Author:Owen, Dave
Position:Symposium: Environmental Law Under Trump

    In June 2017, at a Western Governors' Association meeting in Whitefish, Montana, Interior Secretary Ryan Zinke boasted about signing an order "to end the practice of compensatory mitigation." (1) He then added perhaps the strongest--and least accurate--critique the practice has ever received from a top executive branch official: "I call it un-American." (2)

    By this time, such statements were not entirely surprising. Since 2015, when the Obama Administration took several prominent steps designed to improve compensatory mitigation practices, (3) some conservative politicians had made no secret of their disdain for the practice. Representative Louie Gohmert, for example, charged that the Obama Administration's policies were "another attempt to increase the unilateral expansion of the executive branch and the influence of land managers outside of their fiefdoms," (4) while Senator Dan Sullivan warned that "compensatory mitigation often appears arbitrary and even punitive to those of us trying to navigate this complex process." (5)

    Nevertheless, even if environmental commentators understood that compensatory mitigation was becoming a target, they puzzled about the reasons why. (6) For decades, compensatory mitigation policies had enjoyed bipartisan support. They had emerged and advanced under both Democratic and Republican administrations, (7) and compensatory mitigation enjoyed a reputation as the sort of market-friendly regulatory instrument that even conservatives were supposed to embrace. (8) Indeed, some academics still refer to incentive-based environmental policies--a category that includes compensatory mitigation--as a form of regulatory minimalism. (9) And until recently, the harshest critiques of compensatory mitigation policies tended to come from environmentalists and left-leaning academics, some of whom derided the policies as part of a larger neoliberal project of extending capitalism's empire. (10) For a self-styled deal-making ubercapitalist and his supporting cast of deregulators to turn against compensatory mitigation seemed kind of weird. (11)

    Yet this turn of events has been building for a long time. And it has been building not just because conservative politics now seem defined by rejection of anything the Obama Administration did, though that impulse toward rejection probably does play a role. The reasons, instead, run deeper, and they have been coalescing since the 1980s, when compensatory mitigation policy first shuffled onto the national stage. (12) Compensatory mitigation was never really a product of resurgent capitalism. (13) It instead was largely a creation of the bureaucracy, and while it evolved in ways that were friendly to some private entrepreneurs, it appeals primarily to business entities that are ready to accept and work within the complex regimes of modern environmental law (or that see no other choice) and to professionalized regulatory agencies and environmental groups that are willing to work closely with businesses. (14) It appeals, in other words, to people who believe in regulated capitalism. It arouses some concern from the subset of environmentalists that views business interests as incorrigibly anti-environmental. (15) And to conservatives who disdain any compromise with the administrative state, distrust complex policy instruments, and wear anti-environmentalism as a badge of honor, compensatory mitigation is likely to be particularly repellant.

    This Essay explores the conservative turn against compensatory mitigation. Part II explains what compensatory mitigation is and how it developed a reputation as a market-friendly, nonpartisan form of regulation. Part III turns to the historical evolution of compensatory mitigation practices. It explains how the realities of compensatory mitigation undercut some of the more liberal critiques of the practice, and how those realities set the stage for emerging conservative opposition. Part IV turns to the actual emergence of that opposition, beginning with the courts and then turning to present-day administrative and legislative policy fights. Part V closes by considering the future of compensatory mitigation. For people who believe that compensatory mitigation is an imperfect but promising policy option, (16) that future includes causes for concern: with skepticism on the left and outright opposition on the right, compensatory mitigation may now occupy a position analogous to a politician whose coalition is just a little too small. But even if compensatory mitigation policies may be vulnerable because they do not fit neatly into the most popular narratives of environmental politics, the functionality of a policy also has some relevance in the real world. Compensatory mitigation emerged because it has the potential to address real needs. So long as meaningful environmental regulation remains--and, for now, it does--those needs also will remain, and so too, hopefully, will a continued effort to advance and improve policies for compensatory mitigation.


    To understand the current turn against compensatory mitigation, and the reasons it has been surprising, it helps to first know something about what the practice is. This Part therefore provides a basic primer on compensatory mitigation and explains how it came to have a reputation as a business-friendly, market-oriented kind of policy.

    The core concept of compensatory mitigation is simple. Regulated entities receive permission to engage in environmentally degrading activities that otherwise would be prohibited, and in return, they provide extra environmental benefits at some other time or place. (17) So, for example, a developer might receive permission to build a shopping mall in an area with protected wetlands, and in return for receiving its permit, the developer would restore wetlands somewhere else.

    This basic concept is now integral to the implementation of many environmental law regimes. (18) In the United States, Clean Water Act (19) section 404 drives much of the compensatory mitigation work, (20) but compensatory mitigation also occurs under the National Environmental Policy Act, (21) the Endangered Species Act, (22) the natural resource damages provisions of several statutes, (23) the Federal Power Act, (24) and provisions of state laws. (25) In other countries, compensatory mitigation policies also are on the rise, and they have received the active support of many international organizations devoted to the growth and development of environmental law. (26)

    In practice, regulators and regulated entities use three primary mechanisms to implement compensatory mitigation policies. The first is known as "permittee-responsible" mitigation. (27) As the name suggests, permittee-responsible mitigation is carried out by the same entity that receives permission to cause environmental degradation (or by its contractors). (28) The second two types both fall within the umbrella category of third-party mitigation. In a mitigation banking system, the third party is typically a private, entrepreneurial entity that creates, restores, or protects environmental resources and then markets credits for equivalent environmental degradation. (29) Entities that purchase those credits then can engage in environmentally degrading activities. In an in-lieu fee program, the third party manages a fund into which permittees can pay, and it then uses the aggregated funds to support environmental restoration or protection. (30) Some in-lieu fee programs are managed by public entities, while others are managed by nonprofits. (31) In both of these third-party systems, liability for the performance of the mitigation shifts from the permittee to the mitigation provider. (32)

    One last terminological distinction is important here. In regulatory parlance, compensatory mitigation falls within the broader term "mitigation," which also includes measures to avoid or minimize impacts to protected resources. (33) Under United States Army Corps of Engineers (Corps) and United States Environmental Protection Agency (EPA) policies, (34) which have been widely imitated by other agencies and in other countries, (35) compensatory mitigation is a third-best approach, and impacts should be avoided and then, to the extent avoidance is impossible, minimized before compensatory mitigation takes place. (36) This prioritization system is widely known as the "mitigation hierarchy." (37)


    So how, one might wonder, did compensatory mitigation earn its reputation as a market-friendly, neoliberal policy? There are several reasons.

    First, by replacing flat prohibitions with the possibility of deal-making, compensatory mitigation appears to give flexibility to regulated entities. In a system without compensatory mitigation, the law may appear to simply prohibit some forms of environmental degradation. So, for example, prior to 1982, when Congress amended the Endangered Species Act to allow some forms of compensatory mitigation, the Act seemed to prohibit all actions that "took" protected species, even if that prohibition meant the end of a proposed project. (38) A compensatory mitigation policy opens up another choice: the project can proceed, but with compensation for its impacts. (39) If the absence of this compensatory option really corresponds with full and vigorous enforcement of the law (in practice, that can be a big if), then a compensatory mitigation option creates significant flexibility for the regulated. (40)

    Second, as many observers have pointed out, compensatory mitigation requires commodification of environmental values. (41) In order for a compensatory mitigation system to work, regulators need to decide how much mitigation a...

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