NC0032077_approval_19980323

Company
Engineering
Planning
Architecture
120 N. Boylan Avenue
Raleigh, NC
27603
919-828-0531
Fax: [phone]
Since 1936
March 23, 1998
Mr. Michael E. Templeton
NCDWQ - Point Source Branch
P.O. Box 29535
Raleigh, NC 27626-0535
Re: Nutrient Offset Payments; ;,.. �.
Contentnea Metropolitan Sewerage District UR..E BRANCH
NPDES Permit No. NC0032077
Pitt County
Dear Mr. Templeton:
As a follow-up to our phone conversation of March 20, 1998 we want to verify the
nutrient offset payment calculation procedure as it applies to an existing discharger
investigating the possibility of expansion.
As we discussed, our firm is working with Contentnea Metropolitan Sewerage District
(CMSD), who currently operates a 2.85 MGD wastewater treatment plant. We want to
be able to inform CMSD officials as to the cost of nutrient offset payments for
expansion of the existing plant in 1.0 MGD increments. As the rules state, this
purchase of a portion of the nonpoint source load allocation would have to be made at
200 percent of the cost as set in 15A NCAC 2B .0240 ($11/lb/year) and payment shall
be an amount sufficient to fund 30 years of nitrogen reduction (i.e., 30 years of
annual payments paid up front). Therefore, using a total nitrogen limit of 3.5 mg/L,
the total nutrient offset payment per 1.0 MGD expansion can be calculated as follows:
(1.0 MGD) x (3.5 mg/L) x (8.34) x (365 days/year) = 10,654 lbs/year
(10,654 lbs/year) x ($11/lb/year) x (200%) = $234,388/year
($234,388/year) x 30 years = $7,031,640 total payment
Since this appears to be a rather large payment for a 1.0 MGD expansion, we would
like written verification that this is the correct calculation procedure as specified in the
rules.
You mentioned that the Attorney General's office was currently working on a memo
interpreting the rules as they apply to how this total payment can be paid (i.e., over a
number of years with no interest, etc.). We would definitely be interested in this
interpretation, so please list our company on the list of recipients for receipt of that
memo when it is available.
If you should have any questions, please feel free to contact us at 919-828-0531.
Sincerely,
THE WOOTEN COMPANY
E. Eric Mills, P.E.
cc: Mr. Gene Coley, CMSD

State of North Carolina
Department of Environment
and Natural Resources
Division of Water Quality
James B. Hunt, Jr., Governor
Wayne McDevitt, Secretary
A. Preston Howard, Jr., P.E., Director
April 8, 1998
Mr. Eric Mills
The Wooten Company
120 N. BoyIan Avenue
Raleigh, North Carolina 27603
AEVA
NCDENR
Subject: Nutrient Offset Payments
Contentnea Metropolitan Sewerage District
NPDES Permit No. NC0032077
Pitt County
Dear Mr. Mills:
Thank you for your March 23rd letter regarding nutrient offset payments under the new Neuse
River rules. I am responding to your calculation of the offset payment for a 1.0 MGD plant
expansion by Contentnea MSD, as you requested.
Nutrient Offset Payments
The calculations in your letter appear to be correct for the expansion scenario you presented. Under
the new rule, a 1.0 MGD expansion of an existing facility above permitted flows (permitted as of
December 31, 1995) could require an offset payment of approximately $7 million. This payment
would secure an annual mass allocation equivalent to 3.5 mg/L total nitrogen (TN) for a period of
30 years, in addition to the base allocation already granted to CMSD in the rules.
Other Nutrient Management Options
The Neuse rules also provide dischargers in the basin with other options for meeting the nutrient
management requirements.
Trading coalition. The CMSD submitted a letter of interest in participating in a nutrient trading
coalition. Dischargers who join the coalition will have the option of purchasing additional nitrogen
allocation from other dischargers in the basin. This may be a more cost-effective alternative for
CMSD, depending on the membership fees and nutrient trading costs set by the coalition.
Smaller allocation. The CMSD would only owe the full offset payment if it requested all of the 3.5
mg/L allocation for its expanded flow. If the facility reduced the total nitrogen concentration in the
existing and/ or expanding portions of its wastewater flow, it could request a smaller supplemental
allocation and face a smaller offset payment. Each 0.1 mg/L reduction in TN equates to a savings
of about $200,000 in the offset payment. CMSD may find it more cost effective to upgrade its
nitrogen removal capability than to purchase the full supplemental allocation.
P.O. Box 29535, Raleigh, North Carolina 27626-0535 Telephone [phone] FAX [phone]
An Equal Opportunity Affirmative Acton Employer 50% recycled / 10% post -consumer paper

Nutrient Offset Payments
Contentnea Metropolitan Sewerage District
Page 2
Continuing Interpretation of the Rules
Ruth Swanek of our Modeling Unit confirmed that the calculation method I described to you is
consistent with our present understanding of the new rule. Our interpretation may change to some
degree when the Attorney General's Office responds to certain questions about the rule. When we
receive their legal opinion on those questions, we will share it with the permittees and other
interested parties in the Neuse.
If you have any questions, call me at [phone], extension 541.
Sincerely,
Michael E. Templeton
NPDES Unit
cc: Gene Coley, CMSD
Ruth Swanek, DWQ/ Modeling Unit
NPDES Unit Files