PAGENO="0001" r~9(, ~)o TO AMEND THE FEDERAL WATER POLLUTION CoNTROL ACT ~94~~RY HEARINGS BEFORE THE SUBCOMMITTEE ON WATER RESOURCES OF THE COMMITTEE ON PUBLIC WORKS AND TRANSPORTATION HOUSE OF REPRESENTATIVES NINETY FOURTH CONGRESS FIRST SESSION ON H.R. 9560** A BILL TO AMEND THE FEDERAL WATER POLLUTION CON- TROL ACT TO PROVIDE FOR ADDITIONAL AUTHORIZA- TIONS AND FOR OTHER PURPOSES SEPTEMBER 23 24 AND 30 1975 Printed for the use of the Committee on Public Works and Transportation ERS U\\N SCHOOl L18RI\R~ MOE GOVERNM~ DOCUMENT U.S. GOVERNMENT PRINTING OFFICE 63492 WASHINGTON 1975 ~91Q/1I PAGENO="0002" COMMITTEE ON PUBLIC WORKS AND TRANSPORTATION ROBERT E. JONES, Alabama, Chairman JIM WRIGHT Texas WILLIAM H HARSHA Ohio HAROLD T. JOHNSON, Ca]ifornia JAMES C. CLEVELAND, N~w Hampshire DAVID N. HENDERSON, North Carolina DON H. CLAUSEN, :~flforflia RAY ROBERTS, Texas GENE SNYDER, Kentucky JAMES J. HOWARD, New Jersey JOHN PAUL HAMMERSCHMIDT, GLENN M. ANDERSON, California Arkansas ROBERT A. ROE, New Jersey BUD SHUSTER, Pennsylvania TENO RONCALIO, Wyoming WILLIAM F. WALSH, New York MIKE McCORMACK, Washington THAD COCHRAN, Mississippi JAMES V. STANTON, Ohio JAMES D. ABDNOR, South Dakota BELLA S. ABZUG, New York GENE TAYLOR, Missouri JOHN B. BREAUX, Louisiana BARRY M. GOLDWATER, Ja., California GERRY E. STUDDS, Massachusetts TOM HAGEDORN, Minnesota BO GINN, Georgia GARY A. MYERS, Pennsylvania DALE MILFORD, Texas NORMAN Y. MINETA, California KENNETH L. HOLLAND, South Carolina ALLAN T. HOWE, Utah ELLIOTT H. LEVITAS, Georgia JAMES L. OBERSTAR, Miiinesota JEROME A. AMBRO, New York HENRY J. NOWAK, New York ROBERT W. EDGAR, Pennsylvania MARILYN LLOYD, Tennessee JOHN G. FARY, Illinois SUBc0MMEnIE OIT WATER RESOURCES RAY ROBERTS, Texas, Chairman HAROLD T. JOHNSON, California DON H. CLAUSEN, California JAMES J. HOWARD, New Jersey GENE SNYDER, Kentucky ROBERT A. ROE, New Jersey JOHN PAUL HAMMER5CHMIDT~ MIKE McCORMACK, Washington Arkansas JOHN B. BREAUX, Louisiana WILLIAM F. WALSH, New York BO GINN, Georgia JAMES D. ABDNOR, South Dakota JAMES L. OBERSTAR, Minnesota GENE TAYLOR, Missouri JEROME A. AMBRO, New York TOM HAGEDORN, Minnesota ROBERT W. EDGAR, Pennsylvania MARILYN LLOYD, Tennessee GLENN M. ANDERSON, California BELLA S. ABZUG, New York ALLAN T. HOWE, Utah HENRY J. NOWAK, New York JOHN G. FARY, Illinois- (II)' PAGENO="0003" CONTENTS H.R. 9560: To amend the Federal Water Pollution Control Act to provide 1?age for additional authorizations, and for other purposes TESTIMONY Austin, T. L. Jr., chairman of the board, Texas Utilities, representing Edison Electric Institute; accompanied by Roy Spradley, National Asso- ciation of Electrical Companies 280 Busbee, Hon. George D., Governor, State of Georgia, representing National Governors' Conference; accompanied by Leonard Ledbetter, director, Georgia Environmental Protection Division, and David Johnson, special assistant for natural resources, National Governors' Conference 210 Carmouche, Louis N., general manager, functional products and systems department, Dow Chemical Co.; accompanied by Stacey Daniels 97 Costello, John G., executive director, Bergen County Sewer Authority, New Jersey; accompanied.'by William Blackburn, representing The Consu~ting Engineers, and Hon. Michael J. D'Armenio, commissioner on Bergen County Sewer Authority, and mayor, city of Hackensack, N.J 316 Danielson, Hon. George E., a Representative in Congress from the State of California 19 Derwinski, Hon. Edward J., a Representative in Congress from the State of Illinois 177 Environmental panel: Blackwelder, `Brent, Washington representative, Environmental Policy Center; Gus Speth, Natural Resources Defense Council; David Zwick, clean water action project; Robert Harris, direc- tor, water quality project, environmental defense fund; Ken Kamlet, National Wildlife Federation; Betty MacDonald, director, League of Women Voters of the United States; and 01cm L. Rastatter, senior asso- ciate, The.Conservation Foundation 121 Gray, Melville, past president, 1975 director, Division of the Environmen- ta'l Department of Health and Environment, Kansas, representing Asso- ciation of State and Interstate Water Pollution Control Administrators; accompanied `by Hugh Yantis, director, Texas Water Quality Board and Ralph Purdy, deputy director, environmental protection branch, Michi- gan Department of Natural Resources 272 Industrial panel: Knott, Joseph F., director of distribution, Pittsburgh Plate Glass `Industries, representing `Manufacturing Chemists `Associa- tion; Maloney, Walter E., attorney at law, Bigbam, Englar, Jones & Houston, representing `Marine Insurance Underwriters; Oreelman, Wil- `ham A., president, transport division, National Marine Service, Inc., representing American Waterway Operators; Harrison, Clifford, manag- ing director, National Tank Truck Carrier's, Inc.; Wheeler, Edwin, presi- dent, Fertilizer Institute; accompanied by Ben Day, assistant vice president, Member Services `Fertilizer Institute, John Pr'okop, president, Independent Liquid Terminals Associati'on; James It. Smith, president, The American Waterways Operators, Inc.; and George. J. Hencks, Jr.,, chairman Water Resources Committee Manufacturing Chemists Association Inzero, Peter, president, National Utility Contractors Association; accom- panied by Dr. Robert L. Samson, president, Energy'and, Environmental Analysis, Inc., former Assistant Administrator, EPA 299 Lynam, Bart, president and general superintendent of Greater Chicago' Metropolitan Sanitary District; accompanied by Lee C. White, counseL_ 185 Ma'tich, John N., president, Associated General Contractors of America; accompanied by Harold A. Pickens, Jr., president, Harold A. Pickens & Sons, Inc. of. Anderson, S.C.; and William W. Rogers, president, W. Rogers Co., Lexington, Ky 308 (III) PAGENO="0004" Iv Melas, Nicholas J., president Metropolitan Sanitary District of Greater ~agø Chicago ~79 McGuirk, Hon. Harry J., Maryland State Senator, representing National Conference of State legislators 35 National Association of Counties: Potter, Neal, councilman, Montgomery County, Md.; accompanied by Carol Shaskan, legislative representative, National Association of Counties; and Dennis Hansberger, chairman, board of supervisors, San Bernardino County, Calif 113 Newbould, E. J., chairman, Government Affairs Committee, Water Pollu- tion Control Federation; accompanied by Robert A. Canharn, executive secretary, Water Pollution Control Federation - 38 Orrnsby, Hon. Guy, chairman, Blue Grass Area Development District, Kentucky; `accompanied by Richard J. Davis, executive director, Compre- hensive Planning Organization, California 195 Pearsall, Hon. J. Edward, mayor, Virginia, Minn 311 Porth, Donald, executive vice president, Culligan International Co.; companied by Douglas Oberhamer, executive vice president, Water Quality Association and Robert Doyle, counsel, Water Quality Associa- tion 205 Sumner, Billy, president. American Consulting Engineers' Council; accom- panied by H. Ben Faulkner, Jr., chairman, Envitonmental Committee, National Society of Professional Engineers/Professional Engineers in Private Practice 87 Train, Hon. Russell E., Administrator, `Environmental Protection Agency; accompanied by Dr. Andrew Bredenbach, Acting Assistant Administra- tor for Water and Hazardous Materials; Chris Beck, Deputy Assistant Administrator for Water Planning and Standards; and Jack Rhett, Deputy Assistant Administrator for Water Operations 225 ~Wise, Harold F., American Institute of Planners 109 MATERIALS RECEIVED FOR THE RECORD Associatiofl Of American Railroads, statement 330 Austin, T. L., chairman and chief executive, Texas Utilities Co., 281 Bentley, George A., chairman, New Bedford Industrial Waste Water Corn- mittee letter - 329 Biggs, John A., director, Washington State Department of Ecology, mail- Boihi, Ralph C., president, Board of Trustees, Bay Area Sewage Service Agency, statement 333 Buglier, Robert D., executive director, American Public Works `Associa- tion letter and resolutions .337 Busbee, Hon. George D., Governor of the State of Georgia, policy state- ment of the National Governors' Conference, June 19~5 on water pollu- 211 ~os~ello, John G., executive director, Bergen County, N.J., Sewer Authority, 313 Service Inc., representing The American Waterways Operators, Inc.: Statement 86 Letter 85 Responses to questions Danielson, Hon. George E., a Representative in Congress from the State of California: 17 Statement Letter supplementing testimony Resolution No. 110 N.S. of the California Association of Sanitation 2° A~ericies Cnlifornia Senate Resolution No. 1 Water Pollution Control Federation, letter 4 Datt, John C., director, congressional relations, American Farm Bureau Dendv Bill executive officei State of California Water Resources Control 338 Board, letter PAGENO="0005" V Drozak, Paul, national director, Inland Boatmen's Union, Brooklyn, N.Y., Page letter 334 Environmental Protection Agency, responses to questions posed by mem- bers of the Water Resources Subcommittee 249 Grasso, Hon. Ella, Governor of the State of Connecticut, letters and state- ment 326 Harris, Robert H., Ph. D., director, toxic chemicals program, Environmen- tal Defense Fund, statement 145 Harvison, Clifford J., managing director, National Tank Truck Carriers, Inc., statement 60 Hansberger, Dennis, chairman, San Bernardino, Calif., Board of Super- visors: Statement 109, 112 Statement supplementing testimony 119 Inzero, Peter, president, National Utility Contractors Association, state- ment 297 Kamlet, Kenneth S., counsel, The National Wildlife Federation: Statement 151 Responses to questions 167 Kasten, Hon. Robert W., Jr., a Representative in Congress from the State of Wisconsin, statement 322 Kieliszek, Hon. Eleanor, mayor, Teaneck, N.J., letter 337 Knott, Joseph F., statement on behalf of the Manufacturing Chemists Association 52 Lynam, Bart, president, Association of Metropolitan Sewage Agencies, statement 181 McGuirk, Hon. Harry, Maryland State Senator, statement 30 Maloney, Walter E., statements on behalf of the Water Quality Insurance Syndicate ~ 54, 84 Manufacturing Chemists Association: Supplementary viOW_~_~~ 81 Responses to questions 82 Matich, John N., president, Associated General Contractors of America, statement with attachments 301 Melas, Nicholas J., president, Metropolitan Sanitary District of Greater Chicago, statement 178 Milford, Hon. Dale, a Representative in Congress from the State of Texas, a resolution drafted by the City Council of Grand Prairie, Tex 319 Montgomery, Hon. G. V. (Sonny), a Representative in Congress from the State of Mississippi, statement . Montmeat, Frank E., councilman, chairman, public works commIttee, Leonia, N.J., letter and resolution 343 McDonald, Betty N., director, The League of Women Voters of the United States, responses to questions 162 Newbould, E. J., chairman, Government Affairs Committee, Water Pollu- tion Control Federation, responses to questions' 43 Oberhamer, Douglas R., executive director, Water Quality Association, re. sponses to questions 207 Oberstar, Hon. James L., a Representative in Congress from the State of Minnesota, resolution adopted by the Hibbing, Minn., City Council 320 Ormsby, Hon. Guy Jr., National Association of Regional Council, state- ment 192 Pearsall, Hon. J. Edward, mayor, city of Virginia, Minn., statement 310 Porth, Donald, statement on behalf of the Water Quality Association~_ 201 Potter, Neal, councilman, Montgomery County, Md., and chairman, NACo Water Quality Subcommittee: `Statement on behalf of the National Association of Counties 105 loint resolution of National Association of County Engineers and the ARBA 116 Prokop, John, president, the Independent Liquid Terminals Association, statement 63 Rastatter, Clem L., senior associate, the Conservation Foundation, state- ment ~..-.. 155 PAGENO="0006" Reynolds, James J., president, Ameriëan Institute of Merchant Shipping, Page letter 332 Robinson, Hon. J; Kenneth, a Representative in Congress from the State of Virginia, statement 325 Rousch, Hon. J. Edward, a Representative in Congress from the State of Indiana, statement 324 Smit, Raymond J., attorney, McNamee, Porter & Seeley, Ann Arbor, Mich., letter Speth, J. G., Natural Resources Defense Council, Inc., response to questions 168 Stanton, James J., CPA, Stanton, Fried and Co., Hackensack, N.J., letter__ 328 Train, Hon. Russell E., Administrator, Environmental Protection Agency, statement 220 Wheeler, Edwin NI., president, the Fertilizer Institute, statement 61 Wise, Harold F., American Institute of Planners, statement.. 196 Yantis, Hugh C., Jr., executive director, Texas Water Quality Board, statement 275 Zwick, David, clean water action project: Statement 148 Responses to questions 173 PAGENO="0007" ~4Tn CONGRESS 1ST SEssioN 9560 IN THE HOUSE OF REPRESENTATIVES SEPTEMBER 11, 19Th Mr. JONES of Alabama (for himself, Mr. ~ Mr. ROBERTS, and Mr. Do~ H. Cr~usEx) introduced the following bill; which was referred to th~ Committee on Public Works and Transportation A BILL To amend the Federal Water Pollution Control Act to provide for additional authorizations, and for other Purposes. 1 Be it enacted by the Senate and House ~f Representa-. ~ tives of the United States of America in Congress assembled, 3 That this Act may he cited as the "Federal Water Po1Jutjo~ 4 Control Act Amendments of 1975". 5 ATJTIIORIZATION EXTENSION SEC. 2. (a) Section 104 (u) (2) of the Federal Water 7 Pollution Control Act (33 U.S.C. 1254) is amended by 8 striking out "fiscal years 1973, 1974, and 1975" and insert-. 9 ing in lieu, thereof "fiscal years 1973, 1974, 1975,. 197~, 10 and 1977". 11 (b) Section 104 (u) (3) of the Federal `Water Pôllu-. I-0 (1' PAGENO="0008" 2 2 1 tion Control Act (33 U.S.C. 1254) is amended by striking 2 out "fiscal years 1973, 1974,:and 1975" and inserting in li~n 3 thereof "fiscal years 1973, 1974, 1975, 1976, and 1977". 4 (c) Section 106 (a) (2) of the Federal Water Pollution 5 Control Act (33 U.S.C. 1256) is amended by striking out 6 "and the fiscal year ending June 30, 1975;." andinserting 7 in lieu thereof "and the fisc~d year ending June 30, 1975, and S S100,000.000 per fiscal year for the fiscal year endin~ 9 June 30, 1976, and the fiscal year ending September 30, 10 1977;". 11 (d) Section 112 (c) of the Federal Water Pollution 1~ Control Act (33 U.S.C. 1262) is amended by striking oat 13 "and June 30, 1975," and inserting in lien . thereof "June 14 30, 1975, June 30, 1976, a.nd September 30, 1977,". 15 (e) Section 208 (f) (3) of the Federal Water Pollu- 16 tion Control Act (33: U.S.C. 1288) is amended by strik- 17 ing out "and not to exceed $150,000,000 foi~ the fiscal year 18 ending June 30, 1975." and inserting in lieu thereof "and 19 not to exceed $150,000,000 per fiscal year for the fiscal 20 years ending June 30, 1975, June 30, 1976, and Septem- 21 her.30, 1977.". (f) Section 314 (c) (2) of the Federal Water Pollution 23 Control Act (33 U.S.C. 1324) is amended by striking out 24 "and $150,000,000 for the fiscal year 1975" and inserting* PAGENO="0009" 3 8 -tfl. ~n lieu thereof "and $150,000,OOO per fiscal ~eat for th~ 2 fi~cal years 1975, 1976, and 1977". 3 (g) Section 517 of the Federal Water Pollutioh Control. 4 Act (33 U.S.C. 1376) is amended by striking out "a~na 5 $350,000,000 for the fiscal year ending June 30, 1975." 6 and inserting in lieu thereof "and $350,000,000 per fiscal 7 year for the fiscal year~ ending June 30, 1975, June 30, 8 1976, ana September 30, 1977.". 9 INTERIM PERIOD AUTHORIZATIONS 10 S~o. 3. (a) The following amounts are authorized tO ii be appropriated to carry out the following sections of the 12 Federal Water Pollution Control Act during the interim i.3 period from July 1, 1976, Through September 30, 1976 14 (both dates inclusive) is (1) For section 104 (u) (2), $1,875,000. 16 (2) For section 104 (u) (3), $625,000. 17 (3) For section 106 (a), $25,000,000. 18 (4) For section 112 (c), $6,250,000. 19 (5) For section 208 (f) (3), $37,500,000. 20 (6) For section 31~ (c) (2), $37,500,000. 21 (7) For section 517, $87,500,000. 22 (b) Sums authorized by this section shall be avail-S 23 able in the same manner, to the same extent, an~d for th~ PAGENO="0010" 4 4 1 same purposes as are authorizations for such sections for 2 the fiscal year 1976. 3 uSER ChARGES 4 S~c.. 4. Paragraph (1) (A) *of subsection (b) of *sec~ 5 tion 204 of the Federal Water Pollution Control Act (33 6 U.S.C. 1284) is amended- 7 (1) by striking out "proportionate share" and in~ 8 serting in lien thereof "prol)oltionate share (except as 9 otherwise pi'ovidecl in this paragraph; and 10 (2~) by adding at the end of such paragraph the 11 following: "In any case where an applicant uses an. 12 ad valorem tax system and the Administrator deter- 13 mines such system results in the distribution of operation. 14 and maintenance costs for tieatment works within. the ~-° applicant's jurisdiction, to each user class, in proportion 16 to the contribution to the total waste water loading of 17 the treatment works by each such user class, and such 18 applicant establishes surcharges which will insure that 19 each industrial user will pay its proportionate share on 20 the basis of volume, strength, and other relevant factors, 21 then such ad valorem tax system and surcharges shall 22 be deemed to he a. user charge system meeting the re- 23 quirements of clause (A) of this paragraph.", j PAGENO="0011" 5 5 1~.EIMBURSEMENT AND ~ADVANCED CONSTRUCTION ~ 2 SEC. 5. (a) Subsection (a) of section 206 of the Fed~ 3 eral Water Pollution Control Act (33 U.S.C. 1286) is 4 amended by striking out "July 1, 1972," and inserting in 5 lieu thereof "July 1, 1973,". 6 (b) Subsection (e) of such section 206 is amended by 7 striking out "$2,600,000,000" and inserting in lieu thereof S "$2,950,000,000". (c) Notwithstanding section .206 (c) of the Federal 10 Water Pollution Control Act and section 2 of Public Law 11 93-207, in the case of pub1icl~~ owned treatment works on 12 which construction was initiated between July 1, 1972, and 13 June 30, 1973 (both dates inclusive) , applications for assist- 14 ance under such section 206 shall be filed not later than the 15 ninetieth day after the date of enactment of the Federal Wa- 16 ter Pollution Control Act Amendments of 1975. 17 FEDERAL ~llARE OF PLANNING PROCESS COSTS 18 SEC. 6. Se~tion 208 (f) (2) of the Federal Water Pollu-. 19 tion Control Act (33 U.S.C. 2188) is anlended to read as 20 follows: 21 "(2) For the two-year period beginning on the date the 22 first grant is made under paragraph (1) of this subsection to 23 au agency, the amount of each such giant to such agency 24 shall be 100 ~ centum of the costs of doveloping and oper~ PAGENO="0012" 6 6 1 ating a continuing areawide waste treatment managemen~t 2 planning process under subsection (13) of this section, and 3 thereafter the amount granted to such agency shall not ex- 4 ceed 75 per centum of such costs in each succeeding one- 5 year period.". 6 CONTRACT AFTHORITY 7 SEC. 7. The second sentence of section 208 (f) (3) of 8 the Federal Water Pollution Control Act (33 U.S.C. 1288) 9 is amended by striking out the period at the end thereof and 10 inserting in lieu thereof a commaS iind the following: "subject 11 to such limitations as are provided in appropriation Acts.", 12 CERTiFICATION 13 SEC. 8. Title ~[I ~f the Federal Water Pollution Control 14 Act (33 U.S.C. 1281 et seq.) is amended by adding at the 15 end thereof the following new section: 16 "CERTIFICATION 17 "SEC. 213. (a) (1) The Administrator may carry out 18 any of his responsibilities for actions, determinations, or ap~ 19 provals under sections 201 (g) (2) and (3), 203 (a) and 20 (d), 204 (a), (b) (1), and (b) (3), and 212(2) (B) of 21 this Act with respect to projects or proposed projects for 22 treatment works by accepting a certification by the State 23 water pollution control agency of its performance of such 24 responsibilities. PAGENO="0013" 1~ * a "(2) Nothing in this section shall affect or dischthg~ 2 any responsibility or oblig~tion of the Administrator under 3 any other Federal law, including the Natioinil Enviionmental 4 Policy Act.of 1969 (42U.S.C. 4321 etseq.). 5 "(b) The Administrator shall not accept any certific~ 6 lion provided for in subsection (a) of this section unlèss~ 7 the Administrator determines that the State water pollution 8 control agency has the authority, responsibility, ~i.nd capabil- 9 ity to take all of the actions, determinations, or approvals 10 for which certification is submitted under subsection (a) 11 12 13 14 15 16 1.7 18 19 20 21 22 23.. of this section. (c) If the Administi~ator determines after public hear- ings that a State water pollution control agency, with respect to any requirement, condition, or limitation for which he has accepted a certification under suh~ection (a) , fails to meet the requirements of t.his section, he may suspend his acceptance of certification as to such requirement, conditioii, or limitation with respect to any project, or with respect to all projects in such State, as he.deterrnines necessary. and during such suspension he shall be responsible for such requirement, condition, or 1imitatioi~, (d) The Administrator is authorized to conduct in- terim and final inspections ai~d audits, and to require such .4 PAGENO="0014" S 1 Wormation, data, and reports a~ he may determine necès~ 2 sary to cariyout this section. 3 " (e) (1) The Administrator shall reserve an amount 4 not to exceed 4 per centum of the allotment made to each 5 State under section 205 on or after February 1, 1975. Sums 6 so reserved shall be available for making grants to such State 7 under paragraph (2) of this subsection for the same peiio~i $ as sums are available from such allotment mìdcr subsection 9 (b) of section 203, and any such grant shall be available for 10 obhgation onl during such periodT. Any grant made from 11 sums reserved, under this subsection which has not been 12 obligated by the end of the peliOdi for which available, and 1~ any reserved amount at the request of the State, shall be 14 added to the amounts last allotted to such State under section 15 203 and shal[ h~ immediately available for obligation in the 16 same manner and to the same extent. as such last allotment. 17 "(2) The Administrator is authorized to grant to any 18 State exercising, or proposing to cxerc~se certification au- 19 thoritv under this section, from amounts reserved to such. 20 State under this subsection~ the reasonable costs, as deter- 21 mined by the Administrator, of carrying out such authority. 22 "(f) The Administrator shall promulgate such rules arid. 23 regulations as may be necessar to ~arry out this section. The ~ initial rules ai~, regulations necessa~' to carry out this *sectiom~ PAGENO="0015" `:9 9 1 shall be promulgated not later than the ninetieth day after 2 date of enactment of this sectionS". 3 TIME 1~.EQTJIREMENTS .4 SEC. 9. Section 301 of the Federal Water' Pollution ~ Control Act (33 ThS~C. 1311) is amended by addin'g at 6 the end' thereof `the following new subsection: 7 " (g) (1) The Administrator may modify the tin'ie for S achieving the requirements of subsections (b) (1) (B) and a (C) of this section for any publicly owned treatment works 10 to extend such time beyond the dates specified in such para~ ii graphs, if the Administrator determines- 12 - " (A) that the construction of such treatment works 13 necessary for the achievement of such requirements 14 cannot lie completed by the th~tes specified in such 15 paragraphs, or 16 "(B) in the case where such works are discharg- 17~ ing into ocean waters, the territorial sea, or the contig- 18 nous zone, that compliance ~vitli such time requirements 19 should not be required, and in making such determina- 20 tion the Administrator shall coi~sider the. cost of achiev- 2~ ing s~coiidary and alternative treatment and the effects 22 .~ich secon~Tary and alternative treatment will have on 23 1~ubhc- health and water quality, including effects on 2~ aqu~tic life, the propagation of. fish, and recreation, PAGENO="0016" 10 10 1~ "(2) No timernodifica.tion granted by the Adthinistratoi~ 2 under this subsection shall extend. beyond July 1, i9~2.". 3 STATE REPORTS 4 SEC. 1.0. Subsédfion (b) of section .305 of the Federal 5 `Water Pollution Control Act (33 U.S.C. 1315) is amended- 6 (1) by striking out "January I, .1975, and shall 7 bring up to date each year thereafter," in paragraph (.1). and inserting in lieu thereOf "April 1, 1975, and shall 9 bring up to date by April 1, 1976, ~nd biennially there-. 10 after;"; and 11. 12 13 (2) by striking out "annually" in paragraph (2) and inserting in lieu thereof the following: "October 1, 1976, and biennially". 14 TOXIC AND PRETREATMENT STANDARDS 15 SEe. 11. (a) The first sentence of paragraph (2) df 16 subsection (a) of section 307 of the Federal Water Pollution 1.7 Control Act (33 U.S.C. 1317) is amended by striking out 18 "to he held within thirty days". 19 (b) Paragraph (6) of subsection (a) of section 307 of 20 the Federal `Water Pollution Control Act (~3 U.S.C. 1317) 21 .is amended by adding. at. the end thereof the. following new 22 sentence: "In any cas~ where the Administrator determines 23 that compliance within one year from the date of promulga~. 24 tion is teChnOlQgiCally infeasible for a category of sources, 25 .the Administrator shall Ostablish the.. effective date of the PAGENO="0017" 11 it 1: effluent standard (or prohibition) for such category of 2 sources at the earliest' date which compliaiice can be feasibly 3 . attained by such sources, but in no case shall* such date be .4 i~iore than three years after the date of promulgation.". 5 CIVIL PENALTY* 6 SEC. 12. (a) Subparagraph (B) of paragraph (2) of 7 subsection (b) of section 311 of the Federal Water Pollution .8 Control Act (33 U.S.C. 1321) is amended to read as follows: .9 "(B) The owner or operator of any vessel, onshore 10 facility, or offshore facility from which there is discharged 11 any. hazardous substance shall, subject to the defenses to 12 liability provided in subsection (f) of this `section, as appro- 13 priate, be liable to the United States for a. civil penalty 14 established by the Administrator not to exceed $50,000 per 15 discharge based either on the characteristics of the substance 16 discharged, or damage to the public health or welfare,' includ- 17 ing, but not limited to, fish, shellfish, wildlife, shorelines, and 18 beaches resulting from such discharge, or based on both such 19 factors. In assessing such penalty, the Administrator shall 20 take into account the actions taken by the owner or operator 21 to prevent such discharge and to remove the substance dis-' 22 . charged. In any case where the United States can show such 23 discharge was the result of willful negligence or willful mis- 24 conduct within the privity and knowledge of the, owner or 25 operator, such owner br operator shall be liable to the 63-192-76---2 PAGENO="0018" 12 12 1 United States for a civil penalty in such amount as the 2 Administrator shall establish, based either on the. char~ 3 acferistics of the, substance discharged or damage to the 4 pulilic health or welfare, including, but not limited to,. 5 fish, shellfish, wildlife, shorelines, and beaches resulting 6 from such discharge, or based on both such factors. 7 Wfllfjil failure to act to remove discharges of hazardous sub- S stances as deemed appropriate by the responsible Federal 9 officer specified in the National Contingen6y Plan prepared 10 under subsection (c) (2) shall be deemed to constitute will- 11 ful misconduct for the pui'poses of this subparagraph.". 12 (b) The first sentence of paragraph (5) of subsectioii 13 (ii) of such section 311 i~ hmended to read as follows: "Any 14 person in charge of a. vessel or of an onshore or offshore ~ facility shall, as soon as lie has kno~vledge of any discharge 16 of oil from such vessel oi' facility in violation of paragraph 17 (3) of this subsection. Or of any discharge of a. hazardous ~ substance designated undei' paragraph (b) (2) (A) of this 19 subsection, from such vessel or facility, immediately notify 20 the appropriate agency of the United States Gpy~rnrnei~t of 21 such discharge." PAGENO="0019" * TO AMEND THE FEDERAL WATER POLLUTION CONTROL ACT TUESDAY, SEPTEMBER 23, 1975 HOTJ~E OF R)3~PRESENTATIVES, Stri~coMMtrI~ ON WATER RESOtTRQES OF THE CoMMIrr~r ON PuBLIC WORKS AND TRANSPORTATION, Wa.~Mngto~u, D.C. The subcommittee met, pursuant to call, at 10:05 a.m., in roOm 2167, Rayburn House Office Building, Hon. Ray Roberts (chairman of the subcommittee) presiding. Mr. ROBERTS. The Subcommittee on Water Resources will come to order. This morning the Subcommittee on Water Resources meets to con- sider H.R. 9560, the Federal Water Pollution Control Act Amend- ments of 1975. This bill, which would amend the Federal Water Pollu- lion Control Act, Public Law 92-500, was introduced on September 11 by the distinguished chairman of the full committee, Congressman Bob Jones of Alabama, and also Congressman Bill Harsha, ranking minority member of the full committee, Congressman Don Clausen, ranking minority member of this subcommittee, and by me as chairman of the subcommittee. H.R. 9560 encompasses major issues that have been brought to the attention of this subcommittee by a variety of means including the intensive oversight hearings on the water pollution control program conducted by the Subcommittee on Investigations and Review under the leadership of my esteemed colleague Jim Wright, and several bills which were previously introduced by members of the committee, including H.IR. 4169, H.R. 4170, and H.R. 4171, the Environmental Protection Agency's requests for amendments, and H.R. 2175, a State certification procedure developed by my colleagues, Jim Cleveland and Jim Wright. H.R. 9560 would do the following: Provide additional authorizations for fiscal years 1976 and 1977 for programs of manpower training and forecasting, grants to State water pollution control agencies, training grants and scholarships, grants to areawide waste treatment management planning agencies, the clean lakes program, and funds for the Environmental Protection Agency's-EPA-administration of Public Law 92-500. Permit the use of* ad valorem taxes as a method of collecting opera- tion and maintenance costs. The problems associated with the current prohibition on using these taxes have been explored by the Subcorn- mittee on Investigations and Review and an amendment on this matter was requested by the Environmental Protection Agency. (13) PAGENO="0020" 14 Extend to July 1, 1O7~, the date by which treatment works projects must have initiated construction in order to be eligible for reimburse- ment, provide a SO-day period during which newly eligible treatment works projects could apply for a reimbursement grant, and increase to $2.95 billion the level of funding authorized for reimbursement grants. This section would correct the inequities that resulted from EPA's delay in implementing the reimbursement provisions of the act and would insure that sufficient funds are authorized to fully reim- burse all eligible projects. Permit newly designated areawide waste treatment management agencies to receive 100-percent Federal funding for the first 2 years of their plan development. Grants for each succeeding 1-year period would be at the 7.5-percent level. This section would correct that which resulted from EPA's delay in actively implementing this program. Amend the contract authority provisions for areawide planning grants to cOñiply with certain provisions of the Budget and Impoundment Control Act of 1974. Provide a State certification procedure to reduce redtape in the grant approval process-Cleveland-Wright bill. Permit the Administrator of EPA to modify the 1977 effluent requirement of section 301 for certain municipalities and certain. municipal ocean discharges. Testimony was received at the oversight hearings indica.ting that many municipalities would be unable to pro- vide secondary treatment by July 1, 1977. In addition, there is a ques- tion as to whether, in certain circumstances, it is necessary to require secondary treatment where deepwater outfalls can be utilized. Provide that the State water quality inventory report be submitted biennially instead of annually and revise the submittal date from January 1 to April 1. The purpose of these changes is to reduce the reporting burden on the States and EPA. This amendment was requested by EPA. - Authorize the Administrator to hold a public hearing on a pro- posed toxic standard within 6 months of its publication and permit the Administrator to require compliance with final toxic effluent standards within 3 years where he determined it would be technologi-. cally impossible for many industries to comply with such standards within a 1-year period. The need for this amendment was explored during oversight hearings and this amendment was requested by EPA. Strengthen the penalty and notification provisions of the act con- cerning the discharge of hazardous substances. In 1972 the committee~ on conference on the Federal Water Pollution Control Act Amend- ments of 1972 agreed that this penalty should be reviewed if certain legislation which was pending before the Congress concerning thern handling and shipping of hazardous materials were enacted and~ implemented. Since then the Towing Vessel Operators Licensing Act and the Ports a.nd Waterwa,ys Safety Act, which were enacted at substantially the same time, have been implemented. The potential for a $5 million penalty looms as an unreasonable deterrent to water transportation and plant location and construction. We recognize that many problems concerning the act are currently being considered by the National Commission on Water Quality. The. Commission was established by section 315 of the Federal Water Pol-~ PAGENO="0021" 15 lution Control Act (Public Law 92-500) for the purpose of making a full and complete investigation and study of all of the technological aspects of achieving, and all aspects of the total economic, social, and environmental effectS of aci'iieving or not achieving, the effluent limita- tions and goals in the act. The Commission is chaired by Vice Presi- dent Nelson Rockefeller, and Chairman Jones serves as a Vice Chair- man of the Commission. The staff report is due October 1975, and the final report is due March 1976. After the final report is completed, we will more fully assess the effects and provisions of the act. In additioii, we recognize there is widespread concern about the definition of "navigable waters," as it applies to the implementation of the Corps of Engineers permit program for dredged and fill ma- terial authorized by section 404 of the act. Also, we recognize the con- cern that has been expressed regarding the corps' definition of navi- gable waters as it applies to the 1899 act, particularly involving inland lakes. Because of the specialized nature of these concerns, we will hold a separate set of hearings in November for the express purpose of reviewing the implementation of these sections. The legislative hearings that we begin this morning will be con- tinned tomorrow, September 24, and Tuesday, September 30. This morning as we listen to the comments and suggestions of representa- tives of maj or environmental groups, industries, the governmental sector, and the public, we hope to have a full and frank discussion of -the issues before us. Now, it is `my pleasure to recognize the distinguished minority member, Don Clausen. Mr. CLAUSEN. I would like to thank my colleague from Texas and jOin with him in welcoming our distinguished witnesses. It is my desire that this legislation will facilitate the accomplish- ment of the goals that this committee set forth in Public Law 92-500, commonly referred to as the Federal Water Pollution Control Act Amendments of 1972. This comprehensive act is extremely complex, and as such it is unrealistic to expect that some unforeseen pitfalls would not develop. In the early going of implementing this act, delays were experienced in getting the various programs underway. Many of these programs were designed to be quickly implemented and as such, program auth- orizations and funding levels were tied to this rapid implementation scheme. Because of the delays experienced certain of these authorities and appropriations will soon expire before realization of program goats. Therefore, it is appropriate that we extend these authorities to mitigate for these unforeseen delays. Also, we have experienced a preponderance of bureaucratic redtape in a limited number of these programs. Therefore, it seems appropriate iii an effort to decrease the duplication of effort between the Federal `and State agencies that we transfer the so-called nuts and bolts of these operations to the States. In addition, it has become apparent that cer- tain of the penalties associated with failure to meet the goals of this act are unrealistically restrictive. To this end we are proposing amend- ments which we hope will ameliorate this problem. Recently this subcommittee held hearings on section 404 of this act. As we all know, this section, deals with dredge-and-fill operations in PAGENO="0022" 16 waters of the United States. The controversy that has arisen over the recent court suit and resultant expanded authority of the Corps of Engineers has led to frequent calls for legislative changes. However, I feel that we have not had enough time in which to evaluate the Corps of Engineers performance in trying to meet both the spirit and the letter of the law in this area. I am pleased that you have indicated, Mr. Chairman, that this subcommittee will be holding hearings in late November or early .December to get a status report on the conduct of this new program. Until then, I believe a fair evaluation of the pro- gram is not possible. I am extremely disappointed that EPA was not able to appear be- fore us today. I believe that their comments on this proposed legisla- tion, and insight as the main implementing agency of this act, would be invaluable to members of the subcommittee and the Congress. While we have asked EPA to provide us with their written comments so that we can understand their position, it is distressing that they have not accommodated our request. The responsiveness of the Envi- ronmental Protection Agency to reasonable requests is not acceptable.. Finally, I would like to address the question of the scope of H.iR. 9560. The National Commission on Water Quality is currently evaluat- ing the costs and impacts of meeting and not meeting certam of the provisions of Public Law 92-500. This is a most important effort. It could result in a. setting of the water pollution control pace for years. to come. It is not possible to overstate the importance of the Commis- sion's work. Further, it is unnecessary for me to describe the care and thoroughness which will have to be given to our review of their report. I hope the Commission will not let the. complexities of schedule dictate the thoroughness of the effort. I know I will not want to be rushed into legislative action when the report is released, and I believe that this will be the point of view that will be shared by many of our colleagues on the committee. Rather, I see at least 6 months devoted to review, consideration, and hearings before legislative Proposals can even be developed. Therefore, I also see the scope of H.R.. 9560 and the limitation on this scope as a reason- able and responsible effort at this time. Expansion of H.R. 9560 with the possible exception of construction grant authorization would be unwise. However, H.R. 9560 does recognize current legislative needs, and I look forward to productive hearings and prompt action on both bodies. I and the members of this committee are indebted to our chairman,. my good friend from Texas, Ray Roberts, for scheduling these hear- ings at this time. The work a.t hand, needless to say, is very, very important. Mr. ROBERTS. The Chair is pleased and honored to note the presence of the distinguished chairman of the Public 1~Torks and Transporta- tion Committee. Hon. Robert E. Jones of Alabama. Mr. Jones, do you have a statement? The CHAIRMAN. No. Mr. ROBERTS. Then, we will hear the first witness, Hon. George E. Danielson from California.. Mr. Danielson~ we, of course~ are delighted to have you as a colleague on behalf of this committee. We are operating under a very strict time PAGENO="0023" 17. limitation, and the full text of your prepared statement will* appear in the record a.t this point. [The statement referred to follows:] STATEMENT OF HON. GEORGE E. DANIELSON, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA Mr. Chairman and members of the Subcommittee, my purpose today is to em- phasize the importance of my bill H.R. 2183 which would permit the use of an ad valoreni tax as a user-charge for a waste treatment (sewage) system when the Administrator of the Environmental Protection Agency determines such a system results in a proportionate distribution of operation and maintenance costs among recipients of sewer services, based on the user's contribution to the total waste water treated by the system. Background Presently Section 204 of the Federal Water Pollution Control Act Amendments of 1972, Public Law 92-500, (33 U.S. Code 1284) of October 18, 1972 provides as follows: "(b) (1) Notwithstanding any other provision of this subchapter, the Admin- istrator shall not approve any grant for any treatment works . . . . unless he shall first have determined that the applicant (A) has adopted or will adopt a system of charges to assure that each recipient of waste treatment services within the applicant's jurisdiction, as determined by the Administrator, will pay its proportionate share of the costs of operation and maintenance (including `re- placement) of any waste treatment services provided by the applicant . . ." The above provision is essentially the same as Section 204 of the Senate bill, S. 2770 (92d Cong., 2d `Sess.), dated October 28, 1971. The Committee Report states, in part, as follows, in explanation of Section 204(b) (1) "Although the committee is aware of the many different legal and financial circumstances that characterize state and local governments and agencies throughout the country, the bill directs the Administrator to promulgate guide- lines for the establishment and imposition of user-charge systems as a guide to grant applicants for waste treatment works grants. . . . As a general rule, the volume and character of each discharge into a publicly owned system should ~orm the basis of determining the rate at which each user should be required to pay." In my Congressional District in Los Angeles County, sewage treatment costs have traditionally been paid through an ad valorem tax on the real property served. Initially, there was some question as to whether the ad valoreni tax system met the requirements of the Federal Water Pollution Control Act Amend- ments of 1972. Then, in response to my objection that the creation and inaugura- tion of a new user-charge system, or the installation of sewage meters, would be prohibitively expensive and an undue burden on the people served by the sanita- tion districts within my congressional district, and others similarly situated, the Environmental Protection Agency, on April 5, 1974, issued Program Guidance Memorandum No. 28, which authorized the use of the ad valorern tax as a user- charge under the Act, under certain narrow, well-defined circumstances, as follows: "The use of ad valorem taxes can be permitted as a source of funds for oper- ation and maintenance only in those cases where such a method has been used historically. Where there is a history of the use of ad valorem taxation for col- lection of operation and maintenance costs, and it is properly demonstrated that it would be administratively difficult, more costly, and disruptive to change that system, and that the goal of proportionality among user classes can be achieved by means of an ad valorem tax system, such a `system may be used." On July 2, 1974, however, the Comptroller General rendered a decision that an ad valorem tax for the payment of sewage charges does not meet the require- ments of the Federal Water Pollution Control Act Amendments of 1972. That decision, in effect, reversed the authorization of EPA Memorandum No. 28. After reviewing the legislative history of the Amendments, the Comptroller General stated, in part, that: "The basic difficulty with EPA's position is that the ad valorem system is clearly a tax based on the value of the property and, conceptually at least, the Congress did not intend that a tax be used to obtain the user charges. . . . Of major importance also is the fact that the ad valorem tax does not in any way reward conservation of water and this was clearly an important factor in the congressional adoption of the user charge. PAGENO="0024" 18 "Accordingly, while the matter is quite complex and not entirely free from doubt, it is our view that the Section 204(b) (1) requirement that each recipient of the sewer services wifi pay its proportionate share of the treatment works' operation and maintenance expenses may not be met through an ad valorem tax system." Those responsible for the providing and operation of sanitation districts in Los Angeles County have advised me that there are really only two alternatives to the ad valorem tax is a method of imposing a "user charge". The first of these, which would accomplish a precise measurement of waste water discharge, is the sewage meter. However, in order to comply with the Act, sanitation districts within Los Angeles County, but ??ot including the City of Los Angeles, would have to install some 1,200,000 sewage meters. If we were to add the City of Los Angeles which operate sits own sanitation system, the number of meters would be doubled. ]~eedless to say, it would cost an astronomical sum to purchase and install those meters. The other alternative which would meet the requirements of the Comptroller General's decision, would be to base sewage charges on the amount of water going into each place of use as determined by water meters, on the supposition that water input will bear a direct relationship to sewage output. That system although less costly, would still result in an estimated $2,000,000 per year in addi- tional accounting expense to the sanitation districts within Los Angeles County, but not including the City of Los Angeles. That is because, in my area, the water supply systems are not co-terminus with, do not have the same boundaries as, the sew-age collection systems. In other words, a given residential area may receive its water from one source, but it may be served by two or more different sanitation districts, or conversely, although a given area is in a single sanitation district, it may receive its water from a number of different suppliers. Match- ing up the sewage output with the water input would, in many cases, resule in an administrative nightmare, as well as great additional expense which would have to be passed on to the consumers. This problem is not limited to Los Angeles County. It is nationwide, although many jurisdictions may yet be unaware that they have the problem, because they have not yet applied for, and have not yet been refused, federal aid. However, the EPA has provided me with a list of those areas which they already know to be affected, inasmuch as those areas have applied for aid. Besides Los Angeles County. California, Cook County, Illinois, whicli includes Chicago, is affected. So are several cities in Indiana. San Francisco and Santa Rosa. California. are affected. Others are: Fairbanks, Alaska, Wellesley, Mass., Hampton, N.H., Woonsocket, R.I., Phoenix, Ariz. Those are just the areas that have already been identified. I am certain that there are many more which will be found to be ineligible for federal aid because they use the ad valorem tax to pay for sewage collection and treatment. The goal of the law seems to be to provide for an equitable sharing of the cost of operating and maintaining sanitation systems and a financial incentive for people and industries to conserve water and thereby avoid unnecessary loading of the sew-age system. I am doubtful that such a laudable goal can be achieved, when adoption of the type of system necessary to carry out that goal will auto- matically result in a greater expense to the consumer, rather than a saving. The overall purpose of P.L. 92-500 is to clean the nation's water, but so long as the added expense to the taxpayer defeats eligibility for grants, water will not be cleaned. The legislation I have introduced simply provides that an ad valorem tax is to be regarded as an acceptable form of user charge for sewage collection and treat- ment, provided that it results in an equal distribution of costs among the various classes of users. The ad valorem tax can be structured to insure that each user pays his fair share. My legislation, would in no way hinder the primary goal of the Federal Water Pollution Control program, namely, to clean up our rivers, lakes and streams. The legislation merely attempts to permit the program to op- erate as efficiently and economically as possible. TJSER-CHARGE REQUIREMENTS UNDER THE FEDERAL WATER POLLUTION CONTROL Aer 1. BAOKGROUND Section 204 of the Federal Water Pollution Control Act (33 U.S. Code Sec. 1284) Tequires local authorities to have a system of sewage treatment user-charges as a pre-requisite to Federal financial assistance. PAGENO="0025" 19 2. CHRONOLOGY OF EVENTS Oct. 18, 1972 Enactment of Federal Water Pollution Control Act (P.L. 92-500). Sep. 1973, EPA adopts guidelines for "user charges" which exclude ad valoreni. taxes. Mar. 14, 1974, Danielson urges EPA to revise regulations so as to permit ad valorem taxes. Apri 5, 1974, EPA approves ad valorem tax as an acceptable user charge (PG 28). Jul. 2, 1974, General Accounting Office disapproves ad valorem taxes (reverses EPA). Sep. 10, 1974, Danielson introduces H.R. 16662 to reinstate ad valorem taxes (referred to Public Works Committee). Sept. 24, 1974, Public Works Committee requests comments from EPA, Comp- troller General, and the Office' of Management and Budget. Oct. 31, 1974, Comments received from GAO (Neutral comments-not for or' against). Jan. 28, 1975, Danielson introduces H.R. 2183 for the 94th Congress (identical to old bill). May 13, 1975, Subcommittee on Investigations and Review, Committee on Pub- lie Works and Transportation recommends user charge alteration to permit ad valorem tax. 3. THE SITUATION IN LOS ANGELES COUNTY In Los Angeles County, of the 78 incorporated cities, 72 are members of "LOs Angeles County Sanitation Districts", a "special district" organized under the laws of California (all except Avalon, Burbank, Glendale, Hidden Hills, San Fernando and Santa Monica, and the vastly largest part of the City of Los Angeles). `` , , Abandonment of the existing ad valorem tax system in favor of a new user charge system would require one of the following two actions: 1,200,000 sewage meters (not including City of Los Angeles). $2,000,000 per year for an administrative system that will measure sewage output based on water input. * 4. OTHER AREAS CURRENTLY USING AD VALOREM TAX USER-CHARGES * a. In California: San Francisco, Santa Rosa. Elsewhere: Phoenix, Ariz., Chicago,.Ill., several cities in Indiana, several cities in New England region. TESTIMONY OP HON. GEORGE E. DANIELSON, `A REPRESENTATIVE IN CONGRESS PROM THE STATE OP CALIFORNIA Mr. DANIELSON. Thank you very much, Mr. Chairman. Ladies and gentlemen of the committee, my bill, ILIR. 2183', relates directly to the problems which you have before you in this overall legislation. It addresses itself to one point; namely, what type of tax can be used as the user charge for sanitation systems and still qualify the using public entity for the fund grants that are available under the general bill. When this law was first passed, a provision of the law, section 204 of the Federal Water Pollution Control Act, 33 U.S.C. 1284, provided that the Administrator should approve a system of changes which would guarantee that the users of sanitation systems were paying their proportionate share of the costs of reconstructing, operating, and maintaining of the sewage system in order to qualify for grants under the bill. The intent is excellent. People should pay for what they use. How- ever, immediately, I noticed that within my district, and I find that there are many other districts throughout the United States, we have run into a problem. PAGENO="0026" 20 Historically, in the State of California and in 27 other States of the Union, ad valorem property tax charges have been used as a basis for selecting the cost of erecting, constructing, and maintaining sewage systems. Within the State of California, 100 percent of tl~e urban areas on the basis of ad valorern taxes. It happens that within my own congressional district, which is in Los Angeles County but outside Of the city of Los Angeles, I have all or parts of 14 different cities, no one of those cities operates a sanitation system. They all belong to special purpose districts which are created by the law for the purpose of operating sanitation systems. The tax money which is used to pay for the sanitation system is ad valorem taxes. My sanitation district people got in touch with me as soon as the law was passed and said: George, we have got to do something about this. We wish to participate in these programs. We wish to participate in the funds, but we have come to a situation which is simply untenable. Either we are going to have to install meters to meter the sewage of every person served by our sanitation district in order to determine the amount of effluent discharged into the system, or in the alternative we have to work out some kind of a very sophisticated accounting procedure in order tO have some way of relating water consumption to sewage `discharge, and even that has to assume that there is a direct relationship between the amount of water consumed on the intake and the amount of effluent discharge on the outgo. So, I got in touch with the Director of EPA, and was happy to get a response back from him to the effect, "Well, where you have historically been using ad valorem taxes and it seems to have a logical relationship to the problem involved we will accept ad valorem taxes as an appropriate user charge and you people can go ahead and par- ticipate in the program." That was well and good until the Comptroller General reviewed the law, and on July 2, 1974, came out with his own decision, in which I think he probably construed the language of the law correctly. He said: That the basic difficulty with EPA's position is that the ad valorem system is clearly a tax based on the value of the property and, conceptually at least, the Congress did not intend that tax to be used to obtain the user charges. So, that put us right back to square 1 again, and as a result I intro- duced a bill in the 93d Congress which is identical with the bill which I have in this Congress, H.R. 2183, which I hope you will incorporate into the legislation that you put out. The purpose of my bill is very simple. It is simply to add new sub- sections to section 204. to provide that where the ad valorem tax system is used and the Administrator determines that such system results in the distribution of operation and maintenance cost for treatment work with the users' charge proportioned to the contribution to the total waste water loading of the treatment works that that ad valorem tax system is a satisfactory user charge system. Now, I would like to comment-respecting the chairman's request that we be brief, but yet to cover the problem as thoroughly as pos- sibly we can-I would like to point out that I have done a bit of re- search around the Congress. Quite a number of Members of the Con- gress joined me as coauthors in this bill when they learned their own communities were involved. PAGENO="0027" 21 I have also satisfied myself that there are many Members of Con- gress who are not yet aware of the fact that this will have an adverse- :the existing law will have an adverse impact in their districts, simply because their people have not made an application for a grant and ~have not been turned down, but it is inevitably going to happen. Attached to my statement, and in order to save time, I have given a little chronology of the events that have taken place as far as I am con~cerned, at least on this bill. Mr. ROBERTS. Would the gentleman yield. Have you read the section that we have in section 4, designed to do exactly what the gentleman has asked us to do? Mr. DANIELSON. No, no. Mr. ROBERTS. I wish you would check it and give us your opinion, if it does. I do not think you can do it now, but sometime in the next day or two give the committee your own opinion. i~1r. DANIELSON. I would like to give you a letter, if that would be all right, sir. Mr. ROBERTS. Yes, would you please. Mr. DANIELSON. I surely will. Mr. ROBERTS. And, we share your opinion. We certainly expect to do what you are asking, and we think we have licked it. So, if you will check the language in section 4 of the bill before the subcommittee this morning, and give us your legal opinion, we would be happy to have it. Mr. DANIELSON. Mr. Chairman, you will have it almost immediately nnd I am gratefully appreciative. I hope my colleague, Mr. Clausen, will note that in the areas that we serve 100 percent of our urban areas would be affected. [The following letter was received from Mr. Danielson:] CONGRESS OF THE UNITED STATES, HOUSE OF REPRESENTATIVES, Washington, D.C., September 30, 1975. Hon. RAY ROBERTS, Chairman, Subcommittee on Water Resources, Committee on Public Works and Transportation, Rayburn House Office Building, Washington, D.C. DEAR MR. CHAIRMAN: I wish to thank you for the opportunity of testifying before your committee last Tuesday, September 23, 1975, on the subject of user charges for discharges into waste water systems. I am also gratified that the sub- committee has included a provision similar to my bill, H.R. 2183, regarding the use of the ad valorem tax as a user charge, as Section 4 of H.R. 9560 which was introduced on September 11, 1975. I would like to respond to your request for comments on the proposed language in HR. 9560. I have carefully scrutinized the pertinent language. (The attached copy of that language has been bracketed to delineate that portion to which I nm directing my comments.) The surcharge provision reads as follows: and such applicant establishes surcharges which will insure that each industrial user will pay its proportionate share on the basis of volume, strength and other relevant factors, . . . and surcharges . . ." I feel that this language may be practical in some jurisdictions, but may be impractical or insufficient in others. Mandating language which might be better left to the regulations of the Administrator of the Environmental Protection Agency may render the Administrator's task much more difficult. It is possible that the Administrator would wish to measure the discharge of effluent by industrial users by means of sewage meters. As to sewage meters, see below. ¶II'herefore, I submit that the language might best be eliminated. PAGENO="0028" 22 SEWAGE .METERING I wish to comment on the practicality of sewage metering, and in my opinion. it is not practical. I have contacted Norman H. Nosenchuck, Engineer, Municipal Construction' Division, E.P.A.; John D. Parkhurst, Chief Engineer and General Manager, County Sanitation Districts of Los Angeles County; William Becker, President, Controlled Equipment Companies of Baltimore, Maryland, and Nick DeStefano, Sales Department, BIF Company, Rhode Island, and am informed that there are no sewage meters being manufactured for residential users. The only sewage meters presently available are designs for the use of private industry and sanita- tion companies. The smallest (3 inch) closed pipe sewage meter for industrial purposes which we know of costs $5,000.00 to purchase and several hundred dollars to install. Applying these figures to the needs of Los Angeles County alone, where 1,200.000 such meters would be required (not including the vast majority of the City of Los Angeles) the total cost (assuming a cost of only $5,000 per meter) would be $6 billiom not including the cost of installation. It is doubtful that a 3 inch meter would be large enough. I have been in- formed that they do not perform satisfactorily because they clog. It should be noted that a standard domestic sew-er connection in the Los Angeles area has a 4 inch diameter. This would require at least a 4 inch meter which would be more expensive. Sewage meter manufacturers also pointed out that sewage flow from domestic sources is both low in volume and intermittent and therefore would require a holding tank to build up sufficient pressure to w-ork the meter. Such tanks would be an additional expense. Experts state that monitoring sewage is not cost effective on discharges of less than 50,000 gallons per day. Finally, I have learned that the $2 million estimated annual cost of handling an accounting system in Los Angeles County (cited in my testimony) to provide the requisite "user charge" has now been revised to nearly $5 million. In conclusion, a sewage meter for residential use is presently not available. If one were available, its cost like the cost of the complex accounting system necessary in Los Angeles County would simply be prohibitive. Thank you again, and I would appreciate having this letter made a part of my testimony. Very truly yours, GEORGE B. DANIELSON, Member of Congress. Mr. DANl~LSox. I would like permission to submit for the record a resolution by the California Senate-Senate Joint Resolution No. 1 of this year-which supports my program; Resolution No. 110 of the California Association of Sanitation Agencies. which does the same; and I would like to lodge with the committee-I do not want to burden the record, but I have another statement here from the Water Pollu- tion Control Federation. dated March 4. 1975. setting forth a good deal of the statistical data which supports this program. Mr. ROBERTS. Without objection, these items will be part of the record. [The items referred to follow:] RESOLUTION No. 110 N.S.-RESOLUTION OF THE CALIFORNIA ASSOCIATION OF SANITATION AGENCIES Relative to the use of ad valorem taxes as a source of revenue for operation and maintenance of waste water treatment facilities. Whereas, Section 204 of the Federal Water Pollution Control Act Amendments of 1972 provides, in part, as follows: (b) (1) . . . that the applicant (A) has adopted or will adopt a system of charges to assure that each recipient of waste treatment services within the applicant's jurisdiction, as determined by the administrator, will nay its nronor- tionate share of the costs of operation `and maintenance (inc1udin~ replacement) of any waste treatment services provided by the applicant . , .", and, PAGENO="0029" 23 ~Whereas, the Environmental Protection Agency has interpreted said prOvision' of the Act as allOwing ad valorem taxes as a basis for a user charge system as required in the Act ; and, Whereas, the General Accounting Office has, however, ruled that ad valorein taxes are not allowable as a basis for a user charge system to meet said provisions of the Act; and, Whereas, the members of the California Association of Sanitation Agencies, serving the sewer needs of more thantwo-thirds of California's population, have heretofore demonstrated their ability to finance their activities and distribute costs of said activities equitably among their users, resulting in an efficient and cost-effective program of wastewater quality control; and, Whereas, said program of wastewater quality control has heretofore been, for the most part, supported for capital improvements and expansion and `operation and maintenance of sewerage facilities by ad valorem taxes; and, Whereas, implementation of a direct user charge would not be cost~effective, and would significantly add to the various agencies' operating costs, some by as much as 25%, thus placing an additional burden on all users; and, Whereas, the California Legislature has memorialized the President and Con- gress by the passage of Senate Joint Resolution No. 1 to amend Public Law 92-500 to permit the use of ad valorem taxes as one possible source of revenue for the operation and maintenance of waste water treatment facilities; and, Whereas, Congressman Danielson has sponsored a bill known as HR 2183 which is a bill to amend Section 204 of the Federal Water Pollution Control Act to authorize the use of ad valorem taxes to satisfy the user charge system require- ment under prescribed conditions; now, therefore, be it Resolved, That the California Association of Sanitation Agencies hereby calls upon the United States Congress to adopt legislation such as HR 2183 which would permit agencies to use ad valorem taxes as one of several sources of revenue for user charge system; and be it further Resolved, That this Association urges all members of the Association to adopt resolutions endorsing the adoption of HR 2183 and to request the support of this legislation by the California delegation. Adopted this 23rd day of August, 1975, at the Twentieth Annual Work Con- ference by a unanimous vote of the members present. Attest: GAIL H. STANTON, Secretary. SENATE JOINT RESOLUTION No. 1 RESOLUTION CHAPTER 42 Senate Joint Resolution No. 1-Relative to the use of ad valorem taxes as a source of revenue for operation and maintenance of waste water treatment facilities. [Filed with Secretary of State May 20, 1975] LEGISLATIVE COtNSEL'S DIGEST SJR 1, Cusanovich. Ad valorem taxes. Memorializes the President and the Congress of the United States to amend Public Law 92-500 to permit the use of ad valorem taxes as one possible source of revenue for `the operation and maintenance of waste water treatment facilities. Whereas, Legal counsel to the U.S. Comptroller General has interpreted the user charge requirements of Section 204(b) (1) of Public Law 92-500 in such a manner as to preclude the use of ad valorem taxes as a source of revenue for operation and maintenance of waste water treatment facilities; and Whereas, The U.S. Environmental Protection Agency has instructed its regional offices to initiate steps to withdraw federal grant assistance from any local agency in nonconformance with this section; and ` , Whereas, The elimination of ad valorem taxes as one of several possible sources of revenue will needlessly and drastically restrict the financial operations of many local agencies; now, therefore, be it Resolved by the Senate and Assembly of the State of California, jointly, That the Legislature of the State of California. memorializes the President and the PAGENO="0030" 24 Congress of the TJnited States to amend Public Law 92-500 to permit the use of ad valorem taxes as one possible source of revenue for the operation and main- tenance of waste water treatment facilities; and be it further Resolved, That the Secretary of the Senate transmit copies of this resolution to the President and Vice President of the United States, to the Speaker of the House of Representatives, and to each Senator and Representative from Cali- fornia in the Congress of the United States. WATER POLLUTION CONTROL FEDERATION, WasMngton, D.C., March 4, 1975. Mr. ROBERT. KUSSMAN, U.S. EPA, M~S't.SW., Washington, D.C. DEAR BOB: Here is some very "soft" data on the nationwide use of ad valorein tax systems for funding the operation and maintenance of sewage treatment services. Nevertheless, despite the data's shortcomings, it does point up the pervasiveness of the problem. The following breakdown by States gives some feel for the matter. Use of AVT either solely or in combination of O&M 27 Not used~ 8 Unlikely Uncertain 3 No reply We expect to send this information out to a large review list, including AMSA and ASWICPA, to solicit a critical appraisal of the data. We hope the attachments prove of some value in the upcoming hearings with Senator Muskie. If the Federation can be of further assistance, please do not hesitate to contact us. Sincerely, W. LEE RAWLS, Manager of Public Affairs. Alaba'ina.-No. Alaska-Anchorage, Cordova, Fairbanks, Haines, Juneau-Douglas, Kena: Soldotna, Ketchikan, Nome, Palmer, Petersburg, Seward, Sitka, Skagway, Valdez~ Wrangel (16). Arizona.-95% use AVT. example: Phoenix, Tucson., Arkansas.-No reply. Calif ornia.-Sanitary Districts-173 use pure ad valorem tax for O&M (pure AVT); 165 use combination of AVT and user charge for O&M (combo) ; 8 user charge. Cities: example: LA, San Diego, San Francisco, Oakland (+75% of towns in Bay area), and small towns such as Oxnard. Some small towns use a flat fee which could cause problems (example: çllendale). Uolorado.-Denver metro-21 members. 7 on pure ad valorem. 4 on combo=11 (Alameda. Applewood, Bancroft, Berkeley, Crestview, East Lakewood, Highland Park, North Pecos, Northeast Lakewood, Pleasant View, Westridge). Denver City and County (1 of Denver metros 21 members)-while having a service charge, has 39 connector districts. 22 pure AVT, 10 on combo, 7 on service charge. Example of pyramid and cross-jurisdictional lines. For Denver metro to be eligible for a grant, they have to be able to reach down into Denver cities connector districts and force them to change; something they have no legal power to do. Connecticnt.-160 of 169 towns in Connecticut use AVT. example: Hartford. D elaware.-No reply. District of Colnmbia.-No reply. Fiorida.-Large cities have switched over to user charges to get grants. Some small towns may have. Unlikely. PAGENO="0031" 25 Georgia.-AVT used, predominantly for capital. Uncertain if used for O&M. Hawaii.-A11 4 counties use AVT. Idaho.-Limited use of AVT. Some use combo involving O&M: examples: South Fork, Northwest Boise, S.D., Bench S.D., Sun Valley. State law requires ad valorem as a back up if service charges deficient. Fear that in poor areas a."pure'~ service charge would be inadequate. Indiana.-Of 9 S.D.'s, all use combo. 4 (Hammond, Gary, East Chicago, Rich- mond) would require legislative changes to switch over. Industry presently paying disproportionate share. User charge would mean higher rates. Illinois.-All S.D.'s use AVT, required bY state law (example M.S.D. Chicago). Approximately 90%: of cities also use AVT. Kansas.-250 S.D., +300 cities use AVT. (for about $5.5'mil in O&M costs). Kentueky.-Not used, except Lexington. Louisiana.-Al1 parishes use AVT for O&M (Plaquemines parish rather than changing over is going to build their own facilities). Maine.-? (Belfast). Maryland.-No reply. Massachusetts.-90% of cities or AVT or some combo (examples: Greater Lawrence, Webster, Maribore, Walpole). Some larger cities with large tax exempt properties have gone to service charge. Mic7z~igan.-AVT not used for O&M (poss. exception: Choboygan). Minnesota.-AVT used in some iron range communities and possibly Minne- apolis-St. Paul. Mississippi.-No reply. Missouri .-Many combo, uncertain whether used for O&M. Possibly St~ Louis. Montana.-Widespread use of AVT for O&M, especially small towns. Nebraska.-Possible use in Omaha, and likelihood that some small towns. supplement flat fees with some form of taxes. Nevada.-11 examples, (including Crystal Bay, Sun Valley, Indian Hill,. Kingsberry, etc.). New Hampshire.-Some, example: Lebanon. New Jersey.-Combos for O&M used by Ewing. Lawrence, Hopewell. Possible use of "pure" in older, larger cities of Camden, Newark, Trenton, Jersey City.. New Mea~ico.-Not used for O&M. New York.-Scattered throughout State. Example: West Chester County,. Syracuse. North Carolina.-400 of approx. 412 cities use AVT for O&M. North Dakota.-Unlikely AVG used for O&M. Ohio.-AVT not used for O&M~ Oklahoma.-No reply. Oregom.-Unlikely. Pennsylvania.-Only 1 example given, Sharon. Rhode Island.-Only 1 example given, Warren. South Ua'rolina.-Has both pure AVT, and combos. Examples of pure AVT: Wade Hampton, St. Andrews, Spartanburg, Anderson, Greenville, Mauldin,, Pickens, Seneca, Walhala, Westminister, Simpsonville, Fountain Inn. South Dakota-Aberdeen and Rapid City use AVT, `but are switching over. State law requires ad valorem back up. Many small towns charge flat fees. Tennessee-Not used. Tea,as.-Limited problem. Used backdoor to prop up service charges. Utah.-Combos; for O&M, example Ogden, Provo, Salt Lake, Logan, Bountiful.. Vermont.-No reply. Virgiivia.-Not used. Washington-Not used for O&M. W. Virginia-Not used for O&M. Wisconsin.-S0 of 400 cities (20%) use pure AVT. Mostly older cities; Mil- waukee, Greenbay, Superior, Ashland, Warsaw, Rothchild. Milwaukee consid- ering abandoning to ease burden on industry. Canada-Combos & pure AVP. Federal financing never predicated on type of local financing. . PAGENO="0032" 26 TABLE 1.-AD -VALOREM Combo for Combo O.&M. Alabama (not used) Alaska X Arizona___.. X Aikansas No reply California X X X. Colorado X X X. Connecticut X (?) (?) Delaware No reply District of Columbia Florida (unlikely) Georgia Uncertain Hawaii X Idaho X X. Indiana X X. Illinois x Iowa Not used Kansas X Kentucky-Not used, except Lexington, sole exception. Louisiana X Maine ? (Belfast) Maryland No reply Massachusetts X X Michigan Not used (possible exception- Choboygan). Minnesota X Mississippi No reply Missouri X Possibly. Montana X Nebraska Uncertain Nevada X New Hampshire X New Jersey X (possible) X New Mexico Not used for 0. & M New York X X X. North Carolina X North Dakota Unlikely Ohio Not used for 0. & M Oklahoma No reply Oregon Unlikely Pennsylvania Only 1 example given: Sharon_ Rhode Island Only 1 example given: Warren~ South Carolina X X X. South Dakota X (but switching over) Tennessee Not used Texas X (limited problem) Utah Vermont No reply Virginia Not used Washington do West Virginia do Wisconsin_ X PuI3LIc LAW 92-500-CoNSTRUCTION GRANT PROGRAM ~S~tate funds applied to eligible project costs-percent (becomes part of 25 percent $tate/local share) Region I: PerceUt Connecticut 15. Maine 15. Massachusetts 15. New Hampshire 20. Rhode Island 15.' Vermont 15. Region II: New Jersey 15. New York 12.5. Puerto Rico 25.2 Virgin Islands 25.2 See footnotes at end of table. PAGENO="0033" 27 State funds applied to eligible project costs-percent (becomes part of 25 percent State/local share)-Continued Region III: Percent Delaware 10. Maryland 12.5. Pennsylvania None. Virginia 5~3 West Virginia None. District of Columbia 25.2 Region IV: Alabama None. Florida None. Georgia None Kentucky None. Mi5SiSSippi 12.5. North Carolina 12.5. South Carolina None. Tennessee None. Region V: Illinois None. Indiana io. Michigan 5. Minnesota 15. Ohio --- None. Wisconsin 5-15.~ Region VI: Arkansas None. Louisiana None. New Mexico 12.5. Oklahoma None. Texas None. Region VII: Iowa None. Kansas None. Missouri 15. Nebraska 12.5. Region VIII: Colorado 5 Montana None. North Dakota None. South Dakota 5. Utah None. Wyoming None. Region IX: Arizona 5 California 12.5. Hawaii 10. Nevada - None. American Samoa 25.2 Trust Territory of Pacific Islands 25.2 Guam 25.2 Region X: Alaska 12.5. Idaho 15. Oregon None. Washington 15. 1 May decrease due to lack of funds. 2 Applicant same as State. Variable-State agency option. 63-192--76--------3 PAGENO="0034" 2S TABLE 2.-POPULATION AFFECTED BY AD VALOREM BASED SYSTEMS . State 1970 urban population Estimated percent population served by ad valorem Estimated population served by ad valorem Alaska Arizona Calilornia Connecticut Hawaii Indiana Illinois Kansas Louisiana Massachusetts Montana North Carolina South Carolina Utah Wisconsin Total 146, 000 1,409,000 18,136,000 2,345,000 639,000 3,372,000 9,230,000 1,485,000 2,406,000 4,810,000 371,000 2,285,000 1,232,000 851,000 2,910,000 100 95 90 95 100 50 90 50 50 50 50 90 50 80 50 146, 000 1,338,000 16, 322, 000 2,227,000 639,000 1,686,000 8,307,000 742,000 1,203,000 2,405,000 185,000 2,056,000 6113,080 680,080 1,455,000 40,007,000 Note: Total U.S. urban population (1970)-149,325,000. Total U.S. metropolitan population (1970)-139,413,000. Mr. DANIELSON. Thank you, Mr. Chairman. I believe in (~uittmg when you are ahead, so I thank you for your indulgence and hope we will bring about this justice quickly. Mr. ROBERTS. We are delighted and of the same opinion. Mr. CLAUSEN. Mr. Chairman, I just want to thank our distinguished colleague, Mr. Danielson, from the southern part of California, for making a very articulate prese1~tat1o1T to us, and it is gratifying to see that if you would read on page 4, lines 10 through 23, that is the language of the bill that we have. Mr. Roberts has alluded to this, and I think you will find this committee has been very responsive to the request from the gentleman from California. Mr. DANIELSON. I am so delighted that I cannot describe it. I detected a. question coming from New York, but I am not sure- Mr. ROBERTS. Mr. Chairman, any questions or comments? The CHAIRMAN. No. Mr. ROBERTS. Ms. Abzug. Ms. ABZUG. Yes; I have a question. I am going to listen very care- fully to the testimony on this section of the proposed bill before the committee, and the committee's proposal to change the existing provi- sion in the Federal Water Pollution Control Act, because I am not convinced either from your testimony that this provision will meet the i rposes and intent of the original section for individual user charges, and I want to know how you answer that question. Mr. DANIELSON. Well, I can~ Ms. ABZUG. You have not gotten the question yet. Mr. DANIELSON. I see. Ms. ABZUG. The question involved, is the incentive you see to reduce the waste flow by imposing on the user a tax, and I think that the ad valorern ta.x, even if restructured along the lines suggested in this piece of legislation that our chairman referred to, does not carry out that same purpose and intent. How do you answer that, Mr. Danielson? PAGENO="0035" 29 Mr. DANIELSON. Well, Ms. Abzug, I am not sure what will carry out the purpose of providing a financial incentive. I do not want to call it a sanction-with an intent to be a penalty or a tax to induce people to use less water, and thereby use less-create less effluent. A tax is a tax, however, and I believe-I know on our tax statements in California, there is an itemization as to what the tax is allocated to on the ad valorem tax bill, and. you have got so much for school taxes and so* much for various categories of education, and you are going to find right there a tax for sanitation districts, so many dollars, or such-and-such a percentage, translated into dollars. They list both as mills and as dollars. I can say this, and here certainly is an incentive, and I know the .gentlelady would not favor waste, but the estimate in Los Angeles County is that if they use sewage meters, we would have to install no less than 1,200,000 sewage meters in the area, whiëh lies outside the city of Los Angeles, to say nothing within the city of Los Angeles, or in the alternative spend many millions of dollars for the purpose of try- ing to work out a sophisticated accounting system, and all of that money, I submit-or most of it-would tend to be wasted at a time `we simply cannot afford to add more taxes. Ms. ABZUG. We are dealing with waste, and we are talking about different waste than you are talking about. We: are trying to talk about the waste loads. Mr. DANIELSON. That is correct. Ms. ABZUG. Let us try to keep that objective in mind. Now, what about the other areas of the country that have indeed adjusted to the user taxes? Mr. DANIELSON. Well, I find that less than half of them have. The State of New York, for example, I find is a mixed situation. Some areas within New York have, a special type of tax, and some use the ad valorem tax. The statement from the Water Pollution Control Federa- tion is that the use of the taxes is scattered throughout New Yoik State. I cannot tell you how many do. Twenty-seven States use the ad valorein tax. Out of 149,325,000 `people living in urban areas of the United States in 1970, 40,007,C00 were using `waste disposal taxes based on the ad valorem system. I am lodging with the committee this statement which is not my personal research, but it has been obtained for me and I hope the gentlelady-I am sure she will take a look at it and consider it.' Ms. ABZUG. Well, certainly. With the chairman's consent, your state- ment and everything appended to it should be put in the record at this. point. ` Mr. ROBERTS. It should be made a part of the file, not :the `record. Ms. ABZUG. Part of the file, Mr. Chairman. Mr. DANIELSON. The data here is, at least, very interesting. I cer- tainly favor cutting down on the creation of effluent. I might add that one of the incentives we have found in California which is essentially an arid State-dry State-is that our sanitation districts, by not being municipally owned but owned by special dis- tricts which cover larger areas, and are more efficient thereby, in their operations have created water reclamation plants. We reclaim a great deal of water and inject or percolate it back into the water supply system. PAGENO="0036" 30 The solids are dried and created into-changed into fertilizer and we are finding that by this kind of operation we are cutting down on a problem in a rather good manner, and I think that we should try not to create added expenses if we can possibly avoid it. Mr. ROBERTS. Are there questions on the last? If not, Mr. Danielson, thank you very much for opening this hearing. We appreciate very much your statement, sir. Our next witness, State Senator Harry McGuirk of Maryland, who is also representing the National Conference of State Legislators. Senator McGuirk, it is nice to have you before us. The full text of your prepared statement will appear in the record at this point, and if you can summarize, we will appreciate it. [The. statement referred to follows:] STATEMENT OF Hox. H~nn~ MCGUIRK, MARYLAND STATE SENATOR Members of the Subcommittee, as a Maryland State Senator, I have had a continuing interest in water pollution problems. I am chairman of the Maryland Legislative Council Subcommittee on Water Pollution, and chairman of the Senate Committee on Economic Affairs, which, as you know, have a significant reciprocating link with environmental matters. Before I begin, therefore, I want to thank you for this opportunity to testify on H.R. 9560 and other amendments to the Water Pollution Control Act on behalf of my state and the 7600-member National Conference of State Legislatures. The Intergovernmental Relations Committee, the policy-formulating body for the National Conference, has adopted a policy position dealing with several of the issues now before you, and I fully support its recommendations. A copy of the resolution is attached to my statement. While I would agree w-ith your Interim Staff Report of the Subcommittee on Investigation and Review that the time is not ripe for a major overhaul of P.L. 92-500, I would like to dispute the notion that adjustments this year should be limited to a little fine tuning. By now it should be clear that the Act is seriously deficient as a vehicle for the kind of environmental improvement for which it was designed. The construction grants program is far behind schedule, so far that the 1977 deadline for secondary treatment will have to extended. The National Com- mission on Water Quality suggests in its draft report that this extension prob- ably would have been necessary even without the $9 billion impoundment. The slow start itself underscores two more points: the goals of the Act are unrealistic, and its demands have been framed and executed to put procedures in the way of results. The past three years have seen a triumph of process over product. The construction grants programs in some states were brought to a standstill. Local grant applications had to be redone and done again to comply with a plethora of new regulations, many of them promulgated too late for smooth planning. State agencie.s found themselves mired in paperwork, to the point where many had to cut back monitoring activities. During the delays, construction costs ratched upward at 12 to 15 percent a year. This being so, it would be sensible, as the Investigation and Review Subcom- mittee staff suggests, to minimize amendments that would entail more regulatory requirements, since they could delay and disrupt the program even further. But the fact remains that P.L. 92-500 badly needs simplification and administrative flexibility. As it stands, the Act has been a long nightmare from which both its sul)~ects and its administrators have been trying to awaken. Part of the problem has been the derogation from one of the founding principles of the Act, that, in Section 101(b), "It is the policy of the Congress to recognize, preserve, and protect the primary responsibilities and rights of States to prevent, reduce, and eliminate pollution, to plan the development and use . . . of land * and water resources, and to consult with the Administrator in the exercise of his authority under this Act." Somehow this precept was lost in the early stages of the Act's implementation. EPA, at least at the highest level, has been more solicitous of state needs recently, but much. work needs to be done. Now-here is this need more crucial than in Section 208 planning. As the process is now- set up. the states are effectively frozen out of the areawide agencies' planning development. Section 208(b) (4) allow-s states *to assume part of the planning responsibilities to assure consistency with Section 303(e) plans, but major portions of the 208 plans-the identification of necessary treatment works, PAGENO="0037" 31 for example, and the regulation of sources-are left entirely to the areawide agencies. These important functions have to comport with state plans, both un- der Section 303 and under 208 non~designatcd area planning. Areawide plans also have to be consonant with each other in contiguous designated areas, so that different regulatory requirements do not skew regional development patterns. Yet there is presently no way to assure that state planning requirements are cranked into the areawide plan development process early enough to avert later conflicts and wasted effort. If states have no other input than to certify the final areawide plans as consistent with' state plans, local governments have no adequate assurance that their final product will be certifiable. In keeping with the principle of state primacy set forth in Section :101, then, I would strongly urge you to amend Section 208(b) (3) to require that plans be developed in con- sultation with the Governor or his designee. More than this, however, Section 208(f) (3) should also be amended to channel all 208 planning funds through a single state agency. State approval of area- wide planning grants would give states the needed measure of control over areawide plan development. This brings us to the question of which agency should get the funds, however, and we are forced to look at one of the major problems of P.L. 92-500: its lack of coordination. The Act sets up four planning programs: state program plans under Section 100; river basin plans under Section 303; areawide plans under Section 208; and, whenever Congress gets around to funding them, Level B water resources plans under Section 209. On a smaller scale, there are also facilities plans un- der Step I of the grant application process under Section 201. All these plans are supposed to be consistent with each other, and with the perniit programs under Section 402, but the Act lacks a ~coherent nexus relating them all in a meaningful way. Prograni responsibilities in the states are often fragmented among a number of agencies. In Maryland, Section 100 funds are divided be- tween two agencies, each of which does different planning and enforcement. No doubt the Act envisioned some kind of hierarchy in this process, but in too many cases, my state's included, things seem to go in circles. To help remedy this difficulty, I strongly recommend that all state planning programs be funded through a single agency designated by the Governor to be responsible for the state control strategy under Section 106. This would bring all the planning and implementation money under one roof, and the state would have a better means to coordinate and make them consistent with one another. There would, of course, be new orgaiiizational arrangements to work out- in approving grants for 208 areawide plans, for instance, the Section 100 agency would have to have the views of the state agency. for 208 planning in non-des- ignated areas-but `these arrangements should be left to the states to choose. Putting the money into one state authority would give them the impetus to get their houses in order. Beyond this, I have only two caveats to go with my recommendation. First, if 208 plans are to be funded through Section 106, for purposes of legislative his- tory it should be said that EPA ought to have some flexibility to adjust its state allocation formula to take into account the extent of each state's non-point source control problem, since this is not now reflected in the formula for 100 funds allocation. (For that matter, it would be helpful to provide a little more explicit guidance on what kind of non-point source control alternatives states will have to consider in preparing their implementation strategies. This `is a thorny problem all of us will have to confront down the road.) My second caveat is that under no circumstances should states be forced to divert any Section 106 money to 208 planning. The 106 grant should be earmarked to preclude that possibility. States have found themselves on the short end of the stick too often on program administration. A random sample of nine states last year found that in all but two, the total 106 grant scheduled for fiscal year 1975 was not enough to cover the increased costs necessary for the states to com- ply with all the requirements of the Act. The requirements themselves-the priority listings, need surveys, permits, in- ventories, impact assessments, public hearings, ad nauseum-have swamped the generally understaffed state agencies. The court rulings have of course contrib- uted, but the proliferation of paperwork has been nothing short of cripling. There weren't enough trained people to begin with, even for EPA, but the states have been especially hard put to woo the needed expertise. Their pollution con- trol agencies are short an estimated 3,400 positions, according to one Congres- sional report. PAGENO="0038" 32 ~WitIi their undermanned staffs, the states have had to find the wherewithal to inspect, monitor, assess, and cope with the blizzard of lists and reports. They haven't done it without sacrifices. Needs surveys alone have taken up 10 to 25 percent of their annual man-hours, and the short-circuits have come in the field. The Maryland Environmental Service has had to cut its inspection and monitor- ing activities substantially, and our state's experience has been by no means exceptional. Thus I would suggest that a $125 million annual authorization for Section 106 is the absolute minimum necessary for effective state programs. This will, I think, be enough to cover inflation and the additional court-ordered regulatory requirements. Perphaps this level should be increased another $25 million after a few years to adjust for additional inflation. Looking at state needs to carry out 208 planning, it strikes me that the $150 million authorization proposdd in this bill w-ould also be inadequate. EPA awarded grants totalling almost that much for 138 areawide agencies last year alone, and there are at least `23 grant applications still in the hopper. In addition, there are 244 Standard Metropolitan Statistical Areas (SMSA's) nationwide, most of which are likely to have "substantial water quality control problems" meeting Section 208 eligibility requii~ements for funding. Yet only 117 have been funded for 208 planning. Since we can expect more grant applications from SMSA's as w-ell as other areas in the future, chances are that the $150 `million authoriza- tion, even if fully appropriated, will not be enough to cover even area-wide plan- ning. now estimates that it w-ill cost about $5 million over the next three fiscal ~edera1 court order. The Maryland Environmental Service. w-hich will be responsible for this plan- aing. now estimates that it will cost about $5 mililon over the next three fiscal years. This comports with an unofficial estimate that $150 to $170 million will be neded over the same period nationwide. Accordingly, I would suggest that an additional authorization of at least $50 million a year would be required for an adequate job. Another problem is the need for funding continuity. If states are to be assured of an adequate federal conimitment to help them plan and develop programs, the authorizations under Section 2 of this bill should be extended more than two fiscal years. I would recommend an, extension to at least 1980. You will note that the National Conference of State Legislatures has recommended an exten- sion to 1983 for state program grants under Section 106, and I heartily concur. Section 213. allowing state certification to assume more responsibilities under the construction grant program, is certainly a step in the right direction. I think the more EPA responsibility that can be devolved to the states, the more ex- peditious the project evaluation process can be. There are, how-ever, a few- areas where language in this section can be improved. TTnder subsection (c). it w-ould be helpful to require the Administrator to ac)tify a state agency of deficiencies in the performance of its responsibilities, s~ecifying measures to correct them and allow adequate time (say, 120 days) for a remedy. This should predate the public hearing for the Administrator's determination on whether the state has failed to carry out its commitments. It seems both fair and administratively sound to give the state an opportunity to correct its problems before allow-ing EPA to step in. ~`u1)section (c) should also be amended to limit the Administrator's discretion to suspend approval of certification for all projects in a state. The Administrator should he allowed to suspend for all projects only if, on the basis of evidence adduced at the public hearing, he determines that the state's failure to meet its resi )onsil)ilities has been widespread. My third suggestion concerns EPA rules and regulations under subsection (f). On~ of the major obstacles to effective implementation of the Act has been its inflexibility, especially on procedure. It is one thing for the federal government to set goals and take measures to see that they are `achieved and maintained. But it is quite another to prescribe the process for compliance. States can and should he given more explicit guidance on what needs to be done, but they should he left to themselves to determine how best to do it. Consistent with this principle, which I think is implicit in Section 101 of the Act, I would suggest that there should be a second paragraph under subsection (f) to the effect that states may carry out their responsibilities under this section in a manner incon- sistent w-itlm any procedural rules and regulations under this subsection if, at the request of a Governor and after public hearings, the Administrator deter- PAGENO="0039" 33 mines that duly adopted state procedures will carry out the purposes of this section. Giving states more authority under the construction grant program should help expedite grant approvals, but the outlook is that few projects will be built in time to enable compliance with the 1977 deadlines for secondary treatment for publicly-owned treatment w-orks. Some kind of authority to grant extensions on a case-by-case basis is therefore essential if EPA and the courts are to be spared fruitless time- and resource-consuming enforcement actions. The mi- portant question here is: what are the conditions under which these extensions should be granted? I find the proposed answer in Section 9 of this bill somewhat disappointing. To begin, the first criterion under subsection (g) (1) (a) takes no account of good faith efforts to comply with the deadline; the Administrator has only to find that the necessary treatment works will not be on line by the appointed time. This effectively removes the stimulus for a community to do what it can to press ahead with its project. The blanket extension criterion would also play havoc with state NPDES permit programs. In Maryland, these permits were written to require compliance with Section 301 by the 1977 deadline, and the language in this bill would require our state to rewrite all permits for sources to be served by plants unfinished in time. Surely simple fairness and administrative economy dictate that the Administrator be required to extend compliance only where the delay in com- pletion of the necessary works is due to circumstances substantially beyond the community's control, such as strikes, material shortages, and lack of grant funds. The second criterion, under subsection (g) (1) (B), would set up what I take to be an unwarranted distinction between fresh and salt water discharges. I see no reason why a treatment plant dumping into a bay should be allowed any more time for compliance than a plant dumping into a river or lake. My third objection centers on the language in subsection (g) (2). Simply to set a July 1. 1982 limit on extensions will not insure compliance at the earliest date. The Administrator should be made to require compliance as expeditiously as practicable. Lastly, I think it imperative to put the burden of proof for any time modifica- tion not related to federal grant availability on the local government responsible for the works in question. Otherwise, industrial sources will have a ready-made argument for granting them more lenient treatment. Another area of concern for me is the reimbursement amendment in Section 5. I note that it would authorize an additional $350 million for reimbursement under Section 206 of the Act for projects on which construction was initiated between June 30, 1966. and July 1, 1973. Will this additional authorization be enough to satisfy all the claims? How was this figure arrived at? I am also afraid that the reimbursement process is in danger of becoming as slow as the construction grant approval process. Communities and states like Maryland who aggressively pursued plant construction with less federal assist- ance are entitled to prompt reimbursement, and should not be short-changed. I urge you to require the Administrator to process all reimbursement applications by a date certain. and pay approved amounts with interest. Having said this, I have no further problems with the bill, although we would like to study Section 12 and submit a statement for the record later. Section 4, allowing the use of ad valorem user charges is, I think, a necessary accommoda- tion to the many communities that have been assessing users according to prop- erty values. but I like the provision requiring industrial users to pay their proportionate shares. Eliminating tIme 30-day hearing requirement for toxic effluent standards under Section 307 also seems reasonable, as does the admin- istrative discretion to grant up to three years more time for compliance where compliance within a year is deemed technologically infeasible. Finally, Section 10, allowing biennial state reports under Section 305, will be a welcome relief to state agencies already burdened with too much paper. NATURAL RESOURCES FEDEBAL WATER POLLUTION CONTROL ACT The 1972 amendments to the Federal Water Pollution Control Act have en- countered serious administrative difficulties. Delays in federal funding for waste- water treatment works construction have made it impossible for some localities PAGENO="0040" 34 to meet the 1977-78 deadlines for water effluent limitations. Delays in the promul- gation of federal regulations have also contributed, and state pollution control agencies have lacked sufficient staff and federal funding for timely processing of project applications. Additionally, water pollution control planning and policy needs to be more fully integrated with planning and policy for solid waste management, land use, air quality management, and water resource conservation and development. State agencies need more federal technical assistance, and local governments will need an adequate supply of trained personnel for the operation and maintenance of completed treatment works. In 1974, the survey of state wastewater treatment construction needs estimated that some $350 billion worth of projects w-ould be required to cope with the nation's water quality programs. The U.S. Environmental Protection Agency has proposed several amendments to the Act to limit federal expenditures on individual projects, so that federal funding could be made available for a greater number of eligible works. In response to these proposals, and to other administrative difficulties arising from the Act's implementation, the Intergovernmental Relations Committee of the National Conference of State Legislatures recommends that: 1. Qualifying states should be delegated authority to administer major por- tions of the wastewater treatment construction grant program, including evalu- ation of alternative waste management techniques, project allowances for re- claiming or recycling of water, and control of infiltration, approval of projected plans, specifications, and estimates, determination of project priority, conform- ance w-ith applicable water quality plans, adequecy of operation, reserve capacity, and financial ability to pay the non-federal share of the cost of the project. States should also be delegated responsibility for evaluating the applicant's system of charges for the cost of project operation and maintenance, and the grantee's pro- vision for retaining sufficient project revenues for payment of non-federal costs and future project expansion. To pay for these additional state responsibilities, no less than two percent of each state~s annual construction grant allocation shall be reserved to fund state administrative costs. 2. The federal share of eligible project costs should not be reduced. Congress should increase funding for the wastewater treatment works construction grant program to at least $60 billiOn through 1983 to meet estimated needs for community compliance w-ith secondary treatment standards. 3. None of the treatment w-orks now eligible for federal construction grants should be restricted from eligibility under future project grant applications. 4. The present 1977-78 deadlines for the attainment of effluent limitations based on secondary or more stringent treatment should be extended no later than January 1, 1983, on a case-by-case basis taking into account the avail- ability of federal funds and good faith efforts to comply. Guidelines for such extensions should be developed in cooperation w-ith the states using state data to the maximum extent feasible. 5. Federal funding for reserve treatment capacity should be consistent with applicable state land use policies and programs. Determination of eligible costs should reflect economies of scale. 6. For projects to serve populations of 10,000 or less, grant applications for Steps 1 and 11, facilities planning and design, should be combined to minimize multiple applications for the same project. T. State program grants under Section 106 should be funded to the full extent of authorizations under the Act, and such authorizations should be extended to 1983 at levels reflecting inflation and the cost of additional state planning and regulatory requirements imposed since the enactment of the 1972 amendments. 8. Additional funds should be made available for the training and prepara- tion of persons for the operation and maintenance of treatment plants, and for added technical assistance to the states. 9. Adequate funding should be made available for the preparation of water resources river basin plans under Section 209. 10. Primary responsibility should be given to the states, under federal guide- lines, to determine the most effective means to coordinate water quality poli- cies and programs with those for the management of solid waste, land use, the coastal zone, air quality, and water resource conservation and development. PAGENO="0041" 35 TESTIMONY OF HON. HARRY ~. McGUIRK, MARYLAND STATE SENATOR, REPRESENTING NATIONAL CONFERENCE OF STATE LEGISLATORS Mr. McGrnRIc Mr. Roberts, members of the subcommittee, as a Maryland State senator, I have had a continuing interest in water pollution problems. I am chairman of the Maryland Legislative Council Subcommittee on Water Pollution, and chairman of the Senate Committee on Economic Affairs, which have a significant reciprocating link with environmental matters. Before I begin, there- fore, I want to thank you for this opportunity to testify on H.R. 9560 and other amendments to the Water Pollution Control Act on behalf of my State and the 7,600-member National Conference of State Legislatures. The Intergovernmental Relations Committee, the policy-formulat- ing body for the National Conference, has adopted a policy position dealing with several of the issues now before you, and I fully support its recommendations. A copy of the resolution is attached to my full statement which is submitted for the record. In essence, my statement describes in some detail Maryland's con- cern over the withering impact of the procedural requirements of the law and the regulations it has spawned. Not the least of these is the recent Corps of Engineers regulations implementing section 404 of the act. These regulations are prime examples of putting procedure over product and smacks directly of "big brother" control. We feel that this extension of Federal control is not warranted and I would submit for your consideration and record a full discussion of this important issue in a statement by Mr. Herbert M. Sachs, director of the Mary- land Water Resources Administration. Hopefully, the suggestions in Mr. Sachs' statement and my following remarks will aid in smoothing the administrative processes and assuring progress in reaching the water pollution control goals nationally. Specifically: Provide for the delegation of authority to qualified States to administer the key elements of the construction grant program. I feel that the Federal share of the eligible project costs should not be re- duced and that the grant program be funded through 1983. To assure program continuity, provide for expansion and extension of the State program grants under section 106 at a substantially increased funding rate. Specifically, I would suggest a $125 million annual authorization as the absolute minimum necessary to maintain effective State programs with increases in the future to adjust for additional inflation. Today, Maryland's share of the program grant funds has dwindled in actual purchasing power to the point where most program efforts have been severely curtailed and people in federally funded positions will have to be laid off starting fiscal year In keeping with the principle of State primacy set forth in section 101, I would strongly urge you to amend section 208(b) (3) to require that area-wide plans be developed with a strong State involvement. As presently set up, the States are effectively frozen out of the develop- ment process. if the States have no other input than to certify the PAGENO="0042" 36 final area-wide plans as consistent with State plans, local governments will have no adequate assurance that their final product will be certi- fiable. I urge you to strengthen the State's role by requiring all section 208 funding 1e controlled through a single State agency designated by the Governor. For nondesignated areas under section 208 for which the States are responsible, no funding is presei~tly available under section 106. In Maryland, the estimate for meetmg this responsibility is $5 million over the next 3 years, and this seems to be consistent with estimated national need of $150 to $170 million. I would suggest that an adch- tional $50 million a year be provided under section 208 for specific State support. Any extensions to the 1977 deadlme should be macIc on a case-by- case basis. Good faith efforts should be taken into account in making any assessment and that any extension should be considered only where completion cannot be accomplished clue to circumstances beyond the conmumity's control. Control schedules beyond 1977 should be keyed to the earliest possible completion date. In this connection, I specifically deplore any blanket extension of the deadline since this will play particular havoc with the State permit program for both immicipal and industrial clischargers. Having said this, I have no further problems with the bill, although we would like to study section 12 and submit a statement for the record later. Section 4. allowing the use of ad valorem user charges is, I think, a. necessary accommodation to the many communities that have been assessing users according to property values, but I like the provision reqmring industrial users to pay their proportionate shares. Eliminat- in~ the 30-day hearing requirement for toxic effluent standards under section 307.. also seems reasonable, as does the administrative discretion to grant up to .3 years more time for compliance where compliance within a year is deemed teclmologicafly infeasible. Finally, section 10, allowin~ biennial State reports under section 305, will be a. welcome relief to State agencies already burdened with too much paper. Thank you very much. Mr. ROBERTS. Thank you very much for a very concise resumé of your statement and for a very fine statement. I ou suggest that. section 208 should be amended to require that plans be developed in consultation with the Governor-present law requires that the Governor certify a completed plan. What provisions in the statute in our opimon prohibit the Governor from establishing mini - mum criteria, for a completed plan since he has to certify a completed plan? Mr. McGunui. I think in many of the States in the political sub- divisions . you have local authority which they are very jealous of, and they like to bring this in their own planning process. If the law states that the area that. the States should be responsible with is the certification of them until there is a recommendation or change from the Federal level. I think that many of the counties would be~a little hesitant to join iiito giving this State more authority than that of certification. However, for effectiveness of this bill I see that too often the cer~ tification being the end process is one where if the State has the au- PAGENO="0043" 37 thority by virtue of utilizing some of the funds as well, it would be a welcome process in our State. Mr. ROBERTS. Thank you, sir. The gentleman from California, Mr. Clausen. Mr. CLAtYSEN. Senator, you make reference to the various steps to- ward the advancement of the project which we recognize, of course, as preplanning and designing and engineering and construction, and I believe that you made the suggestion that preplanmng and the de- sign and engineering possibly should be combined. Now, we have been giving some consideration to the possibility of combining the design and engineering and construction in a category where we could better coordinate the overall implementation. I am wondering if you could give us the benefit of your thinking on this as contrasted with the combination of preplanning with the design and engineering. Mr. MGGmRK. I would think one of the problems that comes about in any program, not just the water pollution, is the following through of some form of continuity, and I think what has developed in the wat~r pollution is that the basis for . that continuity was established, and then because of certain happenings such as the impounding of funds,. the various restrictiveness of programs, the quickness of impli- cation by EPA really began to startle some of the people who felt this would be a continuing process and with the inflation rate going to 12 to 15, it also meant you had to curtail a great many projects, and I think that what you saw was really a form of hysteria that developed along the line and because there was not this continuity of planning, you could not hav,e the areas where you would develop the restraint, a.nd I think that in ordei~ to. do it, wherever there is appropriation of funding, and that funding is broken back, then you have to make sure that the method of moving it along is not affected by each individual decision, and I would hope that a continuous plan right through the process would be welcome in every State. Mr. ROBERTS. Mr. Edgar, do ~ou have any questions? Mr. EDGAR. Mr. Chairman, I would just like to make a brief state- ment and to thank the Senator for his testimony. I apologize for the fact that there are not more here to discuss this very important issue. One of our problems is that we are on so many subcommittees which schedule meetmgs on important issues at the same time. It makes it ~mnossible. for us to meet all of our commitments. Mr. McG1~IRIc. I just would like to say we only have 47 Members in our State. We also have, all of the responsibilities, and we find our- selves in the same position, but `I know that the statements are being submitted and will be a matter of record and will be react and I am sure that some information will be gleaned from that, that I hope will be helpful to the committee. Mr. EDGAR. Thank you. Mr. Chairman. Mr. ROBERTS. Senator, we appreciate very much your appearance here. We appreciate the job that you are doing in Maryland. Thank you very much. Our next witness is Mr. E. J.. Newbould, accompanied by Mr~ Rob- ert Canham. Mr. Newbould is chairman, and Mr. Canham is executive secretary, of the Water Pollution Control Federation. We are pleased to have ~roij. PAGENO="0044" 38 TESTIMONY OF E. J. NEWBOULD, CHAIRMAN, GOVERNMENT AFFAIRS COMMITTEE, WATER POLLUTION CONTROL FEDERA- TION, ACCOMPANIED BY ROBERT A. CANHAM, EXECUTIVE SECRETARY, WPCF Mr. NEWBOULD. Thank you very much, Mr. Chairman. %\Te will read most of the statement because there have been correc- tions to the text which we submitted. My nanie is E. J. Newbould, Washington representative for the National Clay Pipe Institute. I am also chairman of the Government Affairs Committee of the Water Pollution Control Federation, and in that capacity I appear today. \\Te do appreciate the opportunity to present our views on H.R. 9650. Present with me is Mr. Robert A. Canham. executive secretary of the Water Pollution Control Federation. Very briefly: The federation was established in 1928 to serve the needs of the technical community in this field. Representing some 25,000 full-time water pollution control specialists, mostly profes- sional. the federation's membership spans the spectrum from engineers -and scientists to lawyers. and from Federal. State, and local govern- ment officials, to industrial technicians and plant operators. Our mem- bers participate in the activities of the federation, moreover, through membership in autonomous member associations located throughout the United States. Many of our members took an active role during the developmental stages of Public Law 92-500. Despite their concern over the complex- ity of the statute, they worked hard during the past 3 years to help make the law, with its stringent requirements. deadlines, and goals, an effective instrument for the purpose of cleaning the Nation's streams. Understandably, they found this experience frustrating at times and voiced disapproval over the way in which the new law was being administered. To better gage the nature and extent of their concerns, the fed~ra- tion sponsored a series of 10 regional workshops during 1972 and 1973 to Provide them with an opportunity to express their views and recommend ways to improve the law. WTe are very pleased with the subcommittee's work in developing this new bill because many of these recothmendations are addressed in our green pamphlet which you have before you. Now. turning to some of the specifics of the bill, we appreciate the committee's continued interest, as evidenced by sections 2 (a), (b), and (d) of the bill. in authorizations relating to programs designed to pro- vide an adequate supply of trained personnel to design, operate, and maintain the waste-water treatment facilities we are planning for the future. ~Te, therefore, support the authorization level contained in 9560, and urge increased appropriations for this program so that the pro- gram does not die for want of administrative support. We also support sections 2(e) and 6 of the bill which relate to the section 208 areawide waste treatment. management planning effort. Taken together. these sections of the bill would provide $337.5 million in contract authority for fiscal 1976 and 1977 to cover 100 percent of PAGENO="0045" 39 the costs. The federation is continually stressing the need to approach the extensive planning requirements of sections 201, 208, and 303 of the act as a rational and coherent entity. Although EPA has made an effort and continues to try to approach it in this way, we believe addi- tional clarification and additional funding are sorely needed for this PuiP0s0. This is particularly true with respect to the 208 program since~ despite its importance to the entire effqrt, the program is just begin- ning to take shape. EPA's earlier decision to allow this program to start slowly argues strongly for the enactment of the ~ con- tained in H.R. 9560. Again, we believe EPA's request for $53 million in direct apprppriations. for the 208 program is inadequate. Furthermore, we believe it would be inequitable to fund the remain- ing designated agencies at less than 100 percent Federal support con- sidering the pace at which the program was implemented. Again, sections 2(c) and 6 of H.R. 9560, we he.reby endorse. A major Problem concerns the ad valorem tax situation which I think has been pretty well covered by Mr. Danielson and in discus- sion by others. ~\Te do support very strongly the introduction of the authority of local communities to use ad valorem and other methods which they should be entitled to use. If I may just add one. statistic that Mr. Danielson did not have at his fingertips for the Los Angeles County sanitation districts. They estimated that to introduce the requirements if they cannot use the ad valorem, would cost them initially a capital investment of $23 million, and it would cost them $5 million every year to keep it up. This is tiie same with Denver and Indianapolis and many other cities through- out the country, and this does not clean the water. Section 8 perhaps is the most significant feature of the proposed legislation. It would authorize the transfer of a large measure of the authority for the construction grants program to the States. One of our own legislative proposals calls for the immediate congressional delegation of all title II responsibilities to the States, subject to Fed- eral audit, to insure that the requirements of the law are faithfully carried out. The delegation program envisioned by section 8 of the bill repre- sents a middle ground between our recommendation and the existing situation because it requires EPA approval of State programs prior to delegation. Naturally, we favor our own approach, but we are very Pleased that the subcommittee has addressed this and has introdluced this, and we support it thoroughly. We do not think, however, that this is going to be a panacea and that there will be no potential drawbacks, and I am sure von dlo not also. WTe are concerned about the possibility of iisin~ the precedent of a percentage of the construction grant money. 1-lopefully. it will be considered a withdrawal as a one-time exception. Assuming the appropriateness of using the funds. the requirement for a long-term Federal funding commitment appears necessary to us to encourage the States to continue. We believe a favorable con~idera- tion of EPA's p1mm which they have just subniitted to 0MB for $42 billion for a period through fiscal 1982, is the way to co. and again, we have supported that in our pamphlet. PAGENO="0046" 40 Mr. Chairman, I am going to speed up our presentation because we ~have covered most of these items in our statement, and I do not think we can do better than by covering the highlights of the next few points. We believe it is iiecessarv to provide administrative relief not only to municipalities but also to industrial clischargers unable to meet the 1977 effluent limitations for toxic standards, provided such dischargers demonstrate ~oocl faith to the Administrator and to his satisfaction. We also believe it would be appropriate and desirable to extend the December 31, 1974, deadline which is past, obviously, and in a sense is a legal weight hanging over industrial disehargers, in particular, and we recommend that it be extended. Sections 9 and 11, we also support, but we would again like to say that we do support relief for industrial dischargers as well as for municipal dischargers. With respect to the language of secton 9, we would recommend more specificity either in the legislative history or in the bill itself because we feel that the Administrator should be given some direction in terms of the factors which he should consider in granting relief to municipalities. In conclusion, we believe that the issues deserve, as Mr. Clausen has already said prompt and favorable con~ideration by the Congress in- asmuch as they focus on problem areas impacting on the short-term success of the water pollution control program. Other, more substantive issues will have to be* addressed at a later time to insure long-range success. And in this regard, the federation plans to focus its attention on the National Commission on Water Quality report. We believe that the technical and scientific expertise of many of our members will prove invaluable to this review, and we look forward to sharing our views and recommendations with the Congress and others. Thank you very much, Mr. Chairman, for the opportunity to present this statement. Mr. ROBERTS. Thank you, Mr. Newbould, for your presentation. What specific criteria would you recommend the Administrator take into account when determining whether municipalities can complete construction by ~July 1, 1977? Mr. NEWBOULD. Well, there are a number of things, Mr. Chairman, that we felt might be desirable to enumerate. Such things as, for exam- ple~ legal delays which might be introduced, labor disputes, equipment shortages, contractual difficulties, and things of this nature. We do not necessarily insist that all of these ought to be stated in the legislation, but we feel that it would be helpful to many if they were in the legis- I ative history. Mr. ROBERTS. Would you recommend this criteria be used nationally or on a case-by-case basis ~ Mr. NEWBOULD. I believe it should still be on a case-by-case basis as is the intent, I believe, of the legislation. Mr. ROBERTS. What determination would you recommend be made in assessing whether municipal ocean discharges should be permitted to receive an extension of the 1977 requirement for secondary treatment? Mr. NEWBOULD. %\Te kind of rushed over that feature in oui~ sta1~e- ment and we are very interested in that, but we did not comment in detail on that particular point. We feel that there should be an oppor- PAGENO="0047" 41 tunity for those who are in this situation to consider primary treat- ment with special ~jffusers_anything which will be in long range a cost beneficial arrangement so that we are not expending our funds for an arbitrary designation of secondary treatment. Mr. ROBERTS. Let me say I agree with you. Last month I was ou~ in Hawaii looking over their problems of ocean discharge, and they were discharging in 240 feet of water, but right on the 100 fathom lme which went straight down. The next island the effluent would have been on is New Zealand and I do not believe Hawaii needed secondary or tertiary treatment. Mi. INEWBOULD. Right. Mr. ROBERTS. How would you assess "good faith" effects of dis- chargers to meet toxic effluent standards? Mr. \`EWBOULD. I do not know that that lends itself readily to some specific formula. Mr. Chairman. I am sure that I think it is appro- piiate. perhaps for all of us, to start working on that particular point~ but I really cannot answer the the question, at this time. Mr. ROBERTS. Thank you, Mr. Newbould. The ~entieman from California. Mr. CLAUSEX. Mr. Chairman, there are a number of questions that come to my mind, having reviewed the statement, and I think it would be helpful again if I were to submit some questions to him and ask that he respond to this point in the record, and over and above that which I would ProPound to him now. Mr. ROBERTS. Thank you. Mr. CLAUSEX. First of of all, you make reference to the support for a larger Federal commitment dealing with section 2 (c) of the bilL and you indicate further that the funding level of $40 million would be adequate. My concern here is how this relates to tl.ue basic thrust of our total effort to maximize involvement with the State in their commitment toward implementation. Do you believe with an expanded funding commitment at the Fed- eral level, we may run the risk of a lesser funding commitment at the State level? Could you comment on that? Mr. NEWBOTJLD. Well, I am sure that it is `a problem. I am sure it is a ~~ossible result for some of the States. I do not think that we feel that it wonlcl he universally that way. Our opinion would be that most of the States just like most of the people who are interested in cleaning up the waters will be a fair and honest job of it. So that, we do not necessarily feel it would be a widespread reduction of this State effort. Mr. CLATTSEX. I make this point simply because, as you know, we have more than our share of financial problems here. As a `matter of fact, I think the Federal Government in some ways is worse. off than some of the States, and that is one of the reasons II~ asked the question. Well, I think I will reserve the time so that I can submit questions. Mr. ROBERTS. Does the gentlewoman from New York have q~uestions? Ms. ABZUG. I would like to know on what basis you suo'gest that the granting of permits should be shifted from th~ Fede~al to the State level? Mr. NEWBOULD. We made a study throughout the Nation in which all of the people who are involved in this program gave us their under- PAGENO="0048" 42 standing that they could handle the program in many of the States, and did iiot need the Federal control of that program. We are not suggesting for an instant that every State would be, at this time, in a position to do that, but we do feel that through the studies that were macic in the workshops that States would eventually come to the point where they could handle it. Ms. ABZUG. That is eventually, but we have an act in effect, and we are trying to deal with the question of cleaning up the waters. Why should be change the jurisdiction when they are not geared up to handle it, at this time? Mr. NEWBOULD. We.ll. we did say that for those who have applied- and. Mr. Canham suggested I had misled you in my previous state- ment. I did not think I had but perhaps I had. We realize there are some States that are not capable of doing it. At least. that was our understanding from EPA and others. One would hope that by the introduction of additional funds in 106, and acidi- tional. training of their personnel, they would be able to step into the program as they develop. It just does not. seem necessary to preclude them from doing so if they are at the present time capable of doing it as are many of the States, such as New York, California, and others. Ms. ABZUG. I would like to get some clarity as to what your recoin- mendations are with respect to that. I am not too clear from reading or from hearing ou now. and are you proposing that there be-that the permit program be shifted from federally issued permits to the State, or what combination are ou proposing? Mr. L\Ew~BoULD. We are proposing that on request the State would be granted the authority to conduct the permit program. Ms. AuzuG. 1-lave you checked that out with EPA? iDo they like that. idea? Mr. NEWBOULD. I have not the foggiest notion if they do or not. Ms. ABZUG. You do talk to them, though? Mr. NEWBOULD. We certainly do. Ms. ABZUG. Do you not think when you are making such a sub- stantial program which affects EPA you ought to have some discus- s~on with them about whether they think that it makes sense, or per- haps it. might or might not? Mr. NEWBOULD. May be. Ms. Anzuo, Particularly if you do iiot have the foggiest notion about what they are thinking. Mr. NEWBOULD. I said I did not. Ms. Abzug. Perhaps the federation staff could straighten me out on that. Mr. CAXI-IAM. The EPA has already certified some 25 States to ad~mn~ster their permit program. Some of this emphasis here should be, I think, more toward the certification of the construction grant proglym. We believe there is a full understanding with EPA on the permit aspect of the law but certification of title II of the law is the crux of the matter here, and our feeling is that if a State indicates that it is capable of carrying' on this function it ought to be given this right to do it with a followul) audit later by the Administrator. If the Administrator feels that after testing the performance there are deficiencies then there should be some recourse to negotiate with him. PAGENO="0049" 43 Ms. ABZUG. I see. I have no further questions, at this time, Mr. Chairman. I thank you. Mr. ROBERTS. Mr. Newbould, again, we thank you for appearing here and we appreciate the statement and the. generally basic support of the bill. Mr. NEWBOULD. Yes, sir, we certainly do. Thank you very much. Mr. CLAUSEX. I know you mentioned an estimate of the cost for Los Angeles County for the initial investment to establish the user charge system based upon water utility meters. You came up with, I think, about $23 million cost with about $5 million annual cost over present cost for the implementation of this. Now, do you have a similar figure for some of the other major cities, such as New York or Philadelphia? Mr. NEWBOULD. The other two examples we gave were Denver and Indianapolis, which we had at hand, but I am sure we do have a lot of other figures. Mr. CLAUSEX. Could you provide them for the record? Mr. N1~wBouID. Yes. Mr. ROBERTS. I share your interest, particularly, for New York. Mr. C.xxii~r. This cost of $23 million was not for Los Angeles County. It was for the Sanitation District of Los Angeles County. Mr. CLAUSEN. Yes, I see district of Los Angeles County. Could you provide that for comparable major cities? Mr. CANn~I. Yes. Mr. ROBERTS. Why do we not put that in our questions to him. Thank you very much, gentlemen. [Responses received from the Water Pollution Control Federation follow:] WATER POLLLTTION CONTROL FEDERATION RESPONSES TO QUESTIONS QUESTIONS SUBMITTED BY REPRESENTATIVE CLAUSEN Question. 1. Vour comment on joint municipal-industrial sewage systems is most appropriate. What will be required of a company which in good faith plans on participating in such a system which will not be available on .July 1, 1977? How should we address this problem? How do pretreatment standards fit into time i)jctule-ea1~ we perhaps require that ijretreatmnent standards be met by July 1, 1977 even if the treatment works isn't available? What Should be re- ouired in the way of a showing that the industry will participate in a mumcipal system? Response. The Federation believes that industrial plants, like some munici- palities, after making good faith efforts, will I)e unable to meet all time conditions of the Act. To promlde relief for these plants, it is necessary to establish a procedure by which the deadline could be extended on a case-l)y-case basis with the applying industrial discharger bearing the full burden of proof as to the good faith nature of his efforts. One situation for which such administrative relief is apparent is in cases where an industrial discharger in good faith plans on tying mnto a municipal system which will not be available by July 1, 1977. Under existing statutory authority, such a discharger would be required to forego the option of par- ticipating in a joint system and to meet applical)le effluent limitations on his own. This approach in our opinion is clearly inequitable and contrary *to the intent of the Act with respect to encouraging the construction of joint municipal- industrial treatment facilities. We recommelidi providing administrative flexibility for these industrial plants, but at the same time believe that they should be required to meet appropriate 63-192-7G-------4 PAGENO="0050" 44 pretreatment standards by July 1, 1977. Of course, this requirement would have to be made contingent upon the Environmental Protection Agency promulgating these standards in a timely manner which allows sufficient time for industry to comply. As to the required showing that the industry plans to participate in the municipal system, we believe it would be reasonable to require the industry to enter into a written agreement with the municipality to the effect that the inunici~~a1ity will accept the industry's wastes at a time certain in the future. We believe that such a requirement, coupled with a requirement to meet applicable pretreatmemit standards, if available, would constitute a sufficient good faith commitment on the l)art of the industry to justify the granting of an extension for meeting the July 1. 1971 "best practicable control' technology deadline. Such an approach would also serve the intent of the Act to construct facilities designed to treat both municipal and industrial wastes. Question 2. ~our comment regarding a good faith effort being required as a basis for granting municipalities relief from the July 1, 1977 date is appropriate. Please expand. Response On October 10, 1974 the Federation approved a document entitled "P.L. 92-500: Certain Recommendations of the Water Pollution Control Federa- tion for Improving the Law and Its Administration." Legislative recoinmenda- tion 5(b) states that `the Congress provide, where appropriate, administrative relief to municipal and industrial dischargers unable to meet July 1, 1977 effluent limitations or toxic standard deadlines, provided such discharges demonstrate good faith efforts to the satisfaction of the Administrator." The concept of good faith' is, we believe, most appropriately addressed in terms of "reasonableness.' In the case of municipalities requesting relief from the July 1, 1977 deadline, we believe the municipality should have the burden of showing that it has taken appropriate steps to meet the deadline but will be unable to do so owing to circumstances beyond its control. More specifically, we believe the municipality should be required to show (a) that it applied for an EPA con- struction grant in a timely manner; (b) made a reasonable effort to raise its share of the costs of the project; (c) met other applicable requirements of the Act; and (d) assuming the award of a grant, took appropriate steps to have construction completed by the required date. WTe also recommend limiting admin- istrative relief to cases where the municipality applied for a grant in a timely fashion but was not awarded one because of its low position on the State priority list. In addition. we recommend relief where, assuming the award of a grant, the municipality could not complete the facility construction on time owing to such factors as insufficient time for construction, labor problems, equipment shortages. the inai)ility. after reasonable effort, to raise its project share, and legal disputes. Question 3. Can the Federation provide figures on the cost of establishing ad valorem user charge systems in major metropolitan areas of the country? Response. Early in 1975 the Federation conducted a survey to determine the extent to which ad valorem tax-based user charge systems were used nationwide. Enclosed is a copy of this survey in the form of a letter and attachments trans- mitted by the Federation to EPA `on March 4, 1975. While it was not the intent of that survey to compile data on the costs that would be involved in requiring comunities utilizing ad valorem systems to convert to utility-based systems. the information is nevertheless valuable as a rough estimate of the magnitude of the adminstrative problem being created by section 204(b) of the Act. We have compiled some data on the costs that large metropolitan areas, which incorporate numerous smaller governmental entities, will incur if the existing user charge requirement remains intact. These costs are described in some detail in our submitted statement for Denver. Indianapolis and Los Angeles County. The Denver situation is particularly instructive. The Denver Metropolitan Sanitation District has 21 members consisting of 6 cities and 15 sanitation dis- tricts. Of the 15 districts represented, 11 utilize ad valorem taxes to raise funds to cover operation and maintenance costs. The city of Denver has 41 sanitation district customers, 33 of which utilize ad valorem tax-based user charge systems. Ten to twenty of these are extremely small communities located in Jefferson County. One-half of these, moreover, are combined water and sanitation districts, which would make any transition even more difficult. PAGENO="0051" 45 The funds required to establish necessary billing and accounting systems, as well as to pay for postage and additional persons to handle the accounts could increase the operating budget of each of the 44 of the 56 sanitation districts in the Denver area using ad valorem systems by approximately $10,000 to $15,000. Using the lower figure of $10,000, requiring these districts to revise their systems would cost an estimated $440,000. The financial and administrative implications of the present user charge re- quirement are even more staggering for the Sanitation Districts of Los Angeles County. Attached is a March 3, 1975 summary position paper of this agency re- garding continued use of ad valorem taxes to finance O&M costs. The paper analyzes the agency's current situation and refers to the second attached docu- ment which estimates, as noted in our prepared statement, that it would cost $23 million as an initial investment to implement, and would entail an additional annual cost of $5 million over present costs. `The Federation is in the process of compiling cost information for other metro- politan areas and will pFovide this information for other metropolitan areas and will provide this information to the Committee as soon as it becomes available. WATER POLLUTION CONTROL FEDERATION, Washington, D.C., March 4, 1975. Mr. ROBERT KU55MAN, U.S. EPA TVashington, D.C. DEAR BOB: Here is some very "soft" data on the nationwide use of ad valorern tax systems for funding the operation and maintenance of sewage treatment serv- ices. Nevertheless, despite the data's shortcomings, it does point up the pervasive- ness of the problem. The following breakdown by States gives some feel for the matter. Use of AVT (either solely or in combination for O&M 27 Not used 8 Unlikely 5 Uncertain .3 No reply 9 We expect to send `this information out to a large review list, including AMSA and ASWICPA, to solicit a critical appraisalof the data. We hope the attachments prove of some value in the upcoming hearings with Senator Muskie. If the Federation can be of further assistance, please do not hesitate to contact us. Sincerely, W. LEE RAWLS, Manager of Public Affairs. -Alabama: No. Alaska: Anchorage, Cordova, Fairbanks, Haines, Juneau-Douglas, Kena: Soldotna, Ketchikan, Norne, Palmer, Petersburg, Seward, Sitka, Skagway, Val- dez, Wrangel (16). Arizona: 95% use AVT. example: Phoenix, Tuscon. Arkansas: No reply. California: Sanitary Districts: 173 use pure ad valorem tax for O&M (pure 165 use combination of AVT & user charge for O&M (combo) ; and 8 user charge-cities: example: LA, San Diego, San `Francisco, Oakland (+75% of towns in Bay area), and small towns such as Oxnard. Some small towns use a fiat fee which could cause problems (example: Glendale). Colorado: Denver metro-21 members. 7 on pure ad valorem. 4 on combo=11 (Alameda, Applewood, Baricroft, Berkeley, `Crestview, East Lakewood, Highland Park, North Pecos, Northeast Lakewood, Pleasant View, Westridge). Denver City & County (1 of Denver metros 21 members)-while having a service charge, `has 39 connector districts. 22 pure AVT, 10 on combo, 7 on serv- ice charg~. Example of pyramid and cross-jurisdictional lines. For Denver metro to be eligible for a grant, they `have to be able to reach down into Denver cities connector districts and force them to change; something they have no legal power to do. Connecticut: 160 of 169 towns in Conn. use AVP. example: Hartford. Delaware: No reply. PAGENO="0052" 46 District of Columbia: No reply. Florida: Large cities have switched over to user charges to get grants. Some small towns may have. Unlikely. Georgia: AVT used, predominantly for capital. Uncertain if used for O&M. Hawaii: All 4 counties use A'VT. Idabo: Limited use of A'VT. Some use combo involving O&M: examples: South Fork, Northwest Boise, S.D.. Bench S.D., Sun Valley. State law requires ad valorem as a back up if service charges deficient. Fear that in poor areas a `pure" service charge would be inadequate. Indiana: Of 9 S.D's. all use combo, 4 (Hammond, Gary, East Chicago, Rich- mond) would require legislative changes to switch over. Industry presently pay- ing disproportionate share. User charge would mean higher rates. Illinois: All S.D's use AVT. required by state law (example i\I.S.D. Chicago). Approx. 90% of cities also use AVT. Kansas: 250 S.D., +300 cities use AVT. (for about $5.5 mu in O&M costs). Ken tueky: Not used, except Lexington. Louisiana: All parishes use AVT for O&M (Plaquemines parish rather than changing over is going to build their own facilities). Maine:? (Belfast). Maryland: No reply. Massachusetts: 90% of cities `or A'VT or some combo (examples: Greater Law-rence, `Webster, Marlbore, Walpole). Some larger cities with large tax exempt properties have gone to service charge. Michigan: AVT not used for O&M (poss. exception: Choboygan). Minnesota : AVT used in some iron range communities and pdSSlbi3' Minne- apolis-St. Paul. Mississippi: No reply. Missouri: Many combo, uncertain whether used for O&M. Possibly St. Louis. Montana: `Widespread use of AVT for O&M, especially small towns. ~vebrasl:a : Possible use in Omaha, and likelihood that some small towns sup- plement flat fees with some form of taxes. Keruda.: 11 examples. (including Crystal Bay, Sun Valley, Indian Hill, Kings- berry. etc.). Xew Ham psli ire: Some. example: Lebanon. Kew Jersey: Combos for O&M used by Ewing. Lawrence, Hopewell. Possible use of "pure" in older. larger cities of Camden. Newark, Trenton, Jersey City. Few ]iea'ico: Not used for O&M. Few York: Scattered throughout State. Example: `West Chester County, Syracuse. Forth Carolina: 400 of approx. 412 cities use AVT for O&M. Forth Dakota: Unlikely AVG used for O&M. Ohio: AVT not used for O&M. Oklahoma: No reply. - Oregon: Unlikely. Pennsylvania : Only 1 example given, Sharon. Rhode Island: Only 1 example given. Warren. South Carolina: Has both pure AFT, and combos. Examples of pure AVT Wade Hampton. St. Andrews. Spartanburg. Anderson. Greenville. Mauldin, Piekens. Seneca. `Walhala. `Westminister. Simpsonville, Fountain Inn. South Dakota : Aberdeen and Rapid City use AVT. but are switching over. State law requires ad valoremn back up. Many small towns charge flat fees. Tennessee: Not used. Tenas: Limited problem. Used backdoor to prop no service charges. Utah: Combos; for O&M. example Ogden, Pro~o, Salt Lake, Logan, Bountiful. Vermont : No reply. Virginia: Not used. `Wash ington: Not used for O&M. TV. Virginia : Not used for O&M. Wisconsin: SO or 400 cities (20%,) use pure AVT. Mostly older cities; Mil- waukee. Greenhay. Superior. Ashland, `Warsaw, Rothehild. Milwaukee consider- ing abandoning to ease burden on industry. Canada: Combos & pure AFT. Federal financing never predicated on type of local financing. PAGENO="0053" 47 AD VALOREM Combo for Pure Combo 0. & M. Alabama Notused Alaska X Arizona x Arkansas Noreply California X X X. Colorado X X X. Connecticut -~< (?) (?). Delaware No reply DistrictofColumbia do Florida Unlikely Georgia Uncertain Hawaii X Idaho X X. Indiana X X. Illinois X Iowa Notused Kansas X Kentucky Not used, except Lexington sole exception Louisiana X Maine (fl(Belfast) Maryland Noreply Massachusetts X X Michigan Not used (possible exception-Choboygan) Minnesota X Mississippi No reply Missouri X Possibly. Montana X Nebraska Uncertain Nevada X NewHampshire X New Jersey X (pcssible) X NewMexico NotusedforO.&M New York X X X. North Carolina X North Dakota Unlikely Ohio Not used for 0. & M Oklahoma No reply Oregon Unlikely Pennsylvania Only 1 example given: Sharon Rhcde Island Only 1 example given: Warren South Carolina x x x. South Dakota X (but switching over) Tennessee Not used Texas X(limited problem) Utah X X. Vermont No reply Virginia Not used Washington do WestVirginia do Wisconsin X TABLE 1.-AD VALOREM Widespread use of ad valorem 1(8) Minor use of ad valorem (13) No information Not used (15) available (12) Arizona, California, Connect- Colorado, Idaho, Kentucky, Alabama, District of Colum- Arkansas, Delaware, Mis- icut, Illinois, Kansas, Loui- Maine, Missouri, Nebraska, bia, Florida, Georgia, Iowa, sissippi, Oklahoma, Ver- siana, Massachusetts, and New Hampshire, New Maryland, Michigan, Mm- mont, Washington, West Wisconsin. Jersey, New York, Penn- nesota, New Mexico, North Virginia, and Wyoming. sylvania, Rhode Island, Dakota, Ohio, Oregon, Ten- - South Dakota, and Nevada. nessee, Texas and Virginia. 1 Includes States that use ad valorem in combination with proportional type user charges. PAGENO="0054" 48 TABLE 2.-POPULATION AFFECTED BY AD VALOREM BASED SYSTEMS Estimated 1970 urban State population percent population served by ad valorem Estimated population served by ad valorem Alaska 146,C00 100 146,000 Arizona 1,409,000 95 1,338,000 California 18,136,000 90 16,322,000 Connecticut - 2,345,000 95 2,227,000 Hawaii 639,000 100 639,000 Indiana 3,372,000 50 1,686,000 lllincis 9,230,000 90 8,307,000 Kansas 1,485,000 50 742,000 Louisiana 2,406,000 50 1,203,000 Massachusetts 4,810,000 50 2~405,000 Montana 371,000 50 185,000 North Carolina 2,285,000 90 2,056,000 South Carolina - 1,232,0CC 50 616,000 Utah 851,000 80 680,000 Wisconsin 2,910,000 50 1,455,000 Total 40,007,000 Note: Total U.S. urban population (1970)-149,325,030; total U.S. metropolitan population (1970)-139,413,000. MARCH 3, 1975. SUMMARY POSITION OF THE SANITATION DISTRICTS OF Los ANGELES COUNTY REGARDING CONTINUED LT5E OF Au VALOREM TAXES TO FINANCE 0. & M. COSTS The Sanitation Districts of Los Angeles County support the proposed EPA amendment to Section 204 of the Federal Water Pollution Control Act Amend- inents of 1972 (P.L. 92-500). Such a change would appear to allow agencies like the Districts to continue to qualify, for federal grants without disrupting their existing cost-effective mechanisms for meeting their financial needs. The Districts have used ad valorern taxes as their primary method of financing for almost 50 years. These taxes are now supplemented by surcharges on industrial wastewater dischargers and other minor revenues. Tax rates have been relatively stable and still average about 20~ per $100 assessed valuation, although they will need to be increased in the next few years to cover the anticipated increase in operating costs occasioned both by inflation and by new secondary treatment facilities anticipated for the full system flow of 430 mgd. The ad valorenn tax-industrial surcharge system of financing clearly assures that industrial dischargers, both individually and as a class, pay their pro- portionate share of Districts' operation and maintenance costs. In fiscal year 1972-73, industrial users paid about 36% of Districts' revenue as compared to the weighted average impact of industrial flows and loadings estimated at about 38% of thetotal system. Applying the same unit rates contained in the industrial surcharge to the average flow and load from a typical residence also results in a calculated charge equal to the taxes collected from a typical residence-about $12.00 per year. * It is recognized that ad valorem taxes are not truly proportionate to use; par- ticularly, since commercial establishments and vacant land pay for services they dOaI't use, and tax-exempt organizations do not pay directly for their use of the system (except under specific contracts if their flows are significant). However, typical tax rates within the county are in the range of $12.00 per $100 of assessed valuation, find only 20ç~ of that $12.00 is for sewage treatment. Yet, most of the services covered by the county tax are people-related and have the same lack of proportionality as the Districts' tax. Local governments provide a variety of serv- ices and everyone shares in the cost while utilizing those services that they need most. This historic system of local financing would become less fair if specific services were deleted from tax roles. Vacant land and commercial establishments are substantially benefitted by the presence of sewage systems and should help pay for their costs. To remove residential users of the Districts' system off the ad valorem tax basis and place them in the position of being billed for their specific use of the systean PAGENO="0055" 49 will not transfer any additional costs to industry. On the contrary, no matter how it is done, it will raise the cost of wastewater treatment to the average and low- income property taxpayer while, to some degree, reducing the costs to commercial establishments and wealthy, large property owners. Such a shift in the tax burden from the wealthy to the poor `appears to be contrary to the interests of the general public and has no relationship to the originally stated reasons for having the user charge provision in the law. The delays, costs and practical difficulties associated with a change from the ad valorem to a direct user charge system have been summarized in a separate report on the impact of the current regulations upon the Districts (attached). Even now, the State of California and the Environmental Protection Agency are attempting to accelerate the construction program while placing user charge con- ditions in grants to the Districts that clearly cannot be met in a timely manner. In order to avoid disrupting the construction programs planned for the next year, Congress is urged to promptly revise P.L. 92-500 in accordance with the EPA's recommended amendment. The attached resolution from the mayors of 72 cities in Los Angeles County and the Board of Supervisors was adopted in support of such a change. POTENTIAL IMPACT OF FEDERAL USER CHARGE REGULATIONS ON THE COUNTY SANITATION DISTRICTS OF LOS ANGELES COUNTY Introduction The .County `Sanitation Districts of Los Angeles County currently have a rev- enue program based on a combination of ad valorem taxes, contract revenues, industrial surcharges, bonds, and federal and state grants which generate suffi- cient revenue to meet all operation, maintenance, and capital expenses. The pres- ent revenue program is capable of meeting the financial needs of the Sanitation Districts and assures that industry, as a class, and non-indu~try, as a class, pay their proportionate share of wastewater treatment costs. To change the existing revenue program radically would be not only administratively difficult, costly, and disruptive, but might not result in a compensatory degree of proportionality or equity. Background The County Sanitation Districts of Los Angeles County are a regional organi- zation of twenty-seven districts that serve the sewage treatment and disposal needs of nearly four million of the seven million people in Los Angeles County. The present service area includes approximately 730 square miles, containing all or part of seventy-two ~ities and large tracts of unincorporated territory, and over 1,000 miles of trunk sewers (serving 8,000 miles of lateral sewers), eleven water pollutiOn control, water reclamation, or water renovation facilities and numerous pumping plants. The sewerage system so described receives a wide variety of wastes-domestic wastes from residential communities and commercial establishments, industrial wastes from two-thirds of the county's industries, brine wastes from refineries, oil fields and water softening plants and radioactive wastes from universities and research centers. In numbers, the Sanitation Districts serve approximately 1,300,000'residences and commercial establishments and 3,500 industrial estab- lishments; ,total daily wastewater flow treated and disposed of amounts to 430 million gallons. The ad valorern~ taco system The Sanitation Districts, like many similar sewerage agencies throughout, the `country, currently utilize ad valorem taxes as their main source of revenue. Ad valorem taxes are supplemented by surch'arges on industrial wastewater dis- chargers and by miscellaneous other revenue, primarily bonds, contracts, and grant mOnies. The tax rates within the various Distrjcts have been relatively stable over the past forty years, averaging about 20~ per $100 of assessed valuation. The revenue program currently utilized by the Districts is designed to be cost- effective and insure that industry as a class and non-industry as a class pay their fair share of wastewater treatment costs. Based on data for FY 1972-1973, the system load parameters of flow, COD,, and suspended solids have been allocated to industrial and non-industrial discharges. The system costs for collection and treatment have, also been apportioned to each of the load parameters. The three parameters (flow, COD and SS) can therefore be combined into an average value weighted in accordance with the relative importance of each parameter to PAGENO="0056" 50 the total costs of treatment for both industrial and non-industrial discharges. Revenues for FY 1972-73 can also be identified as industrial or non-industrial. The estimate of industrial use and revenue for 1972-73 is presented in the fol- lowing table: ESTIMATE OF PROPORTIONALITY OF SYSTEM USE AND REVENUE BY USER CLASS Item Total for JO. districts Industrial Nonindustrial Percent of system flow Percent of system COD Percent of system SS Weighted average percent of use 100.0 100.0 100.0 100. 0 33.0 67.0 51.7 48.3 40.6 59.4 38. 5 61. 5 Ad valorem taxes (millions of dollars) Surcharges (millions of dollars) 17. 4 4. 3 3. 4 14. 0 4. 3 Total revenue (millions of dollars) 21. 7 7. 7 14. 0 Percent of system revenue 100. 0 35. 5 64.5 A comparison of the weighted average percent of use and percent of system revenue values in the table above indicates that the Districts' present revenue system is equitable for both industrial and non-industrial user classes. It is recognized that the above argument of proportionality is advanced only in terms of general user classes-industry and non-industry. While certain in- equities might arise within each of these groups, the Districts believe the costs of determining the extent and magnitude of these imbalances and correcting them w-ould be excessive, especially since typical annual costs to a residence for sewage treatment are only about $12. Further refinement of user groups would not be cost-effective. The following points summarize some of the advantages of main- taining the existing ad valorem system: 1. The existing ad valorem system utilizes an established tax collection mech- anism which involves extremely low administrative overhead costs to the Districts. 2. The existing ad valorem tax system returns a high percentage of the taxes levied. Currently over 97 percent of the property taxes levied are collected. This record is primarily due to the efficiency of the county tax billing and collection system and the legal force of property lien provisions. 3. The ad valorem system takes into account the increase in value that an undeveloped piece of property possesses as a result of having a sewerage system in-place; a user charge system would not. The increase in value due to the pres- ence of services for undeveloped property in Los Angeles County might typically be $7,500/acre. 4. Historically there has been no particular attempt to achieve perfect equity in the financing of all local government services. Any attempt to do so now would result in costly administrative efforts with no resultant public benefit in services. Local governments provide `a variety of services and everyone shares in the cost, utilizing those services which they need most. This system would become pro- gressively less fair if specific services were deleted from tax roles in the name of proportionate equity. 5. The attempt to achieve equity by abandoning the ad valorem tax will only achieve a shift of the burden-along w-ith the overhead costs of implementing a new- system-to the low and middleincome resident. Industry is already paying its proportionate share and vacant, commercial and expensive properties are the only categories that may be paying more of their share than perfect equity would call for. However, the same inequity may be alleged for all people-related services on the tax roles of which only 20C is for wastewater treatment compared to a typical total tax rate of about $12.00 per $100 assessed valuation in Los Angeles County. The shift of that 2Oç~ from 1h~ wealthy to the less financially able appears to be regressive `and inconsistent with the remainder of the tax rate. 0. If the Sanitation Districts must implement user charges to pay for operation and maintenance costs, they would still have to maintain an ad valorem tax system to pay for debt service. Section 4796, Article 5. of the County Sanitation District Act, `Chapter 3. Division 5, of the Health al1d Safety Code, State of California read~ in part as follows: "Bonds and interest thereon shall be paid PAGENO="0057" 51 by revenue derived from an annual tax on real property in the district and all the real property in the district shall be and remain liable to be taxes for such payments." It seems likely that since the ad valorem system would have to continue to be maintained, all revenue not related to 0 & M user charges would be raised through taxes since the present system of utilizing an established tax collection mechanism involves little administrative cost to the District. Strict compliance with current federal law will be both difficult to achieve and very expensive to implement, for the following reasons: 1. The Sanitation Districts are not in possession of names and addresses of the estimated 1,300,000 domestic and commercial dischargers to the sewerage system, nor are they aware of any public record containing such information. 2. It has been suggested that the Districts utilize water bills throughout their area of jurisdiction by assessing a special charge for each unit of water consump- tion. This suggestion does not appear to have any significant advantages over ad valorem taxes for the following reasons: (a) Only 50% of the water distributed in the Sanitation Districts' service area actually reaches the sewers. Obviously some users discharge all of the water they use into the sewerage system and others discharge very little, indicating such a charge is also not proportionate. (b) The Sanitation Districts do not sell, distribute or regulate the sale of distribution of the potable water they ultimately treat. (c) There are approximately 170 water agencies operating within Sanitation Districts boundaries. (Preliminary indications are that most of them would be willing to cooperate on an adequate reimbursement plus overhead and 1)rOfit basis.) (d) Perhaps as many as 100,000 residents still utilize septic tanks and cess- pools for waste disposal. (e) An unknown number of residences and commercial establishments dis- charging to the sewer draw water from private wells. (f) All unmetered water users would have to have meters installed. Best estimates at this time are that as many as 50,000 meters may have to be installed. (g) A user charge rate structure and control program would have to be developed. All work would be handled by Districts' staff. In establishing an equitable rate structure tied to water consumption. studies to answer some of the questions stated below would have to be conducted: How does commercial use compare to domestic use? How should rate chargos incorporate seasonal variations in water usftge? What are typical daily flows? How much revenue needs to be generated to cover 0. & M. expenses? (h) Based on the problems described above, it is estimated that the initial investment required to develop and implement a user charge system through w-ater utilities through the first year of its operation is approximately $23 mu- lion and over 2 years would be required to get it going. Annual costs thereafter are estimated to be approximately $5 million. The ongoing cost figure represents an increase of 10 percent in the total FY 1972-73 Sanitation Districts' budget and the typical homeowner may experience a 30% increase in his bill solely for the sake of proportionality. 3. A fiat rate charge applied to all residences has also been suggested. Although simpler to administer than a water bill system, it is not as proportionate as ad valorem taxes and would require determination of which residences have connections to the sewer system. 4. There is a procedure available to place a special lien on property tax bills after suitable reports and public hearings have been conducted. Although more costly than an ad valorem tax system, it appears to be less costly to administer than direct billing. The bases of the lien can be per parcel, or per square foot, or per bathroom, etc., provided there is information available. The data base in county records is not nearly as complete, reliable, or useful as assessed valuation, and the effect of the distribution will not be significantly more proportional than the ad valorem basis now used. 5. The most proportionate scheme and the only method that would appear to comply with current federal law would of course involve the installation of sampling and flow measuring devices on all connections to the sewer system. Even if such systems could he kept working, the costs would so clearly exceed the value as to be rejected out of hand. PAGENO="0058" 52 Mr. ROBERTS. The Chair is very pleased to introduce one of the most distinguished industrial paiiels, one of the most distinguished that I have seen since I have had the privilege of chairing this subcommittee. Mr. Joseph F. Knott, Pittsburgh Plate Glass Industries, Mr. Walter Maloney, Mr. William Creelman, Mr. Clifford Harvison, Mr. Edwin `Wheeler, accompanied by Mr. Ben Day and Mr. Prokop. Mr. Knott, I believe you are the spokesman for this group. You may pioceed any way you see fit, and again all statements will appear in full in the record. The Chair would like to announce if we are unable to complete the list of witnesses by the time the House goes in session, we will reconvene at 2 p.m. [Statements of Mr. Knott, Mr. Maloney, Mr. Creelman, Mr. Har- vison. M. WTheeler, and Mr. Prokop follow:] STATEMEcT OF THE MANIJFACTTJEIXG CHEMIsTs AssocIATION Mr. Chairman and members of the subcommittee, my name is Joseph F. Knott and I am Director of Distribufion for the Industrial Chemical Division of PPG Industries, Inc. I am appearing on behalf of the Manufacturing Chemists Associ- ation (MCA). MCA is a nonprofit trade association having 186 United States member com- panies representing more than 90 percent of the production capacity of basic mdustrial chemicals within this country. Its members operate more than 1600 plants located in almost every state of the union. Today I shall primarily discuss section 311 of P.L. 92-500. However, MCA is vitally concerned with other concepts and sections of the Act, and I, therefore, request your concurrence in submitting additional comments for inclusion in the hearing record. The purpose of my appearance is to discuss with you the present and future impact that P.L. 92-500. section 311 is hqving and u-ill have on the chemical industry. ir implemented as presently w-ritten, section 311 has the potential to severely disrupt existing chemical distribution patterns. Barge operators have advised chemical shippers that they may elect not to transport chemical products ap- pearing on the list of hazardous substances because of the extreme punitive nature of the section 311 penalties w-hich can be imposed even in the absence of any neg- ligence. Other equally attractive cargoes are available to them without the risk of the potential $5.000.000 penalty. This problem has been recognized by EPA and u-as stated in Mr. Train's leter of January 30, 1975 to Congress: "Another problem w-hich we are studying concerns the provisions of section 311(b) with respect to penalties for the discharge of hazardous substances. Under the system of penalties established by the 1972 Amendments, a penalty of as much as $5 million per discharge may be imposed. Under these circumstances, carriers of hazardous substances may increasingly employ alternate methods of transpor- tation, often involving greater health and environmental hazards." The chemical industry ships over 20,000,000 tons per year on the inland and intercoastal w-aterway systems. We know from experience that occasionally, for some reason over which the pilot may have no control, a barge may spill some or all of its contents. in such a case the crippling penalty provisions of section 311 would apply. A survey of only 22 MCA member companies in 1974' indicated 110 chemical plants wholly or partially dependent on w-ater transportation employing more than 196,000 workers and representing a total investment in excess of $8 billion. These are meaningful figures. Furthermore. because of the basic nature of the chemical industry, disruptions in production have a corresponding multiplier or ripple effect on other segments of the economy. The transportation penalties portion of section 311 does not apply directly to the chemical industry but rather would be felt by the industry through its impact on the transportation industry. Thus, we are particularly vulnerable in terms of planning for both long-range and short-term capital projects. PAGENO="0059" 53 The same problem that confronts the water industry also confronts the rail and highway carriers. Although the exposure of these modes under section 311 is limited to $500,000 per incident their total exposure is significant because of the much larger number of units transported and their increased potential for transportation accidents. These carriers have likewise advised chemical shippers that they will explore all legal remedies to avoid transporting some, or possibly all, of the chemicals appearing on the list. The insurance industry, through a spokesman for the Water Quality Insurance Syndicate (WQIS), advises that, any such civil or criminal penalties in excess of $50,000 will not be insured. Existing laws prohibit the carriers from contract- ually shifting the potential penalties to shippers. Even in the absence of such laws, chemical shippers cannot accept liability for potential accidents in opera- tions over which they exercise no control. I believe that all of the concerned industry groups agree with the basic intent of P.L. 92-500, section 311, which is to discourage pollution of our nation's water- ways. However, they strongly object to the threat of a crippling penalty im- posed as the result of an accident, regardless of the care exercised to prevent the accident. There are occasions when a responsible, conscientious and well-intentioned operator may spill material because of circumstances beyond his control, even though he has exercised a high degree of care to prevent the accident. We recog- nize that any person who spills hazardous substances into a waterway has an obligati6n to remove or mitigate the spill. However, we believe it is unfair to levy a devastating penalty potentially approaching $5,000,000 where there has been an absence of willful negligence. We recommend instead the more moderate, but still significant penalty of up to $50,000. The prevention of spills is more effectively controlled through the use of sound construction and operating rules administered by the U.S. Coast Guard and the Environmental Protection Agency. Significant laws and regulations in this cate- gory, are the Ports and Waterways Safety Act, the Towing Vessel Operators Licensing Act, the Vessel Bridge-to-Bridge Radiotelephone Act, and the spill prevention and contingency plans required under section 311 of P.L. 92-500. In addition, the Coast Guard has strengthened their regulations pursuant to the Dangerous Cargo Act, ". . . to make certain the cargo stayed within its tank, w-hich provided protection to the environment . . ." Congress referred to the possible effectiveness of this approach in Conference Report No. 92-1236, U.S. Code of Congressional and Administrative News, at page 3811 where the Con- ferees expressed hope that during the next two years legislation would be ad- dressed to improved methods of storing, shipping and handling hazardous sub- stances. We believe the record shows this has been accomplished. The possibility exists that spills may be made by operators who are careless or irresponsible, ignore existing regulations or deliberately cut corners in con- ducting their operations. This type operator is not knowingly supported by the chemical industry nor embraced by competitive transportation organizations. Nevertheless, we recognize that the only way to effectively deal with such an individual is through stringent legislation. In this regard we support the language of I-I.R. 9560 which in some cases is potentially more severe than is found in. existing laws. Additionally, we support section 12 of HR. 9560 because it reflects a reason- able and sensible approach to the problem of pollution control. It provides the Enviromnental Protection Agency (EPA) with a set of instructions around w-hich they can draft sound and effective enforcement regulations. At the same time it removes the threat of a devastating penalty from the carriers for an accident over which they could exercise no control and in fact may have gone to considerable effort and expense to avoid. Industry is obviously concerned over the possibility that potential unlimited penalties might be levied for "willful negligence or willful misconduct within time privity and knowledge of the owner or operator" . . . or resulting from "willful failure to act to remove discharges of hazardous substances as deemed appropriate by the responsible Federal officer . . ." ("remove" is defined in the present law as including the taking of action to minimize or mitigate the effect of the discharge). However. we support this section in the belief that the test of reason n-ill be applied in judging whether a company has exhibited a willingness to act to remove a discharge "as deemed appropriate by the responsible Federal officer" and that this test will consider the limits of their capability to take PAGENO="0060" 54 such action. In this regard. MCA stands ready to work with the Environmental Protection Agency, the United States Coast Guard, and other federal and state agency to develop guidelines for removal and/or mitigating action of specific hazardous substances in accordance with the National Contingency Plan specified in subsection (c) (2). We believe it is important to develop joint government/industry guidelines in order to provide guidance for the "responsible Federal officer" in making deci- sions involving extremely complex cost/benefit considerations under adverse conditions, as well as giving specific operational meaning to the language of lines 7 through 10 on page 12 of H.R. 9560 w-hich refer to the "willful failure to act..." We would suggest, however, an amendment to section 12 of H.R. 9560. We are concerned that as presently written the penalty and reporting provisions of P.L. 92-500 and section 12 of H.R. 9560 might be interpreted as applying to dis- charges authorized under the National Pollutant Discharge Elimination System permits provided for in section 402 of that Act. We believe this was an oversight and it w-as not the intent of Congress to authorize discharge permits in one section and then set penalties for such discharges elsewhere in the same Act. For this reason, we urge that section 12 of H.R. 9560 be amended to specifically ex- clude from the provisions of section 311 any discharges authorized under the above permit system, or any discharges for which penalties are provided in any other section of the Act. I would also like to comment briefly regarding tw-o matters contain~d in sec- tion 11 of H.R. 9560. toxic and pretreatment standards. As presently written sec- tion 307(a) (2) of P.L. 92-500 requires the Administrator to hold hearings with- in 30 days of publication of a proposed toxic pollutant effluent standard, and to promulgate such standard w-ithin six months after publication. HR. 9560 pro- poses to eliminate the 30-day requirement. We concur w-ith this because ex- perience has show-n that this does not allow- adequate time to prepare for such hearings. However, the amendment also should assure allowance of adequate time for presentation of hearing arguments and for review of the hearing record. This is not possible if the hearing were deferred well into the six-month period. To avoid this possibility, w-e recommend that the date of promulgation be re- lated to the date upon which the hearing commences. Section 11(b) of H.R. 9560 recognizes the difficulty of compliance with a toxic pollutant effluent standard w-ithin one year of promulgation, but limits extension of the time period only to cases of technological infeasibility for a category of sources. We consider this to be inadequate in two respects. First, technological infeasibility is unlikely to be the sOle reason for legitimate inability to comply within one year. Not only must a discharger determine whether there is tech- nology which can be applied to his discharge to meet the standard, but must accomplish the design, purchase, installation and start-up of the necessary facilities. These very real problems may not be considered to fall within inter- pretation of the phrase "technologically infeasible." Secondly, while categories of sources may be determined by the Administrator to be capable of complying ~vithin a one-year period, there may be legitimate reasons why individual sources in the category may not be able to do so. The Administrator should be allowed discretion in extending compliance time for individual sources as well as cate- gories of sources. STATEMENT OF WALTER E. MALONEY o~c BEHALF OF THE WATER QUALITY INSURANCE SYNDICATE My name is Walter E. Maloney and I appeai' on behalf of the Water Quality Insurance Syndicate. The Syndicate is an association of 27 insurance companies, all of whom are authorized to write marine insurance in one or more States of time United States. The Syndicate. w-hich came into being May 31, 1971, was organized solely for the purpose of providing in the American marine insurance market a facility for the insurance of owners and operators of vessels against the risks of liability to the Government under the Water Quality Improvement Act of 1970 (P.L. 91-224) for costs incurred in the removal of oil. When that Act w-as amended by the Federal Water Pollution Control Act Amendments of 1972 (Public Law 92-500), this Syndicate amended its Articles of Agreement so as to provide insurance coverage against the risks of liability to the Government for spills of hazardous substances other than oil. At the same time, this Syndicate, PAGENO="0061" 55 acting with great reluctance, undertook to provide its assureds. with coverage against liability to the United States for a civil penalty for the discharge of a hazardous substance determined to be not removable. This penalty was fixed at $50,000 per discharge during the two-year period beginning on the date of enact- inent of the Amendments, October 18, 1972. Public Law 92-500 provides that after this two-year period the penalty imposed in the case of a discharge from a vessel may run as high as $5,000,000. Section 12 of H.R. 9560 would amend Section 311 of the Federal Water Pollu- tion Control Act so as to limit to $50,000 the civil penalty which might be im- posed for a marine discharge of a hazardous substance. We believe that this reduction in the maximum civil penalty, from $5,000,000 to $50,000, is very much in order and urge enactment of HR. 9560. We are firmly convinced that if the penalty imposed by Public Law 92-500 in the event of a spill of a non-removable hazardous substance is permitted to increase, the American vessel operator will find it virtually impossible to procure anywhere in the world insurance against this potential liability. This will be true, in our judgment, without regard to the record compiled in the past by the individual operator. Marine underwriters are prepared to pay insured losses of considerable magnitude when the physical and provable dollar dimensions of a casualty are measurable, such as a sunken hull or actual "clean-up" costs of a spilled remova- ble substance. But, no legislation will compel a publicly or privately owned insurance company to write any risk it does not wish to, and insurance of a "civil penalty" for abstract insults to the environment is not "indemnity" for which insurance was designed. In underwriting circles, there is an instinctive revulsion against the payment of penalties imposed on an assured for whatever reason. This is instilled by the reasoning that if a penalty is imposed as a deterrent, how can it possibly serve that purpose if the penalty is to be paid by the insurance company for the party at fault. Underwriters maintain that prevention of casualties is far more mean- ingful and productive in the short and long run than penalizing their occurrence after the fact. There is considerable background for this philosophy. Whether the amount payable be denoted "fine", "penalty", "punitive damages" or "exemplary dam- ages", its purpose is not to make whole an injured party but to deter and punish a party found to have been engaged in some wrongful act. There is a strong body of law in this country, though not unanimous, to the effect that the obligation of the wrongdoer is not legally insurable, the analogy is that of sending one person to jail for the crimes of another simply because the "criminal" has paid him a fee for that purpose. "A policy which permitted an insured to recover from the insurer fines imposed for a violation of a criminal law would certainly be against public policy. The same would be true of a policy which expressly covered an obligation of the insured to pay a sum of money in no way representing injuries or losses suffered by the plaintiff but imposed as a penalty because of a public wrong." Tedesco V. Maryland Casualty Co., 127 Conn. 533, 18 A2d 357, 132 A.L.R. 1259 (1941). See also Northwestern National Casualty Co. v. MeNaulty, 307 F. 2d 432 (1962). The Tedesco decision really stands for the proposition that a "penalty" or "punitive damages" (in the majority sense) may not be insured because both are utilized as ". . . a means of punishing the defendant in order to deter him and others from antisocial conduct . . ." Northwestern National Casualty Co. v. McNaulty, supra, p. 436. In the much cited University of Pittsburgh Law Review Comment by Fischer, "Insurance Coverage and the Punitive Award in Automobile Accident Suits", 19 U. Pitt. Law Review, 144, 149 (1957), the categorical statement is made that statutory penal damages (penalties) are not recoverable from the tortfeasor's insurance company. Another author has said that insurance against exemplary damages frustrates their purposes and should be considered contrary to public policy (Oleck, Damages to Person and Property, sec. 275C, p. 560 (1961)). In this connection, there can be no question that Section 311(b) (1) of the Act is criminal or penal in its nature. "Strictly and properly speaking, a penal law is one imposing a penalty for punishment (and properly a pecuniary fine or mulct) for~ some offence of a public nature or wrong committed against the state." Black's Law Dictionary, 4th Ed., 1951, p. 1290. A question naturally arises as to why American underwriters fully familiar with the foregoing public policy, have agreed to insure vessel operathrs against PAGENO="0062" 56 the penalty fox the spill of a non-removable hazardous substance so long as that penalty did not exceed $50,000. The answer is very simple. Much to the surprise of American underwriters, Protection and Indemnity Associations domiciled abroad expressed a willingness to provide insurance against these penalties if the amount did not exceed $50,000. These Protection and Indemnity Associations are actually organizations made up of the owners and operators of seagoing vessels. Through these Associations shipowners mutually insure themselves against claims for personal injury and death and claims for loss of or damage to property and against other liabilities arising out of the operation of vessels. These organizations are not insurance companies. Their willingness to insure penalties up to $50000. the expression of which had a great deal to do with the appearance of that figure in Public Law 92-500, faced American under- writers with an immediate, serious problem. At the time, the Syndicate for whom I appear w-as insuring the owners and operators of approximately 4100 American flag vessels. Almost without exception, these vessels were craft too small to qualify for membership in the Protection and Indemnity Associations. The members of the Syndicate realized that if they failed to provide insurance against the penalty up to the $50,000 limit, their assureds, the owners and operators of smaller craft, would find it most difficult, and probably impossible, to insure against this potential liability. It is our belief that no underwriter in the Amer- ican insurance market will insure this penalty in excess of $50,000 and we believe further that penalties ranging beyond $50,000 become less insurable anywhere in the world as the penalty is increased. As to civil penalties-be they $50,000 or more, we maintain that- 1. Any mandated dollar penalty conceived as a deterrent for accidental, unintentional polluting discharge does not serve that purpose. 2. No insured penalty befalling a specific vessel owner will be~ totally repaid by him via the increased premium route. That loss will be subsidized by other premium-paying vessel ow-ners-so the "deterrent" aspect of such a penalty upon the culprit virtually evaporates. The higher the penalty, the more the insurance company will pay, and the higher its rates must be- come for all similar shipowners, with consequent direct effect on shipping costs and thence to the consumer. Marine underwriters are businessmen dedicated to the keeping of well-man- aged. sound ships afloat and cargo moving in our domestic and overseas trade by stable and reasonably predictable economical premium costs. If this were not demonstrably so over scores of years or even centuries, goods would not move in waterborne trade. STATEMENT OF WILLIAM A. CREELMAN, JR.. PRESIDENT. TRANSPORT DIVISION NATIONAL MARINE SERVICE INC., REPRESENTING THE AMERICAN WATERWAYS OPERATORS, INC. My name is William A. Creelman. Jr. and I am President of the Transport Division of National Marine Service Incorporated and Chairman of the Towing Industry Advisory Committee of the Marine Safety Council of the United States Coast Guard. We in the bulk liquid barging industry frankly feel that mistakes were made in the drafting of Public Law 92-500 several years back and we have been at- tempting ever since to get our story across. To this end, Mr. James B. Smith, President of The American Waterways Operators, Inc., on July 15, 1974, as Chairman of an ad hoc committee of concerned industries, wrote to both the House and Senate Public Works Committees expressing concern with the exist- ing statutory language. This letter was not just the bleating of industries ad- versely affected by federal laws and regulations. It was rather a brief of sorts with appendices to document the need for and to support basic changes in Sec- tion 311. I respectfully request that Mr. Smith's letter of July 15, 1974, and its en- closures, be incorporated into the record of these hearings. The House and the Senate Conference Committee in 1072. in finalizing Con- gressional action on what was to be Public Law 92-500, recognized the inherent problems involved in a civil penalty provision of the magnitude of Section 311. The conference report stated that the penalty provision would be reviewed if other legislation dealing with the handling of hazardous materials was enacted PAGENO="0063" 57 and implemented. This has occurred. For the record-I am referring to the \Tessel, Bridge-to-Bridge Communication Act, the Towing Vessel Licensing Act and the Ports and Waterways Safety Act. Moreover, Gentlemen, these statutes are the products of your very able Merchant Marine committees and are land- mark laws in the area of marine safety which have been extensively implemented. Over the last several years far-reaching and effective new safety regulations have been promulgated regarding the storing, shipping and handling of hazardous commodities. Title 33 CFR, Subchapter 0 contains a comprehensive set of regulations cov- ering the water transportation by unmanned barge of all bulk dangerous cargoes other than petroleum products. These regulations specify hull types, cargo con- tainment and segregation characteristics, gauging and venting methods and construction standards providing various degrees of compartmentation and other collision protection. In addition, operating standards including inspection and~ testing are prescribed. There are new pollution prevention regulations requiring spill containment devices on vessels and at terminal transfer areas to prevent oil products spilled during cargo transfer from reaching the waterways. It is now mandatory that formalized procedures be followed by vessel and terminal personnel to. assure the readiness and integrity of all systems before cargo transfer begins. Des- ignated qualified personnel must perform the transfer and sign a Declaration of Inspection which clearly identifies those in charge of each part of the op- eration and certifies as to readiness for transfer of cargo. These regulations also require all vessels to have oily waste holding facilities, more frequent dry- dockings and internal tank inspections. Under authority of the Ports and Waterways Safety Act, the Coast Guard has established Vessel Traffic Systems in busy harbors and hazardous crossing areas which are similar to airport traffic control systems. These systems have produced sharply improved accident statistics and have facilitated the flow of traffic. A broad program to bring Vessel Traffic Systems to additional ports is being implemented. The Vessel Bridge-to-Bridge Communication Act requires VHF radiotelephone equipment on the bridge of virtually all cargo carrying vessels as well as tugs and towboats. Pilothouse watchstanding includes maintaining full time radio watch on the navigation channel. In this way all vessels within approximately a twenty mile radius of one another are in constant and instant radio contact. This is a giant step forward toward safe maneuvering as compared to the days when the easily misunderstood whistle signal was the oniy practical means of communication. After the addition of bridge-to-bridge VHF radios on vessels, it was logical that such equipment be placed on navigation locks and on many movable bridges across the waterways so as to permit approaching vessels to communicate directly with the bridge or locktender. In this way vessels can be informed of other approaching traffic and of any operating difficulties or abnormalities which might be present. These improvements in navigational information available to the pilot are effecting a major improvement in waterways safety, setting the stage toward a further reduction in pollution incidents. Those in charge of navigation of diesel towing vessels are now required to be licensed by the Coast Guard. A major program has been completed whereby over 17,000 diesel vessel operators were licensed. This licensing program estab- lishes a minimum level of competence for towboat pilothouse personnel and gives the Coast Guard an enforcement tool since it has the power to revoke or suspend a license under certain circumstances. In addition, other safety regulations are being discussed and their value being determined in an on-going process. Joint industry-Coast Guard committees continually are at work developing new ideas and refining them into workable regulatory methods and procedures. For many years the United States Coast Guard had been working closely with the water carrier industry and the chemicals industry in connection with the design of vessels and the development of regulations for the safe transportation of hazardous commOdities. We recognize the Coast Guard to be a tough but fair regulatory agency to which a full measure of credit is due for the fine safety record of the water transportation industry. PAGENO="0064" 58 Last years Arthur D. Little, Inc. prepared a report for the U.S. Maritime Administration to determine the comparative economic costs and safety risks to people, property and the environment inherent in the transport by various modes of several nonremovable hazardous substances which are frequently shipped. Incidentally, the report of this MarAd study was included in the materials that accompanied Mr. Smith's letter to the Committee in 1974. This study concludes that water transportation long has been and remains tl~e most highly regulated and the safest mode for the transportation of bulk hazardous commodities. It further concludes that if the level of penalties pro- vided for in Section 311 should be allowed to take effect, there would be a shift of much of this traffic from the waterways to other modes at the expense of public safety as well as at higher costs~ Increased transportation costs would be a certainty. These costs ranging from a minimum of 40% higher to more than five times a high for rail transportation and from 21/2 to nine times as high for truck deliveries would, of course, be passed along to the ultimate consumer. Even more serious, the rail, truck and pipeline industries would require years to provide the extra capacity to handle the added traffic load. Resulting regional shortages of chemicals would disrupt production and the supply-distribution process in many industries throughout the ecdiiomy. A real boost would be given inflationary forces as costs increase and production lags. The drastic changes in transportation economics would undoubtedly obsolete many chemical plants, forcing them to be built anew in different locations. The w-aste of assets, the burden of rebuilding at inflated costs, and the lead time before new plants can come into being would all add heavy increments to those inflationary forces already at historic heights. Signifi- cantly, during all of this time duplicative carrier and plant construction programs w-ould be adding a drain on this nation's tight steel supplies. Coincidentally, these increased costs and disruptions would all come about while this country grapples with the specter of chronic, long-term fuel short- ages. Statistics show water transportation as being the "energy efficient mode". Less energy per ton-niile is consumed in barge transportation than in coin- parable movements overland. According to a March 1974 statement by the DOT that for every ton-mile of freight moved by water, 462 BTU's of energy are con- sumed as compared w-ith 770 BTTJ's for rail and 2,770 BTU's for truck. Rail movement consumes % more fuel than the water haul per ton-mile, and truck- ing requires six times as much. Without doubt conservation of our fuel supplies will remain high on our list of national priorities for many years to come. Worst of all, a shift of traffic in hazardous chemicals from barge to rail transportation would increase significantly the likelihood of injuries and death to the people of this nation. The MarAd report studies typical movements in large volume of 10 bulk commodities of which 7 are hazardous to human life if spilled into the waterways. Estimating both frequency and severity of acci- dents from historical data in the various modes of transport, the report finds rail transport more hazardous than barge by factors ranging from 4 to 24 times, except for one example found only 60% more dangerous. Truck transport was nearly as safe as barge in most cases, and even better in one example, but its overall cost, of course, ranged from 21/2 to 9 times as high. In other matters studied in the MarAd report, such as relative exposure be- tween urban and rural areas, yearly recurrence intervals for spills, and ex- pected annual property losses, barge transportation on the whole was clearly found to be safer when compared with other modes of overland transport. As a general rule of law, it is contrary to public p~licy to insure against pen- alties imposed for violation of a law. The purposes of a penalty are twofold. A penalty is intended to act as a deterrent to and as a punishment for trans- gressions of the law-. The marine insurance industry has declared that the level of penalty now on the books is uninsurable. A person cannot obtain insurance to pay for penalties assessed for violations of automobile traffic ordinances. Labeling a penalty as civil" does not change its substantive characteristics, thereby making it insurable. The amount of a penalty for spilling a hazardous nonremovable substance could well exceed by many times the amount of most criminal penalties now on the books. It is necessary to draw distinctions be- tween and misleading to compare the ~5 million penalty ceiling with the ~14 million maximum liability for clean-up costs. Clean-up and removal costs are PAGENO="0065" 59 not penalties. They are what they claim to be-actual costs incurred during the removal operation. For that reason they are indeed insurable. Even if insurance to protect against a $5 million penalty could be obtained and it cannot, surely the rates would be exorbitant. Many responsible but small owners and operators simply would not be able to afford the premiums. As a result evasive devices will spring up, such as the incorporation of separate companies for individual vessels in order to limit liability to the value of the vessel. Once responsible carriers determine they are unable to risk the han- dling of hazardous nonremovable substances, the door will be opened to the irresponsible carrier with no insurance and with old equipment. The irrespon- sible carrier may well be willing to move such substances at a premium since he will have little of value to lose. Other considerations are complicated by the lack of insurance. One such con- sideration is third party liability. Owners and operators of vessels colliding with and causing a spill from a vessel carrying a hazardous nonremovable sub- stance may find themselves, through indemnification of the owners or operators of the carrying vessel, indirectly subject to a Section 311 penalty. Thus, all non-carrying vessels must also in some way be insured or protected against these potentially high liabilities. As a final point, and not withstanding the fact that the Committee has heard directly from a representative of the chemical industry, I must point out that the rapid growth of chemical processing plants along the navigable waterways in the United States is due in large measure to low-cost water transportation. Low- cost transportation of raw materials to these plants and economical distribution of bulk products from these plants are key factors in the chemical process indus- try whose products are feed stocks for the plants of manufacturers in hundreds of other industries. A huge portion of the work force of this country thus depends directly or indirectly for its livelihood upon the availability of bulk chemicals at reasonable prices. Relying upon the continued availability of low-cost water trans- port to meet the growing demand for its products, the chemicals industry year after year has planned and built new plants and equipment at rates of investment now aggregating more than $5 billion per year. The failure by the Congress to amend the level of penalties currently authorized by Section 311 would force an agonizing reconsideration of the expansion~ plans of the chemical industry. If shippers are now asked to take the risk of an uninsurable penalty relating solely to the nature of cargo, the effect upon transportation of hazardous commodities would be profound. Certainly no responsible water carrier who has any substan- tial equity at 5t~ke will assume such a risk at any price if there are other cargoes available to him which carry no penalty or significantly lower rates of penalty. By the same token. EPA can't administratively cure this uncertainty-it must be done by statute. "The Cloud" of Section 311 that hangs over the head of the chemical industry and those who are dependent on it will continue until this Section is amended. Its potential effect is devastating. The loss of many thousands of jobs and the potential permanent dislocation of hundreds of industrial plants throughout the country could be the result of failure to amend this Section. In summary, we support and urge the adoption and enactment of Section 12 of HR. 9500. This amendment will strengthen the Act and provide for its enforcement with- out driving chemical cargoes from the waterways which provide the safest and most efficient way for them to be transported. The amendment provides that where a discharge or spill is a result of willful negligence or willful misconduct, those responsible will be liable for an unlimited penalty to be established by the administrator, based either on the characteristics of the substance or the damage to the public health or welfare or both. Also the amendment mandates prompt action on the part of the owner or operator to take all reasonable steps to mini- inize the impact of the spill. This provision frankly has troubled many in indus- try. Such broad authority in the hands of a delegated government official without specific expertise or necessary guidelines is unprecedented. However, the water carriers have confidence that the guidelines to be established under the national contingency plan for the administration of this provision will be reasonable and be developed in close concert with the affected industries and other interested government agencies. In conclusion, we urge the adoption of the amendment and thank you for the opportunity to appear before you today. 63-1 92---76---------5 PAGENO="0066" 60 STATEMENT OF CLIFFORD J. HARvIs0N, MANAGING DIRECTOR, NATIONAL TANK TRUCK CARRIERS, INC. Mr. Chairman and members of the committee, my name is Clifford J. Harvison, and I am Managing Director of National Tank Truck Carriers, Inc-the national trade association of the for-hire tank truck industry. Our officers are located at 1616 P Street, N.W., Washington, D.C. NTTC's 230 members are primarily engaged in the transportation of thou- sands of petroleum products, chemicals, and drk bulk commodities throughout the 48 Continental United States in tank vehicles. The purpose of my presentation, tOday, is to note the support of our member- ship for the proposed amendments to Section 311 of Public Law 92-500 as proposed in HR. 9560. Of all of the interests concerned with the general application of PL 92-500 and the specific enforcement of Section 311, NTTC best represents the attitude of the small independent businessman. We do not represent the major oil and chemical companies-indeed, they are our customers. With the exception of about 12 companies, the stock of which are publicly-traded, our 200 plus mem- bers are strictly partnerships or family-owned and operated tank truck lines. I have provided the committee with two publications which are Financial Analyses of the tank truck industry compiled by a subsidiary of Dun & Brad- street and contain data for the years 1970 through 1974. You will note that, in 1974, the average revenue per carrier is $6,873,000, while the average net profit is roughly $175,000. In other words, Mr. Chairman, under the present top limits of the penalties found in Section 311, one tank vehiOle-defined as an "onshore facility" within the act-involved in a serious environmental incident, would decimate three years of net income of the average carrier. Of course, as the statement sub- mitted by Mr. Maloney of the Water Quality Insurance Syndicate specifies, the forefeiture is not insurance. The only option left to a carrier in this position would be to remain in business only long enough to cannibalize and sell off his equipment and property, giving up his operating authority and eliminating the availability of his services to the public. It is important to note that, as for-hire carriers, our members are subject to the strictures of the Interstate Commerce Act and the enforcement of the Inter- state Commerce Commission. In oher words, we have a legal obligation to provide service to the public within the terms of our certificates of public convenience and necessity. In other words. if a carrier has authority to haul chemicals from Houston, Texas, to Birmingham, Alabama, then chemicals he will haul, reliably and on demand by the consuming public. We cannot arbitrarily withdraw from transporting environmentally hazardous products. To do so would be patently illegal and would eliminate our industry's enormous investment in highly skilled personnel and specialized equipment. Mr. Chairman, in this respect we are in a position commonly described as being "between the rock and the hard place". We cannot afford not to haul- and we cannot afford to haul w-hen the forfeitures we face when the statistically- certain environmental incident occurs are so unrealistically high. Mr. Chairman, admittedly our prime reason for support is based on economics: however, I would like to deal, preemptorily, with some who might allege that our support is an attempt to gain competitive advantage over other modes. Such is simply not the case. First of all, the proposed amendment would place all modes-onshore or off- shore-in a position of equity as far as the potential for forfeiture is concerned. Secondly, and most importantly, the determination of what mode moves what traffic is based on the needs of the consumer modified by safety and economic considerations. Tank trucks only compete with other tank trucks because of economic and functional applicability. You simply cannot put every gasoline station on a rail line or inland waterway. Today, we haul to customers who want timely, door-to-door service involving deliveries of 4,000-7,000 gallons of products. We do not compete-nor could we compete-with the 20,000-100,000 gallon capacities of the rail and water-borne modes. Our industry provides a very specialized service from the plant or terminal to the consumer, manufacturer or processor. PAGENO="0067" 61 Mr. Chairman, the proposed reduction in penalties is justified if for no other reason than the fact that fallacious reasoning resulting in unrealistic penalties was responsible for Section 311 in the first place. The staff of the Senate committee on Public Works, in its report on 5. 2770 (the original Senate version of PL 92-500) tells us the "why" behind these astronomical penalties. On page ~7, it is stated that: "The Committee recognizes that a bulk carriage of substance which has an extremely high per unit penalty will be exposed to an unacceptable level of liability. Faced with this fact, bulk carriage of extremely toxic materials in most cases will pose an unacceptable risk. Thus by determining not to haul, in bulk, such hazardous materials the carriers will avoid unaccept- able economic risk As noted, this rationale is, at best, suspect. This reasol1ing is simply not practical in today's world. This committee is well aware of the dependence of this nation on the trans- portation of environmentally hazardous products-from chlorine for drinking water, to plasticizers for synthetics, and fertilizers for agricultural production.. Until such time as environmentally safe products are developed, these products. must be transported. Billions of pounds and gallons of vital products are shipped annually-and. much of it in bulk. Even to suggest that the transportation of the needed coin- modities be transferred from bulk modes to 5 gallon cans or 55 gallon drums is. an exercise in irrationality. I would dare say that the number of small, non-bulk. containers which would have to be produced for transportation alone (not to include storage) would defy computation. Therefore, I come before you today to respectfully suggest that you reconsider and amend the unrealistically high civil forfeitures found in Section 311 of: Public Law 92-500. STATEMENT OF EDWIN M. WHEELER, PRESIDENT, THE FERTILIZER INSTITIJT~ Mr. Chairman and mem~ibers of the committee, the Fertilizer Institute is a volun- tary non-profit national trade association representing approximately 90 per cent of the domestic fertilizer production. The Institute's membership includes pro- ducers, manufacturers, dealers and distributors of fertilizer and fertilizer materials. The Institute's members are major shippers by barge of fertilizer and fertilizer materials. Members of the Fertilizer Institute depend upon efficient, frequent low- cost water transportation to distribute the plant food which increases the food supply of the nation. In excess of one million tons of anhydrous ammonia are moved in domestic water transportation each year. If this volume were to be moved by rail, approxi- mately 1,100 additional jumbo tank cars would be required. Currently, there is a shortage of tank cars to move the tonnage already necessarily committed to this form of transportation. There are no excess cars to handle additional tonnage that would accrue if barge transportation were no longer available for anhydrous ammonia, regardless of the impact of greatly increased transportation costs. The result is clear: The bulk of the anhydrous ammonia needed by the agricul- tural community simply could not be delivered without the water distribution network now available. Pipelines can handle very little additional capacity, and this capability is very limited because they do not connect all of the major production plants with major distribution areas. They are inflexible. Anhydrous ammonia, when shipped via water transportation, is in a refriger- ated liquid form, with all water vapor removed. Upon release, it becomes a gas, lighter than air and highly soluble in water. When handled by other forms of transportation, it is handled under pressure. Surveys of the Coast Guard and the various water carriers handling anhydrous ammonia has produced no record of any accidental discharge or spillage, even though there have been several, barge collisions involving the product. Without fear of contradiction, it can be said that anhydrous ammonia has a superior, unblemished safety record in water transportation. There is a very good reason for this safety record: Extensive regulation of barge design and handling. The barging of anhydrous ammonia in cryogenic- PAGENO="0068" 62 type barges is, a relatively recent innovation, thus modern design capability has been utilized to its fullest in the building of these barges. Coast Guard regula- tions with regard to both design and handling are very stringent. The scope and enforcement of Coast Guard regulations and the safety features built into these barges practically assures that there will not be any discharge or spillage in case of accidents. The design requirements of barges are such that they cannot be swamped and are virtually impossible to sink. These protective features built into the barges provide almost complete protection from damage to the cargo container from outside forces. Indeed, in one accident, an ammonia barge took the full impact when rammed amidship by another barge moving at a high rate of speed. While substantial damage was caused to the barge frame, the cargo tank sustained no damage at all. Another design feature of anhydrous ammonia barges is compartmentation, such that if damage did occur to a tank only the product in one compartment would be involved. Flooding capability is available for each compartment, so that the ammonia in any particular compartment that might develop a leak can be neutralized by flooding that compartment with water. Each compartment is fitted with several safety valves so that, in the very unlikely event of a sinking, one of these valves would open to release the am- monia very slowly rather than allow pressure to build up and rupture the com- partment. Since ammonia is completely soluble in water, the only pollution dan- `ger would occur if the rate and amount of ammonia discharged were to be greater than the ability of the water to disperse it. Ammonia release would be caused by temperature rise within the barge cryo- genic storage compartments, resulting from the refrigeration equipment no longer operating. Even without refrigeration equipment, "boil off" would be very slow since the compartments are extremely well insulated. Further, safety factors for the safe transportation of ammonia by barge are: Specially designed hulls and rakes; Coast Guard-approved tow formations; specially trained crews; and special care taken in general operation. There is little danger to the public health and welfare from the transportation of anhydrous ammonia by barge. The Arthur D. Little Economic and Safety An- alysis of Bulk Transportation of Hazardous Substance, conducted for the Depart- meat of Commerce, concluded with respect to this commodity: "Barge [transpor- tation] is less expensive than rail or truck and is the safest of all modes for -people, although it does pi'esent an infrequent water pollution hazard." As stated previously, the present penalty provisions of Section 311. of the `Water Pollution Control Act pose an unnecessary economic burden on domestic w-ater carriers that, if implemented, will drastically curtail, and very probably entirely eliminate the growth of water transportation of anhydrous ammonia and other essential fertilizer products. Use of fertilizer is rising at 5% per year compounded; new production facilities are being erected to meet that demand. Growing demand-supply require growing logistical ability. The Fertilizer Institute supports Congress' efforts to enhance the quality of the nation's inland waters, but this object must not be pursued at the unreason- able expense of other equally vital national goals. A continuing adequate supply of food, both at home and for other areas of the world, is certainly such a goal. This supply cannot be maintained if domestic water transportation is curtailed. The Fertilizer Institute strongly supports the proposed amendment to Section 311 as provided in Section 12 of H.R. 9560. It is a far more practical and realistic ~approach to enhancing water quality, without jeopardizing essential water trans- portation. The Institute wishes to emphasize, however, that before this proposal is enacted, either the amendment to Section 311 or the legislative history should clearly specify that the Government in close cooperation with affected industries ~shall develop adequate regulations or guidelines to determine the scope and extent of responsibility for removal of discharges of each designated hazardous sub- - stance. Section 12 of H.R. 9560 provides unlimited penalties for "willful failure" -to remove such discharges without any guides as to whether an action or inaction ~is deemed "willful." To leave this determination solely to the ad hoc discretion of "the responsible Federal officer specified in the National Contingency Plan" after ~ discharge occurs exposes carriers to an unreasonable and potentially disastrous risk. With the `above clarification, The Fertilizer Institute urges this Committee to adopt Section 12 of H.R. 9560. PAGENO="0069" 63 STATEMENT OF JOHN PROKOP, PRESIDENT, INDEPENDENT LIQUID TERMINALS ASSOCIATION Mr. Chairman, members of the subcommittee, we appreciate very much your invitation to appear at this hearing. I am John Prokop, President of the Inde- pendent Liquid Terminals Association, a national trade association which repre- sents commercial operators of bulk liquid terminal and tank storage facilities located on the East Coast, Gulf Coast, West Coast, Great Lakes, and Inland Waterways of the United States. (A list of ILTA's 43 member companies and their terminal locations is attached to this statement as an appendix.) ILTA Members operate a total of 89 deepwater and barge terminals in 24 states and handle annually over 300,000,000 barrels of bulk liquid commodities essential to American business and hence, the American consumer. The terminals interconnect with and provide services to the various modes of bulk liquid car- riers, namely tankers, tank barges, tank trucks, tank rail cars, and pipeline. The commodities handled include a wide variety of chemicals, crude oil, refined petro- leum products, animal fats and oils, molasses, and vegetable oils. Terminal facilities, as Committee members are probably well aware, consist of docks for tankers and tank barges, pumps and equipment for loading and unloading the vessels, pipelines to and from storage tanks, sometimes pipelines to purchasers and users of products, and loading and unloading facilities for rail tank cars and tank trucks. We wish to commend this Committee for responding to requests to review the hazardous substance discharge penalty provision of Section 311 of the Federal * Water Pollution Control Act. We are here today to endorse the amendment con- tained in Section 12 of HR. 9560, which would re-establish a penalty with a reasonable ceiling which could be imposed upon companies unfortunately suffer- ing an accidental discharge of a hazardous substance. The provision in HR. 9560, amending Section 311, not only provides for a reasonable monetary penalty, but it provides the Administrator of the Environ- mental Protection Agency with categorical guidelines in which he can take into consideration the record of the discharging party and that operator's efforts to implement pollution prevention techniques, plans, and equipment, in determining the amount of the penalty to be imposed. The ILTA believes that this remedial approach represents a tremendous im- provement over the penalty in existing law which some persons have termed as a singularly vengeful approach in that a staggering monetary penalty could be imposed on a company after the fact-after the accidental discharge has occurred. The impact of the penalty in existing law is therefore almost totally negative; it is pure punlshment and holds out no rewards for operators to reduce spills, purchase pollution prevention equipment and implement pollution prevention plans, techniques and programs. Under the Committee's proposed amendment, operators with good records and pollution prevention programs, who have occasional accidental discha rges, know that under the guidelines recommended, that the EPA Administrator can and should take into consideration the operator's efforts at pollution prevention in determinating the amount of the penalty. Operators with good records can be rewarded with lower penalties. Operators with bad records who refuse to im- prove their pollution prevention equipment and plans can have progie~sively higher penalties levied on them. There exists, therefore. for those few persons who might he unmindful of the environment, the opportunity to improve or to be penalized frequently to a maximum degree so that eventually when they compare the cost of penalties they have been paying with the cost of a pollution prevention plan, the pollution prevention plan is the more economical route, if not also the wisest, and environmentally beneficial route to take. If enacted, we would hope that this amendment would have this desirable im- pact and that under the regulations developed by the EPA. that the penalty would he applied with uniformity and impartiality around the nation. We have other reasons w-e feel the existing Sections 311 penalty dealing with hazardous substances discharges should be amended. The existing penalty with a $5 million maximum for vessels and a $500,000 maximum for terminals and other onshore and offshore facilities was spawned in the Senate Committee. When Senate Committee staff considered the problem of hazardous substances dis- charges, they discovered that there was very little data or information to guide them in establishing the penalty. PAGENO="0070" 64 Rather than set too low a penalty, they first proposed unlimited financial liability coupled with no-fault legal liability ; when that proved unacceptable, they proposed a $5,000 per barrel penalty for discharges. Later in Conference, the penalty in existing law was arrived at through negotiation with the belief that it could be changed if it needed improvement. Prior to the Conference, how- ever, the Senate Committee in its Report on the 1972 Amendments to the Federal Water Pollution Control Act made the follow-ing statement: `The Committee recognizes that a bulk carriage of a substance which has an extremely high per imit penalty w-ill be exposed to an unacceptable level of liability. Faced with this fact bulk carriage of extremely toxic materials in most cases will pose an unacceptable risk. Thus, by determining not to haul, in bulk, such hazardous materials the carrier will avoid unacceptable economic risk and the public will not be confronted with unacceptable environmental risk (over w-hich only the carrier has any control) ." (Report No. 92-414, page GL) As with the amount of the penalty the Senate Committee proposed, they were likewise handicapped by lack of information on what substances were hazardous and w-hat w~as the annual tonnage transported by vessel of these unknown substances. Without information, the Senate Committee assumed that the water mode was the most environmentally unsafe and that any substances not carried by w-ater could be carried more safely by other modes. At the recommendation of members of the House Public `Works Committee, the Conference Report on the 19T2 Amendments to the Federal Water Pollution Control Act, recommended that Federal agencies initiate a study with non- agency scientists to determine w-hat substances are hazardous and other specific information about the harmful chai'acteristics. Two such studies have been initiated arid completed. One under the auspices of the EPA on `the substances themselves, and another by the Office of Domestic Shipping, Maritime Adminis- tration. Department of Commerce. examining specific shipments of hazardous substances by various modes and comparing `the spill propensity of each mnode. This study, a "Modal Economic and Safety Analysis of the Transportation of Hazardous Substances in Bulk," performed by Arthur D. Little, Inc., shows the water mode, by a wide margin, to be the most environmentally safe and most economic mode for transporting hazardous substances in bulk. We would hope that this study would dispel the uninformed assumption about the water mode.1 The ILTA Members' terminals are an important part of the American distribu- tion anti manufacturing system w-hich brings raw- materials to plant sites awl moves manufactured goods to the market place. It is *a system that utilizes all modes of transportation in their most efficient, economic manner. Terminals are located at w-aterside because tanker and tank barge (and pipeline where avail- able) are the most efficient, economic method of moving low-value, raw materials in large bulk quantities needed by manufacturing plants and utilities. The ILTA Members' terminals in turn use the rail, and are equally highly dependent on truck (and sometimes pipeline) to redistribute inland in substantial but smaller quantities bulk products to both large and small users. This distribution system is highly dependent upon all modes to keep working; billions of dollars have been invested by hundreds of terminals and thousands of plants to locate at w-aterside and build reception and storage facilities. To shift transportation of these hazardous substances from water to a land mode would cause severe economic dislocations; we w-ould be abandoning an environ- mentally safe low- cost water transportation and waterside facilities, and impose on land modes the burden of handling hundreds of millions' of tons annually of cargoes they do not have the capacity to carry. 1 For example, the "Modal" study shows that for a shipment of styrene (a toxic sub- stance used to make plastic items) from Texas City, Texas, to Addyston, Ohio, by barge ~n time inland river system. the expected interval between spill-causing accidents is 35 years for barge. 4.5 years for truck, and 1.1 years for rail. The number of humans ex- i)OCed to the accident for barge would be 1.0; for truck, 1.4: and for rail, 24. The annual property damage for such a barge soUl would be $570; for truck, $784; and for rail, $13,100. The "Modal" study explains why the risk of accident is low for barges and trucks, but high for rail. Barge flotillas, because of their large capacity, have fewer modal units, and therefore have proportionally fewer accidents. It takes GO 50-ton rail tank cars to equal the capacity of one 3000-toa barge. The combined mechanical energy that results from a barge collision may be tremendous, but such features as double hulls and other a~afety factors tend to preclude or reduce the accident frequency and the likelihood of spills. Rail tank car movements are more susceptible to accidents because rail shipments involve a large number of massive vehicles traveling at high speed in a single line. If an accident occurs. the result is often a multiple collision in which the large masses and velocities result in severe damage, causing cargo spills. PAGENO="0071" 65 Therefore, we favor the Section 12 provision in H.R. 9560, because this amendment would remove from existing law the excessive civil penalty which some fear could result indirectly in causing such a shift of a substantial amount of commodities from the water to land modes. The terminal industry, itself has difficulty with the $500,000 penalty for dis- charges from onshore facilities. Although 10 times less the amount that can be imposed on vessels, it represents a considerable threat to medium to small in size terminals which specialize in handling exotic, toxic or hazardous substances. Those terminals with capability for handling, storing, and distributing large volumes of bulk liquid are usually handling fuel oil anti other petroleum prod- ucts. The liability under Federal law for discharges for oil from terminals is insurable, especially for cleanup costs. There is no comparable excessive penalty for a discharge of oil as there is for a discharge for a hazardous substance. The problem of the terminal handling hazardous substances becomes even some- what more complicated, because in addition to the maximum penalty of $500,000 for a discharge, such terminals generally have not been able to obtain insurance coverage for damages caused by discharge or at best, they can obtain only very restricted insurance coverage. Coverage is generally available for sudden and accidental incidents-fire or explosion resulting in bodily injury and properly damage. But a slow occurrence, a leak or an overflow, is generally not covered today. The insurance problem to cover liability for hazardous substance damage is not one for this Committee, but something our industry must w-ork out with the insurance industry. However, and I think the insurance industry will agree with me, that the amendment considered here today, which is primarily remedial and secondarily punitive, we believe will encourage the implementation of better pollution prevention methods in the handling of substances, and will be helpful in making damage liability insurance available at premiums reasonable for the risk. As you may also be well aware, penalties in any amount are by law generally uninsurable in this country. Since there is no available form of commercial pro- tection against such penalties except to post the assets of one's business as collateral, the terminal and storage industry, a key national business in the American distribution system interconnecting transportation modes, manu- facturing plants and utilities, is particularly vulnerable to the harshness of the $500,000 penalty in Section 311. To help partially resolve this difficulty that the bulk liquid terminal industry faces, ILTA recommends that this Conunittee approve the amendment contained in Section 12 of HR. 9560. It is a proposal which has had the benefit of careful analysis and study by both the industries affected and is supported by data devel- oped in independently performed studies. While the amendment is not perfect in that it does not satisfy everyone concerned 100 percent, it is a compromise far superior to the provision in existing law, and therefore it is an amendment which deserves to be enacted. Mr. Chairman, we appreciate this oppOrtunity to present our views on this legislation which is not only of importance to our industry and the transportation modes, but also to consumer and to the environment in which we must all live. ILTA MEMBER Co~iPANIEs Baker Commodities, Inc.: Long Beach, Calif.; and San Francisco, Calif. Bay Terminals: Richmond, Calif. Bayonne Industries, Inc.: Newark, N.J. Beverly Chemical Terminal Co.: Beverly, Mass. Bulk Terminals Co.: Chicago, Ill. Colonial Oil Industries, Inc.: Savannah, Ga. Columbia Terminals, Inc.: South Kearny, N.J. IDorward Terminals, Inc.: Richmond, Calif. El Dorado Terminals Corp.: Bayonne, N.J. Ergon, Inc.: Jackson, Miss.; Mobile, Ala.; Memphis, Tenn.; Blytheville, Ark.; Greenville, Miss.; Vicksburg, Miss.; Bucks, Ala.; and Pascagoula, Miss. The Excello Corp. (New Haven Term.) : New Haven, Conn. Fore Terminals, Inc.: Alameda, Calif.; and Tacoma, Wash. GATX Terminals: Chicago, Ill.; Carteret, N.J.; Tampa, Fla.; Orlando, Fin.; New Orleans, La.; Houston, Tex.; Los Angeles, Calif.; Vancouver, Wash.; and Port- land, Ore. PAGENO="0072" 66 Gulf Interstate Engineering Co.: Wilmington, Del.: and Chester Penn. Houston Tank Storage Co.: Houston Tex. Hudson Tank Storage Co.: Union City, N.J. Intercontinental Terminals Co.: Houston, Tex.; and Tampa Fla. International-1\fatex Tank Terminals: New Orleans La. Lake-River Terminals, Inc.: Chicago 111. Martin Terminals Co.: Pine Bluff Ark. Milwaukee Ocean Terminal: Milwaukee, Wisc. Norfolk Oil Transit, Inc. ; Norfolk. Va. North American Car Corp.: Lemont. Ill. Northviile Industries Corp.: New- York. N.Y.: and Linden N.J. Northwestern Petroleum. Inc. : Tacoma. Wash. Ocean Terminals. Inc.: Blue Bell, Penna.; Paulsboro, N.J.: and Morehead City. NC. Outerbridge Terminals. Inc.: Perth Amboy, N.J. Pacific Molasses Co. (17 Terminals) : N.Y.; Maryland; Texas; Alabama; Louisi- ana; Oregon; California; Washington; and Illinois. Paktank, U.S.A.: Paulsboro, N.J. Petromark, Inc.: Richmond, Calif. Queen City Terminals: Cincinnati, Ohio Robertson Terminals, Inc.: Houston, Tex. Rollins Terminals, Inc.: Bayonne, N.J.; Rio Hondo, Tex.: and Lake Charles, La. Skyline Terminals, Inc.: Baltimore, Md. South Coast Terminals, Inc.: Houston. Tex. Southland Oil Co.: Savannah, Ga. Steuber Co., Inc.: Texas City, Tex.; Bayport. Tex.; and Bayonne, N.J. Thru-Chem Services: Philadelphia, Penna. Time Oil Co.: Los Angeles, Calif.; and Seattle, Wash. Tresler Oil Co.: Cincinnati, Ohio Trumbull Asphalt Co.: Summit, Ill.; Morehead City, N.C.; and Jacksonville, Fin. W.A.S. Terminals, Inc. : Newark, N.J. Wilmington Liquid Bulk Terminals: Wilmington, Calif. Wolf Lake Terminals~: Hammond, mci. TESTIMONY OF INDUSTRIAL PANEL CONSISTING OP JOSEPH F. KNOTT, DIRECTOR OP DISTRIBUTION, PITTSBURGH PLATE GLASS INDUSTRIES, REPRESENTING MANUFACTURING CHEMISTS AS- SOCIATIOPI; WALTER E. MALONEY, ATTORNEY-AT-LAW, BIGHAM, ENGLAL, SONES ~ HOUSTO~, REPRESENTING MARINE INSUR- ANCE UNDERWRITERS; WILLIAM A. CREELNAN. PRESIDENT, TRANSPORT DIVISION, NATIONAL MARINE SERVICE, INC., REPRESENTING AMERICAN WATERWAY OPERATORS; CLIFFORD HAN VISON, MANAGING DIRECTOR, NATIONAL TANK TRUCK CARRIERS. INC.; EDWIN WHEELER, PRESIDENT, ACCOMPANIED BY BEN DAY, ASSISTANT VICE PRESIDENT, MEMBER SERVICES, FERTILIZER INSTITUTE: JOHN PROKOP, PRESIDENT, INDEPEND- ENT LIQUID TERMINALS ASSOCIATION; JAMES N. SMITH, PRESI- DENT, THE AMERICAN WATERWAYS OPERATORS, INC.; AND GEORGE 5. HANKS, JR., CHAIRMAN, WATER RESOURCES COM- MITTEE, MANUFACTURING CHEMIST ASSOCIATION Mr. KNOTT. Mr. Chairman, we appreciate that kind introduction. We hope we aie distinguished in the sense that we can be brief. I am Joseph Knott, director of distribution for the Industrial Chern- ic.a1 Division of PPG Industries; and while I am appearing on behalf of the Manufacturing Chemists Association, I would like to introduce my associates on the IncTustrial Panel who are with me today. PAGENO="0073" 67 First, Mr. William A. Creelman, president of the Transport Divi- sion, National Marine Service, Inc. Next, I want to point out that Mr. Creelman is also chairman of the Towing Industry Advisory Com- mittee for the Marine Safety Council of the U.S. Coast Guard. Next is Mr. Clifford Harvison, managing director, National Tank Truck Carriers, Inc. Both of these gentlemen will address specific issues with you today. Also with me is Mr. Walter E. Maloney, counselor at law, represent- ing the Water Quality Insurance Syndicate, WQIS, in this matter; along with Mr. James IR. Smith, president of the American Waterways Operators, Inc.; Mr. Edwin Wheeler, president, Fertilizer Institute; and Mr. John Prokop, president Independent Liquid Terminals Association. There will be three brief presentations, and we would like to suggest for brevity to hold the questions for all three. Mr. ROBERTS. Without objection, we will wait until these three state- ments have been presented. Mr. KNOTT. MCA is a nonprofit trade association having 186 U.S. member companies representing more than 90 percent of the produc- tion capacity of basic industrial chemicals within this country. We have member company plants that number 1,600 and are located in almost every State in the Union. Thus, Public Law 92-500 is some- thing of prime interest to us. Before I get into the sections dealing with transportation, I would like to make a brief comment concerning two matters contained in section 311 of H.IR. 9560, toxic and pretreat- ment standards. As presently written, section 307(a) (2) of Public Law 92-500 re- quires that the Administrator hold hearings within 30 days of publi- cation on proposed toxic pollutant standards and promulgate such standards within 6 months. H.R. 9560 proposes to eliminate the 30- day requirement which we support. However, the amendment should also insure a balance of adequate time for presentation of hearing, argument, and for review of the hearing record. This may not be possible if hearings happen to be deferred well into the 6-month time period. To avoid that possibility, we recommend that the date of promulgation be related reasonably to the date of the hearing commencement. Section 11(b) of H.R. 9560 recognizes the difficulty of compliance with toxic effluent standards within 1 year of promulgation. We con- sider this to be inadequate in two respects. First, technological infeasibility is not likely to be the sole reason, legislated, for failure to comply within 1 year. Not only must dis- chargers determine whether technology exists, but they must design, nurchase, and install the needed facility within the 1-year timeframe. We think this is a difficult hurdle to meet. These other matters are very real problems that may not be considered to fall within the interpretation of the phrase "technologically infeasible." Second, while categories of sources may be determined by the Administrator to be capable of complying within a 1-year period, yet there may be legitimate reasons why individual sources in that category may not be able to do so. We believe the Administrator should be allowed some discretion in extending compliance time for mndividual sources as well as categories of sources. PAGENO="0074" 68 Moving on to section 12, I would like to point out that this deals with section 311 of the basic law, and that has been a most difficult portion of this law for industry to handle. Barge operators, particu- larly, have advised chemical shippers that materials appearing on the soon-to-be-published formal list by EPA, may well not move in inter- state commerce. Based on the heavy penalty portion of section 311, other equally attractive cargoes are apparently available `to them without risk of a $5 million penalty structure. This problem has been recognized by EPA, and Mr. Train's letter of January 30 to Congress, and I quote: Another problem which we are studying concerns the provisions of section 311(b) -that is the heavy penalty section- with respect to penalties for the discharge of hazardous substances. LTnder this system of penalties established by the 1972 amendments, the penalty of ~5 million per discharge may be imposed. Under the circumstances, carriers of hazardous substance may increasingly employ alternative methods of transporta- tion, often involving greater health and environmental hazards. This, Mr. Chairman, is the thrust of our message today, but the water carriers are not the only ones who are bothered by this law as it now stands. Even though the chemical industry ships 20 million tolls of product annually on the inland waterway system, obviously we ship many, many more tolls in tile other modes. The impact of this problem, I think, can be gained by just a brief survey that we did in MCA in 1974. We surveyed only 22 member companies and found they had 110 chemical plants wholly or partially dependent upon waterborne transportation for tile contmuecl operation of these some $8 billion worth of facilities. Furthermore, because of the basic nature of the chemical industry, disruption of production at these plants would have a multiplier or ripple effect over tile rest of the economy. The other carriers, while not faced with `a $5 million penalty, are faced with a $500,000 penalty under the law. These carriers have likewise advised us that they will explore every legal opportunity to avoid transport of some or possibly all materials appearing on the list. The insurance industry through its spokesman for WQIS, Water Quality Insurance Syndicate. indicates and advises such civil or criminal penalties in excess of $50,000 will not be insured. Existing laws prohibit the carriers from ~contractually shifting this potential to industrial shippers like ourselves. Even in the absence of such laws, the shippers cannot accept liability for potential accidents in operations over which. they have no direct control. With that before us, we think it is unfair to levy a devastating penalty of $5 million in the case of waterborne and up to $500,000 in the case of land modes because the carrier cannot achieve enough control, cannot provide a. 100-percent control over his environment, and cannot then risk anything which would allow destruction of his corporate entit.y. \~Te recommend instead the more moderate meaningful penalty of $50.000, as put forth in H.R. 9560, be adopted. The prevention of spills is more effectively controlled, we think, through the U.S. Coast Guard and EPA regulations now in effect. PAGENO="0075" 69 Significant laws and regulations which will be quoted by other mem- bers of this panel have been enacted since this law was passed. The possibility still exists that there may be operators who are care- less or irresponsible, ignoring existing regulations or deliberately cutting corners in their operations. This type of operator is not sup- ported by this industry. Nevertheless, w~ recognize the only way to effectively deal with .such an individual is through stringent legisla- tion. Here, we applaud your efforts in H.R. 9560, where in some cases the potential penalty is more severe than is found in existing law. We distinctly support section 12 of H.R. 9560 because it reflects a reasonable and sensible approach to the problem of pollution control, and here I would like to include the EPA group-the technical group with whom we have labored long and hard in a two-prong effort. We are here today representing one prong of that effort, and that is legis- lative reform, but we have also worked diligently with the technical group in EPA to come forward with rationale regulations in writing; that enforcement regulation program, as you know, is well behind schedule. However, we have worked diligently with them and would like to report to you that they have provided the time and effort necessary for us to meet with them on many, many occasions to try to work out reasonable regulations. Now, our industry is obviously concerned about some aspects of H.R. 9560, and those are contained in our prepared statement which we would like to have read into the record. I understand from the Chairman that that has been taken care of. In that regard, MCA stands ready to work with the Environmental Protection Agency, the U.S. Coast Guard and other Federal and State agencies to develop guidelines for removing or mitigating spills of specific hazardous sub- stances in accordance with the national contingency plan specified in subsection (c) (2). V\Te believe it is important to develop these joint government/ industry guidelines in order to provide the guidelines for the respon- sible Federal officer in making decisions involving extremely complex cost/benefit considerations under the most adverse circumstances under which spills occur, and here, specifically, we are giving meaning, we hope, to the language of lines 7 through 10 on page 12 of H.IR. 9560, which refers specifically to the willful failure to act. Obviously, we are not interested in buying the Brooklyn Bridge with those lines. lYe are interested in providing something in the way of meaningful guidelines for the on-scene officers, and we think this is responsive to the intent of the law and will do the most for water quality. lYe would suggest, however, a minor amendment to section 12 of H.R. 9560. We are concerned that as it is presently written, there might be an interpretation that material in this section would not be covered properly under the national pollutant discharge elimination system. In other words, something which in section 402 of this same act has a permit. lYe think you obviously would agree that discharges permitted under section 402 should not be covered under section 311 and thus not placed in a double jeopardy position. We believe this was an oversight and it was not the intent of Congress to authorize dis- charge permits in one section and set penalties for these discharges~ elsewhere in the same act. PAGENO="0076" 70 With that piepared portion of our testimony, I would like to next switch to Bill Creehnan who will discuss his aspects of this law. Mr. CREELMAN. Thank you. I am Bill Creelman, president of National Marine Service, Trans- port Division. We are engaged in the barge transportation of bulk liquid barge transportation, based in St. Louis, Mo., and I also serve as chairman of the Towii~g Industry Advisory Committee of the Marine Safety Council of the TT.S. Coast. Guard. I am here today Tepresenting the American Waterways Operators. We in the bulk liquid barging industry feel that the penalty provi- ~sions of Public Law 92-500 represent a serious threat to the orderly movement of bulk chemicals by water. Mr. James II. Smith, president of the. American Waterways Operators, Inc.. on July 15, 1974, repre- senting the affected industries, wrote to both the House and Senate * Public Works Committees expressing concern with and documenting the need for amendment of section 311 of Public Law 92-500. I respectfully request that. Mr. Smith's letter and its enclosures be incorporated in the record of these hearings. I have them with, me here. Mr. CLATI~SEN. Mr. Cliairman~ how large are the documents the gentleman is referring to? I am thinking in terms of whether they should be in the hearing record~ or referred to in the record and placed in the file. Mr. S~i~xn. I think we can recognize the full report of the Arthur D. Little Co. did come to the Maritime Administration and should not be put in the committee record. but there is a relatively short executive summary, which I think a lot of PeoPle would like to reacT and we would respectfully request that the executive summary be included 0111 V. ~{m. Gixx [Presidingi. Is there objection? Mr. CLAFSEX. No objection and the balance wouldi be referredi to in the hearing record and then placed in the file of the committee. Mr. S~nTI-I. Mr. Chairman, with your permission, there is some in- formation in here andi it is not really long. There is a letter that is rather well put together as a* brief on the whole problem, some answers to questions we put to the Coast Guard about the effect of new laws that had been passed since Public Law 92-500 was passed~ and that ire think are of sufficient merit that. they should be. included in the record because I know a. lot of people are going to be reading this record audi not just. in the committee files, and they are not. very lengthy. Mr. Clausen. Mr. CREELMAN. The House and Senate conference committee in 1972 promised that the penalty provision of Public Law 92-500 would be reviewed if other legislation dealing with the handling of hazard- ous materials was enacted and implemented. Such legislation and regulation is now effective-I am referring to the Vessefl Bridge to Bridige Communications Act. the Towing Vessel Licensing Act, and the Ports and WTaterways Cafety Act. as well as other Coast Guard regulations. For instance, subchapter 0 regulates the construction staudlardls iind operating procedures of barges engaged in the carriage of bulk ~Th'v~eicus cargoes. PAGENO="0077" 71 Subchapter D and the new oil pollution prevention regulations specify construction and operating standards for vessels and terminals engaged in handling bulk oil products by water. The. Ports and Waterways Safety Act has led to the establishment of vessel traffic systems in busy harbors. These systems have produced sharply imprOved accident statistics. The Vessel Bridge to Bridge Communications Act has brought VHF radio/telephone equipment to virtually all cargo carrying ves- sels as well as tugs and towboats and bridges and locks across the waterways. The improved communication which results is a giant step forward toward better waterway safety and toward a significant re- duction in pollution incidents. A major Coast Guard regulation program has been completed whereby over 17,000 diesel vessel operators-or pilots-were licensed. In addition, other safety regulations are being discussed by joint industry Coast Guard committees continually at work developing regulatory methods and procedures which make a significant contri- bution to waterways safety and pollution avoidance. The Coast Guard regulatory strictions for hazardous materials transport is recognized as the world's best and deserves a full measure of credit for the fine safety record of the domestic water transportation industry. Last year, Arthur D. Little, Inc., prepared a report for MAIRAD- that is the one that will go in the record-comparing the cost and safety records of the various modes in the transport of nonremovable hazardous substances. This study concludes that water transporta- tion long has been and remains the most highly regulated and the safest and most energy efficient mode for the transportation of bulk hazardous commodities. It further concludes that if the level of penalties provided for in section 311 would be allowed to take effect, there would be a shift of sothe of this traffic from the waterways to other modes at th.e expense of public safety as well as at higher cost. The extraordinary penalty provisions of section 311 of the un- amended law also represent a threat to other carriers not carrying hazardous materials but subject to third-party liability as operators of vessels colliding with and causing spills from vessels carrying hazardous nonremovable substances. Thus, all noncarrying vessels must also consider the risks of liability for these extraordinary pen- alties and perhaps disrupt their operations to avoid them. As a final point, I must emphasize that the rapid growth of chemical processing plants along the waterways is due in large part to low cost,. safe, water transportation. The failure of the Congress to amend the level of penalties currently authorized by section 311 would force an agonizing reconsideration of the expansion plans of the chemical in- dustry. If shippers are now asked to take the risk of an uninsurable penalty relating solely to the nature of the cargo, the effect upon transportation of hazardous commodities would be profound. Cer- tainly no responsible water carrier who has any substantial equity at stake will assume such an uninsurable risk at any price if there are other cargoes available to him which carry no penalty or substantially lower rates of p&ialty. . The amendment provided by section 12 of H.R. 9~60 will strengthen the act and provide for its enforcement without driving chemical: PAGENO="0078" 72 ettrgoes from the safest mode-the waterways. It provides for report- ing all spills, not just those in excess of a hazardous quantity. It pro- ~vides for an unlimited penalty where willful misconduct causes a spill. It mandates prompt action on the part of the owner or operator to take all reasonable steps to minimize the impact of any spill. In conclusion, we urge adoption of section 12 of H.R. 9560 amend- ing Public Law 92-500 and thank you very much for the opportunity to appear before you today. Mr. GINN. Mr. Creelman, we appreciate your testimony. Mr. Knott, who is your next witness? Mr. KNOTT. Mr. Harvison. Mr. GINN. Mr. Harvison, if you will proceed. Mr. HARVISOX. Thank you. I promise the committee I will be very brief with a very nasal statement. Mr. Chairman and members of the committee, my name is Clifford J. Harvison, and I am managing director of National Tank Truck Carrier, Inc.-the national trade association of the For-Hire Tank Truck Industry. Our offices are located at 1616 P Street, NW., Washington, D.C. National Tank Truck Carrier's 230 members are primarily engaged in the transportation of thousands of petroleum products, chemicals, and dry bulk commodities throughout the 48 continental United States in tank vehicles. The purpose of my presentation, today, is to note the support of our membership for the proposed amendments to section 311 of Public Law 92-500 as proposed in H.R. 9560. Of all the interests concerned with the general application of Pub- lie Law 92-500 and the specific enforcement of section 311, NTTC best represents the attitude of the small independent businessman. We do riot represent the major oil and chemical companies-indeed, they are our customers. With the exception of about 12 companies, the stock of ~which are publicly traded, our 200-plus members are strictly partner- ships or family owned and operated tank truck lines. I have provided the committee with two publications which are fi- riancial analyses of the tank truck industry compiled by a subsidiary of Dun & Bradstreet and containing data for the years 1970 through :1974. You will note that, in 1974, the average revenue per carrier is $6~873,000, while the average net profit is roughly $175,000. I wish to note parenthetically at this point the Small Business Administration has recently revised its regulation to note that truck- ing companies averaging less than $7 million gross revenue is con- sidered as a small business, while the average net profit of carriers is roughly $175,000 per annum and again for the average carrier. In ot:her words, Mr. Chairman, under the present top limits of the ~penalties found in section 311, one tank vehicle-defined as an "onshore facility" within the act-involved in a serious environmental incident, would decimate three years of net income of the average carrier in our industry. Of course, as the statemeilt submitted by Mr. Maloney *of the Water Quality Insurance Syndicate specifies, the forefeiture is not insurable. The only option left to a carrier in this position would be to remain in business only long enough to cannibalize and sell off PAGENO="0079" 73 his equipment and property, giving up his operating authority and eliminating the availability of his services to the public. - It is important to note that, as for-hire carriers, our members are subject to the strictures of the Interstate Commerce Act and the en- forcement of the Interstate Commerce Commission. In other words, we have a legal ~bligation to provide service to the public within the terms of our certificates of public convenience and iiecessity. In other words, if a carrier has authority to haul chemicals from Houston, Tex., to Birmingham, Ala., then chemicals he will haul, reliably and on demand by the consuming public. We cannot arbitrarily withdraw from transporting environmentally hazardous products. To do so would be patently illegal and would eliminate our industry's enormous investment in highly skilled per- sonnel and specialized equipment. Mr. Chairman, in this respect we are in a position commonly de- scribed as being "between the rock and the hard place." We cannot afford not to haul-and we cannot afford to haul when the forfeitures we face when the statistically certain environmental incident occurs are so unrealistically high. Mr. Chairman, admittedly our prime reason for support is based on economics; however, I would like to deal, preemptorily, with some who might allege that our support is an attempt to gain competitive advantage over other modes. Such is simply not the case. First of all, the proposed amendment would place all modes-on- shore or offshore-in a position of equity as far as the potential for- feiture is concerned. Second, and most importantly, the determina- tion of what mode moves what traffic is based on the needs of the consumer modified by safety and economic considerations. Tank trucks only compete with other tank trucks because of economic and functional applicability. You simply cannot put every gasoline sta- tion on a rail line or inland waterway. Today, we haul to customers who want timely, door-to-door serv- ice involving deliveries of 4,000 to 7,000 gallons of products. We do not compete-nor could we compete-with the 20,000 to 100,000 gallon capacities of the rail and water-borne modes. Our in- dustry provides a very specialized service from the plant or terminal to the consumer, manufacturer or processor. Mr. Chairman, the proposed reduction in penalties is justified if for no other reason than the fact that fallacious reasoning resulting in un- realistic penalties was responsible for section 311 in the first place. The staff of the Senate Committee on Public Works, in its report on S. 2770-the original Senate version of Public Law 92-500-tells us the "why" behind these astronomical penalties. On page 67, it is stated that: The committee recognizes that a bulk carriage of substance which has an extremely high per unit penalty will be exposed on an unacceptable level of most cases will pose an unacceptable risk. Thus by determining not to haul, in bulk, such hazardous materials the carriers will avoid unacceptable economic risk. . . . As noted, this rationale is, at best, suspect. This reasoning is simply not practical in today's world. PAGENO="0080" 74 This committee is well aware of the dependence of this Nation on the transportation of environmentally hazardous products-from chlorine for drinking water. to plasti~izers for synthetics, and ferti- lizers for agricultural production. Until such time as environmentally safe products are developed, thes~ products must be transported. Billions of pounds and gallons of vital products are shipped an- nually-and much of it in bulk. Even to suggest that the transporta- tion of the needed commodities be transferred from bulk modes to 5- gallon cans or 55-gallon drums is an exercise in irrationality. I would dare say that the number of small, nonbulk containers which would have to be produced for transportation alone-not to include storage- would defy computation. Therefore. I come before you today to respectfully suggest that you reconsider and amend the unrealistically high civil forfeitures found in section 311 of Public Law 92-500. Thank you, Mr. Chairman. Mr. GINN. I want to thank you, Mr. Harvison. Who will appear next? Mr. KNOTT. That concludes our formal remarks. Mr. Prokop has comments. Mr. Gixx. Mr. Prokop~ would you like to briefly analyze your state- ment for us. Mr. PRoKor. Yes, I will, Mr. Chairman. The bulk liquid terminal business in general, and the Independent Liquid Terminals Association members in particular, serve all modes of surface transportation, and have considerable investment in facili- ties to handle all modes. As you heard the other gentlemen say here today, the effect of this present penalty, whether intentional or not, could shift-or purportedly shift-large quantities of bulk liquid com- modities from the water mode to, the rail mode or truck mode. I say purportedly, because in viewing the overall economic situation of the terminal business, such a shift would be financially and logis- tically impossible because hundreds of millions of dollars have beeii invested in established watersicle facilities. A substantial amount of the 300 million barrels of bulk liquid commodities ILTA members handle annually are transported to or from terminals by tank vessel and eventually are transferred to another surface mode-either rail, truck, or pipeline. Substantial investment has been macIc to handle the most economic mode, the water mode; we could not afford to abandon extensive water facilities. WTe would not have the capital to purchase thousands of acres of land to handle all-rail or all-truck modes and to build new facilities to accommodate these modes. If the impact of the existing penalty takes effect upon promulgation of EPA regulations, thousands of rail tank cars would b8 needed. We do not know where they would come from; who could afford to pay for them and who could afford to abandon the huge investment in the more environmentally safe tank barges and tankers. I think the phi- losophy behind the existing penalty is based on many false premises. The other comment I have to make is that today the Government is ashing industry to finance and install new air and water pollution pre- vention equipment. Yet the pena~ties in existing section 311 are so high that their potential to be imposed on any terminal company makes PAGENO="0081" 75 any such business an economically undesirable `business. When the penalties become effective, I am wondering if bank financing for ex- pansion of a terminal business or for new pollution prevention equip- ment will be available under the threat of this penalty? This is a problem we are exploring. No insurance is available to cover these penalties, for terminals at least, as a matter of law and public policy. Only the assets o'f a company are available to pay for the penalty. A terminal company doing business under the threat of the $500,000 penalty will be putting its assets on the line every day. Mr. GINN. Thank you, Mr. Prokop. Mr. Wheeler, your statement has already been accepted, and if you have a brief comment? Mr. WHEELER. No, I do not, Mr. Chairman, except to say "Amen." Mr. G-INN. Thank you sir. Mr. Maloney. Mr. MALONEY. I have no comments. Thank you. Mr. GINN. At this time, the Chair will recognize the gentleman from Ohio, Mr. Harsha, for questions. Mr. HARSHA. Thank you, Mr. Chairman. Mr. `Creelman, in your statement, you have commented about the amendment `which appears to mandate prompt action on the part of the owner or operator, to take all reasonable steps to minimize the im- pact of the spill, and you say this provision has troubled many of you in the industry. What do you suggest in lieu of that language? Mr. CREELMAN. We would suggest that contingency plans in the form of specific responses be developed jointly by industry and govern- ment, and I would think that would be the EPA, and to the extent that water transportation was involved, and marine safety factor, the Coast Guard should also be involved to develop guidelines which could be followed in the event of a casualty, and which would help organize that effort to respond. `The guidelines would have to be very flexible in order to be meaning- ful in the broad variety of situations likely to occur; but they would at least represent a carefully thought-out-in-advance plan, making use of all the technology that is available, both on the carrier side and on the side of the manufacturing chemist, who has the most `complete knowledge `of the nature of the product itself, as well as the input of the Government agencies involved. So that no one consideration is considered exclusive to the exclusion of the others, such as marine safety. Mr. HAR5uA. Should these guidelines be formal regulations? Mr. CREELMAN. I think ideally they should be formal, provided that in being formal they can remain flexible enough to be useful in the various situations that are likely to develop. Mr. HARSHA. All right. Thank you. Mr. Knott, I want to ask you one question. You make the point about the difficulty with section 311, where it is possible to have a permit to do one thing, and then you are subjected to a penalty for doing that which you have a permit for. Could you expand upon that somewhat, and give the committee rather some examples of specifics, what you have in mind? 63-i92-76---------G PAGENO="0082" 76 Mr. KNorr. I have with me Mr. George Ranks, chairman of the `\~\Tater Resources Committee, to whom I would like to field that ques- tion if you would permit. Mr. GINN. Mr. Harsha, if that meets with your approval? Mr. RARSHA. Yes. Mr. RANKS. I am George J. Ranks, Jr., and I am chairman of the Water Resources Committee, Manufacturing Chemists Association. Mr. GINN. Would someone let him come up to the table, please? Thank you, sir. Mr. RANKS. Thank you, Mr. Chairman. Our concern is in regard to the ambiguity between discharges that are allowed under a permit and discharges that may be penalized or reported under section 311, and that is that there is no clear state- ment in section 311 as to the exclusion of permitted discharges. The legislative history of the act acknowledges this as a problem, and clearly states that discharges of oil and hazardous materials that are permitted under section 402, would be excluded from section 311. \~\Te feel that the clearest way to resolve this problem would be to amend the definition of "discharge" which is specific to section 311, to state that its definition excludes permitted discharges. Mr. RARSHA. Do you have any suggested language for that amend- ment? Mr. RANKS. We would be very happy to work with the staff in pre- senting some suggested legislative language. Mr. RARSHA. Now, did I understand you correctly, it is your impres- sion the act specifically excludes oil that is discharged by virtue of a permit? Mr. RANKS. The act does not specifically exclude it. The legislative history implies the exclusion. Mr. RAR5HA. Well, I have industry within my congressional district that has a permit to discharge oil, very small amounts- Mr. RANKS. That is correct, sir. Mr. HARSHA. And that discharge leaves a sheen on the water, which is in violation of section 311, I am told. Mr. RANKS. This is likely to occur. There are many facilities which have minute, routine discharges of oil which are controlled under the permit condition. These generally will run, say, 5 to 10 parts per million in the allowed discharge. Mr. RARSHA. But enforcing authorities have indicated that is a violation. So. apparently. they are not taking into consideration any of the legislative history implementing the act. Mr. RANKS. I think the enforcement authorities are definitely agreed that in the case of a spill of any quantity of oil that creates a sheen, and I emphasize the word "spill," it is subject to authority under section 311. Mr. HARSHA. Is this situation that you relate of a significant nature? I-las it occurred quite frequently, or is it something that will happen only very infrequently or occasionally, at most? Mr. HANKS. When you define, sir, the situation which I related, I would like to point out that most permitted discharges from chemical industry plants contain a number of different chemical components. Of course, these are reduced by the treatment systems that are required to be installed, or are installed. PAGENO="0083" 77 i\'lany of these components are chemicals which are likely to be desig- nated as hazardous substances. Generally they will create a hazard only if discharged above a certain quantity, and that is a concept that is in the legislation on hazardous substances. The substance must be considered in terms of the quantity discharged. Mr. HARSHA. That is all I have, Mr. Chairman. Mr. GINN. The Chair recognizes Mr. McCormack of Washington State. Mr. MOCORMACK. Thank you, Mr. Chairman. I have no questions. Mr. GINN. Mr. Clausen from California. Mr. CLAUSEN. Thank you, Mr. Chairman. I want to address a ques- tion to Mr. Harvison. You alluded to the staff committee, in your report, associated with Public Law 92-500, and where it reads: The committee recognizes that a bulk carriage of substance which has an extremely high per-unit penalty will be exposed to an unacceptable level of liability. Faced with this fact, bulk carriage of extremely toxic materials in most cases will pose an unacceptable risk. Thus, by determining not to haul, in bulk, such hazardous materials that carriers will avoid unacceptable economic risk. - I am wondering how that particular statement actually squares with your mandate under ICC to serve the public convenience andnecessity. Is there a conflict there? Mr. HARvIs0N. Yes, Mr. Clausen, avery obvious conflict. Shortly after the report was published, I visited with several mem- bers of the staff of the Senate committee involved in the preparation of that report, and they were quite candid in acknowledging that what I referred to as the strictures of the Interstate Commerce Act and enforcement of Interstate Commerce Commission within my statement really never came into consideration during the formula- tion of that particular paragraph. I think the paragraph was written at a time when there was ex- treme concern over the environment and environmental legislation, but there is a definite conflict there, and, as I say, I went to the staff, I asked them about the conflict, and they candidly admitted to me their knowledge of the fact that carriers regulated by the Interstate Commerce Commission never really came into consideration. Plus the fact that in the enforcement of it, EPA has told us quite candidly that some of your carriers would have to go out of business. Naturally, we had a rough time swallowing that. Mr. CLAFSEN. All through your testimony, and that of your fellow panel members, you seem to emphasize a central theme of working out something in the way of more reasonable regulations. Now, there are certain things that we can do through amending the law, and, of course, ultimately the agencies of the Government have the responsibility for promulgating regulations to implement the act. Now, I would like to ask any one of you to respond to this: Are you finding problems with the act-the statute itself-or is it the reg- ulations that are promulgated by the agencies that fall possibly in the category of "unreasonable regulations"? I would like to have a clarification of this, because-let us not kid ourselves-the people in the country have a genuine concern about PAGENO="0084" 78 having clean water, and we spent a good deal of time oil this coIn- mittee in drafting and advancing legislation, and wherever there are polluted waters, it is our objective to try to attack that problem and move in the direction of cleaning up the waters of this country. Now, I will grant you that in discussing the comparisons between the implementation of the Clean Air Act as contrasted with the Clean Water Act, there is one thing that. is coming through loud and clear, and that is that I think we are actually having less problems in imple- menting the Clean Water Act than the Clean Air Act. I believe oiie of the reasons for this is the fact that the House held very rigicfly to the general thesis that we need to have an understanding of what our technology would be prior to the time that standards ale set. This does not occur in the Clean Air Act. as most of you know, and it is costing the consumers of this country a great deal of money, and having quite an impact on the economic recovery. Now. I would like to have a. head-on response to this question. Is this. in your judgment, a case wheTe the agencies are going beyond the intent of the law as spelled out in the legislative history by the regiila- tions they promulgate. or what is it? Mr. KNOTT. Let me see if I c~n answer that question. It is a very, very good pomt. I alluded to it in my discussion earlier. Industry has tried to approach this problem on a two-pronged basis. We have not felt that the legislation was sufficient in detail to guide the Administrator as to how to write the regulations to carry out the will of Congress. To that end- Mr. CLAUSEX. Let me interrupt. Was it the law or the legislative history? Mr. KNOTT. We believe the law is not sufficient. to guide the Administrator. Now, the legislative history has some confusion in it. There aie dif- fering viewpoiiits regarding the legislative history, and we have tried to key in on those differences of opinion, to bring them together, and we think you have done an excellent jobof it in your proposed amend- ment, which is H.R. 9560, which we support wholeheartedly. However, that is iiot the only way we have chosen to approach this problem. Even after. let us say. the amendment was adopted. particularly section 12, as it approaches section 311 of the basic law, we still have a most difficult task in front of us to put forward, with EPA, a reason- able and rational set of regulations. We are not at home by any means on that score. WTe have worked on that prong, the regulatory prong. We have worked on that problem for 21/2 years. I think it is quite apparent to you that the Agency has not been able to come forward with four key elements required-four key adminis- trative requirements-to promulgate this law. They have not been able to do that- Mr. CLAUsEX.Whynot? Mr. KNOTT. Well. the four issues that are required in the law-it lists the degree of removability; it lists the products, harmful quantity, and the rates of penalty. Those four key issues have been worked on continuously for 21/2 years in the Agency with industry cooperation, and some of your own staff have listened to our trials and tribulations as to how we have tried to bring those to the foreground. PAGENO="0085" 79 And I would like to make it clear that industry has tried to push to have those regulations come out. We do not want to operate in the never-never land. We know now, and this law has not been promulgated, and we are operating in a vacuum section of the law as we now see it, and industry cannot make long-term capital commitments in a vacuum. It must know the structure of the penalty that it is going to face in order to make continuing capital investments. So, I submit to you, the law has ambiguities in terms of what is ic- movable, and what is not, and this has been a major stumbling block. We thought we had a way around it. The Agency thought they had a way around it. And on August 2, 1974, in the Federal Register, they promulgated some advanced proposed rulemaking in that specific zone, which got thoroughly shot down, not only by some industry technical people~ but by environmentalists as well. Having taken that defeat in stride, they went back to the drawing board and contracted with Patell Northwest to come up with a ra- tionale with which to set up a penalty and rates; and I have the tran- script of 3 full days of public hearings of the contractual work which Patell Northwest did for EPA. And I think we have to conclude that w-hiie it was a noble and responsible technical work, it did not meet the test of reason in the real world, and would not have carried out the will of Congress in that matter. And~ again, we come back to the basic structure of the law as writ- ten-it did not provide the Agency with a guideline on how to do it. I agree that the law cannot be in minute detail a set of instructions to Russell Train as to how to conduct his business, but nonetheless, every time the Agency has tried to promulgate standards or guidelines in the four issues required, they have been beaten off at the pass by en- vironmentalists or industry people, or within their own house, within their own legal staff. Mr. CLAUSEX. Then I draw from your comment that, in your judg- ment, the law is impossible to comply with in its fullest form, and that you are suggesting that the law itself be amended with even more pre- cise legislative history to serve as guidelines that would be of help to the Agency personnel in the drafting and promulgating of regulations. Is this the point that you are making? Mr. KNoTT. Yes; but I want to point out that H.R 9560 is an ex- cellent piece of work. It takes us a long way down this road, as section 12 applies to this matter. It takes us a great deal down the road, and we believe it will allow the Agency, for the first time, to promulgate some reasonable material in these four standards that they must promulgate. We are not saying we will not contest those if they are unreasonable, but we think this will get us out of the never-never land, and down the road to improving water quality, and believe me, from the Agency point of view-and I would suggest from every citizen's point of view-reporting any quantities is going to be a monstrous task, but in the spirit of getting going with this task of implementing the will of Congress, we can see that that is something that we would submit to; we would do that in the interest of moving from the never-never land, where we are. And I can assure you our efforts will not cease. H.R. 9560 will only be another starting gun for another round of working on it to come up with rational regulations on the part of the PAGENO="0086" 80 Agency, and industry, and, I presume, at some point we will have another 3-day transcript this thick or thicker, where industry and Government will come together to test the rationality of these four items of implementation-Public Law 92-500, section 311, and it is a delicate area; but, I submit to you, it is not one that lacks technology. We have the technology. That is not an issue here, by and large, as it is ih other sections. Sectioii 311 is not technologically tough. It is com- ing up with a rational way to implement the will of Congress, and the basic law unamended does not supply quite enough for the Agency, we believe, but we think with this amendment it does. Mr. CLAUSEX. Among those in EPA that have t.he technical exper- tise to engage in exchange with those of you as well as the environ- mentalists that have a comparable amount of technical expertise~ do you find a. degree of agreement on the part of those individuals that are in EPA that the law is impossible to comply with? Mr. KNOTT. I will not answer for the Agency personnel, because I do not think that would be appropriate. But with the feeling we get ~in terms of vigor of coming forward, and that we are near to a solu- tion with this piece of amending legislation, and the spirit of coopera- tion within the technical department of EPA, I have to guess, if 3TOU are going to ask for au opinion, and it is just that oii my part, I would have to guess that there is discomfort with the law. I believe the Agency will continue, because it is their role in life here. They will continue to try to promulgate. on the basis of the old law if there is no amend- ment, but I think there is a degree of comfort provided in how to do it in section 12 of your excellent piece of legislation. Mr. CLAUSEX. I appreciate this input, Mr. Chairman, and I just want t.o conclude on this point: we will have an opportunity, of course, to extract from the EPA personnel their point of view in directing specific terms; but it has to be recognized that whatever we do in the area. of modification to the amendments to this law has to represent a movement in the direction of the goals that we set out to accomplish in the original act.. It is going to require input.. coordination, and coopera- tion from both those on the economic side and those that share the environmental concerns; and of course, most. important of all, the over- all ublic interests must be served. As I recall, that was one of the reasons we placed a very heavy emphasis, particularly in the House version, on establishing a degree of balance among the environmental, economic, and social factors in- volved in the implementation of the law. Mr. GINN. The Chair observes the distinguished chairman of the subcommittee has returned. Mr. Roberts, do you have any questions? Mr. ROBERTS. I would like to apologize, Mr. Chairman, to the dis- tmguishedl panel for having to leave. ~\Te had two other panels going at the same time, and I had to absent myself. I appreciate the gentlemen from Georgiai taking over, and I apologize to this dhstinguishedl panel. I assure you we will-I will read all of the statements, and we appre- ci ate your being here with us. Mr. GINN. Thank you. The Chair has additional questions which, in the interest of time, we will submit to t.he panel to be answered and placed in the record. PAGENO="0087" 81 [The following were received for the record:] SUPPLEMENTARY VIEWS OF THE MANUFACTURING CHEMISTS ASSOCIATION ON H.R. 9560 The toxic pollutant effluent standards, under subsection (a) of section 307 (P.L. 92-500), will have a significant impact on certain segments of industry, and will require the development of innovative technology in order to achieve compliance. Because of their significance, it is important to provide adequate time for hearings on these standards. This will assure that all available infor- mation is considered before the final promulgation of standards under this section. In addition, compliance within one year of the date of promulgation is un- likely for a large percentage of the sources that will be regulated by these standards. Section 11 of HR. 9560 addresses these problems. 1-lowever, the relief provided is inadequate. Lastly, while section 11 successfully treats the spiii penalty excesses believed possible under section 311 (P.L. 92-500), neither section 11 nor 12 addresses the problem of normal National Pollutant Discharge Elimination System (NPDES) discharges being treated as spills in section 311. TIME FOR HEARINGS P.L. 92-500, section 307(a) requires that EPA designate toxic pollutants and promulgate regulations governing their discharge. It further requires that EPA commence public hearings within 30 days of proposal of a toxic pollutant effluent standard and that EPA promulgate a standard within six months of proposal. In the first hearing held under section 307(a), many parties found it impossible to review adequately the proposed standards and prepare meaningful presenta- tions within the 30-day period. The EPA Administrator, Russell Train, noted this problem in a letter to Congress dated October 9, 1974, and subsequently submitted a legislative proposal to Congress to eliminate the 30-day requirement, while retaining the requirement that the proposed effluent standard be promul- gated not later than six months after proposal. The amendment proposed in 1-I.R. 9560 would not assure adequate time for such hearings. In the case of a protracted commencement delay, the six-month limit would impinge on the time allocated to a hearing, thereby limiting oppor- tunity for formal argument and the Administrator~s opportunity for adequate consideration of the hearing record. To avoid this possibility, any hearing should be started at least 6 months before the anticipated date of promulgation. TIME FOR COMPLIANCE The one-year time period presently allowed to achieve compliance w-ith a toxic pollutant effluent standard (P.L. 92-500, section 307 (a) (6)) is likely to be insufficient. Not only must the discharger determine whether technology exists which can be applied to his discharge to meet the standard, but he must accom- plish the design, purchase, installation and startup of the control facilities. These latter are time-consuming and absolutely necessary to compliance, re- gardless of technology. The amendment proposed in H.R. 9560, section 11(b) recognizes the imprac- ticality of a fixed one-year compliance time by suggesting discretionary authority for the Administrator to extend the time limit to up to three years for categories of sources for which he determines it to be technologically infeasible to comply within the one-year period. However, it does not provide for factors other than technological feasibility which for good and sufficient reasons can delay coin- pliance well beyond one year. Nor does it provide for individual sources incapable of compliance which may fall w-ithin a category of sources regarded as capable of compliance. The Administrator should be given authority at his discretion to recognize these additional factors. NPDES PERMITS P.L. 92-~00 is unclear as to whether discharges authorized under the National Pollutant Discharge Elimination System established under section 402 are sub- ject to the reporting and penalties requirements of section 311. PAGENO="0088" 82 Section 311(a) (2) defines `discharge" as including, but not limited to, any spilling, leaking, pumping, pouring, emitting, emptying or dumping. This defini- tion is somewhat more specific than the general definition of "discharge of a pollutant" (section 502(12)) applicable to P.L. 92-500 as a whole, and it suggests that an effluent within the limits of an NPDES discharge permit may not be subject to section 311 penalties and reporting provisions. However, this is not patently clear, and we are concerned that the present law may be interpreted as permitting the use of section 311 to penalize dischargers under NPDES Permits. H.R. 9560. section 12(b) would compound this ambiguity by requiring any discharge of oil or a hazardous substance to be reported immediately to the appropriate agency of the United States. This suggests the inclusion of reports on routine discharges under NPDES permits in addition to those on abnormal discharges under section 311. Many NPDES permits contain specific allowances for oil. Except for a few substances, specific effluent constitutents are not mentioned in permits. Instead, permits control gross pollutant parameters. Nevertheless, substances designated as harmful when spilled are often a component of the normal overall discharge of a facility under an NPDES permit. We believe this matter can most effectively he resolved by amending HR. 9560, section 12 to specifically exclude discharges authorized under section 402 from the provisions of P.L. 92-500. section 311. MANTJTACTURING CHEMIsTs ASSOCIATION REsPONsEs TO QuESTIONs Question 1. What criteria would have to be considered in defining a harmful quantity of a hazardous substance? How could these criteria be put intO a format that would provide a reasonable guide to the person in the field in determining whether a harmful quantity of a hazardous Substance had been discharged? Response. A spill of a hazardous substance must be examined as a single isolated event. Therefore the potential acute, single exposure effects are the ones to consider. On this basis, the most important questions to ask are whether the quantity spilled will harm mammals or humans, will it kill fish, or is there no likelihood of harm to either? The most important exposure to mammals or humans would occur if the waters contaminated by the spill were ingested. There is extensive data on the effects of ingestion of specific chemical substances that identify the quantities of each that must be ingested in order to cause serious illness or death in test animals. This data can be used to predict w-hether the concentration of a hazardous substance would be so high in a spill situation that mammals drinking at normal rates could ingest a sufficient quantity to cause them harm. Similarly, there is substantial test data on the concentrations of various chem- ical substances in water that aquatic life can be exposed to without harm. These data can be used to predict w-hether the concentration of chemicals in water as a result of a spill, and the duration of exposure at that concentration, could harm aquatic life. Other criteria might be suggested. but these two would be the most important by far. Indeed it is these data that EPA contractors have compiled in relation to EPA's proposed regulations on designation of hazardous substances. Field manuals would require a compilation of this toxicological data plus water flow or mixing characteristics for various water bodies. Data on many river flow- rates is maintained by the Corps of Engineers and the U.S. Geological Survey. In addition, a person can make close approximations of stream flows with only a little training. A simple calculation that takes into account the quan- tity spilled and the stream flow would provide an estimate of the concentration of material in the stream as a result of the spillage, and which can be compared with the concentration that could cause harm, for example: Concentration in stream= Quantity spilled (lbs.) 1 x Duration of snill (min.~ Stre'mm flow ( pounds - ~.minutes Prediction of water movement, and therefore mixing conditions, is much more difficult in the cases of lakes. estuarine tidal flows and coastal waters; but hy- PAGENO="0089" 83 drologists can predict movements of these waters. They probably could develop a reference handbook for field use that would incorporate tables for use with these water bodies. Question 2. HR 9560 would provide for the immediate reporting of the discharge of any amount of a hazardous substance as opposed to the reporting of a harmful quality. What are your views on this provision in the bill? Response. It is likely that this will result in a much larger number of spill reports. Reporting "any quantity" literally means reporting one drop of any haz- ardous substance. The harmful quantity of all but a few substances is likely to be in the range of from one hundred pounds to several hundred or more. In our view the reporting of any quantity will cause a great deal of paper work for all parties. Some minimum cutoff point would reduce this, say 5 or 10 gallons except for unusually hazardous substances. Question 3. What criteria do you suggest be used by EPA in determining whether compliance with a final toxic effluent standard is technologically infeasible? Response. In strict terms we would interpret "technological infeasibility" to mean that there is no available technology which can be applied to the waste water of a source or category of sources which would result in achievement of a toxic pollutant effluent standard. It is that test that should be applied. We do not consider "technological infeasibility" to encompass the other very real problems faced by the owner of a facility which becomes subject to a toxic pollutant effluent standard, and which make the presently allowed one-year time period a virtually impossible requirement for most such owners. Not only must he determine whether there is technology which can be applied to his discharge so as to meet the standard; but, after assuring himself that there is such tech- nology, he must arrange for the design, purchase, installation and start up of the control facilities. One year's time is simply not adequate to accomplish all these steps. In addition, even if categories of sources may be determined by the Adminis- trator to be capable of complying within one year, there may be legitimate reasons why individual sources in that category may not be able to do so. Such reasons might be the manufacturing process he employs, or his facility's location-toxic pollutant effluent standards should be different for different water bodies. For these reasons we feel that the language of H.R. 9560 relating to extension oi~ compliance time should: Apply to individual sources as well as categories of sources; allow the Administrator to consider other causes of infeasibility. Question 4. Section 311(b) (3) of the Act provides that the discharge of a hazardous substance is prohibited except "where permitted in quantities and at times and locations or under such circumstances or conditions as the President may, by regulation, determine not to be harmful." In your testimony you suggest that the Act be amended to exclude from the provisions of Section 311 any discharge authorized under the National Pollutant Discharge Elimination System. Why do you think additional language is required? Response. Section 311(a) (2) defines "discharge" as "including, but not limited to, any spilling, leaking, pumping, pouring, emitting, emptying or dumping." This definition is more specific than the general definition of "discharge of a pollu- tant" (Section 502(12)) applicable to P.L. 92-500 as a whole, and provides a basis for the question of whether an effluent subject to a NPDES discharge permit is subject to Section 311 penalties and reporting provisions. However, the legislative history does give guidance on this matter. Mr. Wright in "House Considerations of the Report of the Conference Committee, October 4, 1972" stated: "Section 311 applies only to spills, leaks, and the like, discharging oil and hazardous substances. Where a discharge is pursuant to and not in violation of a permit issued to a facility under Section 402, it is not subject to Section 311.~~ The EPA has not clarified this in drafts of Section 311 regulations so far made public despite our industry's calling this ambiguity to the agency's atten- tion. Further, for all but a few substances, specific effluent constituents are not mentioned in EPA's effluent guidelines or NPDES permits. Instead, permits control general pollutant parameters rather than individual pollutants. For these reasons we are urging that this uncertainty be resolved by amending Section 12 of H.R. 9560 to specifically exclude from the provisions of Section 311 of P.L. 92-500 any discharges authorized under the Section 402 NPDES permit system. The clearest way of clarifying this situation would be to amend the PAGENO="0090" 84 Section 311 definition of "discharge" (Sec. 311(a) (2)) to exclude discharges gov- erned by a permit issued pursuant to the National Pollutant Discharge Elimina- tion System under Section 402 of the Act. BIGHAM ENGLAR JONES & HOUSTON, £Yew York, IVY., September 29, 1975. HOUSE OF REPRESENTATIVES, Committee on Public Works and Transportation, Subcommittee on Water Re- sources, Wasbington, D.C. GENTLEMEN: Following my appearance before your Subcommittee on Tuesday, September 23rd, you asked that I respond to several questions based on the Statement that I submitted. For your convenient reference, the questions are repeated below, followed by the answers. Question. What does the information available to tl1e insurance companies indicate about the size. frequency. and seriousness of spills on waterborne trans- portation? How is this information reflected in the insurance rate structure? Answ-er. The Water Quality Insurance Syndicate, on w-hose behalf I appeared, has not been involved in any hazardous substance spill and has no statistics with reference to 5uc11 spills. However, the Syndicate has had considerable ex- perience w-ith oil spills and its records show that most oil spills are small, in- volving less than five barrels of spilled products. In its approximately 41/u years of existence, the Syndicate has received reports of approximately 600 oil spills. In December 1974. with 3'/~ years of experience, the Syndicate decided that it had sufficient loss statistics and began to rate policy renewals On the basis of experience. In other words, those assureds with an adverse loss record w-ere charged a higher rate than the Syndicate's standard rates. The amount of rate increase in dependent on the amount of losses paid and the frequency of spills in respect to the particular assured. Question. Tour testimony indicates that insurance defeats the incentive effect of the civil penalty. If this is so, would not the deterrent effect be maintained only if the maximum penalty liability substantially exceeded the maximum in- surable penalty amount? Answer. There can be no question about the fact that if a penalty is to have a deterrent effect it must be borne by the offender or, in this case, by *the op- erator of the vessel or facility from which the spill occurred. It must be kept in mind, however that if an operator is to be subject to an uninsured penalty for an accidental spill, the deterrent effect may well be evidenced by the operator's unwillingness to carry substances that may lead to such a penalty. This dis- location of water borne commerce will increase in direct proportion to the size of the penalty. Furthermore. view-ed strictly from the point of view of the marine insurance underwriters, if the maximum penalty exceeds the insurable amount. I would be concerned that in the interest of deterrence the penalty would al- w-ays exceed the insurance amount. so that underwriters w-ould be paying at the rate of $50,000 per occurrence and not "up to" $50,000 per occurrence. Question. How do you explain the decision of the industries abroad to set the maximum insurable penalty at $50,000? What do you think their response would be if major legislation required a fund of $100,000? Answ-er. I have no knowledge or information as to what prompted the deci- sion of the Mutual Protection and Indemnity Associations abroad to agree to pay penalties up to $50,000. I can only repeat the distinction made in my state- ment that these so-called `P&I Clubs" are associations of steamship companies and not insurers. I have no means of knowing w-hat the response by these Clubs would be if legislation authorized a penalty up to $100,000. Question. In your testimony you indicate that your industry does not believe in insuring against civil penalties. How- do you reconcile your belief with the underwriter's activity in this area? Answ-er. The only activity of underwriters in this area that I know of is the reluctant decision of the `Water Quality Insurance Syndicate to insure up to $50,000 against the penalty for the spill of a non-removable hazardous substance. The membcrs of the Syndicate were justifiably proud of their accomplishment PAGENO="0091" 85 in establishing a facility to provide vessel owners and operators with insurance against the new type of liability spelled out in the Water Quality Improvement Act of 1970. When the law was amended to cover hazardous substances and a penalty was imposed for the spill of a non-removable hazardous substance, the Syndicate had outstanding policies covering the owners and operators of 4122 vessels against the liabilities for the discharge of oil. The members of the Syn- dicate were confronted with the fact that a refusal by the Syndicate to insure these penalties would almost certainly leave their assureds with no market in the world where such insurance could be purchased. This consideration was the motivation for departure by Syndicate members from, a principle that has long been followed in the insurance industry. If you need further information or additional questions arise, please do not hesitate to get in touch w-ith me. Very truly yours, WALTER E. MALONEY. NATIONAL MARINE SERvIcE, INC., St. Louis, Mo., October 6, 1975. Hon. RAY ROBERTS, Chairman, Subcommittee on Water Resources, Committee on Public Works and Transportation, Congress of the United States, House of Representatives, Washington, D.C. DEAR MR. ROBERTS: This letter is in answer to questions presented to the in- dustry panel appearing before your subcommittee September 23, 1975, as follows: I. "What is your industry's record of spills before and after the enactment and implementation of the Ports and Waterways Safety Act, the Towing Ves- sel Operator's Licensing Act and the Vessel Bridge to Bridge Radiotelephone Act? If possible, give examples of substances spilled, frequency of the spills and an indication of the seriousness of the spill in terms of the characteristics of the substances and the resulting damage." There is no question but that the passage of these three landmark waterways safety acts has made a significant contribution to the safe transportation of hazardous materials on the Inland Waterways of the United States. Those of us engaged in this commerce are aware that the navigational safety experience in our industry has improved as a direct result of this legislation and its imple- mentation, as well as from the implementation of other new regulations during the past two years. I have particular reference to the oil pollution prevention regulations which establish procedures for the transfer of cargo between barge and terminal and require containment equipment to avoid spills into the water- way during cargo transfer. These regulations are followed for all liquids trans- ferred, not just oil products, and accordingly they have effected a dramatic im- provement by eliminating the many small spills which occurred during hose hook-up prior to and after cargo transfer. Unfortunately, because there were no requirements for reporting spills of non- oil products in previous years, there is no meaningful statistical background with w-hich to compare present day experience. As a matter of fact, the grow- ing awareness of the need to report such incidents has caused a sharp increase in the number of casualties reported during 1974, the last year for which statis- tics are available. It w-ill be several years before a useful statistical base can be established against which to compare year to year spill experience, and this statistical background will never make it possible for us to accurately evaluate the very real benefits in the protection of the marine environment represented by the landmark legislation and regulation implemented since the passage of Public Law 92-500. The fact that there had been so little record keeping done by industry or by government in the area of spills of hazardous polluting substances into the waterways prior to the passage of Public Law 92-500 illustrates the fact that such spills had been rare and never represented a significant threat to the public safety, to water quality or to the marine environment generally. That long- standing good record, nevertheless, has been significantly improved through the virtual elimination of the small spills which did tend to occur at the interface betw-een terminal and vessel during cargo transfer. Significant spills through PAGENO="0092" 86 catastrophic structural failure or marine accidents have been largely unknown in the domestic water transportation of bulk hazardous materials. Credit for this outstanding record must be given to the high standards required by the Coast Guard regulations for the containment of such materials in water transportation. The committee submitted another question as follows: 2. `Section 311 defines `remove' to include the taking of actions necessary to niinhinize or mitigate damage resulting from the discharge of a hazardous sub- stance. Section 12 in HR. 9500 would provide for an unlimited penalty for willful failure to act to remove a discharge as deemed appropriate by the re- sponsible federal official. Should the criteria for determining what actions are appropriate be set forth in regulations? Why/why not?" Ideally, yes, such criteria should be set forth in regulations. Such regulations should be flexible and subject to continuing review by all parties so as to make them applicable to the broad spectrum of circumstances in w-hich a spill might occur and in w-hich tl~e regulations w-ould be implemented. It would be essential that the manufacturers of each chemical as w-ell as representatives of the several modes of transportation be given the fullest possible opportunity to participate in the development of these guideline regulations. The regulations would become an outline contingency plan to be followed by those on the scene at the time of a spill casualty. Such guidelines would be useful to the carrier personnel in- volved as well as to the government official w-ho might eventually be in charge of the effort. I appreciate the opportunity to enlarge on the testimony presented to your Co~nn~ittee on September 23rd in support of H.R. 9560. \T~~y truly yours, W. A. CREELMAN. President, Transport Dirision. NATIONAL MARINE SERVICE, INC.. St. Louis, Mo., September 26, 1975. Hon. RAY ROBERTS, Chairinan~ Subcommittee on Water Resources. Committee on Public TVorl~s and Transportation. Congress of the United States, House of Representatives, Washington, D.C. DEAR MR. ROBERTS: I appreciated the opportunity to appear before your Sub- Committee on Water Resources on September 23rd to speak on behalf of The American Waterways Operators in support of HR. 9560 amending the Federal Water Pollution Control Act (Public Law 92-500). It has come to my attention that on the morning of September 24th. Mr. David Zwick of the Clean Water Action Project opposed amending Section 311 because the proposal reduces "the maximum permissible penalty from $5 million to a ludicrously low $50,000 level at which the deterrent impact of the penalty scheme w-ould be eliminated." I believe Mr. Zwick fails to understand or to differentiate between the penalty level and the liability for clean-up or mitigation of the effects of any spill. Regardless of the level of the penalty the polluter will still be responsible for clean-up or mitigation costs up to a maximum of $14 million. In addition, the penalty responsibility up to $50,000 at the discretion of the Administrator would remain. Even if the operator were able to find insurance to cover the $50,000 penalty the premium level for that coverage would be significantly affected by the record of the operator. It is certain that the premium level w-ould be pro. hibitive for an operator show-n to be a persistent violater. I would call attention to the sentence of my written presentation, w-hich states: "It is necessary to draw distinctions between and misleading to compare the $5 million penalty ceiling with the $14 million maximum liability for clean-up costs. Clean-up and removal costs are not penalties. They are what they claim to be-actual costs incurred during the removal operation. For that reason they are indeed insurable." It is clear that the premiums payable for the insurance to cover the cost of clean-up or mitigation after a spill will be determined by the record of. the operator. Accordingly, a very significant incentive will remain for the operator to eliminate to the greatest extent possible all pollution incidents through proper maintenance and operation of his equipment in order to avoid prohibitively high insurance costs. We agree with Mr. Zwick that Public Law 92-500 as amended needs to con- tain significant incentives to deter operators from polluting the w-aters. We PAGENO="0093" 87 believe that strong incentives remain in Public Law 92-500 with the adoption of the amending language of H.R. 9560. This amendment will strengthen the Act and provide for its enforcement without driving chemical cargoes from the waterways. We believe adoption of H.R. 9560 represents a significant step toward main- tenance of the public safety in hazardous materials transportation and an im- portant step toward environmental protection. I would appreciate your making this letter a part of the record of the Hearing. Respectfully submitted. W. A. CREELMAN, President, Transport Division. Mr. ROBERTS. If there are no further questions, as previously announced by the Chair, the committee will now stand in recess until 2 o'clock in this room, at which time we will hear from the remaining witnesses. Thank you very much. [WThereupon, at 12 :04 p.m., the subcommittee was recessed, to recon- vene at 2 p.m., the same day.] AFTERNOON SESSION [Whereupon at 2 :10 p.m., the subcommittee reconvened, Hon. Ray Roberts, chairman of the subcommittee, presiding.] Mr. ROBERTS. The subcommittee will come to order. Our first witness this afternoon is Mr. Billy Sumner, president, American Consulting Engineers' Council, accompanied by Mr. H. Ben Faulkner, Jr., chairman, Environmental Committee, National Society of Professional Engineers/Professional Engineers in Private Practice. Gentlemen, you were here this morning. You may proceed in any fashion you choose. TESTIMONY OF BILLY SUMNER, PRESIDENT, AMERICAN CONSULT- INS ENGINEERS' COUNCIL, ACCOMPANIED BY H. BEN FAULKNER, JR., CHAIRMAN, ENVIRONMENTAL COMMITTEE, NATIONAL SOCIETY OF PROFESSIONAL ENGINEERS/PROFESSIONAL ENGI- NEERS IN PRIVATE PRACTICE Mr. SLTMNER. Mr. Chairman, we are Billy T. Sumner, P.E., and H. Ben Faulkner, P.E., representing the American Consulting Engi- neers Council and the Professional Engineers in Private Practice divi- sion of the National Society of Professional Engineers, respectively. Mr. Sunmer is president of the ACEC, and Mr. Faulkner is chairman of the NSPE/PEPP Environmental Committee. Between us we represent in excess of 4,500 consulting engineering firms and 20,000 engineers in private piactice. We appreciate this opportunity to bring to the committee the views of this body of professional engineers who are and have been so inti- mately involved in the implementation of the Federal Water Pollu- tion Control Act Qf 1972. Consulting engineers, as you well recognize, have been in the business of cleaning the Nation's waters longer than has the Federal Government. Our experience and involvement predate the enactment of Public Law 84-660. The consulting engineer, to view his role in its proper perspective, in most cases does much more than design the waste treatment facility. PAGENO="0094" 88 For a number of grantees and prospective grantees, it is the engi- neer in private Practice who leads the community-almost literally by the hand-through the entire process from inception to completion of construction, including completion and submission of applications and responding to the myriad of other very complex bureaucratic require~ ments that have become an integral part of the construction grants program process. Many of these communities-more than half of EPA's grant recipients, in fact-are 10,000 population or less. With that as background, allow us to now address some of the specific issues raised in IE[.R. 9560. We will concentrate on several proposals contained in the proposed legislation which relate to the program's improved functioning. This is not to imply that the other aspects of H.R.. 9560 are not important but rather to recognize and address what we consider to be the major areas of our expertise and responsibility. SECTION 4-USER CHARGES Initially we should like to speak to this proposal relating to user charges. There is no question in our minds that the ad valorem method of financing must be recognized as an acceptable method of support- ing operation and maintenance costs associated with waste treat- ment plants. The prohibition of the ad valorem method has resulted in needless delays in grant approvals pending the development of an acceptable user charge mechanism. These delays are costly both in terms of increasing the investment of the. grantee in the development and utilization of alternative procedures and in terms of increased construction costs. One need look no further than the interim staff report provided by the Subcommittee on Investigations and Review earlier this year to comprehend the magnitude of the problem. That report, in ad- dressing the ad valorem issue, said: Unless the law is modified, several States and literally thousands of municipal jurisdictions will have to change their laws and ordnances. Paper work and bureaucracy will multiply profusely. By precluding the ad valorem method of fixing user charges, there has been inflicted U~Ofl many small communities an administrative burden whose size and complexity are inconsistent with the cost of its establishment and operation. However, it is important that this system-or any system the grantee may install-does in fact assure a balance in the assessment of charges among the various classes of dischargers. There should be, for example, no penalty via higher costs fixed for residential property as compared to commercial prop- erty. At the same time the industrial user charges must be appropri- ately determined to insure reasOnable comparability. SECTION 6-FEDERAL SHARE OF PLANNING PROCESS COSTS We fully support the concept inherent in 208 planning. However, administrative problems have delayed its full implementation and such planning is only now beginning to move forward on a broad front. We would recommend that the full 100 percent funding be continued as proposed but would prefer that the 100 percent funding PAGENO="0095" 89' deadline be linked with a fixed calendar date rather than the rather indefinite deadline as set forth in the proposed legislation. Our recommendation would be that the 100 percent funding be continued for the fiscal years ending June 30, 1976, September 30, 1977 and September 30, 1978. One reason for this recommendation is that each potential grantee will have before him the exact date on which such funding will be terminated. It would also seem that the developmental process of the national budget would be more appro- priately `addressed if there were a fixed date of termination tied directly to the end of a specified fiscal year. SECTION. 8-CERTIFIOATION On the matter of certification, the America~n Consulting Engineers Council and the Professional Engineers in Private Practice division of NSPE are on record as giving full support to the delegation of authority to the respective States. We give this support, however, in full recognition of the fact that there are, lurking in the background, potential pitfalls that could further damage the program `and result in delays in some instances. If such a program were instituted, it would require a m'onitoring mechanism to `be established and operated by Environmental Protec~ tion Agency to insure continued delegation of authority is appro- priate in each instance where such delegation has been made. In other ~words, `the delegation to the States of certain responsibilities relative to the administration of the program does not `and will not totally remove the EPA from the process and should not be viewed in that `manner. The Federal Agency is and will continue to be responsible for the fiscal integrity of the program as the representative of the Federal Government and, ultimately, the taxpayer. Further, the delegation of `authority may not in every instance result in a reduction of redtape. Some consulting engineers have. predicted that in certain of the States such delegation would, in fact, bring about more bureaucratic involvement in the process `and result in further program delays. Of primary concern in this area, however, is the mechanism by which `certification is achieved and retained. What are the measure- ments by which the State will be adjudged `to possess the capability `of administering these `additional portions of the construction grants program? Recognizing that any approval or disapproval will rely heavily on judgment passed by someone or some group it should be understood that the yardstick can only include such components as the number `and experience of personnel, State funds available to assume a portion of the administrative costs, past performance of the appropriate `State agency, and other qualitative factors. It is our belief that thought should be given to revising the pro- posal as it related to section 213 (b) and (c) which place on the Administrator the `sole responsibility for passing judgment on the State agency's capability for initial and continued certification. The capability of the respective States to assume additional administrative PAGENO="0096" 90 authority might. be better determined if the Administrator had avail- able to him an advisory panel cOmposed of individuals representing various elements of the construction industry. It is our thought that this would serve at least two purposes. First, it would provide to the EPA an expertise which is perhaps not always available within the Agency itself and would assure a given level of public involvement in the process. Second, it would bring iiito the judgment procedure the knowledge, experience~ and insights of individuals involved in the clay-to-day, in-the-field operation of the coiistruction grants program. Quite frankly, we believe this input would be invaluable to the program and would. as a matter of fact. lend credibility to the cer- tification aiicl delegation process. To reiterate. while we have expressed concerns about the proposal of assigning certain resnonsibilities to those States which meet as yet undefined certification requirements, we are in full support of the concept and would encourage its adoption and implementation as soon as practically possible. Such support, incidentally, extends to the proposed funding process as outlined in section 213 (e). SECTION 0-TIME REQUIREMENTS Again we find our two orgaiiizatioiis in total support of the con- cept. It is a fact that the deadline prescribed in the law as it cur- rently exists has proven to be unrealistic. We would recommend, however. that. the proposed amendment include an assurance that the owner of such publicly owned treatment works will not be penalized should its inability to effect construction by the specified date result from matters beyond the owiier's control. In our view, however, the owner must be. able to demonstrate a good faith effort to meet the deadline. The authority granted the Administrator to establish arbitrary deadlines on a case-by-case basis must be exercised with care but there must also be a measure of compassion involved in such judg- ments. There. are so many factors involved in the construction grants program which work to the detriment of the grantee or potential grantee: Placement on the priority list, approval of applications and other subniit.tals by both State and Federal agencies, local referen- dums on bond issues, program changes resulting from new regula- tions, to mention only a few. Simply stated, while we believe there is an absolute necessity for the authority which would be granted under this sectioii, the critical feature which cannot be addressed legislatively, as in all similar cases, is the manner in which such authority is utilized. SECTION 1 O~-STATE REPORTS Little more can be said about~ the infamous needs' survey. We give our wholehearted support to the proposal to require such surveys biennially rather than annually. Suffice it to say that conducting such a survey oil an annual basis has been and would continue to be more of a hindrance than a help to the construction grants program. PAGENO="0097" 91 SUMMARY Our two organizations, the American Consulting Engineers Council and the Professional Engineers in Private Practice of the National Society of Professional Engineers, have offered comments on those elements of the legislative proposal which we feel best qualified to address. While we have raised a few concerns rel~tive to these proposals, it is our considered opinion that if the construction grants program is to move as envisioned by the Congress at the time of the enactment of Public Law 92-500, these amendments must be enacted. While it is not a subject of this legislation, our profession feels it would be remiss in its responsibility if it were to ignore the serious problem of delays and changes resulting from EPA's regulatory proc- ess. Our members, to say nothing of the grantees or others associated with the waste-water treatment industry, are finding that they have been buried in redtape requirements which have slowed some projects to a virtual standstill. In some instances we have reports of completed plans and specifications being subjected to so many changes or delays due to regulatory requirements that processing is taking longer than the time spent in actually preparing the plans. WTe feel a sense~of~the-Congres5 resolution specifically implementing section 101 (f) of the Water Pollution Control Act of 1972 is badly needed, that section encourages: * * the drastic minimization of paperwork and interagency decision procedures, and the best use of available manpower and funds * * * to prevent needless duplication and unnecessary delays * * * in the program. In spite of this clear-cut statement of congressional intent there has been a proliferation of rules, regulations and program guidance memos, the sheer volume of which has the potential for creating more serious problems and misunderstandings than these documents are intended to solve. If the committee agrees that this is a problem which merits legisla- tive attention our organizations-in fact virtually every organization whose `members are associated with the wastewater treatment in- dustry-respectfully offers their assistance in working with the com- mittee staff and with EPA in developing some approach other than regulatory overkill which can assure design and construction of much `needed pollution treatment and abatement facilities. Also, although we have not addressed the subject of the extension of funding authorization specifically, a general statement should be offered to fix our position on the record. It is absolutely necessary that the level of funding for this program be known years in advance. Each applicant has the right to know that funds will be available when `this project is ready to go into design and construction. On that basis, we `would strongly encourage a fiscal plan that offers assurance. Our orgarnzation, Mr. Chairman, represents probably 60 percent of `the private practicing engineers in the Nation who do approximately $5 billion worth of services to Government, industry, and individuals. ~We thin'k we probably have 200,000 employees. 63-i92--76------7 PAGENO="0098" 92 We have a large number of cOnsulting firms, of course, involved in the EPA-assisted pollution abatement program, particularly with relation to the construction grants program. We feel like we are a partner, perhaps not an equal partner, but certainly a partner in this effort along with several other sectors of our private economy in accomplishing the goals of Public Law 92-500. Our members are concerned about the lacl~ of progress in the con- struction grants program. Our members are frustrated and concerned by a lack of understand- ing and many factors that bring on instability in our business. At the $18 billion funding level, for instance, there are roughly 200,000 man-years required for just the engineering portion of this federally assisted program. That is a substantial thing to be dealing with when you have an on- again, off-again climate for doing business and accomplishing the job. I do want to make a few additional comments. We support H.R. 9560 under discussion. Some of the sections I will not make reference to and are not referred to in our comments be- cause we do not feel particularly qualified. These have primarily to do with the interim funding and other financial aspects. We favor the ad valorern method of assigning user charges. How- ever, we see some serious problems, some of which were raised this morning-how to make those charges necessarily follow the revised law which says they must be in proportion to the load. ~Te think it is important to have balance and equity in such charges. There also must be a means of charging currently tax exempt property. We favor the extension of the 100-percent funding of the 208 plan process but we think there is some hazard in the method proposed which calls for 2 years after commencement of the plan rather than specific dates tied to fiscal years. We think the latter might permit better fiscal planning by both the grantees and the Federal Government. ~\T~ have long been on record in favor of the delegation of authority to States. ~\Te supported H.R. 2175, Mr~ Cleveland's bill. ~Te think thatthere should be some technique for assigning the task to the States in which the other partners in the process could partici- pate. I am speaking of those of us who are at the working level. I am not speaking of only engineers but speaking of grantee representa- tives, other sectors of the local government and private industry. \\Te think that we can participate. in the qualifications of States to perform the functions that you have outlined. We note that you do propose when a State is discredited on perform- in~ it is done on the basis of public hearing. We think involving the public in accrediting the States might be of assistance to the Administrator. There is another matter that I hope the committee will make clear, and that is on page 7. I have forgotten the line numbers but I believe it is lines 9 and 10. Mr. Chairman, that language could be interpreted that it was all or nothing with the State taking over those various functions referred to in subsection (a). We hope that is not the case. PAGENO="0099" 93 We hope the States svôuld be authorized to do these one at a time as they become qualified by making some sort of reference to all of the actions mentioned in subsection (a). We hope the subcommittee will clarify its intent on this matter. We would also like to state-and it is not addressed in the proposal- that we also favor grantee certification procedures being used to the maximum extent possible since failure to comply generally results iii a sanction against the grantee. We think there is a good reason to permit the grantee to certify compliance and there is precedence for this in other Federal fir~ancial assistance programs. We favor the authotity to extend the time for compliance. We caution, though, that somehow this needs to be tied in with in- dustrial compliance in order not to work a hardship on an industry and have them build a facility just for short-term use while the com- munity has had their time extended and thereby impose an unreason- able burden on an industrial polluter. We favor the needs survey being made. However-and this is also not addressed in the proposal-we think that the allocation rather than being based on th.e needs survey as a whole should be restricted to the categories 1,11, and IV(b) only. Having participated in making need survey,s we realize the diffi- culty in estimating the cost of other categories of work. We also realize to a large extent the other categories of work may have something to do with a community's having perhaps failed to attend to some local government problem in a timely manner. We think the allocation should be restricted to those three categories of work and that it might be more equitable. I will identify those other than by Roman numerals and by cate- gories. They include secondary and advanced treatment and inter~ ceptor sewers. That would eliminate the correction of infiltration/over-flow, coin- bined overflows, collector sewers, sewer rehabilitation, and storm sewers. We do not think those things should be eliminated from the pro- gram. They simply should not feed into the allocation formula. We believe that these amendments must be enacted in order to hell) the grants program move. As I said earlier we are concerned about the lack of progress. We think some emphasis needs to be given to paragraph 101(f) of Public Law 92-500 with regard to national policy stated therein to minimize paperwork, the decisionmaking process, requirements for extra man- power, duplication, delays and so on. We heartily endorse that policy. We are working as best. we e~tn with others in the private sector and with EPA in the regulation process but we suspect there may be overkill. We think that we see somewhat of an obsession with perceived ills. We think we see an effort to totally eliminate risk. We do not believe in a program of this magnitude, that is a practical objective hor is it necessarily cost effective. I will make one specific point. At the current inflation rate approxi- mately 20 percent of the average design fee for a wastewater treatment plant is bi~rned up per month. That. means if a project is delayed 5 months, inflation has equaled the typical cost for design services. PAGENO="0100" 94 There is a tremendous impact to be gained from getting on with the job promptly. We would like for the subcommittee to consider in the future amend- ments. techniques for providmg incentives for prompt action on the part of grantees. see many projects delayed for mmor-or I should say relatively minor-local administrative considerations. We favor water quality standards rather than treatment standards regardless of the receiving stream. We understand the Government's concern about this but we do feel very strongly about the need for lO~~Oi~ for seasonal adjustment in ~treatment methods in order to conserve vital resources. Mr. Chairman, we do not like the cook book approach of just laying down and mandating certain treatment and then regardless of whether it is cost effective year round or as conditions and loads might change, sticking with it. We appreciate the opportunity of appearing and we will be glad to do anything we can to furnish additional information to the corn- mittee or assist in its early consideration of Public Law 92-500 amendments. Thank you. Mr. ROBERTS. Thank you. Mr. Sumner. I appreciate your statement. I wanted to ask you one question. Do you think you could appro- priate money as fast as the 50 States could spend it? What I am getting at; I went to a dedication recently where we had appropriated every dollar, 100-percent federally funded, a big dedication for the State. Let me tell you. There was not a single mention made that this was Federal money. They all come to us and say give me more and more. You take the cussin' but we are going to spend it. I just cannot buy that. Mr. SUMNER. I think that is a rhetorical question. I believe you have answered it. Mr. ROBERTS. I do not know how you get around it. I would like to do what you suggest but you cannot raise money as fast as they can spend it. You have to have some tie-in. If you are going to spend it, you are going to have to raise part of the money, at least. Mr. SrTMNER. I think my concern is that the money is really not being spent as fast as it is being raised. Mr. ROBERTS. Pardon me? Mr. SUMNER. Money is not being spent as fast as it is being raised. Mr. ROBERTS. If you turn it over to the States without any com- munity interest in raising the fund, they can dispense of it fairly quickly. * What criteria would you recommend the Administrator take into account when determining whether a municipality can complete con- struction by July 1, 1977? Do you think that these criteria should be applied to all cases or on a case-by-case determination? Mr. Su~ixu~n. I think it ought to be a case-by-case detern-lination. PAGENO="0101" 95 The EPA has furnished our organization with a list of projects around the country that it says are suffering from construction lag. We have gone out to our member organizations and asked them to determine the engineer working on that project and to find out why the projects are not on the move. We are reporting back to EPA some of the reasons which are sur- prising, to say the least. I can think of one where the mayor did not want to go into the proj- ect because he had an election coming up and he did not want the user charge imposed prior to the election so he was going to put it off until after his race. You know, it is not a question of EPA's delay. It is simply a deci- siori, that is a prerogative of the chief elected official. Mr. ROBERTS. `What level of treatment should an industry be required to attain if it is tied into a municipal works that receive a time extension? How would you handle it? That is one of the things I know you all are working on. Mr. SUMNER. The industry can be expected to reduce its waste to the equivalent of domestic waste and he would have to do that in any event. Ther~ the problem comes if you give the community a time extension do you then force the industry to further reduce his waste and make the investment for a short period of time. Now, that is a mathematical manipulation and it would depend on the time extension you have given the community and the cost that the industry would have to bear and what relationship that would have to his total pricing structure, and so forth. It could be a rather insignificant thing, but it could be a very, very material thing. Mr. ROBERTS. Would it be practical to require compliance with a pretreatment standard for a whole industry by category or plant by plant? Is this practicable? Is it going to have to be on a plant-by- plant basis? Mr. SUMNER. Of course from our point of view it is on a piaiut by plant basis and you do find that the industries are not as homogeneous in a given manufacturing process. There is a good deal of variety and they have different ways of doing the same thing. Mr. ROBERTS. The gentleman from California. Mr. CLAUSEN. Thank you, Mr. Chairman. The reference was made in your testimony to a level of funding for this program in advance. How far in advance and how much would be needed? Mr. SUMNER. I feel like the local communities need to have some as- surance that they have started on a program that will sustain itself because they have experience with other programs, not necessarily in the pollution abatement field where the rug has been pulled out from under them more or less. Mr. CLAUSEX. How many years? Mr. SUMNER. `Well, you know off the top of my head I would say at least a minimum 5 years, but that will not cover some projects. PAGENO="0102" 96 ~When you consider the whole process, especially when we get to the point where we are following only 208-you know, r1ght now we are :go~g ahead and sort of letting 208 run parallel with the 201 study process-but once we get all the sequences of water resources manage- :ment there is going to be quite a long pipeline in the community as they make these commitments. The fact that you ask the communities to pay 25 percent of these early costs creates some problem because they are hard to fund. The typical community does not have, an easy type of funding until they get into construction. That is when they normally borrow money and sell bonds. Now they have to finance 25 percent of the planning cost. Mr. CLAUSEN. Just as the Chair and I have discussed and as you well know, we can come forth with a recommendation but there is no way that we can give you the assurance that a future Congress could not undo this. Mr. SUMNER. Yes, sir. We are not recommending another trust fund. Mr. CLAUSEN. Under user charges. Mr. SUMNER. Well, under any charge. We just have not thought that through. I did not want our recommendation to be misunderstood. Mr. CLAUSEN. I am wondering if you could expand on your com- ments where you say the primary concern in this area is the mechanism by which certifications are achieved and retained. Now, I wonder if you could expand on those comments regarding the mechanism by which certification is achieved and retained because, as you know, our goal is to move this program as rapidly as possible to the. qualified States. Mr. SUMNER. \`\Te share that. goal. First, we do not want the process of certification itself to slow down the program. We think it needs to be set aside and whatever is being done has to keep moving. \`\Te have suggested that in the certification process that perhaps the industry and local public agencies be involved in terms of some sort of an advisory group or something of this nature because there are many of us that are dealing with the State agencies on many other things other thami the construction grants program. We know the people. We know the turn around time. on inquiries and some things that they are now doing comparable to this in connec- tion with other programs, the water program, and so forth. I'Ve know how long it takes them to review plans. I'Ve know their 1)erSonnel problems. We think that groups formed on a State basis could help the EPA in making these determinations. We think the public should also be involved in this determination, not just simpl those of us that have a proprietary interest in the suc- cess of the program. Mr. CLAUSEX. Mr. Chairman, I think it would be helpful if we were to send questions to the witness and let him respond. Mr. ROBERTS. Thank you very much, gentlemen, and maybe we can get the last witness in before the bells ring. We do appreciate your being here and your brevity. The next witness is Mr. Louis N. Carmouc.he, general manager of the Functional Products andi Systems Department, Dow Chemical Co. PAGENO="0103" 97 TESTIMONY OF LOUIS N. CARMOUCHE, GENERAL MANAGER, FUNC- TIONAL PRODUCTS AND SYSTEMS DEPARTMENT, DOW CHEMICAL U.S.A., ACCOMPANIED BY DR. STACY L. DANIELS Mr. CARMOUCHE. Mr. Chairman and members of the subcommittee, I am Louis N. Carmouche. I have brought with me Dr. Stagy L. Daniels who at present is going to handle some charts for us. Stacy is a recognized expert in water and waste treatment technology. Dr. Daniels will not submit a statement but will later participate in the discussion, with your permission. My department is responsible for the production ~nd marketing of a wide variety of products and services including chemicals developed specifically for water and wastewater treatment. Today I would like to provide you with the knowledge, availability, *and costs of chemical treatment in the hope that you will seriously consider it a viable and immediate alternative for helping munici*- palities to achieve the effluent criteria defined in Public Law 92-500 without excessive capital expansion and without modifying the en- forcement deadlines of section 301 proposed in H.R. 9560. The treatment works construction grant program is suffering from a woeful long-term shortage of capital funds while there exists a need for extensive expansion `of treatment capabilities in the next decade. The 75-percent Federal grants available to municipalities for capital construction and the lack of Federal support for operational costs biases local decisions in the direction of higher capital con- struction and lower operating costs. This makes individual citizens bear directly the full burden of paying the operating costs. We strongly believe certain existing chemical technologies and resources should be more fully utilized to meet the demands of Public Law ~92-500. - Chemical treatmeiit is an immediately available alternative which caii be implemented at a -fraction of the capital costs incurred by most other systems. Chemicals accomplish effluent improvement by promoting coagulation and flocculation of suspended solids into large aggregates which settle, float, or filter rapidly and completely. Chem- ical technology is not new and has been widely used for many years for coagulation, flocculation, sludge conditioning, and disinfection. Chemical treatment can be integrated directly into existing facili- ties and increase capacities without requiring large capital expendi- tures. It can achieve or exceed the definition of secondary treatment. Nearly all alternatives for effluent improvement involve massive cap- ital-intensive additions to existing facilities. Engineeripg studies and construction scheduling of such capital projects require much advance planning and extended construction time. There are more than 100 manufacturers of inorganic coagulants' and at least 20 manufacturers of organic flocculants in the United ;States. - Treatment plants should have no problems with supply since these are commodity chemicals whose major uses are water and wastewater treatment. PAGENO="0104" 98 Competitive bidding insures municipalities of maximum return on investment. Chemical treatment has received lesser consideration by munici- palities because the bulk of the costs are associated with daily opera- tion. Only capital expenditures are subsidized by Federal funds. We believe that chemical treatment should be considered as an al- ternative for effluent improvement by municipalities before funds are granted for capital expansion. It may also be desirable long term to subsidize chemical treatment at locations where it can achieve sec- ondary treatment without capital expansion. BENEFITS OF CHEMICAL TREATMENT Chemical treatment is applicable to more than 90 percent of existing and new primary, secondary, and tertiary treatment plants. Chemical treatment is currently used at more than 600 of the 3,500 waste-water treatment plants around the United States, each having capacities equal to or greater than 1 million gallons per day. Chemical treatment systems also have been used effectively to re- move nutrient phosphorus and to promote the biological removal of nitrogen compounds. Chemical treatment is not a panacea. Some plants will still have to expand capital facilities to meet effluent criteria. Chemical treatment, however, can provide interim treatment and minimize discharge of pollutants until construction is completed. Chemical systems are flexible and easily accommodate, changes in plant operation. Chemical systems also can be operated intermittently to handle unusual industrial discharges, shock loads, stormflows, or seasonal inputs. The necessary equipment for chemical treatment consists of simple storage tanks, metering pumps, pipes, and valves, which are relatively inexpensive and readily available. Additional manpower training for chemical treatment is minimal. Other alternatives require extensive process equipment, long delays in procurement, and additional man- power training. ENVIRONMENTAL IMPAGT Extensive literature is available describing the toxicological and environmental impacts of treatment chemicals. Inorganic coagulants have been used extensively for the treatment of waste water and potable water for many decades. The use of flocculants in waste-water treatment has extended in recent years to include potable water treatment. SLEDGE HANDLING Upgrading a plant by any alternative results in additional sludge volume due to greater capture and removal of undesirable suspended solids. Biological processes create more biological solids from soluble biochemical oxygen demand. Chemical treatment creates insoluble materials from soluble pollutants not normally removed. Chemically created sludge can amount to approximately one-third to one-half of the total increase in sludge volume. Chemical treatment will often improve rates of filtration and yields of drier sludges. Chemical sludges are often easier to dewater than normal sludges. PAGENO="0105" 9,9 ECONOMICS The crux of the matter is economics. Typical unit costs for common coagulants, such as aluminum sulfate and ferric chloride, are 2 to 10 cents per pound depending upon volume and associated transportation cost. Unit costs for flocculants may be $1 to $2 per pound, but quanti- ties used are quite small compared to coagulants. Any increases in unit costs are expected to parallel those of similar chemicals in the national economy. The relative economics of four alternatives to accomplish second- ary treatment have been considered. These include: (a) Additional clarification capacity to handle increased hydraulic loadings. (74 Additional clarification and aeration capacities to handle both increased hydraulic and organic loadings. (c) Chemical treatment with fiocculant alone, and (d) Chemical treatment with both coagulant and flocculant. Specific operating and capital costs for these alternatives, and other combinations not shown, were developed by Hydroscience, Inc., at the request of Dow Chemical U.S.A. following cost guidelines proposed by the U.S. Environmental Protection Agency. Capital costs as you can see for these alternatives vary by orders of magnitude. These capital costs are incremental and must be added to costs already incurred for existing capital facilities. The combined alternative of additional clarification and aeration to handle both hydraulic and organic overloads is currently the most likely and most expensive choice. Mr. Chairman, here are the same capital costs to implement im- proved treatment tabulated for four typical communities, populations of 10,000, 50,000, 200,000, and 500,000, having waste-water flows of 1, 5, 20, and 50 million gallons per day, respectively. Comparisons are made between conventional treatment augmented by either capital expansion or chemical treatment. Capital costs are expressed as a range for both categories. The capital costs for chemical treatment are very low compared to capital expansion alternatives. In those places where cheiñical treat- ment can be utilized, significant capital dollars can be saved at a time when they are most limited. The 75-percent Federal grant bias currently tips the balance in the direction of major new construction and often precludes the use of chemical treatment. The major costs associated with chemical treatment are for daily operation and purchase of. chemicals. Operating costs for chemical treatment encom~pass a range depending upon the degree of treatment required, and the amounts and types of chemicals needed. Most alter- natives having lower operational costs also have higher capital costs. Chemical treatment can be competitive with capital expansion as shown by a comparison of operating costs for the same four typical communities. The operating costs are again additions to current costs. Total operating costs for all phases of secondary treatment can exceed $200 per million gallons. Incremental increases amount to about 1 to 30 percent depending upon the applicable alternative. The total incremental cost additions for the four communities also were determined. Total annualized present worth was determined by PAGENO="0106" .100 adding amortized capital costs to operating costs and expressed as dollars/capita/year. For wastewater treatment plants having capaci- ties of 1-50 million gallons per day, the total costs range from 11 cents to 96 cents per person per year for chemical treatment and from 11 cents to $2.60 per person per year for capital expansion. The capital expansion alternative of additional clarification and aeration considered to be the most likely choice to receive capital sub- sidy is twice as expensive as the upper range of chemical treatment~ and requires the immediate outlay of 10 to 40 times the amoui~t of capital. SUMMARY Chemical treatment is an economical and realistic alternative to obtain secondary treatment. Chemical treatment is compatible with most existing conventional processes and can be quickly implemented with minimum capital expense. Chemical treatment systems are flexible and adaptable to changing conditions. Chemical treatment can provide interim treatment for those plants which must go to capital expan- sion. Capital and operating costs of chemical treatment are competitive with other alternatives. Chemical treatment can be used by many plants to improve present operation and more closely approach or surpass effluent criteria defined by Public* Law 92-500. Enforcement deadlines and effluent standards for many municipal wastewater treatment plants need not be mod- erated or lessened, since adequate technology and resources are avail- able for chemical treatment. We sincerely believe that chemical treat- ment should be considered as a.n alternative for effluent improvement by municipalities to insure the most efficient use of Federal funds. This can be accomplished without appropriation of additional funds but by redirection of currently authorized funds to cover both capital and operating costs of the most cost-effective solution. Thank you for your attention. Mr. ROBERTS. Thank you, gentlemen, for your presentation. Most interesting. Do~s the gentleman from California have any questions? Mr. CLA~SEN. No questions. Mr. Chairman. Mr. ROBERTS. Mr. Ambro. Mr. A~mRo. I have two questions, one technical and one general. We have heard testimon-v in my subcommittee on the environment, NEPA, and other science technology, on deepwater dumping, the prob- lem off our coasts. This was by someone who was directing a project in the New York-New Jersey area. That testimony included one iartial solution to the degradation of sludge which was pyrolysis and the construction of pyrolysis plants throughout the New York metropolitan area. How well does chemically created sludge affect the degradation by pyrolysis. do you know? Mr. `CARMOUCHE. Well. chemièally created sludge is generally inor- ganic in nature and is likely not to be as amenable to pyrolysis as or- game sludge is. I would defer technically to Stacy Daniels on that cuestion but I believe as a general statement that will hold up and usually you have to dispose of inorganic sludge by landfill or some similar kind of disposal. PAGENO="0107" 101 Mr. AMBRO. Well, `of course, that intrudes therefore on the entire solution to the problem. Landfill is unacceptable in an area such as Long Island with its very fragile geological substructure containing its potable water supply. I do not know that this solution of pyrolysis is the `correct one either. Mr. CARMOUCHE. Chemical sludge is, in most cases, quite innocuous. I think there are suitable ways of disposing of such sludge and would be glad to give you a `complete dissertation on that if you would like it for the record. Mr. AMBRO. Maybe we will ask you to testify in another place. Mr. ROBERTS. I might say the Science and Technology Committee will be holding some hearings on the R. & D. on the treatment program. The gentleman from Minnesota. Mr. AMBRO. I have another question, Mr. Chairman. Mr. ROBERTS. I am sorry.. Mr. AMBRO. Just a general question. What your recommendatibn is, that we include, in addition to fund- ing for capital construction projects, funding for operations as well which incorporate the inclusion of chemical treatment for p~rimary, ,secondary and, as you say, tertiary treatment as well. 1 think you are absolutely accurate in suggesting the municipalities have a very difficult time in justifying the increase in the operation portion of the budget for the operations of sewage treatment plants but I do not kno'w enough about it to understand whether or not these kinds of moneys can be made available from an ongoing basis to municipalities for operational costs. I find your testimony very interesting and valuable and I thank you.. Thank you, Mr. Chairman. Mr. CARMOITCHE. Well, the comment .on that is something like this: that a combination of `capital use and chemical treatment is usually the most cost-effective solution to all of these things. You find when you combine the solutions that you spend totally less money for the capital expansion and you are not stuck with a solution for 40 years that might not be a right technical solution over that period of time. With chemical treatment you get the advantage of interim tech- nology improvements as new `chemicals and new processes come into that 40-year time period. Mr. AMBRO. You can move to that and, if indeed economic tertiary models are developed for incorporation at the local level, if technology permits us to do that, you can move to chemical treatment. Mr. ROBERTS. The gentleman from Minnesota, Mr. Oberstar. Mr. OBERSTAR. Thank you, Mr. Chairman. I greatly appreciate your presentation, Mr. Carmouche, on chemical treatment. I had the distinct privilege and pleasure of visiting the Dow Chemi- cal plant at Midland, Mich., and seeing many of the techniques that have been `developed and the processes and chemicals that have been developed by Dow in coping with water pollution problems. One question. though, that I would like to have you respond to is to delineate the differences between flocculant, coagulant and polymer. Mr. CAm~roncIIE. WTell, I will let Stacy answer that because I know he has the answer. PAGENO="0108" 102 Dr. DANIELS. In a straightforward way, a coagulant is an inorganic salt; a fiocculant is a water-soluble polymer. Mr. OBERSTAR. And a polymer works by changing the electronic charge. of materials as opposed to the mechanical or chemical action of an inorganic salt. Dr. DANIELS. It is a complex process, but basically they are charged materials with a positive or negative charge that react with tile Op~O- sitely charged particles in tile water. Mr. OBERSTAR. And the reaction time is rather fast, is it not? Dr. DANIELS. Very short.. Mr. OBERSTAR. Are you aware of any EPA research and dernonstra.- tion grants that have focused 011 the use of pol~rmers in coping with volume treatment of wastewater? Dr. DANIELS. Yes, we participated wit.h the city of Grand Rapids, Mich., which had an EPA grant for removal by chemical treatment.. This is about a. 40 million gallons per day waste water treatment plant in southwest Michigan. and there are a number of others. Mr. OBERSTAR. Did the results of that study indicate the plant Ca- pacity could be increased without increasing tue ph~ysical size of the plant? Dr. DANIELS. It is not a. simple yes or no answer to that one because there are other bottlenecks in the capital equipment of such a plant. Usually, sludge handling capabilities are neglected while primary clarifiers and secondary clarifiers are installed. More slu.dge is gath- ered contributing to the real crux of t.iie problem, the sludge handling. Mr. CARMO-G-CHE. There are many combinations of results when you go to c.hemica.l treatment in a. l)lant and you may settle for improved quality of effluent or an enlarged throughput of the same quality and hopefully you would get both. Mr. OBERSTAR. Yes. You point out that the gra.nt provisions of the Federal Water Pollution Control Act. as you say. tip the balance in the direction of major new construction and ofttimes preclude the use of chemical treatment. \~\That do you propose to do in order to offset that.? Mr. CARMOUGHE. Well, we would like to see either a modification amendment or a change in the wording of the proposed law and wOuld be very iiappy to work witii your staff to phrase UI) such a suggested wording or with any otiier appropriate stag that your committee thinks we might best work with. Mr. OBERSTAR. You see. there is almost an ideological question in- volved here, and that is chemical treatment falls into tue category of operation and mamtenance, and unless we are to change our definition of tue sewage treatment plant we would be getting the water pollution program into an area that it has not been involved previously and that is financing clay-to-day operations of the l)laflt. Mr. CARMOUCIIE. There has never been any reasoii in the history of the human race why you could not arrive at tue right solution even though you had to change sonic ancient and honorable con cepts. Mr. OBERSTAR. I agree with that. It poses some special problems for us here. Mr. CARMOUCHE. I am sure it does and we appreciate how grave t.hose are. PAGENO="0109" 103 We simply wanted to point out to the subcommittee that there is an alternative, that is viable, that it does meet the approval of EPA re- quirements, and it is both feasible and~ possible. And that up to now everyone has only considered the massive-capital-hardware, time-con- suming approach which is getting everybody into a lot of trouble by the testimony I heard today. Mr. OBERSTAR. Well, the thrust of your testimony would tend to show that by using chemical treatment we can improve the quality of effluent and the treatment capacity, expand the treatment capacity of existing physical plants without having to expand the capital con- struction investment. Mr. CARMOUGHE. We believe that is so and, with adequate plants to start with, we know this is so. Mr. OBERSTAR. I know that Dow has developed a strain of microbes, Mr. Chairman, that devour certain kinds of chemicals and they just reuse these microbes over and over again. I saw a demonstration at the plant and I think it is fascinating the advances that have been made in chemistry. If we can save on construction costs and build more plants for the same dollars and get better treatment to boot I think we are ahead of the game. No further questions. Mr. CLAUSEN. As a follow-on to our distinguished friend from Minnesota, it seems to me that some of this input that you have made reference tO is one of the reasons for the establishment of the National Water Quality Commission `and the kind of inventory or evaluation' of ongoing programs subsequently leading to some mid-course cor- iections in the form of legislative recommendations. This might be an avenue to pursue, or is it your view that we' have sufficient technology now to the point where the pressure should be placed upon the EPA which, under the law, does have the authority to move in the direction of alternatives in the water management planning area? What in your judgment would be the proper course of action for us to take? Mr. CARMOUCHE. Well, we feel sincerely the technology exists to greatly improve the method of treatment for most municipal plants today without great capital expansion. We have `already worked with the EPA and are in general agree- ment with them that these approaches are feasible and sensible. We would like to continue working with them and also with your staff, to phrase some amendments or ch'anges to the proposed law so that these things can happen. - Mr. CLAUSEN. WTell, you say that you are working with the EPA, but d'o they agree with you? Mr. CARMOUCHE. I think they do'; yes. Mr. CLAUSEN. The answer is what? Mr. CAR~roucm~. Yes; as far as we know, they do agree. Mr. CLAUSEN. I think this is a kind of question we might direct to the EPA witnesses when they come up before the committee. Mr. CARMOUCHE. But the data almost speaks for itself. PAGENO="0110" 104 On a technical level there is no disagreement as to ho'w well it works. Mr. CLAUSEN. Now, to wrap it up, just one final question. I am wondering if you could summarize the thrust of what you ;are trying to convey to us here today. Mr. C~~roucnE. Well, we recognize that the treatment of waste and wastewatQr is a big, big subject but we `also recognize that we can improve the ability to immediately improve the effluents from mu- nicipal waste treatment plants and we can do it without these great lapses of time. Time is a factor that all of us recognize. We may have lots of money of various sorts for hardware con- struction and may be able to get it, but it takes years to properly design and build plants. By chemical treatment we can improve the quality of the effluent and we can do ~t immediately. Mr. CLAUSEX. What would be the response of `highly qualified environmental experts as to this kind o~ change? Mr. CARMOUOHE. This is not intended to be `a facetious answer. If the experts are really highly qualified, they would agree. Mr. ROBERTS. Mr. Carmouche, I know in Texas we had to authorize deep injection wells to get rid of the chemicals from your plant in Freeport. What is the situation now? Mr. CARMOUCHE. To the best of my knowledge, we have ceased putting anything down those wells in Texas. Mr. ROBERTS. Well, I do not think it would hurt anything- Mr. CARMOUCHE. I do not think it did either, the way we were doing it, because we were quite careful and we had everybody's technical input. We have found that that is no longer necessary, and we are not using waste treatment or waste disposal wells for our waste in Texas. Mr. ROBERTS. Thank, you very much for your statement, and it is certainly interesting. The committee will stand in recess until 10 o'clock tomorrow morning. [Whereupon~ at 3 :01 p.m., the subcommittee recessed, to reconvene at 10 a.m., Wechiesday, September 24, 1975.] PAGENO="0111" TO AMEND THE FEDERAL WATER POLLuTION CONTROL ACT WEDNESDAY, SEPTEMBER 24, 1975 HoUsE .0]? REPRESENT4TIVES, SuBooMMrrn~E ON WATER RESOURCES, OF THE Co~rIrniE ON PUBLIC WORKS AND TRANSPORTATION, Washington, D.C. The subcommittee met, pursuant to call, at 10 :08 a.m. in room 2253, Rayburn House Office Building, Hon. Ray Roberts (chairman of the subcommittee) presiding. Mr. ROBERTS. The subcommittee will be in order. This morning the Subcommittee on Water Resources meets in its second day of hearings to consider H.R. 9560, a bill to amend the Fed- eral Water Pollution Act-Public Law 92-500. Yesterday we received testimony from Members of Congress, the Water Pollution Control Federation, and representatives of industries. Today, we will hear the views of local elected officials, representatives of major environ- mental groups, planners, and industry. Most of you know the Chair has a fetish about starting on time, but unfortunately, Mr. Clausen was called to the White House. He has just called in and said for tis to go ahead, and he is represented by his coun- sel. We will first hear the witnesses representing the National Associa- tion of Counties~ Mr. Potter and Mr. Hansberger. Mr. Potter, you will be spokesman, and you may proceed any way you see fit. The complete text of your prepared statements will appear in the record, and if you can summarize and hit the high points, we would appreciate it. Thank you. [The statements referred to follow:] STATEMENT OF NEAL POTTER, COUNCILMAN, MONTGOMERY COUNTY, MD.; CHAIRMAN OF NACo WATER QUALITY SUBCOMMITTEE, ON BEHALF OF THE NATIONAL ASSOCIA- TION OF COUNTIES A. 208. AREAWIDE PLANNING 1. Support $150 million authorization in each fiscal year `76 and `77 and exten- sion of 100 per cent federal funding for areawide planning costs for the first two years of newly designated 208 agencies. (a) Program has not had full three years Congress intended to get underway because EPA delayed implementation for nearly 18 months. (b) Newly designated 208agencies would be unfairly penalized. (c) Recent court decision will increase the number of 208 designations. (a) Existing 208 agencies will require additional funding to keep program moving. 2. Support amendment preventing states from non-designating 208 local agencies. (105) PAGENO="0112" 106 B. STATE CERTIFICATION 1. Support intent of State Certification Program. 2. Concerned that certification process may be so involved that further red tape and delay will occur as seen in Section 117 of Federal Aid Highway Act of 1973. C. EXTENSION OF 1077 DEADLINE DATE Support extension on case by case basis where municipalities cannot achieve 1977 deadlines. P. REIMBURSEMENT 1. Support extension of cut-off date from July 1972 to July 1973. 2. Support authorization and appropriation of additional $350 million. E. USER FEES Support use of ad valorem tax as means of financing operation and mainte- nance of waste treatment plants as long as industry pays proportionate share. (a) It is costly to switch to user fees for counties currently under ad valorem system. (b) Where ad valorem exists, it is easier to administer and less problem to collect. Mr. Chairman and members of the subcommittee, I am Neal Potter, councilman from Montgomery County. Maryland. I am also chairman of the Water Quality Subcommittee of the National Association of Counties Environment and Energy Steering Committee. With me today is Carol Shaskan, Legislative Representa- tive for the National Association of Counties. It gives me great pleasure to appear before your subcommittee to represent the views of the National Association of Counties as well as my own county concerning amendments to the 1972 Federal Water Pollution Control Act. The National Association of Counties represents over 1,400 county governments which together comprise 70 per cent of the United States population. Mr. Chairman, we would like to begin by commending your subcommittee for holding hearings on this important issue of amending the 1972 Federal Water Pollution Control Act P.L. 92-500. As you can well imagine, P.L. 92-500 has met at the lOcal level with optimism and commitment as well as confusion and apprehension. In many cases, imple- mentation of the Act has resulted in total frustration for local officials. Faced with time consuming and cOmplex regulations, unrealistic deadlines, federal footdragging on implementation and presidential impoundments, 1oca~ governments have been made all too aware of the need for changes in the law. Yet, we are not suggesting any retreat from our nation's efforts to cleanse and purify our water. On the contrary, the nation's counties are committed to doing all that is in their power to achieve clean water. Therefore we urge that P.L. 92-500 be amended in order to make the Act a truly workable piece of legislation. The bill HR. 9500 that is pending before your Subcommittee is a first step in this direction. 208-AREAwIDE PLANNING We begin today by urging this committee to act promptly to secure passage of Sections 2(e) and 6 of the bill HR. 9560. Section 2(e) authorizes $150 million for the continuation of the 208 program of the 1972 Water Pollution Control Act for both fiscal years `76 and `77. Section 6 extends the 100 per cent share of fed- eral funding for areawide planning costs for the first two years of newly desig- nated 208 Agencies. Over the past few months. NACo has been very concerned with the future of the 208 program due to the expiration in authorization on June 30th, 1975. In addi- tion we are concerned about the federal funding level. The law currently pro- vides that the Federal Government, through June 1975, pays 100 per cent of area- wide plannmg costs. After June 30th, the law mandates that the federal share of funding be reduced to 75 per cent. Due to the initial lack of commitment to the 208 program by 0MB, the Environ- mental Protection Agency delayed implementation of 208 by almost eighteen months. Once interim regulations were finally issued in May of 1974, many state and local governments still did not jump in to take advantage of the program PAGENO="0113" 107 due in part to EPA's initial failure to adequately explain and publicize the new program. Therefore, many communities have not had the period of time that Congress provided for in the law to participate in the program. We feel it is unfair to penalize new 208 agencies by reducing the federal share of funds. Local governments' strong interest in the program was demonstrated by the flood of applications that the Agency received once they made a commitment to the.208 designation process. Indeed, over 135 of tñe 149 designations were made in the last six months of the program's operation. Forty-three designations and grant awards were approved in the last month of the program operations alone. It should be noted, however, that the funds authorized for the first fiscal year of the program had expired with $137 million of contract authority as yet unobli- gated. Unfortunately twelve additional designations approved were informed after June 10th that no more 208 funds were available this year and that grant awards would be made with FY funds at a 75 per cent federal funding level. Yet, these agencies had applied for designation under the impression that they were entitled to 100 per cent federal funding. Most did not have the ability to come up with 25 per cent of the planning costs in the fiscal crisis local governments are currently experiencing. Atlantic County, New Jersey is an example of an area that can ill afford 25 per cent of planning funds. It estimated its planning costs' at $800 thousand, which would force it to raise an additional $200 thousand from taxpayers who already shoulder a $24 million tax burden in a time of near fiscal crisis. Its desig- nation was delayed due to state inefficiency, not because of any local ignorance of the need for planning or lack of commitment to the 208 process. Cumberland County, New Jersey is experiencing a similar situation. However, the failure to be funded is not the only basis for their present displeasure. As late as June 6th, the county was informed by the Regional office that an adjust- ment was needed on their grant application. After spending additional manpower and money on correcting the application, they were dismayed to learn only four days later from the same Regional office that there were no more funds! Despite a strong desire to plan for water resources, the county cannot come up with 25 percent of the necessary funding in this period of economic duress. Our concern is heightened by a recent U.S. District Government decision con- cerning "208." This decision changes the early interpretation that 208 was mainly a planning process for areas of urban-induStrialized concentration. Now, all parts of the United States are charged with completion of areawide planning by November 1, 1978. Moreover, states are required to conduct this planning on a statewide basis where local governments are not designated. Both of these aspects of the decision will drastically increase the demand for 208 funds. We believe that many more local governments will now participate in the program, in addition to the states which will have to undertake 208 planning where no local governments are designated. While we are pleased by this anticipated increase in the number of new 208' agencies, we feel it is essential to realize that existing 208 agencies will require additional funding to operate. A drastic reduction or interruption of funds in the ongoing process would only further frustrate the efforts of many planning agencies in attaining water goals. Although the EPA regulations require the agencies to become financially self-sustaining, it is unrealistic to expect that after two years, federal funding can suddenly be completely terminated. There must be a gradual reduction of funding in order to prevent instant collapse of the agency. Two years is scarcely adequate time to get staffed, decide upon out- puts and begin the initial task of establishing a workable plan. Superimposed on the problem of increased funding needs of new and old 208 agencies is the President's FY 76 budget request for the program. In the budget message, the President requested only $53 million for this program. Clearly this figure is an inadequate amount of money to allocate to a program which after such a slow beginning finally seems to be getting off the ground. NACo firmly believes that areawide cooperation is essential fQr managing our water resources. The 208 mechanism provides an opportunity to plan for and implement an areawide approach. Therefore we urge your committee to pass these amendments which are so vital to the continued success of the 208 program. In concluding our discussion on the 208 program, we would urge the corn- niittee to consider adoption of an amendment that is not currently included in H.R. 9560. This amendment would prevent states from non-designating 208 agencies where local governments want to participate in the program. Given the G2-492-7G------8 PAGENO="0114" 108 recent court decision, we believe that adoption of this amendment is especially criticaL States should only carry out the planning function after the local gov- ernments make it clear that they do not want or are incapable of carrying out the planning function. STATE CERTIFICATION PROGRAM NACo supports the intent of Section 213 of the bill enabling the EPA Admin- istrator to accept certification by the state Water Pollution Control Agency for carrying out its Title II responsibilities of the 1972 law. Where states are geared up with the professional staff to administer the program, NACo is strongly in favor of reducing the layers of governmental control thereby eliminating duplica- tion of efforts and needless red tape. Indeed, many counties have complained of the unnecessary delays and cost escalation that have resulted from the extra requirement of EPA certification on projects already meeting state regulations. However in practice we are somewhat concerned with the actual process of securing state certification. Our concern stems from problems that have resulted from a similar certification provision that was enacted in Section 117 of the Federal Aid Highway Act of 1973. We believe it would be useful to review these problems in order to avoid the same errors in another important piece of legislation. As with Section 213, the main intent behind the State Certification Clause in the Highway Act was to expedite the program. However, to date only fOur states have qualified under the requirements of the law and FHWA regulations. Much of the delayseems to stem from Section (a) of the Act which stipulates that the DOT Secretary may accept certification if he deems that highway projects "will be carried out in accordance with the State laws, regulations, directives, and standards establishing requirements at least equivalent to those contained iii, or issued pursuant to, this title." This requirement has been interpreted so narrowly and the process of securing certification is so involved that no other states have reached an agreement with the FHWA. While the language in Section 213 of HR. 9560 seems to be less rigid, we are still concerned that certification qualifications may once again be unreason- able and inflexible. The EPA Administrator is authorized to issue regulations that are necessary to carry out this process. It is foreseeable that the Agency could issue regulations making the process of certification so complicated that it would merely add to the burden of red tape. We would reiterate that our intent is not to award certification to states that do not have the capacity to handle it. We support the concept of this amendment, to expedite the construction grant process. We are only concerned that efforts to expedite may result in further red tape, entanglement and ultimate delay. We support EPA audit and urge that if states do not properly perform under this new certification, their approval be rescinded. EXTENSION OF 1977 DEADLINE DATE It has become increasingly clear to all involved with P.L. 92-500 that a number of deadlines required by the Act are totally unrealistic. Of primary concern to our organization is the current requirement that all publicly-owned treatment works must meet secondary treatment standards by July 1, 1977. We therefore urge prompt passage of Section 9 of this bill which allows the EPA administra- tor to make case by case extensions of this deadline date until July 1, 1982. Where individual plants can meet the 1977 deadline date, we urge their con- tinued efforts in this direction. However, an EPA official has pointed out that approximately 50 per cent of the nation's municipal discharges will be unable to~ comply with 1977 secondary treatment requirements. Initially the entire con- struction grant program was delayed because of the absence of final Title II regulations. These were not issued by EPA until February 1974, 15 months after passage of the Act. According to San Diego County, California, it is already quite evident that many projects in San Diego will need additional time to meet the standards. Once EPA regulations finally appeared, actual implementation time was in- creased due to grant review procedures, environmental impact reviews, state requirements and citizen reviews. An official from Fulton County, Georgia noted that in order to meet the 1977 deadline, local governments would have to assign a disproportionate share of their revenue to this effort. Unfortunately, local governments have many competing demands for their limited resources other than satisfying water quality standards. PAGENO="0115" 109 REIMBURSEMENT SECTION We strongly support Section 5 (a), (b) and (c) of the bill extending the date for reimbursable projects from those completed before July 1, 1972 to those completed before July .1, 1973. The extension of the deadline date to July 1, 1973 will enable reimbursement of eligible projects as Congress originally intended in passing the 1972 Act. We support the additional authorization provided in H.R. 9560 to accomplish this. We would point out here, however, that of the $2.7 billion that has already been authorized for reimbursing projects constructed between 1966-1972, only $1.9 billion has been appropriated. Thus we hope that Congress will appropriate as well as authorize the additional new funding level. USER CHARGES A prime example of the frustrations that local governments have encountered in implementing the 1972 Water Act comes from their experience with Section 204 of the 1972 law. This section requires that the grantee adopt user charge systems to finance the operation and maintenance of waste treatment plants. The law has been strictly interpreted by the General Accounting Office as not permitting use of the ad valorem tax for this purpose. NACo strongly believes that the local community should determine whether to finance maintenance and operating costs by monthly service charges or by ad valorem taxes or by a combination of both. Counties agree that where ad valorem taxation exists, it is easier to administer and creates fewer collection problems. In approximately 27 states, the ad valorem tax is relied on either solely or in combination with a surcharge system as a method of financing operation and maintenance of sewage plants. In California, for example, almost all counties currently operate under an ad valorem system. Elimination of ad valorem tax- ation as a method of financing operation and maintenance of sewage facilities means an overwhelming administrative task for those areas currently relying on it. The cost and complexities of shifting to a user fee `system can be truly staggering, as information from Los Angeles and Milwaukee Counties reveals. The Los Angeles Sanitation District, which services 72 cities, has not yet found any means of implementing a user fee system, although they do impose a surcharge tax on their 35,000 industrial dischargers. To institute a complete user fee system for their domestic and commercial dischargers as well, however, would result in a tremendous administrative burden. The county estimates that the administrative costs of switching to a user fee system would be over $5 million including bookkeeping, data processing and collection costs. In addition they estimate that an additional 50,000 meters would need to be installed throughout the county. Similarly, Milwaukee County, Wisconsin has charged that the process of switching to a pure user fee system would be an administrative nightmare. Con- sultants are currently working out a user fee system and studying the full impact of the system on the county's budget. In addition to the high administrative costs of adopting a new system, the problem of instituting a new form of taxation is a very real one in many areas. This is a particularly important consideration in this period of fiscal crisis and cannot be ignored. Mr. Chairman, we appreciate the opportunity to testify so early in these hear- ings. The National Association of Counties staff stands ready to assist the Com- mittee in its work in this important area. I would now be happy to answer any questions. STATEMENT OF DENNIs HANSBERGER, CHAIRMAN, SAN BERNARDINO COUNTY BOARD OF SUPERVISORS, SAN BERNARDINO COUNTY, CALIF.: ON BEHALF OF SAN BER- NARDINO COUNTY BOARD OF SupERvIsoRs Mr. Chairman and members of the subcommittee, I am Dennis Hansberger, Chairman of the San Bernardino County Board of Supervisors. I am pleased to be here to emphasize an intense interest in the Clean Water Grant Program and to assure you that the County I represent complies with and endorses the pro- visions of the Federal Water Pollution Control Act Amendments of 1972 (Public PAGENO="0116" 110 Law 92-500) and the State of California Porter-Cologne Water Quality Act of * 1970, as amended in 1973. Today I wish to comment on the prOposed H.R. 9500 which advocates changes to Public Law 92-500 and changes to P.L. 92-500 that our County and the En- vironmental Protection Agency has been considering. For those of you that may not be familiar with San Bernardino County, a brief résumé of the problems `we face is in order. It is the Nation's largest county in the 48 contiguous states and covers an area of over 20,000 square miles with just under three-quarters of a million people. It is larger than the combined areas of the States of New Jersey, Massachusetts, Delaware, and Rhode Island. There are three major geographical areas: the densely populated valley areas east of Los Angeles, in which many communities are experiencing sewage prob- lems; the mountains which contain many permanent residents and have sig- nificant sewage problems due to steep slopes, small lots, and poor drainage; and the desert areas which include numerous small, medium, and large size communities, many of which have and are developing sanitation problems. There are great industrial complexes of Kaiser Steel and Kerr-McGee Chemical Cor- poration. The recreation areas of `the Colorado River, Lake Arrowhead and the mountain communities with massive seasonal population changes. There are vast agricultural areas and dairy herds with their unique water and sew-age con-~ tamination problems. Several areas w-ithin the county have been placed under prohibition by the Regional and State Water Resources Control Boards, which has had a detri- mental impact on our development and ability to meet environmental and eco- nomic problems. HR. 9560 proposes five amendments to Public Law 92-500 and the following represents the views of this huge county: First: It proposes that Section 208 of Public Law 92-500 be amended to ex- tend the 100 percent Federal funding provision for new-ly designated 208 agen- cies and to authorize ~150 million for both fiscal years `76 and `77 for this program. Our County has been active in many regional organizations and coun- cils of government and we endorse the area-wide management concept and. recommend adoption of this proposed amendment. I also suggest that consider- ation be given to expanding the scope of this type of agency in order to, as a single entity, plan for and comply w-ith the Clean Water Drinking Act, the Air' Pollution Control Act and the Federal Water Pollution Control Act. The prob- lems and actions required to comply with the provisions of these acts are di- rectly related. A centralized planning and management agency would result in a coordinated effective effort at significantly reduced costs. Second: A second proposal under the `H.R. 9560 Bill would amend Section 204 to permit grantees either to levy an ad valorem tax or adopt user charges so that each recipient of waste treatment services pay his or her share of opera- tional and maintenance (including replacement) costs. We also understand that an additional surtax would be required for industrial users to pay their share of the costs. We support this proposed change and believe that the use of an ad valorem tax would be particularly appropriate, beneficial, and applicable in our mountainous and industrial areas due to low densities and the relatively low percentage of permanent residents or permanent users in relationship to the high assessed valuation or stable tax potential. Third: HR. Bill 9560 amendments to Sections 201, 203, 204, and 212 would provide the State Water Resources Control Board with authority to certify grants for municipalities provided the municipalities were grant eligible in accordance. w-ith criteria under existing regulations. The Federal Government would retain the right to monitor the State actions. We concur with this proposal and believe that elimination of one step in the review process would result in a more stream- lined and economical method for administering this program and make it more flexible to quickly meet local needs and problems. Fourth: H.R. 9560 proposes an extension to the 1977 deadline for achievement of secondary treatment (Section 301). We agree with the proposal as there is not sufficient local funds or engineering talent to meet this deadline, but suggest that extensions be on a case-by-case basis, depending on the severity of the prob- lems and all other factors involved. There is no question in my mind that pol- lution of'surface and underground waters is with us to one degree or another in every state inthe Union. We must hold a hard line and strive for purification. However, we must also recognize that there is not sufficient Assessment Act Bond PAGENO="0117" 111. money in the private bond market to meet the County~s needs of $125 million by 1977, much less the needs of the entire state of California. The following are our reactions to the changes to Public Law 92-500 that the Environmental Protection Agency is considering: First: A reduction of the Federal share of any clean water grant from 75 per- cent to 50 percent. It follows that this difference would be borne by the State, by the affected community, or a combination of the two. I am not able to speak for the State of California, but can state unequivocally and with firsthand knowledge that such a reduction would have a devastating effect if the local citizens were required to take up the slack. For example, at the present time, the San Bernardino Mountain area is under prohibition. This means there can be no building without sewers. Areas such as Crestline, Green Valley Lake, Arrowbear and others are in the process of in- stalling sewers to comply with the State Waste Discharge requirements. Current assessnients for individual property owners to pay the community share of the cost averages approximately $2,800 per lot. This effects all governmental entities which depend on property taxes and a depressed property value effects schools, flood control, fire protection, parks and recreation and all local services. This figure has placed a terrific strain on local citizens and some have sold or are try- lug to sell their properties. simply because they cannot afford to pay for these assessments. If the State and local community absorbed the 25 percent federal reduction on a 50-50 basis, the assessment would cost an average individual prop- erty owner $5,600. If the State was unable to assist, the individual's share would be $8,400. Gentl.emen: Many of these property owners are retired and on fixed incomes. California may be thought of as a land of golden youth but our median age in these communities needing sewers is 56 years in Yucaipa, 38 years in Hesperia, 59 years in Joshua Tree~ 55 years in Yucca Valley and 32 years in Crestforest. This compares to the community median age in sewered communities of 26 years. We are penalizing the older retired people with limited income who traditionally reside in our less affluent areas away from established cities. It would wreak havoc in the community because the average property owner could not afford the additional cost. We therefore, strongly urge that the federal government con- tinue to provide 75 percent funding for eligible projects. Second: The second proposal would limit federal financing to serve the needs of existing populations. It is recognized this would spread the money further but restrictive sizing is expensive in the long run as the plant and lines are con- tinually expanded and changed to meet growth needs. In our judgment ALL planning must take expansion into consideration. Although funds are not un- limited-and we recognize this truism-we believe it better to design and build one treatment plant to accommodate population growth for ten to twenty years than to build two or more with the same amount of monies. Otherwise, in two to three years hence, we would be confronted with systems incapable of accom- modating the growth that occurred and again be faced with the probability of violating waste discharge requirements and an everlengthening, everlasting list of areas needing funding for expansion and change. The current concept of funding a treatment plant for a ten-year period and the interceptor for twenty years provides the County and the communities with adequate time to plan, prepare for, and collect the monies necessary for expan- sion ten years downstream. We, therefore, urge that the current policy and pro- cedures be retained. Third: The third proposal would restrict the type~ of projects eligible for grant assistance. Again we are opposed to this approach. We, in the County of San. Bernardino, are fortunate in that we have received many grants to help us solve our problems. These grants cover a spectrum from a $35-million inter- ceptor and secondary treatment plant to a $6.5-million collection system; to a `$25,000 grant for a Step 1 `study of a mountain area. To dwell on the latter for a moment: We, in the County, believe that in certaih areas local government can take actions to prevent pollution `and satisfy waste discharge requirements without traditional expensive sewer systems. These ac- tions would include a requirement for: Localized collection and treatment by `packaged treatment plants and disposal by spray or surface irrigation; a septic tank or holding tank inspection program in conjunction with an enforced program of maintenance and pumping; and population density controls; downzoning; re- `zoning; a building moratorium and others. My point is that the present system for allocating grants is flexible enough to permit the type of study that I am referring to, which, `hopefully, will provide PAGENO="0118" 112 us with one or more cost effective solutions to the problems in the mountains, other than long expensive interceptors and expensive sophisticated treatment plants. Therefore, I firmly believe and recommend that the present system for allocation of grants be retained. We also believe that the Environmental Protection Agency should lead a na- tional effort to clearly establish alternatives such as those I have mentioned above to reduce the national funding requirement. In closing, I wish to thank this committee for inviting me to voice the senti- ments of San Bernardino County and I stand ready to answer any questions, to the best of my ability, that you may have. STATEMENT OF SUPERVISOR DENNIS HANSBERGER, SECOND VICE-PRESIDENT OF SOUTH- ERN CALIFORNIA ASSOCIATION OF GOVERNMENTS (SCAG) AND CHAIRMAN OF THE BOARD OF SUPERvIsoRs, SAN BERNARDINO COUNTY, CALIF. (Subject: Statement on certain provisions of House Resolution 9560 introduced by. Congressman Jones as they relate to the Federal Water Pollution Control Act Amendments (Public Law 92-500).) My name is Dennis Hansberger, Supervisor of San Bernardino County and Second Vice-president of the Southern California Association of Governments. I am presenting this testimony for the Southern California Association of Governments. The Association covers the six Southern California counties of Ventura, Riverside, Imperial, Orange, San Bernardino and Los Angeles and 12G cities within this area. One key aspect of the SCAG program is to serve as a planning body and coordinating agency for the several hundred jurisdictions operating in the six county area. It is within this capacity that SCAG wishes to present its comments on House Resolution 9560. The Southern California Association of Governments has had a long historical concern with the relation of water facilities to the growth and development of the region and specific concerns with waste treatment management. Since 1972. the Association has developed an areawide plan and program for water quality management which meets the requirements of the U.S. Department of Housing and Urban Development for a certified areawide program. As the designated A-95 metropolitan clearinghouse. SCAG uses this plan as one basis for review of local agency applications-for Federal assistance to water related projects. Under contract with State Water Resources Control Board, the Association also pro- vided demographic data as input to development of the seven water basin plans in this region. The Association has also completed an in-depth review of th~ area's water basin plans. SCAG is primarily a planning agency seeking to resolve regional problems through the local elected officials decision making process. The following actions were approved by our Executive Committee, composed of locally elected officials representing the counties and cities of the region, and are pertinent to the Committee's deliberations: (1) The Southern California Association of Governments supports delegation of a greater portion of Federal grant program administration to the States in order to process grants more effectively and expeditiously. (2) The Southern California Association of Governments, after considering various alternatives concerning the~ extension of 1977 deadlines for secondary treatment. supports statutory amendments that would maintain the 1977 date. but would provide the EPA Administrator with discretion to grant compliance schedule extensions on an ad hoc basis. based upon availability of Federal funds. and upon actual time required with the expenditure of good faith efforts to build necessary facilities. This alternative recognizes that some communities cannot meet the 1977 dead- line, due to construction constraints and funding problems, and provides com- pliance schedule extensions to those communities. At the same time, it requires communities that can meet the 1977 deadline to (10 50. Additionafly, this alterna- tive actually attempts to remedy the problem of insufficient Federal funding for meeting secondary treatment by diverting available funds from other more advanced treatment projects not specifically meant for the 1977 deadlino. Furthermore, the Association is seeking designation as a Section "20S" plan- nin~ agency, and its General Assembly recently alopted a resolution urging this designation. As an officer of the Association, I urge you to extend 100% funding PAGENO="0119" 113 for the planning efforts under Section 208, and to extend authorization of 208 funds in the amount of $150 million for 1976-1977. In addition to the substantive issues of immediate concern to your committee, our Association has studied and would like to comment on the issues of the Federal share for water quality grants; the eligibility of types of projects; and the Federal funding of reserve capacity. Our Association opposes reduction in the Federal grant share. The present Federal share of 75 percent should be retained. The Association opposes elimination of certain water quality improvement projects from the grant program which may include correction of sewer in- filtration/inflow, major sewer rehabilitation, collector sewers, correction of com- bined sewer overflows, and treatment or control of stormwaters. Rather, the Association would recommend a prioritizing of projects subject to State and local decisions. On the subject of Federal funding of reserve capacity, the Association supports reduction of Federal funding for reserve capacity at treatment plants to 10 years of forecasted growth and at interceptors to 20 years of forecasted growth, and supports use of forecasted growth figures that derive from adopted areawide growth policies. Such policies should be developed with local government in- volvement, should be integrated with broader state growth allocation, should consider a wide range of social, economic, and environmental impacts, and should also serve as the basis for areawide planning in other major functional areas. Further, the Association recommends that the Committee support use of adopted SCAG growth policies as the basis for establishing 10 arid 20 year requirements in the SCAG region. The Association thinks that continuing the current practice of funding reserve capacity up to 20 years of growth at treatment plants, and 30-50 years at inter- ceptors can encourage overdesign of facilities, and does take away from accom- plishing projects which serve current needs. Likewise, it is our thought that coin- plete elimination of Federal funding for reserve capacity puts a burden on communities to provide reserve capacity when growth is necessary and desirable, and could lead to underdesign problems. On the other hand, a 10 to 20 year funding, consistent with areawide growth policies, enables an incremental pro- vision of reserve capacity, and aids communities to provide cost-effective design within rational growth limitations, while assuring consideration of broad area- wide interests and coordination of diverse functional plans. The association thanks you for the opportunity to address the committee on these important issues. TESTIMONY OF NATIONAL ASSOCIATION OF COUNTIES, CONSISTING OF NEAL POTTER, COUNCILMAN, MONTGOMERY COUNTY, MD., ACCOMPANIED BY CAROL SHASKAN, LEGISLATIVE REPRESENTA- TIVE, NATIONAL ASSOCIATION OF COUNTIES, AND DENNIS HANS- BERGER, CHAIRMAN, BOARD OF SUPERVISORS, SAN BERNARDINO COUNTY, CALIF. Mr. POTTER. Thank you, Mr. Chairman. I am Neal R. Potter, councilman from Montgomery County, Md. I did not believe I could * get this wet just coming that far. I am also chairman of the 1~\Tater Quality Subcommittee of the National Association of Counties En- vironment and Energy Steering Committee. With me today is Carol Shaskan, legislative representative for the National Association of Counties~ and Dennis Hansberger, who will give a statement on be- half of his own county, San ~ernardino, Calif. Mr. Chairman, we would like to commend your subcommittee for holding hearings on this important issue of amending the 1972 Federal Water Pollution Control Act, Public Law 92-500. As you can well imagine, Public Law 92-500 has been met at the local level with optimism and commitment as well as confusion and PAGENO="0120" 114 apprehension. In many cases, implementation of the act has resulted in total frustration for local officials. Faced with time-consuming and complex regulations, unrealistic deadlines, Federal footdragging on implementation and presidential impoundments, local governments have been made all too aware of the need for changes in the law. Yet, we are not suggesting any retreat from our Nation's efforts to cleanse and purify our water. On the contrary, the Nation's counties are committed to doing all that is in their power to achieve clean water. Therefore, we urge that Public Law 92-500 be amended in order to make the act a truly workable piece of legislation. The bill H.R. 9560 that is pending before your subcommittee is a first step in this di- rection. Mr. Chairman, in the interest of saving time, I will give a brief summary of our statement. * First, on section 208, we begin today by urging this committee to act promptly to secure passage of sections 2(e) and 6 of the bill H.R. 9560. Over the past few months. NACo has been concerned with the future of the 208 program due to the expiration in authorization on June 30, 1975. In addition, we are concerned about the Federal funding level. Because of the Environmental Protection Agency de- layed implemention of section 208 by almost 18 months, many com- munities have not had the period of time that Congress provided in the law to participate in the program. We feel it is unfair to penalize new section 208 agencies by reducing the Federal share of funds. Our concern is heightened by a recent U.S. District Government decision concerning section 208. Now, all parts of the United States are charged with the completioii of areawide planning by November 1, 1978. Moreover, States are required to conçluct this planning on a statewide basis where local governments are not designated. Both of these aspects of the decision will drastically increase the demand for section 208 funds. While we are pleased by this anticipated increase in the number of new section 208 agencies, we feel it is essential to realize that existing section 208 agencies will require additional funding to operate. Although the EPA regulations require the agencies to become financially self-sustaining, it is unrealistic to expect that after 2 years, Federal funding can suddenly be completely terminated. There must be a gradual reduction of funding in order to prevent instant collapse of the Agency. In concluding our discussion on the section 208 program, we would urge the committee to consider adoption of an amendment that is not currently included in IH.R. 9560. This amendment would prevent *States from nondesigna.ting section 208 agencies where local govern- ments want to participate in the program. On certification of States, NACo supports the intent of section 213 of the bill enabling the EPA Administrator to accept certification by the State Water Pollution Control Agency for carrying out its title TI responsibilities of the 1972 law. NACo is strongly in favor of reducing the layers of government control thereby eliminating duplication of efforts and needless recitape. and I might say, lost time. PAGENO="0121" 115 However, in practice, we are somewhat concerned with the `actual. process of securing State certification. Our concern stems from prob- lems that have resulted from a similar certification provision that~ was enacted in. section 117 of the Federal Aid Highway Act of 1973. This process has resulted in further redtape, delay and entanglement. It has become increasingly clear to all involved with Public Law 92-500 that a number of deadlines required by the act are totally unrealistic. Of prime concern to our organization is the current re- quirement that all publicly-owned treatment works must meet second- ary treatment standards by July 1, 1977. We therefore urge prompt passage of section 9 of this bill which allows the EPA Administrator to make case-by-case extensions of this deadline date until July 1, 1982. Where individual plants can meet the 1977 deadline date, we urge their continued efforts in this direction. On user charges, `a prime example of the frustrations that local governments `have encountered in implementing the 1972 Water Act comes from their experience with section 204 of the 1972 law. NACo strongly believes that the local community should determine whether to finance `maintenance and operating costs by monthly service charges or by ad valorem taxes or by a combination of the two. Mr. Chairman, we appreciate the opportunity to testify so early in these hearings. NACo staff stands ready to assist the committee in its work in this important area. Mr. ROBERTS. Thank you, Mr. Potter, a very succinct and good statement. Y'ou suggested that there be a gradual reduction of Federal fund- ing' for section 208 agencies. Now, really, are you not really seeking to make this a permanent program? Mr. POTTER. Initially~ the big cost is for those agencies who have not gotten `started. I t'hink that our `biggest concern is that there be' this initial support. Mr~ ROBERTS. You are dodging my question. Just give me a yes' or no answer. Mr. POTTER. Well, we certainly believe in the permanent process. We do believe it would be. possible for the local government to pick up the funding after the whole process is esta'blished. Mr. ROBERTS. You can be sure we are not going to make it perma- nent, because H.R. 9560 provides for a 100 percent Federal fund for the 2 years, and 75 percent thereafter. What period, if we took your recommendation, what period would you accept `as the phaseou't? In other w'ords, instead of 2 years, how' many years would you want to say, 2 years is not enough? Mr. POTTER. Well, the biggest problem would be to cut off the new ones just now getting started. Two years is not always adequate to cover a large metropolitan area. For instance, here in Washington, I `am not sure we will finish in that time. We have started late, but are hoping for a gradual' phaseout of the Federal funding over a 3- or 4-year period. Mr. ROBERTS. If we gave you that gradual phaseout of a 3- or 4- year period, can you `testify you would not be back wanting an exten- sion to `8 years or 10 or 12? Mr. POTTER. I think the initial 100-percent funding for most of the metropolitan areas or other designated areas could make the' PAGENO="0122" hG grade, but there is a tremendous amount of fundamental work to be clone in the initial stages. because it is a new concern which has not been dealt with adequately in the past. Mr. ROBERTS. What has been the counties' experience with the certifi- cation procedure and the highway program? What would you recom- mend to the subcommittee? What would you say should be done for the certification process for the grant program so that it does not develop the same problem that you have experienced with the highway program? Mr. POTTER. Well, I think the problem in the highways has been principally the lack of certification of the States. If I recall, only four States have been certified, and that is really not an operative program. Thus, the counties really have not had any experience with the program. We are fearful that once certification is approved, counties will be asked' to conform to more burdensome re- quirements passed on to them by the State. We suggest that you contact the Federal Highway Administration who is well aware of the prob- lems that have prevented the implementation of this program. We would hope that the legislative history accompanying the passage of this bill H.R.. 9560 would mention the problems that have impeded the implementation of the highway program so as to emphasize the need for flexibility in the regulations that the EPA Administrator ultimately promulgates to administer this section. As evidence of the counties' concern on the highway certification program, I am submitting a resolution for the record that was passed `by the National Association of County Engineers, an affiliate of NACo, and the AREA County Division convening in joint national confer- enc,e on local transportation at Des Moines, Iowa, on August 27, 1975, concerning this program. [The resolution referred to follows:] JOINT RESOLUTION OF THE NATIONAL ASSOCIATION OF COUNTY ENGINEERS AND THE ARBA, COUNTY DIVISION, CONVENING IN JOINT NATIONAL CONFERENCE ON LOCAL TRANSPORTATION AT DES MOINES, IOWA, ON AUGUST 27, 1975 Whereas, it appears that the pending Highway Act may be late in enactment and Whereas, the items of national interest to be addressed in that act, such as the fate of the Highway Trust Fund and financing for highways and transporta- tion of the future may be such as to preclude properly addressing the concerns of the States and the counties with regard to Certification Acceptance and Whereas, since the effective date of Certification Acceptance only three states have been approved, with many of the remaining states in their attempt to com- ply with the "equivaleney" provisions `of the current act find that the procedures do not gain the objectives of less red tape intended by the Secondary Road Plan or Certification Acceptance, and Whereas, the Secondary Road Plans in effect between the States and the Federal Highway Administration were extended by administrative action of the Secretary of the Department of Transportation through December 31, 1975, therefore he it Resolved. That it is in the best interest of the people of the United States and it is the resolution of this body, made up of Local Transportation Officials from across the nation that the Secondary Road Plans in effect between the FHWA and state be administratively continued in effect for any and all improvements on local streets and highways being accomplished with funds administered by the FHWA until such time as 23 U.S.C., section 117, has been properly addressed by the Congress. Insert in line 17-after sentence: ". . . because it is a new concern which has not been dealt with adequately in the past." PAGENO="0123" 11.7 Although the exact phasedown time would differ from agency to agency, we believe some type of formula such as: 100 percent-2 years; 75 percent-3 years; -50 .percent-4th year; 25 percent-5th year, would insure that the process has really gotten underway. Mr. POTTER. I will say that in the water pollution control area, the State of Maryland where I come from has experienced a delay of almost 2 years when Maryland was fully equipped with the necessary agency and expertise who have handled th~ matter for EPA. We are now at a veto situation where EPA can intervene on certifica- tion of the stages made which is satisfactory. I think the State will always live up to whatever EPA might want, and it gradually took so long to get it going. Mr. ROBERTS. One more question. WTas it not a great mistake when we came out for 100 percent of anything; when you put 100 percent Federal money in, was not that a great mistake? Should it not have been 70-30, like the highway pro- gram, or maybe even 80-20? Mr. POTTER. Well, it is very hard to start a totally new program when you have already put your resources to your own old program. I think 100 percent for a year or two makes a lot of sense, especially when a new enterprise and the problems are national and of interstate concern. Mr. ROBERTS. The Chair is pleased to have the distinguished rank- ing minority member of the committee, Mr. Harsha from Ohio. and Mr. Clausen as the ranking mthority member of this subcommittee. Mr. HARSHA. I have no questions, Mr. Chairman. Mr. ROBERTS. Mr. Clausen. Mr. CLAUSEN. Well, Mr. Chairman, I notice that you placed a great emphasis on the areawide planning and, of course, the certification process, and I think it should be stated that this committee and the staff has worked very closely with the EPA in getting them to make the kind of regulation that advances the certification process and, hopefully, to help the States and the local communities to become more and niore involved. Mr. POTTER. Well, we in our State reduced the EPA load and speed, so we too like the certification whenever conditions `are met. Mr.. CLAUSEN. With regard to areawide planning. as you know, `there is a great deal of concern about the possibility of superimposing another level of government. I am assuming what you are advocating is utilization of joint powers agreement in order to accomplish this, or are you talking about setting up regionally another level of government. Mr. POTTER. In this area, it is a coordinating process so that every- body knows the nature of the problem and what they have to do to meet the standards to solve the problem locally. The Washington 208 Agency is a tn-state area. We are only just getting started, you might say. but through the Council of Governments here we have achieved many satisfactory experiences. It is really easier and more satisfactory to all parties to do it here in this Potomac Basin than to go to Rich- mond or Baltimore and the District of Columbia, separately. This way we can work out a joint planning process and not have to go through three different State agencies. Mr. CLAUSEN. Using existing en~itics of government and not impos- ing another level of government on top of it. PAGENO="0124" 118 Mr. POTTER. That is right. It is a. special committee of the Council of Governments which is a. voluntary agency and so far-and I think this will go through to the completion-all agencies are cooperatmg satisfactorily. Everybody understood the problem from the first.. Mr. CLAUSEX. Is your emphasis on the utilization of joint exercise. of powers of agreement through your cause? Mr. POTTER. That is right, and they are not enforcement powers, but they are coordinating powers. Mr. `CLAUSEX. All right, thank you. Mr. ROBERTS. The gentleman from New Jersey, Mr. Roe. Mr. ROE. No quest.ions. Mr. ROBERTS. Mr. Ha.nsberger. Mr. HAXSBERGER. Yes, if I may, Mr. Chairman, members of the sub- committee. my name is Dennis Hansberger and I am chairman of the San Bernardino County Board of Supervisors. I am here to emphasize our interest in the clean water grant program and to assure you that the county I represent complies with and endorses the provisions of the Federal Water Pollution Control Act of 1972. H.R. 9560 proposes four amendments t.o Public Law 92-500. First, section 208 be amended t.o extend the 100-percent Federal funding provision for newly designated 208 agencies and to authorize $150 mil- lion for both fiscal yea.rs 1976 and 1977. Our count.y ha.s been active in many regiona.l organizations and we endorse the areawide manage- ment concept and recommend adoption of t.his proposed amendment. We also suggest that considera.tion be given to expanding the scope of this type of agency to plan for and coordinate the various Federal acts with air pollution control, and we believe this coordinated effort will reduce cost. `Second, this bill would amend section 204 to permit grantees to levy an ad valorem tax or adopt user charges as well as surtax for industrial users. We support this proposed change. Third, the amendments of sections 201, 203, 204, and 212 would pro- vide the State water resources control board with authority to certify grants for municipalities Provided the mumcipalities were grant eligible. We concur with this proposal and believe that elimination of one step in the review process would be more economical to administer. Fourth, the bill proposes t.o extend the 1977 deadline for secondary treatment. We agree as there is not sufficient local funds or engineering capacity to meet with the deadline. We suggest the extension be on a case-by-case basis. While we strive forpurification. we must recognize there is not enough sufficient money in the bond market to meet our county's current needs of $125 million by 1977. I am also vice. nresident of the Southern California Association of Governments which represents 10 million Californians. Additional written testimony has been submitted on their behalf~ and I thank you for hearmg the interests of the San Bernardino a.rea in the full state- ment that has been submitted for the 1ecoldl, and I would appreciate your attention to it. Thank you, Mr. Chairman. PAGENO="0125" 119 Mr. ROBERTS. Thank you. What factors do you think ought to be considered in determining whether municipalities really can meet the 1977 secondary treatthent requirement? One, you have already said, is bonding limitation., Mr. HANSBEHGER. Well, I suppose it is a very involved question. I will try to be brief. My major concern~ Mr. ROBERTS. Would you rather submit it for the record in letter form, think about it, and give us some help? Mr. IIANSBERGER. I will. Mr. ROBERTS. This is a sticky problem. Mr. I-IANSBERGER. We will be happy to have our staff prepare some additional information on that if you so please, Mr. Chairman. [The following was received for the record:] SUPPLEMENTAL MATERIAL FOR THE TESTIMONY OF DENNIs HANSBERGER, CHAIRMAN, BOARD OF SUPERVISORS, SAN BERNARDINO COUNTY, CALIF. In my testimony of Sept. 24, 1975, I concurred in the proposed extension of the 1977 deadline for secondary treatment in publicly owned treatment works. I suggested however that this be done Oil a case by case basis. HR. 9560 provided for extension to the 1977 deadline if the construction of such treatment works cannot be completed by that time. I propose that this pro- vision be expanded to permit additional extensions based on other factors and consideration as follows: In San Bernardino County, some communities desperately need secondary treatment facilities at the earliest possible date because of population densities and health and pollution problems. There are other sparsely populated comnluni- ties that could delay construction of secondary facilities for several years with- out seriously degrading the environment. There are still Others that fall in be- * tween these extremes. To site examples, in one area of a community known as Grand Terrace, a sanitary survey revealed a septic tank failure rate of 40 percent, which repre- sents a severe health hazard. In this case, there should be rigid compliance w-ith deadline dates for secondary treatment. Three communities in an area, Mill Creek, are currently under a regional water quality control board prohibition. This, in effect, implies that sewering will be necessary and a step 1 grant has been awarded to provide a solution to sus- pected pollution. In my judgment, because of the low population density and the lack of documentary evidence proving pollution or health hazards, these com- munities could delay sewering and treatment for years. Because of the above and because money is simply not available to fund the $350 billion needed for eligible w-aste-water projects throughout the United States, I propose that each state develop a priority list and place each municipality destined for secondary treatment facilities on this list based on the urgency and need. This can best be accomplished in California by charging the nine regional water quality control boards with this responsibility. These boards, working in close harmony with local counties and/or city staff, are the most qualified to develop standardized criteria. Some criteria can be as follows: 1. density factors. 2. pollution criteria: (a) Number or rate of septic tank failures; (b) number of homes effected; (e) chemical and bacteriological composition of underground water; and ((1) history of water-related health problems. 3. cost benefit ratios. 4. general plans of counties and cities. 5. historical and projected rates of growth. 6. existing improvements. I have suggested the above because I believe it to be a more realistic ap~ proach to solving both our waste water and budgetary problems, and would PAGENO="0126" 120 provide states with the flexibility needed to comply with Public Law 92-500 based on a more realistic time frame. There simply is not sufficient assessment act bond money in the private bond market to meet the counties needs for $125 million by 1977. I suspect that every county in the natidn is confronted with the same problem to one degree or another. If you would like specific wording and criteria standards, we would be happy to work with you or your staff and supply detailed information. I again thank the Committee for permitting me to voice the sentiment of San Bernardino County. Mr. ROBERTS. Thank you. The gentleman from Ohio, any questions? Mr. HARSHA. Mr. Hansberger, your third topic deals with the certi- fication for municipalities provided the municipalities were grant eli- gible, and you further state: The Federal Government would retain the right to monitor the State actions. We concur with this proposal and believe that elimination of one step in their review process would result in a more streamlined and economical method for administering this program and make it more flexible to quickly meet local needs and problems. Mr. HANSBERGER. First, let me be very candid and tell you I did not process the grant, and I am not sure I could give you the details of the grant program, but the step I have in mind is that as it now stands, all of these grants must be processed and certified by the State, and again, certified by EPA, or vice versa. We would like to remove the step of having EPA actively do that work, turn that work over to the State with monitoring by EPA to de- termine if the State is actually carrying out the program which the Federal Government has authority for. I believe that we are duplicat- ing work there. Either the State ought not to do it, or EPA ought not to do it, and my suggestion is that the State be in close to the problems and prepared to deal with them. Mr. HARSHA. Well, I believe that t.he bill provides for the removal of that step. Mr. HANSBERGER. Yes; and we are in concurrence with that. Mr. HARSHA. Thank you. That is all I have. Mr. ROBERTS. The gentleman from New Jersey, Mr. Roe. Mr. ROE. No questions. Mr. ROBERTS. Gentlemen, thank you very much. Mr. Clausen, any questions? Mr. CLAUSEN. No questions. Mr. HANSBERGER. Thank you. Mr. ROBERTS. Next we will have an environmental panel headed by Brent Blackwelder, Mr. Speth, Mr. Zwick, Mr. Harris, Mr. Kamlet, Mrs. MacDonald, and Ms. Rastatter. While these people are getting their positions at the table, the Chair would like to make it known that the rules of this subcommittee require that witnesses' written statements be presented to the commit- tee 3 days in advance. We. have found today that we have been coming up with a great many people who have not filed their statements. In the future. those people who have not filed their statements will not be permitted to testify. Mr. CLAUSEN. Mr. Chairman, I am pleased that you brought this point to the attention of those that are in the audience because. as you well know. for us to have an opportunity to adequately question wit- nesses, it is absolutely essential for each one of our Members and our PAGENO="0127" 121 own staff to be able to work with us and evaluate the testimony and make the hearing very meaningful, and I appreciate and I concur in what the chairman said. TESTI1~ONY OF ENVIRONMENTAL PANEL, CONSISTING OF BRENT BLACKWELDER, WASHINGTON REPRESENTATIVE, ENVIRON- MENTAL POLICY CENTER; GUS SPETH, NATURAL RESOURCES DEFENSE COUNCIL; DAVID ZWICK, CLEAN WATER ACTION PROJ- ECT; ROBERT HARRIS, DIRECTOR, WATER* QUALITY PROJECT, ENVIRONMENTAL DEFENSE FUND; KEN KAMLET, NATIONAL WILDLIFE FEDERATION; BETTY MACDONALD, DIRECTOR, LEAGUE OF WOMEN VOTERS OF THE UNITED STATES; CLETJ[ L. RASTATTER, SENIOR ASSOCIATE, THE CONSERVATION FOUNDA- TION Mr. BLACKWELDER. I appreciate that. I know some of these state- ments here were not submitted from our panel in time, and I have personally taken steps in the future to see that that does not occur. Mr. ROBERTS. You know the subcommittee tries to work with you on all of these things, so you put us behind the eight ball when you do not have these statements where we can peruse them ahead of time and understand really the testimony. Mr. BLACKWELDER. Absolutely. Mr. ROBERTS. It keeps us from doing our ]ob. The gentleman is recognized and give us your best in as much time as you can with your statement which will appear in full in the record -all of the statements, whether they have been submitted or not, and then we will try to review them. Mr. BLACKWELDER. Very well. We appreciate again the opportunity to have this environmental panel to discuss the views of the conserva- tion community on pending water pollution control legislation. I am Brent Blackwelder, the Washington, representative of the En- vironmental Policy Center, and I will introduce our panelin the order in which they will speak to you. Mr. Gus Speth of the Natural Resources Defense Council will give a brief summary of our panel's view of the pending legislation. Betty MacDonald with the League of Women Voters will speak on user charges, section 4. Bob Harris is with the Environmental Defense Fund and will cover the question of toxic substances. Clern Rastatter will talk about State certification, section 8. Ken Kamlet with the National Wildlife Federation will address the question of ocean outfalls in section 9. And, Dave Zwick who is not here, at this time, will follow up with a discussion of the deadlines in section 9. We will begin then withMr. Speth. Mr. SPETH. Mr. Chairman, members of the committe, we appreciate this opportunity to make this presentation to you today. I think it is fair to say that the basic position of all of us here is that Congress did its work well the first time in enacting the Federal Water Pollution Control Act. That act sets out a strong effective program, we believe. PAGENO="0128" 122 and one which clearly mandates the critical changes that were needed to restore water quality in the Nation. What is needed now is the continued appreciation of the basic sound- ness of that act, a willingness to give the act time to work, and a re- newed effort to implement it vigorously. The last thing we need now is to reopen devisive issues which were put to rest with the passage of *the Federal Water Pollution Control Act of 1972. There are two areas, however, where problems of implementation have proven so severe that new legislation is now badly needed to insure that the law Congress originally wrote is in fact effectuated. The first task for legislative action is to put together new title II funding and revised regulatory deadlines in order to come up with an effective, realistic program for abating municipal sewage discharges. And, the second area for legislation is to change section 307(a) of the act in order to insure that EPA does something it has not yet clone to a.ny degree and that is to take meaningful action to regulate the dis- charge of toxic pollutants. Based on these and other considerations which I will discuss subse- quently, our organization urges the following with regard to 1-1.R. 9560. First, we support the funding authorization provisions-~sectioiis 2, 3, 5 and 6-and we strongly urge their adoption. \Ve also support increased funding for the States so that they can participate more effectively in the title II graiit process. Begarding the provisions amending the deadline for municipal com- pliance with secondary treatment ,and extending the 1-year time limit for compliance with toxic standards. which are found in sections 9 and 11 of I-1.R. 9560, we believe that these changes are inadequate and not sufficiently responsive to the serious situation that now exist in the mumcipal treatment and toxic pollutant areas. The other features of the bill-those pertaining to user charges, delegation of title II responsibilities to the States, ocean discharges from publicly owned treatment works and penalties for spills-seem to us, whether considered singularly or together. to be a big mistake. We strongly oppose those provisions and believe their adoption would constitute a major step backward. I want to take UI) now what is oiie of the sections of the bill, the certification of State title II programs. We strongly urge that this provision of section 8 not be enacted. Its propo~ed delegation to the States of numerous important title II responsibilities is both fiscally irresponsible and environmentally unsound. Moreover, it is unlikely that section 8 will achieve the legitimate objectives of its supporters. I want to en~hasize the word "legitimate" because* our organization does support spending massive amounts of Federal funding on publicly owned treatment works. We are 100 percent behind the idea of the Federal Government supporting publicly owned treatment works. Our concern is that if section 8 goes through, it will harm that program and result in environmentally unsound projects. We must start with the realization that we are talking about who is going to have the responsibility for spending billions and billions of Federal taxpayer's dollars over the next decade. Section 8 simply gives these billions of taxpayer's dollars to the States with only the most rudi- PAGENO="0129" 123 mentary and ineffectual provision for certifying State programs and supervising State activities. The degree to which the enactment of section 8 would be fiscally irresponsible can be seen by comparing the careful and detailed re- quirements set out in sections 402 and 304 of the act for qualifying State NPDES programs with the complete absence of su~h require- ments in the proposed section 8. The EPA Administrator and the public are simply given no criteria by which to judge the acceptability of State programs, resources, and personnel, and again, unlike the situation with the NPDS program, affected members of the public are not insured their right to seek judicial review of the Administrator's certification. Even though billions and billions of tax dollars of public money. is at stake, the Administrator will be under great pres- sure to certify State programs, and it is doubtful he will be able to resist, particularly since lie has been given real criteria for approval, with the result that good and bad alike will become eligible to control the erstwhile Federal billions. Similarly, the provision which authorizes the Administrator to withdraw certification for a particular requirement fails to account for practical realities. EPA will iiot want to stir up a hornet's nest by withdrawing certification, particularly when to do so it must challenge the State openly and present the case against the State fully in a public hearing. The public hearing requirement in section 8 really serves to protect the State and not the Federal taxpayer, a conclusion supported by the absence of a similar requirement at the original certification stage. Moreover, section 8 assumes that EPA will actually monitor the States' implementation of title II, but the reality is that EPA, with its funding constraints and other responsibilities, will do very little monitoring. Our second point is that section 8 is environmentally unsound. What section 8 does is to pass the Federal responsibility for making a whole series of determinations which are set out in the act, which I list in my statement, to the States, and it is those very det~rmiiiations which were the Federal strings on the Federal dollar. What Congress would be doing if it enacted this provision is giving the strings as well as the dollars to the States, and what we will get in the long run is ineffectual implementation of those Federal policies. These are the very policies that are going to make this act work in the long run, and it is vitally important that they remain at the Federal level. are having a hard enough time getting EPA to enforce those polices. The States are even more resistant to them, aiid less accustomed to them, and less delighted with them, with the result EPA is now asked to delegate those strings. They are not going to be Pulled if this legislation passes. Much as President Eisenhower once warned of the miiitarv-inclus- trial complex. it is now approprmate t.o warn of a burgeoningsewage- industrial complex, a collection of interests composed of* land developers, contractors, the sanitary engineering profession, and State. and local officials. The ends of the complex are served by the ~xtensive construction of overlarge and capital-intensive sewage treatment plants and associated sewers of conventional varieties, which are planned audi executedi without regard to environmental constraints or values. 63-192----7G------9 PAGENO="0130" 124 Our concern is that the States. once the title II program is dde- gateci to them, will not have, the will or.the capacity to resist this com- plex of pressures, with the result that POTW's are built with outfalls in the wrong places and with sprawl-stimulating interceptors which should never exist. that conventional treatment plants are built where land treatment systems would have been preferable, and that inno- vative closed cycle, and other systems are never given a chance, and it will all be clone with Federal money. Finally, we oppose section 8 because there are much less drastic and more effective means of speeding up the grant review irocess. The big reason for delay so far has been inadequate funding at the EPA level and the State level and at the local; particularly, at the Federal and State levels. We support making more funds available to those people so they can do the job quicker and get this money spent, but that is a. lot, different from delegating the program to the States. In my testimony, I go on through a number of the other stated ob- jectives of the proionents of the legislation, and I hope this will show less drastic and reasonable ways to address their objectives. Finally, we. think there has been too little attention given to the like- lihoocl that changing the act at t.his point, thus establishing new process will, in fact.. end up delaying the spending of this money-that is, delaying the construction grant program-as everybody at. all levels of governmnent begins to sort out. an entirely new set of arrangements. Three years clown the road now we have become a.ccus~omeci to one. set. of arrangements. I think we have a lot of front-end delays behind us. At this point we know what the ropes are. Those initial delays arc behind us. and I think we can spend this money in an environmentally effective manner in the future, but if we change the program now, if we reorient the program now, we are now just going to buy ourselves another series of delays. I would like, to turn now to the toxic provisions which is another area where we think Congress has got to act decisively. Probably the sorriest chapter in the history of the act is the implementation by EPA's failure 3 days down the road to promulgate a single toxic standard to control the discharge. of toxic pollutants. EPA'S list of toxic pollutants proposed to be regulated contains only nine sub- stances; omits leacL chromium, selenium, zinc, and asbestos, as well as every one of the carcinogenic orgamc compounds in cl~inking water. indeed, almost. all of the substances covered by Federal drinking water standards are. omitted from the EPA list. Moreover, EPA has thus far failed to develop a single standard for the nine pollutants it has already listed as toxic. In short, EPA is doing least about the most important problem. EPA. failure has gone hand in hand with a series of disturbing revel ations regarding the degree to which the water we drink and with which our food is processed and prel)aredL and the fish and shell- fish we eat. are. increasingly contaminated by toxic and cancer-pro- clueing chemicals. The latest of these revelations came a few weeks ago when New *\Torl~ State announced striped bass caught in thi.e Hudson River a.ie essentially all contaminated with polychlorinatecl b~phenyis above the FDA. tolerance level. You cannot find a fish in that river that is not PAGENO="0131" 125 contaminated. And this is also true of fish in Lake Ontario and fish from Lake Michigan. If EPA had implemented section 307(a) on time, we would have had effective PCB standards complied with 9 months ago. Right now, we do not even have one that EPA says it is willing to support. EPA's excuse-which they have offered to us-is that sectiOn 307 (a) is too stringent on the dischargers and its procedures for promulgating standards are too cumbersome. While there have been other problems as well, and I think the other ones are the most serious ones, includ- ing most prominently EPA's consistent failure to allocate the neces- sary resources to section 307 (a) -there is something to EPA's claims, at least in the sense that if we are ever going to get anything out of EPA in this area, EPA is going to have to like the section. So, accordingly, we are willing to propose certain changes to 307 (a) which we hope finally would result in the promulgation of an ef- fective implementation of the toxic standards. The belief that the 1-year deadline, which is now in the act for compliance to 307(a) standards is too strict, prompted EPA's proposal that it be permitted to extend this 1-year dea.dline for 2 additional years. We support this provision, but we would change it in two im- portant respects: first, by changing the phrase "technologically infeasi- ble" to "impossible" and, second, by adding "source or" before "cate- gory of sources." These changes would make the. language which EPA has suggested for extending the deadline, give the Agency additional flexibility, and, I think, better effectuate the intent of EPA in those areas. But this change, which would allow the discharger to continue discharging toxic pollutants longer than the section originally en- visioned, we do support because it seems the only way to get any action in this area. Moreover, such an amendment would not go far enough because it does not deal with the other two big problems. First, that deadline extension amendment does not change the cum- bersome and unnecessary formal hearing procedures which are now required by section 307 (a), procedures which were recently made even more burdensome by certain unfortunate rulings made in the course of EPA's formal hearing on its proposed toxic standards. These, are hypertechnical rules which have made it extraordinarily difficult for EPA to get out standards. EPA attempted-and I think this is very important to appreciate- to amend section 307 (a) to simplify the procedures for developing and promulgating a toxic standard, but its proposal in this regard never cleared the Office of Management and Budget, and so never reached this committee. We would view a modification such as that once sought by EPA as extremely important, and we offer as a model of what the appro- priate rulemaking procedures should be, the procedures prescribed in section 306. where it deals with new sources. Clearly. ~t makes no sense to smgle out toxic standard setting for especially slow and cumber- some proceedings-just the opposite should be the case. Another shortcoming of section 11 is that it does not really mandate EPA to do the. job it is not doing now. For that reason, we ~vould like to see in that section a provision which directs EPA to list and to rr~ul~te the toxic substances that are on EPA's drinking water list. That is a minimal request, it seems to us. The substance~s have been PAGENO="0132" 126 declared tpo deadly to be in the drinking water supplies of the country, and the best way to get them out of the drinking water supplies of the country is to require EPA to regulate them at the source, which is the discharger. ~\Te have lots of ideas of specific language which will accomplish these objectives. We would be happy to discuss them with the com- mittee if you would like to pursue this. The only other matter that I would like to discuss is the ocean- discharge provis~0n. If the ocean-discharge provision were enacted, it would represent a decision by the committee that somehow the secondary treatment re-. quirements were inappropriate for ocean discharges. It would repre- sent a judgment by the Congress that we ought to be cautious at applying secondary treatments at ocean discharges. I think there are two fundamental things wrong with that, First is that when you are talking about near ocean discharge, no one doubts that secondary treatment is appropriate. I have never heard it claimed by anyone that secondary treatment- Mr. ROBERTS. Would you just take time to investigate the Hawaii case, and I will guarantee you you would not recommend secondary treatment, Just you take my word for it and look at it. I have dust been out there, and I guarantee you would not recommend it. Mr. SPETH. As I understand it, Mr. Chairman, the argument for not applying secondary treatment is not for discharges into the near ocean but for the discharges into what is called the deep or open ocean, allegedly. Mr. ROBERTS. The environmental center at the University of Ha- waii has recommended against secondary treatment and, as a matter of fact, the State of Hawaii is just up in arms about the secondary treatment requirement because they are now dumping ocean dis- charge right on the 100-fathom curve and the next island to he touched would be New Zealand. So, anyway~ Mr. SPETH. Let us examine for a minute the question of discharges into the deeper open ocean where there has been most of the contro- versy. I point out first that this provision would permit an exception to secondary discharge anywhere, not just the deeper ocean but any ocean area. If you look at that, you have to appreciate that there are a number. of substahces which EPA and many others, have concluded are removed by secondary treatment which we do not want dis- charged even into the deeper open ocean,. Secondary treatment works take out pathogens, heavy metals, and a number of other things that are da~~gerous, and it is important that those substances not he dis- charged into the open ocean. That concludes my summation. Thank you. Mr. ROBERTS. If it meets with the approval of the committee, we will try to hear them all and to get a time frame so that-Mr. Black- welder, you have spent- Mr. BLACKWELDER. I think he ga.ve a broad overview on the essen- tial things, and what we are just going to do now is briefly touch on a few other things so that you can ask some questions. Mr. ROBERTS. Is it the choice of the committee that we wait until they all testify, or do you want to take each person individually? The Chair has no position. PAGENO="0133" 127 Mr. CLAUSEN. I have no position. Mr. ROBERTS. Let us have them all testify and if you would like to know, Mr. Blackwelder, we would like to be through by 12 even with the questioning, and that gives us an hour and 10 minutes, and for the benefit of the rest of the people if we do not hear all of the witnesses scheduled, we will reassemble at 2 o'clock in this same room. Mr. CLAUSEN. Mr. Chairman, I have to apologize. I do now have to go to another commitment. Mr. ROBERTS. I appreciate your informing me earlier. Mr. CLAUSEN. Yes, sir, and I would ask unanimous consent that I be permitted to address questions to this panel of witnesses once I have had a chance to review the hearing record. Mr. ROBERTS. Mr. Biackwelder, would you go ahead to your next witness. Mr. BLACKWELDER. Our next witness is Betty MacDonald with the League of `Women Voters. Mrs. MACDONALD. Mr. Chairman, members of the committee, I am Betty MacDonald, chairman of the Environmental Quality Com- mittee of the League of Women Voters of the United States. As you are well aware, the League has been concerned with prob- lems of water pollution for almost 20 years. We supported passage of the Federal Water Pollution Control Act Amendments of 1972 as an effective means of improving and maintaining the quality of all our Nation's waters. Since passage of the 1972 amendments, League members have actively worked at the local, regional, and State levels to promote achievement of the law's ambitious goal; elimination of all pollutant discharges into waterways. Our involvement has made League inem- bers aware of the strengths as well as some of the weaknesses in the 1972 law, and we appreciate this opportunity to present our views on modifying some of its provisions. I am going to direct my remarks this morning to- Mr. ROBERTS. May I interrupt. We keep talking about modifying provisions. There are four sections that have expired, you understand. You have no law. So, I am sorry that I should have to interrupt you, when you were speaking about that, but the dates have expired. Do you want to let them go, or do we want another law? And I want to thank you, while I interrupted you. I got your statement a week in advance and I appreciate it. Mrs. MACDONALD. I will direct my remarks this morning to section 4 of H.R. 9560, relating to user charges. The section would amend section 204 of the 1972 amendment by allowing the Administrator to declare an ad valorem tax system plus industrial surcharges to qualify as a user charge system required by Public Law 92-500 for funding operation and maintenance of sewage treatment facilities constructed with Federal funds. The League has always supported user char~res based on volume and strength of discharge flow as a method of computing costs to all water users for services received. Since passage of Public Law 92-500, however, we have been aware of the problem created when older residences in cities such as Chicago, are unmetered. The city is unable to assess user charges in unmetered areas and is therefore PAGENO="0134" 128 imable to obtain badly needed Federal construction funds, and I am certain that in the past day or clays of testimony, other cities where this problem exists-where this situation is a problem-have been mentioned to the committee. The League of Women Voters favors a narrow amendment to section 204 allowing the Administrator to permit the use of ad valorem taxes as a substitute for user charges for residential dwellings in communities where there has been a historic pattern of basing the charge for sewage treatment in proportion to the property valuation and where a change to meters would be difficult, disruptive, and costly. But the rationale that led us to support imposing user charges for commercial and industrial facilities remain valid reasons for retaining such charges for these classes as well as for new residential development. In testifying before this committee on the House bill that became Public Law 92-500, the League stated: User charges must be levied on householders, industries, and commercial establishments that discharge through municipal facilities according to the amount of waste water put through the system and the difficulty of dealing with the material it contains. There were two basic reasons behind our position then: User charges provide an incentive for industrial and commercial facilities to reduce their waste volume and to modernize plant processes to reduce pollutant loads, and for residential consumers, user charges are the most effective means to encourage water conservation. T'hese reasons are as valid today as they were in 1971. The proposed amendment to section 204 is worded far too broadly in our view. It would permit substitution of an ad valorern tax for a nser charge in any community where an applicant uses an ad valorem tax regardless of the difficulty or cost of changing from this type of assessment to a user charge system. By reducing the incentive for water conservation it would thus make it more likely that the Federal Government will continue to have to fund construction of ever larger treatment plants to handle ever-growing volumes of waste water. The proposed amendment does seek to assure some proportionality in cost distribution between user classes on the basis of the contribu- tion to the total waste water loading of the treatment works by each user class, and the bill does provide for establishment of surcharges on industrial users, increasing their incentives to reduce the volume and strength of their discharge, but it makes no similar provision for hea~vy commercial users. Most importantly, by substituting user classes for individual resi- dential and commercial dischargers, this proposed amendment elimi- nates individual incentives to conserve water. One member of a class will see no advantage in restricting his water usage when his cost for service will not reflect this effort. While we do not yet face a water crisis as we do an energy crisis, the principle of cost as an incentive for conservation is equally applicable. In summary, the League of Women Voters supports a grandfather clause in section 204 permitting use of ad valorem taxes as user charo'es for older residential properties that are currently unmetered. We oppose permitting such a substitution for new residential devel- opments or for commercial or industrial users. We would therefore PAGENO="0135" 12fi recommend legislative language specifying that all commercial and industrial facilities and any residential development occurring after January 1, 1976, and discharging wastes into a publicly owned treat- ment work using Federal grant funds must be charged for 1nalntaining and operating the waste treatment facility through user charges. Thank you. Mr. BLACKWELDER. Bob Harris with the Environmental Defense Fund. Mr. HARRIS. Mr. Chairman, my name is Robert Harris, and I am a scientist with the Environmental Defense Fund. I would like to sum- marize my prepared testimony. Mr. ROBERTS. We would appreciate that. Mr. HARRIS. I would like to amplify on what Mr. Speth has said about one very important section of the act dealing with the toxic pollutant section 307. Over the past 2 or 3 years, this Nation has had an increased aware- ness of the importance of toxic pollutants discharged to water. The circumstances surrounding the disclosures in New Orleans of the con- taminants, in drinking water, particularly those contaminants which have been found by the National Cancer Institute to cause cancer, are well known to all of us. Since these disclosures which, of course, were instrumental in heightening interest in passage of the Safe Drinking Water Act, the Environmental Defense Fund has completed addi- tional studies in New Orleans which confirm and strengthen these earlier studies. As you may remember, the Environmental Defense Fund analyzed statistically cancer mortality rates in the lower Mississippi River and found an association between drinking water in the lower Mississippi River and cancer mortality rates. Since this earlier study, we have in- vestigated cancer mortality rates among other exposed groups, white females and nonwhites, male and female, the results of which reinforce our earlier findings that suggest that approximately 20 percent of the cancer mortality seems to be related to drinking water from the lower Mississippi. However, I must emphasize that because of the statistical n,ature of the study it is not proof that drinking water causes cancer, but it cer- tainly suggests that it is. Since the disclosures in New Orleans the Environmental Protection Agency has launched a nationwide study of our drinking water, and about 80 cities have been investigated of which about five were looked at in some detail. Two of those cities, for example, Philadelphia and Cincinnati, produced results which are very similar to New Orleans. Let us look at Philadelphia, for example. Esoterical sounding in- clustrial chen'iicals such as benzene, carbon tetrachloride, chioroben- zene, dichiorobenzene, tetrachioroethylene, vinyl chloride, and bis (chloroethyl) ether are all known or suspected of causing cancer and are in the Philadelphia drinking water. In Cincinnati, there was benzene, chiorobenzene, carbon tetrachlo- ride, dichlorobenzene, tetrachloroethylene, nitrotrichioromethane and all are known or suspected cancer-producing chemicals. One of these, trichioroethylene is showing up almost everywhere where EPA has looked for it in drinking water. You may remember that trichloroeth- yle.ne was the contaminant in some brands of decaffeinated coffee and PAGENO="0136" 130 the coffee manufactnre~s voluntarily removed it from this process. Yet,. unfortunately. it will continue to be in our morning cups of coffee, origmating not from the coffee but from the drinking, water. Another example is his (chioroethyl) ether. a cancer causing chemi- cal which has been found in several drinking water supplies with the highest. concentration having been found in Philadelphia. When the EPA Region ill looked closer at the situation in Philadelphia, they found it was originating from Rohm-Haas, a company who has been discharging this chemical untreated into the domestic sewerage system. So, without national pretreatment standards or toxic pollutant stand- ards on these chemicals, the EPA regional offices stumble across these by accident and these are forecast to deal with them in an ad hoc manner. Now, one would think through all of this EPA would be. collecting data on just where these compounds are coming from and attempting to promulgate. standards on them at. the point source. Unfortunately, as Mr. Speth has indicated. that. has not been the case. EPA has stand- ards on none. of these compounds nor have they even bothered to go out and ask industry for monitoring data to determine the sources of these compounds. A recent study submitted to the EPA which investigated looking at about 154 of the more than 200 industrial chemicals that contaminate our drinking water~ assigned all but two of these chemicals to in- dimst.rial point sources. Thus these chemicals are not manufactured by Mother Nature. Nor are they produced by chlorination at drinking water treatment plants. They are discharged by industry and in many cases discharged into our drinking water supplies. The history of the implementation of section 307 has been cata- strophic. EPA to date, simply has not committed the resources which this section deserves. EPA started out by assigning one person and half a secretary to the task, and as you can imagine with literally thousands and tens of thousands of potentially toxic chemicals on.e person and half a secret.ary could hardly begin to tackle this problem.. I would support what Mr. Speth `has recommended that this corn- mittee take a. closer look at section 307 in an effort to remove whatever ambiguities EPA appears to be hiding behind in their failure to imple- ment. this sectidn. Clearly. I believe the scope of section 307 should be better defined so that the EPA will not be promulgating drinking water standards on tens of thousands of toxic compounds, yet `have no program to abate the discharge of those toxic chemicals. A lack of coordination between the drinking water program audI its water pollution abatement pro- grain should not. exist. This is all I would like to say in summary. Mr. ROBERTS. Thank you. :~.rr. BLACKWELDER. Next. is Clem Rastatter. Ms. RASTATTER. I am Clem L. Rastatter. senior associate of the Conservation Foundation. which is a nonprofit, operating foundation which has devoted a considerable portion of its pro~rarn ~ctivities and resources to research aiid public education in Federa.l water quality issues. I will be talking solely to the question of section 8 of the pro- posed legislation andl will be supporting audI supplementing some of the statements of Mr. Speth. PAGENO="0137" 131 Recognizing that EPA has already decided that State agencies may certify municipal compliance with certain portions of step 2 and step .3 grant requirements, I would like to note that the further delegation that we are discussing here today involves the delegation of step 1 or facilities planning. As the program has evolved, this step 1 facilities planmng includes all of the most important substantive requirements for Federal assistance to construct publicly owned treatment works- environmental impact assessment, user charges, consideration of alter- natives, consistency with 208 planning, industrial cost recovery re- quirements, et cetera. Mr. ROBERTS. I cannot hear you. Would you speak louder. Ms. RASTATTER. Am I speaking loud enough? OK. For reasons which I will explain as my testimony gets underway, the Conservation Foundation is opposed to this proposed delegation of responsibility and authority. In explaining the implications of the proposed section 213 amend- ment to Public Law 92-500, we must ask three sets of questions. First, what is it that the construction grants program established by Public Law 92-500 tried to accomplish? Second, how are the functions of the construction grant program being met-that is, where are the problem areas ?-and third, how successful is the approach of proposed section 213 likely to be in meeting these problems? To answer the first question, What is it that the construction grants program of Public Law 92-500 tried to accomplish? We must look at what I will call the municipal waste treatment facilities program as a whole. A careful examination of this program-the terms of which are found in two major titles of the act-shows that this program is really two programs-each linked to the other to meet the various goals of the. act. The two components of the municipal program are the regulatory component and the financial assistance component. Congress estab- lished a regulatory program and provided Federal financial assistance for the construction of publicly owned treatment works. All point source discharges, municipal and industrial, were to meet specific en- forceable effluent standards. For municipal point source discharges, a significant carrot was added-the possibility of 75-percent Federal funding for the construction of publicly owned treatment works. In structuring a program of Federal financial assistance, Congress showed itself to be acutely sensitive to dangers inherent in a. public. works program of this magnitude. The manner in which the conditions for receipt of title II money were structured showed that Congress ree- ognized that large amounts of available Federal fundinq might reduce incentives for cost effective sewage treatment; that inflated cost figures and fraud might drain off significant parts of the available funds; and that the secondary environmental impact of this public works decision that would determine the use of the land in which the facility was located, could in many cases create worse problems than it solved. In framing the construction grants program, Congress appeared to recognize that the substantial Federal carrot involved represented an opportunity to require communities to meet certain conditions in the ~building of a sewage treatment facility which they might not other- ~wise meet. A variety of restrictions were therefore imposed by Con- PAGENO="0138" 132 gress on the way in which Federal funds could be utilized-restrictions which seemed to recognize the problems and the potentials of the vast amounts of Federal dollars involved in the construction grant program. Without going into great detail on the merits of each of these issues, I have listed in mv formal testimony a quick summary of the problem areas tha.t the act tries to deal with. This committee has had extensive testimony concerning the delays that have occurred jil obligating and expending allotted funds. These delays have been so extensive that it has been variously estimated that no less than 50 percent of all municipal clischargers will not meet the 1977 secondary treatment effluent standard required by title III of the act. To summarize quickly what some of the problems delaying obli- gations have been: The impoundment of half of the $18 billion construction grant funds authorized to be allotted and obligated; delays in construction grant obligations caused by the slowness in development of EPA regulations as well as lack of understanding on the part of municipalities. States and consulting engineers as to what must be done to comply with new Federal requirements; clela s in construction grant obligations caused by inadequate numbers of EPA personnel and/or inflexibility and con- fusion of EPA personnel in response to problems; ai~d inadequate in- struction from Congress on how to deal with those grant applications already in the pipeline which would suddenly have to meet new requirements. With all due respect, I believe there are two additional reasons that have not gotten a great deal of attention from this committee as to why the construction grant program has been slow in getting off the ground. It appears to us that these two reasons are potentially more pervasive with longer reaching implications than any of the abovemen- tionecl administrative and managerial problems. The first problem I would like to discuss is the delays in construction grant obligations caused by the recalcitrance of municipalities and of construction engineers in dealing with new Federal requirements with which they do not agree. The "Report of the Administrator's Special Construction Grants Task Force." May 31. 1975, snrnrnarizPs the problem. It is with interest and dismay we note that time after time as operators of municipal facilities, municipal government representa- tives and representatives of State governments have testified before this committee and in other forums, the substantive requirements- such as user charges, industrial cost recovery, environmental impact assessment. et cetera-have been referied to as lwnP ~~}rv redtai~e. One further problem responsible for municipalities' failures to meet 1977 deadlines was the decision by EPA in 1973 to tie the regulatory and funding requirements of the act together. While the other admin- istrative and management problem areas listed above have gradually sorted themselves out with time-causing temporary delays in the pro~ram and in meeting statutory deadlines-the ramifications of the decision to tie regulatory and funding reomrements together are likely to continue to haunt us for some time. This decision, enunciated in a policy statement entitled "Municipal Permits and Planning: Com- pliance. with the 1977-78 Deadlines," stated that when a municipality failed to receive Federal funding sufficient to begin construction in time to meet the 1977 secondary treatment deadline, this n'iunicipality PAGENO="0139" 133 would be issued a national pollutant discharge elimination systoin per- mit that would be based on optimum operation and maintenance, and would not require a new sionfficant construction. EPA appeared to rewr~te the law-instead of saying that all mu- nicipalities had to achieve secondary treatment by 1977, EPA was now saying that only those municipalities that received Federal funds would have to so comply. I should note here that I used the phrase "appeared to rewrite the law" quite deliberately, as I have had exten- sive debate with EPA over what the congressional intent was concern- ing the relationship of regulatory and funding requirements. Certainly, there is nothing on the face of the law, or in the official legis- lative history to indicate that Congress intended only those municipalities receiving Federal funds had to meet the regulatory requirements of the act. There has been significant debate over the various dollar figures that have arisen in three separate needs surveys. Whatever the current need is-and it seems to be pretty clear that the bulk of the $346 billion need identified in the past survey includes the whole spectrum of eligi- ble construction activities, not just the secondary treatment goal-it is clear that Congress has not authorized an amount sufficient to meet the nationwide secondary treatment goal. We do not feel that there is any indication that Congress is likely to ever authorize such an amount if figures that are currently being bandied about are in any order of magnitude correct. We would also submit that while signfic~nt Federal financial assistance is a desirable objective, an equally de- sirable objective is that municipalities and States treat the provision of sewage treatment as a community responsibility. There has been considerably less documentation of the implementa- tion of some of the qualitative functions of the construction grant program than the quantity of construction grants that have been obli- gated. A careful perusal of a number of reports recently completed for EPA and for the National Commission on Water Quality can high- light some interesting problem areas. The "Review of the Municipal Waste Water Treatment Works Program" by the Construction Grants Review Group in the Environmental Protection Agency_Novem- ber 30, 1974-thoroughly documented the inadequacies of the existing environmental impact assessment and environmental impact state- ment processes in a study of 43 construction projects which required negative declarations and I have included some of that documen- tation in my formal testimony. The functional problems that I have set forth in the proceeding discussion are by no means exhaustive. They are meant to give this committee a feeling for the perspective of the Conservation Founda- tion on the range of issues that must be dealt with in the implementa- tion of the construction grants program. We feel it is important to keep in mind that emphasizing a rapid rate of obligations and expendi- tures will not solve all the problems of the construction grants pro- gram. In fact, there is evidence that too great an emphasis on quantity may be at the expense of quality. To summarize my testimony to this point let us look at what we have. We have a massive public works program designed to provide financial assistance for meeting strong Federal environmental require- ments. At the same time this program is designed to provide incentives PAGENO="0140" 134 for operators of publicly-owned treatment works to move beyond the bare requirements of Federal law, and look in innovative ways at the water quality needs of today and of the future. \\Te also have two sets of problems which have emerged, each of which is tied to and direcNv effects the other. The first set of problems may be called a ciministrative or managerial problems-and involve the expenditure of billions of dollars in an expeditious manner and in such a way as to piotect the public interest in quality and honesty. A second set of problems might be termed qualitative and involve the implementation of major new directions and concerns in sewage treat- ment management. Central to these so-called qualitative problems has been the simple human difficulty of getting people to do things a little differently than they have always operated. I have gone into such detail on the functions and problems of the construction grant program in order to set before this committee the premise that this extraordinarily complex program has extraordinarily complex Problems-problems that will not go away by simply dele- gating' authority to implement the program from one level of govern- ment to another. This is particularly true when one considers the fact that many State and municipal authorities have been among those most resistant to the new conditions that have been part of the massive new Federal construction program. The EPA Construction Grants Review Group pointed out in ~ts report that one of the major problems that affected both the quality of the construction grant program, aiid the rate of obligations of the program, is lack of EPA field staff to handle and evaluate grant applications. The report noted that in 1968, the grant program obli- gated $2 million with 320 program personnel. In 1974, EPA obligated $2.6 billion with 503 program personimel. This same report pointed out the lack of State manpower. administrative and technical capability to peiform greater delegated functions, which I have also supplied ~ ~ P~~eParedl testimony. Itis an important fact of political life that once EPA has the au- thority to delegate the construction grant program, it will be under an enormous amount of pressure from the States to do so. EPA will be under this pressure regardless of the capabilities of the State agencies. And there is no way politically that EPA will be able to take back the delegated authority. So in those five or six States which have for many years had an innovative sewage treatment program, the delegation of authority may improve the rate of obligations of Federal funds. In- the other 44 or 45 States. the delegation may mean the rapid building of large scale traditional, concrete public works projects, with little consideration for the secondlary environmental impacts that are re- quired by Federal law. Lest you begin to question that the rapid obligation of sewage treat- ment grant funds is not a goal of an environmental organization such as ours, let me set- the record straight. It is indeed a goal which we place. high on our list, of priorities. Equally high on our list of priorities, however, is the planning of sewage treatment facilities in such a manner that the secondary environmental impacts of such facilities will not outweigh direct environmental benefits. Mr. ROBERTS. Mr. Blackwelder. we will have to allocate your time. `We are now running out of that time and we only have 15 minutes left. PAGENO="0141" 135 Mr. BLACKWELDER. Fine. `We just have a brief statement on ocean fallout by Ken Kamlet. Mr. ROBERTS. First, the gentleman from Ohio, Mr. Harsha. Mr. HARSHA. That lady that just read the statement, are you going to give us the benefit of your testimony? `We have not seen it. Ms. RASTATTER. I did give a copy- Mr. HARsTIA. `We do not have it. Mr. ROBERTS. You did make a good statement, but it is entirely too long; but you are helping us very much and we appreciate it very much. Mr. Blackwelcier, we are trying to give you more time than any- body else, but would you please allocate your time. Mr. BLACKWELDER. I understand, and we will just sort of summarize kind of quickly. Mr. KAMLET. Mr. Chairman and subcommittee members, my name is Kenneth S. Kamlet. I appear here as counsel to the National Wildlife Federation and on behalf of its 31/2 million members and supporters. I will confine my oral remarks to some brief comments on the ocean outfall provision of section. of House bill 9~6O. `We categorically oppose the ocean outfall provision of section 9, and any other proposal which would encourage, as this one does, ocean disposal of wastes. Section 9 promotes ocean disposal by making it easier to obtain' a waiver of treatment deadlines for sewage dis- charged to the ocean than for similar wastes discharged to other bodies of water. The second-class status this would confer on ocean waters is totally at odds with U.S. treaty commitments and previous congressional and administration expressions of national policy. It is also logically and scientifically indefensible. As emphasized by the Senate report on the 1972 Water Act amendments The ocean must be preserved in as natural a state as possible at least until we understand its tolerances and characteristics, so that discharges permitted today will not irreversibly modify the oceans for future uses. Permitting such alterations, in. the words of the report, would be "inconsistent with the objective of maintaining the integrity of the Nation's coastal waters, which constantly circulate with waters in the open ocean." Studies of the effects of ocean outfall discharges of sewage have shown such discharges to be associated with severe fin erosion of fish in the. southern California Bight, the New York Bight, and southern Florida coastal waters. They are also associated with the incidence of fish tumors in Pu~et Sound and the southern California Bight; with the decline of im- portant kelp beds in southern California and the destruction of coral reefs in southern Florida; with a reduction in the diversity of benthic organisms in waters off southern California, New York. and Honolulu; with human illness in southern California from the consumption of contaminated mussels and clams; and with the dissemination in the New York Bight of coliform bacteria with an abnormally high re- sistance to antibiotics and the ability to transmit this re~istaice to pathogenic bacteria. PAGENO="0142" 136 A 1974 EPA Task Force, established to evaluate the arguments against secondary treatment for ocean outfalls, concluded not only that there is "not sufficient justification" for reducing treatment re- quirements for outfall discharges to nearshore coastal waters, but that "there may [even] be some justification for making these requirements more stringent." Also. last year a. report by the House Committee on Government Operations, following hearings on sewage outfalls in Seattle and Miami, questioned the legitimacy of using ocean outfalls under any circumstances-at least given our inadequate present knowledge about either the long or the short-term effects of this method of disposal. The committee concluded that such outf aIls not only seriously threaten beaches, coral reefs, and fisheries, but that they also waste precious :fresh water which could be recovered if effluents were instead applied to hand as a soil conditioner or fertilizer. In conclusion, the EPA Task Force set up to study this problem -found no substantial technical justification for relaxing treatment re- `quirements for sewage discharged to ocean outfalls, and recommended no change in existing law beyond a general extension of the time al- lowed for municipalities to achieve secondary treatment if adequate Federal funding has not been made available. The first part of section 9 of H.R. 9560 would allow more time for nil ifllfliicipahties to accomplish secondary treatment, where com- ~~~nce "cannot be completed" on schedule. To go beyond this to provide additional exemptions for municipali- ties with ocean outfalls would be inconsistent with our treaty obliga- tions, and would stand previous congressional expressions of national policy on their head. It would also be reckless and unwise and we therefore respectfully urae this committee to reject and disavow any such approach. Thank you. Mr. BLACKWELDER. Next will be Mr. Dave Zwick, Clean Water Action project. Mr. Zwicw. Mr. Chairman, I would like to summarize my testimony and submit it. Mr. ROBERTS. Nice to have you back. Mr. ZwIcK. Thank you. The principal purpose of H.R.. 9560. of course, is the extension of the fui~ding for several programs, whose authorization has expired, as you noted. It is important that these cleanup programs continue, and we support enactment of the funding extensions. I note also the bill does not include extension of funding for title II under section 207. In the absence of taking up a number of larger questions, which have been raised here today about problems with title II, and the Way it works, I think it wise, because if you take that up- if you extend the funding, of course, you are locking in expectation and plans for applicants who then assume the rules are not going to change for a further period into the future. So. in the absence of taking those up, I think it is wise not to extend the funding there. In general. the law was well-designed and requires no major over- haul. I would agree. though, with the other statements rnade here today that the title II area is one that does require a substantial re- PAGENO="0143" 137 view. Several of the basic assumptions on which that title is fou'nded are going to have to be overhauled. I wo~ild like to discuss now section 9 of the bill, which relates to the extension of the deadline on a case-by-case basis for municipalities who will find it not possible to comply with the mid-1977 deadline. It is clear, of course, that an extension will have to be granted at some point or some method of dealing with the fact that all these municipalities are not going to meet the deadline is going to have to be foimcl. What I think is difficult to know, however, is precisely what the shape of that extension should be, and what a number of other details should be, until we know what we are going to do with a number of other problems related to title II. For example, the percentage of funding, reimbursement, and a number of other questions raised here today do require a real review. Without taking up those questions, it is very difficult to ascertain what should be the final cutoff date of a deadline extension, and to which polluters an extension should apply. So I believe it would be preferable to take up that deadline exten- sion in the context of these other larger changes. But, in any event, I think it is absolutely critical that we do not extend that deadline and set up the shape of this deadline extension provision, since it does hinge so critically into all these other provisions, without having a great deal more information from EPA making the case for pre- cisely what this deadline extension ought to be. For example, among information missmg is what types, how many, sizes, and locations of polluters that are expected to miss the. deadline. And where are they? On the ocean, ocean outfall or inland? And by how much are they expected to miss the deadline? In other words, are they going to miss by a year, or missing by 3 or 4 years? We have not seen that information in any status report. And why will they miss the deadline? In response to inquiries we made last week, EPA officials in several regions and at headquarters described the wildly varying estimate that they have bandied about so far about the number of polluters that are going to miss this deadline as "rough guesses," which are "ridiculous" and "worthless," and essentially would not stand behind them. I think this is information which EPA ought to be required to not only gather but make available; and not only for the purpose of making a case for that provision, but which is essential to running a national cleanup program. Certainly, however, I think no information has been presented which would make the case for one part of this deadline extension provision, and that is the one that applies to extending the deadline for meeting water quality standards in sections 301 (b) and 301 (c) of the Federal Water Pollution Control Act. EPA funding priorities can and should direct moneys first to these areas which have the critical water quality problems. We do not yet know how many polluters in those areas are going to miss their dead- lines and what the reasons will be. The provision for expansion of deadline should not apply to that area. The polluters who violate water quality standards should not qual- ify for an extension beyond the statutory deadline in the law. As cur- PAGENO="0144" 138 rentl~ enacted, the law does contain a procedure for dealing with, and for assigning modified compliance schedules to, people who missed the deadline; namely, the administrative order, under the enforce- ment section. I am going to go on now to the section 12 question, the hazardous substance provision. Mr. Speth and Mr. Harris told about the problems in getting en- forcement in the area. of toxic substance control. Well, the problems have been equally as bad in the area of getting the hazardous substance spill control. Three years after passage of this law, EPA is still sitting on pro- posed regulations to implement these controls, including a list that has been developed for a long time-listing more than 300 highly danger- ous chemicals-and a penalty structure governing their discharge. And, as a consequence, of course, spills of these sometimes lethal con- taminants are going entirely unregulated. There is a complete vacuum in the regulatory structure. What section 12 of H.R.. 9560 dOes is take-it basically sets up a dif- feient approach to control these in many respects. Some of the changes are ones that would improve the law. For example, the elimination of the applicability of the penalty only to substances designated nonremovable. That simplifies the adminis- tration of this program since a number of substances are remoTable in some instances and nonremovable in others, and it encourages pol- luters to make an attempt to remove them. Section 12 also brings the question of making an attempt to remove them into the penalty structure. Furthermore. section 12 would promote better notification of spills by eliminating the provision that only spills of harmful quantity need' be reported. Unfortunately, however, the proposal does something which I con- sider very bad. It reduces the maximum permissible penalty from $5 million down to $50,000. a level so low that any deterrent impact of the penalty scheme would be eliminated. I question, here in my prepared statement-and I will not go into it-the insurance industry's state- ment that they cannot provide more than $50,000 worth of insur- aiice, and what would happen if you went ahead and raised that level above what they say their maxinmm insurable limit is. I believe experience shows that you could do that and have an impact on that insurance industry and not let them set the penalty level, but let this committee set the penalty level. But, in any event, I think the key point to remember-is in thinking about what the penalty scheme ought to be when penalties are limitedi to insurable limits, as they would be here-that deterrence to prevent pollution is frustrated because this insurai~ce Indlustrv dlOC5 not mak~ their premium reflect spill rates. You just get your penalty bill taken care of, and that is it. And so there is no penalty, really. Because it would eliminate that deterrent impact of the penalty, I would oppose the maximum limit proposed in section 12. I go on further in my statement to make a number of suggestions, winch I believe could buildl in some of that deterrent capability that is so essential to the penalty scheme. I am not going to run through them here. They are available, and I will be available for questions if you have any. PAGENO="0145" 1') 10 Thank you. Mr. ROBERTS. Thank you. I would like to make one comment, and if it is agreeable to you,. Mr. Blackwelder, I will reserve all of my questions so that I will not impinge on the time of the committee, and I would like to submit my questions in writing to you, but with reference to Mrs. MacDonald concerning the metering of sewerage. we have the statement from the city of Los Angeles, that the official cost would be $23 million and $5 million a year maintenance. [See letter of reply, page 162.1 The gentleman from New York is not here, but they tell us it is: absolutely impossible, even with the exemption, and I think we basi- cally agree with your position, but I did want to make that statement,. and I would like to reserve my questions in order that the rest of the panel-the member~ of the committee may have time for questioning. The gentleman from Ohio. Mr. HARSHA. Thank you, Mr. Chairman. I want to a.sk the panel, and I do not care who answers it, but has not the National Transportation Safety Board fairly concluded by actual. accident rate that the water mode is inherently the safest for the move- ment of hazardous materials? Mr. Zwicic. I talked to that. I should answer the question. I am aware of the report, but I have not studied it in detail, and so I am not familiar enough with it to respond. I think the real question-and I am not really sure precisely what the findings of that report are-but the real question is: To what extent are different modes of transportation actually bearing the environmental costs that they are causing? I think this industry, if it is the safest,. certainly should not have problems covering the likely cost of its activi- ties, if it is in fact the safest. And if it is, insurers should be willing to insure. On the other hand, if they are not willing to insure, that is a signal that insurers do not think it is safe, that there are likely to be fre- quent spills a.nd high risk of danger. And of course we are talking a bout very, very toxic materials and I think that is a signal that we need a lot of deterrent prevention on this scheme. Mr. ilAnsi-JA. Admittedly, there is a great variance between $5 mil- lion and $50,000; but what sum would you suggest as a minimum? Mr. Zwic~c Well, I do not know what the right sum ought to be, but I note in the bill as it was constituted before, there was a difference be- tween the $5 million and the $500~000-I am not sure I understand why the two were different in the original bill, but as it stands now, shore facilities should be liable only for $500,000. But I would say the level should not be lower in any event beneath that of shore facili- ties which now face $500,000. Mr,. HAR5HA. I believe you also stated there ought to be a substan- tia.l increase for repeaters. Mr. Zwicic. Yes, and the reason for that is that insurance premiums do not reflect 5l?111 rates, a.nd if you increase the maximum coverage, it increases their premium rate. Mr. HARSHA. Is that not far better to remove or to tran.sport these materials by waterways rather than have them move through the urban areas in cities and mumcipahties? 63-1.92--76--------iO PAGENO="0146" 140 Mr. ZwICK. Well, I would assume that in many cases it is. But I think if it is true that it is safer than other urban modes of surface transportation, and they simply have to cover the risk of their trans- port, water transportation is going to prove, itself to be cheaper and we are not going to have to make artificial constraints on the system. It will come out the cheaper system. Mr. HARSIIA. Well now, I also assume that you all are in some accord as to the extension of the 1977 date. You vary a little bit in how it would be extended, whether across the board or in case by case or categorically. Mr. ZwICK. The position would be this-I th1nk, first of all, we think it is very difficult to know what the shape of that should be until several other questions are answered. It would be preferable to put this off-the question of what the shape. of this deadline extension is going to be-until we know how the whole system is going to work, because they tie so closely together. And, second, until a great deal more in- formation about how long the extension should be-what the final cutoff date ought to be given the current situation-until we have that kind of information. And I think, in any case, it should not be a blanket extension. A good feature of the way you set this up here is that it is a case-by-case extension, and in no case should a blanket extension be granted. It should not apply to water quality standards. And without fur- ther information about other changes we might see coming down the road in title II, I think that the ffnal cutoff date ought to be moved up earlier to, perhaps, mid-1980, because that still leaves us just 3 years to ratchet it up another notch to the best practicable treatment tech- `nology in 1983. One statement I might make from my prepared state- `ment here, which is that a longer period of time could well be given to systems which go further, like land treatment systems, so they are encouraged to do that kind of thing, so that they have time to plan, for example. But I do not think we have enough information and would en- courage getting a great deal more information and taking up some of -these other issues `before we decide on the final shape. Mr. HARSHA. All right, fine. Thank you. That is all I have. ~`Tr. Ron. [presiding]. Mr. Hammerschmidt. Mr. HAMMERSCIIMThT. No questions. Mr. Ron. Mr. Abdnor. Mr. ABDNOR. I would like to ask some questions, Mr. Chairman. I am sorry I was late. I guess we lia~e too many meetings at the -same time. When you talk about standards and putting them int.o effect across the United States-I know we have problems ~n the seaboard, in New York. the big cities-when they are applied. they have to cover all `parts of the TJnited States. Now I happen to come from an area where `-we may go 30 miles to the next town of 200, or another 50 miles to find * another town of 175 people. They are incorporated towns. Have you ever given any thought to how the standards would or should affect towns of this size? Have you ever lived out in rural America? Have you ever seen this kind of problem addressed? Ms. RASTATTER. Certainly, I believe that was one of the original im- -plernentations of the act~ and I do not think there is necessarily a flaw PAGENO="0147" 141 in the structure of the act itself, but it is the way the stañda~ds have been applied in the implementation of the act for small communities. Because what has happened among other things that have happened within 75 percent of the Federal money that is available, when a small town has gotten itself on a prior list for Federal funding, it usually hires a consulting engineer that often designs an enormous facility that is way beyond the needs for that operational mechanics of the small town. There are a number of different treatment systems, and some of them are small lagoon land treatment systems that can be considerably less expensive than what we think of the traditional primary-secondary treatment systems~ and that could indeed meet the goals of the second- ary treatment of effluent standards. So I think you have pointed out a very real problem, and it is a very complex problem as to all the reasons why it is caused; but I do think it is a basic problem of implementation of the act. Mr. ROE. Mr. Abdnor. Mr. ABDNOR. I realize I am far in the minority, but I do not think the problems of the small communities are always considered, when the standards and problems of this nature are directed at the whole committee, as well as the panel. But I go home and I run into this all the time-most of these towns are broke or are being taxed at the maximum. There are these requirements that they get these consulting engineers with their expensive and elaborate rates, and EPA says it ought to be this way and the law says it is this way, and there is no hope. And with the beginning figures, it is starting to cost $2,000 to start this off the ground; it is driving these little towns up the wall; they do not know where they are going. I bring this question up because it is a problem. Mr. ROE. The panel has provided a splendid presentation-adroit and in-depth testimony. It is most important that the Government must work as a flexible, viable reflection of the consent of the governed. And I do not mean to lecture-that is not my position. When deci- sions are finally made, the extension, the modification, and implementa- tion of this bill are going to determine the direction that the economy of this Nation goes. I do not think there is any question about that. The members of this committee fought very hard for the toxic sub- stance area in the Federal Water Pollution Control Act. The members of this committee fought on every issue, and we are still considered unpopular over some of the issues, but when you talk about the consent of the governed, the operation was a success but the patient died. For example, my State of New Jersey is the most industrialized State and its pollution problems are among the highest of any State. There is no State that is more overpopulated than New Jersey. We had $939 million allocated to my State for construction of waste water treatment works. After having to go through the battle of impound- inent, we have been able to allocate around $300 million since the enact- ment of the water quality legislation in 1972. To me that is utter frustration, just utter frustration. I speak now of firsthand knowledge, not just sitting on a committee and reading a report; I am talking of spending 4 weeks in the field PAGENO="0148" 142 with. mayors, representatives of EPA's New York City office and the~ Commissioner of Environmental Protection in the State of New Jersey. They cannot move. Why can they not move? If we do not get some of these water pollution control projects in place soon we are not going to be able to handle the treatment of the normal waste water we have, let alone trying to clean up the exotic substances that require special treatment vital to our water quality; so the point you are making is that the iroblems lie not only quanti- tatively or because of the direct interrelationship of the water supply of the State of New Jersey relating to the assumption that we recycle our water 25 times in the Passaic. area before it gets to the ocean. If the environmentalists-and. I do not mean this unkindly-would spend their time in the direction of what ought to be done to achieve the optimum yield of our natura.l resources dedicated to the protection of environmental quality and give us enough help, it could help to break the logjams of this program. which is debilitating itself. We have already lost a third-at least-of the. effectiveness of this Water Quality Act for these reasons, and we are now faced with the fact, as~ Mr. Abdnor pointed out. No. 1. the towns are going broke. *Just look at the desperate financial straits of New York City. What- ever your thou~hts ma be, the fact remains that many of the small towns and cities cannot borrow the money. The level of fundin is not there. They do not have the bonding' capacity. What does this cleadencl mean? Some would say about those who are elected directly by the people, "Sorry. let us impeach him." You cannot get blood out of a stone, and' these projects must move ahead for the economic vitality of the cities' and the very health. safety. and well being of our people. That is what we are faced with. The nub of the problem is how do we break the first cycle to get these programs in movement and into place? In the city of Paterson. which is the oldest industrial city in the Nation. we have a. combination of water pollution point sources. We have dumping of every kind of crummy waste and exotic chemicals directly affecting the Passaic,' River-the pivotal water supply' resources of the region. We. are trying to get that corrected. I have worked on Paterson's problem personally for a year and a~ half, to get Federal agency approval. There have been inordinate delays with one regulation piled' upon another by the Federal agency' requirbw information upon information to be supplied by the appli- cant. WTe know we are polluting that river and there is a desperate need for waste water treatment and sewer construction. There is a hospita.1 half way under construction that is desperately' needed in m dl1Strict andi we will be delayed in opening the hospital because we cannot aet a quarter-million-dollar trunkline built to sepa- rate the storm sewers from the sanitary sewers. We have been unable to ~e.t them to move for a year and a half. What do they tell me? WTe1L we have an environmental requirement. \\Tliat about the arrowheads-and this is not meant to be facetious-. what about the arrowheads? PAGENO="0149" 143 This is a very highly significant historical area. How do we get that moved? It is not only the Feds. Although all of this work has begun, we still need a letter to the effect that there are no arrowheads in the street, and we do have to correct the combined storm drain and sanitary sewer problem so that we can open up the hospital-and what is more important, people's health or arrowheads. A year and a half has elapsed and they cannot make a decision. We have given them a stack of reports on highly variable data. Some of it is not really worth the paper it is written on. Then they come back and say that another study is going to take another 2 months to deter- mine the eligibility for step 1 grants, and step 2 grants and step 3 grants. In the meantime, the city has developed another problem. The city is broke and it is necessary to try to borrow somewhere in the neighborhood of $12 million. We can talk about deadlines here today, but we must break the first cycle which is to get the people's money spent where it is going to help and then in my judgment, we have to go from that point and refine ii; further. But if we add 20 more requirements on these kinds of projects, ivhere it takes a year and a half to `get anything approved, we are not going to get anything done. What good is the money if the people of the country say, "Forget about it. We are not going to build it," and that is about the tenor and `temperament that exists in my State right now. They would rather say, "Keep your money. We will pollute andwe will live in our own swill," because that is how serious their movement is becoming politically. I suppose this is not interesting for you, but it ought to be because you people are political leaders, who are elected by their constituency who are coining back and saying: the allocations that were thade and the formula is no longer valid. The Members of the Congress, where the political decisions have to be made, are split down the middle on the Talmadge amendment to I1I.R. 5~47. the Local Public Works and Capital Development Act passed by the House. This amendment by the Senate is unpopular for many of us because it is going to materially shift quantitatively large dollars of commitments from State to State and, of course, it affects `von and members sitting on this committee who also have political responsibility. Under the Talmadge amendment my State will lose $253 million in funds previously allocated under the Federal Water Pollution Control Act for the construction of wastewater treatment works. The State of Michigan will lose $270 million. The State of Illinois will lose close `to $113 million and California will lose $80 million and New York will lose $216 million. ` ` We blame the States. and I agree, in part, that there ought to be a strong responsible hand of the Federal Government, but you cannot pass a camel through the eye of a needle. Everything cannot be run from Washington, D.C., and if this is what the Federal Government has done in the implementation of the i~Vater Quality Act born out of this committee,, I would suggest that PAGENO="0150" 144 the Federal a~encies give very serious consideration to some kind of a. true partnership of the Stat~es with the Federal Government. We speak of not enough personnel, and I grant that is also true m. part of the States, but if they dO not. have enough personnel to handle New York, New Jersey, Delaware, Puerto Rico, and so forth, out of EPA's regional New York office, do we have to continuously delay the Federal approval of applications? What is your answer to that? Are we so afraid that the people are incapable of governing them- selves, that the States are all evil, that they do not have the expertise? They are the ones that are paying the bill; and I call to your attention that in implementing their responsibility under the act they do not want to negate the Federal Government. What they want to do is to move their programs. So let's not take the position that the States are all evil and bad- that is like saying that everybody in those States are evil and bad, and that is not true-and that just Big Brother has the expertise to make the decision-that is not true. One more point. I would like to see. our environmental organizations get together when testifying on a particular point of view and thereby provide a composite view or joint position on what the key issues are,. so that we c*a.n direct our attention and work toward a solution of the major areas of environmental concern. I do not know whether anybody has any comments on that, but that is the situation we are wrestling with right now. Mr. SPETH. Tha.t would be a pretty difficult response to all of that, and I think that the main thing-the way we would like to respond is to say. I t.hink what we have been urging here is really not con- trary to the points that you were making. 1\Te would favor a more effective State role in the grant program.. 1\Te would favor making additional funds available to the States, so that they can play that role. We favor making funds available to the Federal Government, and simplifying and clarifying what. the Federal regulations and rules are in these areas. We favor getting this money out as absolutely quickly as possible, and we would undoubtedly spend more money oii this program than the Congress will ever authorize, and, appropriately so. So we are with you on all of that. There is a. concern that we have, though. to which we think is con- sistent with spending the money as fast a.s possible, and that is the secondary impact.. and some of the spinoffs of some plants can cause environmental problems as serious as the problems that the plant was intended to rectify. Mr. ROE. Will you folks ~et together and come back to us and advise us as to what you see the States can do to emerge in a viable role that would be workable in the context of your concern. Let us know what you would see as probable compromise or alternative roles the States should really play? Mr. SPETH. We certainly can. One point which we t.ried to make, and we did not dwell on, is that we envision the bill. as it is now drafted. could slow up things by creating a new sort. of turmoil of reorganization and shifting the PAGENO="0151" 145 responsibilities; and, second, we have to be-since we have to be very careful in the long run, we do not put the whole program in political jeopardy by causing a lot of turmoil, and there has been Some indication in some cases which have hinted of malfeasance and this is~ in spending money. If the money is spent too fast and the~ program takes on the fringes and aspects of scandal, it could jeopardize the whole thing, and none of us want that to happen. So we have got a lot of problems. We have problems that we have to deal with, and I think everybody here would. be ready and willing and, hopefully, able to try to put our heads ~vith yours and come up with measures which could accomplish the' objectives. Mr. RoE. Mr. Oberstar. Mr. OBERSTAR. Thank you, Mr. Chairman. I have one question to direct to Mr. Harris, and I appreciate very' much your documentation of carcinogens introduced in working water- ways, and you have made a very important contribution. I would like to ask that yo~ also bring this very helpful informa- tion to the attention of the Interstate and Foreign Commerce Subcom- mittee on Health, which you are familiar with, that they author a safe drinking water act; and there is $25 million in the administration budget which the House has approved, and which is on its way to the agencies to help the States develop drinking water standards. And that will get to one other point of your testimony: establishing the standards. I think it is a very important step to helping EPA, or pressuring the other constituent agencies of EPA, to act on removing those ma- terials before they get into the waterways. Mr. ROE. Thank you. Mr. HAImSHA. Mr. Chairman, it is difficult to absorb all that was heard, and many of the witnesses do not have statements, and we did not have an opportunity to peruse them. In light of that, I think that we could elicit some more informa- tion-written questions and written answers. Mr. ROE. `Without objection; so ordered. We wish to thank this panel for its splendid presentation. We look forward to working closely with you in resolving this most important situation. If there is no objection, I would like to place in the record at this point copies of the prepared statements of Mr. Harris, Mr. Zwick, Mr. Kamlet, and Ms. Rastatter. 1 Statements referred to follow:] STATEMENT OF ROBERT H. HARRIS, Pu. D., DRmECTOR, Toxic CHEMICALS PROGRAM, ENVIRONMENTAL DEFENSE FUND Mr. Chairman, Members of the Committee, I am Robert Harris, Director of the Toxic Chemicals Program for the Environmental Defense Fund. The Environ- mental Defense Fund is a nonprofit, pnblic interest organization with a member- ship of over 50,000 scientists, lawyers, and citizens nationwide. We have a long history of interest in the nation's efforts to abate water pollution, with particular reference to its impact on public health. Although three years have lapsed since Congress enacted the Federal Water Pollution Control Act Amendments of 1972 (FWPCA), the Environmental Pro- tection Agency (EPA) has failed to regulate the discharge of toxic po1lutants.~ As a consequence, such toxic pollutants as PCBs, asbestos, and cadmium are* PAGENO="0152" 146 ~ discharged virtually unregulated into surface waters that are intended to support sport fishing and other recreational activities, or to serve as drinking water supplies for over 100 million Americans. Over the past year, `the EPA has identi- `~fied over 200 industrial chemicals in drinking water from major metropolitan areas such as New Orleans, Cincinnati, and Pittsburgh, yet EPA has not adopted discharge regulations on one single chemical on this list. The responsibility for "this failure lies clearly on the shoulders of EPA, for `the FWPCA provides EPA with adequate statutory authority to regulate the discharge of these pollutants. The last three years have witnessed a paradox: EPA has been accumulating extensive data on industrial contaminants in drinking water and their potential health significance, while simultaneously abdicating its responsibility to regulate `the discharge of such contaminants from industrial point sources. In 1972, the year Congress enacted the FWPCA, reports from New Orleans and Evansville, Indiana, suggested that literally millions of Americans may be drinking water contaminated by cancer-causing chemicals discharged by industries upstream. Although the EPA report on New Orleans recommended tha't regulations be ~adopted on the industries responsible for the discharge of these chemicals, no programs were initiated at that time, nor is there today any effort to even `identify the sources of those cancer-causing chemicals, let alone attempt to regulate `them. These earlier suspicions that cancer-causing industrial pollutants are ubiquitous contaminants of drinking w-ater have been confirmed by recent EPA `tests. Last November. the EPA identified 66 potentially toxic organic chemicals `in New- Orleans drinking water, and concluded that the potential hazard from these chemicals was even greater than it was in 1972, despite claims by some `that pollution had been "abated" in, the intervening three years. In addition, the Environmental Defense Fund released a report (Implications of Cancer-Causing Substances in Mississippi River Water) on November 6, 1974, which presented statistical evidence implicating drinking water obtained from the Mississippi River as a causal factor in the incidence of cancer in Louisiana residents. Subsequent studies, a summary of which is attached to this `statement, confirms this earlier analysis and suggests that approximately 20% of the total cancer death rate is due to consumption of Mississippi River water. While these studies were statistical in nature, and therefore cannot serve as proof of a water/cancer relationship, they are nonetheless suggestive of such a Telationship. In response to these studies in New Orleans, the EPA launched a nationw-ide survey of drinking water contaminants including a detailed analysis of drinking water in five more communities (Cincinnati, Miami, Seattle, Ottumwa, and Philadelphia), in addition to a more limited analysis of 75 other community ~drinking water supplies nationwide. One of the more widespread cancer-causing chemicals found in this survey w-as benzene, w-hich was present in drinking water in New Orleans. Cincinnati. Washington, D.C., Miami, Ottumwa, Phila- delphia, and Pittsburgh. Carbon tetrachloride. also a cancer-causing chemical, u-as found in New Orleans, Cincinnati, Washington, D.C., Miami, Ottumwa, Philadelphia, Cape Girardeau (Mo.), Dayton (Ohio), Huntington (W. Va.), Indianapolis, Oklahoma City, Passaic Valley (N.J.), Topeka, Waterbury (Conn.), and Wilmington (Del.). For at least one community. Huntington, West Virginia, `the source of this cancer-causing chemical has been traced to organic chemical plants along the Kanawha River in Charleston, West Virginia. Despite efforts of a Charleston-based public interest group, Campaign Clean Water, to bring to the attention of EPA that 29 carcinogens, 11 mutagens, and 4 teratogens were discharged by 13 industries, into the Kanawha River, EPA `has made no effort to regulate these discharges. Nor is EPA requiring that these or similar industries supply data on the discharges of cancer-causing chemicals `and other toxic chemicals in their applications for NPDES permits. Although EPA Region III has made some effort to require industries to monitor for some of these toxic pollutants, it stands alone among the 10 EPA regions in this effort. Another recently-publicized cancer-causing chemical, trichloroethylene (TCE), which was shown to contaminate certain brands of decaffeinated coffee, has been voluntarily removed from the manufacturing process l)y the coffee manufac- `turers. But for consumers in New Orleans, Cincinnati, Miami, and Philadelphia, their morning cups of coffee will continue to contain TCE-not from the coffee, hut from the drinking water! TCE is similar in chemical properties to vinyl chloride, and despite recent warnings of its cancer-causing potential by the PAGENO="0153" 147 National Cancer Institute, the EPA continues to license its discharge into drink- ing water supplies and has made no effort towards regulating it. In yet another example, Bis(2-Chloroethyl)ether (BCEE), similar in struc- ture to the human cancer-causing chemical bis (chioromethyl) ether (BCME), was first observed in drinking water taken from the Kanawha River in 1965. Since then, EPA has identified BCEE in the drinking water from New Orleens, Evansville, Philadelphia, Brandenburg (Ky.), Uniontown (Ky.), and Hender- son (Ky.). For Philadelphia, EPA Region III traced BCEE to the Rohm and Haas Com- pany on the Delaware River, only to discover that for years Rohm and Haas has been dumping BCEE without treatment into the Philadelphia municipal sewerage system. In the absence of pretreatment standards or toxic pollutant standards, Region III must revert to 0(1 /100 corrective measures without any guidance from EPA-Washington. As indicated previously, to date EPA has identified over 200 industrial chemni- cals in drinking water supplies throughout the nation. In a recent EPA-funded study (Identification of Organic Compounds in Effluents from Industrial $ourccs, Office of Toxic Substances, April. 1975) 154 of these chemicals were investigated as to their likely origin. Of these 154 chemicals. 113 were classified as major products or by-products according to the 1973 SRI Directory of Chemical Pro- ducers (USA). It was noted that 34 SIC categories provided almost complete coverage of the major producers and users of these chemicals. Only 2 of the compounds could not be related to industrial sources. Although this study rec- ommended a program for identifying sources leading to abatement action, the EPA has yet to implement such a program. To criticize the EPA for its failure to regulate toxic pollutants is not to be- little the difficulty of the task, nor is it to suggest that the EPA has gallantly tried but failed. When measured against the enormity of the task, EPA's meager efforts have simply made a mockery of toxic pollutants regulation and scoffed at Congress' intent ". . . that the discharge of toxic pollutants in toxic amounts be prohibited." (FWPCA, Sec. 101(a) (3)). This national goal was to be implemented through various sections of the Act, but most directly through Section 307. The Act requires in Sec. 307(a) (1) that by January 1973, the EPA was to publish a list of toxic pollutants or combina- tions of such pollutants, followed by promulgation of standards to take effect no later than January, 1975. 1-lowever, on the third anniversary of these amend- ments, EPA has yet to promulgate standards on one single toxic pollutant. Strategies for regulating toxic pollutants can also be developed under other sections of the Act. Under Sec. 304(a) (1) the EPA had a non-discretionary duty to publish by October 1973 water quality criteria necessary to presei-ve and protect water supplies, as well as other intended uses. To implement the goals of the Act, states are required to develop for receiving waters, water quality standards which, among others, must consider their use and value for public water supplies (Sec. 303 (c) (1)). States must also consider revising and up- -- dating these water quality standards at least once every three years. According to this latter requirement, each state should have held public hearings by the end of next month. To the extent that the vast majority of states have not held such hearings, the ultimate responsibility must rest with EPA which has failed to publish water quality criteria under Sec. 304. Thus, EPA is encouraging states to base revisions of water quality standards on the water quality cri- teria, while procrastinating on issuing these criteria. A measure of EPA's commitment to regulate toxic pollutants was its initial effort at implementing Sec. 307, which saw one man and half a secretary as- signed the task. Follow-ing a court order, EPA was forced to take Sec. 307 a bit more seriously, and formed a task force charged with this implementation. However, the best efforts of the task force were constantly thwarted by inter- nal politics and bureaucratic manipulation. Consequently, by the time EPA~ could muster enough courage to propose standards for a meager list of 9 chemi- cals, the internal review process had become so convoluted that the criteria and standards were practically unrecognizable by the task force that had ostensibly proposed them. Subsequent to the cumbersome public hearings that followed, where, partly because of restrictive procedures, EPA was unable to defend its proposed stand- ards, the task force was dissolved, and the responsibility for implementing Sec. 307 was passed among the EPA bureaucrats like a hot potato. Even industry:~ PAGENO="0154" 148 has had difficulty in figuring out where the responsibility for implementing Section 307 now lies. In light of the EPA's unconscionable abdication of responsibility for reg- ulating toxic pollutants, I support the Committee's effort to amend Sec. 307 by removing the alleged stumbling blocks and ambiguities behind which EPA has been hiding. Although the changes proposed in H.R. 9560 will be helpful in this regard. I would urge the Committee to make clear to EPA in no uncer- tain terms that Sec. 307 was intended to be implemented rather than ignored. Moreover, I would suggest that the intended scope of the section by clearly articulated so that, for example, EPA would be required under Sec. 307 to reg- ulate any toxic pollutant for which standards have been set under the safe Drinking Water Act. STATEMENT OF DAVID ZWICK REPRESENTING CLEAN WATER ACTION PROJECT Mr. Chairman and members of the Subcommittee, I appreciate this opportunity to testify on H.R. 9560, proposing amendments to the Federal Water Pollution Control Act. The Clean Water Action Project has been working for the elimination of water pollution and for safe drinking water controls since its establishment in 1971. The Project was begun following release of Water Wasteland, the report based on the Nader Task Force Study on water pollution, which I headed from 1069 to 1071. As Director of the Project since that time, I have closely followed Con- gressional efforts on water pollution control and the implementation of the Federal Water Pollution Control Act Amendments of 1972. My testimony is endorsed by the American League of Anglers, a national orga- nization working for the protection of sport fisheries resources. I am a Vice President of the ALA and a member of its Board of Directors. A principal purpose of HR. 9560 is extension of funding for several programs whose authorizations have expired. It is important that these cleanup programs ~continue. We therefore support enactment of the additional funding contained in sections 2. 3, 5, and 6. I note that the bill does not extend funding for municipal treatment plant construction grants under section 207 of the Act. This too, I believe, is a wise decision in the absence of basic change in the rules (in Title II of the 1972 law) governing federal construction subsidies. In general, the law was well designed as enacted in 1972 and requires no major overhaul. The provisions of Title II are a key exception however. As currently constructed, the grant funding system encourages states and local- ities to delay cleaning up, waiting for the day when scarce federal grant money will be available. Delays and other difficulties have been exacerbated by insufficient federal manpower, elimination of the provision contained in the Act prior to 1972 authorizing reimbursement to localities and states that com- menceci cleanup construction prior to receiving federal funds, the 75% federal funding requirement (which prevents spreading the money among a larger number of applicants), and EPA's inept administration. The result is that a substantial percentage of municipal dischargers will apparently not be in com- pliance with the mid-1977 deadline for achieving secondary treatment and meeting water quality standards. Worse. EPA has no idea-because it has not even bothered to set up a system to gather information on (as an inquiry we rnade last week confirmed)-how many or which dischargers are likely to be in compliance and which are not. Mounting evidence points to the likelihood That motion and money expended so far may produce considerable public disappointment and not nearly enough clean water. As an urgent priority, several key parts of Title II need to be redesigned to produce a workable cleanup formula. To extend funding for section 207 without first making major changes that are required would lock an ever Tiarger number of grant applicants' expectations and plans into the current un- workable system and thus perpetuate municipal pollution that I believe could -otherwise be prevented. I urge the Subcommittee to take up a thorough revision -of the construction grants rules at the soonest possible time, lest billions of dollars in monies already authorized hut currently still unobligated also be -committed more wastefully under the exist1na scheme. A related point applies to section 9 of this bill, which ar~nts EPA authority to extend municipalities' cleanup deadlines beyond July 1977 on a case by case PAGENO="0155" 149 basis. I believe this proposed change-like the issue of extended construction grants funding under section 207-should not be taken up out of context of the larger changes required in the municipal pollution abatement program. Without such a revision of the system, polluters and EPA may assume that if the next final cutoff date is missed, Congress will simply extend it again. This would be a prescription for indefinitely extended pollution. Furthermore, with- out knowing more about the overall abatement plan, including funding, one cannot determine what the final cutoff date should be. Other necessary infor- -mation is also missing-most notably a status report from EPA on how many and what types (e.g., size, location) of polluters are expected to miss the dead- line, where, by how much, and why. In response to our inquiries last week, EPA officials in several regions and at headquarters described the wildly vary- lug estimates that have been bandied about so far as "rough guesses" which are "ridiculous" and "worthless". This is information which EPA should be required to gather and make available not just to support its case for propos- ing the changes in section 9, but as minimal information necessary for coordi- nating a national cleanup program. I urge the Subcommittee to ask EPA to provide this information as a step preparatory to enacting any deadline exten- sion. Certainly no such information has been presented which would make the case for granting extensions to the section 301(b) (1) (C) deadline for meeting water quality standards, which in most eases were set long before the 1972 law under the Water Quality Act of 1965, especially since EPA's funding priorities can and should direct monies first to areas with more serious water quality problems (so-called "water quality limited" segments of waterways). It should be noted that the Act already provides a mechanism for putting a violator on a modified enforceable cleanup schedule-the administrative order (section 309). Thus polluters who will violate water quality standards should ~not qualify for an extension beyond the statutory deadline. Similarly, I believe Congress should be reluctant to grant any extension to a polluter who had a state or federal requirement to achieve secondary treatment prior to passage of the 1972 Act. Extending deadlines yet another time for these polluters would reward and encourage continued slippage. Another question raised by section 9: what criteria should guide the Adminis- trator's decision to grant an extension? The key phrase-if the "construction cannot be completed" by July 1977-should be given more specific meaning by statutory or legislative language clearly stating that failure to receive federal funds shall not alone constitute a valid reason to excuse compliance with an enforceable deadline of the law. The temporary extension proposed for treatment works discharging into ocean waters, the territorial sea, or the contiguous zone raises more serious problems. Excessively broad, it could apply not only to the "deep ocean out- falls" whose environmental impact has been defended by coastal sewage officials but also to clearly damaging discharges in biologically sensitive inshore waters. If any such extension is granted, it should not only be restricted to deep ocean areas with carefully specified characteristics (e.g., oxygen-rich, specified cur- rents, etc.) to insure against potential environmental harm but should also require special treatment or pretreatment to remove toxic pollutants and other potentially harmful substances not so easily assimilated. Another approach would be to make any such extension applicable only to biological-oxygen- demanding materials. It should be noted that apart from the pollution they produce, ocean dis- charges also throw away our most precious resource-fresh water. No area that is water-short or that has receding groundwater levels should be permitted to discharge its sewage effluent in the ocean without first demonstrating that freshwater recycling (e.g., land treatment) is not possible. A positive feature of section 9 is the fact that it sets a final cutoff date beyond which extensions cannot be granted. This is a crucial safeguard. As noted above, I believe that a cutoff date for achieving secondary treatment be determined without reference to the rest of the law's municipal abatement scheme, which requires substantial revision. In any event, however, I urge that the final cutoff date for secondary treatment not be extended beyond July 1980 in the absence of clear evidence that it is physically impossible (i.e.. without regard to the pace of federal funding) for plants to be in compliance by that time. (A 1980 date would give some municipal polluters only three years to move up another treatment notch to "best practicable waste treatment tech- PAGENO="0156" 150 nology.") An additional period of time-say, two or three years-could be- granted those polluters working tow-aids a no-discharge scheme like land treat-* ment. Municipalities willing to work towards meeting the objectives of the Act should be given both encouragement and additional time to plan their system. The results would be well worth the wait. An important constructive change proposed in HR. 9560 is section 11, dealing with toxic pollutants. I agree with the positions of the Natural Resources Defense Council and the Environmental Defense Fund in their prepared state-~ ments, supporting section 11 with suggested changes, and join with them in urging the Subcommittee to take the strongest possible action to insure that toxic pollutant controls are restored to their rightful top priority in the cleanup program. EPAs paralysis on toxic pollutant controls under section 307 has been matched, unfortunately, by an equally unconscionable failure to take required action under section 311 to control spills of hazardous substances. Three years after* passage of the 1972 law, EPA is still sitting on proposed regulations to imple- ment these controls, including a long-since developed list of more than three~ hundred highly dangerous chemicals and other substances and penalty structures' governing their illegal discharge. As a consequence, spills of the most lethal con- taminants go entirely unregulated. The simplest statutory remedy would be to~ set an immediate mandatory deadline for promulgation of regulations and de- scribe with greater specificity what kinds of substances must be covered, to insure that the in-house list already developed does not fall victim to bureaucratic' sleight-of-hand and disappear. Section 12 of HR. 9560 takes a different tack and in several respects the pro-- posed changes favor better control. `It eliminates the applicability of penalties only to substances designated "nonremovable", which simplifies administration (since most substances are removable to greater or lesser degrees depending on the ~ircurnstances) and encourages removal efforts by taking them into account in assessing the penalty. It also promotes better notification of spills by eliminat- ing the law-s current requirement that only spills of "harmful quantities" be reported. Unfortunately, however, the proposal reduces the maximum permissible penalty from $5 million to a ludicrously low $50,000, a level at which deterrent impact of the penalty scheme would be eliminated. The ostensible rationale for lowering the penalty is that the marine insurance industry currently refuses to provide coverage for larger amounts. Reducing' the maximum penalty to the current insurable limit is a mistake for several reasons. First, the decision of the Water Quality Insurance Syndicate to offer no mome than $50,000 coverage is a patent attempt by an insurance monopoly to force Congress to do its bidding. Congress should set the penalty scheme, with an eye to pollution prevention, not delegate that task to the insurance industry, whose only concern is for its own financial wellbeing and that of its clients. Evidence that the insurance industry can and would provide more coverage, if' Congress keeps the penalty higher, is ample. The same Water Quality Insurance- Syndicate provides up to $14 million in coverage for oil spills-why only $50,000' for spills of contaminants that are considerably more dangerous? If that evidences its worry that spills will be frequent and highly damaging, all the more reason to keep the penalties high-deterrence is needed all the more. Carriers of hazard- ous substances have in any event the option of pooling to set up their own self- insurance program for larger amounts. Chances are that were they to do this, the commercial insurance industry w~ould be quick to meet the competition with its ow-n expanded coverage, as commercial airlines insurers did under similar' circumstances in 1970. In any event, if penalties are limited to insureable limits- particularly such a low limit-their value as a deterrent to prevent polluters is frustrated This is particularly true since the marine insurance industry has not raised premiums for frequent polluters. Because it eliminates the deterrent impact of the law's pollution penalties, we oppose the reduction of the maximum penalty limit proposed in section 12. Several changes in section 12 would he helpful: If there is to be a maximum penalty limit at all, it should be substantially increased. The law should provide that the maximum penalty limit for each polluter- increases by some multiple of the penalties received by the polluter for previbus violations. The insurance companies would then charge polluters' higher premiums, a penalty that polluters cannot pass on to their insurers. Polluters should be relieved from the higher maximum penalty limits only' PAGENO="0157" 151 after a specified time period-say, three years-and after having adopted a spill prevention plan approved by EPA. Characteristics of the s~,i'bstance discharged upon which penalties are based should be specifically enumerated' (e.g., including, but not limited to, toxicity, degradability, dispersal characteristics of the substance). The section should state that the Administrator's reasonable estimate of damage caused is sufficient basis for a penalty, lest enforcers be frustrated by an impossible burden of proving precise damage. The section should make it clear that the penalty is to be based on char- acteristics of the substance of damage, "whichever is larger". Section 12 should incorporate a minimum penalty schedule based on amount spilled and a specified unit penalty charge, as in the current law. The mandatory minimum penalty would be increased based on damage and other factors. This change would bring back the non-discretionary predict- ability of that part of the curreht law, which section 12 of HR. 9560 sacrifices. The size of the violator should also be taken into consideration in assessing penalties. A penalty that would put a small operator out of business may be pocket change to a large company. The experience with EPA's abdication of responsibility for toxic and hazardous pollutants demonstrates how government acquiescence is often as large a factor in pollution damage as the polluters' own actions. The law should provide criminal sanctions and removal from office for government officials who knowingly fail to carry out mandatory duties designed to pro- tect human health, particularly where "imminent and substantial danger" is involved as with hazarçlous substances. I share the belief, expressed in the prepared positions of the Natural Resources `Defense Council and the Conservation Foundation, that section 8's procedures for state approval of federal construction grants would, without a number of basic modifications, present serious environmental and fiscal dangers. Finally, I agree with the position taken by the League of Women Voters in opposition to authorizing ad valorem funding of sewage treatment plants built with federal monies. The grandfather clause proposed by the League statement, exempting old unmetered residential areas from the user charge requirement, eliminates the situation w'here the difficulties of implementing the requirement could outweigh the benefits. I would be happy to provide any additional information the Subcommittee wOuld like to have. Thank you. STATEMENT OF KENNETH S. KAMLET ON BEHALF or THE NATIONAL WILDLIFE FEDERATION My name is Kenneth S. Kamlet. I appear here today, on behalf of the National Wildlife Fedevation and its 3.5 million members `and suporters, as `an attorney * and biologist, to comment on House Bill 9560, to amend the Federal Water Pollu- tiop Control Act. The National Wildlife Federation is a private, nonprofit conservation educa- tion organization, with affiliate `and associate members in each of the 50 states, Guam, the Virgin Islands, and Puerto Rico. The Federation's corporate head- quarters are located in Washington, D.C. In its efforts to preserve the natural resources of the North American Con- tinent, the Federation has placed a high priority on the preservation and enhance- ment of the Nation's waterways and wetlands, including contiguous coastal and onen ocean waters. These resources are vital not only to the continued survival of important wildlife species, but ultimately to the survival of man himself. T'he Federal Water Pollution Control Act Amendments of 1972 ("FWPCAA") were an important step in the right direction. On balance, we cannot say the same of the proposed 1975 amendments now before you. Obviously, the authorization extenions provised for in sections 2 and 3 of the bill are needed and desirable. And there are desirable provisions in sections 5, 6 and 10 of the bill. However. other substantive provisions of the bill, such as the ocean outfall provision of section 9. the "certification" procedures of section 8, and the penalty reduction of section 12, seem to us clearly ill-advised and inappropriate. `Still other provisions, such as the "user charge" amendment of section 4, and the "toxic and PAGENO="0158" 152 pretreatment standards" amendment of section 11, have bad as well as good features. While it seems rather apparent that major pothons of the 1972 amendments have not been implemented in the manner intended, and that some provisions. have been emphasized to the exclusion of others and to the detriment and obfus- cation of the overall statutory scheme, we do not believe that the band-aid approach of addressing scattered problems--without careful analysis of the success and failures of the entire mechanism-is likely to do more good than harm. For example, although sections 11 and 12 of the bill propose certain im- l)rOvemefltS in the system of regulation for toxic pollutants and hazardous sub- stances, they totally neglect to consider, much less remedy, EPA's dismal per- forniance in carrying out the will of Congress with respect to these most danger- ous of chemicals. Deadline after deadline has been missed. Duty after duty has been ignored. Billions of dollars continue to be poured into sewers and sewage systems to reduce suspended solids and "biochemical oxygen demands," but the most hazardous and toxic of polluting materials continue to go essentially unregulated. Spur of the moment palliatives are not what is needed. Carefully considered, decisive, and far-reaching action is. House Bill 9560, in most of its substantive provisions, misses the mark. With regard to ocean outfall discharges of sewage, the bill does even worse than miss the mark. Proposed subsection (g) (1) (B), which section 9 of the bill seeks to add to section 301 of the FWPCAA, is not only unnecessary; it is a dan- gerous and indefensible reversal of prior Congressional policy.1 1 For example: The President of the Cuited States, in at least 3 messages to the Con- gre~s has emphasized the critical importance of legislation "to assure that our oceans (10 not suffer the fate of so many of our inland waters, and to provide the authority to protect our coastal waters, beaches, and estuaries." February 8, 1971 Message on the Environment; see also, April 15, 1970 Message transmitting the Council on Environ- mental Quality's report on "Ocean Dumping: A National Policy." The Council on Environmental Quality, following its comprehensive study of ocean dumping practices, concluded: "There is reason for significant concern. Dealing with ocean pellution requires that all sources be greatly reduced. If no action is taken and ocean dumping continues to increase, the long-term damage to the marine environment will be ~re:1t.' "Ocean Dumping: A National Policy", at iS. EPA's present Administrator, Russell E. Train (at that time Chairman of CEQ), in 1971 testimony before two subcommittees of the House Committee on Merchant Marine and Fisheries stated that: "Our premise is that action is necessary now to avoid a serious national problem fi'om ocean dumping." Hearings on Ocean Dumping of Waste Materials Before the Subcoinm. on Fisheries and Wildlife Conservation, and the Subcomm. on Oceanography of the House Comm. on Merchant Marine and Fisheries, 92d Cong., 1st Sess.. Set. 2. at 1GS (1971). EPA's other Administrator. William D. Ruckeishaus, similarly has testified that: "Our l)urP~~~ here is to recommend to the committee and to the Congress the creation of the farthest reaching and strongest authority that law and technology will allow." Id., at 392. Congressman Slosher was correct in describing the Ocean Dumping Act [Marine Pro- tection, Research, and Sanctuaries Act] on the floor of the House as "a turning point [away] from man's destructive use of the seas as a garbage dump" and as "a well- (1e'-oloped approach to ocean dumping regulation." 118 Cong. Rec. H9905-06 (October 13,.. 1972). With regai'd to section 403 of the FWPCAA (dealing with ocean, outfall discharges of sewage) itself, the following expressions of policy and purpose are typical: "During the Conference it became apparent that, unless a regulatory mechanism was established to con~rol the by-products of advanced waste treatment plants, the flisposnl of residual sludge could cause a serious problem. Present practices which permit sewage sludge to be hauled out to sea and dumped or placed in areas on land where it is washed into streams and lakes, without regard to the impact on health and welfare, recreation, fish and shellfish and wildlife, are unsatisfactory." Senate Debate on Conference Report, Comm. Print on Legislative Flistory of FWPCAA. Prepared for the use of the Senate Comm. on Public Works, 93d Cong., 1st Scsi., Ser. 1, at 170 (1973). The Senate Report (on S. 2770) makes clear that the ocean discharge provision was. intended to serve as "the model for other nations". It also recognized as "detrimental to human health or welfare". "the contamination of marine organisms or waters which prevents the harvestinc of sea food that is safe to eat, the use of oceans for recreation, or its use as drinking water after desalination, among other things `The Committee also emphasized the "need to preserve the ocean in as natural a state as possible at least until we tillderstand its tolerances and characteristics, so that discharges permitted tocin" will not iri'eversil'lv modify the oceans for future uses." Such alter'itions wo~ld be "inconsistent with the objective of maintaining the integrity of the Nation's coastal waters, which constantly circulate with waters in the open ocean." S. Rept. No. 414, 92d Cono., i~t ~ ~-`-75 (~9T1i : Comm. Print. supra. at 1492-93. At hearings held in Seattle on outfall discharges of sewage in the Puget Sound area. the Interior Department called such outfalls (which received inadequate treatment before dischargel a "shortsighted remedy to a pollution problem" (Puget Sound Hearings, p. 4201. The House Cormnhttee on Government Operations concluded, in its Se-~ember 18. 197.2 Report (HR. Rept. No. 92-1401). entitled "Protecting America's Estuaries: Puget Sound and the Straits of Georgia and Juan de Fuca." thot: "The use of deep water out- falls in Puget Sound as part of EPA's water management program encourages inadequate- PAGENO="0159" 153 This provision ~Tou1d allow the Administrator to extend the dates for achier- ing treatment requirements for publicly owned treatment works until as late as mid-1982-----without requiring any showing that the specified requirements ` `cannot be conipleted by the [earlier] dates specified" [as would be required for non- ocean-discharging facilities]-inerely because the discharge is into ocean waters. The second-class status this would create for ocean waters is totally at odds. with the need to provide special, rather than inferior, protection to these waters, as recognized by section 403 of the FWPCAA, the Marine Protection, Research, and Sanctuaries Act, and the International Ocean Dumping Convention (to which the United States is a party) .~ The provision would substitute a presumption o greater safety for ocean, as opposed to inland discharges, of sewage in place of existing requirements of domestic and international law that waste matter may not be introduced into the ocean without conclusively being shown to be safe. Moreover, by making it easier to obtain a waiver of treatnient requirements for treatment. It is, at best, a questionable practice. We think that the waters of Puget Sound should not be used for assimilation of any additional wastes, and that every effort must be made to reduce the amount of wastes now being discharged into those waters." In the same Committee's Report on "Our Threatened Environment : Florida and the Gulf of Mexico," 93d Cong., 2d Sess., (HR. Rept. No. 1396), at 82-87 (1974), Florida's Secretary of State was quoted with approval in opposing more than temporary or emer- geucy reliance on ocean outfall for sewage effluent disposal: "My reasons . . . are at least three-fold. First, that the effluent damages the coral reef life. Secoucl, that the effluent damages the fishery. And third, that the effluent damages the bordering mangrove areas in southeast Florida and elsewhere." (At 84) The Report observed that this reasoning "applies to all ocean outfalls, in view of the `national goal' established in the 1972 amend- ments ta the FWPCA that discharges of pollutants `be eliminated by 1985.' It is unlikely that any co'nmunity arhich has constructed or reconstructed a costly sewage outfall in the 1970's would want to junk it in the 1980's for another costly alternative." (Id.) The Report referred to the argument that "BOD is not a major problem in ocean waters where there is an abundant supply of oxygen available for degradation of municipal wastes," but emphasized the need to "consider to what extent other materials, such as metals, pathogeus, floatable particles, and other materials in municipal wastes, affect the oceans and human health and what effect the waiving of secondary treatment require- ments would have on these materials in both the short and long terms", and to `considen- whether the continued funding of treatment works, utilizing ocean outfahls, wherever located, is sound environmentally and consistent with the law's national goal." (At 85-86) The Report also urged EPA to "give greater consideration to the land disposal method of treatment." (At 86) The Report concluded with the following observations `s\1tny witnesses at the subcommittee hearings in Seattle and Miami testified that several serious questions must be answered before ocean outfalls could be utilized with any confidence. W'e simply do not have sufficient knowledge about either the long terna or short term effect of this method of disposal of effluent. Beaches, coral reefs and fisheries are seriously threatened. "Ocean outfalls in addition waste precious fresh water. . . . Land treatment would allow the recovery and reuse of this scarce ccnamodity. The nutrients in sewage are fertilizers when applied to the land. . . . It is unfortunate that the straight jacket of tradition continues to encourage waste of resources which we can no longer afford te waste, if we could ever afford to do so. Our eyes open so slowly in the carryover euphoria from decades of plenty." (At 86-87) 2 Section 403 of the FWTPCAA prohibits discharges to ocean waters except in compliance with guidelines, established by the EPA Administrator, for determining the degradation of these waters as a result of allowing such discharges. No discharge permit may issue "[ijn any event where insufficient information exists on any proposed discharge to make a reason- able judgment on any of the guidelines established pursuant to this subsection. Scci;ion 101~a) of the Act also establishes the objective "to restore and maintain the chesiical, physical, and biological integrity of the Nation's waters-including, coastal ocean waters. The Marine Protection, Research. and Sanctuaries Act (P.L. 92-532) established a policy "to prevent or strictly limit the dumping into ocean waters of any material which would adversely affect human health, welfare, or amenities, or the marine environment, ecological systems, or economic potentialities." Under section 102, a dumping permit may be issued only where the Administrator determines that the proposed dumping will not unreasonably degrade or endanger human health or the marine environment. Under section 104(e), it is up to the applicant to provide any information necessary for a proper review and evaluation of a dumping application. The International Ocean Dumping Convention ["The Convention on the Prevention of Marine Pollution by Dumping of Wastes and Other Matter, Opened for Signature at Washington, London. Mexico City, and Moscow on December 29. 1972" 1 recosnizes the "vital importance to humanity" of the "marine environment and the living organisms which it supports" and that "the capacity of time sea to assimilate wastes and ren°er them harmless" is "not unlimited". Article I requires the Contracting Parties [of which the U.S. is one) to "promote the effective control of all soIrees of pollution to the marine environment" and to pledge themseR'es "to take all practicable steps to prevent the pohl'i- tion of the sea hy the dumping [defined to include outfall discharges] . . . that is liable to create hazards to human health. to harm living resources and marine life, t~ damage amenities or to interfere with other legitimate uses of the sea." Contracting Parties are further obliged [by Article II] to "5ake effective measures . . . to prevent marine pollu- tion caused by dumning The Convention goes on to proliihif tile dumiing of certain wastes, and to reonire that the dumping of other wastes be permitted only after considera- tion of a number of specified criteria. PAGENO="0160" 1~4 ocean as opposed to inland-discharging facilities, the provision, if adopted, will of necessity provide a strong incentive to municipalities to discharge their wastes to the ocean. Given what we know-and the far greater amount that we don't know-about the environmental impacts of ocean waste disposal, this would be an extremely unfortunate and undesirable result.3 The notion of the ocean as an infiuiite sink-immutable and unchanging despite the stresses imposed on it by the activities of rnan-~has been thoroughly dia- credited.4 There is virtually no part of the ocean left that does not show tue signs or bear the scars of man's presence-whether in the form of oil slicks, tar balls, plastic containers, PCBs, DDT, heavy metals, or whatever. Adverse changes niay perhaps be more difficult to detect in the ocean than in an inland river,~ but they occur nonetheless.6 And the consequences may be far more substantial. While mankind could probably survive the destruction of many rivers, it is doubtful he could long outlast the death of the ocean. There is more than simply law and logic to condemn the ocean outfall pro- vision of section 9, however. It is also totally unnecessary. The previous paragraph of the bill [proposed section 301(g) (1) (A)], which applies to all other publicly owned treatment works, already allows extensions of time for the completion of treatment requirements, "if the Administrator determines . . . that the construction of such treatment works . . . cannot be 3As noted by a recent National Academy of Sciences' report on "Assessing Potential Ocean Pollutants," effects on marine ecosystems are difficult to deduce. "Even severe re- ductions in populations [caused by pollutants], if sufficiently local, may be replenished rapidly by immigration from nighboring, unpolluted areas." This does not mean however that there is no impact. "Where this replacement does occur there is the denver that the genetic variability of populations may be reduced causing a loss of adaptability in that segment of the species." (At 7) The report also notes that the "natural variability in natural [marine] systems is usually [so] high - . . that only large changes can be de- tected with certainty.' The fact that no changes can be measured, does not mean that changes-even highly deleterious changes-have not occurred. The August 1975 Report by the Southern California Coastal Water Research Project to the National Commission on Water Quality, on `Environmental Effects of the Disposal of Municipal Wastewaters in Open Coastal Waters", cites dozens of gaps in our knowledge regarding the effects of existing ocean outfall discharges. It also cites a number of in- stances of adverse effects (e.g.. fin erosion and decreased diversity) that appear to be correlated with the location of certain outfall discharges. The House Committee on Government Operations, for example, has noted in two of its reports that the concept of "assimilative capacity" is being questioned and that many are urging that it be discarded as "outmoded and unsound". HR. Rept. 92-1401, pp. 78-79; HR. Rapt. 93-1396, p. 83. Moreover, as previously noted [fn. 2, supra]. the International Ocean Dumping Conven- tion expressly recognizes that "tile capacity of the sea to assimilate wastes and render them harmless . . . is not unlimited." See. footnote 3. supra. In the Southern California Bight, for example, several species of soft-bottom (sand or mud) fish are affected with a disease that results in fin deterioration or erosion. Fish with fin erosion are concentrated in an area of tile Palos Yerdes shelf the bottom sediments of which have been heavily contaminated with municipal wastes. (SCCWRP report. supra fn. 3. at 37-38) A nonmalignant skin tumor disease also occurs in two southern California fish, tile Dover sole and the white croaker, but it has not been possible to relate the o~'curi'ence of this disease to waste discharge. Several fish species caught on the Pales Verdes shelf exceed the FDA's limit for DDT in seafood, a result found to be clearly related to proximity to the Los Angeles Conntv outfall system. (Ed., at 38) Increased levels of trace metals have also been observed in mussels collected near municipal waste- water outfall sites. (Id., at 40) Waste discharges also appear to have contributed to the decline of important kelp beds along the Pales Verdes Peninsula. (Id., at 42) Human ill- P southern Caiifo"nia. resultina from consumption of raw contaminated shellfish (mussels, clams), has also been reported. (Id.. at 44) Bottom fauna have been observed to respond to waste discharges through changes in abundance, diversity, and health. (Id., at 47) In the New York Bight. low dissolved oxygen values (3 ppm) have been found in bottom water over the sludge site in summer (id., at 50). tiiere are abnormally low concentrations of surf clams in the Inner Bight (id.). fin erosion related to sewage dumping affects a number of species. principally tile winter flounder (id), tile FDA has closed a 500 square kilometer area around tile sewage sludre dump sites to shellfishing (Id.), and coliform bacteria with an abnormally high resistance to antibiotics and the ability to transmit this resistance to pathogenic bacteria, have been found in Bight waters (id). In Puget Sound. state coliform standards continue to be exceeded periodically (id., at 51). and tumor-bearing fish have been caught in the area of the West Point outfall. In Mamala Bay (receiving discharges from the city of Honolulu). sediments around the outfall show elevated levels of some metals and chlorinated hydrocarbons (id., at 53), water quality parameters have exceeded State standards at some time at all o7 monitoring stations (id), and the diversity of benthic communities has been severely depressed at the Florida coastal waters. water measurements of coliform bacteria sometimes exceed 100 bacteria per 100 ml (id.. at 54), hleaclnng (death) of coral between Miami and Palm Beach increased near wastewater outfalls (id.. at 55), and all fish caught in the vicinity of the Hollywood outfall (north of Miami) showed erosion of the membranes of the dorsal spine (Id.). PAGENO="0161" 155 completed by the dates specified . . ." Surely this provision is adequate to meet the legitimate needs of treatment works discharging to the ocean, as well.7 EPA has rejected proposals to confer special exemptions on treatment works discharging to the ocean.8 This Committee should do no less. We appreciate the opportunity to present these views. STATEMENT OF CLEM L. RASTATTER, SENIOR ASSOCIATE, THE CONSERVATION FOUNDATION I am Clem L. Rastatter, Senior Associate of The Conservation Foundation, a non-profit, operating foundation which has devoted a considerable portion of its program activities and resources to research and public education in federal water quality issues. I am pleased to appear today to present the testimony of The Conservation Foundation. My testimony for this morning is directed at that part of the bill before us that would amend Title II of the 1972 FWPCA Amendment by adding a new Section to that Title allowing the Environmental Protection Agency to dele- gate to state agencies the authority to certify compliance of municipal con- struction activity with major requirements of the law. Recognizing that EPA has already decided that state agencies may certify municipal compliance with certain portions of Step 2 and Step 3 grant requirements, I would like to note that the further delegation that we are discussing here today involves the dele- gation of Step 1 or Facilities Planning. As the program has evolved, this Step I facilities planning includes all of the most important substantive requirements for federal assistance to construct publicly owned treatment works-environ- mental impact assessment, user charges, consideration of alternatives, consis- tency with 208 planning, industrial cost recovery requirements, etc. For reasons which I will explain as my testimony gets underway, The Conservation Founda- tion is opposed to this proposed delegation of responsibility and authority. In explaining the implications of the proposed Section 213 Amendment to PL 92-500, we must ask three sets of questions. First, what is it that the con- struction grants program established by PL 92-500 tried to accomplish. Sec- ond, how are the functions of the construction grant program being met (i.e. where `are the problem areas?) ; and th'ird, how successful is the approach of proposed Section 213 likely to be in meeting these problems. - To answer the first question-what is it that the construction grants program of PL 92-500 tried to accomplish-we must look at what I will call the Munici- pal Waste Treatment Facilities Program as a whole. A careful examination of As noted by the SCCWRP report, supra n. 3, parameters other than BOD and suspended solids (e.g., content of organochiorines, oils and greases, heavy metals) may well be far more significant in assessing the impact of an ocean discharge. It is quite possible that conventional secondary sewage treatment is an inefficient way of preparing sewage for ocean disposal, and that more suitable specialized treatment requirements could be de- signed. (It is also quite possible that land application of sewage wastewaters, in preference to any form of water disposal, is the treatment approach that ought to be pursued). However, an amendment, such as that proposed in H.R. 9560, which provides municipali- ties with an incentive to choose ocean disposal instead of alternatives (which may be less damaging and less wasteful of scarce resources) is not only counter-productive; it is detrimental to the attainment of national policy goals. 8 See, ScOtember 24 (?), 1974 "Action Memorandum" on "Ocean Discharges/Secondary Treatment", from James L. Agee, Ass't EPA Administrator for Water and Hazardous i\[aterinls to the EPA Administrator. This memorandum transmitted the conclusions of an EPA Task Force, established in the spring of 1974 to evaluate the arguments against secondary treatment for ocean ontfalls. Among these was the conclusion that: "There is not sufficient justification for reducing P.L. 92-500 requirements for secondary treatment of POTW [publicly owned treatment works] discharges to nearshore coastal waters. There may be some justification for making the requirements more stringent." (Id., at 4) The Task Force also found that no level of existing degrees of treatment [primary treatment, chemical primary treatment, and secondary treatment] is ideal "in that they are not specifically intended to remove the pollutants of concern in open ocean waters." (Id.) The Task Force recommended, and EPA adopted thi.s recommendation, that no change In the existing la~~ relating to ocean outfall discharges be sought at the present time, beyond a general amendment providing for "extension of the time allowed for municipalities to achieve secondary treatment if adequate Federal funding has not been available for com- pletion of secondary treatment works." (Id., at 15) Also recommended were "[s]ubstan- tially increase[d] EPA research and development efforts to better determine ellects of municipal discharges on the ocean and [to] provide improved technologies for marine pollution control." (Id., at 16) ~o "substantial" technical justification was found to exist for further relaxing treatment requirements for sewage discharges through ocean outfalls. 63-192--7O------11 PAGENO="0162" 156 this program-the terms of which are found in two major titles of the `act- shows that this program is really two programs-each linked to the other to meet the various goals of the act. The two components of the municipal program are the regulatory component and the financial assistance component. Congress established a regulatory pro- gram and provided federal financial assistance for the construction of publicly owned treatment works. All point source dischargers, municipal and industrial were to meet specific enforceable effluent stadards. For municipal point source dischargers, a significant carrot was added-the possibility of 75% federal funding for the construction of publicly owned treatment works. In structuring a program of federal financial assistance, Congress showed itself to be acutely sensitive to dangers inherent in a public works program of this magnitude. The manner in which the conditions for receipt ~f Title II money were structured showed that Congress recognized- That large amounts of available federal funding might reduce incentives for cost effective sewage treatment; That inflated cost figures and fraud might drain off significant parts of the available funds; and That the secondary environmental impact of this public works decision that would determine the use of the land in which the facility was located, could in many cases create worse problems than it solved. In framing the construction grants programs, Congress appeared to recognize that the substantial federal carrot represented an opportunity to require com- munities to meet certain conditions in the building of a sewage treatment facility which they might not otherwise meet. A variety of restrictions were imposed by Congress on the way in which federal funds could be utilized-restrictions which seemed to recognize the problems and the potentials of the vast amounts of federal dollars involved in the construction grant program. Without going into great detail on the merits of each of these issues, I have listed below a quick summary of some of the problem areas that the act tries to deal with. First, it is important to remember that the location of sewer lines frequently determines the face and shape of our communities. For where the sewer lines go there follows residential and commercial development. So the plan for a complete municipal facility is frequently a land use plan for a community- determining the location of housing, and of air quality problems. Sewers running through vacant lands may create a tremendous pressure on those lands for development whether the community wants such development or not. If sewer lines are located in the wrong place (in fioodplains, in highly erodable slopes, etc.) the secondary water quality impacts from urban runoff and from construction activity may ultimately deteriorate rather than improve water quality. Frequently the hydrologic capacity of the sewer pipes, not of the treatment facility determines bow much sewage goes through the pipe out to the river. A brand new treatment facility can be quickly over-loaded if its interceptor sewers have significantly larger capacity than the facility itself and there is no regula- tory program in place to control hook-ups. The facility may also have some severe direct environmental impacts. Such items as where and how the sludge (solid residual waste) is disposed of, is ground water quality likely to be affected and a whole host of other questions need to be dealt with during the planning phase of the municipal facility. Many states have specific policies to encourage industries to discharge their waste into municipal facilities. These industries may not only use up a sub- stantial amount of federal dollars available for sewage treatment, but also may discharge waste products that are incompatible and cause damage to the sewage treatment system. With 75% federal funding there may be very little incentive on the communities to ensure that planned facilities are cost-effective. In addition, sanitary engineer- ing contractors may have every incentive to design a costly set o~ concrete boxes, that are not cost-effective for a particular community's need. Finally, in water short areas particularly, the discharge rather than reuse of waste water may be nothing short of stupidity. Even in non-water short areas, the discharge of waste water may represent a loss of valuable nutrients that can be put to use in the community. Central to the question of what the construction grant program tried to ac- complish is the question of whether the Municipal Program established by PL PAGENO="0163" 157 92-500 was meant to be primarily a public works program or whether it was meant to be primarily a regulatory program. I cannot presume to read the minds of every Congressman and woman. All I can do is read the law and the legislative history and conclude that Congress established a regulatory program and pro- vided federal financial assistance to help publicly owned treatment works meet the requirements of the act. It is extremely important to note that the terms of federal financial assistance found in Title II of the act are only for communities receiving federal funds. In fact, it appears that many of the requirements of Title Il-such as user charges, recycling, reclaiming, consideration of cost/effective alternatives and infiltration inflow analyses are only enforceable where federal funds are available. A mu- nicipal facility without federal funding could presumably get a permit based on whether it met applicable effluent standards. Having examined the basic functions that the program is meant to perform under Pb 02-500, we must now examine the degree to which these functions have been met, and the manner in which the proposed Section 213 attempts to ameli- orate these problems. This committee has extensive testimony concerning the delays that have oc- curred in obligating and expending allotted funds. These delays have beei~ so extensive that it has been variously estimated that no less than 50% of all mu- nicipal discharges will meet the 1977 secondary treatment effluent standard re- quired by Title III of the act. To summarize quickly what some of the problems have been: The impoundment of half of the $18 billion construction grant funds authorized to be allotted and obligated; Delays in construction grant obligations caused by the slowness in develop- ment of EPA regulations as well as lack of understanding on the part of municipalities, states and consulting engineers as to what must be done to com- ply with new federal requirements; Delays in construction grant obligations caused by inadequate numbers of EPA personnel and/or inflexibility and confusion of EPA personnel in response to problems; and Inadquate iiistruction from Congress on how to deal with those grant applica- tions already in the pipeline which would suddenly have to meet new requirements. With all due respect, I believe there are two additional reasons thht have not gotten a great deal of attention from this committee as to why the construction grant program has been slow in getting off the ground. It appehrs to us that these two reasons are potentially more pervasive With longer reaching implications than any of the above mentioned administrative and managerial problems. The first problem I would like to discuss is the delays in construction grant obligations caused by the recalcitrance of municipalities and construction en- gineers in dealing with new federal requirements with which they do not agree. The "Report of the Administrator's Special Construction Grants Task Force" (May 31, 1975) summarized this problem in the following manner: "To the extent that our regulations create problems, the problems can really be attributed to two factors: (1) a diminishing but persistent opposition to the legislation; and (2) the uncertainty and delay which have accompanied the preparation of regulations and procedures to implement the law. With respect to the failure of the new legislation to gain universal acceptance, it must be remembered that sewage treatment systems have been constructed for some decades. NEPA, P.L. 92-500, the Historic Preservation Act, etc. overlaid, if not a different philosophy, certainly new requirements and considerations on an on-going business. In keeping with the current philosophy of goverment, the construction of waste water treatment facilities is now required to serve a variety of more or less related social purposes. Opposition from experienced prac- titioners is to be expected regardless of where they work: EPA, the State or the consultant community. The problem is exacerbated in the case of old projects which occur usually in large metropolitan areas. As a rule of thumb, the "aver- age" size project will take about 2 years to plan and design. Very large regional- ized projects can take up to 12-15 years, not counting actual construction time. Consequently, some percentage of the projects for which funding is now being sought was conceived and planned before various requirements of P.L. 92-500 were applicable. In Region II, for example, upwards of 75 percent of the appll- cations expected through September of 1977 will involve such projects. Given the time and effort already invested in such projects, not to mention the sometimes PAGENO="0164" 158 ~ delicate compromises that have been struck to put the project. together, it is understandable that there w~ou1d be resistance to a requirement for an environ- mental assessment or documentation of public participation. It is with interest and dismay we note that time after time as operators of municipal facilities, municipal government representatives and representatives of state governments have testified before this committee and in other forums, the substantive requirements (such as user charges, industrial cost recovery, en- vironmental impact assessment, etc.) have been referred to as unnecessary red tape. One further problem responsible for municipalities failures to meet 1977 dead- lines was the decision by EPA in 1973 to tie the regulatory and funding require- ments of the act together. While the other administrative and management prob- lem areas listed above have gradually sorted themselves out with time-causing tem~~orary delays in the program and in meeting statutory deadlines-the rami- fications of the decision to tie regulatory and funding requirements together are likely to continue to haunt us for some time. This decision, enunciated in a policy statement entitled ~`Municipal Permits and Planning: Compliance with the 1977-iS Deadlines," stated that when a municipality failed to receive federal funding sufficient to begin construction in time to meet the 1977 secondary treatment deadline, this municipality, would be issued a National Pollutant Dis- charge Elimination System permit that would be based on optimum operation and maintenance, and would not require a new significant construction. EPA ap- peared to rewrite the law-instead of saying that all municipalities had to achieve secondary treatment by 197.7, EPA was now saying that only those municipalities that received federal funds would have to so comply. (I should note here that I used the phrase "appeared to rewrite the law quite deliberately, as I have had extensive debate with EPA over what the Congressional intent was concerning the relationship of regulatory and funding requirements. Certainly, there is nothing on the face of the law, or in the official legislative history to indicate that Congress intended only those municipalities receiving federal funds had to meet the regulatory requirements of the act.) There has been significant debate over the various dollar figures that have arisen in the three separate needs surveys. Whatever the current need is (and it seems to be pretty clear that the bulk of the $346 billion need indentified in the past survey includes the whole spectrum of eligible construction activities, not just the secondary treatment goal), it is clear that Congress has not authorized an amount suffieient to meet the nationwide secondary treatment goal. We do not feel that there is any indication thatCongress is likely to ever authorize such an amount if figures that are currently being bandied about are in any order of magnitude correct. We would also submit that while significant federal financial assistance is a desirable objective, an equally desirable objective is that munici- palities and .states treat the provision of sewage treatment as a community * responsibility. There has been considerably less documentation of the implementation of some of the qualitative functions of the construction grant program than the quantity of construction grants that have been obligated. A careful perusal of a number of reports recently completed for EPA and for the National Commission on Water Quality can highlight some interesting problem areas. The "Review of the Munici- pal Waste Water Treatment `Works Program" by the Construction Grants Review Group in the Environmental Protection Agency (November 30, 1974) thoroughly documented the inadequacies of the,existing Environmental Impact Assessment and Environmental Impact Statement processes in a study of 43 construction projects which require "negative declarations" (i.e. no environmental impact). This report concluded: No project was found to have consistently good documentation. None of the 43 negative declarations could be justified on the basis of the documentation alone, although it is possible that these decisions could be justified on the basis of mate- rial in documents other than those available to the group. The environmental effects of the proposed action generally received the most complete treatment. Next best was the comparison of structural alternatives. Most projects were very deficient in the analysis of nonstriictural alternatives and secondary effects. If growth was considered at all, the appraisal simBly accepted the assertions of the applicant. Discussions of public involvement varied. Some documents were completely silent on the point, while others included tran- scripts of public hearings, copies of letters received from the public, etc. PAGENO="0165" 159 We believe that there are two underlying reasons behind the poor quality of these environmental evaluations. The first has to do with the consultants em- ployed by the applicants. Every Region has reported that the quality of the evaluations is directly related to the environmental capacity of the consultant. A sanitary engineering firm with extensive experience in designing treatment facilities may not have developed a capability to carefully analyze environ- mental effects. The second point has to do with the amount of pressure being brought to bear on the applicant and his consultant to do a good job of environmental evalu- ation. One regional official reported that he has been required to ask applicants for new or additional information based on changing program requirements so often that he is embarrassed to ask for reworkings of environmental evaluations. Others have reported that highest priority is considered to be timely obligation of funds, and so any redrafts of environmental evaluations requiring additional time are not permitted . . . According to a telephone survey, seven Regional Officers prepare an ElS only when there is significant public controversy. (Em- phasis added.) The preliminary draft report done by Touche Ross & Co. for The Contractor's National Commission on WTater Quality entitled "Institutional Assessment of the Implementation of The Construction Grants Program Under PL 92-500" brings us up to date (April 30, 1975) on the implementation of several other conditions for the construction grant program. The thaft report states: "The impact of user charge systeni requirements has not been fully deter- mined since the system does not have to be approved by EPA until the 80% level of construction grant payment has been reached. Very few Step 3 projects have reached this point in construction." The above mentioned report then goes on to note that while the proportion- ality clause of the user charge requirement may cause administrative problems in some municipalities, the major problem is likely to be delays. "Many municipalities have simply deferred the problem in anticipation of legislative action, citing as their reason such matters as the delay in publishing regulations or pending court suits. This tendency to wait for a change in policy rather than make the required changes in legislation and implement a new system is indicated in the fact that national:ly siaty munIcipalities have corn- pleted more than 80% of cOnstruction yet have been paid less than 80% of costs. This represents 38% of the grants which have reached the 80% level in con- struction. Of the rest, 44% have progressed beyond this point, indicating a user charge system acceptable to EPA was developed. The other 18% have just reached the 80% level in construction. (Emphasis added.) The report of the EPA Construction Grants Review Group cited earlier, noted that a thorough consideration of alternative methods of sewage treatment (par- ticularly non-structural alternatives) was rarely undertaken. The Touche Ross & Co. report done for the National Commission on Water Quality amplified the affect of this lack of consideration of alternatives on the cost effectiveness of the facility when operation and maintenance requirements are taken into account. "The current state and regional review practices examine only alternatives relating to the impact of capital costs. This emphasis results in selection of alternatives which reduce initial investment but may require excessive 0 & M funds. In Houston, for example, 0 & M costs have increased between 300 and 400 per cent within several years. Such increases are not cited as uncommon and are likely to impact upon the program. Review procedures also fail to emphasize the importance of 0 & M. In 7 and 8 regions, for example, plans and specifications are not reviewed from the standpoint of operability. Region VI cited an instance of a newly constructed plant being totally inoperable; further delays are resulting from questions of who will pay the costs to make the plant operable. 0 & M is generally not considered until Step 3 in the construction grants process. During Step 3 applicants must assure that satisfactory provision has been made for assuring proper and efficient operations and maintenance of the treatment works. By Step 3, however, the municipality has already committed itself to the plan, and additional personnel or funding to essentially start over is difficult to justify." PAGENO="0166" 1.60 The functional problems that I have set forth in the proceeding discussion are by no means exhaustive. They are meant to give this committee a feeling for the perspective of The Conservation Foundation on the range of issues that must be dealt with in the implementation of the construction grants program. We feel it is important to keep in mind that emphasizing a rapid rate of obli- gations and expenditures will not solve all the problems of the construction grants program. In fact, there is evidence that too great an emphasis on quantity may be at the expense of quality. To summarize my testimony to this point let us look at what we have. We have a massive public w-orks program designed to provide financial assistance for meeting strong federal environmental requirements. At the same time this program is designed to provide incentives for operators of publicly owned treatment works to move beyond the bare requirements of federal law, and look in innovative ways at the water quality needs of today and of the future. We also have tivo sets of problems which have emerged, each of which is tied to and directly effects the other. The first set of problems may be called a dministrative or managerial problems-and involve the expenditure of billions of dollars in an expeditious manner and in such a way as to protect the public interest in quality and honesty. A second set of problems might be termed qualitative and involve the implementation of major new directions and con- cerns in sewage treatment management. Central to these so-called qualitative problems has been the simple human difficulty of getting people to do things a little differently than they have always operated. I have gone into such detail on the functions and problems of the construction grant program in order to set before this committee the premise that this extraordinarily complex program has extraordinarily complex problems-prob- lems that will not go away by simply delegating authority to implement the program from one level of government to another. This is particularly true when one considers the fact that many state and municipal authorities have been among those most resistant to the new conditions that have, been part of the massive new federal construction program. The EPA Construction Grants Review Group pointed out in its report that one of the major problems that affected both the quality of the construction grant program, and the rate of obligations of the program, is lack of EPA field staff to handle and evaluate grant applications. The report noted that in 1968, the grant program obligated $2 billion with 320 program personnel. In 1974, EPA obligated $2.6 billion with 503 program personnel. This same report pointed out the lack of state manpower, administrative and technical capability to perform greater delegated functions. "The two principal factors affecting the expansion of (State) delegation are: (1) the States' capability to perform these functions, and (2) the need to financially support the States' assumptions of delegations. On the first point, EPA's Regional officials believe that the States, with some exceptions, would require time to develop capability to implement additional delegated functions. The overall success. both current and prospective, of delegating the review of plans and specifications and operation and maintenance manuals is the result of the fact that States have performed these functions for a long time. As a general rule, however, the States have traditionally been less involved in most of the other program functions-particularly facilities planning, the most man- power-demanding function-and, in all but a few cases, do not possess the technical and/or administrative experience and manpower to effectively per- form these other functions. Accordingly, except for the above projected dele- gation of plans and specifications and operation and maintenance manuals- and except for a few- other opportunities for readily delegating other func- tions-future delegations will be based on the States' ability to develop the administrative machinery, the technical competence and the expanded staff necessary to implement new delegations. At best, this requires time. At worst, it is inhibited or even made imiiossible by a number of constraints including (1) State personnel ceilings, (2) State inabihities, in some cams, to attract qualified personnel because of low pay scales and other reasons, and (3) in some cases, lack of State interest or incentive to assume new responsibilities. In short, constraints militate against significant immediate expansion `of dele- gations. and necessarily impose time delays (1 to 3 years) on any concerted atfomut by EPA to encourage expanded dcl egati ous." It is an important fact of political life that once EPA has the authority to delegate the construction grant program, it will be under an enormous amount PAGENO="0167" 161 of pressure from the States to do so. EPA will be under this pressure regard- less of the capabilities of the state agencies. And there is no way politically that EPA will be able to take back the delegated authority. So in those five or six states which have for many years had an innovative sewage treatment program, the delegation of authority may improve the rate of obligations of federal funds. In the other 44-45 states, the delegation may mean the rapid building of large scale traditional, concrete public works projects, with little consideration for the secondary environmental impacts that are required by federal law. Lest you begin to question that the rapid obligation of sewage treatment grant funds is not a goal of an environmental organization such as ours, let me set the record straight. It is indeed a goal which we place high on our list of priorities. Equally high on our list of priorities, however, is the planning of sewage treatment facilities in such a manner that the secondary environmental impacts of such facilities will not outweigh direct environmental benefits. Consistent with this priority is the hope that Congress will put pressure on EPA to not only expend funds rapidly but also to insist that publicly owned treatment works are designed in compliance with the Congressional directives of Title II. We do not feel that these two goals are incompatible nor do we feel that these goals are inconsistent with tight regulatory deadlines. The case has not been made convincingly that qualitative problems with the construction grant program will be solved by delegating that program to the states. Certainly EPA's manpower problems will be somewhat alleviated by this delegation. But it appears that such alleviation may be at the cost of meeting federal environmental goals. [I would like to note here that the retention of federal responsibility for environmental impact statements might help alleviate some of the problems mentioned before, if it were not for three things: EPA has traditionally written very few full EIS's and in fact has the funding in this fiscal year to write EIS's on approximately 5% of the construction grant applications; Normally, the environmental impact assessment conducted in the Step I plan- ning process (proposed for state delegation) determines whether a full EIS is necessary; and The EIS has never been treated by EPA as a decisionmaking instrument, even where it concerned an EPA program such as sewage treatment grants.] We suggest that EPA be given the additional manpower it needs to maintain effective quality control while expeditiously obligating funds. The manpower increase can be supplemented by continued delegation of certain discrete program elements in Step II and Step III planning to state agencies. To leave you with some final thoughts on state program delegation-while several states have been quite innovative in their approach to planning sewage treatment facilities, many states have not. In fact, many state agencies have been among those resistant to new and important federal requirements that were imposed as a condition of receiving federal sewage treatment construction grant funds under PL 92-500. The attitude of these state agencies has been, give us the money and let us spend it our way. And our response should properly be: that PL 92-500 is a national environmental law, with specified goals-and that the funds available to help communities fund sewage treatment are meant to be an incentive to meeting those goals. If a state doesn't want to meet the condi- tions of construction grant funds, it shouldn't use federal money. We do not mean to say here that we are of an opinion that the federal govern- ment can better manage a state program than a state agency. But this is not really a state program, but is a federal program of funding to provide incentives for States and municipalities to meet some rather innovative federal goals. We do not wish EPA to retain the program because we feel that EPA has done such a stupendous qualitative job with the construction grant program. We, upon occasion, have been among EPA's most vociferous critics in regard to this program. We do feel, however, that the tension that exists between EPA and the States over this program is a creative tension; that the very existence of a federally run sewage treatment program has had some affect on the manner in which sewage treatment facilities are built; and that the potential for even greater innovation is there as long as the federal government is pushing, pulling, and cajoling the states and municipalities to meet new environmental goals. Finally, we are keenly aware that in many communities across the nation, citizen leaders have regarded the federal leverage provided by strong EPA con- PAGENO="0168" 162 trol over the Grants process as key to their effecting community environmental goals through the construction grants process. In Ocean County, New Jersey, in Gettysburg, Pennsylvania, and in many other communities, ciitzens concerned about secondary environmental impacts of sewage treatment facilities have been able to utilize EPA oversight in changing a specific project. In short, for a variety of reasons, we urge you to retain federal control of this important program. Mr. ROBERTS. As previously mentioned, additional questions will be forwarded to the panel. Without objection, when received, the items will appear at this point in the record. [Material referred to follows:] LEAGUE OF WOMEN VOTERS OF THE UNITED STATES, lvashingtoa, D.C., October 30, 1975. Hon. RAY ROBERTS, Chairman, Subcommittee on TVater Resources, Committee on Public TVorks cmi Transportation, House of Representatives, Rayburn House Office Building, Washington, D.C. DEAR MR. ROBERTS: Enclosed are the Leagues responses to your questions concerning HR. 9560. Thank you for the opportunity to appear before the Subcommittee Septem- ber 24. We stand prepared to assist your deliberations on amending the Federal Water Pollution Control Act (P.L. 92-500) in whatever manner appropriate. Sincerely yours, BETTY N. MACDONALD, Director. USER CHARGES Question 1. In areas experiencing residential development that have tradi- tionally relied upon ad valorem systems for assessing user fees, what will be the effect of developing two types of systems to assess fees-one for old resi- dential areas (ad valorem) and one for new (metered)? Answer. The effect on communities of using two assessment systems should not be unduly burdensome, and in fact, many communities are currently using such combined systems. The National Commission on Water Quality staff re- ports in its October 10, 1975 draft that "the use of sewer service charges has grown from 20 percent of all municipalities in 1945 to 61 percent in 1900 and ~5 percent in 1969. However, other taxes may be used by a given community as well as sewer service charges (emphasis added) ." (Page 111-153.) Victoria Price and David Hartley, in a report prepared under contract to the National Commission on Water Quality (Problems of Municipal `Doers" in 1w- plementing Public Law 92-500) suggest that "one factor which might ease the task of levying and collecting sewer user charges is the combination of both water and sewer programs in one administrative department . . . the Construc- tion Grants report indicates that many municipalities whose user charges are acceptable to EPA have employed this method." (Page 111-22.) Another con- tract study prepared by Touche Ross & Co. (Institutional Assessment of the Implementation of the Construction Grants Program Under Public Law 92-500), also reports that "of the municipalities with acceptable user charge systems interviewed during our field visits, most were using a water usage charge for determining waste treatment charges. The advantages to cities already using this system are: little increase in administrative costs, and no costly additions of meters to the sewer system (assuming a meter is used to monitor usage) ." (Page III-E-6.) The League staff has consulted legal counsel and has been advised that a dual system is legally defensible as long as a "rational classification"-such as a cut-off date for construction of homes which would have user charges imposed- is the basis of the duality. With increasing emphasis on state and local rights, it would seem that some costs should also be borne at the state and local levels; if a dual system would cause some additional administrative costs, these should be incorporated in the local share. The inconvenience of maintaining a dual charge system should pro- vide an inducement to shift gradually entirely to metering as this becomes pos- sible. Allowing use of ad valorem taxes for existing residences is a concession to current realities, but differentiating as the League suggests should over time PAGENO="0169" 1.63 reduce the use of this method of raising operation and maintenance funds to a minimal number of properties. Question 2. How much decrease can we expect in volumes of wastewater by a metering system? Answer. Despite contacts with the Environmental Protection Agency, Water Pollution Control Federation, and National Commission on Water Quality, the League staff was unable to find any data correlating quantitjes of wastew'ater generated with the presence or absence of meters. It may be significant, how- ever, that according to a technical specialist at the Water Pollution Control Federation, Chicago, which does not have a user charge system, has for many years had a per family water consumption rate significantly above the national average (250 gallons per day compared to a national average of 150 gallons). Studies by the American Water Works Association of water consumption before and after installation of meters have indicated that consumers sharply decrease their usage immediately after meter installation but gradually re- turn to approximately their original consumption level. This rebound effect is in part attributable to the low cost of water as a product-a cost that is ex- pected to rise markedly in coining years-and to an attitude that limitless sup- plies of this virtually free commodity will continue to be available. In a June 12, 1975 speech, John Quarles, Deputy Administrator of the Envi- ronmental Protection Agency, predicted that costly measures to ensure the safety of public water supplies will be required to carry out the Safe Drinking Water Act of 1974 and that consumers will have to pay higher costs to finance these measures. The National Commission on Water Quality (NCWQ) staff predicts that with construction of new sewage treatment facilities under P.L. 92-500's grant program, operation and maintenance costs will be "more than $2.0 billion per year in excess of that required in 1973." (Page 1-18.) A system of assessing user charges based on metered water intake as dis- cussed in Answer 1, will undoubtedly reflect both of these cost increases, and will more accurately reflect the costs of water purification (before supply and before discharge) and water waste. Such a system would thus doubly empha- size the economic benefits of water conservation. The comparison drawn in my testimony between a reduction in electricity consumption and in water consumption is particularly relevant in this context. A May 7, 1975 NeW York Times article reported that "goaded mainly by higher prices, the residential customers of Consolidated Edison cut back their usage of electricity by 10.8 percent during the first nine months of 1974." The article, discussing the conclusions of a Public Service Commission report, further states that "during `the first quarter of. 1974, energy conservation programs con- ducted by the [state's electric] utilities were responsible for two-thirds of the reduction in use." Similarly, a TVasltington Star article (October 5, 1975) reports that "despite generally increased use of electric power this year after, virtually no growth in 1974, many of the nation's utilities have found that their customers are still using less electricity than they had predicted." Those in the electric utility busi- ness attribute this decline to "conservation, the state of the economy, and in- creased awareness of price by the consumer." With the virtually certain increase in water supply and treatment costs, and hopefully with greater emphasis placed on the multiple benefits of water con- servation (such as decreased need for dams to increase water supplies), there are ample grounds for concluding that water metering-which reflects to con- sumers their actual use-will decrease volumes of both water intake and waste- water generation. Question 3. Will the cost of requiring metered systems for new residential areas be justified by the decrease in volumes of wastewater? Answer. Although cost figures for installing meters and making the adminis- trative switch to a user charge system for existing residential properties are readily available, no such figures are available for as yet unbuilt residential areas. As explained in Answer 2 above, no precise figures on decreased waste- w-ater volumes under a metering system are available. Therefore a dollar for dollar benefit/cost ratio cannot be developed. However, it is essential to recognize that metering systems, reflecting full costs of water usage for new residential areas, will have multiple benefits, all of which must be weighed in formulating such a ratio. PAGENO="0170" 164 As described in Answer 2, the costs of both water supply and POTW operation and maintenance are likely to increase markedly in coming years in order to bring facilities into compliance with the Safe Drinking Water Act and P.L. 92-500. Decreased volumes of water demand and wastewater generation can contribute to reducing these costs. If an expectation of decreased water use and wastewater flow can be incorporated in planning water supply and waste treatment facilities, smaller facilities with lower capital costs can be built. A technical expert at the Water Pollution Control Federation has advised the League staff that a lower volume of wastewater provides a significant benefit in hydraulic loading (lower volumes of more concentrated wastes). While the more concentrated waste produced requires an increased capability for strength loading, the cost of providing for this is less than the cost of providing for larger volumes of dilute wastes. For example, the cost of large amounts of land for holding tanks to retain water during sedimentation of solids could be reduced if smaller quantities of water had to be treated. Returning ag~in to the analogy between wastewater treatment and providing electricity, another benefit of user charges can also bepredicted: more efficient operation and maintenance of facilities in order to keep these charges low. According to an August 10, 1975 article in the Wew York Times "during the years when electric power was cheap . . . utility executives paid little attention to the degree of use they were getting out of their plants . . . With the cost of building new plants spiralling and customer rates doing the same, some utilities are seriously working on ideas aimed at getting better use of existing plants." The NCWQ staff reports (October 10, 1975 draft) that "at the present time, treatment plant performance represents a serious problem. EPA found that over 30 percent of all treatment plants for which adequate data were available were failing to meet desired criteria." (Page 111-162.) The report later states that "ad valorem taxes have the advantage of rising somewhat with inflation thus requiring fewer rate increases than user charges. User charges, on the other hand, have the advantage of rising to correspond with rise in use of the system, and encourage more efficient use of the system (emphasis added)." (Page 111-164.) Question 4. Would you recommend a study of this issue before we require municipalities to implement two separate assessment methodologies? Answer. No. In st itution al Assessment of the Implementation of Construction Grants Program Under Public Law 92-500 prepared for the NCWQ by Touche Ross & Co. states that "the major concern evolving out of disputes over the type of user charge system is the potential for delaying the program. Many munici- palities have simply deferred the problem in anticipation of legislative action." (Page II1-E-10.) (It is worth noting that the Price and Hartley study for the NCWQ [Problems of Municipal "Doers" in Implementing Public Law 92-500] reports that "a wide vayiety of municipalities expected real political difficulties in attempting to get their new user charge systems approved by their city councils or other elected officials, because of a~ widespread reluctance to place additional financial burdens on industries (emphasis added) ." (Page 111-23.)) Further delay or uncertainty can only delay achieving the goals of P.L. 92-500. The League recommends that to meet the urgent construction grant fund needs of communities with a historic pattern of using an ad valorem system to assess operation and maintenance costs, an amendment incorporating a grandfather clause such as the one suggested in our testimony be enacted. If Congress con- cludes further study of the administrative costs and the many benefits outlined in Answer 3 would be advisable. the cut-off date for new development could be set at January 1, 1977 rather than 1976. as we had suggested. Should such a study dis- close fewer benefits or higher costs than we anticipate, Congress could then eliminate the requirement for user charges for new residential development through future amendments to the law. Question 5. What should be the role of the Federal State and local governments in determining how tax exempt properties should be handled if a system of ad valorem taxes were used to collect operation and maintenance costs? Answer. If ad valorem taxes were approved by the Administrator as an ac- ceptable user charge in a community containing tax exempt property, this should in no way affect the status of such properties. If local residents have chosen to provide common public services to these properties on a tax exempt basis, thin decision should carry over to provision of sewage treatment service. PAGENO="0171" 165 Whatever system is used to raise operation and maintenance revenue must raise adequate funds to carry out these functions. This was a significant reason behind the congressional requirement for user charges in P.L. 92-500. I-louse Report 92-911 accompanying HR. 11896 stated that the Public Works Committee considered the foremost objective of a fair and equitable user charge system "is the underlying objective of achieving a local system that is self-sufficient." (Page 90.) Similarly, Senate Report 92-414 which accompanied 5. 2770 states that "each system of user charges imposed pursuant to the requirements of the bill must be designed in such a way as to generate sufficient revenues to operate and maintain the treatment works to which it applies." (Page 1446.) In order that this goal will be met when new POTW5 are in operation, the proportion of wastes generated from tax exempt properties should be made clear to residents of communities using an ad valorem system at the time facility planning is underway. This will depend upon the number and type of such prop- erties (colleges, hospitals, or churches, for example) and the number of people to whom they will provide sewerage service. Local citizens should be aware that their tax revenues will have to compensate for these exempt properties. CERTIFICATION Question 6. You mentioned that in the proposal for state certification of con- struction grant proposals you felt the program should be modeled after Section 402(b) of P.L. 92-500? What has been your experience froni the standpoint of public involvement in this program? Answer. The League of Women Voters has been actively involved at the state and local levels in the National Pollutant Discharge Elimination System (NPDES). While some League activities concerning this program have proved disappointing to members who felt their positions were disregarded by U.S. EPA or state officials, other actions have had significant impact on the permit program. A report prepared for the National Commission on Water Quality by James Ragan Associates (Assessment of Publie Participation in the Implementation of the Federal Water Pollution Control A et Amendments of 1972) discusses the level of activity and effectiveness of public interest and environmental groups at the local level. According to this report "local Leagues of Women Voters are the mainstays. Members consistently testify at hearings on transferring the NPDES to the state, [and] on specific permit applications . . . and they serve on citizen advisory committees." (Page xi.) League members throughout the nation have studied state agency performance, monitored permit issuance and spoken out frequently-at public and private meetings-about their concerns. Leagues in Maryland and Ohio, among other states, participated in hearings on turning authority for the permit program over to their states. Questions about specifications in the City of Plattsburgh permit raised by the Plattsburgh Area League resulted in a delay in granting that permit until specific answers could he provided. The League in Lincoln, Illinois has been involved through its attorneys in negotiations with state and federal authorities about that city's plans for expanding its sewage treatment plant and studied Lincoln's permit application in connection with this issue. And the Potomac Basin Inter-League Committee is participating in the adjudicatory hearing on the D.C. Blue Plains sewage treatment plant permit-the only such hearing on a munici- pal facility permit in the nation. But while there have been some notable successes in protecting water quality through participation in the NPDES program, the League experience has all too often reflected the general failure in implementing Section 101 (e) described in the Ragan Associates study: "External factors have constrained the implemen- tation of Section 101(e). Public participation's low place in a hierarchy of agency priorities, the program deadlines set by the Act and EPA, and the frequently disinterested or hostile attitude among high-level agency officials combine to give public participation activities little attention . . . In light of the external con- straints imposed upon public participation and the limited opportunities that are offered to citizens for involvement, citizen impact on Act requirements and goals has been minimal." (Page xii.) Some of the reasons for the failure of the League and other public interest groups to play a more active role in NPDES are explored by the Ragan Associ- ates. These include the highly technical nature of discharge requirements and permits, the low priority given to helping the public understand this technical PAGENO="0172" 166 information and the short time provided for studying documents before com- ments or hearing requests must be submitted (Pages 109-111). In its executive summary, the Ragañ Associates study concludes that "Only a handful of people have understood the significance of Section 101 (e) [the provi- sion of P.L. 92-500 specifying that "Public participation in the development, revi- sion, and enforcement of any regulation, standard, effluent limitation, plan or program established by the Administrator or any State under this act shall be provided for, encouraged and assisted by the Administrator and the States."] and `attempted to implement both its letter and intent. The majority have ration- alized that their practices were in conformance with Section 101(e)-and have continued them as before. By any measure, they do not conform to Section 101(e)." (Pagev.) If Congress wants its intent in incor~ orating public participation requirements in P.L. 92-500 to be followed in regard to a state certification `amendment, this should be incorporated in the legislative history ef HR. 9560. Among those fac- tors which could be specified to assure that public involvement in this program will be "provided for, encouraged, and assisted" include : information in lay language that is readily accessible, realistic deadlines for citizen review and com- ment, and opportunities for involvement throughout the process-not merely at a pro forma hearing after decisions have been made. The League is anxious to continue its active role in promoting high water quality throughout the country. Our members would like to see construction uf sewage treatment facilities accelerated to help achieve this goal, and at the same time would like to increase our opportunities for meaningful involvement in planning these projects that will be part of our communities for decades to come. QUEsTIoNs FOR Ma. KEN KAMLET POSED BY MR. ROBERTS AND MR. CLAUSEN TIME REQUIREMENTS 1. What factors should be considered by the Administrator in determining whether a municipality had made a "good faith effort" to meet the 1977 secondary treatment requirement? 2. What will be required of an industry which in good faith plans on partici- pating in a municipal system which will not be available on July 1, 1977? What should be required? 3. Should such an industry be required to meet pretreatment standards by July 1. 1977 even if the treatment works isn't available? 4. What should he required in the way of a showing that the industry will par- ticipate in the municipal system? 5. How would you propose to discourage industry from attempting to avoid the 1977 industrial requirement by claiming that it intended to tie-in with a munici- pal system that receives an extension of the 1977 secondary treatment require- ment, and then, at a later date, refusing to tie-in with that system? 6. The Committee has received correspondence from the Governor of Hawaii stating that the State Office of Environmental Quality Control, the Environ- mental Center at the University of han-au, and major private environmental groups in Hawaii have studied their area and determined that secondary treat- ment would be harmful to their nutrient-deficient waters. Do you have any comments? 7. Have you assessed the efforts of environmental groups at ocean discharge sites such as Hawaii who have claimed that the removal of oxygen-demanding substances from wastes at certain specific sites may actually be harmful to the ecosystem? 8. Do you think ocean discharge sites should be given an opportunity to con- duct intensive studies of their ecosystems to determine whether secondary treat- ment or some other level of advanced treatment should be used in treating their waste waters? 9. In EPA's draft report on ocean discharges, the EPA suggested that legisla- tive language be developed that would make the availability of federal funds a factor in determining whether an exemption to the 1977 deadline should be granted. What do you think of this proposal? 10. On page 5 of your statement you note that EPA has rejected proposals to confer special exemptions of treatment works discharging into the ocean. Are von aware of the fact that the EPA actually proposed in the same report you quote. a proposal which would have given the Administrator the authority to extenddeadlines fo~ certain municipalities which would discharge into the ocean? PAGENO="0173" 167 NATIONAL WILDLIFE FEDEkATION, Washington, D.C., November 3, 1975. Hon. RAY ROBERTS Chairman., House of Representatives, ~nbcommittee on Water Resource~s, Com- mittee on Public TVorks and Transportation, Rayburn House Office Building, Washington, D.C. DEAR Mn. CHAIRMAN: I am pleased to submit the following responses to the questions posed by yourself and Congressman Clausen in your letter of Octo- ber 16, regarding my recent testimony on I-JR. 9500. 1. A demonstration of "good faith" would require a showing that (a) federal construction money was sought and refused and efforts to obtain adequate state and/or local funds (e.g., through bond issue, etc.) were unsuccessful, or (b) acts of God, labor disputes, etc. prevented construction plans from being com- pleted on schedule. 2. The statute would appear to require such an industry to apply "best prac- ticable control technology currently available" ("BPCTCA") for any direct discharge occurring after July 1, 1977. What "should" be required is less clear. At minimum, toxic and pretreatment effluent standards (pursuant to section 307) should be required to be met on schedule. The industry should also be re- quired to furnish a notarized commitment to participate in the municipal system when completed. 2. Yes (see previous answer). Since such dischargers would, in the absence of an opportunity to participate in a municipal treatment system, be obliged to accomplish BPCTCA by mid-1977, it does not seem onerous or unfair to require them to meet the general less stringent requirements of section 307 by the same date-the date by which they would have to do these things anyway were the municipal system ready by that time. 4. (See answer to question 2, above). A binding commitment should be required of the industry. This might take the form of a contractual commitment by the company to the municipality and to the Environmental Protection Agency. Or it might be accomplished via a notarized declaration of intent from the com- pany's chief executive officer supplemented, in the case of a corporation, by an authorizing Board of Directors' resolution. It might also be desirable to require the company to post a monetary bond to ensure that it follows through on its commitment. 5. (See answers to questions 4 and 2, above). Deterrents to industry evasion would include: the prospect of liability for breach of contract ; forfeiture of a monetary bond; and civil or criminal prosecution under section 309 for viola- tion of a permit condition (i.e., the discharge permit issu~d under section 402 should condition continued discharge on participation in the municipal system refusal to participate would cause any subsequent discharge to constitute ah actionable permit violation). 6. I would w-ant to see the studies before commenting in detail. However, two comments seem appropriate: First, although the nutrient content of sewage wastewater discharged through Hawaiian outfalls may enhance the productivity of its coastal waters, this does not by any means guarantee that the wastewater caim be discharged safely without treatment. This is so because sewage waste~ w `items commonly cont'imn toxic hea~ y metals and chloi mated org'mmc compounds `is well `is diseise producing b'ictena ~nuses piotozo'i and other pathogens Unless treatment is employed to remove or inactivate these hazardous con- stituents, productivity may be enhanced at the cost of public hettlth. (i.e., through the ingestion of contaminated seafood) and environmental degradation. Indeed, too great a stimulation of primary productivity (even well short of eutrophica- tion) may itself have a destabilizing effect on other components of the marine escosystem. Secondly, although treatment techniques aimed directly at remOval of toxic chemicals and destruction of pathogens would be preferable in an ocean discharge situation to secondary treatment (which accomplishes these. objectives only partially and indirectly), the state-of-the-art of toxicant removal is at best rudimentary. Consequently, until better substitutes come along and are applied to ocean outfall discharges, secondary treatment must be regarded as an imper- fect, but necessary, second-best approach. While secondary treatment may remove harmless (or even beneficial) nutrients along with toxic constituents, technology does not presently permit a more selective alternative. Some of the possible con- sequences of discharging inadequately treated wastewaters are described in my testimony. .. PAGENO="0174" 168 7. We have not had an opportunity to assess the efforts of the indicated groups. (But see response to previous question.) If the Committee makes the results of these efforts available to us, we would be pleased to analyze them and furnish a more detailed response. 8. "Ecosystem studies" are probably less relevant to the need for various levels of wastewater treatment than chemical and bioassay (toxicological screen- ing tests making use of sensitive "indicator" organisms) analyses. This is so because it is impossible to accurately determine where all the discharged waste- water is going to go and what organisms it will come into contact with. More- over, even if we knew where every drop of wastewater went and even if we had adequate true "baseline" data (which, in addition to factoring out man-in- duced changes, took account of seasonal and diurnal changes), we could not expect to be able to detect any but the most gross pollution-associated altera- tions in ecosystem structure or function. This is not because more subtle altera- tions would not be occurring or because such changes would not be significant, but because ecosystems are subject to a wide range of natural variability which we do not understand sufficiently well to be able to reliably separate changes due to such variability from those caused by pollution. In short, while it is true that rare and endangered species or rich biotic assemblages in the vicinity of `ocean outfall pipes would appear to warrant more exhaustive waste treatment than outfall discharges in the vicinity of a less exotic or prolific array of orga- nisins, all outfall discharges by their very nature are going to have some impact on highly productive coastal waters. It would seem more worthwhile, therefore, to concentrate on keeping toxic wastes out of all productive ocean waters (and out of locations from which they may be transported to productive ocean waters) than to spend time classifying productive areas as more or less productive. Ecosystem studies may be useful and desirable as a means of enhancing our knowledge of marine processes and effects and, as such, they should be encour- aged. However, such studies cannot be expected, given the limitations of pres- ent-day marine science, to tell us when a particular ocean outfall discharge should or should not be permitted or subject to what degree of treatment. 9. The availability of federal funds should be among the factors considered in determining both whether compliance with 1977 deadlines is "possible" and whether the municipality has made a "good faith" effort to meet such deadlines. 10. Yes. Our objection is not to waiving 1977 deadlines under appropriate cir- cumstances, but to conferring "special" exemptions on treatment works dis- charging to the ocean, above and beyond those available to those discharging to inland waters. If inland dischargers must adhere to existing treatment re- quirements unless compliance is not "possible" (a "good faith" effort having been made to comply), ocean dischargers should be subject to controls no less rigorous. Sincerely, I~ENNETH S. KAMLET, Counsel. NATURAL RESOURCES DEFENSE CouNcu~, INC., Washington, D.C., NovenTher 4, 1975. Housn COMMITTEE ON Punric WORKS AND TRANSPORTATION, Raybnrn House Office Building, Washington, D.C. DEAR Sm: Enclosed are the responses of the Natural Resources Defense Coun- cil to the questions raised by Chairman Roberts and Congressman Clausen in their letter to me dated October 10, 1975. I hope they will be useful to the Com- mittee in its deliberations on H.R. 9500. Our responses to the questions should be considered in conjunction with our testimony on the bill. I have tried not to repeat matters covered in that testi- mony in my answers to the questions. One final point deserves particular emphasis. It is our strongly held view that Section 307(a) of the Water Pollution Control Act should be substantially amended, for the reasons stated in our testimony. Accordingly, we are presenting in the attachment to our responses several proposed changes in Section 307(a). It is essential in our judgment that all of these changes be made. Pursuing only a portion of these suggestions will not remedy the problems that have arisen regarding toxic water pollutant regulation. Minor surgery on Section 307 (a) under present circumstances will not lead to effective implementation of that PAGENO="0175" 169 Section by EPA. Accordingly, we urge that the suggestions in the attachment be considered together as a package. We say this also for the additional reason that several of the suggested provisions are intimately interrelated and cannot usefully be considered apart from the others. We think we have put together a balanced proposal containing suggestions made by others as well as environ- mental groups. We hope that you will consider it in this light. Thank you for this opportunity. Sincerely, J. G. SPETH. THE NATURAL RESOURCES DEFENSE COUNCIL'S ANSWERS TO QUESTIONS FROM THE WATER RESOURCES SUBCOMMITTEE TOXIC SUBSTANCES I. As presently written, Section 307 (a) does not permit toxic pollutant effluent standards to be set with an eye to their economic impact, for good reason. Because of the inherent danger of exposure to toxic substances, permissible levels of discharges should be set very low. If economics were to be considered as a factor, it w-ould tend to fix the discharge limits for all sources set in the standards in line w-ith the source least able economically to reduce its discharge-the marginal industrial point source-rather than set the standards at a low level Sufficient to protect against exposure to toxic substances. If Congress feels it is essential that EPA have the discretion to take economics into account in certain circumstances, then we feel it is imperative that a very carefully drawn variance procedure be established in the Act. Such a procedure would allow economic impact to be taken into consideration in applying the effluent standard to individual permits through a hearing process in which the permittee would be required to demonstrate that there is no reasonable relation- ship between the economic and social costs and the economic and social benefits of achieving the standards set in the guidelines. Such a demonstration having been made by a permittee, the Administrator would then be permitted to require less than compliance with the standard provided that the public health is fully protected and the discharger will at least have to achieve best available tech- nology (BAT). We have developed language for amending Section 307(a) in this and other respects, and we attach that language hereto for your consideration. 2. The term "technologically infeasible" would apparently allow consideration of economic factors as well as unavailability of the necessary equipment as grounds for extending the compliance deadline for categories of sources from one to three years. The term "impossible" would allow consideration only of the unavailability of the necessary equipment, i.e., physical impossibility. The "feasibility" language suggested by EPA is actually a subtle attempt to amend Section 307(a) to permit economic feasibility to be considered in establishing deadlines for compliance~with the standards. 3. Our suggestions for changing Section 307(a) are incorporated in the attached proposed language changes. We feel these changes can and should be made in the context of HR. 9560, since time is of the essence in placing restrictions on the discharge of toxic substances into our waterways. Minimal changes will not be enough. 4. Standards governing toxic substances should be set just like new source performance standards as prescribed in Section 306 of the Act, i.e., after full public review and comment but without an unnecessary formal hearing proce- dure. Under the language we are submitting, hearings would be held only after standards have been developed and individual permittees seek a variance. These individual hearings would be directed not at the standards but at whether a variance from the standards is justified. The employment of formal hearing procedures during the standard setting stage delays the final promulgation of standards by thrusting a larger, unwar- ranted burden of defending the standards on the Administrator. It creates abundant opportunities for legal technicalities to delay unduly the promulgation of standards, a conclusion which is supported by recent events. Provided there is ample opportunity for written comments on the proposed standards, there is no reason for requiring a hearing, given the fact that such hearings are not required to set other standards under the Act. 5. In line with our view th~t a formal hearing procedure is not appropriate in the setting of toxic standards, the question of maximum time period is irrelevant. PAGENO="0176" 170 TIME REQU~EMENTS 1. The following should be the factors the Administrator should consider in determining whether a municipality has made a "good faith" effort to comply: (a) The municipality has met all the requirements of the compliance sched- ule set up in its permit, or, in those instances where it has failed to meet the compliance schedule, the factors causing the violation were beyond control of the municipality, i.e.. equipment shortage, strike, etc. (b) Where raising funds is necessary to allow the municipality to meet the Act's requirements, the municipality has taken all feasible steps in a timely manner, including the submission of a timely application for Title II funding and has made a concerted effort to comply with Title II grant requirements and conditions. (c) The municipality has met all state requirements. (ci) The municipality is, in the meantime, making an effort to reduce its dis- charge of pollutants, in so far as is feasible, including the implementation of an approved 0 and M program for existing facilities. 2 and 3. An industry which in good faith plans to tie into a municipal system which will not be available on July 1, 1977, should be required to meet pie- treatment standards, provided the POTW will be available shortly after 1977. Because EPA has been so tardy in promulgating pretreatment standards, it is unlikely that many industries will be able to achieve them by July 1, 1977. With this in mind, industries who plan, in good faith, to tie in to municipali- ties should be required to meet pretreatment standards as soon as possible after they have been promulgated. On the other hand, where there has never been a realistic probability that the POTW would be on line by 1977 or shortly thereafter, the industry should be required to install BPT. 4. An industry should be required to make a showing that it is expeditiously moving toward meeting pretreatment standards as soon as possible after they have been promulgated. 5. First, as noted above, we envision that an industrial discharge would have to meet BPT if the municipal system was not going to be available for several years after 1977. (It is our impression, by the way, that many existing perniits address the issue of what the discharger must do if the municipal system is not available.) Also, as a condition to not having to meet the 1977 requiremeimts of the Act, the industry should be required to produce a w-ritten agreement with the municipality as to the terms of the tie-in. In addition, since the industry will be in violation of the Act's requirements while awaiting the opportunity to tie in, EPA should issue an administrative order requiring the industry to tie in to the nthnicipal plant upon completion and cutlining other interim requirements, such as the meeting of pretreatment standards. Violations of this order should then be made a willful violation sub- ject to criminal penalties under Section 309. It is extremely important that the use of criminal penalties for this tactic be outlined either in the statute or in regulations or guidelines issued by EPA. 6 to S. We endorse the answer given by the National Wildlife Federation to these questions. 9. We endorse the approach put forward by EPA that no express amending language pertaining to ocean discharges is necessary. The ocean discharge issue can be adequately handled through the general provision of the bill authorizing EPA to extend compliance with secondary treatment on a case-by-case basis. The best way to deal with the problem is through the priority list and funding mechanism. We feel, in fact, that adoption of language pertaining to oceans at this time would be extremely detrimental to the goals of the Act, since (i) it would tend to give the ocean discharge practice a presumption of validity that w-ould be hard to overcome if and when ocean discharges are found to be unsound, and (ii) the proposed language fails to distinguish between deep or open ocean discharges and discharges into near-coast waters. STATE CERTIFICATION As outlined in our testimony, NRDC opposes the State certification provision of HR. 9560. We feel it is fiscally irresponsible and environmentally unsound. Outlining specific criteria States must meet in order to have their certification accepted may, however, make the certification concept less objectionable. The criteria we feel must be included, at a minimum, are outlined in the attached l)rOl)Osal. PAGENO="0177" 17~1 EPA'S REQUEST FOR AMENDMENT TO SECTION 509 We are in complete agreement with the Environmental Protection Agency with regard to the need for an amendment to Section 509 to clarify that review of effluent limitations guidelines regulations promulgated pursuant to, inter alia, Section 304 of the Act should be in the appropriate circuit court of appeals. We feel that this minor amendment is indeed an important one. The promulgation and implementation of effluent limitations guidelines reg- ulations has been unfortunately, a long drawn-out affair. If the CPU holding by the Eighth Circuit prevails, and additional layer of review will be inserted, thus prolonging the process even further, much to the detriment of achieving an equitable, yet aggressive, pollution control program. We also share the other concerns of the Administrator about the possibility of review of effluent limita- tions guidelines regulations in the district courts as outlined in his letter: review of new source performance standards separate from the effluent guidelines reg- ulations, the great increased possibility of conflicting judicial opinions, and the impediments to consolidation of proceedings. ATTACHMENT AMENDMENTS TO SECTION 307 (~) Section 1. Paragraphs (2) and (3) of Section 307(a) are repealed and the following inserted in lieu thereof: "Within one hundred and eighty days after the date of publication of any list, or revision thereof, containing toxic pollutants or combination of pollutants under paragraph (1) of this subsection, the Administrator shall propose and publish regulations establishing effluent standards (or prohibitions) for such pollutants or combination of pollutants which shall take into account the toxicity of the pollutant, its persistence, degradabihity, the usual or potential presence of the affected organisms in any waters, the importance of the affected organisms and the nature and extent of the effect of the toxic pollutant on such organisms. The Administrator shall afford interested persons an opportunity for comment on such proposed regulations. After considering such comments, he shall promulgate, within one hundred and eighty days after publication of such proposed regula- tions, such standards (or prohibitions) with such adjustments as he deems appropriate. Such standards (or prohibitions) shall be reviewed and, if appro- priate, revised at least every three years." Section 2. Paragraph (4) is reilumbered as paragraph (3) and amended to read as follows: "Any effluent standard promulgated under this section shall be a nationally uniform standard which assures protection of human health and the aquatic environment with an ample margin of safety." Section 3. Paragraph (5) is renumbered as paragraph (4) and amended by adding the following after the first sentence: "Any standard (or prohibition) promulgated under this section for a toxic pollutant or combination of pollutants shall apply to all categories of sources discharging such pollutant or combination of pollutants." Section 4. Paragraph (6) is renumbered as paragraph (5) and amended to read as follows: "Except as provided in paragraph 6, any standard (or prohibition) established pursuant to this section shall be achieved as soon as possible but in no case longer than three years from the date of promulgation of such standard." Section 5. A new paragraph (6) is added as follows: "(A)' Whenever the owner or operator of any point source subject to an effluent standard (or prohibition) under this section, after a public hearing when requested by any interested party, can demonstrate to the satisfaction of the Administrator that there is no reasonable relationship between the economic and social costs of achieving such standard (or prohibition) and the economic and social benefits (including a margin of safety which takes into account the poten- tial value of benefits which are difficult to evaluate) of achieving such standard (or prohibition), the Administrator may inlpdse a less stringent effluent limita- tion for such point source against endangerment to the health of persons, with an ample margin of safety, and (ii) shall require application of at least the best available technology economically achievable to removal of the toxic pollutant or combination of pollutants covered by such standard (or prohibi- tion). Any effluent limitation imposed under this paragraph shall be achieved 03-192-7d1--------12 PAGENO="0178" 172 as soon as possible but in no case longer than four years from the date of promulgaiton of such standard (or prohibition). Invoking the procedures of this paragraph for purposes of delaying application of such standard (or prohibition) shall constitute a willful violation of this section for purposes of section 309. "(B) In any case in which an effluent limitation has been imposed under subparagraph (A) of this paragraph, to control the discharge of a toxic pollutant or combination of pollutants, the effluent standard promulgated under this sub- section for such toxic pollutant or combination of pollutants shall be achieved by such discharger not later than eight years from the date of promulgation of such standard." Section 6. A new paragraph (8) is added as follows: "Whenever the Administrator [lists any substance on the EPA drinking water list] or receives information that a carcinogenic substance is either used coin- mercially in significant quantities or produced in significant quantities as a result of commercial operations, he shall for each substance: (i) within six months of such listing or receipt of information, determine whether point sources are discharging, or present a substantial prospect of dis- charging, such substance in environmentally significant quantities into navigable waters of the United States, and (ii) within three months of any determination under subparagraph (i) that such substance is or may be discharged in environmentally significant quantities, list such substance as a toxic pollutant under paragraph (1) of this section." Section 7. A new paragraph (9) is added as follows: `Whenever an effluent standard has not been promulgated pursuant to this subsection for any substance, whether or not listed under paragraph 1 of this subsection, and evidence is received by the Administrator that the discharge of such substance is endangering the public health by contaminating either drinking water supplies, food products or fish or shellfish the Administrator shall forth- with propose dnd adopt such permit conditions under section 402 as necessary to assure full protection of the public health, with an ample margin of safety, pending the promulgation and achievement of an effluent standard under this subsection." CHANGE IN SECTION 8-STATE CERTIFICATION (b) The Administrator shall not accept the certification by the State unless, after opportunity for a public hearing, he determines that: (1) (A) the State has laws, regulations, directives and standards establishing requirements at least equivalent to those contained in, or issued pursuant to, this Title, and (B) the State has the capability and legal authority to carry out and enforce such requirements; (2) the State has the capability and adequate legal authority to assure that the proposed treatment works: (A) will be built to minimize all adverse environmental impacts, including secondary impacts, which may occur as a result of constructing the proposed sewage treatment works, (B) will be built utilizing the best practicable waste treatment technology, including reclaiming and recycling of water, and confined disposal of pollutants -so they will not migrate to cause water or other environmental pollution. (C) does not contain excess reserve capacity; (3) the State has adequate fimding and manpower to carry out its responsi- bilities under this section; (4) the State has authority and procedures for participation by the public in processing and approving grant applications, including but not limited to -procedures and authority to insure that (A) the public, and any other State the waters of which may be affected, -receive notice of each application for a grant, and an opportunity is provided -for a public hearing before a ruling on each application, (B) the Administrator receives notice of each application for a grant (in- -clnding a copy thereof), and (C) the public has access to the grant application and all reports and docu- ments related to the grant application; (5) (A) (i) before March 1, 1979, the State has in place, for areas in which a ~local agency has not been designated, a program and schedule for meeting the -planning requirements of Section 208 of this Act, and, PAGENO="0179" 173 (ii) after March 1, 1979, the State has in place, for such. areas, an approved plan under Section 208 of this Act and is carrying out such plan; (B) the State has the capability and adequate legal authority to insure that a grant under this section is not approved, if the treatment works for which such grant is requested is in an area for which a local planning agency has been desig- nated under Section 208, unless (i) before March 1, 1979, such local designated agency has in place a program and schedule for meeting the planning requirements of Section 208 of this Act, and (ii) after March 1, 1979, such local designated agency has in place an approved plan under Section 208 of this Act and is carrying out such plan. (6) the State has adequate legal authority to insure that any person having a significant financial interest in the construction of a treatment works will not be a member on any board or body which submits or processes an application for a grant under this Title; (7) the State has the capability and adequate authority to inspect, monitor, enter, and require reports and audits on `any grant application, plan or con- struction initiated pursuant to this Title and to make any such report `or audit available to the public; (8) the State has the capability and adequate `authority to abate violations of any grant agreement; (9) the State has the capability and adequate authority to insure that `any in- dustrial user of any publicly owned treatment wrorks will comply with sections 204(b), 307, and 308 of this Act; (10) the State has the capability and adequate authority to provide for the preparation by an independent source of an annual report containing an audit of actions taken by the State under this Section and provide for the preparation of any reports the Administrator determines to be necessary to carry out this sec- tion. (c) Whenever the Administrator determines that a State fails to meet, carry. out, or enforce the requirements of this Section, he shall suspend by written notice to the Governor of the State acceptance of certification of `any require- ment, condition, or limitation with respect to any project to which such failure is applicable and, if such failure is applicable to a substantial number of projects in such State, with respect to all projects in such State, `and responsibility for carrying out the requirements of this Title shall revert to the Administrator. A public hearing on the suspension may be held at the request `o.f any affected party. Any affected party may seek judicial review of the Administrator's decision to suspend certification in the Circuit Court of Appeals for the Circuit in which the State is located. * * * (g) Any action taken by a State pursuant to this section shall be deemed to be action by the Administrator. The federal district court fo.r the district in which the proposed treatment works is to be constructed shall have jurisdiction over any civil action or proceeding arising under this Title. * * C Change subsection 213(a), as proposed, by adding after "with respect to" the phrase "grants in an amount not to exceed $2 million for". * * * JUDICIAL navinw Section 509(b) (1) of the Federal Water Pollution Control Act (33 11.5.0. 1369) is amended by striking the word "and" before subsection (F) and inserting after the comma following subsection (F) : `(G) in making any determination as to State certification under section 213." AuswERs TO QUESTIONS ron Mu. DAVID ZwIcK Question 1. What information is available to determine a "harmful quantity" of each substance? Answer. EPA has gathered extensive information on harmful quantities of various substances as a basis for preparing its proposed regulations under Sec- tion 311, which are ready and awaiting long overdue release. I believe that a "harmful quantity" under Section 311 should be interpreted as the least amount of a given substance which could, under any reasonably foreseeable circum- PAGENO="0180" 174 stances, be harmful. For each substance then, a single "harmful quantity" (which in the case of many substances would be any amount) would be designated. The harmful quantity" regulations should be designed to insure that only those spills of such obviously minute amounts that they could not, under any circumstances cause harm will go unreported. It would be preferable, of course, if the reportino and regulatory provisions of Section 311 applied to all discharges of these haz- arclous substances-not just to those in excess of a specified amount-and the determination of any further action necessary made after reporting. Question 2. What determinations would have to be at the site of a dischar~e in order to determine whether a `harmful quantity" had been discharged? Answer. The only determination that should have to be made at the site of the discharge is an estimate of the quantity discharged. Coast Guard personnel involved with investigating spills of pollutants have informed us that this is usually not a difficult determination to make. Question 3. What is your view of the `comment that some industrial chemicals are so potentially hazardous i.e., chlorine, that they should not be transported by water at all? Would not a shift from the water mode to other surface modes risk greater safety and environmental concern? Answer. This comment may be valid with respect to some chemicals. Similarly for some of the most hazardous substances, a determination of which mode of transport is the safest should probably be made taking into account the particu- lar starting point and destination. In any event, which mode of transport is the safest for any given substance depends not just on the overall accident record per distance traveled of the particular mode. Other key considerations would be: the distance to be traveled by alternative modes (barge traffic on meandering rivers typically requires traveling a longer distance between two points than railroad transport, where it is available) ; the uses of the proposed water route (a major fishery or drinking water source would present serious dangers) ; any unusual navigational hazards; the ease of containing damage if an accident does occur (which would depend on the extent to which containment operations are readily available, chemical characteristics of the substance, etc.). It should also be noted that if railroad transportation received federal financial assistance and com- petitive advantages comparable to those given other modes, it could afford track and equipment maintenance and operating methodology that should further improve its safety record. Question. 4. On page 5 of your testimony you make reference to the "deterrent impact of the law's pollution penalties" and suggest that the penalty amount should be increased above $5 million. Has the current penalty limit of $5 million seemed to deter the implementation of Section 311 or the actual rate of spills of hazardous substances? Answer. The current penalty, with a limit of $5 million, has of course prob- ably not deterred the actual rate of spills because regulations implementing it have never been promulgated. In any event, it is not possible to know,. because the reporting requirements of the law have also never been imple- mented. If there is a flaw in the statute however, that has deterred Section 311's implementation, it is not that the penalty limit has been too high. (The $5 million dollar limit would be approached only in cases of spills of the largest imaginable volume of the most dangerous substances and would not even be a possibility for normal-volume cargoes of all but the most hazardous mate- rials.) The problem is rather that the law as initially passed set no deadline by which the penalty scheme had to be put in effect, leaving EPA free to respond to pressures for postponement. Question 5. Do you know of any other Federal law where a sanction of $5 million can be imposed for simple negligence Answer. Many laws provide for higher liability in one form or another. The Deepwater Port Act, for example, imposes up to $20 million "strict liability"- not requiring a showing of negligence-for oil cleanup and damage costs for vessels and up to $50 million for ports. (President Ford's proposed conipre- hensive oil spill liability bill sets a limit of $50 million for both onshore and offshore facilities.) While the maximum $5 million sanction applicable to hazard- ous substances under Section 311 is a civil penalty, rather than liability for cleanup costs, it is intended to take the place of cleanup costs for substances that are non-removable (and, in most cases, damages too-damages in these PAGENO="0181" 175 cases will often be impossible to assess). The Federal Water Pollution Control Act Amendments of 1972 allow up to $14. million in cleanup liabill~y for those spills of hazardous substances for which removal action can be taken. Unless there are comparable sanctions for spilling non-removable hazardous substances, the shipment of non-removable substances will have been given a competitive advantage over those that are removable. The pollution control law should not encourage use and shipment of non-removable substances over substances which can be contained if spilled. From this perspective, the $5 million penalty limit is if anything, too low. Question 6. What does the information available to you indicate about the size, frequency, and seriousness of spills on waterborne transportation? What is your informational base? 1-low is this information reflected in the insurance rate structure for the Section 311 penalties? Answer. There is very little reliable information available about the size, frequency, and seriousness of spills on waterborne transportation. EPA has informed us that it had about 600 non-oil spills (not all of them potentially hazardous substances) reported voluntarily between March 1972 and February 1974. These spills showed a predictable correlation between the amount of a substance carried and the amount spilled. Similarly, those substances most frequently spilled were those substances most commonly carried. But persons with experience in dealing with spills of hazardous substances, in EPA and elsewhere, believe this number represents but a tiny fraction of the spills that are occurring. The paucity of information on this question illustrates the urgent need for implementation of the reporting requirements of Section 311. Information about size, frequency and seriousness of spills is apparently not reflected in insurance rate structures. For vessels regularly carrying "hazardous substances", the quoted premium is 80 cents per gross registered ton. (Attached are rate schedules and an accompanying August 17, 1973 memorandum from the Water Quality Insurance Syndicate outlining procedures and rates.) Thus the rates are not affected by the characteristics of the substance carried. Instead, the rates treat the most and least hazardous substances alike. An advantage of a penalty schedule for various substances, such as that currently in Section 311 but not yet implemented or such as the one proposed in my testimony as a change to HR. 9560, is that it would cause rate structures to reflect the dangers of the substances carried. Whether insurance premiums will be raised for violators when section 311 is implemented, and to what extent if they are, is unknown. But if experience with the marine insurance industry's administration of oil spill liability insurance is a valid indicator, premiums may not be significantly affected by accident records. Question 7. Please expand on your comment regarding setting Section 311 penalties at some multiple of the number of violations in a given period of time. Answer. The marine insurance industry has not in the past raised premiums for carriers with poor spill-prevention records. This means that as long as penalty limits are set at a level at which the penalties are completely insureable, the penalty scheme loses its deterrent value. Rather than depend on the un- certain practice of the insurance industry, Congress can insure that premiums will be raised for a carrier that has a poor record by establishing a penalty limit of a fixed amount plus a multiple (e.g.. three times) of the amount of any penalties assessed against that carrier during a given time period (e.g., the previous five years). Whatever the practice of insurers otherwise, they can be expected to establish substantially higher premiums for carriers requir- ing substantially higher coverage. By basing the amount by which the penalty limit would be increased on a multiple of the amount previous penalties (and not just the number of previous penalties), such a scheme would operate as a greater deterrent against the more serious spills. The scheme could also provide that the period during which higher penalties limits would be applicable could be reduced (to, say, one or two years after a violation) if the violator imple- mented an EPA-approved prevention plan to insure against future violations. Such a feature would further increase the preventive impact of the regulatory scheme. Question 8. On page 6 of your testimony you suggest that the penalty he based on characteristics of the substance or damage "whichever is larger." PAGENO="0182" 176 What would be the advantage of your proposal as compared to the language in H.R. 9560 that provides that the penalty be based on damage resulting from the characteristics of the substance or the damage to public health and welfare or both? Answer. It is important to specify that the basis for the penalty which would result in the larger penalty is the one that should be used. If the statute does not explicitly require this, the EPA Administrator would be free to select the measure of penalty which would result in the lower penalty. Thus, in a case where damages are difficult to estimate, a very small penalty or no penalty could be assessed, even in a case where the substance discharged is known to 1)0 highly dangerous. The phrase "or both such factors" in HR. 9560 does not guard against the possibility that the measure which would result in the lower penalty would be chosen. The law should provide that the penalty will be based on characteristics of the substance or an estimate of damage or upon both such factors, whichever basis results in the larger penalty. Also, the importance of explicitly basing any penalty relating to damages on a reasonable estimate of damages should be noted. Precise measures of actual damages are almost always impossible to make. Unless HR. 9560 is changed to allow an estimate the EPA Administrator could be forced to bear an impossible burden of proof. Question 9. Please expand on your comments regarding EPA's taking into consideration the size of violators in setting the penalty. Answer. The penalty should be larger, all other circumstances being equal~ for a violator whose ability to pay is larger. Otherwise the penalties will fail to deter the polluting activities of large violators and give them a competitive advantage over smaller operators. Question 10. On page 6 of your testimony, you recommend that the character- istics of the substance discharged be specifically enumerated, as they are in the current statute. What is the difference between the position EPA would be in then and the position it is in now as far as not being able to implement the penalty regulations dealing with hazardous substances? Answer. The position EPA would be in if some of the characteristics to be considered were enumerated would not, I believe, be significantly different (from the perspective of enforceability) from the position EPA would be in under HR. 9560 as it is currently drafted. It is important, of course, that any statutory construction be avoided that would appear to require some mechanical review of just a few selected characteristics. EPA should be able to make its determination of penalty based on the overall circumstances of the violation. Question 11. On page 6 of your testimony, you recommend that the penalty be based on the amount spilled and a specified unit penalty charge as in the current law-. What are the problems in implementing this sort of schedule? How would you answer these problems? Answer. My recommendation was that there be minimum penalties based on a schedule of penalty charges established per volume unit of various substances. To establish the minimum penalty the unit charge would be multiplied by the quantity discharged. Such a scheme would have several advantages. It would provide a basis for insurers to set higher rates for more dangerous cargoes and make penalties more predictable, rational and equitable. One possible disad- vantage-that promulgation of the schedule could cause delays in implementation of regulations under Section 311-could be avoided by specifying that other penalty provisions apply prior to the schedules promulgated and by establishing a statutory deadline by which such~ schedule must be published. Much of the work that should go into making up such a schedule has already been done by EPA in preparing the unit-charge schedule that is now required under Section 311. A minimum penalty schedule could also have some deterrent effect on report- ing of spills. But the possibility of a penalty being assessed almost certainly deters reporting even in the absence of established minimum penalties, as does the possibility of incurring large cleanup costs. The key to getting prompt report- ing of spills is not eliminating penalties but establishing more stringent reporting requirements and better enforcement. Question 12. Are you aware of any instances where a discharger disagreed w-ith the Federal on-scene coordinator as to the appropriate means of handling a discharge of a hazardous substanée? How was the disagreement resolved? PAGENO="0183" 177 Answer. I am not aware of any instances. There have been instances of clis- agreement, however, betwreen oil dischargers and the federal on-scene coordina- tor which are typically resolved later in court, when the discharger challenges cleanup costs as too high. EPA'S REQUEST FOR AMENDMENT TO SECTION 509 Question 1. On October 6, the EPA sent to the Speaker a recommended amend- ment to Section 509 of P.L. 92-500 which would reverse the recent court deci- sion (CPU International, Inc. et al. and Train et al.) A copy of this proposal is attached. Please comment. Answer. I support the intent of the amendment and believe it simply clarifies the law, which if correctly interpreted would be consistent with EPA's position in CPU International, Inc. et al. and Train et al. Given that confusion has arisen, * a clarifying change such as the one proposed by EPA would be helpful. We hope, of course, that submission of this proposed amendment does not represent a deci- sion by EPA to discontinue pursuing judicially the position it has taken. That position could be borne out in similar cases in other federal circuits and ulti- mately prevail. AFTERNOON SESSION [Whereupon at 2 p.m., the subcommittee reconvened, Hon. Ray Roberts (chairman of the subcommittee) presiding.] Mr. ROBERTS. The Subcommittee on Water Resources will please come to order. It is my pleasure to welcome, at this time, our colleague from the State of Illinois, Mr. Derwinski, Please proceed. TESTIMONY OP HON. EDWARD J. DERWINSKI, A REPRESENTA- TIVE IN CONGRESS PROM THE STATE OP ILLINOIS Mr. DERWINSKI. Thank you. Mr. Chairman, as a cosponsor of H.R. 8493, which would amend the Water Pollution Control Act to allow the use of ad valorem taxes as a "user charge" provided that such tax results in an equal distribu- tion of sewage costs among the various user classes, I am pleased to join other members in expressing my views as to why this legislation should be approved by the committee. The Environmental Protection Agency, in its interpretation of the' \T\Tater Pollution Control Act of 1972, has ruled that ad valorem taxes do not constitute a proportionate means of sharing the costs of waste water treatment, and are insisting that a "user tax" be implemented before applications for Government funds are even reviewed. The imposition of such requirement will effect a severe negative economic impact without benefit to water quality in the Chicago area. It would also have an extremely adverse effect on the citizens in the Ciii- cago area served by the Chicago Metropolitan Sanitary District. The Greater Chicago Area provides an example of the seriouS problems which would result from the abandonment of their existing ad-valorem tax system in favor of a system that complies with the act. Officials of the Chicago Metropolitan Sanitary District have estimated that instituting a user charge system will add costs which would far outweigh the benefits of such a system. For example, they estimate that between $70 and $100 million will be needed for meters and another $5 million for annual meter reading costs. The additional costs of these two items alone is not only supei- fluous to the clean water objectives of the act, but would impose an unwelcome additiotial expense on the taxpayer as well. PAGENO="0184" 178 Most local governments have already worked out, and have estab- hshed a wholly logical method of paying' the costs of sewage service, which is that of an acT valorem tax based on property values and indus- tual surcharge based upon volume and concentration of waste water contributions by 1lldlustries. This method accomplishes an equitable distrlbutlon of cost between industry and domestic classes of users for the maintenance and operation of sewer treatment facilities. At this time of inflation and expanding municipal budgets, it would be unconscionable to add a needless cost to the burden of the taxpayers. The EPA sewage reguhations would require the needless expenditure of large amounts of money to establish a system which would not be an improvement over the faii' and workable program we already have in the Greater Chicago Area. Now, Mr. Chairman and members of this subcommittee, I would like to introduce to you Mr. Nicholas J. Melas, president of the Metro- politan Sanitary District, of Greater Chicago. And as a completely bipartisan fashion, we strongly endorse the proposal to allow the use of ad valorem taxes as a user charge. And that will be the thrust of that testimony, and I commend Mr. Melas and his associates, to you, and emphasize our Cook County support ~or his position. Thank you, Mr. Chairman. Mr. ROBERTS. Thank you, Mr. Derwinski. Welcome, Mr. Melas, to the subcommittee. The full text of your prepared statement will appear in the record at this point. [Statement referred to follows:] STATEMENT OF NIcHoLAs J. MELAS, PRESIDENT OF THE METROPOLITAN SANITARY DISTRICT OF GREATER CHICAGO The Metropolitan Sanitary District of Great Chicago has consistently sup- iorted the goals of Public Law 92-500. Any statute as comprehensive and ambitious may, during implementation, be criticized if the objectives are not definitely accomplished according to the established schedule. This criticism may take the form of an attack on the objectives. Such criticism would, we feel, be entirely unfair. We believe the objectives are basically achievable and that progress has been made and will be maintained. We recognize the inherent delays which must be acknowledged by all concerned and support the proposals for modifying schedules which apparently cannot be met in all cases. I would like, however, to voice criticism-constructively-on one aspect of the Law which we feel is neither essential to, nor properly a part of, achieving the stated objectives. That aspect is the requirement for the User Charges con- tained in Section 204(b). My commentary is predicated upon opinions expressed by the Comptroller General which rejected the statutory interpretation made by the USEPA. That interpretation accepted the use of ad valorem taxes, with appro- priate industrial surcharges, as an acceptable system of charges under Section `204(b). As elected officials, we have a responsibility to our constituents to properly and efficiently utilize public funds in the discharge of our duties. These expendi- tures must be solely for the accomplishment of the purposes of the agency we are elected to administer. It is paradoxical that the District is dedicated to the same objectives as those set forth in Public Law 92-500 and that Congress has the same responsibility for managing public monies as we have. The paradox is that the implementation of Public Law 92-500 with respect to User Charges requires a non-productive use of local funds, and that this expenditure will have no impact whatsoever on the efforts to clean up our waters. The District has been in existence since 1889. Thus, for 86 years, our revenue system-ad valorem taxes-has funded the development of the largest and most efficient treatment system in the world. The District has-in today's dollars- physical installations valued in excess of $4 billion. Every day, 1.4 billion gallons PAGENO="0185" 179 of sewage receives at least secondary treatment. This quantity represents the wastes of 5.5 million people and over 11,000 industries. In 1067, the District embarked upon a $3.5 billion capital program-fully realizing the commitment of local financial resources necessary to achieve the objectives of the program- the same objectives as Public Law 92-500! The District has demonstrated to the USEPA financial integrity; the dedica- tion of its revenues to eliminate water pollution; and its relatively equitable method of obtaining funds from the users of the system. As stated before, there has been an adverse decision from the Comptroller General disallowing this form of revenue production. This opinion, if maintained, will require the establishment of a billing system with periodic (quarterly) bills to over 1.3 million users. The cost of establishing such a system has been esti- mated to be in excess of $1 million. The annual billing costs are estimated to be $6 million. These costs represent an approximate 7% increase in our annual budget but will not improve the quality of our waters one iota! The current system of ad valorem taxes will have to be maintained to pro- vide for capital improvements and to fund other functions of the District. Thus, for a large sum of money, we will establish and maintain two systems to accom- plish what the single system now achieves. Locally elected officials, such as the Board of Trustees of the Metropolitail Sanitary District, will bear the brunt of the public uproar over this inefficient and unproductive use of their monies. No more arguments can be made to justify an untenable position other than to say "Blame it on Congress We therefore urgently request your correction of this unnecessary counter- productive use of local and federal funds by, preferably, elimination of the User Charge requirements or providing for acceptance of existing revenue sys- tems which have produced funds in a demonstrably effective and efficient man- ner. Specifically, our system of ad valorem taxes with appropriate surcharges should be an acceptable revenue system under the provisions of the Law. We support the USEPA in their .position that legislative correction of the problems associated with the User Charge provisions is essential. CONCLUSION This concludes my statement. I would like to express my appreciation to the Subcommittee on behalf of the Board of Trustees of the Sanitary District for your attention and for providing me with the opportunity to express our views. Thank you. TESTIMONY OF NICHOLAS J. MELAS, PRESIDENT, METROPOLITAN SANITARY DISTRICT OF GREATER CHICAGO Mr. MELAS. Exactly. Mr. Chairman. members of the committee, I am Nicholas Melas and president of the Board of Trustees of the Metropolitan Sanitary Dis- trict of Greater Chicago. I wish to emphasize this is a metropolitan unit. We cover not only the city of Chicago but 122 other municipalities and the unincorpo- rated areas of Cook County as well. As you have requested, copies of my statement are before the commit- tee and I would just ask that they be made a part of the record. And at this point I would only wish to comment on one of the points that we touched on in the written testimony, and that is the question of the bill which addresses itself to the problem of the user charges. Generally speaking, those of us at the Metropolitan Sanitary District of Greater Chicago are in accord with the provisions of H.R.' 9560' that have been presented here, specifically the problem that we face and it is a similar problem to many of the other large metropolitan areas, the interpretation of the present statute as far as the imposition of user charges as such. PAGENO="0186" 180 We are, of course. in complete agreement with the goals and objec- tives of Public Law 92-500 as was passed by the Congress. We fully support the implementation of all aspects of the bill but we feel that placing tremendous amounts of money in an unproductive manner through the imposition of user charges areas such as ours would be to the detriment of the goals of Public Law 92-500. We have computed that in an area like ours to institute such a system of user charges, we would be spending something like $6 million a year ]ust to set up a bureaucracy to repeat and send out these bills and collect them. We feel that history has shown that the sanitary district which has been in existence since 1889 has operated in a responsible manner through the system of ad valorem real estate taxes and has, in fact, built up a lant operated and maintained with an investment in today's dollars of about $4 billion. The system we have we feel meets the requirements of the law as far as equitability among classes of users. I think this is the key to the whole thing because, in addition to the real estate, the ad valorem real estate taxes, we have incorporated an industrial waste surcharge which is based on the volume and on the strength of all the industrial discharges in each of these entities. And they pay according to the delays they are placing upon our system. We have had complete cooperation by our legislature. As a matter of fact, just in the last session, they perfected the legis- lation which enabled us to charge the industrial waste the surcharge by allowing us to eliminate a provision which we had of exempting the first 10~000 gallons daily use which would have created some inequity among the classes of users. As the legislature has passed the legislation, now we feel that this system does conform with the intent of Congress and it does provide for an approximate proportionality of the total waste of water. As your language on page 4 of the printed bill indicates, we would ask that one word be included in line 15 where we would add the word "approximate" just before the word "proportion." So it would read "to each user class in approximate proportion to the total contribution of the waste waters," et cetera. Just to make. that point perfectly clear because it is really physically impossible without exact. precise measurement to get that down where that. is an absolute eciualitv. We feel that the taxation plus the surcharge would accomplish the objectives and. that we have demonstrated historically throne-h the years our willingness and our ability to operate and maintain the system as it is today. With those remarks, I would conclude. If there are any questions, I will be hanpv to a ddress myself to them. Mr. ROBERTS. lVha.t present effect is the user charge requirement having on Chicago's waste treatment program? Mr. MELAS. At this point it is having a. serious effect because we have passed an intent to go into this. to conform with the law, and we have actually engaged the firm of Arthur Young to make a study as to what it rnould require to implement it. Because such a program has not been actually implemented, we are now having 20 percent of our grant money w~t.hheld, held in abeyance. PAGENO="0187" 181 This means that we have to utilize some of our bond moneys and make up that 20 percent loss which gives us a lessened amount of local resources that we could use to qualify for additional Federal grants so that the effect of this holding of the 20 percent which EPA has just put into effect recently is having a slowdown effect on our construction program in 1976. Mr. ROBERTS. The language on page 4 of the bill, as written, wi~th some modification, would take care of your situation. Mr. MELAS. We think it is OK the way it is with the addition of the word "approximate." We think it is fine. Mr. ROBERTS. We might have problems with that word. The gentleman from California, Mr. Clausen. Mr. CLAIJSEN. Following that, is it possible to accomplish your objec- tive by placing it in legislative history or do you feel that with the word "approximate" included that it should be actually in the law? Mr. MELAS. No. We feel that probably it would be all right in the legislative history. I think that would be another way of accomplishing the same obi ective. Mr. CLAUSEN. So with that we can accept from you testimony that the city of Chicago would support H.R. 9560? Mr. MELAS. Yes. Mr. CLAUSEN. With that understanding. Mr. MELAS. Yes. Mr. CLATJSEN. In light of the legislation history to handle the word "approximate~" Mr. MELAS. An additional point that I would like to make is if all of this should fail and we would still be required to impose a user charge, it still would not do away with the ad valorem tax and there are other functions and things we do at the district for which we would still have to continue to impose the tax. And it would be just another burdensome imposition upon the taxpayers of our area and, of course, many other areas throughout the country. Mr. ROBERTS. The gentlein an from Louisiana, Mr. Breaux. Mr. BREAUX. No questions. I thank the gentleman for his statement. Mr. ROBERTS. Mr. Mel.as, thank you for a very succinct statement. Mr. MELAS. I should say, Mr. Chairman, before I leave, that I should have introduced the vice president of the board, Mr. Jack Kean. Mr. ROBERTS. Our next witness is Mr. Bart Lynam, president, Asso- ciation of Metropolitan Sewerage Agencies, and general Superintend- ent of the Greater Chicago Metropolitan Sanitary District, accorn- panieci by Mr. Lee C. White counsel. The full text of your prepared statement will appear in the record at this omt. [State~nent referred to follows:] STATEMENT OF TIlE ASSOCIATION OF METROPOLITAN SEWERAGE AGENCIES Mr. Chairman. I am Bart Lynam and I am appearing today on behalf of the Association of Metropolitan Sewerage Agencies, of which I am President; I am also the General Superintendent of the Metropolitan Sanitary District of Greater Chicago. Our organization, known as AMSA, represents 52 large metropolitan sewerage agencies across the country serving an estimated 55 million people. Appeaiing with me today is Charles B. Kaiser, Jr., Chairman of AMSA's Legis- PAGENO="0188" 182 lative Committee and General Counsel of the Metropolitan St. Louis Sewer District. Also with me is Lee C. White, AMSA's counsel. - INTRODUCTION Mr. Chairman, in 1972, over the veto of former President Nixon, Congress passed major water pollution control legislation. That hill-now Public Law 92-500-was an ambitious statement of national goals. It represented the hope that a concerted national effort backed by a significant Federal financial com- mitment could reverse the process of environmental degradation, and, ill a relatively short period of time, renew the quality of our lakes, rivers and streams. AMSA participated actively in the legislative debates which led to the enactment of PL 92-500 and supported the broad goals of the legislation, although we cau- tioned against certain provisions of the Act. Now, three years later, the reality of achievement has fallen short of the expectations embodied in the 1972 leg- islation, despite enormous efforts on the part of the municipalities, industry, the public and concerned Federal and state agencies. The reasons for these shortcomings are several. First, the Federal financial commitment actually forth- coming has been only a small fraction of that promised at the outset. The legis- lation authorized $18 billion for the construction grant program in the three years leading up to June 30 of 1975. Of this, $9 billion was withheld by Executive action, and it has taken a Supreme Court decision to make these monies available. Second, the magnitude of the effort-in dollars, in planning time, in manage- ment time-has exceeded anyone's wildest estimation. Third, the system has been plagued by lengthy delays at all levels of bureauc- racy. The delay in promulgation of implementing regulations and the constant revision of these regulations and related guidelines and forms have slowed the rate of progress in building badly needed treatment facilities. EPA's "step approval" process for construction grants has, in fact, turned out to be a "stop approval" process. For all these reasons, AMSA~s membership has concluded that the promises of the 1972 legislation cannot and will not be met on the basis and schedule contemplated by the Act. Even with the concerted effort of all concerned and a substantial increase in the level of national funding devoted to this effort, the promises of the 1972 Act by the dates prescribed are not realistic. AMSA has therefore concluded that the Act must be amended in several important respects in order to recognize the limits of realistic achievement. This conclusion as well as the recommendations I wish to make here today have been derived from long and careful consultation with municipal sewerage agencies across the country. As such, these recommendations are based on the working experience of the largest agencies responsible for municipal waste treatment. I would like also to emphasize that we have identified a range of problems with the lttw and its administration much larger than the relatively limited number of issues I will raise this morning. I am purposefully limiting my remarks to those issues which our member agencies believe of critical importance and which we feel must be addressed this year. AMENDMENTS CONTAINED IN HR. 9550 Although our entire organization has not yet had the opportunity to examine HR. 9560 (introduced by Congressmen Jones, Harsha, Roberts, and Clausen), it is evident that a number of the points that are of concern to AMSA have been dealt with in the bill. Quite clearly, the provisions reach only those aspects that are of such a nature that it is necessary that they be acted upon this year, rather than await the report of the National Commission of Water Quality. From our vantage point, most of the provisions in H.R. 9560 meet some of the more pressing needs that we have, as a group, identified. Certainly the bill addresses a larger range of essential issues than is true of the amendments pro- posed by Administrator Train in his communication to the Congress of Jan- uary 30, 1975. We will try to limit ourselves to those issues that are of concern that are included in H.R. 9560 and a few additional items that, on the basis of our experi- ence, we believe warrant consideration now. We recognize the wisdom of post- poning any basic restructuring of the water pollution control program until the Commission on Water Quality has concluded its work and made public its formal findings. We have had the opportunity to work with the Commission and have PAGENO="0189" 183 made suggestions to the staff, and we are hopeful that our experiences, both good and bad, will be useful to the Commission in formulating its basic recommendations. Section 4 of H.R. 9560 deals with a problem of highest priority concern to our organization: namely, the "user charge" requirements of Section 204(b), as they have been rigidly interpreted by the Comptroller General. From the time that PL 02-500 was being initially considered by the Congress, and though the past three years, AMSA. has attempted to make the point that the basic objec- tives of the Act can be accomplished without requiring every system to scrap its ad valorem approach, so long as there is a proper method, such as a surcharge, which will ensure that industrial users pay total charges approximately pro- portionate to the burdens imposed by them on the municipal systems. In our judgment, the language of Section 4 of HR. 0560 could be misinterpreted to require exact proportionality, and we would urge that either the statute or the Committee's report make it clear that approximate proportionality satisfies the intent of the law. We believe that to be the current intent of Section 4 and, if so, we support it completely. Another crucial problem is handled by Section 9 of H.R. 9560, which would amend PL 02-500 by granting the Administrator authority to modify the dead- line for achieving secondary treatment requirements of Subsection (b) (1) (B) and (C) for publicly owned treatment works. It is absolutely clear that there will be many systems that will not be able to meet the deadlines in light of the impoundment of funds and the sluggishness of the program referred to earlier in this statement. Moreover, the discretion that Section 0 would vest in the Administrator in connection with discharges into ocean waters is a modification that reflects arguments that have been made by AMSA continuously. In short, this provision has the support of AMSA~and, indeed, is one of those that is near the top of the priority list. AMSA RECOMMENDATIONS Mr. Chairman, I would now like to turn my attention to several specific prob- lems we have with PL 92-500 which are not addressed in the Administration?s proposals. Indvstrial cost recorv cry-section 204 (b) PL 92-500 currently requires waste treatment systems to recover from indus- trial users that portion of the Federal share of construction costs which is allo- cable to the treatment of industrial wastes. While this provision may be attrac- tive in theory, AMSA believes that it should be deleted for several reasons. First, industrial cost recovery may drive certain industries out of municipal systems, jeopardizing the very economies of scale that the Act intended to encourage, and increasing the cost and difficulty of monitoring municipal areas. Second, it may encourage new industry to locate in communities where treatment works were built without assistance under the Act. Finally, and most importantly, this pro- vision is an accountant's nightmare-there are tremendous difficulties in identi- fying the quantity and quality of industrial flows at any given point in time, aggravated by the need to adjust the cost recovery system over time to allow for variances in quantity and quality of flows, as well as for additions to and dele- tions from the class of industrial users. Recommendation: This form of "exact dollar" recovery is simply not achievable and should be repealed. But if it is not to be repealed, or if this topic is deemed to be one which should await the National Commission report, at the least, PL 92-500 should be amended to permit municipal agencies to retain all of the funds to enable them to meet administrative costs of managing the program. Allotment of Federal construction grant funds-section 205(a) PL 92-500 now requires the Administrator to allot authorized funds to the states on the basis of the needs survey recently conducted pursuant to Section 516(b) of the Act. Not only is the "bottom line" total of the needs survey a stag- gering figure-various estimated at 200, 250, 300, or 350 billion dollars-hut there is considerable controversy over the accuracy with which estimates have been made. To allocate billions of Federal `dollars on the basis of that needs survey would be to reward those states whose estimating techniques biased upward the fi~ures and to further penalize those municipalities who went forward at an early date to achieve waste treatment goals. It would also allow some states to continue allocating funds irrespective of the population concentration w-ithin the state. PAGENO="0190" 184 AMSA believes that Federal funds in this program should flow to where the people are, and would generally prefer allotment on the basis of population. We realize, however, that straight population would fail to recognize the peculiar needs of some less populated states and regions. Recommendation: Therefore, we think an appropriate compromise would be to allot Federal funds to the states 50% on the basis of straight population and 50% on need. To deal with inequitable allocation within states, the law should be amended to require the states to establish priorities and to pass monies through to municipalities on the same 50/50 basis. Criminal penalties under section 309 (e) (1) Section 309(c) (1) provides for criminal penalties, including fines between $2500 and $25,000 per day of violation and imprisonment for up to one year for any person who "willfully or negligently violates Section 301, 302, 306, 307, or 308" or any condition or limitation of a permit issued under Section 402. AMSA does not dispute the need for strong enforcement of PL 92-500. However, the operation of sewage treatment systems is an extremely complex task. Accidents and mistakes will inevitably occur despite the best efforts of management to 1)revent them. Municipal systems cannot completely control that which enters into their system nor are they free to discontinue operations if continued opera- tion risks violation of one of the myriad provisions anti conditions in the statu- tory. regulatory anti permit language. Recommendation: For these reasons, AMSA believes that criminal sanctions ShOUld be imposed on municipal systems and officers only in cases of willful violation. Delegation of administrative responsibilities to the ~S~tates It has been suggested by some that the administration of the Act could be improved if EPA were given discretion to delegate certain of the responsibilities it now exercises to state agencies instead. This proposal was introduced as sep- arate legislation by Congressman Cleveland last year, and has been reintr~duced this year. This concept has also been incorporated in HR. 9560. To be frank, there is a considerable difference of opinion among some of our members regard- ing this proposal. As an organization, we believe decentralized adhilnistration has merit, at least in principle. Many individual members do feel, however, that the state agencies with which they have worked very closely over the years do not have the capacity to take on significantly expanded responsibilities, and that in fact, rather than speeding up the administration of the program, transfer at this time might be another source of delay. If something like the Cleveland Bill is to be adopted, we recommend that the EPA Administrator be required to satisfy himself that the states to receive such delegated authority have dem- onstrated a satisfactory past track record or provide assurance that necessary changes will be instituted, including obtaining competent personnel to ensure that the state role will be satisfactory. Furthermore, we recommend that at least large urban areas be given the option to deal directly with EPA on construction grant application matters. The enormity and complexity of treatment systems for major urban areas requires considerable flexibility in the administration of the law. If administra- tive responsibilities are delegated to the states without the corresponding di~- cretion to interpret and apply EPA rules and regulations flexibly, the inevitable consequence will be the "kicking up" of tough policy decisions from the state to the Federal level. The attendant delays will frustrate the very purpose of state delegation. As for the financing of state administation, we object to the provision in HR. 9560 which would require a state to use 2% of its own construction allotment for this purpose. This would have the inequitable result of maintaining at 100% the allotment of construction funds to those states not undertaking administra- tion, while reducing to 98% the construction allotment for those states willing to assume these additional responsibilities. We would propose instead that a set-aside for this purpose be taken from the aggregate EPA budget-not the construction allotments-for allocation to those states assuming the adminis- trative burden. Equipment specifications-"Two Brand 2cames or Equal"-section 204 (a) (6) Another problem municipal systems have encountered is the statutory require-- ment that "two brand names or trade names of comparable quality or utility" be listed in the specification for bids in connection with waste treatment con- PAGENO="0191" 185 struction projects. Our members have experienced tremendous difficulty in trying to identify for different components in a waste treatment system two brand names that are really "of comparable quality or utility". This time consuming requirement is made all the more difficult by the marketing practices of manu- facturers which are designed to show not comparability but rather produce differentiation. The important part of this requirement is not the two brand names portion, but instead the phrase "or equal". That is the requirement which really protects against bid specifications that are exclusionary and discrimina- tory in nature. Recommendation: Because of the difficulty in identifying two comparable brands, AMSA proposes that Section 204(a) (6) be amended to require one brand name or equal, rather than two. Conclusion Mr. Chairman, the observations I have made here today on behalf of the mem- bers of AMSA are recommended as the minimal corrections necessary to make Public Law 92-500 workable at this stage of its implementation. They do not reflect the sincere desire of many AMSA members for a much more basic restruc- turing of the Federal government's approach to water pollution control. It is our assumption that a more thorough evaluation of the Act will `take place upon co~npletion of the Congressionally mandated report of the National Commission on Water Quality. In the meantime, there has been some discussion of more fundamental redirections in the program which may now be under consideration at the Federal level. I think particularly of suggestions to reduce the Federal share of the construction grant program, to further limit the types of ex- penditures for which Federal funds will be available and of some movement away from effluent controls back towards water quality standards. On our own initiative, as well as in response to the suggestions of others, AMSA has given considerable `thought to some of these more fundamental changes and we would be happy to discuss them with you if this is the appropriate forum in which to do so. I cannot leave without expressing our opinion that the construction grants program is accelerating. Much progress has been achieved in the past six months. Many of the initial impediments have been removed: Communities are accepting their responsibilities and state and Federal agencies have improved their pro- cedures to the point where increased efficiencies have been reflected in an in- creasing rate of project approvals. We are grateful to those both in the Congress and in EPA who have helped make this progress possible. Mr. Chairman, I appreciate the opportunity to appear before this Committee, and my associates and I would be happy to answer any questions you and other members of the Committee may have. Thank you. TESTIMONY OP MR. BART LYNAM, PRESIDENT AND GENERAL SUPERINTENDENT OP GREATER CHICAGO METROPOLITAN SANI- TARY DISTRICT; ACCOMPANIED BY MR. LEE C. WHITE, COUNSEL Mr. LYNAM. I am Bart Lynam and I am appearing today on behalf of the Association of Metropolitan Sewerage Agencies, of which I am president. I am also the general superintendent of the Metropolitan Sanitary District of Greater Chicago. Our organization, known as AMSA, represents 52 large metro- politan sewerage agencies across the country serving an estimated 55 million people. Appearing with me today is Lee C. White, AMSA counsel. Mr. Kaiser who is a member of AMSA and on our board, had to go to St. Louis and will not appear with us today. Mr. Chairman, we have presented a copy of our testimony and we would like to brief that, if we may. Mr. ROBERTS. You may proceed. PAGENO="0192" 186 Mr. LYNAM. Although our entire organization has not reviewed H.R.. ~60. we have limited our discussion to a few of the points we feel are very important. Section 4 of the bill deals with the problem of very high priority in AMSA's view, and that is the user charge requirement which has been discussed fully by other persoiis testifying. To put it as briefly as pos- sible, we concur with the provisions of H.R. 9560 with the appropriate changes in language which we have suggested in our statement. Another problem area that is being handled, we think very satis- factorily, is section XIX of the bill, which relates to the secondary treatment and we also support the position that the bill offers. There are other matters that are not presented in the bill, and one 0± these is the industrial cost recovery section of Public Law 95-200. And it has been discussed by many of the members of AMSA and although there is a difference of opinion, it is generally concluded that this sec- tion of the law should be deleted for the reason that it causes a horren- dous problem of bookkeeping and other such matters. I realize, Mr. Chairman, it is not before you at the present time and that we only point this out because AMSA does feel that particular provision of the law does provide some difficulty. Turning back to H.Ji. 9560 in regard to the delegation of th~ ad- ministrative responsibilities to the States. Here again, we do not have unanimity among our members. However, the general conclusion and the position of AMSA is that it supports the concept of delegation of some of the broad responsi- bilities of EPA to local and State governments. However, we also have the feeling that there are some very large metropolitan areas that in some States represent 50 percent of the State and there should be some consideration given to the possibility of the Federal Government dealing directly with these large metro- politan areas. I think there is some feeling on the part of the larger metropolitan sewerage agencies that dealing with the State government may not be adequate. However, we recognize the duplication of effort in dealing with the States and the Federal Government and from the point of view of efficiency of management, we would concur with the proposal in H.R. 9560. One objection we do have is the proposal to require a State to use 2 percent of its construction allotment for this purpose. We feel that this budgetmg for administrative duties reduces the construction money that would otherwise be going to the State. In conclusion, we would like to point out to the committee that this bill or the law, rather, has been in existence for 3 years. Last year, we testified before this committee that in the last year there has been a. very dramatic improvement in the relationships that the various municipal agencies have with the Environmental Pro- tection Agency. We are starting to move. Mr. Chairman, we are starting to get the mountain of redtape and paperwork behind us, and we seem to be coming out of the woods in a number of these areas. We would like the committee to be aware of this progress, at least as we see it as representatives of AMSA. PAGENO="0193" 187 Mr. WHITE. If I may, Mr. Chairman, I would like to add a point or two that I think you probably heard about this morning and *ought to be focusing on. The major metropolitan areas, of course, have the large expensive, longtime construction projects and involve hundreds of millions of dollars. We are hopeful that the Congress and the administration will focus on the need to keep the level of funding fairly constant. I do not know whether it is going to be $5, $6, or $7 billion. Whatever it is, if we start up and down the scale again not only is there a time loss as people in industries and consulting firms get disengaged and then back into this business, there is also a cost in money. To the extent it is possible to have an orderly program, and I know it is going to be tough, there will be tough years, and this one is no exception-everyone will benefit. If there is some way when next October18 comes, when this pro- gram is scheduled to die, that we do not have to worry about whether or not there is going to be adequate funding. And I have a hunch that the people in this country will be much better served. What that num- ber is we are not prepared to argue. Mr. ROBERTS. I will be happy to tell you what the number will be. It ~wifl be roughly $9 billion. So you undershot it all the way. Mr. Wmi~. $9 billion a year? Mr. ROBERTS. $9 billion next year. That will be my recommendation. Mr. WHITE. Well, I was thinking more about having to come up Tfrom down, but it is a very interesting thing. Cost recovery is not one of the items that has risen to the level that the committee regards it as so crucial as to have to do something about it this year before the Na- tional Commission makes its report. AMSA which has some sectional meetings around the country found that a handful of agencies said it was the most important burden that they had to face. We hope though this year, and we do not really believe that it is very likely, that something as controversial as that is going to be taken care of this year. We would hope to have the opportunity to work with your staff in the subcommittee to let you have the benefit of the hard experiences that cities are facing now as they are having consulting and engineer- ing firms telling them what they have to do in order to comply. And the same 20 percent retainage that Mr. Melas talked about is appli- cable to the ultimate cost recovery. You can see the program being terribly curtailed if that particular part of the program is not looked at very ably and made capable of being administered. Mr. ROBERTS. I want to amend what I said to you. This will be a long year because the fiscal year will actually cover 15 months. What impact is the current user charge requirement having in the cities you are familiar with? Mr. LYNAT%I. The witholding of the 20 percent, to our knowledge, there are very few, if any, who approve of it or the user charge sys- tems or industrial cost recovery. 63-192----i6------13 PAGENO="0194" 188 I think it has put a great financial burden on local communities be- cause of the requirement of the EPA to withhold the 20 percent. Mr. ROBERTS. How many cities do you know that have a fully imple- mented industrial cost recovery system? Mr. LYNAM. I do not know of any. Mr. ROBERTS. Any examples of some cities in the process of implementation. Mr. Wnrca. The one that has gone the further in terms of having an analysis and the proposal offered to them is Nashville, Davidson County. And they have a stack of materials and we have tried to make them available to the staff. Mr. ROBERTS. The gentleman from California, Mr. Clausen. Mr. CLAUSEN. You make the argument that industrial cost recovery may drive certain industries out of the municipal systems. You men- tioned this in your statement here. Can you document this by giving us examples? Mr. LYNAM. If you take a particular community that has already achieved the requirements of secondary treatment and has interceptor sewers and is already receiving grants, they will not be able to obtain any money under the new act because there is no money offered to them. On the other hand, some communities that have not achieved any of this treatment and are building sewers and systems under the new act will have to charge industry in that particular community for that waste treatment. Now, the obvious argument is that industry in communities with older facilities will not have paid specially while industry in new areas will be required to do so resulting in some disparity of equity. It is just a feeling that you now put a burden on a company who is paying income ta.x, who is paying to the Federal Government for something that now they have to return. And it seems as though it is a double burden. Mr. CLAUSEN. You have spoken in generalities. Now, narrowing it down to specifics, can you document specific examples where this has occurred? Mr. LYNAM. No; I cannot. I would have to go back. I think we could research that for you and report back to the committee. I cannot give you a specific example and we would attempt to do that. Mr. WHnT. The organization will be meeting early next month and we will have there, I presume, as many as 60 or 70 percent of the agency heads, and we will ask them for that and submit it to you. ~It is hard to come by because we have had that question before. Part of it is the threat and there may not be very much in the way of documentation. Mr. CI~UsEN. You have been around that, Lee, and you know we hear all sorts of allegations. Mr. Wnrm. We will have all the people together in one room in early October and we will ask for that information. Mr. ROBERT. Are there questions on the right? PAGENO="0195" 189 Mr. ROE. Mr. Chairman, I do not want to take too much time. I have not had a chance to read your testimony in depth. But, under Federal construction grant funds, you say: "Recommendation. Therefore we think an appropriate compromise would be to allot Federal funds to the States at 50 percent on the basis of straight popula- tion and 50 percent on need." I think you are getting to the crux of the financial situation. Now, that is a problem. As I recall it, you come from Illinois. You are aware of the towns in Illinois. Mr. LYNAM. We are speaking of new money. Mr. RoE. You ought to clarify that. Your State, Michigan, New Jersey, New York, Ohio, California and every major industrial State in this Nation without exception will want some kind of amelioration of this matter. My State of New Jersey would lose $253 million, one-third of the allocation for the entire State. If our State had approval to go ahead on two pending major re- gional sewer systems all of the money allocated to the State of New Jersey would be utilized on those two projects, alone which cover about one-tenth of the communities in our State. If I may, Mr. Chairman, I think as long as we have that clarified on the record, if you are talking about some new formula, then we have to come back and talk about the loss of particular types of manufactur- ing or production operations in your area and that gets back to the ad valorem tax aspect. If you do not have the funds in the first in- stance to build adequate water pollution control facilities, by the same token, that would mean it would be less expensive for the indus- tries if they located their manufacturing plants elsewhere. I, for one, as a member of this committee, am looking for equity and fair play and I think where the meat of the problem is, which was brought out most vociferously when this bill was first brought up, there is no sense of having hundreds of millions of dollars sitting on the shelf in States which will not use the funds because the need is not as great in their States. I would stress that aspect of your testimony, if I may. Mr. LYNAM. We are distressed with the Talmadge amendment be- cause it is obvious. Mr. ROE. I have received that word from Illinois. Mr. LYNAM. Because we have lost $110 million in potential funds. What we are talking about is really I think a new evaluation of needs and not to use the existing needs survey. The existing needs do not reflect what the purpose of this is. It talks to things that are not going to be funded and, yet, the moneys are being percentaged out, on the basis of projects that will not be funded. ~Te tried to spell it out to develop the proper needs, and if you have the proper needs, then you have a different ball game. Mr. RoE. We are not coming back and saying the formula should be 50 percent based on need and 50 percent based on population, because that is not magic either. PAGENO="0196" 190 You are going to have 1 million people living in an area and 500 million gallons of effluent. You have people living in other areas where there would be less effluent. The technologies that relate to the treatment of exotic wastes are entirely different than treatment of domestic sewerage. If you are saying keep the formula as it is now and devise new fund- ing to be adequate, equitable and fair to everybody, I can subscribe to that pomt. I cannot subscribe to the point of States with water pollution prob- lems and when they seek bonding to raise the funds locally, their bond- ing efforts will be stopped because they do not have the allocation of necessary Federal funds to serve as collateral and back up their fiscal needs. Mr. LYNAI~r. We apologize for not being clear. That is what we are talking about. We want to develop a new formula and concept and leave what we have now as it is, and we do not support the Talmadge amendment. Mr. V\THI1'~. In fa.irness, if I may say, Mr. Congressman, you will catch us as an umbrella group. WTe have not only people from Illinois and New Jersey. We also have people from Georgia. As an institution, we have a hard time, just as presumably the Senate and House will, be making this determination and when you run your finger down that column, you normally are heavily influenced whether it is plus or minus. As an organization though that represents big city agencies where the people are and where the sewer and sewerage problems are, we have always believed that the population was the most reasonable basis upon which to allocate funds. We are not neophytes and we recognize there has been this arrange- ment. \\That we really would like to have your attention focused on is the last sentence of that recommendation which says that if the Congress is going to allocate funds on a basis that includes population, please tell the States especially if you accept the Cleveland amendments, that is how you got that money and would you please see that it passes through the State's system on that basis rather than on a political basis reached by a. Governor's decision. He gets much more political mileage if he gives the money to the smaller communities. Right now, there is no burden, on the State to pass it through on the same basis on which they got it. Mr. ROBERTS. You will not have to worry about that because there `will be a certain percentage set aside for the smaller communities. `They will not be eating out of your trough. Mr. ROE. Just one more small qiiest.ion~ if I may. You seem to me to be a little spongy in your presentation as to just `what. role, if an'v~ the States should P1~. Are you satisfied that the program should be administered by EPA `out. of Washington? Mr. L~x~r. Mr. Roe. we are because we do represent 52 metropolitan agencies and there is a diversity of opinion. PAGENO="0197" 191 There are a number, if I may speak for a number of AMSA mem- bers, who do not have tJ~e faith in the State agencies that one would expect. And they feel that there is a problem of local politics which may enter into the allocation of funds. Therefore, they would rather have the Federal EPA as a watchdog as the higher agency. There are other communities that have greater faith in their State agency, `and we are willing to accept complete control by the State. There is a divergency among our membership. Mr. ROE. What is your recommendation? I understand that. Mr. LYNAM. Our recommendation on the whole is that the States should assume this administrative responsibility. Mr. ROBERTS. Breaux? Mr. BREATJX. No questions. Mr. ROBERTS. Mr. Clausen? Mr. CLAUSEN. I just want to make a point, Mr. White. When you say that the most reasonable approach for developing an allocation formula is on the basis of population, I would submit to you that carried to its fullest conclusion, this is really one of the rea- sons we are in difficulty today. Because allocation formulas have been developed on the basis of traffic count and population count, all of the money has gone there and they have literally deprived areas of an opportunity to address themselves to the problem because there are no funds. The effect is there is a drain of population from these areas. I think we need to have a balanced consideration `so we can start a reversal of this migration trend that occurs or give it a boost. I think it is already gone. Mr. WHITE. I guess what we are talking about is where the emphasis is or should be. It would be unwise for a State not to take into account some of the areas that are more sparcely settled, I guess really in terms of negotiating or bargaining, we would say the emphasis cer- tainly ought to be where the heavy population centers are, where the heavy burdens are and the heavy costs are. I gather that is one of the reasons in the political process there has been this accommodation and compromise, and we are not un- comfortable with it. We only hope if that is the way it is to be determined to be allo- cated by the Congress it works its way through the State process so some larger cities are not discriminated against. In some States, it is reversed. One city gets everything. If yOU do not have enough of everything, the whole notion of allocation becomes very crucial. It has been proposed that the States undertake this role and you have a different feeling depending on how well your State has per- formed in the past. This is no magic. One of the reasons we understand this was pro- posed or urged by the administration is because they did not believe through the front door they could get adequate staffing personnel to do the job, so the idea is to take 2 percent off the grant money. Nobody is kidding anybody. It means there are going to be 2 per- cent less funds available. PAGENO="0198" 192 Mr. ROBERTS. If they use them. Gentlemen, thank you very much. There is one other factor involved. If we appropriate all the money, you all can spend it. But if we make you come up with part of it, there is a lot less reluctance to nedd all that money. Mr. WHITE. That is a good acid test. Mr. ROBERTS. Thank you very much, gentlemen. ~ext we have the National Association of Regional Councils, rep- resented b-v the Honorable Guy Ormsby. chairman, Blue Grass Area Development District. kentucky: accompanied by Richard J. Huff, executive director. Comprehensive. Planning Organization, and Barold ~\Tise. American Institute of Planners. Judge Ormsby, the full text of your prepared statement will ap- pear in tile record at this point. [Statement ref ered to follows:] STATEMENT OF JUDGE GUY ORUSBY, Ji~., NATIONAL ASSOCIATION OF REGIONAL COUNCILS Mr. Chairman, members of the committee, it is a great privilege for me to testify before the distinguished members of this subcommittee. I am the County Judge of Bourbon County, Kentucky, and Chairman of the Bluegrass Area Devel- opment District. I also serve as the vice Chairman of NARC's Environmental Policy committee. Let me begin with some introductory comments about our organization. The National Association of Regional Councils was initiated in 1967 to assist local government elected officials in organizing a rapidly growing number of regional councils. Regional councils for the most part are areawide organizations of general pur- pose local governments which encompass a total regional community. They exist in both metropolitan and rural areas. Prime purposes of regional councils are to increase communication, cooperative decisionmaking, and coordination among local and state government; to review and comment on certain federal grant appli- cations; and to develop policies and programs to meet mutual problems and guide orderly development. Over 625 such regional councils have been established to deal with areawide problems. Council governing bodies are composed primarily of local government elected officials. In the last few years, the continued growth of regional councils has been encouraged by the actions of the states. Forty-four (44) states have initiated the process of establishing substate districts. Of these, 34 have com- pleted or will shortly complete the subdistricting process and have designated regional councils for each district. S Most regional councils serve a basic co.ordinative function for federal funding of local government activities. This function is based on the "review and com- ment" provisions of Section 204 of the Demonstration Cities and Metropolitan Development Act of 1966, and the Intergovernmental Cooperation Act of 1968, both of which are implemented through Circular A-OS of the Office of Manage- ment and Budget. Regional councils, designated as A-OS agencies, review federal aid applications of local governments before the application is submitted to the federal funding agencies. This review process saves taxpayers an estimated $450 million a year. NARC is a membership association of over 300 regional councils throughout the country. Our Board is composed of local government elected officials and other regional council policy members, as well as representatives from the Boards of the National League of Cities and National Association of Counties. Mr. Chairman, NARC is extremely interested in one of the areas of concern of your Subcommittee in these hearings-the current funding of the Section 208 areawide water quality management planning authorized in Federal Water Pol- lution Control Act Amendment of 1972 (P.L. 92-500). Your inquiry in this matter comes at a propitious time. In our opinion, the success of this pivotal planning and management requirement is in question. PAGENO="0199" 193 It is not the concept embodied in the "208" requirement that is faulty. Indeed, we are convinced that the type of intergovernmental planning and management system envisioned in Section 208 is correct and necessary if this nation is to achieve the goals of fishable and swimmable water provided for in the Act. "208" for the first time weds planning with implementation. Moreover, it as- sesses all of the affected parties-local, state and federals, are parties to the pro- cess and have a stake in it. But there is aproblem in seeing that the "208" management planning process obtains these results, and that problem is federal commitment and funding. We support H.R. 0560 which would provide $300 million in 100 percent contract authority for the funding of new "208" designees. As you recalled, in October 1972, Congress provided $300 million of contract authority to the Administrator of EPA to assist in carrying out the "208" planning program. Recognizing that the program must be phased-it required designation of areas and areawide agencies by the governors as a condition to funding such planning organizations for "208" purposes-$50 million was provided for FY 72 and $100 million in FY 73. The remaining contract authority was to be allocated in FY 74. * Unfortunately EPA assigned the lowest priority to the planning section. This Iact is reflected in their initial water quality strategy paper on the implementa- tion of the Act. Thus, regulations due to be published under the terms of the Act within 60 days of the passage of the Act were not issued until September 1973. This way it was impossible for any obligation of funds in FY 72. Moreover, this late promulgation of regulations was coupled with a misinterpretation of the Congressional intent of "208" by EPA. At that time, it was interpreted to the states and local governments as a discretionary program to be considered in very select circumstances. Consequently almost all the states opted out of par- ticipation; over 30 states determined not to participate in March 1974, the date assigned under EPA's "208" regulation for determining whether to designate "208" areas and agencies. It is not unexpected, therefore, that $13.6 million in contract authority was committed in FY 1973. However, the situation changed in the latter part of 1974. Because of prodding, Congress and the national public interest groups representing local governments and their regional councils, EPA began to emphasize the critical role that "208" must play in carrying out the Congressional mandate in P.L. 92-500. This emphasis on "208" planning was welcomed in most cases, and many of the states that did not participate in the initial round of designations reconsidered and determined to select area and areawide agencies to undertake this type of planning. This response covered application to exceed the $150 million in contract authority provided for in FY 75. In fact, we understand that over 50 designated agencies had to go unfunded because EPA has used the entire $150 million for that year. It should also be noted, Mr. Chairman, that on June 6 of this year an im- portant decision was handed down by the U.S. District Court for the District of Columbia in the case styled NRDG v. Train: In that litigation, the plaintiff, National Resource Defense Fund, Inc. and the Environmental Defense Fund, Inc. contended that under Section 208 the states have the same obligation and responsibilities for "208" planning in nondesignated areas as areawide agencies in designated areas, and they must develop plans to control point and non-point source pollution for these regions. In doing so, it was also argued that the state must adhere to the same planning requirements imposed on designated areawide agencies. District Judge John Lewis Smith, Jr., sustained the plain- tiff's position in the case and found that EPA's previous interpretation of the Act was erroneous; "208" was not discretionary. It is required in all areas of the nation even in those regions where it can be used as a tool to prevent future pollution. He also recognized that the main thrust was to accomplish this type of planning through areawide agencies to the degree possible. At the same time Judge Smith recognized that the State, when acting as a "208" agency for all nondesignated areas, was eligible for "208" funds. This reversed the previous position of EPA which made states ineligible for such funding. The court required EPA to promulgate new regulations by November 1, 1975, em- bodying its decision. Proposed rules have now been promulgated and will be finalized by the 1st of November. In view of the above, we now have a very unsettling situation. So far EPA has committed approximately $163.6 million of the authorized $300 million in contract authority to approximately 150 areawide "208" agencies. These initial funds PAGENO="0200" 194 were 100 percent federal monies. The states under the recent court dccision must complete "208" plans for nondesignated areas no later than November 19i8. Parenthetically, the Court found that the initial "208" planning should have been completed by the end of 1975 but recognized that EPA's inaction in the program made that statutory established date impossible to achieve. The pend- ing EPA regulation on "208" correctly encourage the designation of additional "208" or if friternated would require the states to undertaken the program in nondesignated areas. But it is established that this new designated agency and the states can expect to develop their initial plans on a 75-25 match basis, and the total funding anticipated for FY 76 will probably be no more than $53 mil- lion. By the way, it is important to indicate that the $5.3 million is an amount that reflects EPA's anticipated financial needs before Judge Smith's decision. It did not reflect the mandatory nature of the "208" planning or the eligibility of the states for "208" funds for planning in nondesignated areas. Based on the criteria EPA used in allocating its "208" funds, we find that the financial needs to do the initial planning to be at least $200 million. This would provide funds for the approximately 130 metropolitan areas not yet designated, approximately 50 nonmetropolitan area designations, and funding for the states for nondesignated areas. This figure also envisions 100 percent federal funding of the initial planning as provided to those areas previouslp designated and. funded by EPA. Mr. Chairman, the issue is of such vital importance to NARC, that our Board of Directors has authorized the filing of a suit against EPA to require the re- lease of $136.4 million in unobligated contract authority. In our opinion, EPA has the right to obligate this contract authority. We draw the anology to the New York City litigation challenging the enforcement of waste treatment facility construction funds by EPA. In that case the Supreme Court found that the Administration illegally empounded much of this contract authority and much of the authority was not obligated in the fiscal year pro- vided in the law. In the current situation, we believe EPA should not be able to reduce the federal ftnancial commitment to the program, especially as a result of its OWfl: deliberatory tactics and erroneous interpretation of the mandate in "208'. While we are committed to this course of action, the NARC hopes it will be unnecessary. We need immediate relief, and the judicial route is slow and speculative. It is for this reason, we are here today to urge the Subcommittee to take legislative action and indicate that the $134.4 million of contract au- thority is still available for obligation. Mr. Chairman, we think our cause has merit and it will be grossly unfair for' certain states, regional councils and their local governments to have to under- take the obligation of "208" on different terms than those agencies previously funded especially under the circumstancces described above. We are committed to the "208" program, it makes sense. It is our best chance to make prudent and cost effective investment decision that will lead to meeting the valid water quality goals established in P.L. 92-500. Finally, Mr. ChTairman, for your ready reference we have summarized that funds and conclusions of Judge Smith in the litigation over "208". We believe that they support the need for quick action. Summary of Salient Findings and Conclusion by Judge John Lewis Smith, Jr.,. in the case NRDU V. Train, U.S. District Court for District of Columbia, June 6, 1975. Section 208, "charts a course not only for cleaning up of polluted waters but also for the preventiom of future pollution by identifying problem sources, regu-- lating construction of certain industrial facilities, and developing processes te control runoff sources of pollution." (e.m.) The "bottom line" for Section 208 `waste treatment management activities is' achieving the 1983 goal of fishable and swimmable waters. "Subsection (a) (6) is the residval, clai~se in the areawide waste water treat- ment management planning provision. As such it deals with nondesignated or `leftover' portions of the State not addressed by the Governor or by local officials' in subsection (a) (2)-(4).' The plain implication is that Subsection (a) (6) em- powers the State to achieve what the other planning organizations under the previous Subsections are directed to achieve. Like the other planning organ- izations, the State under Subsection (a) (6) is to engage in Subsection (b) (2) (A through K) planning for the area within its authority; . . . It would be illogical for Congress to set forth a detailed scheme for State, interstate and local water PAGENO="0201" 195 :pollution planning-and then to lump the remainder of State tei~ritory into a residuary provision with veiled instructions to the State to do as it saw fit regard- ~ing waste treatment control, or to carry out the afready required Section 303 (e) plan-7Hng," (ciii.) Congress did not intend Section 208 planning to be "the exception rather than the rule, nor despite the States' primary responsibility under the Act, were the Governors and local officials given effective veto power over Section 208." (em.) The organization alternatives in Section 208-areawide agency or State as agency in nondesignated areas-regulate which level of government is to de- velop a waste treatment management plan-not whether an area or portion of -a State is to be covered by such a plan." (e.m.) EPA in promulgating regulations for State planning under Subsection (a) (6) will not have to require rigorous planning in noudesignated areas where no pollution problem exists. Planning in nondesignated areas can be tailored to a region's problems and where possible coordinated with Section 303(e) planning. Moreover, a State "may certify large portions of its territory as pollution-free * and concentrate on preventative measures for these portions as well as on abate- *ment efforts for the substantial problem areas." For all the reasons cited, the Court enjoined EPA to begin the process of de- veloping and promulgating Section 208(a) (6) regulations consistent with the opinion in the case. Accordingly, the Court issued an Order declaring that: (1) "it is a National goal under the Federal Water Pollution Control Act Amendments of 1972 to restore and maintain the Nation's waters so that, by 1983 they will be fit for human recreation and wildlife propagation; (2) 33 U.S.C. 1288(a) (6) requires a State to act as the Section 208 planning agency for nondesignated portions of the State in the same manner as planning ?organizatlons designated under 33 U.S.C. 1288(a) (2)-(4); (3) 33 U.S.C. 1288 (b) (2) (A through K) waste treatment management plan- fling is required of a State acting under Section 208 (a) (6) for portions of the State not designated under 33 U.S.C. 1288(a) (2)-(4) (4) 33 U.S.C. 1288 (d)-(c) require that in all nondesignated portions, grants -made under 33 U.S.C. 1281(g) (1) and permits issued under 33 U.S.C. 1342 shall be made in conformity with the Section 208(a) (6) plan for such portions; and (5) funding for areawide waste treatment management planning under 33 U.S.C. 1288(f) shall be available to a State for Section 208(a) (6) planning." Although Judge Smith agreed with the plaintiffs contention that the Act called for initial "208" plans to he submitted by mid-1976, he recognized that the long delay in getting the "208" program started made this date impractical. The parties to the suit were instructed to propose a timetable to the Court for a rule- making proceeding for Section 208(a) (6). Plaintiffs and EPA were able to agree on November 10, 1975, as the deadline -for promulgation of new and amended regulations required to fully implement the Court's decision. However, there was still dispute over what would be a reasonable date for final completion and submission of Section 208 plans for nondesignated areas. TESTIMONY OF HON. GUY ORMSBY, CHAIRMAN, BLUE GRASS AREA DEVELOPMENT DISTRICT, KENTUCKY; ACCOMPANIED BY RICHARD J. DAVIS, EXECUTIVE DIRECTOR, COMPREHENSIVE PLANNING ORGANIZATION, CALIFORNIA Judge ORMSBY. Mr. Chairman and members of the committee and staff. I a-in Guy Ormsby, a county judge in Bourbon County, Ky., and chairman of the Blue Grass Area Development District. I have with me here today, he will not testify but will be- available for any questions, Mr. R.ichard Davis from a 208 designee area, and executive director of the Mid-America Regional Council. Now, we have -filed with you my written statement concerning our policy on national association of regional councils, their standpoint oii Public Law 92-500 relative to section 208. PAGENO="0202" 196 It is our understanding that in 1972 Congress authorized $300 mih lion to fund this section of Public Law 92-500 and that EPA has re- leased to this date approximately $163 million. We are requesting that you give authorizfttion to further release of this money to 0MB. I am not prepared to answer any technical questions relative to 208. I do Irnow this: I am from a 208 area which is unfunded. The 208, we feel, is a sound planning measure. I know that there are other areas that are similarly situated to mine.. We cannot do this by ourselves. I would reiterate we feel it is sound planning, and I would request that you give weighty consideration to directing the remainder of the funds which have not been spent, but were allocated, be released. Mr. ROBERTS. Thank you, sir. Any questions-questions on the right? Mr. BunAux. No questions. Mr. ROBERTS. Thank you, Judge Ormsby. Next, Mr. Harold Wise, representing the American Institute of Planners. Mr. Wise, the full text of your prepared statement will appear in. the record at this point. [Statement referred to follows:] STATEMENT OF HAROLD F. WIsE, REPRESENTING THE AMERICAN INSTITUTE OF PLANNERS Mr. Chairman and members of the subcommittee, my name is Harold F. Wise and I am representing the American Institute of Planners, the national pro- fessional society of urban and regional planners in the United States. The In- stitute is comprised of over 12,000 members active in both the public and private sectors in planning for government at the local, regional, state and national levels. The AlP membership possesses a wide spectrum of planning skillS and experience and is actively involved in attempts to solve the complex interrelated~ problems facing society today. This membership has lent its experience and full participation in formulating the AlP national planning policies I am presenting- here today. These policies reflect the basic purpose of the Institute-to achieve a unifled social, economic and physical development of communities and their environs and of states, regions and the nation in order to foster public welfare and help achieve communities and environments that are responsive to the needs of society today. A basic requirement for the rational development of our communities and metropolitan regions is the comprehensive protection and enhancement of their natural environments-air, water, soils and fragile ecosystems-to preserve the public health and to permit the wise utilization and enjoyment of whatever re- sources the area has to offer its citizens. One critically important tool in this. effort is the provision in the Federal Water Pollution. Control Act for water quality management and planning on an areawide basis as provided in Section 208 of that law. AlP testified before this subcommittee four years ago when it was consider- ing legislation that-after much debate, deliberation and an attempted Presi- dential veto-was to become the 19T2 amendments to the Water Pollution Act, and called for the inclusion of areawide/water quality planning and manage- ment as an integral factor in the water pollution regulatory and grants programs to clean up the nation's water. We urged that planning be made an integral part of the water pollution control effort to permit the efficient use of the billions of~ dollars earmarked for construction grants; to permit careful consideration of the interrelationships between water pollution control and the social and physical resources in our communities; and to assure the coordination of the activities of~ all involved levels of government. We stressed that in the long run, wise planning and management on a regional scale would result in cost effective prevention PAGENO="0203" 19~7 of environmental degradation by offering alternatives to unwise developmental decisions (both public and private) that could have adverse impacts on water quality. This method of careful planning and management for preventive en- vii onmental protection is preferable to expensive engineering solutions required because of ill-planned sprawling regional development patterns. Many of these planning considerations-which stressed environmental pro- tection measures based upon such factors as plans for provision of other public facilities and services, patterns of land use, population growth and economic development-were incorporated into Section 208 of the 1972 amendments. I am here today to reaffirm AlPs support of the concepts of regional water quality planning contained in Section 208 and to urge this subcommittee to favorably consider extension of the funding authorization for this critically important, innovative environmental protection tool. As mandated in Section 208 of the 1972 amendments, the areawide waste treatmeiTt planning and management program was to provide a comprehensive, coordinated effort to solve water quality problems which because of their regional scope and complex nature were not amenable to the more simplistic, expensive structural solutions provided for in the treatment works construction grants and discharge permit programs. Section 208 called for innovative programs and intergovernmental cooperation to not only deal with existing w-ater quality problems, but to also plan for future development in the region so as to prevent further degradation of water quality. The basic goal of 208 is the attainment and maintenance of swimmable, fishable waters by 1983. The Act was straightforw-ard in the requirements for implementing Section 208: For those areas which, because of urban industrial concentrations or other factors have substantial water quality problems, there was to be established a process of regional planning with full local and public participation to `inSTitu- tiomali~e water quality planning and management for long term solutions to water quality problems. Problem areas were to be identified, areawide agencies were to be designated and, with federal planning assistance, a plan and planning process were to be developed to serve as an action guide for water quality management agency (ies) designated after plan completion. The 208 agencies were to serve as the focal point for all point and non-point water pollution control activities within the region, including approval of expenditure of federal construction grants and coordination of the discharge permit program. The areawide system was intended to link planning, management of regulatory programs, and construction of treat- ment sytems in a coordinated package. Long range water quality maintenance would be provided for by: development of an institutional framework for plan- fling and management; maintenance of the processes for these activities; and the establishment of a system of financing that would eventualy make the agen- cies self-supportive. The agencies were to go beyond the scope of normal sew-age treatment authorities to establish controls over the more complex non point sources in the region; seek alternatives to the expensive structural solutions to water quality management; and to assess the overall environmental impacts of the program. Significant federal planning grants covering 100% of the cost of preparing the areawide plans were authorized to establish the necessary planning and man- agement expertise in inultijurisdictional (regional) agencies which would, by ~a\v, be required to become self supportive after a three year period of federal aid. A total planning authorization of $300 million was provided for fiscal 1973 through 1975. The intent of 208 was clearly to establish the capabilities, insti- tutions and processes within regional organizations to plan for and manage all sources of water pollution w-ithin the region for an initial twenty year period. However, the promise of 208 has yet to be realized. Slippage has occurred from the beginning of the program and many otherwise eligible areas, encompassing large segments of the nation's water bodies, are in danger of not being funded to establish this critically important program. Several interrelated factors have caused serious delays in implementing the requirements of 208 and others have placed additional financial demands on the program and have thus brought about the possibility that this critical section of the Water Act will be rendered ineffective. From the initial implementation of the Act, EPA has given priority to the structural solutions to water quality problems. Emphasis was placed on point source controls through the construction grants and discharge permit programs. PAGENO="0204" 108 ~The low priority given to the 208 program is illustrated by the delays encountered in EPAs publishing of the required rules, regulations, guidelines and designa- tions of 208 areas and agencies as outlined below. Date accomplished or projected to be corn- Task Date specified by sec. 208 pleted by EPA 208 designation guidelines issued Jan. 10, 1973 Sept. 14, 1973 (effective date). Governors' identification of 208 areas Mid-March 1973 1 March 1974, initial designations and "non- designations." 208 grant regulations 2 Issued May 1974 (effective September 1974). Governors desig~iate local planning area and Mid-July 1973 149 designations submitted to EPA and its organization, approved by July 1975. 208 planning process in operation Mid-July, 1974 208 plans submitted to Administrator Mid-July 1976 EPA expects by July 1979 that all plans will be locally sod State certified and submitted to Administrator. Court case sets Nov. 1, 1978, as final date. I The Governors were never asked by EPA to list eligible 208 areas, apart from actual designations. EPA assumed that all "water quality limited" segments of viaterways were eligible as 208 planning areas. 2 Issued 6 weeks before fiscal year 1975 23i years after effective date of Public Law 92-500. This lack of EPA commitment to 208 has resulted in serious slippage in 208 area/agency designation and grant approvals. The level of 208 expenditure ver- sus authorization tells the story: ]Dollar amsunts in millions] Grant authorizations Expended funds Agencies funded Fiscal 1973 Fiscal 1974 Fiscal 1975 $50 100 150 0 $13 11 150 138 The overwhelming majority of the fiscal 1975 designation/grant approvals took place in the last two months of fiscnl 1975. In addition to these designations, there are still an estimated 140-iSO areas/agencies eligible for designation (by virtue of being SMSA's or potential preservation areas) for 208 planning grants. Some 23 applications were received in fiscal 1975 but not funded because of a lack of additional funds. These potentially eligible areas comprise a large segment of the nation's population and leave affected water bodies unprotected by com- prehensive areawide planning and management. The fiscal burdens caused by these unmet demands are further exacerbated by the Court decision this summer which interpreted Congressional intent to require that states do detailed 208 planning ~or non designated areas. To adequately fund these remaining eligible areas, including the new state requirements, a recent study completed for the National Commission on Water Quality estimates that an additional $200 million in 208 grants will be required. Part of this could be met by the funding authorized for 208 but not expended durirag fiscal 1973 and 1974 and which is now the basis for a court suit between the National Association of Regional Councils and the EPA. However, the settlement of the suit could be drawn out and the eligible agencies unfunded or underfunded for an indeterminate period of time. The coincidence of the expira- tion of funding authorizations w-ith the statutory requirement that any planning grants after fiscal 1975 be at the 75% federal share versus earlier available 100% grants has raised the possibility that newly designated agencies and those to be 4esignated will receive inadequate funding or no funding for reasons entirely beyond their control. The EPA budgetary request of $53 million with 75% grants for fiscal 1976 is entirely inadequate to meet these needs. Agencies/areas should not be penalized, and this potentially valuable planning and management program endangered because of administrative, political and other factors which were unforeseen at the tune the Water Pollution Control Act was passed and over which they had no control. A legislative solution to this problem is warranted and the AlP calls on this subcommittee to provide the leadership needed. Authorizations for 208 planning grants should be extended PAGENO="0205" 199 with two year 100% federal grants guaranteed to all eligible 208 agencies regard- less of the fiscal year in which they were designated or their grant applications approvod. The great potential of this innovative planning program should not go uiF realized because of lack of sufficient Administration support to areawide agencies. The concept of areawide planning and management for multi-media uneviron- mental protection programs-controlling air, water and solid waste problems- should be the logical successor to the current 208 program now authorized for water pollution planning. Various committees of the Congress are now or will be considering proposals for including air pollution and solid waste managemeiit/ resource recovery programs under an umbrella 208 areawide approach. A success- ful 208 water program would serve no better purpose than to prove the efficacy of the areawide approach to environmental protection. AlP has long supported the concept of coordinated regional environmental planning and management that would consider all sources of environmental degradation and formulate pro- grams which would weigh alternative solutions in the context of the larger social, economic and political developments in the region. Such a program would hell avoid conflicts and duplications now being encouhtered in the various federal environmental program requirements and would at the same time help establish the institutional background for problem solving in conjunction with full public participation in the critical decisions which will shape development of our metropolitan areas and the quality of our envirOnment. Three years ago, the Congress realizing the importance of 208 plannnig and management, authorized ~300 million for planning grants to be obligated over three fiscal years. The EPA has clearly dragged its feet ad has not acted to im- plement the intent of the Congress by failing to expend $137 million of the $300 million authorized. AlP believes that this money is still available for contract obligation without need for further authorization by the Congress. The failure of EPA to meet the mandated deadlines for implementing the 208 program places the full burden on the Administration to obligate these 208 funds as legally man- dated in PL 92500. I urge this subcommittee to take full cognizance of this failure in its deliberation on future funding authorizations and in any substantive amendements to the Act. TESTIMONY OF HAROLD F. WISE, REPRESENTING THE AMERI- CAN INSTITUTE OF PLANNERS Mr. WISE. Mr. Chairman, I am Harold Wise. I am representing the American Institute of Planners. I have recently filed after 11 months of study, as a matter of fact, a report to the National Commission on Water Quality, which retained me personally and my associates th make an institu- tional assessment of the implementation o~f the planning requirements of the Water Pollution Control Act Amendments of 1972. Incidentally, Congressman Clausen, I used to live iii your district when I was in California and did a lot of work in your district. You will receive my report to the National Commission, of which, your Chairman, Robert E. Jones, was chairman and Mr. Harsha as well as Congressmen Johnson, Cleveland, and Wright are members. I just want to summarize some of the things we found in our study. You have our written statement and I will not go over it. We have looked at 208 and 303 and 305 and 201 and 209 on a nation- wide basis. I think it is absolutely incredible but it is a fact that the EPX did not understand really what the Congress meant when it set forth these planning requirements. I think it is astounding the first regulations that were issued for 208 areawide planning, the key piece of this act to puii it together at a local decisionmaking basis, were not issued until 6 weeks before the end of fiscal year 1974. PAGENO="0206" 200 As a result, in 1974, there were 11, 208 agencies designated. There were 128, 208 agencies designated in fiscal year 1975. Half of those were funded the last 2 months. Now, they spent $153 million but they have left $137 million lying on the table. I totally support the language and provisions of iH.IR. 9560. Our institution supports them, including the limitations on the contract authority hicludeci in section 7 so that his authority is subject to limitations provided in the Budget Act of 1974. That is proper. That :is the way the Nation is going. Out of the 149, 208 agencies that now exist in this country, they cover 107 metropolitan areas. It has been a slow starting program. There are 131 metropolitan areas that are not funded, and have not Ibeen designated. Judge Smith's decision of the U.S. District Court of the District of Co~imbia in June made it adequately clear to EPA what the Congress really meant. According to his decision, the EPA hos now issued new regulations on September 8 that say, in effect, that if you do not designate an area for areawide water quality management planning, and management is the key through the locally elected officials and the units of general government, then the State has got to do the job. Now, the funding provisions that you have in this act are proper and appropriate and in accord with my studies over the past 11 months. I would say, incidentally, of the 149 agencies that exist now, 107 are metropolitan areas and 32 nonmetropolitan areas. I think non1netro- politan areas are extremely important in this thing. I think the funding you have provided here will make provision for the nonmetropolitan areas. One of the major problems that we foand in our literally nationwide study for the National Commission was the time that it will take to retread the State's water pollution control agencies. They are basically pipe oriented, if I can use that term. They have been and they are good. New York, California; and Texas have done astounding jobs over a long period of time, but*they are not used to nonstructural solutions. They have never had to cTeal with that in their lives. They have never dealt with nonpoint source controls. They have never dealt with land use controls as a means of storm water management, and a means to control water quality. They are in a position of protecting the public works they have which is the important construction part of this program. There is no question about it. They are really not equipped to make the kinds of political decisions that the Congress called for for the management of other than the construction of big sewer plants and big collector systems. `I think that is one of the most important things that we found in the study that we have made. Now, there are 10 States that do not have any 208 agencies in them at all. I can recall only a few of them. Connecticut has no areawide plan- ning, nor does Vermont, Minnesota and Georgia. I had a project funded by EPA in Georgia 3~/2 years ago geared up for areawide 208 type plamiing before the Congress finally passed the act. PAGENO="0207" 201 They were prepared to do it on a wall-to-wall regional council, council-by-council basis, and, yet, they have not received 1 cent of 208 money. New Mexico, Hawaii; and it goes on and on. Now, with 131 metropolitan areas in the Nation still not funded, all I have to say to you is the actions that you propose to take in this bill are proper and appropriate. I would only say one other thing in conclusion. You provided because yOu thought it was important $300 million of funds to sup~ port this local areawide process.. As I indicated, EPA left $137 million on the table because of their administrati~Te ineptitude and because they did not understand the program. I equate your authorization of that money with the authorization that you made of the $18 billion in construction money, $9 billion of which was impounded, went to the Supreme Court and the Supre~ne Court said yes. EPA's position today, as I understand it, is that the time has lapsed and the $137 million is not here. I think it is appropriate for the Congress to take note of the fact that it is there and because of the administrative failure to meet the deadlines set by this Congress, they should go ahead and release those authorized funds because there is $300 million that you said to do a job with. Mr. ROBERTS. Thank you. Mr. Clausen. Mr. CLAU5EN. I do not have any specific questions, Mr. Wise. And I am saying this not because you came from my area, but I am going to take the words of our counsel when he. stated to me that he has reviewed your paper and we believe the historical projection of the program as enunciated in your statement will prove of great value to the committee and we will have a chance to read it in depth. I am appreciative of your forthright comments. Mr. ROBERTS. Comments on the right? Mr. ROE. I am pleased to note my good friend from Wisconsin does not live in California now. He lives in New Jersey. Mr. WISE. I am sorry. I wish I did. I live in the District of Columbia. Mr. ROBERTS. Mr. Harsha. Mr. HARSTIA. No questions. Mr. ROBERTS. Any other questions? Thank you very much, gentlemen. You were very kind to give US this time and your statement was entirely adequate and we appreciate it. Mr. WISE. Thank you. Mr. ROBERTS. WTe have Mr. Donald Porth. executive vice president, Culligan International Company, accompanied by Mr. Douglas Ober- hamer, executive vice president, Water Quality Association and Robert Doyle, counsel, Water Quality Association. The full text of your prepared statement will appear at this point in the record. [Statement referred to follows:] STATEMENT OF DONALD PORTU OF TUE WATER QUALITY AssooIAT~oN The Water Quality Association is a voluntary, nonprofit organization, head- quartered at 477 East Butterfield Road in Lombard, Illinois. The Association PAGENO="0208" 202 consists of members who are engaged in the on-site w-ater conditioning equipment manufacture, wholesale or retail distribution, and allied activities. The objectives of the Association are promotion of industry equipment use, facilitation of mem- bership information exchange, conduct of educational and community affairs. programs, publication of materials related to water quality, and other functions. of traditional trade association nature productive of public benefit through in- dustry improvement. Public Law 92-500, the Federal Water Pollution Control Act Amendments of 1972, passed against a backdrop of environmental emotionalism which reached. crescendo proportions at the decade's turn, is massive in its magnitude, ambi- tiously idealistic, in its goals, disruptive of previously existing methodology in its mechanics, harsh in its mandate, and severe in its non-compliance penalties. For all of this, however, its objective cannot be faulted, nor its intent seriously questioned. But not surprisingly, misinterpretations of legislative purpose and misapplica- tions of authority have occurred, as indeed, in spite of the law's specificity of requirements, they were bound to in an undertaking of such scope. Whila this might appear paradoxical, it is nevertheless understandable as the law does con- tain much subjective, imprecise, and untested language. It is time, therefore, to review some of these areas-particularly those which have resulted in patently erroneous construction of legislative intent. One such area directly and most adversely affects the water quality industry and the tens of millions of private American citizens who use water conditioning appliances in their homes, their offices, and businesses all across the land. Even America's life-sustaining medical institutions may not be exempt from the effects of the federal regulatory agency's misapplication of legislative purpose in this area. This difficulty arises out of the Environmental Protection Agency's interpreta- tion of the definition of "pollution" as contained in Section 502(19), and the position of State agencies, responding to Federal pressures, in mandating un-~ reasonable low discharge limits. A California newspaper item, to cite a practical example, declares that "Soft water may become a thing of the past in San Luis Obispo unless something gives.. To meet sewage treatment standards set by the Regional Water Quality Control Board, the city might have to ban water softeners in the next few years". (The Telegram Tribune, Feb. 4, 19Th.) A Nevada newspaper article announces that "The county Sewage and Waste Water Advisory Committee met with Environmental Protection Agency officials Friday to voice their objections to the proposed salinity standards for the Las Vegas Wash .`. . the county may have to prohibit the installation of new home-regeneration softeners". (Review-Journal, March 9, 1974.) In Wisconsin, the Fond du Lac Reporter points out that ". . . stringent inter- pretation (of the pollution definition) has been held to include even the waste~ discharge of home water softeners". (Nov. 25, 1974.) Similar stories appeared in the Kansas City Kansan (Nov. 11, 1974), The Fort Worth Press (Nov. 15, 1974) and t.he Paso Robles Press (Calif.) (Jan. 30, 1975). In no part of the country have such discharges been shown to be harmful to humans or animals or the environment. Yet, under the guise of pollution control, the Environmental Protection Agency has encouraged many States to establish unreasonably low discharge limits for salt and mineral solids. The issue is basic: the consequences enormous. And one tragic resulting by-~ product is emergence of public inquiry concerning the whole program's credibility. Only four percent of water is used in the home. For general cleansing purposes, water in t.he home is invariably softened in one way or another. The addition of soaps and detergents is necessary in sufficient quantities first of all to soften thefl wa.ter, and t.hen subsequently to impart cleaning properties. In hard water areas, excessive quantities of such .agents obviously become necessary. In the alterna- tive, homeowners may install softening devices which not only reduce the amount of such agents by as much as ninety percent otherwise needed to accomplish the same result, but also produce other known body care values inciden.t to soap and detergent eliminations. Water conditioning equipment consists principally of removing hardness mm- erals. Salt is used in the appliance recharging process and it appears in the waste- water as a part of the total dissolved solids. While this salt is relatively innocuous to man or animal, even in high concentrations,, it nevertheless falls within the definition of a pollutant and thus becomes a non-point source under the law as. PAGENO="0209" 203 currently regarded. The emerging end result is States' actions, encouraged by Washington, establishing such unreasonably low limits for the discharge of so- dium, chloride, and total dissolved solids, that the homeowners' use of water softeners is restricted. Because of the requirement that all wastes not amenable to treatment in con- ventional sewage plants, or which pass through such plants, be pre-treated, the intent of Congress is being misconstrued as a prohibition against the use of softeners in homes. Dissolved salts are entirely soluble, of course, and they will pass through any conventional municipal treatment facility. But are they harmful? Are they really pollutants? Is this what Congress intended? The answer to these three questions is a resounding no! Does softener prohibition produce a better quality sewage effluent at the expense of better quality water in the home? Quixotically, the answer to this one is yes! The reason for this situation can be found in two words: inflexibility and Obfuscation. Public Law 92-500 defines "pollution" as the man-made or man-induced altera- tion of the chemical, physical, biological, or radiological integrity of water. (Section 502(19)). As contemporaneously construed, this language permits no distinction as among discharges: whether they are toxic or not; whether they are damaging or not; whether they are assimilable by the environment or not. A literal application of this definition prohibits the use of equipment to improve the quality of the water. Congressional intention to the contrary notwithstanding,' it has been inter- preted as a prohibition against the use of water softeners in the home. Regulatory interpretation of the guidelines called for in Public Law 92-500 equates such guidelines with inflexible standards in all circumstances rather thami with a set of rules against which scientific conclusions can be measured for the production of reasonable standards applicable to specific situations and proven environmental damage. The emphasis on controls of waste discharge without reference to actual beneficial or detrimental effects totally avoids the law's purpose and the lawmakers' intent. And aggravating the picture still further out of focus is the juxtaposition of State and Federal protestations to the effect that "we didn't do it, they did".. Thus, in a December 17, 1974 letter from EPA's Deputy Assistant Administrator for Water Program Operations to the Water Quality Association, the Washing- ton posture is articulated as follows: "The general Federal pre-treatment regu- lation (citation omitted) promulgated in accordance with Public Law 92-500 restricts Federal pre-treatmemit standards to non-domestic users of municipal sewage treatment facilities. These standards, therefore, are not applicable to homeowners using water softeners. The chlorides discharged from water con- ditioners have not been declared toxic by EPA. No Federal regulations have been promulgated that otherwise limit the disposal of effluents from domestic watei~ softening units into municipal systems". The simple fact of the matter is, however, that many States, acting under Federal encouragement and pressures, have established such unreasonably low limits for the discharge of sodium, chloride, and total dissolved solids that effluent waste standards are often more restrictive then drinking water stand- ards. In California, for example, salt has been classed along with pesticides and. heavy metals as a toxic material. The result, naturally, is restriction on the homeowner's use of water conditioning equipment and preclusion of his ability to improve the quality of water for the use of his family. EPA, acting under the pollution control authority of Public Law 92-500, is. encouraging the banishment of water conditioners. In Las Vegas, for example,. EPA Region IX has instructed city officials that the Agency wants elimina- tion of water softeners in order to correct saline discharges from the Las Vegas Wash into the Colorado River. Reporting on the March, 1974 Nevada meeting between local officials and EPA representatives, the Las Vegas Review- Journal (March 9, 1974) states that the therein identified EPA agent "said that since most of the Las Vegas salinity comes from the water softening in- dustry and home softeners, the county may have to prohibit the installation of `"As one of the sponsors of the Water Pollution Control Act of 1972 and one of the House-Senate conferees on that bill. I did not at any time perceive any intent on the part of the Congress to inhibit private citizens from the voluntary use of water softening sys- tems in their residences", so states Rep. Jim Wright's letter of June 24, 1974, to Quality Water Education Committee. 63-192-76----14 PAGENO="0210" 204 nnv new home-regeneration softeners". The article then goes on to indicate that the same EPA agent cited Corona, California "as an example of a city which had to ban home w-ater softeners to control salinity discharge problems". This case is illustrative of other instances where, although Washington pro- tests that Federal regulations do not apply to home water softeners, the long arm of Washington pressures local governments into compliance with regula- tions which Washington says do not exist and for which Washington Lurther says there is no statutory authority. And the States protest lack of choice be- cause of Washington's pressure tactics. Meanwhile, knowledgeable congress- men, those w-ho designed the law, say they never intended such effect. The Water Quality Association is not unsympathetic to recommendations that "caution should be the watchword . . . toward major program changes". (Report and Recommendations of the Staff, Subcommittee on Investigations and Review, House Committee on Public Works and Transportation on P.L. 92-500. May 13, 1975. page 3). But the Association agrees that "the program needs some identifiable benchmarks . . . a few adjustments are necessary to make the program more purposeful, to achieve simplification in its administra- tion and more flexibility in addressing messy, practical problems". (Ibid). RECOMMENDATIONS OF THE WATER QUALITY ASSOCIATION IMPROVING THE FEDERAL WATER POLLUTION CONTROL ACT OF 1972 We recommend to the Congressthat there be changes in P.L. 92-500 to clarify intent, to permit achievable objectives and to place the water pollution control program in harmony with other environmental programs, rather than pre-empt funds from them. The existing law `limits water quality improvement without exception in favor of enhancing the quality of waste discharge. The definition of pollution in the law prohibits the alteration of water quality, even improvement of water quality by a homeowner, by a commercial/industrial establishment or by a community. An effective water pollution abatement program with defined attainable goals can be provided with the following changes in the law: (1) Change the definition of pollution. Current law defines pollution as the "man-made or man-induced alteration of the chemical, physical, biological or radiological integrity of water." This erroneously assumes that all natural water supplies have inherently, optimum integrity; furthermore, it prevents the improvement (alteration) of water quality in the home for the benefit of the user. The House Public Works Committee adopted a reasonable definition in 1966: "Pollution is an impairment of quality such that it interferes with the intended usage." We recommend adoption of that definition. (2) Make it specific that the Congress intends guidelines to be guidelines and not standards. Moreover, the Congress must spell out the considerations which it expects EPA to include in devising those guidelines. (3) The Congress should adopt the policy that the total environment must be considered as an entity and that the zero discharge concept is not compatible with that or with the conservation of natural resources or energy. (4) Only by defining "pollution" in terms of actual adverse effect can there be a full utilization of municipal treatment works and not a restriction against homeowners for discharges which really have no significant effect on either the treatment works or the receiving stream. The environment is better served by changing Congressional requirements on pre-treatment to allow certain non-toxic dissolved solids to be discharged in the treatment plant as long as there is no interference with the treatment plant operation or receiving-stream use. (5) National uniform standards impose both an economic penalty and, in in- stances, an objective that physically is unattainable. Taking the "exemplary plant" as the requirement for all plants regardless of their age or process or re- ceiving water use is not the way to promote pollution control and, at the same time, maintain employment and combat inflation. This appraisal of the law is prompted by our willingness to believe that the Congress did not intend to prevent a homeowner from having a water softener in his home. A review of the law and its implementation affecting cities and in- dustries demonstrates that Congressional zeal has not been matched with fore- sight. The difficulties can be blamed in part on EPA interpretation, but there are fundamental causes for trouble for which the Congress is responsible. A more expanded exposition of these concepts is available from Water Quality Associa- tion. PAGENO="0211" 205 TESTIMONY OP DONALD PORTH, EXECUTIVE VICE PRESIDENT, OULLIGAN INTERNATIONAL CO., ACCOMPANIED BY DOUGLAS OBERHAMER, EXECUTIVE VICE PRESIDENT, WATER QUALITY ASSOCIATION, AND ROBERT DOYLE, COUNSEL, WATER QUALITY ASSOCIATION Mr. PoRTii. I am Donald Porth, executive vice president of the Cul- ligan International Co. And I no doubt represent today a different type of organization, a water quality association, which has as its intent, and has had for the past 30 years, the improvement of water quality. We have a membership, Mr. Chairman, of 1,000 firms who design, manufacture, and install onsite and point use water conclitiomng equip- ~irient. No one can sincerely quarrel with the intent or purpose of Public ~Law 92-500, but its breadth and idealism have, in fact, caused serious problems, some of which were simply not perceived and some of which ~run contrary to congressional intent. This committee is to be commended for taking a look at some of these consequences. I will touch only on a few of the most onerous which affect the water quality industry. Natural water, suprisingly to many people, seldom has integrity. All water supplies are in need of water quality improvement. Not so surprisingly, there are tens of millions of consumers all across the country who have chosen to utilize our equipment and services in order to correct undesirable and objectionable characteristics inherent in community and private water systems. To illustrate, private water supplies, and there are about 12 million in America, may not be safe to drink. Community supplies may not be palatable because of objectionable taste or odor. Some water supplies have staining characteristics. Hardness in the majority of water supplies requires excessive con- sumption of soaps, detergents, chemicals, and phosphates, thus causing tremendous economic waste. The EPA calculates that hard water damage are in the order of $6.3 billion annua.lly. This, in turn, creates a worse pollution problem. In addition, hardness in water also creates a need for inordinate energy use. improving the quality of water through the use of conditioning equipment, as seen in this perspective, therefore, is a necessity for mil- lions of American homeowners. It is also a necessity for the life-sustaining practitioners who must rely on water to very exacting quality specifications in disease control and treatment. Perhaps the most impressive illustration is the kind of ultrapure wa- ter that our industry must provide for the thousands of patients today on kidney dialysis machines. American industries too have a wide-ranging need for specialized quality water we supply. Now, misinterpretations of legislative purpose surrounding Public Law 92-500 have created situations which are preventing the use of this water conditioning equipment in some parts of the country today. PAGENO="0212" 206 This could easily expand to other parts of the country tomorrow or next week. The problem is caused by application of the act's definition of i~o1- lution by the EPA, and by the position of State agencies in responding to Federal pressures. Let me illustrate. Impurities from water do not just disappear. This is true whether they are removed by a community water purification plant or by individual household treatment equipment. As interpreted, the Public Law 92-500 pollution definition attempts to prevent such returii. In essence, they would have us somehow repeal the laws of nature. The act defines pollution as a manmade or man-induced alteration of the chemical, physical, biological, or radiological integrity of water. As construed, this language permits no distinction among dis- charges, whether they are toxic or not, whether they are damaging or not, whether they are assimilable by the environment or not. A literal application of this definition prohibits the use of our equipment to improve the quality of water. We do not believe this is what Congress intended to produce when the definition became law. Nevertheless, under regulatory interpretations of the guidelines called for in Public Law 92-500 equate such guidelines with inflexible standards in all circumstances rather than with a set of rules against which scientific conclusions can be measured for the production of rea- sonable standards applicable to specific situations and proven environ- mental damage. The emphasis on controls of waste discharge without reference to actual beneficial or detrimental effects seems to us to totally avoid the law's purpose and the lawmakers' intent. The situation is aggravated by the fact that State agencies, relying on Washington's position and encouragement, have themselves estab- lished such unreasonably low limits for the discharge of sodium, chlorides, a.nd total dissolved solids that the State effluent waste stand- ards are often more restrictive than drinking water standards. In California, for example, salt has been classed along with pesti- cides and heavy metals as a toxic material. The result, naturally, is a restriction on the homeowner's ability to improve the quality of water for use of his family. In summary, we make the following recommendations for change in the statutory language of this law: First, change the definition of pollution. The current definition erroneously assumes that all natural water supplies have integrity. Furthermore, it prevents the improvement or alteration of water quality in the home or in the community for the benefit of the user. The I-louse Public Works Committee adopted a reasonable definition in 1966 as follows, and I quote: "Pollution is an impairment of quality, such that it interferes with the intended usage." We recommend adoption of that deffnition. Secoud, make it specific that the Congress intends criteria or guide- lines to be guidelines and not standards. PAGENO="0213" 207 Third, adopt as an expressed congressional policy that the total en- vironment must be considered as an entity, and the zero discharge con- cept is not compatible with that or with the conservation of natural resources or energy. That concludes my statement, Mr. Chairman. We appreciate the opportunity of being heard here today. Mr. ROBERTS. Thank you very much. Any questions, Mr. Roe? Mr. ROE. No, Mr. Chairman. I think they summed the case up very clearly. Mr. ROBERTS. Mr. Abdnor? Mr. ABDNOR. No questions. Mr. ROBERTS. May I express my appreciation to the members for being here and to the witnesses for being so brief and thorough in their statements, and for those of you who have been here for the attention you have given. We will now recess until September 30 at 10 a.m. [Whereupon, at 2:50 p.m. the subcommittee recessed to reconvene at 10 a.m. on September 30, 1975.] [Subsequent to the hearing, the following was received for the record.] WATER QUALITY ASSOCIATION, Lombard, Ill., October 6, 1975. COMMITTEE ON PUBLIC WORKS AND TRANSPORTATION, House of Representatives, Rayburn House Office Building, Washington, D.C. DEAR SIRS: At the conclusion of the September 24, 1975, hearings on proposals to amend the Fecleral Water Pollution Control Act, you presented us with two questions indicating that Mr. Clausen was seeking further information for the record. The first of these questions was as follows: How many corporate members are there in your association? Answer: It's a little difficult to provide a categorical and simple answer, and I apologize in advance for the lack of distinct clarity in my response. The Water Quality Association is a non-profit organization which consists of members en- gaged in the manufacture and in the wholesale and retail distribution of water conditioning equipment. The membership totals 1007. Obviously, our manufac- turer members are corporate entities, and they number 57. The remaining 950- veholesale and retail distributors-comprise various business entities: corporate, partnership, single proprietorship, and possibly other forms. With respect to this latter group, unfortunately, we have never sought to tabulate precise information. With respect, therefore, to your questions on the number of "corporate" numbers, we are unable to supply an answer. Mr. Clausen's secohd question was: What are the products of the reaction be- tween salt and hard water? Answer: This question requires, it seems to us, a technical explanation of the process of hard water formation, its problems for the American user, and a dis- cussion of our treatment methods. And the question seems to suggest a concern re the disposition of the salt effluent incident to such treatment and the problems which such disposition may possibly be conceived to create in its treatment. First, let me deal with the technical issue: salt dissolves in hard water, but does not react with the hardness. It is used as a regenerant in water softeners, but does not itself soften water. Hard water is formed when rainwater, which is naturally acid, dissolves the hardness minerals from the earth, which are pre- dominantly limestone rock. It thus picks up hardness (principally calcium and magnesium) which, is dissolved rock. When hard water is heated' the dissolved rock drops out of solution forming energy consuming scale, in water heaters, boilers and pipes. Hardness also seriously interferes with laundering effective- ness and wastes tremendous amounts of soaps and detergents. When hardness PAGENO="0214" 208 is present, the soaps or detergents must first soften the water before they can exert cleansing action. The simplest method to overcome the hard water problem affecting about 80% of the area of the United States is to remove the hardness by a process called ion-exchange. This is accomplished by household, commercial, or industrial water softeners. The softener is really a column which contains a filter-bed of tiny bead- like particles of ion-exchange resin. These particles do not dissolve in water but have the ability to remove calcium and magnesium (hardness ions) from the water, trading or exchanging them for an equivalent amount of innocuous sodium ions. These sodium ions do not form scale or interfere w-ith the action of soaps or detergents in w-ashing the skin or laundering fabrics. When hard water is softened by the ion exchange resin, the resin produces completely softened w-ater. Depending on the size of the resin bed and the hard- ness of the water, the ability of the resin to remove hardness periodically becomes exhausted. At this time, it must be recharged with a table salt solution which. renews the ability of the bed to soften water. This is done by replacing the calcium and magnesium ions held in the bed with sodium ions. The calcium and magnesium chlorides and excess salt are rinsed from the resin bed and carried to a drain during recharging. This entire process is called a cycle, and the resin is -capable of almost limitless cycles. Its ion exchange properties do not wear out. Over a number of years of operation however, there may be slight degradation and gradual loss of resin particles, or the resin might become fouled if used to soften a water supply that is also high in iron content. The resin bed also filters turbidity (cloudiness) from water supplies. The water softener cycle, removes small amounts of iron very effectively, and also removes copper, as well as toxic dissolved metal impurities, such as cadmium and lead. It also removes radioactive impurities such as strontium 90, cesium 131 and other radioactive metals very effectively, as described in several scientific- papers. Because water softening is simple and effective, it substantially reduces the- need for phosphates in detergents-a fact well known -by laundries, and it reduces the amount of soaps and detergents required-thus substantially reducing the amount of soap, detergent and phosphate wastes which enter our lakes and streams. Medical authorities moreover, have shown that w-ashing, bathing and shampooing with softened water is essential to effective cleansing and to dermato-- logical health. In summary, the benefits are great and the effluent is innocuous and incidental in quantity. The effluent has no undesirable effect on fish or aquatic plant life; it does not precipitate or build-up in lakes or streams to cause eutrophication, and it does not act as a nutrient. It does go to the sea, which predominantly contains identical dissolved substance. With respect to the second aspect of the answer, as we said in our full statement during the September 24 hearing before the Water Resources Subcommittee. the current definition of "pollution" as contained in PL 92-500 (Sec. 502 (19)), is the man-made or man-induced alteration of the chemical, physical, biological or radiological integrity of water." This language permits no distinction as among discharges: whether they are toxic or not; whether they a-re damaging or not: whether they are assimilable by the environment or not. We do not believe that Congress intended a literal application of this definition to prohibit the use of equipment to improve the quality of water. This is precisely w-hy we suggested that the definition should not set-up standards, but rather criteria, against which the total environmental effect can be measured. As affirmed in communication from Congressmen, Congress did not intend to shut the homeowners off. Over and above this, we are greatly troubled by tile fact that EPA disclaims any control over state agencies vis a vis the establish- ment of effluent standards by the states. But it is true, nevertheless, that the long and strong -arm of Washington in fact pressures, through a variety of means. the states to adopt unreasonably low discharge limits. Our files can document, if you like, evidence that this is resulting in some communities prohibiting the -in- stallation of water softeners in homes, and other communities undertaking to dis- connect existing installations. The Water Quality Association would be pleased to work with the Co-mmitte& and its staff in any way which might be deemed useful. Sincerely, - WATER QUALITY ASSOCIATION, DOUGLAS R. OBERHAMER, Ewecutive Director. PAGENO="0215" TO AMEND THE FEDERAL WATER POLLTJTION CONTROL ACT TUESDAY, SEPTEMBER 30, 1975 HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON WATER RESOURCES, OF THE COMMITTEE ON PUBLIC WORKS AND TRANSPORTATION, Was hingto'ii, D.C. The subcommittee met, pursuant to recess, at 10:02 a.m., in room 2167, Rayburn House Office Building, Hon. Ray Roberts (chairman of the subcommittee) presiding. - Mr. ROBERTS. The Subcommittee on Water Resources will come to order. This morning the Subcommittee on Water Resources will conclude its hearings on H,R. 9560, "The Federal Water Pollution Control Act Amendments of 1975." Last week we held 2 days of hearings on H.R. 9560 and received testimony from State and local public officials, representatives of the environment and industry, and representatives of public and pro- fessional organizations. This morning we will receive testimony from an especially dis- tinguished list of witnesses. We are pleased to welcome the Honorable Russell Train, Adminis- trator of the Environmental Protection Agency, who is charged with the major responsibility of implementing the Federal Water Pollu- tion Control Act. Before I present Mr. Train, he said he would defer to the Governor of Georgia. I would like to apologize to the distinguished witnesses today, be- cause the House is in session, we are going to be shuttling back and forth to answer roll calls. We will expedite the situation as much as we can. Generally it takes 15 mimites to get from here over there and vote and get back. So it is going to be a long, hard day. The Chair is pleased at this time to recognize the Chairman of the Full Committee, the Honorable Bob Jones of Alabama. The CHAIRMAN. Thank you very much, Mr. Chairman. I will not impose on the committee's time this morning. Due to the fact that the session just stated could not be anticipated by the Chair- man. We will have to make the best we possibly can of the time, and be as responsive as we possibly can, to the disconvenience of the witnesses who have been solicited to testify before the committee this morning. I hope that we can accommodate the witnesses who are here from some distance. (209) PAGENO="0216" 210 Mr. ROBERTS. The Chair recognizes the distinguished minority men'i- `her of this committee, Mr. Don Clausen. Mr. CLA'USEN. Mr. Chairman, I am pleased tO welcome the witnesses before this committee, and ask unanimous consent that we insert their statements in the record at this point. Mr. ROBERTS. Without objection, so ordered. I want to welcome our leadoff witness, Mr. Train. Mr. Train, are you going to go first? Mr. TRAIN. No; I would be glad to defer to the Governor, if that would be the committee's wishes. I will be available the rest of the morning, and so I will be happy to do that. Mr. ROBERTS. Governor, I understand you have a tight schedule, and with that, thanks to Mr. Train, we would be happy to have you first. Mr. TRAIN. I ought to try to squeeze some concession out of him first. Mr. ROBERTS. Yes. it is my pleasure now to welcome the gentleman from Georgia. Mr. Ginn, to welcome his Governor. Mr. Gixx. In the interest of time, and we are quite crowded today, may I just present to the subcommittee, the best Governor of the T,Jnited States, Governor Busbee of the State of Georgia. Mr. ROBERTS. Mr. Jones. chairman of the Full Committee on Public ~Works and Transportation has a few words. The ChAIRMAN. Mr. Chairman, I would certainly like to join our `friend from Georgia, and welcome Governor Busbee. Very recently he was host to, the Rockefeller Commission down in Atlanta. It was a very pleasant experience to those of us who were on ~the Commission who attended. We gained a great deal of information ~whicli Governor Busbee and his colleagues accumulated, and it was of great advantage to all of us. lYe know of his deep interest in the sub- ject. in which lie is testifying this morning. Thank you. Mr. ROBERTS. Governor Busbee, please proceed. ~TESTIMONY OP HON. GEORGE D. BUSBEE, GOVERNOR, STATE OP GEORGIA, REPRESENTING NATIONAL GOVERNORS' CONFERENCE; ACCOMPANIED BY LEONARD LEDBETTER, DIRECTOR, GEORGIA `ENVIRONMENTAL PROTECTION DIVISION; AND DAVID JOHNSON, SPECIAL ASSISTANT FOR NATURAL RESOURCES Governor B~SBEE. Mr. Chairman, I would like to con'ipact my state- ment, file it, so I will not read the statement in its entirety. I will refer to it. Mr. Chairman and distinguished members of the subcommittee, I apprec1ate the opportunity to preseiit a statement to you this morning on behalf of the National Governors' Conference, regarding proposed amendments to the 1972 Federal Water Pollution Control Act. 92-500. I first would like to thank Mr. Train for deferring to me in order that I might return to my State. I am George Busbee. Governor of Georgia. In our meeting in June of this year in New Orleans, the National Governors' Conference adopted a policy statement on water pollution. The i~olicy statement specifically encourages the prompt passage of amendments to Public Law 92-500, and prompt amendn'ients to certain regulations promul- PAGENO="0217" 211 gated by the Environmental Protection Agency. These changes are needed to permit full implementation of the requirements of the act, and the timely obligation of available construction grant funds. I actively supported the adoption of the NGC policy statement, and I fully support its recommendations. I offer, -for the record, a copy of the policy statement. [Policy statement referred to follows:] POLICY STATEMENT-NATIONAL GOVERNORS' CONFERENCE, NEW ORLEANS, Ju~u 1975 WATER POLLUTION The success of the Federal Water Pollution Control Act Amendments of 1072 (PL 92-500) is dependent upon effective cooperation between the States and the federal government, realistic regulations and administrative procedures, and adequate funding of all activities and construction necessary to accomplish the goals of the act. The National Governors' Conference endorses the policy of Congress as declared in Section 101(b) of the act ". . . to recognize, preserve and protect the primary responsibilities and rights of the States to prevent, reduce and eliminate pollution . . ." The Governors encourage the prompt passage of amendments to the act and proper amendments to the regulations to permit full implementation of this policy and the prompt obligation of available construc- tion grant funds. The actions required to accomplish this include: (A) Title II should be amended to authorize the States to administer the' construction grants program and the EPA Administrator to accept a State's certification of a project. This amendment should provide additional financial support to assist the States in administering the grants program and eliminate the duplicate and time-consuming reviews by both States and EPA. (B) Title II should be amended to require EPA to abolish the three-step,' time-consuming construction grant application process and to replace it with a simplified one-step process, especially for projects serving less than 10,000' population. (C) Title I should be amended to authorize and implement year-ahead funding of the state program grants. (D) Title II should be amended to clarify the areawide waste treatment management requirements of Section 208 `and eliminate the potential duplication of efforts under Sections 201,208 and 303(e). (E) Funding at federal and local levels should be consistent with the goals' of PL 92-500. (`F) All elements of pollution abatement or control facilities should remain eligible for federal grants-in-aid with the ability of individual States to establish priority for the use of the funds for specific projects and project elements in accord with Section 100 of the act. Nothing in Section 100 of the act should be construed to limit the States' ability to fund projects to abate health and en- vironmental hazards. (G) Federal control and influence over local municipal user-rate structures' a'nd industrial cost recovery systems should be removed as current federal statutory `and regulatory controls are unnecessarily cumbersome to administer and disrupt long-standing local arrangements and prerogatives in citizen taxa- tion. Federal involvement should only extend to assure that local government will provide for the local share of project costs and sufficient funds for proper operation, maintenance and compliance monitoring. (H) Attempts to establish by legislation treatment and sewer facility design life should be terminated. State approva'l of 201 plans based on the principles of abatement of existing pollution and reasonable growth in the sewered area are capable of constraining design life more reasonably. (I) The 1977 timetable for municipal secondary treatment should be relieved `and exten'sions granted through the NPDES conditions. Such conditions should be commensurate with the availability of federal grant funds as specified in Section 101 (a) (4) of PL 92-500. (J) Th'ere must be established within EPA effective administrative procedures to receive state input early in the statute and regulation drafting process. PAGENO="0218" 212 (K) Present regulations should be modified to allow States to make minor adjustments to project scope subsequent to facilities plan approval. (L) In order to provide for more effective management of the construction grant program and to promote the expeditious commitment of available federal aid, authority to issue case-by-case waivers to the EPA construction grant regu- lations should be delegated to the regional offices to the maximum extent possi- ble under the act. Governor BUSBEE. J-LR. 9560 extends authorization of funding for several critical aspects of the water pollution control programs; how- ever, the appropriation of these authorized funds must be forthcom- ing if we are to accomplish the objectives. Funding for section 208 areawide waste treatment management planning agencies is needed, and we support the concept. It must be emphasized that IFLIR. 9560 fails to provide specific authorization for funding to the States for required 208 planning efforts in nondesignatecl areas. In many areas of most States a more cost-effective effort ca.n be made by the States providing the needed 208 type planinng. We urge you to evaluate this State program approach and provide specific authorization and fund- ing for State 208 planning activities through 1-I.R. 9560. Also, I would like to remind the committee that the Federal-State budgetary process is out of phase. Without knowing the amount of Federal funds to be available, it is extremely difficult in the State budget process to plan for the required staff and support. Therefore, we recommend that you consider the possibility of a procedure to authorize and appropriate year-ahead funding under section 106 for State program grants. Time National Governors' Conference recommends that Federal requirements and involvement regarding user charges and industrial cost recovery be limited to the requirement that local governments provide for the local share of project costs as well as sufficient funds for pm'oper operation, mnamtenance and compliance monitoring. Sec- tion 4 of H.R. 9560 partially corrects the existing problems in these areas. Further consideration should be given to the provision of more flexibility to the States and local governments in user charges and industrial costs recovery. The reimbursement authorized under section 5 of H.R. 9560 is needed. It is our understanding that you have information from EPA indicating that the authorization under section 5 would be sufficient to fully reimburse all qualified projects. Again, we agree with the con- cept and urge that sufficient funds be appropriated as well as authorized. The Association of State and Interstate Water Pollution Control Administrators (ASTWPCA), which I understand will present a statement to the subcommittee, this morning, represents the technical and professional personnel of the State agencies involved in efforts to implement requirements of Public Law 92-500. Most of our recom- mendations to you will be comparable to those in their prepared state- ment. The No. 1 water pollution PO1iC3T recommendation of the Na- tional Governors' Conference was that title II be amended to author- ize the States to administer the construction grants program. Section 8 of H.IR. 9560 would authorize such action and we support the concept. However, it is our understanding that when members of ASIWPCA worked with EPA in drafting proposed regulations for rapid imple- mentation of the Cleveland-Wright bill (H.R. 2175) certain language PAGENO="0219" 213 in the proposed legislation was identified as needing changes. We fur- ther understand that members of ASI\~\TPCA discussed these needed language changes with Congressman Cleveland and others. We urge that consideration be given to changing the wording in section 8 of 1-1.11. 9560 to be consistent with the revised language proposed by ASIWPCA for ILR. 2175. These changes would facilitate rapid im- plementation of the certification process, and the flexibility provided would assure the involvement of a larger number of States. We continue to support the extension of the 1977 deadline for mu- nicipal secondary treatment. Since the `States are required to develop implementation dates for treatment facility installations as a part of `the section 303 (e) basin plans, and when administering the National Pollutant Discharge Elimination System (NPDE~S) permit program to setforth a compliance schedule, section 9 of `H.iR. 9560 is `inconsistent. The language should be changed `to authorize the Administrator to delegate this responsibility to a State as `a part of the NPDES permit program. If t'his flexibility is not provided an unreasonable increase in paperwork and review procedures will be added to a program already suffering from too much bureaucracy. We agree with `and support section 10 of H.R. 9560. This change will provide sufficient time and frequency for the State water quality re- ports required under section 305 (b) `of Public Law `92-500. `Sections 11 and 12 of BI.IR. 9560 are not ac'tions specifically endorsed by the `National Governors' Conference; however, we generally sup- port these sections as proposed. The changes by ZH.R. 9560 would en- able a more realistic administration of this portion of Public Law 92-500. As members of the Congress know, there has been considerable dis- cussion regarding possible changes in the Federal share for construc- tion grants as well as restricting the types of projects considered eligi~ ble. All elements of water pollution abatement or control facilities should remain eligible, and the States should have the authority to establish priorities for the use of the 75 percent construction grant funds for specific projects. Sin'ce you have not addressed these issues in `I-I.R. 9560, we sincerely hope your intent is consistent with our posi- tion~ that is, the continuation of 75 percent construction grants for eligible projects as defined in Public Law 92-500. Secondary treatment requirements were discu'ssed in a report pre- pared by the staff of the Subcommittee on Investigations and Review, dated May 13, 1975. Further consideration `should be given to amend- ing Public Law 92-500 to assure that the States have the authority to consider a variety of environmentally related local conditions when establishing the minimum level of treatment for publicly owned sys- tems. This flexibility would allow many existing treatment facilities to be identified as providing the required level of treatment to protect the receiving stream instead of providing a level of treatment to meet a Federal definition. `We note with concern that H.R. 9560 does no't provide for the authorization of construction grants in the future. In the States we are presently obligating fiscal year 1976 funds for various projects. Surely the distinguished members of this subcommittee recognize that to plan effectively for the wise use of these funds the States need to know the approximate level of future funding. The funding of f a- PAGENO="0220" 214 cilities plans and engineering documents for projects on the fiscal year 1916 project funding lists without some indication that future funds will be available for construction of these projects does not promote good program planning and management principles. We urge that consideration be given to using a 5-year authorization period for planning and management purposes. Several Governors have been invited to present statements and recommendations at hearings conducted by the National Commission. on Water Quality regarding Public Law 92-500 and the water pollu- tion control program. A review Qf the statements presented will docu- ment that amendments to the act. have been recommended by the majority. We recognize the importance of our valuable water resources and the urgency with which we must move to properly manage and protect them. The amendments to the act and the changes in the pro- gram that we have recommended to this subcommittee and the Na- tional Commission on ~\Tater Quality are for the benefit of the pro- gram and necessary to assure an effective water quality program across the Nation. We recognize the reluctance that some of you and the committee's staff have in considering amendments prior to comple- tion of the National Commission's report and recormnendations. Due to the urgency of this program it is essential that some changes be made now to assure continuity. Other changes to Public Law 92-500 can and should be macic after the National Commission's reports have been reviewed by the Congress. ~\Te offer our statement and recommendations on 1-ii.R. 9560 and related issues in a constructive spirit with the hope of assuring more effective management of this important program. We respectfully request your consideration of these matters and those presented to the National Commission. The National Governors' Conference will continue to work with you and EPA to implement this program. Mr. Chairman, I appreciate this opportunity to speak to you on be- half of the National Governors' Conference. Mr. ROBERTS. Thank you very much for such a brief but thorough statement. The committee will stand in recess for 15 minutes as we have an automatic rollcall. [Short recess.] Mr. ROBERTS. The subcommittee will resume its sitting. The chairman is pleased to recognize again the distinguished chair- man of the full committee, the gentleman from Alabama. The gentleman from Alabama defers to the gentleman from New Jersey, Mr. Roe. Mr. ROE. Thank you Mr. Chairman. I too wish to join with the members of the committee, particularly our subcommittee chairman a.nd full committee chairman, Mr. Jones, in complimenting Governor Busbee for a clear and concise statement. There is one thing that has to be put on deck, because it is a key issue. In your statement, you statedi and I quote: Surely the distinguished members of this subcommittee recognize that to plan effectively for the wise use of these funds the States need to know the approxi- mate level of future funding. Now, in all due candor, Senator Talmadge has tacked on a subse- quent amendment to our economic developmnent legislation which does PAGENO="0221" 215 great violence to the water pollution control programs of many of the industrial States in the North. In my State, in New Jersey, for instance, Senator Talmadge suggests would lose $253 million. The State of New York would lose $216 mil- lion; Michigan $270 million; Illinois, close to $113 million; California $80 million; and so forth. Now, it seems to me that if that is the tenor and the direction of the good Governors of our States, as expressed in your statement which I respect, then it seems to me to be an inordinate thrust upon the whole water pollution control program of the Nation to establish an amend- ment that literally adversely affects the States of 243 Members of the 1-louse. My State has planned and worked diligently on its water pollution control program based on funding allocated to them under legislation enacted into law in 1972 and I just find it a little bit too much at this stage to change direction. Many States have gone into added bond issues, they have gone into referendums to establish their level of funding to meet the fiscal needs that were projected under the original formula of Federal assistance allocated for our respective States. I just wonder if you `have any thoughts on that. I do not want to embarrass you. Governor BUSBEE. You will not embarrass me, and I hope I will not embarrass you, but I may embarrass some of the Governors. I can answer your question about the great States that you men- tioned by saying this. That in addition to the States that you alluded to, we have 31 other great States that have been violently discriminated against by the method of impoundment that has come out. I will say this of Mr. Train. I think Mr. Train came up with a good formula when he came up with a 50 percent population based on the formula and the needs survey. I think this is an important matter that I speak of as one Governor. I want to say in the amendment that you referred to, Senator Tal-' madge, that this was discussed `at the Governors' Conference, that 31 of the Governors did endorse what the Talmadge and Nunu amend- ment did, because here is what it does and this alone. The first formula was based on the 1971 needs survey by EPA. This was used and adopted by the Conference Committee when they passed that piece of legislation. That was not a scientific needs survey, and does not take into con- sideration the needs of pollution control at this time. The second formula was 1973 needs survey, and it was used in the year 1975. It is under the proposed release that you have, and in which you are in accord with, and which I object to, a~id which 31 other States object to, is that that goes back to an old formula where you excluded from consideration every town and municipality of less than 10.000 in population, and let us not distribute this $9 billion according to the scientific needs survey that you had in 1974. I can think of no more equitable formula., Mr. Roe, to make the distribution under than 50 percent, based on population, and 50 per- cent based on the 1~J74 needs survey which every State in this Nation knows is a more scientific and eouitabie recognition of the present needs of pollution control in these United States. PAGENO="0222" 216 I have supporte.d legislation in this Congress that I do not agree to in its entirety, and I have to come up with a policy. I have supported energy proposals that I do not agree to all together. I have addressed many na.tioiial problems. Pollution is a national problem, and I think we should be equitable in this approach. If you want to go back to the archaic method of the 1970 needs program, which evidently you do, then I would suggest to harness that, you modify the Talmadge-Nunii bill, so that you will not be hurt by this, and I would not object to this if you want to do this, but for God's sake, do not sacrifice 31 other great States and all these other States. Mr. ROE. I appreciate, Mr. Governor, the warmth and the respect and the sincerity of your response. I think it is very important, however, in my judgment, half of nothing is nothing. I do not demean, or denigrate any other States. My State is drown- ing in its own swill at this point. But if it is the decision of the States to devise a program that is equitable, one does not pull the rug out from under the other States when they have proceeded to do what they were supposed to do, and in the proper direction, under a for- mula established by the legislation enacted into law in 1972. I would suggest that the good Governors ought to get tog~ther. When one brother is harmed, then all are-we are a nation of 220 million people, and I would warmly support any modification of the Talmadge amendment that would be fair and equitable to Georgia and every other State in this Nation. I will not support, however, any program that is going to denigrate and pull the rug out in the midd'e of a program. It is tough enough to make this program fly. I would suggest that I think the matter is of such moment, Mr. Chairman, that this legislation is categorically not going to move in the House with this division that we have, and we are looking for guidance and wisdom and some kind of comfort from the Governors, too. I think they have a responsibility, and they ought to apprise us of their situation `and come back with a policy position. Governor BIJSBEE. I think Mr. Roe is correct. This is one of the most important things that you have discussed. Mr. ROE. This one issue is holding up several different pieces of legislation, the EPA. legislation, Appalachian ie~isiation and the pub- lic works capital investment construction legislation. I welcome this opportunity to exchange views `and look forward to having your further thoughts and observations. Governor B~SBEE. I think we have conversation now, and in the future. You have mv attention. and I hold it, because I single-handedly did this in New Orleans. I have 31 Governors, and 61 Senators now. I think we have gotten your attention. The time has come for your group and my group to sit down and be equitable with all of the Nation. I am willing to make concessions to these good States that you refer to, if you are willing to make concessions to the good States that I referred to, and let us get on with the program. I am almost maldng shuttle runs here now. I have been with HEW- Mr. ROE. It is your convenience for commisseration. Governor BUSBEE. I will be in immediate contact with you. PAGENO="0223" 217 The CHAIRMAN. If the gentleman of New Jersey would yield. Governor, if I understand your testimony this morning, the con- tentions in what you are advocating are not based on any anticipated changes in the formula. They are based-the assumptions are made- on the formula as they presently exist. Governor BUSBEE. That is correct. The CHAIRMAN. So what you are particularly interested in, is to get away from this herculean task that we, the administration and all of us face, of the consequence of the impoundments and to have a pro- gram that will assure continuity and proper planning, and proper execution on a wise and prudent course. Governor BUSBEE. Absolutely, Mr. Chairman, and this goes over to Mr. Roe's question, I think. The statement that I made, Mr. Chairman, that we need some direc- tion over a period of time as to what the level is going to be on approp- riations of this program. Because we are talking about three steps, including the planning steps. I am called on as Governor to the State's portion of the pollution money, without knowing what the level will be in Congress. I want to say that I fully appreciate the difficulty you have in your appropria- tions process, in not being able to appropriate for the next 5-year period. Here is what my suggestion is. We have the same difficulty in the States- - Mr. ROBERTS. Let me interrupt. We do not appropriate, we just give you a hunting license. Governor BUSBEE. This is what I want to speak of as a hunting license. This is what I would refer to as authorization. What I am asking for in this State, is that this committee and that this Congress, give an authorization level for this program. I think it is going to take, and I think Mr. Train would say from $5 billion to $~ billion. If you come up with the authorization level, I am fully aware of the fact that you still have not passed an appropriation for this amount. We would then have your authorization as being the sense of Con- gress, if the funding level, and it would only be the sense of Congress, but at that point in time when I write my budget for January, then I will know whether to write it based on appropriation at the na- tional level or the $9 billiOn, or $2 billion, or $5 billion, and we have to have not only the grant knowledge, but also the planning knowledge. I cannot afford these high priced people like I have here, if I do not have projects going. But we are faced with the same difficulty at the State level that you are at the national level with this system of appropriations. If you could come up with an authorization level, I recognize that Congress is not bound by it, and we, as Governors, could plan on it. The CHAIRMAN. Before you get that hunting license, you want to know whether there is something out there to hunt. Governor BUSBEE. Mr. Chairman, you have an honorary hunting license in Georgia. The CHAIRMAN. The whole matter is that I think it is a little bit more than a hunting license, because there is an obligation of the PAGENO="0224" 218 Federal Government to provide sufficient funds that will permit you to make these plans, and make these obligations, submit these pros- pectus, have them in accord with national policy, the national bill, and if you are to attain success, it has to be a coordinated effort, not only in planning, and the people in your local communities, but also have some reasonable assurance that the Federal Government will be forthcoming with the funds for the proj ect. Governor B~SBEE. Precisely. Mr. ROBERTS. The gentleman from California, Mr. Clausen? Mr. CLAUSEX. It had not been my intent to get into this very ex- tensively. But I think tha.t, if I read your comments as you have presented them, your objective is to have an assured funding author- ization for continuity to permit all of the States to go forward with their planning, and the design, and the ultimate implementation program. I think the point that needs to be made, however, in support of the gentleman from New Jersey's position, is that the Talmadge- Nunu amendment. as I understand it~ is retroactive, and it would tend to deprive my State of California, the State of New Jersey, and the other States from being able to go forward with the plans as they ~had projected them. It is for that reason I was more than interested in hearing that you agree that there should be some sort of a hold harmless provision, and I think possibly the exchange this morning between you and Mr. Roe and others has set the stage for the kind of negotiations that would bring about this desired objective. If I understand Mr. Train's proposal, it deals with future author- ization, 50 percent needs, and 50 percent on population. But this amendment is retroactive, and I think that is the reason that the gentleman from New Jersey has so ably presented his view on the part of the other States. Governor BUSBEE. Mr. Clausen, this is something I apologize to the members, because there are some people from California and some from New Jersey that do not agree with my views. I am ready, on behalf of the 31 Governors, and their delegations, to a large extent, to sit down with you, Mr. Clausen, and Mr. Roe, and thus work this thing out. I think it is a sense of urgency. I do not want to hold up the bill-all of these other things are being held up. I say there is a sense of urgency, and I am ready to sit down and make some concessions. I hope you will recognize our neecis. Mr. CLAUSEX. Mr. Chairman, I think we have discussed this thor- oughly, and I think it has been fruitful. Let us get on with the business at hand. Mr. ROBERTS. Are there other questions? Mr. GINX. Now that the Governor and Mr. Roe have each other's attention, I simply want to thank the Governor for his excellent statement. I had something to do in a roundabout way with the Talmadge- Nunn amendment, in that I first offered that bill in here, in the 1-louse. \\Te have over 100 cosponsors to it. We are willing to go the legis- lative route, and process, and I think that the help that the Governor has agreed to give when lie sits clown with Mr. Roe and Mr. Clausen will be invaluable. I want to be a part. of it. Thank you very much. PAGENO="0225" 219 Mr. ROBERTS. The gentleman from Ohio. Mr. HARSHA.. I have no questions. Mr. ROBERTS. Governor, the Budget Act passed last year would re- quire the waste treatment grant progran'i in the future be subject to appropriations for procedure. In your opinion, what will be the effect of this change?. Goverilor BTJSnEE. I iehictantly put the responsibility-I hope I have agreed with the new procedure. I think it is a detriment to the pro- gram that we are now in, because we do not know what your appro- priations level is going to be over an extended period of time, or what we have planned for. However, Mr. Chairman, if you will merely pass the authorization level in this legislation, then we will plan, based on that authorization, because I think that the sense of Congress will be whatever the au- thorization level is, and we would plan, and hope that that would be their appropriation bill, and that is the best you can do, and I realize you cannot guarantee it. But again, I go back, that in our State, finances, as in many other States, I cannot appropriate but 1 year at a time, either. But I can tell you 3 years from now what the programs are in my State based on authorization levels. Mr. ROBERTS. Thank you. I think you have been reading Mr. Train's mail when you talk about a level of funding. Mr. Train proposed to the Office of Manage- ment and Budget that the grant program be funded at a level of $7 billion a year for the next 6 years. Now, if such a sum were authorized, what would be your opinion of this type of funding, arrangement in fiscal 1977? Governor BUSBEE. What I would do then, we have over $1 billion in need because of municipalities alone, we would then fund our budget based upon the assumption that the Congress would make an appropriation at the authorization level of $7 million. If they did not do it, it would result in some chaos. But it could not be any worse than what we have now. Mr. ROBERTS. I believe you testified actually that you would prefer to use the ad valorem taxes, at the community level whenever necessary- Governor BUSBEE. Let me go a step further. Your amendment, Mr. Chairman. Mr. Jones'-Mr. Chairman's amendment, provides for that law. We support what he is doing as far as the concept. What we are asking for is a little more flexibility, and this would be speaking for my State, and other States, tha.t we have other alterna- tive taxes, as long as we come up with the money. Mr. ROBERTS. So what you are really saying is you really want flexibility. The gentleman from California, Mr. Clausen. ~ ~ (~ ~-srx. When von say flexibility, could you give us an exam- r~lr~ of n-bet. von mean, as it relates to the States, and Governors and indlTstrwl cost recovery. Governor BUSBEE. Yes; I have given to you the Governors Confer- ence statement, I think paragraph (g), gives some illustrations, but I can give you in my home area an example. You have the user tax now, and you have the proposal. We have in the city of Trion, in Georgia, a situation on bonds where you have 63-192-76-15 PAGENO="0226" 220 two industries, and in fact, I will let Mr. Ledbetter give that illustra- tion, I think it would demonstrate, with the chairman's permission. Mr. ROBERTS. Would you give your name? Mr. LEDBETTER. I am Leonard Ledbetter, director of enivronmental protection in Georgia. The flexibility we are seeking is, for example, in Trion, where we had a large textile mill, and there was a bad situation. They had a bad problem with their bonding rights, et cetera. So the industry simply said, we will buy all of the bonds, and they did this, and then they hired the people to operate the facility itself. Now the industry is paying more than their share, and we are strong believers in industry, or other users, commercial, private users paying their share of the load, but at the same time we need the flexibility in situations like that to implement. Mr. ROBERTS. The gentleman from Minnesota. Mr. OBERSTAR. More a comment than a question. I want to join with Mr. Roe. I appreciate his comments. I want to let Governor Busbee know that in our State of Minnesota we would be very severely hampered by the so-called Talmadge amend- ment. I fully appreciate the problems that these States and municipalities have in planning ahead, in knowing what level of funding they are going to have, and we want to make sure that this is one of the thrusts of Public Law 92-500, for the States and the Federal Government to plan ahead, so that we know what kind of water pollution program we are going to have, and we want to make sure that you get that kind of certainty in your program planning. But I do not think this approach accomplishes that goal. My own district, Governor, I am sad to say, would lose virtually everyone of the applications presently pending for Federal funding, and that is kind of a hard pill to swallow. So I welcome your willingness to cooperate and work something out with this committee. Mr. ROBERTS. The gentlewoman from Tennessee. Mrs. LLOYD. Thank you, Mr. Chairman. I, too, have no questions. I do appreciate your testimony, Governor Busbee. I am from Tennessee, and I certainly do understand some of your problems, and I do know what you are talking about. Thank you for being with us today. Mr. ROBERTS. Governor, we appreciate your bearing with us, and having to leave, and we will appreciate it if you will respond to questions. Our next witness is Hon. Russell Train. You may have anyone join you that you care to, Mr. Train. We welcome you to the committee. The full text of your prepared statement will appear at this point in the record. [The statement referred to follows:] STATEMENT OF Hox. RUSSELL E. TRAIN, ADMINISTRATOR, ENVmONMENTAL PROTECTION AGENCY Mr. Chairman, I welcome this opportunity to appear before your Committee today to diSCUSS proposed amendments to the Federal Water Pollution Control Act. PAGENO="0227" 221 Before I address the principal subject of these hearings, however, I thought you might like to hear a current report on the municipal construction grant program. I am pleased to report that as of August 31, 1975, a total of $7.104 billion of Public Law 92-500 funds have been obligated. All of the FY 73 and FY 74 first allotments amounting to $2 billion and $3 billion, respectively, have been made. As of July 31, 1975, $2.3 billion in FY-75 funds remain to be obligated by June 1976. In June of this year we obligated a total of $1332 billion wjiich represents the highest level of obligation in the history of the program. The FY 75 yearly total of $3.6 billion is the highest yearly total to date. Thus far our average monthly level of obligations has increased $186 million over the monthly rate for FY 74. Although there will continue to be some variations from quarter to quarter, we are confident that the rate of obligation will increase steadily. I am also pleased to report that with respect to reimbursements, the Environ- mental Protection Agency has obligated approximately $1.665 billion as of May 31, and $1.054 billion of that amount has been paid out to the States. We are currently making second round awards of $517 million to cover the re- mainder of the $1.9 billion appropriation. Turning to the subject of these hearings, I need not point out what an extraor- dinarily complex and extensive program we at EPA are administering. The task has not been an easy one. On the contrary, it has been extremely difficult and, in every instance, there has been considerable debate over the specific decisions reached. We nevertheless believe that the basic approach is both sound and workable. At the same time I believe it is also important to recognize that after three years of experience in program operation some adjustments and corrections are needed to aid our efforts in this most ambitious undertaking. Before the Com- mittee today is a bill, H.R. 9560, "to amend the Federal Water Pollution Con- trol Act to provide for additional authorizations, and for other purposes." Some of the proposed amendments are new, some were submitted earlier this year by EPA; and some submitted by others and favorably reviewed by EPA. I believe it would be helpful to the Committee if I summarized the principal sections of the bill and outlined the Environmental Protection Agency's views on the need for their enactment. Eoiten~ions On April 17, 1975, we submitted a letter and proposed bill to the Speaker of the House to extend our authorities under the Act for two years in the amount of $237,413,000 for FY 1976 and $257,700,000 for FY 1977. These authorities are approved by the Administration and are consistent with the program of the President in view of overall government financial capabilities and limita- tions. Therefore, we cannot recommend the additional authority proposed in H.R. 9560 that increases authorities beyond the Administration's program. I would like to point out that the requested authority includes authority for our research program. Therefore, our requested authority for pollution abatement programs only, comparable to the authorities considered by this Committee, is $163,563,000. This amount includes a $14,741,000 request under section 104(u) (1) for abatement and control activities in sections 104(g) (1) (municipal waste treatment operator training) and 104(g) (2) (municipal waste treatment em- ployment studies). User Charges HR. 9560 would amend section 204(b) of the Federal Water Pollution Control Act to allow municipalities to use an ad valorem tax for funding operation and maintenance costs. Unless an amendment to section 204 is enacted, the decision by the Comptroller General that ad valorem taxes are not a proper basis for levying user charges will have a severe impact on the implementation of the construction grant program' as well as upon municipal compliance with the requirements of the Act. As a result of this decision, we advised our Regional Offices to amend all approved' grant agreements `by stipulating that the ad valorem tax base shall not be used in' the development of the user charge system applicable to the project. We also directed them to return all pending grant applications with the notation that they are not in conformance with the statutory requirements of the law as interpreted by the Comptroller General. I would also like to reiterate that numerous cities and districts, including many large metropolitan areas, presently finance operation and maintenance costa PAGENO="0228" 222 tliroOgli ad ~-alorem taxes. Considering the substantial costs involved, many of tiie~e cities are understandably unwilling to revise their systems. l\ioreover, in those cases where there is willingness to comply with the requirements of section 204 (b) (1). the compliance will cause considerable delays before we accomplish any measure Of progress in waste treatmeilt plant construction. We do not believe the communities should have to make such a choice. A properly formulated user charge system based on ad valorem taxation is a viable alid appropriate method for funding operation and maintenance costs of treatment works systems. Such a system would tax domestic users appropriately and fairly. It would also surcharge all heavy users and industrial users of the sys- tem over and above the taxes paid. Industrial discharges, moreover, would be monitored regularly and necessary adjustments would be made in the surcharge. As you know. the Environmental Protection Agency has also made a proposal to amend this section. The principal difference between the two amendments lies in the eligibility of muicipahities to apply this tax. Our proposal would limit the use of the ad valorem tax to those municipalities where sewage treatment costs have traditionally been paid through such a user charge system and where a change to a direct charge would be inordinately disruptive. HR. 9560, on the other hand, does not apply such limitations. We believe that federally assisted sewer systems involving new collector systems should not use ad valorem tax as a matter of course to serve as a basis for assessing user charges. We, therefore, support the ad valorem user charge, but believe its application should be limited to historical use of this tax by municipalities or to instances where direct user charges would be inordinately disruptive. Reim.bursem en t and Advanced Construction H.R. 9560 would amend Public Law 92-500 to allow reimbursement for ad- vanced municipal waste treatment plant construction initiated up to July 1, 1973, and increase the authority for this reimbursement from $2,600,000 to $2,950,000. This one year extension of the reimbursement program is not supported by EPA because the additional funds required are not within the budget program of the President. Furthermore, we do not recommend this extension because we believe this is not an effective method of utilizing funds for implementing Public Law 92-500. Federal Share of Planning Process Costs For FY 1976, the 208 planning grants are 75 percent funded by the Federal government. HR. 9560 would amend Public Law 92-500 to allow 100 percent funding of initial section 208 planning grants for two years for the initial grant and 75 percent funding for succeeding years. EPA cannot support this amend- ment because such authority is not within the budget program of the President. In addition, the unlimited continuation of Federal assistance to section 208 planning activities beyond the initial grant is contrary to the concept of the 208 program. Contract Authority The amendment to the Act limits 208 planning contract authority to appro- priation act limitations. The amendment, in accord with The Congressional Budget and Impoundment Control Act of 1974, is supported by our Agency. Certification H.R. 9560 would add a new section 213 to the Act, dealing with the delegation of certification responsibilities to the States. This certification includes, among other things. the adequacy of the facilities plan the consistency of the pra~ect with areawide 208 planning: and the iegal, institutional and managerial capa- bilities of local applicants. This proposal is, I'm sure you know, similar to H.R. 2175 and its companion bill, S. 1611, and is commonly called the "Cleveland-Wright Bill." On July 18, 1975, EPA submitted its views on this bill to the Chairman of the House Com- mittee on Public Works. As stated in that letter the Environmental Protection Agency looks upon the certification authority envisioned by these proposals as an amplification of its current policy on certification. Over the course of the past two years, our Agency has delegated certain functions regarding the administration of the construction grants program to a number of States. For example, our Title II regulations allow State agencies to certify that no excessive infiltration/inflow exists, thereby PAGENO="0229" 223 eliminating unnecessary time, effort, documentation and expense in the award of a grant. We have also delegated the responsibility for the review of plans and specifications, as well as operation and maintenance manuals, to a number of States. The enactment of State certification procedures currently proposed would represent, therefore, a continuation and enlargement of our present policy with respect to the delegation of construction grant authority to the States. Our letter also makes several recommendations for modification we believe would be helpful in implementing such new authority and clarifying new respon- sibilities. One recommendation concerns suspension of certification. We believe the Agency should be able to resume control of a portion of the program, indi- vidual projects, or grants as expeditiously as possible. As we stated in our letter, the requirement for a public hearing in every case before suspending acceptance of a certification will unduly restrict us in our efforts to monitor the program. We recommended, therefore, that EPA be allowed, assuming informal negotiations have failed, to suspend certification authority by written notice to the Governor of the State. At the same time, the notice should be published in the Federal Register. The suspension should be for the duration of the problem or for six months, whichever occurs first. A public hearing would be held if requested by the affected party; and if the problem causing the suspension is not resolved in the six-month period the Agency must reffirm the suspension and the affected party is allOwed to seek judicial review. Finally, it should be noted that the "Cleveland-Wright" provision of the bill clearly provides for EPA to retain its full responsibilities under NEPA. We sup- port this provision. We would like to point out, however, that certain difficulties may arise where EPA delegates certification of facilities plans under this proposal. Time Requirements HR. 9560 would amend the Act by extending beyond July 1, 1977, the require- inent for publicly owned treatment works to meet secondary treatment standards. The extension up to July 1, 1982 would be granted if the construction of such treatment works could not be completed by the date specified. The Administration is currently considering this issue. My own recommenda- tion on this matter is that extensions be granted until July 1, 1983, when Best Practical Treatment is required by publicly owned treatment works under the existing Act. Such extensions would produce nearly the same effluent discharge clean-up schedule and decrease administrative operation by the program. Ex- tensions would be made on a case-by-case basis. I also believe that the lack of available funds should be a justificationfor the Administrator to grant an extension. With regard to discharges to ocean waters, I recommend deletion of the ocean discharge provision of 1-i.R. 9560 because such discharges can be extended in the same manner as other treatment works under section 9 of the bill. Requirements for ocean discharges are currently being considered by the Administration. State Reports Another proposal made to amend the Act is with regard to section 305(b). That section requires the annual submission of a water quality assessment report to EPA by each State. Under the present statute the first annual report was to be submitted by January 1, 1975. The amendment to section 305(b) would change this date to April 1, 1975, and require another report on April 1, 1976. Thereafter, the sub- mission of a water quality assessment report would be required biennially rather than annually. The preparation of the report by each State on an annual basis represents an extensive undertaking in terms of time and effort. For the purpose of monitor- ing our clean-up effort, however, we do not believe that water quality conditions will change so drastically from year to year to warrant the preparation and submission of an annual report. I would like to emphasize that EPA will continue to report annually on water quality through the water quality surveillance system report also required by the Act. This information, coupled with information contained in the annual State submissions on grants for pollution control programs, will, we believe, be sufficient to keep all interested parties abreast of water pollution control develop- ments for those years in which a section 305(b) report would not be required. PAGENO="0230" 224 Y'owic and Pretreatment Standards Under section 307(a), EPA is required to publish a list of toxic substances, and 180 days thereafter prepare effluent limitation standards for each listed substance. A formal rulemaking hearing is to commence 30 days after proposaL Final standards are to be promulgated based upon the record of that hearing within 180 days of the initial proposal of standards, and all affected disehargers must comply with the standards within one year of their promulgation. Experience gained through our implementation efforts to date has demon- strated that this timetable is far too short for setting effective and responsible standards and for compliance therewith by the affected industrial dischargers. H.R. 9560 would eliminate the requirement that hearings commence within 30 days of publication of proposed standards. Second, it would allow the Administra- tor to extend the time for industrial compliance with standards from the present one-year requirement to up to three years from the date of promulgation in cases where earlier compliance would not be feasible. In the course of hearings conducted by EPA in April and May of last year on proposed standards for nine toxic substances, industry objectors introduced substantial evidence that control technology capable of meeting the proposed standards in many cases either did not exist or could not possibly be obtained and installed within one year. The evidence further indicated that to have enfocred such standards in such a short time frame would have resulted in massive shut- ~lowns in major industries. Thirty days in which to prepare fore rulemaking hearings under these and similar issues is not sufficient time. Likewise, one year to comply with these rules is not sufficient time in most of our major industries. Therefore, we support H.R. 9560, which will alleviate some of the serious problems under § 307(a) and enable us to go forward with our present plans to propose and ultimately promulgate standards for toxic substances. The amendment is similar to an Administration proposal. Civil Penalty Finally, let me mention the proposed amendment to section 311 of the Act. Since the passage of section 311 in Public Law 92-500 and its predecessor, section 12 of Public Law 91-224, which deals with the discharge of hazardous materials in the Nation's waterways, the Environmental Protection Agency has sought to implement the Congressional intent of the legislation. Throughout the regulatory process associated with the control of hazardous polluting sub- stances, the Agency has spent numerous man-hours in conferences, symposia, and workshops discussing the problems associated with reaching that goal. Furthermore, the Agency published an Advance Notice of Proposed Rulemaking in the late summer of 1974, which called for written comments to be submitted by the interested public and which resulted in a large number of personal interviews w-ith trade associations, environmental groups, and individuals. We have gained considerable experience and expertise from development of the four key hazardous substance regulations which are ready to be proposed in the Federal Register. As we reviewed the bill, H.R. 9560, however, we found that the legislative intent was similar to the thrust which we are in favor of and are trying to implement administratively. We find a number of features in this amendment to be of considerable merit and they would certainly eliminate some of the problems we have found in this section. At present section 311 keys penalty rates to substances which cannot "actually be removed" while clean up obligations are keyed to removability. Because the definition of removal is very broad, the Agency has found, in attempting to im- plement this section, that a substance can be "removable" in the sense that some mitigating actions can be taken (i.e. evacuation of endangered residents) while at the same time being not actually physically removable. H.R. 0560 would improve this situation by deleting the requirement that substances be determined to be "actually removable". Thus the need to distinguish between "removable" and "actually removable" would be eliminated. The present section also established an interim scheme of civil penalties for discharges determined to be nonremovable. This interim scheme authorized the tAdministrator of the Environmental Protection Agency to impose a maximum $50,000 penalty against a discharge based on the toxicity, degradability, and dispersal characteristics of the discharged substance. Using the same criteria, the Administrator was also authorized to impose higher penalties in cases where the discharge was the result of willful negligence or willful misconduct. The Act provides the Administrator of the Environmental Protection Agency PAGENO="0231" 225 with the discretion to impose either of two penalties after a hazardous sub- stance has been determined not to be removable. The fine assessed per incident may range from $500 to $5,000 arid is based on the actual toxicity, degradability, and dispersal characteristics of the substance discharged. The penalty may also be determined by the number of units discharged multiplied by the rate of penalty established for each unit of that substance as provided in the Act. The penalty limitations are $5 million for discharges from a vessel and $500,000 for discharges from an onshore or offshore facility. Your proposal in H.R. 9500 to reduce the penalty maximum unless the discharger has been willfully negligent or guilty of willful misconduct provides a strong environmental incentive with- out imposing excessively severe economic dislocation. We support this approach but recommend the deletion of the penalty criteria for damage to the public health or welfare because of the investment required in making such determinations. We believe such determinations would make administration of the program very costly. In addition, we believe the program could be administered effectively by establishing penalties only on the charac- teristics of the substance. The existing law also requires that the President shall by regulation determine quantities of hazardous substances that are harmful when discharged under conditions which pose a threat to the public health and welfare. This provision places a heavy burden on the spiller to evaluate whether the material dis- charged was of sufficient quantity to require notification of Federal authorities. We support the language found in section 12(b) of H.R. 9500 which allows the notice of the discharge to be based upon the designation of a hazardous substance rather than a predetermined quantity. Co~icluSiOfl~ In closing I should perhaps point out that we have experienced other problems in administering this Act. I have not attempted to address these at this time. We are, however, giving serious consideration to additional amendments to address these problems. As I stated earlier, this is an extremely complex law and we are doing all we can to achieve the goals envisioned by it. Many of the amendments we have discussed today would do much to aid us in that effort. TESTIMONY OF HON. RUSSELL E. TRAIN, ADMINISTRATOR, EN- VIRONMENTAL PROTECTION AGENCY, ACCOMPANIED BY DR. ANDREW BREIDENBACH, ACTING ASSISTANT ADMINISTRATOR FOR WATER AND HAZARDOUS MATERIALS; CHRIS BECK, DEP- UTY ASSISTANT ADMINISTRATOR FOR WATER PLANNING AND STANDARDS; AND JACK RHETT, DEPUTY ASSISTANT ADMINIS- TRATOR FOR WATER OPERATIONS Mr. TRAIN. Yes, sir, Mr. Chairman. May I identify them for the record, please ~ On my right, I am particularly glad to introduce Dr. Andrew Breidenbach, who is the Acting Assistant Administrator for Water and Hazardous Materials. As you know, Jim Agee, at his request, has left that post to return to the West, and I feel that the Agency is exceedingly fortunate to have Dr. Breidenbach, who was formerly the Director of the National Re- search Center in Cincinnati, to fill this post in an acting capacity. He has a very long record of experience, both in research and in applica- tion of technology in the water quality area, the drinking water area, and the pesticide area. He brings to his responsibilities a particularly valuable set of experience, and I did want to take the opportunity to make that brief statement. On my left is Jack Rhett, who is the Deputy Assistant Administra- tor for Water Program Operations, and to the right of Dr. Breiden- PAGENO="0232" 226 bach, Chris Beck, who is the IDeputy Assistant Administrator for Water Planning and Standards. Mr. ROBERTS. Mr. Train, we are glad to have you, and you may pro- ceeci in any way you wish. Mr. Tiiiix. knowing the consti~aints of your time this morning~ the fact that my prepared statement has been received for the record, I would piopose to proceed b summarizing it. Thank you, Mr. Chairman. I welcome this opportunity to appear before your committee to discuss proposed amendments to the Federal Water Pollution Control Act, and I will summarize the principal sec- tions of H.R. 9560. and outline EPA's views on the need for their enactment. Before doing that, I would just like to touch on one portion of my prepared statement. with respect to the construction grant program, because I know it. is of such concern and interest to the committee. Let me point out that in June of this year we obligated a total of $i.332 billion, which rel)reSents the highest. level of obligation in the history of the })rogram. Thinking back to my own experience with this urogram. that S1.332 billion obligation level for 1 month~ com- p~ es ` i m~ mu ci Mi Ch'u man with a le el of appiopi i~tioi , as I recall. of ~2l3 million as recently as 1969 and 1970. So here we have roughly six times that amount being obligated in 1 month as compared to an annual total of just some 5 years ago. I think that is really strong evidence of how this program is moving. The fiscal year 1975 total of $3.6 billion is the highest yearly total to date. Thus far our average monthly level of obligation has increased $186 million over the mon~hlv rate for fiscal year 1974:. What that. means is that i.i fiscal yeal 19Th we obligated an average monthly rate of S301million. and in 1974. S115 million. Although there will continue to be some variation from quarter to quarter, we are confident that the iate of obligation will inciesse steadily. Returning to the bill before the committee, }LR. 9560, under the headlmg of extensions, on April 17, 1975, EPA submitted a letter and a proposed bill to the Speaker of the House, to extend our authorities under the act for 2 years in the. amount. of $237,413,000 for fiscal year 1976. and $257,700,000 foi fiscal year 1977. ~Ve cannot recommend the addlitional authority proposed in H.R. 9560 that increases authorities beyondi the administration's program. Under user charges. H.R. 9560 wouldl amend section 204(b) of the Federal Water Pollution Control Act to allow municipalities to use an ad valoreni tax for fundling operation audi maintenance costs. EPA has also made a proposal to amend this section of the act. Our Proposal would limit the use of the ad valorem tax to those munici- palities where sewage treatment costs have traditionally boon paid. through such a user charge system. and where a change to a direct charge wouldi be inordiinately diisruptive. H.R. 9560. on the other hand, would not include these limitations. We continue to support the ad valorem tax system, but believe its. application should be. limited to the areas submitted in our proposal. Under reimbursement and advanced construction, the 1 year exten- sion of the reimbursement program is not supported by EPA, because. PAGENO="0233" 227 the additional funds required are not within the budget program of the President. H.IR. 9560 would amend Public Law 92-500 to allow 100 percent funding of initial section 208 planning grants for 2 years of the initial grant, and 75 percent funding for succeeding years. EPA cannot support this amendment, because such authority is not within the budget program of the President. The contract authority amendment is supported by EPA. H.R. 9560 would add a new section 213 to the act, dealing with the delegation of certification responsibilities to the States. On July 18, 1975, EPA submitted its views of this portion of the bill to the chairman of the House Committee on Public Works. As stated in that letter, the Environmental Protection Agency looks upon the certification authority envisioned by this section as an amphfica- tion of its current policy on certification. Our letter also makes several other recommendations for modifica- tion we believe would be helpful in implementing such new authority and in clarifying these new responsibilities. One recommendation concerns suspension of certification. We recommend, therefore, that EPA be allowed, assuming informal negotiations have failed, to suspend certification authority by written notice to the Governor of the State. At the same time, the notice should be published in the Federal Register. The suspension should be for the duration of the problem, or for 6 months, whichever occurs first. A public hearing would be held if requested by the affected party, and if the problem causing the suspension is not resolved in the 6- month period the agency must reaffirm the suspension, and the affected party is allowed to seek judicial review. Now, let me just make perfectly clear to the committee, that the agency very much supports the principle of certification which is included in the bill, and which is the subject of what has been known as the Cleveland-Wright bill. Under time requirements, the administration is currently consider- ing this issue. My own recommendation on this matter is that exten- sions be granted until July 1, 1983, when best practical treatment is required by publicly owned treatment works under the existing act. Such extensions would produce nearly the same ellfiuent discharge cleanup schedule, and decrease administrative operation by the pro- gram. Extensions would be made on a case-by-case basis. With regard to discharges to ocean waters, I recommend deletion of the ocean discharge provision of H.R. 9560, because such discharges can be extended in the same manner as other treatment works under section 9 of the bill. If section 9 is enacted, providing for case-by-case extension up to July 1, 1983, then we believe that the additional amendment with respect to ocean discharges is not necessary. We support. the amendment with respect to State reports. Under toxic and pretreatment standards, H.R. 9560 would eliminate the requirement that hearings commence within 30 days of publication of proposed standards. Second, it would allow the administrator to extend the time for industrial compliance from the present 1 year requirement to up to PAGENO="0234" 228 3 years from the date of promulgation in cases where earlier com- pliance would not be feasible. Under civil penalty, your propOsal in H.R. 9560, to reduce the pen- alty maximum unless the discharger has been wilfully negligent or guilty of wilfull misconduct, provides a strong environmental incen- tive without imposing excessively severe economic dislocation. This, Mr. Chairman, is under section 12 of the legislation. We support this approach, but recommend that a deletion of the penalty criteria for damage to the public health or welfare because of the investment required in making such determinations. We believe such determinations would make administration of the pro~ram very unenforceable. I think the Coast Guard strongly ad- her~s to this view, that it would impose a cumbersome requirement. We support the language found in section 12(b) of H.R. 9560, which allows the notice of the discharge to be based upon the desig- nation of a hazardous substance rather than a predetermined quantity. In closing, I should perhaps point out that we have experienced other problems in administering this act. I have not attempted to address these at this time. We are, however, giving serious consideration to additional amendments to address these problems. I would suppose that there would be some additional suggestions in the area of water legislation forthcoming from the administration, perhaps early in the year. That concludes my summary, Mr. Chairman. Mr. ROBERTS. Thank you, Mr. Train, for your really good state- ment. The gentleman from Alabama? The CHAIRMAN. Mr. Chairman, I have no inquiries to make of Mr. Train at the moment. I do think that-that lie has had a very substantial career, recog- iiizing that he has been one of the most diligent and hard working members of the executive branch of the Government. It is always refreshing to have Mr. Train, and to know that-and to be comforted with the fact that he is giving prompt attention to a very serious~ and very complex administrative problem, and also a problem that is complex and difficult, and rather innovative in the new programs we seek to implement by legislation in accomplishing the goals as established in the Water Quality Act of 1972. I, of course, realize that new programs of this proportion are always going to be fraught with dangers, and new experiences that we have to recognize and to live with. As lie stated in his prepared statement, there are going to be requirements from time to time on changing circumstances of the local requirements that have to be measured in with national goals and attainments, so we are pleased to have an Administrator of the caliber and dedication of Mr. Train. Mr. TRAIN. Mr. Chairman, I should at least say thank you very much, Mr. Chairman. I appreciate those remarks very much. Mr. ROBERTS. Mr. Train, of course, there are lots ~f questions by the members, and this legal staff. At the hearing we would ask that many of those be withheld, and we will submit them in writin~, if that would be acceptable to you, so that we may proceed. PAGENO="0235" 229 Mr. TRAIN. That would be fine. Mr. ROBERTS. The gentleman from California, Mr. Clausen. Mr. CLAUSEN. Thank you, Mr. Chairman, that is exactly the ques- tion that I was going to ask, because we have a long list of questions. The thought occurred to me that while we would submit these questions to Mr. Train, and then he could respond in writing, it does not permit us the opportunity of having a follow-on exchange, and so it is possible we may have to have more than just the presentation of the questions and the response. It may be that there will have to be a follow up, after they respond, and I think the record ought to be left open so that this could take place. Mr. ROBERTS. Without objection, and I am sure Mr. Train will have some of his people- Mr. TRAIN. You may rest assured, Mr. Chairman, that I will be more than happy to come back with or without staff. Any way the committee wishes to proceed will be fine. I appreciate your efforts to expedite this proceeding. [See pages 249-272 for supplemental material provided by EPA.] Mr. ROBERTS. The gentleman from New Jersey, Mr. Roe. Mr. ROE. Thank you, Mr. Chairman. I share the warmth of welcome towards Mr. Train expressed by the subcommittee chairman and the gentleman from California, re- membering so well when this project was being born, the support and strength of the arguments that we mutually shared. I have a few questions that I feel obliged to ask, because they are important at this point. At the outset, let me say that I think you have made remarkable progress. There are however some areas that really need attention, as attested to in the testimony that was given before the committee recently with the environmental groups. If you press the horse-that reminds me of the story of the fellow who had a racehorse, and the horse was a fine horse, and was running very well. Then finally somebody came aboard and said, if you cut down on the feed to that horse a little bit he will run a little bit better. So the fellow thought it was a good idea, and he cut down on the horsefeed. By golly, the horse zapped through the next week, and won two races. So the fellow said, this is a good idea. He kept cutting down on the feed, and then finally the horse dropped dead. The environmentalists are taking the position that there are highly complex problems that we are faced with, particularly in exotic wastes and, I am thinking about the toxic wastes that your agency has been taken to task on. I monitored what was happening in New Jersey personally and went to EPA's New York regional office on different projects. What these people ask for is enough to drive the State and municipal administra- tors of the program bananas. I realize they are trying to do the right thing, but it seems to me wholly unconscionable that projects must wait for ever and ever. For example, in the city of Paterson, and I know that you talked about ad valorem taxes, involving these new sewer collector systems. I have been working on the citys project now for a year and a half with your New York regional office. The project involves separating a PAGENO="0236" 230 ~combiiied sanitary-storm sewer that goes not more than about 600 feet in the city of Paterson. the oldest city in America, et cetera. We have had our quarrels oii priority consideration of sewer collector systems. A hospital is being constructed in the city and it will be one of the only two hospitals that exists in that city. For 1½ years I personally have been monitoring this situation. Why does it take so long? There is no way that that hospital caii be opened without the sewer facilities. Now-, we have to go to new arrowhead guidelines-and hunt for arrowheads. I am iiot being facetious. It takes 6 weeks to get a letter from the fellow w-ho heads up the environmental arrowhead guide- lines program to understand whether there is any historical input of ~ignific.ance in the project area~ before we can make a decision to go ahead within this 600-foot area. There are 25 chains of inquiries of that. nature which must. be made. Now. what does it. mean? It. means that. the good Governor from Georgia talks about $7 billion or $8 billion added funding more, for his area. and I am not going to quarrel with that. I am going to ask two questions about. the Talmadge-Niinn amendment and we are now talking about the concept of the Congress. Is it not wrong. and unjust, and unfair in every respect, that we3 pay 18 percent more in the cost of constructioii and in the cost of bor- rowing money. because we have been delayed such a terrible length of time by your agency? Is there not some way that you could innovate procedures whereby vitally important. if not crisis, projects could be given priority? Is there not some way that. you can do that? This is the problem that we are faced with. Mr. ROBERTS. Would the gentlenian yield? To nut a question along the same line, Mr. Train, you have authority for reimbursement. to the cities who have proceeded with construction on an emergency basis. which meets the criteria he is talking about. They go ahead and build, and are reimbursed under the present law. Mr. TRAIN. Let me defer to Mr. R.hett on that. I would like to find an answer to the problem. if there is oiie. Mr. RHETT. I think there are probably two portioiis to this question. We. should be able to handle l)riority problems by expediting them. handling them specially, to make sure that these lags do not occur. There are also some incidental problems. and I think you alluded to this. Mr. Roe. where other agencies can block a grant. or slow a grant down. Th~re aie some. 25 to 27 other laws that imninge upon a giant. Snv~ificallv, the archeological problem that New .Tersey has been run- nirvr into in the `ast few months is. I know an example of this problem end we are trying to break that whole thing o~?eii. The second question is on a matter of reimbursement. You have asked whether somebody could start a project and then be reimbursed. I do not believe that is permissible under the law. But there ought. to be ways to expedite any project that is of the nature your are describing. Mr. ROE. Let. me say this. andl I am going to say this publicly, be- cause I think it has to be said publicly. I am elected by 500.000 people in my State. I went to New York a number of times pelsonall3r with the engineers, the mayors, aiid others on these projects. Before coming to Congress~ I administered the whole conservation aiid economic dievelopinent program for the State of New PAGENO="0237" 231 Jersey, and I say that not for aggrandizement, but just to. ge~ the. i ecord straight When someone in the New York office conies back and says we are going to do it our way on our policy as we see it, regardless of whether a Member of Congress speaks up or not, I find that a little much, and I want thi~ on record. It seems to me that the city of Paterson can say to you folks that you may have approval over the regional aspect and interstate cooperation, but if we take our own $12 million to build the sewers, you do not have control over them whatsoever. We can build them if we have the money. Now, something has to be fundamentally wrong, as expressed by our subcommittee chairman, Mr. Roberts, if we can go ahead with the project if we spend our money to separate the storm and sanitary sewer.. V\Te are desperate now. WTe cannot open the hospital unless. we do that.. Then it seems to me that something has to be wrong with the prograni. Mr. RHETh Mr. Roe, I agree with you. I will tell you that I will be, on the phone this afternoon'to Paterson, N.J., with this specific prob- lem. But there have to be ways, and should be ways to expedite `im- portant projects. I just could not agree with you more. Mr. ROE. I think it is also important to bring up one more project. that I have monitored personally. .. . In the regional sewer program for West Milford, Ringwood, and Wanaque in New Jersey, the towns completed their studies in. 1967- 1967, I call to your attention. Their environmental impact statement cost them $25,000 and preliminary surveys cost them $800,000. Now, let me tell you what your New York regional office wanted.. New York came back and said those study reports are not good enough any more. Now we have to check again. To update the environmental impact statement, the cost ~as $80,000. additional. Over four times the cost of the basic environmental, survey to begin with, which is absolutely a ripoff of enormoi~s magnitude On the taxpayer. It cost an additional $100,000 more, which they, agreed: to, in order to update the so-called feasibility study. . . The cost has become so high in that area, which has the key con- trolling river feeding into the key controlling reservoir, in th~, State of New Jersey, that those three towns combined with `their totaj del~t capacity could not pay their share of the cost of the project from 1968 to 1974. Those people said to' me, we are not going to build it~ Seven years of working, and they still cannot get an answer. Is that not extraordinary ?-and this is not a notion or hearsay. .1 walked through this maze personally with the engineers and officials. What do you people want from us to~ be able to, get our programs going? We are not looking `for pie in the sky. We are looking for an answer. There is a short run of the Wanaque River' that flows from Greenwood Lake to the Wanaque Reservoir. It is half a mile long. In 1967, 1968, there was a court case which prohibited them from putting a package sewer plant discharging into the river at the very headwaters of the key controlling reservoir in the State of New Jersey. It was decided in the courts. Now they insist that we go back and study that again. We go back and we take a look at it. What does it mean? One single m~nufacturino plant feeding into that particular so-called interim sewer plant, tha~t PAGENO="0238" 232 they want to put in, with one-tenth of an exotic chemical, and the water supply of the northern part of the State of New Jersey is polluted. Now, what kind of commonsense is that? Another 7 months, and another $80,000. That is what you have going out in the field. That is what you should be checking on. it has to he wrong. Some way, you have to figure a mechanism. We talked about the racehorse. We have these legitimate quarrels of legitimate cases. There has to be some way to resolve these problems and expedite these projects. What is your recommendation concerning the `Talmadge proposal to reallocate the $9 billion to the States in 1975 ?-just for the record. Mr. TRAIN. Thank you, Mr. Roe. Mr. RoE. Now that Georgia and New Jersey are on speaking terms, maybe we should resolve it. Mr. TRAIN. I think this committee has heard me say before, and I know the chairman has, that this Administrator will be glad to carry out and administer any allocation formula that the `Congress directs. :So having got that off my chest, and that is serious, too. Let me say there is no equitable formula, no exactly right rational formula for allocating funds, and there is no getting away from that. As Administrator, when faced with the fact of the release of $9 bil- lion, by both the Supreme Court and Presidential action, I had to make an allocation of the then available funds. What we did was to arrive at an allocation formula which would be the same as if there had been no impoundments in the first place. Under that formula each State would get, assmning the allocation formula that EPA has promulgated by regulation with respect to the remaining $9 billion, together with its previous allocations, exactly the same amount it would have received had the entire $18 million been allocated on the schedule provided by Congress in the first instance. Whether that was an equitable allocation or not, taking into account the two different formulas used by the Congress, there is no way of knowing, because there is no rational, fully rational basis of balancing the equities. But it did put everybody in exactly the same position they would have been in had there been no impoundments, and that, in my view achieved the best equity, under a difficult situation, that was possible. Now, I do not know what more I could really add to that. It is true that under the formula which we have suggested for the allocation of future funds, beyond those presently authorized, that a 50-50 needs rand population basis be used. It is true that if this future formula were applied retroactively to the $9 billion of released funds, a majority of the `States would get more. It is that simple. Mr. ROE. Just one more question, Mr. Chairman. We quite agree with you that the order of magnitude of the prob- lem does not necessarily depend on population per se. It is the order of severity of the type of operations going on. The sug- gestion had been made-suppose we allocated a portion of the funds to be allocated, or set aside for the Administrator to use as a contin- gency fund wherein the Administrator would have the discretion and prerogative to be able to allocate those funds to accommodate hard- ship cases to meet special needs of States. PAGENO="0239" 233 In other words, you would have a revolving fund that you could help out a State. Would there be any sense to that? Mr. Tii~IN. MTell, there might be some sense in it, but it would sure put me in an impossible position, I would suspect. I think the pressures from various portions of the country for an allocation for my contingency fund would be very difficult to deal with on any kind of rational basis. I would be very concerned with that sort of a situation. I do not know how you would go about balancing the equities between different States, under those circumstances, unless the contingency fund was so large that you could acquiesce in every request. That is one way of avoiding the problem, but I cannot really see the Congress buying that approach, or certainly a fiscally responsible administration support- ing it. Mr. ROBERTS. The gentleman from Ohio. You see why we do not operate under the 5 minute rule here, except occasionally, because Mr. Roe is so thorough,, and he has such a dull needle, that we appreciate giving him more time. Mr. TRAIN. I would add one additional comment, Mr. Chairman, if I may, to my answer to Mr. Roe's question. I would assume that adoption of the Talrnadge-Nunn amendment, aside from merits or equities involved, would undoubtedly contribute to further delay in the program. I just think it is inevitable with a new allocation formula. Mr. ROBERTS. Mr. Harsha? Mr. HARSHA. Thank you, Mr. Chairman. The adoption of the Talmadge amendment will not only split the committee wide open, but the Congress up three or four sides, and un- doubtedly delay the program. I just want to take a moment of my time to congratulate you, Mr. Train, on what I know is a very, very complex job, a difficult task, and I think by and large, maybe with the exception of two, you have done an outstanding job in arriving at the stage of the game that you are in now. There have been some problems in certain areas. I think you have done a fine job, and I want to partitcularly commend Mr. Rhett for his tireless and ceaseless efforts in the construction grants program. I think you have done a good job in that regard. Now, section 311 gives some of us some concern, and I do not have to explain to you that the implementation of that section 311, with re- gard to hazardous substances has not been just what we had hoped for, and I am sure it has not been what you hoped for. I think the Congress itself has to accept some of that blame. Would you please review for the Committee the difficulties which EPA has experienced since April of 1970, in identifying at least one element or compound as a hazardous substance? Mr. TRAIN. Can I ask Mr. Beck to respond to that, Mr. Harsha? Mr. HARSHA. Yes. Mr. BECK. I do not think that the problem which the agency has had is one of identifying which substances are hazardous substances, and then designating them in accordance with section 311. The problem which the agency has recognized is that, once we have designated a substance, we have then initiated a whole series of neces- PAGENO="0240" 234 sary regulations whicli are required to make the program implement- able, which culminates with a regulated penalty system. One of the things that has concerned the agency, as we looked at a variety of systems for assessing the penalties associated with hazard- ous substances, is that in some instances the penalty assessment could create unreasonable amounts of money to be assessed through the civil penalty procedure against the respective spiller. The agency feels that there are two appropriate things that should come out of an administrative program such as this. We think that the penalties need to be substantially high to bring about some economic disincentives, so that a person will take the neces- sary steps to avoid spills, number one and number two, we think the penalties after this spill need to be substantially structured so that we have the av~tilable authority or motivation to get mitigating action taken on the spill. As we look at the section 12 of 11.11. 9560, we think the Congress has found a balance which is the $50,000 penalty. Anyone who spills would be assessed a penalty up to that $50,000 amount. If the appropriate cleanup action is not. taken, or as it is stated here, willful misconduct is demonstrated as being committed by the mdi- vidua.l responsible for the spill, then the agency has the opportunity to assess a higher penalty, and we feel that as structured, it will now allow us to go more rapidly ahead and designate hazardous sub- stances, and follow it through to a point of conclusion which clilmi- na.tes in a penalty. Mr. HARSHA. Well, now, there has been some suggestion that there should be a subsequent penalty or additional penalties for a reoc- currence of this spillage. Some of the environmentalists, for example, question the ability of a $50,000 penalty to be a real deterrent to spillage and they would like, of course, to see a higher penalty imposed. But, particularly, there should be a secondary penalty in the event of a subsequent or continuous reoccurrence of this particular type spillage. What is your suggestion to that recommendation? Mr. BECK. Well, you Imow, there are a lot of reasons for reoccur- rence of penalty or reoccurrence of spill. I think that this is typical of the problem that we have in generating the first set of penalty schedules. `If, for instance, spillage is completely accidental, something that is close to an act of God, it is very hard to hold them again responsible for that type of spill, but I think that the feeling of the agency is that if it were neglect or misconduct which caused the spill and clean up action was required and the situation reoccurred, certainly the agency would like to be able to take that into consideration in assess- ing that penalty. As I read the section of the law, and I am not an attorney, I have the feeling that the Administrator is given that discretion in determining what he feels is willful negligence or willful misconduct and he is given that administrative latitude. Mr. TRAIN. If I understand that issue correctly, Mr. Harsha, I do not see why we would have, any objection to an assessment of penal- ties tha.t took into account a. repetition of the `spill, so that up to PAGENO="0241" 235 $50,000 could. be assessed for a fresh occurrence and an assessment which was progressively higher for successive spills up to some~ maxi- mum could be made. I just do not see any particular reason to be troubled by that. I think what one of the concerns which we have had, and which the committee would want to have in mind, is that the upper limit be not so high and the determination of the penalty so uncertain as to make the carrier substantially uninsurable with regard to such a loss and related concerns that the uncertainties and the size of such penalties could lead to the tran~fer of such cargo movement from water to land. This shift may, in effect, be getting us, as a Nation, into a far more hazardous situation in terms of populated areas and so forth than the continued water carrying of hazardous substances would involve. We have been concerned that the present penalty system could have an adverse environmental effect by forcing cargoes off the waterways and onto land in cases where you may not want that. Mr. HARSHA. It has also been suggested that the $50,000 is much too low. It literally is a great variance between that and the $5 million that we have in the present bill. But, there has also been a suggestion since you have an offshore dis- charge, penalty there of $500,000, have you rationalized having a pen- alty for discharge on an onshore facility of $500,000 as opposed to a discharge on the waterways of only $50,000? Mr. TRAIN. I do not think there is any rational basis for the distinc- tion, frankly. Mr. HARSHA. Mr. Train, if you recommend the deletion of the pen- alty criteria dealing with damage to public health and welfare, leaving the characteristics of the substance dictating the penalty, what is the difference between the position you would be in then and the position you are now in as far as not being able to implement the penalty regu- lations dealing with hazardous substances? You might want Mr. Beck to answer that. Mr. TRAIN. Yes. Go ahead. Mr. BECK. OK. Please correct me if I have not summarized this cor- iectly, but you are asking me the question, does- Mr. 1-TARSHA. What I am trying to get at is why you are falling back on what some of us consider to be a basically sound environmental issue. Mr. BECK. The major concern that has been raised to our attention has come from the Coast Guard with regard to this particular lan- guage. It may be very difficult in some instances to demonstrate damage to public health and welfare, including, but not limited to, fish, shellfish, wildlife, and so forth and so on. They felt that if they had to make those findings in each instance or if the Administrator through the onscene coordinator procedure needed to make such findings that it could tend to make the investi- gation rather curnberson'ie. This demonstration could tend to require using an awful lot of re- sources that we presently do not have to administer the program. So the thinking is that if that portion of the section were deleted it, would 63-192-76------16 PAGENO="0242" 236 make it quite clear that the $50,000 penalty could be associated with the characteristics of the substance discharge and that this would be more than adequate in administering the penalties schedule, and it would remove the cumbersome difficulties associated with that phrase. Mr. HARSHA. Thank you. Mr. ROBERTS. Are there further questions on the right? Mr. AMBRO. Yes. Mr. ROBERTS. Mr. Ambro. Mr. AMBRO. Thank you~ Mr. Chairman. As they are fond of saying around here, I associate myself with the complimentary remarks of my colleagues except maybe the horse story my colleague from New Jersey told. Although, I must tell you I agree wholeheartedly with the thrust of his questions and I, too, can cite examples, as he did, but I will not because. of the time constraint. Mr. Train, I would just like to ask you about this. The President in his appearances throughout the Nation has been attacking regulatory agencies in general and environmental con- straints in particular. Now, you are the chief policy implernenter in the environmentals here in the United States. Your views and your attitudes have great meaning in terms of the integrity with which the environmentthl pro- gram and environmental standards will be carried out and met. I just l~ave two questions. I would like to ask you to comment on the frightening first-page story that appeared in the New York Sunday Times. With respect to that specifically, do you believe that the attainment of environmental goals generally, and those laid out by the Water Quality Act, in par- ticular, are unduly burdensome to the economy in the attainment of economic recovery? Mr. TRAIN. Mr. Ambro, let me say several things. First, no; I do not believe that the attainment of environmental standards is unduly burdensome to the economy or economical re- covery at the present time. That is a very broad generalization, but it reflects the analysis by the Agency, both in-house and with the assistance of outside con- tractors. In looking at overall economic impact for environment programs, the overall impact seems to be well within the ability of the U.S. economy to adjust without any undue cause for concern. There are obvious response situations where there are problems and generalizations do not always fit the specific plan situation. But, I certainly would want to make the general statement that I have in answer to that particular question. Second, with respect to the President's statements around the country with respect to the environment, I will have to say that I have accompanied the President on substantially all of his White House conferences on domestic policy in different parts of the country. I will be at another one tomorrow in Omaha, Nebr. I have never heard the President call for the elimination of environment constraints. Mr. AMBRO. I did not use the word "elimination." I must interject that here. PAGENO="0243" 237 Mr. Ti~aIN. The President :has emphasized the need for the country to achieve energy growth and economic goals, but as always, at the same time, emphasized that these be accomplished with protection of the environment. That is the administration policy, and it is cer- tainly the policy which is pursued by me as Administrator of EPA. With regard to the story in the New York Times, I must say I was equally troubled by it. I did not feel that it gave a fair picture of what the Agency was trying to do in terms of regulatory activities. Certainly, on my part there is absolutely no intention whatsoever of deregulating industry or anyone else, nor in terms of environmental protection, is there any intention to refrain from carrying out the regulatory responsibilities imposed by statute. I do concur and share the concern that many people in this coun- try have over excessive government regulations. I know that the Environmental Protection Agency probably produces more notices in the Federal Register than any other agency of the Federal Gov- ernment, except perhaps not including the Food and Drug Adminis- tration. I know we have a very heavy flow of regulatory material. I have emphasized to our top management my belief that we should review regulations presently under development to be sure that they really are needed and are necessary. Second, and equally important, in my view, I have tried to insure that the regulations that we do put out are developed in as understandable, clear, simple, and concise language as possible. I am frequently informed by people around the country that our regulations are excessively long and excessively difficult to under- stand, and since I do undertake the job of reading them before I sign them, I tend to concur with that criticism. They are hard to understand. Unfortunately, I think this impacts particularly on small business- men who do not have the opportunity or the resources to hire the kind of lega~I talent which typically is needed to work your way through these regulations. They are written by lawyers for lawyers, I sometimes say, with apologies to some of my staff with me. I think this is something to worry about and be concerned about, and I am not a bit apologetic about the fact that I have directed this kind of review within the Agency. However, I can certainly assure this committee that it should not take the fact of such a review as indicating any intention on our part to pull away from the environ- mental protection requirements imposed by law. This is simply an effort to be sure we do not overregulate and also to insure that the regulations we put out are as clear, understandable and to the point as we can make them, and we will continue to carry out that policy. This was not done by direction of the White House as I think was implied in the article. I do not ever recall having any particular discussion with anyone in the White House on regulatory matters other than to say that I had undertaken this kind of review. I have made the point that health and safety regulations are very much different from the kind of regulations which the President has ~been expressing his particular concern about. PAGENO="0244" 238 In the case of transportation matters, freight rates, and things of this sort, the purpose of regulation largely is to insure that the free market system can operate and tha.t competition can operate to keep consumer prices down. In the area of health and safety, including environmental regula- tions, the free market system does not operate to give you the direc- tions you want. but operates against you. The competitive free enter- prise system left to its own devices optimizes in the hands of the pro- ducer the passing of pollution costs on to the general public rather than absorbing them and then passing them on to his customer. That is the reason why we need environmental legislation and why we need strong regulatory implementation of that legislation. We are in a. different regulatory posture, if I can put it that way, than the other economic regulatory agencies to which the President has been addressing most of his attention. That was a little lengthy, but I hope it gives the committee some of the sense of what we are trying to do. Mr. ROBERTS. Do you have further questions? Mr. AMBRO. Well, I just wanted to say that I am heartened by what the Administrator says. I do not think anyone here is in favor of excessive regulation, al- though we all recognize why regulatory agencies are set up to begin with. I must again say that I never suggested in any way eliminating standards and regulations, but relaxing. The story did say that you were reviewing your standards with a view to ranking, which implied that you were thinking as well of relaxing in some area and some areas,~ and I am heartened by what you said. I am not, Mr. Chairman, going to question Mr. Train any further even with respect to certain views that the wealth of nations, eco- nomics and the supply and demand will indeed in the free market sys- tern keep prices down and in certain areas, I do not think it will. That is a whole new philosophical bag, which I will not open. Thank you for your answer~ and I think you wanted an opportunity to answer that kind of a question. Mr. TRAIN. I appreciate that. Thank you, Mr. Ambro. Mr. ROBERTS. The gentleman from New York, Mr. Walsh. Mr. WALSH. Thank you. Mr. Chairman. Mr. Train, I, too, want to thank you for coming up here today and exposing yourself to some questions from the committee and I per- sonaflv have enjoyed the excellent cooperation from your agency, and if it were not for the gentleman sitting on your left, Mr. Rhett, we would not have had the sewage treatment project that we have going in the county. I want to ~et into that a little bit. Ye5terday in preparatioii for this meeting, I met with the Consult- in~ Engineers Council for New York and also with the representative of~the National Council. They have prepared some material at my request, which I think highlights the problems we face in the environmental field. They outlined two projects a.nd detailed them to a great extent, and I will submit these to you so you can comment on them, one at a time, but I do want to readl from their statement andi this is it: PAGENO="0245" 239 "We object to the minimum procurement standards proposed by EPA because such standards will result in additional delays in a program already filled with delays clue to Government redtape." On June 4, 1975, Alvin Halm, Assistant Administrator for Plan- ning and Management, EPA, stated the application of these regu- lations would delay the grants program by an additional 4 months. Based on our experience, we estimate that 4 months of delay would actually result, and I would say that that is a very, very conservative estimate after the possibility of delay, and I would almost double that, but the impact of already existing. regulations are substantial. Two typical projects are mentioned to support these claims. In the small project, the village of Waddington, N.Y., 43 months elapsed between the date of submittal of the engineers' report for review and receipt of approval to proceed with construction. During this time the project rose in cost from $273,000 to $425,000 an increase equal to 56 percent of the original project estimate or 15 percent per year. In the larger project in Onondaga County, with which I am very familiar because I was mayor of the city of Syracuse at the time, when it was first proposed in 1965 and we went through many agonies with the proposal at the time. The project cost rose from $48,800,000 to $86,785,000, an increase equal to 75 percent of the original project esti- mate or 15 percent per year. Sixty-two months elapsed between the time of the application and the approval. A 1974 EPA needs survey for New York State indicates that $15,300 million are required for needed new treatment facilities in New York State. The cost to the taxpayer for even a 4-month delay, which Mr. Aim admits is possible, will New York State projects equal $765 million, based on a 4-month delay. This is based on a 15 percent per year increase and this is substan- tiated by actual projects. I do not think we can afford to have these projects double in cost and I am really concerned about what it is going to do to the total program if these delays continue. I am particularly concerned about the impact of 30 to 40 pages of regulations on the elected officials of small communities, communities of 2,500 to 10,000 population, which you have already alluded to, winch lack the technical personnel, and the administrative capabilities to fully comply with responsibilities and detailed instructions set forth in existing and contemplated regulations. I think we cannot continue on in this fashion. I do not think we can afford a program that is going to double in cost simply because of the regulations imposed. I am cognizant of the problems that are connected with regulatory agencies. I served on the public service commission in New York State for a year and left it because I was frustrated by the regulatory lag that occurred. I do think that something has to be done, Mr. Train, and I would like to ask your comments on some of these matters. PAGENO="0246" 240 Section 101 of Public Law 92-500 sets forth the national policy to encourage drastic reduction of paperwork. The proposed regulations for minimum procurement standards are contrary to the provisions of this law. I am concerned that this is what is imposing the delays. I am speaking of 40 Code o,f Federal Regulations 33 and 35, the draft, which pertains to procurement of architectural and engineering services. I would like to have you comment on them. Mr. TRMN. Yes, Mr. Walsh. I will comment and probably ask Jack Rhett to expand on them. These regulations have been under development for the purpose of trying to insure the fiscal integrity of the program. There have been a number of indications of problems in some areas which warrant concern on this score, and with the program of very large magnitude I feel that as an agency we must insure that the public funds are adequately protec.ted in the program. That is the only purpose of these regulations. The 4 months estimate that he referred to, I cannot believe, is an across-the-board kind of estimate. I would imagine that most of the larger communities probably would have very little difficulty in adjusting to the new regulations. It would largely be, as you correctly pointed out, some of the small communities that would doubtless have some difficulty in adjusting to the new proposed requirements. We have tried to be sensitive to this problem, and we have been meeting quite regularly with the various associations of consulting engineers involved. I met, I think, just last week, quite extensively with one rather large group and I think we identified a number of areas where im- provements can be made in the regulations under development. This is a continuing dialog with this group and I think this is probably the best way to get at the answer. I certainly share your concern that we do not introduce umieces- sary delays into the program. Every delay in an inflationary period creates a financial penalty. Could I ask Mr. Rhett to add to this? Mr. RHETT. If I could just add a couple o,f things. we are almost in a position where, let us say, some regulations have to come out aiid the probleths have been very, very minor. They really have not to date, but they are beginning to show up. We are moving into an $18 billion program. We are talking about moving in the neighborhood of $400 million or $500 million a month. I know of no regulation that EPA has produced that has had more outside public massaging, participation, and it is not just from the consulting engineers. I would like to emphasize that the grantee, the States, everybody, has been involved in it. I think there are a lot of misconceptions that have come into the regulation and this may be part of the reason why people have gotten somewhat excited about it. I think one of the first ones is that we were out for competitive bid- ding of services and that is just not true, not true at all. The second point, and probably the one where it will cause problems and it will need quite a bit of help, is the elimination of the percentage of construction cost for a fee. PAGENO="0247" 241 We were about the oniy agency left in the Federal Government that was permitting this type of fee to be charged. In other words, the more work you did, the higher you decide the cost of the project, the more money you made. It is just backward incentive here. I do feel that the regulations we are coming out with are reasonable now. Now, I might add that what we started with 4 or 5 months ago is just not what we have today. I also know of no regulation in which the top policy people of EPA have put in more personal time writing. In other words, this is not something coming out of the bowels of the building and just all of a sudden bubbling up to the top. Mr. Aim and myself have spent, I think, 5, 6, 7 days in which we walked into meetings at 9 o'clock in the morning and walked out at 6 or 7 o'clock at night, in just going over line by line these regulations with the consulting engineers, the States, and others. There will be, Mr. Walsh, I think, problems as we move from one to the other. I do not think it will affect the big cities at all. Mr. WALSH. Let me give you a couple of goals to shoot at, if I may. I mentioned the town of Waddington. There was a $273,000 project that was submitted to the EPA in March 1970, and it was finally completed in May of 1975. That is 5 years. Now, here is a private contract let in the same area for a building costing $580,000 under a private contractor. The engineering contract was executed in June of 1973, and in Feb- ruary of 1974, 8 months later, the project was completed. Now, that is the type of project and the type of goal that we ought to be setting and I think it can be done if EPA really gets down to con- sidering the plight of the little communities. My research shows that there are about 3,908 active projects in EPA as of August 1; 2,732 or roughly three-quarters of these involve communities under 10,000 population. Now, why does a small community like this building a project prob- ably under $2 million have to follow the same detailed regulations of a muitimillion dollar project in the range of $90 to $150 or $200 million? Why does it have to follow that type of procedure? There must be some way of short circuiting or shortcutting the whole redtape that exists here. We have to do it if we are going to return the waters of this country to the quality that we want. Now, one of the projects or one of the suggestions the engineers made, and I would like to have your comment on it, relates to FMC 74-7. This is the seven-page regulation brought out by the Office of Man- agement and Budget. They are pretty detailed. Yet, your agency takes the same details, the same regulations, and expands it to 50 pages. One perfect example of it relates to the question about access to records. There is one short paragraph in here of about eight lines relating to access of records. PAGENO="0248" 242 You take that and expand it to 20-some pages, if I understand it, in the new regulations. It is seven pages for one. regulation, three in another, and so on. Now. how in the world can you justify expanding something that is, in my mind, quite clear, and I am not an attorney, but I cannot think of much more direct information than this. Why do you have to end up with 20 pages to expand on that one. paragraph? This is the type of thing we are, fighting at the local level. This is the type of thing we are fighting all the time. It should not be necessary for every single Congressman in this chamber and everyone in the House, actually, to have to go to EPA and intercede on these projects. They should move through. You are bus and we are busy. \`\Te do not want to bother you, but as Mr. Roe has indicated, this is the only way we seem to get actiOn on the projects. Now, we appreciate the cooperation we have had, but something must be done and I do not think these draft proposals you have here are going to get the job done. You have also indicated that you want to cut down on redtape. This is not cutting down on redtape, gentlemen. This is magnifying the problem. I would like to know why we cannot use these regulatiOns of seven pages rather than the draft proposals which you recommend? Mr. RHETT. The 0MB circular provides a general framework to work under, as for example a highway program that has regulations which implement a procurement.. In fact, what our regulations are really asking for are only a couple of items. First, that the selection be made in the open and, second, that we have access to records. Actually, ours are much shorter than, I might add, most. You did bring up the access to records regulation and why it was expanded. It was expanded primarily at the request of the architect- engineer profession. All we want is one simple statement in there. That is. if you have a Federal contract with us. we want access to records. That is all we want. That is what the title 2 regulations say. Mr. WALSH. Why do you need 20 pages to say that? Mr. R.iiurr. Because they wanted it phased in. What you have in there is their request for phasing in the access to records arrangements. We would really have no problem if all the AE's just put in at the bottom of their contracts that they will just give us access to their records as we need them. It is required in our regulations. But, the question is going in and modifying contracts that already exist. Mr. WALsh. WelL now, about two-thirds of the St.ates have adequate laws referring to subcontracts. Why do you have to go beyond the State regulation and request of 0MB and come out with your own regulation? I think you fail to recognize the fact that in a good many cases, in most cases I would say, local government a.nd State government are not the wards of the Federal Government. PAGENO="0249" 243 They are mature, responsible adults and I think we ought to start treating them as such. I do not think we have to spell out every single little detail for them. Two-thirds of them have adequate laws. Why can we not use those instead of just tying this program up so badly that you are increasing the total expenditure of a program that is so vitally needed in this country by 5.6 percent overall? Mr. RHETT. Any of your municipalities that have adequate aid pro- curement regulations, will not be bothered at all by our regulations. They are already doing it. That is, standard, good, reasonable procurement practice. Mr. WALSH. Well, Mr. Chairman, I do not want to belabor the point, but I do want to mention for the record a list of processes that the Onondaga County Metropolitan Sewage Treatment Authority had to go through beginning back in 1965, and it detailed 187 steps that had to be taken to comply with the Federal government regulations before the grant was finally approved in December 1974. Mr. ROBERTS. Let me say I agree with the gentleman and when I was head of a Federal agency if someone had written a 50-page bulletin, lie would not have been on the payroll the next day. The gentleman from Georgia. Mr. GINN. I, too, want to thank Mr. Train. I am quite interested, Mr. Train, in the subject of reimh~irsement and I had hoped to get into this with you. As I understand, there are some 61 projects caught up in this ques- tion of who is right on the definition of initiation of construction. Some 22 of those projects happen to be in my State and some 5 in my district. In the interest of time. iMir. Chairman, rather than prolong the morning session, I would like, if possible, to submit several questions to Mr. Train, to be answered for the record. Mr. ROBERTS. Thank you. [See pages 249-272 for supplemental material provided b EPA.] Mr. ROBERTS. Does the gentleman from Minnesota have any ques- tions? Mr. OBERSTAR. Yes. Thank you, Mr. Chairman. Mr. ROBERTS. Let me say that it is the Chair's intention to try to complete the questioning of Mr. Train a~id the comments by 12 :30 and then recess until 2 o'clock, so we can get some lunch and finish up with all the other witnesses sometime this evening. Mr. OBERSTAR. I greatly appreciated the line of questioning of Mr. Roe and of Mr. Walsh, our colleagues from New Jersey and New York. It touches a very sensitive nerve responsive chord I have been hear- ing from local governments throughout my district about the in- credibly lengthy and complicated regulations that they have to deal with. Many times we just have a village clerk trying to understand, who is only a part-time person, trying to understand these regulations that, as you point out, you spend days devising. Certainly I do also join with my colleagues. Mr. Train, in compli- menting you on the splendid job you have been doing in handling the enormously complicated job which you have. PAGENO="0250" 244 Our questions are more in concern for your further effectiveness in the position in the program. I would like to ask what percentage of the $7.1 billion has gone into sewer construction? Mr. RHETT. A little over $400 million has gone into collector lines. Mr. OBERSTAR. Is there a. deliberate policy of EPA to downgrade or give lower priority to sewer construction? Mr. RHETT. No; the priority system is based primarily on the fact of worse things first. Collection systems normally would fall toward the bottom of our priority listing of correcting worse things first. But, not all the time. Sometimes collection systems become quite essential. Mr. OBERSTAR. Is this policy one that is initiated by EPA or is it something that the States undertake on their own and is conferred in by EPA? Mr. R~rr. I think it is both because a general guidance of priori- ties, of course, say worse things first. Mr. OBERSTAR. So, even the State on its own determines its priority or its needs for sewage treatment plant construction and chooses to fund last or not at all the very sewer systems authorized under this legislation, you would concur in their decision? ii\Ir. IRHETT. Yes; if it were reasonable. Mr. OBERSTAR. But, in addition to that you would have a policy in EPA giving priority to sewage treatment plants, and if there are some crumbs left over they would go to sewerage? Mr. RIIETT. No; that is not quite what I would say. We would give priority to worse things first. In other words, we would take care of that major pollution sources first. Now, there are cases where you have overflowing septic tanks and things of that nature, where collection systems are important, to health and water quality. Mr. OBERSTAR. Who would you give priority to in those cases- health consideration, preservation of unique resources, such as an unpolluted lake, or what other basis do you settle on? Mr. RHETT. Health and water quality. Mr. OBERSTAR. In Mr. Train's testimony, he discusses the ad va.lorem tax a.pproach and I am very pleased to see that EPA `is supporting the committee proposal for an ad valorern tax, but I am puzzled by your intention to limit this tax to those municipalities who have had a history of using it. Why do you limit your support to the historical use of the tax on municipalities? Mr. TRAIN. The main reason is that it imposes a very substantial burden to change over a system where you have a municipality that has historically been on an ad va.lorem tax basis. It is difficult to make the same argument of disruption and unfair burden where this is not the case. Mr. OBER5TAR. Would it burdensome or would it operate inequi- tably if there were to be a choice? That is, if a community would feel it would be too burdensome, too costly, to switch over to an ad valorem tax or use a tax approach, would PAGENO="0251" 245 it be inequitable to allow them that option or would your burdensome argument apply in that case~ also? I would think if they were given an opportunity and option and they wanted to switch over to it, ad valorem, that they would do so, rec- ognizing whatever burden there might be upon the community. Mr. RI-IETT. There is a philosophical problem with user charges in that if a community has been on an ad valorem a charge may cause disruptions. It can tie up their whole pattern of financing. Yet, we can get it pro- portionate by surcharging. In general, looking from a State pollution viewpoint, some type of user charge system or utility system has major advantages because we have the polluter not just paying but also knowing what he is paying. As an example, if he has to pay $20 a month to put this much pollu- tion in, he knows that if he cuts his pollution in half, then he is only going to have to pay $10 a month. This is in general why from a philosophical utility viewpoint, the general philosophy of user charges is good. On the other hand, it can be completely disruptive and it is for just this reason that we do not believe the Federal Government should be doing it. Mr. OBERSTAR. Well, I recall at that time during the consideration of this legislation, as a member of the staff of this committee, and it was then Chairman John Blatnik, they were attempting to work out a proposal under which distress areas, those designated by the Eco- nomic Development Administration, would have a different basis of taxation so that they would not drive industry away. So I believe that this is a fact, that industry would be very reluctant to locate in, say; a small community where a new sewage treatment had to be built and shoulder a very substantial portion of the user charge, where it had also the option of locating in a larger municipality with facilities already in place, where its proportion of the user charge would be very small. So, I think there has to be some consideration here with another policy of government here to stimulate economic development in dis- tress areas and to make the EPA policy on user charge somewhat flexi- ble so that we do not discourage industry from locating in rural areas or in distress areas and also take those steps that we need to take in order to clean up our wastes. So, I see the ad valorem as kind of a compromise approach and I would like to see some flexibility on the part of EPA to support that policy. Mr. RHETT. We have a real legal problem in proportionality. I really believe your question is not so much one of ad valorern or user charges, but is pointed more toward the law on proportionality. Mr. OBERSTAR. It is directed toward that, as well. Mr. RIIETr. You also have been watching us very closely through GAO, I might add, to make sure that we are keeping this thing proportioii ate. Mr. OBERSTAR. Well, I will not belabor that point. 1 want to go on to another point. In your discussion of reimbursement and advanced construction, I really question why you are opposed to the extension of the reimburse- PAGENO="0252" 246 ment program and I ask that question because your statement that "The additional funds required are not within the budget program of the President~" is to me more of an excuse than a reason. It sounds kind of like a half-hearted statement, one of these, "Oh, and he sent me up here to tell you~" kind of statements. Is there a reason for that? Mr. TRAiN. Yes. The. reason is that you are not dealing with clean- ing UI) prese~it or future water quality problems, but providing adth- tional funds for reimbursement for back periods and the present authorization has covered the. period up through July 1, 1972. H.R. 9560 is an extension beyond that date. What is the present date? Mr. RHETT. June 30, 1972. Mr. TRAIN. We simply do not think this is the best utilization for admittedly limited resources. We a.re never going to have enough money in the program, unfortu- nately, and it is a question of whether you want to put your money to work cleaning up water quality problems now existing or in the future or reimbursing back investments. Mr. OBER5TAR. Would you support it if there were a requirement by the Congress that those communities receiving such funds would have to invest in new treatment. facilities? Would von want time to think that over? Mr. TRAIN. You sort of got me on, that one. I would think they would qualify for funding in the normal course in respect t.o currently available funds. Mr. OBERSTAR. That is what we are thinking. You refer to clifficu.lties in meeting your responsibilities under NEPA under the Cleveland-Wright version of legislation. What certain difficulties do you refer to? Mr. TRAIN. These are certainly potential problems, not necessarily clear problems. At the present time, of course. EPA does environmental impact analyses of these projects unless a negative declaration is called for. With the enactment of a State certification program, we wish to make sure that the NEPA process is iiot somehow circumvented by that fact of certification. It is not our understanding that it would be the Congress' intention to avoid the environmental impict. analysis. So. the only problem I am talking about is that. we would concede that EPA would continue, to have the responsibility for insuring ade- quate environmental impact analyses of these projects while at. the same time recognizing that all of the facility planning and project de- sign and so forth is `being dlone at. the St.ate andl local level. ~\That is going to `be required here is a. very close cooperative effort between us at the Federal Government leveL and the State and local officials to insure that the NEPA process goes forward and that we do not come in at the end. after the fact, so to speal~ a.ndl add a suibstan- tia.l period of delay to t.he project. In other wordls~ it. is going to be importart that. `the NEPA analysis go forward at the same time as the rest of the facility plan~in~ to in- sure that. there are not those kindls of delays. All I am dlOinp. I think. u~ fla.o~.oin~ for the committee this need for close ccordinat.io~. hut vccog_ PAGENO="0253" 247 nizing that when you have some split of responsibility between differ- ent levels of' Government, there can be problems of coordination. Mr. OBERSTAR. Certainly refers to that, to the certification to the State participation and impact statements. Of course, you are aware that the other committee which I serve on and before which you have testified, the Merchant Marine `and Fisheries Subcommittee on Wild- life and Conservation, has held hearings and will be considering revi- sions from NEPA to clarify this State and Federal interaction `and maybe that will be clarifying these problems. I have some other questions, Mr. Chairman, but I will submit for the record. Mr. ROBERTS. Thank you very much. [See pages 249-972 for supplemental material provided by EPA.] Mr. ROBERTS. The gentleman from South Dakota. Mr. ABDNOR. Thank you, Mr. Chairman. Mr. Train, I would like to say I recognize the great challenge you have in implementing your program. During the August recess your Regional Administrator in Denver, Mr. Green, was kind enough to come out to my district and travel with me for 11/2 days, holding some hearings in a little town. He did an awful lot of good. We need more of that. He really did a fine job. In view of the fact that the Federal Govern- ment is being asked to bail New York City out of its bankruptcy, I sometimes wonder if the EPA, and, maybe for that matter, members of the committee and the entire Congress, have ever considered the im- pact that Federal regulations, directed toward maj or problems in this country, in the big cities and the urban areas, are having on these very small communities in rural America and that they could really drive them into bankruptcy, too. I do not speak, as Mr. Walsh did a moment ago, of a small commu- nity of 25,000. I am talking about 500 people, 300 people, 100 people, and the impact your regulations have. It just makes a very difficult situation when they try to meet all of the standards and no doubt it is the big problem which you are con- fronted with when you are trying to arrive at solutions in big cities. I wonder if this is taken into consideration as you draft your regulations? Mr. TRAIN. I totally agree with what you have said. This is the problem and it is not limited to EPA and its activities. I think whenever you get into complex regulatory programs and/or substantial financial requirements, there does tend to be some discrim- ination against the little community, against the small businessman, and against the small family sized farm. In other words, there are always economics of scale and these regula- tory programs tend to work against that and I am very concerned about this and these impacts are among those which I have asked my staff to take better account of in the whole regulatory process. This is part of the regulatory review process that we were talking about earlier. I do not think there is any ready answer to the problem. I think the major need is to be sensitive to the fact that there is a problem. Another area, if I can just expand on this for a moment is simply the relationship to State and local governments generally. PAGENO="0254" 248 We regulate at the Federal level and unless we are very careful and keep it constantly before us, there is a tendency to not see the problem from the standpoint of the other levels of govrenment that are involved. I think we have come a long way in the last 2 or 3 years, toward changing some of the emphasis in the agency to take better account of State and local concerns. I think we have a long way to go, likewise, in terms of some of these other areas of the public that you refer to. As I said, I do not think there is any complete answer to the prob- lem, but a lot of progress can be made by increased sensitivity through- out the process from beginning to end as to these particular kinds of impacts. I assure you that this is one of the areas I give high priority to. Mr. ABDNOR. I appreciate that. I should add that Mr. Green made a good point a.t several of our hearings in noting that the State draws up its own plan to meet the standards established at the Federal level. They can get carried away and sometimes make it even more difficult for little towns to meet these standards which are more than Federal requirements. \~Te found this on a number of occasions. So, it is all the way down to the little community. One area. we went up to specifically was as far away as you can get in our part of the country, in the northern part of the State. It is a community of 395 population. They never had any trouble ex- cept 5 days a year when they do get a little extra moisture in runoff from snow and they have an overflow. So, they have to build. By the time they went through all the plan- ning stages of hiring the engineer, they were talking about expendi- tures of possibly up to $100,000. These people knew they could not afford to hire a professional firm to ~ut up something like that, so they decided to do it themselves. It is going to cost them 20 percent of the total, which has been reduced, but it is still costing the taypayers about $80,000. I know we just cannot turn them loose, but sometimes I think you have to take a look at the situation, such as that. Mr. TRAIN. Mr. Abnor, I think one of the ways we can help in this respect is in a nontechnical sense as we are able to put more resources into this program. I am thinking particularly of people at the regional level. We will be in a better position to consult and advise directly with small communities than we are at the present time. We have had very few people to go around. As a result, there have not been many opportunities for the kind of direct communication,. call it handholding if you will, with the communities in the way we would like to do it. Now, it .is going to be hard td do as much as we would like. But, w& are adding people. The President has given us more people for this. program. They are going to be put out in the regional offices. I think this will help assist many of the small communities to deal with what. must seem very frustrating and insoluble kinds of problems. Mr. ABDN0R. The last thing ,I want to say is that I am sure Mr~ Green has a very fine feel for this. PAGENO="0255" 249 Mr. TRAIN. I share your high regard for Mr. Green. Thank you very much. Mr. ROBERTS. I am sure the gentlemen from the corps will appreci- ate the fact, and several other members will, also, but I have in hand a. letter from the Administrator saying that States may now set aside a certainportion of their EPA funds for the use of small communities. I am sure that will be available for all the members in the next day or two. Mr. Train, I want to thank you for your patience and for being with us all this time. The Chair leaves all its questions to the last. I do have one or two that we should cover now. My staff was sort of playing games and they said that they wanted to know if there was any special signficance of your requiring off date water quality reports on "April Fools Day"? Mr. TRAIN. I better not answer that question. Mr. ROBERTS. A little more seriously, how would you distribute the bloc authorizations of the money that you request for the authorizing sections of the act? Some of the Members are concerned about that. I would suggest that you answer that for the record. Mr. TRAIN. We have this here before me. We can either read it into the record or submit it. It is quite lengthy. Mr. ROBERTS. We can just accept it for the record. Because some of the States are concerned, I wanted to put it in the record. Are there any other questions that must be answered before we recess for lunch? [No response.] Mr. ROBERTS. If not, again we want to thank you. Mr. Chairman, do you have any questions? The CHAIRMAN. No. Mr. ROBERTS. Again, we thank you very much. It has been a pleasure to have you and we will direct the rest of the questions in writing. The committee will stand in recess until 2 o'clock. [Whereupon, at 12:36 p.m., a recess was taken.] [The following was received from EPA:] UNITED STATES ENVIRONMENTAL PROTEcTION AGENCY, Washington, D.C., November11, 1975. Hon. RAY ROBERTS, Chairman, Subcommittee on Water Resources, Committee on Public Works and Transportation, House of Representatives, Washington, D.C. DEAR MR. OIIAIRMAN Enclosed are the Environmental Protection Agency's responses to questions submitted by the Subcommittee on Water Resources in your letters dated October 8, 1975, and October 17, 1975. We have also included responses to further questions suggested by the Subcommittee staff as a result of our meetings with them on October 17 and 22. We appreciate the opportunity to present our views on the water program and H.R. 9560 and hope this information will be helpful to you. Sincerely yours, BRYAN L. LAPLANTE, For ROBERT G. RYAN, Director, Office of Legislation. Enclosure. PAGENO="0256" 250 HOUSE COMMITTEE ox PUBLIC WORKS AND TRANSP0RTA~I0N Questions on FWPCA Amendments AUTHORIZATIONS Question 1. On April 17, 1975, YOU requested an amendment to section 517 of the Federal Water Pollution Control Act which would provide an authorization of $237,413,000 for the fiscal year ending June 30, 1976, and $257,700,000 for the fiscal year ending September 30, 1977. How would you distribute this money among the programs authorized by each section of the Act? Answer. Environmental Protection Agency fiscal year 1976 0111B submission (`in thousands of dollarS) Federal Water Pollution Control Act, as amended Sec. 104-Research, Investigations, Training, and Information: See. 104(g) (1), Pilot Training Program $2, 032 Sec. 104(g) (2), Forcasting Manpower Needs 274 Sec. 104(p), Agricultural Pollution ( 1 Sec. 104(r), Fresh Water Aquatic Ecosystems Sec. 104(t). Thermal Discharges Sec. 104(u) (1). All Other 72, 250 Sec. 105-Grants for Research and Development: Sec. 105(h), General Authorization 5, 807 Sec. 100-Grants for Pollution Control Programs 00, 000 Sec. 107-Mine Water Pollution Control Demonstrations 440 Sec. 108-Pollution Control in Great Lakes: Sec. 108 (a) & (b), General Authorization 1, 031 Sees. 109-112-Training Grants, Contracts, and Scholarships 231 Sec. 113-Alaska Village Demonstration Projects 250 Sec. 114-Lake Tahoe Study Sec. 115-In-Place Toxic Pollutants Sec. 206-Reimbursement and Advanced Construction: June 30, 1960, to July 1, 1972 June 30. 1956 to July 1. 1960 Sec. 207-Waste Treatment Works Contract Authority Sec. 208-Areawide Waste Treatment Management: Sec. 208(f), Grants (Contract Authority) 53, 000 Sec. 304-Information and Guidelines: Sec. ~304(j) (3), Supplement Other Federal Programs `Sec. 314-Clean Lakes Sec. 317-Financing Study Sec. 517-General Authorization 60, 072 Prim ary sections applicable and m ajor purpose: 102-Planning grants 18 102, 208,' and 303-Planning 7, 482 106-Control Agency administration 501 201, 203, 205, 210, 304, and 307-Construction grants operations maintenance and administration 15, 005 301-Municipal permits 1, 256 301, 302, 304, 306, and 515-Industrial waste studies and guidelines_ 6, 396 303-Water quality standards 537 304(c) and 312-Nonpoint source studies and guidelines 1, 804 313-Federal activities 1, 108 311 and 307-Spill prevention and response 301, 308, 309, 310, 318, 311, 504, 505-Enforcement 3, 988 304, 401, 402, 403, 404, and 405-Permit program 11, 406 .503-Water Pollution Control Advisory Board 10, 481 Total 256, 047 i\Iarine protection 1, 282 Water supply 8, 812 Grand total 266, 141 1 Activities being conducted in concert with other research programs authorized by sec. 104(u) (1)-All Other. PAGENO="0257" 251 Question 2. In testimony before the Appropriations Committee on the fiscal year 1976 budget, you indicated that the State agencies could utilize Federal grants of ~60 million level in fiscal year 1976 and $7~ million fiscal year 1977. Would the level of authorizations provided for this program under your requested bloc authorizations be adequate to meet the needs of the State agencies? Answer. Under the Federal Water Pollution Control Act Amendments of 1972 § 517, "General Authorization," the bloc authorization provided for a minimum State program and would not be sufficient to meet the $OOM or $75M level you suggested in your question. 5EOTION 208 Question 1. `When was the Environmental Protection Agency (EPA) required by section 208 to promulgate regulations for the designation of areas and the carrying out of areawide planning? Answer. EPA was required by section 208 to promulgate regulations for the designation of areas and the carrying out of areawicle planning within ninety (90) days after the date of enactment of the Act or January 16, .1973. Question 2. When were these regulations actually promulgated? Answer. The Designation Regulations were published in the Federal Reg- ister on September 14, 1973. The Interim Grant Regulations (Part 35) were published in the Federal Register on May 13, 1974. Question 3. How much money was authorized for fiscal years 1973, 1974 and 1975 for 208 grants? Answer. The amounts of money authorized for 208 grants were: $50 million for Fiscal Year 1973; $100 million for Fiscal Year 1974; $150 million for Fiscal Year 1975. Question 4. How much money did the agency actually obligate from each fiscal years authorization? Account for any funds that were not obligated. Answer. In 1973 the Agency did not obligate any money for 208 grants. There were no designations of areas for 208 planning in FY 73. As the answer to Question No. 5 states, EPA made a decision to place agency emphasis on other programs during FY 73. This was due to the timely comparative gains avail- able from emphasizing permits and construction grants. In FY 74 there were 11 grants awarded for a total of $13,575,550. In FY 75 $149,983,300 was obligated out of the $150,000,000 authorized. It is the opinion of our General Counsel that all funds not obligated by the end of the fiscal year for w-hicli they were authorized have lapsed and reverted to the Department of the Treasury. Question 5. Sec. 208(f) (2) of P.L. 92-500 provided full funding for three fiscal years. It was intended that much of the planning would be done by June 30, 1975. However, because of the delay in promulgation of regulations this clear intent of Congress was thwarted. `We understand you support the concept of areawide planning and are surprised in light of all previous under- standing of your agency's views on this that you now do not support full fund- ing for two years. Please explain. Answer. Implementation of Section 208 presented significant timing difficul- ties. For EPA, there was development of regulations and guidance for a plan- ning program that was entirely different from any previously administered by the Agency. For local planning agencies this new thrust in planning called for establishing a new planning process, staffing up the agencies, as well as develop- ing the plan. All of these activities require time in order to be brought together in a cohesive effort. Statutorily, 208 plans could not have been completed be- `fore mid-summer of 1975. Given this situation and the very limited resources we could devote to the 208 program, the 208 plans had little hope of impact- ing the first round of permits or the major, po~tion of initial construction grants. EPA chose to place agency emphasis on these programs and employ 208 plan- ning to impact the 1977-79 round of permits and construction grants. We wholeheartedly support the areawide planning approach for coordinating local, State and Federal efforts at pollution abatement. EPA's timing for im- plementation of Section 208 was based on recognition of the strengths of the program and the constraints w-ithin which it had to be operated to produce the desired results. 63-192--76-----17 PAGENO="0258" 252 Question 6. How many areas are now designed as 208 areas? How many have 100 percent grants? Answer. By the end of FY75, 149 agencies had been designated by the local governments or State Governors and had been approved by EPA and funded at the 100 percent level. There presently are no agencies with grants less than 100 percent. Question 7. How many areas were designated that had been led to believe that they would be eligible for 100 percent grants. l)ut, in reality, were not? Answer. As of July 1, 1975, twelve agencies had been designated. Other desig- nations had been made by July 1 by Governors or local governments, but had not yet been received in Headquarters. Designation approval has been withheld be- cause the EPA General Counsel has advised us that all designations approved must receive funds, and these designations could not be funded, as all funds had been obligated. Question 8. Why didn't they receive 100 percent grants? Answer. No designations were approved unless full 100 percent funding could lie provided because the Act required 100 percent Federal funding. Consequently. EPA never intended to partially fund designations from FY75 funds. Question 9. How much money would be required to fund these areas at the 100 percent level? Answ-er. Approximately $15 million would be required to fund the 12 un- approved designations at the 100 1)ercent level. Question 10. How many new designations have occurred since June 30, 1975? Answer. Presently in EPA Headquarters there are 25 designations made both before and after July 1. 1975. We are now evaluating these designations and w-ill either approve or disapprove these designations as soon as we receive funds for FY 76. Question 11. How many new designations should, in your opinion, be made? Why do you think they've not been made? Answer. There are from 75 to 125 potential 208 areas remaining to he desig- nated. These areas have not been designated due to uncertainty concerning fund- ing and uncertainty about the distribution of planning responsibilities between the States and the local governments. Political concerns, in sonic areas, have also influenced the decision not to designate. Question 12. What is EPA's position concerning the eligibility of States for 208 grants? Answer. The decision of the District Court for the District of Columbia in ~RDC v. Train (Civ. Act. No. 74-1485) specifies that States are responsible for 208 planning iii all non-designated areas. We are complying with the court order and are amending our regulations to require this planning, and, also in compliance with the court order, we are allowing States to be eligible for 208 funds. Question 13(a). Does EPA intend to use section 208 money for funding the State non-designated planning? How do you propose to divide 208 money between State and local agencies? Answer. EPA expects to use some of the section 208 money for funding the State non-designated area planning. We are reserving judgment until we are able to fully assess the relative needs of State and local agencies. As you may be aware, the President's budget request did not anticipate that States would be eligible to receive § 208 funding. Question- 13(b). How do you intend to fund upcoming 208 areas for both COG's and States? Answer. The available 208 funds will be allocated to the responsible planning agencies based on indices of need. This need will be based on the extent of pollution problems within an area. USER CHARGES Question 1. Assuming a community does not currently use ad valorem taxes as a method of funding operation and maintenance costs, under what circumstances would you propose they be permitted to use these taxes? PAGENO="0259" 253 Answer. We have proposed that a user charge system based on ad valorem taxa- tion be permitted only where such a system is already in use and a change to a non-tax system would be difficult, costly and disruptive. Under EPA's pro- posal, a tax-based system would not be permitted where a community does not currently use ad vaiorem taxes as a method of funding operation and maintenance costs. Question 2. You testified that ad valorem taxes should be available only to existing communities as a method of collection operation and maintenance costs. How would we implement such a policy in jurisdictions with both "old" and "new" communities? Would added paperwork make such an effort worth- while? Answer. We do not propose that two different user charge systems be required under one jurisdiction. Where an existing municipality currently uses the ad valorem tax system, it Would be permitted to continue use of that system for existing as well as new users if conversion to a non-tax system would be costly and disruptive. Question 3. What evidence is there of metering systems resulting in a reduc- tion in the use of a waste treatment works? Answer. It has been found that metering of water systems can result in a substamitial reduction ia water consumption. At least one study indicates that as much as a 35 percent reduction in domestic water consumption can be at- tained. (Steve H. Hanke, "Demand for Water Under Dynamic Conditions," Water Resources Research, October 1970; and Charles W. Howe and F. P. Linaweaver, Jr., "The Impact of Price on Residential Water Demand and Its Relation to Systems Design and Price Structure," TVater Resources Research, Vol. 3, No. 1, p. 1977). The degree to which this reduction would result in a reduction of waste flow is; however, dependent on the particular water use cur- tailed by metering. Of course, a reduction in non-sewered water uses such as lawn sprinkling would not result in a decrease in waste flows received at the treatment works. One study comparing ten metered areas with eight flat-rate areas showed that a 34 percent reduction in domestic water consumption was due primarily to decreased lawn sprinkling. (Linaweaver, Beebe, and Skrivan, Dctta Report of the Resi4ential Water Use Research Project, Johns Hopkins Uni- versity, 1906.) Question 4. What should be the roles of the Federal, State, and local Govern- inents in determining how tax-exempt properties should be handled if a system of ad valorem *taxes were used to collect operation and maintenance costs? Answer. The requirements for tax-exempt properties under an ad valorem tax based user charge system should be set forth in Federal guidelines as are the present user charge requirements. These guidelines should be developed by EPA with adequate opportunity for comment by State and local governments and other interested parties prior to promulgation. Following promulgation of guide- lines, grantees would determine on individual grant projects the method for handling tax-exempt properties within the constraints of the guidelines. The proposed method would then 1)0 submitted to the State and EPA for approval. Question 5. What is EPA's position concerning a differential between residen- tial and non-residential user categories as opposed to industrial and other categories? Answer. In a user charge system based on ad valorem taxes, surcharges as necessary to insure proportionality, should be imposed on all nonresidential users which introduce waters into the municipal system which are significantly different (in terms of strength, volume and delivery flow rate characteristics) from typical wastewaters introduced by residential users. Surcharges should not be restricted to only industrial users. Question 6. On what basis would EPA define tax-exempt property in its regulations? Answer. EPA would accept as tax-exempt property, the decision that the local community makes in such cases in accordance with Federal, State, and local law. COST RECOVERY Question 1. How many communities have implemented an industrial cost re- covery system? PAGENO="0260" 254 Question 2. How long have these systems been in operation? Question 3. When do you anticipate that a substantial number of systems will Pe fully implemented? Answer to questions 1. 2, and 3. The EPA Regional Offices have approved approximately 55 industrial cost recovery systems proposed by municipalities. Further, there are a fairly large number of smaller communities that have assembled all the data necessary to meet their relatively simple requirements. These proposed systems will also he approved and become operational in the near future. No industrial cost recovery systems under P.L. 92-500 are known to be in actual operation to date. However, industrial cost recovery systems are not hew. The old law established requirements for industrial cost recovery with respect to the local share' only and a nmnber of these systems have been iii operation for several years. Question 4. Other witnesses gave testimony on the unreasonable relationship between the costs recovered and the bookkeeping costs. Please comment. Answer. EPA has minimized the costs of bookkeeping as well as other costs associated with industrial cost recovery. This has been accomplished through the inclusion of considerable flexibility in EPA's regulations and guidelines. For example. small industries are permitted to be assessed fiat rates; they may also make annual instead of monthly payments; and may be required to meet less burdensome waste sampling and analysis requirements. Moreover, the user charge system, required of all projects, will collect the same basic data (sewage, strength, volume and delivery flow characteristics) as is necessary for determina- tion of industrial cost recovery charges, thus the additional cost of administering the industrial cost recovery system should be minimal. STATE CERTIFICATIOit Question 1. What is your interpretation of the word "all" which appears in section S of H.R. 9560 on page 7, line 9, of the bill? Do you read this to mean that a State must have the ability to perform all actions, determinations or approval in order to be certified, or do you interpret this to mean that EPA could certify a State agency to, for example. review plans and specifications, but not to conduct construction performance audits? In other words, must a State be able to do everything, or nothing? Answer. Our interpretation of the word "all" is that "all" includes the ~everal actions that go to make up all of the responsibilities that it is possible to delegate, either individually, severally, or in their entirety. We are aware that the word "all" could be interpreted to mean that the States have authority, responsibility and capability to take all of the responsibilities that is is possible to delegate, but it would not seem to be practical or logical for this interpretation to be taken. This is especially so since subsection (a) of the bill, which is referred to, specifies that the Administrator may carry out any of his responsibilities for actions, determinations, or approvals by accepting a certification from a State of its performance of such responsibilities. In summary, we believe that the word "all" refers to the al)iilty of the State to take all of the actions necessary to perform those responsibilities that it accepts rather than all of the responsibilities that it is possible to~delegate to the State. Question 2. Please refer to une 7 of HR. 9560. How does EPA interpret the words. "authority, responsibility, and capability" in their delegation of responsibility? Answer. EPA interprets the words "authority, responsibility, and capability" to refer to the adequacy of the power of the State agency to act in lieu of EPA to take nil of the actions, determinations, or approvals necessary to make a responsible certification to EPA of the completion of the delegated resnonsihility. We expect the delegation to operate in a manner similar to that of the current prourfi in whereby 2S States have accepted responsibility for certifying the adequacy of plans and specifications for a project. Under this program we have exmy'rieuced no difficulties in ascertaining that the State agency has the necessary authority, responsibility and capability, and we expect none from the wording of HR. 9560. PAGENO="0261" 255 Question 3. Will States be required to enact legislation before they can pick up certification responsibilities? Answer. States will not generally be required to enact legislation before they can pick up certification responsibilities. However, where the powers or capabili- ties of a State water pollution control agency to perfonn the duties to be assumed are patently inadequate, there may be instances where State legislation may be required. Such situations, are, however, expected to be very exceptional or even non-existent. Question 4. Will 90 days be adequate for EPA to promulgate regulations to im- plement the State certification portion of the bill? Answer. 90 days for EPA to promulgate regulation is viewed as adequate as EPA is at present working with the States to draw up regulations for the State certification program based on the bill. Question 5. Does EPA consider the States to be eligible for construction grant administration funds immediately upon passage of the Act? Answer. EPA considers States to be eligible for construction grant administra- tive funds upon the completion of an agreement between EPA and the State for the State to perform the delegated responsil)ilities. This process is not expected to entail a great deal of time. However, it will be necessary to define in the agree- ment exactly what responsibilities that the State is assuming and how it will perform the delegated actions. Question 6. Would a~ provision for extending compliance deadlines beyond 1977 by State Certification be acceptable to EPA? Answ-er. Certifications by States under section 8 and extensions of the 1977 deadline for municipal dischargers under section 9 involve different considera- tions and should not be tied together. See generally the discussion under Time Requirements, Question 1. Delegation to States of the authority to grant exten- sions of the 1977 deadline for municipal discha'rgers under section 9 would he acceptable to EPA as part of the normal delegation of permit issuing authority under section 402 of the Act. The exercise of such delegation extension authority by the States would be subject to EPA guidelines and review in accordance with implementing regulations and memoranda of understanding between EPA and the States. Extensions by States with delegated authority would be allowed in circumstances where EPA itself would grant an extension, see discussion under Time Requirements, Question 1. Question 7. If H.R. 9500 is enacted, will the current contractural arrangements for grant applications, plans and specifications review, etc. he negated during the period before delegation procedures are official and implemented? Answer. We do not see that the current contractural arrangements for delega- tion of specific responsibilities will be negated before or after delegation proce- dures, as proposed in I-JR. 9500, are official and implemented. Rather we see that these two possible procedures for delegation will he alternative methods of delegation that a State may choose as it fits their particular needs and situation. Question. 8. How does EPA intend to monitor delegated authority? Can this be included in existing report without new paperwork? Answer. EPA intends to monitor the delegation authority through periodic spot checks of the documentation and other evidence supporting certification. This procedure will not cause any increase in paperwork because it will be a moni- toring rather than paper generating activity. Qnestion .9. Does the Administration intend to reduce State section 106 grant funds if money from the construction grant program becomes available under section S of HR. 9560? Answer. EPA does not intend to reduce State section 106 grant funds because section 8 funds for the construction grant portion are added. Rather, we expect that the 106 funds will then be redistributed among other 106 program activities to make them more viable. TIME REQUIREMENTS Question 1. What criteria would EPA use to determine whether and to what extent a municipality would receive an extension beyond the 1977 deadline? PAGENO="0262" 256 Answer. An extension would be granted only if a municipality had proceeded in good faith to provide the treatment required by July 1, 1977, but either (1) could not physically complete all of the, planning, design and construction needed to provide such treatment by that date; or (2) through no fault of its own could not obtain funds from EPA to meet eligible capital couts to do so and could not otherwise reasonably obtain such funds. Extensions would be granted with time schedules for accomplishing all steps necessary to provide the required treatment within the shortest time feasible, in no case to extend beyond the time specified in section 9. Question 2. Should the extension of the 1977 be authorized only for meeting secondary treatment requirements as opposed to more stringent treatment required to meet water quality standards? Answer. No. There is some feeling that extensions are not appropriate for municipalities which have failed to meet water quality requirements imposed prior to the 1972 Amendments since such municipalities are presumably long time recalcitrants. Such a difference would be artificial for a number of reasons. In the first place the attainment of water quality standards in a number of places is dependent on municipalities providing secondary treatment. Secondly, water quality standards, as they were understood and administered prior to the 1972 Amendments, generally required municipalities discharging into interstate waters to provide a minimum of secondary treatment and established schedules for them to do so. Thirdly, the failure to date of many municipalities to provide required treatment, whether secondary or more stringent, can be traced to the hitherto unavailability to them in Federal construction grant funds. The factors suggested in the answ-er to Question 1 provide a more meaningful basis for determining whether and to what extent a municipality should be granted an extension. Question 3. In your testimony you suggest that the lack of available Fed- eral grant funds should be a justification for the Administrator to grant an exemption from the 1977 effluent requirement for municipalities. By such an amendment do you intend to create the presumption in the law that the Fed- eral government has a responsibility to provide grant funds to a municipality before that municipality should be required to meet the 1977 effluent limitation? Answer. To the extent that a large scale construction grant program exists and continues to exist, the Agency believes that it would be inequitable to sub- stantially fund required treatment facilities for some municipalities while re- quiring other municipalities to fund such facilities on their own, unless other funds are reasonably available to them. If the Federal construction grant pro- gram were to be reduced substantially or eliminated in the future, that situa- tion would change. No presumption of Federal responsibility for funding would be created by the proposed amendment. EPA could grant extensions only in limited circumstances and extensions would only be authorized to the date spe- cified in the proposed amendment. Qnestion 4. Does the EPA now require the consideration of alternatives such as chemical treatment and land treatment in determining whether a munici- pality has selected time most cost-effective approach? Please demonstrate the EPA effort to assure proper thoroughness of this effort. Answer. Yes. Competion and approval of a facility plan is required under time construction grant regulation (40 CFR 34.900-960) as a prerequisite for award of Step 2 or 3 construction grant. Both the construction grant regulations and the supplemental Guidance for Preparing a Facility Plan require the applicant to provide for the Best Practicable Waste Treatment Technology. This means providing as a minimum, for secondary treatment or any more stringent effluent limitations required to meet water quality standards. Also required is a case-by- case evaluation of alternative waste management techniques including treat- ment and discharge of effluent, treatment and reuse and land application. To assist grantees in meeting these requirements, EPA has published technical re- ports entitled "Alternative Waste Management Techniques for Best Practicable Waste Treatment," "Evaluation of Land Application Systems" and "Cost of Wastew-ater Treatment by Land Application." Question. 5. What number and percentage of municipalities do you estimate will be in compliance with the 1977 requirement? How many municipalities w-ill be unable to comply with this requirement? Answer. It has been estimated that 40 to 50 percent of the publicly owned treatment works will be in compliance with the 1977 requirement. With approxi- PAGENO="0263" 257 mately 20,000 known publicly owned treatment works, this would mean approxi- mately 11,000 publicly owned treatment works will not be in compliance in 1977. Question 6(a). Section 9 which would amend section 301 of the Federal Water Pollution Control Act provides that the Administrator may modify the time for secondary treatment in the case where treatment works are discharging into ocean waters, the territorial seas, or the contiguous zone. Does the Environ- mental Protection Agency interpret the terms ocean waters, the territorial seas, or the contiguous zone to include the open water of Puget Sound? Answer. The terms ocean waters, the territorial seas, or the contiguous zone are not interpreted by EPA to include Puget Sound. These terms are defined in section 502 of P.L. 92-500. by these definitions, the ocean and the contiguous zone are those waters beyond the territorial sea. The territorial sea includes those waters "measured from the line or ordinary low water along that portion of the coast which is in direct contact with the open sea and the line marking the seaward limit of inland waters, and extending seaward a limit of three miles." (emphasis added) The line marking the seaward limit of Puget Sound excludes the open water of Puget Sound from the territorial seas. Q uestion 6(b). Should the waters, such as Puget Sound, be included in the category of ocean waters? Answer. It would be appropriate to consider a modification of the time require- mnent for secondary treatment in the case of treatment works discharging into the open waters of Puget Sound in the State of Washington, and Cook Inlet in the State of Alaska. Portions of Puget Sound and Cook Inlet have depth and dispersion characteristics similar to deep ocean waters which permit effective dilution and dispersion of wastewaters from properly designed outfalls. When such conditions exist an extension of the 1977 deadline to 1982 (or 1083 as we have recommended) may provide enough time to develop alternatives to second- ary treatment which are more cost-effective. It should be recognized, however, that authority for extension of the 1977 deadline for secondary treatment for a discharge into Puget Sound or Cook Inlet is already provided under section 9(g) (1) (A) of H.R. 9560. Question 7. Should an industry be required to meet pretreatment standards by July 1, 1977, even if a municipal treatment works is not available? Answer. Industry should be required to provide pretreatment as expeditiously as practicable, without regard to the availability of municipal treatment. This is the case since prstreatment provides environmental benefits as well as protec- tion of publicly owned treatment works. Whether an industry should be re- quired to provide pretreatment by July 1, 1977, however, must be considered on a case-by-case basis. If an industry has been issued a permit under section 402 of the Act requiring the provision of specified pretreatment on or before July 1, 1977, that requirement should and will be enforced. If an industry presently discharges into a publicly owned treatment works, in most cases it w-ould not require a section 402 permit and its pretreatment requirement would be dependent on the establishment of pretreatment standards under section 307 of the Act. EPA has encountered substantial difficulties in establishing such standards. It would be reasonable to afford such industries a reasonable period of time not to exceed three years from the promulgation of such standards to provide the required pretreatment, regardless of the 1977 date. Question 8. What would be required of an industry which in good faith plans on participating in a municipal system which will not be available on July 1, 1977? What should be required? Answ-er. Under the Act as it is presently in effect and would be in effect if the amendment in section 9 were enacted, such an industry would be required to provide best practicable control technology or eliminate its discharge by July 1, 1977. It could eliminate its discharge by connecting to a publicly owned treat- mnent works. Of course, if no such works were available prior to that date, this alternative would not he open to it. In dealing with such situations, EPA ap- proaches each industry on a case-by-case basis to reach the most reasonable and environmentally sound result, considering such factors as: The industry's good faith or lack thereof in providing its own treatment or in promoting the municipal facility; the physical ability of the industry to provide its own treatment; w-hether the municipality would accpet the industry's wastes; whether and to what extent the inclusion of the industry's wastes would affect the viability of PAGENO="0264" 258 the proposed municipal facility; the nature and volume of the industry's wastes iii relation to the design and size of the proposed municipal system; the date by which the proposed municipal system will be available; and the extent of pretreatment required of the industry. Depending on its analysis of these fac- tions, EPA might: (1) require the industry to proceed with the construction of its own treatment facility; (2) take action against it to require it to connect with the municipal facility when available; or (3) take action against it to eliminate its discharge. Question 9. What should be required in the way of a showing that the industry will participate in the municipal system? Answer. An executed and enforceable contract between the industry and the municipality in which the municipality agrees to accept the industry's waste and which covers all relevant issues, including the requirements of the Federal construction grant program. Provision for the timely construction of interceptor and connecting sewers. Expeditious installation of required pretreatment facilities. Toxlcs Question 1. What is the maximum time period in which a hearing on proposed toxic standards could be held while still leaving sufficient time for the testi- mony received at the hearing to be considered in developing the final standard. for publication? Answer. In view of the time requirement to conduct a rule-making hearing, consider post-hearing briefs, and reach a decision on final toxic standards, the Agency would not comence a hearing under any foreseeable set of circumstances later than 90 days after the notice Of proposed standards. In some instances where it is anticipated that a large number of industries will be affected by the proposed standard, the period between notice and commencement might be shorter. In addition, prior to the evidentiary phase of the proceeding, the Agency will in virtually every case hold a pre-hearing conference before the Administrative Law Judge to exchange w-itness lists and documentary evidence, and to narrow- the issuses and thereby streamline the proceedings. It should be added that the proposal to extend the present 30 day period for commencement of hearings is more for the protection of industry objectors than for the Agency, since the Agency can prepare its case prior to issuing the notice of proposed rulemaking, whereas the industry objector's are ex- tremely hardpressed to review the standards and prepare their case in the very short period of 30 days. Question 2. Section 307 is very important to the water pollution control effort. This section is not working. Have you further suggestions which would help implement this section? Answer. EPA's experience over the past three years in trying to implement § 307(a) has provided significant information which was not available to Con- gress w-hen the Act was originally w-ritten. For example, since 1972 it has become apparent that the process of gathering reliable data on the toxicity of substances, their behavior and effects, and the amounts of discharges from identifiable point sources is a moi'e time consuming iwocess than had previously been believed. Moreover, reliable data in these areas was not generally available then, and is only slightly moi'e available now as a result of our efforts. In addition, serious technological problems have arisen. First, is the question as to w-hether technology exists to achieve effluent reduction to the level which may be required to provide the necessary safety for the environment. Second, is the availability of technology sufficiently refined to monitor reliably at low discharge levels. Only recently has sufficient information been developed w-ith respect to control technology and available less harmful substitutes for some toxic substances so as to allow- for an intelligent assessment of industry's ability to comply with rigorous health-protective effluent standards. This information indicates that compliance u-ill in many cases be far more difficult, time consuming, and costly than u-as anticipated in late 1972. In light of the foregoing, the statutory timetable for implementation has proved far too short. This problem has been exacerbated by the statutory requirement of formal rulemaking on the record, a procedure w-hich consumes PAGENO="0265" 259 a great deal of time and resources and which is unique to this section of the Act. The burdens imposed by the foregoing problems have exceeded the Agency's available resources both manpower and funds. The economic and social consequences of the setting of health-protective standards now appears far greater than originally anticipated by Congress, with the result that despite the statute's silence on economic considerations, the Agency has concluded that it would be irresponsible to set effluent limitations standards without giving at least some attention to impact in these areas. The Agency expects to re-propose toxic standards for several substances soon after the first of the year, and to conduct hearings on them this Spring. The ex- perience of those hearings should be available to us at or soon after the time u-hen the National Committee on Water Quality publishes its final report. At that time, w-e should be in a better position to respond further to any questions this Committee may have concerning the effectiveness of section 307 (a). GRANT PROGRAM Question 1. Given the progress to date in obligating construction grant funds, when do you estimate that any State will have obligated 75% of its share of the recently allotted $9 billion? Answ-er. We are uncertain as to when each State will reach the 75% mark in obligating its share of the $9 billion allocated in February, 1975. How-ever, based on existing unobligated balances, and the kinds of projects both being processed in the Regions for grant awards and identified by the States (on priority lists) for funding, an estimate has been made of when each State would exhaust its existing allotments. Full utilization times range from the third quarter of FY- 176 to the fourth quarter of FY-1977. It might be noted that half the States are not expected to fully obligate their contract authority allotment until the last quarter of Fiscal Year 1977 (July-September 1977). Although our analysis indicates that half States u-ill have fully utilized their allotments between 1976 and March 1977, experience w-ith this kind of information indicates that projec- tions of obligationratesat the State level extending to and beyond one year tend to be optimistic. Question 2. When do you think a new authorization should be nrnde available for the construction grant program and how much money do you recommend be authorized? Answ-er. The Administration has not reached a position on new authorizations for the Construction Grants Program. Such a position will be presented in the President's 1977 Budget Proposal. EPA made its recommendations to 0MB in the letter to James Lynn dated July 31, 1975. Question 3. What would be the impact on the construction grant program of the Talmadge proposal to reallot th~ $9 billion in grant funds that were released and distributed among the State in February 1975? Answer. The $9 billion released in February .1975 has been available to the States for nearlynine months. The focus and direction of most State water pol- lution coiltrol programs for the next tw-o years have been shaped by the alloca- tion of these monies. Projects have been developed, public hearings have .been held, commitments to municipalities have been made, interrelationship between basin, areawide and local plans and permits are in the firming process (the level and availability of construction funds brings reality to such interrelationships) and generally the nature and level of Federal support is recognized throughout the Nation. Accordingly, viewing the construction of w-ater pollution control facilities as a total program. we are sensitive to the disruptions likely to occur if a reallocation,' as provided for in the Talmadge Bill, is made. Since the program is ongoing and additional authorizations for future years can be expected and these authoriza- tions will be impartially allotted, the problems addressed by the Talmadge Bill can be moderated with time and the disruptive consequences of its passage avoided. Question 4. What is your recommendation concerning the Talmadge proposal to reallot the $9 billion in grant funds that were released and distributed among the States in February 1975? * Answ-er EPA's position on this question is, in essence, expressed in our response to Question No. 3. PAGENO="0266" All remaining States plan to obligate all of their current allotments by Septem- ber 30, 1077. _______ CONSTRUCTION GRANT PROGRAM Question 1. It is our understanding that EPA has awarded waste treatment works construction grants to municipal water supply or w-ater purification facili- ties for treating effluent for such grants. Cite the applicable provisions of the statute and submit copies of regulations and guidance concerning such grants. Answer. EPA funded sewage treatment (sludge handling) facilities at munici- pal water treatment plants in administering the construction grant program under PL 84-600. Such funding came about when, shortly after the program was in- augurated (circa 1958). an application for a project was received. Questioning its eligibility, the program officials submitted it to the Office of General Counsel (HEW) which ruled that since (1) the project was a water pollution control project, and (2) the applicant was a "municipality" as defined in the law (PL 84-660), the project was eligible providing the State certified it for funding. (A copy applicable sections of PL 84-660 are attached. The provisions are notice- ably brief and general.) Although early in the program such projects were declared eligible, they were not, over the years, assisted in large numbers. Many States never certified such projects for priority while a few, largely rural States, tended to approve them regularly. Question 2. Are such grants still being aw-arded? If not, explain reasons for the changes, particularly in view of the expanded eligibility provisions of PL 92-500. Answer. Grants for the construction of water pollution control (primarily sludge handling) facilities at municipal water treatment plants are no longer being awarded. The attached memorandums set forth the reasons. Question 3. Enclosed is a copy of HR. 9285 which was introduced by Congress- man Satterfleld on August 1, 1975. This bill would amend section 212 of the Fed- eral Water Pollution Control Act to make the treatment of waste from publicly owned water purification plants eligible for construction grant funds. Please comment. Answer. As the attachments in response to Question 2 indicate, EPA's decision 260 Final decisions on State allotments rest with the Congress and EPA will carry out its program in accordance with legislative mandates. States which will run out of fiscal year 76 funds prior to Sept. 30, 1977 State and region: Maine (1) New Jersey (2) Delaware (3) Maryland (3) Virginia (3) Alabama (4) Florida (4) Mississippi (4) North Carolina (4) Michigan (5) Minnesota (5) Ohio (5) Wisconsin (5) Texas (6) Nebraska (7) Colorado (8) Montana (8) North Dakota (8) South Dakota (8) Utah (8) Wyoming (8) Arizona (9) California (9) Hawaii (9) Nevada (9) Trust Territories of the Pacific Islands (9) Alaska (10) Idaho (10) Will run out of funds by end of- 2d quarter, fiscal year 1977. Do. Do. Do. Do. Do. Do. 3d quarter, fiscal year 1977. Do. Transition quarter. 2d quarter, fiscal year 1977. Do. Do. Do. Do. Do. Transition quarter. 4th quarter, fiscal year 1976. Transition quarter. Do. 4th quarter, fiscal year 1976. Do. 2d quarter, fiscal year 1977. 3d quarter, fiscal year 1976. Transition quarter. 2d quarter, fiscal year 1977. Do. Transition quarter. PAGENO="0267" 261 to deny eligibility to sludge handling facilities at water treatment plants was based on Sections 307 and 402 of PL 02-500. Amending Section 212 alone would leave provisions of the law in conflict with each other. The case presented in Program Guidance Memorandum (PG-36-A) has been and remains EPA's position on this matter. The agency is committed to this posi- tion from both a legal viewpoint and a practical viewpoint. Just prior to the nega- tive determination, questions were received from a few municipalities on the eligibility of projects to treat the waste materials from smoke stock scrubbers at municipal power plants. The argument for approving such projects rested solely on EPA's previous precedent of approving sludge facilities at municipal water treatment plants. Clearly, this was another step in a direction not within the intent of the law nor within the funding objectives of the construction grant program. In brief, EPA is not in favor of amending PL 02-500 to make water pollution control facilities at municipally owned utilities eligible for construction grants. U.S. ENVIRONMENTAL PROTECTION AGENCY, Washington, D.C., April 29, 1974. Memorandum to: Harold Cahill, Director, Municipal Construction Division (AW-443). From: Henry K. Garson, Grants, Contracts, and General Administration Division (EG-334). Subject: Grant Project 420605-01-0 Lower Bucks County Joint Municipal Levit- town, Pa., Step 3-Title II Construction Grant, $242,000. In the "Daily Notice of Grant Actions," April 9, 1074, the following description of the above grant was included: "Construction of a pretreatment facility at a water treatment plant and appurtenant conveyances (Date of Award 4/8/74; Rec'd 4/0/74)" A brief check on the purpose of this grant revealed that the pretreatment facility is, in fact, for the purpose of pretreating wastes of a municipal water treatment plant. The pollutants generated by the water treatment plant need pretreatment because they either pass through or are untreated by the Municipal Treatment Plant into which the pollutants are discharged. We believe that this grant presents serious legal questions under the FWPCA and the Title II regulations. Further, this grant must be considered in light of the relationships between Title II construction financing, user charges, industrial cost recovery and the pretreatment requirements of §~ 307 arid 402 of the FWPCA. This grant may, upon study, reveal itself as an evasion (albeit unintended, of the pretreatment requirements of § 307. Further, the affect of this construction under a sewage treatment authority would have the effect of increasing the cost of "sewage treatment" in lieu of "water treatment," while Title II and § 307 intendment is that the consumers bear the cost of treating nonsanitary pollut- ants or pollutants not treated by primary and secondary treatment. I have requested that Robert Kussrnan obtain for this office a copy of the sub- ject grant file for the purpose of assisting determination of the legality of this grant. Until we receive the file and make the `determinations necessary, all prac- ticable steps should be taken `by you to insure that no contract be awarded or aiiy additional costs incurred. U.S. ENVIRONMENTAL PROTECTION AGENCY, Washington, D.C., June 5, 1074. To: Regional Administrators, Attn: Air and Water Program Directors. From: Harold P. Cahill, Jr., Director, Municipal Construction Division. Subject: Construction of pretreatment or treatment facilities for municipal utilities. Questions have been raised regarding the continuation of our practice of aw-arding grants for sludge handling, pretreatment, and/or overall treatment facilities constructed at municipal water treatment plants-separate from the basic municipal waste water treatment system. ,This practice, approVable under PL 84-660 (as amended), is inconsistent with the provisions of PL 92-500. Pretreatment (and treatment) facilities, constructed solely to meet single, special purpose situations, viz., to control pollutants which cannot be handled within the overall municipal system, are not the kind of projects intended for grant assistance under the construction grants program. Such facilities are to be viewed as an integral part of the utility's design and function and their cost, as a capital cost of utility construction. Accordingly, a separate waste water treat- ment facility, constructed at a municipal utility site, for the sole purpose of PAGENO="0268" 262 treating or pretreating pollutants eminating from that utility, is not to be con- sidere(l eligible for grant assistance ; see 40 CFR 35.925-15. Therefore. effective July 1, 1974. grants for all such separate facilities cannot be approved. Pieviously approved grants for projects of this nature are not affected by this decision. nor are Step 3 grants awarded through June 30,: 1974. Hon. GEORGE MCGOVERN, IS. Senate. TVas1~in~iton. D.C. DEAP. SENATOR McGovERx: This is in further reply to your letter dated July 29, 1974 concerning the elimination of grant monies from use in the treatment of waste generated by municipal water treatment plants. As you are aware, section 201(g) (1) of the Federal Water Pollution Control Act, as amended, (the "Act") authorizes the Administrator to make grants for the construction of publicly owned treatment works. Section 202(a) of the Act provides that the amount of any grant shall be 75% of the cost of construction of the treatment works (as approved by the Administrator). The Administrator has promulgated regulations pursuant to the authority vested in him to provide standards for the determination of the amount of construction cost eligible for grant assistance. The appropriate regulation dealing with this question is 40 CFR 35.925-15 which provides, in part, that "allowable project costs do not include costs allocable to the treatment for control or removal of pollutants in w-astes introduced into the treatment works by industrial users unless the applicant is required to remove such pollutants introduced from non-industrial sources * The wastes generated by municipal water works are generally not similar enough to wastes introduced into the treatment works by non-industrial sources: and, as a result thereof, special pretreatment equipment is required in order to properly treat the wastes. Since the treatment of water for human consumption is an industry, the municipal water company (whether publicly or privately owned I is placed. under the applicable regulations, in no better or worse posi- tion than any other industrial user of a treatment works which introduces p01- lutants into the treatment works requiring special treatment equipment so that the wastes will not either impair the treatment work's efficiency or pass through insufficiently treated. This same general approach is followed in sections 402 and 307 (hI of the Act which prohibit the discharge of pollutants into a municipal treatment works which are not susceptible to treatment by such treatment works or which would interfere w-ith the operation of such treatment works. If the wastes of water treatment works are capable of treatment, using the same processes used for pollutants introduced by non-industrial users, grant monies are available to assist the construction of the facilities while if the pollutants need special equipment to treat, the supplier of the pollutant is to bear the entire cost of providing such treatment. Fnder Section S of the former FWPCA, grant monies w-ere available "for the construction of necessary treatment works to prevent the discharge of un- treated or inadequately treated sew-age or other waste into any waters... The distinction between the provisions of P.L. 92-500 and the earlier statute is one of the purposes to which public monies are to be spent. Under the old law-. grant monies w-ere available where the pollutants being discharged by a municipally owned treatment w-orks would be reduced. Under the new statute, grant monies are available to treat "usual" w-astes expected in treatment works and special wastes. generated by industry (including utilities), must be re- moved at the expense of the industry pursuant to sections 402 and 307 of the Act. Further. under the Act any inthistrial user of a treatment w-orks must bear his proportionate share of the operating and maintenance costs of the treatment w-orks anti he must. under section 204(b) of the Act, `pay his share of the Federal share of capital construction costs associated with the treatment works. This interpretation of the non-availability of grant monies for `the pretreat- iwent of industrial wastes will. I believe, fulfill the intent of the new Act and make more grant monies available to clean up the domestic wastes presently being discharged into the waters of the United States. To permit grant assist- ance under Title II of P.L. 92-500 for the w-ater supply industry could open the door for requests for aid from a wide variety of other municipal facilities and industries such as 1)0w-er plants. airports, mass transportation facilities, county-owned and controlled feed lots, etc., owned and operated as public util- ities. thus further depleting the resources available for the principal goals of the Act. PAGENO="0269" 263 I appreciate your concern for the citizens of your State who have expected grant assistance for their water treatment works sewage treatment; however, these monies are available only for municipally owned sewage treatment works and not those portions of such treatment works devoted to specialized treat- ment of commercial industrial or industrial utility wastes. If you have any further questions concerning our activities or policies, I shall be pleased to respond. Sincerely yours, JOHN T. RHETT, Deputy Assistant Administrator for Water Frograni Operations TVH-~e46. U.S. ENVIRONMENTAL PROTECTION AGENCY, Washington, D.C. September 17, 1974. To: Regional Administrators. ATTN: Air and Water Program. Directors. From: Harold P. Cahill, Jr., Director, Municipal Cons~ruct1on Division (WH-447). V V Subject: Eligibility of wastewater treatment facilities at municipally owned w-~tter trea1ment works for construction grants. Program Guidance Memorandum 36, issued. June 5, 1974, gave notice of the termination of the practice of funding wastewater treatment projeets at water treatment plants owned by municipalities. Since the issuance of that memo- randum; numerous requests have been received for a more detailed explanation of the reasons for this action. To give added support to EPA's position denying the eligibility of municipally owned water treatment works for w'astewater treat- ment grants, we are providing the following. It is to be used a supplementary attachment to PG-36. V Section 201(g) (1) of PL 92-500 authorizes the Administrator to make grants for the construction of publicly owned treatment works. Section 202 (a) of the Act provides that the amount of any grant shall he 75% of the cost of con- struction of the treatment works and regulations have been promulgated setting forth standards for determining construction costs eligible for grant assistance. In particular, 40 CFR 35.925-15 provides, in part, "That the allowable project costs do not* include costs allocable to the treatment for control or removal of pollutants in wastes introduced into the treatment works by industrial users unless the applicant is required to remove such pollutants introduced from non- industrial sources; and that the project is included in a waste treatment sys- tem, a principal purpose of which project and system is the treatment of domes- tic w-astes of the entire community, area, region or district concerned." From the above, it is clear that one test of a project's eligibility for grant funds is that it has, as its principal purpose, the treatment of dome~tic wastes of the entire community, area, region or district concerned. A municipally owned utility could not meet this funding test. V The w-astes generated by municipal water works are generally not similar to wastes introduced into the treatment works by non-industi~ial sources and, ac- cordingly, special facilities are required in order to properly treat these wastes. Since the treatment of water for human consumption is an industrial undertaking, the water company serving a municipality, whether publicly or privately owned, is in the same position as any other industrial user of a municipal treatment sys- tem introducing pollutants into the system which require special treatment equipment so that the wastes will neitheVr impair the system's efficiency nor pass through insufficiently treated. This viewpoint is derived from Sections 402 and V 307(b) of the Act which prohibit the discharge of pollutants into a municipal treatment works, which are not susceptible to treatment by such treatment works or, which would interfere with the operation of such treatment works. V Under Section S of PL 84-660, grant monies were available to municipalities for the construction of necessary treatment works to prevent the discharge of un- treated or inadequately treated sewage or other waste into waterways. Under Sections 307 and 402 of the new statute, grant monies are available to treat "usual" wastes expected in treatment works, and special waste~ must be removed by the responsible source at its expense~ V To allow grant funds to be used to assist the water supply industry could lead to similar requests from a wide variety of other municipally owned facilities such as power plants, airports, mass transportation facilities, feed lots, etc., op- erated as public utilities. Such action would have the effect of depleting Federal resources intended `to support the construction of waste treatment facilities to serve the total municipality. PAGENO="0270" 264 QUEsTIoNs SUBMITTED BY Mn. WALSH Question a. I am concerned that we are not implementing the provisions of Section 101(f) of PL 92-500 which sets forth the national policy that to the maximum extent possible the procedures utilized for implementing this Act shall encourage a drastic minimization of paperwork . . * Proposed regulations for `i\Iiniinum Procurement Standards" are contrary to this provision of the law. I am concerned that we may be interposing delays. I speak of 40 CFR 33 and 35 (draft) which pertain to procurement of architectural or engineering services. In light of the 0MB Circular 74-7 why is it necessary at this time of the long sought general expansion of EPA's capabilities in the construction grant program to superimpose yet another level of paperwork on the program? Answer. Our current Title II Regulations, Part 35, reserved a Section (35.937) for procurement of Architect and Engineer services, when they were issued in February 1974. This reservation was made in order that the Agency could con- duct interim audits of grantees' procurement systems. These audits plus those of the General Accounting Office conclusively demonstrated the requirement for more definitive guidance and controls over the grantee's procurement of services in order to protect the federal interest in this $18 billion program. Question b. The President in numerous statements has pointed out the prob- leni of the interjection of the Federal monolith into every facet of our lives. Somehow, this seems to be an example of the type of thing he has promised to avoid. Please comment. Answer. The President's recent statements were generally concerned with eco- nomic regulatory agencies. However, we fully support the minimization of regu- lations that are an unnecessary intrusion into the private sector. Question a. How many active construction grant projects is EPA presently as- sisting? . . . and how many of those involve communities of 10,000 or less? Answer. EPA, as of September 29 assisted 4,168 projects, with 2,732 involving communities under 10,000 population. Question 4. Must a grantee building a $2 million waste water treatment plant meet the same regulatory requirements as a grantee building a $102 or a $200 million waste water treatment plant? Answer. The new 35.937 Regulations for grantee procurement of A&E services will relieve communities of 25,000 population or less from the more detailed pro- cedural requirements in advertising, screening, and selecting the architect-engi- neers for this program. While this may not relate in every case to a $2 million plant, it will very definitely relieve these smaller communities from what, to them, could be a time-consuming process. Question e. Would I be correct in assuming that these small communities, which comprise nearly 70 percent of EPA's active projects, represent at least that percentage or more in technical review time, instructions, audits, and other administration requirements and attention by EPA regional and national staff? Answer. While the small communities represent nearly 70% of EPA's active projects they do not necessarily require 70% of the effort since their projects are usually less complex, and are generally not seriously impacted by problems asso- ciated with NEPA, National Historic Sites Act and other problems faced by many of the larger municipalities. We have made positive efforts to assist these smaller communities. For example, the recent issuance of "A Model Facility Plan for a Small Community" dated September 1975 will materially shorten the preparation and review time associated with this aspect of the program. Question f. Would there be any logic to EPA adopting somewhat simpler, easier-to-understand regulations governing grants for smaller projects? . . . and if this were done, wouldn't it eliminate many of the objections being directed at EPA for its insistence upon compliance by all grantees and grantee contractors with voluminous, detailed and seldom-understood regulations, such as the 70-plus pages of sub-agreement regulations now being finalized by your Agency? Answer. EPA's final regulations to be published in the Federal Register will consist of approximately 8 pages. They will greatly diminish requirements on small communities (under 25,000) and streamline procedures for cost reviews. Question g. With regard to the regulations which you are currently finalizing- I believe it is Part 35-I have seen letters from Mayors, state officials, engineers, PAGENO="0271" 265 contractors, and others expressing concern over the potential for delay which may result, when, or if, those conditions are officially adopted. Do you foresee such a delay, and, if so, how long do you think it might be? Answer. The procurement regulations will be published in the Federal Register in late October, but with an effective date some ninety days later. During the ninety day period, we will, under the joint sponsorship of the engineering pro- fessional societies and local and state government organizations, hold a series of nationwide workshops for local engineers and grantees. We are confident these workshops will provide the grantees and their engineers with a better understanding of, and capability to meet their fiscal and technical requirements without undue delays. While we cannot place a specific time on meeting the requirements, we cannot foresee that they should be any more time-consuming than would the requirements any prudent municipality would employ. Question h. It is my understanding that the Office of Management and Budget in the interest of standardization, has published several "Management Circulars" covering Federal Assistance Programs. One of these-Federal Management Cir- cular 74-7-sets standards for establishing consistency and uniformity among all Federal Agencies in the administration of grants to state and local govern- ments. Appendix 0 of that document covers procurement standards to be observed by grantees. While I have not personally checked all of the elements of FMC 74-7 against the contents of the proposed EPA Subagreement regulations, a cursory review indicates that a large number of the points covered by EPA are, in fact, little more than expansion of requirements already contained in 74-7. (In one case, I noted that a single paragraph in the 0MB document has been expanded to seven pages in EPA's draft regulations.) Is this kind of detail and control really necessary? Answer. Most Agencies have guidelines or directives which they have developed to cover their procurement practices under Federal grant or aid programs. EPA has chosen the Regulaiton route, feeling this public announcement and participatory procedure provides the broadest visibility and interchange of all affected parties views. We have received hundreds of suggestions for improving these regulations and are convinced the final regulations will address these practical problems we face that are not specifically addressed in 74-7. Question i. Are you aware that FMC 74-7, which is supposed to apply to all Federal grant agencies, specifically states in paragraph 1, of Appendix 0, "No additional requirements shall be imposed by the Federal agencies upon the grantees unless specifically required by Federal Law or Executive Order?" In light of that clear-cut stipulation, would it be proper to assume that EPA has obtained a waiver from 0MB to expand and extend upon FMC 74-7? Answer. The Agency has not obtained a waiver but has cleared the issuance of these changes and additions to the Title II Construction Grant Regulations with 0MB. EPA believes that the new regulations implement and provide detailed and necessary guidance to grantees, State agencies, consulting engineers and others concerning acceptable implementation of the broad standards established in FMC 74-7. Question 5. Going back to my earlier concern regarding the problems faced by small communities in acquainting themselves with 20 to 30 pages of procure- ment regulations, has EPA given any thought to the possibility of adopting FMC 74-7 (which is generally recognized and understood by both grantees and their engineers) for use in connection with projects under $25 million estimated construction cost or for projects involving communities of 25,000 population or less? Answer. Same as (d). Question k. I would estimate that at least %rds of the States have adequate provisions on subcontracting. The States are already familiar with these pro- visions and we may again be duplicating the efforts in a fair number of our States. In this regard, I ask . . . would it not be possible under the Cleveland- Wright Bill, which has been incorporated as Section S of HR. 9560, to allow the States to certify, subject to EPA audit, that the 0MB provision of 74-7 are being complied with? Answ-er. The new regulations will provide for certification of local procurement procedures by the States. PAGENO="0272" 266 QUESTIONS SUBMITTED BY CONGRESSMAN GINN Question 1. What was the definition of "construction" in regard to the construc- tion grants program and the reimbursement program in HR. 11806, the House version of P.L. 92-500? Answer. Definition of the term "construction" in HR. 11896: "The term `construction' means any one or more of the following: preliminary planning to determine the feasibility of treatment works, engineering, architec- tural, legal, fiscal, or economic investigations or studies, surveys, designs, plans, w-orking, drawings, specifications, procedures, or other necessary actions, erection, Luilding `~cquisition altei'ttion iemodenng impio~ ement oi extension of tie'it ment works, or the inspection or supervision of any of the foregoing items." Question 2; What was the definition~ of "construction" in regard to these pro- grams in the Federal Water Pollution Control Act Amendments of 1072 when enactedon October 18, 1972?, Answer. Definition of the term "construction" in P.L. 92-500. The term `construction' means any one or more of the following: preliminary planning to determine the feasibility of treatment works, engineering; archi- tectural, legal, fiscal, or economic investigations or studies, surveys, designs, plans, working draw-ings, specifications, procedures, or other necessary actions, erection, building~ acquisition, alteration, remodeling, improvement, or extension of treat- ment works, or the inspection or supei~vision of any of the foregoing items." Question .3. `What is EPA's definition of "initiation of construction" as it applies to the reimbursement program? When were proposed implementing regulations defining this term first published? When were final regulations defining this term published? Answer. The construction grants program has, from its inception, defined "ini- tiation of construction" as "the issuance to a contractor of a notice to proceed, or, if no such notice is required. the execution of a construction contract". This defini- tion of `initiation of construction" u-as included in our regulations for the con- struction grants program under section 8 of the former Federal `Water Pollution Control Act (see 40 CFR 35.805-1), in the regulations for the construction grant program under Title II of the new Federal Water Pollution Control Act (see 40 CFR 35.905-4, 39 P.R. 5254), and in both the proposed regulations (see proposed 35.890, 38 P.R. 26882) and final regulations (published in the Federal Register on January 29, 1974) implementing the section 206 reimbursenient program. The use of this phrase (and the definition w-hich has been traditionally applied to it) has to do with the specific date from w-hich the actual, physical construction of a project can be measured. Question 4. What is the proportion of grant remaining to be paid for each reim- bursable project after the completion of the second round of awards? Anaw-er. Upon completion of the second round of reimbursable aw-ards, each project u-ill have received approximately 68.7 percent of its total reimbursable amount. This leaves 31.3 percent remaining to be aw-arded for each project. Question 5. How much money should be authorized to fully reimburse all proj- ects currently eligible for such payments? Does your estimate include 1975 cost increases? Answer. Under the 1972 Amendments $2.0 billion u-as authorized to reimburse mnnicipal treatment w-orks project on which construction was initiated during the 1066-1972 period. Under P.L. 93-207 this authorization was increased to $2.6 billion. The current estimate of the total reimbursable liability is approxi- mately $2.7 billion. (An exact figure u-ill not be available until completion of the second round of awards.) Therefore at the current time it appears that an authorization of an additional $100 million is needed to fully reimburse all cur- rently eligible projects. Cost increases for 1975 have not been included in these figures because the eligible project cost upon which the reimbursable award is computed is based on project costs received by the appropriate Regional Administrator as of Jan- uary 31, 1974. Question Il. When will EPA request a sufficient appropriation of funds to fully reimburse all projects eligible for such payments? Ansu-er. In order for EPA to aw-ard the reimbursable amounts remaining after completion of the second round an additional $100 million (approximate figure) would have to be authorized and an additional $800 (approximate figure) would' have to be appropriated. It was decided by the Administration in developing PAGENO="0273" 267 the F7 1976 budget request not. to include a request for appropriation of addi- tional reimbursement funds at that time. The entire issue will be considered again in developing next year's Congressional budget request and a final deci- sion wUl be made at that time on whether additional appropriations will be requested. Qucstiom 7. If section 5 of HR. 9560 were enacted extending the deadline for initiation of construction from July 1, 1972 to July 1, 1973, how many proj- ects by State would be eligible for reiiubursement? How much money, by State and nationally, would be required to fully reimburse these projects? Answer. . . Total Region and State Na mber at projecta reimbarsable amoant Region! ~___ 1 1108,800 Cdnnecticat 1 iot, too Maine_ Maaaacheaetta - New Hampahire Rhode laland Vermont Region II 0 0 Newieraey New York PeertoRico Virgin, lalanda Region Ill 8 1,391,050 Delaware Maryland Pennaylvania 6 1,342,301 Virginia *1 0,350 Weat Virginia 1 42,400 Diatrict at Colombia RegionlV 36 57,731,457 Alabama 1 255, 833 Florida 6 4,239,135 Georgia 22 6,756,459 Kentucky 1 59, 000 Miaaiaaippi 3 235, 530 North Carolina 1 45, 985, 300 Snath Carolina 2 199, 400 Tenneaaee Region V 2 183, 010 lllinoia Indiana 2 183, 010 Michigan rdinnesota Ohio Wiaconain Region VI 5 8,501,714 Arkanaaa Louisiana New Mecicn 1 10, 536 Oklahoma 2 8,431,855 Texan 2 5L 323 Region VII Iowa Kanaaa Minanari Nebraaka Region VIIL 2 282, 105 Colorado Montana 1 98, 200 North Dakota Soath Dakota Utah wyoming 1 183,905 Region IX Arizona California Hawaii Nevada AmericanSamaa Traat Territory at Pacific lalanda Gaam RegionX 8 3,258,778 Alaska Idaho Oregon 2 1,969,732 Waahington 6 1,289,046 Total 62 71,456,914 03-192----7G------lS PAGENO="0274" 268 QUEsTIoNs ON HAZARDOUS SUBSTANCES Quest ton 1. In making the determination of actual removability as required under Section 311(b) (2) (B) (i), what definitions or criteria have been used and what, if any, technical problems have been encountered? Answer. Section 311(a) (8) contains a definition of "remove" or "removal". The definition has two elements: (1) "Removal of the oil or hazardous sub- stances from the water and shorelines"; and (2) "the taking of such other ac- tions as may be necessary to minimize or mitigate damage to the public health or w-elfare." We have determined that the phrase "actually be removed as used in Section 311(b) (2) (B) (i) should refer only to the first element of this defi- nition. In other words, if the spilled substance cannot normally be removed from a body by physical, chemical or biological means, then it would not be "actually removable" for purposes of the eventual hazardous substance designation. The fact that some other action may be possible to "minimize or mitigate damage to the public health or welfare" does not make the substance "actually removable" for purposes of hazardous substance designation. However, actions taken under the second element of the definition in section 311(a) (8), i.e., actions taken to minimize or mitigate damage but which do not result in actual removal-may qualify for reimbursement from the revolving fund under section 311(c) and may result in liability of the discharger under the conditions specified in section 311(f). This insures that the penalty provisions are made applicable to a large number of harmful substances yet allows the mitigation, cleanup and liabilities provisions to be properly implemented. Accordingly, we are considering that all hazardous substances are nonre- movable. However, to facilitate protection of public health or welfare, we will use the second part of the definition of "remove or removal" in preparing removal regulations 311(j) (1) (A) and other response programs which will mitigate damage. Further, the civil penalties 311(b) (2) (B) (iii) are proposed to be implemented in such a way that actions which mitigate damages from a non- actually-removable substance will be factored into the penalty assessment. The criteria which have been used relate to the materials' solubility, density, volatility. We have identified eight physical/chemical/dispersal characteristics which are being considered as part of the basis for penalties for discharges of the nonremovable substances. Question 2. In making the determination of a harmful quantity of each sub- stance, what information is useful and how can these data be used to satisfy the requirements of Section 311(b) (4), 311(b) (5) and 311(b) (6)? Answer. To gather the necessary information such as toxicity, hydrodynamic, production, distribution, use patterns, spill histories, damage assessment reports, etc.. the Agency compiled a report [EPA-440/9-75-005-a through dl, Method- ologies for Determining Harmful Quantities and Rates of Penalty for Hazardous Substances, which was completed under Contract #68-01-2268. This document, particularly Volume III, contains the bulk of the toxicological, physical, chemical, water body, and administrative data and considerations available to determine harmful quantities of each substance. In addition, a Development Document to support the proposed rulemaking package is to be published which will have more data in the form of hazard profile sheets and analysis of alternate approaches. These data are thought necessary because the requirements of the law specify that quantities be identified which pose danger depending upon the time, location and circumstances of the discharge. To determine a quantity of a substance which is harmful in all circumstances requires much information and it is difficult to avoid criticism of too much protection (by identifying a small quantity) or too little protection (by identifying a large quantity) depending upon whether the water body receiving the discharge is small or large. To avoid this criticism, several quantities for each substance could be identified depending upon the time, location and circumstances of~ the discharge. A regulation of this sort would be very complex, taking into account all of the above information. Of particular concern would be the ease of understanding in the field of multiple quantity regulation especially during emergency incidents. The law places priority in Section 311(b) (5) on reporting of discharges in excess of harmful quantities. This is backed up by criminal sanctions. To assure rapid and more frequent reporting, this would suggest that the harmful quan- tities be relatively small and simple to understand. The law places priority in PAGENO="0275" 269 Section 311(b) (6) on prohibiting the discharge of harmful quantities and backs this up with civil penalties. To assure successful enforcement, this would suggest that the harmful quantities be relatively large and tailored to the specific water body damages. We are considering, therefore, that the emergency reporting re- quirements are of such importance that a procedure of categorizing the hazardous substances into relatively simple harmful quantity groups will satisfy this need while allowing reasonable enforcement actions to be taken. Question 3. What determinations would have to be at site of a discharge in order to determine whether a harmful quantity had been discharged? Answer. From transportation related discharges, information such as the size of the container, the proximity of the container to the navigable waters of the United States, and other evidence such as damage to public health and welfare would be useful to ascertain whether a harmful quantity had been discharged. From nontransportation related facilities the determination is complicated since only those discharges of designated hazardous substances which are not in compliance under the provisions of the NPDES permit parameters are to be considered as spill candidates under the purview of Section 311. In these cases, the owner or operator of the facility should be aware of relative quantities which have been released in-plant and be able to make a comparison between those and quantities specified as harmful. From the enforcement standpoint, the gathering of evidence on effluent concentrations and on receiving water concentrations can be used in conjunction with flows to calculate quantities dis- charged such that a comparison can be made with the harmful quantity speci- fied. The comprehensive determinations will be to conduct damage assessment studies such as outlined in our manual "Field Detection and Damage Assessment" published in June 1972. Question 4. What is EPA's view of the comment that some industrial chemi- cals are so potentially hazardous, i.e., chlorine, that they should not be trans- ported by water at all? Would not a shift from the water mode to other surface modes risk greater safety and environmental concern? Answer. This Agency, which is much concerned with the effects of hazardous substances discharged into the environment, is aware of the techniques used in risk analysis, but does not possess the necessary transportation expertise and has not conducted studies to evaluate the relative safety of various modes of transportation. Many of these chemicals, e.g., chlorine, are very essential and must be available in large quantity at low costs, even to implement other sec- tions of P.L. 92-500. It has been reported to this Agency, that the water mode is as safe or much safer than the other modes. From our vantage point, it would appear that there are modes that have more of a potential for discharging substances into populated areas for longer exposure periods, and therefore, would cause more environmental damage than the waterborne mode. Question 5. In addition to the determination of removability covered under Question 1, have the level of penalties authorized by Section 311 alone caused problems in the administration of the law? What efforts have been made by EPA to implement the penalty provision of Section 311(b) (2) (B) (iii) of the Act? Describe *any difficulties that were encountered in implementing this provision. Answer. Yes, the level of penalties authorized by Section 311 have been a concern in developing administrative policy. Efforts by the Agency to implement the penalty provisions have been to conduct staff studies, gather opinions, con- duct contractual studies, and then hold national symposia discussing various alternatives in regulation thrust and program initiation. From these efforts we are aware that the potential fine for discharging nonremovable hazardous sub- stances is having an alleged impact upon industrial spending. Questions like "Which mode of transportation should be employed?" "Should plant sites still be near water?"; "What insurance can be obtained?" are typical of those which are signifiëant to the owner or operator. The issue becomes whether or not a reasonable penalty system can be designed which carries the pro~er economic incentives, but is not so inflexible that its implementation will cause undue economic hardship with little environmental benefit. The (bb) penalty limits of Section 311(b) (2) (B) (iii) when implemented fully by the rate schedule created under Section 311(b) (2) (B) (iv) appear to be very inflexible an'd potentially of significant adverse economic impact. It should be understood that without rapid and full notification of discharges of hazardous PAGENO="0276" 270 substances to describe the magnitude of the spill problem, the emergency response and prevention programs are very difficult to implement. From the public symposia held, this Agency understands that the notification requirements could be and would be met, if there were not such severe economic sanctions. Therefore, the level of penalties appear to have an opposite effect of what they were intended: Because of the high penalties, fewer notices of spills may be received, and therefore, conditions of environmental damage would go unreported and only be observed after it u-as too late to do anything about it. The rate of penalty has been difficult to design hecause~ of minimal informa- tion available on what units of measure are common to the trade which handle the proposed designated substances The use of the ~clministrator s discretion is proposed to establish that the higher penalty system and upper limits (bb) would be used only for very grave cases in which the Administrator could show that the discharge wo.~ cnu~ed by gross negligence or that gross negligence was im oh ed in any actions tal en to mitigate damages The normal penalty for discharging non-removable hazardous substances would then be $500 to $5,000 (an) on a per incident basis This low level of pemaltv comp'ired to (bb) may not be sufficIent to motivate all parties concerned to prevent or mitigate damages. from hazardous substance spills. Question 6. On page 15 of your testimony, you recommend deletion of the pen- alty criteria dealing with damage to public health or welfare, leaving the char- acteristics of the substances dictatingthe penalty. What is the difference between the position you would be in then and the position you are in now as far as now being able to implement the penalty regulations dealing with hazardous substances ? Answer. We support the Amendment changing the penalty provision from a published rate schedule to a case-by-case analysis. Because of its inherent in- flexibility. there should be no published penalty rate schedule, viz, a regulation which w-ould precondition the level of penalty. We acknowledge the significance of the actual impact of the discharge on the environment in making the assessment of penalties w-hich should be imposed in any particular case. However, this is an area which must be carefully evaluated because of the questions of equitability of penalties and available resources for the conduct of studies. As presently drafted, the bill suggests that either the substances' character- istics or damage to public health or w-elfare (presumably shown by either EPA or USCG) or both form the basis of the penalty. It is easier to assure that the civil penalties are remedial hi nature if they are based upon actual field damage assessment. However, there u-ill be cases, perhaps many cases, where our agen- cies cannot afford to dedicate the resources needed to conduct the extensive and detailed field studies necessary to document the effect of the spill. Our concern is that some parties may seek to frustrate the program through delay by arguing that a penalty should be based on actual damage rather than the characteristics of the substance. Question 7. Do you know any other Federal law u-here a sanction of $5 million can be imposed for simple negligence? Answ-er. We have not conducted an extensive legal search, but we are not aw-are of any other Federal law with such a sanction. Question 8. What regulations have been pul)lished to date which implement the hazardous substances provisions of Section 311? If regulations are in the process of being prepared for publication, describe how these regulations would imple- ment the provisions of Section 311 w-hich call for: a designation of hazardous substances. a determination of removability, penalty provisions for a discharge of a nonremovable hazardous substance, and designation of a harmful quantity of a hazardous substance. Answ-er. An advance notice Of proposed rulemaking was published on August 22, 19T4. w-hich listed the elements and compounds tentatively being considered to be designated as hazardous substances and the determination that they were actu- ally not removable. The proposed rulemaking package for the sour mentioned reg- ulations is near completion and is expected to be published in the next few weeks to cover: a. listing Olements and compounds as hazardous substances based upon selec- tion criteria which u-are developed to technically quantify and qualify the immi- nent and substantial danger that spills of these materials present to public health. PAGENO="0277" 271 b.'determining the designated substances to be actually nonremoval~ie and pro- viding the rationale for this determination; c. establishing how the Administrator will use his discretion in selecting the system of penalties under Section 311(b) (2) (B) (ii) and use the high level (bb) penalties only when the Ageiicy can show that gross negligence of the owner or operator is involved in causing the spill or in responding to the spill; estab- lishing a penalty rate schedule on a unit of measure is related to the harmful quantity (Section 311(b) (4)) and the units used in trade; d. establishing four categories of the substance by using an internationally accepted rationale similar to that used by the Intergovernmental Maritime Con- sñltative Organization in the 19T3 Convention on Prevention of Pollution from Ships whereby the harmful quantities for each substance are clearly indicated as 1, 10, 100, or 500 pound quantities so that there~ is clear understanding of when notice, of the spill (Section 311(b) (5)) is required. Question 9. How would EPA develop the criteria and guidelines for ,determin- lug whether a discharger of a hazardous substance had willfully failed to act to remove the discharge? Should these guidelines be published as regulations? Answer. The Agency would use the resources of `the National Response Team and other Contingency plan sources such as selected transportation and manu- facturing industries, state agencies, and environmental and public interest groups to formulate these criteria and guidelines. The thrust of these guide- lines should clarify the role of the on-scene personnel; they should be observers looking for certain corrective actions to be taken to satisfy some seven phases of spill response. Only when the owner or operator cannot or will not assume responsibility will the field personnel take responsibility. In some cases it can be shown that an owner or operator is willing but not capable of handling the removal function and needs technical advice and other resources to be made available under Section 311. These cases will be clarified in the criteria and guidelines, which will be published as a technical response manual for use by the owner `or operator as w-ell as the On-Scene Federal Officer. Since these would be guidance to enforcement personnel and the affected industry, we believe it `should be more appropriate to develop them in this manner rather than in formal regulations. QuestiOn 10. Will It be possible to authorize specific response steps that must be taken to avoid being charged with willful failure to act to remove a dis- charge? What recourse should be available to a discharger in the event' of a dis- agreement with the responsible Federal officers concerning the appropriate method to remove a discharge of a hazardous substance? Answer. EPA expects to have a series of technical response manuals similar to the existing "Field Detection and. Damage Assessment Manual for Oil and Hazardous Material Spills" or to the Chemical Response Hazardous Information System (CHRIS) of the Coast Guard. These technical manuals should pro- vide the educational background necessary to minimize on-scene lack of appreci- ation of environmental priorities. It will be more feasible initially to idOntify times, places and circumstances where specific response steps should not be taken and to set up a procedure of variance , to these response steps depending upon the circumstances of the disch'irge Lndei the ~ation'il Cortingenc~ Plan similar `~ctions `ire already being employed as in the use of dispersants to handle oil spills. There should be no disagreement in the field during the emergency. Because of the emergency nature of the decisions which must be made, `the owner or operator must clearly recognize obligations and the On-Scene Federal Officer's atuhority. The owner or operatOr is responsibe for preparing the response plan and implementing it and the On-Scene Federal Officer must approve it and certify that it was implemented. If the plan, which normally would be based upon guidance of the Technical Response Manual, is unacceptable and cannot or will not be amended, then the ow-ncr or operator is in a position where he "cannot or will not take appropriate mitigating action." The On~Scene Federal Officer must be a'ble `to, justify his position to avoid charges of arbitrary or capricious action, or unjustified cx- penditure of Federal funds. This burden is sufficient to temper over-zealous actions on the part of Federal officers. Under the National Contingency, Plan the officer is required to submit a report on his recommendations and the evidence gathered to meet the documentation required for the cost and recovery Phase V section of the National Contingency Plan. PAGENO="0278" 272 The recourse to such action by the Federal officer would be through admin- istrative hearing and de novo court proceeding. AFTERNOON SESSION [Whereupon, at 2 p.m., the Subcommittee on Water Resources reconvened, Hon. Ray Roberts (chairman of the subcommittee) presiding.] Mr. ROBERTS. The Subcommittee on Water Resources will please come to order. This afternoon we are pleased to have with us Mr. Mel- ville Gray, past president, 1975 (director, Division of the Environ- ment, Department of Health and Environment, Kansas) representing Association of State and Interstate Water Pollution Control Admin- istrators; accompanied by Hugh Yantis, director, Texas Water Quality Board; and Ralph Purdy, deputy director, Environmental Protection Branch. Department of Natural Resources, Michigan. I might say that I am delighted to see my friend from Texas, Hugh Yantis, whom I have known for many years. aiicl I wouki like also to indicate tha.t the former Secretary of the Navy, Fred Croft, is present auditing what I have been doing. TESTIMONY OF MELVILLE GRAY, PAST PRESIDENT, 1975, DI- RECTOR, DIVISION OF THE ENVIRONMENT, DEPARTMENT OF HEALTH AND ENVIRONMENT, KANSAS, REPRESENTING ASSOCI- ATION OF STATE AND INTERSTATE WATER POLLUTION CONTROL ADMINISTRATORS; ACCOMPANIED BY HUGH YANTIS, DIRECTOR, TEXAS WATER QUALITY BOARD, AND RALPH PURDY, DEPUTY DIRECTOR, ENVIRONMENTAL PROTECTION BRANCH, DEPART- MENT OF NATURAL RESOURCES, MICHIGAN Mr. ~ Mr. Chairman, I am Melville W. Gray, immediate past president of the Association of State and Interstate Water Pollution Control Administrators, better known perhaps as ASIWPCA, and on behalf of our association, we appreciate the opportunity to relate the views of the State and interstate. WTe appreciate the opportunity to express our opinions on H.R. 9560, and we wish to express appreciation for the continued interest of the Committee on Public Works and Transportation relative to water pollution control and the current interest in modification of Public Law 92-500 in a manner which will expedite implementation by ad- j usting certain acquired administrative procedures. We wish to emphasize that the association's administrators have de- voted their professional careers to the improvement of the Nation's water quality and to assure the Congress of our continued cooperation in every possible way. We have carefully considered H.R. 9560 in conjunction with Public Law 92-~500 as a whole, and have arrived at recommendations for legis- lative amendments which we refer to as "position statements." These Public Law 92-500 position statements are submitted as part of our written testimony for the record. We recognize that Congress will be receiving t.he report of the National Commission on Water Quality as required by Public Law PAGENO="0279" 273 92-500 and our position statements outside the considerations of ELR. 9560 might better be evaluated at a later date along with the National Commission on Water Quality report and other information that may become available. For this reason our comments basically will be limited to those con- siderations set forth in IE[.R. 9560. We have recommendations by section of the proposed bill as foflows: Section 2, authorization extension and section 3, interim period authorizations. It is believed that the moneys authorized in these sections will be adequate to accomplish the program responsibilities of the State and interstate agencies. Particular concern has been expressed within our association re- garding inflation effects on program funds. The authorization for sec- tion 106 moneys in conjunction with the provisions of section 8 of this proposed act should satisfy program needs. We would recommend that future program grant authorizations be made at least 2 years in advance. With this advance knowledge, more efficient administration can be attained through the program planning stability afforded by prior authorization information. Under section 4, user charges, we concur in allowing use of the ad valorem tax in the user charge system. We would recommend the insertion of "substantially" after the comma, page 4, line 15, and after the word "will," page 4, line 19, in order to allow monthly or annual averaging, eliminate legal difficulties, costly administration, and still remain within the intent of law as we understand it. In section 5, reimbursement and advanced construction, we concur with the provisions of this section with the understanding that the increased authorization along with moneys not yet disbursed will be adequate for all eligible projects. Under section 6, Federal share of planning process costs, we concur with the provisions of this section inasmuch as previous funds were inadequate to provide for local agencies applying for 208 designation and funding and eligibility of State agency planning in nondesignated areas. Section 8, certification: We strongly approve the objectives and in- tent of this section in order to significantly reduce administrative delays involved in placing water pollution control projects under con- struction. We consider this section essential if significant national piogress is forthcoming in control of municipal water pollution. Al- though some recent progress has been made in grant money obliga- tions, some States have been reduced to a construction expenditure level that is 15 percent of annual expenditures prior to October 1972. We recommend the following changes in this section. 1. Section 213(a) (1). Line 19-20, page 6, strike "201(g) ((2) and (3), 203 (a) and (d), 204 (a), (b) (1), and (b) (3), and 212(2) (B)" and insert in lieu thereof 201 through 204, 210, 211, 212, 502, and 513. It is our view that this would provide the Administrator maximum flexibility in delegation and while some of the provisions of the pro- posed expansion subsections would not be pertinent for delegation consideration, there are others where States through their normal procedures are performing functions required of EPA, and presently have contractual arrangements to perform these functions for EPA. PAGENO="0280" 274 A specific example of this is the administrative requirement of section 513 labor standards. We believe this nominal expansion of delegation authority will expedite administration of the grants program and eliminate State- Federal duplication. It is recognized that this delegation of responsi- bility is not. mandatory and indeed some States will probably not seek total delegation of allowed functions. 2. Section 213(a) (2). Page. 7, line 3. strike the words "any other Federal law" so as not. to preclude those functions presently per- formed by States in a~reement with and satisfactory to EPA. 3. Section 213 (b). Line S. page 7. We: have significant concern in the use of the words "authority. res~ponsibility. and capability." In receiv- ina responsibility to administer the. NPDES permit program, it was ne~essaiy for t.li~ State to adopt legislation identical to Federal law and regulations in order to receive delegation. If a similar determina- tion is made regarding delegation of responsibll1t.ies under proposed section 213. it. would delay delegation in some States having biennial legislation sessions. by as much as 3 years and in most States at least a. year. . Mr. ROBERTS. I hate to interrupt on but that is none of our business. If they want. to have a session. they can have a special session. Your testimony bothered me up to now because you a.re saying if we give, you the money, you will be glad to spend it. Excuse me, go ahead. Mr. Gnxv. Very well, sir. I would like to respond to your statement. It is not our intent to try to tell you what Congress should do in this area.. We are s~mpl trying to point out some of the problems. Mr. ROBERTS. If you struck those things that you want to strike, we could not pass the bill to save our lives. We sympathize and we are. trying to give as much authority to the State as we possibly can. but we have to be guided by how many votes we get. Mr. GRAY. Yes. sir. Mr. ROBERTS. Thank you. Mr. GR~~Y. Our interpretation of intent., precluding a specific State statute denying authority, is that if the Sta.te has the necessary sta if and is capable of performing the functions in question. they should receive such delegation of certification authority. By way of further explanation, it was not within the proposed language of law that we had concern, but it was within the interpre- tation passed. statutory interpretation by the agency. 4. Section 213(c). Lines 12 and 13, nage 7. strike the words'"public hearings" and insert in lieu thereof the words "a grant appeal process." EPA has a standard process of appeals acceptable to the States which would elimiiuite the time necessary to publish notice of hearings and reduce administrative costs. It is our understanding that the Administrator also endorses this Procedure. 5. We. believe section 213 (3) to be satisfactory with the interpreta- tion that the intent is to make eligible to the States up to 2 Percent of the allotment from the unobligateci 205 moneys at the time of enact- ment. Further, that. States will be able to reserve or obligate adminis- PAGENO="0281" 275 trative funds to enable them to follow n. project to completion at some reasonable time beyond the original allocation period. On line 21 after the word "authority" we recommend the insertion of the words "in advance or by way of reimbursement." Some States have difficulty in prefinancing program costs and program costs do remain relatively stable regardless of slight fluctuations of workload due to staff and salary requirements. We believe the Administrator could appropriately determine reasonable eligible program costs as he does with 106 grants. Section 9, Time Requirements: We recommend the States be granted certification authority in rela- tion to extension of compliance dates beyond the 1977 requirements of law, on an individual case basis, within the constraints proposed for the Administrator. This delegation of responsibility is particularly pertinent for those States having NPDES responsibility in that com- pliance schedules are often made a part of the permit. Once again, this delegation of responsibility would not be mandatory and the Adminis- trator has the capability to rescind authority if it is abused. In conclusion, we wish to reiterate our appreciation for the oppor- tunity to express our views and to answer any questions you might have. Mr. ROBERTS. I apologize for interrupting. The gentleman from Ohio? Mr. HARSHA. No questions. Mr. ROBERTS. Mr. Yantis or Mr. Purdy wish to go next? Mr. YANTIS. Either one. Mr. Prnin~. I have no prepared statement to give, and no comments other than to support what Mr. Gray has stated in his prepared state- nient on behalf of the State administrator. Mr. ROBERTS. Thank you, sir. Mr. Yantis? Mr. YANTI5. Mr. Chairman, I am Hugh Yantis from the State of Texas. I have a prepared statement which, if you would permit me, I would simply like to file and not read. Mi~. ROBERTS.. Without objection. [The statement referred to follows.:] STATEMENT OF HUGH C. YANTIS, JR., EXECUTIVE DIRECTOR, TEXAS WATER QUALITY BOARD Mr. Chairman, members of the subcommittee, I appreciate the opportunity to present testimony tO this Subcommittee on behalf of the Texas Water Quality Board regarding the proposed amendments to the Federal Water Pollution Con- trol Act. Of primary concern to the Texas Water Quality Board are the amend- ments embodied in H.R. 9560 which, in effect, incorporate the positive aspects of legislation we have previously supported; namely, I-I.R. 4169, which establishes the validity, under certain conditions, of a user charge system based upon ad valorern taxation, H.R. 4170, which establishes certain deadlines for compliance with toxic and pretreatment standards, 1-I.R. 4171, which requires . the Water Quality Inventory to be developed on a biennial rather than an annual basis, and HR. 2175, which provides for delegation of certification authority to the States under the construction grant program. \\re are in general support of HR. 9560; however, there are some provisions of this proposed legislation in which we feel clarification of legislative intent is imperative. Section 8 of HR. 9560 adds Section 213 to PL 92-500 and delegates to the Administrator of the Environmental Protection Agency the authority to accept PAGENO="0282" 276 State certification of performance for various aspects of the municipal facilities construction grant program. We feel this is a potentially significant step forward in decentralization of authority from the Federal to the State level and, con- tingent upon positive reaction to the following comments, represents a realistic method to expedite the municipal construction grant process. First, delegation to the State of certification authority for infiltration/inflow rehabilitation studies currently provided by Sectioii 201(g) Paragraphs 3 and 4, is not specifically established by H.R. 9560. Similarly, HR. 9560 does not provide authorization for State certification of sewage collection systems under Section 211 of the Act which would normally be within the realm of infiltration/inflow rehabilitation. We cannot determine from our review of H.R. 9560 if it is the intent of Congress to delegate to the States authority to certify infiltration/ inflow- studies and sewage collection systems to the Environmental Protection Agency. Second, we feel that the majority of the States possess the capability of deter- mining the eligibility and cost estimates provided for in Section 202 of the Act. I-JR. 9560 does not specifically provide for State certification of construction grant cost estimates and, therefore, we cannot determine if it is the intent of Congress to delegate this authority to the States. Third, Congressional intent needs to be clarified in the matter of delegation of authority to the States for certification of adequacy of Section 201 facility plans as this is not specifically provided for in HR. 9560. Fourth, Congressional intent is not clear as to delegation to the States of authority to certify revenues derived for industrial cost recovery provided for in Section 204(b) (3) of the Act. And, finally, H.R. 9560 addresses itself to the authority, responsibility, and capability of the States to assume certification authority. The Congressionally intended ground rules to be used by the Administrator in determining state authority and responsibility to assume certification authorization need to be stipulated. Assuming a broad interpretation of the proposed legislation, these l)oints could be established by regulations. Our fears of narrow- interpretation of H.R. 9560 are founded in a review of the proposed Federal regulations prepared pursuant to H.R. 2175. In developing these regulations, it is our opinion that EPA took a restrictive view and pro- posed only to transfer responsibility for certain portions of the program to the States. For example. the regulations allow- delegation to the States the authority to certify the technical and/or administrative adequacy of specifically required grant documents such as cost effective analyses, best practicable waste treat- ment technology, plans and specification, user charge systems, 0 & M Manuals, and the like. In order to create a partnership between the Environmental Pro- tection Agency and the States, how-ever, the States must also be delegated the authority for such aspects as eligibility determination, grant increases, cost estimates, segmentation of projects, timing of step grants, method of contract award, payment schedules, project period, grant issuance, and the many other facets of the total construction grant program. Lacking this authority, the States are reduced merely to a non-decisionmaking body in the organizational struc- ture of the Environmental Protection Agency. We possess the experience and expertise to assume all of these responsibilities. We do not mind, rather we relish, doing the w-ork as long as w-e have an equitable voice in the management and decisionrnaking process. The proposed revisions, as they relate to Section 208, provide needed addi- tional funding. They also clarify the fact that planning agencies are eligible to receive funds for preparation of the required annual update to the plans. These two items are necessary and constructive amendments to the Act, and as such have our full support. However, w-e believe it would he an invaluable aid in the interpretation and implementation of Section 208 if the eligibility of states to receive moneys provided for 208 planning w-ould also be clarified. Sec- tion 208(f) (1) of the Act seems to provide for state funding for 208 planning efforts: how-ever, the interim grant regulations issued by EPA on May 13, 1974, as 40 CFR Part 35 Subpart (f) specifically excluded the states from eligibility to reecive 208 planning funds. Subsequently, an order w-as issued by a U.S. District Judge. John Lewis Smith, Jr., in the case of the National Resources Defense Council, Inc., et aT. versus Russell Train. et a!., which declared that 208 planning funds shall be available to the states. However, the Court based this decision on the broad intent of the law- as reflected by its legislative his- tory. It is, therefore, recommended that in order to prevent future uncertainty PAGENO="0283" 277 on this point, the law or the regulations should be amended to clearly confirm the eligibility of a state to receive funds appropriated for area-wide waste treat- ment management planning. Without seeking to complicate our testimony and in no way meaning to criticize HR. 0560, we believe that Congress should be more firm in its direction to EPA concerning delegation of authority to States to carry out a permit program under Section 402 of the Act. As you know, we feel that our overall water quality man- agement program is second to none and, on various occasions, EPA has con- curred with this thought. Still we find ourselves in a dispute over seemingly in- significant details which would be much more easily rectified at the Federal level than at the State level. Since we have operated a successful permit program over the past fourteen years, we feel that EPA should, of its own volition or at the urging of Congress, delegate this authority to the State of Texas. Another matter which constitutes possibly a minor problem nationally, but con- sidered to be significant in the State of Texas is a discharge of waste from water- craft. Again, it may also be necessary for Congress to lay out a firm direction to EPA in order that the disputed details relating to this matter can be settled. This concludes my comments on the proposed amendments to the Federal Water Pollution Control Act. I would like to commend you for your efforts in the prep- aration of HR. 9560 and to go on record by stating that contingent upon clarifi- cation of the issues we have raised today, the Texas Water Quality Board is in general support of the amendment in its entirety and we are in unqualified sup- port of the funding authorizations provided thereby. Mr. YANTIS. I have a few comments which I have handwritten, which I would like to give you now. The matter of the distribution of the formally impounded funds is quite important and I did hear it discussed this morning. Certainly as a State that would receive a great deal of money from a changed formula, I have to support the idea of getting as much for our State as we reasonably can or need. However, certainly there are other ways of going about the same thing that might be more agreeable to a great number of people. I would like to suggest a couple of alternates to the Talmadge plan, if the Talmadge plan is, in fact, not acceptable. One point that we have noticed, it is very important and the Chair mentioned this this morning, that we find some way of reinstating the position that a city can proceed to build a sewer system or sewer treat- ment plant provided it meets all the necessary requirements without losing its grant eligibility. Now, there are at least two situations in which this is desirable. One, in the normal course of business within the State. There simply may not be enough grant funds and yet the city may be willing to proceed and it may be desirable that they proceed and we hope that this could i)e made possible for it. The other one is that enforcement action, where grant funds are 75 percent of cost and enforcement action has difficulty in really coming to grips with the requirement to build-for a city to build a sewage treatment plant-here again, if we could find a way of letting the city proceed without losing its grant eligibility, then an enforcement action where regrettably necessary would be feasible and not place the city in the very impossible position of forfeiting a grant. I do not think any of us want grant losses where it can be avoided. Now, it is certainly possible to get money faster than you can spend it, faster than you can spend it wisely, and certainly on a short-range basis, maybe someone else needs it worse. But we would not want to give up our claim over the long haul to having as much money as our program needs. PAGENO="0284" 278 So, instead of looking at an allocation over 1 year of the formally impounded money. I believe the amount was $9 biflion, I may be in- correct on the amount- Mr. ROBERTS. ~9 billion is correct. Mr. YANTTS. Stretching it. out over, say, 3 years would certainly bring stability to the program but perhaps let us run a more stable program. one that is more reasonable. It might be a lot easier for Congress to distribute the moneys avail- able to them but it. would not necessarily mean just spreading $9 billion. It may be some amount more than that. since you cannot anpropriate that far in advance. Again. I would have to come back to the sense of Congress in this type of a resolution. But I think, for instance, for our State and I cannot speak for other States, $250 million each year for 20 years would certainly be every bit as good and I think much better, really, than a somewhat smaller amount, say $500 million in 1 year. It is a little more money, but it is over 3 years' period. This does leave us, though, with one problem remaining. If it would be Congress' intention to fund a major program like the city of Houston, where ou have $90-some-odd-million .grant all in one project, that would be real awkward to any 1 year. It would ~impiy mean that in the year you funded Houston, about. half the other things in the State would have to wait and this is not popular. If there would be some. technique of floating between years a large amount for a. specific project. I think that it would be easier to adjust the. program through a 2- or 3-year program. S& I think that without saying that. we give up any hope whatever of the Talmadge plan. I certainly would support alternate plans that would let cities proceed without losing their grant or that would take a substantial amount of money adequate for a State's need and fund it over several years in succession. It is awkward as others have said, to not know in the future what you may get. Now, Mr. Chairman, if I may change. the subject very slightly. On the matter of the ad valorem tax. and in my prepared statements, I speak to it. since certainly I do support the idea of under safeguards using ccl valorem tax as a revenue over and above your user charge. Yet. I question whether or not the Administrator should be the one who has to say yes or no. I have no id~a how this committee of Congress would look at it, but I hate to see the Administrator back in what. might be an internal pait of the city's tax policy. I would hope that the city on ad valorem taxes and user charges could stop somewhere short of the Administrator, hopefully within State governments. I do not kiiow if you can. but I would certainly like to see that.. I certainh- do support the. comments that have beeii made about clarifying as far as we may. what is actually meant in transferring to the States various powers which currently are vested in the Adminis- trator or which appear to be vested in the .Adlministrator. If the law is not clear, we have some fears that the Administrator may transfer to the States less than was intended and yet lie might be supported in doing this because the law was not clear. PAGENO="0285" 279 So~ I would like to have that spelled out as clearly as possible. I think this would be all of my offhand comments, 1\ir. Chairman, and I appreciate very much the opportunity to appear before you and Mr. ITaisha on behalf of the committee and Mr. Sullivan who has just walked in. Mr. ROBERTS. I appreciate your being here and the statement you made, and particularly your willingness to go into a lo1lg-term lesser amount spread Oil the amount of money that is involved. Particularly, I waiit to thank you for pioneering the smailtown program, because today we have a nationwide proposal from EPA to do exactly what you have been doing for a long time, and I would like to ask you how it has worked. Mr. YANTI5. Mr. Chairman, it has worked superbly. If we could go a little further in that direction, I would hope it can. But it has been an excellent thing and we have helped a lot of small towns that would never have been helped otherwise. I do not think we can take all the credit for it because~ Mr. Chair- man, we could not have clone this at all without your help and that of your staff. Mr. ROBERTS. The gentleman from Ohio is busy. The counsel on both sides have questions. Mr. Edelman. Mr. EDELMAN. Mr. Yantis, with respect to your points concerning reinibursement, you may have heard earlier the question the chairman asked Governor Busbee as to the aspect of the new budget act which the Congress now must follow, which requires the Appropriation Com- mittee to act following the authorization. As you know, prior to the 1972 act, we had funding of a small percentage of the authorizations and the administration at that time encouraged communities to go ahead on their own and they reimbursed them subsequently. As a mat- ter of fact, you may recall this was used as a guise to ask for less money, and less new appropriations. Do you not believe that a reimbursement program might get us in that same position and might act as a deter- rent on full fund ing? Mr. YANTIS. No, I do not. I realize, certainly, that is possible, and various interpretations can be put on anything. ~\That I am conceinecl about, and concerned only, is not actually getting a grant to the city but maintaining their eligibility to a grant when and if money is available~ which may be never. But I think it is very hard for a State. to bring a needed enforcement action when by so doing, you are causing a city to lose its rights ever to have tha.t grant. A city could be ordered under a court order to go ahead and build a plant; a 75-percent grant is hard to give up. All I am saying is, does not the loss of grant eligibility be automatic when the project proceeds before getting a grant? This dloes not mean that you promise the city anything at all other than when andi if your priority is high enough andl if not, you will then get a grant, you must undlerstandi it may be never. I do not quite see that as going under the. contract authority that we want to add for the reimbursement Procedure that we once had. are in the water pollution business and I will grant you a number of others, too, including inflation fighting and so on, but if a city is PAGENO="0286" 280 willing and able to build a sewage treatment plant, that needs to be built, why should we encourage them to wait? Remember, all the questions of fiscal health have been deleted from the various program requirements. You no longer go on the basis of fiscal need in making your priori- ties. Mr. ROBERTS. Mr. Wood? Mr. WOOD. Thank von. Mr. Chairman. Under your unanimous consent request and Mr. Clausen, there is an extensive list of questions to be submitted to the States. Second, Mr. Roberts. in order to make the record complete, I think it is necessary for this staff member acting on behalf of the other mein- bers, that the level of cooperation that the staff has received from the States, from ASIWPCA, Mr. Gray, the president of the organization in particular, Mr. Purdy, Mr. Yantis, Mr. Taylor from Connecticut, and others, it has been a help iii carrying out the direction of the staff members and this one staff member appreciates it. They had a lot more than they discussed today and I think, frankly, that time will have allowed. Mr. YAxTI5. Mr. Chairman. if it would meet with your approval, cer- tainly we would like to respond to any questions of any kind because we do want to be helpful. We can do this far better though if we think before we speak or be- fore we write and if it would meet with your approval, I would like to have an opportunity to get questions from you or your staff and then give you the answer in writing as rapidly as we can. Mr. ROBERTS. Thank you. ~\Te will submit it to all three of you as far as the staff sees fit. Mr. Harsha, the gentleman from Ohio, do you have questions or comments? Mr. HARSHA. No questions. Mr. ROBERTS. Thank you very :nmc,h. It is a pleasure to see you. We hope that we can come up with a bill that will do the job and will meet with your approval. Mr. YAxTIS. Thank you, Mr. Chairman. Mr. ROBERTS. The subcommittee now welcomes my friend, T. L. Aus- tin, chairman of the board of Texas Utilities, representing Edison Electric Institute. It is always a pleasure to have you and you may proceed any way you see fit. You have been here before and you know the rules. Delighted to have you. TESTIMONY OF T. L. AUSTIN, SR., CHAIRMAN OF THE BOARD, TEXAS UTILITIES, REPRESENTING EDISON ELECTRIC INSTITUTE; AC- COMPANIED BY ROY SPRADLEY, NATIONAL ASSOCIATION OF ELECTRICAL COMPANIES Mr. AUSTIN. Thank you, Mr. Chairman. I appreciate the oppor- tunity to be here. I have with me Roy Spradley, from the National Association of Electrical Companies. For the record, I am T. L. Austin, Jr., chair- man of the board of Texas Utilities, here today representing, as you PAGENO="0287" 281 said, not only the Texas Utilities, but the industry from the Edison Electric Institute. We would like to testify regarding the impact on the electric utility industry and the electric consumers of EPA's current regulations under Public Law 92-500, and we have a statement that we will file. Mr. ROBERTS. Without objection, the full text of your prepared state- ment will appear in the record at this point. [The statement referred to follows:] STATEMENT OF T. L. AIJSTIN, CHAIRMAN AND CHIEF EXECUTIVE, TEXAS UTILITIES Co. IMPACT OF THE FWPCA ON THE ELECTRIC UTILITY INDUSTRY The Congress in P.L. 92-500 treated the Electric Utility Industry differently than all other industries. I believe this was in recognition of two fundamental factors: (1) The Electric Utility Industry, because of its peculiar Federal and State rate regulation, is fundamentally different from all other industries which dis- charge to navigable waters; and, (2) Heat, the major discharge from steam electric plants, is not a true pollutant. Industry, EPA, and academic experts all agree that heat is not always a pollutant. Heat is an essential element of life-even aquatic life. Congress treated the Electric Utility Industry uniquely by creating a procedure to obtain variances for heated discharges from both effluent limitations (§~ 301 and 300) and Water Quality Standards (~ 303). The "unique utility problems" were also recognized and addressed by the "Report and Recommendations by the Staff, Subcommittee on Investigations and Review, Committee on Public Works and Transportation on Public Law 92-500, May 13, 1975". Mr. Chairman, my reason for being here today is that EPA has failed to ade- quately consider the unique nature and problems of the Electric Utility Industry. The Act as presently implemented by EPA is overly burdensome and wasteful of precious natural resources. Over the 1974-83 period, the Electric Utility Industry will be required to ex- pend $10 billion in capital costs and $6 billion in increased operating and mainte- nance expenditures. These expenditures will increase consumer charges by 4.5 percent (all figures are in 1974 dollars). About half of these costs are due t:o EPA's policy requiring the backfitting of existing plants with cooling towers and the EPA ban on the use of new cooling lakes. Mr. Chairman, we sincerely believe that these expenditures will produce no appreciable benefits to aquatic life and virtually zero benefits to the American people. In fact, we believe that EPA's policies will cause adverse impacts to the American people. They most certainly adversely affect the people of Texas. According to the Texas A:ttorney General, the EPA rules will increase the predicted Texas fresh water deficit in the year 2000 by 273 million gallons per day. That is enough water.to supply the complete daily needs of about 3 million people-about 1% of the present population of the State of Texas. This adverse result cannot have been the intent of Congress. EPA former Assistant Administrator James Agee on May 14, 1975, publicly stated .that EPA's cooling lakes policy "does need reassessment". However. EPA has not to date modified its policy. Much of EPA's problem in reassessing its ad- mittedly inadequate policy on cooling lakes may be due to its (EPA's) overly broad definition of navigable waters. I understand the Subcommittee will address this problem in later hearings. Recommendation Amend the Act to specifically allow the use of new cooling lakes and the place- ment of new units at existing lakes. Notwithstanding the lateness of EPA's rules and issuance of NPDES permits (TVA does not have any), our industry is making great strides toward compli- ance with the 1977 Best Practicable Control Technology Currently Available re- quirements. More than 75 percent of the investor owned Electric Utility Industry expects to be in compliance with the 1977 chemical limitations and chemical water quality standards. As to thermal limitations, EPA does not impose limitations on heat at the Best Practicable Control Technology `Currently Available level, and for "old PAGENO="0288" 282 units' EPA does not impose limitations on heat at the Best Available Technology Economically Achievable level. For `generating units" and `new sources", EPA strictly requires the use of cooling towers-existing units must be backfitted to meet the 1983 Best Available TechnOlogy Economically Achievable standard in 1981. No units, including old units", are exempt from State Water Quality Standards and a recent EEl survey has revealed that more than 70 percent of the `old units" are allegedly in violation of thermal State Water Quality Standards- many of the alleged violations are the result of EPA Reinterpretation of State Water Quality Standards. (Texas Utilities, Duke, Commonwealth Edison-ex- amples.) The practical result is that almost every plant must undergo a costly, time-consuming 316(a) type procedure-estimated to cost as much as $1 million and take 1-2 years. Thus, a situation has evolved in which compliance is virtually impossible. The Act in § 301(b) (1) (C) requires compliance with State Water Quality Standards by July 1, 1977. It is virtually impossible for a source al- legedly in violation of thermal State Water Quality Standards to petition for a 316(a) examption, conduct studies, submit data to EPA for review, and, should the petition be denied, construct cooling towers by July 1, 1977. EPA has wisely interpreted § 303(g) of the Act to require that full consideration may make achievement of the July 1, 1977, date impossible. Recommendations 1. Amend the Ac.t to clarify that the States, not EPA, have final authority to interpret State Water Quality Standards so long as the State Water Quality Standards are at least as stringent as the Federal Effluent Limitations, Guide- lines, and Standards. 2. Amend Section 301(b) (1) (C) of the Act to provide: (a) Compliance with thermal State Water Quality Standards by July 1, 1981. (b) Compliance with non-thermal State Water Quality Standards by July 1, 1977 except where the discharger demonstrates that compliance is impracticable. There are several compelling reasons why the 1977 deadlines should be ex- tended for the Electric Utility Industry: 1. The EPA "guidelines" were not promulgated until October 8, 1974. (The Act required they be published October 18, 1973.) 2. The "guidelines" w-ere contrary to the Act, w-ere appealed by the Electric Utility Industry, and oral argument n-as not held until September 23, 1975. A final decision remanding the "guidelines" to EPA for further consideration is forthcoming in 3 to 6 months (March 1976). 3. Permits (National Pollutant Discharge Elimination System) were not issued to all sources by December 31, 1974, as required by the Act [~ 402(k)]. As of August 1. 1975, only 642 out of 1013 power plant permits were issued- and of the 642, 133 requested adjudicatory hearings and 331 petitioned for 316(a) variances. 4. Many plants discharge into the same w-ater body as municipal discharges which are not going to achieve the 1977 limits and w-hich n-ill receive extensions under § 0 of HR. 0~00. Given the above facts, Congress cannot prudently expect the Electric Utility Industry to be in full compliance in July, 1977, with regulations which may not be final until mid 1976. In the Act, Congress gave discharges from December 31, 1974, to July 1, 1977-30 months-to comply with limitations of which the dis- chargers should have had knowledge as of October 18, 1973. Without amend- ment to § 301, Congress will ~`educe the time for compliance to Perhaps 12-15 months. Mi'. Chairman, if I may now turn to what the future holds for Electric Utility Industries. EPA. has a bakers dozen of ways to make us waste fresh water. Two are most significant: 1. § 316(5) -Of the 642 permIts issued as of August 1, 1975, 300 require 316(b) studies which EPA contends can lead to the imposition of cooling towers independent of any other section provision, or exemption in the Act. 2. "ia ti-ticgradction".-In its agglomerated 208/303 regulations proposed July 16, 1975, EPA creates-w-ithout basis in the statute-an "anti-degradation" of water quality policy and mandates that the states incorporate it in their water quality standards and management plans. Briefly, the "anti-degradation" policy means that n-here w-ater is not clean-no discharge can be made because the water is not clean; and, where the water is clean, no discharge can be made because the water is clean. If EPA is allow-ed to create this monster, we all might as well go home because Best Practicable Technology, Best Available Technology, New Source Performance Standards, Toxic Effluent Limitations, 316(a) variances, and the National Commission on Water Quality Report are PAGENO="0289" 283 suddenly meaningless and no one has anything close to an estimate of the impact of P.L. 92-500. COST OF FWPCA COMPLIANCE Our industry and the American consumer through his electric bill will be forced over the 1974-1983 period to bear billions of dollars for compliance with the FWPCA. We do not object to about half of these costs. However, the other half, attri'butably largely to the backfit of existing electric power plants with cooling towers under either Federal or State Guidelines and the EPA ban on the use of new cooling lakes, will produce no appreciable benefits to aquatic life and thus virtually zero benefits to the American people. These costs are as follows: TABLE 1.-FWPCA COMPLIANCE COSTS, 1974-83 [In billions of 1974 dollarsj Capitol costs Operation and maintenance costs Increased consumer charges Chemical Thermal $3. 3 6. 7 $2. I 3. 9 $1. 0 2. 7 Total 10.0 6.0 3.7 Industry base 212. 0 307. 0 82. 0 Total cost as a percent of base 4. 7 2. 0 4.5 A comparison of our estimates to these of EPA and Teknekron, a consultant to the National Commission on Water Quality, appear as Tables 2-4. None of the Tables include $2.8 billion of "construction work in progress" for units which will not come into operation until after 1983. Although estimates by EPA and Teknekron, may differ slightly from our industry's, by anyone's estimate the costs are substantial. In these troubled times, with growing inflation and high unemployment we especially must make certain we are not wasting scarce national resources. The question we all must ask and answer wisely is that which John Quarles, EPA Deputy Administrator, conceded the FWPCA requires-"Is this worth it?" In its recent Sections 304 and 306 rulemaking for our industry EPA stated that it "carefully considered the costs of the final regulations and concluded that the control of thermal pollution was worth those costs and that decision is supported by the record." EPA states that in this process it "conducted an analysis in which the benefits of the regula- tions have been quantified in the only terms which at present are realistic (i.e., BTU's of heat rejected to the waters of the United States) and thus satisfied (the utility industry's) demand for, a pragmatic balancing." We disagree strongly with EPA's last conclusion. We believe that the meth- odology for determining the effects of thermal discharges on aquatic life, and in turn on commercial and recreational fishing, is well established. Indeed, since the Calvert Cliff 8' decision in 1971, our industry and AEC, now NRC, have been required to make such analyses for the cooling system of every nuclear power plant licensed in this country. EPA's Section 104(t) studies also include valuable analyses of how thermal effects on biota may be assessed. EPA ignored both NRC and its own substantial experience in our rulemaking. If EPA persists in its view that there is no way to determine the benefits of its regulations except in the simplistic terms of percentage of heat removed, then the protection afforded us explicitly in Section 302 and by EPA's reports to Congress under Section 305 and the National Commission on Water Quality under Section 315 will be worthless. As is made evident in the Electric Industry Briefs filed in our appeal of EPA's Effluent Guidelines and Standards, we do not believe the EPA regulations can pass this test. (These Briefs are included as Appendix A.') We believe the regulations to be contrary to the intent of the Act in that (1) EPA's thermal backfit rule is not cost effective nor economically achievable, (2) EPA's cooling lake rule bans the use of new cooling lakes and new units on axisting lakes. Each of these and other issues will be discussed below. OUR COMPLIANCE EFFORTS TO DATE The EEl recently surveyed its members to determine whether or not they presently expect to meet the Act's July 1, 1977 BPCTCA requirements. The results of the survey, provided in Tables 5 and 6, indicate that 75% or more expect to be 1 Retained in file. 63-192-76------19 PAGENO="0290" 284 in compliance. In view of the lateness and uncertainty of the EPA regulations and in comparison to projected percentages of compliance for municipalities and some other industries, we are quite proud of our industry's effort. As you are aware, the BPCTCA requirements do not impose limitations on heat. For "old units" 2 the EPA rules do not require limitations on heat at the BATEA level but EPA strictly requires off-stream cooling at all other existing and new facilities except those exempted under § 316(a). It has been our industry's experience that the "Old Tjnit Exemption" is illusory in that more than 70% of those "exempted" units are allegedly in violatioll of State Water Quality Standards (See Tables 7 and 8) and therefore must either backfit off-stream cooling by July 1, 1977 (the compliance date for State Water Quality Standards (SWQS) provided in § 301 (b) (1) (C) of the Act) or petition for a § 316(a) exemption notwithstanding the fact that EPA's rules define BATEA for this facility to be "no limitation on heat." The matter is further complicated by EPA's insistence that it may impose off- stream cooling requirements under § 316 (b) independent of and notwithstanding any of its rules and/or exemptions including § 316 (a) exemptions. STATE WATER QUALITY STANDARDS The Act in § 301(b) (1) (C) requires compliance with SWQS no later than July 1, 1977. As is the case with the non-thermal (chemical) component of BPCTCA, our industry expects to be in substantial compliance with the non- thermal (chemical) component of SWQS. How-ever, the thermal component of SWQS creates a problem unique to the electric industry. Those "old units" and "generating units" allegedly in violation of SWQS are required to utilize 1983 BATEA (cooling towers) or in the case of "old units" technology greater than 1983 BATEA in 1977, or petition for a § 316(a) exemption. However, due to the lateness of the issuance of EPA regulations and NPDES permits it is impossible for many of these sources to undergo the 316 (a) process and still construct an off- stream cooling system by July 1, 1977, should the petition be denied. EPA has w-isely interpreted the Act (§ 303(g)) to require that an opportunity to pursue a § 316(a) exemption be provided even if compliance with the Ju]y 1, 1977 date cannot be achieved should the petition be denied. EPA also correctly interprets the Act (§ 303(g)) such that a § 316 (a) exemption satisfies both federal and state thermal regulations. In an alarming number of instances, the decision that State Water Quality Standards are being violated is based on an EPA interpretation of the SWQS iii contravention of a State interpretation that the SWQS are not violated. We do not believe that Congress intended to make the State a puppet of the EPA Administrator. Congressional clarification may be required to advise the EPA that the FWPCA does not grant EPA the pow-er to administratively reverse state interpretations of state law. Tw-o striking examples of EPA reinterpretation of SWQS are pro- vided in Appendix B.3 EPA'S COOLING LAKE POLICY MUST BE REVISED The EPA's Rules ban the use of new cooling lakes and new units on existing lakes. EPA does not have a sound explanation for this position. Former Assistant Administrator Jim Agee in his testimony before Representative Wright's Sub- comiuittee on May 14, 1975, admitted that the EPA ban on cooling lakes "does need reassessment." Mr. Agee stressed the need to be "sensitive to the greater loss of water through the cooling towers." (Emphasis added.) The State of Texas is most interested in the proper consideration of water consumption. The State of Texas in its Brief and oral argument (September 23, 1975) in Tewas v. EPA CA Xo. 72-500, (4th Cir C.A., -) stated that the EPA rules would by the year 2000 increase the projected fresh water deficit in Texas by 273 mgpd! This is intolerable when you consider that this amount of water would satisfy the daily needs of approximately 3 million people. The Texas Utilities System serves about 4 million people: thus, the EPA caused Texas water deficit could adequately supply 75 percent of the Texas Utilities System. The illogical nature of EPA's ban on the use of cooling lakes is epitomized by the follow-ing interchange betw-een Representative Wright and Mr. Agee. `Mr. WRIGHT. Is there any reason why a niultipurpose reservior could not be utilized as a cooling lake or a cooling pond? "Mr. AGEE. Mr. Chairman, w-e could probably find a reason. I am not saying it would be a good one. 2 All Units put in service prior to Jan. 1, 1970, and Units less than 500 MW put in service prior to Jan. 1. 1974. Retained in file. PAGENO="0291" 285 "I personally had the opportunity to visit some facilities in South Carolina where I observed multipurpose lakes that had been utilized, and I found no adverse environmental effects, as far as I could see. "So I think we can have multipurpose cooling lakes, not only for the purpose of cooling the water, but other beneficial uses, too. There are many compatible uses." We implore EPA to modify its cooling lake policy. If the policy is not modi- fied, billions of dollars will be spent to limit the discharge of heat in numerous instances in which heat is not a pollutant and precious fresh water resources will be unnecessarily wasted in Texas, California, Florida and other water short areas. Even in areas not classified as water short, such as North Carolina, electric utilities are already encountering difficulties in obtaining water rights for steam electric facilities. We contend it was not the Act's purpose to arbitarily increase the consumption of fresh water. WHAT IS A "BALANCED-INDIGENOUS" POPULATION? Section 316 of the Act is the sole mechanism through which less stringent thermal limitations than those required by BPT, BAT, NSPS, and SWQS may be utilized where they adequately protect water quality. The importance of accur- ately estimating the number of 316 (a) exemptions in evaluating the impact of the Act on Electric Utilities cannot be over-emphasized. The test employed by § 316 (a) is the "protection and propagation of a balanced, indigenous population of shellfish, fish, and wildlife in and on the body of water into which the dis- charge is to be made." The "balanced-indigenous" test creates several difficult problems: (1) Some beneficial species are not "indigenous" to the waters they presently inhibit and their further development may be prohibited by a strict reading of tl1ese words.4 (2) The application of 316(a) to new cooling lakes or new units at existing cooling lakes preempts consideration of water resource development needs, water consumption, and the economic, environmental and social pros and cons of vari- ous alternatives in favor of a "balanced indigenous population". EPA's stated concern is the population in the cooling lake after impoundment but before the addition of heat. Thus according to EPA and the "balanced indigeonus" test, a reservoir built primarily because of its use and value for cooling and/or water resource development would be adjudged by a test which ignores both the purpose for w-hich the lake was conceived and any benefits attributable to heat. WHAT THE FUTURE HOLDs-MORE UNCERTAINTY AND INCREASED COMPLIANCE COSTS The cost of compliance may be increased by the following actions by EPA w-hicli could force additional plants to closed-cycle cooling. These actions include: A. Far more stringent administration of Section 316(a) that decreases the presently estimated percentages of cacniptions.-The final version of EPA's pend- ing "Guidance Manual" for Section 316(a) could have that effect. EPA's initial proposals for its Section 316 (a) Guidance Manual would have restricted the granting of Section 316(a) exemptions far beyond the intent of the Act. In addi- tion, the proposed manual would have also imposed enormous additional study and legal costs on the industry for which there was little, if any, need. B. Adoption of presently proposed regulations under Section 316 ( b), which will govern the "location, design, construction and capability of cooling water intake structvres".-We are apprehensive that EPA may attempt to use this section to force plants that would otherwise be permitted by Section 304 or Section 316(a) to use once through cooling to go to off-stream cooling. C. EPA interpretation of state water quality standards contrary to the state's immtcrpretation.-To date, EPA has insisted that even where it has reviewed and approved state w-ater quality standards, EPA and not the state has the last word in their interpretation where applied to individual plants. Indeed, in the current round of permit proceedings, there are instances where EPA is refusing to accept at face value a state 401 certification that a plant complies with state water quality standards, and EPA is insisting on its own construction of the state provisions. We believe that this is clearly contrary to the intent of `the Act and, if permitted, would reduce the role of the states to mere ciphers in its administration. Dr. Coutant. Oakridge Lab, a noted expert in time field of effects of thermal discharges believes that the "indigenous" test is contrary to established fish and wildlife practices. PAGENO="0292" 286 D. Future revisions of state water quality standards-Each state must review and, if necessary, revise its water quality standards this year and every three ~years hereafter to assure compliance with the Federal Water Pollution Control Act. (Section 303(c)). This action is reviewable by the EPA Administrator who may substitute revised provisions of his own if he disagrees with the state. The `water quality standards relating to heat must be consistent with the require- ments of Section 316 of the Act. (Section 303(g)). For this reason, we believe that the 1975 reviews of state water quality standards should not substantially effect the electric utility industry. But there are facts now beforO us which lead us to fear that may not be the case. EPA continues to maintain that Section 316(b) can beused independently to force plants to closed cycle cooling and that closed-cycle cooling constitutes "best technology" under Section 316(b). EPA is requiring that state water quality standards be revised to contain an "anti- degradation of water quality" provision. The "anti-degradation" policy is established in EPA's recently proposed regu- lations under FWPCA 303 & 208 (40 FR 29882 et seq). EPA han sua sponte ag- glomerated the 303 Regulations with its 208 Regulations which now under a court order (40 FR 32133 et seq) must be promulgated by November 10, 1975. EPA intends to promulgate these rules by that date without holding a single public hearing and without fully evaluating the environmental, `economic, and energy impacts of this proposal. The "anti-degradation" policy proposed by EPA is simply as follows: Where the water is not clean no farther degradation of water quality is permitted and where the water is clean no degradation of water quality is permitted notwithstanding, BPT, BAT, NSPS, SWQS, 316(a) unless the applicant after lengthy and costly hearings can establish that the lower water quality is allowable as a result of "necessary and justifiable economic or social development". In effect, these proposed regulations establish `a nationwide legal requirement-not a goal-of no discharge and then provide an impracticable if not impossible variance procedure. Because of EPA's "anti-degradation" policy states may be forced to revise water quality standards in such a way that the mixing zones that Section 316(a) was clearly intended to allow may no longer be available. Should this occur, the substantial reduction in additional capital expenditures for backflt, estimated to result from EPA's final thermal categori- zation and the operation of Section 316(a), would disappear and most plants that were spared backfitting in this round of permits may be required to backfit when those permits expire in five years. In any event, such reasons could force a num- ber of plants to run or rerun the costly Section 316 (a) gauntlet. E. Continuing state water use planning and potential production level curtail- meats-The states are required to institute a continuing planning process on water resource uses under EPA supervision. (Section 303 (c)). As a part of that planning process, they must identify waters within their boundaries that do not meet water quality standards generally and also any part of those waters for w-hich controls on thermal discharges under Section 301 "are not stringent enough to assure protection and propagation of a balanced, indigenous popula- tIon Of shellfish, fish and wildlife." The states are then to limit the total maxi- mum daily load that can be imposed on the stream. (Section 303(d)). If EPA disagrees with the level set by the state, it can veto the plan and require the state to incorporate EPA's numbers. The state must thereafter adhere to this plan in deciding on whether or not to grant new permits or on the effluent limi- tations to be specified in future permit renewals. This rationing of water use may or may not conflict with state law governing water rights and may re- quire utilities in some areas to purchase or condemn water rights from others. F. Tonic gubstances.-EPA, as yet, has not exercised its authority under Section 307 to prohibit discharges of toxic pollutants in a way that directly affOcts our industry. We believe that the releases from our plants do not con- tain toxic substances in any quantity harmful to health. But as we learn more and more about what actually causes or does not cause harm, this provision of the Act could have impact on our industry at some future date. G. Radiological Releases.-The issue of whether or not the Act was intended to take jurisdiction over the radiological discharges from nuclear plants away from NRC and give it to EPA is pending before the Supreme Court in Colorado Public Interest Research ~j.~jp v. Train. That decision could have a tremendous impact on our industry. We believe that it makes more sense to leave the NRC with this authority. We and NRC have devoted literally millions of man-hours over the past two decades to the establishment of effective regulations of these PAGENO="0293" 287 discharges. Our industry has also invested billions of dollars in equipment desig- nated to hold these discharges to levels "as low as practicable" and these levels are only slightly above natural background in most instances. If, however, it is determined~that EPA should have this authority, EPA might adopt its pres- ently proposed unreasonable regulations that go far beyond existing NRC regu- lations and present NRC permit conditions. This could impose serious delays in nuclear plant licensing and construction and the expenditure of millions or billions of additional dollars for backfits which would produce little, if any, social benefits. TABLE 2.-ESTIMATED INCREASE IN CAPITAL COSTS1 DUE TO THE WATER POLLUTION CONTROL GUIDELINES FOR THE ELECTRIC UTILITY INDUSTRY, 1974-83 Teknekron (Billions of 197 Effluentguidelines EPA 4 dollars) UWAG2 (billions of 1973 dollars)3 Low High (1) (2) (3) (4) 1. Chemical 1.3 3.3 3.7 3.7 2. Thermal 5. 3 6. 7 . 9 6. 6 3. Total 6.6 10.0 4.6 10.3 4. Industry base 179.0 212.0 213.0 5. Guidelines as a percent of base 3~ 7 4~ 2. 2 4; 8 I Excludes capital expenditures on construction work in progress. 2 Utility Water Act Group, an ad hoc group of electric utilities formed to comment on the Federal water pollution control guidelines. 3 Consultants to the National Commission on Water Quality. 4 Includes costs of Federal guidelines after 316 exemptions and including the impact of State water quality guidelines. These costs also include an allowance for the cost of capacity losses occasioned by State water quality guidelines. SOURCES Cols. (1) and (2): U.S. Environmental Protection Agency, Office of Planning and Evaluation, "Economic Analysis of Effluent Guidelines Steam Electric Power Plants," EPA-230/2-74-006, December 1974, pp. 105, 126, 179. (EPA does not assess the costs of State water quality guidelines using UWAG assumptions. These were derived by scaling up EPA cost estimates by the ratio of UWAG to EPA thermal costs under the Federal guidelines.) Co~.(3):Teknekron, Inc., "Draft Report to the National Commission on Water Quality on the Economic Impact of Water Pollution Control for Steam Electric Power Plants." Tab!es 6-7, 6-9 to 6-15. TABLE 3.-ESTIMATED INCREASE IN OPERATING AND MAINTENANCE COSTS 1 DUE TO WATER POLLUTION CONTROL GUIDELINES FOR THE ELECTRIC UTILITY INDUSTRY, 1974-83 Effluent guidelines Billions of 197 4 dollars Teknekron 3 (billions of UWAG 2 1973 dollars) EPA (1) (2) (3) 1. Chemical 2.1 2.1 2. Thermal 1. 3 3.9 3. Total 3.4 6.0 5.9 4. industry baue 292.0 307.0 172.0 5. Guidelines as a percent of base 1. 2 2.0 3. 4 I Excludes capital expenditures on construction work in progress. 2 Utility Water Act group, an ad hoc group of electric utilities formed to comment on the Federal water pollution control guidelines. 2 Consultants to the National Commission on Water Quality. 4 Includes costs of Federal guidelines after 316 exemptions and including the impact of State water quality guidelines. These costs also include an allowance for the cost of capacity losses occasioned by State water quality guidelines. Note: EPA does not assess the costs of State water quality guidelines using UWAG assumptions. These were derived by scaling up EPA cost estimates by the ratio of UWAG to EPA thermal costs under the Federal guidelines. SOURCES CcIs. (1)-(2): U.S. Environmental Protection Agency, Office of Planning and Evaluation. "Economic Analysis of Effluent Guidelines Steam Electric Power Plants," EPA-230/2-74-006, December 1974, pp. 105, 126, 179. Col. (3): Teknekron, Inc., "Draft Report to the National Commission on Water Quality on the Economic Impact of Water Polluticn Control for Steam Electric Power Plants." Tables 6-7, 6-9 to 6-15. PAGENO="0294" 288 TABLE 4.-TOTAL INCREASE IN CONSUMER CHARGES 1 IN 1983 DUE TO WATER POLLUTION CONTROL GUIDELINES FOR THE ELECTRIC UTILITY INDUSTRY Billions of 1974 dollars Teknekron (billions of Effluent guidelines EPA UWAG 2 1973 dollars) (1) (2) (3) 1. Chemical 0.6 1.0 2. Thermal4 1.3 2.7 3. Total 1.9 3.7 0.1 4. Industry base 74.6 82.0 59.0 5. Guidelines as a percent of base 2.5 4.5 .2 I Excludes capital expenditure on construction work is progress. 2 Utility Water Act group an ad hoc group of electric utilities formed to comment on the Federal water pollution control guidelines. Consultants to the National Commission on Water Quality. 4 Includes costs of Federal guidelines after 316 exemptions and including the impact of State water quality guidelines. These costs also include an allowance for the cost of capacity losses occasioned by State water quality guidelines. Note: EPA does not assess the costs of State water quality guidelines using UWAG assumptions. These were derived by scaling up EPA cost estimates by the ratio of UWAG to EPA thermal costs under the Federal guidelines. SOURCES Cols. (1)-(2): U.S. Environmental Protection Agency, Office of Planning and Evaluation. "Economic Analysis of Effluent Guidelines Steam Electric Power Plants," EPA-230/2-74-006, December 1974, pp. 105, 126, 179. Col. (3): Teknekron, Inc., "Draft Report to the National Commission on Water Quality on the Economic Impact of Water Pollution Control for Steam Electric Power Plants." Tables 6-7, 6-9 to 6-15. PAGENO="0295" 289 (I, C,, >- > 1- ,c~j ~ I ~ *~ :~: H :::~::: : EE 0' ~ (`C..) N ~J I~= ~ CE = p ~ = ..~ ~ ~J 6 -I CI, = 0' C) o c'4 CI)C'J (0(0 -r == ===----- -- = >>> C,) PAGENO="0296" 290 c,co ~ ~ c~ ~OO ~ (0 a~ f- (0 E () L 00 (0 (02 (0 Co C) C,, C,, C >- F- F- C (0 > (0 (0 3 ~ C-) C PAGENO="0297" V_18_1 V-19 - V-20 1 V-21 - V-22 V-23 V-24 V-25 VI-1 Vl-2 Vl-3 Vl-4 Vl-5 Vl-6 Vll-1 VI 1-2 Vll-3 VI 1-4 VII-5' Vll-6' 1 VllI_21 Vlll-3 1 VllI-4 1 VIIl-5 lX-1 IX-2 IX-3 IX-4 x-1 X-2 1 1 90 90 90 90 90 15 16, 691 8, 490 8, 201 4, 560 5, 017 4, 590 5, 227 Thermal (5,145) 121 6, 730 3, 533 1, 760 4, 668 2 1, 575 1, 370 205 1, 096 205 1, 096 205 Thermal/chemical Thermal/Chemical 274 274 205 1, 096 (1,096). (205). 1 1, 170 1, 170 772 772 Thermal/Chemical 772 398 (1,170). 1 2 600 2,600 2 600 2,600 3 1, 645 1, 645 1, 645 1, 645 Thermal/Chemical 1, 645 (1,645). 1 1, 100 1, 100 1, 100 Chemical (1,100) 1, 100 1 1, 291 1, 291 1, 291 1, 291 Chemical/Thermal 1, 291 (1,291). 10 8, 897 3, 000 5, 897 2, 250 1, 447 Aquatic (2,250) WQ (1,447) 5, 200 3, 000 5, 897 3 1,279 1,279 1,279 1,279 2 1, 400 900 500 Chemical (500) 900 900 500 4 5, 781 3, 656 2, 125 Bio (2,090) Blo (1,251) 2, 440 3, 656 2, 125 5 2,759 2,759 2,759 2,759 8 3,493 1,650 1,843 3,493 1,650 1,843 2 456 456 456 456 Thermal (456) 456 2 267 267 207 Chemical (267) 60 60 207 2 1,085 1,085 1,085 1,085 5 1,153 1,153 1,153 1,153 5 5,550 1,200 4,350 1,880 1,880 3,670 70 1,200 ~ 4,280 1 222 222 222 222 222 1 440 440 440 440 2 114 114 114 114 2 246 246 246 246 2 1, 800 400 1, 400 400 1, 400 400 1, 400 7 2,419 350 2,069 2,419 350 2,069 14 16, 713 4, 702 12, 011 2, 280 1, 600 430 Thermal (2,280) Blo (744) 10, 386 4, 702 12, 011 3 1,201 1,201 497 Bio (180) 524 1,201 4 1, 879 1, 879 287 287 Thermal/Chemical 1, 879 (1,612). 2 465 465 135 220 465 1 86 86 86 86 1 1,400 1,400 1,400 1,400 This utility also had a generating facility located within another EPA region. PAGENO="0298" 292 "Ha ~:I:I~::: 00 6 ~ f~g~f~ H---~ C-) I *~ 00a,c,00 E ~ ~ ~ ~ ~ = ~ -c 6 0000C~4~ ~ ~ g ~ 4 C~4 00 - PAGENO="0299" .293 EDISON ELECTRIC INSTITUTE STATTJS REPORT-IMPACT OF THE FWPCA ON THE ELECTRIC UTILITY INDUSTRY The Edison Electric Institute, the principal national association of the investor-owned electric light and power companies in the United States, re- spectfully submits the following status report on the implementation of P.L. 92-500. The report summarizes the environmental studies and progress utilities have made in their efforts to comply with the July 1, 1917 Best Practicable Control Technology Currently Available (BPCTCA) requirements of the Fed- eral Water Pollution Control Act as Amended 1972 (FWPCA § 301(b) (1) (A)) for steam electric generating facilities. The one hundred and ninety-eight EEL member companies serve approxi- mately 09 percent of the ultimate customers of investor-owned electric utilities. The investor-owned industry as of December 31, 1974, had an installed generat- ing capacity of 376,000 MW, approximately 79 percent of the nation's generating capacity. This status report, which contains the results of a survey of BET companies represents 78 utilities w-itli 400 power plants with 269,940 MW's of generating capacity. The data presented for tw-o categories of generating facilities consistent with the definition developed by the Environmental Protection Agency (EPA) in their "Development Document for Effluent Limitations Guidelines and New Source Performance Standards for the Steam Electric Power Generating Point Source Category." Old Units are all units put in service prior to January 1, 1970 and all units less than 500 MW put in service prior to January 1, 1974. Generating Units are all other units. The types of studies referred to-316(a), 316(b)-are studies required by EPA to test "the protection and propagation of a balanced, indigenous population of shellfish, fish and wildlife in and on the body of water into which the discharge (thermal) is to be made" and to measure the impact of cooling water intake structures on the "balanced indigenous population" respectively. The data presented in Tables 5 and 6 illustrate the following facts: (1) 204,884 MW (76 percent) of the surveyed power plants will comply with the FWPCA-July 1, 1977 BPCTCA regulation. (2) Environmental studies on 183,123 MW's (68 percent) of the surveyed plants are either in planning stages, being conducted or have been completed. TABLE 7.-EEl "OLD UNIT" SURVEY-SUMMARY OF RESPONSES TO QUESTIONNAIRE Total "old unit" EPA region Number of utility re- spondents in region Number of plants in region represented Number of units in region represented capacity (MW) with Thermal regulations Regional Thermal No thermal being imposed dee to: response regs being rugs being (MW) imposed imposed SWQS 316(b) Other I 1 1 4 755 755 NA NA NA II III IV V VI VII VIII ix x 4 7 4 12 1 2 1 3 1 26 25 6 54 10 10 1 2 6 1 87 78 21 2 106 36 20 1 25 1 13, 916 10, 920 2, 996 10, 663 1 257 10, 288 9, 099 1, 189 8, 137 4,329 2,485 1,844 2.485 25, 373 17, 538 7, 835 14, 821 3 2, 717 5,707 1,752 3,955 1,752 3,890 1,140 2 750 1,140 35 35 7,757 6,731 1,026 6,731 35 35 Total 36 a 140 379 72, 085 50, 420 21, 665 545, 729 257 2,717 1 A number of utilities had marked both State water quality standards and 316(b) considerations. In this case, however it is only 316(b) considerations. 2 Incomplete regions. 3 Draft permits based on March 1974 guidelines. 4 These numbers are incomplete and do not reflect those plants/units that were not provided in a number of responses to the questionnaire. a 1,717 megawatts did not indicate what their thermal regulations were being required by. NA-not available. PAGENO="0300" TABLE 8.-EEl "OLD UNIT' SURVEY-INDIVIDUAL UTILITY RESPONSES 1 4 755 755 OT Ocean Not available 9 42 5, 977 1 2, 981 2, 996 OT Estuary With thermal 43.5, without thermal 50.1. 4 12 1, 206 1, 206 01 River(s) 63.4 1, 206 State. 5 14 2, 516 2, 516 OT Bay harbor 59.5 2 2, 516 Do. 8 19 4, 217 4, 217 OT Estuary 49.3 4, 217 State and EPA. 1 4 106 - 106 OT Lake 62.3 4 14 1,083 31,083 {~~;:::::::::}Rivers Notavailable 3 9 971 971 OT do 70 3 9 962 962 {~7 -- do 77.8 6 20 4, 137 4, 137 OT~..._ River cooling lake, 56.8 creek(s), estuaries. 2, 229 2, 229 01 River(s) 73.6 800 800 OT do 57.8 240 240 OT do 60 2, 391 890 1, 501 01 Estuary With thermal 57.5, without thermal 36. 1, 012 1, 012 01 do 47.7 686 343 ~ ~OT 10 ~R r With thermal 73, 1CT lye without thermal 0. 4, 588 4, 588 Not available do Not available 8, 203 4, 956 3, 247 01 do With thermal 50, 4, 956 EPA. without thermal not available. NA NA NA Not available. 2,724 257 EPA. Number of plants with old Utility identity No. units Number of old units Total response old units (mega- watts) Megawatts of old units with- Thermal No. thermal regs being regs being imposed imposed Plant cooling system Waterways Thermal regulations required due to- August 1974 load factor for old units State water quality standards 316 consider- ations Other Interpretation made by- I-_i Il-i 11-2 11-3 11-4 Ill-i 111-2 111-3 111-4 Ill-S 111-6 111-7 IV-1 IV-2 IV-3 IV-4 V-i V-2 4 10 4 12 1 1 3 13 .1 5 2 8. NA 12 NA 1 971 State and EPA. NA NA NA Not available. 4,137 Stateand EPA. 2, 229 Do. 800 State. 240 EPA. 890 State and EPA. 1, 012 Do. 11 343 EPA. PAGENO="0301" 1 898 UTdo Not available 1, 898 State and EPA. 899 UT do 71 "899 State. 1217 UT do 40 "1,217 StateandEPA. 297 UT do 54.7 297 Do. 3, 034 UT River(s), lake(s) Not available 113, 034 State. 2 717 UT do 56 12 2, 717 Do. `142 UT do 76 142 State and EPA. 1 215 UT River Not available `1, 215 EPA. 858 UT do 49 858 State and EPA. 305 UT Cooling lake 69 305 Do. `~ 1, 752 3, 955 UT" CT, River(s), lake(s), With thermal 68, 1, 752 EPA. cooling bay, cooling pond. without thermal 38. pond. 5 15 1, 140 1, 140 UT" River(s) lake(s), 53 16 1, 140 State and EPA. stream(s). 5 5 2,750 2,750 UT River 36 1 1 35 35 UT do 61 5 24 1 026 1 026 UT Ucean Not available 1 1 52 52 UT River 35 52 StateandEPA. NA NA 6, 679 6,679 UT Ucean Not available 6, 679 State. 1 1 35 35UT River do 36 utilities 140 379 72, 085 50, 420 21, 665 45, 729 1 4 plants, 9 units. 2 250 megawatts of peaking capacity not included. a In draft permit not yet reviewed. 4 1 unit with CT hotside blowdown. a 1 unit shut down not included. 6 Heat rejection plates and temperature limitation within mixing zone. 7 4~units (650~megawatts) have CT on 28 percent of flow. 8 Both~swqs and 316(b) considerations. 9 Utility_told it must install CT. 6 21 1,898 4 NA 899 3 12 1,217 2 9 297 6 25 3,034 5 20 2,717 2 4 142 3 NA 1,215 2 13 858 1 1 305 10 36 5,707 V-3 V-4 V-5 V-6 V-7 V-8 V-9 V-lU v-li V-12 vI-1 vu-i VI 1-2 Vull-l lx-1 IX-2 IX-3 x-i 257 2,717 `5 CT on 1 unit-utility being told to install UT on others. ii Both swqa and 316 consideration. 52 Draft permits based on March 1974 guidelines. `~ 2 plants, 5 units. `4 UT (54 percent), CT (23 percent), CB (23 percent). 5 90 percent of milliwatt capacity. 16 1 plant is peaking, is not included. NA-not available. PAGENO="0302" 296 Mr. AUsTIN. In the interest of your time and the time of your staff, I will just summarize my summary. Mainly, we think that the Public Law 92-500 treated the electric utility industry differently for two reasons. One: The electric utility industry, because of its peculiar state, is fundamentally different from all other inchistries which discharge to navigable waters. Two: Heat is not a true pollutant. Industry, EPA, and academic experts all agree that heat is not always a pollutant. I will start suimuarizing. Under EPA regulations, we are afraid that once we build a lake like this cooling lake in central Texas, where we buy the land, where we have a permit from the Texas Water Rights Commission for the water, where we buy additional water from the river authority and where we expend $31/2 million for a closed cycle cooling facility-and it is a closed circuit, there is no discharge-that EPA will require the installation of cooling towers. One problem is-and I think the subcommittee plans to take this up in later hearings-what is a navigable stream? Before construction of the cooling facility you could have jumped this stream anytime of the year, and could barely have navigated it with a toy sailboat. But to go back and require the installation of cooling towers that would cost something over $13 million, it seems a complete waste of resources to us and in a time of inflation and high electric bills, any- how, we hope something could be done so that these kind of regula- tions would not be so burdensome upon the public. The addition of cooling towers would not only cost money, it would adversely affect the people of Texas. According to the Texas attorney general, the EPA rules-requir- ing the benefiting of cooling towers-would increase the predicted Texas freshwater deficit in the year 2000 by 273 million gallons per day. This amount of water would satisfy the needs of about 3 mil- lion people-about 25 percent of the present population of Texas. Some practicality has just got to come out of somewhere. - Also, I would like to say that even though the EPA was a little late in getting their rules out, the industry is making great strides toward compliance with the 1977 best practical control technology current available requirements. More than ~ Percent expect to be in compliance with the 1977 chemical limitations and the chemical water standlards but just like the municipal dischargers, we need some additional time because we are not going to be completely in compliance. The EPA regulations came out almost a year late. So we would like some consideration to be given regarding the compliance deadline for those regulations. In our prepared testimony we highlight future rules that we be- lieve EPA will impose on our industr. additionally that wouldburdlen us. I will not bring those up now. They are discussed in the written statement. - That is all I have now, unless you have some questions. PAGENO="0303" 297 Mr. ROBEETS. You are in the situation where you get caught by water pollution, by air pollution, and now by the ambient temperature of the water? Mr. AUSTIN. That is right. I was glad to see the frustration of the members of your committee, because when we try to get some of our projects through up here, we experience delays and iedtape similar to the small cities. \~\T0 cannot open a strip mine. You have seen some of our strip mines and I think we have one of the best reclamation projects in the world. Yet, we must get on with this project because without adequate energy for our present society there will be no need to talk about energy in the future. Mr. ROBERTS. Mr. Harsha. Mr. HARSHA. Mr. Austin, I am somewhat intrigued by your posi- tion on cooling towers and I know that this is an issue with all electric companies. Mr. AUSTIN. Yes, that is right. Mr. 1-IARSHA. But I cannot understand when your rates are based, at least in part, on your investment and your cost of operation, why you so vehemently oppose cooling towers when that cost is ultimately passed on to the consumer? Mr. AUSTIN. That is exactly right. But we do not feel that costs which are not necessary should be passed oii to the consumer. He is burdened enough with necessary costs. You are correct in your statement, that cooling towers would be considered "used and useful" in our rate base and therefore any regulatory authority would pass these costs to our consumers. However, if you already have a closed circuit cooling pond that is not discharging anywhere, that is not discharging downstream, and is open to the public, to fish, ski, and swim, why burden our customers with this additional expense? Mr. 1-IIARSHA. When you have a closed lake, I can see you have a difficulty. \\Te have the same problem in the Ohio River and I think that is a different situation. Mr. AUSTIN. In our testimony today we are not talking about those situations, we are talking about where we have closed cycle lakes. Mr. HARSTIA. That is all I have. Mr. ROBERTS. Mr. Austin, always good to see you visit with us. We enjoyed your statement and your giving us the information. Mr. AUSTIN. Thank you, Mr. Roberts and Mr. Harsha. Mr. ROBERTS. Mr. Peter Inzero, president, National Utility Con- tractors Association. If you will summarize we will appreciate it. [Statement referred to follows:] You may proceed. The full text of your prepared statement will appear in the record at this point. STATEMENT OF PETER INZERO, PRESIDENT OF NATIONAL UTILITY CONTRACTOBS AssocIATIoN I am Peter Inzero, President of the National Utility Contractors Association, an organization representing the nation's sewer, water and underground utility con- PAGENO="0304" 298 tractors. NUCA has nearly 1800 members engaged in various facets of this indus- try from coast-to-coast and border-to-border. We were founded in 1964 and in the past three years alone paralleling increased interest in environmental matters-our membership has tripled. NUCA is grateful for the opportunity to appear before this committee to dis- cuss the association's views on key provisions of the proposed legislation H.R. 9560. If HR. 9560 is adopted, you will eliminate a great deal of the problems causing drastic delays in cleaning up the nation's water. XUUA supports the concept of State delegation as embodied in the proposed Title II Amendments permitting the Administrator to certify State performance of key construction procedures. NUCA is reluctant to see construction grants monies diverted to support State administrative efforts. However, our studies clearly show the impact of limited State funding on construction grant performance. Therefore, some diversion of construction grant funds is an acceptable price to pay to expedite the issuance of funds. It is our view that limiting the diversion to one percent rather than two percent is a better approach. Similarly, we applaud the increased flexibility in the use of ad valorem con- cepts in establishing user charges. Our studies indicated, as did EPA's, that this flexibility is needed to prevent unnecessary delays in obligation of grant funds or payments of awarded funds. The new changes in Section 204(B) (1) (A) will allow increased rates of obligation and prevent delays in payments to contractors. NUCA also supports the amendments to Section 305 permitting States to sub- mit water quality reports every other year. This is a needed reduction of paper work. NUCA supports continued funding at an increased Federal share of Sec- tion 208 areawide planning. This provision of P.L. 92-500, if effectively imple- inented, can resolve many of the local issues that result in long delays in the 201 planning process. Any measure that expedites the Section 201 step will hasten the expenditure of construction funds, employ people, and make the early attainment of clean water possible. Section 50 of HR.. 9560 is another important exhibit of Congressional intent to make good on the Federal commitment to share equitably in funding of pub- licly-owned treatment works. This additional authorization, coupled with the extensions of funding authority in Sections 2 and 3 of this proposed bill will help sustain the momentum P.L. 92-500 has now given to water clean-up in this coun- try. We, of course. await anxiously for Congressional monies to extend Section 205 authority. Action is necessary to secure the confidence of municipal officials. They must believe that continued construction grant funds will be authorized. Funding uncertainty is an obstacle to the rapid municipal efforts that are needed to achieve the goals of the Act. NUCA cannot support Section 9 of HR. 9560. This section allows the Admin- istrator of EPA to extend up to five years the time in which municipal disc.harg- ers must comply with the 1977 goals established in P.L. 92-500 in 1972. Why, when industry is expected to comply with the 1977 goal, should the Ad- ministrator be authorized to nearly double the period of time given to municipal- ities for compliance with the same goal? This is especially disturbing as Con- gress authorized $18 billion for the cOnstruction of the municipal facilities. EPA to date has only obligated $6.8 billion of these funds in the three year period during which Congress expected all the funds to be awarded. Thus, NUCA be- lieves that this section as written allows the EPA Administrator and non-per- forming municipalities to pardon past and future potential failures in adminis- tration of the construction grants program. NUCA's earlier study of the construction grants program found evidence that the National Pollutant Discharge Eliminations Systems hasn't been vigorously employed to expedite the completing of the necessary steps leading to funding of treatment facilities. Recently, studies for the National Commission on Water Quality have found that about 40 percent of all municipal dischargers probably will not meet the 1977 goal. This is not surprising because, although we are now less than two years from the 1977 date of attainment, only 38 percent of the $18 billion in funds have been obligated. Extensions should be granted only when preceded by rigorous enforcement of the compliance schedules precisely deline- ated in NPDES permits. This use of NPDES permits could effectively force com- munities and reviewing agencies to minimize bureaucratic delays in obligating construction grant funds. PAGENO="0305" 299 NUCA has a reputation of not just criticizing but for also simultaneously pro- vithng constructive solutions. NP CA believes tnat Section 9 should be rewritten to include the following requirements; Any extension should be subjected to public hearings disclosing the ration- ale br such extensions; A maximum of two years should be set for any extensions; Extensions should be renewable only after demonstrating at a public hear- ing that good faith efforts have been made to achieve the maximum rate of achieving the goals of that Act; A second extension should not be permitted to be more than one year, for a total of three years; and Compliance scheuules should be established and enforced via the NPDES permit program. These schedules should be independent of Federal fund availability. Our final comment is on the proposed amendment to Section 106 which provides funds in support of State program operations. We have examined relative State performance in terms of desired levels of expenditures (obligations) for construction grant facilities. This is an important measure of performance. At the time the National Utility Contractors Associa- tion, in its critique of the construction grants program in March, 1975, found that EPA'S program was performing abysmally. That report showed that the nationwide monthly obligation rate was $155 million per month since January 1, 19i3 when the $18 billion funds first became available. Our report said that if the ~~rogram were stepped up to meet the originally intended July 1,~ 1976 goal of complete obligation necessary to complete construction by July 1978, a $525 million/month rate would be necessary. More conservatively, if all funds were to be obligated by July 1, 1977-to ailoWT for the delay caused by Administration im- ponndment and other factors-our report said the program should achieve a ~3US million per month goal. Therefore, it was obvious that $155 million per month wouldn't do the job. This report plus heavy Congressional interest spurred EPA to action. For the months April_AUgust, 1975, the EPA average monthly obligation rate jumped to $523.9 million pushing FY 1975 performance to $300 million/month. What worries us is that this may be a flash in the pan. One way to insure it is not to pass the key provisions that are before you by amending Section 106 to provide increased funding for State programs at the $100 million/year authori- zation level. This is one third more than last year's authorizatiOli. It is twice last year's actual appropriation. Why is this important? NUCA has continued its study of the obstacles to con- struction grants performance. We have found, in an update of our report to be released soon, that States with more adequately funded programs have higher rates of construction grants performance. According to this measure of program effort, the best performing States put 25 percent more resources into the program management. This evidence strengthens the argument for your committee's proposed amend- ment which would increase the funds available to the States to administer their programs by one-third, to $100 million. It was suggested that our recommendation that a 1 percent limit be put on the diversion of construction grant funds to program administration uses, is more realistic than the 2 percent figure in your proposed amendments. NUCA is providing this information with one single purpose in mind, we want to see clean water for America. If this goal is accomplished through efficient administration, tens of thousands of jobs will be created and local economies throughout the nation will experience a sorely needed revival. TESTIMONY OP PETER INZERO, PRESIDENT, NATIONAL UTILITY CONTRACTORS ASSOCIATION, ACCOMPANIED BY DR. ROBERT L. SAMSOE, PRESIDENT, ENERGY AND ENVIRONMENTAL ANALYSIS, INC., FORMER ASSISTANT ADMINISTRATOR, EPA Mr. INZERO. All right, I will do that. I am Peter Inzero, president of the National Utility Contractors Association. 63-1 92-76-----20 PAGENO="0306" 300 I have with me Dr. Robert L. Samson, president of the Energy and Environmental Analysis, former Assistant Administrator of EPA. I am going to focus on one aspect of the problem, the need for ade- quate funding to improve States' performance. This is covered in I-LB. 9560. You may recall that in March 1975. we declared that EPA was lag- ging far behind in its construction grants program. At that time, the nationwide monthly obligation rate was Only $155 million per month, despite the fact that $18 billion in funds had become available on January 1, 1973. We reported that a $525 million monthly rate would be necessary ~f the program were to meet the original deadline. For completion of construction by July 1. 1978. Even if all funds were to be obligated by July 1, 1977, to allow for the delay caused by the administration impoundment and other fac- tors. we declared that the program should achieve a minimum of $308 million per month goal. The $155 million per month simply will not get the job done. Our report plus increased congressional interest spurred EPA into action. For the months of April through August 1975, the EPA average monthly obligation rate jumped to $523.9 million per month. This pushed the entire fiscal year 1975 performance to $300 million per month. However, we hope this is not just a flash in the pan. To insure that it is not, we urge you to pass the key provisions that are before you by amending section 106 to provide increased funding for State pi~og~~1~ at the $100 million a year level. This is one-third more than last year's authorization. It is urgent that you act to insure adequate funding for the States. In an update of our March report. which will be released soon, we have found without a doubt, that States with more adequately funded programs have higher rates of ëonstruction grants performance. In preparing this report we have targeted the "dirty clozen"-those States with the poorest performance record. These States averaged only 15.4 of the monthly obligation rate intended by Congress when it passed Public Law 92-500. In stark contrast. the 12 best performing States averaged a 45-percent per- formance level. The 12 worst State programs expenditures averaged only 1.44 per- cent of the per year obligation rate Congress intended, whereas the best performing States spent up to 2.07 percent of the yearly con- struction grant obligation rate. According to this measure of program effort, the best performing States put 25 Percent more resources into the program management. In other words, 9 of the 12 States that performed best in meeting the construction grants goal were in the top 16 by ranking of States by magnitude of the program effort. This evidence strengthens the argument for your committee's pro- posed amendment which would increase the funds available to the States for administration of their programs by one-third, to $100 million. It was suggested in our recommendations that a 1-percent limit on- PAGENO="0307" 301, Mr. ROBERTS. I am sorry to interrupt you, but we have a quorum call and that is the second bell. So we will be back in 15 minutes. [Recess.] Mr. ROBERTS. Mr. Inzero, you may continue. Sorry for the delay but we cannot help those bells. Mr. INzER0. I understand. It was suggested in our recommendations that a 1-percent limit on the diversion of construction grant funds to program adminis- tration uses is more realistic than the 2-percent figure in your proposed amendments. I can't believe that any State wants to be last in the clean water program. Neither can I believe that the U.S. Congress wants to pro- vide an excuse for any State to perform poorly in water cleanup. Therefore, we urge you to provide the increased funding provided in the amendment to section 106. Our written testimony, of course, goes into greater detail on all aspects of }I.R. 9560. NUCA has provided this information with one goal in mind. ~\Te want to see clean water for America. If this goal is accomplished through administration, tens of thousands of jobs will be created and local economies throughout the Nation will experience a. sorely needed revival. One other point I would like to make is that in about 10 days we would like to submit 12 States which we think are performing the worst record. Mr. ROBERTS. That is not a part of this hearing. OK, any questions? Thank you very much. The next witness, Mr. Jack Matich, president, Association of General Contractors. \~Till you iresent for the record the peonie accompanying you. The full text of your prepared statement will appear in the record at this point. [Statement referred to follows:] STATEMENT OF JOHN N. MATICH, PRESIDENT, ASSOCIATED GENERAL CONTRACTORS OF AMERICA Gentlemen, my name is John N. Maticli, President of Matich Constructors of Colton, California. I appear before you today as President of the Associated General Contractors of America and speak on behalf of our membership and the general construction industry. Accompanying me are Mr. Harold A. Pickens, Jr., President of 1-larold A. Pickens and Sons, Inc. of Anderson, South Carolina, Dud Mr. William W. Rogers, President of W. Rogers Company of Lexington, Kentucky. The Associated General Contractors of America is a national association rep- resenting over 8,100 construction firms. These firms perform about 80 percent of the annual contract construction volume of the United States. Our membership represents the full range of the industry, including the construction of pipelines, waste water treatment facilities, highways. buildings, municipal and utilities urojects. and heavy and industrial facilities. The industry employs approximately 3.5 million workers. I am pleased to be able to present our views on the proposed amendments to the Federal Water Pollution Control Act. We hope the Subcommittee finds our comments to be both useful and pertinent to the subject in question... When PL 92-500 was first enacted, Congress, the American public and the construction industry had reason to believe that the enormous task of cleaning PAGENO="0308" 302 up this nation's waters was finally underway. Congress provided the necessary funds to make a tremendous stride in the area of water pollution control and abatement. At the same time, Congress created one of the largest public works projects ever envisioned by this country. By EPA's own estimate over 40,000 primary and secondary jobs are created with each $1 billion in funding. This employment figure is even more significant today than it was in 1972 w'hen the law was passed. Since 1972 we have seen an ever deepening economic recession with inflation and unemployment rates rising steadily. The 1975 construction dollar buys a lot less than the 1972 dollar and the construction industry, our nation's largest industry, has the unfortunate distinc- tion of having the nation's highest unemployment rate. Unfortunately, just as something has gone wrong with the economy, something. has gone wrong with the Construction Grants Program of the Federal Water Pollution Control Act. PL 92-500, although an ambitious law-, should be well on its way to cleaning up our streams and rivers. It is not. PL 92-500 should be act- ing as a major corrective to unemployment and the economy slump our country finds itself in. It is not. At this time Congress should be receiving praise for its foresight in providing a vehicle for both environmental progress and economic recovery. Instead, we meet here today, nearly three years after enactment of the law-, to discuss means by which we can finally get the program nio'ving ahead. There seems to be some misunderstanding about what "moving ahead" means. We have heard a great deal about the progress EPA has made in the past few months. Progress ibas been made, we applaud it, and EPA has had legitimate difficulty in implementing a very complex law. Nevertheless, the progress that EPA refers to is primarily administrative, and the dollar figures they use as statistical support are "moving ahead" on paper, not on actual construction. For example, we have just heard about the billions of federal dollars EPA has been able to obligate, or plans to obligate shortly. This is all well and good, but the mere fact that funds are obligated is little or no indication that waste- water plants are being built. The truth of the matter is that while the $7 billion now obligated represents nearly 40 percent of the total $18 billion appropriated, less than 10 percent of the $18 billion has gone to cash disbursements for actual planning and construction. Gentlemen, the intent of Congress in enacting the Federal Water Pollution Con- trol Act was to clean up our nation's rivers, lakes and streams. To do this, wastewater treatment facilities must be built. After three years under PL 92-500, the Construction Grants Program is so snarled that precious few of these EPA projects have reached the construction stage. The plants are not being built. At the present rate, as a recently released draft report of the National Commis- sion on Water Quality notes, we will be well into the 1980's before the 1977 standards can be met. I would also like to point out that the employment poten- tial of the Program has not and cannot reach optimum until actual construction of the plants begins. Putting things in perspective, I must say that PL 92-500 is an extremely com- plex piece of legislation. This committee should be commended for its efforts to review the problem areas and take steps to solve them. The Environmental Protection Agency's administration of the Act has resulted in a never-ending array of regulations, guidelines and new requirements. New regulations and interminable revisions to old ones continue to issue forth. Instead of environ- mentally and economically needed construction starts we are greeted with changed rules and review requirements. What are the American people paying for? With these thoughts in mind, and the urgent need to get the Construction Grants Program moving ahead, the AGC recommends the Federal Water Pollu- tion Control Act be amended. Most importantly, the Act should be amended to permit qualified states to certify a proposed project's compliance with, the provisions of PL 92-500. A small per- centage of a state's allotment could be used to develop or expand its staff capabili- ties to assume the increased responsibilities. Such an amendment would give states the authority to do the technical reviews and make grant decisions. With the multistage, duplicated application procedure as it is now structured, numerous useless delays are encountered between the stages of the grant process. The communication lag between the municipality, the Regional EPA Office, Washington and back is a frustrating and often senseless roadblock. State and metropolitan sanitation officials have often testified to this fact. State certifica- tion would relieve the federal government, or the Regional Office, of the review PAGENO="0309" 303 responsibility by recognizing those states that have been successful in the im- plementation program, and qualifying them to certify water treatment projects at the state level. Most states were in the water pollution control business long before EPA was born or PL 92-500 was passed. Considering the limited resources they had to work with, the accomplishments of many of these states far exceeded the present record of EPA. The vast majority of expertise and experience in the water pollution abatement field remains in our state agencies. Let's use it. The amendment would also act to improve state capabilities to offset weak- nesses at the municipal level. It would free EPA personnel for more selective and effective use, and would subject projects to mOre informed scrutiny in the critical initial stages. The key fact is that state certification will cut red tape and thus save~ time. As a result, we can expect the benefit of getting projects underway before the con- struction dollar is further eroded by inflation. We will be putting the unemployed back `to work in the severly depressed construction industry, and stimulating the economy in related industries. Finally, we will be building a healthier working relationship between the states and the federal government. There are two other issues of importance to AGC. Without the full support and cooperation of local municipalities, wastewater treatment facilities will continue to be slow in coming on line. As contractors we are quite familiar with some of the problems our cities and towns experience in carrying out the pro- visions of PL 92-500. A method that would alleviate one municipal difficulty and assist the Construction Grants Program is to remove the roadblock of user charges. The Act should be amended to permit the use of ad-valorem taxes. Here again it is the states and local governments that have the greatest knowledge of what form of charge or taxation should be used in their area. They should be permitted to use the best practicable method suitable to their particular circumstances. Finally, I will note that the original authorizations for the Federal Water Pollution Control Act, in retrospect, seem to have been more than adequate. I say this for the simple reason that EPA has found it practically impossible to put existing appropriations to use. Being fair, however, full consideration should be given those states and municipalities `that went ahead with construction of treatment facilities in the expectation of receiving federal reimbursement. If existing funds are not available in sufficient amount to cover this obligation, then they should be appropriated. On the other hand, we feel that authorizations for implementation of Section 208 area wide planning grants are unnecessary at this tline. The program has been planned, programmed, studied and revised to the point where little else has been done. Let's get on with building the treatment facilities that are scheduled and needed now. In the area of future funding we believe that a level of $5 billion per year is a reasonable program. The goals indicated in the most recent Needs Survey are, uimfortunately, more wishful than real. More important, however, is the need for stability of the funding level. States and municipalities must know in advance what funding they can expect to receive. They must be able to plan their budgets to cover future needs. Consistency is of vital importance. Our industry is also critically affected by major speed-ups and slow-downs in construction programs. We have the men, materials and expertise to build the facilities to clean up our nation's waters. All we need is an orderly program in which to operate. While we recognize the limited purview of these hearings, we know of your imiterest in the entire program. So, we attach, for your information and the record, our detailed recommendations to EPA made months ago and still pertinent. RECOMMENDATIONS OF THE ASSOCIATED GENERAL CONTRACToRS OF AMERICA FOR EXPEDITING. THE CONSTRUCTION GRANTS PROGRAM, ENVIRONMENTAL PROTECTION AGENCY (Presented to the Honorable Russell E. Train, Administrator, Environmental Protection Agency, April 16, 1975) It has been almost three years since the enactment of P.L. 92-500. That vei~y complex law established goals for cleaning up the nation's waters and provided Federal funds in the amount of $18 billion to assist states and localities to con- struct the treatment facilities necessary to meet those goals. Of the authorized amount, less than $1 billion has actually been spent for construction, due, we are PAGENO="0310" 304 convinced, to the complexity of the regulations promulgated by EPA to implement the new law, and more important, to the inflexibility in their administration, coupled, up to now, with the assignment of a very lOw priority for this program. The concern of this Association was expressed by the adoption of a Resolution at our recent Annual Convention calling for the acceleration of this program (copy attached). We support and heartily endorse the EPA's recently stated goal of establishing monthly minimum obligation quotas for the remainder of the Fiscal Year and as long as necessary to insure an adequate and consistant level of funding for the Construction Grants Program. Mr. Train's monthly goal of overall funding nationwide at the rate of $500 million is applauded. In order to implement a workable program, we believe that a much more simple and practical set of regulations must be developed. Not new regulations on top of tile others, but a simplification of existing ones. We repeat our November 7, 1974 call for the establishment of a national advisory council, with members representing all water pollution control interests, to work with. the EPA to simplify the regulations and to cut the existing red tape. Similar groups must be established at the regional level, to deal with specific regional problems, and to create an awareness of and responsiveness to tile regional administrators' needs and problems with the .program. AGO long ago established national and regional committees to work with the EPA. AGO recognizes that the law (P.L. 92-500~) and the attendant rules and regula- tions promulgated by EPA are inordinately complex and restrictive. These factors have been responsible for costly delays in the program. Some changes need to be made. However, there is an inherent danger in mak- ing changes at a time when there is evidence that the existing requirements are finally being assimilated by the system. In other words, at this stage it is important that changes, which would otherwise `be desirable, not be made that would defeat the intended purpose of those changes-to eliminate the delays in the program. For this reason, our recommendations .are, as much as possible, restricted to changes which would eliminate requirements rather than change or add `to them, or to changes that could be achieved without interrupting the progr.am. We recommend the following: EPA regional staff-The size of the EPA Regional Staff is not adequate to process projects at a reasonable rate. This problem should be solved by reducing the complexity of the requirements rather .than increasing the staff. Decentralization, of authority-We support passage of the Cleveland-Wright Bill (H.R. 2175) which would permit the Administrator of the EPA to delegate to those states, which are equipped to do so, the responsibility of certifying com- pliance with all requirements. We urge the EPA to support this bill positively. Owners responsibility to engage professional services-Eliminate legal, admin- istrative, and engineering costs as eligible for reimbursement, and at the same time increase correspondingly the percentage of construction costs reimbursed. Standard contract docunients.-Mandate the use of the revised standard Con- tract Documents for Construction of Federally Assisted Water and Sewer Proj- ects for all EPA water/sewer projects. Payments.-In order to maintain a positive cash flow position, provisions need to be made wherein engineers, manufacturers and contractors are entitled to receive timely progress payments. Since cost of money is significantly higher than that of government funds, the net effect of progress payments. would be lower quotations. It should be required that all payments, progress and final, be made promptly.. Payment delays-Sections of the regulations: 35-935-110 (Requirement for draft of 0 & M Manual) ; 35-935-13A (User charges and industrial cost recovery) ; and 35-935-16 (Sewer use ordinance) have been used as the basis for withholding progress payments to the contractors. These regulations should be modified to eliminate the use of owner omissions (over which the contractor has no control) as a barrier to making partial progress pay.ments.on construction. Stabilize project funcling.-In the area of funding, the act should be amended t~ authorized funds through 1983 to insure the steady flow of funds into the waste treatment plant construction program, thus eliminating the peak and valley situations which create difficulty w-ithin the construction industry and inhibit efficiency within the program. Permit ccl valorem taz.-The act should be amended to permit local discretion in devising financing systems which provide sufficient funds to cover operational, PAGENO="0311" 305 maintenance and replacement costs on a proportionate basis among all classes of users. Su~h an amendment should specifically permit imposition of an ad valorem tax as one of the accepted methods of financing. Permit .reimburseable agreement-The regulations which wold forbid payment for planning initiated prior to the receipt of the grant i.e. 35-917(e), should be eliminated, because they stifle initiative by engineers and municipalities. No mOre new regulations-Declare a moratorium on the issuance of any new or additional regulations or guidelines, or, at a minimum make all newly-issued regulations and guidelines effective on all grants or projects promulgated after 60 to 90 days. Under no circumstances should any regulations, requirements or instructions be issued by EPA which are to be applied retroactively or to existing contracts, procedures or grants. New regulations take time to implement and will inevitably delay progress. Dead lines on aetions._Esta:blish deadlines or time periods within which various actions must be achieved. For example: strict limits should be placed on tile time within which a state's priority lists shall be finalized. Inactive coinmuni- ties which, after making the priority list, fail to proceed with their projects within an appropriate period should, after ample warning be dropped from the priority lists and another community substituted. Similarly, deadlines or time limits should be established for completion of reviews, obtaining clearances, completing facility plans, etc. with approval assumed to have occurred if no rejection is forthcoming during the established period. Standardization of procedures.-Standardize procedures, terms and practices between regions. Interpretations and instructions also vary from one EPA Region to another (Examples: the degree of study or detail required ill completing a facilities plan, an infiltration-inflow study, an environmental assessment, etc., are not consistent.) Fast tracking of project-Permit communities to proceed with Step 2 or Step 3 prior to completion of a facility or areawide plan which it is apparent that the project must be built. (In fact, overlapping of Steps 1, 2, and 3 phases of projects is entirely feasible under the "fast-track" process frequently utilized in time construction industry.) EPA should encourage the undertaking of certain aspects of a project immediately, even though certain preliminary requirements have not been completed. This should occur without delay in cases where a majority of the public and private groups interested in a particular facility agree that certain elements (such as a force main, pumping station or back-up generator) are essential and should be installed regardless of what other considerations may need to be made prior to the overall project. Inflltration-inflow studies.-Allow concurrent investigation and repair during infiltration-inflow study. It makes no sense to go to all the work of conducting an I and I study, measuring, taping, reporting, etc., then await an almost auto- matic EPA approval, and then go back to proceed with an almost identical process in carrying out repairs and rehabilitation of the system. Rights-of-way-Make costs of easements eligible for grant funds in all cases where it can be shown that use of such easements will reduce cost or will significantly speed construction. At present, EPA's adamant rejection of ease- ment purchases discourages communities from designing sewers on anything but public right-of-way, regardless of the additional time or cost involved. Prompt award-Award contracts for construction within 15 to 20 days of the taking of bids and determination of tile low bidder. It should not take 60 days, or more, from bid opening to contract award for construction. We appreciate that some of the above recommendations may require legisla- tion, and we urge the EPA to pursue the needed legislation in Congress. We submit, however, that more regulatory flexibility would resolve many problems. In the interest of clean water, in an effort to re-vitalize our national economy, and to reduce unemployment in the construction industry, we strongly urge the EPA to make the Construction Grants Program its first order of priority. REsoLUTIoN 8-PROMPT AWARD OF EPA CONSTRUCTION GRANT PROJECTS Whereas, the Congress authorized a total funding of $18 billion for construc- tion of needed water pollution control facilities for fiscal years 1973, 1974 and 1975, and Whereas, the Administration has not released all funds appropriated for those fiscal years, and PAGENO="0312" 306 Whereas, the Supreme Court has ruled that the Administration does not have the authority to withhold EPA construction grant funds, and Whereas, the capacity of the construction industry is not being fully utilized, and inasmuch as EPA estimates that each $1 billion of its construction funds provides 40,000 jobs, and Whereas, the requirement for federal level detailed review and approval of State certifications, has prevented prompt award of construction contracts. Now therefore be it Resolved, That the Associated General Contractors of America, assembled at its 50th Annual Convention, February 28-March 5, 1975, calls upon the Congress of the United States to enact, at the earliest possible date, H.R. 2175, the Cleveland-Wright Bill, which provides for timely acceptance of State review and certification of construction grants projects by the Environmental Protection Agency. STATEMENT ON AMENDMENTS TO PUBLIC LAW 92-500 BY CAROLINAS BRANCH, ASSOCIATED GENERAL CONTRACTORS OF AMERICA Mr. Chairman and Members of the Committee, my name is Harold A. Pickens, Jr. I am president of my own small construction firm in Anderson, South Caro- lina. I am also Senior Vice President of the Carolinas Branch, AGC, which has a membership of over 2400 firms engaged in the construction industry, in North and South Carolina, and elsewhere in the Southeast. I also serve on the National AGO Municipal-Utilities Coordinating Committee. I thank the Committee for this opportunity to give you a few specific examples of the havoc which EPA's implementation of the PL 92-500 is creating in our area, as part of the serious problem which confronts the Nation. I do not address our contractors' problems in a vacuum of self interests. We have strong cooperative relationships with public officials and engineers in the Carolinas, and I am confident that they largely share our views. For example, I am privileged to serve on a standing Advisory Committee to the South Carolina Department of Health and Environmental Control, on EPA Programs. This Committee meets with top officials of the Department at least once monthly to exchange information and views of diverse groups, which include the Municipal Association, municipal and other public officials, consulting engi- neers and contractors. Repeated pleas, by us and others, with EPA officials in Atlanta and Washing- ton. and at EPA seminars and hearings, have been in vain. EPA's absolute dictation over every detail of the~ Step 1 planning stage of projects appears to be increasing rather than diminishing. As Governor Holshouser testified, in July, before the National Commission on Water Quality, "it (EPA) has delegated only the clerical work to the states." In spite of EPA's public statements to the contrary, EPA's flood of regulations and guidelines con- tinues. (Please note the 1975 Federal Registers of April 14, May 8, July 10, as examples. We know that there will be others in October.) Therefore, I plead before your Committee for limited amendments to the Act, by the Congress, to unblock the flow, for construction, of the already allocated billions for municipal projects, and to bring a reasonable degree of order and stability to this massive program. As concerns our Carolinas utilities contractors, EPA's implementation of the program has brought them to the brink of disaster. Many of them will probably not survive even the next 12 months. This will only add to the depression,.unem- ployment and inflation in our area and the Nation. Please let me briefly describe the desperate situation which faces us wherein we have and will continue to have little work for our firms and for those whom we employ. We are faced with a bidding situation, in which our contractors are bidding just to survive, let alone to try to make a fair profit. Lists of general contractors bidding on water and sewerage projects, large and small, began to run into the 20's and 30's per project. On the last two EPA projects bid in the Carolinas (Ayden, N.C.-$4.5 million and Moore County, N.C.-$17 million) in August 1975, the bid lists were 58 and 48, respectively. We have identified, from recent hid lists, over 400 licensed utilities general con- tractors who are currently bidding such projects in the Carolinas. PAGENO="0313" 307 Even more discouraging, our analysis of the Carolinas' Fiscal Year 1970 pri- ority lists submitted to EPA gives us little hope for any significant nuniber of projects, to bid until the fall of 1976. This "peak" of work should occur as the states strive to meet the July 1, 1976 deadline for obligating their allocated Fiscal Year 1975 funds-$70 million in North Carolina and $53 million in South Caro- lina. Even then the majorportion of these funds will go for a relatively few large projects, ranging in costs as high as 10 to 24 million dollars per project. Beyond that we see another sickening "valley" until the deadline of Septem- ber 30, 1977 for obligating allocated Fiscal Year 1976 funds approaches-$110 millionin North Carolina and $82 million in South Carolina. Meanwhile, the spectre of EPA's regulations and guidelines for the Step 1, Section 201 planning process hangs over current and future priority lists. These EPA requirements have been constantly changing and expanding since the very beginning. We know that even now EPA is considering yet another volume of `draft guidelines". Every change has forced a change in the direction of planning by the engineers, municipalities and states. The ultimate interpretations and approvals have been and are unyieldingly retained by EPA. North Carolina has 100 grants for Step 1 studies; only two Step 1 plans have been approved to date. South Carolina has 65 such grants; however, not a single plan to meet current EPA requirements has yet been approved. Under these conditions, we totally reject EPA's current widely publicized charges that apathy and ineptness on the part of engineers, municipalities and states are the major causes for the delays in `the program. Further, we have attended public hearings, where we heard one small town after another pleading to be included on a State's priority list. Before the Act, some of these towns had been high on the list. However, by EPA's regulation, not by law, EPA has decreed that it will not participate in funding of a collec- tion system for a town that has none. Therefore, these low-income communities who cannot afford to pay for a collection system must continue to live with their privies, overflowing septic tanks and raw sewage discharges unless EPA deter- mines that a "health hazard" exists. EPA has not approved the funding of a single collection system in the Carolinas. We strongly maintain that the states should be delegated the authority, within the law, to plan and build those municipal projects which will best meet local needs. It is at this level that these needs and priorities can best be determined, and not by some EPA person in Atlanta or Washington. On the matter of user charges, we attended a State-EPA seminar in North Carolina this month. This was one item on a packed agenda. Questions of EPA officials, by an audience of some 200 engineers and municipal officials, on this one item, lasted for over an hour before they were cut off. Most of the audience left frustrated `and with less than a full understanding of these requirements. The next matter of concern is funding and allocation of funds among the states. We urge that the "needs" formula for allocations be changed to one of "needs" and population. Under the "needs" formula, the Carolinas received for the two fiscal years 73 and 74, of a total of $5 billion nationally, only the same amount that they received for the single Fiscal Year 1972, of a total of $2 billion, na- tionally, under the old law. The new formula should be applied to the previously impounded $9 billion. We further urge that the Congress provide additional authorizations for the next several years, to enable all concerned to plan and implement this long range program efficiently and economically. We strongly suport the flow of Section 100 and 208 funds to the states to en- able them to carry out responsibilities, which EPA is now hoarding. I would like to close with a word of caution. Many who are here today un- derstand the complexities of the Act and the regulations, to the extent that they can be understood. However, I assure you that a large segment of the public and the municipal officials of smaller cities and towns are only now beginning to learn bits of the nature and impact of this massive program. Especially during this sensitive political period of the pending Presidential elections, this public awareness is sure to grow. Rising sewerage rates will fur- ther nourish this awareness. What will the public reaction be, if relief from the Act's deadlines is not granted to municipalities which find it impossible to meet these deadlines? At the aforementioned EPA seminar in North Carolina, an EPA official incredibly threatened that "EPA will start protecting itself by intensified enforcement", PAGENO="0314" 308 In spite of EPA's self-serving publications of "obligation" data, will not the public ask why. during a critical economic period, expenditures have amounted only to about ~1 billion, of 9 or 18 billions available? Will not the public ask why these massive funds have not yet produced a single functioning municipal treatment facility, at least in the Southeast? Such questions will surely grow. As of now these matters are published mainly in professional and trade association periodicals. I feel safe in predicting that they will soon be filling the columns of local newspapers. I deeply hope that the Congress w-ill act swiftly upon the matters which I have touched, to enhance the effectiveness of this huge, vital public program, the management of which, to date, has been a national disgrace. Gentlemen, thank you very much. TESTI]~[ONY OF JOHN N. MATICH, PRESIDENT, ASSOCIATED GEN- ERAL CONTRACTORS OF AMERICA, ACCOMPANIED BY HAROLD A. PICKENS, JR., PRESIDENT, HAROLD A. PICKENS & SONS, INC., ANDERSON, S.C.; AND WILLIAM W. ROGERS, PRESIDENT, W. ROGERS CO., LEXINGTON, KY. Mr. MATICH. Yes. illr. Chairman, gentlemen, my name is John N. Matich, president of Matich Constructors of Colton, Calif. Accompanying me are Mr. Harold A. Pickens, Jr., president of Harold A. Pickens and Sons, Inc., of Anderson, S.C., and Mr. Wil- liam Rogers. president of W. Rogers Co., of Lexington, Ky. I appear before you tocla as President of the Associated General Contractors of America. and speak on behalf of our membership and the general construction inclustr. We have submitted a detailed statement for the record. In the in- terest of time. I will confine my remarks to a brief summary. Tjnfortunately, just as something has gone wrong with the economy, something has gone wrong with the construction grant program of the Federal Water Pollution Control Act. We should be well on our way to cleaning up our streams and rivers. We are not. Public Law 92-500 should be acting to reverse unemploy- ment. It should be working to pull us out of the economic slump our country finds itself in. It is not. At this time Congress should be receiving Praise for its foresight in providing a vehicle for both environmental progress aiid economic recovery. Instead, we meet here today. nearly 3 years after the law was passed, to discuss means by which we can finally get the program moving ahea cI. Gentlemen, the intent of Congress in enacting the Federal Water Pollution Control Act was to clean up our Nation's waters. To do this, waste water treatment facilities must be built. After 3 years under Public Law 92-500, the construction grants program is so snarled in redta.pe that precious few of these EPA projects have reached the construction stage. The. plants are not being built. Witli these thoughts in mind, and the urgent need to get construction grant programs moving ahead, it is recommended that the Federal Water Pollution Control Act be amended. The act should be amended to permit State certification of plans and specifications. PAGENO="0315" 3O~ A sm~ll percentage of the State's allotment can ho used to ~~13T for the additional personnel needed. Such an amendment would give States the authority to do the technical reviews to make grant decisions, to move the program forward. Most States were in the water pollution control business long before EPA was born, or Public Law 92-500 was passed. Considering the limited resources they had to work with, the accomplishment of many of these States far exceeds the present record of EPA. Most of the expertise, and the experience in the water pollution abatement field remains in our State agencies. Let us use it. The key fact is that State certification will cut redtape and duplica- tion. It would save time. It would get projects underway before the construction dollar is further eroded by inflation. We will be putting the unemployed back to work in the severely de- pressed construction industry. ~Te will be stimulating the economy, and related industries. Finally, we will be building a healthier working relationship between the States and the Federal Government. In the area of future funding, we believe that a~ level of $5 billion per year is a reasonable program. However, the need for the stability of the funding level is more important. States and municipalities must know in advance what funding they can expect to receive. They must be able to plan their budgets to cover future needs. Consistency is of vital importance. Our industry is critically affected by major peaks and valleys in the construction program. We have the men, materials, and the expertise to build the facilities to clean up our Nation's waters. All we need is an orderly program in which to operate. We recognize the limited scope of these hearings. We also know of your interest in the entire program. Our formal statement includes, for your information, in the record, our detailed recommendations to EPA. They were made months ago, and they are still pertinent. Gentlemen, we thank you for this opportunity to present the views of the Assoc.iated General Contractors of America. Mr. Pickens, Mr. Rogers and I will be happy to answer your ques- tions. Both Mr. Pickens and Mr. Rogers are engaged in the construc- tion of waste water treatment facilities. Both have worked hard with public officials and other professional groups in their States to get the construction grants program moving. They can speak to the specifics of the program. Thank you. Mr. ROBERTS. Thank you very much for a very fine statement. Mr. MATICH. Thank you. Mr. ROBERTS. Do the other gentlemen have statements to file ~ Mr. MATICH. No. Mr. ROBERTS. Fine, the gentleman from Ohio. Mr. HAR5HA. Thank you, Mr. Chairman. Thank you, Jack, for a fine statement. I appreciate your being here. In your statement you allude to the various step grants, overlapping grants, like phase I, phase II, phase III grants. Phase I is your planning grant, and phase II your design, and phase III the construction grant. How would you control this to make sure PAGENO="0316" 310 that your money is properly spent, and that the planning isadequately accomplished? Mr. `ROGERS. I will answer that, if I may. Mr. }IIAR5HA. All right, you can submit it for the record later on if you prefer. Mr. ROGERS. I think basically the States would have the capability of managing that within their own facilities. In other words, it should not be managed in Washington. Mr. HAi~sI-JA. I see. Thank you very much. That is all I have. Mr. ROBERTS. Thank you, gentlemen, very much. We have two witnesses left. Mayor J. E. Pearsall of Virginia, Minu. and John G. Costello, executive director, Bergen County Sewer Au- thority of New Jersey, and I will ask both of you gentlemen to come up, since I have agreed to have this hearing terminated by 3 :30 p.m. Mr. Pearsall, you may proceed. Your statement will be included in the record in full. [The statement referred to follows:] STATEMENT OF Ho~. J. EDWARD PEARSALL, MAYOR, CITY OF VIRGINIA, MINN. Gentlemen. I wish to present the following testimony in support of HR. 9500. The City of Virginia was one of the first communities to apply and receive a grant under the Federal Water Pollution Control Act. We are presently in the process of drafting an ordinance as required by the Act to implement the users charge. We have been opposed from the beginning to this requirement to the Water Pollution Control Act. Briefly I would like to present just a few of my reasons for opposing this part of this Act. We strongly advocate local control. The Act removes local control. The cities should have the choice of raising monies for the operation of their wastewater treatment plants either by the ad valorem method or by the users charge method. The Act definitely removes that option. Traditionally the communities on the Iron Range have raised our Operational money by the ad valorem method, and not the users charge method. Mining companies own large bodies of natural ore which is our basic industry and which has, in the past, practically supplied the money to run our schools and cities through ad valorem taxes~ It is im- possible to put a users charge on an ore body. It is the simplest,, cheapest and most equally distributed way of distributing the cost of operation of government units. Beyond a question of doubt, the cost of raising revenues for the operation of a municipality by users charges is by far much more costly than by raising the revenues through ad valorem taxes. By raising your monies for the opera- tion of government or department of municipality by the method of a users charge will take a staff to administer said collection, whereas with the ad valorem tax method, it is a simple procedure costing the city very little to raise this money. At the present time we are in the process of preparing an ordinance required by the Federal Water Pollution Control Act for the approval of the Environ- mental Protection Agency in order to implement the users charge. I am presenting a copy of this ordinance in its preliminary draft form to `show the Committee the impossible situations' our community is faced with. First, the drafting of an ordinance and then carrying out the directives of its c'omplicated formulas to arrive at the fair users `charge. Small communities like ours, with a limited staff with limited finances makes it impossible to hire additional per- sonnel would fiuid it almost impossible to implement a users charge as required by the Enviromnental Protection Agency. With the City having spent considerable money to improve their collection sys- tein and their wastewater treatment plants, the question has arisen would their be money enough to continue to operate their plants in an efficient and proper manner. The' original thought of the users charge was to make sure that the plants would be operated and maintained properly and to take care of deprecia- tion of plant and equipment. By the Minnesota Pollution Control having issued our City a permit which requires us to make the necessary tests, operate the plant in a proper maimer and to provide the money necessary to accomplish this, PAGENO="0317" 311 the requirements of the Water Pollution Control will have been met. The granting to municipalities the option of raising the monies by ad valorem or by users charge will assure an efficient operation of the plants in the future. I greatly appreciate the opportunity to be able to appear before your Honorable Committee. TESTIMONY 01? HON. J. EDWARD PEARSALL, MAYOR, VIRGINIA, MINN. Mr. PEARSALL. My name is J. E. Pearsall, I am the mayor of the city of Virginia, Minn. We are one of the cities that certainly~ encouraged the passing of the Clean Water Act, and we are fortunate to have Congressman Oberstar representing us in Congress, and we advised him to `the problems facing the future of cleaning up the water of our city, and we felt indeed the problems of the Nation. We worked very hard to have thQ Clean Water Act passed by Con- gress. We find now that we have run into some difficulties, and I want to direct the one big problem that I see faces my community, and that is the use of the user charge against the ad valorem charge. Presently, to acquaint the committee, we are in the 90 percent level of getting the project complete. As I mentioned, we were one of the first communities to, under~take such a program of the building of a new sewer plant, adding tertiary treatment, and at the same time renovating our present collection system. I believe we were the first communities to get a joint grant to accomplish this. The problem as it faces us is the requirement by the Federal Govern- ment, that we pass an ordinance implementing the user charge, and I have a copy, of that ordinance to show the problems a city has in its implementing. We had to get EPA to approve the ordinance as it was a new document, and it has taken a tremendous amount of my time, along with their time, to finally get an approved document, and I have here the `approved document that has not been passed by the city of Virginia yet, but it is in the process of going through the passage. It is the ordinance as required, covering the discharge of waste water into the public sewers of the city of Virginia. The question that I bring before the committee is whether the city of Virginia, or any community in the Nation should allow the use of a user charge or ad valorem charge. I have here a tax statement. It happens to be my own tax statement. The placing of an additional charge, which is necessary to operate our plants. We are operating now a primary and secondary plant. We are going into tertiary treatment. No questmon of doubt it is going to cost us additional money to operate teritary treatment. The cost of operating the plant, the chemicals, will raise. the projected costs from $38,000 ito over $200,000 for our community. I represent a community of 13,000. Where do you place that cost? If we place it into this statement, in other words-I am using myself as an individnal-it cost the city no dollars for an additional charge if we place it in the ad valorem tax method. If we go to the user tax method, we then have to issue a card like this to each individual user. These cards cost money. PAGENO="0318" 312 The hiring of additional staff, and so forth, all this costs money. As I stated, the ad valorem tax method will cost us nothing. Further, if we place it in the ad valorem tax, and onto the tax, that is, I believe, the most fairest way, the most just way-taxes should be based on ability to pay. The user's charge is not based on the ability to pay. It simply goes to each individual homeowner. We care less what their income 1S, what type of home they live in. It is simply ba.sed, the user, and whether you have a low income or not, you use water. We care less your ability to pay. If it is placed oii this tax statement, you get the benefit of a homestead credit. For instance, in the city of Virginia, we have homestead credit of 44.6 percent, which we a.llow to homes that are homestead, and that credit is a maximum of $325. W~ also receive taconite credit of 25 per- cent to a maximum of $190. So ~a person owning the more valuable home, and we put an additional amoirnt, as I stated here, a users charge method will not receive this type Of credit. But a person with a home less than $16,000 will get the advantage of that credit. We have an additional credit-I represent a community in the heart of the Iron Range. Traditionally we have not used the user method, be- cause we have received in the past our tax dollars to run our schools, the county and the city, through ad valorem taxes. They were not users of water. ~\Te placed on them an ad valorem tax. So therefore we never use the user method. The only way we could get dollars to run our com- munity-our basic industry is mining-and we had to get that through the ad valorem tax method. We want to continue to use the ad. WTe want to continue to be able to get that through the ad valorem tax method. It is generally the fairest method. It is based on ability to pay. and the users tax is not based on ability to pay it. Mr. ROBERTS. Does the section in the bill suit you then-the provi- Sion in the bill that provides that you may use the ad valorem tax, where you had been using it in the past? Mr. PEARSALL. We. understand that it is being amended. Presently EPA says we must implement this ordinance, and this is the users ordinance. We must do it, unless this amendment is passed by the House and Senate-we must implement this ordlinance, and I would like to refer to this ordinance. Mr. ROBERTS. Without objection, the ordinance will be made a part of the file. [An ordinance covering the discharge of wastewater into the public sewers of the city of Virginia, promulgating regulations. and establish- ing charges for services rendered, retained in subcommittee file.i Mr. PEARSALL. I believe the I-Iouse'has submitted this in the past, and I brought this ordinance to Senator Humphrey, our Senator, and I said to Senator Humphrey, you know that this is the ordinance that you are forcing on the city of Virginia-he said he couldn't believe it. I saidl, I wouldi like to examine this fornmla, andi tell me, as the mayor, how I can implement this formula. This formula says: "Sewer user charge: To offset the operation and maintenance costs of the city waste water works, any person contribut- ing any waste water to the total waste water loading of the city treat-~ PAGENO="0319" 313 mont works shall be charged on the basis of the following," and it is a very complicated formula. iMir. ROBERTS. Our provision in this bill would permit use of either the ad valorem tax you have been using, or the user tax. Mr. PEARSALL. The point I want to make-no way. Now, what does EPA say to the city of Virginia? We will not fund you past the 80 Percent stage unless you implement this ordinance. That is the way the present law is written. Mr. ROBERTS. The law would remove the portion for industry, other- wise it would be exactly the same as 9560. Mr. PEARSALL. Yes. Mr. ROBERTS. We appreciate very much having you with us. Mr. PEARSALL. Yes, the other question-I bring one further point- is the-under the ordinance of the reports to pass, is the portion ic- tamed amounts. The city shall retain 50 percent of the amounts recovered from in- dustrial users, and the remainder, going into interest earned, and there- upon returned to the city treasury. I have stated that a city like I represent., and all cities face a tre- mendous problem with the operation of their plants in the future. No question about it. We face a 200 percent additional charge of operating a tertiary plant. I feel because of this responsibility, that we should keep the money-the additional money-to operate our plants, and set some aside for future operations, and the depreciation of our plants, so that we can in time rebuild our plants, in say 20 years from now, and have that money, and have it available. I do not deny that we should be forced to do that, but I say that the money should remain within the local communities. Mr. ROBERTS. Thank you, Mayor Pearsall. Any questions? Mr. Costello, you are the final witness for this hearing. The full text of your prepared statement will appear at tins point in the record. [Statement referred to follows:] STATEMENT OF JOHN G. COSTELLO, EXECUTIVE DIRECTOR, BERGEN COUNTY, NEW JERSEY, SEWER AUTHORITY MR. CHAIRMAN: My name is John G. Costello, and I am here today in my capacity as Executive Director of the Bergen County Sewer Authority, a regional sewerage agency serving about one-half million people iii forty-four communities in Northeastern New Jersey. (Appendix A is a list of our member municipalities.) We appreciate the opportunity to present the views of the Authority on these important matters that have been set for hearing by the Subcommittee on Water Resources. As a forerunner in the area of regionalized sewage treatment since its creation in 1947, the Sewer Authority has acquired extensive experience through its efforts in conjunction with those of the State and Federal governments to clean up our nation's waters. It is the view from our perspective on the front lines of the battle against water pollution that we feel will be of interest and value to you, the law-makers of our country. Accordingly, we are pleased to offer for your consideration our thoughts and recommendations on the follow- ing maters relative to proposed changes in P.L. 92-500: AD VOLOREM TAX AS USER CHARGE Although apparently the result of a sincere concern for fairness, the absolute prohibition against the use of ad valorem taxes to satisfy the user charge require- PAGENO="0320" 314 ment has become, from our viewpoint, a serious obstacle to the realization of other more important goals of P.L. 92-500. Let me clarify the point. For seine time, the Sewer Authority has been urging its member municipalities to execute service agreement amendments which, among other things, bind the municipality to adopt a user charge system by a specific date in the future. The approval of these amendments by all 44 municipalities is required as a prerequisite to a grant award, which must be obtained prior to the commencement of construction of the badly needed and NPDES-mandated expansion of our sewage treatment plant. Currently, less than half of our communities have agree to execute agreement amendments, and many of the members that have not signed are adamantly opposed to the additional administrative burden that would accompany a re- quired abandonment of the ad valorem tax basis of imposing sewer charges. The facts suggest that the concern of these protesting municipalities is a legitimate one. Presently, thirty-six of the forty-four communities rely exclusively upon the ad valorem tax method for the distribution of all sewer costs, and forty of the localities (91%) employ this method to some degree or other in their sewer charge systems. For these forty municipalities to operate a charge system which complies with current user chhrge requirements, they would collectively have to bear an estimated additional $300,000 to $400,000 annually. It should be noted that these dollar figures represent conservative estimates and do not take into account any additional start-up costs for the new user charge systems. Because of the additional administrative burden and expense resulting from the prohibition of the use of ad valorem taxes as user charges; and because such prohibition tends to delay construction of waste water treatment works pro- jects and, thereby increases construction costs, threatens treatment works owners with violations of its NPDES permit, and postpones the advancement of water pollution control; because of these reasons, we believe Section 204 of P.L. 92-500 should be amended to permit the use of ad valorem taxes to satisfy. the user charge requirement. We think it important to note, however, that Congressional action in accord- ance with our position on the ad valorem tax matter ~annot, by itself, serve to remedy the user charge dilemma. Rather, such action would overcome but one of .the two bases of the problem. Whether a substantial solution will be effected would, it seems to us. also turn upon the flexibility, the latitude that is built into the concept of "proportionality". The importance of the concept becomes evident when we reflect upon the requirement that "each recipient of waste treatment services . . . will pay its proportionate share of the costs of operation and main- tenance. . ." An extremely .strict interpretation of the proportionality require- ment would, in effect, prohibit all methods of determining sewer service charges except that providing the most accurate evaluation of the wastewater loading of each user's discharge. We think everyone would agree that such an interpreta- tion, which would require a community to install, and periodically read, sewage meters for each individual user and routinely sample each user's discharge, would produce a result that is certainly equitable but impracticable from a cost- effective standpoint. Similarly, a somewhat narrow interpretation of a statutory requirement that the distribution of operation and maintenance charges be made on a basis that is "proportional", "approximately proportiona1", or "substantally proportional" to waste water loading would severely limit the number of localities that could obtain approval of their ad valorem tax systems for user charge purposes. Under such circumstances, some communities using ad valorem taxes for sewer charges could be required to implement changes in their sewer charge systems that are impracticable when viewed in the light of equity and cost-effectiveness. Conse- quently, we believe that HR 4169 should be adopted with one modification: The language which reads "(b) the goal of proportionality among classes of recipients will be substantially achieved," should be deleted and a new phrase inserted which reads "(b) there is no gross disproportionality between industrial recip- ients and residential recipients." ELIMINATE INDuSTRIAL COST RECOvERY The requirement that each industrial user of the Authority's treatment works must pay back its share of the federal portion of the cost of construction does not seem unreasonable by itself. However, when an industry or all users are burdened with the administrative, monitoring and other costs incurred by the Authority and a municipality in determining the industry's pay-back share and this cost of PAGENO="0321" 315 leterrnining the share is at least equal to a substantial portion of the share it- self and, in many cases, exceeds such share, then the equity as well as the cost- effectiveness of the pay-back system becomes suspect. To elucidate this point, let us reflect upon some pertinent statistics concerning the industries located within the Authority's service area. First, it should be noted that there are pres- ently 57 industries which could be classified as "large", 357 industries which could be classified as "small", and 608 industries which could be classified as "service industries" that discharge to the Authority's treatment plant. These industries, as a group, contribute about 25% of the total plant loading. Accordingly, their share of the Federal Grant on the present First Phase, $13,000,- 000 Plant Expansion n~ould be about $60 each per year for 30 years. On the other hand, the cost of annual testing, billing and administration of the Indus- trial Cost Recovery system would average about $180 per industry per year. i~iven with the 57 large industries, which average 20% of the plant loading, the com~ parable figures would be $880 per year collected and $900 per year of costs. We believe such a procedure is inefficient and not cost-effective and should be removed from the Act. SECONDARY TREATMENT/EXTENDING 1977 DEADLINE~ Our emphasis is on the need for flexibility concerning both secondary treat- ment standards as well as the July 1, 1977 deadline for achieving those standards or a more stringent level of treatment necessary to meet water quality standards. We certainly favor a revision in Section 304(d) of P.L. 92-500 which would give the EPA Administrator the authority to relax secondary treatment stand- ards when local circumstances of an environmental nature so warrant. For example, we believe that the Administrator should be allowed to determine the necessity for year-round chlorination on a case-by-case basis. Also, we strongly urge the adoption of a revision in Section 301(b) of the Act which would grant the Administrator the discretion to extend the 1977 deadline on an ad hoc basis when the facts jnstif.v same. A case in point which demon- strates tile need for this revision is the Sewer Authority's current situation. As 1)reviously mentioned, the Authority has been forced to postpone the commence- ment of construction on the expansion of its sewage treatment plant pending tile approval of its grant. Because of this delay and in recognition of the fact that the recent economy has witnessed drastic delays in the delivery of construction materials, it is now anticipated that the Authority may not be able to achieve the level of treatment the Act requires by 1977 until at least 1980. CLEVELAND-WRIGHT BILL: DELEGATION TO STATES Throughout our period of involvement with the grants program under P.L. 92-500. we have clearly noticed two important problems which the Cleveland- Wright Bill appears to address: (1) the severe shortage of program manpower; and (2) the duplication of review functions by federal and state agencies. Be- cause of its delegation of significant responsibilities to the states and its pro- vision of additional manpower. this hill offers hope that the grant application processing time can be reduced and, therefore, we find it incumbent upon our- selves to generally support this proposed amendment. However, we do feel that Section 213 (c) of the proposed amendment should he deleted insofar as it authorizes the use of grant funds for the transfer of administration to the states. We would urge that federal funds, other than those earmarked for grants, be used to finance these costs, especially since one of the reasons for this proposal is apparently to remedy the shortage of federal per- sonnel to perform these duties. We would also hope that an orderly transfer of responsibilities is arranged so as to minimize confusion and delays in tile program. THREE-STEP GRANT PROCESS/REIMBURSEMENT We strongly urge that P.L. 92-500 be amended to provide the Administrator with the discretion to award grants for a combination of project Steps including, (1) facilities planning and design, (2) design and construction, and (3) facilities planning, design, and construction. We similarly urge the adoption of an amend- ment which would allow a grantee to be eligible for a reimbursement grant when it proceeds w-ith the facility planning and design phases of a project with- PAGENO="0322" 316 out prior agency approval. The Bergen County Sewer Authority has been able to progress rapidly with projects in the past by proceeding with the planning and design phases before Grant approval. Awaiting such approval before each step would have delayed the present Authority projects several years and cost the taxpayers millions of dollars. It is our firm belief that much of the delay currently experienced in the planning, design and construction of wastewater facilities under the P.L. 92-500 grants program could be eliminated and the progress in the area of water pollution control could be substantially accelerated if these two iecommended amendments w eie `idopted ~LTOT~1E~~T OF TL~~DS We are compelled to urge that funding under P.L. 92-500 be made on the same :"needs" basis and under the same matching formula that now exist with the preservdtion of the eligibility of projects that take into account growth because we believe this approach will serve several important functions. First, it will help avoid disruptions that `accompany significant changes in the policy of the grants program. Next, it will help assure that communities will continue to pursue the water pollution goals they set out to achieve at the inception of the P.L. 92-500 program. Finally and most importantly. it will reinforce the attack against water pollution in areas where the problem poses its most severe threat. We appreciate the opportunity to present the views of the Bergen County Sewer Authority on these important matters concerning P.L. 92-500 and will be pleased to try to answer any questions or to provide aiiy data that may be desired. Thank you. APPENDIX A.-i1[ember municipalities of Bergen County sewer Authority Bergenfield Montvale Bogota Moonacliie Carlstadt New Milford Cliffsicle Park Northvale Closter Norwood Cresskill Oradell iDemarest Palisades Park Dumont Paramus East Rutherford Park Ridge Emerson Ridgefield Englewood Ridgefield Park Englewood Cliff s~ River Edge Fairview River Vale Fort Lee ` Rochelle Park Hackensack Rutherford Harrin~ton Park South Hackensack HasbrOnck: Heights Teaueck Haworth Tenafly Hilisdale Teterboro Leonia Washington Little Ferry Westwood Maywood ` Woodcliff Lake TESTIMONY OP JOHN G. COSTELLO, EXECUTIVE DIRECTOR, BERGEN COUNTY SEWER AUTHORITY, NEW JERSEY, ACCOMPANIED BY WILLIAM BLACKBURN, REPRESENTING THE CONSULTING ENGI- NEERS, AND MICHAEL J. D'ARMENIO, COMMISSIONER ON BERGEN COUNTY SEWER AUTHORITY, AND MAYOR, HACKENSACK, N.J. Mr. COSTELLO. Thank you, Mr. Chairman. I will try to keep `it concise. With me are Commissioner D'Armenio and Mr. Blackburn of our consulting engineers. 1 am here today in my capacity as executive director of the Bergen County Sewer Authority, a regional sewer agency serving about' one- half million ~eo~ie in 44 commumties in northeastern New Jersey. PAGENO="0323" 317 We appreciate the opportunity to present the views of the authority on these important matters that have been set for hearing by the Sub- committee on Water Resources. As a forerunner in the area of regionalized sewage treatment since its creation in 1947, the sewer authority has acquired extensive experi- ence through its efforts in conjunction with those of the State and Fed- eral Governments to clean up our Nation's waters. It is the view from our perspective on the front lines of the battle against water pollution that we feel will be of interest and value to you, the lawmakers of our country. Accordingly, we are pleased to offer for your consideration our thoughts and recommendations on the following matters relative to proposed changes in Public Law 92-500. This is on elimination of industrial cost recovery. I will just again cut that down in part. These industries, as a group, contribute about 25 percent of the total plant loading. Accordingly, their share of the Federal grant on the present first phase, $13 million plant expansion, would be about $60 each per year for 30 years. On the other hand, the cost of annual testing, billing, and adminis- tration of the industrial cost recovery system would average about $180 per industry per year. Even with the 57 large industries, which average 20 percent of the plant loading, the comparable figures would be $880 per year collected, and $900 per year of costs. 1,~Te believe such a procedure is inefficient, and not cost-effective, and should be removed from the act. I think the rest of it is entered as testimony, Mr. Chairman, if there are any questions. Mr. ROBERTS. Mr. Roe. Mr. ROE. I do not have any questions, but I want to welcome my good friend John Costello and his colleagues. They represent one of the largest utilities in northern New Jersey, a splendid organization, and they have been fighting the battle of pollu- tion for many, many years, even before we passed our bill. I have read the testimony in full, and I am sure we will be able to commisserate on the details. It is a splendid statement, and it will help irs in our legislation. I really do not have any specific questions. Mr. ROBERTS. Mr. Harsha.. Mr. HARSHA. I have one question. That is in regard to the ad valo- rem taxes. You suggest the proposal that, to use the ad valorem tax of the user would apply only to existing communities. How this presents a prob- lem of what is an existing-in a new community, as there is obviously some gray areas. Do you have any suggestion in that regard? Mr. COSTELLO. What section of the testimony? Mr. HARSHA. I think just in general nature, you subscribe to the ~u1 va.lorem tax as opposed to the user tax. In the bill that we are holding these hearings on, we have set forth that change, but it has been suggested to the committee that rather than make it broad, let it apply across the board, that it be limited only to the existing communities, and that the new comn-iunities would come on the map as new developments, that they are in a better position at PAGENO="0324" 318 that time to put in the meters, and all the other equipment that you need to facilitate a user charge. But where the problem lies is when you acid a subdivision, whether that becomes a new community, or whether or not you can still call that an existing community, and still use the ad valorem tax. Do you have any problem? Mr. COSTELLO. I consider that as an extension of your present com~ mumty, by your subdivision, Mr. Harsha. I still have the same prob~ lems, Congressman. Mr. ROBERTS. We assured the mayor that von would be back in time for questions, so you have 5 minutes before the second bell. 3i~. Oberstar. Mr. OBERSTAR. Thank you. Mr. Chairman, very much. I am sorry that I was late this afternoon. I had to attend a meeting -with the Federal Energy Commission on Canadian crude oil to our upper Midwest area. I was in a hurry to get back here, but I just wanted to say that Mayor Pearsall of Virginia, Minn., and my congressional district is one of the most knowledgeable people on this Federal water pollution control program, Mr. Chairman. He. in the past, has been a witness to this committee, and he has ~testified knowledgeably, and he is on the working end. He is one of those people that I talked about this morning, who single-hancledly runs interference for his community in his regulations for the Federal agencies, and Mayor, I read your testimony well ahead of time. I would like for you to explain just a little further for the committee the problems of industrial cost recovery, that long list of legal sized description of the various requirements that EPA has set forth for your community. It is one of the most incredible documents that I have seen, and something that our colleague, Mr. Walsh, was referring to this morning. Mr. ROBERTS. The statement of the mayor is already made a part of the record. It is an outstanding statement. Mr. OBERSTAR. I have no further questions. Mr. ROBERTS. I have one question for Mr. Costello. Last week the Association of Metropolitan Sewerage Agencies testi- fled that only one community in the United States has implemented an industrial cost recovery system. Only one in the whole United States. I am trying to get the basis for your statement that administrative costs for such a system would exceed the portion of the cost recovered. This seems to be contrary to what all of the other people have testified to. Mr. COSTELLO. I think the reason we are up on it, is that we are one of the first in the State of New Jersey to come up with these require- ments of the ordinance, audi we would be happy to submit a paper on that particular thing. Mr. ROBERTS. The Chair wishes to express the thanks of all the ~yitnesses who testified. The committee will sta.nd in recess subject to the call of the Chair. fWhereupon, at 3 :20 p.m., the subcommittee recessed~ subject to the call of the Chair.] [The following were received for the record:] PAGENO="0325" 319 CONGRESS OF THE UNITED STATES, HousE OF REPRESENTATIVES, Washington, D.C., July 14, 1975. Hon. ROBERT E. JoNEs, Chairman, House Public Works Committee, Rayburn House Office Building. D~&R MR. CHAIRMAN: Enclosed you will find a copy of a resolution drafted by the City Council of Grand Prairie in which that body expresses opposition to the limiting of Federal funding of wastewater Systems and support of the concept of delegating a greater portion of the management grants program to the states for administration. It is my hope that the resolution will become a part of the Committee record when hearings are held on the matter. I shall be available for comment on the specific needs of this particular community. Thank you very much for giving this matter your attention. With best wishes, I am, Sincerely yours, DALE MILFORD, ALU. RESOLUTION No. 1785 A Resolution of the City Council of the City of Grand Prairie, Texas, opposing reduction of Federal share of grant participation of meeting requirements of Public Law 92-500; opposing limiting Federal funding of reserve capacity of wastewater systems; supporting extension of the 1977 deadline for meeting water quality standards Public Law 92-500; and supporting the concept of delegating a greater portion of the management of construction grants program to the States. Whereas the City of Grand Prairie, Texas, has contracted with the Trinity River Authority of Texas for wastewater transportation and treatment services for said city; and Whereas Public Law 92-500 imposes severe and stringent requirements on waste discharges into public streams; and Whereas in order to comply with said requirements of Public Law 92-500, the Trinity River Authority of Texas has embarked upon a $110 million capital improvement program on its Central Regional Wastewater System; and Whereas the Customer Cities are financially obligated to bear the burden of all costs of said program not funded from Federal Grants; and Whereas the Environmental Protection Agency has proposed changes to Public Law 92-500 which will effect the City of Grand Prairie: Now, therefore, be it Resolved by the City Council of the City of Grand Prairie, Tewas: I. That the City is opposed to any reduction of the Federal Share of grant participation because (a) Funding was provided for in the Law to assist in meeting the severe and stringent requirements of Public Law 92-500 and the City expects the Federal Government to carry its share of the burden as Congress intended when the Law was passed; II. That the City is opposed to limiting Federal Funding of reserve capacity in wastewater systems because (a) such funding for reasonable reserve capacity was intended by Congress and (b) it would be a waste of public funds to construct wastewater facilities on such a short term basis as to be in a constant state of construction, duplicating facilities which can be built on a larger scale to serve reasonable future needs; III. That the City supports extending the 1977 deadline for meeting the Water Quality Standards as envisioned in Public Law 92-500 as proposed in Alternate No. 4 in Paper No. 4 published in the Federal Register on May 28, 1975 which would give the Administrator the discretion of granting extension of time based upon the availability of Federal Funds. However, the City goes on record as stat- ing that the 1977 deadline is unrealistic and cannot be met for the most part even with the availability of Federal Funds. PAGENO="0326" 320 IV. The City supports the concept of delegating a greater portion of the manag& ment of the construction grants program to the States for `administration. Passed and approved by the City Council of the City of Grand Prairie, Texas, this the 1st day of July, 1975. WILLIAM F. BOWLES, Mayor, City of Grand Prairie, Te~. Attest. /5/ MELBA FLAGG, City Secretary. CONGRESS OF THE UNITED STATES, HousE OF REPRESENTATIVES, TVashin.gton, D.C., October 20, 1975. ~Ofl. ROBERT E. JONES. Chairman, House Public Works and Transportation Committee, Rayburn House Office Building, Washington, D.C. DEAR MR. CHAIRMAN: Enclosed is a copy of the Resolution adopted by the Hibbing City Council opposing the Talmadge Amendment to the Public Works Federal Water Pollution Control Act. I hope that it will be taken into considera- tion and made a part of the record. With warm regards. Sincerely, JAMES L. OBERSTAR, MC. REsOLuTIoN OPPOSING THE TALMADGE AMENDMENT TO THE PUBLIC WORKS BILL (HR. 5247) AUGUST 26, 1975 Whereas the Federal Water Pollution Control Act Amendments of 1972 set forth wastewater treatment goals of: (1) the provision of secondary treatment by July 1, 1977: (2) the achievement of water quality which provides for the protection and propagation of fish, shellfish, and wildlife and provides for recrea- tion in and on the water by July 1, 1983; and (3) the elimination of all dis- charges of pollutants into navigable waters by 1985; Whereas the Minnesota Pollution Control Agency has adopted effluent and wafer quality standards; Whereas Minnesota would require in excess of $1.3 billion to meet these goals and standards; Whereas the shortage of money allotted to Minnesota by the U.S. Environmen- tal Protection Agency (EPA) enables us to fund only treatment works, major interceptors and cost effective sewer system rehabilitation, and not collection sys- tems, minor interceptors, storm water and sanitary sewer `separation, or storm wafer control or treatment; Whereas Minnesota would require approximately $775 million to cover only the aforementioned needs which we are currently able to consider for funding; Whereas as a result of the fact that the impoundment of $9 billion in con- struction grant funds for Fiscal Years 1973, 1974, and 1975 was ruled illegal by the U.S. Supreme Court, Minnesota was allocated $172,024,500 on February 27, 1975 to distribute to those cities with needs; Whereas the Fiscal Year 1976 Municipal Project List was compiled on the basis of this allotment, a public hearing was held, and the List was adopted by the Minnesota Pollution Control Agency Board on July 22, 1975; Whereas Senator Herman Talmadge of Georgia in an amendment to the re- cently passed Senate version of the Public Works Bill (5. 1587) has proposed changing the FY 1976 allocation formula from that based on the FY 1971 Needs Survey, by which the FY's 1973, 1974 and 1975 allotments were made, to one based 50% on the FY 1974 Needs Survey and 50% on population; Whereas under the new formula Minnesota stands to lose $24.2 million, which would reduce the FY 1976 Project List from 80 to approximately 16 in the Out- state Area and from 14 to 5 in the Metro Area; Whereas the passage of this proposal, which was not included in the previously passed House version of the Public Works Bill (HR. 5247), would have the great- est impact on the smaller metro and outstate projects; PAGENO="0327" 321 Whereas a change in the allocation formula at this late date would, from an administrative standpoint, significantly delay a program already far behind na- tionally in meeting its pollution abatement goals; Whereas the House and Senate versions of the Public Works Bill (to be re- ferred to as H.R. 5247) are to go to a House-Senate Conference Committee after the August recess for a resolution of the differences, including the Talmadge Amendment: Now, therefore, be it Resolved, That the Minnesota Pollution Control Agency strongly requests that the Talmadge Amendment be removed from H.R. 5247, and the allocations re- main as allocated by EPA on February 27, 1975; and be it further Resolved, That this resolution be sent to the Minnesota Congressional Delega- tion, the Chairman of the Senate and House Public Works Committees, and the House-Senate Conferees. The motion to adopt the foregoing resolution was duly supported by Council- man Kaim, and upon being put to vote, carried as follows: ~ adoption: Councilman Caucci; Councilman Kaim; Clerk Ganrity; and Mayor Lund. Absent: Councilman Collins. Against adoption: None. Adopted and passed this 29th day of September, 1975. KENNETH R. LUND, Mayor. Attest. PATRICK L. GARRITY, Clerk-Treasurer. STATEMENT OF HON. G. V. (SONNY) MONTGOMERY, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF MISSISSIPPI The construction of wastewater treatment facilties to meet standards estab- lished by the Clean Water Act of 1972 is progressing at a slow pace. There are numerous reasons to which this may be attributed and among them is the multi- tude of review actions which must be taken, including compliance with EPA requirements. The process of application approval is time consuming, to say the least, requires a tremendous amount of correspondence and paperwork, and results in unnecessary delays in construction of these facilities throughout the United States. Consequently, many communities throughout the United States, which would have already raised funds for matching federal grants, are encountering un- necessary red tape and are unable to embark on the planning of municipal waste- water treatment facilities. This is one instance in which the federal government is faltering and it seems apparent that the entire process cannot be administered through the Environmental Protection Agency. Legislation introduced by Mr. Cleveland offers a logical solution to the dilemma. HR 6991, which enlarges the role of the states in the development of wastewater treatment projects, has been co-sponsored by more than 130 Members of Con- gress. Also, of significance is the fact that EPA is fully convinced that this ap- proacli is a sound one and has no objection to the legislation. The implementation of the proposals stated in the bill would not only give each state more responsibility in this area, but would also actually strengthen the relationship between states and the federal government. States would be allowed to certify to their compliance with requirements or conditions before taking on additional responsibility. However, this bill has carefully guarded the authority of the Administrator by including a stipulation that acceptance of state certification can be suspended in case of failure to comply or live up to certification standards. Too, certification and other functions would be taken on by the states voluntarily and would leave each state to decide if it wishes to participate. Some may not have the necessary capabilities at first, but the bill would be an incentive for those states to meet the standards of certification. Today, stepping up the construction of facilities such as these is important in that continued inflation serves to reduce the worth of the construction dollar. Jobs are needed in the hard-hit construction industry, and this legislation would enable more workers to return to their jobs, thereby stimulating our economy in other ways. PAGENO="0328" 322 Not to be excluded is the prime benefit-the improvement of water resources as additional facilities are built. I believe that the Cleveland-Wright Bill would be instrumental in advancing the progress of clean water quality and for this. reason and the above considerations, I ask that the Committee~ consider it favorably. STATEMENT OF Hox. ROBERT W. KASTEN, JR., A REPRESENTATIVE IN CONGREss FROM THE STATE OF WISCONSIN Mr. Chairman and members of the committee: In October 1972, Congress passed the Federal Water Pollution ControL Act Amendments over President Nixon's veto. The act, which set as a national goal the achievement of "zero discharge" of pollutants by 1985, provided for stringent regulations to help achieve the national goal, including attainment of best practicable technology" by 1977, and "best available technology" by 1983. Unhampered, this law will bring to an end the harmful discharge of inade- quately treated municipal sewage into our nation's waterways. In enacting the Federal Water Pollution Control Act (FWPCA) amendments of 1972, Congress sought "to restore and maintain the chemical, physical and biological integrity of the Nation's waters." The program devised to reach this ambitious and admirable goal represents one of the most comprehensive and complex legislative programs to combat environmental pollution that any industrialized nation has ever attempted. For municipal sew-age treatment facilities, "best practicable technology" has been defined by the Environmental Protection Agency as achieving "secondary treatment"-sedimentation followed by biological treatment of wastes. For this extremely costly proposition, Congress authorized $18 billion in contract authority to States for constructing municipal waste treatment facilities, including $5 billion for fiscal year 1973 and $9 billion for fiscal year 1974, and $7 billion for fiscal year 1975. Sewage treatment funds which are distributed to the States according to their "needs," can be obligated by the States only upon approval of each project by the Environmental Protection Agency. For a variety of reasons, however, the obligation of waste treatment construc- tion funds by the Agency has been proceeding at a rate far below expectation. Last year, following oversight hearings on the FWPCA by the House Public Works Committee, chairman of the committee, Mr. Wright identified some of those problems: "The clean water program-the bold initiative of the last Congress, l)y which we sought urgently to put in motion a massive clean-up of the Nation's streams- has lagged and faltered for the past 15 nionths. "Cut to less than half its intended size by a series of arbitrary executive im- poundments, the program has been further emasculated by an almost unbelievable proliferation of administrative red-tape. "Incredible though it may seem, the administration has managed to construct a fantastic maze of baffling guidelines, changing directives which have brought what was an ongoing program to a virtual halt. "These `bureaucratic impoundments' have choked off the flow of funds even more drastically than the overt Presidential impoundments." While it is not quite apparent as to where the blame should be placed, it is nevertheless essential that the program for approving municipal construction grant projects be expedited, particularly in view of the recent Supreme Court decision which made available $9 billion for the construction of these facilities. I cosponsored H.R. 2175, that has now been included as Section 8 of H.R. 9560, the proposed Federal Water Pollution Control Act Amendments of 1975. This legislation is the necessary vehicle for increasing the rate of obligation of these funds through the "state-certification" procedures established by the bill. Basically. States meeting the appropriate aualifications can enter into agreements with EPA to carry out specific responsibilities required under the construction grant program, which in the past have been assumed by EPA officers here in Washington. In addition, Section 8 would ultimately reduce th.e unnecessary duplication of Federal and State efforts and provide for a more continuous rate of approval of construction projects and subsequent obligation of sewage treatment funds. There is a 28-step process to obtain federal money meaning that it takes at least two years from the time the process begins until bids can be sought for construction. These delays, together with inflation, have driven construction costs up. I am PAGENO="0329" 323 pleased to note that the Environmental Protection Agency supports this provision and it has been endorsed by the Office of Management and Budget. The Department of Natural Resources in Wisconsin foresees that very few municipalities in the State will be able to comply with the July, 1977 secondary treatment standards due partially to the Nixon administration's impoundment of funds and partially the length of time for reviewing each project as required by EPA. Under the Clean Water Act, all municipal sewage is to receive by July, 1977, at least a secondary level of treatment, eliminating particles from water, before the effluent is sent to streams and rivers. If we are to achieve the goals set forth under the Act, we will need to utilize the capabilities of the State and local governments and enlarge upon their responsibilities in the municipal sewage treatment construction program. While I believe that the course set out in the 1972 Act will ultimately lead to a network of clean lakes, streams and rivers of which we can all be proud, we do need to assess periodically the progress and problems encountered in admin- istering the Act and make mid-course corrections when justified. H.R. 9210, another bill cosponsored to amend Section 204(b) of the act, is such a mid- course correction. As currently enacted into law, Section 204 (b) requires that the operation and maintenance of federally funded waste water treatment works be financed through a system of direct user charges so that each recipient of waste treatment services pays its proportionate share of the costs of operation and maintenance of the facility. In theory, the present Section 204(b) requirement would seem to raise little objection, but as a practical matter this requirement has served to retard the waste water treatment construction grant program. Many communities across the country have for years financed the operation of their sewage treatment works through an ad valorern tax-based system. This system has worked well. Communities have been able to finance their treatment works in an equitable fashion without incurring large administrative expenses in collecting the necessary revenues. In Milwaukee, and other parts of Wiscon- sin, the ad valorern tax assessed for sewage construction plants is included with the users property tax thus allowing the user to deduct this cost from his income tax. In this way, the ad valorem tax in Wisconsin further benefits many citizens. Unless Section 204(b) is amended, those communities which have historically utilized an ad valorern tax approach to financing the operation of their sewage treatment plants will be placed in the untenable position of having either to abandon their present, efficient systems of financing their sewage treatment plants or be declared ineligible to receive Federal funds to construct new and improved facilities. In some communities, local laws stip- ulate that ad valorem taxes are the only authorized means to finance waste treatment works. There is in adequate justification to sustain the present Section 204(b) re- quirement. Requiring communities that have a proven history of meeting the operational expenses of their sewage plants through an ad valorern tax-based system to develop new financing systems is an unwarranted Federal intrusion into an area that need not be so rigidly controlled from Washington. The original goal of Section 204(b)-to insure that the users of publicly funded facilities pay their fair share of the maintenance costs-is preserved in H.R. 9210. Proportionality among the classes of users-industrial, commercial, and resi- dential-would be maintained. A system of industrial surcharges would be implemented so that industrial users of municipal sewage treatment plants w-ould pay their proportional share of operation expenses and be given an ineentive to reduce the volume and strength of their wastes. The soundness of HR. 9210 is indicated by the broad support it has received. It also has the backing of the Environmental Protection Agency which has already drafted an environmental impact statement reporting that the advan- tages of allowing communities to continue ad valorern tax based systems plus variable surcharges outweighed the potential adverse impacts which were found not to be significant. State and local pollution control officers testified in congressional hearings this spring that they support the use of ad valorem taxation and I have noted bipartisan support in Congress for this legislation. Given the proven efficiency of an ad valorern tax approach, I can find little reason for Washington to require communities across the country to make an administratively complex and costly switch to a direct user charge system. At present. the Environmental Protection Agency has withheld the full Federal share of waste water treatment construction grants to communities that utilize PAGENO="0330" 324 a~f valorem tax systems. It is estimated that approximately 25 percent of the Nations' urban population is in cities with ad valorern systems. Failure to amend Section 204(b) can only work to hamper implementation of the construction grant program under the Federal Water Pollution Control Act and impede the efforts being made across the country to halt the discharge of environmentally offensive substances into our waterways. The passage of HR. 9210 will eliminate an unduly restrictive provision of the existing law that has thwarted the construction of much-needed municipal waste water treatment facilities. We must accelerate the development and approval of municipal sewage treat- ment projects by enlarging the responsibility, authority and discretion of the States, making them genuine partners in the Federal-State program. STATEMENT OF Hex. EDWARD RousH, A REPRESENTATIVE IN CONGREss Fao~r THE STATE OF INDIANA Mr. Chairman, it is a pleasure to present to you this statement to discuss issues associated with providing clean w-ater throughout the United States. I am, of course, particularly interested in my own state of Indiana, but the matters I will address myself to today affect many other states as well. I would like to first talk about amendments I have introduced to the Federal Water Pollution Control Act that have to do with Section 200(a) of the Water Quality Amendments. In 1972, when the Water Quality Amendments were enacted, the Congress decided to terminate the so-called reimbursement program under the municipal sewage treatment grant provision of the law-, but to appropriate sufficient funds ($1.9 billion) for making the reimbursement grants to communities already constructing under the old program. A few communities got caught in the transition period and then found them- selves not eligible to receive their share of the funds. Usually these were small communities, in many cases operated by part-time city officials with neither the resources nor the staff expertise tO plead their case. Their problem is that Section 200(a) requires that construction of a project must have been initiated between July 1, 1960 and June 30, 1972 if it were to be eligible for reimbursement. Yet, the 1972 law did not pass until October of that year. Let me give you an example. In my home state of Indiana three communities were caught in this unfortunate situation, one of these is in my district, LaGrange. Indiana. The situation there is typical. This community of about 2.000 population was under order by the Indiana Stream Pollution Control Board to install phosphate removal equipment. They decided to provide the equipment and apply for a reimbursement grant. An engineering firm was em- ployed, plans were drawn up. These were submitted to the state agency and the Environmental Protection Agency. An advertisement for bids was published and a contract was signed. Unfortunately for LaGrange, the contract was signed on July 3. 1972. only three days after the deadline imposed by the bill that finally became law later that year. Obviously, this did not become clear to LaGrange until much later when the EPA, with the law in hand, refused to accept an application for reimbursement on the basis of the July 3 contract date. In the case of LaGrange, and I suspect most other communities which find themselves in a similar situation, the amount of the possible reimbursement is not large in comparison to most expenditures-$35,000. To LaGrange, how- ever, this represents nearly one year's gross revenue from the entire sewage treatment operation. It is a large sum to the LaGrange residents. And it is unfair. The amendment that I l~ave introduced, HR. 5536, 5973, and 0539 with co-sponsors. would provide that the cut-off date should be effective with the passage of the law, October 18, 1972, rather than the July 1 date- thus providing some protection and equity to these small communities which w-ere u-eli on the way with their designs and plans when they were hit with what amounts to a retroactive dateline. I should also like to mention that my bill allows those communities which fall under the provision of this amendment a reasonable amount of time, six months, to file applications for reimbursement. HR.. 0560. introduced by yourself. Mr. Chairman and other members of the Cnmmittee, including the Chairman of the full Committee, addresses itself most adequately, as far as I am concerned, to this reimbursement problem that my PAGENO="0331" 325 bill covers. There' are a few differences, but these are totally acceptable to me. ER. 9560 extends the dateline for initiation of construction until July 1, 1973, whereas mine only provides until October 18, 1972. You provide for an increase in the authorization ceiling of $350,000,000, which I had not included, and instead of the 6 months period to allow communities brought in under this provision to apply under Section 206(a), you allow 90 days. I am in perfect agreement with these provisions as well. The second matter that I wish to take up has to do with Section 314 of the Water Pollution Control Act Amendments of 1972. This "Clean Lakes" section of the act provides funds for research and demonstration projects-exactly what we most need for our lakes in Indiana. The provisions of Section 314 are for demonstration projects to demonstrate how eutrophic lakes can be restored to a less eutrophic condition. Section 314 has not been given a chance to work because it has not been carried out or funded. The tragedy of this is that a demonstration project, car- ried to a successful completion, has more chance of sparking imitations at other than the government financed level than any other type of demonstration project. This is because, in general, eutrophic lakes are surrounded by significant areas of privately owned property. The typical lake property owner can call on some financial resources to clean up a lake and thereby increase the value of his real estate holdings. The problem is not to get lake property owners to under- take projects; it is to prevent them from undertaking ill-advised projects. The total environmental quality of a heavily populated lakes area can be greatly enhanced by the successful demonstration of lakes restorative tech- niques in the area. The value to society in doing this is that these lakes will last as a natural asset for several generations instead of only a few years. My Congressional District has from 400 to 500 Lakes, perhaps all but about 20 of these are in a serious state of eutrophication. Demonstration of methods for restoring them would be of great environmental, social and economic benefit. Lakes in the Northeastern Indiana area under study by the EPA include Crooked Lake, Dallas Lake, Hamilton Lake, Lake James, Long Lake, Oliver Lake, Pidgeon Lake, Sylvan Lake, Wrestler Lake and Witmer Lake. Each of these is a prime candidate to assistance because the eutrophication studies being conducted by EPA are expected to pinpoint restorative or pro- tective steps needed to restore good water quality. I was a sponsor of the Clean Lakes Act, which Section 314 embodies. As you are well aware, this Section has not been given a chance to work and that is why I am appealing to this Subcommittee to see that its authorization con- tinues. Since I-I.R. 9560 provides fo'r an authorization of $150,000,000 per fiscal year 1975, 1976, and 1977, I believe you share my interest in this Section. For the past several years I have urged appropriations for this program. The total authorization in the initial legislation provided for $300 million for fiscal 1973-75. Yet all that has actually been appropriated is $4 million which was .put in the Agriculture-Environmental-Consumer Protection Appropriation bill for 175 and that was included in spite of the fact that there was no Administration request for funds. This year the Environmental Protection Agency was transferred to the juris- diction of the HUD-Space-Sciences Appropriations Subcommittee, on which I serve. I questioned EPA at length on this subject, since once again no budget request was made. At that time they said that they had funded no projects but expected to do so in fiscal 1976, something like 8-10 projects. Just last week I contacted EPA for an up-date and found that they have re- ceived 24 applications from State Agencies and hope to obligate funds for at least 10, perhaps 14 or 15 projects, by the end of the year. I find tins very unsatisfactory. I would respectfully submit that any assist- ance this Commitee could give in prodding the agency to fulfill this Congres- sional mandate would be greatly appreciated. I intend to continue pressing this matter upon them when they come before the Appropriations Subcommittee for review. STATEMENT OF HoN. J. KENNETH RoBINsoN. A REPRESENTATIVE IN CONGRESS FRoM THE STATE OF VIRGINIA Mr. Chairman, as a cosponsor with the gentleman from New Hampshire, Mr. Cleveland, and the gentleman from Texas, Mr. Wright of H.R. 7418, which is PAGENO="0332" 326 ~identical with their H.R. 2175, I appreciate this opportunity to express to this distinguished Subcommittee my support of Section 8 of B.R. 9560, "Federal Water Pollution Control Act Amendment of 1975." There clearly exists a need to streamline administrative procedures for the certification of urgently-needed projects designed to advance the clean water objectives to which all of us here subscribe, although we may have varying views ~as to the necessity and practicability of the application of certain standards in T~uarticular situations. Permitting project approval by the Administrator of the Environmental Pro- tection Agency on certification of a State water pollution control agency would reduce paperwork, lag time and-in this period of continuing inflation-project costs. This is a eminently reasonable arrangement, which retains in the Administra- tor authority to suspend acceptance of State agency certifications when any such agency is found to have failed to observe the requirements of the Act, as estab- lished by the Congress. I can support Section 8 of the pending bill in the confidence that the State Water Control Board of the Commonwealth of Virginia has been, and will con- tinue to be sedulous in the discharge of its responsibilities under the Act. Additionally, on behalf of the Governor of Virginia, I invite the consideration of the Subcommittee to the need for new obligational authority under Title II of the Act. STATE or CONNECTICUT, ExEcwnvE CHAMBERS, Hartford, Conn., September 18, 1975. Hon. RAY ROBERTS, Chairman, Subcommittee on Water Resources, Committee on Public Works and Transportation, U.S. House of Representatives, Rayburn Office Building, Washington, D.C. DEAR CONGRESSMAN ROBERTS: It is our understanding that the Subcommittee on Water Resources will be holding hearings later this month on proposed amendments to the Federal Water Quality Control Act of 1972, HR. 9560, particu- larly with regard to the funding provisions for the 208 water quality planning program. We understand the committee's need and desire to limit the number of speakers and I will personally be unable to attend the hearing because of previous corn- mitments that will find me out of the country. `in my absence, however, I would respectfully like to submit for your review a `~tatement outlining Connecticut's problems with the 208 water planning program rand our support for the amendment to continue 100 percent federal funding of this -`worthwhile federal legiSlation. `My accompanying statement is attached and Commissioner Joseph N. Gill of the Connecticut Department of Environmental Protection and Commissioner "Lynn Alan Brooks of the Department of Planning and Energy Policy are avail- :~able at any time to you or your staff concerning additional questions you may Thave on our position. With best wishes, Cordially, ELLA GRASSO, Governor. Enclosures. STATE OF CONNECTICUT, EXECUTIVE CHAMBERS, Hartford, Conn., September 18, 1975. Hon. ABRAHAM A. RIBIC0FF, U.S. Senate, Old Senate Office Building, Washington, D.C. DEAF. ABE: As you know, Connecticut has been concerned with potential fund- ing for the federal 208 water quality planning program. Later this month, the Subcommittee on Water Resources of the Committee on Public Works and Trans- portation will be holding hearings on the 208 program and other important ele- ments of HR 9560. I have previous i~lans to be out of the country on a brief vacation, and there- fore will be unable to testify personally at the hearings in Washington. PAGENO="0333" 327 The commIttee, however, has agreed to accept my written testimony. Enclosed is a copy of the testimony I submitted to Chairman Ray Roberts of Texas to better outline Connecticut's position on this important legislation. We have noted your past support for our efforts to obtain maximum federal funding for our clean water programs, and hope you will continue your active involvement in this matter. With best wishes, Cordially, ELLA GRASSO, Governor. STATEMENT OF GovERNoR ELLA GRASSO The State of Connecticut has always been a leader in water pollution control. In the legislative sphere, our 1967 Clean Water Act provided a pattern subse- quently adopted by the federal government. Administratively, Connecticut was one of the first states to be authorized to issue federal permits under the national pollutant discharge elimination system. Most important, our rivers and streams are among the cleanest ill the country- 93 percent are now of suitable quality for fishing and swimming, a real accom- plishment for a heavily industrialized state. Clearly, Connecticut has made a strong commitment to clean water. We have authorized $325 million in state funds for municipal treatment plants and untold millions of private funds for industrial treatment. I am pleased, therefore, to see the House Subcommittee on Water Resources sponsoring a bill which would help all of the states advance their clean water programs. The provisions of paramount importance to Connecticut are Section 2, which provides additional authorizations for funding a variety of important programs for fiscal years 1976 and 1977; Section 5, which increases the funding level avail- able to states which pre-financed treatment plant construction prior to July 1, 19~3; and Section 6, which continues 100 percent federal funding for the first two years of state areawide wastewater management planning. I would briefly like to discuss each of the sections which we believe are most important to Connecticut. Section 2-The extension of the funding authorization to continue the various programs established by PL 92-500 is crucial to the future of the nation's water pollution abatement effort. We are especially pleased to see that Congress has recognized that efforts to achieve the goals of PL 92-500 have required ex- penditures by state water pollution control agencies which are currently ex- ceeding historical expenditures. By providing for this recognized need for in- creased funding under Section 106, Congress will significantly improve the pros- pects for continued enhancement of water quality in the states. Section 5-We support the addition of $350 million to the $2.6 billion authorized to reimburse states, like Connecticut, that pre-financed sewerage construction projects prior to July 1, 1973. Connecticut has used this pre-financing mechanism to move many projects forward. We contracted nearly $148 million, while pre- financing was authorized. Some of that total has been reimbursed under previous authorizations, but $45 million in outstanding obligations still remain to be repaid by the federal government. We are also aware that the demand for funds exceeds present authorized levels. Therefore, we urge authorization of the addi- tional funds to assure that Connecticut, which advanced funds to move ahead on pollution control projects, can recover its good faith expenditures for this pro- gram authorized and encouraged by the federal government. Section 6-We support the extension of the 100 percent funding level for FY 76 and 77 to enable states to develop areawide wastewater management on a state- wide basis. With our history of leadership in the clean water field, we were plea'sedi by the prospect of doing much-needed areawide wastewater management planning under the original authorization of Section 208 of PL 92-500. In fact, Connecticut adopted a statewide approach similar to, but in' advance of, one later mandated by the federal courts. This statewide approach was de- signed, in cooperation with regional officials, to assure that every region of the state would benefit from the program. We worked closely with the New England Region of the Environmental Protection Agency in moving the application past the many administrative hurdles now familiar to all of you. The result of this PAGENO="0334" 328 administrative process was an application endorsed by nearly all of the 169 towns in the state, the Connecticut General Assembly, and finally the Region I office of EPA. The completed application was submitted prior to the federal deadline, and we were confident that we would receive 100 percent funding for FY 76 and 77. Unfortunately, ours was one of many applications which were not funded, despite the fact that our application was complete and submitted on time. We wish to move forward with the program and, therefore, strongly support this section of HR 9560. We believe that Connecticut and other states were ham- pered by federal delays in promulgating regulations to implement Section 208 and should be given the chance to receive 100 percent funding. At the very least, we would like to see 100 percent funding for those states and regions which applied with acceptable programs on time, but were told that the money was otherwise committed. In addition, we feel that the impact of the recent court decision ordering a statewide approach should certainly be carefully considered by the Congress in determining both the degree and the level of funding for the 208 program over The next two years. The states are experiencing extreme financial difficulties, as you are well aware, and a 75 :25 percent cost share for even such a desirable program as this would experience tough competition for diminishing state and local revenues. The program is a good one, but in order to be accepted by the states at this time it must carry 100 percent federal funding. In summary, we feel that HR 9560 is an excellent piece of legislation which would maintain the momentum of state and federal clean water programs. We support significant portions of the bill and have tried to note briefly our particular interest in specific sections. Thank you. STANTON, PRIED & Co., Haekensctck, N.J., September 26, 1975. Hon. RAY ROBERTS, C1iairm.an~ Subcommittee on Water Resources of the Committee on Public Works and Transportation, Congress of the United States, House of Representatives, Rayburn House Office Building, Washington, D.C. DEAR SIR: Our firm is engaged in the capacity of auditors and advisors by the East Rutherford Sewerage Authority, which authority is in the State of New Jersey. The Commissioners of the Sewerage Authority have directed us to pre- pare the statement which is contained in the body of this letter. The statement is intended to make known to the members of your committee, the feelings of the East Rutherford Sewerage Authority Commissioners regarding the bills HR 95130 and HR 4169. The Commissioners wish to direct their remarks specifi- cally to the issue of the use of ad valorem taxes as a method of collecting opera- tion and maintenance costs. While it is apparent that the use of ad valorem taxes, as a method of collecting operation and maintenance costs. might in some cases result in a substantial inequity in the distribution of charge to classes of users, it is also true that in certain instances there would not be a substantial inequity. To the extent then, that the previous law substantially forbade the use of ad valorem taxes as a method of collecting sewer charges, it (the law), in thosecases where no inequity existed, created an unnecessary hardship. In referring to the hardship involved, in collecting sewer charges using a sys- tem not based on ad valorenl taxes, I am referring to, of course, the cost of sep- arate billing and collecting. This cost in many instances can be very great in proportion to the per user charge assessed. I feel that the word `substantial" in referring to the proportionality of the amount charged to various classes of users is important for the reason that even the most scientific means available of levying a user charge on each individual user can not be expected to be one hundred percent proportional. I would like to address myself specifically to the situation in the Borough of East Rutherford. The East Rutherford Sewerage Authority was established in 1968. The Authority was established for the purpose of constructing and main- taining sewers in the meadowland section of the Borough. This section of the Borough was strictly industrial. Due to the nature of the land, the cost of pro- viding sewers was extremely high. The "Upland" section of the Borough was PAGENO="0335" 329 predominantly residential. The sewers in that section had been constructed in the past by the Borough at a significantly lower cost. In 1971 the "Upland" sewers were deeded to the East Rutherford Sewerage Authority. Since `then, the Authority has had the jurisdiction and the responsibility over all sewerage matters in the Borough of East Rutherford. The cost of acquiring and main- taining the `Upland" sewers and of treating "Upland" sewerage is significantly less than similar costs in the meadowland area of the Borough. It is estimated, at this time, that the actual cost to the Authority of operation and maintenance, when allocated proportionally, would result in a charge to the residential class of users of approximately 10 percent of the total charge. The added cost to the Authority to charge and collect this amount on an individual user basis would probably consume 20 percent of the residential user charge thus collected. I' offer the situation in East Rutherford as one example of the need for allow- ing the administrator to approve a charge system based on ad valorem taxation, if he determines that such a system will result in the collection of a charge substantially proportional among classes of users. I feel that the case in East Rutherford is by no means the classic case of using ad valorem taxes to collect operation and maintenance costs without effecting a substantial disproportion- ality between classes. It is my intention, however, in addressing this letter to your committee, to indicate to you the feelings of the commissioners of the East Rutherford Sew- erage Authority and I believe the feelings of the large majority of the users of the sewerage system in the Borough of East Rutherford. \Tery, truly yours, JAN~Es J. STANTON, CPA. `CONTINENTAL SCREW Co., New Bedford, Mass., September 26, 1975. Hon. RAY ROBERTS, Gl~airman, Subcommittee of T'Vater Resources, House Committee on Public Works and Transportation, Rayburn House Office Building, Washington, D.C. SIR: With reference to the present hearings conducted by your Subcommittee on the possibility of modifying the provisions of the Clean Waters Bill as it re- lates to municipal waste treatment construction, I and' my committee ask that this letter be included in your hearing record. Our committee represents over, thirty industries in the Greater New Bedford Area of Southeastern Massachusetts. We represent an employment of over 10,- 000 people and an annual payroll in excess of $100 million. Our concern emanates from certain mandatory provisions of the Federal Water Pollution Control Act (PL 92-500). The city of New Bedford employed the firm of'Camp, Dresser & McKee, a rep- utable Boston engineering firm, to make a detailed survery of the needs ,of this area to come in full compliance with the Act and to make recommendation as to the necessary modifications or construction to bring such compliance within the time allotted. Camp, Dresser & McKee came up with a detailed study which, in summary, recommende'd many modifications and expansions upon the recently constructed primary plant now in existence and included the proposal of a secondary treat- ment plant. The cost was estimated at approximately $37 million, the bulk of w hich could be asaigned to the secondary treatment plant requirement The city of New Bedford borders Buzzards Bay, `which is part of the Atlantic Ocean. We, therefore, feel we fall in the, category of an "ocean out- fall" location. Camp, Dresser & McKee believe that, with a comparatively modest expenditure of a couple million dollars to the present primary treatment' plant, effluent into the ocean outfall would comply with the purity standards: `of the State of Massachusetts and of the EPA Recently, the Environmental Protection Agency held public hearings on potential legislative amendments to the Federal Water Pollution Control Act. This was done because of the attention given to situations such as w e ha~ e here in New Bedford, also where `there is the likelihood that insufficient time remained for compliance, and, in addition, the report from Budget, and Man- agement that their survey indicated a requirement of approximately $350 billion in municipal facility construction to meet the requirements of the Act. Our coimnittee is completely behind the ?bj~~t5 of the Act and asks only PAGENO="0336" 330 that our legislators give full consideration to the practical considerations or reaching these objectives. In view of the engineering study completed for our treatment requirements, we are convinced, as is our local government, that such an expenditure for a secondary treatment plant is superfluous. We ask that consideration be given to modifying the Act so that the ultimate goal of pure water standards is reached without mandatory, but unnecessary, facility construction. Should such a modification be impractical at this time, we strongly recommend an extension of compliance time during which further studies be undertaken to confirm our position and the position of those in similar circumstances or to justify the necessity of these huge expenditures. The companies we represent in this area are doing everything possible to alleviate the volume of waste effluent to be treated, but a survey has indicated that individual treatment plants for each business enterprise is beyond the realm of financial practicality at this time. We, therefore, are dependent upon municipal treatment service with its attendant financial obligation to the users. Thus, we urge serious consideration of our request to modify the present language of the Act as it pertains to "ocean outfall" installations. Respectfully, GEORGE A. BENTLEY, Chairman, ~\Tew Bedford Industrial Wastewater Committee. STATEMENT OF THE ASSOCIATION OF AMERICAN RAILROADS The Association of American Railroads submits for inclusion in the record on H.R. 9560-"Federal Water Pollution Control Act Amendments of 1975"---- its views about a particular provision of the bill, namely Section 12. This section is intended to amend Section 311 of the Federal Water Pollution Control Act in several respects. Presently Section 311 requires that the Administrator of the Environmental Protection Agency identify hazardous substances which cannot actually be removed from water and establish a schedule of penalties which would be assessed for the spill or discharge of such substances. The Administrator is given the discretion to impose either a penalty ranging from $500 to $5,000 based on the toxicity, degradability, and dispersal characteristics of the sub- stances discharged or a penalty based on the number of units discharged with a maximum of $5 million for discharges from a vessel and a maximum of $500,000 for discharges from onshore or offshore facilities. EPA has encountered substantial difficulty in determining precisely which hazardous substances are not actually removable from water because the terms "remove" or "removal" are defined in Section 311(a) (8) as including minimization or mitigation of damage. Therefore, the EPA has supported the provision in Section 12 of H.R. 0560 which would preclude the necessity for identifying these substances which are not "actually removable." If adopted, this provision would key the assess- ment of a penalty to the spill or discharge of any hazardous substances rather than keying the penalty rates to the spill or discharge of hazardous substances which cannot "actually be removed" as the law presently provides. Subject to the qualifications which will subsequently be expressed, the AAR does not oppose this provision in Section 12 in H.R. 9560 which would simplify EPA's administration of Section 311. Section 12 of H.R. 9560 would also reduce the existing maximum penalties which might be assessed from $5 million for spills and discharges from vessels and from $500,000 for spills and discharges from onshore and offshore facilities to a more reasonable $50,000 maximum. Additionally, in any case where it can be shown that the discharge was the result of willful negligence or willfull misconduct within the privity and knowledge of the owner or operator of the vessel or facility, such owner or operator would be subject to a civil penalty. without limit, in such amount as the Administrator determines. The AAR supports this rationalization of the penalty structure. It should be noted that sufficient incentives currently exist which will influence the common carrier of property by railroads to take all possible measures to prevent the loss of lading and the imposition of extremely high penalties for the discharge of hazardous substances does not add an additional measurable incentive as much as it creates a disincentive to carry the products which are an absolute necessity In our complex industrial economy. The establishment PAGENO="0337" 331 of a $50,000 limit for discharges or spills, other than those involving willful) negligence or willful misconduct, will preserve the deterrent impact of the penalty schedule. As previously noted, Section 12 would provide that there be no limitation on the potential penalties where the spill or discharge is the result of willful negligence or willful misconduct. To this, the AAR has no objection. However,. the bill would also provide that in the event a hazardous substance has been discharged and the owner or operator fails to take the removal actions deem&L appropriate by a responsible Federal officer, such action would automatically constitute willful misconduct and subject the discharger to the potential un- limited penalty. The AAR views this provision as threatening grave consequences on railroad operations, with little or no benefit to the effectiveness of clean-up efforts. Therefore, the AAR respectfully requests that the Committee delete that sentence beginning at line 7 of page 12 of HR. 9560. In the first instance, this definition of willful misconduct is inappropriate because it would purport to change the characteristics of the circumstances giving rise to the spill or dis- charge as a result of actions taken after the spill or discharge occurred. There can be no reasonable justification for such a novel concept. Either the spill or' discharge resulted from willful misconduct or it did not. Subsequent action or inaction by the owner or operator cannot act to change the characteristics of the cause of the spill or discharge. More importantly, however, this provision pre-- eludes consideration of the fact that actions taken by the owner or operator to remove the substance spilled or to mitigate the damages which might result may be as reasonable, and possibly more effective, than the actions deemed ap- propriate by the responsible Federal officer. The potential for crippling inter- ference with railroad operations would be enormous. This provision would. unjustly subject the owner or operator to an unlimited penalty just because the removal or action in mitigation of damage was not consistent with procedures deemed appropriate by the Federal officer with., no consideration given to the reasonableness of the action taken, or to other important public needs--safety, protection of emergency workers and railroad employees, and protection of property. This provision in H.R. 9560 is simply not needed. Its elimination would not diminish the effectiveness of the Federal officer acting pursuant to the National Contingency Plan in accordance with Subsection (c) of Section 311. The re- sponsible Federal officer is authorized to act to remove or arrange for the removal of a hazardous substance in the event he determines that such removal is noI being done properly by the owner or operator and in that event such owner or operator will be liable for the clean-up costs incurred by the responsible Federal officer. The owner or operator of a vessel may be liable for up to $14 million and the owner and operator of onshore or offshore facilities may be liable, up to $8 million for such clean-up costs. The `members `of the AAR view this as a sub- stantial poteatial liability and a significant influence in determining the ap~ propriate clean-up measures. If the EPA has in its experience been confronted with owners or operators' that have taken no action to remove the substances spilled or discharged and who have failed to take action to mitigate the damages resulting from such spills or discharges or if the EPA anticipates such situations in the future, a specific' legislative remedy should be designed to take care of that problem. Section 311(b) (5) of the Federal Water Pollution Control Act now requires that any person in charge of a vessel or of an onshore or offshore facility im- mediately notify the appropriate agency of the U.S. Government of any discharge of a harmful quantity of oil or hazardous substances. The harmful quantity of each substance is to be determined by the Environmental Protection Agency pur- suant to Section 311(b) (4). Section 12(b) of H.R. 9560 would require that any discharge of oil or any discharge of a hazardous ,substance be reported. The apparent explanation for this amendment is that it will provide the EPA with a broader data base and will relieve the owner or operator of the burden of determining whether the amount discharged equalled or exceeded a harmful quantity of the particular substance. Significantly, however, Section 311(b) (5) also provides that failure to notify the appropriate agency will subject the owner or operator, upen conviction, to a possible fine of not more than $10,000 or imprisonment for not more than one year. HR. 9560 would not amend this criminal penalty provision. - While there may have been justification for imposing such a severe crimina I penalty for the failure to notify the appropriate agency of the spill or discharge 63-192----76-----22 PAGENO="0338" 332 of a hazardous substance in an amount equal to or exceeding a "harmful quan- titv", it would be unconscionable to require notification of all spills or discharges no matter how small and yet retain the same criminal penalty for failure to give such notification. In effect, the provisions of Section 12(b) in HR. 9500 would change the character of the offense and yet retain the previously existing penalty. The law should not subjeet a person to this severe criminal penalty for failure to report a discharge which might be so small that the civil penalties established pursuant to other portions of Section 311(b) would not be assessed. We recoin- mend that a de minimis standard be established so that the failure to report spills of less than a "harmful quantity" of a substance would not subject the owner or operator to possible criminal liability. There are several other aspects of. Section 12 of H.R. l~560 which should be clarified either through an amendment or through definitive statements in the legislative history of this bill. In the proposed new subparagraph (B) of para- graph (2) of Section (b), the phrase "characteristics of the substance dis- charged" upon which penalties are based should be expanded to specifically in- clude the toxicity, degradability, and dispersal characteristics of the substance. Furthermore, the Administrator should be required to consider the quantity of the substance discharged. In addition to requiring a consideration of the specific characteristic of the substance and the quantity discharged, the Administrator, in all cases, should be required to consider the damage to the public health and welfare. Finally, the legslative history should reflect the fact that when the Administrator takes into account the actions taken by the owner or operator to prevent such discharge and to remove the substance discharged this encom- passes actions takeii to mitigate the effects of the discharge. AMERICAN INSTITUTE OF MERCHANT SHIPPING, TVasliington. D.C., September 30, 1975. I-Ion. RAY ROBERTS, Chairman., Subcommittee on. Water Resources, Committee on Public Works and Transportation, U.S. Ho use of Representatives, Washington., D. C. Du&n MR. CHAIRMAN: The members of the American Institute of Merchant Shipping (AIMS) own or operate approximately two-thirds of the ocean-going American-flag vessels serving the foreign and domestic commerce of the United States. AIMS welcomes this opportunity to go on record as supporting Section 12 of H.R. 9560, proposing an amendment to the Federal Water Pollution Control Act. Section 12 of the bill would establish a $50,000 maximum civil penalty for discharging hazardous polluting substances, except in cases of willful negligence or willful misconduct, including willful failure to take mitigating action deemed appropriate by the responsible Federal officer who is the on-scei~e coordinator acting under the National Contingency, Plan in accordance with guidelines de- i-eloped with appropriate industry input. Existing law would be changed by eliminating the prohibitive $5 million maxi- mum civil penalty, hopefully prior to its implementation under subparagraph (B) of paragraph (2) of Subsection (b) of Section 311 of the Act. The amend- ment w-ould also require a spiller to be responsive to directions for removing from water, to the extent possible, discharges of hazardous polluting substances. AIMS believes that the proposed change represents a much more effective ap- .proach to dealing with the problem of water pollution. Rather than, posing an economic disincentive for water-borne transportation of certain substances which generally move safely and efficiently by vessel, as mandated by the existing language of Section 311, the amended language would encourage responsible handling of those substances which move in U.S. foreign and domestic commerce. The approach to the problem of water pollution represented by existing law is to eliminate an environmental risk by establishing an unacceptable economic risk. This approach fails to place proper perspective on the commercial necessity for transporting certain substances by water or the safety experience of alterna- tive modes of transportation. We understand that these factors have now been documented for the consideration of the Committee by various agencies and in- dustries having expertise in such matters. From the point of view of ocean-going vessels, AIMS respectfully suggests that it is inappropriate to penalize exces- PAGENO="0339" 333 sively those providing a transportation service for the benefit of U.S. commerce when an accidental discharge occurs in spite of compliance with extensive safety regulations. We urge the Committee to approve Section 12 of BR. 9560.' Sincerely, JAMES J. REYNOLDS, President. STATEMENT OF THE BAY AREA SEwAGE SERvIcEs AGENCY RELATIVE TO LEGISLATION BEFORE THE SUBCOMMITTEE ON WATER RESOURCES Honorable Members of the Subcommittee, the Bay Area Sewage Services Agency is the nine-county regional entity responsible for development and imple- mentation of regional water quality management planning in the San Francisco Bay Area. The Agency's Board of Trustees, consisting of 21 elected officials repre- Senting local wastew-ater dischargers, has been especially concerned for the suc- cessful accomplishment of cleaning up the waters of California and the San Francisco Bay Region in the face of increasingly complex governmental regula- tions and policies which often conflict with each other. The Agency welcomes this opportunity to present its views on the functioning of the Federal Water Pollution Control Act-Public Law 92-500 and offer its Suggestions for improvement. Our views are based upon the experience of local and subregional waste dischargers during the 3 years that the Federal Act has been in effect. The Agency has conducted hearings in each constituent county to receive local comments and to review extent of local planning progress. In addi- tion, the viewpoints of the California State Water Resources Control Board and the Federal Environmental Protection Agency were obtained. Our Agency Board of Trustees met with members andrepresentatives of the San Francisco Bay Area Congressional delegation on August 20, 1975 in San Francisco and identified the following issues as major impacts upon wastewater management in the Region: 1. San Francisco Bay Area water pollution control programs are being unduly and unreasonably delayed due to conflicting federal laws and regulations. 2. Meeting the San Francisco Bay Region's needs will require continuation of federal funding at current or increased `levels for water pollution control. 3. A commitment exists for the federal government to reimburse to the full extent those agencies eligible for reimbursement of costs for wastewater plant construction completed between 1966 and 1972. 4. Timely construction of needed wastewater facilities will stimulate sagging local economy by providing jobs for the construction industry and for suppliers of materials and equipment. 5. A realistic extension of the 1977 date for publicly-owned treatment works to meet federal water standards should be made. 6. A greater portion of the management of construction grants programs should be delegated to the states. The Bay Area Sewage Services Agen~y has reviewed information available regarding the many pieces of pending legislation pertaining to Public Law 92-500. In particular, we have reviewed HR. 9560 and supports provisions which extend appropriations, authorizes funding, allows substitution of ad valorem taxes for user charges where appropriate, provides for reimbursement of advanced con- struction and other costs, adjust times and shares of funds for Section 208 plan- ning, permits the Environmental Protection Agency Administrator to accept state certifications for certain actions and approvals, and extend the time for publicly-owned treatment works to comply with federal standards. The Bay Area Sewage Services Agency is also in general support of provisions to extend time for compliance with toxic and pretreatment standards when jus- tified by the state of technology and with provisions relating to civil penalties relating to negligent discharges offshore of hazardous substances. Attached as an appendix to this statement is the issue paper prepared by the Bay Area Sewage Services Agency on July 21, 1975 entitled "Impacts of the Federal Water Pollution Control Act on Wastewater Management in the San Francisco Bay Region." Cordially, RALPH C. BOLIN, President, Board of Trustees. PAGENO="0340" 334 Mailgram] STATE DEPARTMENT OF ECOLOGY, Olympia, Wash., October 24, 1975. CONGRESSMAN RAY ROBERTS. Department of Ecology supports section 9 of H.R. 9560 to provide alternative treatment options for publicly owned treatment works discharging into ocean water. Such flexibility is essential to achieve most cost effective solution. Depart- ment of Ecology assume intent of section 9 language is to include Central Puget Sound. JOHN A. BIGGS, Director. AMERICAN FARM BUREAU FEDERATION, Washington, D.C., September 29, 1975. Re Section 12 of H.R. 9560, Water Pollution Control Act. Hon. RAY ROBERTS, Chairman, Water Resources Subcommittee, Committee on Public Works and Transportation, U.S. House of Representatives, Washington, D.C. DEAR CHAIRMAN ROBERTS: Farm Bureau is a voluntary organization of 2,393,391 families in forty-nine states and Puerto Rico, constituting the largest general farm organization in this country. Our membership includes hundreds of thousands of farmers who have a vital stake in the movement of freight on the nation's waterways. We are pleased that Section 12 of HR. 9560 seeks to alleviate a serious threat to this movement of freight. We favo.r the enactment of this section at the earliest possible date. Section 311 of Public Law 92-500, which includes a maximum penalty of $5 million for the discharge of a hazardous substance into waterways, plus uncer- tainties with regard to the definition of hazardous substances and the amounts of discharges that would be subject to penalty, has created a potential threat to the future movement of fertilizers and other essential chemicals on the waterways. These materials are essential to food production, so Section 12 is important to consumers as well as farmers. Movement by water is by far the most economical and energy-efficient mode of transportation for these materials. It is, therefore, unthinkable that any statute or regulation should be allowed to force this movement to other modes, which could not handle the traffic without niajor new investments and substantially higher costs to farmers and other users of these materials. We believe Section 12 constitutes a reasonable compromise. It would continue to provide severe penalties, even though thedischarge of a hazardous Substance is nt the result of willful negligence or misconduct; and where the government can show that the discharge occurred as a result of willful negligence or willful misconduct, there would be no statutory limit on the penalty that could be exacted. We ask that this statement be made a part of the hearing record. sincerely, JOHN C. DATT, Director, Congressional Relations. INLAND BOATMEN'S UNION OF SEAFARERS INTERNATIONAL UNION OF NORTH AMERICA, Brooklyn, N.Y., September 26, 1975. Hon. ROBERT JONES, Chairnwn. Committee on Public Works and Transportation, Rayburn House Ojjice Building, Washington, D.C. DEAR MR. CHAIRMAN: The Inland Boatmen's Union of the Seafarers Interna- tional Union of North America, AFL-CIO. commends you for introducing HR. 9560, the Federal Water Pollution Control Act Amendments of 1975. We are pleased and encouraged by your proposal to reduce the penalty for vessels dis- charging unremovable hazardous materials on to the waters from the present $5000,000 to 850.000. We are certain that unless your bill is enacted to reduce this staggering penalty, the towing industry and the industries dependent thereon will be crippled. PAGENO="0341" 335 We feel that the harsh and punitive after-the-fact penalty presently provided in 33 Usc 1321, Section 311 (b), has nothing to do with the prevention of water pollution. In fact, this heavy and uninsurable penalty only hinders towboat operations by making it more difficult for water carriers to compete for the carriage of hazardous materials, such as petroleum and chemical products. The Federal Water Pollution Control Act and other legislative and regulatory provi- sions, such as the Port and Waterways Safety Act of 1972 and the Coast Guard's pollution control regulations, have enabled water carriage to become one of the safest modes of transportation in this country. Section 311 (b) insures that the cheapest and safest mode of transportation is precluded from freely competing for its rightful share of the traffic, to the ultimate disadvantage of the con- suming public. The discriminating nature of this provision is further evident by the establish- ment of a penalty ceiling of $5,000,000 for vessels as opposed to $500,000 for onshore and offshore facilities. By so doing, Section 311 (b) has branded vessels as the prime polluters of the waterways. This is patently unfair and unjustified. The Inland Boatmen's Union feels that your bill recognizes the negative effects the existing law has on the inland waterways, the water carriers, and the indus- tries dependent thereon. It proposes amendatory language which is not only in the public interest, but also guarantees the continued health and viability of one of the most significant elements of our transportation system. We would appreciate this letter being inserted in the record of the hearings held on this bill. Sincerely, PAUL DROZAK, National Director. MCNAMEE, PORTER & SEELEY, CONSULTING ENGINEERS, Ann Arbor, Mich., September 26, 1975. Hon. ROBERT E. JONES, Chairman, Committee on Public Works and Transportation, U.S. House of Repre- sent atives, Rayburn Office Building, Washington, D.C. GENTLEMEN: Responding to your announcement of legislative hearings on public law 92-500 we offer our comments as follows: I. USE OF AD VALOREM TAX FOR USER CHARGES The provisions found in HR 9500 regarding ad valorem taxes appear to be a desirable improvement to the existing law. We believe that the Congress should do much more. The current administration of public law 92-500 as to user charges results in unreasonable control of the prerogatives local governments have for setting rates for its citizens. To fulfill the requirements now imposed by U.S. EPA incurs unnecessary expenses by the local units in studies, administration and red tape, and goes way beyond the reasonable exercise of federal review of equitable user charges. We believe that the power needs to be restored to local units of government in rate setting for their users and citizens. 2. CLEVELAND WRIGHT BILL Our recent experience with the administration of public law 92-500 indicates that it is totally desirable to shift a greater responsibility for administration of the program to the states. It has only been through aggressive intervention by the state agency in Michigan on behalf of the local units that we have been able to move U.S. EPA to make a limited number of grant awards to local govern- ments. In spite of all of the high sounding phrases coming out of the national ad- ministration since July 1, the program has again become bogged down at the federal level. The only long term solution would seem to be to shift the authority to the states to administer the program. The language of HR 9560 leaves us some concern. Under Sec. 213 paragraph "d" the administrator has to determine that the state's water pollution control agency has the authority, responsibility and capability to take all of the actions, determinations or approvals for which certification is submitted under subsec- tion "a" of this section. We are concerned that the Congress clarify what is meant by this section for we don't believe that the states need to have responsibility for all of the actions of the federal administration. Certainly those responsibilities that pertain to grant administration and project review are needed, but matters such as the user PAGENO="0342" 336 charge review, the Davis Bacon Act requirements, procurement regulations, financial review, etc., need not be duplicated at the state level. If this section intends that they be so duplicated we can foresee that very few states will qualify for the program. 3. EXTENDING THE AUTHORIZATION FOR 208 PLANNING It is unfair that some regions which have applied for 208 planning have not been funded at the 100% level and therefore these regions should be given 100% funding. However we foresee great difficulties with the 208 planning process. Many communities are complaining about the layers of planning structured in public law 92-500. These additional layers of planning are raising new road blocks toward solution of the water population problem. It is urgent that the Congress clarify the roll of 208 agency, for we believe that very few construction projects will be approved when a conflict arises between the 208 agency and the local unit of government. Thus, we can foresee the program being thwarted in its pollution control objective by the 208 planning requirement. Already, early in the 208 planning process, many public officials at the local level, out of frustration over the layers of planning and red tape, are convinced that the federal program will not succeed as it is currently structured. We antic- ipate many difficulties with 208 planning and you should clarify the congressional intent as to how the regional planning agency will interface with the implement- ing agency. 4. AUTHORIZATION FOR EXTENSION OF THE JULY 1977 DEADLINE FOR MUNICIPAL DISCHARGES We enthusiastically support a reasonable extension of this deadline. It will do little good however to extend the deadline unless Congress also simplifies the ilrocedures under winch local units are attempting to work in obtaining con- struction grants. Many communities have been bottled up in their attempts to construct wastewater treatment facilities since passage of the act and unless Congress removes procedural bottle necks rather than imposing new regulations on local government we frankly don't believe any foreseeable date can be set for meeting the 1917 objectives. 5. UNIFORM LEVEL OF SECONDARY TREATMENT The current requirements for the uniform level of secondary treatment are generally quite satisfactory in the Great Lakes Region however on certain coastal areas they may be found to he unrealistic. We would be concerned that Congress not take precipitous action ill the area of treatment level standards for to do so will add confusion to the program for rapid changes of standards have already brought considerable confusion and misunderstanding. If however you can clear- ly define those areas where the secondary treatment standard is an unnecessary hardship it would be an appropriate improvement in public law 92-500. In conclusion we summarize our view- of Public Law- 92-500 as being too COill- plex and entangled with bureaucratic controls and red tape to the extent that local governments and their employees are spending many times the effort from that req aired under the prior programs, of Public Law 84-600, in just under- standing and meeting the new federal bureaucratic procedures and requirements. Almost without exception these have seemed unnecessary and threaten to bog tile program down so that Congressional objectives can never be met. We are frankly quite surprised that the U.S. Congress has not recognized tile difficulty that has been created by the legislation, for Public Law 92-500 appears to be a classic example of the federal promise for public good that just can never be implemented. We have been besieged by files and files of regulations, standards, program guidance memoranda and forms. This may 1)e tile federal way of doing business but it is being found less and less fruitful by local governments and is not resulting in a broad public benefit. The mutual suspicions created between Congress, the bureaucracy, local governmental units and the private sector by the regimentation involved in Public Law- 92-500 is intolerable and in our view dooms the program to failure. It is hoped that this above all will be given im- mediate and searching review by your congressional committee. Thank you for this opportunity for commenting and please let us know if we can provide any further information. Very truly yours, RAYMOND J. SMIT. PAGENO="0343" 337 TOWNSHIP OF TEANECK, Teaneck, N.J., September 19, 1975. Hon. ROBERT E. JONES, Chairman, House Committee on Public Works and Transportation, Thu shiny-. ton, D.C. Sin: As one of the member municipalities of the Bergen County Sewer Authority, the Township of Teaneck has been informed that as a prerequisite to the receipt of U.S. EPA grants by the Authority, each municipality within the Authority must agree to adopt a system of user charges in accordance with Sec- tion 204(b) of the Federal Water Pollution Control Act Amendments of 1972 (PL 92-500). We understand that the Comptroller General of the United States has ruled that the use of ad valorem taxes does not satisfy this user ~harge requirement. It is our firm view that this prohibition of ad valorem taxation will place an ex- cessive administrative and financial hardship on our community; will seriously impede the progress of important Sewer Authority projects; and, in the overview, will promote complication more than equity. Therefore, we join the U.S. EPA in urging your full support of the proposed amendment to PL 92-500 now before Congress which would allow ad valorem taxation to be used in compliance with the user charge requirements. Sincerely, ELEANOR M. KIELISZEK, Mayor. AMERICAN PUBLIC WORKS ASSOCIATION, Chicago, Iii., October 3, 1975. Hon. RAY ROBERTS, Chairman, Subcommittee on. Water Resources, Committee on Public Works and Transportation, House of Representatives, Washington, D.C. DEAR MR. ROBERTS: Enclosed are three resolutions pertaining to implemen- tation of P.L. 92-500. These resolutions were recommended by our APWX Institute for Water Resources and adopted by the full membership of some 16,500 public works professionals at the recent APWA Public Works Congress and Equipment Show, in New Orleans. If the hearing record on H.R. 9560 is still open, we would like to have any of these resolutions you deem pertinent entered in the record. Thank you for your cooperation. Sincerely yours, ROBERT D. BUGHER, Executive Director. Enclosures. RESOLUTION No. 4-INCREASED STATE ROLE IN ADMINISTRATION OF PUBLIC LAW 92-500 Whereas implementation of the Water Pollution Control Act of 1972, P.L. 92-500, has focused pollution control responsibility upon the U.S. Environmental Protection Agency, and Whereas the role of States has been diminished in the administration of the water pollution control program, and Whereas many aspects of the water pollution control program are of direct local or state interest, and Whereas legislation has been introduced in the Congress of the United States to allow assumption by States of a larger role in the water pollution control effort, now therefore be it Resolved That the American Public Works Association meeting in session this 21st day of September 1975 in New Orleans, Louisiana recommends that States be authorized a greater role in the administration of federal water pollution con- trol programs, and be it further Resolved That the Congress of the United States take appropriate action to authorize and fund such a delegation of responsibility to the States. RESOLUTION No. 11-CHANGE OF FEDERAL POLICY RE AD VALOREM TAXES AND INDUSTRIAL WASTE RECOVERY CHARGES Whereas the American Public Works Association at its 1974 Annual Meeting in Toronto, requested that the Water Pollution Control Act of 1972, PL 92-500 be revised, and PAGENO="0344" 338 Whereas such recommended revisions have not been made, and Whereas the problems associated with the requirements of PL 92-500 regarding `the ad valorern tax and Industrial Waste Recovery charges have become and ~wi1l continue to become more acute each month to local authorities until such revisions are made, now therefore be it Resolved That the membership of the American Public Works Association reiterate the importance and necessity of changes to PL 92-500 to provide needed flexibility by incorporating therein the principle that to qualify for grants local governments may utilize tax and other revenues for financing construction, operation, maintenance and replacement of capital facilities used for wastewater treatment and management, and that with respect to Industrial Cost Recovery for capital expenditures .that the recipient of Federal grants be responsible for renn- bursement of that share of the grant expended which is chargeable to the accom- modation of industrial wastewater to the extent required by the present law, with the method utilized for raising funds to be determined by the local authority. RESOLUTION No. 12-CHANGE OF FEDERAL POLICY RE FINANCING OF STORM SEWERS Whereas estimates of needs for water pollution control and abatement have been made in 1973 and 1974 by TJSEPA, and Whereas the magnitude of the identified needs far exceed the funding levels provided by the Water Pollution Control Act of 1972, PL 92-500, making it impossible to meet the goals within the time schedule established by the act, and Whereas the cost of stormwater collection systems was deemed eligible for inclusion in the cost of separate stormwater pollution abatement (category Vi) find Whereas the cost of storm sewer systems has traditionally been the re- sponsibility of the benefiting local authority, now therefore be it Resolved That Federal action be taken to declare eligible for financial assist- ance only such facilities as may be required for the effective treatment of urban stormwater runoff, should such treatment be required to meet receiving water quality objectives. STATE OF CALIFORNIA, STATE WATER RESOURCES CONTROL BOARD, Sacramento, Calif., September 24, 1975. lIOfl. RAY RORERTS, Cbairinan, Water Resources Snbcommittee, Committee on Public Works and Transportation, Rayburn Office Building, Washington, D.C. This is to inform you that the California State Water Resources Control Board strongly supports HR. 9560. We are particularly concerned that the principles contained in the following sections are enacted into law: Proposed Section 204(b) (1) (A) [allowing use of ad valorem taxes for payment of sewage treat- inents works operation and maintenance charges]; proposed Section 213 [allow- ing states to assume a major portion of the responsibility for administration of the construction grants program and to obtain grant funding for those re- sponsibilities which they do assume]; and proposed Section 301(g) (1) [allowing additional time for municipalities to meet secondary or more stringent treatment requirement where appropriate]. Our more detailed comments on what we view as the most significant portions of the bill are as follows: Proposed Section. 204(b) (1) (4) -This section allows the EPA Administrator to approve use of an ad valorem tax system for payment of sewage treatment works operation and maintenance costs where ad valorem taxes would result in distribution of such costs to each class of treatment works users in proportion to their cOfltril)utiOn to the total waste loading the plant, and where surcharges Rre established that will insure that each industrial user will pay its propor- tionate share of such costs on the basis of strength, volume and other relevant factors. Under the current law EPA originally issued regulations which would have nilow-ed the use of ad valorem taxes to pay operation and maintenance costs but the Comptroller General advised that it would be illegal for EPA to fund new projects in cases where communities are utilizing acT valorem tax systems to finance wastewater treatment operation and maintenance costs. However, many Ia r~e metropolitian areas, particularly those without water meters, presently finance these costs through ad valorem taxes. Several projects in California being constructed with grant funds are nearing completion, which means the change from ad valorern taxes to a user charge is PAGENO="0345" 339 imminent unless the law is amended. Of the more than ~uo municipalities in Cali- fornia that have applied for grants since enactment of P.' L. 92-500, a majority have relied on ad valorem taxes for funding costs of wastewater treatnient~ Among .these are some of the larger agencies in the State including: County Sanitation Districts of Los Angeles County; County Sanitation Districts of Orange County; Chino Basin Municipal Water District; City of Los Angeles; aild, City and County of San Francisco. These five agencies serve populations totaling more than six million people. The proposed language of Section 204(b) (1) (A) is functionally the same as earlier language prepared by the Environmental Protection Agency which the State Board reviewed and endorsed in May of this year. If the prohibition against use of ad valorem taxes is continued, it will have the following adverse effects: 1. Costs of service will be increased by 5 percent or more for agencies currently using ad valorem taxes as the principal source of revenue. 2. A heavier burden will be imposed on persons with low or fixed income. 3. The value of vacant lots will be enhanced without the owners sharing in the cost. 4. Agencies will be forced to impose charges which may not achieve greater equity than ad valorem taxes unless all discharges were monitored. (Monitoring is not cost effective on discharges of less than about 50,000 gallons per day.) Proposed ~ectiom 208(f) (2).-Presently, funding is provided under Section 208 for a two-year planning period for any designated agency. Funds are provided on a fiscal year basis ending June 30, 1975. EPA proposed new regulations (40 CFR Part 35, Subpart F) for implementation of the existing Section 208 in the Federal Register dated September 5, 1975. The proposed regulations basically provide for a three-year 208 planning process with the designated 208 planning agency to receive five percent of its total grant amount during an initial period of up to one year to provide for preparation of a work plan to guide development of the initial 208 plan. The proposed' regulations anticipate that the actual planning process would not begin until the Regional Administrator determines that this work plan has been developed and that the planning process is operational. The 208 Agency would then have two years to develop the initial areawide plan. It appears that proposed Section 208 (f) would be inconsistent with this approach because it would allow 208 grants to include 100 percent of the costs of developing an area- wide waste trea'tment management plan only for the first two years following the date a 208 grant is received. We believe the EPA approach is a good one, allowing development of a well thought out work program before actual planning is initiated and allowing full funding of the actual two-year planning process. We would recommend that fuuding of up to five percent of the total cost of developing an areawide plan be made available for up to one year after the con- tinuing areawide waste treatment management planning process is in opera- tion pursuant to paragraph (b) (1) of Section 208 and that 100 percent of the costs of developing and operating a continuing areawide planning process be available during the two-year period provided for development of the initial plan under Section 208(b) (1). Proposed Section 213.-The California Water Resources Control Board vigor- ously supports legislation which would allow our state to assume expanded responsibility for administration of the sewage treatment plant construction grants program. The language of proposed Section 213 as set forth in H. R. 9500 is substantially the same as the language of H. R. 2175 introduced by Congressman Cleveland and others earlier this year. We and the representatives of several other states have worked with EPA and have met with Congressman Cleveland regarding certain amendments to the Cleveland bill which we feel would clarify the intent of the legislation. These proposed amendments are set forth in the attached marked up version of the Cleveland bill. The proposed amendments to `Section 213(a) and 213(d) (2) are of most con- cern to us. We feel proposed Section 213 (a) needs to `be clarified by the addition of references to `a greater number of sections of the Federal Water Pollution Control Act to allow development of a complete grants administration program by the states who receive certification authority. The sections which we feel should be subject to delegation are set forth in the attached copy of the Cleveland bill. PAGENO="0346" 340 The changes suggested in the proposed Section 213(d) (2) on the attached marked up version of H.R. 2175 are primarily for clarification purposes and do not change the effect of the section significantly, but we feel the changes are necessary to make Section 213 easier to understand and to implement. Proposed Section 805(b).-We support proposed Section 305(b) which would greatly reduce the state reporting burden related to the water quality inventory. BILL B. DENDY, Ecoecutive Officer. ~/5/75 S~-u CONGIlESS ~7 ~7 `~~) c~ ~su SESSt0N ~ ii ~: ~7 c ~ ~Jj~ ~ - I~T TE~ HOUSE OP REBRESENTATTVES ~L~ca2jtr 23)1075 Mr. C~.nvzr~xo (for hirnn~li, Mr. Wmcn-r, Mr. ~A~oxor. Mr BATALIs, Mr. Doc ~-L Cmo~, Mr. Co rco~x, Mr. D:~mr, Mr. G~-w, Mr. H~or- DCTaN, Mr. lLiiorrRscHMro-r, Mr. li~oi~. i~1.r. 1L~-n:~Gs, Mr. McKi~r, Mr. Qeiz, Mr. P~IGrI~ Mn Rmu~r~ Mn Ro~z. Mr. ST Grr~-, Mr. Snnrcrr~, Mr. Suvrrzr, Mr. Scroir~. Mr. T;c~- cf J1in~~t-i ~xi~t M;.. W-&~tcou) ntrcciucrd th~ following bill; whicb ~rofrrrc~l to tho Corn-- 3ntt~ on Poblle Works ~nd Trrt~tiort To amend -title U o~ the Fe~EIerai Water PoiJuijon Control Ac~ to provide for State cr~fientlon. ~ 2 thes of thc UniLrd &a~ee of Arnerka ~n Coizgrcas cLssern1~lccl, ~ That title II of the Pederni Water Pollution Control Act 4 (33 U.S.C. 1281 ci seq~) is amended, by adding at the end. ~. thereof the following new section: "CE~TLi~ICATIOY I "Si~c. 213. (a) The Administrator rmw discharge any or ~ S of his r~~ousilnIities for actions, cletenn~nai~ons, or approvals rt1.0n3 2O1-~O1~, 2]X), 211, 212, SO?, nn'l ~i3 9 io 2~ ,~ ~.JP'I ~\`3~ of this x-o* PAGENO="0347" 341 1 Act with respect; to projects OJ. proposed projects for 2 treatment works by accepting a certiBcatiou by the State S water rollution control agency of its lun~orrnance of such 4 responsibitities. 5 "(b) The Administrator shall not aeee~pt; any certifica- G tion prov~cied for in subsection (~) of this section unless 7 the Administrator determines that the State water pollution the 8 nontrol agency has S it;y. to take all of the actions, deterlrjinzitic:ns, or npprovals 10 for svhith certification is submittedL under sabsection (a) i1 ofthissact~on. ~ grant appe~1 procear i2 "(is) If the Administrator determines after ~psthe4rei~r ~a~-s that a-Stht&:~wa~ter:poflution coniroi:agency, with ie~pect 14 fo any reqairensent,. condition, or. limitation for `which be 15 has accepted a certification under subsection (a), fails to `IS mee't the requirements of this Act, he may suspend his nc-' 1? ceptauce of certification as to such requirement, condition, or limitation with respcct to any prc~J~i.ct, or ith re~spect; 19 to all projects in such State; as he tietersi~ines necessary, anti 20 during such suspension lie shall be responsible for such re- 21 quirement, condition, or liniitation_ 22 "(d) (1) The Administra tar is rin~ltorized to conduct 23 nitcnm and final )nspeCtwns and audits: ~ild to redjil)fC such 24 information, data, and reports as he m:v determine ncccs- 25 sary to carry out; this section. PAGENO="0348" 342 (2) Noftiing in this scctiou shall ~afiect or discharge 2 any respunsibi1i~y or obilgation of the Administrator under 3 ~ the Nhcional Environmental ~ Policy Act of 1069 (42 U.S.C. 4321 et seq.) - "(e) (1) The Administrator shall reserve art amoatr~ G not to ~ 7 3 e~-h~n~! ~ 2 percentum of the unobligated balances allotted to States under section 205 of this AcCD as of the date of cnactasnt of this section, and 2 per centum of the allotment made to each State under sectiofl 205 of this Act for each Liscal year after the date of enactment of this section.J Sums s~ rr sh&d lj a a'~railabid~ 9 for-making grants to such State rnderpn-ngra~h (2) of this ~ subsection for the same period as suxn~ nra. availaLle~ from. jj. such aUob~ent under sin)see~on (h) of sectiOn 205,. -ese?i~e.y- 12 ~ U Within the allotsent period, the Admi~st.rstor~ at tue recuest of a State ,asy relesse funds fron +J~~; State's reserve to add to the funds for that State's grants for the construction of publicly o~med tree t~ sent i~orks under Section 201(g)(l). Any grant made from sums reserved under this sub- ~ahd sat aravio~~sl~r relsased by the State from the r~serve,, jj, sectionwhkh li~is iiut bceix obligated by the end of the 2criud. j~ for \vhidh available shall be addcd to the ara~tmts last. allottect 16 to such State under sectiuli 205 and shall ha irninediataly 17 available for ohhgatiou in the same nmmicr anti to the same ~s c~tcut as such last aiobncut~ but in no evant for n psriod of less than one year. PAGENO="0349" 343 /t°y 1orttons or- an inta of a grant to a State agcncy under subsection (e) (2) which remain available for payment under the grant but are released from the grant or reeoved fros the grant by a mutual grant amendment or a partial or full termina~ lion cf the grant by the Administrator ~ fcc~ab~l_~g-t--Q-n shall be added to the amounts last allotted to such State under section 205 and shall be immediately available for obligation in ~he marie manner and to the same extent as such allotment, but in no everit less than one year after the date of such release or terminatiOnS "(2) The Administrator is authorized to grant to any 20 State exercising, or ~ro~iosing to exerwrse ccrtffication au~ 21 thUi-ity under this section, from amonn~s reserved to such 22 State under this subsection, the reasonabi: costs, as deter- 23 ruined by the Administrator, of carrying nut such authority, in advanca or by way of rrirnbursmrrient~. 2-i: " (f) The Adunuistrator shall prornul~n~e such rules and. 23 ~ecrtla Lions ~5 niavi 5jf)~-~flp: ~ The 5niti~ ~cs and re~h~ons rcecms~ to ~ out ~his sec~on shall be ~omu1gated not later than the ninetieth iy after ante of enactment of this sectiou?'~ BOROUGH OF LEONIA, Leowia, N.J., Septeniber 22, 1975. Hon. ROBERT E. JONES, Chairman, CommIttee on Public Works and Transportation, House of Represen- tatives, Rayburn House Office Buitding, Washington, D.C. DEAR CONGRESSMAN JONES: Although we cannot attend your hearings, we ask that you enter into the record this letter in -support of HR. 4169, your amend- ment to the Federal Water Pollution Control Act. The Mayor and Council of the Borough of Leonia, New Jersey have adopted the attached resolution request- ing such a change in the present legislation. We have heard no logical reason why the requirement for user charges was included in the original legislation. If it was thought that such charges would somehow- reduce the amount of waste water generated, we disagree with that premise, at -least as far as this -municipality is concerned. With practically no industry and very little commercial activity, most of the waste water in Leonia is from residential uses. T'he persent method of including the cost of w-aste water treatment in the property -tax allocates these costs in a-n equitable manner in proportion to the value of the property. It makes no sense at all to require this -municipality to hire more people to prepare and collect from each property owner a -separate bill for sewer charges in addition to the property tax bill. Such a procedure is especially futile since there is no economically feas- ible way to determine the contribution of each -residential unit to -the total flow. PAGENO="0350" 344 You and your committee ure certainly aware that property taxes and other taxes are creating hardships for many citizens. You can relieve us of the need to add to that burden by eliminating the requirement for user charges which bene- fit no one. Sincerely, FRANK E. MONTMEAT, Councilman Chairman, Pub lie T'Vorlcs Committee. Attachment. BOEOUGH OF LE0NIA RESOLUTION (Offered by Councilman Frank E. Mthitmeat, at meeting of mayor and council held May 12, 1975) Whereas as one of the member municipalities of the Bergen County Sewer Authority, the Borough of Leonia has been informed that as a prerequisite for a grant of United States Environmental Protection Agency funds to the Authority, each member municipality must agree to adopt a system of user charges in accordance with Section 204(b) of the 1972 Amendments. We under- stand that the Comptroller General of the United States has ruled that use of ad valorem taxes does not satisfy this user requirement; and Whereas for almost twenty-five years the Borough of Leonia has used ad valorem taxes to pay its share of the costs incurred by the Bergen County Sewer Authority in collecting and treating the sewage. Currently, the average resi- dential taxpayer pays about thirty-five dollars annually for sewage treatment. A change in the method of calculating and collecting these charges could increase these costs by five to ten per cent; a waste of taxpayers money; and Whereas the Environmental Protection Agency is supporting an amendment to P. L. 92-500 which would allow ad valorem taxation to be used; therefore, be it Resolved That the Federal Water Pollution Control Act Amendments of 1972 (P.L. 92-500) again be amended to eliminate the compulsory user charge re- quirement which will cause an unnecessary increase in municipal taxes with no discernable benefits; further Resolved That this Governillg Body support the action of the Environmental Protection Agency in its effort to permit the use of ad valorem taxation. Seconded by Councilman Joseph N. Muzio; Approved unanimously upon roilcall vote. I hereby certify that the above resolution was adopted by the Governing Body on the 12th day of May, 1975. RUTH S. FINNIE, Borough Clerk.