Signals mixed on wetlands regulation

Ask any developer or municipal official to identify the source of delay and frustration with completing an important development project, and the issue of wetlands permits will be near the top of the list. Lengthy permitting procedures, complex regulations and endless negotiation over compensation for affected wetlands have too often overwhelmed the process. This year brought important developments that portend to streamline and clarify state wetlands requirements while leaving federal regulation more uncertain.

The U.S. Supreme Court’s anticipated decisions in the consolidated cases of U.S. v. Rappanos and Carabell v. U.S. Army Corps of Engineers handed down this summer succeeded in creating more unpredictability in federal wetlands permitting than in resolving the longstanding dispute over the extent of federal jurisdiction over wetlands under the Clean Water Act.

The court issued a fragmented decision in which four members (a plurality, in legal parlance) found that the federal government could exercise jurisdiction over wetlands that were adjacent to navigable waters as long as there was a “continuous surface connection” to the adjacent waters.

A fifth member of the court issued an opinion that agreed with the plurality’s decision to remand the case for more fact-finding, but expressed the view that federal jurisdiction should not obtain unless the wetlands “significantly affect the chemical, physical, and biological integrity” of a traditionally navigable water, a so-called “significant nexus.”

The effects of the Rappanos/Carabell decisions in New Hampshire, however, will be limited to projects where wetlands impacts are in excess of three acres or where the Army Corps has required an individual federal permit for the development. Projects with impacts to wetlands of less than three acres will generally continue to be reviewed and permitted by the state Department of Environmental Services.

In the meantime, the Army Corps and U.S. Environmental Protection Agency have announced that the agencies will shortly issue new guidance on how they will implement the Rappanos/Carabell decisions.

Contrary to the fact-intensive, case-by-case approach for federal approvals, the state DES is undertaking initiatives that that will clarify state wetlands requirements that are environmentally friendly.

Among the most important of these initiatives is the “in-lieu fee” rulemaking that the department has previewed with stakeholders and will likely present to the Legislature early next year.

A constant obstacle to gaining wetlands approvals is the need to compensate for wetlands that are filled in or reduced by the development. To date, wetlands mitigation was largely satisfied only through the provision of new or restored wetlands or by protecting uplands that surround important wetlands areas or habitats. All of these methods often required the developer or owner to purchase property near the impacted wetlands — not always as easy task.

The “in-lieu fee” program helps overcome this potential roadblock. Senate Bill 140, which took effect in August, allows DES to accept monetary payments in lieu of other forms of compensatory mitigation for wetlands for certain projects. The bill creates a separate non-lapsing fund called the Aquatic Resource Mitigation Fund, allowing DES to receive payments from wetlands permittees and to pay for wetlands creation or restoration, stream restoration, preservation of upland areas adjacent to wetlands and the monitoring and maintenance of these areas.

Although the new program will initially be applied to projects with wetlands impacts of less than one acre and larger public roadway and utility projects, it represents an important turning point in the state wetlands program.

The prospective administrative rules prepared by DES, which will be incorporated into the agency’s existing wetlands mitigation rules at Env-Wt 800, establish the price of the in-lieu fee at $65,000 per acre of wetland created, plus an annual rate of simple interest and a 5 percent administrative fee.

An applicant’s request to pay the fee rather than provide mitigation will be accepted by DES if the project impacts are less than one acre and mitigation by the applicant in the same watershed as the project is not practicable.

The “in-lieu fee” program will not resolve all problems with state wetlands permitting. But it will provide individuals and developers with an important tool to facilitate small private projects and larger transportation and public utility projects.

In the meantime, the federal government’s reach over wetlands continues to be evaluated on a case-by-case basis.

Jeffrey A. Meyers, a former New Hampshire assistant attorney general, is a partner with the Manchester-based law firm of Nelson, Kinder, Mosseau & Saturley.