No. 41410 (New Rule): Rule R634-3. Compensatory Mitigation Program

(New Rule)

DAR File No.: 41410
Filed: 03/28/2017 11:59:05 AM

RULE ANALYSIS

Purpose of the rule or reason for the change:

The purpose of this rule is to establish the Utah Sage-grouse Compensatory Mitigation Program, pursuant to the terms and conditions of Section 79-2-501 et seq.

Summary of the rule or change:

This rule proposes to create a compensatory mitigation program that will help various entities to offset the impacts of development on greater sage-grouse and their habitats. The Department of Natural Resources (DNR) communicated with stakeholders prior to submission of this proposed rule, which is described as follows. There are seven divisions within DNR including the Utah Division of Wildlife Resources, the Utah Division of Parks and Recreation, the Utah Division of Water Rights, the Utah Division of Water Resources, the Utah Division of Forestry, Fire and State Lands, the Utah Division of Oil, Gas and Mining, and the Utah Geological Survey. Each division has its own process for soliciting and receiving input from stakeholders when proposing changes to administrative rules. DNR itself makes changes to administrative rules very infrequently so DNR does not have a required process for gathering such input. In light of this, the DNR took a proactive and collaborative approach to interacting with various stakeholders and gathering public input during the development of this proposed rule. As a result of those efforts, DNR personnel coordinated numerous meetings with key stakeholders who would be, or could be affected by this proposed rule. By doing so, DNR personnel, along with one designee from the Utah Division of Wildlife Resources and one assigned designee by the Governor's Public Lands Policy Coordinating Office, gathered feedback from stakeholders both before and during the drafting of this proposed rule. This process ensured effective, collaborative, and proactive involvement from various stakeholders prior to the formal administrative rulemaking and public review process. The following is a summary of the organizations and individuals that DNR and its assigned designees met with prior to the submission of this proposed rule: 1) United States Forest Service; 2) United States Bureau of Land Management; 3) United States Natural Resource Conservation Service; 4) Utah Division of Forestry, Fire and State Lands; 5) Utah Division of Oil, Gas and Mining; 6) Utah Department of Transportation; 7) Western Energy Alliance and various members; 8) Utah Petroleum Association and various members; 9) Utah Mining Association and various members; 10) K-COE Isom; 11) QEP Resources; 12) Utah Chukar Foundation; 13) Utah Sage-grouse Plan Implementation Council; 14) Rocky Mountain Power; 15) Nature Coservancy; 16) Utah Farm Bureau; 17) Utah Cattlemen�s Association; 18) Uintah Basin Adaptive Resource Management, Local Working Group; and 19) Strawberry Valley Adaptive Resource Management, Local Working Group. Each meeting with the above referenced organizations and individuals was structured around three central topics, including: 1) what items/issues are requested to be included in the proposed rule; 2) what items/issues are requested to be avoided in the proposed rule; and 3) items that need additional clarity or follow-up. This approach framed each discussion fairly and consistently across stakeholder groups and allowed for an effective process for drafting a proposed rule that proactively addressed as many issues as possible. Every good-faith effort has been made to include a summary of every meeting related to this proposed rule. But in light of practical and reasonable limitations, as well as the complexity and scope of this issue, it should be noted that this listing is not exhaustive.

Statutory or constitutional authorization for this rule:

• Section 79-2-501

Anticipated cost or savings to:

the state budget:

It is anticipated that the revenue needed to administer this program will be recovered by the proceeds created by the implementation of the program. Therefore, this program is expected to be revenue and cost neutral to the state of Utah in the long term.

local governments:

This proposed rule does not require participation by local governments. Local governments that choose to participate in this program will do so voluntarily and will be given an opportunity to evaluate the cost vs. benefit of their participation in this program before doing so.

small businesses:

This proposed rule does not require participation by any entity. Therefore, this filing does not create any direct cost or savings impacts to small businesses. Those who choose to participate in this program will do so voluntarily and will be given an opportunity to evaluate the cost vs. benefit of their participation in this program before doing so.

persons other than small businesses, businesses, or local governmental entities:

This proposed rule does not require participation by any entity. Therefore, this filing does not create any direct cost or savings impacts to other persons or entities. Those who choose to participate in this program will do so voluntarily and will be given an opportunity to evaluate the cost vs. benefit of their participation in this program before doing so.

Compliance costs for affected persons:

This program does not require participation; therefore, no compliance cost is anticipated. For those who choose to participate in this program, the cost to do so is intended to be advantageous to the organization or individual.

Comments by the department head on the fiscal impact the rule may have on businesses:

This rule is intended to be mutually beneficial to businesses; local, state, and federal governmental agencies; and the conservation of greater sage-grouse in Utah.

Michael R. Styler, Executive Director

The full text of this rule may be inspected, during regular business hours, at the Office of Administrative Rules, or at:

Natural Resources
AdministrationRoom 3710
1594 W NORTH TEMPLE
SALT LAKE CITY, UT 84116-3154

Direct questions regarding this rule to:

• Kaelyn Anfinsen at the above address, by phone at 801-538-7201, by FAX at 801-538-7315, or by Internet E-mail at [e-mail]

Interested persons may present their views on this rule by submitting written comments to the address above no later than 5:00 p.m. on:

05/15/2017

This rule may become effective on:

05/22/2017

Authorized by:

Michael Styler, Executive Director

RULE TEXT

R634. Natural Resources, Administration.

R634-3. Compensatory Mitigation Program.

R634-3-1. Authority and Purpose.

(1) Under authority of Utah State Code Section 79-2-501 et. seq., this rule establishes the State of Utah's Compensatory Mitigation Program, including procedures for implementing the program to mitigate for permanent disturbances to greater sage-grouse (hereafter sage-grouse) habitat in Utah.

(2) This rule incorporates the conservation strategies contained in the "Conservation Plan for Greater Sage-grouse in Utah".

(3) Sage-grouse habitat in Utah is naturally fragmented due to topography, encroachment of conifer trees, fire, and invasive weeds such as cheat grass. Human-related activities have also contributed to habitat fragmentation. Research conducted on sage-grouse in Utah has clearly demonstrated that the species is space-limited and responds positively when new habitat is created. This compensatory mitigation program will be used to increase space (i.e., habitat) for greater sage-grouse and to connect disjointed habitat by creating connections and corridors where they do not exist. Acres of habitat lost and created will be the measure used to guide the implementation and track the success of the program in Utah. Other programs in Utah, including the Watershed Restoration Initiative, Sage-grouse Initiative and the Grazing Improvement Program, conduct projects to improve the quality of the habitat. The lessons learned from those programs will guide the implementation of this rule.

 

R634-3-2. Program Goals.

(1) The Compensatory Mitigation Program seeks to offset the impacts of permanent disturbances to sage-grouse habitat in Utah by

(a) encouraging responsible economic development through avoiding and minimizing permanent disturbance within sage-grouse habitat, when possible, and thereby maintaining the distribution of functional sagebrush habitats within Sage-grouse Management Areas (SGMAs) in Utah; and

(b) providing Compensatory Mitigation resulting in a net conservation gain in functional habitat to offset the direct and indirect impacts from Permanent Disturbance in sage-grouse habitats within Utah.

 

R634-3-3. Definitions.

(1) "Agreement Fee" means a sum of money paid by a Credit Provider upon entering into a Term Mitigation Agreement or Conservation Bank Agreement with the Department to offset the Department's costs in administering the Agreement.

(2) "Application Fee" means a sum of money paid by an applicant to the Department to offset the cost of processing any compensatory mitigation applications submitted to the Department.

(3) "Area of Permanent Disturbance" means the area within a spatial polygon circumscribing the actual permanently disturbed area directly impacting sage-grouse or its habitat, including the area outside the polygon where project effects would be expected to indirectly disturb sage-grouse or its habitat.

(4) "Baseline" means the pre-existing condition of a defined project area, prior to commencing any Credit Generation Project.

(5) "Bank Property" means permanently protected real property included in or devoted to the development of a Conservation Bank.

(6) "Compensatory Mitigation" means the restoration or establishment of sage-grouse habitat to offset the unavoidable adverse impacts which remain following permanent disturbance to sage grouse habitat.

(7) "Compensatory Mitigation Program" means the sage-grouse habitat mitigation program created by Title 79, Chapter 2, Part 5 of the Utah Code and this Rule.

(8) "Conservation Bank" means a site or suite of sites of at least 640 contiguous acres established under a Conservation Bank Agreement with the Department that provides ecological functions and services for sage-grouse, expressed as Credits that are conserved and managed in perpetuity and used to offset impacts to sage-grouse habitat expressed as Debits, occurring elsewhere.

(9) "Conservation Bank Agreement" means the legal document for the establishment, operation and use of a conservation bank.

(10) "Conservation Easement" means a voluntary legal agreement between a landowner and a third party that limits the use or development of land to protect sage-grouse habitat values.

(11) "Corridor" means an area of land that facilitates sage-grouse movement between two or more areas of Occupied Habitat containing less than 1% canopy cover in conifers and at least 15% ground cover in perennial grasses and forbs.

(12) "Credit" means an acre of Functional Habitat or Corridor lands created by a Credit Provider that may be transferred to a Credit Buyer to offset impacts of Permanent Disturbances and which represents the value in Compensatory Mitigation activities.

(13) "Credit Buyer" means any person who purchases Credits to offset the impacts of permanent disturbances to sage-grouse habitat.

(14) "Credit Exchange Service" means a tool created by the Department to track the development, maintenance and transfer of Credits.

(15) "Credit Generation Project" means any planned habitat manipulation project implemented by a Credit Provider or a designee within any SGMA to create or restore Functional Habitat or to create or restore Corridors to generate Credits.

(16) "Credit Maintenance" means the actions required to ensure that Credit acreage continues to operate as Functional Habitat or Corridor lands for the duration of the disturbance it was intended to offset.

(17) "Credit Provider" means any person or entity that creates or restores Functional Habitat or Corridor(s) to generate Credits to be transferred utilizing the Credit Exchange Service.

(18) "Credit Transfer Fee" means a sum of money paid by a Credit Buyer to the Department when a Credit Provider transfers Credits to a Credit Buyer to offset the Department's costs in administering this Program.

(19) "Debit" means an acre of sage-grouse habitat permanently disturbed, either directly or indirectly, in a SGMA for which Compensatory Mitigation is applicable.

(20) "Department" means the Utah Department of Natural Resources, the agency responsible for administering the Compensatory Mitigation Program.

(21) "Durability" means the ability for mitigation measures to remain effective for a period of time that is at least as long as the direct and indirect impacts from the permanent disturbance that the mitigation is designed to offset.

(22) "Functional Habitat" means any sage-grouse habitat, created through a Credit Generation Project, contiguous with existing Occupied Habitat, and which includes a sagebrush canopy cover of at least 15% and no more than 1% canopy cover of conifer trees.

(23) "Habitat" means the aggregation of Seasonal Habitats used by sage-grouse during their yearly life-cycle.

(24) "In-lieu Fee" means money provided from a developer to the State, at the direction of a regulatory agency, to be used for restoration and enhancement of sage-grouse habitat, with the goal to create or restore Functional Habitat that satisfies Compensatory Mitigation requirements to offset Permanent Disturbances on federal or state lands.

(25) "Mitigation Ratio" means the ratio of Credits needed by a Credit Buyer or produced by the State to offset any Permanent Disturbance within sage-grouse habitat to produce a Net Conservation Gain for sage-grouse. Any person causing Permanent Disturbance to an acre of sage-grouse habitat should provide four acres of Functional Habitat or Corridors as a proper Mitigation Ratio.

(26) "Net Conservation Gain" means the actual benefit or gain in habitat quantity above Baseline conditions, as a result of a Credit Generation Project, after deductions for Permanent Disturbance.

(27) "Occupied Habitat" means any Habitat utilized by Sage-grouse during any portion of their lifecycle.

(28) "Permanent Disturbance" means a human caused action that results in a loss of sage-grouse Habitat for a period of five or more years and includes all areas where the direct and indirect effects of the action could be expected to disrupt the common activities of sage-grouse for a period of five years or more.

(29) "Plan" means the Conservation Plan for Greater Sage-grouse in Utah.

(30) "Program Administrator" means the Executive Director of the Department, or their designee, with authority to establish, operate and manage the Compensatory Mitigation Program.

(31) "Project Area" means the geographic boundary of any Credit Generation Project.

(32) "Remedial Action" means any corrective measures which a Credit Provider is required to take to ameliorate any injury or adverse impact to Credits or Transferred Credits to ensure long-term durability of Functional Habitat.

(33) "Reserve Pool" means a pool of Credits, managed by the Program Administrator or a Bank Manager, intended to cover risks of potential Reversals on any Project Area.

(34) "Reversal" means a Compensatory Mitigation Credit that does not persist as Functional Habitat for the full duration of the Permanent Disturbance.

(35) "SGMA" means Sage-grouse Management Areas as identified in the Plan.

(36) "Seasonal Habitat" means all habitats utilized by sage-grouse for survival during some portion of its life cycle, including leks, nesting, brood rearing, late brood rearing, transitional corridors, and winter habitat.

(37) "Service Area" means any SGMA within the State of Utah.

(38) "SITLA Lands" means lands owned or managed by the Utah School and Institutional Trust Lands Administration.

(39) "State Lands" means lands owned or managed by any State of Utah agency other than SITLA.

(40) "Term Mitigation Agreement" means an agreement between the Department and any person(s) owning property adjacent to Occupied Habitat within any SGMA, where the landowner generates Functional Habitat or Corridor(s) for the benefit of sage-grouse, and which actions result in the creation of Credits to be transferred to Credit Buyers to offset Permanent Disturbances to sage-grouse Habitat.

(41) "Transfer" means the conveyance of Credits from one person or entity to another to offset impacts from Permanent Disturbance.

(42) "Transferred Credit" means any Credit transferred from the Department's Credit Exchange Service to offset impacts from Permanent Disturbance.

(43) "Verification" means the process(es) used to confirm that Compensatory Mitigation Program rules have been followed through standardized reporting and monitoring.

(44) "Verifier" means any person or entity who certifies or monitors the existence of Functional Habitat or Corridors following Credit Generation Projects utilizing the scientific methods and guidelines approved by the Department.

 

R634-3-4. State Sponsored Compensatory Mitigation Program.

(1) Compensatory Mitigation for Impacts to Private, SITLA and other State Lands.

(a) To ensure a Net Conservation Gain for sage-grouse by creating additional Functional Habitat and Corridors for sage-grouse, the Department will:

(i) Generate four acres of Functional Habitat or Corridors in SGMAs for every one acre of Permanent Disturbance on private or SITLA Lands in any SGMA; and

(ii) For every one acre of Permanent Disturbance on State Lands, other than SITLA lands, in any SGMA, the Department will work with other state agencies to generate four acres of Functional Habitat or Corridors.

(2) Determination of Disturbance.

(a) In consultation with county governments and other state agencies, the Department will determine the number of acres of permanent disturbances within all SGMAs on private, SITLA and State Lands every three years, or whenever information becomes available to the Department.

(3) State Credit Generation Projects.

(a) The Department will identify potential Credit Generation Projects within non-functional habitat in any SGMA. Prior to initiation of any Credit Generation Projects on SITLA, State Lands or federal lands, the Department will assess the Project Area to document the Baseline acres of Functional Habitat present within the Project Area before treatment. After conducting any necessary pre-project planning and assessments, the Department will conduct Credit Generation Projects to generate Credits.

( b) The Department will meet annually with federal agencies with jurisdiction over federal lands to identify potential Credit Generation Projects that may be completed on federal lands utilizing non-federal dollars. Credit Generation Projects will only be initiated after compliance with any necessary federal planning and permitting requirements. After conducting any necessary pre-project planning and assessments, the Department will conduct Credit Generation Projects to generate Credits.

(4) Verification and Tracking of Credits.

(a) Upon completion of any Credit Generation Project on SITLA, State Lands or federal lands, the Department will assess the Project Area utilizing a Verifier to certify the number of Credits generated on the Project Area. Once Credits are certified by the Department, it will track the Credits utilizing the Credit Exchange Service.

(b) Credits generated by the Department will provide a net-conservation gain to sage-grouse by offsetting Permanent Disturbance on private, SITLA and other State Lands. Credits generated by the Department will not be transferred to Credit Buyers except as provided in 3-1-4(G).

(5) Verification; Monitoring and Maintenance.

(a) The Department will monitor the condition of each Credit utilizing the monitoring and assessment guidelines it adopts pursuant to Section 3-1-7(D).

(b) If results from monitoring and assessment demonstrate that Credits produced by the Department no longer provide Functional Habitat or Corridors, then the Department may conduct habitat maintenance projects to restore the Credits, or it may create additional Credits as outlined in Section 3-1-4(F).

(6) Duration, Durability and Reversals. State Assurance.

(a) The Department will ensure that any Credits generated by the Department to offset permanent disturbance in any SGMA will be maintained for the duration of any direct and indirect impacts from Permanent Disturbance on those lands and tracked using the Credit Exchange Service.

(b) In the event of a Reversal to any Credits generated by the Department, the Department will apply additional replacement Credits from other Credit Generation Projects in any SGMA throughout the State. Any actions taken under this Section will be tracked using the Department's Credit Exchange Service.

(7) Federal Agency Use of State Generated Credits.

(a) If a federal agency would like to utilize Credits generated by the State to offset Permanent Disturbance on federal lands, the Department may enter into a written agreement with the federal agency outlining the federal agencies' need and use of Credits to offset Permanent Disturbances on federal lands.

(b) Any federal agency may authorize the use of in-lieu payments from a developer to offset the Department's cost to generate and maintain the Credits. Upon payment of the in-lieu fee to the Department, the federal agency will provide a developer with a written receipt stating that the developer's compensatory mitigation requirements are satisfied and allow a development project to proceed on federal lands.

 

R634-3-5. Term Mitigation Credit Program.

(1) Application; Minimum Qualifications. Any person desiring to enter into a Term Mitigation Agreement with the Department to create Credits to mitigate the impacts of disturbances to sage-grouse habitat within Utah, must:

(a) Own, manage and control at least 100 contiguous acres adjacent to Occupied Habitat in any SGMA in Utah identified in the Plan that is not Functional Habitat or a Corridor, but with completion of a Credit Generation Project may become Functional Habitat or a Corridor.

(b) File a completed application with the Department, which, at a minimum, shall include:

(i) name of the owner of the surface and mineral rights on the property;

(ii) legal description of the proposed Project Area and the total number of acres owned by the applicant;

(iii) the number of acres on which Credits will be generated;

(iv) the term of years the person is willing to maintain the Credits on the property, after completing any Credit Generation Project on the property as identified in the Term Mitigation Agreement; and

(v) an Application Fee as outlined in the Fee Schedule attached hereto, as amended by the Department.

(c) Upon receiving any completed application, the Department will make a habitat suitability determination identifying whether the proposed Credit Generation Project will likely result in Functional Habitat or Corridor(s) on the property and identify the number of potential Credits which may result from the creation of Functional Habitat or Corridor(s). In the event another person owns the mineral rights on an applicant property, the Department may request a mineral report for the property.

(d) The Department may deny any application that is incomplete or does not meet the guidelines outlined in this Section.

(2) Establishment of Term Mitigation Agreement.

(a) If the Department determines that an applicant property is suitable for generating Credits, it may enter into a Term Mitigation Agreement with the property owner, identifying, at a minimum:

(i) the scope of work necessary to create and maintain Credits on the Property;

(ii) the entity or person(s) responsible to perform any Credit Generation Projects;

(iii) a management plan identifying maintenance and verification duties for the landowner or a third-party entity;

(iv) the term of the years for Credit Maintenance;

(v) an option clause for renewing the agreement for an additional term of years;

(vi) the legal or financial mechanisms utilized by the landowner to provide assurances to the Department that the Credits generated on the landowner's property will be in place for the duration of the agreement; and

(vii) for split-estate properties, the Department may require the owner of a mineral estate to co-sign the Term Mitigation Agreement and provide a written guarantee that the mineral estate will not be developed during the term of the agreement.

(b) In no event shall the term of a Term Mitigation Agreement be less than twenty (20) years.

(c) Prior to executing the Term Mitigation Agreement, the Department shall collect an Agreement Fee from the person(s) signing the Agreement to offset any costs of administering the Term Mitigation Agreement.

(3) Credit Generation Projects

( a) Prior to initiation of any Credit Generation Project, the Department will assess the Project Area to Verify the number of acres of Functional Habitat or Corridors present on the Project Area before the landowner conducts any Credit Generation Projects.

(b) After conducting any necessary pre-project assessments, a Credit Provider or its designees will complete any Credit Generation Projects as outlined in the Term Mitigation Agreement.

(4) Verification; Tracking of Credits.

(a) Once the Credit Generation Projects are completed, as identified in the Term Mitigation Agreement, a Verifier will inspect the Credit Generation Project area, determine the number of Credits generated on the property, and provide a Certificate of Credits to the landowner identifying the number of Credits available on the property that may be transferred to a Credit Buyer utilizing the Credit Exchange Service.

(b) Upon certifying the Credits, the Department will track the Credits in the Credit Exchange Service identified in Section 3-1-7.

(5) Assessment and Monitoring of Credits.

(a) Credits generated under this Section will be monitored by the Credit Provider and the Department, as outlined in the Term Mitigation Agreement, to ensure that Credits continue to serve as Functional Habitat or Corridors for sage-grouse throughout the duration of the Term Mitigation Agreement.

(b) Credits will be monitored using the Department's Monitoring and Credit Maintenance Policies developed under Section 3-1-7(D). The Program Administrator may utilize monitoring results to amend the Credit maintenance requirements outlined in the Term Mitigation Agreement.

(6) Durability and Assurances.

(a) Prior to the Department listing any Credits on the Credit Exchange Service, the Credit Provider shall provide the Department with financial and/or legal assurances that the Credits developed will be protected for the duration of the Term Mitigation Agreement. Financial assurances may include Letters of Credit, Performance or Guarantee Bonds, Escrow Agreements, endowments or Causality Insurance coverage to offset any losses or reverses to the Credits on the property. Legal assurances may include permanent or term easements, deed restrictions, and contractual guarantees.

(7) Credit Expiration; Renewal of Exchange Agreements.

(a) All Credits generated or transferred under this Section will automatically expire at the end of the term set out in the Term Mitigation Agreement regardless of whether or not the Credit was transferred. Upon expiration of any Credit, the Department will remove the Credit from the Credit Exchange Service.

(b) The Term Mitigation Agreement can be renewed for an additional term as outlined in the agreement. Prior to reissuing the Credits in the Credit Exchange Service, the Department or a Verifier will confirm that the Credits remain as Functional Habitat or Corridors.

(c) In the event any person terminates the Term Mitigation Agreement prior to the terms outlined in the agreement, that person shall pay the Department the state's actual costs to obtain or create replacement Credits to complete the remaining years listed in the agreement.

( 8) Federal Agency Use of Term Credits.

(a) Any federal regulatory agency that directs Credit Buyers to purchase Term Credits from the Credit Exchange Service is encouraged to utilize the Mitigation Ratios recommended herein, including mitigating at four acres for every one acre of Permanent Disturbance.

(b) Any federal regulatory agency may place additional requirements on a Credit Buyer for maintaining, monitoring, verifying or providing additional assurances for Credits utilized to offset disturbances to sage-grouse habitat on federal land. The federal agency, or a Credit Buyer will be responsible for any additional monitoring or verification requirements developed by a federal agency.

 

R634-3-6. Conservation Banks.

(1) Jurisdiction.

(a) The Department has jurisdiction over the creation and regulation of Conservation Banks for Sage-grouse in Utah. Any person desiring to operate a Conservation Bank and transfer Credits generated by the Conservation Bank must first receive authorization from the Department.

(2) Application; Minimum Qualifications.

(a) Any person desiring to establish a Conservation Bank in Utah to create and protect in perpetuity Functional Habitat and/or Corridors to generate Credits to mitigate for the impacts of Permanent Disturbances to sage-grouse habitat within Utah, must:

(i) own, manage and control at least 640 contiguous acres of land that is not Functional Habitat or Corridor(s) adjacent to Occupied Habitat in any SGMA in Utah, as identified by the Plan;

(ii) file a completed application with the Department, which shall include:

(A) the name and address of property owner;

(B) legal description and number of acres included in the proposed Bank Property;

(C) title search of property identifying current owner(s) and title holder(s) and a list of any existing liens on the property;

(D) name and address of Bank Manager;

(E) a proposed property management plan, including identified Credit Generation Projects and monitoring and maintenance activities to take place on the bank; and

(iii) Pay the applicable Application Fee as outlined in the Fee Schedule attached hereto, as amended by the Department.

(b) The Department may reject any bank application that is incomplete or does not meet the requirements of this Section.

(3) Establishment of Conservation Bank Agreement.

(a) The Department may review any completed application and determine whether the property identified in the application may be eligible to operate as a Conservation Bank.

(b) Upon review and informal approval of the application, the Department will provide a written notice of contingent bank approval to the applicant and shall identify the total number of Credits potentially available on the property upon completion of any Credit Generation Projects.

(c) After the applicant receives the notice of contingent bank approval, the applicant and the Department may enter into a Conservation Bank Agreement which will, at a minimum, identify:

(i) the Bank Manager;

(ii) the legal description of the Bank Property;

(iii) a property management plan identifying any habitat enhancement and maintenance activities to be conducted by Bank Manager to generate Credits on the Bank Property;

(iv) the Bank Manager's monitoring and reporting requirements and schedule;

(v) any Remedial Actions and adaptive management strategies to be taken in case of a Reversal;

(vi) the amount and type of legal or financial assurances the Bank Manager provides for the conservation and maintenance of the Conservation Bank and Credits;

(vii) a means by which the bank or bank property may be transferred to a third party; and

(viii) For split-estate properties, the Department may require a mineral report and written guarantee from the owner(s) of the mineral rights that the minerals will not be developed while the Conservation Bank Agreement is in place.

(d) Prior to executing the Conservation Bank Agreement or transferring Credits on the Credit Exchange Service, the owner of the Conservation Bank shall grant a Conservation Easement to any eligible third-party, a deed restriction, or place the property in an irrevocable trust ensuring the perpetual protection of the property for the benefit of sage-grouse and the protection of sage-grouse habitat.

(e) The Conservation Bank Agreement may be implemented in phases, as needed and appropriate, to generate and sell Credits on a periodic basis, and may be modified or amended by mutual agreement between the Bank and the Department.

(f) The Department shall collect an Agreement Fee from the person(s) signing the Agreement to offset any costs of administering the Term Mitigation Agreement.

(4) Credit Generation Projects.

( a) Prior to initiating any Credit Generation Projects, the Bank Manager or the Department will survey the Project Area to verify the number of acres of existing Functional Habitat or Corridors present and report the survey results to the Department.

(b) Once the Conservation Bank Agreement is fully executed by all parties and the survey results in subsection (1) are reported to the Department, the Bank Manager may begin Credit Generation Projects to generate Credits utilizing the plans and procedures identified in the Conservation Bank Agreement. The Bank Manager shall provide written notification to the Department whenever Credit Generation Projects are completed on the Bank Property.

(5) Verification; Credit Certification and Tracking.

(a) Upon completion of any Credit Generation Projects, as identified in the Conservation Bank Agreement, a Verifier will inspect the Credit Generation Project area to determine the number of acres of Functional Habitat or Corridor that exist on the Bank Property using the scientific methods approved or developed by the Department. When the Verifier determines that Functional Habitat or Corridors exist following Credit Generation Projects, the Verifier will provide a Certificate of Credits to the Bank Manager identifying the number of Credits available on the property to be potentially transferred to a Credit Buyer through the Credit Exchange Service.

(b) Upon Verifying the Credits, the Department will track the Credits on the Credit Exchange Service as identified in Section 3-1-7.

(6) Assessment; Management and Monitoring Duties.

(a) The Bank Manager shall manage the Bank Property in accordance with the management plans prescribed in the Conservation Bank Agreement.

(b) The Bank Manager shall be responsible for monitoring and maintaining the condition of the Credits on the Bank Property and shall collect data as prescribed in the Conservation Bank Agreement, in accordance with the Department's Monitoring and Credit Maintenance policies and procedures.

(c) The Bank Manager or a designee will submit an annual assessment and monitoring report to the Department utilizing the reporting guidelines developed by the Department.

(7) Conservation Bank Agreement Revisions.

(a) The Bank Manager and the Department shall meet and confer upon request of the other to consider revisions to the Conservation Bank Agreement which may be necessary to better conserve the habitat and conservation values of the Bank Property.

(8) Compliance Inspection.

(a) The Department may conduct any necessary assessment, monitoring and verification of the Bank Property to Verify that Credits generated by the Bank qualify as Functional Habitat or Corridor(s); to recommend Remedial Action, as needed; or for any other purpose determined necessary by the Department to assess compliance with the Conservation Bank Agreement.

 

R634-3-7. Administration.

The Compensatory Mitigation Program and associated systems to generate and track Credits shall be administered by the Department.

(1) Credit Exchange Service.

(a) The Department shall monitor and track generated and transferred Credits using the Credit Exchange Service which will include the following information:

(i) Credits. Upon Completion of any Credit Generation Project, the Department will track:

(A) the number of Credits generated under each mitigation system herein;

(B) the dates the Credits were Verified and certified by the Department or a trained Verifier;

(C) the types of Habitat(s) created by the Credit(s), if the information is available;

(D) the name and address of each Credit Provider; and (E) the duration or term for maintaining a Credit.

(ii) Transferred Credits. The Department will track information relating to each Transferred Credit including:

(A) name of Credit Buyer;

(B) the number of Credits transferred to the Credit Buyer;

(C) date of transfer;

(D) duration and term the Credit Expires, if applicable.

(iii) Expiration of Credits. If the term of a Credit or Transferred Credit expires, then the Department will remove the Credit or Transferred Credit from the tracking system, and notify the Buyer of the Credit, the Credit Provider and the involved regulatory agency, if applicable, that the Credit has expired.

(2) Procedure for Transferring Credits.

(a) A Credit Buyer may negotiate the acquisition price for a Credit with any Credit Provider listed on the Credit Exchange Service.

(b) Once an agreement on price is finalized between the Credit Provider and Credit Buyer, the Credit Provider shall notify the Department within 7 days.

(c) Once the Department receives notice of the agreement from a Credit Provider, the Department will send the Credit Buyer an invoice identifying the Credit Transfer Fee to be paid by the Credit Buyer to the Department.

(d) The Credit Buyer shall pay the Credit Transfer Fee to the Department within 30 days of the Department sending the invoice. Upon receipt of the Credit Transfer Fee, the Department will transfer the agreed upon Credits to the Credit Buyer.

(e) The Department shall track Credits transferred to any Credit Buyer using the Credit Exchange Service.

(f) Any Credit Buyer may purchase additional Credits to offset future planned development projects anticipated to cause a Permanent Disturbance to sage-grouse habitat.

(g) Once a Credit Buyer acquires a Transferred Credit, the Transferred Credit may not be transferred or sold to any other person or entity.

(3) Fee Schedule.

(a) The Department will annually develop a fee schedule to cover the cost of the Compensatory Mitigation Program, including:

(i) The Application Fee required to cover the cost of processing any compensatory mitigation applications submitted to the Department from a potential Credit Provider.

(ii) The Agreement Fee, which will outline the costs of administering Term Mitigation Agreements and Conservation Banking Agreements

(iii) The Credit Transfer Fee to be paid by the Credit Buyer to offset the operation and maintenance costs of the Credit Exchange Service.

(4) Verification and Monitoring Guidelines; Certification.

(a) All Credits must be certified by the Department or by a trained Verifier prior to being tracked and transferred on the Credit Exchange Service to ensure that Credits represent Functional Habitat or useable Corridors for sage-grouse.

(b) Upon completion of any Credit Generation Project, the Department, or a Verifier, will visit the Project Area, utilize the Departments monitoring and assessment guidelines to determine the number of acres of Functional Habitat or Corridors of new habitat to calculate available Credits, and provide the Credit Provider with Certificate of Credits identifying the number of Credits available to be transferred on the Credit Exchange Service. The Verifier will also submit a verification report to the to the Program Administrator, together with a copy of the Certificate of Credits. Verifiers may also be utilized by the Department to monitor the long-term viability of Credits.

(c) The Department will accredit any person interested in serving as a Verifier. Accreditation will occur after a person attends a verification training provided by the Department, or a designee, and after a person demonstrates proficiency implementing the Department's monitoring and assessment guidelines.

(d) Verifiers will act as a designee to the Program Administrator to Certify Credits upon completion of any Credit Generation Projects.

(e) Upon completion of any property verification activities, the Verifier will provide a written Verification report to the Program Administrator identifying a summary of the verification activities, summary of the number of acres of Functional Habitat or Corridors in the Credit Generation Project area and an estimate of the number of Credits available, and a copy of the Certificate of Credits. The Department may add additional criteria to the report needed to carry out this rule.

(5) Monitoring and Assessment Guidelines; Scientific Method.

(a) The Credit Provider, or a designee, is responsible for monitoring and maintaining Credits utilizing the methods identified by the Department throughout the lifetime of the Credit to ensure that each Credit serves as viable Functional Habitat or Corridors for sage-grouse.

(b) The Department, and any trained Verifier, will utilize existing range trend monitoring guidelines or other scientifically approved methods identified by the Department to identify Credit Maintenance activities to be undertaken by a Credit Provider or their designee.

(c) The Department's monitoring and assessment guidelines will be reviewed, at a minimum, every three years to ensure they are consistent with current scientific literature and methods.

(6) Reserve Pool.

(a) All Credits generated by the Department will be maintained on the Credit Exchange Service to serve as a reserve pool to off-set losses from Reversals to any Credits generated under this Program.

(7) Adaptive Management.

(a) The DNR will monitor compensatory mitigation efforts and employ new scientific findings into this Compensatory Mitigation Program, as such information becomes available.

 

KEY: sage-grouse, mitigation

Date of Enactment or Last Substantive Amendment: 2017

Authorizing and Implemented or Interpreted Law: 79-2-501

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