CONGRESSIONAL RECORD -- SENATE
December 9, 1969
Page 37885
Mr. BOGGS. Mr. President, I commend the distinguished Senator from Nebraska for the position he has taken. I support the committee language on amortization of equipment that will be used for pollution abatement, as well as the other items the Senator has discussed so eloquently.
I wish to ask the Senator one question. It appears to me that there is no danger that this incentive to achieve clean water and clean air would open a loophole into which industry could push a new blast furnace or elevator and call it "pollution equipment." The deduction would be available only after the facility was certified as a pollution abatement facility by the appropriate State and Federal agencies. Is that correct?
Mr. CURTIS. The Senator is correct. And it does not apply to new structures, because they can be designed to eliminate the problem.
Mr. BOGGS. Mr. President, the language of the section we are discussing permits industry to amortize the cost of pollution abatement facilities in a 5-year period. It would be applicable for the full cost of equipment with a normal life of 15 years or less. If the equipment has a normal life beyond 15 years, part of the equipment would be amortized over the regular depreciation basis, part under the accelerated schedule.
This provision, I believe, is a necessary incentive to assure that each of us will find a cleaner and better environment as quickly as possible. To assure that this vital end is accomplished rapidly, the Finance Committee wrote into this section a provision that this amortization would be available only if the abatement equipment is placed into operation by the end of 1974.
There is no danger that this incentive to achieve clean water and clean air would open a loophole into which industry could push a new blast furnace or elevator and call it "pollution equipment." The deduction would be available only after the facility was certified as a pollution abatement facility by the appropriate State and Federal authorities.
Such incentive will implement our national policy of environmental enhancement. This is a policy laid down in large part in legislation that has come from the Subcommittee on Air and Water Pollution, on which I have the honor to serve as ranking Republican.
Let me give two examples. The Federal Water Pollution Control Act declares a "national policy for the prevention, control, and abatement of water pollution." The Clean Air Act was written, according to its language, "to protect and enhance the quality of the Nation's air resources so as to promote the public health and welfare and the productive capacity of its population."
But such improvements cost vast sums of money. This is not a modernization from which industry will profit. It is a modernization for the public health and welfare. Pollution comes from two major sources, industry and government. The Federal Government helps local communities battle pollution. It is only equitable to offer this small advantage to industry.
Our environmental quality standards require industry to meet those standards, or the Government will go into court in an abatement proceeding, seeking to close the plant down. This is a weary and tedious process. I believe it is a far wiser approach to offer the private sector an inducement, such as the committee's proposal. In return for an amortization schedule that would cost the Treasury $15 million in 1970, the private sector will install equipment to give every American a cleaner, healthier, and better environment in which to live.
According to the Cost of Clean Water, a study by the Department of the Interior, private industry faces a cost of as much as $2.6 billion to pay for the backlog of water pollution control facilities in the period from now through 1973. According to estimates prepared by the Department of Health, Education, and Welfare and contained in the study, the Cost of Clean Air, industry faces another 3.2 billion dollar bill for the control of particulate matter and sulfur dioxide emissions into the air we breathe. This cost from next year through 1974 may underestimate in part the full needs, for it was partially based on information for only 85 metropolitan areas and selected industries.
This expense will produce no private profit. Rather, it will produce a public benefit for each and every American. It will clean the air across this Nation. It will improve the quality of life across this Nation. It will enhance the environment in each of the 50 States of our Nation. Rather than providing any private loophole, this provision of the tax bill creates an incentive that will result in a great public benefit.
Mr. LONG. Mr. President, how much time remains?
The PRESIDING OFFICER. The Senator from Louisiana has 8 minutes.
Mr. LONG. How much time remains for the proponents?
The PRESIDING OFFICER. Five minutes.
Mr. LONG. I yield 4 minutes to the Senator from Maine.
Mr. MUSKIE. I thank the Senator from Louisiana.
Mr. President, I rise to oppose that portion of the Gore amendment which has to do with the amortization of pollution control facilities in the case of both air and water.
As chairman of the Subcommittee on Air and Water Pollution, I have been concerned, as have all my colleagues on the subcommittee, including the distinguished Senator from Delaware (Mr. BOGGS), with the problem of stimulating the construction of waste treatment facilities in the public sector.
This year, with the cooperation of the distinguished Senator from Louisiana (Mr. ELLENDER), Congress has approved the appropriation of $800 million for the construction of municipal waste treatment plants. This action on the part of Congress is consistent with the rising surge of interest and concern on the part of the people of America that we deal effectively with the pollution threat to our air and water.
Although in the subcommittee we do not have jurisdiction over tax legislation, the subcommittee -- going back to 1966 in the report on the 1966 Clean Water Restoration Act -- has advocated tax incentives to mount an industrial effort comparable to the public effort.
Mr. President, I ask unanimous consent that there be included in the RECORD at this point, a statement from that committee report.
There being no objection, the statement was ordered to be printed in the RECORD, as follows:
A number of witnesses testified on the need for tax incentives as a means of reducing the cost of noneconomic pollution control facilities. This is not a matter over which the Senate Public Works Committee has jurisdiction but it affects the overall effort to meet water pollution control and abatement needs. This committee strongly recommends that the appropriate congressional committees give consideration to tax relief proposals for industrial pollution control activities.
For the most part, pollution control does not provide a return on an investment to an industry. Installation of pollution control devices is costly and, in many cases, nonremunerative. The billion dollars of capital investment which will have to be made by the industrial sector for the benefit of the entire society will place a substantial burden on corporate resources and ultimately on the general public.
Mr. MUSKIE. Mr. President, I ask unanimous consent to have printed in the RECORD a letter which I addressed to the distinguished Senator from Louisiana, the chairman of the Committee on Finance, with regard to this matter on July 29, 1969.
There being no objection, the letter was ordered to be printed in the RECORD, as follows:
JULY 29, 1969.
Hon. RUSSELL B. LONG,
Chairman, Senate Finance Committee,
New Senate Office Building,
Washington, D.C.
DEAR MR. CHAIRMAN: Pursuant to your request for comments and recommendations on pending legislation which would extend the income tax surcharge, I would like to propose changes to Sec. 168 which provides rapid amortization for air and water pollution control facilities investment.
This section has two major faults. First, the section does not take into account the provisions of the Federal Water Pollution Control Act or the Clean Air Act. Second, the requirement for the development of minimum performance standards is inconsistent with existing policy and would delay environmental improvement programs for several years.
As you know, Federal pollution control legislation has recognized the primary responsibility of the states and local government to control pollution. Federal responsibility is primarily directed to reviewing state standards to assure consistency with the national policy of the enhancement of air and water quality. Federal authority is provided for in those cases where the states have failed to carry out their responsibility to set or enforce standards.
Also, I am sure you are aware that these laws have been in effect for several years, the Water Quality Act since 1965 and the Air Quality Act since 1967. The procedures set forth by these acts are now being implemented by the States.
Any requirement for minimum performance standards would seriously delay effective implementation of these laws during the development of such minimum standards. Furthermore, because the regional approach is an integral part of effective air and water quality programs, minimum national standards would not be relevant to the specific problems of any given region.
Finally, minimum performance standards as defined in H.R. 12290 would be tantamount to national emission standards, a concept carefully evaluated and rejected in favor of the regional approach to air quality in 1967.
I have developed an amendment to Section 168 which I believe assures consistency with the Federal pollution law without jeopardizing the usefulness of special tax incentives for pollution control investment.
My amendment would:
1. Require certification from the state as to conformity with plans for implementation of air or water quality standards;
2. Provide Federal review of state certification to assure consistency with the purposes of the Federal Water Pollution Control Act or the Clean Air Act;
3. Eliminate the requirement for minimum performance standards;
4. Provide for annual state review, during the period of accelerated depreciation, to assure that facilities operate in the manner for which they were certified; and,
5. Disallow use of the tax deduction to the extent that such facilities produce income.
I sincerely hope that members of your Committee will give serious consideration to this amendment.
Sincerely,
EDMUND S. MUsKIe, U.S. Senator,
Chairman, Subcommittee on Air and Water Pollution.
Mr. RIBICOFF. Mr. President, will the Senator yield?
Mr. MUSKIE. I yield.
Mr. RIBICOFF. Mr. President, no man in this country has done more in the field of controlling air and water pollution than the Senator from Maine. I am sure the distinguished Senator from Maine would agree that we will never solve the problem of air and water pollution unless we have the cooperation of private industry.
Mr. MUSKIE. I agree wholeheartedly with the Senator.
Mr. RIBICOFF. Is it not a fact that one of the great problems we have is the problem of costly installations and antiquated plants for air and water pollution devices?
Mr. MUSKIE. The Senator is correct.
Mr. RIBICOFF. What it often means is that an old company, which might be required to pay large sums for air and water devices, might determine that it is cheaper to go out of business rather than to undertake the rehabilitation of these old plants in the industrial sections of our Nation. Is that correct?
Mr. MUSKIE. The Senator is correct.
Mr. RIBICOFF. It is my understanding that through the landmark work of the Senator, the Congress this year has committed itself for an expenditure of $800 million in the entire field of water pollution alone. As a matter of public policy if we do not have an overall program that involves private industry, our public commitment will not achieve the result we seek. Is that correct?
Mr. MUSKIE. The Senator is correct. Under the Air and Water Quality Control Act we undertook to apply standards of quality in the cities which have air pollution problems, and all streams which have water pollution problems, and there are many of them. To apply those standards we must have the cooperation of industry.
Mr. RIBICOFF. The Senator may be interested in the fact that the act is so written by the Committee on Finance that the amortization deduction is available only when the facility is certified by the State and Federal agency.
The PRESIDING OFFICER (Mr. BAYH in the chair). The time of the Senator has expired.
Mr. LONG. Mr. President, I yield 1 additional minute.
Mr. RIBICOFF. So we tie up certification with State and Federal agencies.
Mr. MUSKIE. These are not profitmaking facilities. The language to which the Senator referred is part of the language I recommended to the committee to avoid the possibility that these facilities would be profitmaking facilities. What we are concerned with are facilities that deal wholly with control and regulation of pollution; no profit would be made from them, but there is still an investment to be made by the industry.
This tax relief is only a stimulation to industry to make the investments called for by air and water quality standards.
Mr. RIBICOFF. In addition, these amortization tax writeoffs are available only to old plants and not to new plants.
Mr. MUSKIE. The Senator is correct.
Mr. RIBICOFF. Mr. President, each day it is becoming more evident that man is destroying his environment. Each year, he pumps millions of tons of waste into the sky and dumps huge amounts of sewage and contaminants into streams and rivers.
Only the foolish can expect nature to be able to continue to absorb this pollution.
In the last 5 years, Congress has laid the foundation for a national effort against this problem by adopting comprehensive air and water pollution control legislation. And just a few short weeks ago, the Senate voted $1 billion to help our Nation's municipalities construct waste treatment plants.
But, by themselves, these efforts will not be enough.
To launch a truly comprehensive assault against air and water pollution, private industry, which is a major source of this waste, must be encouraged to purchase and utilize the best pollution abatement equipment available.
It has been estimated that it will cost industry $32 billion to control water pollution by the year 2000.
Private industry and municipalities will pollute two-thirds of our streams, the National Academy of Science predicts.
Forty percent of the contaminants in our atmosphere come from industry and utilities.
The bill before us now, will greatly encourage private industry's purchase of equipment to end this destruction of our environment by allowing it to amortize the cost of the equipment over a period of 5 years rather than over the period of the equipment's useful life.
We must be realistic.
Pollution abatement equipment is costly.
Pollution abatement equipment does not add to a company's profits.
Unless industry is encouraged by the enactment of a tax incentive, real progress in ending industrial pollution will take much longer than this Nation can afford.
By asking the public to bear a small share of the cost of abating industrial pollution, we will bring clean air and clean water much sooner to our Nation.
The committee's bill is very tightly drafted to encourage cooperation by industry without creating a loophole.
I support this bill.