To amend the Federal Water Pollution Control Act relating to wetlands mitigation banking, and for other purposes.

June 19, 2003

Mr. JONES of North Carolina (for himself, Mr. TAUZIN, Mr. BRADY of Texas, Mr. OTTER, Mr. PICKERING, Mr. TAYLOR of Mississippi, and Mr. BAKER) introduced the following bill; which was referred to the Committee on Transportation and Infrastructure

To amend the Federal Water Pollution Control Act relating to wetlands mitigation banking, and for other purposes.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

This Act may be cited as the `American Wetland Restoration Act'.

SEC. 2. DECLARATION OF POLICIES AND GOALS.

Section 101(a) of the Federal Water Pollution Control Act (33 U.S.C. 1251(a)) is amended--

(1) by striking `and' at the end of paragraph (6);

(2) by striking the period at the end of paragraph (7) and inserting a semicolon; and

(3) by adding at the end the following:

`(8) it is the national policy to conserve, create, and restore wetlands so as to increase the quantity and quality of the wetlands resource base of the contiguous United States and to meet the interim goal of no overall net loss for the remaining wetlands resource base of the contiguous United States while taking into account the status and trends of the wetlands resource base in particular regions and area and to achieve such goals through regulatory means that take into account that 75 percent of the wetlands in the contiguous United States are privately owned and that private property rights should not be unreasonably infringed and through nonregulatory opportunities involving all levels of government and supported by private initiatives; and

`(9) it is the national policy to foster wetlands mitigation banking as a means to mitigate the unavoidable loss of wetlands and to do so by providing a regulatory framework for the establishment, operation, and use of mitigation banks, making appropriate use of existing, successful programs for mitigation banking, and taking into account regional variations in wetlands conditions, functions, and values.'.

SEC. 3. USE OF MITIGATION BANKS.

Section 404 of the Federal Water Pollution Control Act (33 U.S.C. 1344) is amended by adding at the end the following:

`(u) USE OF MITIGATION BANKS-

`(1) DEFINITIONS CONTAINED IN FEDERAL GUIDANCE- Except as otherwise provided in this subsection, a term used in this subsection shall have the meaning given such term in the Federal Guidance.

`(2) OTHER DEFINITIONS- In this subsection, the following definitions apply:

`(A) CHARTER- The term `charter' means a mitigation banking instrument, as described in the Federal Guidance. A charter is an agreement between an applicant for a charter and the Secretary or a State (in the case of a State administering a program under subsection (h)(2)(A)) that has been developed in consultation with the mitigation bank review team.

`(B) FEDERAL GUIDANCE- The term `Federal Guidance' means the Federal Guidance for the Establishment, Use and Operation of Mitigation Banks (60 Fed. Reg. 58695 (November 28, 1995)).

`(C) MAINTENANCE- With respect to wetlands, the term `maintenance' means an activity undertaken to ensure viability of a wetland or to ensure the accomplishment of a project goal after a wetland restoration, enhancement, creation, or preservation project has been completed, including hydrological manipulation and control of desirable and undesirable plant species.

`(D) MITIGATION BANK- The term `mitigation bank' means a specified wetland resource restoration, creation, or enhancement project or projects (which may include the preservation of appurtenant wetlands, uplands, or open water resources to the extent that the wetlands, uplands, or open water resources increase the ecological functioning of the mitigation bank) or, in exceptional circumstances, a project or

projects consisting solely of preservation of wetlands that has been chartered by the Secretary

under this subsection for the purpose of providing mitigation credits to offset wetland losses authorized by the terms of permits allowing activities in the waters of the United States.

`(E) SERVICE AREA- The term `service area' means the designated area, as described in the Federal Guidance, in which a mitigation bank may provide compensatory mitigation for impacts to wetlands resources.

`(F) WETLAND FUNCTION- The term `wetland function' means an environmental, hydrological, or other role that the wetland serves, including flood water storage, flood water conveyance, ground water discharge or recharge, erosion control, wave attenuation, water quality protection, scenic and aesthetic use, food chain support, fisheries, wetland plant habitat, aquatic habitat, and habitat for wetland-dependent wildlife.

`(3) CHARTER OF MITIGATION BANKS-

`(A) ISSUANCE- The Secretary, in consultation with the mitigation bank review team, may issue a mitigation bank charter to a person

who, with respect to the project or projects that are to be included in the scope of the mitigation banking charter, meets the following criteria:

`(i) Provides reasonable assurances of success of the proposed restoration, enhancement, creation, or preservation project.

`(ii) Demonstrates an adequate source of water to support the wetland.

`(iii) Demonstrates adequate legal control, such as title, license, contract, or option (contingent upon approval of the charter), over the real property (including necessary uplands, as appropriate) in the proposed project to carry out the proposed project.

`(iv) Demonstrates adequate financial assurances to carry out the proposed project, including the design, operations, and maintenance plan and remedial measures. Such financial assurances may be in the form of performance bonds, irrevocable trusts, escrow accounts, casualty insurance, letters of credit, legislatively-enacted dedicated funds for government operated banks, or other approved instruments. Such financial assurances shall entitle the Secretary to draw upon the assurances in the event of a substantial failure to perform the work provided in the mitigation bank charter, or a substantial failure of the mitigation bank to perform as expected in the application, in any case in which mitigation credits based on such work have already been used or sold. Such financial assurances shall be in place prior to the withdrawal of credits.

`(v) Demonstrates an adequate design, operations, and maintenance plan to ensure continued viability of the proposed project after completion of construction of the project.

`(vi) Demonstrates adequate legal protection, such as easements, covenants running with the land, or other appropriate, legally binding undertakings, to ensure permanent protection of the wetlands in the mitigation bank that are used as the basis for selling credits. Such legal protections shall be in place at the time that the credits are withdrawn.

`(B) APPLICATION AND PROCEDURE- An applicant for a mitigation bank charter shall submit to the Secretary an application and supporting materials signed by a responsible official acting on behalf of the applicant certifying the accuracy of the information contained in the application and materials. The application shall include, at a minimum, information on the criteria contained in subparagraph (A). The Secretary shall advise the applicant, not later than 30 days after the date of filing, of whether the application is complete and advise the applicant, in writing at that time, of any additional materials that must be submitted in order to complete the application. The Secretary shall also transmit a copy of the complete charter application to the affected State, and to the heads of appropriate Federal agencies, each of which shall have 60 days, to run concurrently, to file written comments, which shall be part of the record. If no comments are filed before the last day of such 60-day period, the Secretary may

presume that the entities do not object to the charter.

`(C) MITIGATION BANK REVIEW TEAM- The mitigation bank review team, as defined in the Federal Guidance, shall be responsible for reviewing charter applications, reaching consensus on the terms of the charter, and coordinating, as necessary, to ensure effective implementation of the terms of the charter. The Secretary or the State (in the case of a State administering a program under subsection (h)(2)(A)) shall be the chair of the mitigation bank review team and have the responsibility for making final decisions regarding the terms of the charter if consensus cannot be reached within the timeframes provided by this subsection.

`(D) COORDINATION- To the extent possible, the Secretary shall coordinate the processing of a mitigation bank charter application under this subsection with the processing of applications by such applicant for other permits required under this section, in order that determinations with respect to such permits may be made concurrently with the final decision on the bank charter.

`(E) NOTICE-

`(i) PUBLICATION- The Secretary shall publish notice of the charter application in the Federal Register and in a newspaper of general circulation in the proposed service area in which the mitigation bank is to operate (including the county in which the project is to be located), and shall make copies of the charter application and supporting materials available for public review at appropriate convenient locations in the service area.

`(ii) CONTENTS- The notice shall describe the project or projects provided in the charter application, explain where supporting materials may be reviewed, and provide 30 days for the submission of comments on the compliance of the proposed application in accordance with this subsection. Upon request, the time for comment may be extended once for 30 days.

`(iii) PERMIT REQUIREMENTS- In any case in which a permit is required

under this section to construct a mitigation bank, the notice and opportunity for public comment provided in accordance with the application for the permit may satisfy the requirements of this paragraph for public notice and comment.

`(F) DECISION DEADLINE- The Secretary, in consultation with the mitigation bank review team, shall decide whether to issue a mitigation banking charter not later than 90 days after the date of filing of a completed charter application.

`(G) EXTENSION OF DEADLINE- If additional time is needed to file comments, to provide for a hearing, to provide for further review of comments, or to provide for a reply to adverse comments, the Secretary may extend the time for review once for 90 days.

`(H) DETERMINATION- After a review of public comments and any reply by the applicant, the Secretary may, in accordance with subparagraph (A) and after appropriate coordination and consultation, issue the charter, deny the charter, or issue the charter with modifications. The Secretary's decision shall be based on the entire public record.

`(I) AMENDMENTS- Additional projects may be added to a mitigation bank charter by amendment. Amendment applications shall be processed in the same manner as charter applications, but the Secretary may treat the facts established in support of the charter and confirmed by the most recent report required under subparagraph (J) as established for the purpose of the amendment application process.

`(J) PERIODIC REPORTS- Persons holding a mitigation bank charter shall report to the Secretary in accordance with the charter and on a periodic basis, as determined by the Secretary. The report shall include--

`(i) information demonstrating the success of the proposed restoration, enhancement, creation, or preservation project;

`(ii) a demonstration of a continued compliance with financial assurance requirements;

`(iii) a demonstration of a continued, adequate, long-term source of water to support the wetland;

`(iv) a progress report in accomplishing the construction and design, operations, and maintenance plan provided in the charter;

`(v) a reconciliation of the number of credits sold during the previous years, the number of credits remaining, and any change in the number of credits made in accordance with the requirements of this subsection; and

`(vi) any other reporting requirement defined in the charter.

`(K) RESPONSIBILITY FOR BANK SUCCESS- Subject to the terms of the charter, a person holding the charter shall be responsible for ensuring the success of the restoration, creation, enhancement, and preservation activities.

`(L) REVOCATION- A mitigation banking charter--

`(i) shall be revoked by the Secretary--

`(I) for a criminal conviction for making material false statements in the charter application or annual report; and

`(II) for substantial violations of law (other than violations described in

clause (I)) that demonstrate the unfitness of the holder of the charter to operate the mitigation bank; and

`(ii) may be revoked by the Secretary--

`(I) for a substantial failure of the bank to perform as expected in the charter; and

`(II) for a substantial failure to comply with the terms of the charter, including financial assurances or critical operating requirements.

The charter may be revoked only after an opportunity for a public hearing.

`(M) STANDARDS AND CRITERIA FOR SUCCESS- The Secretary, in consultation with the Administrator, shall establish standards and criteria for the success of mitigation banks under this subsection.

`(4) CREDITS AND DEBITS-

`(A) NUMBER OF CREDITS- The number of credits to which a chartered mitigation bank is entitled for wetlands restoration, enhancement, and creation shall be based on the methodology contained in the charter, consistent with the approach identified in the Federal Guidance. Limited credits may be granted, consistent with the Federal Guidance, for the inclusion of uplands, open water, and preserved wetlands areas within a bank if the uplands, open water, and preserved wetlands areas within the bank increase the overall ecological functioning of the bank.

`(B) CREDITS BASED SOLELY ON PRESERVATION- The number of credits that are based solely on preservation should be based on the functions that would otherwise be lost or degraded if the wetlands were not preserved, and the timing of such loss or degradation, pursuant to the Federal Guidance. In any case in which the Secretary determines that preservation of wetlands is appropriate as the sole basis for providing mitigation credits, the Secretary shall make a determination that the wetlands--

`(i) perform physical or biological functions, the preservation of which is important to the region in which the wetlands are located; and

`(ii) are under a demonstrable threat of loss or substantial degradation due to activities that might not otherwise be expected to be restricted and that are not the consequence of actions under the control of the bank sponsor.

`(C) OFFERING CREDITS FOR SALE- Upon receipt of its charter, a mitigation bank may offer mitigation credits for sale in accordance with the charter. The number of credits that a mitigation bank may offer for sale shall not exceed the number to which the bank is entitled under the charter. As specifically approved under the charter, and consistent with the Federal Guidance, limited credits may be sold before restoration, enhancement, or creation activities have begun if adequate financial and legal assurances described in paragraph (3)(A) are in place to carry out the proposed project, the likelihood of success of the bank is

high, and a construction schedule has been approved.

`(D) DEBITS- To the maximum extent practicable, the Secretary shall use the same methodology to quantify debits as is used to quantify credits at a mitigation bank.

`(E) NO REGULATION OF CREDIT PRICE- The Secretary may not regulate the price charged for the sale of mitigation credits.

`(5) SERVICE AREAS-

`(A) ADDITIONAL GUIDANCE- The Secretary may provide additional guidance, consistent with the Federal Guidance, on the size and use of the service area, including policies regarding linear utility facilities.

`(B) INTERSTATE AGREEMENTS- If the proposed service area or mitigation bank is located in more than 1 State, the Secretary is authorized to resolve any interstate disagreement.

`(6) MITIGATION-

`(A) IN GENERAL- A mitigation bank approved under this subsection may, in accordance with this section, provide compensatory mitigation for activities requiring authorization under this section or provide required injunctive relief in an enforcement action by the Secretary or the Administrator.

`(B) IN-KIND AND OUT-OF-KIND- Consistent with the Federal Guidance, in-kind compensation of wetlands impacts should generally be required. Out-of-kind compensation may be acceptable if it is determined to be practicable and environmentally desirable on a case-by-case basis.

`(C) EQUIVALENT STANDARDS AND CRITERIA- Not later than 1 year after the date of enactment of this subsection, the Secretary and the Administrator, in consultation with the heads of appropriate Federal agencies, shall issue regulations establishing standards and criteria applicable to the use of on-site mitigation, in lieu fees, and other off-site mitigation as compensatory mitigation that are similar to the standards and criteria applicable to a mitigation bank under this subsection. Such standards and criteria shall include, consistent with this subsection, a definition of in lieu fees and specific measures addressing selection of wetland mitigation projects, timing for initiation and completion of wetland mitigation projects, and other terms to ensure that such fees are used only under appropriate circumstances with adequate controls.

`(7) REPORT TO CONGRESS- Not later than 2 years after the date of enactment of this subsection, the Secretary shall transmit to Congress a written report on the effectiveness of wetlands mitigation banking and other forms of compensatory mitigation in meeting the policy and goals identified in section 101(a)(8). The report shall first be issued in draft form and, in a 60-day period, the Secretary shall receive comments from the public about the accuracy of the information contained in the draft report. The final report shall be revised after consideration of the public comments and submitted to Congress not later than 90 days after the last day of the comment period.

`(8) EXISTING BANKS- Nothing in this subsection may be construed to require a person operating a mitigation bank in existence on the date of enactment of this subsection to submit an application for a charter under this subsection to the Secretary for approval.

`(9) MITIGATION BANKING APPROVED UNDER STATE PROGRAMS- A State that operates a program under subsection (h)(2)(A) may administer a wetland mitigation banking program in accordance with procedures established by State law or regulation if the banking program is approved by the Administrator as a part of the State's approved program under such subsection.'.

END