    Storm Water Pollution: Information Needed on the Implications of
    Permitting Oil and Gas Construction Activities (09-FEB-05,
    GAO-05-240).

    To prevent pollutants from entering storm water runoff, the Clean
    Water Act's National Pollutant Discharge Elimination System Storm
    Water Program requires controls for construction activities that
    disturb land. Phase I of this program requires permitting for
    construction activities that disturb 5 acres or more, while Phase
    II requires permitting for activities disturbing between 1 and 5
    acres. The Environmental Protection Agency (EPA) extended the
    Phase II compliance date for discharges associated with oil and
    gas construction activities until March 2005 to analyze the
    impact of Phase II on the oil and gas industry. GAO was asked to
    provide information about oil and gas construction
    activities--such as well drilling and pipeline
    construction--affected by Phase I and likely to be affected by
    Phase II, as well as Phase II's financial and environmental
    implications.
    -------------------------Indexing Terms-------------------------
    REPORTNUM:   GAO-05-240
        ACCNO:   A17276
      TITLE:     Storm Water Pollution: Information Needed on the
    Implications of Permitting Oil and Gas Construction Activities
         DATE:   02/09/2005
      SUBJECT:   Endangered species
    	     Environmental monitoring
    	     Industrial pollution
    	     Oil drilling
    	     Pollution control
    	     Pollution monitoring
    	     Program management
    	     Water pollution
    	     Water pollution control
    	     Wildlife conservation
    	     Land management
    	     Natural gas
    	     Environmental policies
    	     Federal regulations
    	     Construction (process)
    	     Policies and procedures
    	     EPA National Pollutant Discharge
    	     Elimination System Storm Water Program

    	     Texas
    	     Oklahoma
    	     Louisiana

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    GAO-05-240

                     United States Government Accountability Office

                         GAO Report to Congressional Requesters

    February 2005

    STORM WATER POLLUTION

     Information Needed on the Implications of Permitting Oil and Gas Construction
                                       Activities

                                           a

    GAO-05-240

    [IMG]

    February 2005

    STORM WATER POLLUTION

    Information Needed on the Implications of Permitting Oil and Gas Construction
    Activities

                                     What GAO Found

    A small fraction of total oil and gas construction activities have been
    permitted under Phase I of EPA's storm water program. Phase I storm water
    permit data for three of the six largest oil and gas producing states-
    Louisiana, Oklahoma, and Texas-showed that 433 construction activities
    were permitted under Phase I over the most recent 12 months for which data
    were available. About 70 percent, 304 of the 433, were oil and gas
    pipeline activities, most of which were much larger than the 5 acre
    criterion under Phase I. About 17 percent, 72 of the 433, were drilling
    activities. In comparison, these three states reported drilling an average
    of about 10,000 wells for each of the past 3 years. Industry must decide
    whether to seek permit coverage, and it has sought to have its drilling
    activities permitted on few occasions because it has determined that most
    drilling activity involves distinct projects that disturb less than 5
    acres each. In states we reviewed, there were few reported compliance
    problems associated with oil and gas construction activities.

    While it appears that most oil and gas construction activities may have to
    be permitted under Phase II, the actual number of activities that could be
    affected is uncertain, and the financial and environmental implications
    are difficult to quantify. The oil and gas construction activities
    affected by the rule may lead to increased financial costs for the oil and
    gas industry and federal agencies implementing the rule. Many of the
    potential costs stem from meeting permit requirements to review the impact
    of construction activities on endangered species, although this impact
    would be site specific and difficult to quantify. Potentially offsetting
    these costs, the rule may lead to additional environmental protections
    that are difficult to quantify, such as decreased levels of sediment in
    water and benefits for endangered species and their habitat. After
    delaying implementation of this rule for oil and gas construction
    activities for 2 years to study the impact of Phase II, EPA is analyzing
    the impact but, as yet, has not quantified the number of activities
    affected or the potential financial and environmental implications.

    Gas Well Construction Site in Wise County, Texas United States Government
                                 Accountability Office

    Contents

      Letter

    Results in Brief
    Background
    Permit Coverage under Phase I Has Been Obtained by a Small

    Fraction of Total Oil and Gas Activities

    Most Oil and Gas Construction Activity Will Likely Be Affected by Phase
    II, but the Financial and Environmental Implications of Phase II Are
    Difficult to Quantify

    Conclusions
    Recommendation for Executive Action
    Agency Comments and Our Evaluation

    1 3 4

    11

    16 22 22 22

    Appendixes
                   Appendix I:       Objectives, Scope, and Methodology        24
                  Appendix II:     GAO Contacts and Staff Acknowledgments      27
                                                GAO Contacts                   27
                                               Acknowledgments                 27
                               Table 1: Oil and Gas Activities for Which Storm
         Tables                              Water Construction
                                   Permit Coverage Was Obtained, by State      12
                               Table 2: Oil and Gas Activities for Which Storm
                                                Water Permit
                                     Coverage Was Obtained, by State and
                                                Construction
                                                  Activity                     12
                                   Table 3: Onshore Well Completions from      13
                                             2001-2003, by State
        Figures                Figure 1: Activities Covered under Phase I and
                                     II of the NPDES Storm Water Program        7
                               Figure 2: Steps to Obtain Coverage under EPA's
                                                Construction
                                               General Permit                   9
                                 Figure 3: A Texas Gas Construction Location
                                               Including Three
                                        Adjacent Drilling Operations           14

    Contents

    Abbreviations

    DOE Department of Energy
    EPA Environmental Protection Agency
    FWS Fish and Wildlife Service
    NMFS National Marine Fisheries Service
    NPDES National Pollutant Discharge Elimination System
    LADEQ Louisiana Department of Environmental Quality

    This is a work of the U.S. government and is not subject to copyright
    protection in the United States. It may be reproduced and distributed in
    its entirety without further permission from GAO. However, because this
    work may contain copyrighted images or other material, permission from the
    copyright holder may be necessary if you wish to reproduce this material
    separately.

    A

    United States Government Accountability Office Washington, D.C. 20548

    February 9, 2004

    The Honorable James M. Jeffords
    Ranking Minority Member
    Committee on Environment and Public Works
    United States Senate

    The Honorable James L. Oberstar
    Ranking Democratic Member
    Committee on Transportation and Infrastructure
    House of Representatives

    Polluted storm water runoff can lead to U.S. surface water degradation.
    Runoff from sites where the ground has been disturbed-in particular,
    construction sites-can deposit sediment and other harmful pollutants into
    rivers, lakes, and streams. Sediment-the primary environmental concern
    associated with construction activities-clouds water, decreases
    photosynthetic activity; reduces the viability of aquatic plants and
    animals;
    and, ultimately, destroys organisms and their habitat. According to the
    Environmental Protection Agency (EPA), sediment runoff rates from
    cleared and graded construction sites are typically 10 to 20 times greater
    than those from agricultural lands and one-thousand to two-thousand times
    greater than those from forest lands.

    Storm water discharges from certain construction activities, as well as
    from other defined industrial sources and municipal storm water sewer
    systems, are subject to the Clean Water Act's National Pollutant Discharge
    Elimination System (NPDES) Storm Water Program. This program is
    designed to reduce the impact of storm water by requiring the
    implementation of controls designed to reduce harmful pollutants from
    being washed by storm water runoff into local water bodies. The NPDES
    program regulates a variety of municipal, industrial, and construction
    activities, such as oil and gas construction activities.1 Oil and gas
    construction activity includes clearing, grading, and excavating2
    activities
    associated with oil and gas exploration and production, processing and
    treatment operations, and transmission facilities. These activities are
    often

    1Some oil and gas industry groups are asserting in litigation that the
    Clean Water Act does not authorize EPA to regulate most oil and gas
    construction activities under the storm water program.

    240 C.F.R. S: 122.26(b)(14)(x) and 40 C.F.R. S: 122.26(b)(15).

    associated with oil and gas well drilling and pipeline construction, as
    well as other oil and gas construction.

    Phase I of this program, which became effective in 1990, regulates storm
    water discharges from construction activities that disturb 5 acres or more
    of land, as well as smaller construction activities that are part of a
    common plan of development that disturbs 5 acres or more.3 Phase II of the
    storm water program applies to construction activity disturbing between 1
    and 5 acres of land.4 EPA published the Phase II rule in December 1999 and
    set a March 2003 compliance date for permit coverage for discharges from
    small construction sites. EPA had originally assumed that few oil and gas
    construction activities would be affected by Phase II; but subsequent to
    rule promulgation, EPA became aware that as many as thirty-thousand oil
    and gas sites per year might be affected. So that EPA could perform
    further analysis of key issues, including the likely impact of Phase II's
    permitting requirements on the oil and gas industry, EPA postponed the
    Phase II compliance date for storm water discharges from small oil and gas
    construction sites until March 10, 2005.

    Both phases of the rule allow oil and gas companies to obtain storm water
    permit coverage for their discharges under a general permit. In many other
    environmental programs, regulated entities obtain individual permits
    tailored to site-specific conditions. Though oil and gas companies may
    obtain individual storm water discharge permits, they almost always elect
    to obtain coverage under an NPDES general permit that contains general
    conditions applicable to a large number of sites. To obtain coverage,
    companies file a Notice of Intent to be covered under a general permit.
    This generally informs the permitting authority-EPA or the state,
    depending on the type of entity and its location-of planned activities
    that might involve storm water discharges and requires the operator to
    develop a plan to manage storm water pollution caused by these activities.
    The operator must also evaluate other potential impacts, including whether
    the construction activity is likely to adversely affect endangered or
    threatened species or their habitats before seeking coverage under EPA's
    Construction General Permit.

    3Phase I also regulates storm water discharges from medium and large
    municipal storm water sewer systems and other sources of industrial
    discharges.

    4Phase II also regulates storm water discharges from small municipal storm
    sewer systems.

    This report provides information about (1) oil and gas construction
    activities that have obtained permit coverage under Phase I and (2) oil
    and gas construction activities that are likely to be affected by Phase II
    and its financial and environmental implications.

    To gather information about the oil and gas construction activities that
    have sought permit coverage under Phase I, we spoke to oil and gas
    industry associations representing both large and small companies, and
    government representatives, to get a national perspective on the number
    and types of sites affected. Because there is no centralized database that
    tracks nationwide oil and gas construction activities subject to Phase I,
    we reviewed the storm water permitting history of Louisiana, Oklahoma, and
    Texas-three of the nation's six largest oil and gas producing states. EPA
    administers the permitting process for oil-and gas-related projects in
    Oklahoma and Texas, while Louisiana administers the entire NPDES Storm
    Water Program for its state.5 We reviewed EPA's and Louisiana's storm
    water databases and spoke with the administrators of these databases to
    assess the reliability of these data, which we found to be sufficiently
    reliable for our purposes. In addition, in order to gather information
    about the characteristics of oil and gas construction activities, we
    visited oil and gas construction sites in Louisiana, Oklahoma, and Texas.
    To obtain information about the number of oil and gas construction
    activities potentially affected by Phase II, we spoke with industry and
    government representatives. We discussed the financial and environmental
    implications of Phase II with storm water stakeholders, including
    representatives of various federal agencies, an environmental group, and
    oil and gas associations and member companies. A more detailed description
    of our scope and methodology is presented in appendix I. We conducted our
    review between August 2004 and January 2005 in accordance with generally
    accepted government auditing standards.

    Results in Brief	A small fraction of total oil and gas construction
    activities have obtained permit coverage under Phase I of EPA's Storm
    Water Program. Although there is currently no centralized, nationwide
    storm water permit database, our review of Phase I storm water permit data
    for three of the six largest oil and gas producing states-Louisiana,
    Oklahoma, and Texas-identified 433

    5Oklahoma and Texas administer the NPDES programs in their respective
    states for most nonoil- and nongas-related projects with EPA oversight of
    those activities. EPA oversees Louisiana's administration of its program.

    oil and gas construction activities that obtained Phase I permit coverage
    in these states over the most recent 12 months. About 70 percent of these
    activities were oil and gas pipelines, which were generally much larger
    than the 5-acre threshold, while about 17 percent were drilling
    activities. In comparison, these three states reported drilling an average
    of over ten thousand wells for each of the past 3 years. Industry
    officials must decide whether they should seek permit coverage, and they
    have sought to have their drilling activities permitted on few occasions
    because they concluded that most drilling activity involved distinct
    projects that disturbed less than 5 acres each. Neither EPA nor state
    officials reported many compliance problems associated with oil and gas
    construction activities in states we reviewed, although actual compliance
    rates are not known.

    EPA, industry and state officials believe that most oil and gas
    construction activities involve between 1 and 5 acres of land and will
    need permit coverage under Phase II of the NPDES Storm Water Program,
    although the actual number of activities this rule will affect is
    uncertain. Furthermore, the financial and environmental implications of
    implementing Phase II for oil and gas construction activities are
    difficult to quantify. The additional oil and gas construction activities
    affected by the rule may lead to increased financial costs to the oil and
    gas industry and to implementing federal agencies. Many of the potential
    costs that have been identified relate to EPA's permit requirements to
    review construction activities' impact on endangered species. However,
    this impact is site specific and difficult to quantify, given that not all
    sites will have to perform the same level of review. Potentially
    offsetting these costs, additional environmental protections may result
    from a greater number of oil and gas construction activities covered by
    Phase II, including decreased levels of sediment in water and benefits for
    endangered species and their habitat. Similar to the potential costs,
    potential environmental benefits are difficult to quantify. After delaying
    implementation of this rule for oil and gas construction activities for
    almost 2 years to study the impact of Phase II, EPA has not yet completed
    its analysis of the Phase II rule, quantified the number of activities
    affected, or determined the potential financial and environmental
    implications. We are recommending that EPA's Administrator complete the
    agency's analysis of the Phase II program before making a final decision
    on its implementation.

    Background	According to EPA, polluted storm water runoff is a leading
    cause of impairment to the nearly 40 percent of surveyed U.S. water bodies
    that do not meet water quality standards. Pollutants in storm water can

    significantly impact the environmental quality of U.S. waters by
    destroying aquatic habitat and elevating pollutant concentrations and
    loadings. Storm water discharges from construction activities can increase
    pollutants and sediment amounts to levels above those found in undisturbed
    watersheds.

    The NPDES Program was created in 1972 under the Clean Water Act to control
    water pollution from point sources-any discernible, confined, and discrete
    conveyance.6 Though EPA has had authority since 1972 to regulate storm
    water discharges, it declined to require permits for most of these
    discharges for over 15 years. However, in 1987, Congress passed the Water
    Quality Act, which amended the Clean Water Act to require the regulation
    of storm water discharges.7 Accordingly, EPA established the NPDES Storm
    Water Program, which requires certain municipal, industrial, and
    construction sources to obtain permit coverage for storm water discharges.

    The storm water program was implemented in two phases:

    1.	Phase I, adopted in 1990, which applies to medium and large municipal
    separate storm sewer systems and 11 categories of industrial activity
    (including large construction activity disturbing 5 or more acres of
    land);8 and

    2.	Phase II, adopted in 1999, which applies to small municipal separate
    storm sewer systems and small construction activity disturbing between 1
    and 5 acres of land.9

    The Phase II final rule was published on December 8, 1999, and required
    storm water dischargers to obtain permit coverage by March 10, 2003. When
    promulgated, EPA assumed that few, if any, oil and gas sites would be
    impacted by the construction component of the Phase II rule. Subsequent to
    rule promulgation, EPA decided to reevaluate how many oil and gas
    construction sites would be subject to the rule and postponed the deadline
    for seeking coverage to March 10, 2005, for oil and gas construction

    633 U.S.C. S: 1342(p).

    733 U.S.C. S: 1362(14).

    8NPDES Permit Application Regulations for Storm Water Discharges, 55 Fed.
    Reg. 47,990 (Nov. 16, 1990).

    9NPDES -Regulations for Revision of the Water Pollution Control Program
    Addressing Storm Water Discharges, 64 Fed. Reg. 68,722 (Dec. 8, 1999).

    activities disturbing between 1 and 5 acres of land.10 The postponement
    was designed to allow EPA enough time to analyze and better evaluate the
    impact of the permit requirements on the oil and gas industry and to
    reconsider how key elements of the Phase II regulations would apply to
    small oil and gas sites.11

    Analyzing the impact of storm water permitting on oil and gas construction
    activities is important because this type of construction requires
    companies to undertake a number of earth disturbing activities. These
    activities include clearing, grading, and excavating,12 associated with
    oil and gas exploration and production; processing and treatment
    operations; and transmission facilities. For example, to prepare a site
    for drilling, operators must create a pad to support the drilling
    equipment, such as the derrick. Creating the pad generally requires
    clearing and grading-or leveling-an area and then placing rock, concrete,
    or other materials on it to stabilize the surface. If necessary, companies
    may also construct access roads to transport equipment and other materials
    to the site as well as additional pipelines to connect the site to
    existing pipelines. As with other construction activities, storm water
    runoff containing sediment from oil and gas construction can lead to the
    degradation of nearby waters if not properly managed. Figure 1 identifies
    activities, including oil and gas construction, covered under Phase I and
    II of the NPDES Storm Water Program.

    10Modification of National Pollutant Discharge Elimination System (NPDES)
    Permit Deadline for Storm Water Discharges for Oil and Gas Construction
    Activity That Disturbs One to Five Acres of Land, 68 Fed. Reg. 11325-01.

    11The NPDES Storm Water Program does not apply to storm water runoff from
    operational oil and gas sites, as long as the runoff does not come into
    contact with any raw material or product of any kind. Clean Water Act S:
    402(l)(2). EPA has asserted that Clean Water Act section 402(l)(2) does
    not bar EPA from regulating most storm water discharges from construction
    activities at oil and gas sites. Some industry groups disagree, asserting
    that section 402(l)(2) bars such regulations. The issue has been raised by
    industry in a case currently pending in the U.S. Court of Appeals for the
    Fifth Circuit. Tex. Indep. Producers and Royalty Owners Ass'n v. U.S. EPA,
    No. 03-60506 (filed Jun. 19, 2003).

    1240 C.F.R. S: 122.26(b)(14)(x) and 40 C.F.R. S: 122.26(b)(14).

    Figure 1: Activities Covered under Phase I and II of the NPDES Storm Water
    Program

    Indicates a category that includes major oil and gas activities

    Phase I

    Phase II

    Source: GAO analysis of EPA documentation.

    aIndustry categories I, II, and VIII also include some minor oil and gas
    activities: I includes petroleum refining, II includes petroleum products,
    and VIII includes bulk stations and terminals.

    bFacilities subject to storm water effluent limitations guidelines, new
    source performance standards, or toxic pollutant effluent standards under
    40 C.F.R. subchapter N.

    cOil and gas site operators must obtain storm water permit coverage if
    their storm water discharges come into contact with raw material or
    product of any kind.

    NPDES storm water programs are administered at both the federal and state
    level. Under the Clean Water Act, states whose programs EPA has

    approved may manage their state's programs. Forty-five states,13 including
    Louisiana, are responsible for administering their own NPDES program,
    including its storm water component; and EPA is responsible for
    administering and enforcing the NPDES Storm Water Program in five
    states.14 In addition, EPA is the NPDES storm water permitting authority
    for oil and gas activities in Oklahoma and Texas.

    In many environmental programs, regulated entities obtain individual
    permits. In contrast, under the storm water program, regulated entities
    may seek coverage under a single document called a general permit. A
    general permit is issued by EPA or by the state environmental regulator
    and is available to all eligible operators in the EPA or state program.15
    With respect to regulated discharges of storm water associated with
    construction activity, EPA's general permit is called the Construction
    General Permit. Each general permit, whether it is issued by EPA or by a
    state program, sets forth many steps that regulated entities must take to
    ensure the minimization of storm water pollution.

    To obtain coverage under the EPA Construction General Permit, regulated
    entities must file a complete and accurate Notice of Intent to be covered
    under the general permit prior to initiating the construction activities.
    The Notice of Intent includes a signed certification statement from a
    company official acknowledging that the operator has met all eligibility
    conditions of the permit, including development and implementation of a
    plan to control the discharge of pollutants from the site. Examples of
    types of sediment and erosion controls that can be included in the plan
    consist of vegetative cover, rocks, and hay bales to filter storm water,
    or terracing slopes to divert and slow runoff. Figure 2 diagrams the steps
    that must be completed to obtain coverage under EPA's Construction General
    Permit.

    13The Virgin Islands are also authorized to administer their own NPDES
    program.

    14These five states include Alaska, Idaho, Massachusetts, New Hampshire,
    and New Mexico plus the District of Columbia and most U.S. Territories.
    EPA is also the permitting authority on all Indian lands and for federal
    facilities in Colorado, Delaware, Vermont, and Washington.

    15Though states may implement the storm water program without issuing
    general permits, all states with a storm water program have authority to
    issue general permits. In addition, regulated entities may apply for
    individual storm water discharge permits (40 C.F.R. S: 122.28(b)(3)(iii));
    however, regulated entities typically apply for general permit coverage.

    Figure 2: Steps to Obtain Coverage under EPA's Construction General
    Permita

    Source: GAO analysis of EPA documentation.

    Note: Construction activities must comply with applicable state, tribal,
    and local provisions. Additionally, construction site operators must
    determine if their construction activity has the potential to discharge
    storm water into a water with a total maximum daily load (TMDL)
    established-a state limit required by the Clean Water Act on the amount of
    pollutants that may enter that body of water. If so, additional steps may
    be needed to ensure discharges from the site are consistent with any
    applicable limits established by the TMDL.

    aState programs must have requirements that are at least as stringent as
    those in the EPA program. 40 C.F.R. S: 123.25.

    bOperators may submit an application for coverage under an individual
    permit.

    One of the steps operators must complete when filing a Notice of Intent
    involves determining whether the construction activity meets the permit's
    eligibility conditions that address endangered species. The purpose of the
    Endangered Species Act is to conserve endangered and threatened species
    and the ecosystems upon which they depend. The act prohibits the
    "taking"16 of any endangered fish or wildlife. Under the act and
    implementing regulations, federal agencies, including EPA, must determine
    whether their activities might affect a listed species or habitat
    identified as critical. If effects are likely, the agencies, including
    EPA, must consult with the Fish and Wildlife Service (FWS) or the National
    Marine Fisheries Service (NMFS) to ensure that the activities, such as
    issuing permits, will not jeopardize a species' continued existence or
    adversely modify its designated critical habitat.17

    In an effort to satisfy its responsibilities under the Endangered Species
    Act, EPA consulted with FWS and NMFS to create language for its
    Construction General Permit that requires operators to self-certify that
    they have examined their project's potential effects on endangered
    species. Specifically, language in appendix C of EPA's Construction
    General Permit sets out the procedures operators are to follow in meeting
    permit conditions that address endangered species for coverage under the
    permit. Briefly, the procedures in the permit require companies to

    o 	determine if federally listed threatened or endangered species or their
    critical habitats are present on or near the project area,

    o 	determine if the construction activity's storm water discharges or
    related activities are likely to affect any threatened or endangered
    species or designated critical habitat on or near the project area,

    o  determine if measures can be implemented to avoid adverse effects, and

    16The term "take" is defined as "to harass, harm, pursue, hunt, shoot,
    wound, kill, trap, capture, or collect, or attempt to engage in any such
    conduct." 16 U.S.C. S: 1532(15).

    17FWS is the agency in the Department of the Interior to which the
    Secretary has delegated authority for implementing the Endangered Species
    Act for all terrestrial species as well as most aquatic, nonmarine
    species. Similarly, NMFS is the agency to which the Department of Commerce
    has delegated authority for protecting ocean-dwelling and anadromous
    species, such as salmon.

    o 	if adverse effects are likely, work with FWS or NMFS to modify the
    project and/or take other actions to gain authorization for the activity.

      Permit Coverage under Phase I Has Been Obtained by a Small Fraction of Total
      Oil and Gas Activities

    A small fraction of total oil and gas construction activities have sought
    permit coverage under Phase I of EPA's storm water program. Industry and
    state officials we spoke with confirmed that few of their sites obtained
    permit coverage under the Phase I rule, since their activities rarely
    exceeded Phase I's 5-acre size threshold. However, EPA clarified that
    since industry decides whether to seek permit coverage for their oil and
    gas construction activities, the total number of activities for which
    permit coverage should have been obtained is unknown. EPA representatives
    told us they expect that pipeline projects are more likely to obtain
    permit coverage than individual drilling sites due to the higher
    visibility of pipelines, additional preconstruction approval processes
    under other laws, and the higher likelihood of pipeline construction being
    conducted by larger companies with more experienced legal and
    environmental staff.

    Although there is currently no centralized storm water permit database
    that tracks storm water permit coverage nationwide, our review of Phase I
    storm water permit data for three major oil and gas producing states-
    Louisiana, Oklahoma, and Texas-confirmed that permit coverage has been
    obtained for only a small number of oil and gas construction activities,
    compared with the thousands of drilling activities occurring in those
    states.18 Our review found 433 sites in Louisiana, Oklahoma, and Texas
    that have obtained construction storm water permit coverage for their oil
    and gas activities in the most recent 12-month period for which data were
    available. Table 1 shows the breakdown of permit coverage by state for the
    most recent 12 months that data were available.

    18Storm water permit data reflects the number of sites that obtained
    permit coverage. It does not necessarily represent the number of sites
    that should have obtained coverage.

    Table 1: Oil and Gas Activities for Which Storm Water Construction Permit
    Coverage Was Obtained, by State

                         State Number obtaining permit coverage

    Louisiana

                                      Oklahoma 119

                                       Texas 292

                                       Total 433

    Sources: Louisiana Department of Environmental Quality for Louisiana and
    EPA's Office of Water for Oklahoma and Texas.

    Note: For Oklahoma and Texas, these data covered December 2003 through
    November 2004. For Louisiana, the data covered November 2003 to October
    2004.

    Further analysis of Phase I storm water permitting data showed that the
    principal activity for which oil and gas companies sought storm water
    permit coverage in these states was for pipeline construction. Three
    hundred four of the 433 activities for which permit coverage was obtained
    in the most recent 12-month period-about 70 percent-were for pipeline
    construction activities. Table 2 shows the breakdown of permit coverage by
    state and activity.

    Table 2: Oil and Gas Activities for Which Storm Water Permit Coverage Was
    Obtained, by State and Construction Activity

                                 Construction activity

                      State       Pipelines    Drilling      Othera         Total
                  Louisiana              12              2      8
                   Oklahoma             104              3     12             119
                      Texas             188       67           37             292
                      Total             304       72           57             433

    Sources: Louisiana Department of Environmental Quality for Louisiana and
    EPA's Office of Water for Oklahoma and Texas.

    aOther activities include the construction of refineries, compressor
    stations, tank batteries, etc.

    Note: For Texas and Oklahoma, these data covered December 2003 through
    November 2004. For Louisiana, the data covered November 2003 to October
    2004.

    Fifty-four percent of the 304 pipeline activities in these states
    disturbed more than 10 acres of land. Eighty-seven pipeline
    activities-almost 30 percent of all the pipeline permittees-exceeded 20
    acres in size.

    Another key oil and gas construction activity in these states was oil and
    gas well drilling, with 72 of the 433 permits-about 17 percent-involving
    drilling activities. Fifty-six percent of these drilling activities
    disturbed between 5 and 8 acres of land. The drilling activities for which
    storm water permit coverage was sought represents a small portion of the
    total number of oil and gas drilling activities occurring in these three
    states. We reviewed onshore well completion data for Louisiana, Oklahoma,
    and Texas and found that between 2001 and 2003, an average of ten-thousand
    wells was completed each year.19 Table 3 provides data on the number of
    wells completed in these three states between 2001 and 2003 and the
    average number of wells completed each year over the 3-year period.

    Table 3: Onshore Well Completions from 2001-2003, by State

                                                                          Average
                       State         2001    2002         2003           per year
                  Louisianaa          877     556         699                 711
                    Oklahoma        2,348    2,339       2,117              2,268
                       Texas        7,478    5,973       7,622              7,024
                       Total       10,703    8,868       10,438            10,003

    Sources: Louisiana Office of Conservation, Oklahoma Corporation
    Commission, and Railroad Commission of Texas.

    aDue to the structure of the Louisiana Office of Conservation's database,
    this figure may contain a small number of offshore wells.

    Industry officials must decide whether or not they will apply for permit
    coverage, and some may have applied for storm water permit coverage on few
    occasions because they broke their construction activities-which taken
    together would exceed 5 acres-into what they believed were distinct
    projects that disturbed less than 5 acres each. During our site visit to a
    Texas gas construction location, we observed three drilling sites

    19Operators typically file completion reports with state oil and gas
    agencies upon termination of drilling a well. Although the number of
    completion reports filed does not translate exactly to the number of
    construction activities subject to EPA's Phase I and II storm water rules,
    completion numbers do provide context for understanding the magnitude of
    oil and gas drilling activities occurring in different states. Depending
    on how a state manages its completion records, completion data may include
    modifications to wells that do not require significant amounts of
    construction and therefore may not be subject to EPA's storm water rules.
    Additionally, because completion data pertains to wells drilled, it does
    not reflect other construction activities, such as pipeline construction,
    that may be subject to the storm water rules.

    land. Neither the drilling company nor the pipeline company constructing
    these activities obtained a permit under Phase I, although each of the
    four activities would require permitting under Phase II after the
    postponement period passes and small oil and gas sites are required to
    comply with the Phase II rules.

    EPA's Phase I rule requires that activities disturbing 5 acres or more of
    land-as well as smaller construction activities that are part of a common
    plan of development that disturbs 5 acres or more-obtain permit coverage.
    EPA guidance defines a common plan of development as a contiguous area
    where multiple separate and distinct construction activities occur under a
    single plan. As this definition relates to oil and gas activities, EPA
    guidance considers lease roads, pipeline activities, and drilling pads to
    be a single "common" activity if they are under construction at the same
    time-provided there is an interconnecting road, pipeline or utility
    project, or if the activities are within one-fourth mile of each other.
    EPA headquarters officials said that the aforementioned example highlights
    a unique situation in which the definition of the common plan is difficult
    to interpret without more information from the site operator(s). They said
    that depending on the operator's reasons for drilling the second and third
    wells, permit coverage may or may not have been required in this example.
    Many oil and gas industry groups assert that EPA's definition of "common
    plan" is confusing and illegal because it does not adequately consider oil
    and gas industry practices. These oil and gas groups have raised the issue
    of EPA's definition of "common plan" in two lawsuits pending against EPA
    in federal courts.20

    Although actual compliance rates in the field are unknown, neither EPA nor
    state officials reported many compliance problems associated with oil and
    gas construction activities that are 5 acres or more in size in Louisiana,
    Oklahoma, and Texas. Currently, EPA's Region 6-responsible for
    administering the Oklahoma and Texas storm water programs for oil and gas
    activities-has not completed any enforcement actions against oil and gas
    construction companies for violations of the storm water program, although
    it currently has one enforcement action under way. Region 6 enforcement
    officials told us they primarily depend on citizen complaints

    20Wisc. Builders Ass'n v. U.S. EPA, No. 03-2908 (7th Cir. filed Jul. 16,
    2003); Tex. Indep. Producers and Royalty Owners Ass'n v. U.S. EPA, No.
    03-60506 (5th Cir. filed Jun. 19, 2003). Among the industry groups'
    assertions is that EPA's definition of "common plan" fails to adequately
    consider oil and gas industry practices: according to the industry groups,
    drillers do not know at the onset of drilling activity how much land they
    will ultimately disturb.

    and state referrals to identify oil and gas construction activities that
    may adversely impact water quality. Similar to EPA Region 6's program, the
    Louisiana Department of Environmental Quality's (LADEQ) construction storm
    water inspections are complaint driven. A Louisiana inspections
    representative whom we spoke with said that due to the traditionally short
    time frames for completing oil and gas construction activities, LADEQ
    found including these activities in the state's annual compliance
    monitoring strategy to be impractical. As a result, the state relies on
    citizen complaints and routine surveillance to provide cause for
    conducting storm water inspections of construction activities. Although
    LADEQ does not track storm water enforcement actions for oil and gas
    construction separately from those of other types of construction
    activities, Louisiana officials with whom we spoke said they did not
    believe the state had carried out any storm water enforcement actions
    against oil and gas construction activities.

      Most Oil and Gas Construction Activity Will Likely Be Affected by Phase II,
      but the Financial and Environmental Implications of Phase II Are Difficult to
      Quantify

    EPA, industry and state government representatives agree that Phase II
    permit coverage will be required for most oil and gas construction
    activities, but the actual number of activities that will be affected by
    the rule is unknown. In addition, the financial and environmental
    implications of implementing Phase II for oil and gas construction
    activities are difficult to quantify. Phase II may lead to increased costs
    for federal agencies with a role in the storm water permitting process, as
    well as for members of the oil and gas industry who obtain permit
    coverage. However, Phase II may also lead to environmental benefits for
    local waters and endangered species and their habitats, even though these
    benefits are difficult to quantify. As EPA approaches the end of a 2-year
    period to study the impact of Phase II on oil and gas construction
    activities, EPA has not yet quantified the number of sites impacted or the
    financial and environmental implications of the Phase II rule's
    implementation.

        Most Oil and Gas Construction Activities Will Likely Be Required to Obtain
        Storm Water Permit Coverage under Phase II, but the Actual Number of
        Activities That Will Be Affected by the Rule Is Unknown

    EPA, industry and state government representatives agree that most oil and
    gas construction activities will disturb 1 acre or more of land and, as
    such, will have to obtain permit coverage under the Phase II rule.
    However, the precise number of oil and gas construction activities that
    will require storm water permit coverage under the Phase II rule is
    unknown, and estimating the specific number of sites that will be affected
    by Phase II is problematical because there is no data source that
    comprehensively identifies the disparate oil and gas construction
    activities subject to the rule and categorizes them by size. Industry
    representatives that we spoke with said most, if not all, of their oil and
    gas construction activities not covered by Phase I would be required to
    seek permit coverage under Phase

    II. These representatives said that their typical drilling construction
    site disturbs more than 1 acre but less than 5 acres of land. Similarly,
    representatives from the Oklahoma Corporation Commission and Railroad
    Commission of Texas indicated that almost all of the oil and gas well
    construction in their states would disturb over 1 acre of land and would
    have to obtain storm water permit coverage. Furthermore, EPA officials
    generally concurred that most oil and gas construction activities would
    need to obtain coverage, or seek a waiver, under Phase II. A company may
    receive an optional waiver from permit coverage in more arid areas where
    there is low rainfall. EPA officials told us that in arid areas, such as
    western Oklahoma and Texas, most operators could qualify for waivers with
    expeditious construction schedules and careful timing.

        Phase II May Lead to Additional Costs that Are Difficult to Quantify

    The Phase II rule may lead to additional costs for industry and federal
    agencies, but these costs are difficult to quantify. For example, the EPA
    Construction General Permit requires companies to implement erosion and
    sediment controls to minimize pollutants in storm water discharges, which
    will lead to additional costs for operators. Industry representatives we
    spoke with were less concerned with these particular costs, however,
    because they said that the oil and gas industry routinely takes similar
    preventative measures. These officials did express concerns about the
    costs associated with storm water inspections required by the permit.
    These inspections are designed to ensure companies properly implement
    practices to minimize storm water pollution and require that sites be
    inspected (1) at least once every 7 days or (2) at least once every 14
    days and within 24 hours of certain storm events. Industry officials
    explained that oil and gas activities typically occur in remote, rural
    areas, which makes it costly for them to inspect sites as required by the
    permit. Furthermore, since sites may not always have personnel present,
    these

    representatives said it can be difficult to determine when a storm event
    has occurred. EPA maintains that it has reduced the inspection burden by
    allowing less difficult pipeline inspections and authorizing monthly
    inspections under certain circumstances, such as when a site is
    temporarily stabilized or when winter conditions make runoff unlikely.

    The Phase II storm water rule may also lead to additional costs for
    federal agencies and the oil and gas industry associated with the
    endangered species requirements of the storm water permit. The EPA Storm
    Water Construction General Permit provides coverage under the permit only
    if the storm water discharges are not likely to jeopardize the continued
    existence of any species that is listed as endangered or threatened,
    pursuant to the Endangered Species Act, or result in the adverse
    modification or destruction of critical habitat. Because companies seeking
    storm water permit coverage must evaluate the impact their construction
    activities might have on endangered species, the workload of agencies such
    as the U.S. Fish and Wildlife Service (FWS) and National Marine Fisheries
    Service (NMFS), which are the regulatory agencies for the Endangered
    Species Act, could increase if a significantly larger number of sites
    initiated communications or consultation requests. NMFS headquarters
    representatives and FWS field representatives we spoke with indicated that
    the increased workload from a greater number of Phase II consultation
    requests could exceed staff capabilities. However, they also said they
    were unsure what impact Phase II would have on their activities, because
    they did not know how many additional oil and gas construction sites would
    be affected by the rule.

    Oil and gas industry representatives were most concerned about costs that
    stem from delays companies may face when identifying a construction
    activity's impact on endangered species. These representatives said that
    endangered species reviews are often extremely time intensive and require
    interactions with federal agencies that introduce delays into the
    construction process and lead to increased costs. Various forms of
    interactions with FWS and NMFS (the Services) may be used to ensure that
    provisions of the storm water permit concerning endangered species are
    met-including the more common informal consultations and less frequent

    formal consultations.21 Informal consultation can be used to determine
    whether an activity will adversely affect endangered or threatened species
    or critical habitat. If during informal consultation the action agency-in
    this case EPA-determines that no adverse impact is likely and FWS and NMFS
    agree, the consultation process is terminated with the written concurrence
    of the Services. Although there is no regulatory deadline for completing
    an informal consultation, the Services' policy is to respond to informal
    consultations about endangered species within 30 days. Formal
    consultations are necessary if an activity is likely to adversely affect a
    listed species. The Endangered Species Act requires most formal
    consultations to be conducted within 90 days. In addition, the
    implementing regulations require the Services to document in a biological
    opinion, within 45 days after the conclusion of the consultation, whether
    the activity is likely to jeopardize the listed species' continued
    existence or adversely modify its designated critical habitat. If
    necessary, the biological opinion may also provide reasonable and prudent
    alternatives that, if taken, would avoid jeopardizing a species or
    adversely modifying its critical habitat. However, the Services may
    postpone the start of any of these time frames until they have the best
    available information on which to base their opinions.

    The total time needed to consult with the Services is difficult to
    quantify, given that not all sites will have to perform the same level of
    review and because not all construction activities occur in areas where
    endangered species are present. In a March 2004 report on the overall
    consultation process, we identified concerns from federal agencies and
    nonfederal entities about the time it takes to complete the consultative
    process. In one limited review that we conducted of 1,550 consultations,
    about 40 percent exceeded established time frames. However, we found that
    FWS and NMFS needed more complete and reliable information about the level
    of effort devoted to the process. Specifically, these time frames did not
    capture sometimes significant amounts of preconsultation time spent
    discussing a project before the consultation officially was considered to
    have begun.22 Even without the requirements of EPA's Construction General
    Permit and

    21The Endangered Species Act requires federal agencies such as EPA-not
    regulated entities such as individual construction site operators-to
    consult with the Services regarding endangered species. However, EPA's
    Construction General Permit requires applicants to self-certify that they
    have examined their project's potential effects on endangered species. In
    doing so, the Construction General Permit specifies that operators must
    satisfy certain criteria, two of which are entering into formal and
    informal consultations with the Services.

    22U.S. GAO, Endangered Species: More Federal Management Attention Is
    Needed to Improve the Consultation Process, GAO-04-93 (Washington, D.C.:
    Mar. 19, 2004).

    associated consultations under the Endangered Species Act, operators of
    oil and gas construction activities would still have to spend time
    complying with the act by ensuring that their activities do not result in
    a "take" of an endangered species.

        Phase II May Lead to Additional Benefits that Are Difficult to Quantify

    The Phase II storm water rule may lead to additional environmental
    benefits, although these benefits can be difficult to quantify. Officials
    from EPA's Office of Water indicated that while it is difficult to
    quantify all the benefits associated with the rule, the principal benefits
    are based on decreased quantities of sediment in water. These officials
    told us that excess amounts of sediment in water can affect aquatic
    habitat, water quality, waters' use as a source of drinking water and
    water supply reservoir capacity, navigation, and recreational activities.
    According to FWS officials, construction activities may affect listed
    species in both direct and indirect ways. Direct effects may include
    killing or injuring members of listed species. Indirect effects may
    include changing essential behavior patterns like feeding, breeding, or
    sheltering, as a result of modifications to the species' habitat.
    Additionally, the NMFS acknowledged that land disturbance activities that
    increase the amount of sediment in water and turbidity can indirectly
    influence endangered species' productivity and ultimately cause changes in
    migratory behavior, reduce prey abundance, reduce the survival and
    emergence of larvae, and contribute to increased temperatures and chemical
    pollutants that can cause habitat loss.

    An environmental group representative we spoke with said that voluntary
    initiatives are not a viable method for resolving storm water pollution
    issues and that the permit process provides a mechanism for ensuring that
    practices to mitigate water pollution from construction activities are
    implemented. This representative also commented that EPA has not provided
    any evidence that the environmental consequences of oil and gas
    construction activities are different from those of other types of
    construction activities or that the oil and gas industry's controls are
    any better. Finally, this representative said that a single industry
    should not be exempted from regulations with which other industries must
    comply and added that the large number of oil and gas activities
    potentially subject to the rule shows the significant amount of
    environmental damage that could occur if these activities went
    unregulated. EPA is currently studying the environmental impact of oil and
    gas construction activities but has not completed its analysis.

    Industry representatives, however, believe that the Phase II storm water
    rule provides only negligible environmental benefits and that the current
    system of regulation encourages environmentally friendly construction
    practices. For example, one industry representative stated that with only
    the Phase I rule in effect, companies have an incentive to keep
    construction activity to less than 5 acres-thus minimizing the land
    disturbance and associated environmental effects. If the Phase II rule
    were implemented as written, this representative maintained the industry
    would have no incentive to minimize the acreage used in order to keep the
    site under 5 acres.

        EPA Has Not Completed Its Assessment of the Number of Oil and Gas Sites
        Impacted by Phase II or Its Financial and Environmental Implications

    Almost 2 years after delaying the implementation of Phase II for oil and
    gas activities in order to study and evaluate the impact on the industry,
    EPA initiated an analysis of the rule but has not completed the study,
    quantified the number of activities affected, or determined its potential
    financial and environmental implications. In March 2003, EPA extended the
    deadline for operators to obtain Phase II permits for oil and gas
    activities in order to allow itself additional time to analyze and better
    evaluate the impact of the rule on the oil and gas industry. This 2-year
    extended deadline will expire on March 10, 2005. However, as we performed
    audit work for this engagement, EPA had not issued any analysis of the
    rule's impact; nor could EPA management representatives provide a specific
    estimate of when its analysis would be completed or when a final decision
    would be reached. We provided a draft of this report with our
    recommendation to EPA. Subsequently, on January 18, 2005, the agency
    proposed a further extension of the compliance date to June 12, 2006, to
    complete its review and take final action. Within 6 months of a final
    action on the January 18, 2005, proposal, EPA intends to propose
    rulemaking to address storm water discharges from oil and gas sites and
    invite public comment. Separate from EPA's efforts, oil and gas industry
    representatives informed us of a Department of Energy (DOE) study to
    evaluate the impact of the Phase II rule on the oil and gas industry.
    During our study, officials from DOE's Office of Fossil Energy told us
    that DOE's study was still in draft form. These officials would not
    provide an explanation of the purpose, costs, or estimated completion date
    of the study.23

    23As we finalized our report, DOE completed and posted its economic
    analysis study on its Web site at
    http://www.fossil.energy.gov/programs/oilgas/publications/storm_water_analysis/Storm_Wa
    ter_Analysis.html.

    Conclusions	Our review indicated that it is probable that substantially
    more oil and gas activities will be impacted by Phase II of the NPDES
    storm water rule than by Phase I. Given that EPA has not been able to
    quantify the number of oil and gas activities required to obtain storm
    water permit coverage under either rule, it remains important that EPA
    identify the universe of oil and gas activities that would most likely be
    affected. This analysis would provide the necessary foundation for
    understanding the implications that the rule may have for the environment
    and the oil and gas industry and determine the overall effectiveness of
    the NPDES storm water program.

      Recommendation for Executive Action

    So that EPA may fully understand the implications of Phase II of its storm
    water rule prior to deciding whether the oil and gas industry should be
    subject to it, we recommend that EPA complete its Phase II analysis before
    making any final decision. Furthermore, as a part of this analysis, we
    recommend that EPA assess

    o  the number of oil and gas sites impacted by the Phase II rule;

    o 	the costs to industry of compliance with the rule and whether these
    costs are solely attributable to the storm water rule; and

    o 	the environmental implications and benefits of the storm water rule,
    including, but not limited to, potential benefits for endangered species.

    Agency Comments and 	We requested comments on a draft of this report from
    the Administrator of the Environmental Protection Agency (EPA). EPA
    provided oral comments

    Our Evaluation 	and agreed with our findings and recommendation. In
    addition, EPA included technical and clarifying comments, which we
    included in our report as appropriate.

    As agreed with your staffs, unless you publicly announce the contents of
    this report earlier, we plan no further distribution until 30 days from
    the report date. At that time, we will send copies of the report to the
    EPA Administrator and other interested parties. We will also provide
    copies to others on request. In addition, the report will be available at
    no charge at GAO's Web site at http://www.gao.gov.

    Questions about this report should be directed to me at (202) 512-3841.
    Other key contributors to this report are listed in appendix II.

    John Stephenson Director, Natural Resources and Environment

    Appendix I

                           Objectives, Scope, and Methodology

    This report provides information about (1) oil and gas construction
    activities for which permits have been obtained under Phase I and (2) oil
    and gas construction activities that are likely to be affected by Phase II
    and its financial and environmental implications.

    To address the number of oil and gas activities for which permits have
    been obtained under Phase I, we limited our analysis to three of the top
    five natural gas producing states and three of the top six crude oil
    producing states in 2003, according to available data from the Energy
    Information Administration. We chose states with storm water programs
    implemented by both state and federal authorities. Louisiana's Department
    of Environmental Quality administers the National Pollutant Discharge
    Elimination System's Storm Water Program (NPDES) for its state, while
    Oklahoma's and Texas' storm water programs for oil and gas activities are
    administered by the Environmental Protection Agency's (EPA) Region 6.
    Additionally, Oklahoma and Texas are unique in that only the oil and gas
    portions of their storm water program are administered by EPA; the
    remainder of their storm water program is administered by the state.1

    To determine the number of oil and gas construction activities requesting
    storm water permit coverage under Phase I in those three states and to get
    a national perspective on the number and types of sites affected, we spoke
    with oil and gas industry and government representatives. We also reviewed
    EPA's (for Oklahoma and Texas) and Louisiana's storm water database that
    contains information about Notices of Intent filed with the program
    authority to indicate a company's plan to begin a construction activity
    that disturbs 5 acres or more of land. We reviewed the most recent
    12-month period of data available: EPA's information for Oklahoma and
    Texas from December 2003 to November 2004 and Louisiana's information from
    November 2003 to October 2004. Because the database contained more than
    just oil and gas construction information, we isolated data for those
    companies within the oil and gas industry and reviewed relevant
    characteristics of those Notices of Intent. While this data provides
    information about the number of companies that requested storm water
    permit coverage for their oil and gas construction activities, it does not
    indicate the universe of companies that should have filed. Furthermore,
    these data are not generalizible to the nation as a whole. We spoke with
    the administrator of this database to assess the reliability of this data
    and

    1EPA also administers the storm water program for certain agricultural
    activities in Oklahoma.

    Appendix I
    Objectives, Scope, and Methodology

    found the data from 2003 and 2004 to be sufficiently reliable for our
    purposes. Additionally, to provide us with context for understanding how
    the number of drilling activities covered by Phase I compares with the
    total number of oil and gas drilling activities being carried out, we
    reviewed oil and gas well completion data from Louisiana, Oklahoma, and
    Texas. These data provided us with an additional perspective about the
    magnitude of oil and gas activities occurring in these states and proved
    sufficiently reliable for our purposes. We gathered these data from the
    Louisiana Office of Conservation, Oklahoma Corporation Commission, and
    Railroad Commission of Texas. In order to gather information about the
    characteristics of oil and gas construction activities, we visited oil and
    gas construction sites in Louisiana, Oklahoma, and Texas and viewed
    pollution control measures implemented in various terrains. In Louisiana
    and Texas, we were accompanied by industry representatives who were
    members of the Domestic Petroleum Council; in Oklahoma, we were
    accompanied by EPA and oil and gas industry representatives. Both EPA and
    industry officials provided perspectives on the choice of pollution
    control measures implemented. We spoke with the storm water enforcement
    coordinator for oil and gas activities in EPA's Region 6, as well as the
    state official responsible for storm water program permitting at the
    Louisiana Department of Environmental Quality. We discussed their
    respective storm water programs and strategies for enforcing the storm
    water regulations. When possible, their offices provided data about
    enforcement actions and inspections.

    To determine the number of oil and gas activities that may be affected by
    Phase II and the financial and environmental implications of implementing
    Phase II for oil and gas construction activities, we spoke with storm
    water stakeholders, including the Natural Resources Defense Council.
    Finally, we spoke with oil and gas industry representatives, including the
    Domestic Petroleum Council, the American Petroleum Institute, and the
    International Petroleum Association of America and representatives from
    some of these organizations' members. These stakeholders offered
    contrasting views about the environmental benefits and economic costs of
    these regulations. We also reviewed written comments that environmental
    groups and oil and gas industry groups provided to EPA when the agency
    first proposed postponing the Phase II deadline for oil and gas
    activities.

    To formulate a more thorough understanding of federal agencies with a role
    in implementing the Storm Water Program and level of interagency
    coordination, we spoke with U.S. Fish and Wildlife and National Marine
    Fisheries officials responsible for carrying out section 7 of the
    Endangered

    Appendix I
    Objectives, Scope, and Methodology

    Species Act, which requires federal cooperation to protect endangered
    species. Specifically, we spoke with representatives from the U.S. Fish
    and Wildlife Service's headquarters, Arlington, TX and Tulsa, OK offices,
    as well as with the National Marine Fisheries Service's headquarters and
    southeast regional offices.

    We conducted our review between August 2004 and January 2005 in accordance
    with generally accepted government auditing standards.

    Appendix II

                         GAO Contacts and Staff Acknowledgments

    GAO Contacts	John Stephenson (202) 512-3841 or stephensonj@gao.gov Mark
    Gaffigan (202) 512-3168 or gaffiganm@gao.gov

    Acknowledgments	In addition to the individuals above, James W. Turkett,
    Paige Gilbreath, Omari Norman, Carol Bray and Nancy Crothers made key
    contributions to this report.

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