19960894 Ver 1_More Info Received_20050324

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FACSIMILE: 804-697-1339
Shannon R. Varner
shannon.varner@trou1-mansanders. com
s. Cyndi Karoly,'
ivision of Water Quality
orth Carolina Department of
Environment and Natural Resources
2321 Crabtree Boulevard
Raleigh, North Carolina 27604-2260
Ms. Noelle Lutheran
Division of Water Quality
MAILING ADDRESS
P.O. BOX 1122
RICHMOND, VIRGINIA 23218-1122
March 22, 2005
North Carolina Department of
Environment and Natural Resources
127 Cardinal Drive Extension
Wilmington, North Carolina 28405-3845
OP
MAR 2 4 ?0005
1)EN# rVA, t r
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Re: Hestron Shopping Center, Morehead City, North Carolina
Dear Ms. Karoly and Ms. Lutheran:
Direct Dial: 804-697-1331
Direct Fax: [phone]
Enclosed please find a copy of Wal-Mart's response to the United States Army
Corps of Engineers ("Corps") regarding mitigation issues associated with the Hestron Shopping
Center in Morehead City. The response notes some differing positions between the Corps and
your agency regarding appropriate mitigation. However, as expressed in the response, options
exist which can meet both agencies' needs.
It is our hope that the enclosed letter will bring the DWQ and the Corps together
on the appropriate steps to take with regard to Hestron Shopping Center mitigation. Please do
not hesitate to contact me if you have any questions or comments or if Wal-Mart, Wal-Mart's
wetland consultants or I can be of any assistance.
ATLANTA - HONG KONG LONDON - NORFOLK • RALEIGH • RICHMOND
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Ms. Cyndi Karoly
Ms. Noelle Lutheran
March 22, 2005
Page Two
Sincerely,
Shannon R. Varner
1350621
Enclosure
cc: Jennifer May-Brust, Wal-Mart
Steve Howe, Wal-Mart
Gayla Hoipkemeier, Wal-Mart
Ashley H. Story, Esquire, Troutman Sanders LLP
Bob Belcher, Malcolm Pirnie
Todd Simmons, Freeland & Kaufmann
Mickey Sugg, US Army Corps
ATLANTA • HONG KONG • LONDON • NORFOLK • RALEIGH • RICHMOND
TYSONS CORNER • VIRGINIA BEACH • WASHINGTON, D.C.

% TROUTMAN SANDERS LLP
A T T O R N E Y S A T L A W
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BANK OF AMERICA CENTER
1111 EAST MAIN STREET
RICHMOND, VIRGINIA 23219
www.troutmansanders.com
TELEPHONE: [phone]
FACSIMILE: 804-697-1339
MAILING ADDRESS
P.O. BOX 1122
RICHMOND, VIRGINIA 23218-1122
Shannon R. Varner
[e-mail]
March 21, 2005
Mr. Mickey T. Sugg
United States Army Corps of Engineers
Wilmington Regulatory Field Office
P.O. Box 1890
Wilmington, North Carolina 28402-1890
Re: Hestron Shopping Center, Morehead City, North Carolina
Dear Mr. Sugg:
Direct Dial: 804-697-1331
Direct Fax: [phone]
This is in response to the Corps' January 6, 2005, letter to Wal-Mart and our subsequent
conversations requesting alternative proposals addressing issues you have raised regarding
compensatory mitigation for the development of the Cypress Bay Shopping Center/Hestron
Shopping Center in Morehead City, North Carolina ("Hestron Shopping Center"). Wal-Mart
appreciates the Corps' comments commending it for its efforts in pursuit of alternative
mitigation sites. Wal-Mart has expended considerable effort and funds since being contacted by
you to address mitigation and permitting issues and is committed to identifying an equitable
resolution to this matter. As you have requested as a response to the Corps' January 6,. 2005,
letter, Wal-Mart has developed alternative compensatory mitigation proposals that address your
concerns and meet the North Carolina Division of Water Quality (DWQ) regulations. I believe it
useful to first discuss this situation's background in order to put the alternative proposals in
context.
Hestron Corporation obtained Corps Permit No. 199603796 on January 29, 1998, for
impacts to 21.01 acres of wetlands for the expansion of the Hestron Shopping Center. That
permit was transferred to Tribeck on April 30, 1998. Hestron also obtained North Carolina
Division of Water Quality 401 Certification No. 3146 for the impacts. Wal-Mart acquired a
portion of the Hestron Shopping Center in 2000 after all permitting was completed, after wetland
impacts had occurred, and after compensatory mitigation efforts where undertaken. Wal-Mart
was not involved in wetland impacts or in the original compensatory mitigation plan design.
ATLANTA ` HONG KONG LONDON ` NORFOLK - RALEIGH ` RICHMOND
TYSONS CORNER VIRGINIA BEACH ` WASHINGTON, D.C.
TROUTMAN SANDERS LLP
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March 21, 2005
Page 2
Of the wetlands impacted by Tribeck during site development approximately one-half
were on the area subsequently acquired by Wal-Mart. Compensation for Tribeck's impacts to
the 21.01 acres of wetlands included both on and off-site efforts. On-site efforts included a
combination of restoration, preservation, creation and enhancement. The Corps and DWQ have
confirmed that the on-site mitigation areas are protected. The off-site mitigation is the 51 acre
Laurel Road Mitigation Site, a portion of which includes the planned restoration of 23.6 acres.
All 51 acres were placed under a permanent conservation easement in 1998. You and Wal-
Mart's wetland consultant, Malcolm Pirnie, have visited the Laurel Road Site and have identified
five (5) successfully restored wetland acres leaving an apparent 18.6 acre restoration deficit at
the Laurel Road Site. A summary of both off-site and on-site existing mitigation is provided
below (note that the apparent failure to restore 18.6 acres at Laurel Road is listed as "upland
preservation").
Mitigation Type Offsite (Laurel
Road Onsite
Restoration 5.0 2.41
Creation - 1.48
Enhancement - 9.61
Wetland Preservation 27.4 0.23
Upland Preservation 18.6 -
Total 51.0 13.73
It is important to recognize several issues relating to the original permitting and
mitigation plan developed for Tribeck by Land Management Group. First, it appears, in
retrospect, that the mitigation plan design was flawed from the outset. Both the Corps and the
DWQ have expressed misgivings about the mitigation plan since making it a permit condition.
Second, it also appears that the jurisdictional determination used for quantifying the impacts and
for development of the on-site mitigation plan had expired and was of questionable validity.
Third, Wal-Mart had no involvement with the design of the mitigation plan. Fourth, despite
apparent shortcomings in the mitigation plan there have been successes which will continue to
provide environmental benefits. These successes and environmental benefits should be
recognized and should be given credit in consideration of proposals put forth to address
mitigation shortcomings. Benefits associated with both the on and off-site mitigation efforts
included the perpetual protection of those areas providing long term habitat, water quality, flood
attenuation and other environmental benefits.
Wal-Mart has undertaken considerable effort to assess the quality and effectiveness of the
on and off-site mitigation plans, to identify potential alternatives to the Laurel Road restoration
area, and to meet with the Corps to assess potential alternative sites and to assess on-site
mitigation efforts. During this process you, Bob Belcher of Malcolm Pirnie and I have had a
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March 21, 2005
Page 3
number of discussions on how to resolve permitting and mitigation issues. Early on you
indicated that you would not prefer a payment to the Department of Environment and Natural
Resources (DENR) Wetland Trust Fund. Instead, following your guidance and with the
understanding from DWQ that DWQ would be following your lead on mitigation alternatives,
Wal-Mart went to considerable efforts and expense to identify numerous preservation sites. Sites
were narrowed and you and Bob Belcher met on some sites to determine their suitability. Two
sites, the McCotter Property and the Lewis Property, were identified during those visits as prime
candidates as preservation alternatives.
Following those site visits, you, Bob Belcher, representatives of DWQ and I met on
September 1, 2004, to discuss those sites and resolution of permitting, compliance and mitigation
issues through one of their preservation. At our September 1, 2004, meeting we learned that
DWQ had issues with preservation and would rather have some form of restoration or payment
to the (DENR) Wetland Trust Fund - an opposite view from that expressed by you.
DWQ has indicated that their regulations require that restoration or creation be provided
at a 1:1 ratio to impacts. However, while DWQ regulations do indicate a preference for
restoration or payment into the DENR Wetland Trust Fund over preservation, the agency clearly
has the authority to allow alternatives. For example 15A NCAC 02H .0506 (h) (6) states: "All
mitigation proposals shall provide for the replacement of wetland acres lost due to the proposed
activity at a minimum of a 1:1 ratio through restoration or creation prior to utilizing enhancement
or preservation to satisfy the mitigation requirements, unless the Director determines that the
public good would be better served by other types of mitigation." (Emphasis added). The DWQ
regulations also contemplate that preservation is an appropriate option and spells out that it may
be provided at a 5:1 ratio.
We are hopeful that, following your receipt of this letter, additional discussions will take
place to resolve the differing positions of the agencies on appropriate methods for compensating
for impacts. However, at this point we are faced with conflicting agency positions that would in
effect require double compensation if both were to be met. On the one hand DWQ is now
suggesting payment into the DENR Wetland Trust Fund. On the other you have indicated
limited interest in the DENR Wetland Trust Fund and a strong preference in environmentally
valuable preservation areas. Obviously DWQ has stepped back from its position that it would
follow your lead but I believe that options exist that satisfy both agencies' requirements without
requiring double compensation. Below I outline several alternative proposals.
Alternative 1 - DENR Wetland Trust Fund
Payment into the DENR Wetland Trust Fund has been recommended by DWQ as a
means to ensure the 1:1 criteria of 15A NCAC 0214.0506 (h)(6) is met. Currently the project
contains 8.89 acres of restoration and creation (5 successful acres at Laurel Road and 3.89 acres
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onsite) An additional 12.12 credits / acres would need to be added to the existing mitigation to
meet DWQ's recommendation. This alternative consists of a one hundred forty-eight thousand
seven hundred eighty five dollars and twelve cents ($148,785.12) (based on 12.12 acres times
$12,276) payment to the DENR Wetland Trust Fund for the purchase of 12.12 credits.
Implementation of this alternative would require the preparation and submittal of a
request for acceptance into DENR Wetland Trust Fund after receiving confirmation from the
Corps and DWQ that this alternative is acceptable to fulfill all obligations with regard to all
permitting, compliance and mitigation requirements of the above referenced Section 404 permit
and 401 certification and that, if necessary, permit and mitigation plan amendments have been
approved.
This would be the most expedited means for resolving permitting, compliance and
mitigation issues.
Alternative 2 - Preservation of the McCotter Property
The McCotter Property is ±215 acres in size and located less than 2.5 miles north of
Hestron Shopping Center (Figures 1 and 2). The property is immediately northwest of the
confluence of the Newport River and Sandy Branch. The McCotter Property is underlain by
Tomotley fine sandy loam, Goldsboro loamy fine sand, Mastontown mucky loam and Hobucken
muck.
Preservation of this property provides a unique opportunity to protect several habitat
types including pocosin, bottomland hardwood swamp, estuarine marsh, and pine uplands
against development and/or other anthropogenic impacts. Approximate acreage for each of the
communities is provided in the table below.
Community Type Acres
Pocosin 73
Bottomland Hardwood 65
Estuarine Marsh 66
Pine Uplands 11
Total 215
Preservation alone of the approximately 73 acres of pocosin wetland would exceed the
5:1 preservation to impacts ratio requirements in the DWQ regulations (12.12 acres times 5
would require 60.6 acres of preservation). However this site also has many added benefits which
further make it in the "public good" discretion of DWQ as an alternative mitigation method to
restoration, creation or payment to the DENR Wetland Trust Fund. An additional benefit of the
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preservation of the McCotter Property is that it is adjacent to the North Carolina Coastal Land
Trust 1,100 acre easement along Walker's Millpond, Black Creek and the Newport River. In
addition to the wetland and habitat preservation value, the McCotter Property would provide an
approximately 3,700 linear foot buffer along the northern shore of the Newport River upstream
of the above referenced easement and an approximately 4,800 linear foot buffer along the
western bank of Sandy Branch.
At our September 1, 2004, meeting we suggested preserving the approximately 73 acres
of pocosin wetlands on this property. Wal-Mart is now near completion of negotiating the
acquisition of the entire 215 acres. Wal-Mart will need to complete its due diligence on the
McCotter Property but based on site visits issues are not anticipated. Purchase and recordation
of preservation restrictions could occur as soon as practicable after receiving confirmation from
the Corps and DWQ that this alternative is acceptable to fulfill all obligations with regard to all
permitting, compliance and mitigation requirements of the above referenced Section 404 permit
and 401 certification and that, if necessary, permit and mitigation plan amendments have been
approved.
Alternative 3 - Preservation of Lewis Propert
y
The Lewis Property is adjacent to the Croatan National Forest, is ±80 acres in size and is
shown on Figures 1 and 3. The proposed mitigation would not include approximately 3-acres
currently being used as a shooting range or an exiting right of way to the range. Preservation of
this property provides an opportunity to protect the pocosin community which dominates the site
against development and/or other proposed anthropogenic impacts. The Lewis Property is
underlain by Pantego fine sandy loam, Rains fine sandy loam and Mastontown muck.
Wal-Mart is in negotiations for the purchase of the Lewis Property. Lewis has signed a
purchase agreement that is currently being reviewed. Wal-Mart will need to complete its due
diligence on the Lewis Property but issues are not anticipated based on site visits. Purchase and
recordation of preservation restrictions could occur as soon as practicable after receiving
confirmation from the Corps and DWQ that this alternative is acceptable to fulfill all obligations
with regard to all permitting, compliance and mitigation requirements of the above referenced
Section 404 permit and 401 certification and that, if necessary, permit and mitigation plan
amendments have been approved.
Alternative 4 - Restoration of Laurel Road Site
This alternative involves the restoration of 18.6 acres at Laurel Road that was determined
not successfully restored during the implementation of the original mitigation plan developed by
Land Management Group. However restoration activities would involve a significant amount of
time, money, effort and uncertainty and is not in our view a practicable alternative. We mention
it only because of its status as part of the existing mitigation plan.
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Restoration would require clearing and stumping the existing dense sweet gum and
loblolly pine and extensive earthwork to re-grade the 23.6 acres of previous agricultural fields.
Earthwork would include but not be limited to removal of field crowns, filling of internal ditches
and the construction of a shallow berm around the perimeter of the site.
This restoration attempt is not without risk. In order perform the required earthwork the 5
acres of successful restoration adjacent to the ditches would have to be re-graded. The site
would also require extensive post construction management with herbicides to prevent the re-
establishment of sweet gum and loblolly pine. Even if this was accomplished there is no
guarantee that the new grade would achieve the required hydrologic requirement. Guy Pierce of
North Carolina Ecosystem Enhancement Program and you have both expressed this opinion. In
addition, the long term nature of the rehabilitation efforts coupled with the uncertainties of
success do not provide the immediate benefits provided by the preservation alternatives or
payment into the DENR Wetland Trust Fund.
In summary, Wal-Mart has identified means for resolving both DWQ and Corps
mitigation concerns and requirements. Payment into the DENR Trust Fund meets both agencies'
requirements though it is not the preferred method of the Corps. The McCotter Property
provides a unique opportunity to provide preservation of multiple ecologically valuable
resources and it is within DWQ authority to pursue such an option and appears to be the Corps
preferred method. The Lewis Property also provides compensation greater than a 5:1 ratio and
valuable ecological benefits in the public good. Rehabilitation of the Laurel Road restoration
area is not practicable. I am hopeful that we will be able to reach an agreement. Obviously,
assurances are needed from the Corps and DWQ that an approach is acceptable as means for
resolving all permitting, compliance and mitigation issues.
By submitting these proposals Wal-Mart is not indicating that it is the responsible party
for the permitting and mitigation failures associated with the Hestron Shopping Center
development. Nor should this be viewed as Wal-Mart considering that Tribeck is not a
responsible party. The Corps has issued letters to both Tribeck and Wal-Mart indicating
responsibility for compensatory mitigation. Under the permits, as both the Corps and DWQ have
acknowledged, Tribeck is the responsible party. Tribeck has apparently failed to respond to the
Corps' recent letters. However, Wal-Mart has cooperated with the Corps and DWQ in: an effort
to find an equitable solution to Corps concerns given that it is mindful of the need for the Corps
and DWQ to resolve these issues, Wal-Mart's desire to remove the cloud and uncertainty over
the property and mitigation associated with the Hestron Shopping Center of which Wal-Mart is
part and its desire to resolve the Corps claims made against it (whether it is the actual responsible
party or not) and to play a role in assuring that wetland mitigation issues are properly addressed
in an environmentally beneficial manner.
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March 21, 2005
Page 7
As a final note, I was pleased to read in your January 6, 2005, letter that information we
provided in September 2003 assisted you in determining that the 404(b)(1) avoidance and
minimization issues have been addressed. As always, please feel free to contact me if you have
any questions or if I can be of any assistance in reaching resolution.
Sincerely,
Shannon R. Varner
1349920
cc: Jennifer May-Brust, Wal-Mart
Steve Howe, Wal-Mart
Gayla Hoipkemeier, Wal-Mart
Ashley H. Story, Esquire Troutman Sanders LLP
Bob Belcher, Malcolm Pirnie
Todd Simmons, Freeland & Kauffman
Cyndi Karoly, NCDWQ
Noelle Lutheran, NCDWQ

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