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Section 404 of the Clean Water Act

Implementing Financial Assurance for Mitigation Project Success

Financial assurance for mitigation project success, also known as short-term financial assurances, can be defined generally as a mechanism that ensures that a sufficient amount of money will be available for use to complete or replace a mitigation provider’s obligations to implement a required mitigation project and meet specified ecological performance standards in the event that the mitigation provider proves unable or unwilling to meet those obligations.

This report reviews key design and implementation issues and considerations relating to the use of financial assurances for mitigation project success, and describes and compares key features of alternative assurance instruments, including letters of credit, performance bonds, cash-in-escrow, casualty insurance, legislative appropriations, or other appropriate instruments.

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