BOOK REVIEW

FRANK E. MATTHEWS[*]
Copyright 1998 Florida State University Journal of Land Use & Environmental Law

KIMBERLY GRIPPA[**]

<BLOCKQUOTE>WETLAND< /SFONT> MITIGATION: MITIGATION BANKING AND OTHER STRATEGIES FOR DEVELOPMENT AND COMPLIANCE. By Mark S. Dennison with contributions from James A. Schmid. Government Institutes, Inc., Rockville: 1997, Pp. 305.

BLOCKQUOTE> Having practiced environmental law in Florida for many years and after being involved in land use development activities in wetland areas, I was interested in reading Wetland Mitigation: Mitigation Banking and Other Strategies for Development and Compliance. The book's preface states that it is written as a guide to understanding, evaluating, and implementing various mitigation measures needed to avoid, minimize or compensate for land use development impacts to wetlands. Further, this book explains the regulatory framework, permit process, and mitigation prerequisites to obtaining permit approvals to carry out land use development activities in wetland areas.[1]

As a practitioner in this field, I concur that a "how to" book with real life examples of successfully permitted cases is worthwhile. From this standpoint, I critique the book's chapters, address inaccurate statements, and suggest means by which this book could be improved.

The book's format is reader-friendly as it is written in easy to understand language and contains many helpful tables and useful appendices. However, some omissions and faulty premises appear throughout the discussion that need addressing. For instance, in Chapter One Mr. Dennison writes that "[w]etland studies were the driving force behind enactment of federal and state environmental laws and regulations aimed specifically at protection of the nation's wetlands."[2] Assuming that wetland science is the tail wagging the dog of wetland regulation is a faulty premise. In reality, wetland protection was an afterthought of the Clean Water Act. Wetlands are not mentioned or defined in the Clean Water Act, and not until July 25, 1975 did the word wetland appear in the Corps of Engineers (COE) regulations.[3]

However, Mr. Dennison correctly identifies the policy of "no net loss" of wetlands as a political response to the popular sentiment, rather than a well thought out public policy. He writes:

As the public became more environmentally conscious and mindful of the vital role wetland ecosystems played for the environment, the federal government saw it crucial to declare a policy of "no net loss" of wetlands.[4]

Chapter One goes on to describe the scientific and biological functions served by wetlands. He states that wetlands are vital to the survival of various plants and animals, including threatened and endangered species like the wood stork, Florida panther, and whooping crane.[5] However, stating that wetlands are vital to the survival of the Florida panther is a misconception. Wetlands are not a preferred habitat of this species. Rather, the Florida panther was relegated to the wetlands. This is according to the Florida Department of Environmental Protection and Water Management District biologists who testified in the state's Environmental Resource Permit administrative rulemaking that the panther has been forced from its preferred upland habitat by man.[6]

Mr. Dennison lists several "valuable" functions performed by wetlands. I take issue with Mr. Dennison's value judgments regarding wetland functions. Many of the same functions performed by wetlands are also performed by uplands. Functions are objective, but the assessment of value is subjective. While listing functions performed by wetlands is all right, placing the value of these functions or the value of the species they support in a superior posture to those functions performed or species supported by uplands is improper. Are terrestrial animals less important or valuable than aquatic species? Essentially, the elevation of the importance of wetlands over other land forms is a common practice. This hypo thesis needs testing. The author accepts the premise that wetlands are somehow superior and proceeds from that premise.

Chapter Two describes how wetlands are defined and identified. Mr. Dennison recognizes that how a particular wetland is identified depends on many factors. He states:

Obviously, wetlands must be identified to be regulated and/or protected; however, wetland delineation-despite ongoing scientific refinements-is yet to be an exact science. Even if a complete and precise scientific methodology existed for wetland identification, true application of any methodology would surely be hampered by human factors, including resources and time available for determination, the relative expertise of the delineator, and the influence of competing political interests (i.e., environmental protectionists, government regulators, private property owners).[7]

However, the discussion on how to define wetlands begs the real question, which is defining what you want to regulate. The scientific and regulatory determination need not be synonymous. Congress has not decided if it wants to regulate all land areas fitting a scientific definition of wetlands. Therefore, the book and the federal regulations treat as an article of faith that all wetlands should be regulated.

This chapter spends little time on the three subgroups of soil (muck, peat, and mucky peat), hydrology, and vegetative criteria. Soils can in fact be misleading as an artifact of a previous wet condition that no longer exists. Soils will persist to appear hydric long after surface water has been removed from the equation.

The vegetation section is lacking a clear discussion of obligate and facultative wetland species. This distinction is very important as is the principle of dominance versus mere presence. Tree counting, quadrates, and transects all skew vegetative analysis as do varying levels of photo interpretation. These points are critical to a basic understanding of wetland delineations and permit processing.

Furthermore, the chapter omits the critical fact that wetland expanse and size is essential because of acreage thresholds associated with general permits, and because mitigation demands are generally correlated to the amount of wetlands impacted. The latter principle is neglected throughout the book. This is a major omission in a book entitled Wetland Mitigation. The author may have felt this basic principle was self-evident and thus the omission. I would suggest that the readership needs to know why challenging jurisdictional assertions are important.

Chapter Three provides an overview of various federal regulatory programs aimed at development activities in wetland areas. Readers must be alerted to the fact that recent case law has overruled the discussion regarding the incidental discharge rule. In American Mining Congress v. United States Army Corps of Engineers,[8] the United States District Court for the District of Columbia found that the so-called Tulloch rule promulgated by the Environmental Protection Agency and the Army Corps of Engineers was invalid.[9] Under the Tulloch rule, the agencies considered the "incidental fallback" that accompanies dredging and land clearing activities to be a "discharge" necessitating a permit under section 404 of the Clean Water Act. In American Mining Congress, the court concluded that this rule exceeded the scope of the agencies' statutory authority.[10]

This chapter needs additional improving by adding some discussion regarding the relationship between the National Environ mental Policy Act of 1969 (NEPA) and Section 404 of the Clean Water Act. Case law has found that in the absence of additional federal entanglement through funding or regulations, section 404 alone is not a major federal action for NEPA purposes.[11]

As a whole, the book is over inclusive of regulatory programs tangential to wetland mitigation and under inclusive of discussion regarding traditional mitigation. For example, the book goes into some detail regarding the Water Resource Development Act of 1986, Advance Identification of Wetlands, and Special Area Management Plans, yet the book only devotes forty pages to traditional mitigation.

Chapter Four walks the reader through the wetland permitting process. However, the complexity of ascertaining whether a Section 404 permit is needed receives no attention. Chapter Two contains fifteen pages of discussion on wetland identification but the critical nexus of where the "lines" are drawn and the scope and size of the permit is never made. The size of the parcel subject to jurisdiction is critical. The author notes that less than one percent of the applications submitted are denied,[12] but the book fails to emphasize that the debate regarding jurisdiction sets the entire stage for the ultimate discussion of mitigation. The "calculus" of mitigation ratios whereby X acres of impacted wetland acres requires Y acres of restored, enhanced, or preserved acres should be noted as a fundamental "how to" issue.

The author's objective of producing a guide to evaluate and implement mitigation measures is missed without the critical connection being made between wetland acres impacted. Frequently, regulators will argue that the jurisdictional area is inconsequential so long as you receive a permit. That philosophy belies the important cost consideration of providing mitigation. The real number of permit denials should be measured by the number of projects withdrawn or abandoned because the price to comply with the process and the proposed mitigation conditions is simply too high.

Even though it provides a basic outline of the federal regulatory process, Chapter Four gives woeful short shrift to the overlapping and duplications of state, regional, and local wetland programs that operate concurrently. In one short sentence, the author innocently notes that "the applicant may need to secure additional state and local wetland permit approvals."[13] In practice, the difficulty in serving many governmental masters has rendered the Section 404 pro gram one of the most unpopular regulatory programs in the nation. One improvement that might add to Chapter Four is a simple flow chart of the federal process similar to the one provided in the Developer's Guide to Federal Wetlands Regulation.[14]

The best part of the book is the presentation of illustrative examples, in Chapter Five, of how the mitigation process works. The preface promises "numerous real life mitigation case studies."[15] Unfortunately, Chapter Five contains only two such illustrative cases.

A great service would be provided if the public were enlightened on the meaning of "practicable alternatives." Cases deciding the issue of practicability are critically important to provide a blue print to applicants. The most significant missing component of the practicable alternatives discussion is the concept of "water dependency." The first case illustration mentions its importance, but no part of the chapter discusses water dependency. Water dependency is a thresh old and fundamental element of the Section 404(b)(1) guidelines. If you have a water dependent activity, your alternative analysis is much less severe.[16] This topic is essential to an understanding of federal sequencing. The greatest unknown which is given no real guidance in the federal regulations is what constitutes a "water dependent" activity.

Chapter Five is mislabeled. This chapter is actually a discussion of the "sequencing" of wetland avoidance, minimization and compensatory mitigation as oppose discussing mitigation compliance. The two paragraphs on pages 107-108 do not remotely approach the level of information needed to understand the difficulty of achieving mitigation compliance. A number of standard conditions regarding mitigation success could be put forth regarding areal extent, vegetative density, financial assurance, future land use restrictions, reporting and monitoring that would alert the reader to the pitfalls that lurk in achieving mitigation compliance.

The mitigation option overview in Chapter Six is generally very good, except for the brief reference to mitigation satisfying the Section 404(b)(1) guidelines.[17] The discussion of available types of mitigation indicates that increased public access and pure acquisition and preservation are no longer favored. However, the author does not provide an explanation of the rationale for the elimination of enhanced public access as mitigation.

One major overlooked factor in the discussion of mitigation types is that, in practice, the deciding factor is usually costs. Chapter Eight provides a recitation of costs in the case examples, but do note that land costs and preservation of mitigation areas are almost always a requirement regardless of the type of mitigation selected. Therefore, enhancement and/or restoration will be more expensive than simple preservation because there are costs incurred in addition to, not in lieu of, acquisition and preservation.

The overview of the mitigation banking concept is clearly stated in Chapter Seven. However, the benefits of "upfront mitigation" are under emphasized. Many regulators have complained of the temporal loss of wetland functions which occurs from the time construction starts and until the mitigation site is successful.[18] In most mitigation banks, the credits are realized and the environmental benefits created long before the adverse construction impacts occur. This phenomenon is a great plus for mitigation banks, and it also explains why functional replacement can be approved on a one-to-one basis instead of using a large multiplier. In order for banks to be economical and competitive in the market, a critical consideration is that the credits needed to offset wetland losses are as small as possible.

The functional value assessment discussion, in Chapter Seven, is somewhat dated. Virtually no agency operating in Florida uses Habitat Evaluation Procedures (HEP) or Wetland Evaluation Technique (WET) to perform wetland functional assessments. The Mitigation Bank Review Team (MBRT), which oversees mitigation banks in Florida, has developed its own review manual with functional criteria referred to as modified wetland rapid assessment procedures (MWRAP). This evaluation technique is a modified version of an assessment methodology developed and used by the South Florida Water Management District.

This protocol for review was only endorsed in mid-1997, but nationwide the Corps of Engineers (COE) has expressed an intention to perform impact analysis using an assessment technique known as an hydrogeomorphic (HGM) analysis. The chapter is lacking in any reference to this new direction by the COE since credit and impact functional analysis must be compatible or else no means is available to assess the credits needed to offset a given impact. On page 132 the author provides a very brief statement that the same methodology must be used to determine debts and credits.[19] This is a fundamental ingredient for having a ledger that compares apples to apples. The ease of administering a mitigation bank is directly dependent on a functional assessment methodology being easily ap plied to the impact site and the bank site.

Another mitigation issue largely overlooked, in this chapter and the book as a whole, is geographic proximity. The COE's preference for on-site versus off-site mitigation is a disincentive for mitigation banks. A critical issue for mitigation banks is the mitigation service area which defines the geographic limits where mitigation credits can be sold. In many cases, a large service area is critical if a broad enough market is going to be created to sell the credits in a timely fashion.

There is no further explanation of the federal agencies policies on cash payment and no citation as to the federal agencies authority to accept cash payments. The practice of allowing a state, regional, or local government to perform mitigation with monies paid by a private permittee is relatively widespread. The author misses a golden opportunity to discuss how this practice is directly at odds with private mitigation banks.

In Florida, the "pay and go" option is very attractive to permittees, but when the recipient of the payment is a government entity that also regulates the same activity being approved through cash payment, significant ethical issues surface. Mitigation banks are at distinct disadvantages if government regulators are undercutting their price. Who would a permittee rather pay $30,000 an acre for mitigation, a private mitigation banker, the state, or the local permitting agency approving the project?

Legislation has been pursued in Florida to put limits on government pay and go arrangements.[20] The mitigation bankers have insisted on "full cost" accounting and review by independent agen cies on the permitting of projects by cash payments.[21] The problem is that public lands can be used to subsidize mitigation efforts, thus taking the land cost out of the price of the mitigation which in effect ensures that private bank options will always be competitively disadvantaged.

Chapter Eight delivers precisely as advertised, providing a grand overview of the November 1995 federal guidance on mitigation banking. Each of the important elements of the guidance document are examined.

However, the free form non-rule nature of the guidance is presented without comment or criticism. The soft under belly of mitigation banking is the lack of federal statutory or rule authority. Since the Clean Water Act makes no mention of the concept, the federal agencies have created a permitting process without the benefits of regulations. This anomaly deserves considerable discussion. Applicants are at risk with no support from the Federal Administrative Procedures Act. Mitigation banks are approved by multi-agency contracts called mitigation bank instruments (MBI) which are not permits issued under Section 404 and the accompanying Corp of Engineer/Environmental Protection Agency rules. This informal review process has created innumerable delays and frustrations for mitigation bank applicants.

Florida has a relatively elaborate statute and rule outlining its mitigation bank process, but the federal agencies operate wholly independent and outside of those state established protocols. The federal guidance, the MBRT, and the procedure attending the MBI are all subject to attack because of the absence of enabling legislation or formal federal rulemaking.

In Florida, the issue of mitigation bank credits being unavailable if an environmental improvement project is planned and approved has been a major stumbling block, especially in South Florida. On page 146, this limitation is noted, but there is no elaboration on what it means to "supplement" a publicly planned and approved project.[22] This limitation in the federal guidance document has been used by the COE in Florida to deny or delay three mitigation banks: Florida Power and Light's (FPL) Everglades Mitigation Bank, Florida Mitigation Trust Corporation's (FMTC) Lake Okeechobee Mitigation Bank, and the South Florida Water Management District's (SFWMD) Loxahatchee Mitigation Bank.

Under the Jacksonville COE's expansive review of the federal effort to restate the Everglades, virtually no private measure can be reviewed as anything but supplanting federal plans. This short sighted policy precludes private augmentation of federal effort. Clearly, eradication of noxious vegetation-like melaleuca is critical to environmental restoration of the Everglades. However, mitigation banks are excluded from receiving credits for this activity if eradication is the sole province of the federal government. Similarly, FPL has been denied hydrologic credit for manipulation of water levels and canal improvements for fear that the federal plan to reengineer the Everglades plumbing might undo FPL's good work.

The section on the processing of a MBI is the another one of the best parts in the book. The reader is able to gain a full comprehension of the MBRT process culminating in the execution of the MBI.

The four case studies presented in Chapter Nine are informative, but to a certain extent highlight some of the missing information from previous chapters. The jurisdictional wetland discussion of vegetative composition speaks of obligate and facultative plants without any previous background on these distinctions. Case study number one fails to differentiate the public interest nature of the wastewater plant construction. Since the overall objective of the construction in wetlands is to improve water quality in the Delaware River, one is left asking why is mitigation needed at all?

Curiously, case study number two highlights the difficulty of "gardening" created wetlands and ensuring against failure. In that case, vandalism is blamed for vegetative failure but no explanation is given about the reaction of the regulator. The required mitigation was part of an after the fact permit matter, yet the reader is left guessing whether the permittee was excused from his obligation or required to provide alternative compensation.

The third case study introduced the concept of payment in lieu of mitigation. This was an alternative never discussed in the preceding chapters. In the seven pages providing a discussion of the cash payment illustration, the federal agencies' position on the proposal is missing except a notation on page 177 that the COE was satisfied because they didn't require any other need to effectively offset impacts at a given site.[23]

SUMMARY

Overall the book is a fair primer on the topic of mitigation, but it covers too many tangential issues. The author wrestles with the conflicting objectives of providing in-depth analysis of the many subplots impacting mitigation decisions and the desire to cover the water front in a readable yet cursory fashion. The use of New Jersey and Pennsylvania case studies which were decided generally at the state level demonstrates the problem with presenting the book as a guide to federal wetland mitigation. In practice, the federal review of wetland mitigation is greatly driven by state wetland programs. The book's greatest shortcoming may be the lack of a caveat that federal mitigation is to a great degree the imposition of basic federal principles to a wide variety of state programs.

_______________________________

[*] Partner, Hopping, Green, Sams and Smith, Tallahassee, Florida, and member of the New York and Florida Bars. B.A., University of Rochester, 1978; J.D., University of Miami, 1981. Mr. Matthews specializes in wetlands and surface water permitting and has drafted many of Florida's environmental laws and regulations over the last decade. Return to text.

[**] Associate, Hopping, Green, Sams and Smith, Tallahassee, Florida. B.S., State University of New York at Albany, 1992; J.D., Florida State University College of Law, May 1997. Return to text.

[1] See MARK S. DENNISON & JAMES A. SCHMID (contributing), WETLAND MITIGATION: MITIGATION BANKING AND OTHER STRATEGIES FOR DEVELOPMENT AND COMPLIANCE xiii (1997). [hereinafter WETLAND MITIGATION] Return to text.

[2] Id. at 1. Return to text.

[3] As a result of the decision in National Resources Defense Council, Inc. v. Callaway, 392 F. Supp 685 (D.D.C. 1975), the COE adopted regulations defining navigable waters to include wetlands. Return to text.

[4] WETLAND MITIGATION, supra note 1, at 1. Return to text.

[5] See id. at 3. Return to text.

[6] See generally Florida transcripts of depositions in Sun City Center Corp. v. Southwest Florida Water Management District, DOAH Case No. 94-2179RP (1994). Return to text.

[7] WETLAND MITIGATION, supra note 1, at 16 (1997). Return to text.

[8] 951 F. Supp. 267 (D.D.C. 1997) , motion to amend judgment denied, 962 F. Supp. 2 (D.D.C. 1997). Return to text.

[9] See id. at 271. Return to text.

[10] See id. Return to text.

[11] See Village of Los Ranchos De Albuquerque v. Barnhart, 906 F.2d 1477 (10th Cir. 1990). Return to text.

[12] See WETLAND MITIGATION, supra note 1, at 74. Return to text.

[13] Id. Return to text.

[14] See LAWRENCE R. LIEBESMAN, DEVELOPER'S GUIDE TO FEDERAL WETLANDS REGULATION 58-61 (2d ed. 1993). Return to text.

[15] WETLAND MITIGATION, supra note 1, at xiii (1997). Return to text.

[16] See Guidelines for Specification of Disposal Sites for Dredged or Fill Material, 40 C.F.R. 230 (1996). Return to text.

[17] See WETLAND MITIGATION, supra note 1, at 114. Return to text.

[18] Joint State/Federal Mitigation Bank Review Team Guidance Document for Florida (July, 1997). Return to text.

[19] See WETLAND MITIGATION, supra note 1, at 132. Return to text.

[20] See FLA. STAT. 373.4315 (1996); Act effective Oct. 1, 1997, ch. 97-222, 1997 Fla. Laws. Return to text.

[21] See id. Return to text.

[22] See WETLAND MITIGATION, supra note 1, at 146. Return to text.

[23] See id. at 177. Return to text.