start writing a criminal penalty or a civil penalty to say, if the Administrator doesn't submit this report, he shall be personally fined so much, and we can do that if we have to. We may have to.

Now let me ask you about the section 205 report. What information does this report contain? Could you sum it up for us? I see you have a page of findings here. What do you think you basically accomplished in 28 months in giving us this report, which sould have been done in 12?

Mr. DARNAY. Mr. Chairman, to sum up the report as briefly as possible, let me try to break it into its parts. The report begins with a statement of the problem, and the problem is basically identified as a very high, rapidly increasing rate of materials used in this country. This has adverse environmental effects or consequences and results in generation of solid waste at higher rates than is normal or than would be the case if there was not a higher materials consumption pattern per capita growing faster than the population.

Of course, this diagnosis of the problem goes into considerable detail. I think perhaps the most salient aspect of it is that the recovery rate in the country is approximately 25 percent of consumption of those materials that are recovered and that there is a decline in the rate of recovery relative to consumption. This is the result of a number of factors, including the higher costs relative to virgin materials which result from subsidies and from discriminatory freight rate practices and other things, including technology, difficulty in getting the materials out of the waste and so forth.

The second major part of this report makes a number of points. Let me just try to highlight them. One of them is that in those cases where we have actually been able to study in detail the environmental impact, the adverse negative impacts of using a secondary material are lower than the adverse impacts of using virgin material.

We have studied steel, aluminum, glass, and paper in this connection. We present data showing that this is so. In other words, to sum it up, the environmental consequences of recycling are very good, very positive.

In this same chapter we also conclude that the economics of resource recovery are adverse. That is to say, in many instances, when you take the total cost of production from virgin materials and compare them to the total cost of production from secondary materials, odd though it may sound, the virgin system is economically favored, and among the reasons for that are public policies

Mr. CARTER. Mr. Chairman, if the gentleman would yield on that. I have the figure on the aluminum cost being $268 a ton more to recycle and market than the virgin product, but don't we have one of those products you mentioned which is really cheaper to recycle? Glass? Isn't it cheaper to recycle glass?

Mr. DARNAY. It depends on what part of the cost you include and what part you don't include. We have included all the costs, and if you take all the costs colored glass may be cheaper to recycle and to use than virgin sand and so forth, but it is a relative thing. It is relative to the transportation distance. Most of the time you have a greater transportation distance. Therefore, the recycling option is more expensive, even in the case of glass, even though it is more marginal. Mr. CARTER. Thank you.

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Mr. DARNAY. With your permission, Mr. Chairman, I will go on. As I mentioned, the fact that there is a definite economic disadvantage with recycling is one of the reasons for the decline. We recognize, I think there is no question about the fact that we recognize that this

is so.

Mr. ROGERS. But a great deal of that is due to public policy, discrimination in freight rates, depletion allowances, and so forth. Is that correct?

Mr. DARNAY. I would say that to make a statement that a great deal of the economic disadvantage is associated with public policy is perhaps an exaggeration.

Public policy contributes to this, but it is certainly not the only

cause.

Mr. ROGERS. I thought you said transportation was a major cause and that there is discrimination.

Mr. DARNAY. Yes; it is a major cost. I guess we should be much more precise in using adjectives. From my viewpoint as a technician, I wouldn't call it major. I would call it an important element of it, but we are talking about $1 or $2 per ton on things that range from $20 to $200 a ton, so it is relative to the material we are talking about. Mr. ROGERS. Mr. Carter?

Mr. CARTER. Mr. Chairman, if I may. Another thing. It seems that some companies are making money on recycling paper also. Is that not correct?

Mr. DARNAY. That is correct. I should perhaps make the point that there is a considerable amount of recycling going on. There are situations and products that favor recycling, and that is why it is going on.

When you look at it from a point of view of increasing recycling, then you run into marginal cases, and it is on the margins usually where you have this problem of cost.

Mr. Dominick has already dealt with the issue of technology which is discussed in this report in more or less the same terms he has discussed and perhaps with a little more detail, and also figures are presented on what it costs to recover mixed municipal waste.

Mr. ROGERS. What is your conclusion on the present state of technology?

Mr. DARNAY. My conclusion is that it is available. That technology is available to take mixed municipal waste and to convert it to useful, valuable products, provided there is a market for those products. In the absence of those markets, the alternative of sanitary landfill becomes the economical alternative.

Mr. HEINZ. Mr. Chairman?

Mr. Darnay, would it be possible for you to quantify the effects, on each type of product, of public policy choices regarding subsidies, tax incentives, failure to levy effluent charges and the like to or bring virgin raw material production operations up to the environmental standards that we might impose on recycling technologies?

Would it be possible to quanitfy the differences in cost or value for each major element of solid waste?

Mr. DARNAY. We are able at this time and we do in this report present quantification for the environmental impacts of the differential between virgin and secondary in selected cases, not to generalize in all cases, but in selected cases. We are conducting further,

more detailed studies on the environmental impacts of recycling versus virgin production, which will give us better information.

We are using rules of thumb on the amount of money represented by various kinds of fiscal incentives for virgin use, and it is from these rules of thumb that we would derive the fact that between $1 and $2 per ton of materials is represented by such things as depletion allowances.

Mr. HEINZ. When you say you are using rules of thumb, what do you mean?

Mr. DARNAY. What I mean is that these are based on analysis, but not very detailed analysis.

Mr. HEINZ. By industry?

Mr. DARNAY. Of the tax code and of the cost structure of industry. Mr. HEINZ. Of each industry?

Mr. DARNAY. Of major materials industries in this case, like the steel industry.

Mr. HEINZ. You look at steel and you would say that various public policy contributions amount to a subsidy of x dollars per ton? Mr. DARNAY. Yes.

Mr. HEINZ. And that information is available?

Mr. DARNAY. That information is available.

Mr. ROGERS. Could you furnish it to the committee for the record? I understand that you would like it broken down as to various products.

Mr. HEINZ. I think that would be quite helpful.

Mr. ROGERS. Without objection, it is so ordered. Make it a part of of the record at this point.

[The following tables were received for the record:]

TAX BENEFITS FOR VIRGIN MATERIALS-1969

TAX BENEFITS FROM CAPITAL GAINS TREATMENT ON TIMBER FOR SELECTED PAPER AND LUMBER INDUSTRIES

Mr. DARNAY. The point on the costs of technology-the major point I guess I should make is that resource recovery does not pay for itself, but requires some additional payment by the operator of the resource recovery facility.

In a city where disposal costs are high, resource recovery becomes a real option and is already a real option today. Data are presented on this in the report itself.

Then there is a discussion. The third chapter of the report discusses major options and discusses the inhibition of virgin materials use by such vehicles as possibility of taxation of virgin materials, and the removal of existing subsidies.

It discusses demand creation incentives. In other words, positive steps to reward the use of secondary materials, and supply creation steps which would provide a supply of waste materials for those who wish to use it.

Finally, it discusses what we consider to be a somewhat more longrange option, that of reducing the generation of waste at the source. All of these questions are dealt with in this paper in an analytical sense. Now, what do we conclude? We conclude basically that positive incentives are preferable to negative incentives for specific job of inducing more resource recovery.

In other words, it is better to provide incentive for a small quantity of materials than to put a negative incentive on a very large quantity of materials, which is what the Nation uses.

We conclude that it is extremely difficult to predict the effects of fiscal incentives and that, consequently, we are not prepared to make a specific recommendation as to what types of incentives should be used for what types of recovery.

We conclude that Federal procurement is a good test bed for the testing out of various concepts and that further study is really required in dealing with long-range, far-out question of reducing waste generation at the source.

The next chapter deals in some detail with the program activities that we are undertaking, giving sort of a summation of the studies that we have done or are undertaking, the conceptual framework for those studies, and the kinds of questions we are addressing, and in what manner.

Finally, there is a detailed appendix materials on paper, metals, and so forth, which give analysis and data on the problems and the opportunities.

Mr. ROGERS. Basically, what does this report suggest to the Congress in the way of a new approach or new emphasis? Is there anything in particular that you think we should note?

Mr. DARNAY. Well, the report

Mr. ROGERS. It is just a summary?

Mr. DARNAY. It is basically a summation of the situation. It does present some judgment as to a choice between various policies, as to which ones would be more effective than others, without recommending specific policy actions at this time.

Mr. ROGERS. Let me ask you: Is the solid waste problem growing or diminishing?

Mr. DARNAY. It appears to be growing.

Mr. ROGERS. It is growing. It is getting more severe. Can you tell us the magnitude of that growth?

Mr. DARNAY. That is presented in the report; yes, sir.

Mr. ROGERS. Are we going to double in 8 years, or 12 years, or what? Mr. DARNAY. The growth rate, as we see it now, is 4 percent annually, as against a population increase of about 1 percent annually.

Mr. ROGERS. So we have 4 percent growth in solid waste volume annually?

Mr. ĎARNAY. Growth-yes.

Mr. ROGERS. Were any recommendations in the report submitted to OMB that were not released in the report, submitted to the Congress?

Mr. DOMINICK. No, there were not, Mr. Chairman.

Mr. ROGERS. None at all?

Mr. DOMINICK. There were some modifications of emphasis in the report. However, we are satisfied with the report as it has emerged from this process.

Mr. ROGERS. I understand, but we may not be satisfied. What I wonder is: Did they say not to recommend any change in public policy? Did they suggest that you not go into any recommendations on that and just to stick to a general summation?

Mr. DOMINICK. No, I don't believe there was any discussion of that

nature.

Mr. ROGERS. Then what was the major thrust of OMB's objection? Mr. DOMINICK. I don't believe that OMB had a significant objection with this report. The report does reflect the best judgment of the agency at the time.

Mr. ROGERS. All right. So OMB thought everything was fine. You just kept it from October until now.

Mr. DOMINICK. There were no fundamental changes made in this report.

Mr. ROGERS. Well, I won't pursue that further. Let me ask how many employees you have in the solid waste functions of EPA? Mr. DOMINICK. Approximately 312.

Mr. ROGERS. How many are here in the central office and how many in the regional offices?

Mr. HALE. We had 212 in solid waste management programs split between Washington and Cincinnati.

Mr. ROGERS. 212. How many are professional and how many are clerical?

Mr. HALE. Roughly 60 percent of those are professional in terms of engineering.

Mr. ROGERS. Where are the other 100?

Mr. HALE. 20 are in the research office and the remainder are in regional offices.

Mr. ROGERS. 80 are in the regions?

Mr. DOMINICK. That is correct.

Mr. ROGERS. How are they spread over the regions?

Mr. DOMINICK. We have 10 regional offices, as you know, Mr. Chairman, 10 Federal regional offices, so

Mr. ROGERS. About eight each? What do they do in those regional offices?

Mr. DOMINICK. They are engaged primarily in offering technical assistance to States.

Mr. ROGERS. Are they the technical teams that you speak of or do these teams come out of Washington and Cincinnati?

Mr. DOMINICK. The major technical assistance comes out of Washington and Cincinnati. The other assistance efforts, including State and local regional planning efforts, are conducted out of the regional offices.