As DENR maintains the authority to decide whether or not the use of these credits is

appropriate to meet mitigation requirements, it also has the ability to prevent the public
outcry we will lead, should an expenditure which does not result in environmental benefit
be made using EEP funds. In order to protect water quality and the appropriate use of
public funds we strongly suggest that, at a minimum, these credits be removed from
consideration for purchase by EEP until the circumstances surrounding the award of these
credits are more fully understood.

In addition, the Neuse RIVERKEEPER® Foundation respectfully requests that DWQ

produce documentation demonstrating no prior allocation of the environmental
benefits associated with the Neu-Con Bank, or pursue every possible legal avenue to
revoke approval of the 250,000+ lbs of nutrient offsets created from acreage within this
bank that has already been used to provide compensatory stream and wetland mitigation
credits to DOT. These credits represent no real protection or improvement to water
quality in the Neuse Basin and amount to nearly 20% of the total mitigation obligation
accepted by EEP since its inception. The continued existence of ecologically
meaningless credits will negatively impact our ability to comply with State and Federal
water quality standards and to protect our waters for future generations.

Sincerely,

Alissa Bierma Larry Baldwin

Upper Neuse RIVERKEEPER® Lower Neuse RIVERKEEPER®

Cc:
Colleen Sullins (NCDWQ)
Bill Gilmore (NCEEP)
Pete Peterson (EMC WQC)
Norton Webster (EBX)
March 10, 2009

Secretary Dee Freeman

N.C. Department of Environment and Natural Resources (DENR)
1601 Mail Service Center
Raleigh, NC 27699-1601

Re: Validity of EBX Buffer Bank Credit Award

Dear Secretary Freeman,

As you will likely remember from our prior letter, the Neuse RIVERKEEPER® Foundation
opposes the use of acreage that has already been used to offset stream or wetland
impacts to obtain riparian buffer or nutrient offsets, as this results in re-crediting of
the same nutrient removal function already allotted to the existing offset credits and
in a net degradation of water quality.

In addition to the concerns expressed in our joint letter (Re: Recent Policy Decisions
Regarding Assignment of Nutrient and Buffer Offset Credits) of March 4th, 2009, the
Neuse RIVERKEEPER® Foundation would like to express our great concern regarding a
specific decision which will impact the health of the Neuse River and tributaries.

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 N.C. Department of
Transportation (DOT) compensatory mitigation project. 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; 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.

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.

Recently EBX proposed to provide 60 acres of riparian buffer mitigation credits to

the N.C. Ecosystem Enhancement Program (EEP) as part of the request for proposal
process. Given our current information we believe it is likely that the environmental
benefits of that acreage have already been allocated to offset the impacts of previous
DOT projects. In this case, use of the EBX Buffer Bank credits by EEP would violate the
intentions of the nutrient offset program by using the fees generated from the program to
purchase credits which resulted in no additional improvement to or protection of water
quality.