Environmental Review Toolkit
Water, Wetlands, and Wildlife

Wetlands and Aquatic Resources

The Federal Highway Administration as a Wetland Mitigation Bank User

FHWA Presentation, DOE Wetland Banking Workshop Washington, D.C., June 1995

The current Administration and federal regulatory policy on wetlands have placed increased emphasis on wetland mitigation banking. As a result, Federal resource agencies have accepted the practice of establishing mitigation banks for wetlands and other ecological impacts, and the number of highway-related mitigation banking projects has increased rapidly in the last two years.

The FHWA and other government agencies involved in managing impacts to wetlands and other natural resources have made notable progress in implementing mitigation "banking" procedures and projects. The Intermodal Surface Transportation Efficiency Act of 1991 (ISTEA) specifically identifies the following as eligible for Federal-aid participation under the National Highway System and Surface Transportation Program (Sections 1006, 1007):

(1) banking of wetlands mitigation concurrent or in advance of project construction;

(2) contributions to statewide and regional efforts to conserve, restore, enhance and create wetlands;

(3) development of statewide and regional wetlands conservation and mitigation plans.

This authority is consistent with the goal of no net loss of the Nation=s remaining wetlands and a long-term net gain in wetlands, stated in the 1993 White House policy statement on wetlands, Protecting America's Wetlands: A Fair, Flexible, and Effective Approach.

23 CFR 771.101-771.137, which implement measures of the National Environmental Policy Act in Federal Highway Administration programs, provides for the mitigation of environmental impacts to ecological systems. Section 771.105. states:

"It is the policy of the Federal Highway Administration that: ...d) Measures necessary to mitigate adverse impacts be incorporated into the action. Measures necessary to mitigate adverse impacts are eligible for Federal funding when the Administration determines that: (1) the impact for which the mitigation is proposed actually results from the Administration action; and (2) The proposed mitigation represents a reasonable public expenditure after considering the impacts of the action and the benefits of the proposed mitigation measures. In making this determination, the Administration will consider, among other factors, the extent to which the proposed measures would assist in complying with a Federal statute, Executive Order, or Administrative Order, or Administration regulation or policy."

The implementation of this policy has been demonstrated on many federal transportation projects for mitigation of wetlands impacts required under Section 404 of the Clean Water Act, and under provisions of the Endangered Species Act.

More than 20 State Highway Agencies have developed wetland mitigation banking agreements and/or programs, and have actively begun developing banks. Not all experiences with banking have been positive, either from an ecological or administrative perspective. Problems associated with bank development and use have included restrictions on use of credits for out-of-kind mitigation and availability of suitable bank sites within acceptable geographic limits. However, the potential for improved ecological benefits associated consolidation of management responsibility, the advantage of more cost-effective mitigation and quicker, less contentious review of permit applications, make wetland banking an attractive option for compensatory mitigation requirements.

Wetland mitigation banking programs implemented by State transportation agencies offer unique opportunities to consolidate, manage, and protect wetlands resources more effectively while maintaining more workable alternatives for transportation and development. Onsite mitigation remains the first and preferable alternative where feasible. However, by moving the location of mitigation away from transportation projects and development centers, mitigation often can be better integrated with supporting ecosystems, more effectively managed, provide more services to society, and allow for better planning of business, commercial, and residential development.

The scope of alternatives and approaches used by State highway agencies include the full range of options for mitigation banking, from creation and restoration to preservation or fee-in-lieu. The form of authorizing documents also varies, and includes general permits, letters of authorization, signed interagency agreements, and agreements-in-principal. Some states have identified specific, large bank sites (North Carolina and Tennessee are examples); others are using overflow sites. Mitigation ratios vary from one-to-one to multiples of three, four, or more in cases where preservation has been the mode of mitigation.

Future wetland banking options considered should continue to include the full range of compensatory mitigation alternatives: establishment, fees in lieu, restoration, enhancement, and preservation, each of which has advantages and disadvantages. Preservation should be considered a valid option for compensatory mitigation under certain circumstances involving an anticipated and identifiable threat to existing valuable wetland resources. Preservation offers the advantages of certainty - a wetland already exists. A big plus in selecting preservation as an alternative is the presence of an intact drainage and surrounding ecosystem that will contribute to wetlands functions in the future.

A common problem in establishing wetlands mitigation projects is protecting and managing environmental resources at a mitigation or banking site throughout and after the initial period of establishment. Establishment of the mitigation wetland should be considered successful, and therefore complete, when the construction activity at the site is completed and the desired wetland features which were to be established are in place and in a viable, self-sustaining state, or have been accepted by participants in the mitigation agreement as fully functional. Establishment periods may be from as little as 1-3 years on some mitigation sites to 20 years or more on slow-maturing sites. For sites where the wetland mitigation is not successfully established at the end of the agreed-to establishment period, activities required to complete wetland establishment or bring the mitigation site to the agreed-upon condition are eligible for participation with Federal-aid highway funds.

As the number and age of active banks increase, policy for participation with Federal-aid highway funds must address not only costs to acquire or construct wetland banks, but also those costs for managing and sustaining established mitigation to ensure it remains viable and that mitigation credits are available in the future when are needed.

Because of gradual demands for mitigation, some mitigation banks may have credits available for extended periods of time. During the time after the wetland bank has been successfully established when credits are still available to be withdrawn, it is essential that the mitigation wetlands be protected and managed to ensure that credits will be available when needed. It is consistent with FHWA policy that costs associated with protecting banked mitigation credits are considered eligible for participation with Federal-aid highway funds. These costs include, but are not limited to, such items as replacement or repair of fencing or drainage structures, and irrigation, replacement, and management of vegetation plantings, or other activities required to ensure the availability and persistence of mitigation resources during the period when credits are still being withdrawn, during the establishment period of the bank, or during other predetermined, agreed-to time-frames needed to effectively ensure success of the purpose and objectives of establishing the bank. This can be assumed to be for the duration of FHWA participation in a general or site-specific mitigation banking agreement, or until any other preestablished termination date for use of the bank.

Establishment of mitigation sites and banks often requires the acquisition of a property interest, either through easement or fee title. The ISTEA and 23 CFR 777.9 (b) authorize the use of Federal-aid funds to purchase, or establish, replacement wetlands for impacts to private wetlands, with priority given to restoration or creation of wetlands. The public interest in replacement wetlands must be sufficient to ensure that the area is maintained as a wetland. This can be accomplished by a restrictive covenant or easement that is attached to the title of the property, or by transfer of title in fee to a public or quasi-public, nonprofit resource management interest or agency. Up-front costs associated with easements, covenants, or property transfers are eligible for Federal-aid participation, and should encompass activities necessary to ensure that wetland functions are perpetuated and protected at mitigation sites.

Sale of mitigation credits in wetland mitigation banks or other mitigation activities established with Federal-aid transportation funds for the purpose of mitigating anticipated impacts due to highway or surface transportation projects, to private or public entities or agencies for mitigation of impacts due to non-Federal-aid, transportation projects, or nontransportation related activities, is not allowable.

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Questions and feedback should be directed to Mike Ruth (Mike.Ruth@dot.gov, 202-366-9509).

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