TESTIMONY OF ROBERT H. WAYLAND III
DIRECTOR, OFFICE OF WETLANDS, OCEANS, AND WATERSHEDS
OFFICE OF WATER
U.S. ENVIRONMENTAL PROTECTION AGENCY
BEFORE THE SUBCOMMITTEE ON CLEAN AIR, WETLANDS, PRIVATE PROPERTY AND NUCLEAR SAFETY
OF THE
COMMITTEE ON ENVIRONMENT AND PUBLIC WORKS
UNITED STATES SENATE
June 26, 1997

Good morning, Mr. Chairman and members of the Subcommittee. I am Robert H. Wayland, III, Director of the Environmental Protection Agency's (EPA's) Office of Wetlands, Oceans, and Watersheds. I am pleased to be here today to provide this statement addressing the important issue of wetlands protection.

At the outset, I would like to emphasize EPA's commitment to the Administration's 1993 Wetlands Plan to assure that wetlands protection is fair, flexible, and effective. Implementation of many of the Plan's administrative initiatives has produced tangible results by making the Clean Water Act's Section 404 program more fair and flexible, while continuing to ensure effective protection of the Nation's human health and the environment.

Consistent with the focus of this hearing, this statement addresses three recent developments in the Section 404 program: ongoing litigation concerning activities subject to Clean Water Act (CWA) permitting; mitigation banking; and, our Alaska wetlands initiative. EPA and the Corps of Engineers have coordinated closely in the preparation of agency testimony. To help to facilitate our presentations, EPA's testimony focusses on issues related to the "Tulloch rulemaking" and the recent federal District Court decision, while the Corps' testimony discusses the recent improvements to the Section 404 Nationwide permit program. Before turning to these specific matters, I want to review why we believe wetlands protection and restoration are so important in realizing the CWA objective to "restore and maintain the physical, chemical, and biological integrity of the Nation's waters."

IMPORTANCE OF WETLANDS

Wetlands are among our Nation's most critical and productive natural resources. Wetlands are the vital link between land and water. They provide a multitude of services to society, are the basis of many thousands of jobs, and contribute billions of dollars to the economy. Wetlands fulfill vital functions across the landscape. They protect private property from flooding, and provide shoreline erosion control. They are critical areas for recharge of aquifers that provide drinking water for communities across the country. Wetlands are primary habitat for wildlife, fish, and waterfowl, and, as such, provide opportunities for recreation, education, and research, as well as the basis for many economic opportunities. Waterfowl hunters spend over $600 million annually in pursuit of wetlands-dependent birds. In the southeastern United States, over 90% of the commercial catch of fish and shellfish depend on coastal wetland systems. In fact, wetlands contribute over $15 billion annually to our economy for fisheries alone. Also, a high percentage of the Nation's threatened and endangered species rely on wetlands for their survival and recovery.

Wetlands are part of our Nation's waters and their protection is important to achieving the goals set forth in the CWA. Wetlands are integral to the functioning of watersheds and aquatic ecosystems. Protection and restoration of wetlands reduce non-point source pollution and provide other benefits throughout watersheds, including improved aquatic habitats and floodwater control. For example, forested riparian wetlands along the river's edge provide important sediment stabilization, habitat corridors for aquatic and terrestrial species, and water quality improvement by reducing nutrient loading into water bodies. One study found a riparian forest in a predominantly agricultural watershed removed approximately 80% of the phosphorus and 89% of the nitrogen from the water before it entered a tributary of the Chesapeake Bay. Excess nutrients can cause algal blooms, oxygen depletion, fish kills, and biological dead zones.

THE AMERICAN MINING CONGRESS DECISION

As part of the 1993 Administration Wetlands Plan, the Corps and EPA jointly issued a rule that revised three key definitions contained in the agencies' CWA Section 404 regulations. One part of the rule defined the term "discharge of dredged material" within the meaning of the Section 404 program to include discharges associated with excavation activities that destroy or degrade wetlands or other waters of the United States. A second component of the joint rule defined the term "discharge of fill material" for purposes of Section 404 to include the placement of pilings to construct structures in waters of the U.S. when such placement has the effect of a discharge of fill material. Third, the rule incorporated into the Section 404 regulations the existing EPA/Corps policy that prior converted croplands are not waters of the U.S. and, therefore, not regulated under the CWA.

In American Mining Congress v. U.S. Army Corps of Engineers, No. 93-1754 SSH (D. D.C., Jan. 23, 1997) (hereafter "AMC") a federal District Court invalidated the agencies' revised definition of "discharge of dredged material" (hereafter "Tulloch Rule"), holding that Congress did not intend to regulate "incidental fallback" discharges under Section 404. The plaintiffs did not challenge the other two components of the 1993 joint rule and, in the Government's view, they are in no way affected by the decision. "Incidental fallback" typically includes the material that drops from a backhoe being used to drain wetlands or channelize a stream. The Court ordered the agencies not to apply or enforce the invalidated rule.

For the reasons explained below, we respectfully disagree with the decision. On April 10, 1997, the Department of Justice filed a Notice of Appeal and, on April 22, 1997, a Motion for Stay of the Judgment in the District Court. On May 27, 1997, the District Court issued a decision rejecting the government's request for the Stay. On May 30, 1997, the Department of Justice filed a Motion for Stay pending appeal in the Court of Appeals and requested that the Court of Appeals expedite consideration of the case. Although we continue to appeal the District Court decision, unless and until the District Court decision is stayed or overturned, the government is compelled to comply with the terms of the Court's injunction. To that end, on April 11, 1997, EPA and Corps Headquarters issued joint written guidance to our field staffs that explains the decision and its effect on the Section 404 program. In addition, the agencies are continuing to coordinate closely with our field staffs to ensure that we comply with the injunction pending any further rulings in the case.

I would like to focus this part of my testimony on the purpose of and basis for the 1993 Tulloch Rule, and then turn to the implications of the AMC decision, especially in terms of its effect on the ability of the Corps and EPA to ensure effective protection of human health and the environment.

Purpose of the Tulloch Rule: Ensuring Fair and Effective Environmental Protection

Consistent with the CWA's objective to "restore and maintain the chemical, physical, and biological integrity of the Nation's waters," EPA and the Corps issued the Tulloch Rule in 1993 to ensure that discharges of dredged material that are associated with activities that destroy or degrade wetlands or other waters of the United States are reviewed in the Section 404 permitting process. This environmental review is not aimed at preventing development, but, instead, is designed to ensure that these discharges do not result in unacceptable adverse environmental impacts that can otherwise be avoided, minimized, or mitigated. Prior to the Tulloch Rule, Section 404 regulatory jurisdiction over discharges of dredged material in many parts of the country turned on the amount of material redeposited in the water of the U.S. If the amount of dredged material redeposited was incidental and small, the discharge was not regulated by many Corps districts even where it was associated with an activity that caused substantial adverse environmental impacts. As a result of this regulatory loophole, a person could construct drainage ditches in a wetland in order to lower the area's water table, and thereby eliminate the area's wetland hydrology and convert the area to dry land, as long as the dredged material excavated from the ditches was not "sidecast" (i.e., redeposited alongside the ditch or otherwise discharged to waters of the U.S.). Once the area had been converted in this fashion, it would be removed from the jurisdiction of the CWA. At the same time, the courts were being asked to address the scope of activities regulated under Section 404. For example, in 1983 in Avoyelles Sportsmen's League v. Marsh, the Fifth Circuit Court of Appeals agreed with the plaintiff sportsmen's group that the Corps could regulate under Section 404 the mechanized landclearing activities at issue in that case. The property owners in Avoyelles converted forested wetland to agricultural use, which involved land leveling and the filling of sloughs.

The agencies' decision to issue the Tulloch Rule was based on our increased understanding of the severe environmental effects often associated with the activities covered by the rule, and the increasing sophistication of developers who seek to convert waters of the U.S. to uplands without being subject to Section 404 environmental review. The Corps and EPA continue to believe that the regulatory clarification expressed in the Tulloch Rule is within the authorities provided to our agencies pursuant to Section 404 of the CWA, and was in fact consistent with the practice of many Corps districts as they sought to apply the Avoyelles decision in the field. Moreover, to the extent that the rule represented a change of previous administrative practice, such a change was warranted in order to ensure that the Section 404 program can effectively protect our aquatic resources from the degradation that can result from unregulated ditching, channelization, and other excavation activities. The agencies have learned increasingly over the last decade how these activities can severely impact our Nation's aquatic resources, and therefore view the Tulloch Rule as an important means of achieving the objective of the CWA -- to "restore the chemical, physical and biological integrity" of those resources.

Pocosins are a relatively rare and valuable type of wetland found only in the Southeast that owe their existence to limited drainage and abundant rainfall. Pocosin wetlands provide a multitude of functions and values. They provide abundant water capacity, acting as storm buffers by greatly reducing flood peaks. In addition, pocosins help stabilize water quality and balance salinity in coastal waters. This is especially important for maintaining productive estuaries for commercial and recreational fisheries. This valuable wetland type also serves as habitat for many animals, especially black bear along the coast.

The case that gave rise to the Tulloch rulemaking involved a project in New Hanover, North Carolina, that converted a 700-acre tract of pocosin wetlands to a residential/commercial development and golf course through carefully conducted actions that drained and cleared the wetlands, while only causing incidental, small volume redepositions of dredged material. In that case, the Corps had initially determined that the 700 acres of wetlands were subject to the jurisdiction of the CWA, and, therefore, that discharges of dredged or fill material into the area would require a section 404 permit. While the developer originally applied for a section 404 permit for the development, it subsequently withdrew the application after comments from other federal agencies, including EPA, raised concerns about the adverse effects of the project.

Rather than pursue the permitting process, the developer decided to try to remove the site from CWA jurisdiction through the construction of drainage ditches that would convert the wetland to dry land without triggering the need for a permit. The developer accomplished this by constructing ditches using backhoes with welded buckets, and placing excavated material directly on uplands or in altered sealed containers resting on truck beds adjacent to the site. The excavation was, for the most part, performed in such a manner that only drippings from the buckets of the excavation machinery were allowed to fall back into the wetland. The ditches were constructed at locations and to a depth that computer modeling indicated would be sufficient to lower the water table and convert the wetlands to dry land. The ditches achieved their purposes, and the local Corps office subsequently concluded that the area no longer constituted a wetland for purposes of CWA jurisdiction. The developer was thereafter free to construct the project without the need to obtain a section 404 permit. As a result of this operation, hundreds of acres of environmentally-valuable pocosin wetlands were converted without Section 404 environmental review, eliminating opportunities to avoid and mitigate adverse environmental effects.

The Corps and EPA also issued the Tulloch Rule to reduce the inequities in the existing regulatory structure. Prior to the rule, sophisticated developers who had the financial resources and technical expertise, like those in the North Carolina case, could attempt to convert wetlands without causing more than incidental, small volume discharges of dredged material. Even though the impacts of these activities could be equally as severe as similar projects involving "sloppy" disposal practices associated with large volume redepositions of dredged material, such developers could avoid Section 404 review, while those undertaking less sophisticated projects were subject to the permitting process. The facts in the North Carolina case help demonstrate the necessity of the Tulloch Rule by revealing how one developer with the technical expertise and financial resources was able, under past agency policies, to avoid Section 404 review for activities that destroyed ecologically-valuable pocosin wetlands.

EPA and the Corps also believe that the approach in the Tulloch Rule is consistent with the statutory scheme set forth in CWA Section 404(f) -- the provision under which discharges associated with particular activities, including certain ditching activities, are exempt when they do not result in significant environmental impacts. Section 404(f) includes strict limitations with respect to the types of activities and their impacts, and whether the exemption applies. The agencies believe that it is, therefore, reasonable that the Tulloch Rule regulates similar types of activities that are outside the scope of the Section 404(f) exemption and that result in the destruction or degradation of wetlands.

Implications of the AMC Decision

We are very concerned that the inability of the Corps and EPA to provide Section 404 review of activities covered by the AMC decision will weaken our ability to ensure effective and consistent protection of the Nation's human health and the environment. The decision creates an incentive for persons to take advantage of the regulatory loopholes that are once again available as a result of the District Court's invalidation of the Tulloch Rule, and to design large projects that destroy hundreds of acres of wetlands, harm neighboring property, and pollute streams and rivers in a manner that precludes effective CWA review. Such review is needed to minimize pollution and ecological damage, as well as provide appropriate mitigation to offset environmental harm.

The District Court's decision immunizes from Section 404 review various activities that can have devastating impacts on wetlands and other waters of the U.S., even though the physical amount of discharges from those projects may be small. Excavation projects of particular concern include drainage ditch construction, stream channelization, and mining activities undertaken in waters of the U.S. in a manner that results in only incidental, small volume discharges and therefore avoids Section 404 review.

As one example among many, the AMC decision will result in significant environmental impacts associated with mining activities in waters of the U.S. that would go unregulated under Section 404. In the southwestern United States, the acreage adversely affected by sand and gravel mining activities, for example, dwarfs those of other activities typically regulated under Section 404. In particular, in the Arid West, riparian areas have already suffered significant loss or degradation: estimates place riparian habitat loss between 75 and 95 percent in most western States. While riparian areas are not geographically large, their environmental importance is immense. For example, riparian areas comprise less than one percent of the land area of most western States, yet up to 80 percent of all wildlife species in this region of the country are dependent upon riparian areas for at least part of their life cycles.

With almost 50 percent of all commercially-viable deposits of sand and gravel located in or near riparian habitats, these areas remain extremely vulnerable to excavation activities. In addition to the loss of valuable fish and wildlife habitat, such excavation can lead to reduced water quality, channel instability, and increased bank erosion. Extraction of sand and gravel from within or near a stream bed, for example, can significantly alter the natural flow of a stream or river and subsequently lead to excessive scouring of both the stream channel and its banks. This instability spreads both upstream and downstream from the excavation site, in some cases miles in either direction, until the stream or river is able to reach a new equilibrium. In the process, the stream channel and its banks may be relocated anywhere across the floodplain, potentially placing important infrastructure such as bridges, utility lines, and roads at risk.

ADVANCES IN MITIGATION BANKING AND ALASKA WETLANDS

In addition to the 1993 joint rulemaking, the Administration's Wetlands Plan contained numerous other administrative initiatives intended to improve the effectiveness of the Section 404 program. I am pleased to provide the following update on two of the initiatives -- mitigation banking and Alaska wetlands.

Wetland mitigation banks are an innovative, market-based way for landowners to effectively and efficiently compensate for unavoidable wetland impacts. Previously, landowners had to undertake mitigation projects themselves which had proven to be a costly and time-consuming process for both landowners and regulators. Moreover, there has been limited benefit to the environment because many of these projects have failed to meet their ecological objectives. Through mitigation banking, the responsibility for providing mitigation is transferred to an entity that has the financial resources, scientific expertise, and incentives necessary to ensure that the mitigation will be ecologically successful.

In November 1995, the federal agencies issued guidance promoting the establishment and appropriate use of mitigation banks within the Section 404 and "Swampbuster" programs. The new mitigation banking policy encourages proper siting and design of mitigation banks and requires that bank sponsors provide the necessary financial assurances and commit to long-term monitoring and management of the wetlands that will ensure there is greater environmental benefit from mitigation efforts. Release of the guidance has facilitated interest in the establishment of mitigation banks nationwide. Recent survey information indicates that there are approximately 200 mitigation banks that have been approved or are under development.

With regard to Alaska, EPA and the Corps continue to recognize that circumstances in Alaska are different than those in the lower 48 States, and that administration of the Section 404 program should reflect those differences. As part of the Administration's Wetlands Plan, EPA and the Corps convened a panel of stakeholders and solicited public input in the State of Alaska in 1993-94 to identify and address specific concerns with the implementation of the Section 404 program in that State. Three years later, a number of measures point to the success of this effort.

Permitting figures demonstrate that evaluation times for individual and general permits have declined each year and are lower than the National average. Some 60 general permits authorize 1,000 activities (over 75% of all permitted activities in the State) in wetlands each year in an average of only nine days. Of those activities with potential impacts that warrant individual review, the average processing time has been cut from 106 days to 68 days. Abbreviated Permit Processing procedures have expedited the evaluation and issuance of 24 permits for discharges into wetlands associated with the construction of water, wastewater, and sanitation facilities in Alaskan villages (in calendar 1996, 16 of these permits were issued in an average time of only 20 days).

The Administration also evaluated concerns with compensatory mitigation requirements and the "No Net Loss" of wetlands goal as part of the 1993-94 Alaska Wetlands Initiative. The agencies issued Alaska-specific mitigation flexibility guidance and also now specifically recognize that the "No Net Loss" of wetlands goal must account for Alaska's unique circumstances. Mitigation is practicable and provided for only about 12% of Alaska's individually permitted wetlands acreage losses, as compared with over 150% for the U.S. as a whole. While these and other administrative steps have been taken by the Corps and EPA to improve the Section 404 program in Alaska, we continue to look for additional opportunities to make the program more fair and flexible while continuing to ensure effective protection for the State's valuable aquatic resources.

CONCLUSION

In conclusion, Mr. Chairman, through implementation of the 1993 Wetlands Plan, the Clinton Administration has demonstrated its commitment to meaningful improvements to the Section 404 program, while maintaining effective environmental protection. The purpose of the Tulloch Rule was to close a regulatory loophole that allowed those with sufficient resources and technical expertise to destroy and degrade significant acreage of valuable wetlands. The Administration is optimistic that the Appellate Court will overturn the District Court and reinstate the rule, thereby allowing the Corps and EPA to once again ensure effective protection of human health and the environment.

Thank you, Mr. Chairman.

* * *