(a) The BLM will apply the mitigation hierarchy to avoid, minimize, and compensate, as appropriate, for adverse impacts to resources when authorizing uses of public lands. As appropriate, the authorized officer may identify specific mitigation approaches or requirements to address resource impacts through land use plans or in other decision documents.

(b) For important, scarce, or sensitive resources, authorized officers shall apply the mitigation hierarchy with particular care, with the goal of eliminating, reducing, and/or offsetting impact on the resource, consistent with applicable law.

(c) When implementing the mitigation hierarchy, including authorizing mitigation leases, the BLM will:

(1) Use a landscape-scale approach to develop and implement mitigation strategies that identify mitigation needs and opportunities in a geographic area, including opportunities for the siting of large, market-based mitigation programs or projects (e.g., mitigation banks) on public lands;

(2) Use high-quality information to inform the identification and analysis of adverse impacts, to determine appropriate mitigation programs or projects for those impacts, and to achieve appropriate and effective mitigation outcomes;

(3) Require identification of performance criteria for mitigation programs or projects, effectiveness monitoring of those performance criteria, and reports that assess the achievement of those performance criteria;

(4) Use adaptive management principles to guide and improve mitigation outcomes; and

(5) Ensure that any compensatory mitigation programs or projects are commensurate with the applicable adverse impacts and that the required compensatory mitigation programs and projects are durable, additional, and timely.

(6) As used in this section, the terms additional, commensurate, durable, and timely have the following definitions:

(i) Additional means the compensatory mitigation program or project's benefit is demonstrably new and would not have occurred without the compensatory mitigation measure.

(ii) Commensurate means the compensatory mitigation program or project is reasonably related and proportional to the adverse impact from authorizing uses of public lands.

(iii) Durable means the maintenance of the effectiveness of a mitigation program or project, including resource, administrative, and financial considerations.

(iv) Timely means the lack of a time lag between the impact to the resources and the achievement of the outcomes of the associated compensatory mitigation.

(d) The BLM may approve, through a formal agreement, a third-party mitigation fund holder to administer funds for the implementation of compensatory mitigation programs or projects. A BLM-approved third-party mitigation fund holder may:

(1) Collect mitigation funds from permittees;

(2) Manage funds in accordance with agency decision documents, use authorizations and applicable law; and

(3) Disperse those funds in accordance with agency decision documents, use authorizations, and applicable law.

(e) Approved third-party mitigation fund holders must file with the BLM annual fiscal reports. To qualify as a third-party mitigation fund holder, the entity must either:

(1) Qualify for tax-exempt status in accordance with Internal Revenue Code section 501(c)(3); provide evidence that they can successfully hold and manage mitigation accounts; be a public charity bureau for the State in which the mitigation area is located, or otherwise comply with applicable State laws; be a third party organizationally separate from and having no corporate or family connection to the entity accomplishing the mitigation program or project, BLM employees, or the permittee; adhere to generally accepted accounting practices that are promulgated by the Financial Accounting Standards Board, or any successor entity; and have the capability to hold, invest, and manage the mitigation funds to the extent allowed by law; or

(2) Be a State or local government agency, if the government agency is able to demonstrate, to the satisfaction of the BLM, that:

(i) it is acting as a fiduciary for the benefit of the mitigation project or site and can show that it has the authority and ability to collect the funds, protect the account from being used for purposes other than the management of the mitigation project or site, and disburse the funds to the entities conducting the mitigation project or management of the mitigation site;

(ii) it is organizationally separate from and has no corporate or family connection to the entity accomplishing the mitigation program or project, BLM employees, or the permittee; and

(iii) it adheres to generally accepted accounting practices that are promulgated by the Governmental Accounting Standards Board or any successor entity.

(f) Authorized officers will require mitigation leases and collect annual rent at fair market value for large or otherwise substantial compensatory mitigation programs or projects on public lands, including mitigation banks and in-lieu fee programs. Mitigation leases may be required for other compensatory mitigation projects on public lands at the discretion of the authorized officer.

(g) In addition to the general requirements for mitigation leases (§ 6102.4), in some circumstances, authorized officers may require that mitigation lease holders submit to the agency a formal agreement with a qualified mitigation fund holder as defined in paragraph (d) of this section.

(h) An application for a mitigation lease for a mitigation bank or an in-lieu fee program, in addition to the requirements in (§ 6102.4(c)), must also include sufficient information about the anticipated demand for and duration of the mitigation bank or in-lieu fee program, the anticipated types of mitigation projects that will be conducted, and the methods that will be used to generate, evaluate, assess, and maintain the mitigation projects.

(i) Authorized officers will ensure that compensatory mitigation programs and projects, including those with mitigation leases, are tracked in the appropriate BLM data systems.