or proposed, and the first entrepreneurial or "commercial" banks have opened. If the Jones bill passes, a subsequent increase of mitigation banks could lead to more work for environmental consulting firms in the area of wetlands creation.

The Administration is supportive of mitigation banking as a concept but may oppose specific legislation. In October of 1997, Vice President Al Gore announced the Administration's Clean Water Initiative, which includes the goal of having a net gain of 100,000 acres of wetland per year starting in 2005. If passed, H.R.1290 will for the first time establish the national goal of "no-net-loss of wetlands" into the Clean Water Act, advancing it from policy to law. H.R.1290 could then be a vehicle to increase wetland acreage. Although the Administration has not officially submitted a position on this bill, Democratic staff members on the Hill believe that the Administration will join many congressional Democrats in opposing the bill as currently worded.

H.R. 1290 passed the Committee on Transportation and Infrastructure's subcommittee on Water Resources and Environment by a 24-10 vote on June 4, 1998. If the full committee convenes to discuss it, controversy will likely arise when the minority committee members continue to voice opposition to certain provisions. Democrats are concerned that the bill lacks oversight of the ecological success of the created wetlands, allows for the compensatory wetlands to be far removed from those destroyed, permits credits to be sold before wetlands are created, exempts existing mitigation banks from new compliance safeguards, lessens EPA oversight, and is vulnerable to abuse due to loose definition of terms.

Sticking Points
A principle concern of bill opponents is that it will re-arrange the "sequencing process" established by the EPA and Corps to guide regulations concerning wetlands impact. The current policy states that a permit applicant must take all proper and feasible steps to first avoid and then minimize adverse impact to wetlands. The potential for these efforts must be addressed before a permit may be granted to allow for compensation, the third option in the sequence. Because H.R.1290 only specifies mitigation banking and would not codify avoidance or minimization of impact, environmentalists are concerned that this bill would result in an undue favoring of compensation, which they see as the least environmentally sound option.

A construct called the "Tulloch Rule" could also be a sticking point with the potential to keep the bill from passing through Congress. Despite the wording of Section 404 which calls for regulation of "discharge of dredged and fill materials," the EPA and the Corps interpreted it to include earth-moving activities such as draining, excavating, and clearing. The agencies acted under this "Tulloch Rule" until 1997 when a federal district court invalidated the regulation and the U.S. Court of Appeals upheld the decision. The ranking minority members of both the Water Resources and Environment subcommittee and full Transportation committee contend that any wetlands legislation should contain language to mandate the "Tulloch Rule," which would result in the expansion of EPA and Corps oversight authority to the above-mentioned activities.

Other Legislation
Mitigation banking is written into other legislation introduced this Congress. The Wetlands and Watershed Management Act (H.R.2762) sponsored by Rep. Wayne Gilchrest (R-MD) includes a section on mitigation banks and addresses many of the concerns raised by the minority. In addition to codifying mitigation banking that could also lead to more work for environmental consulting firms, Gilchrest's bill calls for wetlands research to be carried out at the federal, state, and local levels. The bill, however, has not made it out of subcommittee. Considering the limited time remaining for the 105th Congress, chances are that neither bill will pass by the end of this session. Pending re-election, look for both Jones and Gilchrest to reintroduce their bills in January at the start of the 106th Congress.

Although these bills may be stagnant, the concept of mitigation banking has already received support in enacted legislation in this Congress. Section 1108 of the Transportation and Equity Act for the 21st Century (TEA-21), the massive highway bill passed in June, requires the use of a mitigation bank to compensate for a project's impact to wetlands if there is a mitigation bank within the service area. The inclusion of this provision in a law authorizing approximately $4 billion annually perhaps signals that mitigation banking, exclusive of specific wetlands legislation, will increasingly be exercised as an option for developing on wetlands.


Joy Roth completed an M.S. in geology from Rice University in Houston this fall and is now employed at Texaco in New Orleans.

This article is reprinted with permission from The Professional Geologist, published by the American Institute of Professional Geologists. AGI gratefully acknowledges that permission.

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

Posted November 30, 1998

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