The Army-EPA Mitigation Agreement: No Retreat From Wetlands Protection

Royal C. Gardner

Editors' Summary: In an effort to fulfill President Bush's no net loss of wetlands policy, the Department of the Army and the Environmental Protection Agency (EPA) in November 1989 entered into an agreement that clarified mitigation requirements of the Clean Water Act's § 404(b)(1) guidelines. The implementation of the agreement was delayed three times in response to concerns raised by oil and gas interests and the development community. After much interagency debate and amidst continued controversy, the Army and EPA signed a new agreement on February 6, 1990. This Article explains the mitigation requirements and the differences between the November and February agreements. It concludes that the agreement supports the goal of no net loss of wetlands.

Mr. Gardner is an Assistant to the General Counsel, Department of the Army. The author thanks Earl Stockdale for his invaluable assistance in the preparation of this Article. The views expressed in this Article are those of the author and do not necessarily represent the views of any governmental agency.

[20 ELR 10337]

In November 1989, the Department of the Army and the Environmental Protection Agency (EPA) entered into an agreement to clarify the mitigation requirements of the Clean Water Act's (CWA's) § 404(b)(1) guidelines.¹ The environmental community hailed the document as a landmark agreement and a critical first step to fulfilling President Bush's no net loss of wetlands pledge.² Others, including the state of Alaska, oil and gas interests, and the development community, voiced concern that the agreement established a no net growth policy that protected the environment at the expense of economic growth.³ Even within the federal government, some agencies expressed anxiety over the agreement. The Department of Energy echoed the oil and gas interests' fears that the agreement would frustrate energy development, and the Department of Transportation asserted that it would interfere with airport and highway construction.⁴

In response to the other agencies' worries, the Army and EPA delayed the agreement's implementation three times to allow for interagency discussions.⁵ After those discussions, which were intended to clarify the agreement's scope and effect, the Army and EPA signed a new memorandum of agreement (MOA) on February 6, 1990.⁶ Environmental groups described it as "very disappointing."⁷ Nor did representatives of the development community and the state of Alaska find the revisions palliative.⁸ Newspapers reported that the original agreement had been watered down,⁹ and commentators suggested that the new MOA signaled a significant retreat by the Bush administration with regard to wetlands protection.¹⁰

Notwithstanding the critical responses, the final MOA represents a major step forward in the preservation, restoration, and creation of wetlands. It provides substantial protection for aquatic ecosystems, yet is entirely consistent with existing regulations. It furnishes important guidance to agency personnel and the public regarding the type and level of mitigation necessary to comply with the § 404(b)(1) guidelines. Enunciating the goal of no net loss of wetlands, the MOA explains the process of sequencing and clarifies the guidelines' compensatory mitigation requirements. [20 ELR 10338] Much of the criticism directed at the MOA stems from a misinterpretation of its purpose and provisions and from a misunderstanding of the § 404 program.

This Article explains the mitigation requirements of § 404(b)(1) of the CWA¹¹ and its implementing regulations. It also reviews the MOA and examines the differences between the November and February agreements.

The § 404 Program: Statutory and Regulatory Background

The CWA, substantially enacted in its present form in 1972, sets forth the ambitious goal of restoring and maintaining the "chemical, physical, and biological integrity of the Nation's waters."¹² One principal means to achieve this goal is the CWA's regulation of point source discharges of pollutants. Under § 301(a), it is unlawful for a person to discharge any pollutants except in accordance with other provisions of the CWA, such as § 404.¹³ Section 404 authorizes the Secretary of the Army, acting through the Chief of the Corps of Engineers (Corps), to issue permits for the discharge of dredged or fill material into the waters of the United States.¹⁴

Congress intended the CWA to regulate point source discharges to the maximum extent permissible under the interstate commerce clause.¹⁵ Accordingly, both "dredged or fill material" and "waters of the United States" are broadly defined by regulation. Dredged material is any material that is excavated or dredged from waters of the United States;¹⁶ fill material means "any material used for the primary purpose of replacing an aquatic area with dry land or of changing the bottom elevation of a waterbody."¹⁷ Waters of the United States include lakes, rivers, streams, wetlands, prairie potholes, ponds, and other water bodies.¹⁸

Although the CWA grants the Army the responsibility to issue permits for the discharge of dredged or fill material, EPA plays an important role in the administration of the § 404 program.¹⁹ Section 404(b)(1) of the CWA directed EPA, in conjunction with the Army, to develop guidelines to govern the evaluation of § 404 permit applications.²⁰ In developing these guidelines, which provide information on unacceptable adverse impacts on aquatic ecosystems, EPA considered, among other criteria, the effect of the discharge on human health and welfare, marine life, and aesthetic, recreation, and economic values.²¹ A proposed discharge must comply with these EPA regulations (the guidelines);²² otherwise, the Corps may not issue a permit.²³

Like the CWA, the guidelines posit as their purpose the restoration and maintenance of the chemical, physical, and biological integrity of the waters of the United States.²⁴ They distinguish between "aquatic environments" or "aquatic ecosystems" and the more specific "special aquatic sites." The former are waters of the United States that serve as habitat for interrelated communities of plants and animals.²⁵ Special aquatic sites are subsets of aquatic environments and ecosystems which possess special ecological characteristics and easily disrupted ecological values.²⁶ As areas that significantly influence or positively contribute to the overall vitality of a regional ecosystem, special aquatic sites include wetlands, mud flats, sanctuaries, refuges, and coral reefs.²⁷ The guidelines emphasize that the degradation of special aquatic sites is considered a severe environmental impact,²⁸ and therefore they accord different treatment to permit applications involving discharges into these areas.²⁹

To achieve its goals, the guidelines set forth four restrictions [20 ELR 10339] that must be satisfied before the Corps may issue a permit.³⁰ First, the Corps must determine whether a less environmentally damaging practicable alternative to the proposed discharge is available.³¹ If such a practicable alternative exists, the applicant must avoid placing dredged or fill material in the originally proposed site. Second, the proposed discharge must not violate a state's water quality standards, other provisions of the CWA, or the requirements of the Endangered Species Act and the Marine Protection, Research, and Sanctuaries Act.³² Third, the proposed discharge must not "cause or contribute to significant degradation of the waters of the United States."³³ Fourth, the applicant must take all "appropriate and practicable steps" to minimize the discharge's potential adverse effects on the aquatic ecosystem.³⁴ Both the first and the fourth requirements—avoidance and minimization—constitute mitigation measures.

To mitigate, according to Webster's, is "to make or become milder, less severe, less rigorous, or less painful."³⁵ This definition is no less applicable to the realm of environmental regulatory programs. To mitigate a discharge's potential adverse effects on the aquatic ecosystem is to alleviate the damage it causes to the environment. Regulations of the Council on Environmental Quality, which monitors the nation's progress in achieving environmental goals, offer specific examples of mitigation: avoiding impacts, minimizing impacts, rectifying impacts, reducing impacts over time, and compensating for impacts.³⁶ The guidelines generally discuss mitigation in terms of avoidance and minimization, the latter of which encompasses actions that rectify, reduce, and compensate.³⁷

Avoidance, which necessarily involves the consideration of alternatives, is central to the permitting process.³⁸ The Corps will not authorize a discharge if a less environmentally damaging practicable alternative exists. Practicable is defined as "available and capable of being done after taking into consideration cost, existing technology, and logistics in light of overall project purposes."³⁹

When the proposed discharge will adversely affect a special aquatic site, the guidelines create two rebuttable presumptions that protect those critical natural resources. First, they provide that if the activity associated with the discharge is not "water dependent" (i.e., requiring access to or siting in the special aquatic site to fulfill its basic purpose), the Corps must presume that practicable alternatives in areas other than the special aquatic site are available.⁴⁰

Second, the guidelines presume that these practicable alternatives to proposed discharges into special aquatic sites will have a less adverse effect on the aquatic ecosystem.⁴¹ Thus, the guidelines set a high hurdle for applicants to clear if they seek a permit to fill a special aquatic site for a project that is not water dependent.

The guidelines' minimization requirement, which applies to all aquatic ecosystems including special aquatic sites, provides that an applicant must take additional steps to reduce possible damage to a disposal site when avoiding the site altogether is not practicable.⁴² A proposed discharge will not comply with the guidelines unless the applicant offers to perform "all appropriate and practicable measures to minimize potential harm to the aquatic ecosystem. . . ."⁴³ For example, such measures may involve selecting a disposal site where the substrate is composed of material similar to that being discharged⁴⁴ or timing the discharge to occur during certain months so as to limit interference with the spawning season.⁴⁵

Minimization includes more than merely reducing or limiting a discharge's unavoidable impacts. The guidelines clearly contemplate that minimization encompasses compensatory mitigation as well,⁴⁶ and state that "[h]abitat development and restoration techniques can be used to minimize adverse impacts and to compensate for destroyed habitat."⁴⁷ Simply put, compensatory mitigation involves the enhancement, restoration, or creation of aquatic environments. Because the guidelines require "all appropriate and practicable" mitigation measures, compensatory mitigation can be used to offset unavoidable impacts to animal and plant habitat. By only requiring mitigation that is appropriate and practicable, however, the guidelines limit the compensatory mitigation that must be provided.⁴⁸

Corps districts throughout the country applied the guidelines' mitigation requirements differently. Some districts interpreted them to mandate "sequencing," a procedure that involves first the avoidance of impacts, then the minimization of any unavoidable impacts, and finally compensation for any unmitigated impacts remaining. Under this sequencing, the Corps would initially examine the effects of a proposed discharge and consider whether any less environmentally damaging alternative sites for the discharge existed. The discharge's deleterious effects on an aquatic ecosystem could be avoided if the Corps directed a permit applicant to use such an alternative site. If an alternative site was impracticable or did not sufficiently reduce the discharge's impacts on the aquatic ecosystem, the Corps could then require the permit applicant to take steps to minimize the discharge's impacts. Finally, the Corps could request additional measures to compensate for any unavoidable impacts remaining after minimization.

Other Corps districts interpreted the guidelines to allow for a process referred to as a "buy down."⁴⁹ Under this [20 ELR 10340] approach, compensatory mitigation is used to buy down the adverse impacts of a proposed discharge during the consideration of alternatives stage. For example, an applicant may offer to create 10 acres of wetlands to compensate for 10 acres that his proposed discharge will affect. The compensatory mitigation can reduce the net impact of the proposed discharge to zero, thus eliminating the need to consider alternative sites. Accordingly, under this interpretation of the guidelines, the Corps may grant a permit for a discharge despite the existence of an environmentally less damaging alternative elsewhere. The issue, therefore, is whether compensatory mitigation should be considered in the evaluation of alternatives or whether compensatory mitigation should be used only after avoidance.

While some districts within the Corps subscribed to the buy-down interpretation, EPA clearly did not.⁵⁰ Even Corps Headquarters, though, recognized that the buy down could conflict with the guidelines' provisions regarding practicable alternatives.⁵¹ The issue was joined in a permit case involving the construction of a shopping mall in Attleboro, Massachusetts.⁵² The applicant sought to fill 32 acres of wetlands, but offered to create 45 acres of wetlands.⁵³ Concluding that no other site was environmentally desirable because of the proposed compensatory mitigation, the Corps decided to issue the permit. ⁵⁴ EPA argued that the Corps should not have considered compensatory mitigation at the avoidance stage and should have employed sequencing instead. Pursuant to its power under § 404(c) of the CWA, EPA vetoed the issuance of the permit on those grounds.⁵⁵ The Court of Appeals for the Second Circuit ultimately upheld EPA's veto, thus implicitly affirming the propriety of sequencing.⁵⁶

Complicating the miasma surrounding the guidelines' mitigation requirements is the fact that the Corps promulgated its own regulations regarding mitigation.⁵⁷ The Corps' regulations, though, discuss mitigation in the context of all the Corps' regulatory programs and do not address the issue of sequencing in the § 404 program. Moreover, the Corps' regulations, including its public interest review, in no way supplant or alter the guidelines' mitigation requirements.⁵⁸ Indeed, the Corps' regulations recognize that the guidelines' mitigation requirements are a separate inquiry and note that an interagency working group was developing clarifying guidance on those requirements.⁵⁹ The fruition of the working group's efforts was the MOA, which reinforced EPA's long-standing interpretation of the guidelines.

The MOA

The final MOA was a product of five years of interagency discussions and negotiations. In 1986, the Senate Subcommittee on Environmental Pollution directed the Army and EPA to form a work group to respond to concerns of the environmental community, private landowners, and industry groups, which complained of inconsistencies in the manner in which mitigation requirements were administered nationwide.⁶⁰ Believing that permit applicants should be subject to a consistent and uniform process, the two agencies agreed to develop and issue guidance to clarify the guidelines' mitigation requirements.

The MOA is an important environmental initiative in at least four respects. First, it states that both the Army and EPA are committed to a goal of no net loss of wetlands. Second, reinforcing the guidelines' directives, the MOA specifies the sequence that field personnel must use in determining mitigation requirements. The sequence prevents the use of compensatory mitigation to buy down the impacts of a discharge. Third, the MOA emphasizes that the guidelines require compensatory mitigation in all cases, provided it is appropriate and practicable. Finally, the MOA provides specific guidance on the level of compensatory mitigation that is ordinarily necessary for compliance with the guidelines: a minimum of one-for-one acreage replacement.

It is important to note what the MOA does not do. Neither the Army nor EPA intended the MOA to establish a national no net loss policy for wetlands or to dictate decisions on individual permit applications.⁶¹ While recognizing that compliance with the guidelines would contribute to the goal of no net loss, the agencies did not require no net loss of a wetlands' values and functions in each and [20 ELR 10341] every permit action.⁶² Nor did the agencies attempt to define the concept of "no net loss." That task is the responsibility of the Domestic Policy Council, which President Bush has charged with developing a national wetlands policy.⁶³ The introduction to the MOA, which emphasizes the MOA's limits, states: "The MOA does not establish any new mitigation requirements beyond those currently found in the Guidelines. . . ."⁶⁴ the MOA itself notes in two places that it "does not change the substantive requirements of the Guidelines"⁶⁵ and is not "intended to diminish, modify or otherwise affect the statutory or regulatory authorities of the agencies involved."⁶⁶

The MOA is divided into three sections: "Purpose," "Policy," and "Other Procedures." The MOA's stated purpose is to provide general guidance to Corps and EPA field personnel on the guidelines' mitigation requirements. The Purpose section also specifies that this guidance applies to standard permits only.⁶⁷

The MOA's Policy section recognizes that regulations of the Council on Environmental Quality define mitigation as including "avoiding impacts, minimizing impacts, rectifying impacts, reducing impacts over time, and compensating for impacts."⁶⁸ The MOA notes that these kinds of mitigation, which are compatible with the guidelines, can be combined to form three general types: avoidance, minimization, and compensation.⁶⁹ The MOA discusses mitigation in terms of those three types.

The MOA then recites the CWA's goals of restoring and maintaining existing aquatic resources.⁷⁰ To that end, the MOA provides that the "Corps will strive to avoid adverse impacts and offset unavoidable adverse impacts to existing aquatic resources, and for wetlands, will strive to achieve a goal of no overall net loss of values and functions."⁷¹ In affirming the goal of "no net loss," the MOA expressly recognizes that "no net loss of wetlands functions and values may not be achieved in each and every permit action."⁷² The MOA reiterates in several places that all mitigation must be appropriate and practicable.⁷³ Appropriate mitigation is based solely on the effect that a permitted action would have on an aquatic resource's values and functions.⁷⁴

Next, in what is the heart of the document, the MOA explains the sequential process that Corps personnel must follow when determining the type and level of mitigation necessary to comply with the guidelines. The sequence set forth tracks the sequence advocated by EPA, providing for avoidance, minimization, and compensation.⁷⁵ The MOA, however, lists exceptions to sequencing. For example, the Corps may deviate from the sequence when it and EPA "agree the proposed discharge is necessary to avoid environmental harm . . . [or] that the proposed discharge can reasonably be expected to result in environmental gain or insignificant environmental losses."⁷⁶

After laying out the required sequence, the MOA explains the terms "avoidance," "minimization," and "compensatory mitigation." Emphasizing that avoidance necessarily involves the consideration of alternatives, the MOA repeats the requirements that "no discharge shall be permitted if there is a practicable alternative to the proposed discharge which would have less adverse impact to the aquatic ecosystem, so long as the alternative does not have other significant adverse environmental consequences."⁷⁷ The MOA reminds field personnel of the rebuttable presumptions created by the guidelines: that alternatives are available for non-water-dependent activities that do not involve special aquatic sites and that alternatives that do not involve special aquatic sites have less impact on the aquatic ecosystem.⁷⁸ The MOA also unequivocally states that in the evaluation of alternatives, "[c]ompensatory mitigation may not be used as a method to reduce environmental impacts. . . ."⁷⁹ This requirement clearly rejects the use of the compensatory mitigation to buy down the impacts of a discharge.

After a brief paragraph on minimization,⁸⁰ the MOA delves into compensatory mitigation. It flatly states that "[a]ppropriate and practicable compensatory mitigation is required for unavoidable adverse impacts which remain after all appropriate and practicable minimization has been required."⁸¹ Despite its awkward phrasing, that declaration sets forth the proposition that compensatory mitigation will ordinarily be a component of any permitted action. The MOA favors certain types of compensatory mitigation over others: on-site mitigation is preferable to offsite, and in-kind mitigation is better than out-of-kind.⁸² Commenting on the uncertainty concerning the successful creation of artificial wetlands, the MOA counsels field personnel to consider carefully the likelihood of success when determining the nature and extent of habitat development required to comply with the guidelines.⁸³

In the Other Procedures section, the MOA states that where relevant, compensatory mitigation should provide, at a minimum, one-for-one functional replacement of any remaining impacts to wetlands.⁸⁴ The MOA provides that "[i]n the absence of more definitive information on the functions and values of specific wetlands sites, a minimum [20 ELR 10342] of 1 to 1 acreage replacement may be used as a reasonable surrogate for no net loss of functions and values."⁸⁵ The MOA ties this one-for-one provision to the CWA's goals of maintenance and restoration of aquatic resources. The MOA notes, however, that this minimum mitigation requirement may not always be appropriate and practicable and thus may not be relevant in all cases.⁸⁶ As a specific example, the MOA observes in a footnote that

there are certain areas where, due to hydrological conditions, the technology for restoration or creation of wetlands may not be available at present, or may otherwise be impracticable. In addition, avoidance, minimization, and compensatory mitigation may not be practicable where there is a high proportion of land which is wetlands.⁸⁷

Thus, one-for-one functional replacement, while an important goal of the MOA, is not an absolute requirement.

The November and February MOAs

When introducing the February MOA, the Army and EPA stated that they intended the revisions to clarify the MOA's scope and effect.⁸⁸ Most provisions of the MOA, such as the discussion on the goal of no net loss, remained unchanged. Further, most of the changes can be characterized as minor edits that do not affect the document's substance.⁸⁹ Revisions in the Purpose section, for example, underscore that the MOA's purpose is to provide guidance to field personnel on the exercise of discretion under the guidelines and that the MOA does not change the guidelines' substantive requirements.⁹⁰ While other additions or deletions do in fact touch upon the MOA's substance, the revisions do not eviscerate the environmental gains embodied in the document.

Sequencing and Buy Downs

The agencies slightly altered the provisions discussing sequencing. The November MOA stated:

This sequence will be considered satisfied where the proposed mitigation is in accordance with specific provisions of a Corps and EPA approved comprehensive plan that ensures compliance with the compensation requirements of this MOA, as set forth at Section II.B (examples of such comprehensive plans may include Special Area Management Plans, Advance Identification areas (Section 230.80), and State Coastal Zone Management Plans). In some circumstances, it may be appropriate to deviate from the sequence when EPA and the Corps agree the proposed discharge is necessary to avoid environmental harm (e.g., to protect a natural aquatic community from saltwater intrusion, chemical contamination, or other deleterious physical or chemical impacts), or EPA and the Corps agree that the proposed discharge can reasonably be expected to result in environmental gain. This environmental gain must be solely attributable to the project itself, exclusive of benefits which may accrue from proposed compensatory mitigation.⁹¹

The February MOA appeared with the following changes:

This sequence is considered satisfied where the proposed mitigation is in accordance with specific provisions of a Corps and EPA approved comprehensive plan that ensures compliance with the compensation requirements of the Section 404(b)(1) guidelines (examples of such comprehensive plans may include Special Area Management Plans, Advance Identification areas (Section 230.80), and State Coastal Zone Management Plans). It may be appropriate to deviate from the sequence when EPA and the Corps agree the proposed discharge is necessary to avoid environmental harm (e.g., to protect a natural aquatic community from saltwater intrusion, chemical contamination, or other deleterious physical or chemical impacts), or EPA and the Corps agree that the proposed discharge can reasonably be expected to result in environmental gain or insignificant environmental losses.⁹²

Although the provision was altered in five places, close examination of the two versions reveals no significant retreat from the requirement of sequencing. The first three changes are inconsequential. The tense change, from "[t]his sequence will be considered satisfied" to "[t]his sequence is considered satisfied," was made for purposes of the MOA's internal consistency. The phrase "In some circumstances" was probably dropped from the final version as unnecessary. Thus, these two changes are simply edits. In contrast, inserting the reference to the guidelines into the discussion of compensation requirements corrects an inaccuracy. It is the guidelines that contain the compensation requirements, not the MOA; the latter can merely clarify the former.

The remaining two changes—the insertion of "insignificant environmental losses" into the discussion of permissible deviations from the sequence and the omission of the paragraph's last sentence—have engendered more controversy. Judging from the comments to the final MOA, however, most interests have misconstrued or overreacted to the changes. The purpose of this provision was to provide guidance on sequencing. The February MOA retains the requirement for sequencing and specifies that in determining the appropriate type and level of mitigation under the guidelines a precise order is to be followed: avoidance, minimization, and compensation. Further, the changes do not resurrect the concept of a buy down.

Both the November and February MOAs allow for deviations from the sequential process under very limited circumstances. In both documents, deviations are circumscribed by the requirement of an agreement between the Corps and EPA that the discharge itself, rather than the project as a whole, has beneficial effects. Obviously, sequencing should not be required when the discharge will provide an environmental gain, such as preventing salt - water intrusion or the spread of chemical contamination. It would be pointless to search for a less environmentally damaging alternative site when the discharge itself is protecting the aquatic environment.

The February MOA took this logic one step further and stated that discharges that produce insignificant environmental losses need not go through the sequencing process. Although the MOA offered no rationale for this addition, when a discharge results in insignificant environmental losses, a consideration of alternatives becomes irrelevant. Distinguishing between discharges that have insignificant or negligible impacts demands a scientific precision that does not exist. Hence, in this limited circumstance, there is no requirement for sequencing. Clearly, the insertion of "insignificant environmental losses" was an accommodation to those who felt that the November MOA stripped agency personnel of flexibility that otherwise might exist under the guidelines.

The MOA's purpose was to provide clear guidance on the guidelines' mitigation requirements, thereby ensuring consistency in the § 404 program nationwide. The February MOA's major problem is its failure to define the word "insignificant," which introduces an uncertainty that tends to undermine the MOA's basic purpose.

Although the guidelines also do not define "insignificant," its meaning may be gleaned from its preamble. In discussing alternatives, the preamble states that once practicable alternatives have been identified, "the permitting authority should consider whether any of them, including land disposal options, are less environmentally harmful than the proposed discharge project. Of course, where there is no significant or easily identifiable difference in impact, the alternative need not be considered to have 'less adverse' impact."⁹³ The preamble later defines, albeit in a different context, "significant" and "significantly" to "mean more than 'trivial'. . . ."⁹⁴ Thus, a reasonable interpretation of the MOA is that deviation from sequencing is permissible only when the impacts of a discharge are so insignificant as to be deemed trivial.

At present, the agencies' position on this point remains uncertain. Assuming, however, that some Corps districts read this provision differently, environmentalists can take solace in the fact that a deviation from sequencing may occur only when both EPA and the Corps agree that the discharge itself will result in insignificant environmental losses. It is likely that both agencies will reach such an agreement only in cases where the environmental impact is benign. As a practical matter, then, this addition does not weaken the sequencing requirements.

Furthermore, the insertion of "insignificant environmental losses" does not affect the MOA's rejection of the buy - down principle. The entire discussion of deviations focuses on the impacts of a discharge itself, not on any compensatory mitigation offered as part of a project. The phrase "insignificant environmental losses" does not alter this focus.

The deletion of the paragraph's concluding sentence also does not affect the MOA's guidance on buy downs. The deleted sentence stated that a project's environmental gain, which would allow for a deviation from the sequence, must be based on the project itself, rather than on any proposed compensatory mitigation. Perhaps one could argue that the sentence's omission, standing alone, represents a retreat from the position that buy downs are no longer permitted. One might even infer that the sentence was removed because proposed compensatory mitigation may permit a deviation from the sequence. When viewed in the context of the entire MOA, however, such an argument is unpersuasive. The MOA clearly states that "[c]ompensatory mitigation may not be used as a method to reduce environmental impacts in the evaluation of the least environmentally damaging practicable alternatives for the purposes of requirements under Section 230.10(a)."⁹⁵ Moreover, footnote 4 states that "[a]voidance as used in the Section 404(b)(1) Guidelines and this MOA does not include compensatory mitigation."⁹⁶ A more reasonable explanation of the sentence's deletion is that it engendered confusion. The sentence referred to the impact of a project as a whole, while the previous discussion centered solely upon the impact of a discharge itself.

Compensatory Mitigation and the One - for - One Replacement Requirement

A major difference between the two MOAs is found in footnote seven of the February MOA. This footnote observed that due to hydrological conditions compensatory mitigation may not be practicable. The footnote also commented that any type of mitigation — whether avoidance, minimization, or compensatory — may not be practicable where a high proportion of lands is wetlands. When examined in its context, the footnote constitutes neither a retreat from the guidelines' requirements nor a deemphasis of the protection of aquatic resources.

The footnote underscores the general rule that compensatory mitigation should ordinarily include one - for - one acreage replacement when appropriate and practicable. The guidelines require mitigation only when it is appropriate and practicable.⁹⁷ The footnote merely offers examples of situations where mitigation may be impracticable. The MOA does not state that mitigation is not required in an area where a high percentage of wetlands exists; rather, it only observes that mitigation may be impracticable under those circumstances. Obviously, requiring mitigation that is unavailable or impossible is outside the scope of the guidelines. Footnote seven simply emphasizes the guidelines' requirement that all mitigation must be appropriate and practicable.

Footnote seven does not foreclose compensatory mitigation requirements in areas such as Alaska. In fact, it expressly notes that compensatory mitigation is possible in these areas by stating that the "EPA and Army, at present, are discussing with representatives of the oil industry, the potential for a program of accelerated rehabilitation of abandoned oil facilities on the North Slope to serve as a vehicle for satisfying necessary compensation requirements."⁹⁸ Thus, the MOA clearly recognizes that mitigation is possible and may be appropriate and practicable in areas with high concentrations of wetlands. By providing examples of situations where mitigation may be practicable, as well as situations where it may be impracticable, the footnote gives the MOA a degree of specificity that makes it a more valuable tool to field personnel.

Another example of that specificity is the discussion of one-for-one acreage replacement. The February MOA revised some of the language concerning one-for-one replacement, but did not alter the substance of the principles. Footnote six of the November MOA, which recognized that the ratio of one-for-one replacement may be greater or lower depending on the circumstances, was transposed into the text of the document — an appropriate place for an important point.⁹⁹ The November MOA failed to call sufficient attention to this statement.

The only other change of significance regarding one - for - one replacement is the addition of the sentence: "In the absence of more definitive information on the functions and values of specific wetlands sites, a minimum of 1 to 1 acreage replacement may be used as a reasonable surrogate for no netloss of functions and values."¹⁰⁰ This sentence points out the practical difficulties in assessing a wetlands' value and functions. The MOA recognizes the uncertainty surrounding the creation of wetlands and accordingly advises field personnel to rely on this emerging science only when necessary.¹⁰¹ Thus, the revisions in the February MOA had no real effect on the compensatory mitigation and one - for - one replacement provisions.

Conclusion

Despite the February revisions and protestations to the contrary, the MOA remains a successful environmental initiative. For the first time, both EPA and the Army committed themselves to a goal of no net loss of wetlands. The agencies provided guidance on sequencing and, in doing so, sounded the deathknell for buy downs. Just as important, the MOA affirms the cooperative spirit that exists between the two agencies responsible for administration of the § 404 program. Although on its face the MOA merely provides guidance on the type and level of mitigation necessary to comply with the guidelines, its significance runs deeper. The MOA is further evidence of a new spirit of cooperation between the Army and EPA, which is borne out by recent agreements on enforcement,¹⁰² geographic jurisdiction,¹⁰³ and § 404(f) exemptions.¹⁰⁴ As such, the MOA signals the close of an era, at least at the Washington level, where the § 404 program was inconsistently administered by two agencies with radically divergent points of view.¹⁰⁵

1. The cumbersome title of the document was Memorandum of Agreement between the Environmental Protection Agency and the Department of the Army Concerning the Determination of Mitigation Under the Clean Water Act Section 404(b)(1) Guidelines. 54 Fed. Reg. 51319 (Dec. 14, 1989) [hereinafter November MOA].

2. E.g., Administration Delays Key Wetlands Protection Plans, Wash. Post, Dec. 15, 1989, at A19, col. 1.

3. Id.; White House Postpones Implementation of Recent Wetlands Mitigation Agreement, 20 Env't Rep. (BNA) 1432 (Dec. 22, 1989); Stevens, Wetlands Policy Is "Deathknell" for Alaska, Anchorage Times, Dec. 19, 1989, at A1, col. 3.

4. See Hearing Before the Subcomm. on Investigations and Oversight of the House Comm. of Public Works and Transportation, 101st Cong., 2d Sess. (Feb. 20, 1990) (statement of Robert W. Page, Ass't Secretary of the Army (Civil Works)).

5. The MOA was originally scheduled to go into effect on December 15, 1989. 54 Fed. Reg. 51319, 51322 (Dec. 14, 1989). The MOA's signators, LaJuana Wilcher, EPA's Assistant Administrator for Water, and Robert Page, Assistant Secretary of the Army for Civil Works, agreed to delay the MOA's implementation until January 16, 1990. Id. at 52438, 52439 (Dec. 21, 1989). Wilcher and Page again postponed the MOA's effective date to January 31, 1990. 55 Fed. Reg. 1726 (Jan. 18, 1990). As the end of January approached, the agencies put off the MOA's implementation once more to February 7, 1990. Impasse on Wetlands, Wash. Post, Feb. 1, 1990, at A19, col. 2 (Talking Points).

6. Memorandum of Agreement between the Environmental Protection Agency and the Department of the Army Concerning the Determination of Mitigation Under the Clean Water Act Section 404(b)(1) Guidelines, 55 Fed. Reg. 9210 (Mar. 12, 1990), ELR ADMIN. MATERIALS 35223 [hereinafter February MOA]. The March notice corrected 55 Fed. Reg. 5510 (Feb. 15, 1990), which erroneously omitted the revised MOA.

7. Wetlands Agreement Watered Down, Wash. Post, Feb. 7, 1990, at A8, col. 4 [hereinafter Watered Down]; see also Kosowatz, Developers Gain in Wetlands Pact, ENG'G NEWS-REC. 8 (Feb. 1990); Winter, Sununu Pulled Rank, NAT'L WETLANDS NEWSL. 3, Mar.-Apr. 1990, at 3.

8. Latest Version of Wetlands Policy Seen Harmful to Alaskan Economy, INSIDE ENERGY, Mar. 5, 1990, at 12; Wetlands MOA Threatens Alaska, ON TOP OF ANWR, Jan.-Feb. 1990, at 1 (ARCO Alaska, Inc., publication); Young, Wetlands Before Hospitals? NAT'L WETLANDS NEWSL., Mar.-Apr. 1990, at 3; Land Developers Leery of Wetland Protection Pact, L.A. Times, May 14, 1990, at A3, col. 6.

9. House Member Says Revised Memorandum Weakened Pledge on Wetlands Protection, 20 Env't Rep. (BNA) 1867 (Mar. 16, 1990); Over EPA Protest, White House Alters Wetland Agreement, N.Y. Times, Feb. 8, 1990, at A1, col. 1; Watered Down, supra note 7, at A8.

10. E.g., Houck, More Net Loss of Wetlands: The Army-EPA Memorandum of Agreement on Mitigation Under the § 404 Program, 20 ELR 10212 (June 1990).

11. CWA § 404, 33 U.S.C. § 1344; ELR STAT. FWPCA 054. When enacted, the statute was formally known as the Federal Water Pollution Control Act (FWPCA). Pub. L. No. 92-500, 86 Stat. 816 (1972). In 1977, Congress amended the FWPCA and adopted the statute's more popular name, the Clean Water Act. Pub. L. No. 95-217, 91 Stat. 1566 (1977).

12. Id. § 101, 33 U.S.C. § 1251, ELR STAT. FWPCA 003.

13. Id. § 301(a), 33 U.S.C.§ 1311(a), ELR STAT. FWPCA 025.

14. Id. § 404(a), 33 U.S.C. § 1344(a), ELR STAT. FWPCA 054, authorizes the "Secretary" to issue permits; § 1344(d) defines the "Secretary" as "the Secretary of the Army, acting through the Chief of Engineers," id. § 404(d), ELR STAT. FWPCA 054.

15. See United States v. Riverside Bayview Homes, Inc., 474 U.S. 121, 133, 16 ELR 20086, 20089 (1985).

16. 33 C.F.R. § 323.2(c) (1989); see also id. at § 323.2(d) ("discharge of dredged material").

17. Id. at § 323.2(e). The term does not include pollutants discharged primarily to dispose of waste, which § 402 of the CWA regulates. CWA § 402, 33 U.S.C. § 1342, ELR STAT. FWPCA 051.

18. See 33 C.F.R. pt. 328 (1989). Section 404 refers only to navigible waters. 33 U.S.C. § 1344(a), ELR STAT. FWPCA 054. For purposes of the Clean Water Act, however, "navigible waters" means "the waters of the United States, including the territorial seas," a decidedly more expansive term. Id. at § 1362(7), ELR STAT. FWPCA 058.

19. The CWA gives EPA a number of responsibilities. EPA was required to develop, in conjunction with the Army, the § 404(b)(1) guidelines. On a day-to-day level, EPA reviews permit applications and provides the Corps with comments. The Corps, though, may grant a permit even if EPA adversely comments. EPA, in turn, may exercise a veto pursuant to § 404(c) if the Administrator determines that a proposed discharge "will have an unacceptable adverse effect on municipal water supplies, shellfish beds and fishery areas. . ., wildlife, or recreational areas." CWA § 404(c), 33 U.S.C. § 1344(c), ELR STAT. FWPCA 054. In practice, EPA employs its veto power sparingly. See Houck, Hard Choices: The Analysis of Alternatives Under Section 404 of the Clean Water Act and Similar Environmental Laws, 60 U. COLO. L. REV. 773, 790 (1989) (noting that EPA has issued only eight vetos as of January 1, 1989).

20. CWA § 404(b)(1), 33 U.S.C. § 1344(b)(1), ELR STAT. FWPCA 054.

21. Section 1344(b)(1) states that the guidelines "shall be based upon criteria comparable to the criteria applicable to the territorial seas, the contiguous zone, and the ocean under [33 U.S.C. § [ 1343(c). . . ." Id.

22. EPA published the § 404(b)(1) guidelines, entitled Guidelines for Specification of Disposal Sites for Dredged and Fill Material, as a final rule on December 24, 1980. The guidelines are codified at 40 C.F.R. part 230. The term "guidelines" is misleading, since it detracts from the mandatory nature of the regulations.

23. See 40 C.F.R. § 230.12 (1989) (findings of compliance or noncompliance with the restrictions on discharge). The Corp's regulations recognize that a discharge must satisfy the guidelines before the Corps can issue a permit. 33 C.F.R. §§ 320.4(a)(1), 320.4(r)(1)(ii), 323.(6)(a), 325.4(a)(1).

24. 40 C.F.R. § 230.1(a).

25. Id. at § 230.3(c).

26. Id. at § 230.3(q-1), .40-.45.

27. Id. at § 230.40-.45.

28. Id. at § 230.1(d). That provision states:

From a national perspective, the degradation or destruction of special aquatic sites, such as filling operations in wetlands, is considered to be among the most severe environmental impacts covered by these guidelines. The guiding principle should be that degradation or destruction of special sites may represent an irreversible loss of valuable aquatic resources.

29. Id. at § 230.10(a)(3); see text accompanying infra notes 40-41 for a further explanation.

30. 40 C.F.R. § 230.10 (restrictions on discharge).

31. Id. at § 230.10(a).

32. Id. at § 230.10(b).

33. Id. at § 230.10(c).

34. Id. at § 230.10(d); see also id. at § 230.12(a)(3)(iii) (specifying that the Corps must deny a permit application where the "proposed discharge does not include all appropriate and practicable measures to minimize potential harm to the aquatic ecosystem").

35. WEBSTER'S NEW WORLD DICTIONARY 943 (college ed. 1966).

36. 40 C.F.R. § 1508.20 (1989).

37. See generally 40 C.F.R. § 230.70-.77.

38. The guidelines state that "no discharge of dredged or fill material shall be permitted if there is a practicable alternative to the proposed discharge which would have less adverse impact on the aquatic ecosystem, so long as the alternative does not have other significant adverse environmental consequences." 40 C.F.R. § 230.10(a).

39. Id. at § 230.3(q).

40. Id. at § 230.10(a)(3).

41. Id.

42. Id. at § 230.10(d).

43. Id. at § 230.12(a)(3)(iii) (emphasis added).

44. Id. at § 230.70(d).

45. Id. at § 230.75(e).

46. Id. at § 230.75(d).

47. Id.

48. Id. at § 230.10(d).

49. See Memorandum of General John F. Wall, Views of the Chief of Engineers 5 (May 31, 1985) [hereinafter Wall Memorandum]; Houck, supra note 10, refers to this as "mitigation-based permitting."

50. See Oversight Hearings on Section 404 of the Clean Water Act Before the Subcomm. on Environmental Pollution of the Senate Comm. on Environment and Public Works, 99th Cong., 2d Sess. 10-11 (1986) [hereinafter § 404 Oversight Hearings]; Want, The Army-EPA Agreement on Wetlands Mitigation, 20 ELR 10209 (June 1990).

51. Wall Memorandum, supra note 49, at 5. General Wall noted that the buy down "is somewhat problematic, because, if not implemented carefully, it could serve to weaken or subvert key provisions of the current 404(b)(1) guidelines. . . ." Id.

52. Bersani v. EPA, 674 F. Supp. 405, 18 ELR 20001 (N.D.N.Y. 1987), aff'd sub nom. Bersani v. Robichaud, 850 F.2d 36, 18 ELR 20874 (2d Cir. 1988), cert. denied, 109 S. Ct. 1556, 19 ELR 10232 (1989).

53. Notice of Decision to Prohibit the Use of Sweedens Swamp Site for the Discharge of Dredged or Fill Material in Attleboro, Massachusetts, 51 Fed. Reg. 22977 (1986) [hereinafter Swedens Swamp Notice]. In addition to creating 45 acres of wetlands, the applicant proposed to enhance 13 acres of forested wetlands. Id.

54. Initially, the Corps' New England District recommended a denial of the permit. Bersani, 850 F.2d at 42, 18 ELR at 20877. General John F. Wall, the Director of Civil Works, reviewed the decision and reached a contrary conclusion. He found that the applicant had satisfied the practicable alternatives test, stating: "In a proper case, mitigation measures can be said to reduce adverse impacts of a proposed activity to the point where there is no 'easily identifiable difference in impact' between the proposed activity (including mitigation) versus the alternatives to that activity (including mitigation) versus the alternatives to that activity." Id.

55. Sweedens Swamp Notice, supra note 53, at 22978 (interpreting guidelines as not "allowing mitigation as a remedy for destroying wetlands when a practicable alternative exists").

56. See Bersani, 850 F.2d at 47, 18 ELR at 20880.

57. See 33 C.F.R. § 320.4(r) (1989).

58. As noted earlier, the Corps' regulations recognize that a discharge must satisfy the guidelines before the Corps can issue a permit. 33 C.F.R. §§ 320.4(a)(1), 320.4(r)(1)(ii), 323.(6)(a), 325.4(a)(1).

59. Id. at § 320.4(r) n.1. The footnote recognized that subsection (r)

is a general statement of mitigation policy which applies to all Corps of Engineers regulatory authorities covered by these regulations (33 CFR Parts 320-330). It is not a substitute for the mitigation requirements necessary to ensure that a permit action under section 404 of the Clean Water Act complies with the section 404(b)(1) Guidelines. There is currently an interagency Working Group formed to develop guidance on implementing mitigation requirements of the guidelines.

60. See generally § 404 Oversight Hearings, supra note 50.

61. 55 Fed. Reg. 9210 (Mar. 12 1990).

62. Id. at 9210-11.

63. See Remarks by President Bush, Sixth Int'l Waterfowl Symposium (June 8, 1989), reprinted in 25 WEEKLY COMP. PRES. DOC. 860, 861 (June 12, 1989).

64. 55 Fed. Reg. at 9211.

65. February MOA, supra note 6, at 1, 55 Fed. Reg. at 9211.

66. Id. at 6, 55 Fed. Reg. at 9213.

67. Id. at 1 & n.1, 55 Fed. Reg. 9211 & n.1. The MOA does not apply to letters of permission, regional permits, nationwide permits, or programmatic permits.

68. Id. at 2, 55 Fed. Reg. at 9211.

69. Id.

70. Id.

71. Id.

72. Id.

73. Id. at 2- 3, 55 Fed. Reg. at 9211-12.

74. Id. at 2, 55 Fed. Reg. at 9211.

75. Id. at 3, 55 Fed. Reg. at 9211-12.

76. Id. at 3, 55 Fed. Reg. at 9212.

77. Id. (citing 40 C.F.R. § 230.10(a)).

78. Id. (citing 40 C.F.R. § 230.10(a)).

79. Id. at 4, 55 Fed. Reg. at 9212.

80. Id. The entire paragraph provides: "Section 230.10(d) states that appropriate and practicable steps to minimize the adverse impacts will be required through project modifications and permit conditions. Subpart H of the Guidelines describes several (but not all) means for minimizing impacts of an activity."

81. Id.

82. Id.

83. Id.

84. Id. at 5, 55 Fed. Reg. at 9212-13.

85. Id. at 5, 55 Fed. Reg. at 9213.

86. Id. at 5, 55 Fed. Reg. at 9212-13.

87. Id. at 5 n.7, 55 Fed. Reg. at 9213 n.7.

88. 55 Fed. Reg. 9210, 9210-11 (Mar. 12, 1990).

89. An examination of revisions regarding "appropriate mitigation" is instructive. The November MOA stated:

The determination of what level of mitigation constitutes "appropriate" mitigation shall be based on the values and functions of the aquatic resource that will be impacted. This determination shall not be based upon characteristics of the proposed project such as need, societal value, or the nature or investment objectives of the project's sponsor.

November MOA, supra note 1, at 2, 54 Fed. Reg. at 51320. The February MOA omitted the second sentence and revised the first sentence to provide that "[t]he determination of what level of mitigation constitutes "appropriate" mitigation is based solely on the values and functions of the aquatic resource that will be impacted." February MOA, supra note 6, at 2, 55 Fed. Reg. at 9211 (emphasis added). The insertion of the word "solely" simply rendered the second sentence superfluous.

90. The February MOA added such provisions as "[t]he MOA does not change the substantive requirements of the Guidelines. It is intended to provide guidance regarding the exercise of discretion under the Guidelines." February MOA, supra note 6, at 1, 55 Fed. Reg. at 9211.

91. November MOA, supra note 1, at 3, 54 Fed. Reg. at 51320-21.

92. February MOA, supra note 6, at 3, 55 Fed. Reg. at 9212.

93. 45 Fed. Reg. 85336, 85339 - 40 (Dec. 24, 1980) (emphasis added).

94. Id. at 85343.

95. February MOA, supra note 6, at 4, 55 Fed. Reg. at 9212.

96. Id. at 3 n.4, 55 Fed. Reg. at 9212 n.4.

97. 40 C.F.R. § 230.10(d)(1989).

98. February MOA, supra note 6, at 5 n.7, 55 Fed. Reg. at 9213 n.7. Cf. Greening of the Gravel/Enhanced Habitat Rehabilitation, ALASKA SPARK, at 6 (Earth Day 1990 ed.) (discussing rehabilitation efforts of ARCO Alaska, Inc.).

99. Cf. November MOA, supra note 1, at 5 & n.6, 54 Fed. Reg. at 51321 & n.6 with February MOA, supra note 6, at 5-6, 55 Fed. Reg. at 9213.

100. February MOA, supra note 6, at 5, 55 Fed. Reg. at 9213.

101. See The Conservation Foundation, Protecting America's Wetlands: An Action Agenda 61 (1988) (noting that approximately 50 percent of attempts to create wetlands fail in the short term).

102. Memorandum of Agreement between the Department of the Army and the Environmental Protection Agency Concerning Federal Enforcement for the Section 404 Program of the Clean Water Act (Jan. 19, 1989).

103. Memorandum of Agreement between the Department of the Army and the Environmental Protection Agency Concerning the Determination of the Geographic Jurisdiction of the Section 404 Program and the Application of the Exemptions Under Section 404(f) of the Clean Water Act (Jan. 19, 1989) [hereinafter MOA on Geographic Jurisdiction and § 404(f) Exemptions]; see also FEDERAL MANUAL FOR INDENTIFYING JURISDICTION AND DELINEATING JURISDICTIONAL WETLANDS (Jan. 1989) (interagency cooperative publication between the Army, EPA, Fish and Wildlife Service, and Soil Conservation Service).

104. MOA on Geographic Jurisdiction and § 404(f) Exemptions, supra note 103. In addition, on May 3, 1990, the agencies signed a joint Memorandum for the Field regarding the Section 404 program and agricultural activities.

105. For discussions of EPA's and the Army's differences, see Blumm & Zaleha, Federal Wetlands Protection Under the Clean Water Act: Regulatory Ambivalence, Intergovernmental Tension, and a Call for Reform, 60 U. Colo. L. Rev. 695 (1989); Houck, supra note 10; See also Hays, The Politics of Environmental Administration, in THE NEW AMERICAN STATE 21, 25 -26 (1987); Houck, supra note 18, at 774 - 75 ("Section 404 is constructed on the backs of two beasts moving in different directions.").