Mitigation of Impacts to Wetlands

DEPARTMENT OF TRANSPORTATION

Federal Highway Administration

23 CFR Part 777

[FHWA Docket No. 96-8]

RIN 2125-AD78

Mitigation of Impacts to Wetlands

AGENCY: Federal Highway Administration (FHWA), DOT.

ACTION: Notice of proposed rulemaking (NPRM); request for comments.

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SUMMARY: In accordance with the President's Regulatory Reinvention

Initiative, the FHWA proposes to amend its regulation outlining the

procedures to be followed in mitigating the impacts of Federal-aid

highway projects and programs to wetlands. The current regulation has

become outdated as a result of advances in the science of wetland

management and the amendments made by sections 1006(d) and 1007(a) of

the Intermodal Surface Transportation Efficiency Act of 1991 (ISTEA)

(Pub. L. 102-240, 105 Stat.1914) to the statutory provisions of title

23, United States Code (U.S.C.). The ISTEA amendments significantly

alter the range and timing of alternatives eligible for Federal-aid

participation for mitigation of wetland impacts due to Federal-aid

highway projects. Accordingly, this proposal would revise the current

regulation to conform to the ISTEA amendments, thereby providing more

flexibility to State highway agencies in determining eligibility of

mitigation alternatives for Federal participation. This proposal would

broaden the scope of the current regulation to encompass all wetlands

mitigation projects eligible for Federal participation, not just those

involving privately owned wetlands.

DATES: Comments must be received on or before August 16, 1996.

ADDRESSES: Submit written, signed comments to FHWA Docket No. 96-8,

Federal Highway Administration, Room 4232, HCC-10, Office of the Chief

Counsel, 400 Seventh Street, SW., Washington, D.C. 20590. All comments

received will be available for examination at the above address between

8:30 a.m. and 3:30 p.m., e.t., Monday through Friday, except Federal

holidays. Those desiring notice of receipt of comments must include a

self-addressed, stamped postcard.

FOR FURTHER INFORMATION CONTACT: Mr. Paul Garrett, Office of

Environment and Planning, HEP-42, (202) 366-9173, or Mr. Brett Gainer,

Office of the Chief Counsel, HCC-32, (202) 366-1372, Federal Highway

Administration, 400 Seventh Street, SW., Washington, D.C. 20590. Office

hours are from 7:45 a.m. to 4:15 p.m., e.t., Monday through Friday,

except Federal holidays.

SUPPLEMENTARY INFORMATION:

Background

Executive Order (E.O.) 11990, ``Protection of Wetlands,'' requires

all Federal agencies to ``avoid to the extent possible the long and

short term adverse impacts associated with the destruction or

modification of wetlands'' (42 FR 26961, May 25, 1977). Specifically,

this

[[Page 30554]]

order directs Federal agencies to avoid new construction in wetlands

unless (1) there is no practicable alternative to such construction,

and (2) the proposed action includes all practicable measures to

minimize harm to wetlands resulting from such construction. The

Department of Transportation subsequently issued DOT Order 5660.1A,

Preservation of the Nation's Wetlands, which provided departmental

policy and instruction for implementing E.O. 11990. Copies of these

documents are available for inspection and copying pursuant to 49 CFR

Part 7, App. D.

The provisions of E.O. 11990, the Clean Water Act (33 U.S.C 1344 et

seq.), and the DOT Order proclaim that wetlands are a valuable national

resource and that special efforts are required of all Federal agencies

to preserve the beneficial values inherent in them. Wetlands are a

valuable resource for a number of reasons. They provide habitats for

numerous plants and animals, including many commercially important

species. In addition, wetlands can reduce the severity of flooding,

control erosion, and remove contaminants from polluted waters.

Consequently, wetland preservation has become a matter of concern to

Federal and State agencies charged with resource management

responsibilities and has been emphasized by resource conservation

groups.

Under E.O. 11990 each Federal agency must avoid, whenever

practicable, impacts to wetlands. Therefore, a highway location or

design which will impact a wetland must be evaluated for its natural

functions and values, in addition to all relevant social, economic, and

physical environmental values. Inevitably, there will be instances when

reasoned and balanced judgments will result in the location of highways

in wetlands and in the destruction or modification of those resources.

In such cases, E.O. 11990 requires that ``all practicable measures to

minimize harm to the wetland(s) be incorporated into the project.'' In

addition, section 404 of the Clean Water Act, entitled Permits for

Dredged or Fill Material, requires that a permit be obtained through

the U. S. Army Corps of Engineers for proposed discharges of dredged or

fill material into waters of the United States, including wetlands (33

CFR 320-330; (Regulatory Program)). The Regulatory Program and

associated guidelines (40 CFR 230-233) require, among other things,

assessment of the functions and values of wetlands to be impacted by

proposed discharges of dredged or fill material as part of the Public

Interest Review Process. Furthermore, permits issued by the Corps of

Engineers under authority of the Regulatory Program may contain

conditions requiring mitigation to compensate for impacts to wetlands

that result in a loss of wetlands functions and values to society.

Another Federal statute applicable to Federal-aid highway projects

involving impacts to wetlands is section 4(f) of the Department of

Transportation Act 1 (49 U.S.C. 303 and 23 U.S.C. 138). Section

4(f) provides protection for certain environmentally significant,

publicly owned land areas including parks, wildlife refuges, and

waterfowl refuges. When such lands must be used for a federally-

assisted highway project, section 4(f) requires all possible planning

to minimize harm to the protected area. If wetlands included in these

publicly owned 4(f) lands are used for or impacted by a highway

project, current FHWA policy permits Federal-aid highway funds to be

used in the acquisition, restoration, or creation of replacement

wetlands or improvement of existing wetlands as mitigation. Federal

participation must be based on a determination that such mitigation

measures are necessary to meet the section 4(f) requirement that all

possible planning and measures be undertaken to minimize harm. Federal

assistance in these instances often involves the use of Federal-aid

funds for activities outside the right-of-way. The FHWA regulations

implementing section 4(f) are found at 23 CFR 771.135.

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\1\ Section 4(f) of Pub. L. 89-670, 80 Stat. 934, was repealed

by Pub. L. 97-449, 96 Stat. 2444, and enacted without substantive

change at 49 U.S.C. 303. Section 138 of title 23, U.S.C., remains

unchanged. Because of common usage and familiarity, the term section

4(f) continues to be used by the Department of Transportation in

matters relating to 49 U.S.C. 303 and 23 U.S.C. 138.

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The FHWA has long recognized that the importance of wetland

preservation is not limited to publicly owned wetlands. Privately owned

wetlands are often an important component of local, State, and Federal

wetland management programs. In addition, the requirements of E.O.

11990 and section 404 of the Clean Water Act apply to wetlands

regardless of ownership. Consequently, the FHWA is required to find

that proposed Federal-aid projects include all practicable measures to

minimize harm to privately owned wetlands adversely impacted by the

projects. The current part 777, which this NPRM proposes to amend, was

promulgated to address these requirements.

Discussion of Proposed Rulemaking

Congress included provisions in the ISTEA granting the FHWA more

flexibility to authorize the use of Federal-aid highway funds for

mitigation of impacts to wetlands caused by federally-funded highway

projects. These provisions are codified at 23 U.S.C. 103(i)(13) and

133(b)(11), and pertain to projects eligible for National Highway

System (NHS) and Surface Transportation Program (STP) funds,

respectively. Consequently, the FHWA is proposing to amend its

regulations to authorize the expenditure of Federal-aid highway funds

for mitigation of impacts to wetlands due to federally-funded highway

projects.

Mitigation activities may include, but are not limited to,

participation in wetlands mitigation banks, contributions to statewide

and regional efforts to conserve, restore, enhance and create wetlands,

and development of statewide and regional wetlands conservation and

mitigation plans, including any such banks, efforts, and plans

authorized pursuant to the Water Resources Development Act of 1990

(Pub. L. 101-640, 104 Stat. 4604). Contributions toward such efforts

may take place concurrent with or in advance of project construction,

but contributions may occur in advance of construction only if such

mitigation efforts are consistent with all applicable requirements of

Federal law and State planning processes.

Most significantly, measures found by a State highway agency and

the FHWA to be appropriate and necessary to mitigate significant

adverse impacts to publicly or privately owned wetlands would be

eligible for Federal participation where the impacts actually result

from an FHWA action. Appropriate mitigation measures could include the

acquisition of additional land or interests in land for the purpose of

mitigating adverse environmental impacts to wetlands which actually

result from a Federal-aid highway project.

The justification for the cost of proposed mitigation measures

should be considered in the same context as any other public

expenditure; that is, the proposed mitigation would have to represent a

reasonable public expenditure when weighed against other social,

economic, and environmental values, and the benefit realized would have

to be commensurate with the proposed expenditure. Decisions on

mitigation measures would be required to take into account

consideration of traffic needs, safety, durability, and economy of

maintenance of the highway.

As previously mentioned, the proposed amendments to 23 CFR 777

formally express the FHWA's current

[[Page 30555]]

policy and incorporate the eligibility criteria set forth in the ISTEA

with respect to mitigation of impacts to both publicly and privately

owned wetlands which actually result from Federal-aid highway projects

or an FHWA action. The explanation of Federal participation policy

already included in Sec. 777.5 is expanded in the proposed regulation.

The proposed regulation would also include additional guidance and

procedures to be followed in the evaluation (Sec. 777.7) and mitigation

of impacts (Secs. 777.9, 777.11).

The requirements of 23 CFR 777 apply to the mitigation of impacts

to wetlands which actually result from federally-funded highway

projects or programs. The requirements and policies stated therein do

not apply to highways or other projects funded by other Federal, State,

or private agencies or entities.

Section-By-Section Analysis

The following section discusses both the current provisions of 23

CFR 777 and the proposed changes to that regulation contained in this

NPRM.

Section 777.1

Section 777.1 would be amended to expand the applicability of the

regulation to Federal-aid participation in mitigation of all impacts to

publicly or privately owned wetlands which actually result from

Federal-aid highway projects. The existing regulation applies only to

privately owned wetlands.

Section 777.2

Section 777.2 would be a new section. This section would contain

definitions for administrative, scientific, and technical terms found

in the amended regulation.

Section 777.3

Section 777.3, Background, would be amended to include discussion

of the ISTEA provisions which increased the eligibility for Federal-aid

participation of efforts to mitigate the wetlands impacts of highway

projects funded under the provisions of the National Highway System

(ISTEA Sec. 1006 (23 U.S.C. 103)) and Surface Transportation Program

(ISTEA Sec. 1007 (23 U.S.C. 133)). As in the existing regulation, this

section would also cite the authority and requirements of E.O. 11990 to

minimize wetlands losses and DOT Order 5660.1A for implementing wetland

mitigation in FHWA programs.

Section 777.5

The FHWA wetlands policy and practice, incorporating expanded

scientific knowledge and management experience, have recognized that

wetland mitigation includes a wider range of impacts, alternatives, and

activities than were known or understood when the existing regulation

was promulgated in 1980. The science and technology of wetland

mitigation have identified methods and needs for effective wetland

mitigation that were not well known at the time the existing regulation

was issued. The amended Sec. 777.5, Federal Participation Policy, would

expand applicability of the regulation to include all impacts to

wetlands which actually result from Federal-aid highway projects. The

kinds of activities needed to mitigate wetland impacts include the

general areas of planning, design, right-of-way acquisition,

construction, and establishment. Specific tasks and activities which

fall within these general areas are identified and included in the

amended section as eligible for Federal-aid participation. Specific

project criteria for Federal participation in wetlands mitigation

activities are restated from the existing regulation, and are

consistent with 23 CFR 771, Environmental Impacts and Related

Procedures. The ``test of reasonableness'' in the existing regulation

for the expenditure of public funds for wetlands mitigation is included

in the NPRM. This test is based on commensurate social, economic, and

environmental values and benefits of wetlands mitigation relative to

costs of the mitigation and benefits of the highway project or program.

Section 777.7

Section 777.7, Evaluation of Impacts, currently provides that the

extent of Federal participation in mitigation measures should be

directly related to the importance and functional capacity of the

impacted wetlands and the extent of wetland losses due to highway

impacts.

In both the existing regulation and NPRM, Section 777.7 relates the

cost of Federal-aid participation in wetland mitigation activities to

the importance of the wetlands impacted in the project area. As

amended, this section would refer to scientific functional assessment

methodologies as the appropriate tool for evaluating wetlands resources

and impacts, and would recognize the need for interdisciplinary,

interagency coordination in evaluating wetlands functions and values.

General functions of wetlands would be identified using current

scientific terminology and concepts of wetlands analysis.

Section 777.9

Section 777.9, Mitigation of Impacts, identifies general categories

of actions, taken to mitigate the impact of highway projects on

wetlands, which are eligible for Federal-aid participation. Federal

participation is not, however, limited to these activities, if other

alternatives are practicable, more ecologically desirable, and

represent a more effective expenditure of public funds. The existing

Sec. 777.9 states specific requirements for the protection of wetlands

established as compensatory mitigation. Two criteria for Federal-aid

participation in wetland mitigation are that the mitigation must

represent a reasonable expenditure of public funds and be in the public

interest.

In Sec. 777.9(a) of the NPRM, the Environmental Protection Agency's

Clean Water Act Sec. 404(b)(1) guidelines (40 CFR 230) are referenced

to establish the required sequence of alternatives that must be

considered for mitigation of wetlands impacts. The 404(b)(1) guidelines

require that, where practicable, avoidance and then minimization of

wetland impacts be given first consideration. Under Sec. 777.9(a)(2) of

the NPRM, once practicable avoidance and minimization measures had been

exhausted, the regulation would establish the objective of selecting

ecologically desirable and practicable compensatory mitigation

alternatives consistent with the 404(b)(1) guidelines. The requirement

to consider compensatory mitigation within the highway right-of-way

before other, possibly more ecologically desirable and reasonable

alternatives outside of the right-of-way, would be removed by this

NPRM. The existing Sec. 777.9(b) contains the requirement that the

public interest in wetlands restored, enhanced, or created as part of

mitigation for wetlands impacts due to Federal-aid highway projects

must be sufficient to ensure that they will be maintained as wetlands.

This requirement would be moved to Sec. 777.11(b). Section 777.9(a)(3)

would be added, and would list examples of the specific kinds of

activities eligible for Federal-aid participation when existing

wetlands are being enhanced or restored.

A new Sec. 777.9(b) would be added, and would cite and explain the

specific mitigation alternatives listed in the ISTEA eligible for

Federal-aid participation. The activities listed in the ISTEA are

related to wetlands banking, planning, and resource inventory. These

activities are not exclusive, and other activities listed in this

regulation would also be eligible. This paragraph would

[[Page 30556]]

conform the regulation to ISTEA provisions allowing the use of Federal-

aid highway funds to pay for costs of wetland mitigation activities as

needed to mitigate impacts caused by Federal-aid highway projects and

programs.

Section 777.11

Like any other activity in which Federal funds participate, the use

of those funds is governed by various restrictions and conditions

established by Federal law and agency policy in order to protect the

public interest and provide for sound program management. A number of

these considerations are set forth in Sec. 777.11, Other

Considerations, including consultation requirements and provisions for

ownership and management of acquired lands. Depending upon the extent

of mitigation justified under the provisions of Sec. 777.7,

Sec. 777.11(f) currently permits Federal participation in the

acquisition of replacement land for privately owned wetlands directly

impacted by a Federal-aid highway project. Such privately owned lands

thus acquired, above and beyond wetlands purchased for use as highway

right-of-way, will thereafter be retained in public ownership and

dedicated to future use as wetlands. The replacement ratio for wetlands

directly affected by a Federal-aid highway project should be determined

based on use of a scientific methodology of wetland functional

assessment and best professional judgment, in combination with

interagency coordination and considerations of fiscal responsibility

and a desire to minimize adverse impacts on the local tax base of

converting land from private to public ownership.

In both the existing regulation and the NPRM, Sec. 777.11(a)

emphasizes the need for consultation with appropriate State and Federal

agencies concerning impacts to wetlands on Federal-aid highway

projects. Section 777.11(b) of the NPRM, furthermore, would require

that the public interest in all compensatory wetland mitigation

projects, where wetlands have been purchased, enhanced, restored, or

created with Federal-aid highway funds, be sufficient to ensure that

the wetlands are permanently protected. This includes both private and

public wetlands mitigation banks. The current Sec. 777.11(b), which

sets forth the definition of wetlands to be used in applying the

regulation, would be moved to Sec. 777.2, Definitions. Sections 777.11

(c) through (g) of both the existing regulation and the NPRM are

intended to state the conditions and requirements for acquisition of

interests in lands for purposes of mitigating wetlands impacts due to

Federal-aid highway projects. For its part, Sec. 777.11(g) would

emphasize that the objective of wetlands mitigation in the Federal-aid

highway program is to implement the policy of no-net-loss in area or

functional capacity. To that end, this paragraph would declare eligible

for Federal-aid participation certain activities intended to ensure the

viability of compensatory mitigation wetlands during the period of

establishment. These would include, but would not be limited to, such

activities as repair or adjustment of water control structures, pest

control, irrigation, fencing modifications, and replacement of

plantings. The NPRM would encourage mitigation bank managers to

determine the establishment period in the mitigation agreement itself

prior to beginning any mitigation activities.

The NPRM would allow Federal-aid participation in the mitigation of

impacts to both publicly or privately owned wetlands if such impacts

actually resulted from Federal-aid highway projects. This proposal

would not, however, require States to undertake mitigation efforts.

Instead, part 777 would continue to provide policy and procedures for

the evaluation and mitigation of adverse environmental impacts to

wetlands which actually result from new construction of Federal-aid

highway projects. Therefore, the FHWA believes the current

Sec. 777.11(h)--with its explicit statement that the program is not a

mandatory one--is no longer necessary and the NPRM would delete this

provision. Finally, Sec. 777.11(i) of the existing regulation, which

addresses mitigation of ecological impacts in non-wetlands, would be

deleted. Since this NPRM would apply solely to wetlands issues, the

FHWA has determined that the current Sec. 777.11(i) would not be

applicable to the policy set forth in this proposal. The FHWA has also

determined that this paragraph is not consistent with 23 U.S.C.

133(b)(1), added by the ISTEA, which allows States to obligate STP

funds to mitigate damage to wildlife, habitat, and ecosystems caused by

a transportation project funded under title 23, United States Code.

Rulemaking Analyses and Notices

All comments received before the close of business on the comment

closing date indicated above will be considered and will be available

for examination in the docket at the above address. Comments received

after the comment closing date will be filed in the docket and will be

considered to the extent practicable, but the FHWA may issue a final

rule at any time after the close of the comment period. In addition to

late comments, the FHWA will also continue to file in the docket

relevant information that becomes available after the comment closing

date, and interested persons should continue to examine the docket for

new material.

Executive Order 12866 (Regulatory Planning and Review and DOT

Regulatory Policies and Procedures)

The FHWA has considered the impact of this document and has

determined that it is neither a significant rulemaking action within

the meaning of Executive Order 12866 nor a significant rulemaking under

the regulatory policies and procedures of the Department of

Transportation. This rulemaking would amend FHWA regulations regarding

mitigation of impacts to privately owned wetlands, which have become

outdated because of provisions in Secs. 1006 and 1007 of the ISTEA

authorizing greater flexibility for Federal participation in mitigating

impacts to wetlands. These amendments have been codified at 23 U.S.C.

103 and 133.

This rulemaking would not cause any significant changes to the

amount of funding available to the States under the STP or NHS programs

or add to the process by which States receive funding. The provisions

of this proposed rulemaking would not require the additional

expenditure of Federal-aid or State highway funds. Thus, it is

anticipated that the economic impact of this rulemaking would be

minimal. In addition, it would not create a serious inconsistency with

any other agency's action or materially alter the budgetary impact of

any entitlements, grants, user fees, or loan programs; nor will

amendment of this regulation raise any novel legal or policy issues.

Therefore, a full regulatory evaluation is not required.

Regulatory Flexibility Act

In compliance with the Regulatory Flexibility Act (5 U.S.C. 601-

612), the FHWA has evaluated the effects of this rule on small entities

and has determined that amendment of the FHWA regulations regarding

mitigation of impacts to wetlands would not have a significant economic

impact on a substantial number of small entities. Amending this

regulation would not affect the amount of funding available to the

States through the STP or NHS programs, or the procedures used to

[[Page 30557]]

select the States eligible to receive these funds. Furthermore, States

are not included in the definition of ``small entity'' set forth in 5

U.S.C. 601. For these reasons, and for those set forth in the analysis

of E.O. 12866, the FHWA hereby certifies that this action will not have

a significant economic impact on a substantial number of small

entities.

Executive Order 12612 (Federalism Assessment)

This action has been analyzed in accordance with the principles and

criteria contained in Executive Order 12612, and it has been determined

that this action does not raise sufficient federalism implications to

warrant the preparation of a federalism assessment. Amendment of this

FHWA regulation concerning the mitigation of impacts to wetlands would

not preempt any State law or State regulation. No additional costs or

burdens would be imposed on the States as a result of this action, and

the States' ability to discharge traditional State governmental

functions would not be affected by this rulemaking.

Executive Order 12372

Catalog of Domestic Assistance Program Number 20.205, Highway

Planning and Construction. The regulations implementing Executive Order

12372 regarding intergovernmental consultation on Federal programs and

activities apply to this program.

Paperwork Reduction Act

This action does not create a collection of information requirement

for the purposes of the Paperwork Reduction Act of 1995, 44 U.S.C.

3501-3520.

National Environmental Policy Act

The FHWA has analyzed this rulemaking for the purposes of the

National Environmental Policy Act of 1969 (NEPA) (42 U.S.C. 4321-4347).

This NPRM would not, in and of itself, constitute a major Federal

action significantly affecting the quality of the human environment.

Instead, it would increase the flexibility available to States when

deciding how to mitigate impacts to wetlands caused by those Federal-

aid highway projects they undertake. Such impacts and appropriate

mitigation measures would be evaluated pursuant to NEPA on a project-

by-project basis by the States and the FHWA. Accordingly, promulgation

of this NPRM would not require the preparation of an environmental

impact statement.

Regulatory Identification Number

A regulation identification number (RIN) is assigned to each

regulatory action listed in the Unified Agenda of Federal Regulations.

The Regulatory Information Service Center publishes the Unified Agenda

in April and October of each year. The RIN contained in the heading of

this document can be used to cross reference this action with the

Unified Agenda.

List of Subjects in 23 CFR Part 777

Flood plains, Grant programs--transportation, Highways and roads,

Wetlands.

Issued on: June 4, 1996.

Rodney E. Slater,

Federal Highway Administrator.

In consideration of the foregoing, the FHWA proposes to revise part

777 of title 23, Code of Federal Regulations, as set forth below.

PART 777--MITIGATION OF IMPACTS TO PRIVATELY OWNED WETLANDS

1. Part 777 is revised to read as follows:

Sec.

777.1 Purpose.

777.2 Definitions.

777.3 Background.

777.5 Federal participation policy.

777.7 Evaluation of impacts.

777.9 Mitigation of impacts.

777.11 Other considerations.

Authority: 42 U.S.C. 4321 et seq.; 49 U.S.C. 303; 23 U.S.C.

101(a), 103, 109(h), 133(b)(1), 133(b)(11), 133(d)(2), 138, 315;

E.O. 11990; DOT Order 5660.1A; 49 CFR 1.48(b).

Sec. 777.1 Purpose.

To provide policy and procedures for the evaluation and mitigation

of adverse environmental impacts to wetlands which actually result from

new construction of Federal-aid highway projects.

Sec. 777.2 Definitions.

In addition to those contained in 23 U.S.C. 101(a), the following

definitions shall apply as used in this regulation:

Biogeochemical transformations. Those changes in chemical compounds

and substances which naturally occur in ecosystems. Examples are the

carbon, nitrogen, and phosphorus cycles in nature, in which these

elements are incorporated from inorganic substances into organic matter

and recycled on a continuing basis.

Compensatory mitigation. Activities such as wetland restoration,

enhancement, or creation, performed to replace or compensate for the

loss of wetlands functional capacity actually the result of Federal-aid

highway construction projects. Compensatory mitigation usually occurs

in advance of or concurrent with the impact to be mitigated, but may

occur after such impacts in special circumstances.

Ecologically desirable. A state or condition desired or wanted as

the result of a mitigation agreement that provides additional wetland

functional capacity.

No-net-loss of wetlands. A wetland resource conservation and

management principle, under which, over the long term, loss of wetlands

area or functional capacity is offset by gains in wetland area or

functional capacity due to wetland restoration, enhancement,

preservation, or creation.

On-site, in-kind mitigation. Compensatory wetland mitigation which

replaces wetlands functional capacity lost as a result of a highway

project on the same site or in the immediate vicinity of the impacts.

Wetland or wetlands. The terms wetland and wetlands have the same

meaning as the definition issued by the U. S. Army Corps of Engineers

(33 CFR 328.3(b)) and the U.S. Environmental Protection Agency (40 CFR

230.3).

Wetlands banking and related measures. Efforts, or contributions to

efforts, to restore, create, enhance, or, in exceptional circumstances,

preserve wetlands functional capacity, usually undertaken outside the

area of potential effect of proposed highway projects and intended

expressly to compensate for unavoidable adverse wetlands impacts caused

by such projects, when compensation could not be achieved or would not

be as environmentally beneficial if located at individual project

sites.

Wetland enhancement. Increasing wetland functional capacity by

modifying the site conditions of an existing wetland. Examples include,

but are not limited to, alteration of hydrologic regime, vegetation

management, fencing, pest control, and fertilization.

Wetland establishment period. The period required to establish

wetland functional capacity in a compensatory wetland mitigation

project sufficient to compensate losses due to impacts of Federal-aid

highway projects. The establishment period may vary depending on the

specific wetland type being developed.

Wetland functional capacity. The ability of a wetland to perform

natural functions, such as provide wildlife habitat, store surface

water, or perform biogeochemical transformations, as determined by a

scientific assessment methodology. Natural functions of wetlands

include those listed by the

[[Page 30558]]

U.S. Army Corps of Engineers at 33 CFR 320.4(b)(2) (i) through (viii).

Wetland restoration. Reestablishment of wetlands functional

capacity at a site at which such capacity formerly existed but has

since essentially been eliminated.

Wetlands mitigation credit. A unit of wetlands mitigation, defined

either by (1) area or (2) a measure of functional capacity through

application of a scientific functional assessment methodology.

Sec. 777.3 Background.

Executive Order 11990, Protection of Wetlands, and DOT Order

5660.1A, Preservation of the Nation's Wetlands, emphasize the important

functions and values inherent in the Nation's wetlands. Federal

agencies are directed to avoid new construction in wetlands unless the

head of the agency determines that: (1) There is no practicable

alternative to such construction, and (2) the proposed action includes

all practicable measures to minimize harm to wetlands which may result

from such use. Sections 1006 and 1007 of the Intermodal Surface

Transportation Efficiency Act of 1991 (ISTEA) (Pub. L. 102-240, 105

Stat. 1914)(codified at Secs. 103 and 133 of title 23, United States

Code, respectively) identify additional approaches for mitigation and

management of wetland impacts which actually result from highway

projects as eligible for Federal participation.

Sec. 777.5 Federal participation.

(a) Those measures which the Federal Highway Administration (FHWA)

and a State Highway Agency (SHA) find appropriate and necessary to

mitigate adverse environmental impacts to wetlands are eligible for

Federal participation where the impacts actually result from an FHWA

action. The justification for the cost of proposed mitigation measures

should be considered in the same context as any other public

expenditure; that is, the proposed mitigation represents a reasonable

public expenditure when weighed against other social, economic, and

environmental values, and the benefit realized is commensurate with the

proposed expenditure. Mitigation measures shall give like consideration

to traffic needs, safety, durability, and economy of maintenance of the

highway.

(b) It is FHWA policy to permit, consistent with the limits set

forth in this part, the expenditure of Federal-aid highway funds for

activities required for the planning, design, construction, and

establishment of wetlands mitigation projects, and acquisition of land

or interests therein.

Sec. 777.7 Evaluation of impacts.

(a) The reasonableness of the public expenditure should be directly

related to:

(1) The importance of the impacted wetlands, as determined through

a scientific functional assessment methodology and interagency

coordination with the appropriate resource management agencies; and

(2) The highway impact on the wetlands, as determined through a

scientific functional assessment methodology.

(b) Evaluation of the importance of the impacted wetlands should

consider:

(1) The wetlands' functional capacity;

(2) The relative importance of these functions to the total wetland

resource of the area; and

(3) Other factors such as uniqueness, esthetics, or cultural

values.

(c) A determination of the highway impact should focus on the

short- and long-term effects of the project on the wetlands' functional

capacity.

Sec. 777.9 Mitigation of impacts.

(a) Actions eligible for Federal funding. There are a number of

actions that can be taken to minimize the impact of highway projects on

wetlands. The following actions qualify for Federal-aid highway

funding:

(1) Where practicable, avoidance or minimization of wetland impacts

through realignment and special design or construction features. In

accordance with the Environmental Protection Agency's Clean Water Act

Section 404(b)(1) guidelines (40 CFR 230 et seq.), avoidance and then

minimization must be given first consideration in the sequence for

mitigating wetlands impacts.

(2) After practicable avoidance and minimization measures have been

exhausted, other ecologically desirable compensatory mitigation

alternatives consistent with the Section 404(b)(1) guidelines, either

inside or outside of the right-of-way. This may include on-site

mitigation, when that alternative is determined to be ecologically

desirable and practicable, improvement of existing degraded or historic

wetlands through restoration or enhancement, or creation of new

wetlands from non-wetland areas. Restoration or enhancement of wetlands

is generally preferable to construction or creation of new wetlands

from non-wetland areas. Under this approach, first consideration should

be given to the development of compensatory mitigation on publicly

owned lands.

(3) Improvements to existing wetlands. Such activities may include,

but are not limited to, construction of water level control structures,

establishment of wetland vegetation, recontouring of the site,

installation or removal of irrigation or water distribution systems,

pest control, installation of fencing and other measures to protect,

enhance, or restore the wetland character of the site.

(4) Wetlands mitigation banking and related measures.

(b) Participation in wetlands mitigation banks. If the development

or acquisition of wetland mitigation credits in wetland mitigation

banks, either on or off-site, is determined to be the most ecologically

desirable and practicable alternative for compensatory mitigation, the

first alternative in mitigation bank use should be those established as

publicly owned resources. These can be--

(1) Restored or enhanced wetlands on public lands;

(2) Single purpose publicly owned banks, established by and for the

use of a highway agency with Federal-aid participation; or multipurpose

publicly owned banks, established with public, non-Federal-aid funds,

in which credits may be purchased by highway agencies using Federal-aid

funds on a per-credit basis; or

(3) Other forms of mitigation banks in which credits are purchased

by State highway agencies to mitigate wetlands impacts actually the

result of Federal-aid highway projects.

(c) Contributions to statewide and regional efforts to conserve,

restore, enhance and create wetlands. Federal-aid funds may participate

in the development of statewide and regional wetlands conservation

plans, including any efforts and plans authorized pursuant to the Water

Resources Development Act of 1990. Contributions to these efforts may

occur in advance of project construction only if such efforts are

consistent with all applicable requirements of Federal law and

regulations and State transportation planning processes.

Sec. 777.11 Other considerations.

(a) The development of measures proposed to mitigate wetlands

impacts should include consultation with appropriate State and Federal

agencies.

(b) Federal-aid funds may not participate in the replacement of

wetlands absent sufficient assurances that the area will be maintained

as a wetland.

(c) The acquisition of proprietary interests in replacement

wetlands as a mitigation measure may be in fee simple

[[Page 30559]]

or by easement, as appropriate. The acquisition of ``mitigation

credits'' in wetland mitigation banks should be accomplished through a

legally recognized instrument, such as permanent easement or deed

restriction, which provides for protection and permanent continuation

of the wetland nature of the mitigation.

(d) A State Highway Agency (SHA) may acquire privately owned lands

in cooperation with another public agency or third party. Such an

arrangement may accomplish greater benefits than would otherwise be

accomplished by the individual agency acting alone.

(e) An SHA may either transfer the title of lands acquired outside

the right-of-way, without credit to Federal funds, to an appropriate

public agency (e.g., U.S. Fish and Wildlife Service or State natural

resource agency) or enter into an agreement with such agency to manage

such lands. When such transfer occurs, there shall be an explicit

agreement that the lands or interests therein transferred shall remain

in the grantee agency's ownership or control so long as the lands

continue to serve the purpose of the original acquisition. In the event

the area transferred no longer serves the purpose of the original

acquisition, the lands or interests therein transferred shall revert to

the SHA for proper disposition.

(f) The reasonable costs of acquiring lands or interests therein to

provide replacement lands with equivalent wetlands functional capacity

are eligible for Federal participation.

(g) The objective in mitigating impacts to all wetlands in the

Federal-aid highway program is to implement the policy of no-net-loss

in area or functional capacity. Certain activities to ensure the

viability of compensatory mitigation wetlands during the period of

establishment are eligible for Federal-aid participation. These

include, but are not limited to, such activities as repair or

adjustment of water control structures, pest control, irrigation,

fencing modifications, and replacement of plantings. The establishment

period should be specifically determined by the mitigation agreement

among the mitigation bank managers prior to beginning any mitigation

activities.

[FR Doc. 96-15297 Filed 6-14-96; 8:45 am]

BILLING CODE 4910-22-P