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Surveying the landscape – an approach to compensatory mitigation

American College of Environmental Lawyers

December 12, 2016

Not that there is anything wrong with wetlands mitigation banking. I, for one, would certainly like to own one with the perceived return on investment and lack of control on the market – but, there is another option that achieves the same “no net loss” goal for impacting wetlands.

While we all recognize that the Corps’ mitigation rule establishes a hierarchy that favors the purchase of credits from approved mitigation banks, permitted responsible mitigation is still allowable under certain circumstances. In fact, most recently in South Carolina the landscape mitigation approach has been successfully used to further economic development projects. In at least one instance, the landscape approach was used entirely in lieu of the purchase of mitigation banking credits. In another, a hybrid approach was used which combined a permittee-responsible-project with the purchase of credits.

How did it work – you ask? Rather well, I might say. But how did it work?

In each instance, the applicant involved a conservation entity to serve as the sponsor for the project. Desirable property was identified which had previously been targeted for preservation by a state or federal resource agency. The sponsor then entered into an agreement with the applicant to secure the mitigation property and, if necessary, perform any enhancement work to achieve the required mitigation credit for the project. The applicant agreed to reimburse the sponsor for acquiring, holding, and enhancing the mitigation property. In one instance, the sponsor will ultimately convey the property to a state resource agency. The mitigation property will be transferred to the state resource agency, subject to a restrictive covenant to encumber the property as approved by the Corps and the resource agency. The mitigation property only partially satisfied the mitigation obligation. A small credit purchase for the balance was also necessary. In the other instance, the mitigation obligation will again be partially satisfied by the purchase of the mitigation property by the sponsor on behalf of the applicant and then transferred to the federal resource agency. However, the ratio of the credit purchase and the property purchase were approximately equal. This approach seemed to work more effectively because it also provided for the involvement of an approved mitigation bank which did not object to the project.

Why do it – you ask? Time and money – when time is money.

On many large economic development projects there is often resistance from third parties or resource agencies. Working with these third parties and resource agencies to identify desirable mitigation properties can facilitate consensus for securing a 404 permit in a timely manner. The approach only works for the applicant when the permit timeline tracks with the project and the cost of the landscape mitigation approach is essentially equivalent to the cost of purchasing credits from an approved mitigation bank.

Try it, you might like it, Mikey.

This article was originally published on the American College of Environmental Lawyers website.

Tommy Lavender’s private practice in environmental law spans more than 30 years.  He is Chair of the firm’s Environmental, Administrative and Regulatory Law Group and works to ensure that the firm’s business and professional clients receive high quality legal services.