Regulatory Insights April 2025: How Pending Decisions Could Reshape the Mitigation Banking Industry

April 2025 Regulatory Insights: Navigating the Changing Landscape of Mitigation Banking

As we move through the second quarter of 2025, several major regulatory decisions are taking shape, each with the potential to significantly impact how we approach environmental permitting, credit sales, and long-term mitigation banking strategies.

I believe staying ahead of these changes is key to protecting your investments and continuing our shared mission of preserving critical ecosystems. Here are four important updates to keep on your radar:

1. Redefining “Waters of the United States” (WOTUS)

Summary:

The U.S. Supreme Court’s decision in Sackett v. EPA narrowed the federal definition of WOTUS, now limiting protections to wetlands with a direct, continuous surface connection to navigable waters.

What This Means:

Fewer wetlands may now fall under federal jurisdiction, potentially reducing the regulatory requirement for federal mitigation credits. But with that shift, the role of state and local agencies becomes more important than ever. We may start to see new state-level policies or programs step in to fill the gap—and that could bring new opportunities for mitigation banking at the state level.

Next Steps:
Now, the case is heading to the D.C. Circuit Court of Appeals—and the implications are major.
Listening Session for Environmental and Conservation Stakeholders: May 1, 2025 from 1:00 – 3:30 p.m. ET (Virtual and at EPA Headquarters in Washington, D.C.)
https://www.epa.gov/wotus/public-outreach-and-stakeholder-engagement-activities

2. Section 404 Permitting in Florida (FDEP Assumption)

Summary: 
In December 2020, Florida became only the third state in the nation (after Michigan and New Jersey) to receive the authority to issue Section 404 permits. The shift was intended to streamline permitting by consolidating state and federal review processes under the Florida Department of Environmental Protection (FDEP).
However, conservation groups filed suit, arguing the approval violated the Endangered Species Act (ESA). In 2023, a federal district judge ruled in their favor, vacating the transfer and returning permitting authority to the U.S. Army Corps of Engineers. Both Florida and the EPA appealed the ruling.The conservation groups, represented by Earthjustice, claim that the EPA and the U.S. Fish and Wildlife Service (FWS) failed to comply with ESA requirements—specifically by not issuing a proper biological opinion and incidental take statement. These are essential safeguards when federally protected species like the Florida panther or manatee may be affected by permitted activity.
Florida, meanwhile, argues that the state has built the staff capacity and infrastructure necessary to process permits more efficiently than the federal government. Business groups like the Florida Chamber of Commerce and Associated Industries of Florida are backing the state, citing delays caused by the regulatory reversal.
On May 5, 2025, a federal appeals court will hear arguments in a high-profile case challenging the EPA’s 2020 transfer of Section 404 permitting authority to Florida. This shift allowed our state to manage dredge-and-fill permits for wetland impacts, but it was recently overturned by a district court due to concerns about endangered species protections.

3. Endangered Species Act: “Take” vs. “Harm” Redefinition

Summary:

Proposed changes under the ESA would redefine “harm” to exclude habitat modification unless there is clear intent to harm an individual species.

What This Means:

If adopted, this could reduce the use of species credits by limiting protections for habitat loss. For those involved in conservation banking, it’s important to watch this closely because if fewer impacts qualify as “harm,” the demand for mitigation could be affected. Still, I believe long-term conservation strategies will remain essential as pressure on biodiversity grows.

4. Florida’s Pending Mitigation Banking Legislation (SB 492 / HB 1175)

Summary:

As of April 11, both SB 492 and HB 1175 have passed through the Legislature and are heading toward final approval. These bills are designed to address mitigation credit shortages while introducing new rules around credit release schedules, out-of-service-area credit use, and annual reporting.

What This Means:

For mitigation bankers, these bills could bring more predictability to credit release timelines and expand flexibility in high-demand watersheds. But they also introduce multipliers for proximity and require more transparency with annual credit reporting. It’s a significant shift and one I’ve been following closely in partnership with FAMB and other stakeholders.

You can read the bills and analysis below:

SB 492 Amended

SB 492 New Analysis Rules-Pre-meeting

HB 1175 Amended

HB 1175 Analysis

Final Thoughts

These regulatory updates represent both challenges and opportunities. The decisions being made now will shape the future of mitigation banking not just in Florida, but nationally. As always, I encourage bank owners, developers, and consultants to stay informed, stay engaged, and reach out if you have questions about how these changes could affect your projects or property.

If you’d like help evaluating your options or planning for what’s next, I’m here to help.

—

Victoria K. Bruce

CEO & Founder

The Mitigation Banking Group, Inc.

📧 victoria@mitigationbankinginc.com

📞 (407) 960-5787