a. The latest report was available Feb. 9, 2006, at http://www.fws.gov/endangered/expenditures/reports/FWS%20Endangered%20Species%202004%20Expenditures%20Report.pdf . b. See also Congressional Budget Office, Cost Estimate for H.R. 3824 , available at http://www.cbo.gov/showdoc.cfm?index=6663&sequence=0 , Feb. 9, 2006. Since conservation banks and tax incentives are addressed only in S. 2110 , they will be discussed outside the table to conserve space. Provisions related to conservation banks will be paraphrased and CRS comments arein italics. Page numbers refer to the PDF version of S. 2110 as introduced. Under S. 2110 , a conservation bank is defined as an area of land,water, or other habitat (not necessarily contiguous) that is managed in perpetuity orfor an "appropriate period" under an enforceable legal instrument and for the purposeof conserving and recovering habitat, or an endangered, threatened, or candidatespecies, or a species of special concern (p. 31). The conservation bank definition includes habitat "not necessarilycontiguous," which suggests that a bank could consist of segments of habitat ratherthan a block. Given the importance and benefits of habitat continuity for speciessurvival, some might argue that banks consisting of fragmented portions would haveless value than banks with contiguous habitats. This definition also mentions an"appropriate period" as an alternative to in perpetuity when referring to the lifetimeof the bank. The bill does not identify who will make the determination of anappropriate period or what criteria will be used. Credit is defined as the "unit of currency" of a conservation bank generatedby preserving or restoring habitat in an agreement, and quantified through theconservation values of a species or habitat. Conservation values are to be determinedby the Secretary for each bank and converted into a fixed number of credits (pp.31-32). The definition of credit is written in a way that appears to allow alternativesto money that could be exchanged to pay for the values being purchased out of thebank. There is no indication what those alternatives might be. There is littleguidance on how the Secretary will determine or measure conservation value, andhow much "value" will equal a credit. Due to the changing nature of habitat and thepotential for habitat improvement or degradation, conservation values may changewithin banks. There do not appear to be any provisions that allow the Secretary toreassign values to conservation banks. On the other hand, allowing the Secretaryto determine the value and credits for each bank, has the potential to insure thatthere will be consistency among banks. This may be helpful, since a credit programfor species could involve a wide range of habitat values. A service area is an area identified in a conservation bank agreement. Itincludes a soil type, watershed, habitat type, political boundary, or an area in afederally recognized conservation plan, among others, in which a credit may be usedto offset the effects of a project (p. 32). The scope of a service area may vary broadly under this definition, whichcould allow the Secretary to create areas that fit desired biological criteria. Because person under the ESA includes federal agencies, and page 32 includes a referenceto federally recognized conservation plans, the provisions on conservation bankingmay apply to federal agencies; it is unclear if this was intended. Conservation banks may be established by any private landowner who appliesand demonstrates that the affected area is managed under an enforceable legalinstrument and contributes to the conservation of a listed species, a candidate species,or a species of special concern (pp. 32-33). Secretary shall approve or disapprove abank within 180 days after the application is submitted (p. 33). A bank can bemanaged by a state, a holder of the bank, another party specified in the agreement,or a party that acquires property rights related to the conservation bank (p. 34). While conservation banks would require an enforceable legal instrument, thebill does not specify any contents for that instrument. There may be certain minimalcontents that all such instruments or banking agreements should contain to ensurethat protection of species and habitat will be effective and consistent from site to site. The time limit for a decision will allow approved banks to enter into the program andgain credits within six months, which some feel would encourage participation, butit is unclear whether this period will be sufficient for the Secretary to render adecision with adequate justification. Management of the bank is not restricted,which may relieve the burden of management from the landowner and allow otherentities (e.g., state agencies or non-governmental organizations) to manage the bank. However, no criteria for holders are stated. The holder of a conservation bank is required to establish an agreement thatdescribes the proposed management of the bank (p. 34). The agreement is submittedto the Secretary, who shall approve or disapprove it "as soon as practicable" (p. 35). Conditions for amending and nullifying the agreement are given (pp. 35-36). TheSecretary shall consider the use of banks for implementing recovery plans and mustadopt regulations on managing banks that balance the biological conditions of thetarget species and habitat with "economic free market principles" to ensure value tolandowners through a tradeable credit program (p. 36). A bank management agreement undergoes a separate approval process fromestablishing a conservation bank, and the deadline for approving or disapprovingbank management agreements is uncertain. No standards for acceptable agreementsare provided. An approved agreement does not seem to be required to transfercredits or to maintain a conservation bank. The bill does specify that the bank mustcontribute to the conservation of qualified species, but there is no requirement thatbanks be consistent with approved recovery plans, and it is not clear that bankmanagers must comply with the relevant agreement. The Secretary is to promulgate regulations on managing conservation banks(p. 37). The regulations are to relate to 11 subjects, including conservation andrecovery goals, activities that may be carried out in any conservation bank, measuresthat ensure the viability of conservation banks, "the demonstration of an adequatelegal control of property proposed to be included in the conservation bank" (p. 37),criteria for determining credits and an accounting system for them, and theapplicability of and compliance with Â§7 and Â§10 of ESA. Monitoring and reportingrequirements are also to be addressed in the regulations (pp. 37-38). The regulations are to include provisions "relating to" how the consultationrequirements of Â§7 of the ESA and the incidental take provisions apply in the contextof conservation banks. It is not clear whether the authority given the Secretary todevelop these regulations could be broad enough to eliminate consultation, or toauthorize the issuance of general incidental take permits for activities inconservation bank areas. The requirement that banks be financially viable (pp.37-38) appears to refer to both biological and financial viability. As to the latter,some contend that financial viability should be determined by market forces ratherthan the federal government, which should ensure the biological viability of thespecies or habitat should a bank fail. Biological data would determine how many credits a bank can sell (p. 38),and the Secretary is to establish a standard process by which credits could betransferred. Credit transfers can be used to comply with court injunctions, to meetrequirements of Â§Â§7(a), 7(b) or 10(a)(1) of the ESA, and to provide out-of-kindmitigation (p. 39). "Out-of-kind mitigation" is defined as mitigation involving thesame species or habitat, but in a different service area. Additional requirements mustbe met for approval of out-of-kind mitigation, and the Secretary is to give preferenceto in-kind mitigation to the maximum extent practicable (pp. 39-40). The Secretaryis not to regulate the price of credit transfers or to limit participation by any party inthe credit transfer process (p. 40). In some circumstances, credits may be transferredbefore the Secretary approves a bank (p. 41). The criteria for transferring credits do not include habitat or speciesrequirements for the area being mitigated by the purchase of credits. Habitat fordifferent species may not be interchangeable; therefore, if the area being mitigatedcontained habitat for an endangered species of salamander, there are norequirements that credits purchased will be from a conservation bank with similarhabitat. Out-of-kind mitigation is allowed when both ecological desirability andeconomic practicability can be met. The bill allows transfer of credits before thebank is approved if specified conditions can be met, which would seem to be a riskto the federal interest in species protection should the Secretary ultimately reject theapplication for establishing the bank. If the Secretary rejects a bank proposal, howwould that rejection affect any prior purchase of credits? Creation of conservation banks can be integrated with conservation plansdeveloped under Â§10 of the ESA if certain criteria are met (pp. 41-42). Any party toan agreement, including the United States, may sue for breach of the agreement, andsovereign immunity is waived for participating federal, state, tribal, and localgovernments (pp. 42-43). Subsection (g) (pp. 41-42) requires, to the maximum extent practicable , thata bank be integrated with habitat conservation plans developed under Â§10 of the ESAif the bank meets the ecological criteria of the habitat conservation plan andprovides greater economic benefits compared with other forms of mitigation ofhabitat destruction. Only a party to the agreement (not interested outsiders withstanding) may sue for breach of the agreement.