20081473 Ver 2_Public Comments_20090413

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Beverly Eaves Perdue
Governor
A
NCDENR
North Carolina Department of Environment and Natural Resources
Division of Water Quality
Coleen H. Sullins
Director
April 13, 2009
Alissa Bierma
Upper Neuse Riverkeeper
112 South Blount Street
Suite 103
Raleigh, NC 27601
Heather Jacobs Deck
Pamlico Tar Riverkeeper
108 Gladden Street
PO Box 1854
Washington, NC 27889
Larry Baldwin
Lower Neuse Riverkeeper
1307 Country Club Road
New Bern, NC 28562
David Merryman
Catawba Riverkeeper
421 Minuet Lane
Suite 205
Charlotte, NC 28217-2784
Dear Ms. Bierma, Mr. Baldwin, Ms. Deck, Mr. Merryman:
1Z
V3
Dee Freeman
Secretary
Thank you for your letters dated March 4 and March 10, 2009 to Secretary Freeman concerning assignment of
nutrient and buffer offset credits and the validity of the EBX buffer bank credit award. The Secretary
forwarded your letter to Bill- Gilmore, Director of the NC Ecosystem Enhancement Program (EEP), and me to
answer. As you know, the Division of Water Quality agreed in writing to allow nutrient offset credits from the
EBX bank site. We have met with representatives from another private banker (Restoration Systems) who also
expressed their concern with this decision. As a result of that meeting, I sent a letter dated February 16, 2009 to
Mr. Steve Levitas (who represents Restoration Systems) stating our position on the matter (see attached letter).
The letter states that the Division will begin an in-depth internal review of the underlying issue (often called
"additionality") over the next few months in coordination with the Corps of Engineers and US Environmental
Protection Agency. In the meantime, we will not approve any similar crediting until that review is complete
and the results receive public review and comment through our 401 Water Quality Certification Mailing List.
With respect to future EEP-related actions, we have discussed the matter with EEP staff with respect to our
conclusion that these credits from the EBX site are legally legitimate credits. Please note that DENR cannot
comment on an active Request for Proposal for mitigation.
1617 Mail Service Center, Raleigh, North Carolina 27699-1617
Location: 512 N. Salisbury St. Raleigh, North Carolina 27604 One
Phone: [phone] FAX: [phone] Customer Service: 1-877-623-6748 NOrt1Carofina
Internet: www.ncwaterquality.org l??'"'/
An Equal Opportunity 1 Affirmative Action Employer ?i?t ?Z11r?/
Alissa Bierma
Larry Baldwin
April 13, 2009
Page 2 of 2
Thank you again for your concerns. Once this new policy is developed, we will make certain that you receive a
draft copy of it for your review and comment before it becomes final. Please call John Dorney at 919-733-9646
of my staff or Suzanne Klimek of the EEP program at 919-715-1835 if you have any questions.
SinceqSu eecc: Secretary
Dee Freeman
Bill Gilmore, EEP
Pete Peterson, EMC - WQC
Matt Matthews, DWQ
John Domey, DWQ
Suzanne Klimek, EEP
Eric Kulz, DWQ
Norton Webster, EBX
?C Yncttt-

March 10, 2009
4. sue'
NEUSE
RMRKEEPER.
FOUNDATION
Advocate I Educote t Protect
LOWER NEUSE
RWERKEEPER®
Larry Baldwin
1307 Country Club Road
New Bern, NC 28562
252-637-7972
252-514-0051 fax
riverkeeper d(?i teuseriver.org
UPPER NEUSE
RIVERKEEPER®
Alissa Bierma
112 South Blount Street
Suite 103
Raleigh, NC 27601
919-856-1180
919-839-0767 fax
alissa(grieuserlver. org
BOARD OF
DIRECTORS
Natalie Bagged
Phil Bowie
Tames Boyd
Richard Dove
Richard Goodwin
Marilyn Grolitzer
Tom Hardin
Jeffrey Harrison
Mary Ann Harrison
David McCracken Wil-
liam Olah
Sandra Parker
Jim Starr
Earth Share
...,;.11. ,1--
Is your voice being
heard? Join us, or renew
your membership here.
www.neuseriver.org
Secretary Dee Freeman
N.C. Department of Environment and Natural Resources
1601 Mail Service Center
Raleigh, NC 27699-1601
Re: Validity of EBX Buffer Bank Credit Award
Dear Secretary Freeman,
1
MAR 12 2Q09
rr n--' f
As you will likely remember from our prior letter, the Neuse RIVERKEEPERV Foundation
opposes the use of acreage that has already been used to offset stream or wetland
impacts to obtain riparian buffer or nutrient offsets, as this results in re-crediting of
the same nutrient removal function already allotted to the existing offset credits and
in a net degradation of water quality.
In addition to the concerns expressed in our joint letter (Re: Recent Policy Decisions
Regarding Assignment of Nutrient and Buffer Offset Credits) of March 4', 2009, the
Neuse RIVERKEEPERV Foundation would like to express our great concern regarding a
specific decision which will impact the health of the Neuse River and tributaries.
According to our information, in November of 2008, private mitigation bankers
Environmental Bank and Exchange (EBX) were given approval to derive greater
than 250,000 pounds of nutrient offsets from a previous N.C. DepartmQ of
Transportation (DOT) compensatory mitigation project. As we understand the
situation, the DOT mitigation project completed by EBX utilized the entire project to
fulfill compensatory mitigation for DOT wetland and stream impacts; the action by DWQ
to then release nutrient offset credits from that same site is certainly re-crediting of the
same ecological and nutrient removal function.
Specifically, the acreage comprising the original "EBX Neu-Con Umbrella Wetland
Mitigation and Stream Restoration Bank" (Neu-Con Bank) restored in or about 2002 with
NCDOT funds designated specifically for compensatory mitigation for unavoidable
wetland and stream impacts. Now, we understand that the Department of Water Quality
has approved the use of portions of this same site for Nutrient and Buffer Mitigation
Credit under the auspices of the EBX Neuse Riparian Buffer Umbrella Mitigation Bank
(Buffer Bank). By providing additional offset credits where no additional offsets were
generated, a substantial environmental debt has been created.
Recently EBX proposed to provide 60 acres of riparian buffer mitigation credits to
the N.C. Ecosystem Enhancement Program (EEP) as part of the request for proposal
process. Given our current information we believe it is likely that the environmental
benefits of that acreage have already been allocated to offset the impacts of previous
DOT projects. In this case, use of the EBX Buffer Bank credits by EEP would violate the
intentions of the nutrient offset program by using the fees generated from the program to
purchase credits which resulted in no additional improvement to or protection of water
quality.
Advocate I Educate I Protect
As DENR maintains the authority to decide whether or not the use of these credits is
appropriate to meet mitigation requirements, it also has the ability to prevent the public
outcry we will lead, should an expenditure which does not result in environmental benefit
be made using EEP funds. In order to protect water quality and the appropriate use of
public funds we strongly suggest that, at a minimum, these credits be removed from
consideration for purchase by EEP until the circumstances surrounding the award of these
credits are more fully understood.
In addition, the Neuse RIVERKEEPER® Foundation respectfully requests that DWQ
produce documentation demonstrating no prior allocation of the environmental
benefits associated with the Neu-Con Bank, or pursue every possible legal avenue to
revoke approval of the 250,000+ lbs of nutrient offsets created from acreage within this
bank that has already been used to provide compensatory stream and wetland mitigation
credits to DOT. These credits represent no real protection or improvement to water
quality in the Neuse Basin and amount to nearly 20% of the total mitigation obligation
accepted by EEP since its inception. The continued existence of ecologically
meaningless credits will negatively impact our ability to comply with State and Federal
water quality standards and to protect our waters for future generations.
Sincerely,
Alissa Bierma
Upper Neuse RIVERKEEPER'R'
Cc:
Colleen Sullins (NCDWQ)
Bill Gilmore (NCEEP)
Pete Peterson (EMC WQC)
Norton Webster (EBX)
Larry Baldwin
Lower Neuse RIVERKEEPER'"-'
' March 4 2009 ??"-.• ?? ' s
pp- ___1qNE1WW NEUSE Secretary Dee Freeman Lj
N.C. Department of Environment and Natural Resourc s
RI D AT y ,PER 1601 Mail Service Center --_w - - ?/?
PC ?.f' E-' DA.f- , f?1' f\ oI4fIJ, - IV I f,i,tUT
Raleigh, NC 27699-1601
Advocate I Educate ! ?recct
Re: Recent Policy Decisions Regarding Assignment of Nutrient and Buffer Offset Credits
Lower Neuse
RIVERKEEPER'"'
Larry Baldwin Dear Secretary Freeman

1307 Country Club Road ,
New Bern, NC 28562
252-637-7972 The Pamlico-Tar River Foundation (PTRF), Neuse RIVERKEEPER® Foundation (NRF)

252-514-0051 fax
[e-mail] ,
and Catawba RIVERKEEPER® Foundation (CRF) are writing to you today to express our
concern over the Division of Water Quality's (DWQ or Division) recent policy decisions
addressing the calculation of both nutrient offset and buffer credits for restoration sites.
Upper Neuse
RIVERKEEPER'"' The undersigned organizations strongly oppose any policy which allows a single
A

lissa Bierma
112 South
Blount Street

mitigation action to provide multiple credits which offset the same treatment
I function and believe that such a policy would contradict the i
t
t
f th
Suite 103 n
en
o
e enabling
legislation.
Raleigh, NC 27601
919-856-1180
919-839-0767 fax It is within the intent of wetland and stream impact mitigation to provide the same water
[e-mail] quality benefits, including a reduction in nutrient loading to the receiving waters, as was
provided by the existing stream or wetland. Therefore, both stream and wetland
m
itigation credits have an intrinsic. nutrient offset function in addition to their
replacement of equivalent habitat and other ecological function. The use of acreage that
has already offset stream or wetland impacts to obtain riparian buffer or nutrient
offsets results in re-crediting of the same nutrient removal function already allotted
PhMl WD/1no1v 11 to the existing offset credits, resulting in net degradation of water quality. Any
policy which encourages or allows this type of dual credit assignment contradicts the
Pamlico-Tar
RIVERKEEPER'?' intent of the nutrient offset program's enabling legislation which was designed to support

Heather Jacobs Deck the General Assembly's goal for the reduction of nutrients in the Neuse and Tar-Pamlico

108 Gladden Street Basins. Allow us to explain, in de th wh a
p y policy of dually crediting the same
Po Box 1854 ecological benefit violates the intent and reality of the various mitigation/offset programs
Washington, NC 27889 at work in the State of North Carolina

252-946-7211 .
252-946-9492 fax
[e-mail]
State Riparian Buffer Protection Rules
??.Nffl The Tar-Pamlico, Neuse and Catawba River basins all have rules requiring the protection
RIVERKEEPER` of or mitigation for impact to riparian buffers. The purpose of these rules is "to protect
and preserve existing riparian buffers ...to maintain their nutrient [pollutant] removal
functions," therefore any mitigation for impact to riparian buffers must include
Catawba
RIVERKEEPER* mitigation for the lost nutrient removal function (15A NCAC 2B .0233, 15A NCAC
David Merryman 02B .0259, 15A NCAC 02B .0243)
421 Minuet Lane, Ste 205
Charlotte, NC 28217-2784 Under these rules, impacts to buffers that require mitigation can be fulfilled via three
704-679-9494 alternatives:
704-679-9559 fax
[e-mail]
1) Payment of compensatory mitigation fee to Riparian Buffer Restoration Fund
2) Donation of real property, where buffers can be restored
Re: Recent Policy Decisions Regarding Assignment of Nutrient and Buffer Offset Credits 03/04/09
3) Restoration or enhancement of a non-forested riparian buffer
The buffer mitigation must take place the same distance from or closer to the estuary or river as
the impact and as close to the location of the impact as feasible.
Federally-based Stream and Wetland Protection Rules
The objective of the Clean Water Act, and delegation of action to the States, is "to restore and
maintain the chemical, physical, and biological integrity of waters of the United States."
Pursuant to that objective, for unavoidable stream and wetland impacts, DWQ requires
compensatory mitigation at a minimum of 1:1 ratio for losses of streams and wetlands (for both
404 jurisdictional wetlands as well as isolated wetlands) (15A NCAC 2H .0506(h)). Stream
mitigation for 401/404 impacts requires a minimum 50-foot buffer to assure stream bank
stabilization; this buffer is a required component of 404/401 stream mitigation which
compensates for the loss of nutrient removal function due to the stream or wetland impacts
associated with the project requiring the subject mitigation. Compensatory mitigation can be
achieved via:
1) Project-specific mitigation
2) Mitigation banks
3) In-lieu fee mitigation via EEP
State Nutrient Sensitive Waters Management Strategy & Nutrient Offset Payments
The Tar-Pamlico and Neuse Basins' Nutrient Sensitive Waters Management Strategies both
allow dischargers to provide payment in-leiu of nutrient offsets that cannot be reasonably
accommodated on-site. The nutrient offset in-lieu fee program (NOP) provides both the
private and public sectors opportunities to "purchase" nutrient mitigation to assist them in
meeting compensatory nitrogen- or phosphorus-mitigation requirements for new construction. In
the Neuse basin the NOP is also utilized to offset nutrient impacts from the point-sources. Once
fees are received, the North Carolina Ecosystem Enhancement Program (NCEEP) or private
mitigation bank assumes the responsibility for conducting the required mitigation.
Internal Conflict and Violation of Intent
In January, 2007, DWQ released a buffer interpretation clarification memo relating to stream
restoration and buffer mitigation. This memo has allowed for riparian buffer credit to be
generated from stream mitigation projects. The rationale behind this policy by DWQ is that
stream mitigation and buffer mitigation programs are requirements under two separate laws
(federal clean water act and state buffer law). However, the mitigation of stream impacts (with
associated buffer impacts) requires mitigation of the stream channel and a minimum 50-foot
buffer, so the "credit" generated here includes the buffer. Therefore, if the state or a private
bank utilizes previous stream mitigation projects to generate the buffer credits, an
environmental deficit is created, generating two credits of nutrient removal function from a
single improvement to that function. This scenario results in a net loss of riparian buffer acreage
and function, violating the intent of the rules outlined above and cheating the public out of the
water quality benefit they promise.
Page 2 of 4
Re: Recent Policy Decisions Regarding Assignment of Nutrient and Buffer Offset Credits 03/04/09
The NRF, PTRF and CRF also have concerns related to the Draft Flexible Buffer Mitigation
rules that would allow "stream and riparian wetland mitigation credit for the construction of
headwater wetlands in subtle stream valleys in the outer Coastal Plain..." (DWQ, 3 Dec 2008).
The division must be careful to separate wetland mitigation credits from buffer or nutrient offset
credits to avoid another scenario of double stacking or double crediting the ecological function
and nutrient removal function of a single mitigation site.
Problems Already Underway
According to our information, in November of 2008, private mitigation bankers
Environmental Bank and Exchange (EBX) were given approval to derive greater than
250,000 pounds of nutrient offsets from a previous DOT compensatory mitigation project.
As we understand the situation, the DOT mitigation project completed by EBX utilized the entire
project to fulfill compensatory mitigation for DOT wetland and stream impacts; the action by
DWQ to then release nutrient offset credits from that same site is certainly re-crediting of the
same ecological and nutrient removal function.
Specifically, the acreage comprising the original "EBX Neu-Con Umbrella Wetland Mitigation
and Stream Restoration Bank" (Neu-Con Bank) restored in or about 2002 with NCDOT funds
designated specifically for compensatory mitigation for unavoidable wetland and stream impacts.
Now, we understand that the Department of Water Quality has approved the use of portions of
this same site for Nutrient and Buffer Mitigation Credit under the auspices of the EBX Neuse
Riparian Buffer Umbrella Mitigation Bank (Buffer Bank). By providing additional offset credits
where no additional offsets were generated, a substantial environmental debt has been
created.
The division's explanation, provided via email, was this:
Environmental Bank and Exchange has three sites that were constructed as stream
and wetland mitigation sites for NCDOT. These sites were constructed between
four and six years ago, and their contractual obligation to DOT was settled. EBX
owns the sites. EBX has submitted a Prospectus and Mitigation Banking
Instrument to operate an Umbrella Bank for buffer and nutrient offset credits at
these sites. Neuse riparian buffer credit will be generated within the first 50 feet
of buffer along the restored streams. From 51 - 200 feet, nutrient offset credit will
be generated. There is no "double-dipping", as it has been decided previously that
404/401 relate to federal regulations, while the riparian buffer and nutrient offset
programs are state programs.
DWQ's rationale and explanation is insufficient to explain how this policy does not re-credit the
same buffer acreage and nutrient removal function already allotted to the existing offset credits,
resulting in net degradation of water quality.
In addition, this response and award of these credits runs contrary to other DWQ nutrient
offset positions. Other division policies work to avoid any double crediting or double dipping.
One such example is the Tar-Pamlico Basin Association (TPBA) trading program. If the TPBA
exceeds its nutrient cap, then a payment is made to the agricultural cost-share program to
implement nutrient reducing BMP's on agricultural land. The agricultural community also has
Page 3 of 4
Re: Recent Policy Decisions Regarding Assignment of Nutrient and Buffer Offset Credits 03/04/01
the same nutrient reduction requirement; they must first meet their nutrient reduction goals (30%
for nitrogen) before payments from the TPBA can be. used for BMPs. In simpler terms, the
agricultural community must meet their offset requirements as well as those of the basin
association. The agricultural community cannot utilize the TPBA funds to meet their nutrient
reduction requirements. Therefore, all offsets are met and an environmental debt has not been
created.
In summary, the Pamlico-Tar River Foundation, Neuse RIVERKEEPER® Foundation, and
Catawba RIVERKEEPER® Foundation are opposed to any policy that creates an
environmental debt where new impacts to water quality occur without any new
corresponding mitigation being performed, including the retroactive award of nutrient off-set
credits from projects previously performed to offset 401/404 compensatory mitigation.
Furthermore, we respectfully request that the Division 1) reassess the January 2007 policy that
provides for both buffer and stream mitigation credit, and 2) provide official clarification of how
and why different types of mitigation credits may be gained from the acreage on which the
mitigation is implemented so that mitigation of a single ecological function results in off-set
credits for only that single function.
We would be happy to arrange a time to discuss this matter in person should you require further
explanation. Please do not hesitate to contact the below signatories with any questions you may
have.
Sincerely,
Alissa Bierma
Upper Neuse RIVERKEEPER"'
Neuse RIVERKEEPER"'Foundation
v
Heather Jacobs Deck
Pamlico-Tar RIVERKEEPER'"'
Pamlico-Tar River Foundation
Cc:
Colleen Sullins (NCDWQ)
Bill Gilmore (NCEEP)
Pete Peterson (EMC WQC)

Larry Baldwin
Lower Neuse RIVERKEEPER"'.'
Neuse RIVERKEEPER" Foundation
David Merryman
Catawba RIVERKEEPER'"'
Catawba RIVERKEEPER`. Foundation
Page 4 of 4