Subsection (j) provides for the payment of bonus grants in the amount of 40 percent of the basic grant for each "improved program" element achieved. If all five elements are achieved a grant in an amount of 250 percent of the basic grant may be made.

Subsection (k) would authorize the Administrator to make grants, not in excess of 10 percent of the funds authorized by section 7, to States and interstate agencies for support of exceptional projects dealing with significant water pollution problems.

Section 2 of the bill would amend section 5 of the Act, relating to research and development, by extending authorizations for appropriations for those authorities through fiscal year 1972.

Section 3 of the bill would amend section 6 of the Act, relating to the development of technology in the areas of advanced waste treatment, combined sewers and industrial waste treatment, to provide authority to pursue the development of such technology within the Environmental Protection Agency as well as through grants and

contracts.

Section 4 of the bill would amend section 23 of the Act to include American Samoa and the Trust Territory of the Pacific Islands within the definition of "State" for all purposes of the Act. Those areas would be able to participate in all State programs and activities under the Act.

ANALYSIS OF S. 1013, A BILL TO AMEND SECTION 8 OF THE FEDERAL WATER POLLUTION CONTROL ACT

Section 1 of the bill would amend section 8 of the Federal Water Pollution Control Act.

Subsection 8(a) would authorize Federal grants for the construction of treatment works to prevent the discharge of inadequately treated Wastes and for other purposes. Paragraph 8(a) (1) would retain the provisions of the present Act authorizing the Administrator to make grants for treatment works and related reports, plans and specifications. No change would be made in the existing definition of "treatment works" in section 23 of the Act and no change would be made in those eligible to receive grants, which would include States, municipalities, intermunicipal agencies and interstate agencies.

Grant limitations would be listed in paragraph 8(a) (2). There would be some modifications and additions to the grant limitations in the present Act. Subparagraph 8(a) (2) (A) would prohibit a grant unless it were approved by the State water pollution control agency and by the Administrator. Subparagraph 8(a) (2) (B) would prohibit a grant unless the grantee agreed to pay all costs not paid for by Federal and

State funds.

Subparagraph 8(a) (2) (C) would permit a grant only if the grantee made provision for satisfactory operation and maintenance of the treatment works. Adequate provision would have to be made for an operating and managerial staff of well qualified personnel. A new provision in this subparagraph would require the grantee to have or develop the financial and other capability necessary to satisfy future

waste treatment needs.

Subparagraph 8(a) (2) (D) would retain the provisions of the existing Act which prohibit a grant unless the project conforms with a section 7 State plan and is entitled to priority over other eligible projects. In addition, the project would have to be consistent with any planning requirements specified by the Administrator in regulations.

Subparagraph 8(a) (2) (E) would retain the provision of the present Act which specifies that the basic Federal grant share is 30 percent of the cost of the project.

Modifications would be made in the provisions of the present Act relating to the requirements for an increased Federal share and the requirements for matching payments by States. Subparagraph Na(2)(F) would provide that the Federal share shall be increased to a maximum of 40 percent if the State agrees to "grant, loan or otherwise finance" 25 percent of the cost. (The required State share is 30 percent in the present Act). The words "to grant, loan or otherwise finance" Would replace the words "to pay" in the present Act to make it clear that the State matching funds need not be an outright grant but may be in the form of a loan. This subparagraph would also provide that the Federal share shall be increased to 40 percent, regardless of whether are State matching funds, if the grantee has a user charge system as well as other capability for satisfying future waste treatment needs.

there

Subparagraph 8(a)(2)(G) would change the provisions of the present Act which provide that the Federal share shall be increased to 50 percent if she State agrees to pay 25 percent of the cost and if enforceable water quality standards have been established. The new provision would increase the Federal share to 55 percent if there are enforceable water quality standards and either the State agrees to grant, loan or otherwise finance 25 percent of the cost, or the grantee has a user charge system as well as other capability for satisfying future waste treatment needs.

Subparagraph 8(a) (2) (H) would add a new provision to prohibit grants unless the grantee provides assurance that it comply with regulations to assure the effective and efficient use of funds under the section.

Subparagraph 8(a)(2) (H)_would add a new provision designed to make more effective and efficient use of construction grant moneys and to avoid certain abusive practices and inequities associated with the treatment of industrial wastes in municipal waste treatment facilities. Grants would be prohibited for projects treating industrial wastes unless the industrial user were required by the grantee to pay back that portion of the project cost attributable to the treatment of industrial wastes. The Federal share of such recovered costs would be used by the grantee to operate and maintain its works and for meeting future waste treatment needs.

Paragraph 8(a) (3) identifies the factors which would be considered by the Administrator in approving a grant under subsection 8(a). Two factors specified in the present Act would be retained, specifically, an assessment of public benefits and the relation of project costs to the public interest. In addition, the Administrator would be required to assess the capability of the grantee to satisfy its own future waste treatment needs.

Paragraph 8(a) (4) would provide a new allocation formula to permit the optimum distribution of funds over the next three fiscal years in closer relationship to the construction needs of the respecting States. Four factors would be employed in distributing construction grant funds among the States. First, 45 percent of the amounts authorized to be obligated in each fiscal year would be allocated on the basis of relative State population; second, up to 20 percent would be allocated to States which agree to grant, loan or otherwise finance at least 25 percent of all project costs during a given fiscal year; third, up to 25 percent would be allocated to States which have approved projects for which grants have not been made or which have been made in a reduced amount because of lack of Federal funds; and fourth, the remainder would be distributed to meet the most serious water pollution control problems as determined by the Administrator. The new allocation formula would give the Administrator a degree of flexibility to direct construction grant funds to areas where funds are most critically needed and where they can be most effectively used. This paragraph would also provide for the reallotment of any sums which are not obligated by a State at the end of a fiscal year because of a lack of certified projects (The Act now calls for reallotment after 18 months.] These funds would be reallotted by the Administrator to meet the most serious water pollution control needs in accordance with the fourth factor mentioned above.

Paragraph 8(a) (5) would authorize Federal payments in reimbursement of State or local funds used to pre-finance the Federal share of qualified projects on which construction was initiated after June 30, 1966, but prior to July 1, 1971. Paragraph 8(a) (6) would extend this authorization with respect to projects on which construction is initiated after June 30, 1971, in order to continue to provide some encouragement to localities to initiate projects even though Federal funding is not then available. However, projects commenced after June 30, 1971, would not qualify for reimbursement unless, prior to the initiation of construction, the Administrator makes three findings. He would be required to find (1) that the State in which the project is located has given funding priority in the current fiscal year to projects in more advanced stages of construction; (2) that the project is necessary to achieve compliance with water quality standards; and (3) that construction on the project will be initiated within a reasonable period of time. This approach would give the Administrator some control over the accumulation of reimbursables and thus minimize abusive practices.

Paragraph 8(a) (7) would direct the Administrator to make grant payments through the disbursing facilities of the Department of the Treasury. Such payments would be required to be used exclusively to meet the costs of construction.

Paragraph 8(a) (8) would retain the provisions from the present Act which direct the Administrator to make certain determinations with regard to the adequacy of wages of laborers working on projects funded under subsection 8(a).

Paragraph 8(a) (9) would define certain terms used in subsection 8(a). Subparagraph 8(a) (9) (A) would define "industrial wastes" as waste discharges (other than domestic sewage) from industries identified in the Standard Industrial Classification Manual and other wastes as determined by the Administrator. Subparagraph 8(a) (9) (B) would retain the same definition of "construction" as appears in the present Act which includes a range of activities from preliminary planning to the actual installation of the facility and alterations and improvements of the facility.

Subsection 8(b) would direct the Administrator to administer section 8 and related sections so as to encourage and assist grantees in developing adequate legal, institutional, managerial and financial capability for meeting foreseeable future waste treatment needs to achieve compliance with applicable water quality standards. Future waste treatment needs would include the operation, maintenance, expansion and replacement of treatment works. This would be an important new provision to encourage local self-sufficiency and possibly to reduce the future levels of Federal funding needed for treatment works construction.

Subsection 8(c) would authorize the appropriation of $2 billion in each of fiscal years 1972, 1973, and 1974 for the purpose of making grants under this section. Sums appropriated would remain available until expended.

Section 2 of the bill would provide that the provisions of the bill take effect on July 1, 1971.

ANALYSIS OF S. 1014, A BILL TO AMEND SECTION 10 OF THE FEDERAL WATER POLLUTION CONTROL ACT

Subsection (a) defines the terms to be used in the section, particularly "water quality standards" and the components of such standards.

Subsection (b) states a Federal policy in favor of encouraging State and interstate action to abate pollution, and provides that the Administrator may not initiate an enforcement action if he determines that a State is taking appropriate abatement action.

Subsection (c) identifies the waters for which water quality standard would be required. These waters would include interstate waters, already subject to standards under the present Act, and, in addition, navigable waters, ground waters; tributaries of any such waters; the contiguous zone (with respect to pollution which threatens the territorial sea); and the high seas (with respect to discharges of matter transported from or originating within the United States).

Under a new requirement contained in subsection (d), the Administrator would be required, within six months after the enactment of the section and from time to time thereafter, to publish in the Federal Register regulations establishing specifications for water use designations, water quality criteria and effluent requirements for the purpose of advising the States in adopting or revising water quality standards. The regulations concerning water use designations will provide methods for assuring that legitimate factors are taken into account. The regulations concerning water quality criteria would, on the basis of the latest scientific knowledge about the effects of identifiable pollutants on health, welfare and the environment, specify minimum and maximum water quality characteristics required to protect various legitimate and beneficial water uses. The regulations concerning effluent requirements would specify the minimum levels of treatment or control which would be generally applicable to various categories of industrial and municipal facilities and other pollution sources, and would specify procedures for determining additional treatment required to comply with water quality criteria or to prevent the degradation of high-quality waters. The Administrator would also be required to publish information concerning recommended pollution control techniques for complying with water quality criteria and effluent requirements.

Under subsection (e), States would have up to one year after the publication of regulations under subsection (d) to submit required new standards and revisions of old standards for all waters specified in subsection (c) which are within their jurisdiction, The Administrator would be required to advise the States as to which elements of existing standards require revision. If the State did not act within the one-year period, the Administrator would be authorized, after a public hearing, to publish regulations setting forth water quality standards for water over which the State has jurisdiction, The Ad