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PLEASE NOTE: The following transcript is a portion of the official hearing record of the Committee on Transportation and Infrastructure. Additional material pertinent to this transcript may be found on the web site of the Committee at [http://www.house.gov/transportation]. Complete hearing records are available for review at the Committee offices and also may be purchased at the U.S. Government Printing Office.







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DECEMBER 9, 1997

Printed for the use of the

Committee on Transportation and Infrastructure


BUD SHUSTER, Pennsylvania, Chairman

THOMAS E. PETRI, Wisconsin
HOWARD COBLE, North Carolina
JOHN J. DUNCAN, Jr., Tennessee
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JAY KIM, California
STEPHEN HORN, California
BOB FRANKS, New Jersey
JOHN L. MICA, Florida
SUE W. KELLY, New York
RAY LaHOOD, Illinois
FRANK RIGGS, California
CHARLES F. BASS, New Hampshire
JACK METCALF, Washington
ROY BLUNT, Missouri
JOSEPH R. PITTS, Pennsylvania
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JOHN R. THUNE, South Dakota
CHARLES W. ''CHIP'' PICKERING, Jr., Mississippi
JON D. FOX, Pennsylvania
J.C. WATTS, Jr., Oklahoma

NICK J. RAHALL II, West Virginia
ROBERT A. BORSKI, Pennsylvania
ROBERT E. WISE, Jr., West Virginia
BOB CLEMENT, Tennessee
ELEANOR HOLMES NORTON, District of Columbia
PAT DANNER, Missouri
JAMES E. CLYBURN, South Carolina
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BOB FILNER, California
FRANK MASCARA, Pennsylvania
GENE TAYLOR, Mississippi
BILL PASCRELL, Jr., New Jersey
JAY W. JOHNSON, Wisconsin
JAMES P. McGOVERN, Massachusetts
TIM HOLDEN, Pennsylvania

Subcommittee on Water Resources and Environment

SHERWOOD L. BOEHLERT, New York, Chairman

JOHN R. THUNE, South Dakota, Vice Chairman
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THOMAS E. PETRI, Wisconsin
JAY KIM, California
STEPHEN HORN, California
BOB FRANKS, New Jersey
SUE W. KELLY, New York
FRANK RIGGS, California
BUD SHUSTER, Pennsylvania
(Ex Officio)

ROBERT A. BORSKI, Pennsylvania
JAY JOHNSON, Wisconsin
ROBERT E. WISE, Jr., West Virginia
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FRANK MASCARA, Pennsylvania
GENE TAYLOR, Mississippi
BILL PASCRELL, Jr., New Jersey
JAMES P. McGOVERN, Massachusetts
NICK J. RAHALL II, West Virginia
(Ex Officio)




    Davis, Michael L., Deputy Assistant Secretary of the Army (Civil Works), U.S. Army Corps of Engineers

    Jennings, Ann, Staff Scientist, Chesapeake Bay Foundation

    Jones, Hon. Walter, a Representative in Congress from North Carolina
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    Lautin, Lew, CEO and Partner, Wetlandsbank, Inc

    Sutliff, James, President, Ohio Wetlands Foundation

    Wayland, Robert H., III, Director, Office of Wetlands, Oceans, and Watersheds, Environmental Protection Agency


    Thune, Hon. John R., of South Dakota


    Davis, Michael L

    Jennings, Ann

    Lautin, Lew

    Sutliff, James

    Wayland, Robert H

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Lautin, Lew, CEO and Partner, Wetlandsbank, Inc.:

Aquatic Vegetative Coverage Summary, chart

Florida Wetlandsbank Pembroke Pines Site Wildlife Tabulation, chart

FWB Phase 2 Hydrograph, chart

Sutliff, James, President, Ohio Wetlands Foundation:

Big Island Monitoring Highlights, report

List of Animal Species Observed by Envirotech Consultants, Inc., at the Big Island Wildlife Area Mitigation Site, Big Island Township, Marion County, Ohio

List of Plant Species Found at the Big Island Wildlife Area Mitigation Site, Big Island Township, Marion County, Ohio

Mitigation Activity, Ohio Wetlands Foundation's Big Island Mitigation Bank Through 1996, chart

    Wayland, Robert H., III, Director, Office of Wetlands, Oceans, and Watersheds, Environmental Protection Agency, response to post hearing questions

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    Dean, Henry, Chairman, Interstate Council on Water Policy, Executive Director, St. Johns River Water Management District, statement, and position paper




U.S. House of Representatives,

Subcommittee on Water Resources and Environment,

Committee on Transportation and Infrastructure,

Washington, DC.

    The subcommittee met, pursuant to call, at 10 a.m., in room 2167, Rayburn House Office Building, Hon. Sherwood L. Boehlert (chairman of the subcommittee) presiding.

    Mr. BOEHLERT. The hearing will come to order. Welcome to the Water Resources and Environment Subcommittee. Today's hearing focuses on wetlands mitigation banking, a concept that is increasingly important in the debate over wetlands protection. Reaching the goal of or maintaining the goal of no net loss and eventually the goal of net gain wetlands protection is a priority concern for this subcommittee.
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    Because we expect a lot of other priority issues to come before the subcommittee in the second session, Superfund, Corps of Engineers, water resources projects, the Clean Water Act programs, it makes sense to have this hearing as soon as possible, even in December when this town normally turns a lot of its attention to the holidays.

    Mitigation banking proposals are also currently being considered in the context of BESTEA and the reauthorization of ISTEA, a process that is under an extremely tight time frame. There are many congressional advocates of mitigation banking. Perhaps two of the strongest are Richard Baker, a member of this subcommittee, and the person who has introduced me to the subject and has educated me on the subject, our good friend and colleague, Mr. Walter Jones, who will be our first witness before the subcommittee today. As a matter of fact, Mr. Jones hosted me in his congressional district to show me a product that is exciting and offers a lot of promise.

    Wayne Gilchrest, who is another member of this subcommittee and one of the most active members of the effort to protect wetlands, just recently introduced a comprehensive wetlands and watershed bill that also includes mitigation banking provisions.

    Mitigation banking has great promise if applied in the right context and accompanied by appropriate environmental safeguards. However, it is not the silver bullet of meeting the overall wetlands challenge. There are a whole host of other regulatory and other conservation issues that deserve attention and need to be part of a broader resolution.

    Unfortunately, some of these issues continue to be victims of gridlock and rhetoric and the effort to move forward legislatively will be difficult at least until parties agree to seek common ground and where that is not possible, middle grounds.
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    Unlike some of the most contentious issues, mitigation banking has made some incremental progress toward consensus and compromise. The administration has developed guidance, and both the regulators and the regulated community have learned some lessons about what works and what doesn't. We are learning more and more about a track record of success and a future of promising results. At the same time, though, there are legitimate concerns. Knowledgable critics warn us to go slowly.

    Today's hearing is about the successes and failures and opportunities for improvement. Specifically we will explore the provisions of H.R. 1290, Mr. Jones's bill, and proposals by Representative Baker and Representative Gilchrest. Today's witnesses include Congressman Jones, noted experts on mitigation banking from Florida and Ohio, a representative of the Chesapeake Bay Foundation, and officials from the Army Corps of Engineers and the Environmental Protection Agency.

    As the subcommittee turns more of its attention to water quality, wetlands and reauthorization of the Clean Water Act, I expect there will be considerable discussions on actions regarding mitigation banking. Through it all, our goal will be to help develop new tools to supplement some of the existing ones so that our Nation can continue to make progress toward protecting and restoring America's waters and wetlands. With that, let me turn to my distinguished colleague from the Commonwealth of Pennsylvania Mr. Borski.

    Mr. BORSKI. Thank you very much, Mr. Chairman.

    Mr. Chairman, the regulation of activities affecting wetlands is probably the single most significant reason that Congress has not been able to consider and enact changes to the Clean Water Act over the past 10 years. No other issue has generated the discussion and activity which accompanied this aspect of the law. For example, the regulation of activities in wetlands is largely responsible for the debates in Congress over property rights and takings. We also know that the loss of historical wetlands played a major role in the severity of flooding throughout the Midwest and the Missouri and the Red River Basins in the 1990s. That is contributing to the debate on the proper role of the Federal Government in providing for flood protection.
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    The loss of wetlands has also been linked to declines in water quality particularly along our coasts. Wetlands are one of the Nation's greatest natural treasures. They provide critical habitat for fish and wildlife. They lessen the effects of potentially disastrous floods, they recharge our precious drinking water aquifers and serve as Mother Nature's natural filtering system to improve water quality. Unfortunately, despite all the known benefits of wetlands, we continue to allow wetland losses to occur.

    Mitigation banking is one method that helps arrest the loss of wetlands. The restoration of wetlands and the mitigation bank to compensate for the loss of other wetlands in the watershed can be a valuable tool in preserving and restoring wetlands values and functions. However, mitigation banking should not be viewed as the preferred option to avoid impacts on wetlands or minimizations of impacts on wetlands. Compensation for wetland losses is not a first option. It arises out of necessity, since there will always be unvoidable losses of wetlands.

    With that in mind, I believe that our task is not to create as many compensatory wetland mitigation banks as possible but to ensure that there are as many high-quality mitigation banks as needed.

    Mr. Chairman, I look forward to the testimony of today's witnesses and particularly want to welcome Mr. Jones who I also had a great deal of pleasure serving with his father. He has followed in his footsteps of service to his district.

    Mr. BOEHLERT. Thank you very much, Mr. Borski. It is obvious from our opening statements that we are pretty much on the same wavelength here. Mr. Bateman, do you have an opening statement?
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    Mr. BATEMAN. No.

    Mr. BOEHLERT. Mr. Ehlers.

    Mr. EHLERS. Thank you, Mr. Chairman. I want to thank you for calling this hearing. I think it is a very important topic that needs attention from this Congress. I am very pleased to see you begin the process. Thank you.

    Mr. BOEHLERT. We start today's deliberations with our first witness who in my estimation is Mr. Mitigation Banking; Walter Jones has been outstanding in advancing this concept. He is a responsible Member. He is doing it very thoroughly and very methodically. He is as concerned as those of us who are proud to identify as environmentalists are about preserving wetlands, but he is also very much interested in doing something that is responsible in terms of this concept so that we can in certain instances permit a progress toward development.

    So, Mr. Jones, it is with a great deal of respect for your fine work that I welcome you here, and I noted that my colleague Mr. Borski had the same observation, so we are both anxious to have you address the subcommittee.


    Mr. JONES. Mr. Chairman, thank you very much. I would like to take this opportunity to thank you and the subcommittee members for giving me this opportunity to talk with you during this recess about mitigation banking. This hearing on wetland mitigation banking, specifically H.R. 1290, the Wetlands Restoration and Improvement Act, builds upon the Federal guidance which was issued in 1995 to increase the use of mitigation banking.
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    On a regular basis we are reminded of the important role wetlands play in our ecosystem, specifically in maintaining good quality of water. I have witnessed firsthand the importance of wetlands, whether it be combating the deadly toxin pfiesteria in eastern North Carolina or helping the landowner manage his land effectively.

    Chairman Boehlert, as you know, my district includes a majority of the coast and four major river basins. Specifically 65 percent of the land can be classified as wetlands.

    Since coming to Congress 3 years ago, I have been contacted by farmers, business owners, State and local officials, landowners, environmentalists and even the military for advice and guidance in hopes of reaching a balance between protecting these valuable wetlands and improving water quality while allowing for eco-safe development.

    Quite frankly, each group has voiced concern that the regulations either go too far or not far enough. These differing opinions have led to years of confrontation. In order to make progress, we need cooperation instead of confrontation. It is time to find the middle ground on which everyone can agree.

    I am not one who believes we must do away with all wetland regulations. However, I do believe that we must adopt regulations that promote economic development while protecting and expanding our valuable wetlands. Wetland mitigation banking can do just that. I am not a wetland expert but mitigation banking is the common sense approach that we need.

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    Mitigation banking is a concept embraced by regulators, developers and the environmental community. It is a balanced approach to improving the mitigation process. Mitigation banking recognizes the need to protect our wetland resources while balancing the rights of property owners to have reasonable use of their properties.

    Wetlands mitigation banking allows private property owners to pay experts to mitigate the impact their development has on wetlands. Those experts working with regulators do the mitigation in banks of land which are set aside and restored.

    Unfortunately, traditional mitigation is not working. It is too expensive, time consuming and ineffective. Approximately 90 percent of onsite mitigation is unsuccessful. Mr. Chairman, I would like to repeat that. It is too expensive, time consuming and ineffective. Approximately 90 percent of onsite mitigation is unsuccessful.

    Unlike other mitigation projects, mitigation banks are complete ecosystems. Regulators usually require that more wetlands be restored in a bank than are destroyed in the project. So instead of only trying to protect the remaining wetlands with mitigation banking, we are actually trying to increase wetland acreage.

    What is more, because mitigation banks give economic value to wetlands, potentially billions of private sector dollars could flow into restoring wetlands in sensitive watersheds.

    However, Federal legislation is needed. Mitigation banking has been occurring for some time but it is very limited because regulators have no statutory guidance. Also, investors are hesitant to invest the money needed to restore wetlands without legal certainty.
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    The Wetlands Restoration and Improvement Act will give banking the statutory authority it needs to flourish and it will begin protecting and expanding the wetlands that many thought were lost forever.

    Specifically, the legislation requires banks to meet rigorous physical, financial and legal standards to ensure that the wetlands are restored and preserved over the long term. Secondly, ample opportunity for meaningful public participation and banks to have a credible long-term operation and maintenance plan.

    This legislation can and should be a bipartisan effort to assure that in the coming years we will do what we have failed to do in the past, and that quite simply is to protect our valuable wetlands.

    Mr. Chairman, again I would like to thank you and the subcommittee members for allowing this hearing to take place and look forward to working with the committee on what I consider important legislation.

    Thank you, Mr. Chairman.

    Mr. BOEHLERT. Thank you very much, Mr. Jones. A fine statement.

    I noted in the preamble, at least section 2 of your bill, you state as one of the objectives, no net loss of remaining wetland resources. I commend you for that because, quite frankly, knowing Mr. Borski as I do, the two of us, you wouldn't have a prayer with this subcommittee if you were going to do damage to our Nation's wetlands. But you are trying to come up with some enlightened approaches to a problem that I think we have to address. So I thank you for your contribution. I have no questions. Do any of my colleagues?
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    Thank you very much.

    Mr. JONES. Thank you, Mr. Chairman.

    Mr. BOEHLERT. The second panel consists of, from the Florida Wetlandsbank, Mr. Lew Lautin—I might point out I have just returned from a CODEL with Chairman Goss of the House Permanent Select Committee on Intelligence; he was waxing eloquently about the Florida project, so we are looking forward to hearing from Mr. Lautin—Mr. James Sutliff from the Ohio Wetlands Foundation, and Ms. Ann Jennings who is a staff scientist with the Chesapeake Bay Foundation.

    What we will do is ask that you try to condense your formal statement to approximately 5 minutes. We will not hold you strictly to that 5-minute rule but that allows you—your statement will appear in the record in its entirety, but by minimizing your formal opening statement because we have the benefit of it here, you allow more time for questions, and that is where we really elicit the most information.

    With that preamble, I will go in the order of introduction. First, Mr. Lautin.


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    Mr. LAUTIN. Mr. Chairman and members of the subcommittee, thank you for inviting me back to testify today. My name is Lew Lautin and I am Chief Executive Officer of Florida Wetlandsbank and Wetlandsbank, Inc., entrepreneurial mitigation banking companies.

    We launched our pioneering efforts to correct the failures of postage stamp mitigation in 1991. In 1994 we became the first entrepreneurial mitigation bank to transfer credits in a fully permitted 350-acre bank in Pembroke Pines, Florida.

    The site was jurisdictional nonfunctioning wetlands dominated by melaleuca trees, non-native trees that threaten the water supply of Florida. This site had been ditched and farmed for years, abandoned to become littered with trash, devoid of significant habitat or functional water values.

    On March 7, 1995 when I first testified before this committee, we had just started constructing our site. The Chairman asked this one important question, quote: ''I like the idea of mitigation banking. I am just wondering how we can respond to the purists who say, 'It's not for real. It sounds good. The intentions are great. It looks good on paper, but in practice it really doesn't work like a natural wetland would.''' That is a quote from the chairman.

    In the 33 months since then, our experience with Florida Wetlandsbank has scientifically proven that when properly permitted and constructed, mitigation banking offers a successful alternative to onsite mitigation and addresses ecological, biological and public policy concerns.

    As of today, as our pictures show we have completely restored almost 350 acres to fully functioning wetlands, monitored and approved by Federal, State and local agencies. My written report includes information that supports the success through the elimination of exotic plants, reestablishment of hydrology and growth of a variety of plants and trees that now thrive and provide critical habitat for diverse wildlife species that now make their home in our bank.
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    We recently entered into a partnership with the Barron Collier companies to create the Panther Island Mitigation Bank, a 2,775-acre mitigation bank contiguous to the National Audubon Society's Corkscrew Sanctuary. In addition to this and other banks we are planning in Florida, we have opened an office north of Seattle and have begun taking steps to develop mitigation banks in Washington, Oregon and elsewhere.

    As mitigation bankers, we are not asking for a change in Federal sequencing, as stated by Representative Jones and the Chairman. We agree avoidance first, minimization second, mitigation third. When regulators allow dredge and fill activities and mitigation is approved, then we believe that a fully permitted mitigation bank may be a favored option to onsite mitigation. When circumstances favor mitigation banking, it has now been proven a successful alternative that ensures a true no net loss of wetland functional values.

    The 1995 Federal guidance is well crafted and contains safeguards to ensure that wetlands restored or enhanced through a permitted mitigation bank will thrive; be constructed and thrive in perpetuity. Examples of these safeguards include allowing but limiting the amount of presales of credits, financial assurances for construction and financial and legal requirements ensuring long-term maintenance of the bank at no cost to the public.

    I would also like to mention our support for any amendment to the pending ISTEA legislation that encourages mitigation banking. Use of mitigation banks for Federal road projects will allow DOT to realize significant savings compared to traditional DOT mitigation solutions.

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    I renew my invitation that committee members visit our bank in south Florida and find a thriving replication of the Everglades in place of a nonfunctioning wetlands that existed a few short years ago. If not Florida, visit Ohio banks or Chicago banks. Private mitigation bankers with their own capital and with true American entrepreneurial spirit have not only created a new industry but through hard work, diligence and through government encouragement can provide successful mitigation projects of significant long-term ecological benefits.

    Mr. Chairman, the answer to your 1995 question is that it does work and we are for real. I will be happy to answer any questions. Thank you.

    Mr. BOEHLERT. Thank you very much, Mr. Lautin. I appreciate that. I appreciate being reminded of the exchange we had back in 1995.

    For purposes of introduction, the chair recognizes the distinguished gentleman from Ohio, Mr. LaTourette.

    Mr. LATOURETTE. I thank you, Mr. Chairman. It is a pleasure for me to be here at this hearing and leave the hearing with Attorney General Reno on the other side of the hall for the moment to talk about wetlands mitigation.

    Mr. Chairman, it is my pleasure to introduce the next witness who is Mr. James Sutliff, Mr. Sutliff is a native of our home State of Ohio and is currently the President of the Ohio Wetlands Foundation.

    The Ohio Wetlands Foundation came to my attention early in our first term in Congress when they were kind enough to come educate me on its wetlands mitigation program and also seek our office's assistance in working with the Army Corps of Engineers. I remain impressed with the foundation's ability to design mitigation projects that meet the regulatory requirements of State and Federal agencies and further the important goal of resource restoration.
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    A substantial amount of our staff resources are dedicated to assisting economic development in our congressional district. Wetlands permitting continues to be one of the most complicated and at times contested aspects of most projects that we are required and requested to assist in. When a project cannot avoid impacting a wetland, then the engineers have minimized to the best of their technical abilities, efforts then become focused on compensation.

    Wetlands mitigation banks such as those provided by the Ohio Wetlands Foundation often provide the only opportunity to move ahead on important projects that require compensation for lost resources. The foundation has a record of providing such services in a cost-effective manner that provides true value to both the customer and the Federal steward of the resource.

    I am pleased that Ohio has been a leader and an innovator in the area of wetlands mitigation banking and I am certain that the subcommittee will benefit from Mr. Sutliff's testimony before us today. Welcome, Mr. Sutliff and thank you, Mr. Chairman.

    Mr. BOEHLERT. How do you like that advance billing? Welcome, Mr. Sutliff.

    Mr. SUTLIFF. I hope I can live up to it.

    Mr. BOEHLERT. I am sure you can.

    Mr. SUTLIFF. Good morning, Mr. Chairman, and thank you for inviting me to testify before the subcommittee.
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    The Ohio Wetlands Foundation is a not-for-profit private foundation established in 1992 to provide environmentally sound and cost-effective wetlands mitigation in the state of Ohio and to promote the establishment of high-quality wetlands and to fund and advance the study of wetlands and wetland mitigation efforts.

    We have established three banks in Ohio, two of them in central Ohio, one in Hebron. In 1993 when it was constructed, it was 33 acres and it was on Department of Natural Resources land. In 1995 we did a Big Island site which was 329 acres. Again it was on the Ohio Department of Natural Resources land. We have had to date about 60 people use the bank.

    We did our third one in 1997. We just finished the construction of it and it is west of Cleveland, in Lorain. It is on the Lorain Metro Park District land. It is 115 acres. To date, we are about 50 percent sold out with 13 permits being used there.

    Our biggest client has been the Ohio Department of Transportation. By using the mitigation bank, the Department of Transportation has been able to save over $2 million; rather, I should say that $2 million was able to be used for asphalt and concrete and bricks, and not mitigation banking.

    Mitigation banking provides the best environmental solution to offsite mitigation. As was stated earlier, first you must avoid, then you must minimize, and if those two options don't work, then you can look at offsite mitigation. Mitigation banking is the best solution there. We get larger high-quality, cost-effective wetlands restored, allowing for small, isolated, low-quality wetlands to be mitigated. In Ohio, we use a 1.5 to 1. That was a ratio established by the Army Corps of Engineers. That means we have a net gain of wetlands in Ohio.
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    I think it is important that you recognize here what we are filling, because we are not filling pristine bogs and swamps. I hope you can see this. This is just a subdivision around Columbus, Ohio, about 70-some acres. You can't really see it, but there were 22 fills on this subdivision. Remember, your nationwide permit and your permit process is a cumulative effect. You can only have, the nationwide permit is from one-third of an acre of fill to 3 acres of fill. It is a cumulative.

    We have 22 fills. The largest fill of the 22 is .029 acres. That is about 1,400 square feet, just a little bit larger, or about the size, a little smaller actually than a starter home. We have a great deal of fills .01 of a square acre, and the best way to describe that is the size of a two-car garage. This is what the subdivision looks like.

    Here are some of your headwaters in the United States that are being filled, right there, right here. This one happens to be back in the woods. It is a little bit bigger, about the size of this room. This is what we call a John Deere fill, tracks in the field, in cold water. Here is another one running through.

    Here is a second subdivision. Each of these A's, the A's here, that is where they have delineated that there is some wetlands. The largest one in this one—and there are 10 of them, they accumulate to .65 acres, I believe, so they had to buy one credit, 1.5 to 1—the largest one was .4, 17,424 square feet. You have a little trouble even finding the wetlands on there. But I guess that would be your headwaters United States right down in here, again out in the field. This is it. Right there is some.

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    This is the Big Island where they have been mitigated; 300 acres. There is an aerial shot of it. This is the berm we created right there. This has all been restored or enhanced wetlands. You can see some of the pictures and what it looks like.

    I am sorry for going fast but I have got limited time. Here are some statistics on the fills that are important. You can see that 68 percent of the fills are less .1 of an acre, less than 4,350 square foot. On year 2, we have to do a monitoring. We do monitoring for 5 years. But you have a preconstruction and a year 2. Notice we went from 12 birds observed to 64; mammals, from 5 to 8; zero invertebrates to 16. You can see that the wildlife has flourished at this site. We have now 80 percent of our samples contain 100 percent of wetlands plants. We started with 54 wetlands plants prior to restoration and we now have 108.

    You can see that the restoration of wetlands in a mitigation bank has a great impact on the wildlife and their habitat. You also see that at least in the flyover lands such as Ohio and away from the coastal areas, that we really are not talking about major type wetland fills; we are talking about postage stamp John Deere type of fills.

    I see my time is up. I thank you for inviting me to testify here and invite all of you or any of you that would like to come out and see what we have done to come out, because we are very proud of what has occurred.

    Mr. BOEHLERT. Thank you very much. I do appreciate that.

    Now for our final witness on this panel, from the Chesapeake Bay Foundation, the staff scientist Ann Jennings. Ms. Jennings, welcome.
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    Ms. JENNINGS. Thank you and good morning. My name is Ann Jennings and I am a staff scientist in the Virginia office of the Chesapeake Bay Foundation. Chesapeake Bay Foundation is an 85,000 member not-for-profit conservation organization working to ''Save the Bay.'' I appreciate your invitation to present the Bay Foundation's position on mitigation banking.

    Mitigation banking must be viewed as simply one tool in a large box of regulatory options. Our efforts to preserve and protect wetlands within the Chesapeake Bay watershed do and will continue to fall short as long as the emphasis on avoidance and minimization, which are the most critical options in that tool box, continue to be overshadowed by a growing emphasis on compensation.

    As one tool in the regulatory tool box, mitigation banking can provide a number of positive opportunities, such as consolidating wetland replacement projects, increasing oversight of permit requirements by the Army Corps of Engineers. And focusing wetland compensation planning from a watershed perspective.

    Too often, however, these opportunities are overshadowed by shortfalls in the current system. From our experience in reviewing existing and proposed mitigation banks within Virginia, the Chesapeake Bay Foundation has discovered that because of a lack of sufficient parameters and strong guidance, the banking tool is being misused in both the private and public sector.

    I would like to take this opportunity to discuss four problems we have seen as a result from these misuses. Firstly, mitigation banks in Virginia frequently incorporate the preservation of existing wetlands as part of their compensation package, even though using the preservation of existing wetlands as compensation for loss of other wetlands should be a rare occurrence, not frequent.
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    In a few circumstances the Bay Foundation has reluctantly accepted the use of preservation as compensation where a particular wetland community is considered under threat. For example, in those situations where it is small isolated wetlands which can be impacted without notification to the Corps.

    Unfortunately, several existing and proposed banks in Virginia incorporate preservation of wetlands systems commonly seen as already protected by existing Federal and State regulations, such as tidal systems and forested swamps. To allow preservation of existing wetlands already protected from destruction or impact to serve as compensation flies in the face of a no net loss goal. Such preservation equals a net loss of wetland acreage no matter what the compensation ratio, period.

    When the Foundation shared this concern with the Corps, its response was that the use of preservation was consistent with the Federal guidance on mitigation banking and thus permissible. This is simply unacceptable. For us, accepting a scheme guaranteed to yield losses violates the Federal and State commitment to a short-term no net loss and long-term goal of wetlands for the Chesapeake Bay watershed. Preservation should not be a substantial element of any mitigation bank.

    Secondly, we must recognize the wetlands function on a local level. That is, the societal and ecological values provided by wetlands serve to guarantee the long-term existence of a healthy environment and a good quality of life at our local watershed level.

    In Virginia, mitigation banking initiatives are allowing individual watersheds to lose wetland functions, resulting again in a net loss of wetlands within the fragile Chesapeake Bay ecosystem. Even with the Virginia State law that prohibits such out-of-watershed compensation, mitigation bank proposals continue to push for large multiwatershed service areas.
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    The Bay Foundation is currently opposing a banking proposal by the Virginia Department of Transportation which could result in the loss of over 750 wetland acres in the Chesapeake Bay. Under the guise of a new and improved compensation, these banks will guarantee the continued downward spiral of the health of the Chesapeake Bay.

    Out-of-watershed compensation has become a common practice, even though Federal guidance has continually stated a preference for mitigation within the same watershed. It is obvious that current guidance is grossly inadequate to prevent this practice. This must be changed or watersheds like the Chesapeake will continue to suffer additional losses from mitigation banking.

    Our third concern regards the opportunity for the public to comment on banks. While the Corps considers the published notice of a mitigation bank prospectus sufficient opportunity for the public to review and comment, it is not. The lack of detail in the public notice and the banking prospectus severely limits an informed review by the public on critical issues regarding use and operation of the bank. In Virginia, except for our insistence, we would not have had an opportunity to comment on several mitigation bank memorandums of agreement. The Bay Foundation has urged the Corps to public notice the draft banking instruments and individual site development plans before approving a mitigation bank. Absent such, there is no public review of the complete banking proposal. The Foundation opposes these behind-closed-doors private contractual agreements for the protection of public resources.

    Finally, although the often cited benefit of mitigation banking is the restoration of wetlands in advance of impacts, most current banking proposals in Virginia allow for advanced use of projected banking credits. Moreover, all call for weak performance standards. With the advanced crediting and minimal performance standards, the majority of bank credits are available within just a few years of construction. Of several recent bank proposals in Virginia, 75 to 100 percent of the bank credits are available for sale within just 1 year of project construction. Under this framework, this system is not a banking system. There is no cash in the account before a withdrawal is made. Eliminating advance credits and requiring strong performance standards could guarantee that a mitigation bank functions more like a bank.
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    As with any tool, mitigation banking can offer an effective solution for wetland compensation needs. However, unless strong directives are provided to ensure proper use, this tool will merely further and legitimize continued wetland losses.

    I thank you again for this opportunity to present the Chesapeake Bay Foundation's concerns regarding mitigation banking and I ask for your assistance in making banking a more effective program for the protection of our natural resources.

    Mr. BOEHLERT. Thank you very much, Ms. Jennings, and thank you to all of our panelists.

    Let me start with you, Ms. Jennings.

    My interpretation of what you are saying is that mitigation banking can be a valid concept from a scientific point of view if the proper safeguards are there. Is that fair to summarize it in that way?

    Ms. JENNINGS. That is correct, yes, as long as those safeguards are there.

    Mr. BOEHLERT. Fine. That is very important I think to this subcommittee, that it can be done.

    Getting back to my question of Mr. Lautin back in 1995, you know; is this for real or is this somebody's just imaginative approach to something? And you said, no, it is for real and you are coming back to us with some very fine testimony, I think, Mr. Lautin, proving it is for real.
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    Let me ask Ms. Jennings one more. Have you had a chance to look at Mr. Jones's bill, H.R. 1290?

    Ms. JENNINGS. Yes; I did have a chance to read that.

    Mr. BOEHLERT. Do you have any initial thoughts on it?

    Ms. JENNINGS. We would support calling for regulations for mitigation banking in the law. I feel that there are some safeguards that aren't there in the Jones bill. I reviewed it very quickly. What I did not see are things such as a requirement to compensate in the same watershed as the impact. The other issue regarding the opportunity for the public to comment—from my reading, there are several safeguards left out of that bill.

    Mr. BOEHLERT. I would encourage you, and Mr. Jones is still here, to maybe chat with him after this, because I have found him to be one to be constantly reaching out to get more input to develop the best possible bill, and I am sure he would be receptive to any suggestions you might have.

    Let me ask all the panelists, if you had to grade what EPA has done so far since 1995 and the guidance that they are giving, how would you grade them—A, B, C, D? Mr. Lautin?

    Mr. LAUTIN. We are now going through the MBRT process for the first time with our Panther Island mitigation bank based on the Federal guidance. We find the guidance to be very well written, the MBRT team is working. They are protecting the public. They are allowing our bank to go through. It will take us a year to permit a 2,775-acre bank. The team members understand the benefits of mitigation banking, while safeguarding the public.
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    I would give EPA and the Corps and Fish and Wildlife an A for the work they have done so far.

    Mr. BOEHLERT. Is that the Ohio experience?

    Mr. SUTLIFF. Yes. We have gone through the MBRT process with two of our banks and will be going with two more this year. The guidance as written is very good. A lot of thought was put into it. A lot of interagency input was put into the guidance back in 1995. The Corps needs a certain amount of flexibility out in the field, because the problems you experience on a coastal wetlands are not the same as our John Deere wetlands that we're experiencing in Ohio, Indiana and so on.

    The Corps has done an outstanding job of administering the program and the MBRT process works. All of the agencies meet, they all have input. As a banker, I have to address all of their concerns before I get approval to go ahead with a bank. The field people have got a lot of good input. They have done outstanding work, and in our case they stuck their neck out long before this was a very popular thing to do and you don't find many government people that are willing to do that. We had that in Huntington, and the Buffalo District was opposed to it until they saw the success we had in our first bank, and then they have turned about 180 degrees and we will be doing three. We have done one bank but we will be doing two more in the Buffalo District this year.

    I think what you have got is good. I think Mr. Jones's bill needs a little tweaking here and there for some adjustments and for some thoughts but the presale of credits is an important thing for us. We would have never been able to do anything because we didn't have any money, and we were able to get the presale of credits so we had money to construct the bank. We have found the whole process works pretty well.
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    Mr. BOEHLERT. Super. Thanks for those good words.

    Ms. Jennings, I'll get to you in a moment. It is always comforting from this side of the proceedings to have good words said about our Federal employees. I find that day in and day out, whether it is the EPA or the Corps of Engineers or any other Federal agency, that they are your neighbors and ours. For the most part I think they work very hard and try to do a good job. It is comforting for me to have positive words come from your side of the table.

    Ms. Jennings.

    Ms. JENNINGS. Yes, if I could just answer that question. While I have the utmost respect for all of the Federal agencies involved with the MBRT, the concerns that we have continued since 1995 and since the Federal guidance was put in place. Frankly, we are not part of the MBRT. As a representative of the public today, we don't sit at the table when all of the very critical decisions regarding performance standards, advance crediting, service area and as such are negotiated with the Federal agencies, so we don't have the opportunity to work with them.

    Mr. BOEHLERT. Thank you.

    Mr. Borski, I see my time is up and the chair is going to be pretty strict on the time limit because we have good attendance here this morning. Mr. Borski.

    Mr. BORSKI. Thank you, Mr. Chairman. Let me welcome and thank our panelists for their testimony. I have read what you submitted to us and enjoyed what you have said here. I want to congratulate you for the good work you are doing.
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    Ms. Jennings, let me ask you, however, a question. Mr. Jones's bill and the testimony of both Mr. Lautin and Mr. Sutliff indicate support for mitigation sequencing. Do you believe that the Jones bill sufficiently ensures that mitigation sequencing is preserved, and should we do more?

    Ms. JENNINGS. The only caution I have—I'm not certain if it protects adequately the sequencing requirement. I have not reviewed it in that sort of detail. I was concerned about one aspect of his bill which essentially requires the use of mitigation banks for any projects that are over—that impact more than 35 acres of wetlands. In Virginia that would essentially be all individual permits as well as all nationwide permits. So my concern would be if there is an insistence to use banks for that size project, then maybe there would not be as strong of an effort to avoid or minimize the impacts.

    Mr. BORSKI. You also criticized, both to the Chairman and in your remarks, the public participation in establishing wetland banks. Why are the public notice requirements of permit issue not adequate to address your concerns?

    Ms. JENNINGS. The Corps has made the statement to us that we do have the opportunity to review banks when they are used for individual projects. Unfortunately, most of those projects, at least in Virginia, are going in under nationwide permits, and we don't have the opportunity to review nationwide permits. The specific nationwide permit we can review every 5 years when they come up for review. When an individual permit is required of a project, generally the Corps public notices it before any decisions are made regarding what mitigation to use. So in the 30-day time period that I have to review an individual public notice, there is no decision at that point whether the developer will go to a bank. So I don't have the opportunity to comment on the bank.
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    Mr. BORSKI. Thank you very much. Thank you, Mr. Chairman.

    Mr. BOEHLERT. Mr. Bateman.

    Mr. BATEMAN. Mr. Chairman, you have already asked most of the questions I was going to raise. I think it is very important, Ms. Jennings, that you look at some of these mitigation projects and ascertain, to the extent that onsite inspection would be valuable, whether or not indeed they work.

    I am curious at your statement about the requirement of mitigation banking where more than 35 acres of wetlands is being disturbed, requiring mitigation banking for national permit projects and any and all projects. If it says you have got to use them if it is 35 acres or more, it is certainly not a mandate that you allow it, permit it or use it if it is a national permit project or if it is a project of less than 35 acres. I am not sure I understand your position there.

    Ms. JENNINGS. That is my interpretation of reading the proposed bill that was developed by Mr. Jones. It indicates here that such regulations will establish a preference for using a mitigation bank to mitigate an activity which is part of a single and complete project which disturbs less than 35 acres of wetlands.

    Mr. BATEMAN. Disturbs less than, not more?

    Ms. JENNINGS. Yes. I am sorry if you interpreted me wrong. But on a project that is 35 acres or less, the preference would be to use a bank.
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    Mr. BATEMAN. Mr. Lautin and Mr. Sutliff, you have indicated that you would give the regulatory authorities, the Corps of Engineers, the Fish and Wildlife Service an A in terms of their performance in this area. If that be the case, do we need legislation? There comes to mind if it ain't broke, don't fix it. Give me your reaction to that.

    Mr. SUTLIFF. I don't think you need a lot of legislation on it because I think you might overregulate it. The guidance works. Certainly if we codified in law the guidance, that would be certainly a step in the right direction. But I do believe you have to give the Corps and the other agencies, the EPA, the flexibility at the local level to adjust to conditions that exist there.

    I think it would be very difficult to write something that would cover all wetlands in the entire United States because there are three distinct differences in wetlands, and certainly what safeguards you might need for coastal could be way overregulated for the inland, such as where we come from.

    The guidance works. I think what we need is some preference for mitigation banking on linear projects such as the Bond-Breaux highway bill amendment, that would be a step in the right direction. It just gives us a little more weight on our side of the equation that this is a good step, and it certainly would allow the State departments of transportation to do it and feel comfortable they are doing the right thing without repercussions that they haven't followed the correct regulations. Lew?

    Mr. LAUTIN. Yes.
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    Mr. BOEHLERT. That was good. In the interest of time, that was a snappy answer. Thank you, Mr. Bateman.

    Mr. Ehlers.

    Mr. EHLERS. Thank you, Mr. Chairman. I will be brief. I come from the only State, Michigan, which for years, that had its own wetlands laws. We have used mitigation banking for a long time—or mitigation, I should say—and have developed the concept of banking.

    We have done two things which I want to make sure is being done on the Federal level as well. One is to try whenever possible to require that the mitigation be greater than the wetlands that are destroyed, and secondly to be very concerned about the quality of the wetland that is being mitigated and make sure that it is replaced by a wetland of equal or greater quality, as quality is defined.

    I am wondering, is this being followed at the Federal level as well? Mr. Lautin?

    Mr. LAUTIN. Yes, Mr. Ehlers; we feel very strongly that the quality of mitigation is more important than an acre of mitigation. Our top picture was a picture of our site before we started, which was a nonfunctioning wetland, zero functioning. That represents 95 percent of the impacts for people that buy mitigation credits in our bank.

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    The bottom picture represents a fully functioning 10 habitat ecosystem that has incredibly high-functioning values. We state uncategorically that the functioning value of the wetland improved in our bank should be equal to or be greater than the destroyed functional value of the wetland that is being impacted with dredge and fill activities. But we say it should be done on a scientific, functional value because all wetlands are not created equal.

    Mr. EHLERS. What factors are included in your definition of function?

    Mr. LAUTIN. Hydrogeomorphic values from water purification to water storage to habitat value. We work very closely in the state of Florida. We are now going through our third process of determining functional values while we wait for the Corps to finish up their HGM scientific studies. We are now using something called a modified W.R.A.P. system that has 40 or 50 different categories that were created by EPA, the Corps, Fish and Wildlife and the State to determine the functional values. And the Jones bill I think addresses this very well and states you need to measure the functional lift of the mitigation bank on a scientific, functional value basis and then measure the impacted site so you are always balancing out so you don't have a net loss of functional values. But it includes habitat, water functions and other values.

    Mr. EHLERS. Do you not only worry about not having a net loss but also about achieving a net gain?

    Mr. LAUTIN. Yes, sir. I think with mitigation banks you will have a net gain because it is economically preferable for a mitigation banker to put more into his bank than traditional onsite mitigation. We in our bank have 10 different habitats. We could have had a single sawgrass community that would not have had a high functional value, as our bank does today, because as a banker as opposed to somebody doing onsite mitigation, we have an economic incentive to build a better mitigation bank. So I think that mitigation banking in the next 50 years will provide wetland functional values that far exceed what we have ever seen in the last 50 years in terms of mitigation.
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    Mr. EHLERS. Mr. Sutliff?

    Mr. SUTLIFF. I would agree with what Lew has said. I would state that we are very concerned about quality. Our regulators, our Corps has said we have to be the highest quality, our banks have to be the highest quality. I guess our position is that if somebody has a real high-quality fill that they want to try to get a permit for, if it is too high quality, it shouldn't be filled. That is the call of the Corps and the EPA. We have no control over who comes in and who does what. We just provide an option. But if it is a high quality, it shouldn't be filled.

    Mr. EHLERS. Ms. Jennings?

    Ms. JENNINGS. In Virginia, I think circumstances are a little bit different. On all of the banks that I have reviewed, the Corps is using simply an acreage figure as their functional value assessment for the wetland. They don't use any methodologies to determine whether or not the restored wetland is providing the functions that the wetland that we will lose is providing. And they also typically provide or require just a one-to-one compensation ratio, so there is no net gain.

    Mr. EHLERS. I find that a little disturbing. You certainly want equal or greater functional value and preferably also a net gain.

    Fine. Thank you all very much.

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    Mr. THUNE [presiding]. The chair would next recognize the gentleman who has very keen interest in this issue and is working with the highway bill to improve that where wetlands are concerned and that is the gentleman from Louisiana, Mr. Baker.

    Mr. BAKER. I thank the chair. Mr. Sutliff, I am very interested in the observed benefits from implementation of your plan. As I understand it, you have a 1.5 to 1 ratio for offset. Your wildlife account has actually gone up. The Department of Transportation actually estimates a savings of some $2 million by activities of the bank. And characterizing prebank activity with postage stamp onsite remediation generally, given the lack of economic incentives often for the developer, you perhaps would get a single environmental approach, habitat approach.

    Given the contrast between prior experience and what you have learned from your banking activities, would you come to the conclusion that mitigation banking ought to be the preferred method of resolution for future activity?

    Mr. SUTLIFF. Yes, very definitely. In the past, whether it would be the highway department or a private developer when they had to do onsite mitigation, they did the least they could to satisfy the permit. Once it was done, they tended to walk away from it. It was rarely followed up. The Corps does not have enough people to go out and check every offsite mitigation—or onsite mitigation for a period of 5 years. With the mitigation bank, we are monitored every year—we have to produce a monitoring report for 5 years. The Corps makes a visit generally once a year and at the end of 3 years they do a real extensive delineation of what has been done.

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    Mr. BAKER. In addition to the immediate up-front benefits that are identified with the construction of the bank, is it your view that the maintenance of the bank also far offsets the single shot onsite mitigation effort?

    Mr. SUTLIFF. Absolutely. I think back in about 1994, we took—the U.S. EPA came out to Ohio and looked at our bank and then they went and looked at an avoidance and it was full of McDonald's wrappers and shopping carts. I think at that point they saw the real benefits of mitigation banking.

    Mr. BAKER. Thank you. Mr. Lautin, any comments?

    Mr. LAUTIN. Yes, Congressman. This is our maintenance monitoring report. Four times a year we provide this to three different regulatory agencies: the Corps, the South Florida Water Management District, the Broward County DNRP. Four times a year they come out to our site. Our bird count went from 3 to 79. Our plants went from 600,000 planted to over 3 million.

    Four times a year, three different agencies come out, inspect our bank. We have money put aside in bonds in case we fail. We will provide the city of Pembroke Pines $700,000 in money to perpetually take care of this, if at the end of 5 years we have met all of the success criteria.

    There are safeguards that work. As Representative Jones said, studies have shown that up to 90 percent of onsite mitigation has failed. Even with the best regulators, we know that onsite mitigation put in the ground today will have a much less chance of success than our mitigation bank. Fifty years from today, Florida Wetlandsbank will still be there, replication of the Everglades. Fifty years from today, most of the postage stamp mitigation, for very sad reasons, will probably have disappeared and be lost forever.
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    Mr. BAKER. Let me follow up on this issue. Many are cautious about entering into wetlands mitigation because of the uncertainty with which developers may view that project, and other reasons. If we were to establish under certain parameters, whether it be a 1 1/2 to 1 offset, certainly a net gain requirement as opposed to no net loss, if we were to establish a habitat enhancement method using your scientific criteria, if we were to establish those ''safeguards''—I prefer to call them goals for successful operation and to then stipulate that the regulators should look at this as a preferred method—would that not be an enhancement and therefore advisable for us to pursue?

    Mr. LAUTIN. Sir, if that would help perpetuate the mitigation banking business and help eliminate some of the risk that as mitigation bankers we face every day, because if regulations change, we are out of business; we have a half million dollars invested in permitting our mitigation banking, and if legislation passes here tomorrow that puts us out of business, we are at risk. So to answer the question, sir, if changes are made that eliminate many of the risks—and any business is a risk— but contains the safeguards for the public, helps us continue to work with the agencies on functional values that make sense, we would be very much for that, sir.

    Mr. BAKER. Thank you very much.

    Mr. THUNE. I see I am next on the list here. I have a statement which, without objection, I will include in the record, in order to be brief this morning.

    [Mr. Thune's prepared statement follows:]
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    [Insert here.]

    Mr. THUNE. I want to credit Mr. Jones because of the effort he has made on behalf of his constituents in North Carolina. I think it is a good one. I hope we can move something along. I hope it will be also one step in what will be broader wetlands reform. One of the questions I have with respect to the whole mitigation banking issue is, in my State of South Dakota, of course, we have a lot of wetlands this year that we do not normally have as wetlands, frankly, after last winter and spring, a lot of what we call prairie potholes. Of the 2 million acres that are deemed to be wetlands in South Dakota, about 75 percent of those are 1 acre or less. I guess I am curious, Mr. Lautin, you mentioned in your testimony that some of the credits are $40,000. Do you feel that there are—the credits are, one, available, and, two, acceptable at affordable rates for small-sized wetlands?

    Mr. LAUTIN. Yes, sir. We made a .039-acre transfer for the city of Plantation that was improving a ball park, and it costs them $6,000 to do the transfer, and the city engineer said he probably saved $30,000 in permitting costs. The mitigation banks and the cost of mitigation is very site-specific. If we charge $40,000 in one site, Jim can charge $12,000 in another, and it relates to land costs, it relates to development costs; there is a whole complex formula.

    Mitigation banking can work for the smallest consumer or the largest consumer. It can work for the ''mom and pop'' homeowner who is developing a 2-acre piece in the Keys, if it makes sense economically, and we have to be economically competitive with on-site mitigation, we have to be economically competitive with other off-site mitigation opportunities. So to answer your question, sir, we think that mitigation banking, when properly done, with properly formulated construction, can become a tool and useful for any of the users that are out there.
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    Mr. THUNE. In my State, we have had some limited experience with a couple of communities that have spent considerable time and resources toward developing mitigation banking in order to speed economic development. Their experience has revealed some frustration with the whole process, some of the rules that are imposed, and the banking concepts that are established and the Federal guidelines. Our situation, bear in mind, is somewhat unique from others that mitigation banking faces around the country. But I would hope as we move down this track that we can do it in a way that would make whatever we come up with applicable to all areas of the country, including areas like agricultural parts of the country which have unique needs.

    I yield to the gentleman from Maryland, Mr. Gilchrest.

    Mr. GILCHREST. I thank the gentleman from South Dakota, land of the Corn Palace, Mount Rushmore, and what was the name of that place where you stop for ice water?

    Mr. THUNE. Wall Drug.

    Mr. GILCHREST. Wall Drug. Not Wal-Mart, but Wall Drug.

    I would like to ask a series of questions, and if you disagree with my statement, please tell me. If you do not, then we will just move on to the other questions.

    Would you agree that wetlands and nontidal wetlands provide—if looked at through the eyes of science to understand the nature of the mechanics of natural processes, provide for people an abundance of resources free of charge; for example, spawning for much of the oceans' fisheries, water that we drink every single day from wells, habitat for wildlife, the soaking up of water to reduce the damage of flooding? Would anyone disagree that, understanding the mechanics of natural processes, wetlands and nontidal wetlands provide us as human beings an enhanced quality of life through what nature provides?
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    Ms. JENNINGS. Absolutely. I agree.

    Mr. LAUTIN. Yes.

    Mr. GILCHREST. Looking at human activity, we have impacted to some great degree the mechanics of natural processes by disturbing wetlands. Nobody disagrees. If we now have that human activity and must provide spaces for people to live, we also have to provide safe places, places where people can drink the water, continued economic prosperity through a whole range of activities, and we have to figure out, I would guess, where wetlands and nontidal wetlands were before human activity, where they are now, and how much more we can afford to lose, and how much more, through ingenious human activity, we can create to replace some of the loss.

    With mitigation banking—and here is the question I would like you to respond to—with mitigation banking, with my understanding of mitigation banking, there is a defined, finite amount that we can use. There is a limit to what we can use mitigation banking for. As soon as you fill up the bank, then what happens? Would you agree that, acre for acre, there is a limit and a time frame? Say you have 300 acres of an area that will be mitigated into, that are used for that bank, but as you go around and take a half-acre here, 3 acres there, a quarter-acre here, eventually you come up with one for one. So what happens after the bank is full?

    Mr. LAUTIN. Sir, I would like to answer that, because we have experienced that. Our bank started out as 350 acres. We are not creating wetlands, we are enhancing and restoring historic wetlands. In our site, after we sold out our first 350-acre credits, we started to acquire contiguous outparcels, and we have now added——
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    Mr. GILCHREST. You have acquired more land for the bank?

    Mr. LAUTIN. We have added over 80 arces in outparcels to our


    Mr. GILCHREST. This is not necessarily a theoretical or philosophical question. It has to be for the people that will be in this room in the year 2097, and there will be people in this room in 2097, I am sure, discussing wetlands. Is there a limit? Do we, as people, say yes, there is an absolute definable limit to mitigation banking; it might not be for 50 years, but there is a definable limit?

    Mr. LAUTIN. There is a limit to the amount of impacts in Broward County on dredge-and-fill activities, so we think that so far we have a very good balance and will continue to provide enough mitigation banking as a solution to failed policies in Broward County.

    Mr. GILCHREST. For 10 years, 20 years?

    Mr. LAUTIN. Yes, sir.

    Mr. GILCHREST. 30 years?

    Mr. LAUTIN. We think mitigation banking, which—I was in the economic business. We are entrepreneurial mitigation bankers, and we will go where we think the economic opportunities are, where we think there is a client and a need for our services, and we think it will balance out very well, sir.
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    Mr. GILCHREST. I think your ingenuity is positive, and I praise the gentleman from North Carolina for coming up with a mitigation proposal. I think with this ingenuity and with this balancing, we can continue to move forward and protect, preserve, enhance, and increase the number of wetlands, as long as we understand the mechanics of natural processes so future generations will be happy with our decisions.

    One last quick question. The discussion was low value and high value. Would you agree or disagree that there certainly are degrees of what is low value and what is high value?

    The Susquehanna River, the main source of the Chesapeake Bay, starts a little above Cooperstown, New York, in a tiny little narrow stream that is fed by a number of other streams and actually fed by groundwater through wetlands. It does not look like much in Cooperstown, and it is probably low value in a lot of that area, but if you looked at all the low-value wetlands that contribute to the water of the Susquehanna River before it reaches the Chesapeake Bay, the cumulative effect of all those low-value wetlands is rather drastic when you take all of them put together. Now, we recognize high-value wetlands, so considering the nature of the number of wetlands that have been lost, considering the nature of the cumulative effect of wetlands in general, including low-value wetlands, is this placed in your frame of reference, when it comes to mitigation banking, and, in fact, considering—I hate to use the term ''a John Deere wetland,'' because we have a lot of John Deere wetlands in the Eastern Shore of Maryland. But is that placed, in anybody's frame of reference, considering the cumulative impact of the loss of low-value wetlands?

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    Ms. JENNINGS. I think, for my specific circumstance, that is one of the most significant problems. What we are seeing are wetlands moving out of the low-value areas. Wetlands, for instance, in urban settings that may not have high value for wildlife, however provide incredible water quality or flood control benefits, they are being lost, and essentially those functions are being moved into rural areas where property values are lower, and bank proposals are popping up and restoring wetlands in those areas. So you are losing the functions of the wetlands in urban settings, and the cumulative values of those losses are not being addressed.

    Mr. GILCHREST. Thank you.

    Mr. SUTLIFF. In our case, these isolated small wetlands, the values are really questionable, what they are doing in terms of filtering water, even in terms of what kind of wildlife are being maintained.

    With our one bank, the Big Island Bank, which you saw pictures of, we are actually covering our watershed. The water coming into the bank is over 1,000 acres. So we have got over 1,000 acres that we are filtering, and it is all farmland, that is being filtered before it goes eventually into the river, if it should overflow, or down into the groundwater. So the other thing that happens is these small—with the mitigation banking and the process that we have, these small, isolated wetlands that have historically been filled with no compensation until the last few years, in our situation in central Ohio those fills are now—illegal fills have stopped because no developer is willing to take the risk of being caught filling two-tenths of an acre of wetlands. They would rather pay a fee to us and buy the credit. And we have sold credits as small as, I think, one-tenth of an acre. Our credits right now in the Columbus area are like $16,000 a credit. No developer is going to risk the wrath of the regulatory agencies for illegal fills. So we think the whole concept of mitigation banking in allowing for very isolated small fills has worked very, very well and has stopped all the illegal activities that have gone on in the past.
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    Mr. LAUTIN. Sir, if I may make one quick comment, we only can transfer credit in Pembroke Pines on our site if the Corps, EPA, Fish and Wildlife, if South Florida Water Management District, and if the Broward County DNRP all agree that destruction of those low-quality wetlands make environmental sense. We agree with sequencing, we agree that we do not determine who comes into our banks. Your fine Federal agencies who are protecting the environment decide whether it is appropriate for somebody to come into our bank. They are your line of protection, sir.

    Mr. GILCHREST. Thank you, Mr. Chairman.

    Thank you, ladies and gentlemen.

    Mr. BOEHLERT. Thank you very much. I thank the panel. I really appreciate it. You may expect some further questions in writing, and we would appreciate a timely response. I am not quite certain what happened in my absence, but I anticipate we might have a question or two of each of you. For the time being, thank you very much for serving as resources to this committee as we try to be responsible in shaping public policy, Ms. Jennings, Mr. Lautin, Mr. Sutliff.

    Our final panel for the day consists of Mr. Michael L. Davis, deputy assistant secretary of the Army, Civil Works, for the Corps of Engineers; Robert Wayland, III, director of the Office of Wetlands, Oceans, and Watersheds, from the Environmental Protection Agency. We will go in the order introduced.

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    Mr. DAVIS. Mr. Chairman and members of the subcommittee, I am Michael Davis, Deputy Assistant Secretary of the Army for Civil Works. As always, it is a real pleasure to be here to share with you the Army's and administration's view on wetlands protection and wetlands mitigation banking.

    Twenty-five years ago, the Congress gave the Army and EPA the authority through Section 404 of the Clean Water Act to ensure the chemical, physical, and biological integrity of the Nation's waters, in part through the protection of wetlands. While the value of wetlands was appreciated by some at that time, even today the importance of wetlands is not always understood or appreciated. We do know that during the last 200 years the loss of over half of the Nation's original wetlands has contributed to the decline in water quality, increased flooding, and reduced fish and wildlife habitat. It is, therefore, vital that we maintain and improve programs that protect our remaining wetlands and lead to an increase in the wetlands base. The administration's 1993 wetlands plan has provided a much needed road map and strategy for improving wetlands programs. We have implemented many of the 40 initiatives included in the plan, and wetland programs are in fact more fair, more flexible, and more effective than ever.

    On October 18, 1997, the Administration took a bold new step when Vice President Gore announced that by 2005 Federal agency programs will result in a net increase of 100,000 acres of wetlands annually. We are currently developing an action plan to implement this important initiative which will focus both on quantity and quality of this wetlands increase.
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    As we have worked hard over the past 4 years to make improvements to wetlands programs, we have observed that often issues were raised based on the perception about how a particular program worked, and not on how it was actually being implemented in the field.

    For example, as all members of this committee know, in the Section 404 regulatory program there have been complaints about how long it takes to get a decision on a wetlands permit application. Others have expressed concerns about property rights and alleged aggressive enforcement action by Corps and EPA regulators. While I would certainly never suggest to you that the program is perfect and cannot be improved, I will submit that wetlands protection programs are working well and that landowners are generally treated fairly and with respect for their private property.

    For example, in fiscal year 1997 the average overall time for all Section 404 permit decisions across the Nation was 21 days. The average time to reach a decision on individual 404 permit applications, the most complicated ones requiring a public notice and environmental documentation, was just 104 days.

    Eighty-seven percent of all the applications received by the Corps under Section 404 were processed using general permits in an average time of 15 days. Only 0.2 percent of the permit applications were denied, meaning that most all landowners realized their development expectations and development needs. Regarding enforcement, less than 1 percent of all Corps enforcement actions result in civil or criminal penalties.

    Notwithstanding these program statistics, we must continue to make improvements in wetlands programs. In accordance with the strategy laid out in the administration's wetlands program and the Vice President's Clean Water Action Plan, we are doing just that. For example, this winter we will publish activity-based nationwide permits that will replace Nationwide Permit 26 by December 1998. Also early next year we will publish a final regulation and begin implementing an administrative appeals process. This will allow landowners to appeal a Corps permit denial without the inconvenience, intimidation, and expense of going to Federal court. These are only two examples of initiatives that will result in continued improvements in the Section 404 program. There are many others under way.
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    In the interests of time, however, I would now like to focus on wetlands mitigation banking. Mitigation banking continues to gain support by both environmental and development interests. In fact, today there are over 100 banks in operation and over 100 more in the planning stage. If properly implemented, mitigation banking provides an environmentally sound option for completing compensatory mitigation requirements for unavoidable wetland impacts. Banking allows us to be more strategic in siting mitigation at the most environmentally desirable location within the watershed. Banking allows for a more efficient and effective method of compensating for impacts associated with general permits. After practical steps are taken to avoid and minimize impacts, banking provides another tool for applicants to compensate for wetland losses without having to become wetland experts or assume long-term management commitments for their mitigation projects. These roles may be transferred to mitigation bankers, who are typically wetlands experts. This combination of environmental experts and mitigation banking is a formula for success that will help improve our overall wetlands mitigation track record.

    To facilitate consistent application of mitigation banking, the administration issued Federal guidance in November 1995. This guidance provides the policy framework for all Federal agencies. Overall, the guidance has served us well in promoting environmentally sound mitigation banking proposals. In fact, approximately 20 percent of the current banks were put in operation based on this guidance. As a result, we are very optimistic about the future of mitigation banking.
    It is important, however, to understand that this concept is still evolving, and we are learning more all the time. This calls for flexibility and periodic evaluations of our banking approaches. As such, we believe that any legislation on banking should be general in nature and provide sufficient flexibility to allow us to respond to varying circumstances and new information on mitigation banking. Any legislation should explicitly embrace the requirement to first avoid and minimize impacts. In addition, we believe that mitigation banking and other Section 404 issues should be addressed in the context of a broader Clean Water Act reauthorization.
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    We appreciate the efforts of Congressman Jones, Congressman Gilchrest, and others in their endorsements of wetlands mitigation banking. However, in part for some of the reasons I just mentioned, we do have some concerns with H.R. 1290. We would, however, welcome the opportunity to work with Congressman Jones and other members of this committee on legislation that meets our mutual objectives of promoting wetlands mitigation banking and in a flexible and environmentally sound manner. Mr. Chairman, that concludes my oral statement. I would be pleased to answer any questions you or the committee may have.

    Mr. WAYLAND. Thank you, Mr. Chairman.

    The 13-page joint statement from Mr. Davis and myself is already on the record, so I will just try and do about 5 minutes of highlights. At the outset, I would like to emphasize that our support for the concept of mitigation banking is coupled with our belief that banking and other compensatory mitigation must be implemented in the context of first avoiding and then minimizing wetlands losses. I appreciate the fact that so many of you have emphasized the values and importance of our Nation's wetlands in your comments this morning. Wetlands provide a multitude of services to society: flood control, water quality improvement, fish and wildlife habitat, to name a few. They form a basis for many thousands of jobs and contribute billions of dollars to the economy. Just think, for example, of the importance of commercial fishing and recreational hunting to our Nation, to name just two values.

    The importance of wetlands protection and restoration in achieving the goals of the Clean Water Act was recently recognized in the Vice President's call for a new initiative to protect America's waterways. On the occasion of the Clean Water Act's 25th anniversary, the Vice President highlighted the Act's tangible effects on the improvement of the Nation's waters, including wetlands, and challenged the agencies to redouble their efforts in protecting these valuable resources.
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    In response to this challenge, the agencies will report in February on specific efforts that can be undertaken to improve the quality of our Nation's waters by strengthening public health protection, preventing polluted runoff, and promoting community-based watershed management.

    The Section 404 permitting program has proven to be an effective tool in reducing wetlands losses, moving us closer to our goals of achieving no overall net loss of our remaining wetlands and increasing the quality and quantity of our wetlands base in the long term.

    While we have seen successes with both the permitting program and nonregulatory programs designed to restore and preserve wetlands, we must begin to aggressively move beyond strategies that are based solely on permit-by-permit approaches.

    As you know, healthy, functioning wetlands play a critical role in assuring the health of a watershed through their role in flood control, water supply, protection of fish and wildlife, recreation, control of stormwater, and nonpoint source pollution. Advanced planning, particularly comprehensive planning conducted on a watershed basis, offers the opportunity to protect these valuable wetland functions through solutions that are designed and implemented with strong participation of State, tribal, local governments, and private citizens.

    Advanced planning generally involves at least the identification, mapping, and preliminary assessment of relative wetland functions within the planning area and may identify wetlands that merit a high level of protection and others that may be considered for development. The agencies are actively promoting this watershed approach to comprehensive planning in a way that balances land use and wetlands protection and encourages the restoration of those valuable systems.
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    In this regard, the Clean Water Initiative embraces the watershed approach and seeks to improve the success of wetlands restoration, creation, and enhancement activities to improve community-based wetlands and watershed management efforts and lead us toward a goal of an annual net increase of 100,000 acres of wetlands by the year 2005.

    If we are to meet our key objective, achieving a net gain in wetlands quantity and quality, we must have a more coordinated Federal strategy and must engage more fully with other levels of government and key stakeholders that are implementing water restoration efforts in communities across the country.

    As the agencies work together in the coming months to meet many of the wetlands objectives of the Clean Water Initiative, we are also taking steps that continue to make Federal wetlands programs more fair, flexible, and effective. Mitigation banking offers an important opportunity to achieve these objectives by streamlining the permit review process, providing greater flexibility and certainty to landowners needing to satisfy mitigation requirements, and enhancing the quality and quantity of wetlands by improving the effectiveness of restoration efforts.

    Our efforts to promote the innovative approach of mitigation banking have been very successful in the last few years. As Mike has said, since 1993, the number of banks either in existence or in the application process have more than doubled. We believe today that over 200 banks are fully operational or well along in the planning stages. This progress has demonstrated the unique win-win opportunity provided by mitigation banking, resulting in significant benefits both to the environment and the economy.
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    From an environmental standpoint, mitigation banking projects have successfully brought together the financial resources and technical expertise needed to ensure that restoration efforts are effectively managed and protected to achieve long-term environmental goals.

    In addition, by consolidating mitigation efforts, banking helps ensure that valuable wetland functions, including improved water quality and wildlife habitat, are successfully restored. Economically, the agencies' approach to mitigation banking has facilitated rapid growth in private commercial banking ventures.
    The rapid growth of mitigation banking has played a key role in the administration's ability to continue to reduce wetland losses under the Federal lands programs. Through implementation of the mitigation banking guidance, a reasonable economic market for operating banks has flourished across the country while operating consistent with the environmental safeguards inherent in the 404 program.

    Compliance with the mitigation sequencing provisions under Section 404, which requires avoiding and minimizing impacts to wetlands first, is perhaps the most important environmental safeguard needed to ensure that mitigation banking promotes, rather than undermines, the protection of wetlands under Federal programs. We want to continue to take steps to make banking work better, both environmentally and economically.

    Mr. BOEHLERT. Thank you very much.

    Mr. Wayland, would you share with us that statement?
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    Mr. WAYLAND. Yes, I will.

    Mr. BOEHLERT. I know you do have the joint statement, but this was from a different text, and we would like to have the benefit of that.

    Let me ask each of you, the concerns, obviously, of those of us who are proud to identify with the environmental movement, the concerns are as expressed by people like Ms. Jennings, and I think they are legitimate. Would you care to address these concerns? I mean, she listed three or four in her testimony, and you were both here to hear that testimony. Restricted public review, let us do that for openers.

    Mr. WAYLAND. Mr. Chairman, I think that with respect to public review, that issue is addressed in our multi-agency mitigation banking guidance pretty clearly. Let me just read the opening statement of paragraph 5 of that guidance. It says, ''The public should be notified of and have an opportunity to comment on all bank proposals.''

    And for banks which require a 404 or Section 10 permit, that public notice and review will typically occur through the permit review by which the bank is, in fact, created. But where no Section 10 or 404 permit is required, upon receipt of the complete banking prospectus, the agency taking the lead on that bank should provide notification of the availability of the prospectus for a minimum of a 21-day comment period. I believe that those requirements are being adhered to in the field.

    A second concern Ms. Jennings alluded to was a concern about advanced debiting of banks. In Mr. Gilchrest's bill, I believe there is a limitation on the amount of advanced debiting that can occur. We thought it was, in fact, necessary and appropriate to allow a limited amount of advanced debiting in order to allow some revenues to help support the development of an appropriate and effective bank. In our proposal, we had suggested 15 percent of the credits mitigation banking made available in advance. We opted instead to provide more flexibility by eliminating a bright-line test like the 15 percent. But in many cases most of the debits are taken after the bank has been constructed and we begin to see wetland functions and values returning to the degraded areas that have been restored through the bank. Mr.
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    BOEHLERT. Mr. Davis, do you have any comment?

    Mr. DAVIS. I would only add one point. I think some caution is appropriate and warranted. I think the guidance we put out in 1995 reflects a considerable amount of caution. I think it is also important to understand what we are comparing mitigation banking to—the status quo, the old way of doing this, the permit-by-permit mitigation—and ask the question, ''Is that really resulting in better wetlands mitigation?'' I would suggest in many cases it is not.

    Mr. BOEHLERT. What about responding to the claim that in Virginia the Corps is only requiring one-for-one compensation and is only looking for acreage to measure performance? I think that is a serious matter.

    Mr. DAVIS. We would certainly have to look into that in a little more detail and get back to you for the record.

    Mr. BOEHLERT. I would appreciate that.

    Mr. DAVIS. My guess is they are not just using acreage as a surrogate, they are using professional judgment to do an assessment of the wetlands functions, and that is the guidance across the country.

    One of the things we are working real hard on is to complete work on a more formal, official, functional assessment methodology. Then we will put that into the hands of all the regulators.
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    But I don't believe they are just using acreage alone. I think they are using their professional judgment as biologists, geologists, and engineers to decide what functions should be replicated.

    [Ihe information received follows:]

    In Virginia, the Norfolk District currently does require one-for-one compensation when determining mitigation amounts for one category of wetlands. However, the District uses a 1.5:1 acreage ratio for determining mitigation for scrub/shrub communities and requires a 2:1 acreage ratio for forested wetlands. Best professional judgement is used to adjust these ratios to fit the circumstances of the project being evaluated.

    Mr. BOEHLERT. Mr. Wayland.

    Mr. WAYLAND. If I could just illustrate some of the concerns as I understand them with some of the facts as I know them, I had a recent occasion to visit a bank in Virginia. That banker was given 19 acres of credit for a site that includes over 200 acres of wetlands, forested wetlands with mature trees, which serve as a buffer for the 19 acres on which he is creating wetlands from uplands.

    Now we all appreciate that creating wetlands from uplands is a dicey proposition. But the bank has been given 19 acres of credit for a 200-plus-acre site which is predominantly wetlands, so I think that in potentially offering a 1-acre credit from that bank for the 1-acre loss of forested wetlands and/or a 1-acre loss of other less mature wetlands, the banking instrument recognized that the upland buffer, the wetlands, the natural wetlands that are associated with the bank, have significant value and will be protected in perpetuity as part of that banking arrangement.
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    Mr. BOEHLERT. Thank you.

    Mr. BORSKI. Thank you, Mr. Chairman.

    Mr. Wayland, let me just start and say that I concur completely with the chairman about the statement of yours not getting to the subcommittee beforehand. It just makes our job that much more difficult. I just want you to know, in a bipartisan vein, we would appreciate advanced copies of your statement.

    I also want to follow up on the chairman's question about the issues raised by Ms. Jennings. It does not surprise me that we have a spirited defense of the regs. That is your job, to comply with them. I guess my question or my concern is, I am troubled by what she has raised. I would ask that you go back and take a look and make sure that this is actually working the way it should. Public participation is extremely important, and I think she did raise some valid points, and perhaps we could take another look at that.

    I also wanted to follow up on something that Mr. Gilchrest had raised earlier, and for either one of you, when he was talking and exploring issues related to the cumulative effect of wetlands modification. Do we not need to know cumulative impacts whenever we allow destruction or modification to wetlands, and what steps are your agencies undertaking to assess cumulative impacts to both high- and low-value wetlands?

    Mr. Davis?

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    Mr. DAVIS. As we evaluate each permit application, we do the best we can to assess cumulative impacts. If we are looking at a large project involving a detailed evaluation, perhaps an EIS or a detailed environmental assessment, and the evaluation takes a longer period of time, we are probably fairly successful there.
    I think where we have a problem is in the context of our general permit program, where about 80 percent of the actions are actually authorized. It is much more problematic when you are dealing with very short timeframes and actually very small impacts—one-tenth of an acre to 1-acre type impacts. It is much more difficult to assess cumulative impacts in that context, due to the speed with which we have to make those decisions. I think that is why the mitigation banking option can be a very effective tool, particularly in the context of our general permits, where we can have much more success aggregating small impacts into one larger site.

    Mr. WAYLAND. If I could add to that, I tried to emphasize in my oral statement, which you did not have in advance, although the full statement was provided to the subcommittee in advance, we think that there is great promise associated with the broad movement in this country in which States and grass-roots organizations are participating along with Federal agencies towards watershed management, where we try to look comprehensively at the quality and condition of aquatic resources within a watershed, the stressors and threats to those aquatic resources, and identify as best we can in advance strategies for trying to protect them, both from traditional point source pollution discharges, polluted runoff, and from habitat destruction associated with development pressures or other activities that may be permitted under the Clean Water Act or may not be subject to permitting.

    We really think that rather than looking permit by permit, project by project, facility by facility, we need to take a more integrated and comprehensive approach, and that is the basis on which we are advocates and supporters of the transition from that paradigm to one that begins by looking at the watershed, its condition, its needs, and how best to protect it.
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    Mr. BORSKI. Thank you very much.

    Let me just note that a tenth of an acre here, a tenth of an acre there, pretty soon you are talking about real impact. I think that is the point Mr. Gilchrest was making, and I did want to follow up.

    Thank you, Mr. Chairman.

    Mr. BOEHLERT. Thank you very much, Mr. Borski.

    Mr. Gilchrest.

    Mr. GILCHREST. Did you call me, Mr. Chairman? I thought the gentleman from South Dakota was before me.

    Mr. BOEHLERT. No one is before you in the eyes of the Chair.

    Mr. GILCHREST. My children feel that way, too. They give me due respect.
    Just to continue on this follow-up of postage-stamp-sized wetlands and the cumulative impact, could you give us some scientific response to the way in which you would determine a low-value wetland to be mitigation banked or not mitigation banked? What are the criteria?

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    I know it would vary, I would assume, from southern California to Michigan to Maryland to Louisiana and so on. But is there at least an identifiable scientific method to determine what is a low-value wetland? I am sure there are places all over the country that say this is low-value. I have it in my district as well. There is a place called Odenton where they want to build a town center. You shake your head, so you are aware of that. There is a question whether that is low-value, high-value. The county executive wants to mitigate 1 acre or the 3 acres lost there for 30 acres. To my way of thinking, I just have this idea that a wetland is a wetland is a wetland, and if I had my way—and it is probably a good thing I don't—we would not build on low or high. But that is not the nature of the beast here.

    Can you point to six or seven things that determine a nontidal wetland that has no value at all but appears on the surface in some way to function as a wetland?

    Mr. DAVIS. I think we have to proceed with some caution as we try to attach labels to wetlands and other resources. For example, wetlands generally perform many functions, typically 12 to 14. Some scientists would say a wetland may only perform one of those functions and still be a very-high-value wetland; for example, if it is providing flood storage community and protecting a community. It may not perform any other functions, but that one, in itself, makes the wetland a very high value.

    So it is not an average across all of those functions that we are looking at here. I think it is very important to understand that.

    Going back to a previous question, the method that we use right now is primarily good professional, biological, ecological judgment on the part of the regulators and the resource agencies who are working with the Corps of Engineers on this. Again, what we need and what we are developing is this tool that allows us to go out on-site and rapidly, in the context of a regulatory program, do an assessment and make some judgments.
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    Mr. GILCHREST. In the process of doing that assessment, do you use within that assessment cumulative impact within a watershed, not only—say in the Chesapeake Bay watershed, since you are a Federal agency, do you go across State lines when you make that assessment? Is there a specific line item within the regulation that evaluates cumulative impact?

    Mr. DAVIS. No. There is a requirement to look at cumulative impacts. There are no procedures articulated or described.

    Mr. GILCHREST. Is it possible for there to be a procedure, with all the computers holding data? Is that possible?

    Mr. DAVIS. I think it is possible, Congressman. I think the technology is now catching up with us that allows us to do that through more advanced geographic information systems.

    Going back to what Bob Wayland suggested, if we have truly moved to a more watershed-based approach, which mitigation banking could be a part of, then that gives us the opportunity to really look, outside the context of an individual permit action, at cumulative impacts, at what is in the watershed, and where the pressures are.

    Mr. GILCHREST. I would assume you could understand the nature of the geology of the surface activity, where the water goes and all of that. I just want to ask one other quick question. The 100,000 acres that you made a comment on that will be there by the year 2005, an increased net gain of 100,000 acres, where does the Vice President or where do you see that coming from? Just the regulated community, or——
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    Mr. DAVIS. No.

    Mr. GILCHREST. Do you assume that is going to come from the private sector? State, local governments?

    Mr. DAVIS. It is 100,000 acres annually, beginning in the year 2005. That is the Vice President's goal. It is not going to come from the regulated community. In fact, our position is that the regulatory programs will continue to provide no net loss and that we are going to look outside regulatory programs using the programs of the Department of Agriculture, the Corps of Engineers, and the other Federal agencies to do restoration projects in partnerships with States, tribes, and local communities. It will not happen just by the Federal Government requiring effective partnerships at all levels, but we think we can meet the goal.

    Mr. GILCHREST. That is great.

    Thank you very much, Mr. Chairman.

    Mr. BOEHLERT. The Chair now recognizes the distinguished vice chairman of the subcommittee, Mr. Thune.

    Mr. THUNE. Thank you, Mr. Chairman.

    Very briefly, one of the frustrations—and I realize this is a very complex issue in a State like mine where you have so many different regulatory agencies involved, and after changes in farm legislation last year that address the wetlands issue. One of the things in dealing with that, that landowners, farmers, people in the business who make their living in agriculture in my State struggle with is, they perceive what appear to be inconsistencies in the way that some of the laws and regulations or whatnot are applied on a State-by-State basis.
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    Again, the Corps comes into this to some extent, the EPA, but in a lot of ways the Department of Agriculture, NRCS, the Conservation Service. But, for example, Minnesota-Iowa-South Dakota, they interpret and treat a lot of these things differently.

    I am wondering if you could comment on how the various agencies are able to coordinate and work with each other. I realize you have to have flexibility. I suspect to a degree the States are involved in that, too. But you have so many players in this. That is something guys on my side of the border look at Minnesota and say, they are doing this, they allow tiling over there, how come we cannot do that, and what is the problem here? Any comment on that, either of you?

    Mr. WAYLAND. We have put a premium on trying to better integrate particularly the farm bill conservation programs and Clean Water Act Section 404. That was a strong element of the 1993 Interagency Wetlands Plan. We completed a memorandum of agreement to clarify roles and responsibilities so the answer a landowner got from one agency would stand for all agencies, and to clarify which agency that ought to be in particular circumstances.

    The 1996 farm bill changes are causing us to need to revisit that agreement and consider some modification to it, but I think the guiding principle will still be to try to simplify and harmonize the programs to the best extent we can.

    NRCS, because of its large field presence, is the lead agency for making wetland determinations, jurisdictional determinations, and of course is the lead for implementing the Swampbuster program. We have worked very closely with them. Several thousand NRCS employees have participated in interagency wetlands training so delineation techniques and methods would be consistent between the two programs.
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    Mr. DAVIS. That is a very important first step in reconciling different methods and approaches to determining whether or not you have a wetland. There are some other pieces that we are continuing to work on to the extent we can. We want, to standardize the mitigation requirements that we have on agriculture land through the farm bill programs and the Clean Water Act programs. We are working on that now.

    Mr. THUNE. I would simply say, to the extent that you can, continue to work to systematize that as much as possible. There is also the widely held perception out there that there are different rules that apply to people in other areas.

    I know I, for one, am very much in favor of giving the States some flexibility to administer some of these things. But there is a lot of Federal jurisdiction and regulation in this area. It is something that I think, again, to the extent that we can, I would like to be able to tell our folks in my State that essentially those things are all being applied the same way.

    Thank you.

    Mr. BOEHLERT. Thank you very much.

    Mr. Davis, I wonder if you might, after you go back to your office, think about the coordination with the Department of Agriculture and sort of send us some of your thoughts on how that is working, because we are particularly interested in that. We would like to see the coordination going forward.
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    I think it has been a very constructive hearing this morning. I want to thank you for participating, and I want to thank all who have participated and contributed significantly to this morning's hearing.

    I am optimistic as I go forward. I think we have something that offers great promise if it is implemented in a correct manner, if we continually consider the public's interest and input. I am optimistic.

    So I want to thank all of you who have traveled from afar to come testify, from Florida, from Ohio, my neighbors, Ms. Jenkins, and my fellow employees of Uncle Sam. This hearing is concluded.

    [Whereupon, at 12:50 p.m., the subcommittee was adjourned.]

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