Mitigation banking is the restoration, enhancement, creation, and in exceptional circumstances, preservation undertaken to compensate in advance for adverse impacts to the aquatic ecosystem.

In a Memorandum of Agreement (MOA) signed February 6, 1990 between the USACE and the EPA, mitigation was defined as a sequential process of avoiding, minimizing, and compensating for adverse impacts to the aquatic ecosystem.  

• Avoid:  Take all appropriate and practicable measures to avoid those adverse impacts to the aquatic ecosystem that are not necessary.
• Minimize:  Take all appropriate and practicable measures to minimize those adverse impacts to the aquatic ecosystem that cannot be avoided.
• Compensate:  Implement appropriate and practicable measures to compensate for adverse project impacts to the aquatic ecosystem that cannot reasonably be avoided or further minimized.  This step is also referred to as compensatory mitigation.  The purpose of compensatory mitigation is to replace those aquatic ecosystem functions that would be lost or impaired as a result of USACE-authorized activity.