Many State DOT highway development projects must mitigate impacts to natural resources. This is frequently done through compensation for loss of wetlands, purchase of land for lost public uses, or complex agreements to avoid impacts to listed endangered species. When these mechanisms are tailored to individual projects or are not developed until late in the project development process, they can be costly and unproductive. They can also lead to public opposition, resulting in expensive and protracted litigation.

A number of State DOT’s have purchased property to establish wetland mitigation banks to establish “credits” to compensate for wetland losses. Many State DOT’s have extensive coordination procedures with their State natural resource agencies to avoid last minute negotiations that can exacerbate expense and negative publicity. A few State DOT’s participate in Habitat Conservation Plans (HCP’s) designed to avoid adverse consequences resulting from the cumbersome approval procedures associated with Sections 7 and 10 of the Endangered Species Act. HCP’s can cover a general area and therefore are not limited to individual transportation projects.

Research is needed to describe HCP’s and their relation to wetland mitigation banking, regional planning, and NEPA. Purchase and sale of wetland bank, habitat, and stream credits may be characterized as real property or personal property transactions. If a “credit” constitutes real property, its purchase or sale in most jurisdictions must be for fair market value. In contrast, purchase or sale of a personal property “credit” may be subject to State procurement laws and Federal funding restrictions.

Additional research should cover the mechanism used in California and other States to set up, monitor, and maintain HCP’s on private or public property through an endowment fund and/or the use of conservation easements.

STATUS: Completed. Published as NCHRP Legal Research Digest, Issue 75