Opinion ID: 3008274
Heading Depth: 2
Heading Rank: 1

Heading: Introduction and Background

Text: In 2003 and 2004, Hearts Bluff purchased approximately 4,000 acres of “bottomland” in Titus County near the Sulphur River. “Bottomland” is seasonally or continuously flooded hardwood river swamps. 313 S.W.3d 479, 481. Hearts Bluff planned to create a federal mitigation bank which is a commercial endeavor that allows a person who restores, establishes or preserves a wetland or other aquatic resource to sell “mitigation bank credits” he receives from the federal government to third parties who negatively impact aquatic resources in other locations. See 33 U.S.C. § 1251; 33 C.F.R. §§ 332.2, 332.3(b)(2) (2011); Butler v. Comm’r, 103 T.C.M. (CCH) 1359, at , n. 20 (2012) (citing the U.S. Environmental Protection Agency, Mitigation Banking Factsheet, available at http://www.epa.gov/owow/wetlands/facts/fact16.html. 33 C.F.R. 332.1, 332.3(b)(2) (2011). The 14 Mashhood, Current Drought Pales in Comparison. -4- Corps is the only governmental entity with authority to issue these permits. Clean Water Act, 33 U.S.C. § 1344 et seq. (authorizing the Secretary of the Army, acting through the “Chief of Engineers,” to issue these permits); Rivers and Harbors Act of 1899, 33 U.S.C. § 403 (similar); 33 C.F.R. §§ 332.1, 332.3 (describing general compensatory mitigation requirements); see also Clean Water Act, Pub. L. No. 108-136, § 314(b), 117 Sta. 1431 (2003). Hearts Bluff acknowledges the exclusive authority of the Corps to grant or deny federal mitigation banking permits. Hearts Bluff’s land lies within the bounds of the potential Marvin Nichols Reservoir, a 67,957 acre site identified by the State since 1968 as a possible drinking water reservoir to service the Dallas and Fort Worth areas. Marvin Nichols Reservoir has been included in every version of the TWDB’s state water plan15 since 1968.16 Hearts Bluff acknowledged that at the time it purchased the land, it was aware both that the State was considering creating the reservoir and that the land it purchased was within the reservoir’s footprint. After Hearts Bluff purchased the land and applied for a mitigation banking permit with the Corps, the Corps solicited public comment on Hearts Bluff’s application. The USACE solicited comments from resource agencies, other federal, state and local government agencies, public interest groups, the general public, adjacent property owners, and other interested parties on various factors. The Corps received over 300 responsive comments, including from state elected officials representing Northeast Texas, the Texas Committee on Natural Resources, the City of Texarkana, 15 The plan’s purpose is to “provide for the orderly development, management, and conservation of water resources and preparation for and response to drought conditions, in order that sufficient water will be available at a reasonable cost to ensure public health, safety and welfare; further economic development; and protect the agricultural and natural resources of the entire state.” T EX . W ATER C O D E § 16.051(a). 16 The site, appearing as the “Naples Reservoir” in the 1968 water plan, was later renamed the “Marvin Nichols Reservoir” in the 1984 Texas W ater Plan of TW DB. (Louis A. Beechrl, Sr., Chairman). -5- local municipalities and regional water districts, the United States Fish and Wildlife Service, the Environmental Protection Agency, and the Texas Commission on Environmental Quality. Most of the comments received supported the mitigation bank, however “all of the agencies” expressed concern with the location of the proposed mitigation bank within the footprint of the Marvin Nichols Reservoir. Local municipalities and regional water districts opposed the mitigation bank proposal. The TWDB responded by letter, dated December 9, 2004, to the Corps’ request for comment, explaining how the permit could affect its interests and observing that the mitigation bank could potentially render the Reservoir project less viable or infeasible. The TWDB opined that approval of Hearts Bluff’s mitigation bank would “not prevent construction of a reservoir,” but it would require a re-analysis of the water management strategy for the Dallas and Fort Worth region of the State. The TWDB advised that it opposed the permit’s approval. The USACE denied the permit application in July 2006.17 A year later, in May 2007, the Legislature approved the TWDB’s 2006 water plan, thus conferring upon the Marvin Nichols Reservoir site the designation as a “unique” potential reservoir site. TEX . WATER CODE § 16.051(g). The Corps’ stated reason for denying the application was that the mitigation bank would not exist in perpetuity if the Legislature chose to build the Reservoir. Hearts Bluff then applied for a limitedterm mitigation bank permit, but the Corps denied this request because mitigation banks must be perpetual. Hearts Bluff later applied again, but the Corps once again denied the permit in July 2008.