Final Environmental Assessment, Finding of No Significant Impact, and Regulatory Analysis for the Compensatory Mitigation Regulation Department of the Army U.S. Army Corps of Engineers Directorate of Civil Works Operations and Regulatory Community of Practice Washington, DC 20314-1000 ii TABLE OF CONTENTS EXECUTIVE SUMMARY ................................................................................................ v ES.1 Purpose and Need................................................................................................... v ES.2 Background ............................................................................................................ v ES.3 Alternatives ........................................................................................................... vi ES.4 Affected Environment........................................................................................... vi ES.5 Environmental Consequences ............................................................................. vii ES.6 Regulatory Analysis ...........................................................................................viii 1.0 PURPOSE AND NEED................................................................................................ 1 2.0 BACKGROUND ......................................................................................................... 2 2.1 Corps Regulatory Program ....................................................................................... 2 2.1.1 Statutory Authorities......................................................................................... 2 2.1.2 Categories of Waters Regulated Under the Corps Program ............................. 2 2.1.3 Types of Permits ............................................................................................... 3 2.1.4 General Mitigation Policy.................................................................................. 5 2.1.5 Mitigation for Different Permit Types.............................................................. 5 2.1.6 Current Compensatory Mitigation Policy Documents...................................... 6 2.1.7 Types of Compensatory Mitigation .................................................................. 8 2.1.8 Compensatory Mitigation Methods .................................................................. 8 2.2 Compensatory Mitigation Requirements ............................................................... 10 2.2.1 General Requirements...................................................................................... 10 2.2.2 Current Permitting and Compensatory Mitigation Profile.............................. 10 2.2.3 Ecological Performance Standards and Other Requirements .......................... 16 2.3 Development of Mitigation Banks and In-Lieu Fee Programs............................... 19 2.3.1 Mitigation Banks.............................................................................................. 19 2.3.2 In-Lieu Fee Mitigation Programs..................................................................... 21 2.4 Compensatory Mitigation Success.......................................................................... 22 3.0 ALTERNATIVES...................................................................................................... 29 3.1 Preferred Alternative – Watershed approach to compensatory mitigation............. 29 3.1.1 Reviews of In-Lieu Fee Programs ................................................................... 32 3.1.2 In-Lieu Fee Program Case-Study..................................................................... 34 3.2 No Action Alternative – Do not promulgate this regulation.................................. 40 3.3 Third Alternative – Watershed approach with mitigation banks and permittee- responsible mitigation................................................................................................... 40 4.0 AFFECTED ENVIRONMENT.................................................................................. 43 4.1 Physical and Biological Environment..................................................................... 43 4.2 Socioeconomics ..................................................................................................... 47 4.2.1 Ecosystem services and values ........................................................................ 47 4.2.2 Wetland Restoration Costs.............................................................................. 50 4.2.3 Compensatory Mitigation Costs to Permittees ................................................ 51 4.2.4 Mitigation Bank Development Costs............................................................... 53 4.2.5 In-Lieu Fee Program Development Costs........................................................ 54 4.2.6 Costs to the Federal Government..................................................................... 54 5.0 ENVIRONMENTAL CONSEQUENCES ................................................................ 58 iii 5.1 Consequences of the Preferred Alternative............................................................ 58 5.1.1 Effects on Aquatic Resources ......................................................................... 58 5.1.2 Socioeconomic Effects.................................................................................... 59 5.1.3 Other Environmental Effects .......................................................................... 60 5.2 Consequences of the No Action Alternative.......................................................... 61 5.3 Consequences of third alternative (watershed approach with mitigation banks and permittee-responsible mitigation) ................................................................................. 62 5.4 Cumulative Effects.................................................................................................. 63 6.0 COORDINATION WITH OTHERS......................................................................... 64 6.1 Requirement for an Environmental Impact Statement............................................ 64 6.2 Alternatives............................................................................................................. 65 6.3 Use of Mitigation Banks ......................................................................................... 67 6.4 Types of Mitigation................................................................................................. 68 6.5 Characterization of the Affected Environment....................................................... 68 6.6 Costs........................................................................................................................ 69 6.7 Permit Data ............................................................................................................. 70 6.8 Success of Compensatory Mitigation ..................................................................... 71 6.9 In-Lieu Fee programs.............................................................................................. 72 7.0 LIST OF PREPARERS ............................................................................................. 74 8.0 LITERATURE CITED .............................................................................................. 75 9.0 FINDING OF NO SIGNIFICANT IMPACT............................................................ 81 10.0 REGULATORY ANALYSIS................................................................................... 82 10.1 Evaluation Approach ............................................................................................ 82 10.2 Baseline Permitting and Mitigation Profile .......................................................... 83 10.3 Major Rule Provisions .......................................................................................... 83 10.4 Rule Effects on Permittee Mitigation Costs.......................................................... 88 10.4.1 Compensatory Mitigation Supply Costs ........................................................ 89 10.4.2 Effects on Commercial Mitigation Bank Costs ............................................. 92 10.4.3 Effects on In-Lieu Fee Program Costs........................................................... 98 10.4.4 Effects on Permittee-Responsible Mitigation Costs .................................... 102 10.4.5 Effects on Permittee Flexibility ................................................................... 105 10.4.6 Summary of Rule Effects on Permittee Mitigation Costs............................ 107 10.5 Rule Effects on Administrative Burdens ............................................................ 108 10.6 Summary of Rule Effects on Social Costs.......................................................... 113 APPENDICES ................................................................................................................ 115 Appendix A. 2005 Corps Survey of District Mitigation Practices ............................ 116 Appendix B. Compliance with Applicable Environmental Laws and Executive Orders ..................................................................................................................................... 121 iv EXECUTIVE SUMMARY ES.1 Purpose and Need Section 314 of the National Defense Authorization Act for Fiscal Year 2004 (Public Law 108-136) requires the Secretary of the Army, acting through the Chief of Engineers, to issue regulations establishing, to the maximum extent practicable, equivalent