effective mandatory permit system covering all significant waste sources, or a training program for water pollution control personnel, or a capability for water quality planning. EPA favors the approach taken in S. 1012 because, by providing incentives and bonuses to States for developing elements of a superior program, it would channel the increased grant funds to States which have a demonstrated capability for utilizing them effectively, while at the same time assuring continued funding at previously authorized levels for States whose programs are maintained at existing quality.

S. 523 would continue and even expand upon the provisions of present law providing for hearings and appeals in connection with decisions of the Administrator disapproving plans or terminating payments under approved plans. We consider these procedures cumbersome and unnecessary and prefer S. 1012 which simplifies or eliminates them.

CONSTRUCTION GRANTS

S. 523 would authorize appropriations for section 8 construction grants of $12.5 billion $2.5 billion per year for each of the fiscal years 1972 through 1976 inclusive. The bill would continue the provisions of present law for Federal grants at the 30%, 40% and 50% levels, as well as for the 10% "planning bonus." In addition the bill would authorize grants at the 60% level for treatment works which are part of an approved river basin plan for a basin designated by the Administrator. The Administrator would be required to designate eligible river basins on the basis of published guidelines. Before making a 60% grant for a project within an eligible river basin, he would be required to find that a plan exists for each basin which provides an effective and economical system for the collection and treatment of sewage and all other wastes throughout the basin, and which includes or requires (1) a system of user charges to assure equitable participation in non-Federal construction costs; (2) provision for adequate reserves to offset the cost of future treatment works constructed in the vasin; (3) provision for equitable sharing of operation and maintenance costs; (4) a degree of treatment compatible with long-range needs of the basin; and (5) that users pay the cost of any treatment works constructed after fiscal year 1976. Amounts appropriated in each year would be allotted among the States in accordance with the formula contained in present law, i.e., the first $100 million would be allotted 50% on the basis of population and 50% on the basis of per capita income, and the balance entirely on the basis of population. In the reallottment of funds representing appropriations in excess of $100 million, the Administrator would be required to give priority to States with 25% matching grant programs or to States having designated river basins eligible for 60% grants for projects in such basins. The bill would continue the provisions of present law governing reimbursement-i.e., projects on which construction was initiated after June 30, 1966, which were approved by the State water pollution control agency and which met the requirements for a Federal grant, but which were constructed without a grant or with a lesser amount of grant funds than the amount to which they were entitled, are eligible for payments in reimbursement of State or local funds used for such construction to the extent that grants could have been approved if adequate appropriations had been available.

S. 1013 would authorize appropriations of $6 billion over three years ($2 billion per year), as compared with $12.5 billion over five years under S. 523. The $6 billion request, expected to stimulate a total of about $12 billion in waste treatment facilities construction, is based on a detailed study of waste treatment facility construction needs for fiscal years 1972, 1973 and 1974 completed by EPA in December 1970. This study is covered in detail in our annual report on the cost of clean water prepared pursuant to section 26(a) of the Act and represents our best estimate of the cost of waste treatment facilities needed to meet water quality standards.

S. 1013 contains a new allotment formula which we prefer to the old formula which would be continued in S. 523. Under S. 1013, the allotment of appropriated funds would be as follows: 45% to all States on the basis of population, up to 25% to States with projects eligible for reimbursement, up to 20% to States with matching grant programs, and the balance to meet the most serious water pollution control problems. This new, more flexible formula is designed to channel grant funds where they are most needed and can be most effectively used.

While the necessity for reallotments would be reduced under the new allotment formula contained in S. 1013, the bill has a new reallotment formula which also reflects a policy of increased flexibility: reallotments would be made in the Administrator's discretion to meet the most serious water pollution control problems.

The reallotment formula contained in S. 523, which would favor States with matching grant programs and designated river basin, provides no assurance that funds would be reallotted where they are most needed.

Under S. 523, funds allotted out of appropriations in excess of $100 million would become subject to reallotment 6 months after their allotment if not obligated within that period. Under S. 1013, on the other hand, funds would not become subject to reallotment unless they remained unobligated at the end of the fiscal year for which they were allotted. We believe that the 6 month obligation period proposed in S. 523 is unrealistic, in that it would not give State gaencies or EPA adequate time in which to obligate for Federal grants.

We favor the concept of river basin planning incorporated in the provisions of S. 523 authorizing grants at the 60% level. However, the benefit of 60% grants would be confined to projects which are in river basins designated as eligible by the Administrator. This preferential treatment of particular projects is avoided in S. 1013. Under EPA regulations published on July 2, 1970 (35 F.R. 10756), the requirements of which are incorporated in S. 1013 as a condition of all construction grants, all projects receiving Federal assistance are required to be included in an effective current basinwide plan and in an effective metropolitan or regional plan.

S. 1013 would require as a condition for all grants an assurance that the grantee has or will acquire capability for meeting its own future waste treatment needs. Development of such a capability would make grantees eligible for grants at the 40% or 55% level regardless of whether the State has a matching grant program. By comparison, this concept of self-sufficiency is limited in S. 523 to the provisions dealing with grants at the 60% level: plans for designated river basins would be required to include provisions for reserves to offset the cost of future treatment works, and to provide that projects constructed after 1976 be paid for by users. We believe that the development of economic self-sufficiency by all municipalities is a desirable objective and that S. 1013 is better designed to achieve this objective than S. 523.

While S. 523 would continue the provisions of present law governing the eligibility of projects for reimbursements, S. 1013 would tighten the eligibility requirements for projects initiated after June 30, 1971. To make these new projects eligible the Administrator would be required to find, prior to the initiation of construction, that the State, in approving projects for Federal grants, has given priority to projects in the more advanced stages of construction, and that the project in question is necessary to achieve compliance with water quality standards and will be commenced within a reasonable period of time. The purpose of this provision, which we favor, is to ensure more immediate tangible benefits, in terms of the initiation and completion of necessary construction, than has been the case heretofore.

S. 1013 would require grantees to recover from industrial users of a project the entire amount of the construction costs allocable to the treatment of industrial wastes. This provision represents an extension of present Government policies designed to eliminate inequities and abuses resulting from Federal subsidization of the costs of treating industrial wastes. We favor this provision, of which there is no counterpart in S. 523.

WATER QUALITY STANDARDS AND ENFORCEMENT

S. 523, like present law, provides for the adoption by the States of water quality standards for all interstate waters within their jurisdictions, and in addition, for State adoption of standards for all navigable waters and adoption by EPA of standards for the waters of the contiguous zone. Effluent requirements are identified as required elements of implementation plans. The Administrator would be required to promulgate regulations on recommended water quality criteria, as well as information on recommended pollution control techniques. Under section 10(b) (1), each State would be given 9 months after promulgation of the Administrator's regulations in which to adopt "standards" for all interstate and navigable waters and tributaries thereof within its jurisdiction, and a "plan" for the implementation and enforcement of such standards, such plan to provide for the achievement of standards within three years. Such "standards" and "plan" would become the applicable "standards" for the waters to which they relate if the Administrator finds that they are consistent with the purposes of the Act. The Administrator would be required to develop and promulgate standards where the States fail to take appropriate action. Pre-existing standards lacking one or more of the elements of standards identified in the bill would be required to be supplemented. States would be required to hold public hearings at least once

every 5 years to review established standards and to revise them as appropriate. Revisions made pursuant to this procedure would become effective upon approval by the Administrator.

S. 523 would authorize the Administrator to issue administrative orders to compel compliance with water quality standards, and to commence civil actions for injunctive relief or civil or criminal penalties in cases where such orders are complied with. Alternatively, the Administrator would be authorized to resort directly to court proceedings against violators of standards. Courts would be authorized to assess penalties of up to $10,000 per day negligent violations of standards or administrative orders. Knowing violations would invite fines of up to $25,000 per day, imprisonment of up to one year, or both. The Administrator would have authority to require monitoring and record keeping and to gain access to premises to inspect facilities and records. The Administrator would have authority to institute proceedings for injunctive relief whenever he determines that any pollution source is presenting an imminent or substantial endangerment to human health or to treaty-protected fish or wildlife, or may present a substantial economic injury because of inability to market shellfish or shellfish products. The bill would authorize citizen suits for injunctive relief against violators of of standards or administrative orders, or against the Administrator for alleged failure to perform any act or duty under the Act. Discharges of all hazardous substances identified by the Administrator in regulations published under present section 12(a) would be prohibited; dischargers would be liable for all damages resulting from a discharge, including costs of removal, without regard to negligence or willfulness; violations of discharge prohibitions would be enforceable by administrative orders and punishable by fines in approximately the same way as violations of water quality standards.

The use of the term "water quality standards" in S. 523 is not wholly consistent. At some places, the bill distinguishes between "standards" and a "plan"; at others, it appears to refer to standards as including a plan. S. 1014 carefully defines "standards" and the following specific elements of that term water use designations, water quality criteria, effluent limitations, and a plan of implementation and enforcement.

S. 1014 would require that EPA publish regulations providing specifications for water use designations and effluent limitations, as well as for water quality criteria as required in S. 523. EPA believes that it would be desirable to have regulations for all of these elements and not just for water quality criteria. While S. 523 identifies effluent requirements as an element of standards, there is no definition of the term nor would there be an administrative procedure established for defining it.

S. 523 would add a section 10(b) (2) dealing with procedures and requirements for establishing water quality standards which overlaps and conflicts with section 10(b)(1) previously referred to. Section 10(b)(1) purports to set forth procedures and requirements for establishing standards for both interstate and navigable waters, whereas 10(b) (2) refers only to standards for navigable waters. There appears to be a need for clarification in this instance.

Deadlines for taking various required actions with respect to water quality standards are shorter in S. 523 than in S. 1014; e.g., 90 days versus 6 months for promulgation of initial regulations by the Aministrator; 9 months versus 1 year for the States to adopt standards based on those regulations; and 180 days versus 1 year for States to supplement pre-established standards. Experience indicates that the shorter deadlines contained in S. 523 are unrealistic. Also noted is the fact that S. 523, unlike S. 1014, would impose time limits within which the Administrator would be required to approve standards or promulgate alternative proposals. Experience has shown that productive negotiations often take more time than these time limits would allow, and that, therefore, such deadlines for required actions by the Administrator are undesirable.

Under section 10(b)(1) of S. 523, implementation jplans would be required to provide for the achievement of "standards" within three years. No provision is made for extending this period in particular cases. We consider this approach unduly restrictive. Achievement of standards within 3 years may not be possible. On the other hand, compliance will be attainable in some cases in a shorter period, and a deadline such as that contained in S. 523 might serve as a deterrent to rapid compliance in such cases. We prefer the more flexible approach adopted in S. 1014, which requires that plans for implementation and enforcement provide for attainment of compliance with effluent limitations as expeditiously as practicable.

S. 523, like S. 1014, sets forth an explicit policy against non-degradation of high quality water. Section 10(b)(1) of S. 523 provides that the Administrator may

not approve standards which provide for the degradation of the present quality of any waters. The approach adopted in S. 1014 is more flexible. It provides that the Administrator shall promulgate regulations for guidance to the States dealing with maintenance of the quality of high quality waters. This continues what has been our consistent policy with respect to non-degradation.

With respect to new commercial facilities, S. 523 would require State and EPA certification of compliance with regulations of the Administrator governing the latest pollution control techniques, and would require a no-discharge policy where closed-cycle systems are available. S. 1014 adopts a broader, more flexible approach which, in many cases, would produce the same results. Under S. 1014, the Administrator's regulations on effluent limitations for new industrial facilities would be required to reflect the "best available technology", and standards adopted by the States would be required to be consistent with these regulations. One fault with S. 523 is that the "latest" technology is not necessarily the "best."

Under S. 523, the Administrator would not be authorized to impose fines for violations of administrative orders, but would be required to resort to court action for the imposition of sanctions. Under S. 1014, on the other hand, the Administrator would be empowered to impose fines of up to $25,000 per day for violations of final administrative orders; orders would not become final without an opportunity for a hearing. We favor the approach in S. 1014 since it would foster more rapid administrative resolution of pollution problems, which, because of their complexity, courts are not always equipped to deal with.

Court authorized fines for violations of water quality standards and limitations. are stiffer in S. 1014 than in S. 523. S. 523 authorizes fines of up to $10,000 per day for negligent violations and fines of up to $25,000 per day for knowing violations, while S. 1014 authorizes fines of up to $25,000 per day without regard to negligence or willfulness. The approach in S. 1014 is preferable since it would authorize fines of up to $25,000 per day for negligent violations, without the need of proving a knowing violation. S. 1014 would not preclude consideration of this factor and certainly the Administrator or the Court would take this into account.

S. 523 would completely eliminate the provisions of present law with respect to the enforcement conference (except in cases of "international" pollution). S. 1014, on the other hand, while eliminating the conference as a necessary prerequisite to certain classes of court actions, would retain its most desirable attribute that of providing a face-finding forum for use in complex pollution situations in a provision authorizing the Administrator to call public hearings to investigate particular pollution incidents or violations of standards. Such hearings could serve as the basis for enforcement actions, expedited revisions of standards, promulgation of guidelines and regulations, and legislative proposals. We favor retaining the essence of the enforcement conference as provided in S. 1014. The grounds specified in S. 523 for instituting actions for emergency injunctive relief-danger to human health, treaty-protected fish, etc.-seem unnecessarily restrictive. The comparable provision of S. 1014 contains a broader reference to endangerment to human health or welfare or water quality.

With respect to citizen suits, S. 1014 contains several useful safeguards governing the initiation of suits which are not contained in S. 523. S. 1014 would require notice to interested persons and a 60-day waiting period prior to bringing suit, and would not permit an action to be commenced if the Administrator or a State is taking diligent enforcement action. We favor the limitations contained in S. 1014 since they would tend to discourage unnecessary or abusive use of the citizen suit device.

We prefer the approach to hazardous substances taken in S. 1014 to that taken in S. 523. Under S. 1014, the Administrator would be required to publish a list of hazardous elements and compounds, followed by effluent limitations including discharge prohibition where appropriate. S. 523, on the other hand, contemplates only discharge prohibitions. S. 1014 provides a more flexible and comprehensive regulatory mechanism since it would embrace substances for which discharge prohibitions are appropriate only in excess of limited amounts, as well as substances for which complete prohibitions are necessary.

S. 523 includes a section which would prohibit the discharge of any matter into the territorial sea or waters of the contiguous zone, or the transport of any matter from any United States port for discharge into the ocean, without a permit from the Administrator. A comparable permit system would be established by the Administration's proposed "Marine Protection Act of 1971." We favor the Administration proposal for several reasons. First it would apply to the Great Lakes as well as to ocean waters. Further, while S. 523 provides no penalties for violations

of permits or of provisions of the bill requiring permits, the Administration bill would authorize civil and criminal penalties of up to $50,000 for each violation of a permit or of the Act or regulations issued thereunder, as well as appropriate injunctive relief.

S. 523 would prohibit firing of or other discrimination against employees who institute proceedings under the Act or supply information about violations of the Act. It would also prohibit Federal agencies from contracting for the procurement of goods or services with convicted violators of water quality standards or administrative orders, where the contract is to be performed at the facility at which the violation in question occurred. The bill would require all Federal agencies "to effectuate the purpose and policy of this Act" in making loans or grants or entering into contracts. These proposals have merit and deserve further consideration by the Congress and by the Administration.

Finally, S. 523 would require a study and report to Congress on the impact on water quality of uncontrolled agricultural run-off. We believe there is already adequate authority under section 5 of the Act to conduct such a study and, in fact, such studies are currently in progress.

The Office of Management and Budget advises that presentation of this report would be in accord with the program of the President.

Sincerely yours,

WILLIAM D. RUCKELSHAUS,

Administrator.