Compensatory mitigation for impacts to natural resources is a common component of a number of federal permitting and resource management programs. Wetland and stream mitigation banking has been an important option for permit applicants in the Clean Water Act Section 404 permitting program. Over 1400 privately funded and managed wetland mitigation bank sites exist in the United States according to the Corps of Engineers. Still, a number of federal agencies and regulatory programs have been slow to recognize resource mitigation banks as an integral mitigation option to facilitate permitting and resource management.

On November 3, 2015, the Obama Administration issued a Presidential Memorandum titled “Mitigating Impacts on Natural Resources from Development and Encouraging Related Private Investment”. The memorandum provides direction to the Department of Defense, the Department of the Interior, the Department of Agriculture, the U.S. Environmental Protection Agency, and the National Oceanic and Atmospheric Administration to incorporate, where appropriate, resource restoration mitigation banking into the programs administered by these agencies. Further, the agencies are to revise their internal guidance documents and procedures to require consideration of restoration banking or advance restoration projects. The agencies must also establish measurable performance standards to confirm that the mitigation is effective.

The Memorandum is likely, to have significant impacts on a number of programs including the U.S. Fish and Wildlife Services endangered species protection programs. The memorandum specifically directs the FWS to finalize a revised policy by November 3, 2016 which will incorporate these concepts into its compensatory mitigation requirements.

Importantly, the memorandum specifically recognizes that certain resources may be irreplaceable and that impacts to these resources should be avoided regardless of the availability of compensatory mitigation. It will be interesting to watch how this concept of “irreplaceable resources” is implemented by the affected agencies.

The Memorandum confirms the benefits of private investment in natural resources restoration. Wetland mitigation banking has been successfully implemented across the country and has leveraged private funding for many large scale restoration projects which provide proven resource development prior to permitted resource impacts. If carried forward, the Obama administration directives should provide additional opportunities for the development of successful resource restoration banking and related programs.