The Watershed Institute is a non-typical In-Lieu-Fee Option

The federal guidance on the use of in-lieu-fee arrangements dated
November 7, 2000, further sets forth on page 66915 in
subparagraph F that in-lieu-fee mitigation generally is not
considered to meet the definition of banking because they do not
“typically” provide compensatory mitigation in advance of project
impacts. However, the paragraph goes on to say that moreover,
such arrangements do not “typically” provide a clear time table for
the initiation of mitigation efforts.

the Watershed Institute In-Lieu-Fee agreement is
not typical in that it was carefully drafted similar to a banking
and further that there is a clear time table for the
initiation of mitigation efforts of less than one year. Subparagraph F
continues to say:

    “The Corps, in consultation with the other agencies, may find
    circumstances where such (sic In-lieu-fee) arrangements are
    appropriate so long as they meet the requirements that would
    otherwise apply to an off-site prospective mitigation effort
    and provides adequate assurances of success and timely
    implementation. In such cases a formal agreement between a
    sponsor and the agencies, similar to a banking instrument, is
    necessary to define the conditions under which its use is
    considered appropriate”.

As with the Watershed Institute, careful effort was given with then
Chief of the Regulatory Branch, Joseph S. Hughes, USACE Legal
Counsel, Matthew P. Jeppson, Regulatory Project Manager Cody
Wheeler, as well as all interested agencies to draft said formal
agreement with the Watershed Institute similar to a banking

In review of the above, it appears that the language set forth in the
federal guidance on the use of in-lieu-fee arrangements for
compensatory mitigation under section 404 of the Clean Water Act
and Section 10 of the Rivers and Harbors Act read in conjunction
with the regulatory guidance letter of the USACE dated December
24, 2002, would at least put the Watershed Institute In-Lieu-Fee
program on equal footing, if not in a priority status over mitigation
banking with a Mitigation Bank.