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HB-5501, As Passed House, June 4, 2026
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SUBSTITUTE FOR
HOUSE BILL NO. 5501
A bill to amend 1994 PA 451, entitled
"Natural resources and environmental protection act,"
by amending sections 30311b and 30311d (MCL 324.30311b and
324.30311d), section 30311b as added by 2009 PA 120 and section
30311d as amended by 2013 PA 98, and by adding section 30311e.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 30311b. (1) A permit issued under this part shall is not 1
be valid for more than 5 years. 2
(2) The department may establish a reasonable time when the 3
construction, development, or use authorized under any permit 4
issued under this part is to must be completed or terminated. 5
(3) The department may impose on any a permit or authorization 6
under a general permit under this part conditions designed to do 7
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any of the following: 1
(a) Remove or reduce an impairment to wetland benefits, as set 2
forth in section 30302, that would otherwise result from the 3
project. 4
(b) Improve the water quality that would otherwise result from 5
the project. 6
(c) Remove or reduce the effect of a discharge of fill 7
material. 8
(4) Any condition imposed on a permit or authorization under a 9
general permit under subsection (3) that is intended to mitigate 10
impacts on wetlands must comply with section 30311e. 11
(5) (4) The department may impose a condition on an 12
authorization under a general permit under subsection (3) only 13
after consultation with the applicant or applicant's agent. 14
Sec. 30311d. (1) The department may impose as a condition on 15
any a permit, other than a general permit, under this part a 16
requirement for compensatory wetland mitigation. The department may 17
approve 1 or more of the following methods of compensatory wetland 18
mitigation: 19
(a) The acquisition of approved credits from a wetland 20
mitigation bank. The department shall not require a permit 21
applicant to provide compensatory wetland mitigation under 22
subdivision (b), (c), or (d) if the applicant prefers and qualifies 23
to use approved credits from the wetland mitigation bank to provide 24
required compensatory wetland mitigation under this subdivision. 25
(b) The restoration of previously existing wetland. The 26
restoration of previously existing wetland is preferred over the 27
creation of new wetland where none previously existed. 28
(c) The creation of new wetlands, if the permit applicant 29
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demonstrates that ecological conditions necessary for establishment 1
of a self-sustaining wetland ecosystem exist or will be created. 2
(d) The preservation of exceptional wetlands. 3
(2) If compensatory wetland mitigation under subsection 4
(1)(b), (c), or (d) is required, a permit applicant shall submit a 5
mitigation plan to the department for approval. In approving a 6
compensatory mitigation plan, the The department shall consider how 7
the location and type of wetland mitigation supports the 8
sustainability or improvement of aquatic resources in the watershed 9
where the activity is permitted when approving a compensatory 10
mitigation plan. The permit applicant shall provide for permanent 11
protection of the wetland mitigation site. The department may 12
accept a conservation easement to protect wetland mitigation and 13
associated upland. 14
(3) If a permittee carries out compensatory wetland mitigation 15
under subsection (1)(b), (c), or (d) in cooperation with public 16
agencies, private organizations, or other parties, the permittee 17
remains responsible for the compensatory wetland mitigation to the 18
extent otherwise provided by law. 19
(4) The Subject to section 30311e(3), the department may 20
require financial assurance to ensure that compensatory wetland 21
mitigation is accomplished as specified. To ensure that wetland 22
benefits are replaced by compensatory wetland mitigation, the 23
department may release financial assurance only after the permit 24
applicant or mitigation bank sponsor has completed monitoring of 25
the mitigation site and demonstrated compliance with performance 26
standards in accordance with a schedule in the permit or mitigation 27
banking agreement. 28
(5) If compensatory wetland mitigation is required, in setting 29
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the mitigation ratio the department shall consider the method of 1
compensatory mitigation, the likelihood of success, differences 2
between the functions lost at the impacted site and the functions 3
expected to be produced by the compensatory mitigation project, 4
temporary losses of aquatic resource functions, the difficulty of 5
restoring or establishing the desired aquatic resource type and 6
functions, and the distance between the affected aquatic resource 7
and the mitigation site. 8
(6) For agricultural activities, a permit applicant may 9
provide for protection and restoration of the impacted site under a 10
conservation easement with the department as part of mitigation 11
requirements. A permit applicant may make a payment into the 12
stewardship fund, if established under subsection (7), as part of 13
mitigation requirements, as an alternative to providing financial 14
assurances required under subsection (4). 15
(7) The department may establish a stewardship fund in the 16
state treasury. The state treasurer may receive money or other 17
assets from any source for deposit into the fund. The state 18
treasurer shall direct the investment of the fund . The state 19
treasurer shall and credit to the fund interest and earnings from 20
fund investments. Money in the fund at the close of the fiscal year 21
shall remain remains in the fund and shall does not lapse to the 22
general fund. The department shall be is the administrator of the 23
fund for auditing purposes. The department shall expend money from 24
the fund, upon on appropriation, only to develop mitigation for 25
impacted sites or as an alternative to financial assurance required 26
under subsection (4). 27
(8) By 1 year after the effective date of the amendatory act 28
that added this subsection, the department shall submit to the 29
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office of regulatory reform for informal review revised 1
administrative The department shall promulgate rules on mitigation 2
in accordance with the administrative procedures act of 1969, 1969 3
PA 306, MCL 24.201 to 24.328, that do all of the following: 4
(a) Create an expedited permit review process if an applicant 5
submits preliminary designs, proposed adaptive monitoring 6
requirements, and proof of financial assurance, if applicable. 7
(b) Regarding mitigation, all of the following: 8
(i) (a) Reduce the preference for Except in cases where 9
transportation infrastructure is present, promote on-site 10
mitigation and encourage internal reconfiguration of wetlands 11
within development parcels. 12
(ii) (b) Allow flexibility in mitigation ratios for uses of 13
wetlands, which must include offering a 1:1 ratio for wetlands 14
relocated within the same development parcel if ecological function 15
of the development parcel is maintained or improved. 16
(iii) (c) Allow a reduction of mitigation ratios when approved 17
credits from a wetland mitigation bank are used. 18
(iv) (d) Allow consideration of additional ecologically 19
beneficial features. 20
(v) (e) Allow any excess mitigation for any project to be 21
credited to another project at a later date. 22
(vi) Provide design incentives, including, but not limited to, 23
density bonuses and open-space credits. 24
(9) The department shall submit revised administrative rules 25
that encourage the development of wetland mitigation banks to the 26
office of regulatory reform for informal review within 1 year after 27
the effective date of the amendatory act that added this 28
subsection. The rules shall do all of the following: 29
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(vii) (a) Enlarge mitigation bank service areas. However, a A 1
mitigation bank service area shall must be located within the same 2
watershed or ecoregion as the permitted project or activity, ensure 3
no net loss of the wetland resources, and protect the predominant 4
wetland functions of the service area. The department shall 5
consider enlarging the size of ecoregions for mitigation bank 6
service areas. 7
(viii) (b) Allow earlier release of credits if the benefits of a 8
mitigation bank have been properly established and the credits are 9
revocable or covered by a financial assurance. 10
(ix) (c) Allow wetland preservation to be used in areas where 11
wetland restoration opportunities do not exist, if an unacceptable 12
disruption of the aquatic resources will not result. 13
(x) Allow developers to buy temporary mitigation credits to 14
offset time delays while permittee-responsible mitigation is 15
completed. Credits can be retired or reassigned once the site is 16
built and certified. As used in this subparagraph, "temporary 17
mitigation credits" means credits generated by an approved wetland 18
mitigation bank or other department-approved source that may be 19
used to offset wetland impacts for a limited period of time. 20
(xi) Allow off-site mitigation in cases where transportation 21
infrastructure is present. 22
(9) (10) The department shall establish a wetland mitigation 23
bank funding program under part 52 that provides grants and loans 24
to eligible municipalities for the purposes of establishing 25
mitigation banks. 26
(10) Not later than 1 year after the effective date of the 27
amendatory act that added this sentence, the department shall 28
develop guidelines that describe the best practices for on-site 29
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mitigation and internal reconfiguration of wetlands within 1
development parcels. The guidelines must include templates for 2
monitoring plans and site design proposals. The department shall 3
make the guidelines available on the department's website. 4
(11) In addition to the requirements under this section, 5
compensatory wetland mitigation must comply with section 30311e. 6
(12) As used in this section, "transportation infrastructure" 7
means roads, bridges, or aeronautics infrastructure projects. 8
Sec. 30311e. (1) Subject to subsection (2), mitigation 9
activities must be completed concurrently with other permitted 10
activities, unless the department and the permittee agree to an 11
alternative schedule. 12
(2) Mitigation activities may occur on a time-adjusted 13
schedule for seasonal hydrology or construction conditions or in 14
stages based on the development phasing plans of other permitted 15
activities. If a permittee opts to complete mitigation activities 16
on a time-adjusted schedule, the permittee shall provide the 17
department with a justification of the need for the time-adjusted 18
schedule and a start date for the mitigation activities. If a 19
permittee opts to complete mitigation activities in stages, the 20
permittee shall include in the development phasing plan performance 21
deadlines and reporting requirements for each stage of mitigation 22
activity. 23
(3) Except as otherwise provided in this subsection, the 24
department may require financial assurance to ensure that 25
mitigation activities are accomplished as specified. Financial 26
assurance is required for high-risk mitigation activities and 27
delayed mitigation activities, as described in subsection (4). 28
Financial assurance is not required for the following mitigation 29
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activities: 1
(a) On a site that is 0.25 acres or less in size. 2
(b) That occur on the same site as the permitted activities. 3
(4) If the department and the permittee agree to an 4
alternative schedule under subsection (1) that delays mitigation 5
activities, the department shall require the permittee to provide 6
financial assurance in the form of a bond in an amount equal to the 7
estimated cost of completing the remaining mitigation activities, 8
including monitoring and corrective actions, as determined by the 9
department and based on a third-party cost estimate. 10
(5) As used in this section: 11
(a) "Development phasing plans" means a written, site-specific 12
plan submitted as part of a permit application that includes the 13
following information: 14
(i) The identity of the discrete stages of construction or land 15
development over time, including the sequencing of site 16
disturbance, infrastructure installation, and associated mitigation 17
activities. 18
(ii) A demonstration of how wetland mitigation will be 19
implemented, monitored, and completed in coordination with each 20
development phase. 21
(b) "High-risk mitigation activities" means types of 22
mitigation activity that have an elevated likelihood of failure to 23
achieve required wetland performance standards due to factors 24
including, but not limited to, complex hydrology manipulation, 25
reliance on engineered water control structures, use of novel or 26
experimental design approaches, limited site accessibility for 27
long-term management, or implementation in areas with uncertain 28
soil, groundwater, or watershed conditions. 29
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Final Page
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(c) "Mitigation activities" means activities performed to 1
avoid, minimize, rectify, reduce, or compensate for impacts to 2
wetlands, including, but not limited to, wetland restoration, 3
creation, enhancement, preservation, relocation, internal 4
reconfiguration within a development parcel, monitoring, 5
maintenance, and adaptive management, as required by a permit or 6
authorization issued under this part. 7