[Federal Register Volume 60, Number 59 (Tuesday, March 28, 1995)]
[Notices]
[Pages 15913-15920]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-7590]



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ENVIRONMENTAL PROTECTION AGENCY
[FRL-5179-6]


Russo Development Corporation Site, NJ; Proposed Amendment to 
March 21, 1988, Clean Water Act Section 404(c) Final Determination

AGENCY: U.S. Environmental Protection Agency.

[[Page 15914]] ACTION: Notice of consideration of amendment of Section 
404(c) final determination and request for comment.

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SUMMARY: Notice is hereby given that the Environmental Protection 
Agency (EPA) is considering amendment of the total site prohibition 
identified in EPA's March 21, 1988, Final Determination concerning the 
Russo Development Corporation (Russo) site in Carlstadt, New Jersey, 
pursuant to Section 404(c) of the Clean Water Act (CWA). EPA is 
considering amendment of this Final Determination on the basis that 
compensatory mitigation now proposed by Russo would satisfactorily 
address the unacceptable adverse effects to wildlife described in the 
March 21, 1988, document. This amendment would be done as a 
prerequisite to Russo seeking CWA after-the-fact authorization for the 
past discharge of fill material into the subject wetlands for the 
purpose of constructing a warehouse complex, as well as authorization 
for the future discharge of fill material into remaining wetlands for 
additional development activities. This proposed action would revise 
the Section 404(c) prohibition adopted in 1988 to a restriction on 
discharges at the site based on Russo's meeting the compensatory 
mitigation requirements specified in this document.
    EPA's 1988 Final Determination in this case concerned a 57.5 acre 
wetland in Carlstadt, New Jersey where Russo proposed to maintain 52.5 
acres of unauthorized fill (of which 44 acres have been built upon) and 
to fill the remaining five acres of wetland of a 13.5 acre parcel to 
complete a warehouse complex. The Final Determination states that the 
Russo site was/is very valuable to wildlife from a site specific and 
cumulative standpoint and, therefore, that its values must be retained. 
EPA also found that the compensatory mitigation proposed by Russo would 
not replace those wildlife values that had been and were anticipated to 
be lost. In the Final Determination, however, EPA indicated that this 
prohibition could be reconsidered upon demonstration that the adverse 
effects to wildlife have been satisfactorily addressed.
    EPA is requesting comments on this proposed amendment of the Final 
Determination's total site prohibition to a restriction that would 
allow specification of the 13.5 acre site as a discharge location 
provided Russo agrees to deed over an approximately 16 acre parcel of 
wetlands in Ridgefield, N.J. for preservation, and provide $700,000 for 
the purpose of enhancing wetlands at this site and on sites to be 
contained in the Hackensack Meadowlands District mitigation bank. In 
particular, EPA is interested in comments relating to the currently 
proposed compensatory mitigation and its ability to replace the 
wildlife values lost as a result of past fill activities, as well as 
anticipated losses due to proposed discharges in the subject wetlands.

DATES: Written comments concerning this proposed amendment must be 
submitted to EPA on or before April 27, 1995.
ADDRESSES: Copies of EPA's 1988 Final Determination and relevant 
documents supporting the proposed modification are available for public 
inspection upon request at the following locations:

U.S. Environmental Protection Agency, Office of Wetlands, Oceans, and 
Watersheds, Wetlands Division, 499 South Capitol Street, SW, Fairchild 
Building, Room 703, Washington, DC 20009
U.S. Environmental Protection Agency--Region II, Water Management 
Division, 26 Federal Plaza, Jacob K. Javits Federal Building, Room 
1137, New York, NY 10278

    Comments must be submitted in writing to Joseph P. DaVia, Acting 
Chief, Elevated Cases Section, Mail Code: 4502F, U.S. EPA, 401 M Street 
SW, Washington, DC 20460. Written comments may also be sent by 
facsimile to Mr. DaVia at (202) 260-7546.

FOR FURTHER INFORMATION CONTACT: John Ettinger (EPA) at (202) 260-1190.

SUPPLEMENTARY INFORMATION: On March 21, 1988, the Assistant 
Administrator (AA) for Water of the United States Environmental 
Protection Agency (EPA) rendered a final determination which prohibited 
the designation of 57.5 acres of wetlands as a disposal site for fill 
material. These wetlands were and are currently owned by the Russo 
Development Corporation (Russo), and are located in the Hackensack 
Meadowlands in Carlstadt, Bergen County, New Jersey. The reason cited 
by the AA for Water for this action was that the discharge of fill 
would have unacceptable adverse effects, both immediately and 
cumulatively, to wildlife in the Meadowlands. This action was taken 
pursuant to Section 404(c) of the Clean Water Act (CWA, U.S.C. 1251 et 
seq.), which authorizes the Administrator (who has delegated this 
authority to the AA for Water), after notice and opportunity for a 
public hearing, to prohibit or restrict the use of any defined area as 
a disposal or discharge site for dredged material or fill. In such a 
case, the AA for Water must have first determined that such discharge 
will have an unacceptable adverse effect on municipal water supplies, 
shellfish beds and fishery areas (including spawning and breeding 
areas), wildlife, or recreational areas.

Procedural History and Rationale for the Determination

    The chronology of the Corps and EPA actions leading up to EPA's 
1988 404(c) determination is summarized in the Final Determination of 
the AA for Water. Briefly, the events are summarized as follows: In 
1981, Russo placed 44 acres of fill for the purpose of constructing a 
warehouse complex in Carlstadt in the Hackensack Meadowlands in Bergen 
County, New Jersey (44 acre tract). Russo constructed six warehouses 
and began a seventh on the 44 acre tract. Russo subsequently excavated 
most of the adjacent 13.5 acre parcel (13.5 acre tract) and then filled 
8.5 of the 13.5 acres in order to build more warehouses. The Corps 
issued a cease and desist order subsequent to his placement of 8.5 
acres of fill. Five acres of the 13.5 acre tract remain wetland. Russo 
excavated two to three acres of the unfilled five acres to remove 
unsuitable soils and fill with suitable construction material. This 
excavated area subsequently ponded and developed into open water with 
aquatic and emergent vegetation.
    EPA first learned of Russo's fill activities in an April 22, 1985, 
letter from the Corps which announced their investigation of 
unauthorized fill activity on the 8.5 acres. The Corps subsequently 
extended enforcement action to the 44-acre tract as well. EPA initially 
recommended either removal of fill or mitigation to compensate for the 
wetlands losses. The Corps processed an after-the-fact permit 
application and issued a public notice on August 28, 1985, proposing to 
authorize 55 acres of existing fill (later corrected to 52.5 acres) and 
to authorize the placement of additional fill in the remaining five 
acres of wetland.
    On December 22, 1986, the Corps submitted a Notice of Intent to 
Issue a permit to the Russo Development Corporation accompanied by a 
Statement of Findings, environmental assessment, and evaluation of 
compliance with the Section 404(b)(l) Guidelines. The permit decision 
would authorize 0.5:1 value-for-value compensation for the 57.5 acre 
loss of wetlands. The mitigation proposal would provide for the 
enhancement of a nearby, unspecified wetland northeast of the project 
site and would secure the permanent preservation of a 23 acre wetland 
site in Troy Meadows in the Passaic River basin (to the southwest of 
[[Page 15915]] the Hackensack River basin). EPA responded on December 
24, 1986, requesting a meeting with the Division Engineer and 
suspension of further action on the project. The U. S. Fish & Wildlife 
Service (FWS) also elevated the decision under CWA Section 404(q). 
Subsequently, EPA and the Corps attempted to negotiate a resolution 
which would provide a 1:1 value-for-value compensation, but were 
unsuccessful. Unable to resolve both agencies' concerns, the Corps 
eventually issued its final Notice of Intent to Issue on March 23, 
1987, proposing to authorize 52.5 acres of existing fill and placement 
of five additional acres of fill, and to require Russo to compensate on 
a 0.5:1 value-for-value basis for the loss of 57.5 acres of wetlands. 
Under Section 404(q) of the CWA, EPA requested elevation of the permit 
decision to national level review on April 27, 1987, and that request 
was denied by the Department of the Army on May 8, 1987.
    Having exhausted administrative procedures to resolve agency 
concerns, the Regional Administrator for Region II then notified the 
District Engineer and the Russo Development Corporation on May 26, 
1987, in accordance with Section 404(c), of his intent to issue a 
public notice of a proposed determination to prohibit or restrict the 
discharge of fill on the Russo site, based on his belief that the 
discharge had resulted and would result in unacceptable adverse effects 
to wildlife. The letter afforded the mentioned recipients 15 days to 
demonstrate that no unacceptable adverse effects would occur as a 
result of permit issuance. On May 27, 1987, the District Engineer 
responded that his analysis clearly demonstrated that no unacceptable 
adverse effects would occur from permit issuance. Russo responded on 
June 10, 1987, concluding that EPA could not successfully argue that 
the project would have an unacceptable adverse effect on the 
environment, and they requested the Corps decision to issue a permit be 
affirmed. The Regional Administrator concluded that no new information 
had been presented and therefore he was not satisfied that the project 
would not pose unacceptable adverse impacts.
    On August 7, 1987, a public notice was published in the Federal 
Register and the New Jersey Star Ledger announcing the proposed 
determination to prohibit or restrict the discharge of fill material. 
The comment period extended for 60 days and closed on October 6, 1987. 
The notice requested comment on the need for a public hearing. There 
was response requesting a public hearing, and the holding of a hearing 
was found to be in the public interest. On October 13 and 14, 1987, a 
public notice was published in the New Jersey Star Ledger and the 
Federal Register scheduling a public hearing for November 5, 1987. The 
hearing was held and the comment period closed on November 20, 1987.
    The Regional Administrator forwarded his Recommended Determination 
to the AA for Water, along with the Administrative Record of the case. 
The Recommended Determination was adopted by the AA for Water and was 
incorporated into his final decision. The decision to prohibit the 
specification of the Russo wetlands as a fill disposal site was based 
upon findings by the AA for Water that: 1. The wetlands on the Russo 
tracts were valuable to wildlife because they represented a diverse 
array of wetland types, types which are rare in the context of the 
Meadowlands landscape; 2. the wetlands on the Russo tracts supported/
support a large mix of species, most of which are declining in New 
Jersey due in part or whole to a loss and/or deterioration of available 
habitat (of particular importance was/is the ability of the site to 
support populations of black duck, a FWS species of special concern, 
whose populations have declined nationally due to a loss and/or 
deterioration of available habitat); 3. the loss of this habitat would 
cause unacceptable impacts to wildlife values unless these values were 
maintained through mitigation; and, 4. the proposed/required mitigation 
would neither compensate for the loss of approximately 57.5 acres of 
valuable wildlife habitat nor constitute appropriate and practicable 
mitigation. Therefore, the mitigation would not offset the significant 
wildlife impacts identified. Thus, the fill had resulted and would 
result in unacceptable adverse impacts to wildlife under Section 404(c) 
of the Clean Water Act. Accordingly, the AA for Water prohibited the 
designation of the Russo tracts as a discharge site.
    As part of the findings and conclusions which led to the 
prohibition of the Russo site as a fill discharge site, the AA for 
Water noted the following:

    In the present case, my findings of unacceptable adverse effects 
stems [sic] from current and anticipated losses of valuable wildlife 
habitat that has/will result from direct effects of discharges 
regulated under Section 404 of the CWA and within the Russo site. As 
previously stated, however, fill has already been placed on 
approximately 52.5 acres of wetlands and only 5 acres remain 
unfilled. Although I have concluded that the wildlife values 
previously and currently provided by the Russo tract are important 
enough to preserve, the fact remains that most of the site has been 
filled and its value to wildlife destroyed. Also, I am mindful that 
under these circumstances, final action by EPA pursuant to Section 
404(c) of the CWA will not prevent the occurrence of most of the 
unacceptable adverse effect or accomplish reversal of such effects. 
Further actions will be necessary, either within the context of 
voluntary compliance by Russo or an enforcement action, to determine 
the extent of wetland value replacement and pursue compensatory 
action. The site has been damaged and, indeed, some or all of this 
damage may be irreversible. In addition, the presence of tenanted 
warehouses on the unauthorized fill raises other issues that run 
counter to restoration of the site. Mitigation has been a focal 
point of discussions with respect to this project during the Corps 
permit process as well as a contributing factor to my determination 
of unacceptable adverse effects. If the condition of the Russo tract 
precludes onsite restoration from a technical or practical 
standpoint, then EPA would expect to pursue replacement of lost 
wildlife values elsewhere. Mitigation of lost wildlife values will 
not be required for any portions of the previously discussed old 
field areas that are determined to have been uplands.1

    \1\As part of the Final Determination, the AA for Water noted 
that portions of the areas delineated as old field on EPA's map of 
the Russo site in its pre-discharge condition may have contained 
uplands, because the information on vegetation at this point was 
inconclusive and raised the possibility that portions of the old 
field areas may have been uplands. That consideration did not alter 
the final decision, which was based on conclusions concerning the 
extent of the wildlife values provided by the site, nor did it alter 
conclusions that the proposed/permitted mitigation was inadequate, 
since the portions of the tract in question comprised a small 
portion of the impact area. The jurisdictional issue was left 
unresolved due to Russo's desire for a timely decision by EPA. 
However, it was noted that the issue might ultimately affect the 
precise amount of mitigation necessary, since no compensation would 
be required for areas determined to be uplands, which are not 
jurisdictional under Section 404.
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The AA for Water did note the following:

    I will reconsider this prohibition at the request of EPA's 
Regional Administrator in Region II upon a showing that the 
unacceptable adverse effects to wildlife have been addressed to his 
satisfaction.

Judicial Decisions Related to the Proposed Amendment of EPA's 404(c) 
Determination

    Russo brought suit against the Corps and EPA in U.S. District 
Court. Russo Development Corporation v. Thomas et al., No. 87-3916 
(D.N.J.). In a series of opinions, the court vacated in part and 
remanded in part EPA's 404(c) decision. In its first decision, the 
court found the Corps had been arbitrary and capricious in requiring 
Russo to submit jointly an [[Page 15916]] application for a permit 
encompassing both the 13.5 and 44 acre sites. The court found that, on 
the facts of this case, the activities on the two sites did not 
constitute the ``same project'' under applicable Corps regulations (33 
CFR 325.1(d)(2)). To remedy this error, the court stated that it would 
``limit the plaintiff's application for a Corps permit and the 
subsequent grant and veto of the permit to the 13.5 acre parcel.'' 735 
F. Supp. 631, 637 (D.N.J. 1989). This decision therefore vacated EPA's 
Section 404(c) determination as it related to the 44 acre parcel. See 
also Id., at 639 (``Because of the court's decision that the veto of 
the 44 acre parcel is void, the question [of the validity of EPA's 
404(c) decision] concerns only the 8.5 acre tract.''). The court also 
held in this opinion that EPA should have considered the New Jersey 
Coastal Management Program in its 404(c) determination. The court also 
dismissed Russo's claims that EPA's and the Corps' actions violated 
Russo's due process rights under the Constitution.
    On May 17, 1991, the court ruled on the remainder of Russo's claims 
in this case. Russo Development Corporation v. Reilly, 1991 U.S. Dist. 
Lexis 20965, 21 ELR 21345. The court first dismissed Russo's claims 
that EPA and the Corps acted in bad faith, and that the agencies had 
failed to demonstrate that they had jurisdiction over the 13.5 acre 
site under the CWA. Consistent with the holding in its 1989 opinion 
that it was arbitrary and capricious for the Corps and EPA to link the 
44 acre and 13.5 acre parcels in their decisions, the court remanded 
the permitting and veto decisions for further considerations. The court 
further directed the Corps and EPA to consider, on remand, the precise 
extent of CWA jurisdiction over the 13.5 acre site and the appropriate 
mitigation to compensate for impacts to the site. The court also 
directed EPA to articulate on remand its reasons for any deviations of 
its decision from the New Jersey Coastal Zone Management Plan.

New Information and Developments Supporting Reconsideration of the 
404(c) Prohibition

    Since 1988, several important pieces of new information concerning 
the site and concerning wildlife habitat utilization within the 
Meadowlands have been developed subsequent to the prohibition of the 
site for fill discharge. These include:
    1. A re-evaluation of the extent of wetlands on the 13.5-acre site 
(April 15, 1992, Corps memorandum). The Corps determined that 3.27 
acres of the 13.5 acre site are not considered to have been wetlands, 
while the remaining 10.23 acres were wetlands prior to disturbance in 
1985. Based on the criteria used in this re-evaluation, EPA has re-
evaluated the pre-discharge extent of jurisdiction on the 44-acre 
parcel as well, and finds that approximately 40.7 acres of this tract 
were wetlands subject to jurisdiction under Section 404 of the CWA.
    2. A study of habitat utilization by numerous species of wildlife, 
particularly birds, of Phragmites-dominated habitat in the Meadowlands. 
This report, Site Survey Report: Ecological Studies, Hartz Mountain 
Development Corporation Villages at Mill Creek, was prepared in 
December, 1991 by U.S. EPA Region II and Gannett Fleming, Inc. This 
study provides detailed information on the wetland characteristics 
which are of value to wildlife in the Meadowlands, which species use 
this habitat, and how this habitat is used. Based on this information, 
a more precise determination can be made of the wetland values lost on 
the Russo tracts, and what features could be provided in a mitigation 
proposal to replace those values. In particular, this study provided 
detailed information on the use of these habitats by black duck, which 
is a FWS species of special concern. In the Final Determination, the AA 
for Water's conclusions that the fill would cause unacceptable adverse 
effects to wildlife were strongly influenced by the impacts of the fill 
on black duck. Based on this new information, a better estimate of the 
Russo tract's importance in supporting black duck populations in its 
pre-discharge state may be made.2 In addition, habitat attributes 
which support black duck populations in the Meadowlands have been 
identified. These habitat attributes can be provided in a mitigation 
design for the purpose of more predictably increasing habitat value to 
black ducks. This would provide compensation for the loss to this 
species and would reduce cumulative impacts to this species.

    \2\Black ducks would have used the mixed emergent areas for 
feeding and resting, which are identified in the January 19, 1988, 
Recommendation of the Regional Administrator pursuant to Section 
404(c) of the CWA.
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    3. The development of a Mitigation Banking Agreement for the 
Meadowlands. This agreement is currently being developed and is 
expected to be completed shortly. Under this agreement, the Hackensack 
Meadowlands Development Commission (HMDC) would develop and administer 
several mitigation banks. Some of these would be implemented by 
performing mitigation on publicly or quasi-publicly owned wetlands 
(thus not requiring outright purchase of these lands), and HMDC is 
seeking to acquire additional lands on which to implement mitigation. 
Since EPA and the Corps would be among the Federal agencies 
participating in the mitigation banking process, they would be advising 
HMDC on the design, construction, monitoring and remedial action for 
mitigation projects on a more comprehensive and consistent scale. 
Consequently, value replacement, performance, and success could be more 
predictably and consistently ensured through this mechanism. Thus, 
mitigation opportunities within the Hackensack River basin, within the 
area of impact, could be provided where opportunity was previously 
scarce or unavailable to private developers.
    4. Selected terms of a proposed agreement reached between the 
Corps, EPA and Russo to settle litigation regarding this matter. Under 
the settlement terms, Russo would deed over, for preservation and 
enhancement, an approximately 16-acre parcel of wetlands in Ridgefield, 
NJ, (the Ridgefield tract) located approximately 1.5 miles from the 
subject Russo tracts. Russo would also provide $700,000 for the purpose 
of enhancing wetlands, both at this site and on sites contained in the 
HMDC mitigation bank.
    The Final Determination by the AA for Water treated the 44 and 13.5 
acre tracts as a single ecological unit for the purposes of evaluating 
their loss to the ecosystem. As discussed above, the court in Russo 
Development Corporation v. Thomas, et al. invalidated the linkage of 
the 13.5 and 44 acre parcels by the Corps, and vacated EPA's 404(c) 
determination as to the 44 acre parcel. Therefore, the proposed 
amendment to revise EPA's 404(c) determination would amend only the 
portion of EPA's original 404(c) prohibition that has remained in 
effect (i.e., for the 13.5 acre parcel). Because the proposed 
settlement terms discussed above seek to resolve all issues related to 
both the 44 and 13.5 acre parcels, however, this notice also discusses 
the adequacy of mitigation as it relates to all of the activities 
conducted by Russo on the two sites. Russo has agreed to waive any 
objections to the agencies' consideration of the totality of the 
impacts of fill at the 44 acre and 13.5 acre sites in their 
determinations on remand.

Wetland Values Lost, and Outline of Unacceptable Adverse Effects to 
Wildlife

    The Final Determination of the AA for Water identified several 
habitat features [[Page 15917]] on the Russo tracts which contributed 
to their ecological importance. First, several different types of 
wetland habitat were found on each of the tracts. This juxtaposition of 
wetland types to each other, as well as to surrounding wetland areas, 
provided habitat diversity in a landscape that is generally somewhat 
monotypic in nature. Second, several of the wetland types, viz., wet 
meadow, mixed emergent, and wooded, are relatively rare in the 
Meadowlands, and provided habitat for a large mix of species. Many of 
these species are experiencing population declines within New Jersey, 
which are attributable in whole or in part to loss and/or deterioration 
of available habitat. The interspersion of habitat types, along with 
the relative rarity of those types, made the Russo tracts valuable to 
wildlife. The breakdown of wetland types by approximate acreage3 
is provided in Table 1 below:

    \3\The acreages have been calculated based on the wetland map 
provided in the Maguire Group report entitled, Vegetation Types--
1978. Because the extent and description of these types is based on 
aerial photointerpretation, and not on precise survey, acreages can 
only be approximate.

   Table 1.--Acreage (Approximate) of Wetland Types Comprising the Two  
                      Russo Tracts in Carlstadt, NJ                     
------------------------------------------------------------------------
                                                 13.5 acre     44 acre  
                 Wetland type                      tract        tract   
------------------------------------------------------------------------
Wet Meadow....................................      3.68 ac     21.73 ac
Mixed Emergents...............................      1.14 ac      2.92 ac
Wooded........................................      0.00 ac      0.37 ac
Phragmites....................................      5.41 ac     15.69 ac
Old field (subsequently determined to be non                            
 jurisdictional)..............................      3.27 ac      3.30 ac
                                               -------------------------
    Total.....................................     13.50 ac     44.00 ac
------------------------------------------------------------------------

    The conclusion and findings of the Final Determination were that 
unacceptable adverse effects to wildlife were caused by/ would be 
caused by the fill unless those values are maintained through 
mitigation. While the quality and importance of the lost wetlands to 
the lower Hackensack watershed weighed strongly in the AA for Water's 
decision to prohibit specification of the sites for disposal, perhaps 
the most significant factor contributing to the finding of the AA for 
Water was that the impacts were unlikely to be adequately compensated 
by the proposed/permitted mitigation plan.
    The mitigation plan which was originally proposed by Russo during 
the permit evaluation was considered by EPA to be both inappropriate in 
type and inadequate in its extent to provide sufficient compensation 
for the wetlands values lost. The plan comprised two parts: enhancement 
of offsite wetlands within the Hackensack basin and preservation of 
wetlands outside the basin. The enhancement component of the mitigation 
proposal would have provided enhancement of an unspecified acreage of 
wetlands somewhere to the northeast of the site. Since the location and 
exact acreage proposed for enhancement were never identified, the 
existing and post-enhancement wetland values could not be evaluated to 
determine how much compensation would have been provided by those 
means.
    The other component, which was the proposed preservation of a 23 
acre wetland parcel outside the Hackensack River basin, would not have 
provided any increase in wetland value to compensate for wetland values 
lost as a result of the filling activity, since the parcel was already 
a functioning wetland and no other enhancement activity was proposed to 
provide an increase in value. Furthermore, any wetland value which 
might have been added to that parcel would not have provided 
compensation in the watershed where the damage occurred, and so could 
not have compensated for the loss to the Hackensack River system. 
Finally, the Corps permit required only 0.5:1 value for value 
replacement, which would have resulted in, at best, a 50% loss of 
wetland values as a result of Russo's activities.

Desirability of Obtaining Compensatory Mitigation

    Russo's activities on the 13.5-acre site have destroyed almost all 
of the pre-discharge wetland characteristics of the site. The site was 
almost completely excavated of its original soil. Eight and one half 
acres were subsequently filled with shot rock to a depth of several 
feet. The stone used for fill was of varying sizes, but most of the 
material would be classified as boulders, according to the Wentworth 
scale. The fill material has continued to compact and consolidate in 
the ensuing nine years since the fill activity took place, and it is 
likely that the underlying soil layers have also compacted. Therefore, 
the likelihood of restoring this site to its original condition or to a 
suitable wetland condition is small, and it is not practicable or 
feasible to consider this as a preferred option. Consequently, offsite 
mitigation would need to be provided to eliminate the unacceptable 
adverse effects to wildlife identified in the decision of the AA for 
Water to prohibit specification of this site under Section 404(c).
    Likewise, the 44-acre parcel was filled in 1981 with material of 
the same type. The soils on this site are more likely to have compacted 
and consolidated into material unlikely to support site restoration, 
because the site has been constructed on and has had functioning 
warehouses with concomitant large vehicle traffic since the early 
1980's. This site is even less likely to be restorable to a suitable 
wetland condition than the 13.5 acre parcel owing to this factor and 
also to the fact that tenanted warehouses occupy the site. As such, 
offsite compensatory mitigation would be needed to offset the wildlife 
values lost as a result of the fill activity.

Mechanisms To Provide Compensatory Mitigation

    The changes in circumstances and information described above have 
improved the ability of Russo to achieve reasonable compensation for 
wetland wildlife values lost as a result of the unauthorized discharge 
of fill. One of the main factors which influenced Russo's original 
mitigation proposal was the alleged difficulty in privately obtaining 
large tracts of wetlands within the Meadowlands for the purpose of 
providing compensatory mitigation. This can now be addressed with the 
use of a mitigation bank, which will obtain and have available large 
wetlands tracts for the purposes of providing compensatory mitigation. 
HMDC's proposed mitigation bank will make wetland mitigation on a 
substantial acreage within the Hackensack River basin, the area of 
impact, available for purchase. With adequate funding, wetland 
enhancement through this mitigation bank can be obtained, and will 
provide significant compensation opportunity.
    Under the terms of the settlement discussed above, Russo will 
provide approximately 16 acres of wetlands which will provide 
additional compensatory value via enhancement. Thus, between the land 
to be provided by Russo and the lands available for enhancement in the 
mitigation bank, sufficient land for mitigation purposes is now 
reasonably available to provide compensation for the wetlands losses 
resulting from the discharges of fill on the Russo tracts.
    Under the terms of the settlement, Russo also would provide a total 
of $700,000 for the purposes of implementing compensatory mitigation 
through the HMDC mitigation bank. A portion of this funding will be 
spent [[Page 15918]] providing enhancement to the 16-acre Ridgefield 
tract. The remainder of the funds will be used to enhance the wetland 
values of acreage within the HMDC mitigation bank. The means to provide 
compensation for lost wetland values are therefore available. What 
remains is to provide a demonstration that adequate compensation, and 
appropriate compensation, can be provided through this proposal.

Determination of Adequate Compensation

    The additional information on habitat values in the Meadowlands 
which was provided in the EPA study previously referenced provides 
useful guidance for the appropriate design of mitigation sites in the 
Meadowlands. A mitigation design which incorporates the habitat 
features identified by this study as valuable is likely to provide a 
greater guarantee of success in achieving the goal of no net loss in 
wetland values. Such a design would be directly tailored to wildlife 
needs in the Meadowlands, and is thus appropriate to compensate for the 
particular values lost from the Russo tracts. For example, open water 
areas which are interspersed among and surrounded by Phragmites were 
found to be preferentially used as resting/feeding habitat by 
overwintering black ducks, Anas rubripes, a FWS species of special 
concern. The open water provides necessary feeding/resting habitat, 
while the associated Phragmites provides shelter from winter winds, 
thus reducing caloric requirements and stress on this species. 
Mitigation designed to increase hydrologic flow and provide open water 
areas interspersed with Phragmites will greatly increase the value of 
those tracts to black duck populations in the Meadowlands. Such a 
component responds directly to one of the wildlife losses of concern 
identified by the AA for Water in the Final Determination, and will 
provide compensation for this loss. While the exact location of the 
acreage proposed for enhancement has not yet been specified, the 
mitigation bank locations which are being evaluated by HMDC have the 
similar habitat features and are generally good candidates for 
enhancement. The candidate sites are large tracts, mostly dominated by 
a monoculture or near-monoculture of Phragmites. Most of the proposed 
bank sites have a reduced or nonexistent flow and interspersion of 
water, or have been cut off from tidal inundation. A variety of 
different mitigation activities are able to be performed on such sites 
and will provide good compensation for wildlife values which were lost/
are being lost from the Russo tracts.
    Since the mitigation banks are not yet functioning, the precise 
type and amount of mitigation that will be performed to compensate for 
the wetlands values lost from the Russo tract has yet to be determined. 
However, outlined below in Table 2 is an example mitigation strategy 
that would likely be feasible to implement with the funding made 
available by Russo for mitigation activities. EPA believes, moreover, 
that such a mitigation strategy would adequately compensate for wetland 
losses experienced on the Russo tracts.

Table 2.--Wetland Types, by Acreage, Which Were Lost From the Russo 13.5-
   Acre Tract, and Enhancement Activities Which Would Provide Adequate  
                      Compensation for Those Losses                     
------------------------------------------------------------------------
                                                   Habitat improvement  
  Wetland type lost     Enhancement activity     which will result from 
       (acres)                                  the enhancement activity
------------------------------------------------------------------------
Mixed emergents/open  Excavation of two 1-acre  Diverse ponds or        
 water (1.14 ac).      ponds or meandering       watercourses attractive
                       channels in Phragmites    to waterfowl and       
                       fields; planting/         muskrats, able to      
                       seeding with emergent     provide winter shelter 
                       species at fringe.        and improved feeding.  
Wet meadow (3.68 ac)  Remove Phragmites on 4    Creation of habitat     
                       ac and excavate to        valuable to raptors and
                       maintain a permanently    species such as        
                       saturated hydrologic      woodcock and pheasant; 
                       regime; seed with         possible provision of  
                       mixture of wet meadow     nesting habitat for    
                       species. In tidal         certain species of     
                       areas, an alternative     waterfowl. Wet meadow  
                       would be establishment    would directly replace 
                       of high salt marsh.       lost habitat type.     
                       Since there is less                              
                       plant diversity in a                             
                       high salt marsh, 6                               
                       acres of enhancement                             
                       would be recommended.                            
Phragmites, unbroken  Either excavation of      Creation of saturated   
 field (5.41 ac).      5.41 ac from upland to    system of emergents    
                       create regularly          which would provide the
                       saturated habitat and     same functions as      
                       planting or seeding       Phragmites. Enhancement
                       with suitable wetland     to a S. alterniflora   
                       emergents, or             marsh increases value  
                       excavation and            seasonally to wildlife,
                       eradication of            but more plant         
                       approximately 5.5 acres   diversity is needed    
                       of tidal, unbroken        since enhancement is   
                       Phragmites to average     occurring on a         
                       mean water and planting   functioning wetland.   
                       or seeding with           Shrub layer provides   
                       Spartina alterniflora     this.                  
                       and shrubs.                                      
------------------------------------------------------------------------

    Three types of wetland habitat are believed to have existed on the 
13.5-acre site prior to Russo's fill activities; viz., mixed emergent, 
wet meadow, and Phragmites. Since 3.27 acres, which was identified by 
aerial photography as ``old field'' has been determined by the Corps to 
have been a non-wetland area, a determination with which EPA concurs, 
no compensation is required for fill activity which occurred on this 
portion of the site.4

    \4\This is consistent with the findings and guidance of the AA 
for Water set forth in the Final Determination.
---------------------------------------------------------------------------

    The excavation of two, one-acre ponds or approximately two acres of 
meandering channel will provide two acres of valuable feeding/resting 
habitat for waterfowl, particularly black duck. The mixed emergent 
areas originally present on the 13.5-acre site totalled 1.14 acres. 
This acreage, however, was divided among three areas, and was less 
likely to be attractive to waterfowl than a single pond or watercourse 
of the same size. Since an existing wetland, which has functional 
values of its own, will be excavated to create the ponds or channel, it 
will lose some functional value as a result of the excavation activity. 
The creation of an additional acre of open water is likely to offset 
any losses associated with the enhancement activity itself. The cost of 
such an enhancement is likely to be low, since only the fringe of the 
ponds would be seeded, and would probably not exceed $5,000/acre, based 
on EPA Region II's best estimates of cost.
    The enhancement of approximately four acres of Phragmites 
monoculture to provide a frequently saturated wet meadow will restore 
the same acreage of wet meadow that was lost from the site. As an 
alternative, should the proposed mitigation site be tidal, a tidal high 
salt marsh, dominated by Spartina patens and Distichlis spicata, can be 
established. High salt marsh is also a remnant habitat in the District, 
and [[Page 15919]] would provide many of the same values to wildlife as 
wet meadow (i.e., attractive to raptors, small mammals, etc.) but is 
not usually as species-rich in plants, including those with food value 
to wildlife, as a freshwater wet meadow. Consequently, this type of 
compensation should be established at a 1.5:1 acreage replacement, 
since it represents out-of-kind mitigation, and would not have as many 
functions as the habitat for which it is providing compensation.
    The remaining 5.4 acres of the 13.5-acre tract was dominated by 
Phragmites. The creation of a 5.4 acre emergent marsh from upland would 
offset this loss. If enhancement is the technique used (as is likely), 
then the replacement vegetation for Phragmites must be twice as 
valuable to wildlife to provide value-for-value compensation for 
wildlife. Based on EPA studies, Spartina marsh habitat is more 
attractive to wading birds and waterfowl, and is of equal value to 
certain passerine species. Phragmites-dominated habitat can be doubled 
in its value to most wildlife species if it is enhanced to provide an 
equal acreage of Spartina alterniflora/scrub-shrub marsh, and it is 
interspersed with the other proposed habitat types. Therefore, 
conversion of approximately 5.5 acres of uniform Phragmites to S. 
alterniflora/scrub-shrub salt marsh will compensate for the wildlife 
value of the 5.41 acres of Phragmites marsh lost from the Russo 13.5-
acre tract, and will result in no net loss of wildlife value for the 
acreage lost.
    Estimates for the eradication of Phragmites, excavation and seeding 
of other species (such as Spartina or hydrophytic herbaceous forbs, 
such as those found in wet meadow habitats) varies, but are expected to 
average about $20,000/acre, based on EPA Region II's best available 
information. Approximately nine acres of such enhancement would be 
required to provide the suggested wet meadow and S. alterniflora/scrub-
shrub marsh. (The land acquisition for mitigation activities will 
already have occurred when these activities are expected to be 
implemented.) Adequate funds would therefore be available to provide 
the requisite enhancement to ensure a value-for-value replacement.
    The balance of the funds would go toward providing replacement of 
wetland wildlife value lost as a result of filling the 44-acre tract. 
An example mitigation strategy that would likely be feasible to 
implement with the resources made available by Russo, and which would 
provide compensation for wildlife values lost from the 44-acre tract is 
listed in Table 3.

  Table 3.--Wetland Types, by Acreage, Which Were Lost From the 44-Acre 
     Tract, and Enhancement Activities Which Would Provide Adequate     
                      Compensation for Those Losses                     
------------------------------------------------------------------------
                                                   Habitat improvement  
  Wetland type lost     Enhancement activity     which will result from 
       (acres)                                  the enhancement activity
------------------------------------------------------------------------
Mixed emergents/open  Excavation of 6 acres of  Diverse ponds or        
 water (2.92 ac).      open water habitat        watercourses attractive
                       (ponds and/or channels)   to waterfowl and       
                       in Phragmites fields;     muskrats, able to      
                       planting/seeding with     provide preferred      
                       other emergent species    winter shelter and     
                       at fringe..               improved feeding.      
Wooded (0.37 ac)....  Planting of               Provides nesting        
Phragmites areas       approximately 3 acres     opportunities for      
 (15.69 ac).           of shrub/tree layer on    waterfowl/passerine    
                       16.5 ac Ridgefield        species, as well as    
                       tract                     buffer from developed  
                                                 area. Fruit-bearing    
                                                 shrubs greatly         
                                                 increases wildlife food
                                                 value.                 
Wet meadow (21.73     Removal of Phragmites on  Creation of habitat     
 ac).                  22 ac and excavation to   valuable to raptors and
                       achieve seasonally        species such as        
                       saturated hydrologic      woodcock and pheasant; 
                       regime with some ponded   possible provision of  
                       areas. Seeding with a     nesting habitat for    
                       mixture of wet meadow     certain species of     
                       grasses and forbs.        waterfowl. Direct      
                       Alternatively,            replacement of habitat 
                       establishment of 33 ac    type lost.             
                       of high salt marsh                               
------------------------------------------------------------------------

    The rationale for the types of enhancements suggested for the 44-
acre tract is essentially the same as for the proposal for the 13.5-
acre tract. The one component which is different is the proposal to 
mitigate for the loss of approximately 15.7 acres of homogeneous 
Phragmites fields and for the loss of 0.37 acres of wooded habitat by 
providing approximately three acres of a shrub/woody vegetation layer 
on the 16.5 acre Ridgefield tract. The Ridgefield tract is essentially 
a monoculture of Phragmites; however, it contains abundant marsh/open 
water tidally influenced complexes. As previously mentioned, this type 
of Phragmites/open water mosaic provides feeding and resting areas to 
waterfowl on a year round basis, but is especially valuable to 
overwintering waterfowl because it provides them not only with feeding 
and resting areas but also with shelter from severe weather, thus 
lowering their expenditure of calories. Consequently, its existing 
wildlife value is good in context of the Meadowlands as a landscape. 
However, it does not provide any nesting opportunities for birds 
requiring trees and shrubs. Neither does it contain any substantial 
source of fruits or seeds which are used as preferred foods by wildlife 
such as pheasant, woodcock, etc., which were believed to have been on 
the 44-acre tract prior to filling. Both the nesting and food values to 
wildlife are largely lacking in the immediate vicinity of the 
Ridgefield tract. By providing the woody vegetation layer, at an 
acreage ten times that which was lost on the 44-acre tract, this value 
is not only replaced for the woody vegetation that was lost, but also 
enhances the entire 16.5-acres and provides wildlife value that has 
never been on that parcel. When considered in conjunction with the 
valuable open water mosaic present on that site, we believe that the 
enhancement will increase the value of the Ridgefield site sufficiently 
to compensate for the loss of the 15.7 acre homogeneous Phragmites 
field and .37 acres of wooded wetlands.
    Most of the wetlands on the 13.5-acre tract have already been 
filled and converted to upland; the entire tract has been disturbed 
from its original condition. If the prohibition on fill is amended to 
allow the proposed settlement to proceed, it is likely that Russo would 
be permitted to complete his activity on site. The calculation of 
mitigation includes considerations based on the complete loss of the 
tract's wetlands value.

Proposed Action and Consistency With the New Jersey Coastal Zone 
Management Plan (CZMP)

    In its May 17, 1991 opinion, the court in Russo Development Corp v. 
Reilly, No. 87-3916, held that EPA was arbitrary and capricious for 
failing to articulate its reasons for deviating from the New Jersey 
Coastal Zone Management Plan (CZMP) in the Agency's 404(c) 
determination. The [[Page 15920]] Agency's decision was remanded to EPA 
in part on this ground.
    Section 307(c)(3)(A) of the Coastal Zone Management Act (CZMA) 
prohibits a Federal permit from being issued for an activity affecting 
any land or water use or natural resource of the coastal zone of that 
state until the applicant furnishes a certification that the activity 
is consistent with an approved CZMP, and the State concurs in the 
certification or waives review. This portion of the CZMA is implemented 
in the Corps regulations by 33 CFR 325.2(b)(2). Because the Corps' 
regulations adequately address the CZM consistency requirement, EPA did 
not duplicate Sec. 325.2(b)(2) in the 404(b)(1) Guidelines.
    The Hackensack Meadowlands District Master Plan is the Coastal Zone 
Management Plan for the Meadowlands District, and the current plan 
zones the 13.5 acre parcel for development. Because EPA's 404(c) 
determination, if it is finalized as proposed today, would no longer 
preclude the Corps from authorizing fill activity on the 13.5 acre 
parcel, such an action would appear to be consistent with the Master 
Plan. Of course, under section 307(c)(3)(A) of the CZMA and 33 CFR 
325.2(b)(2), it is the State that ultimately would have the authority 
to determine consistency of a new permit proposal with the applicable 
plan.

Conclusions

    The Final Determination by the AA for Water contemplated a 
reconsideration of the prohibition upon a showing that adequate 
mitigation could be provided to offset unacceptable impacts to 
wildlife. Russo has proposed the following mitigation to compensate for 
impacts of the fill activity: (1) Deed over an approximately 16 acre 
parcel of wetlands in Ridgefield, N.J. for preservation, and (2) 
provide $700,000 for the purpose of enhancing wetlands at this site and 
on sites to be contained in the Hackensack Meadowlands District 
mitigation bank. Since there will be Federal oversight of the type of 
enhancements performed, as well as the design, construction, and 
implementation of the mitigation activities, and since the funding 
provided for mitigation would be applied to enhancement alone5, 
the mitigation activities would be applied to sufficient acreage, and 
would be of appropriate kind and quality, to provide adequate 
compensation for losses of wetlands values which resulted/are resulting 
from the unauthorized fill.

    \5\Costs for enhancement vary widely, but private contractors 
generally range from $10,000-$20,000/acre in this area to implement 
mitigation, based on an informal EPA Region II survey of costs. In 
this case, monitoring will be overseen by agency personnel, which 
reduces the cost. Because the mitigation activities will occur over 
a large number of acres, there is an economy of scale involved in 
design and construction, since mobilization/demobilization and 
design costs will be distributed over many participants. Finally, 
since there would be a large pool of wetlands acreage available for 
enhancement, wetlands to be enhanced using Russo's funds can be 
strategically chosen so that the value increase of Russo's portion 
of the mitigation may be maximized.
---------------------------------------------------------------------------

    Unlike the proposal in the original permit, all of the compensation 
proposed will involve an increase in value and will be located within 
the lower Hackensack River basin (the location of the impact). 
Furthermore, the proposed combinations of mitigation activities will 
ensure that a mosaic of different habitats, which was an important 
factor contributing to the wildlife value of the Russo tracts, will be 
restored elsewhere within the relevant area of the impact. Finally, the 
above proposals will provide adequate acreage of the different wetland 
types to compensate for the extent of wildlife values lost on the Russo 
tracts. Therefore, under the terms of the settlement, there would be no 
significant loss of wetland values which would not be offset by 
appropriate and adequate mitigation. There would, we believe, no longer 
be unacceptable adverse effects to wildlife from this activity. The 
prohibition on specifying the Russo tracts as disposal sites for fill 
would no longer be necessary to prevent unacceptable adverse effects to 
wildlife and the aquatic ecosystem. EPA therefore proposes that, 
conditional upon a binding agreement by Russo to provide the funds and 
land preservation discussed above, the Section 404(c) prohibition on 
specification of the 13.5-acre site for fill material be removed, and a 
restriction be imposed that would allow specification of these areas as 
disposal sites provided Russo implements the mitigation plan discussed 
above.

    Dated: March 21, 1995.
Robert Perciasepe,
Assistant Administrator for Water.
[FR Doc. 95-7590 Filed 3-27-95; 8:45 am]
BILLING CODE 6560-50-P