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S. HRG. 108–362

IMPLEMENTATION OF THE CLEAN WATER ACT

HEARING

BEFORE THE

SUBCOMMITTEE ON FISHERIES, WILDLIFE, AND

WATER

OF THE

COMMITTEE ON

ENVIRONMENT AND PUBLIC WORKS

UNITED STATES SENATE

ONE HUNDRED EIGHTH CONGRESS

FIRST SESSION

SEPTEMBER 16, 2003

ON

THE TOTAL MAXIMUM DAILY LOAD (TMDL) PROGRAM, SPILL PREVENTION CONTROL AND COUNTERMEASURE PLANS, STORM WATER

ISSUES, WATER QUALITY TRADING AND THE NEGLIGENT VIOLATION

SECTION OF THE ACT

Printed for the use of the Committee on Environment and Public Works

(
COMMITTEE ON ENVIRONMENT AND PUBLIC WORKS

ONE HUNDRED EIGHTH CONGRESS

FIRST SESSION

JAMES M. INHOFE, Oklahoma, Chairman

JOHN W. WARNER, Virginia

CHRISTOPHER S. BOND, Missouri

GEORGE V. VOINOVICH, Ohio

MICHAEL D. CRAPO, Idaho

LINCOLN CHAFEE, Rhode Island

JOHN CORNYN, Texas

LISA MURKOWSKI, Alaska

CRAIG THOMAS, Wyoming

WAYNE ALLARD, Colorado

JAMES M. JEFFORDS, Vermont

MAX BAUCUS, Montana

HARRY REID, Nevada

BOB GRAHAM, Florida

JOSEPH I. LIEBERMAN, Connecticut

BARBARA BOXER, California

RON WYDEN, Oregon

THOMAS R. CARPER, Delaware

HILLARY RODHAM CLINTON, New York

ANDREW WHEELER, Majority Staff Director

KEN CONNOLLY, Minority Staff Director

SUBCOMMITTEE ON FISHERIES, WILDLIFE, AND WATER

MICHAEL D. CRAPO, Idaho, Chairman

JOHN W. WARNER, Virginia

LISA MURKOWSKI, Alaska

CRAIG THOMAS, Wyoming

WAYNE ALLARD, Colorado

BOB GRAHAM, Florida

MAX BAUCUS, Montana

RON WYDEN, Oregon

HILLARY RODHAM CLINTON, New York

(II)
(III)

CONTENTS

Page

SEPTEMBER 16, 2003

OPENING STATEMENTS

Chafee, Hon. Lincoln, U.S. Senator from the State of Rhode Island, prepared

statement .............................................................................................................. 51

Crapo, Hon. Michael D., U.S. Senator from the State of Idaho ........................... 1

Graham, Hon. Bob, U.S. Senator from the State of Florida, prepared statement ...................................................................................................................... 52

Inhofe, Hon. James M., U.S. Senator from the State of Oklahoma .................... 2

Jeffords, Hon. James M., U.S. Senator from the State of Vermont .................... 5

Thomas, Hon. Craig, U.S. Senator from the State of Wyoming .......................... 6

Wyden, Hon. Ron, U.S. Senator from the State of Oregon .................................. 20

WITNESSES

Fuller, Lee, vice president, Government Relations, Independent Petroleum

Association of America ......................................................................................... 35

Prepared statement .......................................................................................... 114

Response to additional question from Senator Inhofe ................................... 119

Hall, Jim, principal partner, Hall and Associates ................................................ 38

Prepared statement .......................................................................................... 155

Hoover, Julie Beth, Director of Planning and Zoning, City of South Burlington, VT ............................................................................................................ 25

Prepared statement .......................................................................................... 79

Responses to additional questions from Senator Jeffords ............................. 88

Kouplen, Steve, president, Oklahoma Farm Bureau ............................................ 31

Prepared statement .......................................................................................... 100

Lozeau, Michael R., attorney, Earthjustice ........................................................... 33

Prepared statement .......................................................................................... 103

Responses to additional questions from Senator Jeffords ............................. 111

Mabe, David, Administrator, Water Quality Division, Idaho Department of

Environmental Quality ........................................................................................ 23

Prepared statement .......................................................................................... 77

Responses to additional questions from Senator Inhofe ............................... 78

Mehan, G. Tracy, Assistant Administrator for Water, U.S. Environmental

Protection Agency ................................................................................................. 7

Prepared statement .......................................................................................... 54

Responses to additional questions from:

Senator Chafee .......................................................................................... 60

Senator Inhofe............................................................................................ 61, 63

Senator Jeffords ......................................................................................... 64

Senator Wyden .......................................................................................... 75

Samoviski, Michael, city manager, City of Hamilton, OH ................................... 26

Prepared statement .......................................................................................... 88

Responses to additional questions from:

Senator Inhofe ........................................................................................... 97

Senator Voinovich ..................................................................................... 98

Steinzor, Rena, professor and director, Environmental Law Clinic, University

of Maryland School of Law .................................................................................. 36

Prepared statement .......................................................................................... 120

Responses to additional questions from Senator Jeffords ............................. 131
Page

IV

ADDITIONAL MATERIAL

Articles:

ELR, News & Analysis, Criminal Negligence Prosecutions Under the

Federal Clean Water Act: A Statistical Analysis and an Evaluation

of the Impact of Hanousek and Hong ...................................................... 169–173

Charts:

Bartlett Brook Stormwater Treatment System, City of South Burlington............................................................................................................. 82–83

Englesby Brook Construction Wetland Treatment, City of Burlington............................................................................................................. 84–87

EPA Civil Enforcement Judicial Settlements Fiscal Years 1999–2002 ....... 130

Number of Overflow Events ............................................................................ 97

Storm Water Utility Projected Income Statement, City of Hamilton, OH .. 90

The Decline of Environmental Enforcement at EPA Under the Bush

Administration, January 2003 ..................................................................... 127

Federal Register, Friday, December 22, 1995, Part III, Environmental Protection Agency, Incentives for Self-Policing: Discovery, Disclosure, Correction

and Prevention of Violations; Notice............................................................... 147–154

Letters to:

Boehner, Hon. John, U.S. Representative from the State of Ohio ............... 95

Horinko, Hon. Marianne, Acting Administrator, Environmental Protection

Agency.................................................................................................... 18, 96, 244

Jeffords, Hon. James M., U.S. Senator from the State of

Vermont ..................................................................................... 227, 238, 243, 247

Olivas, Hon. Adolf, Mayor, City of Hamilton, June 8, 2001 ......................... 93

Robertson, Joseph C., Ohio Department of Development, May 10, 2001 .... 92

Todd-Whitman, Hon. Christine, Administrator, Environmental Protection

Agency................................................................................................ 224, 229, 240

Voinovich, Hon. George V., U.S. Senator from the State of Ohio ................. 94

Memorandum, The Exercise of Investigative Discretion, U.S. Environmental

Protection Agency ............................................................................................. 134–140

Reports:

A Pilot for Performance Analysis of Selected Components of the National

Enforcement and Compliance Assurance Program................................. 174–223

Source of Impairment ....................................................................................... 15

Use of Immunity and Evidentiary Privileges to Encourage Voluntary

Disclosure of Self-Discovered Regulatory Violations, Spring 2000, U.S.

Department of Justice............................................................................... 141–146

Resolution, R2001–4–23, Requesting the Ohio Department of Development

to designate the city of Hamilton, OH, as ‘‘situationally distressed’’ under

the guidelines of the Ohio manufacturing machinery & equipment investment tax credit program ...................................................................................... 90

Statements:

American Society of Civil Engineers ............................................................... 159

American Waterways Operators ..................................................................... 157

Greenwald, Robin, clinical professor of law, Rutgers School of Law, Newark, NJ; Former Assistant Chief, Environmental Crimes Section, Department of Justice; Assistant U.S. Attorney, Eastern District of New

York, October 20, 2002 ................................................................................. 166
(1)

IMPLEMENTATION OF THE CLEAN

WATER ACT

TUESDAY, SEPTEMBER 16, 2003

U.S. SENATE, SUBCOMMITTEE ON FISHERIES, WILDLIFE, AND WATER, COMMITTEE ON ENVIRONMENT AND PUBLIC WORKS, Washington, DC.

The subcommittee met, pursuant to notice, at 9:30 a.m. in room

406, Senate Dirksen Building, Hon. Michael D. Crapo (chairman of

the subcommittee) presiding.

Present: Senators Crapo, Thomas, Wyden, Inhofe [ex officio] and

Jeffords [ex officio].

OPENING STATEMENT OF HON. MICHAEL D. CRAPO,

U.S. SENATOR FROM THE STATE OF IDAHO

Senator CRAPO. Good morning. The hearing will come to order.

This is a hearing of the Subcommittee on Fisheries, Wildlife, and

Water on the Implementation of the Clean Water Act.

I would like to welcome everyone here, especially our Chairman

of the full committee, Senator Inhofe. At the outset, I would like

to recognize one of our witnesses, Dave Mabe, who is here from

Idaho. David is the administrator of the Water Quality Programs

for the Idaho Department of Environmental Quality. Senator

Inhofe, Dave, and I worked together way back when I was in the

State Senate in Idaho on issues of this kind. He brings a very high

level of expertise to these issues. We welcome him here today.

Today, we are going to discuss a number of the aspects of the

Clean Water Act. I will alert everybody at the outset that we expected to have votes this morning. We are going to try to keep everybody moving along appropriately so that we can get through all

of the testimony and the questions that the members of the Senate

have here today.

Although we all understand the fundamental importance of

water, I do not think we should gloss over the importance of the

Clean Water Act to our efforts. We should begin our discussion

today by remembering that our shared goal is to continue improving the cleanliness of water throughout the United States, and do

it by focusing on action and results instead of the endless arguments that sometimes I think we get into as a result of the implementation of some of the statutes.

The Clean Water Act is one of the statutes that allows a productive State and Federal relationship. It is important that we protect

the basis for that relationship in the law, and that we use that relationship fully. By working together, State and Federal Govern-
2

ment can accomplish more and can discover more and better ways

of sharing responsibility on all aspects of conservation.

To protect the State/Federal partnership, we should attend especially to whether and how the Federal partner should approve or

disapprove of State decisions. In developing TMDLs, for example,

State decisions, in my opinion, should be respected on which water

body should be listed and what order they should be acted upon.

On this and other specific issues, the Federal program should accept responsibility for difficulties we face in those contexts. By confusing effort with results, we often waste idle resources and gravely

delay progress.

Today, as I believe everybody knows, we are going to go over four

or five issues dealing with the Clean Water Act, TMDLs, pollution

trading, storm water management, spill containment, and negligence standards. We expect to have many interesting perspectives

on these issues raised to us by our witnesses who are here today.

We look forward to their testimony.

With that, I will turn to our Chairman, Senator Inhofe, for his

statement.

OPENING STATEMENT OF HON. JAMES M. INHOFE,

U.S. SENATOR FROM THE STATE OF OKLAHOMA

Senator INHOFE. Thank you, Mr. Chairman.

First of all, good morning. I welcome everyone to this hearing

today. I am very proud that we are joined, Mr. Chairman, by Steve

Kouplen, who is the president of the Oklahoma Farm Bureau. He

and I have had a chance to visit. He has a commercial Hereford

cow/calf operation. He also grows wheat, alfalfa, and a few other

things. He represents 140,000 Farm Bureau members in my State

of Oklahoma.

Today’s hearing will focus on several pressing clean water issues,

some of which have been the subject of recent EPA actions. Of particular importance to my State, as you brought out, Mr. Chairman,

is the future of the TMDL program, as well as how oil and gas sites

are treated under the Storm Water Rule.

This Administration is absolutely correct in withdrawing the

TMDL proposal of the Clinton administration. Many stakeholders,

including the States, were concerned about a number of its provisions, including the requirement that an implementation plan be

submitted along with the TMDL. The TMDL rule has the potential

to severely limit local and individual land use decisions. A TMDL

is a number. It is the maximum amount of a particular pollutant

in a water body can sustain and meet the water quality standards.

That number is then divided among the contributors of the water

body.

The rule can be perceived in one of two ways: It gives the EPA

authority to approve just the TMDL number with States deciding

how to distribute it. Or, they could give the EPA the authority to

approve how the State divides that number among its contributors.

I have to say: What does it matter if they conform with the number? The States are probably in a better position to do that than

we would be here in Washington. There is this prevailing mentality

here, though, that no good decisions are made unless they are

made in Washington.
3

Just imagine a farmer, like Steve Kouplen, who has been assigned a certain pollutant reduction to achieve. If he wants to

change his crop or sell his land—all those actions may have a

water quality impact and may cause him to exceed his pollutant allocation. The decision on what to do can be made between him, the

State, and others, on the water body. But if the EPA has the authority over how the TMDL obligation is divided, that decision will

be made by the EPA.

My message on the TMDLs is this: We need a new rule, but it

must be a rule that outright prohibits any EPA role in local and

land use decisions. We must give the EPA the authority to approve

just the TMDL number itself and let the States handle the rest of

it, along with the land owners.

Assistant Administrator Mehan has been a strong proponent of

trading the EPA issued guidance earlier this year to help the

States create trading programs. Trading allows one source to meet

its obligation under the Clean Water Act by using pollution reductions created by another source that has lowered costs and, thus,

can reduce pollution beyond its obligation under the Act.

A key objective to the trading guidance, and any trading program, is to meet water quality standards and to ensure that at the

end of the day the water is cleaner and safer. That is what we

want to accomplish. States have successfully developed programs to

meet this objective, but also reduce costs. I believe trading will help

reduce costs without affecting the water quality. Therefore, we

should do all we can to promote it. We need to give the regulated

more tools and not just more requirements.

Today we are also going to hear about two other issues that are

very important to the small oil and gas producers in my State of

Oklahoma. The Clean Water Act exempts uncontaminated runoff

from oil and gas sites from the Storm Water Program. Contaminated runoff is still covered. The Act is silent on contaminated runoff. EPA, on a technicality, has included all runoff from oil and gas

sites in the construction side of its Storm Water Program because

the term ‘‘construction’’ is not in Section 402(l).

EPA made two mistakes. The first was failing to recognize that

construction is not a separate part of developing oil and gas sites,

and was never intended to be covered by the program. The second

mistake was in underestimating the number of oil and gas sites

that would be impacted by the rule. I am pleased that EPA realized

the latter of their two errors and correctly proposed a 2-year delay,

in part because their cost benefit analysis did not include the nearly 30,000 oil and gas sites impacted by the rule.

It is also important that we take a very close look at the Spill

Prevention Control Program. Everyone must understand the SPCC

Plans are required for any facility that houses large amounts of oil.

This includes the Nation’s farms. The new rule increases the number of facilities that need a plan by reducing the amount of oil that

can be housed on a site before the requirement kicks in. The EPA

granted an 18-month extension for facilities to comply because facilities were struggling to meet the new requirements, including

how to address secondary containment at loading operations. I

think it is very important that you keep in mind. I can see this
4

going to the extent that every farmer out there would be faced with

this type of a site.

Another issue that will be raised today will be the unintended

consequence of Section 309 of the Clean Water Act. Unlike other

environmental statutes, including the Air Act, to be convicted of a

negligent violation, a person does not have to be guilty of an intentional or reckless act. Such person, entirely by accident, without

any force thought, and without any malice or intent, may have

caused an accidental spill of some type and end up having to serve

jail time. This is something that we do not want to allow.

I would like to ask unanimous consent to submit. One is a colloquy that Senators Breaux, Domenici, and I had during the floor

debate on the Energy bill.

Senator CRAPO. Without objection, so ordered.

[Material supplied follows:]

COLLOQUY BETWEEN SENATORS DOMENICI, INHOFE AND BREAUX

Senator INHOFE. I would like to engage the gentlemen in a colloquy and draw the

Senate’s attention to several statutes which have been, through litigation, expanded

beyond what we believe was the intent of Congress.

Senator DOMENICI. Is the gentleman referring to the criminal negligence provision

of the Clean Water Act and the strict criminal liability provision of the Migratory

Bird Act and the Refuse Act which can be triggered by a simple accident?

Senator INHOFE. Precisely. Now, I want to be clear that I do not want to suggest

for a minute that we should make it easier for polluters to damage the environment

or put the public at risk.

Senator DOMENICI. Out the situation you are talking about refers to clear accidents involving ordinary people, correct?

Senator INHOFE. Yes. Recent court decisions have made it clear that employees,

at any level, who are involved in environmental accidents, can be prosecuted criminally, and potentially imprisoned. These are non-deliberate environmental accidents

that do not threaten or harm others.

Senator BREAUX. Mr. President, I am also concerned about criminal liability as

it applies to oil spills. In fact, during the 106th Congress, I introduced legislation

to address a long-standing problem which adversely affects the safe and reliable

maritime transport of oil products. The legislation was aimed at eliminating the application and use of strict criminal liability statutes, statutes that do not require a

showing of criminal intent or even the slightest degree of negligence, for maritime

transportation-related oil spill incidents.

As stated in the Coast Guard’s environmental enforcement directive of 1997, a

company, its officers, employees, and mariners, in the event of an oil spill ‘‘could

be convicted and sentenced, to a criminal fine even where [they] took all reasonable

precautions to avoid the discharge’’. Accordingly, responsible operators in my home

state’, of Louisiana and elsewhere in the United States who transport oil are unavoidably exposed to potentially immeasurable criminal fines and, in the worst case

scenario, jail time. Not only is this situation unfairly targeting an industry that

plays an extremely important role in our national economy, but it also works contrary to the public welfare.

To preserve the environment, safeguard the public welfare, and promote the safe

transportation of oil, we need to eliminate inappropriate criminal liability that otherwise undermines spill prevention and response activities. I pledge my support to

work with my colleagues to address these environmental liability issues.

Senator INHOFE. The American Waterways Operators have devoted a great deal

of time to training mariners and vessel operators. Clearly, the Coast Guard goes to

great lengths to ensure its officers and staff are well trained. However, unfortunately, accidents—true accidents—happen.

Senator DOMENICI. My colleagues are clearly describing a legal minefield where

employees involved in an accident become less likely to cooperate with accident investigations because they are being advised by counsel not to potentially incriminate

themselves.

Senator INHOFE. That is absolutely correct.
5

Senator DOMENICI. And as Chairman of the Environment and Public Works Committee, is it the Senator from Oklahoma’s position that this leads to less environmental safety instead of more?

Senator INHOFE. Indeed. I also wish to draw the gentleman’s attention to the

Clean Air Act, which has a different, and I suggest, more appropriate provision of

negligent endangerment.

Senator DOMENICI. I am familiar with the provision—it requires risk of physical

harm to the public for an accident to trigger criminal prosecution.

Senator INHOFE. Yes, That is the type of activity for which we should reserve

criminal prosecution. I also remind my colleague that the Clean Water Act clearly

allows prosecution for deceitful or purposeful environmental damage, or for fraudulent efforts to conceal such damage—a provision we would not change.

Senator DOMENICI. I agree with the gentlemen’s assessment, share their concern,

and look forward to working with them to address this important issue.

Senator INHOFE. With that, I look forward to the hearing today.

Again, as the Chairman said, ‘‘We will be interrupted for awhile.’’

We have three panels. We will make it as contiguous as possible.

Senator CRAPO. Thank you very much, Mr. Chairman.

Senator Jeffords.

OPENING STATEMENT OF HON. JAMES M. JEFFORDS,

U.S. SENATOR FROM THE STATE OF VERMONT

Senator JEFFORDS. Mr. Chairman, I want to thank you for holding this hearing. Clean water is one of the most basic needs and

one of our greatest luxuries. We are reminded time and time again

of the role of clean water in our society as we see new coverages

of the situation in Iraq.

In our own country, just a month ago, the effects of an unreliable

power grid spilled over into the water industry as waste water

treatment plants in Ohio dumped 60 million gallons of untreated

sewage into receiving waters, closing beaches to swimming. Multiple cities were under boil water notices for days.

During the 107th Congress, as Chairman of this committee, I

held a Clean Water Act oversight hearing on the 30th anniversary

of the Act. We heard from the EPA that 45 percent of our waters

cannot meet water quality standards. Since our hearing in October

2002, the Administration has chosen to go backward on clean water

protections rather than forward. Rather than step up to the challenge of cleaning up our remaining waters, the Administration is

both failing to maintain the progress we have made since 1970, and

failing to move forward on the remaining challenges that we all

identified just 1 year ago.

Today, we will review in detail the Administration’s actions on

TMDLs, Storm Water, SPCC, and water quality trading. We will

also be covering the effect of Section 309(c)(1) which, Mr. Chairman, I understand that you have a special interest in that.

I ask unanimous consent, Mr. Chairman, that the testimony from

Ms. Robin Greenwald in the October 20, 2002 article from the Environmental Law Reporter on this topic be included in the hearing

record.

Senator CRAPO. Without objection, so ordered.

Senator JEFFORDS. I am pleased that we have agreed, at your

suggestion, to address enforcement issues in general as a broad

hearing on EPA enforcement in the near future.

I want to take a few minutes to provide some context for today’s

discussion on this limited number of actions the Administration
6

has taken under the guise of protecting our water quality. On January 15, 2003, the Bush administration began a rulemaking process that threatens the integrity of the Clean Water Act by severely

reducing the water that it protects.

In June 2003, reports surfaced that Clean Water Act enforcement

was faltering under the Bush administration. An internal analysis

performed by the EPA documented extensive noncompliance with

the discharge permits and a decline in enforcement activities. For

example, there was a 45 percent decrease in EPA formal enforcement actions between 1999 and 2001.

Since President Bush took office, he has pursued significant reductions in the enforcement capacity at the EPA. Enforcement personnel have been reduced by 100. In January 2003, the President

submitted his fiscal year 2004 budget. It reduced clean water infrastructure spending by 40 percent from the prior year funding level.

In March 2003, the Bush administration withdrew the existing

rule on Total Maximum Daily Load, or TMDL, without producing

an alternative. Today, we will review the Administration’s latest

draft regulation which weaken protections by the dirtiest waters.

On March 7, 2003, the EPA issued a final rule that extended the

permit deadline for storm water discharges for oil and gas construction activity that disturbs 1 to 5 acres of land by 2 years.

The EPA’s action gives a regulatory free ride to the oil and gas

industry while thousands of small communities and industries

building construction projects struggle to comply with the same

rule.

In a similar action to benefit the oil and gas industry, the EPA

extended the compliance deadline for spill prevention control and

countermeasures planned. We will discuss this in more detail

today.

Mr. Chairman, I could continue with a longer list, but I will end

there. Each time I review this list, I am dumbfounded by the casual attitude of this Administration toward the future of our country. It seems that the choices we witness each day are choices

made with one thing in mind—immediate gratification to special

interests at the expense of the environment. History will demonstrate that the changes I mentioned, taken as a group, will have

been the largest step backward in clean water protection in our Nation’s history.

Thank you, Mr. Chairman.

Senator CRAPO. Thank you.

Senator Thomas.

OPENING STATEMENT OF HON. CRAIG THOMAS, U.S. SENATOR

FROM THE STATE OF WYOMING

Senator THOMAS. Thank you, Mr. Chairman.

I will not take very long. I do appreciate your having this hearing. I think it is very important. Seldom have I ever been optimistic about what we are doing with TMDLs. I think we need to

be very watchful and careful about the storm water rule. I think

we are headed in the right direction.

Thank you, Mr. Chairman.

[The prepared statement of Senator Thomas follows:]
7

STATEMENT OF SENATOR CRAIG THOMAS, U.S. SENATOR FROM THE

STATE OF WYOMING

Mr. Chairman, thank you for holding today’s hearing. I appreciate your commitment in allowing this subcommittee, which has jurisdiction over the Clean Water

Act, the opportunity to discuss the implementation of that law particularly the rule

on Total Maximum Daily Loads (TMDLs).

Mr. Chairman, I’ve sat behind this dais many times and rarely had the opportunity or reason to applaud EPA especially thinking back to the 2000 rule on

TMDL’s (that has since been repealed). But with respect to TMDL’s and the existing

rule, EPA has been helpful to my State of Wyoming. The national TMDL coordinator has worked with my state to achieve success through the local watershed

process. Wyoming has been using a local approach to address our impaired waters

rather than a top down approach. When EPA Region 8 was sued over Wyoming’s

alleged failure to comply with the TMDL program, the State prevailed.

The local approach is working. It is my hope the new rule will embrace this sort

of an approach and allow other flexibilities to get the job done. If the end result

is the same, I should not think a one-size-fits-all approach should matter. We have

seen more than once that what works in one region in the country does not necessarily work in the other. Thank you, Mr. Chairman, and I look forward to hearing

from the witnesses.

Senator CRAPO. With that, we will now move to our first panelist.

Mr. Tracy Mehan is the Assistant Administrator for Water for the

U.S. Environmental Protection Agency.

As Mr. Mehan is taking his seat, I would like to remind all of

the witnesses today that we, as usual, are under a tight timeframe

that will be impacted by votes. We will remind the witnesses that

we would like you to pay attention to the clocks that are in front

of you and keep your oral testimony to 5 minutes. That gives us

time for questions from the Senators. We assure you that we will

carefully review your written testimony.

Like I always say, you will never get everything you want to say

in the 5 minutes, but we ask you to pay attention. For those of you

that get involved and do not quite notice when you time is up, I

will just lightly tap the gavel as a reminder that you should pay

attention to the clock. We will try to keep ourselves moving along.

With that, Mr. Mehan, please proceed.

STATEMENT OF G. TRACY MEHAN, ASSISTANT ADMINISTRATOR FOR WATER, U.S. ENVIRONMENTAL PROTECTION

AGENCY

Mr. MEHAN. Thank you, Mr. Chairman.

It is a pleasure to be here. My written testimony deals with a

broad array of watershed issues as well as the storm water issue,

including TMDLs, watershed-based permitting, monitoring, and

water quality trading.

I am going to focus in my 5 minutes on monitoring and water

quality trading. While monitoring may not have been a top-of-themind issue for many, I think where we are today in trying to move

to the watershed approach is crucial. You will be hearing a lot

more of it as we move into the fiscal year 2005 budget process on

this.

Again, we are in a period where we are trying to transition from

a purely technology based approach to a water quality based approach, and to reorient all our water programs on a watershed

basis. We think it is imperative to strengthen our water quality

monitoring and assessment programs.
8

In the 1970’s, monitoring was primarily carried out at or near

the end of pipe to measure effectively individual permits and

whether they were working. However, today we need to monitor

and assess the inputs of millions of diffuse sources of pollution—

from sediments, from agricultural sources, from construction sites,

fertilizer, and pollutants coming from the air. This is going to require more innovative tools and flexible approaches such as trading. But we need baseline monitoring to better implement these

new innovative approaches.

We currently have site-specific information that tells us about

many localized and regional conditions. But as stated in EPA’s

Draft Report on the Environment 2003, ‘‘At this time, there is not

sufficient information to provide a national answer to this basic

question on water quality status and trends with confidence and

scientific credibility.’’

Working with State, Federal, tribal, and local agencies, with the

private sector and nonprofit organizations, we must be able to provide answers to some very fundamental questions: How clean is the

water? Is it getting cleaner? Are our management actions working?

Without answers to these questions, we run the risk of flying

blind when it comes to making decisions on how best to address

water quality problems and to allocate limited resources. One recent example is the data we are assembling for our report to Congress under the Wet Weather Act on sewer overflow. When I came

to Washington 2 years ago, we were talking about 500 billion gallons of overflow year. Based on a statistically valid inventory and

sampling process, it looks like that number is dropping to 10 billion

gallons per year. That has a big impact on how we decide how we

are going to deal with these challenges. That is the kind of information we have to have.

Currently, most States are doing monitoring at that level. That

is all to the good, but we need to integrate that as part of a national scale water quality monitoring program. Again, my testimony deals with some of the specifics on that. I hope in future

hearings next year, that we will spend much more time on water

quality monitoring because it is fundamental to innovation and the

watershed approach.

Let me say a few words about water quality trading. EPA believes that water quality trading, which allows sources to find the

least cost alternative to achieving clean water, can be a critically

important tool for restoring impaired watersheds efficiently and

cost effectively. In its analysis of the Clinton administration’s

Clean Water Initiative, EPA concluded that the total potential savings from all types of trading—point-to-point, point-to-nonpoint,

and pretreatment trading—ranges from $650 million to $7.5 billion

annually.

Another study of three watersheds in the upper Midwest by the

World Resources Institute, found that controlling phosphorous loadings from point and nonpoint sources, the cost could be reduced by

40 percent in watersheds in Wisconsin and more than 80 percent

in watersheds in Michigan where trading was applied between

point and nonpoint sources. These examples, where differential

costs can be used to the benefit of achieving water quality gain, illustrate the potential for water quality trading.
9

In January, EPA issued its Water Quality Trading Policy. The

policy provides guidance on aligning trading programs with the

Clean Water Act and implementing regulations. It identifies common elements of credible trading programs. The policy supports

trading to improve or preserve water quality in a variety of circumstances.

In unimpaired waters, trading may be used to preserve water

quality by offsetting new or increased discharges of pollutants,

thereby allowing for economic growth in a watershed. In waters impaired by pollutants, trading may be used to achieve earlier pollutant reductions, and progress toward water quality standards even

in advance of the development of a TMDL.

Trading, of course, may be used to reduce the cost of achieving

reductions established by a TMDL. The policy highlights existing

Clean Water Act flexibility that can facilitate trading programs,

and emphasizes the need for accountability and safeguards to ensure the trading programs protect our resources and keep advancing toward water quality standards.

I am happy to note what I think is really growing support for the

policy. We had a national forum on trading in Chicago this summer. Three hundred people showed up for several days. They came

early and stayed late and explored a whole raft of case studies and

lessons learned from trading pilots around the country. Recently,

we received a letter from the U.S. Conference of Mayors endorsing

our policy.

A number of core principles and environmental safeguards form

the foundation of our policy. These principles help ensure the trading programs create actual pollutant reductions, avoid hot spots,

provide accountability for trading activity, and involve the public.

I am going to name just a few that are set out in the policy.

First, trading programs operate within the existing regulatory

structure and are consistent with all aspects of the Clean Water

Act. Trading programs are designed to meet water quality goals,

including TMDLs. Water quality standards or goals are our polestar, that is, the end point, the object of all these efforts. Trading

programs ensure that water quality standards are not exceeded.

Trading programs retain enforceability of NPDES permit limits.

Trading is not used to meet point source technology-based limits,

but may be used to achieve water quality-based limits consistent

with the Clean Water Act.

We already see evidence that water quality trading programs

work. For example, the State of Connecticut’s Nitrogen Credit Exchange Program is expected to save the State an estimated $200

million in control costs through trading, while also making significant gains in cleaning up pollutants in Long Island Sound, saving

several years off the cleanup schedule.

In the Cherry Creek watershed in Colorado, a trading program

conducted in conjunction with a TMDL has reduced phosphorous

loads to Cherry Creek watershed by approximately 450 pounds per

year. The nonpoint source projects that were implemented to create

the phosphorous credits have provided ancillary environmental

benefits, such as flood control and wildlife habitat in recreational

areas.
10

A partnership trading effort in Illinois’ Piasa Creek along the

Mississippi River will save several million dollars in capital improvements for a drinking water treatment facility, while reducing

sediment loads to the Mississippi River. The Grasslands selenium

trading program in California, which was led by the Environmental

Defense, was the Nation’s first nonpoint source cap-and-trade program. It utilized an innovative penalty and rebate system to create

economic incentives to substantially reduce selenium in Kesteron

Reservoir that was adversely harming bird populations. I am also

happy to recognize the project in Idaho along the Lower Boise that

we are very excited about.

Experience with trading has also taught us that trading will not

work everywhere. It is just one tool in the tool box. For example,

the level of pollutant reductions that would need to be achieved

from all sources in a given watershed may be such that additional

or surplus reductions cannot be achieved so as to allow trading.

Certain watersheds may not have the number and mix of sources

necessary for trading to be successful. In addition, trading programs that work in one State or tribal area may not be successful

in others.

Generally, Mr. Chairman, we are exited about the experimentation that is going on. We look forward to working with the committee to see that this policy is successfully implemented.

Thank you. I would ask that my complete testimony be included

in the record in its entirety.

Senator CRAPO. Without objection, so ordered.

Thank you very much, Mr. Mehan. We appreciate your testimony.

For my questions, I want to focus on the TMDL program. You

and I have had discussions on this in the past. As you know, I was

very concerned with the rule that was first proposed by the EPA

under the Clinton administration. The testimony we had in the

hearing was that it would not only impose significant increased

cost burdens on the States, but not necessarily increase the effectively of the activities already underway at the State level. Therefore, I strongly supported the EPA’s decision to withdraw that rule

and start again.

Now, however, I am very anxious to see that a new rule come

out. As we have discussed, the regulatory uncertainty that we face

in the absence of a rule is itself creating a significant amount of

problems.

In that context, my first question is this. Do you have a time line

that you can give us as to how soon we can expect that the EPA

will issue a new rule?

Mr. MEHAN. Senator, I am not in a position to give you a precise

time line. I can tell you we are in an interagency process. There

was a little bit of a quietus after the Fourth of July. I can assure

you that we are back into long and steady negotiations and discussions with our other Federal Agencies. We are hopeful that we will

be able to move forward in the not-too-distant future.

Senator CRAPO. In the context of the new rule, particularly in the

context of the nonpoint sources, it seems to me that it is important

for us to recognize the roles of the State in being able to allocate

the total load to various sources within a watershed. The EPA
11

should be primarily involved in determining what the total load

level should be, but should let the States make decisions about how

that is allocated and how accomplishment of the purposes of the

rule is achieved. Is that the direction in which we are headed?

Mr. MEHAN. We, I think we would view it as somewhat of a more

complex challenge. In approving the total load, it is like approving

a budget. You cannot really look at the bottom line without looking

at all the elements that go into creating the budget, whether it is

a pollution budget or a financial budget.

There has to be some mechanism for EPA to meet its statutory

responsibilities to approve the TMDL to ensure that the allocations, both the waste load allocation to point sources and the load

allocations to nonpoint sources, are actually put together in a technically and scientifically defensible way in order to justify our approval.

So we are wrestling with this issue of how to respect State prerogatives who at the first instance have the responsibility to put

together the TMDL, but at the same time allow us to make an informed technical evaluation of the final work product.

Senator CRAPO. Are you saying that the EPA has to basically be

in charge of every minute decision in terms of the allocation of the

load throughout a watershed in order for them to make a decision

about the total load for the watershed?

Mr. MEHAN. It comes down to what degree of specificity you

need. You obviously have to have great specificity when you are

talking about point sources because those waste load allocations to

point sources will be written into NPDES permits. It would not require anywhere near the same kind of specificity for load allocations to nonpoint sources where you could do things through categorizations or sub-categorizations without necessarily worrying

about specifics, say in the case of an agricultural producer or

sources like that.

The issue is: How much specificity do you need to ensure a fair

and credible technical review of the overall pollution budget in the

TMDL?

Senator CRAPO. Well, my time is up. I will encourage you to work

as much flexibility as possible into the program for the States and

have the EPA mainly administering at the broader level and let

our States do their jobs. I think they can.

Mr. MEHAN. Thank you, sir.

Senator CRAPO. Senator Jeffords.

Senator JEFFORDS. Has the EPA done any written analysis showing what the effect of the proposed changes, the TMDL rule, will

be on water quality? In other words, does EPA’s analysis show that

a new rule will make the waters dirtier or cleaner, and sooner or

later than the existing TMDL?

Mr. MEHAN. At least as I understand what you are asking, Senator, I do not think we have that kind of an analysis or document

at the present time. The TMDL contemplated rule right now in

many ways accomplishes several things. We are responding to criticisms from the National Academy of Sciences. We are trying to accommodate State practical implementation concerns. We are trying

to optimize the performance of an existing program.
12

In other words, in many respects you can say that the cost of

meeting the water quality standards of the Clean Water Act are already sunk costs, but now we are coming along with a new, proposed, or contemplated TMDL rule to just make the whole thing

work more efficiently toward ends that are already set out by Congress and by our regulations.

We look at it as a way to better optimize the existing program.

I hasten to add that the TMDL program is a very robust program

right now. We have done 8,000 TMDLs to date and are spending

quite a bit of time in the continuous improvement mode to continue

to perfect the program while we are also going through the interagency discussions about a possible new rule.

Senator JEFFORDS. On March 10, 2003, the day the Storm Water

Phase II regulations took effect, the EPA extended the compliance

deadline for the oil and gas industry. We have corresponded extensively on the details of this issue.

I ask unanimous consent that several pieces of correspondence

between the members of the committee and the Agency’s responses

be included in the hearing record.

Senator CRAPO. Without objection, so ordered.

Senator JEFFORDS. Your final rule extending the deadline for the

oil and gas industry states that you have received information that

30,000 oil and gas sites could be affected. Is that number accurate?

Mr. MEHAN. That is our understanding.

Senator JEFFORDS. The final Storm Water Phase II regulation

issued in 1999 states that ‘‘EPA believes that the implementation

of Best Management Practices, BMP, controls at small construction

sites will also result in a significant reduction in the pollutant discharges and an improvement in surface water quality.’’

Is that statement still accurate? If so, how will the removal of

30,000 sites from the regulation change the water quality benefits

EPA expects to achieve?

Mr. MEHAN. Senator, taking the second question first, there is no

decision to remove 30,000 sites from the rule. We simply deferred

action on that sector in light of newer information received from

the Department of Energy, from members of the industry, and

through other sources that were inventoried as to extent of the potential regulatory universe that we previously had not fully understood or comprehended.

Generally, the imposition of BMPs on sources of storm water will

have beneficial environmental impacts. But obviously issues of

costs and benefits and issues in terms of regulatory feasibility are

all relevant. We need to learn more about this sector. We also need

to learn more about what the industry is already doing by way of

best management practices under, say, State regulatory regimes at

the present time.

Senator JEFFORDS. On the Storm Water EPA No. 3, can you describe the relative contribution of storm water versus other sources

of pollution to the 45 percent of the Nation’s waters that remain

impaired, including a description of the types of pollutants normally found in storm water, and the change in pollutant content

that could be expected in cold water climates? What role does

transportation infrastructures play in generating storm water run

off?
13

Mr. MEHAN. Obviously there are a number of points in your

question, Senator, that I would request the opportunity to respond

in writing in a very detailed technical review.

Basically, in the latest reports that we have seen from the

States, urban run off was cited as the source of impairments for

34,871 miles of rivers and streams, 7.7 million acres of lakes, and

over 5,000 estuary square miles.

Clearly, speaking again at the broader level, this has impacts.

All the wet weather issues do, whether it is CSOs, SSOs, or storm

water. You can go down the list. To some degree there is a hierarchy in there. Clearly, storm water run off is part of that. I would

be happy to get back to you with more detail as to which sector

contributes to which degree of impairments.

Senator JEFFORDS. We would appreciate that.

Senator CRAPO. Without objection, so ordered.

Senator JEFFORDS. Thank you, Mr. Chairman.

Senator CRAPO. Thank you very much, Senator Jeffords.

Senator Thomas.

Senator THOMAS. Thank you. I will be brief.

What if EPA’s role was to reject indefensible State decisions

rather than specifically approving all the decisions they make?

Mr. MEHAN. Senator, the present system set up under the Clean

Water Act, and not unlike any other provisions of other laws, is

really environmental federalism. Forty-five States presently have

delegated authority to carry out the Clean Water programs. We do

have an oversight role, but with the delegation of that program,

primary responsibility for things like the NPDES program and the

TMDL program, where quality standards are specifically recognized as State prerogative in Section 510 of the Act, the States are

in the driver’s seat.

We do have oversight responsibility. In some cases, say, in the

water quality standards, the law requires us to approve those

standards. We view the water program, compared to many programs in Government, and even in the EPA, as the quintessential

environmental Federalist program with 45 delegated States in the

Clean Water program and 49 States delegated under the Safe

Drinking Water program.

There are obviously professional disagreements that will happen

from time-to-time, but for 30 years, that has been the way we have

carried out the program. We are seeing more and more reliance on

State programs, even in the face of some financial challenges of

late. You have to get to cases. There are going to be given circumstances where people are going to come down on different sides

of any given decision.

Senator THOMAS. This is aside from your statement. But one of

the things we run into quite often is a lack of coordination among

Agencies; for instances, on permitting. One Agency will go ahead

and say, ‘‘Yes, we are ready to go.’’ Then the next thing you know,

the EPA has challenged that. They have a perfect right to challenge it, but it seems to me that it would be appropriate if the

Agencies work together so that when the permitting was finalized,

then it is finalized, and someone does not come back in again and

stop the whole thing because their opinions are not represented apparently.
14

Mr. MEHAN. Well, I think it is certainly just generally good practice that the further upstream you can get on any regulatory decision in terms of interactions, you are better off rather than sort of

a late hit, so to speak. We do try. We spend a lot of time with our

State agencies, whether it is under ECOS’ or under ASIWPCA’s

umbrella, working with them on programs, trying to continually do

a horizon scan of where we are going to see areas of potential disagreement or areas for potential cooperation and synergies. There

is no question that we need to stay in a mode of continually trying

to revisit these.

Senator THOMAS. I am not talking about the State. I am talking

about Federal Agencies. I am talking about the BLM and the EPA

who do not seem to be able to be in accord when the permitting

is out there. It does not seem to me that there is any excuse for

that.

Mr. MEHAN. The problem is that we are all creatures of the various laws that establish our Agencies. We do not have one comprehensive organic statute that cuts across all environmental and

resource issues. We have different Agencies responding to different

statutory and legal regimes. That inevitably results in some stovepiping. We are trying to improve on that at every opportunity. We

have an oversight panel we have established with the Fish and

Wildlife Service to look at the review of water quality standards

under the Endangered Species Act, trying to again proactively

work to streamline that effort. But again, you have two different

statutory regimens.

Senator THOMAS. I understand that. But there is no reason why

the final decision cannot encompass the decisions of both or all

three of those Agencies. You always have reasons and excuses because of the law. But I am afraid I do not understand why it cannot be implemented in such a way that the final decision embraces

the role of all the appropriate Agencies. But that does not happen.

Mr. MEHAN. I agree we need to make it happen, Senator.

Senator THOMAS. Thank you. I appreciate it.

Thank you, Mr. Chairman.

Senator CRAPO. Thank you.

Senator Jeffords has a few more questions.

Senator JEFFORDS. The trading policy states that EPA would consider pilot projects to obtain more information regarding the trading of persistent bio-accumulative toxics, PBTs, such as mercury.

What are your plans with regard to these pilot projects? How could

it be possible to increase the concentration of PBTs in one location

without impairing water quality and putting human health at risk?

Mr. MEHAN. Well, Senator, we have no proactive plans or agenda

to promote or push any trading involving persistent bio-accumulative toxics. That statement in the policy really is more of an in-box

position that if someone comes forward, we would certainly examine it. We have one on the Sacramento River involving mercury.

We intentionally put that statement in the policy to show that we

were not hanging out a sign to necessarily promote this.

On the other hand, under the Clean Water Act, we do not have

a handle under some of the primary sources, which are air depositions. That is the same analogy to row crop agriculture. One of the

advantages of trading is that it presents an opportunity to address
15

unregulated sources through least-cost and incentive-based practices in a watershed context. We just did not want to foreclose the

opportunity that someone out there might have a very creative idea

dealing with a multimedia problem like mercury. Certainly in

places like Michigan or the Southeastern United States, 90 percent

of the mercury is coming from an unregulated source, at least from

the Clean Water Act perspective; that is, air deposition. There are

other areas, too, where it is coming from runoff and other things

that are not subject to the traditional NPDES regulatory tools.

We have not had any new proposals come in other than the one

we announced back in January in the Sacramento which is still

more in a scoping stage. If one comes in, we will take a look at it

on its merits and decide whether it is worth pursuing.

Senator JEFFORDS. The Storm Water Phase II final rule extending the compliance deadline for oil and gas states that EPA will

analyze and evaluate the scope and effect of Section 1342(l)(2) of

the Clean Water Act which allows certain types of discharges from

oil and gas activities to occur within a permit.

I have several questions with respect to that. What is EPA’s current policy on the applicability of Sections 1342(l)(2) to oil and gas

construction sites? How long has that been in place?

Mr. MEHAN. I think you are referring to the 1992 decision by

EPA to distinguish between runoff from the operations itself versus

the construction. There has been no change on that policy as of this

date.

Senator JEFFORDS. How has the Storm Water Phase I regulation

covering large municipalities and large construction sites impacted

water quality?

Mr. MEHAN. I have only anecdotal evidence. I would be happy to

check to see what more systematic information we have on that,

Senator. We are talking obviously larger operations on a watershed

basis that could be significant.

Ms. Benita BEST-WANG [accompanying Mr. Mehan]. We have

done some work evaluating monitoring data from large municipalities. We do have some work on construction sites.

Mr. MEHAN. Again, I would be happy to assemble that information and present it to you, Senator.

Senator JEFFORDS. Thank you.

Senator CRAPO. Without objection, so ordered.

[Material supplied by the witness follows:]

SOURCES OF IMPAIRMENT

EPA compiles data on water quality impairments and sources of impairments consistent with the requirements of Section 305(b) of the Clean Water Act. The most

recent biennial report for which data are available is from calendar year 2000 (2000

National Water Quality Inventory Report). In that report, EPA presents data independently for three significant types of waterbodies: rivers and streams, lakes and

reservoirs, and coastal resources. The report defines number of categories for

sources of waterbody impairments. Many of these are storm water management related. Following is impairment data for each of the waterbody types:

RIVERS AND STREAMS

Of miles assessed, 39 percent are impaired (a total of 269,258 miles out of the

699,946 miles assessed). Of the total, following is the percent of the impairment due

to the identified source:
16

Agriculture ................................................................................................................................................................ 48 percent

Hydrologic Modification ............................................................................................................................................ 20 percent

Habitat Modification ................................................................................................................................................. 14 percent

Urban Runoff/Storm Sewers ..................................................................................................................................... 13 percent

Forestry ..................................................................................................................................................................... 11 percent

Municipal Point Sources ........................................................................................................................................... 10 percent

Resource Extraction .................................................................................................................................................. 10 percent

While not clearly delineated as storm water sources, other than the municipal

point sources, all of the other sources are likely heavily influenced by storm water

runoff.

LAKES

Of the acres assessed, 45 percent are impaired (a total of 7.7 million acres out

of the 17.3 million acres assessed). Impairment sources are as follows:

Agriculture ................................................................................................................................................................ 41 percent

Hydrologic Modifications .......................................................................................................................................... 18 percent

Urban Runoff/Storm Sewers ..................................................................................................................................... 18 percent

Nonpoint Sources ...................................................................................................................................................... 14 percent

Atmospheric Deposition ............................................................................................................................................ 13 percent

Municipal Point Sources ........................................................................................................................................... 12 percent

Land Disposal ........................................................................................................................................................... 11 percent

COASTAL RESOURCES

Of the square miles assessed, 51 percent are impaired (15,676 square miles out

of 31,072 square miles assessed). Impairment sources are as follows:

Municipal Point Sources ........................................................................................................................................... 37 percent

Urban Runoff/Storm Sewers ..................................................................................................................................... 32 percent

Industrial Discharges ............................................................................................................................................... 26 percent

Atmospheric Deposition ............................................................................................................................................ 24 percent

Agriculture ................................................................................................................................................................ 18 percent

Hydrologic Modifications .......................................................................................................................................... 14 percent

Resource Extraction .................................................................................................................................................. 12 percent

Common pollutants found in storm water include pathogens, nutrients, sediment,

oil and grease, toxic metals, and debris. In cold weather climates, road salts are an

additional pollutant of concern that have been shown to impact water quality.

Transportation infrastructure plays a significant role in storm water runoff. Annual pollutant loads generated from roads and associated facilities were estimated

as part of the Agency’s ongoing effort to develop national guidelines for the construction and development industry (FHWA 1996, 2001, HUD 2002, USDA 2000, NWS).

These estimates do not account for inplace management practices to control storm

water runoff, but are for uncontrolled pollutant loads delivered to the nation’s waterways. Some representative parameter estimates include:

Parameter Annual loading (1,000

metric tons/yr)

Total Suspended Solids ........................................................................................................................ 4,000–64,000

Phosphorus ........................................................................................................................................... 9–80

Oil and Grease ..................................................................................................................................... 200–2,000
17

1 U.S. Department of Housing and Urban Development (HUD). 2002. Housing Completions (as

reported by the U.S. Census Bureau) Washington, DC. Available at www.census.gov.

U.S. Department of Transportation, Federal Highway Administration (FHWA). June 1996.

Evaluation and Management of Highway Runoff Water Quality. FHWA Office of Environment

and Planning. Washington, DC. Publication Number FHWA–PD–96–032.

U.S. Department of Transportation, Federal Highway Administration (FHWA). 2001. Highway

Statistics 2000. FHWA Office of Highway Policy Information, Washington, DC. Publication

Number FHWA–PL–01–1011.

National Weather Service (NWS). Hourly rainfall data, collected for selected sites within each

of the 19 U.S. Ecoregions for the past 30 years.

U.S. Department of Agriculture (USDA), National Resources Conservation Service. 2000. 1997

National Resources Inventory. Washington, DC.

Parameter Annual loading (1,000

metric tons/yr)

Mercury ................................................................................................................................................. 260

Zinc ....................................................................................................................................................... 4.5–74

Cadmium .............................................................................................................................................. 0–3

Arsenic .................................................................................................................................................. 4.6–5

Copper .................................................................................................................................................. 2–560

Iron ....................................................................................................................................................... 190–820

Lead ...................................................................................................................................................... 6–140

Chromium ............................................................................................................................................. 0–3

Magnesium ........................................................................................................................................... 85

Total Kjeldahl Nitrogen ......................................................................................................................... 28–4,400

Chemical Oxygen Demand .................................................................................................................... 1,200–22,000

These national estimates are appropriate for assessing the overall magnitude of

the potential problems generated by runoff from roads, highways, and related facilities. Nevertheless, it should be recognized that different pollutants are considered

more significant based on the designated use of the receiving water body, among

other factors. Aquatic life protection in streams will generally emphasize oxygen demand or metals; the effect of phosphorus is often the most important consideration

in lakes. In general, the impacts of any typical runoff constituent have to be considered in conjunction with the type of receiving water, its use, and overall ecological

health.1

Senator JEFFORDS. If EPA expands the application of this section

to exempt the oil and gas industry, how will permit holders in the

industry that have been regulated since 1990 be affected?

Mr. MEHAN. That is a hypothetical question, Senator. At this

point, no such decision has been made. I am not in a position to

speculate.

Senator JEFFORDS. With respect to TMDLs, what environmental

effects would result from allocating a lump sum of gross load to

nonpoint sources of water pollution instead of the more specific allocations?

Mr. MEHAN. Again, keep in mind that a TMDL does not create

any new regulatory authorities, whether it is on air deposition, or

row crop agriculture, or even the operation of dams. The power of

a TMDL is in the information that it provides to stakeholders at

a watershed level to be able to understand what is contributing the

impairment of those waters.

My own preference, if I were back in the State government where

I did spend 13 years, would be to have as finely differentiated data

set as I could get so I could have a road map as to what needs to

be done, either through voluntary approaches on the nonpoint

source side, or subsidy approaches, or regulatory on the pointsource side.

We could do a TMDL using strictly lump sum allocations to

nonpoint sources. The problem is that you would not know if it
18

were good or bad without at least some degree of sub-categorization. That may not have to be in the TMDL itself. It could be in

a sidebar submittal, if you will, or some other document that gives

us the technical background. Many people are nervous about putting things in the TMDL because of regulatory consequences.

Again, I would come back to my initial comments. What we are

wrestling with is what degree of specificity do we need to be able

to make an informed technical evaluation of the quality of the pollution budget in the TMDL. Hopefully, we would keep in mind that

it is utility to local stakeholders.

If we just only had a lump sum allocation for all point sources,

we might be able to approve the TMDL, but it would be hard without some understanding of how that lump sum budget was put together from the bottom up, so to speak.

Senator JEFFORDS. Mr. Chairman, I ask unanimous consent that

the letter that Senator Graham and I sent to the EPA on trading

on July 17th of this year, and EPA’s response be inserted into the

record.

Senator CRAPO. Without objection, so ordered.

[Material supplied follows:]

October 6, 2003.

Hon. MARIANNE HORINKO, Acting Administrator,

Environmental Protection Agency,

Washington, DC.

DEAR ACTING ADMINISTRATOR HORINKO: Thank you for your July 17, 2003 response to our letter raising concerns regarding the Agency’s failure to effectively enforce Clean Water Act requirements. We appreciate your detailed response to our

questions regarding the Agency’s plans to respond to the Environmental Protection

Agency (EPA) Inspector General and the Office of Enforcement and Compliance Assistance (OECA) recommendations for improving the EPA’s performance in enforcing the Clean Water Act.

We are concerned that your letter does not present a more aggressive approach

to dealing with the substantial rate of non-compliance with NPDES permits. Your

letter dismisses the 45 percent reduction in EPA formal enforcement actions by citing an undocumented redirection of resources to wet weather enforcement actions.

The only significant step described in your letter to increase or change the enforcement program is the creation of a Facility Watch List, a useful tool, if it is actually

used by decisionmakers to take enforcement actions. Below we are requesting answers to specific questions on the degree to which the Watch List has actually been

implemented.

We are concerned that although the EPA provided a detailed response to our

questions regarding the Agency’s enforcement of the Clean Water Act, the EPA is

not taking the steps that are needed to bring our Nation closer to the goal of clean,

safe water.

WET WEATHER ENFORCEMENT

In your response, your letter indicates that the 45 percent reduction in EPA formal enforcement actions is, ‘‘due to the focus on wet weather related cases. . . .’’

In EPA briefings immediately following the release of the OECA report, the Agency

indicated that it believed this to be the case and that the Agency would be conducting an analysis to gather data and information to support this belief. Based on

the conclusions presented in the Agency’s letter, we are assuming that the analysis

is complete. Please provide a copy of the analysis, including a description of the wet

weather enforcement cases pursued during the 1999–2001 period that led to the diversion of resources from the NPDES majors program and a comparison in terms

of FTEs and other resources required to conduct an NPDES major enforcement action versus a wet weather enforcement action. In your letter, the Agency also states

that it will be looking at the impact of wet weather events on CAFOs, CSOs, SSOs,

and Storm Water, and the relative impact of these wet weather events on environmental degradation when compared to the noncompliance of NPDES major
19

permitholders. Please describe the results of this study if it has been completed, its

scope, your methodology, and the intended use of the results.

State Role in Enforcement

Your letter describes the 9 percent increase in state formal enforcement actions

as ‘‘encouraging.’’ What analysis is the Agency conducting to determine the cause

of this increase, and if this is a trend or an anomaly? What has the Agency done

to encourage formal enforcement actions at the state level—for example, will the

EPA seek to provide additional resources to states to increase formal enforcement

actions? Has the EPA made a policy decision to pursue formal enforcement actions

at the state level and informal enforcement actions at the Federal level? If so, please

provide a copy of the decision documents. On a related issue, your letter states that

during performance reviews, EPA will evaluate whether or not states are escalating

enforcement actions and penalties over time. Has this occurred? If so, please describe the results of EPA’s review.

FACILITY WATCH LIST

One of the major corrective actions that your letter states the EPA will be taking

to improve enforcement is the creation of a Facility Watch List that will be used

to target resources and enforcement actions at serious violators. We believe that this

tool has the potential to improve enforcement if the decisionmakers who receive the

watch list actually use it to prioritize enforcement actions. We understand that the

first version of this list was scheduled for distribution to EPA Regions during the

first 2 weeks in September. Please provide a copy of this list and a description of

the enforcement actions that have begun since the Watch List was distributed. In

addition, please provide a description of the difference between the Watch List and

the Exceptions List previously in use at the Agency.

While the creation of the Watch List may address high profile, serious violators,

it does not necessarily address the 51 percent of the facilities in Significant NonCompliance (SNC) that do not recover without a formal action. Please describe how

you will ensure that the full 51 percent of facilities in SNC that require a formal

enforcement action to return to compliance actually receive one. For example, does

the Agency intend to request additional funds in its Fiscal Year 2005 budget for this

purpose?

Types of Significant Non-Compliance

Your letter makes an effort to distinguish between the different types of significant noncompliance as effluent-related, reporting, or schedule violations. In a system of compliance based wholly on self-reporting, it seems evident that the integrity

of the system depends on the equivalent treatment of reporting violations and other

types of violations. Does the Agency have a policy to treat different types of SNC

violators differently? If not, is EPA considering adopting one?

DATA QUALITY

In addition, your letter describes the data quality problems that exist in the Permit Compliance System (PCS) data base. You state that EPA will encourage states

to report penalty data prior to the implementation of the modernized PCS. What

actions has the Agency taken to encourage the reporting of penalty data by states?

CHANGING PERMIT LIMITS TO IMPROVE COMPLIANCE

In a repeat of a pattern that is becoming all too familiar, your letter states that

OECA intends to ‘‘have a dialog’’ with the Office of Water to explore the ‘‘problem’’

of extremely high exceedances of permit limits by pollutant dischargers that hold

NPDES permits. The OECA report recognized that permit limits are established

based on human health protections, but it also indicated that a dialog would address

the question of whether permit limits are currently too high. Has this dialog begun

and if so, what are your results to date?

FEDERAL FACILITIES’ LACK OF COMPLIANCE

In response to recommendation #10 of the OECA report, you indicate that OECA

will begin working with the Federal Facilities Enforcement Office to determine the

root cause and possible solutions of the proportionately higher rate of non-compliance with NPDES permits among Federal facilities. Has this work begun and what

are your results to date?
20

PROGRESS ON RECIDIVISTS

In response to recommendation #12 of the OECA report, your letter indicates that

OECA has already begun reviewing the Agency’s existing information on recidivists.

Please describe the results of this effort—what behavior patterns among recidivists

has the Agency identified and how do they compare to other types of violators?

PCS Modernization Effort

What is the status of the EPA’s decision to potentially modify the scope of the

modernized PCS data base?

There are several actions related to the PCS data base modernization that you

identified in your letter as items to be completed by the end of September 2003.

What is the status of the Agency’s efforts to develop a realistic cost estimate for the

PCS modernization effort, a cost-benefit analysis, and a plan for fully funding the

PCS modernization effort?

Your letter indicates that 2 FTEs will be added to the PCS modernization effort.

What is the timing for this change and what is the source of these FTEs?

Thank you for your prompt attention to this matter, and we look forward to your

timely response.

Sincerely,

James M. Jeffords, Charles Schumer, Frank Lautenberg, Jon S. Corzine,

Bob Graham, Joseph I. Lieberman, Hillary Rodham Clinton, John

Kerry, Ron Wyden, Joseph Biden, Christopher Dodd, Russell Feingold, Max Baucus, Barbara Boxer.

Senator JEFFORDS. I have one more question.

Trading has been used successfully to achieve pollution reduction

caps that are reduced incrementally and that have been used to

create value in the credits, and to ensure that the overall result of

the trading application of the program is a reduction in pollution.

Because the water quality trading policy does not use caps, and you

allow trading outside of a TMDL, how to do you intend to ensure

that the cleaner water is a result of using the trading policy?

Mr. MEHAN. In the context of the Clean Water Act, the caps are

the water quality standards. Some people are looking for the word

‘‘cap’’ in there. That may disappoint some. But the whole drift of

the policy is to use, as I said, water quality standards, as our pulse

star, as our object, as our limit our cap, if you will.

Whether or not you have a TMDL, you still have to respect and

deal with the water quality standards. The analogous problem is

trying to write a NPDES permit without a TMDL. If you have a

narrative standard, you still can write a NPDES permit. It would

be easier with a TMDL allocation. I will grant you that. But you

can still do it.

We are not contemplating trading without the limitation of the

water quality-based standard. Again, we do not allow trading just

to meet the technology-based standard, but only to achieve the

water quality-based standard.

Senator JEFFORDS. Thank you.

Thank you, Mr. Chairman.

Senator CRAPO. Thank you.

Senator Thomas, do you have any further questions?

Senator THOMAS. No, Mr. Chairman.

Senator CRAPO. Senator Wyden, do you want to ask any questions?

OPENING STATEMENT OF HON. RON WYDEN, U.S. SENATOR

FROM THE STATE OF OREGON

Senator WYDEN. I do, Mr. Chairman. This is a matter of enormous importance to my hometown of Portland. I think Mr. Mehan
21

is aware of it. I will tell you, Mr. Mehan, I think the most charitable thing that I can say with respect to your policies in this area

is that they are just absolutely incoherent. I want to see if we can

make a little sense out of exactly what is going on.

We looked at the new report, the February 2003 report, on major

facilities with waste water permit violations. The report that was

done by the EPA Office of Enforcement and Compliance found that

EPA frequently has tolerated significant violations of clean water

permits by industrial polluters even in the case of repeat offenders.

Your Agency, the EPA, found that in the past 2 years only 24 percent of the facilities in significant noncompliance received formal

25 enforcement actions.

This is what your Agency found with respect to major violators.

At the same time, you are going gangbusters to come after our

hometown that is working very hard to deal with enforcing the law

and with your Agency. The city of Portland has had in place an enforceable agreement with the State of Oregon for more than a decade. Our city is already more than halfway toward meeting its goal

of 96 percent reduction in sewer overflows. It is a more stringent

standard than your enforcement guidelines. Our rate payers have

spent more than $500 million to address the sewer overflow. We

are getting clobbered in terms of these rates.

For the life of me, I cannot figure out when your own office is

saying that you will not go after major violators, significant recidivists, with respect to Clean Water violations. Instead of targeting

them, you are going after the people in my hometown. As you can

probably tell, I have pretty strong feelings about this.

With the Chair’s permission, I am going to ask you some detailed

questions. This is of such importance to my constituents. Maybe

you can just tell us generally this. What is the philosophy behind

letting so many repeat significant violators off the hook, and then

going after my hometown with hobnail boots when they are working so hard to be in compliance?

Mr. MEHAN. First of all, I do not mean to be the Artful Dodger

here. I am in the Office of Water and am not in the Office of Enforcement. I will communicate your sentiments to my colleague,

J.P. Suarez, the Assistant Administrator for Enforcement.

I am really not in a position to discuss the Portland issue. It is

subject to litigation. It has been referred to the Department of Justice. I understand negotiations are ongoing. Again, this is carried

on by our Office of Enforcement and not by the Office of Water.

As to your general point, we are concerned about the overall integrity of the NPDES program. Enforcement does begin with the

NPDES permit. We are in the middle now of working with the

States to put in place what we are calling a permit integrity program to begin to shore up the program which is getting a little

frayed at the edges. We have 19 administrative petitions challenging our delegation of the NPDES authority around the country.

We have had five lawsuits. We had a Federal judge in Indiana who

was about ready to return the CAFO program. We have problems

with Louisiana that we are working through.

Again, in the face of really financial stressful times with our

State partners, we still need to return to the basics and shore up
22

the NPDES program. As to the decisions on enforcement, I must

respectfully refer you to my colleague, Mr. Suarez on those.

Senator WYDEN. Just out of curiosity, are you telling the subcommittee, then, for the record, that EPA’s Assistant Administrator

for Water does not have anything to do at all—not from a policy

standpoint, and not from any standpoint—with respect to how the

Clean Water Act is enforced? Is that what you want to communicate today?

Mr. MEHAN. I deal with it at the front end in terms of the issues

in terms of the functioning of the NPDES program. But I am never

consulted on an enforcement action.

Senator WYDEN. I was expecting that you might say that this is

not exclusively your providence, but do you not think it would be

useful at the front end to say, ‘‘We are going to go after major violators,’’ if the policy is to be to go after repeat major violators rather than to chase down a city that has an outstanding record in the

environment and is doing somersaults to work with all of you to

be in compliance?

That is a front-end judgment. It is my view that your office and

the Agency has a stilted set of priorities, priorities that seem to me

to just be incoherent. I would hope that using your front-end authority, as you could characterize it, you could send a message that

it is time to go after major violators when people are trying to meet

you more than halfway, that that be considered.

Mr. MEHAN. Let me clarify this. There is another front-end role

that we play in the Office of Water in conjunction with our colleagues in Enforcement of setting overall priorities. While you can

define a major violator in a lot of different ways—whether they are

in or out of compliance or how many violations—we prefer to use

a relative risk screen. Where we are in total agreement with the

Office of Enforcement is that wet weather issues, specifically combined sewer overflow issues, rank at the top of the pyramid in

terms of enforcement priorities. Without getting into the details of

the Portland case, that is what is at issue in Portland.

Senator WYDEN. My time is up. I would only say that in your

February 2003 report, you said, ‘‘Target polluters with the worst

compliance records and without enforcement action.’’

By any stretch of the imagination, that is not my hometown.

That is not. You can say that they have enforcement issues. We are

not disputing that. That is why we are working hard to meet the

Agency more than halfway.

But by your own report and by the own kind of central recommendation, you are honoring it more in the breach than in the

observance.

I thank you for the time, Mr. Chairman.

Senator CRAPO. Thank you very much.

Mr. Mehan, we thank you for the time and effort you have made

to be here before us today. We appreciate your attention to these

critical issues.

Mr. MEHAN. Thank you, Mr. Chairman.

Senator CRAPO. Thank you.

We will call up our second panel. Dave Mabe, administrator,

Water Quality Division, Idaho Department of Environmental Quality; Juli Beth Hoover, AICP, director of planning and zoning, city
23

of South Burlington, VT; and Michael Samoviski, city manager, city

of Hamilton, OH.

While these witnesses are coming forward, let me remind you

that we are probably going to be interrupted by a vote here. We

are trying to keep everybody on time. Please pay attention to the

clocks.

I have already introduced Mr. Mabe from Idaho. David, it is good

to have you with us. Please proceed.

STATEMENT OF DAVID MABE, ADMINISTRATOR, WATER QUALITY DIVISION, IDAHO DEPARTMENT OF ENVIRONMENTAL

QUALITY

Mr. MABE. Thank you, Mr. Chairman.

My name is David Mabe. I am the administrator of Water Quality Programs at the Idaho Department of Environmental Quality in

Boise. I bring greetings to you, Mr. Chairman, from Governor

Kempthorne and from Director Allred.

I am testifying today to share with you the perspectives of the

State of Idaho regarding the challenges that we face implementing

the Clean Water Act and the need for regulatory or statutory

changes to the program.

As background for what I am about to present, I would like to

give just a brief overview of the implementation in Idaho of Clean

Water Act programs. We have completed 484 TMDLs, primarily involving sediments, nutrients, and temperature, but we have also

written TMDLs for other pollutants.

Next month, we will submit to the Environmental Protection

Agency a revised 303(d) list done in the integrated report form, as

per EPA’s new guidance. It is set up in accordance with the EPA’s

new guidance regarding a five-part list. The call for data, public

comment, and review was accomplished electronically. Our 305(b)

report was submitted in electronic format. We are allowed now

greater public access to this process than ever before.

Our monitoring program is designed to cover the State in a 5-

year period using a probabilistic monitoring approach. This involves the development of random sites and then refines the areas

in progressive years until the fifth year when we focus all the monitoring in those areas that we think have the highest probability

of being impaired.

We are making the Clean Water Act TMDL process work in

Idaho, but I believe there are some fairly simple changes to be

made that could lower costs, make the process be more sensible on

the ground, provide better environmental protection, and allow

public participation in a more meaningful way.

The first of those is the listing, the delisting, or the 303(d)/305(b)

process. We would like to support a longer schedule to comply more

with our monitoring approach in the State of Idaho. We are suggesting a 5-year timeframe for reporting using the integrated report format. It is very difficult and expensive for us to do our monitoring in a timeframe less than a 5-year period.

Simply put, we do not have the budget to accomplish a statewide

monitoring program in a timeframe of less than 5 years. In addition, many of the improvements that we look for in impaired waters are not going to be apparent in a 2-year timeframe. To report
24

on this shorter timeframe is not just meaningless. It is also becomes a burden to the process and to public participation in the

process.

To give an example, in our first 2-year cycle, we would still be

very early in the process of probabilistic monitoring. We would

have no new data to report. At the end of the 4-years, the second

2-year cycle, we still have not completed the 5-year probabilistic

monitoring timeframe and have no new data to report.

In the 6-year of a 2-year cycle, we have waited, in essence, 1 year

longer than necessary to get the data out and report to the public

on the changes in Idaho’s water quality. Valuable staff time and resources are diverted to make two reporting cycles that really are

relatively meaningless. By the time we do get around to that third

reporting cycle where we have some things to say, I think public

interest is going to be waning.

In recent rulemaking and guidance efforts, EPA has also supported a very important concept in reporting and differentiating between pollutants and pollution. We think that this help create a report to the public that focuses them on the issues that we can resolve with the TMDL process. These are pollutants that can be allocated and can be improved upon using the TMDL process.

Idaho is a State that is blessed with surplus water that we are

able to use for irrigation purposes, and periodically those diversions

can cause water quality problems. But those diversions are not

something that can be quantified and solved through the TMDL

process.

So the new listing and reporting format does give us an ability

to report those problems, but not in the context of confusing the

public that these are issues for which TMDLs can be completed.

It does, then, make the public aware of those issues. They can

work with our Department of Water Resources, or agencies that do

have authority to deal with those problems in resolving water concerns in those areas.

Another concept that is very important to us is to allow more

flexibility in how pollutant loads are allocated. Currently, in both

statute and rules, TMDL stands from Total Maximum Daily Loading. The rules have bent that just a little bit, trying to create a

process that really works more sensibly on the ground. But I think

that at some point we are going to be subject to legal challenges

regarding that.

Pollutants, like sediment, are not loaded on a daily basis.

Nonpoint source loadings are generally not occurring on a daily

basis. They occur during storm events and occur periodically. The

definition of a TMDL makes it very difficult to work with them.

The approval process is another issue that probably causes a

great deal of waste in administration of the program. Currently, in

the system EPA has to affirmatively act on standards, on TMDLs,

and on other listing processes. I think that it is very important

that each Agency involved in these listing processes is trying to

create an administrative record. They are all subject to legal challenge. We are duplicating a great deal of work at the State and

Federal level in creating administrative records.

In Idaho, industry challenges, or challenges from groups that

want to see TMDLs that are less stringent, generally occur in State
25

court. Challenges that think we have not done enough will occur

in Federal court. We are allowing different groups the kind of

venue shop by having all these different agencies have an affirmative duty to approve. We would really like to see a process that

changes slightly so that we can allow the Federal Agencies to object to issues where they feel there are concerns.

Thank you very much, Mr. Chairman, for the opportunity to testify. I look forward to working with the committee to resolve some

of these issues. I would ask that my complete testimony be included in the record in its entirety.

Senator CRAPO. Without objection, so ordered. Thank you very

much, Mr. Mabe.

Ms. Hoover.

STATEMENT OF JULI BETH HOOVER, DIRECTOR OF PLANNING

AND ZONING, CITY OF SOUTH BURLINGTON, VT

Ms. HOOVER. Good morning, Senators.

I am Juli Beth Hoover. I am the director of planning and zoning

for the city of South Burlington, VT. Among my other storm water

hats, I am the director of our Water Quality programs in South

Burlington, and also the Chittenden County demonstration project

through EPA’s National Decentralized Water Resource Demonstration Grant Program.

Storm water pollution has become a major economic problem for

Northwest Vermont. Basically everything that is subject to the

Phase II regulations in Vermont drains into Lake Champlain.

Whatever pollutants we put into Lake Champlain we then turn

around and pay the Champlain Water District to filter and treat

before it becomes our drinking water.

Therefore, with the cost to our recreation-based economy, and the

cost of filtration, we are really finding in Vermont that implementing the Phase II program is a good investment, especially considering what we are investing in the GASB accounting standards.

Spending between $4 and $12 per capita per year is really making

sense, given the economic impact of storm water pollution on Lake

Champlain and on our water filtration costs.

Being good Vermonters, we have aggressively looked for cost savings and achieved them largely through the use of inter-municipal

agreements on everything from the legal work required to implement the program, to storm water mapping and planning, and also,

very importantly, meeting the public education and public outreach

standards.

We were concerned about the potential costs and drain on staff

resources from that component of Phase II. We are pleased to say

that we have managed to meet that in what we think will be a far

more effective and certainly cost-effective manner through this

inter-municipal agreement.

Our biggest initiative on storm water treatment, besides Phase

II, is the use of decentralized or distributed storm water systems

to deal with some of our most difficult and challenging storm water

problems and economic problems.

Basically, decentralized or distributed systems, take land that no

one really wants to build on, or could build on, and retool it to do

something useful for water quality and for development. Last year,
26

Congress directed the EPA to try to spend $75 million of the over

$1 billion in State revolving fund moneys on this type of distributed approach was to both storm water and to onsite septic systems.

I would like to encourage you to do more for this program which

is extremely cost effective, extremely good for municipalities and

businesses, and really terrific for clean water.

The picture on the left is the frozen tundra of Bill Shearer’s

Chevrolet on Route 7. Here it is on the left. This is not a picture

we put on the postcards of Vermont. This is where we go to get our

snow tires put on. Basically, Bill Shearer needed some capacity for

storm water so he could expand his business, as did two of his

neighbors.

The City and the Champlain Water District had a pressing interest in stopping the petroleum hydrocarbons and the other polluted

run off from these auto dealerships and gas stations on Shelburne

Road from getting into the Lake right near the intake for the water

district.

So, with some creative head-scratching and engineering, Bill

Shearer’s back yard has become a 4-acre constructed wetland treatment system. We did not lose land for development and business

growth. Instead, we gained the opportunity to grow Bill’s business.

Our monitoring this season has shown that we are getting excellent removal of these pollutants. The problem is that this system cost $300,000. We had to scrape

up 13 different grant sources to pay for it. Trying to administer 13

different grants will dissuade anyone from trying with this approach. Being stubborn, we are trying three more of these systems

in other problem spots; nonetheless, through our demonstration

grant through the EPA national program. This one will deal with

runoff from commercial plazas at the interchange with the Southern Connector, using land that is currently used for the cloverleafs.

This one will use the land by an interstate on-ramp to support

development of our city center. This one is planned in the city of

Burlington on Engelsby Brook to remove pollutants that we know

are causing chronic beach closures at Oakledge Park, which happens to be a block from my house. I am very tired of that ‘‘Area

Not Recommended for Swimming’’ sign, especially in the middle of

the summer.

Senators, we know that we have the ability through these decentralized systems to do a great job on water quality. We need a consistent, predicable, funding stream to do this, whether it is through

a set-aside in the SRF, or expansion of storm water funding

through the demonstration projects or other means.

Thank you. I look forward to your questions. I would ask that my

complete testimony be included in the record in its entirety.

Senator CRAPO. Without objection, so ordered. Thank you very

much, Ms. Hoover.

Mr. Samoviski.

STATEMENT OF MICHAEL SAMOVISKI, CITY MANAGER, CITY

OF HAMILTON, OH

Mr. SAMOVISKI. Good morning. It is a pleasure to be here. I am

Michael Samoviski, city manager for the city of Hamilton, OH.
27

Hamilton is located in Southwestern Ohio. It has a population of

62,000 people. We operate our own treatment works and a separate

storm water collection system. In compliance with the promulgated

Phase II storm water rules, Hamilton did receive, under the

NPDES, a general storm water discharge from it in April 2003.

To obtain this permit, we did develop a necessary storm water

management plan which was submitted to the regulatory Agency

in March 2003. The plan does encompass the six minimum controls

mandated by the Phase II rules.

Hamilton’s Council is seriously concerned about implementation

and enforcement of this recently issued permit, especially in light

of our very challenging local and State economic climates. As the

City prepared its storm water management plan, it became apparent to the City Council that the costs associated with this implementation will have to be assumed by our local government, that

is, our citizens and businesses since surplus municipal moneys for

this purpose are nonexistent.

The City anticipates having to form and implement a storm

water utility to achieve the necessary revenues to implement our

plan. The charges will be based upon the amounts of impervious

areas on various parcels of land. In Ohio, according to the Ohio Supreme Court, storm water fees of this sort, since they are utility

charges, must be applied evenly and consistently without regard to

tax status or land use. This means that all residents, businesses,

schools, governmental and institutional complexes will be subject to

these charges without exception.

Each residential unit would certainly pay a flat monthly charge,

but the nonresidential units would pay a much higher charge based

on the larger expanse of impervious areas. Hamilton’s projected annual expense attributable with complying with the Phase II program is an additional $1.6 million over the $800,000 that the City

now spends on storm water activities.

Since Phase II is a federally unfunded mandate, the City expects

to have to raise this revenue by imposing a monthly fee of up to

$550 on residential customers, and a multiplier effect on nonresidential users.

A few examples will illustrate our point. Hamilton’s First Baptist

Church was determined to have an impervious factor of 68 times

that of a single equivalent residential unit, or ERU. The Church’s

expected storm water utility charge would be $374 per month.

The Smart Paper Company, a manufacturer of high quality papers, has an impervious factor 912 ERUs. Its monthly charge

would be $5,017 per month. Our local high school has an impervious area equal to 243 ERUs. Its monthly charge would be $1,338.

It goes on with other related examples.

The federally unfunded mandate is being imposed upon local

communities at a time when our economies are stagnant and our

Nation is facing huge deficits. Hamilton is no exception. Local

budget deficits are already predicted for 2004, and the State’s

budget is in such distress that no funding for cities is available for

Phase II compliance.

Now is not the time for distressed cities, such as Hamilton, to

impose a new monthly storm water utility charge across our community to achieve Phase II compliance. When the local economy
28

improves, Hamilton’s businesses and citizens may be better able to

absorb this type of fee.

In our currently flagging economy, however, our local businesses

cannot afford this additional expense, nor can our citizens who

have very recently been called upon to take on more of the public

safety burden by paying higher taxes for police and fire fighter

staffing.

Accordingly, the city of Hamilton respectfully asks that you, our

elected Federal representatives in Washington, commence action

before Congress to enact a 5-year moratorium. This moratorium

could postpone the unfunded mandate to a time better suited for

requiring communities, such as our distressed city, to step forward

and implement the Phase II rules.

The city of Hamilton is not seeking to avoid serving as a good

steward of its river and receiving waters, but we are concerned

public officials seeking to strike a reasonable balance between the

stark reality of our current depressed local economy and continuing

environmental improvement.

Thank you again for your attention and courtesy in allowing us

to address this committee. We were honored to receive your invitation to appear and present our concerns. I would ask that my complete testimony be included in the record in its entirety.

Senator CRAPO. Without objection, so ordered. Thank you very

much, Mr. Samoviski.

I will advise everybody that the vote that was going to be at

10:30 a.m. has been delayed until 11 a.m. We have a reprieve for

a short time, but it is still going to happen to us.

Let me start out with a question with you, Mr. Mabe.

Mr. Mabe, as I listened to your testimony, it became evident to

me that a number of the concerns that the State of Idaho sees with

the implementation of the TMDL process have to do with process—

the monitoring process, the approval process, and the like.

Could you just quickly summarize what the best income outcome

would be in terms of improvements? Please hit just three or four

of these things. Please summarize them so we have a short list of

what really needs to be done in terms of improvements in the process.

Mr. MABE. Mr. Chairman, I would be happy to. I think if I could

make the changes in the new rule that we would look forward to

effectively operate the program, we would change the listing cycle

to a 5-year cycle. We would clarify the concept of pollutant loading

so that it is not a daily load; that it is just any qualified load that

fits the pollutant and the situation within the watershed. Then we

would change from an affirmative duty to approve standards,

TMDLs, and reports to give EPA the ability to object to a scenario

that they do not think is being protective or implementing the

Clean Water Act, to try to remove some of that administrative burden.

It is the process that tends to bog us down and cause most of the

disagreements in getting watershed planning done and getting it

implemented on the ground.

Senator CRAPO. Thank you. You heard the questions I asked of

Tracy Mehan about the new rule and the context of the EPA being

involved more at the level of determining the overall load for a wa-
29

tershed, or for an area under discussion, and letting the States

then allocate properly.

I am sure you heard his answer as well. As I heard him, he said,

‘‘that is hard to do because in order to determine the overall load,

they have to determine how it is allocated.’’ Could you comment on

that issue?

Mr. MABE. Mr. Chairman, I think there are clear roles for EPA

and for the States. EPA has, I believe, four staff in the State of

Idaho. The State of Idaho has about 200 staff working in the water

quality program. The actual on-the-ground work with stakeholders

needs to be done at the State level—to develop those allocations,

to do the monitoring, to determine what standards should be applicable. Those should be worked on by the State. That should be subject to EPA approval and should be subject to appropriate schedules. But in order to actually accomplish the work of writing

TMDLs, and of implementing TMDLs, the State is really the only

logical entity to perform that.

Senator CRAPO. How would we respond to the EPA? Let us take

the fact that right now they have four employees who are going to

have essentially approve the work of 200 people working at the

State level. It seems to me that there has to be some point at

which the EPA adopts or delegates in some context so that the

work of the State is accepted.

Is that happening now?

Mr. MABE. Mr. Chairman, it is an improving relationship, but

still a very difficult one. They are trying to create an administrative record on every decision that they can defend. So if we submit

12 or 14 TMDLs a year, that small number of staff are trying to

review and approve each of those TMDLs and create an administrative record where they can defend the challenge.

That, I think, is the main point that I would bring today. If we

could shift that burden a little bit and let them focus on what they

think the priorities are, and a scenario where they could object to

work that they find substandard, and not have to go through the

motions of approving and creating substandard, and not have to go

through the motions of approving and creating administrative

records for the work which they believe is adequate.

Senator CRAPO. So for the purposes of preparing against potential litigation, they have to make it a reality that they redo the

work of the State of Idaho?

Mr. MABE. They have to create an administrative record upon

which to base their decision and be able to defend that in court.

I think that really is the rub. They start to question a great deal

work that has been done. They start to redo or reanalyze decisions

that have been made. It really slows the process down. They are

just not staffed to make decisions at that level.

Senator CRAPO. All right. Thank you very much.

I would just like to say to Ms. Hoover and Mr. Samoviski my

time is up. I really appreciate your testimony. You have raised very

interesting options that we need to pursue here more aggressively.

These are interesting and disturbing issues that we need to address. I just want to let you know that we are paying very close

attention to the issues that you have raised.

Senator Jeffords.
30

Senator JEFFORDS. Thank you, Mr. Chairman.

Ms. Hoover, thank you for an excellent presentation. There was

a lot of work putting that together. I deeply appreciate what you

have done and your community for what they have done.

Can you describe the impact of storm water runoff from transportation infrastructure on your community’s overall storm water program? Do you believe that your situation in Vermont is similar

throughout the country?

Ms. HOOVER. The impact of transportation infrastructure is huge,

just in terms of the sheer amount of imperious surface and runoff

and the nature of the runoff it creates. South Burlington, of course,

as you know, is one of the more heavily urbanized areas. The impact is consistent throughout Chittenden County, and probably a

little less so in the rest of Vermont, except with places with an

interstate highway running through it.

The good news is that the land associated with our transportation infrastructure—cloverleafs, on-ramps—tends to be outstanding for use for decentralized storm water treatment. The

transportation enhancement program is starting to fund the use of

transportation enhancement dollars to do storm water management

in these transportation-related lands. That is a trend that we

would like to see continued to really deal with the impact of transportation on our communities.

Senator JEFFORDS. How do the costs described by your colleague

from Ohio for storm water management compare with the costs you

are projecting for South Burlington? What are some of the possible

reasons for the differences?

Ms. HOOVER. Among the towns in Vermont subject to Phase II,

only South Burlington is looking at a utility. Our projected costs

at this point are about one-third of what my colleague from Ohio

is projecting.

I suspect that the State enabling legislation for utilities and utility fees has a great deal to do with that. Storm water utilities tend

to be a different animal from conventional centralized water and

sewer utilities where the user rate gets applied across the board.

We certainly have been working with the Vermont legislature to

deal with that in an appropriate way to make sure that we can

keep the costs down and exempt those properties that need to be

exempted.

Senator JEFFORDS. Thank you very much. It was very wonderful

testimony.

Mr. Samoviski, did you use a contractor to develop your storm

water management plan? What role is that contractor playing in

the implementation of your plan?

Mr. SAMOVISKI. Yes, we did hire a consultant to advise us and

to work through the planning of the storm water management

plan. They developed a comprehensive program identifying the

issues for our community which is an aging industrial community.

The consultant has advised us continuously through the process

and has been working with our Department of Public Works to

oversee the implementation of the program.

We intend to use a variety of consultant services as we get into

the necessary steps of monitoring our local commitments to the

storm water regulations and controls. We will continually use that
31

consultant to upgrade our plan and to evaluate some of its effectiveness.

Senator JEFFORDS. Mr. Mabe, I want to compliment you for your

testimony, too. I do not have a question for you.

Thank you, Mr. Chairman.

Senator CRAPO. Thank you very much. I appreciate this panel’s

testimony. Again, as I said, your written testimony will be a part

of the record. You have provided some very valuable insights as we

look at how we can approach this legislatively and through our

oversight. Thank you very much.

Mr. MABE. Thank you.

Ms. HOOVER. Thank you.

Mr. SAMOVISKI. Thank you.

Senator CRAPO. We will call up our third panel now. We will try

to get through as much of the panel as we can before the vote is

called.

We have Steve Kouplen, president, Oklahoma Farm Bureau; Michael R. Lozeau, attorney, Earthjustice; Lee Fuller, vice president,

Government Relations, Independent Petroleum Association of

America; Rena Steinzor, professor and director, Environmental

Law Clinic, University of Maryland School of Law; and Jim Hall,

principal partner, Hall and Associates.

Let us go ahead and begin with the testimony.

Mr. Kouplen, would you please begin?

STATEMENT OF STEVE KOUPLEN, PRESIDENT, OKLAHOMA

FARM BUREAU

Mr. KOUPLEN. Thank you, Mr. Chairman, and members of the

subcommittee. My name is Steve Kouplen and I am the president

of the Oklahoma Farm Bureau. It is a pleasure to be here with you

today and talk with you about a couple of issues that are important

to agriculture and dealing with water.

On July 13, 2000, the EPA published final regulatory requirements for establishing Total Maximum Daily Loads under the

Clean Water Act. The Farm Bureau strongly opposed those regulations, as we believe that they exceed the Agency’s authority under

the Clean Water Act.

One of the most disturbing aspects of the now-withdrawn July

2000 rule was the Agency’s conversion of the TMDL program into

a nationwide enforcement mechanism for all sources of pollution,

both point and nonpoint sources. We believe that the TMDL program should respect the practical and legal differences between

point and nonpoint sources.

As the Clean Water Act has recognized for 30 years, the availability of endo-pipe technologies for point sources has made a precise command-and-control strategy feasible. Nonpoint sources, on

the other hand, cannot rely on any comparable technologies and

must, therefore, use less precise and more subjective best management practices to achieve load reductions. Given the inherently less

predictable results of the measures available to nonpoint sources,

a command-and-control strategy for nonpoint sources has never

made any sense.

Congress went to great lengths in the Clean Water Act to ensure

that the EPA did not mettle in local land use decisions by dele-
32

gating nonpoint source control to the States in Sections 208 and

319. The 2000 rules undercut this approach and allow EPA to prepare implementation plans that dictate how and when nonpoint

sources can use their land. States should have the freedom to implement their TMDL programs at their discretion.

The fundamental balance of State and Federal control requires

that EPA ensure that the ultimate goal is properly defined, but

that the States alone determine how the goal will be achieved.

Thus, States, not EPA, must determine how loading capacity will

be allocated among the various pollutant sources. Such highly subjective decisions necessarily require balancing the needs of competing land uses based on considerations of equity, economy, and

public welfare.

As such, allocation decisions are the essence of implementation

planning that has been strictly reserved for the States. We urge

EPA to address this issue and the rulemaking on the TMDL rule.

In relation to the oil spill final rule impact on agriculture, EPA’s

July 17, 2002, Oil Spill Prevention Control and Countermeasures

Rule will negatively impact farmers and ranchers and their cooperatives across the country. While the subsequent January 9,

2003, rule providing an 18-month delay in the implementation allows for more time to prepare, it does not reduce the overall cost

or impact.

There is now a growing realization across the country that the

oil spill rule and program will greatly affect agriculture. Farmers

and ranchers need to store fuel on their farms in order to control

costs and to fulfill time-sensitive production operations. Many

farms, especially in the Western States, require more than the regulatory threshold of 1,320 gallons of fuel storage for their operations.

On many larger farms, the fuel storage is not in one single location. Above-ground tanks are placed where needed on the farm for

efficient equipment operation. These may be miles apart. Given the

dispersed nature of the farm fuel storage and the costs associated

with following the rule requirements for containment, integrity

testing, security, and plan development.

We believe that the threshold level is inappropriate for the family farm and for those storages where a spill would have no impact

on water quality. In addition, the aggregation of many smaller

tanks, often in dispersed locations across farms and farmland,

must also be addressed so as not to place farms in a costly regulatory program where there is no threat to water quality.

The concerns about the impacts of oil spill rules warrant a complete review of the final rule as it impacts agriculture. EPA should

address agricultural storage differences in a manner that allows

the farm and ranch community to protect water quality in an economically and environmentally sound and effective manner. EPA

should look to the USDA for appropriate conservation practices and

technical support to address the oil spill issue and other water

quality issues with Agriculture.

We support using our U.S. Department of Agriculture Conservation Programs, such as Environmental Quality Incentives Program

and the Conservation Security Program, to help the agriculture

protect and improve our water quality.
33

Mr. Chairman, I thank you for the opportunity to be here. I

would ask that my complete testimony be included in the record in

its entirety.

Senator CRAPO. Without objection, so ordered. Thank you very

much, Mr. Kouplen.

Mr. Lozeau, please proceed.

STATEMENT OF MICHAEL R. LOZEAU, ATTORNEY,

EARTHJUSTICE

Mr. LOZEAU. Thank you, Mr. Chairman. Good morning, Mr.

Chairman, and Senator Jeffords. I thank you for inviting me here

today to testify to assist the committee in overseeing the current

Administration’s implementation of the Clean Water Act.

I would like to discuss the latest in a series of efforts by the current Administration, described earlier by Senator Jeffords, of weakening the effectiveness of the Clean Water Act and providing us

some insight as to the full scope of the Administration’s efforts to

undermine one of our most critical and most successful environmental laws.

I will be discussing Total Maximum Daily Loads for the most

part, which is a key part of the Act’s comprehensive program, and

an essential element of how Congress envisioned the Act would

work. It is based on common sense, focusing all the Clean Water

Act’s tools on a particular threatened or impaired water volume,

and having them work in concert to effectively and efficiently protect that water body.

The TMDL program currently is the best hope to eventually

achieve these as yet unattained goals of the Clean Water Act only

by addressing all sources of pollution and assuring that every

source control their share of the pollution. Will water quality be restored and protected?

The existing TMDL regs, which were put in place by the Reagan

Administration and the first Bush administration, as late as 1992,

have begun paying off. The rate of TMDLs being established is accelerating. The 1992 regulations have created considerable certainty in the TMDL program. The States are beginning to understand how the process works, as well as the dischargers. However,

EPA’s draft TMDL rule now threatens to undermine that progress

and undermine the certainty that was achieved over the last decade.

EPA’s draft TMDL rule, if enacted, will undermine the TMDL

program in clean water by eliminating large number of waters from

the benefits of the TMDL program. For those impaired waters left

on the left, it would transform the TMDLs into meaningless numbers, devoid of specifics, and with only a vague relationship to the

water body and pollution sources it claims to be cleaning up.

EPA proposes, for example, to limit the waters to be protected by

TMDLs by suggesting a complicated mix of five categories of waters, only one category of which would require TMDLs. The other

four, in essence, exempt waters from the TMDL program. Unfortunately, EPA’s listing scheme would exempt waters that Congress

intended to be included in the mandatory TMDL program.

I would just focus on Category 4(b) which is a category of waters

that is identified by the Agency as impaired, but for which EPA or
34

the State has identified some programs other than a TMDL that

they claim will cleanup those waters. As a legal matter, these impaired waters meet the criteria for listing and must be slated for

TMDLs.

Second, the open invitation for EPA to the States to rationalize

not listing these impaired waters based on alternative programs invites confusion and invites challenges from all sides. These are programs that as of that listing decision obviously were not working.

That is why the water was impaired.

This is the exception that may have swallowed the rule. I think

we will find States trying to fit as many impaired waters as they

possibly can into this one category in the hopes of getting out from

the TMDL obligation.

In regards to the substance of the TMDLs, EPA claims that the

Agency does not have to review TMDL’s pollutant loading allocations, and that these unreviewable allocations can be done by the

States as gross allocations.

Without reviewing and approving TMDL’s allocations of pollutant loadings for specific sources, there is simply no way for EPA

to say in any rational way that it is implementing the standard

created in the statute. That standard is that the TMDL must be

established at a level necessary to implement applicable water

quality standards. Those standards apply throughout a watershed,

not just at some arbitrary downstream point.

Also, by lumping together a bunch of discrete sources and treating them as one through a gross allocation, EPA will render any

efforts at trading within that watershed ineffective without discrete

credits. For discrete individual sources, no trading will be possible.

EPA claims to be clarifying the TMDL program. I believe the opposite is true. If enacted, widespread uncertainty will result and we

will see more and more challenges to TMDLs by both dischargers

and by citizens. The rules would undermine existing permits that

have been the most notable success story under the Act. For the

many water bodies that have yet to achieve even the fishable and

swimmable standard, in essence the rule would have us go back to

the 1960’s, before the 1972 amendments, to programs that have not

worked in the past. History shows us that that is the road to increased pollution and increased impaired waters.

I would like to mention quickly two other issues that are before

the committee today. One is the oil and gas extension, the 2-year

extension from the Storm Water Phase II regs for oil and gas drill

sites. I believe that decision was a mistake. Section 1342(l)(2) clearly does not create any kind of blanket exemption for that kind of

drilling or for the pollutants that are discharged. Sediment and

erosion from such sites affects our waters in the same way as sediment and erosion from any site.

In terms of the SPCC rules, we certainly are concerned, especially with the apparent conversations going on and negotiations

stemming from the challenges the oil and gas industry filed to

those rules regarding the extent of jurisdiction of the regulations

to waters of the States. I would certainly voice our concern there,

as well.

Thank you, very much. I would ask that my complete testimony

be included in the record in its entirety.
35

Senator CRAPO. Without objection, so ordered. Thank you very

much, Mr. Lozeau.

Mr. Fuller.

STATEMENT OF LEE FULLER, VICE PRESIDENT, GOVERNMENT

RELATIONS, INDEPENDENT PETROLEUM ASSOCIATION OF

AMERICA

Mr. FULLER. Thank you, Mr. Chairman. Today I would like to

address two issues under the Clean Water Act—storm water permitting requirements and new SPCC Plan requirements. However,

before addressing these regulations, I want to discuss the role of

the independent producer in domestic production because these

producers are the most significantly affected.

Independent producers are engaged essentially only in the exploration and production, or E&P phase, of the industry. There are

about 7,000 of them, and they average 12 employees. Over the past

15 or more years, the domestic E&P industry has changed significantly. Independent producers now develop about 85 percent of the

wells in the United States, producing 75 percent of domestic natural gas and about 60 percent of the crude oil in the lower 48

States. This role will continue to grow.

Another important issue is recognizing the role of marginal wells.

Marginal oil wells average about 2.2 barrels per day. However, collectively they produce about 20 percent of our domestic oil, an

amount roughly equal to what we have been importing from Saudi

Arabia. Marginal natural gas wells account for roughly 10 percent

of domestic production. Of the 876,000 producing oil and natural

gas wells in the United States, about 650,000 are marginal wells.

These wells are the most economically vulnerable to price reductions or cost increases. Consequently, when independent producers

look at these EPA regulations, at issue is the effect that they will

have on reducing new production, or shutting down existing production.

Turning first to the issue of storm water permitting for facility

construction, independent producers believe EPA incorrectly interpreted the Clean Water Act. The 1987 Act Storm Water provisions

have become inappropriately intertwined. Section 402(p) directs

EPA to require permits for storm water discharges under the

NPDES permitting program. At the same time, Section 402(l)(2)

specifically excludes discharges of storm water runoff from the

E&P facilities unless the discharge is contaminated by contact

with, for example, products, byproducts, or wastes.

IPAA believes that EPA has erred in its interpretation of the

Clean Water Act with regard to the relationship between these sections. Congress spoke directly to the exclusion of storm water related to E&P facilities in Section 402(l), the specific statutory exclusion it should control.

Nevertheless, through a series of disconnected events, EPA has

pulled E&P construction into the scope of its storm water permitting program. As a matter of law and policy, EPA should evaluate

the environmental risks and regulatory burdens created by its actions. In this case, IPAA does not believe that EPA made a reasonable assessment of either the risk or the burden.
36

No where in the information that IPAA has reviewed, is there is

an indication of significant environmental risks associated with

E&P facility construction, nor is there any indication that EPA understood the burdens this program would impose. Recently, EPA

deferred until March 2005, the Phase II Storm Water permit deadline for E&P facilities that disturb less than 5 acres of land area.

In the meantime, EPA will have an opportunity to consider

whether there are alternative approaches that might be consistent

with EPA’s statutory authority and that would be consistent with

the environmental impacts of construction of these facilities and

minimizing the regulatory burden. IPAA believes this action is essential.

Finally, let me turn to the SPCC Plan regulations. SPCC Plans

have been required for several decades. Those Plans are in place.

Moreover, the Plan requirement is separate from any spill reporting and response requirements. Those responsibilities exist whether the facility has a SPCC Plan or not.

So at issue is whether the new requirements are necessary, appropriate, and cost effective. From an IPAA perspective, IPAA believes they are not.

IPAA is unaware of any extensive information indicating that existing SPCC Plans have systemically failed. But the new regulations would require extensive and costly plan revisions. IPAA believes that if there are elements of E&P operations where the planning process can be improved, those should be identified and a

cost-effective method should be developed to address them.

This is far different from the current regulations that are prescriptive regarding specific planning actions, including construction

of certain containment structures. EPA has extended the compliance date for its new SPCC Plan regulations for 18 months. IPAA

supports this extension and hopes that it will be used to reconsider

both the scope and the approach to SPCC Plan development.

The Clean Water Act generates many regulations to improve

water quality in the United States. But it is essential that regulations target issues where action is truly needed and that they are

cost effective. These regulations do not meet these tests. Moreover,

they pose a significant risk to the development of new domestic oil

and natural gas resources and the continued operation of existing

production. In each case, EPA needs to reconsider its actions.

Thank you very much. I would ask that my complete testimony

be included in the record in its entirety.

Senator CRAPO. Without objection, so ordered. Thank you very

much, Mr. Fuller.

Ms. Steinzor.

STATEMENT OF RENA STEINZOR, PROFESSOR AND DIRECTOR,

ENVIRONMENTAL LAW CLINIC, UNIVERSITY OF MARYLAND

SCHOOL OF LAW

Ms. STEINZOR. Mr. Chairman and members of the committee,

thank you for the opportunity to appear before you today on behalf

of the Center for Progressive Regulation to testify regarding EPA’s

implementation of the Clean Water Act.

CPR is an organization of academics specializing in the legal,

economic, and scientific issues that surround health, safety, and
37

environmental regulation. This committee deserves much credit for

recognizing the importance of the topics you consider today, especially environmental enforcement.

Deterrence-based enforcement lies at the core of an effective regulatory program designed to maintain and improve water quality.

Yet, congressional oversight of EPA’s enforcement record has been

sporadic, and without such oversight, it is difficult to hold the

Agency accountable for keeping the environmental cop on the beat.

There are ample signs that the environmental cop is not only off

the beat; he is asleep in his cruiser. The latest numbers indicate

a precipitous decline in every measure of enforcement effectiveness

from cases brought and penalties paid to staffing levels. The number of EPA inspection and enforcement staff has fallen to its lowest

level since the establishment of the Agency, dropping by more than

12 percent since the Bush administration took office.

Violators have paid 64 percent less in fines for breaking environmental laws during the first 2 years of the Bush administration

than they did under the Clinton administration. The average civil

penalty paid by polluters has dropped more than 50 percent, and

the money spent on supplemental environmental projects has

dropped by 77 percent.

In the Clean Water Act area alone, the number of inspections declined by 8 percent. There was a 50 percent decrease in the number

of informal enforcement actions, and a 45 percent decrease in formal actions. Despite this disgraceful track record, as Senator Jeffords mentioned earlier, the Administration’s 2003 budget request

eliminates 200 enforcement personnel.

These changes are not abstract. They directly threaten water

quality and hurt people. As just one example, an EPA analysis concluded that 13 percent of major sources emitting toxic pollutants

into the Nation’s surface waters exceeded their permit limits by

more than 1,000 percent. In that same report, EPA reported that

significant noncompliance by major polluters was on the rise, increasing by 8 percent between 1994 and 2001, to a grand total of

one-quarter of all such sources engaged in blatant violations of the

law.

Today you will hear a witness challenge the wisdom of one small

subset of criminal enforcement under the Clean Water Act that is

typically used to punish oil and gas companies that cause disastrous spills. The oil and gas industry has already urged you to consider amendments to undercut these provisions, adding insult to

the gross injury already visited on EPA’s enforcement program.

Not only do I disagree with the reasoning that underlies these

complaints, I believe they can be best characterized as fiddling

while Rome burns. They distract attention from the much more important point that EPA’s entire enforcement program is on the

ropes.

These complaints are based on a false premise. The most respectable argument for weakening the law in this area is the concern

that the possibility of criminal enforcement has made witnesses reluctant to speak frankly with an Agency’s investigators.

Much the same argument could be made in any area where

criminal prosecutions are possible. Yet, it is difficult to imagine any
38

serious person arguing that we should repeal criminal laws because

they make potential witnesses uncomfortable.

The cases pursued by the Department of Justice involved very

careless, egregious conduct. The question before you is: Which is

more effective, creating a strong incentive to prevent such spills, or

gaining some undocumented additional cooperation after the fact?

The Nation faces many challenges at home and abroad. The

economy is worsening and the funding for domestic programs continues to shrink. In this environment, deterrence-based enforcement is crucial because the only alternative is the far more expensive practice of cajoling law breakers back into compliance.

Thank you. I would ask that my complete testimony and the

chart be included in the record in its entirety.

Senator CRAPO. Without objection, so ordered. Thank you very

much, Ms. Steinzor.

Before you begin, Mr. Hall, let me tell you that a vote is underway. However, our Chairman, Senator Inhofe, I understand is voting and coming this way so he can take the Chair when I go vote.

Hopefully, we will be able to continue the hearing uninterrupted.

If he does not arrive before I have to leave, then there will be a

very short break. We encourage everyone to stay here and be

ready.

Mr. Hall, please begin.

STATEMENT OF JIM HALL, PRINCIPAL PARTNER, HALL

AND ASSOCIATES

Mr. HALL. Mr. Chairman, Senator Jeffords, thank you for the invitation to testify before you today on a matter I believe is important to transportation safety.

On my background, I was nominated as a member of the National Transportation Safety Board by President Bill Clinton in

1993, and served as the Board’s Chairman from June 1994 to January 2001. I presently serve as the president of Hall and Associates

where I advise a number of government and private clients on

transportation safety and security issues. Although I do represent

oil industry interests who have an interest in the provision I will

discuss, my testimony is my own and reflects my experience on the

Safety Board.

The Safety Board serves as the eyes and ears of the American

people whenever there is a significant transportation incident. Its

mission is to impartially and thoroughly investigate accidents to

determine their cause, with the primary goal of preventing future

accidents. NTSB investigations rely, in large part, on the voluntary

and unpaid assistance of companies involved in accidents to understand what went wrong and how to fix it.

This system of voluntary cooperation works exceedingly well and

has succeeded in its goal of a safer transportation system. However, the threat of criminal sanction for purely accidental behavior

has the real potential to stifle this voluntary cooperation, to stifle

the development of information necessary to understand an occurrence and to prevent its repetition.

Every mode of transportation is regulated for safety purposes

under a variety of statutes. Each of these provides for both civil

and criminal sanction for some classes of regulatory violation. Typi-
39

cally, criminal violations are reserved for knowing violations. Activities such as falsification of records or safety tests, the deliberate

violation of regulatory standards, or willful or reckless behavior

that leads to injury, death, or destruction of property.

However, one statute, the Clean Water Act, provides criminal

penalties including fines and imprisonment for simple negligence.

Simple negligence does not require criminal intent or knowledge, or

even willful or reckless disregard of norms. Potentially, an entity

believing that it is exercising due caution and using current technology and modern procedures may still find that the company, its

operating employees, and its supervisors will be charged criminally

if a water source becomes polluted. The implication for safety investigations, and ultimately safe regulation under the Clean Water

Act are problematical, at best.

During my tenure at the NTSB, I became increasingly concerned

with the trend toward the criminalization of any or all transportation accidents. Let me be clear. There are accidents where criminal prosecution is warranted, and even the preferred course of action. While traditional criminal law theory requires a finding that

one intended the consequences of the criminal act, it has long been

accepted—and I accept the proposition—that wanton disregard of

behavioral norm suffices to sustain a criminal prosecution, even if

the consequences of the behavior were not intended, indeed, even

if they were as horrifying to the perpetrator as to the rest of us.

At a symposium on Transportation Safety and the Law that the

NTSB convened under my direction in April 2000, several themes

emerged that bear repeating. Transportation safety is increasingly

dependent on being able to spot trends, to see problems as they

arise, to anticipate failures from sophisticated data mining, and

from the sometimes not so sophisticated self-disclosure of near

misses.

That is exactly the issue with the Clean Water Act. Since simple

negligence can be treated as a criminal act, punishable by imprisonment when an accident investigator arrives on the scene, prevention and understanding takes a back seat to legal maneuvering.

While criminal enforcement can be an important tool, it should

be directed toward intention or reckless behavior rather than nonintentional conduct. Criminal penalties do deter intentional conduct, but have a much diminished or unproven relationship to preventing purely accidental behavior, and can deny safety regulators

the very information they need to decide how to prevent similar accidents in the future. The intent should be to promote cooperation

rather than to threaten parties with punishment for things over

which they have no control.

In conclusion, it is my conviction that the balance between appropriately pursuing individual wrongdoers on the one hand and the

broader purpose of accident investigation and prevention on the

other, tips more and more aware from a focus on prevention. We

follow that road at our long-term peril.

Thank you, Mr. Chairman. I would ask that my complete testimony be included in the record in its entirety.

Senator CRAPO. Without objection, so ordered.

Senator Inhofe [assuming the chair]. Thank you very much, Mr.

Hall.
40

Let me apologize to the witnesses, and particularly to the previous panel. This happens to be a day that happens once a year

that the Oklahoma State Chamber of Commerce comes to Washington. With them, come all the organizations—the farmers, the

bankers, and the rest. That is why Mr. Kouplen is here. It also

makes it for a very busy day. On top of that, we have Senate

Armed Services hearings taking place right now.

I think it is important to talk a little bit how about the SPCC

Plans are going to affect the agricultural community. Most of my

colleagues will read any concerns about the rule that would be

coming from industry or coming from the oil industry. It should be

emphasized that this is also going to impact family farmers.

In your testimony, Steve, you provide some information about

the use and storage of oil and fuel on farms. You also indicated

that the EPA did not fully consider the impact of the rule, and

what impact it would have on farms. What else should the EPA

know about how farms use and store fuel and the efforts of this

rule that you have?

I would ask you to answer that question by drawing upon your

background. I think you represent some 140,000 farmers in our

State of Oklahoma. Every time something like this comes up, they

always talk about industry. They always talk about the energy industry, or about electricity generation. How does it affect you?

Mr. KOUPLEN. Well, to begin with Senator, let me say that we

really did not realize we had a problem in the agricultural sector

with this issue. We think that we do a good job of being very careful with how we handle fuel and oils on our properties. We have

come to the table realizing that if this rule goes into effect, that

the possible cost—and these are projections—could run as high as

$25,000 to the individual farm family. If they have separate fuel

locations in more than one place on their operation, it could go

even higher than that.

We probably have come late to the game with this issue. But we

really realize now that it could drastically affect the family farmer.

With that low of a threshold of fuel, 1,320 gallons, that is not very

much. It would affect a great number of our producers, not only in

Oklahoma, but in this country.

Senator INHOFE. Would you give a similar response on TMDLs

and how this could affect the land owners and land rights?

Mr. KOUPLEN. Well, there again, as agricultural producers, we

try to be good stewards of the land and definitely not be polluters.

We have done all we can through conservation practices to make

sure we are not. Anytime you have any type of a regulatory program put on you, that puts a cost on your business. We do not have

a way to push that cost through as farmers. We just absorb that.

It does create a cost problem to producers, and especially to the

family farmers who are in a very bad position right now as far as

trying to stay in business in this country.

Senator INHOFE. I think a lot of people are not aware of the effect

that a lot of these things have on the agricultural community. Certainly, we are an agricultural State in Oklahoma. I remember

when we were debating the use of propane, as to should be treated

as hazardous waste. I remember it so well. One of the persons is
41

in the audience right now that was there at that subcommittee

hearing that I chaired back 5 or 6 years ago. The response was, ‘‘Well, do not worry. It only costs about $600 or $700 a year to your average farmer.’’ That was right after the

Endangered Species suggestion on the Silver Shiner. It would also

cost another $700. I think it is easy for people who are not out

there and realizing how tough things are in what I call the real

world. These things really do add up.

Mr. Lozeau, in this world that we are living in of limited resources, if we want States to put their money and staff toward waters that are impaired, why list waters which meet water quality

standards and are clean, by your own testimony, just because they

met standards by some means other than the BPT, or secondary

treatment? Why waste resources that could be put toward waters

that do not meet the standards?

Mr. LOZEAU. Because in addition to cleaning up the impaired waters, Mr. Chairman, it is important to protect the waters that are

currently meeting the standards. Many of the waters in that category would be threatened. I think it would be very inefficient for

a program like the TMDL program certainly not to apply to a

water body that currently is still meeting standards, but degrading.

The proposal that EPA has put forward would eliminate consideration of the anti-degradation policies that the States have in

place. It would eliminate those kinds of threatened waters from the

list. Certainly, I would think those are high priority waters, in

many ways for many States. Other waters that are less threatened

could be lower priority, certainly, for the State. But I think Congress had in mind to have TMDLs in place to protect all waters,

to make sure that the gains that are in place now have been

achieved. It will stay that way for the coming decades, and not just

for the moment.

Senator INHOFE. Were you here during my opening statement?

Mr. LOZEAU. Yes, I was.

Senator INHOFE. I commented on what difference does it make

whether the EPA would issue a figure, a number, as opposed to

issuing the way that they have reached that number. Maybe I am

not wording that right. Do you have any thoughts you would like

to share with us on that?

If you achieve it, what difference does it make if the EPA is supervising it or if it is done by the State and by the land owner himself in cooperation with each other?

Mr. LOZEAU. Well, we are talking about water quality standards

that would apply throughout a watershed. If you create a loading

capacity that is going to meet those standards, you would have to

know where the loads are coming in and who is putting those loads

in, where they hit that water body, and whether in that particular

area you are going to have a violation of the standards.

The gross allocations would make believe that you only measure

success at one point low in the watershed, for example, of some arbitrary downstream point. In order to know if a TMDL is going to

work, you have to make sure it works throughout the watershed.

You would have to know where it is coming in, where the allocations are occurring, and whether there is a smaller tributary that

is more burden, perhaps, than the mainstem river downstream.
42

Senator INHOFE. Would any of the rest of you like to address

that?

Ms. Steinzor.

Ms. STEINZOR. Mr. Chairman, I would like to address that. Mr.

Mehan was telling the committee about his great confidence in

trading as an alternative, a less expensive method for achieving

greater water quality. If the only total burden that is calculated is

done on a watershed-wide basis, as opposed to an individual facility

basis, the trading program becomes virtually impossible.

I must admit to being very puzzled. It would seem as if EPA is

on a course that is completely inconsistent. It would allocate one

single total load for all sources in a watershed, at the same time

that it is touting trading as the solution to many of our problems.

I surely agree with you that the best way to approach nonpoint

sources is through a trading program. But we have to have one

that is not based on paper trades or sham trades that do not

achieve real reductions.

Senator INHOFE. Does anyone else have any thoughts on that?

All right.

I would only comment that as a general rule they think that a

federally regulated mandate is better just by virtually the fact that

it done from the Federal Government. There is a basic difference

of opinion on that.

Mr. Hall, did anyone talk about the liability, the criminal punishments? Did you visit about that during your opening statement?

Mr. HALL. I addressed that in my opening statement, sir. I think

Ms. Steinzor alluded to it. That was the only other conversation.

Senator INHOFE. Well, I would like to ask each one of you. Do

you believe that Congress, when it enacted the Clean Water Act,

the criminal negligence provisions intended, to cause citizens to

refuse to cooperate with the NTSB and other accident investigators

due to potential criminal liability? In other words, I am getting

around the unintended, accidental, consequences.

Would anyone like to address this?

Mr. Hall?

Mr. HALL. Mr. Chairman, my feeling, of course, and the purpose

for my being here today, is that I do not believe that Congress intended at the time that this Act was passed, to set up a situation

where individuals who did not knowingly or willingly commit an

act, and truly accidental behavior, would face criminal penalties for

an act that obviously impacted transportation safety, and in this

case, of course, water quality.

That is why I am here today to ask the committee, in its judgment, to relook again at this policy. I think it is not an effective

policy for achieving the goal of transportation safety. I do not think

the Justice Department should be put in the position of substituting for what should be a regulatory framework to protect the

environment.

Senator INHOFE. I was in the House at the time that the Act

passed. I remember the discussion on this. I guess what you are

saying is that there are cases that you know of, and all of us in

this room know of, where something was done. But it was done accidentally, where they actually went through the process, and

maybe even served time.
43

Would either of you, on the other side of this issue, like to comment on this? Do you think that if something is done, it is done

not with intent, and just through negligence, that there should be

that type of punishment?

Ms. Steinzor.

Ms. STEINZOR. Mr. Chairman, I believe that I am the one that

is supposed to take this issue. I think that the question really does

not make much sense outside the context of the specific facts of the

cases that have brought.

Let me just describe the facts of supervision of pipeline maintenance of them, the Hanousack case. This was a gentleman who

took over from another person. Mr. Hunz was the first man and

Mr. Hanousack was the second. He was a road master, out of sight,

where there was a lot of blasting going on right near an oil pipeline.

Mr. Hunz had established procedures for protecting the pipeline,

making it very clear where the pipeline was located, building protective covering over it, and fencing it off, so that there would be

no accident, that these boulders that were being blown up by dynamite would not fall on the pipeline and crack it.

When Mr. Hanousack came on the job, he abandoned all of that

precaution and removed the barricades, removed the protective covering, and proceeded to allow his crew to push these big rocks

around until one day when Mr. Hanasack was not on the site,

somebody dropped a big boulder on the pipeline and there was a

huge spill.

This is not an innocent accident. This is a person who was acting

in reckless disregard of the basic safety needs that happen when

you work near a pipeline. He cost not just the environment, but the

pipeline company, lots of money and caused tremendous trouble.

I guess the question would be—and, of course, you would know

this much better than I because you were in the Congress at the

time—did you intend to make people who are so reckless and so

careless, did you intend to give them the comfort that no matter

what they did, they would escape prosecution?

Senator INHOFE. Well, I would only respond that you have cited

one case, Ms. Steinzor, where perhaps it was reckless. I am not

talking about those cases. I am talking about when an accident occurs.

Does anyone have any kind of anecdotal thing they would like to

put as an example of something that was purely accidental that

ended up with the type of punishment that I outlined?

OK. All right. I think that we are in the process of votes right

now. Unfortunately, that does happen sometimes. I appreciate very

much your coming to testify. Your entire statements will be considered by this committee as we are making these formulations. Your

interests will be attended to.

Let us do this. Let us go ahead and recess, subject to the call of

the Chair. If no one gets back in about 10 minutes, then we will

go ahead and adjourn this meeting.

[Recess.]

Senator INHOFE. I would ask the meeting to come back to order.

Senator Jeffords has returned and has some questions for our

witnesses.
44

Senator Jeffords, you are recognized to question the witnesses.

Senator JEFFORDS. Mr. Lozeau, as someone who has worked on

TMDLs, what do you think will be the real world effect of the proposed new TMDL rule on water quality if it were enacted?

Mr. LOZEAU. Well, in the version of the draft that we have seen

were enacted, I think the rule would not guarantee or assure that

any water that is currently on any of the TMDL lists, would ever

comply with standards. I think it would create a program that

would cede so much control to individual discharges ultimately,

and that it would have no real provisions for the EPA to guarantee

that pollution coming into a water body would be controlled at its

source, and that it is going to lead to widespread water quality degradation.

I do think that many threatened waters which we would hope

would be protected before they become impaired, will fall by the

wayside, and that we are going to see the lists of impaired waters

growing in the same rate they are currently growing. We are going

to see no effect of the program to prevent those additional pollutants and the additional costs that come from that by waiting to

clean up these waters.

Senator JEFFORDS. Instead of the rewrite of the TMDL rule,

what would you propose that EPA and the Bush administration do

to clean up the Nation’s waters?

Mr. LOZEAU. Well, I think they should certainly vigorously implement the existing rules and continue to provide them an opportunity to work. I think over time, certainly, those rules can be improved, and can bring more waters into the program and realize

the benefits of the program. I think that would be the obvious first

step, albeit hopefully the program, over time, will continue to improve.

That would be my suggestion. Obviously, funding is important to

assist the States and other stakeholders in making sure that the

TMDLs that ultimately are being developed actually work. Certainly, I would hope that the quality of TMDLs will continue to improve over time. Certainly, there are some TMDLs out there, I suspect, are not very effective. Over time, I would hope that the frame

work that is in place would continue to improve those and that we

would realize the benefits that Congress hoped for back in 1972.

Senator JEFFORDS. Thank you.

Mr. Hall, in your testimony, you state that if the NTSB can do

a thorough investigation, completed, and have cooperation, larger

problems can be corrected before they cause future accidents or incidents.

One of the accident investigations you completed while you were

at the NTSB is the Olympic Pipeline case in which three youths

were killed in Bellingham, WA. In December 1999, as Chairman of

the NTSB, when speaking of the Olympic Pipeline explosion and oil

spill, you said, ‘‘We will not be surprised to find that some of the

factors in this accident reflect lessons that have gone unlearned.’’

The NTSB had for years recommended improvements, such as a

rapid shutdown of ruptured pipelines, periodic inspection and testing of old pipelines, and improved employee training. You went on

to say, ‘‘Pipeline industry reaction to these recommendations has

been tepid, if not hostile.’’
45

In December 2002, Olympic and Shell agreed to pay $112 million

to settle criminal charges. Much of that money will be spent on

pipeline safety improvements. Today, less than a year after paying

this seemingly large sum of money, Olympic is embroiled in a dispute with the city of Seattle over the company’s efforts to avoid

conducting a high-pressure water test for the portion of the pipeline running through Seattle and close to two elementary schools.

It seems that testing a pipeline for weakness in a highly populated area could be one of the solutions you mentioned in your testimony that could avoid a future accident. Much of your argument

seems to depend on the assumption that given no potential for the

criminal enforcement under the Clean Water Act, companies will

voluntarily cooperate with the NTSB and voluntarily improve their

safety records.

Your comments in 1999 suggest that you have very little confidence that the industry will voluntarily make any safety improvements, even in the urging of the NTSB. It seems that the Olympic

case would disprove the theory that you have presented to the committee today.

Can you explain this kind of contradiction?

Mr. HALL. Yes, sir, Senator. Let me first make just one clarification. I was Chairman during the majority of that investigation.

However, that investigation was completed and the final report

was issued after I had left the National Transportation Safety

Board.

My interest in this issue goes from observations I had over 7

years as Chairman of the National Transportation Safety Board in

trying to obviously advance safe transportation policies in the

United States.

Where I saw failures, either by the industry or by the Government, to put in place safe regulatory frameworks for which the safe

operation of transportation systems could then be completed, I was

very vocal and spoke out. I felt very strongly about the statements

you read. I felt very strongly about that. It correctly reflects my

feelings at that time.

As a result of that tragedy—and I think the Board’s investigation—we have seen Congress now move to put in place a regulatory

framework for pipeline safety that requires training, that requires

periodic testing, and that requires education, a number of the

things that were not in place in the safety system at that time.

I have observed, and we have in our country and should be proud

of t, the safest aviation transportation system in the world. That

has been built, I believe, out of the voluntary compliance that we

have seen in the aviation community with NTSB investigations.

Programs like FOQWA and the Aviation Safety Reporting System

Program run by NASA, have put us in a situation where I believe

now we are almost close to 2 years without a major aviation transportation accident in our country.

I am speaking today on the basis of policy. I believe in a policy

that includes obviously industry compliance, voluntary reporting

systems, and a sound regulatory framework in this situation obviously at the State and Federal level. I think there is certainly an

appropriate place for criminal penalties, but it is my belief—based

on my own experience—that the present trend toward the criminal-
46

ization in the Clean Water Act for a criminal penalty, without

knowing or willing conduct, will have a chilling effect on the

Board’s investigations, and will not achieve what Ms. Steinzor and

others in the environmental community might want by substituting

the Justice Department as the regulatory authority in terms of

pipeline or clean water safety.

Senator JEFFORDS. Thank you.

Thank you, Mr. Chairman.

Senator Crapo [resuming the chair]. Thank you very much, Senator Jeffords.

Senator Inhofe.

Senator INHOFE. Thank you, Mr. Chairman.

Mr. Fuller, I have two very short questions.

First of all, welcome back. I always enjoy your testimony, although I was not here to hear your opening statement. You were

minority staff under Lloyd Bentsen back during the formulation of

all this.

Under 407(l) dealing with uncontaminated water in terms of

storm water runoff, would you characterize what you felt at that

time was the intent of the legislation as it was formulated?

Mr. FULLER. That issue is one that arose in the context of dealing with storm water generally. My recollection of it was that because we were dealing with essentially water flows over ground,

that the effort was designed to try to say we did not want to add

another permitting burden to the process of developing and producing oil and natural gas without there being some contamination

that needed to be addressed.

There had been issues that had been raised about the application

of the NPDES program broadly to that activity. Our intent was, as

we were working on it, to try to come up with a cut-point that basically said, ‘‘Well, if it is contaminated, then——’’

Senator INHOFE. The test was whether or not it was contaminated?

Mr. FULLER. Yes, sir; it would be captured under the NPDES

permit under that section. If it was not, then it would not require

a permit.

Senator INHOFE. I notice in my notes here that Mr. Lozeau’s testimony accuses the oil industry of being in back room negotiations

with the EPA on the SPCC rules and definition of waters of the

United States. Mr. Fuller, would you are to characterize those negotiations?

Mr. FULLER. Well, I think the reference in the testimony has to

do with litigation that was filed by some parts of the oil industry

with respect to the SPCC Plan requirement, the new rules and regulations. IPAA was not a part of that litigation so I do not know

any of the details there.

What I can say is that one of the issues in developing a SPCC

Plan is whether it has an effect on navigable waters. There are two

tests. You have to be a facility and you have to have an effect on

navigable waters. That is what triggers the need to do a plan.

When these regulations were put together—they were actually

put together over a decade or more—and became finalized, during

that same period of time the issue of the so-called SWANCC deci-
47

sion arose which called into question exactly what the scope of navigable waters are.

Another process is underway to try to address that question, to

try to come up with a clear definition and a consistent one of what

constitutes navigable waters. If you are a producer, and particularly a small producer like my members are, you now are looking

at this requirement that says that you have to have a new Plan

requirement. If it goes forward under the structure that it is currently written, you have an effect on navigable waters.

But what constitutes a navigable water while this other issue remains is unsettled. From our perspective, we believe that the first

issue needs to be settled in some clear fashion before we try to then

broadly apply new plan requirements based on an uninformed

sense of what navigable waters are.

The reason why that becomes important to somebody like my members is that these plans are costly. They can cost $20,000. Just

to give you an idea, a marginal well has a break-even point of

about $19.50 a barrel. So, where prices are now, that means that

the average well makes about $20 a day. If it costs $20,000 to do

an SPCC Plan, that is 1,000 days worth of profit from that well.

I do not believe that our members want to spend that kind of

money for something that turns out to be unneeded because the

definition is different. So it is the definition of navigable waters

that is driving what happens with SPCC, and not the other way

around.

Senator INHOFE. I appreciate that very much.

I have one last thing, Mr. Chairman. In my State of Oklahoma,

approximately .00126 of the oil produced in Oklahoma was spilled

in 2002. That statistic, I think, is supposed to be pretty accurate.

That is not a very high spill rate.

I would just like to ask you, Mr. Fuller, in your opinion, is there

a problem with oil spills that was not being met with the existing

rule because no great improvements were made during that time?

Mr. FULLER. Those are all based on procedures that had been in

place for decades. The SPCC requirement has been around since

shortly after the Clean Water Act was passed in 1972. Plans had

been in place. These new requirements are all changes to those

plans.

What that spill data says, and what we have been trying to say

for a long time, is that the existing program has worked. Apart

from that, whether there are Plans or not, we still have a responsibility to respond to oil spills if they occur.

What we are dealing with here is really a planning requirement,

not a response requirement. I think the record in Oklahoma and

other States demonstrates that the existing planning requirements

have been successful. We have not seen the type of need to make

these changes that we would expect if they were a logical change.

Senator INHOFE. That is a very good answer. Thank you very

much, Mr. Fuller.

Thank you, Mr. Chairman.

Senator CRAPO. Thank you very much.

In the interest of time, I am going to forego my questions.

Does anybody have any further questions?

Senator JEFFORDS. I do.
48

Senator CRAPO. Senator Jeffords.

Senator JEFFORDS. Mr. Hall, and Ms. Steinzor, your testimony

implies that the Clean Water Act precludes the use of the same

tools used by other Agencies to elicit testimony from people who

may be criminally liable in an event.

Is the Government somehow precluded from offering immunity

under the criminal negligence section of the Clean Water Act?

Mr. Hall.

Mr. HALL. In terms of the NTSB, the NTSB does not have the

authority to grant immunity in our investigations. We rely on voluntary compliance. Again, I believe that criminal penalties, where

again it is for simple negligence, and not a knowing or willing act,

such as in the Clean Water Act, does not work as an effective deterrent in terms of preventing future events.

The success, Senator,—and I know you are familiar with a great

deal of this as well—in accident investigation, and particularly

where we are entering this age of technology, is to understand obviously the various change in the accident sequence, whether it be

technology or whether it be human factors so that we can put in

place effective deterrents to better protect our society.

For example, we had a recent accident in California with a very

elderly driver who probably, with an unintentional act. A number

of individuals were killed in an open air market where they had

been no barriers and no protections put in place for separation between the motorists and the pedestrians.

To criminalize these types of investigations as far as the NTSB

is concerned, I believe is going to end up in a situation where we

are going to be unable to learn from accidents, and therefore, create statutory responses and appropriate standards and policies

within the industry.

Let me say very clearly that where there are intentional acts, intentional wrongdoing, I would be the very first to say that the use

of criminal penalties are necessary and appropriate. I respectfully

believe that this is having unintended consequences. My purpose of

being here today is to ask the wisdom of this committee and this

Congress and look at that to see if they agree.

Certainly, on any issue of this nature, there are two sides of any

discussion. I am here today to speak to you based on my experience

at the National Transportation Safety Board over 7 years in trying

to work in this area to advance transportation safety.

Senator JEFFORDS. Ms. Steinzor.

Ms. STEINZOR. Senator Jeffords, I appreciate an opportunity to

respond. While you were voting we had a conversation about specific cases that have been brought under 309. Mr. Hall says he is

closely reading this statute.

It is worth noting that there is not a single case that he can raise

that has actually been brought under this provision where an innocent person who had a simple accident was prosecuted. I think that

is very telling.

The cases that have come up that we have discussed involve very

willful carelessness, and in fact, have involved deaths and great

tragedies for the environment. For example, the Exxon Valdez case

was premised on negligence because great damage was caused to
49

the environment and there was a belief that the company had been

very careless in screening its employees in that case.

As for voluntary compliance, I am confused here. When Mr. Hall

was with the NTSB, as your question to him before suggested, he

was decrying the lack of cooperation by the oil industry with these

investigations. It is also true that you in your wisdom enacted very

strong legislation regulating pipeline safety. I do not think there is

anyone here who would say that all we need to do is leave folks

alone and they will voluntarily choose to do the right thing. That

was not the reaction to the Olympic incident which caused very serious damage.

Finally, the Justice Department has complete authority to grant

immunity to witnesses that it feels it needs to pursue an investigation, or if its sister Agency, the NTSB needs to have a witness

granted immunity, this is one Government. People talk with each

other. Immunity is always an option. There are also ample policies

that encourage people to come forward voluntarily. If they cooperate, they are given special consideration in the way that they are

punished, civilly or criminally.

After listening today, I think I understand the arguments here

less well than I did when I read a lot of materials about them. I

am quite perplexed.

Senator JEFFORDS. Mr. Hall.

Mr. HALL. Senator, Ms. Steinzor may be confused. I am not. Let

me say that I believe she misspoke. I did not say that the industry

did not cooperate with the investigations of the NTSB. What I stated was that there had been a failure to act by both the Congress

and the industry on some 14 years of recommendations the Board

had made for simple basic things such as regulatory requirements

for training and testing that needed to be put in place.

Regretfully, because of that horrible tragedy at Olympic, we do

have a new Pipeline Safety Act. Congress has addressed, and the

industry has, I believe, put in place, a number of the Board’s recommendations.

I am speaking here, Senator, on the basis of what I believe is

good policy. That is my purpose. I have spoken on this issue. I held

a symposium while I was Chairman of the NTSB on this issue.

This is not an issue that I have not raised as much concern about

as I did at the time I spoke very forthrightly. I thought about the

industry and the Government’s responsibility and actions in the

pipeline area.

I have also spoken out on my concern about the criminalization

and having the Justice Department become the regulatory in this

Nation for transportation safety, and putting citizens that are not

in a willing or knowing act, at peril for the whim of a criminal

prosecution by whoever a local prosecutor might be.

Senator JEFFORDS. Thank you.

Thank you, Mr. Chairman.

Senator CRAPO. Thank you very much, Senator Jeffords.

Our time for the hearing is rapidly expiring but I did want to ask

one followup question on this interchange right here. This will be

both to Ms. Steinzor and to Mr. Hall.

Ms. Steinzor, if I understand your testimony correctly, you have

pointed out that there are no prosecutions of a purely negligent
50

conduct under this statute. If I understand Mr. Hall’s testimony

correctly, he is saying that the threat of such a prosecution is having a chilling effect on people bringing forward information.

I would like both of you to just discuss that for a moment. Is

there, in fact, a chilling effect taking place here on the ability of

the Government to get adequate information and to get the kind

of compliance that is necessary?

Ms. STEINZOR. I believe that what I said was that there is no

case that Mr. Hall is willing to describe to you that has happened

in the real world where people are totally innocent, who never did

anything wrong, were prosecuted criminally. I do not know how

you measure whether it is having a chilling effect. I do know that

when I look at the prosecutions of the people that were involved

in these cases, I do not care if it chilled them from cooperating because they were punished for very bad acts.

What Mr. Hall seems to be asking you to do is to remove any

penalty for behavior that is grossly careless. That is what the cases

show.

I think you would be more comfortable considering an amendment of the law if there was one case that had been brought forward here where when you looked into the facts. All of these convictions have been upheld through the Court of Appeals. The Supreme Court has resisted reviewing them for whatever reason.

These cases have been litigated very heavily. As the facts were developed, not one single case of all of these is worth describing to

you as an example of some innocent sympathetic person who just

wandered into accident. I would suggest that is telling.

Senator CRAPO. Mr. Hall.

Mr. HALL. Well, Mr. Chairman, let me say that I came here

today to discuss the policy. That was my concern. I think that is

reflected in both my oral and written testimony to the Board. It

has been my personal experience that it is having a chilling effect

on the NTSB investigations. That is why I convened the symposium on this subject. That is why I have chosen to come here today

to make this testimony to all of you.

I worked on Senator Muskie’s staff at the time the Clean Air Act

and the Clean Water Act were being written. I worked for 7 years

in the State of Tennessee in Governor McWhorter’s office trying to

work on environmental issues and concerns. I worked 7 years at

the Board.

I also believe, however, in the fundamental fairness of our Government and our country as it pertains to the treatment of individuals. Since Ms. Steinzor is relying on a case, I will just close by

quoting a citation from the Supreme Court in which the Court said,

‘‘in 1952 that the contention that an injury can amount to a crime

only when inflicted by intention, is as universal and persistent in

mature systems as law, as belief in freedom of the human will and

a consequent ability of the normal individual to choose between

good and evil.’’

Where someone knowingly and willingly performs an act, I do

think there is an appropriate place for criminal law. I do think that

this provision can have a chilling effect. I think that the nose under

the camel’s tent of having the Justice Department become the regu-
51

lator for transportation safety in our country, is bad public policy.

That is my personal opinion.

I appreciate very much the Senator’s patience and time in listening to my opinions.

Senator CRAPO. Thank you very much.

We thank everyone on the panel.

Senator JEFFORDS. Mr. Chairman, I would like to have just one

further question.

Senator CRAPO. Senator Jeffords?

Senator JEFFORDS. Mr. Lozeau, what will be the impact on clean

water protections if the oil industry lawsuit on SPCC Plans results

in a settlement agreement that modifies the definition of the waters of the United States?

Mr. LOZEAU. Obviously, Senator, first of all, we are worried that

the 10-year policy we heard about is now being replaced with a

back room discussion which the environmental organizations are

not invited to. Out of that will come some indication by EPA that

industries exaggerated interpretation of the Supreme Court’s discussion of the waters of the United States issue in the solid waste

case has some merit of some kind.

We would be worried that the EPA would make a decision in

that back room that would withdraw a definition of waters which

has been in place in other parts of the regulations for the past 30

years.

There is no issue as to the definition of navigable waters. What

we have is industry exaggerating the import of the Supreme

Court’s decision, trying to expand it beyond the terms that the

Court laid down on paper, and now using that argument to set up

these discussions out of earshot and short circuit what was a long

and thoughtful process, to come up with that regulation in the first

place.

That is what we are worried about.

Senator JEFFORDS. Thank you.

Thank you, Mr. Chairman.

Senator CRAPO. Thank you very much.

Again, we want to thank all the panelists for the time and effort

you have put in, not just to come here and testify in person, but

also in preparing your written testimony. Even before the hearing

began with the benefit of all the written testimony, we have had

a significant amount of activity and evaluation going on with regard to the suggestions of the members of these three panels.

We are very concerned about the Clean Water Act and the proper

implementation of the Act. We want to get to the right public policy

as we move forward. Your testimony here today has helped us. We

again thank everybody for their participation.

With that, this hearing is adjourned.

[Whereupon, at 12:05 p.m., the subcommittee was adjourned, to

reconvene at the call of the chair.]

[Additional statements submitted for the record follow:]

STATEMENT OF HON. LINCOLN CHAFEE, U.S. SENATOR FROM THE STATE OF

RHODE ISLAND

Thank you Chairman Crapo and Senator Graham for holding this important oversight hearing on implementation of the Clean Water Act. I appreciate the opportunity to raise an issue of great concern for my state and region—the availability
52

of Clean Water Act Section 319 funding for development and implementation of the

Phase II Storm Water Program.

Yesterday, I visited the site of a devastating fish kill in Rhode Island, caused by

the absence of dissolved oxygen—an anoxic event—in an area known as Greenwich

Bay. As the former Mayor of the city of Warwick, which encompasses Greenwich

Bay, I had undertaken a massive bond issue several years ago to provide funding

for improving septic systems and restoring the water quality of this area. Visiting

the fish kill site yesterday, I was disheartened to learn how much more needed to

be done. In combination with other factors—including the ongoing deficiencies of

private septic systems—stormwater has been found to be a significant contributor

to the nutrient loads entering Greenwich Bay and disrupting its natural balance.

In Rhode Island, as well as many other highly urbanized areas, stormwater ranks

high on the list of top-priority pollution sources impacting the water quality of our

lakes, rivers, streams, and bays. As states proceed with development of the federally

mandated Phase II Storm Water Program, the costs of implementing the requirements of the program are becoming a major concern for states and municipalities.

At issue is whether funds provided to states through Section 319 of the Clean

Water Act may be used for the purposes of developing and implementing the Phase

II Storm Water Rule that went into effect in March 2003. Last year, this Committee

approved an amendment, signed into law as part of the Great Lakes and Lake

Champlain Act of 2002, that provided a 1-year fix, during fiscal year 2003, for states

to retain maximum flexibility in utlizing 319 funding for addressing their

stormwater concerns.

In recent years, the EPA Nonpoint Source Program has increasingly focused on

impaired waters and stormwater-related impairments. Although the Clean Water

Act appears silent on the eligibility of Section 319 funding to address storm water

or NPDES-related issues, EPA has thus far interpreted the Act to prohibit 319

funds from being used for implementation of the Phase II Storm Water Program.

In recent months, a lack of clarity also exists on the use of Section 319 funding in

geographic areas covered by the Phase II Program. Phase II applies to all populated

areas of 1000 people or greater per square mile. In Rhode Island, nearly all of the

state’s impaired waters are included in Phase II areas. Given a strict EPA interpretation of the law, Section 319 funds could not be used in any of these areas.

In the weeks ahead, I will be exploring the idea of introducing a bill to provide

permanent authority for states to utilize Section 319 moneys for development and

implementation of the Phase II Storm Water Program. I look forward to working

with my committee colleagues and EPA on this legislation.

STATEMENT OF HON. BOB GRAHAM, U.S. SENATOR FROM THE

STATE OF FLORIDA

Clean water. Mankind, and virtually every other living thing on this planet, needs

clean water to survive. And yet, after 30 years of progress, our clean water programs are under assault once again. Under this administration, pollution restrictions are being rolled-back, enforcement of the remaining regulations is being curtailed, and much of the fresh water in the arid west is being handed over to a small

circle of industrial interests. All of this will harm the average American.

There is no question that clean water is one of our most important resources. For

human beings, water is actually more important than food. A person will die from

dehydration more quickly than from starvation. The harmful effects of sewage in

drinking water has been known for many years. And even though they are less obvious in the short-term, the harmful effects of industrial and chemical pollutants were

well known long before Congress passed the Clean Water Act in 1972.

But we humans have a long history of misusing our water resources. Historically,

we have used our rivers, our streams and even the oceans as a free disposal system

for every imaginable type of waste. Abuse of our waters reached new heights during

the industrial revolution. The industrial revolution was one of the principal factors

that made our modern civilization possible, but it was also a chief source of new

pollution problems. It led to population growth and concentration, it exacerbated existing pollution problems, and it created new types of pollution, such as massively

concentrated natural pollutants and a host of artificial pollutants, all on a scale

never before imaginable. In retrospect, we now know that our industrial prowess developed much more quickly than our environmental awareness.

Once upon a time we believed that swamps and wetlands were the sources of disease, and that it was a lofty goal to drain them or fill them. Now we now that these

lands are incubators for many marine species that are critical elements of the food
53

chain, and that they act as filters to remove countless tons of pollutants from the

land and water every year.

Once upon a time, large pipes discharging tons of untreated waste into the rivers

were a sign of economic strength. Now we realize that it is unacceptable for a river

to be so polluted it can catch fire.

Once upon a time we thought the oceans were the ultimate disposal system—that

they were so large that they could absorb any amount of waste we dumped into

them. Now we know that even the oceans have their limits. We have seen the beach

closings. We have seen whales that died after eating plastic bags or balloons. We

have seen fish, birds and other animals that died after getting entangled in carriers

from six-packs of drinks and other trash. And we know now that many of the fish

in the oceans are contaminated by mercury and other chemicals that we have produced.

Once upon a time we thought that only large ‘‘navigable’’ waters were worth protecting. Now we know that dumping pollution in small streams and ponds is often

more harmful. There is less water to dilute the pollution, the types of fish and animals in those waters are often less tolerant of pollution, and eventually it will find

its way into the navigable waters.

The modern era of water protection was born in the 1940’s and 50’s when the Federal Government began providing financial assistance for local jurisdictions to construct sewage treatment plants. The current basis for most of our water pollution

control efforts is the Clean Water Act of 1972, which had a stated goal of making

most waters ‘‘fishable and swimmable’’ by 1983, and to eliminate the discharge of

pollutants to ‘‘navigable’’ waters by 1985.

We have fallen short of those lofty goals. There has been progress, but not

enough. According to EPA, the percentage of our nation’s waters that meet water

quality standards has increased by one-third to two-thirds since the Clean Water

Act went into effect. But EPA also says approximately forty percent of our stream

miles and forty-five percent our lake acres are still impaired, and forty-four states

have some sort of fish-consumption advisory in effect.

After 30 years of work, and billions of dollars, why haven’t we been more successful? There are many factors, but I believe a major factor is that Congress has been

inconsistent in its demand for water quality improvement. Rather than demanding

that EPA enforce the Clean Water Act, Congress has more often undercut it. Authorizations for several provisions, including assistance to states, research, and general EPA support, were allowed to expire in 1987. Authorization of wastewater

treatment funding, the program that started it all, expired in 1994. The fact that

Congress allowed these authorizations to expire, but continues to appropriate funds

for them, suggests that Congress would like to abandon these critically important

programs but is afraid of the public’s reaction. So it is not surprising that EPA and

the states have been hesitant to enforce the Clean Water Act consistently. That is

why some states refused to make water quality determinations until the courts told

them to. That is why some states fall behind on their discharge permit reviews and

do not always enforce even the outdated permits that they have issued.

And all of this is why our citizens are compelled to use their time an money to

sue the states and the Federal Government demanding implementation of the laws

Congress enacted. And what is the government response? Too often, government

sides with the polluters, against the citizens. Although the Clean Water Act explicitly provides for citizen suits, all too often government’s first action is to ask the

court to deny citizens the standing to sue. The result is that with each case it becomes harder for citizens, the very people the laws should protect, to play a role

in ensuring that Federal and state governments to do what was promised with such

fanfare when the laws were passed.

Its time for Congress to step up to the plate. This Congress should:

• Recognize that every citizen of this country has a right to clean water;

• Recognize that the hidden costs of water pollution far exceed the cost of prevention;

• Ensure that wastewater funding programs are strengthened and made permanent;

• Set a new schedule to eliminate the discharge of pollutants into waterways from

point sources;

• End the debate about ‘‘navigable’’ waters by expressing the Congress’ intent to

prohibit the discharge pollutants into any waters or water courses, including

aquifers;

• Set procedures for periodically updating the list of regulated pollutants to keep

pace with new scientific findings;

• Take steps to protect groundwater recharge areas; and

• Get serious about addressing nonpoint water pollution.
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Once upon a time, United States common law held that it was a nuisance or tort

for one person to emit pollution that harmed another. That long-standing legal precept was another casualty of the industrial revolution because judges were looking

for ways to allow economic expansion. We suffer from that legacy today. Rather that

saying our citizen’s have the right to be free from pollution caused by others, our

environmental regulations operate more like it is the businesses that have a right

to pollute.

It is time to reassess our national policy on water pollution. We need to decide

which ‘‘right’’ is more important. Who’s rights should we be protecting, citizens that

want to have safe water to drink and swim in, or industries that want permission

to continue polluting the environment?

I do not profess to know the best way to resolve these issues. But I do know that

limiting the ‘‘intensity’’ of emissions will result in more pollution, not less. We cannot continue down that path if we want our children to be able to swim in the local

pond or eat the fish they catch. We need to cap, and then reduce, the total aggregate

amount of pollution from all sources.

We made significant progress during the past 30 years, and we grew the economy

at the same time. I believe we can continue doing both. I ask the members of this

committee, and the entire Congress to join me in embracing these goals.

STATEMENT OF G. TRACY MEHAN III, ASSISTANT ADMINISTRATOR FOR WATER, U.S.

ENVIRONMENTAL PROTECTION AGENCY

Good morning, Mr. Chairman and Members of the Subcommittee. I am Tracy

Mehan, Assistant Administrator for Water at the U.S. Environmental Protection

Agency (EPA). I appreciate this opportunity to discuss today’s water quality challenges, and the Bush Administration’s vision for protecting and restoring our Nation’s watersheds.

INTRODUCTION

Last year, in a hearing on the 30th anniversary of the Clean Water Act (CWA),

I testified before the full Committee regarding the tremendous progress that our

Nation has made over the past three decades in addressing water pollution problems. Thanks to the investment of many local, Tribal, State, Federal, public and private partners we have successfully controlled the most egregious sources of pollution

from municipal sewage treatment plants and industry. Many communities now

enjoy the environmental and economic benefits of cleaner water, such as thriving

lakefront communities in Cleveland and Chicago, restored fisheries in Lake Erie

and the Potomac River, and increased revenues from real estate investment, recreation and tourism in many coastal communities such as Boston.

Despite those success stories, we recognize that many challenges remain. There

are signs that some of our waters are in distress. States are reporting increases in

beach closures and fish consumption advisories, and a large zone of low dissolved

oxygen in the Gulf of Mexico.

Our water programs are at a historic turning point. Today I first want to share

with you our vision for the future and to discuss some of our top priorities: our efforts to reorient our programs toward a watershed approach; establishment of a national-scale water quality monitoring and assessment program; better implementation of the Total Maximum Daily Load (TMDL) program; and, greater reliance on

innovative tools such as trading and watershed-based permitting. All of these activities are critical in addressing today’s water quality challenges more effectively and

efficiently. Finally, I will address our efforts to control stormwater runoff.

THE WATERSHED APPROACH

Now that we have largely addressed problems from discrete point sources of pollution, we need to turn our attention to threats that are much more difficult to control, such as: nutrient over-enrichment, urban runnoff, groundwater/surface water

interactions, invasive species, microbes in drinking water, and atmospheric deposition. These complex problems demand a more comprehensive or watershed-based

approach that focuses less on the ‘‘end of pipe’’ and instead targets pollutants coming from the land—nonpoint source pollution or diffuse runoff. This approach to environmental management brings together public and private sector efforts to address the highest priority problems, looking at all sources of pollution within

hydrologically defined geographic areas. The approach is grounded in sound science,

characterized by robust stakeholder involvement, and focused on environmental results.
55

Because most water quality problems are best solved at the watershed level rather than at the individual waterbody or discharger level, we need to examine how

we can best integrate the efforts of local watershed groups. Over the past decade

and a half, we have seen the rise of literally thousands of citizen-based watershed

organizations working to protect and restore their lakes, rivers, wetlands, and estuaries.

To provide support for these locally driven watershed protection efforts, in May

EPA announced nearly $15 million in grants to 20 watershed organizations selected

as part of President Bush’s new Watershed Initiative. The grants will support community-driven initiatives to improve water quality and enhance outdoor recreation.

EPA intends to announce a solicitation for new Watershed Initiative nominations

for fiscal year 2004. We are confident that these projects will result in cleaner water

for these communities and will serve as models for other communities. We are

grateful for Congress’ enthusiasm for this Initiative and ask support for the President’s request of $21 million for the Initiative for next fiscal year.

MONITORING AND ASSESSMENT PROGRAMS

As we transition from a technology-based approach to a water-quality based-approach, and begin to reorient our programs on a watershed basis, it is imperative

that we strengthen our water quality monitoring and assessment programs. In the

1970’s, monitoring was primarily carried out at or near the end of the pipe, to measure how effectively individual permits were working. Today, however, we must be

able to assess the inputs of millions of diffuse sources of pollution, such as sediments from construction sites, fertilizers from agricultural lands, and even pollutants coming from the air. And, to enable the use of more innovative tools and flexible approaches, such as trading between pollution sources, we need better baseline

monitoring data to help us keep score.

How clean is the water? We currently have enough information to allow us to

know what the conditions are in some site-specific areas, but as stated in EPA’s

Draft Report on the Environment 2003, ‘‘At this time, there is not sufficient information to provide a national answer to this question with confidence and scientific

credibility.’’

Working with State, Federal, tribal, and local agencies, with the private sector,

with universities and with the public, we must be able to provide answers to some

very fundamental questions such as: How clean is the water? Is it getting any better? Are our management actions working? Without answers to these questions, we

are challenged when it comes to making decisions about how best to address water

quality problems and allocate our limited resources for cleanup, pollution prevention, and restoration.

Currently, most States monitor only a portion of their waters. While some States

are using new approaches like statistically based surveys to characterize the overall

condition of waters from a representative sample, many are still in the beginning

stages of using these tools. And, because State standards and assessment methods

vary across State lines, we find we cannot add up the data. In varying degrees,

States are working to improve their monitoring systems, and EPA is working with

them to help them identify and implement the key tenets of good monitoring programs.

Many Federal Agencies have, over the years, conducted a range of monitoring programs that have yielded valuable water quality data. However, none of them were

designed to characterize the overall national condition of the waters of the U.S. in

a comprehensive, statistically valid fashion. Because of the lack of comprehensive,

national-level data, we cannot yet systematically document whether or not our pollution programs are effectively improving water quality on a national scale.

Besides EPA’s recent Draft Report on the Environment 2003, the Heinz Center

Report on the State of the Nation’s Ecosystems, and various reports from the General Accounting Office, the National Academy of Public Administration and others

show that there are major gaps in aggregate nationwide data on water quality and

overall ecosystem health. These reports call for a national investment to build a

cost-effective, scientifically sound foundation for our water quality management decisions.

We need, therefore, to take four critically important steps to achieve our goal of

better monitoring for better management. First, we need to work with States to improve and strengthen State monitoring programs so that they can generate credible,

comparable, comprehensive information. EPA is currently working with the States

to ensure that they all achieve, for the first time, a set of basic monitoring elements

including a common set of core water quality indicators that can be compared over

time and across State boundaries. In March 2003, EPA provided States guidance on
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such elements for a State monitoring and assessment program. Second, we must

promote the use of multiple monitoring tools such as statistically based surveys,

predictive monitoring, and remote sensing to support the full range of water quality

decisions. Statistically based surveys, such as EPA’s Environmental Monitoring and

Assessment Program for example, provide a scientifically rigorous way to sample a

subset of waters and then provide an estimate of the quality of all waters, along

with a statement about the uncertainty surrounding that estimate. Third, we must

manage our electronic data systems to share and improve compatibility of monitoring information and make data more accessible to the public. And fourth, perhaps

most importantly, we must build stronger partnerships at the Federal, State, Tribal,

and local levels to facilitate the sharing of comparable data and the use of multiple

monitoring tools.

We need to continue working with States, Tribes, and our Federal partners to

identify what investments are needed for long-term improvements in water quality

monitoring. We need to look for efficiencies through new monitoring approaches,

such as statistically based surveys or the use of models, through better collaboration, and through data sharing. And, we need to secure commitment from all stakeholders to better monitoring for better management of our water resources. We will

be able to target our control actions wisely, and achieve the level of protection we

need.

THE TOTAL MAXIMUM DAILY LOAD PROGRAM

As we look to manage our watersheds more holistically, the Total Maximum Daily

Load (TMDL) program is one of our key CWA tools. In enacting Section 303(d), Congress retained a water quality-based approach for waters that remained polluted

after the application of technology-based and other controls. TMDLs do not themselves require compliance; they simply establish a pollution budget for impaired waters. This information is key to determining what actions should be taken in a watershed to address ongoing water quality problems. The TMDL is then translated

into permit requirements for point sources. For other pollution sources, the program

relies on local, State, Tribe and Federal watershed plans and programs to achieve

implementation of the TMDL.

This part of the CWA was not a priority for about 20 years while EPA focused

primarily on industrial and municipal dischargers. Few States were addressing the

TMDL requirements in the CWA until the wave of litigation began in the early

1990’s, when environmental groups, anxious to get the program off the ground, filed

lawsuits in a total of 40 States. EPA and States now operate the TMDL program

pursuant to judicial settlements or decrees in 22 States. Prior to 1999 fewer than

1,000 TMDLs were completed. As of today, States and EPA have approved or established about 8,000 TMDLs. States and EPA continue to work to improve the quality

of TMDLs and use TMDLs to achieve water quality goals on a watershed-basis.

Because TMDLs are water-quality based, they can be information-intensive, sometimes prompting widespread and systematic monitoring to identify and characterize

problems and priorities, and to track progress in solving them. Public involvement

can contribute to this information process both directly and through increased visibility for problem-solving. In addition, such public involvement can help make sure

that TMDLs get translated from allocations into action, because information

brought before the public is itself a driver for action.

WATER QUALITY TRADING

EPA believes that water quality trading, which allows sources to find the least

cost alternative to achieving clean water, can be a critically important tool for restoring impaired watersheds efficiently and cost effectively. In its analysis of the

Clinton Administration’s Clean Water Initiative, EPA concluded that the total potential savings from all types of trading (point to point, point to nonpoint, and

pretreatment) ranges from $658 million to $7.5 billion annually. Another study of

three watersheds in the Midwest found that the cost of controlling phosphorus loadings from point and nonpoint sources could be reduced by 40 percent in Wisconsin

and by more than 80 percent in Michigan when trading was applied between point

and nonpoint sources. These examples illustrate the potential for water quality trading to reduce pollution with greater efficiency and to achieve significant water quality and environmental benefits.

Market-based approaches to improving the quality of the environment are not

new. Air emissions trading programs date back to the Acid Rain program and the

lead-in-gasoline phase-down programs implemented under the Clean Air Act. These

and other programs have clearly demonstrated that market-based approaches can

dramatically and quickly reduce emissions at substantially lower costs.
57

In January, EPA issued its 2003 Water Quality Trading Policy. The Policy provides guidance on aligning trading programs with the Clean Water Act and implementing regulations and identifies common elements of credible trading programs.

The Policy supports trading to improve or preserve water quality in a variety of circumstances. In unimpaired waters, trading may be used to preserve water quality

by offsetting new or increased discharges of pollutants. In waters impaired by pollutants, trading may be used to achieve earlier pollutant reductions and progress

toward water quality standards in advance of the development of a TMDL. And,

trading may be used to reduce the cost of achieving reductions contemplated by a

TMDL. The Policy highlights existing Clean Water Act flexibility that can facilitate

trading programs and emphasizes the need for accountability and safeguards to ensure that trading programs protect our resources and maintain progress toward attaining water quality standards.

Key Principles and Safeguards for Water Quality Trading

A number of core principles and environmental safeguards form the foundation

of EPA’s Water Quality Trading Policy, and these principles help ensure that trading programs create actual pollutant reductions, avoid hotspots, provide accountability for trading activity, and involve the public:

• Trading programs operate within the existing regulatory structure and are consistent with all aspects of the Clean Water Act.

• Trading programs are designed to meet water quality goals including TMDLs.

• Trading programs ensure that water quality standards are not exceeded.

• Trading programs retain enforceability of National Pollutant Discharge Elimination System (NPDES) permits.

• Trading can be used to comply with water quality-based effluent limitations;

however, EPA does not support trading to comply with existing technology-based effluent limitations except as expressly authorized by Federal regulations.

• Trading programs include accountability mechanisms for nonpoint sources that

trade to ensure that promised pollutant reductions actions are taken.

• Trading programs are visible and engage the public in program design.

• Trading programs monitor to ensure anticipated load reductions are achieved,

or to take corrective action if loads are not adequately reduced.

• Trading is voluntary and based on collaboration among watershed stakeholders.

States and Tribes may choose to establish trading programs in accordance with

EPA’s Policy. There is no requirement to implement or participate in a trading program.

Water Quality Trading: Examples of Environmental Innovation

We already see evidence that water quality trading programs work. For example,

the State of Connecticut’s nitrogen credit exchange program is expected to save the

State an estimated $200 million in control costs through trading, while also making

significant gains in cleaning up pollutants in Long Island Sound.

In the Cherry Creek watershed in Colorado, a trading program conducted in conjunction with a TMDL has reduced phosphorus loads to the Cherry Creek watershed

by approximately 450 pounds per year. The nonpoint source projects that were implemented to create the phosphorus credits have provided ancillary environmental

benefits such as flood control and wildlife habitat. A partnership trading effort in

Illinois’ Piasa Creek along the Mississippi River will save several millions in capital

improvements to an aging drinking water treatment facility, while reducing sediment loads to the Mississippi River. The Grasslands selenium trading program in

California, the nation’s first nonpoint source cap and trade program, utilized an innovative penalty and rebate system to create economic incentives to substantially

reduce selenium levels in Kesteron reservoir that were adversely harming bird populations.

Experience with trading has also taught us that trading will not work everywhere. For example, the level of pollutant reductions that would need to be achieved

from all sources in a given watershed may be such that additional, or surplus, reductions cannot be achieved so as to allow trading. Certain watersheds may not

have the number and mix of sources necessary for trading to be successful. In addition, trading programs that work in one State or Tribal area may not be successful

in others. Just as each watershed has unique characteristics and needs, each trading program will be tailored by State agencies and stakeholders to meet environmental goals. EPA recognizes that States and Tribes face diverse water quality

issues, sociological and economic factors and political considerations. EPA’s Trading

Policy is intended to provide consistent guidance, while allowing sufficient flexibility

for States and watershed stakeholders to create workable solutions.
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EPA believes that water quality trading programs, where carefully designed and

implemented, can be powerful and effective tools for States, Tribes, local governments and citizens to use in achieving the goals of the Clean Water Act, while also

saving taxpayer dollars.

WATERSHED-BASED PERMITTING

An important part of the watershed approach includes fostering innovations that

provide data and information in ways that allow stakeholders at the local level to

better assess and address their unique problems. Watershed-based permitting is one

such innovation. To clearly communicate support for watershed-based permitting, on

January 7, 2003, we issued the Watershed-based Permitting Policy.

Watershed-based NPDES permitting is an approach to developing NPDES permits for multiple point sources located within a defined geographic area (watershed

boundaries). Through this approach, NPDES permitting authorities consider watershed goals and the impact of multiple pollutant sources and stressors, including

nonpoint source contributions. Watershed-based permitting may encompass a variety of activities ranging from synchronizing permit issuance within a basin to developing water quality-based effluent limits using a multiple-discharger modeling analysis.

To better understand how watershed-based permitting approaches work, EPA is

working with permit holders and State agencies to document different approaches

currently being implemented. The lessons learned from these approaches are documented in a series of case studies featuring watersheds across the country. The case

studies provide background information on the watershed, give an overview of the

permitting strategy or project goals, and describe the expected outcomes and measures of success. These case studies will provide stakeholders with the information

and lessons learned necessary for implementing this approach in other watersheds.

Current case studies include: the State of Connecticut and the Long Island Sound;

State of North Carolina and the Neuse River; and ConocoPhillips in Colorado. Municipal case studies include Louisville-Jefferson County, Kentucky; Sanitation District #1 in Kentucky; and Clean Water Services in Oregon. These case studies are

available on EPA’s web site at www.epa.gov/npdes. EPA has also been working with

municipalities through the CWA section 104(b)(3) grants program to investigate additional ideas and approaches.

To help interested parties implement watershed-based approaches, EPA published

draft Implementation Guidance in the Federal Register on August 25, 2003 (we are

soliciting comments until Sept. 24th). Technical Guidance, which will focus on developing permit requirements and procedural issues for permit development and

issuance, will be issued later this Fall. In addition, EPA is providing training course

materials, brochures, speaking at conferences and meetings all designed to create

a network for sharing lessons learned, and innovative approaches to NPDES permitting.

STORMWATER

I am informed that the Subcommittee is interested in the stormwater program,

particularly our efforts to implement the Phase II Rule that became effective on

March 10, 2003. Stormwater runoff from urban, agricultural, and industrial areas

is the most common problem affecting our nation’s rivers, lakes and coastal waters.

In the latest reports from the States, urban runoff was cited as the source of impairments on 34,871 miles of rivers and streams, 7.7 million acres of lakes, and 5,045

estuary square miles. EPA’s NPDES program addresses stormwater runoff from

urban as well as industrial areas.

Stormwater Phase I

The Clean Water Act directs EPA to address stormwater from urban and industrial sources, including construction sites. In 1990, EPA promulgated Phase I of the

stormwater program. That rule requires permits for the control of stormwater discharges for communities with populations over 100,000, construction sites disturbing more than five acres, and many categories of industrial facilities. Over the

last 13 years, EPA has worked closely with the States and municipalities to implement the stormwater program. Many have risen to the challenge and developed excellent, comprehensive programs. San Diego’s ‘‘Think Blue’’ campaign is a highly

successful effort that educates local citizenry on the impact of daily life on one of

the City’s most precious resources: the Pacific Ocean. The city of Austin, Texas has

developed a comprehensive program to protect the Edwards Aquifer and the famous

Barton Springs recreational area that includes local ordinances and comprehensive

educational and voluntary efforts and involves a wide spectrum of homeowners, de-
59

velopers, and industry. Another successful effort involved the cleanup of the lower

Charles River that runs through Boston. The city of Boston focused on detecting and

eliminating illicit discharges to its storm sewer system. This effort has lead to the

discovery and removal of dozens of illicit discharges and prevented over 1 million

gallons of contaminated flows from entering the River.

Stormwater Phase II Implementation

Phase II of the stormwater program requires smaller communities located in urbanized areas to develop and implement storm water controls to restore and maintain local water resources. Phase II also extends permitting requirements to construction activities that disturb between one and five acres of land.

At present, 45 States are authorized to administer the NPDES program and thus

issue permits, including storm water permits, in their respective States. These

States are also responsible for working with communities to implement the Phase

II requirements. Unfortunately, implementation of this program happens to coincide

with one of the most serious economic crises facing State and municipal governments. State governments are reducing their budgets and their staffs and are also

reducing the funds they normally provide to communities. These budget problems

are affecting the ability of States and communities to implement these new

stormwater requirements. In short, implementation is going a bit slower than expected.

There are two important milestones that are good indicators of State progress in

implementing the Phase II program—issuance of NPDES permits to municipal separate storm sewer systems (MS4s) and to construction sites disturbing 1 to 5 acres.

EPA has encouraged States to use general permits to cover all activity within a regulated category for the entire State—issuing one general permit for construction and

one for MS4s. To date, approximately 28 of the authorized States have issued permits for MS4s and approximately 34 have issued permits for construction activity.

Indications are that the other States are working hard to finalize these permits and

all are expected to have them finalized within the next year.

EPA was behind schedule in reissuing its construction general permit (issued on

July 1, 2003), and several of the EPA Regional offices (Regions II, VI, IX, X) still

have not issued permits for MS4s in those handful of States where EPA remains

the permitting authority. However, two of these Regions (VI, and IX) have proposed

permits.

We have anecdotal information that many communities did not meet the deadline

for applying for and obtaining permit coverage, often due to the fact that there was

no State permit in place under which they could apply for coverage. Because of the

real economic problems causing delays, EPA is taking a supportive approach to

helping States and communities come into compliance with these requirements. It

is also important to keep in mind that the Phase II regulation allows communities

5 years to develop and implement their programs; therefore, full implementation is

not expected until 2008.

To assist States and communities, EPA is working on a number of fronts. First,

financing is critically important. As you know, the 1987 Amendments to the Clean

Water Act created the State Revolving Fund (SRF) system. Every State and Puerto

Rico now operates a successful revolving fund that provides low-interest loans to

fund a wide variety of projects to clean up rivers, lakes, coastal waters. The President’s fiscal year 2004 Budget extends the Federal commitment to capitalize the

CWSRF through fiscal year 2011, providing an additional $21 billion in loans over

the next 20 years. We continue to work with each State and are encouraging them

to target their financing toward important water quality efforts, including

stormwater projects.

EPA has been working to develop useful tools to assist States and communities

as they implement this new program. EPA has developed a comprehensive ‘‘Menu

of Best Management Practices’’ to help communities plan design all aspects of their

stormwater programs. In addition, EPA has produced guidance on developing measurable goals to help States and communities evaluate the effectiveness of their programs. Finally, EPA has invested considerable effort in its stormwater website

(www.epa.gov/npdes/stormwater) to ensure that States and communities have the

tools and information they need.

Oil and Gas Extension

I understand that the committee is also interested in hearing about the extension

EPA recently finalized for oil and gas construction activities. When EPA wrote the

Phase II regulation over 5 years ago, we significantly underestimated the number

of oil and gas sites that would be affected. Since that time, EPA has become aware

of new information on the impact of the regulation on this industry indicating that
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it may impact as many as 30,000 facilities. Additionally, questions have been raised

about the appropriateness of some aspects of the program for these sites. Considering these factors, EPA decided to postpone the effective date of these requirements

until March 10, 2005. Over the next 2 years, we intend to analyze the impact of

these regulations on the oil and gas industry and to evaluate the appropriateness

of the program requirements.

CONCLUSION

All of the tools I have been discussing represent a major programmatic shift that

is necessary to make further progress in cleaning up America’s waters. It is time

to expand our focus: from an almost exclusively point source orientation to one that

examines all sources of pollution, including nonpoint; from relying largely on technology-based standards to a water quality-based approach; and, from emphasizing

inputs to focusing on environmental outcomes. We have made tremendous progress

in cleaning up our waters over the past three decades—an achievement that is even

more remarkable in view of substantial increases in our population. As a Nation,

we can be proud of how far we have come. These successes should strengthen our

resolve to complete the hard work ahead.

Thank you. I look forward to your questions.

RESPONSES BY TRACY MEHAN TO ADDITIONAL QUESTIONS FROM SENATOR CHAFEE

Question 1a. In March 2003, the Phase II Storm Water Rule went into effect, requiring States and municipalities to begin developing and implementing management plans and general permits for stormwater runoff in urbanized areas. Last

year, this Committee approved an amendment, signed into law as part of the Great

Lakes and Lake Champlain Act of 2002, that provided a 1-year fix for States to retain maximum flexibility in utilizing Section 319 funding for addressing stormwater

concerns. What is the current status of a State’s ability to utilize 319 funds for

Phase II programs and activities? What will the status be at the start of the fiscal

year 2004 budget cycle?

Response. Under the Great Lakes Legacy Act of 2002, States may use Section 319

funds that are appropriated in fiscal year 2003 ‘‘to carry out projects and activities

in the State related to the development or implementation of Phase II of the storm

water program.’’ Therefore, States may use fiscal year 2003 Section 319 funds for

that broad set of purposes. So long as fiscal year 2003 funds are being used, EPA

understands the law to provide that they may continue to be used for these

stormwater Phase II purposes even in fiscal year 2004 and beyond. In contrast, any

funds that are appropriated in fiscal year 2004 and beyond must be utilized consistent with Section 319 of the Clean Water Act.

Question 1b. If Congress does not provide another temporary extension providing

States with flexibility to utilize 319 funds for Phase II activities, will 319 funds be

eligible for use in Phase II geographic jurisdictions in the future?

Response. EPA described the extent to which stormwater activities may be eligible

for Section 319 funding in guidance, originally issued in May 1996 and re-issued in

October 2003. This guidance provides that Section 319 funds may be used to fund

any urban storm water activities that are not specifically required by a draft Phase

I or II permit. EPA based this guidance on Congress’ direction in Section 319(h) that

the funds be used by States to implement their nonpoint source management programs approved under Section 319(b), which by its terms addresses only nonpoint

sources and not permitted point sources.

The guidance provides some examples of stormwater activities that may be funded

under Section 319. These include:

• Technical assistance to State and local stormwater programs;

• Monitoring needed to design and evaluate effectiveness of implementation

strategies;

• BMP’s ‘‘except for BMPs required by a draft or final NPDES permit’’;

• Information and education programs;

• Technology transfer and training; and

• Development and implementation of regulations, policies, and local ordinances to address stormwater runoff (which may apply to areas covered by

NPDES permits, provided that they apply to non-permitted areas as well).

In addition, EPA notes that a variety of watershed restoration activities fall outside the scope of Phase II permit requirements and are thus also fundable under

Section 319 in all areas.
61

Question 1c. During an EPA briefing with Committee staff, the agency indicated

a list of stormwater activities that would be eligible to receive Section 319 funding,

including ‘‘monitoring and evaluation’’, information and education’’, and development of enforceable policies’’. As many of these items are specifically required to be

included in Phase II NPDES permits under the rule’s six minimum control measures, would you identify what guidance the agency is providing to States to clarify

319 uses as they proceed with development and implementation of their Phase II

programs?

Response. As indicated in the response to the preceding question, EPA believes

that it is appropriate to recognize that some activities which generally support implementation efforts should logically be implemented in a consistent manner across

both permitted and non-permitted areas. Monitoring and evaluation, information

and education, and the development of enforceable policies are good examples of

this. EPA believes that if a State wishes to establish a State-wide program for such

general purposes as to promote monitoring and evaluation of urban stormwater controls or to provide information and education to citizens, such activities will equally

benefit both the municipal separate storm sewer systems subject to NPDES permits

and those other areas of the State that remain subject to the NPS program. For this

reason, EPA believes that such activities are 319-eligible even though they may

apply to areas covered by NPDES permits, provided that they apply to non-permitted areas as well.

RESPONSES BY TRACY MEHAN TO ADDITIONAL QUESTIONS FROM SENATOR INHOFE

Question 1. One of the later witness’ testimony expresses concern about trading

in mercury. You have a pilot project in San Diego that addresses mercury trading.

Can you describe this project for the Committee?

Response. The pilot project referred to is taking place in the Sacramento River

basin and is exploring whether trading could be used to offset a future discharge

of mercury from the Sacramento Regional Wastewater Treatment Plant. The plant’s

NPDES permit, issued by the State of California, requires the plant owner and operator, Sacramento Regional County Sanitation District, to perform a feasibility study

to identify possible opportunities for mercury offsets (e.g., reduction of mercury

loads from abandoned mine sites). If the State approves the study, it could choose

to reopen the permit and allow the plant to offset the plant’s discharge above its

current limit of 5.1 pounds per year. The plant’s discharge is currently lower than

5.1 pounds per year, but may exceed 5.1 pounds per year in the future due to increased flows resulting from population growth. In 2002, EPA provided $50,000 in

project funding to the U.S. Geological Survey for the development of a decision support tool to assist in determining if mercury offsets are feasible. We have not received requests to review any such project other than the Sacramento offset pilot.

EPA’s 2003 Water Quality Trading Policy generally does not support the trading of

bioaccumulative toxic pollutants except within a pilot project.

Question 2. As I mentioned in my opening statement, I am very concerned about

giving EPA authority, through the TMDL program, to veto local land use decisions.

If EPA is given authority to approve more than just the TMDL number itself, including individual allocations to categories and subcategories of users, how do you

anticipate the TMDL program working without hindering local and individual land

use decisions?

Response. Under the current (1992) TMDL program regulations, EPA approves

the loading capacity for a waterbody and the initial allocations for sources of pollutants including point sources (wasteload allocations) and nonpoint sources (load allocations). EPA believes that the TMDLs must include adequate information to show

that the allocations will result in attainment of water quality standards. EPA does

not approve or disapprove implementation plans as part of the TMDL and therefore

does not get involved in local decisions, but relies on the States to identify the best

methods and approaches for achieving the load allocations. Once the TMDL’s initial

allocations are approved, States have a significant degree of flexibility to work with

stakeholders in a watershed to use a range of different approaches to implement

these allocations in the TMDL and, if appropriate, adjust them to achieve water

quality standards more efficiently.

Question 3a. The House Report for the Water Quality Renewal Act of 1984 explains that Section 402(I)(2) of the Clean Water Act was ‘‘developed . . . in recognition of the fact that there are numerous situations in the mining and oil and gas

industries where storm water is channeled around plants and operations through

a series of ditches and similar devices in order to prevent pollution contamination
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of the storm water.’’ During his testimony, Mr. Lee Fuller—minority staff director

to the Committee on Environment and Public Works during the drafting of the 1987

amendments—further explained Congressional intent to distinguish between contaminated and uncontaminated runoff. Congress had not anticipated the agency

would attempt to regulate all uncontaminated runoff through the industrial portion

of the storm water program.

Can you explain what EPA believes Congress’ intent was when it wrote Section

402(l)(2) of the Clean Water Act and where it believes it derives the authority to

regulate uncontaminated runoff from oil and gas sites?

Response. CWA section 402(l)(2) exempts from NPDES permitting requirements

storm water runoff from oil and gas facilities that is composed entirely of flows from

conveyances used for collecting and conveying runoff that are not contaminated by

contact with raw materials, petroleum products or wastes located at the site. EPA

requires permit coverage for a long list of industries and focuses the permit requirements on the likely pollutants from each specific industry. Oil and gas is one of the

industries included in EPA’s multi-sector general permit (MSGP). However, due to

the CWA section 402(l)(2) exemption, oil and gas facilities need to apply for permit

coverage only if they discharge waste water or storm water that does not meet the

requirements of the exemption. EPA believes that Congress’s intent was to exempt

from permit coverage only uncontaminated runoff, not contaminated discharges of

oil or hazardous substances.

Question 3b. Will you please then explain the history behind EPA’s decision to

provide oil and gas sites with a 2-year delay to comply? For instance, what information did EPA have, and when did they have it, about the impact the rule would have

on oil and gas sites?

Response. When EPA finalized the Storm Water Phase II rule in December 1999

(64 FR 68722), we thought that very few oil and gas facilities would be subject to

the Phase II rule because information the Agency received through a member of the

storm water subcommittee of the Urban Wet Weather Federal Advisory Committee

suggested that most oil and gas sites were either over five acres or under one acre.

In the summer of 2002, EPA learned through data submitted by States and industry

representatives that the number of oil and gas sites that would be subject to the

Phase II rule was significantly greater than originally estimated. In order to verify

the information submitted by States and the oil and gas industry, EPA requested

and used data from the Energy Information Administration (EIA). The EIA is a statistical agency of the U.S. Department of Energy that serves as the primary clearinghouse for all energy-related data in the U.S., including data pertaining to the oil

and gas industry. The EIA data confirmed that the number of oil and gas sites potentially subject to the rule was significantly more than what we had assumed during development of the Phase II rule. EPA is using the 2-years to more thoroughly

understand and consider the impacts of the construction requirements on oil and

gas sites. EPA is also evaluating the applicability of the 402(l)(2) exemption to oil

and gas construction sites.

Question 4a. Does the Office of Water review and approve the design plans for

treatment works that receive EPA funds? Has EPA ever funded plants that have

included blending during infrequent wet weather events in their designs?

Response. The Office of Water provides funds for treatment works through the

Clean Water State Revolving Funds (CWSRF), the Clean Water Act Title II Construction Grants Program (Construction Grants) and/or Special Project grants (Special Projects) appropriated by Congress. States, not EPA, have the responsibility for

reviewing and approving nearly all design plans for treatment works that receive

these funds.

The CWSRF is the Federal Government’s primary funding source for municipal

wastewater treatment works. EPA provides CWSRF capitalization grants to States

which, in turn, contribute matching funds and make project funding loans. The

CWSRF is authorized as a State-run program.

The Construction Grants program was, prior to 1987, the Federal Government’s

primary funding source for municipal wastewater treatment works and its operation, including review and approval of all design plans for treatment works, was

entirely delegated to States under authority of the Clean Water Act.

Special Projects are individually designated by Congress each Fiscal Year. Congress has not required EPA to review and approve the design plans for these

projects.

It is possible that the CWSRF, Construction Grants program and/or Special

Projects appropriations have provided funds for facilities or components of facilities

that have included in their designs blending of primary treated wastewater with

biologically treated wastewater to protect the integrity of the treatment system dur-
63

ing wet weather while still ensuring that discharges meet established secondary

treatment limits. The Agency does not centrally track this type of information.

Question 4b. In a recent briefing of Committee staff, representatives for the environmental community claim EPA has not allowed municipalities to ‘‘blend’’ at their

treatment plants. They further claim that if EPA permits blending, this would be

a new position for the agency. What has the Office of Water’s position been on allowing treatment works to blend water during peak storm events?

Response. Reducing the frequency and volume of collection system overflows and

backups of sewage into buildings, and improving the structural integrity of collection systems have been some of the major objectives of EPA’s emphasis on wet

weather discharges over the last decade. Typically, an important component of strategies to reduce collection system overflows and backups into buildings is to increase

the delivery of wet weather flows to the treatment plant. The volume of wet weather

flows delivered to treatment facilities can also be increased by measures that reduce

exfiltration of wastewater out of a collection system. Increased wet weather flow volumes at treatment plants, along with increased attention to water quality problems

caused by wet weather flows have lead to increased attention to the manner by

which publicly owned treatment works (POTWs) manage wet weather flows.

As these issues received greater attention, regulatory agencies, municipal operators of POTWs, and representatives of environmental advocacy groups have expressed confusion over and requested clarification regarding the proper interpretation of certain regulatory provisions in the context of wet weather flow management

at POTW treatment plants. Of particular concern are National Pollutant Discharge

Elimination System (NPDES) permit requirements for peak wet weather discharges

from a treatment plant when those discharges are comprised of peak wet weather

flows (i.e., incoming sanitary wastewaters are more dilute due to wet weather influences) that are routed around biological treatment units and blended with the flows

from the biological units (or other advanced treatment units) prior to discharge.

Such re-routing where the capacity of biological (or other advanced) treatment units

is exceeded might be necessary to avoid damaging the treatment units. Questions

have focused primarily on the situation where the final discharge of these blended

waste streams would meet effluent limitations based upon the secondary treatment

regulations and any more stringent limitations necessary to meet water quality

standards. EPA’s proposed clarification of its interpretation of these regulations,

along with draft implementation guidance, was published in the Federal Register

for public comment on November 7, 2003. EPA intends its policy would provide a

framework that:

(1) ensures appropriate management of wet weather flows at a POTW consistent with generally accepted good engineering practices and criteria for longterm design,

(2) clarifies technology-based requirements

(3) uses water quality-based effluent limitations to address residual site-specific health and environmental risks, and

(4) provides appropriate safeguards, including a monitoring scheme and protection for sensitive waters.

The draft policy addresses only the limited situations where blended wet weather

POTW effluent meets permit limitations. EPA’s intention is to ensure that NPDES

requirements be applied in a nationally consistent manner that improves the capacity, management, operation and maintenance of POTW treatment plants and collection systems and protects human health and the environment.

RESPONSES BY EPA’S OFFICE OF SOLID WASTE AND EMERGENCY RESPONSE TO

ADDITIONAL QUESTIONS FROM SENATOR INHOFE

Question 1. EPA had cited several aviation fuel providers for not having secondary

containment for their trucks. Aviation fuel providers were shocked at the application

of these regulations to their vehicles. It had long been the understanding of the industry that the secondary containment requirement of the SPCC rules did not apply

to aviation fuel trucks used on airports. This had been confirmed by approval of

many airport SPCC Plans that do not address this requirement for aviation fuel

trucks. The aviation industry has sought to work with the EPA to provide the agency with an understanding of the inappropriateness of imposing this requirement on

aviation fuel trucks, yet the agency has been slow to respond to these concerns and

seems little interested in recognizing the unique nature of airport fueling operations. What steps will the EPA take to ensure that aviation fuel providers, particularly those at smaller non-commercial airports, are not unduly burdened by impos-
64

ing secondary containment requirements on fuel trucks used only to transport and

deliver such products?

Response. EPA has been involved in an active dialog with the aviation industry,

including fuelers, on the applicability of the SPCC requirements to this industry sector. We have discussed their concerns within EPA and intend to provide guidance

on these activities. EPA is currently focusing primarily on resolving litigation related to the 2002 final rule, but expects to address questions regarding the applicability of containment requirements by February 2004, in time to allow the development of revised SPCC Plans by the August 17, 2004 compliance deadline. We plan

to discuss issues associated with revised SPCC plans with the regulated community,

including representatives of smaller airport fuel providers, before any guidance is

communicated in final form.

Additional Background: The Spill Prevention Control and Countermeasures

(SPCC) regulation (40 CFR § 112) which has been in effect since 1974 was recently

amended in a 2002 final rule. The regulation applies to non-transportation-related

facilities with a total aboveground (i.e., not completely buried) oil storage capacity

of greater than 1,320 gallons. To be regulated, in addition to the storage capacity

criteria, a facility must due to its location reasonably be expected to discharge oil

into navigable waters of the U.S. or adjoining shorelines.

The main requirement of facilities subject to the regulation is the preparation and

implementation of a Plan to prevent the discharge of oil into waters of the United

States. These Plans are certified by a professional engineer and not subject to Agency approval. Mobile fuelers operating exclusively within the confines of a facility

(such as an airport) are considered non-transportation related and, therefore, subject to SPCC requirements which must be addressed in the airport SPCC Plan or

in a separately maintained SPCC Plan.

Question 2. What is the basis for EPA determining that the previous rule was incapable of planning for spill prevention at loading operations for oil and natural gas

exploration and production facilities and that these facilities needed to provide secondary containment around the loading area rather than another approach, such as

a simple mechanism to capture any spilled product? Many of these loadings are

done infrequently because of the low production volumes of these marginal wells.

Response. This question appears to be directly related to the ‘‘loading rack’’ issue

currently subject to litigation. EPA is actively involved in settlement discussions in

the hopes of resolving that litigation. Additionally, EPA has met with stakeholders

outside of the litigation on this, as well as other, issues. We expect to be able to

discuss this issue more fully within the next one or 2 months.

Question 3. The USDA Natural Resource Conservation Service (NRCS) fully understands how farms impact their environment and works very closely with farmers

to minimize those impacts through best management practices, not heavy-handed

Federal regulation. The Farmers in my State of Oklahoma correctly believe the

NRCS has a much better appreciation for the daily struggle of maintaining a farm

in today’s economy than EPA does while keeping the environment always in mind.

Is there a means by which EPA could work through or with the NRCS to help farmers address any pollution problems—which have not been documented—with their

tanks?

Response. Over the past 6 months we have initiated dialog with representatives

of the agricultural sector regarding the SPCC regulation. We are aware of the concerns of this sector and are committed to working with them in partnership with

the United States Department of Agriculture (USDA) to address their concerns. We

plan to work with USDA to develop guidance to help farmers effectively meet the

SPCC spill prevention requirements. We believe the performance-based nature of

the SPCC rule (which allows waivers of most requirements when ‘‘equivalent environmental protection’’ is provided) allows for the flexibility needed by small businesses such as farms.

RESPONSES BY TRACY MEHAN TO ADDITIONAL QUESTIONS FROM SENATOR JEFFORDS

Question 1. Can you describe the relative contribution of storm water versus other

sources of pollution to the 45 percent of the nation’s waters that remain impaired,

including a description of the types of pollutants normally found in storm water and

the change in pollutant content that could be expected in cold weather climates?

What role does transportation infrastructure play in generating storm water runoff.

Response. EPA compiles data on water quality impairments and sources of impairments consistent with the requirements of Section 305(b) of the Clean Water

Act. The most recent biennial report for which data are available is from calendar
65

year 2000 (2000 National Water Quality Inventory Report). In that report, EPA presents data independently for three significant types of waterbodies: rivers and

streams, lakes and reservoirs, and coastal resources. The report defines a number

of categories for sources of waterbody impairments. Many of these are storm water

management related. Following is impairment data for each of the waterbody types:

Rivers and Streams.—Of miles assessed, 39 percent are impaired (a total of

269,258 miles out of the 699,946 miles assessed). Of the total, following is the percent of the impairment due to the identified source: Agriculture 48 percent, Hydrologic Modification 20 percent, Habitat Modification 14 percent, Urban Runoff/Storm

Sewers 13 percent, Forestry 11 percent, Municipal Point Sources 10 percent, Resource Extraction 10 percent.

While not clearly delineated as storm water sources, other than the municipal

point sources, all of the other sources are likely heavily influenced by storm water

runoff.

Lakes.—Of the acres assessed, 45 percent are impaired (a total of 7.7 million

acres out of the 17.3 million acres assessed). Impairment sources are as follows: Agriculture 41 percent; Hydrologic Modifications 18 percent; Urban Runoff/Storm Sewers 18 percent; Nonpoint Sources 14 percent; Atmospheric Deposition 13 percent;

Municipal Point Sources 12 percent; Land Disposal 11 percent.

Coastal Resources.—Of the square miles assessed, 51 percent are impaired

(15,676 square miles out of 31,072 square miles assessed). Impairment sources are

as follows: Municipal Point Sources 37 percent; Urban Runoff/Storm Sewers 32 percent; Industrial Discharges 26 percent; Atmospheric Deposition 24; percent; Agriculture 18 percent; Hydrologic Modifications 14 percent; Resource Extraction 12 percent.

Common pollutants found in storm water include pathogens, nutrients, sediment,

oil and grease, toxic metals, and debris. In cold weather climates, road salts are an

additional pollutant of concern that have been shown to impact water quality.

Transportation infrastructure can play a significant role in storm water runoff.

Annual pollutant loads generated from roads and associated facilities were estimated as part of the Agency’s ongoing effort to develop national guidelines for the

construction and development industry (FHWA 1996, 2001, HUD 2002, USDA 2000,

NWS), however they are likely overestimates because they do not account for inplace management practices to control storm water runoff.

Question 2. What is EPA’s cost estimate for mitigating the impact of storm water

runoff?

Response. It is very difficult to reliably estimate the cost to mitigate the impact

of storm water runoff. EPA’s Clean Watersheds Needs Survey 2000 Report to Congress developed a modeled estimate for municipal storm water management programs. This total capital cost of $8.4 billion represents the estimated Clean Water

State Revolving Fund-eligible portion of costs to develop and implement storm water

programs for municipal separate storm sewer systems (MS4s).

Question 3. What is EPA doing to ensure that post-construction storm water discharges are addressed?

Response. EPA has several regulations that address the impacts of post-construction runoff on water quality. The medium and large municipal separate storm sewer

systems (MS4s), covered by the regulations promulgated in November 1990, must

develop, implement, and enforce programs to reduce the discharge of pollutants

from areas of new development and significant redevelopment. Specifically, these

programs are to address controls to reduce pollutants in discharges from MS4s after

construction is completed. The small MS4s, covered by the regulations promulgated

in December 1999, must develop, implement and enforce a program to address

storm water runoff from new development and redevelopment projects that disturb

one acre or more. These programs must include strategies appropriate for the communities and are to: include both structural and non-structural controls; use an ordinance or other regulatory mechanism; and ensure adequate long-term operation

and maintenance of BMPs.

Additionally, EPA’s recently reissued construction general permit (July 1, 2003),

applicable to construction projects disturbing one acre or greater, requires construction site operators to identify all post-construction storm water management measures that will be installed during the construction process to control pollutants in

storm water discharges after construction activities have been completed. Such

measures are to be designed and installed in compliance with any applicable Federal, State, tribal, or local requirements.
66

Question 4. Can you describe some of the cases in which EPA and/or the Department of Justice have used section 309(c)(1) to prosecute cases that involved primarily environmental harm?

Response. Please note that the response to this question regarding the CWA negligence provision was prepared by EPA’S Office of Enforcement and Compliance Assurance. The Clean Water Act negligence criminal offense, 33 USC § 1319(c)(1)(A), is an essential enforcement tool that reaches illegal conduct resulting in significant and

avoidable environmental harm that would likely otherwise go unprosecuted, such as

in the case of the Exxon Valdez oil spill (see case summary, below). The Agency,

in concert with Federal prosecutors, has reserved the use of this provision for appropriate circumstances, including violations where corporations or their employees

have failed to take proper measures to prevent discharges of substantial quantities

of pollutants into our nation’s waters despite the fact that such discharges were reasonably foreseeable. The Agency stands behind its record of using this provision in

a fair and just manner that promotes prevention of such pollution in the future,

while ensuring that no entity or individual is punished for a mere accident.

Some of the CWA negligence prosecutions that were initiated primarily because

of environmental harm are described below:

Recent examples

U.S. v. Omar Mining (S.D. W. Va. 2003).—On February 24, 2003, Omar Mining

was sentenced for negligent violations of the Clean Water Act, 33 U.S.C. § 1319

(c)(1)(A). The company was sentenced to 60 months of probation and ordered to pay

a criminal fine of $200,000. Omar Mining was also required to implement an environmental management system and undergo annual third-party environmental audits.

On August 12, 2001, a 15,000-gallon black water spill occurred at the Omar Mining facility. The spill resulted from the company’s failure to monitor underground

water levels during the underground injection of waste water. The West Virginia

Department of Environmental Protection (‘‘WVDEP’’) allowed the excess water from

the mine to be pumped out through a permitted discharge point.

On August 23, 2001, WVDEP detected a fish kill in the creek downstream from

Omar Mining. The fish kill was traced back to Omar Mining where it was discovered that the company had re-routed the mine pumping operation to an unpermitted

holding pond discharge point formerly used to settle out heavy metals from mine

runoff. Subsequently, an Omar Mining supervisor activated a water treatment facility connected to the pond, but failed to monitor the amount of treatment material

flowing into the pond. These actions resulted in the fish kill.

Prior to the initiation of the criminal negligence prosecution, Omar Mining was

the subject of a large number of civil enforcement and administrative actions by

WVDEP.

U.S. v. Richard Anthony (W.D. Va. 2002).—On January 29, 2002, Richard Anthony, owner and president of Sanville Utilities, Inc., in Bassett, Virginia, was

criminally charged for negligently discharging pollutants without an NPDES permit

into Blackberry Creek, a water of the United States, in violation of 33 U.S.C.

§ 1319(c)(1)(A). Sanville Utilities operated the Fairway Acres wastewater treatment

plant (‘‘WWTP’’) which provided sewage treatment services for a small apartment

complex and single-family home community. Richard Anthony served as the sole operator of the WWTP for a period of years, however, he abandoned the plant in September 1999 after its NPDES permit expired, leaving the plant to discharge untreated sewage into Blackberry Creek—an estimated 1.2 million gallons of raw sewage per day for a minimum of 1 month. The Virginia Department of Health issued

a health emergency notice in response to the sewage discharge which occurred between September 8, 1999 and September 27, 1999. On April 23, 2002, Richard Anthony pled guilty to one count of negligently violating the Clean Water Act. On July

11, 2002, Anthony was sentenced to serve the maximum 12 months in prison, followed by 12 months of supervised release. Restitution was ordered in the amount

of $31,068.73.

U.S. v. Koch Petroleum Group, L.P. (D. Minn. 2000).—On September 28, 1999,

Koch Petroleum Group, L.P. (‘‘Koch’’), was charged in a two count information with

negligently violating the Clean Water Act, 33 USC §§ 1321(b)(3) & 1318(a) &

1319(c)(1). Koch admitted that it negligently discharged oil into a wetland area and

an adjoining navigable water near Spring Lake Park Reserve, an area next to the

Mississippi River in Dakota County, Minnesota. In early 1993, Koch knew that a

tank had lost between 200,000 and 600,000 gallons of aviation fuel and that the fuel

would reach surface water, but the company did not develop a plan to recover the

fuel until June, 1997. While establishing a system to recover the fuel, Koch installed
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a one-half mile long trench and booms in a wetland to prevent the jet fuel from

reaching the Mississippi River, which had the effect of destroying a portion of the

surrounding ecosystem and wildlife habitat. On March 1, 2000, Koch pled guilty to

the information and was sentenced to 36 months of probation and was ordered to

pay a criminal fine of $6,000,000. Koch was also ordered to pay $2,000,000 to Dakota County, Minnesota, for remediation of the Spring Lake Park Reserve.

U.S. v. Plummer Excavating, Inc. (D. Minn. 2000).—On April 21, 1999, Randy Lee

Konickson, vice president of Plummer Excavating, Inc., and Plummer Excavating,

Inc., were each indicted and charged with a misdemeanor count under the Clean

Water Act, 33 USC § 1319(c)(1), for negligently discharging oil from a crude oil pipeline into waters of the United States. In September 1998, Konickson directed an employee to bury rocks in a field adjacent to the company’s Plummer, Minnesota facility. Konickson knew the field contained buried pipelines. When the employee struck

a crude oil pipeline with a backhoe, Konickson failed to notify the appropriate authorities. The pipeline ruptured and caused nearly 5,200 barrels or 218,000 gallons

of crude oil to spill into the field and eventually into a county drainage ditch that

flows into the Clearwater River. As a result of the spill, authorities evacuated the

town of Plummer. On December 10, 1999, Konickson was sentenced to 2 years of

probation and 100 hours of community service. On January 7, 2000, Plummer Excavating was sentenced to 36 months probation, and ordered to pay a criminal fine

of $50,000.

Selected ‘‘historical’’examples

U.S. v. Puerto Rico Electric Power Authority (D.P.R. 1998).—The Puerto Rico Electric Power Authority (PREPA) pled guilty to criminal negligence violations of the

Clean Water Act, 33 USC § 1319(c)(1)(A), on June 1, 1998. The company’s guilty

plea followed an investigation by the Environmental Protection Agency in conjunction with the Federal Bureau of Investigation of a September 1995 sulphuric acid

spill into the Bayamon River, on the north coast of Puerto Rico. The acid had been

transferred to a wastewater storage tank that was not designed to withstand acid.

As a result, about 270,000 gallons of highly acidic water spilled, contaminating the

river and killing marine life.

PREPA was placed on a 2-year probation. Under its probation, PREPA agreed to

establish environmental procedures and file quarterly reports in court showing that

it is complying with environmental standards.

U.S. v. Eklof Marine Corp. (D.R.I. 1997)

On September 25, 1997, a three count information was filed charging defendants

Eklof Marine Corporation, Thor Towing Corporation, Odin Marine Corporation, Leslie Wallin and Gregory R. Aitke with a negligent Clean Water Act count, and only

the corporate defendants with a Rivers and Harbors Act count and a Migratory Bird

Treaty Act count. This case involved a spill of approximately 828,000 gallons of

heating oil being transported by barge off the coast of Rhode Island. The spill resulted from the confluence of four factors: (1) a severe winter storm, the forecast

of which was disregarded—although other ships in the area had sought safe harbor;

(2) an engine room fire on the tug, which the crew were not equipped to handle;

(3) a jury-rigged anchor on the barge that was missing the necessary anchor winch

because it was removed 2 weeks earlier for repair; and (4) poor maintenance of the

tug and barge. The spill, by far the worst in Rhode Island history, killed hundreds

of thousands of lobsters and other marine life, as well as hundreds of migratory

birds. As a result of the spill, Rhode Island waters were closed to fishermen for

months. Moreover, the oil washed up on Moonstone Beach, a federally protected marine sanctuary, and other fragile coastal areas.

As a result of the violations, the corporate defendants were ordered to pay a $7

million fine, an additional $1.5 million to the Nature Conservancy to purchase and

preserve land in the area of the spill, and make an additional $1 million worth of

remedial safety measures to its fleet of vessels. The vessel’s captain, Gregory

Aitken, was sentenced to 2 years probation and a $10,000 fine. Eklof Marine Corporation president, Leslie Wallin, was sentenced to 3 years probation and a

$100,000 fine.

U.S. v. Exxon Corp. (D. Alaska 1991)

On March 24, 1989, the Exxon Valdez ran aground on Bligh Reef, spilling approximately 11 million gallons of oil into Alaska’s Prince William Sound, affecting approximately 1,300 miles shoreline, with 200 miles considered ‘‘heavily or moderately

oiled.’’ The wildlife death toll from the immediate impact of the spill was estimated

to be: 250,000 seabirds, 2,800 sea otters, 300 harbor seals, 250 bald eagles, up to

22 killer whales, and billions of salmon and herring eggs. As a result of this spill,

the United States charged Exxon Shipping Company, the owner of the Exxon

Valdez, and its parent, Exxon Corporation, with five criminal counts each, with the
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lead count being under the Clean Water Act for negligent discharge of a pollutant

without a permit in violation of 33 U.S.C. § 1319 (c)(1)(A). In March 1991, Exxon

Shipping agreed to plead guilty to three misdemeanor counts, include the Clean

Water Act violation and lesser charges under the Refuse Act and the Migratory Bird

Treaty Act. Exxon Corporation pleaded guilty only to a violation of the Migratory

Bird Treaty Act. The criminal fines and restitution totaled $125,000,000

($25,000,000 of which was straight fine) still the largest amount in U.S. environmental history.

U.S. v. Ashland Oil, Inc. (W. D. Pa. 1988)

On January 2, 1988, one of Ashland Oil’s storage tanks collapsed, spilling more

than 500,000 gallons of oil into the Monongahela River outside of Pittsburgh. On

September 15, 1988, a Federal grand jury indicted Ashland for negligently violating

the Clean Water Act, 33 USC § 1319(c)(1)(A). The criminal investigation determined

that routine tests were not conducted on the tank and that following proper, industry-standard procedures might have prevented the vessel from rupturing. Ashland

Oil was ordered to pay a criminal fine of $2.25 million.

U.S. v. Pennwalt Corp. (W.D. Wash. 1988)

A tank owned and operated by Pennwalt Corp. containing chemicals collapsed and

spilled more than 75,000 gallons into an adjacent tidal waterway. A grand jury returned indictments against both the corporation and three corporate officers, charging them with ‘‘negligently . . . discharging . . . certain hazardous chemicals . . .

as the result of the collapse of a . . . poorly maintained . . . steel storage tank.’’

The chief executive of Pennwalt entered a guilty plea on behalf of the corporation,

acknowledging that Pennwalt had a duty to anticipate and perform such maintenance and take other appropriate steps as reasonably necessary to prevent releases

of chemicals into the waters of the United States. The corporation paid a $1.1 million fine.

Question 5. The EPA website includes an extensive list of funding programs associated with storm water management. Can you identify which of those programs are

explicitly for the purpose of storm water management? Please identify how much

money in each of those programs has ever been spent on storm water management.

Response. Of the 32 funding programs associated with storm water management,

none are exclusively for providing funds for storm water projects. Three of the most

prominent funding programs that provide money for storm water projects are the

Clean Water State Revolving Fund, Water Quality Cooperative Agreements (CWA

section 104(b)(3)), and Nonpoint Source Implementation Grants (CWA section 319).

EPA does not track funding specifically for storm water management in all grant

programs, mainly because of the multi-faceted nature of storm water management.

EPA does have data indicating that between 1991 and 2002, the Clean Water State

Revolving Fund has spent $193 million on Storm Sewers. This investment excludes

the investment in combined sewer overflow (CSO) and sanitary sewer overflow

(SSO) correction. The Clean Water State Revolving Fund also spent over $1.6 billion

on nonpoint source projects between 1990 and 2002, many of which addressed storm

water runoff from urban and rural areas. For Section 319 grants, EPA estimates

that from FY 1994 to FY 2002, at least $100 million was used for urban runoff

projects. Additionally, EPA regularly funds research and demonstration projects to

address storm water under Section 104(b)(3) cooperative agreements and in recent

years has funded more than $5 million in storm water management projects.

Question 6. What is the implementation status of the storm water phase II program—how many States have completed their general permits?

Response. Phase II Municipal Separate Storm Sewer (MS4) permits—28 of the 45

States required to issue small MS4 permits have completed those efforts. Of the remaining 17 States, 4 have public noticed their draft permits, but several of these

States have not finalized the permits because of the concerns about the impact of

the recent 9th circuit ruling that requires some changes to EPA’s small MS4 general

permitting provisions. EPA was sued on 22 different aspects of the 1999 storm

water phase II rule. The 9th circuit recently issued a final decision that supported

EPA on all issues, except three aspects of the small MS4 general permit program.

The court said that the Notices of Intent (NOIs) for small MS4s had to be public

noticed; the public must have the opportunity to request a public hearing on the

NOI; and the NOIs must be reviewed by the permitting authority. EPA is still reviewing the court decision to determine what actions EPA and the authorized States

should take to comply. Three States plan to issue individual permits to small MS4s,

and one has in fact issued some of those required permits. EPA Regions 1, 6, and

10 are responsible for issuing small MS4 general permits to cover the remaining five

States. Region 1 has issued its permit, which covers two States. Region 6 proposed

its permit, which covers one State, but has not finalized it due to concerns about
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the 9th circuit ruling mentioned above. Region 10 has obtained individual permit

applications from small MS4s in its two States and is in the process of trying to

decide how to proceed due to the 9th circuit ruling.

Phase II Construction permits—33 of the 45 States required to issue small construction permits have completed those efforts. The EPA Regions have issued small

construction general permits that are applicable in all five States where EPA is the

permitting authority.

Question 7. The Agency’s information provided in the public docket on this rulemaking cites only data from the Energy Information Administration, specifically

Table 5.2 of the Monthly Energy Review, as the source for the estimate of 30,000

sites that will be affected—data, which has been collected by EIA since 1973. Why

did EPA not review this data in 1999 when developing the original regulation?

Response. When EPA developed the Economic Analysis for the Phase II rule, the

information obtained for the analysis showed that most sites were either over five

acres, and therefore already regulated, or less than one acre, and therefore would

not be covered by the construction permitting requirements of the rule. In developing this rule, we worked to obtain information with a wide range of stakeholders

through the Federal Advisory Committee Act (FACA).

Question 8. In the Agency’s correspondence with me, you also reference estimates

of the number of wells being drilled each year from States with oil and gas activity

and industry representatives. Which States provided input to the Agency? What industry representatives provided input to the Agency? Were the industry estimates

validated in any manner before the 2-year exemption was adopted? Was any input

sought from industry watchdog or environmental organizations prior to issuing a

proposed rule?

Response. We obtained information from Texas and Oklahoma through our Regional Office. We received input from numerous industry representatives, including

the Texas Independent Producers and Royalty Association, the Louisiana Independent Oil and Gas Association, the Oklahoma Independent Petroleum Association,

and the Independent Petroleum Association of America. Industry representatives,

affected States, and EPA Regional staff all agreed that there were large numbers

of oil and gas sites potentially affected by our storm water rules. We have an obligation to consider the impact of our regulations on all affected industries. There could

be many more sites than even the industry has estimated, but we may find that

they are not significantly impacted. The 2-year postponement rule provides EPA

with the time to make this determination. Environmental organizations were informed about this situation before the rule was issued.

Question 9. I have attached two reports by the EIA regarding its drilling estimates. Are you aware that the EIA data is not collected by the government, but is

instead compiled from industry sources? Are you aware that the EIA itself has identified accuracy problems with its own data used in developing the reports that EPA

relied on to support this 2 year exemption for the oil and gas industry? If so, why

has the Agency depended so heavily on this data to support its actions in support

of the oil and gas industry.

Response. EPA is aware that the EIA is not the primary data collector for oil and

gas exploration activity. However, EPA recognizes EIA as the preeminent source of

national estimates of drilling activities, having compiled these data for 25 years.

EPA considers the EIA data to be the best data currently available, notwithstanding

the issues of accuracy and completeness raised by EIA in its review of its own data.

EPA does not consider these potential problems to be significant in making its determination to extend the compliance date for oil and gas related construction activity. In fact, many of the corrections listed in the EIA reports actually increase the

number of drill sites reported previously, suggesting that EIA’s data may actually

underestimate the total number of drill sites potentially affected by the 2-year exemption. In addition, as mentioned in the answer to Question 8, additional data

from industry were used to supplement EIA estimates.

Question 10. Clean Water Act section 402(l), and the legislative history that accompanies it, is explicit in its application to particular types of discharges from particular types of systems. Clearly, the intent was to exempt uncontaminated flows

from conveyances or systems of conveyances already in place that are used for collecting runoff. In the letter that I sent to you with five other members of the Senate

on February 20 of this year, we asked a question on this topic that was not answered—what is the difference between uncontaminated flows from conveyances or

systems of conveyances and the discharges resulting from a small construction

project at an oil and gas site?
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Response. CWA section 402(l)(2) exempts from Federal permitting requirements

storm water runoff from oil and gas facilities that is composed entirely of flows from

conveyances used for collecting and conveying runoff that are not contaminated by

contact with raw materials, petroleum products or wastes located at the site. EPA

has extended the permit coverage deadline until March 10, 2005, for small construction activity associated with oil and gas exploration, production, processing, or treatment operations or transmission facilities. EPA is currently assessing the applicability of the 402(l)(2) exemption to such activities.

Question 11. Does the EPA’s proposed rule on TMDLs comply with EO 12866 requirements regarding the consideration of the benefits and costs to the natural environment of a ‘‘significant regulatory action?’’ If so, please describe the results of your

cost-benefit analysis. If not, please explain why EPA has not complied with EO

12866.

Response. EPA’s draft proposed watershed rule is under informal review among

Federal agencies, CEQ and OMB. EPA will wait until the conclusion of that process

to decide whether to go forward with a formal proposal. If EPA does go forward with

a proposed rule, we will comply with all the requirements set forth under EO 12866.

Question 12. I understand that the EPA is planning to re-interpret the bypass

rule for sewage treatment plants so as to allow sewage to be discharged without aerobic treatment during rain events. How would this change impact the concentration

of viruses and parasites, like cryptosporidium and giardia, in wastewater effluent?

What analysis did EPA conduct to reach those conclusions?

Response. As EPA has focused greater attention on wet weather issues, regulatory

agencies, municipal operators of POTWs, and representatives of environmental advocacy groups have expressed confusion over and requested clarification of the proper interpretation of certain regulatory provisions in the context of wet weather flow

management at treatment plants. As part of the Agency’s effort to ensure appropriate management of wet weather flows at a POTW, EPA is evaluating the applicability of the bypass provision at 40 CFR 122.41(m) to diversions of a portion of peak

wet weather flow at POTWs. We have prepared a draft policy document which was

published in the Federal Register on November 7, 2003, requesting public comment.

EPA intends its policy would provide a framework that:

(1) ensures appropriate management of wet weather flows at a POTW consistent with generally accepted good engineering practices and criteria for longterm design,

(2) clarifies technology-based requirements,

(3) uses water quality-based effluent limitations to address residual site-specific health and environmental risks, and

(4) provides appropriate safeguards, including a monitoring scheme and protection for sensitive waters.

The draft policy addresses only the limited situations where blended wet weather

POTW effluent meets permit limitations. The NPDES regulations require that

NPDES permits, including those for blended discharges, must include water qualitybased effluent limitations to control all pollutants or pollutant parameters which the

Director of the NPDES program determines are or may be discharged at a level

which will cause, have the reasonable potential to cause, or contribute to a non-attainment of any water quality standard. EPA’s 1986 water quality criteria for pathogens provides a relevant tool for establishing water quality-based effluent limitations for infrequent blended discharges. The 1986 criteria serve as an indicator for

a wide range of pathogens in wastewater, including viruses and parasites, that can

produce acute gastrointestinal disease symptoms. The data supporting the 1986 bacteria water quality criteria were obtained from a series of epidemiological studies

that examined the relationship between swimming-associated illness (namely, acute

gastrointestinal illness) and the microbiological quality of the waters used by recreational bathers. The wastewater sources affecting the recreational waters evaluated during the studies for the 1986 criteria received a variety of treatment, including no treatment, partial treatment and secondary treatment. Discharges occurring

under the draft policy would be within the range of treatment scenarios considered

during the epidemiological studies used to develop the 1986 criteria. Hence, we believe the 1986 criteria is a relevant indicator for protecting against gastrointestinal

disease associated with potential exposure to ambient waters. However, the 1986

criteria is not a direct measure of Giardia or Cryptosporidium. The Beaches Environmental Assessment and Coastal Health (BEACH) Act, enacted on October 10,

2000, P.L. No. 106–284 Stat. 870, address pathogens and pathogen indicators in

coastal recreation waters. Among other things, the BEACH Act added section 303(i)

to the Clean Water Act to require States and Tribes with coastal (and Great Lakes)
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recreation waters to adopt new or revised water quality standards by April 10, 2004,

for pathogens and pathogen indicators for which EPA has published criteria under

section 304(a). The BEACH Act also directs EPA to promulgate standards for States

and Tribes that fail to adopt standards for pathogens and pathogen indicators for

coastal recreation waters that are as protective of human health as those published

by EPA.

Question 13. What requirements has EPA put in place to ensure that there is public participation in trading programs?

Response. Requirements for public notice, comment and opportunity for hearing

on all NPDES permits and TMDLs, including those that have provisions for trading,

are established by the Clean Water Act and its implementing regulations. In addition to the opportunity for public participation in trading already provided through

NPDES permits and TMDLs, EPA’s 2003 Water Quality Trading Policy encourages

States and tribes to involve the public at the earliest stages of trading program development and to provide easy and timely public access to trading information. As

a practical matter, States wishing to develop a trading program will need to do so

by incorporating provisions for trading into core water quality management programs such as watershed plans, water quality standards, TMDLs, and NPDES permits. Some States choose to incorporate trading provisions in rulemaking. The

mechanism a State uses is a matter of State law and policy. EPA’s trading policy

does not specify which approach a State must use; rather it provides flexibility for

States to develop trading programs while advising consultation with the public on

trading program design and ready access to information on trades. As a practical

matter, virtually any mechanism a State chooses would require public notice and

comment under State and/or Federal law.

Question 14. Your staff referenced some monitoring data that EPA has evaluated

from large municipalities and large construction sites regarding the effect of the

storm water phase I regulations on water quality. Please provide this information

to the committee in response to the question of how has the storm water phase I

regulation, covering large municipalities and large construction sites, impacted

water quality.

Response. In accordance with section 431(b) of the Department of Veteran Affairs

and Housing and Urban Development and Independent Agencies Appropriations Act

of 2000, Public Law 106–74 (1999), EPA conducted an evaluation of the Phase I

Storm Water Program to provide ‘‘a detailed explanation of the impact, if any, that

the Phase I program has had in improving water quality in the United States.’’ EPA

presented its Report to Congress on the Phase I Storm Water Regulations to the

Committee on Environment and Public Works and the Committee on Transportation

and Infrastructure on March 1, 2000 (EPA833–R–00–001, February 2000). That report led the Agency to the following findings:

• Although information on the water quality impacts of Phase I is unavailable

at the national level, loading reductions and subsequent water quality impacts

have been documented at specific sites.

• The fundamental approach for addressing storm water discharges involves

the use of site specific pollution prevention and best management practices.

These measures can be implemented cost-effectively.

• The flexible nature of the program has encouraged innovation on the part

of municipalities, construction operators, and industrial facilities and allowed

them to tailor control programs to their own unique circumstances.

• Further improvements can be made in both program design and implementation to enhance effectiveness.

At present, EPA has funded a number of 104(b)(3) cooperative agreements to

evaluate storm water Phase I monitoring data to further evaluate the impacts of

the program. Funds have been awarded to the University of South Florida, the University of Alabama, and the California State Water Resources Control Board to summarize and evaluate those data. Results of those efforts are expected in FY04 and

FY05.

Please note that the responses to the questions regarding EPA’s investigative discretion and the Colonial and Olympic Pipeline cases were prepared by EPA’s Office

of Enforcement and Compliance Assurance.

Question 15. Mr. Chairman, I ask unanimous consent that the EPA’s investigative

discretion memorandum of January 12, 1994 be included in the hearing record. Mr.

Mehan, can you articulate the standard that EPA uses to determine when to criminally prosecute cases? I understand that this memorandum was issued by the Office
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of Enforcement. Please coordinate with your counterpart to provide a complete answer to this question.

Response. As the title of the January 12, 1994 memorandum suggests, ‘‘The Exercise of Investigative Discretion’’ (‘‘investigative discretion memorandum’’), EPA does

not engage in the exercise of prosecutorial discretion. That is the province of prosecutors in the United States Department of Justice, including the Office of the

United States Attorney in each Federal judicial district. EPA does, however, exercise

its discretion by determining when to criminally investigate cases involving potential violations of Federal environmental laws. This is much the same as is the case

with other Federal law enforcement agencies, and is a reflection of, among other

things, the fact that enforcement resources are not unlimited and good management

dictates prioritizing the Agency’s investigatory work.

In order to ensure the investigations undertaken by the Criminal Investigation

Division reflect an appropriate use of the Agency’s authority, the Office of Criminal

Enforcement (the predecessor of the Office of Criminal Enforcement, Forensics and

Training) articulated the factors which govern its selection of cases to criminally investigate in the investigative discretion memorandum. That guidance remains the

touchstone for case initiation by the Criminal Investigation Division (CID).

At the risk of over-simplifying what is already a rather succinct six page guidance, the CID’s investigative discretion policy may be briefly summarized as follows:

The criminal case selection process is guided by two general measures—significant

environmental harm and culpable conduct. Criminal investigations may be initiated

for instances of actual harm—demonstrated by illegal discharge, release, or emission—that has identifiable and significant harmful impact on human health or the

environment, or instances where there is a threat of such impact. Criminal investigations may also be warranted when there is culpable conduct, as evidenced by:

(1) a history by the offender of violations, (2) deliberate misconduct resulting in a

violation, (3) a failure to report a discharge, release, or emission required to be reported, or falsification of records within the Agency’s jurisdiction, especially when

coupled with actual or threatened environmental harm, (4) tampering with monitoring or control equipment and (5) operation of a business without a required permit or other necessary documentation.

As noted in the policy, this is not to suggest that all cases meeting the case selection criteria will proceed to prosecution. Indeed, the exercise of investigative discretion must be clearly distinguished from the exercise of prosecutorial discretion. The

employment of EPA’s investigative discretion to dedicate its investigative authority

is, however, a critical precursor to the prosecutorial discretion later exercised by the

Department of Justice. The Agency continues to operate on the general principle

that less flagrant violations with lesser environmental consequences should be addressed through administrative or civil monetary penalties and remedial orders,

while the most serious environmental violations ought to be investigated criminally.

Question 16. Can you describe the recent cases that EPA and DOJ successfully

prosecuted against Colonial Pipeline and Olympic Pipeline Companies including a

description of the environmental damage and the penalties paid?

Response. U.S. v. Colonial Pipeline Company (D.S.C. 1999).—Colonial Pipeline

Company (Colonial) of Atlanta, Georgia, operator of the largest-volume pipeline carrying refined petroleum products in the world, pled guilty to criminal charges in

connection with a spill of almost one million gallons of oil into the Reedy River in

South Carolina. Colonial was ordered to pay a fine of $7 million and serve a 5-year

term of probation.

Colonial is owned by several of the world’s largest oil companies. Colonial pled

guilty on February 25, 1999, to a misdemeanor charge of violating the Clean Water

Act, 33 U.S.C. § 1319(c)(1)(A), when it failed to exercise reasonable care leading to

the rupture of its pipeline where it crosses the Reedy River near Simpsonville,

South Carolina. Among other things, Colonial: (1) failed to properly train its employees who worked on pipeline, (2) failed to conduct required pipeline tests, or conducted them but disregarded or improperly interpreted the results, and (3) disregarded the advice of its own engineers regarding the appropriate throughput of

the pipeline that ruptured.

Colonial acknowledged that its actions led to spill of about 960,000 gallons of diesel fuel, affecting a 23-mile segment of the Reedy River. The spill killed about

35,000 fish and also affected wildlife such as beaver, muskrat and turtles, which

died as a result of direct contact with the spilled oil.

During the 5-year term of probation, Colonial must develop and implement an extensive environmental compliance program to prevent and detect further violations

of the CWA on the entire pipeline—over 5,500—miles that runs from Houston,

Texas, to Linden, New Jersey. The court also required the company to make presen-
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tations to national pipeline associations regarding the obligations such pipelines

have under the CWA.

On April 1, 2003, in a related matter, EPA and DOJ settled a civil case in significant part concerning the aforementioned Reedy River spill and six others, with Colonial. Under the civil agreement, Colonial will upgrade environmental protection on

the pipeline at an estimated cost of at least $30 million, and pay $34 million, the

largest civil penalty a company has paid in EPA history. The $34 million civil penalty will go to the United States’ Oil Spill Liability Trust Fund, which underwrites

nationwide oil spill cleanup activities. The government found Colonial violated the

CWA on seven recent occasions by spilling 1.45 millions gallons of oil from its 5,500

mile pipeline in five States and the company’s pipeline corrosion, mechanical damage, excavation damage, operator error and other operation and maintenance deficiencies resulted in chronic releases from the pipeline over decades.

The civil settlement required Colonial to designate its entire pipeline as potentially affecting ‘‘high consequence areas,’’ subjecting the entire 5,500-mile pipeline

to the pipeline integrity regulations of the U.S. Department of Transportation’s Office of Pipeline Safety (OPS). Moreover, the settlement requires Colonial to follow

enhanced inspection, repair and maintenance procedures beyond those required by

Federal regulations, and to pay for an independent monitoring contractor, approved

by EPA, to ensure that the company incorporates these requirements into its existing programs.

U.S. v. Olympic Pipeline Company (W.D. Wash. 2003)

On June 18, 2003, the Olympic Pipeline Company (‘‘Olympic’’), the Equilon Pipeline Company LLC (‘‘Equilon’’), former Olympic Manager, Frank Hopf, Jr., Olympic

Supervisor of Product Movement, Ronald Dean Brentson, and Olympic Control Operator, Kevin Scott Dyvig were sentenced for criminal violations arising from rupture of the Olympic petroleum pipeline and subsequent gasoline explosion in Bellingham, Washington on June 10, 1999. The rupture resulted in the release of approximately 236,000 gallons of gasoline into nearby Hannah Creek and Whatcom

Creek, where the gasoline ignited leading to the deaths three individuals and causing extensive damage to the waters, shorelines and other natural resources.

Specifically, two 10-year-old boys died as a result of the burns they sustained from

the fire. An 18-year-old was overcome by fumes, drowned and then burned. The fire

resulting from the release of gasoline destroyed all living organisms in over 11⁄2

miles of a salmon spawning stream in a city park. The trees and vegetation surrounding the creek were also destroyed. Over $26 million needed to be spent to address this damage and to remove the gasoline that had soaked into the soils in this

area as a result of the spill. There was also damage to the city of Bellingham water

supply system and a house was destroyed.

On September 13, 2001, the Federal grand jury in Seattle indicted Olympic,

Equilon, Hopf, Jr., Brentson, and Dyvig on misdemeanor negligence charges under

the Clean Water Act and various charges under the Federal Hazardous Liquid Pipeline Safety Act.

Olympic pleaded guilty to three criminal counts, specifically: (1) knowingly and

willfully violating a regulation under the Hazardous Liquid Pipeline Safety Act, setting forth minimum safety standards for interstate pipelines carrying hazardous liquids relating to training of its operating personnel, a felony; (2) negligently causing

the discharge of a harmful quantity of gasoline into a navigable water of the United

States in violation of the Clean Water Act; and (3) unlawfully discharging refuse

matter into a navigable water and tributary of a navigable water of the United

States without a permit, in violation of Rivers and Harbors Act, a misdemeanor.

In accordance with Olympic’s plea agreement, the court sentenced Olympic to: (1)

a criminal fine of $6 million, (2) an additional civil penalty of $5 million to resolve

pending State and Federal civil proceedings, (3) 5 years of corporate probation, and

(4) comply with the terms and conditions of a consent decree and an injunctive relief

program in the Federal civil enforcement case. The injunctive relief program required that Olympic undertake specific inspection and damage prevention measures

on Olympic’s 400 miles of petroleum pipeline in Washington State. The United

States estimated that this injunctive relief program would require over $15 million

in new spending by Olympic, over $5 million of which was not otherwise required

by any regulation.

Equilon, through the Shell Pipeline Company LP (‘‘Shell’’), Equilon’s successor-ininterest, pleaded nolo contendere to two criminal counts, specifically: (1) knowingly

and willfully violating a regulation under the Hazardous Liquid Pipeline Safety Act,

setting forth minimum safety standards for interstate pipelines carrying hazardous

liquids relating to training of its operating personnel, a felony and (2) negligently

causing the discharge of a harmful quantity of gasoline into a navigable water, a

misdemeanor. The nolo, or ‘‘no contest,’’ plea has the same effect as a guilty plea
74

in the criminal case in which it is entered, although it is generally not admissible

in subsequent civil litigation.

In accordance with Equilon’s plea agreement the court sentenced Equilon to: (1)

a criminal fine of $15 million (with up to $5 million of the criminal fine being applied to United States’ approved community service projects in the Bellingham

area), (2) a civil penalty of $10 million to resolve pending State and Federal civil

proceedings, (3) 5 years of corporate probation and (4) comply with the terms and

conditions of a consent decree and pipeline integrity/spill mitigation program entered in the Federal civil enforcement case. The pipeline integrity/spill mitigation

program required that Shell undertake specific inspection and damage prevention

measures on 2100-plus miles of Shell’s petroleum products pipelines throughout the

United States. The United States estimated that this pipeline integrity/spill mitigation program would mandate over $61 million in new spending by Shell, more than

$40 million of which was not otherwise required by any regulation.

Hopf was ordered to serve 6 months in prison, followed by 3 years of supervised

release. He also was ordered to pay a fine of $1,000, and to perform 200 hours of

community service. Hopf had pleaded guilty to knowingly and willfully violating a

regulation under the Hazardous Liquid Pipeline Safety Act, setting forth minimum

safety standards for interstate pipelines carrying hazardous liquids relating to training Olympic’s operating personnel.

Brentson, was ordered to serve 30 days in prison, 30 days of home detention with

electronic monitoring, and 2 years of supervised release. He also was ordered to pay

a fine of $1,000, and to perform 150 hours of community service. Brentson had

pleaded guilty to the same charge as Hopf.

Dyvig, was placed on probation for 1 year, and ordered to perform 100 hours of

community service. Dyvig had pleaded guilty to negligently causing the discharge

of a harmful quantity of gasoline into a navigable water.

Question 17. EPA has postponed a rule regarding sanitary sewer overflows that

is based on consensus recommendations of a Federal advisory committee. The proposed rule would, among other things, require sewer operators to monitor for sewer

overflows and notify public health authorities and the general public of overflows

that could make people sick. Beachgoers across the country would benefit from early

detection and minimization of overflows and from having the beach closed before the

sewage reaches the beach, not after it is already in the water and they are (literally)

swimming in it. Although some portions of the rule no longer have the support of

the sewer operators, the monitoring, reporting, and public notification provisions are

not opposed by any of the stakeholders. Will you commit to moving those provisions

separately in a rulemaking so as to provide immediate protection to the American

public while the other portions of the rule are debated?

Response. SSOs are covered by the Clean Water Act and are generally prohibited

as unpermitted discharges. We are evaluating options for proceeding with improvements to NPDES permit requirements for SSOs and municipal sanitary sewer collection systems. The Agency received extensive comments and suggestions in response to its January 2001 draft proposed regulations. We are reviewing those comments, as well as the data we have collected to prepare a Report to Congress on

the impacts and control of CSOs and SSOs, in order to determine the best way to

address this environmental issue. We have also met extensively with our stakeholders on this issue. Based on the information collected, we will consider a range

of options to address SSOs, including rulemaking. In the meantime, EPA and States

are continuing to address SSO problems with compliance assistance and enforcement in accordance with the EPA’s April 27, 2000, Compliance and Enforcement

Strategy Addressing Combined Sewer Overflows and Sanitary Sewer Overflows.

Question 18. EPA is moving forward a new policy that would allow sewer operators to divert sewage around (bypass) secondary treatment units when it is raining.

Will you commit to studying the public health impacts of this proposed policy

change before moving it forward?

Response. EPA is evaluating the applicability of the bypass provision at 40 CFR

122.41(m) to diversions of a portion of peak wet weather flow at POTWs. We are

requesting public comment on a proposed policy which was published in the Federal

Register on November 7, 2003. The framework of the draft policy is described in

question 12 of this response. EPA intends that the permit framework described by

its policy should ensure that permittees develop information to assess potential

water quality impacts associated with blended effluent.
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RESPONSES BY TRACY MEHAN TO ADDITIONAL QUESTIONS FROM SENATOR WYDEN

Question 1(a). There are 15 communities in Region 10 that have combined sewers.

Knowing that all the communities in Oregon have enforceable orders with the State

to control combined sewer overflows (CSOs), why was the city of Portland targeted

for investigation?

(b) The U.S. Environmental Protection Agency (EPA) received copies of the agreements entered into between the City and the State of Oregon back in 1991 and

again when the agreement was amended in 1994. EPA began looking into Portland’s

efforts in February 2001, 10 years after the City had first signed an enforceable

order with the Oregon Department of Environmental Quality. Why did the agency

wait for 10 years to ask questions about the city of Portland’s program?

(c) The city of Portland is more than halfway toward meeting its goal of a 96 percent reduction in combined sewer overflow volumes. This is a more stringent reduction level than many communities around the country are committed to achieve, and

more stringent than EPA guidance. Why would EPA spend scarce resources to pursue a community already on schedule to go beyond what EPA has approved elsewhere?

(d) The city of Portland has spent over $100,000 in expenses and staff time to respond to your requests for information, visits, tours, and meetings. How much

money has EPA spent on staff time, travel and the use of consultants to undertake

this two and a half year effort?

(e) The July 7, 2003 letter from Department of Justice claims EPA finds the City

to have violated the Clean Water Act because they have had hundreds of CSO

events during the past 5 years. How is it possible given that the order signed by

the State and the City expressly contemplates CSOs will continue until the abatement program is completed in 2011? Does this mean that the Federal Government

does not recognize the CSO abatement orders issued by the State of Oregon?

(f) The July 7, 2003 letter discusses the need for the Federal Government to collect penalties from the City. The Portland community has already spent over

$500,000,000 of local ratepayer money since 1991 to attack the CSO problem. They

will undoubtedly spend at least that much during the next 8 years to finish the job

they have already begun. What purpose would a financial penalty serve? What is

the economic benefit the City has enjoyed during the past 10 years when sewer

rates have tripled to address the very problems all of us are interested in solving?

(g) In order to evaluate EPA’s actions in connection with the city of Portland’s

Combined Sewer Overflow program, I am requesting the following documents concerning this matter:

• All correspondence, including electronic mail, regarding the Environmental Protection Agency’s and your consultants’ 2001–2003 inquiry into the city of Portland’s

Bureau of Environmental Services’ operation of its wastewater treatment and collection system; compliance with the Combined Sewer Overflow and Separate Sewer

Overflow provisions of the City’s National Pollution Discharge Elimination System

(NPDES) permits (Columbia Boulevard and Tryon Creek Wastewater Treatment

Plants); and compliance with Department of Environmental Quality (DEQ) Amended Stipulation and Final Order, No. WQ–NWR–91–75, dated August 11, 1994 regarding the city of Portland’s combined sewer system.

• All notes, summaries, communications, meeting schedules, requests for information and documents regarding Portland’s compliance with requirements for combined sewer overflow control.

• All correspondence, guidance, initiatives, memoranda, enforcement initiatives or

other materials related to EPA’s request of the city of Portland for information regarding operation of wastewater treatment and collection systems and compliance

with the Combined Sewer Overflow and Separate Sewer Overflow provisions of

NPDES permits, within the past 3 years.

• All correspondence, including electronic mail, guidance, initiative, memoranda,

and documents or other materials relating to national, regional or local policies regarding the administration of the Underground Injection Control (UIC) program

within the State of Oregon within the past 3 years. Underground Injection Control

(UIC) program within the State of Oregon within the past 3 years.

Response. For EPA’s responses to the questions from Senator Wyden requesting

information and documents on the U.S. Environmental Protection Agency’s investigation of the city of Portland’s sewer collections system, please see the attached

letter, dated October 14, 2003, from Acting Administrator Horinko to Senator

Wyden.
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U.S. ENVIRONMENTAL PROTECTION AGENCY,

Washington, DC, October 14, 2003.

Hon. RON WYDEN,

U.S. Senate,

Washington, DC.

DEAR SENATOR WYDEN: Thank you for your letters of August 6 and August 28,

2003, requesting information and documents on the United States Environmental

Protection Agency’s (EPA’s) investigation of the City of Portland’s sewer collection

system. I share your concern on this very important matter, and I remain hopeful

that we can work cooperatively with the City and the State to resolve this matter

expeditiously.

As noted in your letter, you have asked several questions regarding Federal involvement in this matter. Although we agree that Federal environmental programs

are often best administered at the State and local level, EPA retains the authority

and responsibility to assure consistent implementation of Federal laws nationally.

EPA continues to exercise that authority judiciously.

With regards to the City of Portland, EPA is attempting to address significant environmental problems resulting from continuing and new violations of the Clean

Water Act (CWA) and Safe Drinking Water Act. While EPA recognizes that the City

has entered into earlier agreements with the State of Oregon, it is important to note

that it appears the City of Portland continues to experience illegal CSO discharges,

even in areas where construction work on CSO controls has been completed. The

City has also experienced many significant sewage releases that are not CSOs and

not addressed in the prior state agreements. Finally, EPA is concerned that the City

uses over 9,000 underground injection wells as part of its overall storm water management program and that some of those wells may violate the Safe Drinking Water

Act. EPA hopes to work with the City of Portland to address any risks posed by

the use of these underground injection wells.

In addition to the foregoing, EPA is concerned that the City of Portland may have

committed numerous violations of the Clean Water Act and Safe Drinking Water

Act that were not addressed by the earlier state settlements. EPA’s review of these

instances indicates that these violations may include the failure to control the discharge of solid and floatable materials from the CSO outfalls, the uncontrolled overflows of raw sewage from manholes, cracked pipes, and elsewhere in the collection

system that have flowed into public streets, private yards, and surface waters, and

the placement of storm water injection wells within 500 feet of domestic water supply wells, which poses a potential health threat to those using the wells.

This final point is a key one. The City relies heavily on underground injection

wells for storm water control. While many of these 9,000 wells may be found to be

an appropriate part of the City’s overall storm water management program, they

have not been permitted or authorized by any entity as required by the Safe Drinking Water Act, and little information is available as to whether storm water injection in the Portland area is safe and adequately protective of the local aquifer,

which is an underground source of drinking water. EPA hopes to work with the City

to resolve these issues as quickly as possible.

EPA does recognize that the timing of our investigation is unfortunate, and we

acknowledge the City and State’s previous commitments to address Portland’s sewage problems. We hope that our current investigation will not unduly interfere with

the City’s ongoing efforts, and we remain committed to working with City and State

officials as we progress forward.

Finally, your letters also requested copies of documents concerning EPA’s inquiry

into the City of Portland’s CSO program. We are working with your staff to identify

which of the documents that are not enforcement sensitive or confidential would be

most helpful to you. As I am sure you can appreciate, it would be inappropriate to

release enforcement sensitive and confidential documents at this time, given the ongoing nature of EPA’s investigation and settlement negotiations with the City of

Portland.

Again, thank you for your letter and support of EPA’s enforcement and compliance assurance program. Should you have any further questions or concerns, please

contact James McDonald in EPA’s Office of Congressional and Intergovernmental

Relations at (202) 564-9942.

Sincerely yours,

MARIANNE L. HORINKO,

Acting Administrator.
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STATEMENT OF DAVID MABE, ADMINISTRATOR, IDAHO WATER QUALITY PROGRAMS, STATE OF IDAHO, IDAHO DEPARTMENT OF ENVIRONMENTAL QUALITY

Mr. Chairman and Members of the Committee: My name is David Mabe and I

am the Administrator of Water Quality Programs at the Idaho Department of Environmental Quality in Boise, Idaho. I bring greetings to you, Mr. Chairman, from

Governor Kempthorne and Director, Steve Allred.

I am testifying to share with you the perspectives of Idaho regarding the challenges that we face implementing the Clean Water Act and the need for regulatory

or statutory changes to the program.

STATUS OF OUR PROGRAM

As background for what I am about to present, I would like to give a very brief

overview of the status of Idaho’s water quality program. We have completed four

hundred eighty four TMDLs (Total Maximum Daily Loads) primarily involving sediment, nutrients and temperature; but we have also written TMDLs for metals, oil

and grease, and other pollutants.

Next month we will submit to the Environmental Protection Agency (‘‘EPA’’) a revised 303(d) list done in the integrated report form. It is set up in accordance with

the EPA’s new guidance regarding a five-part list. The call for data, public comment

and review was accomplished electronically. Our 305(b) report was submitted in

electronic format.

Our monitoring program is designed to cover the state in a 5-year period using

a probabilistic approach. This involves development of a random list of sites, and

then refines the areas based on each year’s monitoring results until we are focused

in the areas having the highest chance of impairment in the fifth year to do more

detailed monitoring. Other types of monitoring are done to assess progress in impaired waters, effectiveness of Best Management Practices, or to determine progress

of TMDLs in improving water quality.

We are making the Clean Water Act TMDL process work in Idaho, but I believe

that there are some fairly simple changes to be made that will lower costs of compliance for all parties involved, make more sense on the ground, and provide better

environmental protection.

SUGGESTED CHANGES TO THE LISTING AND DE-LISTING PROCESS

The water quality reporting/listing process under section 303(d) for impaired waters and under 305(b) for all waters needs to occur on a longer schedule. I suggest

a 5-year timeframe for mandatory reporting using an integrated reporting format.

It is very difficult and expensive to do meaningful reporting with public involvement

on a shorter timeframe. Simply put, we do not have the budget to accomplish a

‘‘statewide’’ monitoring program on a timeframe less than 5 years. In addition, many

of the improvements in impaired waters will not be apparent in 2 years. To report

on a shorter timeframe is not meaningful. For example, using a 2-year reporting

schedule Idaho would show very little change in the first two reporting periods (the

first four yeas), then the meaningful information we complete in year five would be

delayed until the third reporting period (year six) before it becomes public. Valuable

staff time and resources are diverted to make two reports in which we have little

to say and the public begins to pay less attention to our reporting.

In recent rulemaking and guidance efforts, the EPA has supported a very important concept in differentiating between pollutants and pollution. This allowed creation of a section of the 303(d) list where the waters are not fully supporting the

uses, but a TMDL will not fix the problem. Issues like water diversion are identified

in the new format, but there is not an expectation that a TMDL will fix an underlying problem that is not water quality based. The new format does allow other

agencies, the Idaho Department of Water Resources using the water diversion example, to be put on notice that there is a problem.

SUGGESTED CHANGES TO THE TMDL PROCESS

Another concept that is very important is to allow more flexibility in how pollutant loads are allocated. The current rules envision that loads will be allocated on

a daily basis to attain numeric goals. Unfortunately, the real world does not function in this simple fashion. The vast majority of Idaho’s TMDLs are to correct problems caused by nutrients or sediments that violate narrative standards. These pollutants are frequently not loaded on a daily basis. Often the majority of the loading

occurs in only a few days of runoff over the course of the entire year. A very important concept that has been discussed in recent EPA rulemakings is to allow additional flexibility in pollutant loading and recognize that daily numeric loads will not
78

work in all cases. A TMDL needs to become a Pollutant Control Plan (PCP) with

the flexibility to allow for numeric allocations for those pollutants where this situation fits, or to allow for a problem assessment and identification of specific water

quality goals to be achieved when a daily load does not fit. Trying to describe and

quantify what needs to happen is desirable, trying to allocate loads daily between

sources for some pollutants, is not possible.

Finally, the approval process we go through for our water quality reports, our

standards, and our TMDLs desperately needs to be revisited. The Clean Water Act

requires that each of these actions be approved by EPA within a 30 or 60 day timeframe. If they do not act, they are subject to legal action. The fact that they must

take affirmative action also makes each of these actions subject to consultation. This

system creates a tremendous workload for all parties involved. It favors those who

wish to litigate, and it creates a situation where different standards may be in place

at the state and Federal level simultaneously. I believe the solution is simple,

change the requirement for the Federal agencies to affirmatively approve each plan,

standard or water quality report to a system where they have discretion to reject

items they do not believe meet the goals of the Clean Water Act.

This change will place the burden of defending a work product on the agency that

created it. It will limit the number of venues where a challenge can be made. Currently, a challenge that we were overly protective is made in state court against the

state, and a challenge that we were under protective is made in Federal court

against EPA. This causes both agencies to create separate administrative records

to defend the same work product and if NOAA Fisheries or Fish and Wildlife Service are involved there can be as many as four separate administrative records created. This will result in less duplication between agencies and allow each agency

to focus on their priorities rather than try to be a generalist defending everything.

SUPPORT FOR POLLUTANT TRADING

Idaho has two watersheds set up to pursue pollutant trading. The first is the

Lower Boise River Drainage, the most populous area of our state. The second is in

the Mid Snake River, which supports a very large aquaculture industry. In both

areas we have designed programs in conjunction with active watershed advisory

groups over a multiyear period that should result in dynamic trading for nutrients.

In order to begin in the Mid Snake River we need the final NPDES permit language

from EPA Region 10 for issuing NPDES permits in the state of Idaho. In the Lower

Boise River, the state has just finished the final nutrient allocation for Hells Canyon

TMDL, which now must be translated into waste load allocation in the lower Boise

Watershed. I have trading partners waiting to begin in both cases. EPA has been

an excellent partner in establishing both of these trading areas.

Thank you, Mr. Chairman and Members of the Committee, for this opportunity

to comment on this important issue to Idaho and all of the stakeholders participating in Idaho’s TMDL process.

RESPONSES OF DAVID MABE TO ADDITIONAL QUESTIONS FROM SENATOR INHOFE

Question 1. Do you believe the current TMDL regulations are clear enough to protect states from unnecessary lawsuits? In not, what are the most important issues

a new rule should address to assure a workable, legally defensible program?

Response. The 40 plus legal challenges against EPA and states Nation wide in

the last 6 years are evidence that the rules need clarification. I believe the following

changes would improve the TMDL program and help focus resources on water quality problems rather than legal and administrative actions.

• Extend listing cycle to 4 or 5 years

• Incorporation of the current 5 part Integrated Report listing process

• Clearly separating 303(d) requirements for TMDLs from 303(e) for implementation plans via the continuing planning process.

Question 2. Identification and listing of impaired waters under Section 303(d) of

the Clean Water Act continues to be a source of controversy between EPA and the

states, even after the issuance of listing guidance. Can you explain, from a state

perspective, the source of the problem and what might be done to resolve it?

Response. The 2002 and 2004 listing guidance has helped overcome some of the

problems that plague section 303(d) of the Clean WaterAct. To help minimize future

litigation it would be helpful to put the provisions of this guidance into rule. Many

of the unanswered questions that remain are really policy level or even philosophical questions about how to interpret the clean water act or a state’s water

quality standards.
79

I believe there is still a fair amount of debate about the purpose of section 303(d)

of the Clean Water Act. Is it a stream list from which water quality plans are developed, or is it a tool to stop new or modified activities from occurring until it is demonstrated that there will be no impact to water quality. Obviously, the environmental groups and industries view these two potential interpretations very differently. Another example is which type error should be made when making listing

decisions. Some parties support a high probability that any impaired water be listed

(resulting in many streams being listed that are not impaired), while others are

more concerned that the streams on the list be impaired (resulting in some impaired

streams not being listed).

Another issue that frequently causes controversy is the interpretation of an individual state water quality standard. Across the United States there is a tremendous

variability in climate, vegetation, soils and human activities. This interacts to create

different and varying water quality conditions and stream potential. The National

Research Council (200) report to Congress describes this. Additionally, there is a

great deal of variability in the methods used to assess water quality and describe

the beneficial uses that are being protected in the various states. EPA is left in the

position of trying to compare and approve each state’s impaired waters list and create a record supporting their decision that will stand up to litigation. In reality, the

states are really the only one’s in a position to make these calls and Federal approval process creates a great deal of controversy.

Question 3. Does Idaho currently, include on its 303(d) list those waters that meet

some standards but for which there is inadequate data for other uses? What about

those waters that meet all standards but not through best practical technology or

secondary treatment? Should these waters be listed?

Response. Idaho uses the new integrated report format so we have a specific category that identifies all waters that do not have adequate data to make a call. This

is Part 3 of the report and a schedule should be developed to monitor these waters.

I would be opposed to putting them on the 303(d) (part 5 of the integrated report)

for 2 reasons. It causes the list to grow substantially and in Idaho we would then

be reviewing new or modified activities to assure that they met a no net increase

standard. This can be a substantial workload in areas where water quality is really

not a problem—lack of information is. The second reason is that delisting a stream

is really difficult. It viewed suspiciously by environmental groups and EPA—they

almost always oppose it and the amount of data it can take to delist a stream can

be substantial.

Using the integrated report also allows us to put streams fully supporting all of

the uses that have been evaluated into part 2. This is where most Idaho streams

will probably go that are outside of wilderness boundaries because we have not figured our how to determine is a stream is fully supporting the ‘‘aesthetics’’ one of

our more subjective beneficial uses. So if we listed all streams for which there was

insufficient data for a use—we would probably be forced to list all streams outside

wilderness boundaries.

If point sources are not using best available technology and the data indicates

that water quality is fine, the stream should not be listed. This is simply a matter

where the technology required should be updated in the next NPDES permit cycle

(within 5 years) unless other variances or exemptions apply.

STATEMENT OF JULI BETH HOOVER, AICP, CITY OF SOUTH BURLINGTON, VT

I am testifying on behalf of the city of South Burlington, Vermont, where I serve

as Director of Planning and Zoning, and also our eight fellow towns who are subject

to EPA’s Phase II NPDES stormwater regulations. My testimony concerns our experience with the Phase II program, some creative ways we have found to meet the

Phase II requirements, and also our expanding, highly successful program of decentralized stormwater management projects that are showing great promise as a costeffective way to meet local economic and environmental needs.

South Burlington and our fellow towns comprise the urban core of Vermont. We

are all located within the Greater Burlington area of Chittenden County, which with

its 150,000 residents is home to one-quarter of Vermont’s population and most of

its major employers. Where water and the economy are concerned, most of what

happens in Chittenden County relates to Lake Champlain. The Lake is our drinking

water source, a major driver of Northwest Vermont’s tourism economy, and a local

and national treasure. It is also the endpoint for nine urban streams that drain

most of the County’s urbanized area, Seven of these are on the State’s 303(d) list

of waters impaired by urban stormwater runoff. Stormwater is a major environmental concern in Vermont; some of our beaches are plagued by bacterial-related
80

closings, and we continue to work to reduce phosphorus loading into our beautiful

lake.

When we first began learning about the Phase II program, we said ‘‘Ugh.’’ More

requirements, more paperwork, more expense. Our experience with the program to

date, 6 months after receiving authorization under the program, has been much better than anticipated for two principal reasons.

First, the Phase II stormwater management plan development has led to a thorough accounting of just what the towns spend on stormwater to begin with: in other

words, what are all of the things we do and expenses we incur because it rains, and

because snow melts? The answer is anything spent or done on flood control, catch

basin cleaning, culvert replacement, maintaining beaches and streamside recreation

areas, or ensuring that commercial sites are properly managed becomes part of each

town’s Phase II Stormwater Management Plan. In short, the Stormwater Management Plans have become a sort of gap-in-services analysis pointing out what our

stormwater actions and budgets really are, what holes there may be, and how to

pull together new and particularly existing resources to cover those gaps.

Second, the Chittenden County towns developed a creative and cost-effective way

to meet the public education and public outreach minimum control measures. It was

apparent early in the Phase II process that the collective public education skill level

of our group of engineering, public works, wastewater and planning geeks was absolutely zero. Concerned that we were going to be compelled to spend staff time and

funds on ineffective and boring brochures, we did something different. Eight towns,

the Burlington Airport and the University of Vermont hired a local marketing firm

to develop a professional, highly visible public education campaign to meet the

Phase II requirements for all of these permittees. Instead of boring brochures and

wasted staff time, we will have a professional public education campaign on how

citizens can keep the Lake clean. This approach, which will cost 33 cents per county

resident per year, has had an enormous impact in King County, Washington and

Prince George’s County, Maryland and we believe it will work in Chittenden County, too.

It is South Burlington’s direct experience, and my testimony, that given the level

of effort, staff time, and resources being spent to meet the GASP–34 accounting

standards for fixed-asset inventory, the fractional share of time and resources we

are spending to meet the Phase II regulations is a far more useful, cost-effective,

and publicly beneficial program. The asset inventory doesn’t prevent beach closings

and higher water filtration costs; having the authority to implement Phase II will

help us do just that.

In Chittenden County, we estimate our communities will spend between $20,000

and $200,000 apiece per year on new expenditures related to Phase II—including

the cooperative public education program which—is a per capita expenditure of between $4 and $12 per year. In a recreation-based economy, and in a place where

the Champlain Water District will charge us to remove from the Lake whatever pollutants we put into it, we are confident that this is money well spent.

The second, and very exciting, initiative for which I would ask your support, is

the our effort to use decentralized or distributed stormwater systems to prevent pollution and support business development. In 2000, a very creative Vermont Environmental Conservation employee noticed three things on a piece of land in South Burlington: a brook polluted with petroleum hydrocarbons, sediment and phosphorus

from stormwater runoff in our ‘‘auto alley’’ and which drained, of course, directly

to Lake Champlain; a Chevy dealership that needed more stormwater capacity to

expand its business; and a totally unused piece of land behind the Chevy dealer that

was part of a railroad right-of-way.

With $300,000 from 13 separate grant sources, the cooperation of the Chevy dealer, and a lot of head-scratching by some very talented people, the city of South Burlington built the Bartlett Brook Stormwater Treatment Facility. This four-acre system does three things: It allowed Bill Shearer to expand his business; has now been

shown through scientific monitoring to be removing toxic pollutants and nutrients

from Bartlett Brook that otherwise would be dumped in the lake; and it made use

of a piece of undevelopable land to serve the environment and the economy in an

incredibly cost-effective and attractive way.

This approach works. Distributed stormwater treatment systems using constructed wetlands or micropool extended detention, can make use of under-utilized

and un-developable land to create capacity for new development and cleanup even

the most difficult stormwater runoff pollution problems. They can compliment CSO

and other structural treatment systems, or in some cases, substitute for them entirely. Within Chittenden County we have plans on the board for a half-dozen more

of these systems, all using land such as highway rights-of-way where no one wants
81

to build, but where we have tremendous potential to improve water quality and create development capacity where stormwater storage and treatment is an issue.

In Chittenden County, we have planned this type of distributed treatment system

in two transportation-related locations here in South Burlington where commercial

properties need storage and treatment area, and we can provide that in otherwise

useless cloverleafs and on-ramp lands. From a cost standpoint, these systems typically cost between $300,000 and $800,000 to build. When existing public lands, such

as railroad or interstate rights-of-way can be used, the cost drops accordingly.

Burlington is proposing a wetland system just upstream of Oakledge Beach, a

beautiful beach that is plagued by closures after rain events due to urban runoff

from Engelsby Brook. A constructed wetland system similar to Bartlett Brook is proposed just a quarter-mile upstream to remove bacteria, toxics and sediment. The

cost is close to $1 million and again, must be funded through multiple grant sources

when it should be funded as a matter of good basic water quality infrastructure.

South Burlington is proposing two similar systems to be funded through an EPA

STAG grant and the EPA Decentralized Water Resources Demonstration Grant,

with costs of $300,000 for one that treats runoff from our downtown in land down

below an Interstate on-ramp, and $800,000 for a system treating runoff from state

and Federal highways, three shopping centers, and a residential neighborhood just

a half-mile upstream of Lake Champlain, and South Burlington’s beautiful Red

Rocks park and beach.

I would ask Congress’s support for this distributed approach through more aggressive funding for and directives to the SRF program to make use of these funds for

distributed and non-structural stormwater treatment. Last year, Congress directed

the use of $75 million of the over $1 billion in Federal funds for the SRF for distributed, non-traditional and soft path techniques such as these. We would greatly improve public use of funds to spend a larger share of our traditional clean water

funds on cheap, effective, distributed stormwater strategies instead of forcing municipal staff to chase down and administer 13 grants for such a valuable approach.

DISTRIBUTED/DECENTRALIZED STORMWATER TREATMENT SYSTEMS FOR URBAN

STORMWATER MANAGEMENT IN CHITTENDEN COUNTY, VT

BARTLETT BROOK STORMWATER TREATMENT SYSTEM, CITY OF SOUTH BURLINGTON

The Bartlett Brook Stormwater Treatment System in South Burlington, Vermont

is a state-of-the-art constructed wetland system. It illustrates the many advantages

of distributed stormwater management, also known as decentralized or ‘‘soft path’’

systems. These utilize land-based treatment of stormwater to clean pollutants from

runoff before the runoff enters streams and lakes.
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Stormwater runoff from the auto-related businesses on U.S. Route 7 is diverted

into a four-acre system of settling ponds and constructed wetlands prior to discharge

into Bartlett Brook and Lake Champlain.
83

The pond makes use of unused land in a railroad right-of-way, and created

enough stormwater capacity to allow expansion of Shearer Chevrolet. Monitoring

has shown the system effectively removes petroleum hydrocarbons, sediment, and

phosphorus from stormwater. The project cost $300,000 and was funded through 13

grants.
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ENGELSBY BROOK CONSTRUCTED WETLAND TREATMENT, CITY OF BURLINGTON

The city of Burlington will build a constructed wetland similar to the Bartlett

Brook system on this land along Engelsby Brook, roughly 1⁄4 mile upstream from

Oakledge Park and Lake Champlain. This system includes a $60,000 EPA demonstration grant and funding from the EPA Superfund settlement for the Pine

Street Barge Canal.

The constructed wetland will remove pollutants upstream of this stormwater outfall, which contributes to beach closures just downstream at the popular Oakledge

Park beach.
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PLANNED MICROPOOL STORMWATER TREATMENT SYSTEMS, CITY OF BURLINGTON AND

CITY OF SOUTH BURLINGTON

South Burlington will be using the decentralized stormwater treatment approach

to treat runoff from its two major commercial centers. Unused, un-developable land
86

in highway rights-of-way will be used to install micropool extended detention systems.

This land along Shelburne Road will treat runoff from and enable redevelopment

of three major shopping centers in Burlington and South Burlington.

This interstate on-ramp’s right-of-way contains the outfalls for runoff from South

Burlington’s newly developing City Center area. A micropool system, estimated to
87

cost $300,000, will provide capacity for development and ensure that pollutants stay

out of Centennial Brook and Lake Champlain.
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RESPONSES OF JULIE BETH HOOVER TO ADDITIONAL QUESTIONS FROM SENATOR

JEFFORDS

Question 1. Can you comment on the interaction between stormwater management and the amount of water that arrives at a wastewater treatment plant during

a wet weather event?

Response. There is no question that the use of decentralized or distributed

stormwater treatment and storage systems can help alleviate wet-weather flows to

wastewater treatment plants. Infiltrating stormwater into the round, detaining it in

basins or storage tanks, or diverting it through land-based treatment systems prior

to discharge into a storm drainage system reduces the amount of water that must

go through a treatment plant, thereby reducing the potential for overflows. Using

distributed systems also reduces the impact of peak flows by detaining stormwater

and releasing it over time, rather than flooding the storm drainage system and

treatment plant all at once.

In addition to ameliorating the quantity of stormwater arriving at a treatment

plant, distributed treatment and storage also improves the quality of the

stormwater that must be treated. Techniques that detain stormwater result in

heavy particles settling out prior to discharge, keeping these pollutants out of the

wastewater treatment plant, and land-based treatment systems also remove volatile

organic compounds from stormwater. Treating stormwater through detention or

land-based treatment thus reduces the amount of treatment that must occur in a

plant, and reduces the pollutant load found in any overflows.

Question 2. In your experience, have structural or non-structural solutions to

storm water management problems been the most effective?

Response. Structural and non-structural techniques must be used together to create the most effective stormwater management program. Just as a city needs developed areas and parks to create a healthy community, stormwater infrastructure

needs both structural and non-structural or land based components to maximize pollution control and meet water quality goals.

Structural solutions, while very costly, are essential both in fostering urban development and meeting water quality goals. They take very little land area and thus

facilitate compact land development patterns. Structural solutions may not, however, be necessary in very low-density areas, or in locations where stormwater treatment can be accomplished through land-based treatment without compromising economic and community development goals. In all cases, non-structural solutions

should be an essential complement to structural stormwater treatment. Land based

treatment, especially in stormwater pollution ‘‘hot spots,’’ is essential for improving

groundwater recharge, reducing peak flows, and especially for achieving better pollutant removal.

But without even investing in land-based or structural treatment, non-structural

practices can have a substantial, positive impact on water quality. Practices such

as making landscaping more ‘‘water-friendly,’’ reducing the amount of pesticides,

herbicides and other chemicals used, and changing public behaviors on such issues

as car washing and pet waste, can further improve water quality without further

investment in structural or land-based treatment.

STATEMENT OF MICHAEL SAMOVISKI, CITY OF HAMILTON, OH, OFFICE OF THE CITY

MANAGER, DEPARTMENT OF PUBLIC WORKS

Mr. Chairman and Committee members, thank you for granting the City of Hamilton this opportunity to testify before you today.

The City of Hamilton is located in the southwest portion of the State of Ohio and

has a population of somewhat more than 60,000 people. Hamilton operates a Publicly Owned Treatment Works, including a Wastewater Treatment Plant and 212.7

miles of sanitary sewer lines. Hamilton also maintains a separate storm water collection system consisting of 180.5 miles of storm sewer and 6,500 catch basins.

In 1999, the US EPA promulgated Phase II Storm Water Rules which require covered political jurisdictions to obtain a National Pollutant Discharge Elimination System—General Storm Water Discharge Permit, which Hamilton received in April

2003. To obtain this Permit, Hamilton was first required to develop a Storm Water

Management Plan, which the City submitted to Ohio EPA in March 2003. This Plan

encompasses the 6 minimum controls mandated by the Phase II Rules.

Hamilton’s City Council is seriously concerned about municipal implementation

and enforcement of this recently issued General Storm Water Discharge Permit, especially in light of our very challenging local and state economic climates. As the

City prepared its Storm Water Management Plan, it became apparent to City Coun-
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cil that the costs associated with its implementation will have to be assumed by our

local government, or more likely by our citizens and businesses since surplus municipal moneys for this purpose are non-existent.

To pay for its Phase II Program, the City of Hamilton anticipates having to form

and implement a Storm Water Utility. Storm Water Utility charges will be based

upon the amount of impervious area on parcels of land. In this manner, each parcel

of land within the City of Hamilton would be assigned a fee determined by its runoff

characteristics.

According to the Ohio Supreme Court, storm water fees of this sort, since they

are utility charges, must be applied in an even and consistent manner without regard to tax status or land use. This means that all residents, businesses, schools,

churches, governmental and institutional complexes, etc. will have to be subject to

these charges, without exception. Each residential unit would have to pay a flat

monthly charge; but, non-residential properties would pay a higher amount equivalent to the relative expanse of impervious surfaces at their locations.

The City of Hamilton’s projected annual expense attributable to having to comply

with the new Phase II Program is an additional $1.6 Million over the current

$800,000 that the City now spends on storm water activities. Since Phase II is a

federally unfunded mandate, the City of Hamilton expects to have to raise this revenue by imposing a monthly fee of up to $5.50 on residential customers. Non-residential customers would be charged $5.50 multiplied by a factor which takes into

account the proportional increase of impervious area.

The following examples help to drive home our point: Hamilton’s First Baptist

Church, with its associated parking area, was determined to have an impervious

factor of 68 times that of a single equivalent residential unit (ERU). As a result,

the Church’s projected Storm Water Utility charge is calculated to be $374 per

month ($5.50 multiplied by 68). Smart Paper Company, a manufacturer of high

quality papers, has an impervious factor of 912 ERU’s, and its monthly charge

would be $5017. Hamilton High School has an impervious area equal to 243 ERU’s;

its monthly charge would be $1338. The local airport in Hamilton has 584 ERU’s

associated with its runways and other impervious areas which results in a $3215

monthly charge. Hamilton Scrap Processors, a privately owned recycler, with 88

ERU’s would have to pay $484 monthly.

This federally unfunded mandate is being imposed upon local communities at a

time when our economies are stagnant, and our Nation is facing huge deficits as

forecast by public financial officers. The City of Hamilton is no exception: local budget deficits are already predicted for 2004, and the state’s budget is in such distress

that no funding for cities and counties is available for Phase II compliance.

Now is not the time for distressed cities, such as the City of Hamilton, to have

to impose a new monthly Storm Water Utility charge across the community to

achieve Phase II compliance. When the local economy improves, Hamilton’s businesses and citizens may be better able to absorb this type of fee. In our current flagging economy, however, our local businesses cannot afford this additional expense.

Nor can our citizens who have very recently been called upon to take on more of

the municipal financial burden, specifically more of the public safety burden, by paying more in taxes for police and firefighter staffing at the local government level.

Please let me emphasize again that the time for implementation of this Phase II

Program is not now. Accordingly, the City of Hamilton respectfully asks that you,

as our elected Federal representatives in Washington, commence action before Congress to enact a 5-year moratorium. This moratorium could postpone the unfunded

mandate to a time better suited for requiring communities, such as our distressed

City, to step forward and implement the Phase II Rules and to impose additional

financial burdens on both your and our constituents.

We ask this not because the City of Hamilton is seeking to avoid serving as a

good steward of its river and receiving waters, but because we are concerned public

officials seeking to strike a reasonable balance between the stark reality of our current depressed local economy and continuing environmental improvement.

Thank you again for your attention and courtesy in allowing us to address this

Committee. We were honored to have received your invitation to appear before you

to present our concerns.
90

Storm Water Utility Projected Income Statement

City of Hamilton, Ohio

FY 2003 FY 2004 FY 2005 FY 2006 FY 2007 FY 2008

Estimated Annual Billing ERUs 37,430 37,430 37,430 37,430 37,430 37,430

Annual Utility Fee ($/ERU/mo) $5.50 $5.50 $5.50 $5.50 $5.50 $5.50

Program Expenses:

Regulatory Compliance ............... $5,000 $100,000 $100,000 $100,000 $100,000 $100,000

Operation & Maintenance-Leaf

Collection & Street Sweeping $595,000 $610,000 $630,000 $650,000 $670,000 $690,000

Operation & Maintenance-Collection System ........................ $150,000 $802,000 $826,000 $851,000 $877,000 $903,000

Planning and Management ........ .................... $170,000 $170,000 $170,000 $170,000 $170,000

Capital Projects-Engineering

Studies ................................... .................... $300,000 $300,000 $300,000 .................... ....................

Capital Projects-As Needed System Repair Replacement ....... $236,000 250,000 $260,000 $270,000 $280,000 $290,000

Capital Projects-Engineering

Projects .................................. .................... $305,000 .................... .................... $500,000 $500,000

Total Annual Expenses ........... $986,000 $2,537,000 $2,286,000 $2,341,000 $2,597,000 $2,653,000

Program Revenues:

Utility Revenue (From New User

Fee) ........................................ $206,000 $2,470,000 $2,470,000 $2.470,000 $2,470,000 $2,470,000

Revenues .................................... $206,000 $2,470,000 $2,470,000 $2,470,000 $2,470,000 $2,470,000

Revenue Breakdown:

Residential .................................. $138,867 $1,665,052 $1,665,052 $1,665,052 $1,665,052 $1,665,052

Commercial ................................. $30,370 $364,148 $364,148 $364,148 $364,148 $364,148

Industrial .................................... $20,344 $243,935 $243,935 $243,935 $243,935 $243,935

Agricultural ................................. $3,910 $46,882 $46,882 $46,882 $46,882 $46,882

Non-Residential Misc ................. $141 $1,692 $1,692 $1,692 $1,692 $1,692

Non-Residential Public ............... $12,368 $148,292 $148,292 $148,292 $148,292 $148,292

Total Non Residential ............ $67,133 $804,948 $804,948 $804,948 $804,948 $804,948

Revenues .................................... $206,000 $2,470,000 $2,470,000 $2,470,000 $2,470,000 $2,470,000

APRIL 25, 2001

RESOLUTION NO. R2001–4–23

A RESOLUTION REQUESTING THE OHIO DEPARTMENT OF DEVELOPMENT

TO DESIGNATE THE CITY OF HAMILTON, OHIO, AS ‘‘SITUATIONALLY DISTRESSED’’ UNDER THE GUIDELINES OF THE OHIO MANUFACTURING MACHINERY & EQUIPMENT INVESTMENT TAX CREDIT PROGRAM

WHEREAS, until January 1999, the City had received the ‘‘distressed city’’ designation under the Guidelines of the Ohio Manufacturing Machinery & Equipment

Investment Tax Credit Program, thereby allowing for a investment tax credit of

13.5%, as opposed to a 7.5% investment tax credit, on new manufacturing machinery and equipment purchased by local manufacturing companies; and

WHEREAS, following January 1999 and based upon discussions with Ohio Department of Development personnel, the City of Hamilton was upgrade to a ‘‘nondistressed’’ designation based upon the improvement of the unemployment rate

within the community, and

WHEREAS, the following, recent events have had, and are likely to continue to

have, a serious impact upon employment opportunities within the corporate limits

of the City of Hamilton and upon the economic health of the City:

1. Since 1999 several major companies have either downsized, relocated or been

sold, and have expressed intentions to leave the City;

2. Ohio Casualty Group recently relocated its corporate headquarters from

Hamilton to Fairfield, Ohio, moving approximately 1,000 employees out of the

City;
91

3. Champion International Corporation, formerly the City’s largest employer,

was sold to International Paper (IP) in June 2000, and:

(a) At the time of the sale, Champion had two facilities in Hamilton, including

a paper mill with 800–850 employees and a corporate administrative complex

with 550 employees.

(b) IP already owned another paper mill in the City, with approximately 225

employees.

(c) After the sale, IP announced that it would close the administrative

complex and relocate some of the existing 550 employees to other IP sites in

and out of Ohio, but not in Hamilton, and additionally, IP announced that

it was putting the two paper mills it owned in Hamilton up for sale;

(d) In January 2001, a prospective buyer, Smart Papers, LLC, was identified

for the former Champion paper mill, and thereafter it has expressed the need

to make serious cuts in costs at the mill in order to make it profitable as a

stand-alone entity;

(e) While it is uncertain how these cost-cutting measures will affect the

overall short- and long-term employment outlook, as an initial move by Smart

Papers, the work force was decreased to 550 employees;

(f) By raising the investment tax credit percentage back up to 13.5%, an

added incentive may be provided to Smart Papers and other Hamilton

manufactures to make additional capital investments in their plants;

(g) The IP Dayton Street Mill is for sale as part of the IP diverstiture of their

entire Fine Papers Division;

(h) While the Dayton Street Mill is currently operating profitably, paper

production began at this location in 1848 and it is one of the oldest

continuously operating paper mills in the Midwest; and

(i) The long-term viability of the Dayton Street Mill and status of the existing

225 employees is uncertain:

4. In March 2001, Mercy Health Partners announced that it was closing its hospital in Hamilton, which will result in the relocation of approximately 635 out

of Hamilton to either other Mercy facilities or other employers; and

5. At the end of March 2001, Thyssen Krupp Hoesch Suspensions announced

that it was permanently closing its Hamilton spring and suspension parts plant

over the next several months, resulting in the loss of another 106 quality manufacturing jobs in Hamilton.

WHEREAS, while the Ohio Manufacturing Machinery & Equipment Investment

Tax Credit is not seen as a panacea for development in the City, it does provide

an additional, needed incentive to locate within the corporate limits of the City, and

WHEREAS, in total, over the last year and a half, the City of Hamilton has experienced losses in private sector employment of approximately 2,700 jobs, totaling almost 8% of the civilian labor force for the City, as determined by the Ohio Department of Jobs and Family Services.

NOW, THEREFORE, BE IT RESOLVED by the Council of the City of Hamilton,

Ohio;

SECTION I: That based upon the evidence provided and the circumstances that

have and are presently occurring within the City of Hamilton, Council does hereby

formally request the Ohio Department of Development to designate the City of

Hamilton as ‘‘situationally distressed’’ under the Ohio Manufacturing Machinery &

Equipment Investment Tax Credit Program.

SECTION II: That Council further requests the aforesaid ‘‘situationally distressed’’ designation take effect immediately or at the soonest time possible and remain in effect until such time as prevalent economic and employment conditions

positively change in the City of Hamilton.

SECTION III: That the ‘‘situationally distressed’’ designation for the City of Hamilton, Ohio, will allow any company locating within its corporate limits to be eligible

for an investment tax credit of 13.5%, for new manufacturing machinery and equipment.

SECTION IV: This resolution shall take effect and be in full force from and after

the earliest period allowed by law.

PASSED: April 25, 2001

Adolf Olivas, Mayor

Effective Date: Immediately

ATTEST: Ina Allen, Acting City Clerk
92

CERTIFICATE

I, Ina Allen, Acting Clerk of the City of Hamilton, Butler County, Ohio, hereby certify that the foregoing Resolution No. R2001–4–23 was duly published as provided

by Section 113.01 of the Codified Ordinances of the City of Hamilton, Ohio, by posting ten days after passage, a copy thereof in each fire station within the city for

a period of ten days. POSTED: April 30, 2001

Ina Allen, Acting Clerk

City of Hamilton, Ohio

CERTIFICATE

The undersigned Acting Clerk of Council of Hamilton, Ohio does hereby certify that

the foregoing is a true and correct copy of Resolution R2001–4–23 of the City of

Hamilton, Ohio, duly adopted at the Regular Meeting on April 25, 2001.

Ina Allen, Acting Clerk

City of Hamilton, Ohio

DEPARTMENT OF ECONOMIC DEVELOPMENT,

Hamilton, OH, May 10, 2001.

JOSEPH C. ROBERTSON, Interim Director,

Ohio Department of Development,

Columbus, OH.

ATTN: Steve Kelley

DEAR JOE: This letter is written as a request for reconsideration of the City of

Hamilton’s designation relative to the Ohio Manufacturing Machinery & Equipment

Investment Tax Credit. Attached is Certified Resolution from the Hamilton City

Council formally requesting this consideration.

Up until 1999, the City had received the ‘‘distressed city’’ designation under this

program, allowing for the 13.5 percent as opposed to the 7.5 percent tax credit on

manufacturing machinery & equipment investments by our local manufacturers.

Based upon discussions with Ohio Department of Development personnel at that

time, the City of Hamilton was downgraded as ‘‘non-distressed’’ based upon the improvement of our unemployment rate in the community.

Unfortunately, recent events have and are occurring that have and will continue

to seriously affect the employment situation and the economic health in the City of

Hamilton. Since 1999, several major companies have either downsized, relocated or

been sold and expressed intentions to leave the City.

Ohio Casualty Group (OCG) recently relocated its corporate headquarters from

Hamilton to Fairfield, moving approximately 1,000 employees out of the City. This

relocation was facilitated through an Enterprise Zone Agreement with the City of

Fairfield and a Job Creation Tax Credit from the State. (Enterprise Zone Application and Job Creation Tax Credit Program correspondences are attached.) The City

attempted to retain OCG through a number of offered incentives, including a sale/

leaseback on their Hamilton facilities, but OCG relocated out of Hamilton, despite

our efforts.

Champion International Corporation, the City’s largest employer, was sold to

International Paper (IP) in June 2000. At the time of the sale, Champion had two

facilities in Hamilton, including a paper mill with approximately 800 employees and

a corporate administrative complex with 550 employees. (WARN Act letter to the

City of Hamilton Mayor, dated January 2, 2001, relative to the administrative complex, is attached. Also attached are relocation notices from Butler and Clermont

Counties, relative to the relocation of these jobs out of Hamilton. Additionally, various articles are provided outlining the job losses and relocations.) In this case as

well, various tax incentives, including enterprise zone and job creation tax credits,

have been utilized to assist a company to relocate existing jobs out of Hamilton.

IP already owned another paper mill in the City, with approximately 225 employees. After the sale, IP announced that it would close the administrative complex and

relocate some of the existing 550 employees to other IP sites in and out of Ohio,

but not in Hamilton. Additionally, IP then announced that it was putting the two

paper mills it owned in Hamilton up for sale.

In January 2001, a prospective buyers, Smart Papers, LLC, was identified for the

former Champion paper mill. The new buyer has expressed the need to make serious cuts in costs at the mill in order to make it profitable as a stand-alone entity.
93

How these cost-cutting measures affect overall employment in the short- and longterm is yet to be seen. However, as an initial move by Smart Papers, the work force

was decreased to 550 employees. By raising the investment tax credit percentage

back up to 13.5 percent, an added incentive may be provided to Smart Papers to

make additional capital investments at the plant (Attached are several articles relating the Smart Papers transaction and the employment impact resulting from the

sale.)

The other IP paper mill is being sold as part of the sale of the entire Fine Papers

Division by IP. While this mill is currently operating profitably, paper production

began at this location in 1848 and it is the oldest paper mill in the Midwest. The

long-term viability of the mill and status of the existing 225 employees is a question

that is unanswered at this time.

On January 4, 2001, the City received another relocation from an existing company, Alba Manufacturing, looking to relocate operations from Hamilton to Fairfield. This relocation notice resulted from an enterprise zone application. This relocation will cost the City of Hamilton an additional 52 quality manufacturing jobs.

The relocation waiver was granted and Enterprise Zone Agreement was extended

even though the company had an existing Enterprise Zone Agreement in place for

their last expansion in Hamilton and their first Agreement with the City had expired only last year. (Enterprise Zone Application with Fairfield is attached.)

In March 2001, Mercy Health Partners announced that it was closing its hospital

in Hamilton. This move by Mercy will result in the relocation of another approximately 635 out of Hamilton to either other Mercy facilities or other employers.

(WARN Act letter to the City of Hamilton Mayor, dated April 11, 2001, is attached.)

On March 30, 2001, Thyssen Krupp Hoesch Suspensions announced that it was

permanently closing its Hamilton spring and suspension parts plant, resulting in

the loss of another 106 quality manufacturing jobs in Hamilton. (WARN Act letter

to the City of Hamilton Mayor, dated March 30, 2001, is attached.)

In total, over the last year and a half, the City of Hamilton has experienced losses

in private sector employment of approximately 2,700 jobs, totaling almost 8 percent

of the City’s civilian labor force, as determined by the Ohio Department of Job and

Family Services. Additionally, City personnel has recently spoken to several other

medium-sized employers in the City who are also considering long-term plans that

could seriously affect their local employment complement. These other companies

combined with the already near devastating effects that the City has felt from Ohio

Casualty and IP/Champion, Mercy and the number of other companies would nearly

cripple the financial condition of the City for the foreseeable future.

While the Ohio Manufacturing Machinery & Equipment Investment Tax Credit

is not seen alone as a development panacea for the City, it does provide an additional incentive to locate within the City.

If you have any questions, comments, or require additional information, please

contact me.

Sincerely,

TIMOTHY E. BIGLER,

Director.

OHIO DEPARTMENT OF DEVELOPMENT,

Columbus, OH, June 8, 2001.

Hon. ADOLF OLIVAS, Mayor,

City of Hamilton,

Hamilton, OH.

DEAR MAYOR OLIVAS: I am in receipt and have reviewed the City of Hamilton’s

petition for designation as a ‘‘Situational Distress’’ Municipal Corporation. Acting

under the authority granted to the Director of the Ohio Department of Development

in Amended Senate Bill 188, reference Ohio Revised Code 57733.33, A13; I am designating the City of Hamilton in Butler County, as a Situational Distress Municipal

Corporation. This designation will be in effect from July 1, 2001 through June 30,

2004.

Effective July 1, 2001 manufacturing or refining companies located within the political boundaries of the City of Hamilton, which make machinery and equipment

purchases in compliance with the guidelines as outlined in Ohio Revised Code Sections 5733.33 and 5747.31, are allowed to claim a credit against their Ohio Cor-
94

porate Franchise Tax equal to 13.5 percent. This is an increase from the base of

7.5 percent, which is available anywhere in the State of Ohio.

Sincerely,

JOSEPH C. ROBERTSON,

Interim Director.

OFFICE OF THE CITY MANAGER,

Hamilton, OH, February 27, 2003.

Hon. GEORGE V. VOINOVICH,

Washington, DC.

Re: Proposed Legislative Moratorium on the Implementation/Enforcement of the

NPDES Storm Water Phase II Final Rule

DEAR SENATOR VOINOVICH: The City Council of the City of Hamilton, Ohio (City)

is concerned about the implementation and enforcement of the National Pollutant

Discharge Elimination System (NPDES) Storm Water Phase II Final Rule (Phase

II Rule) in this challenging local, state and federal economic climate. As part of the

Clean Water Act (CWA) legislation, the USEPA extended the NPDES permitting

program to storm water discharges in 1990. The 1990 regulations established requirements for permitting discharges from industries, construction sites large than

5 acres, and drainage systems in large and medium municipalities serving a population greater than 100,000 (Phase I program). On December 8, 1999, USEPA promulgated the expansion of the existing NPDES Storm Water Program to include

discharges from small municipalities with a population less than 100,000. This program, termed the Phase II program, requires covered political jurisdictions to obtain

an NPDES storm water discharge permit by March 10, 2003. In Ohio, about 280

cities, counties, villages and townships located in urbanized areas that own and operate municipal separate storm sewer systems (MS4s) are required to obtain this

type of permit, which includes the City of Hamilton. To comply with this unfunded

government mandate, the City has retained the environmental engineering consulting firm of CDM to assist the City in preparing a Storm Water Management

Plan (Plan) that outlines best management practices (BMPs) that the City must implement over the next five years. These BMPs address the six minimum control

measures required within the Phase II Rule, and when implemented in concert, are

expected to result in significant reductions of pollutants discharging into receiving

streams.

We will not dispute that since the passage of the CWA 30 years ago, the quality

of our Nation’s waters has markedly improved. The City sees daily visual evidence

of these remarkable achievements here locally along Hamilton’s major watercourse—the Great Miami River—with the continuing presence of large numbers of

wildlife, including herons, Canada geese, wood ducks, mallards, swans, beaver, and

sea gulls. To maintain and/or improve upon this status however, will come at a certain cost.

As the City has prepared its Phase II Plan, which we fully intend to submit to

the Ohio EPA on or before March 10, 2003, it has become noticeably apparent to

our City Council that the costs associated with the implementation of this Plan will

have to be assessed to our local government, and alternatively and more likely, to

our citizens and businesses. This occurring at a time when our economy is stagnant

and our nation is facing huge deficits that are being forecast by both local and state

financial officers, not to mention federal fiscal authorities. Hamilton is no exception;

local budget deficits are already predicated for the next fiscal year, and Ohio’s governor has declared the state’s budget to be in such crisis that no additional help

for local communities will be forthcoming from that sector. Alas, Hamilton, along

with 279 other jurisdictions, are being asked to comply with an unfunded government mandate at a time when we can ill afford to be capriciously spending.

To pay for this Phase II program, the City is considering forming and implementing a Storm Water Utility (Utility). The Utility charges will be related to the

impervious area factor (i.e., potential runoff following a storm event from a given

parcel of land). In this manner, each parcel of land within Hamilton would be assigned a fee based on its runoff characteristics. The state supreme courts have ruled

that all parcels must pay the storm water charge if the Utility is to pass the rationale nexus test. No parcel can be exempted due to its tax status or land use—only

adjustments to the charge can be applied. This means that to implement a Utility

that is fair, equitable and thus legally defensible in a court of law, all residents,

businesses, schools, churches, government and institutional complexes, etc. will be

subject to these charges. Residents would pay a flat monthly charge, but non-resi-
95

dential properties would pay a higher amount equivalent to the expanse of impervious surface at their respective locations—some as high as hundreds or thousands

of dollars per month.

Now is not the time to impose a new monthly Utility charge upon our community

in furtherance of Phase II compliance. When the economy improves, our businesses

and citizens will be better able to absorb this type of storm water management fee.

In our flagging economy however, businesses cannot afford it; nor can our citizens

who are already being called upon to absorb more and more of the financial burden

of local and state government.

Please let me emphasize that the time for implementation of this Phase II program is not now. Consequently, the City respectfully asks that you, as our elected

federal representatives to Washington, commence whatever action can be promptly

placed before Congress to legislatively enact a five-year moratorium to delay the requirement that communities such as ours step forward to implement the Phase II

Rule. This will delay the necessity that communities, such as ours, have to impose

the financial burden of Phase II compliance on your and our constituents at this

time. We ask this not because Hamilton is seeking to avoid our responsibilities as

being good stewards of our receiving waters, but as concerned elected officials looking to strike a balance between the best interests of our economy and the environment during tough economic times.

Thank you for looking into this on our behalf. Our City Council, our administrative staff, our consulting engineer and I are all available to talk with you about this

should you have any questions.

Sincerely,

MICHAEL J. SAMOVISKI,

City Manager,

City of Hamilton, OH.

OFFICE OF THE CITY MANAGER,

Hamilton, OH., Feburary 27, 2003.

Hon. JOHN BOEHNER,

Hamilton, OH.

Re: Proposed Legislative Moratorium on the Implementation/Enforcement of the

NPDES Storm Water Phase II Final Rule

DEAR REPRESENTATIVE BOEHNER: The City Council of the City of Hamilton, Ohio

(City) is concerned about the implementation and enforcement of the National Pollutant Discharge Elimination System (NPDES) Storm Water Phase II Final Rule

(Phase II Rule) in this challenging local, state and federal economic climate. As part

of the Clean Water Act (CWA) legislation, the USEPA extended the NPDES permitting program to storm water discharges in 1990. The 1990 regulations established

requirements for permitting discharges from industries, construction sites large

than 5 acres, and drainage systems in large and medium municipalities serving a

population greater than 100,000 (Phase I program). On December 8, 1999, USEPA

promulgated the expansion of the existing NPDES Storm Water Program to include

discharges from small municipalities with a population less than 100,000. This program, termed the Phase II program, requires covered political jurisdictions to obtain

an NPDES storm water discharge permit by March 10, 2003. In Ohio, about 280

cities, counties, villages and townships located in urbanized areas that own and operate municipal separate storm sewer systems (MS4s) are required to obtain this

type of permit, which includes the City of Hamilton. To comply with this unfunded

government mandate, the City has retained the environmental engineering consulting firm of CDM to assist the City in preparing a Storm Water Management

Plan (Plan) that outlines best management practices (BMPs) that the City must implement over the next five years. These BMPs address the six minimum control

measures required within the Phase II Rule, and when implemented in concert, are

expected to result in significant reductions of pollutants discharging into receiving

streams.

We will not dispute that since the passage of the CWA 30 years ago, the quality

of our Nation’s waters has markedly improved. The City sees daily visual evidence

of these remarkable achievements here locally along Hamilton’s major watercourse—the Great Miami River—with the continuing presence of large numbers of

wildlife, including herons, Canada geese, wood ducks, mallards, swans, beaver, and

sea gulls. To maintain and/or improve upon this status however, will come at a certain cost.
96

As the City has prepared its Phase II Plan, which we fully intend to submit to

the Ohio EPA on or before March 10, 2003, it has become noticeably apparent to

our City Council that the costs associated with the implementation of this Plan will

have to be assessed to our local government, and alternatively and more likely, to

our citizens and businesses. This occurring at a time when our economy is stagnant

and our nation is facing huge deficits that are being forecast by both local and state

financial officers, not to mention federal fiscal authorities. Hamilton is no exception;

local budget deficits are already predicated for the next fiscal year, and Ohio’s governor has declared the state’s budget to be in such crisis that no additional help

for local communities will be forthcoming from that sector. Alas, Hamilton, along

with 279 other jurisdictions, are being asked to comply with an unfunded government mandate at a time when we can ill afford to be capriciously spending.

To pay for this Phase II program, the City is considering forming and implementing a Storm Water Utility (Utility). The Utility charges will be related to the

impervious area factor (i.e., potential runoff following a storm event from a given

parcel of land). In this manner, each parcel of land within Hamilton would be assigned a fee based on its runoff characteristics. The state supreme courts have ruled

that all parcels must pay the storm water charge if the Utility is to pass the rationale nexus test. No parcel can be exempted due to its tax status or land use—only

adjustments to the charge can be applied. This means that to implement a Utility

that is fair, equitable and thus legally defensible in a court of law, all residents,

businesses, schools, churches, government and institutional complexes, etc. will be

subject to these charges. Residents would pay a flat monthly charge, but non-residential properties would pay a higher amount equivalent to the expanse of impervious surface at their respective locations—some as high as hundreds or thousands

of dollars per month.

Now is not the time to impose a new monthly Utility charge upon our community

in furtherance of Phase II compliance. When the economy improves, our businesses

and citizens will be better able to absorb this type of storm water management fee.

In our flagging economy however, businesses cannot afford it; nor can our citizens

who are already being called upon to absorb more and more of the financial burden

of local and state government.

Please let me emphasize that the time for implementation of this Phase II program is not now. Consequently, the City respectfully asks that you, as our elected

federal representatives to Washington, commence whatever action can be promptly

placed before Congress to legislatively enact a five-year moratorium to delay the requirement that communities such as ours step forward to implement the Phase II

Rule. This will delay the necessity that communities, such as ours, have to impose

the financial burden of Phase II compliance on your and our constituents at this

time. We ask this not because Hamilton is seeking to avoid our responsibilities as

being good stewards of our receiving waters, but as concerned elected officials looking to strike a balance between the best interests of our economy and the environment during tough economic times.

Thank you for looking into this on our behalf. Our City Council, our administrative staff, our consulting engineer and I are all available to talk with you about this

should you have any questions.

Sincerely,

MICHAEL J. SAMOVISKI,

City Manager,

City of Hamilton, OH.

U.S. SENATE,

Washington, DC, July 15, 2003.

MARIANNE LAMONT HORINKO, Acting Administrator,

U.S. Environmental Protection Agency,

Washington, DC.

DEAR ACTING ADMINISTRATOR HORINKO: As the EPA is moving forward with the

implementation of National Pollution Discharge Elimination System (NPDES)

Phase II permits, I would like to share with you the concerns of many Ohio cities

and communities who are uncertain where they will find funding to cover the costs

associated with this implementation.

As you are aware, NPDES Storm Water Run-off Permits were designed to help

reduce water and soil pollution caused by contaminated run off from streets, roofs,

buildings, residences, etc. Over the next five years, the EPA will implement Phase

II, which will add smaller metro centers in urbanized areas. These communities

have been told to expect little help from the EPA to aid in their compliance efforts.
97

The State of Ohio originally planned to offer grants to help meet the requirements,

however due to budgetary constraints, the State will be unable to assist the cities.

Communities say that in order to meet the costs of implementing Phase II, they will

have to place additional tax burdens on businesses. Given the state of today’s national and state economies, along with the rising costs of doing business, I am concerned over the economic impact this will have in Ohio.

I would like to hear your suggestions on how to ease the financial burden on communities as they begin implementing this mandate. I look forward to hearing your

response. If you have any questions, please contact me or my staff assistant Elizabeth Belleville at 202–224–2315.

Very respectfully yours,

MIKE DEWINE,

U.S. Senator.

RESPONSES OF MICHAEL J. SAMOVISKI TO ADDITIONAL QUESTIONS FROM

SENATOR INHOFE

Question 1. Can you explain what role ‘‘blending’’ plays in the City’s ability to

manage peak storm events and how EPA’s recent internal debate on the practice

is affecting the City?

Response. In 1998, the Ohio EPA approved a Permit to Install for the expansion

of city of Hamilton’s (City) Wastewater Treatment Plant (WWTP). These plans for

expansion approved and permitted the use of an alternative wet-weather routing

scenario, which includes diverting wet-weather flows into: (1) the WWTP’s pre-existing primary treatment system and aeration tanks where it is either stored and

drained back into the primary treatment system where it receives full treatment,

or (2) blended back into the treatment scheme upstream of the chlorination tank

where it bypasses secondary treatment. The second option is used only if the storage

capacity of the pre-existing primary treatment system and aeration tanks is

reached. By allowing the second option to occur, the City is able to eliminate overly

stressing the treatment processes at the WWTP and eliminate surcharging of the

interceptor mains conveying flow into the WWTP, which also minimizes the direct

discharge of sanitary sewage via sanitary sewer overflows (SSOs) into the receiving

stream. The ‘‘blending’’ concept allows the City to maximize primary treatment during wet-weather flows in lieu of no treatment should SSOs occur. Pursuant to the

Ohio EPA Permit To Install, the City first put this system in use in the Fall of 2000,

and the cost of this expansion has totaled $14.9 Million. The use of this alternative

wet-weather flow routing system and occasional blending has reduced the total

number of SSOs experienced by the City as shown on the following chart.

Response. Hamilton has begun discussions with Ohio EPA concerning the inclusion of blending in the City’s discharge permit. The City is also currently conducting

water quality sampling to demonstrate the percent removal of solids achieved

through our alternative wet-weather routing scenario. The City’s WWTP effluent
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consistently meets permitted discharge limits while blending. The additional storage

and primary treatment capacity that this alternative wet-weather routing scenario

provides the City results in better stream water quality by reducing the volume and

occurrence of SSOs while maximizing the conveyance of wet-weather inflow and infiltration through the WWTP.

Question 2. In your testimony, you explain that you will now have to levy a fee

to all businesses and residents in your city. Smart Paper will have to pay $5,000

per month. Has the company, one of the few larger employers remaining in Hamilton, expressed concerns about the fee with the city and whether it will impact their

ability to continue doing business in Hamilton? Are you concerned about how it will

impact your ability to attract other employers?

Response. Smart Papers is very concerned about the monthly fees associated with

the proposed Storm Water Management Program. Smart Papers is a production

paper mill owned and operated by former Champion International Management and

a group of venture capital investors, and as additional fees adversely affect profits,

the investors could have no alternative but to close the mill.

Hamilton is considering and researching a number of fair, equitable and lawful

options to assist companies, such as Smart Paper, to apply for adjustments and/or

credits to their monthly storm water bill. For example, Smart Paper discharges

some storm water directly into the Great Miami River through infrastructure

owned, operated and maintained by the company and not the city of Hamilton.

Based on the amount of upstream drainage area that conveys storm water through

this system, the City can potentially offer Smart Paper a storm water credit because

the City does not have to incur the expense of performing capital improvements and

operation and maintenance activities on this system; however, the company has indicated that any credit less than 100 percent would offer insufficient relief.

The City is very concerned about how these fees may adversely affect new businesses locating into Hamilton. In the competitive atmosphere of the business world

every applicable cost, whether it is construction or utility rates, plays a factor as

to where the business ultimately decides to locate. Often times, our experience

shows that businesses decide upon their final destinations based on very subtle differences in cost.

RESPONSES OF MICHAEL J. SAMOVISKI TO ADDITIONAL QUESTIONS FROM

SENATOR VOINOVICH

Question 1. What were the specific challenges the city of Hamilton faced when

preparing the Storm Water Management Plan?

Response. The City hired an environmental engineering consulting firm to conduct

Phase 1 or Gap Analysis to evaluate Hamilton’s existing storm water management

programs and identify the deficiencies or gaps that the City would need to address

in order to develop an acceptable Storm Water Management Plan. The City then

authorized the consultant to conduct Phase 2 of the Program Development, which

included the development and preparation of a Storm Water Management Plan and

the identification and selection of a funding option(s) to successfully implement the

Plan. The funds needed to pay for our consultant came from the General Fund

(largely employment taxes), which has suffered greatly from the closing of many of

the City’s larger commercial and industrial customers. Development of this Plan

meant reducing the limited amount of money available for as needed repair and replacement of the storm water collection system. The total cost to the City for the

Gap Analysis and Program Development was $310,000.

The development of the Storm Water Management Plan and funding option required active public involvement. Toward this goal, the City formed a Storm Water

Advisory Board (SWAB), which included representatives from industry, small business, schools, churches, airport, and private citizens. The City selected a diverse

group from a broad cross-section of the community, in order to obtain feedback that

would reflect the City as a whole. Hamilton’s Storm Water Advisory Board consisted

of 5 citizens, 6 industrial representatives, and 4 community groups (hospital, school,

metropolitan housing and homebuilders association). A total of 8 meetings were held

over an 8 month period of time. Maintaining interest in the process over this timeframe and keeping adequate attendance at meetings was a challenge and a huge

educational process.

Another challenge was determining what level of service and which Best Management Practices (BMPs) would satisfy the EPA Phase II National Pollutant Discharge Elimination System (NPDES) mandate. Many questions needed to be answered, and several examples include:
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• Would cleaning catch basins every 5 years result in improved water quality or

should they be cleaned every 3 years?

• What BMPs should be included in the Storm Water Management Plan?

• Would the citizens of Hamilton be receptive to these BMP’s?

Question 2. Briefly describe the costs associated with the implementation of the

City’s Storm Water Management Plan.

Response. The City has projected an average annual cost for the first 3 years of

the Storm Water Management Program to be $2,270,000 with the last 2 years of

the program being an average annual cost of $2,470,000. These costs were developed

based on the SWAB’s Level of Service recommended to Hamilton’s Council and are

allocated as shown below:

Regulatory Compliance ($100,000)—includes public education, employee training;

monitoring and detection of illicit discharges; and program management staff salaries.

Leaf Collection/Street Sweeping ($600,000)

Operation and Maintenance of Collection System ($850,000)—includes the hiring

of 4 additional maintenance workers, 1 additional supervisor and establishment of

a routine proactive inspection and maintenance program.

Planning and Management ($170,000)—includes funds to complete and update

current GIS mapping of stormwater system and outfalls as required by Phase II and

engineering, GIS staff salaries.

Engineering Studies ($300,000 for first 3 years)—funds to implement system-wide

planning of capital improvement projects to ensure economy of scale and best pollutant reduction.

As Needed Repair and Replacement ($250,000)

Engineering Projects ($500,000 for the last 2 years of the 5-year Plan)—systemwide improvements needed to improve water quality—such as stream bank stabilization.

Question 3. Your testimony explains that the city of Hamilton’s projected annual

expense attributable to the Storm Water Phase II program is an additional $1.6 Million over the current $800,000 the City currently spends. What storm water activities does the City currently perform?

Response. The City currently has annual expenditures of approximately $600,000

on Leaf Collection/Street Sweeping and $200,000 on Improvement Projects for as

needed system repairs and replacement of existing infrastructure. The City currently can only afford to employ 4 full time sewer maintenance workers who are responsible for maintaining 217.7 miles of sanitary sewer, 5600 sanitary manholes,

180.5 miles of storm sewer and approximately 6500 storm water catch basins and

inlets.

Question 4. In your testimony, you recommend that Congress should enact a 5-

year moratorium on the time or implementation of the Phase II Storm Water program. Other than a moratorium, what other recommendations would you make to

Congress to help communities like the city of Hamilton comply with the Phase II

program?

Response. Congress could provide startup grants and low interest loans to every

city showing a need for assistance in the initial implementation costs—such as planning, mapping and purchasing additional equipment.

Change the implementation period from 5 years to 10 years. USEPA is requiring

cities to improve water quality and change the ingrained habits of our citizens in

an impossibly short timeframe.

Question 5. Does the State of Ohio have funding available in the form of grants

or loans to assist Ohio Communities conduct storm water activities? Has the city

of Hamilton applied for funding from the State of Ohio?

Response. The State of Ohio has extremely limited funding available for storm

water activities. Furthermore, these sources are not consistent with funding a comprehensive storm water management program nor are they dedicated to storm

water only projects. When applying for these funds, the City’s storm water projects

must compete with sanitary sewer projects, source water protection projects, street

maintenance projects, etc.

The City is aware of three grant and loan programs from the State of Ohio. None

of these opportunities are specific for storm water management and do not provide

the significant source of funding the City would need to reduce the burden on the

citizens and businesses in Hamilton.
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Question 6. Other than resources, what other specific challenges does the city of

Hamilton face affecting the City’s ability to implement the Phase II Storm Water

program requirements?

Response. The City is required to locate and identify every storm water system

outfall. It will also be necessary to map every pipe, catch basin, and curb inlet in

our system in order to track illicit discharges. The City’s stormwater infrastructure

is over 100 years old, and complete maps do not exist for some of the older sections.

Mapping these sections will require utilizing technicians currently working on other

equally important and time sensitive projects to field check and/or verify locations,

depth and size of storm sewer lines and appurtenances.

The City is concerned with the state of apathy the population in general has toward storm water management. To be successful, the Storm Water Management

Plan is relying on a vast public education effort and participation by the citizens

to control storm water pollution.

Question 7. Briefly describe any wastewater or drinking water infrastructure

issues affecting the city of Hamilton resulting from a Federal mandate.

Response. Sanitary Sewer Overflow—0 discharge prohibition.—The City has spent $ 25.85 Million since 1994. Preproposal of SSO regulations published in 1999 indicates USEPA is considering defining basement back ups as sanitary sewer overflows. If enacted, this determination would create a tremendous administrative as

well as financial burden on the City since based on the proposal, Hamilton would

be required to determine that the back up was not related to any collection system

flow restrictions.

Proposed TMDL.—The City is being required to collect additional data (re: phosphorous, Nitrate plus Nitrite, Total Dissolved Residue) unrelated to our wastewater

operation. OEPA is requiring Hamilton to collect this data on a monthly basis for

assistance in their efforts to develop a TMDL for the lower Great Miami River in

2013. This OEPA requirement to collect and analyze these samples has created an

additional burden on our already limited lab staff.

Blending.—The City is very concerned about the proposed guidance on Blending

being negotiated with the various USEPA regions. As per the Ohio EPA’s Permit

To Install, Hamilton invested $14.9 Million in 1999 on an approved alternative wetweather flow routing system that was designed and constructed to blend effluent

flows during excessive wet weather flow situations.

Consumer Confidence Reports

Water Plant Security Initiative which was totally funded by grants from the US

EPA

Wellhead (Source Water) Protection—City of Hamilton spends approximately

$150,000 annually

STATEMENT OF STEVE KOUPLEN, PRESIDENT, OKLAHOMA FARM BUREAU, AMERICAN

FARM BUREAU FEDERATION

Mr. Chairman and members of the subcommittee, my name is Steve Kouplen. I

am president of the Oklahoma Farm Bureau Federation. I am pleased to be here

today to offer testimony on several water issues of importance to agriculture across

the country.

On July 13, 2000, EPA published final regulatory requirements for establishing

Total Maximum Daily Loads (TMDLs) under the Clean Water Act (CWA). Farm Bureau strongly opposed those regulations and promptly petitioned the court and asserted that many of EPA’s revisions were unlawful under the Administrative Procedure Act or exceeded the agency’s authority under the CWA. One of the most disturbing aspects of the July 2000 rule was the agency’s conversion of the TMDL program into an overarching, nationwide enforcement mechanism for all sources of pollution—point and nonpoint sources. We believe that the TMDL program should respect the practical and legal differences between point and nonpoint sources. As the

CWA has recognized for over 30 years, the availability of end-of-pipe technologies

for point sources has made a precise control strategy feasible. Nonpoint sources, on

the other hand, cannot rely on any comparable technologies and must therefore use

less precise, more subjective ‘‘best management practices’’ to achieve load reductions. Given the inherently less predictable results of the measures available to

nonpoint sources, a command-and-control strategy for nonpoint sources has never

been feasible. Until the July 2000 rulemaking, the agency had never formally embraced this approach to nonpoint sources.

We opposed the 2000 regulations in large part because they required an implementation plan as part of a TMDL. Section 303(d) provides no authority for the
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preparation or establishment of an implementation plan. It merely envisioned the

translation of waste load allocations into water quality-based effluent limitations for

point sources. Since this was the intended purpose of Section 303(d), there was no

need for a formal implementation mechanism.

But even assuming Section 303(d) required the preparation of implementation

plans, there is no authority for the July 2000 rule to require the plans to include

‘‘reasonable assurances’’ that load allocations be achieved. Indeed, the words ‘‘reasonable assurances’’ do not exist in Section 303(d).

Further, Congress went to great lengths to ensure that EPA did not prescribe in

local land use decisions by delegating nonpoint source control to the states in Sections 208 and 319. The 2000 rules undercut this approach, allowing EPA to prepare

implementation plans that dictate how and when nonpoint sources can use their

land. Implementation of a nonpoint source TMDL is clearly an inappropriate area

for Federal management. States should have the freedom to implement their TMDL

programs at their discretion.

Farm Bureau believes a TMDL is information about the assimilative capacity of

an impaired water body. Once EPA approves a TMDL that information should be

used by the state in their Continuing Planning Process (CPP), established under

Section 303(e), for state implementation of Waste Load Allocations (WLAs) and Load

Allocations (LAs). The CPP allows for an integrated watershed approach that brings

together and integrates the distinctive approaches contained within the CWA for

point and nonpoint sources. Specifically, point sources would be subject to water

quality-based effluent limitations that could be incorporated into National Pollutant

Discharge Elimination System (NPDES) permits, over which EPA would exercise

discretionary review and veto authority. Nonpoint sources would be subject to statedeveloped best management practices, over which EPA would exercise the power of

review and grant funds. The integrated watershed approach, conducted under the

umbrella of the CPP, allows states and local watersheds to——

1. Monitor and assess their needs;

2. Plan their economic development, implement water quality management measures and even institute trading policies;

3. Achieve the goals and objectives of the watershed in a manner consistent with

the goals of the CWA; and

4. Diffuse and minimize the potential for adverse litigation that will frustrate a

cooperative and locally led watershed approach.

The CWA requires that states identify waters impaired by pollutants and establish Total Maximum Daily Loads (TMDLs) at levels necessary to implement applicable water quality standards. Pursuant to CWA § 303(d)(2), EPA must approve or disapprove all such TMDLs and must directly establish TMDLs in the event of disapproval. EPA has consistently recognized that ‘‘the decision on how to identify the

most cost-effective or equitable means of allocating loadings is best handled by the

state.’’ E.g., 65 Fed. Reg. 43,586, 43,620 (July 13, 2000) (preamble discussion of July

2000 final TMDL rule, also commenting that states can use ‘‘any kind of system or

policy for allocating pollutant loadings among sources, as long as the resulting allocations will lead to attainment and maintenance of water quality standards’’). Such

subjective judgments concerning equity and cost-effectiveness—like other aspects of

water quality planning—are specifically committed to the states’ discretion under

the CWA, subject to EPA guidance and support. Finally it is our understanding that

the draft watershed rule states that ‘‘EPA is proposing that load allocations for

these sources may be expressed as allocations to specific sources or as gross allocations without connection to categories or subcategories or sources.’’ We are concerned about the use of individual load allocations that would be subject to EPA approval. A gross allocation would provide the states and the stakeholders the flexibility they need to develop reasonable limits for both point and nonpoint sources.

In the Pronsolino v. Nastri 291 F. 3d 1123 (9th Cir. 2003) decision the U.S. Court

of Appeals for the Ninth Circuit said, ‘‘[t]he upshot of this intricate scheme is that

the CWA leaves to the states the responsibility of developing plans to achieve water

quality standards if the statutorily mandated point source controls will not alone

suffice, while providing Federal funding to aid in the implementation of the state

plans.’’ Consistent with the primary responsibilities and rights of the states, EPA

approves state nonpoint source management plans as a condition of establishing eligibility for CWA funding. See CWA § 319. Even in the event of ‘‘disapproval,’’ EPA

lacks CWA authority to dictate state decisionmaking by directly establishing such

plans. In contrast, TMDLs—like water quality standards themselves—may be directly established by EPA if states fail to do so in accordance with CWA requirements. See CWA §§ 303(c)(3)-(4), 303 (d)(2). This ensures that TMDLs will be available as ‘‘informational tools that allow the states to proceed from the identification

of waters requiring additional planning to the required plans.’’
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This fundamental balance of state-Federal control requires that EPA ensure that

the ultimate goal (the ‘‘total’’ load) is properly defined, but that states alone determine how the goal will be achieved. Thus, states—not EPA—must determine how

loading capacity will be ‘‘allocated’’ among the various industrial, municipal, commercial, residential, agricultural, silvicultural, and other pollutant sources. Such

highly subjective decisions necessarily require balancing the needs of competing

land uses based on considerations of equity, economy, and public welfare. As such,

allocation decisions are the essence of implementation planning that has been strictly reserved for the states.

Implementation programs will be effective only if states revise allocations based

on experience—i.e., demonstrated successes or failures of existing programs and control measures. TMDL implementation for nonpoint sources in particular must be a

process where state strategies evolve to expand programs that work and change or

abandon programs that fail. TMDLs will unnecessarily constrain, rather than foster,

state efforts to achieve water quality standards if allocations to particular sources

or source categories are ‘‘locked in’’ absent submission and EPA approval of a revised TMDL.

Stakeholder participation and innovation—including nutrient trading and other

market-based approaches—will be stifled if pollutant allocations are fixed. Where

achievement of the ‘‘total’’ pollutant load is the clear objective, states and stakeholders have the incentive and the flexibility to achieve that goal in the most efficient and cost-effective manner. Yet much of the incentive for such collaborative efforts will disappear if the results are subject to disapproval at the Federal level.

Trading Policy.—Trading policy empowers states and tribes to implement marketbased programs to achieve and go beyond the goals of the CWA. Both point and

nonpoint sources need new tools that move beyond the existing regulatory framework. Our Nation must participate in a highly competitive world market and our

policy should reflect the demands and efficiencies of market-based program. Trading

will allow the water program to go beyond the technological and economic limitations of our existing regulatory framework to find solutions to complex water quality

problems. Trading is an innovative strategy that can align with other core conservation and water programs.

Oil Spill Final Rule Impact on Agriculture.—EPA’s July 17, 2002, Oil Spill Prevention, Control and Countermeasures ( SPCC) Rule will negatively impact farmers

and ranchers, and their cooperatives across the country. While the subsequent January 9, 2003, rule providing an 18-month delay in its implementation allows more

time to prepare; it does not reduce its overall cost or impact. The oil spill rule and

program will greatly affect agriculture.

The rule fails to take into account the nature of production agriculture, and appears to be based on limited data or information that is out of date. It also does

not take into account the cumulative effect of EPA’s rules and regulations on agriculture.

Farmers and ranchers need to store fuel on their farms in order to control costs

and to fulfill time sensitive production operations. Many farms, especially in the

western states, require more than the regulatory threshold of 1,320 gallons of fuel

storage for their operations. On many larger farms the fuel storage is not centrally

located. Above ground tanks are placed where needed for efficient equipment operation and these may be miles apart.

In a letter to EPA on June 2, 2003, several agricultural organizations and cooperatives stressed that the SPCC rule for agriculture:

(1) underestimated the economic impact by:

a. using 1991 cost data for a 2002 rule

b. using examples of costs based on farms in the upper 9 percent income

bracket

c. basing impact on inadequate survey data

d. drawing conclusions about tankage based on income and not tank survey

data

e. exempting 27,700 farms out of 2 million

(2) showed a lack of understanding of ag operations by:

a. mentioning farms only six times in the 112-page rule and only in the preamble

b. not understanding farm layouts and oil storage operations

(3) inappropriately applied bulk terminal rules to private family property and/or

small businesses.

Given the dispersed nature of farm fuel storage and the costs associated with following the rule requirements for containment, integrity testing, security and plan

development, we believe that the threshold should not apply to family farms nor to
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those storages where a spill would have no impact on water quality. We believe that

based on the 1971 and 1993 Memorandums of Understanding between DOT and

EPA, that SPCC rules should have been intended for commercial wholesale and retail sales and not the private party small end user. In addition, the aggregation of

many smaller tanks, often in dispersed locations across farms and farmland, must

also be addressed so as not to place farms in a costly regulatory program where

there is no threat to water quality.

Farm Bureau has been a strong supporter of the voluntary, incentive-based approach to working with farmers and ranchers to improve and protect our environment. EPA should first look to the USDA for appropriate conservation practices and

technical support to address this issue with agriculture. We support using our U.S.

Department of Agriculture conservation programs, such as the Environmental Quality Incentives Program and the Conservation Security Program to help agriculture

address the above-ground fuel tank issue.

The concerns about the impacts of the oil spill rule warrant a complete review

of the final rule as it impacts agriculture. EPA should address agricultural oil storage differences in a manner that allows the farm and ranch community to protect

water quality in an economically and environmentally sound and effective manner.

Thank you for accepting our testimony.

STATEMENT OF MICHAEL R. LOZEAU, ESQ., EARTHJUSTICE

INTRODUCTION

Good morning Chairman Crapo, Ranking Member Graham and members of the

subcommittee. My name is Michael Lozeau. I am an attorney with Earthjustice, a

non profit environmental law firm with offices located throughout the country. I am

employed at the Earthjustice Environmental Law Clinic at Stanford, a joint project

between Earthjustice and Stanford Law School that provides students with a real

world experience in environmental litigation and advocacy before administrative

agencies on behalf of non-profit environmental advocacy organizations. I also am a

Lecturer at Stanford Law School. It is an honor to have the opportunity to share

with you today some of my and Earthjustice’s concerns regarding several recent actions by the Environmental Protection Agency that have or will undermine the implementation of the Clean Water Act and allow substantially more pollution to enter

our Nation’s waters and prevent the clean-up of the vast number of waters, estimated at about 45 percent of all of the country’s rivers, lakes, streams, and coastal

waters, that are too polluted for fishing, swimming and the myriad other uses made

of those waters by the American public.

The Clean Water Act was enacted in 1972 because the water quality laws that

came before it did not work. Those laws were limited in scope, often based on voluntary programs, and sought to enforce the few available ambient water quality

standards directly without pollution control permits or clear requirements applicable

to individual sources of pollution. Those laws did not work. As recognized by many

Members of Congress thirty years ago, our Nation’s waters were treated as little

more than open sewers for industrial and municipal wastes.

In 1972, the Congress solved this problem by enacting the Clean Water Act—creating a comprehensive legislative program that, as written, addresses almost every

water pollution problem facing the country. In particular, the Act’s National Pollutant Discharge Elimination System (‘‘NPDES’’) permitting program, where applied,

has been heralded as a great success in reducing pollution from sewage plants and

many industrial dischargers. In the last decade, this Clean Water Act program has

begun to have similar positive impacts on reducing storm water pollution from municipal storm systems, many industrial storm water pollution sources and construction sites.

Juxtaposed with the success of the Act’s permitting program is the notable absence of progress for pollution sources that have not been brought into the NPDES

program. Many of these include point source discharges that EPA has simply failed

to address or affirmatively attempted to exempt from the NPDES program. Examples include point source discharges associated with the logging industry. Likewise,

discharges exempted from the NPDES program created by Congress also have

grown worse over the years, despite Congress’ provision of funds and voluntary programs. The widespread toxicity of the rivers flowing into San Francisco Bay in California’s Central Valley by pesticides, nutrients and other farming-related pollution

is a depressing testament to the ineffectiveness of Clean Water Act programs, outside of the standard setting and NPDES program, to clean up pollution.
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One very important reason no discernable progress has been made to reduce pollution outside of the NPDES program is EPA’s historic failure to implement a common sense and core requirement established by Congress in 1972—the Total Maximum Daily Load (‘‘TMDL’’) program. Over the last 5 years, both EPA and the

States have gone through, and are continuing to go through, a steep learning curve,

starting a program essentially from scratch after 25 years of neglect. During those

25 years, rather than heading off well-documented water quality problems, numerous pollution problems in our rivers and lakes that were left unregulated by the permitting program have in many cases steadily increased or become more intractable.

The current efforts need to be given time to determine their effectiveness at cleaning up pollution. Implementation of the current TMDL rules should be given a

chance to work before they’re abruptly changed.

Instead of aggressively implementing the TMDL program, closing existing loopholes, and faithfully implementing and enforcing the statute, this administration

has instead taken a series of action to weaken the tools available to protect our Nation’s waters. While I will not cover most of these today, the administration’s actions

in many ways are attacking Clean Water Act safeguards that most people would

assume are firmly protected by law. For example, the administration repealed a 25-

year old regulation to authorize waste dumps in waters of the United States; eliminated Clean Water Act protections for as many as 20 million acres of wetlands; allowed factory farms to write their own pollution control standards; and withdrew

a regulatory proposal to control sewer overflows and notify the public of overflows

that could make them sick.

Pending policy decisions are potentially even more damaging, including the decision on whether to eliminate Federal jurisdiction over more than 60 percent of the

stream miles and millions more acres of wetlands and ponds that are currently protected by the Clean Water Act. These rollbacks often involve this administration

doling out favors to various industries to exempt them from other Clean Water Act

requirements instead of protecting the public interest. This includes the oil industry,

which has been given exceptions from storm water regulations that apply to almost

every other industrial activity in the country and with which EPA is now engaged

in private back room discussions regarding the Act’s application to preventing oil

spills into tributaries and other waters.

Earthjustice encourages the Committee to dissuade EPA from reversing thirty

years of efforts undertaken by this country to implement the Clean Water Act and

restore and preserve the integrity of the Nation’s waters. The American public feels

very strongly about the health of their rivers, streams, lakes and shorelines. Neither

a weak TMDL program nor questionable legal positions that simply invite litigation

will cleanup or protect the Nation’s waters; nor will these policies provide any certainty to businesses that must comply with clean water laws. If the agency’s administrators continue down these and other paths aimed at weakening the Clean Water

Act and its implementation, they ultimately will not be able to convince the American public that EPA is serving the public’s rather than corporate interests.

WERE EPA TO PROMULGATE ITS DRAFT TMDL RULE THE RESULTS WOULD BE DEVASTATING TO CLEAN-UP EFFORTS AROUND THE COUNTRY AND UNDERMINE CONGRESS’

CLEAN WATER ACT MANDATES

Of particular concern is the Bush Administration’s draft plan to drastically amend

the regulations that currently guide the development of water quality protection

plans known as Total Maximum Daily Loads so-called TMDLs. For the last 18

months, the EPA has been working on a proposal to rewrite the rules that implement the TMDL program—rules that were put in place by the Reagan and previous

Bush Administrations. A draft of their rewrite of the rules was made available to

the public earlier this year. The draft is currently being considered by the Office

of Management and Budget under ‘‘informal’’ review.

This proposal, if promulgated by the administration, would significantly weaken—

if not completely derail—one of the Clean Water Act’s most important programs.

When enacted in 1972, the Clean Water Act required municipal and industrial

dischargers to comply with two levels of pollution control treatment technology back

in the late 1970’s and 1980’s. Industry was required to comply with ‘‘best practicable

treatment technology’’ (BPT) by July 1, 1977. Cities were required to apply secondary treatment to their sewage by that same date. Congress recognized from the

start that in many cases, those initial technology requirements were not going to

be sufficient to implement water quality standards in many waterbodies throughout

the country. Water quality standards are set by the States and specify how clean

a waterbody needs to be in order to be usable, for example, for swimming, aquatic

habitat, or as a drinking water source. So Congress created the TMDL requirement
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to supplement the BPT and secondary requirements. In short, this section of the

law—Section 303(d)—requires States to identify all waters where BPT and/or secondary treatment—the lowest pollution control technology requirements—are not by

themselves sufficient to implement water quality standards. For each of those identified waters, the States, and if they fail to do so, EPA, must prepare a TMDL.

A TMDL is just what it says, a total, maximum, daily load of a given pollutant

that assures implementation of all water quality standards applicable to that pollutant. The current regulations define a TMDL as ‘‘the sum of the individual WLAs

[waste load allocations] for point sources and LAs [load allocations] for nonpoint

sources and natural background.’’ 40 C.F.R. § 130.2(i). Together, the waste load and

load allocations add up to a water body’s ‘‘loading capacity’’ which is defined as

‘‘[t]he greatest amount of loading that a water can receive without violating water

quality standards.’’ 40 C.F.R. § 130.2(e). That safe level of pollutant loading, assuming there is any safe level, is then allocated to each of the sources discharging that

pollutant and, using the NPDES permitting program and other pollution control

tools established by the Act or State laws, those allocations are implemented in

order to assure attainment of the TMDL.

In 1972, Congress envisioned TMDLs as an integral component of the Act’s comprehensive regulatory scheme, applied early on in the Act’s lifespan to any waters

that were not fully protected or would not be fully protected by the application of

BPT and/or secondary treatment. Wherever BPT and/or secondary treatment, by

themselves, could not assure the implementation of all water quality standards, a

waterbody had to be listed and a TMDL prepared and implemented.

That is still the law today. Historically, however, instead of implementing Congress’ clear and logical vision for ensuring all waters were safe for fishing, swimming and other uses, EPA has served as a barrier to implementing the TMDL program. EPA wrote and finalized regulations for the program in 1985 and amended

them in 1992, but for over two decades EPA and the States literally did nothing

to make the program work as a tool to reduce water pollution, instead, letting it

languish on the books. During that time, waters that would have been protected or

cleaned up at much less expense by an early application of the TMDL program were

instead allowed to get dirtier and dirtier.

The 1992 EPA regulations were an attempt to get the TMDL program on track.

Although flawed, and only after encouragement by numerous citizen enforcement efforts and provision of additional funding from Congress and individual States, EPA

has finally begun to make progress implementing those 1992 regulations. The number of TMDLs approved or established annually has steadily increased in the last

4 years, jumping from 500 in 1999 to nearly 3,000 in 2002. In 2001 and 2002 combined, more than 5,000 TMDLs were approved or established under the current

TMDL rule. Granted, the quality of those TMDLs may vary substantially at this

point. But they’re in place and, with improvements that can be made under existing

legal authority, these TMDLs should over time provide an effective framework to

address both polluted waters and waters threatened by pollution, achieving the rational and comprehensive pollution control program that Congress envisioned to

clean up dirty waters and protect our rivers, lakes, and shorelines for generations

to come. Progress is certainly being made. However, much work remains to be done.

The adverse effects of EPA’s years of neglect of this critical component of the

Clean Water Act are still being felt throughout the country. Lists of impaired waters

continue to expand—irrefutable testimony of the need for EPA and the States to aggressively implement the TMDL program. For example, California started with a

list of 18 impaired waters in 1978–79. That list has steadily grown to 28 waters by

1986, 77 waters in 1988, 245 impaired waters by 1991, 276 in 1992, 388 waters by

1996, 509 waters by 1998 and most recently a new high of 684 impaired waters.

In short, pollution problems are growing in the absence of TMDLs. This fact is confirmed by the most recent National Water Quality Inventory, which shows—for the

first time in many years—that overall water quality of the Nation’s rivers, lakes,

estuaries and coastal waters is getting worse.

Instead of responding to these water pollution problems by doubling its efforts to

implement the TMDL program, EPA’s current managers are considering and perhaps poised to adopt a proposal that would reverse the progress made to date. The

EPA’s proposal would abruptly limit the scope of the TMDL program and, for those

lucky waters where the TMDL program might still apply at all, turn Congress’ pollution control mechanism into a paper exercise whose only relevance to a

waterbody’s water pollution control efforts is to legitimate less stringent controls on

existing discharges without any corresponding pollution reductions by other sources.

That vision of the TMDL program’s purpose directly contravenes Congress’ vision.

I would like to highlight six of the key problems I find in EPA’s draft proposal

to rewrite the existing TMDL regulations.
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EPA’S DRAFT RULE ILLEGALLY TRUNCATES THE UNIVERSE OF WATERS CONGRESS

INTENDED TO PROTECT OR CLEAN-UP THROUGH THE IMPLEMENTATION OF TMDLS

First is the use of listing criteria that, if implemented, would illegally and illogically restrict the use of TMDLs to a relatively small number of waterbodies, ignoring thousands of waters that Congress envisioned would be protected and/or cleaned

up through a TMDL. Listing decisions are critically important because whether a

water is listed and scheduled to get a TMDL is the gateway into the entire cleanup program. If a water is not listed (or is on some list other than the list of waters

requiring a TMDL) then that water will not benefit from the program. Therefore,

it is important for the Committee to understand the ways in which EPA is trying

to close the gateway into the TMDL program to thousands of waters across the

country that Congress required be included in the TMDL program.

EPA’s draft rule completely ignores the express terms of Section 303(d)(1), the requirements put in place by Congress. Under the statute, the only question relevant

to listing a waterbody under section 303(d)(1) is ‘‘were BPT and secondary treatment sufficient to implement all applicable water quality standards?’’ If a waterbody

is impaired or has ever been impaired since the implementation of BPT and secondary treatment requirements, the answer to that question is obviously ‘‘no.’’ If a

waterbody has no point source discharges to which either BPT or secondary applied,

the answer also must be ‘‘no.’’ It is as simple as that.

In contrast, EPA’s draft rule proposes a complicated set of five categories of waters, only one of which is apparently identified as a list required by Section 303(d).

None of the five categories tracks the listing criteria established by Congress in that

section. Indeed, the criteria identified by EPA to establish the categories, in most

instances, include waters that Congress’ Section 303(d)(1) criteria mandate including on the Section 303(d) list and the preparation of a TMDL.

Going through each of the categories described in the draft, the draft rule places

in its Category 1 waters those waters that currently are attaining all designated

uses. Although some of these waters may not have to be listed for a TMDL under

the statute, such currently clean waters do need to be listed and a TMDL prepared

if attainment with the standards is not the result of BPT or secondary treatment.

The draft rule’s Category 2 waters include those waters where only some designated

uses are attained but there is insufficient data to determine whether other uses are

being achieved. According to the statute, all of these waters must be listed because,

especially at this late date almost 30 years after implementation of BPT and secondary treatment requirements, it is certain that BPT and secondary treatment

were not stringent enough to implement these waters’ standards. EPA’s Category

3 waters include those waters where there is insufficient information to determine

whether or not compliance with standards is achieved. These also must be listed,

again, to the extent that BPT and/or secondary treatment were not sufficient to implement standards. Category 4A is a list of those waters, impaired or otherwise, for

which TMDLs already have been established. Congress did not intend for waters to

be removed from the 303(d) list just because a TMDL was prepared. Obviously, they

may no longer need a TMDL but they must remain on the list in order to implement

Section 303(d)(4) and to assure the TMDL remains intact and up to date into the

future. Indeed, Section 303(d)(4) invokes the antidegradation policy ‘‘[f]or waters

identified under paragraph [303(d)(1)(A)] where the quality of such waters equals

or exceeds levels necessary to protect the designated use for such waters or required

by applicable water quality standards,’’ underscoring the fact that the criteria for

listing waters under section 303(d)(1)(A) encompasses waters that are not yet impaired and, hopefully, will never be impaired.

Perhaps of greatest concern is Category 4B waters where it is known that standards are not being attained but other ‘‘enforceable’’ pollutant control mechanisms

are alleged to be in place and purportedly designed to attain water quality standards within a reasonable timeframe. These waters by definition must be listed

under 303(d)(1)(A) and TMDLs completed for them. EPA has no authority to substitute other pollutant control mechanisms as listing and TMDL criteria to replace

those selected by Congress, i.e. BPT and secondary treatment. The agency cannot

keep a water off the 303(d) list because standards were achieved by implementation

of best available technology. Nor can EPA refuse to list waters where a non-TMDL

based water quality-based effluent limit achieved standards. And the agency certainly cannot eliminate waters from States’ 303(d) lists based on some future,

unnamed trading programs or other untested programs.

The agency’s Category 4C waters include impaired waters where the impairment

is not caused by a pollutant. Although it’s difficult to imagine what impaired waters

would fit this description, this category is apparently an effort by the agency to

eliminate waters from the list that are impaired by low flows or otherwise sensitized
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to pollution discharges by disturbances other than pollution discharges. I cannot

imagine a source of impairment that does not involve either point or nonpoint

sources of pollution. Even streamside tree canopy removal that reduces shade along

a stream resulting in temperature pollution amounts to nonpoint source pollution

and can be readily addressed through a TMDL.

The last and final category—Category 5—is the only section 303(d) list proposed

by EPA’s draft rule. The list is limited to waters that are currently impaired and

that do not fit into any of the other categories. Nothing in the statute suggests that

such a truncated list satisfies the conditions established by Congress.

Notably, EPA rejects any category, whether under section 303(d) or not, for

threatened waters. Again, by definition, waters whose standards are threatened

with exceedances are directly addressed by Congress’ listing criteria for Section

303(d). If a waterbody’s standards are threatened now in 2003, then it is clear that

the pollution control technology applied back in the late 1970’s does not have much

chance of assuring the implementation of the threatened standards today. Likewise,

ignoring threatened waters will in almost every case violate the Clean Water Act’s

antidegradation requirements. EPA, apparently aware of this contradiction, simply

proposes to eliminate consideration of the Federal and State antidegradation standards when implementing section 303(d), a cynical and underhanded proposal addressed further below.

To summarize the listing concerns, it is clear that the draft proposal bears little

if any relationship to Congress’ Section 303(d) criteria. EPA’s truncated list will prevent thousands of critical but currently clean waterbodies from being protected by

the TMDL program, assuring a continuous supply of new impaired waters for future

agencies’ to have to contend with cleaning up. In a very real way, by truncating the

list, EPA also may very well undermine the States’ ability to establish their own

priorities for establishing TMDLs by not allowing them, for example, to put a critical but threatened water supply on the list and perhaps ahead of an impaired but

less important water.

EPA’S DRAFT RULE WILL RESULT IN INEFFECTIVE TMDLS THAT WILL UNDERMINE ANY

POTENTIAL FOR EFFECTIVE POLLUTION TRADING SCHEMES

The other five concerns address aspects of EPA’s proposals to rewrite the rules

that, if implemented, would render TMDLs ineffective at protecting water quality.

The first of these is the untenable assertion by EPA that the agency is not required to review and approve the States’ allocation of a TMDL for a given pollutant

to the various sources discharging that pollutant as part of EPA’s obligation to approve or disapprove TMDLs. That approach entirely undermines the agency’s duty,

assigned to it by Congress, to review States’ TMDLs and to make sure that they

are established at a level necessary to implement the applicable water quality

standards. EPA must review the ‘‘load established’’ by each State. 33 U.S.C.

§ 1313(d)(2). That established load to be reviewed by EPA ‘‘shall be established at

a level necessary to implement the applicable water quality standards with seasonal

variations and a margin of safety which takes into account lack of knowledge concerning the relationship between effluent limitations and water quality.’’ 33 U.S.C.

§ 1313(d)(1)(C). Hence, EPA is obliged to review any TMDL based on that standard

and based on resulting effluent limitations. As a rational and scientific matter, EPA

cannot make a finding that a TMDL will implement standards throughout a watershed without reviewing and approving the allocations. In addition, allocations are

expressly referenced in the Act. See section 303(d)(4), 33 U.S.C. §1313(d)(4). EPA

is wrong that allocations are not required by section 303(d).

Second is a related problem, which is the general theme throughout EPA’s proposal—moving away from allocating pollution reductions needed to implement a

TMDL to specific, individual sources and, instead, allocating larger portions of a

TMDL to many sources, albeit perhaps similar in nature. Hence, the proposal includes the concept of establishing gross allocations of a TMDL to entire categories

of dischargers throughout a watershed, including, for example, all logging, all farming, all grazing, all non-NPDES storm water, all marinas, all dredging and all dams.

Similarly, the proposal floats the idea of a gross allocation for all future growth

within a watershed, regardless of location or localized pollution impacts or similarity

of pollution sources. Simply allocating a single load to, for example, all logging dischargers in a watershed will not implement standards throughout that watershed.

Nor would EPA be able to find that a TMDL allocated in such a manner will implement such standards throughout the watershed. The agency will have no ability to

determine where the categorical logging load will be discharged and hence whether

the upstream waters will be protected. I also would think that the agency would

be concerned about not requiring a TMDL to be allocated to specific individual
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sources if it hopes to ever create functional pollution trading opportunities from this

program. Lump sum allocations as described in the draft will doom any such trading

schemes from the start because nobody will know how much loading (i.e. how many

pollution shares) they control and must reduce.

A third problem stemming from EPA’s incorrect assertion that the agency does

not have to review a State’s allocations in approving a TMDL is EPA’s proposal that

States be allowed to reallocate its TMDL after EPA approves it. The notion that

EPA believes it can review a TMDL and determine that it will assure implementation of water quality standards without reviewing the TMDL’s allocations in the

first place and allowing a State agency to alter those allocations however it wants

is irrational and a complete abandonment of science as well as the law.

Fourth, the draft proposal allows existing NPDES dischargers to increase their

loadings of pollutants that are still impairing a waterbody immediately after a

TMDL is drafted, even when there have been no reductions whatsoever from other

sources and no guarantee that such reductions will ever occur. That, of course, is

a recipe for further impairment, not clean-up. Such a TMDL scheme would not implement applicable water quality standards. Instead, for a possibly indefinite

amount of time, it would simply provide an unwarranted excuse for existing point

source discharges to expand their contribution to a waterbody’s impairment or degradation while absolutely no pollution reductions are realized from nonpoint or

other sources. In order for Congress’ goals for the Act and the TMDL program to

be realized, it is clear that existing point source pollution must be further controlled

as long as no progress is made in reducing pollution from nonpoint sources into a

waterbody that is impaired or being degraded.

The fifth and last concern I will discuss today is EPA’s suggestion that the agency

can simply ignore the Federal and state antidegradation policies from consideration

when establishing or reviewing TMDLs. EPA’s contemplated slashing of that core

principle, a principle embodied by every word of the Clean Water Act, strikes at the

heart of Congress’ intent in creating the TMDL program and best exemplifies EPA’s

underhanded effort to distort the purpose of the TMDL program from a regulatory

mandate to protect and restore water quality to a regulatory shield providing dischargers cover while they continue to pollute and degrade the Nation’s waters.

Every State in the country is required to have an antidegradation policy established

as one of the three mandated components of its water quality standards. The entire

scheme of the Clean Water Act hinges on the concept that waters become less polluted until all uses are fully protected and, indeed, all pollution is eliminated. By

thinking about removing antidegradation requirements from the ambit of the TMDL

program, EPA sentences the nation’s waters to further spoliation and sentences the

States and the American public to ever expanding lists of impaired waters.

This is not an exhaustive list of concerns. Other significant problems exist in the

EPA draft, including the agency’s refusal to acknowledge the ‘‘daily’’ loads required

by Congress; the excessive length of schedules proposed for establishing the truncated list of TMDLs; the proposal to allow less frequent 305(b) reports despite the

Act’s mandate that such reports be submitted by the State every 2 years and, hence,

the fictional assertion that allowing integrated 303(d) and 305(b) reports every 4

years will amount to significant cost savings by the States; the questionable reading

of the thermal list required by section 303(d)(1)(B); the incorrect notion that EPA

or the States have authority to delist waters under section 303(d), and; last but perhaps not least, the bizarre notion that ‘‘natural background’ could include pesticides

in sediments are all significant concerns. The above concerns will be further addressed by the environmental community should EPA’s proposal ever see the light

of day.

Taken together, the proposals in EPA’s rewrite of the TMDL program will virtually guarantee that this important Clean Water Act program will be rendered entirely ineffective at protecting and cleaning up the Nation’s waters. This rewrite of

the rules will condemn the over 215 million Americans who currently live within

10 miles of a polluted waterbody to a least another generation of unsafe waters and

will add many more Americans around the country to that group as their community’s waters get more polluted from point and nonpoint sources. Therefore, we urge

the Committee to encourage EPA to withdraw the draft proposal before expending

its limited resources on a blatantly illegal proposal.

EPA’S ARBITRARY STORM WATER EXEMPTION FOR THE OIL AND GAS INDUSTRY

While working on rulemaking that would dismantle the TMDL program, EPA also

has been busy doling out favors in the form of special exemptions to Clean Water

Act requirements for certain industries, including the oil and gas industry. In particular, I would like to state Earthjustice’s objection to the agency’s rulemaking this
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past March delaying for at least 2 years the Phase II storm water permitting rules

that otherwise would have gone into effect on March 10, 2003 for construction activities by the oil and gas industry at their exploration and productionsites. EPA’s

special exemption for the oil and gas industry was based on undocumented and last

minute claims by the industry’s lobbyists that somehow that industries’ construction

activities were qualitatively different from every other construction activity in the

country. Whether a 2.4 acre or 105,000 square foot site is cleared and graded by

a housing developer, an office building developer, or an oil and gas drilling operation

does not make the dirt and sediments any less erosive or any less capable of polluting. Who builds a road also will not alter its potential for pollution. Indeed, the

pollution threats from drilling sites go well beyond those posed by sediment discharges and the many dischargers who are now subject to the Phase II regulations.

Storm water from drilling activities contains not only sediments and silts, but also

oil and grease, drilling compounds and other construction related materials. The cumulative threat of 30,000 industrial construction sites cannot be ignored if Congress’

mandate that all storm water discharges be controlled through the NPDES program

and the resulting environmental benefits are to ever be attained.

Industry argues that oil and gas exploration and production, including pre-drilling

construction activities, are exempt from NPDES permitting pursuant to section

402(l)(2) of the Act, 33 U.S.C. § 1342(l)(2). The express language of that section does

not support industry’s argument. By its terms, Section 402(l)(2) does not include any

storm water runoff that has either been ‘‘contaminated by contact with, or do[es]

not come into contact with, any overburden, raw material, intermediate products,

finished product, byproduct, or waste products, located on the site of such operations.’’ The disturbed soils around drilling wells are both overburden and waste

products. See Sen. Rep. No. 99–50 at 44 (May 14, 1985) (‘‘[e]xamples of contamination include suspended or dissolved solids from . . . disturbed soils’’). Hence, any

storm water contacting the disturbed areas of a drilling site, if discharged, is not

exempt from the Act’s permitting requirements.

The legislative history makes even clearer the limited scope of the exemption set

forth at Section 402(l)(2). The final conference report for the Water Quality Act of

1987 makes it clear that Section 402(l)(2) ‘‘provides that permits are not required

where stormwater runoff is diverted around mining operations or oil and gas operations and does not come in contact with overburden, raw material, product, or process wastes. In addition, where stormwater runoff is not contaminated by contact

with such materials. . . .’’ H.Rep. Conf. Rep. No. 99–1004 at p. 152 (Oct. 15, 1986).

See also H.R. Rep. No. 99–189 at p. 37 (July 2, 1985) (‘‘The subsection was developed by the Committee in recognition of the fact that there are numerous situations

in the mining and oil and gas industries where stormwater is channeled around

plants and operations through a series of ditches and similar devices in order to prevent pollution contamination of the stormwater’’).

Nothing in EPA’s administrative record, including the numerous industry comments, suggests that storm water is routed around such drilling sites. Nor do any

of those comments suggest that storm water falling on or flowing through these

sites are then free of sediment and other pollutants. Indeed, the opposite appears

to be true. See Letter from Warren County Conservation District (Jan. 23, 2003)

(EPA Docket Item OW–2002–0068–0023); Letter from California State Water Resources Control Board (Jan. 31, 2003) (EPA Docket Item OW–2002–0068–0082).

In California, I had the opportunity to work on the implementation of the Phase

I industrial and construction storm water permit and have been involved in the past

in numerous actions enforcing those general permits. Compliance with the storm

water requirements is not complicated, relying in large part on the implementation

of best management practices, many of which have been available for years. The oil

and gas industry need merely pick the appropriate measures off of the shelf, articulate those in a storm water management plan that, in many cases, would be easily

transferable to nearby drilling sites, and monitor to assure compliance. This is no

more than what is expected of much smaller businesses who have been implementing the storm water requirement for the past decade, including thousands of

mom-and-pop businesses with much fewer resources than the oil and gas industry.

Ironically, EPA’s abdication of its duties may result in less certainty for the oil

and gas industry. EPA’s duty to establish regulations is separate and distinct from

the Act’s mandate that all storm water point sources obtain NPDES permits. Right

now, it is certain that thousands of oil and gas drilling sites are in violation of the

Act by discharging pollutants without a permit. Rather than assure an orderly process for issuing permits to that industrial sector, as intended by Congress, EPA has

simply ceded it to private citizens and the courts to enforce the law. I would think

the oil and gas industry would prefer the certainty of EPA regulations to the uncer-
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tainty of an illegal interpretation of the Clean Water Act that exposes them to lawsuits.

EPA’S BACKROOM NEGOTIATION REGARDING LIMITING THE WATERS OF THE UNITED

STATES PROTECTED BY THE CLEAN WATER ACT

I also want to highlight a strong concern regarding legal maneuverings that appear to be occurring in the context of litigation filed by the American Petroleum Institute and other oil industry representatives challenging rules promulgated by EPA

in July 2002 addressing oil spill prevention and response requirements for businesses that store large quantities of oil (greater than 1320 gallons). These rules are

generally referred to as the Spill Prevention Control and Countermeasures (‘‘SPCC’’)

rules. As part of that rulemaking, EPA updated and clarified the definition of ‘‘waters of the United States’’ included in the SPCC rules to be consistent with the regulatory definitions of ‘‘waters of the United States’’ included elsewhere in the Clean

Water Act regulations. The definition EPA adopted for the SPCC rule is essentially

the same definition already promulgated throughout the Clean Water Act regulations, including at 40 C.F.R. §§ 122.2, 230.3(s) and 33 C.F.R. § 328.3(a).

The main thrust of the oil industry’s challenge is an allegation that EPA’s definition of waters of the United States goes beyond those waters protected by the Clean

Water Act. Industry argues that the requirements of the Clean Water Act are limited to discharges of pollutants to traditionally navigable waters and wetlands adjacent to such traditionally navigable waters. In essence, the oil industry would like

to exempt tens of thousands of facilities from the SPCC rules if, for example, any

potential oil spill would flow to a small creek or ephemeral stream, despite those

waters’ clear connections to downstream waters and the potentially devastating effects of an oil spill, especially one beginning in the headwaters of a watershed and

adversely affecting all downstream waters.

Industry’s primary basis for its assertion is an exaggerated reading of the Supreme Court’s 2001 decision in Solid Waste Agency of Northern Cook County v.

United States Army Corps of Engineers, the so-called ‘‘SWANCC’’ decision. Industry’s expansive view of SWANCC is inconsistent with that decision’s express terms.

SWANCC simply ruled that the Corps could not use the ‘‘Migratory Bird Rule’’—

a portion of a 1986 Federal Register preamble—as a sole basis to regulate waters

used by migratory birds. The decision does not suggest that intrastate waters that

are used in or affected by interstate commerce, for example, by a group of anglers

or a power plant feeding electricity to a multi-State grid that uses a lake’s waters

for cooling, would not be subject to the Clean Water Act.

Industry’s wish that SWANCC was a more expansive ruling also is inconsistent

with over two dozen Federal court briefs filed on behalf of EPA and the Army Corps

by the Department of Justice and emphasizing the limited ruling in SWANCC and

the necessity of EPA’s existing definition of water of the United States in order to

implement the Clean Water Act consistent with Congress’ mandate. Last, virtually

every court that has considered the scope of the holding in SWANCC has ruled that

the holding is limited to the facts and express ruling in that case and has no effect

on EPA’s or the Corps’ existing regulatory definitions.

According to the industry plaintiffs, settlement discussions are ongoing on the appeals of the SPCC rule. NRDC and the Sierra Club, represented by Earthjustice,

have sought to intervene in the case. While awaiting the court’s ruling on that request, the groups have asked to participate in the settlement discussions but this

request has been denied. We are very concerned that the discussions going on now

behind closed doors will lead to some tacit acknowledgement by EPA that industry’s

strained reading of SWANCC has some merit and that EPA may withdraw regulations embodying a definition that the agency has stood by for almost three decades.

I hope that EPA will vigorously defend the broad jurisdiction of the Clean Water

Act established by Congress, and not cave to the wishes of the oil industry to create

another special standard for that industry. EPA should not resort to a cowardly retreat from decades of clear, regulatory direction assuring broad coverage of the Act

and accompanying certainty to businesses by hiding its complicity with the oil industry to undermine one of our country’s most important environmental laws behind

closed-door settlement negotiations. If the agency retreats from its long-established

definition of waters of the United States this would, at best, set the agency and the

regulated community on a path of uncertainty that would be easily avoided if EPA

were to simply defend its long-standing definition of waters of the United States.

CONCLUSION

It is important to keep in mind that EPA’s above-described activities are a few

of many efforts by the agency that do not bode well for the Clean Water Act and
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the future health of America’s rivers, lakes, streams, wetlands, and coastal waters.

The above proposals are the most recent examples of an expanding pattern by the

agency to cut back the protections of the Clean Water Act. The thousands of polluted lakes, rivers, and ocean waters around the country will not be cleaned by EPA

walking away from the problems, and the States taking the agency’s cue and following close behind. The gains that have been made in protecting many of the country’s waters will be lost if EPA continues on its current path. We are the children

left with cleaning up the rivers polluted by our parents’ and grandparents’ generations. If we are to avoid leaving our sons and daughters with a lot more polluted

rivers and lakes, EPA must abandon its efforts to dismantle the current TMDL program, take more aggressive steps to implement the current regulations, and assure

that every industry, including the oil and gas industry, abide by Congress’ clear directives to protect and cleanup our Nation’s waters.

I hope my comments assist the Committee in its oversight of EPA’s current implementation of the Clean Water Act. Thank you again for this opportunity to appear

before the Committee.

RESPONSES OF MICHAEL R. LOZEAU TO ADDITIONAL QUESTIONS FROM

SENATOR JEFFORDS

Question 1. We heard in testimony that the EPA’s proposed rewrite of the TMDL

rules could undermine effective trading. This is interesting to me because trading

is something that the EPA testified they support. Can you describe how the TMDL

proposal undermines trading among pollution sources?

Response. EPA’s proposed rewrite of the TMDL rules will undermine the prospects for water pollution trading in at least seven ways:

i. The draft rule’s built-in vagaries and conscious lack of clarity provides no

incentive for pollution sources to contribute resources to any given TMDL and

any accompanying trading proposal. As I stated in my testimony, EPA’s proposal would allow for only ‘‘gross allocations’’ of responsibility for sources’ contributions of pollutants to a waterbody. Not only is such a scheme illegal, in

that EPA will be unable to find that a TMDL allocated in such a manner will

implement water quality standards throughout the watershed, but these lump

sum allocations will doom trading schemes because pollution sources will not

know how much loading they must reduce. See Response #5 below. If these

sources are not identified as the source of a pollution problem, they will have

no incentive to participate in any trade. Following the existing law, which requires specific allocations, would encourage buy-in and resource contributions

from pollution sources to formulate trading proposals that could subsidize the

states’ generally cash-starved water quality programs.

ii. Similarly, by allowing gross allotments, the proposed TMDL rule fails to

identify a watershed’s market participants. A TMDL rule that defined the marketplace in which trades would occur could establish one of the basic components of a trading scheme.

iii. By allowing for gross allotments of pollution responsibility within a

TMDL, the proposed rule fails to provide any science-based scheme for creating

and distributing pollution ‘‘shares.’’ On the other hand, if a TMDL identifies

each individual source and quantifies their individual load, then the shares of

a potential trading program would be self-evident.

iv. Those same gross allotments will preclude EPA from assuring that water

quality standards and beneficial uses throughout a watershed would be implemented by a TMDL. By the same token, EPA’s proposed gross allotments would

prevent the agency from procuring and reviewing the information and data necessary to assure that any proposed trading scheme for that watershed would

not cause hot spots within the watershed. This also is true of the proposal that

EPA not review TMDL allocations at all.

v. Obviously, identifying individual sources is a prerequisite to monitoring

their compliance with their allocation. Without provisions for monitoring of individual sources and the ability of market participants and others to enforce individual pollution allocations, a legitimate and functional trading scheme amongst

individual sources will not come to pass.

vi. By allowing the states and local agencies to alter their general allocations

without review by EPA would make those allocations and their resulting ‘‘market’’ values less certain and less capable of prediction, thereby discouraging participation by potential traders.

vii. A TMDL rule that purported to encourage trading also would not include

any allocations for future growth or other new pollution sources. Trading, if it
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were to have any chance of proving effective at all, would require a firm total

maximum daily load that was fully protective of beneficial uses and standards

throughout a watershed. It also would have to include very specific allocations

to existing individual sources, not based on their current pollution levels, but

on levels necessary to comply with the TMDL. No allocations would be given

to future sources or increased pollution from existing sources. Those new quantities of pollution would only be allowed if the source were to buy up existing

allocations in an amount greater than the proposed increase. The ‘‘offset’’ ratio

would presumably be determined by the schedule for achieving the TMDL and

compliance with standards.

Question 2. Why is the SPCC rule itself important, aside from the interactions

with the SWANCC decision? In other words, what protections will be lost while implementation of the rule is delayed for the oil and gas industry?

Response. The SPCC Rule is intended to prevent oil discharges from reaching

navigable waters of the United States or adjoining shorelines. It applies to owners

or operators of facilities that drill, produce, gather, store, use, process, refine, transfer, distribute, or consume oil and oil products. The SPCC rule requires facilities

that store more than 1,320 gallons of oil to prepare a spill prevention control and

countermeasure (‘‘SPCC’’) plan. These plans help prevent oil discharges by such facilities and mitigate the damage caused by such discharges if and when they occur.

In addition to preparing SPCC plans, the rule requires facilities to institute a number of preventative measures to reduce the risk of spills. These measures include

tank leak detection, spill overfill protection, pipe external protection, and secondary

containment. A 1995 EPA survey demonstrated that compliance with even one of

these requirements reduces both the number of spills and the amount of oil that

migrates outside of a facility’s boundaries. 62 Fed. Reg. 63817/2 (1997).

EPA amended the SPCC rule in July 2002. The amendments generally clarify the

language and organization of the rule. The July 2002 Rule confirmed the broad applicability of these requirements to all navigable waters—i.e., ‘‘waters of the United

States.’’ The final rule also requires a number of improvements in the plans themselves. For instance, it requires that all SPCC plans be reviewed and certified by

a professional engineer, that facilities evaluate potential for brittle-fracture of

aboveground containers, and that all buried piping use a protective wrapping and

coating.

Postponing the compliance date for the new rule delays implementation of these

improvements in the SPCC program, thereby increasing the risk of oil spills from

these facilities. According to EPA, one gallon of oil can contaminate one million gallons of water. There are approximately 24,000 oil spills each year in the United

States, with more than half of those spills occurring inland where they contaminate

streams, rivers, and wetlands.

Question 3. In your comments, you mentioned that the real effect of the Administration’s TMDL regulation on the water quality program would be to return to pre1972 TMDL protections. Can you provide more detail on this point?

Response. Prior to the 1972 amendments that created the modern Federal Water

Pollution Control Act, the national water quality program relied on the states to directly enforce their water quality standards against individual discharges. As is emphasized in the FWPCA’s legislative history, those efforts proved ineffective and

spurred the 1972 amendments’ focus on establishing effluent limitations in permits

as a means of implementing the states’ water quality standards. TMDLs were part

of that concept, filling in the gaps left by the point source permitting program to

identify and quantify all pollution sources to a listed water body and, although not

always requiring a NPDES permit to address each of those sources (i.e. the nonpoint

sources), at least quantifying each sources maximum load of pollutants that they

could release to a waterbody. That load limit could then be implemented either

through the NPDES program or the various nonpoint source programs set forth by

the Act.

By rewriting the existing TMDL rule to say that states do not have to identify

specific pollution sources and can allocate pollution to numerous sources in one

lump sum, EPA essentially gives up on the meaningful role for TMDLs contemplated by Congress and attempts to turn them into the same unenforceable, general standards that were proven to be ineffective in the past. In addition, because

the TMDLs, even if allocated on these gross bases, will in turn be relied upon to

change existing limitations that currently apply to point sources in listed

waterbodies, I am concerned that inaccurate TMDLs setting forth gross allocations

that cannot be ground-truthed will result in a weakening of effluent limitations for

the relevant point sources. Meaningless gross allocations for many pollution sources

coupled with less stringent effluent limitations for point sources looks and feels a
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lot like the disavowed programs from prior to 1972—programs described by the late

Senator Muskie, upon introducing the bill that was to become the Clean Water Act,

as ‘‘inadequate in every vital aspect.’’ 117 Cong. Rec. 17397 (daily ed. Nov. 2, 1971).

Question 4. In Mr. Kouplen’s testimony, he states, ‘‘Section 303(d) provides no authority for the preparation or establishment of an implementation plan. It merely

envisioned the translation of wasteload allocations into water quality based effluent

limitations for point sources. ‘‘ Can you comment on his interpretation of section

303(d)?

Response. To the extent Mr. Kouplen’s testimony suggests that the only meaningful limits resulting from a TMDL are the water quality-based effluent limitations

for point sources, he clearly is wrong. TMDLs also are required to address nonpoint

sources of pollution. TMDLs must be ‘‘established at a level necessary to implement

the applicable water quality standards with seasonal variations and a margin of

safety. . . .’’ 33 U.S.C. § 1313(d)(1)(C). Water quality standards must be implemented throughout a listed waterbody, not merely at some arbitrary downstream

point or in the larger order streams within a watershed. Upstream waters and tributaries must comply with standards. That is the standard that EPA must apply in

reviewing and approving or disapproving a TMDL.

So, although it is true that Section 303(d) does not call for something called an

‘‘implementation plan,’’ it does require a TMDL to include a specific allocation of

loadings for each specific pollution source in a waterbody in order to ‘‘implement’’

the applicable water quality standards. Without individual, source-specific allocations, it is impossible for either a state or EPA to find that the TMDL is ‘‘established at a level necessary to implement the applicable water quality standards.’’

The sole purpose of a TMDL, its very reason for being, is to implement water quality standards. Given the objective, water quality driven criteria that must be used

to develop a TMDL, any need for an additional ‘‘implementation plan’’ is hardly necessary. If completed with the level of detail necessary to achieve Congress’ criteria,

implementing a TMDL’s allocations should be a relatively simple matter of adopting

the point source allocations into existing NPDES permits and adopting the nonpoint

source allocations into the existing nonpoint source management plans.

Question 5. Can you comment on Mr. Kouplen’s analysis of the impacts of the

Pronsolino case that he included in his written testimony?

Response. I do not believe the Pronsolino decision assists Mr. Kouplen’s analysis

asserting that EPA may only set an overall goal but how that overall goal will be

achieved is reserved for the States. If I am correct, the analysis Senator Jefford’s

question is referring to in Mr. Kouplen’s testimony concludes by saying ‘‘allocation

decisions are the essence of implementation planning that has been strictly reserved

for the states.’’ Mr. Kouplen’s assertion is not based in the statutory language or

common sense. As described above, how a TMDL is allocated to specific pollution

sources is an elementary component and cannot be separated from the TMDL itself

if the state and EPA are claiming to establish or approve the TMDLs based on the

express criteria of Congress.

Mr. Kouplen’s assertion that the formal TMDL to be reviewed and approved by

EPA consists of a single number allowing for one gross loading figure of a pollutant

into some large waterbody would not be indicative of a loading established at a level

necessary to implement the applicable water quality standards. A TMDL cannot be

established in any realistic sense except as the sum of its component allocations

and, without knowing where and how much a TMDL’s allocations occur, no agency—no objective scientist—can say that the TMDL is established at a protective

level throughout that waterbody. In other words, Section 303(d) mandates that EPA

review allocations in order to assure that a TMDL is at a level necessary to implement standards in every part of the waterbody, not just the one downstream point

where the gross load could theoretically be measured.

Question 6. In Mr. Fuller’s testimony, he states that he believes that Section

402(l)(2) was intended to exempt all oil and gas activities from all storm water permit requirements. In reviewing the legislation history on this issue, I believe that

his interpretation is incorrect. Specifically, the statute lists three main criteria to

determine if this provision applies to a particular discharge:

• First, the discharge must be ‘‘stormwater runoff from mining operations or oil

and gas exploration, production, processing, or treatment operations or transmission

facilities. . . .’’

• Second, the flow must be ‘‘composed entirely of flows which are from conveyance

or systems of conveyances (including but not limited to pipes, conduits, ditches, and

channels) used for collecting and conveying’ precipitation runoff. . .’’
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• Third, the flow must be ‘‘not contaminated by contact with, or do not come into

contact with, any overburden, raw material, intermediate products, finished product,

byproduct or waste products located on the site of such operations. ‘‘Section 402(1)

clearly applies only to particular types of discharges from particular types of systems. It does not provide authority for a blanket exemption to the Clean Water Act

NPDES permitting requirements. A number of questions arise with regard to the

application of Section 402(l) (2) to the phase I and phase II programs. What is the

difference between flows from conveyances or systems of conveyances and the discharges resulting from a construction project? Are flows from oil and gas construction sites uncontaminated as envisioned by section 402(l)(2)?

Response. In short, it is clear that Section 402(l)(2) does not exempt all oil and

gas activities from the NPDES permitting program as asserted by Mr. Fuller. There

is a distinction between a construction site and subsequently constructed conveyances. And disturbed soils and other pollutants washed by storm water from construction sites associated with oil and gas exploration are contaminated discharges.

If we are talking about grading and preparing a site for construction activities,

in most instances, those sites will be devoid of any conveyances or systems of conveyances. Without such conveyances, the exemption is not triggered. Even if there

were some temporary conveyance systems set up to collect rainwater from the construction area, those conveyances, by definition, would not be conveying storm water

around the construction area and its polluting materials but from it. If those discharges include pollutants, they are not exempted pursuant to section 402(l)(2). In

addition, Congress anticipated disturbed soils, such as are encountered at any construction site, to be one type of pollutant that would preclude the section 402(l)(2)

exemption. See Sen. Rep. No. 99–50, pp. 44–45 (May 15, 1985) (‘‘Examples of contamination include heavy metals or suspended or dissolved solids from process

wastes or disturbed soils, or salts, surfactants, or solvents used or produced in the

oil and gas operations’’).

Question 7. Please provide your interpretation of the legislative history accompanying section 402(l)(2) of the Clean Water Act and its applicability to oil and gas

construction sites, both large and small.

Response. My review of the legislative history leading up to Congress’ enactment

of Section 402(l)(2) shows that Congress did not specifically address discharges of

pollutants from construction activities in anticipation of drilling an oil and gas well.

Because exemptions from the CWA’s permitting program cannot be implied, that

alone is sufficient to show that Congress did not intend to exempt such discharges.

There is support in the legislative history that the section 402(l)(2) exemption is limited in scope. 131 Cong. Rec. H 19846, 19855 (July 22, 1985) (Statement of Mr.

Breaux) (Section 402(l)(2) a ‘‘limited stormwater exemption’’). The main rationale for

the exemption was to avoid discouraging voluntary efforts by the mining and oil and

gas industry to route unpolluted storm water around their operations in order to

prevent it from being contaminated:

The subsection was developed by the Committee in recognition of the fact that

there are numerous situations in the mining and oil and gas industries where

stormwater is channeled around plants and operations through a series of

ditches and similar devices in order to prevent pollution contamination of the

stormwater. Many of these stormwater run-off devices are voluntary means of

pollution control.

See H.R. Rep. No. 99–189, p. 37. If there are no storm water conveyances, it is

clear that the exemption is not triggered. See H. Rep. Conf. Rep. No. 99–1004, p.

150 (Oct. 15, 1986) (‘‘To be exempted, such discharges must be composed entirely

of flows of precipitation, runoff from conveyances or systems of conveyances used for

collecting and conveying such water’’). It also is clear from the history that any runoff polluted by the oil and gas or mining operations would not qualify for the permitting exemption, though Congress left EPA with some discretion to determine whether conveyed runoff that does come into contact with overburden, raw material, product, or process wastes is contaminated or not. See id. (‘‘any stormwater which has

come into contact with any potential pollutant would not be eligible for the

stormwater runoff exemption’’); see also H. Rep. Conf. Rep. No. 99–1004, p. 151

(Oct. 15, 1986) (‘‘where stormwater runoff is not contaminated by contact with such

materials, as determined by the Administrator, permits are also not required’’).

In conclusion, it is clear that section 402(l)(2) does not expressly exempt construction activities at oil and gas or mining sites. The legislative history does not suggest

otherwise. Instead, the legislative history supports a conclusion that, without conveyances, as would normally be the case for a grading project, the exemption does

not apply. Moreover, even assuming that the construction phase of a drilling site
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is not generally outside the scope of section 402(l)(2), EPA has discretion to determine whether runoff from oil and gas and indeed any construction sites is contaminated or not. It would be entirely arbitrary if EPA were to conclude that stormwater

from construction associated with potential oil and gas exploration is not contaminated but it is contaminated from every other construction site of one acre or more

anywhere else in the country.

STATEMENT OF LEE FULLER, VICE PRESIDENT, GOVERNMENT RELATIONS FOR THE

INDEPENDENT PETROLEUM ASSOCIATION OF AMERICA (IPAA) ON BEHALF OF THE

ASSOCIATION OF ENERGY SERVICE COMPANIES; THE INTERNATIONAL ASSOCIATION

OF DRILLING CONTRACTORS; THE NATIONAL STRIPPER WELL ASSOCIATION; THE PETROLEUM EQUIPMENT SUPPLIERS ASSOCIATION; THE U.S. OIL & GAS ASSOCIATION;

CALIFORNIA INDEPENDENT PETROLEUM ASSOCIATION; COLORADO OIL & GAS ASSOCIATION; EAST TEXAS PRODUCERS & ROYALTY OWNERS ASSOCIATION; EASTERN

KANSAS OIL & GAS ASSOCIATION; FLORIDA INDEPENDENT PETROLEUM ASSOCIATION; ILLINOIS OIL & GAS ASSOCIATION; INDEPENDENT OIL & GAS ASSOCIATION OF

NEW YORK; INDEPENDENT OIL & GAS ASSOCIATION OF PENNSYLVANIA; INDEPENDENT OIL & GAS ASSOCIATION OFWEST VIRGINIA; INDEPENDENT OIL PRODUCERS ASSOCIATION TRI-STATE; INDEPENDENT PETROLEUM ASSOCIATION OF

MOUNTAIN STATES; INDEPENDENT PETROLEUM ASSOCIATION OF NEW MEXICO; INDIANA OIL & GAS ASSOCIATION; KANSAS INDEPENDENT OIL & GAS ASSOCIATION;

KENTUCKY OIL & GAS ASSOCIATION; LOUISIANA INDEPENDENT OIL & GAS ASSOCIATION; MICHIGAN OIL & GAS ASSOCIATION; MISSISSIPPI INDEPENDENT PRODUCERS &

ROYALTY ASSOCIATION; MONTANA OIL & GAS ASSOCIATION; NATIONAL ASSOCIATION

OF ROYALTY OWNERS; NEBRASKA INDEPENDENT OIL & GAS ASSOCIATION; NEW

MEXICO OIL & GAS ASSOCIATION; NEW YORK STATE OIL PRODUCERS ASSOCIATION;

OHIO OIL & GAS ASSOCIATION; OKLAHOMA INDEPENDENT PETROLEUM ASSOCIATION; PANHANDLE PRODUCERS & ROYALTY OWNERS ASSOCIATION; PENNSYLVANIA

OIL & GAS ASSOCIATION; PERMIAN BASIN PETROLEUM ASSOCIATION; PETROLEUM

ASSOCIATION OF WYOMING; TENNESSEE OIL & GAS ASSOCIATION; TEXAS ALLIANCE

OF ENERGY PRODUCERS; TEXAS INDEPENDENT PRODUCERS AND ROYALTY OWNERS;

WYOMING INDEPENDENT PRODUCERS ASSOCIATION

Mr. Chairman, members of the committee, I am Lee Fuller, vice president of Government Relations for the Independent Petroleum Association of America (IPAA).

This testimony is submitted on behalf of the IPAA, the Association of Energy Service Companies, the International Association of Drilling Contractors (IADC), the National Stripper Well Association (NSWA), the Petroleum Equipment Suppliers Association (PESA), the US Oil & Gas Association (USOGA), and 33 cooperating state

and regional oil and gas associations. These organizations represent petroleum and

natural gas producers, the segment of the industry that is affected the most by regulations that are not cost effective and do not address real environmental risks.

This hearing addresses issues associated with regulations under the Clean Water

Act. This testimony will focus on two specific issues that have significant potential

implications for domestic oil and natural gas producers—regulations associated with

the management of stormwater during the construction of oil and natural gas exploration, production, processing, or treatment operations or transmission facilities

(E&P facilities) and expanded regulations for Spill Prevention, Control, and Countermeasure (SPCC) Plans.

Before presenting information on these provisions, it is important to understand

the nature of domestic oil and natural gas exploration and production and the role

of independent producers. Independent producers are companies that explore for

and develop oil and natural gas. Typically, they only operate in these aspects of the

petroleum and natural gas industries. There are approximately 7000 independent

producers who are predominately small businesses employing an average of 12 employees each. However, they drill approximately 85 percent of the nation’s oil and

gas wells.

Domestic petroleum and natural gas production has changed over the years, particularly since the mid–1980’s. Maturing production areas in the Lower–48 states

and the need to respond to shareholder expectations have resulted in major integrated petroleum companies shifting their exploration and production focus toward

the offshore in the United States and into foreign countries. More and more, these

large companies must rely on large producing fields that are found only in frontier

areas. Consequently, the role of independents is increasing in both the Lower–48

states and in the near offshore areas. For example, the independents’ share of

Lower–48 states petroleum production has increased from 45 percent in the mid–

1980’s to over 60 percent by 1995—and these states, despite their mature fields, still
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account for 60 percent of domestic oil production. Similarly, independent producers

account for 75 percent of overall domestic natural gas production. These trends will

continue. The Nation will need a strong independent exploration and production industry to meet it future needs.

Another significant aspect of domestic production—particularly in the context of

the effects of regulations—involves the critical role of ‘‘marginal’’ wells. Marginal oil

wells are wells producing no more than 15 barrels per day or producing heavy oil;

marginal natural gas wells are wells producing no more than 90 mcf per day. The

average marginal oil well produces only about 2.2 barrels per day. But, they comprise 84 percent of domestic oil wells (over 400,000) and produce over 20 percent

of our domestic oil—an amount roughly equal to imports from Saudi Arabia. Natural gas marginal wells account for about 10 percent of domestic production—or

more than a third of current natural gas imports. Taken together, these marginal

oil and natural gas wells are about 650,000 of the nation’s 876,000 wells. However,

they are the most susceptible to being shutdown when prices fall or costs increase.

And, once shutdown, they are lost forever. During the low oil prices of 1998–99 domestic oil production dropped from about 6.5 million barrels per day to less than

6.0 million barrels per day. Most of this loss is attributable to the plugging of marginal oil wells. Average domestic crude oil production has never exceeded 6.0 million

barrels per day since; in 2002 production averaged 5.817 million barrels per day.

This perspective is significant because the Clean Water Act regulatory issues that

will be addressed in this testimony directly affect the development of new domestic

production and the continuation of existing domestic production.

STORMWATER CONSTRUCTION PERMITTING ISSUES

The 1987 Clean Water Act (CWA) included two stormwater provisions that have

become, through informal interpretation by EPA, intertwined regarding their application to oil and natural gas E&P facilities. Section 402(p) directs the Environmental Protection Agency (EPA), in general, to require permits for stormwater discharges from municipal and industrial activities under the National Pollutant Discharge Elimination System (NPDES) permitting program. At the same time, Section

402(l)(2) specifically excludes certain stormwater discharges from this requirement,

including discharges of stormwater runoff from oil and natural gas E&P facilities,

unless the discharge is contaminated by contact with, for example, products, byproducts, or wastes. As discussed in more detail below, EPA says that section 402(l)(2)

does not to apply to clearing, grading, and excavating activities at E&P facilities,

which EPA considers to be ‘‘construction activities’’ required to obtain a stormwater

discharge permit, not E&P activities excluded by 402(l)(2).

IPAA believes that EPA has erred in its interpretation of the Clean Water Act

with regard to the relationship between these sections as they apply to oil and natural gas E&P facilities. Congress spoke directly to the exclusion of stormwater related to E&P facilities in section 402(l)(2), and this specific statutory exclusion

should control with respect to all activities normally associated with such facilities.

Section 402(p) makes no mention of its applicability to construction activities in general, much less of an intent to undercut the specific exemption for E&P facilities

in section 402(l)(2). However, despite this structure, EPA has—through a series of

disconnected actions—pulled E&P facilities into the stormwater construction permitting program. Following is a summary of these events.

In 1990, EPA promulgated stormwater permitting regulations under Section

402(p). These regulations defined ‘‘industrial activities’’ to include construction activities that disturb five or more acres of land area or are part of a ‘‘common plan

of development or sale’’ that ultimately will do so. At the same time, EPA promulgated regulations exempting stormwater discharges from E&P sites from the

stormwater permit requirement, unless such discharges are ‘‘contaminated’’ in that

they cause a reportable release of oil or hazardous substance or contribute to a

water quality standard violation. In 1999,EPA issued Phase II stormwater regulations covering construction activities that disturb from 1 to 5 acres or are part of

a common plan that will ultimately do so. Throughout this period, EPA’s regulations

exempting uncontaminated stormwater discharges from E&P facilities remained unchanged. Also during this period, however, EPA issued an internal, non-binding

guidance memorandum interpreting the scope of section 402(l)(2). The memorandum

was issued in December 1992 in response to a question from an enforcement coordinator in one Region. In it, EPA stated that clearing, grading, and other land-disturbing activities at E&P facilities were ‘‘construction activities,’’ not E&P activities

and, therefore the oil and gas exclusion in section 402(l)(2) did not apply. IPAA believes that this guidance is inconsistent with the law. However, industry’s challenge
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to EPA’s 1992 memorandum was dismissed in 1994because of finality constraints

on the courts’ authority to review informal agency guidance.

As a matter of law and policy, EPA should evaluate the environmental risks and

regulatory burdens created by its actions. In the case of oil and natural gas E&P

facilities, IPAA does not believe that EPA made a reasonable assessment of either

the risk or the burden. Nowhere in the information that IPAA has reviewed is there

an indication of significant environmental risks associated with oil and natural gas

E&P facility construction. Nor is there any indication that EPA understood the burdens its program would impose. For example, in an October 1999 report on the costs

of the new Phase II requirements there is a revealing footnote, buried in several

hundred pages of background and economic analysis, stating:

Based on public comments received on the propose rule, EPA considered including oil and gas explorationsites but, upon further review, determined that

few, if any, such sites actually disturb more than one acre of land.

In reality, most oil and natural gas exploration and productionsites fall within the

one to five acre range. In 2000, a total of 31,732 exploratory and production wells

were drilled over 10,000 in Texas and Oklahoma. To meet future natural gas demand, the National Petroleum Council estimates that the number of natural gas

wells alone needs to increase to approximately 48,000 wells annually. However, in

the EPA cost analysis of the Phase II program, it estimated that the number of construction starts would be approximately 130,000 units. But, none of these units were

oil and gas facilities. Oil and gas facilities alone would increase the number of units

by 25 percent with a third of that total coming from the two states of Texas and

Oklahoma where EPA Region 6 must handle the administrative burdens. Overall,

the ultimate economic consequences of the permit requirement could be staggering,

by one estimate as much as $8 billion annually.

Three things are clear. First, if the current level of drilling activity presented

stormwater runoff problems during construction, it would be well known. Second,

the magnitude of permitting that EPA estimated during the regulatory development

process is significantly understated. Third, because the Agency believed that oil and

gas facilities were not affected, the final regulation is structured to address construction of building facilities—houses and commercial buildings.

This approach is inappropriate for oil and gas facilities. For example, subdivisions

are properties that are purchased by the developer, go through an extensive design

process, and have a construction period that may be months or years. There is more

opportunity to build time for permitting into the schedule for a commercial or residential construction project, and more opportunity to respond to permit delays. In

contrast, oil and gas production operations involve the leasing of sub-surface rights,

often on private lands under oil and gas leases with short primary terms. Construction must occur within a matter of weeks, and timing is critical because failure to

commence drilling and/or production and/or to maintain production will cause

leases, and therefore oil and gas reserves, to be lost. Exploration and production of

oil and gas reserves, moreover, involves obtaining a drilling rig, which must be

quickly and carefully scheduled to coincide with drilling windows and lease obligations, and is paid for based on the number of days it is in use. Disruption in this

process can place oil and gas leases, entire projects, and the ability to develop domestic onshore oil and gas reserves—not to mention substantial capital—at risk.

These consequences are at issue in EPA’s interpretation of the scope of the oil and

gas exemption under section 402(l)(2), particularly with the impending decrease in

the acreage threshold to one acre under the Phase II stormwater regulations.

The permitting process is further complicated by EPA’s interpretation of its ‘‘common plan of development’’ concept. This concept requires projects to be permitted

if, taken together, the components will ultimately exceed the permitting acreage

threshold. For E&P facilities, this concept makes no sense. E&P facilities are dependent on the success of one well before locating and drilling the next. For the producer, there is no common plan.

In addition, EPA’s existing ‘‘common plan’’ guidance is very confusing and difficult

to apply to actual E&P activities. The definition is overly inclusive, in that activities

otherwise consistent with the ordinary course of exploration and development of an

oil and gas prospect would likely be grouped together by EPA as a ‘‘common plan,’’

causing the (currently applicable) 5-acre threshold to be exceeded by many common

activities. Under the current guidance, even with the 2-year deferral of the 1-acre

threshold, there is great cause for concern that EPA could conclude that the second

or third or fourth well in a field could constitute a common plan and then enforce

against a producer for failing to file for a construction permit.

Because of these concerns, IPAA believes that EPA should reconsider its approach

to stormwater construction permitting and E&P facilities. Recently, EPA deferred
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until March 2005 the Phase II deadline for E&P facilities that disturb less than five

acres of land area to obtain a stormwater permit. In the meantime, EPA will have

an opportunity to consider whether there are alternative approaches that might be

consistent with EPA’s statutory authority and that would be consistent with the environmental impacts of construction of these facilities and minimizing the regulatory

burden. IPAA believes this action is essential. However, the issue of common plan

of development remains unclear in the recently issued Construction General Permit;

failure to clarify it could lead to unintended regulation of these small facilities during the deferral period. Moreover, IPAA believes that EPA should revisit its current

interpretation of the CWA to address whether it should be requiring E&P facilities

of any size to be to obtain construction permits under subsection 402(p),given the

clear exclusion in subsection 402(l).

Spill Prevention, Control, and Countermeasure Plans. The 1972 CWA required the

EPA to develop regulations to address oil spill prevention and response. These

SPCC Plans were required to be developed and implemented in 1973.

Following a major oil spill from an Ashland oil terminal, EPA proposed revisions

to the SPCC rule on three occasions, in 1991, 1993, and 1997. A new SPCC rule

was finalized and became effective August 16, 2002. This new rule raises serious

issues for E&P facilities.

An initial issue that causes concern and confusion is what triggers the need to

create an SPCC Plan. This decision must be based on whether an operation is a ‘‘facility’’ under the regulation and whether it could result in a release that would

reach ‘‘navigable waters’’. Both elements must be met and both pose significant

questions to the producer interpreting them.

Some sources indicate that EPA estimates that there are approximately 144,000

oil and natural gas E&P operations that would require SPCC Plans. However, there

are approximately 876,000 producing oil and natural gas wells in the United States.

Most producers believe that the SPCC regulation definition of a facility would capture most of these operations. Moreover, about 650,000 of these producing wells are

marginal wells that are highly vulnerable to the impact of excessive regulatory

costs. Many of these wells could be shutdown if meeting the new SPCC Plan requirements is too costly.

A similar fundamental issue relates to the interpretation of navigable waters.

Making a judgment regarding whether an operation particularly one a remote area

poses a threat to navigable waters has been consistently confounding. Over the past

two decades different interpretations of the scope of the term have been complicated

by different assessments by various EPA Regional offices. Further confusing the

issue is the Supreme Court decision limiting the definition of the term in the Solid

Waste Agency of Northern Cook County v. United States Army Corps of Engineers

(‘‘SWANCC’’) case. New guidance has been released regarding the implications of

this decision on all Federal regulations and an Advanced Notice of Proposed Rulemaking has been published on the issue.

However, this guidance has not yet been systematically applied and the additional

regulatory action is designed to produce specific regulations on the definition of wetlands. The outcome of these actions significantly affects the ability of producers to

determine whether an SPCC Plan is required for their operation. Additionally, it is

essential that all EPA Regional offices consistently apply these ultimate standards.

Without some common understanding of the law, producers will be compelled to

make judgments regarding the need for SPCC Plans that may be incorrect. They

would either risk enforcement actions or incur unnecessary costs. Neither choice is

appropriate.

Moving beyond these pivotal issues, a number of other significant issues with the

new regulations must be either clarified or addressed.

• Past interpretations of the SPCC Plan requirements clearly allowed the operator to consider costs in the planning process. In the new regulation, EPA states,

‘‘Thus, we do not believe it is appropriate to allow an owner or operator to consider

costs or economic impacts in any determination as to whether he can satisfy the secondary containment requirement.’’ The consequence of this approach could be enormous for marginal wells. The costs of SPCC Plans are estimated to range from

around $5,000 to $20,000 with most of this cost associated with secondary containment requirements. Clearly, these costs put the economic viability of marginal wells

in jeopardy.

• One of the principal issues affecting these costs is a requirement in the new

regulations for secondary containment at loading operations. A similar issue exists

regarding secondary containment related to flow lines.

• EPA has concluded that produced water operations are not exempted as wastewater treatment. This decision would subject hundreds of thousands of produced
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water tanks and vessels to secondary containment requirements when they contain

only incidental amounts of oil.

• There is a significant issue regarding the availability of licensed professional

engineers to certify new SPCC Plans.

EPA has extended the compliance deadlines in the regulations 18 months. IPAA

supports this extension as an opportunity to revisit the key issues raised by the new

regulation. It is important to emphasize that the environment is not at increased

risk during this extension period. First, the SPCC Plan requirements in existence

prior to the new regulations remain in place. Second, the responsibility to report

and respond to spills is unaffected.

IPAA believes that there are three broad challenges that must be met. First, there

is a compelling need to continue the process of developing an approach that is clearly understood by all domestic oil and natural gas producers particularly marginal

well producers. Second, the process must yield a Plan that can be certified by licensed professional engineers. Third, the Plan must be affordable so that both the

environmental objective of SPCC regulation can be met and domestic production is

not inappropriately impaired.

IPAA believes that EPA should develop an approach to formulating SPCC Plans

to meet the environmental risks of domestic oil and natural gas E&P. Such an approach should be focused on addressing those circumstances that have presented

past problems. Such an approach would assure that the limited funds available particularly for marginal well producers are spent on areas where past experience has

demonstrated a compelling call for action.

CONCLUSION

The CWA generates many regulations to improve water quality in the United

States. But, it is essential that the CWA target issues where regulation is truly

needed and that those regulations are cost effective. The applications of the

stormwater construction permitting requirements and the new SPCC Plan regulations to domestic oil and natural gas E&P facilities do not meet this test. Moreover,

they pose a significant risk to the development of new domestic oil and natural gas

resources and the continued operation of existing production. In each case, EPA

needs to reconsider its actions.

IPAA appreciates the opportunity to submit this testimony.

RESPONSE OF LEE FULLER TO ADDITIONAL QUESTION FROM SENATOR INHOFE

Question. What do you believe will be the impact on clean water protections if the

oil industry lawsuit on SPCC plans results in a clarification of the definition of the

waters of the United States?

Response. Given the significant implications of the definition of navigable waters,

I do not believe that it will be resolved as a part of the oil industry lawsuit on SPCC

Plans. Earthjustice and other groups have suggested that the Environmental Protection Agency (EPA) and the Department of Justice (DOJ) are conducting some type

of secret negotiations to resolve the definitional question as a part of the SPCC Plan

litigation, but I do not believe that this substantial issue will be resolved there for

several reasons.

While the scope of navigable waters is essential to the determination of whether

an SPCC Plan must be prepared, the issue of defining navigable waters after the

Supreme Court decision in the SWANNC case is far broader and extremely complicated.

The navigable waters definition confusion has been a factor in the Clean Water

Act since its initial enactment in 1972. At that time both Houses of Congress passed

Clean Water bills in 1972 with navigable waters definitions similar to the definition

used in the River and Harbor Act. However, the final conference agreement—and

ultimately the Clean Water Act—created a new navigable waters definition. Under

the Clean Water Act, ‘‘navigable waters’’ means the waters of the United States, including the territorial sea. However, there was little explicit report language or debate to define the scope of the term. Consequently, when the Clean Water Act was

implemented and used an historic navigable waters definition, litigation (Calloway)

challenged the definition and prevailed.

Since then, broad definitions of navigable waters have been used, but different interpretations are common and problematic. The SWANNC case precludes using migratory bird habitat as a basis for defining navigable waters but provides little guidance beyond that. What we really know is that the River and Harbor definition is

too narrow and migratory bird habitat is too broad.
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1 I am grateful for the assistance of University of Maryland law students Katherine Baer and

Jeff Gilberg to develop the research that forms the basis of this testimony.

As a result, the Bush Administration has solicited input to the EPA and the Corps

of Engineers to address the challenge of developing a consistent, legal navigable waters definition. That effort is ongoing. Meanwhile, several Federal court cases have

been considered regarding post-SWANNC interpretations of navigable waters. These

are winding their way through the appeals process.

Consequently, with all of these efforts and activities underway, it is implausible

that the Bush Administration would try to resolve such a complicated and pervasive

question in a settlement associated with the SPCC Plan litigation.

STATEMENT OF PROFESSOR RENA STEINZOR,1 UNIVERSITY OF MARYLAND

SCHOOL OF LAW

Mr. Chairman and members of the Committee, thank you for the opportunity to

appear before you today on behalf of the Center for Progressive Regulation (CPR)

to testify regarding the Environmental Protection Agency’s (EPA) implementation of

the Clean Water Act. Specifically, I plan to address EPA’s enforcement record and

water quality trading policies. CPR is an organization of academics specializing in

the legal, economic, and scientific issues that surround health, safety, and environmental regulation. The Center seeks to provoke debate on how the government’s authority and resources may best be used to preserve collective values and hold accountable those who ignore and trivialize them. We reject the idea that government’s only function is to increase the economic efficiency of private markets. For

further information, please see our web site at www.progressiveregulation.org.

This Committee deserves much credit for recognizing the importance of the topics

you consider today. Deterrence-based enforcement lies at the core of an effective regulatory program designed to maintain and improve water quality in America. Yet

congressional oversight of EPA’s enforcement record has been sporadic and, without

such oversight, it is difficult to hold the Agency accountable for keeping, so to speak,

the environmental cop on the beat.

Similarly, trading of pollution ‘‘credits’’ or ‘‘allowances’’ is the most prominent

market-based alternative to traditional regulation now under consideration by state,

Federal, and even international governments. This hearing is one of the first to consider how best to use trading as an innovative approach to pollution control. I congratulate you for recognizing how crucial it is to get the design of these initial experiments right.

That said, I am afraid I have disappointing, even alarming, news on both fronts.

The core provisions of the Clean Water Act are under relentless attack by powerful members of regulated industries, raising the real possibility that the Administration will eliminate crucial protections, squandering the gains of the last two decades. I speak here of proposals to eliminate Federal controls on pollution for 50 to

60 percent of streams and 20 percent of wetlands. Unless and until the states pick

up the slack left by EPA and the Army Corps of Engineer (Corps) abrupt departure

from the field, these vast and irreplaceable natural resources could be polluted,

drained, or filled in by industrial dischargers, real estate developers, and sewage

treatment plants. The cumulative impact of these changes will produce grave erosions in water quality, not just in the affected streams and wetlands, but in the vast

bodies of water into which they feed.

In another arena, as discussed in greater detail by my colleague Michael Lozeau,

the Bush Administration is pursuing a rule on Total Maximum Daily Loads

(TMDLs) that will make it impossible for states to establish enforceable limits for

individual sources, potentially rendering that keystone program a dead letter as a

practical matter. Ironically, these changes will undermine the state trading programs EPA claims to support because they would also eliminate any basis for allocating pollution allowances to individual sources.

Last but by no means least, there are ample signs that routine enforcement is

at a lower ebb than it has been in a decade. The latest numbers indicate a precipitous decline in every measure of enforcement effectiveness from cases brought and

penalties paid to staffing levels. But even those disconcerting statistics do not portend what may well be in store in the next several years as EPA’s ‘‘brain trust’’ of

experienced civil servants drains away. Because enforcement is such an important

measure of the Agency’s effectiveness, I will consider it first and then turn to Agency’s trading policy.
121

2 Natural Resources Defense Council, Rewriting the Rules, Year-End Report 2002: The Bush

Administration’s Assault on the Environment. Jan.2003, p. 26. 3 Id. at 27.

4 Id.

5 Id. at 26.

6 Id. at 26.

7 A Pilot Performance Analysis of Selected Components of the National Enforcement and Compliance Assistance Program, OECA EPA, Feb. 2003 [hereinafter OECA Analysis]. 8 Id. at 10.

9 Id. at 17.

10 Id. 11 Id. at 18. 12 Joel A. Mintz, Enforcement at the EPA: High States and Hard Choices (1995).

ENFORCEMENT

Overall, enforcement of environmental laws has decreased dramatically since the

Bush Administration came to power. For example, the number of EPA inspection

and enforcement staff has fallen to its lowest level since establishment of the Agency, dropping by more than 12 percent since the Administration took office.2 Additionally, fewer violators pay penalties and those who do pay are paying less. Violators have paid 64 percent less in fines for breaking environmental laws during the

first 2 years of the Bush Administration than they did under the Clinton Administration.3 The average civil penalty paid by polluters has dropped from $1.36 million

to $605,455 and polluters pay 77 percent less for required supplemental environmental projects (SEPs) as part of settlement agreements.4 Apparently this trend will

only continue in his 2003 budget request the President sought to eliminate the positions of over 200 enforcement personnel.5

Despite the importance of preserving quality of the nation’s surface waters, enforcement under the CWA parallels the general decline of environmental enforcement.6 As a direct result, compliance rates are also declining. A recent report by

EPA’s Office of Enforcement and Compliance Assurance (OECA) on the performance

of the major National Pollutant Discharge Elimination System (NPDES) permits reveals that enforcement activity for these dischargers has also declined from 1999 to

2001.7 The percent of major NPDES permits in significant noncompliance increased

from 16 percent to 24 percent from 1994 to 2001.8 The number of inspections declined by 8 percent and the percent of facilities that were inspected declined by 6

percent.9 There was a 50 percent decrease in the number of informal enforcement

actions and a 45 percent decrease in formal actions.10 Initiation of administrative

complaint orders (ACOs) declined by 31 percent, and the initiation of administrative

penalty order (APO) complaints declined by 28 percent.11

Yet even these statistics do not capture the implications of a downward spiral in

this arena. My fellow CPR member scholar, Joel Mintz, a professor at Nova Southeastern University and the author of the seminal book Enforcement at the EPA,12

is in the process of doing field research on the reasons why the Bush Administration

has such a poor track record in this arena. Specifically, Professor Mintz interviewed

about 20 enforcement officials at EPA and the Department of Justice (DOJ), both

at their Washington D.C. headquarters offices and in some of the EPA regions.

Based on those conversations, he has developed the following preliminary findings:

• Most EPA enforcement cases in the past 2 years have been directed at relatively small violations. The Agency has largely avoided the kinds of coordinated enforcement initiatives that proved so successful in the 1980’s and 90’s, under both

Democratic and Republican Administrations. The non-Superfund enforcement that

EPA has been doing is hampered by an extraordinary shortage of attorney resources

at the Justice Department.

• Part of the reason for this shortage is that DOJ has assigned a very large number of attorneys to try enforcement cases against electric utilities based on the New

Source Review provisions of the Clean Air Act. Even as those resources are expended, other components of the Administration have systematically undercut those

cases through public statements and policy changes.

• EPA’s Senior Executive Service (SES) personnel, who are the high level, career

civil servants with the greatest collective expertise regarding EPA enforcement policies and techniques, are almost totally isolated within the Agency. Political appointees, especially in the Agency’s regional offices, almost never consult SES people

on important policy questions. As a result, their morale, and the morale of many

who report to them, is very low.

• Many senior enforcement managers at the Agency have retired or plan to retire

shortly. This trend is causing a severe loss of the expertise and institutional memory that are crucial to the success of vigorous EPA enforcement efforts.
122

13OECA Analysis, supra note 10, at 6. 14 Id. at 7.

Clean Water Act enforcement is crucial to protecting public health; as just one example, as many as 13 percent of effluent violations for major sources emitting toxic

pollutants exceed regulatory limits by more than 1,000 percent.13 Additionally, enforcement spurs pollution prevention and treatment. Although the data are not complete, the percentage of pollutant reduction, elimination, and increased treatment

that results from enforcement actions has increased as a percentage of the total enforcement actions taken.14

Given its importance, what accounts for these disturbing indications that EPA’s

enforcement program is, quite literally, falling apart? It has become very clear that

this Administration is just not committed to deterrence-based enforcement of the nation’s environmental laws. But what are the underlying reasons or justifications for

that fact?

To be sure, the Nation faces many challenges at home and abroad and, in the absence of a fundamental change in fiscal policies (e.g., the determined pursuit of recent tax cuts despite a worsening economy), resources for domestic programs will

continue to be very limited. But deterrence-based enforcement that is, the publicized

prosecution of a few bad actors to create a disincentive for further law violations

among a regulated industry as a whole is far more important when resources are

tight because the only alternative is the far more resource-intensive practice of cajoling lawbreakers back into compliance.

Whatever the explanation, CPR urges this Committee to remain focused on enforcement as a leading topic for continued oversight of EPA.

TRADING

Overall Advantages and Principles.—Trading can be an effective, as well as efficient, management tool under conditions where reliable methods allow us to allocate

allowances and track trades, as well as to detect unforeseen consequences. It also

has two very significant political advantages.

First, trading has the potential to break political stalemate. The acid rain program established by the 1990 Clean Air Act Amendments broke a 13-year legislative

stalemate regarding whether and how to control sulfur dioxide emissions from

power plants. By making the fight about how to carve up the pie of total allowances,

rather than whether to bake the pie in the first place, trading proved an extremely

successful solution to what had become an intractable problem.

Second, regulated industrial sources perceived trading as lowering compliance

costs to the point that they were affordable, especially in the Midwest, where the

‘‘big dirties’’ insisted they could not afford to comply with traditional pollution requirements. Everyone involved in the debate over environmental regulation recognizes the validity of industry preoccupation with costs, although it is also true that

pre-implementation cost estimates are often exaggerated.

Trading works especially well when the pollutants at issue have a cumulative,

long-term effect on the environment and do not pose immediate, short-term risks

except in extraordinarily high concentrations. Expanding the use of trading to situations where it replaces regulatory requirements and produces localized pollution

‘‘hot spots’’ that harm human health and the environment will only serve to discredit it as a viable approach for environmental protection in the new millennium.

Water quality trading policy at the Federal and state levels should focus on control of nutrients by fostering exchanges between point and non-point sources. Water

trading programs must:Include an appropriately low, and steadily declining, cap on

total discharges;

• Rely on accurate methods for measuring emissions, awarding allowances, and

reconciling the number of allocated allowances with subsequent trades;

• Prevent the formation of localized hot spots;

• Involve the public in the setting of caps and the operation of the program; and

• Rest on a foundation of enforceable commitments.

For a further discussion of these issues, please see Rena I. Steinzor, Toward Better Bubbles and Future Lives: A Progressive Response to the Conservative Agenda

for Reforming Environmental Law, 32 Envtl. L. Rep. 11421 (Dec. 2002).

Analysis of EPA Guidance.—EPA’s Water Trading Policy encourages states and

tribes to develop water quality trading programs for a variety of constituents as a

way to achieve water quality improvements at lowered costs. The Policy is premised

on the basis that flexibility and economic efficiency will yield greater environmental

benefits than traditional regulatory approaches. Water quality trading supposedly

allows ‘‘one source to meet its regulatory obligations by using pollutant reductions
123

15 U.S. EPA, Water Trading Policy (January 13, 2003) at 1 (emphasis added), available at

www.epa.gov/owow/watershed/trading/finalpolicy2003.pdf [hereinafter Water Trading Policy]. 16 Id. at 4. 17 Id. at 3 and 6.Achieves early reductions and progress toward water quality standards pending development of TMDLS for impaired waters. 18 Id. at 6. 19 Id. at 4 and 6. 20 Ann Powers, Reducing Nitrogen Pollution on Long Island Sound: Is There a Place for Pollutant Trading? 23 Colum. J. Envtl. L. 137, 168 (1998) (hereinafter referred to as Powers). 21 Id. at 162. 22 H.R. 3948, 103d Cong. (1994). 23 H.R. 3948, 103d Cong. § 314 (1994). 24 140 Cong. Rec. 353 (1994)(remarks of Rep. Mineta). 25Water Trading Policy, supra note 15, at 6. 26 Id. 27Sen. Rpt. 92–414, at 3675 (Oct. 28, 1971). 28 33 U.S.C. § 1311 (b)(1)(C).

created by another source that has lower pollution control costs.’’15 Further, the

Water Trading Policy restricts trading to a watershed or Total Maximum Daily Load

(TMDL)-defined segment, although there are no stated limitations on the size of the

watershed.16 EPA specifically supports trading in situations, including the following,

where trading:17

• Reduces the costs of TMDL implementation. • Provides economic incentives for voluntary pollutant reductions. • Reduces the cost of compliance with water quality based requirements. • Offsets new or increased discharge to maintain support for designated uses. • Creates ancillary benefits (e.g., wetland creation).

The Policy does not support trading to comply with existing technology-based effluent limitations.18

CONSISTENCY WITH THE CLEAN WATER ACT

Although the Policy states that trading is supposed to be consistent with the CWA

and ‘‘aligned with and incorporated into core water quality programs’’ (e.g., watershed plans, water quality standards, the continuing planning process),19 the CWA

does not provide any statutory language to authorize trading.20 In this sense, the

CWA is in sharp contrast to the Clean Air Act, which broadly employs trading to

reduce emissions as part of several programs. Significant CAA trading programs,

however, were written into the Act as explicit statutory authority, including provisions for compliance monitoring and enforcement.21 Because the Policy, like the creation of CAA offsets and SO2 trading, attempts to create an inter-source trading program to achieve environmental gains by significantly changing the permitting system, these changes must occur at the legislative level, and not via guidance.

Congress also apparently recognizes the fact that trading is not currently authorized by the CWA as reflected by a previous attempt to add such authority to the

CWA. The Water Quality Act of 1994 to amend the CWA included a number of provisions directed at controlling nonpoint source pollution.22 Specifically, the bill included provisions for enforceable nonpoint source pollution plans and the study of

trading programs.23 At the bill’s introduction sponsor Representative Mineta stated

that a provision with a mechanism to authorize pollution trading would be added.24

Ultimately the bill was not enacted, thus leaving the CWA without authorization

for such water quality trading.

MECHANISMS FOR TRADING

The Water Trading Policy states that trading can legally be accomplished by incorporating trading into water quality management plans, the continuing planning

process, watershed plans, water quality standards, TMDLs and NPDES permits.25

Clearly, however, trading cannot be used by an NPDES permittee to achieve its primary technology-based effluent limits, as recognized in the Policy. However, the Policy also states that EPA will consider revising certain effluent limitations to allow

such technology-based trading,26 which would undermine the basic structure of the

CWA that Congress created based upon point source effluent controls.27

NPDES permits, in addition to technology limits, must also include water qualitybased limits to ensure that ambient water quality standards are not violated.28 The

Water Trading Policy identifies trading to meet water quality standards as an instance where trading may occur to offset an increased discharge. This sort of trade

to meet water quality standards is inconsistent with the CWA and merely moves

a pollution problem from one spot to another. Legally a point source cannot violate

its water quality standards in exchange for a reduction elsewhere. Allowing a point
124

29Water Trading Policy, supra note 15, at 5. 30 33 U.S.C. § 1313(d)(3). 31Water Trading Policy, supra note 15, at 5. 32 Id. at 4.

source to buy credits instead of meeting water quality-based effluent limitations is

also a poor policy choice because, by definition, it would allow pollutants to be discharged at levels that would be inconsistent with the designated uses protected by

the water quality standards at the point of discharge.

Ironically, these aspects of the Water Trading Policy appear to contradict other

provisions of the same document that define a pollution ‘‘credit’’ as reductions greater than those mandated by a regulatory requirement or established by a TMDL.29

Unfortunately, this apparent contradiction can be reconciled if one remembers that

TMDLs apply over a far greater area than the water quality standards that are incorporated into individual permits in the form of discharge limits. Even if EPA insists, as a practical matter, that trading comply with TMDLs, numerous plant-specific violations of Water Quality Standards could easily occur. Indeed, the new guidance would have little value to industry if it did not produce this outcome.

VALID TRADING OPPORTUNITIES: TMDLS FOR NUTRIENTS

EPA trading supporters probably dismiss the complaints of environmentalists on

the basis that we have never seen trading that we like. This perception is wrong

and allows staff to evade real problems with the Water Trading Policy using a heavily politicized rationale. In meeting after meeting with top EPA officials, national

environmentalists repeatedly stated that, while trading to meet permit standards

under an NPDES permit is troublesome, TMDLs30 for nutrients provide optimal vehicles for trading to occur. Under TMDLs trading can be limited to circumstances

in which there is adequate information on ambient water quality, sources of pollution, current loadings, and the amount of reduction needed to meet water quality

standards (i.e. baseline loadings and a declining pollution cap), which are all provided by the TMDL program.

Unfortunately, the Policy allows pre-TMDL trading.31 This tactic effectively attempts to circumvent the TMDL process and implement trading without a baseline

or cap provided by a TMDL. Trading should be allowed to occur only when there

is a TMDL in place and the trading program is consistent with TMDL allocations.

For trading to improve water quality, it must either be limited to point-point trading of reductions exceeding those already required under an NPDES permit (technology and water-quality-based standards) or be done to implement future reductions under a TMDL designed to meet water quality standards. Without a TMDL,

EPA cannot allocate a reliable, environmentally sound baseline of initial ‘‘credits’’

are allocated. Trading without a reliable baseline and cap could result in environmental degradation, not environmental improvement. This result could occur, for example, if trading is allowed in a waterbody impaired by both point sources and

nonpoint sources, where the point sources trade needed additional reductions with

some nonpoint sources, yet other nonpoint sources increase their discharges more

than the amount of the trade.

TRADABLE CONSTITUENTS: NUTRIENTS VERSUS TOXICS32

According to the Policy:

• Nutrients (TN, TP) and sediments including cross-pollutant trading for oxygen

related pollutants are tradable as a matter of course.

• ‘‘Other’’ pollutants (e.g., NH4, Se) can be traded on a case-by-case basis where

prior approval is provided via an NPDES permit, TMDL, or as part of a state/tribal

watershed plan or pilot trading project.

• No trading of ‘‘persistent bioaccumulative toxics’’ (PBTs) is supported unless it

is part of a pilot project to obtain more information about PBT trading.

Nutrients provide an excellent opportunity for trading because they are a leading

cause of water quality impairment and are largely attributable to nonpoint sources

of pollution, which are inadequately controlled. However, because many states do

not yet have water quality standards for phosphorus and nitrogen, trading to reduce

these nutrients should only occur in a TMDL situation where there is good data

about baseline conditions and a declining cap can be implemented. Cross-pollutant

trading, on the other hand, is extremely complicated, because it makes tracking and

monitoring difficult.

As for toxics, needless to say, one person’s ‘‘pilot project,’’ if replicated often

enough, is another person’s entire program. It is profoundly disappointing that EPA

did not shut the door to these dangerous experiments not just with environmental
125

33 USATODAY, USATODAY.com, Anita Manning, If you Eat a lot of Fish, you may Run a

Health Risk, <http://usatoday.com/news/health/2002–11–04-fish–1acover—x.htm> (Nov. 4, 2002). 34 U.S. EPA, Office of Water, Press Release: EPA Releases Innovative Approach to Cleaner

Water 11 Pilot Projects Receive More than $800,000 in Funding, Jan. 13, 2003 <http://yosemite.epa.gov/opa/admpress.nsf/b1ab9f485b098972852562e7004dc686/

7f1b0616de4dc2a285256cad006a60a7?OpenDocument> (last updated Jan. 13, 2003).

quality, but with public health. Trading must not apply to toxic pollutants because

of the risk to human health aquatic life and the potential to create ‘‘hot spots.’’ A

hot spot is a localized concentration of pollutants in excess of water quality standards, which could result in fish kills and contamination, adverse human exposure,

beach closures, and other impacts on aquatic life. The potential for creating hot

spots is particularly troublesome in the case of toxics since the hot spots created

today may not dissipate for decades or even centuries to come, but may instead persist in the sediment or increase in the food chain through bioaccumulation and biomagnification.

THE MERCURY EXAMPLE: NOT JUST WATER, BUT ALSO AIR

Mercury, for example, is recognized as a serious threat to human health that

poses a threat to children and pregnant women who eat a range of fish.33 Once mercury is deposited in water, fish absorb it. When humans eat the fish, their bodies

take in the poison. At even very low levels, mercury poisoning in pregnant women

damages their babies’ central nervous system and causes heart, kidney and brain

damage. Yet pregnant women are not the only ones at risk. After a yearlong study,

a San Francisco physician announced in November 2002 that she had found symptoms of low-level mercury poisoning in dozens of her patients who consumed typical

amounts of fish. Symptoms included hair loss, fatigue, depression, difficulty concentrating, and headaches.

In addition, the families of low-income, subsistence fishermen, who rely on daily

catch for the protein portion of their diet, are at even greater risk. In 2001, 44 states

issued public-health warnings that people should not eat mercury-contaminated fish

from local waters. The Great Lakes, the Florida Everglades, and portions of the

Chesapeake Bay are afflicted, along with hundreds of other lesser-known water bodies. Provoked by the very severe problems in the Great Lakes, a broad coalition of

sportsmen, wildlife groups, and environmentalists has urged EPA to work toward

a phase-out of all mercury pollution.

In nine states, fish advisories for mercury extend from inland lakes to coastal waters where tuna and other popular fish are caught. Tuna is the most consumed fish

in the country, but because of concerns about mercury, many experts recommend

that pregnant women limit themselves to two small cans per week. As one indication of the extent of this problem, the Senate Environment and Public Works Committee passed legislation in 2002 that bans mercury thermometers a mere drop in

the bucket by comparison to the quantities of mercury that could be traded the Administration is now prepared to let industry pump into the environment.

EPA, in fact, has already funded one mercury pilot project in Sacramento.34 How

many more may be in the pipeline is anyone’s guess.

To add insult to injury, the Administration’s ‘‘Clear Skies’’ initiative would establish a complex credit-swapping scheme by which power plants will be entitled to

trade mercury emissions. Most of the mercury that ends up in the water is released

first into the air, from smokestacks where large utilities burn coal. The heavy metal

particles in the smoke fall down into the water. The President’s Clear Skies initiative, supposedly crafted to clean up the air more cheaply, would permit the creation

of hot spots with vastly more mercury than the environment can sustain.

For 30 years, the standard approach has been to force plants to put scrubbers on

their stacks so that the worst pollution will be removed before it goes into the air

and EPA is overdue in promulgating Maximum Achievable Control Technology

(MACT) for mercury. But the Bush Administration has decided that this straightforward solution is too costly for the utility industry. Clear Skies permits power

plants to trade unused credits with plants up or downwind, even if mercury emissions land where fish are spawned. Worse, high sulfur coal, such as the coal used

by the infamous ‘‘Big Dirties’’ in the Midwest, produces more mercury than low sulfur coal, used by the relatively clean power plants in the southwest. There is nothing in the Clear Skies proposal that prohibits trading of mercury credits generated

by utilities in the arid southwestern deserts while the Great Lakes, the Everglades,

and the Chesapeake Bay become more polluted.
126

35Water Trading Policy, supra note 15, at 8. 36 Id. at 9 and 10. 37 Id. 38 Rena Steinzor, Center for Progressive Regulation, Testimony before the House Subcommittee on Water Resources and the Environment of the U.S. House of Representatives regarding Water Quality Trading: An Innovative Approach to Achieving Water Quality Goals on

a Watershed Basis. June 13, 2002 [hereinafter Steinzor Testimony]. 39Richard Toshiyuki Drury, et al., Pollution Trading and Environmental Injustice: Los Angeles’ Failed Experiment in Air Quality Policy, 9 Duke Envtl. L. & Pol’y. For. 231 (1999). 40Steinzor Testimony, supra note 38. 41Water Trading Policy, supra note 15, at 10. 42 Id. at 11.

ANTIDEGRADATION

The Water Trading Policy also states that antidegradation review is not required

as part of trading programs because EPA does not believe that trading will result

in ‘‘lower water quality’’ where trading programs result in a no net increase of pollutants.35 This claim assumes that trades are done by plants in close proximity.

However, the Policy permits individual trades between sources at some distance

from each other, as long as such sources are located within a watershed, raising the

real possibility of a localized pollutant impact that would require an antidegradation

analysis.

ENFORCEMENT AND MONITORING: THE POTENTIAL FOR WASTE AND FRAUD

Although the Water Trading Policy lists elements that should be used to ensure

a successful state/tribal trading program, there is no requirement that states or

tribes include any of these elements. This permissiveness is especially troubling

with respect to provisions for enforcement or monitoring.36 For example, the Water

Trading Policy recommends that credits should be generated before or at the same

time as they are used to comply with a limit, that standardized protocols should be

used to account for the uncertainty associated with reduction of nonpoint source

(NPS) pollution, and that there should be methods for determining compliance.37

Trading programs, however, are subject to manipulation and fraud and thus demand stringent monitoring and enforcement mechanisms.38 Failed programs to reduce air pollution in Los Angeles by the South Coast Air Quality Management District make this point clear.39 In that case, stationary sources purchased credits, including from vehicle owners to take their old engines off the road, and without adequate monitoring the result was fraud and the creation of volatile organic compound

hotspots in minority neighborhoods.40 This real life and spectacular failure makes

plain that all trades should be governed by a regulation, permit, or other enforceable mechanism with both governmental and citizen enforcement provisions.

The Policy offers some sound ideas such as consideration of compliance history to

determine trading eligibility.41 But these ideas must be transformed from notions

into requirements for a trading program. Additionally, EPA oversight and approval

for all trading programs is crucial, but it is a responsibility that is abdicated in the

Policy, which states that ‘‘EPA does not believe that the development and implementation by states and tribes of trading programs consistent with the provisions of this

policy necessarily warrant a higher level of scrutiny under these oversight authorities [NPDES and TMDL] than is appropriate for activities not involving trading.’’42

On the contrary, continual EPA oversight of any state trading program is important

both to the state agency and to those who use state waterbodies.

Compounding the potential for waste and fraud is the fact that the technology

necessary to measure pollution reductions at non-point sources is still in it infancy.

Consider, for example, a promise by agribusiness to erect a tree buffer to stop runoff from reaching the local water body. It is far more of an art than a science to

predict how effective the buffer will be in stopping run-off, especially since meteorology, topology, and geology (e.g., soil type) play such a crucial role in those determinations.

For this reason, environmentalists have called for trading ratios that would compensate for problems in the methodology of measuring non-point emissions by requiring, for example, two credits from a non-point source to be traded for one credit

from a point source. The EPA Policy, however, neither acknowledges these problems

nor recommends this kind of solution.

PUBLIC INVOLVEMENT

Public participation is key to environmental programs, and similar to monitoring

and enforcement, EPA makes references to public participation and access to infor-
127

43 Id. at 10.

mation but without any specific requirements.43 If the trade is part of an NPDES

permit, the public will have a chance to comment only when the permit including

a trading program is issued, but not for each trade. For trades that are not part

of an NPDES permit, the opportunity for public involvement is unspecified and the

Policy supports public participation and access to information and encourages states

and tribes to make information available. There are no requirements, however, for

such involvement.

The public must have a seat at the table when developing a trading program. All

trading programs involve changes to components of a state water pollution program

that require full public review (e.g., the TMDL, the NPDES program, the impaired

waters list, etc). The public must be allowed to comment on and object to proposed

trades, and should be given adequate information to track trades and their water

quality effects. The Policy ‘‘encourages’’ entities to make trading information available to the public, but does not call for public comment on proposed trades or publicly available information on water quality impacts.

SUMMARY

Water quality trading offers promise in solving some of our remaining and intractable water quality problems. It is not, however, the ‘‘silver bullet’’ answer to solve

all problems. Each trading program must be tailored to local conditions and based

upon a legally defensible background that will support trading consistent with existing legislative authority. To achieve real gains, trading must focus on reducing nutrients in TMDL settings with an enforceable and declining cap against which credits can be measured.

ENVIRONMENTAL INTEGRITY PROJECT

PAYING LESS TO POLLUTE

The Decline of Environmental Enforcement at EPA Under the Bush Administration
128

EXECUTIVE SUMMARY

Shortly after taking the reins at the Environmental Protection Agency, the Bush

Administration announced that it would cut the Agency’s enforcement staff by 270

positions. The Administration has also made clear that it does not support the laws

that EPA has been trying to enforce that prevent aging power plants, refineries, and

other factories from increasing pollution when they expand. Predictably, these decisions have begun to take their toll on EPA’s ability to persuade violators to agree

to settle enforcement actions brought against them.

In the 2002 fiscal year—the first full year in which EPA was under the thumb

of the Bush Administration and its allies in the energy lobby—the number of penalties recovered from polluters in civil cases that were settled in Federal court declined by half compared to the previous 3 year average. Defendants paid over $130

million, $84 million, and $94 million, respectively, in fiscal years 1999, 2000, and

2001 to settle judicial actions. In 2002, the U.S. Government was able to recover

only $51 million in civil penalties. In addition, nearly two-thirds of penalties in the

2001 fiscal year (October 1, 2000 to September 30, 2001) came from settlements

lodged before the Bush Administration took office on January 20, 2001. Declining

penalties can be explained in part by the absence of large settlements with the kind

of Fortune 1000 companies that were the subject of large enforcement actions in

prior years.

In addition to paying penalties, companies are expected to return to compliance.

EPA, however, will reduce penalties somewhat for those willing to undertake ‘‘supplemental environmental projects’’ or ‘‘SEPs’’ that bind companies to do work that

is well beyond what is required to comply with the law. These SEPs offer substantial benefits to local communities by, for example, financing the purchase and preservation of wetlands and greenspace, underwriting the cost of fenceline monitoring

and mobile asthma clinics, or supporting conversion of bus fleets to natural gas. The

value of these SEPs declined from a 3-year average of $106 million between fiscal

years 1999 and 2001, to only $43 million in 2002. Significantly, more than half of

the SEPs obtained in the 2001 fiscal year originated from settlements lodged during

the Clinton Administration.

Attachment A documents the current Administration’s persistent campaign to cut

back on enforcement staffing at EPA. By undercutting the enforcement program, the

Administration has hamstrung EPA’s power to effectively negotiate for environmental projects. The U.S. Senate has acted to restore full funding to EPA’s enforcement program, which could help to reverse this trend, but has been stymied by the

U.S. House of Representatives’ push to restore only partial funding that would leave

EPA with more than 100 fewer enforcement positions than it had when the current

Administration took office. Meanwhile, the Bush Administration has made existing

clean air laws even harder to enforce by weakening rules that require plants to obtain permits and install pollution controls. See Environmental Integrity Project

(EIP), Turning the Clock Back on the Clean Air Act (Oct. 2002); EIP, Bright Lines

or Loopholes? (Dec. 2002).

The attached analysis is based on a review of EPA cases lodged in Federal court

over the past four fiscal years. Because all judicial settlements that resolve ongoing

violations have to be published in the Federal Register for comment, the Environmental Integrity Project was able to obtain penalty and SEP data for almost all

cases by searching through the LEXIS inventory of Federal Register notices. EIP

compared the notices to EPA’s announcements and press advisories on judicial cases

and Department of Justice docket data obtained through a Freedom of Information

Act request. The attached charts indicate ‘‘no value given’’ where the notice of lodging notes that there was a penalty or SEP obtained but does not state a specific

amount. Entries are left completely blank in a handful of cases where the notices

of lodging make no reference to penalties or SEPs whatsoever.

This analysis focuses on settlements lodged under the Clean Air Act, Clean Water

Act, the Resource Conservation and Recovery Act, and several other statutes. According to Department of Justice data, a small number of cases brought in fiscal

years 2001 and 2002 were not lodged. These settlements required only payment of

a penalty, generally because the facility had closed or already returned to compliance. Because this data was not available from prior years, it was not included in

this analysis. Similarly, enforcement actions establishing the government’s environmental claims in bankruptcy cases were omitted, as recovery is uncertain under

such circumstances.

The attached does not include Superfund cases, or a tally of natural resource

damages under the Oil Pollution Act. It also does not include administrative actions,

as that data is not yet available. Nevertheless, judicial cases typically account for

more than two-thirds of penalties and supplemental environmental benefits recov-
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ered in civil enforcement cases. The analysis is limited to civil enforcement cases,

and does not include statistics from the criminal enforcement program, as these are

not yet readily available.

No single statistic can capture the full range of benefits realized when environmental laws are enforced. Moreover, enforcement trends tend to be cyclical in nature, making it possible that the results for fiscal year 2002 are an aberration. Unfortunately, it is more likely that these numbers reflect an intentional effort to

weaken enforcement efforts, indicating that the Bush Administration will do little

to enforce environmental laws unless the public demands it.
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RESPONSES OF RENA STEINZOR TO ADDITIONAL QUESTIONS FROM SENATOR JEFFORDS

Question 1. Is the government somehow precluded from offering immunity under

the criminal negligence section of the Clean Water Act?

Response. In a word, no. Like every other provisions of Federal criminal law, this

section does not preclude the government from offering immunity to cooperating witnesses. The major rationale offered by those who wish to narrow the negligence provision is that it impedes government investigations of accidents because witnesses

are too afraid to cooperate. Given the government’s unimpeded authority to offer immunity, it is difficult to understand the basis for this argument.

Question 2. On page 3 of Mr. Hall’s testimony, he outlines a scenario where the

FAA provides for lenience when individuals self-disclose violations. He implies that

the same does not exist at EPA or elsewhere in the Federal Government.

Attached are three key documents related to this point.

(1) First, EPA’s 1994 memo on the Exercise of Investigative Discretion states that

significant environmental harm and culpable conduct should be present before deciding to proceed with a criminal case; (2) Second, the US Department of Justice

Spring 2000 Status Report on the Use of Immunity and Evidentiary Privileges to

Encourage Voluntary Disclosure of Self-Discovered Regulatory Violations described

the use of voluntary disclosure policies like the one you describe at FAA throughout

the government. It cites the long standing 1991 policy of the Environment and Natural Resources Division that voluntary disclosure will lead to criminal prosecutorial

leniency; (3) Third, the EPA December 1995 policy statement provides incentives

such as elimination of the gravity component of civil penalties and not recommending cases for criminal prosecution in situations where voluntary disclosure has

occurred.

Ms. Steinzor, it would appear that these documents as well as other similar documents found at the FBI and the Coast Guard offers the very protection Mr. Hall

describes at the FAA. In addition, it seems that these documents would limit the

use of criminal prosecutorial tools to a fairly limited universe of cases. Can you comment on this?

Response. Yes, these documents substantially limit the use of criminal prosecutorial tools to a very limited universe of cases. Not only is criminal prosecution reserved for the most significant and egregious violations, but leniency policies are in

place that encourage companies to voluntarily disclose environmental violations so

as to avoid criminal prosecution. Accordingly, very few cases are actually criminally

prosecuted. The three documents mentioned in the above question specifically support this contention.

First, the EPA’s 1994 memo on the Exercise of Investigative Discretion explicitly

recognizes that there are ‘‘specific factors that distinguish cases meriting criminal

investigation.’’ (EPA 1994 memo, page 1) More specifically, the criminal case selection process is ‘‘guided by two general measures—significant environmental harm

and culpable conduct.’’ (EPA 1994 memo, page 3) Investigative discretion is based

upon whether—and to what extent—these two general measures are present.

In deciding whether significant environmental harm has occurred, investigators

will examine four factors. Specifically, investigators will consider: (a) the actual

harm, either to the environment or human health, caused by the illegal discharge,

release, or emission; (b) the threat of significant harm, either to the environment

or human health, caused by the illegal discharge, release, or emission; (c) the failure

to report the discharge, release, or emission; and, (d) the likelihood of the illegal

conduct representing a trend or common attitude within the regulated community

(EPA 1994 memo, page 4). The more of these factors that are present, the greater

the chance that investigators will find that significant environmental harm has occurred.

In deciding whether culpable conduct has been exhibited, investigators will consider five factors. Specifically, investigators will determine whether: (a) there is a

history of repeated violations; (b) the violation was a result of deliberate misconduct;

(c) an attempt was made to conceal the misconduct; (d) monitoring or control equipment was tampered with; and, (e) the business operation was conducted with the

proper permit, license, manifest, or other required documentation. (EPA 1994 memo,

page 5) Again, if more than one of these factors are present, there is a greater

chance that investigators will find that culpable conduct has been exhibited.

After considering the two general measures explained above, investigators will decide whether to proceed criminally. However, even if investigators elect to do so, it

doesn’t necessarily translate into a criminal prosecution. In fact, this exercise of investigative discretion is but a ‘‘critical precursor to the prosecutorial discretion later

exercised by the Department of Justice. (EPA 1994 memo, page 3) In addition, when

a case does not meet the specific criteria to proceed criminally, as is the case most
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of the time, it is ‘‘systematically referred back to the Agency’s civil enforcement office for appropriate administrative or civil judicial action.’’ (EPA 1994 memo, page

3) Therefore, investigators neither arbitrarily nor recklessly decide whether to criminally proceed. Rather, two general measures and several accompanying factors are

considered in order to reach an appropriate determination. Accordingly, the criminal

enforcement authority entrusted is taken very seriously and is used only to prosecute the ‘‘most significant and egregious violators.’’ (EPA 1994 memo, pages 2, 7)

Second, as explained in the US Department of Justice Spring 2000 Status Report

on the Use of Immunity and Evidentiary Privileges to Encourage Voluntary Disclosure of Self-Discovered Regulatory Violations, many Federal agencies have supported and/or adopted leniency policies, which ‘‘reduce or waive penalties for violations that were voluntarily discovered, promptly disclosed, and quickly remedied.’’

(DOJ 2000 Status Report, page 1) These policies—modeled on ‘‘discretionary leniency’’—encourage disclosure while preserving Federal discretion to impose appropriate administrative and civil sanctions. (DOJ 2000 Status Report, pages 1–2)

Therefore, companies are given an opportunity to escape criminal prosecution so

long as they voluntarily disclose such violations and quickly remedy the problems

that the violation caused.

Third, in its December 1995 policy statement, the EPA provides for such a leniency policy. More specifically, the EPA policy seeks to ‘‘enhance protection of human

health and the environment [by encouraging voluntary disclosure of environmental

violations].’’ (EPA 1995 policy statement, page 66706) In exchange for such disclosure, the EPA offers the incentives of ‘‘eliminating or substantially reducing the

gravity component of civil penalties and not recommending cases for criminal prosecution.’’ (EPA 1995 policy statement, page 66706) Therefore, the EPA itself offers

violators an opportunity to avoid criminal prosecution by voluntary disclosing the

details of the violation.

As Robin Greenwald alluded to in her testimony, two former chiefs of the Department of Justice, Environmental Crimes Section, Ronald Sarachan and Steven Solow,

undertook a statistical analysis illustrating that of the 1,436 environmental crimes

prosecuted from 1987 to 1997, only 86, or approximately 6 percent, were negligence

cases. Clearly, the EPA and DOJ have taken very seriously their authority to criminally investigate and prosecute environmental violations. Furthermore, as my testimony reflects, an environmental violation that was merely an accident has never

been criminally prosecuted. Rather, as the EPA sets forth, the criminal enforcement

authority is used only to prosecute the ‘‘most significant and egregious violators.’’

(EPA 1994 memo, pages 2, 7)

Question 3. Section 309 of the Clean Water Act has been used in a number of

prosecutions involving both environmental damage and personal injury. Can you describe a few cases other than the Hanousek and the Hong cases that have resulted

in successful enforcement actions against violators?

Response. There are three other cases that immediately come to mind as examples of successful enforcement actions under Section 309 of the Clean Water Act.

First, as noted by Ms. Greenwald’s testimony, the Exxon Valdez oil spill was perhaps ‘‘one of the worst environmental catastrophes in this country.’’ In that case,

the specific negligence was Exxon’s decision to allow a known alcoholic to ‘‘navigate

the barge in the Prince William Sound.’’ The combination of ‘‘significant environmental harm’’ and ‘‘culpable conduct’’ in the Exxon spill made this case a clear Section 309 criminal enforcement.

Second, also noted by Ms. Greenwald’s testimony, the Colonial Pipeline spill in

the Reedy River is another example of a significant environmental harm resulting

from the negligence of an operator. In particular, there was a ‘‘tremendous loss’’ of

nearly one million gallons of petroleum products caused by the ‘‘’negligent’ failure

to repair a known weak spot in the pipeline.’’ In fact, Colonial knew specifically of

the weak spot yet elected to take the risk and move the petroleum product anyway.

As Greenwald asserts, if Section 309 were amended to include the proposed statutory language, neither the Exxon Valdez nor Colonial Pipeline cases could have been

prosecuted for Clean water Act negligence because ‘‘no one was injured nor put at

risk of death or serious bodily injury.’’ But, both of these cases were deserving of

criminal prosecution due to the ‘‘significant environmental harm’’ and ‘‘culpable conduct’’ involved.

A third example of successful Section 309 criminal enforcement is the tragic case

of the Olympic Pipeline spill. In June 1999, a rupture in the Olympic petroleum

pipeline resulted in a spill of approximately 236,000 gallons of gasoline into Hannah

Creek and Whatcom Creek. (http://www.usdoj.gov/usao/waw/text—version/press—

room?2003/jun/olympic.htm). In addition, the gasoline ignited, resulting in the

deaths of three teenagers (http://www.usdoj.gov/usao/waw/text—version/press—
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room?2003/jun/olympic.htm). This example differs from the previous two in that it

illustrates the ability of the EPA and DOJ to investigate and prosecute cases that

did cause death or serious bodily injury. In other words, the proposed amendment

to Section 309 is not only too restrictive, but it is also unnecessary. As the case of

Olympic Pipeline demonstrates, both the EPA and DOJ are already well aware that

whenever death or serious bodily injury occurs as a result of an environmental violation, criminal prosecution is appropriately preferred.

Question 4. It is my understanding that the Department of Justice has applied

a simple negligence standard to criminal environmental cases for an extended period of time. Can you comment on this?

Response. As the testimony of Robin Greenwald reflects, the Department of justice has applied a simple negligence standard to criminal environmental cases since

1987, when Congress amended the Clean Water Act in 1987 to add Section 309.

However, defendants have never been prosecuted for what was a simple ‘‘accident’’,

as the oil industry suggests. In fact, neither the Hanousek and Hong decisions represent a departure from that practice. Both cases, as described by Ms. Greenwald,

evidence the practice of only criminally prosecuting ‘‘catastrophic’’ environmental

violations that were caused by an operator’s failure to exercise the care that a reasonable person would have taken under similar circumstances; the defendants in

both cases acted with ‘‘utter disregard’’ for the environment. Accordingly, both decisions ‘‘represent the need for Section 309 to punish egregious behavior.’’ Furthermore, as the statistical research of Ronald Sarachan and Steven Solow illustrates,

only 6 percent of the criminal environmental prosecutions between 1987 and 1997

were negligence cases. In addition, as I testified, there has never been a case of an

environmental violation prosecuted for which there was merely an ‘‘accident.’’ Therefore, Section 309 has functioned in the very manner for which it was created—to

only hold the most significant and egregious violators criminally responsible.
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STATEMENT OF JIM HALL, PRINCIPAL PARTNER, HALL AND ASSOCIATES; FORMER

CHAIRMAN, NATIONAL TRANSPORTATION SAFETY BOARD

Mr. Chairman, Mr. Ranking Member, Members of the Committee, thank you for

the invitation to testify before you today. I am pleased to be here to share my experience with transportation safety, and its particular relevance to aspects of the

Clean Water Act (CWA).

Briefly, let me spend a few moments on my previous role at the National Transportation Safety Board (NTSB) and on the Board’s overall mission. I was nominated

as member of the NTSB by President Bill Clinton in 1993, and subsequently served

as the Board’s Chairman from June 1994 to January 2001. I currently serve as

President of Hall & Associates, where I advise a host of government and private

clients on transportation safety and security issues.

Ever since Congress created the NTSB, the Safety Board has served as the ‘eyes

and ears’ of the American people whenever there is a significant transportation incident. The mission, then and now, is to impartially and thoroughly investigate accidents to determine their cause, with the primary goal of preventing future accidents

and providing Americans with continued confidence in the nation’s many transportation modes. The Board issues scores of recommendations to government and industry every year. In making recommendations, the Board looks for, and historically

achieves, a high level of voluntary compliance.

Likewise, NTSB investigations rely in large part on the voluntary and unpaid assistance of companies involved in accidents to understand what went wrong and

how to fix it. This system of voluntary cooperation works exceedingly well, and the

goal—a safer transport system—is considered so important to our national interest

that Congress has given NTSB accident investigations priority over all other Federal investigations.

As Chairman, I often said our work focused on a single, very simple, point—the

more information we have, the safer we all can be. During my tenure at NTSB, I

was never bashful in speaking out about issues that sometimes inadvertently separate our government from that focus. The threat of criminal sanction for purely accidental behavior has the real potential to stifle cooperation, to stifle the ready development of information necessary to understand an occurrence and prevent its repetition.

That has a price, potentially high, and would need to be offset by the possibility

that punishing pure accidents reduces their likelihood. I have seen no evidence for

that proposition, and indeed, several successful safety programs sponsored by the

Department of Transportation proceed on exactly the opposite presumption.

As the Members of this Committee are well aware, every mode of transportation

is closely regulated for safety purposes under a variety of statutes, and each of these

provides for both civil and criminal sanction for some classes of regulatory violation.

Typically criminal violations are reserved for knowing violations—activities such as

falsification of records or safety tests, the deliberate violation of regulatory standards, or willful or reckless behavior that leads to injury or death, or destruction of

property.

However, one statute, the Clean Water Act (CWA), provides criminal penalties,

including fines and imprisonment, for simple negligence. Simple negligence, as defined, does not require intent, or knowledge, or even willful or reckless disregard

of norms. As such, it easily is charged and potentially just as easily proved in accidents where all due care was thought to have been exercised. Potentially, an entity

believing that it is exercising due caution and using current technology and modern

procedures may still find that the company, its supervisors, or its operating employees will be charged criminally, if a water source becomes polluted. Wholly apart

from the impact that such a regime has on the ability of a company to attract top

notch employees and managers, its implications for safety investigations and ultimately safe regulation are problematical at very best.

During my tenure at the NTSB, I became increasingly concerned with the trend

toward the criminalization of any or all transportation accidents. Let me be clear,

there are ‘‘accidents’’ where criminal prosecution is warranted and even the preferred course of action. While traditional criminal law theory requires a finding that

one intended the consequences of the criminal act, it has long been accepted, and

I accept, the proposition that wanton disregard of behavioral norms suffices to sustain a criminal prosecution, even if the consequences of the behavior were not intended, indeed even if they were as horrifying to the perpetrator as to the rest of

us. No one hesitates to prosecute drunken driving as negligent homicide. But what

good would come of prosecuting a driver who, blinded by the sun, lost track of the

vehicle in front him and did harm identical to that of the drunk? How best to answer the questions raised by these issues became the major focus of a symposium
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on Transportation Safety and the Law that the NTSB convened under my direction

in April of 2000. This conference, attended by more than 400 representatives of public, private, and academic organizations, covered a host of important issues. However, discussion about when an accident warrants criminal prosecution was a dominant topic.

Two general themes emerged out of that symposium that bear repeating.

First, transportation safety is increasingly dependent on being able to spot trends,

to see problems as they arise, to anticipate failures from sophisticated ‘‘data mining,’’ and from the sometimes not-so-sophisticated self-disclosure of the near misses.

This is an enormously productive field that is being pursued by almost all the regulatory agencies. And these agencies often include, as part of this type of program,

some form of prosecutorial immunity for persons and companies who participate.

FAA, for example, treats self-disclosure from pilots, or data derived from quick access flight recorders as exempt from use in enforcement actions based on simple violations discovered. Of course the agency doesn’t waive the right to proceed against

knowing violations, and may even do so criminally. What agencies do say is we

won’t proceed against simple accidental behavior. Without such a promise, the data

wouldn’t be forthcoming, and safety would be compromised.

And that is exactly the issue with the Clean Water Act. Simple negligence can

be treated as a criminal act, punishable by imprisonment. When accident investigators arrive on scene to find out what has occurred, they are in no way empowered

to grant any immunity from prosecution for pure mistakes. So if there has been waterway contamination, prevention and understanding will take a back seat to legal

maneuvering.

If the NTSB hopes to make timely recommendations based on their investigations,

cooperation is necessary. NTSB recommendations form a basis by which the industry involved in the accident can make changes to avoid a re-occurrence of the incident. And avoiding future incidents provides more value to the public than attempting to prosecute a company or an employee for an accident.

A second and related theme that developed at the NTSB symposium was the belief that, while criminal enforcement can be an important tool, it should be directed

toward intentional or reckless behavior rather than non-intentional conduct. Criminal enforcement, strong civil and administrative remedies, and an independent investigative body such as the NTSB, are all essential tools in protecting public safety,

our transportation systems, and the environment. Criminal penalties do deter intentional conduct, but have a much diminished and unproven relationship to preventing purely accidental behavior.

Criminal enforcement, indiscriminately and routinely applied to ordinary industrial accidents, can deny safety regulators the very information they need to decide

how to prevent similar accidents in the future. The rush to assess blame and punish

those connected with the accident inevitably forces this vital information behind

closed doors as the prosecution and the defendants prepare for a potential criminal

trial. The intent should be to promote cooperation rather than threaten parties with

punishment for things over which they had no control.

The language of the CWA, prosecutors’ increasing use of the criminal negligence

provisions of the CWA, and new views of the CWA taken by the courts have all combined to deter post-event industry cooperation when CWA criminal violations are

potentially involved.

Individuals engaged in industrial activities that bring them in contact with water

face a difficult proposition. How should companies respond to parallel criminal and

accident investigations? In that situation, companies face conflicting demands on

one hand, they need to be responsive and open to the public, and on the other, they

the need to fairly protect their employees. That was one of the questions raised at

our symposium, and I still cannot adequately answer that question.

Another issue is the effect that the possibility of criminal prosecution will have

on hiring and retaining a skilled work force. Although I don’t have direct experience,

this was a common complaint that I heard while at the NTSB, and one that is intuitive. If skilled employees are to be subject to criminal charges for their role in an

accident despite their training and the technologies at their disposal, then they will

be less likely to engage in those occupations. These positions would then have to

be filled with less qualified personnel or not filled at all, leaving the remaining employees over-extended. This could have a disastrous outcome and would be counterproductive to the intent of the CWA.

Defense attorneys representing firms and individuals facing criminal liability for

accidental behavior often advise prudent reluctance in providing information to the

NTSB. Other times, the NTSB arrives at an accident scene after a criminal investigation has already begun in earnest, and simply inspecting evidence can be extremely difficult for Board investigators.
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The bottom line is if the NSTB can do a thorough investigation, and can complete

its investigation, and have cooperation in that investigation, potential larger problems can be corrected before they cause future accidents or incidents. What’s more,

these problems can be understood in a broader context, and solutions can have an

industry-wide application through consensus reached with the regulators and the

firms involved.

However, a growing fear of criminal prosecution is rapidly compromising industry’s willingness to cooperate in safety investigations, and, while this is understandable, it is in the long run contrary to the interests of government and industry alike.

What is needed is a widespread agreement within the government not to proceed

criminally for purely accidental behavior, particularly where firms have agreed to

cooperate fully with the government’s subsequent safety investigation. And amendment of the Clean Water Act to make clear that simple negligence is not sufficient

for criminal prosecution is probably now necessary to recover from the tremors

caused by recent court cases, which have chilling implications for supervisors, and

managers who may be remote in time and place from the activities giving rise to

negligent spill.

I do not believe in a model of enforcement that immediately sends all the parties,

public and private, before a magistrate. I do believe in a robust regulatory regime

with adequate civil, administrative, and criminal teeth to ensure compliance. At the

same time, it is clearly counter-productive to the greater collective good to criminalize ordinary industrial accidents.

While this issue deserves a thoughtful review by this Committee, I submit that

this one provision of the CWA clearly is inconsistent with the larger body of transportation law, and the criminalization of simple negligence really has no place in

a statute not lacking for ‘‘teeth.’’

My primary concern is information, and more of it. Investigators and regulators

need access to relevant information to do their jobs. To an increasing extent, information is becoming harder to obtain which impacts the Board’s ability to investigate

and make recommendations. We are all safer and more secure when we can learn

from these incidents, and implement improved technologies and procedures as a result.

In conclusion, it is my conviction that the balance between appropriately pursuing

individual wrong-doers on one-hand and the broader purpose of accident investigation and prevention on the other hand, tips more and more away from a focus on

prevention. We follow this road at our long-term peril.

When there is no malfeasance, but merely an accident, our overriding concern

should be fixing the problem, not the blame. By focusing criminal prosecutions

where they are most appropriate, we protect the rights of workers, address scarce

government resources in the most useful way, increase compliance and cooperation,

and find answers more swiftly that can, in turn, be applied to prevention. I urge

the Committee to think through this issue, and have no doubt the net result of a

positive change in this provision will be increased safety, continued reduction in the

number of incidents, and greater protection of our fellow citizens and the environment.

I thank the Committee for its consideration in allowing me to testify today. I

would be happy to answer any questions that you may have.

STATEMENT OF THE AMERICAN WATERWAYS OPERATORS

The American Waterways Operators (AWO) appreciates the opportunity to submit

this statement for the hearing record. AWO is the national trade association representing America’s inland and coastal tugboat, towboat, and barge industry, the

largest segment of the U.S.-flag domestic maritime industry. AWO’s 375 member

companies include the owners and operators of tugboats, towboats, and barges that

move more than 800 million tons of America’s cargo every year, including dry, liquid, containerized and specialty cargoes on the inland river system, the Atlantic, Pacific, and Gulf coasts, and the Great Lakes. The transportation of petroleum and petroleum products is a key segment of our industry’s business: tank barges move 20

percent of the oil that fuels our economy and keeps our cars running and our homes

warm. Powerful, state-of-the-art tugboats also provide tanker escort services to facilitate the safe movement of petroleum cargoes in busy ports and harbor approaches.

Chairman Inhofe and Senator Baucus, AWO would first like to thank you for convening this hearing to examine issues related to the Clean Water Act. AWO and

its member companies are deeply committed to marine safety and environmental

protection. We understand that one of the issues addressed at today’s hearing will
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be criminal liability for oil spill incidents. We believe that criminal liability, when

imposed under OPA 90, should be employed only where a discharge is caused by

conduct that is truly ‘‘criminal’’ in nature, i.e., where a discharge is caused by reckless, intentional or other conduct deemed criminal. We agree that the current ‘‘negligence’’ standard in OPA 90 is a lower threshold than traditionally seen for criminal liability. Criminal culpability in the United States typically requires intentional

actions or omissions by individuals.

In addition, we are very concerned that responsible operators are exposed to

criminal fines and potential imprisonment for maritime transportation-related oil

spills due to the application and use of antiquated and unrelated strict criminal liability statutes. Strict criminal liability imposes criminal sanctions without requiring a showing of criminal knowledge, intent or even negligence. AWO and its members are very troubled, as are other responsible, law-abiding maritime interests, by

both the Justice Department’s increasing willingness in the post-OPA 90 environment to use strict criminal liability statutes and the increasing attention to criminal

enforcement in oil spill incidents. These Federal actions imposing strict criminal liability have created an atmosphere of extreme uncertainty for AWO members about

how to respond and cooperate with the Coast Guard and other Federal agencies in

cleaning up an oil spill. Strict criminal liability statutes such as the Migratory Bird

Treaty Act (16 U.S.C. 703 et.seq.) and the Refuse Act (33 U.S.C. 407, 411)—statutes

that were enacted at the turn of the century to serve other purposes—have been

used to harass and intimidate the maritime industry, and in effect, have turned

every oil spill into a potential crime scene without regard to the fault or intent of

companies, corporate officers and employees, and mariners.

The Migratory Bird Treaty Act (MBTA) provides that ‘‘it shall be unlawful at any

time, by any means or in any manner, to pursue, hunt, take, capture, kill, attempt

to take, capture, or kill any migratory bird . . .’’, a violation of which is punishable

by imprisonment and/or fines. Prior to the Exxon Valdez oil spill in 1989, the MBTA

was primarily used to prosecute the illegal activities of hunters and capturers of migratory birds, as the Congress originally intended when it enacted the legislation

in 1918. In the Exxon Valdez case itself, prior to the enactment of OPA 90, the

MBTA was first used to support a criminal prosecution against a vessel owner in

relation to a maritime oil spill, and this ‘‘hunting statute’’ has been used since

against the maritime industry. The Refuse Act was enacted over 100 years ago at

a time well before subsequent Federal legislation essentially replaced it with comprehensive requirements and regulations specifically directed to the maritime transportation of oil and other petroleum products.

OPA 90 provides a statutory framework for proceeding against individuals for

civil and/or criminal penalties arising out of oil spills in the marine environment.

When Congress crafted OPA 90, it balanced the imposition of stronger criminal and

civil penalties with the need to promote enhanced cooperation among all of the parties involved in the spill prevention and response effort. OPA 90 imposes criminal

liability for negligent violations and provides for punishment of up to 1-year imprisonment and/or fines between $2,500 and $25,000 per day. The punishment for each

knowing violation was increased by OPA 90 to up to 3-years imprisonment and/or

fines between $5,000 and $50,000 per day. Furthermore, OPA 90 added and/or substantially increased criminal penalties under the following pre-existing laws which

comprehensively govern the maritime transportation of oil and other petroleum

products:

• Negligent Vessel Operations. 46 U.S.C. 2302

• Vessel Inspections. 46 U.S.C. 3318

• Carriage of Liquid Bulk Dangerous Cargoes. 46 U.S.C. 3718

• Vessel Load Lines. 46 U.S.C. 5116

• Foreign Commerce Pilotage. 46 U.S.C. 8503(e)

• Ports and Waterways Safety Act. 33 U.S.C. 1232(b)

• Intervention on the High Seas Act. 33 U.S.C. 1481(a)

• Deepwater Port Act of 1974. 33 U. S.C. 1514(a)

• Act to Prevent Pollution from Ships. 33 U.S.C. 1908(a)

Congress, by omitting the Migratory Bird Treaty Act and the Refuse Act from this

list of existing statutes modified by OPA 90, apparently did not anticipate or intend

their use in the case of maritime oil spills.

In the event of an oil spill, a responsible party not only must manage the cleanup

of the oil and the civil liability resulting from the spill, but also must protect itself

from the criminal liability that now exists due to the available and willing use of

strict criminal liability laws by the Federal Government. Managing the pervasive

threat of strict criminal liability, by its very nature, prevents a responsible party

from cooperating fully and completely in response to an oil spill situation. The OPA

90 ‘‘blueprint’’ of prevention and response is no longer clear. The use of the strict
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criminal liability statutes has undermined the spill prevention and response objectives of OPA 90, the very goals that were established by Congress to preserve the

environment, safeguard the public welfare, and promote the safe transportation of

oil.

Archaic statutes such as the Migratory Bird Treaty Act and the Refuse Act are

unrelated to the regulation and enforcement of oil transport activities and were not

included within OPA 90 as one of the many applicable statutes where criminal liability could be found. Without the elimination of the use of such strict liability statutes, the maritime industry cannot avoid exposure to criminal liability, regardless

of how diligently it adheres to prudent practice and safe environmental standards.

As stated the U.S. Coast Guard’s own environmental enforcement directive, a company, its officers, employees and mariners, in the event of an oil spill ‘‘could be convicted and sentenced to a criminal fine even where [they] took all reasonable precautions to avoid the discharge.’’ (Criminal Enforcement of Environmental Laws,

U.S. Coast Guard Commandant Instruction M16201.1 of 30 July, 1997.)

The exposure of mariners and management to criminal liability regardless of fault

has had a negative impact on the recruitment and retention of qualified and committed personnel for the maritime transportation of oil and petroleum products. At

a 1998 hearing of the Subcommittee on Coast Guard and Maritime Transportation

of the House Committee on Transportation and Infrastructure, several working

mariners noted this development. One Captain with long experience in the industry

indicated that he could not recommend a similar career path to his children because

of the uncertainty created by the existence of strict liability. A witness from the

management of a company that transports petroleum testified that his company had

modified its response protocol and had retained criminal counsel to assist in the

event of a spill because of the potential impact of criminal liability on the company

and its employees. At conferences held in 2001 and 2002, jointly sponsored by the

Coast Guard, industry and labor organizations, criminal liability was identified as

one of six factors affecting the recruitment and retention of mariners. The conclusion of the group considering criminal liability was that ‘‘(t)he unjustifiably low

threshold for prosecution inhibits the recruitment and the retention of mariners.’’

The group recommended changes in the laws governing criminal liability in the

event of oil spills.

Criminal sanctions under OPA 90 should follow the traditional notion of what constitutes criminal acts in this country—namely, that a crime occurs when a knowing,

intentional act is committed. AWO respectfully requests that the Environment and

Public Works Committee take the lead on this critical issue by: (1) reaffirming the

traditional definition of criminal conduct for prosecutions in oil spill incidents; and,

(2) reasserting the preeminent role of OPA 90 as the statute providing the exclusive

criminal penalties for oil spills. Such legislation would ensure increased cooperation

and responsiveness, while not diluting the deterrent effect of stringent criminal penalties imposed under OPA 90 itself.

Thank you again for the opportunity to present this statement for the hearing

record.

STATEMENT OF THE AMERICAN SOCIETY OF CIVIL ENGINEERS

Mr. Chairman and Members of the Subcommittee, the American Society of Civil

Engineers (ASCE) is pleased to offer this statement to the Subcommittee for the

hearing on issues related to the implementation of the Clean Water Act.

ASCE was founded in 1852 and is the country’s oldest national civil engineering

organization. It represents more than 130,000 civil engineers in private practice,

government, industry, and academia who are dedicated to the advancement of the

science and profession of civil engineering.

I. POLICY RECOMMENDATIONS

• ASCE supports a Clean Water Act (CWA) that maximizes, to the extent possible, the protection of our nation’s waters and the beneficial use of those waters.

The Act should aggressively address nonpoint source pollution from watersheds and

also point sources, including from sanitary sewer overflows, combined sewer overflows, and storm sewer discharges.

• National policy should protect the beneficial uses of the nation’s water and be

flexible enough to allow innovative practices and means to achieve these goals.

• Water quality should be protected at the source through cooperative partnerships that utilize financial incentives or other market-based mechanisms. Emphasis

needs to be given to protecting water quality and habitat from adverse impacts of
160

wet weather flows, including non-point sources, stormwater, and combined sewer

overflows.

II. BACKGROUND

Wastewater treatment is now well established throughout the Nation, and the design, construction, and maintenance of treatment plants is understood. There is still

a need for controlling other sources of point source pollution (e.g. stormwater wet

weather systems, combined sewer overflows, sanitary sewer overflows, and

stormwater discharges) and a much greater effort is needed to control nonpoint

sources of pollution.

Measuring the effects of nutrients as well as toxic pollutants on water quality and

ecosystems requires further research. Establishing source water programs will minimize downstream pollution programs. Watershed approaches to water-quality management offer the best way to integrate management of diverse pollution sources

with the wide range of water usages seen in the United States.

The Federal Water Pollution Control Act is the principal law that deals with pollution in the nation’s streams, lakes, and estuaries.1 The Act, commonly referred to

as the Clean Water Act, is ‘‘one of the landmark statutes of the twentieth century,

. . . .’’2

The Act consists of two major parts: a regulatory scheme that imposes progressively more stringent requirements on industries and cities to abate pollution and

meet the statutory goal of zero discharge of pollutants and provisions that authorize

Federal financial assistance for municipal wastewater treatment plant construction.

Both are supported by permit and enforcement provisions. Programs at the Federal

level are administered by the Environmental Protection Agency (EPA); the Act allows EPA to delegate enforcement and permitting authority to the states, and they

have major responsibilities to implement the Act’s programs.

In 1972, Congress declared that it intended to restore and maintain the chemical,

physical, and biological integrity of the nation’s waters.3 These objectives were accompanied by statutory goals to eliminate the discharge of pollutants into navigable

waters by 1985 and to attain, wherever possible, waters deemed ‘‘fishable and swimmable’’ by 1983. While the goals have not been entirely achieved, progress has been

made, especially in controlling conventional pollutants (suspended solids, bacteria,

and oxygen-consuming materials) discharged by industries and municipal sewage

treatment plants. These discrete sources are easily identifiable and regulated.

The Act focuses on two possible sources of pollution: point sources and nonpoint

sources. Adopting a command-and-control response to water pollution, Congress

dealt with the problem of point source pollution using the National Pollution Discharge Elimination System (NPDES) permit process. Under this approach, compliance rests on technology-based controls that limit the discharge of pollutants from

any point source into certain waters unless that discharge complies with the Act’s

specific requirements.4

When the NPDES system fails to adequately cleanup certain rivers, streams, or

smaller water segments, the Act requires use of a water-quality based approach.

States are required to identify such waters, which are to be designated as ‘‘water

quality limited segments’’ (WQLS). The states must then rank these waters in order

of priority, and based on that ranking, calculate levels of permissible pollution called

‘‘total maximum daily loads’’ or TMDLs.5

TMDLs are the maximum quantity of a pollutant the water body can receive on

a daily basis without violating the water quality standard. The TMDL calculations

are to ensure that the cumulative impacts of multiple point source discharges and

nonpoint source pollution are accounted for. The TMDL does not establish direct

controls over pollutants, however. It is a technology-forcing program that may require pollutant sources within a watershed to install new pollution-control devices.

States may then institute whatever additional cleanup actions are necessary,

which can include further controls on point and nonpoint pollution sources. Under

the Act, states are required to submit lists of WQLSs and TMDLs to the EPA at

certain times; the first were due by June 26, 1979.6

The TMDL program regulates waste load allocations for point sources, watershed

allocations for nonpoint sources, and includes a margin of safety. It was intended

to serve as a backstop to the NPDES permit program.

Section 303(d) and the TMDL program were included in the Act as a secondstring safeguard against failure of the primary water quality improvement

mechanism, the NPDES program. As a result of its backup status, the TMDL

program was not aggressively or broadly pursued until the late 1980’s and early

1990’s when it became clear that the NPDES program alone could not solve the

country’s water quality problems.7
161

The NPDES and TMDL approaches sanction the controlled release of pollutants

into the ambient environment. Like virtually every aspect of the American environmental protection system, the programs assume that a certain amount of pollution—

an external diseconomy—is acceptable in order to maintain the overall wealth and

security of the Nation.

Such a tradeoff between economic welfare and ecological protection, while politically essential, cannot provide the most advantageous outcome to environmental

degradation, however. Every contaminant release, no matter how well controlled, results in a progressively greater pollutant load on the environment, although it may

be argued that the burden likely grows more slowly because the releases occur at

less toxic levels than if there were no NPDES program at all.

The use of economic tools to assess the ecological effects of market-based activities

in order to alleviate environmental pollution is a relatively new phenomenon. But

human economic welfare, not the physical welfare of ecosystems or species, is at the

heart of all neoclassical economic analysis.

In neoclassical economic theory, groups and individuals act to advance their own

economic self-interest. Non-economic considerations—including real or potential

damages to the commons from industrial pollution or other threats to the environment from economic activity—are not possible. This is because all market-driven

economic systems are unsentimental and utilitarian; they do not place the preservation of natural resources above the need to improve the economic welfare of individuals and groups in the economy. The central function of neoclassical economics is

the well-being of the consumers (and producers) who make up the economy.8

To state it clearly:

The hallmark of welfare economics is that policies are assessed exclusively in

terms of their effects on the well-being of individuals. Accordingly, whatever is

relevant to individuals’ well-being is relevant under welfare economics, and

whatever is unrelated to individuals’ well-being is excluded from consideration

under welfare economics.9

Because classical economics concentrates on the control of pollution only as it affects the economic utility of agents in the economy, it frequently ignores the effect

of pollution on economic activity and the resulting restrictions placed on the economy by increasingly polluted (and therefore scarcer) ecosystem resources.

Although the severe economic functionalism has been somewhat softened by a

host of environmental laws like the Clean Water Act and other regulations governing virtually every aspect of American financial and industrial life, the use of

economics to measure the benefits of these protective laws remains controversial. Indeed, the advent of new economic approaches—often called ‘‘natural capitalism’’ or

‘‘resource economics’’—simply exacerbates the old problem of how best to allocate

scarce natural resources.10

Despite some obvious disadvantages, however, economic solutions to environmental problems are increasingly seen as preferable by policymakers looking for different solutions to pollutant-control issues and ecological degradation.

[There is] a general trend toward using market mechanisms to attain environmental protection objectives. Market-based programs operate under the assumption that allowing regulated entities to choose among a range of compliance options results in more efficient environmental management than does traditional ‘‘command-and-control’’ regulation. Essentially, environmental markets

attach costs to environmentally damaging activities and values to environmental benefits, thereby encouraging companies and individuals to consider the

environmental impact of their activities. Regulators increasingly are turning to

taxes, subsidies, unit charges, deposit-refund schemes, and tradable permit programs to force regulated entities to internalize environmental costs.11

III. IMPLEMENTATION OF THE CLEAN WATER ACT

A. The National Pollutant Discharge Elimination System

The EPA frequently has lauded its efforts and those of its state partners to protect the nation’s waters from point sources regulated under the NPDES permitting

program. ‘‘Over the nearly thirty years since enactment of the Clean Water and Safe

Drinking Water Acts, we have worked together at all levels to make remarkable

progress in improving the quality of surface waters and the safety of drinking

water.’’12

The admiration is not universally shared. Critics have noted, for example, that

‘‘EPA has never been very interested in pursuing a broad interpretation of the Clean

Water Act that would construe some of the statute’s ambiguities to fit the scope of

the nation’s water pollution problem.’’13 Another states: ‘‘Unfortunately, point source
162

controls have reached the limits of their effectiveness, yet water quality remains

ubiquitously substandard nationwide. While America’s rivers and harbors no longer

catch fire, thousands of waterways fail to meet water quality standards despite

point source regulation.’’14

The nation’s remaining water quality problems are varied, ranging from runoff

from farms and ranches, city streets, and other widely distributed sources to metals

(especially mercury), organic and inorganic toxic substances discharged from factories and sewage treatment plants, as well as numerous nonpoint sources.

Whatever limited success the Act has enjoyed is due almost entirely to Federal

and state efforts to apply the NPDES program to control point sources. Inadequate

nationwide data make it difficult to assess the scope of the remaining water quality

issues.

In 2000, the latest year for which data are available, EPA concluded from an extremely narrow examination of the nation’s waters that only 61 percent of assessed

river and stream miles; 54 percent of assessed lake acres; 49 percent of assessed

estuarine square miles; and 22 percent of assessed Great Lakes shoreline miles supported the water quality standards evaluated.15

B. Total Maximum Daily Loads

The Total Maximum Daily Load (TMDL) program languished for decades. Despite

the mandate in the Act, after 30 years, there are still more than 22,000 impaired

waters nationwide, with an estimated 48,000 individual impairments in these water

bodies, according to the EPA.16 The states, who have been delegated to implement

the TMDL program under EPA oversight, have generally failed to carry out their

section 303(d) duties.17

The TMDL provision . . . is a relic of the previous strategy that calls for

states to manage pollution loading into waterways that, despite point source

regulation, do not meet water quality standards. With a few exceptions, the

states have consistently bowed to political pressure and not established TMDLs.

In addition . . . EPA had virtually ignored its mandate to evaluate state

TMDLs.18

The program was reinvigorated in the 1980’s and 1990’s after environmental

groups began making use of the Act’s citizen suit provisions to go to court to force

EPA and the states to speed the approval of TMDLs. Because the Act requires EPA

to develop a priority list for the state and make a Federal TMDL determination if

a state fails to set TMDLs for its impaired water bodies, the suits met an initial

round of judicial successes.

Numerous judicial rulings employed the doctrine of ‘‘constructive submission’’ to

require the EPA to issue a TMDL when states failed (often for many years) to submit a TMDL for EPA approval. The doctrine held that a state’s failure to submit

any TMDLs effectively was a ‘‘constructive submission’’ of no TMDLs, thus requiring

EPA to act.19 Lately, however, environmentalists have found a less friendly reception at the courthouse. In a recent shift from earlier decisions, at least two Federal

appellate courts have narrowed the doctrine to situations in which a state clearly

refuses to adopt a TMDL and the EPA delays action unreasonably.20 The burden

of conclusively proving Federal and state obduracy is now ‘‘nearly insurmountable.’’21

C. Water Quality Trading

In January 2003, EPA sought to ration water pollution in U.S. watersheds. It

adopted a new ‘‘Water Quality Trading Policy’’ designed, in part, to move away from

top-down regulations and to establish a market-based program by which state and

tribal governments may attain the required TMDLs for their impaired water bodies.22

[M]arket-based approaches such as water quality trading provide greater

flexibility and have potential to achieve water quality and environmental benefits greater than would otherwise be achieved under more traditional regulatory

approaches. . . . [T]he policy is intended to encourage voluntary trading programs that facilitate implementation of TMDLs, reduce the costs of compliance

with CWA regulations, establish incentives for voluntary reductions and promote watershed-based initiatives.23

The modified ‘‘cap-and-trade’’ policy focuses on total emissions of nutrients and

sediment in a watershed. It caps total pollutant emissions and encourages pollution

reductions through the trading of nutrients and sediment from point and nonpoint

sources. Trades of other pollutants are possible, but the Agency will oppose any
163

trades involving persistent bioaccumulative toxics in the absence of evidence that

such a trade would achieve ‘‘a substantial reduction’’ of the pollutant.

The Water Quality Trading Policy is similar to the program for sulfur dioxide

emissions established under the Clean Air Act Amendments of 1990. In title IV,

Congress authorized EPA to create a tradable emissions market for sulfur dioxide

(SO2). The SO2 program produced a market for pollution permits (allowances) in

order to reduce emissions from older, less efficient electric generating plants. The

CAA Amendments established a cap-and-trade system whereby the government

capped emissions from generating units at each plant. (Many plants have more than

one generating unit subject to the cap.)

In general, an ambient pollution permit for a given environmental receptor (air,

water, or land) gives the holder the right to emit a pollutant at any location, provided that the incremental pollution emitted into the specific receptor does not exceed the permitted amount. The marginal savings to the permit holder should equal

the permit price. When the price of a permit is greater than the savings from releasing the pollutant, the allowance holder will try to sell some allowances and emit

fewer pollutants.

Theoretically, allowance trading creates more flexibility than the standard command-and-control policies in the reduction of pollutants. The increased efficiency resulting from a tradable permit system potentially allows environmental regulators

to tighten emission standards, resulting in less pollution while still holding costs at

their initial level.

A central feature of any emissions trading program is that it shifts the burden

of designing and locating pollution controls from the government to industry. Finally, three points in determining the economic significance of pollution allowances

must be kept in mind:

• A market equilibrium exists in the buying and selling of ambient pollution permits for any initial issuance of permits.

• Emissions from each source in a permit market equilibrium are efficient (the

least costly way of attaining the efficient level of pollution for each environmental

receptor) no matter how the permits are initially distributed.

• If the price of the permits in equilibrium equals the marginal damage from pollution, economic efficiency has been obtained.24

The CAA Amendments granted allowance holders with a surplus of credits a Federal license to release one ton of SO2 emissions or to sell the allowances to another

generating unit. The allowances transfer pollutant abatement from high-cost generating units to ones that cost less, thus improving economic efficiency.

Under the Amendments, owners of existing generating units are given fixed numbers of tradable allowances each year following rules that depend primarily on historic emissions and fuel use. Each allowance entitles its holder to emit one ton of

SO2. A small number of additional allowances are auctioned annually by the EPA,

with the revenues rebated to utilities roughly in proportion to their allowance allocations.

New units must buy needed allowances from existing units or at the EPA auctions. Each covered generating unit must deliver to EPA valid allowances sufficient

to cover each year’s emissions within 30 days of year’s end or incur serious penalties. Allowances can be bought or sold without restrictions to cover emissions from

any generating unit in the U.S.25 The overall amount of SO2 released by all units

remains the same as long as the number of permits does not increase.

Opinion among economists as to the supposed superiority of the cap-and-trade

system is divided, however. Command-and-control regulations may be more protective and more cost-effective if they result in reductions in environmental pollutants

below the standard set in the regulations. This ‘‘over control’’ may make commandand-control policies more expensive—and more efficient.26

‘‘The evidence is ambiguous as to whether marketable permits have stimulated

any more innovation in pollution control than the command-and-control technological restrictions. Marketable permits have proved to be administratively cumbersome.’’27

Under the 2003 Water Quality Trading Policy, emissions of sediment and nutrients are to be capped in the form of the waste load established under a TMDL for

point and nonpoint sources. For water bodies or watersheds for which there are no

TMDLs at the time of the trade the caps are implied, according to EPA.

In watersheds with approved TMDLs, the watershed itself effectively will be

treated as if it were a more traditional point source under the Policy; in watersheds

without a TMDL at hand, the task of establishing regulatory baselines in order to

determine the allowances to be traded will be exceedingly difficult in the absence

of good data on total emissions of the covered pollutants.
164

It is this feature of the new Water Quality Trading Policy—the attempt for the

first time to measure and regulate emissions from nonpoint sources within an entire

watershed with ‘‘implied’’ caps—that holds the greatest challenge for the Agency. Almost certainly, the regulation of these widespread regional pollutants promises to

be difficult, as the EPA concedes in its January announcement.28

IV. POLICY CONSIDERATIONS FOR THE SUBCOMMITTEE

A. The Subcommittee Should Consider Legislation to Establish a Water Quality

Trading Program at EPA

EPA has established the Water Quality Trading Policy without explicit congressional authorization. Although the Agency claims that the Policy is supported by the

existing Clean Water Act, this point is at least arguable. EPA established its air

quality trading program in 1974, but Congress did not codify Agency practices until

1990. In the absence of statutory authority, such a lengthy deferral in establishing

a clear congressional role for pollutant trading under the Clean Air Act postponed

the ecological reckoning by many years years in which independent analysts raised

serious questions about the environmental worth of the Agency’s air quality

trades.29

To eliminate any doubts as to the legality and efficacy of the program, Congress

should enact enabling legislation within the Clean Water Act. The legislation should

contain explicit safeguards and a strong and continuing oversight role for Congress,

including the use of regular audits of the water quality trading program by the General Accounting Office (GAO) and independent analyses of its utility by the Congressional Budget Office (CBO).

B. Congress Must Monitor the EPA Water Quality Trading Program Closely

Cap-and-trade programs generally have reduced the regulatory burden on industry and increased its welfare, but they have not had large or unusually positive effects on the environment. They merely place a limit on total emissions of a given

pollutant in a given area, and then allow firms that emit this pollutant to trade excess emissions allowances (each allowance entitles the user to emit a certain

amount) with each other and with other third-party traders. These types of programs can be contrasted with command-and-control programs, which tend to be

more prescriptive and more expensive for industry, requiring regulated units to install various types of pollution-control equipment.30

It is important to remember, however, that emissions trading programs are heavily dependent upon historic emissions data. The permits are not simply a means of

improving economic efficiency for polluters or for abolishing the standard technological controls; they are meant to ration the release of pollutants governed by the

allowances into the ambient environment based upon well established past practices.

Congress needs to maintain a close watch on the EPA Water Quality Trading Policy as it evolves. There are enough uncertainties associated with this particular policy, especially its unique approach to the trading pollutants from area sources, that

it must be carefully overseen.

Among the issues that need to be carefully assessed are the timing of the permits,

knowing how the monitoring data are to be obtained, and determining the appropriate government inspection schedule. Penalties for violating the permit must be

greater than the permit price so that producers will stay within the rules of the

market.

It is especially important for Congress to assess the marketable permit system for

water bodies for which no TMDL has been approved early in the process. Without

hard data on historic emissions within a watershed, it will be extremely difficult for

the EPA to measure the amount of nutrients and sediment to establish in the initial

permit issuance. Congress must insist on the best data available or consider prohibiting trades in non-TMDL watersheds.

NOTES

1 33 U.S.C.A. 1251 et seq. (West 2003).

2William L. Andreen, The Evolution of Water Pollution Control in the United

States—State, Local, and Federal Efforts, 1789–1972: Part II, 22 Stan. Env. L.J.

215, 216 (2003). 3William H. Rodgers Jr., Environmental Law 248 (2d ed. 1994).

4 33 U.S.C.A. §§ 1311(a), 1362(12) (West 2003).

5San Francisco BayKeeper v. Whitman, 297 F.3d 877, 880 (9th Cir. 2002). 6See Id.
165

7 Jim Vergura and Ron Jones, The TMDL Program: Land Use and Other Implications, 6 Drake J.Agric. L. 317, 320 (2001) (citations omitted). 8Kalman Goldberg, the Market System 57 (2000).

9Louis Kaplan and Steven Shavell, Fairness Versus Welfare, 114 Harv. L. Rev.

961, 977 (2001). 10Paul Hawken et al., Natural Capitalism (1999). (‘‘[H]umankind is facing a historic juncture: For the first time, the limits to increased prosperity are due to the

lack not of human-made capital but rather of natural capital.’’) 11David Sohn and Madeline Cohen, From Smokestacks To Species: Extending The

Tradable Permit Approach From Air Pollution To Habitat Conservation, 15 Stan.

Envtl. L.J. 405, 408 (1996) (footnote omitted). 12Statement of G. Tracy Mehan III, Assistant Administrator for Water, U.S. EPA,

before the Subcommittee on Water Resources and Environment, Committee on

Transportation and Infrastructure, U.S. House of Representatives, Feb. 27, 2003, at

http://www.epa.gov/water/speeches/022703tm.html (last visited Sept. 11, 2003). 13Michael C. Blumm and William Warnock, Roads Not Taken: EPA vs. Clean

Water, 33 Envtl. L. 79 (2003) (concluding that the Agency ‘‘has failed miserably’’ to

carry out the point and nonpoint source control programs in the Act due to political

expediency). 14Debbie Shosteck, Pronsolino v. Marcus, 28 Ecology L.Q. 327, 328–329 (2001)

(footnotes omitted). 15 Environmental Protection Agency, 2000 National Water Quality Inventory Report to Congress ES–5 (2002), at http://www.epa.gov/305b (last visited Sept. 11,

2003) Less than half of all U.S. waters were assessed in 2000. States assessed 19

percent of the nation’s total river and stream miles; 43 percent of its lake, pond,

and reservoir acres; 36 percent of its estuarine square miles; and 92 percent of

Great Lakes shoreline miles. 16 Environmental Protection Agency, National Section 303(d) List Fact Sheet, at

http://oaspub.epa.gov/waters/national—rept.control (last visited Sept. 11, 2003).

Approximately 9,100 separate TMDLs nationally covering the more than 22,000 impaired water bodies have been completed since 1972. Indeed, most of them have

been completed only since 1996. Id. 17See U.S. General Accounting Office, Clean Water Act: Proposed Revisions to

EPA Regulations to Clean Up Polluted Waters (2000). (‘‘[State] compliance with existing TMDL regulations has been problematic, and future compliance in the absence of the proposed regulation [of 2000] is uncertain . . .’’). 18Shosteck, Pronsolino supra note 14, at 330. 19See, e.g., Scott v. Hammond, 741 F.2d 992, 998 (7th Cir. 1984) (holding that

the Clean Water Act ‘‘undoubtedly imposes mandatory duties on both the states and

the EPA’’); Alaska Center for the Environment v. Reilly, 762 F. Supp. 1422, 1429

(1991) (‘‘Section 303(d) expressly requires the EPA to step into the states’ shoes if

their TMDL submissions or lists of water quality limited segments are inadequate.’’)

aff’d sub nom. Alaska Center for the Environment v. Browner, 20 F.3d 981 (9th Cir.

1994); Defenders of Wildlife v. Browner, 909 F. Supp. 1342 (1995) (same); Natural

Resources Defense Council v. Fox, 909 F. Supp. 153 (1995) (same); Sierra Club v.

Hankinson, 939 F. Supp. 865 (1996) (same); Raymond Profitt Foundation v. EPA,

930 F. Supp. 1088 (1996) (same); Idaho Conservation League v. Browner, 968 F.

Supp. 546 (1997) (same). 20See San Franscisco Baykeeper supra note 5, at 883 (holding that, because the

State of California had submitted at least 18 TMDLs for pollutants received by waters designated as WQLS and had established a schedule for completing its remaining TMDLs, the constructive submission doctrine, under which complete failure by

state to submit TMDLs was treated as decision not to submit TMDLs, did not

apply); see also Hayes v. Whitman, 264 F.2d 1017, 1023 (10th Cir. 2001) (‘‘Only

upon [a] determination that the states’ inaction was so clear as to constitute a ‘constructive submission’ of no TMDLs would the EPA then incur a nondiscretionary

duty to approve or disapprove the constructive submission.’’). 21 James R. May, Where The Water Hits The Road: Recent Developments in Clean

Water Act Litigation, 33 Envtl. L. Rep. 10,369 (2003). 22 Environmental Protection Agency, Water Quality Trading Policy; Issuance of

Final Policy, 68 Fed. Reg. 1608 (Jan. 13, 2003). 23 Environmental Protection Agency, water quality trading policy 1–2 (Jan. 13,

2003), at http://www.epa.gov/owow/watershed/trading/finalpolicy2003.html (Last visited Sept. 10, 2003). 24 Charles C. Kolstad, Environmental Economics 163 (2000). 25 Richard Schmalensee et al., An Interim Evaluation of Sulfur Dioxide Emissions

Trading, 12 J. Econ. Persp. 53 (1998). See also Susanne M. Schennach, The Econom-
166

1 In an article by two former chiefs of the Department of Justice, Environmental Crimes Section, Ronald Sarachan and Steven Solow, the authors undertake a statistical analysis of the

total number of negligence based Federal environmental crimes prosecutions compared to the

total number of Federal environmental crimes prosecuted over a 10-year span, from 1987 to

1997. In total, of the 1,436 environmental criminal prosecutions during that decade, only 86,

or approximately 6 percent, of the prosecutions were negligence cases. 2 176 F.3d 1116 (9th Cir. 1999), cert. denied, 528 U.S. 1102 (2000).

3 242 F.3d 528 (4th Cir. 2001), cert. denied, 112 S.Ct. 60 (2001).

ics of Pollution Permit Banking in the Context of Title IV of the 1990 Clean Air

Act Amendments, 40 J. Envtl. Econ. and Mgmt. 189 (2000). 26See W.E. Oates et al., The Net Benefits of Incentive-Based Regulation: A Case

Study of Environmental Standard Setting, 79 Am. Econ. Rev. 1233 (1989). 27 Nick Hanley et al., Environmental Economics in Theory and Practice 88 (1997). 28See 68 Fed. Reg. at 1612. 29See, e.g., Robert W. Hahn and Gordon L. Hester, Where Did All the Markets

Go? An Analysis of EPA’s Emissions Trading Program, 6 Yale J. on Reg. 109, 151

(1989) (concluding that, after 15 years of air emissions trading, the program had

provided billions of dollars worth of pollution-control savings to industry, but also

determining that the EPA-designed program had had a negligible effect on the environment). 30The United States is not the only Nation to experiment with cap-and-trade permits for pollutants from area sources. In 2001, the European Union established a

cap-and-trade program for governing greenhouse gas emissions among EU countries.

See Michael J–H. Smith and Thierry Chaumeil, Greenhouse Gas Emissions Trading

within the European Union: An Overview of the Proposed European Directive, 13

Fordham Envtl. L.J. 207 (2002).

STATEMENT OF ROBIN GREENWALD, CLINICAL PROFESSOR OF LAW, RUTGERS SCHOOL

OF LAW, NEWARK, NJ; FORMER ASSISTANT CHIEF, ENVIRONMENTAL CRIMES SEC- TION, DEPARTMENT OF JUSTICE; ASSISTANT U.S. ATTORNEY, EASTERN DISTRICT OF

NEW YORK

Mr. Chairman, Mr. Ranking Member, Members of the Committee, thank you for

considering my comments on the oil industry’s proposal to amend Section 309 of the

Clean Water Act to require human endangerment as a prerequisite for criminal negligence. Based on my experiences spanning more than 10 years prosecuting environmental crimes cases, including prosecuting negligent Clean Water Act cases, I am

submitting this written testimony in opposition to the proposed legislative amendment and to encourage the Committee to reject its proponents’ ‘‘smoke and mirrors’’

argument that Section 309 of the Clean Water Act impedes safety investigations

conducted by the National Safety Transportation Board. Recent decisions by the

Ninth and Fourth Circuit Courts of Appeals have not changed the standard for prosecuting negligent Clean Water Act cases and, to date, Section 309 has not impeded

NSTB investigations.

In the cloak of concern for comprehensive NSTB investigations following oil spills,

the oil industry is pressuring Members of Congress from oil-rich states to weaken

substantially an important, and sparingly used, Clean Water Act criminal provision,

Section 309 of the Clean Water Act, which carries misdemeanor penalties for negligently violating the Clean Water Act.1 In fact, under Federal law, section 309 has

not interfered and should not interfere with NSTB investigations, and in those precious few cases in which a negligent CWA criminal investigation and a NSTB investigation are proceeding simultaneously, there are procedures available, when appropriate, to ensure that an important and time-sensitive safety concern is fully and

expeditiously investigated.

The recent interest in this statutory amendment appears to be the prosecutions

of two negligent CWA cases, United States v. Hanousek2 and United States v. Hong3. Neither of these cases, however, represents a departure from the type of negligent CWA prosecutions brought by the Department of Justice since Congress

amended the Clean Water Act in 1987 to add Section 309, nor do the decisions affirming the convictions in Hanousek and Hong constitute a departure from well-established criminal negligence law. In each of these cases, neither defendant was

prosecuted for what was a simple ‘‘accident’’, as the oil industry suggests. Indeed,

in the case of an ‘‘accident’’ that results from conduct that was reasonable under

the circumstances, the type of conduct to which the oil industry refers, no criminal

liability would attach under Section 309. It is only when a person causes an event

that violates the Clean Water Act, such as a catastrophic oil spill, as a result of

his or her failure to exercise the care that a reasonable person would have taken
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under similar circumstances that the person is subject to negligent CWA prosecution. This is precisely the type of criminally negligent conduct that occurred in the

events leading up to the Clean Water Act criminal violations in the Hanousek and

Hong cases, and it is the very type of criminal negligence prosecutions Congress contemplated when it enacted Section 309.

A review of the facts in Hanousek and Hong illustrate these points. In Hanousek,

the defendant was engaged in rock blasting operations adjacent to what defendant

knew was an old pipeline. Hanousek’s predecessor had created a protective work

area around the blasting operations to ensure that the pipeline was not compromised during the blasting operations. When Hanousek became the manager of

the operations, with full knowledge of the pipeline’s proximity to the blasting operations, he stopped protecting the pipeline. As a result, the pipe broke when workers

drove over the pipeline with a backhoe. To make matters even worse, well before

Hanousek knew the type of enforcement case the government was contemplating,

Hanousek mislead government investigators and hid pieces of the pipeline from investigators. Clearly, the break of the pipeline here was not an unavoidable accident,

and Hanousek did not mislead investigators because he knew they were investigating him for criminal negligence. Had Hanousek taken the care that the former

manager of the blasting operations took to protect the pipeline, the pipeline would

not have broken and Hanousek would not have been subjected to criminal prosecution. It was Hanousek’s failure to exercise the care that a reasonable person would

have taken to protect the pipeline under the circumstances, and his subsequent efforts to mislead the government, that resulted in his conviction.

The defendant in Hong acted with the same utter disregard for the environment

as did Mr. Hanousek. Hong acquired wastewater treatment facilities in 1993. Two

years later, Hong inquired about the purchase of a carbon-filter treatment system

for one of his facilities, which lacked a wastewater treatment system altogether. The

seller of the system told Hong that the treatment system he was considering was

not appropriate for completely untreated wastewater; rather, it was designed only

for the final step in the wastewater treatment process. Despite this warning, Hong

purchased the system and used it as the sole means of treating wastewater. Employees soon complained to Hong that the system was becoming clogged, and soon

thereafter Hong’s employees began discharging untreated wastewater into the sewer

system in violation of the company’s discharge permits and in the presence of Hong

on several occasions. Certainly Hong’s actions that resulted in untreated wastewater

being dumped into the sewer system were not the result of an ‘‘accident.’’ Hong,

knowing full well that the treatment system he installed was insufficient for the use

he used it for, did not act as a reasonable person would have acted in a similar situation. Indeed, while Hong’s actions could be said to be knowing, warranting a felony

prosecution under the Clean Water Act, at a minimum Hong failed to exercise the

care to prevent untreated wastewater from being discharged into the sewer system

that a reasonable person would have taken in the same situation.

Essentially, Hanousek and Hong do not represent a sea change in negligent Clean

Water Act prosecutions; rather, they represent the need for Section 309 to punish

the egregious behavior of these defendants whose negligent actions caused environmental damage.

Other noteworthy negligent Clean Water Act prosecutions that involved the discharge of large quantities of petroleum products illustrate further that Federal prosecutors have reserved Section 309 for egregious conduct. For example, in the case

of the Exxon Valdez oil spill, Exxon of course did not want to lose millions of gallons

of product and to spend many times more to remediate the environment. But the

‘‘negligent’’ event that caused one of the worst environmental catastrophes in this

country was Exxon’s decision to allow a captain with a history of alcohol abuse to

navigate the barge in the Prince William Sound. The Colonial Pipeline spill in the

Reedy River is another example of an unwanted, tremendous loss of valuable product and an expensive clean-up that was caused by the ‘‘negligent’’ failure to repair

a known weak spot in the pipeline that was carrying the petroleum product. Colonial Pipeline, anxious to move product quickly, yet knowing the risks of over-pressuring the pipeline, made the decision to take the risk and move the petroleum

product which the pipeline could not withstand, causing the pipeline to burst and

spilling nearly one million gallons of products. If the proposed statutory language

were part of Section 309, not one of these cases could have been prosecuted for

Clean Water Act negligence because no one was injured nor put at risk of death

or serious bodily injury.

Just as there is no basis for the argument that recent case law has somehow

changed the standard for Clean Water Act criminal negligence, it is similarly not

credible for industry to argue the need for this statutory amendment on the basis

that Section 309 impedes NSTB investigations. It is highly unlikely that the rewrit-
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4The emphasis placed on ‘‘accident’’ is obvious given the fact that in the context of oil spills

the pollutant discharged into the—water petroleum product—has great value and no petroleum

company or transporter of petroleum products want to spill valuable product, unlike other Clean

Water Act prosecutions, such as Hong where the discharge is not a product but a waste. But

the events that are subject to prior negligence Clean Water Act prosecutions are far from ‘‘accidents’’ as that word is commonly used. Merely because the defendant in an oil spill prosecution

never intended nor wanted to discharge the oil does not obviate the facts that lead up to the

spill that constitute a deviation from the care that a reasonable person would have exercised

in a similar circumstance.

ing of Section 309 will change a person’s decision not to speak to the government

after a catastrophic environmental event. Other penalties might still attach to the

conduct that caused the catastrophe, and the uncertainty allegedly created now by

Section 309’s negligence provision will still be present based on the threat of other

prosecutions, such as prosecution for knowing Clean Water Act violations or obstruction of justice, just to name a couple.

Moreover, the oil industry’s proposed statutory amendment to Section 309 to allow

criminal negligence prosecutions only when the result of the violation involves injury or risk of injury to people certainly would not create, in their own words, ‘‘an

incentive to cooperate in bringing forward information on accident causes’’, the goal

the oil industry claims it seeks to achieve. To the contrary, with its statutory revision, in the most serious of cases when the need for prompt and complete information (i.e., when people are injured or in serious risk of injury) is most important,

workers who fear criminal prosecution might assert their 5th Amendment rights,

the very right industry fears impeding NSTB investigations under the current

version of Section 309. In fact, this concern is really no concern at all, because in

a case in which a criminal investigation is proceeding simultaneously with a NSTB

investigation, and there is a necessity to speak to a worker who has asserted his

5th Amendment right that trumps the criminal investigation, the government can

immunize that worker and compel his cooperation in the NSTB process. There simply is no reason to amend the negligence provision of Section 309 out of fear of what

might happen in a future NSTB investigation in which the Department of Justice

is investigating a matter at the same time the NSTB is conducting a safety investigation, an event that has occurred many times in the past without conflict.

Supporters of the legislative amendment also emphasize that ‘‘accidents’’ should

not be criminally penalized,4 and history shows that the Department of Justice has

not used Section 309 to ‘‘turn clean-up efforts and accident assessment procedures

into legal minefields.’’ Ironically, supporters of this legislation suggest amending the

language of Section 309 to allow criminal prosecutions following an ‘‘accident’’ only

when such accidents involve injury or risk of injury to the public. Yet if the real

concern is prompt and open cooperation with NSTB investigations following an oil

spill, for example, wouldn’t the need for a prompt and open NSTB investigation be

most important in cases where the public is placed at risk? Why under these circumstances are the proponents of this legislation not concerned with employees’ reluctance to speak because of fear of prosecution? The transparency of their argument is evident: this provision is intended to shield the oil industry from criminal

CWA negligence for oil spills because most CWA negligence prosecutions result in

extreme environmental damage, but not injury to the public.

Finally, there is a practical reason for rejecting oil industry’s proposed statutory

amendment to Section 309. The negligence provision of Section 309 oftentimes benefits defendants by giving prosecutors a lesser offense to which defendants can plead

guilty. Without this provision, prosecutors are left only with charging defendants

with a Clean Water Act felony for knowing violations of the Act. Thus, in Hong, for

example, where there appears to have been ample evidence of knowing conduct,

prosecutors would have no discretion to consider a misdemeanor charge for his conduct if the oil industry prevails and, instead, could only charge him with a Clean

Water Act felony. Surely this is a result that not even the industry advocating for

change desires.
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