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Utilizing Federal Mitigation Credits Outside of Service Areas

In the complex landscape of environmental compliance, obtaining federal mitigation credits can be challenging, especially when no local mitigation options are available. The Proximity Factor Tool was approved by the USACE on March 30, 2023.  The new procedure provides a solution by allowing the use of federal mitigation credits from banks outside of their designated service areas under specific conditions.

What is the Proximity Factor Tool?


The Proximity Factor Tool is a regulatory mechanism that calculates the required compensatory mitigation needed to offset unavoidable impacts to aquatic resources outside the impact area's Hydrologic Unit Code (HUC), ecoregion, or approved mitigation bank service areas. This tool ensures that environmental impacts are mitigated effectively, even when local mitigation options are insufficient.


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Service Area HUCs Map

Conditions for Using Out-of-Service Area Mitigation Banks

To utilize mitigation credits from banks outside their service area, the following conditions must be met:

  1. No Local Alternatives: There must be no available federal credits within the impact area’s basin or HUC.

  2. MBI Language: The Mitigation Banking Instrument (MBI) for the proposed Bank must include specific language allowing the use of credits for impacts outside the designated service area. This language is essential to ensure regulatory compliance.

  3. Case-by-Case Approval: Each use of out-of-service area credits is subject to approval on a case-by-case basis by the relevant regulatory agencies.

Benefits of Using the Proximity Factor Tool

  1. Expanded Options: Enables project developers to access mitigation credits even when local options are unavailable.

  2. Regulatory Compliance: Ensures projects meet federal environmental regulations, avoiding project delays.

  3. Ecological Benefits: Promotes effective mitigation strategies by leveraging high-quality mitigation banks regardless of their location relative to the impact area.

How to Proceed

If you have a project that might benefit from the Proximity Factor Tool, consider the following steps:

  1. Identify Potential Mitigation Banks: Use resources such as the Regulatory In-lieu Fee and Banking Information Tracking System (RIBITS) to locate suitable mitigation banks.

  2. Review MBI Terms: Ensure the selected bank’s MBI includes the necessary provisions for out-of-service area mitigation.

  3. Coordinate with Regulatory Agencies: Engage with the USACE and EPA early in the planning process to obtain necessary approvals.

How does it work?

The Proximity Factor Tool calculates the number of mitigation credits needed when a project impacts areas outside a mitigation bank’s service area. Here’s a concise summary of how to use the tool:

01. Location Relative to HUCs

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  • One 8-digit HUC away: Multiplier = 1.5

  • Each additional 8-digit HUC: Add 0.25

02. In-Kind vs. Out-of-Kind Replacement

  • In-kind: Multiplier = 0

  • Out-of-kind: Multiplier = 0.75

03. EPA Level IV Ecoregions

  • Same Ecoregion: Multiplier = 0

  • Different Ecoregion: Multiplier = 0.25

04. Calculate Total Proximity Factor

  • Sum all multipliers to get the total proximity factor.

05. Determine Required Credits

  • Multiply the total proximity factor by the Corps-required credits for the project.

General Considerations:

  1. The tool aligns with 33 CFR 332 regulations.

  2. The Corps determines the most environmentally preferable option.

  3. Applicable for DA permits on a case-by-case basis.

For more detailed guidance, refer to the Proximity Factor Tool Documentation.

The Proximity Factor Tool offers a viable path for project developers needing federal mitigation credits when local options are not available. By understanding and utilizing this tool, developers can ensure their projects remain compliant with environmental regulations while promoting effective mitigation strategies.

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