(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:

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(1) An outline for adaptive management and monitoring of conserved habitat and other conserved natural resources, consistent with the goals and objectives of the regional conservation investment strategy. The outline shall guide the preparation of, and consistency among, monitoring and long-term adaptive management plans required pursuant to paragraph (14) of subdivision (g).

(2) (A) A process for persons and entities entering into mitigation credit agreements approved pursuant to the regional conservation investment strategy to provide information to the public agency or federally recognized tribe that proposed the regional conservation investment strategy to allow the public agency or federally recognized tribe to track the progress of, and evaluate the effectiveness of, conservation actions and habitat enhancement actions identified in the strategy in offsetting identified threats to focal species and achieving the strategy’s biological goals and objectives.

(B) The tracking and evaluation required pursuant to subparagraph (A) shall begin upon the creation of the first mitigation credit under a mitigation credit agreement approved pursuant to the regional conservation investment strategy. The evaluation required pursuant to subparagraph (A) shall be submitted to, and shall be considered by, the department before the department may extend the duration of an approved or amended regional conservation investment strategy pursuant to Section 1854. The evaluation may occur, and may be submitted to the department, no earlier than one year before the expiration of the regional conservation investment strategy. Tracking and evaluation shall be based on relevant, current, best available information and analyses, including, but not limited to, information reported under monitoring and long-term adaptive management plans required pursuant to paragraph (14) of subdivision (g).

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

(c) If a person or public or private entity intends to create mitigation credits on multiple future sites over time, the person or entity may develop and submit an advance mitigation framework to the department for approval in a draft mitigation credit agreement pursuant to subdivision (g). Alternatively, the person or entity may submit an advance mitigation framework to the department for approval before submitting a draft mitigation credit agreement to the department and, if the advance mitigation framework is approved, may include it in a draft mitigation credit agreement. An advance mitigation framework shall include all of the following:

(1) A process and the terms and conditions on which the department will base its review and approval of mitigation credits on future sites.

(2) A description of the conservation actions or habitat enhancement actions that are consistent with, and will measurably advance the conservation objectives of, an approved regional conservation investment strategy, and will be used to create mitigation credits.

(3) A prioritization strategy for selecting future sites to implement the conservation actions or habitat enhancement actions described in the framework.

(d) (1) 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.

(2) With the approval of the department, mitigation credit agreements may be combined with other instruments or agreements for the purpose of creating mitigation credits that may be used to fulfill, in whole or in part, compensatory mitigation requirements established in permits issued by one or more local, state, or federal regulatory agencies, as well as permits issued by the department.

(3) Mitigation credits approved by the department in accordance with this section may be used for, but are not limited to, the following:

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

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

(C) To mitigate significant effects on the environment within an approved 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).

(e) 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.

(f) To create mitigation credits pursuant to this section, a person, or public or private entity, 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 permanent impacts 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.

(g) 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 30 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 website, 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 60 days, following which the person or entity submitting the draft mitigation credit agreement proposal shall respond to written comments submitted during the public comment period, and the department 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 actions or habitat enhancement actions will be adequately funded and that long-term protection and management of the sites 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, another 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 (h).

(h) (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. Once the department has approved the release of a mitigation credit, it may be used, sold, or transferred in accordance with the mitigation credit agreement regardless of the duration or expiration of the regional conservation investment strategy or strategies on which the mitigation credit agreement relied.

(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 limited to, the following:

(A) Permanently protecting 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 (e).

(B) Completing construction of any proposed habitat restoration actions.

(C) Achieving temporal ecological performance standards for any proposed habitat restoration actions, 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.

(i) (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 (h) 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 (h).

(j) 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).

(k) 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 require the advance written approval of the plan’s implementing entity. This advance written approval may be provided in a letter from the implementing entity to the person or entity seeking a mitigation credit agreement with the department, or in any other form approved by the department.

(l) The department shall make project mitigation credit and release information, including the demonstration submitted pursuant to paragraph (4) of subdivision (h), publicly available on the department’s internet website.

(Amended by Stats. 2022, Ch. 463, Sec. 5. (AB 2805) Effective January 1, 2023.)