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Report to Congressional Requesters: 

February 2005: 

Storm Water Pollution: 

Information Needed on the Implications of Permitting Oil and Gas 
Construction Activities: 

[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-05-240]: 

GAO Highlights: 

Highlights of GAO-05-240, a report to congressional requesters: 

Why GAO Did This Study: 

To prevent pollutants from entering storm water runoff, the Clean Water 
Act’s National Pollutant Discharge Elimination System Storm Water 
Program requires controls for construction activities that disturb 
land. Phase I of this program requires permitting for construction 
activities that disturb 5 acres or more, while Phase II requires 
permitting for activities disturbing between 1 and 5 acres. The 
Environmental Protection Agency (EPA) extended the Phase II compliance 
date for discharges associated with oil and gas construction activities 
until March 2005 to analyze the impact of Phase II on the oil and gas 
industry. GAO was asked to provide information about oil and gas 
construction activities—such as well drilling and pipeline 
construction—affected by Phase I and likely to be affected by Phase II, 
as well as Phase II’s financial and environmental implications. 

What GAO Found: 

A small fraction of total oil and gas construction activities have been 
permitted under Phase I of EPA’s storm water program. Phase I storm 
water permit data for three of the six largest oil and gas producing 
states—Louisiana, Oklahoma, and Texas—showed that 433 construction 
activities were permitted under Phase I over the most recent 12 months 
for which data were available. About 70 percent, 304 of the 433, were 
oil and gas pipeline activities, most of which were much larger than 
the 5 acre criterion under Phase I. About 17 percent, 72 of the 433, 
were drilling activities. In comparison, these three states reported 
drilling an average of about 10,000 wells for each of the past 3 years. 
Industry must decide whether to seek permit coverage, and it has sought 
to have its drilling activities permitted on few occasions because it 
has determined that most drilling activity involves distinct projects 
that disturb less than 5 acres each. In states we reviewed, there were 
few reported compliance problems associated with oil and gas 
construction activities. 

While it appears that most oil and gas construction activities may have 
to be permitted under Phase II, the actual number of activities that 
could be affected is uncertain, and the financial and environmental 
implications are difficult to quantify. The oil and gas construction 
activities affected by the rule may lead to increased financial costs 
for the oil and gas industry and federal agencies implementing the 
rule. Many of the potential costs stem from meeting permit requirements 
to review the impact of construction activities on endangered species, 
although this impact would be site specific and difficult to quantify. 
Potentially offsetting these costs, the rule may lead to additional 
environmental protections that are difficult to quantify, such as 
decreased levels of sediment in water and benefits for endangered 
species and their habitat. After delaying implementation of this rule 
for oil and gas construction activities for 2 years to study the impact 
of Phase II, EPA is analyzing the impact but, as yet, has not 
quantified the number of activities affected or the potential financial 
and environmental implications. 

Gas Construction Site in Wise County, Texas: 

What GAO Recommends: 

GAO recommends that EPA’s Administrator complete the agency’s analysis 
of the Phase II program before making a final decision on its 
implementation. 

In reviewing our draft report, EPA officials agreed with our 
recommendation. EPA subsequently proposed an extension for the Phase II 
deadline for small oil and gas activities until June 2006 to allow time 
to complete its analysis. 

www.gao.gov/cgi-bin/getrpt?GAO-05-240. 

To view the full product, including the scope and methodology, click on 
the link above. For more information, contact John Stephenson at (202) 
512-3841 or stephensonj@gao.gov. 

[End of section]

Contents: 

Letter: 

Results in Brief: 

Background: 

Permit Coverage under Phase I Has Been Obtained by a Small Fraction of 
Total Oil and Gas Activities: 

Most Oil and Gas Construction Activity Will Likely Be Affected by Phase 
II, but the Financial and Environmental Implications of Phase II Are 
Difficult to Quantify: 

Conclusions: 

Recommendation for Executive Action: 

Agency Comments and Our Evaluation: 

Appendixes: 

Appendix I: Objectives, Scope, and Methodology: 

Appendix II: GAO Contacts and Staff Acknowledgments: 

GAO Contacts: 

Acknowledgments: 

Tables: 

Table 1: Oil and Gas Activities for Which Storm Water Construction 
Permit Coverage Was Obtained, by State: 

Table 2: Oil and Gas Activities for Which Storm Water Permit Coverage 
Was Obtained, by State and Construction Activity: 

Table 3: Onshore Well Completions from 2001-2003, by State: 

Figures: 

Figure 1: Activities Covered under Phase I and II of the NPDES Storm 
Water Program: 

Figure 2: Steps to Obtain Coverage under EPA's Construction General 
Permit: 

Figure 3: A Texas Gas Construction Location with Three Adjacent 
Drilling Operations: 

Abbreviations: 

DOE: Department of Energy: 

EPA: Environmental Protection Agency: 

FWS: Fish and Wildlife Service: 

NMFS: National Marine Fisheries Service: 

NPDES: National Pollutant Discharge Elimination System: 

LADEQ: Louisiana Department of Environmental Quality: 

Letter February 9, 2004: 

The Honorable James M. Jeffords: 
Ranking Minority Member: 
Committee on Environment and Public Works: 
United States Senate: 

The Honorable James L. Oberstar: 
Ranking Democratic Member: 
Committee on Transportation and Infrastructure: 
House of Representatives: 

Polluted storm water runoff can lead to U.S. surface water degradation. 
Runoff from sites where the ground has been disturbed--in particular, 
construction sites--can deposit sediment and other harmful pollutants 
into rivers, lakes, and streams. Sediment--the primary environmental 
concern associated with construction activities--clouds water, 
decreases photosynthetic activity; reduces the viability of aquatic 
plants and animals; and, ultimately, destroys organisms and their 
habitat. According to the Environmental Protection Agency (EPA), 
sediment runoff rates from cleared and graded construction sites are 
typically 10 to 20 times greater than those from agricultural lands and 
one-thousand to two-thousand times greater than those from forest 
lands. 

Storm water discharges from certain construction activities, as well as 
from other defined industrial sources and municipal storm water sewer 
systems, are subject to the Clean Water Act's National Pollutant 
Discharge Elimination System (NPDES) Storm Water Program. This program 
is designed to reduce the impact of storm water by requiring the 
implementation of controls designed to reduce harmful pollutants from 
being washed by storm water runoff into local water bodies. The NPDES 
program regulates a variety of municipal, industrial, and construction 
activities, such as oil and gas construction activities.[Footnote 1] 
Oil and gas construction activity includes clearing, grading, and 
excavating[Footnote 2] activities associated with oil and gas 
exploration and production, processing and treatment operations, and 
transmission facilities. These activities are often associated with oil 
and gas well drilling and pipeline construction, as well as other oil 
and gas construction. 

Phase I of this program, which became effective in 1990, regulates 
storm water discharges from construction activities that disturb 5 
acres or more of land, as well as smaller construction activities that 
are part of a common plan of development that disturbs 5 acres or 
more.[Footnote 3] Phase II of the storm water program applies to 
construction activity disturbing between 1 and 5 acres of 
land.[Footnote 4] EPA published the Phase II rule in December 1999 and 
set a March 2003 compliance date for permit coverage for discharges 
from small construction sites. EPA had originally assumed that few oil 
and gas construction activities would be affected by Phase II; but 
subsequent to rule promulgation, EPA became aware that as many as 
thirty-thousand oil and gas sites per year might be affected. So that 
EPA could perform further analysis of key issues, including the likely 
impact of Phase II's permitting requirements on the oil and gas 
industry, EPA postponed the Phase II compliance date for storm water 
discharges from small oil and gas construction sites until March 10, 
2005. 

Both phases of the rule allow oil and gas companies to obtain storm 
water permit coverage for their discharges under a general permit. In 
many other environmental programs, regulated entities obtain individual 
permits tailored to site-specific conditions. Though oil and gas 
companies may obtain individual storm water discharge permits, they 
almost always elect to obtain coverage under an NPDES general permit 
that contains general conditions applicable to a large number of sites. 
To obtain coverage, companies file a Notice of Intent to be covered 
under a general permit. This generally informs the permitting 
authority--EPA or the state, depending on the type of entity and its 
location--of planned activities that might involve storm water 
discharges and requires the operator to develop a plan to manage storm 
water pollution caused by these activities. The operator must also 
evaluate other potential impacts, including whether the construction 
activity is likely to adversely affect endangered or threatened species 
or their habitats before seeking coverage under EPA's Construction 
General Permit. 

This report provides information about (1) oil and gas construction 
activities that have obtained permit coverage under Phase I and (2) oil 
and gas construction activities that are likely to be affected by Phase 
II and its financial and environmental implications. 

To gather information about the oil and gas construction activities 
that have sought permit coverage under Phase I, we spoke to oil and gas 
industry associations representing both large and small companies, and 
government representatives, to get a national perspective on the number 
and types of sites affected. Because there is no centralized database 
that tracks nationwide oil and gas construction activities subject to 
Phase I, we reviewed the storm water permitting history of Louisiana, 
Oklahoma, and Texas--three of the nation's six largest oil and gas 
producing states. EPA administers the permitting process for oil and 
gas-related projects in Oklahoma and Texas, while Louisiana administers 
the entire NPDES Storm Water Program for its state.[Footnote 5] We 
reviewed EPA's and Louisiana's storm water databases and spoke with the 
administrators of these databases to assess the reliability of these 
data, which we found to be sufficiently reliable for our purposes. In 
addition, in order to gather information about the characteristics of 
oil and gas construction activities, we visited oil and gas 
construction sites in Louisiana, Oklahoma, and Texas. To obtain 
information about the number of oil and construction activities 
potentially affected by Phase II, we spoke with industry and government 
representatives. We discussed the financial and environmental 
implications of Phase II with storm water stakeholders, including 
representatives of various federal agencies, an environmental group, 
and the oil and gas associations and member companies. A more detailed 
description of our scope and methodology is presented in appendix I. We 
conducted our review between August 2004 and January 2005 in accordance 
with generally accepted government auditing standards. 

Results in Brief: 

A small fraction of total oil and gas construction activities have 
obtained permit coverage under Phase I of EPA's Storm Water Program. 
Although there is currently no centralized, nationwide storm water 
permit database, our review of Phase I storm water permit data for 
three of the six largest oil and gas producing states--Louisiana, 
Oklahoma, and Texas--identified 433 oil and gas construction activities 
that obtained Phase I permit coverage in these states over the most 
recent 12 months. About 70 percent of these activities were oil and gas 
pipelines, which were generally much larger than the 5-acre threshold, 
while about 17 percent were drilling activities. In comparison, these 
three states reported drilling an average of over ten thousand wells 
for each of the past 3 years. Industry officials must decide whether 
they should seek permit coverage, and they have sought to have their 
drilling activities permitted on few occasions because they concluded 
that most drilling activity involved distinct projects that disturbed 
less than 5 acres each. Neither EPA nor state officials reported many 
compliance problems associated with oil and gas construction activities 
in states we reviewed, although actual compliance rates are not known. 

EPA, industry and state officials believe that most oil and gas 
construction activities involve between 1 and 5 acres of land and will 
need permit coverage under Phase II of the NPDES Storm Water Program, 
although the actual number of activities this rule will affect is 
uncertain. Furthermore, the financial and environmental implications of 
implementing Phase II for oil and gas construction activities are 
difficult to quantify. The additional oil and gas construction 
activities affected by the rule may lead to increased financial costs 
to the oil and gas industry and to implementing federal agencies. Many 
of the potential costs that have been identified relate to EPA's permit 
requirements to review construction activities' impact on endangered 
species. However, this impact is site specific and difficult to 
quantify, given that not all sites will have to perform the same level 
of review. Potentially offsetting these costs, additional environmental 
protections may result from a greater number of oil and gas 
construction activities covered by Phase II, including decreased levels 
of sediment in water and benefits for endangered species and their 
habitat. Similar to the potential costs, potential environmental 
benefits are difficult to quantify. After delaying implementation of 
this rule for oil and gas construction activities for almost 2 years to 
study the impact of Phase II, EPA has not yet completed its analysis of 
the Phase II rule, quantified the number of activities affected, or 
determined the potential financial and environmental implications. We 
are recommending that EPA's Administrator complete the agency's 
analysis of the Phase II program before making a final decision on its 
implementation. 

Background: 

According to EPA, polluted storm water runoff is a leading cause of 
impairment to the nearly 40 percent of surveyed U.S. water bodies that 
do not meet water quality standards. Pollutants in storm water can 
significantly impact the environmental quality of U.S. waters by 
destroying aquatic habitat and elevating pollutant concentrations and 
loadings. Storm water discharges from construction activities can 
increase pollutants and sediment amounts to levels above those found in 
undisturbed watersheds. 

The NPDES Program was created in 1972 under the Clean Water Act to 
control water pollution from point sources--any discernible, confined, 
and discrete conveyance.[Footnote 6] Though EPA has had authority since 
1972 to regulate storm water discharges, it declined to require permits 
for most of these discharges for over 15 years. However, in 1987, 
Congress passed the Water Quality Act, which amended the Clean Water 
Act to require the regulation of storm water discharges.[Footnote 7] 
Accordingly, EPA established the NPDES Storm Water Program, which 
requires certain municipal, industrial, and construction sources to 
obtain permit coverage for storm water discharges. 

The storm water program was implemented in two phases: 

1. Phase I, adopted in 1990, which applies to medium and large 
municipal separate storm sewer systems and 11 categories of industrial 
activity (including large construction activity disturbing 5 or more 
acres of land);[Footnote 8] and: 

2. Phase II, adopted in 1999, which applies to small municipal separate 
storm sewer systems and small construction activity disturbing between 
1 and 5 acres of land.[Footnote 9]

The Phase II final rule was published on December 8, 1999, and required 
storm water dischargers to obtain permit coverage by March 10, 2003. 
When promulgated, EPA assumed that few, if any, oil and gas sites would 
be impacted by the construction component of the Phase II rule. 
Subsequent to rule promulgation, EPA decided to reevaluate how many oil 
and gas construction sites would be subject to the rule and postponed 
the deadline for seeking coverage to March 10, 2005, for oil and gas 
construction activities disturbing between 1 and 5 acres of 
land.[Footnote 10] The postponement was designed to allow EPA enough 
time to analyze and better evaluate the impact of the permit 
requirements on the oil and gas industry and to reconsider how key 
elements of the Phase II regulations would apply to small oil and gas 
sites.[Footnote 11]

Analyzing the impact of storm water permitting on oil and gas 
construction activities is important because this type of construction 
requires companies to undertake a number of earth disturbing 
activities. These activities include clearing, grading, and 
excavating,[Footnote 12] associated with oil and gas exploration and 
production; processing and treatment operations; and transmission 
facilities. For example, to prepare a site for drilling, operators must 
create a pad to support the drilling equipment, such as the derrick. 
Creating the pad generally requires clearing and grading--or leveling-
-an area and then placing rock, concrete, or other materials on it to 
stabilize the surface. If necessary, companies may also construct 
access roads to transport equipment and other materials to the site as 
well as additional pipelines to connect the site to existing pipelines. 
As with other construction activities, storm water runoff containing 
sediment from oil and gas construction can lead to the degradation of 
nearby waters if not properly managed. Figure 1 identifies activities, 
including oil and gas construction, covered under Phase I and II of the 
NPDES Storm Water Program. 

Figure 1: Activities Covered under Phase I and II of the NPDES Storm 
Water Program: 

[See PDF for image]

[A] Industry categories I, II, and VIII also include some minor oil and 
gas activities: I includes petroleum refining, II includes petroleum 
products, and VIII includes bulk stations and terminals. 

[B] Facilities subject to storm water effluent limitations guidelines, 
new source performance standards, or toxic pollutant effluent standards 
under 40 C.F.R. subchapter N. 

[C] Oil and gas site operators must obtain storm water permit coverage 
if their storm water discharges come into contact with raw material or 
product of any kind. 

[End of figure]

NPDES storm water programs are administered at both the federal and 
state level. Under the Clean Water Act, states whose programs EPA has 
approved may manage their state's programs. Forty-five states,[Footnote 
13] including Louisiana, are responsible for administering their own 
NPDES program, including its storm water component; and EPA is 
responsible for administering and enforcing the NPDES Storm Water 
Program in five states.[Footnote 14] In addition, EPA is the NPDES 
storm water permitting authority for oil and gas activities in Oklahoma 
and Texas. 

In many environmental programs, regulated entities obtain individual 
permits. In contrast, under the storm water program, regulated entities 
may seek coverage under a single document called a general permit. A 
general permit is issued by EPA or by the state environmental regulator 
and is available to all eligible operators in the EPA or state 
program.[Footnote 15] With respect to regulated discharges of storm 
water associated with construction activity, EPA's general permit is 
called the Construction General Permit. Each general permit, whether it 
is issued by EPA or by a state program, sets forth many steps that 
regulated entities must take to ensure the minimization of storm water 
pollution. 

To obtain coverage under the EPA Construction General Permit, regulated 
entities must file a complete and accurate Notice of Intent to be 
covered under the general permit prior to initiating the construction 
activities. The Notice of Intent includes a signed certification 
statement from a company official acknowledging that the operator has 
met all eligibility conditions of the permit, including development and 
implementation of a plan to control the discharge of pollutants from 
the site. Examples of types of sediment and erosion controls that can 
be included in the plan consist of vegetative cover, rocks, and hay 
bales to filter storm water, or terracing slopes to divert and slow 
runoff. Figure 2 diagrams the steps that must be completed to obtain 
coverage under EPA's Construction General Permit. 

Figure 2: Steps to Obtain Coverage under EPA's Construction General 
Permit[A]: 

[See PDF for image]

Note: Construction activities must comply with applicable state, 
tribal, and local provisions. Additionally, construction site operators 
must determine if their construction activity has the potential to 
discharge storm water into a water with a total maximum daily load 
(TMDL) established--a state limit required by the Clean Water Act on 
the amount of pollutants that may enter that body of water. If so, 
additional steps may be needed to ensure discharges from the site are 
consistent with any applicable limits established by the TMDL. 

[A] State programs must have requirements that are at least as 
stringent as those in the EPA program. 40 C.F.R. § 123.25. 

[B] Operators may submit an application for coverage under an 
individual permit. 

[End of figure]

One of the steps operators must complete when filing a Notice of Intent 
involves determining whether the construction activity meets the 
permit's eligibility conditions that address endangered species. The 
purpose of the Endangered Species Act is to conserve endangered and 
threatened species and the ecosystems upon which they depend. The act 
prohibits the "taking"[Footnote 16] of any endangered fish or wildlife. 
Under the Act and implementing regulations, federal agencies, including 
EPA, must determine whether their activities might affect a listed 
species or habitat identified as critical. If effects are likely, the 
agencies, including EPA, must consult with the Fish and Wildlife 
Service (FWS) or the National Marine Fisheries Service (NMFS) to ensure 
that the activities, such as issuing permits, will not jeopardize a 
species' continued existence or adversely modify its designated 
critical habitat.[Footnote 17]

In an effort to satisfy its responsibilities under the Endangered 
Species Act, EPA consulted with FWS and NMFS to create language for its 
Construction General Permit that requires operators to self-certify 
that they have examined their project's potential effects on endangered 
species. Specifically, language in appendix C of EPA's Construction 
General Permit sets out the procedures operators are to follow in 
meeting permit conditions that address endangered species for coverage 
under the permit. Briefly, the procedures in the permit require 
companies to: 

* determine if federally listed threatened or endangered species or 
their critical habitats are present on or near the project area,

* determine if the construction activity's storm water discharges or 
related activities are likely to affect any threatened or endangered 
species or designated critical habitat on or near the project area,

* determine if measures can be implemented to avoid adverse effects, 
and: 

* if adverse effects are likely, work with FWS or NMFS to modify the 
project and/or take other actions to gain authorization for the 
activity. 

Permit Coverage under Phase I Has Been Obtained by a Small Fraction of 
Total Oil and Gas Activities: 

A small fraction of total oil and gas construction activities have 
sought permit coverage under Phase I of EPA's storm water program. 
Industry and state officials we spoke with confirmed that few of their 
sites obtained permit coverage under the Phase I rule, since their 
activities rarely exceeded Phase I's 5-acre size threshold. However, 
EPA clarified that since industry decides whether to seek permit 
coverage for their oil and gas construction activities, the total 
number of activities for which permit coverage should have been 
obtained is unknown. EPA representatives told us they expect that 
pipeline projects are more likely to obtain permit coverage than 
individual drilling sites due to the higher visibility of pipelines, 
additional preconstruction approval processes under other laws, and the 
higher likelihood of pipeline construction being conducted by larger 
companies with more experienced legal and environmental staff. 

Although there is currently no centralized storm water permit database 
that tracks storm water permit coverage nationwide, our review of Phase 
I storm water permit data for three major oil and gas producing states-
-Louisiana, Oklahoma, and Texas--confirmed that permit coverage has 
been obtained for only a small number of oil and gas construction 
activities, compared with the thousands of drilling activities 
occurring in those states.[Footnote 18] Our review found 433 sites in 
Louisiana, Oklahoma, and Texas that have obtained construction storm 
water permit coverage for their oil and gas activities in the most 
recent 12-month period for which data were available. Table 1 shows the 
breakdown of permit coverage by state for the most recent 12 months 
that data were available. 

Table 1: Oil and Gas Activities for Which Storm Water Construction 
Permit Coverage Was Obtained, by State: 

State: Louisiana; 
Number obtaining permit coverage: 22. 

State: Oklahoma; 
Number obtaining permit coverage: 119. 

State: Texas; 
Number obtaining permit coverage: 292. 

State: Total; 
Number obtaining permit coverage: 433. 

Sources: Louisiana Department of Environmental Quality for Louisiana 
and EPA's Office of Water for Oklahoma and Texas. 

Note: For Oklahoma and Texas, these data covered December 2003 through 
November 2004. For Louisiana, the data covered November 2003 to October 
2004. 

[End of table]

Further analysis of Phase I storm water permitting data showed that the 
principal activity for which oil and gas companies sought storm water 
permit coverage in these states was for pipeline construction. Three 
hundred four of the 433 activities for which permit coverage was 
obtained in the most recent 12-month period--about 70 percent--were for 
pipeline construction activities. Table 2 shows the breakdown of permit 
coverage by state and activity. 

Table 2: Oil and Gas Activities for Which Storm Water Permit Coverage 
Was Obtained, by State and Construction Activity: 

State: Louisiana; 
Construction activity: Pipelines: 12; 
Construction activity: Drilling: 2; 
Construction activity: Other[A]: 8; 
Total: 22. 

State: Oklahoma; 
Construction activity: Pipelines: 104; 
Construction activity: Drilling: 3; 
Construction activity: Other[A]: 12; 
Total: 119. 

State: Texas; 
Construction activity: Pipelines: 188; 
Construction activity: Drilling: 67; 
Construction activity: Other[A]: 37; 
Total: 292. 

Total; 
Construction activity: Pipelines: 304; 
Construction activity: Drilling: 72; 
Construction activity: Other[A]: 57; 
Total: 433. 

Sources: Louisiana Department of Environmental Quality for Louisiana 
and EPA's Office of Water for Oklahoma and Texas. 

[A] Other activities include the construction of refineries, compressor 
stations, tank batteries, etc. 

Note: For Texas and Oklahoma, these data covered December 2003 through 
November 2004. For Louisiana, the data covered November 2003 to October 
2004. 

[End of table]

Fifty-four percent of the 304 pipeline activities in these states 
disturbed more than 10 acres of land. Eighty-seven pipeline activities-
-almost 30 percent of all the pipeline permittees--exceeded 20 acres in 
size. 

Another key oil and gas construction activity in these states was oil 
and gas well drilling, with 72 of the 433 permits--about 17 percent-- 
involving drilling activities. Fifty-six percent of these drilling 
activities disturbed between 5 and 8 acres of land. The drilling 
activities for which storm water permit coverage was sought represents 
a small portion of the total number of oil and gas drilling activities 
occurring in these three states. We reviewed onshore well completion 
data for Louisiana, Oklahoma, and Texas and found that between 2001 and 
2003, an average of ten-thousand wells was completed each 
year.[Footnote 19] Table 3 provides data on the number of wells 
completed in these three states between 2001 and 2003 and the average 
number of wells completed each year over the 3-year period. 

Table 3: Onshore Well Completions from 2001-2003, by State: 

State: Louisiana[A]; 
2001: 877; 
2002: 556; 
2003: 699; 
Average per year: 711. 

State: Oklahoma; 
2001: 2,348; 
2002: 2,339; 
2003: 2,117; 
Average per year: 2,268. 

State: Texas; 
2001: 7,478; 
2002: 5,973; 
2003: 7,622; 
Average per year: 7,024. 

State: Total; 
2001: 10,703; 
2002: 8,868; 
2003: 10,438; 
Average per year: 10,003. 

Sources: Louisiana Office of Conservation, Oklahoma Corporation 
Commission, and Railroad Commission of Texas. 

[A] Due to the structure of the Louisiana Office of Conservation's 
database, this figure may contain a small number of offshore wells. 

[End of table]

Industry officials must decide whether or not they will apply for 
permit coverage, and some may have applied for storm water permit 
coverage on few occasions because they broke their construction 
activities--which taken together would exceed 5 acres--into what they 
believed were distinct projects that disturbed less than 5 acres each. 
During our site visit to a Texas gas construction location, we observed 
three drilling sites situated adjacent to each other with an attached 
pipeline. Although the total acres disturbed by these activities 
exceeded 5 acres, industry officials did not believe these three sites 
needed permit coverage because each of the four activities--three 
drilling sites and a pipeline--was less than 5 acres, under 
construction at different times and stabilized prior to constructing 
the next activity. Figure 3 illustrates the layout of this area. 

Figure 3: A Texas Gas Construction Location with Three Adjacent 
Drilling Operations: 

[See PDF for image]

[End of figure]

Sites A, B, and C each disturbed approximately 3.5 acres of land and 
were connected by pipeline to an existing pipeline located about a mile 
from this site. According to industry officials, site A was financed, 
drilled, deemed a productive well, shut-in and the area stabilized 
prior to subsequent wells being drilled. The company did not decide to 
drill exploratory well B until A was identified as profitable. Once it 
drilled well B and found it to be profitable, the company drilled a 
well on site C between well A and B. Prior to well C being drilled, a 
different company agreed to construct a pipeline to connect this site 
with an existing pipeline. The industry officials estimated the 
pipeline disturbed less than 5 acres and said it was stabilized prior 
to starting construction on site C. The total acres disturbed by these 
sites exceeded 5 acres; individually the sites disturbed less than 5 
acres of land. Neither the drilling company nor the pipeline company 
constructing these activities obtained a permit under Phase I, although 
each of the four activities would require permitting under Phase II 
after the postponement period passes and small oil and gas sites are 
required to comply with the Phase II rules. 

EPA's Phase I rule requires that activities disturbing 5 acres or more 
of land--as well as smaller construction activities that are part of a 
common plan of development that disturbs 5 acres or more--obtain permit 
coverage. EPA guidance defines a common plan of development as a 
contiguous area where multiple separate and distinct construction 
activities occur under a single plan. As this definition relates to oil 
and gas activities, EPA guidance considers lease roads, pipeline 
activities, and drilling pads to be a single "common" activity if they 
are under construction at the same time--provided there is an 
interconnecting road, pipeline or utility project, or if the activities 
are within one-fourth mile of each other. EPA headquarters officials 
said that the aforementioned example highlights a unique situation in 
which the definition of the common plan is difficult to interpret 
without more information from the site operator(s). They said that 
depending on the operator's reasons for drilling the second and third 
wells, permit coverage may or may not have been required in this 
example. Many oil and gas industry groups assert that EPA's definition 
of "common plan" is confusing and illegal because it does not 
adequately consider oil and gas industry practices. These oil and gas 
groups have raised the issue of EPA's definition of "common plan" in 
two lawsuits pending against EPA in federal courts.[Footnote 20]

Although actual compliance rates in the field are unknown, neither EPA 
nor state officials reported many compliance problems associated with 
oil and gas construction activities that are 5 acres or more in size in 
Louisiana, Oklahoma, and Texas. Currently, EPA's Region 6--responsible 
for administering the Oklahoma and Texas storm water programs for oil 
and gas activities--has not completed any enforcement actions against 
oil and gas construction companies for violations of the storm water 
program, although it currently has one enforcement action under way. 
Region 6 enforcement officials told us they primarily depend on citizen 
complaints and state referrals to identify oil and gas construction 
activities that may adversely impact water quality. Similar to EPA 
Region 6's program, the Louisiana Department of Environmental Quality's 
(LADEQ) construction storm water inspections are complaint driven. A 
Louisiana inspections representative whom we spoke with said that due 
to the traditionally short time frames for completing oil and gas 
construction activities, LADEQ found including these activities in the 
state's annual compliance monitoring strategy to be impractical. As a 
result, the state relies on citizen complaints and routine surveillance 
to provide cause for conducting storm water inspections of construction 
activities. Although LADEQ does not track storm water enforcement 
actions for oil and gas construction separately from those of other 
types of construction activities, Louisiana officials with whom we 
spoke said they did not believe the state had carried out any storm 
water enforcement actions against oil and gas construction activities. 

Most Oil and Gas Construction Activity Will Likely Be Affected by Phase 
II, but the Financial and Environmental Implications of Phase II Are 
Difficult to Quantify: 

EPA, industry and state government representatives agree that Phase II 
permit coverage will be required for most oil and gas construction 
activities, but the actual number of activities that will be affected 
by the rule is unknown. In addition, the financial and environmental 
implications of implementing Phase II for oil and gas construction 
activities are difficult to quantify. Phase II may lead to increased 
costs for federal agencies with a role in the storm water permitting 
process, as well as for members of the oil and gas industry who obtain 
permit coverage. However, Phase II may also lead to environmental 
benefits for local waters and endangered species and their habitats, 
even though these benefits are difficult to quantify. As EPA approaches 
the end of a 2-year period to study the impact of Phase II on oil and 
gas construction activities, EPA has not yet quantified the number of 
sites impacted or the financial and environmental implications of the 
Phase II rule's implementation. 

Most Oil and Gas Construction Activities Will Likely Be Required to 
Obtain Storm Water Permit Coverage under Phase II, but the Actual 
Number of Activities That Will Be Affected by the Rule Is Unknown: 

EPA, industry and state government representatives agree that most oil 
and gas construction activities will disturb 1 acre or more of land 
and, as such, will have to obtain permit coverage under the Phase II 
rule. However, the precise number of oil and gas construction 
activities that will require storm water permit coverage under the 
Phase II rule is unknown, and estimating the specific number of sites 
that will be affected by Phase II is problematical because there is no 
data source that comprehensively identifies the disparate oil and gas 
construction activities subject to the rule and categorizes them by 
size. Industry representatives that we spoke with said most, if not 
all, of their oil and gas construction activities not covered by Phase 
I would be required to seek permit coverage under Phase II. These 
representatives said that their typical drilling construction site 
disturbs more than 1 acre but less than 5 acres of land. Similarly, 
representatives from the Oklahoma Corporation Commission and Railroad 
Commission of Texas indicated that almost all of the oil and gas well 
construction in their states would disturb over 1 acre of land and 
would have to obtain storm water permit coverage. Furthermore, EPA 
officials generally concurred that most oil and gas construction 
activities would need to obtain coverage, or seek a waiver, under Phase 
II. A company may receive an optional waiver from permit coverage in 
more arid areas where there is low rainfall. EPA officials told us that 
in arid areas, such as western Oklahoma and Texas, most operators could 
qualify for waivers with expeditious construction schedules and careful 
timing. 

Phase II May Lead to Additional Costs that Are Difficult to Quantify: 

The Phase II rule may lead to additional costs for industry and federal 
agencies, but these costs are difficult to quantify. For example, the 
EPA Construction General Permit requires companies to implement erosion 
and sediment controls to minimize pollutants in storm water discharges, 
which will lead to additional costs for operators. Industry 
representatives we spoke with were less concerned with these particular 
costs, however, because they said that the oil and gas industry 
routinely takes similar preventative measures. These officials did 
express concerns about the costs associated with storm water 
inspections required by the permit. These inspections are designed to 
ensure companies properly implement practices to minimize storm water 
pollution and require that sites be inspected (1) at least once every 7 
days or (2) at least once every 14 days and within 24 hours of certain 
storm events. Industry officials explained that oil and gas activities 
typically occur in remote, rural areas, which makes it costly for them 
to inspect sites as required by the permit. Furthermore, since sites 
may not always have personnel present, these representatives said it 
can be difficult to determine when a storm event has occurred. EPA 
maintains that it has reduced the inspection burden by allowing less 
difficult pipeline inspections and authorizing monthly inspections 
under certain circumstances, such as when a site is temporarily 
stabilized or when winter conditions make runoff unlikely. 

The Phase II storm water rule may also lead to additional costs for 
federal agencies and the oil and gas industry associated with the 
endangered species requirements of the storm water permit. The EPA 
Storm Water Construction General Permit provides coverage under the 
permit only if the storm water discharges are not likely to jeopardize 
the continued existence of any species that is listed as endangered or 
threatened, pursuant to the Endangered Species Act, or result in the 
adverse modification or destruction of critical habitat. Because 
companies seeking storm water permit coverage must evaluate the impact 
their construction activities might have on endangered species, the 
workload of agencies such as the U.S. Fish and Wildlife Service (FWS) 
and National Marine Fisheries Service (NMFS), which are the regulatory 
agencies for the Endangered Species Act, could increase if a 
significantly larger number of sites initiated communications or 
consultation requests. NMFS headquarters representatives and FWS field 
representatives we spoke with indicated that the increased workload 
from a greater number of Phase II consultation requests could exceed 
staff capabilities. However, they also said they were unsure what 
impact Phase II would have on their activities, because they did not 
know how many additional oil and gas construction sites would be 
affected by the rule. 

Oil and gas industry representatives were most concerned about costs 
that stem from delays companies may face when identifying a 
construction activity's impact on endangered species. These 
representatives said that endangered species reviews are often 
extremely time intensive and require interactions with federal agencies 
that introduce delays into the construction process and lead to 
increased costs. Various forms of interactions with FWS and NMFS (the 
Services) may be used to ensure that provisions of the storm water 
permit concerning endangered species are met--including the more common 
informal consultations and less frequent formal consultations.[Footnote 
21] Informal consultation can be used to determine whether an activity 
will adversely affect endangered or threatened species or critical 
habitat. If during informal consultation the action agency--in this 
case EPA--determines that no adverse impact is likely and FWS and NMFS 
agree, the consultation process is terminated with the written 
concurrence of the Service. Although there is no regulatory deadline 
for completing an informal consultation, the Services' policy is to 
respond to informal consultations about endangered species within 30 
days. Formal consultations are necessary if an activity is likely to 
adversely affect a listed species. The Endangered Species Act requires 
most formal consultations to be conducted within 90 days. In addition, 
the implementing regulations require the Services to document in a 
biological opinion, within 45 days after the conclusion of the 
consultation, whether the activity is likely to jeopardize the listed 
species' continued existence or adversely modify its designated 
critical habitat. If necessary, the biological opinion may also provide 
reasonable and prudent alternatives that, if taken, would avoid 
jeopardizing a species or adversely modifying its critical habitat. 
However, the Services may postpone the start of any of these time 
frames until they have the best available information on which to base 
their opinions. 

The total time needed to consult with these agencies is difficult to 
quantify, given that not all sites will have to perform the same level 
of review and because not all construction activities occur in areas 
where endangered species are present. In a March 2004 report on the 
overall consultation process, we identified concerns from federal 
agencies and nonfederal entities about the time it takes to complete 
the consultative process. In one limited review that we conducted of 
1,550 consultations, about 40 percent exceeded established time frames. 
However, we found that FWS and NMFS needed more complete and reliable 
information about the level of effort devoted to the process. 
Specifically, these time frames did not capture sometimes significant 
amounts of preconsultation time spent discussing a project before the 
consultation officially was considered to have begun.[Footnote 22] Even 
without the requirements of EPA's Construction General Permit and 
associated consultations under the Endangered Species Act, operators of 
oil and gas construction activities would still have to spend time 
complying with the act by ensuring that their activities do not result 
in a "take" of an endangered species. 

Phase II May Lead to Additional Benefits that Are Difficult to 
Quantify: 

The Phase II storm water rule may lead to additional environmental 
benefits, although these benefits can be difficult to quantify. 
Officials from EPA's Office of Water indicated that while it is 
difficult to quantify all the benefits associated with the rule, the 
principal benefits are based on decreased quantities of sediment in 
water. These officials told us that excess amounts of sediment in water 
can affect aquatic habitat, water quality, waters' use as a source of 
drinking water and water supply reservoir capacity, navigation, and 
recreational activities. According to FWS officials, construction 
activities may affect listed species in both direct and indirect ways. 
Direct effects may include killing or injuring members of listed 
species. Indirect effects may include changing essential behavior 
patterns like feeding, breeding, or sheltering, as a result of 
modifications to the species' habitat. Additionally, the NMFS 
acknowledged that land disturbance activities that increase the amount 
of sediment in water and turbidity can indirectly influence endangered 
species' productivity and ultimately cause changes in migratory 
behavior, reduce prey abundance, reduce the survival and emergence of 
larvae, and contribute to increased temperatures and chemical 
pollutants that can cause habitat loss. 

An environmental group representative we spoke with said that voluntary 
initiatives are not a viable method for resolving storm water pollution 
issues and that the permit process provides a mechanism for ensuring 
that practices to mitigate water pollution from construction activities 
are implemented. This representative also commented that EPA has not 
provided any evidence that the environmental consequences of oil and 
gas construction activities are different from those of other types of 
construction activities or that the oil and gas industry's controls are 
any better. Finally, this representative said that a single industry 
should not be exempted from regulations with which other industries 
must comply and added that the large number of oil and gas activities 
potentially subject to the rule shows the significant amount of 
environmental damage that could occur if these activities went 
unregulated. EPA is currently studying the environmental impact of oil 
and gas construction activities but has not completed its analysis. 

Industry representatives, however, believe that the Phase II storm 
water rule provides only negligible environmental benefits and that the 
current system of regulation encourages environmentally friendly 
construction practices. For example, one industry representative stated 
that with only the Phase I rule in effect, companies have an incentive 
to keep construction activity to less than 5 acres--thus minimizing the 
land disturbance and associated environmental effects. If the Phase II 
rule were implemented as written, this representative maintained the 
industry would have no incentive to minimize the acreage used in order 
to keep the site under 5 acres. 

EPA Has Not Completed Its Assessment of the Number of Oil and Gas Sites 
Impacted by Phase II or Its Financial and Environmental Implications: 

Almost 2 years after delaying the implementation of Phase II for oil 
and gas activities in order to study and evaluate the impact on the 
industry, EPA initiated an analysis of the rule but has not completed 
the study, quantified the number of activities affected, or determined 
its potential financial and environmental implications. In March 2003, 
EPA extended the deadline for operators to obtain Phase II permits for 
oil and gas activities in order to allow itself additional time to 
analyze and better evaluate the impact of the rule on the oil and gas 
industry. This 2-year extended deadline will expire on March 10, 2005. 
However, as we performed audit work for this engagement, EPA had not 
issued any analysis of the rule's impact; nor could EPA management 
representatives provide a specific estimate of when its analysis would 
be completed or when a final decision would be reached. We provided a 
draft of this report with our recommendation to EPA. Subsequently, on 
January 18, 2005, the agency proposed a further extension of the 
compliance date to June 12, 2006, to complete its review and take final 
action. Within 6 months of a final action on the January 18, 2005, 
proposal, EPA intends to propose rulemaking to address storm water 
discharges from oil and gas sites and invite public comment. Separate 
from EPA's efforts, oil and gas industry representatives informed us of 
a Department of Energy (DOE) study to evaluate the impact of the Phase 
II rule on the oil and gas industry. During our study, officials from 
DOE's Office of Fossil Energy told us that DOE's study was still in 
draft form. These officials would not provide an explanation of the 
purpose, costs, or estimated completion date of the study.[Footnote 23]

Conclusions: 

Our review indicated that it is probable that substantially more oil 
and gas activities will be impacted by Phase II of the NPDES storm 
water rule than by Phase I. Given that EPA has not been able to 
quantify the number of oil and gas activities required to obtain storm 
water permit coverage under either rule, it remains important that EPA 
identify the universe of oil and gas activities that would most likely 
be affected. This analysis would provide the necessary foundation for 
understanding the implications that the rule may have for the 
environment and the oil and gas industry and determine the overall 
effectiveness of the NPDES storm water program. 

Recommendation for Executive Action: 

So that EPA may fully understand the implications of Phase II of its 
storm water rule prior to deciding whether the oil and gas industry 
should be subject to it, we recommend that EPA complete its Phase II 
analysis before making any final decision. Furthermore, as a part of 
this analysis, we recommend that EPA assess: 

* the number of oil and gas sites impacted by the Phase II rule;

* the costs to industry of compliance with the rule and whether these 
costs are solely attributable to the storm water rule; and: 

* the environmental implications and benefits of the storm water rule, 
including, but not limited to, potential benefits for endangered 
species. 

Agency Comments and Our Evaluation: 

We requested comments on a draft of this report from the Administrator 
of the Environmental Protection Agency (EPA). EPA provided oral 
comments and agreed with our findings and recommendation. In addition, 
EPA included technical and clarifying comments, which we included in 
our report as appropriate. 

As agreed with your staffs, unless you publicly announce the contents 
of this report earlier, we plan no further distribution until 30 days 
from the report date. At that time, we will send copies of the report 
to the EPA Administrator and other interested parties. We will also 
provide copies to others on request. In addition, the report will be 
available at no charge at GAO's Web site at h [Hyperlink, 
http://www.gao.gov]. 

Questions about this report should be directed to me at (202) 512-3841. 
Other key contributors to this report are listed in appendix II. 

Signed by: 

John Stephenson: 
Director, Natural Resources and Environment: 

[End of section]

Appendixes: 

Appendix I: Objectives, Scope, and Methodology: 

This report provides information about (1) oil and gas construction 
activities for which permits have been obtained under Phase I and (2) 
oil and gas construction activities that are likely to be affected by 
Phase II and its financial and environmental implications. 

To address the number of oil and gas activities for which permits have 
been obtained under Phase I, we limited our analysis to three of the 
top five natural gas producing states and three of the top six crude 
oil producing states in 2003, according to available data from the 
Energy Information Administration. We chose states with storm water 
programs implemented by both state and federal authorities. Louisiana's 
Department of Environmental Quality administers the National Pollutant 
Discharge Elimination System's Storm Water Program (NPDES) for its 
state, while Oklahoma's and Texas' storm water programs for oil and gas 
activities are administered by the Environmental Protection Agency's 
(EPA) Region 6. Additionally, Oklahoma and Texas are unique in that 
only the oil and gas portions of their storm water program are 
administered by EPA; the remainder of their storm water program is 
administered by the state.[Footnote 24]

To determine the number of oil and gas construction activities 
requesting storm water permit coverage under Phase I in those three 
states and to get a national perspective on the number and types of 
sites affected, we spoke with oil and gas industry and government 
representatives. We also reviewed EPA's (for Oklahoma and Texas) and 
Louisiana's storm water database that contains information about 
Notices of Intent filed with the program authority to indicate a 
company's plan to begin a construction activity that disturbs 5 acres 
or more of land. We reviewed the most recent 12-month period of data 
available: EPA's information for Oklahoma and Texas from December 2003 
to November 2004 and Louisiana's information from November 2003 to 
October 2004. Because the database contained more than just oil and gas 
construction information, we isolated data for those companies within 
the oil and gas industry and reviewed relevant characteristics of those 
Notices of Intent. While this data provides information about the 
number of companies that requested storm water permit coverage for 
their oil and gas construction activities, it does not indicate the 
universe of companies that should have filed. Furthermore, these data 
are not generalizible to the nation as a whole. We spoke with the 
administrator of this database to assess the reliability of this data 
and found the data from 2003 and 2004 to be sufficiently reliable for 
our purposes. Additionally, to provide us with context for 
understanding how the number of drilling activities covered by Phase I 
compares with the total number of oil and gas drilling activities being 
carried out, we reviewed oil and gas well completion data from 
Louisiana, Oklahoma, and Texas. These data provided us with an 
additional perspective about the magnitude of oil and gas activities 
occurring in these states and proved sufficiently reliable for our 
purposes. We gathered these data from the Louisiana Office of 
Conservation, Oklahoma Corporation Commission, and Railroad Commission 
of Texas. In order to gather information about the characteristics of 
oil and gas construction activities, we visited oil and gas 
construction sites in Louisiana, Oklahoma, and Texas and viewed 
pollution control measures implemented in various terrains. In 
Louisiana and Texas, we were accompanied by industry representatives 
who were members of the Domestic Petroleum Council; in Oklahoma, we 
were accompanied by EPA and oil and gas industry representatives. Both 
EPA and industry officials provided perspectives on the choice of 
pollution control measures implemented. We spoke with the storm water 
enforcement coordinator for oil and gas activities in EPA's Region 6, 
as well as the state official responsible for storm water program 
permitting at the Louisiana Department of Environmental Quality. We 
discussed their respective storm water programs and strategies for 
enforcing the storm water regulations. When possible, their offices 
provided data about enforcement actions and inspections. 

To determine the number of oil and gas activities that may be affected 
by Phase II and the financial and environmental implications of 
implementing Phase II for oil and gas construction activities, we spoke 
with storm water stakeholders, including the Natural Resources Defense 
Council. Finally, we spoke with oil and gas industry representatives, 
including the Domestic Petroleum Council, the American Petroleum 
Institute, and the International Petroleum Association of America and 
representatives from some of these organizations' members. These 
stakeholders offered contrasting views about the environmental benefits 
and economic costs of these regulations. We also reviewed written 
comments that environmental groups and oil and gas industry groups 
provided to EPA when the agency first proposed postponing the Phase II 
deadline for oil and gas activities. 

To formulate a more thorough understanding of federal agencies with a 
role in implementing the Storm Water Program and level of interagency 
coordination, we spoke with U.S. Fish and Wildlife and National Marine 
Fisheries officials responsible for carrying out section 7 of the 
Endangered Species Act, which requires federal cooperation to protect 
endangered species. Specifically, we spoke with representatives from 
the U.S. Fish and Wildlife Service's headquarters, Arlington, TX and 
Tulsa, OK offices, as well as with the National Marine Fisheries 
Service's headquarters and southeast regional offices. 

We conducted our review between August 2004 and January 2005 in 
accordance with generally accepted government auditing standards. 

[End of section]

Appendix II: GAO Contacts and Staff Acknowledgments: 

GAO Contacts: 

John Stephenson (202) 512-3841 or [Hyperlink, stephensonj@gao.gov]; 
Mark Gaffigan (202) 512-3168 or [Hyperlink, gaffiganm@gao.gov]. 

Acknowledgments: 

In addition to the individuals above, James W. Turkett, Paige 
Gilbreath, Omari Norman, Carol Bray and Nancy Crothers made key 
contributions to this report. 

(360513): 

FOOTNOTES

[1] Some oil and gas industry groups are asserting in litigation that 
the Clean Water Act does not authorize EPA to regulate most oil and gas 
construction activities under the storm water program. 

[2] 40 C.F.R. § 122.26(b)(14)(x) and 40 C.F.R. § 122.26(b)(15). 

[3] Phase I also regulates storm water discharges from medium and large 
municipal storm water sewer systems and other sources of industrial 
discharges. 

[4] Phase II also regulates storm water discharges from small municipal 
storm sewer systems. 

[5] Oklahoma and Texas administer the NPDES programs in their 
respective states for most nonoil-and nongas-related projects with EPA 
oversight of those activities. EPA oversees Louisiana's administration 
of its program. 

[6] 33 U.S.C. § 1342(p). 

[7] 33 U.S.C. § 1362(14). 

[8] NPDES Permit Application Regulations for Storm Water Discharges, 55 
Fed. Reg. 47,990 (Nov. 16, 1990). 

[9] NPDES - Regulations for Revision of the Water Pollution Control 
Program Addressing Storm Water Discharges, 64 Fed. Reg. 68,722 (Dec. 8, 
1999). 

[10] Modification of National Pollutant Discharge Elimination System 
(NPDES) Permit Deadline for Storm Water Discharges for Oil and Gas 
Construction Activity That Disturbs One to Five Acres of Land, 68 Fed. 
Reg. 11325-01. 

[11] The NPDES Storm Water Program does not apply to storm water runoff 
from operational oil and gas sites, as long as the runoff does not come 
into contact with any raw material or product of any kind. Clean Water 
Act § 402(l)(2). EPA has asserted that Clean Water Act section 
402(l)(2) does not bar EPA from regulating most storm water discharges 
from construction activities at oil and gas sites. Some industry groups 
disagree, asserting that section 402(l)(2) bars such regulations. The 
issue has been raised by industry in a case currently pending in the 
U.S. Court of Appeals for the Fifth Circuit. Tex. Indep. Producers and 
Royalty Owners Ass'n v. U.S. EPA, No. 03-60506 (filed Jun. 19, 2003). 

[12] 40 C.F.R. § 122.26(b)(14)(x) and 40 C.F.R. § 122.26(b)(14). 

[13] The Virgin Islands are also authorized to administer their own 
NPDES program. 

[14] These five states include Alaska, Idaho, Massachusetts, New 
Hampshire, and New Mexico plus the District of Columbia and most U.S. 
Territories. EPA is also the permitting authority on all Indian lands 
and for federal facilities in Colorado, Delaware, Vermont, and 
Washington. 

[15] Though states may implement the storm water program without 
issuing general permits, all states with a storm water program have 
authority to issue general permits. In addition, regulated entities may 
apply for individual storm water discharge permits (40 C.F.R. § 
122.28(b)(3)(iii)); however, regulated entities typically apply for 
general permit coverage. 

[16] The term "take" is defined as "to harass, harm, pursue, hunt, 
shoot, wound, kill, trap, capture, or collect, or attempt to engage in 
any such conduct." 16 U.S.C. § 1532(15). 

[17] FWS is the agency in the Department of the Interior to which the 
Secretary has delegated authority for implementing the Endangered 
Species Act for all terrestrial species as well as most aquatic, 
nonmarine species. Similarly, NMFS is the agency to which the 
Department of Commerce has delegated authority for protecting ocean- 
dwelling and anadromous species, such as salmon. 

[18] Storm water permit data reflects the number of sites that obtained 
permit coverage. It does not necessarily represent the number of sites 
that should have obtained coverage. 

[19] Operators typically file completion reports with state oil and gas 
agencies upon termination of drilling a well. Although the number of 
completion reports filed does not translate exactly to the number of 
construction activities subject to EPA's Phase I and II storm water 
rules, completion numbers do provide context for understanding the 
magnitude of oil and gas drilling activities occurring in different 
states. Depending on how a state manages its completion records, 
completion data may include modifications to wells that do not require 
significant amounts of construction and therefore may not be subject to 
EPA's storm water rules. Additionally, because completion data pertains 
to wells drilled, it does not reflect other construction activities, 
such as pipeline construction, that may be subject to the storm water 
rules. 

[20] Wisc. Builders Ass'n v. U.S. EPA, No. 03-2908 (7th Cir. filed Jul. 
16, 2003); Tex. Indep. Producers and Royalty Owners Ass'n v. U.S. EPA, 
No. 03-60506 (5th Cir. filed Jun. 19, 2003). Among the industry groups' 
assertions is that EPA's definition of "common plan" fails to 
adequately consider oil and gas industry practices: according to the 
industry groups, drillers do not know at the onset of drilling activity 
how much land they will ultimately disturb. 

[21] The Endangered Species Act requires federal agencies such as EPA- 
not regulated entities such as individual construction site operators- 
to consult with the services regarding endangered species. However, 
EPA's Construction General Permit requires applicants to self-certify 
that they have examined their project's potential effects on endangered 
species. In doing so, the Construction General Permit specifies that 
operators must satisfy certain criteria, two of which are entering into 
formal and informal consultations with the services. 

[22] U.S. GAO, Endangered Species: More Federal Management Attention Is 
Needed to Improve the Consultation Process, GAO-04-93 (Washington, 
D.C.: Mar. 19, 2004). 

[23] As we finalized our report, DOE completed and posted its economic 
analysis study on its Web site at 
http://www.fossil.energy.gov/programs/oilgas/publications/storm_water_an
alysis/Storm_Water_Analysis.html. 

[24] EPA also administers the storm water program for certain 
agricultural activities in Oklahoma. 

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