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Mr.
Chairman, members of the Subcommittee, I am James R. Jones, a Director of the
Board of Directors of the South Tahoe Public Utility District (District).
On behalf of the District, I am honored to be here today to address one
of the most serious drinking water quality challenges that we, as public
officials, have had to encounter in recent memory--MTBE contamination.
I
also appear before you today as a former U.S. Environmental Protection Agency
and U.S. Bureau of Reclamation employee. My
educational training is as a Professional Civil Engineer.
And in the instance of MTBE, former California Governor Pete Wilson
appointed me to sit on the Advisory Panel on Leaking Underground Fuel Tanks and
MTBE.
As
background, the District provides regional water treatment and supply and
wastewater treatment services. Our
service area comprises the Counties of Alpine and El Dorado, California covering
more than 380 square miles. We
serve approximately 17,000 permanent residents and more than 1.8 million
citizens who visit the Tahoe region annually.
Our source of drinking water is exclusively groundwater and annual
production is 2.4 billion gallons
For
more than 28 years, the District has prided itself in delivering the highest
quality drinking water supplies while protecting what has become one of the
world’s most valuable ecosystems, Lake Tahoe.
In 1997, our mission changed overnight from a water supplier and
wastewater treatment operator to an organization trying to grapple with the
problems created by MTBE contamination. Over
the past several years, the District has been on the front lines of the MTBE
battle.
I
have been requested as part of this hearing to comment on provisions of H.R. 4,
the energy bill, currently pending before Congress that address MTBE and the
underground storage tank program. H.R.
4 as passed by the House contains section 504.
Section 504 would authorize the U.S. EPA Administrator to use not more
than $200 million of the Leaking Underground Storage Trust fund revenues to
respond to MTBE-related investigations and corrective action needs.
Similarly, the Senate-passed version of H.R. 4 contains section 832,
which would direct the use of the trust fund’s revenues in a manner similar to
the House version except that it appears the funding is phased over five years
rather than being made available as necessary.
We would encourage the House language be accepted during conference
committee negotiations. The
Committee and the House are to be commended for this action. It is a good start to ensure that future MTBE catastrophes
are avoided or mitigated without delay. However,
the costs associated with MTBE cleanups are tremendous and estimated to cost in
the tens of billions of dollars. As I will note later in my statement, the LUST trust fund’s
resources must be used to their maximum utility. The point I want to emphasize with you is that the estimated
cost to respond to MTBE contaminated groundwater supplies ranges from $29 to $40
billion dollars. The provisions of
H.R. 4 will only begin the process; we should not anticipate that these
resources would adequately address our local communities’ needs.
Our
communities have experienced the closure of a substantial portion of our water
supply because of MTBE contamination. This
has created a serious potential for water shortages should we experience any
serious drought conditions. So, as
we consider the implications of MTBE contamination, I want to draw your
attention to a few important points that we have encountered over the past
several years.
First,
MTBE contamination is a potential health issue.
Once contamination occurs, the potential for health consequences of
ingesting MTBE may exist for a long period because of MTBE’s slow breakdown in
the environment.
Second,
MTBE contamination is a consumer confidence issue.
The turpentine-like quality of the contamination makes drinking the water
impossible, even at very low concentrations.
The secondary MCL in California illustrates this fact.
It was set at 5 parts per billion.
Third,
MTBE contamination is a technological challenge.
One of the bigger problems we have experienced is responding to the
contamination. Quite simply, it is
difficult and expensive to remove MTBE from a water supply.
The contamination can remain in our water supplies for decades.
Fourth,
MTBE contamination is an economic issue. For
an area like Lake Tahoe, tourism is vital to our local economy’s health.
A water shortage created by MTBE contamination has devastating effects to
the vibrancy of the local economy.
Fifth,
MTBE contamination cleanup is an equity issue.
The use of MTBE, we believe, was an ill advised if not pernicious
decision that has potentially created tens of billions of dollars in cleanup
needs across the country that could have been avoided.
It is important that we do not ask innocent ratepayers to pay the cost of
cleanup. This contamination occurred because of a blatant disregard
for the known hazards of MTBE use.
Each
of these points leads us to a conclusion that Congress must take decisive action
to remedy the threats generated by MTBE use.
Equally important, Congress must take action to ensure that we do not
repeat the steps that led to MTBE contamination.
With
these points in mind, I would like to turn attention to how the District and our
ratepayers found ourselves in the position of becoming the first victim of MTBE
contamination, the lessons we learned, and our recommendations on how we should
proceed to address local communities’ cleanup needs.
In
1997, the first of 8 wells were contaminated.
As of today, 15 wells have been shutdown or suffered limited pumping to
contain the contamination. This
translates into over a third of our wells.
As a result of this situation, in 1998 the District filed a lawsuit in
San Francisco Superior Court against 31 defendants including refiner,
distributor, and local retailers. These
included Exxon, Shell, TOSCO, Atlantic Richfield, Lyondell (formerly ARCO
Chemical), Chevron, BP, and Ultramar.
To
date, the District has settled with twenty-six of the defendants for
approximately $34 million. This
action was taken to recover the costs incurred to the water system as a result
of MTBE contamination.
In
2002, the District learned that it had received a verdict in its case, finding
the defendants guilty. At this stage, the case is proceeding with the penalty phase.
Because of a court order that prohibits comment on any aspects of the
pending litigation, I can only say that the District is hopeful that once the
case is closed our ratepayers will be fully compensated for the tragic and
avoidable circumstances we have had to deal with for the past several years.
In
1999, Governor Davis issued an Executive Order to phase out MTBE in California
gasoline by December 2002, and to provide Lake Tahoe with special consideration
to secure MTBE free gasoline without delay. (This has been extended for an
additional year.) In addition, the District adopted a non-detection policy for
MTBE in its drinking water. Because
of the contamination, the District was also forced to enact a water shortage
contingency plan. In 2000, El
Dorado County followed with its own ordinance banning the use of MTBE.
The
question that comes to mind is: How
did this happen? The answer is not
a simple one. The origin of the
contamination was from 14 different gas stations’ tanks.
Second, our area’s geography is a confined basin with a high
groundwater aquifer and porous soils that were highly susceptible to the fast
spreading MTBE.
From
a different perspective, when the District sought assistance, the very state and
local agencies that were charged with protecting public health and the
environment were slow to react to the problem.
So, as contamination continued to spread and authorities failed to react,
we were forced to initiate actions in this vacuum.
We
conducted a series of investigations to identify the problem.
We organized a Potential Responsible Parties meeting to determine if we
could work together to solve the problem. Working
closely with the Association of California Water Agencies (ACWA) we encouraged
strong state and county enforcement of regulations.
We imposed water conservation measures to anticipate the possibility of
losing more wells. We sought
federal and state assistance. And,
we enacted a groundwater management plan ordinance that would provide the
necessary teeth to protect our limited resource.
As
a result of these activities, we discovered the nature, extent and impact of the
problem for our community. Unfortunately,
the costs of the response were dramatic. Estimates
of the cleanup exceed $45 million. To
date, we have expended more than $9 million for cleanup and modifications to the
system. This is for a water
purveyor with an annual budget of approximately $11 million.
The District was in no position to initiate the cleanup because of the
cost, and because our ratepayers and we were not responsible for the problem.
When
we turned for help, we found ourselves in a no-win situation.
The responsible parties refused to lend a hand and the regulators
informed us that there was no program or resources available to address this
situation. Effectively we were told
go away. The District was forced to
initiate the lawsuit I mentioned earlier to address our needs.
The
suit found the industry knew that MTBE would reach groundwater, pollute public
water supplies, and threaten public health.
As I mentioned, we are now in the penalty phase of that trial.
After
years of struggling with a public health and environmental threat, we learned a
number of lessons.
Once
MTBE enters the environment, there is no easy solution to respond to the
impaired water supply. The solution is expensive from a treatment point of view as
well as local staff resources and finance perspectives. You need to respond without delay to reduce the movement,
spread and dilution of the MTBE plume. And
last, the current regulatory agency framework is unable to provide timely
assistance.
Let
me now turn attention to how we can avoid creating future MTBE-like situations.
First
and foremost, avoid any effort to provide refiners and distributors of MTBE or
other fuel additives liability protections.
Our experiences demonstrate that the consequences of using MTBE were well
known. The decision to proceed
armed with this knowledge should never be rewarded with a get out of jail card.
Simply stated local, state and federal governments should have the
freedom to secure remedies from the responsible parties.
Second,
the current regulatory program governing underground tanks fails to address the
problems that have contributed to the MTBE crisis.
We have had very good relations with U.S. EPA’s Office of Underground
Storage Tanks, but the resource base and authorities to respond to MTBE are
stretched. The program should be
reformed to provide meaningful assistance (financial and technical) support to
communities that are grappling with this fast moving contaminant.
Third,
the existing underground storage tank program needs a thorough top to bottom
review. Clearly, the circumstances
surrounding the contaminations origin in Lake Tahoe illustrates that there are
cracks in the regulatory program that allow leaks such as those experienced by
the District to endanger public health and the environment.
Fourth,
spend the money. The current appropriation for the LUST program is $77 million
dollars. The trust fund has more
than $1.7 billion in receipts. If
ever there was a time that we should use our resources it is now.
I urge you to work with your colleagues on the Committee on
Appropriations to leverage the trust fund to its maximum potential.
In
closing, the District believes that with a mix of aggressive enforcement,
federal cleanup assistance and an effective regulatory program that alerts
communities to potential problems before they get out of control, we can avoid a
repetition of the serious public health and environmental threats that the
District has had to address.
Again,
thank you for the opportunity to appear before you today.
I look forward to responding to any questions you may have.
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