ENVIRONMENTAL PROTECTION AGENCY WASHINGTON, D. C. 20460 Dear Mr. [President/Speaker]: "TO Enclosed is a draft of a proposed bill. amend section 8 of the Federal Water Pollution Control Act, as amended, and for other purposes. We recommend that the bill be referred to the appropriate committee for consideration, and we recommend that it be enacted. The proposed legislation would amend section 8 of the Act to provide financial assistance for the construction of treatment works, and for the development of financial and other capability to provide for future waste treatment needs. The overall objective of this bill is to achieve an equitable and fully effective Federal financing program for the construction of waste treatment facilities. This can better be accomplished if investments for treatment works are made as part of a comprehensive water quality management process which relates these investments to the environmental quality objectives. The long range effectiveness of these investments in attaining and maintaining environmental quality will depend upon the actions taken now to develop self-sufficient systems at the State and local levels for assuring the future operation, maintenance, expansion and replacement of treatment facilities. The bill would authorize appropriations of $6 billion, $2 billion for each of the three fiscal years beginning with fiscal year 1972. These requested appropriations are based on detailed studies and surveys of waste treatment facility construction needs for fiscal years 1972, 1973 and 1974. A detailed analysis and report of those studies and surveys will be transmitted to the Congress shortly pursuant to the provisions of section 26 (a) of the Federal Water Pollution Control Act. In determining the amounts to be requested for this purpose, full account was taken of the amounts expended by States and municipalities to prefinance the Federal share of needed waste treatment facilities, so as to render such States and municipalities eligible for reimbursement. Account was also taken of the unobligated balances of funds previously appropriated for this purpose. In addition, the bill would revise the allocation formula to provide greater flexibility to meet the most severe water pollution problems. The new allocation formula for distributing construction grant funds among the States would employ four factors. First, 45 percent of the funds would be allocated based on relative State population; second, up to 20 percent would be allocated to States which agree to pay at least 25 percent of the cost of all projects receiving construction grants during a fiscal year; third, up to 25 percent would be allocated to States which have existing "reimbursables" for which grants have not been made because of lack of Federal funds; and fourth, the remainder would be distributed to meet the most serious water pollution control problems as determined by the Administrator. This new allocation formula would permit the Administrator a degree of flexibility to direct construction grant funds to areas where those funds are most critically needed and where they can be most effectively used. Any sums not obligated by a State at the end of a fiscal year because of a lack of approved projects would be reallotted by the Administrator to meet the most serious water pollution control needs. This bill would authorize Federal payments in reimbursement of State or local funds used to prefinance the Federal share of qualified projects on which construction was initiated after June 30, 1966, but prior to July 1, 1971. "Reimbursables" for projects proposed to be initiated after June 30, 1971, would be permitted only if they met certain qualifications. The Administrator would thus be given some control over the accumulation of new "reimbursable" projects to minimize abusive practices. A number of inequities and problems have been identified in connection with the treatment of industrial wastes in municipal waste treatment facilities financed in part with Federal funds. This has resulted in the ineffective and inefficient use of construction grant monies. This bill is designed to overcome these problems by prohibiting the granting of funds for projects treating industrial wastes unless the industrial user is required to pay back that portion of the project costs attributable to the treatment of industrial wastes. The $6 billion share proposed in this bill will stimulate about $12 billion worth of total waste treatment construction. That estimate represents our best estimate of total investment needs. The President's proposal of last year was based on an estimated need of $10 billion, including a Federal contribution of $4 billion. That estimate was based on an estimated need of $10 billion, including a Federal contribution of $4 billion. That estimate was based upon two independent studies of nation-wide waste treatment facility needs. A detailed reassessment of the Nation's needs, including contacts with most of the major cities, has revealed a total need of about $12 billion by the end of fiscal year 1974. The increased estimate of $2 billion 'over last year's proposal is attributed to the identification of new needs by the States and revision of engineering estimates to reflect current price levels. In last year's proposal, the Federal share was 40 percent of the total $10 billion investment required. The present bill proposes a Federal share of $6 billion which represents 47 percent of the total $12 billion investment required. This amount is increased by the amounts needed to reimburse States and municipalities which have prefinanced the Federal share of needed projects, and reduced by the amount of unobligated funds appropriated for this purpose. Our underlying concern is the attainment of water quality standards. It is our best estimate that the funds requested in this bill for the construction of needed waste treatment facilities will permit us to achieve our water quality standard goals shortly after 1974. This proposed bill is part of the President's environmental program as announced in his Environmental Message of February 8, 1971. The Office of Management and Budget has advised that this proposed legislation would be in accord with the program of the President. Sincerely yours, /s/ William D. Ruckelshaus Honorable Spiro T. Agnew Honorable Carl B. Albert Speaker of the House of Representatives |