Construction Forecast Issue Home

March 30, 2000

Proposed EPA rules a costly blow to construction

Changes to the Clean Water Act would usurp local permitting authority, increasing red tape and costs for developers wanting to build in and around some waters.

By JACQUELINE LESCOTT
Associated Builders and Contractors

Last August the federal Environmental Protection Agency proposed new regulations that dramatically expand and alter existing programs authorized under the Clean Water Act of 1972. The changes reconstruct the Total Maximum Daily Load (TMDL) and National Pollutant Discharge Elimination System (NPDES) programs by adding new requirements and increasing or inserting EPA control in areas which have traditionally fallen under the discretion of state and local governments.

These regulations, largely referred to as a single rulemaking, will have a very strong, negative impact on construction and development if allowed to go through in their current form.

Congress passed the Clean Water Act in 1972 with the intention of cleaning up the nation’s waterways. At the time, huge amounts of pollutants were being discharged from industrial and municipal facilities, directly into the nearest body of water. Because they came from a clearly identifiable source, they were known as point-source pollution. Non-point source pollution was attributed to agriculture, atmospheric deposition, and various types of runoff, such as stormwater runoff.

For nearly three decades, pollutant reduction has focused on the point sources, which are more easily measured, monitored and reduced through implementation of technology-based controls, best management practices and oversight of production. Point sources have been regulated through NPDES permits. Very little scientific data on nonpoint sources is available, which is one of the main reasons that EPA has let TMDL language in the Clean Water Act lie dormant.

The Total Maximum Daily Load refers to the maximum amount of a given pollutant that a waterbody can absorb and still attain water quality standards. In 1972, states were assigned the task of evaluating impaired waters and assigning TMDLs where necessary. However, they were unable to do so, due to lack of technological tools necessary to conduct across-the-board analyses of pollutant levels and sources. Other steps were taken to reduce pollutant levels, and over the decades the TMDL program was left behind, largely because of a dearth of scientific data and the high costs associated with implementation.

Now the EPA is trying to revamp and expand the program, attempting to create an overarching enforcement mechanism that will affect every segment of the economy. There is widespread concern from industry and congressional leaders alike, that the EPA has far overstepped its authority, and is attempting to create what amount to new legislation through regulation.

The following are several proposed changes to the TMDL program that should be of immediate concern to the construction and development industry:

1 Regulating point source and nonpoint source pollutants. The rule attempts to regulate all sources of pollution under the same mechanism. Natural sources of pollution and manmade discharges must vie for a percentage of a TMDL. The definition of what constitutes a point source is hotly contested, as is the EPA’s ability (and authority) to regulate nonpoint source pollutants. Contrary to the EPA’s assertion, construction sites are more properly characterized as non-point sources. Construction activity is already subject to stormwater and erosion and sediment control permits. NPDES stormwater permits regulate construction runoff as though it were a point source, under the assumption that ditches and water channels constitute a means to readily identify flow rates and content. However, the control of sediment and other runoff pollutants are best achieved through the implementation of best management practices.

2Takeover of the NPDES permits. EPA proposes to grant itself the authority, even in states with delegated NPDES permit programs, to designate point sources subject to NPDES permit requirements. In addition to usurping state rights, this would make it more difficult for contractors to obtain permits for work around waters that have been listed.

3Offset requirement for new or expanding dischargers. EPA’s rule would require new or expanding operations in listed watersheds to find NPDES permit offsets of the same pollutant at a ratio of 1.5 to 1 (2 to 1 if the load reduction would not be obtained prior to the increased loading). This would place a huge technical, legal and financial burden on the private sector. The regulations are very unclear as to how these offsets would be obtained. Nor does the requirement take into account regional or other considerations.

This requirement could have a disproportionate effect upon the construction industry, due in part to the absence of any pre-existing waste load attributable to a given construction project, and could greatly increase the cost of construction. As defined, it is not clear whether the "new discharger" offset requirement would routinely apply to construction sites. Construction sites are generally not required to obtain individual NPDES permits and are traditionally regulated through other programs, such as the stormwater permit program.

The offset requirements should be limited to those dischargers which would otherwise be required to obtain an individual NPDES permit. Otherwise, every construction site would be a "new discharger" as contemplated under the proposal and therefore would be subject to the 1.5:1 ratio offsets.

4Lack of cost/benefit analysis. Federal agencies are required to conduct an analysis to determine the impact of regulatory action for any rulemaking. The rule ignores most state costs and all federal and private sector incremental costs, as well as the fact that small businesses will be dramatically affected. EPA has not conducted a cost-benefit analysis, or a regulatory flexibility analysis describing the impact of the proposed action on small entities.

The EPA states that the rule would not have a significant economic impact on a substantial number of small entities, and that any expected impact would be "indirect" and "highly speculative." The agency deftly avoids the necessity of commenting on its expected economic impact by claiming that true impact will result from the states listing and development of TMDLs. Ironically, they have determined that the proposal is a "significant regulatory action," which means that it is likely to have an annual effect on the economy of $100 million or more. Added costs will, in all likelihood, be passed on to permitees and other entities through increased permitting fees and other administrative costs.

5Listing "threatened" as well as "impaired" waters. EPA’s rule would require all states list and develop TMDLs for "threatened" waters as well as impaired waters. By definition, "threatened" waters currently meet all applicable water quality standards. Once listed, "threatened" waters would be subjected to regulatory limitations, seriously affecting the operations of nearby landowners and businesses. Not only would this reduce property values (with no mention of "takings" payment), but it would add such a level of uncertainty to local planning and development boards that future projects would be at risk.

6No "delisting" mechanism. EPA’s rule would require states to list waters for a multitude of reasons, and proposes a public petition process for adding waters to the list. However, EPA provides no effective mechanism for interim delisting of waters improperly added to the list, or which achieve water quality standards during the proposed five-year listing cycle.

7Requirement for state implementation plans. EPA’s rule requires states to develop EPA-approved implementation plans. Without these approved plans, EPA will design and implement TMDLs for the state. Aside from the fact that this gives the agency total authority over state decision, there is no existing statutory requirement that TMDLs be implemented once developed. EPA’s proposed requirement presupposes that states can fully and accurately anticipate the rainfall and other climatic pressures as well as the funding, human resources, technological developments and mid-course adjustments that will be available over the course of TMDL implementation. The proposal ignores the inherent difficulty in quantifying the source of non-point source pollution and the extent to which such sources are contributing to the impairment of a given watershed.

The states are required to adopt an implementation plan that is to include a description of the control actions and/or management measures which the state will implement to achieve water quality standards for all impaired waterways. States must additionally identify source categories of pollutants as well as individual sources of pollutants. This will be virtually impossible to quantify.

8Lack of scientific data: EPA’s rule encourages states to use evaluated data and narrative criteria for listing decisions, rather than monitored data and numerical criteria. It also emphasizes the fact that "existing data" is to be used to set TMDLs. However, that data is scarce and lacks uniformity. Failure to require scientific backing, for a regulation which will have such widespread impact, is tantamount to arbitrary action on the part of the agency. A recent study by the General Accounting Office showed that only six of the 50 states felt they had a majority of the data needed to fully assess their waters. States also claimed to have much more data on point source pollution problems than they do for nonpoint sources. Only three states reported having the majority of the data needed to develop TMDLs related to runoff.

9Effluent limitation guidelines (ELGs) for construction not yet developed. The EPA is currently working on its proposed ELG guidelines for construction and development. They are due out in December of 2000, although the agency is trying to gain an extra year or two because they lack the data necessary to set the guidelines.

In fact, ELGs have yet to be established for the majority of industries. How industry would follow TMDL requirements when their effluent standards have not even been determined is difficult to know. The final scope of TMDLs, as well as stormwater, NPDES and other regulations, will determine the parameters of ELGs. Applicabil-ity of the TMDL program to discharges from construction sites would be premature in light of the anticipated promulgation of effluent limitations for the construction industry within the next two years.

EPA plans to allow states only 15 years to measure their water bodies and establish TMDLs. The most severely impaired are supposed to be analyzed and allotted within the next five years, but the funding, widespread use of uniform technologies, and background of historical data are just not available. State associations have testified to this fact in several of the five congressional oversight hearings that have been held this year.

The Environmental Protection Agency has already received an unprecedented 30,000 comments against the TMDL proposed ruling. Yet despite these serious concerns regarding the efficacy and legality of the proposal, the EPA still intends to finalize the rule by June 30 this year. The agency admits that part of the reason for this haste is the need to complete the ruling before the elections bring in a new administration and the possibility of a more balanced approach to environmental issues.