DMS_02R_amendments May WQC

Department of Environmental Quality
Division of Mitigation Services
May 10, 2017
Water Quality Committee
Proposed Amendments to 15A NCAC 02R
Proposed Amendments to Subchapter 02R Rules
Major proposed revisions:
•Actual Cost Method (ACM) calculate buffer fees
•Modified ACM to calculate stream and freshwater wetland rates•Increase coastal wetland rate commensurate with costs
Minor proposed revisions:
•Updated language for watershed planning component
•Formatting and technical corrections
•Modification to adjustment factor for nutrient fees to address diminishing revenue volume
•Modification to consistency determination
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What is In-Lieu Fee Mitigation?
•Assist developers with mitigation requirements
•Payment in-lieu of permittee-responsible mitigation
•DMS becomes responsible for permit requirements
•DMS uses watershed planning to inform project location for
highest environmental benefit
Solutions for the Development Community
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SECTION .0200 -BASINWIDE RESTORATION PLANS
•Reflect current basinwide restoration planning components
•Address public comments
•Assessment of watershed conditions
•Prioritization of functional improvement for aquatic resources
Proposed Amendments to 02R .0201-.0203
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SECTION .0300 -COMPENSATORY MITIGATION
Proposed Amendments to 02R .0301
•Clarifies what it means to be consistent with basinwide restoration plans
•Current Rule-located within TLW or approved by USACE
•Proposed Rule-project demonstrates it advances functionalimprovement goals of basinwide restoration plan
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SECTION .0400 -ECOSYSTEM RESTORATION FUND
•Riparian Buffer Rates (.0601)
•Nutrient Offset Rates (.0602)
SECTION .0600 –RIPARIAN BUFFER RESTORATION FUND
•Stream and Wetland Rates (.0402)
Nutrient Offset ILF
Nutrient Offset ILF Program
•State laws and rules
•Application Process
•Fee schedule financing
•Uses Actual Cost Methodology to set rates
•Rates evaluated quarterly
•Rates automatically updated annually
•Timeline requirements based on payment date
Actual Cost Method
Actual Cost Method
Completed Projects
Terminated Projects
Existing Projects in Process
Staff
Supplies
Rent
All Costs Adjusted to Present Day Costs
Actual Cost Method
•Represents true cost of implementing new project
•Addresses concerns over regulation changes
•Ensures rate will never be below actual cost
Total Pounds Adjusted to Present Day
Values
Actual Cost Method
Actual Cost Method
•If Actual Costs > Actual Receipts, the gap is distributed to future pounds
paid into program
•Ensures additional collections are made if historical receipts were below costs
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15A NCAC 02R .0602 NUTRIENT OFFSET PAYMENT RATES
Continue using ACM
Minor changes:
•Premium watershed rates applied when costs exceed rate by 33% (from 40%)
•Immediate rate adjustment when program suspends acceptance of payments due to costs
•Modification to adjust for the lower and volatile nature of the frequency of payments:
•Adjustment Factor shall not comprise more than 60% of overall rate
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Riparian Buffer ILF
Riparian Buffer ILF Program
•State laws and rules
•Application process
•All customer types
•Receipts based
•Uses single statewide fee ($1.16)
•Annual inflation adjustment
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15A NCAC 02R .0601 RIPARIAN BUFFER MITIGATION FEES
Actual cost method-ACM
•Detailed method
•Rate evaluated and adjusted quarterly
•2 premium watershed rates
•Rates reflect actual project costs
•Ensure financial sustainability
•Rates responsive to changes in costs
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15A NCAC 02R .0601 RIPARIAN BUFFER MITIGATION FEES
Current Rate Estimated Initial
ACM Rates
Standard Rate Areas $1.16 $0.99
Randleman Watershed Rate $1.16 $2.38
Jordan (Lower New Hope)$1.16 $2.38
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Statewide Stream & Wetland ILF
Statewide Stream & Wetland Program
•1996 Start
•All customer types
•Application process
•Fee schedule financing
•Annual updates for inflation
•Costs accelerated faster than inflation
•Program costs currently exceed receipts
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Statewide Stream & Wetland Program
Annual inflation adjustments have ranged from -1.9% to +6.4% since the last time the rates were amended.
Type Higher Rate Standard Rate
Stream $391 $297
Coastal Wetland $175,323 $175,323
Riparian Wetland $71,273 $40,297
Nonriparian Wetland $51,422 $26,445
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15A NCAC 02R .0402 STATEWIDE STREAM & WETLAND PROGRAM RATES
Issues
•Last Fee change -2008 rulemaking
•Costs accelerating faster than inflation
•Rates are not reflective of current costs
•Rates must keep pace for program to remain viable
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15A NCAC 02R .0402 STATEWIDE STREAM & WETLAND PROGRAM RATES
Simplified Actual Cost Method-ACM
•Ensure financial sustainability
•Allows rates to respond to actual costs
•Rate evaluated and adjusted annually
•Statewide rates and special watershed rates
•Eliminates quarter-acre wetland rounding
•Simplifies wetland categories in rate schedule
•Rates reflect actual project costs from last 3 years
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15A NCAC 02R .0402 STATEWIDE STREAM & WETLAND PROGRAM RATES
Watershed
Planning
Inventory Overhead
Administrative Costs
(Staff, Rent, Office Equip., etc.)
Credit Risk / Contingency
Project Costs (including Stewardship)
30%
70%
Program Costs
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15A NCAC 02R .0402 STATEWIDE STREAM & WETLAND PROGRAM RATES
Actual Total Costs = 1.43 x Project Costs
Project
Costs (70%)
All Other
Program Costs
(30%)
Program Costs
70% Total = Project Costs
Total = (1.0/0.7) * Project Costs
Total Costs = 1.43 * Project Costs
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15A NCAC 02R .0402 STATEWIDE STREAM & WETLAND PROGRAM RATES
Actual Project CostsPresentDay means the sum of all Full Delivery and Mitigation
Bank Credit Purchase project costs in the three years prior adjusted for
inflation.
Costs associated with administrative, watershed planning, operational, and
contingency are captured by the coefficient of 1.43 and represent 30% of
the total fee calculation.
Simplified ACM
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15A NCAC 02R .0402 STATEWIDE STREAM & WETLAND PROGRAM RATES
Coastal Wetlands
State Program Wetland Type Price Range (Present Day)
Virginia ILF Tidal Wetlands $429,457 -$644,187
Massachusetts ILF Saltmarsh $1,006,515
New Hampshire ILF Saltmarsh $451,542
•Payments average 0.25 credits per yr
•No economies of scale
•High coastal land costs
•Proposed rate sufficient for single project every 2-4 years
•Will allow mitigation to occur closer to impacts
Proposed Coastal Wetland Rate: $825,000/credit
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Current Rates
(Higher/Standard)
Estimated Initial
ACM Rates
Stream $391/ $297 $458
Riparian Wetland $71,273/ $40,297 N/A
Non-riparian Wetland $51,422/ $26,445 N/A
Freshwater Wetland N/A $67,851
Coastal Marsh Wetland $175,323 $825,000
Statewide Stream & Wetland Program –Rates (.0402)
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NC DIVISION OF MITIGATION SERVICES
Department of Environmental Quality
NC Division of Mitigation Services
1652 Mail Service Center
Raleigh, NC 27699-1652
919-707-8976
https://deq.nc.gov/about/divisions/mitigation-services