April 7, 1970
Page 10486
S. 3688 – INTRODUCTION OF NATIONAL LEAGUE OF CITIES WATER POLLUTION BILL
Mr. MUSKIE. Mr. President, at the request of the U.S. Conference of Mayors and the National League of Cities, I introduce the Clean Water Commitment Act of 1970.
This bill represents proposals which the conference and the league believe necessary to stimulate construction of waste treatment facilities at the local level and accomplish other purposes. This bill will be considered by the subcommittee on air and water pollution in conjunction with other pending water pollution legislation.
I ask unanimous consent that the text of the bill and accompanying correspondence be printed in the RECORD at this point.
The PRESIDING OFFICER (Mr. BELLMON). The bill will be received and appropriately referred; and, without objection, the bill and correspondence will be printed in the RECORD.
The bill (S. 3688) to provide a national commitment for financing of expanded programs under the Federal Water Pollution Control Act, to assure better coordination in development of clean water programs, and for other purposes, introduced by Mr. MUSKIE, was received, read twice by its title, referred to the Committee on Public Works, and ordered to be printed in the RECORD, as follows:
S. 3688
Be it enacted by the Senate and Souse of Representatives of the United States of America in Congress assembled,
That this Act may be cited as the "Clean Water Commitment Act of 1970".
Sec. 2. The Congress hereby finds and declares–
(1) that continued population growth and economic expansion require high quality water supplies;
(2) that the nation's waterways are currently in serious danger of becoming polluted to a degree that will be injurious to the health and welfare of the nation, and
(3) that the urgency of this problem requires dedication of substantial public and private resources to control and abate water pollution, including a firm commitment of at least $20,000,000,000 in Federal expenditures during the next decade.
Sec. 3. Subsection 3(e) of the Federal Water Pollution Control Act is amended to read as follows:
"(c) (1) Each State, in cooperation with the Secretary, shall identify all water basins or elements of water basins within its jurisdiction with proper regard to such geographic, social and other environmental factors as will make each water basin an appropriate unit for application of comprehensive water quality standards and regulations. For each water basin so identified, the State or States with waterways or land included within the water basin shall establish a water basin commission representative of the State and local governments and other public, private and (when appropriate) international interests in the water basin area.
"(2) Each water basin commission established under this section shall develop an effective, comprehensive water quality control and pollution abatement plan for the water basin for which it was established. Such plan shall cover a period of at least five years and
"(A) provide for updating at least every two years;
"(B) be consistent with any applicable water quality standards established pursuant to current law within the basin;
"(C) recommend such treatment works and sewer systems as will provide the most effective and economical means of collection, storage, treatment, and purification of waters, recommend means to encourage both municipal and industrial use of such works and systems, and Specify the costs necessary to construct such works and systems; and
"(D) identify Federal. State, local and private financing available to construct such works and systems and establish a schedule for the maintenance and improvement of water quality standards within the water basin with which compliance shall be required consistent with the availability of Federal, State, local and private financing to construct the necessary works and systems to implement the plan.
"(3) The Secretary shall, at the request of the governor of a State, or a majority of the governors when more than one State Is involved, make a grant to pay not to exceed 50 per centum of the administrative expenses of a water basin commission for a period not to exceed 5 years, if such commission provides adequate representation of State and local governments and other public, private and (when appropriate) international interests in the water basin area and is capable of developing an effective, comprehensive water quality control and pollution abatement plan for a basin.
"(4) For the purposes of this subsection the term "water basin" includes, but is not limited to, rivers and their tributaries, streams, coastal waters, sounds, estuaries, bays, lakes, and portions thereof, as well as the lands drained thereby which together or individually form an integral geographic unit for which a comprehensive water pollution control program can be effectively planned and implemented.
Sec. 4 (a) Subsections (a), (b), (c) and (d) of section 7 of the Federal Water Pollution Control Act are amended to read as follows:
"(a) There are hereby authorized to be appropriated for the fiscal year ending June 30, 1971, $15,000,000, and for each succeeding fiscal year to and including the fiscal year ending June 30, 1976, $25,000,000 for grants to States, to water basin planning commissions and to interstate agencies to assist them in meeting the costs of establishing and maintaining adequate measures for the prevention and control of water pollution, including the training of personnel of public agencies.
"(b) The portion of the sums appropriated pursuant to subsection (a) for a fiscal year which shall be available for grants to interstate agencies and the portion thereof which shall be available for grants to States and water basin planning commissions shall be specified in the Act appropriating such sums.
"(c) From the sums available therefor for any fiscal year the Secretary shall from time to time make allotments to the several States, in accordance with regulations, on the basis of (1) the population, (2) the extent of the water pollution problem, and (3) the financial need of the respective States and water basin planning commissions.
"(d) (1) From each State's allotment under subsection (c) for any fiscal year the Secretary shall pay to such State an amount equal to its Federal share (as determined under subsection (h)) of the cost of carrying out its state plan approved under subsection (f), including the cost of training personnel for State and local water pollution control work and including the cost of administering the State plan.
"(2) From the remainder of such State's allotment under subsection (c) for any fiscal year the Secretary is authorized to make grants to any water basin commission within the State in an amount not to exceed 50 per centum of the cost of carrying out its water basin plan approved tinder subsection (f) including the cost of administering the water basin plan."
(b) Subsection 7(f) of the Federal Water Pollution Control Act is amended to read as follows:
"(f) The Secretary shall approve any plan for the prevention and control of water pollution in a water basin or portion thereof within a State which is submitted through the State water pollution control agency or, in the case of an interstate agency, by such agency, if such plan
"(1) provides for administration or for the supervision of administration of the plan by the State water pollution control agency and the appropriate water basin commission or, in the case of a plan submitted by an interstate agency, by such interstate agency;
"(2) provides that such agency or agencies will make such reports, in such form and containing such information, as the Secretary may from time to time reasonably require to carry out his functions under this Act;
"(3) sets forth the plans, policies, and methods to be followed in carrying out the plan and in its administration;
"(4) provides for extension or improvement of the State or interstate water basin program for prevention and control of water pollution;
"(5) provides such accounting, budgeting, and other fiscal methods and procedures as are necessary for the proper and efficient administration of the plan; and
"(6) sets forth the criteria used by the State in determining priority of projects as provided in
Section 8(b) (7), and such criteria may consider financial need and other factors deemed relevant by the State in assessing individual projects in abating water pollution and improving water quality, but they must place primary emphasis on effectiveness of individual projects in abating water pollution and improving water quality. The Secretary shall not disapprove any plan without first giving reasonable notice and opportunity for hearing to the State water pollution control agency and appropriate water basin commission or interstate agency which has submitted such plan."
Sec. 5. (a) Section 8(b) of the Federal Water Pollution Control Act is amended to read as follows:
"(b) Federal grants under this section shall be subject to the following limitations: (1) no grant shall be made for any project pursuant to this section unless such project shall have been approved by the appropriate State water pollution control agency or agencies and by the Secretary; (2) no grant shall be made, from funds appropriated for the fiscal year beginning July 1, 1971, and any succeeding fiscal years, for any project pursuant to this section unless such project has been approved by the appropriate water basin plan commission and is included in a comprehensive water pollution abatement plan developed pursuant to this Act; (3) no grant shall be made for any project pursuant to this section unless enforceable water quality standards have been established for the waters into which the project discharges, in accordance with section 10(c) of this Act in the case of interstate waters, and under State law in the case of intrastate waters; (4) no grant shall be made for any project in an amount exceeding 50 per centum of the estimated reasonable cost thereof as determined by the Secretary; (5) no grant shall be made unless the grantee agrees to pay the remaining cost; (6) no grant shall be made for any project under this section until the applicant has made provision satisfactory to the Secretary for assuring proper and efficient operation and maintenance of the treatment works after completion of the construction thereof; and (7) no grant shall be made for any project under this section unless such project is in conformity with the State water pollution control plan submitted pursuant to the provisions of section 7 and has been certified by the appropriate State water pollution control agency as entitled to priority over other eligible projects on the basis of financial as well as water pollution control need; (8) the percentage limitation of 50 per centum imposed by clause (4) of this subsection shall be increased to a maximum of 70 per centum in the case of, grants made under this section to those municipalities which have received Federal or State assistance from any source which has provided, in total, less than 20 per centum of the cost of projects eligible for assistance under this Act.
(b) Section 8(c) of such Act is amended by
(1) adding "and prior to July 1, 1971,"
After "on or after July 1, 1965" wherever appearing therein; and
(2) adding at the end thereof the following: "All sums authorized for obligation pursuant to subsection (d) for each fiscal year beginning on or after July 1, 1971, shall be allotted by the Secretary from time to time, in accordance with regulation, in the ratio that the population of each State bears to the population of all States. Sums allotted to a State in excess of amounts required to cover the federal share of costs for eligible projects approved by the appropriate State water pollution control agency or agencies shall be reallocated among these States where the Federal Share of eligible projects is greater than the sums allocated under the initial allocation. Reallocation of sums authorized for expenditure in the fiscal year beginning July I, 1971, shall be determined by the Secretary on the basis of needs identified in lists of eligible projects submitted by the States on or before January 31, 1971. Reallocation of sums authorized for expenditure for each fiscal year beginning on or after July 1, 1972, shall be determined by the Secretary on the basis of needs identified in lists of eligible projects submitted by the State one year in advance of the fiscal year for which the expenditure is authorized."
(c) Section 8(d) of such Act is amended by inserting " (1) " after " (d) " and by adding at the end thereof the following new paragraphs;
"(2) To finance the programs and activities under this section, the Secretary is authorized to incur obligations in the form of grant agreements or otherwise in amounts aggregating not to exceed $10,000,000.000. This amount shall become available for obligation upon the effective date of this subsection and shall remain available until obligated. There are authorized to be appropriated for liquidation of the obligations incurred under this subsection not to exceed $2,000,000,000 prior to July 1, 1972, which amount may be increased to not to exceed an aggregate of $4,000,000,000 prior to July 1, 1973, not to exceed an aggregate of $6,000,000,000 prior to July 1, 1974, not to exceed an aggregate of $8,000,000,000 prior to July 1, 1975,, and not to exceed an aggregate of $10,000,000,000 prior to July 1, 1976. Sums so appropriated shall remain available until expended.
"(3) The Secretary shall report annually to the Congress, after consultation with States, water basin commissions, and municipalities, with respect to outstanding grants or other contractual agreements executed pursuant to this subsection. To assure program continuity and orderly planning and project development, the Secretary shall submit to the Congress (A) authorization requests for fiscal years 1977 and 1978 no later than February 1, 1973, (B) authorization requests for fiscal years 1979 and 1980 no later than February 1, 1975, and (C) authorization requests for fiscal years 1981 and 1982 no later than February 1, 1977. Such authorization requests shall be designated to meet the Federal commitment specified in section 2 of the Clean Water Commitment Act of 1970. Concurrently with these authorization requests, the Secretary shall also submit his recommendations for any necessary adjustments in the schedule for liquidation of obligations."
The correspondence, presented by Mr. MUSKIE, is as follows:
NATIONAL LEAGUE OF CITIES, U.S. CONFERENCE OF MAYORS,
Washington, D.C.,
January 20, 1970.
Hon. EDMUND MUSKIE,
U.S. Senate,
Washington, D.C.
DEAR SENATOR MUSKIE: The National League of Cities and the U.S. Conference of
Mayors believe that abatement of water pollution is among the most urgent problems facing our nation. We have recently conducted an extensive review of the Federal Water Pollution Control Program. The resulting enclosed report cites current problems and suggests major changes in the Federal Water Pollution Control Act.
The changes we recommend include:
Establishment of a long-term funding program for clean water;
An increase in the standard matching ratio for federal support of treatment plant construction from the current 30 percent to 50 percent;
Increased emphasis on allocation of funds based on need and effectiveness of the projects in controlling pollution.
Both this report and the enclosed letter to President Nixon urge the President to utilize the full $800 million appropriated for FY 1970 for clean water. In addition, we support the appropriation of the $1.25 billion authorized for the clean water program in fiscal 1971.
Because of your interest in and support for clean water legislation, we urge you to examine our recommendations closely and consider them favorably as the Federal Water Pollution Control Act is being reviewed by the Congress. If you wish further information on our proposal we will be happy to provide it to you.
Sincerely,
JOHN GUNTHER, Executive Director,
U.S. Conference of Mayors
PATRICK HEALY, Executive Vice President,
National Leagues of Cities.
NATIONAL LEAGUE OF CITIES,
U.S. CONFERENCE OF MAYORS,
Washington, D.C.,
January 12, 1970.
The PRESIDENT of THE UNITED STATES,
The White House,
Washington, D.C.
DEAR Mr. PRESIDENT: The National League of Cities and the U.S. Conference of Mayors believe that abatement of water pollution is among the most urgent problems facing our nation.
We are encouraged by your recent statements stressing priority far improvement of the environment and by Congress' demonstrated commitment to clean water in voting $800 million for pollution control facilities in fiscal 1970. However, we are deeply concerned that this $800 million so badly needed for improvement of the nation's waterways will not be spent and that the long term effort to achieve a quality environment is being sacrificed to the immediate concern with inflation.
Developing an effective local clean water program is a substantial task involving years of planning, often necessitating voter approval of bond referenda, and requiring binding long term commitments for the financing and construction of capital facilities. Relying on the promise of the Clean Water Restoration Act of 1966, many localities initiated substantial programs which now collectively have needs for Federal assistance approaching $2.5 billion. The recent Congressional appropriations action was a significant step toward fulfilling these needs. Further delay and uncertainty in allocating the $800 million now available may seriously increase costs and impede progress of the national clean water effort. This vital long term program should not be subjected to such delays and confusion.
To dispel these concerns and reaffirm the national policy to achieve a quality environment, the National League of Cities and the U.S. Conference of Mayors urge you to make an immediate commitment to spend the $800 million by directing the Interior Department to allocate all funds for state and local programs during the current fiscal year.
Sincerely yours,
PATRICK HEALY, Executive Vice President,
National League of Cities.
JOHN GUNTHER,
Executive Director,
U.S. Conference of Mayors.
CLEAN WATER IN THE 1970's
The Federal Water Pollution Control Act currently authorizes federal assistance to local governments for construction of sewage treatment works through fiscal 1971. Because of the long-term nature of the commitments involved in this program, reauthorization of the Federal Water Pollution Control Act will be necessary during 1970 to assure localities an unbroken pattern of federal assistance with which they can plan and implement clean water programs.
Because of its substantial importance in local efforts to achieve a high quality environment, the National League of Cities (NLC) and the U.S. Conference of Mayors (USCM) have closely monitored the progress of the Federal Water Pollution Control Program.
Staff of NLC and USCM have discussed the program with many local officials, and in late November of 1969, NLC and USCM convened a special task force of local officials expert in the water pollution control fields to examine the Federal Water Pollution Control Act and make recommendations for program changes believed necessary to improve the effectiveness of the water pollution control effort. The special task force included: Vinton W. Bacon, General Superintendent, Metropolitan Sanitary District of Greater Chicago; William T. Eiffert, Director, Department of Water, Dayton, Ohio; Charles V. Gibbs, Executive Director, Municipality of Metropolitan Seattle; Henry J. Grasser, Superintendent of Water, Dallas, Texas; Charles B. Kaiser, Jr., General Counsel, Metropolitan St. Louis Sewer District; and F. Worth Landers, Director of Public Works, Portland, Maine.
The recommendations and following report are the result of discussions of this task force and discussions with city officials, state municipal league executives and other persons concerned with local application of the Federal Water Pollution Control Act.
RECOMMENDATIONS
1. NLC and USCM recommend that administrative procedures be revised to become more consistent with the goals established by the Federal Water Pollution Control Act by placing greater emphasis on overall water quality improvement rather than individual polluting sources.
2. NLC and USMC recommend that state priority setting systems be revised to emphasize effectiveness of projects in abating water pollution. Included in this redirection should be an amendment to the Federal Water Pollution Control Act to place greater emphasis on pollution control effectiveness in priority setting.
3. NLC and USMC recommend that water pollution plans should be developed with the river basin as the essential unit in the planning structure.
4. NLC and USCM recommend that the Federal Water Pollution Control Act be amended to allow the federal government to enter into long-term commitments obligating a substantially increased level of funds for expenditures over the next five years to provide federal share of costs for implementing river basin plans as these plans are developed.
5. NLC and USCM recommend that the allocation formula among states be modified; State allocations would be continued according to a population formula to the extent that such allocations are necessary to implement elements of river basin plans within a particular state, but where funds are not needed to implement projects within a state's borders, no more funds would be assigned to that state. The remaining available funds would be divided, again on a population formula, among those states which still require federal assistance to implement elements of approved river basin plans within their borders.
6. NLC and USCM recommend establishment of a basic 50% matching ratio for all projects, regardless of the degree of state participation in financing the non-federal share of project costs.
7. NLC and USCM recommend that the level of assistance for projects provided under the Federal Water Pollution Control Act be increased by 20% for those localities which, in constructing their existing facilities, have received federal or state assistance from any source, which, in the aggregate, amounts to less than 20% of the cost of these facilities which would be eligible for assistance under the Federal Water Pollution Control Act.
INTRODUCTION
The planning, financing and construction of capital facilities required for municipalities to meet the water quality standards of state water pollution control plans must, of necessity, take place over periods of several years. Advance planning, voter approval of bond referenda, and binding long-term commitments for the financing and construction of capital facilities are all often necessary elements of local clean water efforts. The long-term nature of such programs requires that the financing and basic policy assumptions upon which they are developed be reasonably stable. Policy assumptions and financing commitments which shift sporadically cannot be the basis of a long-term capital improvement program.
Currently, federal aid for local clean water programs depends entirely upon the annual appropriations process, subjecting local capital financing programs relying on federal assistance to the continued uncertainties of support incident to the annual competition for dollars in Congress. Even when the level of support from Congress is decided, allocation of appropriated funds for state and local action to abate water pollution is by no means assured, for the size of the clean water program makes it a convenient subject for manipulation by fiscal policy-makers whose primary concern is short-term shifts in the economy rather than longer range environmental problems posed by water pollution.
In addition to problems posed by the uncertain commitment of Federal assistance, the federal policy assumptions and program direction upon which long-term state and local capital improvement programs we based have often been revised as new personnel come into positions of responsibility at the Department of Interior and the Federal Water Pollution Control Administration (FWPCA) or as new ideas become popular in the water pollution control field.
These changes, while not affecting the basic goals of the program, often represent changes of emphasis which have significant cost implications for state and local program participants. The changes of emphasis may represent best theory for achieving success in a clean water program.
But to expect rapid compliance by states and localities deeply committed in long-term projects and financing programs which may be difficult and costly to change once they are well underway, discourages further long-term program commitments and creates confusion in the state and local programs which can be detrimental to the overall water quality effort.
Examples of changes in emphasis of the Federal Water Pollution Control program which have caused concern at the local level are those changes relating to the extent to which construction of secondary treatment works will be compulsory as a condition of receiving federal assistance and the extent to which the availability of federal assistance will affect the standards compliance pressure placed on municipalities by the FWPCA. Recent changes have raised the pressures to build secondary treatment works and insisted that strong standards compliance pressure will be applied regardless of the availability of federal assistance.
New discussions of sewage overflow problems and the necessity of separating storm and sanitary sewers or utilizing alternative devices to prevent discharge of raw sewage into waterways during periods of heavy demand on sewer capacity raises the possibility that new policy directives will be issued to cover this area in the near future. Again the changes called for may, be good, but if immediate compliance with new directives is expected, costly modification may be required which will delay implementation of existing clean water programs
DIFFICULTIES OF FWPCA UNIFORM REQUIREMENTS
The problem of shifts in emphasis is created because of attempts by the FWPCA to apply a fixed set of program requirements nationally to a myriad of programs facing very different pollution control challenges. These programs in turn are implemented by governmental units with greatly differing characteristics, each of which must fit its pollution control effort, and many other vital programs, to its limited revenue structure.
An example of the potential difficulties which may develop from imposition of hard-and-fast program requirements of FWPCA may be found in examination of the now strictly enforced requirement that all municipalities, regardless of individual local need or financial capability, build secondary treatment facilities. Municipalities which could construct primary treatment works but cannot also afford the local share of costs for secondary treatment works may be forced to delay implementation of any treatment program. In addition, the necessity of secondary treatment for all sewage at today's state of program development is not universally accepted doctrine. The Examination into the Effectiveness of the Construction Grant Program for Abating, Controlling and Preventing Water Pollution, published in November 1969 by the General Accounting Office (GAO) notes:
"We believe that the assimilative capacity of waterways should be considered in planning for the construction of waste treatment plants. In some cases, secondary treatment at all locations will be insufficient to maintain the desired quality of a waterway, while in other cases only primary treatment may be necessary."
The Department of Interior, in commenting on the GAO report and defending its national application of a secondary treatment requirement, stated that exceptions might be made in the case of some coastal waters.
The concept of broad requirements applied to all individual conditions fails in implementation even within the Interior Department and is severely complicated by the sometimes inconsistent actions of other federal agencies whose responsibilities affect the water pollution control field.
Within FWPCA, the various regional offices apply differing standards to determine eligibility of projects for federal assistance. The problem is particularly important as it relates to determination of eligibility for various segments of interceptor sewer projects. Such differences in eligibility determinations do not appear serious now, but could become so if national policy is revised to place greater emphasis on seeking solutions to storm drainage and sewage outflow problems.
Differences with pollution control activities controlled by other departments also exist. Recently these differences have been highlighted in the conflict between Minnesota's desire to maintain its water quality standards and the Atomic Energy Commission's certification allowing construction of a nuclear power plant in that state.
States and localities seeking aid for sewer facility construction have been known to go on shopping trips, shifting their grant application from one agency to another until they find one that accepts the standards of the project they have developed. Such is particularly true of smaller communities which can receive grants for waste treatment or sewage facilities from FWPCA, the Department of Agriculture, the Department of Housing and Urban Development or the Economic Development Administration. Each of these grant programs has separate standards and requirements which a community can choose among.
While Section 10 of the Federal Water Pollution Control Act calls for establishment of water quality criteria and water quality standards and overall state plans to achieve these criteria, it was the opinion of local officials consulted by NLC and USCM that the FWPCA Program has essentially become one of developing and applying effluent standards to particular municipal and industrial polluters with little regard for the actual use intended or the level of water quality established for the affected waterway. This conclusion is backed by the GAO Report which criticized the FWPCA for failure to coordinate its program to achieve most effective water quality results:
"Our examination has shown that FWPCA and the states have not adequately coordinated the planning and the construction of waste treatment facilities with that of other major polluters on a waterway. Rather, the construction of municipal waste treatment facilities appears to have been administered without sufficient regard to what was being planned or done by other municipalities and industries. As a result, significant amounts of federal, state, and local funds have been expended for the construction of waste treatment facilities which, in many cases, have not resulted in obtaining the maximum benefits in terms of improved water quality because major polluters – industrial and municipal – located nearby continued to discharge untreated or inadequately treated wastes into the waterways."
Such a program aimed at individual polluting sources without regard to the quality of the total waterway would appear inconsistent with the purposes of the statute which aims at achieving total water quality improvements in the nation's waterways.
NLC and USCM recommend that administrative procedures be revised to become more consistent with the goals established in the Federal Water Pollution Control Act by placing greater emphasis on overall water quality improvement rather than individual polluting sources.
This can be achieved by developing clean water standards which relate to the projected uses of the waterways in question. With these use standards as a base, water quality criteria can be developed consistent with the projected waterway uses. Plans could then be made to meet these criteria expeditiously but also consistent with the particular conditions of the area affected. Such plans would include a coordinated program of improvement for municipalities and industries which may contribute pollution to the affected waterway.
DOLLAR ALLOCATION PRACTICES
Contributing to the confusion of direction in the Federal Water Pollution Control Program is the present system for allocation of dollars for grants to local treatment works under Section 8 of the Federal Water Pollution Control Act. Funds are allocated among states according to a population formula, except for the first $100 million which is allocated on a formula 50% according to population and 50 % according to relative per capita income of the state. The money is then distributed within states according to project priority lists prepared by the state and submitted to FWPCA as part of the state water pollution control plans. The priority lists are generally followed without question by FWPCA in making grants.
State control of priority lists has resulted in serious flaws in the program because the states in their priority setting systems have failed to use dollars most productively to encourage projects which could give greatest benefits in pollution control. The GAO Report was critical of the present results of grant distribution according to state controlled priorities for this reason.
There has also been concern that the pollution control needs of. major metropolitan areas have not received adequate recognition in this program. The 1969 study of The Cost of Clean Water, published by the Interior Department notes: "State priority systems admittedly stress the small town in many cases."
The following chart shows, by population of the municipalities, the number of waste treatment projects for which federal construction grants were made through June 30, 1969, and the amount of the grants.
A survey by the Municipality of Metropolitan Seattle revealed that 26 major sewage agencies serving 31.8% of the nation's sewered population and controlling 24% of the nation's investment in pollution control facilities have received only 6% of all federal aid for sewage treatment facilities under the Federal Water Pollution Control Act. More specifically, in Ohio 58% of waste treatment facility funds have been distributed to serve the one-quarter of the state's population which lives in counties under 100,000 population, and in Alabama, the city of Birmingham and surrounding Jefferson County had received as of January 1969, less than $1.5 million of $26.7 million allocated to the state, though the city and county contained 15 % of the state's population.
There are two reasons for this discrimination against the larger metropolitan areas and failure to use federal pollution control dollars in projects which would be most productive in abating water pollution.
1. For the first decade of its existence the Federal Water Pollution Control Act strongly favored grants to smaller communities. Dollar limits were placed on federal assistance to individual projects which discouraged applications of communities whose programs required multi-million dollar expenditures.
Today, the only limitation on grants is in the requirement that at least 50% of the first $100 million appropriated each fiscal year be used for grants for treatment works serving municipalities of under 125,000 population. This limitation does not appear to be a significant factor affecting fund allocations.
2. The second factor adversely affecting dollar distribution in the Federal Water Pollution Control Program is the traditional state pattern of dollar distribution for state controlled federal grant programs. This pattern results in dollars being distributed broadly across the states in relatively small grants with only limited regard to need in order to satisfy the many competing political pressures which are applied to state dollar distributing agencies. Such dollar distribution patterns have resulted in inequitably small allocations of state channeled federal assistance to major urban areas and continue to do so today.
Many state priority setting systems, in addition to recognizing a project's pollution control potential and the readiness of the municipality to proceed with construction, also place major emphasis on factors irrelevant to pollution control such as the median income of the community, per capita costs of the project (with higher per capita cost being, strangely enough, a favorable factor in getting higher priority), and bonded indebtedness of the community.
While it would superficially appear that such priority criteria are aimed at determining the financial need of the community, on closer examination, this is not the case. Many communities with a lower per capita cost or higher median income – factors which lower their position in the priority scale – must provide many more services for their populations than communities which can achieve a higher priority rating. The extent to which a community provides other services which compete for dollars which might otherwise be expended on water pollution control is not considered sufficiently in any state priority setting system. Thus, the community with a low median income, but a cost of $30 per capita for construction of a pollution control facility, is favored over the community with a $20 per capita cost which also must make substantial expenditures for improvement of highways, schools, recreation, etc. which may not be required at all of the unit with the $30 per capita cost for the pollution control facility.
The priority setting structure has also led to the paradoxical situation that many cities which are low on the state priority list are feeling the greatest enforcement pressure to build pollution control facilities to comply with state water quality standards. These cities, generally the larger ones, are placed in such a situation because they are visible in creating major pollution problems that become the basis for public concern and resulting enforcement action. A striking example of this is the city of Toledo, Ohio, against which in September of 1969, the Interior Department initiated a compliance proceeding to force construction of a waste treatment works. Though Toledo was the first city against which enforcement action was directed, it stands fifty-first on the Ohio fiscal 1970 priority list and as such, may not even receive a grant under Ohio's allocation of the $800 million appropriation for fiscal 1970.
NLC and USCM recommended that state priority setting systems be revised to emphasize effectiveness of projects in abating water pollution. Included in this redirection should be an amendment to the Federal Water Pollution Control Act to place emphasis on pollution control effectiveness in priority setting.
The state by state need levels are also no longer consistent with the dollar distribution formula established in the Act. In the early years of the program, when funding levels were low and there was a universal need to upgrade treatment facilities, a dollar distribution formula generally following population patterns resulted in use of almost all funds allocated to each state. Today, many states with widely dispersed populations have exhausted their capacity to use funds equal to their share of the substantial federal appropriation being made available. For example, in the fall of 1969 Utah, with a population of 1,024,000 indicated ability to use $238,540 in Federal aid while Maine, with a population of 979,000 required $19,737,725 to cover the Federal share of its program. Even among large urban states, need patterns are not consistent. New York indicated a need level nearly thirteen times greater than California. The following chart, listing states in order of population, illustrates the differences in state perceived need levels for federal assistance as of fall, 1969.
While some states today could not even use their share of a $100,000,000 appropriation, the needs of others could not be met even with an appropriation of several billion dollars under the present population related distribution formula.
RIVER BASIN PLANNING
Major changes in the dollar allocation pattern are needed to end the inequity of the present distribution plan and assure most effective use of federal, state and local funds in controlling pollution.
NLC and USCM recommend that water pollution control plans should be developed with the river basin as the essential unit in the planning structure. State boundaries and the state wide pollution control plans and fixed requirements of the Interior Department would become less important in relation to the plan for the individual river basin. Emphasis on the river basin as a basic planning unit will allow development of programs more relevant to the characteristics of a particular area. It will permit individualized problem solving approaches to controlling water pollution with guidance provided by general federal supervision. The basin plans would identify pollution problems and set water quality criteria and pollution control standards for municipalities and industries to meet, as under the present Act. But in addition, the new basin plans would set the financing and enforcement plan and priorities in its projection of the date for compliance with the water quality standards. Thus, the enforcement program would be required to take into account federal, state and local financing capabilities which are the key to local ability to comply with pollution control directives.
These plans and financing and enforcement priority systems would be devised through meetings of local officials with officials of the state or states involved in the river basin program. The federal role would be oversight of the state and local action to assure the goal of cleaner waterways set in the Federal Water Pollution Control Act is met. Such federal action might include providing the mechanisms for states and localities to meet together to develop these pollution control plans where the states were slow to act on their own. Also, FWPCA would work with states and localities as under the present Act, to establish pollution control timetables.
A revision of the program with greater emphasis on basin planning would mean no slackening of the present effort to clean up the nation's waterways. What it would assure is a coordinated effort geared to the particular conditions of a river basin area, giving states and localities greater responsibility in solving their own problems rather than trying to work their special conditions into general guidelines dictated from Washington.
DEPENDABLE FINANCING
It is now clear that the need for high levels of financing for municipal waste treatment works will not end at any time in the near future when any construction backlog of 50 waste treatment works construction is completed. The 1969 report on The Cost of Clean Water by the Department of Interior noted:
"Long-held expectations that the investment requirements associated with municipal waste treatment would be eased when some fixed backlog of needed treatment works was worked off do not seem likely to be borne out by events. As treatment deficiencies give way to new plant construction, investment requirements imposed by replacement, upgrading, and treatment of industrial wastes have been taking their place."
In light of this, federal, state and local thinking must be oriented toward long term financing programs, assuring continuously high levels of support for water pollution control efforts.
States and localities will be unable to develop river basin plants with reliable commitments for financing, facility construction and enforcement if the federal commitment of assistance is uncertain. Without this commitment, the first and crucial element of the river basin plan implementation structure – financing – remains tenuous. The inadequacy of the present financing structure is recognized by all. Federal Water Pollution Control Commissioner David D. Dominick, has stated;
"Piecemeal financing and year-to-year uncertainties occasioned by the previous legislation clearly does not allow for the lead time and planning which is required at the state and local level. So one of the top priorities in seeking any resolution to the financing issue is to come up with a program which will give firm assurances as to the future availability of funds and upon which firm planning for construction needs can be based."
The GAO Report cited the failure of adequate federal funding as one of the most serious impediments to success of the present program.
“A serious question exists, however, as to the attainability of the water quality standards by the dates in the implementation schedule, because due to federal funding in amounts significantly less than amounts authorized, construction is proceeding at a rate well below that which was anticipated."
The failure of federal funding has also caused serious dislocation in the funding programs of those state and local governments which did commit substantial funds to pollution control activity on the assumption that adequate federal aid would be available. In December of 1969, state and local governments were owed over $760 million as reimbursement for the federal share of costs for approved water pollution control projects which they had constructed using their own resources with the hope that federal funds would later be available to repay them.
Connecticut, Maryland, Massachusetts and New York are states which have been among the leaders in aiding local waste treatment financing programs. Each of these states floated major bond issues to provide the state share of funds, and in each state, clean water funds are being depleted faster than planned because expected federal contributions have not been made.
Connecticut has had to float an additional $100 million in bonds to keep its pollution control program on schedule. Maryland Governor Marvin Mandell told a Senate committee that the Maryland Sanitary Facilities Fund, which had been planned to last through 1980, might go broke in 1970 unless more federal funds were forthcoming. And a spring issue, 1969, of the Daily Bond Buyer had this to say about New York's problem:
"It is questionable whether Governor Rockefeller's six-year $1 billion pure water program will meet its goals in either cost or timing, a report now completed by the Department of Audit and Control indicates.
"The findings result from a depth study made by staffers in the office of State Comptroller Arthur Levitt and designed to trace the program's progress from its inception on April 1, 1962 through February 29, 1968.
"Unless the Federal Government comes up with more money than is now foreseen, the report indicates the job will require $160 million more in state funds than the $1 billion bond issue provides – an estimate that doesn't allow for escalating construction costs which seem certain.
"The findings also call attention to a lagging timetable which makes it likely that 62 required projects costing $1.5 billion will not be started by March 31, 1972 – the current deadline for committing bond monies. It observed that over half of the potential projects were not yet under construction."
Many local governments have faced a similar predicament, having to scrape together extra funds to complete projects for which it was thought federal aid would be available.
Also, the low level of federal funds has discouraged many localities from taking action to build control facilities. The state of Georgia in replying to an October 1969 survey of pollution financing capacities, noted:
"City and county governments have been discouraged from developing abatement programs and applying for federal construction grants because of the gap between federal funds authorized and federal funds appropriated. It is estimated that an additional $25 million in grant applications would have been filed last fiscal year, if authorized federal funds had been appropriated."
For the national water pollution control effort to succeed an entirely new financing structure must be developed consistent with the long term nature of programs which state and local governments must undertake to clean up their waterways. NLC and USCM recommend that the Federal Water Pollution Control Act be amended to allow the federal government to enter into long term commitments obligating a substantially increased level of funds for expenditure over the next five years to provide the federal share of costs of implementing the river basin plans as these plans are developed. Levels of annual expenditure would be assigned to spread use of the obligated funds over the next five year period consistent with the extent to which the funds would likely to be required yearly in implementing the river basin plans. An essential element of the new program would be that obligation levels would be reviewed every two years and new obligational authority and expenditure levels again assigned for five year periods consistent with new need levels identified at the review period.
The long term nature of the program also requires changes in the dollar allocation formula to give greater flexibility to the program in assigning federal assistance to the areas of greatest needs. NLC and USCM recommend that the allocation formula among states be modified. State allocation would be continued according to a population formula to the extent that such allocations are necessary to implement elements of river basin plans within a particular state, but where funds are not needed to implement projects within a state's borders, no more funds would be assigned to that state. The remaining available funds would be divided, again on a population formula, among those states which still require federal assistance to implement elements of approved river basin plans within their borders. Because river basin plans would be of a long term nature, need levels and allocations of dollars under the new program could be determined well in advance of the year of actual expenditures so that the program could proceed expeditiously when federal dollars become available, Where a state did not identify needs equal to its dollar allocation a year in advance of planned expenditure of those funds, expenditure authorizations would be reallocated to projects in other states identifying greater need levels.
MATCHING RATIOS
Another essential element of any new financing program, besides the long term commitment of federal funds, must be a greater assurance to local governments of the matching ratio of federal funds which will be available to them to construct waste treatment works. Currently the local match required for local participation in the program ranges from a low of 20% to a high of 70% or more, all dependent on factors completely beyond control of the individual local unit. The principal variant in this matching ratio is the willingness of the state to contribute 25% of the cost of local projects. However, while the state contribution is a benefit of the local government, the Federal Water Pollution Control Act gives no real incentive to the states themselves to provide any funds. Actually, there is a disincentive to state action in that the set amount of dollars allocated to the states can cover more projects if the state does nothing and federal dollars are distributed on 30% of cost grants, than if the state acts and federal dollars are distributed on 50% of cost grants. In Oregon, the State legislature discontinued participation in the 50% federal, 25% state grant program because federal funds available at 50% grants were not sufficient to cover all projects required by the state's Environmental Quality Control Commission. While the actual reasons for this action were subject to question, the reason the legislature gave was that with discontinuance of state participation, federal assistance would be available to cover more projects.
According to FWPCA data as of December 1969, only 14 states were contributing the full 25 % share of program costs to make local programs eligible for the 50% federal matching funds. These were the states of Connecticut, Indiana, Maine, Maryland, Massachusetts, Michigan, Missouri, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, Vermont and Wisconsin. Four other states – Delaware, Oregon, Tennessee and Washington – had programs to provide some share of local project costs.
The real stimulus behind those states which have appropriated funds to match local dollars in the pollution control effort appears to be a state level concern with pollution problems rather than any stimulus provided by the federal act. Those localities with severe pollution problems in states where state legislatures fail to commit resources to solving water pollution problems should not, however, be punished financially for such state inaction.
NLC and USCM recommend establishment of a basic 50% matching ratio for all projects, regardless of the degree of state participation in financing the non-federal share of project costs.
This uniform matching ratio, a 20% increase from the current 30% rate, will give localities greater assurance of the level of federal assistance they can expect. It would not diminish state involvement in financing, since there is no real encouragement to state action under the present program.
An increase in the matching ratio is also necessary because localities are facing increasing difficulties in providing the local share of costs for waste treatment facilities under the present matching ratios. This situation has developed because of the rapidly increasing demands for financing various social programs which are being made upon the limited local revenue base, and the strained condition of the municipal bond market which has created unprecedented difficulties for local governments in obtaining financing for capital projects such as waste treatment facilities. (For detailed discussion of local financial problems, see Appendix A).
Because of the high demands for local expenditures, a number of municipalities have incurred debts up to or closely approaching their bonded indebtedness ceilings. In many cases, a substantial portion of this indebtedness has been incurred for water pollution control programs.
Though many municipalities have needs for additional water pollution control facilities, it will be difficult for municipalities which have incurred these debts close to their debt limits to finance much of the cost of these facilities from their own resources. The condition will be aided by an increase in the basic matching ratio to 50%. However, extra support may be needed for municipalities which are at or near limits of available financing for pollution control facilities.
Such additional support for future facilities is justified where municipalities have used substantially their own financing resources to build existing facilities with little assistance from the state or federal government. In such cases, their desire to proceed with further improvements should not be constrained by the limits on their financing capability resulting from their prior initiative in constructing pollution control projects without the level of federal assistance provided in the Federal Water Pollution Control Act. NLC and USCM recommend that the level of assistance for projects provided under the Federal Water Pollution Control Act be increased by 20% for those localities which in constructing their existing facilities have received federal or state assistance from any source which, in the aggregate, amounts to less than 20% of the cost of those facilities which would be eligible for assistance under the Federal Water Pollution Control Act.
CONCLUSION
The grant-in-aid program under the Federal Water Pollution Control Act has provided valuable and necessary assistance to state and local water pollution abatement efforts. However, federal aid dollars have not always been used most effectively. Under the present dollar distribution formula and state priority setting practices, federal assistance is not pinpointed on the most severe pollution problems where its use could be most productive. Further, uncertainties resulting from dependence on annual appropriations to support the program have created confusion and costly delays for state and local pollution control efforts in need of federal assistance. NLC and USCM believe that their recommendations can substantially improve the effectiveness of the Federal Water Pollution Control program and lead to significant progress toward the goal of a quality environment in the 1970's.
OTHER ISSUES FOR CONSIDERATION
In addition to the above points upon which specific recommendations are made there are three issues which NLC and USCM believe merit close examination in the review of the Federal Water Pollution Control Act, but upon which specific recommendations cannot be made at this time.
These are:
1. Should land acquisition be an item eligible for federal assistance under the FWPCA program? Presently it is not.
2. Should much greater assistance be available under FWPCA for support of programs to separate storm and sanitary sewers and construct storm sewers? Presently projects relating to separation of storm and sanitary sewers or other devices to meet the problems of sewage overflows are not adequately covered in the Federal Water Pollution Control Act. Increased aid for storm sewer construction is considered particularly necessary as such facilities do not lend themselves to an equitable system of allocating user charges, and thus must depend more on general revenues for financing. In reviewing this question it may be advisable for the Congress to study in detail the progress made to date in research and development efforts supported by the Federal Water Pollution Control Act. New technology might have significant impact in reducing the cost of solutions to the combined sewer problem and generally developing more effective waste treatment programs without the substantial costs now anticipated.
3. What level of need should be recognized in determining the level of federal assistance to be available under Section 8 of the Federal Water Pollution Control Act? This question will be determined in part by the answers to questions 1 and 2 and in part by further examination of the current waste treatment facility needs. Total cost figures are estimated to range as high as $65 billion in the next decade, depending on solutions developed for the storm sewage overflow problem. It would appear from existing data that Federal assistance of at least $10 billion for fiscal years 1972 through 1976 will be absolutely necessary to support the substantial state and local clean water programs which can make significant progress in abating water pollution.
APPENDIX A – THE LOCAL CAPITAL FINANCING CRISIS, ITS RELATION TO FEDERAL AID ALTERNATIVES
Even if a city is completely committed to action to construct waste treatment facilities, the city may not be a free agent to collect and dedicate the necessary resources to achieve this purpose.
Local revenue raising capability, and to some extent, local spending choices are severely constricted by state law:
States tell cities what taxes they may raise, and in some cases how high they may raise them.
States designate who may and who may not be taxed.
States set limits on how much debt may be incurred and what interest rates may be paid, and
States sometimes mandate services which must be performed and what people must be paid to perform them.
From limited local revenue bases, demands for the full variety of municipal services must be filled, and demands for increased commitments of local resources have never been greater. Local government is the government closest to the people, and it is local government toward which people turn first when they need help. With only so much money to go around, difficult choices must be made: better schools or better sewers, more firemen or more social workers, safer streets or cleaner waters.
Compounding the problems of financing local capital improvements today is the strained condition of the municipal bond market.
From September, 1968, the time many experts assign for the beginning of the municipal credit crunch, through December of 1969, over $2.8 billion in state and local bond issues have failed to sell because bids were rejected, no bids were received, or the issues were postponed because of high interest rates. Many of these bonds have been for water resource related projects.
During the last half of 1969, municipal bond yield rates consistently set records, with December rates averaging over 6.5 percent. At current interest rates municipalities will pay more in interest costs than in principal payments on most long term issues for water pollution control. As long as such rates persist, every extra dollar of a Federal grant for capital facilities saves the local government more than two dollars in principal and interest costs for such a project.
NLC and USCM are concerned that the debt service financing approach being discussed as an alternative to direct grants from appropriations will further disrupt the municipal bond market and not accomplish the objectives of the Federal Water Pollution Control program. Testifying before the Senate Commerce Committee in June of 1969, Secretary of Transportation John A. Volpe stated the administration's opposition to debt service financing as it would affect airports:
"Because it is inflationary, and because it creates a very long-term commitment for the Federal government, the administration does not favor the debt-service approach." Inflation remains a serious problem. In addition, there are several other reasons why debt service financing is unacceptable as an alternative for financing the clean water effort:
1. The Federal government has a commitment to aid in construction of waste treatment facilities and should not turn to the severely strained local debt market to fulfill this commitment.
2. Use of local bonds to finance the full cost of waste treatment facilities will increase pressures on the local bond market and make capital financing for all municipal facilities – schools, hospitals, airports, waste treatment facilities, etc. – more difficult. An increase in interest rates of only ¼ of 1% could raise interest costs $250,000 to $400,000 on an average $10,000,000 bond issue.
3. In communities whose bonded indebtedness is close to statutory debt ceilings, inclusion of the federal share of waste treatment facilities in the allowable local debt may prevent financing of other necessary local programs.
4. Because the contract debt service financing proposal does not propose to cover the interest costs for the Federal share, effective matching ratios for Federally assisted projects would be reduced 50% or more from whatever matching ratio for principal costs is proposed. Even full Federal payment of principal costs would result in a matching ratio of less than 50% at today's interest rates.
5. Those local governments in greatest need of financial assistance – the localities which cannot market bonds because of statutory interest ceilings or because they have incurred debts up to bonded indebtedness limits – would be effectively excluded from participating in the contract debt service financing program because of difficulties they would face in marketing their bonds.
6. Adoption of the contract debt service proposal in one Federal program aiding local capital financing would set a precedent for use of this financing device in other Federal programs, seriously compounding the difficulties discussed above.