Little water is actually used in the United States, but vast quantities are contaminated. When we flush the toilet, we don't use water, we contaminate it. The overall problem of a clean water supply then can logically be broken down into three parts: 1. There is the regional problem of developing and exploiting new sources of clean, and generally unused water, without damaging the environment by so doing. 2. There is the regional or local government problem of propertly treating effluent for return to the clean water supply source. 3. There is the same treatment problem as it relates to industrial effluent. The National Water Quality Standards Act of 1971, which is under consideration by this subcommittee deals primarily with regional and municipal water treatment problems, standards and enforcement. In the water treatment area, technological improvements constantly are being made which are resulting in faster, and therefore less costly, treatment methods. One area which only recently has come to light is the discovery of traces of heavy metals, such as lead and mercury, in water supply sources. Additional research and some new technology will be required to eliminate these. But, let me again emphasize it is not lack of technology, materials, skills, labor or equipment that is delaying the Clean Water Program. The only lack isof dollars to pay for new and improved facilities. By and large, we feel the bill under consideration is a good one. Our suggestions to the subcommittee deal exclusively with the dollar prblem, through two specific proposals. While there is urgent need for more speed in getting this job done, we should note that a great deal of progress already has been made. A considerable amount of this progress is not yet evident for the projects are not completed and on-stream. For example, the Department of the Interior reports that as recently as 1967, Federal aid funds for construction of municipal waste treatment facilities were granted for projects having a total cost of $70 million. By the fiscal year ended last June, the total cost of like projects was over $2 billion, a four-fold increase in just three years. It is interesting to note that only about 21 per cent of the total cost of these $2 billion worth of new treatment facilities is being paid through Federal grants. The other 79 per cent is being paid from state or local monies. We are pleased to note that the provisions of the bill under considerations would sharply increase the participation of Federal funds. But the problem of local financing will still remain, and it is in this area that we believe more Federal help can be provided at very low cost to the Government. The bulk of the State and local funds required come from bond issues. We all are well aware that the credit ratings of many of these borrowing entities, particularly at the municipal level, have deteriorated in recent years. The result sometimes has been difficulty in marketing these bond issues and almost invaribaly, high interest rates. To help this situation, we respectfully suggest that the subcommittee consider the advisability of providing for Federal loan guarantees to help in the local financing of new treatment facilities. Specifically, we propose an FHA-type Federal loan guarantee for municipalities faced with the necessity of substantial borrowing to finance new water treatment facilities. This type of Federal guarantee has been successful in other areas, it has made credit available, it has kept interest rates at reasonable levels, and it has been done at remarkably low cost to the Federal Government. We disagree with those who feel that municipal and industrial water treatment are two separate problems. While there are no reliable figures available that I am aware of, I would estimate that something like 50 per cent of all industrial effluent goes into municipal systems. This, of course, will vary in different parts of the country, but anything that can be done to quickly improve the treatment of industrial effluent will result in a marked benefit for municipal and regional systems. Yet, we must recognize that investments in costly pollution control facilities are not attractive ones for business management. Such investments almost never produce profits. While there are many public spirited companies moving ahead in this area as rapidly as they can, there also are many companies that will do nothing above and beyond the requirements of law. The problem, therefor, becomes one of making it as attractive as we can for industry to invest in more than minimal treatment facilities and to do it now. And above all, to do it without direct subsidy from the government. To accelerate industrial expenditures for pollution control, we respectfully propose that for a limited period of time, the subcommittee consider making all capital expenditures for pollution control equipment a direct business expense in the year incurred, for income tax purposes. There are a number of reasons for making this suggestion: 1. We believe it will quickly result in a substantial increase in industrial expenditures for pollution control, particularly if the tax incentive is provided for a limited period of time. 2. When combined with public and government-regulatory pressures, the immediate tax saving becomes a strong incentive for industry to buy more and better pollution control now, before costs go up. 3. Assuming a reasonably constant income tax rate, there will be no longrange loss of revenue for while taxes are reduced in the year of the expenditure, there will be no depreciation allowance on this equipment in future years. While some economists may argue that this is an interest-free Federal loan to industry, the government certainly will benefit through reduction of law enforce ment costs, and it will get the job done. 4. This type incentive is easy to administer for any profit or cost reductions resulting from recycling of raw materials, reductions in process costs or recovery of by-products will automatically show up as increased taxable income in future years. 5. Government entities will benefit through lower water treatment costs resulting from higher quality industrial effluent. In summary, it is the belief of the Water and Wastewater Equipment Manufacturers Association that the primary need is for more adequate financing if we are to succeed in accelerating the construction of more and better wastewater treatment facilities. This need for additional financing exists at the Federal level, at the regional and local levels, and in industry. WWEMA basically is in accord with the objectives and provisions of Senate Bill No. 523, but suggests two additions to help overcome the financing problems. First, create an FHA-type system of Federal guarantees for local borrowing entities to help make funds more readily available at lower cost. Second, acclerate the installation of industrial pollution control equipment by making the cost of new facilities or improvements fully tax deductable in the year of expenditure. It is our belief that incentives are far more effective stimuli than bigger administrative agencies and more enforcement. These proposed stimuli will help generate activity in the construction of water treatment facilities now. New facilities will produce the ecological benefits the public is clamoring for. [General Appendix, Section II, containing comments made on subcommittee draft print of July 2, 1971, by representatives from industry, government, conservation, and miscellaneous groups and individuals, follows as Part 4 of these hearings.] О Y 4. P96/10: 92-H9/pt 4 LOGED WATER POLLUTION CONTROL LEGISLATION Part 4 HEARINGS BEFORE THE SUBCOMMITTEE ON AIR AND WATER POLLUTION OF THE COMMITTEE ON PUBLIC WORKS UNITED STATES SENATE NINETY-SECOND CONGRESS FIRST SESSION ON 3. 75, S. 192, S. 280, S. 281, S. 523, S. 573, S. 601, S. 679, S. 927, GENERAL APPENDIX Section II. Comments on Draft Print of July 2, 1971 Printed for the use of the Committee on Public Works WATER POLLUTION CONTROL LEGISLATION Part 4 HEARINGS BEFORE THE SUBCOMMITTEE ON AIR AND WATER POLLUTION OF THE COMMITTEE ON PUBLIC WORKS UNITED STATES SENATE NINETY-SECOND CONGRESS FIRST SESSION ON S. 75, S. 192, S. 280, S. 281, S. 523, S. 573, S. 601, S. 679, S. 927, BILLS AMENDING THE FEDERAL WATER POLLUTION CONTROL GENERAL APPENDIX Section II. Comments on Draft Print of July 2, 1971 Printed for the use of the Committee on Public Works Serial No. 92-H9 U.S. GOVERNMENT PRINTING OFFICE 59-068 O WASHINGTON: 1971 For sale by the Superintendent of Documents, U.S. Government Printing Office |