October 20, 2009

Mr. Monte Matthews

U.S. Army Corps of Engineers
Raleigh Regulatory Field Office
3331 Heritage Trade Drive, Suite 105
LOWER NEUSE Wake Forest, NC 27587
RIVERKEEPER®
Larry Baldwin
1307 Country Club Road
Re: Cedar Fork Creek Mitigation Site, Corps Action SAW-2009-01917
New Bern, NC 28562
252-637-7972
252-514-0051 fax
riverkeeper@neuseriver.org
Dear Mr. Matthews,

I am writing to you today to express concern over the Division of Water Quality's
(DWQ or Division) recent policy decisions addressing the calculation of both
UPPER NEUSE nutrient offset and buffer credits for restoration sites which may affect calculation
RIVERKEEPER®
Alissa Bierma of the credits available from the “Cedar Fork Creek Mitigation Site” proposed for
112 South Blount Street inclusion into the City of Raleigh’s umbrella mitigation bank. While the
Suite 103
Raleigh, NC 27601
inclusion of the site itself into an umbrella mitigation bank does not present a
919-856-1180 problem for us—the site itself seems a good candidate for wetland and stream
919-839-0767 fax preservation and restoration—the potential for conflicting State and Federal
alissa@neuseriver.org
policy exists and warrants discussion.

The Neuse RIVERKEEPER® Foundation—as well as other RIVERKEEPER®

BOARD OF organizations in the state—strongly oppose any policy which allows a single
DIRECTORS mitigation action to provide multiple credits which offset the same treatment
Natalie Baggett function and believe that such policies contradicts the intent of the enabling
Phil Bowie legislation.
James Boyd
Richard Dove It is within the intent of wetland and stream impact mitigation to provide the same
Richard Goodwin water quality benefits, including a reduction in nutrient loading to the receiving
Marilyn Grolitzer waters, as was provided by the existing stream or wetland. Therefore, both stream
Tom Hardin and wetland mitigation credits have an intrinsic nutrient offset function in
Jeffrey Harrison addition to their replacement of equivalent habitat and other ecological function.
Mary Ann Harrison The use of acreage that has already offset stream or wetland impacts to
David McCracken obtain riparian buffer or nutrient offsets results in re-crediting of the same
William Olah nutrient removal function already allotted to the existing offset credits,
Sandra Parker resulting in net degradation of water quality. Policies which encourage or
Jim Starr allow this type of dual credit assignment contradict the intent of the N.C. nutrient
offset program’s enabling legislation and allow the State to rely upon work
already conducted and required by the Army Corps of Engineers while appearing
to provide citizens with additional, heightened environmental protection.

Allow me to explain, in depth, why a policy of dually crediting the same

ecological benefit violates the intent and reality of the various mitigation/offset
programs at work in the State of North Carolina, including the stream and wetland
mitigation program of the Army Corps of Engineers.
Re: Cedar Fork Creek Mitigation Site, Corps Action SAW-2009-01917 10/20/09

State Riparian Buffer Protection Rules

The Tar-Pamlico, Neuse and Catawba River basins all have rules requiring the protection of or
mitigation for impact to riparian buffers. The purpose of these rules is “to protect and preserve
existing riparian buffers…to maintain their nutrient [pollutant] removal functions,” therefore any
mitigation for impact to riparian buffers must include mitigation for the lost nutrient
removal function (15A NCAC 2B .0233, 15A NCAC 02B .0259, 15A NCAC 02B .0243)

Under these rules, impacts to buffers that require mitigation can be fulfilled via three
alternatives:

1) Payment of compensatory mitigation fee to Riparian Buffer Restoration Fund

2) Donation of real property, where buffers can be restored
3) Restoration or enhancement of a non-forested riparian buffer

The buffer mitigation must take place the same distance from or closer to the estuary or river as
the impact and as close to the location of the impact as feasible.

Federally-based Stream and Wetland Protection Rules

The objective of the Clean Water Act, and delegation of action to the States, is “to restore and
maintain the chemical, physical, and biological integrity of waters of the United States.”
Pursuant to that objective, for unavoidable stream and wetland impacts, DWQ requires
compensatory mitigation at a minimum of 1:1 ratio for losses of streams and wetlands (for both
404 jurisdictional wetlands as well as isolated wetlands) (15A NCAC 2H .0506(h)). Stream
mitigation for 401/404 impacts requires a minimum 50-foot buffer to assure stream bank
stabilization; this buffer is a required component of 404/401 stream mitigation which
compensates for the loss of nutrient removal function due to the stream or wetland impacts
associated with the project requiring the subject mitigation. Compensatory mitigation can be
achieved via:

1) Project-specific mitigation
2) Mitigation banks
3) In-lieu fee mitigation via EEP

State Nutrient Sensitive Waters Management Strategy & Nutrient Offset Payments

The Tar-Pamlico and Neuse Basins' Nutrient Sensitive Waters Management Strategies both
allow dischargers to provide payment in-leiu of nutrient offsets that cannot be reasonably
accommodated on-site. The nutrient offset in-lieu fee program (NOP) provides both the
private and public sectors opportunities to “purchase” nutrient mitigation to assist them in
meeting compensatory nitrogen- or phosphorus-mitigation requirements for new construction. In
the Neuse basin the NOP is also utilized to offset nutrient impacts from the point-sources. Once
fees are received, the North Carolina Ecosystem Enhancement Program (NCEEP) or private
mitigation bank assumes the responsibility for conducting the required mitigation.

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Re: Cedar Fork Creek Mitigation Site, Corps Action SAW-2009-01917 10/20/09

Internal Conflict and Violation of Intent

In January, 2007, DWQ released a buffer interpretation clarification memo relating to stream
restoration and buffer mitigation. This memo has allowed for riparian buffer credit to be
generated from stream mitigation projects. The rationale behind this policy by DWQ is that
stream mitigation and buffer mitigation programs are requirements under two separate laws
(federal clean water act and state buffer law). However, the mitigation of stream impacts (with
associated buffer impacts) requires mitigation of the stream channel and a minimum 50-foot
buffer, so the “credit” generated here includes the buffer. Therefore, if the state or a private
bank utilizes previous stream mitigation projects to generate the buffer credits, an
environmental deficit is created, generating two credits of nutrient removal function from a
single improvement to that function. This scenario results in a net loss of riparian buffer acreage
and function, violating the intent of the rules outlined above and cheating the public out of the
water quality benefit they promise.

Conflicts Already Underway

According to our information, in November of 2008, private mitigation bankers

Environmental Bank and Exchange (EBX) were given approval to derive greater than
250,000 pounds of nutrient offsets from a previous DOT compensatory mitigation project
approved by the Corps. As we understand the situation, the DOT mitigation project completed
by EBX utilized the entire project to fulfill compensatory mitigation for DOT wetland and
stream impacts under a mitigation bank approved by the Army Corps of Engineers; the action by
DWQ to then release nutrient offset credits from that same site is certainly re-crediting of the
same ecological and nutrient removal function ‘credited’ by the Army Corps without the
consultation or notification of the same.

Specifically, the acreage comprising the original “EBX Neu-Con Umbrella Wetland Mitigation
and Stream Restoration Bank” (Neu-Con Bank) restored in or about 2002 with NCDOT funds
designated specifically for compensatory mitigation for unavoidable wetland and stream impacts.
Now, we understand that the Department of Water Quality has approved the use of portions of
this same site for Nutrient and Buffer Mitigation Credit under the auspices of the EBX Neuse
Riparian Buffer Umbrella Mitigation Bank (Buffer Bank). By providing additional offset credits
where no additional offsets were generated, a substantial environmental debt has been
created.

The division's explanation, provided via email, was this:

Environmental Bank and Exchange has three sites that were constructed as stream
and wetland mitigation sites for NCDOT. These sites were constructed between
four and six years ago, and their contractual obligation to DOT was settled. EBX
owns the sites. EBX has submitted a Prospectus and Mitigation Banking
Instrument to operate an Umbrella Bank for buffer and nutrient offset credits at
these sites. Neuse riparian buffer credit will be generated within the first 50 feet
of buffer along the restored streams. From 51 - 200 feet, nutrient offset credit will

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Re: Cedar Fork Creek Mitigation Site, Corps Action SAW-2009-01917 10/20/09

be generated. There is no "double-dipping", as it has been decided previously that

404/401 relate to federal regulations, while the riparian buffer and nutrient offset
programs are state programs.

DWQ's policy of re-crediting the same buffer acreage and nutrient removal function
already allotted to existing federal offset credits results in net degradation of water quality
and discredits the intent and effect of the Army Corps stream and wetlands mitigation
program.

In summary, the Neuse RIVERKEEPER® Foundation is extremely concerned that N.C. State
policies create an environmental debt where new impacts to water quality occur without any new
corresponding mitigation being performed, and we request that the Army Corps of Engineers
evaluate and approve projects within the State, including the Cedar Fork Creek Mitigation
Site, in a way that ensures Federal laws are not subverted by short-sighted and poorly
designed State policies. Furthermore, we respectfully request that the Army Corps of Engineers
include in their approval the condition that upon inclusion in the City of Raleigh’s Corps-
approved umbrella mitigation bank the subject acreage is no longer available for inclusion in any
State or local nutrient and/or buffer mitigation umbrella bank. It is vital for the maintenance of
the chemical, physical, and biological integrity of waters of the United States that we ensure
mitigation of a single ecological function results in off-set credits for only that single function.

I would be happy to arrange a time to discuss this matter in person should you require further
explanation. Please do not hesitate to contact me with any questions you may have.

Sincerely,

Alissa Bierma
Upper Neuse RIVERKEEPER®
Neuse RIVERKEEPER® Foundation

Cc:
Kenny Waldroup (CORPUD)
Hazen and Sawyer
Axiom Environmental, Inc.
Colleen Sullins (NCDWQ)
Pete Peterson (EMC WQC)

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