Public Hearings on
Proposed Revisions to Rules
Governing the Nutrient Offset
Payment Program
March 22, 2010 in Greenville, NC
March 23, 2010 in Raleigh, NC
Hearing Agenda
• Welcome and Introductions
• Presentation of Proposed Rule Revisions
(15 minutes)
• Opportunity for Questions on Proposed Rules
(30 minutes)
• Receipt of Comments
• Close of Hearing
Background
• In 2007 the NC Legislature directed DENR
to move to an actual cost approach
• EEP augmented existing databases to allow
for rate calculations incorporating all costs
• Stakeholders were convened and asked to
aid in the development of the ACM
• Rules were drafted and approved for formal
proposal by the EMC
Proposed Rule Revision and
Rule Establishment
• Proposed Revision of 2B .0240
– Original fee rule proposed to focus on procedural
requirements
• Proposed Establishment of 2B .0274
– New rule proposed for establishment to contain
Actual Cost Method to set rates for payments made
to the Ecosystem Enhancement Program
Proposed 2B .0240 Amendments
• Rate formula deleted - addressed in .0274
• Legislated Requirements:
– Specifies 8-digit CU restriction – NOTE Option to consider
smaller service area
– Requires reduction projects in Falls Lake watershed for
impacts in that watershed
– Establishes guidelines on use of third party providers
• Requires DWQ pre-approval of proposed nutrient
offset projects
• Specifies Jordan reservoir mitigation location
requirements
• Allows access for future nutrient rule requirements
Proposed 2B .0274
• Sets forth provisions for setting rates for
payment to EEP using Actual Cost Method
Objectives of Actual Cost Method
Account for all costs
Method should be understandable and easy to
use
Rates should be predictable and equitable
Rates must change with actual costs
Method must be applicable at various
geographic scales
Method must be applicable to either nitrogen
or phosphorus offsets
Actual Cost Method
Simple Premise:
Actual Costs / Total Pounds = Actual Cost per pound
Proposed Actual Cost Method
Proposed Actual Cost Method
Completed Projects
Terminated Projects
Existing Projects in Process
Staff
Supplies
Rent
All Costs Adjusted to Present Day Costs
Proposed Actual Cost Method
Total Pounds Adjusted to Present Day
•Represents true cost of implementing new project
•Addresses concerns over regulation changes
•Ensures rate will never be below actual cost
Adjustment Factor
If Actual Costs are greater than Actual Receipts the
difference is distributed to future pounds paid into program
• Ensures additional collections are made if historical receipts
were below costs
Additional ACM Provisions
• General and Special Rates
• Adjustment at least annually but more
frequently if actual costs are 10% higher than
existing rate
• In new rate areas where there are no nutrient
reduction projects, highest Program rate
applies until two projects are at least in design
Anticipated ACM Rates (in pounds)
RB/
Watershed
Neuse Basin*
Neuse 01
Neuse Falls
Neuse Falls
Tar-Pam
Tar-Pam
Jordan
Jordan
Nutrient
N
N
N
P
N
P
N
P
Existing
Rate
$28.35
$28.35
$28.35
-$21.67
$286.20
---
*Does not include Neuse 01 or the Falls Lake Watershed
ACM
Antic. Rate
$12.57
$16.78
$22.27
$139.66
$22.27
$139.66
$22.27
$139.66
Anticipated ACM Rates (in pounds)
RB/
Watershed
Neuse Basin
Neuse 01
Neuse Falls
Neuse Falls
Tar-Pam
Tar-Pam
Jordan
Jordan
Nutrient
N
N
N
P
N
P
N
P
Existing
Rate
$28.35
$28.35
$28.35
-$21.67
$286.20
---
ACM
Antic. Rate
$12.57
$16.78
$22.27
$139.66
$22.27
$139.66
$22.27
$139.66
Opportunity to ask questions
regarding the proposed rules…..
Hearing Officer Accepts
Comments
Next Steps and Schedule
• Comment period open until April 16th
• EMC Consideration - July 15, 2010
• Rules Review Commission – August 19th
• Targeted effective date – September 1, 2010
Comments will be accepted
through April 16th, 2010
Please submit comments to:
Suzanne Klimek
NC Ecosystem Enhancement Program
1652 Mail Service Center
Raleigh, NC 27699-1652
Or
Suzanne.klimek@ncdenr.gov