NC0005274_Proposed Transfer of Lowell Investments' Nutrient Allocations_20171114

Water Resources
ENVIRONMENTAL QUALITY
November 14, 2017
Mr. David Shellenbarger
Assistant Division Manager, Compliance
Two Rivers Utilities
P.O. Box 1748
Gastonia, North Carolina 28053-1748
Dear Mr. Shellenbarger:
ROY COOPER
Governor
MICHAEL S. REGAN
Secretary
LINDA CULPEPPER
Interim Director
Subject: Proposed Transfer of Lowell
Investments' Nutrient Allocations
Long Creek WWTP
NPDES Permit NCO020184
Gaston County
I have reviewed your September 12, 2017, outline of a potential agreement between Two Rivers
Utilities (TRU) and Lowell Investments for the transfer of nutrient allocations from the Lowell
Investments facility, NC0005274, to your Long Creek WWTP. In accordance with the 1995 Lake
Wylie Nutrient TMDL, Lowell Investments holds allocations of 144 lb/ day of total nitrogen
(TN) and 7.6 lb/day of total phosphorus (TP).
I believe that, in most respects, the outline provides a satisfactory framework for the transfer of
these allocations. The Division of Water Resources could transfer the allocations to your Long
Creek facility in accordance with an acceptable sales agreement between the parties. The
transfer would be implemented by adding the allocations to the Nutrient Allocations special
condition of the Long Creek permit. The allocations would initially be designated as 'reserve'
but could be activated in the future to increase the facility's nutrient limits, consistent with the
Lake Wylie Nutrient TMDL.
Please note that the contract must transfer ownership of the allocations to TRU immediately
rather than merely provide an option for their future purchase. Each facility's nutrient
allocations are associated with its NPDES permit; thus, upon termination of Lowell
Investments' permit (expected in early 2018), any allocations it still holds will be eliminated and
no longer available to the company or to Two Rivers. As we discussed, the parties may be able
to craft a contract that executes the sale up front but defers payment until TRU needs to apply
the allocations.
In addition, the proposed 25 -year duration of the agreement is excessive, given that significant
changes in the Lake Wylie nutrient strategy could occur in that time. A 10- to 15 -year term, with
the option to extend in 5 -year increments, seems a more reasonable approach.
State of North Carolina I Environmental Quality I Water Resources
1617 Mail Service Center I Raleigh, North Carolina 27699-1617
919 807 6300

Proposed Transfer of Lowell
Investments' Nutrient Allocations
November 14, 2017
In response to your question, TRU does not in any way assume responsibility or liability for the
Lowell Investments site as the result of its purchase of the nutrient allocations.
Feel free to contact me at [phone] or [e-mail] if you have any
questions.
Sincerely,
Michael E. Templeton, P.E.
Water Quality Engineer
Enclosure: Proposed Option for Purchase Structure (TRU)
Copies: NPDES Files
Central Files
eCopies: Tom McKittrick, Lowell Investments I, LLC
Wes Bell, Mooresville Regional Office
2

Outline of possible Lowell Investments -Two Rivers Utilities agreement (David Shellenbarger,
TRU, 9/12/2017 email to Templeton):
Proposed Option for Purchase Structure:
1. The City of Gastonia will agree to pay Lowell Investments $XXXXX for an option to
purchase the phosphorus and nitrogen Threshold Management Plan allocation from the
site at 1602 N Main Street, Lowell. At any time prior to the expiration of this agreement,
the City may purchase this allocation in its entirety for the sum of $XXXXX.
2. Lowell Investments and the City of Gastonia will request to modify their respective
NPDES Permits such that 100% of the phosphorus and nitrogen allocation currently in
the Lowell permit will be transferred to NPDES Permit NCO020184 for the City of
Gastonia's Long Creek WWTP.
3. Until this purchase is completed, Lowell Investments will retain ownership of the
nitrogen and phosphorus allocation, but it will be temporarily transferred to the City of
Gastonia with an option to purchase and will be listed as Reserved Allocation for the
Eagle Road and Long Creek Bubble Limit within NPDES Permit NC0020184.
4. The transaction shall be structured as a purchase option with a term of 25 years. If the
option has not been exercised the end of this term, the parties shall agree to negotiate
in good faith on a renewal. In the event no renewal agreement can be reached, the City
agrees to request removal of the subject reserve allocation from its NPDES permit(s).
5. If the 1995 Lake Wylie Threshold Management Plan is reopened in a manner that does
not preserve this reserve allocation, the City of Gastonia is not obligated for any further
compensation to Lowell Investments.
6. In the event the City of Gastonia does not utilize the Lowell Investments Allocation, no
cost shall be incurred by the City of Gastonia.
Obligations of Lowell Investments
• Submit to NCDEQ a permit rescission letter requesting the structure outlined above.
Obligations of the City of Gastonia
• Submit to NCDEQ a permit modification requesting the structure outlined above.
• Provide Lowell Investments notification and a report of any activation of the allocation
in the permit and any usage of the allocation in any monthly monitoring period
• Provide Lowell access to the City of Gastonia discharge data (DMRs) as needed.
NOTE: "Threshold Management Plan' refers to the Lake Wylie TMDL.