STATEMENT OF MICHAEL L. DAVIS
DEPUTY ASSISTANT SECRETARY OF THE ARMY (CIVIL WORKS)
BEFORE THE COMMITTEE ON ENVIRONMENT AND PUBLIC WORKS,
SUBCOMMITTEE ON CLEAN AIR, WETLANDS, PRIVATE PROPERTY AND NUCLEAR SAFETY
UNITED STATES SENATE
JUNE 26, 1997

Mr. Chairman and Members of the Committee: Thank you for the opportunity to provide the Department of the Army's views on recent Clean Water Act Section 404 regulatory and judicial developments. I am Michael Davis, Deputy Assistant Secretary of the Army for Civil Works. As the Deputy Assistant Secretary responsible for Civil Works policy and legislation, I am directly involved in the regulatory initiatives of the Army Corps of Engineers, which has primary responsibility for the administration of Sections 9 and 10 of the Rivers and Harbors Act and Section 404 of the Clean Water Act (CWA), which is co-administered by the Environmental Protection Agency. The Section 404 program is the primary Federal regulatory program for wetlands protection and will be the focus of my testimony today. The Corps of Engineers and the EPA have coordinated closely in the preparation of agency testimony. To help to facilitate our presentations, the Corps testimony focuses on issues related to the Nationwide Permit Program, while the EPA's testimony discusses the "Tulloch rulemaking" and the recent federal District Court decision.

When deciding whether changes to a particular program are needed or desirable, it is important to first understand how a program actually performs. Before discussing the recent regulatory changes due to the reauthorization of the nationwide general permits and a recent court decision, I will highlight recent CWA Section 404 statistics and a few other wetlands initiatives currently being implemented by the Administration.

Section 404 Statistics -- How the Program Works

As noted in Figures 1 and 2, in Fiscal Year 1996, over 64,000 landowners asked the Corps for a Section 404 permit to discharge dredged or fill material into the waters of the United States, including wetlands. Over 85 percent received authorization under a general permit in an average time of 14 days. Less than 10 percent were subjected to the more detailed individual permit evaluation, where the average time was 104 days. Less than one-half of one percent of the 64,000 applications were denied. It may be that in a few cases the Corps took too long to evaluate an application and perhaps subjected landowners to an unnecessarily lengthy evaluation process. However, these cases are very rare compared to the ones that go forward in a timely manner with minimal regulatory burdens. Finally, it should be noted that many more thousands of landowners proceed under the authority of general permits that do not require notifying the Corps.

While a case can be made that generally the program is fair and working well from a landowner's perspective, some continue to criticize the Corps for issuing too many permits. However, the Corps has been very successful in reducing wetlands impacts, and adverse effects on other landowners, through the regulatory evaluation and conditioning process, including the general permit process. Most applicants are willing to "avoid, minimize, and/or compensate" for the adverse effects on wetlands or other landowners that their projects could cause. Through effective application of the environmental criteria and the public interest review, the Corps believes that it has been successful in striking the correct balance between protection of the overall public interest and reasonable development of private property.

Administration Wetlands Initiatives -- A Fair, Flexible, and Effective Approach

Notwithstanding the statistics noted above, the Section 404 Program is not perfect -- from either the environmental protection standpoint or the regulatory burden perspective. There are a few real problems, and improvements can and should be made. In this regard, the Administration is using its August 1993

Wetlands Plan as a policy roadmap for making all wetlands policy by:

-- streamlining the wetlands permitting program to eliminate unnecessary regulatory burdens;

-- increasing cooperation with private landowners to protect and restore wetlands;

-- basing wetland protection on good science and sound judgement; and

-- increasing participation by States, Tribes, local governments, and the public in wetlands protection.

The Administration's Wetlands Plan includes over 40 specific initiatives. The Corps, the Environmental Protection Agency (EPA), and other agencies have completed many of these initiatives since 1993 to help meet the Administration's wetlands goals. For example, in 1993, and also in 1995, the Corps and EPA issued guidance (Regulatory Guidance Letters (RGL) 93-2 and 95-1) clarifying the need for flexibility in processing permit requests, emphasizing that small projects with minor impacts do not need the same detailed review as large projects. In June of 1995, the Corps issued Nationwide Permit 29 for single family homes impacting less than acre of non-tidal wetlands. In November of 1995, the Corps, along with four other agencies, issued joint Federal guidance concerning the establishment of wetland mitigation banks. Finally, the Corps has developed an administrative appeals process which is ready to be finalized. This program will allow landowners to appeal a Corps wetland jurisdictional determination or permit denial without the trouble and expense of going to court. Lack of funding for the appeals process has delayed its implementation. As was the case in the past two fiscal years, President Clinton's 1998 budget requests funding for this important initiative. The Corps will implement this program if this funding is approved. These are some of the program initiatives that demonstrate our commitment to implementation of the Administration's Wetlands Plan.

General Permit Program -- Nationwide Permits

Nationwide Permits - an overview

The authority for the Corps of Engineers to issue general permits for activities involving discharges of dredged or fill material into wetlands and other waters of the U.S. is found in CWA Section 404(e). This authority prescribes two explicit requirements for all general permits: 1) the permits must be based on categories of activities which are similar in nature; and, 2) the activities authorized must not result in more than minimal adverse environmental effects either individually or cumulatively. General permits can be issued on a state, regional, or nationwide basis for a period not to exceed five years. The Nationwide Permit (NWP) Program has become an integral part of the Corps regulatory program and, currently, approximately 65 percent of all Corps permit actions are authorized as nationwide permits. Through NWPs, activities that have minimal environmental impacts are allowed to proceed with little or no review by the Corps. Yet, under current approaches, activities that exceed the statutory requirements are effectively screened out for more detailed evaluation.

One nationwide permit in particular, nationwide permit 26 (NWP 26), has engendered considerable controversy since its inception in 1977. NWP 26 is used to authorize 30 percent of all NWP activities, yet this 30 percent accounts for over 75 percent of the impacts attributed to all NWPs (see Figure 3). This information, in part, highlighted the need for changes and eventual replacement of NWP 26, which will be discussed in more detail later.

In the December 13, 1996, Federal Register, the Corps announced the reissuance of the 37 existing NWPs and the issuance of two new NWPs. These NWPs provide a balanced package that incorporates over 4000 public comments, years of Corps experience with the nationwide permits, and many months of discussions with government, private, commercial and non-profit entities. Over two-thirds of the nationwide permits were reissued without change. These nationwide permits have proven to be useful and effective in their current form. Less than one-third of the nationwide permits were modified; the vast majority of those modifications were made to increase their applicability and scope. Finally, two new NWPs were issued to allow for a more rapid evaluation of some activities where the adverse effects are minimal. These activities formerly required an individual permit.

The changes made to the nationwide permit program in December, 1996, will allow the Corps to implement a more fair, flexible and effective regulatory program in accordance with the CWA and the Administration's Wetlands Plan. The Corps published the proposed changes to the nationwide permit program in the June 17, 1996, issue of the Federal Register. In response, the Corps received approximately 4000 comments from Federal, state and local agencies, private industries , the environmental community, and the general public. Additionally, many meetings were held with interested parties to share ideas on the proposal. Ideas from the meetings, together with the comments, assisted us in evaluating the proposed changes. For example, some NWPs still require applicants to submit a Preconstruction Notification (PCN) to the Corps for evaluation of certain projects. This allows the Corps to ensure that the adverse effects of those projects will not be greater than minimal. Conversely, many NWPs do not require notification to the Corps and allow an applicant to conduct his or her project so long as it meets the nationwide permit terms and conditions. And while the scope of Nationwide Permit 26 decreased, in many cases, we increased the scope of activities covered under other nationwide permits. For example, NWP 12 can now be used to authorize overhead transmission lines and can be used to authorize projects in Section 10 waters in addition to Section 404 waters. We also added two new nationwide permits to cover activities that previously required an individual permit. We believe that on balance the decreased scope of some of the NWPs, including NWP 26, in conjunction with the increased scope of other NWPs and the two new NWPs, will not substantially increase the Corps workload or the overall burden on the regulated public, while, at the same time, will provide better protection to landowners and the environment. We also believe these changes will not substantially effect the districts responsiveness to the regulated public. Accordingly, we feel the changes are fair and were needed and made in a reasonable and open manner.

The Corps has continued to remain flexible in its regulation of the waters of the United States. In reviewing PCNs for nationwide permit authorization, the Corps works with the applicants to allow, where possible, authorization under a nationwide permit. The changes to the NWPs still allow the Corps to consider mitigation to reduce the impacts so as to bring the project within the minimal impact threshold for nationwide permits.

The Corps believes that it is critical that Federal, state and local agencies work together to maximize environmental protection of the various regulatory programs involved in protecting the Nation's aquatic system, while minimizing duplication and delay for the regulated public. One important element of such intergovernmental cooperation is the state and tribal action to certify the Corps NWPs under CWA Section 401, and their determination of consistency with the coastal state's coastal zone management plans. The revised NWPs received more state certifications and concurrence positions because the Corps made changes to some key NWPs, such as NWP 26, and because the Corps districts more assertively worked with the states to develop regional conditions that would further reduce state and tribal concerns for protection of the environment on a regional basis. For example, 23 states denied water quality certification of the previous NWP 26, while only 14 states denied water quality certification of the new NWP 26. Although the states and tribes were more receptive to the reissued NWPs, there remain several states who continue to believe that the Corps should further restrict the NWPs. The Corps will continue to work closely with states and tribes to develop the most effective replacement NWPs that we can.

As for effectiveness, the nationwide permits are an effective way to authorize, in a timely fashion, activities with minimal adverse effects, thus not overburdening or over-regulating the public while protecting the integrity of the Nation's waters. Since projects authorized by nationwide permits must, by law, have minimal individual and cumulative adverse effects, the high environmental standards of the CWA can be maintained. In addition, by utilizing the NWP program, the Corps can issue permits without the added complexity or delays of unnecessarily requiring an individual permit.

Nationwide Permits - NWP 26 changes

In 1977, the Corps developed the headwaters and isolated waters nationwide permit, also known as NWP 26, as we extended Section 404 jurisdiction to all waters of the United States (including isolated and headwaters areas). Prior to 1977, the Corps did not require Section 404 permits for discharges of dredged or fill material into waters in these geographic areas. Over the past 20 years NWP 26 has been revised in an attempt to ensure that activities are not authorized under NWP 26 if such activities would result in more than minimal adverse effects, either individually or cumulatively, to the waters of the United States, including wetlands. While the Corps had to assure compliance with this statutory requirement, it also had to consider the constraint of an extremely heavy regulatory workload resulting from obtaining compliance and from Congress constricting the program's funding.

The most recent data and scientific literature indicate that isolated and headwater wetlands often play an ecological role that is as important as other types of wetlands in protecting water quality, reducing flood flows, and providing habitat for many species of fish and wildlife. For example, in many parts of the Nation, isolated and headwater wetlands comprise a significant portion of the functioning wetlands that remain in existence. The National Academy of Sciences concluded in its 1995 report on wetlands that "the scientific basis for policies that attribute less importance to headwater areas and isolated wetlands than to other wetlands is weak".

In light of the above, and in response to public comments, several substantive changes were made to NWP 26 during the 1996 reauthorization. These include the reduction of the upper threshold from 10 acres to three acres, addition of a 500 linear foot limitation for streambed impacts, prohibiting the use of NWP 26 with other NWPs when the total impacts exceed three acres, and the expiration and subsequent replacement of NWP 26 within two years. The Corps determined that these provisions were necessary to ensure minimal impacts either individually or cumulatively. These changes were supported by public comment as follows:

Lowering of the upper threshold from 10 acres to three acres. Surveys of our districts were conducted to determine the use of NWP 26 and NWPs in general for FY 94 and FY 95 respectively. The most complete data was collected for FY 95. We only collected wetland acreage impacts (which does not include other waters of the U.S.) from the FY 95 data. That data shows that of the 13,800 projects for which a NWP 26 verification was requested and granted, approximately 5,020 acres of wetlands were lost or adversely affected nationwide. The overall number of projects allowed under NWP 26 is an estimate simply due to the nature of NWP 26, which allowed applicants to proceed with activities with less than one acre of impact without contacting the Corps. The estimated number of projects allowed to proceed under NWP 26 for FY 95, for which no verification from the Corps was required or requested, is approximately 20,000. The FY 94 data contains information on the use of NWP 26 at different acreage thresholds. The most important conclusions reached through the evaluation of these data involved the impacts to the resources and the regulated public by the reduction of the NWP 26 thresholds. Evaluation of these data resulted in a conclusion that a reduction of the upper threshold of NWP 26 to three acres would move only 10 percent of the verified activities normally authorized under NWP 26 into the individual permit review process. Yet, this 10 percent accounted for over half of the adverse effects caused by NWP 26 activities (see Figure 4). We expect over two-thirds of those applicants with acitvities impacting greater than 3 acres to reduce the amount of impact so as to allow for authorization of their project under the reissued NWP 26.

It is important to note that many Corps districts have limited, through regional conditioning or by exerting discretionary authority on a case-by- case basis, the impacts allowed under NWP 26 to acreages much lower than the national threshold due to the possibility of individual and cumulative impacts becoming greater than minimal in that district. For example, a project was proposed in one of our districts that would have impacted approximately 7.6 acres of wetlands. This project was a multi-use housing development with high-density and low density housing units and an industrial access road to a main road located adjacent to a main waterway in an urbanizing area. It was determined that this project, if approved, would have greater than minimal cumulative adverse effects within the watershed. Consequently, meetings with the applicant revealed that some of the wetland impacts were avoidable through the relocation of the housing and roads. The reconfiguration did not decrease the economic value of the development and the final project retained the same number of homes and townhouses. The reconfiguration of the development changed the location of the townhouses and the homes and avoided impacts to approximately 3.5 acres of forested wetlands while increasing the green area/playing areas within the development. Relocation of the roadway and stormwater detention ponds avoided another 1.4 acres of wetlands. The final project was authorized with 2.7 acres of impact, which was considered to be within the limitations of a nationwide permit.

The two-year expiration of NWP 26. The Corps received substantial comment on NWP 26. Many commenters wanted NWP 26 to remain as it was issued in 1991 with one and 10 acre limits, while many others recommended that, at a minimum, the Corps needed to reduce the acreage thresholds to the 1/3 to three acre level to ensure that no more than minimal adverse effects would occur. Many others recommended total elimination of NWP 26 because of the impacts that they believed were occurring. Numerous commenters also stated that, since NWP 26 covers a category of waters, rather than a category of activities, that the NWP is illegal under the CWA. The Corps received a wide range of comments regarding reissuance of NWP 26 and thus obtained a clear picture of the public's concerns regarding this NWP. After careful consideration of all comments, the Corps determined that NWP 26 should be replaced by activity-based NWPs. However, in fairness to the regulated public, the Corps determined that a two year transition period was needed rather than a decision not to re-issue NWP 26 at all. The Corps believes that the two year period is sufficient to develop and issue necessary replacement NWPs for activities with minimal adverse effects on waters of the U.S. In order to ensure that no more than minimal adverse environmental effects occur during the transition period, the Corps also determined that the 1/3 and three acre thresholds needed to be put in place as previously discussed.

Although NWP 26 will expire on December 13, 1998, the Corps is already moving forward to develop replacement, activity-specific NWPs to authorize many activities previously covered under NWP 26. We have met with development and environmental interests to listen to their ideas for replacement NWPs. We are continuing to receive recommendations and are eager to work with all interested parties on this effort. Additionally, we have our field personnel collecting data on the current use of NWP 26 to assist in the analysis. This is just the informal part of the process. The public will have a formal opportunity to participate when we publish the proposed replacement permits in the Federal Register for comments.

An example of the type of activity based NWPs we are considering already exists. Nationwide Permit 29, also known as the Single Family Housing nationwide permit, was issued in June of 1995. This NWP was established to meet the needs of "mom and pop" property owners wishing to fulfill their "American Dream" of owning a home, while simultaneously protecting the Nation's waters and reducing regulatory constraints on these home owners. NWP 29 allows for up to acre of impact to non-tidal wetlands for the construction of a single family home, not housing subdivisions, but single homes, and their attendant features. To date, this NWP has been utilized to authorize the construction of 385 homes throughout the nation with total impacts of only 70.76 acres of waters of the U.S. Through the notification process required for authorization under NWP 29, the Corps has been able to avoid impacts onsite to the extent practicable and to ensure the impacts remain minimal while allowing projects to go forward in a timely manner. We envision replacement NWPs for similarly defined minor activities with practical, environmentally sound restrictions.

It is important to note that these new activity specific nationwide permits, similar to the other nationwide permits, generally will not be restricted to isolated waters or above headwaters areas. While the scope of activities authorized by NWP 26 may decrease, the geographic scope of coverage will increase. Furthermore, the existing NWPs which are not geographically restricted, will now be used above headwaters and in isolated waters, where NWP 26 was used previously. For example, NWP 29, mentioned in the previous paragraph, will now serve as a replacement for NWP 26 for single family homes above the headwaters and in isolated waters.

Finally on replacement NWPs, I would like to give you an idea of the projected course of action over the next 12-18 months that will ensure the issuance of replacement NWPs prior to the expiration of NWP 26. These replacement NWPs will only authorize activities that the Corps determines would have minimal impact on the aquatic environment. We will continue to work with interest groups and Federal, state and tribal agencies to further develop NWPs this summer and fall. We will publish the proposed replacement NWPs in the Federal Register by February of 1998 for formal public review and comment. We expect to issue the replacement NWPs in August of 1998. The new permits would become effective 60 days from the date of final publication.

The prohibition on the use of NWP 26 for projects affecting more than 500 linear feet of a streambed. The Corps received several comments regarding the adverse impact of NWP 26 projects that affect lengthy sections of flowing streams. In response to these comments and based on Corps experience, the Corps determined that to ensure that the adverse environmental effects of NWP 26 remain minimal, it was necessary to limit the length of project impacts on the stream bed as well as to limit the overall acreage. The Corps believed applying this restriction to only direct impacts of filling or excavating the streambed was sufficient to ensure that the impacts would be minimal. The restriction does not limit the ability of the Corps to authorize projects that cause the inundation of more than 500 linear feet of a stream, nor filling in areas of wetlands in areas adjacent to the stream for more than 500 linear feet, provided the impacts are not more than minimal. The limitation restricts projects that could have, under the three acre limitation (and without the 500 linear foot limit), totally filled a 10 foot wide streambed for nearly 2.5 miles.

The prohibition against "stacking" (the use of NWP 26 with other nationwide permits on the same project), if the total adverse effects on waters of the U.S. would exceed the three acre limit applicable to activities authorized solely by NWP 26. The Corps received numerous comments suggesting that there were cumulative impacts caused by the practice of stacking or multiple use of NWPs for a single and complete project. Such stacking was authorized under the previous NWPs. However, during the Corps review of the comments and the Corps review of the implementation of the NWPs, it became apparent that more than minimal impacts were possible when stacking occurred. This was particularly apparent when considering stacking additional NWPs with NWP 26. The Corps, after careful consideration, established the three acre limit for NWP 26, and thus any additional impact would likely increase impacts beyond the minimal level. That is, to ensure that the minimal impact level threshold is not exceeded, other NWPs may not be combined with NWP 26 in a manner that results in more than three acres of impact.

These last three issues, the two year limit, 500 LF prohibition and stacking of NWP 26, are the subject of a law suit brought by the National Association of Home Builders against the Corps. The plaintiffs' claim that the Corps violated the Administrative Procedure Act in adopting these three changes. We believe, as discussed above, that we have complied with all legal requirements for reissuing and modifying the nationwide permits.

Conclusion

The Corps believes that the changes in the NWP program were clearly needed in order to continue to ensure that the thousands of activities authorized result in no more than minimal adverse environmental effects, either individually or cumulatively. Our extensive experience with administering the NWP program indicated that the former limitations of NWP 26 could no longer ensure that only minimal impacts to the aquatic environment would occur. An essential part of the Corps experience with implementing the NWPs includes an increase in scientific information that clearly indicates the important functions and values of headwaters and isolated waters to the Nation's overall aquatic system. At the same time, the Corps recognizes that activities that do involve only minimal impacts should be allowed to proceed with minimal review and delay. The Corps has ensured that such projects can be authorized under the reissued interim NWP 26. Over the next one and one half years, this interim approach will be replaced with a more focussed group of activity specific NWPs. The replacement NWPs will ensure that adverse environmental effects of the NWP program are only minimal, and more clearly identify the activities covered to assist the regulated public. Furthermore, the changes to NWP 26 should be considered in the overall context of all NWP changes. We believe that the reduction in the regulatory burden on landowners will, on balance, offset the increases. Our approach to NWP 26, along with the other NWP changes, ensures sound environmental protection and the efficient authorization of development resulting in minimal adverse environmental effects.

While I have not discussed the recent opinion in American Mining Congress v. U.S. Army Corps of Engineers, I will note that we support fully the comments expressed in EPA's written statement on this case. As discussed in their statement, the Tulloch Rule was issued by the Corps and EPA because of an increase in the number of cases where important waters of the United States were being destroyed or severely degraded, by activities that involved excavation with incidental discharges. Such activities were being regulated inconsistently nationwide by the Corps, resulting in inequitable treatment of various permit applicants, depending on their geographic location. We continue to believe that the CWA provides the authority for the Corps to regulate excavation activities involving discharges in all waters of the U.S. Because of the substantial impacts that such excavation activities can cause to the Nation's waters, we intend to vigorously defend our position in an appeal of the DC District Court's decision.

Mr. Chairman that concludes my statement. I would be pleased to address any questions that you or the committee may have on the important subject of wetlands protection and regulation.