Testimony by Becky Norton Dunlop
Secretary of Natural Resources
Commonwealth of Virginia
June 10, 1997

INTRODUCTION

I appreciate the opportunity to present Virginia's views on state-federal relations in the context of environmental enforcement. There is more to policy than enforcement, however, and I caution that enforcement is only one tool in the kit bag of environmental policy. The truth is that enforcement action means "failure" not success. It is certainly not the best tool to improve the quality and condition of the resources which make up our environment. In fact, it is the tool of last resort.

Virginia's legislature and Virginia's Governor have, in many important ways, established that policies which focus on compliance with environmental laws are better for the natural resources than policies which focus on enforcement. Virginia has demonstrated leadership in putting the proper emphasis on the purpose, goals and objectives of environmental policy, which, of course, is to improve the quality and condition of the air, water, soil, flora and fauna resources which make up the environment.

Having said that, it is important for the committee to have an understanding of the entire issue of enforcement, and not simply a current "cross section" of what is happening. Allow me to provide a brief historical background of where the environmental compliance and enforcement debate has been, and where it is going, in addition to articulating Virginia's pro-active views on getting results.

HISTORY OF ENFORCEMENT AND VIRGINIA/STATES ACTION IN THE 1990s

*The 1970s saw the first, serious enactment of comprehensive, media-specific environmental laws, whose basis was a facility-based permit system.

-- The inception of environmental enforcement took place in the mid-1970s, when then-EPA Administrator William D. Ruckelshaus took the first enforcement steps in dealing with the permitting issues under the then newly-enacted Clean Water Act. Historical records show that EPA's first enforcement steps were difficult to engage, because the federal government had never before taken federal action to meet discharge and emission limits.

-- The 1970s were punctuated with the passage of other permit-driven statutes, such as the Clean Air Act (in 1970 and amended in 1977) and the 1976 Resource Conservation and Recovery Act and the 1972 Clean Water Act.

-- Because of this company-by-company permit system, enforcement by the EPA was also company-by-company, and in the many cases where government entities were the polluters, on a government jurisdiction by government jurisdiction, basis.

* The 1980-1990 decade witnessed enactment and implementation of far more punitive measures, in response to serious pollution incidents.

-- In 1980, Congress passed the federal Superfund statute (Comprehensive Environmental Response, Compensation and Liability Act), which provides for strict, joint and several, and retroactive liability. This turned much of the environmental profession into a lawyers' business instead of an environmental science and resource management business.

-- In 1990, Congress passed the Oil Pollution Act, which also provides strong regulation in the oil and gas sector.

*Once it was understood that these punitive enforcement measures were not particularly effective, environmental policy makers turned up the heat.

-- In 1986, EPA issued its first environmental audit policy, which sought to encourage companies to perform environmental audits, but which left the companies at significant enforcement jeopardy. In 1991, the Justice Department's Environment Division issued its Audit Policy. These strict enforcement-driven rules continue to exist today, even as amended by EPA.

-- In 1991, EPA issued its first policy on "Supplemental Environmental Projects" by which violators could mitigate part of the civil penalties levied on violations in exchange for a same or greater investment in environmental improvements at or near the same facility. Again, the regulated community has been left at significant enforcement jeopardy.

-- In 1990, Congress passed the Pollution Prevention Act, by which it directed EPA to begin establishing measures to prevent pollution, in addition to focusing on "end of pipe" permits and enforcement actions.

-- In the 1986 Superfund Reauthorization (the Superfund Amendments and Reauthorization Act, "SARA" of 1986), Title III was added (known as the Emergency Planning and Community Right-to-Know Act (EPCRA), which instituted the annual Toxics Release Inventory (TRI) publication. The publication and dissemination of the annual TRI, published since 1987, has brought the "sunshine" of public disclosure of emissions, and has resulted in considerable reduction in emissions. This is quite a success story for voluntary compliance strategies, and has happened in spite of EPA's preference for non-voluntary enforcement-litigation strategies.

* In the 1990s, Virginia and other states took a more comprehensive, pro-active role in obtaining environmental solutions.

-- Virginia and other states "staffed up" with their own environmental expertise, and subsequently took their own actions to pro-actively lead the environmental results agenda:

-recognizing the inherent deficiencies in the cumbersome, permit-by-permit and litigation approach to regulatory enforcement, Virginia and other states formulated their own, outcome-driven compliance measures to improve the quality and condition of the environment, including:

-- implementation of a "Compliance First, Enforcement Second" approach to expeditiously gain compliance and avoid the hemorrhage of non-compliance while conducting cumbersome litigation;

-- as done in Florida by Carol Browner and other states, Virginia "regionalized" its compliance and enforcement system, by which it created a broader, more comprehensive team (permitting, technical, and compliance/enforcement staff) to respond to environmental complaints faster;

-- Virginia was the first state to institute a new paradigm for implementation of environmental policy. Previously in Virginia, and in almost all other states, environmental protection and natural resource agencies had been organized on what is called a "media-specific" basis. That is, each environmental department had an Air Division, a Water Division, and a Waste Division, etc. Each of these divisions employed all the tools of permitting, compliance, and enforcement. The Virginia paradigm has reorganized and streamlined environmental policy management by substituting the previous media-based divisions for Divisions of Permitting, Compliance, and Enforcement, each with the capability to deal with the media of air, water, and waste. This new paradigm has empowered regional and local DEQ officials to expedite improvements in environmental quality.

-- Virginia took a new, varied approach, not relying simply on the slow, often litigious permit-by-permit and administrative enforcement penalty system:

-- instead, we focused on environmental remedies and behavior modification to gain expeditious compliance;

-- developed a bifurcated approach:

-- cooperatively working with entities who want to get into compliance;

-- take formal, punitive action against recalcitrant actors. (E.g., the U.S. Government/Avtex, the U.S. Army (Vint Hill Farms, Warrenton Army Training Center), U.S. Navy/Little Creek, NASA/Wallops Island, Rhinehart/tire pile, multiple private sector landfill operators, Smithfield Foods, state government (VDOT, Dept. of Mental Health, Dept. of Corrections, state universities -- UVa, Va. Tech, James Madison U.)

-- work with Commonwealth's Attorneys and the U.S. Attorneys to bring the full force of law against criminal polluters.

-- targeted "worst polluters" and long-overlooked government facilities, which are the most egregious and persistent polluters in Virginia.

-- used compliance incentives by which to encourage, and not discourage, broad groups of entities to pro-actively "think ahead" about their environmental responsibilities. Among these are:

-- development of specific plans of work with specific timelines to improve emissions performance rather than imposing fines on cash-strapped municipalities -- i.e., non-profit, taxpayer-funded entities, to take that necessary action to retrofit their municipal water/wastewater treatment and waste systems (since 1994, Va. has issued orders to over 110 municipalities, by which they will fix their water systems, at a cost to them of approx. $1-2 billion);

-- encourage environmental audits by which companies and municipalities take the initiative to pro-actively deal with their environmental problems and avoid being the subject of expensive governmental enforcement action, fines and litigation;

-- work with and encourage -- i.e., not discourage -- environmental entrepreneurs, who wish to run a business for profit while simultaneously and expeditiously repairing an environmental malady

(e.g., Virginia's Voluntary Remediation Program, by which some 40 companies are voluntarily moving to cleanup contaminated properties; also quickly encouraging Va. Power to join the Army Corps of Engineers to clean up the Tidewater Community College site, thus avoiding the legal nightmare of EPA naming the College as a NPL Superfund site, thus forcing gargantuan cleanup costs on the state government)

-- use of specialized grant and tax funds as economic incentives for unique environmental problems -- e.g., the Virginia Waste Tire Fund and reimbursement allocation for tire pile cleanups, which has prevented a major environmental crisis for Virginia. Virginia's Revolving Loan fund to help small communities deal with long-standing air, water, and waste problems (e.g., the 1996 Tangier Island settlement, ending a ten year nightmare of environmental litigation and delay in cleanup)

-- We are now involved with the states in EPA Region III and ECOS to develop and refine new measures of compliance and enforcement success, rather than simply relying on numerical action outputs, originated in the 1970s, that do not measure real environmental results. Frankly, it is an absurdity and demonstrated failure to measure improvements in environmental quality by the number and amount of fines imposed or litigations entered into. We believe that a true environmental compliance and enforcement system will:

-- measure concrete, physical, and measurable improvements in the quality of the resources themselves.

-- utilize the comprehensive range of environmental tools, from Small Business Assistance, Compliance Assistance and use of specialized funds, in preference to punitive litigation;

-- by these measures, Virginia has done quite well, including but certainly not limited to:

-- real, measurable improvements in Virginia's air, water and land (EPA announced this year (including Thursday, June 5) that two of the 3 Clean Air Act Non-Attainment Areas (Hampton Roads, Richmond area) will be removed from their non-attainment status, due the technical results from many measures that have been taken.

-- By taking this approach, Virginia has moved to resolve its most serious, known environmental problems, and, in so doing, has resolved a list of long-standing environmental violations that date to the mid-1980s.

These are environmental results that count, consistent with the federal Government Performance and Results Act -- not simply the typical "bean counting" exercises (how much in fines, number of lawsuits or orders issued) that continue to characterize traditional enforcement. We believe the compliance-first approach is one that focuses on real solutions, not simply, rhetorical assertions about complex, technical problems.

Virginia's leadership in streamlining permitting, appropriate use of consent orders, and our compliance assistance initiatives have encouraged new investment in Virginia that has created the wealth and technological innovations for a continuing and ever-increasing improvement in environmental quality for the people of the Commonwealth.

IN LIGHT OF THIS HISTORY, WHAT IS AN OBJECTIVE VIEW OF EPA and HOW DOES IT WORK WITH STATES LIKE VIRGINIA?

* A range of disinterested but knowledgeable parties, ranging from former EPA Administrator Bill Ruckelshaus to EPA's current Inspector General and Congress' General Accounting Office are making the same statement that many states are making: EPA has some serious problems that need to be fixed. To quote from GAO's June, 1996 report on the Government Performance and Results Act:

The Environmental Protection Agency (EPA) was established in 1970 under a presidential reorganization plan in response to public concerns over unhealthy air, polluted rivers, unsafe drinking water, and haphazard waste disposal. Congress gave EPA responsibility for implementing federal environmental laws. From the start, however, EPA lacked an overarching legislative mission, and its environmental responsibilities have yet to be integrated with one another. As a result, EPA could not ensure that it was directing its efforts towards the environmental problems that were of greatest concern to citizens or posed the greatest risk to the health of the population or the environment itself.

* It was with almost universal approval that Carol Browner testified before this committee in March, 1993, on her objectives, including her affinity for state environmental programs and providing flexibility to such states and their programs. I agree with the following insightful remarks she made then, because they were based on her experience in both Florida as well as in Washington:

This [EPA's relationship with State, tribal and local governments] is an issue of particular interest to me, obviously, because of my past experience in a State environmental agency. I have a real affinity for State environmental agencies and what they bring to the table. In Florida, we launched a fairly intensive program to delegate a number of our powers to regional, county and city organizations because we felt they brought to the table a real understanding of the issues at hand and a set of resources to do the job that the public demanded.

I think that one of the most important pieces of this Administration will be to forge stronger relationships with State and local government and to build on what has already been done. I feel very strongly that we cannot reach environmental objectives until we acknowledge the value of and support of the building of strong State and local capacity to manage environmental programs.

In response to Senator Baucus' question regarding EPA allowing states to manage environmental programs, Ms. Browner stated:

Well, it's a change in how we think about our relationship with the State agencies. We at EPA are going to have to think a little bit differently about the State agencies. We're going to have to recognize the strengths that they bring to the table, and we're going to have to allow them to do the job the way they see fit.

I would just say that the other piece of this is that there are places where -- and we look forward to working with this committee during reauthorization -- where we would like to see greater flexibility in some of the statutes under which we delegate, to make sure we're not put in an awkward position of always being responsible for making sure on a permit-by-permit basis that in fact what Congress intended is being done.

Again in response to Senator Baucus' question, "But where can EPA be more flexible?", Ms. Browner stated:

I do think that we can also change how we relate to the States. It's not all going to take statutory changes. Part of it is just recognizing within EPA that we need to behave in a different way.

Again in response to Senator Baucus, Ms. Browner stated:

Well, we have several processes going on right now in terms of dialogs taking place between EPA and local governments, between State and tribal governments. We need to increase these dialogs. And, quite frankly, we probably need to swallow hard. I know when I looked at delegating my powers in Florida to regional governments, it was just a question of sort of saying, "OK, we're going to do it, and we're going to trust them." That's a hard thing. It's not within our nature, but we have to do it.

I think there is a growing recognition within the agency at all levels that if we are going to accomplish our mission, it will only be through the cooperation of State, tribal and local governments, that they bring such a large number of resources to the table to help us do our job, and that we have to maximize the use of those resources so that we can be moving on to the next challenge....

[I] recognize that we at EPA have a tremendous responsibility to improve that relationship and that we have to reach out to the States in a way that we never have before.

* With Ms. Browner's mission statement for EPA as context, we ask anew: What is the relationship between EPA and Virginia?

Answer: Though much of the staff-level relationship is good, however, a number of unilateral, surprise EPA actions leave Virginia perplexed:

Which EPA are we supposed to deal with? Is it Ms. Browner's cooperative, collegial approach, or is it that approach punctuated by repeated, rhetoric-laden surprises by which Virginia has been treated? Examples:

Example: EPA's Belief in Civil Penalties as a Measure of Enforcement Success.

EPA maintains a steadfast belief, by and through their annual enforcement accomplishments, that one of the key barometers to the success of environmental enforcement is civil penalties extracted from violators. If this is so, consider the following:

Blue Plains. The District of Columbia's Blue Plains wastewater treatment plant is one of the largest plants on the Potomac River, and has had a long-standing, chronic compliance problem which has polluted Virginia waters. So when the Attorney General of Virginia sought to join in a federal lawsuit over the plant, the United States Department of Justice and EPA successfully kept the Commonwealth out of the suit. Then, when the U.S. got a consent decree requiring -- yet again -- that Blue Plains get into compliance (a judgment that it had received in previous litigation), the U.S. sought and received no civil penalties for the dramatic Clean Water Act violations that had impacted the Potomac River and Virginia Waters.

Lorton. On the heels of this, Virginia sued the U.S. and the District of Columbia for the chronic compliance problems at the Lorton, Virginia wastewater treatment plant that was polluting Virginia waters. When the Commonwealth obtained a consent decree calling for $175,000 in civil penalties (some of which would be waived pending significant environmental plant construction), EPA Region III wrote to Virginia stating that Virginia's civil penalty was not high enough.

Virginia is perplexed: Which EPA are we supposed to deal with? The one that claims collegiality and joint efforts, or the one that cuts Virginia out of litigation, seeks no civil penalties for repeated violations, and then separately criticizes Virginia for its civil penalties being too small.

Example: EPA's Posture on Government Facility Pollution and Responsibility.

Virginia enforcement against government facilities. Virginia has taken the lead to enforce environmental laws among its own state government, as well as local and federal government. It has enforced against entities varying from the Virginia Dept. of Transportation to the University of Virginia, as well as the municipalities mentioned before, at extraordinary cost for environmental retrofitting and construction. It also must enforce against the largest polluter in the Commonwealth, the federal government, and has done so against Army, Navy, and NASA facilities, in order to require them to do the same thing as private entities.

EPA Non-Enforcement at Avtex Fibers. EPA claims to take this same posture, but there is a serious question about this. Why is it that the Commonwealth has to sue the Department of Defense, Air Force and NASA to recover Virginia's cleanup costs at a toxic waste disaster that they knowingly bailed out and exacerbated, while EPA refuses to enforce against them? In November, 1988, the U.S., by and through the National Security Council, bailed out Avtex Fibers -- then recognized as the largest polluter in the state -- with $43 million, in order to continue providing specialized rayon for Air Force missiles and the NASA space shuttle. The NSC meeting included an EPA warning that the plant had major environmental problems, and that taking such bailout action would bring on Superfund liability. Notwithstanding this warning, the U.S. bailed the company out and -- according to Air Force memos -- pushed production "all the while knowing an environmental disaster was brewing". When Avtex closed and abandoned the facility one year later, the U.S. abandoned the facility as well. Since then, EPA has not taken any enforcement action against the federal government, and has been slowly cleaning it up using money from the Commonwealth, the Superfund, and one private responsible party. The environmental property damage to this 440 acre site is gargantuan, including a 65-mile health advisory warning people not to fish in that part of the Shenandoah River. Though Virginia was not responsible for this toxic waste disaster, it is having to pay 10% of all of EPA's cleanup costs and 100% of EPA's future operation and maintenance costs, at an expected exponential figure. EPA's posture? They won't enforce against a sister agency, due to the federal government's "Unitary Executive Theory", thus leaving the Commonwealth of Virginia having to pay for the federal government's knowing environmental damage.

Virginia is perplexed: Which EPA is it supposed to believe? The one who claims enforcement against the worst polluters is a priority, or the one that sits idly by as the Commonwealth has to sue the federal government to make it pay back Virginia for the environmental catastrophe it created?

Example: EPA Violation of EPA-Virginia Enforcement Agreement, and Inflammatory EPA Rhetoric.

Smithfield Foods. The formal, 1975 enforcement agreement between EPA and the Commonwealth of Virginia states that, pursuant to delegation, Virginia has primacy in all NPDES environmental enforcement. That agreement has characterized the relationship since 1975.

So why did EPA surprise Virginia by secretly taking enforcement action against a private party, Smithfield Foods, when it has known and acquiesced in the results-driven actions Virginia has taken against that party since 1991? And, why did EPA take this action after Virginia complied with a request from EPA, Justice and the FBI not to take civil action, so as not to jeopardize a criminal investigation? And, when EPA did so, why did EPA make false, rhetorical statements about Virginia?

Virginia is perplexed. Which EPA are we to believe? The collegial one Ms. Browner suggested, or the hostile one Virginia deals with at Region III that breaks a 22 year agreement?

Example: EPA's Posture on Environmental Audits

Like many other states, Virginia enacted an environmental audit and related limited civil immunity statute. Any immunity was predicated on it being consistent with federal law. In a survey of all states' environmental audit statutes, EPA's Director of Congressional Relations for Virginia was quoted as saying that EPA was familiar with Virginia's environmental audit statute and that, even though it had criticized it before, the EPA team reviewing these state audit statutes did not intend to contact Virginia again. Surprisingly, the EPA Regional Administrator wrote a letter shortly thereafter regarding the Smithfield case, and cited as a criticism of Virginia the same Virginia statute that EPA had just tacitly approved.

Virginia is perplexed. Which EPA are we to believe? The EPA Headquarters Team that has reviewed and acquiesced in Virginia's statute, or the EPA Regional Administrator who takes a contrary view?

Example: EPA's Posture on Tributyltin (TBT)

In 1988, Congress mandated EPA to conduct a study of tributyltin, a chemical defoliant agent by which shipyards clean the hull of ships, for purposes of arriving at a national regulatory standard in water. EPA has never done that study. If that is the case, then why is EPA publicly criticizing Virginia and holding up EPA's approval of a major permit over TBT?

Virginia is perplexed. Which EPA are we to believe? The one that is required to promulgate a national standard with which all states are to comply, or the one that fails to comply with such Congressional mandate and then criticizes a state for acting on the EPA created vacuum.

Example: EPA's Plan for State Delegated Program Flexibility

EPA announced in 1995 that it intended to promulgate a plan by which it would provide considerably more flexibility to states by which to run delegated environmental programs. However, shortly after the 1996 election, the Deputy Administrator of EPA withdrew this plan.

Virginia is perplexed. Considering Ms. Browner's testimony before this very Senate committee, which EPA are we supposed to believe? Her firmly stated belief in state environmental programs and EPA flexibility, or EPA's recent move to shut off such flexibility.

Example: EPA's Non-Responsiveness Regarding Challenge to Virginia's Water Program Delegation

In November, 1993, a public interest group, the Chesapeake Bay Foundation, filed a formal petition with EPA Region III by which it sought for EPA to withdraw its 1975 delegation of the NPDES program to the Commonwealth of Virginia. Notwithstanding multiple requests since 1994, EPA Region III has never made a decision, even though it has historically ranked Virginia as one of its better states dealing with the water program.

Virginia is perplexed. Considering Ms. Browner's testimony, which EPA are we to believe? The collegiality and state flexibility that Ms. Browner articulated, or the non-responsiveness of Region III?

Example: EPA Overfiling After State Achieves Environmental Resolution

Conclusion: As was stated at a recent meeting of the Environmental Council of the States, "states are not branch offices of EPA".

These facts remain clear:

* Virginia is achieving real environmental results, and is not relying on 1970s barometers to measure 1990s accomplishments;

* Virginia is in the forefront of developing useful, environmentally-sound methods by which to expeditiously achieve environmental compliance, notwithstanding 1970s era-EPA criticism;

* Virginia remains perplexed. Why has Ms. Browner's cooperative, collegial approach somehow gotten lost in EPA between her office and Region III?

Finally, one more note regarding state-federal relations. On May 30, the U.S. District Court for the Eastern District of Virginia ruled, in U.S. v. Smithfield Foods, that Virginia's statutory water enforcement program is not afforded any deference from EPA, since it is not comparable to the Clean Water Act's program. This was because, the Court reasoned, Virginia's water law does not have the same administrative civil penalty tools as the Clean Water Act. If this is upheld, then any state whose state water laws do not contain the same tools as the Clean Water Act should know that EPA can overfile them, regardless of what environmental progress the state is making. This effectively means that there can and will be serious questions by every state's permittees regarding whether they even need to deal with the state, since EPA can simply ignore such state action. If this is the result that EPA sought, then we must truly ask which EPA any state deals with: the one which believes that "We're going to have to recognize the strengths that they (the states) bring to the table, and we're going to have to allow them to do the job the way they see fit", or the one which wants to turn back the clock, to return to the 1970s, monolithic "Big Brother" approach to environmental enforcement? Ms. Browner said that the change would be hard, but that EPA would "have to do it". Despite these sentiments, they have not done it yet, and it isn't clear from their actions that they ever intended to.

HELPFUL SERVANT OR FEARFUL MASTER?

The issue about EPA and State relations in regard to enforcement of environmental laws is simply this: Is government to be a helpful servant or a fearful master? This question is at the very core of the reforms and improvements now taking place in environmental quality policy in the States all across this land.

States, not only Virginia, but in virtually all states, including those whose top environmental officials have long been associated with the "Enforcement First" approach are moving in the same direction as Virginia. Indeed, Florida under Administrator Browner's leadership, began to initiate Compliance First policies when she was my counterpart there. States' environmental agencies, States' legislatures and States' governors want the quality of the environment in which they and their people live and work to be improved.

States want real and meaningful reform to help them put aside the one-size-fits-all, top down, Washington knows best, litigious approach of the past because the experience of the past thirty years demonstrates that compliance with national environmental quality goals and standards is the most effective focus of environmental policy. This is the helpful servant approach.

The "fearful master" approach is simply wrongheaded and is proven to be counter productive in improving environmental quality. The "fearful master" approach demonstrated by EPA for the past thirty years to be its preferred approach, has turned concern for the environment away from its beginnings as a profession of scientists, environmental engineers and resource managers into a profession of lawyers, litigators and one-size-fits-all regulators and political opportunists.

In his Farewell Address, George Washington warned Americans to always be vigilant to assure that the new American Nation would never allow the government to become a fearful master. Virginia submits that now is the time for Congress to assess this State and Federal relationship as regards environmental policy. Will you determine George Washington was correct in thinking that the "helpful servant" approach we are now trying to implement in Virginia is far more effective and far more suitable for a free and prosperous people? I trust you will find this to be true.