15A NCAC 02B .0240      Nutrient Offset Payments

(a) The purpose of this Rule is to establish procedures for the optional payment of nutrient offset fees to the NC Ecosystem Enhancement Program, subsequently referred to as the Program, or to other public or private parties where the Program or such parties implement projects for nutrient offset purposes and accept payments for those purposes, and where either of the following applies:

(1)           The following rules of this Section allow offsite options or nutrient offset payments toward fulfillment or maintenance of nutrient reduction requirements:

(A)          .0234 and .0235 of the Neuse nutrient strategy,

(B)          .0258 of the Tar-Pamlico nutrient strategy, and

(C)          applicable rules of the Jordan nutrient strategy, which is described in Rule .0262; and

(2)           Other rules adopted by the Commission allow this option toward fulfillment of nutrient load reduction requirements.

(b)  Offset fees paid pursuant to this Rule shall be used to achieve nutrient load reductions subject to the following geographic restrictions:

(1)           Load reductions shall be located within the same 8-digit cataloguing unit, as designated by the US Geological Survey, as the loading activity that is being offset;

(2)           The Division shall track impacts by 10-digit watershed, as designated by the US Geological Survey and providers shall locate projects proportional to the location of impacts to the extent that the projects would meet the least cost alternative criterion per S.L. 2007-438.  The location of load reduction projects shall be reviewed during the approval process described in Paragraph (c) of this Rule;

(3)           Impacts that occur in the watershed of Falls Lake in the upper Neuse River Basin may be offset only by load reductions in the same watershed; Impacts in the Neuse 01 8-digit cataloguing unit below the Falls watershed, as designated by the US Geological Survey, may be offset only by load reductions in that same lower watershed;

(4)           Restrictions established in the Jordan nutrient strategy, which is described in Rule 15A NCAC 02B .0262; and

(5)           Any further restrictions established by the Commission through rulemaking.

(c)  The Program and other parties shall obtain Division approval of proposed nutrient offset projects prior to construction. Other parties shall sell credits in compliance with approved credit release schedules and with the requirements of this Rule. Project approval shall be based on the following standards:

(1)           Load reductions eligible for credit shall not include reductions used to satisfy other requirements under the same nutrient strategy;

(2)           The Program and other parties shall agree to provide adequate financial assurance to protect and maintain load reductions for the stated duration, including for maintenance, repair and renovation of the proposed measure;

(3)           The Program and other parties shall agree that once credits are established for a measure and until they are exhausted, they shall provide a credit/debit ledger to the Division at regular intervals;

(4)           The Program and other parties shall agree that the party responsible for a measure shall allow the Division access to it throughout its lifetime for compliance inspection purposes;

(5)           The Program or other party seeking approval shall obtain a site review from Division staff prior to Division approval to verify site conditions suitable to achieve the proposed load reductions through the proposed measure; and

(6)           The Program shall submit a proposal, and other parties shall submit a proposal or a draft banking instrument, addressing the following items regarding a proposed load-reducing measure:

(A)          Identify the location and site boundaries of the proposed measure, the geographic area to be served by credits in compliance with the requirements of Paragraph (b) of this Rule, existing conditions in the contributing drainage area and location of the measure, and the nature of the proposed measure with sufficient detail to support estimates of load reduction required in this Paragraph;

(B)          Provide calculations of the annual magnitudes of load reductions and identify final credit values incorporating any delivery factors or other adjustments required under rules identified in Paragraph (a) of this Rule;

(C)          Define the duration of load reductions, and provide a conservation easement or similar legal mechanism to be recorded with the County Register of Deeds and that is sufficient to ensure protection and maintenance of load reductions for the stated duration;

(D)          Identify the property owner and parties responsible for obtaining all permits and other authorizations needed to establish the proposed measure, for constructing and ensuring initial performance of the proposed measure, for reporting on and successfully completing the measure, for holding and enforcing the conservation easement, and for ensuring protection and maintenance of functions for its stated duration;

(E)           Provide a plan for implementing the proposed measure, including a timeline, a commitment to provide an as-built plan and report upon establishment of the measure, elements to be included in the as-built plan and report, a commitment to provide a bond or other financial assurance sufficient to cover all aspects of establishment and initial performance prior to the release of any credits, and criteria for successful completion; and

(F)           Provide a monitoring and maintenance plan designed to achieve successful completion, that commits to annual reporting to the Division until success is achieved, that recognizes the Division's authority to require extension or re-initiation of monitoring depending on progress toward success, and that commits to a final report upon completion.  The final report shall reaffirm the party that shall hold and enforce the conservation easement or other legal instrument.

(d)  The Program shall establish and revise nutrient offset rates as set out in Rule .0274 of this Section.  Offset payments accepted by the Program shall be placed into the Riparian Buffer Restoration Fund administered by the Department pursuant to G.S. 143-214.21

(e)  Persons who seek to pay nutrient offset fees under rules of this Section shall do so in compliance with such rules, the requirements of Paragraph (b) of this Rule, and the following:

(1)           A non-governmental entity shall purchase nutrient offset credit from a party other than the Program if such credit is available in compliance with the criteria of this Rule at the time credit is sought, and shall otherwise demonstrate to the permitting authority that such credit is not available before seeking to make payment to the Program;

(2)           Offset payments made to the Program shall be contingent upon acceptance of the payment by the Program.  The financial, temporal and technical ability of the Program to satisfy the mitigation request will be considered to determine whether the Program will accept or deny the request;

(3)           Where persons seek to offset more than one nutrient type, they shall make payment to address each type;

(4)           The offset payment shall be an amount sufficient to fund 30 years of nutrient reduction.

(5)           Persons who seek offsets to meet new development stormwater permitting requirements shall provide proof of offset credit purchase to the permitting authority prior to approval of the development plan; and

(6)           A wastewater discharger that elects to purchase offset credits for the purpose of fulfilling or maintaining nutrient reduction requirements shall submit proof of offset credit acquisition or a letter of commitment from the Program or third party provider with its request for permit modification.  Issuance of a permit that applies credits to nutrient limits shall be contingent on receipt of proof of offset credit acquisition.  A discharger may propose to make incremental payments for additional nutrient allocations, contingent upon receiving a letter of commitment from the Program or third party provider to provide the offset credit needed for permit issuance.  In that event the Division may issue or modify that permit accordingly, and shall condition any flow increase associated with that incremental purchase on payment in full for the additional allocation.  Offset responsibility for nutrient increases covered under this Paragraph shall be transferred to the Program or third party provider when it has received the entire payment.

(f)  Credits associated with load reducing activities funded under this Rule shall be awarded exclusively to the person, municipality, discharger, or group of dischargers who paid the offset fee.


History Note:        Authority G.S. 143-214.1; 143-214.20; 143-214.21; S.L. 1995, c. 572; S.L. 2007, c. 438; S.L. 2009, c. 337; S.L. 2009, c. 484; S.L. 2009, c. 486;

Eff. August 1, 1998;

Amended Eff. August 1, 2006;

Amended Eff. September 1, 2010.