APPENDIX-MARCH 24, 1971 (The following supplemental statement was submitted by the Manufacturing Chemists Association in response to a request by the subcommittee:) MANUFACTURING CHEMISTS ASSOCIATION, Hon. EDMUND S. MUSKIE, Chairman, Subcommittee on Air and Water Pollution, U. S. Senate Washington, D. C. DEAR Mr. CHAIRMAN: On behalf of the Manufacturing Chemists Association, I am pleased to submit comments relating to proposed ocean disposal legislation in response to an invitation by the Subcommittee staff following our testimony on March 24. The vital importance of the ocean environment to our total ecological well being is an undisputed scientific fact. It is important to recognize, however, that the oceans are the ultimate sink in the hydrologic cycle. An inquisitive child might ask the question, "Why are the oceans salty?" The answer is not so apparent. The oceans receive, concentrate, and to a degree provide natural treatment to water-borne substances. Natural and man-made water-borne substances eventually find their way to the oceans where the water evaporates. Rains then fall over the land and fresh water resources are replenished. We are faced with a dichotomy. On the one hand, oceans are the source of life, vital to ecological well being, and a significant economic factor in many parts of the world. On the other hand, oceans are the natural and ultimate depository for water-borne residues of man and nature. Decisive action must be taken to regulate and control the practice of dumping deleterious wastes into oceans and coastal waters. In some instances serious problems have arisen from irresponsible dumping practices primarily dredging spoils and municipal sewage sludges in coastal waters where the contaminating materials have washed shoreward or affected commercial and sport fishing. Such practices should be prohibited or strictly controlled. We submit, however, that there are instances where ocean disposal, if responsibly and conscientiously performed, is justified and that this disposal method should not be categorically prohibited. We would like to put forth for consideration some basic regulatory concepts and then comment specifically on the proposed "Marine Protection Act of 1971". The hydrologic cycle is an element in a complex ecological system which must be balanced to serve mankind's needs. How we go about maintaining this balance is the central issue. It is our view that control of ocean disposal practices should not be totally divorced from protection of coastal and estuarine waters or inland fresh water lakes, streams, and ground waters. The interplay between all aspects of water pollution control dictates that a flexible grant of authority be given to the regulatory agency. The agency should have latitude to determine within reasonable bounds the control strategy and alternatives most appropriate in a particular instance. It should be recognized that there are technical limitations on what can be accomplished in wastewater treatment and control. It is not always possible, with today's state of the art, to adequately treat and control all wastewaters to a degree which would allow the safe discharge to surface waters. Some wastewaters are presently untreatable; others may be treatable, but where treatment does not result in complete destruction, residuals may have adverse environmental consequences. The diversity and scope of the chemical industry present a wide range of waste residuals that must be disposed of. The industry has been forced to seek various disposal alternatives when such wastes cannot be safely or economic ally recycled. These alternatives are deep well injection, land application, incineration, and ocean dumping. Each has its place if properly selected and conscientiously performed. The central question is which disposal alternative poses the least risk of environmental harm. In certain instances, ocean disposal may be the only responsible alternative. We reiterate that indiscriminate ocean dumping should be outlawed, but maintain that ocean disposal should be allowed under strict regulation. It is appropriate that a Federal agency, specifically the Environmental Protection Agency, be given regulatory authority in this matter. EPA is the only agency at either the Federal or State governmental level with broad authority for wastewater control. Other Federal agencies, such as NOAA, Corps of Engineers, and the Coast Guard, along with State agencies, may very well play an active role in the regulatory process or surveillance, but we recommend that ultimate responsibility be centered at the Federal level in EPA. Regulatory control should take into account the quantity as well as type of material to be disposed of, the disposal site, and method of disposal. The Environmental risks of various alternative disposal means should be weighed, taking into consideration technically feasible control methods and the possible effect of onshore disposal. We envision that certain potentially toxic materials which can be practically treated should not be allowed to be discharged into the oceans, whereas other potentially toxic substances which might create greater hazards of land, air or surface water pollution be disposed of at sea under strictly controlled conditions. Disposal areas should be carefully selected and monitored for any adverse effect. Marine sanctuaries should be maintained, and fishing and recreational areas protected for present as well as future generations. The issue is not simply one of ocean disposal, since wastes eventually find their way to the ocean, if not by direct disposal then by conveyance in surface streams and subsurface waters. Rather it is a matter of farsighted wastewater control management, soundly and effectively administered. The controlling agency must have a broad grant of authority, alternative choices, flexibility of action, and the resources to fully implement its program. We have reviewed the various legislative proposals presently pending and feel that the "Marine Protection Act of 1971" offers the more complete and appropriate approach to regulatory control. Our recommendations in reference to it follow. Recommendation 1.-Incorporate regulation of ocean disposal as a separate Title of the Federal Water Pollution Control Act. Control of ocean disposal should be regarded as simply one element of water quality management. Accordingly, we suggest that control of ocean disposal would most appropriately be provided for as a separate Title of the Federal Water Pollution Control Act. Recommendation 2.-Subject agencies of the Federal Government to injunctive proceedings for violations. As the proposed Act now reads, departments and agencies of the Federal Government are exempt from the penalty provisions of Section 6. Ocean dumping, significantly the dumping of dredging spoils, has been practiced by a number of Federal agencies with alleged detriment to the environment. We believe Federal agencies should be subject to injunctive proceedings brought by the Administrator, and recommend the exception provided under Section 3(e) be limited specifically to those penalties provided in Subsections 6(a) and (b), i.e., fines and imprisonment. Recommendation 3.-Criteria establishment under Section 5 should afford interested persons an opportunity for written comment. The development of ocean disposal criteria will affect a large number of interested parties, including other agencies of the Federal Government, State control officials, conservation and economic interest groups, permit applicants, etc. On matters as important and complex as this, criteria should be published as a proposed regulation with reasonable time given for interested persons to submit written comments thereon. Valuable assistance and added expertise can be made available when government fosters a common spirit of cooperation and coordination in the resolution of environmental problems. Recommendation 4.-Clearly delineate between responsibility for (a) the nature of the material to be disposed of and (b) the proper deposition of such material at the permitted site. Many barging activities are conducted by independent waste haulers who are under contract to the waste-generating party. A barge may contain wastes from a number of different sources and a party turning his wastes over to the independent hauler may not have control over other types of wastes included with the load, the exact disposal location, or the actual disposal technique practiced. We feel that the various responsibilities of the waste generator and the waste hauler should be specifically delineated. A possible approach would be to issue permits for various types of waste materials specifying the zone or area in which the material could lawfully be discharged. The waste generator would certify the quantity, nature of the waste material, and the permitted disposal area when the waste material was loaded upon the barge. It would then be the responsibility of the waste hauler to dispose of the material in the permitted disposal area. This could be checked by requiring reports of the log of the barge's activities including copies of the waste certificates of the barge load. This system is in accordance with the realities of most ocean disposal activities, and would provide a workable and enforceable system of control. Recommendation 5.-Include a provision to allow continued ocean disposal pending implementation of the permit system. The reasons for not categorically banning all ocean disposal of waste materials were stated earlier. Similarly, a precipitous moratorium on ocean disposal pending the implementation of the permit system would be unwise and could result in adverse environmental and economic consequences. We suggest two years as an appropriate and realistic lead time for obtaining the requisite permits. Interim measures such as prohibiting the discharge of waste materials within a 30-mile limit could be initiated if thought necessary or desirable. Recommendation 6.-Provide funding to initiate and support fundamental scientific and social research related to ocean disposal practices. Existing knowledge of effects of ocean disposal on the actual physical, chemical and biological properties of the oceans is sadly lacking. Active research in this area should be sponsored by the Federal Government. We recommend that a system of Federal grants be established to initiate and support fundamental scientific and social research related to ocean disposal practices. Should there be further hearings on this subject, we would be pleased to participate. As emphasized in our statements, the chemical manufacturing industry has vital interests in the continued availability of alternative methods for disposal of unusuable residues. We support sound legislation and regulation and offer cooperation and technical expertise toward its development. Sincerely, W. J. DRIVER, President. (The following exchange of correspondence took place after Mr. Fogarty's appearance as a witness on March 23. See p. 803 of this volume for reference.) Mr. JOHN F. FOGARTY, U.S. SENATE, Washington, D.C., April 27, 1971. DEAR MR. FOGARTY: I have reviewed the transcript of the hearings before the Air and Water Pollution Subcommittee of the Senate Public Works Committe on March 23, 1971 at which you testified. I regret that a previous commitment made it impossible for me to hear all your testimony, but I appreciate the opportunity to submit questions to you in writing. I would appreciate your response to two related questions concerning the 1968 amendment to the Housing Act which permits commercial banks to underwrite and deal in housing, university, and dormitory bond issues. If your organization has examined the results of the commercial banks' underwriting efforts in that sector of the revenue bond market, I would appreciate your making that analysis available to the Subcommittee. Since one of the points made to support the amendment to permit commercial banks to underwrite water and sewer revenue bonds is that interest costs would be lowered, I would appreciate your including in your analysis any information that you may have relative to the effect upon interest costs of the commercial banks' underwriting efforts under the 1968 amendments to the Housing Act. I have found your testimony before the Air and Water Pollution Subcommittee informative and helpful, and look forward to receiving your response to these questions. Sincerely yours, THOMAS E. EAGLETON, (Mr. Fogarty's response follows: INVESTMENT BANKERS ASSOCIATION OF AMERICA, Hon. THOMAS F. EAGLETON, DEAR SENATOR: The question of Senator Proxmire's amendment to permit commercial banks to deal in water and sewer revenue bonds is certainly a difficult one to understand. I should like to give you my views on the subject. The competition between investment dealers and banks is the same as between rival dealers-intense. There is a definite advantage residing with the banks in that their basic capital for dealing in bonds is the deposits of their cus tomers, which includes the dealers. They also enjoy the benefit of having their own bank's portfolio as an exclusive customer, a customer who does not always demand the market price in its purchases from itself. The dealer, lacking such a "built-in" receptacle, is forced to take price reductions and the subsequent losses when the market takes adverse actions in order to sell his merchandise. Since he usually is borrowing at least half of his inventory, he must be aware of the interest costs of loans and move his merchandise. The bank merely carries its inventory as tax-free income. The dealer faces an unfair tax situation in that his is the only business in the country where he is not allowed to deduct the net cost of borrowing because of the business he is in, namely, tax-exempt obligations. Further, under the new Security Investors Protection Insurance Corporation (SIPIC), only the dealer is assessed a percentage of his gross revenues to fund the program. Bank bond departments are not assessed. Despite these substantial handicaps, dealers in municipal bonds throughout the country do compete strongly with the banks. One area that has helped them to survive is the revenue bond area where dealers for years have built up organization that underwrite all of the small communities in the country. I fear that permission for banks to take another step may result eventually in serious damage to the hundreds of small dealers throughout the country who regularly serve the small communities. As you know, they have had substantia! problems over the past several years in remaining in business. The resultant problem would intensify during the periods (1957, 1959, 1961, 1963, 1966, 1969, 1970) when the credit "squeeze" has resulted in banks suspending operations in the bond underwriting business to provide funds for their basic purposes, i.e., to make loans to their corporate customers. If the present market apparatus is destroyed or severely changed, all of these communities which have always had a market for their bonds, may periodically find it impossible to borrow in the private market and be forced to add to the demands on the Federal government which are already substantial. The banks that are supporting the amendment are but a handful but are the largest in the country. Have you received mail or calls from the thousands of smaller banks throughout the country? The question of lower costs to issuers is always current. I suggest that it is impossible to measure any change in the college bond market since banks were allowed in this area a few years ago. The reason is that some banks have joined existing dealer accounts on such bids, or a new combination is created. There have been few, if any, cases of banks only being the underwriters and the interest cost differential is indeterminate. Please remember that, under existing laws, banks may underwrite all kinds of revenue bonds for their own account. They are asking for permission to resell such bonds to other customers. Thus, no new capital is made available to finance these activities. I hope you vote against the amendment. If you have any questions, please do not hesitate to let me hear from you. Sincerely, |