(a) A conservation action or habitat enhancement action that measurably advances the conservation objectives of an approved regional conservation investment strategy may be used to create mitigation credits that can be used to compensate for impacts to focal species and other species, habitat, and other natural resources, as provided in this section. The requirements of this section apply only to the creation of mitigation credits under mitigation credit agreements pursuant to this section and do not establish requirements for other forms of compensatory mitigation.

(b) For a conservation action or habitat enhancement action identified in a regional conservation investment strategy to be used to create mitigation credits pursuant to this section, the regional conservation investment strategy shall include, in addition to the requirements of Section 1852, all of the following:

(1) An adaptive management and monitoring strategy for conserved habitat and other conserved natural resources.

(2) A process for updating the scientific information used in the strategy, and for tracking the progress of, and evaluating the effectiveness of, conservation actions and habitat enhancement actions identified in the strategy, in offsetting identified threats to focal species and in achieving the strategy’s biological goals and objectives, at least once every 10 years, until all mitigation credits are used.

(3) Identification of a public or private entity that will be responsible for the updates and evaluation required pursuant to paragraph (2).

(c) A mitigation credit created in accordance with this section may be used to fulfill, in whole or in part, compensatory mitigation requirements established under any state or federal environmental law, as determined by the applicable local, state, or federal regulatory agency, including, but not limited to, the following:

(1) To compensate for take or other adverse impacts of activities authorized pursuant to Chapter 1.5 (commencing with Section 2050) of Division 3 within the regional conservation investment strategy area.

(2) To reduce adverse impacts to fish or wildlife resources, or both, from activities authorized pursuant to Chapter 6 (commencing with Section 1600) within the regional conservation investment strategy area to less than substantial.

(3) To mitigate significant effects on the environment within the regional conservation investment strategy area pursuant to the California Environmental Quality Act (Division 13 (commencing with Section 21000) of the Public Resources Code) and Guidelines for Implementation of the California Environmental Quality Act (Chapter 3 (commencing with Section 15000) of Division 6 of Title 14 of the California Code of Regulations).

(d) The department shall ensure the long-term durability of a habitat enhancement action. If a habitat enhancement action is used to create one or more mitigation credits pursuant to this section, the habitat enhancement action shall remain in effect at least until the site of the environmental impact is returned to preimpact ecological conditions.

(e) To create mitigation credits pursuant to this section, a person or entity, including a state or local agency, shall enter into a mitigation credit agreement with the department. The mitigation credit agreement shall identify the type and number of mitigation credits proposed to be created and the terms and conditions under which the mitigation credits may be used. Mitigation credits shall not be created on a site that has already been permanently protected and has been used, or is currently in use, to fulfill compensatory mitigation requirements for one or more projects. The person or entity may create and use, sell, or otherwise transfer the mitigation credits upon department approval that the credits have been created in accordance with the agreement.

(f) To enter into a mitigation credit agreement with the department, a person or entity shall submit a draft mitigation credit agreement to the department for its review, revision, and approval or disapproval. Within five days of deeming a draft agreement complete, the department shall publish notice of the availability of the draft agreement by filing its notice with the Governor’s Office of Planning and Research and the city and county clerks of each county in which the agreement is applicable in part or in whole and shall make the draft agreement available to the public on its Internet Web site, and to any public agency, organization, or individual who has filed a written request to the department for notices regarding agreements, for review and comment for a period of at least 45 days, following which the department shall respond to written comments submitted during the public comment period and may approve the agreement, approve it with revisions, or disapprove it. The department may enter into a mitigation credit agreement if it determines that the mitigation credit agreement does all of the following:

(1) Provides contact information for, and establishes the qualifications of, the person or entity entering into the agreement, the entity that will manage the site of the conservation action or habitat enhancement action, and any contractors or consultants.

(2) Fully describes the proposed conservation actions or habitat enhancement actions and explains how, and to what extent, they will measurably advance conservation objectives of the regional conservation investment strategy that have not yet been achieved.

(3) Identifies the location of the conservation actions or habitat enhancement actions, including a location map, address, and size of the site where the proposed conservation action or habitat enhancement action will be implemented.

(4) Provides color aerial and ground-level photographs that reflect current conditions on the site and surrounding properties.

(5) Explains how the mitigation credits will be created, including, but not limited to, information regarding proposed ownership arrangements, long-term management strategy, and any phases of implementation.

(6) Identifies mitigation banks and conservation banks approved by the department as a mitigation alternative and explains how available mitigation credits at those banks will be purchased or used in combination with the mitigation credits created under the mitigation credit agreement or, if those available mitigation credits will not be purchased or used, why they will not be purchased or used.

(7) Includes a natural resources evaluation that documents biotic and abiotic baseline conditions, including past, current, and adjacent land uses, vegetation types, species information, topography, hydrology, and soil types.

(8) Identifies public lands and permanently protected lands in the vicinity of the conservation actions or habitat enhancement actions.

(9) Fully describes the proposed type and quantity of mitigation credits and the supporting rationale. Mitigation credits created pursuant to this section shall directly correlate to the focal species and other species, habitat, and other natural resources protected by the conservation actions or habitat enhancement actions.

(10) Identifies metrics or indicators by which the proposed conservation action or habitat enhancement action’s contribution to achieving the strategy’s conservation goals and objectives can feasibly be measured with existing technology. The net ecological gain from the implementation of conservation actions and habitat enhancement actions that include habitat restoration shall be reported using consistent metrics that measure the increment of gain in the area and quality of habitat or other natural resource values compared to baseline conditions described in the regional conservation investment strategy, and measures the increment of gain in relation to the regional conservation investment strategy’s conservation objectives.

(11) Describes the proposed landownership of the site or sites of the conservation actions or habitat enhancement actions.

(12) Includes a template conservation easement, or other instrument providing for perpetual protection of land in a manner consistent with approved natural community conservation plans within the area of the applicable regional conservation investment strategy, for the sites of any conservation action and an explanation of how the long-term durability of the sites of any habitat enhancement actions will be ensured.

(13) Ensures that the implementation of the conservation action or habitat enhancement action will be adequately funded and that long-term protection and management of the site will be funded in accordance with Chapter 4.6 (commencing with Section 65965) of Division 1 of Title 7 of the Government Code or, if a state agency proposed to enter into a mitigation credit agreement, other comparable funding mechanism approved by the department in accordance with an adopted statewide policy regarding funding for long-term management and operations of mitigation sites.

(14) Includes a template monitoring and long-term adaptive management plan.

(15) Explains the terms and conditions under which the proposed mitigation credits may be sold or otherwise transferred and how the proposed mitigation credits will be accounted for, including the specific methods proposed for reporting and maintaining a record of credit creation, release, and use, sale, or transfer.

(16) Includes enforcement provisions.

(17) Ensures that, for each site on which the conservation actions or habitat enhancement actions will be implemented, information consistent with, pursuant to this chapter, the information required for a mitigation bank in paragraph (2) of subdivision (b) of Section 1798 and subparagraphs (B) to (H), inclusive, of paragraph (2) of subdivision (a) of Section 1798.5 shall be prepared and submitted to the department for review for adequacy and approval prior to implementation.

(18) Includes a proposed credit ledger and credit release schedule that meets the requirements of subdivision (g).

(g) (1) The release of mitigation credits for use, sale, or transfer under a mitigation credit agreement shall require the department’s approval in accordance with this subdivision.

(2) The release of mitigation credits shall be tied to performance-based milestones and achievement of ecological performance standards. The credit release schedule for each mitigation credit agreement shall reserve a substantial share of the total credits for release after those ecological performance standards are fully achieved. Performance-based milestones shall include, but are not be limited to, the following:

(A) Recording a conservation easement consistent with approved natural community conservation plans within the area of the applicable regional conservation investment strategy on the site of a conservation action, or putting into place measures that ensure the long-term durability of a habitat enhancement action in accordance with subdivision (d).

(B) Completing construction of a habitat restoration action.

(C) Achieving temporal ecological performance standards for habitat restoration, such as standards established for one year, three years, or five years following the initiation of habitat restoration.

(D) Fully achieving ecological performance standards.

(3) The terms of the credit release schedule shall be specified in the mitigation credit agreement. When conservation actions and habitat enhancement actions are implemented and meet the performance-based milestones specified in the credit release schedule, credits shall be created in accordance with the credit release schedule. If a conservation action or habitat enhancement action does not meet performance-based milestones, the department may suspend the release of credits, reduce the number of credits, or otherwise modify the credit release schedule accordingly.

(4) In order for mitigation credits to be released, the person or entity that has entered into a mitigation credit agreement shall demonstrate to the department that the appropriate performance-based milestones for credit release have been met. The department shall determine whether the milestones have been met and the credits may be released.

(h) (1) Mitigation credit agreements may be used to establish the terms and conditions under which mitigation credits can be created by projects that improve wildlife habitat, or that address stressors to wildlife, to an extent that quantifiably exceeds compensatory mitigation requirements established by the department for those projects pursuant to Chapter 6 (commencing with Section 1600) or Chapter 1.5 (commencing with Section 2050) of Division 3. Those projects may include, but are not limited to, the construction of setback levees that result in the creation of more floodplain or riparian habitat than is required to compensate for construction impacts or the construction of transportation facility improvements that remove barriers to fish or wildlife movement and thereby improve the quality of habitat or address stressors to wildlife to a greater extent than is required to compensate for construction impacts. For those projects, the project proponent may submit a draft mitigation credit agreement that proposes the terms and conditions under which mitigation credits may be created and used by or in conjunction with those projects to the department for its review, revision, and approval. The submission may occur concurrently with, or after, an application submitted pursuant to Chapter 1.5 (commencing with Section 2050) of Division 3 or a notice submitted pursuant to Chapter 6 (commencing with Section 1600) or may occur after the application or notice is submitted. Where a draft mitigation agreement is submitted concurrently with the application or notice, the department shall review the draft mitigation credit agreement concurrently with its review of the application or notice and shall, to the maximum extent practicable, complete its review of both the notice or application and the draft agreement concurrently.

(2) Mitigation credit agreements submitted to the department pursuant to this subdivision may comply with the requirements of subdivision (g) with a credit release schedule related to construction of the project that will improve wildlife habitat, or will address stressors to wildlife, to an extent that exceeds compensatory mitigation requirements quantifiably. For those projects, construction of the project may be a performance-based milestone required by paragraph (2) of subdivision (g).

(i) Nothing in this chapter is intended to limit or impose additional conditions on the creation or sale of mitigation credits by a conservation bank or mitigation bank approved by the department pursuant to Chapter 7.9 (commencing with Section 1797).

(j) The creation of mitigation credits pursuant to this section from a conservation action or habitat enhancement action implemented within the plan area of an approved natural community conservation plan shall not duplicate or replace mitigation requirements set forth in the natural community conservation plan and shall require the advance written approval of the plan’s implementing entity. Mitigation credits created pursuant to this section may be used for covered activities under an approved natural community conservation plan only in accordance with the requirements of the plan. Individuals and entities eligible for coverage as a participating special entity under an approved natural community conservation plan may use mitigation credits created pursuant to this section only if the plan’s implementing entity declines to extend coverage to the covered activity proposed by the eligible individual or entity.

(k) The department shall make project mitigation credit and release information, including the demonstration submitted pursuant to paragraph (4) of subdivision (g), publicly available on the department’s Internet Web site.

(Added by Stats. 2016, Ch. 455, Sec. 2. (AB 2087) Effective January 1, 2017.)