FHWA Policy Memorandums - Office of Environment and Planning

INFORMATION: Funding for Establishment
of Wetland and Mitigation Banks

Associate Administrator
for Program Development
Associate Administrators
Staff Office Directors
Regional Administrators
Federal Lands Highway Program Administrator
Director, Joint ITS Program Office

The current White House policy on wetlands has placed increased emphasis on mitigation banking. As a result, Federal resource agencies have accepted the practice of establishing mitigation banks for wetlands and other ecological impacts, and the number of highway-related mitigation banks has increased rapidly in the last 2 years.

We have received questions concerning the eligibility of Federal-aid participation for costs to acquire, restore, or establish wetlands, and also costs to sustain established, viable wetland mitigation projects. The attached guidelines address these participation issues and will help ensure that mitigation credits will not be lost, and that banked credits will be available when needed.

The attached guidelines for Federal-aid participation in establishment and support of wetland mitigation banks will provide State transportation agencies with the flexibility to meet the need to manage mitigation of wetland impacts now and in the future.

Original signed by:
Anthony R. Kane


Guidelines for Federal-aid Participation in the
Establishment and Support of Wetland Mitigation Banks

  1. General Authority

    The FHWA and other government agencies involved in managing impacts to wetlands and other natural resources have made notable progress in implementing mitigation "banking" procedures and projects. The Intermodal Surface Transportation Efficiency Act of 1991 (ISTEA) specifically identifies the following as eligible for Federal-aid participation (Section 1006, 1007):

      (1) banking of wetlands mitigation concurrent or in advance of project construction;

      (2) contributions to statewide and regional efforts to conserve, restore, enhance and create wetlands;

      (3) development of statewide and regional wetlands conservation and mitigation plans.

  2. National Wetlands Policy

    These guidelines are consistent with the White House policy statement on wetlands, Protecting America’s Wetlands: A Fair, Flexible, and Effective Approach. The Administration stated five principles for Federal wetlands policy, which included the following:

      (1) a goal of no net loss of the Nation’s remaining wetlands, and the long-term goal of increasing the quality and quantity of the Nation’s wetlands resource base;

      (2) fair, efficient, flexible, and predictable regulatory programs;

      (3) increased emphasis on non-regulatory programs, including advance planning, restoration, inventory, and research to accomplish long-term wetland gains;

      (4) expanded Federal partnerships with State, Tribal, and local governments and private sector to restore and protect wetlands; and

      (5) mplementation of policy based on the best scientific information available.

  3. Wetland Mitigation Banking-Establishment/Management Costs

    Wetland mitigation banking programs implemented by State transportation agencies offer unique opportunities to moreeffectively consolidate, manage, and protect ecological and wetlands resources while maintaining more workable alternatives for transportation and development. On-site mitigation remains the first and preferable alternative where feasible. However, by moving the location of mitigation away from transportation projects and development centers, mitigation often can be better integrated with supporting ecosystems, more effectively managed, provide more services to society, and allow for better planning of business, commercials, and residential development.

    A common problem in establishing wetlands mitigation projects is protecting and managing environmental resources at a mitigation or banking site throughout and after the initial period of establishment. Wetland establishment should be considered successful, and therefore complete, when the construction activity at the site is completed and the desired wetland features which were to be established are in place and in a viable, self-sustaining state, or have been accepted by participants in the mitigation agreement as fully functional. Establishment periods may be from as little as 1-3 years on some mitigation sites up to 20 years on slow-maturing sites. For sites where the wetland mitigation is not successfully established at the end of the agreed-to establishment period may be extended for a discrete period if FHWA finds that such an extension will result in the successful completion of the mitigation objectives.

    Because of gradual demands for mitigation, some mitigation banks may have credits available for extended periods of time. During the time between the successful establishment of the wetland bank and the credits are exhausted, it is essential that the mitigation wetlands be protected and managed to ensure that credits will be available when needed. It is consistent with FHWA policy that costs associated with protecting banked mitigation credits be considered eligible for Federal-aid participation. These costs include, but are not limited to, such items as replacement or repair of fencing or drainage structures, irrigation, replacement, and management of vegetation plantings, or other activities required to ensure the availability and persistence of mitigation resources during the period when credits are still being withdrawn, during the establishment period of the bank, or during other predetermined, agreed-to time-frames needed to effectively ensure success of the purpose and objectives of establishing the bank. This can be assumed to be for the duration of FHWA participation in a general or site-specific mitigation banking agreement, or until any other preestablished termination date for use of the bank.

  4. Property Acquisition Criteria

    If Federal funds are involved in any part of the project for which the mitigation is intended, the acquisition of property interests for purposes of wetland banking will necessarily be accomplished in accordance with the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970, as amended, PL 91-646 (42 U.S.C. 4601). If acquisitions are site specific and subject to use of the power of eminent domain, all provisions of the Uniform Act implementing regulations at 49 CFR 24 are applicable.

    If acquisitions are not site specific and eminent domain authority will not be used, then the acquisition could be defined as "voluntary": and only the limited requirements of 49 CFR 24.101 (a)(1) and (2) would apply. If however, the acquisition would displace tenant occupants, the relocation assistance provisions of 49 CFR 24 would also apply.

    Establishment of mitigation banks often requires the acquisition of a property interest, either through easement or fee title. The ISTEA and 23 CFR 777.9 (b) authorize the use of Federal-aid funds to purchase, or establish, replacement wetlands for impacts to private wetlands, with priority given to restoration or creation of wetlands. The public interest in replacement wetlands must be sufficient to ensure that the area is maintained as a wetland. This can be accomplished by a restrictive covenant or easement that is attached to the title of the property, or by transfer of title in fee to a public or quasi-public, non-profit resource management interest or agency. Up-front costs associated with easements, covenants, or property transfers are eligible for Federal-aid participation, and should encompass activities necessary to ensure that wetland functions are perpetuated and protected at mitigation site.

  5. Sale of Mitigation Credits

    Mitigation credits in wetland banks established with Federal-aid transportation funds for the purpose of mitigation anticipated impacts of highway or surface transportation projects may not be sold to other entities unless the credits will be used for mitigating impacts of Federal-aid transportation projects.

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