Enabling Legislation

Agreements Rules & Laws

The In-Lieu Fee (ILF) programs administered by the Division of Mitigation Services (DMS) are governed by multiple legal and administrative documents that define how the programs are to be managed. Information on and links to these documents are contained within this subsection of the DMS website.

ILF Agreement

In July 2010, a new legal document (or instrument) for the operation and use of the Ecosystem Enhancement Program's ILF programs for stream and wetland mitigation was signed by the U.S. Army Corps of Engineers and the N.C. Department of Environment and Natural Resources. The instrument complies with federal rules governing compensatory mitigation that became effective in June 2008, and supersedes the 2003 Memorandum of Agreement among USACE, NCDENR and NCDOT governing EEP operations, as well as a 1998 Memorandum of Understanding between NCDENR and USACE.

EEP worked with USACE, the U.S. Environmental Protection Agency (EPA) and other state and federal regulatory and resource agencies to develop the new instrument.

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NCDOT Agreement

NCDENR and NCDOT developed an agreement that provides details on how the two agencies interact on key aspects of their mitigation relationship. This agreement sets forth business operations between the two agencies. The original agreement was updated in 2016 and supersedes the one developed in 2008.



Federal Rules

In 2008, EPA and USACE promulgated rules governing all forms of compensatory mitigation. Information on and the text of these rules can be found on the EPA website.

The state of North Carolina provided a detailed written response when the rules were first proposed and a comment period was provided. The original draft of the rules called for the elimination of ILF programs as a mitigation option in the country. North Carolina and others successfully argued the merits of ILF programs, which were maintained as an option in the final rule.

State Rules

General Operations: Subchapter 2R  of Environmental Management Commission rules sets forth implementation details for the program’s enabling legislation (see the section on State Laws).  Click here for proposed amendments to 15A NCAC Subchapter 02R

Riparian Buffer Mitigation: A number of rules have been established to protect and restore riparian buffers in particular parts of the state. Management of riparian buffers is linked to strategies designed for watersheds and river basins that have impaired water quality associated with nutrient enrichment.

In North Carolina, the following areas are subject to riparian-buffer management and protection rules: Neuse River basin, Tar-Pamlico River basin, the main stem of the Catawba River basin below Lake James, the watershed of the Randleman Reservoir, the Goose Creek watershed, and the Jordan Lake watershed.

Nutrient Offset Payment Program: As with riparian-buffer mitigation, a number of areas of the state have requirements for the management of nonpoint source pollution from new development activities. In these areas, after a certain amount of nutrient reduction is met on the site of a project, the developer has the option to "buy down" the additional reduction requirement. Nutrient-management rules that allow off-site nutrient reductions to gain compliance with reduction requirements are currently in place for the Neuse River basin, the Tar-Pamlico River basin, the Falls Lake watershed and the Jordan Lake watershed.

In addition, two rules are in place that govern DMS nutrient-offset payment program and the delivery of nutrient reduction projects. 15A NCAC 02B .0240 establishes procedures for making payments to DMS or other third-party mitigation providers. 15A NCAC 02R .0602 describes how DMS sets rates for nutrient payments made to the program.

Federal Laws

Compensatory-mitigation requirements are connected to the federal Clean Water Act. Development activities must be planned in such a way that they avoid impacts to aquatic resources. Impacts that cannot be avoided must be minimized. Finally, impacts that cannot be minimized must be compensated for by restoring, enhancing or protecting a similar resource within a specified geographic area (i.e., compensatory mitigation).

State Laws

The following laws (under G.S. 143-214.8-143-214) established the Wetlands Restoration Program (DMS predecessor) in the mid-1990’s. DMS remains governed by these laws.

•  143-214.8    - Program Establishment

•  143-214.9    - Program Purpose

•  143-214.10  - Development and Implementation of Basin-wide Restoration Plans

•  143-214.11  - Compensatory Mitigation

•  143-214.12  - Ecosystem Restoration Fund

•  143-214.13  - Reporting Requirement 

Recent Legislation:  Session Law 2009-337 modified laws governing all of DMS ILF programs (streams and wetlands; riparian buffer; nutrient offset) to require that non-governmental entities purchase credits from mitigation banks when seeking third-party mitigation and such credits are available. Session Law 2011-343 broadened the applicability of SL 2009-337 to require most local government entities seeking mitigation credits to purchase bank credits when they are available. Through a collaborative effort by DMS and the N.C. Division of Water Quality, NCDENR updated policies effective July 1, 2011 to implement the modifications.  In addition, DMS has published a policy describing how the program will implement Section 1.2 of Session Law 2011-343.

Buffer Program: The following laws are related to the buffer mitigation program (note that S.L. 2009-337 influenced 143-214.20):

•  143-214.20 Riparian Buffer Protection Program

•  143-214.21 Riparian Buffer Restoration Fund

Nutrient Offset Program:  A series of session laws were passed after nutrient offset fees increased due to rising program costs in 2006. The revised fees were suspended by S.L. 2006-215. Two session laws followed that affected how fees are set for voluntary payments made to the Nutrient Offset Program:

•  S.L. 2007-438 spells out requirements for the Nutrient Offset Program payments.

•  S.L. 2009-484 extends the deadline for one of the requirements of S.L. 2007-438.