Current through Register Vol. 39, No. 6, September 16, 2024
(a)
PURPOSE. The purpose of this Rule is to establish standards and procedures
applicable to providers for approval of nutrient reduction projects and
associated nutrient offset credits that will be transferred to persons or
entities subject to nutrient rules of this Subchapter. Nutrient offset credit
is distinct from nutrient accounting for direct compliance with individual
nutrient strategy rules, which is not governed by this Rule. Nutrient
accounting includes joint compliance by multiple local governments as
authorized in individual nutrient strategy rules. Nutrient offset credits
represent a compliance option to the extent allowed by nutrient rules of this
Subchapter, including:
(1) the Neuse Nutrient
Strategy as set forth in Rule .0710 of this Section;
(2) the Tar-Pamlico Nutrient Strategy as set
forth in Rule .0730 of this Section;
(3) the Jordan Lake Nutrient Strategy as set
forth in Rule .0262 of this Subchapter, including to the extent that the
requirements of this Rule related to the nutrient offset credits are
incorporated by the Jordan Lake rules; and
(4) the Falls Lake Nutrient Strategy as set
forth in Rule .0275 of this Subchapter, including to the extent that the
requirements of this Rule related to the nutrient offset credits are
incorporated by the Falls Lake rules.
(b) GEOGRAPHIC RESTRICTIONS. Nutrient offset
credits may be used to satisfy regulatory obligations only when generated by a
nutrient reduction project within an allowable geographic area identified in
G.S.
143-214.26, as designated by the U.S.
Geological Survey, with the following additional restrictions:
(1) Nutrient offset credits may be used to
satisfy regulatory obligations incurred in the upper Falls watershed only if
they were generated by a nutrient reduction project located within the upper
Falls watershed, as this geographic area is described in
15A NCAC
02B .0276.
(2) Nutrient offset credits may be used to
satisfy regulatory obligations incurred in the lower Falls watershed only if
they were generated by a nutrient reduction project located within the Falls
Lake watershed, as these geographic areas are described in
15A NCAC
02B .0276.
(3) Nutrient offset credits may be used to
satisfy regulatory obligations incurred in the Jordan Lake watershed only if
they were generated by a nutrient reduction project in the same subwatershed of
the Jordan Lake watershed, as these geographic areas are described in
15A NCAC
02B .0262.
(4) Nutrient offset credits may be used to
satisfy regulatory obligations incurred in the Neuse 01 8-digit cataloguing
unit, as designated by the U.S. Geological Survey, outside of the Falls Lake
watershed only if they were generated by a nutrient reduction project located
outside of the Falls Lake watershed.
(5) Nutrient offset credits generated by
nutrient reduction projects for compliance with an estuarine nutrient strategy
shall be generated in an area that is within or drains to:
(A) surface waters identified for restoration
under the applicable nutrient-related TMDL or nutrient strategy; or
(B) surface waters classified as SA, SB, or
SC that fails to meet the chlorophyll-a water quality standard in a subsequent
integrated report.
(c) NUTRIENT OFFSET CREDIT APPROVAL STANDARD.
Providers shall demonstrate that a nutrient reduction project is designed,
constructed, implemented, and sustained in a manner that, according to the best
available scientific evidence, studies, and principles, will generate the
estimated nutrient load reduction for the duration of time for which credits
are approved. Nutrient offset credits shall be generated and transferred in
accordance with
G.S.
143-214.26.
(d) QUANTIFYING NUTRIENT OFFSET CREDITS. The
quantity of nutrient offset credits eligible to be generated by a nutrient
reduction project shall be determined according to the following provisions:
(1) Nutrient reduction credit sought on
developed lands shall be calculated in relation to load reductions achieved
relative to the project site's current loading condition, as determined by the
provider and verified by the Division;
(2) Nutrient load reductions shall be
site-specific estimates of decreases in annual mass load of nitrogen or
phosphorus to the nearest receiving surface water feature. Such estimates shall
be supported by the weight of evidence from available, current and applicable
research, may involve water quality modeling or engineering formulas and
calculations, and shall reflect as closely as possible project design
specifications.
(3) Unless
specifically excepted in Rule, reductions shall not include those already
implemented to satisfy other requirements under the same nutrient strategy;
other local, State or federal requirements; or those resulting from State or
federal compensatory mitigation requirements. Specifically, a nutrient
reduction project shall not generate nutrient offset credits and buffer or
wetland mitigation credits in spatially overlapping areas. However, restored
forest buffer areas associated with stream mitigation projects may generate
both stream and nutrient offset credits in spatially overlapping areas within
50 feet from the top of the stream bank.
(4) Stream, buffer, or wetland mitigation
credit that has not been used to satisfy a mitigation requirement may be
converted into nutrient offset credit if the credit-generating project or
portion thereof complies with this Rule.
(5) A nutrient reduction project may generate
both nitrogen and phosphorus offset credits in the same area.
(6) A nutrient reduction project may be
designed to generate permanent nutrient offset credit or term nutrient offset
credit and shall specify which, or both, in the project plan. Permanent
nutrient reduction credits and term nutrient reduction credits shall be
maintained separately, even if associated with the same nutrient offset
project.
(7) Permanent nutrient
offset credits may be utilized for temporary compliance purposes. If so, for
each pound of annual term compliance credit received,
1/30th of one pound of permanent nutrient offset
credit shall be utilized and retired by removal from the applicable
ledger.
(8) Nutrient offset credits
that were approved prior to the adoption of this Rule may make application to
be reclassified. The Division shall approve the application associated with any
nutrient offset project to reclassify credits as permanent that meet the
requirements for permanent credits at the time of the application to be
reclassified. Other nutrient offset credits that were approved prior to the
adoption of this Rule or that were conditionally approved pursuant to a
mitigation banking instrument or other agreement with DEQ prior to the adoption
of this Rule, shall be considered term credits and may be transferred between
term and permanent ledgers at a ratio of 30 years of term nutrient offset
credit to one permanent nutrient offset credit.
(9) Term nutrient offset credits shall be
associated with the calendar year or years in which the associated nutrient
load reductions are generated.
(e) PROJECT APPROVAL STANDARDS. Providers
shall comply with the following requirements to request approval from the
Division to implement a nutrient reduction project for the purpose of
generating nutrient offset credits.
(1)
NUTRIENT OFFSET BANKING INSTRUMENT. Providers seeking approval of a nutrient
offset bank shall submit their draft nutrient offset banking instrument to the
Division prior to seeking approval of project plans. A nutrient offset banking
instrument shall provide legal and financial assurances that a provider will
implement, maintain, and sustain nutrient reduction projects as proposed in
subsequent project plans and associated nutrient reduction practice design
specifications.
(2) PROJECT PLAN
REQUIREMENTS. Prior to initiating a nutrient reduction project, providers shall
submit a project plan proposal to the Division for review and approval that
includes the following elements:
(A) A site
location and site boundaries of the proposed project.
(B) The geographic area eligible to be served
by nutrient offset credits in accordance with Paragraph (b) of this Rule or in
compliance with in-lieu fee nutrient offset requirements applicable at the time
an in-lieu fee payment was accepted.
(C) Documentation of the conditions of the
site at the time of the submittal of the project plan.
(D) Documentation of the condition of the
site during the baseline period of the applicable nutrient strategy, unless
excepted by Subparagraph (d)(1) of this Paragraph. The Division may accept more
recent documentation if it determines such documentation establishes the
probable loading condition of the site during the baseline period.
(E) A description of the proposed project
that supports compliance with the standard in Paragraph (c) of this Rule.
Projects conforming to minimum design criteria for stormwater control measures
in 15A
NCAC 02H .1050 through
02H .1062 shall be deemed as
meeting this requirement. Design criteria for stormwater control measure
variants and additional nutrient reduction practices established in the
Division's Catalog of Nutrient Reduction Practices also meet this
requirement.
(F) Nutrient credit
calculations determined in conformance with Paragraph (d) of this
Rule.
(G) Identification of the
property owner and parties responsible for obtaining all permits and other
authorizations needed to:
(i) establish the
proposed project;
(ii) construct
and ensure initial performance of the project;
(iii) report on and successfully complete the
project by completing all crediting milestones;
(iv) hold and enforce all easement or other
protection mechanisms; and
(v)
ensure maintenance of the project for its credited duration.
(H) A description of how the
project will be implemented, which shall include a timeline and a commitment to
provide an as-built report upon the full project construction or
installation.
(I) A description of
how the project will be maintained and monitored after it has been installed
and for its duration.
(J) A
description of how the project will be sustained for its credited life,
including a commitment to repair and renovate it as needed to maintain its
performance, to keep records of all such operation, maintenance, monitoring,
repair and renovation, and to notify the Division of any significant
performance remediation needs and plans.
(K) Identification of federal or State grant
funding contributing to project implementation.
(3) FINANCIAL ASSURANCES. Providers seeking
approval of a nutrient offset bank shall provide the financial assurance that a
project plan will be constructed as proposed. The financial assurance shall be
in the form of a completion bond, credit insurance, letter of credit, escrow,
or other vehicle acceptable to the Division in accordance with this
Subparagraph, payable to, or for the benefit of, the Division, to ensure the
involved property is secured in fee title or by easement and that planting or
construction, monitoring or maintenance are completed as necessary to meet the
requirements of the project plan.
(4) PROJECT PLAN APPROVAL. The Division shall
approve the provider's project plan proposal after verifying the provider's
compliance with Subparagraphs (1), (2) and (3) of this Paragraph and completing
an onsite review to verify that preconstruction site conditions are suitable to
generate the credits proposed by the project plan. However, the Division may
partially or fully waive these requirements for term practices or projects if
it determines that the burden of compliance is disproportionate to the value of
the credits being generated and alternative means are used to satisfy the basic
credit approval standard set forth in Paragraph (c) of this Rule.
(f) RELEASE AND ACCOUNTING FOR
NUTRIENT OFFSET CREDITS. The Division shall release nutrient offset credits
from an approved project in the following manner:
(1) The Division shall release credits to
providers upon confirmation that project-specific milestones reflected in the
project plan's credit release schedule have been met. Project-specific
milestones for permanent nutrient offset credits shall conform to the following
requirements:
(A) Credits shall not be
released until the property is secured in fee title or by easement and
financial assurance is posted for planting or construction of the
project.
(B) No more than 50
percent of the credits shall be released for a project until financial
assurance is provided for monitoring and maintenance activities lasting until
project completion.
(C) No more
than 80 percent of the credits shall be released for a project until the
provider complies with the requirements of Paragraph (g).
(2) Once credits are released for a nutrient
offset bank and until bank closure, nutrient offset bank providers shall
provide a credit/debit ledger to the Division at intervals no less frequently
than quarterly.
(3) The Division
shall not release any credits for a project if that project is financed in
whole or in part by State grant funding or federal grant funding.
(g) MAINTAINING PERMANENT NUTRIENT
OFFSET CREDITS. All permanent nutrient offset projects shall comply with the
following requirements:
(1) A provider shall
transfer responsibility for oversight of a completed permanent project to a
perpetual steward in accordance with this Paragraph and the approved project
plan. A perpetual steward may also transfer responsibility to another perpetual
steward in accordance with the terms of this Paragraph, subject to DWR
approval. Perpetual stewards may not assume project maintenance or restoration
responsibilities.
(2) The provider
shall create and transfer to the perpetual steward a non-wasting endowment or
other dedicated financial surety to provide for the oversight of the completed
permanent project. The endowment amount shall be proportionate to the duties
accepted by the perpetual steward.
(3) For projects utilizing conservation
easements, the provider shall acquire and then transfer a conservation easement
to a perpetual steward in accordance with
26 U.S.C.
170(h) and the Conservation
and Historic Preservation Agreements Act, G.S. 121, Article 4. The terms of the
conservation easement shall be consistent with a Division-approved template or
be approved by the Division as conforming to Paragraph (c) of this Rule.
Non-governmental perpetual stewards shall be accredited by the Land Trust
Accreditation Commission or approved by the Division.
(4) For projects utilizing SCMs, they shall
be placed in and protected by recorded drainage easements with recorded access
easements to the nearest public right-of-way for purposes of operation and
maintenance. These easements shall be granted in favor of the person or entity
responsible for operating and maintaining the structures, with a note as to the
responsible person or entity. Easements shall be of sufficient width for
inspection and maintenance of the project.
The Division may temporarily or permanently invalidate
permanent credits generated by an SCM if it determines that the SCM has been
impacted due to failure to comply with the terms of an associated project plan,
nutrient offset banking instrument, easement, maintenance agreement, other
protective agreement, or this Rule.
(5) Projects designed to restore a natural
ecological community at the project site, which are completed and then damaged
by natural causes, may be passively restored exclusively through natural
ecological processes.
(h) RENEWING TERM NUTRIENT OFFSET CREDITS.
Expiring term nutrient offset credits may be renewed by the provider upon
providing documentation to the Division that the project meets the credit
approval standard set forth in Paragraph (c) of this Rule for the duration of
the renewal period.
(i) ADDITIONAL
PROVISIONS REGARDING THE DIVISION OF MITIGATION SERVICES.
(1) DMS shall establish and revise nutrient
offset rates as set out in
15A NCAC
02R .0602. Offset payments accepted by DMS
shall be placed into the Riparian Buffer Restoration Fund administered by the
Department pursuant to
G.S.
143-214.21.
(2) On or before November 30 of each year,
DMS shall provide an annual report to the Division concerning the nutrient
in-lieu fee program that includes a requirement ledger. The requirement ledger
shall include all nutrient offset credit requirements paid by 8-digit
cataloguing unit or for each geographic area identified in Paragraph (b) of
this Rule, the date by which the requirement shall be satisfied by a project,
and the projects and credits that have been applied to all
requirements.
(3) Subject to the
geographic restrictions in Paragraph (b) of this Rule, DMS may accept payments
for nutrient offset credits prior to initiating projects. After accepting
payment, DMS shall construct projects that, upon completion as described in the
approved project plan, will generate nutrient offset credits sufficient to
fulfill all new requirements generated by these payments. Projects shall be
instituted before the end of the first full State fiscal year after DMS
receives payment and constructed before the end of the third full State fiscal
year after DMS receives payment. DMS may also acquire credits from another
provider to apply toward its requirements.
(4) If DMS fails to meet deadlines associated
with project institution or construction as specified in Subparagraph (3) of
this Paragraph, then DMS shall develop an action strategy to include in the
annual report specified in Subparagraph (2) of this Paragraph. Action
strategies shall include all of the following:
(A) a list of factors resulting in delays or
deficiencies in procurement, project implementation, or construction;
(B) specific actions and a timeline planned
by DMS to satisfy outstanding credit requirements such that a project will be
instituted before the end of the first full state fiscal year after the action
strategy is submitted to the Division in the annual report and constructed
before the end of the third full state fiscal year after the action strategy is
submitted to the Division in the annual report, unless otherwise specified in
the action strategy;
(C) the
anticipated date by which all outstanding nutrient offset credit requirements
will be satisfied; and
(D) an
evaluation of current progress in relation to any prior action
strategies.
(j) NUTRIENT OFFSET CREDIT TRANSACTIONS.
Parties who seek to acquire nutrient offset credits under rules of this
Subchapter shall do so in compliance with those rules, the requirements of
Paragraph (b) of this Rule,
G.S.
143-214.26, and the following:
(1) Offset payments made to DMS shall be
contingent upon acceptance of the payment by DMS. DMS shall consider its
financial, temporal, and technical ability to satisfy the request to make its
determination.
(2) Where persons
seek to satisfy regulatory obligations for more than one nutrient type, they
shall acquire nutrient reduction credits to address each type.
(3) Projects shall be approved and the
associated offset credits released by the Division before they may be utilized
for NPDES wastewater permit compliance purposes.
(4) For offset credits used to meet NPDES
wastewater discharge requirements, the applicant shall provide 50 percent
additional credits to address the uncertainty factor for using unmonitored
nonpoint source reductions to meet point source discharge limits. Application
of this ratio is in addition to other ratios that may be applied, including
delivery or transport factors where applicable. Exceptions to the application
of this uncertainty factor are as follows:
(A)
The uncertainty factor for wastewater dischargers in the Jordan Lake watershed
shall instead be determined in accordance with
15A NCAC
02B .0273(2)(d)(ii) until
final action is taken with respect to that rule's next readoption pursuant to
G.S.
150B-21.3A, S.L. 2016-94, and S.L.
2018-5.
(B) The uncertainty factor
for wastewater dischargers in the Falls Lake watershed shall instead be
determined in accordance with
15A NCAC
02B .0282(2)(b)(i) until
final action is taken with respect to that rule's next readoption pursuant to
G.S.
150B-21.3A, S.L. 2016-94, and S.L.
2018-5.
(5) Delivery
factors shall be applied to estimate nutrient reductions to an impaired water
body subject to a nutrient strategy if required under rules of this Subchapter
for that strategy.
(6) Term credits
may be utilized for compliance only during the year in which they are generated
and as described in Subparagraph (d)(2) of this Rule. They may not be
cumulatively banked for future years.
(k) DEVELOPER-RESPONSIBLE NUTRIENT OFFSET
PROJECTS. A developer subject to new development stormwater requirements of
this Subchapter may satisfy its nutrient reduction obligations by generating
its own offsite credits. It may do so by establishing a nutrient offset bank
and generating credits in accordance with this Rule. Alternatively, the
developer shall comply with all provisions of this Rule governing the
generation of nutrient offset credits by a provider with the following
modifications:
(1) Instead of a credit release
schedule, credit for the project may be assigned upon construction of the
project and submission to the Division of the as-built report as described in
the project plan;
(2) Credit shall
be assigned at a 50 percent rate based on the design specifications of the
fully completed project(s); and
(3)
Liability for the generation of credits as described in the project plan
remains with the developer until the completion of all milestones associated
with the project.
(l)
NPDES WASTEWATER PERMITTEE-RESPONSIBLE NUTRIENT OFFSET PROJECTS. A locality,
authority, utility, or sanitation district operating a permitted wastewater
facility subject to wastewater rules of this Subchapter may generate nutrient
offset credits by installing projects in accordance with this Rule. Any credits
generated may then be utilized for compliance purposes as if acquired from
another provider.
Authority
G.S.
143-214.1;
143-214.20;
143-214.21;
143-214.26;
Eff.
August 1, 1998;
Amended Eff. August 1, 2006;
Amended
Eff. September 1, 2010;
Recodified from
15A NCAC
02B .0240 Eff. April 1, 2020;
Readopted Eff. April 1, 2020.
