[Federal Register Volume 61, Number 117 (Monday, June 17, 1996)]
[Proposed Rules]
[Pages 30553-30559]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-15297]



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DEPARTMENT OF TRANSPORTATION

Federal Highway Administration

23 CFR Part 777

[FHWA Docket No. 96-8]
RIN 2125-AD78


Mitigation of Impacts to Wetlands

AGENCY: Federal Highway Administration (FHWA), DOT.

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

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SUMMARY: In accordance with the President's Regulatory Reinvention 
Initiative, the FHWA proposes to amend its regulation outlining the 
procedures to be followed in mitigating the impacts of Federal-aid 
highway projects and programs to wetlands. The current regulation has 
become outdated as a result of advances in the science of wetland 
management and the amendments made by sections 1006(d) and 1007(a) of 
the Intermodal Surface Transportation Efficiency Act of 1991 (ISTEA) 
(Pub. L. 102-240, 105 Stat.1914) to the statutory provisions of title 
23, United States Code (U.S.C.). The ISTEA amendments significantly 
alter the range and timing of alternatives eligible for Federal-aid 
participation for mitigation of wetland impacts due to Federal-aid 
highway projects. Accordingly, this proposal would revise the current 
regulation to conform to the ISTEA amendments, thereby providing more 
flexibility to State highway agencies in determining eligibility of 
mitigation alternatives for Federal participation. This proposal would 
broaden the scope of the current regulation to encompass all wetlands 
mitigation projects eligible for Federal participation, not just those 
involving privately owned wetlands.

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

ADDRESSES: Submit written, signed comments to FHWA Docket No. 96-8, 
Federal Highway Administration, Room 4232, HCC-10, Office of the Chief 
Counsel, 400 Seventh Street, SW., Washington, D.C. 20590. All comments 
received will be available for examination at the above address between 
8:30 a.m. and 3:30 p.m., e.t., Monday through Friday, except Federal 
holidays. Those desiring notice of receipt of comments must include a 
self-addressed, stamped postcard.

FOR FURTHER INFORMATION CONTACT: Mr. Paul Garrett, Office of 
Environment and Planning, HEP-42, (202) 366-9173, or Mr. Brett Gainer, 
Office of the Chief Counsel, HCC-32, (202) 366-1372, Federal Highway 
Administration, 400 Seventh Street, SW., Washington, D.C. 20590. Office 
hours are from 7:45 a.m. to 4:15 p.m., e.t., Monday through Friday, 
except Federal holidays.

SUPPLEMENTARY INFORMATION:

Background

    Executive Order (E.O.) 11990, ``Protection of Wetlands,'' requires 
all Federal agencies to ``avoid to the extent possible the long and 
short term adverse impacts associated with the destruction or 
modification of wetlands'' (42 FR 26961, May 25, 1977). Specifically, 
this

[[Page 30554]]

order directs Federal agencies to avoid new construction in wetlands 
unless (1) there is no practicable alternative to such construction, 
and (2) the proposed action includes all practicable measures to 
minimize harm to wetlands resulting from such construction. The 
Department of Transportation subsequently issued DOT Order 5660.1A, 
Preservation of the Nation's Wetlands, which provided departmental 
policy and instruction for implementing E.O. 11990. Copies of these 
documents are available for inspection and copying pursuant to 49 CFR 
Part 7, App. D.
    The provisions of E.O. 11990, the Clean Water Act (33 U.S.C 1344 et 
seq.), and the DOT Order proclaim that wetlands are a valuable national 
resource and that special efforts are required of all Federal agencies 
to preserve the beneficial values inherent in them. Wetlands are a 
valuable resource for a number of reasons. They provide habitats for 
numerous plants and animals, including many commercially important 
species. In addition, wetlands can reduce the severity of flooding, 
control erosion, and remove contaminants from polluted waters. 
Consequently, wetland preservation has become a matter of concern to 
Federal and State agencies charged with resource management 
responsibilities and has been emphasized by resource conservation 
groups.
    Under E.O. 11990 each Federal agency must avoid, whenever 
practicable, impacts to wetlands. Therefore, a highway location or 
design which will impact a wetland must be evaluated for its natural 
functions and values, in addition to all relevant social, economic, and 
physical environmental values. Inevitably, there will be instances when 
reasoned and balanced judgments will result in the location of highways 
in wetlands and in the destruction or modification of those resources. 
In such cases, E.O. 11990 requires that ``all practicable measures to 
minimize harm to the wetland(s) be incorporated into the project.'' In 
addition, section 404 of the Clean Water Act, entitled Permits for 
Dredged or Fill Material, requires that a permit be obtained through 
the U. S. Army Corps of Engineers for proposed discharges of dredged or 
fill material into waters of the United States, including wetlands (33 
CFR 320-330; (Regulatory Program)). The Regulatory Program and 
associated guidelines (40 CFR 230-233) require, among other things, 
assessment of the functions and values of wetlands to be impacted by 
proposed discharges of dredged or fill material as part of the Public 
Interest Review Process. Furthermore, permits issued by the Corps of 
Engineers under authority of the Regulatory Program may contain 
conditions requiring mitigation to compensate for impacts to wetlands 
that result in a loss of wetlands functions and values to society.
    Another Federal statute applicable to Federal-aid highway projects 
involving impacts to wetlands is section 4(f) of the Department of 
Transportation Act 1 (49 U.S.C. 303 and 23 U.S.C. 138). Section 
4(f) provides protection for certain environmentally significant, 
publicly owned land areas including parks, wildlife refuges, and 
waterfowl refuges. When such lands must be used for a federally-
assisted highway project, section 4(f) requires all possible planning 
to minimize harm to the protected area. If wetlands included in these 
publicly owned 4(f) lands are used for or impacted by a highway 
project, current FHWA policy permits Federal-aid highway funds to be 
used in the acquisition, restoration, or creation of replacement 
wetlands or improvement of existing wetlands as mitigation. Federal 
participation must be based on a determination that such mitigation 
measures are necessary to meet the section 4(f) requirement that all 
possible planning and measures be undertaken to minimize harm. Federal 
assistance in these instances often involves the use of Federal-aid 
funds for activities outside the right-of-way. The FHWA regulations 
implementing section 4(f) are found at 23 CFR 771.135.
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    \1\ Section 4(f) of Pub. L. 89-670, 80 Stat. 934, was repealed 
by Pub. L. 97-449, 96 Stat. 2444, and enacted without substantive 
change at 49 U.S.C. 303. Section 138 of title 23, U.S.C., remains 
unchanged. Because of common usage and familiarity, the term section 
4(f) continues to be used by the Department of Transportation in 
matters relating to 49 U.S.C. 303 and 23 U.S.C. 138.
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    The FHWA has long recognized that the importance of wetland 
preservation is not limited to publicly owned wetlands. Privately owned 
wetlands are often an important component of local, State, and Federal 
wetland management programs. In addition, the requirements of E.O. 
11990 and section 404 of the Clean Water Act apply to wetlands 
regardless of ownership. Consequently, the FHWA is required to find 
that proposed Federal-aid projects include all practicable measures to 
minimize harm to privately owned wetlands adversely impacted by the 
projects. The current part 777, which this NPRM proposes to amend, was 
promulgated to address these requirements.

Discussion of Proposed Rulemaking

    Congress included provisions in the ISTEA granting the FHWA more 
flexibility to authorize the use of Federal-aid highway funds for 
mitigation of impacts to wetlands caused by federally-funded highway 
projects. These provisions are codified at 23 U.S.C. 103(i)(13) and 
133(b)(11), and pertain to projects eligible for National Highway 
System (NHS) and Surface Transportation Program (STP) funds, 
respectively. Consequently, the FHWA is proposing to amend its 
regulations to authorize the expenditure of Federal-aid highway funds 
for mitigation of impacts to wetlands due to federally-funded highway 
projects.
    Mitigation activities may include, but are not limited to, 
participation in wetlands mitigation banks, contributions to statewide 
and regional efforts to conserve, restore, enhance and create wetlands, 
and development of statewide and regional wetlands conservation and 
mitigation plans, including any such banks, efforts, and plans 
authorized pursuant to the Water Resources Development Act of 1990 
(Pub. L. 101-640, 104 Stat. 4604). Contributions toward such efforts 
may take place concurrent with or in advance of project construction, 
but contributions may occur in advance of construction only if such 
mitigation efforts are consistent with all applicable requirements of 
Federal law and State planning processes.
    Most significantly, measures found by a State highway agency and 
the FHWA to be appropriate and necessary to mitigate significant 
adverse impacts to publicly or privately owned wetlands would be 
eligible for Federal participation where the impacts actually result 
from an FHWA action. Appropriate mitigation measures could include the 
acquisition of additional land or interests in land for the purpose of 
mitigating adverse environmental impacts to wetlands which actually 
result from a Federal-aid highway project.
    The justification for the cost of proposed mitigation measures 
should be considered in the same context as any other public 
expenditure; that is, the proposed mitigation would have to represent a 
reasonable public expenditure when weighed against other social, 
economic, and environmental values, and the benefit realized would have 
to be commensurate with the proposed expenditure. Decisions on 
mitigation measures would be required to take into account 
consideration of traffic needs, safety, durability, and economy of 
maintenance of the highway.
    As previously mentioned, the proposed amendments to 23 CFR 777 
formally express the FHWA's current

[[Page 30555]]

policy and incorporate the eligibility criteria set forth in the ISTEA 
with respect to mitigation of impacts to both publicly and privately 
owned wetlands which actually result from Federal-aid highway projects 
or an FHWA action. The explanation of Federal participation policy 
already included in Sec. 777.5 is expanded in the proposed regulation. 
The proposed regulation would also include additional guidance and 
procedures to be followed in the evaluation (Sec. 777.7) and mitigation 
of impacts (Secs. 777.9, 777.11).
    The requirements of 23 CFR 777 apply to the mitigation of impacts 
to wetlands which actually result from federally-funded highway 
projects or programs. The requirements and policies stated therein do 
not apply to highways or other projects funded by other Federal, State, 
or private agencies or entities.

Section-By-Section Analysis

    The following section discusses both the current provisions of 23 
CFR 777 and the proposed changes to that regulation contained in this 
NPRM.

Section 777.1

    Section 777.1 would be amended to expand the applicability of the 
regulation to Federal-aid participation in mitigation of all impacts to 
publicly or privately owned wetlands which actually result from 
Federal-aid highway projects. The existing regulation applies only to 
privately owned wetlands.

Section 777.2

    Section 777.2 would be a new section. This section would contain 
definitions for administrative, scientific, and technical terms found 
in the amended regulation.

Section 777.3

    Section 777.3, Background, would be amended to include discussion 
of the ISTEA provisions which increased the eligibility for Federal-aid 
participation of efforts to mitigate the wetlands impacts of highway 
projects funded under the provisions of the National Highway System 
(ISTEA Sec. 1006 (23 U.S.C. 103)) and Surface Transportation Program 
(ISTEA Sec. 1007 (23 U.S.C. 133)). As in the existing regulation, this 
section would also cite the authority and requirements of E.O. 11990 to 
minimize wetlands losses and DOT Order 5660.1A for implementing wetland 
mitigation in FHWA programs.

Section 777.5

    The FHWA wetlands policy and practice, incorporating expanded 
scientific knowledge and management experience, have recognized that 
wetland mitigation includes a wider range of impacts, alternatives, and 
activities than were known or understood when the existing regulation 
was promulgated in 1980. The science and technology of wetland 
mitigation have identified methods and needs for effective wetland 
mitigation that were not well known at the time the existing regulation 
was issued. The amended Sec. 777.5, Federal Participation Policy, would 
expand applicability of the regulation to include all impacts to 
wetlands which actually result from Federal-aid highway projects. The 
kinds of activities needed to mitigate wetland impacts include the 
general areas of planning, design, right-of-way acquisition, 
construction, and establishment. Specific tasks and activities which 
fall within these general areas are identified and included in the 
amended section as eligible for Federal-aid participation. Specific 
project criteria for Federal participation in wetlands mitigation 
activities are restated from the existing regulation, and are 
consistent with 23 CFR 771, Environmental Impacts and Related 
Procedures. The ``test of reasonableness'' in the existing regulation 
for the expenditure of public funds for wetlands mitigation is included 
in the NPRM. This test is based on commensurate social, economic, and 
environmental values and benefits of wetlands mitigation relative to 
costs of the mitigation and benefits of the highway project or program.

Section 777.7

    Section 777.7, Evaluation of Impacts, currently provides that the 
extent of Federal participation in mitigation measures should be 
directly related to the importance and functional capacity of the 
impacted wetlands and the extent of wetland losses due to highway 
impacts.
    In both the existing regulation and NPRM, Section 777.7 relates the 
cost of Federal-aid participation in wetland mitigation activities to 
the importance of the wetlands impacted in the project area. As 
amended, this section would refer to scientific functional assessment 
methodologies as the appropriate tool for evaluating wetlands resources 
and impacts, and would recognize the need for interdisciplinary, 
interagency coordination in evaluating wetlands functions and values. 
General functions of wetlands would be identified using current 
scientific terminology and concepts of wetlands analysis.

Section 777.9

    Section 777.9, Mitigation of Impacts, identifies general categories 
of actions, taken to mitigate the impact of highway projects on 
wetlands, which are eligible for Federal-aid participation. Federal 
participation is not, however, limited to these activities, if other 
alternatives are practicable, more ecologically desirable, and 
represent a more effective expenditure of public funds. The existing 
Sec. 777.9 states specific requirements for the protection of wetlands 
established as compensatory mitigation. Two criteria for Federal-aid 
participation in wetland mitigation are that the mitigation must 
represent a reasonable expenditure of public funds and be in the public 
interest.
    In Sec. 777.9(a) of the NPRM, the Environmental Protection Agency's 
Clean Water Act Sec. 404(b)(1) guidelines (40 CFR 230) are referenced 
to establish the required sequence of alternatives that must be 
considered for mitigation of wetlands impacts. The 404(b)(1) guidelines 
require that, where practicable, avoidance and then minimization of 
wetland impacts be given first consideration. Under Sec. 777.9(a)(2) of 
the NPRM, once practicable avoidance and minimization measures had been 
exhausted, the regulation would establish the objective of selecting 
ecologically desirable and practicable compensatory mitigation 
alternatives consistent with the 404(b)(1) guidelines. The requirement 
to consider compensatory mitigation within the highway right-of-way 
before other, possibly more ecologically desirable and reasonable 
alternatives outside of the right-of-way, would be removed by this 
NPRM. The existing Sec. 777.9(b) contains the requirement that the 
public interest in wetlands restored, enhanced, or created as part of 
mitigation for wetlands impacts due to Federal-aid highway projects 
must be sufficient to ensure that they will be maintained as wetlands. 
This requirement would be moved to Sec. 777.11(b). Section 777.9(a)(3) 
would be added, and would list examples of the specific kinds of 
activities eligible for Federal-aid participation when existing 
wetlands are being enhanced or restored.
    A new Sec. 777.9(b) would be added, and would cite and explain the 
specific mitigation alternatives listed in the ISTEA eligible for 
Federal-aid participation. The activities listed in the ISTEA are 
related to wetlands banking, planning, and resource inventory. These 
activities are not exclusive, and other activities listed in this 
regulation would also be eligible. This paragraph would

[[Page 30556]]

conform the regulation to ISTEA provisions allowing the use of Federal-
aid highway funds to pay for costs of wetland mitigation activities as 
needed to mitigate impacts caused by Federal-aid highway projects and 
programs.

Section 777.11

    Like any other activity in which Federal funds participate, the use 
of those funds is governed by various restrictions and conditions 
established by Federal law and agency policy in order to protect the 
public interest and provide for sound program management. A number of 
these considerations are set forth in Sec. 777.11, Other 
Considerations, including consultation requirements and provisions for 
ownership and management of acquired lands. Depending upon the extent 
of mitigation justified under the provisions of Sec. 777.7, 
Sec. 777.11(f) currently permits Federal participation in the 
acquisition of replacement land for privately owned wetlands directly 
impacted by a Federal-aid highway project. Such privately owned lands 
thus acquired, above and beyond wetlands purchased for use as highway 
right-of-way, will thereafter be retained in public ownership and 
dedicated to future use as wetlands. The replacement ratio for wetlands 
directly affected by a Federal-aid highway project should be determined 
based on use of a scientific methodology of wetland functional 
assessment and best professional judgment, in combination with 
interagency coordination and considerations of fiscal responsibility 
and a desire to minimize adverse impacts on the local tax base of 
converting land from private to public ownership.
    In both the existing regulation and the NPRM, Sec. 777.11(a) 
emphasizes the need for consultation with appropriate State and Federal 
agencies concerning impacts to wetlands on Federal-aid highway 
projects. Section 777.11(b) of the NPRM, furthermore, would require 
that the public interest in all compensatory wetland mitigation 
projects, where wetlands have been purchased, enhanced, restored, or 
created with Federal-aid highway funds, be sufficient to ensure that 
the wetlands are permanently protected. This includes both private and 
public wetlands mitigation banks. The current Sec. 777.11(b), which 
sets forth the definition of wetlands to be used in applying the 
regulation, would be moved to Sec. 777.2, Definitions. Sections 777.11 
(c) through (g) of both the existing regulation and the NPRM are 
intended to state the conditions and requirements for acquisition of 
interests in lands for purposes of mitigating wetlands impacts due to 
Federal-aid highway projects. For its part, Sec. 777.11(g) would 
emphasize that the objective of wetlands mitigation in the Federal-aid 
highway program is to implement the policy of no-net-loss in area or 
functional capacity. To that end, this paragraph would declare eligible 
for Federal-aid participation certain activities intended to ensure the 
viability of compensatory mitigation wetlands during the period of 
establishment. These would include, but would not be limited to, such 
activities as repair or adjustment of water control structures, pest 
control, irrigation, fencing modifications, and replacement of 
plantings. The NPRM would encourage mitigation bank managers to 
determine the establishment period in the mitigation agreement itself 
prior to beginning any mitigation activities.
    The NPRM would allow Federal-aid participation in the mitigation of 
impacts to both publicly or privately owned wetlands if such impacts 
actually resulted from Federal-aid highway projects. This proposal 
would not, however, require States to undertake mitigation efforts. 
Instead, part 777 would continue to provide policy and procedures for 
the evaluation and mitigation of adverse environmental impacts to 
wetlands which actually result from new construction of Federal-aid 
highway projects. Therefore, the FHWA believes the current 
Sec. 777.11(h)--with its explicit statement that the program is not a 
mandatory one--is no longer necessary and the NPRM would delete this 
provision. Finally, Sec. 777.11(i) of the existing regulation, which 
addresses mitigation of ecological impacts in non-wetlands, would be 
deleted. Since this NPRM would apply solely to wetlands issues, the 
FHWA has determined that the current Sec. 777.11(i) would not be 
applicable to the policy set forth in this proposal. The FHWA has also 
determined that this paragraph is not consistent with 23 U.S.C. 
133(b)(1), added by the ISTEA, which allows States to obligate STP 
funds to mitigate damage to wildlife, habitat, and ecosystems caused by 
a transportation project funded under title 23, United States Code.

Rulemaking Analyses and Notices

    All comments received before the close of business on the comment 
closing date indicated above will be considered and will be available 
for examination in the docket at the above address. Comments received 
after the comment closing date will be filed in the docket and will be 
considered to the extent practicable, but the FHWA may issue a final 
rule at any time after the close of the comment period. In addition to 
late comments, the FHWA will also continue to file in the docket 
relevant information that becomes available after the comment closing 
date, and interested persons should continue to examine the docket for 
new material.

Executive Order 12866 (Regulatory Planning and Review and DOT 
Regulatory Policies and Procedures)

    The FHWA has considered the impact of this document and has 
determined that it is neither a significant rulemaking action within 
the meaning of Executive Order 12866 nor a significant rulemaking under 
the regulatory policies and procedures of the Department of 
Transportation. This rulemaking would amend FHWA regulations regarding 
mitigation of impacts to privately owned wetlands, which have become 
outdated because of provisions in Secs. 1006 and 1007 of the ISTEA 
authorizing greater flexibility for Federal participation in mitigating 
impacts to wetlands. These amendments have been codified at 23 U.S.C. 
103 and 133.
    This rulemaking would not cause any significant changes to the 
amount of funding available to the States under the STP or NHS programs 
or add to the process by which States receive funding. The provisions 
of this proposed rulemaking would not require the additional 
expenditure of Federal-aid or State highway funds. Thus, it is 
anticipated that the economic impact of this rulemaking would be 
minimal. In addition, it would not create a serious inconsistency with 
any other agency's action or materially alter the budgetary impact of 
any entitlements, grants, user fees, or loan programs; nor will 
amendment of this regulation raise any novel legal or policy issues. 
Therefore, a full regulatory evaluation is not required.

Regulatory Flexibility Act

    In compliance with the Regulatory Flexibility Act (5 U.S.C. 601-
612), the FHWA has evaluated the effects of this rule on small entities 
and has determined that amendment of the FHWA regulations regarding 
mitigation of impacts to wetlands would not have a significant economic 
impact on a substantial number of small entities. Amending this 
regulation would not affect the amount of funding available to the 
States through the STP or NHS programs, or the procedures used to

[[Page 30557]]

select the States eligible to receive these funds. Furthermore, States 
are not included in the definition of ``small entity'' set forth in 5 
U.S.C. 601. For these reasons, and for those set forth in the analysis 
of E.O. 12866, the FHWA hereby certifies that this action will not have 
a significant economic impact on a substantial number of small 
entities.

Executive Order 12612 (Federalism Assessment)

    This action has been analyzed in accordance with the principles and 
criteria contained in Executive Order 12612, and it has been determined 
that this action does not raise sufficient federalism implications to 
warrant the preparation of a federalism assessment. Amendment of this 
FHWA regulation concerning the mitigation of impacts to wetlands would 
not preempt any State law or State regulation. No additional costs or 
burdens would be imposed on the States as a result of this action, and 
the States' ability to discharge traditional State governmental 
functions would not be affected by this rulemaking.

Executive Order 12372

    Catalog of Domestic Assistance Program Number 20.205, Highway 
Planning and Construction. The regulations implementing Executive Order 
12372 regarding intergovernmental consultation on Federal programs and 
activities apply to this program.

Paperwork Reduction Act

    This action does not create a collection of information requirement 
for the purposes of the Paperwork Reduction Act of 1995, 44 U.S.C. 
3501-3520.

National Environmental Policy Act

    The FHWA has analyzed this rulemaking for the purposes of the 
National Environmental Policy Act of 1969 (NEPA) (42 U.S.C. 4321-4347). 
This NPRM would not, in and of itself, constitute a major Federal 
action significantly affecting the quality of the human environment. 
Instead, it would increase the flexibility available to States when 
deciding how to mitigate impacts to wetlands caused by those Federal-
aid highway projects they undertake. Such impacts and appropriate 
mitigation measures would be evaluated pursuant to NEPA on a project-
by-project basis by the States and the FHWA. Accordingly, promulgation 
of this NPRM would not require the preparation of an environmental 
impact statement.

Regulatory Identification Number

    A regulation identification number (RIN) is assigned to each 
regulatory action listed in the Unified Agenda of Federal Regulations. 
The Regulatory Information Service Center publishes the Unified Agenda 
in April and October of each year. The RIN contained in the heading of 
this document can be used to cross reference this action with the 
Unified Agenda.

List of Subjects in 23 CFR Part 777

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

    Issued on: June 4, 1996.
Rodney E. Slater,
Federal Highway Administrator.
    In consideration of the foregoing, the FHWA proposes to revise part 
777 of title 23, Code of Federal Regulations, as set forth below.

PART 777--MITIGATION OF IMPACTS TO PRIVATELY OWNED WETLANDS

    1. Part 777 is revised to read as follows:

Sec.
777.1  Purpose.
777.2  Definitions.
777.3  Background.
777.5  Federal participation policy.
777.7  Evaluation of impacts.
777.9  Mitigation of impacts.
777.11  Other considerations.

    Authority: 42 U.S.C. 4321 et seq.; 49 U.S.C. 303; 23 U.S.C. 
101(a), 103, 109(h), 133(b)(1), 133(b)(11), 133(d)(2), 138, 315; 
E.O. 11990; DOT Order 5660.1A; 49 CFR 1.48(b).


Sec. 777.1  Purpose.

    To provide policy and procedures for the evaluation and mitigation 
of adverse environmental impacts to wetlands which actually result from 
new construction of Federal-aid highway projects.


Sec. 777.2  Definitions.

    In addition to those contained in 23 U.S.C. 101(a), the following 
definitions shall apply as used in this regulation:
    Biogeochemical transformations. Those changes in chemical compounds 
and substances which naturally occur in ecosystems. Examples are the 
carbon, nitrogen, and phosphorus cycles in nature, in which these 
elements are incorporated from inorganic substances into organic matter 
and recycled on a continuing basis.
    Compensatory mitigation. Activities such as wetland restoration, 
enhancement, or creation, performed to replace or compensate for the 
loss of wetlands functional capacity actually the result of Federal-aid 
highway construction projects. Compensatory mitigation usually occurs 
in advance of or concurrent with the impact to be mitigated, but may 
occur after such impacts in special circumstances.
    Ecologically desirable. A state or condition desired or wanted as 
the result of a mitigation agreement that provides additional wetland 
functional capacity.
    No-net-loss of wetlands. A wetland resource conservation and 
management principle, under which, over the long term, loss of wetlands 
area or functional capacity is offset by gains in wetland area or 
functional capacity due to wetland restoration, enhancement, 
preservation, or creation.
    On-site, in-kind mitigation. Compensatory wetland mitigation which 
replaces wetlands functional capacity lost as a result of a highway 
project on the same site or in the immediate vicinity of the impacts.
    Wetland or wetlands. The terms wetland and wetlands have the same 
meaning as the definition issued by the U. S. Army Corps of Engineers 
(33 CFR 328.3(b)) and the U.S. Environmental Protection Agency (40 CFR 
230.3).
    Wetlands banking and related measures. Efforts, or contributions to 
efforts, to restore, create, enhance, or, in exceptional circumstances, 
preserve wetlands functional capacity, usually undertaken outside the 
area of potential effect of proposed highway projects and intended 
expressly to compensate for unavoidable adverse wetlands impacts caused 
by such projects, when compensation could not be achieved or would not 
be as environmentally beneficial if located at individual project 
sites.
    Wetland enhancement. Increasing wetland functional capacity by 
modifying the site conditions of an existing wetland. Examples include, 
but are not limited to, alteration of hydrologic regime, vegetation 
management, fencing, pest control, and fertilization.
    Wetland establishment period. The period required to establish 
wetland functional capacity in a compensatory wetland mitigation 
project sufficient to compensate losses due to impacts of Federal-aid 
highway projects. The establishment period may vary depending on the 
specific wetland type being developed.
    Wetland functional capacity. The ability of a wetland to perform 
natural functions, such as provide wildlife habitat, store surface 
water, or perform biogeochemical transformations, as determined by a 
scientific assessment methodology. Natural functions of wetlands 
include those listed by the 

[[Page 30558]]

U.S. Army Corps of Engineers at 33 CFR 320.4(b)(2) (i) through (viii).
    Wetland restoration. Reestablishment of wetlands functional 
capacity at a site at which such capacity formerly existed but has 
since essentially been eliminated.
    Wetlands mitigation credit. A unit of wetlands mitigation, defined 
either by (1) area or (2) a measure of functional capacity through 
application of a scientific functional assessment methodology.


Sec. 777.3  Background.

    Executive Order 11990, Protection of Wetlands, and DOT Order 
5660.1A, Preservation of the Nation's Wetlands, emphasize the important 
functions and values inherent in the Nation's wetlands. Federal 
agencies are directed to avoid new construction in wetlands unless the 
head of the agency determines that: (1) There is no practicable 
alternative to such construction, and (2) the proposed action includes 
all practicable measures to minimize harm to wetlands which may result 
from such use. Sections 1006 and 1007 of the Intermodal Surface 
Transportation Efficiency Act of 1991 (ISTEA) (Pub. L. 102-240, 105 
Stat. 1914)(codified at Secs. 103 and 133 of title 23, United States 
Code, respectively) identify additional approaches for mitigation and 
management of wetland impacts which actually result from highway 
projects as eligible for Federal participation.


Sec. 777.5  Federal participation.

    (a) Those measures which the Federal Highway Administration (FHWA) 
and a State Highway Agency (SHA) find appropriate and necessary to 
mitigate adverse environmental impacts to wetlands are eligible for 
Federal participation where the impacts actually result from an FHWA 
action. The justification for the cost of proposed mitigation measures 
should be considered in the same context as any other public 
expenditure; that is, the proposed mitigation represents a reasonable 
public expenditure when weighed against other social, economic, and 
environmental values, and the benefit realized is commensurate with the 
proposed expenditure. Mitigation measures shall give like consideration 
to traffic needs, safety, durability, and economy of maintenance of the 
highway.
    (b) It is FHWA policy to permit, consistent with the limits set 
forth in this part, the expenditure of Federal-aid highway funds for 
activities required for the planning, design, construction, and 
establishment of wetlands mitigation projects, and acquisition of land 
or interests therein.


Sec. 777.7  Evaluation of impacts.

    (a) The reasonableness of the public expenditure should be directly 
related to:
    (1) The importance of the impacted wetlands, as determined through 
a scientific functional assessment methodology and interagency 
coordination with the appropriate resource management agencies; and
    (2) The highway impact on the wetlands, as determined through a 
scientific functional assessment methodology.
    (b) Evaluation of the importance of the impacted wetlands should 
consider:
    (1) The wetlands' functional capacity;
    (2) The relative importance of these functions to the total wetland 
resource of the area; and
    (3) Other factors such as uniqueness, esthetics, or cultural 
values.
    (c) A determination of the highway impact should focus on the 
short- and long-term effects of the project on the wetlands' functional 
capacity.


Sec. 777.9  Mitigation of impacts.

    (a) Actions eligible for Federal funding. There are a number of 
actions that can be taken to minimize the impact of highway projects on 
wetlands. The following actions qualify for Federal-aid highway 
funding:
    (1) Where practicable, avoidance or minimization of wetland impacts 
through realignment and special design or construction features. In 
accordance with the Environmental Protection Agency's Clean Water Act 
Section 404(b)(1) guidelines (40 CFR 230 et seq.), avoidance and then 
minimization must be given first consideration in the sequence for 
mitigating wetlands impacts.
    (2) After practicable avoidance and minimization measures have been 
exhausted, other ecologically desirable compensatory mitigation 
alternatives consistent with the Section 404(b)(1) guidelines, either 
inside or outside of the right-of-way. This may include on-site 
mitigation, when that alternative is determined to be ecologically 
desirable and practicable, improvement of existing degraded or historic 
wetlands through restoration or enhancement, or creation of new 
wetlands from non-wetland areas. Restoration or enhancement of wetlands 
is generally preferable to construction or creation of new wetlands 
from non-wetland areas. Under this approach, first consideration should 
be given to the development of compensatory mitigation on publicly 
owned lands.
    (3) Improvements to existing wetlands. Such activities may include, 
but are not limited to, construction of water level control structures, 
establishment of wetland vegetation, recontouring of the site, 
installation or removal of irrigation or water distribution systems, 
pest control, installation of fencing and other measures to protect, 
enhance, or restore the wetland character of the site.
    (4) Wetlands mitigation banking and related measures.
    (b) Participation in wetlands mitigation banks. If the development 
or acquisition of wetland mitigation credits in wetland mitigation 
banks, either on or off-site, is determined to be the most ecologically 
desirable and practicable alternative for compensatory mitigation, the 
first alternative in mitigation bank use should be those established as 
publicly owned resources. These can be--
    (1) Restored or enhanced wetlands on public lands;
    (2) Single purpose publicly owned banks, established by and for the 
use of a highway agency with Federal-aid participation; or multipurpose 
publicly owned banks, established with public, non-Federal-aid funds, 
in which credits may be purchased by highway agencies using Federal-aid 
funds on a per-credit basis; or
    (3) Other forms of mitigation banks in which credits are purchased 
by State highway agencies to mitigate wetlands impacts actually the 
result of Federal-aid highway projects.
    (c) Contributions to statewide and regional efforts to conserve, 
restore, enhance and create wetlands. Federal-aid funds may participate 
in the development of statewide and regional wetlands conservation 
plans, including any efforts and plans authorized pursuant to the Water 
Resources Development Act of 1990. Contributions to these efforts may 
occur in advance of project construction only if such efforts are 
consistent with all applicable requirements of Federal law and 
regulations and State transportation planning processes.


Sec. 777.11  Other considerations.

    (a) The development of measures proposed to mitigate wetlands 
impacts should include consultation with appropriate State and Federal 
agencies.
    (b) Federal-aid funds may not participate in the replacement of 
wetlands absent sufficient assurances that the area will be maintained 
as a wetland.
    (c) The acquisition of proprietary interests in replacement 
wetlands as a mitigation measure may be in fee simple

[[Page 30559]]

or by easement, as appropriate. The acquisition of ``mitigation 
credits'' in wetland mitigation banks should be accomplished through a 
legally recognized instrument, such as permanent easement or deed 
restriction, which provides for protection and permanent continuation 
of the wetland nature of the mitigation.
    (d) A State Highway Agency (SHA) may acquire privately owned lands 
in cooperation with another public agency or third party. Such an 
arrangement may accomplish greater benefits than would otherwise be 
accomplished by the individual agency acting alone.
    (e) An SHA may either transfer the title of lands acquired outside 
the right-of-way, without credit to Federal funds, to an appropriate 
public agency (e.g., U.S. Fish and Wildlife Service or State natural 
resource agency) or enter into an agreement with such agency to manage 
such lands. When such transfer occurs, there shall be an explicit 
agreement that the lands or interests therein transferred shall remain 
in the grantee agency's ownership or control so long as the lands 
continue to serve the purpose of the original acquisition. In the event 
the area transferred no longer serves the purpose of the original 
acquisition, the lands or interests therein transferred shall revert to 
the SHA for proper disposition.
    (f) The reasonable costs of acquiring lands or interests therein to 
provide replacement lands with equivalent wetlands functional capacity 
are eligible for Federal participation.
    (g) The objective in mitigating impacts to all wetlands in the 
Federal-aid highway program is to implement the policy of no-net-loss 
in area or functional capacity. Certain activities to ensure the 
viability of compensatory mitigation wetlands during the period of 
establishment are eligible for Federal-aid participation. These 
include, but are not limited to, such activities as repair or 
adjustment of water control structures, pest control, irrigation, 
fencing modifications, and replacement of plantings. The establishment 
period should be specifically determined by the mitigation agreement 
among the mitigation bank managers prior to beginning any mitigation 
activities.

[FR Doc. 96-15297 Filed 6-14-96; 8:45 am]
BILLING CODE 4910-22-P