May 16, 2025

The Risk of Advance Credits

According to US Army Corps of Engineers (USACE) data, there are more than 8 million Advance Mitigation Credits sitting on the ledgers of the many dozens of In-Lieu Fee (ILF) Programs across the United States today, nearly all of which are exempt from any financial assurance that the mitigation projects will actually be performed.

These credits represent lots of potentially risky bets by USACE contingent on little more than promises of future project deliveries.

Graph showing Advance Credits vs Released (earned) Credits for U.S. In-Lieu Fee Programs between 2015-2024 from US Army Corps RIBITS Data.

This enormous current inventory of unearned credits only serves to increase the unnecessary risks and possible expenses as USACE continues to close these ineffective and noncompliant programs >RECENT EXAMPLE. When many of these credits are sold without the proper environmental offset, as has regrettably happened in so many instances in the past, what are the financial and environmental costs?

Due to the nearly complete previous programmatic failures, the authors of the 2008 Final Mitigation Rule were on the verge of eliminating the In-Lieu Fee as a viable mitigation strategy. Scholars that have examined ILFs throughout the United States attribute the numerous failures to "moral hazards" and other factors.

Read The 2019 Duke University Study which highlights the potential for ILF programs to accumulate significant and underfunded financial liabilities due to the cumulative exposure of millions of Advance Credits. Here is a link to another great resource on the continued failure of In-Lieu Fee programs. Click Here

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