mitigation credits, the Corps and EPA state that “the bank sponsor should sign such [Clean Water Act Section 404 and/or Rivers and Harbors Act Section 10] permits for the limited purpose …of confirming that those [mitigation] responsibilities are enforceable against the bank sponsor if necessary.” In addition, the banking guidance calls for the posting of financial assurances so that the Corps may require that the escrowed funds be used to rectify conditions at the bank site that may prevent it from meeting the performance standard.
Legal responsibility also will be shifted under in-lieu fee arrangements (a fee is paid in lieu of permittee-responsible mitigation). In this case, once the permittee provides the required funds to the entity administering the in-lieu fee financial account, the permittee has satisfied its compensatory mitigation obligations. The in-lieu fee financial account holds the funds until they are adequate for mitigation actions to begin. In practice, the actions taken by the in-lieu fee programs had no binding requirement to meet formal design or performance standards established at the time the permit was issued (Scodari and Shabman 2000). Instead, there was an expectation that the in-lieu fee administrator would undertake actions that would lead to functional wetland sites. Indeed, prior to the October 2000 interagency guidance on in-lieu fees, the legal responsibilities of in-lieu fee administrators for meeting either design or performance criteria as a condition of accepting the fees was unclear. As a practical matter, it appears that in-lieu fee administrators did not accept such legal responsibility. For example, the Nature Conservancy's in-lieu fee agreement with the Corps Sacramento district states that the Conservancy” does not guarantee any specific results, actions or effects on any lands acquired, managed or restored under this agreement but will use good faith efforts to meet the objectives. The Corps recognizes that The Nature Conservancy cannot guarantee specific results for mitigation efforts. ” The October 2000 guidance provides that in-lieu fee agreements should now “clearly state” that legal responsibility for undertaking specified mitigation actions for the ecological performance of mitigation site conditions rests with the organization accepting the in-lieu fee.
Some Corps districts authorize permittees to make cash donations on an ad hoc basis to satisfy their compensatory mitigation obligations (Gardner 2000). Such donations are not technically in-lieu fee arrangements because there is no formal general agreement between the Corps and the entity accepting the fee. These cash donations are often used to defray the expenses of an ongoing mitigation project; in contrast, most formal in-lieu fee arrangements (at least prior to the October 2000 guidance) involved the collection of funds for future mitigation projects. It is not clear what design or performance criteria the recipient of the cash donation must meet. As in the case of commercial mitigation banks and