Evaluation of a Land Conservation Credit Jim Hawhee N.C. Division of Water Resources 05 August 2016 Department of Environmental Quality

First things first… One, I absolutely agree that land conservation is a good thing, even a great thing…. Please don’t think my criticism of the draft nutrient load reduction crediting method for conservation is a universal criticism of conservation. –Rich to UNRBA/Cardno “I was really hoping to find a constructive line of reasoning to better justify a land conservation credit” -Jim to Rich “The Division recognizes that land conservation is an important tool to protect water quality and can potentially avoid future nutrient load increases. We also recognize its multitude of other benefits, including sensitive habitat protection and recreational opportunities for the citizens of our state.” –Jay Zimmerman to Forrest Westall Department of Environmental Quality

The Setting: Load Reduction Credits J/F rules require nutrient reductions from a baseline year to restore water quality. “Load-reduction credits” are used to track progress toward these goals. Falls rules: “address the extent of load reduction” from “reforestation with conservation easement or other protective covenant.” Jordan rules silent. Department of Environmental Quality

The Setting: Load Reduction Credits Offset rules: “the party seeking approval to sell excess loading reductions shall provide for accounting and tracking methods that ensure genuine, accurate, and verifiable achievement of the purposes of this rule.” NSAB role in advising regarding nutrient accounting. Department of Environmental Quality

Proposal Summary “The credit associated with land conservation would be calculated as the difference between the average annual loading rate from new development … and the observed loading rate in undisturbed forests…” Preliminary cap proposal Preliminary conservation easement terms Geographic limitation to UNCWI-identified high priority lands Geologic Province Annual Nitrogen Credit (lb/ac/yr) Annual Phosphorus Credit (lb/ac/yr) Carolina Slate Belt 1.2 0.19 Triassic Basin 0.4 0.16 Raleigh Belt 1.1 0.17 Department of Environmental Quality

DWR Technical Concerns Load Reduced… Loading Verifiable nutrient reduction and credit BMP installed, cattle fenced, etc., etc. Time Department of Environmental Quality

DWR Technical Concerns … vs. Load Avoided (Conservation Easement) Speculative increase avoided Loading Verifiable nutrient reduction (0) Easement secured Theoretical development Time Department of Environmental Quality

DWR Technical Concerns Load Reduced vs. Load Avoided “As we’ve recognized previously, this practice is unique …in that it does not result in quantifiable load reductions from pre-existing conditions; instead… it may result in stemming of future load increases from watershed development. We – NPS Planning Branch staff – continue to see this distinction as a fundamental barrier to assigning the practice ED load reduction credit..” -February 2016, DWR to Cardno/UNRBA Department of Environmental Quality

DWR Technical Concerns Response? “We do not understand why a load avoided would need to be reported separately from a load reduced if load reductions are avoided either way: either by future load avoided or by existing load controlled onsite.” Department of Environmental Quality

Technical vs. Policy Let me say again, maybe in a different way, this isn’t a technical debate.  This is a public policy debate. -Forrest Westall to Rich Gannon, Nov. 11, 2015  Department of Environmental Quality

UNRBA’s Position (a distillation…) Let’s make it simple.  Relative to nutrient impacts to the Lake:  Forest land conservation:  GOOD. Development of forest land: BAD. Avoiding the potential for additional nutrient load is a credit, no matter how you look at it.  -Forrest Westall to Rich Gannon, November 2015 Department of Environmental Quality

Staff Policy Assessment Credit and accounting integrity Credit proposal evaluated in the context of the J/F rules Civics 101: limits on executive power Standard of review . Department of Environmental Quality

Staff Policy Assessment Incentivizing Land Conservation Worthy of incentivizing? Sure… But where does this incentive come from? Mixing “speculative loads avoided” with actual loads reduced. Land conservation at the expense of load reductions and water quality improvements. Department of Environmental Quality

Moving forward: DWR The Division and staff remain open to (and happy to assist with!): Crediting restoration activities (including reforestation) on conserved lands. Studying land conservation in the context of the Falls relook, the UNC study, and rules readoption. Evaluating proposals that seek to incentivize land conservation for its source protection value. Department of Environmental Quality

Big Picture Issues: Land Conservation in the Nutrient Strategy Context The speculative nature of conservation easements for pollution avoidance Role of future land use projections Allowable activities and conservation easement language Varying incentive approaches The near-term conversation Department of Environmental Quality

Questions? Department of Environmental Quality

Procedural Setting and Timeline Regarding the timeline, Rich and Forrest have had informal conversations on this topic for several years. First conceptual proposal provided by Cardno/UNRBA on 10/20/2015. Agency/Cardno/UNRBA discussions hitting on many of the themes I’ll cover in this presentation through November 2015. I was brought in on this discussion around the New Year… 2/4 Cardno/UNRBA revised proposal submitted to DWR. 2/15 DWR comments to revised proposal. 3/9 Cardno/UNRBA response to comments. 4/13 DWR staff denial of the credit. 6/7 COR/Cardno appeal to Director (meeting) Department of Environmental Quality