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Making the Most of the Watershed Approach: New Report From ELI

April 2018

(Washington, D.C.) — The Oil Pollution Act and CERCLA allow for the recovery of more than just cleanup costs following an oil spill or the release of hazardous substances. These laws also provide for the recovery of damages to restore or replace natural resources to the conditions that would have existed prior to the spill or release, as well as to compensate for interim losses of ecological services. Natural resource trustees—states and tribes acting on behalf of the public—are tasked (along with federal trustees) with planning and implementing the restoration of these lost natural resources and services. A new report from the Environmental Law Institute (ELI) explains how natural resource trustees can integrate natural resource damage (NRD) restoration with the Clean Water Act §404 compensatory mitigation program.                             

Integrating the NRD assessment (NRDA) process with mitigation banking, conservation banking, and in lieu fee (ILF) programs offers many benefits. “Integration can reduce the time until active restoration occurs and can provide efficiencies in evaluating ecosystem services, identifying restoration options, and implementing needed actions,” explains senior attorney James McElfish, lead author of the report. “Coordination can also produce a more regionally oriented outcome by identifying sites that can serve multiple ecosystem goals in a regional context,” he adds.

The report, Natural Resource Damages, Mitigation Banking, and the Watershed Approach, offers several useful observations and recommendations:

  • States and tribes can encourage the use of existing regional plans and complementary compensatory mitigation mechanisms by bringing these forward early in the NRDA process.
  • Wetland programs provide numerous opportunities to plan for integration with the NRDA process.
  • When using CWA §404 or conservation bank credits, credit definition is extremely important to ensure that NRDA requirements are satisfied.
  • Public comment on use of credits for NRDA remains important, and can be integrated with existing processes.
  • Tribal trustees may need to examine opportunities to generate restoration credits on their own lands or treaty rights lands via participation in restoration banking.
  • Provisions for restoration banks should include all necessary assurances for siting, monitoring, maintenance, long term management, and financial assurances, which can be based on the mechanisms required in the Corps-EPA Compensatory Mitigation Rule, and the Fish & Wildlife Service’s Conservation Banking Interim Guidance.

Notably, the report explains that CWA §404 banking, ILF, and conservation banking may work well in environments that experience frequent, recurrent spills. Moreover, use of these watershed-based mechanisms can work especially well for addressing small spills where full-scale assessment is not always justified, and where individualized restoration projects cannot be funded effectively based on likely recoveries. In areas where there are likely to be multiple NRD claims, restoration banks could be recognized and pre-designated by trustee agencies as a potential means of meeting liabilities. ELI finds, however, that most large-scale NRDA cases will continue to require individualized assessments and detailed determination of restoration plans tailored to the array of resources that have been injured. Integration of these other compensatory mitigation mechanisms in these setting may be more complex. Among the relevant factors are whether mitigation bank and conservation bank developers are likely to make a speculative investment in the likelihood of a demand for restoration credits arising out of a multi-year assessment process by NRDA trustees.

The report was funded with the support of the U.S. Environmental Protection Agency’s Office of Wetlands, Oceans, and Watersheds. The report is available for download here.