Groundwater & Wetland News: IN-LIEU FEE WETLAND MITIGATION–A Boring Name For an Exciting Idea

by Becka Downard and Diane Menuz

A photo of a beaver dam analog on a stream, with mountains in the background. This is a common stream and wetland restoration technique that could be pursued by an ILF.

A beaver dam analog installed on a stream near Strawberry Reservoir. This is a common stream and wetland restoration technique that could be pursued by an ILF.

The goal of the 1972 Clean Water Act is to restore and protect the health of all waterbodies in the United States. Though people do not often think of wetlands when they go fishing and swimming, healthy wetlands improve the water quality of nearby lakes and streams. Water becomes cleaner as it slowly flows through wetlands because pollutants settle out in the mud or are taken up by plants. Wetlands are also nurseries and nesting grounds for fish and wildlife and can decrease the impact of drought and floods by storing floodwaters like a sponge and releasing water slowly. Wetlands in good health can support many ecosystem functions like improving water quality, providing habitat, and hydrologic buffering. However, it has taken Americans a long time to recognize how important wetland functions are.  Before the 1970s more than one-half of the nation’s wetlands were destroyed to make room for farms, homes, and roads. 

One part of the Clean Water Act—the Section 404 Dredge and Fill Permit referred to here as a wetland permit—protects wetland functions by requiring anyone who negatively impacts wetlands to make up for those impacts through wetland mitigation. Wetland mitigation is the term for creating, restoring, or preserving wetlands to replace wetland functions that have been lost. The U.S. Army Corps of Engineers (USACE) approves wetland permits only after permit applicants show how they will offset their impacts.  Mitigation projects that create high-functioning wetlands are challenging because they require a lot of specific scientific knowledge, time, and money. Permittee-responsible mitigation—when a permit applicant is responsible for mitigation rather than a wetland bank or fee program—slows down the wetland permit process as applicants wrestle with layers of red tape, which is especially costly with high inflation. Even worse, many permittee-responsible mitigation projects are small and isolated “postage-stamp” wetlands that do not support many wetland functions because they do not have enough water or because weed species like cattails and Phragmites invade the mitigation wetlands. 

An In-lieu Fee (ILF) mitigation program, an alternative to permittee-responsible mitigation, has the potential to streamline wetland permitting and increase the quality of wetlands in Utah. ILF programs collect fees from permit-seekers based on how much they impact wetlands instead of (i.e., in-lieu of) permittee-responsible mitigation. The ILF collects fees from multiple permits and then can combine the fees to fund large wetland projects in places where they are more likely to succeed. USACE and a team of scientists provide feedback on and approve the ILF program’s mitigation plan and all the projects they build, which saves time for permit-seekers (who do not have to get those approvals themselves) and leads to better projects. An ILF also takes responsibility for monitoring the progress of wetland projects and long-term site management.

During the 2022 Utah Legislative Session, Representative Casey Snider proposed House Bill 118—Wetland Amendments— which asked the Utah Geological Survey to study how an ILF might work in Utah. To answer that question, we spoke with people who run ILF programs in other states as well as scientists and managers in Utah that could play a role in wetland mitigation. The first concern we addressed was whether such a program could work financially in a very dry state that does not have a lot of wetlands to impact. ILF programs in other states highlighted the opportunities for a state with a lot of public lands and the possible flexibility if fees are designed with arid lands in mind. 

Two themes emerged from interviews with Utah stakeholders. First, no one is happy with the current wetland permit process. Permit-seekers are frustrated with the lengthy approval process while they develop mitigation projects and with how uncertain they are about the outcome of their applications.  Despite their best efforts, stakeholders are often disappointed when mitigation projects result in small, weed-choked wetlands that do not provide many ecosystem functions. The second important issue is that Utah’s land and wildlife managers believe an ILF program would give them a great opportunity to learn more about wetland restoration. A single program responsible for wetland mitigation would provide a venue for experts on wildlife, hydrology, and local watershed needs to share their knowledge and develop new skills to enhance wetland restoration across Utah.

Photo of Moab's Mill Creek, with native willows growing along the shoreline.

Riparian wetlands of Moab’s Mill Creek, where invasive species removal and cattle fencing has allowed native willows to grow again.

We recommend that the State of Utah create an ILF program because it would be good for both permit-seekers and for Utah’s wetlands. An ILF would benefit the environment by creating better wetland mitigation projects and would also benefit the economy by speeding up permitting and preventing project delays. For an ILF to become a self-sustaining program it will need a program administrator who can focus on planning the program structure and getting approval from USACE. Representative Snider submitted a request for funding during the 2023 legislative general session for such a position that ultimately wasn’t funded. A final report on the ILF for Utah is due during this spring’s interim legislative session after which more support may be generated for funding for an ILF administrator through either the legislative or executive branch.

Wetlands are rare in Utah, covering less than one percent of the state, but they provide so many more services than their small area would suggest. Healthy wetlands that support many wetland functions are critical, especially because wetlands are so scarce in the West. An ILF program for Utah could make a big difference in replacing lost functions through high-quality mitigation and by improving general knowledge and collaboration regarding wetland restoration.