In-lieu fee mitigation: coming into compliance with the new Compensatory Mitigation Rule

Under Section 404 of the federal U. S. Clean Water Act, the U. S. Army Corps of Engineers and U. S. Environmental Protection Agency require compensatory mitigation for unavoidable impacts stemming from the permitted discharge of dredged or fill material into waters of the United States. There are three primary mechanisms supported by the Corps and EPA for permittees to meet their compensatory mitigation obligations: permittee-responsible mitigation, purchasing credits from a mitigation bank, or making a payment to an approved in-lieu fee mitigation program. In 2005, the Environmental Law Institute studied the 38 approved, active in-lieu fee programs operating in the US. This paper seeks to assess how the in-lieu fee programs that were approved and active as of October 2005 will need to update their administrative and procedural practices to come into compliance with new regulations on compensatory mitigation published in April 2008. Of the 10 new requirements for in-lieu fee reviewed here, three in particular will likely have the most significant impact on whether the 2005 programs are able to seek authorization and continue to operate. These are the compensation planning framework, the cap on the number of advance credits that can be sold, and the requirement to provide financial assurances for all projects. Those programs that make the investment in meeting the new requirements by the June 2010 deadline are likely to overcome past concerns over the ability for in-lieu fee mitigation to replace lost aquatic resources in a timely and efficient fashion.