CWA In-Lieu Fee Mitigation: Project and Programmatic Risks

• Date: 01 June 2019
• Author: Royal C. Gardner, Erin Okuno, Rebecca Kihslinger, and Christina Libre

49 ELR 10538 ENVIRONMENTAL LAW REPORTER 6-2019

In 2008, after prompting by the U.S. Congress,1 the

U.S. Environmental Protection Agency (EPA) and the

U.S. Army Corps of Engineers (the Corps) issued a

regulation governing compensatory mitigation under the

Clean Water Act (CWA).2 e agencies’ primary goa l was

to improve the eectiveness of mitigation projects to o-

set the impacts of lling wetlands and streams.3 e 2008

Compensatory Mitigation Rule was also designed to level

the playing eld for the three ty pes of mitigation providers:

mitigation banks, in-lieu fee (ILF) programs, and permit-

tee-responsible mitigation.4

After a decade of experience with this regulation, it is

appropriate to reect on its implementation. Although

much has been written about mitigation banks, less

attention (in the literature at least) has been paid to ILF

programs and permittee-responsible mitigation.5 is

Comment focuses on ILF programs.

1. National Defense Authorization Act for Fiscal Year 2004, Pub. L. No. 108-

136, §314, 117 Stat. 1392, 1430-31 (2003).

2. Final Rule: Compensatory Mitigation for Losses of Aquatic Resources, 73

Fed. Reg. 19594 (Apr. 10, 2008).

3. Id.

4. Id.

5. For example, a Google Scholar search using terms related to “mitigation

bank” in the title since 2009 yields more than 50 relevant results, while a

similar search using terms related to “in-lieu fee” provides only nine relevant

results. Perhaps, this is to be expected, in light of the 2008 Compensa-

tory Mitigation Rule’s expressed preference for mitigation bank credits and

the corresponding increase in the use of mitigation bank credits, which

accounted for approximately 60% in 2017. See Palmer Hough & Rachel

Harrington, Ten Years of the Compensatory Mitigation Rule: Reections on

Progress and Opportunities, 49 ELR 10018, 10025 (Jan. 2019). Of course,

since the 2008 Compensatory Mitigation Rule was promulgated, there have

been some reports and articles that have focused primarily on ILF mitiga-

A key point of the 2008 regulation is that it attempts to

reduce risks to ensure that ILF mitigation (as well as other

mitigation types) is provided in an eective, sustainable

manner on a watershed basis. Challenge s abound: Will the

mitigation project be done in a timely fashion, to reduce

or eliminate the lag time bet ween ecological impacts and

osets? Once the mitigation project is carried out, does

the site have sucient protections—including a source of

funding—for long-term stewardship? What happens to

mitigation sites if the entity operating the ILF program

fades away (e.g., goes bankrupt)?6 e regulation seeks to

minimize the risks associated with such events where, to

state it simply, something is missing (the mitigation, the

money, or the administrator).

Another broader risk is the regulatory driver underlying

the entire CWA mitigation program. ere is the risk that

a large portion of the Corps’ regulatory program will be

eliminated, as contemplated by President Donald Trump’s

Executive Order7 and EPA and the Corps’ subsequent pro-

posed rule to signicantly reduce the number of wetlands

and streams aorded CWA protection.8 If the “waters of

the United States” replacement rule is promulgated in

substantially its present form, what would be the impli-

cations for existing ILF mitigation sites? What would be

the implications regarding ILF program obligations (e.g.,

advance credits)? And what would be the implications for

the future administration of ILF programs if the federal

tion, including J B. W, I-L F M: M

I L  R (2009); Rebecca Kihslinger et al.,

Establishing In-Lieu Fee Mitigation Programs: Identifying Opportunities and

Overcoming Challenges, 36(4) N’ W N. 8 (2014); and M-

 W. D, T F  E R  I L F

P  C M (2019).

6. For a discussion of nancial diculties related to mitigation banks, see gen-

erally Royal C. Gardner & eresa J. Pulley Radwan, What Happens When

a Wetland Mitigation Bank Goes Bankrupt?, 35 ELR 10590 (Sept. 2005).

7. Restoring the Rule of Law, Federalism, and Economic Growth by Review-

ing the “Waters of the United States” Rule, Exec. Order No. 13778, 82 Fed.

Reg. 12497 (Feb. 28, 2017).

8. Revised Denition of “Waters of the United States,” 84 Fed. Reg. 4154

(proposed Feb. 14, 2019).

CWA In-Lieu Fee Mitigation:

Project and Programmatic Risks

by Royal C. Gardner, Erin Okuno, Rebecca Kihslinger, and Christina Libre

Authors’ Note: Portions of this Comment are adapted from Rebecca

Kihslinger et al., In-Lieu Fee Mitigation: Review of Program

Instruments and Implementation Across the Country (forthcoming

2019), which was supported through a Wetland Program

Development Grant (No. WD-83692501) awarded by the U.S.

Environmental Protection Agency. e opinions are those of the

authors and not necessarily those of the sponsoring agency.

Royal C. Gardner is a Professor of Law and Director of the Institute for Biodiversity Law and Policy at Stetson University

College of Law. Erin Okuno is the Foreman Biodiversity Fellow and an Adjunct Professor of Law at Stetson University

College of Law. Rebecca Kihslinger is the Senior Science and Policy Analyst and Director of the Wetlands Program

at the Environmental Law Institute. Christina Libre is a Research Associate with the Environmental Law Institute.

Copyright © 2019 Environmental Law Institute®, Washington, DC. Reprinted with permission from ELR®, http://www.eli.org, 1-800-433-5120.