(d) As shown in the chart in subdivision (e) of this section, a determination of compatibility and a weighing of need against benefits lost are the criteria for decisionmaking. The three tests for compatibility must be used for all activities listed in the minimum land use regulations and section 663.4(d) of this Part that carry a compatibility category of “C” or “N” as defined in Part 665 of this Title and in section 663.4(d). Activities and land uses not listed in the minimum land use regulations or in the procedures table in section 663.4(d) also must be evaluated using the three-part compatibility test. Activities designated as “L” in section 663.4(d) have been determined under the minimum land use regulations to be compatible and no further compatibility or weighing analysis need be performed before issuance of a letter of permission as defined in section 663.2(r). Activities identified as “E” are exempt and do not require either a permit or letter of permission. Exempt activities are included in section 663.4(d) to assist the department and applicants in determining regulatory procedures.

1. (1) When the three tests of compatibility given in the chart in subdivision (e) of this section are met, no other weighing standards need apply, regardless of the wetland's classification, and a permit, with or without conditions, may be issued for the proposed activity. In conjunction with the three-part test, the statewide minimum land use regulations or a local variance from them that has been duly adopted according to the provisions of Part 665 of this Title are the basis for determinations of compatibility.
2. (2) If the proposed activity cannot meet all three tests of compatibility or if it is identified as “X,” incompatible, then, for a permit to be issued, the activity must meet each of the weighing standards listed in the chart in subdivision (e) of this section for the classification of the wetland that would be affected by the proposed activity.

3. (3) If it is determined that a written request for a letter of permission exceeds the thresholds identified in the items listed in sections 665.7(g) and 663.4(d), a letter of permission may not be issued. Instead the proposed action must be tested for compatibility using the three-part test in subdivision (e) of this section and a permit application must be processed pursuant to the act and this Part. If there is question or doubt as to whether any proposed activity being reviewed for compatibility with the three-part test in subdivision (e) meets any of the three parts of the test, the action must be treated as incompatible and the activity weighed according to the standards identified in subdivision (e).

   (e) Standards for Permit issuance.

4. (1) Compatibility. These three tests are to be used to determine the compatibility of all activities identified as P(C) or P(N) in section 663.4(d) of this Part or for any actions not listed in section 663.4(d). If all three of the following tests of compatibility are met, no other weighing standards need be met, regardless of the wetland class. A permit, with or without conditions, may be issued for a proposed activity on a wetland of any class or in a wetland's adjacent area, if it is determined that the activity (i) would be compatible with preservation, protection and conservation of the wetland and its benefits, and (ii) would result in no more than insubstantial degradation to, or loss of, any part of the wetland, and (iii) would be compatible with public health and welfare.

5. (2) Weighing. These weighing standards must be applied to all activities identified as P(X) in section 663.4(d) of this Part, and to all those activities listed as P(C) of (N) in section 663.4(d) or not listed in section 663.4(d) that do not meet the three tests of compatibility listed in section 663.5(e)(1). If the proposed activity is listed as (X) or cannot meet the three tests for compatibiltiy, then a permit may be issued only if the proposed activity meets each of the standards below for the class of wetland affected:

   For wetland Classes I, II, III and IV, the proposed activity must be compatible with the public health and welfare, be the only practible alternative that could accomplish the applicant's objectives and have no practicable alternative on a site that is not a freshwater wetland or adjacent area.

   For wetland Classes I, II, and III, the proposed activity must minimize degradation to, or loss of, any part of the wetland or is adjacent area and must minimize any adverse impacts on the functions and benefits that the wetland provides.

   For wetland Class IV, the proposed activity must make a reasonable effort to minimize degradation to, or loss of, any part of the wetland or its adjacent area.

   Class I wetlands	Class II wetlands	Class III wetlands	Class IV Wetlands
   Class I wetlands provide the most critical of the State's wetland benefits, reduction of which is acceptable only in the most unusual circumstances. A permit shall be issued only if it is determined that the proposed activity satisfies a compelling economic or social need that clearly and substantially outweighs the loss of or detriment to the benefit(s) of the Class I wetland.	Class II wetlands provide important wetland benefits, the loss of which is acceptable only in very limited circumstances. A permit shall be issued only if it is determined that the proposed activity satisfies a pressing economic or social need that clearly outweighs the loss of or detriment to the benefit(s) of the Class II wetland.	Class III wetlands supply wetland benefits, the loss of which is acceptable only after the exercise of caution and discernment. A permit shall be issued only if it is determined that the proposed activity satisfies an economic or social need that outweighs the loss of or detriment to the benefit(s) of the Class III wetland.	Class IV wetlands provide some wildlife and open space benefits and may provide other benefits cited in the act. Therefore, wanton or uncontrolled degradation or loss of Class IV wetlands is unacceptable. A permit shall be issued for a proposed activity in a Class IV wetland only if it is determined that the activity would be the only practicable alternative which could accomplish the applicant's objectives.

   (f) Interpretation of some terms used in subdivision (e) of this section.

6. (1) Public health and welfare. Those concerns include:

   1. (i) consistency of the proposed activity with physical health, if necessary, as judged by health professionals; and

   2. (ii) consistency with related Federal, State and local laws, regulations and policies.

      If a proposed activity is inconsistent with physical health, or with any related laws, regulations and government policies, this would weigh against issuing a permit under the act until such conditions were met that would make the proposed activity consistent with these provisions.

7. (2) Only practicable alternative. A proposed activity is the only practicable alternative if no other is physically or economically feasible. This does not, however, mean that the most profitable or least costly alternative is the only feasible one nor that the least profitable or more costly alternative is the only feasible one.
8. (3) Economic and social need. When the economic and social need for the proposed activity is considered, the economic and social burden that would be imposed on the public shall be considered. The public economic and social burden may include: associated services, such as sewer systems, schools, and fire and police protection, necessitated by the proposed activity; prevention of contamination, flood or other damage to the proposed development on the wetland by methods such as channelization, alteration of land, alteration of water flow, draining or construction of dams, dikes or levees; and/or services and repairs, such as medical care, pumping, cleaning, dredging and emergency assistance as a result of contamination, flooding or other damage to the proposed development on the wetland. Nothing in this section precludes the consideration of any issue which must be addressed under the State Environmental Quality Review Act (article 8 of the Environmental Conservation Law).

9. (4) Specific Class I standards.

   1. (i) “. . . reduction of which is acceptable only in unusual circumstances.” Permits for the vast majority of activities that could not avoid reducing a benefit provided by a Class I wetland would not be approved. The word reduction means that this applies not just to the loss of any benefit, but to the partial loss or reduction of a benefit.
   2. (ii) “. . . satisfies a compelling economic or social need. . .” The word compelling implies that the proposed activity carries with it not merely a sense of desirability or urgency, but of actual necessity; that the proposed activity must be done; that it is unavoidable.
   3. (iii) “. . . clearly and substantially outweighs. . .” Clearly means that the need for the proposed activity must outweigh the loss of or detriment to the benefits in a way that is beyond serious debate. Substantially carries this further, in that not only must the need clearly outweigh the loss or detriment, but the margin of outweighing itself must be large or significant.

10. (5) Specific Class II standards.

    1. (i) “. . . loss of which is acceptable only in limited circumstances.” Permits for most activities that could not avoid causing a loss of or detriment to a benefit provided by a Class II wetland would not be approved.
    2. (ii) “. . . satisfies a pressing economic or social need. . .” Pressing should suggest that for the need to outweigh the loss of or detriment to a benefit of a Class II wetland, it must be urgent and intense, though it does not have to be necessary or unavoidable.
    3. (iii) “. . . clearly outweighs. . .” means that the need for the proposed activity must outweigh the loss of or detriment to the benefits in a way that is beyond serious debate, although there does not have to be a large or significant margin between the need and the loss.

11. (6) Specific Class III standards.

    1. (i) “. . . loss of which is acceptable only after the exercise of caution and discernment.” This means that permits could be issued for activities that could not avoid loss of or detriment to a benefit provided by a Class III wetland but only after careful evaluation.
    2. (ii) “. . . satisfies an economic or social need. . .” The need for the activity is real and undeniable, though it does not have to be necessary, unavoidable, urgent or intense.
    3. (iii) “. . . outweighs. . .” means that the need for the activity must outweigh the loss of or detriment to a benefit, but the balance in favor of the activity does not have to be beyond serious debate.

12. (7) Class IV standards. Permit issuance cannot be indiscriminate or unexamined for Class IV wetlands and still require consideration of loss of wetland values.

    (g) Mitigation of impacts.

13. (1) The applicant may suggest a proposal to enhance the existing benefits provided by a wetland or to create and maintain new wetland benefits in order to increase the likelihood that a proposed activity will meet the applicable standards for permit issuance. Such a proposal must meet the following provisions:

    1. (i) the mitigation must occur on or in the immediate vicinity of the site of the proposed project;
    2. (ii) the area affected by the proposed mitigation must be regulated by the act and this Part after mitigative measures are completed; and
    3. (iii) the mitigation must provide substantially the same or more benefits that will be lost through the proposed activity.
14. (2) Any mitigation considered as part of a permit granted pursuant to this Part will be included as a condition on such permit and must be complied with as mandatory if other work is started or completed.
15. (3) If mitigation proposed does not totally compensate for lost values or benefits that would be lost by the proposed activity, then the net loss of benefits must be assessed. Any unmitigated net loss of wetland values must then be weighed according to standards contained in section 663.5 of this Part.

(h) A duly filed notice in writing that the State or any agency or political subdivision of the State is in the process of acquiring any freshwater wetland by negotiation or condemnation authorizes, but does not require, denial of any permit, but only if both the affected landowner and the local government have been so notified.

1. (1) The written notice must include an indication that the acquisition process has commenced, such as that an appraisal of the property has been prepared or is in the process of being prepared.
2. (2) If the landowner receives no offer for the property within one year of the permit denial, this ban to the permit lapses. If its negotiations with the applicant are broken off, the State or any agency or political subdivision must, within six months of the end of negotiation, either issue its findings and determination to acquire the property pursuant to section 204 of the Eminent Domain Procedure Law or issue a determination to acquire the property without public hearing pursuant to section 206 of the General Domain Procedure Law, or this ban to the permit lapses.