In a recent blog post, we described the basic statutory and regulatory framework supporting the increasing popularity of mitigation banking. In this update, we offer some additional observations for property owners and other sponsors who may wish to develop a mitigation bank, and identify some of the risks associated with that undertaking.
A mitigation bank is a wetland, stream, or other habitat area that has been restored, established, enhanced, or (in certain circumstances) preserved for the purpose of providing compensation for unavoidable impacts to such natural resources. When a corporation or other entity undertakes these activities, it can generate “compensatory mitigation credits” (“CMCs”), which in recent years have significantly increased in value. Corporations and other owners of brownfield or dormant/underutilized properties are increasingly using these lands to create mitigation banks in order to generate CMCs that can be sold into the mitigation market.