fill permitting and compensatory mitigation should promote compensatory mitigation sites that meet ecological performance criteria and that result in a matrix of protected, restored, and created wetlands in the watershed that contribute to the physical, chemical, and biological integrity of the waters of each watershed.

Wetland management programs should seek to achieve three specific outcomes by ensuring that the following conditions are met:

• Individual compensatory mitigation sites should be designed and constructed to maximize the likelihood that they will make an ongoing ecological contribution to the watershed, and this contribution is specified in advance.

• Compensatory mitigation (i.e., wetlands created or restored to compensate for wetland damage) should be in place concurrent with, and preferably before, permitted activity.

• To ensure the replacement of lost wetlands functions, there should be effective legal and financial assurances for long-term site sustainability of all compensatory wetland projects.

Achieving these results will require modifications to the regulatory program and compensatory mitigation mechanisms described in Chapters 4 and 5. In Chapter 5, permittee-responsible mitigation, on-site, offsite, or at a single-user mitigation bank, was distinguished from third-party mitigation, where some party other than the permit recipient assumes responsibility for the mitigation. This chapter describes institutional reforms governing compensatory mitigation that could move the nation toward the outcomes identified above.

The committee proposes these reforms as a suite of integrated recommendations and urges that they be considered in their entirety and not be selectively implemented. However, for clarity of exposition, the committee first offers an overarching recommendation on the need to move wetland mitigation in the CWA Section 404 program toward a watershed focus and suggests alternative means to move in that direction. Second, because permittee-responsible mitigation will likely continue to be the prevalent form of compensatory mitigation, regulations and guidelines governing this approach should be modified to address its weaknesses. Finally, third-party compensation approaches (mitigation banks, in-lieu fee programs) may offer advantages over permittee-responsible mitigation, especially when compensating for smaller fills, but they also have weaknesses. The committee makes specific suggestions on how to build on the strengths of these compensatory mitigation mechanisms.

Finally, in making all of these recommendations, the committee recognizes that wetland permitting is a decentralized process. In this process, regulators in field offices of federal and state agencies are expected