    [From the U.S. Government Printing Office, www.gpo.gov]

                        United States General Accounting Office
    GAO0 7 (:0       0 ; 0   0  00Reportto the Chairman, Subcommittee on
                         versight and Investigations, Committee
           ,f;: :. f 1  on Energy and Commerce, House of
                        Representatives

    JuIe 1987          WT
                            ATER POLLUTION

                        EPA Controls Over

                        Ballast Water at Trans-
                        Alaska Pipelie Marine

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                                    U. S. -DEPARTMENT OF COMMERCE NOAA
                                    COASTAL SERVICES CENTER
                                     2234 SOUTH HOBSON AVENUE
                                    CHARLESTOWN, SCK  29405-2 413

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                                       United States
                                       General Accounting Office
    :GAO                              Washington, D.C. 20548

                                       Resources, Community, and
                                       Economic Development Division
                                       B-221467

                                       June 18, 1987

                                       The Honorable John D. Dingell
                                       Chairman, Subcommittee on Oversight
                                          and Investigations
                                       Committee on Energy and Commerce
                                       House of Representatives

                                       Dear Mr. Chairman:

                                       As requested by your letter of July 29, 1985, and as subsequently
                                       agreed to with your office, we obtained certain information on the Envi-
                                       ronmental Protection Agency's (EPA) controls over pollutants discharged
                                       into Valdez Bay by the Alyeska Pipeline Service Company (Alyeska) at
                                       its oil pipeline terminal at Valdez, Alaska. Alyeska operates a water
                                       treatment plant at the terminal to treat ballast water, oily sea water that
                                       is carried in oil tankers to provide stability, before it is discharged into
                                       the bay. The Clean Water Act requires plants like Alyeska's to have per-
                                       mits regulating the types and amounts of pollutants that can be
                                       discharged.

                                       On October 22, 1986, we briefed your office on the information we
                                       obtained. As agreed, this report contains the information discussed at
                                       that briefing, information requested at the briefing by your office, and
                                       information on events that have occurred since that meeting. Specifi-
                                       cally, we obtained information on (1) why EPA has not issued a new
                                       water discharge permit with updated pollution controls for Alyeska's
                                       ballast water treatment (BWT) plant and (2) whether EPA has effectively
                                       monitored and enforced the conditions of Alyeska's existing permit.

                                        In summary, we found that EPA did not issue the new permit on time in
                                        1983 because of higher priority work, staffing limitations, and the
                                        absence of funds to hire technical expertise. In 1985, however, EPA
                                       began devoting more resources to developing a new permit and expects
                                       to issue a draft permit for public comment during the summer of 1987.
                                        In the meantime, Alyeska has operated under an extension of its old
                                        permit whose conditions may be less stringent than the new permit will
                                        require. We also found that, prior to 1984, EPA monitored Alyeska's
                                        permit and identified instances of noncompliance with permit condi-
                                        tions, but its enforcement actions were limited to discussions and corre-
                                        spondence with Alyeska. In contrast, since 1984 EPA has begun taking
                                        enforcement actions as well as investigating allegations of other envi-
                                        ronmental problems. Although, in our opinion, it should have acted

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                                        B-221467

                                        sooner, EPA'S actions since 1984 indicate that it is taking steps to resolve
                                        the environmental concerns raised about the Alyeska facility.

    Background                          To ensure that polluted wastewater is treated before it is discharged
                                        into the nation's waterways, the Congress enacted the Federal Water
                                        Pollution Control Act Amendments of 1972 (33 U.S.C. 1251, et seq.),
                                        known as the Clean Water Act. The act requires every facility dis-
                                        charging wastewater to obtain a permit, either from the state or from
                                        EPA, that limits the amounts and types of pollutants the facility may dis-
                                        charge. Permits can be issued for up to 5 years. Permit conditions and
                                        limits are set by the "permitting authority." EPA'S Region X, in Seattle,
                                        Washington, is the authority responsible for issuing and enforcing Aly-
                                        eska's permit.

                                        The permitting authority also monitors the permittees to determine
                                        whether they are complying with their permit requirements. Permittees
                                        are required to analyze their wastewater discharges and report monthly
                                        to the permitting authority on the amount and type of discharges. The
                                        permitting authorities also inspect all major permittees at least once a
                                        year to determine the accuracy of the permittees' reports and to ensure
                                        that the facility is in compliance with its permit requirements. When a
                                        facility violates its permit, the permitting authority decides what
                                        enforcement action, if any, it should take by evaluating the data to
                                        determine the severity of the violation, the compliance history of the
                                        permittee, and relevant facts and legal provisions involved.

    EPA's Resource                      As of April 21, 1987, EPA was almost 4 years late in completing action on
                                        Alyeska's application for a new permit. In the interim, Alyeska's 1980
    Limitations Delay New    permit was extended by EPA and still serves as the plant's discharge
    Permit                              permit. EPA limited Alyeska's 1980 permit to a 3-year period because it
                                        planned to reissue the permit in time to meet the Clean Water Act's 1983
                                        deadline for imposing pollutant limits based on more advanced treat-
                                        ment technologies. The new limits were expected to be more stringent
                                        than the 1980 limits. In order to reissue the permit, EPA needed various
                                        technological, economic, and water quality data to set permit conditions
                                        and limitations on the types and amounts of pollutants that could be
                                        discharged into Valdez Bay. EPA also needed a permit writer with the
                                        technical qualifications to analyze these data and develop the permit.

                                        As required by its 1980 permit, Alyeska provided studies related to such
                                        data to EPA and the Alaska Department of Environmental Conservation

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                                        B-221467

                                        (ADEC) in 1982. However, EPA and ADEC were not satisfied that the data
                                        contained in these studies would enable them to set proper pollutant
                                        limits. Because of staffing problems and higher priorities, EPA officials
                                        told us they did not have a permit writer with the qualifications to
                                        follow up on the needed studies at the time, nor funds to hire an expert
                                        to help develop a specific permit for the Alyeska facility.

                                        In 1985 EPA began devoting more resources to developing a new permit.
                                        EPA assigned a permit writer at that time, and since then data have been
                                        collected on technologies available for treating ballast water pollutants,
                                        costs and benefits of such technologies (including capital and operating
                                        costs), and the water quality in Valdez Bay. EPA is currently assessing
                                        the data developed from these studies and plans to issue a draft permit
                                        for the Alyeska facility in the summer of 1987. EPA anticipates that this
                                        permit may contain more stringent limits for pollutants now regulated
                                        by the permit and may set limits on additional pollutants not currently
                                        regulated by the permit.

    EPA Has Begun to                  Since the August 1977 inception of BWT operations by Alyeska through
                                         the end of calendar year 1983, EPA has monitored the BWT plant opera-
    Actively Enforce                  tions by reviewing Alyeska's discharge monitoring reports and con-
    Permit Conditions                 ducting annual inspections. From its monitoring, EPA identified a number
                                         of instances of noncompliance with permit limits, as well as late sub-
                                        mittal of several discharge monitoring reports. While some of these
                                         instances of noncompliance were considered by EPA to be minor, others,
                                         such as some of the BTX violations,, were considered to be significant.

                                         In response to these instances of noncompliance, EPA obtained informa-
                                         tion on the facts and circumstances surrounding the noncompliance
                                         through discussions and correspondence with Alyeska. EPA took no
                                         formal enforcement action requiring Alyeska to achieve compliance
                                         during this period. EPA officials told us they did not take formal enforce-
                                         ment action because (1) not all of the violations warranted an enforce-
                                         ment action, (2) the region's limited resources were allocated to other
                                         priority areas, and (3) the region was following EPA'S policy (in 1981 and
                                         1982) of working with the violators to bring them into compliance
                                         rather than penalizing them.

                                         1BTX are toxic or hazardous pollutants consisting of benzene, toluene, ethlybenzene, and xylene. The
                                         amount of BTX that can be discharged is limited by Alyeska's permit.

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                                        B-221467

                                        However, according to one EPA official responsible for the Alyeska
                                        permit in 1981 and 1982, EPA should have inspected the BWT facility,
                                        given the number of noncompliances with BTX limits. EPA can make
                                        inspections when it suspects a problem. EPA knew that (1) an April 15,
                                        1981, EPA annual inspection identified a difference, though not consid-
                                        ered significant, between EPA'S and Alyeska's sample analyses of the
                                        amount of BTX discharged; (2) BTX monthly average or daily maximum
                                        permit limits were exceeded 25 times during the 7-month period-
                                        October 1981 through April 1982; and (3) Alyeska had investigated the
                                        excessive BTX discharges and could find no explanation for the problem.
                                        However, EPA officials said they did not have the resources for normal
                                        operations, let alone an additional inspection, at Alyeska at that time.
                                        Available resources in Alaska were assigned to higher priority work,
                                        particularly writing permits for pulp mills, mines, and seafood
                                        processors.

                                        Beginning in calendar year 1984, EPA officials became increasingly con-
                                        cerned about Alyeska's continued noncompliance with BTX permit limits
                                        and other environmental issues that began to surface regarding the
                                        operations of the BWT facility. Since January 1985 EPA has taken a series
                                        of enforcement and other actions to bring the plant into compliance with
                                        permit requirements and initiated an investigation of allegations of envi-
                                        ronmental problems related to the operations of the plant made by a
                                        private citizen.

                                        To date, EPA has taken two formal enforcement actions ordering Alyeska
                                        to stop recycling sludges through the plant. Alyeska has responded to
                                        these enforcement actions. In addition, in April 1986 EPA issued a
                                        warning letter requiring Alyeska to comply with its BTX permit limits.
                                        Subsequently, Alyeska informed EPA that it had made changes in its
                                        treatment process for BTX. Since April 1986 Alyeska has reported that it
                                        is in compliance with its BTX limits. EPA has also used the administrative
                                        authority provided under the Toxic Substances Control Act to pursue
                                        information related to the allegations made on the treatment plant's
                                        operations. EPA officials told us that they plan to assess the information
                                        provided by Alyeska and complete their investigation of the allegations
                                        before deciding whether to take further enforcement action.

    Conclusions                        EPA is nearly 4 years late in completing action on Alyeska's new permit.
                                        The actual environmental effects of this delay are uncertain. However,
                                        if the new permit has more stringent limits for pollutants currently reg-
                                        ulated and/or new limits for pollutants not currently regulated, which is

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                                       B-221467

                                       possible according to EPA'S permit writer, there may be two potential
                                       effects. First, the BWT facility may have discharged more pollutants over
                                       the past 4 years than would have been allowed by the new permit. The
                                       effects on marine life and water quality of such discharges are difficult
                                       to determine and are currently being assessed as part of the permit reis-
                                       suance process. Second, Alyeska has not had to incur the capital
                                       expenditures necessary to enable it to implement more advanced tech-
                                       nologies and associated operating costs.

                                       The information available to EPA on noncompliance with BTX limits
                                       during 1981 and 1982 should have prompted EPA to take enforcement
                                       actions requiring Alyeska to comply with its BTX limits or to inquire fur-
                                       ther into this problem. At a minimum, EPA should have conducted an
                                       inspection to evaluate the quality and reliability of Alyeska's self-moni-
                                       toring activities.

                                       The enforcement and other actions EPA has taken since 1985 indicate
                                       that it is taking steps to bring the Alyeska facility into compliance with
                                       its permit requirements and to resolve the allegations raised about the
                                        facility. However, since enforcement actions have not been finalized and
                                       the investigation into the allegations is ongoing, it is too early to deter-
                                       mine the appropriateness of EPA'S enforcement actions.

                                        EPA should have acted sooner to develop a new permit and take enforce-
                                        ment actions. Until the new permit is issued, the enforcement actions
                                        finalized, and the environmental allegations resolved, questions about
                                        appropriate permit limits and the protection of marine life and water
                                        quality in Valdez Bay will remain unanswered. Recently, EPA has
                                        devoted more resources to developing the permit, is currently assessing
                                        the information it obtained in response to enforcement actions, and is
                                        pursuing an investigation of the private citizen's allegations. While we
                                        are not making any recommendations at this time, we believe EPA needs
                                        to resolve the questions surrounding the Alyeska facility as soon as
                                        possible.

    Scope and Methodology   We performed our work between September 1, 1985, and February 28,
                                        1987. We interviewed officials and collected information at the fol-
                                        lowing locations: EPA headquarters, EPA'S Seattle Regional Office, EPA'S
                                        Alaska office, the ADEC, and Alyeska's Anchorage office and its BWT
                                        facility in Valdez, Alaska.

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    B-221467

    To determine why EPA had not issued a new permit, we interviewed
    appropriate EPA and Alyeska officials and reviewed the documentation
    in the permit files. To determine whether EPA effectively monitored and
    enforced Alyeska's BWT permit, we reviewed the permit, Alyeska's dis-
    charge monitoring reports, EPA's inspection reports, correspondence
    between Alyeska and EPA, EPA enforcement actions, and relevant
    documents.

    We have discussed the information we obtained with EPA headquarters
    and Seattle Regional Office officials and with Alyeska officials and have
    included their comments where appropriate. They generally agreed with
    the facts we presented. However, in accordance with your request, we
    did not obtain agency comments on a draft of this report. This review
    was conducted in accordance with generally accepted government
    auditing standards.

    Unless you publicly release its contents earlier, we will make this report
    available 30 days after the date of this letter. At that time copies of the
    report will be sent to appropriate congressional committees; the Admin-
    istrator, EPA; the Director, Office of Management and Budget; and other
    interested parties; and we will make copies available to others upon
    request.

    If you have any questions about this report, please call me at (202) 275-
    5489. Other major contributors to this report are listed in appendix V.

    Sincerely yours,

    Hugh J. Wessinger
    Senior Associate Director

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    Page 7                         GAO/RCED-87-118 Controls Over Ballast Water Treatment

    Contents

    Letter                                                                                                   i

    Appendix I:                                                                                             10
    Background Permit Needed to Discharge Wastewater                                                        10
                                     Monitoring Compliance 12
                                     Enforcing Compliance                                                14
                                     Objectives, Scope, and Methodology                                  15

    Appendix II:                                                                                            17
    EPA's Resource                     1980 Permit Limits Still Apply                                       17
                                     Initial Efforts to Develop Permit Unsuccessful                      17
    Limitations Delay New    Region X's Current Permit Development Efforts                                  22
    Permit                             Effects of Delayed Permit Issuance Uncertain                         26

    Appendix III:                                                                                           28
    EPA Has Begun to                   Monitoring and Enforcement, 1977-83                                  28
    Actively Enforce                   Monitoring and Enforcement, 1984 to October 1986                     34
    Alyeska's Permit
    Requirements

    Appendix IV:                                                                                            40
    Status of Actions
    Required of Alyeska
    Under Compliance
    Orders as of February
    28, 1987

    Appendix V:                                                                                             42
    Major Contributors to              Resources, Community, and Economic Development                       42
                                         Division, Washington, D.C.
                                     Seattle Regional Office                                             42

    Tables                             Table 111.1: Alyeska's Permit Limits                                 29

                                     Page 8                     GAO/RCED-87-118 Controls Over Ballast Water Treatment

    Contents

    Table III.2: Compliance Inspections for Alyeska BWT               29
        Plant
    Table III.3: Summary of Violations Reported on DMRs,              30
        1977-83
    Table III.4: Actions Taken by Region X                            36

    Abbreviations

    ADEC    Alaska Department of Environmental Conservation
    BAT      best available technology
    BCT      best conventional technology
    BTX      benzene, toluene, xylene, and ethlybenzene
    BWT      ballast water treatment
    DMR      discharge monitoring report
    EPA      Environmental Protection Agency
    NPDES    National Pollutant Discharge Elimination System
    NOAA    National Oceanic and Atmospheric Administration
    pH       A measurement of the acidity or alkalinity of a solution

    Page 9                    GAO/RCED-87-118 Controls Over Ballast Water Treatment

    Appendix I

    Background

                                        Ballast water treatment (BWT) facilities are located at ports where oil
                                        tankers take on oil for delivery to refineries. Oil tankers discharge
                                        wastewater, used as ballast enroute to the port, into the BWT facilities to
                                        be treated before it is returned to the sea. The BWT facility treats the
                                        wastewater by separating the oil and water that have become mixed in
                                        the tankers' holds where it was used as ballast. The separated oil is
                                        retained and loaded with other crude oil' onto tankers. The remaining
                                        water is further treated to meet permit limits set by the Environmental
                                        Protection Agency (EPA) and the state before it is discharged into the
                                        sea.

                                        The BWT facility at Valdez, Alaska, is one of the largest in the world.
                                        Valdez is both a marine port and the terminus for the Trans-Alaska
                                        pipeline, which delivers millions of barrels of oil a day from Alaska's
                                        North Slope oil fields. The Alyeska Pipeline Service Company (Alyeska),
                                        a consortium of eight oil companies that own and operate the Trans-
                                        Alaska pipeline and the marine shipping facilities at Port Valdez, is
                                        responsible for ensuring that the BWT facility meets its legal
                                        requirements.

                                        To ensure that polluted wastewater is treated before it is discharged
                                        into the nation's waterways, the Congress enacted the Federal Water
                                        Pollution Control Act Amendments of 1972 (33 U.S.C. 1251, et seq.),
                                        known as the Clean Water Act. The act requires every facility dis-
                                        charging wastewater to obtain a permit, either from the state or from
                                        EPA, that limits the amounts and types of pollutants the facility may dis-
                                        charge. All permits are issued and enforced under the act's National Pol-
                                        lutant Discharge Elimination System (NPDES), which is administered by
                                        both EPA and the states. The NPDES system contains three essential oper-
                                        ational elements-permitting, compliance monitoring, and enforcement.

    Permit Needed to                    To discharge pollutants into the nation's waterways, facilities must have
                                        a permit that specifies
    Discharge Wastewater
                                     � who is allowed to discharge;
                                     * the types and amounts of pollutants to be discharged;
                                     � the conditions under which the discharge is to occur; and
                                     * the discharge location, called an outfall.

                                        Permit conditions and limits are set by the "permitting authority"-the
                                        states or EPA regional offices. EPA has delegated permitting authority to
                                        37 of the 50 states. Because Alaska has not been delegated authority for

                                        Page 10                    GAO/RCED87-118 Controls Over Ballast Water Treatment

    Appendix I
    Background

    this program, EPA'S Region X in Seattle, Washington, is the permitting
    authority responsible for issuing and enforcing Alyeska's permit.

    A company's application to discharge wastewater must include informa-
    tion about the size, nature, and location of the discharge. Company offi-
    cials are responsible for the accuracy of the information and are subject
    to fine and imprisonment for knowingly falsifying information on the
    application.

    The permitting authority reviews the application and determines
    whether the facility has had a permit before and, if so, what if anything
    has changed since the last permit was issued. Permits can be issued for
    up to 5 years.

    The permit is prepared by the permit writer who researches the pre-
    vious permit, the permitting authority's files (for information accumu-
    lated over the life of the previous permit), the application, relevant
    national standards, and the receiving waters' water quality standards.
    From these sources, the permit writer prepares specific pollutant dis-
    charge limits.

    National standards are set by EPA on the types and amounts of pollut-
    ants industries can discharge into the waterways. EPA has issued 27
    standards since 1978. EPA bases its national standards on studies it
    makes to quantify the results achieved by actual industry practices in
    limiting the amount of pollutants in their discharge. EPA was required by
    the Clean Water Act to set best available technology (BAT) economically
    achievable standards for the toxic pollutants that industry discharges
    by 1984. The BAT standards were to be designed so that the average pol-
    lutant discharge within an industry represented the best of industry
    practice. EPA was also required to set best conventional technology (BCT)
    standards for conventional pollutants (e.g., oil and grease). The BCT stan-
    dards are designed to ensure that before an industry is required to meet
    more stringent standards for conventional pollutants (industry was
    required to meet a lower standard, best practicable standard, by 1977),
    EPA must demonstrate that the costs of meeting such standards are "rea-
     sonable" in relation to the benefits derived. BAT standards are not
    required to meet this cost test.

     Permit limits can be more stringent than national standards where it is
     necessary to deal with local water quality problems. Water quality stan-
     dards, set by the states, are based on what individual bodies of water
     are used for. State standards are developed to ensure that-water quality

     Page 11                   GAO/RCED-87-118 Controls Over Ballast Water Treatment

                                          Appendix I
                                          Background

                                          and the growth and propagation of marine life are protected. For
                                          example, waters used for contact recreational purposes have to meet
                                          higher standards than waters used for non-contact recreational pur-
                                          poses in the state of Alaska.

                                          EPA develops two types of discharge permits, individual and general. An
                                          individual permit is one developed for a particular facility. General per-
                                          mits are developed for more than one facility. Facilities can be included
                                          under a general permit if they (1) involve the same or substantially sim-
                                          ilar types of operations, (2) discharge the same types of waste, (3)
                                          require the same effluent limitation or operating conditions, (4) require
                                          the same or similar monitoring, and (5) are more appropriately con-
                                          trolled under a general permit in the opinion of the head of the permit-
                                          ting authority.

                                          For some pollutants and industries, national standards have not been
                                          developed, receiving waters do not have water quality limitations, and
                                          no general permit exists. The act and EPA regulations provide that
                                          permit writers may consider the relevant facts about the facility and
                                          prepare limits in such cases on the basis of "best professional
                                          judgment."

                                          Draft permits are released for public and agency comment. Before the
                                          final permit is issued, the permittee may petition for modification of the
                                          permit on the basis of the Clean Water Act, the regulations, or technical
                                          evidence that shows that the permitting authority erred in interpreting
                                          the facts. However, once the permit is issued, it represents a legal com-
                                          mitment on the part of the permittee to discharge within its limits.

    Monitoring Compliance   The permitting authority is responsible for monitoring the permittees to
                                          determine whether they are complying with their permit requirements.
                                          The permitting authority also conducts annual inspections for all major
                                          permittees,I such as Alyeska, to review permittees' compliance
                                          activities.

                                          'EPA defines major industrial permittees on the basis of a numerical rating each facility receives. The
                                          rating considers factors such as the facility's potential for discharging toxic pollutants, the volume
                                          and type of wastewater discharged, the amount of traditional pollutants in the discharge wastewater,
                                          and whether the water receiving the discharge is used for drinldng water.

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                                        Appendix I
                                        Background

    Perrmittees Report                 The act requires permittees to monitor their wastewater discharges and
    Discharge Data                     report them in a manner dictated by the Administrator, EPA. Under EPA
                                        regulations, permittees must monitor their discharges, analyze what is
                                        being discharged, and report monthly to the permitting authority on the
                                        amount and types of discharges. To meet this self-monitoring require-
                                        ment, facilities submit discharge monitoring reports (DMR) to the permit-
                                        ting authority. The DMR is a routine compliance report summarizing the
                                        quality and/or quantity of the daily and average monthly discharges; it
                                        is usually submitted on a monthly or quarterly basis.

    Reviewing DMRs                     The permitting authority is responsible for ensuring that DMRS are
                                        received from each permittee within its jurisdiction and that they are
                                        complete. Failure to submit DMRs is a violation of the permit. The permit-
                                        ting authority may take an enforcement action against those permittees
                                        that do not submit DMRS or submit them late.

                                        When the permitting authority identifies violations of permit limits, it
                                        records the information on a violation notification form, which is used
                                        to flag violations and as a control to insure timely decision making on
                                        permittee reports. In addition to a list of violations, this form also
                                        includes a description of any extenuating circumstances, previous or
                                        repeated violations, and recommendations for action to be taken.

                                        Accurate as well as timely DMR data are critical. In 1980, EPA instituted
                                        the Discharge Monitoring Report Quality Assurance Program to enable
                                        both the permittee and EPA to determine whether the permittee's testing
                                        laboratory is correctly analyzing the discharge samples. Under this pro-
                                        gram, EPA annually provides major permittees with a sample of waste-
                                        water containing quantities of pollutants (already known to EPA), such
                                        as oil and grease, which are normally found in industrial and municipal
                                        wastewaters. The permittee's laboratory is required to analyze the sam-
                                        pies, using the analytical methods it generally employs for its self-moni-
                                        toring samples, and submit the results to EPA. The permittee is notified
                                        of the results, and if one or more of the reported values do not conform
                                        with EPA'S analysis of the sample, the permittee is advised to take reme-
                                        dial actions and report those actions to EPA. EPA may follow up on the
                                        effectiveness of such actions.

    Compliance Inspections             EPA guidance requires the permitting authorities to conduct compliance
                                        inspections for all major permittees at least once a year. These inspec-
                                        tions are used to document the accuracy and completeness of permittee

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                                        Appendix I
                                        Background

                                        self-monitoring and reporting activities and to provide documentation
                                        for enforcement actions. The permitting authority may also inspect per-
                                        mittee facilities to verify that permit requirements are being met.

                                        Two routine types of inspections may be conducted: compliance evalua-
                                        tion and compliance sampling. In both types of inspections, trained EPA
                                        inspectors, state personnel, or both, gather information that can be used
                                        to determine compliance with permit conditions, applicable regulations,
                                        and other requirements. They may review all data relating to compli-
                                        ance with the permit: files, operating logs and records, treatment
                                        processes, controls, and facilities. In addition, a compliance sampling
                                        evaluation includes taking a sample of a permittee's effluent for anal-
                                        ysis. Permitting authorities conduct either a compliance evaluation or
                                        compliance sampling inspection each year.

                                        In addition to their routine inspections, permitting authorities may con-
                                        duct a performance audit inspection. EPA policy is to use these inspec-
                                        tions when it suspects problems with permittees' self-monitoring
                                        procedures, on the basis of either the DMR data or an earlier compliance
                                        inspection. This inspection provides a more accurate and reliable
                                        method for assuring adequate quality control by a permittee over its
                                        self-monitoring activities than a compliance evaluation or compliance
                                        sampling inspection. Unlike those inspections, the primary objectives of
                                        a performance audit inspection include evaluating the permittee's sam-
                                        pling techniques, analytical procedures, quality control procedures, and
                                        acceptability of DMR data.

    Enlforcing Compliance              Enforcement responses include all actions taken in response to an identi-
                                        fied instance of noncompliance, including determining the appropriate
                                        response and following up to ensure that the permittee is back in com-
                                        pliance. When a facility violates its permit, the permitting authority
                                        decides what enforcement action, if any, it should take by evaluating
                                        the data to determine the severity of the violation, the compliance his-
                                        tory of the permittee, and relevant facts and legal provisions involved.

    Enforcement Options                 There are three levels of enforcement responses: no action, informal,
                                        and formal. A decision not to take any enforcement action may be made
                                        after reviewing the facts and circumstances surrounding a violation.
                                        Informal responses include telephone calls and letters. The letter can be
                                        limited to a notification of the violation (acknowledge letter), or it can

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                                       Appendix I
                                       Background

                                       require certain steps to be taken within specific time frames (warning
                                       letter).

                                       A formal enforcement action requires the permittee to take action to
                                       achieve compliance. These actions include:

                                     a Administrative Order. This document, authorized under section
                                       309(a)(3) of the act, contains findings of fact determined through a uni-
                                       lateral, administrative process and demands that the permittee achieve
                                       compliance with the act or with conditions of a permit that implements
                                       one of the act's sections. The document contains an order to cease the
                                       violation immediately, or a specific timetable for compliance.
                                     � Referral. If EPA does not want to use its administrative authority, or if
                                       the administrative procedures (warning letters or 309 order) do not pro-
                                       duce a satisfactory resolution, EPA can refer the case to the U.S.
                                       Attorney's Office to consider bringing a lawsuit in federal district court.

                                       EPA had no authority to administratively issue monetary fines for non-
                                       compliance until recently. Legislation reauthorizing the Clean Water
                                       Act, entitled the Water Quality Act of 1987 (Public Law 100-4), enacted
                                       by the Congress on February 4, 1987, included the authority to issue
                                       monetary fines.

    Objectives, Scope, an~~d   The Chairman, Subcommittee on Oversight and Investigations, House
                                       Committee on Energy and Commerce, requested in his letter of July 29,
    Methodology                        1985, that we examine certain matters relating to the NPDES permit for
                                       the Alyeska oil pipeline marine terminal at Valdez, Alaska. We subse-
                                       quently agreed with the Chairman's office to address these matters by
                                        focusing on

                                     * why EPA has not issued a new water discharge permit for the treatment
                                        plant, and
                                     * whether EPA has effectively monitored and enforced Alyeska's existing
                                        permit.

                                        We performed our work between September 1, 1985, and February 28,
                                        1987. We interviewed officials and collected information at the fol-
                                        lowing locations: EPA headquarters, EPA'S Seattle Regional Office (Region
                                        X), EPA'S Alaska office, the Alaska Department of Environmental Con-
                                        servation (ADEC), Alyeska's Anchorage office, and the BWT facility in
                                        Valdez.

                                        Page 15                    GAO/RCED87-118 Controls Over Ballast Water Treatment

    Appendix I
    Background

    To determine why EPA had not issued a new permit, we interviewed
    appropriate EPA and Alyeska officials and reviewed the documentation
    in the permit files. We also interviewed several consultants who assisted
    EPA in developing the permit. We also obtained studies from Alyeska
    officials conducted by their consultants on the operation of the BWT
    facility and the condition of Valdez Bay.

    To determine whether EPA effectively monitored and enforced Alyeska's
    BWT permit, we reviewed EPA'S criteria for monitoring and enforcing
    NPDES permits. We also reviewed Alyeska's permit, its DMRS, EPA'S inspec-
    tion reports, its DMR quality assurance program results, correspondence
    between Alyeska and EPA, EPA enforcement actions, and other relevant
    documents. To determine whether the permit had been violated, we
    reviewed EPA files for Alyeska letters notifying EPA of violations and
    compared the DMRS to the permit limits. We also interviewed EPA and
    Alyeska officials to discuss the violations.

    The views of EPA and Alyeska officials directly responsible for these
    matters were sought during our review and are incorporated into the
    report where appropriate. However, in accordance with the requestor's
    wishes, we did not obtain formal agency comments on a draft of this
    report. This review was conducted in accordance with generally
    accepted auditing standards.

    Page 16                   GAO/RCED-87-118 Controls Over Ballast Water Treatment

    Appendix II

    EPA's Resource Limitations Delay New Permit

                                       As of April 21, 1987, EPA'S Region X was almost 4 years late in com-
                                       pleting action on Alyeska's application for a new permit that may estab-
                                       lish more stringent controls over the types and amounts of pollutants
                                        discharged by the BWT facility. Region X did not issue Alyeska a new
                                       permit on time because the region had limited resources and higher pri-
                                       orities related to the NPDES program. However, region X has taken
                                        actions since 1985 to develop the permit. A draft permit is expected to
                                       be issued during the summer of 1987. The permit writer said the permit
                                        is expected to establish more stringent limits for pollutants now regu-
                                        lated by the permit and may regulate additional pollutants for the first
                                        time.

    1980 Permiet Lirmits Still  In 1978 EPA adopted a policy of reissuing permits for short periods-2
                                        or 3 years, rather than the usual 5-year period. This policy was intended
    Apply                              to allow EPA to establish in these permits, as they were renewed, limits
                                        based on BAT and BCT guidelines for treating toxic and conventional pol-
                                        lutants as required by the Clean Water Act by July 1, 1983.'

                                        Because of this policy, Alyeska's 1980 permit, effective September 10,
                                        1980, covered about 33 months. It was to expire on June 1, 1983. The
                                        short period of the permit was intended to allow region X and ADEC to
                                        prepare a new permit that would take into consideration additional data
                                        on the water quality of Valdez Bay being developed by Alyeska and the
                                        anticipated new federal pollution requirements.

                                        EPA regulations require a permittee to submit an application for reissu-
                                        ance of a discharge permit 180 days before its current permit expires.
                                        Alyeska submitted a new application in July 1982, which more than met
                                        the 180-day requirement. The 1980 permit was automatically extended
                                        by EPA regulations on the basis of the Administrative Procedure Act (5
                                        U.S.C. 558(c)) and continues as the current permit until a new permit is
                                        issued.

    Initial Efforts to                 Developing a NPDES permit, and the Alyeska permit in particular,
                                        requires substantial technical data and the expertise to analyze these
    Develop Permit                     data. Region X was not able to gather all of the technical data it needed,
    Unsuccessful                       nor was it able to provide the expertise necessary to develop the new
                                        permit before Alyeska's 1980 permit expired in 1983. Regional officials

                                        'The July 1, 1983, deadline for application of BAT and BCT guidelines was changed to July 1, 1984,
                                        by the Clean Water Act amendments in 1981.

                                        Page 17                    GAO/RCED-87-118 Controls Over Ballast Water Treatment

                                             Appendix II
                                             EPA's Resource Limitations Delay
                                             New Permit

                                             said this was because they had limited resources and higher priorities in
                                             the NPDES program.

    Necessary Data Not                      In order to develop the Alyeska BWT plant discharge permit, region X
    Gathered                                needed three kinds of data: technological, economic, and water quality.
                                             The technological and economic data were needed to determine the BAT
                                             and BCT levels for treating toxic and conventional pollutants. The water
                                             quality data were needed to ensure that the discharge limits would meet
                                             Alaska State Water Quality Standards.

                                             EPA has national guidelines, providing minimum technology-based dis-
                                             charge standards, to help develop individual permits. However, there
                                             are no national guidelines for BWT facilities. Therefore, region X had to
                                             rely on the permit writer's analysis of the technological and economic,
                                             as well as water quality data to determine the specific pollutant limits in
                                             Alyeska's permit.

                                             Alyeska's 1980 discharge permit required it to submit studies on all
                                             three types of data-technological, economic, and water quality. A
                                             region X permit writer told us that these studies were needed to help the
                                             region determine the appropriate effluent limits for the 1983 permit.

    Technological and Economic Data         Alyeska's 1980 permit required it to study toxic and conventional waste
                                             disposal to evaluate the operation of the BWT facility; advances in waste-
                                             water treatment, technology, and equipment; and the feasibility of
                                             improving the BWT facility's performance. Emphasis was placed on
                                             studying the reduction of toxic pollutants, the attainment of BCT for con-
                                             ventional pollutants, and the reduction of aromatic hydrocarbons (BTX).2
                                             It consisted of three phases:

                                             2Treated ballast water that is discharged contains hydrocarbons. The most toxic hydrocarbons are
                                             the aromatic hydrocarbons. This report focuses on aromatic hydrocarbons, which can be divided into
                                             two groups, BTX and other aromatic hydrocarbons. BTX, which accounts for over 80 percent of the
                                             aromatic hydrocarbons in the discharge, are the more water-soluble toxic or hazardous pollutants
                                             that are regulated in the 1980 permit. BTX consists of benzene, toluene, ethlybenzene, and xylene.
                                             Less water-soluble aromatic hydrocarbons, e.g., phenanthrene, are present in lower concentrations in
                                             the effluent. They tend to associate with particulate matter in the effluent and receiving waters, and
                                             therefore settle and accumulate in sediments at the bottom of bodies of water. In this report, BTX
                                             refers to the more water-soluble hydrocarbons limited in the permit and hydrocarbons refers to the
                                             remaining hydrocarbons that tend to accumulate in the sediment. While the discharge of these
                                             remaining hydrocarbons is not limited by the permit, Alaska has a state water quality standard for
                                             concentrations of hydrocarbons in the sediment, as discussed in appendix Ill.

                                             Page 18                       GAO/RCED-87.118 Controls Over Ballast Water Treatment

      Appendix II
      EPA's Resource Limitations Delay
      New Permit

    � Phase I. Alyeska was to thoroughly search the literature and investigate
      any new processes proposed or in use that might improve the BWT plant.
    � Phase II. Alyeska was to provide a more detailed engineering develop-
      ment analysis of processes or procedures that, in the joint opinion of
      region X and ADEC and in consultation with Alyeska, have technological
      and economic advantages for reducing significant toxic pollutants and/
      or BTX.
    � Phase III. If a process or alternative identified in the first two phases
      appeared to be economically and technologically effective, Alyeska was
      either to build a pilot plant or to modify its existing plant to test a pro-
      posed alternative process. Region X and ADEC, after consultation with
      Alyeska, would decide whether this phase should be required.

      After conducting phases I and II of the study, Alyeska informed region
      X, in a January 8, 1982, letter, that all of the identified processes had
      high capital and operating costs and that additional treatment of ballast
      water would provide no equitable benefit to the environment of Valdez
      Bay. Therefore, Alyeska concluded that it already had the best available
      control technology for ballast water and phase III was unnecessary.

      Region X and ADEC did not agree with Alyeska's conclusion. Both agen-
      cies concluded the study did not discuss removal of all of the toxic pol-
      lutants nor provide enough cost data. On March 9, 1982, ADEC wrote to
      Alyeska outlining the deficiencies in the Alyeska studies of the BWT
      facility. ADEC requested Alyeska to provide, among other things, infor-
      mation on optimizing the BWT'S conventional pollutant removal and the
      basis for determining that the current treatment system represents BAT.
      On April 7, 1982, EPA notified Alyeska that it shared ADEC'S concerns
      and asked Alyeska to provide additional information on the removal of
      both toxic and conventional pollutants and additional technical and cost
       data on the four alternative treatment processes that Alyeska had iden-
      tified in its study. Alyeska provided additional information in letters
       dated May 14, 24, and 26, 1982, outlining its position and concluding
      that it had met the permit requirements.

       Region X did not pursue the matter further in 1982. Region X officials
       told us that they did not have the staff available for followup in 1982
       because the reorganization of their Alaska Operations Office (respon-
       sible for various aspects of region X's work in Alaska) left that office
       with only one full-time staff member to do NPDEs-related work.

       Page 19                   GAO/RCED-87-118 Controls Over Ballast Water Treatment

                                         Appendix II
                                         EPA's Resource Limitations Delay
                                         New Permit

    Water Quality Data                 The 1980 permit required Alyeska to conduct a diffuser verification
                                         study and environmental studies of Valdez Bay (the first year progress
                                         report, 1980-81). The diffuser verification study was to provide infor-
                                         mation about BTX concentrations along the boundaries of the mixing
                                         zone.3 The first year progress report was to provide information on bio-
                                         logical studies of Valdez Bay and hydrocarbon accumulations in the
                                         Bay's sediments. According to a region X permit writer, the purpose of
                                         these studies was to provide water quality data so that the region could
                                         determine effluent limits and ADEC could certify that the effluent limits
                                         would meet the state's water quality standards.

                                         Alyeska provided these studies on January 8, 1982. Region X and ADEC
                                         found the diffuser verification study inadequate because Alyeska did
                                         not document the sampling techniques used and the locations of the
                                         samples. Region X and ADEC also found that the first year progress
                                         report, while providing a strong basis for detecting changes in chemical
                                         and biological indices over subsequent years of monitoring, needed addi-
                                         tional information for several of its biological studies. Region X and
                                         ADEC requested additional information in March and April 1982, and
                                         Alyeska complied on May 24, 1982. A region X official told us in 1986
                                         that Alyeska's response was unsatisfactory. However, he said region X
                                         did not follow up in 1982 because of the shortage of staff.

    Expertise Not Available to    Region X needed a technically qualified expert to develop Alyeska's
    Write New Permit                   permit. Because of staffing problems and the priority placed on moni-
                                         toring other wastewater dischargers, region X was not able to assign a
                                         qualified permit writer to develop the Alyeska permit in the 1982-83
                                         time frame.

    In-House Staff Not Available       According to region X officials, with the 1982 reorganization of the
                                         Alaska Operations Office, only one person was available for inspecting,
                                         monitoring, and developing NPDES permits as they came due. This official
                                         said her caseload included 35 to 40 major and about 1,000 minor NPDES
                                         permits. She also said she told region X management that she believed
                                         she was not qualified to develop the Alyeska permit without expert
                                         assistance because she did not have the technical expertise needed to
                                         evaluate treatment technologies for toxic pollutants. Region X officials

                                         3The diffuser is the portion of the discharge pipe that releases the wastewater into the bay. The
                                         mixing zone is a defined area around the diffuser where the effluent from the BWT plant enters the
                                         receiving waters in the bay. Alaska's water quality standards must be met at the boundary of the
                                         mixing zone.

                                         Page 20                   GAO/RCED-87-118 Controls Over Ballast Water Treatment

                                       Appendix II
                                       EPA's Resource Limitations Delay
                                       New Permit

                                        told us there was one other person in the region technically qualified to
                                        develop the Alyeska permit, but that individual was also the region's
                                        expert for the Alaska pulp mills. He was busy with appeals and hearings
                                        involving the pulp mill permits and was unavailable for the Alyeska
                                        permit.

                                        The director of the Alaska Operations Office in 1983 said that, in addi-
                                        tion to staffing problems, the Alyeska permit was of lower priority
                                        because region X faced considerable pressure to monitor other facilities
                                        producing polluted discharges. The official identified these higher pri-
                                        orities as follows:

                                        Alaska pulp mills. There was pressure from Alaska's congressional dele-
                                        gation to address the problems with these permits. Although the permits
                                        were issued in 1980, EPA continued to devote resources to this area until
                                        1985 because of appeals for variances from national effluent limitation
                                        guidelines.
                                     * Placer miners. Lawsuits were pending concerning the issuance of these
                                        permits, which had to be issued prior to June 1983 because of Alaska's
                                        short mining season.
                                     * Seafood processors. Statutory deadlines were pending for these permits.
                                     * Other permittingpriorities. In addition, permitting resources were used
                                        to develop other permits. For example, the region concentrated on off-
                                        shore oil and gas permits for which national effluent guidelines had not
                                        been established.

                                        According to region X officials, the pressures to concentrate their efforts
                                        on these permits made it very difficult to assign resources to the Aly-
                                        eska permit.

    Funds Not Available to Hire Expert Since it did not have a qualified permit writer available, region X
    to Develop Permit                  decided that it needed outside technical assistance to develop an indi-
                                        vidual permit for the Alyeska facility. The region asked EPA headquar-
                                        ters in February 1983 to contract for expert assistance to develop the
                                        permit. Region X's proposed work assignment required the contractor to
                                        review and analyze existing permit and compliance files, review the
                                        studies supplied by Alyeska, visit the facility, submit a draft report with
                                        permit limits and conditions, and after EPA review of the draft report,
                                        submit a final report to include a draft permit.

                                        An EPA headquarters official told us that funds were not available for
                                        technical studies for individual facilities at that time. However, funds

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                                        Appendix II
                                        EPA's Resource Limitations Delay
                                        New Permit

                                        were available to develop general permits, and to assist region X, head-
                                        quarters agreed to develop a model general permit for BWT facilities. At
                                        that time, according to the headquarters official, EPA was attempting to
                                        expand the use of general permits to reduce the backlog of unissued or
                                        expired permits. On June 9, 1983, a work assignment amendment (esti-
                                        mated by EPA at $39,500) was processed to develop permit terms and
                                        conditions for a general permit to cover BWT facilities. The work assign-
                                        ment required the contractor to apply the general permit model to Aly-
                                        eska as a test case.

                                        Region X received the draft general permit report in October 1984. EPA
                                        headquarters staff said the report was sent to all permitting authorities
                                        for their use in developing BWT facility permits. In October 1984, a work
                                        assignment amendment was approved to allow the contractor time to
                                        complete the task of using the Alyeska facility to test the model general
                                        permit. Region X officials and the contractor met in November 1984 to
                                        discuss the specific application of the general permit to the Alyeska BWT
                                        facility. After discussing the general permit's applicability to the Aly-
                                        eska facility, regional officials concluded that the general permit was
                                        not suitable because of the facility's size and because Alaska's water
                                        quality standards would require more stringent limits. The regional offi-
                                        cials requested the contractor to provide additional information on the
                                        cost and feasibility of the technologies available to reduce BTX at the
                                        Alyeska facility.

                                        The final report, submitted in December 1984, presented comparative
                                        costs for treatment technologies. It concluded that a detailed cost anal-
                                        ysis of the available, viable treatment processes should be made, which
                                        would require specific information about the site and wastewater. While
                                        EPA headquarters' attempt to assist region X did produce a general
                                        permit for BWT facilities, the general permit did not provide the specific
                                        data the region needed to set effluent limits for the Alyeska facility.

                I                       0
    Region X's Current                  The permit-writing process was restarted with the assignment of a new
                                        permit writer in July 1985. In March 1986, EPA entered into a contract to
    Permit Development                  obtain the expert assistance the permit writer needed to set BAT and BCT
    Efforts                            permit limits. The water quality data needed to ensure Alaska water
                                        quality standards are being met have been collected through EPA and
                                        Alyeska studies done in 1985 and 1986.

                                        Page 22                    GAO/RCED-87-118 Controls Over Ballast Water Treatment

                                        Appendix II
                                        EPA's Resource Limitations Delay
                                        New Permit

    Technical Data Being              Technical data have been developed by both EPA and Alyeska. Region X
    Collected                         needed to contract for expert assistance to determine the technological
                                        feasibility and cost of various technologies because the permit writer
                                        needed a more thorough evaluation of the treatment options than the
                                        general permit provided. The EPA contractor's final report on technical
                                        assistance was provided on December 22, 1986, according to region X's
                                        permit writer. The permit writer said the contractor evaluated 10 treat-
                                        ment technologies to identify the BAT that are technologically feasible
                                        for the Alyeska BWT facility. The report recommended four technologies
                                        for further consideration as the BAT. The report further developed con-
                                        struction or capital costs and annual operating costs for three of the
                                        four technologies. Costs and final conclusions on technological feasi-
                                        bility were not developed for the other technology because Alyeska is
                                        currently experimenting with this technology and is providing data on
                                        the costs and treatment performance to the region.

                                        According to the permit writer, the EPA contractor's study shows that if
                                        further treatment is required by the Alyeska permit, capital costs could
                                        range from $8.8 million to $53.7 million. In addition, there may be
                                        annual operating costs ranging from $1.9 million to $6.3 million. She
                                        said that Alyeska's consultant estimated the capital and operating costs
                                        for six treatment technologies (which included the uncosted technology
                                        noted above). The consultant's estimated capital costs ranged from $5.9
                                        million to $88.5 million, whereas first-year operating costs ranged from
                                        $1.1 million to $7.4 million.

    Water Quality Data                Concerns about the quality of the water in Valdez Bay were still pending
    Collected                          as work started on the new permit in July 1985. In September 1983,
                                        scientists; government officials, including EPA, ADEC, and National
                                        Oceanic and Atmospheric Administration (NOAA); and industry and other
                                        officials met because of interest in and concerns about environmental
                                        impacts in Valdez Bay. The problem of repeated high BTX readings in the
                                        effluent, as discussed in appendix III, was also discussed at the meeting.
                                        ADEC began making plans in October 1983 to secure funding for a new
                                        mixing zone study because of concerns about water quality.

                                        ADEC had not been able to obtain funding for the mixing zone study in
                                        1983 or 1984. In 1985 an ADEC official said the agency believed a mixing
                                        zone study, in addition to Alyeska's 1982 study, still needed to be done.
                                        Consequently, region X conducted this study in September 1985. In
                                        addition, Alyeska officials said they conducted two mixing zone
                                        studies-in October 1985 and March 1986. According to the permit

                                        Page 23                   GAO/RCED-87-118 Controls Over Ballast Water Treatment

    Appendix II
    EPA's Resource Limitations Delay
    New Permit

    writer, the region received these studies from Alyeska and is analyzing
    them as part of developing the permit.

    The permit writer told us that when she was planning the permit's
    development, region X and ADEC had concerns about hydrocarbon levels
    in the bay sediments, and ADEC was planning a sediment study. Region X
    and ADEC learned, however, that Alyeska was planning to study the sedi-
    ment, and Alyeska agreed to do most of the work that region X and ADEC
    wanted as part of its study. The University of Alaska conducted the
    study for Alyeska, which was released in June 1986. Region X and ADEC
    are evaluating that study as part of developing the permit.

    The University of Alaska was requested "to design additional environ-
    mental measurements to determine whether the marine environment of
    Valdez Bay had changed since the last previous measurements were
    made in 1982." According to the executive summary, the report
    addresses the question of change since 1982, to the extent possible.
    However, it notes that the report cannot be considered a direct exten-
    sion of the previous monitoring programs and that while the study was
    designed to be interpreted with the results of the previous monitoring
    programs, the gap of 3 years between data sets and absence of seasonal
    data in the present study limit some aspects of interpretation.

    Nevertheless, the report concludes that it "contains important informa-
    tion which indicates that Port Valdez has not undergone environmental
    deterioration between 1982 and 1985." The report points out that the
    data indicate that the environmental parameters, including hydrocarbon
    concentrations in sediments, are fluctuating within previously observed
    ranges at 11 locations sampled. It points out that the hydrocarbon con-
    centrations were significantly higher at only two locations. Its general
    conclusion is that the levels of hydrocarbons in sediments have not
    markedly increased in the last 3 to 5 years.

    A NOAA monograph, an overall review of the environmental status of
    Valdez Bay, provides some information on hydrocarbon concentrations.
    At a meeting in 1984, government officials from NOAA, EPA, and ADEC,
    scientists from the University of Alaska, and representatives of the
    petroleum industry discussed the environmental status of Valdez Bay
    and the issuance of the Alyeska permit. The participants agreed that
    more data were needed, including samples of the mixing zone and
    bottom sediments. A work plan and cost estimates for performing the
    necessary work were prepared. While EPA and ADEC could not obtain
    funds for that work plan, NOAA officials obtained about $100,000 for an

    Page 24                   GAO/RCED-87-118 Controls Over Ballast Water Treatment

                                       Appendix II
                                       EPA's Resource Limitations Delay
                                       New Permit

                                        overall review of the environmental status of Valdez Bay. A NOAA offi-
                                        cial said the results of this study, a 16-chapter monograph, is expected
                                        to be issued in the summer of 1987.

                                        As part of the NOAA review, a National Marine Fisheries Service scientist
                                        reported in October 1986 that, on the basis of total hydrocarbon values
                                        found in sediments and water in Valdez Bay, it appears that concentra-
                                        tions near the diffuser are sufficiently high to cause sublethal (adverse)
                                        effects on organisms occupying the habitat. The report compared Valdez
                                        Bay hydrocarbon data to similar data from other studies. It pointed out
                                        that the hydrocarbon values at Valdez are within the range of hydro-
                                        carbon concentrations correlated with liver lesions and other disorders
                                        in fish from Puget Sound, Washington. However, since certain hydrocar-
                                        bons are more toxic than others, it is important to know their composi-
                                        tion to assess their potential impact. The report also noted that the
                                        Puget Sound sites generally showed higher amounts of the more toxic
                                        and carcinogenic hydrocarbon compounds.

                                        The draft summary chapter of the NOAA study states, "there does appear
                                        to be consensus that [Valdez Bay] has not undergone marked environ-
                                        mental degradation in the last decade." The draft report points out that
                                        while some laboratory studies predict adverse effects from petroleum
                                        (e.g., the National Marine Fisheries Service scientist's study)4 at concen-
                                        trations encountered in some locations in Valdez Bay, field studies indi-
                                        cate that biological changes in the presence of oil are generally no
                                        greater than natural variability (e.g., the University of Alaska study).
                                        However, the authors of the summary chapter said that, because of the
                                        sampling design and the analytical procedures used, the ability of pre-
                                        vious field studies to detect pollutant-induced environmental changes is
                                        severely limited. The permit writer said she would be considering the
                                        results of the NOAA and University of Alaska studies as she develops the
                                        new permit.

    Setting BWT Permit Limits    There are no national standards for BWT facilities and, according to
    Is a Complex Task                  region X's permit writer, the Alyeska facility is sufficiently different, in
                                        its size and characteristics, from the facilities used to develop the gen-
                                        eral permit for BWT facilities. Therefore, the permit writer must develop
                                        the permit limits on the basis of her best professional judgment. She is
                                        currently completing her assessment of the technological, economic, and

                                        4BTX and other hydrocarbons as defined earlier are derived from petroleum.

                                        Page 25                   GAO/RCED-87-118 Controls Over Ballast Water Treatment

                                        Appendix H
                                        EPA's Resource Limitations Delay
                                        New Permit

                                        water quality data. She said the new permit limits will be based pri-
                                        marily on which technologies (1) are determined to be BAT and BCT and
                                        (2) meet state water quality standards.

                                        The first step, according to the permit writer, is to evaluate the technol-
                                        ogies that may be used to determine the BAT and BCT limits. Region X is
                                        currently evaluating the results of the EPA contractor's assessment of
                                        these technologies and the information Alyeska is supplying on its full-
                                        scale experiment with one of the treatment technologies under consider-
                                        ation. Limits will be derived on the basis of the technology that is chosen
                                        as BAT and BCT. After these limits are established, the permit writer has
                                        to determine whether these limits will meet the state water quality
                                        standards.

                                        The permit writer, in consultation with ADEC, will evaluate the data col-
                                         lected on water quality and marine life to determine how stringent the
                                         limits must be to meet the state water quality standards. There are two
                                         key state standards for hydrocarbons: (1) total aromatic hydrocarbons
                                         concentrations in the water (predominately BTX compounds in this case)
                                         beyond the mixing zone are limited to 10 parts per billion and (2) the
                                         concentration of hydrocarbons in the sediment (predominately other
                                         hydrocarbons) shall not cause deleterious (harmful) effects to aquatic
                                         life. She will analyze the water quality data and the mixing zone studies
                                        to determine if the BAT-derived limits for BTX and other hydrocarbons
                                        meet the standards. If the BAT-derived limits do not assure that the state
                                         standards are met, region X and ADEC must impose more stringent limits
                                        to meet the standards.

                                        After this analysis, region X will issue the draft permit for comment.
                                        The permit writer is planning to release the draft final permit for the
                                        Alyeska BWT facility for a 30 to 60 day public comment period during
                                        the summer of 1987. Before the final permit is issued, ADEC must certify
                                        that the permit limits will meet the state water quality standards.

    Effects of Delayed                  While region X was unable to reissue the permit by 1983 and is still
                                         developing the permit, it is difficult to determine the actual effects of
    Permit Issuance                     this delay. If the new permit has more stringent limits for pollutants
    Uncertain                           now being regulated and/or new limits for pollutants not previously reg-
                                        ulated, as is anticipated by the permit writer, there are two potential
                                        effects. First, the BWT facility may have discharged more pollutants for
                                        the past 4 years than would have been allowed. While these discharges'
                                        effects on aquatic life and water quality are unknown, their impact is

                                        Page 26                   . GAO/RCED-87-118 Controls Over Ballast Water Treatment

    Appendix II
    EPA's Resource Limitations Delay
    New Permit

    being reviewed as part of the reissuance process. Second, Alyeska has
    not had to make the capital expenditures necessary to implement the
    BAT and BCT technology or pay the associated operating costs. Capital
    expenditures are currently estimated to range from $5.9 million to $88.5
    million. The operating costs, which would have been incurred from 1983
    until the permit is issued, are currently estimated to range from $1.1
    million to $7.4 million per year.

    Page 27                    GAO/RCED-87-118 Controls Over Ballast Water Treatment

    Appendix III

    EPA Has Begun to Actively Enforce Alyeska's

    Permit Requirements

                                      In the last few years, EPA's Region X has changed its enforcement stance
                                      toward Alyeska, shifting from discussions and correspondence on
                                      permit noncompliance to requiring Alyeska to take actions to achieve
                                      compliance with permit requirements. Between August 1977 and
                                      December 1983, region X monitored Alyeska's activities and identified
                                      instances of noncompliance, but it did not take enforcement actions
                                      when it found the facility was not in compliance with permit require-
                                      ments. Region X officials said they did not take any enforcement actions
                                      because (1) not all of the violations warranted enforcement action, (2)
                                      the region's limited resources were allocated to other priority areas, and
                                      (3) the region was following EPA'S policy (in 1981 and 1982) of working
                                      with the noncompliers to bring them into compliance rather than penal-
                                      izing them. Since January 1984, however, region X has taken formal
                                      enforcement and other actions to bring the facility into compliance with
                                      its permit requirements.

    Monitoring and                      The essential elements in operating the NPDES system are the permits,
                 Monitorcemeng 19773   compliance monitoring, and enforcement of noncompliance.
    Enforcement, 1977-83

    Alyeska's Permit Limits             Alyeska's first permit became effective January 30, 1975, although the
                                      plant did not begin discharging wastewater until August 1977. The
                                      permit was reissued on August 11, 1980. Although EPA did not reissue
                                      the 1980 permit in 1983 as it had planned, Alyeska's application for a
                                      new permit automatically extended the 1980 permit, as discussed in
                                      appendix II. The 1980 permit is the valid permit until a new one is
                                      issued.

                                      Alyeska's permit limits and monitoring requirements are listed in table
                                      III.1. The BTX limits went into effect when the permit was reissued in
                                      1980. Alyeska is also required to monitor and report discharges of 18
                                      other substances, such as total suspended solids and nickel, but dis-
                                      charges of these substances are not limited by the permit.

                                      Page 28                    GAO/RCED-87-118 Controls Over Ballast Water Treatment

                                          Appendix II
                                          EPA Has Begun to Actively Enforce Alyeska's
                                          Permit Requirements

    Table 111.1: Alyeska's Permit Limits
                                                                      Discharge Limitations         Monitoring
                                          Substance          (monthly av.)       (daily max.)        frequency
                                          Oil and grease     8 milligrams per liter  10 milligrams per liter Daily
                                                               per day
                                          BTX                6 milligrams per liter  9 milligrams per liter  Twice weekly
                                                               per day
                                          pH                    Not less than 6 standard units and not    Continuous
                                                                     greater than 9 standard units
                                          Flow               27.0 million gallons   33.6 million gallons   Continuous
                                                               per day            per day

    Region X Monitored                    Region X monitored Alyeska's permit during the period from August
    Alyeska's Permit                      1977 to December 1983. It reviewed the DMRS submitted by Alyeska and
                                          inspected the facility annually.

                                          Our review of region X's files showed that it was aware of instances of
                                          noncompliance with permit requirements by Alyeska during this period.
                                          The files contained letters from Alyeska describing the violations and
                                          what actions it was taking in response to the violations. The files also
                                          contained records of phone calls both from and to Alyeska discussing
                                          these violations. And, as discussed in the enforcement section below,
                                          region X documents showed that it had identified the instances of
                                          noncompliance.

                                          Since August 1977, region X had conducted either compliance sampling
                                          or compliance evaluation inspections at Alyeska's BWT plant each fiscal
                                          year. (See table I1.2.) Region X's inspection reports from 1977 to 1983
                                          reported that Alyeska was generally in compliance with its permit.

    Table 111.2: Compliance Inspections for
    Alyeska BWT Plant                     Type of inspection                     Date                Conducted by
                                          Compliance sampling                   8-2-77              EPA
                                          Compliance sampling                   4-10-78             EPA
                                          Compliance sampling                   4-27-79             EPA/state
                                          Compliance sampling                   12-5-79             EPA/state
                                           Compliance sampling                   4-15-81             EPA
                                           Compliance sampling                   9-2-82              EPA/state
                                           Compliance evaluation                 9-28-83             EPA/state

                                           Page 29                      GAO/RCED-87-118 Controls Over Ballast Water Treatment

                                        Appendix In
                                        EPA Has Begun to Actively Enforce Alyeska's
                                        Permit Requirements

                                        However, region X noted discrepancies between EPA and Alyeska's con-
                                        tract laboratory analyses on duplicate samples taken during the inspec-
                                        tions in 1981 and 1982. The EPA data generally tended to show higher
                                        values than those of the contract laboratory. The region X inspector
                                        who performed the inspections said she contacted the EPA laboratory to
                                        determine if the differences were significant, was told they were not,
                                        and did not pursue the discrepancy further. An EPA chemist told us he
                                        performed the analyses in 1981 and 1982 and that the differences
                                        between EPA and Alyeska's sample results were not significant enough to
                                        warrant any further EPA actions.

                                        Alyeska has also participated in the DMR quality assurance program
                                        since 1981. Region X's program coordinator told us that Alyeska's lab
                                        results were within acceptable ranges.

    Region X Did Not Take             Alyeska reported that it was in noncompliance with its permit limits 100
    Formal Enforcement Action   times during the period August 1977 through December 1983. Table 111.3
                                        summarizes the type and frequency of noncompliance.

    Table 111.3: Summary of Violations
    Reported on DMRs, 1977-83         Type of violation                                              Number
                                        Oil and grease daily max.                                          16
                                        BTX daily max.                                                     29
                                        BTX monthly average                                                12
                                        pH limits (daily)                                                  43
                                        Total                                                             100

                                        We asked region X officials how we could identify whether any of the
                                        violations were significant. They explained that while the definition of
                                        significant noncompliance has changed over the years, any significant
                                        violations would appear on the quarterly noncompliance report that the
                                        region sends to headquarters. The noncompliance report provides infor-
                                        mation on major NPDES permittees' noncompliance, including significant
                                        noncompliance.

                                        Alyeska appeared on the noncompliance report six times from August
                                        1979 through December 1983.1 Alyeska was listed once for violating its
                                        pH limit, twice for submitting its DMRS late, twice for violating its BTX
                                        limits, and once for violating both its BTX and pH limits.

                                        1A region X official said the region did not have noncompliance reports before August 1979.

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                                       Appendix mI
                                       EPA Has Begun to Actively Enforce Alyeska's
                                       Permit Requirements

    pH Violations                     The third quarter 1980 and the second quarter 1982 noncompliance
                                       reports reported that Alyeska violated its pH limit in July 1980 and'June
                                        1982, respectively. The third quarter report described the pH violation
                                        as being minor with no action taken. A region X official said no enforce-
                                       ment action was taken because the pH violations were considered minor.
                                       The official was not sure why the pH violations were listed on the non-
                                       compliance report, but noted that the noncompliance report provides
                                        more information than just significant noncompliance.

    Late DMRs                         Alyeska appeared on the noncompliance report for the second quarter in
                                        1981 for not submitting its April, May, and June 1981 DMRS. The non-
                                        compliance report noted that a phone call (informal enforcement action)
                                        had been made about the missing DMRS. The report said that Alyeska
                                        was unable to obtain laboratory results on time because its contract lab
                                        had recently moved and had had trouble calibrating its equipment. The
                                        report also noted that Alyeska was pressuring the lab for results and
                                        would submit its results as soon as possible. A no action decision was
                                        listed as being made on August 21, 1981.

                                        Alyeska appeared on the third quarter 1981 noncompliance report for
                                        submitting its September DMR late. The report noted that a phone call
                                        had been made about the late DMR. It also noted that EPA had received
                                        the April, May, and June DMRS on August 30 and the September DMR on
                                        November 16, 1981. A region X official said that Alyeska's submission
                                        of the DMRS resolved the violations.

    BTX Violations                    During the period from October 1981 to April 1982, Alyeska exceeded
                                        its monthly average BTX limit each month and its daily maximum BTX
                                        limit 18 times. Although Alyeska appeared on the noncompliance report
                                        three times for some of these violations, region X did not take any
                                        formal enforcement action. Region X did consider taking enforcement
                                        action three times during this period. Region X officials provided a
                                        number of reasons why no enforcement action was taken, including that
                                        they were working with Alyeska to bring them into compliance, which
                                        was in accordance with EPA'S overall enforcement policy at that time.

                                        Alyeska began reporting noncompliance with its BTX limits in September
                                        1981. Alyeska reported to region X on September 18, 1981, that it had
                                        exceeded its daily maximum BTX limit on August 17 and 19, 1981. Aly-
                                        eska said that it had no explanation for why it occurred and that it
                                        would not be able to prevent a recurrence. Alyeska reported virtually

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    Appendix III
    EPA Has Begun to Actively Enforce Alyeska's
    Permit Requirements

    the same situation again in October and twice in November. On
    November 23, 1981, Alyeska reported that it had begun investigating
    the possible cause by sending duplicate discharge samples to its contract
    laboratory and another laboratory to determine whether or not the high
    values were due to analytical errors. Alyeska continued to report BTX
    violations in December, January, and February.

    On February 8, 1982, a region X official completed a violation notifica-
    tion form for the monthly average BTX violations in October, November,
    and December 1981. (Region X had not received the January 1982 data
    at this time.) The source of the report of violations was identified on the
    form as Alyeska's letters, review of DMRS, and the region's noncompli-
    ance tracking system. The form noted that Alyeska was working on the
    problem and recommended that no action be taken.

    On February 28, 1982, Alyeska appeared on the fourth quarter noncom-
    pliance report (1981) for the BTX violations in October, November, and
    December. The report noted that a no action decision was made on
    February 26, 1982, and that Alyeska was evaluating the problem and
    would be issuing a report.

    Alyeska reported BTX violations in March and April. On May 5, 1982,
    Alyeska reported that it thought laboratory error by its contract labora-
    tory was the reason for high BTX values and that it was sending replicate
    samples to an expert for analysis. Alyeska initiated an investigation of
    the analytical techniques used by its contract laboratory when the repli-
    cate sample results showed differences between the Alyeska contract
    laboratory's analyses and the expert's. Alyeska officials told region X
    that the investigation was to include (1) a review of the written proce-
    dures used by the contractor to determine BTX concentrations, (2) an
    audit by an expert chemist of the procedures used by the contractor,
    and (3) a set of preanalyzed ballast water samples to be analyzed by the
    contractor.

    Alyeska appeared on the first quarter 1982 noncompliance report. The
    report listed monthly average BTX violations in February and March
    1982 and relisted the 1981 BTX violations. The report again noted that
    Alyeska was evaluating the problem and would issue a report.

    On May 27, 1982, region X completed a violation notification form for
    the BTX violations in February and March. The form noted that Alyeska
    was working to resolve the problem but still did not know the answer.
    The form recommended no action be taken.

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    Appendix III
    EPA Has Begun to Actively Enforce Alyeska's
    Permit Requirements

    On July 20, 1982, Alyeska reported that it was unable to determine why
    there were differences between results from Alyeska's contract labora-
    tory and the expert's. However, it had implemented certain quality con-
    trol changes to provide better data on BTX. Alyeska reported that its
    expert found that

    "We will probably never have a definite explanation for the high results earlier this
    year. However, the stronger QC [quality control] program will enable us to identify
    future analytical problems before results are reported to ADEC."

    Region X conducted another pre-enforcement evaluation on August 30,
    1982. The violation notification form noted the monthly average BTX
    limit was exceeded in April, but not in May and June. The form noted
    that the problem looked to be under control and recommended no action.
    The Water Compliance Section Chief concurred with the no action deci-
    sion on September 2, 1982, bringing the matter to a close.

    Alyeska appeared on the second quarter 1982 noncompliance report.
    The report listed a monthly average BTX violation in April. The February
    and March BTX violations were also noted on the report, as was the fact
    that Alyeska complied with its monthly average BTX limits in May and
    June. The report continued to note that Alyeska was evaluating the
    problem. It also noted a no action decision was made in August 1982.

    However, on September 2, 1982, region X's inspector performed the
    annual inspection at the Alyeska BWT plant. The inspection report, dated
    November 22, 1982, noted that the daily maximum BTX limit was vio-
    lated on the day of the inspection.

    According to the regional officials responsible for monitoring or over-
    seeing Alyeska's permit in 1981 and 1982, the number of violations war-
    ranted EPA enforcement action against Alyeska. Although they cannot
    remember why no action was taken, they cited three factors that had to
    be considered. First, the BTX limits for the monthly average and daily
    maximum were not based on national guidelines. The BTX limits were
    based on an EPA permit writer's expertise, ADEC personnel's judgment,
    and the facility's estimated capability to remove BTx. Second, the analyt-
    ical sampling method was only a proposed method still in the develop-
    ment stage. Third, the region's limited resources were allocated to other
    priority areas.

    Another regional official said he believed no enforcement action was
    taken against Alyeska because it was cooperating with EPA to correct the

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                                        Appendix mI
                                        EPA Has Begun to Actively Enforce Alyeska's
                                        Permit Requirements

                                        problem. Because of resource constraints, he said, region X was taking
                                        enforcement actions at that time against violators, such as placer miners
                                        in Alaska, that were not cooperating with EPA in addressing environ-
                                        mental issues. Both regional and headquarters officials said that EPA'S
                                        overall enforcement policy during this period was one of trying to work
                                        with the noncompliers and bring them back into compliance rather than
                                        penalizing them for noncompliance.

    Monitoring and                     Region X has taken two formal enforcement actions since January 1984
                                        to order the recycling of sludges back into the facility to cease. Concerns
    Enforcement, 1984 to               about how the BWT facility was being operated and its BTX violations had
    October 1986                       come from several sources in addition to region X officials. Federal and
                                        state officials who had met in July 1984 to discuss reviewing Alyeska's
                                        permit were concerned about the operation of the Alyeska facility, its
                                        BTX violations, and water quality problems. In addition, an EPA consul-
                                        tant and a private citizen expressed concerns about the BWT facility's
                                        operations. To address these concerns, in 1985 region X issued Alyeska
                                        a request for information, an administrative order to retain all records,
                                        and two administrative orders on the operation of the facility. In April
                                        1986, region X also issued Alyeska a warning letter for BTX discharge
                                        violations. In addition, region X issued an administrative subpoena,
                                        under the Toxic Substances Control Act, to gather information related to
                                        concerns about the BWT facility's operation.

    Region X Actively Monitors   From January 1984 through July 1986, region X carried out its over-
    Alyeska                            sight of Alyeska's permit by evaluating the DMRS, inspecting Alyeska's
                                        facility three times, and conducting its DMR quality assurance program.
                                        While region X officials had been monitoring Alyeska's activities since
                                        1977, it was not until mid-1984 that concerns began to be raised that led
                                        to region X's enforcement actions.

                                        Between January 1984 and July 1986, Alyeska submitted all its monthly
                                        DMRS. During this time, Alyeska reported 13 violations for exceeding the
                                        BTX effluent discharge limit for the monthly average or daily maximum
                                        and 1 violation of its pH limit. It did not comply with the BTX monthly
                                        average limit for 7 consecutive months--October 1985 through April
                                        1986. Alyeska explained that the monthly BTX violations were due to a
                                        change in sample preservation techniques. According to an Alyeska offi-
                                        cial, there were no apparent operational problems at the facility that
                                        would have caused the high values.

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                                        Appendix III
                                        EPA Has Begun to Actively Enforce Alyeska's
                                        Permit Requirements

                                        Alyeska participated in the DMR quality assurance program during 1985
                                        and 1986. A region X official stated that Alyeska's laboratory results
                                        were within the acceptable range of the results of the EPA samples. He
                                        added that Alyeska did not receive its sample of wastewater in 1984,
                                        although the reason is unknown. By the time EPA found out that the
                                        sample had not arrived,. it was late in the testing year, and EPA decided
                                        to wait until the following year before sending Alyeska another sample.

    Concerns Raised About              In July 1984, federal and state officials met to discuss the current opera-
              Alyeska Operations      tional process at the Alyeska BWT plant before reissuing the permit. Offi-
                                        cials were concerned with validating the plant's suspected problem
                                        areas so that new requirements could be included in the plant's permit,
                                        which was then scheduled to be issued by September 1985. An EPA con-
                                        sultant, for example, questioned whether the plant's mode and scale of
                                        operation had been reduced without necessary verification studies to
                                        determine that a reduced operating mode would in fact achieve permit
                                        compliance. Many were concerned about discrepancies in the data
                                        between Alyeska reports and EPA consultant studies on BTX accumula-
                                        tions. The participants generally concluded that the central problems in
                                        Valdez Bay involved excessive concentrations of BTX, and they outlined
                                        a plan for research and monitoring that would help them understand
                                        what was happening to water quality.

    Compliance Monitoring              In November 1984, region X's inspector responsible for the Alyeska
    Leads EPA Inspector to             plant suggested that the region issue a request for information order
    Recommend Enforcement              because her most recent inspections in September 1983 and August 1984
                                        turned up discrepancies between what she observed and what Alyeska's
                                        permit required. For example, the August 1984 inspection found that
                                        the Alyeska BTX testing was not done as required in the permit. The
                                        inspector reported that, according to region X's files, Alyeska had not
                                        requested, nor had the region approved, the method change. The
                                        inspector also found that changes had been made to the facility without
                                        notification to the region. On the basis of her recommendation, region X
                                        issued a 308 request for information order in January 1985.

    Allegations Made Against           In December 1984, a region X official said he received a telephone call
    Alyeska                            from a citizen who alleged that Alyeska was violating its permit limits.
                                        In early 1985, that citizen notified EPA he intended to file a "citizen's
                                        suit" to enforce the terms of the Alyeska permit. The citizen urged EPA
                                        to take immediate action to audit operations at the Valdez facility, to

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                                           Appendix HI
                                           EPA Has Begun to Actively Enforce Alyeska's
                                           Permit Requirements

                                           enjoin further violations, and to seek penalties against Alyeska for past
                                           violations. EPA began an investigation as discussed on page 37.

    1985 Inspection Reveals               During the July 1985 inspection, region X officials, ADEC officials, and an
    More Concerns                         EPA consultant visited the plant to initiate a study. EPA asked the consul-
                                           tant to compare the plans for the physical plant as approved in Aly-
                                           eska's permit with the actual plant and examine the condition of the
                                           operating units. The consultant's final report, dated September 23, 1985,
                                           noted that

                                        * the physical plant did not contain a waste disposal facility or monitoring
                                           instrumentation as originally proposed and designed;
                                        * a number of constructed facilities, originally intended to be used in the
                                           treatment process, were not being used;
                                        * some individual unit processes were modified;
                                        * pollutants not limited by the permit were entering Valdez Bay in uncon-
                                           trolled quantities; and
                                           the present mode of effluent monitoring did not have sufficient safe-
                                           guards to effectively protect the quality of the receiving waters of
                                           Valdez Bay.

                                           An EPA official said that the report's results are being considered, along
                                           with other information, as it decides whether to take further enforce-
                                           ment action.

    EPA Takes Enforcement                 As a result of the concerns raised about the BWT plant's operations,
    Actions                               region X launched a series of actions to bring Alyeska into compliance
                                           with its permit. Table 111.4 lists the actions taken as of February 1987.

    Table 111.4: Actions Taken by Region X
                                           Date                Action
                                           1/28/85             Section 308 request for information
                                           4/5/85              Section 308/309 order requiring retention of records pertaining to
                                                               the operation of the BWT facility
                                           7/12/85             Section 309 administrative order requiring Alyeska to stop recycling
                                                               sludgesa
                                           11/6/85             Amendment to section 309 administrative order requiring Alyeska to
                                                               take a series of actions (see appendix IV)a
                                           4/9/86              Warning letter concerning BTX violations
                                           9/11/86             Administrative subpoena to Alyeska representatives
                                           aThis is a formal enforcement action.

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    Appendix Hm
    EPA Has Begun to Actively Enforce Alyeska's
    Permit Requirements

    As a result of the region's concerns and the citizen's allegations, EPA
    began investigating the operations of the Alyeska facility and related
    environmental concerns. This investigation was ongoing as of April 21,
    1987. Region X officials said they do not know when it will be com-
    pleted. As part of this investigation, on September 11, 1986, region X
    issued an administrative subpoena, under the Toxic Substances Control
    Act, which called for the appearance of an Alyeska representative and
    presentation of documents on October 7, 1986. EPA and Alyeska have
    engaged in a series of legal proceedings to determine the validity of the
    subpoena. A region X official said the subpoena was ruled to be valid in
    February 1987, and they enforced the subpoena by interviewing Aly-
    eska officials in March.

    Request for information. On January 28, 1985, region X issued a request
    for information to Alyeska, giving it 20 days to respond. The request
    asked for, among other things, information about modifications to the
    facility and how it was currently operating. This request was based on
    the concerns raised by region X's inspector in November and December
    1984. Alyeska provided the information to region X on February 25,
    1985.

    Order to retain records. On April 5, 1985, region X issued an order
    requiring Alyeska to retain all records pertaining to the operation of the
    BWT facility. The order stated that the region had recently received
    notice of a citizen's intent to commence a legal action against Alyeska
    for alleged permit violations. It also said the region had become aware of
    statements by some past Alyeska employees, which gave the region
    reason to believe some terms of the permit may have been violated.

    Order on BWT operations. On July 12, 1985, EPA issued Alyeska an
    administrative order requiring it to stop recycling sludges back into the
    BWT plant. It also required Alyeska to submit a plan describing its proce-
    dures for removing and disposing of all sludges. Alyeska responded to
    the order on September 6, 1985, with its plan describing the procedures
    it would follow to comply with the order.

    Amended order issued. On November 6, 1985, region X issued an amend-
    ment to the administrative order because it determined that Alyeska's
    response to the July 1985 order essentially continued its existing prac-
    tices and therefore would not resolve the sludge disposal issue. The
    amended order specified activities that Alyeska needed to complete and
    time frames for completing them through May 6, 1986. Alyeska com-
    pleted all of the required activities on or before their due dates. (See

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                                        Appendix III
                                        EPA Has Begun to Actively Enforce Alyeska's
                                        Permit Requirements

                                        app. IV.) A region X official said that, as of February 1987, the region
                                        was evaluating Alyeska's response to the amended order.

                                        In February 1986, region X conducted its annual compliance inspection.
                                        The report noted that Alyeska had begun making modifications to the
                                        plant in response to the amended order.

    BTX Problems Intensify             Alyeska reported to region X in a letter dated October 18, 1985, that it
                                        had not been following the prescribed procedure for preservation of
                                        effluent samples to be analyzed for BTX. Alyeska noted that an amend-
                                        ment to 40 C.F.R. Part 136 was published in the Federal Register on
                                        October 26, 1984, effective January 25, 1985, requiring that samples be
                                        preserved with acid. Alyeska stated that acid had not been added to BTX
                                        samples and it had taken steps to ensure that it would be done in the
                                        future. A region X official said Alyeska has been using the proper proce-
                                        dure since October 1985.

                                        Alyeska stated in a January 24, 1986, letter to region X that it had done
                                        a study to determine the impact of acid preservation on BTX samples.
                                        The results indicated a degradation of BTX with time in samples that
                                        were not preserved with acid. Alyeska concluded that, depending on the
                                        length of time between sampling and testing, many samples taken before
                                        late September 1985 were biased because the BTX concentrations had
                                        degraded before analysis. Thus, Alyeska's test results, according to a
                                        region X official, indicated that BTX results reported on the DMRS prior to
                                        September 1985 may have understated the actual amounts in the
                                        discharge.

                                        Alyeska reported noncompliance with its permit limits 14 times between
                                        January 1984 and July 1986, 13 of which were for BTX discharges. Aly-
                                        eska did not comply with its monthly average BTX limit for 7 consecutive
                                        months-October 1985 to April 1986. Alyeska appeared on the noncom-
                                        pliance report twice during this period.

                                        Region X sent Alyeska a warning letter (an informal enforcement action)
                                        on April 9, 1986, after reviewing the circumstances surrounding six con-
                                        secutive monthly BTX violations. This letter informed Alyeska that it
                                        was responsible for implementing any alterations in the treatment pro-
                                        cess in order to achieve its effluent limits. The letter also required Aly-
                                        eska to outline the steps it would take to eliminate the BTX violations,
                                        and it required Alyeska's response within 20 days.

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    Appendix ImI
    EPA Has Begun to Actively Enforce Alyeska's
    Permit Requirements

    In its response on April 21, 1986, Alyeska stated that immediate steps
    were being taken to lower BTX concentrations. First, it had initiated a
    BWT process experimentation program to achieve optimum BTX removal
    within the capabilities of the present treatment system (i.e., it made sev-
    eral adjustments to current operating procedures). Second, in connection
    with the renewal of its permit, it was evaluating the possibility of
    enhanced biological degradation of BTX by aeration during the last stage
    of treatment. Alyeska reported in June 1986 that initial results showed
    that marginal BTX reduction had occurred from the process experimenta-
    tion program and that the biological tests were encouraging. Alyeska
    reported additional results in September 1986 indicating that biological
    treatment was potentially an effective process for BTX reduction.

    The first quarter 1986 noncompliance report, dated June 7, 1986, noted
    that Alyeska had not complied with its monthly average BTX limit from
    October 1985 to March 1986. The report noted that a warning letter had
    been sent on April 9, 1986, and that the company responded that it
    would correct the problem.

    Alyeska was also listed on the second quarter 1986 noncompliance
    report. The second quarter report noted that Alyeska had violated its
    BTX limits in April but was in compliance in May, June, and July. The
    third quarter report listed the violations as being resolved and noted
    that Alyeska was in compliance through September.

    In February 1987, Region X officials told us that Alyeska had complied
    with its monthly average BTX effluent discharge limits since April 1986
    as a result of its efforts to reduce BTX. According to these officials, no
    decision has been made regarding additional enforcement actions for
    past BTX violations. The officials said a final decision will not be made
    until the investigation into the allegations about the BWT facility's opera-
    tions is complete.

    Page 39                   GAO/RCED-87-118 Controls Over Ballast Water Treatment

    Appendix IV

    Status of Actions Required of Alyeska Under

    Compliance Orders as of February 28, 1987

                                               Task                                            Due Date         Status
                                               309 Order (7/12/85)
                                               1. Cease reintroduction of sludge to            Immediately      See below.
                                                 treatment system.
                                               2. Submit sludge handling plan.                 9/15/86          Plan submitted on time.
                                                                                                        EPA's evaluation resulted in
                                                                                                        issuance of amended order.

                                               Amended 309 Order (11 /6/85)a
                                               1. Submit plan for transfer of wastewater       11/20/85         Plan submitted on time and
                                                 from crude oil storage tanks to 90 tanks. implemented by Alyeska.
                                                 Implement upon approval.                                      Approved 3/19/86.
                                               2. Order equipment for continuous flow-         11/20/85         Completed on time.
                                                 weighted effluent sampling.
                                               3. Submit study of DAF (dissolved air           1/6/86           Plan submitted on time.
                                                 flotation) flow velocity and plan for                         Company notified that
                                                 correcting any operational problems.                          submittal was inadequate.
                                                 Implement plan upon approval.                                 Company replied 4/11/86.
                                               4. Submit plan for treatment and disposal of  1/6/86             Plan submitted on time.
                                                 DAF and impound basin "float.'                                Under EPA/ADEC review.
                                                 Implement upon approval.
                                               5. Reinstall and operate originally designed   3/6/86
                                                 equipment in DAF.
                                               OR
                                               Submit plan for equivalent or better removal   1/6/86            Plan submitted on time.
                                                 of sludges. Implement plan upon                               Company notified that
                                                 approval. submittal was inadequate.
                                                                                                        Company replied 4/11/86.
                                               6. Submit analytical quality assurance plan.   1/6/86            Plan submitted on time.
                                                 Implement upon approval.                                      Approved by EPA 2/21/86.
                                               7. Submit evaluation of placement and           2/6/86           Plan submitted and
                                                 design of effluent sampling system and                        implemented by Alyeska.
                                                 plan to install most effective system for
                                                 collecting a representative sample.
                                                 Implement upon approval.
                                               8. Install composite effluent sampler and       2/6/86           Installed 11/27/85. In
                                                 commence operation.                                           operation 2/1/86.
                                               9. Submit operating plan for transferring only 3/6/86            Plan submitted on time.
                                                 clarified wastewater from 80 to 90 tanks.                     Under EPA/ADEC review.
                                                 Implement upon approval.
                                               10. Submit study of settling characteristics    3/6/86          Plan submitted on time.
                                                 of 90 tanks; determine settling time                          Under EPA/ADEC review.
                                                 required for wastewater separation.
                                               11. Submit plan to ensure only clarified       3/6/86           Plan submitted on time.
                                                 wastewater is moved from 90 tanks to                          Under EPA/ADEC review.
                                                 DAF unit. Implement upon approval.

                                               Page 40                             GAO/RCED-87-118 Controls Over Ballast Water Treatment

    Appendix IV
    Status of Actions Required of Alyeska Under
    Compliance Orders as of February 28,1987

    Task                                         Due Date         Status
    12. Submit plan for routine removal of sludge 5/6/86          Plan submitted on time.
      from bottoms of 90 and 80 tanks.                           Under EPA/ADEC review.
      Implement upon approval.
    13. Submit plan for treatment and/or         5/6/86           Plan submitted on time.
      disposal of system-generated sludge.                       Under EPA/ADEC review.
      Implement upon approval.

    aConsistent with the due dates for the amended order, cease and desist reintroduction, resuspension,
    or re-entrainment of sludges into treatment plant.

    Page 41                            GAO/RCED-87-118 Controls Over Ballast Water Treatment

    Appendix V

    Major Contributors to This Report

                                     Hugh J. Wessinger, Senior Associate Director, 275-5489
    Resources, Community,    Robert S. Procaccini, Group                   Director
    and Economic                         Robert P. Cavanaugh, Evaluator-in-Charge
    Development Division,    Carol Herrnstadt Shulman, Writer-Editor
    Washington, D.C.                     Cynthia Y. Robinson, Typist

    Seattle Regional Office    Donald A. Praast, Evaluator
                                     Steven N. Calvo, Evaluator
                                     Nancy R. Purvine, Evaluator

    (089320)                             Page 42                     GAO/RCED-87-118 Controls Over Ballast Water Treatment

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