January 18, 2001

To: Environmental Review Commission

Fr: Bill Holman

Re: Clean Water Management Trust Fund Annual Report

Thank you for visiting and learning about our wetlands restoration project at Open Grounds Farm, our acquisition project at Hoop Hole Creek on Bogue Banks, and the Wetlands Restoration Project at the Maritime Museum's Gallant Channel property in Beaufort on January 12, 2000. These projects demonstrate both the partnerships forged and the water quality and public benefits obtained by legislative establishment and funding of the Clean Water Management Trust Fund (CWMTF).

I am writing on behalf of the Board of Trustees of the Clean Water Management Trust Fund to provide the annual report to the Environmental Review Commission on our efforts to assist local governments, state agencies, non-profit conservation organizations, and others in protecting and restoring surface water quality.

The General Assembly for many years has advocated non-regulatory, incentive-based programs to help meet the State's environmental goals.

The 1996 General Assembly established the Clean Water Management Trust Fund (CWMTF) (GS 113-145) "to clean up pollution in the State's surface waters and to protect and conserve those waters that are not yet polluted." The CWMTF "shall be used to help finance projects that specifically address water pollution problems and focus on upgrading surface waters, eliminating pollution, and protecting and conserving unpolluted surface waters, including urban drinking water supplies" and "to build a network of riparian buffers and greenways for environmental, educational, and recreational benefits."

The CWMTF is an independent agency housed for administrative purposes in the Department of Environment and Natural Resources (DENR). The eighteen-member Board of Trustees establishes criteria, allocates funds and approves grants, makes rules, and hires the executive director. Six members are appointed by the Governor; six, by the General Assembly upon the recommendation of the President Pro Tempore of the Senate, and six by the General Assembly upon the recommendation of the Speaker of the House. Governor Jim Hunt appointed Joe Hester of Rocky Mount as Chair. An Advisory Council composed of the Commissioner of Agriculture, Chair of the Wildlife Resources Commission, Secretary of DENR, and Secretary of Commerce advises the Board of Trustees.

State agencies, local governments or other political subdivisions of the State, and nonprofit conservation organizations, such as land trusts, may apply for grants. The deadline for applications is June 1 and December 1 of each year.

Moneys from CWMTF may be used to acquire land or easements for riparian buffers and watersheds; to restore wetlands, buffers and watershed lands; to repair failing wastewater treatment systems; to improve stormwater controls and management practices; for planning, and for administration and staff. The Board works through three principal committees: acquisitions, infrastructure/wastewater, and restoration/stormwater/planning.

CWMTF application form for grants, grant evaluation guidelines, enabling legislation, list of the Board of Trustees, staff directory, and news releases are available at www.cwmtf.net.

The executive director, senior scientist, business manager, and administrative assistant are based in the central office in Raleigh. The Board moved the central office from Greenville to 530 North Wilmington Street in Raleigh in November 2000. Three field representatives cover the coast and coastal plain, piedmont, and mountains. A part-time water quality advisor is home based. The first executive director resigned effective May 1, 2000. The Board hired a new executive director in November. He started work on January 8, 2001.

Clean and adequate water is essential to public health, the environment, and the economy. Later this year the N.C. Progress Board will establish targets and measures of a sustainable environment, including: 1) increasing the number of stream miles of waters supporting their designated uses, 2) opening shellfish waters to harvest, 3) protecting and restoring wetlands and their functions, and 4) increasing healthy stocks of marine fisheries. Over twenty percent of North Carolina's waters do not currently support their designated uses. The General Assembly and the Environmental Management Commission have established targets of reducing nitrogen and other pollutants in the Neuse and Tar-Pamlico Rivers by thirty percent. North Carolina can not achieve these targets without incentive-based conservation programs such as the Clean Water Management Trust Fund.

DENR's Million Acre Coordinator is assessing local, regional and state park, forest, greenway, gameland, farmland, and open space needs. North Carolina can not achieve the goal of preserving a million acres of green open spaces over the next ten years without the CWMTF.

The CWMTF is prepared to continue to work with local governments and others to reduce water pollution. The Rural Economic Development Center estimated in 1998 that $7.34 billion was needed to repair and upgrade wastewater collection and treatment facilities in North Carolina. The N.C. League of Municipalities estimates that $ 1-3 billion is needed to collect and manage urban stormwater runoff and comply with new national stormwater regulations. The Division of Soil and Water Conservation estimates that over $25 million is needed to install agriculture best management practices to reduce sedimentation, about $23 million is needed to clean up and close abandoned animal waste lagoons, and about $9 million to buy out 30 more swine operations located in the 100-year floodplain.

The 1990 census identified 1.4 million septic tanks in North Carolina. Local health departments and the Division of Environmental Health estimate that about 19% of the septic tanks in North Carolina are violating health and water standards. Surveying, repairing and in many cases installing septic tanks to replace straight pipes would cost over $150 million.

As of December 1, 2000 the CWMTF has received over $700 million in requests for water quality projects. Last calendar year the Board of Trustees of CWMTF approved 59 grants for a total of $49.8 million. The Board has approved 234 grants for a total of $211 million since 1997. CWMTF grants have leveraged at least $60 million in other private and public funds. CWMTF's $40 million investment in the Conservation Reserve Enhancement Program (CREP) will leverage $221 million in U.S. Department of Agriculture and $10 million in other funds over the next six years.

Sixty three applicants requested $59.4 million from CWMTF on December 1, 2000. Eleven million dollars have not been allocated by the Board and are available for this cycle.

The CWMTF and our partners have protected 1560 miles of riparian buffers and preserved 134,673 acres of land. The CWMTF has assisted 60 local governments with wastewater improvements, funded 45 restoration projects, and funded 16 stormwater projects.

A grant from the CWMTF has been the catalyst for many public and private partnerships to protect and restore water quality. Officials from UNC Institute for Marine Sciences, Duke Marine Lab, Open Grounds Farm, N.C. Coastal Federation, and Town of Atlantic Beach briefed you on our projects at Open Grounds Farm and Hoop Hole Creek last week.

In 1997 the CWMTF provided $l.0 million to the Piedmont Land Trust in support of the Mitchell River Watershed Coalition's work to acquire and protect 212 acres and to assist four private landowners with conservation transactions on 200 additional acres in the headwaters of the Mitchell River in Surry County. The Mitchell River is one of the few outstanding resource waters in the piedmont. After CWMTF awarded its grant, the coalition and the local soil and water conservation district have continued working to protect water quality. Over a half dozen other donated easements have occurred and currently twenty-five landowners have donated easements or expressed interest in easements.

In 1998 the CWMTF provided a $500,000 challenge grant to Land Trust for Central North Carolina to protect land near a drinking water intake in Salisbury on the South Yadkin River. The land trust raised over $370,000 and matched the original 300-acre acquisition with conservation easements on an additional 200 acres of riparian buffers donated at a value of over $250,000. The tract of land was transferred to Catawba College where it is used as an wildlife and ecological study area. Other landowners are now interested in protecting a riparian corridor along the river and creeks. The land trust believes that an additional 400-500 acres of riparian buffers may be donated and over 2000 acres may be available for purchases. The land trust recently received a $100,000 private donation to support its work on this project.

In 1998 CWMTF provided critical support to the Division of Coastal Management's effort to add the nearly18,000 acre Buckridge Tract in Tyrell County to its coastal reserve system. CWMTF's $3.9 million grant leveraged $2.0 million from the Natural Heritage Trust Fund and National Fish and Wildlife Foundation funds. Buckridge borders the Alligator River, an outstanding resource water and important fish habitat.

In 2000 CWMTF provided funds to the Wildlife Resources Commission to assist in the acquisition of the almost 4000 acres and 28 miles of riparian buffers of the beautiful Lake Logan property in the headwaters of the Pigeon River in Haywood County.

CWMTF has provided funds to the Madison County health department to survey and eliminate straight piping; CWMTF has awarded grants to Granite Falls, Tryon, and other small towns to replace leaky sewers and to Old Fort and other communities to eliminate failing septic systems. CWMTF is funding many restoration projects such as the Clay County Soil & Water Conservation District's work with farmers and landowners to restore the Hiawassee River.

The 2000 Session of the General Assembly committed to appropriate $40 million to CWMTF in FY 2001-02, $70 million in FY 2002-03, and $100 million in FY 2003-04 and subsequent years. The CWMTF greatly appreciates the General Assembly's strong support.

The Board is holding a retreat on January 20-22 to plan for the future. Some of the important issues are appropriations to continue the work of CWMTF, legislative cap on CWMTF administration, adequate staff, Million Acre Initiative, easements, and technical assistance to small local governments.

The new executive director is working to hire a business manager, to establish relationships with legislators and staff, and to improve communication, coordination and cooperation between the CWMTF and local and state agencies and key stakeholders.

I look forward to continuing to work with the General Assembly to protect and restore water quality. Please contact me if I can be of assistance or if you need more information.

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