HomeMy WebLinkAboutSW8970224_Historical File_19970401 State of North Carolina
•
Department of Environment,
Health and Natural Resources
Wilmington Regional Office 4 •
Division of Water Quality
JamesnatB. HB. nt, Jr., Secretary
Governor IC)E H N
Jonathan B. Howes, Secre
A. Preston Howard, Jr., P.E., Director
April 1, 1997
Mr. K.E. Austin, President
K.E. Austin Corporation
3301 Burnt Mill Drive
Wilmington, NC 28403
Subject: Permit No. SW8 970224
GOGAS Murrayville
High Density Commercial Stormwater Project
New Hanover County
Dear Mr. Austin:
The Wilmington Regional Office received the Stormwater Management Permit Application for GOGAS of Murrayville on
February 20, 1997, with final information on March 25, 1997. Staff review of the plans and specifications has determined that
the project, as proposed, will comply with the Stormwater Regulations set forth in Title 15A NCAC 2H.1000. We are
forwarding Permit No. SW8 970224 dated April 1, 1997,for the construction of the detention pond at GOGAS of Murrayville.
This permit shall be effective from the date of issuance until April 1, 2007, and shall be subject to the conditions and limitations
as specified therein. Please pay special attention to the Operation and Maintenance requirements in this permit. Failure to
establish an adequate system for operation and maintenance of the stormwater management system will result in future
compliance problems.
If any parts,requirements,or limitations contained in this permit are unacceptable, you have the right to request an ajudicatory
hearing upon written request within thirty (30) days following receipt of this permit. This request must be in the form of a
written petition, conforming to Chapter 150B of the North Carolina General Statutes, and filed with the Office of Administrative
Hearings,P.O. Drawer 27447, Raleigh,NC 27611-7447. Unless such demands are made this permit shall be final and binding.
If you have any questions, or need additional information concerning this matter, please contact Linda Lewis, or me at(910)
395-3900.
Sincerely,
Rick Shiver, P.G.
Acting Regional Water Quality Supervisor
RSS/arl: S:IWQSISTORMWATIPERMIT1970224.APR
cc: Dan Dawson, P.E.
Tony Roberts, New Hanover County Inspections
Beth Easley, New Hanover County Engineering
Linda Lewis
Wilmington Regional Off c ieo
Central Files
P.O. Box 29535, Raleigh, North Carolina 27626-0535 Telephone 919-733-5083 FAX 919-733-9919
An Equal Opportunity Affirmative Action Employer
State Stormwater Management Systems
Permit No_ SWR 970224
STATE OF NORTH CAROLINA
DEPARTMENT OF ENVIRONMENT, HEALTH AND NATURAL RESOURCES
DIVISION OF WATER QUALITY
STATE STORMWATER MANAGRMF.NT PERMIT
HIGH DENSITY DEVELOPMENT
In accordance with the provisions of Article 21 of Chapter 143, General Statutes of North Carolina as amended, and other
applicable Laws, Rules, and Regulations
PERMISSION IS HEREBY GRANTED TO
K.E. Austin Corporation
GOGAS Murrayville
New Hanover County
FOR THE
construction, operation and maintenance of a Detention Pond in compliance with the provisions of 15A NCAC 2H .1000
(hereafter referred to as the "stormwater rules") and the approved stormwater management plans and specifications and other
supporting data as attached and on file with and approved by the Division of Water Quality and considered a part of this permit.
This permit shall be effective from the date of issuance until April 1, 2007 and shall be subject to the following specified
conditions and limitations:
I. DESIGN STANDARDS
1. This permit is effective only with respect to the nature and volume of stormwater described in the application and other
supporting data.
2. This stormwater system has been approved for the management of stormwater runoff as described on page 3 of this
permit, the Project Data Sheet. The stormwater control has been designed to handle the runoff from 33,039 square feet
of impervious area. Additional volume has been provided to make up for the inability of the project to direct all of the
impervious area to the pond.
3. Approved plans and specifications for this project are incorporated by reference and are enforceable parts of the
permit.
2
State Stormwater Management Systems
Permit Nn_ SW8 970924
DIVISION OF WATER QUALITY
PROJECT DATA SHEET
Project Name: GOGAS Murrayville
Permit Number: 970224
Location: New Hanover County
Applicant: Mr. Kit Austin, President
Mailing Address: K.E. Austin Corporation
3301 Burnt Mill Drive
Wilmington, NC 28403
Application Date: February 20, 1997
Water Body Receiving Stormwater Runoff: Smith Creek
Classification of Water Body: "C Sw"
If Class SA, chloride sampling results: N/A
Pond Depth: 6 feet
Permanent Pool Elevation: 32.75 MSL
Total Impervious Surfaces Allowed: 33,039 square feet
Outparcels N/A square feet
Future N/A sq
uare feet
Offsite Area entering Pond: N/A square feet
Required Surface Area: 1,907 square feet
Provided Surface Area: 3,500 square feet
Required Storage Volume: 2,633 cubic feet
Provided Storage Volume: 3,297 cubic feet
Temporary Storage Elevation: 33.6 MSL
Controlling Orifice: 1" pipe
3
State Stormwater Management Systems
Permit Nn_ SWR 970224
4. The tract will be limited to the amount of built-upon area indicated on page 3 of this permit, and per approved plans.
5. The permittee is responsible for verifying that the proposed built-upon area does not exceed the allowable built-upon
area.
6. The following items will require a modification to the permit:
a. Any revision to the approved plans, regardless of size.
b. Project name change.
c. Transfer of ownership.
d. Redesign or addition to the approved amount of built-upon area.
e. Further subdivision of the project area.
f. Filling in, altering, or piping of any vegetative conveyance shown on the approved plan.
In addition,the Director may determine that other revisions to the project should require a modification to the permit.
7. The Director may notify the permittee when the permitted site does not meet one or more of the minimum requirements
of the permit. Within the time frame specified in the notice, the permittee shall submit a written time schedule to the
Director for modifying the site to meet minimum requirements. The permittee chall provide copies of revised plans
and certification in writing to the Director that the changes have been made.
II. SCHEDULE OF COMPLIANCE
1. The permittee will comply with the following schedule for construction and maintenance of the stormwater management
system:
a. The stormwater management system shall be constructed in it's entirety, vegetated and operational for it's
intended use prior to the construction of any built-upon surface except roads.
b. During construction, erosion shall be kept to a minimum and any eroded areas of the system will be repaired
immediately.
2. The permittee shall at all times provide the operation and maintenance necessary to assure the permitted stormwater
system functions at optimum efficiency. The approved Operation and Maintenance Plan must be followed in its entirety
and maintenance must occur at the scheduled intervals including, but not limited to:
a. Semiannual scheduled inspections(every 6 months).
b. Sediment removal.
c. Mowing and revegetation of side slopes.
d. Immediate repair of eroded areas.
e. Maintenance of side slopes in accordance with approved plans and specifications.
f. Debris removal and unclogging of outlet structure, orifice device and catch basins and piping.
g. Access to the outlet structure must be available at all times.
3. Records of maintenance activities must be kept and made available upon request to authorized personnel of DWQ.
The records will indicate the date, activity, name of person performing the work and what actions were taken.
4. This permit shall become voidable unless the facilities are constructed in accordance with the conditions of this permit,
the approved plans and specifications, and other supporting data.
4
State Stormwater Management Systems
Permit Nil_ SWR 970224
5. Upon completion of construction, prior to issuance of a Certificate of Occupancy, and prior to operation of this
permitted facility,a certification must be received from an appropriate designer for the system installed certifying that
the permitted facility has been installed in accordance with this permit, the approved plans and specifications, and other
supporting documentation. Any deviations from the approved plans and specifications must be noted on the
Certification.
6. A copy of the approved plans and specifications shall be maintained on file by the Permittee for a minimum of ten years
from the date of the completion of construction.
III. GENERAL CONDITIONS
1. This permit is not transferable. In the event there is a desire for the facilities to change ownership, or there is a name
change of the Permittee,a formal permit request must be submitted to the Division of Water Quality accompanied by
an application fee, documentation from the parties involved, and other supporting materials as may be appropriate.
The approval of this request will be considered on its merits and may or may not be approved.
2. Failure to abide by the conditions and limitations contained in this permit may subject the Permittee to enforcement
action by the Division of Water Quality, in accordance with North Carolina General Statute 143-215.6A to 143-
215.6C.
3. The issuance of this permit does not preclude the Permittee from complying with any and all statutes, rules,
regulations, or ordinances which may be imposed by other government agencies (local, state, and federal)which have
jurisdiction.
4. In the event that the facilities fail to perform satisfactorily, including the creation of nuisance conditions, the Permittee
shall take immediate corrective action, including those as may be required by this Division, such as the construction
of additional or replacement stormwater management systems.
5. The permittee grants DEHNR Staff permission to enter the property for the purpose of inspecting all components of
the permitted stormwater management facility.
6. The permit may be modified, revoked and reissued or terminated for cause. The filing of a request for a permit
modification, revocation and reissuance or termination does not stay any permit condition.
Permit issued this the 1st day of April, 1997.
NORTH CAROLINA ENVIRONMENTAL MANAGEMENT COMMISSION
1_c)t2 A. Preston Howard, Jr., P.E., Director
Division of Water Quality
By Authority of the Environmental Management Commission
Permit Number SW8 970224
5
State Stormwater Management Systems
Permit Nn_ SW8 970774
GOGAS Murrayville
Stormwater Permit No. SW8 970224
New Hanover County
Engineer's Certification
I, , as a duly registered Professional Engineer in the State of North Carolina,
having been authorized to observe (periodically/weekly/full time)the construction of the project,
(Project)
for (Project Owner) hereby state that, to the best of my abilities, due care and
diligence was used in the observation of the project construction such that the construction was observed to be built within
substantial compliance and intent of the approved plans and specifications.
Noted deviations from approved plans and specification:
SEAL
Signature
Registration Number
Date
6
GOGAS MURRAYVILLE
DRAINAGE CALCULATIONS
MARCH 19,1997
SUBMITTED BY:
DAWSON ENGINEERING
3177 WRIGHTSVILLE AVENUE
WILMINGTON, NC 28403
MAR. 2 51997
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DAWSON ENGINEERING
Engineering 3177 Wrightsville Avenue
Land Planning Wilmington,NC 28403
Surveying (910)762-4200
GOGAS -MURRAYVILLE
TOTAL AREA DRAINING TO POND :
=37,315 SF
=0.86 ACRES
TOTAL PROPOSED IMPERVIOUS SURFACE
AREA DRAINING TO POND :
BUILDINGS AND
PAVED PARKING LOT AREA =33,039 SF
=0.76 ACRES
REQUIRED STORAGE FOR 1-INCH RUNOFF FOR POND :
= [33,039 SF+(0.2 x 4,276 SF)] x 1/12 FT
=2,825 CF(3,345 CF PROVIDED- SEE NEXT PAGE)
% IMPERVIOUS DRAINAGE AREA FOR POND :
=33,039 SF/37,315 SF
=88.0%
POND DEPTH SA/DA % POND SURFACE AREA(MIN.)
(FT) (SF)
4.5 5.18 1,932
5.0 4.68 1,746
6.0 3.68 1,373
IF POND DEPTH=6.0 FT,MINIMUM SURFACE AREA= 1,373 SF
USED 90% TSS REMOVAL CHART
AREA @ RLPVATION 32.75 =3,500 SF> 1,746 SF
PROJECT: GOGAS MURRAYVILLE SUBJECT: DRAINAGE CALCS JOB NO.: 9527
PREPARED BY: (.Pc DATE: 3/Zo�7 CHECKED BY: pp DATE:3/79/P PAGE NO j OF 3
VELOCITY CONTROL:
OUTFALL INTO POND
Qpeak=3.59 CFS FROM 15"PIPE
Q=VA
V=Q/A=(4.10)/(1.23) =3.33 F/S
New York DOT Dissipater Method For Use in Defined Channels: Zone 1
45 SF CLASS B RIPRAP PROVIDED
Upstream Width=3.75 ft
Downstream Width= 7.50 ft
Length=7.50 ft
Depth= 12 in
EMERGENCY SPILLWAY DESIGN
A= 0.86 ac
C= 0.87
Tc= 8.89 in/hr
Q5o=(0.87)(8.89)(0.86)=6.65 cfs
Q=CwLH3/2 ; H=(Q/CwL)23 =(6.65/(3)(15.0))y3 =0.28 ft— Spillway can function without
overtopping
PROJECT: GOGAS MURRAYVI LLE SUBJECT: DRAINAGE CALCS JOB NO.: 9527
PREPARED BY: LA DATE:3/26/g7 CHECKED BY: pp DATE: She 7PAGE NO 2OF 3
DAWSON ENGINEERING
Engineering 3177 Wrightsville Avenue
Land Planning Wilmington,NC 28403
Surveying (910)762-4200
CAPACITY OF GRATED INLET
Q=(Cd)(A) (2g * h)^(1/2)
Q=(0.60)(5.31)((64.4)(0.17))^(1/2)
Q = 10.54 CFS
Cd=0.60 typical value
2g =64.4 ft/sec^3
h =2" =0.17ft
A =5.31 sgft
AREA DRAIN BY GRATED INLET
A=Q/(CI)
A= 10.54/((0.91)(7.22))
A= 1.60 acres
Q= 10.54 CFS
C= 0.91
I =7.22 in/hr for Tc<= 5 min, 10 year storm
SINCE A=1.60 acres>0.69 acres(ACTUAL DRAINING TO INLET) THE GRATE INLET WILL
NOT OVERFLOW
PROJECT: GOGAS MURRAYVILLE SUBJECT: DRAINAGE CALCS JOB NO.: 9527
PREPARED BY: LA DATE:31/97 CHECKED BY: PP DATE31o/*7 PAGE NO_L OF 3
STAGE-AREA-STORAGE
GOGAS MURRAYVILLE 2/18/97
ELEV. AREA STORAGE TOT.STORAGE
(Fr) (SF) (CF) (CF)
NORMAL
POOL 32.75 3500 0
917
33.00 3836 917
2428
I"RUNOFF 33.60 4257 3345
1761
34.00 4549 5106
940
34.20 4850 6046
POND RELEASE TIME FOR CONTROL PIPE: GOGAS MURRAYVILLE 2/18/97
ELEV. EFF.STORAGE VOL. RELEASE OUTFLOW RATE RELEASE TIME
(FT) (CF) (CF) (CPS) (HOURS)
33.60 3345
2428 0.024 27.9
33.00 917
917 0.013 19.4
32.75 0
TOTAL HOURS 47.3
DAYS 2.0
CONTROL PIPE 1 INCH
USED ORIFICE EQUATION TO DETERMINE OUTFLOW RATE
Q = Cd*A*(2gh)"1/2 I
Plan View
1
2
Proj.file:POND.STM I IDF file:WILM.IDF I No. Lines:2 02-04-1997
Line 1 Q=7.89 Size= 15 x 15(Cir) Nv=0.013 Len=118.0 JLC=0.50
/Outfall
Invert Depth HGL EGL Area Vel T-Wid Cover
Dnstrm 30.20 15 31.89 32.53 1.23 6.43 0.00 2.05
Upstrm 30.60 15 33.65 34.30 1.23 6.43 0.00 1.95
Drainage area (ac) = 0.61 Slope of invert(%) = 0.339
Runoff coefficient (C) = 0.91 Slope energy grade line (%) = 1.493
Time of conc. (min) = 5.57 Critical depth(in) = 14
Inlet Time (min) = 5.00 Natural ground elev. (ft) = 33.80
Intensity @ 10 yr(in/hr) = 7.11 Upstream surcharge (ft) = 1.80
Cumulative C x A = 1.11 Additional Q (cfs) = 0.00
Q = CA x I (cfs) = 7.89 Full-flow capacity(cfs) = 3.76
Q Catchment (cfs) = 4.01 Inlet Type = N1H
Q Carryover(cfs) = 0.00 Gutter slope (ft/ft) = 0.00
Q Captured(cfs) = 0.00 Cross slope (ft/ft) = 0.00
Q Bypassed to offsite = 4.01 Width of Flow (ft) = 0.00
Line 2 Q=4.01 Size= 15 x 15(Cir) Nv=0.013 Len= 103.0 JLC= 1.00
/Downstream line 1
Invert Depth HGL EGL Area Vel T-Wid Cover
Dnstrm 30.60 15 33.97 34.14 1.23 3.27 0.00 1.95
Upstrm 32.00 15 34.37 34.54 1.23 3.27 0.00 1.45
Drainage area (ac) = 0.61 Slope of invert (%) = 1.360
Runoff coefficient (C) = 0.91 Slope energy grade line (%) = 0.386
Time of conc. (min) = 5.00 Critical depth(in) = 10
Inlet Time (min) = 5.00 Natural ground elev. (ft) = 34.70
Intensity @ 10 yr(in/hr) = 7.23 Upstream surcharge (ft) = 1.12
Cumulative C x A = 0.56 Additional Q (cfs) = 0.00
Q =CA x I (cfs) = 4.01 Full-flow capacity(cfs) = 7.53
Q Catchment (cfs) = 4.01 Inlet Type = Grate
Q Carryover (cfs) = 0.00 Gutter slope (fl/ft) = 0.00
Q Captured (cfs) = 4.01 Cross slope (ft/ft) = 0.09
Q Bypassed to 1 (cfs) = 0.00 Width of Flow(ft) = 5.32
DAWSON ENGINEERING
Engineering 3177 Wrightsville
Land Planning Wilmington,NC NCA28403
Surveying (910)762-4200
March 24, 1997
REC:EIVED
Ms. Linda Lewis MAR 2 5 1997
N.C. Department of Environment,
Health, and Natural Resources BY:
Water Quality Section
127 Cardinal Drive Extension
Wilmington, NC 28405
Re: Stormwater Management Permit Application Revisions
GOGAS -Murrayville
New Hanover County
Project No. 9527
Dear Ms. Lewis:
As per our agreement 33,039 square feet of pavement/building is the entire paved area, including that
portion that does not actually drain to the pond is correct. K.E. Austin Corporation owns the entire
track of land including the area for the pond allowing access to the pond at all times. Currently there
are no wetlands on the site and as noted in your letter the spillway elevation has been decreased to
elevation 33.6 ft. Please find the following items enclosed, one(1)copy of the Stormwater calculations
sealed for the referenced project, and three(3) copies of the revised site plan C-8.
We request NCDEM approval of these revisions. Please do not hesitate to call if any further
information is required.
Very truly yours,
DAWSON ENGINEERING
C gr,___
Daniel E. Dawson, P.E.
Encl.: As noted above.
POND MAINTENANCE REQUIREMENTS
Project Name: GO G2 5 HUrr2y.J V///e
1
Permittee: l�. �• Au s/,'t._ Q -
Address: 33a( l ue i1J (i(( On-'e. J,!. 1`)L Z S 4O3 PhoneNo. %Z-4300
Monthly, or after every runoff producing rainfall event, whichever comes first:
A. Inspect the trash rack; remove accumulated debris, repair/replace if it is not functioning.
B. Inspect and clear the orifice of any obstructions. If a pump is used as the drawdown
mechanism, pump operation will be checked. A log of test runs of the pump will be kept
on site and made available to DWQ personnel upon request.
C. Inspect the pond side slopes and grassed inlet swales; remove trash, and repair eroded areas
before the next rainfall event.
D. If the pond is operated with a vegetated filter, the filter will be checked for sediment
accumulation, trash accumulation, erosion and proper operation of the flow spreader
mechanism. Repairs/cleaning will be done as necessary.
II. Quarterly (Four times a year):
A. Inspect the collection system (ie. catch basins, piping, grassed swales) for proper
functioning. Accumulated trash will be cleared from basin grates, basin bottoms, and piping
will be checked for obstructions and cleared as required.
B. Pond inlet pipes will be checked for undercutting. Riprap or other energy dissipation
structures will be replaced, and broken pipes will be repaired.
III. Semi-annually (twice a year):
A. Accumulated sediment from the bottom of the outlet structure will be removed.
B. The forebay depth will be checked at various points. Sediment removal is required when the
depth is reduced to 75% of the original forebay design depth of -
C. Grassed swales, including the vegetated filter if applicable, will be reseeded twice a year as
necessary.
POND MAINTENANCE REQUIREMENTS
PAGE 2
IV. Annually (Once a year):
A. The pond depth will be checked at various points. Sediment removal is required when the
depth is reduced to 75% of the original design depth or 3', whichever is greater. Design
depth is ' ', measured vertically from the orifice down to the pond's bottom.
Sediment must be removed to at least the original design depth.
V. General:
A. Mowing of the side slopes will be accomplished according to the season. Maximum grass
height will be 6".
B. Cattails are encouraged along the pond perimeter, however they will be removed when they
cover more than 1/2 the surface area of the pond. The best time to cut them is at the end of
the growing season, in November. Environmentally sensitive chemicals for use in killing
cattails can also be used. Contact your nearest Agricultural Extension Agent.
C. The orifice/pump is designed to draw down the pond in 2-5 days. If drawdown is not
accomplished in that time, the orifice will be replaced with a larger or smaller orifice. Slow
drawdown may be attributed to a clogged system. The source of the clogging will be found
and eliminated.
D. All components of the detention pond system will be kept in good working order. Repair
or replacement components will meet the original design specifications as per the approved
stormwater plan. If previously approved components are determined to be ineffective, the
component must be redesigned and/or replaced.
VI. Special Requirements:
IKe. At4eL at.) (Ze0 2A) , hereby acknowledge that I am the financially
(please print or type name clearly)
responsible party for maintenance of this detention pond. I will be responsible for the performance of the
maintenance as outlined above, as part of the Stormwater Management Permit received for this project.
� oSignature: �,. .9 Date: 3 0 7lq7
Revised 2/25/97
4,� .. ' `
tr-,,,,,
•( ;00•.
State of North Carolina
Department of Environment, Health, and Natural Resources
Wilmington Regional Office
James B. Hunt, Jr. Division of Water Quality
Governor Water Quality Section Jo B. Howes
March 10, 1997 Secretary
Mr. Dan Dawson, P.E.
Dawson Engineering
3177 Wrightsville Avenue
Wilmington, NC 28403
Subject: ACKNOWLEDGEMENT OF RECEIPT AND
REQUEST FOR ADDITIONAL INFORMATION
Stormwater Project No. SW8 970224
GoGas Murrayville
New Hanover County
Dear Mr. Dawson:
The Wilmington Regional Office received a Stormwater Management Permit Application for GoGas
of Murrayville on February 20, 1997. A preliminary review of that information has determined that the
application is not complete. The following information is needed to continue the stormwater review:
'., 1. The calculations must be sealed.
'/ 2. Per our agreement, can I assume that the 33,039 square feet of
pavement/building paved area, including that portion that does not actually drain the pond.
is the
n
/ 3. A signed Operation and Maintenance Plan.
Ark
qk
r
3' 4. Delineate all wetlands on site, or note on the plans none exist.
\ 1114j.
,/ 5. Locate the pond in a recorded access/drainage easement.
d�^
✓6. An outlet must be provided at elevation 33.6, or the spillway elevation must be decreased to
33.6, or the outlet must be resized for the volume at 33.8.
7. Demonstrate the ability of the one catch basin to catch the runoff associated with the first inch
and not overflow.
127 Cardinal Drive Extension,Wilmington,N.C.28405-3845•Telephone 910-395-3900•Fax 910-350-2004
•
An Equal Opportunity Affirmative Action Employer
Mr. Dawson
March 10, 1997
Stormwater Project No. SW8 970224
Please note that this request for additional information is in response to a preliminary review. The
requested information should be received by this Office prior to April 10, 1997, or the application will be
returned as incomplete. The return of a project will necessitate resubmittal of all required items, including
the application fee.
If you have any questions concerning this matter please feel free to call me at (910) 395-3900.
Sincerely,
e( i,7-dA2
Ms. Linda Lewis
Environmental Engineer
RSS/arl: S:\WQS\STORMWAT\ADDINFO\970224.MAR
cc: Linda Lewis
Central Files
2
DIVISION OF WATER QUALITY
NORTH CAROLINA STORMWATER MANAGEMENT PERMIT APPLICATION
I. GENERAL INFORMATION
(Please prvu clearly or type) GOGAS - Murrayville •
1. Project Name
2. Location,directions to project(include County, Address, State Road)Attach map.
Highway 132 North of Murrayville Road
3.Owner'sName K.E. Austin Corporation Phone ( 910) 762-4700
4.Owner's Mailing Address 3301 Burnt Mill Driue.:
City Wilmington state NC Zip 28403
5.Nearest Receiving Stream Smith Creek Class CSW
6.Projectdescription Project area of 37, 315 sf with 33,039 impervious and
4,276 sf grassed to be treated in pond.
II. PERMIT INFORMATION
1.Permit No.(robe. dledinbynwQ) 5608 9 70 Z24-
2.Application Date 2/1 9/9 7 Feeenclosed$ 385. 00
3.Permit Type: X New Renewal Modification(existing Permit No.)
4. Project Type: Low Density x Detention Infiltration Redevelop General Alter Offsite
5. Other State/Federal Permits/Approvals Required (Meek appropriate blanks)
CAMA Major Sedimentation/Erosion Control X 404 Permit
III. BUILT UPON AREA (Please see NCAC 2H.100S thru.1007 for applicable density limits)
Drainage Drainage Breakdown of Impervious Area
Basin Basin (Please indicate below the design impervious area)
Classification CSW Buildings 390 sf
Existing Built-upon Area 0 sf Streets 32,649 sf
Proposed Built upon Area 33,039 sf parking/SW n/a
Total Project Area 37,315 sf Othff n/a
% Built-upon Area 88% Totals 33 , 039 sf
IV. STORMWATER TREATMENT (Describe how the runoff will be treated)
The developed areas will be treated in detention pond.
V. DEED RESTRICTIONS AND PROTECTIVE COVENANTS
Deed restrictions and protective covenants are required to be recorded for all low density projects and all
subdivisions prior to the sale of any lot. Please see Attachment A for the specific items that must be recorded
for the type of project applied for.
By your signature below,you certify that the recorded deed restrictions and protective covenants for this project
shall include all the items required by the permit, that the covenants will be binding on all parties and persons
claiming under them,that they will run with the land, that the covenant cannot be changed or deleted without
concurrence from the State, and that they will be recorded prior to the sale of any lot.
VI. OWNER'S CER CA N
I, K , certify that the information included on this permit
(Please print clearly or type) p t
application form is correct, that the project will be constructed in conformance with the approved plans, that
the deed restrictions will be recorded with all required permit conditions,and that to the best of my knowledge,
the proposed project complies with the requirements of 15A NCAC 2H.1000.
•
I authorize the below n ed person or firm to submit stormwater plans on my behalf.
41K ?A‘14.44Q1j- Z 20o Q
Owner/Authorized Ag Signature and Title D to
VII. AGENT AUTHORIZATION (Please fill in the name of the engineer/surveyor authorized to submit plans on the owner's behalf.)
Person or firm name Dawson Engineering
Mailing Address 31 77 Wrightsville Avenue
City Wilmington State NC Zip 28403 Phone ( 91 0 ) 762-4200
Please submit application, fee, plans and calculations to the appropriate Regional Office.
cc: Applicant/WiRO//Central FilesS 111R
Office use only
M@ME7 �
FEB 2.® 1997
DAWSON ENGINEERING
Engineering 3177 Wrightsville Avenue
Land Planning Wilmington,NC 28403
Surveying (910)762-4200
RECEIVED
February 18, 1997
FEB 2 0 1997
Ms. Linda Lewis BYClogq
N.C. Department of Environment,
Health, and Natural Resources
Water Quality Section
127 Cardinal Drive Extension
Wilmington,NC 28405
Re: Stormwater Management Permit Application
GOGAS -Murrayville
New Hanover County
Project No. 9527
Dear Ms. Lewis:
Enclosed please find the original and two (2) copies of the stormwater application for the referenced
project, three(3)copies of the revised site plan C-8, and a check for the amount of$385.00 covering
the application fees.
We request NCDEM approval of these revisions. Please do not hesitate to call if any further
information is required.
Very truly yours,
DAWSON ENGINEERING
Daniel E. Dawson, P.E.
Encl.: As noted above.
DAWSON ENGINEERING
Engineering 3177 Wrightsville Avenue
Land Planning Wilmington,NC 28403
Surveying (910)762-4200
July 8, 1996
Linda Lewis
Environmental Engineer
NC Division of Water Quality
127 Cardinal Drive Extension
Wilmington,NC 28405-3845
RE: K.E.Austin Corporation
GOGAS North College Road
New Hanover County
Dear Ms.Lewis:
Mr. Austin and I appreciate you and Mr.Adkins meeting with us on June 25, 1996 to discuss the recently completed
GOGAS on North College Road. Per your suggestion we met on July 2nd with Reverend G.A. Griffin,pastor of the
Fellowship Baptist Church,to discuss the possibility of sharing a stormwater wet pond to treat stormwater runoff from the
church property and GOGAS property. Enclosed is copy of the plan showing the proposed pond.
Reverend Griffin indicated that the pond,as proposed,would not be acceptable to the church because it would
significantly impact the existing playground area. However Reverend Griffin indicated that the church may consider
jointly establishing an elongated swale/pond along the property line. We are currently working on a plan for the church to
consider. We anticipate meeting again with Reverend Griffin before July 19, 1996 and will report to you the outcome of
our meeting.
Sincerely,
DAWSON ENGINEERING
Daniel E.Dawson,P.E.
Enclosures: As noted above
cc: K.E.Austin Corporation
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DAWSON ENGINEERING
Engineering 3177 Wrightsville Avenue
Land Planning Wilmington,NC 28403
Surveying (910)762-4200
June 18, 1996
Linda Lewis
Environmental Engineer
NC Division of Environmental Management
127 Cardinal Drive Extension
Wilmington,NC 28405-3845
RE: REQUEST FOR STORMWATER MANAGEMENT PERMIT APPLICATION
GOGAS North College Road
New Hanover County
Dear Ms.Lewis:
Dawson Engineering has been requested by K.E. Austin Corporation to respond to your letter of May 20, 1996. Per my
telephone conversation with you last week,it is my understanding that the NCDEM has scheduled a meeting on June 25,
1996 at 10:00 a.m.for iupiesentatives of NCDEM and K.E. Austin Corporation to discuss the recently completed GOGAS
on North College Road.
Last summer K.E.Austin Corporation contracted to purchase the property at 2424 North College Road for the purpose of
constructing a standard GOGAS facility. Prior to K.E. Austin Corporation purchasing the property,it had been used for
agricultural purposes on an annual basis. Approximately half of the property is still used for agricultural purposes.
K.E.Austin Corporation typically disturbs less than one acre when constructing a GOGAS facility. When an application
for a building permit was made in September of 1995,K.E.Austin Corporation planned to disturb 41,600 square feet
(0.97 acres)of the site. Since K.E. Austin Corporation intended to disturb less than one-acre,they proceeded with
clearing and grading the site while the final building permits were being obtained. A building permit is not required in
New Hanover County for clearing and grading. During the building plan review by the County,the County Zoning Office
required K.E. Austin Corporation to add a screen fence and a 20 foot planted buffer across the rear of the site to screen the
property along the rear from the facility. (Please keep in mind that K.E.Austin Corporation owns the property to the rear
of the facility and currently allows the neighbor to continue farming the rear of the property.)
When the screen fence and 20 foot buffer was added,K.E.Austin Corporation inadvertently exceeded their intended area
of disturbance by approximately 1,000 square feet. This 20 foot buffer also required them to relocate and mound the
septic tank for the site which resulted in an additional 1,000 square feet of area being disturbed.
K.E. Austin Corporation did not realize they had disturbed more than one acre on the site until New Hanover County
Erosion Control Specialist,Beth Easley,notified them of the violation of the erosion control ordinance. Please visit the
site to observe that all of the disturbed areas,that are not paved or under cultivation,have been sodded and landscaped.
Also a permanent irrigation system has been installed to maintain the grass and landscaping plants. Even though K.E.
Austin Corporation has taken the necessary corrective actions to comply with the intent of the New Hanover County Soil
and Erosion Control Ordinance and feels that it should not be required to submit a land-disturbance permit plan after this
project has been completed,an erosion control plan was prepared and submitted to New Hanover County on May 1, 1996.
Access to US Highway 132 required the construction of two NCDOT approved driveways in the NCDOT right-of-way.
These driveways were permitted and constructed in accordance with the NCDOT approved driveway permits and have
been approved by the NCDOT. Erosion control in the NCDOT right-of-way work was provided in accordance with the
standard NCDOT best management practices. It was our understanding that the driveways were apart of the NCDOT
erosion control program and should not be considered as land-disturbance and stormwater management associated with
the project disturbed area. Please note that the right-of-way line in front of our property is approximately 90 feet from the
existing pavement edge of US Highway 132. Requiring K.E.Austin Corporation to include the 0.31 acres of NCDOT
right-of-way in their project area for storm water permitting would be unreasonable.
Since K.E. Austin Corporation did not intentionally violate the ordinance,or DEM stormwater regulations,when they
inadvertently disturbed more than an acre and since they have taken the necessary corrective actions to provide final cover
and comply with the ordinance,we would like to resolve this stormwater issue as quickly as possible We estimate that
approximately 38,750 square feet of the site is impervious. The total area of the parcel is 2.19 acres.
As you know,the NCDEM revised the stormwater rules last year. Under the stormwater rules in effect last year this
project would have been exempt from the stormwater rules as long as the built-upon areas did not exceed one acre.
Dawson Engineering received the official memorandum to the public in the mail on October 3, 1995. The effective date
of the revised rules was.September 1, 1995. If the project is approved under the stormwater rules in effect when the
project was started,K.E.Austin Corporation would have to limit the amount of impervious surface to one acre.
Based on the above facts,this project is not subject to the current stormwater rules. This project was designed and
completed under the previous stormwater rules. However we understand that any new construction on the site will,of
course,be designed and completed under the new rules.
We look forward to meeting with you on Tuesday,June 25, 1996. If you have any questions prior to the meeting please
call.
Sincerely,
DAWSON ENGINEERING
Daniel E.Dawson,P.E.
cc: K.E. Austin Corporation
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9174- NEW HANOVER COUNTY AWINGManager4r170'..
320 CHESTNUT STREET,ROOM 502 ANDREW J.ATI�`TSON CPA
" - QDeputy County Manager
9` ? WILMINGTON,NORTH C4ROLINA 28401-4093
'"
Na Fmk t' TELEPHONE(910)341-7184 DAVIDF.WEAVER
FAX(910)341-4027 Assistant County Manager
414 Chestnut Street,Room 101
Telephone(910)341-7139
Fax(910)341-4035
MEMORANDUM
44 MAY 28 iQQ
TO: LINDA LEWIS °beA"'"---.
DEM
FROM: BETH EASLEY
EROSION CONTROL SPECIALIST
RE: SEDIMENTATION AND EROSION CONTROL PLAN (�
CT_'P '-tL& 9.(o Go G A-S ' ?-� M . Cb t.¢i.�Ke c-
Please review the attached plan.
If you have any questions, please contact this office.
BE/a 'J Ci1 . 2,
A4-1144(1-7
Attachment
,a,,STATEy
6
State of North Carolina
Department of Environment, Health, and Natural Resources
Wilmington Regional Office
James B. Hunt, Jr. DIVISION OF ENVIRONMENTAL MANAGEMENT Jonathan B. Howes
Governor = WATER QUALITY SECTION Secretary
May 20, 1996
CERTIFIED MAIL Z 257 980 466
RETURN RECEIPT REQUESTED
Mr. K.E. Austin
K.E. Austin Corporation
3301 Burnt Mill Road
Wilmington, North Carolina 28403
Subject: REQUEST FOR STORMWATER MANAGEMENT
PERMIT APPLICATION
GoGas North College Road
New Hanover County
Dear Mr. Austin:
On May 20, 1996, the Wilmington Regional Office received a copy of the Sedimentation Erosion Control
Notice of Violation for GoGas North College Road. The North Carolina Administrative Code requires any project
that must receive either a Sedimentation and Erosion Control Plan permit and/or a CAMA major permit to apply
for and receive a Stormwater Management Permit by the Division of Environmental Management. Any construction
on the subject site, prior to receipt of the required permit, will constitute a violation of 15A NCAC 2H.1000 and
may result in appropriate enforcement action by this Office.
Either a Stormwater Permit Application Package including 2 sets of plans, completed application form, fee,
and supporting documentation, or a written response regarding the status of this project and the expected submittal
date must be received in this Office no later than June 20, 1996, or the subject project file will be closed and
construction may experience a subsequent delay. If you have any questions, please call me at (910)-395-3900.
Sincerely,
/64";(14..) tee--44-44;
Linda Lewis
Environmental Engineer
DA/arl: S:\WQSISTORMWATISTORMS UB\GOGAS.MAY
cc: Alan Golden, New Hanover County Inspections
Dan Dawson, P.E.
Linda Lewis
127 Cardinal Drive Extension, Wilmington, N.C.28405-3845 •Telephone 910-395-3900 • Fax 910-350-2004
An Equal Opportunity Affirmative Action Employer
. .._. - ," . . ER,`'�G NEW HANOVER COUNTY
•`.i' +�� - ENGINEERING DEPARTMENT
‘p' •
414 CHESTNUT STREET MCTEET'MC1
rFof MI
WILNGTON,NORTH CAROLINA 28401-4 5 D OR TELEPHONE(910) 341-7139 MAY 0 8 1996 v
WYATTE.BLANCHARD,P.E.
County Engineer
STORM
VIAT
March 29 , 1996 E C E I V E
MAY 2 01996
K.E. Austin Corporation D E M
3301 Burnt Mill Road PROJ#
Wilmington, North Carolina 28403 606.4S A Y
CERTIFIED
RE: Notice of Violation of Land Disturbing Activity
Grading Permit Number: None
Site location: GO GAS, 2424 North College Road
Location/Description of Violation(s) : It appears that more
than one acre of land was disturbed during construction of the
GO GAS facility at 2424 North College Road. All of the
associated land-disturbed including the right-of-ways or other
adjacent properties that was disturbed for construction of
this site must be included in the disturbed area for this
site.
Dear Sir:
This letter constitutes Notice of Violation of Section 7-18(b)
and also Section 7-21(a) ( 3) of the New ' Hanover County's Soil
Erosion and Sedimentation Control Ordinance.
Section 7-I8(b) states :
Erosion and sedimentation control plans .
b. Persons conducting land-disturbing activity which covers
one ( 1) or more contiguous acres shall file three ( 3) copies
of the erosion control plan with the County at least thirty
(30) days prior to beginning such activity and shall keep
another copy of the plan on file at the job site. After
approving the plan, if the County either upon review of such
plan or on inspection, of the job site, determines that a
significant risk of accelerated erosion or off-site
sedimentation exists, the County will require a revised plan.
Pending the preparation of the revised plan, work shall cease
or shall continue under conditions outlined by the appropriate
authority.
•
Section 7-21(a) (3) states :
Any person who fails to submit an erosion control plan for
approval as required by this ordinance shall be subject to a
single noncontinuing civil penalty of not more than one
thousand dollars ($1,000) . Any person who is subject to a
civil penalty under this subdivision may be subject to
additional civil penalties for violation of any other
provision of •this ordinance, or rules or orders adopted or
issued pursuant to this ordinance.
You must take the following immediate action to restore
compliance within the specified number of days calculated from the
mailing of this correspondence:
Corrective measure(s) needed: Submit a land-disturbing plan
to this office. If the disturbed area is or exceeds one acre,
you must also submit an application fee and erosion control
plan to this office within 20 working days of receipt of this
letter. An application package is enclosed for your use.
Time to Comply: 20 days
You can contact Beth Easley, Erosion Control Specialist,
Engineering Department, 414 Chestnut Street, Wilmington, North
Carolina 28401, (910) 341-7139, regarding the required compliance
action.
Your failure to take the above noted corrective action within
30 days will result in the assessment of a civil penalty, or other
enforcement action, pursuant to Section 21 (a) of New Hanover
County's Soil Erosion and Sedimentation Control Ordinance. If your
disturbed area is an acre or more you will be subject to a
$1,000 .00 fine for starting work without an approved plan. If the
$1,000 . 00 fine is not appealed to Dave Weaver, Assistant County
Manager (341-7139) within 30 days,a demand for payment will be
issued.
Sincerely,
SaA41.0_4_y
Beth Easley
Erosion Control Specialist
New Hanover County
cc : Kemp Burpeau, Assistant County Attorney
Dave Weaver, Assistant County Manager
BE/aj
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.
ENGINEERING a FACILITIES APPLICATION FOR PERMIT FORA-7�
• 0 LAND-DISTURBING ACTIVITY File Number
*�'R.V4 . , UNDER THE CONDITIONS SET-FORTH BY. 50.00
i.: 4�=-* THE NEW HANOVER COUNTY •4* SOIL EROSION AND SEDIMENTATION CONTROL ORDINANCE Fee Paid
"D""r • Date
•
Applicant: K.E. AUSTIN CORPORATION Applicant's Agent: DAWSON•ENGINEERING
- Address: 3301 BURNT MILL DRIVE . Address: " - -3177 WRIGHTSVILLE AVENUE .
' ' ' • WIU'IINGTON,. NC 28403 • . ... . `r `-WILMINGION, NC 28403
Telephone Number: •(910) 762-4700 • Telephone Number. 1910) 762.4200 • •
Total Acres of Land Disturbance: ' 1-34 Purpose of Development: COMMERRCIAL
Location and Description of Land Disturbance: '
TRACT OF LAND APPROXIMATELY 700 Ek..±;i' NORTH OF MURRAYVILLE''ROAD. PRG3ECT
WILL INCLUDE SITEWORK FOR GOGAS FACILITY. 1_422 - is} 11' J p e;; . ?.420.0t
STATEMENT OF FINANCIAL RESPONSIBILITY
Land owner(s)of Record - Person or firm(s)financially responsible for the
land-disturbing activity. If not a North Carolina
• - resident you must have a N.C.agent(List Below)
Name: K.E. AUSTIN CORPORATION Name: K.E. AUSTIN- 'CORPORATION
Address: 3310 BURNT MILL DRIVE Address:3301' BURNT.MI , DRIVE
WILMINGI'ON, NC 28403 - WILMINGION, NC 28403 ..
Telephone Number: (910) 762-4700 Telephone Number. (9'1 0)- 762-4700 ' '
Location of deed(s)or instrument(s): County NEW HANOVER ' Book -1952 Page 475
The aboveinformationis true•and correct to the best of miknowledge and belief and was provided by me w(iiie under oath.
ghis form must be signed by the financially responsible person if an individual and by an officer,director pa:Cher,attorney-in-
fact,or other person of authority to execute instruments for the financially responsible person if not an individual.) I agree to
provide corrected inf rmation should there be any change in the.information provided herein. -;',.: ;= -' - ,
.Name(Type or Pnnt)IS- :114: :7(4 ti•;;•'4:;',: - :--::..:. :•:"• ::.if...:!::: -...:-• .:, - • . . :, :: . :, t --.:•!-:• -,...:."..,...!:. : ;,:c..t...: .A M, :OR.. •
• . • . ' •••-:- •. ..----, :•:'•'•'. -1...--!•:r• •• •• • ' .. ••• •• • !•,!' i' t...:'
Title: • PRESIDENT . ' Signature: - .
r,
�� ~�v' � cc-'
,a Notary Public of the County of PG1-1D - State of North
Carolina, hereby certify that 1<C. (3.4..'-' .r -Jct. appeared personally before me this day and be=
ing duly sworn acknowledged that the above form was executed by him.
,T., OFFICIAL SEAL ,'tness m .�nd and notarial seal,this
<� , � �_ SUSAN II.COLUCCI y I � day of �� , 19��
y n r.} - itary Public North Carolina; I n I
'�; f.',- PENDER CDUNN N;tary SQ,�... 't-1 , Q..OLL.Cc..�.
My Commission Expires
3I ^ ?�ooc� ,
- , } commission expires 3-i4-zoo 0
MAY!-10-9� FR I 13:31 K E AUST I N CORP FAX NO, 9107620075 P, 01
i
L9OGASI
K. E. Austin. Corp ration
3301 Burnt Mill Drive, Wilmington, NC 28403
TELEPHONE: 910-762-4700 FAX NUMBER: 910-762-0075
TO: FAX #
ATTN: ices '674:
FROM: .1,,FE
DATE:
Number of Pages (Including Cover Skit): .
COMMENTS:
07. A
MAY-10-96 FRI 13:31 K E AUSTIN CORP FAX NO. 9107620075 P, 02
Charles
River
Associates
Market Chaos
A Speech to The
Society of Independent Gasoline Marketers of America
by
Philip K. Verieger, Jr.
Vice President
Charles River Associates
1001 Pennsylvania Avenue
Washington, DC 20008
April 28, 1996
Thank you for inviting me to appear at this annual meeting of the Society of Independent
Gasoline Marketers. I am particularly grateful to Leo Liobwitz and Ken Doyle for the invitation.
It is a special pleasure to be here in this lovely location.
These are not, however, lovely times for gasoline marketing business. Recent increases in
prices of crude oil, heating oil futures, natural gas, natural gas futures, and gasoline futures, and in
wholesale prices of heating oil and gasoline, have led a number of patties to question to the
market's rationality. The phrase I hear every day is"what's going on?" Recent articles in The
Wall Street Journal and hearings before the California Air Resources Board have created more
smoke than light.
Why all the noise? Consider the following facts. Since December the price of natural gas has
increased from$2 per mcf to $14 per mcf on spot markets. This winter some consumers of
natural gas in Chicago paid $60/mcffor small supplies of natural gas—the equivalent of$360
per barrel for oil or$8_60 per gallon for gasoline. (Imagine how drivers of natural-gas-powered
vehicles would have felt if they had been forced to pay such prices.) Spot heating oil prices rose
from$0.50 to $0.79 per gallon in New York Harbor. Crude oil prices increased by 50 percent
from $17 per barrel in mid-December to $25.43 a few weeks ago. And now some observers—
myself included— say gasoline will be next.
While I will refrain from offering a forecast of prices for the summer today, I would like to
talk to you about the factors driving the markets_ It is important for You to understand these
factors because they are likely to become a permanent fixture on the landscape—a fixture you
must understand if you want to survive. I will briefly list these factors and then go into more
detail on many of them_
'W.,
MAY-10-96 FRI 13:32 K E AUSTIN OORP FAX NO, 9107620075 P, 03
r
Charles
River
Associates
Philip K. Verieger, Jr., "Market Chaos"
_ April 28, 1996
The first critical factor driving prices up is environmental reguation or rather, regulations. In
particular, regulations mandating the introduction of various typesiof gasoline and regulations that
make it economically dangerous to own storage have limited available supplies and increased
prices.
i
i
i
The second factor driving up prices is bad hick. For the last seieral years, directors of
refining economics at every company I know have hoped that one of their competitors would
suffer an upset. No one wanted their friends to have a major disaster and clearly no one wanted
to see refinery workers harmed. But everyone secretly hoped the supply chain would be
moderately disrupted, This year, the disruptions are happening. i
The third factor is consumption. American consumers are in lobe with the large utility
vehicles that are subject to minimal CAFE standards_ They also Io`e speed, and the increase in
speed limits has boosted use. The EIA estimates that the combined{effect of these factors may
raise consumption by 2 percent. I think growth may be larger if su ply is available.
The fourth critical factor is weather. Cold weather provided an extra stimulus to consumption
this winter, perhaps delaying the shift to maximum gasoline produ on. At the same time,
droughts and low grain stocks are boosting agricultural demand for els while limiting ethanol
availability.
The fifth factor is the industry's aggressive ggressive effort to boost return on investment Through all
sectors of the economy, including the energy industry, CFOs have ben sending out the order to
increase returns on assets or dispose of them. One response has been to reduce working capital
invested,in inventories.
The sixth factor has been the desire to avoid losses if and when Oil prices collapse_ Companies
do not want to be caught with high priced inventories if this happens.
The seventh factor is the loss of liquidity in energy commodity markets—particularly
gasoline. This has made it harder to hedge and has reduced the market's usefulness.
The eighth and probably least important factor has been speculation. Over the last few years,
speculators have influenced oil price movements, and as of last Tuesday, speculators had clearly
contributed to the increase in gasoline prices. However, their role in the recent episodes has been
minimal. In fact,increased speculation might work in the interest of gasoline marketers.
Together, these eight factors have created a witch's brew of price volatility, high spot prices,
high retail prices at times, and an absolutely impossible business environment. While I fervently
wish this situation would go away, I am here today to tell you it wont. I am also here to tell you
CN '
MAY-10-96 FRI 13.32 K E AUSTIN CORP FAX NO. 9107620075 P. 04
Charles
River
Associates
Philip K. Verleger, Jr., 'Market Chaos"
April a, 1996
there is very little the government can do in the short run to fix the problem unless it repeals
important environmental laws, which it won't Thus my task here as to provide some advice on
how you might survive and profit in this more turbulent envirottmett.
GOVERNMENT REGULATIONS
One of the
primary causes of the price increase—in my view, lierhaps the primcny cause
is, unfortunately, government regulation. Various laws enacted by Ill-informed or uncaring
legislatures and enforced by equally ill-informed regulators have combined to reduce the oil
industry's ability to supply the market with products required by consumers. These regulations
and laws have also removed the flexibility of the petroleum disuibutton system, making large price
increases more likely.
The actions that I believe have had the most pernicious effect ark those related to
groundwater contamination and reformulated gasoline. Enforcement of the Clean Water Act has
almost made it a crime to operate a petroleum storage facility. As a consequence, every company
has sought to limit its storage capacity and rely hopefully on the other guy. Shell capacity of
storage has been reduced, and ironically, companies have been complemented by
environmentalists for their actions.
And why not complement them? After ail, storage facilities are unsightly, occasionally
pollute, and perform no obvious service that consumers or environmentalists can see_ Thus the
closure of these facilities has been viewed as good.
However, the opponents of storage miss one important point—capacity is necessary to
smooth out unexpected blips in production or consumption. Inventories allow firms to meet
unexpected surges in consumption or cuts in production in an apparently seamless fashion. If
inventories are not available, we all know what happens. As we learned in first-year economics,
prices change (increase)until markets clear. If buyers panic,the increase can be quite dramatic_
Thus the government's admirable push for clean water combined with its arbitrary
implementation of the Clean Water Act have contributed to the price increase by making it more
difficult, more costly, and more financially dangerous to own storage facilities.
The second regulatory contributor to the price increase has been the introduction of
reformulated gasoline. The RIG program represents another example of a well-intentioned
program that has harmed both consumers and refiners. I would like to say the program's impact
has been a surprise. However, I cannot. Indeed, T wrote about the in plications of the program
almost two years ago and my forecast has proven to be all too true.
3
NAY-10-96 FRI 13:33 K E AUSTIN CORP FAX NO. 9107620075 P. 05
Charles
River
Associates
Philip K. Vet-legal; Jr., "Market Chaos"
April 28, 1996
There are, as you know, a host of problems with the RFG program. However, the basic
difficulty with the regulations is theyrequire more
q product segr-egations. This requirement ties up
existing storage facilities and limits distribution flexibility. The consequence is that companies
have to hold larger total inventories to meet a given level of total d4tnand, while limiting the
possible impact of sudden changes in consumption or production_ I300 million barrels of stocks
was the correct amount before the transition to RFG, 400 million barrels may be the right member
today.
However, as noted above we are operating with fewer total stacks
water regulations and the RFG regulations � not more. Thus the clean
are in conflict. The resu�t is price volatility.
Of course, the problem could be resolved by importing more products. However, the ability
to do this has been reduced by regulations included in the RFG program, which have effectively
boosted the costs incurred by foreign refiners who participate in the inarket. The net effect has
been to limit imports.
REFINERY ACCIDENTS
Bad luck at the nation's refineries has also contributed to price volatility. For the last several
years, refiners have operated at historically high utilization rates. Experts have marveled at the
industry's success and, at the same time, crossed their fingers because they recognized that
refineries can experience disruptions. This year it appears the industry's luck has run out. During
the period of peak distillate consumption, several East Coast refineries experienced disruptions
that caused them to cut output. And this spring, several West Coast refiners have experienced
outages that led to reductions in gasoline and heating oil production.
Such disruptions would have caused price changes in the past, but the effect would have been
smaller because there was greater fungibility among products and larger inventories. Today, the
mandated shift to a wide variety of products combined with the higher risk of holding inventories
exacerbates the impact of refinery problems.
Unfortunately, the problems that have occurred this year have come about early in what is
known as the driving season. This fact should concern you,the public, and those policymakers
who are awake. The loss in productive capacity threatens to leave us unprepared for the
summer—especially if there are more refinery problems.
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MAY-10-96 FRI 13:34 K E AUSTIN CORP FAX NO. 9107620075 P. 06
Charles
River
Associates
Philip K. Verleger, Jr., "Market Chaos"
April 28, 1996
CONSUMPTION
The third factor contributing to recent market events is increased consumption_ Here there is
a big surprise that I would like to bring to every bureaucrat's attention: consumers drive more
when their income increases_ Consumers also like comfortable cars. For years, environmental
advocates have pointed to Japanese and European automobile own{
rr as being environmentally
correct because they did not buy big cars. At least they did not b ig cars until their incomes
increased. Recently, sales of full-sized passenger vehicles in these tlountries have increased
dramatically. If you want proof just visit Tokyo. The freeways there are packed with large cars
crawling along at 5, 10, or 15 kilometers per hour, depending on road conditions_
In the United States, consumers have shown a strong preferenc4 for vans and sports utility
vehicles. Air conditioning is also a popular option. As a consequence, consumption per car is
increasing again after remaining stable for years. I expect it wiII continue to increase.
A further stimulus has come from the removal of the"double-nickel" speed limit. As most of
you know, average speeds have picked up noticeably since the 55 mph speed limit was repealed.
Fuel economy per vehicle has declined as speed has increased.
Unfortunately, the members of Congress who restored the highet'speed limits did not bother
to grant relief to the refining industry in terms of making or storing more gasoline. The people
who produce the fuel are expected to make do under the more rigorous program.
The consequences are not surprising. Consumption has increased while limits on storage and
production have remained fixed. Bottlenecks have occurred. More bottlenecks will occur.
WEATHER
Weather has also played a very important role in the market
gyrations over the last few
months. Cold weather during the winter boosted heating oil consumption and pushed up prices.
High distillate prices caused refiners to operate in maximum distillate mode longer than they had
intended, thus delaying the shift to gasoline.
The drought in the grain belt will add pressure on prices this spring by cutting the availability
of ethanol to the gasoline pool and by boosting consumption from they agricultural sector. The
impact is identical to the effect noted earlier when I discussed the role of government regulations_
Supply was reduced by the cold weather and drought, and high prices are now stimulating
consumption.
MAY-10-96 FRI 13:35 K E AUSTIN CORP FAX NO. 9107820075 P. 08
Charles
River
Associates
Philip K. Verieger, Jr., "Market Chaos"
April 28, 1996
This year heating oil dealers entered the winter with lower stocks. When cold weather
arrived, they were forced onto the spot market, where they bid up',prices. Their demand spurred
refiners to continue in maximum distillate mode for a much longer period.
Here again one can see the pernicious impact of government r ations on the market. The
shift to low-sulfur diesel fuel, while undoubtedly a good idea, has ctured the distillate pool and
nal
removed market flexibility, When consumption is unexpectedly higher than anticipated, the
incremental requirements must be met from production, not stocks
1
AVERSION TO FALLING PRICES
The recent market events can also be traced to the fear of an impending price collapse. For
the last nine to twelve months, oil buyers have operated in fear of ail impending
he
possibility of another price collapse. This worry has been exacerbatled by the promise or threat ofIraq's return to the world oil market, a concern that seemingly dominates the action of every
trader.
There are two obvious ways to deal with this problem. The first is to hedge inventories. The
second is to either own no inventories or operate with the minimum level of stocks. Most
companies have decided to cut or eliminate inventories.
The first option—hedging—has become a less and less satisfactory means of obtaining
facial production from price collapses as inventories have been drawn down. To be precise,
the lower inventories are, the more expensive it is to hedge. The cost of hedging is revealed in the
spread between the first and second month futures contracts(a so-called calendar spread). As
these spreads worsen, a firm considering holding inventories and hedging faces increased
"backwardation" (a condition that exists when cash oil sells at a premium to forward oil). In turn,
the cost of hedging increases.
For example, in periods of high inventories, oil futures may sell for two or three cents per
gallon more than cash. In such circumstances, a firm that hedges actually locks in a profit, selling
not at today's price but at a price that is two cents higher. Under these circumstances, it is not
expensive to hold stocks.
However, in periods of low inventories it becomes expensive to hedge. Gasoline supplies
today may sell for 65 cpg, while supplies for next month may sell at a discount of 2,3,4, or 5 cpg.
In such a situation it is very, very expensive to hold stocks. i
f
Cal
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MAY-10-96 FRI 13:34 K E AUSTIN CORP FAX NO. 9107620075 P. 07
Charles
River
Associates
Philip K. Verfeger, Jr., "Market Chaos"
April 28, 1996
CASH MINIMIZATION AND JUST-IN-TIME INVENTORIES:
One of the important and, until recently, ignored stories in the industry has been the
aggressive effort by senior managers to extract cash from the business. For the last ten to fifteen
years, companies have worked very hard to reduce the amount ofvrorking capital tied up in
stocks. Recently, however, the effort to limit inventories took a new turn—firms began to
tolerate runouts.
The impact of the change in strategy should not be underestimated. This was brought home
to me recently when I made one of my periodic presentations to the senior managers of a major
oil company. One individual in the audience asked me what was different today from the situation
a year ago or two years ago. This individual went on to note, "We pave been trying to minimize
working capital invested in stocks for years."
I responded by asking for a show of hands from the audience by individuals who had managed
terminals. I then asked these people whether the situation had changed. The answer was that it
had_ Up until late 1994 or early 1995, the cardinal rule for terminal managers was never run out.
One former manager noted, "There are quite a few used car salespeople who once had promising
careers in the oil industry until the terminal they were managing ran out of product. Then they
quickly became expendable."
The situation today is different. One major keeps a sign in its trading room that says"K£ILL "
The goal is not to kill the competition but to"Keep Inventories Low and Lean. "
The effects of this new policy were seen in the natural gas market this winter. Last year(that
is, in the fall of 1994)many local distribution companies(LDCs)went into winter with high
stocks which it turns out, were not needed because the weather was,warm. As a result gas that
had been purchased for$1.80/mcthad to be sold for$1.40/mcf or less. Some of the losses were
passed on to LDC stockholders because regulators treated the losses as imprudent.
This year the LI)Cs apparently went into winter determined not to be stuck with unwanted
stocks at the end of the year. Inventories were much lower and, as it turns out, inadequate for
demand. The consequence was much higher prices.
The same situation occurred in the distillate market. In the spring of 1995 dealers found that
they had unwanted inventories of heating oil. In the past these stocks would have been sold into
the distillate market. However, the imposition of more stringent requirements on diesel fuel made
it impossible to sell the fuel for over-the-road use. The product had to be held or sold at a large
loss.
(6i]
6
MAY-10-96 FRI 13:35 K E AUSTIN CORP FAX NO, 9107620075 P, 09
Charles
River
Associates
Philip K. Verieger, Jr., 'Market Chaos"
April 28 196
This phenomenon can also be described using terms from the insurance industry. During
periods of high inventories,it is very inexpensive to purchase price insurance(that is, to hedge).
It becomes progressively more expensive to buy insurance as inventories decline.
I
Unfortunately, the desire to minimize stocks to avoid potential sses from a price collapse se has
a way of becoming a self-fulfilling cycle. As stocks decline, the cost ofp
buying price Insurance
(hedging)increases and as the cost of buying price insurance incr les, firms reduce inventories.
Today we are in one of those cycles. Some companies have begun o run down stocks to free up
working capital and to avoid inventory losses of the type associated with the 1986 price collapse.
eaAs inventory levels decline, their actions push the market into backwardation, causing other
companies to cut stocks_
LOSS OF MARKET LIQUIDITY
The gasoline market has also been plagued by a loss of liquidity 3
hi the has made it more difficult to hedge substantial volumes and, as a result, limited rth es market. This
foreign offshore refiners to participate in the market a ability of
The loss of liquidity can be traced to the shift to reformulated gasoline—again evidence of
government meddling—and to the confusion at the state level as to the specifications required.
Here the finger needs to be pointed squarely at the governors of New Jersey and Pennsylvania,
Their actions last year on"opt outs"and the months in which oxygenates are required had a
devastating impact on the gasoline futures market. Consumers in their states are now paying
heavily for these actions.'
Here I need to point out that futures markets are delicate instruments. Participants use them
with care when they are new until they can be sure that the delivery mechanism works and that
futures prices converge to cash prices. Use drops every time there is`a change in specifications.
For example, use of the gasoline contract dropped in the mid 80s during the switch from leaded to
unleaded gasoline. Use also dropped with the switch to REG until the basis between the products
could be established_
However, the uncertainty created by the governors of Pennsylvania and New Jersey has
caused a far greater decrease than might have been predicted. Further, use has not picked up
substantially_
'I prepared an affidavit for the New York Mercantile Exchange in its snit with the state of New Jersey. In that
affidavit I stated that the confusion created by the state would result in a loss of liquidity in the market and higher
prices this spring. Unfortunately,I was right_
ekt
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MAY-10-96 FRI 13:36 K E AUSTIN CORP FAX NO. 9107620075 P. 10
Charles
River
Associates
Philip K. Verfeger, Jr., "Market Chaos„
April 28, 1996
When you think about it,you reach the conclusion that there is;no reason for use to pick up.
There is still uncertainty regarding the continued participation in the RFC program by many .
counties in the Northeast. Indeed,
one or two entire states may drgp out. Further, the EPA has
made it clear that regulations requiring prolonged reviews of withd I will petitions will be waived.
Since the Republicans took over Congress, the EPA has been all to willing to take the politically
expedient action and let a state or county opt out on almost no noti e. The agency's view seems
to be"so what if a few oil companies lose money. It is not our problem."
This uncertainty makes it much riskier to hedge and much more advantageous to hold low
stocks. This is precisely the action the industry has taken. linfortui1ately, marketers and
consumers pay a heavy price for this. 1
The uncertainty also makes it much riskier to be an independent I elner. And not surprisingly,
firms like Tosco have aggressively '� �Ya
expanded into the retail business,'in part to protect themselves
from the whims of government regulation.
SPECULATION
Speculators are also blamed by some observers for recent marke events. The purchases by
these participants, it is claimed, have tended to raise the level of prices and boost price volatility.
In my view this conclusion is incorrect. Indeed, I would argue that the problem is there is too
little, not too much speculation.
Let me begin by defining speculation. Speculation in commodity futures consists of the
purchase or sale of commodity fixtures or other instruments linked to commodities by buyers or
sellers, These buyers and sellers are not involved in the underlying physical business and for them,
the fluctuations in the commodity price do not correlate with fluctuations in the revenues received
from the firms' actual business. In short, speculators buy or sell the commodity to earn a return
on the fluctuation of the commodity's price.
Those who participate in speculation range from single individuals(the infamous doctors and
dentists)to hedge funds to pension funds. Today a large share of the money comes from pension
funds, who have concluded that the overall returns on the funds under management can be
increased or risk exposure reduced by investing in commodities. This;group of speculators is
more appropriately labeled"commodity investors."
Taken together, speculators tend to be buyers,not sellers of commodity futures. Examining
data from the Commodity Futures Trading Commission reveals that the speculative segment of
CM ,
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MAY-10-96 FRI 13:37 K E AUSTIN CORP FAX NO. 9107620075 P, 11
Charles
River
Associates
Philip K Verleger, Jr., "Market Chaos'
April28, 1996._
the market tends to be long, not short futures. This seems to imply that speculators push up
prices.
1
{
Such a conclusion is incorrect because speculators must offset their positions, ultimately
selling out a long position or buying back a short position_ Thus s eculators(mcluding
commodity investors)will bid up forward prices when they buy an then depress cash prices when
they liquidate their positions. Alternatively, speculators will push own forward prices when they
short the market and then push them up when they offset their posI ions. Since speculators on
average tend to be long, it appears that speculation pushes up forty d prices.
By boosting forward prices, speculation boosts the economic incentive to manufacture
gasoline and to hold inventories. Thus speculation tends to help, not hurt, this segment of the
business.
The positive impact of speculation could be seen at its best during the period in which
Metalgesellschaft dominated the market—say, from the spring of l 993 to the spring of 1994.
Although that firm's actions were referred to in the press and some academic articles as hedging,
MG was in fact engaged in a very large bet on higher oil prices—a bet that could have put many
firms out of business. MG's bet took the form of being long gasoline and heating oil futures. Its
trading pushed up forward prices and provided an enormous incenti i e to make gasoline and hold
inventories. One firm, Tosco, even acknowledged that the incentiv provided by the market
caused it to increase production of gasoline and heating oil at its Ba ay refinery by 50 percent
The beneficiaries of MG's bet were consumers and marketers. 'pie increased demand for
futures led to greater production and lower prices.
Unfortunately, there are too few speculators today. As a result, the market provides less of an
incentive to manufacture and store gasoline. Consumers and marketers are the losers.
The decline in speculation is directly related to the problems cited above with RING—in other
words, government regulation. Surprising as it sounds, speculators Want the same thing the
industry wants—a fair market, One of the elements of a fair market is liquidity. Speculative
funds want to be able to open and close positions without affecting prices. Thus they will
participate in large markets but stay away from small markets.
The shift to RFG and the government's poor management of the transition has limited
liquidity in the market Open interest in gasoline futures had dropped by 70 percent from peak
1993 levels. Speculation is down and prices are up. You know who has lost_
L i0
P.
MAY-10-96 FRI 13:38 K E AUSTIN CORP FAX N0, 9107620075
Charles
River
Associates
Philip K Vey ger, Jr., "Market Chaosn I
April 28, 1995
majors. Today there are only 20,000 stations and roughly 50 percent are hypermarkets.
(Hypermarkets are supermarkets with attached gasoline stations. You might
convenience stores.") The same phenomenon is now occurring in t United Kingdom is
about to start in Japan, ►e d is
1
I do not know whether the hypermarket phenomenon will reach!the United States.
owever,
I do know that firms need to innovate to stay in the business. Thus i conclude by advising you tocontinue pushing the innovation curve if you want to survive.
Let me thank you again for inviting me to speak,
I
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