Over the last decade, the concept of mitigation banking has gained traction across the country with credit purchases from mitigation banks increasing in popularity. This increase in popularity is two-fold. First and most important, mitigation banking provides a streamlined and cost-effective mechanism for permittees to meet Section 404 and 401 of the Clean Water Act (CWA) and state and local compensatory mitigation requirements. Additionally, as established under the 2008 Compensatory Mitigation Rule, the purchase of bank credits has become the preferred mitigation method by the United States Environmental Protection Agency (USEPA) and the US Army Corps of Engineers (USACE) in lieu of permittee responsible mitigation and state specific In-Lieu Fee (ILF) credit purchase.
Purchasing credits from mitigation banks helps permittees accelerate and simplify CWA Section 404 permit compliance while providing several distinct advantages. First and foremost, purchasing mitigation credits delivers project budget certainty by providing predictable pricing and allowing for a one-time credit purchase. Mitigation bank credits also release you from all long-term liability.
The liability now falls on the bank sponsor; however, if you were to choose permittee-responsible (onsite or off-site) mitigation you would hold all liability and responsibility for establishment, monitoring/report submittals, financial instruments, meeting success criteria, etc. Another great benefit of a credit purchase is it can accelerate your time to permit. Since mitigation banks are already approved, there is no need for subsequent approval. Plus, your mitigation permit requirements are met at the point of sale. In fact, data from all USACE Section 404 permits across the country show that the purchase of mitigation bank credits can cut permitting time in half as compared with permittee responsible mitigation. Additionally, mitigation credits eliminate up-front costs since you only incur costs of mitigation upon credit delivery. Lastly, credit purchase can reduce your overall credit need. Under permittee responsible mitigation and ILF, your mitigation must account for temporal loss, which is the time lapse between mitigation commencement and establishment of anticipated ecological functions. When bank credits are used there is no temporal loss of aquatic resources or habitat function.