Under Section 37 of Biological Diversity Act, 2002 (BD Act), the State Government in consultation with concerned State Biodiversity Board and local bodies may notify in the official gazette, areas of biodiversity importance as Biodiversity Heritage Sites (BHSs).

The State Government in consultation with the Central Government may frame rules for the management and conservation of BHSs under sub section (2) of Section 37 of BD Act, 2002.

Under sub section (3) of Section 37 of BD Act, 2002, the State Governments shall frame schemes for compensating or rehabilitating any person or section of people economically affected by such notification.

Areas which have already been designated, identified or notified (for example as protected area, biosphere reserve, etc.) under other Acts or programmes may not be considered under this provision. The idea is to identify those areas important from Biodiversity point of view which do not enjoy protection/support under any other Act or programme.