Regulatory and ecological risk under federal requirements for compensatory wetland and stream mitigation

In 2008, federal regulators issued formal regulations governing wetland and stream mitigation in an effort to improve ecological quality and reduce uncertainty during the mitigation process. In this article, we explore how the federal regulations (“the Rule”) reduce compliance risks assumed by regulators when issuing permits that require wetland and stream mitigation under the U.S. Clean Water Act. Regulatory risk involves the timeliness and adequacy of mitigation provided for permitted impacts. The Rule attempts to accomplish this by requiring more consistent implementation of compensatory mitigation projects in general, largely through a series of provisions that create equivalent ecological and mitigation standards for all sources of mitigation (mitigation banks, permittees and in-lieu fee programs). Between April–May 2009, we administered a national, web-based survey of mitigation bankers and other mitigation professionals (N = 156 responses; 47.7% response rate). Our results reveal banker perceptions that several Corps districts have incompletely implemented equivalent standards, and therefore a variety of barriers to abating regulatory risk continue to exist 1 year after the regulations took effect. Qualitative analysis of respondent comments revealed the reasoning behind these perceptions, including perceptions that regulatory conflicts of interest involving close relationships with in-lieu fee (ILF) programs, as well as regulatory preference for NGO and government sponsored mitigation. Based on our results, it appears that Rule clarification may be necessary to further reduce regulatory uncertainty and promote high quality compensation.