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PURPOSE

BACKGROUND

WITNESSES

The Water Resources and Environment Subcommittee is scheduled to meet on Thursday, November 15, 2001, at 9:30 a.m. in 2167 RHOB, to receive testimony from G. Tracy Mehan, Assistant Administrator, Office of Water, on the Environmental Protection Agency’s (EPA’s) plans for managing the Total Maximum Daily Load (TMDL) program in light of the Congressional request to review the program and the report by the National Academy of Sciences’ National Research Council Report (NAS report).

Statutory Framework

The Water Resources and Environment Subcommittee has jurisdiction over the Clean Water Act (CWA). Enacted in 1972, section 303 of the Act establishes both the water quality standards and TMDL programs.

Under section 303 of the CWA, states establish water quality standards, which are submitted to and subject to the approval of the EPA. A water quality standard consists of two parts: the designated use of a water body and the water quality criteria used to measure whether or not the designated use is being met. Designated uses include: public water supply, propagation of fish and wildlife, recreation, agricultural consumption, industrial uses, and other purposes. EPA regulations also require states to develop and adopt a statewide antidegradation policy to maintain and protect existing uses.

Under section 303(d)(1) of the CWA, states are required to develop a list of waters within a state that remain impaired after the application of technology-based controls. Technology-based controls are minimum requirements under the CWA. The state is required to prioritize its list of impaired waters, “taking into account the severity of the pollution and the uses to be made of such waters.” In accordance with the priority ranking established by the state, each state is then required to establish a TMDL for each impaired water, for each pollutant that EPA identifies as suitable for such calculation. A TMDL is a calculation of the maximum amount of a pollutant that a waterbody can receive and still meet water quality standards. The TMDL must be established “at a level necessary to implement the applicable water quality standards with seasonal variations and a margin of safety which takes into account any lack of knowledge concerning the relationship between effluent limitations and water quality.”

Under section 303(d)(2), both the list of impaired waters and the TMDL established for each pollutant must be submitted to EPA. EPA must act to approve or disapprove the submission within 30 days. Approved lists and TMDLs must be incorporated into the state’s water quality management plan under section 303(e) of the CWA. If EPA disapproves a list of impaired waters and a TMDL, then EPA must identify impaired waters in the state and establish TMDLs for those impaired waters within 30 days. The EPA developed list and TMDLs must then be incorporated into the state’s water quality management plan.

TMDL Regulations

In August 1999, EPA proposed to comprehensively revise its TMDL regulations. This proposal generated significant interest among stakeholders and members of Congress. EPA received over 30,000 public comments. In the 106th Congress, thirteen hearings were held on these proposed regulations by House and Senate Committees, including two hearings held in this Subcommittee in February 2000. Six separate pieces of legislation were introduced in the 106th Congress to affect these regulations.

Due to the controversy surrounding EPA’s proposed regulations, the Supplemental Appropriations Bill for Fiscal Year 2000 included statutory language that prohibited EPA from using funds made available for fiscal year 2000 or 2001 to make a final determination on or to implement any new rule relating to TMDLs published in the Federal Register on August 23, 1999.

In July 2000, before the Supplemental Appropriations Bill was signed into law, EPA issued final regulations to comprehensively amend its TMDL program. Those final regulations include a provision stating that: “This regulation is not effective until 30 days after the date that Congress allows EPA to implement this regulation.” Under the Supplemental Appropriations Bill, the EPA could not implement the new rule until October 31, 2001.

Even though it had a delayed effective date, the July 2000 rule was a final rule that was ripe for judicial review. Various industry, environmental, and state organizations filed petitions for review challenging the July 2000 rule in the U.S. Court of Appeals for the District of Columbia.

In October 2000, the Statement of Managers accompanying the Conference Report on the Fiscal Year 2001 Appropriations Act for Veterans Affairs, Housing and Urban Development, and Independent Agencies, directed EPA to conduct more complete analyses of the costs of the TMDL rule changes and costs of the TMDL program. The conferees also directed EPA to contract with the National Academy of Sciences for a review of the quality of science used to develop and implement TMDLs.

On June 15, 2001, the National Research Council of the National Academy of Sciences released its report, “Assessing the TMDL Approach to Water Quality Management.” The Subcommittee held a hearing on that report on June 28, 2001. The witness was Dr. Kenneth H. Reckhow, chair of the National Research Council committee that prepared the report. At the hearing Dr. Reckhow offered many recommendations from the NAS report for improvement in the TMDL program. The Statement of Managers accompanying the Fiscal Year 2002 Appropriations Act for Veterans Affairs, Housing and Urban Development, and Independent Agencies incorporates by reference language from House Report 107-159 that directs EPA to carefully review the NAS report before making any decisions on the future and direction of the TMDL program.

On July 16, 2001, EPA asked the U.S. Court of Appeals for the District of Columbia, which has jurisdiction over the various actions challenging the July 2000 TMDL rule, to stay these lawsuits for 18 months to allow EPA to reconsider the rule. The court granted this motion on October 12, 2001, over the objection of some of the plaintiffs.

On August 1, 2001, EPA released a draft on “The National Costs to Implement TMDLs.” This report is intended to respond to the Congressional mandate to perform additional cost studies. The draft report states that the average costs of developing TMDLs, primarily by states, over the next 15 years is estimated to be between $63 and $69 million a year, nationwide. In contrast, at a February 2000 Subcommittee hearing on EPA’s proposed TMDL regulations, the Association of State and Interstate Water Pollution Control Administrators provided the Subcommittee with an estimate that the average cost to states of developing TMDLs over the next 15 years will be between $670 million and $1.17 billion a year, nationwide. The costs of TMDL development cited in the draft report are based on compliance with current regulations including the TMDL regulations published in July 2000. According to the draft report, the costs of the additional requirements associated with the July 2000 regulations represent less than 10% of the total development costs estimated in the draft report. A June 21, 2000, GAO report criticized EPA’s methodology for determining the cost of proposed changes to the TMDL program because EPA assumed full compliance with existing regulations. The draft cost report does not perform the analysis of alternative compliance rates, recommended by GAO in its report. Instead, according to EPA, the draft cost report and its supporting cost analyses estimate the full cost of the TMDL program, not the incremental cost.

The draft report also states that the annual cost to pollutant sources to implement TMDLs is between $906 million under a more cost-effective TMDL program and $4.34 billion under the least flexible TMDL program. Notwithstanding this wide cost differential, and criticisms that the July 2000 rule would reduce state flexibility to implement a more cost-effective TMDL program, the draft cost report states that EPA’s July 2000 rule did not add additional requirements, or therefore costs, to implement TMDLs and would not result in additional costs to businesses. The Statement of Managers accompanying the Fiscal Year 2002 Appropriations Act for Veterans Affairs, Housing and Urban Development, and Independent Agencies notes that the draft report fails to respond to the Congressional mandate to include an estimate of costs to small businesses in its report and instructs EPA to estimate those costs, whether those costs are imposed directly by EPA or indirectly by State programs implementing EPA regulations. The petroleum industry has submitted data to EPA estimating annual TMDL compliance costs of $410 million for that industry alone, above an initial capital investment of $1.9 billion. Other cost analyses submitted to EPA include an estimate that, over ten years, the annual average TMDL compliance costs for wastewater treatment plants will be $5 billion and the annual average TMDL compliance costs for industrial dischargers will be $3 billion. EPA is accepting comments on the draft cost report until December 7, 2001.

On October 18, 2001, EPA issued a final rule to extend the effective date of the July 2000 TMDL rule until April 30, 2003. EPA intends to issue a new regulatory proposal and issue a new final rule before that date. In the preamble to the Federal Register notice EPA states that:

“Based on concerns expressed by many interested organizations and in light of a recent report from the National Research Council (NRC), entitled ‘Assessing the TMDL Approach to Water Quality Management,’ which recommends changes to the TMDL program, EPA believes it is important at this time to re-consider some of the choices made in the July 2000 rule, while continuing to operate the program under the 1985 regulations, as amended in 1992. A delay of the effective date would allow the Agency to solicit and carefully consider suggestions on how to structure the TMDL program to be effective and flexible and to ensure that it leads to workable solutions that will meet the Clean Water Act goals of restoring impaired waters.”

At the hearing on November 15, EPA Assistant Administrator G. Tracy Mehan will provide the Subcommittee with an overview of the policy decisions that EPA is now reconsidering, the process EPA is following as it makes new decisions, and the progress EPA has made to date.