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Lawmakers’ dilemma: Raise ADEQ fees or risk EPA intervention

Policymakers in Arizona may have to choose between two undesirable options – greater environmental fees for businesses or greater federal intervention in local affairs.

Officials from the U.S. Environmental Protection Agency are considering taking more control of some state-run Superfund cleanup projects and perhaps asserting more influence over enforcement efforts that are handled by the state. Taking over entire state programs is unlikely, EPA officials said, but the prospect of federal intervention has some lawmakers mulling higher state fees to stave off the threat.

Like most other state agencies, the Arizona Department of Environmental Quality (ADEQ) has become a casualty of the budget crisis. The ADEQ budget’s high-water mark was in 2007, when it received about $32 million from the general fund, but since then the appropriation has dropped to $13.2 million.

In order to make up the funding shortfall, ADEQ Director Benjamin Grumbles is hoping the Legislature will approve a number of fee increases that he said would allow permitting, monitoring and enforcement programs to pay for themselves. The request would pit two historic Arizona trends against each other – reluctance by lawmakers to add to the burden of taxpayers and a traditional distaste for federal involvement in state affairs.

Grumbles, a former water official with the U.S. Environmental Protection Agency, said the decrease in funding comes with a limited ability to monitor environmental conditions, enforce regulations and authorize permits for businesses. He said the lack of resources might trigger greater intervention by the EPA, including a federal takeover of programs that the federal agency only recently delegated to the state.

“There are some things that EPA does very well. They’re very good at setting national, scientifically based standards. But the key is to have more state-based or regional- and local-based solutions, and that’s where it helps to have delegated programs, not federal permits being issued,” Grumbles said. “There’s a lot at stake.”

One such program is the Arizona Pollutant Discharge Elimination System. Any business that emits pollutants into navigable waters must get a permit under that system, which was delegated to the state by the EPA in 2002. But the Legislature swept nearly $3 million from the program, Grumbles said, and ADEQ must now use money from the Water Infrastructure and Finance Authority of Arizona, which generally goes toward clean-water projects.

Grumbles said an inability to properly fund the pollutant-discharge program might result in the federal government reasserting control. He also is concerned about the possibility of EPA taking over cleanup duties for water contamination at four sites designated for cleanup under the Comprehensive Environmental Response, Compensations and Liability Act, more commonly known as Superfund. Under the program, federally designated Superfund sites are targeted for massive cleanup efforts by the federal and state governments.

The EPA, however, said federal takeovers are not likely. State control is not granted easily, federal officials said, and a reversal is a lengthy, complicated and rare process.

Besides, the EPA doesn’t need to take over a program to have an impact if the agency feels that state efforts are falling short, according to Alexis Strauss. Strauss, director of the water division at EPA’s Region 9, which includes Arizona, said the EPA is usually reluctant to take such drastic moves, and the agency is suffering from many of the same budget problems as ADEQ.

But there are other ways to have an impact, Strauss said. The EPA might take over certain aspects of enforcement or monitoring. Under especially severe conditions, the agency could theoretically pull federal funding, but Strauss said that is usually counterproductive because that reduces the ability of state agencies to enforce environmental regulations.

“I could probably more easily spend that time in a shared work setting with Ben (Grumbles) and his folks,” Strauss said.

Under federal control, Strauss said, permitting would take longer, because EPA would be operating from its office in San Francisco. But EPA could start taking enforcement actions against polluters, a role now handled by local officials at ADEQ.

“I don’t need to take it over to have an impact,” she said.

Superfund is a different animal. The federal government controls the cleanup efforts at many Superfund sites, although some are handled by the state.

Keith Takata, Superfund director for the EPA’s Pacific Southwest region, said EPA has considered taking a more assertive role at state- run Superfund sites if the state falls short. He said that proposition is much more likely than a total EPA takeover of state-run programs.

The EPA has been in preliminary discussions with ADEQ about the possibility, Takata said. If EPA took the lead, it would deal directly with the parties responsible for causing the pollution, the therefore responsible for many cleanup efforts, instead of ADEQ.

“EPA does not easily delegate programs to states, and then once it’s delegated it’s not easy to take it back. Remember in the case of Superfund, though, it’s not a delegated program. It’s really kind of site by site, so it’s not as big a deal,” Takata said.

With further budget cuts, or maybe without them, Grumbles said, ADEQ may soon lack the resources to continue cleanup efforts at four sites – two in Phoenix, one in Payson and one in Quartzsite. More funding cuts are possible, and Grumbles listed those four sites in a ADEQ report that outlined the probable impact of a 15 percent budget cut, an exercise Gov. Jan Brewer required of all state agency heads.

ADEQ primarily funds cleanup efforts at the Superfund sites with money from the Water Quality Assurance Revolving Fund, which if funded through corporate income taxes, fees and costs recovered from polluters, and Grumbles said the state would direct money from that pool to other sites if EPA became more involved in any of the four.

“If we have an additional 15 percent cut to the state’s Superfund program … (it) would be over a $1 million reduction in that program. The effects would be that we may not be able to respond to hazardous waste emergencies,” Grumbles said.

EPA takeover of a state program wouldn’t necessarily be initiated by federal officials, Strauss said. Citizen groups can petition the agency to take such actions. The Sierra Club, for example, requested EPA intervention in a water-pollution program in West Virginia earlier this year. The request is pending.

In most cases, Strauss said, the EPA negotiates with state officials over the best way for both sides to continue enforcing environmental standards. One petition by environmental groups over California’s storm water-pollution controls has dragged on for more than a decade, Strauss said.

State Rep. Daniel Patterson, an ecologist and Tucson Democrat, said EPA can take actions such as
stripping the state of federal highway funds in areas that are not meeting air-quality standards. He said ADEQ is not fully meeting its obligations and the agency needs to make more vigorous efforts. If it doesn’t, he said he would support a greater role by EPA.

“I think there’s some solid reasons why EPA should look closely at what’s going on in Arizona,” Patterson said. “I support the state having the lead role, but the state has to do the job to protect public health and the environment. I’m not sure that’s happening right now.”

A greater EPA role in Arizona may mean more rigorous enforcement of environmental standards. Takata said EPA’s authorities are probably a bit stricter. EPA Region 9 spokeswoman Margot Perez-Sullivan said, “Our laws have a little bit more teeth and … the fines are bigger usually, and things like that.”

Of course, for ADEQ to fully meet its responsibilities, the agency needs money, which is in short supply in Arizona these days. The state still has a deficit of about $1.5 billion in fiscal 2010, and next year is expected to be worse.

To bridge that gap, Grumbles proposes raising fees for some permitting programs, such as the Aquifer Protection Program. Companies that discharge chemicals that could pollute aquifers pay $61 for each hour spent by agency officials to inspect permits. The largest projects, such as wastewater-treatment plants or large-scale mining projects, can take hundreds of hours.

Grumbles wants the Legislature to allow the agency to charge $122 an hour, a request he has already submitted to the Governor’s Office for the fiscal 2011 budget.

Grumbles also is seeking permission to charge fees for the Arizona Pollutant Discharge Elimination System, which ADEQ views as a top candidate for EPA intervention. About 20-25 states charge fees for the permits, which are issued under the aegis of the U.S. Clean Water Act.

Grumbles said the move would be controversial because the state decided in 2002, when the program was delegated by EPA, that municipalities would not have to pay for the permits. But the director said the program must be more fiscally self-sufficient.

“I think the key … to environmental sustainability is to have the beneficiaries pay – some would say have the polluters pay – and to charge a fee for the services that are rendered in reviewing and issuing those permits,” Grumbles said.

That idea is going to be a tough sell. Republicans control the Governor’s Office and both chambers of the Legislature, and they are loath to raise fees on businesses. Grumbles said he has Brewer’s strong support – the Governor’s Office did not respond to a request for comment on the matter – but the issue may come down to whether lawmakers are willing to raise fees to stave off greater federal control over local issues.

Rep. Ray Barnes, a Phoenix Republican who chairs the House Environment Committee, said some of his colleagues consider fees as another form of taxation.

One of those lawmakers, Sen. Thayer Verschoor, a Gilbert Republican, skipped recent budget vote over leadership’s refusal to consider an amendment he proposed that would have barred some agency heads from raising fees on their own. Verschoor later relented. But Sen. Ron Gould, a Republican from Lake Havasu City, voted against three bills in special session after raising concerns about agency fee-setting authority.

Barnes doesn’t think fees are the same as taxes.

“I don’t look at it as a tax. I look at that as a cost of doing business. A tax is when everybody is involved,” Barnes said. “I don’t want to hurt business, but I don’t want the federal government to take them over either. … If the EPA gets involved because Grumbles can’t afford to enforce the regulations, the EPA will come in and say we’ll enforce them for you.”

Barnes said fee increases would have to be considered on a case-by- case basis, a sentiment echoed by Glenn Hamer, president and CEO of the Arizona Chamber of Commerce and Industry. He said businesses in the state would prefer to deal with ADEQ, rather than the EPA, and would support fee hikes that simply cover the cost of permitting and enforcement. But that support would be conditional.

“Yes, but cautiously so,” Hamer said when asked if the chamber would support higher fees at ADEQ. “We want to make sure that the fees are tied to … that goal. It’s something we will obviously watch very, very carefully, but we support the director in terms of the overall goal.”

Like many other facets of state government, ADEQ has received federal money from the American Recovery and Reinvestment Act. The agency is slated to receive about $5 million for projects involving leaking underground storage tanks, water-quality management and the reduction of diesel truck emissions, while the Water Infrastructure Finance Authority has received about $80 million for water infrastructure projects.

But that money will run out soon, Grumbles said. He emphasized that stimulus money is absolutely not a long-term solution.

“It’s not operating funds. It’s all going to projects. The goal has been … to put shovels in the ground and have concrete results,” Grumbles said.

Sen. Sylvia Allen, a Snowflake Republican, said she would be willing to increase fees to help ADEQ meet its fiscal responsibilities, but would have to examine each request on a case-by-case basis. She doesn’t want the EPA to take a greater role in Arizona.

“We’re in that situation where we all need to come up with ideas,” she said.

Others aren’t so sure. Sen. Russell Pearce, who chairs the Senate Appropriations Committee, said ADEQ might have to look at where else it can cut back, and the state might look at where it can ease up on regulations to save money during the budget crunch. “Maybe we’re doing things we ought not to be doing,” the Mesa Republican said.

Pearce said he views fees as more taxes. But he said he supports user fees, as long as there’s a vetting process to make sure they’re appropriate. He said the prospect of EPA intervention would play into his decisions.

“A lot of debate goes in that. Would I listen carefully? Yeah, because sometimes the federal government oversteps their boundary, and the states need to tell them we’re not going to do that,” Pearce said.
ADEQ also is considering changing the type of permits the agency issues. Grumbles said the agency is looking to move away from individual permits, which are issued for individual projects, and rely more heavily on general permits, which are issued for multiple facilities or projects in a geographic area. The general permits are cheaper and less time-intensive for the state to issue.

But Sandy Bahr, of the Grand Canyon chapter of the Sierra Club, said general permits aren’t as effective in enforcing environmental standards and require far less public input. She said the state is now issuing general permits for projects it never would’ve done in the past, such as uranium mines.

“With a general permit, there’s more of an assumption that you’re not going to contaminate the aquifer, versus an individual permit, (with which) you have to show that you’re not going to contaminate the aquifer,” she said. “You have to have monitoring. It’s much more in the way of monitoring requirements.”

Grumbles said general permits are effective, and he said ADEQ can negotiate specific provisions into the permits to ensure standards are being enforced.

Meanwhile, the Governor’s Office, ADEQ and others in the state are chafing under new regulations proposed by the EPA for the Navajo Generating Station in Page, which provides power for Central Arizona Project canals. The EPA is considering new rules that would force the plant to make technological upgrades to limit air pollution, an endeavor Brewer and Grumbles have said is unnecessary and costly.

Because the plant is on Navajo tribal land, it is regulated by the EPA, not ADEQ.

“I think that the EPA has already signaled at the national level – they’ve told Congress and they’ve told all of the states – that they’re looking to get more heavily engaged in enforcement, particularly in the water arena,” Grumbles said.

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