    [Senate Hearing 108-362]
    [From the U.S. Government Publishing Office]

                                                            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

                                     ______

                        U.S. GOVERNMENT PRINTING OFFICE
    92-384                      WASHINGTON : 2005
    _____________________________________________________________________________
    For Sale by the Superintendent of Documents, U.S. Government Printing Office
    Internet: bookstore.gpo.gov  Phone: toll free (866) 512-1800; (202) 512�091800
    Fax: (202) 512�092250 Mail: Stop SSOP, Washington, DC 20402�090001

                   COMMITTEE ON ENVIRONMENT AND PUBLIC WORKS

                          one hundred eighth congress
                                 first session

                      JAMES M. INHOFE, Oklahoma, Chairman
    JOHN W. WARNER, Virginia             JAMES M. JEFFORDS, Vermont
    CHRISTOPHER S. BOND, Missouri        MAX BAUCUS, Montana
    GEORGE V. VOINOVICH, Ohio            HARRY REID, Nevada
    MICHAEL D. CRAPO, Idaho              BOB GRAHAM, Florida
    LINCOLN CHAFEE, Rhode Island         JOSEPH I. LIEBERMAN, Connecticut
    JOHN CORNYN, Texas                   BARBARA BOXER, California
    LISA MURKOWSKI, Alaska               RON WYDEN, Oregon
    CRAIG THOMAS, Wyoming                THOMAS R. CARPER, Delaware
    WAYNE ALLARD, Colorado               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             BOB GRAHAM, Florida
    LISA MURKOWSKI, Alaska               MAX BAUCUS, Montana
    CRAIG THOMAS, Wyoming                RON WYDEN, Oregon
    WAYNE ALLARD, Colorado               HILLARY RODHAM CLINTON, New York

                                      (ii)

                                C O N T E N T S

                                  ----------
                                                                       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

                              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

                          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 Government 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.
        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 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.
        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 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:]

           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-
    the-mind 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.
        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.
        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.
        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 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.
        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?
        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.
        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 stove-piping. 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 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:

    ------------------------------------------------------------------------

    ------------------------------------------------------------------------
    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:

    ------------------------------------------------------------------------
                                                       Annual loading (1,000
                       Parameter                         metric tons/yr)

    ------------------------------------------------------------------------
    Total Suspended Solids.........................             4,000-64,000
    Phosphorus.....................................                     9-80
    Oil and Grease.................................                200-2,000
    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\
    ---------------------------------------------------------------------------
        \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.

        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 point-source side.
        We could do a TMDL using strictly lump sum allocations to
    nonpoint sources. The problem is that you would not know if it
    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 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 Non-Compliance (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?

                            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 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 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 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 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 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, 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.
        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 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 watershed, 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.
        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 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 delegating 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.
        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 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.
        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.
        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 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 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. 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, 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 non-intentional 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.
        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 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.
        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.
        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.
        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.''
        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 criminalization 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 decision 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.
        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 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 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 regulator 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 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 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.
        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.
        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 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.
        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.
        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, developers, 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 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.

        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 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 during 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 long-term 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 imposing 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 Sec. 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 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
    in-place 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.

        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
    Sec. 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. Sec. 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. Sec. 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 Sec. Sec. 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 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 Sec. 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
    Sec. 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 lead count being under the Clean
    Water Act for negligent discharge of a pollutant without a permit in
    violation of 33 U.S.C. Sec. 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
    Sec. 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 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?
        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 long-term 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 quality-based 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) 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 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. Sec. 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 presentations 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 1\1/2\ 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-in-interest, 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 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.
                                     ______

      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.
                                     ______

                          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 on-going 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.
     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
    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.
        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 cost-effective 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 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 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.
    [GRAPHIC] [TIFF OMITTED] T2384.001

        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.

    [GRAPHIC] [TIFF OMITTED] T2384.002

        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.

    [GRAPHIC] [TIFF OMITTED] T2384.003

        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.

    [GRAPHIC] [TIFF OMITTED] T2384.004

        The constructed wetland will remove pollutants upstream of this
    stormwater outfall, which contributes to beach closures just downstream
    at the popular Oakledge Park beach.

    [GRAPHIC] [TIFF OMITTED] T2384.005

    [GRAPHIC] [TIFF OMITTED] T2384.006

    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 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.

    [GRAPHIC] [TIFF OMITTED] T2384.007

        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 cost $300,000, will provide capacity for
    development and ensure that pollutants stay out of Centennial Brook and
    Lake Champlain.

    [GRAPHIC] [TIFF OMITTED] T2384.008

                                     ______

      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 Council 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.

                         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           $595,000     $610,000     $630,000     $650,000     $670,000     $690,000
     Collection & Street Sweeping.....
    Operation & Maintenance-Collection     $150,000     $802,000     $826,000     $851,000     $877,000     $903,000
     System...........................
    Planning and Management...........  ...........     $170,000     $170,000     $170,000     $170,000     $170,000
    Capital Projects-Engineering        ...........     $300,000     $300,000     $300,000  ...........  ...........
     Studies..........................
    Capital Projects-As Needed System      $236,000      250,000     $260,000     $270,000     $280,000     $290,000
     Repair Replacement...............
    Capital Projects-Engineering        ...........     $305,000  ...........  ...........     $500,000     $500,000
     Projects.........................
      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         $206,000   $2,470,000   $2,470,000   $2.470,000   $2,470,000   $2,470,000
     Fee).............................
    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 ``non-distressed'' 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;
            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

                                  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. How these cost-cutting
    measures affect overall employment in the short- and long-term 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 Corporate 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-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.
                                     ______

                                    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.
        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. 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.

    [GRAPHIC] [TIFF OMITTED] T2384.009

        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 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:
         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)--system-wide 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.

        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 wet-weather 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 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 state-developed
    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
    Sec. 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 Sec. 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 Sec. Sec. 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.''
        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 market-based 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 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.
        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 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. Sec. 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.
    Sec. 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.

     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 clean-up
    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 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. Sec. 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. Sec. 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.
    Sec. 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 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 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.
    Sec. 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
    uncertainty 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. Sec. Sec. 122.2, 230.3(s) and 33 C.F.R. Sec. 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 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 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 pre-1972 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 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. Sec. 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. . .''
         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 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 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 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 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 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.
        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
    ---------------------------------------------------------------------------
        \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.
    ---------------------------------------------------------------------------
        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.

                                  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\
    ---------------------------------------------------------------------------
        \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.
    ---------------------------------------------------------------------------
        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\
    ---------------------------------------------------------------------------
        \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.
    ---------------------------------------------------------------------------
        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:
    ---------------------------------------------------------------------------
        \12\ Joel A. Mintz, Enforcement at the EPA: High States and Hard
    Choices (1995).
    ---------------------------------------------------------------------------
         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.
        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\
    ---------------------------------------------------------------------------
        \13\ OECA Analysis, supra note 10, at 6.
        \14\ Id. at 7.
    ---------------------------------------------------------------------------
        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 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\
    ---------------------------------------------------------------------------
        \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.
    ---------------------------------------------------------------------------
         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\
    ---------------------------------------------------------------------------
        \18\ Id. at 6.
    ---------------------------------------------------------------------------
                      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.
    ---------------------------------------------------------------------------
        \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.
    ---------------------------------------------------------------------------
        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.
    ---------------------------------------------------------------------------
        \22\ H.R. 3948, 103d Cong. (1994).
        \23\ H.R. 3948, 103d Cong. Sec. 314 (1994).
        \24\ 140 Cong. Rec. 353 (1994)(remarks of Rep. Mineta).
    ---------------------------------------------------------------------------
                             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\
    ---------------------------------------------------------------------------
        \25\ Water Trading Policy, supra note 15, at 6.
        \26\ Id.
        \27\ Sen. Rpt. 92-414, at 3675 (Oct. 28, 1971).
    ---------------------------------------------------------------------------
        NPDES permits, in addition to technology limits, must also include
    water quality-based 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 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.
    ---------------------------------------------------------------------------
        \28\ 33 U.S.C. Sec. 1311 (b)(1)(C).
    ---------------------------------------------------------------------------
        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.
    ---------------------------------------------------------------------------
        \29\ Water Trading Policy, supra note 15, at 5.
    ---------------------------------------------------------------------------
                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, TMDLs\30\ 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.
    ---------------------------------------------------------------------------
        \30\ 33 U.S.C. Sec. 1313(d)(3).
    ---------------------------------------------------------------------------
        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.
    ---------------------------------------------------------------------------
        \31\ Water Trading Policy, supra note 15, at 5.
    ---------------------------------------------------------------------------
        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 TOXICS\32\

    ---------------------------------------------------------------------------
        \32\ Id. at 4.
    ---------------------------------------------------------------------------
        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 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.
    ---------------------------------------------------------------------------
        \33\ USATODAY, USATODAY.com, Anita Manning, If you Eat a lot of
    Fish, you may Run a Health Risk,  (Nov. 4, 2002).
    ---------------------------------------------------------------------------
        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.
    ---------------------------------------------------------------------------
        \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  (last updated Jan. 13,
    2003).
    ---------------------------------------------------------------------------
        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.

                                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.
    ---------------------------------------------------------------------------
        \35\ Water Trading Policy, supra note 15, at 8.
    ---------------------------------------------------------------------------
         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.
    ---------------------------------------------------------------------------
        \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].
        \39\Richard 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).
        \40\ Steinzor Testimony, supra note 38.
    ---------------------------------------------------------------------------
        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.
    ---------------------------------------------------------------------------
        \41\ Water Trading Policy, supra note 15, at 10.
        \42\ Id. at 11.
    ---------------------------------------------------------------------------
        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 run-off 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 information 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.
    ---------------------------------------------------------------------------
        \43\ Id. at 10.
    ---------------------------------------------------------------------------
        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
            [GRAPHIC] [TIFF OMITTED] T2384.010

                               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 recovered 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.
    [GRAPHIC] [TIFF OMITTED] T2384.011

        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 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--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.

    [GRAPHIC] [TIFF OMITTED] T2384.012

    [GRAPHIC] [TIFF OMITTED] T2384.013

    [GRAPHIC] [TIFF OMITTED] T2384.014

    [GRAPHIC] [TIFF OMITTED] T2384.015

    [GRAPHIC] [TIFF OMITTED] T2384.016

    [GRAPHIC] [TIFF OMITTED] T2384.017

    [GRAPHIC] [TIFF OMITTED] T2384.018

    [GRAPHIC] [TIFF OMITTED] T2384.019

    [GRAPHIC] [TIFF OMITTED] T2384.020

    [GRAPHIC] [TIFF OMITTED] T2384.021

    [GRAPHIC] [TIFF OMITTED] T2384.022

    [GRAPHIC] [TIFF OMITTED] T2384.023

    [GRAPHIC] [TIFF OMITTED] T2384.024

    [GRAPHIC] [TIFF OMITTED] T2384.025

    [GRAPHIC] [TIFF OMITTED] T2384.026

    [GRAPHIC] [TIFF OMITTED] T2384.027

    [GRAPHIC] [TIFF OMITTED] T2384.028

    [GRAPHIC] [TIFF OMITTED] T2384.029

    [GRAPHIC] [TIFF OMITTED] T2384.030

    [GRAPHIC] [TIFF OMITTED] T2384.031

    [GRAPHIC] [TIFF OMITTED] T2384.032

     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 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 counter-productive 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.
        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 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 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 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 second-string 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\

        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 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 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 command-and-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.
        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).
        \2\ William 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).
        \3\ William H. Rodgers Jr., Environmental Law 248 (2d ed. 1994).
        \4\ 33 U.S.C.A. Sec. Sec. 1311(a), 1362(12) (West 2003).
        \5\ San Francisco BayKeeper v. Whitman, 297 F.3d 877, 880 (9th Cir.
    2002).
        \6\ See Id.
        \7\ Jim Vergura and Ron Jones, The TMDL Program: Land Use and Other
    Implications, 6 Drake J.Agric. L. 317, 320 (2001) (citations omitted).
        \8\ Kalman Goldberg, the Market System 57 (2000).
        \9\ Louis Kaplan and Steven Shavell, Fairness Versus Welfare, 114
    Harv. L. Rev. 961, 977 (2001).
        \10\ Paul 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.'')
        \11\ David 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).
        \12\ Statement 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).
        \13\ Michael 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).
        \14\ Debbie 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.
        \17\ See 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 . . .'').
        \18\ Shosteck, Pronsolino supra note 14, at 330.
        \19\ See, 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).
        \20\ See 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 Economics 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).
        \26\ See 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).
        \28\ See 68 Fed. Reg. at 1612.
        \29\ See, 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).
        \30\ The 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
       Section, 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.
    ---------------------------------------------------------------------------
        \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.
    ---------------------------------------------------------------------------
        The recent interest in this statutory amendment appears to be the
    prosecutions of two negligent CWA cases, United States v. Hanousek\2\
    and United States v. Hong\3\. 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 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.
    ---------------------------------------------------------------------------
        \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).
    ---------------------------------------------------------------------------
        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 rewriting 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.
    ---------------------------------------------------------------------------
        \4\ The 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.
    ---------------------------------------------------------------------------
        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.

    [GRAPHIC] [TIFF OMITTED] T2384.033

    [GRAPHIC] [TIFF OMITTED] T2384.034

    [GRAPHIC] [TIFF OMITTED] T2384.035

    [GRAPHIC] [TIFF OMITTED] T2384.036

    [GRAPHIC] [TIFF OMITTED] T2384.037

    [GRAPHIC] [TIFF OMITTED] T2384.038

    [GRAPHIC] [TIFF OMITTED] T2384.039

    [GRAPHIC] [TIFF OMITTED] T2384.040

    [GRAPHIC] [TIFF OMITTED] T2384.041

    [GRAPHIC] [TIFF OMITTED] T2384.042

    [GRAPHIC] [TIFF OMITTED] T2384.043

    [GRAPHIC] [TIFF OMITTED] T2384.044

    [GRAPHIC] [TIFF OMITTED] T2384.045

    [GRAPHIC] [TIFF OMITTED] T2384.046

    [GRAPHIC] [TIFF OMITTED] T2384.047

    [GRAPHIC] [TIFF OMITTED] T2384.048

    [GRAPHIC] [TIFF OMITTED] T2384.049

    [GRAPHIC] [TIFF OMITTED] T2384.050

    [GRAPHIC] [TIFF OMITTED] T2384.051

    [GRAPHIC] [TIFF OMITTED] T2384.052

    [GRAPHIC] [TIFF OMITTED] T2384.053

    [GRAPHIC] [TIFF OMITTED] T2384.054

    [GRAPHIC] [TIFF OMITTED] T2384.055

    [GRAPHIC] [TIFF OMITTED] T2384.056

    [GRAPHIC] [TIFF OMITTED] T2384.057

    [GRAPHIC] [TIFF OMITTED] T2384.058

    [GRAPHIC] [TIFF OMITTED] T2384.059

    [GRAPHIC] [TIFF OMITTED] T2384.060

    [GRAPHIC] [TIFF OMITTED] T2384.061

    [GRAPHIC] [TIFF OMITTED] T2384.062

    [GRAPHIC] [TIFF OMITTED] T2384.063

    [GRAPHIC] [TIFF OMITTED] T2384.064

    [GRAPHIC] [TIFF OMITTED] T2384.065

    [GRAPHIC] [TIFF OMITTED] T2384.066

    [GRAPHIC] [TIFF OMITTED] T2384.067

    [GRAPHIC] [TIFF OMITTED] T2384.068

    [GRAPHIC] [TIFF OMITTED] T2384.069

    [GRAPHIC] [TIFF OMITTED] T2384.070

    [GRAPHIC] [TIFF OMITTED] T2384.071

    [GRAPHIC] [TIFF OMITTED] T2384.072

    [GRAPHIC] [TIFF OMITTED] T2384.073

    [GRAPHIC] [TIFF OMITTED] T2384.074

    [GRAPHIC] [TIFF OMITTED] T2384.075

    [GRAPHIC] [TIFF OMITTED] T2384.076

    [GRAPHIC] [TIFF OMITTED] T2384.077

    [GRAPHIC] [TIFF OMITTED] T2384.078

    [GRAPHIC] [TIFF OMITTED] T2384.079

    [GRAPHIC] [TIFF OMITTED] T2384.080

    [GRAPHIC] [TIFF OMITTED] T2384.081

    [GRAPHIC] [TIFF OMITTED] T2384.082

    [GRAPHIC] [TIFF OMITTED] T2384.083

    [GRAPHIC] [TIFF OMITTED] T2384.084

    [GRAPHIC] [TIFF OMITTED] T2384.085

    [GRAPHIC] [TIFF OMITTED] T2384.086

    [GRAPHIC] [TIFF OMITTED] T2384.087

    [GRAPHIC] [TIFF OMITTED] T2384.088

    [GRAPHIC] [TIFF OMITTED] T2384.089

    [GRAPHIC] [TIFF OMITTED] T2384.090

    [GRAPHIC] [TIFF OMITTED] T2384.091

    [GRAPHIC] [TIFF OMITTED] T2384.092

    [GRAPHIC] [TIFF OMITTED] T2384.093

    [GRAPHIC] [TIFF OMITTED] T2384.094

    [GRAPHIC] [TIFF OMITTED] T2384.095

    [GRAPHIC] [TIFF OMITTED] T2384.096

    [GRAPHIC] [TIFF OMITTED] T2384.097

    [GRAPHIC] [TIFF OMITTED] T2384.098

    [GRAPHIC] [TIFF OMITTED] T2384.099

    [GRAPHIC] [TIFF OMITTED] T2384.100

    [GRAPHIC] [TIFF OMITTED] T2384.101

    [GRAPHIC] [TIFF OMITTED] T2384.102

    [GRAPHIC] [TIFF OMITTED] T2384.103

    [GRAPHIC] [TIFF OMITTED] T2384.104

    [GRAPHIC] [TIFF OMITTED] T2384.105

    [GRAPHIC] [TIFF OMITTED] T2384.106

    [GRAPHIC] [TIFF OMITTED] T2384.107

    [GRAPHIC] [TIFF OMITTED] T2384.108

    [GRAPHIC] [TIFF OMITTED] T2384.109

    [GRAPHIC] [TIFF OMITTED] T2384.110

    A[GRAPHIC] [TIFF OMITTED] T2384.111

    [GRAPHIC] [TIFF OMITTED] T2384.112

    [GRAPHIC] [TIFF OMITTED] T2384.113