I
104TH CONGRESS
2D SESSION
H. R. 3692
To promote the restoration, conservation, and enhancement of wetlands
through the establishment of a responsible wetlands mitigation banking
program.
IN THE HOUSE OF REPRESENTATIVES
JUNE 20, 1996
Mr. JONES introduced the following bill; which was referred to the Committee
on Transportation and Infrastructure
A BILL
To promote the restoration, conservation, and enhancement
of wetlands through the establishment of a responsible
wetlands mitigation banking program.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Wetlands Restoration
and Improvement Act of 1996’’.
SEC. 2. FINDINGS AND DECLARATION OF POLICIES AND
GOALS.
(a) FINDINGS.—Congress finds that—
(1) half of the Nation’s wetlands have been de-
stroyed through a failure to understand and appre-
ciate the important environmental, hydrological, and
social functions which wetlands serve, including—
(A) essential nesting and feeding habitat
for waterfowl and other wildlife, including many
rare and endangered species;
(B) fish and shellfish habitat;
(C) water storage, including natural flood
and drought control and aquifer recharge;
(D) the enhancement of water quality;
(E) the provision of recreational, edu-
cational, and research opportunities; and
(F) opportunities for aesthetic apprecia-
tion;
(2) much of the Nation’s valuable wetlands
have been significantly degraded, thus necessitating
that activities that destroy wetlands adhere to a
strict mitigation policy that involves sequentially
avoiding impacts, minimizing impacts, and com-
pensating for unavoidable impacts;
(3) where impacts are unavoidable, wetlands
mitigation banking restores, enhances, and in excep-
tional cases, preserves and creates ecologically sig-
nificant wetlands and provides for long-term restora-
tion and enhancement of these vital resources;
(4) wetlands mitigation banking is not only con-
sistent with the important Federal goal of no net
loss of wetlands resources but, when conducted with-
in the parameters of a thoughtfully designed regu-
latory program, contains the procedural safeguards
necessary to greatly increase the overall number and
quality of wetland resources;
(5) wetlands mitigation banks can be particu-
larly effective in restoring, enhancing, creating, and
preserving the valuable environmental functions of
wetlands;
(6) mitigation banks often provide greater flexi-
bility, reliability, and effectiveness in meeting mitiga-
tion requirements than on-site mitigation can and
often have significant environmental advantages over
haphazardly placed individual mitigation projects,
such as—
(A) maintaining the integrity of a larger
aquatic ecosystem by consolidating compen-
satory mitigation into a single large parcel;
(B) bringing together financial resources,
planning, and scientific expertise not practicable
to bring to many project-specific compensatory
mitigation proposals;
(C) reducing permit processing times and
providing 
more 
cost-effective 
compensatory
mitigation opportunities for projects that qual-
ify;
(D) improving regulatory oversight by fo-
cusing regulatory agency resources more effec-
tively; and
(E) contributing towards attainment of the
goal of no net loss of the Nation’s wetlands by
providing opportunities to compensate for au-
thorized impacts when mitigation might not
otherwise be required, appropriate, or prac-
ticable;
(7) wetlands mitigation banking shows consid-
erable promise for preventing and reversing the con-
tinuing net loss of wetlands while accommodating
desirable economic and community growth and, if
implemented on a widespread basis, may result in
further progress toward restoring past losses of criti-
cal wetlands;
(8) the absence of Federal enabling legislation
impedes the widespread and effective use of wetlands
mitigation banking, while encouraging needless regu-
latory delay, financial uncertainty, and unproductive
litigation; and
(9) the adoption of Federal enabling legislation
providing for binding Federal standards governing
wetlands mitigation banking will foster economic
growth and environmental protection by providing
the public, the regulated community, State and local
governments, and potential investors reasonable as-
surance about the technical capabilities, financial
soundness and integrity, and overall performance of
large-scale wetlands mitigation banks and about the
environmental acceptability of desirable projects re-
lying on such banks to mitigate their unavoidable
adverse effects on wetlands.
(b) DECLARATION OF POLICIES AND GOALS.—Sec-
tion 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 para-
graph (7) and inserting a semicolon; and
(3) by adding at the end the following:
‘‘(8) it is the national policy to achieve, through
regulatory and nonregulatory opportunities involving
all levels of government and supported by private
initiatives, the conservation and restoration of wet-
lands to increase the quantity and quality of the
wetlands resource base of the United States and the
policy of no overall net loss for the remaining wet-
lands resource base of the United States; and
‘‘(9) it is the national policy to foster wetlands
mitigation banking as a means to mitigate the loss
of wetlands and to do so by providing a stable, prac-
tical, and workable regulatory framework for the use
of mitigation banking, making appropriate use of ex-
isting, successful State programs for mitigation
banking, and taking into account regional variations
in wetlands conditions.’’.
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.—In this subsection, the fol-
lowing definitions apply:
‘‘(A) CREATION.—The term ‘creation’, as
used with respect to wetlands, means an activ-
ity that brings a wetland resource into existence
at a site where wetlands did not exist imme-
diately prior to the activity.
‘‘(B) CREDIT.—The term ‘credit’ means a
unit of measure that represents the accrual or
attainment of wetland functions at a mitigation
bank.
‘‘(C) DEBIT.—The term ‘debit’ means the
loss of wetland functions at an impact or
project site. Such losses shall be evaluated
using the same scientific criteria as are applied
to evaluate wetlands functions for credit pur-
poses.
‘‘(D) 
ENHANCEMENT.—The 
term 
‘en-
hancement’ means an activity that increases
any of the wetland functions of a wetland in ex-
istence prior to the date of enhancement.
‘‘(E) LINEAR
UTILITY
FACILITY.—The
term ‘linear utility facility’ means a road, rail-
road, pipeline (including gathering or distribu-
tion lines), cable, line (including transmission
lines) and wire, and appurtenant support equip-
ment such as towers, poles, pumping equip-
ment, switches, signals, signs, and substations.
‘‘(F) MAINTENANCE.—The term ‘mainte-
nance’, as used with respect to wetlands, means
an activity undertaken to ensure continuation of
a wetland or the accomplishment of a project
goal after a wetland restoration, enhancement,
creation, or preservation project has been com-
pleted, including hydrological manipulation and
control of normative plant species.
‘‘(G) MITIGATION BANK.—The term ‘miti-
gation bank’ means a person, chartered by the
Secretary under this subsection, to conduct a
specified wetland resource restoration, enhance-
ment or, in exceptional circumstances, creation
and preservation project or projects identified
in its charter, each project undertaken for the
purpose of providing mitigation credits to offset
wetland losses authorized by the terms of per-
mits allowing activities in the waters of the
United States.
‘‘(H) PRESERVATION.—The term ‘preser-
vation’ means the protection of ecologically im-
portant wetlands in perpetuity through the im-
plementation of appropriate legal and physical
mechanisms and may include protection of up-
land areas adjacent to wetlands as necessary to
ensure protection or enhancement of the aquat-
ic ecosystem.
‘‘(I) RESTORATION.—The term ‘restora-
tion’ means an activity undertaken to return
wetlands, former wetlands, or other aquatic re-
sources from a disturbed or altered condition
with lesser wetland acreage or fewer wetland
functions to a previous condition with greater
wetland acreage or wetland functions.
‘‘(J) SERVICE
AREA.—The term ‘service
area’, as used with respect to a mitigation
bank, means the designated area, typically a
watershed or hydrologic unit within a State (or
watershed crossing State lines), wherein the
bank can reasonably be expected to provide ap-
propriate compensation for impacts to wetlands
resources.
‘‘(K) WETLAND
FUNCTION.—The term
‘wetland function’ means an environmental or
hydrological role that the wetland serves, in-
cluding flood water storage, flood water convey-
ance, ground water discharge or recharge, ero-
sion control, wave attenuation, water quality
protection, scenic and aesthetic use, food chain
support, fisheries, wetland plant habitat, aquat-
ic habitat, and habitat for wetland-dependent
wildlife.
‘‘(2) CHARTER OF MITIGATION BANKS.—
‘‘(A) ISSUANCE.—The Secretary shall issue
a mitigation bank charter to a person whose ap-
plication satisfies the criteria set forth in this
subsection.
‘‘(B) APPLICATION.—An applicant for a
mitigation bank charter shall submit an appli-
cation and supporting materials signed by a re-
sponsible official acting on behalf of the appli-
cant certifying the accuracy of the information
contained in the application and materials. The
application shall show, at a minimum, the fol-
lowing:
‘‘(i) The proposed restoration, en-
hancement, 
creation, 
or 
preservation
project or projects which are proposed to
be included in the scope of the mitigation
banking charter.
‘‘(ii) The proposed service area for
each proposed restoration, enhancement,
creation, or preservation project. The geo-
graphic designation of the service area
should be based upon the cataloging unit
of the ‘Hydrologic Unit Map of the United
States’ (United States Geological Survey
1980). Each such service area shall be
within a single State, unless the watershed
or hydrologic unit in which the service area
is located crosses State lines, in which case
the service area shall be within the same
watershed. If the watershed crosses State
lines, the Secretary is strongly encouraged
to resolve any interstate disagreement.
‘‘(iii) Reliable assurances of an ade-
quate source of water to support the wet-
land.
‘‘(iv) Adequate legal control over the
real property (including necessary uplands)
in the proposed project to carry out the
proposed work.
‘‘(v) Adequate financial assurances to
carry out the proposed project, including
the operation and maintenance plan. Such
financial assurances shall be in the form of
irrevocable letters of credit, performance
bonds, surety bonds, trust funds, corporate
guarantees by guarantors which meet fi-
nancial criteria set by regulations issued by
the Secretary, or a combination of such in-
struments and other financial undertak-
ings. Such financial assurances shall enti-
tle the Secretary to draw upon them in the
event of a substantial failure to perform
the work provided in the mitigation bank
charter where mitigation credits based on
such work have already been used or sold.
‘‘(vi) An adequate operations and
maintenance plan to assure continued via-
bility of the proposed project after comple-
tion of construction of the project.
‘‘(vii) Adequate legal protection, in-
cluding easements, covenants running with
land, or other appropriate, legally binding
undertakings, to assure permanent protec-
tion of the wetlands in the mitigation bank
that are used as the basis for selling cred-
its. Such legal protections shall be in place
at the time that the credits are withdrawn.
‘‘(C) ANNUAL REPORTS.—Persons holding
a mitigation bank charter shall report annually
to the Secretary. The report shall include—
‘‘(i) an independent audit of the fi-
nancial assurances on which the charter is
based and a demonstration of continued
compliance with financial assurance re-
quirements;
‘‘(ii) a demonstration of a continued
adequate long-term source of water to sup-
port the wetland;
‘‘(iii) a progress report in accomplish-
ing the construction and operation and
maintenance plan provided in the charter;
and
‘‘(iv) a reconciliation of the number of
credits sold during the previous years, the
number of credits remaining, and any
credits added in accordance with the re-
quirements of this subsection and imple-
menting regulations.
‘‘(D) DECISION
DEADLINE.—The Sec-
retary, in consultation with the Environmental
Protection Agency, and Federal and State au-
thorities, as appropriate, shall decide whether to
issue a mitigation banking charter within 180
days of the filing of a completed charter appli-
cation. Prior to the issuance of implementing
regulations, the Secretary shall do so on the
basis of best professional judgment concerning
compliance of the charter application with the
requirements of this subsection.
‘‘(E) PROCEDURE WITH RESPECT TO AP-
PLICANT
AND
OTHER
AGENCIES.—The Sec-
retary shall advise the applicant within 30 days
of filing whether the application is complete and
advise the applicant in writing at that time of
any additional materials which must be submit-
ted in order to complete the application. The
Secretary shall also transmit a copy of the com-
plete charter application to the affected State,
and to the Fish and Wildlife Service, the Envi-
ronmental Protection Agency, the National Re-
sources Conservation Service, and the National
Marine Fisheries Service, each of which shall
have 90 days, to run concurrently, in which to
file written comments, which shall be part of
the record. If no comments are filed within 90
days, these entities shall be presumed not to ob-
ject to the charter.
‘‘(F) NOTICE.—
‘‘(i) PUBLICATION.—The Secretary
shall publish notice of the charter applica-
tion in the Federal Register and in a news-
paper of general circulation in the pro-
posed 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 pub-
lic review at appropriate convenient loca-
tions in the service area.
‘‘(ii) CONTENTS.—The notice shall de-
scribe the project or projects provided in
the charter application, explain where sup-
porting materials may be reviewed, and
provide 30 days for the submission of com-
ments on the compliance of the proposed
application with this subsection. Upon re-
quest, the time for comment may be ex-
tended once for 30 days.
‘‘(G) DETERMINATION.—After a review of
public comments and any reply by the applicant
and a determination of whether the application
complies with this subsection, the Secretary
may issue the charter, deny the charter, or
issue the charter with modifications. The Sec-
retary’s decision shall be based on the entire
public record, including all public comments.
‘‘(H) PUBLIC HEARING.—Upon a showing
of a material contested factual issue about the
compliance of the proposed application with this
subsection, the Secretary shall provide notice
and opportunity for a public hearing on the
record with respect to the application.
‘‘(I) EXTENSION OF DEADLINE.—The Sec-
retary may extend the time for review once for
90 days, 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.
‘‘(J) REIMBURSEMENT TO EXPEDITE RE-
VIEW.—The Secretary is authorized to accept
reimbursement from a charter applicant for the
direct salary and benefit costs of additional gov-
ernment or contract personnel necessary to ex-
pedite review of a charter application.
‘‘(K) AMENDMENTS.—Additional projects
may be added to a mitigation bank charter by
amendment. Amendment applications shall be
processed in the same fashion as charter appli-
cations, but the Secretary may treat the facts
established in support of the charter and con-
firmed by the most recent annual report as es-
tablished for the purpose of the amendment ap-
plication process.
‘‘(L) STATE
APPROVALS.—The Secretary
shall give substantial weight to State approvals
of mitigation bank projects if the State pro-
grams under which such projects are approved
require a careful review of the long-term oper-
ation and maintenance of the project, including
provision of an adequate long-term source of
water to support the wetlands and legal control
over the real property in question and otherwise
require similar conditions to those in this sec-
tion.
‘‘(M) 
COORDINATION.—The 
Secretary
shall coordinate the processing of a mitigation
bank application under this subsection with the
processing of applications by such applicant for
other permits and authorities under this Act
and under the National Environmental Policy
Act of 1969 so that determinations with respect
to such other permits and authorities may be
made concurrently with the final decision on the
bank charter.
‘‘(N) REVOCATION.—A mitigation banking
charter may be revoked by the Secretary at any
time (i) for substantial failure to comply with
financial assurance, long-term water source, or
other critical operating requirements, (ii) for a
criminal conviction for making material false
statements in the charter application or annual
report, or (iii) for other substantial violations of
law which demonstrate the unfitness of the
holder of the charter to operate the mitigation
bank. The charter may only be revoked after an
opportunity for a public hearing on the record
within the meaning of chapter 5 of title 5,
United States Code.
‘‘(3) CREDITS.—
‘‘(A) OFFERING
CREDITS
FOR
SALE.—
Upon receipt of its charter, a mitigation bank
may offer mitigation credits for sale. The maxi-
mum number of credits which a mitigation
bank may offer for sale shall not exceed the
number to which it is entitled based on—
‘‘(i) the number of acres of wetlands
the bank has completed restoring, enhanc-
ing, and in exceptional circumstances, pre-
serving or creating and provided financial
assurance for their long-term operation
and maintenance; plus
‘‘(ii) a limited number of the addi-
tional acres of wetlands for which the bank
has provided adequate financial assurance
that it will—
‘‘(I) create, restore, enhance, or
preserve, and
‘‘(II) provide long-term operation
and maintenance if the Secretary has
approved the plans for such work, in-
cluding a schedule for construction
and there is adequate legal control
over the real property to carry out the
proposed work; minus
‘‘(iii) the number of credits it has pre-
viously sold based on the acreage described
in clauses (i) and (ii).
‘‘(B) NUMBER OF CREDITS.—The number
of credits to which a chartered mitigation bank
is entitled based on its acreage and the wet-
lands functions served by that acreage shall be
determined according to objective criteria set by
regulation or, if a completed charter application
is filed before regulations are issued, according
to objective criteria applied by the Secretary,
using best professional judgment as part of the
charter decision. The application of the objec-
tive criteria applied shall be set forth in detail
in the charter decision. The Secretary shall
apply the same criteria to each mitigation bank
in the same State and to mitigation banks in
neighboring States which have overlapping serv-
ice areas.
‘‘(C) REDUCTION OF CREDITS.—The num-
ber of mitigation credits to which a mitigation
bank is entitled shall not be decreased except by
sale or upon a showing by the Secretary, after
notice and opportunity for a public hearing, of
the bank’s failure to comply with charter condi-
tions resulting in the Secretary’s decision to
draw on the mitigation bank’s financial assur-
ances for the acreage on which such credits are
based. If the Secretary draws on the mitigation
bank’s financial assurances for all or part of its
acreage, the Secretary may suspend the sale of
credits based on that acreage in order to pre-
vent irreparable harm, provided that notice and
opportunity for a hearing to review the suspen-
sion decision is provided promptly thereafter.
‘‘(D) INCREASE IN CREDITS.—The number
of mitigation credits to which a mitigation bank
is entitled may only be increased if the bank
makes a factual showing in its charter applica-
tion, or in an amendment application, that it is
entitled to more credits under the objective cri-
teria set by the Secretary by regulation or used
by the Secretary in the exercise of best profes-
sional judgment in chartering or amending the
charter of another mitigation bank in the same
State or a neighboring State.
‘‘(E) DEBITS.—If a permit issued by the
Secretary to conduct activities in waters of the
United States authorizes unavoidable impacts
on wetlands and relies on a mitigation bank to
offset such impacts, the Secretary shall use the
same objective criteria to determine the wet-
lands mitigation debits from such permitted ac-
tivity as is used to determine the wetlands miti-
gation credits at the relevant mitigation bank.
Until the issuance or regulations, however, in
no case shall a ratio of less than 1.5 credits for
every debit be allowed.
‘‘(F) NO
REGULATION
OF
PRICE.—The
Secretary shall not regulate the price charged
for the sale of mitigation credits.
‘‘(4) STANDARDS TO BE ESTABLISHED.—
‘‘(A) DEADLINES
FOR
REGULATIONS.—
Within 1 year after the date of the enactment
of this subsection, the Secretary shall propose
regulations implementing this subsection and
shall promulgate such regulations not later than
18 months after such date of enactment.
‘‘(B) CRITERIA FOR CREDITS.—Such regu-
lations shall set forth objective criteria by which
the number of credits to be yielded by a mitiga-
tion banking project may be determined and
shall take into account the wetlands functions
served by the wetlands restored, enhanced, cre-
ated, or preserved by such project, as well as
the environmental benefits served by the adja-
cent uplands included in such mitigation bank-
ing project. Such objective criteria shall also es-
tablish a preference for restoration or enhance-
ment of degraded wetlands but also provide for
the preservation of high quality wetlands if such
preservation results in a demonstrable benefit
to the watershed and there is a demonstrable
threat to the wetlands and creation of wetlands
where there is a high likelihood for ecological
success with adequate financial undertakings,
long-term source of water, and appropriate legal
control of the realty to assure their long-term
maintenance and viability.
‘‘(C) CRITERIA
FOR
SERVICE
AREAS.—
Such regulations shall set objective criteria by
which mitigation bank service areas are to be
determined, taking into account the need to set
service areas at a size providing a reasonable
prospect of vigorous market competition among
large scale mitigation banks while ensuring that
the bank effectively mitigates for unavoidable
wetland impacts. Such regulations shall provide
that an activity in waters of the United States
permitted under this section which activity is a
linear utility facility and is otherwise partially
within a service area shall be eligible to pur-
chase mitigation credits from a mitigation bank
within the same State. Such regulations shall
establish a preference for using a mitigation
bank to mitigate an activity which is part of a
single and complete project which disturbs less
than 5 acres of wetland in a mitigation bank.
‘‘(D) PREFERENCE
FOR
IN-KIND
COM-
PENSATION.—Such regulations shall establish a
preference for in-kind compensation of wetland
impacts. Out-of-kind compensation may be ac-
ceptable only if there is clear demonstration