The Environmental Law Institute® (ELI) released the first-ever, comprehensive study of in-lieu fee mitigation today. “In-lieu fee” mitigation refers to a form of compensatory mitigation that allows developers and others to pay a fee to a third party to support conservation when they receive a Clean Water Act permit to dredge or fill wetlands and other waters. The study, conducted between July 2005 and June 2006, concludes that although few of the existing 38 in-lieu fee programs studied meet many of the basic standards for the practice, it may remain a legitimate and effective mechanism for supporting the national goal of “no net loss” of wetlands.
ELI’s study examines whether these programs have adequately addressed recommendations by the federal wetland regulatory agencies, as well as the findings of significant studies by the Government Accountability Office and National Research Council.
“Without question, the majority of the in-lieu fee programs in operation today largely fail to apply the rules, guidance, and policy that have been established to guide the practice,” says Jessica Wilkinson, Director of ELI’s Wetlands Program. “However, these deficiencies may be a product of the structure of the existing programs and in-lieu fee mitigation policy, rather than the mitigation method itself.”
Although in-lieu fee mitigation makes up only about ten percent of the mitigation conducted in the United States, it has been the center of ongoing debate for more than ten years. In March 2006, the U.S. Environmental Protection Agency and Army Corps of Engineers issued proposed rules that would phase out the use of in-lieu fee mitigation over the next five years. The federal wetland regulatory agencies are, however, seeking public comment on “alternative approaches that would retain in-lieu fee programs as a separate category of mitigation with somewhat different requirements.”
ELI’s study finds that in-lieu fee mitigation offers some advantages over other forms of mitigation. In-lieu fee programs are often sponsored by conservation organizations that have extensive experience in providing long-term stewardship of conservation sites, and it holds considerable promise for supporting watershed-based decision-making. Also, the ELI report notes, the method is often well-suited to provide a simple means to offset impacts to smaller wetlands by aggregating the mitigation.
Nonetheless, this form of mitigation continues to draw criticism and existing programs have largely done an insufficient job of addressing past concerns. Many programs have experienced delays between the time when impacts occur and when mitigation projects are implemented. Programs have also been criticized for inaccurately assessing mitigation costs and for failing to charge fees that provide sufficient funds to offset impacts.
“Since no existing ecological, empirical, field-based research has demonstrated whether or not in-lieu fee mitigation is inherently unable to replace lost aquatic resource functions,” Wilkinson added, “the fundamental questions for in-lieu fee mitigation are whether the risks can be adequately managed and whether the risks that remain are outweighed by the potentially significant benefits of in-lieu fee mitigation.”
The report comes on the heels of a law suit recently filed by the National Mitigation Banking Association (NMBA). The NMBA suit challenges a Clean Water Act permit that allows in-lieu fee mitigation to offset a portion of the impacts resulting from the proposed expansion of O’Hare International Airport in Chicago. The group argues that the in-lieu fee arrangement violates the Clean Water Act’s requirements for specific and enforceable compensatory mitigation.
Over the past 30 years, ELI has established itself as the nation’s leading source of information on compensatory wetland mitigation. The in-lieu fee study follows another noteworthy aquatic resource mitigation report by ELI. Last month, ELI released the 2005 Status Report on Compensatory Mitigation in the United States, which profiles the nature and extent of all forms of wetland mitigation in the United States, including the nation’s 405 approved wetland mitigation banks.
Jessica Wilkinson, Director of ELI’s Wetlands Program, is available for contact regarding questions about both reports’ findings (wilkinson@eli.org; 202-558-3100). This and other ELI mitigation studies are available at