Endangered and Threatened Wildlife and Plants; Endangered Species Act Compensatory Mitigation Policy, 61031-61065 [2016-20757]

Agencies

• Fish and Wildlife Service
• DEPARTMENT OF THE INTERIOR

[Federal Register Volume 81, Number 171 (Friday, September 2, 2016)]
[Notices]
[Pages 61031-61065]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-20757]



[[Page 61031]]

Vol. 81

Friday,

No. 171

September 2, 2016

Part V





Department of the Interior





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Fish and Wildlife Service





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 Endangered and Threatened Wildlife and Plants; Endangered Species Act 
Compensatory Mitigation Policy; Notice

Federal Register / Vol. 81 , No. 171 / Friday, September 2, 2016 / 
Notices

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DEPARTMENT OF THE INTERIOR

Fish and Wildlife Service

[Docket No. FWS-HQ-ES-2015-0165; FXES11120900000--167--FF09E30000]
RIN 1018-BB72


Endangered and Threatened Wildlife and Plants; Endangered Species 
Act Compensatory Mitigation Policy

AGENCY: Fish and Wildlife Service, Interior.

ACTION: Announcement of draft policy; request for public comment.

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SUMMARY: We, the U.S. Fish and Wildlife Service, announce the draft 
Endangered Species Act (ESA) Compensatory Mitigation Policy. The draft 
new policy is needed to implement recent Executive Office and 
Department of the Interior mitigation policies that necessitate a shift 
from project-by-project to landscape-scale approaches to planning and 
implementing compensatory mitigation. The draft new policy is also 
needed to improve consistency in the use of compensatory mitigation as 
recommended or required under the ESA. The draft ESA Compensatory 
Mitigation Policy, if adopted, would cover permittee-responsible 
mitigation, conservation banking, in-lieu fee programs, and other 
third-party mitigation mechanisms, and would stress the need to hold 
all compensatory mitigation mechanisms to equivalent and effective 
standards. We request comments, information, and recommendations on the 
draft new policy from all interested parties.

DATES: We will accept comments on the draft policy from all interested 
parties until October 17, 2016. Please note that if you are using the 
Federal eRulemaking Portal (see ADDRESSES, below), the deadline for 
submitting an electronic comment is 11:59 p.m. Eastern Time on this 
date. For the information collection aspects of this draft policy, 
comments will be accepted until October 3, 2016.

ADDRESSES: Document Review: The draft policy is available for review at 
https://www.regulations.gov, under docket number FWS-HQ-ES-2015-0165.
    General Comments: You may submit comments on the draft policy by 
one of the following methods:
     Federal eRulemaking Portal: https://www.regulations.gov. In 
the Search box, enter the docket number for the draft policy, which is 
FWS-HQ-ES-2015-0165. You may enter a comment by clicking on the 
``Comment Now!'' button. Please ensure that you have found the correct 
document before submitting your comment.
     U.S. mail or hand delivery: Public Comments Processing, 
Attn: Docket No. FWS-HQ-ES-2015-0165; Division of Policy, Performance, 
and Management Programs; U.S. Fish and Wildlife Service, MS: BPHC; 5275 
Leesburg Pike; Falls Church, VA 22041-3803.
     For the Information Collection Aspects of the draft 
policy: You may review the Information Collection Request online at 
https://www.reginfo.gov. Follow the instructions to review Department of 
the Interior collections under review by OMB. Send comments (identified 
by 1018-BB72) specific to the information collection aspects of this 
proposed rule to both the: Desk Officer for the Department of the 
Interior at OMB-OIRA at (202) 295-5806 (fax) or 
OIRA_Submission@omb.eop.gov (email); and Service Information Collection 
Clearance Officer; Division of Policy, Performance, and Management 
Programs; U.S. Fish and Wildlife Service, MS: BPHC; 5275 Leesburg Pike; 
Falls Church, VA 22041-3803 (mail); or hope_grey@fws.gov (email).

We will post all comments on the draft policy on https://www.regulations.gov. This generally means that we will post any 
personal information you provide us (see Request for Information, 
below, for more information).

FOR FURTHER INFORMATION CONTACT: Craig Aubrey, U.S. Fish and Wildlife 
Service, Division of Environmental Review, 5275 Leesburg Pike, Falls 
Church, VA 22041-3803; telephone 703-358-2442.

SUPPLEMENTARY INFORMATION: 

Background

    The mission of the U.S. Fish and Wildlife Service (Service or 
USFWS) is working with others to conserve, protect, and enhance fish, 
wildlife, and plants and their habitat for the continuing benefit of 
the American people. As part of our mission, we continually seek 
opportunities to engage both the public and private sectors to work 
with us to conserve species and the ecosystems on which they depend. 
This collaborative effort includes conservation of endangered and 
threatened (listed) species and their designated critical habitat 
protected under the Endangered Species Act of 1973, as amended (ESA; 16 
U.S.C. 1531 et seq.), and other species proposed for listing or at-risk 
of being listed. The purposes of the ESA are to provide a means whereby 
the ecosystems upon which listed species depend may be conserved and to 
provide a program for the conservation of such species. The Service and 
National Oceanic and Atmospheric Administration's National Marine 
Fisheries Service share responsibilities for administering the ESA. 
However, this draft policy would only apply to the Service and species 
under our jurisdiction.
    This draft policy is the first comprehensive treatment of 
compensatory mitigation under authority of the ESA to be issued by the 
Service. Both the 1995 interagency policy on the establishment and 
operation of wetland mitigation banks (60 FR 58605, November 28, 1995), 
and the 2000 interagency policy on the use of in-lieu fee arrangements 
(65 FR 66914, November 7, 2000) are specific to wetland mitigation, but 
provide guidance that is generally applicable to conservation banking 
and in-lieu fee programs for species associated with wetlands or 
uplands. These interagency policies were superseded by the 
Environmental Protection Agency-U.S. Army Corps of Engineers 2008 
Compensatory Mitigation Rule for Losses of Aquatic Resources (73 FR 
19670, April 10, 2008). In 2003, the Service issued guidance on the 
establishment, use, and operation of conservation banks (68 FR 24753, 
May 8, 2003). In 2008, we issued recovery crediting guidance (73 FR 
44761, July 31, 2008). This draft ESA Compensatory Mitigation Policy 
would replace these previous policies and guidance documents and expand 
coverage to all compensatory mitigation mechanisms recommended or 
supported by the Service when implementing the ESA, including, but not 
limited to, conservation banks, in-lieu fee programs, habitat credit 
exchanges, and permittee-responsible mitigation.

Purpose and Importance of the Draft Policy

    The primary intent of the draft policy is to provide Service 
personnel with direction and guidance in the planning and 
implementation of compensatory mitigation, primarily through 
encouraging strategic planning at the landscape level and setting 
standards and providing minimum criteria that mitigation programs and 
projects must meet to achieve conservation that is effective and 
sustainable. Compensatory mitigation is defined in this draft policy as 
compensation for remaining unavoidable impacts after all appropriate 
and practicable avoidance and minimization measures have been applied, 
by replacing or providing substitute resources or environments (see 40 
CFR 1508.20) through the restoration, establishment,

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enhancement, or preservation of resources and their values, services, 
and functions (part 600, chapter 6 of the Departmental Manual (600 DM 
6.4C)). While this policy addresses only the role of compensatory 
mitigation under the ESA, avoidance and minimization of impacts retain 
their central role in both the Section 7 and Section 10 processes. 
Guidance on the application of the mitigation hierarchy is provided in 
our draft Mitigation Policy (81 FR 12380, March 8, 2016), regulations 
implementing the ESA, and other policies and guidance documents 
specific to various sections of the ESA.

Alignment of the Draft Policy With Existing Directives

    By memorandum (80 FR 68743), the President directed all Federal 
agencies that manage natural resources, ``to avoid and then minimize 
harmful effects to land, water, wildlife, and other ecological 
resources (natural resources) caused by land- or water-disturbing 
activities, and to ensure that any remaining harmful effects are 
effectively addressed, consistent with existing mission and legal 
authorities.'' This draft policy is consistent with the Presidential 
memorandum (``Mitigating Impacts on Natural Resources from Development 
and Encouraging Related Private Investment'') issued November 3, 2015; 
the Secretary of the Department of the Interior (Department) 
Secretarial Order 3330 entitled, ``Improving Mitigation Policies and 
Practices of the Department of the Interior,'' issued October 31, 2013; 
and is intended to institute the policies and procedures reflected in 
the guiding principles on mitigation established by the Department 
through the report to the Secretary entitled, ``A Strategy for 
Improving the Mitigation Policies and Practices of The Department of 
the Interior,'' issued in April 2014 (Clement et al. 2014). These 
directives anticipate a more comprehensive use of a landscape-scale 
approach to planning and implementing mitigation. The landscape-scale 
approach to mitigation is not a new concept. For example, in 2013 the 
Service issued mitigation guidance for two listed song birds in central 
Texas based on recovery goals for these species. The song bird 
mitigation guidance sets minimum standards that must be met by 
mitigation providers and encourages the use of consolidated 
compensatory mitigation in the form of permanent protection and 
management of large, contiguous patches of species habitat. Proactive 
approaches, such as this example, provide greater regulatory certainty 
for project proponents and encourage the establishment of conservation 
banks and other mitigation opportunities by mitigation sponsors for use 
by project proponents.
    This draft policy adopts the mitigation principles in the 
Presidential memorandum (80 FR 68743); the strategy report to the 
Secretary (Clement et al. 2014); the Department's Mitigation Policy, 
``Implementing Mitigation at the Landscape-scale'' (600 DM 6); and the 
Service's draft revision of our Mitigation Policy (81 FR 12380, March 
8, 2016), including a mitigation goal to improve (i.e., a net gain) or, 
at a minimum, to maintain (i.e., no net loss) the current status of 
affected resources, as allowed by applicable statutory authority and 
consistent with the responsibilities of action proponents under such 
authority, primarily for important, scarce, or sensitive resources, or 
as required or appropriate. The mitigation goal is not necessarily 
based on habitat area, but on numbers of individuals, size and 
distribution of populations, the quality and carrying capacity of 
habitat, or the capacity of the landscape to support stable or 
increasing populations of the affected species after the action 
(including all proposed conservation measures) is implemented. In other 
words, it is based on those factors that determine the ability of the 
species to be conserved.

Benefits of the Draft Policy

    This draft policy would set forth standards for compensatory 
mitigation that would implement the tenets in the directives cited 
above and reflect the many lessons learned by the Service during our 
more than 40-year history implementing the ESA, particularly sections 7 
and 10 of the ESA. The standards would apply to all compensatory 
mitigation mechanisms (i.e., permittee-responsible mitigation, 
conservation banks, in-lieu fee programs, habitat exchanges, and other 
third party mitigation arrangements), which is instrumental to 
achieving effective compensatory mitigation on the landscape and 
encouraging private investment in compensatory mitigation.
    Adherence to the mitigation principles and compensatory mitigation 
standards identified in this draft policy would be expected to achieve 
greater consistency, predictability, and transparency in implementation 
of the ESA. Service offices are encouraged to work with Federal 
agencies and other partners to establish compensatory mitigation 
programs based on landscape-scale conservation plans, such as more 
efficient, better coordinated, and expedited regulatory processes, 
which can provide project applicants with incentives to mitigate their 
actions. Compensatory mitigation programs and projects designed and 
implemented in accordance with the standards set forth in this draft 
policy and that also adhere to prescriptive guidance provided in this 
draft policy would be expected to achieve the best conservation 
outcomes for listed, proposed, and at-risk species through effective 
management of the risks associated with compensatory mitigation.
    This draft policy would encourage the use of market-based 
compensatory mitigation programs such as conservation banking in 
conjunction with programmatic approaches to ESA section 7 consultations 
and habitat conservation plans that can be designed to achieve a no net 
loss or net gain mitigation goal. Consultations and habitat 
conservation plans that establish a ``program'' to address multiple, 
similar actions and/or impacts to one or more species operate on a 
larger landscape scale and expedite regulatory processes. Market-based 
mitigation programs improve regulatory predictability, provide 
efficiencies of scale, and incentivize private investment in species 
conservation (Fox and Nino-Murcia 2005). The benefits provided by these 
mitigation programs generally encourage Federal agencies and 
incentivize applicants to develop proposed actions that fully 
compensate for adverse impacts to affected species anticipated as a 
result of their actions.

Discussion

    ``In enacting the ESA, Congress recognized that individual species 
should not be viewed in isolation, but must be viewed in terms of their 
relationship to the ecosystem of which they form a constituent element. 
Although the regulatory mechanisms of the [ESA] focus on species that 
are formally listed as endangered or threatened, the purposes and 
policies of the [ESA] are far broader than simply providing for the 
conservation of individual species or individual members of listed 
species'' (Conference Report No. 97-835 House of Representatives, 
September 17, 1982). This comment, made over 30 years ago during 
reauthorization of the ESA, is a reminder of the challenges still 
before us. Incorporating a landscape-scale approach to development and 
conservation planning, including mitigation, that ensures a net gain 
or, at a minimum, no net loss in the status of affected resources, as 
directed by the Presidential memorandum (80 FR 68743), would help 
address the additive impacts that lead to significant

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deterioration of resources over time and has the potential to foster 
recovery of listed species and avoid listing of additional species.
    As discussed later in this document, the Service's authority to 
require compensatory mitigation under the ESA is limited and differs 
under Sections 7 and 10. However, we can recommend the use of 
compensatory mitigation to offset the adverse impacts of actions under 
certain provisions of the ESA and under other authorities, such as the 
Fish and Wildlife Coordination Act (16 U.S.C. 661-667e) and the 
National Environmental Policy Act (NEPA; 42 U.S.C. 4321 et seq.). This 
draft policy would encourage Service offices to work with Federal 
agencies and applicants, and to recommend or require, if appropriate, 
the inclusion of compensatory mitigation for all unavoidable adverse 
impacts to listed, proposed, and at-risk species and their habitat 
anticipated as a result of any proposed action. While this practice 
currently exists for some species, it is not used broadly throughout 
the Service. Recommending, where applicable, that Federal agencies use 
their authorities to fully mitigate the adverse effects of their 
actions (i.e., ensure no net loss in the status of affected resources) 
is consistent with the Presidential memorandum (80 FR 68743), the 
Department's and the Service's proposed mitigation planning goal, and 
the purposes of the ESA. Effective mitigation that fully offsets the 
impacts of an action prevents that action from causing a decline in the 
status of affected species (i.e., achieves no net loss).

Compensatory Mitigation Under Sections 7 and 10 of the ESA

    The additive effects of impacts adversely affecting listed and at-
risk species as a result of many past and current human-caused actions 
are significant. The number of listed species has increased from 
slightly more than 300 in 1982 (when the ESA was reauthorized) to more 
than 1,500 by the end of 2015. While some listed species have been 
downlisted or delisted within the last 40 years, the projected increase 
in human population growth, increasing demand on our natural resources 
associated with this projected population growth, accelerated climate 
change, continued introductions of invasive species, and other 
stressors are putting even more species at risk and compromising the 
essential functions of ecosystems necessary to improve the status of 
these species and recover listed species. We cannot expect to change 
the status trajectories of these species without a commitment to 
responsible and implementable standards for accomplishing effective, 
sustainable compensatory mitigation that fully offsets the adverse 
impacts of actions to species and other resources of concern.
    Compensatory mitigation is a conservation measure that can be used 
within an appropriate context under section 7 of the ESA to address 
proposed actions that may result in incidental take of listed species 
that cannot be avoided. Under section 7(a)(1) of the ESA, all Federal 
agencies are required to use their authorities to carry out 
conservation programs for listed species. Federal agencies may choose 
to develop and implement section 7(a)(1) conservation programs for 
listed species in conjunction with section 7(a)(2) consultation through 
a coordinated program. The Service supports these efforts, and we 
encourage Federal agencies to coordinate with us on development of such 
programs.
    Compensatory mitigation can be used under section 10(a)(1)(B) of 
the ESA through habitat conservation plans developed to address adverse 
impacts of non-federal actions on listed and other covered species that 
cannot be avoided. Landscape-scale habitat conservation plans developed 
for use by multiple applicants to conserve multiple resources are 
generally the most efficient and effective approaches. The Service 
supports these efforts and encourages applicants, particularly local 
and State agencies and organizations, to coordinate with us on the 
development of such plans.

Landscape-Level Approaches to Compensatory Mitigation

    Taking a landscape-level approach to mitigation will assist the 
Service to modernize our compensatory mitigation procedures and 
practices and better meet the challenges posed by the growing human 
population's demands on our natural resources and changing conditions 
such as those resulting from climate change. Conservation banking is a 
market-based compensatory mitigation mechanism based on a landscape 
approach to mitigation that achieves compensation for listed and other 
resources of concern in advance of project impacts. In-lieu fee 
programs also establish compensatory mitigation sites but generally not 
in advance of impacts and often not through a market-based approach. 
Habitat credit exchanges are market-based compensatory mitigation 
programs based on a clearinghouse model that may or may not accomplish 
mitigation in advance of project impacts. All three of these mitigation 
mechanisms use a landscape-level approach to consolidate and locate 
compensatory mitigation in areas identified as conservation priorities. 
These programs have designated service areas within which proposed 
actions that meet certain criteria may be mitigated with Service 
approval. The functions and services provided for listed, proposed, and 
at-risk species by these compensatory mitigation programs are 
represented by credits. Credits are used to offset impacts (often 
referred to as debits). Most credit transactions involve a permittee 
purchasing the amount of credits needed to offset the anticipated 
adverse effects of an action from the mitigation project sponsor. The 
Service must approve credit transactions as to their conservation value 
and appropriate application for use related to any authorization or 
permit issued under the ESA.
    The conservation banking model is generally perceived as successful 
at achieving effective conservation outcomes and, when used in 
conjunction with section 7 consultations and section 10 habitat 
conservation plans, has achieved notable regulatory efficiencies. 
Results include ecological performance that usually achieves no net 
loss, and often a net benefit, in species conservation; increased 
regulatory predictability for Federal agencies and applicants; and more 
efficient and better coordinated permitting processes, especially when 
multiple agencies with overlapping regulatory jurisdictions are 
involved.
    Permittee-responsible mitigation for many small to moderate impacts 
cannot provide adequate compensation because it is often difficult to 
achieve effective conservation on a small scale. Small mitigation sites 
are often not ecologically defensible, and it is often difficult to 
ensure long-term stewardship of these sites. Most individual actions 
result in small or moderate impacts to species and habitat, yet the 
additive effects of these actions (often referred to as ``death by a 
thousand cuts''), when not compensated for, can have substantial 
adverse effects on these resources. In general, conservation banking, 
in-lieu fee programs, and similar mitigation mechanisms that 
consolidate compensatory mitigation on larger landscapes are designed 
to serve project proponents with small to moderate impact actions, are 
ecologically more effective, and provide more economical options to 
achieve compensation than permittee-responsible mitigation.
    Furthermore, larger landscape-scale conservation programs with 
market-based compensatory mitigation

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opportunities create an economic incentive for private landowners, 
investors, and mitigation project sponsors to participate in these 
programs. The most robust programs generate competition among 
mitigation sponsors and may provide cost-effective means for complying 
with natural resource laws such as the ESA. To be successful, these 
market-based and other compensatory mitigation programs must operate 
transparently and be held to high standards that are uniformly applied 
across all compensatory mitigation mechanisms. Equally important is 
transparency in the implementation of the ESA and the development of 
mitigation programs for use by regulated communities.

Mitigation Defined

    Because endangered and threatened species are by definition in 
danger of extinction or likely to become so in the foreseeable future, 
avoiding, minimizing, and compensating for impacts to their populations 
are all forms of mitigation that the Service may consider when 
administering the ESA. The Council on Environmental Quality (CEQ) 
National Environmental Policy Act (42 U.S.C. 4321 et seq.) regulations 
(40 CFR 1508.20) state that mitigation includes:
     Avoiding the impact altogether by not taking a certain 
action or parts of an action;
     Minimizing impacts by limiting the degree or magnitude of 
the action and its implementation;
     Rectifying the impact by repairing, rehabilitating, or 
restoring the affected environment;
     Reducing or eliminating the impact over time by 
preservation and maintenance operations during the life of the action; 
and
     Compensating for the impact by replacing or providing 
substitute resources or environments.
    In 600 DM 6, the Department of the Interior states that mitigation, 
as enumerated by CEQ, is compatible with Departmental policy; however, 
as a practical matter, the mitigation elements are categorized into 
three general types that form a sequence: Avoidance, minimization, and 
compensatory mitigation for remaining unavoidable (also known as 
residual) impacts. Historically, those administering the ESA have often 
used a condensed mitigation sequence--avoid, minimize, and compensate 
or avoid, minimize, and mitigate. This draft policy adopts the 
Department's definition of compensatory mitigation--compensation for 
remaining unavoidable impacts after all appropriate and practicable 
avoidance and minimization measures have been applied, by replacing or 
providing substitute resources or environments (see 40 CFR 1508.20) 
through the restoration, establishment, enhancement, or preservation of 
resources and their values, services, and functions (600 DM 6.4C). And, 
throughout this draft policy, ``compensatory mitigation'' or 
``compensation'' is used in this broad sense to include any measure 
that would rectify, reduce, or compensate for an impact to an affected 
resource. We also use the term ``minimize'' in the broad sense 
throughout this draft policy to include any conservation measure, 
including compensation, which would lessen the impact of the action on 
the species or other affected resource. We recognize there is some 
overlap in the use of these terms but, as a practical matter, this use 
in practice is consistent with the intent of the ESA. Information 
regarding avoidance and observance of the mitigation sequence can be 
found at our draft Mitigation Policy (81 FR 12380, March 8, 2016). This 
draft ESA Compensatory Mitigation Policy would cover permittee-
responsible mitigation, conservation banking, in-lieu fee programs, and 
all other compensatory mitigation mechanisms.
    The draft policy follows:

U.S. Fish and Wildlife Service

(Draft) Endangered Species Act Compensatory Mitigation Policy

1. Purposes

    This policy adopts the mitigation principles established in the 
U.S. Fish and Wildlife Service (Service) draft Mitigation Policy (81 FR 
12380, March 8, 2016), establishes compensatory mitigation standards, 
and provides guidance for the application of compensatory mitigation 
through implementation of the Endangered Species Act of 1973, as 
amended (16 U.S.C. 1531 et seq.) (ESA). Compensatory mitigation 
(compensation) is defined in this draft policy as compensation for 
remaining unavoidable impacts after all appropriate and practicable 
avoidance and minimization measures have been applied, by replacing or 
providing substitute resources or environments (see 40 CFR 1508.20) 
through the restoration, establishment, enhancement, or preservation of 
resources and their values, services, and functions (600 DM 6.4C). This 
policy applies to all Service compensatory mitigation requirements and 
recommendations involving ESA compliance. It is also intended to assist 
other Federal agencies carrying out their statutory and regulatory 
responsibilities under the ESA and to provide applicants with guidance 
on the appropriate use of compensatory mitigation for proposed actions. 
The standards and guidance in the policy will also assist mitigation 
providers in developing compensatory mitigation project proposals.
    Adherence to the principles, standards, and guidance identified in 
this policy is expected to: (1) Provide greater clarity on applying 
compensatory mitigation to actions subject to ESA compliance 
requirements; (2) improve consistency and predictability in the 
implementation of the ESA by standardizing compensatory mitigation 
practices; and (3) promote the use of compensatory mitigation at a 
landscape scale to help achieve the purposes of the ESA.
    This policy encourages Service personnel to collaborate with other 
agencies, academic institutions, nongovernmental organizations, Tribes, 
and other partners to develop and implement compensatory mitigation 
measures and programs through a landscape-scale approach to achieve the 
best possible conservation outcomes for activities subject to ESA 
compliance. It also encourages the use of programmatic approaches to 
compensatory mitigation that have the advantages of advance planning 
and economies of scale to: (1) achieve a net gain in species' 
conservation; (2) reduce the unit cost of compensatory mitigation; and 
(3) improve regulatory procedural efficiency.
    Appendices A and B provide a list of acronyms and a glossary of 
terms used in this policy, respectively.

2. Authorities and Coordination

    This policy is focused on compensatory mitigation that can be 
achieved under the ESA. The Service's authority to require mitigation 
is limited, and our authority to require a ``net gain'' in the status 
of listed or at-risk species has little or no application under the 
ESA. However, we can recommend the use of mitigation, and in particular 
compensatory mitigation, to offset the adverse impacts of actions under 
the ESA. Other statutes also provide the Service with authority for 
recommending compensatory mitigation for actions affecting fish, 
wildlife, plants, and their habitats (e.g., Fish and Wildlife 
Coordination Act (FWCA; 16 U.S.C. 661-667e), National Environmental 
Policy Act (NEPA; 42 U.S.C. 4321 et seq.), and Oil Pollution Act (33 
U.S.C. 2701 et seq.)). In

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addition, statutes such as the Clean Water Act (CWA; 33 U.S.C. 1251 et 
seq.) and Federal Power Act (16 U.S.C. 791a-828c) provide other Federal 
agencies with authority to recommend or require compensatory mitigation 
for actions that result in adverse effects to species or their 
habitats. These other authorities are often used in combination with, 
or to supplement the authorities under, the ESA to recommend or require 
compensatory mitigation for a variety of resources including at-risk 
species and their habitats. For example, the ESA and the Federal Land 
Policy and Management Act (43 U.S.C. 1701 et seq.) together provide a 
greater impetus to conserve desert tortoise habitat than either statute 
alone.
    Synchronizing environmental review processes, especially through 
early coordination with project proponents, allows the Service to 
provide comments and recommendations for all mitigation types (i.e., 
avoidance, minimization, and compensation) included as part of proposed 
actions in an effort to reduce impacts to listed, proposed, and at-risk 
species and critical habitat. For example, the Service may comment on 
proposed actions under NEPA and State environmental review statutes 
(e.g., California Environmental Quality Act and Hawaii Environmental 
Policy Act). Coordination of environmental review processes generally 
results in conservation outcomes that have a greater likelihood of 
meeting the Service's mitigation goal.
    The supplemental mandate of NEPA (42 U.S.C. 4335) adds to the 
existing authority and responsibility of the Service to protect the 
environment when carrying out our mission under the ESA. The Service's 
goal is to provide a coordinated review and analysis of the impacts of 
proposed actions on listed, proposed, and at-risk species, and 
designated and proposed critical habitat that are also subject to the 
requirements of other statutes such as NEPA, CWA, and FWCA. 
Consultation, conference, and biological assessment procedures under 
section 7 and permitting procedures under section 10(a)(1)(B) of the 
ESA can be integrated with interagency cooperation procedures required 
by other statutes such as NEPA or FWCA. This is particularly the case 
for cumulative effects. Cumulative effects are often difficult to 
analyze, are defined differently under different statutes, and are 
often not adequately considered when making decisions affecting the 
type and amount of mitigation recommended or required.

3. Scope

    The ESA Compensatory Mitigation Policy covers all forms of 
compensatory mitigation, including, but not limited to, permittee-
responsible mitigation, conservation banking, in-lieu fee programs, and 
other third-party mitigation projects or arrangements, for all species 
and habitat protected under the ESA and for which the Service has 
jurisdiction. Endangered and threatened species, species proposed as 
endangered or threatened, designated critical habitat, and proposed 
critical habitat are the primary focus of this policy. Candidates and 
other at-risk species would also benefit from adherence to the 
standards set forth in this policy, and all Service programs are 
encouraged to develop compensatory mitigation programs and tools to 
conserve at-risk species in cooperation with States and other partners.
    This policy does not apply retroactively to approved mitigation 
programs; however, it does apply to amendments and modifications to 
existing conservation banks, in-lieu fee programs, and other third-
party compensatory mitigation arrangements unless otherwise stated in 
the mitigation instrument. Examples of amendments or modifications to 
which this policy would apply include authorization of additional sites 
under an existing instrument or agreement, expansion of an existing 
site, or addition of a new type of resource credit such as addition of 
a new species credit.
    Additional guidance that provides more specific operational steps 
may be developed by the Service to further implement this policy. 
Existing guidance documents will be reviewed and revised as necessary 
to ensure consistency with this policy.
    This policy supersedes the Service's ``Guidance for the 
Establishment, Use, and Operation of Conservation Banks,'' published in 
the Federal Register in 2003 (68 FR 24753), and ``Guidance on Recovery 
Crediting for the Conservation of Threatened and Endangered Species'' 
(73 FR 44761) published in 2008. It also supersedes ``Federal Guidance 
on the Establishment, Use, and Operation of Mitigation Banks'' (60 FR 
58605, November 28, 1995) and ``Federal Guidance on the Use of In-lieu 
Fee Arrangements for Compensatory Mitigation under Section 404 of the 
Clean Water Act and Section 10 of the Rivers and Harbors Act'' (65 FR 
66914, November 7, 2000).
    This policy does apply to other Federal or non-Federal actions 
permitted or otherwise authorized or approved prior to issuance of this 
policy under circumstances where the action may require additional 
compliance review under the ESA if: new information becomes available 
that reveals effects of the action to listed species or critical 
habitat not previously considered; the action is modified in a manner 
that causes effects to listed species and critical habitat not 
previously considered; authorized levels of incidental take are 
exceeded; a new species is listed or critical habitat is designated 
that may be affected by the actions; or the project proponent 
specifically requests the Service to apply the policy. This policy does 
not apply to actions that are specifically exempted under the ESA. It 
also does not apply where the Service has already agreed in writing to 
mitigation measures for pending actions, except where new activities or 
changes in current activities associated with those actions would 
result in new impacts, or where new authorities, or failure to 
implement agreed upon recommendations warrant new consideration 
regarding mitigation. Service offices may elect to apply this policy to 
actions that are under review as of the date of publication of the 
final policy.

4. Compensatory Mitigation Standards

    The mitigation principles, as described in the Service's draft 
Mitigation Policy (81 FR 12380, March 8, 2016), are goals the Service 
intends to achieve, in part through recommending or requiring, as 
appropriate, under the ESA and other applicable authorities, the 
inclusion of compensatory mitigation in proposed actions with adverse 
impacts to listed, proposed or at-risk species and designated or 
proposed critical habitat. The compensatory mitigation standards 
described in this section of the policy will implement the mitigation 
principles, as outlined in the draft Mitigation Policy, including using 
a landscape approach to inform mitigation and aspiring to meet the goal 
to improve (i.e., a net gain) or, at minimum, to maintain (i.e., no net 
loss) the current status of affected resources, as allowed by 
applicable statutory authority and consistent with the responsibilities 
of action proponents under such authority. Compensatory mitigation 
programs, projects, and measures that are consistent with the 
mitigation principles and adhere to the compensatory mitigation 
standards set forth in this section of the policy are expected to 
achieve the best conservation outcomes. The compensatory mitigation 
standards apply to all compensatory mitigation mechanisms (i.e., 
permittee-responsible

[[Page 61037]]

mitigation, conservation banks, in-lieu fee programs, etc.) and all 
forms of compensatory mitigation (i.e., restoration, preservation, 
establishment, and enhancement) approved by the Service. The standards 
are as follows:

4.1. Siting Sustainable Compensatory Mitigation

    Compensatory mitigation will be sited in locations that have been 
identified in landscape-scale conservation plans or mitigation 
strategies as areas that will meet conservation objectives and provide 
the greatest long-term benefit to the listed, proposed, and/or at-risk 
species and other resources of primary conservation concern. In the 
absence of such plans, conservation needs of the species will be 
assessed at scales appropriate to inform the selection of sustainable 
mitigation areas that are expected to produce the best ecological 
outcomes for the species using the best available science. The 
following factors should be considered when selecting sites for 
compensatory mitigation:
     Core areas of existing and projected suitable species 
habitat and areas that provide connectivity between core areas;
     Designated and proposed critical habitat;
     Recovery plan, 5-year review, and State conservation 
recommendations;
     Size and configuration of the site within the landscape;
     Land use trends and compatibility with adjacent land uses;
     Habitat types that provide the required ecological 
functions and services (these may not be the same habitat types that 
are impacted);
     Existing encumbrances on the site and split estates (e.g., 
sites with separate ownership of the surface and subsurface mineral 
rights);
     Degree of threat to the proposed site (e.g., imminent 
development or invasive species encroachment); and
     Existing and projected landscape conditions (e.g., climate 
change projections) that may hinder or improve the resilience of the 
species and other resources of concern.
    Other factors may also warrant consideration when siting 
compensatory mitigation. Compensatory mitigation plans and programs may 
not necessarily be limited to the above list.

4.2. In-Kind for Species

    Compensatory mitigation must be in-kind for the listed, proposed, 
or at-risk species affected by the proposed action. The same 
requirement does not necessarily apply to the habitat type affected, as 
the best conservation outcome for the species may not be an offset of 
the same habitat type or ecological attribute of the habitat impacted 
by the action. Many species use different habitat types at different 
life stages or for different life-history requirements such as feeding, 
breeding, and sheltering. For example, some species are migratory. 
Selecting a habitat type different from that impacted by the action or 
selecting more than one type of habitat for compensatory mitigation may 
best meet the conservation needs of the species.
    Offsetting impacts to designated or proposed critical habitat 
through the use of compensatory mitigation should target the 
maintenance, restoration, or improvement of the recovery support 
function of the affected critical habitat as described in the relevant 
biological or conference opinion, conservation or mitigation plan, 
mitigation instrument, permit, or conference report. Recovery plans, 5-
year reviews, proposed and final critical habitat rules, and the best 
available science on species status, threats, and needs should be 
relied on to inform the selection of habitat types subject to 
compensatory mitigation actions for unavoidable adverse impacts to 
species or critical habitat.
    The use of compensatory mitigation to minimize the impacts of 
incidental take on listed species can be based on a habitat or another 
surrogate such as a similarly affected species or ecological conditions 
under circumstances where it is not practicable to express or monitor 
the amount or extent of take in terms of the number of individuals of 
the species, in accordance with 50 CFR 402.14(i)(1)(i). A causal link 
between the surrogate and take of the species must be explained and 
must be scientifically defensible. For example, occupied habitat of a 
listed species has been used as a surrogate to express the amount or 
extent of take of the vernal pool fairy shrimp (Branchinecta lynchi) 
because quantification of take in terms of individuals is not 
practicable but the surface area of occupied vernal pool habitat is 
easily measured and monitored.

4.3. Reliable and Consistent Metrics

    Metrics developed to measure ecological functions and/or services 
at compensatory mitigation sites and impact sites must be science-
based, quantifiable, consistent, repeatable, and related to the 
conservation goals for the species. These metrics may be species- or 
habitat-based. Metrics used to calculate credits should be the same as 
those used to calculate debits for the same species or habitat type. If 
they are not the same, the relationship (conversion) between credits 
and debits must be transparent and scientifically defensible. Metrics 
must account for duration of the impact, temporal loss to the species, 
management of risk associated with compensatory mitigation, and other 
such measures. This does not mean that metrics developed to measure 
losses and gains on the landscape must be precise, as this is rarely 
possible in biological systems, but uncertainty should be noted where 
it exists and metrics must be based on the best scientific data 
available to gauge the adequacy of the compensatory mitigation. 
Modifying existing metrics on which approved conservation banks or 
other compensatory mitigation programs are based and still in use 
warrants careful consideration and must be based on best available 
science.
    Scientifically defensible metrics also are needed to measure 
biological and ecological performance criteria used to monitor the 
outcome of compensatory mitigation. It may be necessary to adjust 
metrics over time through monitoring and adaptive management processes 
in order to respond to changing conditions and ensure they remain 
effective at assessing the conservation objectives of the compensatory 
mitigation program. However, modifying metrics used to monitor 
performance should not be a substitute for lack of compliance or 
failure to implement adaptive management.

4.4. Judicious Use of Additionality

    Compensatory mitigation must provide benefits beyond those that 
would otherwise have occurred through routine or required practices or 
actions, or obligations required through legal authorities or 
contractual agreements. A compensatory mitigation measure is 
``additional'' when the benefits of the measure improve upon the 
baseline conditions of the impacted resources and their values, 
services, and functions in a manner that is demonstrably new and would 
not have occurred without the compensatory mitigation measure (600 DM 
6.4G). The additional benefits may result from restoration or 
enhancement of habitat; preservation of existing habitat that lacks 
adequate protection; management actions that protect, maintain, or 
create habitat (e.g., regularly scheduled prescribed burns or purchase 
of rights in a split estate); or other activities (e.g., an action that 
reduces threats from disease or predation, or captive breeding and 
reintroduction of individuals or populations). Baseline conditions for 
the habitat relevant to the species must be assessed prior to 
implementing the compensatory mitigation project for

[[Page 61038]]

comparison to conditions after completion of the compensatory 
mitigation project in order to quantify and verify the additional 
benefits derived from the mitigation project.
    Demonstrating additionality on lands already designated for 
conservation purposes can be challenging, particularly when the lands 
under consideration are public lands. In general, credit can only be 
issued for compensatory mitigation on public lands if additionality can 
be clearly demonstrated and is legally attainable. See section 6.2. 
Eligible Lands for guidance on using public lands for compensatory 
mitigation.

4.5. Timing and Duration

    Compensatory mitigation projects must achieve conservation 
objectives within a reasonable timeframe and for at least the duration 
of the impacts. Ideally, compensatory mitigation should be implemented 
in advance of the action that adversely impacts the species or critical 
habitat. When this is not possible or practicable, temporal losses to 
the affected species must be compensated through some means (e.g., 
increased mitigation ratio that reflects the degree of temporal loss). 
Temporal loss may include indirect effects of the action on the species 
that occur beyond the time period of any direct effects of the action 
(e.g., removal of habitat during a season when individuals of a 
migratory species are absent). Temporal loss to the species as a result 
of both direct and indirect adverse effects must be addressed when 
determining appropriate compensatory mitigation. Losses of habitat that 
require many years to restore may best be offset by a combination of 
restored habitat, preservation of existing high-quality habitat, and 
improved management of existing habitat. The amount of temporal loss, 
the form of compensatory mitigation (i.e., establishment, enhancement, 
restoration, preservation, or some combination of these forms), and the 
time anticipated to establish the compensatory mitigation on the 
landscape should be used to determine the amount of compensatory 
mitigation needed to meet the mitigation goal for the species, critical 
habitat, and/or other resources of concern.

4.6. Ensure Durability

    Compensatory mitigation must be secured by adequate legal, real 
estate, and financial protections that ensure the success of the 
mitigation. Most compensatory mitigation projects are permanent, and 
the viability of the assurances to achieve long-term stewardship of a 
mitigation site must be carefully planned and implemented to ensure 
durability. A compensatory mitigation measure is ``durable'' when the 
effectiveness of the measure is sustained for the duration of the 
associated impacts (including direct and indirect impacts) of the 
authorized action (600 DM 6.4H). The parties responsible for 
establishment, implementation, performance, long-term management of the 
mitigation site, management of financial resources, and oversight of 
various aspects of the mitigation project must be clearly identified in 
the permit or other regulatory documentation that authorizes the use of 
compensatory mitigation and, in the case of third-party mitigation 
providers, the authorizations for the establishment and use of third-
party mitigation (e.g., a conservation bank instrument). The Service 
shall require sufficient site protection (e.g., conservation easement), 
and careful consideration should be given to allowable and prohibited 
activities on compensatory mitigation sites. Activities that are 
incompatible with the purposes of compensatory mitigation sites must be 
precluded. The site protection instrument must also include provisions 
for transfer of ownership or management responsibility for the 
mitigation site to successors and, in the case of default, by the 
landowner and other responsible parties, a description of the 
remediation process. The Service will also require financial assurances 
in amounts and forms necessary to ensure a high level of confidence 
that the compensatory mitigation project will have adequate and 
accessible funding for long-term management, monitoring, reporting, and 
administrative and other performance requirements for the duration of 
the mitigation project.

4.7. Effective Conservation Outcomes and Accountability Through 
Monitoring, Adaptive Management, and Compliance

    Compensatory mitigation programs and projects will be assessed to 
determine if they are achieving their conservation objectives through 
use of science-based, outcome-based ecological performance criteria 
that are reasonable, objective, measureable, defensible, and 
verifiable. Ecological performance criteria must be tied to 
conservation goals and specific objectives identified in compensatory 
mitigation programs and projects. Continued management, monitoring, and 
reporting are required for long-term compensatory mitigation projects 
(most long-term projects are permanent) after initial ecological 
performance criteria are met (e.g., successful habitat restoration) to 
ensure expected conservation outcomes are achieved. Monitoring and 
evaluation protocols used to assess achievement of conservation 
objectives for long-term compensatory mitigation projects must be 
developed and implemented within an adaptive framework where adaptive 
management may be used to modify a program as needed if the program 
does not meet the objectives.
    The Service has authority to conduct direct oversight of all 
compensatory mitigation programs and projects for which we have 
exempted or permitted incidental take under the ESA. A standard 
condition of HCP incidental take permits provides for such oversight. 
Incidental take exemptions provided by statute to Federal agencies and 
applicants through the ESA section 7 process require that mandatory 
terms and conditions included with the take statement must be 
implemented by the federal agency or its applicant to activate the 
exemption in 7(o)(2) of the Act. Compensatory mitigation instruments 
and conservation easements must include language that clearly states 
the Service has this oversight authority. The Service may rely on 
third-party evaluators to provide project-specific information on 
ecological and administrative compliance through monitoring and other 
reports. The cost for these services must be built into and covered by 
the mitigation project. Should a mitigation project fail to meet its 
performance criteria and therefore fail to provide the expected 
conservation for the species, the responsible party must provide 
equivalent compensation through other means. A process for achieving 
remediation or alternative mitigation for compensatory mitigation 
failures beyond the control of the responsible party (e.g., unforeseen 
circumstances) must be clearly described in the mitigation instrument, 
biological and/or conference opinion, or permit.

4.8. Encourage Collaboration

    Successful landscape-scale compensatory mitigation depends on the 
engagement of affected communities and stakeholders. Governments, 
communities, organizations, and individuals support what they help to 
develop. The Service will provide opportunities for and encourage 
appropriate stakeholder participation in development of landscape-scale 
compensatory mitigation strategies that affect listed, proposed, and 
at-risk species and proposed and designated critical habitat through 
appropriate public processes such as those used for programmatic 
habitat conservation plans. Programmatic approaches to

[[Page 61039]]

compensatory mitigation programs for at-risk species are also 
encouraged, particularly when led by State agencies, and the Service 
will make every effort to participate in the planning, establishment, 
and operation of such programs as described in our draft Policy 
Regarding Voluntary Prelisting Conservation Actions (79 FR 42525). The 
Service's regional and field offices will determine or assist in 
determining, as appropriate, the level and methods of public 
participation using transparent processes.

4.9. Maintain Transparency and Predictability

    Consistent implementation of ESA programs that permit or authorize 
incidental take of listed species will provide regulatory 
predictability for everyone. The Service will share appropriate 
information on the availability of compensatory mitigation programs and 
projects with the public through online media or other appropriate 
means. Mitigation instruments, long-term management plans, mitigation 
monitoring reports, and other supporting documents for approved 
mitigation projects should be readily available to the public, with the 
exception of any personally identifiable information or other 
information that would be exempt in accordance with the Freedom of 
Information Act (5 U.S.C. 552, as amended). This information will be 
available on the Regulatory In-lieu fee and Bank Information Tracking 
System (RIBITS) for conservation banks. RIBITS can be accessed at 
https://ribits.usace.army.mil. Similar information for in-lieu fee 
programs, habitat credit exchanges, and other third-party sponsored 
mitigation projects must be made available on RIBITS when possible. 
When it is not possible to use RIBITS, another publicly accessible 
online system must be used.

5. Application of Compensatory Mitigation Under the ESA

    Sections of the ESA under which the Service has authority to 
recommend or require compensatory mitigation for species or their 
habitat are identified below. In this section, we provide guidance on 
applications of these ESA authorities within the context of 
compensatory mitigation. The compensatory mitigation standards set 
forth in section 4. Compensatory Mitigation Standards of this policy 
apply to compensatory mitigation programs and projects established 
under the ESA, as appropriate.

5.1. Section 7--Interagency Cooperation

    Section 2(c)(1) of the ESA directs all Federal departments and 
agencies to conserve endangered and threatened species. ``Conserve'' is 
defined in section 3 of the ESA as all actions necessary to bring the 
species to the point that measures provided pursuant to the ESA are no 
longer necessary (i.e., recovery or the process through which recovery 
of listed species is accomplished). This requirement to contribute to 
the conservation of listed species is reaffirmed in section 7(a)(1) of 
the ESA. Congress recognized the important role Federal agencies have 
in conserving listed species.
    When the ESA was enacted in 1973, section 7 was a single paragraph 
directing ``all Federal departments and agencies . . . [to] utilize 
their authorities in furtherance of the purposes of [the ESA] by 
carrying out programs for the conservation of endangered species and 
threatened species listed pursuant to section 4 of [the ESA] and 
[emphasis added] by taking such action necessary to insure that actions 
authorized, funded, or carried out by them do not jeopardize the 
continued existence of such endangered species and threatened species 
or result in the destruction or modification of habitat of such species 
which is determined . . . to be critical.'' In 1979, section 7 was 
amended to make subsections 7(a)(1) and 7(a)(2). Federal agencies have 
separate responsibilities concerning species and their habitats under 
these two subsections. Section 7(a)(1) is a recovery measure that 
requires Federal agencies to carry out programs for the conservation of 
listed species (with discretion to individual conservation actions or 
programs). Section 7(a)(2) is a stabilization measure that requires 
Federal agencies to ensure actions they authorize, fund, or carry out 
are not likely to jeopardize the continued existence of a listed 
species or destroy or adversely modify critical habitat.
5.1.1. Section 7(a)(1)
    Section 7(a)(1) of the ESA states ``. . . Federal agencies shall, 
in consultation with and with the assistance of the Secretary, utilize 
their authorities in furtherance of the purposes of [the ESA] by 
carrying out programs for the conservation of endangered species and 
threatened species.'' The Secretary's role has been delegated to the 
Service, and the Service therefore consults with and assists Federal 
agencies to accomplish these programs.
    Mitigation Goal: Development of landscape-scale conservation 
programs for listed and at-risk species that are designed to achieve a 
net gain in conservation for the species.
    Guidance: One way that Federal agencies can meet their 
responsibility under section 7(a)(1) of the ESA is by working with the 
Service and other conservation partners to develop landscape-scale 
conservation plans that include compensatory mitigation programs 
designed to contribute to species recovery. Landscape-scale approaches 
to compensatory mitigation, such as conservation banking and in-lieu 
fee programs, are more likely to be successful if Federal agencies, 
especially those that carry out, fund, permit or otherwise authorize 
actions that can use these programs, are involved in their 
establishment and support their use. For example, the Federal Highway 
Administration, as part of its long-term planning process, can use its 
authorities to work with the Service and other conservation partners on 
conservation programs for listed species that may be impacted by 
anticipated future actions. The conservation programs can include 
identifying priority conservation areas, developing crediting 
methodologies to value affected species, and developing guidance for 
offsetting those impacts that is expected to achieve no net loss, or 
even a net gain, in conservation for the species. These tools and 
information can then be used by conservation bank sponsors and other 
mitigation providers to develop compensatory mitigation opportunities 
(e.g., conservation banks) for use by the Federal Highway 
Administration, and also by State departments of transportation and 
other public and private entities seeking compensation to offset the 
impacts of their actions for those same species. The resulting 
compensatory mitigation program provides conservation for the species 
that would otherwise not have been achieved--a contribution to listed 
species conservation under section 7(a)(1) of the ESA by the Federal 
agency.
5.1.2. Section 7(a)(2)
    Section 7(a)(2) of the ESA states, ``[e]ach Federal agency shall . 
. . insure that any action authorized, funded, or carried out, by such 
agency . . . is not likely to jeopardize the continued existence of any 
endangered species or threatened species or result in the destruction 
or adverse modification of [critical] habitat.'' The Service determines 
through consultation under section 7(a)(2) whether or not the proposed 
action is likely to jeopardize the continued existence of listed 
species or destroy or adversely modify critical habitat. The Service 
then issues a

[[Page 61040]]

biological opinion stating our conclusion and, in the case of a finding 
of no jeopardy (or jeopardy accompanied by reasonable and prudent 
alternatives that can be taken by the Federal agency to avoid 
jeopardy), formulates an incidental take statement, if such take is 
reasonably certain to occur, that specifies the anticipated amount or 
extent of incidental take of listed species and specifies reasonable 
and prudent measures necessary or appropriate to minimize such impacts 
under section 7(b)(4) of the ESA. If the proposed action is likely to 
adversely affect critical habitat, the Service's biological opinion 
also analyzes whether adverse modification is likely to occur and 
specifies reasonable and prudent alternatives to avoid adverse 
modification, if available. If the listed species is a marine mammal, 
incidental taking is authorized pursuant to section 101(a)(5) of the 
Marine Mammal Protection Act (MMPA; 16 U.S.C. 1361 et seq.) prior to 
issuance of an incidental take statement under the ESA. Appendix C of 
this policy provides additional guidance on authorities under the MMPA.
    Mitigation Goal: The Service should work with Federal agencies to 
assist them in proposing actions that are not likely to jeopardize the 
continued existence of any listed species or result in the destruction 
or adverse modification of any designated critical habitat, as required 
under section 7(a)(2) of the ESA, and encourage Federal agencies and 
applicants to include compensation as part of their proposed actions to 
offset any anticipated impacts to these resources that are not avoided 
to achieve a net gain or, at a minimum, no net loss in the conservation 
of listed species.
    Guidance: The Service should coordinate with Federal agencies and 
encourage them to use their authorities under appropriate statutes 
(e.g., Federal Land Policy and Management Act) to avoid and minimize 
adverse impacts to listed species and designated critical habitat using 
the full mitigation sequence. Compensation is a component of the 
mitigation sequence that can be applied to minimize adverse effects of 
actions on listed species and critical habitat. Furthermore, the 
Service can work with Federal agencies to establish compensatory 
mitigation programs such as conservation banking and in-lieu fee 
programs that incentivize offsetting the effects of their actions 
through the appropriate use of compensation while expediting regulatory 
processes for the Federal agencies and applicants. Due to economies of 
scale, such mitigation programs are particularly effective at providing 
more effective and cost-efficient compensation opportunities for 
offsetting the effects of multiple actions that individually have small 
impacts.
5.1.2.1. Proposed Actions and Project Descriptions
    To better implement section 7(a)(2) of the ESA and prevent species 
declines, the Service will work with Federal agencies and applicants to 
identify conservation measures, using the full mitigation sequence, 
that can be included as part of proposed actions for unavoidable 
impacts to listed species and critical habitat to achieve, at a 
minimum, no net loss in the species' conservation. The mitigation 
sequence should be observed (i.e., avoid first, then minimize, then 
compensate), except where circumstances may warrant a departure from 
this preferred sequence. For example, it may be preferable to 
compensate for the loss of an occupied site that will be difficult to 
maintain based on projected future land use (e.g., the site is likely 
to be isolated from the population in the future) or climate change 
impacts. The Service will consider conservation measures, including 
compensatory mitigation, as appropriate, proposed by the action agency 
or applicant as part of the proposed action when developing a 
biological opinion addressing the effects of the proposed action on 
listed species and critical habitat. This consideration of beneficial 
actions (i.e., compensatory mitigation) is consistent with our 
implementing regulations at 50 CFR 402.14(g)(8). Federal agencies 
should coordinate early with the Service on the appropriateness of such 
beneficial actions as compensation for anticipated future actions.
5.1.2.2. Jeopardy or Adverse Modification Determinations and RPAs
    When the Service issues a biological opinion with a finding of 
jeopardy or adverse modification of critical habitat, we include 
Reasonable and Prudent Alternatives (RPAs) when possible. RPAs may 
include any and all forms of mitigation, including compensatory 
mitigation, that can be applied to avoid proposed actions from 
jeopardizing the existence of listed species or destroying or adversely 
modifying critical habitat, provided they are consistent with the 
regulatory definition of RPAs in 50 CFR 402.02.
5.1.2.3. No Jeopardy and No Adverse Modification Determinations and 
RPMs
    When the Service issues a biological opinion with a finding of no 
jeopardy, we provide the Federal agency and applicant (if any) with an 
incidental take statement, if take is reasonably certain to occur, in 
accordance with section 7(b)(4) of the ESA. The incidental take 
statement specifies the amount or extent of anticipated take, the 
impact of such take on the species, and any reasonable and prudent 
measures (RPMs) and implementing terms and conditions determined by the 
Service to be necessary or appropriate to minimize the impact of the 
take. RPMs can include compensatory mitigation, in appropriate 
circumstances, if such a measure minimizes the effect of the incidental 
take on the species, and as long as the measure is consistent with the 
interagency consultation regulations at 50 CFR 402.14. RPMs should also 
be commensurate with and proportional to the impacts associated with 
the action. The Service should provide an explanation of why the 
measures are necessary or appropriate. If the proposed action includes 
conservation measures sufficient to fully compensate for incidental 
take, it may not be necessary to include additional minimization 
measures (beyond monitoring) through RPMs.
5.1.3. Section 7(a)(4)
    Section 7(a)(4) of the ESA states, ``[e]ach Federal agency shall 
confer with [the Service] on any agency action which is likely to 
jeopardize the continued existence of any species proposed to be listed 
. . . or result in the destruction or adverse modification of critical 
habitat proposed to be designated for such species.'' The conference is 
designed to assist the Federal agency and any applicant to identify and 
resolve potential conflicts at an early stage in the planning process.
    Mitigation Goal: The Service should work with Federal agencies to 
assist them in proposing actions that are not likely to jeopardize the 
continued existence of any species proposed for listing or result in 
the destruction or adverse modification of any proposed critical 
habitat, in accordance with section 7(a)(4) of the ESA. Federal 
agencies and applicants should also be encouraged to include 
compensation as part of their proposed actions to offset any 
anticipated impacts to resources that are not avoided to achieve a net 
gain or, at a minimum, no net loss in their conservation.
    Guidance: The Service should coordinate with Federal agencies and 
encourage them to use their authorities to avoid and minimize adverse 
impacts to proposed and at-risk species and proposed critical habitat 
using the full mitigation sequence. The Service may recommend 
compensatory mitigation for adverse effects to proposed or at-risk

[[Page 61041]]

species during informal conference or in a conference report or 
conference opinion, or the Federal action agency or applicant may 
propose compensatory mitigation as part of the action. If a conference 
opinion or report determines that a proposed action is likely to 
jeopardize the continued existence of a proposed species or adversely 
modify or destroy proposed critical habitat, the Service will include 
RPAs that may include compensatory mitigation. If the species is 
subsequently listed or critical habitat is designated prior to 
completion of the action, the Service will give appropriate 
consideration to compensatory mitigation when confirming the conference 
opinion as a biological opinion or if formal consultation is necessary. 
This consideration of beneficial actions is consistent with our 
implementing regulations at 50 CFR 402.14(g)(8).

5.2. Section 10--Conservation Plans and Agreements

5.2.1. Safe Harbor and Candidate Conservation Agreements
    Under a candidate conservation agreement with assurances (CCAA), 
private and other non-Federal property owners may voluntarily undertake 
conservation management activities on their properties to address 
threats to unlisted species and to enhance, restore, or maintain 
habitat benefiting species that are candidates or proposed for listing 
under the ESA or other at-risk species in exchange for assurances that 
no further action on their part is required should the species become 
listed during the term of the CCAA. Under a safe harbor agreement 
(SHA), private and other non-Federal property owners may voluntarily 
undertake management activities on their property to enhance, restore, 
or maintain habitat benefiting species listed under the ESA in exchange 
for assurances that there will not be any increased property use 
restrictions as a result of their efforts that either attract listed 
species to their property or that increase the numbers or distribution 
of listed species already on their property during the term of the 
agreement. Both types of agreements are designed to encourage 
conservation of species on non-Federal land.
    Mitigation Goal: Transitioning CCAAs and SHAs into long-term/
permanent conservation that can serve as compensatory mitigation when 
appropriate and desired by landowners. Such transitions provide greater 
assurance that the species conservation efforts begun under the CCAA or 
SHA will persist on the landscape beyond the term of the original 
agreement.
    Guidance: CCAAs and SHAs are not intended to be mitigation programs 
and do not require the site protection and financial assurances that 
meet the compensatory mitigation standards set forth in this policy; 
however, they are required to meet a similar conservation standard 
(i.e., net conservation benefit) as compensatory mitigation projects, 
as described in the proposed amendments to the regulations concerning 
enhancement of survival permits under the ESA (81 FR 26769, May 4, 
2016) and revisions to the policy implementing these proposed 
regulations (81 FR 26817, May 4, 2016). The conservation achieved 
through implementation of a CCAA or SHA may be `rolled over' for use as 
compensatory mitigation if: (1) The CCAA or SHA permit has expired or 
is surrendered; (2) the landowner is in compliance with the terms and 
conditions of the CCAA or SHA at the time of transition; (3) any 
commitments for conservation for which financial compensation from 
public sources was received has been fulfilled and if not fulfilled is 
prorated and deducted from the mitigation credit assigned to the 
property; and (4) all other requirements for providing compensatory 
mitigation are met. If the Service believes the CCAA or SHA would 
provide greater conservation to the species as compensatory mitigation, 
then the Service should inform the landowner of this assessment and 
provide the landowner with the opportunity to transition their property 
from a CCAA or SHA site to a mitigation site. A mitigation instrument 
appropriate for the type of compensatory mitigation site established 
(e.g., conservation bank instrument) is required. See section 6.2. 
Eligible Lands for additional guidance.
    Landowners enrolled in CCAAs while the species remains unlisted can 
provide compensatory mitigation under a State or other non-Service 
mitigation program if the actions related to the mitigation are 
additional to those taken to satisfy the CCAA requirement. Should the 
species become listed before the CCAA expires, the landowner has the 
option to roll over the existing mitigation agreement to a Service-
approved mitigation instrument that meets the standards established in 
this policy. See the Service's draft Policy Regarding Voluntary 
Prelisting Conservation Actions (79 FR 42525) for more information on 
these types of programs.
5.2.2. Habitat Conservation Plans
    Section 10(a)(1)(B) of the ESA allows the Service to issue an 
incidental take permit for ``any taking otherwise prohibited by section 
9(a)(1)(B) [of the ESA] if such taking is incidental to, and not the 
purpose of, the carrying out of an otherwise lawful activity.'' 
Pursuant to section 10(a)(2)(A) of the ESA, an applicant must first 
submit a habitat conservation plan (HCP) that specifies, among other 
requirements, the ``. . . steps the applicant will take to minimize and 
mitigate such impacts, and the funding that will be available to 
implement such steps.'' If under section 10(a)(2)(B) of the ESA the 
Service finds the issuance criteria are met by the applicant, including 
that the applicant will, ``to the maximum extent practicable, minimize 
and mitigate the impacts of such taking,'' the Service will issue a 
permit. Plant species and unlisted animal species may also be covered 
in the HCP, provided the applicant meets requirements for their 
coverage described in the implementing regulations. The Service 
incorporates these measures as terms and conditions of the permit. 
Regulations governing incidental take permits for endangered and 
threatened wildlife species are found at 50 CFR 17.22 and 17.32. The 
Service is required to conduct a section 7(a)(2) consultation on 
issuance of an incidental take permit.
    Mitigation Goal: Consistent with the purposes and polices of the 
ESA, the Service should work with applicants to assist them in 
developing HCPs that achieve a net gain or, at a minimum, no net loss 
in the conservation of covered species and critical habitat. Though the 
statute does not require this of HCP applicants, applicants often will 
request additional measures for greater future assurances. This is 
generally achievable through programmatic approaches, which provide 
opportunities for the use of landscape-scale compensatory mitigation 
programs to offset impacts of actions.
    Guidance: Compensatory mitigation should be concurrent with or in 
advance of impacts, whenever possible. Programmatic approaches are 
recommended when they will produce regulatory efficiency and improved 
conservation outcomes for the covered species. These HCPs operate on a 
landscape scale and often use conservation banks, in-lieu fee programs, 
or other compensatory mitigation opportunities established by 
mitigation sponsors and approved by the Service. These landscape-scale 
programmatic approaches can achieve a net gain in conservation for the 
covered species as a result of economies of scale. See the draft 
revised HCP Handbook (81 FR 41986) for the various options available to 
address compensatory mitigation for HCPs.

[[Page 61042]]

5.3. Other Sections of the ESA Where Compensatory Mitigation Can Play a 
Role

    Section 4(d) of the ESA authorizes the Service to issue protective 
regulations that are necessary and advisable to provide for the 
conservation of threatened species. The Service used this authority to 
extend the prohibition of take (section 9) to all threatened species by 
regulation in 1978, through promulgation of a ``blanket 4(d) rule'' (50 
CFR 17.31). This blanket 4(d) rule can be modified by a species-
specific 4(d) rule (e.g., Special Rule Concerning Take of the 
Threatened Coastal California Gnatcatcher (58 FR 65088)). Depending on 
the threats, the inclusion of compensatory mitigation in a species-
specific 4(d) rule may help offset habitat loss, and could hasten 
recovery or preclude the need to reclassify the species as endangered.
    Section 5 of the ESA provides authority for the Service and the 
U.S. Department of Agriculture, with respect to the National Forest 
System, to establish and implement a program to conserve fish, 
wildlife, and plants, including those which are listed as endangered 
species or threatened species through:
     Use of land acquisition and other authority under the Fish 
and Wildlife Act of 1956, as amended, the Fish and Wildlife 
Coordination Act, as amended, and the Migratory Bird Conservation Act, 
as appropriate; and
     Acquisition by purchase, donation, or otherwise, of lands, 
waters, or interests therein.
    Establishment of compensatory mitigation programs that conserve 
listed or at-risk species on lands adjacent to National Forests could 
be used to offset losses to those species and their habitats by actions 
authorized by the Service and also help buffer National Forests from 
incompatible neighboring land uses.

6. General Considerations

6.1. Preferences

    The appropriate form of compensatory mitigation (i.e., 
preservation, restoration, enhancement, establishment, or a combination 
of some or all of these forms) must be based on the species' needs and 
the nature of the impacts adversely affecting the species. The Service 
has the following general preferences related to compensatory 
mitigation.
6.1.1. Preference for Strategically Sited Compensatory Mitigation
    Preference shall be given to compensatory mitigation projects sited 
within the boundaries of priority conservation areas identified in 
existing landscape-scale conservation plans as described in the 
Service's draft Mitigation Policy (81 FR 12380, March 8, 2016). 
Priority conservation areas for listed species may be identified in a 
species status assessment, recovery plan, or 5-year review.
6.1.2. Preference for Compensatory Mitigation in Advance of Impacts
    After following the principles and standards outlined in this 
policy and all other considerations being equal, preference will be 
given to compensatory mitigation projects implemented in advance of 
impacts to the species. Mitigation implemented in advance of impacts 
reduces risk and uncertainty. Demonstrating that mitigation is 
successfully implemented in advance of impacts provides ecological and 
regulatory certainty that is rarely matched by a proposal of mitigation 
to be accomplished concurrent with, or subsequent to, the impacts of 
the actions even when that proposal is supplemented with higher 
mitigation ratios. While conservation banking is by definition 
mitigation in advance of impacts, other third-party mitigation 
arrangements and permittee-responsible mitigation may also satisfy this 
preference by implementing compensatory mitigation in advance of 
impacts. In-lieu fee programs can also satisfy this preference through 
a ``jump start'' that achieves and maintains a supply of credits that 
offer mitigation in advance of impacts.
6.1.3. Preference for Consolidated Compensatory Mitigation
    Mitigation mechanisms that consolidate compensatory mitigation on 
the landscape such as conservation banks, in-lieu fee programs, and 
habitat credit exchanges are generally preferred to small, disjunct 
compensatory mitigation sites spread across the landscape. Consolidated 
mitigation sites generally have several advantages over multiple, 
small, isolated mitigation sites. These advantages include:
     Avoidance of a piecemeal approach to conservation efforts 
that often results in small, non-sustainable parcels of habitat 
scattered throughout the landscape;
     Sites that are usually a component of a landscape-level 
strategy for conservation of high-value resources;
     Cost effective compensatory mitigation options for small 
projects, allowing for effective offsetting of the cumulative adverse 
effects that result from numerous, similar, small actions;
     An increase in public-private partnerships that plan in 
advance and a landscape-scale approach to mitigation to provide 
communities with opportunities to conserve highly valued natural 
resources while still allowing for community development and growth;
     Greater capacity for bringing together financial resources 
and scientific expertise not practicable for small conservation 
actions;
     Economies of scale that provide greater resources for 
design and implementation of compensatory mitigation sites and a 
decreased unit cost for mitigation;
     Improved administrative and ecological compliance through 
the use of third-party oversight;
     Greater regulatory and financial predictability for 
project proponents, greatly reducing the uncertainty that often causes 
project proponents to view compensatory mitigation as a burden; and
     Expedited regulatory compliance processes, particularly 
for small projects, saving all parties time and money.

6.2. Eligible Lands

6.2.1. Lands Eligible for Use as Compensatory Mitigation
    Compensatory mitigation sites may be established by willing parties 
on private, public, or Tribal lands that provide the maximum 
conservation benefit for the listed, proposed, and at-risk species and 
other affected resources. Maintaining the same classification of land 
ownership between the impact area and mitigation site may be important 
in preventing a long-term net loss in conservation, in particular a 
reduction in the range of the species. Because most private lands are 
not permanently protected for conservation and are generally the most 
vulnerable to development actions, the use of private lands for 
mitigating impacts to species occurring on any type of land ownership 
is usually acceptable as long as durability can be ensured. Locating 
compensatory mitigation on public lands for impacts to species on 
private lands is also possible, and in some circumstances may best 
achieve the conservation objectives for species, but should be 
carefully considered--see section 6.2.2. Use of Public Land to Mitigate 
Impacts on Private Land for additional guidance.
    Good candidates for compensatory mitigation sites are unprotected 
lands that are high value for conservation and that are acceptable to 
the Service. Designations of high conservation value may include lands 
with existing high-value habitat or habitat that when restored, 
enhanced, established, or

[[Page 61043]]

properly managed will provide high value to the species. In addition to 
these general considerations, lands that may be good candidates for 
compensatory mitigation sites include:
     Lands previously secured through easements or other means 
but that lack the full complement of protections necessary to conserve 
the species (e.g., buffer lands for a military installation that do not 
include management);
     Lands adjacent to undeveloped, protected public lands such 
as National Wildlife Refuges or State Wildlife Management Areas;
     Private lands enrolled in programs that provide financial 
compensation from public sources to landowners in exchange for 
agreements that protect, restore, or create habitat for federally 
listed or at-risk species for a limited period of time, such as the 
Service's Partners for Wildlife Program or some Farm Bill programs 
(e.g., Environmental Quality Incentives Program) if additional 
conservation benefits are provided above and beyond the terms and 
conditions of the agreement or if the agreement/easement has expired;
     Private lands enrolled in programs that provide regulatory 
assurances to the landowner such as an SHA or CCAA that can be 
transitioned into compensatory mitigation, after all terms and 
conditions of the agreement have been met and the agreement has expired 
or the permit is surrendered in exchange for a mitigation instrument 
(see section 5.2.1. for additional guidance); and
     Private lands with existing conservation easements for 
which landowners have not received financial compensation from public 
sources or regulatory assurances from the Service.
    See section 4.1. Siting Sustainable Compensatory Mitigation for 
other considerations when selecting a site suitable for compensatory 
mitigation.
    Lands that generally do not qualify as compensatory mitigation 
sites include:
     Lands without clear title unless the existing encumbrances 
(e.g., liens, rights-of-way) are compatible with the objectives of the 
mitigation site or can be legally removed or subordinated;
     Split estates (i.e., lands which have separate owners of 
various surface and subsurface rights, usually mineral rights), unless 
a remedy can be found (see below for guidance on split estates);
     Private or public lands already designated for 
conservation purposes, unless the proposed compensatory mitigation 
project would add additional conservation benefit for the species above 
and beyond that attainable under the existing land designation;
     Private lands enrolled in government programs that 
compensate landowners who permanently protect, restore, or create 
habitat for federally listed or at-risk species (e.g., Wetland Reserve 
Program easements administered by the USDA Natural Resources 
Conservation Service);
     Inventory and debt restructure properties under the Food 
Security Act of 1985 (16 U.S.C. 3801 et seq.); and
     Lands protected or restored for conservation purposes 
under fee title transfers.
    Additional guidance on limitations involving Federal funding and 
mitigation, including grants, is provided in the Service's draft 
Mitigation Policy (81 FR 12380, March 8, 2016).
    Lands with split estate ownership and laws and policies governing 
existing rights (e.g., mining laws) may prevent land protection 
instruments (e.g., permanent conservation easements) from providing 
sufficient protection from future development of mineral rights, 
including oil and gas exploration or development. Many potential high-
value conservation properties throughout the United States are split 
estates. The risk of using split estate properties as compensatory 
mitigation should be carefully considered. When legal remedies to 
restore single ownership are not possible or practicable, other 
approaches to managing the risks may be available to bolster durability 
on split estates. A mineral deed acquisition, mineral assessment 
report, or subsurface use agreement are a few of the options for 
managing mineral rights on compensatory mitigation sites that provide 
varying levels of protection (Raffini 2012). Service personnel tasked 
with assessing the viability of split estates as mitigation sites 
should work with the Service's Realty Specialists and the Department of 
the Interior Solicitor to assess risks and possible remedies or other 
approaches.
6.2.2. Use of Public Land To Mitigate Impacts on Private Land
    In general, the Service supports compensatory mitigation on public 
lands that are already designated for the conservation of natural 
resources to offset impacts to the species on private lands only if 
additionality is clearly demonstrated and is legally attainable. 
Additionality is a reasonable expectation that the conservation 
benefits associated with the compensatory mitigation actions would not 
occur in the foreseeable future without those actions. Offsetting 
impacts to private lands by locating compensatory mitigation on public 
lands already designated for conservation purposes generally risks a 
long-term net loss in landscape capacity to sustain species (e.g., 
future reduction in the range of the species) by relying increasingly 
on public lands to serve conservation purposes. However, we recognize 
under certain circumstances this offset arrangement may provide the 
best possible conservation outcome for the species based on best 
available science. When this is the case, the Service will consider 
mitigation on public lands to offset impacts to the species on private 
lands appropriate if:
     Compensatory mitigation is an appropriate means of 
achieving the mitigation planning goal for the species;
     Additionality can be clearly demonstrated and quantified, 
and is supplemental to conservation the public agency is foreseeably 
expected to implement absent the mitigation (only conservation benefits 
that provide additionality are counted towards achieving the mitigation 
planning goal);
     Durability of the compensatory mitigation is ensured (see 
section 6.2.3. ``Ensuring Durability on Public Lands'');
     It is consistent with and not otherwise prohibited by all 
relevant statutes, regulations, and policies; and
     Private lands suitable for compensatory mitigation are 
unavailable or are available but cannot provide an equivalent or 
greater contribution towards offsetting the impacts to meet the 
mitigation planning goal for the species.
    When the public lands under consideration for use as compensatory 
mitigation for impacts on private lands are National Wildlife Refuge 
(NWR) System lands, the Regional Director must recommend the mitigation 
to the Service Director for approval. Additional considerations may 
apply for NWR System lands for habitat losses authorized through the 
section 10/404 program (i.e., Rivers and Harbors Act/Clean Water Act); 
see the Service's Final Policy on the NWR System and Compensatory 
Mitigation Under the Section 10/404 Program (USFWS 1999).
6.2.3. Ensuring Durability on Public Lands
    Ensuring the durability of compensatory mitigation on public lands 
presents particular challenges, especially regarding site protection 
assurances, long-term management, and funding assurances for long-term 
stewardship. Mechanisms available for ensuring durability of land 
protection for compensatory mitigation on public lands vary from agency 
to agency, are subject to site-specific limitations, and are likely to 
be politically and administratively challenging to secure. Some 
mechanisms may require a

[[Page 61044]]

legislative act while other mechanisms can be achieved administratively 
at various levels of an agency's organization. Tools such as protective 
designations, right-of-way grants, withdrawals, disposal or lease of 
land for conservation, conservation easements, cooperative agreements, 
and/or agreements with third parties (e.g., conservation land use 
agreement or multiparty agreement), in combination with land use plans, 
may assist in providing durable site protections. Designations made 
through land use plans alone are not adequate to provide durability as 
they are subject to modification. Durability on public lands may 
require layering of tools to preclude conflicting uses and assure that 
protection and management of the mitigation land is commensurate with 
the scope, scale, and duration of the impacts to the species.
    To ensure the durability of long-term management on public lands, 
there should be a high degree of confidence that incompatible uses are 
removed or precluded to ensure that uses of the public lands do not 
conflict with or compromise the conservation of the species for which 
the compensatory mitigation project was established. If the 
compensatory mitigation obligation will be met by the Federal agency or 
applicant, the authorization, permit, or license should include in 
whole or by reference a final mitigation plan as a formal condition of 
the authorization, permit, or license. If the compensatory mitigation 
obligation will be satisfied through use of a conservation bank or 
other third-party mitigation provider, then the authorization, permit, 
or license should identify the party responsible for providing the 
compensatory mitigation and the type(s) and amount(s) of credits that 
must be secured. Any agreements enabling mitigation on public lands 
should include provisions for equivalent alternative mitigation if 
subsequent changes in public land management directives result in 
actions on public land that are incompatible with the conservation 
needs of the species. These provisions should also be identified in the 
administrative and regulatory documents (e.g., records of decision) 
that accompany the mitigation enabling agreements.
    Ensuring funding to accomplish long-term management of compensatory 
mitigation on public lands is generally the same mechanism used for 
conservation banks and in-lieu fee programs on private lands. 
Government agencies are limited in their ability to accept, manage, and 
disburse funds for this purpose and must not be given responsibility 
for holding endowments for compensatory mitigation sites on public or 
private lands. These funds must be held by a qualified third party as 
described in section 8.3. Qualifications for Holders of Site Protection 
and Financial Assurance Instruments. A nonprofit organization with a 
conservation mission or similar organization that is formed in 
accordance with applicable State and Federal law may accept and 
administer private funds for the benefit of the public good, and may 
serve as a fiduciary for long-term management of funds for mitigation 
projects on public lands.
6.2.4. Transfer of Private Mitigation Lands to Public Agencies
    Private mitigation lands may be transferred to public agencies with 
a conservation mission if allowed by applicable laws, regulations, and 
policies. The Service considers this to be generally consistent with 
this policy if:
    a. The mitigation property is consistent with the agency's 
purposes;
    b. All administrative and ecological performance criteria have been 
met, and the mitigation project is in compliance with the mitigation 
instruments;
    c. The mitigation property has retired or forfeited any and all 
remaining mitigation credits;
    d. The agency agrees to maintain the mitigation property in 
accordance with the long-term management plan developed for the 
mitigation property as part of the original mitigation instrument; and
    e. Funding for the management, monitoring, and reporting of the 
mitigation lands continue to be held, managed, and disbursed by a 
qualified third party as described in section 8.3. Qualifications for 
Holders of Site Protection and Financial Assurance Instruments.
6.2.5. Compensatory Mitigation on Tribal Lands
    Tribal lands are generally eligible as compensatory mitigation 
sites if they meet the standards and other requirements set forth in 
this policy. Ensuring durability, particularly site protection, is 
usually a sensitive issue for a tribal nation because a conservation 
easement entrusts the land to another entity (Terzi 2012), but 
acceptable entities may be available to hold easements (see section 
8.2.3.5. ``Real Estate Assurances''). Financial assurances can be 
handled similarly to other governmental mitigation sponsors. Additional 
guidance regarding mitigation and Tribes is included in the Service's 
draft Mitigation Policy (81 FR 12380, March 8, 2016).

6.3. Service Areas

    A service area is the geographic area assigned to a compensatory 
mitigation site within which credits for a specific resource (e.g., a 
species) are utilized. The impacts for which mitigation is sought must 
be located within the designated service area for the species, unless 
otherwise approved by the Service. If a proposed action is located 
within the identified service area of a specific conservation bank, in-
lieu fee program, or other third-party mitigation program or site, then 
the proponent of that action may offset unavoidable impacts, with the 
Service's approval, through transfer of the appropriate type and number 
of credits from that mitigation program or site. Use of the credits 
outside of service areas is subject to approval by the Service. Service 
areas that apply to all mitigation mechanisms may be designated by the 
Service's regional or field offices, usually through issuance of 
species-specific mitigation guidance. This approach generally improves 
regulatory consistency in areas where more than one compensatory 
mitigation mechanism is likely to be available (e.g., banks, in-lieu 
fee programs, and permittee-responsible mitigation will all be used) 
and is helpful to Federal agencies and applicants when developing their 
project proposals.
    The service area is an important component for a potential 
mitigation sponsor who will need to evaluate the market for credits 
prior to committing to a mitigation project. The mitigation sponsor has 
the responsibility to determine if a proposed mitigation project or 
program will be financially feasible and if they will move forward with 
the action. The mitigation instrument should clearly define any 
constraints that exist within the service area. These might include 
exclusion of areas that have been identified in an approved or 
developing HCP (e.g., areas within which projects may not mitigate at 
conservation banks).

6.4. Crediting and Debiting

    A credit is a defined unit representing the accrual or attainment 
of ecological functions and/or services at a mitigation site. Credits 
are often expressed as a measure of surface area (e.g., an acre or 
hectare), linear distance of constant width (e.g., stream miles), 
number of individuals or mating pairs of a particular species, habitat 
function (e.g., habitat suitability index), or other appropriate metric 
that can be consistently quantified.

[[Page 61045]]

    Metrics developed to support credits by measuring an increase in 
ecological functions and services at compensatory mitigation sites and 
those developed to measure an expected loss or debit in ecological 
functions and services at impact sites must be science-based, 
quantifiable, consistent, repeatable, and related to the conservation 
goals for the species. In general, the method of calculating credits at 
a mitigation site should be the same as calculating debits at project 
impact sites. If use of a common ``currency'' between credits and 
debits is not practicable, the conversion between crediting and 
debiting metrics must be transparent.
    Credits are available for use as mitigation once they are verified 
and released by the Service. Credits are released in proportion to 
administrative and ecological milestones specified in the instrument 
(see section 6.6.3. ``Credit Release Schedules''). Credits are 
considered retired if they are no longer available for use as 
mitigation, including credits that have been transferred to fulfill 
mitigation obligations. Credits may also be voluntarily retired, 
without being used for mitigation, which may help achieve no net loss 
or net conservation benefit goals. Credits are not to be traded among 
developers or anyone else and cannot be re-sold. Once a credit has been 
transferred as mitigation for a particular action, it may not be used 
again.
    A mitigation site may contain habitat that is suitable for multiple 
listed species or other resources in the same spatial area. When this 
occurs, it is important to establish how the credits will be stacked or 
bundled and if they can be unstacked and sold separately. See section 
9.3. Credit Stacking and Bundling for guidance.
    Compensatory mitigation programs that use credits are voluntary and 
permittees are never required to purchase credits from these 
compensatory mitigation sources. Pricing of credits is solely at the 
discretion of the mitigation provider.

6.5. Timelines

    The Service does not have mandated timelines for review of 
conservation banks, in-lieu fee programs, or other compensatory 
mitigation projects that are not part of a consultation or permit 
decision. However, this does not mean that compensatory mitigation 
programs and projects are not a priority for the Service. Establishment 
of programmatic compensatory mitigation options for project proponents 
will provide efficiencies, particularly when developed in coordination 
with programmatic consultations and HCPs for large landscapes. These 
efficiencies include reducing the Service's ESA sections 7 and 10 
workloads, expediting incidental take authorization for project 
proponents, and achieving better conservation outcomes for listed and 
other at-risk species.

6.6. Managing Risk and Uncertainty

    Compensatory mitigation can be a valuable conservation tool for 
offsetting unavoidable adverse impacts to listed and at-risk species if 
the risk can be sufficiently managed. Predictions about the 
effectiveness of compensatory mitigation measures have varying degrees 
of uncertainty. Compensatory mitigation accounting systems (e.g., 
debiting and crediting methodologies) should consider risk and adjust 
metrics and mitigation ratios to account for uncertainty. An exact 
accounting of the functions and services lost at the impact sites and 
gained at the mitigation sites is rarely possible due to the 
variability and uncertainty inherent in biological systems and 
ecological processes. To buffer risk and reduce uncertainty, it is 
often helpful to design compensatory mitigation programs and projects 
to achieve measures beyond no net loss to attain sufficient 
conservation benefits for the species. Designing conservation plans 
with mitigation that is expected to achieve more than no net loss in 
species conservation generally increases regulatory predictability and 
can result in shorter project reviews and facilitated permitting. The 
following risk management tools should be considered when developing 
proposals for compensatory mitigation programs and projects.
6.6.1. Adaptive Management
    Adaptive management is an iterative approach to decision-making, 
providing the opportunity to adjust initial and subsequent decisions in 
light of learning with an overarching goal of reducing uncertainty over 
time. Frameworks such as the Service's strategic habitat conservation 
(SHC) model (USFWS and USGS 2006) and the Department's technical 
guidance regarding adaptive management (Williams et al. 2009) should be 
used both in the assessment of models used to inform metrics for 
compensatory mitigation programs as well as development and 
implementation of long-term management plans for individual 
compensatory mitigation projects.
    The management of natural resources can be complex, and it will be 
even more challenging to make resource decisions in a structured and 
transparent way based on science to account for uncertainty in an 
environment that has always been dynamic but is now experiencing 
accelerated climate change. Incorporating adaptive management 
strategies into compensatory mitigation site management plans can help 
to manage risk and uncertainty for any type of mitigation project if 
clear goals, objectives, and measurable success criteria are defined in 
the management plan. The monitoring data can be used to determine if 
the desired results are being achieved or if management actions need to 
be modified. Adequate long-term funding assurances are also necessary 
for successful implementation of adaptive management.
6.6.2. Buffers
    Buffers may be necessary to protect compensatory mitigation sites 
from edge effects. Undesirable edge effects may include increased 
opportunities for the introduction of invasive species, garbage 
dumping, erosion due to damaging runoff or other hydrological 
conditions on adjacent lands, noise, or a variety of other activities 
or conditions that would adversely affect the species. Small mitigation 
sites or sites with a high edge-to-area ratio are generally the most 
vulnerable to edge effects. Buffers may be able to reduce these risks 
when properly located, sized, and managed. If buffers also provide 
functions and services for the species or other resources of concern, 
compensatory mitigation credit will be provided at a level commensurate 
with the level of functions and/or services provided to the species.
6.6.3. Credit Release Schedules
    One way to manage risk associated with the establishment of 
compensatory mitigation sites is by designing credit release schedules 
that only allow credit releases when specific performance criteria are 
met. Performance criteria should be designed with clear milestones that 
identify when risk and uncertainty have been substantially reduced. 
Phased credit release based on both ecological and administrative 
performance is highly recommended. This approach will buffer situations 
in which default or other unintended events occur, allowing for 
mitigation project remediation rather than failure. Administrative 
performance relative to credit release is usually based on durability 
such as funding a specific percentage of the endowment required for 
long-term site management by a set date, and on timely submission of 
reports. The mitigation instrument should provide a schedule for credit 
releases that are tied to achievement of appropriate milestones. The 
credit

[[Page 61046]]

release schedule should reserve a significant share of the total 
credits for release until after full performance has been achieved. 
Failure to meet these milestones requires compliance actions such as 
suspension of further credit releases to reduce risk and incentivize 
compliance.
6.6.4. Mitigation Ratios
    Mitigation ratios can be used as a risk-management tool to address 
uncertainty, ensure durability, or implement policy decisions to meet 
the net gain or no net loss goal. However, ratios should be reserved 
for dealing with the true uncertainty of any mitigation program or for 
policy-based incentives and not to compensate for limited understanding 
of species' conservation needs. Mitigation ratios should be developed 
within the context of a landscape conservation plan and mitigation 
strategy that is designed to meet specific conservation goals for the 
species. The rationale for the required mitigation ratio must be 
justified and documented. Mitigation ratios must be based in science, 
readily explained and understood, and consistently applied. Effects 
contributing to the need for mitigation ratios may include, but are not 
limited to:
    a. Type of compensatory mitigation (preservation, restoration, 
enhancement, establishment, or some combination of these types);
    b. Temporal loss due to loss of functions and services to the 
species;
    c. Temporal loss due to interruption of breeding and/or impaired 
fecundity as a direct or indirect result of the proposed action;
    d. The likelihood of success of the mitigation site (e.g., past 
permittee-responsible mitigation has been shown in many cases to have a 
low likelihood of success);
    e. Degree of threat to the mitigation site by existing or 
anticipated future land use at adjacent sites;
    f. Differences in the functions and services to be lost at the 
impact site and projected to be gained at the mitigation site;
    g. Scarcity of the species or resources at the impact and 
mitigation sites;
    h. Projected change in physical parameters affecting habitat 
condition as a result of processes such as climate change; and/or
    i. Distance from the impact site.
    Mitigation ratios can be adjusted to achieve conservation goals. 
For example, mitigation ratios may be adjusted upward to create an 
incentive for avoidance of impacts in areas of high conservation 
concern (e.g., a zoned approach). Or they may be adjusted downward to 
provide an incentive for project applicants to use conservation banks 
or in-lieu fee programs that conserve habitat in high priority 
conservation areas rather than permittee-responsible mitigation, which 
is likely to be of lower quality due to smaller parcel size. Mitigation 
ratios may also be adjusted upward to move from a no net loss goal to a 
net gain goal. Such adjustments in mitigation ratios should be 
transparent, reasonable, and scientifically justified.
6.6.5. Reserve Credit Accounts
    A reserve credit account can spread the risk among mitigation 
providers and provide added assurance that the goal for the mitigation 
project or program is achieved. It may be appropriate to establish a 
``reserve credit account'' to manage risk associated with mitigation 
projects or programs that require additional assurances for 
contingencies. Potential uses of these accounts may include offsetting 
catastrophic natural events such as wildfire or flooding, adjacent land 
use that may negatively affect a mitigation site, or risk associated 
with split estates, as agreed to by the Service and defined in the 
mitigation instrument. In such cases, the use of reserve credits would 
allow the mitigation program to continue uninterrupted (i.e., prevent 
the need for temporary suspension of credit transfers while the 
landscape recovers or the situation is resolved). Reserve credit 
accounts are not to be used as a substitute for site protection or 
financial assurances required under the standards set forth in this 
policy or to offset impacts of development projects or to otherwise 
balance credit-debit ledgers due to lack of mitigation provider 
participation or compliance. Remedial processes and actions for dealing 
with unsuccessful management actions or lack of compliance by 
mitigation providers must be clearly described in the mitigation 
instrument.
    The number of reserve credits in the account should reflect a 
conservative estimate of the anticipated risk as determined by best 
available science and should be managed adaptively to changing 
conditions on the landscape. If expended, reserve credits should be 
replenished in accordance with a process and schedule clearly described 
in the mitigation instrument.
    Reserve credit accounts may also be created to contribute to a net 
gain goal for a project or program. In this case the reserve credits 
are not used, but are immediately retired to provide an overall 
benefit. If both types of credits exist within a reserve credit 
account, then each type of credit must be accounted for separately and 
used for its intended purpose.

6.7. Disclaimer Provision

    The signature of the Service on a mitigation instrument constitutes 
regulatory approval that the conservation bank, in-lieu fee program, or 
other mitigation project satisfies standards of biology and durability 
and can, therefore, be used to provide compensatory mitigation under 
the ESA in appropriate circumstances. The instrument is not a contract 
between the Service and any other entity. Any dispute arising under the 
instrument will not give rise to any claim for monetary damages by any 
party or third party. Compensatory mitigation instruments and 
agreements shall not involve participation by the Service in project 
management, including receipt or management of financial assurances or 
long-term financing mechanisms. Compensatory mitigation programs and 
projects must comply with all applicable Federal, State, and local 
laws.

7. Compensatory Mitigation Mechanisms

    Compensatory mitigation mechanisms can be divided broadly into 
habitat-based mechanisms and other non-habitat-based mitigation 
programs or projects. Whatever mechanism(s) are selected, compensatory 
mitigation is expected to provide either equivalent or additional 
conservation for the species to that lost as a result of the action.

7.1. Habitat-Based Compensatory Mitigation Mechanisms

    Compensatory mitigation mechanisms based on habitat acquisition and 
protection may consist of restoration of damaged or degraded habitat, 
enhancement of existing habitat, establishment of new habitat, 
preservation of existing habitat not already protected, or some 
combination of these that offsets the impacts of the action and results 
in or contributes to sustainable, functioning ecosystems for the 
species. Preservation of existing habitat often includes a change in 
land management that renders the site suitable for the species or 
provides additional ecological function or services for the species. 
Preservation includes site protection and is a valid mechanism for 
achieving compensatory mitigation that, at a minimum, reduces threats 
to the species. Existing habitat that is not protected and managed for 
the long term is vulnerable to loss and cannot count toward recovery of 
listed species.

[[Page 61047]]

    The five habitat-based mitigation mechanisms described below and 
compared in Table 1 differ by: (1) The party responsible for the 
success of the mitigation site (the permittee or a third party); (2) 
whether the mitigation site is within or adjacent to the action area 
(on-site) or elsewhere (off-site); and (3) whether credits are 
generated at the mitigation site for use by more than one action. All 
compensatory mitigation sites require site protection assurances, a 
management plan, and financial assurances. Habitat-based compensatory 
mitigation will be held to equivalent standards (the standards set 
forth in this policy) regardless of the mitigation mechanism(s) 
proposed. Habitat-based compensatory mitigation programs developed to 
credit conservation actions that benefit unlisted species should meet 
all compensatory mitigation standards set forth in this policy if they 
are intended to be used as compensatory mitigation for adverse impacts 
of actions undertaken after listing.
7.1.1. Permittee-Responsible Compensatory Mitigation
    Permittee-responsible compensatory mitigation is a conserved and 
managed mitigation site that provides ecological functions and services 
as part of the conservation measures associated with a permittee's 
proposed action. Permittee-responsible mitigation sites are usually 
permanent, as most proposed actions with a need for compensatory 
mitigation are anticipated to result in permanent impacts to the 
species. The permittee retains responsibility for ensuring the required 
compensatory mitigation is completed and successful. This includes 
long-term management and maintenance when the mitigation is intended to 
be permanent. Permittee-responsible compensatory mitigation may be on-
site or off-site, and each permittee-responsible mitigation site is 
linked to the specific action that required the mitigation. Permittee-
responsible mitigation approved for a specific action is not 
transferable to other actions and cannot be used for other mitigation 
needs.
7.1.2. Conservation Bank Program
    A conservation bank is a site or suite of sites established under a 
conservation bank instrument (CBI) that is conserved and managed in 
perpetuity and provides ecological functions and services expressed as 
credits for specified species that are later used to compensate for 
adverse impacts occurring elsewhere to the same species. The details of 
the establishment, operation, and use of a conservation bank are 
documented in a CBI that is approved by the Service. The signature of 
the bank sponsor and/or property owner on the CBI indicates their 
acceptance of the relevant terms, much like permit conditions are 
accepted by regulated entities. Bank sponsors may be public or private 
entities. Ensuring the required compensatory mitigation measures for a 
permitted action are completed and successful is the responsibility of 
the bank sponsor. The bank sponsor assumes liability for success of the 
mitigation through the transfer (usually a purchase by the permittee) 
of credits. Conservation banks provide mitigation in advance of 
impacts. An umbrella CBI can be established to facilitate approval and 
establishment of multiple bank sites over a specified period of time 
for a particular species, suite of species, habitat type, or ecosystem.
7.1.3. In-Lieu Fee Program
    An in-lieu fee site is a conserved and managed compensatory 
mitigation site established as part of an in-lieu fee program that 
provides ecological functions and services expressed as credits for 
specified species and used to compensate for adverse impacts occurring 
elsewhere to the same species. In-lieu fee sites are usually permanent 
as most proposed actions with a need for compensatory mitigation are 
anticipated to result in permanent impacts to the species. In-lieu fee 
programs may be sponsored by a government agency or an environmental 
conservation-based not-for-profit organization with a mission that is 
consistent with species or habitat conservation. The in-lieu fee 
sponsor collects fees from permittees that have been approved by the 
Service to use the in-lieu fee program, instead of providing permittee-
responsible compensatory mitigation. An in-lieu fee site that meets the 
mitigation requirements for the impacts of permittees' actions will be 
established when the in-lieu fee program has collected sufficient 
funds. The establishment, operation, and use of an in-lieu fee program 
requires an in-lieu fee program instrument which is approved by the 
Service and accepted by the sponsor, and the property owner(s). All 
responsibility for ensuring the required compensatory mitigation 
measures are completed and successful, including long-term management 
and maintenance, is transferred from the permittee to the in-lieu fee 
program sponsor through the transfer (usually purchase) of credits. In-
lieu fee programs generally do not provide mitigation in advance of 
impacts.
    In-lieu fee programs can also be established to fund non-habitat-
based compensatory mitigation measures. See section 7.3 Other 
Compensatory Mitigation Programs or Projects for guidance on these 
types of programs.
7.1.4. Habitat Credit Exchange
    A habitat credit exchange is an environmental market that operates 
as a clearinghouse in which an exchange administrator, operating as a 
mitigation sponsor, manages credit transactions between compensatory 
mitigation providers and project permittees. This is in contrast to the 
direct transactions between compensatory mitigation providers and 
permittees that generally occur through conservation banking and in-
lieu fee programs. Exchanges provide ecological functions and services 
expressed as credits that are conserved and managed for specified 
species and are used to compensate for adverse impacts occurring 
elsewhere to the same species. Exchanges may be designed to provide 
credits for permanent compensatory mitigation sites, short-term 
compensatory mitigation sites, or both types of sites. Habitat credit 
exchanges may operate at a local or larger landscape scale, may consist 
of one or more mitigation sites, and may obtain credits from 
conservation banks or in lieu fee programs. Exchange administrators may 
be public or private entities. Exchanges developed for federally listed 
species will require Service approval through a habitat credit exchange 
instrument signed by the Service and the exchange administrator.
7.1.5. Other Third-Party Compensatory Mitigation
    A compensatory mitigation site may be established by a third party 
to compensate for impacts to specified species for a single action 
taken by a permittee. The third-party mitigation site provides 
ecological functions and services that are conserved and managed for 
the species. Third-party compensatory mitigation sites are usually 
permanent, as most proposed actions with a need for compensatory 
mitigation are anticipated to result in permanent impacts to the 
species. Third-party mitigation sites may be located on-site or off-
site. All responsibility for ensuring the required compensatory 
mitigation measures are completed and successful, including long-term 
management and maintenance, is transferred from the permittee to the 
third-party mitigation provider and/or property owner through a bill of 
sale between the parties. This arrangement requires a mitigation 
instrument approved by the Service and accepted by the permittee, the 
third-

[[Page 61048]]

party mitigation provider, and the property owner(s). Third-party 
mitigation sites do not generate credits that can be used for other 
actions. A separate mitigation instrument is required for each action 
that proposes to use a third party to provide a compensatory mitigation 
site, even if a portion of that site has been used to mitigate a 
previous action. When a mitigation provider plans to offset multiple 
projects at a single mitigation site, the Service's preference is to 
review and approve a conservation bank instrument or in-lieu fee 
program instrument (these mechanisms are designed to serve multiple 
permittees) rather than review multiple third-party mitigation 
instruments for multiple actions. Third-party mitigation sites may 
provide mitigation in advance of the impacts.

    Table 1--Comparison of Habitat-Based Compensatory Mitigation Sites Established Under Different Mechanisms
----------------------------------------------------------------------------------------------------------------
                                                                              Instrument           Liability
      Mitigation  mechanism       Responsible  party  Credits  generated       required          transferable
----------------------------------------------------------------------------------------------------------------
Permittee-responsible Mitigation  Permittee.........  No................  No--Incidental      No.
 Site.                                                                     Take Statement
                                                                           (linked to
                                                                           Biological
                                                                           Opinion),
                                                                           Incidental Take
                                                                           Permit (for
                                                                           HCPs), or other
                                                                           authorization.
Conservation Bank...............  Bank Sponsor......  Yes...............  Yes--Conservation   Yes.
                                                                           Bank Instrument.
In-lieu Fee Program Site........  In-lieu Fee         Yes...............  Yes--In-lieu Fee    Yes.
                                   Sponsor.                                Program
                                                                           Instrument.
Habitat Credit Exchange Site....  Exchange            Yes...............  Yes--Habitat        Yes.
                                   Administrator,                          Credit Exchange
                                   Mitigation                              Instrument.
                                   Sponsor, or other
                                   identified
                                   responsible
                                   entity.
Other Third-party Mitigation      Third-party         No................  Yes--Mitigation     Yes.
 Site.                             Mitigation                              Instrument.
                                   Provider.
----------------------------------------------------------------------------------------------------------------

7.2. Short-Term Compensatory Mitigation

    The concept of short-term compensatory mitigation has merit if it 
serves the conservation goals of the species. Short term compensatory 
mitigation may be appropriate in some situations to offset impacts that 
can be completely rectified by repairing, rehabilitating, or restoring 
the affected environment within a short and predictable timeframe. 
Under this policy, short-term compensatory mitigation includes 
rectifying the damage at the impact site and providing short-term 
compensation to offset the temporal loss caused by the action to 
achieve a conservation outcome that results in, at a minimum, no net 
loss to the species.
    A short-term impact is defined in this policy as an action that 
meets the following criteria: (1) The impact is limited to harassment 
or other forms of nonlethal take; (2) the impact can be completely 
rectified through natural or active processes, and the site will 
function long term within the landscape at the same or greater level 
than before the impact; (3) restoration of the impact site can occur 
within a short and predictable timeframe based on current science and 
the knowledge of the species; and (4) all temporal loss to the species 
by the impact can be estimated and compensated. Opportunities for 
short-term compensation are likely to be very limited and may not apply 
to most species.
    Inherent in applying short-term compensatory mitigation is the 
recovery of the affected species' populations to pre-disturbance levels 
and any additional increase in population levels that was anticipated 
to occur if the action had not taken place (i.e., adjusted for temporal 
loss). Determining the amount and duration of compensatory mitigation 
needed requires substantial knowledge of the biology of the species 
(e.g., abundance, distribution, fecundity). Actions that meet the 
criteria for short-term impacts are not limited to short-term 
compensatory mitigation as a mitigation option. The Service prefers 
mitigation mechanisms that protect conservation values in perpetuity. 
Permanent compensatory mitigation either at the same or a reduced 
mitigation ratio (determined by the Service) is usually an alternative. 
Conservation banks or in-lieu fee programs with available credits that 
meet the compensatory mitigation needs for actions with short-term 
impacts are usually a good alternative to short-term compensatory 
mitigation.

7.3. Other Compensatory Mitigation Programs or Projects

    Compensatory mitigation is based on the concept of replacing or 
providing substitute resources or environments for the impacted 
resource (40 CFR 1508.20). However, mechanisms or conservation measures 
that do not exactly meet this definition, but that meet the 
conservation objectives for the specified species and are expected to 
compensate for adverse effects to species or their habitats, may be 
suitable as compensatory mitigation. These types of compensatory 
mitigation measures are acceptable if they are closely tied to recovery 
actions identified in species status assessments, recovery plans, 5-
year reviews, or best available science on the threats and needs of the 
species. Compensatory mitigation of this type is often funded through 
an in-lieu fee program. Examples of potentially suitable compensatory 
measures include, but are not limited to:
    a. Transfer and retirement of timber, water, mineral, or other 
severed rights to an already existing conservation site, thereby 
significantly reducing or eliminating the risk of future development on 
the site that would be incompatible with conservation of the species;
    b. Restricting human use of waterways or other public spaces 
through legal means to allow for increased or exclusive use by the 
species;
    c. Controlled propagation, population augmentation, and 
reintroduction of individuals of the species to offset losses from an 
action;
    d. Captive rearing and release of individuals of the species to 
offset losses from an action;
    e. Administering vaccination programs vital to species survival and 
recovery;
    f. Gating of caves that serve as habitat for the species;
    g. Construction of wildlife overpasses or underpasses to protect 
migratory passages for the species; and/or

[[Page 61049]]

    h. Programs that reduce the exposure of the species to contaminants 
in the environment that are known to cause injury or mortality.
    In rare circumstances, research or education that can be linked 
directly to the relative threats to the species and provide a 
quantifiable benefit to the species may be included as part of a 
mitigation package. Although research can assist in identifying 
substitute resources, it does not replace impacted resources or 
adequately compensate for adverse effects to species or habitat. See 
the Service's draft Mitigation Policy (81 FR 12380, March 8, 2016) for 
additional guidance on appropriate uses of research or education as 
mitigation.

8. Establishment and Operation of Compensatory Mitigation Programs and 
Projects

    Compensatory mitigation programs and projects will be established 
subject to authorization from the Service or a combination of the 
Service and other Federal and/or State regulatory agencies. 
Compensatory mitigation proposals must meet minimum criteria described 
in this policy to be acceptable. Compensatory mitigation programs 
designed to serve multiple mitigation sites should discuss within the 
program documents how the minimum criteria described in this policy 
will be met by the program and what is required for each mitigation 
site. Service regional and field offices may provide more detailed 
guidance as needed for their jurisdictions. Any additional guidance, 
including checklists, templates, or assessment methods, will be posted 
on the Web site of the regional and/or field office that developed the 
guidance documents and on RIBITS. To the extent appropriate, regional 
and/or field offices should strive for consistency within and across 
jurisdictions when developing compensatory mitigation programs and 
species/resource specific mitigation guidance.
    Service criteria for establishing compensatory mitigation projects 
should be compatible with criteria already established by statute in 
other Federal and/or State agencies so that mitigation programs and 
sites may satisfy the requirements of multiple agencies. While it is 
our intent to work with other Federal, State, and/or local agencies, 
the Service recognizes that there may be situations in which 
coordinated multi-agency processes do not exist, and project applicants 
may need to coordinate with each agency separately.

8.1. Agency Review Process

    The purpose of the agency review is to provide guidance and 
feedback to prospective mitigation providers as they develop their 
mitigation project proposals and instruments, and to project applicants 
as they develop their conservation plans and measures as part of their 
proposed actions.
8.1.1. Service Review
    The Service will conduct agency review when a mitigation proposal 
addresses solely Service-administered resources. When a mitigation 
proposal includes mitigation requirements by other agencies, a multi-
agency team should be formed to complete the review. The agency review 
process details will be developed by the Service's regional and/or 
field offices.
8.1.2. Multiple Agency Review
    We recognize that the Service has common goals with other Federal, 
State, and local agencies that may be served by collaborative review of 
mitigation project proposals. To facilitate collaboration, the 
Service's regional or field offices may develop collaborative review 
processes through a memorandum of understanding or/memorandum of 
agreement with other Federal, State, and/or local agencies.
    For conservation banks, in-lieu fee programs, and habitat credit 
exchanges in which the sponsor seeks mitigation credits under multiple 
authorities, including species under Service authority, the Service 
will serve on the Mitigation Review Team (MRT) as chair or co-chair. 
MRTs consist of Service and other Federal, State, Tribal, and/or local 
regulatory and resource agency representatives that review mitigation 
documents and advise managers and decision-makers within their 
respective agencies or Tribes on the establishment and management of 
mitigation programs and projects. The Service representative is the 
chair of the MRT. Any other agencies that will also issue credits for 
resources under their jurisdiction and will be signatories to the 
instrument are designated as co-chairs of the MRT. If a government 
agency or Tribe is the compensatory mitigation project sponsor, that 
agency or Tribe is excluded from the MRT for that project.
    For wetland and stream mitigation banks and in-lieu fee programs 
authorized by the U.S. Army Corps of Engineers (USACE) and U.S. 
Environmental Protection Agency (EPA), in which the mitigation sponsor 
also seeks mitigation credits for species under Service authority 
(e.g., joint bank), the Service will serve on an interagency review 
team (IRT) as co-chair of that IRT, as set forth in the EPA-USACE 2008 
Compensatory Mitigation Rule (33 CFR 332.8(b)(1)).
8.1.3. Dispute Resolution Process
    When co-chairs on the MRT disagree on substantive aspects of a 
mitigation program or project under review and have exhausted all tools 
for resolution within the MRT, the issue can be elevated to the 
appropriate decision makers in their respective agencies. When a 
dispute arises between co-chairs on an IRT and the bank or in-lieu fee 
program under review is a joint mitigation-conservation bank or in-lieu 
fee program to which the Service and USACE are to be signatories, the 
Service will follow the dispute resolution process described in the 
EPA-USACE 2008 Compensatory Mitigation Rule (33 CFR 332.8(e)).
    For consistency, it is recommended that the same MRT or IRT used 
for banks, in-lieu fee programs, and habitat credit exchanges also 
review other types of mitigation projects, such as permittee-
responsible mitigation and other third-party mitigation arrangements, 
when practicable to ensure consistency in the application of this 
policy.

8.2. Proposal Process and Minimum Requirements

    This policy identifies the minimum requirements for establishment 
and operation of compensatory mitigation programs or projects requiring 
Service approval. The Service's regional or field offices may develop 
more specific guidance or additional requirements. Each stage of the 
process is subject to approval by the Service, and the mitigation 
sponsor must obtain Service approval before moving on to the next stage 
in the process (e.g., proposal to draft instrument). The Service's 
minimum requirements for compensatory mitigation are described for each 
stage of the process below.
8.2.1. Scoping
    All prospective mitigation sponsors, Federal agencies, and 
applicants are encouraged to contact the Service early in their project 
planning processes. In the case of a conservation bank or in-lieu fee 
program the sponsor may engage the MRT or IRT by submitting a draft 
proposal, which includes enough information for the agencies to give 
informed feedback on site selection and overall concept. Habitat credit 
exchanges should engage the MRT early in the process. This scoping is 
optional, but highly recommended, as it provides the sponsor with an 
opportunity to

[[Page 61050]]

present their conceptual proposal and obtain feedback from the Service 
and other applicable regulatory agencies before embarking on costly 
analyses of their site(s). Early coordination with the MRT or IRT is 
especially helpful to new sponsors who have minimal experience with 
compensatory mitigation projects. Federal action agencies and 
applicants may submit a draft proposal that describes their proposed 
conservation measures for permittee-responsible mitigation early in the 
planning process.
    In general, a more detailed draft proposal will better enable the 
Service to render a timely and informed opinion as to the suitability 
of a proposed mitigation site. A draft proposal is optional, but if 
submitted, must include at least the following:
    a. Maps and aerial photos showing the location of the site and 
surrounding area;
    b. Contact information for the applicant, mitigation sponsor, 
property owner(s), and consultants;
    c. Narrative description of the property including: acreage, access 
points, street address, major cities, roads, county boundaries, 
biological resources (including the resource/species to be mitigated at 
the site), and current land use;
    d. Narrative description of the surrounding land uses and zoning, 
including the anticipated future development in the area, where known;
    e. Ownership of surface and subsurface mineral and water rights and 
other separated rights (e.g., timber rights);
    f. Existing encumbrances (e.g., utility rights-of-way); and
    g. Additional information as determined by the Service's regional 
and/or field office.
    In addition, a conservation bank, in-lieu fee program, or habitat 
credit exchange draft proposal must also include:
    a. Proposed service area(s) with map(s) and narrative(s); and
    b. Proposed type(s) and number of credits to be generated by the 
program or project.
    Umbrella conservation banks follow the same process as conservation 
banks, and must include at least one site in the proposal. The bank 
would become an umbrella bank as new sites are added.
    The Service, MRT, or IRT, as appropriate, will review the draft 
proposal and provide comments to the mitigation sponsor or applicant. 
The mitigation sponsor or applicant may then choose to submit a 
complete or full proposal for formal review by the Service, MRT, or 
IRT, as appropriate.
8.2.2. Development of the Proposal
    All mitigation sponsors must submit a full proposal describing 
their proposed mitigation program or project. Federal agencies/
applicants include any proposed compensatory mitigation measures with 
the description of the proposed action. All proposals must include 
enough information at a sufficient level of detail for the Service to 
provide informed feedback. Mitigation sponsors and Federal agencies/
applicants should be aware the Service has discretion to reject a 
proposed mitigation site that is unsuitable. In-lieu fee programs and 
habitat credit exchanges may develop a proposal prior to identifying 
specific sites, in which case they must include the non-site-specific 
information listed below.
    Proposals must include, but are not limited to, the following:
    a. Name of proposed mitigation site(s), conservation bank, or in-
lieu fee program;
    b. Maps and aerial photos showing the location of the site(s) and 
surrounding area;
    c. Contact information for the applicant, mitigation sponsor/
provider, property owner, and consultants;
    d. Narrative description of the property including: acreage, access 
points, street address, major cities, roads, county boundaries, 
biological resources, and current land use;
    e. Narrative description of the surrounding land uses and zoning, 
including the anticipated future development in the area, where known;
    f. Description of how the site fits into conservation plans for the 
species;
    g. Proposed ownership arrangements and long-term management 
strategy for the site;
    h. Qualifications of the mitigation sponsor/provider to 
successfully complete the type of project proposed, including a 
description of past such activities by the mitigation sponsor/provider;
    i. Preliminary title report showing all encumbrances on the 
proposed mitigation site;
    j. Phase I Environmental Site Assessment evaluating the proposed 
site for any recognized environmental condition(s);
    k. Ecological suitability of the site to achieve the objectives, 
including physical, chemical, and biological characteristics (i.e., 
inventory), of the site and how the site will support the planned 
mitigation;
    l. Assurances of sufficient water rights to support the long-term 
sustainability of any proposed aquatic habitat(s); and
    m. Additional information as determined by the Service's regional 
and/or field office.
    In addition, a conservation bank, in-lieu fee program, or habitat 
credit exchange draft proposal must also include:
    a. Description of the general need for the bank, in-lieu fee 
program, or credit exchange, and the basis for such a determination;
    b. Proposed service area(s) with map(s) and narrative(s); and
    c. Proposed type(s) and number of credits to be generated by the 
program or project.
    In-lieu fee programs and habitat credit exchanges that do not 
provide mitigation in advance of impacts must also include:
    a. Prioritization strategy for selecting mitigation sites and 
compensatory mitigation activities;
    b. Description of any public and private stakeholder involvement in 
plan development and implementation, including any coordination with 
Federal, State, Tribal, and local resource management authorities; and
    c. Description of the in-lieu fee program or exchange account.
8.2.3. Development of the Mitigation Instrument
    A mitigation enabling instrument will be developed after the 
Service has approved a full proposal. This instrument sets forth the 
basis on which the Service has approved the proposal and the conditions 
to which it is subject. The Service's signature on the instrument 
constitutes the Service's regulatory conclusion that the proposal meets 
the applicable mitigation standards subject to any conditions. The 
sponsor's signature constitutes agreement to those terms. The final 
mitigation instrument may only be submitted subsequent to Service 
approval of the draft instrument. The draft instrument must be based on 
the proposal and must describe in detail the physical and legal 
characteristics of the mitigation site(s), conservation bank, in-lieu 
fee or habitat credit exchange program, and how it will be established 
and operated. The instrument must also include a closure plan that 
specifies responsibilities once all credits are transferred and/or 
forfeited, performance criteria are achieved, and financial obligations 
are met. The draft instrument must include the following items:
     Restoration or habitat development plan
     Service area maps
     Credit evaluation/credit table
     Management plans

[[Page 61051]]

     Real estate assurances
     Financial assurances
     Additional requirements for business entities
     Closure plan
8.2.3.1. Restoration or Habitat Development Plan
    A restoration or habitat development plan is required if habitat is 
to be enhanced, restored, or established. This plan is typically 
submitted as an exhibit to the mitigation instrument. Minimum 
requirements for this plan include:
    a. Baseline conditions of the mitigation site, including biological 
resources; geographic location and features; topography; hydrology; 
vegetation; past, present, and adjacent land uses; species and habitats 
occurring on the site;
    b. Surrounding land uses and zoning, including anticipated future 
development in the area;
    c. Historic aerial photographs and/or historic topographic maps (if 
available), especially if restoration to a historic condition is 
proposed;
    d. Discussion of the overall habitat development goals and 
objectives;
    e. Description of activities and methodologies for establishing, 
restoring, and/or enhancing habitat types;
    f. Detailed anticipated increases in functions and services of 
existing resources and their corresponding effect within the watershed 
or other relevant geographic area (e.g., habitat diversity and 
connectivity, floodplain management, or other landscape-scale 
functions);
    g. Ecological performance criteria and a discussion of the 
suitability of the site to achieve them (e.g., watershed/hydrology 
analysis and anticipated improvement in quality and/or quantity of 
specific functions, specific elements in recovery plan goals expected 
to be accomplished);
    h. Maps detailing the anticipated location and acreages of habitat 
developed for species;
    i. Monitoring methodologies to evaluate habitat development and 
document success in meeting performance criteria;
    j. An approved schedule for reporting monitoring results;
    k. A discussion of possible remedial actions; and
    l. Additional information as determined by the Service's regional 
and/or field office.
8.2.3.2. Service Area Maps
    The minimum requirement is a map showing the service area for each 
species or credit type proposed. The map must be at an appropriate 
scale to determine the boundaries at street level and contain a 
narrative description of the limits. The Service ultimately establishes 
service areas--see section 6.3 Service Areas.
8.2.3.3. Credit Evaluation/Credit Table
    A credit evaluation is an explanation of the assessment undertaken 
to formulate the habitat value and total number of each type of credit. 
Credit evaluations are typically developed for banks and in-lieu fee 
programs, but may also apply to other types of mitigation provided by 
third parties. The credit evaluation should include a credit table 
showing the number and type of credits proposed for approval by the 
Service to transfer as compensation for unavoidable impacts to species 
as a result of permitted actions. Any spatially overlapping mitigation 
resources or credits must be clearly shown in the table with an 
explanation as to how these credits will be debited from the credit 
ledger. Overlapping, bundled, or stacked credits can be used only one 
time and for a single impact project. For details on the use of 
credits, see section 9.3. Credit Stacking and Bundling.
8.2.3.4. Management Plans
    Management plans prescribe the management, monitoring, and 
reporting activities to be conducted for the term of the mitigation 
site (e.g., in perpetuity for conservation banks). The management plan 
is often separated into two plans: the interim management plan and the 
long-term management plan. The interim management plan contains the 
requirements for managing and monitoring a mitigation site or bank from 
establishment until all performance criteria have been met, and the 
endowment fund has matured (at least 3 years after it has been fully 
funded) and can be drawn upon for long-term management expenses.
8.2.3.4.1. Interim Management Plan
    Requirements for the interim management of a site may be the same 
or very similar to those for long-term management (this is often the 
case for sites that are preserved, and on which no habitat restoration 
or establishment is undertaken). In this case, the interim management 
requirements may be included with the long-term management requirements 
in one management plan. A combined interim and long-term management 
plan must make clear that this is the case, and must cover the period 
from establishment of a mitigation site or bank through the required 
duration of the mitigation project (in perpetuity for most compensatory 
mitigation sites).
    When the requirements for the interim management of a site differ 
from those for long-term management, then the interim management plan 
may be a separate plan or a separate section within the long-term plan. 
At a minimum, the interim plan should include a description of:
    a. All management actions to be undertaken on the site during this 
period;
    b. All performance criteria and any monitoring necessary to gauge 
the attainment of performance criteria;
    c. Reporting requirements;
    d. Monitoring and reporting schedule; and
    e. A cost analysis to implement the plan.
    Reporting requirements include:
    a. Copies of completed data sheets and/or field notes, with photos;
    b. Monitoring results to date; and
    c. A discussion of all monitoring results to date to achievement of 
the performance criteria.
8.2.3.4.2. Long-Term Management Plan
    The long-term management plan is intended to be a living document 
based on adaptive management principles and should be revised as 
necessary to respond to changing circumstances (e.g., changed 
conditions as a result of climate change). Revisions to the long-term 
management plan are subject to Service approval.
    The long-term management plan must be incorporated by reference 
into the conservation easement or other site protection mechanism and 
should include at minimum:
    a. Purpose of mitigation site establishment and purpose of long-
term management plan;
    b. Baseline description of the setting, location, history and types 
of land use activities, geology, soils, climate, hydrology, habitats 
present (after the mitigation site meets performance criteria), and 
species descriptions;
    c. Overall management, maintenance, and monitoring goals; specific 
tasks and timing of implementation; and a discussion of any constraints 
which may affect goals;
    d. Biological monitoring scheme including a schedule, appropriate 
to the species and site; biological monitoring over the long term is 
not required annually, but must be completed periodically to inform any 
adaptive management actions that may become necessary over time;
    e. Reporting schedule for ecological performance and administrative 
compliance;

[[Page 61052]]

    f. Cost-analysis of all long-term management activities, cross-
referenced with the tasks described in paragraph c. above and including 
a discussion of the assumptions made to arrive at the costs for each 
task (these itemized costs are used to calculate the amount required 
for the long-term management endowment);
    g. Discussion of adaptive management principles and actions for 
reasonably foreseeable events, possible thresholds for evaluating and 
implementing adaptive management, a process for undertaking remedial 
actions, including monitoring to determine success of the changed/
remedial actions, and reporting;
    h. Rights of access to the mitigation area and prohibited uses of 
the mitigation area, as provided in the real estate protection 
instrument;
    i. Procedures for amendments and notices; and
    j. Reporting schedule for annual reports to the Service.
    Annual reports to the Service are necessary for the Service to 
fulfill its due diligence responsibilities in ensuring that authorized 
mitigation programs are successful and continue to meet their stated 
objectives. To that end, the reports must contain the appropriate level 
of detail, and at a minimum, must include:
    a. Description of mitigation area condition, with photos;
    b. Description of management activities undertaken for the year, 
including adaptive management measures, and expenditure of funds to 
implement each of these activities;
    c. Management activities planned for the coming year; and
    d. Results of any biological monitoring undertaken that year, 
including photos, copies of data sheets, and field notes. This level of 
documentation is important in verifying the conclusions reached by 
report preparers and can be essential in informing necessary adaptive 
management actions. In the interests of reducing paperwork, the Service 
may require that annual reports be submitted in electronic form and 
uploaded into RIBITS.
    In-lieu fee programs and habitat credit exchanges that do not 
provide mitigation in advance of impacts must also include:
    a. In-lieu fee or exchange program account description, including 
the specific tasks, equipment, etc., for which funds are to be used;
    b. Methodology for determining the fee schedule(s);
    c. Methodology and criteria for adding mitigation sites;
    d. Timeframe in which the funds must be used for their intended 
purpose; and
    e. Timeframe in which conservation must be implemented.
8.2.3.5. Real Estate Assurances
    Real estate assurances ensure that a compensatory mitigation 
project or site will be available for use as mitigation for the 
duration specified in the permit or consultation and protect the site 
from development or other incompatible uses that are inconsistent with 
the conservation goals of the bank or other mitigation project. 
Proposed mitigation sites must be vetted prior to acceptance by the 
Service to ensure they are biologically appropriate and legally able to 
be encumbered with a site protection instrument. A perpetual 
conservation easement held by a qualified entity, not the fee title 
owner, is the required site protection instrument when mitigation is to 
be permanent and where not prohibited by law. Conservation easements 
and other site protection instruments are generally governed by State 
laws and vary from State to State. Where conservation easements are of 
limited duration by law (e.g., 30 years), a clear schedule for re-
recording of the easement prior to expiration should be identified. The 
property owner and easement grantee should identify and address this 
task in the conservation easement.
    Granting a conservation easement on tribal land poses additional 
challenges due to Tribal sovereignty. State and local governments and 
nonprofit organizations are usually not acceptable to Tribes. A 
supportive service organization created by a consortium of Tribes is 
generally acceptable as an easement holder if the organization's 
representative for the Tribe proposing the bank or in-lieu fee program 
steps aside in any decision concerning matters arising from the bank's 
or in-lieu fee program's conservation easement. The Lummi Nation's 
Wetland and Habitat Bank provides an example (Terzi 2012).
    For land that will be held in fee by Federal agencies that cannot 
accept land encumbered by a conservation easement, that Federal agency 
will be required to place the land under conservation easement upon 
transfer to a subsequent owner. Where perpetual conservation easements 
are prohibited by law, another and/or additional long-term site 
protection mechanism approved by the Service must be used.
    Site protection instruments must meet the following requirements 
and are subject to Service approval:
    a. The site protection instrument must designate the Service as a 
third-party beneficiary with rights of enforcement (may not apply to 
Federal land protection mechanisms).
    b. The site protection instrument must incorporate the interim and 
long-term management plans for the mitigation site, as set forth 
therein.
    c. The site protection instrument must, to the extent appropriate 
and practicable, prohibit incompatible uses (e.g., clear cutting or 
mineral extraction) that might otherwise jeopardize the objectives of 
the compensatory mitigation project. Where appropriate, multiple 
instruments recognizing compatible uses (e.g., fishing or grazing 
rights) may be used.
    d. The site protection instrument must contain a provision 
requiring 60-day advance notification to the Service before any action 
is taken to void or modify the instrument or other site protection 
mechanism, including transfer of any title to or establishment of any 
other legal claims over the compensatory mitigation site.
    e. If changes in statute, regulation, or agency needs or mission 
results in an incompatible use on public lands that have been set aside 
for compensatory mitigation through a Federal facility management plan 
or other similar mechanism, the public agency authorizing the 
incompatible use is responsible for providing alternative compensatory 
mitigation that is acceptable to the Service. The alternative 
compensation must be commensurate with and proportional to the loss in 
functions and services resulting from the incompatible use.
    f. Service approval of a site protection instrument for permittee-
responsible mitigation must be obtained in advance of, or concurrent 
with, the activity causing the authorized or permitted impacts. The 
Service will require a preliminary title report and title insurance for 
the mitigation site and will consider, at a minimum, the following 
attributes of the property:
     Title/ownership;
     Existing liens, mortgages, and other financial 
encumbrances on the site;
     Existing easements, rights-of-way, and other real property 
encumbrances on the site;
     Split estates (properties where the surface and subsurface 
mineral rights are under separate ownership);
     Ownership of water rights, timber rights, and any other 
severed rights; and
     Other attributes of the proposed mitigation site that may 
be incompatible with the purposes of the mitigation.
    In the case of a split estate, the Service preference is for 
severed

[[Page 61053]]

mineral rights to be acquired by the property owner or mitigation 
sponsor and reattached to the title of the property that will be used 
for compensatory mitigation. However, in some cases, we may rely on a 
mineral assessment report, which provides a credible analysis of why 
the chances of anyone accessing any mineral resources on a proposed 
mitigation site would be so remote as to be negligible. The assessment 
must be performed by a registered professional geologist or 
professional engineer, and must contain their stamp with current 
certification. The assessment must take into consideration the scope of 
the rights that have been severed and provide a thorough and rigorous 
analysis as to why they believe that the minerals would not be 
accessed, including, but not limited to: (1) discussion of the mineral 
resources located in the area; (2) discussion of the mining history of 
the region; and (3) database records, maps, photos, and anything else 
that would support their findings. The acceptance of any specific real 
estate assurance is discretionary on the part of the Service and is 
subject to approval.
    Other potential measures for managing risk associated with split 
estates are accounting for the future uncertainty in the crediting 
methodology or establishing a reserve credit account.
8.2.3.6. Financial Assurances
    Financial assurances are necessary to ensure that compensatory 
mitigation projects will be successfully completed in accordance with a 
permit, consultation, or instrument, and any attendant performance 
criteria. The amount of the financial assurances will be reviewed by 
the Service and is expected to be based on the size and complexity of 
the compensatory mitigation project, the likelihood of success, the 
past performance of the project applicant or mitigation sponsor, and 
any other factors the Service deems appropriate to consider for any 
specific project. Financial assurances may be in the form of an 
endowment, performance bonds, escrow accounts, casualty insurance, 
letters of credit, or other appropriate instruments, depending on the 
purpose, duration, and entity providing the compensatory mitigation. 
The acceptance of any financial assurance is discretionary on the part 
of the Service and is subject to approval.
    While the Service's regional and field offices have discretion to 
determine which forms of short-term financial assurance are acceptable, 
the long-term financial assurance must be in the form of a perpetual 
endowment for permanently protected sites. The mitigation provider must 
provide documentation of the rationale for determining the amount of 
the required financial assurance. In reviewing the proposed financial 
assurance, the Service will consider the cost of providing replacement 
mitigation, including costs for land acquisition, planning and 
engineering, legal fees, mobilization, construction and monitoring, and 
long-term stewardship.
    Financial assurances should be in place prior to commencing the 
action authorizing the impact action.
8.2.3.6.1. Short-Term and Interim Financial Assurances
    Short-term financial assurances are required in an amount adequate 
to guarantee performance of measures such as construction of habitat or 
initial fencing of the mitigation site. Short-term financial assurances 
are intended to be phased out once the compensatory mitigation project 
has been determined by the Service to be successful in accordance with 
its performance criteria. The Service-approved document must clearly 
specify the conditions under which the financial assurances are to be 
released to the project applicant, mitigation sponsor, or other 
financial assurance provider, including linkage to achievement of 
performance criteria specified in the mitigation instrument or 
management plan, or compliance with terms and conditions or a permit, 
as appropriate.
    Interim financial assurances are required in an amount adequate to 
fund management and operation of the mitigation site until long-term 
financial assurances are available. The amount is expected to be 
calculated based on the projected cost of managing and monitoring the 
mitigation site for a period of at least 3 years after the long-term 
management endowment has been fully funded. Interim financial 
assurances are intended to be phased out once the endowment fund 
becomes available and may be released to the project applicant, 
mitigation sponsor, or other financial assurance provider, or may be 
used to fund the initial years of long-term management, as applicable. 
The mitigation instrument, permit, or biological opinion must clearly 
specify the conditions under which the financial assurances are to be 
released to the project applicant, sponsor, or other financial 
assurance provider, including linkage to funding the long-term 
endowment, and to specific management and operation tasks required by 
the management plan or interim management plan that are needed to 
maintain the mitigation site in accordance with the mitigation 
instrument, permit, or biological opinion.
    The following apply to short-term and interim financial assurances:
    a. Each form of financial assurance must include a provision that 
states the Service will receive notification at least 120 days in 
advance of any termination or revocation. For third-party assurance 
providers, this may take the form of a contractual requirement for the 
assurance provider to notify the Service at least 120 days before the 
assurance is revoked or terminated.
    b. In the event a mitigation project has not met performance 
criteria as specified in the mitigation instrument or management plan, 
the financial assurance will be used for corrective action. Specific 
instructions for use must be included in the financial assurance 
instrument (i.e., letter of credit, performance bond, escrow account, 
casualty insurance, etc.). These funds will be spent in accordance with 
the provisions of the instrument. When a standby trust is used (e.g., 
performance bonds or letters of credit), all amounts paid by the 
financial assurance provider shall be deposited directly into the 
standby trust fund for distribution by the trustee in accordance with 
instructions in the mitigation enabling instrument, conservation 
easement, or other controlling document. Generally the entity holding 
the easement or long-term management endowment is an appropriate 
designee.
8.2.3.6.2. Long-Term Financial Assurances
    Long-term financial assurances are required to ensure long-term 
stewardship of compensatory mitigation sites and must be in the form of 
a perpetual endowment. Endowments may be funded over time only when the 
funding source is the sale of mitigation credits or when the funding 
source is through legislative appropriation for government agency-
sponsored projects. In such cases, a funding schedule and a target date 
for fully funding the endowment must be specified in the instrument. If 
an endowment is not fully funded by its target date, the Service may, 
at its discretion, negotiate a new target date or require that the 
endowment be fully funded within 30 days of the original target date.
    Endowments must be held by qualified third parties who are subject 
to approval by the Service (see section 8.3. Qualifications for Holders 
of Site Protection and Financial Assurance Instruments). To be approved 
by the Service, the endowment holder must:

[[Page 61054]]

    a. Hold, invest, and manage the endowment to the extent allowed by 
law and consistent with modern ``prudent investor'' and endowment law, 
such as the Uniform Prudent Management of Institutional Funds Act of 
1972 (UPMIFA). UPMIFA incorporates a general standard of prudent 
spending measured against the purpose of the fund and invites 
consideration of a wide array of other factors.
    b. Disburse funds on a timely basis to meet the stewardship 
expenses of the entity holding the property consistent with UPMIFA.
    c. Use accounting standards consistent with standards promulgated 
by the Financial Accounting Standards Board or any successor entity (if 
a nonprofit) and with standards promulgated by the Governmental 
Accounting Standards Board or any successor entity (if a governmental 
entity).
    d. Provide the Service with an annual fiscal report that contains 
at least the following elements:
    i. Balance of each individual endowment at the beginning of the 
reporting period;
    ii. Amount of any contribution to the endowment during the 
reporting period including, but not limited to gifts, grants, and 
contributions received;
    iii. Net amounts of investment earnings, gains, and losses during 
the reporting period, including both realized and unrealized amounts;
    iv. Amounts distributed during the reporting period that accomplish 
the purpose for which the endowment was established;
    v. Administrative expenses charged to the endowment from internal 
or third-party sources during the reporting period;
    vi. Balance of the endowment or other fund at the end of the 
reporting period;
    vii. Specific asset allocation percentages, including, but not 
limited to, cash, fixed income, equities, and alternative investments; 
and
    viii. Most recent financial statements for the organization audited 
by an independent auditor who is, at a minimum, a certified public 
accountant.
8.2.3.7. Additional Requirements for Business Entities
    If the mitigation sponsor or owner of the mitigation site is a 
business entity, such as a Limited Liability Company (LLC), the 
sponsor/owner must provide the following documentation:
    a. Articles of incorporation or equivalent documents;
    b. Bylaws or other governing documents; and
    c. List of board members, including biographies.
8.2.3.8. Closure Plan
    The instrument must include a closure plan that describes at what 
point a mitigation project or program is ``closed'' and what 
responsibilities remain. Upon closure, the long-term stewardship phase 
begins, where the property owner is primarily responsible for managing 
the site as described in the long-term management plan, the easement 
holder is responsible for oversight as described in the real estate 
protection instrument, and the endowment holder is responsible for 
managing and making disbursements from the endowment fund as described 
in the endowment funding and management agreement or declaration of 
trust. Once a mitigation project or program is closed, it can no longer 
be used as mitigation for new impacts. Minimum criteria for closure for 
mitigation programs or sites are:
    a. Transfer of all credits or forfeiture of any remaining credits;
    b. Attainment of all performance criteria;
    c. Endowment maturation;
    d. Compliance with all terms of the mitigation instrument; and
    e. Written acknowledgement from the Service that all closure 
criteria have been met.

8.3. Qualifications for Holders of Site Protection and Financial 
Assurance Instruments

    Qualifications for entities entrusted with holding real estate 
protection instruments and/or financial assurance instruments intended 
to fund the stewardship of compensatory mitigation sites are essential 
in ensuring that mitigation is carried out for the duration specified 
in the permit or consultation. Holders of these instruments are 
proposed by the mitigation sponsor and are subject to approval by the 
Service. Minimum qualifications (listed below) must be met prior to 
Service approval of a mitigation program, project, or site.
    Land trusts that are accredited by the Land Trust Accreditation 
Commission (Commission) and are in good standing will automatically 
meet the minimum requirements for holding real estate and financial 
assurance instruments and be approved by the Service. We recognize that 
the Commission has developed national standards for excellence, 
upholding the public trust, and ensuring that conservation efforts are 
permanent. We are confident that organizations successfully completing 
this rigorous process will meet the needs for long-term stewardship of 
mitigation lands. Therefore, the use of an accredited land trust as 
holder or grantee of a conservation easement is required in those areas 
where accredited land trusts are available and willing to hold 
easements for Service-approved mitigation sites. In the event that a 
land trust acting as grantee on a conservation easement or holding 
stewardship funds fails to maintain accreditation or otherwise loses 
accredited status, the Service may require that the conservation 
easement and/or endowment fund be transferred to another entity. Should 
other national or State accreditation programs that use the same 
rigorous criteria as the Commission be developed in the future, the 
Service may consider entities qualifying in those programs for an 
expedited approval process.
    The Service recognizes that accredited land trusts willing to hold 
easements for Service-approved mitigation sites are not available in 
all areas. For those areas in which accredited land trusts are not 
available, holders of real estate and/or financial assurance 
instruments must meet these minimum qualifications prior to Service 
approval of a mitigation program or site:
    a. A nonprofit organization or government entity having as its 
principal purpose and activity the direct protection or stewardship of 
land, water, or natural resources, including, but not limited to 
agricultural lands, wildlife habitat, wetlands, and endangered species 
habitat;
    b. Adoption and demonstrated implementation of the Land Trust 
Alliances' Land Trust Standards and Practices;
    c. For holders of easements or other long-term site protection 
mechanisms, an organization with a history of successfully holding land 
or easements in long-term stewardship for the above purposes that:
    i. has been incorporated (or formed as a trust) for at least five 
years,
    ii. is named as the Grantee on at least two conservation easements, 
and
    iii. has successfully upheld their responsibilities under the 
conservation easements which they hold as Grantee;
    d. For holders of financial assurances, a successful history of 
holding and managing funds for the above purposes consistent with 
requirements under UPMIFA; and,
    e. A non-profit, non-governmental organization must also:
    i. qualify for tax exempt status in accordance with Internal 
Revenue Code section 501(c)(3);
    ii. have a Board of Directors comprising at least 51% disinterested 
parties;

[[Page 61055]]

    iii. disclose the relationship between all board members and the 
mitigation provider and/or project applicant;
    iv. be registered as a charitable trust with the appropriate State 
agency for the State in which the mitigation area is located, or 
otherwise comply with applicable State laws; and
    v. adhere to generally accepted accounting practices that are 
promulgated by the Financial Accounting Standards Board, or any 
successor entity.
    The National Fish and Wildlife Foundation (NFWF) is approved by the 
Service to hold financial assurance instruments. NFWF is organized 
under IRC section 501(c)(3), and was established by Congress in 1984 to 
support the Service's mission to conserve fish, wildlife and plant 
species. NFWF is one of the nation's largest non-profit funders for 
wildlife conservation, is transparent, and accountable to Congress, 
federal agencies and the public, and has a record for successfully 
managing endowments for permanent conservation. NFWF generally does not 
hold conservation easements.
    Government agencies are limited in their ability to accept, manage, 
and disburse funds for the purposes described here and must not be 
given responsibility for holding endowments or other financial 
assurances for compensatory mitigation projects. These funds must be 
held by a third party as described in this section.

9. Criteria for Use of Third-Party Mitigation

9.1. Project Applicability

    Activities regulated under section 7 or section 10 of the ESA may 
be eligible to use third-party sponsored mitigation, if the adverse 
impacts to the species from the particular project can be offset by 
transfer of the appropriate type and number of credits provided by the 
third party sponsored mitigation program. The impacts for which third 
party sponsored mitigation is sought must be located within the service 
area for the species provided by the third party sponsored mitigation 
program unless otherwise approved by the Service. In no case may the 
same credit(s) be used to compensate for more than one action. However, 
the same credit(s) may be used to compensate for a single action that 
requires authorization under more than one regulatory authority (e.g., 
a vernal pool restoration credit that provides mitigation for a listed 
species under the ESA and wetlands under section 404 of the CWA).
    Only credits that have been verified by the Service and released 
are considered available. Only available credits can be used to 
mitigate actions.

9.2. Transfer of Liability

    The mitigation sponsor assumes liability for success of the 
mitigation through the transfer (usually a purchase by the permittee) 
of credits or other quantified amount of compensatory mitigation 
documented in a mitigation instrument. The credit sale must be recorded 
in a fully executed sales contract between the permittee and the 
mitigation sponsor that specifically states the transfer of liability 
to be legally binding. Service offices must retain a copy of the 
executed sales contract in the project file and maintain a copy in 
RIBITS (if the bank or mitigation project is tracked in RIBITS) or in 
the file for the authorized in-lieu fee program, or habitat credit 
exchange.
    The Service's role is regulatory. The Service must approve credit 
transactions as to their conservation value and appropriate application 
for use related to any authorization or permit issued under the ESA. 
Service approval is usually through signature; however, the Service's 
signature as an approving entity on the sales contract does not mean 
the Service is party to the contract. Market and legal risks arising 
from the purchase and use of mitigation credits are borne solely by the 
parties to the sale of such credits. See section 6.7. Disclaimer 
Provisions.

9.3. Credit Stacking and Bundling

    The Service recognizes the inherent efficiencies in leveraging 
multiple conservation efforts on the landscape and encourages these 
coordinated efforts. However, compensatory mitigation and other 
conservation actions that occur on the same mitigation site must be 
accounted for separately, and all aspects of the different actions must 
be managed and tracked in a transparent manner. Stacking mitigation 
credits within a mitigation site (i.e., more than one credit type on 
spatially overlapping areas) is allowed, but the stacked credits cannot 
be used to provide mitigation for more than one permitted impact action 
even if all the resources included in the stacked credit are not needed 
for that action. To do so would result in a net loss of resources in 
most cases because using a species credit separately from the functions 
and services that accompany its habitat, such as carbon sequestration 
or pollination services, would result in double counting (i.e., double 
dipping). Double counting is selling or using a unit of the same 
ecosystem function or service on the ground more than once. This can 
occur through an accounting error in which the credit is sold twice, 
and it also can occur when stacked credits are unstacked and one or 
more functions or services are sold separately. For example, a credit 
representing an acre of habitat is sold once as a species habitat 
credit for a permitted action and again as a carbon credit for a 
different action in a different location. The loss of species habitat 
at the first impact site included all functions and services associated 
with that habitat including carbon sequestration, so selling that same 
unit of compensatory mitigation again for carbon sequestration results 
in no carbon offset for the loss of carbon sequestration at the second 
impact location. Using a stacked credit separately to reflect its 
various values is an ecologically challenging accounting exercise.
    Compensatory mitigation projects may be designed to holistically 
address requirements under multiple programs and authorities for the 
same action and may use bundled credits to accomplish this goal. For 
example, a stream credit may satisfy requirements for an U.S. Army 
Corps of Engineers section 404 CWA permit and issuance of incidental 
take authority under the ESA for a listed mussel species occurring in 
that stream, or a county-wide HCP may establish an in-lieu fee program 
for which a single fee is collected from project applicants for a 
permit which covers multiple mitigation obligations under Federal, 
State, and local authorities. In both these examples the bundled credit 
is used as a single commodity (i.e., it is not unbundled or unstacked) 
and is only used once.

9.4. Use of Credits for Mitigation Under Authorities Other Than the ESA

    Compensatory mitigation projects established for use under one 
Service program (e.g., Ecological Services) may also be used to satisfy 
the environmental requirements other Service programs (e.g., Migratory 
Birds or Refuges) or other Federal, State, or local agency programs 
consistent with the laws and requirements of each respective program. 
However, the same credits may not be used for more than one authorized 
or permitted action (i.e., no double counting of mitigation credits).

10. Compliance and Tracking

    A tracking system is essential in ensuring compliance with the 
mitigation instruments used to implement compensatory mitigation 
programs described in this policy.

[[Page 61056]]

Tracking systems also facilitate consistency in the implementation of 
compensatory mitigation programs and projects. It is vital that the 
Service track compliance directly for permittee-responsible mitigation 
and, at a minimum, through third-parties responsible for operating 
compensatory mitigation programs or projects such as in-lieu fee 
programs and habitat exchanges. Minimum requirements for compliance and 
tracking are described below. More specific guidance (e.g., monitoring 
report outlines or templates) may be developed or additional 
requirements may be set by Regional and/or Field.
    Transactions (credit withdrawals) at a Service authorized 
mitigation program or project that are not related to ESA compliance 
and are not approved by the Service must be tracked in the same 
tracking system. The Service is not liable for any event or transaction 
that eludes detection through the Service's tracking function.

10.1. General Compliance

10.1.1. Conservation Banks, In-Lieu Fee Programs, Habitat Credit 
Exchanges
    Conservation banks, in-lieu fee programs, and habitat credit 
exchanges must comply with the terms of their instruments, including 
meeting performance criteria and submitting required reports. 
Appropriate action will be taken if the Service determines a 
compensatory mitigation program is not meeting performance criteria or 
complying with the terms of the enabling instrument or site protection 
instrument. Such actions may include decreasing available credits, 
suspending the use of credits as mitigation, and/or determining that 
financial assurance resources should be used to perform remediation or 
alternative mitigation as provided by the mitigation instrument.
10.1.2. Permittee-Responsible Mitigation Projects
    Permittee-responsible mitigation projects are linked to one 
permitted action, therefore no credits are available to reduce or 
suspend. Failure to complete mitigation or failure of a mitigation site 
to meet performance criteria may trigger reinitiation under 50 CFR 
402.16 or suspension of a section 10(a)(1)(B) permit. If the Service 
determines that a permittee-responsible mitigation site is not meeting 
performance criteria, appropriate corrective actions will be taken, 
such as determining financial assurance resources should be used to 
perform remediation or alternative mitigation, as provided by the 
mitigation instrument.
10.1.3. Other Third-Party Mitigation Projects
    Similar to conservation banks and in-lieu fee programs the 
responsibility for ensuring success of a mitigation project provided by 
a third party lies with the third party. Like permittee-responsible 
mitigation projects, these projects are linked to a single permitted 
action. If the Service determines that a third party mitigation project 
is not meeting performance criteria or is not in compliance with the 
mitigation instrument or site protection instrument, appropriate 
corrective actions will be taken, such as determining financial 
assurance resources should be used to perform remediation or 
alternative mitigation, as provided by the mitigation instrument.

10.2. Reporting

    Reports will be required at least annually. Reports document the 
compensatory mitigation program's or project's performance. Reports 
generally include a description of the mitigation site conditions, 
attainment of performance criteria, status of the endowment fund or 
other financial assurance mechanism, expenditures, and management 
actions taken and expected to be taken in the future. See Section 8.2. 
Proposal Process and Minimum Requirements for other report 
requirements. Conservation banks, in-lieu fee programs, and habitat 
credit exchanges must also include a copy of the ledger with a record 
of all credit transactions to date.
    Conservation banks, in-lieu fee programs, and habitat credit 
exchanges often have requirements for reaching milestones which lead to 
the release of credits to be made available for use as mitigation. 
Annual monitoring reports document the condition of the sites and the 
achievement of these milestones. Credits should not be released until 
all reports are submitted and verified.

10.3. Third-Party Monitoring of Real Estate Protection

    Third-party monitoring of the real estate protection instrument 
(e.g., conservation easement) is necessary to ensure the conservation 
values of the mitigation site are protected for the required duration. 
Annual reports to the Service, describing the site conditions and 
compliance/non-compliance with the site protections, must be built into 
the real estate protection instruments. The Service must be designated 
as a third-party beneficiary with rights of enforcement in the easement 
or similar site protection instruments. This is necessary to allow the 
Service continued access to the site and oversight authority after the 
conservation bank has closed or the in-lieu fee program or other 
compensatory mitigation mechanism has terminated. This third party 
beneficiary right shall not involve the Service in project management 
or receipt or management of financial assurance mechanisms.

10.4. Credit Transfers

    Each use of credits as compensatory mitigation is subject to 
authorization by the Service. The Service will review each proposed use 
of credits to determine if the mitigation program is in good standing 
(i.e., is in compliance with the instrument and site protection 
mechanism) and has the appropriate available credits. The criteria that 
determine whether a bank, in-lieu fee program, or habitat credit 
exchange is in good standing will be contained in its instrument and 
can include, but is not limited to meeting performance criteria, 
submitting reports, and funding the management endowment on schedule. 
If upon review, the Service determines that the mitigation program is 
not in good standing or does not have the appropriate available 
credits, then the sponsor will be notified of such determination. In 
such case, the use of the credits as compensatory mitigation will not 
be authorized until the sponsor corrects the deficiency. If upon 
review, the Service determines that the mitigation program is in good 
standing, the Service will provide authorization in writing approving 
the pending credit transfer. If there is a substantial delay between 
the Service's authorization of a pending credit transfer and the actual 
transfer of credits, an updated review of the mitigation program's 
standing may be conducted. It is the responsibility of the permittee to 
secure the transfer of credits in a timely manner or contact the 
Service and request reauthorization of the pending credit transfer.

10.5. Tracking Compensatory Mitigation

    Monitoring reports and other documents used to evaluate compliance 
will be uploaded into the Service's Environmental Conservation and 
Online System (ECOS) or the Regulatory In-lieu fee and Bank Information 
Tracking System (RIBITS), as appropriate. Permittee-responsible 
mitigation is tracked in ECOS. Conservation banks are tracked in 
RIBITS. In-lieu fee programs and habitat credit exchanges will be 
tracked in RIBITS when sufficient modifications to RIBITS have been 
made to accommodate these mitigation mechanisms. Until that time, in-
lieu fee programs and habitat credit exchanges must be tracked in 
databases

[[Page 61057]]

that can be accessed by the Service and the public, as appropriate. 
RIBITS can be accessed at: https://ribits.usace.army.mil/.
    Documents uploaded into the RIBITS cyber repository will be 
available to the public to the extent allowed by law and in accordance 
with the requirements of mitigation instruments approved by the 
Service. At a minimum, mitigation instruments and credit ledgers will 
be visible to the public. Regional and/or Field Offices will determine 
the types of additional documents to be uploaded into the cyber 
repository and made visible to the public. Field Offices will 
coordinate with mitigation sponsors to ensure that credit ledgers are 
updated at least monthly.

References Cited

Clement, J.P. et al. 2014. A strategy for improving the mitigation 
policies and practices of the Department of the Interior. A report 
to the Secretary of the Interior from the Energy and Climate Change 
Task Force, Washington, DC. 25 pp.
Fox, J. and Nino-Murcia, A. 2005. Status of Species Conservation 
Banking in the United States. Conservation Biology 19:996-1007.
Presidential Memorandum (PM). 2015. ``Mitigating Impacts on Natural 
Resources for Development and Encouraging Related Private 
Investment.'' Issued November 3, 2015.
Raffini, E. 2012. Mineral Rights and Banking. National Environmental 
Newsletter 34:9-10. Environmental Law Institute, Washington, DC.
Terzi, G. 2012. The Lummi Nation Wetland and Habitat Bank--Restoring 
a Piece of History. National Wetlands Newsletter 34:12-13. 
Environmental Law Institute, Washington, DC.
U.S. Fish and Wildlife Service. 1999. Final Policy on the National 
Wildlife Refuge System and Compensatory Mitigation Under the Section 
10/404 Program. September 10, 1999. Federal Register 64:49229-49234. 
U.S. Fish and Wildlife Service. 2003. Guidance for the 
Establishment, Use and Operation of Conservation Banks. May 2003. 
U.S. Department of the Interior Fish and Wildlife Service.
U.S. Fish and Wildlife Service. 2003. Guidance on the Establishment, 
Use, and Operation of Conservation Banks. May 2, 2003. U.S. 
Department of the Interior Fish and Wildlife Service. 18 pp.
U.S. Fish and Wildlife Service. 2008a. Strategic Habitat 
Conservation Handbook: A Guide to Implementing the Technical 
Elements of Strategic Habitat Conservation (Version 1.0). June 2008. 
U.S. Department of the Interior Fish and Wildlife Service. 22 pp.
U.S. Fish and Wildlife Service. 2008b. Guidance on Recovery 
Crediting for the Conservation of Threatened and Endangered Species. 
July 2008. U.S. Department of the Interior Fish and Wildlife 
Service.
U.S. Fish and Wildlife Service. 2016. Proposed Revisions to the U.S. 
Fish and Wildlife Service Mitigation Policy. March 8, 2016. U.S. 
Department of the Interior Fish and Wildlife Service.
U.S. Fish and Wildlife Service and U.S. Geological Survey. 2006. 
Strategic Habitat Conservation: Final Report of the National 
Ecological Assessment Team. U.S. Department of the Interior, 
Washington, DC. 48 p.
Williams, B. K., R. C. Szaro, and C. D. Shapiro. 2009. Adaptive 
Management: The U.S. Department of the Interior Technical Guide. 
Adaptive Management Working Group, U.S. Department of the Interior, 
Washington, DC.

Appendix A: List of Acronyms and Abbreviations Used in This Policy

CCAA Candidate Conservation Agreement with Assurances
CEQ Council on Environmental Quality
CFR Code of Federal Regulations
CWA Clean Water Act
ECOS Environmental Conservation and Online System
EPA Environmental Protection Agency
ESA Endangered Species Act
FWCA Fish and Wildlife Coordination Act
HCP Habitat Conservation Plan
IHAs Incidental Harassment Authorizations
IRT Interagency Review Team
ITRs Incidental Take Regulations
MMPA Marine Mammal Protection Act
MRT Mitigation Review Team
NEPA National Environmental Policy Act
NWR National Wildlife Refuge
RPA Reasonable and Prudent Alternative
RPM Reasonable and Prudent Measure
RIBITS Regulatory In-lieu fee and Bank Information Tracking System
SHA Safe Harbor Agreement
SHC Strategic Habitat Conservation
UPMIFA Uniform Prudent Management of Institutional Funds Act
USACE United States Army Corps of Engineers
U.S.C. United States Code
USDA United States Department of Agriculture
USFWS United States Fish and Wildlife Service
USGS United States Geological Survey

Appendix B: Glossary of Terms Related to Compensatory Mitigation

    Definitions in this section apply to the implementation of the 
U.S. Fish and Wildlife Service (Service) Endangered Species Act 
Compensatory Mitigation Policy and were developed to provide clarity 
and consistency. Some definitions are defined in Service authorities 
such as the Endangered Species Act or the National Environmental 
Policy Act, or in regulations or policies existing at the time this 
policy was issued. Other definitions have been developed based on 
compensatory mitigation practices. Definitions in the glossary do 
not substitute for statutory or regulatory definitions in the 
exercise of those authorities.
    Action--an activity or program implemented, authorized, or 
funded, in whole or in part, by Federal agencies; or a non-Federal 
activity or program for which one or more of the Service's 
authorities apply to make mitigation recommendations, specify 
mitigation requirements, or provide technical assistance for 
mitigation planning (81 FR 12380; March 8, 2016).
    Action area--all areas to be affected directly or indirectly by 
the Federal action and not merely the immediate area involved in the 
action (50 CFR 402.02). See also ``affected area.''
    Adaptive management--a systematic approach for improving 
resource management by learning from management outcomes. An 
adaptive approach involves exploring alternative ways to meet 
management objectives, predicting the outcomes of alternatives based 
on the current state of knowledge, implementing one or more of these 
alternatives, monitoring to learn about the impacts of management 
actions, and then using the results to update knowledge and adjust 
management actions. Adaptive management focuses on learning and 
adapting, through partnerships of managers, scientists, and other 
stakeholders who learn together how to create and maintain 
sustainable resource systems (Williams et al. 2009). As applied to 
compensatory mitigation, it is a management strategy that 
anticipates likely challenges associated with compensatory 
mitigation projects and provides for the implementation of 
activities to address those challenges, as well as unforeseen 
changes to those projects. It requires consideration of the risk, 
uncertainty, and dynamic nature of compensatory mitigation projects 
and guides modification of those projects to achieve stated 
biological goals. It includes the selection of appropriate measures 
that will ensure that the resource functions and services are 
provided and involves analysis of monitoring results to identify 
potential problems of a compensatory mitigation project and the 
identification and implementation of measures to rectify those 
problems (modified from 33 CFR 332.2).
    Additionality--conservation benefits of a compensatory 
mitigation measure that improve upon the baseline conditions of the 
impacted resources and their values, services, and functions in a 
manner that is demonstrably new and would not have occurred without 
the compensatory mitigation measure (600 DM 6.4G).
    Additive impacts, additive effects--the combined effects of past 
actions on a species, other resource, or community; impacts of an 
action may be relatively insignificant on their own, but when 
considered with the impacts from other actions as they accumulate 
over time collectively lead to significant overall loss or 
degradation of resources. See also ``cumulative effects.''
    Affected area--the spatial extent of all effects, direct and 
indirect, of a proposed action to fish, wildlife, plants, or their 
habitats (81 FR 12380; March 8, 2016). See also ``action area.''
    Affected resources--those resources that are subject to adverse 
effects of an action (81 FR 12380; March 8, 2016).
    Applicant--any person who requires formal approval or 
authorization from a Federal agency as a prerequisite to conducting 
an action (50 CFR 402.02);

[[Page 61058]]

``person'' means an individual, corporation, partnership, trust, 
association, or any other private entity; or any officer, employee, 
agent, department, or instrumentality of the Federal Government, of 
any State, municipality, or political subdivision of a State, or of 
any foreign government; any State, municipality, or political 
subdivision of a State; or any other entity subject to the 
jurisdiction of the United States (16 U.S.C. 1532(13)).
    At-risk species--candidate species and other unlisted species 
that are declining and are at risk of becoming a candidate for 
listing under the Endangered Species Act. This may include, but is 
not limited to, State listed species, species identified by States 
as species of greatest conservation need, or species with State 
heritage ranks of G1 or G2.
    Avoidance--avoiding the impact altogether by not taking a 
certain action or parts of an action (40 CFR 1508.20).
    Bank Sponsor--any public or private entity responsible for 
establishing and, in most circumstances, operating a conservation 
bank. Bank sponsors are most often private individuals, companies, 
or Limited Liability Corporations; but may also be non-governmental 
organizations, Tribes, or government agencies. See also ``mitigation 
sponsor.''
    Baseline--the pre-existing condition of a defined area of 
habitat or a species population that can be quantified by an 
appropriate metric to determine level of functions and/or services 
and re-measured at a later time to determine if the same area of 
habitat or species population has increased, decreased, or 
maintained the same level of functions and/or services.
    Candidate Conservation Agreement with Assurances (CCAA)--a 
formal agreement between the Service or the National Marine 
Fisheries Service and one or more non-Federal parties who 
voluntarily agree to manage their lands or waters to remove threats 
to candidate or proposed species and in exchange receive assurances 
that their conservation efforts will not result in future regulatory 
obligations in excess of those they agreed to at the time they 
entered into the Agreement. The management activities included in 
the Agreement must significantly contribute to elimination of the 
need to list the target species when considered in conjunction with 
other landowners conducting similar management activities within the 
range of the species (USFWS CCAA Policy).
    Candidate species (candidate)--any species being considered by 
the Secretary for listing as an endangered or threatened species, 
but not yet the subject of a proposed rule (50 CFR 424.02); a 
species for which the Service or the National Marine Fisheries 
Service has on file sufficient information on biological 
vulnerability and threats to support a proposal to list as 
endangered or threatened under the Endangered Species Act.
    Compensatory mitigation (compensation)--compensation for 
remaining unavoidable impacts after all appropriate and practicable 
avoidance and minimization measures have been applied, by replacing 
or providing substitute resources or environments (See 40 CFR 
1508.20.) through the restoration, establishment, enhancement, or 
preservation of resources and their values, services, and functions. 
(600 DM 6.4C)
    Compensatory mitigation project--compensatory mitigation 
implemented by the action agency, a permittee, or a mitigation 
sponsor. Compensatory mitigation projects include permittee-
responsible mitigation, conservation banks, in lieu fee programs and 
sites, habitat credit exchanges, and other third party compensatory 
mitigation projects.
    Conservation, conserve, conserving--to use and the use of all 
methods and procedures which are necessary to bring any endangered 
or threatened species to the point at which the measures provided 
pursuant to the Endangered Species Act are no longer necessary (16 
U.S.C. 1532(3)).
    Conservation bank--a site, or suite of sites, established under 
a conservation bank instrument that is conserved and managed in 
perpetuity and provides ecological functions and services expressed 
as credits for specified species that are later used to compensate 
for impacts occurring elsewhere to the same species.
    Conservation Bank Instrument (CBI), (Conservation Bank Agreement 
(CBA))--the legal document for the establishment, operation and use 
of a conservation bank. When a conservation bank is established 
jointly with a wetland mitigation bank, the instrument is often 
referred to as a Mitigation Bank Instrument (MBI) or Bank Enabling 
Instrument (BEI).
    Conservation easement--a recorded legal document established to 
conserve biological resources for a specified duration, usually in 
perpetuity, on a identified conservation property and which 
restricts certain activities and requires certain habitat management 
obligations for the conservation property.
    Conservation Land Use Agreement, Federal Facility Management 
Plan--real estate assurance mechanisms used by some Federal or State 
agencies that do not have the authority to limit use of the agency 
property by recording a restriction on deed such as a conservation 
easement.
    Conservation measures (conservation actions)--measures pledged 
in the project description that the Federal agency or applicant will 
implement to minimize, rectify, reduce, and/or compensate for the 
adverse impacts of the development project on the species. 
Conservation measures designed to compensate for unavoidable impacts 
may include the restoration, enhancement, establishment, and/or 
preservation of species habitat or other measures conducted for the 
purpose of offsetting adverse impacts to the species. Upon issuance 
of a permit, license or other such authorization associated with the 
proposed project, implementation of that project requires 
implementation of the conservation measures as well as any other 
terms and conditions of the permit.
    Conservation objective--a measurable expression of a desired 
outcome for a species or its habitat resources. Population 
objectives are expressed in terms of abundance, trend, vital rates, 
or other measurable indices of population status. Habitat objectives 
are expressed in terms of the quantity, quality, and spatial 
distribution of habitats required to attain population objectives, 
as informed by knowledge and assumptions about factors influencing 
the ability of the landscape to sustain the species (81 FR 12380; 
March 8, 2016).
    Conservation plan (species conservation plan)--a plan developed 
by Federal, State, and/or local government agencies, Tribes, or 
appropriate non-governmental organizations, in consultation with 
relevant stakeholders, for the specific goal of conserving one or 
more listed or at-risk species. A conservation plan is developed 
using a landscape-scale approach and addresses the status, needs and 
threats to the species and usually includes recommended conservation 
measures for the conservation/recovery of the species. Examples of 
species conservation plans include species conservation frameworks, 
rangewide conservation plans, and conservation plans developed as 
part of a large landscape Habitat Conservation Plan.
    Covered species--species specifically included in a Conservation 
Bank Instrument, Habitat Conservation Plan, Safe Harbor Agreement, 
Candidate Conservation Agreement with Assurances, rangewide 
conservation plan, or other such conservation plan for which a 
commitment is made to achieve specific conservation measures for the 
species.
    Credit (species credit, habitat credit)--a defined unit 
representing the accrual or attainment of ecological functions and/
or services for a species at a mitigation site or within a 
mitigation program.
    Credit bundling--allowing a single unit of a mitigation site to 
provide compensation for two or more spatially overlapping ecosystem 
functions or services which are grouped together into a single 
credit type and used as a single commodity to compensate for a 
single permitted action. A bundled credit may be used to compensate 
for all or a subset of the functions or services included in the 
credit type but may only be used once, even if all functions and 
services represented in the credit type were not required for the 
permitted action. See also ``credit stacking.''
    Credit stacking--allowing a single unit of a mitigation site to 
provide two or more credit types representing spatially overlapping 
ecosystem functions or services which can be unstacked and used as 
separate commodities to compensate for different permitted actions. 
Credit stacking can result in double counting (i.e., a net loss of 
resources on the landscape) if the same functions or services are 
not also accounted for separately at all impact sites. See also 
``credit bundling'' and ``double counting.''
    Credit Transfer--the use, sale or conveyance of credits by a 
bank sponsor or mitigation provider to a permittee or other entity 
for the purposes of offsetting impacts of an action.
    Critical habitat--specific areas within the geographical area 
occupied by the species at the time it is listed as threatened or 
endangered under the Endangered Species Act, on which are found 
those physical or biological features essential to the conservation 
of the species and which may require special management 
considerations

[[Page 61059]]

or protection; and specific areas outside the geographical area 
occupied by the species at the time it is listed, which are 
determined by the Secretary of the Department of the Interior to be 
areas essential for the conservation of the species (16 U.S.C. 
1532(5)(A)).
    Cumulative effects--those effects of future State or private 
activities, not involving Federal activities, that are reasonably 
certain to occur within the action area of the Federal action 
subject to consultation under the Endangered Species Act (50 CFR 
402.14(g)(3)). Under the National Environmental Policy Act 
cumulative effects are defined as the impact on the environment 
which results from the incremental impact of the action when added 
to other past, present, and reasonably foreseeable future actions 
regardless of what agency (Federal or non-Federal) or person 
undertakes such other actions (40 CFR 1508.7).
    Debit--a defined unit representing the loss of ecological 
functions and/or services for a species at an impact site. Debits 
should be expressed using the same metrics used to value credits at 
mitigation sites.
    Direct effects--those effects to the species or other resource 
that are caused by the action and occur at the same time and place 
(81 FR 12380; March 8, 2016).
    Double-counting (double-dipping)--using a credit, however 
defined, representing the same unit of ecosystem function or service 
on a mitigation site more than once. This is not allowed.
    Durability--the condition or state in which the measurable 
environment benefits of the compensatory mitigation project or 
measure is sustained, at a minimum, for the duration of the 
associated impacts (including direct and indirect impacts) of the 
authorized action. To be durable, mitigation measures effectively 
compensate for remaining unavoidable impacts that warrant 
compensatory mitigation, use long-term administrative and legal 
provisions to prevent actions that are incompatible with the 
measure, and employ financial instruments to ensure the availability 
of sufficient funding for the measure's long-term monitoring, site 
protection, and management (600 DM 6.4G).
    Effects (effects of the action)--changes in the environmental 
conditions caused by an action that are relevant to the species or 
other resources (81 FR 12380; March 8, 2016), including the direct, 
indirect, and cumulative effects of the action on the species and 
other activities that are interrelated to, or interdependent with, 
that action as defined at 50 CFR 402.02. See also ``cumulative 
effects.''
    Endangered species--any species which is in danger of extinction 
throughout all or a significant portion of its range (16 U.S.C. 
1532(6)).
    Endowment--as used in this policy, funds that are conveyed 
solely for the long-term stewardship of a mitigation property and 
are permanently restricted to paying the costs of management and 
stewardship of that property. The management of endowment funds is 
generally governed by state and federal laws, as applicable. 
Endowments do not include funds conveyed for meeting short term 
performance objectives of a mitigation project.
    Enhancement--activities conducted in existing habitat of the 
species that improve one or more ecological functions or services 
for that species, or otherwise provide added benefit to the species 
and do not negatively affect other resources of concern. Compare 
with ``restoration.''
    Establishment (creation)--construction of habitat of a type that 
did not previously exist on a mitigation site but which will provide 
a benefit to the species and does not negatively affect other 
resources of concern. Compare with ``restoration.''
    Fee title (fee)--an interest in land that is the most complete 
and absolute ownership in land; it is of indefinite duration, freely 
transferable and inheritable.
    Fish or wildlife--any member of the animal kingdom, including 
without limitation any mammal, fish, bird (including migratory, non-
migratory, or endangered bird for which protection is also afforded 
by treaty or other international agreement), amphibian, reptile, 
mollusk, crustacean, arthropod or other invertebrate (16 U.S.C. 
1532(8)).
    Functions--the physical, chemical, and biological processes that 
occur in ecosystems (33 CFR 332.2); functions are the ecological 
processes necessary for meeting species' habitat and lifecycle 
needs.
    Habitat--an area with spatially identifiable physical, chemical, 
and biological attributes that supports one or more life-history 
processes for the species (81 FR 12380; March 8, 2016).
    Habitat Conservation Plan (HCP)--a planning document that 
describes the anticipated effects of a proposed activity on the 
taking of federally-listed species, how those impacts will be 
minimized and mitigated, and how the plan will be funded (16 U.S.C. 
1539). The HCP is required as part of an incidental take permit 
application to the Service or the National Marine Fisheries Service 
(see ``incidental take'').
    Habitat credit exchange (habitat credit exchange program)--a 
market-based system that operates as a clearinghouse in which an 
exchange administrator, acting as a mitigation sponsor, manages 
credit transactions between compensatory mitigation providers and 
permittees or others authorized to implement actions that adversely 
affect protected species.
    Impact(s) (of an action)--adverse effects relative to the 
affected resources (81 FR 12380; March 8, 2016). More specifically 
under this policy, adverse effects on the species or its habitat 
anticipated in a proposed action or resulting from an authorized or 
permitted action.
    Incidental take--take of any threatened or endangered species 
that results from, but is not the purpose of, carrying out an 
otherwise lawful activity conducted by a Federal agency or an 
applicant (50 CFR 402.02). Incidental take may be authorized for 
threatened or endangered species through section 7 or 10 or for 
threatened species through a rule codified under section 4(d) of the 
Endangered Species Act. See also, ``take'').
    Indirect effects--those effects to the species that are caused 
by the action at a later time or another place, but are reasonably 
certain to occur (50 CFR 402.02).
    In-kind--a resource of a similar structural and functional type 
to the impacted resource (33 CFR 332.2); when used in reference to a 
species, in-kind means the same species.
    In-lieu fee program--a program involving the restoration, 
establishment, enhancement, and/or preservation of habitat through 
funds paid to a governmental or non-profit natural resources 
management entity to satisfy compensatory mitigation requirements 
for impacts to specified species or habitat (modified from 33 CFR 
332.2).
    In-lieu fee program instrument--the legal document for the 
establishment, operation, and use of an in-lieu fee program (33 CFR 
332.2). See also, ``instrument.''
    In-lieu fee program sponsor--any government agency or non-profit 
natural resources management organization responsible for 
establishing, and in most circumstances, operating an in-lieu fee 
program. See also, ``sponsor.''
    In-lieu fee site--a compensatory mitigation site established 
under an approved in-lieu fee program.
    Instrument, agreement--the document that reflects the regulatory 
decision by the FWS that the conservation bank or other compensatory 
mitigation program or project satisfies applicable biological and 
durability standards and can, therefore, be used to provide 
compensatory mitigation under the ESA in appropriate circumstances. 
The instrument must be signed by the mitigation sponsor and 
landowner to reflect their acceptance of the terms. The instrument 
is not a contract between FWS and any other entity. Any dispute 
arising under the instrument will not give rise to any claim for 
monetary damages by any party or third party.
    Interagency Review Team (IRT)--an interagency group of Federal, 
Tribal, State, and/or local regulatory and resource agency 
representatives that reviews documentation for, and advises the 
district engineer for the U.S. Army Corps of Engineers on, the 
establishment and management of a wetland or stream mitigation bank 
or an in-lieu fee program (33 CFR 332.2 and 332.8(b)). When the 
wetland or stream mitigation bank or in-lieu fee program sponsor 
also seeks credits authorized by the Service, then the Service 
becomes a co-chair of the IRT. See also, ``Mitigation Review Team.''
    Joint bank--a mitigation bank that that has been designed to 
holistically address mitigation requirements under multiple programs 
and authorities for the same types of actions or activities.
    Landscape--an area encompassing an interacting mosaic of 
ecosystems and human systems that is characterized by a set of 
common management concerns. The landscape is not defined by the size 
of the area, but rather by the interacting elements that are 
relevant and meaningful in a management context (600 DM 6D).
    Landscape-scale approach--an approach to conservation planning 
that applies the mitigation hierarchy for impacts to resources and 
their values, services, and functions at the relevant scale, however 
narrow or broad, necessary to sustain, or otherwise achieve 
established goals for those resources and their values, services, 
and functions. A

[[Page 61060]]

landscape-scale approach should be used when developing and 
approving strategies or plans, reviewing projects, or issuing 
permits. The approach identifies the needs and baseline conditions 
of targeted resources and their values, services and functions, 
reasonably foreseeable impacts, cumulative impacts of past and 
likely projected disturbance to those resources, and future 
disturbance trends. The approach then uses such information to 
identify priorities for avoidance, minimization, and compensatory 
mitigation measures across that relevant area to provide the maximum 
benefit to the impacted resources and their values, services, and 
functions, with full consideration of the conditions of 
additionality and durability (600 DM 6E).
    Listed species--any species or subspecies of fish, wildlife, or 
plant which has been determined to be endangered or threatened under 
section 4 of the Endangered Species Act (50 CFR 402.02). Listed 
species are found in 50 CFR 17.11-17.12.
    Management plan--the stewardship plan prepared to instruct the 
land manager in the operations, biological management and 
monitoring, and reporting for the compensatory mitigation site to, 
at a minimum, maintain the functions and services for specified 
species and other resources on the mitigation site. These are 
generally long-term plans that include a detailed estimate of the 
itemized costs for all management actions required by the plan. 
These annual costs are used to estimate the size of the endowment 
that will be needed to maintain and monitor the mitigation site for 
the intended duration.
    Mitigation (mitigation hierarchy, mitigation sequence)--as 
defined and codified in the Council on Environmental Quality (CEQ) 
National Environmental Policy Act (42 U.S.C. 4321 et seq.) 
regulations (40 CFR 1508.20), mitigation includes:
     Avoid the impact altogether by not taking the action or 
parts of the action;
     minimize the impact by limiting the degree or magnitude 
of the action and its implementation;
     rectify the impact by repairing, rehabilitating, or 
restoring the affected environment;
     reduce or eliminate the impact over time by 
preservation and maintenance operations during the life of the 
action; and
     compensate for the impact by replacing or providing 
substitute resources or environments.''
    This sequence is often condensed to: Avoidance, minimization, 
and compensation.
    Mitigation bank--a site, or suite of sites, where resources 
(e.g., wetlands, streams, riparian areas) are restored, established, 
enhanced, and/or preserved for the purpose of providing compensatory 
mitigation for impacts authorized by Department of the Army permits 
(33 CFR 332.2). Mitigation banks may include credits authorized by 
other agencies to compensate for impacts to other (non-Clean Water 
Act 404) resources. The term ``mitigation bank'' is sometimes used 
in the broad sense to include mitigation and conservation banks.
    Mitigation Bank Instrument (Mitigation Bank Enabling 
Instrument)--the legal document for the establishment, operation, 
and use of a wetland and/or stream mitigation bank approved by the 
U.S. Army Corp of Engineers (33 CFR 332.2). See also, ``conservation 
bank instrument'' and ``mitigation instrument.''
    Mitigation Instrument (Mitigation Enabling Instrument)--the 
legal document for the establishment, operation, and use of a 
compensatory mitigation project or site. Examples of specific types 
of mitigation instruments include: Conservation bank instrument, in-
lieu fee program instrument, and habitat credit exchange instrument.
    Mitigation ratio--the relationship between the amount of the 
compensatory offset for, and the impacts to, the species, habitat 
for the species, or other resource of concern.
    Mitigation Review Team (MRT)--an interagency group of Federal, 
State, Tribal and/or local regulatory and resource agency 
representatives that reviews mitigation documents for, and advises 
their respective agency decision-makers on, the establishment and 
management of a compensatory mitigation program or project. See 
also, ``Interagency Review Team.''
    Mitigation sponsor (mitigation project sponsor, sponsor, 
mitigation provider)--any public or private entity responsible for 
establishing, and in most circumstances, operating a compensatory 
mitigation program or project such as a conservation bank, in-lieu 
fee program, or habitat credit exchange (modified from 33 CFR 
332.2).
    Off-site--a mitigation area that is located neither on or 
adjacent to the same parcel of land as the impact site (33 CFR 
332.2).
    On-site--a mitigation site located on or adjacent to the same 
parcel of land as the impact site (33 CFR 332.2).
    Performance criteria--observable or measurable administrative 
and ecological (physical, chemical, or biological) attributes that 
are used to determine if a compensatory mitigation project meets the 
agreed upon conservation objectives identified in a mitigation 
instrument or the conservation measures proposed as part of a 
permitted or otherwise authorized action.
    Permit or license applicant--see ``applicant.''
    Permittee--any person who receives formal approval or 
authorization, generally in the form of a permit or license, from a 
Federal agency to conduct an action. See also, ``applicant.''
    Permittee-responsible mitigation--activities or projects 
undertaken by a permittee or an authorized agent or contractor to 
provide compensatory mitigation for which the permittee retains full 
responsibility. As used in this policy, permittee-responsible 
mitigation also includes compensatory mitigation undertaken by 
Federal agencies to offset impacts resulting from actions carried 
out directly by the Federal agency.
    Perpetuity--endless or infinitely long duration or existence; 
permanent.
    Plant--member of the plant kingdom, including seeds, roots and 
other parts thereof (16 U.S.C. 1532(14)); fungi including spores and 
other parts thereof; and other non-wildlife species.
    Practicable--available and capable of being done after taking 
into consideration existing technology, logistics, and cost in light 
of a mitigation measure's beneficial value and a land use activity's 
overall purpose, scope, and scale (81 FR 12380; March 8, 2016).
    Preservation--the protection and management of existing 
resources for the species that would not otherwise be protected 
through removal of a threat to, or preventing the decline of, the 
resources to compensate for the loss of the same species or 
resources elsewhere.
    Proponent (project proponent)--the agency proposing an action, 
and if applicable, any applicant(s) for agency funding or 
authorization to implement a proposed action (81 FR 12380; March 8, 
2016). For purposes of this policy any person, organization, or 
agency advocating a development proposal that is anticipated to 
result in adverse impacts to one or more listed or at-risk species. 
See also, ``applicant'' and ``permittee.''
    Proposal--a compensatory mitigation project proposal that 
includes a summary of the information regarding a proposed 
conservation bank, in-lieu fee program, or other compensatory 
mitigation project or program at a sufficient level of detail to 
support informed comment by the Mitigation Review Team (MRT).
    Release of credits--a determination by authorized decision-
makers within agencies that are signatories to a compensatory 
mitigation project instrument, in consultation with the MRT, that 
credits associated with the approved instrument are available for 
sales or use. Credits are released in proportion to milestones 
specified in the credit release schedule as specified in the 
instrument.
    Reserve credit account--credits set aside in reserve to offset 
force majeure or other unforeseen events as agreed to by the Service 
and defined in the mitigation instrument, allowing a mitigation 
program to continue uninterrupted.
    Resources (resources of concern)--fish, wildlife, plants, and 
their habitats for which the Service has authority to recommend or 
require the mitigation of impacts resulting from proposed actions 
(81 FR 12380; March 8, 2016).
    Restoration--repairing or rehabilitating habitat for the benefit 
of the species on a mitigation site with the goal of returning it to 
its natural/historic habitat type with the same or similar functions 
where they have ceased to exist, or exist in a substantially 
degraded state.
    Retired credit--a credit that is no longer available for use as 
mitigation. Credits that have been sold or otherwise used to fulfill 
a mitigation obligation are considered retired. Credits may also be 
voluntarily retired or forfeited, without being used for mitigation.
    Safe Harbor Agreement (SHA)--formal agreement between the 
Service or National Marine Fisheries Service and one or more non-
Federal property owners in which property owners voluntarily manage 
for listed species for an agreed amount of time providing a net 
conservation benefit to the species and, in return, receive 
assurances from the Service or National Marine Fisheries Service 
that no additional future regulatory restrictions will be imposed 
(USFWS Safe

[[Page 61061]]

Harbor Policy). Under the Safe Harbor Policy, ``net conservation 
benefit'' is defined as contributing to the recovery of the listed 
species covered by the SHA.
    Service Area--the geographic area within which impacts to the 
species or other resources of concern can be mitigated at a specific 
compensatory mitigation site, as designated in its instrument.
    Species--the term ``species'' includes any species, subspecies 
of fish, or wildlife, or plants, and any distinct population segment 
of any species of vertebrate fish or wildlife which interbreeds when 
mature (16 U.S.C. 1532(16)).
    Strategic Habitat Conservation (SHC)--a framework for setting 
and achieving conservation objectives at multiple scales based on 
the best available information, data, and ecological models. Full 
implementation of SHC requires four elements that occur in an 
adaptive management loop: (1) Biological planning, (2) conservation 
design, (3) delivery of conservation actions, and (4) monitoring and 
research.
    Take--means to harass, harm, pursue, hunt, shoot, wound, kill, 
trap, capture or collect a federally listed species, or to attempt 
to engage in any such conduct (16 U.S.C. 1532(19)). ``Take'' applies 
only to fish and wildlife, not plants.
    Temporal loss--the cumulative loss of functions and/or services 
relevant to the species attributed to the time between the loss of 
habitat functions and/or services or individuals of the 
population(s) caused by the action and the replacement of habitat 
functions and/or services or repopulation of the species at the 
compensatory mitigation site to the same level had the action not 
occurred.
    Threatened species--any species which is likely to become an 
endangered species within the foreseeable future throughout all or a 
significant portion of its range (16 U.S.C. 1532(20)).
    Unavoidable impact--an impact for which an appropriate and 
practicable alternative to the proposed action that would not cause 
the impact is not available (81 FR 12380; March 8, 2016).

Appendix C: Requirement of the Marine Mammal Protection Act

    Section 5 of this policy addresses sections of the ESA under 
which the Service has authority to recommend or require compensatory 
mitigation for species or their habitat. Specific regulatory 
requirements exist for marine mammals under the Marine Mammal 
Protection Act of 1972, as amended (16 U.S.C. 1361 et seq.) (MMPA), 
whether or not they are also listed or proposed for listing under 
the ESA. The MMPA prohibits the take (i.e., hunting, killing, 
capturing, or harassing; or the attempt to hunt, kill, capture, or 
harass) of marine mammals, and enacts a moratorium on the import, 
export, and sale of marine mammals and their parts and products. 
There are exemptions from and exceptions to the prohibitions. 
Section 101(a)(5) allows for the authorization of incidental, but 
not intentional, take of small numbers of marine mammals by U.S. 
citizens while engaged in a specified activity (other than 
commercial fishing) within a specified geographical region, provided 
certain findings are made. Specifically, the Service must make a 
finding that the total of such taking will have no more than a 
negligible impact on the marine mammal species and will not have an 
unmitigable adverse impact on the availability of these species for 
subsistence uses. Negligible impact and unmitigable adverse impact 
are defined in 50 CFR 18.27(c).
    Section 101(a)(5)(A) provides for the promulgation of Incidental 
Take Regulations (ITRs), which can be issued for a period of up to 5 
years. The ITRs set forth permissible methods of taking pursuant to 
the activity and other means of effecting the least practicable 
adverse impact on the species or stock and its habitat, paying 
particular attention to rookeries, mating grounds, and areas of 
similar significance. In addition, ITRs include requirements 
pertaining to the monitoring and reporting of such takings.
    Section 101(a)(5)(D) established an expedited process to request 
authorization for the incidental, but not intentional, take of small 
numbers of marine mammals for a period of not more than 1 year if 
the taking will be limited to harassment, i.e., Incidental 
Harassment Authorizations (IHAs). Harassment is defined in section 3 
of the MMPA (16 U.S.C. 1362).
    As stated in section 17 of the ESA, no provision of the ESA 
shall take precedence over any more restrictive conflicting 
provision of the MMPA.
    Mitigation Goal: To avoid or minimize to the greatest extent 
practicable adverse impacts on marine mammals, their habitat, and on 
the availability of these marine mammals for subsistence uses.
    Guidance: Where appropriate, ITRs and IHAs can provide 
considerable conservation and management benefits to marine mammals. 
ITRs include a process for U.S. citizens to obtain a Letter of 
Authorization (LOA) for activities proposed in accordance with the 
ITRs. The Service evaluates each request for an LOA based on the 
specific activity and geographic location, and determines whether 
the level of taking is consistent with the findings made for the 
total taking allowable under the applicable ITRs. If so, the Service 
may issue an LOA for potential incidental take due to the specific 
project and will specify the period of validity and any additional 
terms and conditions appropriate to the request, including 
mitigation measures designed to minimize interactions with, and 
impacts to, marine mammals. The LOA will also specify monitoring and 
reporting requirements to evaluate the level and impact of any 
taking. Depending on the nature, location, and timing of a proposed 
activity, the Service may require applicants to consult with 
potentially affected subsistence communities in Alaska and develop 
additional mitigation measures to address potential impacts to 
subsistence users. Regulations specific to LOAs are codified at 50 
CFR 18.27(f).
    An IHA prescribes permissible methods of taking by harassment 
and includes other means of affecting the least practicable impact 
on marine mammal species or stocks and their habitats, paying 
particular attention to rookeries, mating grounds, and areas of 
similar significance. In addition, the IHA will include appropriate 
measures that are necessary to ensure no unmitigable adverse impact 
on the availability of the species or stock for subsistence purposes 
in Alaska. IHAs also specify monitoring and reporting requirements 
pertaining to the taking by harassment. Both the promulgation of 
ITRs and requests for IHAs are subject to a 30-day public comment 
period.
    The Service shall recommend mitigation for impacts to species 
covered by the MMPA that are under our jurisdiction consistent with 
the guidance of this policy. Proponents may adopt these 
recommendations as components of proposed actions. However, such 
adoption itself does not constitute full compliance with the MMPA.

Request for Information

    We intend that a final policy will consider information and 
recommendations from all interested parties. We, therefore, invite 
comments, information, and recommendations from governmental agencies, 
Indian Tribes, the scientific community, industry groups, environmental 
interest groups, and any other interested parties. All comments and 
materials received by the date listed above in DATES will be considered 
prior to the approval of a final policy.
    In addition to more general comments and information, we ask that 
you comment on the following specific aspects of the draft new policy:
    (1) Compensatory mitigation standards set forth in section 4 of the 
draft policy.
    (2) The clarity of the information in section 6. General 
Considerations.
    (3) The clarity of the information in section 8. Establishment and 
Operation of Compensatory Mitigation Programs and Projects.
    If you submit information via https://www.regulations.gov, your 
entire submission--including any personal identifying information--will 
be posted on the Web site. If your submission is made via a hardcopy 
that includes personal identifying information, you may request at the 
top of your document that we withhold this information from public 
review. However, we cannot guarantee that we will be able to do so. We 
will post all hardcopy submissions on https://www.regulations.gov.

Determinations Under Other Authorities

    As mentioned above, we intend to apply this policy when considering 
the adequacy of compensatory mitigation programs, projects, and 
measures proposed by Federal agencies and applicants as part of a 
proposed action and mitigation sponsors. Below we discuss compliance 
with several

[[Page 61062]]

Executive Orders and statutes as they pertain to this policy.

National Environmental Policy Act (NEPA)

    We have analyzed the draft new policy in accordance with the 
criteria of the National Environmental Policy Act (NEPA) (42 U.S.C. 
4332(c)), the Council on Environmental Quality's Regulations for 
Implementing the Procedural Provisions of NEPA (40 CFR parts 1500-
1508), and the Department of the Interior's NEPA procedures (516 DM 2 
and 8; 43 CFR part 46).
    Issuance of policies, directives, regulations, and guidelines are 
actions that may generally be categorically excluded under NEPA (43 CFR 
46.210(i)). However, our initial analysis has determined the draft new 
policy may not be purely administrative in nature and may not meet the 
requirements for a categorical exclusion (40 CFR 1508.4 and 43 CFR 
46.210(i)). While reliance on a categorical exclusion may be possible 
for this proposed action, extraordinary circumstances may be present, 
as outlined in 43 CFR 46.215. Therefore, although the draft new policy 
may qualify for a categorical exclusion, we announce our intent to 
prepare an environmental assessment (EA) pursuant to the National 
Environmental Policy Act (NEPA) of 1969, as amended, to assist our 
agency in its decision (per 40 CFR 1501.3) and avoid delays that may 
arise should there be public concern that we did not perform a thorough 
NEPA analysis. We request comments on the scope of the NEPA review, 
information regarding important environmental issues which should be 
addressed, the alternatives to be analyzed, and issues that should be 
addressed at the programmatic stage in order to inform the site-
specific stage. This notice provides an opportunity for input from 
other Federal and State agencies, local government, Native American 
Tribes, nongovernmental organizations, the public, and other interested 
parties.

Paperwork Reduction Act of 1995

    This proposed policy contains information collection requirements 
that we have submitted to the Office of Management and Budget (OMB) for 
review and approval under the Paperwork Reduction Act of 1995 (44 
U.S.C. 3501 et seq.). We may not conduct or sponsor and a person is not 
required to respond to a collection of information unless it displays a 
currently valid OMB control number.
    OMB Control No.: 1018-XXXX.
    Title: Compensatory Mitigation Program.
    Service Form Number: None.
    Type of Request: New.
    Description of Respondents: Businesses, organizations, and State, 
local, and tribal governments.
    Respondent's Obligation: Required to Obtain or Retain a Benefit.
    Frequency of Collection: On occasion for plans/instruments; 
annually for reports.

                                             Annual Burden Estimates
----------------------------------------------------------------------------------------------------------------
                                                                                    Completion
                    Activity                         Number of       Number of       time per      Total annual
                                                    respondents      responses       response      burden hours
----------------------------------------------------------------------------------------------------------------
Phase I--Mitigation Proposal:
    Private Sector *............................               8               8           1,756          14,048
    State, Local, Tribal Govts..................               2               2           1,756           3,512
Phase II--Mitigation Instrument:
    Private Sector..............................               8               8           1,214           9,712
    State, Local, Tribal Govts..................               2               2           1,214           2,428
Phase III--Operation, Management, Monitoring,
 and Reporting:
    Private Sector..............................             112             112             787          88,144
    State, Local, Tribal Govts..................              28              28             787          22,036
                                                 ---------------------------------------------------------------
        Totals..................................             160             160  ..............         139,880
----------------------------------------------------------------------------------------------------------------
* Private sector includes businesses, non-profit organizations, farms, and ranches.

    Estimated Annual Nonhour Burden Cost: $2,396,570. Costs vary 
considerably and will depend on the size and complexity of each project 
or monitoring year. These expenses include, but are not limited to: 
Travel expenses for site visits, studies conducted, and meetings with 
the Service and other agencies; training in survey methodologies and 
certifications, equipment needed for habitat construction, equipment 
needed for surveys and monitoring, special transportation such as all-
terrain vehicles or helicopters, and data management.

                                         Annual Nonhour Burden Estimates
----------------------------------------------------------------------------------------------------------------
                                                                                                      Annual
                            Activity                              Annual  number      Nonhour         nonhour
                                                                   of  responses    burden  ($)     burden  ($)
----------------------------------------------------------------------------------------------------------------
Phase I--Mitigation Proposal--Private Sector....................               8         $17,500        $140,000
Phase I--Mitigation Proposal--State, Local, Tribal Govts........               2          17,500          35,000
Phase II--Mitigation Instrument--Private Sector.................               8          65,833         526,664
Phase II--Mitigation Instrument--State, Local, Tribal Govts.....               2          65,833         131,666
Phase III--Operation, Management, Monitoring, and Reporting--                112          11,166       1,250,592
 Private Sector.................................................
Phase III--Operation, Management, Monitoring, and Reporting--                 28          11,166         312,648
 State, Local, Tribal Govts.....................................
                                                                 -----------------------------------------------
    Total.......................................................  ..............  ..............       2,396,570
----------------------------------------------------------------------------------------------------------------


[[Page 61063]]

    We are proposing to collect the following information:
    Phase I: Information collected as part of the mitigation proposal 
process for a mitigation proposal as part of an individual action; or a 
mitigation proposal for a conservation/mitigation bank, in-lieu fee 
program, habitat credit exchange, that is intended to serve multiple 
actions; or other third-party sponsored mitigation site or program 
proposal that is intended to serve one or multiple actions. The draft 
proposal includes, but is not limited to:
    1. Maps and aerial photos showing the location of the mitigation 
site and surrounding area;
    2. Contact information for the applicant, mitigation sponsor, 
property owner(s), and consultants;
    3. Narrative description of the property including: Acreage, access 
points, street address, major cities, roads, county boundaries, 
biological resources (including the resource/species to be mitigated at 
the site), and current land use;
    4. Narrative description of the surrounding land uses and zoning 
along with the anticipated future development in the area, where known;
    5. Description of how the site fits into conservation plans for the 
species or meets species specific criteria;
    6. Proposed ownership arrangements and long-term management 
strategy for the site;
    7. Qualifications of the mitigation sponsor/provider to 
successfully complete the type of project proposed, including a 
description of past such activities by the mitigation sponsor/provider;
    8. Preliminary title report showing all encumbrances (e.g., utility 
rights-of-way) on the proposed mitigation site, including ownership of 
surface and subsurface mineral and water rights and other separated 
rights (e.g., timber rights);
    9. Phase I Environmental Site Assessment evaluating the proposed 
site for any recognized environmental condition(s);
    10. Ecological suitability of the site to achieve the objectives, 
including physical, chemical, and biological characteristics (i.e., 
inventory), of the site and how the site will support the planned 
mitigation; and
    11. Assurances of sufficient water rights to support the long-term 
sustainability of any proposed aquatic habitat(s).
    In addition, the draft proposal for a conservation bank, in-lieu 
fee program, habitat credit exchange, or other third-party sponsored 
mitigation project intended to be used by multiple actions also 
includes, but is not limited to:
    1. Name of proposed mitigation site(s), conservation/mitigation 
bank, in-lieu fee program, or habitat credit exchange;
    2. Proposed service area(s) with map(s) and narrative(s); and
    3. Proposed type(s) and number of credits to be generated by the 
program or project. In-lieu fee programs and habitat credit exchanges 
that do not provide mitigation in advance of impacts also include:
    1. Prioritization strategy for selecting mitigation sites and 
compensatory mitigation activities;
    2. Description of any public and private stakeholder involvement in 
plan development and implementation, including any coordination with 
Federal, State, Tribal, and local resource management authorities; and
    3. Description of the in-lieu fee program or exchange account.
    Phase II: If the Service supports development of the mitigation 
proposal, the following information is collected as part of a fully 
developed mitigation instrument for a conservation/mitigation bank, in-
lieu fee program, habitat credit exchange, or other third-party 
mitigation project; or equivalent applicable information regarding 
mitigation for an individual action: A fully developed mitigation 
instrument/agreement that includes, but is not limited to:
    1. A description of the framework of the mitigation program/
project;
    2. The roles and responsibilities of each party (e.g., project 
applicant or mitigation sponsor, property owner, the Service, and any 
other government agencies that are on the interagency team overseeing 
development of the mitigation program or project);
    3. A closure plan (this can be in the form of an exhibit) that 
specifies responsibilities once all credits are transferred and/or 
forfeited, performance criteria are achieved, and financial obligations 
are met; and
    4. The following exhibits, as applicable:
    A. Restoration or habitat development plan, which includes, but is 
not limited to:
    (1) Baseline conditions of the mitigation site, including 
biological resources; geographic location and features; topography; 
hydrology; vegetation; past, present, and adjacent land uses; species 
and habitats occurring on the site;
    (2) Surrounding land uses and zoning, along with the anticipated 
future development in the area;
    (3) Historic aerial photographs and/or historic topographic maps 
(if available), especially if restoration to a historic condition is 
proposed;
    (4) Discussion of the overall habitat development goals and 
objectives;
    (5) Description of activities and methodologies for establishing, 
restoring, and/or enhancing habitat types (if applicable);
    (6) Detailed anticipated increases in functions and services of 
existing resources and their corresponding effect within the watershed 
or other relevant geographic area (e.g., habitat diversity and 
connectivity, floodplain management, or other landscape-scale 
functions);
    (7) Ecological performance criteria and a discussion of the 
suitability of the site to achieve them (e.g., watershed/hydrology 
analysis and anticipated improvement in quality and/or quantity of 
specific functions, specific elements in recovery plan goals expected 
to be accomplished);
    (8) Maps detailing the anticipated location and acreages of habitat 
developed for species;
    (9) Monitoring methodologies to evaluate habitat development and 
document success in meeting performance criteria;
    (10) An approved schedule for reporting monitoring results; and
    (11) A discussion of possible remedial actions.
    B. Service area maps for each credit type proposed;
    C. Credit evaluation/credit table;
    D. Management Plans--Interim (if applicable) and long term 
management plans that describe the management, monitoring, and 
reporting activities to be conducted for the term of the mitigation 
project or program. The interim management plan includes, but is not 
limited to:
    (1) Description of all management actions to be undertaken on the 
site during this period;
    (2) Description of all performance criteria and any monitoring 
necessary to gauge the attainment of performance criteria;
    (3) Monitoring and reporting schedule;
    (4) Cost analysis to implement the plan; and
    (5) Description of reporting requirements. Reporting requirements 
include, but are not limited to:
    (a) Copies of completed data sheets and/or field notes, with 
photos;
    (b) Monitoring results to date; and
    (c) A discussion relating all monitoring results to date to 
achievement of the performance criteria.
    The long-term management plan includes, but is not limited to:

[[Page 61064]]

    (1) Purpose of mitigation site establishment and purpose of long-
term management plan;
    (2) Baseline description of the setting, location, history and 
types of land use activities, geology, soils, climate, hydrology, 
habitats present (after the mitigation site meets performance 
criteria), and species descriptions;
    (3) Overall management, maintenance, and monitoring goals; specific 
tasks and timing of implementation; and a discussion of any constraints 
which may affect goals;
    (4) Biological monitoring scheme including a schedule, appropriate 
to the species and site; biological monitoring over the long term is 
not required annually, but must be completed periodically to inform any 
adaptive management actions that may become necessary over time;
    (5) Reporting schedule for ecological performance and 
administrative compliance;
    (6) Cost-analysis of all long-term management activities, cross-
referenced with the tasks described in c. above and including a 
discussion of the assumptions made to arrive at the costs for each task 
(these itemized costs are used to calculate the amount required for the 
long-term management endowment);
    (7) Discussion of adaptive management principles and actions for 
reasonably foreseeable events, possible thresholds for evaluating and 
implementing adaptive management, a process for undertaking remedial 
actions, including monitoring to determine success of the changed/
remedial actions, and reporting;
    (8) Rights of access to the mitigation area and prohibited uses of 
the mitigation area, as provided in the real estate protection 
instrument;
    (9) Procedures for amendments and notices; and
    (10) Reporting schedule for annual reports to the Service. Annual 
reports include, but are not limited to:
    (a) Description of mitigation area condition, with photos;
    (b) Description of management activities undertaken for the year, 
including adaptive management measures, and expenditure of funds to 
implement each of these activities;
    (c) Management activities planned for the coming year; and
    (d) Results of any biological monitoring undertaken that year, 
including photos, and copies of data sheets and field notes. This level 
of documentation is important in verifying the conclusions reached by 
report preparers, and can be essential in informing necessary adaptive 
management actions. In the interests of reducing paperwork, the Service 
may require that annual reports be submitted in electronic form, and 
uploaded into the Regulatory In-lieu Fee and Bank Information Tracking 
System (RIBITS).
    E. Description of the form(s) of real estate assurance to be used 
and qualifications of proposed holder(s) of the assurance(s) and any 
related assurance documentation such as a Minerals Assessment Report 
(if applicable); and
    F. Description of the form(s) of financial assurances (short, 
interim, and long term assurances) to be used and the qualifications of 
proposed holder(s) of the assurance(s).

In-lieu fee programs and habitat credit exchanges that do not provide 
mitigation in advance of impacts also include, but are not limited to:
    1. In-lieu fee or exchange program account description, including 
the specific tasks, equipment, etc., for which funds are to be used;
    2. Methodology for determining the fee schedule(s);
    3. Methodology and criteria for adding mitigation sites;
    4. Timeframe in which the funds must be utilized; and
    5. Timeframe in which conservation must be implemented.

Business entities (e.g., Limited Liability Company) also include the 
following documentation, but are not limited to:
    1. Articles of incorporation or equivalent documents;
    2. Bylaws or other governing documents; and
    3. List of board members, including biographies.
    Phase III: Operation, maintenance, monitoring, and reporting of 
approved mitigation projects and programs (e.g., a conservation bank or 
in-lieu fee program) that have been implemented/established, including 
mitigation conducted as part of an individual action by an agency/
applicant. A report submitted to the Service in accordance with the 
terms of the mitigation instrument, permit, biological opinion or other 
Service approved agreement or authorization under the ESA that 
includes, but is not limited to:
    1. Description of mitigation project or program, with photos;
    2. Description of management activities undertaken for the year or 
period specified in the mitigation instrument, including adaptive 
management measures, and expenditure of funds to implement each of 
these activities;
    3. Management activities planned for the coming year or period 
specified in the mitigation instrument; and
    4. Results of any biological monitoring undertaken that year, 
including all information requirements described above under section 
4.D. Management Plans, including photos, and copies of data sheets and 
field notes;
    5. Annual report(s) on site visit from holder(s) of real estate 
assurance(s) in accordance with the Management Plan and including 
verification of current qualifications to hold such assurance(s); and
    6. Documentation of any changes in land ownership or management 
responsibility.

Conservation/mitigation banks, in-lieu fee programs, and habitat credit 
exchanges also include information on credit transactions in the form 
of a Credit Sale Agreement, between the purchaser of any mitigation 
credit and the seller of the credit(s), which includes, but is not 
limited to, the following information:
    1. Name of Seller;
    2. Name of Purchaser (or Permittee, or Project Applicant, or other 
purchasing entity);
    3. Name of Bank, Program, or Exchange;
    4. Type of credit;
    5. Number of credits;
    6. Permit or biological opinion or file number associated with the 
credit transaction (if applicable);
    7. Date of transaction.

In the interests of reducing paperwork, the Service may require that 
any of the forgoing documentation, but especially annual reports and 
credit transactions, be submitted in electronic form, and uploaded into 
the Regulatory In-lieu Fee and Bank Information Tracking System 
(RIBITS).
    We invite comments concerning this information collection on:
     Whether or not the collection of information is necessary, 
including whether or not the information will have practical utility;
     The accuracy of our estimate of the burden for this 
collection of information;
     Ways to enhance the quality, utility, and clarity of the 
information to be collected; and
     Ways to minimize the burden of the collection of 
information on respondents.
    If you wish to comment on the information collection requirements 
of this proposed policy, send your comments directly to OMB (see 
detailed instructions under the heading Comments on the Information 
Collection Aspects of this Proposal in the ADDRESSES section). Please 
identify

[[Page 61065]]

your comments with 1018-BB72. Please provide a copy of your comments to 
the Service Information Collection Clearance Officer (see detailed 
instructions in the ADDRESSES section).

Government-to-Government Relationship With Tribes

    In accordance with the President's memorandum of April 29, 1994, 
``Government-to-Government Relations with Native American Tribal 
Governments'' (59 FR 22951), Executive Order 13175 ``Consultation and 
Coordination with Indian Tribal Governments,'' and the Department of 
the Interior Manual at 512 DM 2, we have considered possible effects on 
federally recognized Indian tribes and have determined that there are 
no potential adverse effects of issuing this policy. Our intent with 
the policy is to provide a consistent approach to the consideration of 
compensatory mitigation programs, projects, and measures, including 
those taken on Tribal lands. We will work with Tribes as applicants 
proposing compensatory mitigation as part of proposed actions and with 
Tribes as mitigation sponsors.

Authority

    The authorities for this action include the Endangered Species Act 
of 1973, as amended (16 U.S.C. 1531 et seq.) and the National 
Environmental Policy Act (42 U.S.C. 4321 et seq.).

    Dated: August 18, 2016.
Stephen D. Guertin,
Acting Director, U.S. Fish and Wildlife Service.
[FR Doc. 2016-20757 Filed 8-31-16; 4:15 pm]
 BILLING CODE 4333-15-P