Report 2003-102 Summary - December 2003
Water Quality Control Boards:
Could Improve Their Administration of Water Quality Improvement Projects Funded by Enforcement Actions
Our review of the State Water Resources Control Board's (state board) and Regional Water Quality Control Boards' (regional boards) collection of fines and subsequent expenditure of those funds under the Porter-Cologne Water Quality Control Act (State water quality act) revealed the following:
- As allowed by law, there is no correlation between the amount of fines collected by a given regional board and the amount the regional board receives from the state board for water quality projects.
- From fiscal years 1998-99 through 2002-03, the regional boards collected about $26 million in fines and the state board committed $24.9 million for water quality projects throughout the State.
- The state board received almost $21 million from a legal settlement between the State and Atlantic Richfield Company and Prestige Stations, Inc., and shortly after committed $19.2 million of those funds for water quality projects throughout the State.
- Despite appearing to focus on the main goal of ensuring that public and private entities comply with the State water quality act, regional boards sometimes fail to follow through on enforcement actions.
RESULTS IN BRIEF
The State Water Resources Control Board (state board) and the nine Regional Water Quality Control Boards (regional boards) it oversees are responsible for establishing plans for meeting the State's water quality needs. However, the regional boards have not adequately followed up on enforcement actions they have taken against public or private entities that violate water quality laws and policies. Consequently, the State may have missed opportunities to implement water quality improvement projects that could have enhanced the State's water resources and benefited the public.
Created by the Legislature in 1969, the state board is responsible for creating objectives for meeting the State's current and future water quality needs. To meet those objectives, the state board establishes and implements water quality control plans for California's water resources and adopts a permitting system to enforce the plans. Sharing these responsibilities are nine regional boards, which the state board oversees. Organized according to the State's major watersheds, the regional boards establish water quality plans for their individual regions (subject to state board approval), issue waste discharge permits to public and private entities, monitor the permits, and take enforcement actions as regulated by the Porter-Cologne Water Quality Control Act (State water quality act). One enforcement action at the state and regional boards' disposal is the imposition of administrative civil liabilities (ACLs), or fines, on public or private entities or individuals that violate the State water quality act (polluters). State law allows the state board to allocate the funds these agencies collect from ACLs to projects that improve water quality within the State.
As allowed by law, there is no correlation between the ACLs that a given regional board collects and the amount of funds the regional board receives from the state board to spend on water quality improvement projects within that region. When allocating funds to regional boards, the state board attempts to determine how best to use available funds to meet the State's most urgent water quality needs. It appears reasonable that the state board would base its fund commitments not on where fines are generated but on what represents the highest and best use of those funds, consistent with the priorities established by the state constitution and the State water quality act. From fiscal years 1998-99 through 2002-03, the regional boards collected about $26 million in ACLs and either spent or committed to spend $24.9 million for water quality projects throughout the State. Whereas two of the regional boards that assessed the smallest amount in fines received almost two to three times the money they collected, three of the regional boards that collected the most ACLs received only 55 percent to 60 percent of the money they collected.
Sometimes the State's efforts to enforce environmental laws result in a judicial review, which may lead to a settlement that requires actions or monetary payments that benefit a particular region and possibly the entire State. One such lawsuit was the People of the State of California v. Atlantic Richfield Company and Prestige Stations, Inc. (ARCO), which resulted in the State receiving $25 million from ARCO in addition to improvements costing almost $21 million that ARCO claims to have spent on the 59 locations of the underground tank systems identified in the lawsuit. Soon after the settlement was reached, the state board committed $19.2 million of the $20.1 million it collected from the ARCO settlement for water quality projects throughout the State.
Although the regional boards do not keep the money associated with the ACLs they impose locally, they can recover at least a portion of the money or otherwise retain the benefits of their enforcement actions. First, a regional board can endorse a water quality improvement project within its region and forward it for approval to the state board, which then can allocate funds to projects it considers worthy. However, not all regional boards take advantage of this option, and they may miss opportunities to realize some benefits from their enforcement actions. For example, the Colorado River Basin regional board submitted no water quality projects to the state board during the last five fiscal years (1998-99 through 2002-03), and the Los Angeles regional board submitted no water quality projects in four of the last five fiscal years.
Second, regional boards might benefit from their enforcement actions, in accordance with state board procedures, by seeking partial reimbursement for staff costs they incurred in enforcing the State water quality act. However, over the last five fiscal years, only five of the nine regional boards used this option to submit a total of roughly $670,000. Again, four of the nine regional boards may have missed an opportunity.
Third, a regional board can retain the benefits of some of the ACLs it assesses within its region by allowing a polluter to perform or fund a supplemental environmental project (SEP) in lieu of paying a portion of an ACL. A SEP is a project that enhances the uses of state water resources and benefits the public. The state board requires regional boards to ensure that each SEP addresses water quality issues that are related to the violation of the State water quality act. Of the four regional boards we visited, one retained benefits in lieu of almost $3.5 million and another retained benefits in lieu of more than $2.2 million of the ACLs they assessed in their respective regions. The four regions we visited retained more than $6.5 million total for SEPs.
Despite appearing to focus on the main goal of ensuring that public and private entities comply with the State water quality act, regional boards sometimes fail to follow through on enforcement actions. For example, the Santa Ana and San Francisco Bay regional boards often approved SEPs for their enforcement actions but did not always ensure that the SEPs were completed. Further, all four regional boards we visited had, as state board policy allowed, suspended portions of or entire ACLs for polluters that agreed to clean up the pollution or to stop violations. However, the San Francisco Bay regional board did not always follow up to determine that polluters either came into compliance with the State water quality act in accordance with the ACL suspension agreements or paid the ACLs. Additionally, although all the regional boards appear to collect the mandatory minimum penalties (MMPs) that they initially assessed against polluters, the San Francisco Bay and Santa Ana regional boards could assess fines more promptly when polluters continue to commit violations subject to MMPs. Regional boards that do not assess and collect fines appropriately and ensure completion of SEPs limit their ability to protect the public health and the environment and do not ensure that violators of the State water quality act do not gain a competitive advantage over those that comply with it.
Finally, the state board's Division of Financial Assistance (division) does not consistently obtain written information regarding proposed water quality improvement projects before submitting them to the state board for review. One reason it has not consistently obtained the information is inadequate direction from the state board. Specifically, we found that in fiscal year 2002-03, for 20 water quality projects costing $17.9 million (64 percent of the $27.9 million funded that required state board approval), although the division followed procedures it has informally established for reviewing water quality projects, it did not follow these procedures in two cases, failing to obtain documentation on two projects worth a total of $10 million from funds the state board received from the ARCO settlement. By not gathering all the necessary written information, it is not clear whether the division analyzed the merits of the two projects before submitting them for the state board to consider along with other water quality projects; thus, the state board could not make a fully informed decision regarding which water quality projects were the best use of funds. One factor limiting the division's ability to evaluate and analyze requests for water quality projects is that the state board has not formally adopted a policy to guide the division in fulfilling this responsibility. Instead, the division has its own set of informal procedures that, lacking the authority of the state board behind them, the division is under no obligation to follow.
To ensure that the regional boards receive all the funding they are entitled to under the State water quality act, the state board should encourage and assist the regional boards in taking the following steps:
- Identify any needed water quality improvement projects in their regions and submit the appropriate funding requests to the state board.
- Collect and compile staff costs associated with enforcing the State water quality act and submit periodic claims for these costs from the account, as the State water quality act allows.
- Evaluate strategies that other regional boards use to maximize water improvement activities in their respective regions.
To ensure that the state water system receives the maximum benefit from SEPs the regional boards approve, the state board should require the regional boards to monitor and report on the progress and completion of these projects.
To ensure that the regional boards effectively use enforcement actions to discourage violations of the State water quality act, the state board should require the regional boards to promptly issue and collect all ACLs.
To ensure that division staff consistently review funding requests for water quality improvement projects, the members of the state board should establish and approve a policy to guide division staff in processing project requests. Further, to ensure that the state board has the information necessary to decide which of these water quality projects to fund, the division should follow the established policy in all instances.
The California Environmental Protection Agency stated that the state board would attempt to implement the recommendations contained in this report.