SEATTLE, WASHINGTON AN EXAMPLE OF FEDERAL GRANT DISCRIMINATION AGAINST A LARGE CITY SEATTLE METROPOLITAN AREA FIRST AND SECOND STAGE CONSTRUCTION $9.9 MILLION FEDERAL GRANTS RECEIVED $44.4 MILLION POSSIBLE FEDERAL GRANTS AT 30% 34.5 MILLION BELOW 30% LEVEL -$ 148 MILLION INVESTED HOW $34.5 MILLION WOULD BE RECOVERED VIA A 20% MAXIMUM INCENTIVE WATER UTILITIES THE CITY OF SAN DIEGO CITY ADMINISTRATION BUILDING 202 C STREET SAN DIEGO, CALIE 9210! March 10, 1971 Mr. Kerry W. Mulligan, Chairman State Water Resources Control Board Room 1140 1416 Ninth Street, Resources Bldg. Dear Kerry, Subject: Grants for Capital Buy-in Contracts This is a request for a new interpretation or perhaps new As you know, the San Diego Metropolitan Sewerage System was When a new agency is accepted as a participant in the Metro We now have cases coming up where an agency would have to spend millions of dollars to build new transmission, treatment and disposal works to serve their needs. Presumably such a system would be eligible for an 80% construction grant. Yet, by building a connecting trunk sewer the agency may be able to participate in the Metro syster, making a far better regional solution. However, the agency is told, in effect, "Maybe we can give you a grant for your connecting line, but not a penny toward your yearly "capacity charge" in Metro." Appendix B Mr. Kerry W. Hulligan -2 March 10, 1971 The local agency is under a terrific political and economic @queeze to choose between a possibly poor solution, 80% paid by grants, vs. a good solution for which grant assistence is not available. The effect on the total picture is, in our opinion, a destrucLive one. The grant program is hit for the same or perhaps more cost to build a new system from roxatch, whereas joining the regional system is a better program for society in general. Grants were made for the original Metro construction. E ch agency was granted a maximum of $250,887, for a total grane of $2,146,370 (see attached Statements dated 3/1/65). This grant total alrendy has been accounted for in a reduction of the "buy-in" c bacity charge, both for original pricipants and for any later ones. Therefore, any grants at this he would not be dupliceting grants of several years ago. Ju would be greatly appreciated if your Board and Staff could review this problem and perhaps find a way to correct it. Your Pssistance vill be greatly appreciated. STATEMENT OF CHARLES V. GIBBS, PRESIDENT AND DIRECTOR, ASSOCIATION OF METROPOLITAN SEWERAGE AGENCIES, AND EXECUTIVE DIRECTOR, MUNICIPALITY OF METROPOLITAN SEATTLE Mr. GIBBS. Thank you, Mr. Chairman. Before I go into some other considerations that we feel are important to the Federal commitment for water pollution control, I would like to refer to exhibit 1 which we put up before you and which, incidentally, is a part of my testimony. We have developed a hypothetical case of two essentially equally sized cities, which in 1960 had the same water pollution control need, $395 million apiece. City "A" spent $170 million in the next 10 years largely through issuance of local bonds, $145 million, as shown in the example. City "B" did nothing. The local sewer service charge to customers in city "A" is currently $2.75 a month. The charge in city "B" is nothing. If city "A" and "B" were treated equally for the remaining work that they had to accomplish and each got a 50-percent Federal grant for all remaining work, you can see that total local bonds required for city "A" would be $257 million and for city "B" only $197 million. In effect, city "A" would have used another $60 million in its bonding capacity. This is $60 million not available for other needs in that community. Let's further assume that the cities grew to the same point in size. At some point in the future, say, in about 15 years when all required pollution control work is completed, the sewer service charge in city "A" would be $4.50 a month per customer and in city "B" $3 per month, a 50-percent differential or inequity. That may not sound like much money per customer, but if you expand that to the annual revenue requirements, you will find that city "A" must produce $13,400,000 more per year than city "B" to satisfy its pollution control needs. This is their reward for moving early to meet the national goal of clean waters. I think this is a graphical representation of the problem that Mr. Kaiser has just described and a problem that many of the large cities of the country find themselves in. Senator EAGLETON. I take it you describe these as being two hypothetical cities. There are cases in actuality? Mr. GIBBS. Yes; there are. The Senator may remember last year he presided at a hearing where we presented much of the material in my testimony and I will not repeat that. There are two or three other points we would like to amplify and a couple of others we would add to last year's testimony. On the incentives for river basin planning, we feel strongly this is an important consideration for Congress to support and, in fact, to support more strongly than it has been in the past. We think at this stage in the game when the Nation is far behind in meeting pollution control needs, that governmental policy at all levels should be geared to getting the most good for the money we are spending. Because we do not have absolutely unlimited funds, we feel the Federal Government must not enact legislation providing for national effluent standards. We feel to do so would cause a waste of taxpayers' money because the use of such standards by the administrator will result in treatment costs far exceeding those required to maintain Federal and State water quality standards. Effluent standards established by Federal Government will necessarily be established on the worst situation and all others will be penalized. We feel river basin planning and not effluent standards will give us the tool to effectively control pollution. I believe that with sufficient funds for both river basin planning and construction grants our clean water goals can be achieved and at a cost far less than required if we give the Federal bureaucracy national or regional effluent standards. We feel that the Federal Government should not prescribe details for local system design. We urge that the Federal control of local sewage facilities design decisions be kept at a minimum consistent with national goals. In our experience, federally imposed design standards will result in designs based on common denominators derived to meet the worst possible situation and hundreds of millions of dollars could be wasted on design features for which there was no demonstrated need. We are, of course, firmly committed to technological progress and refinement. In fact, we pride ourselves on the accomplishments of our member agencies in developing and promoting the most advanced techniques in handling and disposing of waste materials. However, we urge the committee to be wary of trying to legislate technological change by flat requirements that the latest available techniques be used. We must remember that today we are barely keeping up with inflationary cost increases in the backlog of pollution control needs. The estimated cost of this backlog is based on currently available technology, not the increased cost associated with new technology. Senate Bill 523, which members of the subcommittee have cosponsored, really gives the Nation its first opportunity to make an impact on our clean water needs. I feel we should not lose this chance simply because of academia's preoccupation with new technology simply because "it is there." The Federal Government should not prescribe local rate structures. We recognize the interest in the development of local sufficiency but we feel if the Federal Government requires or encourages local systems of waste disposal charges, it should be sufficient that that system be adequate to recover from industrial users of the system taken as a whole, those costs attributable to those users. We think local agencies should determine the priorities between pollution abatement facilities. The local agency, we feel, should be able to decide, for instance whether to put money into an interceptor system, et cetera, or into facilities which will solve the combined sewer problem. That opportunity is denied us today. There are two policy declarations which we feel are important and although the bills before the subcommittee simply amend and extend the existing Water Pollution Control Act, which act clearly states. Congress' intent to preserve and protect the primary responsibility of |