Summary

Since the late 1980’s, both the United States and the Commonwealth of Virginia have had a policy of “No Net Loss” of wetlands.  This policy directs national and state law to protect wetlands acreage and the environmental functions performed by wetlands.  The goal of No Net Loss was set when governments finally recognized the essential functions performed by wetlands, functions severely degraded by the extensive loss of wetlands to human settlement and land development. 

Sincere efforts by federal, state and local policymakers, regulatory staff and scientific advisory personnel have since managed to slow the rate of wetlands destruction, both in the Nation and in the Chesapeake Bay watershed.  However, wetlands loss is still a major problem.  In Virginia, which contains 40% of the wetlands in the Chesapeake Bay watershed, No Net Loss is an illusory goal at best.  Its achievement is thwarted by many factors, ranging from poor understanding of the values of wetlands by the citizenry to a regulatory system full of loopholes and inadequate resources devoted to understanding and protecting wetlands functions.  This white paper focuses on systemic problems in the regulatory system that prevent achievement of No Net Loss of wetlands acreage and function in Virginia.

Wetlands of all kinds continue to be destroyed and degraded.  There has been a documented net /permitted/ loss of 111 acres of tidal wetlands in Virginia from 1993 – 2004 due to the exemption of small impacts (less than 1,000 square feet) from mitigation requirements.. The Citizens Wetlands Advisory Committee reported in 1999 that hundreds of non-tidal wetlands are lost to development every year in Virginia. VIMS reports that in the years 2000 to 2002, Virginia lost over 32 acres of tidal vegetated wetlands, nearly 142 acres of tidal non-vegetated wetlands, and about 8055 acres of subaqueous habitat.   From 1994 to 2004, the tidal vegetated wetland loss was 111 acres.  These are the known losses coming through the regulatory program.  Many more acres of wetlands loss and degradation go unaccounted for behind the hedges and fences of private homes, farms, and businesses.  And we have no idea what the associated functional losses are because government has not established a baseline for ecological functions of wetlands within specific watersheds.

Every American president and Virginia governor over the last 15 years has endorsed a No Net Loss policy for wetlands acreage and function.  But Virginia cannot meet this goal with its current wetlands resource planning and regulatory environment.   This white paper shows the need for regulatory reform and a comprehensive wetlands resource management strategy. Otherwise, “No Net Loss” will be only a dream.

The summary findings of this review are:

• Regulatory agencies are unwilling to insist on avoidance of wetlands losses, instead settling for modest minimization and compensation schemes that allow an easy “buy down” of impacts.
• Regulatory agencies routinely allow wetlands damage without considering the “cumulative impact” of their decisions within watersheds and the state.
• Loopholes in regulations allow many small exempted and uncompensated impacts to add up to significant losses.
• Chronically inadequate resources for scientific study of the Commonwealth’s wetlands inventory, statewide and within specific watersheds, leave policymakers and regulators working “in the dark.”
• Shortage of staff and staff resources, at state and federal regulatory agencies, undermine full and fair enforcement of wetlands laws and regulations.

No Net Loss – A Pledge Unfulfilled

The term, “No Net Loss,” became a rallying cry in the late 1980’s as national inventories showed large losses of wetlands along with their valuable ecological functions.  At the federal level, President Bush first used the term in 1988, when he set “no net loss” as a national policy.  The goal was made law in 1990 and defined to mean no net loss of both wetland area and function.  The Chesapeake Bay Program in issuing its 1988 Wetlands Policy Implementation Plan used the term in a legal/regulatory context, and Virginia was a signatory to that agreement.  Virginia later enacted No Net Loss of acreage and function a goal of its State Water Control Law.

Wetlands perform a number of essential ecological functions such as water pollution control and nutrient cycling, flood control and groundwater recharge, sediment and erosion control, and fish and wildlife habitat. Commercially important Chesapeake Bay species are dependent on wetlands and adjacent shallow water habitats. In addition, wetlands provide numerous recreational opportunities such as canoeing, bird watching fishing, and waterfowl hunting.  When too many wetlands are destroyed or impaired in a given watershed, some of these functions can no longer be performed.  Avoiding this environmental degradation is the reason for our federal and state No Net Loss policy.  In the longer run, there will need to be a net gain in wetlands acreage and function to restore the health of the Chesapeake Bay.

In thirteen years of trying Virginia has not been able to achieve No Net Loss of wetlands.  The Virginia Institute of Marine Science (VIMS) estimates, in just the years 2000 to 2002, Virginia lost over 32 acres of tidal vegetated wetlands, nearly 142 acres of tidal non-vegetated wetlands, and about 8055 acres of subaqueous habitat.  Hundreds of acres of non-tidal wetlands are lost to development every year. While compensation is required for much of this loss of acreage, we know nothing about the functional losses in a given watershed.

Even though these losses are smaller that before the era of wetlands protection laws, they are increasingly significant now for three reasons.  First, we have already lost 42% of the wetlands that were here when the first settlers came to Virginia, making the loss of every remaining wetland even more serious.  Second, with rising sea level due to global warming, many acres of wetlands are becoming inundated and destroyed.  Shoreline hardening and coastal development in most of Virginia’s watersheds prevent the creation of replacement wetlands shoreward (as naturally occurs with rising sea levels), making the loss of a single acre of wetlands under the regulatory system even more threatening to the viability of the ecosystem.  Finally, the demand of a growing and increasingly affluent population for waterfront and countryside homes is increasing pressure on this diminishing natural resource.

Wetlands acreage can readily be ascertained.  The National Wetlands Inventory is nearing completion and VIMS has compiled an extensive database of Virginia’s tidal wetlands.  However, there is little understanding and agreement in the scientific and regulatory communities about how to assess and measure functional values in nature. Even if one could devise practical wetlands functional evaluations, there are insufficient resources to perform such evaluations on all watersheds.  Thus, the regulatory system measures wetlands loss in acres and uses acreage to set compensation schemes used to mitigate permitted wetlands losses. Figuring functional equivalence is little more than a guessing game without more knowledge and resources.  Yet in the end it is the No Net Loss of wetlands function that we seek to preserve..

Why do we continue to lose wetlands acreage and function despite having No Net Loss embedded in federal and state policy and law for more than a decade?  Two central reasons are problems with mitigation strategies for wetlands losses, and the failure of the regulatory system to consider the cumulative impacts of individual permit decisions.

Mitigation and Compensation - Maintaining the Illusion of Conservation

 
Federal and State law and regulations lay out a sequential strategy for protecting wetlands.  First, anyone seeking a permit under federal or state law must seek to avoid any negative impact on wetland acreage and function.  Then, for any “unavoidable” wetlands impacts, the applicant must minimize those impacts by, for example, scaling the project down and using best management practices.  Finally, for adverse impacts on wetlands that cannot be avoided or minimized, the applicant is required to compensate for them, for example by restoring wetlands or by paying into a wetlands compensation fund.  Federal and state laws require that this sequencing process  - avoidance, minimization, and compensation – be followed in all wetlands permitting actions.  In practice, too little emphasis is given to avoiding wetlands impacts, minimization is often nominal and compensation is becoming too convenient, when it is required at all.

Compensation is “the least preferred option” according to the Citizens Wetlands Advisory Committee report of 1999. They also noted that avoidance is the “least costly and most effective method of sustaining the benefits society derives from these [wetland] systems.”  But if compensation should be the last resort from an ecological standpoint, it is the easiest approach from a political standpoint.  Compensation lets permit applicants carry out their projects while allowing regulators to tell the public that something is being done to protect the environment.  With cash compensation, in-lieu fees, and wetlands banks, the expense of wetlands mitigation simply becomes a cost of doing business as permit applicants seek to “buy down” the impact of their project.

In the early days of the Clean Water Act, US Army Corps of Engineers (USACE) routinely used in-lieu fees to allow applicants to “buy-down” the impact of their projects and gain regulatory approval. In 1990, the US Environmental Protection Agency (EPA) and the USACE signed a Memorandum of Agreement (MOA) in which the USACE agreed to adhere to the "sequencing process" requiring that they, “…first makes a determination that potential impacts have been avoided to the maximum extent practicable; remaining unavoidable impacts will then be mitigated to the extent appropriate and practicable by requiring steps to minimize impacts and, finally, compensate for aquatic resource values.”

However, soon after this agreement, the Corps felt political pressure against strict adherence to sequencing and a series of USACE decisions in the mid-1990’s systematically weakened the sequencing process.  The permit approval process became increasingly dependant upon compensatory mitigation to achieve No Net Loss, rather than avoidance and minimization.  But compensatory mitigation has not been working well according to two major program reviews:  a 1994 study by the U.S. Fish and Wildlife Service and the EPA, a 2001 General Accounting Office (GAO) investigation, and a 2005 Government Accountability Office (GA0) study.

In June 2001, the National Research Council (NRC) issued a report that evaluated the nation’s progress towards the goal of No Net Loss of wetland functions and concluded that it is not being met.  The NRC said the reasons for this failure are due in part to a lack of adequate evaluation and compensation for functional losses and failure to implement, enforce, and monitor compensatory mitigation for wetland losses.  The report recommended changes to USACE policies regarding mitigation such as taking a watershed approach, using science-based assessments of wetlands functions, and obtaining adequate functional replacement through compensatory mitigation.  It further recommended the establishment of a database to track changes in wetlands and the creation of watershed organizations to monitor and manage public wetlands.  The NRC was recommending that a strategic approach replace the tactical approach currently used.

The Corps of Engineers responded to the NRC study with Regulatory Guidance Letter (RGL) 02-2 redefining their approach to determining both when compensatory mitigation would be required and in what form it would be implemented.  The RGL embraces the need for functional compensation rather than an acreage based compensation. However it makes no provision for evaluating baseline watershed functional values, so regulators will still not know which functions are most valuable or most threatened within a watershed.   Strengthened monitoring requirements are proposed, for 5-10 years following the permit issuance.  But the Corps does not routinely require financial assurance of successful compensation outcomes.

The new RGL moves away from requiring in-kind compensation and same-watershed compensation, if functional gains and cost/availability of other options dictate.  However, there is no phase-in of these provisions or contingencies making them effective only when watershed functional assessments have been completed.  The result has been out-of-kind compensation for destruction and degradation of aquatic resources with no scientifically valid assessment of the functional needs of the watershed.  The most specious cases involve construction of oyster reefs for vegetated wetlands losses.  The RGL says nothing to strengthen the most valuable steps of the sequencing process, the use of avoidance and minimization of functional losses.  Nor does it address the failure to meaningfully consider cumulative losses.

More recent federal and state efforts to address wetlands mitigation and compensation appear to be “double-edged swords.”  A National Wetlands Mitigation Action Plan was issued by the Bush administration in December 2002.  The primary purpose of this action plan is “to further achievement of the goal of no net loss by undertaking a series of actions to improve the ecological performance and results of wetlands compensatory mitigation under the Clean Water Act and related programs.”  The plan calls for improvements in the way compensatory mitigation is done.  But by emphasizing in-lieu fee compensation, the emphasis on avoidance and minimization is diminished, effectively returning to the pre-1990 practice of “buying down” project impacts.

The EPA and the USACE have also initiated a regulatory revision on compensatory mitigation that is nearing the completion of its public comment period.   This regulation will move the agencies away from “in-kind” and “on-site” mitigation preferences toward a watershed compensation focus with more emphasis on wetlands banks, phasing out in-lieu fee programs in five years.  The rule also begins to implement RGL 02-2 in its use of functional equivalency rather than acreage-based compensation.

On the state level, small, incremental losses (less than 1,000 square feet of tidal wetlands) have been exempted from regulation in law and in practice, seen as having too small an impact to require regulatory action.  But these small losses have added up, square foot by square foot, and have led to a net loss of tidal wetlands in Virginia, despite the state and federal laws to the contrary.

The Virginia Marine Resources Commission (VMRC) has revised its Wetlands Mitigation-Compensation Policy with input from the Virginia Institute of Marine Sciences and the public.  This new policy is designed to address the net loss of tidal wetlands acreage that has continued through the compensation exemptions for wetlands losses smaller than 1,000 square feet.  Local wetlands boards are implementing this new policy and its effectiveness is unknown.

Unfortunately, even a strict adherence to these provisions will not address those wetlands losses that are exempted from regulation.    Virginia’s Joint Legislative Audit and Review Committee has reported that as of 2002, nearly 90% of requests for exceptions to the Chesapeake Bay Protection Act have been granted.

Beyond the exemptions and exceptions, there are large wetlands losses that are never submitted to the regulatory process.  The size of these unregulated wetlands losses is unknown, but the Virginia Department of Environmental Quality stated that, “…losses due to unregulated activities are the main contributor to the net loss of wetlands in Virginia.” (Final Draft, Section 309 Needs Assessment, October 20, 2005)

All of the exceptions and most of the small permit losses resulting from exemptions and wetlands permits do not even require compensatory mitigation, and the unregulated losses add to that, making the achievement of No Net Loss quite impossible.

Cumulative Impacts – Death by a Thousand Cuts

Under the federal National Environmental Policy Act (NEPA), cumulative impact is:
 “The impact on the environment which results from the incremental impact of an the action when added to other past, present, and reasonably foreseeable future actions regardless of what agency (federal or non-federal) or person undertakes such other actions.” (40 CFR 1508.7)
Under Virginia’s State Water Control Law, consideration of cumulative impacts is required as part of the permitting process. The law requires that:
 ”A permit shall be issued only if the Board finds that the effect of the impact, together with other existing or proposed impacts to wetlands, will not cause or contribute to a significant impairment of state waters or fish and wildlife resources.” (Code of Virginia, Section 62.1-44.15:5)

The concern about cumulative impacts is based on the ecological reality that a natural function can withstand only so much degradation before the ecosystem’s ability to respond and repair itself collapses.  This can occur in a single, overwhelming event or, as most often happens, in a series of small events that, when aggregated, equal the force of an overwhelming event.

While current law and sound environmental practice require the consideration of cumulative impacts, in practice this is rarely done.  Regulators usually consider permit applications in isolation, without regard to other permits that have been granted in the past or are expected to be considered in the future.  And, as has been noted elsewhere, there exists no systematic inventory of the total wetlands function within a watershed, making cumulative impact analysis practically impossible, even should the regulatory system want to do so.
 
It is contradictory to take a piecemeal regulatory approach to the protection of an integrated ecosystem like a watershed.  It would seem that both science and common sense would dictate a holistic approach to wetlands conservation.  But watersheds such as that of the storied Lynnhaven River in Virginia Beach have been severely degraded over the past 30 years – since the passage of the Clean Water Act, the Wetlands Protection Act and the Chesapeake Bay Preservation Act – as permit by permit have been approved by regulatory agencies. 

Wetlands functional losses are accumulating at a rate we can only guess at. There is a sense of futility in the regulatory community about being able to do any better in the absence of more scientific knowledge and political will.  The scientific community struggles to live with severe budget cuts eroding their capacity for doing the science to answer practical questions.  Meanwhile, when it comes to wetlands, the Federal and State environmental regulatory agencies are under continued political pressure to “issue permits” at the expense of Virginia’s natural resources.

Strategy and Resources – Critical Missing Elements:  planning and funding

Virginia has lost nearly half of the 2 million acres of wetlands it had 200 years ago.  A state proud of its historical heritage is squandering its natural heritage.  As important as wetlands are to the state, Virginia has not adopted a comprehensive strategic plan for wetlands protection and conservation.  While it has comprehensive management plans for other natural resources, such as crabs and rockfish, it does not have a resource management plan for wetlands.

Virginia is attempting to manage only a small portion of its wetlands resources – those acres that come before the state agencies in permitting and other regulatory processes and those acres that are acquired by the state for preservation.  The shortcomings of  this permit-based management approach are apparent.  To quote from the Arkansas State Wetlands Strategy, “Wetland scientists, policy-makers, landowners and agency regulators agree that case-by-case wetland permitting is not an overall conservation strategy, is often inconsistent and confusing to landowners, and usually does not result in 'no net loss'.”  

Virginia’s wetlands resources are only now being fully inventoried for acreage. A state wetlands monitoring and assessment program is being developed to get at issues of function and values of wetlands but whether that effort will lead to a state wetlands management plan over its anticipated ten-year development is unknown. 

Virginia’s “Wetland Preservation Plan,” which it submitted as part of its Chesapeake 2000 commitment to the Chesapeake Bay Program, focuses on “the conservation of ecologically important wetlands in perpetuity through acquisition….” and, “does not anticipate that preservation efforts would require an appreciable change or modification in adjacent land use planning or practices.” Unlike the other signatories, Virginia does not plan to identify key wetlands to encourage preservation or acquisition.  It assumes that the regulatory system is achieving No Net Loss through compensation, which it is not.  It assumes that mitigation is being carried out, which the GAO report questions.  Without more enforcement resources, permit issuance and monitoring functions are impaired.  As a result, violators have little to fear:  if they are caught, penalties are light enough to be counted as business expenses.
 
Virginia is last in the nation in per-capita spending on natural resources.  Without a significant enhancement of resources, there is little chance that No Net Loss of wetlands acreage or function can be attained.  The 1999 Citizens Wetlands Advisory Committee found that reaching the No Net Loss goal would require 8 new regulatory staff and $1.2 million annually in additional funding.  Those funding and staffing levels were not met. 

Beyond simple No Net Loss is the need for restoring the ecological functions provided by wetlands.  In the state Tributary Strategies, prepared to meet the Chesapeake Bay 2000 goals for reduction of nutrient and sediment loading to the Bay, the state estimates that is will require 171,292 acres of wetlands to be restored at a cost of $181,185,899.
 

Recommendations

Achieving No Net Loss of wetlands is not the kind of problem that lends itself to purely voluntary solutions because of the inherent human problem of self-interest.  There is a major role for expanded education and outreach efforts to encourage people to become better environmental stewards.  Small individual actions can lead to significant improvements in the quality of our environment.  But wetlands, standing as they do where the land meets the sea, are in the way of citizens’ understandable desire to enhance their quality of life.  To achieve the goal of No Net Loss of wetlands acreage and functions in the near term will require additional actions by federal and state government.

As discussed above, we have little knowledge of the current state of this vital natural resource.  We have no information on the functional value of wetlands on a watershed basis.  Before we take any actions we need better information.
. 

Assessment of the state of Virginia’s wetlands

Audit of the State regulatory programs affecting wetlands, and the implementation of Federal programs in the state through joint permits.

Development of a statewide wetlands resource management strategy under the guidance of the Secretary of Natural Resources to meet the no net loss goal.

Increased Resources for State Regulatory and Research Agencies

References

GENERAL
Studies and Reports

            “Citizens Wetlands Advisory Committee Report,” September 1999
              (http://www.deq.state.va.us/pdf/current/wetlands.pdf)

National Academy of Sciences/National Research Council,
“Compensating for Wetland Losses Under the Clean Water Act” June 2001.
  (http://www.nap.edu/execsumm/0309074320.html) Executive Summary
              (http://www.nap.edu/books/0309074320/html/) Text of Report

General Accounting Office, “Wetlands Protection:  Assessments Needed to Determine Effectiveness of In-Lieu Mitigation,” May 2001
  (http://www.gao.gov/new.items/d01325.pdf)
Government Accountability Office, “Wetlands Protection:  Corps of Engineers Does not Have an Effective Oversight Approach to Ensure that Compensatory Mitigation is Occurring.”
(http://www.epa.gov/owow/wetlands/pdf/GAO05898.pdf)

            Chesapeake Bay 2000 Agreement
             (http://www.chesapeakebay.net/agreement.htm)

NO NET LOSS
Laws and Regulations

            Virginia State Water Control Law “No Net Loss” - Sec. 62.1-44.15.5 (16)
              (http://leg1.state.va.us/cgi-bin/legp504.exe?000+cod+62.1-44.15)

Chesapeake Bay Program Wetlands Policy Implementation Plan 1988
  (http://www.chesapeakebay.net/info/wet.cfm)

Federal Law on “No Net Loss” – 33 USC 2317

MITIGATION AND COMPENSATION
Laws and Regulations

Federal Sequencing requirements:  see Section II (C) of MOA of 1990
              (http://www.usace.army.mil/inet/functions/cw/cecwo/reg/moafe90.htm)

            USACE Wetlands Mitigation Regulatory Guidance Letter 02-2 (12/24/02)
              (http://www.usace.army.mil/inet/functions/cw/hot_topics/RGL_02-2.pdf)

Virginia State Water Control Law (Generally)
  (http://leg1.state.va.us/cgi-bin/legp504.exe?000+cod+62.1-44.2)
 
VMRC Wetlands Mitigation-Compensation Policy
              (http://ccrm.vims.edu/wetlands/handbook/compensation.pdf)

DEQ definitions at Virginia Code: 9VAC25-210-10
  (http://leg1.state.va.us/cgi-bin/legp504.exe?000+reg+9VAC25-210-10)

CUMULATIVE IMPACTS
Laws and Regulations

            Federal National Environmental Policy Act Regulations - 40 CFR 1508.7
             (http://ceq.eh.doe.gov/nepa/regs/ceq/1508.htm#1508.7)

Virginia State Water Control Law  - Cumulative Impacts - Section 62.1-44.15:5
              (http://leg1.state.va.us/cgi-bin/legp504.exe?000+cod+62.1-44.15C5)

This Report

This white paper focuses on topics that are critical to understanding Virginia’s failure to adequately protect and conserve her wetlands.  The promise of “No net loss” of wetlands acreage and function is being undercut by current implementation of the compensation and mitigation provisions of environmental law, and by the failure of the regulatory system to consider the cumulative impacts of individual permit decisions.  This white paper seeks to examine the reasons why we are not achieving “No net loss.”

The issues in this white paper have emerged from the work Wetlands Watch has been doing on individual permit applications in Hampton Roads.  The US Army Corps of Engineers, the Department of Environmental Quality, the Virginia Marine Resources Commission and local wetlands boards are all involved in issuing permits for wetlands-disturbing activities. The public assumes that they are parts of a rational system that is successfully protecting the state’s wetlands resources.  But, Wetlands Watch has found that this is not the case, as we have detailed here. 

Who we Are

Wetlands Watch is a non-profit organization, based in Hampton Roads, that is working to protect and conserve the wetlands of Virginia by educating the public and governmental leaders, monitoring and commenting on wetlands permit applications, and advocating for better regulatory policies and procedures.
(Updated, August 2006)