Mitigation Bank, In-Lieu Fee or Do It Yourself? Section 404 Mitigation Options in Virginia
When a project can't avoid filling a stream or wetland, the U.S. Army Corps of Engineers and Virginia DEQ will require compensatory mitigation: restoring or protecting comparable aquatic resources somewhere else. In Virginia you have three ways to provide it. They differ in cost, timing and, most of all, in who carries the risk if the mitigation fails.
First, avoid and minimize
Mitigation comes last. Under Section 404 of the Clean Water Act, an applicant has to show it avoided impacts to waters where it could, minimized the ones it couldn't avoid, and only then offsets what remains. A site plan that shifts a building pad or a road crossing can save more money than any credit purchase. Good consultants push on that step first.
The three options
Buy credits from a mitigation bank
A bank is a site where a sponsor has already restored, created or protected streams or wetlands under a banking instrument approved by the Corps and an interagency review team. Credits are released in stages as the site meets its performance standards. When you buy, the legal responsibility for the mitigation transfers to the bank sponsor.
Pay into an in-lieu fee program
You pay a fee to a program sponsor, which pools fees and builds restoration projects later. In Virginia the statewide program is the Virginia Aquatic Resources Trust Fund, sponsored by The Nature Conservancy, which has operated since 1995. Responsibility also transfers to the sponsor, but the restoration may not exist yet when your impact happens.
Do it yourself (permittee-responsible mitigation)
You design, build, monitor and protect your own mitigation site, on your property or elsewhere in the watershed. You keep the liability, the monitoring reports and the long-term maintenance.
Why the federal rule prefers banks
The 2008 Compensatory Mitigation Rule sets an order of preference in 33 CFR 332.3(b): mitigation bank credits first, then in-lieu fee credits, then permittee-responsible mitigation under a watershed approach, then onsite and in-kind permittee-responsible mitigation, and last offsite and out-of-kind. The reasoning is in the rule itself. Bank credits are tied to restoration that has already been done and checked, which reduces the risk that mitigation fails and shortens the gap between the loss of a stream and its replacement.
That preference isn't absolute. Where no bank holds credits for your watershed, an in-lieu fee program fills the gap, and some sites justify doing the work yourself. But when a bank serves your site, it's usually the fastest and lowest-risk path to a permit.
Comparing the options
| Mitigation bank | In-lieu fee program | Permittee-responsible | |
|---|---|---|---|
| Restoration in place when you buy | Yes, released credits only | Often not yet | You build it |
| Who carries long-term liability | Bank sponsor | Program sponsor | You |
| Monitoring and reporting | Sponsor | Sponsor | You, typically five years or more |
| Long-term site protection | Sponsor | Sponsor | You |
| Cost certainty | Quoted price | Published fee schedule | Depends on design, land and construction |
How to find out whether a bank serves your site
Every bank has a service area written into its banking instrument, usually its own HUC 8 watershed and sometimes neighboring ones. The Corps' RIBITS registry lists approved banks, their service areas and their credit ledgers; select the Norfolk District and use Find Credits. DEQ's compensatory mitigation page recommends contacting the bank sponsor directly to confirm credits are available and that your project is inside the service area. Registry balances can lag real sales, so a call settles it.
One recent change helps buyers. In March 2025, DEQ and the Corps updated their memorandum of agreement to shorten target schedules for certain credit releases, which should bring new bank credits to market sooner.
Potomac's stream and wetland banks
Potomac Mitigation Bank sponsors stream and wetland banks in Loudoun County, with a Westmoreland County bank in development. Send us your project location, impact type and amount (linear feet of stream or acres of wetland), and your permit timeline. We'll tell you whether our service areas cover it and quote availability. Request pricing or call (540) 251-1321.
