Current through Register Vol. 39, No. 6, September 16, 2024
(a) For the purposes of this Rule, the term
"cost" or "costs" means the costs of the NC Division of Mitigation Services,
hereinafter in this Rule the "Program," associated with nutrient offset
projects in a given rate area, as described in this Rule.
(b) The Program shall calculate and publish
general offset payment rates applicable to each river basin where Commission
rules allow such nutrient offsets and premium watershed rates for specific
watersheds as identified in Paragraph (d) of this Rule. All rates shall be
based on the per-pound nutrient reduction costs incurred by the Program in
those watersheds.
(c) Payment rates
shall be developed for nitrogen, phosphorus, or other nutrients as dictated by
Commission rules for each river basin. Rates shall be published on the
Division's website (https://deq.nc.gov/about/divisions/mitigation-services).
(d) Premium Watershed Rates. The Program
shall apply premium watershed rates to:
(1)
The Neuse 03020201 cataloging unit below the Falls watershed, the Jordan Lake
watershed, and the Falls Lake watershed; and
(2) Any eight-digit cataloging unit or
smaller watershed that is subject to nutrient management rules where costs are
33 percent greater than costs in the larger watershed or river basin where that
cataloging unit is located.
The initial rate for a premium watershed with fewer than
two nutrient reduction projects that have reached the design stage shall be the
highest rate in effect under the Program for the applicable nutrient. The
initial rate shall be revised for a premium watershed in the quarter following
a quarter in which at least two nutrient reduction projects in that watershed
have reached design stage.
(e) Once an area has been established as an
area with premium watershed rates, it shall remain a premium watershed rate
area.
(f) Rate Adjustment
Frequency. Rates shall be adjusted quarterly whenever the rate calculation set
forth in Paragraph (g) of this Rule exceeds the existing rate by at least 10
percent. The rates shall also be adjusted annually. Annual calculations and
adjusted rates shall be published by June 15 on the Program's website
http://deq.nc.gov/about/divisions/mitigation-services,
and shall become effective July 1. Any quarterly rate adjustments shall become
effective on the first day of October, January, or April, as applicable, and
shall be published on the same website two weeks prior to that date. The rate
shall be adjusted within two business days if the Program suspends acceptance
of payments at the current rate pursuant to
15A NCAC
02B .0240(e)(2).
(g) Payment rates for each nutrient shall be
determined for a rate area using the following equation and presented in
per-pound values:
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Where:
(1) "Actual
CostsPresentDay" means the sum of all costs adjusted for
inflation as described in this Subparagraph. Costs shall mean project costs and
administrative costs and shall include the costs of completed projects,
terminated projects, and projects in process. At the time the rate is set, all
completed land acquisition contracts and expenditures shall be adjusted to
present-day values using the current North Carolina Department of Agriculture
and Consumer Services' Agricultural Statistics Farm Real Estate Values. All
other completed contracts and expenditures shall be adjusted to present-day
values using the annual composite USACE Civil Works Construction Cost Index.
Future land acquisition contract costs for projects in process shall be
calculated using the Program's per-credit contract costs of the same type
adjusted to the inflated future value at the time the contracts will be
encumbered using the North Carolina Department of Agriculture and Consumer
Services' Agricultural Statistics Farm Real Estate Values. All other future
contracts shall be calculated using the Program's per-credit contract costs of
the same type adjusted to the inflated future value at the time the contracts
will be encumbered using the current composite USACE Civil Works Construction
Cost Index. For projects in process where the contract type has not been
determined, the cost of the project shall be calculated using the Program's
average per pound cost adjusted to the future inflated value at the time the
project will be initiated. Future year annual inflation rates shall be drawn
from the USACE Civil Works Construction Cost Index. If not available from
either source, they shall be calculated using the average annual percentage
change over the last three-year period;
(2) As used in this Rule:
(A) "Project Costs" means the total costs
associated with development of nutrient reduction projects including
identification, land acquisition, project design, project construction,
monitoring, maintenance, and long-term stewardship;
(B) "Administrative Costs" means costs
associated with administration of the Program including staffing, supplies, and
rent; and
(C) The "costs for
projects in process" means the sum of expenditures of project contracts to
date, contracted cost to complete existing contracts, and the projected cost of
future contracts needed to complete those projects required to fulfill Program
nutrient reduction obligations in the rate area;
(3) "Total Pounds
OffsetPresentDay" means the total number of pounds of a
nutrient reduced by the Program's projects in the rate area at the time of
calculation. If the Total Pounds OffsetPresentDay for an
existing or completed project is reduced, the Actual
CostsPresentDay for that existing or completed project
shall be proportionally adjusted:
(A) The
Adjustment Factor shall be calculated using the following formula:
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The Adjustment Factor shall be applied only in those
calculation periods where actual costs are calculated to be greater than actual
receipts. The Adjustment Factor shall not comprise more than 60 percent of the
overall rate;
(B) "Actual
Costs" shall be the same as Actual CostsPresentDay as
defined in Subparagraph (1) of this Paragraph, except that the existing
contracts and completed land acquisitions are not adjusted for
inflation;
(C) "Actual Receipts"
means the sum of all offset payments made to the Program in the rate area at
the time of calculation; and
(D)
"Number of Pounds Paid during Adjustment Period" means the average number of
pounds of a nutrient paid to the Program over the last three years in the rate
area multiplied by the adjustment period. If no payments have been made to the
Program in a rate area, the number of pounds paid shall be 1,000 pounds until
greater than 1,000 pounds have been purchased in that rate area.
(4) Adjustment Period shall be one
to four years, determined as follows for a rate area:
(A) One year if Actual Costs exceed Actual
Receipts by less than five percent;
(B) Two years if Actual Costs exceed Actual
Receipts by five percent or more but less than 15 percent;
(C) Three years if Actual Costs exceed Actual
Receipts by 15 percent or more but less than 25 percent; and
(D) Four years if Actual Costs exceed Actual
Receipts by 25 percent or more.
(h) If individual projects produce more than
one type of nutrient reduction, the project costs shall be prorated for each
nutrient being offset by the project.
(i) If an applicant is required to reduce
more than one nutrient type and chooses to use the Program to offset nutrients,
the applicant shall make a payment pursuant to
15A NCAC
02B .0240(e)(3) for each
nutrient type.
Authority
G.S.
143-214.1;
143-214.20;
143-214.21; S.L. 1995-572; S.L.
2006-215; S.L. 2007-438; S.L. 2009-337; S.L. 2009-484; S.L.
2009-486;
Eff. September 1, 2010;
Transferred from
15A NCAC
02B .0274 Eff. May 1, 2015;
Readopted Eff. March 1, 2018.
