Wetland mitigation banking is often touted as a happy medium between the interests of private developers, natural resource managers, and environmentalists, in which developers are allowed to offset unavoidable impacts on wetlands by purchasing “credits” from a designated mitigation bank—a wetland area that is restored, created, or preserved, then set aside to compensate for future impacts on wetlands due to development activities. The value of these “credits” is determined by quantifying the wetland function or by the acreage of wetlands restored or created.[1] Wetland mitigation banking is a tool used to achieve compliance with the “no net loss” goal mandated by section 404 of the Clean Water Act, [2] and is often regarded as a win-win situation that allows economic development while mitigating harmful impacts to the environment. Mitigation banks also create an incentive for landowners to preserve wetlands on their property, rather than viewing development as the only way to generate value from the land.
However, research has shown that mitigation banks fail to achieve the “no net loss” goal, both on a regulatory and ecological level.[3] On a regulatory level, a Government Accountability Office (GAO) report published in 2005 found that the Corps of Engineers—which oversees compensatory mitigation—performed little oversight to ensure that compensatory mitigation was occurring.[4] More specifically, the GAO found that only 15% of the 152 permit files evaluated contained proof that a compliance inspection was completed. Further, despite the range of enforcement actions that the Corps could take for violations of compensatory mitigation requirements, the agency opted for negotiation, and in some cases was limited in recommending legal action because the agency did not specify mitigation requirements in the permits it issued. In response to the report, the Corps developed new regulations governing compensatory mitigation, including new minimum monitoring requirements.[5] The substance of the monitoring report, however, is left to the individual Corps district office to decide, so there is still the potential for compliance variability between different mitigation banks.[6]